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The case against Pernod Ricard, S.A. is dismissed under Title III of the Helms-Burton Act

| Publications | Cuban Desk

In this lawsuit, the defendant was accused of engaging in "trafficking" with respect to assets confiscated from the plaintiffs' family by the Cuban government after 1st January 1959

The Southern District Court of Florida has dismissed the lawsuit and filed the case against Pernod Ricard, S.A. (PR) by Ms. Marlene Cueto Iglesias and Ms. Miriam Iglesias Álvarez under Title III of the Helms-Burton Act (HBA). In this lawsuit, the defendant was accused of engaging in "trafficking" with respect to assets confiscated from the plaintiffs' family by the Cuban government after 1st January 1959.

Let us remember that Title III of the LHB, activated in 2019 by the Trump administration, allows US nationals to sue any person who knowingly and intentionally traffics in property that was confiscated from them by the Cuban government on or after 1st January 1959 over which they hold any rights. The definition of "trafficking" includes the purchase, receipt, possession, control, management, use or holding of an interest in confiscated property without the owner's consent. It also includes engaging in commercial activities that use or benefit in any way from confiscated property without the owner's consent.

PR is a French group based in Paris, active in the production and marketing of alcoholic beverages. PR owns 50 % of the shares of a joint venture in Cuba (Havana Club Internacional), which is engaged in the manufacture and international marketing of the Havana Club rum brand. The French group also manufactures in France and markets through its subsidiary Martell, Cognac Cohiba, under licence to use the brand name of Habanos, S.A. The US subsidiary Pernod Ricard USA (PRUSA), based in New York, is responsible for the marketing of its portfolio in the USA.

The claimants allege that the Cuban government confiscated the company Coñac Cueto, C.I.A. ("Cueto"), a Cuban-based cognac producer and marketer founded by Mr. Fernando Tomás Cueto Sánchez. The applicants are the daughter and surviving widow of Mr Fernando Tomás Cueto Sánchez.

The US court dismissed the claim for lack of "personal jurisdiction", without analysing the alleged "trafficking" by PR of the confiscated goods. It should be noted in this regard that Havana Club rum is manufactured and marketed in a newly built factory in Cuba, and Cohiba cognac is produced in France. Furthermore, there is no relationship between the applicants and the defendant in terms of trademark ownership. Consequently, we are unaware of the assumptions based on which they claimed to support the said "trafficking".

The plaintiffs, among other grounds, alleged the marketing of Havana Club rum and Cohiba cognac through duty free shops in US airports and through PR's website. Regarding Internet sales, it should be noted that PRUSA's website does not include any reference to the two products. They can only be accessed via the link on PR's website called "Pernod Ricard Global". On the other hand, according to the provisions of the embargo on Cuba, Cuban products cannot be sold in the US, and US citizens have even been prohibited from entering the country from abroad with these products, so it is doubtful that duty free shops are outside these prohibitions. Nevertheless, what is most relevant in this case is that there is no subsidiary or agent of PR in the state of Florida, although the products are marketed there.

The Court found that the plaintiffs did not sufficiently argue the alter-ego theory, and that, even if PRUSA were shown to be behind the defendant for purposes of satisfying the "substantial and not isolated activity" requirement in the state of Florida, PR's connections with Florida are not so continuous and systematic as to meet the substantial activity requirement and thus fall within the jurisdiction of Florida courts.

The Court also argued that, if the plaintiffs' arguments about sales through duty free shops at international airports as well as through freely accessible websites were upheld, it would result in foreign companies being subject to personal jurisdiction in almost every major city in the United States where consumers have access to an airport and the internet.

You can download the full PDF file here.

For further information please contact:

Ignacio Aparicio | Partner Corporate / M&A and Director of the Cuban Desk

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