Chloe v. Queen Bee of Beverly Hills, LLC

Filing 115

MEMORANDUM AND OPINION re: 65 MOTION for Partial Summary Judgment filed by Chloe, S.A., Chloe. For the foregoing reasons, Chloe's motion for partial summary judgment 65 on liability against Ubaldelli is granted. (Signed by Judge Richard J. Holwell on 8/19/2011) (mro)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

CHLOÉ, a division of RICHEMONT NORTH
AMERICA, INC. and CHLOÉ, S.A.,
Plaintiffs,

06 Civ. 3140 (RJH)

-againstMEMORANDUM OPINION
AND ORDER
QUEEN BEE OF BEVERLY HILLS, LLC, et al.,
Defendants.

Plaintiffs Chloé and Chloé, S.A. originally brought this action against defendants Queen
Bee of Beverly Hills, LLC (“Queen Bee”), Sun-Eye Productions, Inc. (“Sun-Eye”), Rebecca
Rushing, Simone Ubaldelli, Jennifer Suns, Mohammad Zarafshan a/k/a Alexander Zar, and John
Does 2–20, alleging trademark infringement and false designation of origin under §§ 32(1) and
43(a)(1) of the Lanham Act, 15 U.S.C. §§ 1114(1) and 1125(a)(1), respectively. Chloé now
moves for partial summary judgment on liability against defendant Simone Ubaldelli. For the
reasons that follow, Chloé’s motion is GRANTED.
BACKGROUND
I. The Parties
For the purpose of this motion, the relevant parties are Chloé, S.A., Chloé, and Simone
Ubaldelli.

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A. Chloé & Chloé, S.A.
Chloé, S.A., a French corporation with its principal place of business in Paris, is the owner of
a trademark registration for the word mark CHLOÉ for handbags and other goods. (Copeman
Decl. ¶ 1.) Chloé, a division of Delaware corporation Richemont North America, Inc. with its
principal place of business in New York, is the exclusive U.S. licensee of the CHLOÉ trademark
for all Chloé branded goods. (Id.) Plaintiffs operate a fashion company that sells women’s
clothing and accessories. (Id. ¶ 3.) In this opinion, “Chloé” refers to both Chloé, S.A. and Chloé
for convenience’s sake.
B. Simone Ubaldelli
In 2001 defendant Simone Ubaldelli opened a business, Italian Only, through which he
bought clothing from Italy and sold it to retail stores in the United States. (Benschar Decl. Ex. D
(“Ubaldelli Dep.”) 9:6-23.) Ubaldelli operated Italian Only out of his office in Beverly Hills,
California. (Ubaldelli Dep. 4:14-18, 9:8-15.) A year after opening the business, Ubaldelli began
to buy and sell designer handbags through Italian Only as well. (Id. at 10:17-24.) In 2003,
Ubaldelli met Rebecca Rushing, the registered agent of Queen Bee, who was in the business of
selling handbags. (Id. at 17:17 – 18:9.) The two reached an agreement under which Ubaldelli
would seek out available designer bags and then consult with Rushing to determine which bags
to buy for the purpose of resale. (Id. at 26:19 – 27:2.) Ubaldelli would then buy these bags and
Rushing would sell them at her Queen Bee boutique shop in Huntsville, Alabama or through her
website www.QueenBeeBeverlyHills.com. (Id. at 18:16-24; Ball Decl. ¶¶ 3, 8; Cochran Decl. ¶¶
2, 6, 9.) The profits from any sales were deposited into a joint corporate account in the name of
“Queen Bee of Beverly Hills,” which Ubaldelli and Rushing split between the two of them.
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(Ubaldelli Dep. 20:2-12, 21:3-16.) Both Ubaldelli and Rushing had the authority to sign checks
for the account. (Id. at 27:6-7.)
Ubaldelli’s primary source for designer bags was an individual named “Guido.”1 (Id. at
31:15-16.) Ubaldelli would purchase bags from Guido and have them delivered to his office in
Beverly Hills. (Id. at 52:24 – 53:11.) Once he received the bags, Ubaldelli would ship them to
Rushing for her to sell. (Id. at 53:9-13.) Altogether, Ubaldelli purchased approximately onehundred bags from Guido, including approximately forty or fifty bags that contained the “Chloé”
mark. (Id. at 52:8-12.) Ubaldelli also bought roughly six Chloé handbags from an Italian
distributor called World Business in Verona. (Id. at 31:21 – 33:25.)
II. Alleged Infringement
Chloé first became aware of the allegedly infringing activities of the defendants in this
action in mid-December 2005 when, in the course of a seizure for a separate action, it obtained
records of shipments between Sophisticated Spirit, an Internet vendor selling counterfeit Chloé
bags, and Queen Bee. (Springut Decl. dated April 21, 2006 (“First Springut Decl.”) ¶¶ 3-4.) The
principal of Sophisticated Spirit claimed that Queen Bee supplied her with the counterfeit Chloé
items. (Id. ¶ 4.) At the direction of Milton Springut, a partner for the firm Kalow & Springut
LLP, who represent Chloé in this action, Rosa Santana, an administrative assistant at the firm,
accessed Queen Bee’s website, on which two items described as Chloé handbags were offered
for sale. (Santana Decl. ¶ 2.) Santana then contacted Queen Bee and ordered a “Chloé

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Throughout his deposition, Ubaldelli referred to a man named Guido as his primary source for handbags. At the
end of his deposition, however, Ubaldelli acknowledged that “Guido” is an alias for Mohammad Zarafshan a/k/a
Alexander Zar. (Ubaldelli Dep. 101:2-4.) For consistency, this opinion will use the name Guido to refer to
Ubaldelli’s source.

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Paddington Bag” to be delivered to her home in New York City.2 (Id. ¶¶ 2, 3.) The bag was
turned over to Springut the day after it arrived and has been in the firm’s possession ever since,
except when sent to Plaintiffs’ expert to determine its authenticity and when sent to the Court in
connection with Plaintiffs’ motion for a preliminary injunction and seizure order in April 2006.
(Id. ¶¶ 4, 5; First Springut Decl. ¶ 12; Benschar Decl. ¶ 2.) Though the bag sent to Ms. Santana
bears the Chloé name and was represented on the Queen Bee website as a Chloé product, Sophie
Garric, Production Manager for Chloé, S.A., examined the bag and determined that it is a
counterfeit. (Garric Decl. ¶¶ 10–12.)
Plaintiffs also hired a private investigator, Terry Cochran, to purchase a Chloé item from
Queen Bee’s office in Huntsville, Alabama. (Cochran Decl. ¶¶ 1-2.) Pursuant to his
instructions, Cochran called the Queen Bee office and purchased a Chloé Paddington purse. (Id.
¶ 9.) Once he received the bag, Cochran shipped it to Kalow & Springut LLP to be examined.
Garric determined that this bag is a counterfeit as well. (Garric Decl. ¶¶ 10–12.) Ubaldelli does
not dispute that the bags purchased by Plaintiffs’ agents are counterfeit and were not
manufactured, produced, or in any manner authorized by Chloé or by its corporate affiliates or
licensees. (See Chloé Local Rule 56.1 Stmt. ¶ 5; Ubaldelli Local Rule 56.1 Stmt. ¶ 5.)
III. Procedural History
This case first came before the Court in 2006. On November 5, 2007, Chloé moved for
partial summary judgment on liability against Ubaldelli and defendant cross-moved to dismiss
for lack of personal jurisdiction. By memorandum opinion and order dated August 1, 2008, the
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Plaintiffs, in their opposition brief, state that Ms. Santana purchased the bag “from [the Queen Bee] website.”
(Pls.’ Opp’n 1, citing Santana Decl. ¶¶ 2-3.) However, Ms. Santana’s declaration does not support this
characterization. Ms. Santana states that, on December 22, 2005, she accessed the Queen Bee website and, “that
same day . . . contacted the vendor” to purchase a “Chloé Paddington” handbag. (Santana Decl. ¶¶ 2-3.)

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Court granted Ubaldelli’s motion and denied Chloé’s motion as moot. Chloé v. Queen Bee of
Beverly Hills, LLC, 571 F. Supp. 2d 518 (S.D.N.Y. 2008). The Court then granted Chloé’s
motion to certify dismissal as final. Chloé v. Queen Bee of Beverly Hills, LLC, 630 F. Supp. 2d
350 (S.D.N.Y. 2009). Chloé appealed. Holding that Queen Bee’s single act of shipping a
handbag to New York, combined with its extensive business activity involving New York, gave
rise to personal jurisdiction over Ubaldelli, the Second Circuit vacated this Court’s judgment and
remanded for further proceedings. Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158 (2d
Cir. 2010). Pursuant to the Second Circuit’s decision, this Court then reopened the case.
Ubaldelli is currently the only defendant still actively participating in this litigation.
Chloé settled its claims against Sun-Eye and Jennifer Suns. (Consent J. Granting Permanent Inj.,
Jan. 3, 2008, ECF No. 69.) Queen Bee and Rushing have filed for bankruptcy and this action has
been stayed against them. (Queen Bee Notice of Bankruptcy July 12, 2007, ECF No. 56;
Rebecca Rushing Notice of Bankruptcy July 12, 2007, ECF No. 57.) Default judgment has been
entered against Zarafshan. (Order Granting Default J. Dec. 13, 2006, ECF No. 41.)
By Order dated April 21, 2011, the Court restored Chloé’s motion for partial summary
judgment on liability against Ubaldelli. (ECF No. 114.) This opinion resolves that motion.
DISCUSSION
I.

Legal Standard

Summary judgment is appropriate if the evidentiary record shows that “there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(c). An issue of fact is genuine if “a reasonable jury” could decide it
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in favor of the non-movant. Roe v. City of Waterbury, 542 F.3d 31, 35 (2d Cir. 2008) (citing
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A fact is “material” if it “might
affect the outcome of the suit” under controlling law. Ricci v. DeStefano, 530 F.3d 88, 109 (2d
Cir. 2008) (quoting Anderson, 477 U.S. at 248). The movant bears the burden to show that no
genuine issue of material fact exists. Vermont Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d
241, 244 (2d Cir. 2004). For summary judgment purposes, all evidence is to be construed in the
light most favorable to the non-movant, and every justifiable inference must be drawn in that
party’s favor. McClellan v. Smith, 439 F.3d 137, 144 (2d Cir. 2006).
II.

Queen Bee’s Infringement

Chloé has moved for summary judgment with respect to Ubaldelli’s liability for
trademark infringement under Section 32 of the Lanham Act, 15 U.S.C. § 1114(1), and for false
designation of origin or unfair competition, under Section 43(a) of the Lanham Act, 15 U.S.C. §
1125(a). Two issues must be resolved in addressing Chloé’s motion. The first question is
whether any substantive infringement occurred in Queen Bee’s activity. The second is whether
Ubaldelli can be held individually liable for that infringing activity. Addressing the first
question, it is clear that Queen Bee’s activities constitute infringement.
“To prevail on a trademark infringement claim [under Sections 32 and 43(a) of the
Lanham Act], a plaintiff must demonstrate [1] that it has a valid mark entitled to protection and
[2] that the defendant’s use of it is likely to cause confusion.” Time, Inc. v. Petersen Publ’g Co.
L.L.C., 173 F.3d 113, 117 (2d Cir. 1999). In deciding the issue, “[i]t is well established that
wrongful intent is not a prerequisite to an action for trademark infringement . . . and that good
faith is no defense.” Chloé v. DesignersImports.com USA, Inc., 07-CV-1791 (CS)(GAY), 2009
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WL 1227927, at *5 (S.D.N.Y. Apr. 30, 2009) (quoting Sunward Elecs., Inc. v. McDonald, 362
F.3d 17, 26 (2d Cir. 2004)).
Here, there is no dispute that Chloé is the owner of a trademark registration for the word
mark CHLOÉ for handbags and other apparel, as Chloé has submitted a copy of a certified copy
of its federal registration for the Chloé Trademark and defendant admits its validity. (Benschar
Decl. Ex. C.) As such, Chloé has satisfied the first prong of the test.
As for the second, it is well recognized that counterfeit items are, by their very nature,
confusing to consumers; therefore, while the Court would normally engage in an analysis of the
factors enunciated in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961), a
complete discussion of the Polaroid factors is unnecessary in this case. See Gucci Am., Inc. v.
Duty Free Apparel, Ltd., 286 F. Supp. 2d 284, 287 (S.D.N.Y. 2003) (“the Court need not
undertake a factor-by-factor analysis under Polaroid because counterfeits, by their very nature,
cause confusion”); see also Topps Co., Inc. v. Gerrit J. Verburg Co., 41 U.S.P.Q.2d 1412, 1417
(S.D.N.Y.1996) (“[W]here the marks are identical, and the goods are also identical and directly
competitive, the decision can be made directly without a more formal and complete discussion of
all of the Polaroid factors . . . .”). Here, it is undisputed that the two Chloé bags that Queen Bee
sold to plaintiffs’ agents are counterfeits, and therefore, were likely to cause confusion for
consumers, satisfying the second element.
As Chloé has established Queen Bee’s liability for trademark infringement and false
designation of origin or unfair competition, the Court’s resolution of plaintiffs’ motion will turn
on whether Ubaldelli is individually liable for that infringement.

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III.

Individual Liability

It is well established in the Second Circuit that “under the Lanham Act, a corporate
officer may be held personally liable for trademark infringement and unfair competition if the
officer is a moving, active[,] conscious[,] force behind [the defendant corporation’s]
infringement.” Cartier v. Aaron Faber, Inc., 512 F. Supp. 2d 165, 170 (S.D.N.Y. 2007); accord
Gucci Am., Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d 511, 526, amended in part, 328 F.
Supp. 2d 439 (S.D.N.Y. 2004) (“Because [the individual defendant] made all of the decisions for
[defendant corporation] as to what merchandise to offer for sale, he is liable individually to the
same extent as the corporation.”); Calvin Klein Jeanswear Co. v. Tunnel Trading, No. 98 CIV.
5408 (THK), 2001 WL 1456577, at *6 (S.D.N.Y. Nov. 16, 2001) (“As its sole corporate officer
and employee, [individual] defendant unarguably served as the moving, active, conscious force
for [corporate defendant’s] conduct”); W. Indian Sea Island Cotton Ass’n Inc. v. Threadtex, Inc.,
761 F. Supp. 1041, 1054 (S.D.N.Y. 1991) (“The general rule is that a corporate officer who
participates in a tort, even if it is in the course of his duties, may be held individually
responsible.”) (quoting National Survival Game v. Skirmish, U.S.A., Inc., 603 F. Supp. 339, 341
(S.D.N.Y.1985)); Bambu Sales, Inc. v. Sultana Crackers, Inc., 683 F. Supp. 899, 913 (E.D.N.Y.
1988) (individual defendants were directly involved in the purchase, approval and resale of
infringing products, and therefore liable) (citing Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606
(3d Cir.1978)). A showing that an officer “authorized and approved the acts of unfair
competition which are the basis of [the] . . . corporation’s liability . . . is sufficient participation
in the wrongful acts to make [the officer] individually liable.” Bambu Sales, Inc., 683 F. Supp. at
913-14. Furthermore, “in determining whether the officer’s acts render him individually liable, it
is immaterial whether . . . he knows that his acts will result in an infringement.” Id. at 913.
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The case law is clear that if a corporate officer was either the sole shareholder and
employee, and therefore must have approved of the infringing act, or a direct participant in the
infringing activity, the officer is a moving, active, conscious, force behind the corporation’s
infringement. See Chloe v. DesignersImports.com USA, Inc., No. 07-CV-1791 (CS)(GAY),
2009 WL 1227927, at *11 (S.D.N.Y. Apr. 30, 2009) (“[Individual defendant] was the founder,
sole officer and sole shareholder of the [online company], and . . . as such he makes all the
business decisions for the [online company], including the decision to purchase from third parties
and offer for sale the counterfeit Chloé items . . .”); Calvin Klein Jeanswear Co. v. Tunnel
Trading, No. 98 CIV. 5408 (THK), 2001 WL 1456577, at *6 (S.D.N.Y. Nov. 16, 2001) (“As its
sole corporate officer and employee, [individual] defendant unarguably served as the moving,
active, conscious force for [corporate defendant’s] conduct”); Bambu Sales, Inc., 683 F. Supp. at
913 (individual defendants were directly involved in the purchase, approval and resale of
infringing products, and therefore liable). Here, Chloé argues that, along with Rushing,
Ubaldelli made the decisions as to what Queen Bee would acquire for the purpose of selling to
the public and, as a result, he was a moving, active, conscious force behind any sales of
counterfeit goods. Even drawing all reasonable inferences in Ubaldelli’s favor, the Court agrees.
Although Ubaldelli was not the sole shareholder of Queen Bee and did not control all of its
business decisions, it is nevertheless clear that he was a participant in the infringing behavior.
Ubaldelli’s primary role for Queen Bee was to meet with his source, Guido, and ascertain
which types of designer handbags were available and for what prices. With this information, he
would contact Rushing to decide which bags to purchase. (Ubaldelli Dep. 26:14 – 27:2.) The
goal was to determine which bags would generate the most profit by reselling them. If they
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found that certain brands were particularly popular with customers, Ubaldelli would purchase
more bags with those brands. (Id. at 26:14 – 27:2, 52:8-12.) In fact, Ubaldelli explained that he
bought greater amounts of Chloé handbags specifically because they sold well. (Id. at 52:8-12.)
Once he purchased the handbags, Ubaldelli would ship them to Rushing for her to sell through
Queen Bee and they would split any profits. (Id. at 18:16-24, 20:2-12, 21:3-16.) These facts
demonstrate that Ubaldelli was a moving, active, conscious force behind Queen Bee’s conduct,
and, as such, is liable for its infringement.
Ubaldelli makes two arguments in his opposition. Both are unavailing. First, he argues
that there is no direct evidence that he purchased, shipped, or possessed the two counterfeit bags
that plaintiffs’ agents purchased from Queen Bee. The undisputed evidence, however, does not
allow for a reasonable inference that Ubaldelli was not involved in the purchase of the infringing
bags. Ubaldelli made an agreement with Rushing, in which he would buy designer handbags for
the purpose of reselling them under the Queen Bee corporate name. While defendant claims that
Rushing occasionally bought bags on her own, he also admits that she would generally consult
him about these purchases. (Ubaldelli Dep. 27:3-5.) Moreover, the only purchases of Chloé
handbags on behalf of Queen Bee that are indicated in the record were made by Ubaldelli. (Id. at
30:3-25, 52:8-12.) Nowhere in the record is there evidence that Rushing also purchased Chloé
bags on her own. Because the record indicates that Ubaldelli was both Queen Bee’s chief
purchaser for designer handbags and the only person to purchase bags bearing the “Chloé” mark
for Queen Bee, no reasonable juror could infer that Ubaldelli was not involved with the purchase
of the two counterfeit Chloé bags.

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Defendant’s second argument is that he was not an officer or director of Queen Bee and
therefore is not liable for its trademark infringement. Defendant, however, fails to cite any
authority to support this claim. While Ubaldelli highlights cases that only use the term “officer,”
when discussing individual liability, there are other cases that use the term “employee.” See
Microsoft Corp. v. Computer Care Ctr., Inc., No. 06-CV-1429 SLT RLM, 2008 WL 4179653, at
*7 (E.D.N.Y. Sept. 10, 2008) (“Where the facts show that a corporate employee was the
‘moving, active conscious force behind [the defendant corporation's] infringement,’ personal
liability will attach.”) (emphasis added) (quoting Bambu Sales, Inc., 683 F. Supp. at 913); see
also 4 McCarthy on Trademarks and Unfair Competition § 25:24 (4th ed.) ([M]anaging
employees can be held personally liable if they are the “moving, active, conscious forces behind”
the corporation.).
Furthermore, officer or director status is not a prerequisite to individual liability. Instead,
“[t]he only crucial predicate to [an individual’s] liability is his participation in the wrongful
acts.” Donsco, Inc., 587 F.2d at 606; see also Mead Johnson & Company v. Baby’s Formula
Service, Inc., 402 F.2d 19, 23 (5th Cir. 1968) (“There can be no doubt but that a
trademark . . . can be infringed by an individual . . . The fact that the persons . . . are acting for a
corporation also, of course, may make the corporation liable . . . [but] it does not relieve the
individuals of their responsibility.”). Whether Ubaldelli was an officer for Queen Bee does not
determine his liability; rather it is his participation in the infringing conduct that is determinative.
Finally, the only case that the parties cite that appears to address a similar argument is
Metromedia Steakhouses Co., L.P. v. Resco Mgmt., Inc., 168 B.R. 483 (D.N.H. 1994). In
Metromedia Steakhouses, defendant restaurant manager moved to dismiss plaintiff trademark
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owner’s claims of infringement, arguing that he could not be held liable for the restaurant
management company’s trademark infringement because he was never an “owner, officer or
director of the [company].” Id. at 486. The court denied defendant’s motion, holding that “[a]n
individual, including a director, officer, or agent of a corporation, may be liable for injuries
suffered by third parties because of his torts, regardless of whether he acted on his own account
or on behalf of the corporation.” Id. at 487 (quoting Al–Khazraji v. St. Francis College, 784
F.2d 505, 518 (3d Cir. 1986)). The court reached its holding, in part, by analyzing Sections 32
and 43(a) of the Lanham Act, and deciding that “[p]ursuant to the plain language of the Lanham
Act, any individual may be liable in civil actions for damages. Id. at 486 (emphasis in original).
Here, whether Ubaldelli can be considered an officer of Queen Bee is not an issue that is
essential to finding him liable, as courts have found that corporate employees, regardless of their
officer status, can be held individually liable for the torts they commit, such as trademark
infringement, on behalf of a corporation. Ubaldelli made the purchase decisions with Rushing
and specifically purchased Chloé handbags for Rushing to resell through Queen Bee’s office and
website. Two of the bags were counterfeit. It is this participation in the infringing conduct of
selling counterfeit Chloé bags that makes Ubaldelli individually liable.

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CONCLUSION

For the foregoing reasons, Chloe's motion for partial summary judgment [65] on liability
against Ubaldelli is GRANTED.

SO ORDERED.
Dated: New York, New York
2011
August

1'L-,

~ ~1 ~---------.
Richa1d J. Holwell
United States District Judge

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