Mae West famously inquired, “[w]hat’s a gal got to do to get a drink around here?” The response, if any, is not recorded. In a recent case, a New York based company has demanded, “what’s a trademark infringer got to do to be subject to personal jurisdiction here?” To this, the Court of Appeals for the Second Circuit has responded. (Chloe, A Division Of Richemont North America, Inc. et al. v. Queen Bee Of Beverly Hills LLC et al.)
Chloe is a French “fashion company” selling, among other things, women’s leather handbags. These handbags, which are sold under the CHLOE trademark, retail for $1,600 – yes, that’s right, SIXTEEN HUNDRED BUCKS. The principal office of Chloe’s North American operations is in New York.
Queen Bee Of Beverly Hills is actually an Alabama limited liability company. Simone Ubaldelli is one of two principals of this company. Queen Bee sold counterfeit CHLOE handbags, for a mere $1,200, through their website, offering to ship the goods anywhere in the U.S. The website provided both a telephone number customers could call to make credit card payments and an interface through which customers could pay online through PayPal. Ubaldelli had the primary responsibility for obtaining the handbags, which, the Court found, he (Simone is a “he”) purchased from a man named “Guido” (we are not making this up).
Chloe, unhappy with the cut-rate competition, retained a law firm to sue Queen Bee and its principals. An administrative assistant at the law firm accessed the Queen Bee website and ordered a CHLOE handbag. The handbag was duly delivered to the assistant at her home in the Bronx.
Chloe then brought suit against Queen Bee, its principals and a host of others in federal district court in New York, claiming that the court had personal jurisdiction over the accused parties on the basis of the sale to the Bronx administrative assistant. Most of the defendants settled or filed for bankruptcy, leaving only Mr. Ubaldelli – apparently, “Guido” was not to be found. Chloe then proceeded against Ubaldelli alone, on the basis that New York’s law confers jurisdiction over individual corporate officers who supervise and control an infringing activity.
Ubaldelli moved to dismiss the suit, on the grounds that a single “manufactured” transaction was not sufficient to confer personal jurisdiction over him. The district court agreed. Chloe, naturally, appealed.
The appellate court acknowledged that there was a split of authority as to whether the sale of a counterfeit item to an agent of the plaintiff was, by itself, an act of trademark infringement. The Court, however, neatly side-stepped this issue, holding that, “[n]o single event or contact connecting defendant to the forum state need be demonstrated; rather, the totality of all defendant’s contacts with the forum state must indicate that the exercise of jurisdiction would be proper” and that “the exercise of jurisdiction is favored where the plaintiff has made a threshold showing of minimum contacts …”
Applying this “totality of the circumstances” test, the appellate court then went on to find that “Queen Bee had more related contacts with New York than the single act of shipping a counterfeit Chloe bag into the forum. As noted, Queen Bee operated a website which offered Chloe bags for sale to New York consumers, permitted New York consumers to purchase such bags, and facilitated the shipment of those bags into New York …” In addition, documents produced during discovery in the trial court case indicated that Queen Bee had shipped non-Chloe merchandise into New York on 52 separate occasions, whereby “Queen Bee had extensive business contacts with New York customers.”
The bottom line? “Ubaldelli’s single act of shipping an item into New York combined with the substantial business activity of Queen Bee, the entity with which Ubaldelli was affiliated, involving New York, give rise to personal jurisdiction over Ubaldelli.”
THE LESSON TO BE LEARNED: Beware – it doesn’t take much to confer personal jurisdiction on New York courts.
Yes, the minimum contacts test seems traditionally to be quite flexible. In fact, "minimum" seems to be the operative -- and quite appropriate -- word.