Gear, Inc. v. LA Gear California, Inc.
| Decision Date | 26 March 1986 |
| Docket Number | No. 85 Civ. 4754 (CSH).,85 Civ. 4754 (CSH). |
| Citation | 637 F. Supp. 1323 |
| Parties | GEAR, INC., Plaintiff, v. L.A. GEAR CALIFORNIA, INC.; L.A. Gear Licensing Corp.; L.A. Gear Ltd.; Robert Y. Greenberg; Doe Spun, Inc.; Calabash Fashion Ltd.; Ocean Trends, Inc. and S.T.S. Graphics, Inc., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Pennie & Edmonds, New York City, for plaintiff; Walter G. Marple, Judith D. Cohen, of counsel.
Speyer, Thurm, Perlberg & Heller, New York City, Arant, Kleinberg & Lerner, Los Angeles, Cal., for defendant L.A. Gear; Marshall A. Lerner, Los Angeles, Cal., Milton Thurm, New York City, of counsel.
Plaintiff Gear, Inc. ("Gear" or "plaintiff") brings this action for alleged trademark infringement, dilution and unfair competition. The verified complaint (the "complaint"), filed July 26, 1985, named only L.A. Gear Ltd. ("L.A. Ltd."). Gear filed a verified amended complaint (the "amended complaint" or "am. complaint") on October 18, 1985 adding the remaining defendants.1 The gravamen of the complaint and amended complaint is that defendants' use of "L.A. Gear" as a trademark and in corporate names constitutes unlawful infringement. L.A. Ltd. moves to dismiss for lack of in personam jurisdiction, and defendants L.A. Ltd., L.A. Gear California, Inc. ("L.A. California"), L.A. Gear Licensing Corp. ("L.A. Licensing") (the "L.A. Defendants"), and their president and chief executive officer, Robert Y. Greenberg (collectively, the "defendants") move to dismiss for insufficient service of process. Gear moves for a preliminary injunction, and defendants cross-moved for summary judgment. Finally, Gear seeks summary judgment on its own behalf. For the reasons which follow, defendants' motions to dismiss on jurisdictional grounds are denied, and Gear's motion for a preliminary injunction is denied. The cross-motions for summary judgment are denied.
Defendants challenge the timeliness of service of process under Rule 4(j), F.R. Civ.P. The original complaint was filed on July 26, 1985, and service was attempted on July 30, 1985. (Affidavit of Louis Curto.) In its first pleading, original defendant L.A. Ltd. challenged the sufficiency of the July 30 service. After the amended complaint was filed on October 18, 1985, the newly added defendants joined this challenge. However, an affidavit of service by one Jerome P. Curtis was subsequently filed averring that the amended complaint was served by hand on Elliot Horowitz, chief financial officer for each of the L.A. Defendants, on December 25, 1985. Horowitz does not recall receiving service, but has conceded that he cannot be sure service was not so effected on that date. Accordingly, counsel for the L.A. Defendants and Greenberg has conceded that service was accomplished on that date. (Letter from Marshall A. Lerner to Court dated February 5, 1986).
Defendants contend, however, that the amended complaint should be dismissed pursuant to Rule 4(j), F.R.Civ.P. Rule 4(j) requires that a complaint be dismissed if service is not accomplished within 120 days of its filing unless good cause is shown for the delay.2 Defendants concede, of course, that service on December 23, 1985 was within 120 days of the filing of the amended complaint on October 18, 1985. But defendants contend that the 120 day period as to L.A. Ltd. began to run on July 26, 1985, when the original complaint was filed, and that the attempted service on July 30, 1985 was fatally flawed. Since in defendants' view the 120 day clock began to run against L.A. Ltd. on July 26, 1985, and since no effective service was made until December 23, 1985, they contend the action should be dismissed pursuant to Rule 4(j).
Whether or not defendants are correct that the July 30 attempt at service was flawed — upon which I express no present view — I do not believe dismissal is required by Rule 4(j).
Rule 4(j) provides that a dismissal for failure timely to serve the complaint is "without prejudice." Thus, it clearly contemplates that even if a complaint is dismissed for failure to serve within 120 days of filing, a new complaint may be filed. That contemplation would be frustrated if the 120 day clock on the new complaint began to run when the old complaint was filed.3
Furthermore, Rule 4(j) provides that failure to accomplish service within the 120 day period may be excused for "good cause." Plaintiff attempted service of the original complaint on July 20, 1985 — only four days after it was filed. After obtaining an extension of time to move or answer until October 3, 1985, L.A. Ltd. moved to dismiss, claiming that service of process was insufficient. Plaintiff disputed that claim; and although I need not resolve the merits of that dispute, I do not find plaintiff's defense of its attempt at service frivolous. Much of the 120 day period was consumed awaiting L.A. Ltd.'s first pleading — a period during which plaintiff had no reason to believe service would be challenged. Since plaintiff then profferred at least arguably meritorious reasons why service had been sufficient, plaintiff has amply justified any delay in service of the original complaint.
The other defendants argue that the filing of the original complaint on July 26, 1985 should also start the 120-day clock running, as to them. Their theory — for which they concede they have no authority — is that their 120 day period should relate back to July 26 because, in their view, plaintiff would have named them in the original complaint if it had exercised due diligence in determining the identities of those responsible for "L.A. Gear" products.
Since I have determined that the 120 day period started to run anew as to L.A. Ltd. when the amended complaint was filed, the same conclusion applies a fortiorari to the defendants who were not even named in the original complaint. But I also conclude that defendants' proposed extension of Rule 4(j) is unsound. Defendants offer neither authority nor compelling policy reason for departing from Rule 4(j)'s plain language, and I see no need for such an interpretation. Defendants are protected by the applicable statutes of limitation if plaintiffs fail diligently to investigate the proper parties to their suits. And once the complaint has been filed against them and the statute of limitations tolled, they are protected against undue delays in service by the clear mandate of Rule 4(j).
Defendants' motion to dismiss for failure timely to serve is therefore denied.
Plaintiff originally attempted to serve the amended complaint by first class mail, return receipt requested with forms of notice and acknowledgement enclosed. See F.R.Civ.P. 4(c)(2)(C)(ii). The acknowledgements were never returned. (Affidavit of Judith D. Cohen dated December 23, 1985 ¶ 4.) Plaintiff therefore proceeded with personal service and moves this Court to order defendants to pay the costs of personal service of the amended complaint pursuant to Rule 4(c)(2)(D), F.R.Civ.P. (Plaintiff's Memorandum of Law In Opposition to Defendants' Motion to Dismiss the Action, at 4-5.) Defendants have not offered any reasons for their failure to return the acknowledgements. Accordingly, I grant plaintiff the costs of personally serving the amended complaint. See F.R. Civ.P. 4(c)(2)(D) (). The costs incurred must be shown by affidavit.
L.A. Ltd. moves to dismiss the amended complaint for lack of personal jurisdiction. The amended complaint alleges on information and belief, that L.A. Ltd. offers products bearing the infringing marks at their California place of business and "participates in tortious acts" committed in New York. (Am. Complaint ¶ 6). It goes on to allege, on information and belief, that Greenberg is the "alter ego" of L.A. Ltd. (Am. Complaint ¶ 7).
In affidavits submitted in support of L.A. Ltd's motion to dismiss and the other pending motions, defendant Greenberg avers as follows. Greenberg is the president and chief executive officer and a 40% owner of all three L.A. Defendants. L.A. Ltd. is a California corporation. It is "neither a parent nor a subsidiary" of the other two L.A. Defendants. (Dec. 4 Greenberg Decl. ¶ 1). Its only business is retail sales at a store in Los Angeles, California. As its president, Greenberg is "generally aware" of L.A. Ltd's operations but is not involved with L.A. Ltd. on a "day-to-day basis." (Greenberg Declaration dated November 26, 1985, hereinafter "Nov. 26 Greenberg Decl.," ¶¶ 2-4.) L.A. Ltd. does no business in New York; all its business is conducted at the Los Angeles store. It has no mail or telephone order business. (Nov. 26 Greenberg Decl. ¶¶ 5-6). Other than the allegations of the verified amended complaint, plaintiff offers nothing to rebut these assertions.
Federal courts look to the long-arm statute of the forum state — constrained, of course, by the due process clause — to determine whether personal jurisdiction can be obtained over a nondomiciliary defendant. United States v. First National City Bank, 379 U.S. 378, 381, 85 S.Ct. 528, 530, 13 L.Ed.2d 365 (1965); Marsh v. Kitchen, 480 F.2d 1270, 1272 n. 6 (2d Civ.1973); F.R.Civ.P. 4(e), (f). Plaintiff contends that jurisdiction over L.A. Ltd. is authorized by Section 302 of New York's Civil Practice Law and Rules. Plaintiff argues in the alternative that it should be permitted discovery to establish the relationships among the L.A. Defendants and Greenberg.
Section 302 of the C.P.L.R. authorizes courts to exercise personal jurisdiction over nondomiciliaries with contacts in New York of certain qualities and quantities. Specifically, it provides for long-arm jurisdiction over nondomiciliaries that transact business in New York,...
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