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OCEAN ATLANTIC WOODLAND CORP. v. DRH CAMBRIDGE HOMES

March 22, 2004.

OCEAN ATLANTIC WOODLAND CORPORATION, a Virginia Corporation, Plaintiff,
v.
DRH CAMBRIDGE HOMES, INC., a California Corporation, COWHEY, GUNDMUNDSON, LEDER, LTD., an Illinois Corporation, and PUGSLEY & LAHAIE, LTD., an Illinois Corporation, Defendants



The opinion of the court was delivered by: RONALD GUZMAN, District Judge

MEMORANDUM OPINION AND ORDER

Ocean Atlantic Woodland Corporation ("Ocean Atlantic") has sued DRH Cambridge Homes, Inc. ("Cambridge"), Cowhey, Gundmundson, Leder, Ltd ("Cowhey"), and Pugsley & LaHaie, Ltd ("Pugsley") (collectively "defendants") alleging copyright infringement, unfair competition and deceptive trade practices, false designation of origin, conversion and unjust enrichment. This Court referred all discovery matters to Magistrate Judge Bobrick. Defendants filed a joint motion for protective order, bifurcation of discovery, and for other relief. Magistrate Judge Bobrick denied the motion to bifurcate and granted in part and denied in part defendants' joint motion for protective order and Ocean Atlantic's motions to compel. Ocean Atlantic timely filed objections to Magistrate Judge Bobrick's Memorandum Order. Presently pending before this Court are Ocean Atlantic's objections to Magistrate Judge Bobrick's order, which include: (1) objections to the discovery rulings limiting the scope of potential damages; (2) objections to the denial of production of all documents used by defendants in responding to Ocean Atlantic's Page 3 interrogatories; (3) objections to the denial of production of documents relating to the existence of other possible design plans considered by Cambridge for the development site; (4) objections to the denial of the identities and communications concerning Cambridge's customers and potential customers for the developments site. For the reasons provided in this Memorandum Opinion and Order the Court stays Ocean Atlantic's objections to Magistrate Judge Bobrick's Memorandum Order relating to damages until after resolution of the issue of liability, rejects Ocean Atlantic's remaining objections to the Memorandum Order, and sua sponte orders bifurcation of discovery.

FACTS

  The factual background of this case has been described by this Court in detail in Ocean Atl Woodland Corp. v. DRH Cambridge Homes, Inc., No. 02 C 2523, 2003 WL 1720073, at * 1 (N.D. Ill. Mar. 31, 2003). Therefore, the facts here will be limited to those necessary to understand the basis of this ruling.

  On April 9, 2002 Ocean Atlantic acquired copyright ownership in two development plans for the Liberty Grove development in the Village of Plainfield. These development plans were previously incorporated into the annexation agreement for the Liberty Grove development by the Village of Plainfield, Ocean Atlantic lost its right to develop the land under the development plans when it attempted to close on the sale of the land late. See Elda Arnhold & Byzantio, L.L.C. v. Ocean Atl Woodland Corp., 284 F.3d 693, 710 (7th Cir. 2002). Ocean Atlantic now asserts copyright infringement of the development plans by the defendants in their development of Liberty Grove.

  Before Magistrate Judge Bobrick were defendants' motion for a protective order and Ocean Atlantic's motion to compel answers to interrogatories and production of documents. At Page 4 issue here are Ocean Atlantic's objections to Magistrate Judge Bobrick's Memorandum Order granting in part and denying in part the motion for protective order and the motion to compel answers.

  DISCUSSION

 I. Bifurcation of Discovery

  On November 26, 2002, the defendants filed a motion pursuant to Rule 42(b) requesting the court to bifurcate liability and damages discovery. The defendants requested that the Court decline to allow the parties to enter into damages discovery until liability issues were determined. (Defs.' Joint Mot, Protective Order, Bifurcation Disc. Other Relief ("Defs.' Joint Mot.") at 6.) On December 20, 2002 the defendants' motion relating to bifurcation of discovery was denied. This Court now reconsiders sua sponte the December 20, 2002 ruling denying bifurcation of discovery and grants bifurcation of discovery.

  Whether to bifurcate discovery is a matter committed to the discretion of the trial court. Moriarty v. LSC Ill. Corp., No. 98 C 7997, 1999 WL 1270711, at *7 (N.D. Ill. Dec. 29, 1999); see generally Sattar v. Motorola, Inc., 138 F.3d 1164, 1171 (7th Cir. 1998) ("district courts have broad discretion in matters related to discovery"); Priority Records, Inc. v. Bridgeport Music, Inc., 907 F. Supp. 725, 734 (S.D.N.Y. 1995) (recognizing that district judge has discretion to bifurcate discovery); Am. Nurses Ass'n. v. State of Ill., No. 84 C 4451, 1986 WL 10382, at *2 (N.D. Ill. Sept. 12, 1986) ("the decision to bifurcate discovery is within the discretion of the district court and depends on the circumstances of the individual case"). In accordance with the broad language of Rule 42(b), the district court is vested with discretion in determining whether to try issues separately, Keyes Fibre Co. v. Packaging Corp. of Am., 763 F. Supp. 374, 375 (N.D. Ill. 1991) (internal citations omitted). Rule 42 specifies the factors to be weighed when Page 5 considering whether or not to bifurcate: convenience, the avoidance of prejudice, expedition and economy. Fed.R.Civ.P. 42(b).

  The Court has the inherent power to control its docket. Separating the issues of liability and damages for the purposes of discovery will avoid unnecessary time and expense and further the interest of expedition by expediting the decision on liability. A verdict of no liability for infringement would render discovery on the damages issue unnecessary. In the instant case, this Court has already found, with regard to the preliminary injunction, that, "[t]he record in this case . . . presents substantial issues which bear on Ocean Atlantic's likelihood of proving infringement. . . ." Ocean All. Woodland Corp. v. DRH Cambridge Homes, Inc., No. 02 C 2523, 2003 WL 22225594, at *2 (N.D. Ill. Sept. 24, 2003). Thus, should plaintiff fail to establish liability in this case, the savings in time and costs with regard to discovery and discovery management would benefit both the parties and the Court.

  It is clear, based on the breadth of the discovery requests, that the defendants would expend substantial amounts of time and resources responding to the discovery requests on damages. Continuation of discovery on the issue of damages would necessitate considerable operating costs in hiring accountants, researching, and calculating at a time when the development site is not even complete. Because, as noted above, the distinct possibility exists that the issue of damages will never be reached, bifurcating discovery as to liability from that of damages will serve the goals of convenience, expedition and economy. Moreover, evidence necessary to establish liability will nominally, if at all, overlap with evidence relating to damages and therefore the risk of duplication and delay is minimal.

  Accordingly, the discovery of this case will be bifurcated into two phases. In the first, all discovery on liability will be completed. The defendants have already notified this Court that Page 6 they will seek summary judgment as soon as discovery is complete. Therefore, ...


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