12-2317-cv (L) Tiffany LLC v. China Merchants Bank 

### UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT 

### SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Fole y Square, in the City of New York, on the 17 thday of September, two thousand fourteen. PRESENT:
D EBRA A NN L IVINGSTON , G ERARD E. L YNCH , R AYMOND J. L OHIER , J R ., Circuit Judges

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______________________________________________ T IFFANY (NJ) LLC, T IFFANY AND C OMPANY , Plaintiffs-Appellees , -v.- Nos. 12-2317-cv; 12-2330-cv; 12-2349-cv C HINA M ERCHANTS B ANK , N EW Y ORK B RANCH , I NDUSTRIAL AND C OMMERCIAL B ANK OF C HINA , L TD ., N EW Y ORK B RANCH , B ANK OF C HINA , N EW Y ORK B RANCH , Movants-Appellants , B RUCE F ORBSE , C HEN J IA WEN , G IMI W OOTEN , ET AL ., Defendants

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1A NDREW R HYS D AVIES (Molly C. Spieczny, on the brief ), Allen & Overy LLP, New York, NY,for Movants-Appellants.
R OBERT L. W EIGEL (Howard S. Hogan, Jennifer C. Halter, Anne M. Coyle, on the brief ), Gibson, Dunn & Crutcher LLP, New York, NY, for Plaintiffs-Appellees.

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the order of the District Court is AFFIRMED in part, VACATED in part, and REMANDED. Plaintiffs-Appellees Tiffany (NJ) LLC and Ti ffany and Company (the “plaintiffs”) brought suit in the United States District Court for th e Southern District of New York asserting, inter alia , claims for trademark infringement against nine identified defendants plus unidentified John Does and ABC Companies (collectively “defendants”) that allegedly produced and sold counterfeit products. On August 3, 2011, the district court (Buchwald, J. ) entered a preliminary injunction freezing the defendants’ assets. The preliminary injunction specifically listed five accounts located at China Merchants Bank, Industrial and Commercial Bank of China, and Bank of China (collectively, the third-party “Banks”). Tiffany pr ovided the Banks with notice of the preliminary injunction at their New York branches. The Banks subsequently moved to modify the preliminary injunction so that it would not apply to accounts he ld in China and the plaintiffs cross-moved to compel compliance. On May 23, 2012, the district court denied the motion to modify and granted Tiffany’s cross-motion to compel compliance with the asset freeze provisions of the preliminary injunction. 1 This appeal followed. We assume the parties’ familiarity with the underlying facts,

1 The district court also granted Industrial and Commercial Bank of China’s motion to modify the discovery portion of the injunction a nd directed Tiffany to seek discovery through the Hague Convention as to that Bank. On the other hand, the district court denied Bank of China’s 2the procedural history of the case, and the issues on appeal. Simultaneously with this summary order we decide, by opinion, Gucci America, Inc. v. Bank of China , Nos. 11-3934; 12-4557, which was argued in tandem with this case. The legal issues decided in Gucci substantially overlap with the legal issues presented here, and we therefore incorporate the legal analysis in Gucci relevant to this summary order.
* * * I. Asset Freeze Injunction The Banks first challenge the district court’s authority to issue the preliminary injunction freezing the defendants’ assets. The Banks argue that the asset freeze injunction was impermissible because: (1) the district court lacked jurisdicti on over the Bank to issue it; and (2) the court lacked the equitable authority pursuant to Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc. , 527 U.S. 308 (1999), to do so. As to both arguments, we disagree. Relying on the analysis set forth in Gucci , we reject the Banks’ argument that personal jurisdiction over the Banks was necessary for the di strict court to issue the asset freeze injunction. Because the injunctions at issue “do not directly en join payment system participants [such as banks], it is irrelevant whether the district court has personal jurisdiction over them.” NML Capital, Ltd. v. Republic of Arg. , 727 F.3d 230, 243 (2d Cir. 2013), cert. denied, 134 S. Ct. 2819 (2014). Once a district court issues an asset freeze injunc tion against parties over whom it has personal jurisdiction, the injunction “automatically forbids others – who are not directly enjoined but who act ‘in active concert or participation’ with an enjo ined party – from assisting in a violation of the

motion to modify the discovery portion of the orde r, declining to direct the plaintiffs to seek documents through the Hague Convention as to the Bank of China. The district court’s discovery rulings are not raised on this appeal. 3injunction.” NML Capital , 727 F.3d at 243 (citing Fed. R. Civ. P. 65(d)). Therefore, only personal jurisdiction over the defendants – which is not contested on appeal – was required to issue the asset freeze injunction. Moreover, we also conclude that the district court had the equitable authority to issue the prejudgment asset freeze, relying again on the analysis in Gucci . The Supreme Court in Grupo
Mexicano was careful not to abrogate the settled princi ple that in an action for equitable remedies, courts have the inherent authority to issue prejudgment asset freezes. See 527 U.S. at 325 (noting that “preliminary relief available in a suit seeking equitable relief has nothing to do with the preliminary relief available in a creditor’s bill seeking . . . a lega l debt”). In this case, Tiffany’s complaint includes a request, under the Lanham Act, 15 U.S.C. § 1501, et seq. , for an “accounting and disgorgement of Defendants’ illicit profits.” J.A. 45. In accordance with our holding in Gucci

– and well settled Supreme Court precedent – a clai m for an accounting of profits under the Lanham Act is equitable in nature. Ther efore, the district court had th e equitable authority to issue a prejudgment asset freeze in this case. II. Order Enforcing Asset Freeze Injunction Against Banks In addition to issuing a preliminary injunction freezing the defendants’ assets, the district court denied the Banks’ motions to modify the in junction and specifically compelled the Banks to comply with the asset freeze provisions in the preliminary injunction. We vacate this portion of the May 23, 2012 order and remand for the district c ourt to: (1) consider whether it has personal jurisdiction necessary to order the Banks to comp ly with the asset freeze; and (2) apply principles of international comity before deciding whether to order the Banks to comply.

4While jurisdiction over a defendant is all that a court needs to issue an injunction freezing that party’s assets, a district court can enforce an injunction against a nonparty only if it has personal jurisdiction over that nonparty. See Canterbury Belts Ltd. v. Lane Walker Rudkin, Ltd. , 869 F.2d 34, 40 (2d Cir. 1989). Following th e Supreme Court’s decision in Daimler AG v. Bauman , 134 S. Ct. 746 (2014), and for the reasons stated in Gucci , the Banks were not subject to general jurisdiction in the district court. The Banks’ sites of incorporation and principal places of business are all outside of the United States. See J.A. 810 (China Merchants Bank branches); J.A. 857-61 (Industrial and Commercial Bank of China branch es); Gucci ECF No. 288 (citing OCC Evaluation Aug. 18, 2008) (“At year-end 2007, [Bank of China] had 10,145 domestic branches, 689 overseas branches and subsidiaries in 27 countries around the world and 1200 correspondent banks.” Id. at 1): J.A. 863 (Bank of China branches in the Un ited States). And there is no basis on which to conclude that the Banks’ contacts in New York ar e so “continuous and systematic,” judged against their national and global activitie s, that they are “essentially at home” in that state. Daimler , 134 S. Ct. at 761. Thus, the district court erred in exercising general jurisdiction over the Banks. But as in Gucci , the district court’s exercise of ju risdiction here rested on the only recently abrogated principle that the presence of the Banks’ branches in New York subjected them to general jurisdiction. Accordingly, the dist rict court had no reason to consid er, or to develop the record as to, whether it could properly assert specific ju risdiction over the Banks, or whether the Banks consented to jurisdiction by applying for author ization to conduct business in New York and designating the New York Secretary of State as their agent for service of process. See N.Y. Bus. Corp. Law §§ 1301(a), 1304(a)(6); N.Y. Banking Law § 200; Bagdon v. Phila. & Reading Coal &
Iron Co. , 217 N.Y. 432 (1916) (Cardozo, J. ). We therefore vacate the May 23 order requiring the

5Banks to comply with the asset freeze injunction a nd remand for the district court to determine, in accordance with the principles we outline in Gucci , whether it may properly exercise jurisdiction over the Banks for the purpose of compelling their compliance with the asset freeze. In the event that the district court determines that it has personal jurisdiction over the Banks, it should also consider, before exercising such jurisdiction, whether it should do so, considering principles of international co mity. As we hold today in Gucci , before a district court may enforce an asset freeze injunction extraterritorially against a third-party foreign bank in a way that would cause the bank to violate its own domestic law, prin ciples of comity require the court to conduct an analysis drawing upon the factors provided by § 403 of the Restatement (Third) of Foreign Relations Law, entitled “Limitations on Jurisd iction to Prescr ibe.” As in Gucci , the Banks here assert a conflict between their domestic law and the asset fr eeze injunction. In particular, they assert that complying with the injunction and freezing the de fendants’ assets would violate Chinese law. Before ordering the Banks nonetheless to comply with the asset freeze, the district court failed to conduct a comity analysis with reference to th e factors in § 403, relying instead on its previous comity analysis regarding the production of documen ts. For this additional reason we vacate and remand the district court’s order. We have reviewed Appellants’ remaining argumen ts and find them to be without merit. For the foregoing reasons, the judgment of the district court is AFFIRMED in part, VACATED in part, and REMANDED. FOR THE COURT: Catherine O’Hagan Wolfe, Clerk

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