Preview
INDEX NO. 651885/2010
(FILED: NEW YORK COUNTY CLERK 1170872010)
NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 11/08/2010
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
— nx
JMB APPAREL DESIGNER GROUP, INC.
Plaintiff, Affidavit Submitted In
Support of Preliminary
- against - Injunction and TRO from
Marcella Law for JMB
ROBERT S. AROCHAS, D-NACH, LTD, and
FAB MILL, INC.,
Defendants.
a penne XK
State of New York, County of New York, SS:
Marcella Law, being duly sworn deposes and says:
1 Iam the Treasurer of JMB Apparel Designer Group, Inc. (”JMB”).
I am familiar with the facts and circumstances in this affidavit, which is submitted in
support of an application for a temporary restraining order and for a preliminary
injunction in this action against defendants, based on the complaint in this action, a
copy of which is attached as an exhibit to the affirmation of Joseph H. Adams, Esq.
2. The primary claims in the complaint are for A) common law trademark
infringement of JMB’s common law ” Atelier” trademark, and B) unfair competition by
(I) the palming off or passing off of garments, which are identical to JMB’s garments
(except quality); by (ii) the theft, use and misappropriation of confidential, proprietary
information and trade secrets, relating to JMB successful garment styles, manufacturing
specifications, and the inventory needs and buying habits of JMB’s established discount
retailer clientele, etc.; and by (iii) improper use of a newly minted, similar trademark
“ Atelier Luxe”, intentionally designed and created to cause confusion, which has in fact
caused confusion with the buyers at our retailer clientele, and with the purchasing
public. These acts constitute a virtually perfect example of a wholesale theft of JMB’s
business by Robert S. Arochas (” Arochas”), a former employee in charge of JMB’s own
marketing, from 2004 until he left JMB on short notice on May 28, 2010. As set forth in
more detail below, Arochas has copied all of the JMB garment styles; he is selling those
styles to JMB’s established network of buyers, at well-known national discount retailers
who are JMB’s primary clientele); he is selling the JMB ” Atelier” garments as ” Atelier
Luxe” garments, which is a confusingly similar trademark causing real confusion in the
marketplace; he is holding himself out as either the owner of the Atelier line, or as
somehow otherwise entitled to sell the same JMB garments to retailers that he has sold
to them in prior seasons for JMB (and, in a few documents instances, for which he had
already taken new orders for the 2010 fall season) when he was JMB’s sales director.
3 The complaint asserts additional claims for Arochas’ breach of fiduciary
duty, and tortious interference with our imminent business opportunities in the fall
2010 season; its seeks to have the Court impose a constructive trust on the revenues
earned by defendants, from the wholesale theft of JMB’s identify and its business. As
these claims involve certain legal issues, I direct the Court to our attorney's affirmation.
4, Arochas, with the two corporate defendants, has stolen the business of
JMB for its 2010 fall season's sales because the buyers who previously bought the
same garments from JMB, without exception, are buying only from “Bob‘s company.”
To add insult, and additional injury, to these injuries, Arochas played a key role in
assisting JMB to order its current inventory from its manufacturer for the 2010 fall
season. Arochas then left to sell the same (copied) garments to JMB’s retailer clientele
through his companies. At present, a quantity of over 120,000 garments ordered by
JMB, at an approximate cost of $1.8 million, are sitting in JMB warehouses unsold. Our
buyers do not return our calls. The actions of Arochas, if not restrained by court order,
can destroy JMB and its business, which was clearly Arochas‘ intention when he left us.
In exit interviews, Arochas assured us (falsely) he was going to anew company with its
own label, and that he would not be copying or using JMB styles. This was clearly false.
SUMMARY AND STATEMENT OF FACTUAL SUPPORT FOR THE CLAIMS
5) As set forth below, even before we made use of the legal procedures in
this Court to obtain information from defendants, we have been able to compile a
significant amount of detailed information that shows that Arochas, acting through at
least two corporations known to us, D-Nach Ltd. (“D-Nach”) and Fab Mill Inc. ("Fab
Mill”) has engaged in this extraordinary campaign to steal and to destroy JMB’s
successful business by selling exact copies of JMB's Atelier-branded women’s garments,
re-labeled as “ Atelier Luxe“ garments, to what appears to be JMB’s entire network of
buyers at its pre-existing accounts with major discount retailers like Nordstrom Rack,
Stein Mart, Annie Sez, Filenes Basement, Loehmans, Marshalls, TJ Max and others.
A) Key to Determining the Scope of Theft and Misappropriation; Style Numbers
6. To assist the Court in its review of the information that is being submitted
on this application, the Court needs to take note of one important part of the logistics
that Arochas implemented to step into the place of JMB immediately after he left JMB
and began (if not before) to solicit orders from the buyer's at JMB’s retailer clientele. To
do this, Arochas copied or imitated the garment style numbers used by JMB to contro!
and to identify its inventory; these same numbers are used on all purchase orders by the
retailer clientele who bought JMB garments, on all shipping records, and invoices. Our
clientele use the same numbers to control their inventory, and to place orders. In his
haste to take over JMB’s sales and to integrate the sales from his new companies into the
inventory control systems at the retailers, Arochas used the same numbers as JMB.
7. The last two digits in the multi-digit product or style numbers identify
the style of garment, as shown by the summary or illustrations in Exhibit A. JMB used
a7 digit code to identify its garments; the first digit referred to the type of garment; the
next three digits referred to the fabric; the last three digits referred to the garment style.
In his product identification numbers, Arochas used a 5 digit code, which did the same
functions: the first digit referred to the garment type; the next two digits to fabric; and
the last two digits to garment style. As one can see by comparing the product numbers
used as illustration in Exhibit A, the last 2 digits of Arochas’ styles confirm to the last 2
digits of the JMB Atelier styles. This means that we can identify the copied garments
just by comparing the last two digits (as well as the prior 2 digits for fabric), Without
exception, it appears, Arochas has produced only styles that copy JMB’s Atelier styles,
and he has used the same fabrics to make those garments; they are complete copies.
8. I point this out to the Court in advance of presenting detailed fact and
and document information to show that, once the Court sees defendants’ records that
must be created to do business, the Court will be able to see from the documents that
the entire garment line that is being sold by Arochas was copied directly from JMB.
We have a number of these business records already to demonstrate the point. In our
extensive field research prior to commencing this action, we have found NO exceptions.
We have purchased sample garments in the stores to confirm the identity of the styles;
we have uncovered multiple documents showing the inventory records or orders that
have come out of Arochas’ new business. Indeed, many of these inventory records have
been sent directly to Arochas’ old email address at JMB, because the buyers at our big
discount retailer clientele seemed to believe that Arochas was still associated with JMB.
B) Direct access and use of [MB proprietary information stolen by Arocha:
9. Before he left JMB at the end of May, 2010, Arochas had assisted JMB in
formulating our order for the fall season’s garment collection to our own manufacturer.
In doing that, Arochas had canvassed our network of buyers to anticipate their orders,
although much of that information was known to him from past seasons. As part of his
work product, Arochas generated a recommended list of the garment styles and the
number of units of each garment that JMB should order from its manufacturer. A copy
of that list is attached hereto as Exhibit B. That list prepared by Arochas was captioned
on the email Excel attachment as ”Fall 2010 for factory””, and the attached Excel sheet,
which is printed as part of Exhibit B, identifies the styles, quantities and colors to be
ordered by JMB for the fall 2010 season. That list also contains the style numbers that
JMB used, which — as will be seen below - are the same style numbers (using the last 2
digits instead of 3 digits) that Arochas made, ordered and sold for his fall 2010 season.
10. With possibly minor exceptions, the recommendations made by Arochas
for the JMB fall season were accepted and used. The recommendations in Exhibit A
were sent by Arochas, from his email address at JMB, bob@jmbnyc.com on March 8,
2010, to Ben at JMB, who is in charge of production. Thereafter, JMB placed its orders
to produce these garments to its manufacturer in China. A complete set of those orders
are copied and made part of an Appendix to this affidavit, since they are voluminous.
It is important to summarize the content of the orders (see below) because they show
the exact styles that JMB had planned to sell the fall 2010 season, the style numbers on
these orders match the style numbers (adjusted from 3- to 2-digits) on Arochas’ orders,
and similar inventory documents. {Per our attorney’s application, JMB requests the
immediate production of defendants’ business records to match the two sets of styles,
i.e. those for the original design styles of JMB and the copied styles used by Arochas.]
svi We have also discovered that Arochas received and then copied to his
private email address, a complete set of the manufacturing specifications that JMB uses
for its garments. By an email dated April 30, 2010, sent at 9:10 p.m., when no one
would ordinarily be in the JMB offices, Arochas sent a letter to our manufacturer in
China, Shentong Fashions, and asked for the “size specs for pants from size 2-14 in
missy, petite, and large for sizes W16 to W22" ostensibly because a buyer needed them.
However, his email records show that Arochas then forwarded the Excel sheets that he
obtained with the information to his personal email at barochas@aol.com. He would
have no reason or purpose in forwarding that information to himself, as part of his job
at JMB. This email does show that he was collecting and could easily put himself in
possession of the confidential manufacturing specifications for JMB’s garments, here
Pants. Copies of the manufacturing specifications need to be produced in a separate
appendix, so that appropriate arrangements can be made to keep it confidential.
Copies of emails to Arochas on April 30 and to himself on May 3, 2010 are Exhibit C.
The emails refer to Excel attachments, referring to style numbers 31142, 811142, 911142,
which are copied in the Appendix, with other documents to be kept confidential.
12. For purposes of this submission, I can attest that the three Excel sheets
that are attached to the April 30, 2010 email to Arochas and forwarded to himself a few
days later on May 3, 2010, contain the manufacturing specs for certain pant garments.
It is easy to see how that Arochas had access to this confidential information and that it
was easy to access, because Arochas was our sales director, and he could get access to
this information. The specifications referenced in the email of April 30, and the one by
Arochas forwarding those specifications to his personal email address at aol.com, only
have the specifications for pants. Arochas copied our entire line of jackets, skirts, and
pants, and he could not have done that so fast without JMB’s manufacturing specs. So
it is highly probable that he also obtained the specification for these other garments.
13. JMB ordered the garments recommended by Arochas in Exhibit B, with
possibly some modifications in the final orders. What needs to be pointed out is that
Arochas knew exactly what garments were ordered; he provided sales information to
assist us in placing those orders, and determining how many garments to buy in
different styles. Much critical input for this order came from Arochas, because it was
based on his knowledge and judgment, as our sales director, about what our clients
wanted to buy, what they indicated they planned to buy, or what he knew about their
buying habits from prior seasons. All of that information was proprietary to JMB.
14. I want to summarize the contents and dates of the JMB orders to our
manufacturer, without producing the orders themselves. A complete set of these orders
has been compiled Appendix B to be submitted herewith, subject to an appropriate
confidentiality order. In the following table, | snow the dates of all orders, the styles
ordered, and the quantities ordered. Each of the orders had a hand-drawn sketch of the
garment style, which wil! enable us to compare it the 100% copied styles that Arochas
sold (which can also be done by comparing the sample garments that we bought in the
stores, in the last few weeks of October.) The practical value of producing this table is
that it allows the Court to identify the JMB garment styles to compare to style numbers
defendants are selling the marketplace to JMB’s established customers today. The first
of these orders was place on or about March 30, 2010, and the last of the six orders was
placed on or about May 24, 2010, the day before Arochas announced he was leaving:
Date Order No. Garment Style Garment Quantity
3/30 1241 311142 1000
3/30 1242 311142 1100
3/30 1243 811142 6012
3/30 1244 911142 3012
3/30 1245 811290 6012
3/30 1246 811325 2520
3/30 1247 811453 3012
3/30 1248 811466 4008
3/30 1249 811475 6012
3/30 1250 911475 3012
3/30 1251 811476 4008
3/30 1252 911476
3/30 1253 811519 2520
3/30 1254 811522 2520
3/30 1255 811547 3024
3/30 1256 911547 2016
3/30 1257 811568 2520
3/30 1258 811573 5016
3/30 1259 811575 2016
March subtotal 60,848 60,848
4/26 1260 8147142 2508
4/26 1261 9147142 3012
4/26 1262 8147290 4008
4/26 1263 9147290 1512
4/26 1264 8147332 2508
4/26 1265 8147336 2508
4/26 1266 8147475 2508
4/26 1267 8147547 2508
4/26 1268 61475666 612
April subtotal 21,684 21,684
5/17 1269 8202142 2508
5/17 1270 9202142 1500
5/17 1271 8202290 2004
5/17 1272 9202290 2004
5/17 1273 8202475 1500
5/17 1274 9202475 1500
5/17 1275 8202463 1500
5/17 1276 8202547 2000
5/17 1277 9202547 1500
5/17 1278 8202568 1500
5/17 1729 6202574 2004
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Ma i subtotal 19,250 19,250
5/24 1280 8205142 2004
5/24 1281 9205142 1500
5/24 1282 8205290 2004
5/24 1283 8205463 1500
5/24 1284 8205475 1500
5/24 1285 8205519 1177
5/24 1286 8205547 2236
5/24 1287 9205547 1500
5/24 1288 8205556 1008
5/24 1289 8205568 1008
5/24 1290 6205570 1240
5/24 1291 8203142 2004
5/24 1292 9203142 1008
5/24 1293 8203290 1008
5/24 1294 8203332 2004
5/24 1294 (sic) 8203475 2004
May (2) ubtotal 2 705 24,705
TOTAL GARMENTS PURCHASE FOR FALL SEASON 126,487
It is possible that Arochas has copied styles of JMB not produced this year, but it will
require additional information to be obtained from Arochas to determine that. In any
i
event, JMB has a record of prior styles, and our purchases in the stores indicate that he
is selling primarily or even exclusively the styles that JMB ordered for this fall season,
15. Virtually all these garments, over 120,000 , remain in storage, and unsold.
We do not know exactly what Arochas has said to these buyers to persuade them to buy
his Atelier Luxe copies of JMB garments, instead of genuine Atelier garments by JMB,
but it appears that he has stated or implied that he has been the owner or is now owner
of JMB’s business, and that he has a legal right to copy and sell JMB garments. On the
Linked In networking site for professionals, Arochas lists himself as the “owner” of JMB
Apparel Designer Group, and states, as of some date in 2010, that he currently “holds
this position” (Exhibit D). The retailers (and their buyers) who normally purchase these
identical garments from JMB have not done so this year, and in some cases, they have
refused to deal with JMB saying that they are buying from” Bob” or “Bob’s company”.
16. Arochas first announced his resignation from JMB on May 25, 2010, and
he left our employment only three days later, on May 28, 2010. The line of garment
styles, which he is now selling to the same well-known discount retailers to which JMB
sells garments are currently on display for the fall season with these retailers. This
means — simply stated - that the orders for these garments which Arochas delivered so
quickly after he left JMB in May, had to have been solicited and taken when Arochas
was still associated with JMB, Arochas was the person who dealt directly with the
buyers who purchased JMB garments for our retailer client; he had that position since
JMB first started business, in 2004. JMB has used the Atelier label and trademark since
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2006, and it is associated with JMB by our retailers, their buyers and the retail public.
17. From the earlier presentation, it should be clear that Arochas had access
to a wide range of JMB’s confidential information. He knew our clientele and their
buyers; he knew our projected sales and planned inventory so intimately that he aided
in the creation of our order to manufacturers for the fall 2010 season. He apparently
made an effort to obtain, and succeeded in obtaining our manufacturing specifications,
which are critical. The garments that JMB has manufactured and delivered to retailers
have a distinctive traditional style, and they are very well-made for the price category
in which we sell them. Our current garment styles are skirts, pants and jackets. JMB’s
reputation is so established that the same garment styles repeatedly to retailers for
years, and our most important retailer clients, Nordstrom Rack and Stein Mart, order
extra replenishment orders -in addition to their first orders -- because the styles sell so
well. The replenishment orders are an important source of revenues for JMB; garments
for those anticipated replenishment orders from retailers are purchased by JMB at the
beginning of the season when we order the garments that we plan to sell in that season.
18. When Arochas announced that he was leaving JMB on May 25, 2010, we
had a discussion with him about what he was going to do. Arochas would not tell us
where he was going, but he gave us many repeated assurances about the trademarks,
and the proprietary information that he had obtained and used while he was at JMB. In
these discussions in May, Arochas assured us that his new company had its own styles,
and that he would create only new styles that would not infringe on what JMB was
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producing and selling under the Atelier mark. All of these statements were false when
made because Arochas has already put in motion what he needed to do to copy the JMB
Atelier designs, and to market the copycat documents to the JMB retailer clientele. He
had already applied for, U.S. registration for the Atelier Luxe mark, as noted below.
19, As we have gone back to investigate how Arochas managed to reproduce
the JMB line so completely and so quickly and get it into the stores of our established
retailers, immediately after he left, we have discovered a number of important facts.
that show us how he did. In addition to discovering the emails in which he got copies
of our manufacturing specifications, we discovered that Arochas has applied for his
new “Atelier Luxe” trademark the U. S. Patent and Trademark Office (“USPTO”) as
early as March 31, 2010, which was two months before he left. He already had complete
knowledge of what our retailer clientele and their buyers previously purchased. After
he left, some buyers continued to attempt to communicate with him about the pending
orders for his new ” Atelier” brand, by sending emails to his email address at JMB.(A
status report confirming the USPTO filing on March 31 2010 is Exhibit E hereto.)
Copies of some emails sent to Arochas at JMB for his new business are identified below.
20 By October, we knew that something was seriously wrong with our sales
operation, and we went to the stores to discover what was happening. All of the
buyers, who normally purchased our garments, were not buying anything. Some of
them told us they had all the garments they needed; others admitted they were using
“Bob's company”. From our field work, we went to our retailers’ stores to inspect
4
their inventory; what we found is remarkable. Arochas - and I used this term to refer
not only to him individually, but to the two corporate defendants by which he is now
doing business - D-Nach and Fab Mill - has sold his “new” garment line that copied
100% from JMB garments to all of our retailers. The copycat Atelier Luxe garments
are on display with the few Atelier garments the retailers may still have in stock from
prior seasons; the two sets of garments cannot be distinguished (except for quality); the
garments and the fabrics are identical. The labels which Arochas uses for his new
Atelier Luxe brand are very similar to the Atelier labels, as the attached photos will
show. The trade dress - including a number of “hang tags” for price, size etc. - are
literally identical and appear to be from the same source as JMB’s other hang tags.
21. When we first visited the stores, we found the Atelier and Atelier Luxe
garments mixed up in the same displays with the Atelier Luxe garments outnumbering
JMB garments. The Atelier Luxe garments had a white background, with simple black
letters used for Atelier Luxe; while Atelier had white letters on a black background.
Most recently,I have gone to the stores, and Arochas has changed his label to make it
even more similar to the one used by JMB for Atelier. The new Arochas label has a
black background and uses white lettering for Atelier Luxe; the font or script style that
he is using for Atelier Luxe is now closer to the style always used by JMB. His new
labels are indistinguishable from the JMB Atelier label; unless you were looking for
proof of trademark infringement. You could not notice that they were different labels.
Exhibit F shows photos comparing the new Atelier Luxe labels with the JMB labels.
b
22. Once we discovered this information, we contacted counsel to bring this
action, On October 8, 2010, our counsel sent a cease and desist letter to Arochas
demanding that he stop selling the copies JMB garments and that he stop using the
infringing Atelier Luxe trademark. By letter dated October 18, 2010, the attorneys who
represent Arochas denied any wrongdoing but information we collected completely
rebuts this claim. Copies of these letters are attached to the attorney affirmation.
23. JMB requires the immediate and forceful assistance of this Court.
24. On the grounds set forth below, JMB is entitled immediately to the most
broad and comprehensive form of preliminary and permanent injunction that can be
fashioned and approved by this Court, to stop Arochas from stealing )MB‘s business.
SUMMARY OF [MB‘S FIELD RESEARCH ON ABOUT AROCHAS’ ACTIONS
25. JMB is prepared to present evidence and testimony at the Court's earliest
convenience to demonstrate the scope and the audacity of Arochas’ improper conduct.
Store Visitations Showing Full Stock of JMB styles sold as Atelier Luxe:
Our most compelling evidence of the theft, copying and sale of JMB style garments
comes from our inspection and inventory of the garments on sale in JMB retailers:
26. Nordstrom Rack: Nordstrom Rack is the discount retailer affiliated with
the Nordstrom department stores. We visited the Nordstrom Rack stores at 14"
Street, in Manhattan, and at Berger Center in Paramus New Jersey. At these stores, we
found that Atelier and Atelier Luxe garments were on display together without any
distinction between the two labels. At the 14" Street store, both labels appeared under a
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store display for ATELIER brand, apparently used in prior seasons.' All of the styles
on display of the Atelier Luxe garments were identical to Atelier garments; they had
inventory style numbers that ended in the same two numbers as JMB’s styles, as noted.
{In separate exhibits identified below, I show the identity of the Atelier Luxe styles to
the Atelier styles, in all of the stores we visited in which we have discovered them.]
Inthe 14" Street store, Arochas’ garments outnumbered JMB garments 5 to 1 (115 to 16
out of 31 garments); in the Paramus store, the Arochas garments outnumber the JMB
garments by a similar ratio (131 to 21 out of 152 garments.) All styles were identical,
either to the JMB styles on display in the store, or to the JMB styles in our inventory.
Copies of PDFs showing the identity of styles and their quantity is Exhibits G &H,
respectively for the 14" Street store and the Paramus store, with photos of displays.
27. I personally inspected the displays at 14" Street, and one of our salesmen
Jeffrey Scher, inspected the displays at Paramus, per his affidavit submitted herewith.
Nordstrom Rack is one of JMB’s most important clients, but they have refused to deal
with our sales people and they gave us only one purchase order for 67 units this fall.
28, Stein Mart: Stein Mart is a regional retailer, with store primarily in the
South, but they have store in Ocean New Jersey visited by Mr. Scher. The Stein Mart
store appears to have purchased its copycat garments with JMB styles from the Fab Mill
company. Based on Mr. Scher’s inspection at the Ocean New Jersey store, the pattern
‘ After our attorney sent out a cease and desist letter to Arochas, he apparently contacted this
store to have them remove the Atelier sign, which they then did, replacing with one for an Atelier Luxe.
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that we discovered for the Nordstrom Rack stores is repeated there. At this store, there
were 135 JMB style garments in the store, 103 with the Atelier Luxe label, and 32
garments with the Atelier label. The photos show that the two labels are displayed
together; the similarity of the hang tags, as trade dress, makes the two labels impossible
to distinguish. A copy of the PDF summarizing this information with the photos is
Exhibit I. Stein Mart gave us only one purchase order for 2340 women’s garments.
29. In addition, because of some clear confusion by Steinmart’s buyers that
Arochas must still associated with JMB, we have received copies of three orders from
Stein Mart, for the JMB-style garments (undated), but which provide for “start ship” on
August 16, 2010, November 11, and November 12, 2010, for these quantities and price:
Site/Dept Ship Date Quantity Cost
40997/ 310 8/16/2010 528 $10,650
40997 /310 11/11/2010 2057 $41,140
40997/310 11/15/2010 2089 $41,780
These orders were made to Fab Mill, with Robert Arochas as the contact person. The
orders came to us by emails addressed to “bob@jmbnyc.com", from the buyer for Stein
Mart, Rola DeLamielleure. The first order was transmitted to Arochas at his JMB email
address, as early as July 28, 2010, and the last two orders were emailed on August 30.
Copies of these orders and emails to” bob” at his JMB email address are Exhibits J .
The last of these two emails requests that “Bob” provide the style numbers, but, based
on the inspection by Mr. Scher at the Ocean NJ store, all the Atelier Luxe styles were
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copied from JMB Atelier styles, and, in this store, there was a perfect match of4 styles.
30. Mysterious Cancellation of JMB orders from Annie Sez Retailer: In our
files, JMB has two orders from an retailer Annie Sez, which makes repeat purchases of
JMB styles annually, but Annie Sez refused to honor the orders, clearly put together on
an Annie Sez order from were just “notes”, not orders. (Exhibit K). Later visits to two
local Annie Sez stores, one on Coney Island, and one on Jericho Turnpike, disclose that
both stores the same JMB style garments on sale, under Arochas’ Atelier Luxe labels.
31. Annie Sez: Two Annie Sez stores were inspected by Mr. Scher, one on
Jericho Turnpike in Long Island and one on Coney Island. [At the Jericho store, Mr.
Scher did not count inventory, but a substantial number of garments were displayed
there.] The pattern is the same as with the other stores. Atelier and Atelier Luxe
garments were in the same display. At the Coney Island store, the Atelier Luxe
garments outnumber the Atelier garments by 23 to1. As noted, the styles on display
were exactly the same styles (as indicated by the style numbers) that were listed on the
Annie Sez orders that JMB had originally received but were cancelled. According to the
buyer, the filled out order forms were not orders, they were just “notes”. When Mr.
Scher asked the sales person at the Jericho store if there was any difference between the
two brands of Atelier and Atelier Luxe, the sales person responded “yes it is the same
brand”; at the Coney Island store, the one Atelier garment was not marked with a price,
so the sales person was asked to price it; she took an copycat Atelier Luxe garment and
noted that it was the “same looking” style. When asked if there was any difference
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between the two similar Atelier labels, she told me : they are the “same, no different”.
32. These statements show actual confusion not only likelihood of confusion.
To the extent that Arochas persuaded Annie Sez to refuse to honor the orders that were
already placed with JMB, these transactions show direct interference with those orders.
It appears that Arochas somehow enlisted the buyers to stop dealing with JMB at all.
Copies of Excel sheets reporting on the visits to Annie Sez stores are Exhibits L.
33. ideeli (Website Sales) ideeli is a retail website, which does not sell things
in physical stores. Recently, we discovered that ideeli was having a special one-day
sale of Atelier Luxe garments. That website display is valuable as evidence, because it
showed photos of all of the Atelier Luxe garments on sale that day. This sale took place
on October 21, and 22, apparently. Literally all of the garments on sale at this Ideeli site
are JMB style garments; they show the essential skirts, pants and jackets of our line. A
copy of the web page from Ideally copied on October 22, 2010 shows these styles, and is
copied as Exhibit M; a PDF edited version of that page matching JMB style numbers to
the photos shown on the Ideeli website of Atelier Luxe garments is Exhibit N. Match of
the JMB styles to the so-called Atelier Luxe garments from Arochas is a complete one.
34. Von Maur Order Lost by Confusion, Another of JMB’s clients isa
company called Von Maur Inc. (“Von Maur”). This company frequently places large
orders and thus is a very important client. The extent to which Arochas conduct has
interfered with JMB’s business, and how he has done so dishonestly, is shown very
clearly in a set of transactions with Von Maur that began before Arochas left JMB and
20
continued through the last part of October, when Von Maur came to JMB with an order
they thought was a JMB order, but in fact was one - for JMB style garments ~ that
Arochas had taken. is shown clearly. In these transactions, Arochas took an order from
Von Maur, lied to us before left that it was cancelled (even though it had not been), and
later took an order for JMB copied styles from Von Maur (which inadvertently was sent
back to JMB in October, because Von Maur’s representative thought he was with JMB.
35, Before Arochas left JMB, we had received an order from Von Maur, a
copy of which is Exhibit O, which provided for August delivery of 633 units, for a total
cost of $23,587.00 (with a retail price of $72,574.00). When Arochas left us, he told my
partner Ben Choy that the Von Maur order had been cancelled, which we later learned
as not true. Arochas lied to us about the cancellation. However, because we thought the
order had been cancelled, we did not act on it, but we later learned from Von Maur that
they thought the order remained in effect. In or about August, when the delivery
should have been made (as is noted by hand at the top of the earlier order Exhibit O)
the order was cancelled by Von Maur because Von Maur had been receiving some
communications from Arochas concerning these orders, and they became so confused
that they just cancelled the order from JMB. The court can see this Von Maur order
had been included in our own orders to the manufacturer, because as part of the total
manufacturing order (which is copied in an appendix and not attached hereto), there
were three separate orders that were specifically designated as being an order for the
garments that Von Maur ordered. Copies of those orders (3), are attached as Exhibit P.
21
The style numbers on Exhibits O and P are the same ones: 6205570, 8205547, 8205519.
36. Most recently, on October 25, 2010, JMB received emails from a company
called ED]-America, which generates Electronic Data Entry (“EDI”) information for Von
Maur account relating to their orders. This was sent electronically to JMB‘s offices,
directly to the email address that both I and my partner Ben Choy use at JMB; they
asked for information about an attached order dated October 22, 2010. That order refers
toa vendor style number 21073, which reflects style number of JMB. The EDI
representative was confused about the source of that order, and thought it had to be a
JMB order (JMB also deals with EDI on its Von Maur orders. (A copy of those emails,
with the October 22 order, which was for a JMB style number, but was not a JMB order,
is Exhibit xxx . Tt is to be noted that the October 22, 2010 order is for a total of 232 units.
The shows a lost order, which would otherwise have come to JMB. The fact that EDI
was communicating with JMB for an Arochas’ order, shows there was confusion here.
37. Additional Emails to Arochas: Additional emails sent to Arochas email
address at JMB show orders being place for JMB numbered styles as early as June 25,
2010, from one Cara Castagna at Henry Doneger Associates; additional emails from a
buyer at Stein Mart, Angie Brack, dated September 10, 2010, referencing purchase
orders and requesting style numbers for orders to Arochas, ; and an email from Barbara
Bordieri at T] Max, on September 27, 2010 offering to return samples to Arochas. These
three emails are attached as Exhibit P; at a minimum, they show actual confusion as to
Arochas’ continuing association with JMB; and the followup to the Stein Mart requests
22
for style numbers on pending purchase orders should show the copying of JMB styles.
38. USPTO Submission to Show Actual Use. After our retained attorney
sent a cease and desist letter to Arochas, the first thing Arochas’ lawyer did was to file
submissions on their pending (but not yet granted ) application to register the Atelier
Luxe trademark. The proof of ”actual use” that they submitted to the USPTO consisted
of TR Max UK order (Exhibit S), and an inventory report from Nordstrom Rack to show
the sales of the Atelier Luxe Garments in interstate commerce (Exhibit T) | have
personally compared the style numbers listed on these USPTO submitted documents,
and they are a 100% match with the JMB style numbers; the cover sheet to these two
exhibits, lists and compares the comparable style numbers for Atelier and Atelier Luxe.
As noted above, what Arochas did was to use the same last two digits in the garment
or style number, to identify his garments, which were copied from the same JMB styles.
This probably was as done to integrate Arpchas’ inventory into existing inventory
controls at the retailers; his products could be logged into the same Atelier inventory
system that existed at these companies already. As with the comparison of Arochas/
JMB styles at the ideeli website, and at Stein Mart, the match with JMB styles is 100%.
39. This affidavit sets forth my personal knowledge of the transactions that
are going to be in dispute in this action. I also direct the Court to the accompanying
affidavit of Jeffrey Scher, who visited some of the stores that we surveyed and can
report on his findings. Mr. Scher also dealt with Arochas on a few occasions, in
particular on one occasion when he had difficulty returning some of JMB’ samples, from
23
a buyer, who like all the other decided not order garments from JMB this year. After a
few requests to this buyer, Mr. Scher was advised that the samples from JMB had been
sent to Arochas at his new showroom, at 250 West 39" Street, where he apparently
showing and selling his “Atelier Luxe” garments that are copied from JMB’s styles.
40. To get back our samples, Mr. Scher had to go to Arochas new showroom.
This was at some point in late September, as I recall. Arochas would not let Mr. Scher
enter his studio, and left the samples downstairs in the lobby. Mr. Scher did have a
chance to talk to Arochas about his new business, and Arochas repeated to him what he
had told us when he left JMB at the end of May. Arochas told Mr. Scher that he was
doing things totally different from JMB, and that all his garments were new updated
styles. These were clearly false representations, and they were intended to conceal
what he was really doing. Arochas copied our label, imitated our trademark with his
Atelier Luxe, copied all of our garments styles and sold them through to our established
clientele, without missing a beat, by having his garments ready to replace ours this fall.
SUMMARY AND CONCLUSION
41. The actions that | have described by Arochas are improper, unethical and
illegal. Arochas has stolen the JMB business, in its entirety, with the transparent goal
of destroying JMB. Arochas has used our proprietary information, copied our
garments, stolen our clientele and done everything possible to take over the position of
JMB in the market place. Our Atelier label and trademark, although not registered, has
acquired secondary meaning with our retailer clientele and the public; our garments are
24
recognized has high-quality and fashionable ones in the discount retail market. Our
best customers (formerly) found our products so reliable and successful they placed
replenishment orders during the season to keep those garment styles available to sell.
42. Arochas has engaged in unfair competition to destroy JMB; he has used a
intentionally similar mark to confuse the market as to the identity of the source of the
JMB garments. Our garments are on display in the stores of all of our retailer clientele,
but all of those garments were made and sold by Arochas not by JMB who owns them.
43. The JMB garments are sitting in our warehouse unsold. Unless drastic
action is taken by the Court by injunctive relief, JMB could be destroyed. We request
that the Court grant the relief requested, in the manner described by our counsel.
MARCELLA LAW
Sworn to before me this SHUKYEE NG
No. 01NG618955"
Notary Public, State of New York
Qualified in New York County
3 day of November, 2010 My Commission Expires 06/30/2012
_ Abiypa “K
NOTARY PUBLIC
LIST OF EXHIBITS TO THE AFFIDAVIT OF MARCELLA LAW
Illustration by example how Arochas style numbers copied JMB
List of recommended styles from Arochas for JMB fall 2010 season
Copy of emails, May 3, 2010, showing Arochas copying mfg specifications
Arochas listing on Linked-In networking website as JMB owners
USPTO status report showing the filing for Atelier Luxe March 31, 2010
Photo display of JMB Atelier labels and new Atelier Luxe labels
Report of inspection of Nordstrom Rack for 14"* Street store, with photos
Report of inspection of Nordstrom Rack for Paramus store, with photos
Report of inspection of Stein Mart in Ocean New Jersey, with photos
Copies of three (3) orders received at JMB from Stein Mart from Arochas
Copies of two (2) Annie Sez orders rejected or cancelled by Annie Sez
Report of inspections at Annie Sez stores, Coney Island & Jericko Tpke
Copy of Ideeli one day sale of Atelier Luxe, taken on October 22, 2010
PDF version of Ideeli web-pages matching JMB styles to the Ideeli photos
Photo copy (not good guality) of Von Maur order cancelled August 12
Copied of sections of manufacturing orders, for the Von Mauer garments
Email note from EDI-America to JMB re October 22, 2010 Von Maur order
Copies of additional emails sent to JMB but intended for Arochas orders
Copies of TK Max documents that were submitted to the USPTO, to show
actual use of trademark, with cover sheet comparing JMB style numbers,
Copies of Nordstrom Rack document that was submitted to the USPTO, to
show actual use of trademark, with cover sheet comparing JMB style
numbers with the Atelier Luxe styles numbers, which are a 100% match
APPENDIX DOCUMENTS; TO BE FILED AS CONFIDENTIAL
1 Set of Manufacturing Specifications, copied by Arochas May 3, 2010
2. Set of orders placed by JMB to its Manufacturer March to May 2010
Preview
INDEX NO. 651885/2010 (FILED: NEW YORK COUNTY CLERK 1170872010) NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 11/08/2010 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK — nx JMB APPAREL DESIGNER GROUP, INC. Plaintiff, Affidavit Submitted In Support of Preliminary - against - Injunction and TRO from Marcella Law for JMB ROBERT S. AROCHAS, D-NACH, LTD, and FAB MILL, INC., Defendants. a penne XK State of New York, County of New York, SS: Marcella Law, being duly sworn deposes and says: 1 Iam the Treasurer of JMB Apparel Designer Group, Inc. (”JMB”). I am familiar with the facts and circumstances in this affidavit, which is submitted in support of an application for a temporary restraining order and for a preliminary injunction in this action against defendants, based on the complaint in this action, a copy of which is attached as an exhibit to the affirmation of Joseph H. Adams, Esq. 2. The primary claims in the complaint are for A) common law trademark infringement of JMB’s common law ” Atelier” trademark, and B) unfair competition by (I) the palming off or passing off of garments, which are identical to JMB’s garments (except quality); by (ii) the theft, use and misappropriation of confidential, proprietary information and trade secrets, relating to JMB successful garment styles, manufacturing specifications, and the inventory needs and buying habits of JMB’s established discount retailer clientele, etc.; and by (iii) improper use of a newly minted, similar trademark “ Atelier Luxe”, intentionally designed and created to cause confusion, which has in fact caused confusion with the buyers at our retailer clientele, and with the purchasing public. These acts constitute a virtually perfect example of a wholesale theft of JMB’s business by Robert S. Arochas (” Arochas”), a former employee in charge of JMB’s own marketing, from 2004 until he left JMB on short notice on May 28, 2010. As set forth in more detail below, Arochas has copied all of the JMB garment styles; he is selling those styles to JMB’s established network of buyers, at well-known national discount retailers who are JMB’s primary clientele); he is selling the JMB ” Atelier” garments as ” Atelier Luxe” garments, which is a confusingly similar trademark causing real confusion in the marketplace; he is holding himself out as either the owner of the Atelier line, or as somehow otherwise entitled to sell the same JMB garments to retailers that he has sold to them in prior seasons for JMB (and, in a few documents instances, for which he had already taken new orders for the 2010 fall season) when he was JMB’s sales director. 3 The complaint asserts additional claims for Arochas’ breach of fiduciary duty, and tortious interference with our imminent business opportunities in the fall 2010 season; its seeks to have the Court impose a constructive trust on the revenues earned by defendants, from the wholesale theft of JMB’s identify and its business. As these claims involve certain legal issues, I direct the Court to our attorney's affirmation. 4, Arochas, with the two corporate defendants, has stolen the business of JMB for its 2010 fall season's sales because the buyers who previously bought the same garments from JMB, without exception, are buying only from “Bob‘s company.” To add insult, and additional injury, to these injuries, Arochas played a key role in assisting JMB to order its current inventory from its manufacturer for the 2010 fall season. Arochas then left to sell the same (copied) garments to JMB’s retailer clientele through his companies. At present, a quantity of over 120,000 garments ordered by JMB, at an approximate cost of $1.8 million, are sitting in JMB warehouses unsold. Our buyers do not return our calls. The actions of Arochas, if not restrained by court order, can destroy JMB and its business, which was clearly Arochas‘ intention when he left us. In exit interviews, Arochas assured us (falsely) he was going to anew company with its own label, and that he would not be copying or using JMB styles. This was clearly false. SUMMARY AND STATEMENT OF FACTUAL SUPPORT FOR THE CLAIMS 5) As set forth below, even before we made use of the legal procedures in this Court to obtain information from defendants, we have been able to compile a significant amount of detailed information that shows that Arochas, acting through at least two corporations known to us, D-Nach Ltd. (“D-Nach”) and Fab Mill Inc. ("Fab Mill”) has engaged in this extraordinary campaign to steal and to destroy JMB’s successful business by selling exact copies of JMB's Atelier-branded women’s garments, re-labeled as “ Atelier Luxe“ garments, to what appears to be JMB’s entire network of buyers at its pre-existing accounts with major discount retailers like Nordstrom Rack, Stein Mart, Annie Sez, Filenes Basement, Loehmans, Marshalls, TJ Max and others. A) Key to Determining the Scope of Theft and Misappropriation; Style Numbers 6. To assist the Court in its review of the information that is being submitted on this application, the Court needs to take note of one important part of the logistics that Arochas implemented to step into the place of JMB immediately after he left JMB and began (if not before) to solicit orders from the buyer's at JMB’s retailer clientele. To do this, Arochas copied or imitated the garment style numbers used by JMB to contro! and to identify its inventory; these same numbers are used on all purchase orders by the retailer clientele who bought JMB garments, on all shipping records, and invoices. Our clientele use the same numbers to control their inventory, and to place orders. In his haste to take over JMB’s sales and to integrate the sales from his new companies into the inventory control systems at the retailers, Arochas used the same numbers as JMB. 7. The last two digits in the multi-digit product or style numbers identify the style of garment, as shown by the summary or illustrations in Exhibit A. JMB used a7 digit code to identify its garments; the first digit referred to the type of garment; the next three digits referred to the fabric; the last three digits referred to the garment style. In his product identification numbers, Arochas used a 5 digit code, which did the same functions: the first digit referred to the garment type; the next two digits to fabric; and the last two digits to garment style. As one can see by comparing the product numbers used as illustration in Exhibit A, the last 2 digits of Arochas’ styles confirm to the last 2 digits of the JMB Atelier styles. This means that we can identify the copied garments just by comparing the last two digits (as well as the prior 2 digits for fabric), Without exception, it appears, Arochas has produced only styles that copy JMB’s Atelier styles, and he has used the same fabrics to make those garments; they are complete copies. 8. I point this out to the Court in advance of presenting detailed fact and and document information to show that, once the Court sees defendants’ records that must be created to do business, the Court will be able to see from the documents that the entire garment line that is being sold by Arochas was copied directly from JMB. We have a number of these business records already to demonstrate the point. In our extensive field research prior to commencing this action, we have found NO exceptions. We have purchased sample garments in the stores to confirm the identity of the styles; we have uncovered multiple documents showing the inventory records or orders that have come out of Arochas’ new business. Indeed, many of these inventory records have been sent directly to Arochas’ old email address at JMB, because the buyers at our big discount retailer clientele seemed to believe that Arochas was still associated with JMB. B) Direct access and use of [MB proprietary information stolen by Arocha: 9. Before he left JMB at the end of May, 2010, Arochas had assisted JMB in formulating our order for the fall season’s garment collection to our own manufacturer. In doing that, Arochas had canvassed our network of buyers to anticipate their orders, although much of that information was known to him from past seasons. As part of his work product, Arochas generated a recommended list of the garment styles and the number of units of each garment that JMB should order from its manufacturer. A copy of that list is attached hereto as Exhibit B. That list prepared by Arochas was captioned on the email Excel attachment as ”Fall 2010 for factory””, and the attached Excel sheet, which is printed as part of Exhibit B, identifies the styles, quantities and colors to be ordered by JMB for the fall 2010 season. That list also contains the style numbers that JMB used, which — as will be seen below - are the same style numbers (using the last 2 digits instead of 3 digits) that Arochas made, ordered and sold for his fall 2010 season. 10. With possibly minor exceptions, the recommendations made by Arochas for the JMB fall season were accepted and used. The recommendations in Exhibit A were sent by Arochas, from his email address at JMB, bob@jmbnyc.com on March 8, 2010, to Ben at JMB, who is in charge of production. Thereafter, JMB placed its orders to produce these garments to its manufacturer in China. A complete set of those orders are copied and made part of an Appendix to this affidavit, since they are voluminous. It is important to summarize the content of the orders (see below) because they show the exact styles that JMB had planned to sell the fall 2010 season, the style numbers on these orders match the style numbers (adjusted from 3- to 2-digits) on Arochas’ orders, and similar inventory documents. {Per our attorney’s application, JMB requests the immediate production of defendants’ business records to match the two sets of styles, i.e. those for the original design styles of JMB and the copied styles used by Arochas.] svi We have also discovered that Arochas received and then copied to his private email address, a complete set of the manufacturing specifications that JMB uses for its garments. By an email dated April 30, 2010, sent at 9:10 p.m., when no one would ordinarily be in the JMB offices, Arochas sent a letter to our manufacturer in China, Shentong Fashions, and asked for the “size specs for pants from size 2-14 in missy, petite, and large for sizes W16 to W22" ostensibly because a buyer needed them. However, his email records show that Arochas then forwarded the Excel sheets that he obtained with the information to his personal email at barochas@aol.com. He would have no reason or purpose in forwarding that information to himself, as part of his job at JMB. This email does show that he was collecting and could easily put himself in possession of the confidential manufacturing specifications for JMB’s garments, here Pants. Copies of the manufacturing specifications need to be produced in a separate appendix, so that appropriate arrangements can be made to keep it confidential. Copies of emails to Arochas on April 30 and to himself on May 3, 2010 are Exhibit C. The emails refer to Excel attachments, referring to style numbers 31142, 811142, 911142, which are copied in the Appendix, with other documents to be kept confidential. 12. For purposes of this submission, I can attest that the three Excel sheets that are attached to the April 30, 2010 email to Arochas and forwarded to himself a few days later on May 3, 2010, contain the manufacturing specs for certain pant garments. It is easy to see how that Arochas had access to this confidential information and that it was easy to access, because Arochas was our sales director, and he could get access to this information. The specifications referenced in the email of April 30, and the one by Arochas forwarding those specifications to his personal email address at aol.com, only have the specifications for pants. Arochas copied our entire line of jackets, skirts, and pants, and he could not have done that so fast without JMB’s manufacturing specs. So it is highly probable that he also obtained the specification for these other garments. 13. JMB ordered the garments recommended by Arochas in Exhibit B, with possibly some modifications in the final orders. What needs to be pointed out is that Arochas knew exactly what garments were ordered; he provided sales information to assist us in placing those orders, and determining how many garments to buy in different styles. Much critical input for this order came from Arochas, because it was based on his knowledge and judgment, as our sales director, about what our clients wanted to buy, what they indicated they planned to buy, or what he knew about their buying habits from prior seasons. All of that information was proprietary to JMB. 14. I want to summarize the contents and dates of the JMB orders to our manufacturer, without producing the orders themselves. A complete set of these orders has been compiled Appendix B to be submitted herewith, subject to an appropriate confidentiality order. In the following table, | snow the dates of all orders, the styles ordered, and the quantities ordered. Each of the orders had a hand-drawn sketch of the garment style, which wil! enable us to compare it the 100% copied styles that Arochas sold (which can also be done by comparing the sample garments that we bought in the stores, in the last few weeks of October.) The practical value of producing this table is that it allows the Court to identify the JMB garment styles to compare to style numbers defendants are selling the marketplace to JMB’s established customers today. The first of these orders was place on or about March 30, 2010, and the last of the six orders was placed on or about May 24, 2010, the day before Arochas announced he was leaving: Date Order No. Garment Style Garment Quantity 3/30 1241 311142 1000 3/30 1242 311142 1100 3/30 1243 811142 6012 3/30 1244 911142 3012 3/30 1245 811290 6012 3/30 1246 811325 2520 3/30 1247 811453 3012 3/30 1248 811466 4008 3/30 1249 811475 6012 3/30 1250 911475 3012 3/30 1251 811476 4008 3/30 1252 911476 3/30 1253 811519 2520 3/30 1254 811522 2520 3/30 1255 811547 3024 3/30 1256 911547 2016 3/30 1257 811568 2520 3/30 1258 811573 5016 3/30 1259 811575 2016 March subtotal 60,848 60,848 4/26 1260 8147142 2508 4/26 1261 9147142 3012 4/26 1262 8147290 4008 4/26 1263 9147290 1512 4/26 1264 8147332 2508 4/26 1265 8147336 2508 4/26 1266 8147475 2508 4/26 1267 8147547 2508 4/26 1268 61475666 612 April subtotal 21,684 21,684 5/17 1269 8202142 2508 5/17 1270 9202142 1500 5/17 1271 8202290 2004 5/17 1272 9202290 2004 5/17 1273 8202475 1500 5/17 1274 9202475 1500 5/17 1275 8202463 1500 5/17 1276 8202547 2000 5/17 1277 9202547 1500 5/17 1278 8202568 1500 5/17 1729 6202574 2004 10 Ma i subtotal 19,250 19,250 5/24 1280 8205142 2004 5/24 1281 9205142 1500 5/24 1282 8205290 2004 5/24 1283 8205463 1500 5/24 1284 8205475 1500 5/24 1285 8205519 1177 5/24 1286 8205547 2236 5/24 1287 9205547 1500 5/24 1288 8205556 1008 5/24 1289 8205568 1008 5/24 1290 6205570 1240 5/24 1291 8203142 2004 5/24 1292 9203142 1008 5/24 1293 8203290 1008 5/24 1294 8203332 2004 5/24 1294 (sic) 8203475 2004 May (2) ubtotal 2 705 24,705 TOTAL GARMENTS PURCHASE FOR FALL SEASON 126,487 It is possible that Arochas has copied styles of JMB not produced this year, but it will require additional information to be obtained from Arochas to determine that. In any i event, JMB has a record of prior styles, and our purchases in the stores indicate that he is selling primarily or even exclusively the styles that JMB ordered for this fall season, 15. Virtually all these garments, over 120,000 , remain in storage, and unsold. We do not know exactly what Arochas has said to these buyers to persuade them to buy his Atelier Luxe copies of JMB garments, instead of genuine Atelier garments by JMB, but it appears that he has stated or implied that he has been the owner or is now owner of JMB’s business, and that he has a legal right to copy and sell JMB garments. On the Linked In networking site for professionals, Arochas lists himself as the “owner” of JMB Apparel Designer Group, and states, as of some date in 2010, that he currently “holds this position” (Exhibit D). The retailers (and their buyers) who normally purchase these identical garments from JMB have not done so this year, and in some cases, they have refused to deal with JMB saying that they are buying from” Bob” or “Bob’s company”. 16. Arochas first announced his resignation from JMB on May 25, 2010, and he left our employment only three days later, on May 28, 2010. The line of garment styles, which he is now selling to the same well-known discount retailers to which JMB sells garments are currently on display for the fall season with these retailers. This means — simply stated - that the orders for these garments which Arochas delivered so quickly after he left JMB in May, had to have been solicited and taken when Arochas was still associated with JMB, Arochas was the person who dealt directly with the buyers who purchased JMB garments for our retailer client; he had that position since JMB first started business, in 2004. JMB has used the Atelier label and trademark since 12 2006, and it is associated with JMB by our retailers, their buyers and the retail public. 17. From the earlier presentation, it should be clear that Arochas had access to a wide range of JMB’s confidential information. He knew our clientele and their buyers; he knew our projected sales and planned inventory so intimately that he aided in the creation of our order to manufacturers for the fall 2010 season. He apparently made an effort to obtain, and succeeded in obtaining our manufacturing specifications, which are critical. The garments that JMB has manufactured and delivered to retailers have a distinctive traditional style, and they are very well-made for the price category in which we sell them. Our current garment styles are skirts, pants and jackets. JMB’s reputation is so established that the same garment styles repeatedly to retailers for years, and our most important retailer clients, Nordstrom Rack and Stein Mart, order extra replenishment orders -in addition to their first orders -- because the styles sell so well. The replenishment orders are an important source of revenues for JMB; garments for those anticipated replenishment orders from retailers are purchased by JMB at the beginning of the season when we order the garments that we plan to sell in that season. 18. When Arochas announced that he was leaving JMB on May 25, 2010, we had a discussion with him about what he was going to do. Arochas would not tell us where he was going, but he gave us many repeated assurances about the trademarks, and the proprietary information that he had obtained and used while he was at JMB. In these discussions in May, Arochas assured us that his new company had its own styles, and that he would create only new styles that would not infringe on what JMB was 13 producing and selling under the Atelier mark. All of these statements were false when made because Arochas has already put in motion what he needed to do to copy the JMB Atelier designs, and to market the copycat documents to the JMB retailer clientele. He had already applied for, U.S. registration for the Atelier Luxe mark, as noted below. 19, As we have gone back to investigate how Arochas managed to reproduce the JMB line so completely and so quickly and get it into the stores of our established retailers, immediately after he left, we have discovered a number of important facts. that show us how he did. In addition to discovering the emails in which he got copies of our manufacturing specifications, we discovered that Arochas has applied for his new “Atelier Luxe” trademark the U. S. Patent and Trademark Office (“USPTO”) as early as March 31, 2010, which was two months before he left. He already had complete knowledge of what our retailer clientele and their buyers previously purchased. After he left, some buyers continued to attempt to communicate with him about the pending orders for his new ” Atelier” brand, by sending emails to his email address at JMB.(A status report confirming the USPTO filing on March 31 2010 is Exhibit E hereto.) Copies of some emails sent to Arochas at JMB for his new business are identified below. 20 By October, we knew that something was seriously wrong with our sales operation, and we went to the stores to discover what was happening. All of the buyers, who normally purchased our garments, were not buying anything. Some of them told us they had all the garments they needed; others admitted they were using “Bob's company”. From our field work, we went to our retailers’ stores to inspect 4 their inventory; what we found is remarkable. Arochas - and I used this term to refer not only to him individually, but to the two corporate defendants by which he is now doing business - D-Nach and Fab Mill - has sold his “new” garment line that copied 100% from JMB garments to all of our retailers. The copycat Atelier Luxe garments are on display with the few Atelier garments the retailers may still have in stock from prior seasons; the two sets of garments cannot be distinguished (except for quality); the garments and the fabrics are identical. The labels which Arochas uses for his new Atelier Luxe brand are very similar to the Atelier labels, as the attached photos will show. The trade dress - including a number of “hang tags” for price, size etc. - are literally identical and appear to be from the same source as JMB’s other hang tags. 21. When we first visited the stores, we found the Atelier and Atelier Luxe garments mixed up in the same displays with the Atelier Luxe garments outnumbering JMB garments. The Atelier Luxe garments had a white background, with simple black letters used for Atelier Luxe; while Atelier had white letters on a black background. Most recently,I have gone to the stores, and Arochas has changed his label to make it even more similar to the one used by JMB for Atelier. The new Arochas label has a black background and uses white lettering for Atelier Luxe; the font or script style that he is using for Atelier Luxe is now closer to the style always used by JMB. His new labels are indistinguishable from the JMB Atelier label; unless you were looking for proof of trademark infringement. You could not notice that they were different labels. Exhibit F shows photos comparing the new Atelier Luxe labels with the JMB labels. b 22. Once we discovered this information, we contacted counsel to bring this action, On October 8, 2010, our counsel sent a cease and desist letter to Arochas demanding that he stop selling the copies JMB garments and that he stop using the infringing Atelier Luxe trademark. By letter dated October 18, 2010, the attorneys who represent Arochas denied any wrongdoing but information we collected completely rebuts this claim. Copies of these letters are attached to the attorney affirmation. 23. JMB requires the immediate and forceful assistance of this Court. 24. On the grounds set forth below, JMB is entitled immediately to the most broad and comprehensive form of preliminary and permanent injunction that can be fashioned and approved by this Court, to stop Arochas from stealing )MB‘s business. SUMMARY OF [MB‘S FIELD RESEARCH ON ABOUT AROCHAS’ ACTIONS 25. JMB is prepared to present evidence and testimony at the Court's earliest convenience to demonstrate the scope and the audacity of Arochas’ improper conduct. Store Visitations Showing Full Stock of JMB styles sold as Atelier Luxe: Our most compelling evidence of the theft, copying and sale of JMB style garments comes from our inspection and inventory of the garments on sale in JMB retailers: 26. Nordstrom Rack: Nordstrom Rack is the discount retailer affiliated with the Nordstrom department stores. We visited the Nordstrom Rack stores at 14" Street, in Manhattan, and at Berger Center in Paramus New Jersey. At these stores, we found that Atelier and Atelier Luxe garments were on display together without any distinction between the two labels. At the 14" Street store, both labels appeared under a 16 store display for ATELIER brand, apparently used in prior seasons.' All of the styles on display of the Atelier Luxe garments were identical to Atelier garments; they had inventory style numbers that ended in the same two numbers as JMB’s styles, as noted. {In separate exhibits identified below, I show the identity of the Atelier Luxe styles to the Atelier styles, in all of the stores we visited in which we have discovered them.] Inthe 14" Street store, Arochas’ garments outnumbered JMB garments 5 to 1 (115 to 16 out of 31 garments); in the Paramus store, the Arochas garments outnumber the JMB garments by a similar ratio (131 to 21 out of 152 garments.) All styles were identical, either to the JMB styles on display in the store, or to the JMB styles in our inventory. Copies of PDFs showing the identity of styles and their quantity is Exhibits G &H, respectively for the 14" Street store and the Paramus store, with photos of displays. 27. I personally inspected the displays at 14" Street, and one of our salesmen Jeffrey Scher, inspected the displays at Paramus, per his affidavit submitted herewith. Nordstrom Rack is one of JMB’s most important clients, but they have refused to deal with our sales people and they gave us only one purchase order for 67 units this fall. 28, Stein Mart: Stein Mart is a regional retailer, with store primarily in the South, but they have store in Ocean New Jersey visited by Mr. Scher. The Stein Mart store appears to have purchased its copycat garments with JMB styles from the Fab Mill company. Based on Mr. Scher’s inspection at the Ocean New Jersey store, the pattern ‘ After our attorney sent out a cease and desist letter to Arochas, he apparently contacted this store to have them remove the Atelier sign, which they then did, replacing with one for an Atelier Luxe. 17 that we discovered for the Nordstrom Rack stores is repeated there. At this store, there were 135 JMB style garments in the store, 103 with the Atelier Luxe label, and 32 garments with the Atelier label. The photos show that the two labels are displayed together; the similarity of the hang tags, as trade dress, makes the two labels impossible to distinguish. A copy of the PDF summarizing this information with the photos is Exhibit I. Stein Mart gave us only one purchase order for 2340 women’s garments. 29. In addition, because of some clear confusion by Steinmart’s buyers that Arochas must still associated with JMB, we have received copies of three orders from Stein Mart, for the JMB-style garments (undated), but which provide for “start ship” on August 16, 2010, November 11, and November 12, 2010, for these quantities and price: Site/Dept Ship Date Quantity Cost 40997/ 310 8/16/2010 528 $10,650 40997 /310 11/11/2010 2057 $41,140 40997/310 11/15/2010 2089 $41,780 These orders were made to Fab Mill, with Robert Arochas as the contact person. The orders came to us by emails addressed to “bob@jmbnyc.com", from the buyer for Stein Mart, Rola DeLamielleure. The first order was transmitted to Arochas at his JMB email address, as early as July 28, 2010, and the last two orders were emailed on August 30. Copies of these orders and emails to” bob” at his JMB email address are Exhibits J . The last of these two emails requests that “Bob” provide the style numbers, but, based on the inspection by Mr. Scher at the Ocean NJ store, all the Atelier Luxe styles were 18 copied from JMB Atelier styles, and, in this store, there was a perfect match of4 styles. 30. Mysterious Cancellation of JMB orders from Annie Sez Retailer: In our files, JMB has two orders from an retailer Annie Sez, which makes repeat purchases of JMB styles annually, but Annie Sez refused to honor the orders, clearly put together on an Annie Sez order from were just “notes”, not orders. (Exhibit K). Later visits to two local Annie Sez stores, one on Coney Island, and one on Jericho Turnpike, disclose that both stores the same JMB style garments on sale, under Arochas’ Atelier Luxe labels. 31. Annie Sez: Two Annie Sez stores were inspected by Mr. Scher, one on Jericho Turnpike in Long Island and one on Coney Island. [At the Jericho store, Mr. Scher did not count inventory, but a substantial number of garments were displayed there.] The pattern is the same as with the other stores. Atelier and Atelier Luxe garments were in the same display. At the Coney Island store, the Atelier Luxe garments outnumber the Atelier garments by 23 to1. As noted, the styles on display were exactly the same styles (as indicated by the style numbers) that were listed on the Annie Sez orders that JMB had originally received but were cancelled. According to the buyer, the filled out order forms were not orders, they were just “notes”. When Mr. Scher asked the sales person at the Jericho store if there was any difference between the two brands of Atelier and Atelier Luxe, the sales person responded “yes it is the same brand”; at the Coney Island store, the one Atelier garment was not marked with a price, so the sales person was asked to price it; she took an copycat Atelier Luxe garment and noted that it was the “same looking” style. When asked if there was any difference 19 between the two similar Atelier labels, she told me : they are the “same, no different”. 32. These statements show actual confusion not only likelihood of confusion. To the extent that Arochas persuaded Annie Sez to refuse to honor the orders that were already placed with JMB, these transactions show direct interference with those orders. It appears that Arochas somehow enlisted the buyers to stop dealing with JMB at all. Copies of Excel sheets reporting on the visits to Annie Sez stores are Exhibits L. 33. ideeli (Website Sales) ideeli is a retail website, which does not sell things in physical stores. Recently, we discovered that ideeli was having a special one-day sale of Atelier Luxe garments. That website display is valuable as evidence, because it showed photos of all of the Atelier Luxe garments on sale that day. This sale took place on October 21, and 22, apparently. Literally all of the garments on sale at this Ideeli site are JMB style garments; they show the essential skirts, pants and jackets of our line. A copy of the web page from Ideally copied on October 22, 2010 shows these styles, and is copied as Exhibit M; a PDF edited version of that page matching JMB style numbers to the photos shown on the Ideeli website of Atelier Luxe garments is Exhibit N. Match of the JMB styles to the so-called Atelier Luxe garments from Arochas is a complete one. 34. Von Maur Order Lost by Confusion, Another of JMB’s clients isa company called Von Maur Inc. (“Von Maur”). This company frequently places large orders and thus is a very important client. The extent to which Arochas conduct has interfered with JMB’s business, and how he has done so dishonestly, is shown very clearly in a set of transactions with Von Maur that began before Arochas left JMB and 20 continued through the last part of October, when Von Maur came to JMB with an order they thought was a JMB order, but in fact was one - for JMB style garments ~ that Arochas had taken. is shown clearly. In these transactions, Arochas took an order from Von Maur, lied to us before left that it was cancelled (even though it had not been), and later took an order for JMB copied styles from Von Maur (which inadvertently was sent back to JMB in October, because Von Maur’s representative thought he was with JMB. 35, Before Arochas left JMB, we had received an order from Von Maur, a copy of which is Exhibit O, which provided for August delivery of 633 units, for a total cost of $23,587.00 (with a retail price of $72,574.00). When Arochas left us, he told my partner Ben Choy that the Von Maur order had been cancelled, which we later learned as not true. Arochas lied to us about the cancellation. However, because we thought the order had been cancelled, we did not act on it, but we later learned from Von Maur that they thought the order remained in effect. In or about August, when the delivery should have been made (as is noted by hand at the top of the earlier order Exhibit O) the order was cancelled by Von Maur because Von Maur had been receiving some communications from Arochas concerning these orders, and they became so confused that they just cancelled the order from JMB. The court can see this Von Maur order had been included in our own orders to the manufacturer, because as part of the total manufacturing order (which is copied in an appendix and not attached hereto), there were three separate orders that were specifically designated as being an order for the garments that Von Maur ordered. Copies of those orders (3), are attached as Exhibit P. 21 The style numbers on Exhibits O and P are the same ones: 6205570, 8205547, 8205519. 36. Most recently, on October 25, 2010, JMB received emails from a company called ED]-America, which generates Electronic Data Entry (“EDI”) information for Von Maur account relating to their orders. This was sent electronically to JMB‘s offices, directly to the email address that both I and my partner Ben Choy use at JMB; they asked for information about an attached order dated October 22, 2010. That order refers toa vendor style number 21073, which reflects style number of JMB. The EDI representative was confused about the source of that order, and thought it had to be a JMB order (JMB also deals with EDI on its Von Maur orders. (A copy of those emails, with the October 22 order, which was for a JMB style number, but was not a JMB order, is Exhibit xxx . Tt is to be noted that the October 22, 2010 order is for a total of 232 units. The shows a lost order, which would otherwise have come to JMB. The fact that EDI was communicating with JMB for an Arochas’ order, shows there was confusion here. 37. Additional Emails to Arochas: Additional emails sent to Arochas email address at JMB show orders being place for JMB numbered styles as early as June 25, 2010, from one Cara Castagna at Henry Doneger Associates; additional emails from a buyer at Stein Mart, Angie Brack, dated September 10, 2010, referencing purchase orders and requesting style numbers for orders to Arochas, ; and an email from Barbara Bordieri at T] Max, on September 27, 2010 offering to return samples to Arochas. These three emails are attached as Exhibit P; at a minimum, they show actual confusion as to Arochas’ continuing association with JMB; and the followup to the Stein Mart requests 22 for style numbers on pending purchase orders should show the copying of JMB styles. 38. USPTO Submission to Show Actual Use. After our retained attorney sent a cease and desist letter to Arochas, the first thing Arochas’ lawyer did was to file submissions on their pending (but not yet granted ) application to register the Atelier Luxe trademark. The proof of ”actual use” that they submitted to the USPTO consisted of TR Max UK order (Exhibit S), and an inventory report from Nordstrom Rack to show the sales of the Atelier Luxe Garments in interstate commerce (Exhibit T) | have personally compared the style numbers listed on these USPTO submitted documents, and they are a 100% match with the JMB style numbers; the cover sheet to these two exhibits, lists and compares the comparable style numbers for Atelier and Atelier Luxe. As noted above, what Arochas did was to use the same last two digits in the garment or style number, to identify his garments, which were copied from the same JMB styles. This probably was as done to integrate Arpchas’ inventory into existing inventory controls at the retailers; his products could be logged into the same Atelier inventory system that existed at these companies already. As with the comparison of Arochas/ JMB styles at the ideeli website, and at Stein Mart, the match with JMB styles is 100%. 39. This affidavit sets forth my personal knowledge of the transactions that are going to be in dispute in this action. I also direct the Court to the accompanying affidavit of Jeffrey Scher, who visited some of the stores that we surveyed and can report on his findings. Mr. Scher also dealt with Arochas on a few occasions, in particular on one occasion when he had difficulty returning some of JMB’ samples, from 23 a buyer, who like all the other decided not order garments from JMB this year. After a few requests to this buyer, Mr. Scher was advised that the samples from JMB had been sent to Arochas at his new showroom, at 250 West 39" Street, where he apparently showing and selling his “Atelier Luxe” garments that are copied from JMB’s styles. 40. To get back our samples, Mr. Scher had to go to Arochas new showroom. This was at some point in late September, as I recall. Arochas would not let Mr. Scher enter his studio, and left the samples downstairs in the lobby. Mr. Scher did have a chance to talk to Arochas about his new business, and Arochas repeated to him what he had told us when he left JMB at the end of May. Arochas told Mr. Scher that he was doing things totally different from JMB, and that all his garments were new updated styles. These were clearly false representations, and they were intended to conceal what he was really doing. Arochas copied our label, imitated our trademark with his Atelier Luxe, copied all of our garments styles and sold them through to our established clientele, without missing a beat, by having his garments ready to replace ours this fall. SUMMARY AND CONCLUSION 41. The actions that | have described by Arochas are improper, unethical and illegal. Arochas has stolen the JMB business, in its entirety, with the transparent goal of destroying JMB. Arochas has used our proprietary information, copied our garments, stolen our clientele and done everything possible to take over the position of JMB in the market place. Our Atelier label and trademark, although not registered, has acquired secondary meaning with our retailer clientele and the public; our garments are 24 recognized has high-quality and fashionable ones in the discount retail market. Our best customers (formerly) found our products so reliable and successful they placed replenishment orders during the season to keep those garment styles available to sell. 42. Arochas has engaged in unfair competition to destroy JMB; he has used a intentionally similar mark to confuse the market as to the identity of the source of the JMB garments. Our garments are on display in the stores of all of our retailer clientele, but all of those garments were made and sold by Arochas not by JMB who owns them. 43. The JMB garments are sitting in our warehouse unsold. Unless drastic action is taken by the Court by injunctive relief, JMB could be destroyed. We request that the Court grant the relief requested, in the manner described by our counsel. MARCELLA LAW Sworn to before me this SHUKYEE NG No. 01NG618955" Notary Public, State of New York Qualified in New York County 3 day of November, 2010 My Commission Expires 06/30/2012 _ Abiypa “K NOTARY PUBLIC LIST OF EXHIBITS TO THE AFFIDAVIT OF MARCELLA LAW Illustration by example how Arochas style numbers copied JMB List of recommended styles from Arochas for JMB fall 2010 season Copy of emails, May 3, 2010, showing Arochas copying mfg specifications Arochas listing on Linked-In networking website as JMB owners USPTO status report showing the filing for Atelier Luxe March 31, 2010 Photo display of JMB Atelier labels and new Atelier Luxe labels Report of inspection of Nordstrom Rack for 14"* Street store, with photos Report of inspection of Nordstrom Rack for Paramus store, with photos Report of inspection of Stein Mart in Ocean New Jersey, with photos Copies of three (3) orders received at JMB from Stein Mart from Arochas Copies of two (2) Annie Sez orders rejected or cancelled by Annie Sez Report of inspections at Annie Sez stores, Coney Island & Jericko Tpke Copy of Ideeli one day sale of Atelier Luxe, taken on October 22, 2010 PDF version of Ideeli web-pages matching JMB styles to the Ideeli photos Photo copy (not good guality) of Von Maur order cancelled August 12 Copied of sections of manufacturing orders, for the Von Mauer garments Email note from EDI-America to JMB re October 22, 2010 Von Maur order Copies of additional emails sent to JMB but intended for Arochas orders Copies of TK Max documents that were submitted to the USPTO, to show actual use of trademark, with cover sheet comparing JMB style numbers, Copies of Nordstrom Rack document that was submitted to the USPTO, to show actual use of trademark, with cover sheet comparing JMB style numbers with the Atelier Luxe styles numbers, which are a 100% match APPENDIX DOCUMENTS; TO BE FILED AS CONFIDENTIAL 1 Set of Manufacturing Specifications, copied by Arochas May 3, 2010 2. Set of orders placed by JMB to its Manufacturer March to May 2010