Court Opinion

ID: 179819
Source: CourtListenerOpinion
Date Created: 2010-11-24 15:08:38+00
Date Added: 2024-06-11T17:25:49.773959
License: Public Domain

06-3532-cv
     Federal Treasury Enterprise v. Spirits International N.V.

                                UNITED STATES COURT OF APPEALS
                                   FOR THE SECOND CIRCUIT

                          AMENDED 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
     Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York,
     on the 24th day of November, two thousand ten.

     PRESENT:
                     JOSÉ A. CABRANES,
                     BARRINGTON D. PARKER,

                                                  Circuit Judges,
                     P. KEVIN CASTEL,*

                                                  District Judge.
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 4   FEDERAL TREASURY ENTERPRISE SOJUZPLODOIMPORT                                06-3532-CV
 5   AND ZAKRYTOE AKTSIONERNOE OBSCHESTVO “LIVIZ”,
 6
 7          Plaintiffs-Appellants,
 8
 9          – v. –
10
11   SPIRITS INTERNATIONAL N.V., SPI SPIRITS LIMITED , SPI GROUP SA, YURI SHEFLER, ALEXEY
12   OLIYNIK, ALLIED DOMECQ INTERNATIONAL HOLDINGS B.V. AND ALLIED DOMECQ SPIRTS &
13   WINE USA, INC.,
14
15          Defendants-Appellees.

     *
      The Honorable P. Kevin Castel, of the United States District Court for the Southern District of
     New York, sitting by designation.
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 4   FOR APPELLANT:                       KATHLEEN M. SULLIVAN , (DANIEL H. BROMBERG , on the
 5                                        brief), Quinn Emanuel Urquhart & Sullivan, LLP,
 6                                        Redwood Shores, California (JOHN B. QUINN , DAVID W.
 7                                        QUINTO , Quinn Emanuel Urquhart & Sullivan, LLP, Los
 8                                        Angeles, California, JUSTIN HUGHES, Cardozo School of
 9                                        Law, New York, New York, JEFFREY A. CONCIATORI,
10                                        JONATHAN OBLAK, WILLIAM B. ADAMS, New York, New
11                                        York, on the brief).
12
13   FOR APPELLEES:                       EUGENE D. GULLAND (OSCAR M. GARIBALDI, NEIL K.
14                                        ROMAN , EMILY JOHNSON HENN , on the brief), Covington &
15                                        Burling LLP, New York, District of Columbia, (BRADLEY
16                                        J. NASH , Covington & Burling LLP, New York, New York,
17                                        on the brief) for Defendants-Appellees Spirits International
18                                        N.V., SPI Spirits Limited, SPI Group SA, Yuri Shefler,
19                                        Alexey Oliynik.
20
21                                        DAVID H. BERNSTEIN (MICHAEL SCHAPER, on the brief)
22                                        Debevoise & Plimpton LLP, New York, New York for
23                                        Defendants-Appellees Allied Domecq.
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27          Appeal from a judgment of the United States District Court for the Southern District of

28   New York (Daniels, J.).

29          UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED AND

30   DECREED that the judgment of the district court be AFFIRMED IN PART and VACATED

31   AND REMANDED IN PART.

32          Plaintiff-Appellant Federal Treasury Enterprise Sojuzplodoimport (“FTE”) appeals from

33   a judgment of the United States District Court for the Southern District of New York (Daniels,

34   J.) arising from litigation over ownership of the famous STOLICHNAYA vodka trademarks.

35   FTE, an entity created by the Russian government and purportedly granted rights by the

36   government to manage the trademarks, sued two groups of defendants: (1) Spirits International

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 1   N.V., SPI Spirits Limited, SPI Group SA, Yuri Shefler, and Alexey Oliynik (collectively, the

 2   “SPI defendants”), who also claim to be the lawful owners of the trademarks, and (2) Allied

 3   Domecq International Holdings B.V. and Allied Domecq Spirts & Wine USA, Inc. (collectively,

 4   “Allied Domecq”), to whom SPI has assigned its purported ownership rights. FTE’s complaint

 5   asserted a variety of Lanham Act and related common-law claims. See 15 U.S.C. § 1051 et seq.

 6          The principal dispute below was essentially whether Allied Domecq’s claimed rights in

 7   the marks had become “incontestable” under the Lanham Act. See 15 U.S.C. § 1065(1)-(4). The

 8   district court concluded that the marks had become incontestable, and that therefore FTE could

 9   not challenge the validity of their assignment to Allied Domecq. We address this issue in a

10   separate opinion filed contemporaneously with this summary order, in which we vacate the

11   judgment of the district court and hold that FTE may challenge Allied Domecq’s claim of

12   ownership of the marks in a federal action. That opinion includes a detailed account of the

13   complicated factual and procedural background of this litigation.

14          FTE has also appealed the district court’s dismissal of its common-law fraud and unjust

15   enrichment claims. For the following reasons, we affirm the district court’s dismissal of these

16   claims. We also address a lingering joinder issue.

17          The district court dismissed FTE’s fraud claim against the SPI entities and Allied

18   Domecq, and its claim for aiding and abetting fraud against the latter, on the ground that FTE had

19   failed to plead that it had relied on a false statement of the defendants. It pled instead that

20   PepsiCo, a third party, had relied on SPI’s false statements. The district court, relying on

21   Cement & Concrete Workers v. Lollo, 148 F.3d 194, 196 (2d Cir. 1998), concluded that New

22   York law did not permit a fraud action based on misrepresentations to a third party. Since the

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 1   district court’s decision, we held in City of New York v. Smokes-Spirits.com, Inc., 541 F.3d 425

 2   (2d Cir. 2008), that “allegations of third-party reliance . . . are insufficient to make out a common

 3   law fraud claim under New York law.” Id. at 454. Lollo and Smokes-Spirits make clear that

 4   fraud claims may not be premised on false statements on which a third party relied.

 5   Consequently, we affirm the district court’s dismissal of FTE’s fraud claims.

 6           FTE also contests the district court’s dismissal of its claim of unjust enrichment against

 7   the SPI entities. The district court properly identified the three elements of an unjust enrichment

 8   claim under New York law: “(1) . . . the defendant benefitted; (2) at the plaintiff’s expense; and

 9   (3) . . . equity and good conscience require restitution.” The court then dismissed this claim

10   because, it reasoned, any benefit the SPI entities received from the course of conduct FTE

11   complained of was not at FTE’s expense. This was so, the district court stated, because FTE was

12   not created by the Russian government until 2000; did not receive rights to any of the Russian

13   STOLICHNAYA trademarks until 2002; and still has not received the rights to the Russian

14   Federation’s share of the profits of the American STOLICHNAYA trademarks. The district

15   court also believed that FTE’s pleading did not show that equity and good conscience required

16   restitution.

17           We agree with the district court’s holding, albeit for a different reason. Unjust

18   enrichment is an equitable claim that is unavailable where an adequate remedy at law exists. See

19   Lucente v. Int’l Bus. Mach. Corp., 310 F.3d 243, 262 (2d Cir. 2002). FTE argues that legal

20   remedies are inadequate because it seeks the return of the American STOLICHNAYA

21   trademarks, but the complaint reveals that it seeks only monetary relief on its unjust enrichment

22   claim. Moreover, proceeding under a theory of unjust enrichment would allow plaintiff to evade

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 1   the statute of limitations applicable to a tortious interference with contract claim. See Norris v.

 2   Grovesnor Mktg., 803 F.2d 1281, 1287 (2d Cir. 1986) (“An equitable claim cannot proceed

 3   where the plaintiff has had and let pass an adequate alternative remedy at law.” (collecting

 4   cases)); see also Buller v. Giorno, 28 A.D.3d 258, 259 (N.Y. 1st Dep’t 2006); New York Civil

 5   Practice Laws and Rules § 214(4) (McKinney 2003). Thus, we affirm the district court’s

 6   dismissal of the unjust enrichment claim.

 7          Finally, as we have vacated the district court’s decision as to several of FTE’s claims and

 8   remanded for further proceedings, we observe that the complaint, and the exhibits attached to it,

 9   raise the question of whether there are absent, required parties, pursuant to Federal Rule of Civil

10   Procedure 19, and, if so, whether joinder of those parties is feasible. We requested supplemental

11   briefing on this issue, noting that “[b]ecause Rule 19 protects the rights of an absentee party, both

12   trial courts and appellate courts may consider this issue sua sponte even if it is not raised by the

13   parties to the action.” MasterCard Int’l v. Visa Int’l Serv. Ass’n, 471 F.3d 377, 382-83 (2d Cir.

14   2006). The SPI defendants also moved the district court to dismiss FTE’s complaint on the

15   grounds that FGUP or the Russian Federation is a required party, as the true owner of any rights

16   that FTE claims to the American STOLICHNAYA trademarks, although they have not renewed

17   those arguments on appeal.

18          After considering the parties’ supplemental briefing on the issue, we are unable still to

19   discern on the present record whether FGUP is a required party. FTE asserts that FGUP’s claims

20   to the American STOLICHNAYA marks (which it allegedly owned as the legal successor to

21   VVO-SPI) were assigned to FTE, thus rendering FGUP disinterested to the outcome of this

22   dispute. However, the document to which FTE cites as evidence of this transfer – a 2002 decree

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 1   of the Russian government – appears to refer only to the Russian STOLICHNAYA trademark,

 2   not the American mark. Even according to FTE’s own complaint, the Russian government

 3   issued this order after Russian courts determined that the Russian trademarks had been

 4   misappropriated and were lawfully the property of the state, further suggesting that the decree

 5   was addressing the newly returned Russian trademarks, not the still-missing American ones. The

 6   only clear reference to non-Russian trademarks comes later, in a January 2005 decree wherein the

 7   Russian government gives FTE the right to “represent the interests of the Russian Federation in

 8   the courts on matters of recovery and protection of the rights of the Russian Federation to the

 9   trademarks for alcoholic products abroad.” This language, on its face, does not appear to be an

10   obvious transfer of ownership from FGUP to FTE, and, in any case, purports to expire on

11   January 1, 2006. Thus, we find that the record is insufficient for us to determine whether FGUP

12   or the Russian Federation are necessary parties. On remand, we leave it to the district court to

13   determine, in the first instance, whether the required parties are before it.

14                                             CONCLUSION

15          The judgment of the district court is hereby AFFIRMED with respect to FTE’s fraud and

16   unjust enrichment claims (claims 2, 3, and 9). In the separately filed companion opinion, we

17   VACATE the judgment of the district court with respect to claims 1, 4-8, 10-13, and 15, and

18   REMAND for further proceedings. We also remand the joinder issue considered in this

19   summary order.

20                                                          FOR THE COURT:
21                                                          Catherine O’Hagan Wolfe, Clerk
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