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Family Dollar Stores, Inc v. United Fabrics International

April 4, 2012

FAMILY DOLLAR STORES, INC.,
PLAINTIFF,
v.
UNITED FABRICS INTERNATIONAL, INC., DEFENDANT.
UNITED FABRICS INTERNATIONAL, INC., COUNTER-CLAIMANT,
v.
PRESTIGE GLOBAL COMPANY LTD. AND FAMILY DOLLAR STORES, INC.,
COUNTER-DEFENDANTS.



The opinion of the court was delivered by: James C. Francis IV United States Magistrate Judge

MEMORANDUM AND ORDER

This is an action concerning a copyright registered to defendant and counter-claimant United Fabrics International, Inc. ("UFI" or the "Defendant"). Plaintiff and counter-defendant Family Dollar Stores, Inc. ("Family Dollar" or the "Plaintiff") has filed a motion for sanctions pursuant to Rule 37(b) of the Federal Rules of Civil Procedure ("Motion") against UFI asserting that UFI failed to comply with a February 14, 2012 order issued by the Honorable Colleen McMahon, U.S.D.J. (the "February 14 Order"). (Plaintiff's Memorandum of Law dated Feb. 23, 2012 ("Pl. Memo.") at 1). Specifically, Family Dollar complains that UFI failed to produce documents that "include, but are not limited to, the sales records relating to [] 18 [] designs [other than the one identified in the complaint] listed on UFI's copyright registration" number VAu 978-345 (the "Copyright Registration"). (Pl. Memo. at 1, 6). As sanctions, Family Dollar asks that UFI's pending motion for partial summary judgment be dismissed, that certain factual issues be deemed established, and that UFI pay the expenses Family Dollar has incurred in bringing this motion. (Pl. Memo. at 7-9). For the reasons that follow, Family Dollar's motion is granted in part. Background

This motion is the culmination of many discovery disputes that have arisen in this litigation. Resolution of this dispute turns on what, precisely, UFI was required to produce pursuant to the February 14 Order. That, in turn, requires a detailed account of its complicated history.

UFI holds copyright registration number VAu 978-345 for a collection of two-dimensional designs, including one called "Mod Squad." (Complaint at 2 & Exh. A at 5). Family Dollar brought this action seeking a declaration that UFI's copyright in Mod Squad is "invalid, void, unenforceable and/or not infringed" by an allegedly infringing girl's dress sold by Family Dollar. (Complaint at 2, 4 & Exh. A at 5-7). In response, UFI filed a counterclaim alleging that garments sold by Family Dollar and counter-defendant Prestige Global Company Ltd. ("Prestige") infringe the Mod Squad design. (UFI's Answer and Counterclaim ("Counterclaim") at 4-6).

In July 2011, in accordance with Rule 26 of the Federal Rules of Civil Procedure, UFI sent Family Dollar its initial disclosures.

(UFI's Rule 26 Initial Disclosures ("Initial Disclosures"), attached to Declaration of Michael D. Steger, Esq., dated July 8, 2011 ("Steger Decl."), as Exh. 3). These Initial Disclosures enumerated relevant documents in UFI's possession, including "[i]nvoices and purchase orders for the print designs at issue," "[o]ther miscellaneous documents related to the print designs at issue," "[d]ocuments showing the offering for sale of the print design at issue," and "sales documents related to the print design at issue." (Initial Disclosures at 3-4).

In August 2011, Family Dollar propounded its first requests for production. (Plaintiff Family Dollar's First Request for Production dated Aug. 30, 2011 ("RFP"), attached to Declaration of Richard S. Schurin, Esq., dated Feb. 23, 2012 ("Schurin Decl."), as Exh. B). The document defined the phrase "Subject Design" as it is used in the RFP as "[UFI's] design which is identified and denoted in the Counterclaim." (RFP at 4). As noted above, the Counterclaim designates only the Mod Squad design. (Counterclaim at 4). The RFP also included requests that did not refer explicitly to the Subject Design. For example, Family Dollar asked for "[a] sample of each of 19 works . . . that comprise the 2008 Geometric Floral Collection II that is the subject of Copyright Registration No. VAu978-345." (RFP at 6 ("Request No. 4")). In addition, Family Dollar requested "[a]ll invoices and purchase orders for the print designs at issue as referenced in [UFI's] initial disclosures." (RFP at 9 ("Request No. 24")).

On October 13, 2011, Family Dollar sought an order compelling UFI to respond to the RFP, and Judge McMahon referred the dispute to me. (Memorandum Endorsement dated Oct. 13, 2011). On October 21, 2011, I ordered UFI to provide written responses to Family Dollar's discovery requests immediately and to produce responsive documents by October 28, 2011. (Order dated Oct. 21, 2011 ("October 21 Order")). UFI timely provided written responses, including objections, to Family Dollar's RFP.*fn1 Notwithstanding the objections, UFI consistently agreed to produce documents. For example, in response to Request No. 4, UFI stated, "Notwithstanding the foregoing [boilerplate objections], Plaintiff will produce documents related to the design at issue in this case." (UFI'S Responses at 5 (emphasis added)). In response to Request No. 24, UFI stated, "Notwithstanding the foregoing [boilerplate objections], Plaintiff will produce documents." (UFI'S Responses at 12).

On October 28, 2011, UFI produced documents, including a sales summary ("Sales Order Item Report") detailing all sales of the Mod Squad design. (Steger Decl., ¶ 7). Family Dollar deposed Shahariar Simantob, president of UFI, on November 10, 2011. (Excerpt from Transcript of Deposition of Shahariar Simantob dated Nov. 10, 2011 ("Simantob Tr."), attached to Schurin Decl. as Exh. D). At the deposition, Family Dollar requested that UFI produce a similar sales summary for each of the 18 other designs included in the Copyright Registration. (Simantob Tr. at 45; Letter from Richard Schurin dated Jan. 5, 2012 ("January 5 Letter"), attached to Steger Decl. as Exh. 7, at 2).

The discovery period closed on November 21, 2011. (Memorandum Endorsement dated Oct. 13, 2011). On December 5, 2012, after a pre-trial conference, I ordered both parties to "answer all outstanding interrogatories and produce all non-privileged documents responsive to document requests" by December 15, 2011. (Order dated Dec. 5, 2011 ("December 5 Order")).

UFI filed a motion for partial summary judgment on January 4, 2012, which argues, in part, that the Copyright Registration constitutes prima facie evidence of the validity of UFI's copyright in the Mod Squad design. (UFI's Memorandum of Points and Authorities dated Jan. 4, 2012, at 5-6).

On January 6, 2011, Family Dollar requested an order compelling UFI to "produce documents previously requested," including "all invoices and purchase orders, and other evidence of first sale" of the 18 designs (other than Mod Squad) included in the Copyright Registration. (Letter from Richard Schurin dated Jan. 6, 2012 ("January 6 Letter"), attached to Schurin Decl. as Exh. F, at 1, 2). These documents are relevant, Family Dollar argued, because "[c]ollection copyright registrations . . . are valid only when all of the constituent materials were published in the subject collection together, simultaneously, and for the first time anywhere." (January 6 Letter at 2 (citing McLaren v. Chico's FAS, Inc., No. 10 Civ. 2481, 2010 WL 4615772 (S.D.N.Y. Nov. 9, 2010), and L.A. Printex Industries Inc. v. Aeropostale, No. CV 08-7085, 2010 WL 2813800 (C.D. Cal. May 5, 2010), rev'd, __ Fed. App'x __, 2012 WL 91316 (9th Cir. Jan. 12, 2012))). In an attachment, Family Dollar enumerated nine categories of documents that UFI had allegedly agreed, but failed, to produce:

(1) invoices reflecting when Mod Squad fabric was first shipped to customers and shipping records related to sales to two particular people;

(2) sales and shipping records for the designs other than Mod Squad included in the Copyright Registration;

(3) a copy of a document transferring ownership of the Mod Squad design from its designer to UFI;

(4) documents identifying UFI's salespeople in the New York area active during ...


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