Iberia Foods Corp. v. Latinfood U.S. Corp.

CourtDistrict Court, E.D. New York
DecidedApril 26, 2021
Docket1:20-cv-03009
StatusUnknown

This text of Iberia Foods Corp. v. Latinfood U.S. Corp. (Iberia Foods Corp. v. Latinfood U.S. Corp.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Iberia Foods Corp. v. Latinfood U.S. Corp., (E.D.N.Y. 2021).

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ---------------------------------X IBERIA FOODS CORP., et al.,

Plaintiffs, Memorandum and Order

v. 20-CV-3009(KAM)(RLM)

LATINFOOD U.S. CORP., et al.,

Defendants. ---------------------------------X KIYO A. MATSUMOTO, United States District Judge: The plaintiffs in this trademark infringement action voluntarily dismissed the case pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i). The defendants thereafter filed a motion to recover their costs, including attorneys’ fees, pursuant to Federal Rule of Civil Procedure 41(d)(1), and asserting the plaintiffs’ purported bad faith in pursuing their claims. The plaintiffs filed a cross-motion for attorneys’ fees and costs, asserting the defendants’ purported bad faith. For the reasons herein, the defendants’ motion is DENIED, and the plaintiffs’ motion is DENIED. Background This case was initiated July 7, 2020 by four plaintiffs: Iberia Foods Corporation (“Iberia”); North Shore Bottling Company, Inc.; Brooklyn Bottling of Milton, New York, Inc.; and International World Foods Corporation (collectively, “Plaintiffs”). (See generally ECF No. 1, Complaint.) Plaintiffs named three defendants: Latinfood U.S. Corporation (“Latinfood”); J. Wilson International, Inc.; and Wilson Zuluaga. (Id.) The parties subsequently stipulated to J.

Wilson International, Inc.’s dismissal (ECF No. 26, Stipulation and Order of Partial Dismissal), leaving Latinfood and Wilson Zulaga and the only remaining defendants (together, “Defendants”). Plaintiffs alleged that Iberia had an exclusive agreement with Bavaria, S.A. (“Bavaria”), a corporation based in Colombia that is not a party in this action, to distribute Bavaria’s Pony Malta brand beverages in certain states in the United States. (ECF No. 30, Amended Complaint (“Am. Compl.”), ¶ 16.)1 Pony Malta beverages are non-alcoholic carbonated beverages that are manufactured in Colombia, and they are popular with the Colombian community in the United States. (Id.

¶¶ 16-17, 23.) Bavaria obtained United States trademarks for the Pony Malta brand in 1990 and in 2011. (Id. ¶¶ 24-26.) At some point thereafter, the trademarks were canceled, although Pony Malta products were still sold in the United States. (Id. ¶¶ 28-29.)

1 Plaintiffs originally also brought claims based on beverages bearing the HIT trademark, but those claims were subsequently settled (ECF No. 19, Order of Partial Settlement), and Plaintiffs filed an amended complaint focused solely on the Pony Malta brand. Plaintiffs alleged that despite their exclusive agreement with Bavaria to sell Pony Malta beverages in certain parts of the United States, Defendants engaged in the

unauthorized sale of Pony Malta beverages within the same territory. (Id. ¶¶ 38-39.) According to Plaintiffs, the Pony Malta versions sold by Defendants were allegedly “gray market goods”: goods authorized for sale outside the United States that were being sold in the United States without authorization from the manufacturer. (Id. ¶ 43.) Upon filing their complaint in July 2020, which brought claims for alleged violations of the federal Lanham Act as well as state law claims, Plaintiffs sought an ex parte temporary restraining order to prohibit Defendants from selling the alleged gray market beverages. (ECF No. 3, Unsigned Order to Show Cause.) The court ordered Plaintiffs to serve the

motion on defense counsel, and the next day, the court held a hearing, with both parties present by telephone, to hear argument on the proposed temporary restraining order. (See July 8, 2020 ECF Minute Entry & Dkt. Order.) Based on the representations made by Defendants’ counsel during the hearing, including that Plaintiffs had previously brought similar claims against Defendants in New York State court, and issues regarding Plaintiffs’ entitlement to injunctive relief, the court denied the motion for a temporary restraining order. (Id.) Thereafter, Plaintiffs moved for a preliminary injunction, and Defendants indicated their intent to file a motion to dismiss the case. (See ECF No. 31, Declaration in

Support of Preliminary Injunction; Oct. 30, 2020 ECF Dkt. Order.) While the motion for a preliminary injunction was pending, and before the motion to dismiss was filed, Plaintiffs notified the court that Defendants “provided [Plaintiffs’ counsel] with an email chain which appeared to indicate that persons unknown at Bavaria were working directly [with Defendants] to sell the [allegedly gray market Pony Malta beverages] for distribution in the” states where Plaintiffs claimed to have the exclusive right to sell Pony Malta beverages. (ECF No. 42, Letter, at 2.) Based on this new information, Plaintiffs voluntarily dismissed the case pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i). (ECF No. 44,

Notice of Voluntary Dismissal.) Following Plaintiffs’ voluntary dismissal, Defendants moved for attorneys’ fees and costs against Plaintiffs. (ECF No. 48, Motion for Attorneys’ Fees; see ECF No. 48-1, Memorandum in Support (“Def. Mem.”); ECF No. 53, Reply in Support (“Def. Reply”).) Plaintiffs filed a cross-motion for attorneys’ fees and costs. (ECF No. 50, Cross Motion for Attorneys’ Fees; see ECF No. 51, Memorandum in Support (“Pl. Mem.”); ECF No. 54, Reply in Support (“Pl. Reply”).) Legal Standards “If a plaintiff who previously dismissed an action in any court files an action based on or including the same claim

against the same defendant, the court [] may order the plaintiff to pay all or part of the costs of that previous action[.]” Fed. R. Civ. P. 41(d)(1). Pursuant to this Rule, the Second Circuit has held that “a district court [is] free, in its discretion, to award attorneys’ fees as part of costs.” Horowitz v. 148 S. Emerson Assocs. LLC, 888 F.3d 13, 25 (2d Cir. 2018). The purpose of awarding a party costs and fees after the opposing party dismisses one action, only to bring a second one based on the same claims, is to “to serve as a deterrent to forum shopping and vexatious litigation.” Id. (quoting Andrews v. America’s Living Centers, LLC, 827 F.3d 306, 309 (4th Cir. 2016)).

When attorneys’ fees are not explicitly authorized by a statute or rule (such as Rule 41(d)(1)), the traditional “‘American Rule’ is that the prevailing party in federal court litigation generally cannot recover attorneys’ fees[.]” Dow Chem. Pac. Ltd. v. Rascator Mar. S.A., 782 F.2d 329, 344 (2d Cir. 1986). One exception to this traditional rule is that “the court does have the power to award attorneys’ fees to a successful litigant when his opponent has commenced or conducted an action ‘in bad faith, vexatiously, wantonly, or for oppressive reasons.’” Id. (quoting F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 129 (1974)). To qualify for this bad faith exception to the “American Rule,”

there must be “‘clear evidence’ that the challenged actions ‘[were] entirely without color and [were] taken for reasons of harassment or delay or for other improper purposes[.]’” Id. (quoting Weinberger v.

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