Ga. Judge Rolls Back Order In Fake Tobacco Papers Suit

By Rosie Manins ·  Listen to article

Law360 (March 24, 2023, 9:54 PM EDT) — A Georgia federal judge rescinded Friday his same-day order for two Georgia wholesalers to permanently dissociate from the Top and Job brands of cigarette rolling papers and affiliated products, following a counterfeiting trial in which the companies were slapped with $2.3 million in damages.

U.S. District Judge Michael L. Brown had ordered Star Importers & Wholesalers Inc. and Ziya Business Inc. – doing business as ZCell & Novelties – to get rid of all materials they had bearing the trademarks for the Top and Job brands. He also barred the companies from falsely representing themselves or their goods or services as affiliated with the trademark owners.

But later in the day, Judge Brown doubled back after objections from the wholesalers. He asked the parties to propose new injunction orders that they all agreed to by March 29 and to notify the court if they wanted a hearing.

Top Tobacco LP, Republic Technologies (NA) LLC and Republic Brands LP – formerly known as Republic Tobacco LP – sued the wholesalers in 2019 after discovering that some of the rolling papers they sold under the Top and Job brands were fake.

A jury in Atlanta found that the trade by Star and ZCell of counterfeit papers wasn’t intentional but still awarded the tobacco companies, collectively referred to as Republic, $2.3 million in statutory damages under the Lanham Act. The trial started March 6 and the evidence wrapped a week later.

Richard L. Robbins of Robbins Alloy Belinfante Littlefield LLC, lead attorney for Star and its owner and president, Amin “Monty” Hudda, told Law360 on Friday that they had asked Judge Brown to clarify that his order didn’t apply to the purchase or sale of genuine products.

“We assume that is the intent,” Robbins said, before the order was rescinded. “Star has never had any intention of trading in counterfeit goods, whether they be from Republic or any other company.”

James M. Johnson of Johnson Trial Law LLC, lead attorney for ZCell and its owner and CEO Samadali Lakhani, said Friday that his clients had no problem being forthright with Republic and the court about their intent to stay away from knockoffs in the future.

“My clients are not counterfeiters, nor would they have ever intentionally traded in the goods at issue in this case,” Johnson said.

Both sets of defendants, which operate separately, are contemplating their post-trial options.

Johnson said the case represented Republic’s “heavy-handed exercise in dumb, non-economical litigation.” He said Republic spent millions in a failed attempt to show the counterfeit trading was willful in order to seek up to $54 million in trebled statutory damages.

“While my clients still take issue with the damages that the jury awarded based on the thin evidence Republic provided – and we expect to address this issue in post-trial motions – we are proud to have stood up to Republic, and we are happy that a Georgia jury largely rejected Republic’s misguided bullying,” Johnson said.

Robbins said he plans to ask Judge Brown to reduce the damages, given the actual damages in the case were arguably between $20,000 and $30,000. If that doesn’t work, an appeal to the Eleventh Circuit is likely, he said.

“Otherwise, our client is pleased that the jury agreed with the owner, Mr. Hudda, that neither he nor his company knew or had reason to know these particular items were counterfeit,” Robbins said. “Everyone at trial agreed it was impossible to look at these products and tell they were counterfeit, hence the need for lab tests in France.”

In a post-trial statement, Republic said its unique victory reflects its commitment to safeguarding consumer trust. In March 2022, Republic won $11 million in the same court against a different Georgia wholesaler. The verdict in that case is before the Eleventh Circuit.

In the case before Judge Brown, Tennessee resident Alex Seriana and his companies TN Vape LLC and TN Vape & Smoke Shop LLC, doing business as Greenbrier Wholesale, were added as third-party defendants. Star and ZCell claimed the counterfeit papers they sold were purchased in good faith from Seriana, who held himself out to be an authorized Republic distributor.

Judge Brown also signed a permanent injunction Friday against Seriana and his companies, which had settled ZCell’s claims on the eve of trial and agreed to the order.

Counsel for Republic did not immediately respond to questions about Judge Brown’s orders Friday.

Republic is represented by Maia T. Woodhouse, Amy L. Hanna Keeney, Joshua Counts Cumby, Eric J. Partlow and Lyndey R.Z. Bryant of Adams and Reese LLP and Sheldon T. Zenner of Katten Muchin Rosenman LLP.

Star and Hudda are represented by Richard L. Robbins, Rachel F. Gage and Matthew T. Parrish of Robbins Alloy Belinfante Littlefield LLC.

ZCell and Lakhani are represented by Philip T. Poole and James M. Johnson of Johnson Trial Law LLC.

The case is Top Tobacco LP et al. v. Star Importers & Wholesalers Inc. et al., case number 1:19-cv-04939, in the U.S. District Court for the Northern District of Georgia.

–Editing by Janice Carter Brown.