Automobili Lamborghini S. P.A. v. Lamborghini Latino Am. USA

400 F.Supp.3d 471

AUTOMOBILI LAMBORGHINI S.P.A., et al., Plaintiffs,

v.LAMBORGHINI LATINO AMERICA USA, et al., Defendants.

Case No. 1:18-cv-62

United States District Court, E.D. Virginia, Alexandria Division.

Signed August 21, 2019

Daniel Yonan, Monica Riva Talley, Sterne, Kessler, Goldstein & Fox PLLC, Washington, DC, for Plaintiffs.

Warren Arthur Zitlau, Cahn & Samuels LLP, Washington, DC, for Defendant Jorge Antonio Fernandez Garcia.

Anthony Crudup, Bala Cynwyd, PA, pro se.

ORDER

T. S. Ellis, III, United States District Judge

This action arises from the alleged marketing and sale of counterfeit Lamborghini-marked merchandise into the United States by defendants on the website www.lamborghinigrupo.com. Based on this alleged conduct by defendants, plaintiffs, the owner of the Lamborghini trademark and two corporate subsidiaries, have asserted claims of trademark infringement, trademark counterfeiting, trademark dilution, cybersquatting, and false designation of origin under the Lanham Act against defendants. See 15 U.S.C. §§ 1114, 1116, 1117, 1125(a). At issue in this case is defendant Jorge Antonio Fernandez Garcia's ("Garcia") motion to dismiss for lack of personal jurisdiction and for failure to state a claim. The focus of the parties' dispute is whether Garcia is subject to personal jurisdiction based on his contacts with the United States as a whole pursuant to Rule 4(k)(2), Fed. R. Civ. P.

This matter previously came before the Court on April 5, 2019 for a hearing on Garcia's motion to dismiss. During briefing and argument, both sides relied on evidence and materials outside of the pleadings to challenge and defend the existence of personal jurisdiction over Garcia. Accordingly, by Order dated April 5, 2019, (i) an evidentiary hearing was scheduled to resolve the factual disputes material to the existence of personal jurisdiction,¹ (ii) the parties were directed to file supplemental briefing to explain how the evidence to be introduced at the evidentiary hearing would prove or disprove that personal jurisdiction over Garcia is established, and (iii) this case was stayed until the resolution of the motion to dismiss.

On August 1, 2019, the evidentiary hearing was held on the motion to dismiss. Plaintiffs and Garcia, by counsel, were present for the hearing. Plaintiffs introduced the testimony of co-defendant Anthony Crudup ("Crudup") along with various documentary evidence. Garcia did not call any witnesses and elected to introduce only documentary evidence and testimony adduced by cross-examining Crudup. At the conclusion of the evidentiary hearing, the matter was taken under advisement, and the parties were given an additional opportunity to submit supplemental briefing in light of the evidence introduced at the hearing. Accordingly, this matter has now been fully briefed and argued and is therefore ripe for disposition.

I.

When, as here, personal jurisdiction is to be resolved on the basis of an evidentiary hearing, the plaintiff must "prove grounds for jurisdiction by a preponderance of the evidence." Carefirst of Maryland, Inc. v. Carefirst Pregnancy Centers, Inc. , 334 F.3d 390, 396 (4th Cir. 2003).² Plaintiffs argue that personal jurisdiction over Garcia is established pursuant to Rule 4(k)(2), which "provides for personal jurisdiction through nationwide service of process over any defendant provided (i) exercise of jurisdiction is consistent with the Constitution and the laws of the United States, (ii) the claim arises under federal law, and (iii) the defendant is not subject to the jurisdiction of the courts of general jurisdiction of any state." Graduate Mgmt. Admission Council v. Raju , 241 F. Supp. 2d 589, 596-97 (E.D. Va. 2003) (citing Rule 4(k)(2) ; Base Metal Trading, Ltd. v. OJSC "Novokuznetsky Aluminum Factory" , 283 F.3d 208, 215 (4th Cir. 2002) ).

A.

The first element of the Rule 4(k)(2) analysis "requires the same minimum contacts due process analysis as is conducted under Rule 4(k)(l)(A), with the significant difference that the relevant forum is the United States as a whole, not an individual State." Graduate Mgmt. , 241 F. Supp. 2d at 597. It is well-settled that exercising jurisdiction over a defendant is consistent with due process as long as the defendant has sufficient "minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotes omitted). The Fourth Circuit has held that "a single act by a defendant can be sufficient to satisfy the necessary ‘quality and nature’ of such minimal contacts, although ‘casual’ or ‘isolated’ contacts are insufficient to trigger such an obligation." CFA Inst. v. Inst. of Chartered Fin. Analysts of India , 551 F.3d 285, 293 (4th Cir. 2009) (quoting Int'l Shoe , 326 U.S. at 317–19, 66 S.Ct. 154 ). In particular, the defendant's contacts with the forum are sufficient to permit the exercise of specific personal jurisdiction over the defendant if the defendant "purposefully availed itself of the privilege of conducting activities in [the forum]" and the plaintiff's "claims arose out of the activities that [the defendant] directed at [the forum]." Sneha Media & Entm't, LLC v. Associated Broad. Co. P Ltd. , 911 F.3d 192, 198 (4th Cir. 2018).³ Of particular relevance here, the Fourth Circuit has held that a defendant's Internet activity can serve as a basis for exercising specific personal jurisdiction if the defendant "(1) directs electronic activity into the [forum], (2) with the manifested intent of engaging in business or other interactions within the [forum], and (3) that activity creates, in a person within the [forum], a potential cause of action cognizable in the [forum]'s courts." ALS Scan, Inc. v. Digital Serv. Consultants, Inc. , 293 F.3d 707, 714 (4th Cir. 2002).

Here, exercising jurisdiction over Garcia is consistent with the limits of due process because plaintiffs' claims arise from the activities that Garcia purposefully directed at the United States as a whole. In particular, the evidence presented at the evidentiary hearing proves by a preponderance of the evidence that Garcia, in concert with Crudup, took steps to market and sell infringing and counterfeit Lamborghini-marked products into the United States through an online store at the website www.lamborghinigrupo.com. In this regard, the testimony and documentary evidence established the following facts by a preponderance of the evidence.

In 2011, co-defendant Anthony Crudup was introduced to Garcia by a mutual acquaintance. Garcia represented to Crudup that he possessed licensing agreements⁴ that gave Garcia worldwide rights to license, manufacture, and sell Lamborghini-marked merchandise for a period of 99 years. Initially, Garcia and Crudup entered into a partnership agreement in 2011 for the purpose of manufacturing and selling automobiles bearing the Lamborghini trademark in the United States. Despite taking steps to pursue this venture, Garcia and Crudup's plan to manufacture and sell a Lamborghini-marked vehicle in the United States did not come to fruition. Garcia and Crudup thus attempted to find other ways to profit from using the Lamborghini brand.

In early 2015, Garcia and Crudup decided to manufacture and sell so-called "lifestyle" merchandise, such as cigars and t-shirts, bearing the Lamborghini trademark in the United States through a website, www.lamborghinigrupo.com. Unlike their prior attempt to make and sell cars, the merchandising venture was not covered by any formal partnership agreement between Garcia and Crudup. Garcia made decisions with Crudup regarding the design of the www.lamborghinigrupo.com website, the type of merchandise that should be listed for sale on the website, and the appearance of the merchandise. Indeed, because Garcia was the one who held the alleged licensing rights, Garcia had to approve all business decisions relating to the marketing and sale of Lamborghini-marked merchandise on the www.lamborghinigrupo.com website. The two men also agreed on a plan for allocating profits made from selling Lamborghini merchandise in the United States, with 12% of the profits to go to Garcia. Through the www.lamborghinigrupo.com website, Garcia and Crudup made two confirmed sales of Lamborghini-marked cigars into the United States in Virginia and Florida.

These facts demonstrate that Garcia has sufficient contacts with the United States as a whole such that the exercise of personal jurisdiction would comport with the limits of due process under the ALS Scan test. First, the above facts show that Garcia "direct[ed] electronic activity into the [United States]," in satisfaction of the first ALS Scan element. See ALS Scan , 293 F.3d at 714. It is undisputed that the www.lamborghinigrupo.com website specifically targeted the United States market; indeed, the only confirmed sales made by Garcia and Crudup through the website were to purchasers in the United States.⁵ And importantly, the evidence persuasively demonstrates that Garcia personally marketed and sold products into the United States through the website. Specifically, as explained above, the facts show that Garcia worked in concert with Crudup (i) to design the www.lamborghinigrupo.com website, (ii) to list products bearing the Lamborghini brand for sale on the website, and (iii) to design the appearance of such products. In fact, as Crudup testified, Garcia had the final say with respect to all decisions concerning the marketing and sale of products on the website, as he was the holder of the purported licensing rights. The above facts also show that Garcia was to receive 12% of the profits from selling Lamborghini-merchandise into the United States through the website. This evidence makes clear that Garcia personally directed electronic activity into the United States through his participation in marketing and selling...