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Lokai Holdings, LLC v. Twin Tiger USA, LLC

United States District Court, S.D. New York

June 2, 2017

LOKAI HOLDINGS, LLC, Plaintiff,
v.
TWIN TIGER USA, LLC, et al., Defendants.

          OPINION AND ORDER

          DEBRA FREEMAN, United States Magistrate Judge

         Currently before this Court are a number of discovery disputes, raised by the parties through a series of letter motions. The motions identified below are resolved as follows:

         Motions Concerning the Deposition of Steven Izen (Dkts. 99, 137, 138)

         By letter dated February 3, 2017, Defendants' counsel sought a pre-motion conference regarding, inter alia, Defendants' anticipated motion to compel the continuation of the deposition of Steven Izen ("Izen"), Plaintiffs founder and principal. (Dkt. 99.) This Court held a telephone conference with counsel on February 8, 2017 (see Transcript (Dkt. 112)), during which Defendants' counsel clarified that Defendants were not seeking to ask further questions of Izen in his individual capacity, but only in his capacity as Plaintiffs designated corporate representative under Rule 30(b)(6) of the Federal Rules of Civil Procedure. For that matter, Defendants' counsel clarified that Defendants were not necessarily seeking to compel Izen to appear for further deposition questioning, but rather a "properly prepared corporate designee as to the topics that [Defendants had] noticed." (Id., at 40; see also Id. (the Court: "You're not looking for more time for the individual; you're looking for more time on 30(b)(6) topics?" Mr. Shaw (counsel for Defendants): "Correct.").) After hearing oral argument from counsel, this Court granted Defendants' request to continue the Rule 30(b)(6) deposition of Izen (or an alternate corporate designee) for another three hours - plus additional time, if needed by Plaintiff for reasonable cross-examination. (See id., at 66, 96; see also id., at 59-60 (making clear that this would be a Rule 30(b)(6) deposition).) This Court also cautioned counsel for both sides, at length, regarding the conduct that it expected to see (and that it did not expect to see) during the continued deposition. (See generally id., at 51-67.)

         On April 24, 2017, Defendants' counsel wrote to this Court again (Dkt. 137), stating that, earlier that day, Defendants had attempted to continue the deposition in question in accordance with the Court's ruling at the February 8 conference (with Izen again appearing as Plaintiffs designated corporate witness), but that both Izen and Plaintiffs counsel had been obstructionist, leading Defendants' counsel to "closef] the deposition in order to bring a motion" (id., at 2). Defendants sought an order from this Court (a) compelling the further continuation of the deposition in my Courtroom, under Court supervision, (b) requiring Plaintiffs counsel "to fully reimburse Defendants for costs and fees incurred as a result of their improper conduct, " and (c) "formally reprimanding] Plaintiffs counsel." (Id., at 3.) As an alternative to Court supervision, Defendants proposed the appointment of a "discovery referee to supervise the deposition." (Dkt. 139, at 1.)

         On April 25, 2017, Plaintiffs counsel wrote to this Court (Dkt. 138), providing a different version as to what had occurred at the continued deposition. According to Plaintiffs counsel, Izen was "well prepared for three hours of additional questions, " but Defendants' counsel "ended the deposition by theatrically storming out. . . after only twelve minutes, mostly comprised of badgering and.harassing Mr. Izen." (Id., at 1 (emphasis omitted).) Plaintiff requested that this Court (a) enter a protective order preventing the deposition from being continued further, and (b) awarding sanctions against Defendants and their counsel in the amount of the attorneys' fees expended by Plaintiff in preparing for the "terminated" deposition, traveling to and attending the deposition, and bringing the motion. (Id.)

         Having reviewed the transcript of the April 24 continued deposition (Dkt. 138-1), this Court finds the conduct of all participants to be lacking. The witness, Izen, was plainly evasive, failing repeatedly to give direct responses to straightforward questions. Plaintiffs counsel, in turn, took inadequate steps to address the witness's evasiveness, made improper objections, and wrongly directed the witness not to answer questions that did not call for the disclosure of privileged communications. Defendants' counsel, however, made improper statements to the witness (seemingly challenging the witness to disregard his counsel's instructions), and ended the deposition in an unnecessarily abrupt fashion, rather than trying to maximize the use of the time allotted for the deposition and conserve resources. Under the circumstances, it is hereby ORDERED that:

         1. Plaintiff is directed, once again, to produce Izen (or an alternate Rule 30(b)(6) witness) for three hours of continued deposition questioning by Defendants. This continued deposition shall be conducted within 30 days of the date of this Order, on a date to be agreed by the parties.

         2. Given that all participants in the last (attempted) deposition share at least some blame for its going rapidly off track, this Court will not impose any sanctions - including any shifting of costs - at this time, nor will this Court require the continued deposition to be held in the Courthouse, supervise it directly, or appoint a referee to supervise it. Counsel are members of the bar and are considered officers of the Court, and this Court will not accept that they are incapable of acting professionally without such oversight. Nonetheless, the witness and all counsel are cautioned that this Court will no longer tolerate evasive, obstructionist, improper, or unprofessional conduct. If, upon completion of the deposition, any counsel believes that the witness or opposing counsel engaged in such conduct, then counsel may submit the new transcript to this Court, and, if this Court agrees, it will strongly consider imposing sanctions at that time.

         Motions Concerning Subpoenas Served on Plaintiffs Counsel and Related Privilege Issues (Dkts. 116, 129, 130)

         By letter dated March 17, 2017 (Dkt. 116), Plaintiffs counsel moved to quash deposition and document subpoenas served by Defendants on Plaintiffs current and former attorneys -Ronald Bienstock, Esq. ("Bienstock") and David M. Perry, Esq. ("Perry"), respectively - who had been involved with certain applications for trade-dress registrations made by Plaintiff in the United States Patent and Trademark Office (the "PTO"). According to Plaintiff, the subpoenas called for the disclosure of matter protected by the attorney-client privilege, and therefore this Court was required to quash the subpoenas under Rule 45(d)(3) of the Federal Rules of Civil Procedure. Defendants responded by arguing that the subpoenas properly sought discoverable information that was either non-privileged that would likely fall within the "crime-fraud exception" to privilege. (See Dkts. 120, 121, 122.) This Court considered the motion and opposition, as well as Plaintiffs reply (Dkt. 123), and Defendants' sur-reply (Dkt. 124), and held a telephone conference with counsel on March 27, 2017 to address the issues raised (see Transcript (Dkt. 152)).

         In brief, Defendants pointed out that, at different times, in connection with seeking both trade-dress registration and also a design patent for the beaded bracelets that are the focus of this litigation, Plaintiff provided to the PTO different dates for Plaintiffs supposed "first use in commerce" of its bracelets. Defendants suspect that Plaintiff did this deliberately, with fraudulent intent. (See generally Dkt. 120.) Specifically, Defendants surmise that Plaintiff provided an earlier (2010) date for such "first use" in connection with its initial efforts to register its bracelet design as trade dress, as an early first-use date would have helped Plaintiff to establish the "secondary meaning" necessary to obtain the trade-dress registration. (See Dkt. 152, at 9-10.) Defendants further surmise that Plaintiff provided a later (2013) date for its first use of its bracelets in connection with its design-patent application, as the earlier date -which was more than one year prior to the effective filing date of the patent application - would have precluded it from obtaining the desired patent. (See id., at 10-11.) Plaintiff, which now asserts that the 2010 date was "not accurate" (id., at 7), eventually abandoned its initial trade-dress application and refiled a new application, stating a 2013 first-use date that matched the date put forward in Plaintiffs patent application (see Dkt. 120, at 9-10; Dkt. 123, at 3-4). Consistent with this, Izen has apparently now given deposition testimony in this case that the 2013 first-use date is correct, and that Plaintiff had provided the 2010 date to the PTO in error. (See Dkt. 120, at 11.)

         Given the several verified declarations originally filed by Plaintiff with the PTO that represented the supposed 2010 first-use date - including declarations made after the PTO specifically sought clarification on the date issue - Defendants question the veracity of Izen's current testimony that the statements of such early use were merely mistaken. Indeed, facing a patent-infringement claim in this case, Defendants counterclaimed for a declaratory judgment of patent invalidity, relying, at least in part, on Plaintiffs multiple prior statements to the PTO as grounds for alleging that Plaintiffs bracelet design had been in public use, on sale, or otherwise made available to the public more than a year before the effective filing date of Plaintiff s claimed invention. As the date of first use was clearly central to that counterclaim, Defendants sought discovery regarding it, and when Izen denied providing the supposedly "incorrect" 2010 first-use date to the attorneys who had filed declarations with the PTO citing that date, Defendants served the subpoenas at issue, seeking discovery from the attorneys regarding the source of the factual information they had passed on to the PTO.

         In its March 27 telephone conference with counsel regarding the subpoenas, this Court instructed Plaintiff to review its position that all of the subpoenaed documents were protected by attorney-client privilege. This Court reasoned that factual information provided by Plaintiff to its counsel, with the understanding that it would be provided, in turn, to the PTO (which, as noted above, had made specific inquiry of Plaintiff regarding the first-use date), could not be considered to have been provided to counsel with an expectation of confidentiality, and thus would not be privileged. This Court further ruled that, if Plaintiff continued to take the position that all requested documents ...


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