Schieffelin & Co. v. Jack Co. of Boca, Inc.

• Citation: 725 F. Supp. 1314
• Decision Date: 04 December 1989
• Docket Number: No. 89 Civ. 2941 (PKL).,89 Civ. 2941 (PKL).
• Parties: SCHIEFFELIN & CO., Plaintiff, v. The JACK COMPANY OF BOCA, INC. and John P. Calderaio, individually and doing business as The Jack Company, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

725 F. Supp. 1314

SCHIEFFELIN & CO., Plaintiff, v. The JACK COMPANY OF BOCA, INC. and John P. Calderaio, individually and doing business as The Jack Company, Inc., Defendants.

No. 89 Civ. 2941 (PKL).

United States District Court, S.D. New York.

December 4, 1989.

COPYRIGHT MATERIAL OMITTED

Robin, Blecker, Daley & Driscoll, New York City, Marie V. Driscoll, Jon A. Lewis, C. Donald Mohr, of counsel, for plaintiff.

Scully, Scott, Murphy & Presser, Garden City, N.Y., Kenneth L. King, John S. Sensny, of counsel, for defendants.

ORDER & OPINION

LEISURE, District Judge:

Plaintiff Schieffelin & Co. ("Schieffelin") brings this action for injunctive and monetary relief against defendants The Jack Company of Boca, Inc. ("The Jack Company") and its president John P. Calderaio. Schieffelin distributes the champagne Dom Perignon and owns a registered trademark of the champagne's label. Schieffelin alleges that The Jack Company has violated the Federal Trademark Act (the "Lanham Act"), the General Business Law of the State of New York, and New York common law by marketing a popcorn product whose packaging bears a physical resemblance to Schieffelin's champagne label. Schieffelin asks that this Court enter a permanent injunction against the sale or distribution of defendants' popcorn product, order that all labels, advertising, and packaging which infringe on the Dom Perignon trademark be destroyed, and find defendants liable to Schieffelin for all profits realized on the popcorn.

Defendants have filed a motion to dismiss the action against John P. Calderaio for lack of personal jurisdiction, to dismiss the case against all defendants for improper venue or transfer the case to the proper district, and to dismiss certain counts of the complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6). Plaintiff opposes the motion in all respects.

BACKGROUND

Plaintiff owns all rights to trademarks in the name Cuvee Dom Perignon and in a shield design used as a label on Dom Perignon bottles. These trademarks have been registered with the United States Patent and Trademark Office for over twenty years, and Schieffelin claims that they have become "famous" and "symbolize a very valuable business and goodwill belonging exclusively to plaintiff." Complaint, ¶ 9. The trademarked shield is gold with a black leaf design around the perimeter and scripted black writing. The words "Cuvee Dom Perignon" appear in the middle of the shield directly over a horizontally-striped star. Other inscriptions on the label give the year of the vintage, the percentage of alcohol contained by volume, and the words "fondee en 1745," which note the founding year of the winery.

Defendant The Jack Company is a Florida corporation based in Boca Raton, Florida, which markets a variety of products such as T-shirts, jelly beans, and unpopped popcorn. The Jack Company markets its products in several states, and consumption of the products is widely dispersed. The popcorn product is called Champop and is packaged in a champagne bottle of similar proportions to Dom Perignon. More significantly, the label affixed to Champop bottles is of identical shape and color as the Dom Perignon label though it is slightly larger. The popcorn label states the name "Dom Popignon" in a black script over a horizontally-striped star. The popcorn label also gives a vintage year, a percentage of alcohol contained by volume (zero), and the words "fondee en 1986," which apparently refer to a significant date in the history of the Champop product.

Neither of the defendants have ever maintained any offices or bank accounts in New York State. Nor have they owned any real estate or other property in New York. Deposition of John P. Calderaio, sworn to on July 27, 1989, at 19 ("Calderaio Deposition"). The Jack Company is not licensed to do business in New York. Calderaio Deposition at 8. But on four occasions in 1988 and 1989, John Calderaio, acting solely in his capacity as president of The Jack Company, travelled to New York City to attend trade shows at the Javits Convention Center in Manhattan. Calderaio Deposition at 20; Declaration of John P. Calderaio, sworn to on June 19, 1989, ¶¶ 5-6 ("Calderaio Declaration").

Calderaio's purposes in attending the trade shows in New York were to show his products, among them Dom Popignon, and to conduct business transactions. Calderaio Deposition at 21. While in New York, he executed the sale of approximately 10,000 bottles of Dom Popignon. Calderaio Deposition at 25. The total number of bottles of Champop sold so far is near to 16,000. Calderaio Deposition at 61, 65. Approximately 2256 or 14.1% of the 16,000 bottles have been sold to customers residing or locating their businesses in New York State. Of these bottles, 768 or 4.8% were sold to customers in the Southern District of New York. Affidavit of Jon Lewis, sworn to on August 22, 1989, ¶¶ 4-5 ("Lewis Affidavit").¹ Defendants also distributed 62 Dom Popignon display kits, each containing three bottles of Champop, to customers in New York State, 22 of them in the Southern District. Calderaio Deposition at 56. The total value of all sales of Dom Popignon to New York customers is $12,300, $4,300 of which is attributable to sales in the Southern District. Lewis Affidavit, ¶ 6.

On March 13 and 14, 1989, Schieffelin hired a private market research company to conduct a pilot study on whether Dom Popignon was likely to cause consumer confusion with Dom Perignon. Fifty interviews were conducted with shoppers in Manhattan stores which sold Dom Popignon. The president of the market research company, in a sworn affidavit now before the Court, interpreted the results of the study as showing that it was "likely that a significant level of customer confusion" was occurring. Affidavit of Ronald C. Silver, sworn to on August 18, 1989, ¶ 7 ("Silver Affidavit"). More specifically, 46% of those asked thought that the producers of Dom Popignon had obtained permission to sell Champop, and 28% immediately thought of Dom Perignon when first showed the Dom Popignon bottle. Silver Affidavit, ¶ 7. The president of the market research company further stated that he had a "reasonable degree of confidence that if the survey were expanded to include more respondents, significant levels of confusion would still be shown." Silver Affidavit, ¶ 8.

On April 28, 1989, Schieffelin & Co. filed this lawsuit in federal court. The first count of the complaint alleges infringement upon plaintiff's registered trademark in violation of the Federal Trademark Act (the "Lanham Act"), 15 U.S.C. § 1114. The second count claims that defendants made false representations as to the source and origins of the Dom Popignon product in violation of the Lanham Act, 15 U.S.C. § 1125(a). The third count accuses defendants of unfair competition under the common law of New York. The fourth count alleges unlawful dilution of the distinctive quality of plaintiff's trademark and injury to plaintiff's business reputation under the General Business Law of the State of New York, § 368-d. In response to the complaint, defendants moved this Court to dismiss defendant Calderaio for lack of personal jurisdiction, to dismiss the entire case for improper venue or transfer it to the Southern District of Florida, and to dismiss the first three counts of the complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6).

DISCUSSION

A. Personal Jurisdiction

Defendant Calderaio claims that this Court does not have personal jurisdiction over him in his individual capacity. All of his individual actions relating to the alleged trademark infringement, he argues, took place in Florida. Defendants' brief at 3. The business trips that Calderaio took to New York were all in his capacity as president of The Jack Company, and he has never transacted business in New York for himself. Calderaio Declaration, ¶¶ 5-7.

The "fiduciary shield" doctrine prevents a court from exercising jurisdiction over an individual corporate officer if the officer acted solely within his corporate capacity in the forum state. CutCo Indus- tries, Inc. v. Naughton, 806 F.2d 361, 367 (2d Cir.1986); Marine Midland Bank v. Miller, 664 F.2d 899 (2d Cir.1981). The fiduciary shield doctrine has been employed by courts when it would be inequitable to exercise jurisdiction directly over the corporate officer. The inquiry most often pursued is whether the corporate entity is a mere shell created for the benefit of the individual, or whether the officer conducted business essentially for the benefit of and in response to the corporation. Marine Midland, supra, 664 F.2d at 903.

Both the Second Circuit and the New York Court of Appeals have recently held that the fiduciary shield doctrine is inapplicable when jurisdiction is asserted under the New York long-arm statute. Retail Software Services, Inc. v. Lashlee, 854 F.2d 18, 22-24 (2d Cir.1988); Kreutter v. McFadden Oil, Inc., 71 N.Y.2d 460, 471-72, 527 N.Y.S.2d 195, 522 N.E.2d 40 (1988). The state Court of Appeals found sufficient protection for individual corporate officers in the constitutional and statutory jurisprudence of long-arm jurisdiction already in existence, and held that applying the fiduciary shield doctrine would be unfair to plaintiffs. Kreutter, supra, 71 N.Y.2d at 471, 527 N.Y.S.2d 195, 522 N.E.2d 40. The state court did not focus on the nature of the corporation-officer relationship, as did the Second Circuit in Marine Midland.

This Court follows the most recent holdings of the Second Circuit and the New York Court of Appeals and finds the fiduciary shield doctrine inapplicable to long-arm jurisdiction. Even if this Court found the fiduciary shield doctrine relevant, this case would not be a likely instance for the doctrine's invocation. Calderaio is president of a corporation with two shareholders (Calderaio and his brother) and three officers (Calderaio, his wife, and his brother). When Calderaio travelled to New York to...