Eliya, Inc., 128 Engle Street, Englewood, NJ 07631 v. STEVEN MADDEN, LTD., 5216 Barnet Avenue, Long Island City, NY 11104

Filing 52

ORDER ADOPTING REPORT AND RECOMMENDATIONS : Having considered all the arguments raised in Madden's objections and having reviewed de novo those portions of the R&R to which objection was made and findings no error in those portions that were not objected to, the Court adopts Judge Locke's February 2, 2017 Report and Recommendation in its entirety. Accordingly, Plaintiff's motion to amend is granted and Defendant's motion to strike is denied. Plaintiff is directed to file an amended complaint in accordance with this Order within ten (10) days of the date hereof. See attached Memorandum & Order. Ordered by Judge Denis R. Hurley on 3/30/2017. (Gapinski, Michele)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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ELIYA, INC.,
MEMORANDUM & ORDER
Civil Action No. 15-1272(DRH)(SIL)

Plaintiff,
-againstSTEVEN MADDEN, LTD., J&l, and
John Doe 1-10.
Defendants.
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APPEARANCES:
The Law Offices of Tedd S. Levine, LLC
Attorneys for Plaintiff
1305 Franklin Avenue, Suite 300
Garden City, NY 11530
By:
Tedd S. Levine, Esq.
Osterlenk Faber LLP
Attorneys for Defendant
1180 Avenue of the Americas
New York, NY 10036-8403
By:
Douglas A. Miro, Esq.
Alan Federbush, Esq.

HURLEY, Senior District Judge:
Presently before the Court are objections by defendant to the Report and
Recommendation, dated February 2, 2017 (“R&R”), of Magistrate Judge Steven I. Locke insofar
as it recommends (1) granting plaintiff’s motion for leave to file the Second Amended Complaint
so as to amend the trade dress claims consistent with the proposed second amended complaint

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and (2) denying defendant’s motion to strike as moot.1
BACKGROUND
I.

Relevant Procedural History
A.

The Original Complaint

Plaintiff, Eliya, Inc. (“plaintiff” or “Eliya”), commenced this trademark infringement
action on March 11, 2015, asserting claims of false designation of origin and unfair competition
in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1051 et seq., as well as state law
claims, against defendant, Steve Madden Ltd. (“defendant” or “Madden”). See DE 1. According
to the original complaint (the “Complaint”), Eliya designed and created a line of shoes that
possess a discernable trade dress, in which Plaintiff, therefore, now has rights regarding the
overall look and specific features of certain named shoes in that line. Id. ¶¶ 10-15. It was alleged
that the trade dress in Eliya's shoes "acquired distinctiveness through secondary meaning such
that consumers are likely to associate the source of its products with Plaintiff.” Id. ¶ 13. It further
alleged that Madden profited by copying the trade dress of Eliya's shoes by selling "direct
knock-offs" of its shoes. Id. ¶¶ 12-13, 16.
B.

The First Motion to Amend the Complaint

On October 6, 2015, Eliya sought leave to file an amended complaint adding allegations
(1) regarding the trade dress and (2) of infringement regarding two additional lines of shoes, as

1

There have been no objections filed to Judge Locke’s Report and Recommendation in so
far as it recommended denying plaintiff leave to amend the complaint to add a new count of
unjust enrichment. Pursuant to 28 U.S.C. § 636(b) and Fed. R. Civ. P. 72, this Court has
reviewed that portion of Report and Recommendation for clear error, and finding none, now
concurs in its reasoning and its result. Accordingly, to the extent plaintiff’s motion sought to
amend the complaint to add a claim for unjust enrichment, it is denied.
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well as to add Madden’s unidentified supplier as a defendant for its alleged contributory
infringement. A copy of the proposed amended complaint (“PAC”) was attached to the motion.
As Defendant opposed the motion only to the extent that it sought to add its supplier as a
defendant, that is the only issue that was addressed by the Court when it granted the motion. See
De 30.
C.

The Filed Amended Complaint

Without seeking any further leave of Court and after the court-ordered deadline set for the
amendment of pleadings,2 Eliya filed an amended complaint that differed markedly from the
PAC attached to its motion. The filed amended complaint (“FAC”) focused on only three alleged
product design trade dresses, to wit, its Lulia, Comfi, and Catwalk shoes, instead of the eight
shoes set forth in the PAC. As to each of the three identified shoes, Madden asserts that the trade
claims are comprised of elements not previously identified. A comparison of the FAC and the
PAC reveals that in the FAC, which contains a more detailed description of previously identified
elements as well as additional elements, Eliya is relying on the “overall look” of the shoes as the
basis for its claim and no longer asserts that each element is individually protected.
D.

Defendant’s Motion to Strike

In response to the FAC, defendant moved to strike the FAC and have this matter
dismissed in its entirely, arguing in support of its motion that (1) Eliya filed an unnoticed,
unauthorized and substantially modified amended complaint, and (2) Eliya has failed to show
good cause for, and Madden would be prejudiced by, the late filing. Eliya opposes defendant’s

2

Pursuant to the June 5, 2016 scheduling order entered by Judge Locke, the deadline to
amend pleadings was September 25, 2015. See DE 18. The FAC was filed on March 31, 2016.
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motion asserting that (1) the FAC merely provides supporting details that do not alter the
previously pleaded elements of its prima facie case, and (2) it need not show good cause and
Madden has not proven actual prejudice.
E.

Plaintiff’s Motion for Leave to Amend

After the filing of the motion to strike, Eliya filed a second motion to amend. In addition
to relying on the grounds set forth in its opposition to the motion to strike, Eliya asserts that it
was acting in good faith, motivated by its receipt of an intervening ruling in the related case of
Eliya Inc. v. Kohl’s Corp., which necessitated rewriting the PAC to include additional details
regarding its trade dress. In Kohl’s, Judge Bianco dismissed the complaint reasoning that the
trade dress claims' reliance on conclusory allegations supported only by photographs without
clear specification as to the distinct features that substantiated the protected trade dress failed to
state a cognizable infringement claim. See Eliya, Inc. v. Kohl's Corp., 2016 WL 929266, at *7-8
(E.D.N.Y. Feb. 22, 2016), Report and Recommendation, adopted by 2016 WL 929321 (E.D.N.Y.
Mar. 9, 2016). Accordingly, he directed that if Eliya were to amend its pleading, the trade dress
claims would need to be more clearly articulated and additional details provided in order to state
a claim under the Lanham Act. See id.
F.

Judge Locke’s Report and Recommendation

Inasmuch as Eliya’s second motion for leave to file an amended complaint was filed long
after the court-ordered deadline to do so expired, Judge Locke recognized that the requirement in
Federal Rule of Civil Procedure 15 that leave to amend be freely given must be balanced with
Rule 16's “good cause” standard. (R&R at 7-8.) With respect to good cause, Judge Locke focused
on the “diligence of the moving party,” more specifically whether “the pleading is based on
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information that the party knew or should have known, in advance of the deadline sought to be
extended.” (Id. at 8.)
Focusing on this standard, Judge Locke reasoned that the determination in Kohl that “the
trade dress claims’ reliance on conclusory allegations supported only by photographs without
clear specification as to the distinct features that substantiated the protected trade dress failed to
state a [claim] . . . would reasonable cause Plaintiff . . . to amend its similar PAC proactively to
address possible concerns regarding Eliya’s claims’ viability were they to be similarly challenged
. . . .” (R&R at 9). As both the Kohl Report and Recommendation and the Order adopting it were
issued after the deadline to amend in the present case, Judge Locke concluded that “as Eliya
could not have known this information prior to the Scheduling order deadline expiring, it
constitutes ‘good cause’ to extend the deadlines to amend the relevant pleadings here.” (Id.)
Judge Locke also rejected Madden’s argument that “Eliya failed to act diligently and in
good faith by the filing the FAC after previously attaching and serving the PAC with its prior
motion to amend,” concluding that (1) the FAC was not filed in violation of the Court’s prior
order allowing amendment as that order only addressed the issue of joinder of a supplier as a
necessary party; (2) the delay of fourteen months between the filing of the original complaint and
the FAC was not of sufficient length to demonstrate a lack of diligence; and (3) there was no
evidence of a deliberate delay. (R&R at 10-12.)
As there was no claim that the proposed amendment would be futile, Judge Locke then
turned to whether permitting the amendment would prejudice Madden and concluded that it
would not. (R&R at 14-15.) Madden’s claim of prejudice centered “around the possibility that
additional discovery could then be necessary and would thus cause further delay and expense for
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Defendant.” (Id. at 15.) Madden contended that discovery would need to be restarted “from
scratch because the FAC represents ‘completely new trade dress claims.’” (Id. at 16 quoting Def.
Amend. Opp at 9.) Judge Locke rejected this contention stating “[e]ven if this were the case,
because the allegedly new claims are substantially related to the same underlying subject matter,
the amendments would nevertheless be permissible.” (Id.) He further noted that Madden’s
argument was undermined by the facts that the trade dress claim in the FAC was more limited
than in the PAC and that it was not, as Madden claimed, a “complete rewrite.” (Id. at 17-18.)
Finally, “whatever perceived prejudice additional discovery might cause can be properly
mitigated through scheduling orders and the imposition by the Court of appropriate constraints
and guidance to ensure that the matter is ready for dispositive motion practice and/or trial as
expeditiously as possible.” (Id. at 17.)
G.

Madden’s Objections and Eliya’s Response
Madden does not assert that Judge Locke applied the wrong standard in determining

whether plaintiff’s amendment should be allowed, but rather that he overlooked facts which
indicate that the request should have been denied. (Def.’s Obj. at 1.) Specifically, it summarizes
its argument as follows:
The R&R concludes that solely because Eliya had not yet
received the Report and Recommendation in a parallel action in
this Court - - Eliya, Inc. v. Kohl’s Corp., . . . - - dismissing an
almost identical complaint to that which Eliya filed here (the
“PAC”), “Eliya could not have known this information prior to the
Scheduling Order deadline expiring.” (DE 48, at 9). However, in
view of clear Second Circuit law determining when a plaintiff
knew, or should have known, what his trade dress claims are, and
the fact that Eliya had actual notice of the deficiencies in its trade
dress claims before the deadline to amend, the Magistrate Judge
failed to properly apply the standard he set out to the facts of this
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case. In any event, the Court missed a key consideration in that the
Kohl’s dismissal, regardless of when it issued or Eliya learned of it,
has no bearing on whether Eliya had “good cause” to further
amend its complaint.
(Id. at 1-2.)
Eliya asserts that the arguments of Madden are flawed in that “(1) [t]he Amended
complaint attached to the most recent motion to amend [viz. the FAC] asserts a description of its
trade dress that is consistent with prior pleadings; (2) Eliya did not have cause to include the
supplemental verbal explanation of its trade dress until both the Kohl’s decision was confirmed
and this Court granted leave to amend; and (3) there is no prejudice to Madden.
DISCUSSION
I.

Standard of Review
Federal Rule of Civil Procedure 72(b) provides that when a magistrate judge issues a

report and recommendation on a matter “dispositive of a claim or defense of a party,” the district
court judge shall make a de novo determination of any portion of the magistrate judge’s
disposition to which specific written objection has been made. Fed. R. Civ. P. 72(b). Here,
Madden does not challenge the standard used to address Eliya’s motion to amend but rather the
application of the standard. Accordingly, the Court shall conduct a de novo review of only that
portion of the R&R to which objection has been made.3
II.

The Report is Adopted
Upon a de novo review of the record and the law, the Court adopts Judge Locke’s

thorough and carefully crafted Report in its entirety. In doing so, the Court finds that there is
3

As to the unobjected portions of the R&R, the Court has reviewed them for clear error
and finding none, adopts them in full.
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good cause to extend the deadline for Eliya to amend and that the amendment will not unduly
prejudice Madden.
Madden’s argues that “given Second Circuit pleading law” which “required Eliya to plead
its trade dress claims by specifying the character and scope of its alleged trade dress” and given
that the motion to dismiss in Kohls was made prior to the deadline to amend, Eliya “should have
added the now sought specificity to its claims . . . prior to the September 25, 2015 deadline to
amend,” and therefore cannot Eliya cannot establish good cause. (Def.’s Obj. at 7-10.) However,
that a party makes a motion to dismiss does not necessarily provide actual notice of deficiencies
or require amendment of the relevant pleading. Judge Locke correctly measured Eliya’s
diligence from the granting of the motion to dismiss in Kohls by Judge Bianco and, measured
from that date, that its action was not unduly delayed. Moreover, that under the Second Circuit’s
pleading standard Eliya “knew or should have known, the character and scope of its trade dress
claims before it filed its action” (Def.’s Obj. at 5), does not preclude Eliya from establishing
good cause. As Eliya persuasively points out, Madden never challenged the description by
motion to dismiss, apparently believing that it was properly crafted. (Pl.’s Resp. to Obj. at 1.)
Moreover, many of the changes to the description of Eliya’s trade dress in the FAC were a
verbalization of certain features that were disclosed in images of the shoes contained in the
Complaint. Accordingly, the Court agrees with Judge Locke’s statement that the Kohl
determination “would reasonably cause Plaintiff here to amend its similar PAC proactively to
address possible concerns regarding Eliya’s claims’ viability were they to be similarly challenged

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. . . .” (R&R at 9.)4
With respect to prejudice, Madden asserts that if the amendment is allowed it will have to
expend additional resources to conduct further discovery and that the resources it has already
expended “would have been for naught.” Def.’s Obj. at 13. However, as Judge Locke correctly
observed, Madden’s assertion is undermined by the following (1) “the allegedly new claims are
substantially related to the same underlying subject matter;” (2) the trade dress claims in the FAC
are “more limited than in the PAC, dropping to three sets of shoes and relying on the overall look
as opposed to each of the individual elements;” (3) any additional discovery will “likely impose a
far greater burden on Plaintiff than on Madden;” and (4) any perceived prejudice can be
mitigated through scheduling order and Court guidance.” R&R at 15-20.
CONCLUSION
Having considered all the arguments raised in Madden’s objections and having reviewed
de novo those portions of the R&R to which objection was made and findings no error in those
portions that were not objected to, the Court adopts Judge Locke’s February 2, 2017 Report and
Recommendation in its entirety. Accordingly, Plaintiff’s motion to amend is granted and
Defendant’s motion to strike is denied. Plaintiff is directed to file an amended complaint in
accordance with this Order within ten (10) days of the date hereof.
SO ORDERED.
Dated: Central Islip, N.Y.
March 30, 2017

/s/ Denis R. Hurley
Denis R. Hurley
United States District Judge

4

Notwithstanding Madden’s assertion to the contrary (see Def.’s Obj. at 11), the viability
of Eliya’s claims as stated in the PAC could still have been challenged on a motion for judgment
on the pleadings or a motion for summary judgment.
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