Philip Morris Usa Inc. v. Lee, EP-05-CA-0490-PRM.
| Decision Date | 08 April 2008 |
| Docket Number | No. EP-05-CA-0490-PRM.,EP-05-CA-0490-PRM. |
| Citation | 549 F.Supp.2d 839 |
| Parties | PHILIP MORRIS USA INC., Plaintiff, v. William W. LEE, et al., Defendants. |
| Court | U.S. District Court — Western District of Texas |
Bruce A. Koehler, Carl H. Green, Mounce, Green, Myers, Safi, Paxson & Galatzan, P.C., El Paso, TX, John C. Ulin, Los Angeles, CA, Samuel R. Watkins, Heller Ehrman LLP, Seattle, WA, for Plaintiff.
Robert A. Skipworth, Attorney at Law, Corey W. Haugland, James & Haugland, P.C., Christopher Allen Antcliff, Law Office of Chris Antcliff, El Paso, TX, Gerson M. Joseph, Plantation, FL, for Defendants.
Felipe Castaneda, El Paso, TX, pro se.
On this day, the Court considered (1) Plaintiff Philip Morris USA Inc.'s ("Philip Morris") "Motion for Summary Judgment Against Defendants William W. Lee and Felipe Castaneda," filed on September 17, 2007; (2) Defendant William W. Lee's ("Lee") "Response to Plaintiffs Motion for Summary Judgment," filed on October 16, 2007; (3) Philip Morris's "Reply Memorandum in Support of Its Motion for Summary Judgment Against Defendants William Lee and Felipe Castaneda," filed on November 2, 2007; (4) Defendant Felipe Castaneda's ("Castaneda") pro se "Response of Felipe Castaneda to Plaintiffs Motion for Summary Judgment," filed on November 5, 2007;1 (5) Philip Morris's "Objections to Affidavit of Defendant William W. Lee and Motion to Strike," filed on November 1, 2007; (6) Lee's "Response of William W. Lee to Plaintiff, Phillip [sic] Morris USA, [sic] Inc.'s Objections to Affidavit and Motion to Strike," filed on November 6, 2007; (7) Philip Morris's "Reply in Support of its Motion for Summary Judgment Against Defendant Felipe Castaneda," filed on November 20, 2007; and (8) Philip Morris's "Reply to William W. Lee's Response to Objection [sic] to Affidavit and Motion to Strike," filed on November 20, 2007, in the above-captioned cause. After due consideration, the Court is of the opinion that Philip Morris's Motion for Summary Judgment should be granted in part and denied in part for the reasons set forth below.
Philip Morris is a Virginia corporation with its principal place of business in Virginia. PI.'s Second Am. Compl. ¶ 14. As evidenced by certificates of registration issued by the United States Patent and Trademark Office (the "PTO"), Philip Morris is the registered owner of the Marlboro word mark and the Marlboro Roof Design label mark (collectively, the "Marlboro Marks"), which it uses in connection with its tobacco products. Pl's Mot. Summ. J. App. Exs. 1, 2 (Certificates of Registration). The present suit arises from a seizure of counterfeit Marlboro cigarettes made by the United States Bureau of Customs and Border Protection ("Customs"). Id. App. Ex. 4 (Notice of Seizure). Neither party disputes the facts as stated below.
In 2003, Lee and Castaneda, both residents of El Paso, Texas, became acquainted. Id. App. Ex. B, 32, 41 (Lee's Deposition). They agreed to form a business importing and selling cigarettes in the United States. Id. App. Ex. B, 32, 41. They named the business Kagro Inc. ("Kagro"). Id. App. Ex. 6 (Kagro Partnership Agreement).2 Though Lee lacked prior experience in the cigarette industry, he became president of Kagro. Lee's Resp. to Pl's Mot. Summ. J. Lee Aff. ¶ 17; PI. Mot. Summ. J. App. Ex. 6. Castaneda, on the other hand, had some familiarity with the industry. In 2004, he pled guilty in the United States District Court for the Western District of Texas to conspiring to smuggle counterfeit cigarettes into the United States and to trafficking in counterfeit goods in 2001 and 2002, in violation of 18 U.S.C. §§ 371, 545, 2342 and 2320. Pl.'s Mot. Summ. J. App. Ex. E, 158-59 (Castaneda's deposition).3
In discussing their partnership, Castaneda told Lee he had found a buyer looking to purchase cigarettes. Id. App. Ex. B, 32. Castaneda identified the buyer as Raul Martinez, III ("Martinez"), who lived in El Paso, Texas. Id. App. Ex. B, 43. Castaneda asked Lee to locate a cigarette distributor from whom Kagro could buy cigarettes and then re-sell them to Martinez. Id. App. Ex. B, 32-33, 38. Lee found a sales advertisement on the Internet for Marlboro cigarettes posted by Synergy Trading Group, Inc. ("Synergy"), a Florida-based company. Id. App. Ex. B, 42. Lee contacted Synergy and spoke with two of its representatives, Julian Balea ("Balea") and Ronald Morrison ("Morrison"). Id. App. Ex. B, 43-45.
According to the sales invoice, Kagro agreed to purchase 1,960 master cases of cigarettes from Synergy at $260.00 each. Id. App. Ex. 8 (Sales Invoice). The cigarettes were to be delivered in two equal installments.4 Id. App. Exs. 8; B, 170-71. Kagro was to pay Synergy $254,800.00 to cover the cost of the first installment. Id. App. Ex. B, 110. Kagro arranged to sell the cigarettes to Martinez at $345.00 per master case. Id. App. Ex. 7 (Kagro Purchase Order). Kagro planned to repeat this scheme each month over the course of a year. Lee and Castaneda stood to profit approximately $1 million from the entire transaction. Id. App. Ex. B, 171, 173-74.
Synergy stored the cigarettes in a warehouse in Curacao, Netherlands Antilles. Id. App. Ex. 8. It hired John Tominelli ("Tominelli") and his company, Southeastern Cargo Services, Inc., to inspect the cigarettes. Id. App. Ex. C, 101-02 (Balea's deposition). After completing the inspection, Tominelli issued a report, which listed the quantity, packaging, and freshness of the cigarettes. Id. App. Ex. 9 (Inspection Report). The report falsely described the cigarettes as "Made Under Authority of Philip Morris Products S.A., Neuchatel, Switzerland." Id. App. Ex. 9. According to Balea and Morrison, before the goods were shipped to El Paso, Texas, Tominelli told Castaneda that it was illegal to import the cigarettes into the United States. Id. App. Exs. C, 153-54; F, 41-47 (Morrison's deposition). Castaneda responded that he "wasn't really concerned about that [illegality]." Id. App. Ex. C, 153-54. He also told Morrison that he had "everything arranged," and advised him not to "worry" because his "contacts in Houston [were] strong ...," which Morrison understood to indicate that Castaneda knew that importing the cigarettes was illegal, but had arranged with Customs agents to ensure that they would nonetheless be imported. Id. App. Ex. F, 47.
Customs notified Philip Morris that it seized a shipment of counterfeit Marlboro cigarettes at the Port of Houston, Texas on October 8, 2003. Id. App. Ex. 4. The cigarettes bore marks indicating that they had been shipped from Curasao and were destined for El Paso, Texas. Id. App. Ex. 4.
As a result of the seizure by Customs, Philip Morris initiated this action against numerous defendants, including Lee and Castaneda.5 Philip Morris raised the following six claims: (1) trademark infringement in violation of 15 U.S.C. § 1114(1); (2) false designation of origin in violation of 15 U.S.C. § 1125(a)(1)(A); (3) unlawful importation of goods bearing infringing marks in violation of 15 U.S.C. § 1124; (4) unlawful importation of goods bearing registered trademarks in violation of 19 U.S.C. § 1526(a); (5) trademark infringement in violation of Texas Business and Commerce Code § 16.26; and (6) unfair competition in violation of Texas common law. Pl's Second Am. Compl. ¶ 56-82.
Philip Morris moves for summary judgment against Lee and Castaneda on all six grounds. Pl's Mot. Summ. J. ¶ 1. In his response, Lee "concedes liability and agrees to a permanent injunction." Lee's Resp. to Pl's Mot. Summ. J. ¶ 2. He opposes the imposition of statutory damages and the award of attorneys' fees. Id. at ¶ 3, 13. In his response, Castaneda admits importing cigarettes into the United States, but submits that he believed the cigarettes were genuine. Castaneda's Resp. to Pl's Mot. Summ. J. ¶¶ 6, 8. Castaneda also alleges that he thought that he could lawfully import the cigarettes because he intended to re-sell them in duty free stores. Id.
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). A genuine issue exists only if there are "factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
To defeat summary judgment, the nonmoving party must set forth specific facts showing the existence of a genuine issue concerning an essential component of the case. Moms v. Covan World Wide Moving, Lie, 144 F.3d 377, 380 (5th Cir.1998). Conclusionary allegations and unsubstantiated allegations are insufficient to defeat a motion for summary judgment. Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 347 (5th Cir.2007); Douglass v. United Servs. Auto Ass'n, 79 F.3d 1415, 1429 (5th Cir.1996). In evaluating a motion for summary judgment, the court reviews the evidence in the light most favorable to the non-moving party and draws any reasonable inferences in its favor. Daniels v. City of Arlington, Tex., 246 F.3d 500, 502 (5th Cir.2001).
In support of his Response, Lee submits his affidavit. Lee's Resp. to Pl's Mot. Summ. J. Lee Aff. Philip Morris objects to portions of this affidavit as inadmissible on various grounds. Pl's Obj. 1-4.
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