Kim v. Coach, Inc, et al

Filing 21

AMENDED ANSWER to First 4 Amended Complaint, Amended COUNTERCLAIM against plaintiff Gina Kim by Coach, Inc.. (Keehnel, Stellman)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 v. COACH, INC., a Maryland corporation, and COACH SERVICES, INC., a Maryland corporation, Defendants, and, as to Coach, Inc., counterclaim plaintiff.

THE HONORABLE RICARDO S. MARTINEZ

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE GINA KIM, on behalf of a class consisting of herself and all other persons similarly situated, Plaintiffs, and as to Ms. Kim, counterclaim defendant, NO. 2:11-cv-00214-RSM COACH, INC.'S AMENDED ANSWER, DEFENSES, AND AFFIRMATIVE DEFENSES TO FIRST AMENDED COMPLAINT, AND AMENDED COUNTERCLAIM

Pursuant to Federal Rule of Civil Procedure 15(a)(1), defendant Coach, Inc. ( "Coach") hereby submits its amended answer to the First Amended Complaint (the "Amended Complaint") filed by plaintiff Gina Kim on behalf of a putative class consisting of Ms. Kim and all other Washington residents similarly situated, and filed by plaintiffs Jay Carlson, Carlson Legal, Christopher Carney, Carney Gillespie & Isitt PLLC, Jason B. Moore, and Van Eyk & Moore, PLLC. Coach's amended answer, defenses, affirmative defenses, and amended counterclaim are based on information and knowledge thus far secured by Coach, and Coach
AMENDED ANSWER, DEFENSES, AND AFFIRMATIVE DEFENSES TO FIRST AMENDED COMPLAINT, AND AMENDED COUNTERCLAIM ­ 1 NO. 2:11-cv-00214-RSM DLA Piper LLP (US) 701 Fifth Avenue, Suite 7000 Seattle, WA 98104-7044 Tel: [phone]

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reserves the right to amend or supplement its amended answer, defenses, affirmative defenses, and amended counterclaim based on facts later discovered, pleaded, or offered. To the extent that any express or implied allegations in the Amended Complaint are not specifically admitted herein, Coach hereby denies any such allegations. ANSWER TO THE FIRST AMENDED COMPLAINT SUMMARY Coach denies each and every allegation in plaintiffs' "Summary," except to admit that its law firm Gibney, Anthony & Flaherty, LLP ("Gibney") monitors certain items listed for sale on eBay, that Gibney alerts eBay when counterfeit Coach products are detected, that Gibney delivers communications to sellers when counterfeit Coach products are detected, and that Ms. Kim is a former Coach employee. Coach specifically denies that it "is trying to force all consumers to purchase Coach products" only in Coach's retail stores. Coach specifically denies that it "wantonly accuses consumers of infringing its trademarks . . . ." Coach specifically denies that it makes any accusations of counterfeiting "[w]ithout investigating the validity of its allegations . . . ." Coach specifically denies that it "fails to conduct even a minimally reasonable investigation into its counterfeiting claims . . . ." I. NATURE OF PLAINTIFF'S CLAIMS

To the extent that this section contains allegations of fact, Coach denies the allegations contained therein, except to state that counsel for Coach indicated to counsel for Ms. Kim that counsel for Ms. Kim had committed actionable defamation that would be the subject of a claim. Coach specifically denies that any threats were made. II. 1. PARTIES Coach denies that Ms. Kim is representative of any purported class in this

matter. As to the remaining allegations in Paragraph 1, Coach lacks sufficient knowledge or information to form a belief as to the truth of the allegations contained therein and, on that basis, denies such allegations.

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2.

Coach denies that the putative class described in Paragraph 2 is valid under

Fed.R.Civ.P. 23. As to the remaining allegations in Paragraph 2, Coach lacks sufficient knowledge or information to form a belief as to the truth of the allegations contained therein and, on that basis, denies such allegations. 3. Coach admits that Coach, Inc. and Coach Services, Inc. are Maryland

corporations and that their principal places of business are not in Washington. The meaning of the term "extensive" is undefined and, on that basis, Coach denies the remaining allegations in Paragraph 3. 4. Coach denies that counsel for Ms. Kim "have been directly threatened with a

defamation lawsuit by Coach's counsel." As to the remaining allegations in Paragraph 4, Coach lacks sufficient knowledge or information to form a belief as to the truth of the allegations contained therein and, on that basis, denies such allegations, except to acknowledge that Ms. Kim's lawyers have been made named plaintiffs in this lawsuit. III. 1. JURISDICTION AND VENUE Answering Paragraph 1, Coach lacks sufficient knowledge or information to

form a belief as to the truth of the allegations contained therein and, on that basis, denies such allegations. 2. Paragraph 2 contains legal conclusions to which no response is necessary. To

the extent that Paragraph 2 contains allegations of fact, Coach admits that the Amended Complaint purports to invoke jurisdiction under 28 U.S.C. §§ 1331, 1332, 1367, and 2201-02. 3. Coach admits that it markets and sells trademarked goods in Washington.

Coach denies the remaining allegations in Paragraph 3. 4. Paragraph 4 contains legal conclusions to which no response is necessary. To

the extent that Paragraph 4 contains allegations of fact, Coach admits that the Amended Complaint purports to invoke venue under 28 U.S.C. §§ 1391(a), (b), & (c).

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 herein.

IV. 1.

FACTS COMMON TO ALL COUNTS Answering Paragraph 1, Coach lacks sufficient knowledge or information to

form a belief as to the truth of the allegations contained therein and, on that basis, denies such allegations. 2. Answering Paragraph 2, Coach lacks sufficient knowledge or information to

form a belief as to the truth of the allegations contained therein and, on that basis, denies such allegations. 1. "VIOLATION OF THE WASHINGTON CONSUMER PROTECTION ACT" 1. Coach incorporates and realleges the preceding paragraphs as if set forth fully

2.

Paragraph 2 contains legal conclusions to which no response is necessary. To

the extent that Paragraph 2 contains allegations of fact, Coach lacks sufficient knowledge or information to form a belief as to the truth of the allegations contained therein and, on that basis, denies such allegations. 3. Coach admits that, in October 2010, Gibney notified eBay that Gibney believed,

on the basis of Ms. Kim's eBay listing, that a handbag listed for sale by Ms. Kim is counterfeit and infringed Coach's trademarks. Coach denies the remaining allegations in Paragraph 3. Coach specifically denies that it acted "without conducting any reasonable investigation." 4. Coach admits that the listing referenced in the preceding paragraph was briefly

removed from eBay but denies that Ms. Kim's characterization, which implies that the listing was never re-instated, is accurate. Coach further denies that it made any claims at all. As to the remaining allegations in Paragraph 4, Coach lacks sufficient knowledge or information to form a belief as to the truth of the allegations contained therein and, on that basis, denies such allegations.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 herein. 2.

5.

Coach admits that, on or about October 8, 2010, Gibney sent a letter to Ms. Kim

regarding her eBay listing. Coach denies that Ms. Kim's characterization of the letter is accurate or complete, and submits that the letter is the best evidence of its contents. 6. Answering Paragraph 6, Coach lacks sufficient knowledge or information to

form a belief as to the truth of the allegations contained therein and, on that basis, denies such allegations. 7. 8. 9. 10. 11. Coach denies the allegations contained in Paragraph 7. Coach denies the allegations contained in Paragraph 8. Coach denies the allegations contained in Paragraph 9. Coach denies the allegations contained in Paragraph 10. Coach denies the allegations contained in Paragraph 11.

"MISREPRESENTATION OF TRADEMARK INFRINGEMENT IN VIOLATION OF 17 U.S.C. 512(f), AND DECLARATORY JUDGMENT" 1. Coach incorporates and realleges the preceding paragraphs as if set forth fully

2. 3.

Coach admits the allegations in Paragraph 2. Coach admits that, in October 2010, Gibney notified eBay that Gibney believed,

on the basis of Ms. Kim's eBay listing, that a handbag listed for sale by Ms. Kim is counterfeit and infringed Coach's trademarks. Coach denies the remaining allegations in Paragraph 3. 4. Coach admits that, on October 8, 2010, Gibney sent a letter to Ms. Kim

regarding her eBay listing. Coach denies that Ms. Kim's characterization of the letter is accurate or complete, and submits that the letter is the best evidence of its contents. Coach denies the remaining allegations in Paragraph 4. 5. Answering Paragraph 5, Coach lacks sufficient knowledge or information to

form a belief as to the truth of the allegations contained therein and, on that basis, denies such allegations.
AMENDED ANSWER, DEFENSES, AND AFFIRMATIVE DEFENSES TO FIRST AMENDED COMPLAINT, AND AMENDED COUNTERCLAIM - 5 NO. 2:11-cv-00214-RSM DLA Piper LLP (US) 701 Fifth Avenue, Suite 7000 Seattle, WA 98104-7044 Tel: [phone]

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 herein. 4. herein. 3.

6. 7. 8. 9.

Coach denies the allegations in Paragraph 6. Coach denies the allegations in Paragraph 7. Coach denies the allegations in Paragraph 8. Coach denies the allegations in Paragraph 9.

"DEFAMATION BY DEFENDANT AGAINST PLAINTIFF" 1. Coach incorporates and realleges the preceding paragraphs as if set forth fully

2.

Coach admits that, in October 2010, Gibney notified eBay that Gibney believed,

on the basis of Ms. Kim's eBay listing, that a handbag listed for sale by Ms. Kim is counterfeit and infringed Coach's trademarks. Coach denies the remaining allegations in Paragraph 2. 3. 4. Coach denies the allegations in Paragraph 3. Answering Paragraph 4, Coach lacks sufficient knowledge or information to

form a belief as to the truth of the allegations contained therein and, on that basis, denies such allegations. 5. 6. 7. Coach denies the allegations in Paragraph 5. Coach denies the allegations in Paragraph 6. Coach denies the allegations in Paragraph 7.

"TORTIOUS INTERFERENCE WITH A BUSINESS EXPECTANCY" 1. Coach incorporates and realleges the preceding paragraphs as if set forth fully

2.

Coach admits that, in October 2010, Gibney notified eBay that Gibney believed,

on the basis of Ms. Kim's eBay listing, that a handbag listed for sale by Ms. Kim is counterfeit and infringed Coach's trademarks. Coach denies the remaining allegations in Paragraph 2. 3. Coach admits that, on October 8, 2010, Gibney sent a letter to Ms. Kim

regarding her eBay listing. Coach denies that Ms. Kim's characterization of the letter is accurate or complete, and submits that the letter is the best evidence of its contents.
AMENDED ANSWER, DEFENSES, AND AFFIRMATIVE DEFENSES TO FIRST AMENDED COMPLAINT, AND AMENDED COUNTERCLAIM - 6 NO. 2:11-cv-00214-RSM DLA Piper LLP (US) 701 Fifth Avenue, Suite 7000 Seattle, WA 98104-7044 Tel: [phone]

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4. 5.

Coach denies the allegations in Paragraph 4. Coach denies the allegations in Paragraph 5.

"DECLARATION OF NO DEFAMATION BY PLAINTIFF'S COUNSEL" 1. Coach admits that it has hired counsel named Stellman Keehnel, who practices

at DLA Piper in Seattle. Coach further admits that Mr. Keehnel has been in communication with counsel for Ms. Kim. Coach further admits that, as of the filing of the Amended Complaint, Mr. Keehnel had not yet filed a notice of appearance in this matter because there was no occasion to do so, as the time for Coach to appear and respond, following service of process, had not run. Coach denies the remaining allegations in Paragraph 1. Coach specifically denies that Mr. Keehnel has been in "regular communication" with counsel for Ms. Kim. Coach specifically denies that Mr. Keehnel was under any obligation to appear in this case because of "repeated written and oral requests" to appear. 2. Coach denies that Mr. Keehnel sent counsel for Ms. Kim a letter dated February

27, 2011. Coach denies that counsel for Ms. Kim's characterization of any letter sent by Mr. Keehnel is accurate or complete, and submits that the best evidence of the contents of any letter sent to Ms. Kim's counsel is such letter. 3. Coach again denies that Mr. Keehnel sent counsel for Ms. Kim a letter dated

February 27, 2011. Coach admits that, in a February 17, 2011 letter, Mr. Keehnel informed counsel for Ms. Kim that they committed defamation. Coach denies that counsel for Ms. Kim's characterization of any letter sent by Mr. Keehnel is accurate or complete, and submits that the best evidence of the contents of any letter sent to Ms. Kim's counsel is such letter. 4. Coach denies that any "threat" was made. Coach admits that Mr. Keehnel

informed counsel for Ms. Kim that counsel for Ms. Kim committed defamation and that a claim would be filed. Coach denies the remaining allegations in Paragraph 4. 5. Coach denies the allegations in Paragraph 5.

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6.

Coach denies that the description of counsel for Ms. Kim's actions during the

interview ­ that they "repeated the allegations in the Complaint and answered questions about the case" ­ is accurate or complete. As to the remaining allegations in Paragraph 6, Coach lacks sufficient knowledge or information to form a belief as to the truth of the allegations contained therein and, on that basis, denies such allegations. 7. Coach admits that Gibney sent Ms. Kim a letter, although Coach denies that

counsel for Ms. Kim's characterization of the letter is accurate or complete, and submits that the letter is the best evidence of its contents. Coach admits that Ms. Kim is a former Coach employee. Coach lacks sufficient knowledge or information to form a belief as to the truth of the allegation that "[t]he actual product was depicted in photographs taken by Ms. Kim and posted in the eBay.com advertisement . . . ." Coach denies the remaining allegations in Paragraph 7. Coach specifically denies that the defamatory statements by counsel for Ms. Kim were substantially true. Coach specifically denies that Coach "failed to reasonably investigate" the authenticity of the product. Coach specifically denies that "[i]f Coach had reasonably investigated that issue, they could have easily discovered that the product was genuine." Coach specifically denies that counsel for Ms. Kim had a "good faith basis to assert that Coach failed to investigate, and the statement was substantially true." Coach specifically denies that "[t]here has been no defamation against Coach." 8. Coach admits that its brand is famous. Coach lacks sufficient knowledge or

information to form a belief as to the truth of the allegation regarding "the reason the media was interested in this Complaint in the first place . . . ." The meaning of the phrase "great deal of money" is undefined and, on that basis, Coach denies the allegation regarding the amount of money it spends on marketing. Coach denies the remaining allegations in Paragraph 8. 9. Coach denies the allegations in Paragraph 9.

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V. 1.

CLASS ALLEGATIONS Paragraph 1 contains legal conclusions to which no response is necessary. To

the extent that Paragraph 1 contains allegations of fact, Coach denies the allegations in Paragraph 1. 2. 3. Coach denies the allegations in Paragraph 2. Paragraph 3 contains legal conclusions to which no response is necessary. To

the extent that Paragraph 3 contains allegations of fact, Coach denies the allegations in Paragraph 3. 4. 5. 6. 7. 8. VI. Coach denies the allegations in Paragraph 4. Coach denies the allegations in Paragraph 5. Coach denies the allegations in Paragraph 6. Coach denies the allegations in Paragraph 7. No response is necessary to Paragraph 8. PRAYER FOR RELIEF

Coach denies that Ms. Kim is entitled to the relief sought in the Amended Complaint or to any other relief. DEFENSES AND AFFIRMATIVE DEFENSES As separate and distinct defenses and affirmative defenses to the Amended Complaint, Coach further alleges as follows, without admission that Coach carries the burden of proof on any of the defenses set forth below: 1. Failure to State a Claim. The Amended Complaint fails to state a claim for

which relief can be granted. 2. Unclean Hands. Ms. Kim is not entitled to obtain recovery for damages she has

incurred, if any, arising out of her own wrongful conduct. 3. Prior Breach. Each and every one of Ms. Kim's causes of action in the

Amended Complaint is barred by the doctrine of prior breach.
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4.

Intervening Cause. Each and every one of Ms. Kim's causes of action in the

Amended Complaint is barred by the doctrine of intervening cause. 5. Kim's Own Conduct. Each and every one of Ms. Kim's causes of action in the

Amended Complaint is barred by Ms. Kim's own conduct. 6. Estoppel. Each and every one of Ms. Kim's causes of action in the Amended

Complaint is barred by the doctrine of estoppel. 7. Justification. Each and every one of Ms. Kim's causes of action in the

Amended Complaint is barred by the doctrine of justification. 8. 9. Truth. Ms. Kim's claim for defamation is barred by the doctrine of truth. Lack of Damages. The Amended Complaint, and each purported claim by

Ms. Kim for relief therein, is barred because Ms. Kim has not suffered any damages as a result of any acts, conduct, or omissions by Coach. 10. Failure to Mitigate. Ms. Kim is precluded from pursuing her Amended

Complaint and each claim for relief therein because Ms. Kim has failed to mitigate her damages, if any, which she seeks to recover. 11. Successful Mitigation of Damages. Ms. Kim is precluded from pursuing her

Amended Complaint and each claim for relief therein because Ms. Kim has successfully mitigated her damages, such that there are no damages to recover. 12. Justifiable Reliance. Coach justifiably relied on Ms. Kim's false statement that

the subject bag is "NEW." In fact, the subject bag was six or seven years old at the time Ms. Kim falsely represented that the bag is "NEW." 13. 14. requirement. 15. Counsel Not Qualified. Ms. Kim's selected counsel are not qualified to serve No Typicality. Ms. Kim is not typical of the class she purports to represent. No Numerosity. The putative class does not satisfy the numerosity

as class counsel.
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16. inappropriate. 17.

No Predominance. Individual issues predominate, rendering class treatment

Failure to Join Necessary Party. Each and every one of Ms. Kim's causes of

action in the Amended Complaint is barred by Ms. Kim's failure to join a necessary party. 18. Right to Assert Additional Defenses. The above defenses and affirmative

defenses are based on the facts and information currently known to Coach. Coach reserves the right to amend or add defenses or affirmative defenses based on facts later discovered, pleaded or offered.

COUNTERCLAIM FOR DECLARATORY RELIEF Counterclaim plaintiff Coach, Inc. ("Coach") alleges as follows: PARTIES 1. Plaintiff Coach, Inc. is a Maryland corporation with its principal place of

business in New York, NY. 2. Washington. JURISDICTION AND VENUE 6. § 1367. 7. Venue is proper in this District under 28 U.S.C. § 1391 because, on information This Court has supplemental jurisdiction over this counterclaim under 28 U.S.C. Declaratory judgment defendant Gina Kim is a resident of King County,

and belief, this is a civil action wherein jurisdiction is not founded solely on diversity of citizenship, and (1) all of the defendants reside in the same state, and at least one defendant resides in this District; and (2) this is the district where a substantial part of the events or omissions giving rise to the claim occurred.

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GENERAL ALLEGATIONS Coach is a leading designer, producer, and marketer of accessories and gifts,

including handbags, business cases, luggage and travel accessories, wallets, outerwear, eyewear, gloves, scarves, fragrance, and fine jewelry bearing the COACH trademark and other associated marks. 9. Coach's reputation for high quality workmanship and creative design is critical

to Coach's business model. Coach relies heavily on the enormous goodwill that it enjoys with respect to its well-known and highly-regarded brand. 10. its business. 11. As with other designers and producers of consumer products, Coach is faced Impairment of Coach's reputation directly diminishes Coach's ability to conduct

with the insurmountable task of policing its intellectual property and protecting itself and consumers from counterfeit merchandise. 12. Removing suspicious listings is a routine function that eBay undertakes in

connection with its efforts to limit the potential for massive counterfeiting on eBay. If eBay were not permitted to remove suspicious listings, it would have no ability to control counterfeiting. Similarly, if intellectual property rights holders were not able to request removal of suspicious listings ­ especially when the listing itself inaccurately describes the product at issue ­ then websites like eBay would be overrun with counterfeit merchandise, to the detriment of the websites, the producers, and consumers. 13. When intellectual property rights holders request the removal of suspicious

listings, they are entitled to rely on the product description in the listing. If intellectual property holders cannot rely on the product description in the listing, then they are powerless to prevent counterfeit products from reaching consumers. 14. In late September or early October 2010, Ms. Kim listed a handbag on

eBay.com as "NEW." Ms. Kim also advertised the bag as a COACH handbag.
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15.

On information and belief, the eBay user agreement that Ms. Kim agreed to

when listing an item on eBay provided that she "will not... post false, inaccurate, [or] misleading . . . content." 16. Acting on behalf of Coach, the law firm Gibney, Anthony & Flaherty LLP

("Gibney") conducted an investigation of the handbag listing. Gibney concluded, correctly, that if the bag were "NEW," it is not an authentic COACH handbag. 17. On information and belief, in October 2010, eBay removed Ms. Kim's handbag

listing for a short time in connection with suspicion that Ms. Kim was selling a counterfeit bag. 18. Shortly after Ms. Kim's listing was removed from eBay, Gibney sent Ms. Kim a

letter, which letter is attached as Exhibit A. Ms. Kim received the letter, contacted Gibney, and her listing with eBay was reinstated almost immediately thereafter. 19. On February 8, 2011, counsel for Ms. Kim filed the above-captioned lawsuit in

this Court. Among the claims asserted was a claim for defamation. It appears that the statements alleged to have been defamatory are (a) a communication by Gibney to eBay allegedly requesting that eBay remove Ms. Kim's listing; and (b) the letter from Gibney to Ms. Kim. 20. Nothing that Gibney communicated was false. A "NEW" bag of the sort that

Ms. Kim was selling would be counterfeit. Gibney reasonably relied on Ms. Kim's description of the item in question in forming this belief. 21. Gibney's letter to Ms. Kim was published only to Ms. Kim. Neither Gibney nor

Coach disseminated the letter. The letter was brought to the attention of the general public only through this lawsuit and through publicity associated with a newscast regarding this lawsuit, participated in by plaintiffs Jay Carlson and Christopher Carney. 22. Coach is entitled to a declaration that Gibney and Coach were entitled to rely on

Ms. Kim's description of the listed bag as "NEW" in her listing, and that no defamation occurred.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 proper. herein.

23.

Even if the defamation claim is dismissed, the propriety of Gibney's actions

goes to the heart of anti-counterfeiting efforts. For this reason, Coach is entitled to a declaratory judgment, independent of the adjudication of Ms. Kim's defamation claim. FIRST CAUSE OF ACTION (Declaration Of No Defamation) 24. Coach incorporates and realleges the preceding paragraphs as if set forth fully

25. 26.

A case of actual controversy exists within this Court's jurisdiction. Coach respectfully requests this Court for a declaration that Gibney and Coach

were entitled to rely on Ms. Kim's description of the listed bag as "NEW" in her listing. 27. occurred. REQUEST FOR RELIEF Coach requests the following relief: 1. 2. Dismissal of the Amended Complaint with prejudice; A declaratory judgment under 28 U.S.C. § 2201 that Gibney and Coach were Coach respectfully requests this Court for a declaration that no defamation

entitled to rely on Ms. Kim's description of the listed bag as "NEW" in her listing. 3. 4. 5. A declaratory judgment under 28 U.S.C. § 2201 that no defamation occurred. An award of costs and reasonable attorneys' fees incurred in this lawsuit; and An award of any such other and further relief as the Court may deem just and

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Dated this 24th day of March, 2011. DLA Piper LLP (US) By: s/ Stellman Keehnel Stellman Keehnel, WSBA No. 9309 R. Omar Riojas, WSBA No. 35400 Patrick Eagan, WSBA No. 42679 DLA Piper LLP (US) 701 Fifth Avenue, Suite 7000 Seattle, WA 98104 Tel: [phone] Fax: [phone] E-mail: [e-mail] E-mail: [e-mail] E-mail: [e-mail] Attorneys for defendant and counterclaim plaintiff Coach, Inc.

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WEST\223319331.1

CERTIFICATE OF SERVICE I hereby certify that on March 24, 2011, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to all counsel of record. Dated this 24th day of March, 2011. /s/ Stellman Keehnel Stellman Keehnel, WSBA No. 9309

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EXHIBIT A