Havas Worldwide New York, Inc. et al v. Lions Gate Entertainment Inc.
Filing
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OPINION & ORDER re: 26 MOTION to Dismiss Plaintiff's Amended Complaint. MOTION to Transfer Case to the Central District of California. filed by Lions Gate Entertainment Inc. For the reasons stated above, defendant 39;s motion to transfer venue is GRANTED. The Clerk of Court is directed to terminate the motion at ECF No. 26 and to transfer this action to the Central District of California. (As further set forth in this Order) (Signed by Judge Katherine B. Forrest on 9/29/2015) (lmb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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HAVAS WORLDWIDE NEW YORK, INC. and :
TD AMERITRADE SERVICES COMPANY,
:
INC.,
:
:
Plaintiffs,
:
:
-v:
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LIONSGATE ENTERTAINMENT INC.,
:
:
Defendant.
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:
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15-cv-5018 (KBF)
OPINION & ORDER
KATHERINE B. FORREST, District Judge:
Plaintiffs, a marketing agency, Havas Worldwide New York, Inc. (“Havas”),
and the marketing arm of an investment company, TD Ameritrade Services
Company, Inc. (“TD Ameritrade”), bring this action under the Declaratory
Judgment Act (“DJA”) against defendant Lionsgate Entertainment Inc.
(“Lionsgate”), an entertainment company that owns the rights to the 1987 film
Dirty Dancing. At issue is whether portions of an advertising campaign contained
images and language that infringed defendant’s rights under trademark law and
the Lanham Act. Before this Court is defendant’s motion to dismiss the amended
complaint pursuant to Federal Rules of Civil Procedure 12(b)(6) or in the
alternative, to transfer venue to the Central District of California under 28 U.S.C. §
1404(a). For the following reasons, defendant’s motion to transfer is GRANTED.
The motion to dismiss on other substantive grounds is DENIED as moot.
I.
BACKGROUND
In 2014, plaintiff Havas created an advertising campaign for defendant TD
Ameritrade Services. It used phrases such as “Nobody puts your old 401k in a
corner” and “Take that baby and roll it over to an IRA.” (Amended Complaint at
¶ 10, 12, 14.) The advertising campaign also included images of a man lifting a
piggy bank over his head. (Id. at ¶ 15.) The campaign aired from October 2014
until April 2015. (Id. at ¶ 12.)
Defendant Lionsgate owns the 1987 motion picture Dirty Dancing. (Id. at
¶ 13.) According to defendant, plaintiffs’ advertising campaign exploits a famous
line from Dirty Dancing, “nobody puts Baby in a corner” as well as a famous scene
in the film in which the main male character lifts the main female character over
his head in a dance move. (Id.) In April 2015, counsel for defendant Lionsgate
issued two letters to plaintiffs, notifying them that the advertising campaign was an
unauthorized use that “constitutes trademark infringement, unfair competition,
false association, and dilution.” (Walters Decl. Exs. E, H.)
Defendant’s two initial letters, one dated April 2, 2010 and the other April 15,
2015, requested present and future cessation of all reference to the phrase “Nobody
puts baby in a corner,” and a $1,000,000 fee for prior use. (Walters Decl. Exs. E, H.)
The letters gave plaintiffs one week to respond, after which “we will advise
Lionsgate to seek all remedies available to it for your unlawful acts.” Plaintiffs
formally rejected the licensing fee demand in an April 21, 2015 letter. (Walters
Decl. Ex. I.)
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On June 3, 2015, defendant Lionsgate responded to plaintiffs, outlining its
rights under the Lanham Act and California unfair competition law. Lionsgate
stated that it would “prefer to resolve these issues amicably . . . . To that end, we
are prepared to negotiate a reasonable license fee.” It stated that a “reasonable
license fee” is a requirement of settlement, and that “[i]f pressed, we are prepared to
resolve these issues through litigation, and we will pursue our claims before the
U.S. District Court for the Central District of California, where Lionsgate maintains
its principal place of business.” (Walters Decl. Ex. J.)
On June 8, 2015, plaintiffs made a settlement offer. The parties agreed to
refrain from filing lawsuits before the settlement was being considered. (Walters
Decl. Ex. K.) On June 18, 2015, Lionsgate rejected plaintiffs’ offer, and
counteroffered. (Walters Decl. Ex. L.) In a June 26, 2015 email to defendant’s
counsel, plaintiffs formally rejected the June 18 settlement counteroffer and
informed defendant that, “Since you have repeatedly threatened litigation if your
demands were not met, we have this afternoon filed a complaint for declaratory
judgment in U.S. District Court for the Southern District of New York.” (Walters
Decl. Ex. M.) On July 2, 2015, Lionsgate filed suit in the Central District of
California, making Lanham Act, 15 U.S.C. § 1051 et seq. and state and common law
unfair competition and dilution claims.
II.
DISCUSSION
Defendant argues that the Court should dismiss this action because 1) the
action qualifies under exceptions to the first-filed rule because it is improperly
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anticipatory and in violation of the parties’ agreement during settlement
discussions and 2) the DJA does not apply when an accused infringer has already
ceased infringing activities. In the alternative, defendant argues that the Court
should transfer the action to the Central District of California on the basis of forum
non conveniens. As set forth below, the Court GRANTS defendant’s motion to
transfer venue on the basis that the action was plainly filed as a preemptive strike
– and is there for an improper anticipatory filing. Intra-district transfer achieves
the same end as dismissal in this case.
A.
First-Filed Rule Exceptions
Generally, “[w]here there are two competing lawsuits, the first suit should
have priority.” Employers Ins. of Wausau v. Fox Entm’t Grp., Inc., 522 F.3d 271,
274–75 (2d Cir. 2008). There are, however, rare exceptions to the first-filed rule.
Id. at 275. One of those exceptions is when the “first-filed lawsuit is an improper
anticipatory declaratory judgment action . . . filed in response to a direct threat of
litigation that gives specific warnings as to deadlines and subsequent legal action.”
Id. at 275–76; see also Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 219 (2d Cir.
1978) (“When the declaratory action has been triggered by a notice letter, this
equitable consideration may be a factor in the decision to allow the later filed action
to proceed to judgment . . . .”), abrogated on other grounds by Pirone v. MacMillan,
Inc., 894 F.2d 579 (2d Cir. 1990); Akers Biosciences, Inc. v. Martin, 2015 WL
1054971 at *2 (S.D.N.Y.) (“Special circumstances may exist either where a party
improperly files an anticipatory declaratory judgment or where they are attempting
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to forum shop.”).1 Furthermore, “where two actions are filed within a short span of
time, as they were here, less deference may be afforded to the forum of the first
filing.” Michael Miller Fabrics, LLC v. Studio Imports Ltd., Inc., 2012 WL 2065294
at *6 (S.D.N.Y. 2012).
There is no question that plaintiffs filed this action in anticipation of
Lionsgate filing a suit against them. “When a notice letter informs a defendant of
the intention to file suit, a filing date, and/or a specific forum for the filing of the
suit, the courts have found, in the exercise of discretion, in favor of the second-filed
action.” J. Lyons & Co. v. Republic of Tea, Inc., 892 F. Supp. 486, 491 (S.D.N.Y.
1995); see also Cephalon, Inc. v. Travelers Companies, Inc., 935 F. Supp. 2d 609,
614 (S.D.N.Y. 2013). Here, Lionsgate communicated its intention to file suit and
the forum in which it would do so. Lionsgate informed plaintiffs on June 3, 2015
that it would file suit in “the Central District of California” should settlement
discussions proved unfruitful. (Declaration of Whitney Walters-Sachs (“Walters
Decl.”), Ex. J.) While Lionsgate did not provide a definite date by which it would
That district courts have the power to dismiss declaratory judgment suits filed in
anticipation of other coercive action is well-recognized. See, e.g., Michael Miller Fabrics, LLC v.
Studio Imports Ltd., Inc., 2012 WL 2065294 (S.D.N.Y. 2012) (collecting cases); see also Dow Jones &
Co. v. Harrods, Ltd., 237 F. Supp. 2d 394, 440 (S.D.N.Y. 2002) aff’d, 346 F.3d 357 (2d Cir. 2003) (“A
rush to file first in anticipation of litigation in another tribunal, thereby enabling a potential
defendant to choose the forum and governing law by which to adjudicate the dispute, and otherwise
to interfere with or frustrate the other party’s pursuit of claims elsewhere, is one of the equitable
considerations a court may weigh in ruling on a request for declaratory relief.”); Reliance Ins. Co. v.
Bend’N Stretch, Inc., 935 F. Supp. 476, 478 (S.D.N.Y. 1996) (“If a court finds that a declaratory
judgment action was brought in anticipation of the coercive suit for the purpose of gaining ‘home
field advantage,’ the coercive suit is given precedence.”); Great Am. Ins. Co. v. Houston Gen., 735 F.
Supp. 581, 584 (S.D.N.Y. 1990) (“Even if the basic requirements for a declaratory judgment action
are met, it is still within the discretion of the district court to decline to hear a declaratory judgment
action, particularly when there is a pending proceeding in another court . . . that will resolve the
controversies between the parties.”).
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file suit, it specified both intent to sue and the forum. See Cephalon, 935 F. Supp.
2d at 615 (“[A] date and forum are not fixed prerequisites, but mere indicia of
notice.”). The June 3, 2015 letter was a more concrete notice that followed two
previous letters on April 2, 2015 and April 15, 2015, in which Lionsgate’s counsel
told plaintiffs that failure to sign the settlement offer letters within a week will
mean that “we will advise Lionsgate to seek all remedies available to it for your
unlawful acts.” (Walters Decl. Exs. E, H.)
While Lionsgate’s counsel could have been more careful with the wording of
their earlier notice letters to provide even stronger indication of its intent to file
suit, there is no question that plaintiffs understood them to mean that a lawsuit by
Lionsgate was imminent. In fact, in its June 26, 2015 email to Lionsgate, plaintiffs
expressly stated that they were filing the instant action because Lionsgate
“repeatedly threatened litigation if [its] demands were not met.” (Walters Decl.
Ex. M.) The fact that the parties needed to explicitly agree not to file suit while
settlement discussions were ongoing is strong evidence that plaintiffs had clear
notice that should it reject Lionsgate’s June 18, 2015 counteroffer, it would surely
face a lawsuit in the Central District of California.2
“[T]he federal declaratory judgment is not a prize to the winner of a race to
the courthouses.” Factors, 579 F.2d at 219 (internal citations and quotation marks
omitted). This is particularly true where, as here, “a party is prepared to pursue a
While in its June 8, 2015 email Lionsgate also asked plaintiffs to hold off on any declaratory
judgment actions while settlement discussions were pending, (Walters Decl. Ex. K), any declaratory
judgment action by plaintiffs in anticipation of a suit by Lionsgate would be improper in any event.
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lawsuit, but first desires to attempt settlement discussions.” Ontel Prods., Inc. v.
Project Strategies, Corp., 899 F. Supp. 1144, 1150 (S.D.N.Y. 1995). Lionsgate
“should not be deprived of the first-filed rule’s benefit simply because its adversary
used the resulting delay in filing to proceed with the mirror image of the anticipated
suit.” Id. Plaintiffs’ early arrival at the courthouse steps will not be rewarded with
procedural advantage and frustration of defendant’s pursuit of the claims in
California. See Dow Jones & Co., Inc. v. Harrods, Ltd., 237 F.Supp.2d 394, 440
(S.D.N.Y. 2002).
B.
Personal Jurisdiction
Havas also argues that it is not subject to personal jurisdiction in California.
Based on the current record, this argument is insufficient to defeat transfer. The
Court assumes Havas will raise any personal jurisdiction defense in California if
there remains a serious issue. This Court’s determination is based on its
determination that it is more likely than not that Havas is subject to jurisdiction in
California.
Despite separate incorporation, it does appear that Havas Worldwide (New
York) operates with a nationwide presence and may well be synergistically linked to
the operations of the separate Californian offices. The materials before the Court
indicate that Havas Worldwide has five North American offices, one in New York
and two in California (San Francisco and San Diego). (Walters Supp. Decl., Ex. D.)
Despite the separate offices, the Havas enterprise is self-described as “one of the
world’s largest communications groups” and “offers a single business model . . . and
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integrated structure that responds with a single voice to clients’ new expectations.”
(Walters Suppl. Decl. Ex. A (emphasis added).) It states that “100% of all
communications disciplines [are] contained under one roof.” (Id.) Various entities
within the larger corporate structure partner with Californian businesses. (Id.)
The New York office has Californian clients. (Id. at Ex. B, C.)
It appears that Havas’s business model indicates that its New York office’s
interactions with California are not “solely as a result of random, fortuitous, or
attenuated contacts,” but rather, it “established a continuing relationship” with
Californian subsidiaries, business partners, and clients. Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 475, 487 (1985); see also Benitez-Allende v. Alcan
Aluminio do Brasil, S.A., 857 F.2d 26, 30 (1st Cir. 1988) (“If International Shoe
stands for anything . . . it is that a truly interstate business may not shield itself
from suit by a careful but formalistic structuring of its business dealings.”).
Moreover, the specific contacts at issue in this case likely constitute sufficient
minimal contacts for jurisdiction in Californian courts. Havas (New York) created
“over 100 different ads in various channels, including short online video, digital
display, social media, television print, pages on the TD Ameritrade website and
communications to TD Ameritrade clients.” (Declaration of Nancy Wynne at ¶ 9.)
The campaign was “designed to appeal to individual retail investors.” (Amended
Compl. at ¶ 10.) While there is no evidence to suggest that the campaign
specifically targeted Californian customers, “it is easy to infer that . . . [this]
national marketing campaign is intended to reach as large an audience as possible.”
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uBID v. GoDaddy Grp., 623 F.3d 421, 428 (7th Cir. 2010); see also Vermeulen v.
Renault, U.S.A., Inc., 985 F.2d 1534, 1548-49 (11th Cir. 1993) (finding that,
although defendant’s business partner was not an alter ego, the facts that
“distribution system created by [their] alliance . . . contemplated a nationwide
network” and that defendant “had a large hand in directing [the advertising]
campaign” supported specific jurisdiction).
III.
CONCLUSION
For the reasons stated above, defendant’s motion to transfer venue is
GRANTED. The Clerk of Court is directed to terminate the motion at ECF No. 26
and to transfer this action to the Central District of California.
SO ORDERED.
Dated:
New York, New York
September 29, 2015
______________________________________
KATHERINE B. FORREST
United States District Judge
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