MOSSACK FONSECA & CO., S.A. et al Document 24

Filed October 17, 2019

BackBack to MOSSACK FONSECA & CO., S.A. et al, Connecticut District Court Case No. 3:19-cv-01618-JBA

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Page 1 UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
____________________________________
:
MOSSACK FONSECA & CO., S.A.,
:
BUFETE MF & CO., JURGEN
:
MOSSACK and RAMON FONSECA
:
:
Plaintiffs,
:
CIVIL ACTION NO. 3:19-cv-01618
:
v.
:
:
NETFLIX INC.
:
:
Defendant.
:
____________________________________:
OCTOBER 16, 2019
REPLY MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT NETFLIX INC.’S
MOTION TO DISMISS OR IN THE ALTERNATIVE TO TRANSFER VENUE
Page 2 In its motion to dismiss, Defendant Netflix, Inc. (“Netflix”) seeks dismissal of Plaintiffs’
Complaint because Plaintiffs do not meet the requirements of the Connecticut long-arm statute,
Conn. Gen. Stat. § 33-929(f), or the requirements of Constitutional due process, both of which are
necessary prerequisites to this Court exercising personal jurisdiction over Netflix. In response,
Plaintiffs, relying on Talenti v. Morgan & Brother Manhattan Storage Co., argue that the longarm statute is inapplicable and that by registering in Connecticut as a foreign corporation, Netflix
has consented to the jurisdiction of the Connecticut. 113 Conn. App. 845 (Conn. Ct. App. 2009).
However, Plaintiffs, either negligently or deliberately, have failed to cite to the controlling
Second Circuit precedent of Brown v. Lockheed Martin Corp., which explicitly rejected Talenti,
and held that a foreign corporation’s registration and appointment of an agent for service of process
under the Connecticut statute does not result in that corporation’s “submit[ting] to the general
jurisdiction of Connecticut courts.” 814 F.3d 619, 634 (2d Cir. 2016).
Brown v. Lockheed Martin Corp. is binding precedent in this District, and only further
reinforces the merits of Netflix’s motion to dismiss for lack of personal jurisdiction based on
Plaintiffs’ inability to meet the requirements of the Connecticut long-arm statute. Although
Plaintiffs have just amended their Complaint to add additional allegations regarding Netflix’s
purported connections to Connecticut, the Amended Complaint remains devoid of any allegations
that Plaintiffs reside in or have a usual place of business in Connecticut, and Plaintiffs thus remain
unable to satisfy the requirements of the Connecticut long-arm statute.1 The Amended Complaint
should be dismissed pursuant to Federal Rule 12(b)(2) and 12(b)(3).2
In light of the Court’s order setting an expedited briefing schedule (Dkt. 17), Netflix respectfully requests that the
Court deem Netflix’s pending motion to dismiss (Dkt. 9) to be directed to the allegations of Plaintiffs’ Amended
Complaint (Dkt. 22).
Further, although Plaintiffs’ original Complaint contained verified allegations, Plaintiffs Amended Complaint is not
verified. (Compare Dkt. 1 with Dkt. 22). The Amended Complaint supersedes the original Complaint, and the
unverified Amended Complaint is ineffective for the purpose of supporting Plaintiffs’ motion for a temporary
restraining order. “Unsupported assertions cannot serve as a basis for injunctive relief.” PA Realty Group, LLC v.
Page 3 Further, the additional allegations in Plaintiffs’ Amended Complaint do not alter the
analysis of whether Netflix has minimum contacts with Connecticut or that exercise of personal
jurisdiction over Netflix would be reasonable. Finally, Plaintiffs’ Lanham Act claims, which are
insufficient as a matter of law, provide no basis for jurisdiction or venue in this District.3
ARGUMENT
I.
The Second Circuit Has Expressly Rejected Talenti
A.
The Talenti Decision
In Talenti, the out-of-state plaintiffs sued a New York corporation in Connecticut state
court. 113 Conn. App. at 846. The trial court applied the Connecticut long-arm statute, Conn.
Gen. Stat. 33-929(f), and determined that since the plaintiffs neither resided in Connecticut nor
had a usual place of business in Connecticut, and the defendant was a foreign corporation, the
court lacked personal jurisdiction. Id. at 849.
The Connecticut Court of Appeal reversed, holding that by obtaining a certificate of
authority to do business in Connecticut and authorizing a registered agent to accept service of
process in Connecticut, the foreign corporation had “consented to the exercise of jurisdiction over
Hornbeck, Case No. 3:16-CV-00630-VLB, 2016 WL 2944155, at *1 (D. Conn. May 20, 2016) (citing 13 Moore’s
Federal Practice § 65.23[1] (3d ed.) for proposition that allegations contained in an unverified complaint could not be
considered in support of preliminary injunction).
In addition to erroneously relying on Talenti, Plaintiffs’ Opposition is larded with irrelevant points. The Opposition
repeatedly refers to the existence of federal question jurisdiction (Plaintiffs’ Opp. at 3-4), which pertains to subject
matter jurisdiction rather than whether Defendant is subject to personal jurisdiction. Similarly, the Opposition
discusses service of process, references Fed. R. Civ. P. 4(k)(1)(A), and argues that “Defendants [sic] agreed to accept
service of documents in this case, and have been served with the documents filed by the Plaintiffs prior to appearances
having been filed.” (Id.) Plaintiffs seem to be confusing challenges to proper service under Rule 12(b)(5) with
challenges to the exercise of personal jurisdiction under Rule 12(b)(2). Defendant’s counsel’s agreement to accept
service of documents by email in no way constituted a waiver regarding personal jurisdiction. (Indeed, personal
jurisdiction was never mentioned by either counsel. Defendant notes, however, that even though the service or
acceptance of a summons does not waive objections to personal jurisdiction, Defendant’s counsel has never been
served (by email or otherwise) with the summons in this matter (Dkt. 15), despite having requested in writing that
Plaintiffs serve it once it was issued.)
Page 4 it by the courts of this state.” Id. at 855 (citation omitted).4 In a footnote, the Talenti court noted,
in dicta, that this fictional consent to jurisdiction might obviate the need to undertake any analysis
of constitutional due process was satisfied. Id. at 855 n. 14. Although the Connecticut Supreme
Court denied certiorari for an appeal of Talenti, at least one federal district court has surmised that
“the Connecticut Supreme Court may have denied certiorari on the ground that the result of the
case was proper under the alternate or second prong [concerning service of the vice-president
within Connecticut under Conn. Gen. Stat. § 52-57(c)].” WorldCare Corp. Ltd. v. World Ins. Co., F. Supp. 2d 341, 356 n.27 (D. Conn. 2011).5
B.
The Brown v. Lockheed Decision
The Talenti holding regarding the consequence of a foreign corporation obtaining a
certificate of authority in Connecticut was put squarely before the Second Circuit in Brown v.
Lockheed Martin. In that case, the mesothelioma plaintiff was neither a resident of Connecticut
nor had a usual place of business in Connecticut. 814 F.3d at 622. The defendant Lockheed Martin
had a worldwide presence, but was incorporated in and had its principal place of business in
Maryland. 6 Id. Lockheed registered to do business in Connecticut, and maintained a registered
agent for service, pursuant to the same statutes addressed in Talenti. Id.
The case was removed to federal district court from Connecticut state court. The federal
district court, applying constitutional due process principles rather than the state long-arm,
dismissed the case for lack of personal jurisdiction. On review, the Second Circuit directly
addressed the Talenti decision, and explicitly rejected it. Id. at 636 (“We hazard that the Appellate
The Talenti court did note that the defendant corporation maintained its principal place of business in Connecticut
and that service of process was made upon the defendant corporation’s vice president in Connecticut. Talenti, 113
Conn. App. at 846.
The Talenti decision has subsequently been criticized by state courts within Connecticut. See Peeples v. State Farm
Mut. Auto. Insur. Co., No. FSTCV186036595S, 2019 WL 4201550, at *7 (Conn. Super. Ct. Aug. 8, 2019).
Further, from 2008 to 2012, Lockheed maintained offices in Connecticut and employed up to seventy workers there.
Brown, 814 F.3d at 622.
Page 5 Court erred in reading the registration and agent appointment statutes as constituting corporate
consent to the exercise of general jurisdiction by the Connecticut state courts, and—more within
this Court's ordinary domain—that it also erred in casually dismissing related federal due process
concerns in a brief footnote.”).
In particular, the Second Circuit found the Talenti decision raised grave federal due process
concerns and would threaten to eviscerate the Supreme Court’s holdings in Daimler AG v. Bauman, U.S. 117 (2014) and Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011).
Brown, 814 F.3d at 640 (“If mere registration and the accompanying appointment of an in-state
agent—without an express consent to general jurisdiction—nonetheless sufficed to confer general
jurisdiction by implicit consent, every corporation would be subject to general jurisdiction in every
state in which it registered, and Daimler's ruling would be robbed of meaning by a back-door
thief.”).
Conducting its own comprehensive analysis of relevant Supreme Court precedent, the
Second Circuit distinguished between the limited effect of a foreign corporation registering an
agent for service of process versus the broad effect of that foreign corporation effectively
submitting to general jurisdiction:
Section 33–929 nowhere expressly provides that foreign corporations that register
to transact business in the state shall be subject to the “general jurisdiction” of the
Connecticut courts or directs that Connecticut courts may exercise their power over
registered corporations on any cause asserted by any person. Indeed, it appears to
limit the ability of out-of-state plaintiffs to proceed against foreign corporations
registered in Connecticut even with respect to certain listed matters bearing a
connection to Connecticut. See id. § 33–929(f) (allowing suit only by residents of
Connecticut and “person[s] having a usual place of business in this state”).
What it does provide is that the registered agent of a foreign corporation “is the [ ]
agent for service of process, notice or demand required or permitted by law to be
served on the foreign corporation.” Id. § 33–929(a) (emphasis added). To our
reading, this provision neither issues an open invitation nor expressly limits the
matters as to which process may be served. Nor does it speak to the relationship
between process so served and the state courts' jurisdiction.
Page 6 Brown, 814 F.3d at 634.
C.
Under Controlling Precedent, Plaintiffs Fail to Satisfy Requirements for Personal
Jurisdiction Over Netflix
Plaintiffs’ opposition to the motion to dismiss for lack of personal jurisdiction is entirely
predicated on the erroneous argument, based on Talenti, that Plaintiffs are not subject to the
requirements of Conn. Gen. Stat. § 33-929(f). But upon proper application of Brown v. Lockheed
Martin, it is apparent that Conn. Gen. Stat. § 33-929 must be satisfied for this Court to exercise
jurisdiction over Netflix. Brown, 814 F.3d at 633 (“Section 33–929, ‘Service of process on foreign
corporations,’ is part of Connecticut's long-arm statute.”)
Neither Plaintiffs’ Opposition nor Plaintiffs’ Amended Complaint allege that any of the
Plaintiffs resides in Connecticut or has a usual place of business in Connecticut. This fact alone
compels the conclusion that personal jurisdiction may not be exercised over Netflix under the
Connecticut long arm statute. “Only if personal jurisdiction has attached under state law do we
reach the constitutional question of whether due process is offended thereby.” Brown, 814 F.3d at (quoting U.S. Trust Co. v. Bohart, 197 Conn. 34, 39 (1985)).
II.
Plaintiffs’ Lanham Act Claims Are Legally Insufficient and Therefore Do Not
Justify Jurisdiction Or Venue in This Court
To the extent that Plaintiffs attempt to justify either the exercise of personal jurisdiction or
venue in this District based upon their Lanham Act claims, that argument should be rejected
because those claims are insufficient as a matter of law.
Plaintiffs allege two causes of action under the Lanham Act: (1) “Trademark Infringement
by Dilution” under 15 U.S.C. § 1125(c); and (2) “Federal False Advertising” under 15 U.S.C. §. As an initial matter, “Trademark Infringement by Dilution” is a non-existent hybrid of two
separate causes of action, trademark infringement and trademark dilution. 15 U.S.C. § 1125(c),
Page 7 under which Plaintiffs have pleaded their claim, governs trademark dilution. Both of Plaintiffs’
Lanham Act claims are subject to dismissal under 12(b)(6) because they are insufficient as a matter
of law. 7
A.
All of Plaintiffs’ Lanham Act Claims Are Subject to Dismissal Under the Rogers
Rule
As explained in detail in Defendant’s Opposition to Plaintiffs’ Motion for Temporary
Restraining Order and Preliminary Injunction, Section II.F, Plaintiffs’ Lanham Act claims should
be dismissed as a matter of law under the Rogers test. It is axiomatic that artistic expression such
as Defendant’s Film is constitutionally protected speech. See Joseph Burstyn, Inc. v. Wilson, 343
U.S. 495 (1952). The Rogers test, derived from the seminal case of Rogers v. Grimaldi, 695 F.
Supp. 112 (S.D.N.Y. 1988), aff’d, 875 F.2d 994 (2d Cir. 1989), is the established test used by
courts to balance conflicting trademark rights and First Amendment protection for artistic works.
Under Rogers and its progeny, the First Amendment precludes Lanham Act claims premised upon
the use of a trademark in an expressive work unless the use of the mark “has no artistic relevance
to the underlying work whatsoever, or, if it has some artistic relevance, unless [it] explicitly
misleads as to the source or the content of the work.” Rogers, 875 F.2d at 999 (emphasis added);
see Louis Vuitton Mallatier S.A. v. Warner Bros. Entm’t Inc., 868 F. Supp. 2d 172, 178 (S.D.N.Y.) (“The threshold for artistic relevance is purposely low and will be satisfied unless the use
has no artistic relevance to the underlying work whatsoever”) (citations & quotations omitted)
(emphasis in the original); E.S.S. Entm’t 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095, 1100
(9th Cir. 2008) (same).

Even if Plaintiffs had pleaded trademark infringement, that claim, too, would be subject to dismissal under the Rogers
test, as described in Section A.
Page 8 The Rogers test has been widely adopted and relied upon to dismiss trademark claims as a
matter of law, including in granting Rule 12(b)(6) motions. See, e.g., Louis Vuitton, 868 F. Supp.
2d at 177 n.9 (granting motion to dismiss based on use of trademark in film); Medina v. Dash
Films, Inc., No. 15-CV-2551 (KBF), 2016 WL 3906714, at *5 (S.D.N.Y. July 14, 2016) (granting
motion to dismiss based on use of trademark in title of film); ETW Corp. v. Jireh Publ’g, Inc., 332
F.3d 915, 928 (6th Cir. 2003) (granting summary judgment to defendant and applying Rogers test
to claim for false advertising under the Lanham Act).
Here, the Rogers test bars Plaintiffs claims outright, as explained in Section II.F of
Defendant’s brief in opposition to Plaintiffs’ Motion. Defendant more than meets the threshold
for establishing artistic relevance. The Film employs Plaintiffs’ names, and logo in the course of
telling the fictionalized story of how these two lawyers found and exploited loopholes to help
wealthy individuals and companies avoid taxation and other liabilities, largely through the creation
of shell companies located offshore. Because these men and their companies, identified by the
MOSSACK FONSECA logo, all feature in subject and story of the Film, their use is artistically
relevant to the Film. See E.S.S. Entertainment 2000 Inc., 547 F.3d at 1095, 1098, 1100 (finding
that video game creator’s use of “Pig Pen,” a virtual, cartoon-style strip club similar in look at feel
to trademark owner’s Los Angeles strip club, was protected by the First Amendment from
trademark and trade dress infringement claims; the court found artistic relevance because the
creator sought to create a “cartoon-style parody of East Los Angeles,” and “a reasonable way to
do that is to recreate a critical mass of the businesses and buildings that constitute it”); Dillinger,
LLC v. Electronic Arts, Inc., No. 1:09-cv-1236-JMS-DKL, 2011 U.S. Dist. LEXIS 64006, at *14
(S.D. Ind. June 16, 2011) (finding the name “Dillinger” in reference to a Tommy Gun was
artistically relevant to the defendants’ The Godfather video game because “the gentleman-bandit,
Page 9 commonly known for his public persona as a flashy gangster who dressed well, womanized, drove
around in fast cars, and sprayed Tommy Guns, has above-zero relevance to a game whose premise
enables players to act like members of the mafia and spray Tommy Guns.”) (citation & quotations
omitted).
For the same reasons, the Film does not explicitly mislead as to source or content. The
Complaint and Amended Complaint are devoid of any allegation that the Film, or advertising for
the Film, makes any claims about Plaintiffs’ endorsement of or approval of the Film, or any role
they played in creating it. Thus, the Film does not explicitly mislead as to the source or content of
the work. Furthermore, as detailed in Section II.B.3.b of Defendants’ opposition brief, The
Laundromat repeatedly makes clear that it is not intended to be taken as factual representation.
Moreover, the use of Plaintiffs’ logo in the Film “is not, and the public would not interpret it to be,
a source-denoter.” Medina, 2016 WL 3906714, at *5. Consumers do not expect the trademark of
a character in a fictionalized film to denote the Film’s creator. Not to mention the fact that given
the parodic nature and critical commentary contained in the Film, it is inconceivable that viewers
would assume Plaintiffs endorsed or approved of the Film. Thus, Plaintiffs’ Lanham Act claims
will fail as a matter of law.
B.
Plaintiffs’ Dilution Claim Fails As a Matter of Law Because Plaintiffs’ Film Is
Not “Commercial Speech”
Plaintiffs’ dilution claim also fails as a matter of law because it falls within the
“noncommercial use” exception to dilution claims under the Lanham Act. Under the statute,
“[a]ny noncommercial use of a mark” is not actionable as trademark dilution. 15 U.S.C. §(c)(3). Courts have granted motions to dismiss dilution claims based upon use of the
plaintiff’s mark in a film based upon this provision of the dilution law. See Sporting Times, LLC
v. Orion Pictures, Corp., 291 F. Supp. 3d 817, 826-27 (W.D. Ky 2017). As in Sporting Times,
Page 10 LLC, “as the [Film] does more than merely propose a commercial transaction, and as . . .
Defendants’ use of the Mark is entitled to First Amendment protection, Plaintiffs’ dilution claim
is meritless and will be dismissed.” Id.
III.
Transfer to the Central District of California Under Section 1404 Is Appropriate
Even if the Complaint were not subject to dismissal pursuant Rule 12(b)(2), the action
should still be transferred to C.D. Cal. pursuant to 28 U.S.C. § 1404(a). Regarding Defendant’s
motion to dismiss or transfer venue, the Opposition notes that the action “could be re-filed in the
event of dismissal,” but asks that “if this Court decides not to continue hearing the matter, Plaintiffs
would adopt the alternative relief requested by Defendant, and request consideration of a Transfer
[sic] to California in the interests of justice.” (Opp. at 15-16.)
Plaintiffs’ opposition to Defendant’s alternative request for transfer to C.D. Cal. is
thoroughly unpersuasive. Plaintiffs assert that the Film has “caused negative association with
[Plaintiffs’ logo] in Connecticut” and that unidentified “Connecticut witnesses would testify in
‘relation’ to publication [sic] effect, scope and the types of association generated by Defendant’s
use of the Plaintiffs’ logo . . . .” Plaintiffs make similar arguments regarding their defamation
claims. (Opp. at 11-12.) The Netflix platform, however, will make the Film available for viewing
in all fifty states and internationally, so Connecticut obviously has no greater connection to
Plaintiffs’ claims than any other state. However, the issue of actual malice – which Plaintiffs will
have to establish for the reasons set forth in Defendant’s opposition to Plaintiffs’ motion for a
preliminary injunction, considers a defendant’s knowledge and state of mind.
The Netflix
employees responsible for the marketing materials for the Film – of which Plaintiffs complain, and
the screenwriter of the Film, are all based in Los Angeles. Similarly, to the extent the visual
content of the Film is a product of where it is filmed, California was the location for the
overwhelming majority of principal photography.
(Dkt. 9-2, Chilton Decl. ¶ 2). Plaintiffs’
Page 11 arguments regarding unidentified generic witnesses and amorphous connections to Connecticut
should be rejected.
Finally, Plaintiffs’ references to the existence of a Netflix office in New York and their
suggestion that Netflix has not consented to jurisdiction in C.D. Cal. are specious. Netflix’s
headquarters and main office are in California and no employees in the New York office were
involved with the Film. (Dkt. 9-2, Chilton Decl. ¶ 3). Moreover, by moving to transfer venue to
C.D. Cal., Netflix has obviously consented to personal jurisdiction there.
CONCLUSION
For the foregoing reasons, Netflix respectfully requests that the Court grant the motion to
dismiss for lack of personal jurisdiction, improper venue, and failure to state a claim, or in the
alternative, transfer this action to the United States District Court for the Central District of
California.
Page 12 Respectfully submitted,
DEFENDANT NETFLIX, INC.
By: //s// James J. Healy (ct28447)
James J. Healy (ct28447)
Cowdery & Murphy, LLC Trumbull Street
Hartford, CT 06103
(860) 278-5555 Office
(860) 249-0012 Facsimile
jhealy@cowderymurphy.com
Tom J. Ferber
Ilene S. Farkas
Felicity S. Kohn
Michael B. Adelman
Pryor Cashman LLP Times Square
New York, NY 10036
(212) 421-4100 Office
(212) 326-0806 Facsimile
tferber@pryorcashman.com
ifarkas@pryorcashman.com
fkohn@pryorcashman.com
madelman@pryorcashman.com
- Its Attorneys -
Page 13 CERTIFICATION
I hereby certify a copy of the foregoing was filed electronically on October 17, 2019. Notice
of this filing will be sent by email to all parties by operation of the Court’s electronic filing system
or by mail to anyone unable to accept electronic filing. Parties may access this filing through the
Court’s system.
By: //s// James J. Healy (ct28447)
James J. Healy
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