United States v. Shayota

• Decision Date: 13 May 2016
• Docket Number: Case No. 15-CR-00264-LHK
• Parties: United States of America, Plaintiff, v. Joseph Shayota, et al., Defendants.
• Court: U.S. District Court — Northern District of California

186 F.Supp.3d 1052

United States of America, Plaintiff,

v.Joseph Shayota, et al., Defendants.

Case No. 15-CR-00264-LHK

United States District Court, N.D. California, San Jose Division.

Signed May 13, 2016

Susan Frances Knight, Matthew A. Parrella, US Attorney's Office, San Jose, CA, for Plaintiff.

ORDER DENYING MOTION TO SUPPRESS EVIDENCE

LUCY H. KOH, United States District Judge

On March 23, 2016, defendants Mario Ramirez and Camilo Ramirez (the "Ramirezes") filed a Motion to Suppress Evidence ("Motion"), ECF No. 112, joined by defendant Walid Jamil, ECF No. 120. The Government filed an Opposition. ECF No. 133. The Ramirezes filed a Reply. ECF No. 138.

The Court held a hearing on the Motion on May 13, 2016. Having considered the parties' submissions, argument, the record in this case, and the relevant law, the Court DENIES the Motion to Suppress.

I. BACKGROUND

A three-count indictment was filed on May 14, 2015 against defendants Joseph Shayota, Adriana Shayota, Justin Shayota, Walid Jamil, Raid Jamil, Kevin Attiq, Fadi Attiq, Leslie Roman, Juan Romero, Mario Ramirez, and Camilo Ramirez (collectively, "Defendants"). ECF No. 1 ("Indictment"). All Defendants are named in each of the three counts of the Indictment, which relates generally to alleged criminal conspiracies to manufacture and distribute counterfeit bottles of a liquid dietary supplement known as "5-Hour ENERGY." Id. ¶ 1. The Indictment alleges that a group of commonly owned and controlled companies, referred to collectively as "Living Essentials," owns the trademarks and copyrights related to 5-Hour ENERGY. Id. The Indictment further alleges that the Ramirezes' role was to design and print counterfeit 5-Hour ENERGY boxes. Id. ¶¶ 15–16.

The Ramirezes' Motion concerns evidence obtained several years earlier in connection with a civil suit in the Eastern District of New York. On October 25, 2012, Living Essentials filed a civil complaint against a number of defendants, alleging that the defendants sold or distributed counterfeited 5-Hour ENERGY. See Innovation Ventures, LLC et al. v. Ultimate One Distributing Corp. , No. 12-CV-05354-KAM, ECF No. 1 (E.D.N.Y. Oct. 25, 2012). In connection with that action, Living Essentials applied for, and obtained, several ex parte civil seizure orders pursuant to 15 U.S.C. § 1116(d)(1)(A). Those orders permitted seizure of counterfeit 5-Hour ENERGY, as well as related materials, such as records concerning merchandise bearing the 5-Hour ENERGY marks and equipment used to bottle, label, or package counterfeit 5-Hour ENERGY.

One such order directed a seizure at the premises of Midwest Wholesale Distributors ("Midwest"). See Innovation Ventures , No. 12-CV-05354-KAM, ECF No. 41 at 2 ("Seizure Order").¹ Midwest's principals include Walid Jamil and Justin Shayota, who are also named as defendants in the instant criminal action. See ECF No. 133-3 at 12, 16 (Kevin Attiq Depo. Tr. 10:19–21, 28:4–13); ECF No. 133-2 ¶ 6. The Seizure Order listed three specific addresses at which Midwest was believed to be operating, including the address at issue here: 7920 Airway Road, Suite A1, San Diego, California, 95124 ("7920 Airway Road"). Seizure Order at 2. The Ramirezes state that in early 2012, Midwest actually subleased the 7920 Airway Road location to MCR Innovations & Packaging, Inc. ("MCR Innovations"). ECF Nos. 112 at 4–5; 112-5. Although the record is not entirely clear, MCR Innovation's principals include Walid Jamil, who is also a principal of Midwest, as well as Mario Ramirez and Camilo Ramirez, neither of whom appear to be officers or employees of Midwest. ECF No. 112 at 4 (Ramirezes); ECF No. 112-5 at 2 (identifying Walid Jamil as President of MCR Innovations). A seizure pursuant to the Seizure Order was executed at 7920 Airway Road on November 15, 2012 in the civil case.

As noted above, in 2015, the Ramirezes were indicted in this criminal action. The Ramirezes now move to suppress evidence obtained as a result of the execution of the Seizure Order on three grounds. First, the Ramirezes contend that the Seizure Order did not comply with 15 U.S.C. § 1116(d), because it permitted "an exhaustive or intrusive search of the premises," rather than being directed to the seizure of items. ECF No. 112 at 6. Second, the Ramirezes contend that the Seizure Order did not comply with 15 U.S.C. § 1116(d) because two of the factual findings upon which the Seizure Order was based were "clearly erroneous and not based on facts specific to any of the civil defendants." Id. at 7. Third, the Ramirezes contend that the civil plaintiffs intentionally misled the Eastern District of New York court that issued the Seizure Order into believing that Midwest instead of MCR Innovations operated at 7920 Airway Road. Id. at 8.

II. DISCUSSION

To provide context for the Ramirezes' claims, the Court begins by providing a brief overview of civil seizure orders, and then addresses each of the Ramirezes' contentions in turn.

A. Overview of Civil Seizure Orders

Congress authorized the issuance of civil seizure orders under 15 U.S.C. § 1116(d) to permit trademark plaintiffs "to preserve the evidence necessary to bring trademark counterfeiters to justice." In re Lorillard Tobacco Co. , 370 F.3d 982, 987 (9th Cir.2004). The statute is available in civil actions involving the use of a counterfeit mark. 15 U.S.C. § 1116(d)(1)(A). Under the statute, a court may, upon application, issue an ex parte seizure order "providing for the seizure of goods and counterfeit marks involved in such violation and the means of making such marks, and records documenting the manufacture, sale, or receipt of things involved in such violation." Id . The statute requires, among other things, that the United States Attorney in the district where the order is sought be notified, id. § 1116(d)(2), and that the application be based on an affidavit or similar sworn document. Id. § 1116(d)(3)(A). Furthermore, a party seeking a seizure order must post a bond against claims of wrongful seizure, and the court must hold a hearing promptly after the ex parte seizure order issues. Id. §§ 1116(d)(4)(A), (d)(10)(A).

In addition, as is relevant to the Ramirezes' claim, an application for a civil seizure order may not be granted unless the court finds that it clearly appears from specific facts that: (1) "an order other than an ex parte seizure order is not adequate to achieve the purposes of [15 U.S.C. § 1114 ]"; (2) "the applicant has not publicized the requested seizure"; (3) "the applicant is likely to succeed in showing that the person against whom seizure would be ordered used a counterfeit mark in connection with the sale, offering for sale, or distribution of goods or services"; (4) "an immediate and irreparable injury will occur if such seizure is not ordered"; (5) "the matter to be seized will be located at the place identified in the application"; (6) "the harm to the applicant of denying the application outweighs the harm to the legitimate interests of the person against whom seizure would be ordered of granting the application"; and (7) "the person against whom seizure would be ordered, or persons acting in concert with such person, would destroy, move, hide, or otherwise make such matter inaccessible to the court, if the applicant were to proceed on notice to such person." 15 U.S.C. § 1116(d)(4)(B).

Seizures carried out pursuant to Section 1116(d) are subject to Fourth Amendment scrutiny. See, e.g., Gucci Am., Inc. v. Accents , 955 F.Supp. 279, 281–82 (S.D.N.Y.1997) ("As a general matter, the fact that a court-ordered seizure...arises from the application of a private party in a civil action does not exempt it from scrutiny under the Fourth Amendment.... Accordingly, such responses to Fourth Amendment violations as suppression of unlawfully-seized evidence may well be available to victims of unlawfully-obtained seizure orders under the Trademark Counterfeiting Act, even if the goods prove in fact to be counterfeit."). Courts consistently hold, however, that civil seizure orders issued in accordance with Section 1116(d)'s extensive requirements satisfy the requirements of the Fourth Amendment. See, e.g., NBA Properties v. Does , 113 F.3d 1246, 1997 WL 271311 (10th Cir.1997) (unpublished) (civil seizure order satisfying 15 U.S.C. § 1116(d)"satisfied the Fourth Amendment requirements"); Gucci Am., Inc. , 955 F.Supp. at 282 ("[H]ere all the careful requirements for issuance of the seizure orders were met, and thus the seizure orders did not violate the defendants' Fourth Amendment rights"); Reebok Int'l Ltd. v. Su Youn Pak , 683 F.Supp. 929, 930 (S.D.N.Y.1987) (civil seizure order issued pursuant to 15 U.S.C. § 1116(d) satisfied Fourth Amendment requirements).

B. Seizure Order's Authorization of a Search

The Ramirezes first contend that the application of Section 1116(d) in this case to obtain the Seizure Order violated the Fourth Amendment because "[t]he Seizure Order permitted both a broad ranging search and a seizure," ECF No. 112 at 6, but Section 1116(d) provides only for the "seizure of goods and counterfeit marks involved in such violation and the means of making such marks, and records documenting the manufacture, sale, or receipt of things involved in such violation." The Government responds that a seizure order covering particular items at a particular location necessarily requires a search for those items at that location, and that the Seizure Order in this case both specified the items to be seized and where on the premises a search was permitted to locate the items for seizure. ECF No. 133 at 6.

The Government has the better of this argument. The Ramirezes cite no authority for an interpretation of Section 1116(d) that would limit civil seizure orders to permitting only the seizure of items in plain view, or that are otherwise immediately apparent without any incident search at the location specified by the seizure order. Moreover, the Ramirezes' interpretation would be inconsistent with the...