Gucci America, Inc. et al v. Li et al
Filing
158
OPINION AND ORDER re: 135 MOTION to Compel Bank of China to produce all documents requested in the July 16, 2010 and February 23, 2011 Subpoenas and clarifying that "Defendants" covers Defendants newly identified in Plaintiffs 39; Second Amended Complaint filed by Balenciaga America, Inc., Bottega Veneta Inc., Bottega Veneta International S.A.R.L., Yves Saint Laurent America, Inc., Balenciaga S.A., Gucci America, Inc., Luxury Goods International (L.G.I.) S.A . For the reasons set forth above, the Court concludes that it has specific personal jurisdiction over BOC with respect to the 2010 and 2011 Subpoenas and that exercising such jurisdiction comports with due process and principles of comity. Acc ordingly, Plaintiffs' motion to compel is granted. IT IS HEREBY ORDERED THAT BOC shall produce all documents requested in the 2010 and 2011 Subpoenas as they pertain to all Defendants, including but not limited to (1) all documents and communic ations regarding Defendants or their accounts, (2) all documents associated with any accounts or deposits held in any Defendants' name, and (3) all documents relating to any checks, money orders, or other negotiable instruments purchased by Defe ndant. For clarification, "all Defendants" covers all Defendants who have been named in this action, including those in the Second Amended Complaint: Wenying Guo, Xiaochao Shang, Lei Xu, Fengyuan Zhao, Liqun Zhao, Ming Zhao, and Peiyuan Zhao. IT IS FURTHER ORDERED THAT Plaintiffs shall submit a letter to the Court by October 15, 2015 apprising the Court of BOC's compliance with the 2010 and 2011 Subpoenas. The Clerk of Court is respectfully directed to terminate the motion located at docket number 135. (As further set forth in this Opinion and Order.) (Signed by Judge Richard J. Sullivan on 9/29/2015) (mro)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
_____________________
No. 10 Civ. 4974 (RJS)
_____________________
GUCCI AMERICA, INC., et al.,
Plaintiffs,
VERSUS
WEIXING LI, et al.,
Defendants.
__________________
OPINION AND ORDER
September 29, 2015
___________________
RICHARD J. SULLIVAN, District Judge:
On June 25, 2010, Plaintiffs Gucci
America, Inc., and certain of its affiliates
(“Gucci”) commenced this trademark
infringement action against the owners and
operators of a Chinese website dedicated to
the sale of imitation handbags and other
counterfeit items bearing Gucci’s trademarks.
(Doc. No. 1.) Now before the Court is Gucci’s
motion to compel nonparty Bank of China
(“BOC”) to comply with subpoenas
requesting the production of account
documents relating to all Defendants. (Doc.
No. 135.) For the reasons set forth below, the
motion is granted.
I. BACKGROUND
The Court presumes the parties’
familiarity with the facts underlying this case,
which were thoroughly discussed in the
Court’s August 23, 2011 Memorandum and
Order (Doc. No. 75 (“August 23 Order”)) and
May 18, 2012 Memorandum and Order (Doc.
No. 98 (“May 18 Order”)). However, to
provide context, the Court briefly recites the
facts and procedural history below.
Gucci is a distributor of luxury handbags,
clothing, jewelry, fragrances, and home
products. In or around June 2010, Gucci
discovered that Defendants and their affiliates
were offering for sale on the internet
counterfeit versions of Gucci’s products. On
June 25, 2010, Gucci initiated this action
against certain Defendants pursuant to the
Lanham Act, 15 U.S.C. § 1051, et seq., and
related state-law causes of action. Gucci
amended its complaint to add additional
(Doc. No. 109-4.) Although again seeking
documents pertaining to “any” BOC accounts
maintained by any of the Defendants, the 2011
Subpoena specifically identified the same two
accounts identified in the 2010 Subpoena,
along with six additional accounts. (Id.) In a
supplemental submission, Gucci identified
one other account, bringing the total number
of BOC accounts connected to Defendants to
nine. (Doc. No. 58-9.)
Defendants on October 4, 2010 (Doc. No. 18)
and on March 10, 2011 (Doc. No. 55).
On July 12, 2010, the Court issued a
preliminary injunction (the “Injunction”),
which froze Defendants’ assets and enjoined
Defendants from manufacturing, distributing,
marketing, or selling counterfeit goods. (Doc.
No. 12.)
Because Gucci had obtained
evidence that certain Defendants had wired
the proceeds of the counterfeit sales to
accounts at the Chinese headquarters of BOC
(the “Head Office”), the Injunction also
provided that “any banks . . . who receive
actual notice of this order . . . are, without prior
approval of the Court, restrained and enjoined
from transferring, disposing of, or secreting
any money, stocks, bonds, real or personal
property, or other assets of Defendants.” (Id.
at 6.) The Injunction also provided that “any
third party receiving a subpoena pursuant to
this Order shall produce documents
responsive to such requests within ten (10)
days of service of such subpoena.” (Id. at 9.)
On August 23, 2011, the Court granted
Gucci’s motion to compel BOC to comply
with the 2010 Subpoena and the asset freeze
provisions of the Injunction, and denied
BOC’s cross-motion to modify the Injunction
so as to exclude assets held by BOC in any of
its locations in China. (August 23 Order at 1.)
On September 12, 2011, the Court denied
BOC’s motion for leave to appeal, as well as
BOC’s request for an additional twenty-one
days to comply with the August 23 Order.
(Doc. No. 79.) In response to the Court’s
September 12 Order, BOC produced
documents relating to only the two accounts
identified in the 2010 Subpoena, and refused
to produce information regarding other
accounts held by Defendants. (Doc. No. 116
at 3.) According to Gucci, BOC’s production
was also incomplete as to even those two
accounts, since it did not include “documents
reflecting deposits and withdrawals into the
account[s], such as monthly account
statement[s], even though these were among
the documents [that] Gucci specifically
requested.” (Doc. No. 111 at 9.)
Pursuant to the Injunction, Gucci served a
subpoena on BOC on July 16, 2010 (the “2010
Subpoena”) in accordance with Rule 45 of the
Federal Rules of Civil Procedure, requesting
documents pertaining to any BOC accounts
maintained by Defendants and defining
“ACCOUNTS” to include “all . . . accounts at
[BOC] held by Defendants; including, but not
limited to” two specifically named BOC
accounts. (Doc. No. 28-5 at 4.) The 2010
Subpoena also requested “documents
associated with any open or closed checking,
savings, money market accounts, and
certificates of deposit held in the name of any
of the Defendants, including but not limited
to” the two named BOC accounts. (Id. at 6.)
Shortly before filing the Second Amended
Complaint, Gucci served BOC with a second
subpoena on February 23, 2011 (the “2011
Subpoena”), making some new requests for
information but largely repeating the same
requests contained in the 2010 Subpoena.
On November 30, 2011, BOC filed a
motion for reconsideration of the Court’s
August 23 Order, based principally on a
November 3, 2011 letter that BOC received
from the People’s Bank of China (“PBOC”)
and the China Banking Regulatory
Commission (“CBRC”). In the letter, PBOC
and CBRC set forth their views as to the
application of Chinese bank secrecy laws to
disclosures of customer information outside of
2
II. DISCUSSION
China, China’s commitment to using Hague
Convention procedures for document
requests, and the likelihood of sanctions being
imposed on BOC in China as a result of its
compliance with the August 23 Order. (Doc.
No. 91-9.) On May 18, 2012, the Court issued
its Memorandum and Order denying the
motion for reconsideration. (May 18 Order at
1.) BOC thereafter appealed the Court’s
August 23 and May 18 Orders to the Second
Circuit. (Doc. Nos. 80 & 99.)
As noted above, the Second Circuit has
directed the Court on remand to consider (1)
whether it has specific personal jurisdiction
over BOC justifying an order to compel it to
produce the documents called for in the 2010
and 2011 Subpoenas, and, if so, (2) whether
recent decisions from Chinese courts alter the
Court’s previous comity analysis pursuant to
§ 442 of the Restatement (Third) of Foreign
Relations Law. For the reasons set forth
below, the Court concludes that it has specific
personal jurisdiction over BOC and that the
§ 442 factors still strongly support ordering
BOC to comply with the 2010 and 2011
Subpoenas.
On September 17, 2014, the Second
Circuit affirmed the Court’s Injunction but
vacated its August 23 and May 18 Orders in
light of the Supreme Court’s opinion on
general personal jurisdiction in Daimler AG v.
Bauman, 134 S. Ct. 746 (2014), which postdated the Court’s August 23 and May 18
Orders. Gucci Am., Inc. v. Weixing Li, 768
F.3d 122 (2d Cir. 2014) (“Gucci II”). The
Second Circuit remanded the case to this
Court to consider in the first instance whether
the Court has specific personal jurisdiction
over BOC, and, if so, whether exercising such
jurisdiction is consistent with principles of
comity in light of recent Chinese court
decisions. Id. at 145.
A. Specific Personal Jurisdiction
A district court must have personal
jurisdiction over a nonparty to compel it to
comply with a Rule 45 subpoena. See, e.g.,
First Am. Corp. v. Price Waterhouse LLP, 154
F.3d 16, 20 (2d Cir. 1998); In re Sealed Case,
141 F.3d 337, 341 (D.C. Cir. 1998); In re
Application to Enforce Admin. Subpoenas
Duces Tecum of the S.E.C. v. Knowles, 87
F.3d 413, 418 (10th Cir. 1996). Federal courts
must satisfy three primary requirements to
lawfully exercise personal jurisdiction over an
entity: (1) the entity must have been properly
served, (2) the court must have a statutory
basis for exercising personal jurisdiction, and
(3) the exercise of personal jurisdiction must
comport with constitutional due process.
Licci ex rel. Licci v. Lebanese Canadian Bank,
SAL, 673 F.3d 50, 59-60 (2d Cir. 2012) (“Licci
II”). Here it is undisputed that BOC was
properly served at its New York branch.
(August 23 Order at 5.) Accordingly, the
Court will address the second and third
“primary requirements” under Licci II –
namely, whether the Court has a statutory
basis for exercising jurisdiction, and whether
doing so comports with constitutional due
process.
On December 1, 2014, Gucci filed its
motion to compel BOC’s compliance with the
2010 and 2011 Subpoenas (Doc. No. 135) and
an accompanying memorandum of law (Doc.
No. 136 (“Mem.”)).
BOC filed its
memorandum of law in opposition to the
motion to compel on January 23, 2015 (Doc.
No. 141 (“Opp.”)), and Gucci filed its reply
memorandum of law on February 6, 2015
(Doc. No. 146 (“Rep.”)). After the matter was
fully submitted, the parties submitted
additional letters relating to recent cases they
argue are relevant to the motion before the
Court. (Doc. Nos. 152, 154, 155, 156 & 157.)
The matter was thus fully briefed as of
September 10, 2015.
3
With respect to the second prong of the
§ 302(a)(1) jurisdictional analysis, the New
York Court of Appeals requires that “in light
of all the circumstances, there must be an
articulable nexus or substantial relationship
between the business transaction and the claim
asserted.” Id. (citations and internal quotation
marks omitted) (emphasis added). Notably,
New York does not require a causal
relationship between the business transaction
and the claim asserted; it is enough that “the
latter is not completely unmoored from the
former.” Id. Considering this analysis in the
subpoena context, the Second Circuit in this
action endorsed a focus on “the connection
between the nonparty's contacts with the
forum and the discovery order at issue.”
Gucci II, 768 F.3d at 141-42 (citing Knowles,
87 F.3d at 418).
1. Statutory Basis for Personal Jurisdiction
A federal statute or the law of the state in
which the court is located can provide the
statutory basis for personal jurisdiction. See
Licci II, 673 F.3d at 60. New York’s long-arm
statute provides that a court “may exercise
personal jurisdiction over any nondomiciliary . . . who in person or through an
agent . . . transacts any business within the
state” so long as the plaintiff’s “cause of
action aris[es] from” that “transact[ion].”
N.Y. C.P.L.R. § 302(a)(1); see also Licci II,
673 F.3d at 60.
Accordingly, before
exercising personal jurisdiction over an entity,
“a court must decide (1) whether the
defendant transacts any business in New York
and, if so, (2) whether this cause of action
arises from such a business transaction.” Licci
II, 673 F.3d at 60 (quoting Best Van Lines, Inc.
v. Walker, 490 F.3d 239, 246 (2d Cir. 2007))
(internal quotation marks omitted).
In answering a certified question from the
Second Circuit, the New York Court of
Appeals in Licci III applied its § 302(a)(1)
analysis to a foreign bank in a strikingly
similar situation to that of BOC here. There,
the foreign bank “did not operate branches or
offices, or maintain employees, in the United
States,” Licci III, 20 N.Y.3d at 332, but it
nevertheless executed dozens of U.S. dollardenominated wire transfers through a
correspondent account it maintained with a
domestic bank in New York, id. at 340. In so
doing, the plaintiffs alleged, the foreign bank
provided financial support for a terrorist
group. Id. The New York Court of Appeals
held that “the fact that [the foreign bank] used
a New York account ‘dozens’ of times
indicates desirability and a lack of
coincidence,”
which
demonstrates
a
transaction of business in New York. Id. The
court also held that the plaintiffs had shown
“an articulable nexus or substantial
relationship between the transaction and the
alleged breaches” because the foreign bank
“did not route a transfer for a terrorist group
once or twice by mistake,” but rather
“deliberately used a New York account again
The New York Court of Appeals has noted
that, in the banking context, the first prong of
the § 302(a)(1) inquiry “may be complicated
by the nature of inter-bank activity, especially
given the widespread use of correspondent
accounts nominally in New York to facilitate
the flow of money worldwide, often for
transactions that otherwise have no other
connection to New York, or indeed the United
States.” Licci ex rel. Licci v. Lebanese
Canadian Bank, SAL, 20 N.Y.3d 327, 338
(2012) (“Licci III”). Notwithstanding this
potential complication, the New York Court
of Appeals has held that “complaints alleging
a foreign bank’s repeated use of a
correspondent account in New York on behalf
of a client” are sufficient to “show purposeful
availment of New York’s dependable and
transparent banking system, the dollar as a
stable and fungible currency, and the
predictable jurisdictional and commercial law
of New York and the United States.” Id. at
339.
4
and again to effect its support of [the terrorist
group].” Id.
nexus” between BOC’s New York business
activity and Gucci’s discovery requests.
Here, BOC’s New York conduct is, if
anything, even more substantial, deliberate,
and recurring than that of the foreign bank in
the Licci cases (collectively “Licci”). As a
result, the Court has no trouble concluding
that Gucci satisfies the first prong of
§ 302(a)(1). Unlike the bank in Licci, BOC
owns multiple real properties in New York
and maintains two branches that are staffed
with employees. (Doc. No. 138, Declaration
of Robert L. Weigel, dated Dec. 1, 2014
(“Weigel Decl.”), Exs. 14-15.) Moreover,
BOC’s Head Office opened a correspondent
account at JPMorgan Chase Bank (“Chase”)
in New York to facilitate transfers directly
from Chase customers to BOC customers.
(Weigel Decl., Exs. 2-8, 17.) This relationship
enables BOC to boast that its New York
branches are the “principal U.S. dollar
clearing channel of [BOC] worldwide,” and
that BOC is “the first choice of U.S. dollar
wire transfers to and from China.” (Weigel
Decl., Ex. 17.) Such marketing apparently
captivated Defendants, who used BOC nearly
a dozen times to transfer what Gucci alleges
are ill-gotten gains denominated in U.S.
dollars from the United States to China.
(Weigel Decl, Exs. 2-12.)
BOC’s efforts to distinguish Licci are
unpersuasive. BOC asserts that “there is a vast
difference between a bank’s purposeful use of
a correspondent account in the United States
to make illegal payments for a client, as in
Licci, and BOC’s passive receipt of transfers
that [D]efendants and Chase Bank initiated
and routed to BOC.” (Opp. at 14 (emphasis in
original).) But BOC mischaracterizes Licci.
The Second Circuit and New York Court of
Appeals emphasized that frequent and
deliberate use of a domestic correspondent
account to execute international wire transfers
was enough to constitute transacting business
in New York; neither court said anything
about the Licci foreign bank knowingly
making illegal payments, much less that such
knowing complicity was required to establish
jurisdiction pursuant to § 302(a)(1). See Licci
III, 20 N.Y.3d at 338-39; Licci ex rel. Licci v.
Lebanese Canadian Bank, SAL, 732 F.3d 161,
168 (2d Cir. 2013) (“Licci IV”). Here, there
can be no real dispute that BOC frequently and
deliberately used its New York correspondent
account with Chase to effectuate wire
transfers for its U.S. clients, including,
critically, Defendants in this action. BOC did
not simply “maintain” a correspondent
account with Chase in New York that was
used “once or twice by mistake” or
“coincidental[ly]” by Defendants. To the
contrary, BOC encouraged its clients to rely
on its relationships with Chase so that they
could effectuate frequent wire transfers from
the United States to China, which is exactly
what Defendants did here. Licci III, 20
N.Y.3d at 340.
Furthermore, with respect to the second
prong of the § 302(a)(1) analysis, there is a
strong relationship between BOC’s New York
conduct and Gucci’s subpoena requests.
Specifically, Gucci alleges that Defendants’
use of BOC’s correspondent account at Chase
and BOC’s relationship with Chase in New
York to effectuate wire transfers between the
United States and China were crucial
components of their counterfeiting operation.
Gucci’s 2010 and 2011 Subpoenas seek
information about those very transfers, as well
as Defendants’ relationship with BOC.
Clearly, there is more than “an articulable
Moreover, the cases that BOC relies on to
support its argument that “receiving a transfer
of funds, whether via a U.S. correspondent
account or through wire services, does not
subject the recipient to personal jurisdiction”
(Opp. at 15), are equally inapplicable to the
5
directly addressed and rejected the argument
that the effects of the entity’s in-forum
conduct must also take place in New York for
jurisdiction to be proper. In fact, the Second
Circuit concluded that “[s]o long as [the
entity’s] in-forum activity sufficiently reflects
the [entity’s] ‘purposeful availment’ of the
privilege of carrying on its activities here,
minimum contacts are established, even if the
effects of the [entity’s] entire course of
conduct are felt elsewhere.” Licci IV, 732
F.3d at 173. Thus, the fact that BOC’s
deliberate conduct in New York produced
effects in China – such as causing Chinabased BOC employees to make book entries
to Defendants’ Chinese bank accounts to
reflect wire transfers – does nothing to
undermine the nexus between BOC’s New
York-based conduct and the 2010 and 2011
Subpoenas.
instant facts. None of those cases involved a
foreign bank deliberately thrusting itself into
the New York financial market by establishing
a New York office and a correspondent
account with a New York bank to repeatedly
facilitate the transfer of money from its
clients’ bank accounts in the United States to
their accounts abroad. Rather, the cases either
involved banks with no New York operations
that passively received money via a New York
correspondent account, see e.g., Rushaid v.
Pictet & Cie, 9 N.Y.S.3d 16, 17 (App. Div.
2015) and Leema Enterprises, Inc. v. Willi,
575 F. Supp. 1533, 1537 (S.D.N.Y. 1983), or,
even less applicable, concerned non-banks
that received wire transfers from an account
that happened to be associated with a New
York or U.S. bank, see e.g., Ballard v. Walker,
No. 11-cv-5874 (LLS), 2013 WL 6501234, *3
(S.D.N.Y. Dec. 11, 2013), Gargano v.
Cayman National Corp., 2010 WL 2245034,
at *6 (D. Mass. June 2, 2010), and Canadian
Group Underwriters Insurance Co. v. M/V
“Arctic Trader”, No. 96-cv-9242 (DAB),
1998 WL 730334, at *3-4 (S.D.N.Y. Oct. 19,
1998).
BOC’s argument that the information that
Gucci seeks is physically located in China, not
New York, is equally unavailing. BOC seems
to be invoking a species of the “separate entity
rule,” which “provides that even when a bank
garnishee with a New York branch is subject
to personal jurisdiction, its other branches are
to be treated as separate entities for certain
purposes.”
Motorola Credit Corp. v.
Standard Chartered Bank, 24 N.Y.3d 149,
158 (2014). However, “where the remedy
sought is . . . a subpoena, the separate entity
rule has not barred enforcement;” rather,
“only personal jurisdiction over the legal
entity, the bank and its branches, is
necessary.” CE Int’l Res. Holdings, LLC v.
S.A. Minerals Ltd. P’ship, No. 12-cv-8087
(SN), 2013 WL 2661037, at *17 (S.D.N.Y.
June 12, 2013) (citing United States v. First
Nat’l City Bank, 379 U.S. 378, 384 (1965));
see also Eitzen Bulk A/S v. Bank of India, 827
F. Supp. 2d 234, 239-41 (S.D.N.Y. 2011).
Therefore, it is clear that the Court has a
Here, BOC is a bank that is in the business
of providing banking services to individuals in
China and the United States. (Weigel Decl.,
Ex. 13.) Critical to serving those clients is the
existence of a correspondent account at a
reputable New York bank to conduct secure,
efficient, and quick wire transfers. BOC
cannot credibly compare itself to a passive
recipient of a few one-off wire transfers that
by pure happenstance were routed through a
domestic correspondent bank account.
Finally, BOC asserts that Gucci cannot
demonstrate the requisite nexus between
BOC’s New York-based conduct and the
Subpoenas, since the information sought by
Gucci is in fact located in China and the active
task of crediting Defendants’ Chinese bank
accounts took place in China. (Opp. at 10-11,
14.) However, the Second Circuit in Licci
6
statutory basis to exercise
jurisdiction over BOC.1
personal
conduct satisfied § 302(a)(1), “yet, in
connection with the same transaction of
business,” that the entity did not have
sufficient minimum contacts with New York
or that the exercise of personal jurisdiction
would be otherwise unreasonable. Licci IV,
732 F.3d at 170. The court further observed
that it was aware of no such decisions in the
Second Circuit. Id. Therefore, in light of the
Court’s prior finding that it has statutory
personal jurisdiction over BOC for the
enforcement of the Subpoenas pursuant to
§ 302(a)(1), it would be “unusual,” and in fact
unprecedented in this Circuit, if the Court’s
exercise of personal jurisdiction over BOC did
not comport with due process. Nevertheless,
the Court will specifically assess whether
BOC has sufficient “minimum contacts” with
New York and whether the exercise of
jurisdiction in this action is otherwise
“reasonable.”
2. Constitutional Due Process
When assessing whether the exercise of
specific personal jurisdiction over an entity is
constitutionally proper, courts must apply a
two-step test: first, they must determine
whether the entity has sufficient “minimum
contacts” with the forum, and second, they
must find that the exercise of jurisdiction
under the circumstances was “reasonable.”
Licci IV, 732 F.3d at 170; Metro. Life Ins. Co.
v. Robertson-Ceco Corp., 84 F.3d 560, 567
(2d Cir. 1996). Determining whether an entity
has sufficient “minimum contacts” with a
forum turns on whether the entity
“‘purposefully directed’ [its] activities
at . . . the forum and [whether] the litigation
results from alleged injuries that ‘arise out of
or relate to’ those activities.” Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)
(citations omitted).
Once the threshold
showing of “minimum contacts” is met, the
party objecting to jurisdiction must present “a
compelling case that the presence of some
other considerations would render jurisdiction
unreasonable.” Bank Brussels Lambert v.
Fiddler Gonzalez & Rodriguez, 305 F.3d 120,
129 (2d Cir. 2002) (Sotomayor, J.) (quoting
Metro. Life Ins. Co., 84 F.3d at 568). Reduced
to its essence, the “reasonableness” of
exercising jurisdiction depends on whether
doing so would comport with “fair play and
substantial justice.” Burger King Corp., 471
U.S. at 476.
a. Minimum Contacts
Court often analyze the “minimum
contacts” inquiry as two separate prongs: (1)
the “purposeful availment” prong, whereby
the court determines whether the entity
deliberately directed its conduct at the forum,
and (2) the “relatedness” prong, whereby the
court determines whether the controversy at
issue arose out of or related to the entity’s inforum conduct. See, e.g., Chew v. Dietrich,
143 F.3d 24, 27-29 (2d Cir. 1998); Nowak v.
Tak How Inv., Ltd., 94 F.3d 708, 713 (1st Cir.
1996).
As the Court has already noted, BOC’s inforum conduct is deliberate and recurring, not
“random, isolated, or fortuitous.” Licci IV,
732 F.3d at 171 (quoting Keeton v. Hustler
As an initial matter, the Second Circuit
noted in Licci IV that it would be “rare” and
“unusual” for a court to find that an entity’s
1
Citing the amended Rule 45, which provides that “[a]
subpoena may be served at any place within the United
States,” Fed. R. Civ. P. 45(b)(2), the Second Circuit
suggested that the Court may consider BOC’s contacts
nationwide in evaluating personal jurisdiction. See
Gucci II, 768 F.3d at 142 n.21. However, because the
Court finds that it has personal jurisdiction over BOC
under New York’s long-arm statute, the Court need not
determine whether BOC’s nationwide contacts with the
United States are relevant to the personal jurisdiction
analysis.
7
of New York and the United States.” Licci III,
20 N.Y.3d at 339. Clearly, BOC could have
chosen to process Defendants’ U.S. dollardenominated
wire
transfers
through
correspondent accounts elsewhere, or chosen
to have its Head Office establish a
correspondent account elsewhere, but it did
not. See Licci IV, 732 F.3d at 171. Thus,
BOC’s arguments that it did not purposefully
avail itself of the privilege of conducting
business in New York are as unpersuasive
here as they were when considered in
connection with the § 302(a)(1) analysis
above.
Magazine, Inc., 465 U.S. 770, 774 (1984)).
BOC’s Head Office opened a correspondent
account at Chase in New York to facilitate
transfers directly from Chase customers to
BOC customers, thereby enabling BOC to
assert that its New York branches are the
“principal U.S. dollar clearing channel of
[BOC] worldwide” and that it is “the first
choice of U.S. dollar wire transfers to and
from China.” (Weigel Decl., Ex. 17.) There
is also no dispute that BOC’s New York
branches are “mainly funded by deposits from
various third parties in China as well as in the
United States,” are “designated as the U.S.
dollar funding pool within [BOC]’s global
operations,”
provide
“U.S.
dollar
funding . . . to other [BOC] foreign branches
and affiliates,” and “manage[] the liquidity for
other U.S. branches.” (Weigel Decl., Ex. 13.)
As noted above, BOC owns multiple real
properties in New York (Weigel Decl., Exs.
14-15), and it has initiated multiple lawsuits in
the Southern District of New York (see, e.g.,
Mem. at 10 n.5). Accordingly, as the Court
observed in its August 23 Order, it is clear that
BOC “has purposely chosen to do business in
New York and has availed itself of the myriad
benefits that come with establishing a
presence in the United States’ premier
financial center.” (August 23 Order at 11.)
Relatedness, the second prong of the
minimum contacts inquiry, is a sliding-scale
test: when an entity has only limited contacts
with a forum, relatedness requires that “the
plaintiff’s injury was proximately caused by
those contacts,” but when an entity’s contacts
with the forum “are more substantial,” it is not
unreasonable to exercise personal jurisdiction
“even though the acts within the state are not
the proximate cause of the plaintiff’s injury.”
Chew, 143 F.3d at 29; see also S.E.C. v.
Straub, 921 F. Supp. 2d 244, 254 n.6
(S.D.N.Y. 2013) (recognizing that Chew
established a sliding-scale analysis for
assessing relatedness).
For an entity’s
contacts to fall on the “more substantial” end
of the sliding scale test, the contacts need not
rise to the level that would establish general
jurisdiction. See Del Ponte v. Universal City
Dev. Partners, Ltd., No. 07-cv-2360 (KMK),
2008 WL 169358, at *10 (S.D.N.Y. Jan. 16,
2008) (concluding that a defendant’s contacts
with New York placed it on the “more
substantial” end of the spectrum because it
repeatedly sent its principals on business trips
to New York and it purchased a large portion
of its products from New York suppliers).
And when an entity’s contacts with the forum
are “more substantial,” courts have
determined that it is sufficient that those
contacts be a “but for” cause of the plaintiff’s
injury, rather than the “proximate cause” of
Once again, the Licci decisions
demonstrate that BOC had the requisite
“minimum contacts” with New York. In Licci
IV, the Second Circuit concluded that “the
selection and repeated use of New York’s
banking system . . . constitutes ‘purposeful
availment of the privilege of doing business in
New York.’” Licci IV, 732 F.3d at 171
(quoting Bank Brussels Lambert, 305 F.3d at
127) (alterations omitted). Like the foreign
bank in Licci, BOC selected Chase in New
York to be its correspondent bank to give it
access to “New York’s dependable and
transparent banking system, the dollar as a
stable and fungible currency, and the
predictable jurisdictional and commercial law
8
correspondent account in New York. As such,
there is a substantial nexus between (1) the
motion to compel BOC to comply with
Gucci’s Subpoenas, which focus on
Defendants who allegedly sold counterfeit
goods on the internet in violation of the
Lanham Act and utilized New York banks as
part of that scheme, and (2) BOC’s contacts
with New York.
the injury. In re Libor-Based Fin. Instruments
Antitrust Litig., No. 11-mdl-2262 (NRB),
2015 WL 4634541, at *23 (S.D.N.Y. Aug. 4,
2015). Finally, the Second Circuit in this
action endorsed the Tenth Circuit’s approach
to applying the relatedness inquiry in the
context of a subpoena, which focused on “the
connection between the nonparty's contacts
with the forum and the discovery order at
issue.” Gucci II, 768 F.3d at 141-42 (citing
Knowles, 87 F.3d at 418).
Accordingly, the Court finds that BOC
purposefully availed itself of this forum and
that its conduct was sufficiently related to the
subpoena enforcement action that is the
subject of this dispute. The Court thus
concludes that BOC has sufficient minimum
contacts with New York for the Court to have
personal jurisdiction over Gucci’s motion to
compel.
Under the Chew sliding scale, BOC’s
contacts with New York are sufficiently
“substantial” that they need only be a “but for”
cause of Gucci’s 2010 and 2011 Subpoenas.
As noted previously, BOC has significant
operations, employees, and physical locations
in New York, actively solicits business and
customers in New York, and has deliberate
and recurring contacts with New York.
Furthermore, BOC provides extensive
services to its clients in New York, including
a correspondent account at Chase that its Head
Office established to facilitate U.S. dollardenominated transfers. Therefore, contrary to
BOC’s assertions, BOC bears little
resemblance to the defendants in SPV OSUS
Ltd. v. UBS AG – which were “foreign banks
alleged to have provided services to foreign
investment funds, acting entirely abroad and
with only sporadic or indirect contacts with
the United States,” with no physical presence
or employees in New York, and which did not
“directly or purposefully solicit, market, or
otherwise seek out business from potential
customers located in the United States.” No.
15-cv-619 (JSR), 2015 WL 4394955, at *5-6
(S.D.N.Y. July 20, 2015).
b. Reasonableness
In determining whether the exercise of
personal jurisdiction would comport with
“traditional notions of fair play and substantial
justice,” courts consider five factors: (1) “the
burden that the exercise of jurisdiction will
impose on the [entity],” (2) “the interests of
the forum state in adjudicating the case,” (3)
“the plaintiff’s interest in obtaining
convenient and effective relief,” (4) “the
interstate judicial system’s interest in
obtaining the most efficient resolution of the
controversy,” and (5) “the shared interest of
the states in furthering substantive social
policies.” Bank Brussels Lambert, 305 F.3d at
129 (citations omitted). When the entity that
may be subject to personal jurisdiction is a
foreign one, courts consider the international
judicial system’s interest in efficiency and the
shared interests of the nations in advancing
substantive policies. See Asahi Metal Indus.
Co. v. Superior Court of Cal., Solano Cty., 480
U.S. 102, 115 (1987). Here, it is clear that
BOC, as the party objecting to jurisdiction,
has not carried its burden of making “a
compelling case” that jurisdiction is
On the record before it, the Court has little
difficulty concluding that BOC’s New York
contacts are a “but for” cause of Gucci’s
document requests. Gucci’s Subpoenas are
premised on the fact that Defendants’
proceeds from the sale of counterfeit goods
were
transferred
through
BOC’s
9
(2d Cir. 2000). Here, it is clear that such
burdens are minimal or non-existent, since
BOC is physically present in the forum, no
stranger to litigation in it, and already
represented by able New York counsel.
unreasonable. Bank Brussels Lambert, 305
F.3d at 129.
The burden on BOC of submitting to
jurisdiction in New York is minimal. BOC
has been litigating this action in New York
since June 2010. Moreover, BOC has initiated
multiple lawsuits in the Southern District of
New York and maintains physical operations
here. In addition, “the conveniences of
modern communication and transportation
ease” any burden BOC might experience from
further contesting the 2010 and 2011
Subpoenas. Licci IV, 732 F.3d at 174 (quoting
Metro. Life Ins., 84 F.3d at 574). Indeed, the
fact that the controversy at issue involves
subpoena compliance, and not BOC’s own
liability, gives BOC even less “cause to
complain of an outrage to fair play.” First Am.
Corp., 154 F.3d at 20. Although BOC asks the
Court to consider the fact that granting
Gucci’s motion would force BOC to violate
Chinese law (Doc. No. 141 at 16), BOC cites
to no other courts that have considered such
arguments in the context of assessing the
reasonableness of an exercise of personal
jurisdiction, as opposed to a separate and
subsequent comity analysis, and the Court
declines to be the first. In fact, in a case that
BOC cites to support its contention, the court
specifically declined to consider any potential
“clash between the forum law and the
substantive policies of another state” as part of
the personal jurisdiction analysis. Ballard v.
Savage, 65 F.3d 1495, 1501 (9th Cir. 1995);
see also United States v. Int’l Bhd. of
Teamsters, 945 F. Supp. 609, 623 (S.D.N.Y.
1996) (considering the conflict of two nations’
laws only in the comity analysis, not the
personal jurisdiction due process analysis).
With respect to the burden factor, courts tend
to focus their inquiry on the logistical
difficulties facing a foreign entity forced to
litigate in a given forum, such as the distance
the entity would have to travel and the entity’s
unfamiliarity with the forum. See Wiwa v.
Royal Dutch Petroleum Co., 226 F.3d 88, 99
With respect to the forum’s interest in
adjudicating the dispute, courts do not
“compare the interests of the sovereigns” but
rather “determine whether the forum state has
an interest.” Nowak, 94 F.3d at 718 (emphasis
in original). Here, New York as the forum
state has a “manifest interest in providing
effective means of redress for its residents.”
Chloe v. Queen Bee of Beverly Hills, LLC, 616
F.3d 158, 173 (2d Cir. 2010) (quoting Burger
King, 471 U.S. at 483). Several Plaintiffs,
including Gucci and Yves Saint Laurent
America, Inc., are incorporated in New York
and have their principal place of business here.
(Doc. No. 55 ¶¶ 6 & 9.) Furthermore, the U.S.
dollar-denominated transfers of allegedly illgotten gains were routed through New York.
Finally, New York has a strong interest in
litigants’ compliance with their discovery
obligations, such as subpoenas, to ensure an
efficient and effective judicial process, see,
e.g., Hickman v. Taylor, 329 U.S. 495, 501
(1947), and it is clear that New York and the
United States “ha[ve] a powerful interest in
enforcing the acts of Congress, especially
those, such as the Lanham Act, that are
designed to protect intellectual property rights
and prevent customer confusion,” (August 23
Order at 11).
As for “the plaintiff’s interest in obtaining
convenient and effective relief,” Bank
Brussels Lambert, 305 F.3d at 129, there can
be no doubt that Gucci has a strong interest in
BOC complying with the 2010 and 2011
Subpoenas because, as the Court already
found, “the documents sought by the
Subpoena[s] are likely to provide the most
fruitful avenue for discovering the identity of
additional infringers” and “the most effective
measure of the revenues generated by
10
with the 2010 and 2011 Subpoenas is
consistent with “fair play and substantial
justice,” Burger King, 471 U.S. at 476, and
comports with due process.
Defendants.”
(August 23 Order at 6.)
Because “there exists substantial doubt that
[Gucci] could adequately resolve the dispute”
by other means, Nowak, 94 F.3d at 718,
Gucci’s interests in obtaining its desired relief
in its desired forum are even greater. (See
August 23 Order at 10 (casting doubt on the
viability of a Hague Convention request
yielding Gucci the information it seeks).)
B. Comity
In its August 23 Order, the Court
conducted a detailed comity analysis and
concluded that a balancing of the § 442 factors
strongly supported ordering BOC to comply
with Gucci’s document requests. (August 23
Order at 13.) The Second Circuit upheld this
conclusion, holding that there was “no abuse
of discretion in this analysis” and that “BOC’s
arguments to the contrary are without merit.”
Gucci II, 768 F.3d at 141. However, the
Second Circuit also directed the Court to
“consider the question of comity again” in
light of recent Chinese court cases involving
BOC. Id. at 142.
With respect to the international judicial
system’s interest in obtaining the most
efficient resolution to the controversy, the
Court’s retention of jurisdiction over this
action would undoubtedly provide the fastest
and most practical means of resolving this
dispute. The Court is already intimately
familiar with the parties, facts, and legal
issues, see Ballard, 65 F.3d at 1502, and BOC
has already partially complied with Gucci’s
document requests. Forcing Gucci to initiate
this process in China would be significantly
less efficient, extremely time consuming, and
potentially fruitless. (August 23 Order at 10.)
The Court’s initial comity analysis
considered seven factors. Five of those factors
came from § 442(1)(c): (i) “the importance to
the investigation or litigation of the documents
or other information requested;” (ii) “the
degree of specificity of the request;” (iii)
“whether the information originated in the
United States;” (iv) “the availability of
alternative
means
of
securing
the
information;” and (v) “the extent to which
noncompliance with the request would
undermine important interests of the United
States, or compliance with the request would
undermine important interests of the state
where the information is located.” Two
additional factors that the Court considered
included “the hardship of compliance on the
party or witness from whom discovery is
sought” and “the good faith of the party
resisting discovery.” (August 23 Order at 6
(quoting Minpeco S.A. v. Conticommodity
Servs., Inc., 116 F.R.D. 517, 523 (S.D.N.Y.
1987).)
After carefully considering the
various factors and interests, the Court
concluded that a balancing of the factors
Finally, a balancing of the substantive
social policies at issue further supports
exercising personal jurisdiction. As the Court
already concluded in its original § 442 comity
analysis under the “balance of national
interests” factor, Gucci’s interest in
compelling BOC to comply with the 2010 and
2011 Subpoenas and the United States’
interest in enforcing the Lanham Act clearly
outweigh BOC’s interest in resisting
compliance and China’s interest in its bank
secrecy laws. (August 23 Order at 11; see
also infra Section II.B.) BOC has failed to
identify any compelling substantive social
policies not raised in its earlier comity briefing
that would alter the Court’s conclusion on this
factor.
Accordingly, having carefully considered
each of the factors discussed above, the Court
concludes that the exercise of personal
jurisdiction over BOC to compel it to comply
11
are Defendants here – alleged that BOC
unlawfully froze their bank accounts as a
result of the litigation before this Court, and
argued that the terms and conditions of their
account opening documents did not permit
BOC to suspend their banking services.
(Beijing Intermediate Court Judgment at 2-3.)
Consequently, the account holders sought an
order directing BOC to lift the account freezes
and to pay all litigation costs associated with
the case. (Id. at 2.)
“strongly weighs in favor” of granting Gucci’s
motion to compel. The Court noted that this
result was particularly necessary in light of (1)
“[BOC’s] failure to demonstrate an actual
likelihood that compliance with the Subpoena
would result in criminal or civil liability in
China,” (2) “[BOC’s] failure to put forward
credible, non-speculative evidence that
requests made through the Hague Convention
represent a viable alternative method of
obtaining discovery,” (3) “the clear and
obvious harm caused by counterfeiters to
mark holders such as [Gucci],” and (4) “the
fact that such counterfeiters have deliberately
utilized institutions such as [BOC] to thwart
Congress and the reach of the Lanham Act.”
(August 23 Order at 13.)
The Beijing Intermediate Court held that
BOC “failed to produce evidence to prove that
[the plaintiffs] actually made any operation
with malicious intent, or defamed or damaged
the reputation of the bank, or maliciously
attacked the electronic banking system of the
bank,” which the Beijing Intermediate Court
found was the necessary prerequisite for BOC
to freeze the plaintiffs’ bank accounts. (Id. at
6-7.) The Beijing Intermediate Court further
noted that the action before this Court “is still
on-going and pending,” “no judgment has
taken effect in China,” and BOC “failed to
produce evidence sufficient to prove that it has
justifiable reason . . . to cease to provide
services” to the account holders. (Id. at 7.)
The Beijing Intermediate Court therefore
concluded that BOC had no contractual or
legal basis for suspending the plaintiffs’
accounts and ordered BOC to resume
providing banking services to the account
holders. (Id.)
The Second Circuit directed the Court to
“consider the question of comity again in light
of the newly available December 4, 2013
Judgment of the Second Intermediate People’s
Court of Beijing Municipality, and any
subsequent judgments it finds relevant.”
(Doc. No. 127 at 44.) After the Second
Intermediate People’s Court of Beijing
Municipality issued the December 4, 2013
Civil Judgment (Doc. No. 142, Declaration of
Yuqing Zhang, dated Jan. 22, 2015 (“Zhang
Decl.”), Ex. 10 (“Beijing Intermediate Court
Judgment”)), BOC appealed the Beijing
Intermediate Court Judgment to the Higher
People’s Court of Beijing Municipality. On
June 20, 2014, the Higher People’s Court
issued a Civil Judgment, upholding the
Beijing Intermediate Court Judgment. (Zhang
Decl., Ex. 11 (“Beijing High Court
Judgment”).) Accordingly, the Court will
consider how both the Beijing Intermediate
Court Judgment and Beijing High Court
Judgment (the “Beijing judgments”) affect the
§ 442 comity analysis.
On appeal, the Beijing High Court noted
that under Chinese commercial banking law,
“the lawful business operation of a
commercial bank [should be] free from
interference of any entity or individual,” “a
commercial bank shall protect the lawful
interest of depositors from being damaged by
any entity or individual,” and “personal
savings deposit business with commercial
banks shall be based on the principles of
voluntary deposit, free withdraw[al], deposit
bearing interest, and the confidentiality for the
The controversy underlying the Beijing
judgments is a private civil suit between BOC
and some of the Defendants in this action.
Specifically, the plaintiffs in that action – who
12
depositor.” (Beijing High Court Judgment at
8.) After de novo review of the Beijing
Intermediate Court Judgment (Doc. 137,
Declaration of Donald Clarke, dated Dec. 1,
2014 (“Clarke Decl.”) ¶ 13), the Beijing High
Court held that BOC “failed to produce
evidence to prove that [the account holders]
violated any contractually agreed terms, [that
BOC] unilaterally terminated services for
their bank accounts, [and] thus there is no
contractual or legal basis for BOC to
unilaterally stop financial service and suspend
usage of the accounts.” (Id.) The Beijing High
Court Judgment directed BOC to pay 140
renminbi in court fees (approximately $22.00
at current exchange rates) and upheld the
Beijing Intermediate Court’s injunction. (Id.)
With respect to the balancing of national
interests, the Court noted that while China has
bank secrecy laws that prevent disclosure of
an individual’s account information without
consent, such protection can be waived by
several different public bodies. (August 23
Order at 10 (discussing declaration of BOC’s
Chinese bank law expert).) Accordingly, the
Court concluded that “China’s bank secrecy
laws merely confer an individual privilege on
customers rather than reflect a national policy
entitled to substantial deference.” (Id. at 11.)
Weighing against China’s interests, the Court
concluded that the United States “has a
powerful interest in enforcing the acts of
Congress, especially those, such as the
Lanham Act, that are designed to protect
intellectual property rights and prevent
consumer confusion.” (Id.) Overall, the Court
determined that this factor “clearly weighs in
favor of” Gucci. (Id.)
As an initial matter, it is important to note
that the Beijing judgments impact only a few
of the seven factors the Court considered.
Nothing in the Beijing judgments changes the
Court’s conclusion that: (i) “the documents
requested in the Subpoena[s] are important to
the instant litigation,” (ii) “the Subpoena[s]
[are] sufficiently specific,” and (iv) “Hague
Convention requests in circumstances similar
to those presented here are not a viable
alternative method of securing the information
[Gucci] seek[s].” (August 23 Order at 6-10.)
The only factors that the Beijing judgments
could affect are (v) “the extent to which
noncompliance with the request would
undermine important interests of the United
States, or compliance with the request would
undermine important interests of the state
where the information is located,” and “the
hardship of compliance on the party or witness
from whom discovery is sought.” The Court
will consider each in turn.2
The Beijing judgments, if anything, shift
the balance of national interests more firmly
toward the United States because they
acknowledge that BOC had broad contractual
rights over its customers’ account
information, such as the power to suspend or
terminate service in certain circumstances.
(Clarke Decl. ¶¶ 16-18.) That BOC did not
sufficiently prove the existence of those
circumstances does not change the fact that
the Beijing judgments recognized BOC as
lawfully having that authority. The Beijing
judgments do not provide any support for
BOC’s assertion that China’s bank secrecy
laws are rigidly enforced or a matter of strong
state policy that trump the United States’
interest in enforcing the Lanham Act.
2
Because the Second Circuit explicitly cabined the
Court’s reconsideration of its comity analysis to the
Beijing Intermediate Court Judgment and “any
subsequent judgments it finds relevant,” such as the
Beijing High Court Judgment, the Court does not
consider the numerous arguments the parties raise with
respect to the Court’s comity analysis that have nothing
to do with the Beijing judgments. (See Mem. at 23-24;
Opp. at 23-24; Rep. at 8-9.) In any event, most of the
parties’ arguments are simply rehashes of ones
previously made in connection with the Court’s initial
comity analysis.
13
not change his opinion that “there is no strong
state policy affording a high degree of
protection to clients of Chinese banks” and
that “BOC and its officers are unlikely to be
prosecuted for complying with the Court’s
orders in this case” (Clarke 2014 Decl. ¶¶ 1415). Put simply, the Beijing judgments, which
resulted in BOC paying the equivalent of
$22.00 in court fees, do nothing to change the
Court’s prior conclusion that BOC’s
contention that compliance with the 2010 and
2011 Subpoenas would subject it to serious
criminal and civil liability is unduly
speculative.
Accordingly, the Court concludes that this
factor “clearly weighs in favor of” Gucci.
As for the hardship of compliance, the
Court initially found that this factor weighed
in favor of Gucci because it concluded that
BOC’s representations that it would face
significant criminal and civil liability from
complying with the 2010 Subpoena were
unduly speculative. Specifically, the Court
determined that the Chinese cases that
purportedly demonstrated that Chinese courts
take customer bank account secrecy seriously
did not in fact support BOC’s assertion that
compliance with the 2010 Subpoena would
subject BOC or its employees to heavy fines
or incarceration. (August 23 Order at 11-12.)
In fact, the Court concluded that BOC could
point to no case where a Chinese bank was
subjected to liability for disclosing the type of
bank account information sought by Gucci.
(Id. at 12.) In light of the speculative nature
of BOC’s professed hardship, the Court
determined that the factor supported granting
the motion to compel.
Because the Court previously found that a
balancing of the § 442 factors “strongly
weighs in favor of” granting Gucci’s motion
to compel, and the Beijing judgments actually
strengthen that determination, the Court
reaffirms its comity analysis and concludes
that ordering BOC to comply with the 2010
and 2011 Subpoenas is consistent with § 442
of the Restatement (Third) of Foreign
Relations Law.
III. CONCLUSION
Once again, the Beijing judgments only
provide further support for Gucci’s case. The
controversy underlying the Beijing judgments
was a simple, private contract case. The
Beijing Intermediate Court and Beijing High
Court merely concluded that BOC had not
sufficiently proven grounds upon which it
could lawfully freeze the plaintiffs’ bank
accounts. Nothing in the Beijing judgments
suggests that China has an ironclad
requirement of bank secrecy or that disclosure
of the information requested by the 2010 and
2011 Subpoenas would expose BOC and its
employees to serious criminal or civil liability
in China. Even BOC’s own Chinese bank law
expert does not opine that the Beijing
judgments demonstrate that China has a strong
national policy against disclosure of bank
client information (see Zhang Decl. ¶¶ 30-35),
whereas Gucci’s Chinese bank law expert
expressly states that the Beijing judgments do
For the reasons set forth above, the Court
concludes that it has specific personal
jurisdiction over BOC with respect to the 2010
and 2011 Subpoenas and that exercising such
jurisdiction comports with due process and
principles of comity. Accordingly, Plaintiffs’
motion to compel is granted. IT IS HEREBY
ORDERED THAT BOC shall produce all
documents requested in the 2010 and 2011
Subpoenas as they pertain to all Defendants,
including but not limited to (1) all documents
and communications regarding Defendants or
their accounts, (2) all documents associated
with any accounts or deposits held in any
Defendants’ name, and (3) all documents
relating to any checks, money orders, or other
negotiable instruments purchased by
Defendant. For clarification, “all Defendants”
covers all Defendants who have been named
14
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