Although Dismissal Granted, Pernod Ricard Libertad Act Title III Lawsuit May Continue- Plaintiff Has Standing To Proceed

MARLENE CUETO IGLESIAS AND MARIAM IGLESIAS ALVAREZ V. PERNOD RICARD [1:20-cv-20157; Southern Florida District]

IPS Legal Group, P.A. (plaintiff)
Law Offices of Andre G. Raikhelson LLC (plaintiff)
Ainsworth & Clancy PLLC (plaintiff)
Carlton Fields P.A. (defendant)
Carlton Fields Jorden Burt, P.A. (defendant)

On 17 August 2020, Judge Kathleen M. Williams of the Southern District of Florida granted a motion to dismiss the case, but with leave for the plaintiff to amend its complaint.  Of consequence, the Court found the plaintiff’s allegations of trafficking gave the plaintiff constitutional standing to proceed with the lawsuit. 

LINK Court Order (17 August 2020) 

Excerpts: 

To determine whether the exercise of specific jurisdiction affords due process, the Eleventh Circuit applies a three-part test. Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339, 1355 (11th Cir. 2013). First, courts consider whether plaintiffs have established that their claims “arise out of or relate to” at least one of the defendant’s contacts with the forum. Id. (internal quotation marks omitted). Second, courts determine whether plaintiffs have demonstrated that defendant “purposefully availed” itself of the privilege of conducting activities within the forum state. Id. (internal quotation marks omitted). If the plaintiffs carry their burden of establishing the first two prongs, a court next considers whether the defendant has “ma[de] a compelling case that the exercise of jurisdiction would violate traditional notions of fair play and substantial justice.” Id. (internal quotation marks omitted).  

Plaintiffs have failed to address any of these issues in response to the Motion to Dismiss, and the Complaint fails to provide allegations for the Court to assess whether specific jurisdiction requirements could be met in this case. As such, the Court concludes that Plaintiffs have failed to establish that Defendant Pernod is subject to specific jurisdiction in this case. The Court, however, grants Plaintiffs leave to file a Second Amended Complaint to advance allegations to establish specific jurisdiction, if appropriate. 

B. Subject Matter Jurisdiction  

Defendant contends that the Court lacks subject matter jurisdiction over this matter because Plaintiffs lack standing. Specifically, Defendant contends that Plaintiffs’ injuries were not the result of Defendant’s actions and that Plaintiffs cannot establish causation.  

This argument fails, however, because Defendant misapprehends the nature of Plaintiffs’ cause of action. The injury for which Plaintiffs seek to be compensated is not the Cuban Government’s confiscation of Cueto’s property in Cuba, but rather the proceeds obtained by a third party, in this case Pernod, who allegedly intentionally and knowingly trafficked in that confiscated property. Thus, Defendant’s contention that it was not complicit in the 1963 taking by the Cuban Government or has not been empowered to return the property [DE 30 at 24] is not relevant. 

The Act provides a cause of action for U.S. nationals against those entities who knowingly traffic in confiscated property. In other words, an entity or person need not be complicit in the taking of the property at issue to be found liable for money damages under the Act. See Glen v. Club Mediterranee, S.A. 450 F.2d 1251, 1256 (11th Cir. 2006) (stating purpose of Act is to provide a statutory remedy to U.S. nationals who were the victims of the confiscation and to deny traffickers any profits from economically exploiting those wrongful seizures.). Defendant asserts that Pernod’s commercial activities with Corporación Cuba Ron S.A. are not the cause of Plaintiffs’ injury given that the commercial activity occurred with a different product and brand name nearly thirty years after the alleged illegal taking. [DE 30 at 25]. This argument is unavailing because Plaintiffs’ sole cause of action is not based on whether Defendant participated in the illegal taking but whether they knowingly and intentionally trafficked in the confiscated property in which Plaintiffs hold an interest. Additionally, Plaintiffs allege that Cueto’s intellectual property was taken, so Defendant’s assertion that the product is different after thirty years—even if true—is not sufficient to defeat these allegations. 

Defendant also asserts that there are no allegations in the Complaint that Pernod trades in Conac Cueto products, benefits from Conac Cueto’s intellectual property or that the Cueto family has any rights in the rum products Pernod produces in Cuba [DE 30 at 24, 25]. The Complaint does allege that the intellectual property of Conac Cueto was used in the production and sale of Havana Club brand and line of products.10 The Complaint also alleges that Defendant owns rights in the brand Havana Club [DE 22 at 2] and further alleges that beginning in 1993, Defendant “commenced conducted, promoted and distributed its Havana Club brand and line of products worldwide using the Subject Property by using the assets and intellectual property of the Subject Property” and “participated and profited from the communist Cuban Government’s possession of the Subject Property.” [DE 22 at 6]. Therefore, Plaintiffs allege that Defendant used Cueto property in its product distribution. These allegations are sufficient to establish Plaintiffs’ standing as an injured party due to, as discussed below, the Defendant’s trafficking actions. 

Here, the Complaint alleges that Defendant knowingly and intentionally conducted business—i.e. trafficked with the Cuban government—related to the Havana Club brand even though Defendant knew or should have known, because of the publication in Cuban newspapers and the markings on the materials, that the Cuban government had wrongfully confiscated such property from Cuban citizens. Plaintiffs, therefore, have alleged the requisite scienter sufficient to survive the Motion to Dismiss. To the extent that Defendant contests the veracity of those allegations, such determinations are “inappropriate in deciding a motion to dismiss,” Garcia-Bengochea v. Carnival Corp., 407 F. Supp. 3d 1281, 1284 (S.D. Fla. 2019) (citing Twin City Fire Ins. Co. v. Hartman, Simons & Wood, LLP, 609 F. App’x 972, 977 (11th Cir. 2015)), and Defendant’s motion is denied on this ground. 

The Defendant fails to cite any case law to support its proposition but instead relies on the pre-enactment testimony of a member of the House of Representatives, and argues that a United States citizen must already own the claim to the confiscated property on March 12, 1996, when the Act was passed. Thus, Defendant contends that in order for Plaintiffs to hold an actionable claim, Cueto would have had to set up a U.S. subsidiary or affiliated entity in the United States and have transferred the claim to that entity. [DE 30 at 30].  

Similar arguments were rejected by the Court in Garcia-Bengochea where the Court described the defendant’s argument for dismissal as follows:  

Carnival argues that even if Plaintiff did acquire ownership of Parreno’s certified claim, Plaintiff still does not own a “direct interest” in the confiscated property because “the claim concerns stock in [La Maritima], which in turn owned the docks.” In Carnival’s view, this requires dismissal because, “[a]s a matter of corporate law, Plaintiff does not own a claim to the docks themselves.” And because La Maritima “is not a United States national capable of bringing a Helms-Burton claim,” Carnival says Plaintiff cannot save his case by attempting to bring the action on behalf of the company.  

407 F. Supp. 3d at 1285 (internal citations omitted). The Court concluded that such an interpretation would undermine Congress’ goal of deterring trafficking and yield an untenable result: any corporation that was nationalized by the Cuban Government once it was confiscated (as Plaintiffs allege occurred in this case) would not qualify as a U.S. national capable of bringing a Helms-Burton claim, nor would any person who held an interest in that Cuban entity qualify. If true, virtually no one could bring an action under the Act. Id. at 1290.  

The Court agrees with the rationale advanced in Garcia-Bengochea and concludes that Plaintiffs’ allegation that they have—albeit through an alleged inheritance—a claim to property once owned by a corporation confiscated by the Cuban Government is sufficient to survive a motion to dismiss.

VI. CONCLUSION

For the reasons set forth above, it is ORDERED AND ADJUDGED that Defendant’s Motion to Dismiss [DE 30] is GRANTED, in part, and DENIED, in part. To the extent that Defendant’s Motion seeks dismissal pursuant to Fed. R. Civ. P. 12(b)(2), lack of personal jurisdiction, the Motion is granted. To the extent that Defendant seeks dismissal based on lack of subject matter jurisdiction, improper service, failure to state a claim and any other grounds, the Motion is denied. Plaintiffs may file a Second Amended Complaint within fourteen (14) days of this Order.