Astor Chocolate Corp. v. Elite Gold Ltd.

Background

Astor Chocolate Corp. alleged trademark infringement, unfair competition, deceptive business practices, false advertising, and injury to business reputation. The claims concerned products bearing the registered “ASTOR” mark owned by Elite Gold Ltd. Astor alleged that the Mayora defendants manufactured and sold similar products under a license from Elite Gold, that Takari International, Inc. distributed the products to U.S. retailers, and that the Food Depot defendants sold them through online marketplaces, including to customers in New York.

The defendants moved to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). The Mayora defendants also challenged service of process. The court previously authorized limited jurisdictional discovery and then considered the original motions together with the parties’ supplemental submissions.

Personal Jurisdiction Standards

Because jurisdictional discovery had occurred, Astor had to make a factually supported initial showing of personal jurisdiction. The court considered whether service was proper, whether a statute authorized jurisdiction, and whether exercising jurisdiction would satisfy constitutional due-process requirements.

Astor relied primarily on New York’s long-arm statute, which can allow specific personal jurisdiction over claims connected to a defendant’s New York conduct. Astor also relied alternatively on Federal Rule of Civil Procedure 4(k)(2), which can provide jurisdiction for federal claims against a defendant not subject to jurisdiction in any state but having sufficient contacts with the United States as a whole.

Food Depot Defendants

The court denied the Food Depot defendants’ motion to dismiss. Jurisdictional discovery showed that they had made at least five sales of allegedly infringing products to New York customers who were not connected to Astor or its counsel, in addition to the two purchases arranged by Astor’s counsel. Those sales and shipments constituted business conducted in New York, and Astor’s claims arose from that conduct.

The court also held that exercising jurisdiction was consistent with due process. The Food Depot defendants marketed the products to New York customers and sold, invoiced, and delivered products there. Those activities showed that they purposefully availed themselves of the privilege of doing business in New York. The court recognized some burden from litigating in New York but found that the relevant fairness factors did not make jurisdiction unreasonable.

Mayora Indah

The court granted the motion to dismiss filed by Mayora Indah. It did not need to decide whether service through Yuki Teng was valid because Astor later served Mayora Indah directly. The court held that the later service was timely, reasoning that Astor had attempted service within the relevant period, acted reasonably after the service dispute arose, and caused no demonstrated prejudice through the delay.

The court nevertheless found no personal jurisdiction over Mayora Indah. Mayora Indah sold the products to Takari, which sold them to U.S. retailers, which then sold some products to New York customers. The court found no evidence that Mayora Indah itself sold products into New York, controlled Takari or the Food Depot defendants, or had an agreement directing products to New York. This indirect distribution chain did not establish jurisdiction under New York’s provisions for transactions of business or tortious acts in New York.

The court also rejected jurisdiction under the provision covering out-of-state torts causing injury in New York. Although several required factors appeared to be present, Astor did not show that Mayora Indah expected or should reasonably have expected its conduct to have consequences in New York. The record showed, at most, awareness that products might eventually reach New York through distribution channels Mayora Indah did not control. Astor also failed to satisfy Rule 4(k)(2) because it did not certify that Mayora Indah was not subject to jurisdiction in any state. The court therefore could not exercise personal jurisdiction over Mayora Indah.

Mayora Group and Mayora Co.

The court treated “Mayora Group” as a trade name for Mayora Indah rather than a separate legal entity, and found that no legal entity named “Mayora Co.” had been identified. Because no contrary information emerged during discovery, the court granted the Mayora defendants’ motion and directed the clerk to terminate Mayora Group and Mayora Co. from the case.

Elite Gold

The court granted Elite Gold’s motion to dismiss. Elite Gold licensed the “ASTOR” mark to Mayora Indah but did not itself manufacture, sell, distribute, market, or promote products bearing the mark. The court concluded that Elite Gold’s connections to New York were even more remote than Mayora Indah’s and that Mayora Indah’s activities did not establish jurisdiction over Elite Gold.

The court rejected Astor’s argument that Elite Gold’s U.S. trademark registration supplied federal jurisdiction under Rule 4(k)(2). It also rejected the argument that an unrestricted license between foreign parties created sufficient U.S. contacts merely because the license did not prohibit sales in the United States. The court concluded that no statutory basis supported personal jurisdiction over Elite Gold.

Additional Discovery and Disposition

Astor asked for additional jurisdictional discovery based on allegedly incomplete or evasive responses. The court declined that request because Astor had not sought an order compelling discovery during the discovery period and had proceeded with the record it received.

Judge Paul A. Engelmayer denied the Food Depot defendants’ motion to dismiss and granted the motions filed by the Mayora defendants and Elite Gold. The clerk was directed to terminate PT Mayora Indah TBK, Mayora Group, Mayora Co., and Elite Gold Ltd. from the case. The Food Depot defendants were required to file an answer by January 4, 2021.