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Magic Link Garment Ltd. v. Thirdlove, Inc.

United States District Court, N.D. California

October 23, 2019

THIRDLOVE, INC. Defendants.



         Plaintiff Magic Link Garment Ltd. filed the instant suit against Defendant ThirdLove, Inc., alleging breach of contract and misappropriation of trade secrets and proprietary materials. (First Amended Compl. (“FAC”) at 1, Dkt. No. 9.) Defendant has filed counterclaims, alleging that Plaintiff's products were defective and that Plaintiff has wrongfully interfered with Defendant's business relationships with third-parties. (Def.'s Counterclaims ¶¶ 1-2, Dkt. No. 22.)

         Pending before the Court are two identical discovery letters concerning Defendant's interrogatories and requests for production (“RFP”), filed on October 11 and 15, 2019.[1](Discovery Letters, Dkt. Nos. 71, 73.)

         I. BACKGROUND

         Plaintiff is a manufacturer and designer of custom products, including women's undergarments. (FAC ¶ 9.) Defendant is a bra and women's underwear company that sells its products online. (Def.'s Counterclaims ¶ 1.) Around 2012 or 2013, Defendant contracted with Plaintiff to produce bras and other undergarments. (FAC ¶ 10; Def.'s Counterclaims ¶ 8.) The parties never entered into a master agreement; instead, Defendant would place purchase orders (“PO”), and Plaintiff would produce and ship the products under the specific invoices. (FAC ¶ 12; Def.'s Counterclaims ¶ 10.)

         On December 21, 2017, Plaintiff sent PO #542 for TL 50A bras. (Def.'s Counterclaims ¶ 13; Joint Case Management Conference St. (“CMC St.”) at 1.) Defendant began receiving the product in 2018, but alleges that the product was of significantly worse quality. (Def.'s Counterclaims ¶ 13.) Defendant also alleges that Plaintiff had started subcontracting the manufacture of its products to third-parties, which was a breach of the agreements between the parties. (Def.'s Counterclaims ¶¶ 15-16.) Plaintiff alleges that there were no such problems with its product, and that Defendant asserted such problems as pretext to not pay for Plaintiff's product that Defendant had accepted and sold to its customers. (CMC St. at 2.) Defendant then sought to cancel other POs (PO #619, 620, 624, 625, 626, 627, 629, 630, 631, 632, and 633) under which Plaintiff had already completed tens of thousands of products. (Id.; see also FAC ¶ 15.) Defendant also withheld payment on outstanding invoices and stopped ordering product from Plaintiff. (Def.'s Counterclaims ¶ 16.)

         Defendant alleges that in response, Plaintiff “embarked on a campaign against” Defendant. (Def.'s Counterclaims ¶ 17.) For example, Defendant had a relationship with V Shapes Moulders Ltd. (“VSM”), a manufacturer of foam cups for bras. (Def.'s Counterclaims ¶ 18.) Defendant asserts that personnel from Plaintiff informed personnel from VSM that Defendant “was delinquent in its payments, without disclosing the quality problems that had led [Defendant] to withhold payment from [Plaintiff].” (Def.'s Counterclaims ¶ 20.) Defendant also asserts that Plaintiff urged VSM to stop shipping bra cups for Defendant, resulting in VSM stopping shipment of its products to Defendant's manufacturers. (Def.'s Counterclaims ¶ 21.)


         Under Rule 26, in a civil action, a party may obtain discovery “regarding any non-privileged matter that is relevant to any party's claim or defense and proportional to the needs of the case considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Fed.R.Civ.P. 26(b)(1). Additionally, the court must limit the frequency or extent of discovery if it determines that: “(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or (iii) the proposed discovery is outside the scope permitted by Rule 26(b)(1).” Fed.R.Civ.P. 26(b)(2)(C).


         A. Subcontracting

         First, Defendant seeks information about Plaintiff's subcontracting of Defendant's products. (Discovery Letters at 1.) Defendant asserts that subcontracting was not permitted, and was one of the reasons Defendant withheld payment and rejected products from Plaintiff. (Id.; see also Def.'s Counterclaims ¶¶ 15-16.) Defendant further states that there is “extensive evidence” of Plaintiff's representations that it would not subcontract Defendant's products, but that Plaintiff admitted in deposition and its discovery responses that some of Defendant's products were made by subcontractors. (Id. at 1-2.) Defendant also points to pictures of Defendant's products being produced at one of Plaintiff's subcontractors. (Id. at 2.)

         Plaintiff responds that there is no evidence that Plaintiff agreed not to subcontract, and that the allegedly defective products were manufactured at Plaintiff's Cambodia facility, rather than the subcontractor depicted in Defendant's pictures. (Discovery Letters at 3.) Plaintiff also argues that no discovery on this topic should be permitted because Defendant failed to produce the pictures - which include five smartphone videos and over 100 photographs, taken on January 24, 2018 - until October 9, 2019, five days after fact discovery cut off. (Id. at 2.)

         The Court finds that information about Plaintiff's subcontracting of Defendant's products is discoverable, to the extent it concerns product produced under POs that are at issue in this litigation. Even if the product at issue did not include the allegedly defective products produced under PO #542, Defendant has asserted that it rejected or canceled product under other POs due to the subcontracting issue. (Def.'s Counterclaims ΒΆΒΆ 15-16 (referring to the withholding of payment on multiple invoices due to the subcontracting issue).) Additionally, while Plaintiff argues that it does not have to disprove the existence of an agreement not to subcontract to prove its ...

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