Beverly Hills Teddy Bear Company v. Best Brands Consumer Products, Inc. et al

Filing 206

MEMORANDUM OPINION AND ORDER re: 186 MOTION to Amend/Correct 121 Answer to Amended Complaint . filed by Best Brands Sales Company, LLC, Best Brands Consumer Products, Inc. Because all of the claims in Best Brands' pro posed supplemental answer are futile, Best Brands' motion to supplement (styled as a motion to amend) is DENIED. The Clerk of Court is directed to terminate the motion pending at Dkt. No. 186. SO ORDERED. (Signed by Judge Gregory H. Woods on 6/21/2021) (rro) (Main Document 206 replaced on 6/21/2021) (rro).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
BEVERLY HILLS TEDDY BEAR COMPANY, :
:
Plaintiff, :
:
-against:
:
BEST BRANDS CONSUMER PRODUCTS, INC, :
BEST BRANDS SALES COMPANY, LLC, and
:
GENNCOMM, LLC,
:
:
Defendants. :
:
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GREGORY H. WOODS, United States District Judge:
I.

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: 6/21/2021

1:19-cv-3766-GHW
MEMORANDUM
OPINION AND ORDER

INTRODUCTION
Plaintiff Beverly Hills Teddy Bear Company (“Beverly Hills”) sued Defendants Best Brands

Consumer Products, Inc. and Best Brands Sales Company, LLC (together, “Best Brands”) for
infringing on its copyrights in the popular Squeezamals line of foam plush toys. After discovery,
Best Brands learned that Beverly Hills may have assigned those copyrights to GennComm, LLC
(“GennComm”) before filing the suit. That potential assignment called into question Beverly Hills’
standing to bring the suit. As a result, the Court decided that GennComm was a necessary party.
Beverly Hills amended its complaint to join GennComm as a defendant. Beverly Hills and
GennComm subsequently entered into a settlement agreement and obtained a consent judgment
from a California state court, which in effect held that Beverly Hills had never assigned its
Squeezamals copyrights to GennComm.
Best Brands has moved for leave to add a counterclaim against Beverly Hills and a

crossclaim against GennComm. 1 Both claims seek declaratory judgment that Beverly Hills and
GennComm’s settlement agreement and consent judgment cannot be applied retroactively to accord
Beverly Hills standing in this action. The Court, however, lacks personal jurisdiction over
GennComm for the proposed crossclaim. The Court would, in its discretion, decline to exercise
jurisdiction over the proposed counterclaim for declaratory judgment against Beverly Hills because it
is duplicative of claims and defenses already asserted in this case. Because the Court would
ultimately dismiss both of the proposed claims if they were added to Best Brands’ answer, the
claims contained in Best Brands’ proposed supplemental answer are futile. Therefore, Best Brands’
motion to supplement its answer is DENIED.
II.

BACKGROUND
The Court assumes the parties’ familiarity with the facts and procedural history in this

matter. Nonetheless, the Court recapitulates the aspects of the case relevant to this motion.
This case involves a copyright infringement claim regarding the popular Squeezamals toys.
Beverly Hills’ remaining claims are one cause of action against Best Brands under the Copyright Act,
17 U.S.C. § 501(a), and one request for declaratory judgment against GennComm regarding
ownership of the copyrights-in-suit. See Dkt. No. 117 at 17–18. Beverly Hills has alleged that Best
Brands has infringed on its copyrights in the Squeezamals toys. Id. ¶ 41. Beverly Hills has alleged
that it owns “both registered and unregistered copyrights in and related to the Squeezamals

As discussed below, the Court treats Best Brands’ motion as a request to supplement under Rule 15(d), even though
Best Brands moved for leave to amend its answer under Rule 15(a). Rule 15(d) provides the mechanism for a party to
add “any transaction, occurrence, or event that happened after the date of [a prior] pleading.” Fed. R. Civ. P. 15(d). The
claims Best Brands seeks to add are based on fraud and collusion allegedly perpetrated by counsel for Beverly Hills and
GennComm in connection with those parties’ 2020 settlement agreement and consent judgment. That conduct allegedly
occurred after Best Brands filed its most recent amended answer on December 1, 2020. See Best Brands’ Proposed
Suppl. Answer at ¶ 47 (“it was impossible for Best Brands to file a counterclaim or crossclaim on December 1st to
address Beverly Hills’ and GennComm’s [alleged] fraud and collusion, since it had not yet arisen”). The conduct
therefore may be pleaded only under Rule 15(d). However, Rule 15(d) motions are evaluated under the same standard
used to evaluate Rule 15(a) motions. Bemben v. Fuji Photo Film U.S.A., Inc., No. 01 Civ. 8616 (KMW) (DF), 2003 WL
2146709, at *1 (S.D.N.Y. May 19, 2003). Thus, the distinction does not affect the Court’s ruling on this motion.

1

2

Products” (id. ¶ 19) and that it is the “exclusive owner of the Squeezamals Works” (id. ¶ 72). Best
Brands has raised defenses on the issues of, inter alia, standing, copyright validity, and copyright
ownership. See Dkt. No. 121 at 9.
On January 6, 2020, the Court issued a scheduling order which established a February 29,
2020 deadline for the completion of all fact discovery. Dkt. No. 38. On July 14, 2020, after the
close of discovery, GennComm contacted Best Brands and informed it that GennComm had been
party to a non-exclusive license agreement with Beverly Hills since June 16, 2017 (the “Agreement”),
and that the Agreement covered the products at issue in this case. See Dkt. No. 90 at 2; Dkt. No. 90
Ex. 1 at 1; Dkt. No. 85 at 4:24–5:23, 7:15–8:13. In addition, Best Brands learned that Beverly Hills
and GennComm were then litigating two cases in California courts that directly involved the
Agreement and the Squeezamals products. Dkt. No. 90 at 2, 10, 12–13. Specifically, GennComm
sued Beverly Hills in California state court to enforce its rights under the Agreement, and Beverly
Hills sued GennComm in federal court in the Central District of California, seeking a declaratory
judgment of invalidity and unenforceability with respect to two of GennComm’s patents. See id.
Exs. 11–15.
After reviewing briefing from Best Brands and Beverly Hills, the Court determined that it
could not decide the parties’ rights under the license agreement without affording GennComm, a
party to the agreement, an opportunity to present its position. See Dkt. No. 112. The Court ordered
that GennComm be joined to this action as a necessary party but deferred its decision as to whether
joinder was feasible and whether GennComm was an indispensable party. Dkt. Nos. 112, 115–16.
On November 10, 2020, Beverly Hills amended its complaint and added GennComm as a
defendant. Dkt. No. 117.
On December 21, 2020, the Court was informed that Beverly Hills and GennComm had
entered into a settlement agreement, resolving their claims in California. Dkt. Nos. 126–27. The
3

agreement was endorsed by the California state court as a stipulated judgment. On December 22,
2020, Beverly Hills and GennComm asked the Court to enter a consent judgment based on their
settlement agreement. Dkt. No. 130. The proposed consent judgment provided that those parties
stipulated to certain facts, including that “the License Agreement be deemed void ab initio,” that
Beverly Hills “has and at all times has had full ownership of all trademarks and copyrights relating to
the Squeezamals Products including the Squeezamals Works” and that GennComm “assigned nunc
pro tunc to [Beverly Hills] any and all rights that GennComm ever had (if any) relating to any
trademarks and copyrights used by [Beverly Hills] relating to Squeezamals Products, including but
not limited to the right to sue for copyright and trademark infringement (including past damages),
including the right to institute this action.” Id. Based on those stipulated facts, Beverly Hills and
GennComm requested that the Court order, judge, and decree “that GennComm has no rights in
and to Plaintiff ’s Squeezamals Works or this action” and be dismissed from this action. Id. at 5.
The Court declined to endorse the proposed consent judgment because the Court did not have any
factual or legal support upon which to conclude that the terms of the parties’ stipulation were
appropriate, and the facts included therein were disputed by Best Brands, who was not a party to the
settlement agreement. The Court took no position regarding the terms of the parties’ private
agreement. See Dkt. No. 141.
On May 10, 2021, Best Brands moved to amend its answer to add one claim for declaratory
relief against Beverly Hills and another against GennComm. See Dkt. No. 186, Mot. to Amend.
Best Brands attached as an exhibit to its motion a proposed answer that includes 101 paragraphs of
new allegations. See Dkt. No. 186 Ex. 1 (“Best Brands’ Proposed Answer”) at 12–28, ¶¶ 10–101.
The proposed answer also includes four additional prayers for relief. See Best Brands’ Proposed
Answer at 27–28, ¶¶ B, I, J & L. In substance, the proposed answer would ask the Court to find that
Beverly Hills, GennComm, and their respective counsel (1) colluded to settle the dispute over the
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validity of their license agreement in a way that would give Beverly Hills standing in this action; and
(2) defrauded a state court in California into entering a consent judgment declaring the license
agreement between Beverly Hills and GennComm void ab initio. See id. at 24–25, ¶¶ 85–86. Based
on these findings, the proposed answer would ask the Court to dismiss this action for lack of
standing, id. at 27, ¶ B, or to declare “that the 2020 Settlement Agreement and California Consent
Judgment are unenforceable against Best Brands in the current proceedings, and cannot be used to
the detriment of Best Brands’ defenses,” id. at 28, ¶ J.
The proposed answer would also ask the Court to “enter judgment that GennComm and
Beverly Hills and their respective counsel have engaged in deceit and collusion, for which they
forfeit to Best Brands treble damages.” Id. at 28, ¶ L. That prayer for relief stems from allegations
listed under both the proposed counterclaim and proposed crossclaim that “the deceit and collusion
by GennComm’s counsel and Beverly Hills’ counsel . . . is sanctionable under New York Judiciary
Law § 487, and subject to damages set forth therein.” Id. at 23, ¶ 75; see also id. at 26, ¶ 99.
On June 1, Beverly Hills and GennComm separately opposed Best Brands’ motion. See Dkt.
Nos. 198, 200. On June 8, Best Brands replied to each of the opposition briefs. See Dkt. Nos. 200–
01.
III.

LEGAL STANDARD
Under Rule 15(a), “a party may amend its pleading only with the opposing party’s written

consent or the court’s leave. The court should freely give leave when justice so requires.” Fed. R.
Civ. P. 15(a)(2). But “leave to amend may properly be denied if the amendment would be futile.” F5
Cap. v. Pappas, 856 F.3d 61, 89 (2d Cir. 2017) (quoting Krys v. Pigott, 749 F.3d 117, 134 (2d Cir. 2014)).
“A proposed amendment to a complaint is futile when it could not withstand a motion to dismiss.”
Id. (quoting Balintulo v. Ford Motor Co., 795 F.3d 160, 164–165 (2d Cir. 2015)).
Under Rule 15(d), “the court may, on just terms, permit a party to serve a supplemental
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pleading setting out any transaction, occurrence, or event that happened after the date of the
pleading to be supplemented.” Fed. R. Civ. P. 15(d). “Rule 15(d) motions are evaluated by the Court
under the same standards used to evaluate motions to amend pleadings under paragraph (a) of the
same rule.” Bemben, 2003 WL 2146709, at *1; Milligan v. Citibank, N.A., No. 00 CIV. 2793 (AGS),
2001 WL 1135943, at *9 (S.D.N.Y. Sept. 26, 2001) (“Rule 15(d) motions are evaluated under the
same standards as Rule 15(a) motions.”). Accordingly, “[d]istrict courts in this circuit have construed
motions made under Rule 15(a), but which should have been made under Rule 15(d) (or vice versa),
as if they had been brought under the correct rule.” Wertzberger v. Shapiro, DiCaro & Barak LLC, 19CV-4272 (MKB), 2021 WL 327619 (E.D.N.Y. Feb. 1, 2021) (collecting cases); cf. Wright & Miller §
1510 (“the court should . . . determine the merits of the [Rule 15(d)] application as if it had been
properly made under Rule 15(a) or Rule 15(b) in the first instance”).
IV.

DISCUSSION
Both of the claims Best Brands seeks to add to its answer are futile. Best Brands’ proposed

crossclaim against GennComm is futile because it could not withstand a motion to dismiss for lack
of personal jurisdiction. Best Brands’ proposed counterclaim against Beverly Hills is futile because
it seeks declaratory judgment that is wholly duplicative of the claims and defenses that the parties
have already asserted, and the Court would therefore exercise its discretion under the Declaratory
Judgment Act to dismiss the claim. Because those two futile claims encompass all of the substantial
changes in Best Brands’ proposed supplemental answer, the motion to supplement the answer is

6

denied. 2
A. Proposed Crossclaim Against GennComm
Best Brands’ proposed answer would fail to establish that the Court has personal jurisdiction
over GennComm to hear Best Brands’ proposed crossclaim. The answer alleges that the Court has
personal jurisdiction over GennComm “because GennComm has waived personal jurisdiction in this
action.” Best Brands’ Proposed Answer at 13, ¶ 8. However, neither the proposed answer nor
anything in the record establishes that GennComm has waived or forfeited its right to contest
personal jurisdiction in this case. 3 Because Best Brands’ answer would not establish the Court’s
personal jurisdiction over GennComm for the proposed crossclaim, that crossclaim is futile.
A district court may deny a party’s motion to supplement when the proposed pleading would
add a claim against a party over which the court lacks personal jurisdiction. See, e.g., Spiegel v.
Schulmann, 604 F.3d 72, 78 (2d Cir. 2010) (district court did not abuse its discretion when it found

2 The Court also reads the proposed supplemental answer to include separate claims for damages under N.Y. Judiciary
Law § 487 against Beverly Hills, GennComm, and their respective attorneys. See Best Brands’ Proposed Answer at 23, ¶
75, 26, ¶ 99. Although the only references to § 487 appear under the proposed claims for declaratory relief, the
proposed answer seeks an award of “treble damages,” suggesting that Best Brands intended to propose a substantive
claim under § 487 rather than to seek declaratory judgment that § 487 had been violated. See id. at 28, ¶ L. Whatever
Best Brands’ intentions, the proposed claim is futile. First, N.Y. Judiciary Law § 487 only authorizes civil actions against
attorneys, not their clients. See Vayani v. 146 W. 29th St. Owners Corp., No. 16-CV-1774 (JGK), 2017 WL 3476046, at *8
n. 11 (S.D.N.Y. Aug. 11, 2017), aff’d, 726 F. App’x 71 (2d Cir. 2018) (dismissing claims against clients because § 487
“only applies to attorneys or counselors”); Polanco v. NCO Portfolio Management, Inc., 23 F. Supp. 3d 363, 376–77 (S.D.N.Y.
2014) (dismissing claim against client on theory of derivative liability but acknowledging disagreement in the law);
Yalkowsky v. Century Apartments Assocs., 626 N.Y.S.2d 181, 182 (1st Dep’t 1995) (“§ 487 . . . is only applicable to attorneys
and cannot extend derivative liability to a client”). None of the attorneys alluded to in Best Brands’ allegations is a party
to this action, nor has Best Brands proposed that any of the attorneys be joined. Second, the proposed answer makes no
attempt to establish the Court’s personal jurisdiction over the attorneys it accuses of violating § 487. Third, the
proposed answer makes no attempt to establish the Court’s subject matter jurisdiction over the proposed § 487 claims.
Fourth, to the extent that the proposed § 487 claims rest on conduct undertaken in connection with the California state
court case between Beverly Hills and GennComm, it fails to state a claim under § 487, which does not apply to conduct
outside New York. See Schertenleib v. Traum, 589 F.2d 1156, 1166 (2d Cir. 1978). For all of those reasons, the proposed §
487 claims would not survive a motion to dismiss and are therefore futile.
3 The proposed answer also alleges that the Court has personal jurisdiction over GennComm because it has “availed
itself of the privileges and protections of the laws of the State of New York such that this Court’s assertion of
jurisdiction over GennComm does not offend traditional notions of fair play and due process, and/or GennComm
should reasonably expect its actions to have consequences in New York and in this judicial district.” Best Brands’
Proposed Answer at 14, ¶ 8. Because this allegation merely recites the relevant legal standards, it does not contribute to
the allegation of facts necessary to make a prima facie showing of personal jurisdiction. See S. New England Tel. Co. v. Glob.
NAPs Inc., 624 F.3d 123, 138 (2d Cir. 2010) (prima facie showing must be made through “an averment of facts”).

7

that because “Plaintiffs had failed to demonstrate personal jurisdiction . . . allowing such an
amendment would be futile”); Simmons v. Nat’l R.R. Passenger Corp., No. 19 CIV. 6986 (LGS), 2020
WL 2904847, at *5 (S.D.N.Y. June 3, 2020) (finding that an amendment would be futile because it
would not establish personal jurisdiction over the defendant). “A plaintiff bears the burden of
demonstrating personal jurisdiction over a person or entity against whom it seeks to bring suit.”
Troma Ent., Inc. v. Centennial Pictures Inc., 729 F.3d 215, 217 (2d Cir. 2013) (citation omitted). That
burden is modest: to survive a motion to dismiss, “plaintiffs need only make a prima facie showing
of personal jurisdiction.” S. New England Tel. Co., 624 F.3d at 138 (citation omitted). “This showing
may be made through the plaintiff ’s ‘own affidavits and supporting materials, containing an
averment of facts that, if credited, would suffice to establish jurisdiction over the defendant.’” Id.
(quoting Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 2001)).
Best Brands attempts to make such a showing by arguing that GennComm has waived or
forfeited any objection to personal jurisdiction by participating in this litigation without making a
motion to dismiss under Rule 12(b)(2) or raising personal jurisdiction in an answer to Beverly Hills’
complaint. That showing is insufficient.
“[I]n determining whether waiver or forfeiture of objections to personal jurisdiction
has occurred, ‘we consider all of the relevant circumstances.’” Mattel, Inc. v. Barbie–
Club.com, 310 F.3d 293, 307 (2d Cir.2002) (quoting Hamilton v. Atlas Turner, Inc., 197
F.3d 58, 61 (2d Cir.1999), cert. denied, 530 U.S. 1244 (2000)). It is well established that
a party forfeits its defense of lack of personal jurisdiction by failing timely to raise the
defense in its initial responsive pleading. See Fed. R. Civ. P. 12(h). But there are
“various [additional] reasons a defendant may be estopped from raising the issue.” Ins.
Corp. of Ireland, 456 U.S. at 704. A court will obtain, through implied consent, personal
jurisdiction over a defendant if “[t]he actions of the defendant [during the
litigation] . . . amount to a legal submission to the jurisdiction of the court, whether
voluntary or not.” Id. at 704–05.
City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 133–34 (2d Cir. 2011) (alterations in
original).
A party’s actions during litigation, if sufficiently pervasive, may cause a party to forfeit its
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personal jurisdiction defense even if it raises the defense in a timely manner. See Hamilton, 197 F.3d
at 61–63 (defense forfeited after party raised defense in answer but did not move to dismiss until the
eve of trial, four years later); Mattel, Inc. v. Animefun Store, 18 Civ. 8824 (LAP), 2020 WL 2097624, at
*4 (S.D.N.Y. May 1, 2020) (defense forfeited after party raised defense in answer but did not move to
dismiss for seven months, following extensive discovery in which it filed a motion to compel). “To
waive or forfeit a personal jurisdiction defense, a defendant must give a plaintiff a reasonable
expectation that it will defend the suit on the merits or must cause the court to go to some effort
that would be wasted if personal jurisdiction is later found lacking.” Corporacion Mexicana de
Mantenimiento Integral, S. de R.L. de C.V. v. Pemex-Exploracion y Produccion, 832 F.3d 92, 102 (2d Cir.
2016) (citation omitted).
1. Waiver of GennCom’s Personal Jurisdiction Defense
Best Brands argues in its brief in support of this motion that GennComm has waived its
personal jurisdiction defense because it did not raise the defense before the deadline for filing an
answer under Rule 12(a)(1)(A)(i). See Dkt. No. 201, Best Brands’ Br. in Supp. of Mot. (“Best Brands’
Brief ”) at 1. However, as one treatise aptly explains, “[Rule 12(a)] only deals with the time at which
the pleading must be served and is silent on the question of waiver. [Rule 12(h)] does not call for
the assertion of the defense within the time provided in Rule 12(a) for serving a responsive pleading;
it merely dictates waiver if the defense is not made by motion or included in the responsive pleading,
presumably whenever it may happen to be served.” Wright & Miller § 1391 (3d ed.). Applying the
21-day deadline in Rule 12(a) to a motion to dismiss under Rule 12(b) would requiring adopting “an
overly strict interpretation of the language of Rule 12(a) and Rule 12(h)(1).” Luv N’ Care, Ltd. v.
Babelito, S.A., 306 F. Supp. 2d 468, 472 (S.D.N.Y. 2004) (quoting Wright & Miller § 1391 (3d ed.))
(finding that a motion under Rule 12(b)(2) after the deadline to file an answer need only be made in
a generally timely manner); see also Hedeen Intern., LLC v. Zing Toys, Inc., 811 F.3d 904, 906 (7th Cir.
9

2016) (citing Wright & Miller § 1391 (3d ed.)); Chang Young Bak v. Metro-N. R. Co., 12 CV 3220, 2013
WL 1248581, at *2 (S.D.N.Y. Mar. 26, 2013) (“[c]ourts have . . . been willing to proceed to the merits
of a motion to dismiss for lack of personal jurisdiction even when it is arguably untimely”).
Because GennComm has not yet filed an answer, it has not waived its personal jurisdiction defense.
Best Brands argues that GennComm waived its personal jurisdiction defense by filing a brief
in opposition to Best Brands’ motion to compel discovery without repeating its objections to
personal jurisdiction. See Best Brands’ Brief at 2; see also Dkt. No. 192 at 1, GennComm’s Br. in
Opp’n to Best Brands’ Mot. to Compel (arguing that contesting personal jurisdiction was
unnecessary because Best Brands filed its motion to compel in the wrong court). But the
consolidation requirement established by Rule 12(g)(2) and Rule 12(h)(1)(A) has no bearing on
which defenses parties must raise in briefings on other parties’ motions. Nor does failing to object
to personal jurisdiction in every briefing burden the court or suggest that a party intends to defend a
suit on the merits. GennComm therefore did not waive or forfeit its personal jurisdiction defense
when it chose not to oppose Best Brands’ motion to compel on personal jurisdiction grounds.
2. Forfeiture of GennComm’s Personal Jurisdiction Defense
Best Brands alleges in its proposed answer that GennComm has forfeited its personal
jurisdiction defense by generally participating in this action. See Best Brands’ Proposed Answer at
13–14, ¶ 8; see also Best Brands’ Brief at 2. However, while GennComm has joined conferences in
this case and filed briefs on other parties’ motions, it has not taken an active role: it has not filed any
motions, asserted any claims, sought any discovery, or otherwise given any indication that it intends
to “defend the suit on the merits.” See Pemex-Exploracion y Produccion, 832 F.3d at 101–02 (finding
such an indication when a defendant “affirmatively and successfully sought relief ” from the court in
the form of “additional proceedings addressed to the merits”). To the contrary, GennComm has
maintained that it is not subject to the jurisdiction of this Court. See Dkt. No. 188, Tr. of April 8,
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2021, Conference at 21:4–13; Dkt. No. 199, Letter from Counsel for GennComm (proposing to file
a motion to dismiss for lack of jurisdiction).
GennComm and Beverly Hills’ application to the Court for a consent judgment dismissing
Beverly Hills’ claim against GennComm conditioned GennComm’s consent to personal jurisdiction
on the Court’s approval of the judgment. See Dkt. No. 130, ¶ 1. Far from forfeiting any
jurisdictional defense, this application made clear that GennComm would not consent to defend the
suit on the merits and that it would submit to personal jurisdiction only if it were permitted to settle
the suit. Id. Because the Court declined to enter the requested consent judgment, see Dkt. No. 141,
GennComm did not consent to personal jurisdiction.
In sum, GennComm has neither waived by delay nor forfeited by litigation its right to
contest personal jurisdiction in this matter. Nor has Best Brands attempted to establish any other
basis for personal jurisdiction over GennComm in connection with its proposed crossclaim. The
proposed crossclaim therefore would not survive a motion to dismiss under Rule 12(b)(2) and is
thus futile.
B. Proposed Counterclaim Against Beverly Hills
Best Brands’ proposed counterclaim against Beverly Hills asks the Court to grant declaratory
judgment on issues that the Court will inevitably address in the context of Beverly Hills’ copyright
infringement claim. The issues all relate to whether Beverly Hills had standing to bring this suit, a
question which Best Brands has already raised as an affirmative defense. Because the Court would
exercise its discretion under the Declaratory Judgment Act to dismiss a claim for redundant relief,
Beverly Hills’ proposed crossclaim is futile.
“In a case of actual controversy within its jurisdiction . . . any court of the United States,
upon the filing of an appropriate pleading, may declare the rights and other legal relations of any
interested party seeking such declaration, whether or not further relief is or could be sought.” 28
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U.S.C. § 2201(a). “The Declaratory Judgment Act by its express terms vests a district court with
discretion to determine whether it will exert jurisdiction over a proposed declaratory action or not.”
Dow Jones & Co., Inc. v. Harrods Ltd., 346 F.3d 357, 359 (2d Cir. 2003). A court may exercise its
discretion in various procedural contexts, including when it considers a motion to dismiss. See id. at
359–360 (district court did not abuse its discretion in dismissing a claim for declaratory judgment in
response to a motion to dismiss under Rule 12(b)(1) and Rule 12(b)(2)). It follows, therefore, that a
court may deny as futile a party’s motion to amend when the amendment asserts a claim for
declaratory judgment over which the court would decline to exercise jurisdiction. Cf., e.g., S. Bos.
Mgmt. Corp. v. BP Prod. N. Am. Inc., No. 03 CIV 6845 (RBM) (RLE), 2004 WL 2624891, at *2
(S.D.N.Y. Nov. 18, 2004) (assessing the utility of declaratory judgment sought in a motion to amend).
[T]o guide the exercise of discretion in Declaratory Judgment Act cases . . . [the
Second Circuit has] articulated a simple test that asks (1) whether the judgment will
serve a useful purpose in clarifying or settling the legal issues involved; and (2) whether
a judgment would finalize the controversy and offer relief from uncertainty. See
Broadview Chemical Corp. v. Loctite Corp., 417 F.2d 998, 1001 (2d Cir. 1969). Other
circuits have built upon this test, to ask also: ([3]) whether the proposed remedy is
being used merely for ‘procedural fencing’ or a ‘race to res judicata’; ([4]) whether the
use of a declaratory judgment would increase friction between sovereign legal systems
or improperly encroach on the domain of a state or foreign court; and ([5]) whether
there is a better or more effective remedy.
Dow Jones, 346 F.3d at 359–360 (citations omitted).
Courts may entertain declaratory judgment counterclaims in suits for intellectual property
infringement where the counterclaims seek a declaration of invalidity. See, e.g., King-Devick Tes Inc. v.
NYU Langone Hosps., No. 17-CV-9307 (JPO), 2019 WL 78986, at *3 (S.D.N.Y. Jan. 2, 2019) (denying
a motion to dismiss a counterclaim seeking declaratory judgment of copyright invalidity); see also
Altvater v. Freeman, 319 U.S. 359, 363 (1943) (“the issue of validity may be raised by a counterclaim in
an infringement suit”); Leach v. Ross Heater & Mfg. Co., 104 F.2d 88, 89–92 (2d Cir. 1939)
(counterclaim for declaratory judgment of invalidity is useful because “the patentee may, for all that
the defendant knows, withdraw his suit without prejudice and continue broadcasting assertions of
12

infringement”); Wright & Miller § 2761 (3d ed.). But “[w]hen a counterclaim is merely the ‘mirror
image’ of an opposing party’s claim and the counterclaim serves no independent purpose, the
counterclaim may be dismissed. In determining whether a counterclaim is merely a mirror image of
a claim, the court must consider whether a case or controversy would still exist in connection with
the counterclaim if the court entered a judgment dismissing the opponent’s claim.” Worldwide Home
Products, Inc. v. Bed Bath and Beyond, Inc., No. 11 CIV. 03633 LTS, 2013 WL 247839, at *2 (S.D.N.Y. Jan.
22, 2013) (citing Arista Records LLC v. Usenet.com, Inc., No. 07 Civ. 8822, 2008 WL 4974823, at *3
(S.D.N.Y. Nov. 24, 2008)); see also Larson v. Gen. Motors Corp., 134 F.2d 450, 453 (2d Cir. 1943)
(dismissing a claim for declaratory relief as failing to raise an independent case or controversy
following dismissal of the substantive claim to which it was opposed); Maverick Recording Co. v.
Chowdhury, Nos. CV-07cv200 (DGT), CV-07-640 (DGT), 2008 WL 3884350, at *2 (E.D.N.Y. Aug.
19, 2008) (“a counterclaim seeking a declaration of non-infringement will be viable only when it
presents an independent case or controversy that would survive a dismissal of the plaintiff's
infringement claim”).
Three of the five factors listed by the Second Circuit in Dow Jones weigh decisively against the
Court entertaining Best Brands’ claim for declaratory relief. First, the proposed declaratory
judgment would serve no “useful purpose in clarifying and settling the legal relations at issue.” Dow
Jones, 346 F.3d at 359. Although resolving the question of Beverly Hills’ standing at filing would
bring much-needed clarity to this case, couching that question as a claim for declaratory judgment
does nothing to speed its resolution. Because Best Brands has already asserted standing as an
affirmative defense, see Dkt. No. 121 at 9, the Court anticipates that the issue presented in the
proposed counterclaim will be thoroughly considered in this case. Nor is this a case where the
defendant would be prejudiced if the case were resolved without answering the question on which it
seeks declaratory judgment: if the case were to be dismissed or settled before the Court resolves the
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standing issue, Best Brands’ claim for declaratory relief would become moot. Best Brands’
counterclaim is therefore a wholly redundant “mirror claim.” See Worldwide Home Products, Inc., 2013
WL 247839, at *2.
Second, the proposed declaratory judgment would do nothing to remedy the “uncertainty,
insecurity, and controversy giving rise to the proceeding.” Dow Jones, 346 F.3d at 359. Declaring that
Beverly Hills lacked standing to bring this suit would terminate the suit without resolving the
controversy that gave rise to it—i.e., Beverly Hills’ claim that Best Brands infringed on its copyrights.
The parties’ legal relations would be no clearer than they were before the suit began.
Third, Best Brands has access to “a better or more effective remedy,” id. at 360, in the
procedure for asserting affirmative defenses set out in the Federal Rules, see Fed. R. Civ. P. 12(b). Of
course, “[t]he existence of another adequate remedy does not preclude a declaratory judgment that
is otherwise appropriate.” Fed. R. Civ. P. 57. But where, as here, an ordinary procedural mechanism
is available, the Court is not obliged to grant the party’s request to cobble together an alternative
mechanism. Indeed, Best Brands has already availed itself of the ordinary procedural mechanism by
asserting affirmative defenses of standing and non-ownership. See Dkt. No. 121 at 9 (“Plaintiff ’s
claims are barred by lack of standing” and “Plaintiff ’s claims are barred as Plaintiff is not the owner
of the Copyright Registrations that it has asserted”). Recasting those affirmative defenses as claims
for declaratory judgment does not strengthen the defenses and only unnecessarily complicates the
pleadings.
Best Brands argues that its proposed counterclaim “cannot be duplicative of prior defenses”
because it is based on conduct that occurred after Best Brands’ most recent amended answer. See
Dkt. No. 200 at 6. While Best Brands’ proposed counterclaim includes facts that could not have
been alleged in Best Brands’ most recent amended answer, the claim itself and the relief sought for
it are fully encapsulated by the affirmative defenses Best Brands has already asserted. See Dkt. No.
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121 at 9. The proposed counterclaim is therefore duplicative of existing claims and defenses, even
if it includes additional facts.
V.

CONCLUSION
Because all of the claims in Best Brands’ proposed supplemental answer are futile, Best

Brands’ motion to supplement (styled as a motion to amend) is DENIED.
The Clerk of Court is directed to terminate the motion pending at Dkt. No. 186.
SO ORDERED.
Dated: June 21, 2021
New York, New York

__________________________________
GREGORY H. WOODS
United States District Judge

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