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July 14, 2004.


The opinion of the court was delivered by: BARBARA JONES, District Judge


Before the Court is Plaintiff's motion to vacate the judgment, entered after Plaintiff accepted Defendants' Rule 68 offer, and its motion to hold Defendants in contempt of court. For the reasons to follow, I grant Plaintiff's motion to vacate the judgment and deny the motion to hold Defendants in contempt.


  On December 3, 2003, Plaintiff obtained an ex parte seizure order authorizing seizure of allegedly infringing merchandise and related documents from Defendants. On December 9, 2003, I issued an order, memorializing a conference I conducted with the parties that day, directing the Defendants to "supply plaintiff with purchase and sales orders pertaining to defendants' purchase of jewelry similar to that described in the complaint. Such papers must be delivered to the plaintiff by December 10, 2003, or defendants must notify the Court of the need to extend the deadline." 12/9/03 Order at 2.

  After several communications between the parties and conferences with the Court regarding the timing and confidentiality of the documents to be produced, Defendants produced the customer and supplier documents that it had in its possession on December 29, 2003. The documents reflected that Defendants' purchased between $50,000 and $70,000 of jewelry for resale from a company named Unicorn of Hong Kong. It is undisputed, however, that the document production did not contain all of Defendants' invoices of its relevant purchases from Unicorn, but rather contained only the invoices that Defendants had in their possession at the time. These invoices, according to Defendants' recent admissions, were largely incomplete because of their haphazard record-keeping. Mr. Sholom Rubinoff, principal of Defendants Rubinoff Imports, Inc. and Rubinoff Jewelry, Inc., declared that he "did not keep . . . detailed business records. . . . ledgers, journals, and other books of account[s] reflecting the entire business." (Rubinoff Decl. at ¶ 5). In fact, Mr. Rubinoff averred that he did not "systematically maintain records of old purchases and sales," and instead "dispose[d] or some old invoices in the ordinary course of [his] business." (Rubinoff Decl. at ¶ 6). It is undisputed that at no time did Defendants' attorney, Mr. Steven Horowitz, inform Plaintiff that the Defendants did not keep regular records or that the documents Defendants produced reflected only some, but not all, of the purchase information that Plaintiff was seeking.

  On December 26, 2003, Defendants served upon Plaintiff a Rule 68 offer of judgment in the amount of $60,000, which was set to expire on January 12, 2004. During the time that the offer was pending, counsel for the parties communicated about the profits realized by the Defendants. Defendants' counsel asserted that, by its calculation, Defendants realized a profit of $54,291, and provided Plaintiff with, what it characterized, as "a summary of the calculation of gross profits on the jewelry items at issue along with relevant explanations." (Pl's Ex. 1 (1/2/03 Ltr. from Steven Horowitz to Theodore Steingut)). It is undisputed that this calculation accounted only for the jewelry reflected in the documents Defendants produced to Plaintiff.

  Plaintiff accepted the offer of judgment for $60,000 on January 12, 2004, and this Court entered judgment on January 20, 2004. Following the entry of judgment, Plaintiff commenced litigation against Defendants' supplier, Unicorn. During the course of that litigation, Plaintiff obtained several of the Rubinoff Defendants' invoices that they had not been produced during this litigation, which reflected that the Rubinoff Defendants likely profited between $84,500 and $115,000 over and above the amounts previously disclosed. Specifically, Unicorn produced an invoice dated December 2, 2003, which reflected that the Rubinoff Defendants purchased approximately 50 pieces of jewelry from Unicorn, as well as invoices dated October 3, 2003, November 11, 2003, and January 20, 2004 reflecting numerous purchases that were not disclosed prior to the settlement. (See Pl's Ex. 2). Notably, Unicorn's production showed that the Rubinoff Defendants had produced invoices generated almost a year before the seizure, but not others that were generated much closer to the time of the seizure — including one that was dated one day before this lawsuit commenced.

  Based on this new information, Plaintiff made a motion to vacate the judgment pursuant to Federal Rule of Civil Procedure 60(b) on April 21, 2004. After reviewing the parties' briefs, as well as conducting a 2-day hearing that included witness testimony and exhibits, it is my opinion that the judgment should be vacated because the Defendants made material misrepresentations and engaged in misconduct with respect to the documents they produced and their representations relating to the amount of profits they realized from the allegedly infringing jewelry.


  1. Motion to Vacate the Judgment Pursuant to Rule 60

  Rule 68 judgments may be vacated under Rule 60(b), which allows a court, in its sound discretion, to "relieve a party . . . from a final judgment order," for several enumerated reasons. Fed.R.Civ.P. 60(b); see also Mendell v. Gollust, 909 F.2d 724, 731 (2d Cir. 1990), aff'd, 501 U.S. 115 (1991). According to 60(b)(3), a court may vacate a judgment upon a showing of "fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party." Fed R. Civ. P. 60(b)(3).

  In order to vacate the judgment under Rule 60(b)(3), Plaintiff "must demonstrate, by clear and convincing evidence, that `material misrepresentations' were made," which "prevented plaintiff from `fully and fairly' presenting his case." Walther v. Maricopa Int'l Inv. Corp., 2002 WL 31521078, *3 (S.D.N.Y. Nov. 12, 2002) (citing Fleming v. New York Univ., 865 F.2d 478, 484 (2d Cir. 1989). I believe Plaintiff has met its burden here.

  I ordered Defendants, both by written order and verbally, to produce all relevant supplier documents, without limitation to documents that Defendants currently had in their possession. It was clear to me, as well as to Defendants' attorney, that Plaintiff was seeking all supplier purchase records.

  However, Defendants' attorney never informed Plaintiff or the Court that Defendants did not possess many of the relevant records, including records of purchases made within months of the litigation and records that, in total, reflected ...

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