case brief

CASE BRIEF 7.2

Tiffany and Company v. Andrew

2012 WL 5451259 (S.D.N.Y.)

FACTS: Tiffany (plaintiffs) allege that Andrew and others (defendants) sold counterfeit Tiffany

products through several websites hosted in the United States. Andrew accepted payment in U.S.

dollars, used PayPal, Inc. to process customers' credit card transactions, then transferred the sales

proceeds to accounts held by the Bank of China (“BOC”), Industrial and Commercial Bank of

China (“ICBC”), and China Merchants Bank (“CMB”) (“Banks”).

Andrew defaulted on the suit, and Tiffany sought discovery from the Banks by serving subpoenas

seeking the identities of the holders of the accounts into which the proceeds of the counterfeit sales

were transferred and the subsequent disposition of those proceeds. The Banks involved all

maintained branch offices in the Southern District of New York, and the subpoenas were served

on those branch offices.

The Banks responded to the subpoenas by explaining that the information sought was all

maintained in China and that the New York branches of the Banks lacked the ability to access the

requested information. China's internal laws prohibited the disclosure of the information except

under certain conditions. The Banks proposed that the plaintiffs pursue the requested discovery

pursuant to the Hague Convention.

The court concluded that Tiffany should pursue discovery through the Hague Convention. Tiffany

submitted its Hague Convention application to China's Central Authority in November 2010, and

on August 7, 2011, the Ministry of Justice of the People's Republic of China (“MOJ”) responded

by producing some of the documents requested. For each of the Banks, the MOJ produced account

opening documents (including the government identification card of the account holder), written

confirmation of certain transfers into the accounts and a list of transfers out of the accounts. With

respect to CMB, the records indicate that all funds in the account were withdrawn through cash

transactions at either an ATM or through a teller. BOC and CMB each produced documents

concerning a single account; ICBC produced documents for three accounts.

In its cover letter, the MOJ noted that it was not producing all documents requested. Specifically,

the letter stated, “Concerning your request for taking of evidence for the Tiffany case, the Chinese

competent authority holds that some evidence required lacks direct and close connections with the

litigation. As the Chinese government has declared at its accession to the Hague Evidence

Convention that for the request issued for the purpose of the pre-trial discovery of documents only

the request for obtaining discovery of the documents clearly enumerated in the Letters of Request

and of direct and close connection with the subject matter of the litigation will be executed, the

Chinese competent authority has partly executed the requests which it deems conform to the

provisions of the Convention.”

On the grounds that the MOJ's production is deficient, Tiffany moved to enforce the subpoenas

previously served on the New York branches of the Banks. The deficiencies Tiffany claims are (1)

whether any of the defendants have any additional accounts at the Banks; (2) detailed wire transfer

records concerning the deposits into and withdrawals from the CMB and ICBC accounts.

ISSUE: Could the court issue subpoenas in order to obtain more information about the bank

accounts to help Tiffany identify the perpetrators of the counterfeit goods?

DECISION: No, the court will not issue the subpoenas. The Banks, through the MOJ, have

unquestionably produced relevant, responsive documents. Second, the scope of the Banks'

production has not been so narrow that resort to the Convention can fairly be described as futile.

The account holders' identities and addresses have been identified as well as transaction histories.

Plaintiffs' argument that additional documents concerning transfers into and out of the accounts

will lead to a fuller understanding of the trademark counterfeiting operation is extremely

speculative. Finally, the fact that the MOJ China takes a narrower view concerning the appropriate

scope of pretrial discovery does not render the Hague Convention process futile. The high cost of

discovery in federal litigation is well known, and the fact that another sovereign chooses to take a

more restrictive view of the appropriate scope of pretrial discovery is not unreasonable. In addition,

as noted above, China is not unique in reserving its right to limit production in response to a Hague

Convention request to documents that it considers to bear a direct and close connection with the

litigation; many other countries have made the same reservation.

Questions:

1. What information was provided by the Chinese government?

2. What did Tiffany hope for?

3. Why will the court not issue subpoenas to the Chinese government?