Mcgraw-Hill Global Educ. Holdings, LLC v. Mehul Mathrani, Ankush Sharma, Anshoo Sharma, & Ibestbargains, LLC
Mcgraw-Hill Global Educ. Holdings, LLC v. Mehul Mathrani, Ankush Sharma, Anshoo Sharma, & Ibestbargains, LLC
Opinion of the Court
*408McGraw-Hill Global Education Holdings, LLC, Pearson Education, Inc., Cengage Learning, Inc., and Elsevier Inc. bring this copyright and trademark infringement against Mehul Mathrani, Ankush Sharma, Anshoo Sharma, and iBestBargains, LLC.
BACKGROUND
This case is one front in a multi-theater war by major textbook publishing companies against textbook counterfeiters in this District. The following facts are gleaned from the Complaint and are presumed true for the purposes of this motion. Plaintiffs are publishers and distributors of physical and digital textbooks and own copyrights in certain textbooks at issue in this action. (Compl. ¶¶ 21-23.) These textbooks also bear certain trademarks and service marks that Plaintiffs registered with the United States Patent and Trademark Office. (Compl. ¶ 24.)
The crux of the Complaint is that Defendants infringed Plaintiffs' copyrights and trademarks by engineering an international scheme to reproduce, import, distribute, and sell counterfeit versions of Plaintiffs' textbooks beginning in 2015 and continuing to this day. (Compl. ¶¶ 1, 3, 27.) Defendants-such as Mehul Mathrani in the United States and Ankush Sharma and Anshoo Sharma in India-allegedly perpetrated the scheme by creating a profusion of online accounts with wholesalers to whom they then sold counterfeit textbooks using automated "buyback" tools on the wholesalers' websites. (Compl. ¶¶ 18, 31-35, 39-41.) To ship the books to the wholesalers, the Indian operators of the online accounts sometimes provided the textbooks to shipping companies known as "freight forwarders" for delivery into the United States. (Compl. ¶¶ 35-36.) Once the books arrived in the United States, they were delivered to the wholesalers. (Compl. ¶¶ 14-15, 36.) Other times, the Indian operators of the online accounts shipped the counterfeit textbooks from India with the help of international logistics companies. (Compl. ¶ 40.) In addition, Plaintiffs allege that Defendants-such as Mehul Mathrani and iBestBargains-received bulk shipments of textbooks from India by seaborne freight, which they re-sold to wholesalers and individual consumers through online marketplaces, such as Amazon. (Compl. ¶¶ 31, 42-45.) Relevant to the issues raised in iBestBargains' motions, the Complaint alleges that iBestBargains purchased counterfeit textbooks from Radhika International, a known provider of counterfeit textbooks, for resale in the United States, and that the Sharma Defendants directed *409counterfeit textbooks to iBestBargains for resale.
DISCUSSION
I. Personal Jurisdiction
On a Rule 12(b)(2) motion, a plaintiff bears the burden of showing jurisdiction. Metro. Life. Ins. Co. v. Robertson-Ceco Corp.,
For a court to exercise personal jurisdiction, three requirements must be met: (1) "the plaintiff's service of process upon the defendant must have been procedurally proper"; (2) "there must be a statutory basis for personal jurisdiction"; and (3) "the exercise of personal jurisdiction must comport with constitutional due process principles." Waldman v. Palestine Liberation Org.,
A. iBestBargains' New York Contacts
In determining the strength of the defendant's contacts under section 302(a) and the Due Process Clause for purposes of specific jurisdiction, a court considers "the totality of [a defendant's] contacts with the forum state." Chloe v. Queen Bee of Beverly Hills, LLC,
With respect to iBestBargains, the Complaint alleges that (1) Radhika International sold counterfeit textbooks to iBestBargains for resale; (2) the Sharma Defendants directed counterfeit textbooks to iBestBargains for resale; and (3) Plaintiffs purchased counterfeit textbooks, including Economics: Private and Public Choice (Cengage) and Computer Organization and Design (Elsevier), from iBestBargains. (Compl. ¶¶ 42, 45, 47.) Plaintiffs attach a declaration describing their investigator's "test" purchases from third-party online sellers of textbooks distributed by iBestBargains, including the two examples enumerated in paragraph 45 of the Complaint. (Declaration of Michael Candore, ECF No. 83 ("Candore Decl.").) These test purchases, which Plaintiffs determined to be counterfeit, were shipped from Texas addresses associated with *410iBestBargains to an investigator's address in Maryland.
Another declaration submitted by Plaintiffs describes three categories of New York contacts. First, between January 1, 2015 and September 17, 2017, iBestBargains made 1,124 sales of books to New York consumers on three online marketplaces, representing 7.09% of iBestBargains' total sales on those marketplaces. (Declaration of Kerry M. Mustico, ECF No. 82 ("Mustico Decl.") ¶ 6.) iBestBargains derived $21,741.44 in revenue from these New York sales, which constitutes 6.23% of its total revenue on these marketplaces. (Mustico Decl., Ex. 2.) Although iBestBargains made sales through other online marketplaces, it has not produced the corresponding sales information. (Mustico Decl. ¶¶ 8-9.) Second, the declaration avers that iBestBargains operates a website at www.acadymix.com through which it sells Plaintiffs' textbooks and advertises shipment anywhere in the United States. (Mustico Decl. ¶ 10.) Third, Plaintiffs allege that iBestBargains granted a power of attorney authorizing Priority Airfreight NY, Ltd., a New York entity, to act on behalf of iBestBargains with respect to "all shipments of books imported, exported, or transported to or by" iBestBargains. (Mustico Decl. ¶ 11.) In the four-and-a-half months after executing the power of attorney, iBestBargains received 39 shipments of books totaling 27,712 pounds from Radhika International. (Mustico Decl. ¶ 11.)
B. New York's Long-Arm Statute
For an out-of-state defendant in a federal question case, "federal courts apply the forum state's personal jurisdiction rules if the applicable federal statute does not provide for national service of process." Sunward Elecs., Inc. v. McDonald,
Plaintiffs rely on two provisions of New York's long-arm statute to support the exercise of jurisdiction over iBestBargains: CPLR §§ 302(a)(1) and 302(a)(3). CPLR § 302(a) provides that for "a cause of action arising from any of the acts" enumerated below, New York courts may exercise jurisdiction over any non-domiciliary who in person or through an agent:
1. transacts any business within the state or contracts anywhere to supply goods or services in the state; or
...
3. commits a tortious act without the state causing injury to person or property within the state, ... if he
i. regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or
ii. expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce ...
CPLR § 302(a)(1) & (3).
This Court need look no further than § 302(a)(1).
Plaintiffs rely extensively on Chloe, which "update[d] [the Second Circuit's] jurisprudence on personal jurisdiction in the age of internet commerce." Chloe,
To be fair, Chloe was concerned with whether the court could exercise personal jurisdiction over the employee defendant, who had moved to dismiss under Rule 12(b)(2). Nevertheless, Chloe's discussion of the relevant minimum contacts between the employer defendant and New York is instructive on what constitutes a sufficient nexus between a defendant's New York contacts and the cause of action to satisfy the "arising from" prong. There, the district court characterized the defendant's non-Chloe sales as "purposeful availment of New York only for 'some business activity,' but not for 'the purpose of selling Chloe handbags-the only activity upon which Plaintiffs' complaint is based.' " Chloe,
Applying these principles, iBestBargains' 1,124 sales to New York customers through online marketplaces constitute relevant minimum contacts, even if not all of those sales were counterfeit or of Plaintiffs' textbooks.
In any event, Plaintiffs' averments that iBestBargains operates a website through which customers in the United States-including those in New York-may purchase Plaintiffs' textbooks provides an additional basis for jurisdiction under § 302(a)(1). Lifeguard Licensing Corp.,
In response, iBestBargains submits two affidavits from its managing member, Chanana Deepali. The first broadly disavows all connections to New York. The second merely denies various factual allegations made by Plaintiffs in their opposition papers. The Deepali affidavits are unpersuasive, however, not only because of their conclusory and self-serving nature, but also because some of the averments are flatly contradicted by iBestBargains' own jurisdictional discovery.
C. Constitutional Due Process
Having found that New York's long-arm statute permits personal jurisdiction, this Court proceeds to "analyze whether personal jurisdiction comports with the Due Process Clause." Chloe,
1. Minimum Contacts
The minimum contacts inquiry considers "whether the defendant has sufficient contacts with the forum state to justify the court's exercise of personal jurisdiction." Chloe,
Here, iBestBargains' contacts with New York satisfy the minimum contacts prong of the constitutional inquiry for the same reasons that they satisfy the statutory inquiry. Accord Licci ex rel. Licci,
2. Reasonableness
The reasonableness analysis pertains to whether exercising personal jurisdiction *414comports with "traditional notions of fair play and substantial justice." Int'l Shoe Co.,
Here, iBestBargains does not offer any argument that other considerations outweigh Plaintiffs' showing of minimum contacts. Cf. Peeq Media, LLC v. Buccheri,
II. Failure to State a Claim
iBestBargains' motion under Rule 12(b)(6) is premised solely on the argument that lumping all defendants together in the complaint is insufficient to provide fair notice of the grounds for the claims made against each specific defendant.
Under Rule 8, a complaint must "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly,
Here, the complaint alleges the roles that the Defendants-including iBestBargains-played in the counterfeiting scheme. (See, e.g., Compl. ¶¶ 13-18, 35-36, 38, 42, 44-45, 47.) Plaintiffs also allege that the infringement began in 2015 and continues to this day. (Compl. ¶ 27.) See LivePerson, Inc. v. 24/7 Customer, Inc.,
In sum, while the Complaint's references to all Defendants as a collective necessarily "muddles the clarity of the allegations," Vantone Grp. Ltd. Liability Co. v. YangpuNGT Indus. Co.,
III. iBestBargains' Supplemental Requests
iBestBargains challenges consideration of any facts obtained in jurisdictional discovery as beyond the four corners of the Complaint and asks this Court to exclude from evidence any jurisdictional discovery in direct conflict with or unsupported by the Complaint. The decision to allow jurisdictional discovery and "to what extent, are matters committed to a trial judge's broad discretion." In re Terrorist Attacks on Sept. 11, 2011,
*416While personal jurisdiction must "[e]ventually ... be established by a preponderance of the evidence, either at an evidentiary hearing or at trial," iBestBargains' request to exclude jurisdictional discovery from consideration on this motion is premature. See Capitol Records, Inc. v. MP3tunes, LLC,
Not to be deterred, iBestBargains moved to strike Plaintiffs' affidavits on the basis that they are not admissible evidence. In its filing, iBestBargains also interposes various evidentiary objections to statements in those affidavits and seeks "a ruling from the court on the objections to the entry of Kerry Mustico's and Michael Candore's affidavits into evidence in which a hearing is scheduled for December 1, 2017." (Objection of Entry of Plaintiffs' Affidavits Alternatively Motion to Strike Plaintiffs' Affidavits, ECF No. 93, at 1.) District courts "have broad discretion in formulating the appropriate procedure to consider its personal jurisdiction, including the decision to conduct an evidentiary hearing." Harris v. Wu-Tang Prods., Inc.,
CONCLUSION
For the foregoing reasons, iBestBargains' motion to dismiss is denied. iBestBargains' requests to exclude jurisdictional discovery and to strike Plaintiffs' affidavits are also denied. The Clerk of Court is directed to terminate the motions pending at ECF Nos. 79 and 93.
SO ORDERED.
This action is stayed against Mathrani, who has filed a bankruptcy petition. On November 22, 2017, this Court granted Plaintiffs' motion for alternative service on Ankush Sharma and Anshoo Sharma, and Plaintiffs served the Sharma Defendants by email on December 4, 2017. (See ECF No. 94.)
In its reply, iBestBargains contends that because Plaintiffs represented at the pre-motion conference that personal jurisdiction was supported by CPLR § 302(a)(3), their arguments for personal jurisdiction under CPLR § 302(a)(1) should be stricken. Of course, Plaintiffs made that representation before this Court granted limited jurisdictional discovery, and in any event, the complaint alleges that personal jurisdiction is permitted by CPLR § 302 based on Defendants' transaction of business within New York-an argument that sounds in CPLR § 302(a)(1). (Compl. ¶ 7.)
While personal jurisdiction cannot be premised on Plaintiffs' investigators' test purchases because those textbooks were shipped into Maryland, those test purchases-which were made through another online marketplace-suggest that at least some of the 1,124 New York sales may be of counterfeit copies of Plaintiffs' textbooks.
For instance, iBestBargains' first affidavit states that iBestBargains "has not and currently does not, target any business activities towards residents of the State of New York" and that it "does not derive substantial (if any) revenue from goods used or consumed in the State of New York," statements which are plainly belied by their jurisdictional discovery. (Affidavit of Chanana Deepali, ECF No. 80-1.) As another example, iBestBargains' second affidavit states that iBestBargains "is not transacting business in New York through Priority Airfreight," despite the power of attorney produced by Priority Airfreight NY's affiliate, Aramex. (Supplemental Affidavit of Chanana Deepali, ECF No. 91-1, ¶ 5.)
iBestBargains argues for the first time in its reply and at oral argument that Plaintiffs' copyright claims fail because they do not allege when the infringement occurred or identify every allegedly infringed work. Its reply also advances the argument that Plaintiffs' failure to allege a use in commerce is fatal to their trademark infringement claims. This Court need not consider arguments made for the first time in a reply brief or at oral argument. See Standard Gen. L.P. v. Travelers Indem. Co. of Conn.,
Reference
- Full Case Name
- MCGRAW-HILL GLOBAL EDUCATION HOLDINGS, LLC, Pearson Education, Inc., Cengage Learning, Inc., and Elsevier, Inc. v. Mehul MATHRANI, Ankush Sharma, Anshoo Sharma, and iBestBargains, LLC
- Cited By
- 14 cases
- Status
- Published