Tiffany (NJ) LLC et al v. Andrew et al
Filing
58
OPINION AND ORDER: Accordingly, for all the foregoing reasons, plaintiffs' application to compel the Banks to comply with the subpoenas previously served on them is denied. (Signed by Magistrate Judge Henry B. Pitman on 11/7/2012) Copies Sent By Chambers. (cd)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------X
TIFFANY (NJ) LLC and
TIFFANY AND COMPANY,
:
:
10 Civ. 9471 (RA)(HBP)
:
OPINION
AND ORDER
Plaintiffs,
-against:
QI ANDREW, GU GONG, SLIVER DENG
and KENT DENG, all d/b/a
TIFFANYSTORES.ORG, FASHION STYLE
and STORESORG; ABC COMPANIES; and
JOHN DOES,
:
:
:
Defendants.
:
-----------------------------------X
PITMAN, United States Magistrate Judge:
I.
Introduction
By letter dated September 20, 2012, plaintiffs renew an
application they made last year to enforce subpoenas that they
served on the New York branches of three Chinese banks.
For the
reasons set forth below, plaintiffs' motion is denied.1
1
Plaintiffs' September 20, 2012 letter also raises an issue
concerning the alleged failure of the three Chinese banks to
comply with a preliminary injunction issued by the Honorable
William H. Pauley, III, United States District Judge, on January
3, 2011. Because this matter was referred to me only with
respect to the discovery dispute concerning the Chinese banks, I
do not address any issue concerning Judge Pauley's injunction.
II.
Facts2
This is a trademark counterfeiting case in which
plaintiffs allege that defendants sold counterfeit Tiffany
products through several websites hosted in the United States.
Plaintiffs claim that defendants accepted payment in U.S. dollars, used PayPal, Inc. ("PayPal") to process customers' credit
card transactions, then transferred the sales proceeds to accounts held by the Bank of China ("BOC"), Industrial and Commercial Bank of China ("ICBC") and China Merchants Bank ("CMB")
(collectively the "Banks").
After defendants defaulted, plaintiffs sought discovery
last year from the Banks by serving subpoenas seeking the identities of the holders of the accounts into which the proceeds of
defendants' sales were transferred and the subsequent disposition
of those proceeds.
The Banks all maintained branch offices in
the Southern District of New York, and plaintiffs served their
subpoenas on those branches seeking the information.
The Banks responded to the subpoenas by advising that
the documents plaintiffs sought were all maintained in China and
2
The background facts relevant to the present application
are set forth in greater detail in my prior Opinion and Order in
this matter, Tiffany (NJ) LLC v. Qi Andrew, 276 F.R.D. 143
(S.D.N.Y. 2011), familiarity with which is assumed. I set forth
the pertinent background facts here in summary form.
2
that the respective New York branches of the Banks lacked the
ability to access the requested information.
The Banks further
advised that China's internal laws prohibited the disclosure of
the information except under certain conditions.
The Banks
proposed that the plaintiffs pursue the requested discovery
pursuant to the Hague Convention.
After receiving the parties' briefs and hearing oral
argument, I issued an Opinion and Order dated July 25, 2011 in
which I performed the comity analysis suggested in Section
442(1)(c) of the Restatement (Third) of Foreign Relations Law and
concluded that plaintiffs should pursue discovery through the
Hague Convention in the first instance.
Andrew, supra, 276 F.R.D. at 151-61.
Tiffany (NJ) LLC v. Qi
However, my Opinion and
Order concluded that, in the event the Hague Convention process
proved futile, plaintiffs could renew their application to
enforce the subpoenas served on the Banks' New York branches.
Judge Pauley subsequently affirmed my July 25, 2011 Order.
Tiffany (NJ) LLC v. Qi Andrew, 10 Civ. 9471 (WHP)(HBP) (Docket
Item 50) (S.D.N.Y. November 14, 2011).
In November, 2011, plaintiffs submitted their Hague
Convention application to China's Central Authority, and on or
about August 7, 2011, the Ministry of Justice of the People's
Republic of China ("MOJ") responded to the Hague Convention
3
request and produced some of the documents requested.
With
respect to each of the Banks, the MOJ produced account opening
documents (including the government identification card of the
account holder), written confirmation of certain transfers into
the accounts and a list of transfers out of the accounts.
With
respect to CMB, the records indicate that all funds in the
account were withdrawn through cash transactions at either an ATM
or through a teller.
BOC and CMB each produced documents con-
cerning a single account; ICBC produced documents for three
accounts.
In its cover letter, the MOJ expressly noted that it
was not producing all documents requested.
Specifically, it
noted
Concerning your request for taking of evidence for the
Tiffany case, the Chinese competent authority holds
that some evidence required lacks direct and close
connections with the litigation. As the Chinese government has declared at its accession to the Hague
Evidence Convention that for the request issued for the
purpose of the pre-trial discovery of documents only
the request for obtaining discovery of the documents
clearly enumerated in the Letters of Request and of
direct and close connection with the subject matter of
the litigation will be executed, the Chinese competent
authority has partly executed the requests which it
deems conform to the provisions of the Convention.
4
(Letter to the Undersigned from the International Legal Cooperation Center, Ministry of Justice, People's Republic of China,
dated August 7, 2012).3
Plaintiffs claim that the MOJ's production is deficient
and that I should now grant its application to enforce the
subpoenas previously served on the New York branches of the
Banks.
Specifically, plaintiffs claims that the MOJ's response
is deficient because (1) it does not state whether any of the
defendants have any additional accounts at the Banks; (2) the MOJ
did not produce detailed wire transfer records concerning the
deposits into and withdrawals from the CMB and ICBC accounts, and
(3) the MOJ did not produce documents concerning the Banks'
efforts to comply with the preliminary injunction issued by Judge
Pauley on January 3, 2011.
III.
Analysis
The principal issue to be resolved is whether the
Banks' production through the MOJ has been so limited that resort
3
As noted in my July 25, 2011 Opinion and Order, China, like
35 other signatories to the Hague Convention (including the
United Kingdom and Switzerland) has reserved rights under Article
23 of the Hague Convention and stated that it will only execute
pre-trial discovery requests for documents which are clearly
enumerated in the request and which bear a direct and close
connection to the subject matter of the litigation. See Tiffany
(NJ) LLC v. Qi Andrew, supra, 276 F.R.D. at 155-56.
5
to the Hague Convention process can be characterized as futile.
Although the Banks' document production has been more limited
than it would have been under the Federal Rules of Civil Procedure, I cannot conclude that it is so limited that the process
has been futile.
Initially, I note that the centerpiece of plaintiffs'
futility argument last year was the argument that the People's
Republic of China would either not respond at all to a request
pursuant to the Hague Convention or would take an inordinate
amount of time to do so.
ments to be unfounded.
Experience has now proven both arguThe Banks, through the MOJ, have unques-
tionably produced relevant, responsive documents.
In addition,
although the MOJ took approximately nine months to respond to the
Hague Convention request, this period is not inordinately long
given the delays inherent in international discovery proceedings.
Although I am not aware of any statistical compilations, based on
my experience as a Magistrate Judge, China's nine-month response
time is, at most, only slightly longer than the response time I
have seen in other cases involving Hague Convention requests; it
is not so long that the process can be described as futile.
Second, the scope of the Banks' production has not been
so narrow that resort to the Convention can fairly be described
as futile.
The account holders' identities and addresses have
6
been identified as well as transaction histories.
Plaintiffs'
argument that additional documents concerning transfers into and
out of the accounts will lead to a fuller understanding of the
trademark counterfeiting operation is extremely speculative.
With respect to the CMB account, the documents already produced
show that all funds in the account were withdrawn in cash; thus,
there are no meaningful transferee records with respect to that
account.
With respect to the BOC and ICBC accounts, additional
transfer documentation will identify the transferee and transferor institutions and the numbers of the accounts making or
receiving the transfer.
Although none of the parties to the
current dispute has submitted evidence on the issue, it is my
understanding that the Banks' transfer documentation will not
provide any information concerning the owner of the transferor or
transferee account nor will it provide any information concerning
the transaction giving rise to the transfer.
While I understand
plaintiffs' desire to identify the source of the counterfeit
merchandise, the bank transfer information they are seeking will
be at, at most, a small step that may or may not lead to that
goal.4
4
In an effort to frustrate detection and tracing, many
domestic transactions in illegal or contraband merchandise are
conducted in cash. The possibility that individuals in China who
(continued...)
7
Finally, the fact that the MOJ China takes a narrower
view concerning the appropriate scope of pretrial discovery does
not render the Hague Convention process futile.
The high cost of
discovery in federal litigation is well known, see generally Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 558-59 (2007); Bondi v.
Capital & Fin. Asset Mgmt. S.A., 535 F.3d 87, 97 (2d Cir. 2008);
In re WorldCom, Inc. Sec. Litig., 234 F. Supp. 2d 301, 305–06
(S.D.N.Y. 2002) (Cote, D.J.), and the fact that another sovereign
chooses to take a more restrictive view of the appropriate scope
of pretrial discovery is not unreasonable.
In addition, as noted
above, China is not unique in reserving its right to limit
production in response to a Hague Convention request to documents
that it considers to bear a direct and close connection with the
litigation; many other countries have made the same reservation.
As the Honorable Victor Marrero, United States District Judge,
has noted in an analogous context:
Absent extraordinary circumstances, it would not comport with considerations of "practicality and wise
administration of justice" for the courts of one nation
as a matter of course to sit in judgment of the adequacy of due process and the quality of justice rendered in the courts of other sovereigns, and to decree
injunctive relief at any time the forum courts conclude
4
(...continued)
deal in counterfeit trademarked jewelry follow a similar practice
is a further reason to believe that additional bank transaction
documents will not provide fruitful information.
8
that the laws of the foreign jurisdiction under scrutiny do not measure up to whatever the scope of rights
and safeguards the domestic jurisprudence recognizes
and enforces to effectuate its own concept of justice.
On this larger scale, there can be no room for arrogance or presumption, or for extravagant rules or
practices that may encourage insularity or chauvinism
rather than respect for comity. It cannot be the
proper province of any one judge in any one country,
giving expression to the push of a moment or the pull
of the immediate case, to promulgate judgments that
impose that court's rule and will across all sovereign
borders so as to reach the rest of humankind.
Dow Jones & Co. v. Harrods, Ltd.,
237 F. Supp. 2d 394, 428-29
(S.D.N.Y. 2002) (footnotes omitted).
Given the undeniably high
cost of discovery under the Federal Rules of Civil Procedure and
the fact that more than 30 countries have made the same reservation under the Hague Convention that China has made, I submit
that concluding that the broad scope of Federal Rules discovery
is the only fair manner in which to conduct discovery would be
"the essence of sanctimonious chauvinism."
United States v.
Giffen, 326 F. Supp. 2d 497, 507 (S.D.N.Y. 2004) (Pauley, D.J.)
("An argument in favor of the export of United States law represents not only a form of legal imperialism but also embodies the
essence of sanctimonious chauvinism." (citation and inner quotations omitted)).
In summary, resort to the Hague Convention here has not
proven futile.
Although China, pursuant to its reservation of
rights under the Convention, has not produced all the documents
9
that would be required under the Federal Rules of Civil Proce
dure, its production is sufficient for plaintiffs to continue
their investigation concerning the counterfeit goods at issue in
this case.
Plaintiffs' application to enforce their subpoenas of
their subpoenas against the Banks' New York branches is, there
fore, denied.
IV.
Conclusion
Accordingly, for all the foregoing reasons, plaintiffs'
application to compel the Banks to comply with the subpoenas
previously served on them is denied.
Dated:
New York, New York
November 7, 2012
SO ORDERED
J
HENR~
United States Magistrate Judge
Copies transmitted to:
Robert Weigel, Esq.
Gibson, Dunn & Crutcher, LLP
47th Floor
200 Park Avenue
New York, New York 10166
Andrew R. Davies, Esq.
Allen & Overy, LLP
1221 Avenue of the Americas
New York, New York 10020
10
Dwight Healy, Esq.
White & Case, LLP
1155 Avenue of the Americas
New York, New York 10036
11
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