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Leadership Studies, Inc. v. Blanchard Training & Development, Inc.

United States District Court, S.D. California

June 26, 2017

LEADERSHIP STUDIES, INC., a California corporation, Plaintiff,
v.
BLANCHARD TRAINING AND DEVELOPMENT, INC. a California corporation, Defendant.

          ORDER RE JOINT MOTION FOR DETERMINATION OF DISCOVERY DISPUTE (PLAINTIFFS DOCUMENT REQUEST NOS. 73-78) [DOC. NOS. 70 AND 72.]

          Karen S. Crawford United States Magistrate Judge

         Before the Court is the parties' Joint Motion for Determination of Discovery Dispute. [Doc. Nos. 70 and 72.][1]In the Joint Motion, plaintiff seeks an order compelling defendant to produce documents in response to Request for Production of Document Nos. 73 through 78. [Doc. No. 72, at p. at p. 2-6.] Alternatively, plaintiff wants the Court to conduct an in camera review to determine whether defendant's privilege claims are valid under the common interest doctrine. [Doc. No. 72, at p. 16.]

         Defendant argues that plaintiffs request for an order compelling production of all documents responsive to Request Nos. 73 through 78 should be denied, because it has already produced responsive documents that are non-confidential and non-privileged. [Doc. No. 72, at p. 16-18.] As to responsive documents that purportedly include trade secrets or confidential commercial information, defendant argues that the Court should not order them produced to plaintiff, who is defendant's competitor, because they are not important to resolving matters at issue in the case and because production would be harmful to defendant's business interests. Defendant also requests a protective order pursuant to Federal Rule of Civil Procedure 26(c) precluding the production of certain confidential documents. As to other responsive documents, defendant argues that its assertion of the attorney-client privilege is appropriate based on the common interest doctrine. Both parties seek monetary sanctions against the other for costs and fees related to resolving their dispute. [Doc. No. 72, at p. 16, 29.]

         For the reasons outlined more fully below, the Court finds that plaintiffs request for an order compelling defendant to produce all documents responsive to Request Nos. 73 through 78 must be DENIED as untimely and because relevance and/or proportionality have not been demonstrated under Federal Rule 26(b)(1). In addition, plaintiffs request for an in camera review is DENIED as unnecessary and inappropriate under the circumstances presented. Defendant's request for a Federal Rule 26(c) protective order as to confidential documents exchanged with a third party is also DENIED as untimely and because defendant did not make the required showing. Finally, the Court finds that the parties' mutual requests for monetary sanctions must be DENIED.

         Background

         The operative Third Amended Complaint was filed on November 7, 2016 and includes nine causes of action for: (1) breach of written contract; (2) breach of the covenant of good faith and fair dealing; (3) trademark infringement in violation of the Lanham Act; (4) trademark infringement via reverse confusion under the Lanham Act; (5) fraud in obtaining registered marks; (6) unfair competition; (7) copyright infringement; (8) an accounting; and (9) declaratory relief. [Doc. No. 49, at pp. 1, 11-38.] Since two of plaintiff's claims are asserted under Federal law, jurisdiction in this case is based on Title 28, United States Code, Section 1331. [Doc. No. 49, at p. 3.]

         Plaintiff Leadership Studies, Inc., doing business as Center for Leadership Studies ("CLS"), represents in the Third Amended Complaint that it "is engaged in the business of teaching and promoting the 'Situational Leadership Model, ' which enables managers, salespeople, peer leaders, teachers, and parents to interface with and influence others more effectively. [Plaintiff] conducts workshops and certification processes with its customers, who use its unique curriculum to guide the customers onto the path of becoming more effective leaders." [Doc. No. 49, at p. 2.] Defendant is essentially involved in the same type of business. [Doc. No. 49, at p. 2.]

         Plaintiffs founder, Paul Hersey ("Dr. Hersey"), developed the "Situational Leadership Model" methodology while working with Ken Blanchard ("Dr. Blanchard"), and the two became partners in CLS. [Doc. No. 49, at p. 4.] Dr. Blanchard later sold his interest in CLS, released his rights to any of CLS's copyrighted materials, and assigned his interest in a pending trademark application for the mark "Situational Leadership" to CLS. [Doc. No. 49, at p. 4.]

         Next, Dr. Blanchard decided to open his own company, apparently known as Blanchard Training and Development, Inc., the defendant in this action. [Doc. No. 49, at p. 2, 5.] Defendant entered into a License Agreement with plaintiff in 1987 to use the trademark "Situational Leadership." [Doc. No. 49, at p. 4.] According to the Third Amended Complaint, the License Agreement only permitted the use of the Situational Leadership trademark "in association with goods and services which [met] and [exceeded] a level of quality exemplified by the goods and services presently offered under the mark 'Situational Leadership.'" [Doc. No. 49, at p. 4.] Under the License Agreement, defendant was also obligated to cooperate with plaintiff in maintaining the viability of the trademark and was required to use the "appropriate statutory notice symbol" (i.e., Situational Leadership®). [Doc. No. 49, at p. 5.]

         In 2006, plaintiff learned that defendant "registered the mark 'Situational Leadership II' in English in China." [Doc. No. 49, at p. 6.] To avoid litigation, plaintiff and defendant entered into an agreement allowing defendant to use the "Situational Leadership" mark in English in China. [Doc. No. 49, at p. 7.] However, defendant then "commenced a pattern and practice of registering the marks 'Situational Leadership' and 'Situational Leadership II' in other countries" in violation of the License Agreement [Doc. No. 49, at p. 7.] As a result of defendant's actions, plaintiff has been denied the ability to register the mark in these other countries. [Doc. No. 49, at p. 7.]

         Plaintiff also claims that defendant began marketing its product as "Situational Leadership® II - the SLII Experience" and then applied to register "SLII" as a trademark. [Doc. No. 49, at p. 8.] The acronym "SLII" did not "trigger any potential conflicting marks with the Patent and Trademark Office or other notice to [plaintiff] that [defendant] claimed ownership of this derivative mark." [Doc. No. 49, at p. 8.] In addition, plaintiff claims that defendant did not disclose the existence of a senior mark (i.e., Situational Leadership®) in its trademark application even though "SLII" is shorthand for "Situational Leadership® II." [Doc. No. 49, at p. 8.] According to the Third Amended Complaint, defendant's position is that its use of "Situational Leadership II" falls outside of and is not governed by the License Agreement. [Doc. No. 49, at p. 9.]

         Plaintiff further alleges in the Third Amended Complaint that "Situational Leadership II" and "SLII" are "confusingly similar" and are "likely to cause, and cause, consumer confusion, thereby infringing upon [plaintiff's] rights to its mark, 'Situational Leadership.'" [Doc. No. 49, at p. 9.] Other allegations in the Third Amended Complaint are that defendant is marketing its products in a manner that is detrimental and disparaging to plaintiff. [Doc. No. 49, at pp. 9-11.] Plaintiff represents that it terminated the License Agreement in a letter to defendant on September 30, 2015. [Doc. No. 49, at p. 11]

          Discussion

         I. Timeliness.

         Defendant argues that plaintiffs request for an order compelling production of documents responsive to Request Nos. 73 through 78 and plaintiffs alternative request for an in camera review should be denied as untimely. [Doc. No. 72, at p. 17 n.7.] As with prior Scheduling Orders [Doc. Nos. 43 and 53], the Second Amended Scheduling Order in this case states as follows:

1. ... All discovery motions must be filed within 45 days of the service of an objection, answer, or response which become the subject of dispute, or the passage of a discovery due date without response or production, and only after counsel have met and conferred and have reached an impasse with regard to the particular issue.... In any case, the event giving rise to a discovery dispute is not the date on which counsel reach an impasse in meet and confer efforts. If the discovery dispute concerns written discovery requests, the parties shall submit a joint statement entitled, "Joint Motion for Determination of Discovery Dispute" with the Court. (For further information on resolving discovery disputes, see Judge Crawford's 'Chambers' Rules' which are accessible via the Court's website at www.casd.uscourts.gov.) A failure to comply in this regard will result in a waiver of a party's discovery issue. Absent an order of the Court, no stipulation continuing or altering this requirement will be recognized by the Court.
* * * *
15. The dates and times set forth herein will not be modified except for good cause showing.

[Doc. No. 59, at p. 2 (emphasis added).]

         Federal Rule of Civil Procedure 16(b)(4) also states as follows: "A schedule may be modified only for good cause and with the judge's consent." Fed.R.Civ.P. 16(b)(4).

         On September 26, 2015, defendant served plaintiff with objections to Document Request Nos. 73 through 78 and declined to produce any responsive documents. [Doc. No. 72, at p. 8.] Defendant then served plaintiff with amended responses/objections to these requests on November 23, 2016 and agreed to produce some documents. [Doc. No. 72, at p. 8.] The parties' Joint Motion was not filed until April 19, 2017, long after the 45-day deadline expired. [Doc. No. 72.] Apparently, the parties did not follow the Court's Scheduling Orders and informally agreed to "an ongoing meet-and-confer process" that continued over an extended period of time. [Doc. No. 72, at p. 16 n.7.] The parties did not seek, and the Court did not grant, a request for an extension of time for the parties to present their discovery. Accordingly, the Court finds that plaintiff's request for an order compelling defendant to produce documents in response to Document Request Nos. 73 through 78 and plaintiff's alternative request for in camera review must be denied as untimely and because plaintiff's requests are unsupported by a showing of good cause for extending the time for the parties to present their discovery dispute to the Court.

         II. Procedural Backeround Relevant to the Parties' Discovery Dispute.

         Plaintiff's Document Request Nos. 73 through 78 all seek documents related to a "recently-contemplated transaction" between defendant Blanchard Training and Development, Inc. and third party Korn/Ferry International ("Korn/Ferry"). [Doc. No. 72, at p. 7.] Although the parties' papers indicate the transaction was not completed, Korn/Ferry considered purchasing defendant. [Doc. No. 72, at pp. 7, 16-17.] Document Request Nos. 73 through 78 seek production of "[a]ll documents" showing communications between defendant and Korn/Ferry concerning: (1) defendant's "alleged rights" in the mark "Situational Leadership®" (Req. No. 73); (2) Korn/Ferry's potential acquisition of defendant (Req. No. 74); (3) ...


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