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Brighton Collectibles, Inc. v. RK Texas Leather MFG

United States District Court, Ninth Circuit

September 3, 2013

BRIGHTON COLLECTIBLES, INC., Plaintiff,
v.
RK TEXAS LEATHER MFG; K & L IMPORTS, INC.; et al., Defendants, and related cross claims.

ORDER DENYING DEFENDANTS' MOTION FOR ISSUE PRECLUSION SANCTIONS [Dkt. No. 265.]

GONZALO P. CURIEL, District Judge.

On August 5, 2013, Defendants K&L Imports, Inc.; NHW, Inc.; Joy Max Trading, Inc.; YK Trading, Inc.; and AIF Corporation filed a motion for issue preclusion sanctions against Plaintiff for failure to comply with the pretrial disclosure requirements as to actual damages. (Dkt. No. 265.) Plaintiff filed an opposition on August 23, 2013. (Dkt. No. 277.) Defendants filed a reply on August 30, 2013. (Dkt. No. 278.)

Background

On February 24, 2010, Bright filed its original complaint against Defendant RK Texas Leather Mfg., Inc. ("Texas Leather"). (Dkt. No. 1.) On December 6, 2010, Texas Leather filed a third party complaint against K&L Import, Inc.; NHW, Inc. d/b/a/ Sense Trading Co.; YK Trading, Inc.; JCNY; Joy Max Trading, Inc.; AIF Corporation d/b/a Global Time International, Lucky-7 International and Time World. (Dkt. No. 17.)

On February 28, 2011, Plaintiff filed a first amended complaint against Texas Leather; K&L Imports, Inc.; NHW, Inc.; YK Trading, Inc.; JC NY; Joy Max Trading, Inc.; and AIF Corporation. (Dkt. No. 51.) On August 31, 2011, Plaintiff filed a second amended complaint against Texas Leather; Richard Ohr, Texas Leather's owner; K&L Imports, Inc; NHW, Inc.; YK Trading, Inc; Joy Max Trading, Inc.; and AIF Corporation. (Dkt. No. 87.) The SAC alleges causes of action for copyright infringement; trade dress infringement; false designation of origin; common law unfair competition; statutory unfair competition; and trademark infringement. (Id.) On November 8, 2011, Defendant Richard Ohr filed a cross claim against K&L; NHW; Joy Max, YK Trading, Inc.; JCNY and AIF Corporation. (Dkt. No. 101.)

On August 5, 2013, Defendants moved for issue preclusion sanctions pursuant to Federal Rule of Civil Procedure 37(c)(1) for failure to comply with the pretrial disclosure requirements pursuant to Federal Rule of Civil Procedure 26. (Dkt. No. 265.) Defendants contend that Plaintiff failed to disclose its actual damages theory. Plaintiff argues that all information about its actual damages calculations has already been presented to Defendants during discovery.

Discussion

I. Federal Rule of Civil Procedure 37(c)(1)

Federal Rule of Civil Procedure ("Rule") 26(a) provides that a party's initial disclosures provide a "computation of each category of damages claimed by the disclosing party." Fed.R.Civ.P. 26(a)(1)(A)(iii). Rule 26(e)(1)(A) requires disclosing parties to supplement their prior disclosures "in a timely manner" when the prior response is "incomplete or incorrect." Fed.R.Civ.P. 26(e)(1)(A). Rule 37(c) provides that "[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information to supply evidence... at a trial, unless the failure was substantially justified or is harmless." Fed.R.Civ.P. 37(c)(1).

District court have discretion to impose discovery sanctions. Payne v. Exxon Corp. , 121 F.3d 503, 507 (9th Cir. 1997). The remedies of issue preclusion sanctions exist for a discovery abuse that is so extreme and prejudicial that no lesser remedy will cure the harm. Synapsis, LLC v. Evergreen Data Sys., Inc., No. C05-1524 JF(RS), 2006 WL 2884413, at *1 (N.D. Cal. 2006) (citing In re Exxon Valdez , 102 F.3d 429, 432-33 (9th Cir. 1996)).

While Defendants cite to cases where courts have excluded evidence at trial relating to damages that were not disclosed in the Rule 26(a)(1)(C) initial disclosures, these cases involved the failure to disclose the damage theory and computation. See Roberts v. Ground Handling, Inc., No.04 Civ. 4955(WCC), 2007 WL 2753862, at *4 (S.D. N.Y. 2007) (excluding newly advanced damage theory); Wilson v. Pope, 1997 WL 403684, at *8 (N.D. Ill. July 14, 1997) (evidence precluded of damages not disclosed during discovery and only disclosed until final pretrial order). The instant situation is different. While Plaintiff has properly disclosed its damages theory, it has not properly supplemented its disclosures to provide the computation of damages.

Defendants argue that the only damage theory and computation provided by Plaintiff was excluded by the Court in its order on Defendants' motion for summary judgment. They assert that no other damage theories or other damage computations have been provided as required under Rule 26(a). Defendants argue that Plaintiff should be precluded from presenting any theory of actual damages, including without limitation damages based on claimed lost sales, lost profits, damage to goodwill or corrective advertising.

Plaintiff contends that it disclosed the theory of actual damages it intends to present at trial during discovery and the information supporting its method of calculating actual ...


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