Johnson & Johnson et al v. Azam International Trading et al
ORDER re 69 Order Referring Motion, see attached Order for requested additional briefing. Plaintiffs shall submit their supplemental briefing and evidence no later than March 30, 2012. Any opposition by defendants should be filed no later than April 27, 2012. Any reply by plaintiffs is due no later than May 11, 2012. Ordered by Chief Magistrate Judge Steven M. Gold on 3/9/2012. (O'Connor, Erin)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
JOHNSON & JOHNSON and LIFESCAN, INC.
-againstAZAM INTERNATIONAL TRADING, et al.,
Gold, S., United States Magistrate Judge:
Plaintiffs bring this action alleging that defendants sold and distributed counterfeit blood
glucose test strips bearing plaintiffs’ trademarks. Plaintiffs now seek a default judgment against
defendants Azam International Trading, Jasani Scientifics, Arabian International, Muhammad
Hamid Butt, Elentta Po Butt, Mohammed Ramzan, and Massood Sitter. Docket Entry 67. More
specifically, plaintiffs seek joint and several liability and an award of $5 million in statutory
damages, $96.5 million in punitive damages under New York law, plus an award of attorney’s
fees. The Honorable Sandra L. Townes has referred plaintiffs’ motion to me to report and
recommend on what relief, if any, should be awarded. Docket Entry 69.
Having conducted an initial review of plaintiffs’ motion, the court requests additional
briefing and evidence on the following issues:
Whether this court has personal jurisdiction over the defaulting defendants. See
City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 133 (2d Cir. 2011) (“[B]efore a court
grants a motion for default judgment, it may first assure itself that it has personal jurisdiction over
the defendant.”) (internal quotation marks omitted). Plaintiffs contend that this court has personal
jurisdiction over the defaulting defendants who are Pakistani individuals and corporations
pursuant to New York C.P.L.R. 302. More specifically, plaintiffs contend that defendants
transacted business in New York under subsection (a)(1) and committed a tortious action within
New York, as provided in subsection (a)(2).
In their complaint and memorandum of law, Docket Entry 68, plaintiffs allege that
defendants shipped some of the infringing goods through a New York airport and that defendants’
bank, Royal Bank of Canada, processed defendants’ banking transactions through its New York
branch. Compl. ¶¶ 37, 43; Docket Entry 1-5 at 6, 32, 34; Pls. Mem. 8-11, Docket Entry 68.
Although it appears that plaintiffs are able to show that Azam and Mohammed Hamid Butt
(“Hamid Butt”) did indeed ship counterfeit goods to New York, and are thus subject to this court’s
personal jurisdiction, there is little evidence of the other defaulting defendants’ New York
The allegations and evidence supporting a finding of liability of each of the
defaulting defendants, and in particular with respect to whether each of them acted willfully.
Again, it appears, based on documents submitted in connection with plaintiffs’ motion for a
temporary restraining order and preliminary injunction, that Azam, through Hamid Butt, sold
infringing goods. See generally Docket Entry 1. The references in the complaint with respect to
the conduct of the other defendants, however, are few in number and slim in substance. The
complaint alleges that the Butt family used “several different ‘freight forwarders’ to transport their
counterfeit goods, and sometimes to accept payment for the ill-gotten gains of their sales,
including Jasani, S.M. Enterprises and Arabian International in Pakistan.” Compl. ¶ 35. The
complaint also states that S.M. Enterprise and “Arabian International handled shipping” and
“Babar Butt arranged payment . . . directed to any number of bank accounts, including . . . Jasani’s
account, at a Karachi branch . . . .” Id. ¶¶ 38, 41. With respect to individual defendants Sittar and
Ramzan, plaintiffs allege that these individuals purchased counterfeit test strips from a Chinese
manufacturer, but they fail to connect these defendants’ actions to Azam’s counterfeiting. Id.
¶ 43. Finally, with respect to Elentta Po Butt, plaintiffs allege that Elentta Butt “is one of the
active and controlling forces behind the operations of Azam.” Compl. ¶ 15. The only additional
reference to Elentta in the complaint is that an Azam business card lists Elentta as a “company
contact.” Id. ¶ 33. Other than the business card, none of plaintiffs’ documents submitted in
connection with their complaint mention Elentta Butt. Docket Entry 1.
Whether the defaulting defendants are entitled to a set-off of the settlement
amounts recovered by plaintiffs from non-defaulting defendants SFF Enterprises, Babar Butt, and
Sakia Butt. Compare Chloe v. Zarafshan, 2009 WL 2956827, at *7 (S.D.N.Y. Sept. 15, 2009)
(holding that a defendant in default “may not invoke the benefits of the set-off rule”); RLI Ins. Co.
v. King Sha Grp., 598 F. Supp. 2d 438, 446-47 (S.D.N.Y. 2009) (finding that, under New York
law, a defaulting defendant is not entitled to any set-off based on a co-defendant’s settlement) with
Cooper v. Faith Shipping, 2009 WL 1789405, at *6-8 (E.D. La. June 22, 2009) (citing McDermott
v. AmClyde, 511 U.S. 202, 221 (1994) and noting that, because of the default, “there will be no
apportionment of fault” from which to determine each defendant’s proportionate share of
damages, but nevertheless reducing defaulting defendant’s liability by the amount of the
settlement); State Farm Mut. Auto. Ins. Co. v. Kalika, 2007 WL 4326920, at *9 (E.D.N.Y. Dec. 7,
2007) (reducing a RICO default judgment by the amount of the settlements but without discussion
of the set-off issue). Plaintiffs shall also submit evidence of the amounts of any settlements.
The excessiveness of plaintiffs’ requested punitive damages award in light of
constitutional due process concerns, see BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 575 (1996)
(outlining three factors to be taken into account when determining whether a punitive award
exceeds the limits of due process); State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419
(2003), especially where plaintiffs seek a punitive damages multiplier of nineteen. State Farm,
538 U.S. at 425 (stating that “[s]ingle digit multipliers are more likely to comport with due
process” than larger ones).
Evidence showing that the defaulting defendants continue to pose a threat of
violating plaintiffs’ trademarks justifying injunctive relief. See Chanel, Inc. v. Kouzniakova,
2008 WL 2741133, at *3 (E.D.N.Y. July 10, 2008) (“[P]ermanent injunctive relief will be granted
only upon proof of the likelihood that purchasers of the product may be misled in the future. The
Second Circuit has upheld the refusal of district courts to grant a permanent injunction where there
was no likelihood of future violations.”) (internal quotation marks and citation omitted); Pan Am.
World Airways, Inc. v. Flight 001, Inc., 2007 WL 2040588, at *6 (S.D.N.Y. July 13, 2007)
(denying plaintiff a preliminary injunction where it failed to present evidence demonstrating the
likelihood that defendants’ infringing conduct would recur in the future). Here, the evidence
establishes that defendants made sales of infringing touch strips to two entities in 2006, but
plaintiffs offer no evidence of these defendants’ continued infringement or the likelihood that they
will infringe in the future.
If plaintiffs press their claim for an award of attorney’s fees, they shall submit a calculation
of the amount they seek, their contemporaneous time records, and an attorney affidavit or
declaration that the rates they seek are reasonable and typical of the rates attorneys charge in this
district for similar litigation. See Scott v. City of New York, 643 F.3d 56, 58-59 (2d Cir. 2011);
Simmons v. New York City Trans. Auth., 575 F.3d 170, 172 (2d Cir. 2009); Arbor Hill Concerned
Citizens Neighborhood Ass’n v. County of Albany, 522 F.3d 182, 183-84 (2d Cir. 2008).
Plaintiffs shall submit their supplemental briefing and evidence no later than March 30,
2012. If plaintiffs seek to hold oral argument on their motion, they shall so indicate in their
supplemental submission. Any opposition by defendants should be filed no later than April 27,
2012. Any reply by plaintiffs is due no later than May 11, 2012. Plaintiffs shall also provide a
courtesy copy of all of their filings contained in Docket Entry 1. Finally, plaintiffs shall submit a
letter by March 16, 2012, indicating the status of their claims against the following defendants and
whether they intend to prosecute their claims against them: Al-Shafiq Electronics LLC, Hunter
Freight Services, S.M. Enterprise, and Anwar Ahmed.
Plaintiffs are hereby directed to serve a copy of this Order, its motion for default judgment,
Docket Entry 67, and their supplemental briefing upon the defaulting defendants at their last
known addresses, and to file proof of service with the Court. Any defaulting defendant may
contest the amount of damages sought. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty
Corp., 973 F.2d 155, 158 (2d Cir. 1992), cert. denied, 506 U.S. 1080 (1993).
STEVEN M. GOLD
United States Magistrate Judge
Brooklyn, New York
March 9, 2012
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