Donnelly v. Anand

Background

Brian Donnelly, also known as “KAWS,” sued Jonathan Mohan Anand in the Southern District of New York, alleging violations of federal trademark and copyright laws arising from the sale and promotion of counterfeit KAWS products. After Anand filed for bankruptcy, the New York case was stayed. Donnelly then filed an adversary proceeding in the United States Bankruptcy Court for the Eastern District of Virginia seeking a determination that his claim was not dischargeable under Bankruptcy Code § 523(a)(6), which covers debts arising from a debtor’s willful and malicious injury.

Donnelly moved to withdraw the bankruptcy court’s reference of the adversary proceeding and asked that the matter be transferred to the Southern District of New York. Anand did not object, and the objection period expired.

Withdrawal of the Bankruptcy Reference

The court held that withdrawal was mandatory under 28 U.S.C. § 157(d). The dischargeability claim depended, at least in part, on whether Anand’s alleged conduct violated the Lanham Act, the federal trademark statute. Resolving that issue could require deciding whether Donnelly owned a valid and legally protectable trademark, whether the mark was used in a way likely to cause consumer confusion, and related trademark questions. Because the proceeding required substantial and material consideration of federal law regulating activities affecting interstate commerce, the court concluded that the bankruptcy reference had to be withdrawn.

The court also found that discretionary factors supported withdrawal. The trademark issues were non-core bankruptcy matters because they did not arise under bankruptcy law, originated in the earlier New York litigation, and could exist independently of the bankruptcy case. Keeping those issues in bankruptcy court could delay resolution because the bankruptcy judge would have to submit proposed findings and conclusions for review by the district court. The court also found that Donnelly was not seeking withdrawal to shop for a favorable forum; he had originally brought the trademark claims in New York and filed the bankruptcy proceeding there only because Anand filed for bankruptcy in Virginia. The court did not analyze the factors concerning efficient use of resources or the preservation of a jury-trial right because the parties had not addressed them.

Transfer to the Southern District of New York

The court held that transfer was appropriate under 28 U.S.C. § 1404(a). The matter could have been brought in the Southern District of New York, where the related action involved the same underlying trademark and copyright allegations. The court gave substantial weight to Donnelly’s choice of venue and found that witness access, party convenience, and the interests of justice favored transfer. The related New York case had proceeded there for more than two years, including discovery and evidence submissions, before being stayed because of the bankruptcy filing.

Disposition

The court GRANTED Donnelly’s Motion to Withdraw Reference. It ordered that the matter be transferred to the United States District Court for the Southern District of New York in the related action, Donnelly v. Anand, No. 1:21-cv-9562. The opinion resolves the location and court handling the proceeding; it does not decide the underlying trademark claims or the dischargeability issue.