Star Mark Management, Inc. v. Koon Chun Hing Kee Soy & Sauce Factory, Ltd.
682 F.3d 170
| 2d Cir. | 2012Background
- Koon Chun sued Star Mark in EDNY (2004) for trademark infringement; district court granted partial summary judgment for Koon Chun on infringement and trade dress.
- In 2007, Star Mark, represented by Li, sought leave to amend and add counterclaims, but the magistrate expressed skepticism and Star Mark instead filed a new action.
- In 2008, Koon Chun served a letter with a proposed Rule 11 motion listing six grounds; Star Mark did not withdraw; Koon Chun moved for sanctions and judgment on the pleadings, which the district court granted in 2009 under Rule 11.
- The district court referred the fee issue to a magistrate, who recommended $105,037.02 in fees; the district court reduced to $10,000 based on financial hardship and then denied reconsideration.
- Star Mark and Li appealed, and Koon Chun cross-appealed regarding the amount; the court affirmed the sanctions and denied additional sanctions under Rule 38.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether safe harbor was satisfied under Rule 11(c)(2). | Li argues no formal motion was served for safe harbor. | Koon Chun contends notice with motion attached satisfied safe harbor. | Safe harbor satisfied; service of motion with notice complied. |
| Whether the district court properly found the claims frivolous for Rule 11 sanctions. | Li contends claims had merit or color and could be argued otherwise. | Koon Chun argues the claims were objectively frivolous and lacking color. | District court did not abuse discretion; claims deemed frivolous. |
| Whether §1927 sanctions were required or appropriate in addition to Rule 11 sanctions. | Li suggests §1927 should have been considered due to bad-faith behavior. | District court found no clear evidence of bad faith to support §1927 sanctions. | No §1927 sanctions; court did not err in limiting to Rule 11 sanctions. |
| Whether the sanctions amount was appropriate in light of financial hardship and deterrence. | Li contends the amount was too low or improperly considering hardship. | Koon Chun argues the lower amount balanced ability to pay and deterrence. | District court did not abuse discretion; $10,000 appropriate given circumstances. |
Key Cases Cited
- Lawrence v. Richman Grp. of CT LLC, 620 F.3d 153 (2d Cir. 2010) (safe harbor and notice purposes of Rule 11; preventive sanctions)
- Storey v. Cello Holdings, L.L.C., 347 F.3d 370 (2d Cir. 2003) (objective standard for Rule 11 frivolousness; cost-shifting considerations)
- Dow Chem. Pac. Ltd. v. Rascator Maritime S.A., 782 F.2d 329 (2d Cir. 1986) (bad-faith standard for §1927 sanctions)