Koch v. Royal Wine Merchants, Ltd.

847 F. Supp. 2d 1370, 2012 WL 957536, 2012 U.S. Dist. LEXIS 38115, 23 Fla. L. Weekly Fed. D 210
CourtDistrict Court, S.D. Florida
DecidedMarch 21, 2012
DocketCase No. 11-81197-CV
StatusPublished
Cited by7 cases

This text of 847 F. Supp. 2d 1370 (Koch v. Royal Wine Merchants, Ltd.) is published on Counsel Stack Legal Research, covering District Court, S.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Koch v. Royal Wine Merchants, Ltd., 847 F. Supp. 2d 1370, 2012 WL 957536, 2012 U.S. Dist. LEXIS 38115, 23 Fla. L. Weekly Fed. D 210 (S.D. Fla. 2012).

Opinion

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

DANIEL T.K. HURLEY, District Judge.

THIS CAUSE is before the Court upon Defendants’ Motion to Dismiss [DE # 21], The motion is fully briefed and ripe for adjudication. For the reasons to follow, the Court will grant Defendants’ motion and dismiss the Complaint without prejudice.

Plaintiff William I. Koch commenced this action on October 27, 2011 asserting causes of action for fraud, conspiracy to defraud, aiding and abetting fraud, violation of the civil Racketeer Influenced and Corrupt Organization (“RICO”) Act, and violation of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”). Defendants are Royal Wine Merchants, Inc., a New York corporation, and its principals, Daniel Oliveros and Jeff Sokolin.

According to the Complaint,1 Defendants and a person by the name of Hardy Ro[1374]*1374denstock conspired to produce and sell counterfeit bottles of expensive, rare wines. Rodenstock’s role was to produce bottles filled with ordinary wine, but containing counterfeit labels indicating rare vintages from the most prestigious French vineyards. Defendants’ role was to import the counterfeit wine into the United States and promote its sale by advertising on their website and regularly sending faxes and e-mails touting the wines to potential purchasers. Despite their knowledge that the wines were counterfeit, Defendants represented the wines as genuine, i.e., that the contents of the bottles conformed to the labels. The success of the scheme was enhanced by the fact that collectors tend to retain rather than consume the wine. All told, Plaintiff purchased thirty-two bottles of Defendants’ counterfeit wine for over $500,000.

In the instant motion, Defendants seek dismissal of these claims for lack of personal jurisdiction over Defendants Sokolin and Oliveros, lack of standing, and lack of specificity in the pleadings.

I.

PERSONAL JURISDICTION

The general rule is that “courts should address issues relating to personal jurisdiction before reaching the merits of a plaintiffs claims.” Republic of Panama v. BCCI Holdings (Luxembourg) R.A., 119 F.3d 935, 940 (11th Cir.1997). The rationale for this rule is that “[a] defendant ... not subject to the jurisdiction of the court cannot be bound by its rulings.” Id. Inexplicably, the parties in this case limited their discussion of personal jurisdiction to the traditional analysis applied to a state’s long-arm statute and the Fourteenth Amendment’s requirement of “minimum contacts.” Both parties ignored the RICO claim’s impact on personal jurisdiction.2

In Republic of Panama, the Eleventh Circuit noted that “[sjection 1965(d) of the RICO statute provides for service in any judicial district in which the defendant is found. When a federal statute provides for nationwide service of process, it becomes the statutory basis for personal jurisdiction.” 3 Id. at 942. In turn, if personal jurisdiction can be established under RICO, the doctrine of pendent personal jurisdiction would come into play, making it unnecessary to consider Florida’s long-arm statute. See ESAB Grp., Inc. v. Gentricut, Inc., 126 F.3d 617, 628 (4th Cir. 1997); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1056 (2d Cir. 1993), cert. denied 513 U.S. 822, 115 S.Ct. 86, 130 L.Ed.2d 38 (1994) (“[Ujnder the doctrine of pendent personal jurisdiction, where a federal statute authorizes nationwide service of process and the federal and state claims ‘derive from a common nucleus of operative fact’ ... the district court may assert personal jurisdiction over the parties to the related state law claims even if personal jurisdiction is not otherwise available.” (internal citation omitted)).

The Republic of Panama court held that a federal district court in Florida, presented with a RICO claim, had person[1375]*1375al jurisdiction over non-Florida entities under RICO’s nationwide service of process provision. The Court noted that the constitutional inquiry is governed by the Due Process Clause of the Fifth (not the Fourteenth) Amendment. Furthermore, the Court ruled that a trial court evaluating personal jurisdiction “must ... examine a defendant’s aggregate contacts with the nation as a whole rather than his contacts with the forum state.” Republic of Panama, 119 F.3d at 947. The Court rejected a “pure national contacts” approach and employed a multiple-factor balancing test. The premise for this ruling is that the Fifth Amendment’s Due Process Clause requires consideration of “fairness” and “reasonableness” when resolving a question of personal jurisdiction. This test only comes into play, however, that “only if a defendant has established that his liberty interests actually have been infringed.” Id. at 946. Defendants bear the burden of demonstrating that assertion of jurisdiction in this forum will make litigation “so gravely difficult and inconvenient” that they will be at a “severe disadvantage” in comparison with their opponent. Id. at 948.

Applying these principles here, the court finds that Defendants have failed to satisfy their burden of presenting a compelling case that would render personal jurisdiction unreasonable. Defendants advertise and sell wine throughout the United States, and they have not shown that it would be gravely difficult and inconvenient to litigate in Florida.

II.

STANDING

To show standing,4 a plaintiff must demonstrate a redressable injury caused by the defendant’s actions. Kelly v. Harris, 331 F.3d 817, 819-20 (11th Cir. 2003). Defendants challenge both that Plaintiff has been injured and that their actions caused any injury. On the issue of whether Defendants caused Plaintiffs injury, Defendants argue that Plaintiff has not shown “any particular activities directed toward him by the Defendants, nor experienced by him as a direct consequence of their actions.” Defs’ Reply Supp. Mot’n to Dismiss, 6 [DE # 30]. Here Defendants overstate the required showing. Plaintiff needs not demonstrate that Defendants targeted him in any way or that his injury was a “direct consequence” of their actions. Loggerhead Turtle v. Cnty. Council of Volusia Cnty., Fla., 148 F.3d 1231, 1251 n. 23 (11th Cir.1998) (“[N]o authority even remotely suggests that proximate causation applies to the doctrine of standing.”). Rather, Plaintiff must only show that his injury is “fairly traceable to conduct of the Defendant^].” Kelly, 331 F.3d at 820. Plaintiff makes this showing by alleging that Defendants were the source of all of the bottles at issue and that they knew the wine was counterfeit but nevertheless adopted the representations on their labels that they were of the stated vintage. Plaintiffs allegations also support the conclusion that he would not have purchased the wine had the labels not suggested that they were genuine. Therefore, Defendants’ conduct in selling the wines with counterfeit labels was a factual or “but-for” cause of Plaintiffs injury.

The Court further finds that Plaintiff has been injured. The Complaint alleges that the Plaintiff having paid over $500,000, is left with wine that is worthless. The Court therefore concludes that [1376]

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847 F. Supp. 2d 1370, 2012 WL 957536, 2012 U.S. Dist. LEXIS 38115, 23 Fla. L. Weekly Fed. D 210, Counsel Stack Legal Research, https://law.counselstack.com/opinion/koch-v-royal-wine-merchants-ltd-flsd-2012.