Too, Inc. v. Kohl's Dep't Stores, Inc.

213 F.R.D. 138 (S.D.N.Y. 2003)

 

RULE:

A district court has considerable discretion in deciding whether to permit a third-party complaint. Upon determination that a third-party complaint would be appropriate and foster the interest of judicial economy, the factors to be considered in determining whether to grant leave to implead a third-party defendant are: (1) whether the movant deliberately delayed or was derelict in filing the motion; (2) whether impleading would unduly delay or complicate the trial; (3) whether impleading would prejudice the third-party defendant; and (4) whether the third-party complaint states a claim upon which relief can be granted. The court must balance the benefits derived from impleader--that is, the benefits of settling related matters in one suit--against the potential prejudice to the plaintiff and third-party defendants.

FACTS:

Plaintiff copyright owner sued defendant retailer, clothing producer, and individuals, alleging copyright infringement, trademark infringement, and unfair competition. Defendant clothing producer moved for leave to file a third-party complaint seeking contribution and indemnification from third-party defendants, former employees of the producer. Third-party defendants, a designer and a salesperson, allegedly represented to defendant that the designer created the infringing designs, and the salesperson allegedly sold the infringing clothing knowing of the infringement. The district court granted defendant's motion for leave to file a third-party complaint for contribution from third-party defendants, and denied defendant’s motion for leave to file a third-party complaint for indemnification against third-party defendants.

ISSUE:

Should defendant’s third-party complaint for contribution and indemnification against third-party defendants, its former employees, arising from a complaint filed by plaintiff for copyright infringement, trademark infringement, and unfair competition be granted?

ANSWER:

Yes.

CONCLUSION:

Defendant stated a claim for contribution including the essential elements of knowledge and material contribution to the alleged infringing conduct for the third-party defendants to be liable as contributory infringers. Given the interest in judicial economy and a lack of undue prejudice to third-party defendants or of undue delay, the untimeliness of defendant's motion would not prevent the filing of the third-party complaint for contribution.

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