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Jake's Fireworks Inc. v. SKY Thunder, LLC

United States District Court, D. Kansas

September 13, 2017

JAKE'S FIREWORKS, INC., Plaintiff,
v.
SKY THUNDER, LLC, et al., Defendants.

          MEMORANDUM AND ORDER

          GERALD L. RUSHFELT U.S. MAGISTRATE JUDGE.

         This matter comes before the Court on Defendant Sky Thunder LLC's Motion to Compel Discovery and Memorandum of Law in Support (ECF 52). Defendant moves to compel Plaintiff Jake's Fireworks, Inc. to provide supplemental answers to some of its interrogatory answers and respond to Defendant's requests for production of documents (“RFPs”). The motion is fully briefed, and the Court is prepared to rule. For the reasons explained in detail below, Defendant's motion to compel is granted in part and denied in part.

         I. Background

         Plaintiff filed this action on June 30, 2016, alleging trademark infringement and federal and state unfair competition claims. The Court granted Plaintiff's motion for leave to amend on December 13, 2016. In its Amended Complaint, Plaintiff alleges the same trademark infringement and unfair competition claims, along with a counterfeiting claim under 15 U.S.C. § 1114.

         Plaintiff served its initial disclosures, pursuant to Fed.R.Civ.P. 26(a)(1), on October 28, 2016. They disclosed the following documents, among others: (1) Advertising and marketing materials for Plaintiff's EXCALIBUR® mark; (2) Sales and distribution information for Plaintiff's EXCALIBUR® products; and (3) Advertising and marketing materials for Defendant's X-CALIBUR-branded fireworks. Plaintiff also provided the following computation of its damages:

Sky Thunder's profits earned from the sale of X-CALIBUR fireworks and damages sustained by Jake's Fireworks (to be determined) as provided by 15 U.S.C. § 1117(a) or, at Plaintiff's election, $2, 000, 000 in statutory damages as provided by 15 U.S.C. § 1117(c)(2), whichever is greater, plus Jake's Fireworks' attorneys' fees incurred in this lawsuit.[1]

         Defendant served its first interrogatories, first requests for admission and first requests for production on November 2, 2016. Relevant to the instant motion, RFPs 9, 10, and 24 through 26 sought documentation related to Plaintiff's computation of actual damages and documentation related to any expenses, lost profits, or other damages Plaintiff claims it suffered as a result of Defendant's alleged actions. RFP 29 sought all of Plaintiff's financial records from 2014 to the present. RFP 30 sought documentation reflecting total gross sales revenue from 2014 to the present. RFP 39 sought documents evidencing the retail and wholesale prices for goods bearing Plaintiffs' EXCALIBUR mark.

         Plaintiff served its answers and objections to Defendant's RFPs on December 19, 2016. Plaintiff objected to the RFPs listed above on various grounds, including that RFPs related to computation of damages were premature, and that the RFPs were overbroad and unduly burdensome. On January 18, 2017, Defendant provided Plaintiff a “golden rule” letter regarding its answers to interrogatories and its responses to requests for admission and RFPs. Over the course of several months, the Court extended the deadline for the parties to file discovery-related motions, as they continued to confer regarding Plaintiff's responses to Defendant's written discovery. Plaintiff supplemented its answers, responses, and objections several times during the course of the parties' ongoing discussions.

         On June 12, 2017, the deadline for Plaintiff to submit its initial disclosures, counsel for Defendant sent an email to counsel for Plaintiff requesting a time to discuss the remaining issues concerning Plaintiff's discovery responses. Counsel for Plaintiff responded on June 13 that it would supplement its formal responses to some RFPs, but that it would stand on its objections regarding RFPs 9, 10, 24, 25, 26, 29, 30, and 39. After counsel for Defendant again attempted to contact counsel for Plaintiff later on June 13 by telephone, counsel for Plaintiff responded by email that Plaintiff had addressed all issues Defendant raised. Defendant filed the instant motion later that day.

         II. Discussion

         Defendant moves to compel Plaintiff to supplement its Rule 26(a) initial disclosures by producing certain categories of documents Plaintiff identified in its disclosures, and by producing a complete damages calculation. Defendant also moves to compel Plaintiff “to respond completely, fully, and without objection to the Defendants' [RFP] Nos. 9, 10, 24-26, 29, 30, & 39.”[2] Plaintiff responds that (1) the request for a damages computation and documentation reflecting actual damages is premature, (2) Plaintiff is not required to produce documents to fulfill its initial disclosure obligations under Fed.R.Civ.P. 26(a), and (3) the RFPs seek information that is not relevant, and the RFPs are overbroad and unduly burdensome.

         A. Rule 26(a) Initial Disclsoures

         1. Categories of Documents

         Fed. R. Civ. P. 26(a)(1)(A) provides, in relevant part, that “a party must, without awaiting a discovery request, provide to the other parties . . . a copy-or a description by category and location-of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment.” As explained above, in its initial disclosures Plaintiff identified several categories of sales, distribution, and marketing materials as relevant to its case.[3] Defendant argues that Rule 26(a) obligates Plaintiff to produce the documents identified in its initial disclosures.

         While Rule 26(a) requires a party to identify and describe supporting documents, it does not require the party to produce them.[4] If a party chooses to identify but not produce the documents, other parties that desire copies may seek them through either informal requests or formal requests for production of documents under Fed.R.Civ.P. 34.[5] The Court will address below Defendant's motion to compel as it relates to Plaintiff's responses to Defendant's formal Rule 34 RFPs. But a motion to compel in relation to initial disclosures is not a proper avenue for compelling document production.[6] Here, Plaintiff has properly identified and described in its initial disclosures the categories of information it has in its possession. Accordingly, the Court denies Defendant's motion to compel Plaintiff to supplement its initial disclosures by producing the sales, distribution, and marketing materials it identified.

         2. Computation of Damages

         Pursuant to Fed.R.Civ.P. 26(a), a party must disclose its computation of damages without waiting for a discovery request.[7] “A party must make its initial disclosures based on the information then reasonably available to it. A party is not excused from making its disclosures because it has not fully investigated the case.”[8] “While a party may not have all of the information necessary to provide a computation of damages early in the case, it has a duty to diligently obtain the necessary information and prepare and provide its damages computation within the discovery period.”[9]

         In its initial disclosures, Plaintiff asserted that it was claiming as damages either (1) Defendant's profits; (2) Plaintiff's actual damages; or (3) a statutory damages award pursuant to 15 U.S.C. § 1117(c). Plaintiff stated that its actual damages were “to be determined.”[10]Defendant moves to compel Plaintiff to provide a calculation of its actual damages. Plaintiff argues that it need not provide this calculation because it can choose among the three remedies described above under the Lanham Act, and thus it is not required to prove its actual damages.

         However, until Plaintiff elects one of the remedies it listed in its initial disclosure and disclaims the other remedies, Rule 26(a)(1)(A)(iii) requires “a computation of each category of damages claimed.”[11] Furthermore, although Plaintiff frames its claimed damages in the disjunctive using the word “or” in its initial disclosures, Plaintiff explicitly claims actual damages as a form of relief in its First Amended Complaint.[12] Thus, because it claims actual damages, it was required to compute this category of damages in its initial disclosures.

         Rule 26(a)(1)(A)(iii) does not require Plaintiff to provide a computation of its actual damages, if it does not have the information required to make this calculation, so long as it diligently works to obtain this information and provides the computation within the discovery period.[13] Although Plaintiff suggests that it may be able to provide a more accurate computation of its damages and determine which remedy it seeks after it serves its expert disclosures, it does not argue here that the information necessary for the computation of its actual damages is unavailable. Instead, it simply suggests that it need not provide a computation, based on its ability to choose among the Lanham Act remedies, and that it will provide calculations for its damages through its experts. As explained above, the Court finds that the ability of Plaintiff to elect remedies under the Lanham Act is not a sufficient basis to withhold a computation of its actual damages. But the Court recognizes that Plaintiff may be able to provide a more accurate computation after it discloses its experts. Accordingly, the Court grants Defendant's motion to compel as to Plaintiff's computation of actual damages. Plaintiff is ordered to promptly provide a computation of its actual damages to Defendant after Plaintiff serves its expert disclosures, [14]and in any event no later than October 12, 2017.[15]

         B. Requests for Production of Documents

         1. RFPs 9, 10, and 24 through 26

         Fed. R. Civ. P. 26(b)(1) sets out the general scope of discovery as follows:

[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.[16]

         Thus, considerations of both relevance and proportionality now govern the scope of discovery.[17] Relevance is still to be “construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on” any party's claim or defense.[18]

         When the discovery sought appears relevant, the party resisting discovery has the burden to establish the lack of relevancy by demonstrating that the discovery (1) does not meet the definition of relevancy under Fed.R.Civ.P. 26(b)(1), or (2) is of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure.[19] By contrast, when the relevancy of the discovery request is not readily apparent on its face, the party seeking discovery has the burden to show the relevancy of the request.[20]

         Defendant's RFPs 9, 10, and 24 through 26 seek documentation related to Plaintiff's computation of damages and documentation related to any expenses, lost profits, or other damages Plaintiff claims it suffered as a result of Defendant's alleged actions. These RFPs appear relevant because they are targeted at the collection of documents that bear on Plaintiff's claim for damages.

         The burden thus shifts to Plaintiff to show that the discovery sought does not meet the definition of relevancy under Rule 26(b)(1) or is of such marginal relevancy that the harm occasioned by discovery would outweigh the presumption in favor of disclosure.[21] Plaintiff argues that, because it may elect to not pursue lost profits and actual damages, the amount of actual damages it claims is not, and may never be, relevant to its case. Defendant cites two Tenth Circuit cases that suggest that, even if Plaintiff seeks an award of Defendant's profits, its own actual damages is nevertheless an “important factor in determining whether an award of profits is appropriate.”[22] Plaintiff responds that these cases do not require it to prove a specific dollar amount in actual damages and that it can instead satisfy the requirements for an award of Defendant's profits by showing “either actual damages or willful action on the part of the defendant.”[23] But as Defendant contends, both cases indicate that the issue of whether plaintiff suffered ...


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