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Wholesale Sports, Inc. v. Henle

United States District Court, S.D. California

October 9, 2019

WHOLESALE SPORTS, INC., Plaintiff,
v.
ANDREW HENLE; LES SPORTS TRON; and JEAN H. HENLE, INC., Defendants.

          ORDER RE JOINT MOTION FOR DETERMINATION OF DISCOVERY DISPUTE (RE: PLAINTIFF'S DOCUMENT REQUESTS AND INTERROGATORIES TO DEFENDANTS) [DOC. NO. 31.]

          HON. KAREN S. CRAWFORD, UNITED STATES MAGISTRATE JUDGE

         Before the Court is the parties' Joint Motion for Determination of Discovery Dispute. [Doc. No. 31.] In the Joint Motion, plaintiff seeks an order requiring defendants to provide further responses to document requests; produce additional documents; and provide further responses to interrogatories. [Doc. No. 31, at pp. 1-24.] For the reasons outlined below, the Court finds that plaintiffs request for an order requiring defendants to provide further responses to document requests and interrogatories must be GRANTED in part and DENIED in part.

         Background

         A. The Complaint

         The Complaint includes the following causes of action: (1) breach of written contract; (2) breach of the implied covenant of good faith and fair dealing; (3) intentional misrepresentation; (4) trademark infringement under Federal law; and (5) unfair competition under California and Federal law; (6) unjust enrichment; and (7) declaratory relief. [Doc. No. 1, at pp. 7-12.]

         Plaintiff is in the business of manufacturing and distributing sporting equipment in the United States, such as hockey sticks, helmets, jerseys, and socks. [Doc. No. 1, at p. 3.] These sporting goods and equipment are sold under the brand "Tron" or "TronX" (the "Tron brands"), and plaintiff has two registered trademarks for the name "TronX." [Doc. No. 1, at pp. 3-4.] Many of the plaintiffs products are purchased through two websites: hockeytron.com and hockeywest.com. [Doc. No. 1, at p. 3.]

         On September 15, 2014, the parties entered into a written agreement entitled the "Hockey Tron Agreement." [Doc. No. 1, at p. 4; Doc. No. 5, at p. 4.] Under the agreement, defendant was granted the exclusive right to import Tron and TronX brand sporting equipment and other products and distribute them in Canada. [Doc. No. 1, at p. 4.] The agreement allowed defendant to operate independently in Canada under the name "Tron Canada." [Doc. No. 1, at p. 4.] However, defendants had to obtain approval from plaintiff to use the Tron and TronX brand names on any product not previously approved by plaintiff. [Doc. No. 1, at p. 4.] Defendants were responsible for setting up and operating separate hockeytron.com and tronsports.com websites in Canada using plaintiffs business management software for a fee "based on a percentage of the cost of the goods [defendants] imported pursuant to the Hockey Tron Agreement." [Doc. No. 1, at p. 5.]

         From 2014 through the end of 2016, defendants consistently placed orders to purchase large quantities of goods from plaintiff bearing the Tron brands and distributed the purchased goods as agreed. To fill these orders, defendants obtained products according to plaintiffs specifications through plaintiffs manufacturers in the United States and Asia. [Doc. No. 1, at pp. 5-6.]

         The Complaint states that defendants "initially performed" under the Hockey Tron Agreement and sales expanded in Canada. However, plaintiff claims that defendants: (1) affixed the Tron brands to unapproved, inferior products; and (2) stopped paying the fees outlined in the Hockey Tron Agreement. Despite these problems, defendants continued to place orders for plaintiffs goods and continued to market and distribute them in Canada under the Tron brands. [Doc. No. 1, at p. 6.]

         In the Fall of 2016, plaintiff threatened to stop filling orders for defendants because of their "non-payment of fees." [Doc. No. 1, at p. 6.] Defendants repeatedly represented they would pay, and plaintiff continued to fill orders. However, plaintiff came to believe that defendants had no intention of paying outstanding or future fees. [Doc. No. 1, at p. 6.]

         The Complaint further alleges that defendants damaged plaintiffs business relationships with its vendors, and they began selling sporting equipment bearing the Tron brands but hid those sales to avoid paying fees according to the Hockey Tron Agreement. [Doc. No. 1, at p. 5.] In addition, plaintiff believes defendants entered into the Hockey Tron Agreement and thereafter began purchasing equipment with the intent to misappropriate plaintiffs good will for its own benefit. [Doc. No. 1, at pp. 6-7.]

         B. The Counter-Complaint.

         The Counter-Complaint includes the following causes of action: (1) breach of written contract; (2) fraudulent inducement; and (3) negligent misrepresentation. [Doc. No. 5, at pp. 4-10.]

         The Counter-Complaint alleges that plaintiff/counter-defendant breached the Hockey Tron Agreement "by intentionally and repeatedly selling products in Canada in contravention of the exclusivity provision," which created confusion in the Canadian marketplace and caused defendants/counter-complainants to lose sales. [Doc. No. 5, at pp. 4-5.] Defendants/counter-complainants also allege plaintiff/counter-defendant breached the Hockey Tron Agreement by shipping inferior goods to them that did not meet product specifications, and, as a result, these goods "were incapable of being sold as first-rate goods." [Doc. No. 5, at p. 5.] ...


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