ALLSTAR MARKETING GROUP, LLC v. AFACAI
- John Cronan
- 1:20-cv-08406
- U.S. District Court · Southern District of New York
- 7
In Allstar Marketing Group v. Afacai, Judge Cronan granted Wish’s intervention request for limited purposes and denied its discovery request as moot.
Wish may participate in the case to oppose the storefront shutdowns and asset freezes that directly affect its marketplace operations; its discovery-related intervention request was denied as moot. The merchants and Allstar remain parties to the underlying trademark and copyright dispute.
What happened
Allstar Marketing Group, LLC sued various Wish marketplace merchants over alleged counterfeit versions of its “Socket Shelf,” asserting trademark, copyright, and related claims. Wish sought to intervene because a preliminary injunction required it to shut down the merchants’ storefronts and freeze their accounts.
Wish said those measures affected its own business and revenue, while Allstar argued Wish lacked a protectable interest and was asserting the merchants’ rights. The court found Wish had a concrete interest because the injunction directly restricted its operations, and the absent merchants would not adequately protect that interest.
Judge John P. Cronan denied as moot Wish’s request to intervene regarding discovery and granted its request to intervene regarding the storefront closures and asset freezes. The court did not change the preliminary injunction at that time but allowed Wish to address any permanent injunction.
The detailed version
- ALLSTAR MARKETING GROUP, LLC v. AFACAI · No. 1:20-cv-08406
- John Cronan
- Jan. 8, 2021
Background
Allstar Marketing Group, LLC sued various merchants on Contextlogic doing business as Wish’s online marketplace. Allstar alleged that the merchants sold counterfeit versions of its “Socket Shelf,” asserting claims under federal trademark and copyright laws and related state and common law. The court had entered a preliminary injunction that required Wish to shut down the merchants’ storefronts, freeze their Wish accounts, and comply with limited discovery obligations.
Wish moved to intervene, meaning it asked to become a participant in the case for the limited purpose of challenging obligations imposed directly on it. Wish did not seek full intervention and did not challenge the merits of Allstar’s underlying claims. It sought to intervene regarding the discovery requests and the storefront shutdowns and asset freezes.
Court’s Analysis
The court first concluded that Wish’s request concerning discovery was moot because the court had already limited discovery to search terms agreed upon by Allstar and Wish. The court therefore considered only Wish’s request concerning the storefront shutdowns and asset freezes.
Wish sought intervention as of right under Federal Rule of Civil Procedure 24(a), or alternatively permissive intervention under Rule 24(b). For intervention as of right, a nonparty must file a timely motion, have an interest in the litigation, show that the interest may be impaired by the case’s outcome, and show that the existing parties do not adequately protect that interest.
The court found that Wish’s motion was timely and that the merchants, none of whom had appeared, would not adequately represent Wish’s interests. The court also found that Wish had a direct, substantial, and legally protectable interest. The injunction bound Wish, restricted its ability to support commerce on its platform, required it to shut down businesses operating there, deprived it of revenue from those businesses’ sales, and imposed obligations that significantly limited its business.
The court rejected Allstar’s arguments that Wish was asserting the merchants’ rights or that Wish’s alleged complicity in counterfeit sales prevented intervention. The court found that Wish sought to protect its own interest in the continued operation of marketplaces on its platform, and Allstar had not brought claims against Wish. Because the court granted intervention as of right, it did not decide whether Wish could intervene permissively under Rule 24(b).
Ruling
The court denied as moot Wish’s motion to intervene regarding discovery. It granted Wish’s motion to intervene regarding the storefront closures and asset freezes under Rule 24(a)(2). The court declined to adjust the preliminary injunction at that time, but stated in a separately docketed order that Wish could express its views on permanent injunctive relief. Judge John P. Cronan signed the order.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.