LLC v. Caliber Corp.

          ORDER GRANTING IN PART AND DENYING IN PART CALIBER CORPORATION'S MOTION TO REOPEN DISCOVERY AND CONTINUE DATES [ECF NO. 57]

          Honorable Michael S. Berg, United States Magistrate Judge.

         Currently before the Court is Caliber Corporation's (“Caliber”) “Motion to Re-open Discovery and Extend Existing Dates for 90 Days” [ECF No. 57 (“Mot.”)], Bullets2Bandages, LLC's (“B2B”), 2 Monkey Trading LLC's (“2 Monkey”), and Lucky Shot USA LLC's (“Lucky Shot”) Opposition to the motion [ECF No. 72 (“Opp'n”)], and Caliber's Reply [ECF No. 74 (“Reply”)]. For the reasons set forth below, Caliber's motion is GRANTED in part and DENIED in part.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Plaintiff B2B and Defendant Caliber manufacture and sell bullet-shaped bottle openers. (ECF No. 5 at 9.) In 2013, B2B filed a suit against Caliber alleging trademark infringement of B2B's U.S. Trademark Registration No. 4, 364, 453 for the mark CALIBER, and Caliber counterclaimed against B2B for Caliber's Trademark Application No. 85/588, 703 for its Bullet Trade Dress. (See Bullets2Bandages, LLC v. Caliber Corp., 13cv3134-CAB(BLM), ECF Nos. 1 & 15.) On June 9, 2014, B2B and Caliber entered into a Settlement Agreement, pursuant to which B2B assigned to Caliber all rights to the CALIBER mark and agreed to not use the phrase “the original” in relation with its sale of bullet-shaped bottle openers. (ECF No. 5 at 10.) On June 9, 2014, B2B's U.S. Trademark Registration No. 4, 364, 453 was assigned to Caliber, and Caliber granted B2B a worldwide, non-exclusive license to both the CALIBER mark and the Bullet Trade Dress. (Id. at 9-10.)

         In this action, Plaintiff B2B alleges that in reliance on the Settlement Agreement, it manufactures products that it sells to wholesalers, including 2 Monkey, which in turn, sell the products to consumers through Amazon and Etsy websites. (ECF No. 1 at 4.) B2B discovered that someone complained to Amazon and Etsy that 2 Monkey's products were infringing, and the websites removed 2 Monkey's listings. (Id.) B2B filed this suit against Caliber alleging breach of contract, interference with existing contractual relations, interference with prospective economic relations, and unfair competition. (Id. at 6-9.) Caliber filed counterclaims against B2B for breach of contract, interference with prospective economic relations, negligent misrepresentation, common law unfair competition, federal unfair competition, and federal trademark infringement. (ECF No. 5 at 16-22.) Caliber also asserted claims against Third-Party Defendants Lucky Shot and 2 Monkey for common law unfair competition, federal trademark infringement, federal unfair competition, and counterfeiting. (Id. at 22-29.) Third-Party Defendants counterclaimed against Caliber seeking a declaration that Trademark No. 4, 630, 557 is invalid and cancellation of Federal Trademark Registrations No. 4, 630, 557; 4, 364, 453; and 4, 930, 487. (ECF No. 28 at 17-22.)

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 16(b)(4) provides that a scheduling order regulating discovery “may be modified only for good cause and with the judge's consent.” Fed.R.Civ.P. 16(b)(4). The Rule 16 good cause standard focuses on the “reasonable diligence” of the moving party. See Noyes v. Kelly Servs., 488 F.3d 1163, 1174 n.6 (9th Cir. 2007); Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 2000). In its recent ruling, the Ninth Circuit has instructed district courts to consider the following factors when ruling on a motion to amend a Rule 16 scheduling order to reopen discovery:

1) whether trial is imminent, 2) whether the request is opposed, 3) whether the non-moving party would be prejudiced, 4) whether the moving party was diligent in obtaining discovery within the guidelines established by the court, 5) the foreseeability of the need for additional discovery in light of the time allowed for discovery by the district court, and 6) the likelihood that the discovery will lead to relevant evidence.

City of Pomona v. SQM N. Am. Corp., 866 F.3d 1060, 1066 (9th Cir. 2017) (citation omitted). “District courts have ‘broad discretion to manage discovery and to control the course of litigation under Federal Rule of Civil Procedure 16.'” Hunt v. Cty. Of Orange, 672 F.3d 606, 616 (9th Cir. 2012) (quoting Avila v. Willits Envtl. Remediation Trust, 633 F.3d 828, 833 (9th Cir. 2011)).

         III. DISCUSSION

         Defendant Caliber seeks to reopen discovery to obtain information regarding the Asset Purchase Agreement (“the AP Agreement”), which Plaintiff B2B and Third-Party Defendant 2 Monkey executed after fact discovery cutoff. (See Mot.) Caliber argues that the execution of the AP Agreement justifies reopening discovery and represents a change in circumstances providing good cause for extending the remaining deadlines. (Id. at 6-12.) Caliber asserts that the AP Agreement (1) purports to change the relationships between the parties and affects nearly every aspect of the case, (2) creates new claims of trademark infringement and unfair competition against B2B by retroactively removing B2B's trademark license and granting it to 2 Monkey, (3) creates new breach of contract claims against Third-Party Defendants by allegedly transferring the license to 2 Monkey, and (4) creates new interference with prospective economic advantage claims against Third-Party Defendants. (Id. at 4-5.) Caliber also contends that if it is not allowed to conduct discovery into the AP Agreement, it can only pursue the claims arising out of the Agreement by filing a separate lawsuit, even though those claims are intertwined with the existing trademark infringement and breach of contract claims asserted in this case. (Id. at 5.)

         B2B, 2 Monkey, and Lucky Shot (“the non-moving parties”) oppose Caliber's motion arguing that reopening discovery will prejudice them and will not lead to relevant evidence. (Opp'n at 3-5.) In support, they assert that motions for summary judgement have been submitted, and the rulings on those motions could affect the need for any additional discovery. (Id. at 3-4.) The nonmoving parties also argue that Caliber was provided sufficient evidence that the AP Agreement is valid, including an unreacted copy of the AP Agreement marked as Attorneys' Eyes Only, a copy of the cancelled check that 2 Monkey paid to B2B under the AP Agreement, and the affidavit filed in support of B2B's motion to substitute parties. (Id. at 4.) The nonmoving parties further contend that the AP Agreement does not create new claims and ask the Court to deny Caliber's motion. (Id. at 5.)

         Caliber replies that the nonmoving parties made the discovery regarding the AP Agreement directly relevant to the claims at issue in this case, and reopening discovery will not prejudice them. (Reply at 3.) Caliber states that some of the pending claims are independent of the issues that will be resolved by the rulings on the motions for summary judgement, and will require analysis of the AP Agreement that purports to retroactively change the relationship between B2B and 2 Monkey. (Id. at 4.) Caliber also argues that the AP Agreement is highly relevant to Third-Party Defendants' infringement defense and all of B2B's claims. (Id. at 5.) Caliber asserts that the AP Agreement is a sham, the limited evidence regarding the AP Agreement provided to date is one-sided and incomplete, and Caliber needs an opportunity to issue formal document requests, interrogatories, and obtain deposition testimony related to the AP Agreement, its formation, repercussions, and validity. (Id. at 5-6.) Caliber thus moves to reopen discovery and extend existing dates by ninety days. (Id. at 6.)

         A. Caliber's Motion ...