2004 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit

7-28-2004 

# Lor i l l a r d T ob a cco C o v

. B i s a n F o o d C or p

P r e c e de n t i al or N on-P r e c e de n t i al : P r e c e de n t i al

D ocke t N o . 03-3151

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Thi s de c i sion i s br ou gh t t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i l l a no va U nive r sit y S choo l of L a

w Di g it al Re posit or y

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w . v i l l a no va . e du

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w . v i l l a no va . e du/thir dc ir c uit_2004/4291 PRECE DENTI AL

IN T HE UNI TED ST ATES C OURT OF

APPEALS FO R T HE TH IRD CIR CU IT

_______________ NO. 03-3151

LORI LLARD T OBACCO COMPA NY a Delaware corpor ation,

Appellant

v.

BIS AN FOOD COR P. d/ b/ a NEW WAY SUPERMARKET, AL I SA YAM, HAME D S AYA M, SAMMY J. ABDUL

______________________ NO. 03-3160

LORI LLARD T OBACCO COMPA NY a Delaware corpor ation,

Appellant

v.
EDWIN LIQUOR STORE; ANNA RO DRIGUEZ

______________________ NO. 03-3161

LORI LLARD T OBACCO COMPA NY a Delaware corpor ation,
Appellant

v.

JOH N D OE CO RP . d/b/a KRAU SZER’S; SUBHASH PATEL

_______________________________ On Appeal From The United State s Distri ct Court For

The Distri ct Of New Jersey (D.C. Nos. 03- cv-03445, 03- cv-02132,

03-cv-02807) Honorable Katharine S. Hay den, Dist rict Judge

_______________________________ Argued June 15, 2004 Be for e: A LIT O, S M ITH and BE CK ER , Circuit

Judges

.

(Fil ed July

28, 2004)

ERI C S. ARONSON ( ARGUED) Gre enbe rg Tr aurig 200 Campus Drive P.O. Box 677 Florham Park, NJ 07932
Attorneyfor Appell

ant

________________________ OPINI ON OF THE COURT

________________________2

BE CK ER , Circuit

Judge

. This c ase concern s a District Cou rt’s refusalto is sue , at the be hest o f ciga rette manufacturer L oril lard Tobacco C o

. (“Lo rill ard ”), ex parte orders directi ng the seizure from three New Jersey retailers (c ol lec tiv ely, the “d efen dants ”) of a lle g edly
coun te rf eit Newport brand cigarettes, under the Tra demarkCo un terfe iti ng Act of 1984 (the “Ac t”) , Pu b. L. No. 98- 473, Title II , ch. XV, 98 S tat. 21 78, codifie d in relevant part at 15 U.S.C. § 1116(d) . In ruling on Lo rillard’s applic a ti ons for ex parte seizure, the District Cou rt declin ed to find, pur suantto 15 U. S. C. § 1116(d ), eithe r that

(1) “an or der other

than
an ex pa rte se izure o rder is n ot ade quate to achieve the purpos es of secti on 1114 [relating to counterf

eite d trademarks], ” or (2) the defe ndan ts or t he ir a ss oc iat es “w ou ld de str oy, move, hide, or otherwise make [the
coun terfeit] matter

inacces sibl e to the cour t, if [ L orilla rd] w ere to pro cee d on not ice.” Acco rd in gl y, the D istrict Co urt refu sed to issue the requested seizure orders, an d f ortwo of the defendant s iss ued br oad tem porary restraini ng or ders (T RO s), one of w hich is
resc rib ed infra note 2. Finding t hat the Distri ct Court correctl y i nterpreted § 1114(d ), that its factu a l findin gs are not cle arly erroneous, and th at it d id not ab use its di sc re ti on, we wi llaff

irm.

I. Facts and P rocedura l History
Lorill ard is the holder of severalregis ter e d trademarks affil iate d with the N ewp ort brand of mentholated cigarettes. As the number one brand of m entho l c ig arettes (and the
over all number two b r and) in t he United States, th e Ne wport brand has become a target of co unterf eit cigare tte ma kers. T his is a consoli da ted a ppeal of three case s against three d iffere nt defendant s who allege dly dealt

in thes e count er feit New port cigarettes

. Each of the case s was pursued sepa rately in the D istrict Co urt, though all t

hree were hear d by t he s ame Di stri ct Judge. T he cases a re, in every relevant sense, indistin guishabl e, and the record in one case (agains t Edwin Liquor Store) estab lis hes the reasons for the Distri ct Court’s refusal to issue the e x parte seizure orders request ed in al l three
cases. Fo r th e s ak e o f c omp le te ne ss , w e will briefly describe the proc edural history of the other c ases a s we ll.
A. Ed win L iquor Store
Edw in Liquor S tore (“Edwin”) is a retail liquor

store locat ed in a re sidential neighborhoodin N ew ar k, N ew Je rse y. On Ap ril 10, 2003, a Lorill ard sal es
r epr esentat

ive, cha rge d w ith, inter alia , ensuri ng that

fresh Lo rillard cigarettes are availa ble for sal e atret aile rs, discovered what he believed to be stale N ewp ort prod ucts based o n pro d uct codes i mprinted
on the p ack age s at E dw in. H e removed four packs o f cigare t tes from the shelves, and replac ed them with f re sh pro duct. Upon closer exam ination , the stale prod ucts were determi ned to b e counterfeits. They al so eit her lacked valid state tobacco tax stamps o r were im pr ope rl y st amp ed und erst at e l aw. Lorillard commenced this s uit on May3

12, 2003, byfili ng a complaint and making an emergency ex pa rte app licati on for a seizure orderand a T RO , and seeking a preliminary injunct ion. Though it agreed w ith Lorillard at oral arg u ment that m any of the statutory requ ireme nts for ex parte seizure had been met, the Dist rict

Court decl ined to f

ind that “Defe nda nts, or oth er pers ons a cting in concert with the de fend ants , ma y de str oy, move, hide, o r other wise mak e th e merchandise bear in g a counterfeit of the Lorillard Marks inaccess ible to the C ourt if Lorillard we re to pr ocee d on notice to De fen dan ts,” or that “ [e]ntry of an order other than an ex parte seizure order wil l not adeq uately achieve th e pu rp ose s of 15 U. S. C. § 1114 to pr es erve to Lorill ard it s remedies for trademark infr ing em ent.” 1 The Court did,

1 In full, t he statute at

issue reads:
(4) The court

shallnot grant such an appli cati on [for ex parte seizure] unl ess— (A) the per son obtai ning an order under

this subsection prov ides the secu rity determi ned adequate by the court for the pay ment of such damages as anyperson may be entitled t o recover as a resul t of a wrongful s eizure or
wron gful attemp ted seizure under thi s subsection; and
(B) th e cou rt finds that it clearly app ears f rom spec ific facts th at— (i) an order ot her than an ex parte seizure order i s not adequate t o achieve t

he purposes of s ecti on 1114 of this title;
(ii ) the appl icant

has not publici zed the r equested seizure; (iii) the ap plican t is likely to succeed i n showing that the person ag ainst who m seizure would be ordered us ed a counterf eit mark in connection with the s ale, offering f or sal e, or distri bution of goods or services;
(iv) an imm ediate and irr epara ble injury w ill occu r if suc h seizu re is not ordered;
(v) the matter

to be sei zed will be locate d at the place identif ied in the appl ication;
(vi) the harm t o the appl icant of denyi ng the appl ication outweighs the ha rm to th e legitim ate intere sts of the per son agains t whom seizure would be ordere d of granti ng the appl ication; and
(vii) t he person against whom seizure would be ordered, or persons acti ng in concert with s uch pe rso n, w ou ld de str oy,4

how ever, grant a br oad T RO pending a preliminary injunct

ion h ear in g. The T RO directed Edwin to cease dea ling in coun terfeit Lorillard prod ucts an d pre serve the go ods in questi on, along with a ll mat erial s, packagi ng, documents, and busin ess rec ords re lated to any goo ds be aring g enuin e or co unterf eit Lorillard marks. 2

move, hide, or otherwis e make such matte r inacc essible to the court , if t

he applic ant w ere to proc eed o n no tice to such person.

15 U .S.C. § 111 6(d)(4).

2 In full , Edwin and it s propri etor, Anna Ro drigu ez, “an d any of their of ficers, a gents servant s, employ ees, and attorneys and those per sons in ac tive c oncert or parti cipation with t

hem who receive actual notice of this Order by personalservi ce or otherwis e” (col lectively referred to as “Defendants” here and in the District Court’s order) were temporaril y r estr ained from “dire ctly

or indi rectl y”:
(i) Using any reproduction,
coun terfeit, co py, or colo rable imitation of the L orillard Marks in connection with t he importat ion, s ale, offering f

or sale, or dist

ribution of cigarettes in the United States;
(ii ) using t

he Loril lard Marks or any reproduction, counterf eit, copy, or colorabl e imit ation of

the
sam e in an y mann er likely to cause ot

hers t o belie ve that de fend ants’ p rodu cts
are co nnec ted w ith Lorill ard or ar e genuine Lorill ard product s if they
are no t;
(ii i) pas sing off, inducing, or enabli ng others to sel l or pass off any merchandise which is not

genuine Lorill ard merchandi se as and fo r genuine L orillard merchandise ;
(iv) making any false or mislea ding statem ents regard ing L orillard o r its respective goods, or the relat ionshi p between Lorill ard, on t

he one hand, and Defendants, on the other hand;
(v) committing any

other acts calculated to cause purchaser s to bel ieve the Defe ndants’ pro ducts are Lorillard products;
(vi) importi ng, shi pping, delive ring, dist

ributing, holding for

sale, returning, transferri ng, or otherwise
mo ving or disp osing of in5 The Cou rt explai ned its refusalto is sue the ex pa rte seizu re ord er at ora l argum ent:
I am constrai ned to conc lude that L orillard has fail ed to make the requ isite s ho wing that no ot her method of prese rvi ng a state of affairs on which a court can provide effecti ve finalreli ef exists. And this is th e so le me thod , this seizure orde r, this ex p arte sei zure order i s the sol e method.
There i s no showing of pri or disobedi en ce or destructi on of evidence on th e part o f Ed win Liquor Store or

its owne r, its regis teredowner Anna Rodriguez. There is an assert

ion by Lorill ard of the oppo rtuni ty to dest

roy evidence, but that i s based upon Lor illard’s assert ions and not based upon a showing of this particular, to this parti cular

entit y. Nor did I hear from [coun sel for Lo ri lla rd], who has been candid and forthright and clearly experienced in this ar ea, that othermerchants wit

h which Edw in Liquors migh t reas on ab ly b e combined [sic; compared?] have destr oyedeviden ce in the p ast. M erely that

there i s the opp ortun ity to do so.
The Distri ct Court c ontinued: any manner

such cigare ttes false ly bearing on e or mo re of the Lori llard Marks or any repro ductio n, cou nterfe it, copy or colorabl e imit ation of the same; and
(vii ) assi sti ng, ai ding, or abetting anyother per son or business entit

y i n engaging or performing any of t

he acti viti es refer

red to i n the above paragr aphs (i ) thr ough (vi);

The defendants were f

urther restrained f

rom “sell ing, movi ng or otherwise disposing of any goods, boxes, label s, packagi ng or product bearing t

he Lorill ard marks;

. . . . [or] other t han pursuant to a dis coveryinst

rument prop oun ded b y Lorillard or an orde r of this Court, moving, destroyi ng, or otherwise disposing of any goods, boxes, label s, pack aging or oth er item s or do cum ents bearing any r eproducti on, count erfei t, or imitation of the L orillard Ma rks[; or] removing, destr oyi ng or otherwise dispos ing of an y busine ss reco rds or d ocum ents relat ing in any

way to t he manufacture , importat ion, a cquisi tion, purchase, dist ribution, or

sale of goods or mercha ndise bearing any of the Lo rillard Marks or any reproduction, c ounterfe it or imitation thereo f.” Fin ally, the De fend ants
were o rdered to “allow [] a Lorillard representati ve to inspect allgoods, boxes, label s, pr oducts, etc. bearing t he Lorilla rd m arks to determ ine the ir auth entic ity.”6

I do not find t

hat an orde r other t

han a seizure order is n ot ade quate to provide final and effecti ve rel ief to Lorill ard. . . . I do no t fin d that there ha s b een any showing that the pers on against whom the se i zure is to be ordere d, “would destr oy, move, hide,
or otherwis e make su ch matter inacc essib le to the c ourt” i f notic e
were given, other t

han the ass erti on that there exist s the opport unity for such

. . . . [I]t is really a failu re to demonstrate, num ber one , of § 111 6( d) (4 )( B) that

an order ot

her than
a seizure order is not

adequate. And number seven, that

the person against whom seizure w o uld b e ord ered w ould dest roy , move, hide, or otherwise make such matte r inacc essibl e to the court if notic e were given. And theref ore, I am denyi ng the appl ication for a seizure o rder.
In short, the Court c oncluded that “more t han anyt hing else, the statute c ontain s rock solid requ ireme nts tha t I fin d ar e no t me t her e.” Lorillard file d a notic e of appeal, and moved to proceed ex parte on appeal, that i s, without giving Edwin notice of the app eal. The C ourt denied Lori llard’s moti on. B. John Do e Corp. (Krauszer’s)
J ohn Do e Co rp. (“K rausz er’s”) is a retail grocery store lo ca ted in Wall ington, New Jers ey. O n M ay 28, 20 03, a (d iffere nt) Lorillard sales repres entative dis covered at Kraus zer’s wh at he b elieve d to b e stale New port p roducts , agai n based on product codes imp rinte d on the p ack age s. Five packs of cigarettes we re removed from the shelves, and replac ed w ith fresh prod uct. A s wit h the packs take n fr om Edw in, the sta le prod ucts turne d out, on c los e r examinati on, to be counterfeit and lacki ng val id tax st amps or improperly stamped und erst at e l aw. Lorillard commen ced su it o n June 12, 2003, again byfili ng a complaint and making an emergencyex parte application for a seizure order and a TRO, and seeking
a prelim inary injun ction. A s with the Edw in case, t

he Distri ct Court a greed that
som e statutory factors were met, but ag ain decli ned to find t

hat “Defendants , orother persons acti ng in concert with t he defe ndan ts may dest

roy , move , h ide, or otherwise make the merchandi se beari ng a
coun terfeit of the Lori llard Mar k s inacc essible to the C ourt ifLorillard were to procee d on notice to Defendants ,” or that “[e]ntry of an o rder other than an ex parte seizure order wil l not ad equa tely achieve the purposes of 15 U.S.C. § 1114 to preserve to Lori llard its remedies f or trad em ark infr ing em ent.” Although t he D ist

rict Court did not hear oral argument in the Kraus zer’s case,
as it had i n the Ed win case, th e ord er it entere d in the Kraus zer’s case—which granteda TRO simil ar to t he one iss ued in the Edw in case, but refuse d ex pa rte seizure—explained that i ts rul ing was “consis tent

with its analy sis of the applic able stat

utoryand case la w se t forth in its bench ruli ng on May 13, 2003 in the
case of Lo rillar d Toba cco Co

. v. Ed win Liquors [sic ], D ock et N o. 03- 21 31

. ” We underst and this to mean t h at the Distri ct Cou rt declin ed, as it h ad in th e Ed win7

case, to ma ke the factu al find in gs ne cessary under the statute to issue an ex parte seizure order. Wh ile t his appealhas been pendi ng, the pa rtie s have volunt aril y di smissed t he acti on as settled.

C. Bisan Food Corp.
Bisan FoodCo rp d/b/a New Way Supermarket

(“ Bi san ”) is an independent retail gr oc er y sto re lo ca ted in U ni on C ity, New Je rsey . On June 26, 2003, the sam e Lorillard sales repres entative that serviced Edwin, agai n a cting on product codes, discovered wh at he b elieve d to b e stale New port products at New Wa y Supe rmar ket. Ten packs of ci garettes were removed from the shelves an d rep laced with fresh prod uct. As in the ot

her two cases , cl oserexaminati on reveal ed counterf

e it goo ds thatwer e impro perly stamped u nder st ate l aw or without valid tax stamps.
Lorillard com men ced th is suit on July23, 2003, again byfili ng a complaint and making
an emergenc y e x parte app lication for a seizure order and a TRO , and seeki ng a preliminary in

ju nctio n. The Di stri ctCo u rt, having by this ti me a djud icated the E dw in and Krauszer’ s matter s, i n which L o rillard had “rel[ ied] on vi rtual ly identi cal arguments, briefs, and s upp orting c ertific ation s,” determi ned that “ a p rompt ap peara nce b y both si de s is of as sistanc e to the Co urt in evaluating the e xten t of rel ief t o which plaint iff i s enti tled. ” Thus the Dist rict Cou rt did not is sue a TRO, and directe d Lo rillard to proceed against

Bisan on noti ce (i. e., by servi ng a summons and complaint upon Bisan pursuant to Fed. R. Civ. P. 4). Lorill ard fil ed
a notice of appeal fr om the deni al o f the ex pa rte seizure order, and asked thi s Cour t for a s tay of the Distric t Cou rt’s orde r to proceed against

Bisan on n oti ce

. We denied the stay, and L orillard s ubse quen tly withdrew its request

for an ex parte TR O against Bisan, s o as to avo id givi ng them notice of the litigation b efore th e Di stri ct Co urt. Lorill ard has since s erved Bisan with certain materials (it s brie f and appendices) in connection with t he present appe al.

II. Juris dicti on We have an independe nt obli gation at the thres hold to examine whether we have appe llate juris dicti on. Gov’t of V. I. v. Hodge , 359 F.3d 312, 317 (3d Cir. 2004 ); Vui tton v. Wh ite , 945 F.2d 569, 571 ( 3 d Cir. 1991). I n Vu i tton , w e h el d tha t we have statutory appe llate juri sdiction under 28 U.S .C. § 1292(a)( 1) overinterlocutory appe als from order s d enying e x par te seizure. 945 F.2d at 571- 74; but see In re Lorillard Tobacco Co. , 370 F.3d982 (9th Cir. 2004) (hol ding that t he denialof

an ex parte seizur e ord er is no t imm ediate ly appealab le). We are, of course, bound by Vuitton he re. See Th ird C ircu it IO P 9 .1 (“Poli cy of Avo iding I ntra- Circuit Confl ic t of Precedent ”). I n Vuitt

on , we also note d that the ap paren t moo tness o f the d ispute did n ot de prive us of Article III jurisdicti on. “Now that noti ce has been given, a seizure order ca nnot be grante d ex parte and m ay well b e in effecti ve. Nevertheless, we agree with Vu itto n that wh ile this case might

otherwis e be mo ot, it fal ls within t

he excepti on from the8

mootne ss doctri ne for cases ‘capabl e of repeti tion, yet

evading re view.’” Vuitton , 945 F.2d at 571 n. 1 (quoti ng Weins tein v

. Bradford , 423 U .S. 147, 149 (1975)). Though we did not dis cuss the point at length in Vuitton , one coul d ar gue that t he history of the relat

ionshi p between the part ies there was critical to our conclusion that the dispu te was “capable of repeti tion”: Vuitton,
a designer

of h igh quali ty handbags and lugg age, hadre pea te dl y pur sue d the s ame defendants, stre et vendo rs of co unterf eit Vuitton me rch and ise. Se e Vu itt on , 945 F.2d at 570. There is no such prior h istory between Lo ril lard and a n y of th e defe ndan ts —L orillard does not alle ge tha t, prior to the e vents at

issue he re, i t knew or
even suspect ed any of t he defendants of deali ng in counterfe it cigare ttes —an d
co ns eq ue nt ly, we have no basis t o suspect that this disp ute is l ikely to be repe ated among these same p arties.
In the prese nt ex p arte proceduralposture , how ever, what matter s with re s pec t to mootness is w he th er th e p ar ty seek ing the ordercan d emo nstrate th at it is likely to requ est such order s in the future agains t
so me defendant ( not necess aril y the sa me defend ant). At bottom ,“cap able of repetiti on, yet ev ad in g r ev ie w” is a pr agmatic exc eption t h at temp ers the mo otnes s doc trine in situations where denialof app ellate revi ew works a hard ship on the pa rties. When th ere is only on e party expos ed to such hardshi p—the party seek ing the ex pa rte orde r— it seems needle ssly infle xible to say that th at p ar ty m ust d emo nstrate th at it will again conf ront the s ame d efenda nts. Lorillard has amply de monstrated tha t cigare tte counterf eiti ng is a seri ous and widespread problem for it; fo r exam ple, L oril l ard repres ents that

by the beginni ng of 2 004 it had file d, in t

he District of New Jersey alone, som e s ix te en d if ferent comp lai nts against differe nt defenda nts seeking ex parte seiz ure relie f. Thu s we conclude that the appe als fall within t he “capable of

r epeti tion, yet evad ing rev iew” exce pti o n to mo otn ess. See Globe Newspaper Co. v. Su peri orCourt , 457 U.S. 596, 602-03 (1982); Praxis Props. , Inc. v. Coloni al Sav. Bank, S.L .A. , 947 F.2d 49, 61- 62 (3d Ci r. 199 1); Publicker Indus. , Inc. v
. Cohen , 733 F .2d 1059 , 1065-66 (3d Cir. 1984); Luther v. Molina , 627 F.2d 71, 73- 74 (7th C ir. 1980).
One final ju risdictio nal matter
c ommands our

atte nt io n. As we not e above, during t

he pendency of

this app eal, Lorill ar d sett led its case agai ns t Krauszer’s. In many circumstance s set t lementwo uld m oot a p endin g app eal. See Loc alNo. 8- 6, Oil

, Ch em
. & Ato mic Workers Int’ l Union v. Missouri , 361 U.S. 363 (19 60)

. This rul e of th umb does not ap pl y, however, wh en a case falls wi thin the “capable of rep et iti on, y et evadi ng
rev ie w” exc eptio n to mo otn ess. See Int ’ l Uni on, United Auto. Workers v. Dana Corp , 697 F.2d 718, 721 ( 6th Cir. 1983) ( en banc ). Thus we also have juri sdiction over the appeal i n the Krauszer ’s case

.

III. The M erits
In Vuitton , we articulated the s tandard of review overa dist

rict court’ s denialof a motion for ex parte seizure under 159

U.S .C. § 1116 (d ). T he s ta ndard is th e s ame used fo r r ev ie w o f an order gr anting or denyi ng a prelim inary inju nct i on : “We review a dist

rict court’ s ruli ng . . . onl y t o determi ne i f t here has bee n (1) an abus e of discr etion, (2) an error o f la w, or (3 ) a cle ar mistake of fact. ” Vuitton , 945 F.2d at 574 (quoti ng Hoxwor th v . Bl inder, Ro bin son & Co. , 903 F.2d 186, 198 (3d Cir. 199 0)). Here, the form and subst ance of the District Cou rt’s ruli ng places our

review in t

he firs t and third categories: Did the D istrict Co urt abu se its discr etion, or were its factu al find ings c learly erroneous? 3 The two st atutor y el ements at

issue here—the elements that t he District Cou rt poin tedly decli ned t o find on the record before it— a r e 15 U .S.C

. § 111 6(d)(4 )(B)(i) and (vii), wh ich require a court issu ing an ex parte s eizure orde r to find, respectively , that “an orde r other t han
an ex pa rte seizu re ord er is no t adeq uate to achieve the purpose s of secti on 1114 of this titl e” and that “the person against whom seizure would be ordere d , or persons acti ng in con cert w ith such person,
wo uld destro y, move , hid e, o r otherwise make such matte r inacc essible to the c ourt, if the applicant w ere to pro c eed on noti ce to such perso n.” T hou gh n ot iden tical, th ese are in e ffect two sides of the s am e coin: “Proceed[i ng] on not ice” (i.e., not ex parte) will us ually

entai l serving the defendantwith a TR O and proc eedin g to
an ad v ersary hearing on a preliminary injunct ion. A finding up on emergency ap pl ication that proceeding on notice
wo uld resul t in t

he destruction, removal, or hiding of the count erfei t matt er is argu ably tantamount to a finding that t he defendant will not com ply with a T RO , which in turn
wo uld suggest t

hat nothi ng less t

han ex parte seizure is r equired to vindicate the trademark holder’s rights

. We pose the issue in thi s way because it gets us to the fundamenta l factua l inquiry the District

Cou rt focused on, and its finding t

hat we revi ew for clear e rror: Co uld the defendant s be trusted to com ply with the order of

a Fed eral D istrict Co urt? F indi ng no ev idenc e that th e def enda nts 3 Lorill ard argues stre nuouslythat t he Distri ct Court’ s comments at oral argument on the Senat e Report accompany ing the Act led to an erroneous legal conclusi on that t he Act contai ns a “one freebite” excepti on, that is, that e x par te seizu re is no t availab le absent a s howing of prior disobedi ence of a court or der by the defendant . Pri or disobedi ence is s urelyhighly probati ve of some of the st atutor

y el ements—for example, § 1116(d)(4)(B)(vii) requires a determination that “t

he person against wh om seizur e w ould be or dered . . . wou ld destro y, move , hide [ etc.]” the coun terfeit matter. But there is n o statutory basis for a per se requirement that prior disobedi ence be show n to obtain an ex parte seizu re order. At all e vents, we do not underst and the Dist rict Court to have reli ed on such a legal conclusi on in reac hing the determi nation i t did; as our excer pts fr om oral argument make clear , Lori llard was ulti matelydenied re lief on factualand discr etionary grounds, not on a le gal ground.10

could not be tru ste d, the District Cou rt concluded that t

hey coul d, and that

they shou ld be pr esum ed to b e w illing to abide by
a TRO. The presumption can run no other

w ay, for absent extenuating circumstances,
we gene rally do not as sum e that p arties w ill disobeya court ord er. Cf., e.g. , Inter metal Mexicana, S.A. v. In s. Co. of N. Am. , 866 F.2d 71, 78 (3 d C ir. 1989 ) (“It is reas onab le to expectthat a v alid co urt o r der willbe obeyed.”). Moreover , fundamental fairness dict at es that pre sum ptions gene rally shou ld not run a gains t the ab sent p arty in an e x par te proceedi ng. The Ac t directs th e cou rt to consider whether the record di sclose s reasons to rebut this presumpti on. The Dist ric t Court fol lowed this course. It expr essly noted that “L orillard h as faile d to make th e r eq ui si te sh owi n g that no ot her method of preservi ng a state of affair s on which a court c an provide e ffec tive f inal reli ef exis ts.” It obse rved that L orillard c ould have put in di rect e vidence that the defe ndan ts had no t complied w ith other court orders, and s tated th at, on th e reco rd be fore it, “there is no showing of prior di sobedience or evidence of des truction on the part of E dw in Liquor Store or it s owner, i ts re gist ered owner Anna Rodriguez. ” The Distri ct Court furt her suggeste d that Lorill ard could h ave sh own that the defendant s were comparabl e to othe r retai le rs who had flouted court order s, but again obse rved that, on th e record befo re it, Lorillard had n ot s how n t hat “o ther m ercha nts with wh ich E dw in Liquors migh t reaso nably be combined [si c; compared?] have destr oyed evid enc e in th e pa st.”
He rein lies acri tica l diff erence between this c ase a nd Vuitton . In Vuitton , the defendant s we re street v endo rs wh o sold
coun terfeit Vu itton me rch and ise. Eve n setting a side that V uitton h ad pr eviou sly secured a perm anen t inju nct ion against some of the defendant s in the new acti on, Vuitton , 945 F.2d at 570, the un mistak able lessonfrom prior

proceedi ng s w as that these stre et vendors would not even appear in court af

ter bei ng served, let a lone
com ply with a TR O, id. at 575. M oreover, though the Vuitton Cou rt did not discuss it,
common sense sugges ts that st reet vendor s , being it

inerant and lacki ng signi ficant

asset s, have rela tively little to fearfrom the Dist

rict Court’s c ontempt powers. The record befo re the D istrict Co urt in th e cas es now before us supports (t hough does not compel) the opposite inferences: First, t her e is no evidence that these defe ndan ts hav e p reviou sly failed to
a ppear in court

when required; indee d , ther e has b een n o prio r legal a ction a t all against these defendants. Seco nd, the re is not even t he s ugg estion th at sma ll independent

retailers w ith fix ed places of business are as a class u nlikely to com ply with a court order. Third, t hese defendants —incorporatedbusine sse s with inventories, asset s, and a fi xed phys ical presence—have mu ch to lo se if he ld in conte mp t. Lorill ard can poi nt to no direct evidence in th e r ec or d t o t he co nt ra ry. Esp ecially in li ght of the Ac t’s em phatic command that the elements supporti ng ex parte seizure “clearly appear[] f rom spec ific fac ts ,” 15 U. S. C. § 1116(d )(4)(B), the District Cou rt’s factual findings w ere not clearlyerroneous.11

One ar gument from Loril lard— perh aps its strongest—remains. The ciga rettes recove red from the de fend ants’ sto res d id not have the stat e tobacco t ax stamps r equired by New Jersey law —the stamps were eit her missi ng
or in va li d. As Lorilla rd po ints out, au thentic cigare ttes distri b uted th roug h legitim ate chan nels will ha ve va lid tax sta mps, but
coun terfeit cigarettes, distributed thro ug h a blackmark et, d o not. Thi s difference provides part of t

he profit motive for retailers to sell cou nterfe it cigarette s: Th e untaxed,
cou nterf eit cigare ttes can be pr ocur ed at a lower cos t than taxe d, a ut hentic cigarettes, but the untaxed, counterf eit c igaret

tes will be sold at the same price as the ta xed, a uthen tic product—at the st atewide man dator y minimum pr ic e e st ab li sh ed byNe w Je rsey’s Un fair Cig arett e Sa les A ct, N .J. Sta t. A nn

. 56:7- 18 to -38. 4 The defendants’ acti ons seem ingly expose them t o the cri minal sancti ons of the Unf air Cigarette Sale s Ac t, N.J. St at. Ann. 56:7-20( b), i n additi on to their po ssible f edera l crimin al liability under 18 U.S.C. § 2 320 fo r traffic king in counterf eit goods , and possibl e violations of crimin al law s aga inst illega l i mportation and tax evasi on. This, Lorillard contends, gives the defend ants a stron g ince ntive to dest roy or otherwise dispos e of the cigare ttes if the y l earned (by recei ving
no tice of Lo rillard’s civil trademark infri ngement suit ) that theyhad been discovered.
Ther e is mu ch fo rce to th is argu men t. The Dis tric t Co ur t, how ever, re jected it, commenting that “[t]here is an as sertion by Lorillard of the opport uni ty to dest

roy eviden ce, but that is based u pon L orillard’s assert ions and not based upon a showing of this particular, to th is pa rticu lar en tity.” As th is determi nation is mo re discretionary and pred ictive tha n it is factu al, we review the Distric t Cou rt’s dec is ion for abuse of discr etionrather

than fo r clear error. Though the Dist

rict Court could ha ve more fully arti culat ed its reluct ance to accept this particu la r li ne of argument, it di d not abuse its discre tion in rejecting Lorillard’s position, espe c iall y i n light of the otherwis e weak factual record.
Two reas o ns support

our conclus ion. First, Lorill ard’s argument est ablis hes an incent ive, but the stat ute req uire s
som e thing more ce rtai n—for example, one 4 Strictly spea king , the U nfair C igarette Sales Act pr ovides a mandat ory minimum price for sales bydistri butors to retai lers, currently$51.03 per carton (200 cigarettes) for dis tri butor- delive red cigarettes, of which $20.50 represents the tax paid bythe dist ribut or to t

he state. Competit

ion among dist ribut ors likelystabi lize s dist ribut or sal es prices at thi s level , and competi tion among many outl ets for

retai l purchas e of cigar ette s likelykeeps retail pri ces at a level j ust abov e the d istributor price. T he ultim ate effect i s a stabili zati on of reta il prices within a na rrow ran ge, allowing distributors and retailer s of untaxed c igaret tes t o reap the $20. 50 in unpaid t axes—on top of the differe nce in manufacturer price between authe ntic an d (pre sum ably low er-cos t) counterf eit c igaret

tes. The profit

margin, and motive, are thus enormous.12

of th e r eq ui re m en ts i s m et o nl y by a finding that the defendant

“ wo uld destr oy, move, hide [etc .]” the count erfei t mat ter. § 1116(d )(4)(B )(vii) (emphas is added)

. Second, if w e found an abuse of di scretion here, Lorill a rd’s argument would become a perse rule tha t ex parte s eizure must be order ed whe n coun terfeit cigarettes are involved. Inde ed, arg uably an yone wh o is intentio nally sell ing any counterf eit goods h as—by virt

ue of the threat of

crimina l sancti on from the criminal tradem ark counterf eiti ng stat

ute, 18 U.S.C. § 2320—an incentive t o di spos e of th ose c oun terfeit goods. In that

light , Lori llard’s inc entive

based argu men t could logica lly be extended to cover all tr ademark counterfeiting, whic h
wo uld rend er mo st of th e spe cific factor s of § 1116(d)(4) a nullity. We therefore must rej ect Lor illard’s argum ent that the D istrict Court abused its discr etion i n rejec ting i ts i ncenti vebase d arg um ent.

IV. Conclusi on On the face of t

he stat ute it is cl ear that ex parte seizure is n ot to be ordered as a matter of course . In this resp ect, ou r opin ion in Vuitton repres ents t

he extre me case, as we expr essly noted : “ If

we were to concl ude that
a § 11 16 se izure o rder w ould be ina ppro priate i n this case, w e w ould be ha rd pre ssed to image a case i n which such an order wo uld be app rop riate .” 945 F.2d 575-76. The cases be f ore us now are not t he extre me case, and the Distric t Cou rt wa s not require d to order
an ex parte s eizure . Rather , it was oblige d to scrutinize the rec ord, which Lorill ard had the obligat ion to devel op; to make fi ndings; and to exerci se it s sound judi cial discr etion. For the fore going reas ons, we conclude that the Distri ct Court di d not commit an
error o f law, make cl early erroneous factualfindings , or abus e its discr etion i n refusi ng to is sue ex parte seizur e ord ers in these three c ases. The or ders of the Distri ct Court wil l therefore be affirmed.