Federal Treasury Enterprise Sojuzplodoimport et al v. Spirits International B.V. et al

Filing 52

MEMORANDUM OPINION AND ORDER #104687 re: 45 MOTION for Reconsideration, filed by OAO "Moscow Distillery Cristall", Federal Treasury Enterprise Sojuzplodoimport, 43 JOINT MOTION for Reconsideration re; 42 Memora ndum & Opinion, filed by Yuri Shefler, Allied Domecq International Holdings B.V., Spirits International B.V., William Grant & Sons USA, Stoli Group (USA) LLP, SPI Group SA, Allied Domecq Spirits & Wines USA, Inc., William Gra nt & Sons, Inc., Alexey Oliynik, SPI Spirits Limited. In an Opinion and Order on August 25, 2014 ("August 25 Order"), I granted in part and denied in part Defendants' joint motion to dismiss. Both FTE and Defendants now move for p artial reconsideration of the August 25 Order. In the alternative, Defendants request that the Court certify the res judicata issue for interlocutory appeal. For the following reasons, both motions are DENIED. A conference is scheduled for September 5, 2014 at 11:00 a.m. (Status Conference set for 9/5/2014 at 11:00 AM before Judge Shira A. Scheindlin.) (Signed by Judge Shira A. Scheindlin on 9/4/2014) (ja) Modified on 9/5/2014 (ca).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
·--------------------------------------------------- :x:
FEDERAL TREASURY ENTERPRISE
SOJUZPLODOIMPORT and OAO
"MOSCOW DISTILLERY CRISTALL,"

MEMORANDUM OPINION
AND ORDER

Plain tiffs,

v.
14-cv-0712 (SAS)
SPIRITS INTERNATIONAL B.V., SPI
SPIRITS LIMITED, SPI GROUP SA,
YURI SHEFLER, ALEXEY OLIYNIK,
ALLIED DOMECQ INTERNATIONAL
HOLDING B.V., ALLIED DOMECQ
SPIRITS & WINE USA, INC.,
WILLIAM GRANT & SONS USA,
WILLIAM GRANT & SONS, INC., and
STOLi GROUP (USA) LLC,
Defendants.
·--------------------------------------------------- :x:

SHIRA A. SCHEINDLIN, U.S.D.J.:
I.

INTRODUCTION
In an Opinion and Order on August 25, 2014 ("August 25 Order"), I

granted in part and denied in part Defendants' joint motion to dismiss. 1 Both FTE

See Federal Treasury Enter. Sojuzplodoimport v. Spirits Int 'l B. V.,
No. 14 Civ. 0712, 2014 WL 4207133 (S.D.N.Y. Aug. 25, 2014) ("FTE V").

1

and Defendants now move for partial reconsideration of the August 25 Order. 2 In
the alternative, Defendants request that the Court certify the res judicata issue for
interlocutory appeal. For the following reasons, both motions are DENIED.
II.

LEGAL STANDARD
A.

Motion for Reconsideration

"The standard for granting ... a motion [for reconsideration] is strict,
and reconsideration will generally be denied unless the moving party can point to
controlling decisions or data that the court overlooked-matters, in other words,
that might reasonably be expected to alter the conclusion reached by the court." 3
Reconsideration of a court's previous order is "an extraordinary remedy to be
employed sparingly in the interests of finality and conservation of scarce judicial
resources." 4 Typical grounds for reconsideration include "an intervening change of
controlling law, the availability of new evidence, or the need to correct a clear error

2

See Memorandum of Law in Support of Defendants' Joint Motion for
Reconsideration or, in the Alternative, Certification of Issues for Interlocutory
Appeal ("Def. Mem. ") at 1; Plaintiffs' Memorandum of Law in Support of Their
Motion for Partial Summary Judgment ("Pl. Mem.") at 1.
3

Hochstadt v. New York State Educ. Dept., 547 Fed. App'x 9, 10 (2d
Cir. 2013) (citing Shrader v. CSXTransp., Inc., 70 F.3d 255, 257 (2d Cir. 1995)).
4

In re Initial Pub. Offering Sec. Litig., 399 F. Supp. 2d 298, 300
(S.D.N.Y. 2005) (internal citation and quotation omitted), aff'd sub nom. Tenney v.
Credit Suisse First Boston Corp., Nos. 05 Civ. 3430, 05 Civ. 4759, and 05 Civ.
4760, 2006 WL 1423785, at *l (2d Cir. May 19, 2006).
2

or prevent manifest injustice." 5

B.

Certification for Interlocutory Appeal
The decision whether to grant an interlocutory appeal lies within the

district court's discretion. 6 Section 1292(b) allows a district judge to certify a
question or Order to the appellate court when it is "not otherwise appealable under
this section" if she is "of the opinion that such order involves [ 1] a controlling
question of law as to which there is [2] substantial ground for difference of opinion
and that [3] an immediate appeal from the order may materially advance the
ultimate termination of the litigation." Only "exceptional circumstances justify a
departure from the basic policy of postponing appellate review until after the entry
of a final judgment." 7

III.

DISCUSSION

5

Kole! Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Trust,
729 F.3d 99, 104 (2d Cir. 2013) (citing Virgin At!. Airways, Ltd. v. National
Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992)).
6

See Swint v. Chambers County Comm 'n, 514 U.S. 35, 47 (1995)
("District courts [have] first line discretion to allow interlocutory appeals."); D. M
Rothman Co., Inc. v. Cohen Mktg. Int'l, Inc., No. 98 Civ. 7905, 2006 WL 2128064,
at* 1 (S.D.N.Y. July 27, 2006) ("[T]he determination of whether [section] 1292(b)
certification is appropriate under these standards lies with the discretion of the
district court.") (quoting Certain Underwriters at Lloyd's, London v. ABB Lummus
Global, Inc., No. 03 Civ. 7248, 2004 WL 1286806, at *6 (S.D.N.Y. June 10,
2004)).
7

Coopers & Lybrandv. Livesay, 437 U.S. 463, 475 (1978).
3

A.

FTE's Motion

FTE has not pointed to any new or overlooked facts, intervening
changes in law, or the possibility of manifest injustice. Instead, FTE 's motion
rehashes arguments that I considered and rejected in the August 25 Order.
FTE contends that the Court should reconsider its ruling that res
judicata bars FTE's non-Section 32(1) claims. 8 Because this Court determined that
the Second Circuit's dismissal of the Section 32(1) claims was not an "adjudication
on the merits," FTE argues that res judicata does not bar any of its claims. 9
Although FTE pled all but two of its non-Section 32( 1) claims in its Second
Amended Complaint ("SAC"), it abandoned them in its Third Amended Complaint
("TAC") for tactical reasons. 10 The remaining two claims were pled for the first
time in the present Complaint. 11 By abandoning its claims, FTE deliberately
prevented any adjudication on the merits.

8

See Pl. Mem. at 2-3. FTE's non-Section 32(1) claims are federal
unfair competition (Claim 2), federal trademark dilution (Claim 3), state law
trademark infringement (Claim 4), state law unfair competition (Claim 5), state law
trademark dilution (Claim 6), contributory unfair competition (Claim 8), and
contributory federal trademark dilution (Claim 9).
9

See id.

JO

See FTE V, 2014 WL 4207133, at *6.

11

See id.
4

Even if FTE could avoid the application of res judicata, all of its nonSection 32( 1) claims would be time-barred. Because FTE asserted its Section
32( I) claims in each of its complaints, those claims were tolled between 2004 and
2014. 12 But FTE's non-Section 32(1) claims were not tolled. Under New York
law, tolling does not apply to claims that a plaintiff has voluntarily dropped. 13
FTE' s claims accrued in January 2001 when Defendants began using the Marks. 14
The applicable statutes of limitations -

none of which are more than six years -

had run by 2014 when FTE filed the Complaint. 15 Finally, although trademark
infringement is a "continuing wrong," laches bars both damages and injunctive

12

See id. at *9.

13

See C.P.L.R. § 205 (stating that tolling does not apply where an action
"is terminated ... by a voluntary discontinuance"); Drees v. County of Suffolk, No.
06 Civ. 3298, 2009 WL 875530, at* 14 (E.D.N.Y. Mar. 30, 2009) ("[T]here is no
tolling of the statute of limitations during the time plaintiffs claim was pending in
State Division because of her self-initiated discontinuance of her State Division
action for administrative convenience.").
14

See Compl. ii 39.

15

See Parks v. ABC, Inc., 341 Fed. App'x 737, 739 (2d Cir. 2009)
(citing Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 191 (2d Cir. 1996))
("New York's six-year fraud statute of limitations [applies] to ... Lanham Act
claim[s]."); Charles Atlas, Ltd. v. DC Comics, Inc., 112 F. Supp. 2d 330, 334
(S.D.N.Y. 2000) ("[T]he statute of limitations for violation of New York's
Anti-Dilution Statute, N.Y. Gen. Bus. Law§ 360-1 ... is three years."); Zinter
Handling, Inc. v. General Elec. Co., 956 N.Y.S.2d 626, 630 (3d Dep't 2012)
(finding that state law unfair competition claim is governed by three-year statute of
limitations).
5

relief. 16 FTE "had knowledge of defendant's use of its marks" and "inexcusably
delayed in taking action with respect thereto." 17 Defendants would be prejudiced if
FTE were allowed to resurrect its non-Section 32( 1) claims. Defendants consented
to FTE's motion for leave to file the TAC presumably because FTE agreed to drop
the non-Section 32(1) claims. 18 FTE may not now reintroduce these claims in this
decades-long litigation.

B.

Defendants' Motion

Similarly, Defendants have failed to identify any "controlling
decisions or data that the court overlooked" that might warrant reconsideration of
the August 25 Order.

First, Defendants argue that the Court overlooked certain statements

16

Vaad L 'Hafotzas Sichos, Inc. v. Kehot Publ'n Soc., 935 F. Supp. 2d
595, 602 (E.D.N.Y. 2013) (noting that without laches, "a plaintiff could delay
filing suit indefinitely"). Accord Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.
Ct. 1962, 1974 n.15 (2014) ("In contrast to the Copyright Act, the Lanham Act,
which governs trademarks, contains no statute of limitations, and expressly
provides for defensive use of' equitable principles, including laches. "') (quoting 15
u.s.c. § l l 15(b)(9)).
17

Saratoga Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1040 (2d Cir.

1980).
18

See 2/18/11 Order (granting FTE's motion to amend the SAC "with
Defendants' consent").
6

from the TAC that show that the alleged infringement began in 1992, not 2001. 19
Specifically, Defendants contend that FTE's claims are time-barred because "no
later than [] 1992, Pepsico was openly using the marks ... based on the authority
ofV AO-SPl." 20 At the outset, I note that Defendants may not assert a new
argument for the first time on reconsideration. 21 In their motion to dismiss,
Defendants did not argue that FTE' s trademark claims accrued in 1992. Instead,
they argued that FTE' s "antecedent misappropriation" claim accrued in 1992 and is
therefore time-barred. 22

19

See Def. Mem. at 3.

20

Id. at 3-4 (citing TAC

~~

89-92).

21

See Arthur Glick Truck Sales, Inc. v. Stuphen E. Corp., 965 F. Supp.
2d 402, 405 (S.D.N.Y. 2013), ajf'd sub nom., Arthur Glick Truck Sales, Inc. v.
Travelers Cas. & Sur. Co. ofAmerica, No. 13 Civ. 3373, 2014 WL 4179878 (2d
Cir. Aug. 25, 2014) ("[A] motion for reconsideration is not an opportunity for a
losing party to advance new arguments to supplant those that failed in the prior
briefing of the issue.").
22

Moreover, Defendants support their new argument with allegations
drawn from the TAC in FTE III but omitted from FTE' s present Complaint. As
noted, given its tardiness, I need not consider this argument at all. However, I note
in passing that "[a] party's assertion of fact in a pleading is a judicial admission by
which it normally is bound throughout the course of the proceeding," it is not
considered binding in a subsequent proceeding. Setevage v. Department of
Homeland Sec., 539 Fed. App'x 11, 13 (2d Cir. 2013) (citing Bellefonte Re Ins.
Co. v. Argonaut Ins. Co., 757 F.2d 523, 528-29 (2d Cir. 1985)). Accord American
Tissue, Inc. v. Donaldson, Lufkin & Jenrette Sec. Corp., 351 F. Supp. 2d 79, 96
(S.D.N.Y. 2004) ("[W]hile research discloses no Second Circuit authority on point,
the general rule seems to be that a judicial admission only binds the party that
7

In any event, Defendants' argument is meritless. In the Complaint,
FTE alleges that VVO-SPI- FTE's predecessor in interest- "authorized"
PepsiCo to use the Marks as a licensee. 23 Defendants cannot explain how they or
their predecessor- VAO-SPI- could have infringed the Marks by supplying
vodka bearing the Marks to a party authorized to use them. Therefore, the
infringement did not begin until 2001 when "SPI [successor in interest to V AOSPI] induced PepsiCo to purport to assign its rights to the [] marks to Allied
Domecq" by "falsely represent[ing] themselves to be VVO-SPI's legitimate
successor. " 24
Second, Defendants argue that the Court should reconsider its ruling

regarding FTE' s standing because allowing FTE to cure its standing defect would

makes it in the action in which it is made, not 'in separate and subsequent cases."')
(quoting State Farm Mutual Auto. Ins. Co. v. Worthington, 405 F.2d 683, 686 (8th
Cir. 1968); accord Universal American Barge Corp. v. J-Chem, Inc., 946 F .2d
1131, 1142 (5th Cir. 1991 )). Therefore, these allegations are not binding here.
Compl. ~ 29. Defendants contend that PepsiCo was the "owner" of
the Marks, but the Complaint alleges that PepsiCo was a "mere licensee." Id.~ 39.
23

24

Id. ,-i 39. Defendants also argue that the limitations period should not
have been tolled between 2004 and 2014 because C.P.L.R. § 205 only applies to
toll the statute of limitations when "it is the same person or entity whose rights are
sought to be vindicated in both actions." Def. Mem. at 4 n.2. But section 205
contains no such limitation. In any event, regardless of whether FTE had standing,
it asserted claims on its own behalf from 2004 through 2014.
8

be "manifestly unfair." 25 Under the "manifest unfairness" exception, "[a] prior
jurisdictional dismissal has full res judicata effect when it is manifestly unfair to
permit a second action after [the plaintiff] satisf[ies] a precondition that easily
could have been satisfied at the time of the prior action." 26 I already considered
and rejected Defendants' argument because -

as Defendants concede - the

"manifest unfairness" exception is not recognized in the Second Circuit. 27
Nor should the Court certify the "manifest unfairness" issue for
interlocutory appeal. While resolution of this issue might advance the termination
of this litigation, Defendants' request does not raise "a controlling question of law
as to which there is substantial ground for difference of opinion." 28 Only the
Fourth Circuit has recognized this exception and only in a very narrow context. In
Stebbins v. Nationwide Mutual Insurance Company, the Fourth Circuit held that
res judicata may bar a plaintiffs claims litigated on the merits -

even where they have not been fully

if "the circumstances are such that it would be manifestly

25

Def. Mem. at 2.

26

Id. (quoting 18A Wright & Miller, Fed. Prac. & Proc.§ 4437 (2d

ed.)).
27

See id. at 6 (recognizing that application of the exception is a "matter
of first impression" in this circuit).
28

28 U.S.C. § 1292(b).
9

unfair to subject the defendant to such an action." 29 Stebbins involved a serial
litigant who had made a "career" out of suing insurance companies and had
previously exhibited an "intentional, wilful, and contemptuous disregard of both
Court and statutory rules and requirements." 30 In one suit, the plaintiff filed an
untimely Title VII claim after receiving a right-to-sue notice. 31 In dismissing the
claim, the district court relied on an earlier evidentiary hearing in which another
judge found that the plaintiff was not qualified to be a claims adjuster. 32 On
appeal, the Fourth Circuit held that it would be "manifestly unfair" to the defendant
to allow the plaintiff to renew his Title VII claim. 33 The court reasoned that the
plaintiff had intentionally delayed in filing, and "[m]ore importantly" he had
participated in a "full-blown trial" on the merits of his qualifications. 34
Although the Fourth Circuit recognizes the "manifest unfairness"
exception, it has limited it to cases where a plaintiff's claims were "subject to an

29

Stebbins v. Nationwide Mut. Ins. Co., 528 F.2d 934, 937 (4th Cir.

30

Id. at 93 7 n.4.

31

See id. at 936.

32

See id.

33

Id. at 937.

34

Id. at 938.

1975).

10

actual trial on the merits." 35 There has been no trial on the merits in the instant
case. In fact, over the course of this decades-long litigation, the parties have never
advanced beyond the pleading stage or conducted discovery. In addition,
Plaintiffs' standing defect was not "intentional, wilful and contemptuous." 36
Therefore, even if this circuit recognized the manifest unfairness exception, there
would be no "difference of opinion" as it is clearly inapplicable here.

IV.

CONCLUSION
For the foregoing reasons, both motions are DENIED. A conference

is scheduled for September 5, 2014 at 11 :00 a.m.

SO ORDERED:

Dated:

New York, New York
September 4, 2014

35

McCray v. Pee Dee Reg'/ Transp. Auth., 263 Fed. App'x 301, 305
(4th Cir. 2008). Accord Pizlo v. Bethlehem Steel Corp., 884 F.2d 116, 119-120
(4th Cir. 1989).
36

Stebbins, 528 F.2d at 937 n.4.
11

-AppearancesFor Plaintiffs:
Daniel H. Bromberg, Esq.
Jones Day
51 Louisiana Ave. N.W.
Washington, DC 20001
[phone]
Jessica Anne Rose, Esq.,
Marc Laurence Greenwald, Esq.,
Robert Lloyd Raskopf, Esq.
Quinn Emanuel Urquhart & Sullivan LLP
51 Madison Avenue, 22nd Floor
New York, NY 10010
[phone]

For Defendants:
David M. Zionts, Esq.
Covington & Burling, LLP
1201 Pennsylvania Avenue, N.W.
Washington, DC 20004
[phone]
Emily Johnson Henn, Esq.
Covington & Burling, LLP
333 Twin Dolphin Drive, Suite 700
Redwood Shores, CA 94065
[phone]
Bingham B. Leverich, Esq.,
Eugene Gulland, Esq.
Covington & Burling, LLP
1201 Pennsylvania Avenue, N.W.
Washington, DC 20004
12

[phone]
Hope Ivy Hamilton, Esq.
Holland & Hart LLP
1800 Broadway, Suite 300
Boulder, CO 80302
[phone]
David H. Bernstein, Esq.,
Carl Micarelli, Esq.,
Michael Shaper, Esq.
Debevoise & Plimpton, LLP
919 Third A venue, 31st Floor
New York, NY 10022
[phone]
Edward T. Colbert, Esq.
Kenyon & Kenyon LLP
1500 K Street, N.W. Suite 700
Washington, DC 20005
[phone]

13