Helios Int'l S.A.R.L. v. Cantamessa USA, Inc.

HELIOS INTERNATIONAL S.A.R.L. and IDEA ITALIANA s.r.l., Plaintiffs,

v.CANTAMESSA USA, INC., FABRIZIO CANTAMESSA, and ROBERT KHEIT, Defendants.

12 Civ. 8205

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

Dated: July 31, 2013

Dated: July 27, 2013

OPINION

APPEARANCES:

Attorneys for Plaintiffs

OBERDIER RESSMEYER LLP

By: Carl W. Oberdier, Esq.

Kellen G. Ressmeyer, Esq.

Attorneys for Defendants

COWAN, LIEBOWITZ & LATMAN, P.C.

By: J. Christopher Jensen, Esq.

Scott P. Ceresia, Esq.

Sweet, D.J.

Defendants Cantamessa USA, Inc., ("CUSA"), Fabrizio Cantamessa and Robert Kheit (collectively, "Defendants") have moved under Fed. R. Civ. P. 12(b)(6) ("Rule 12(b)(6)") for partial dismissal of the complaint ("Complaint") filed by plaintiffs Helios International S.A.R.L. ("Helios") and Idea Italiana s.r.l. ("Idea" and collectively, "Plaintiffs").

In the Complaint, which was filed on November 9, 2012, Plaintiffs have asserted the following causes of action: violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962 (Counts 1-4); copyright infringement under the U.S. Copyright Act, 17 U.S.C. §§ 106(1)-(3) (Count 5); trademark infringement under the Lanham Act, 15 U.S.C. § 1125 (Count 6); trademark dilution under the Lanham Act (Count 7); false designation under the Lanham Act (Count 8); cancellation of federal registration under the Lanham Act (Count 9); state statutory and common law trademark infringement under the Trademark Act of New York, Gen. Bus. L. 360-1 and the common law of each of the fifty states (Count 10); conversion (Count 11); common law fraud (Count 12); trespass to chattels (Count 13); breach of fiduciary duty (Count 14); misappropriation of trade secrets (Count 15); unfair competition (Count 16); andbreach of the New York Consumer Protection Act ("NYCPA") § 349 (Count 17).

On January 18, 2013, Defendants submitted the instant motion for partial dismissal of the Complaint, which moved for dismissal of the following claims: (i) RICO (Counts 1-4); (ii) trademark dilution (Count 7); (iii) common law fraud (Count 12); (iv) breach of fiduciary duty (Count 14); (v) trade secret misappropriation (Count 15); and (vi) breach of the NYCPA § 349 (Count 17). The motion was heard and marked fully submitted on March 13, 2013.

Based upon the conclusions set forth below, the Defendants' motion to dismiss is granted with respect to Counts 1-4, Count 7, Count 12, and Count 17, and denied with respect to the other counts.

The Facts

As required on a motion to dismiss pursuant to Rule 12(b)(6), the facts alleged in the Complaint, which are set forth in pertinent part below, are presumed to be true, and all factual inferences are drawn in the plaintiffs' favor. See Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993).

Plaintiffs are owners and distributors of the Cantarnessa brand of jewelry. Compl. ¶ 2. The Cantaraessa line of jewelry was founded in Valenza, Italy in 1939 by the Cantarnessa family, and flourished for six decades under the family's leadership. Id. ¶ 3. However, in the early 2000s the business began to decline, and in 2004 the company ("Cantarnessa s.r.l.") was forced to declare bankruptcy. Id.

In 2007, Cantarnessa s.r.l.'s assets, including its tangible assets, i.e., jewelry, and intangible assets, i.e., copyrighted jewelry designs, the Cantarnessa name and the Cantarnessa "Crown Logo" trademark (collectively, the "Intellectual Property"), were acquired by plaintiff Idea. Id. ¶ 4. In 2009, plaintiff Helios purchased Idea's entire inventory of Cantarnessa brand jewelry and entered into an exclusive distributorship agreement with Idea. Id. ¶ 5.

In December 2009, Helios entered into an agreement with defendant Fabrizio Cantarnessa ("Cantarnessa"), a grandson of the founder of Cantarnessa s.r.l., in which Cantarnessa agreed to act as Helios' global sales agent in connection with the marketing and sale of Cantarnessa brand jewelry, and was authorized to use the Intellectual Property in that capacity.Id. ¶¶ 39-41. Cantarnessa was granted "unrestricted, unsupervised access" to a warehouse in Geneva, Switzerland containing Cantarnessa jewelry (the "Warehouse") and permission to remove jewelry from the Warehouse, and also was given "general authority to execute sales" of any Cantarnessa jewelry that he took from the Warehouse. Id. ¶¶ 6, 47. The agreement granted the same rights to Cantarnessa's wife, non-party Paola Brussino ("Brussino") .

In 2010, defendant Robert Kheit ("Kheit"), a business associate of Cantarnessa, entered into an agreement with Helios similar to the agreement between Helios and Cantarnessa. Id. ¶¶ 44-47.¹ As with Cantarnessa, Kheit was bestowed with authorization to use the Intellectual Property in connection with the marketing and sale of Cantarnessa brand jewelry. Id.

At some point in 2010, Cantarnessa, who was "infuriated and embittered by the loss of his family's jewelry business," secretly devised a plan with Kheit "to steal back from Heliosand Idea the entire Cantarnessa brand, including millions of dollars of inventory, jewelry designs, the Crown Logo and the Cantarnessa name." Id. ¶ 48.

In September 2010, the Defendants incorporated defendant Cantarnessa USA in New York and thereafter opened a boutique located in New York City (the "New York Boutique") that offered Cantarnessa brand jewelry for sale. Id. 11 49, 63. Defendants used the Intellectual Property to market Cantarnessa jewelry in the United States, and Plaintiffs have alleged that this included both authorized and unauthorized instances of usage. Id. ¶ 43.

From March 2010 through December 2010, Cantarnessa and Kheit sold approximately 125 pieces of Cantarnessa jewelry having an approximate aggregate value of $1,757,484.00. Id. ¶ 50. Pursuant to their respective agreements with Plaintiffs, Cantarnessa and Kheit were entitled to retain a total of $236,380.95 as commission, and were required to remit the remainder to Helios. Id. However, Cantarnessa and Kheit retained $1,138,787.26, and remitted only $618,696.81 to Helios. Id.

From the beginning of 2011 through November 2011, Defendants removed 185 pieces of Cantarnessa jewelry from the Warehouse. Id. ¶¶ 52-55. Defendants subsequently sold many of these pieces and kept all of the sales proceeds for themselves. Id.

During the course of 2011, Defendants engaged in efforts to publicize the Cantarnessa brand by sending pieces of Cantarnessa jewelry around the United States and the world for use in high-profile and high-visibility events. Id. ¶¶ 72. In June 2011, Defendants donated a pair of Cantarnessa earrings for use in a charity event held in Paris, France hosted by the fashion designer Valentino. Id. In July 2011, Defendants sent several pieces of Cantarnessa jewelry to California for use in a photo shoot of actress Lindsay Lohan for Vanity Fair magazine. Id. In September 2011, Defendants sent several pieces of Cantarnessa jewelry to Florida for use in a photo shoot of supermodel Adriana Lima for Elle Magazine. Id. In December 2011, Defendants sent several pieces of Cantarnessa jewelry to Philadelphia for use in a photo shoot of Melania Trump, wife of Donald Trump, for Philadelphia Style Magazine. Id.

Also in 2011, Cantarnessa and Kheit asked Helios and Idea to send approximately $5 million of jewelry to New York onthe premise that the jewelry was to be used in a temporary exhibition (the "New York Exhibition") meant to publicize the Cantarnessa jewelry line to U.S. consumers. Id. ¶ 57. In shipping the jewelry, Helios and Idea filed certain forms with customs officials indicating that the items were being imported temporarily and would later be returned, and therefore were not subject to the usual taxes that would be due on items being imported for commercial sale. Id. ¶ 58. During the exhibition, Cantarnessa and Kheit utilized the Intellectual Property, including the Cantarnessa name and the Cantarnessa Crown Logo, on the signage used to display the pieces. Id. ¶79. Following the exhibition, Defendants began selling the jewelry in their New York Boutique and via the internet. Id. ¶ 63. Idea has been notified by the Italian Chamber of Commerce that failure to produce proof of the jewelry's return to Italy will result in a fine of $27,452.61. Id. ¶ 97.

In June 2011 and November 2011, Defendants submitted trademark registration applications to the United States Patent & Trademark Office ("USPTO") and the Trademark and Designs Office of the European Union ("ETO") for the Crown Logo and Cantarnessa name. Id. ¶¶ 80-85. The application to the USPTO claimed that CUSA was the owner of the Crown Logo and the Cantarnessa name, and the ETO application asserted ownership byCantarnessa himself, whereas in actuality the Crown Logo and the Cantarnessa name belong to Idea. Id. In addition, the USPTO application claimed that the Crown Logo and Cantarnessa name were first used in commerce on March 15, 2011, whereas in actuality they had been used by Defendants prior to that date in their marketing efforts on behalf of Helios. Id.

Helios first became aware of Defendants' alleged scheme in October 2011, when it performed an inventory check on the contents of the Warehouse which revealed that jewelry was missing. Id. ¶ 53. Further investigation revealed that the jewelry had been taken by Cantarnessa and Kheit. Id. On October 5, 2011, Helios demanded an accounting by Cantarnessa of all sales of Helios' jewelry and all pieces still in Cantarnessa's possession. Id. ¶ 66. When Cantarnessa did not immediately respond to the request, Helios investigated further and discovered that its entire inventory that had been stored in the Warehouse was missing. Id. ¶ 67.

In early November 2011, Helios terminated its agreement with Cantarnessa, restricted Cantarnessa from having any access to its inventory, and demanded that Cantarnessa cease associating himself with Helios or the Cantarnessa brand and/or using the Cantarnessa Intellectual Property. Id. ¶¶ 67-68.

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