Allstar Marketing Group LLC. v. 545756338
- Katherine Failla
- 1:19-cv-04209
- U.S. District Court · Southern District of New York
- 6
In Allstar Marketing Group LLC v. 545756338, Judge Failla denied four post-judgment requests but allowed immediate enforcement and electronic service on defaulting defendants.
Allstar Marketing Group LLC, the defaulting defendants, and the financial institutions and third-party service providers targeted by Allstar’s additional requests.
What happened
In Allstar Marketing Group LLC v. 545756338, the court had already entered default judgment and granted Allstar some relief, including statutory damages, a permanent injunction, and continued electronic service on the defaulting defendants. This opinion addressed four additional requests concerning asset restraints, transferring assets, orders against third parties, and electronic service on financial institutions and service providers.
The court declined to continue the 30-day restraint on the defendants’ assets, explaining instead that Allstar could enforce the default judgment immediately. It also declined to freeze and transfer assets because third parties might have competing claims and would need notice and an opportunity to be heard. The court further declined to issue injunctions against financial institutions and service providers that were not parties, and declined to authorize electronic service on those third parties.
Judge Katherine Polk Failla ruled that the requested asset-transfer and third-party relief was not authorized under the cited rules and statutes, and that Allstar had not shown the necessary reasons for electronic service on the third parties. The court therefore denied those four requested forms of relief while permitting immediate enforcement and continued electronic service on the defaulting defendants.
The detailed version
- Allstar Marketing Group LLC. v. 545756338 · No. 1:19-cv-04209
- Katherine Failla
- July 1, 2020
Background
The court had entered judgment on June 30, 2020, against certain defendants who had defaulted. The earlier order granted Allstar Marketing Group LLC statutory damages, a permanent injunction, and authorization to continue serving the defaulting defendants electronically. This opinion explained why the court declined to grant four additional parts of Allstar’s proposed default-judgment relief.
Temporary asset restraint
Allstar sought a 30-day continuation of the restraint on property in which the defaulting defendants had an interest. Allstar relied on the 30-day enforcement stay in Federal Rule of Civil Procedure 62(a), arguing that the stay would give the defendants time to dispose of assets that could satisfy the judgment. The court declined to impose the requested restraint. Instead, it exercised its authority under Rule 62(a) to remove the 30-day stay, allowing Allstar to execute and enforce the default judgment immediately.
Asset freeze and transfer
Allstar sought to continue the prejudgment restraint on assets and require financial institutions holding those assets to transfer them to Allstar. It cited Federal Rules of Civil Procedure 64, 65, and 69, 15 U.S.C. § 1116(a), and New York Civil Practice Law and Rules § 5222.
The court concluded that it lacked authority to grant this request. Under Rule 69, New York procedures governing execution on the judgment required notice and an opportunity to be heard for third parties possessing or claiming an interest in the assets. The requested order would have required unknown financial institutions to transfer assets without addressing whether other creditors had superior claims. The court also concluded that § 1116(a), which permits narrowly tailored injunctions against further infringement, does not govern execution after judgment. Rules 64 and 65 likewise did not provide a basis for the requested asset freeze and transfer.
Requests against third parties
Allstar sought injunctions against financial institutions and third-party service providers. The court declined to grant those requests because the institutions and providers were not parties and had not been shown to be subject to the court’s personal jurisdiction. Rule 65(d) could potentially permit relief against nonparties shown to be acting in active concert or participation with the defaulting defendants. But the court found that Allstar had not made that showing. In particular, merely holding the defendants’ assets did not establish active participation in the alleged counterfeiting.
Electronic service
The court authorized continued electronic service on the defaulting defendants. It did not grant the same authorization for financial institutions or third-party service providers. Courts have discretion to authorize alternative service under Rule 4(f)(3), but generally require a reasonable attempt to serve the defendant and circumstances showing that court intervention is necessary. The court found Allstar’s explanation sufficient for continued electronic service on the defaulting defendants, but found that Allstar had not explained why electronic service should continue for the financial institutions and service providers.
Disposition
The court declined to grant the Temporary Restraint Request, the Freeze and Turn Over Request, the Third Party Requests, and the Alternative Service Request as to financial institutions and third-party service providers. It allowed Allstar to enforce the default judgment immediately and continued electronic service on the defaulting defendants. Judge Katherine Polk Failla signed the order.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.