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Maui Jim, Inc. v. SmartBuy Guru Enterprises

United States District Court, N.D. Illinois, Eastern Division

November 27, 2017

MAUI JIM, INC., an Illinois Corporation, Plaintiff,


          Jeffrey T. Gilbert United States Magistrate Judge

         This matter is now before the Court on Plaintiffs Motion to Compel Defendants' Production of Documents ("Plaintiffs Motion"), [ECF No. 35], For the reasons stated below, Plaintiffs Motion [ECF No. 35] is granted in part and denied in part.

         I. BACKGROUND

         Plaintiff Maui Jim, Inc. ("Plaintiff) is a designer, manufacturer, and provider of prescription and non-prescription sunglasses. Plaintiffs Memorandum in Support of Its Motion to Compel Defendants' Production of Documents ("Plaintiffs Brief), [ECF No. 36], at 2. Plaintiff only distributes its sunglasses to authorized retailers. Id., Each authorized retailer must enter into a written agreement with Plaintiff. See Complaint, [ECF No. 1], ¶ 27. Among other things, the written agreement includes a provision that prohibits an authorized retailer from selling sunglasses purchased from Plaintiff to another entity that intends to resell them. See id.¶ 32. Plaintiff attempts to exercise tight control over its distribution network so as to maintain the quality of its sunglasses, selection, and customer service. See Id. ¶27.

         Defendants SmartBuy Guru Enterprises, Motion Global Ltd., Smartbuyglasses Societa a Responsabilita Limitata, and SmartBuyGlasses Optical Limited (collectively, "Defendants") are online retailers of designer eyewear. Defendants' Response to Plaintiffs' Motion to Compel ("Defendants' Response"), [ECF No. 46], at 2. Defendants sell over 80, 000 products, including prescription and non-prescription Maui Jim-branded sunglasses.[1] Id. at 3; Declaration of Doron Kalinko ("Kalinko's Declaration"), [ECF No. 46-1], ¶¶ 4, 6. Defendants do not purchase products directly from Plaintiff. Defendants' Response, [ECF No. 46], at 3; Kalinko's Declaration, [ECF No. 46-1], ¶ 7; see also Plaintiffs Brief, [ECF No. 36], at 2; Complaint, [ECF No. 1], ¶34. Instead, Defendants procure Maui Jim-branded sunglasses from distributors and affiliates that, according to Defendants, purchase the sunglasses from Plaintiff. Defendants' Response, [ECF No. 46], at 3; Kalinko's Declaration, [ECF No. 46-1], ¶ 7.

         In this lawsuit, Plaintiff asserts claims arising out of Defendants' marketing and selling of Maui Jim-branded sunglasses. Complaint, [ECF No. 1], A detailed recitation of Plaintiffs factual allegations is unnecessary at this point. For now, it suffices to note that Plaintiff alleges the following counts: Trademark Counterfeiting and Infringement (Count I), Unfair Competition and False Advertising (Count II), Trademark Dilution of Blurring and Tarnishment (Count III), Copyright Infringement (Count IV), and Unfair Competition (Count V). Id. ¶¶ 1, 71-107. In their answer, Defendants assert 13 affirmative defenses, including Waiver (Fourth Affirmative Defense), Exhaustion (Fifth Affirmative Defense), and License (Tenth Affirmative Defense). Defendants' Answer, Affirmative Defenses and Counterclaim to Plaintiffs Complaint ("Defendants' Answer"), [ECF No. 20], at 36-37. Defendants also allege counterclaims for unfair competition, trade disparagement, trademark misuse, unjust enrichment, and various forms of declaratory relief. Id. ¶ 36 at p. 47-¶ 81 at p. 53.

         On March 24, 2017, Plaintiff served Defendants with Plaintiffs First Set of Document Requests. Plaintiffs Brief, [ECF No. 36], at 2. Six requests matter for the Motion now before the Court. Request Nos. 5 through 8 demand the production of documents sufficient to show any person or entity that supplies any Defendant with Maui Jim-branded sunglasses. Defendants' Response to Plaintiffs First Set of Document Requests, [ECF No. 36-1], at 3-4. Request Nos. 9 and 10 demand the production of documents relating or referring to any Defendant's procurement of, or attempt to procure, Maui Jim-branded sunglasses. Id. at 4-5. Defendants have objected to these six requests and refused to produce the requested documents. Id. at 3-5. Having reached an impasse, Plaintiff filed the Motion to Compel that is now before the Court. Plaintiffs Motion, [ECF No. 35]. In the Motion, Plaintiff asks the Court to order Defendants to produce the documents sought in Request Nos. 5 through 10 and to pay Plaintiffs reasonable expenses incurred in filing the Motion. Id. at 2.


         Under Federal Rule of Civil Procedure 37(a), when a party does not respond properly to a discovery request, the party that issued the request may file a motion to compel a proper response. Fed.R.Civ.P. 37(a); Vukadinovich v. Hanover Cmty. Sch. Corp., 2014 WL 667830, at *4 (N.D. Ind. Feb. 20, 2014). The court then must independently determine the proper course of discovery. John Wiley & Sons, Ltd. v. McDonnell Boehnen Hulbert & Berghoff LLP, 2013 WL 505252, at *2 (N.D. Ill. Feb. 12, 2013). When doing so, the court has significant discretion. Gile v. United Airlines, Inc., 95 F.3d 492, 496 (7th Cir. 1996). Ultimately, the party objecting to discovery bears the burden to show the requested discovery is improper. Deere v. Am. Water Works Co., 306 F.R.D. 208, 215 (S.D. Ind. 2015); Dauska v. Green Bay Packaging Inc., 291 F.R.D. 251, 258 (E.D. Wis. 2013); JAB Distributors, LLC v. London Luxury, LLC, 2010 WL 4008193, at *1 (N.D. Ill. Oct. 13, 2010).


         Defendants argue they should not be required to produce any of the documents Plaintiff is seeking. Defendants say the documents are irrelevant to any claim or defense in this case. Even if the documents are relevant, Defendants contend they should not be required to produce them because they contain confidential commercial information within the meaning of Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure and Plaintiff does not need the documents to prosecute its claims. Defendants also say if the Court concludes some discovery related to its supply chain is appropriate, then the Court should prescribe a different discovery method (i.e., not full document production). Defendants propose two alternatives: warehouse inspections of Defendants' inventory or in camera review by the Court of "proof of authenticity." In response, Plaintiff argues the requested documents are relevant to Plaintiffs claims and to three of Defendants' affirmative defenses. Plaintiff maintains Defendants have not shown the requested documents actually contain confidential commercial information. Finally, Plaintiff asserts it needs the requested documents to prosecute its claims and Defendants' proposed alternatives to document production are inadequate because they will not result in production of all the information that is responsive to Plaintiffs discovery requests.

         A. Relevance

         Under Rule 26(b)(1) of the Federal Rules of Civil Procedure, parties "may obtain discovery of any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case." Fed.R.Civ.P. 26(b)(1). Defendants do not dispute that information about their supply chain for Maui Jim-branded sunglasses is relevant to the issue of whether those sunglasses are genuine and authentic.[2] Instead, Defendants contend Plaintiff has not adequately alleged that Defendants are selling non-genuine, counterfeit sunglasses. The Court disagrees. According to Plaintiffs Complaint, Defendants obtain Maui-Jim branded sunglasses from "unknown sources." Complaint, [ECF No. 1], at ¶ 34. Plaintiff alleges the nonprescription Maui Jim-branded sunglasses Defendants acquire from these unknown sources are "non-genuine" and the prescription Maui Jim-branded sunglasses are "counterfeit" and "not manufactured or otherwise authorized by Plaintiff." See, e.g., Complaint, [ECF No. 1], at ¶¶ 2, 42, 56. Plaintiff also alleges Defendants' advertisements stating that their Maui Jim-branded sunglasses are "approved and manufactured by Plaintiff, " "genuine, " and "authentic" are false or misleading. See, e.g., Id.¶¶ 3, 56. Although Defendants argue discovery related to these allegations should not be permitted because they are too general and vague, Defendants have not moved to dismiss Plaintiffs claims. Instead, Defendants answered the Complaint and filed a counterclaim. As of now, these claims are a part of this case and Plaintiff is entitled to discovery relevant to them.

         Defendants also have put the identity of their suppliers at issue through their own pleadings. Three of Defendants' affirmative defenses do as much. Defendants explicitly plead that their license affirmative defense is "based on agreements between Maui Jim and its past and present customers and/or distributors." Defendants' Answer, [ECF No. 20], at 37. Defendants assert an exhaustion (or first sale doctrine) affirmative defense, which courts often find opens the door to discovery about a defendant's supply chain.[3] Defendants' Answer, [ECF No. 20], at 36; Pendleton Woolen Mills, Inc. v. Kraff's Men's Wear Co., 2014 WL 7777762, at *8 (D. Or. Nov. 21, 2014), aff'd, 2015 WL 500846 (D. Or. Feb. 2, 2015) ("[T]hose district courts of this Circuit that have considered the issue have found that, in consequence, assertion of the first sale doctrine places supplier information within the scope of discovery under Rule 26(b)(1)."); Adobe Sys. v. Kornrumpf, 2011 U.S. Dist. LEXIS 80613, at *5 (N.D. Cal. July 25, 2011) ("Defendants have put their supplier information at issue by invoking the first sale doctrine .,, ."); Bare Escentuals Beauty, Inc. v. Costco Wholesale Corp., 2007 WL 4357672, at *3 (S.D. Cal. Dec. 11, 2007). The same door is opened by Defendants assertion of a waiver affirmative defense. Defendants' Answer, [ECF No. 20], at 36; Coach, Inc. v. Asia Pac. Trading Co., Inc., 2009 WL 10675238, at *1 (CD. Cal. Aug. 25, 2009); Bare Escentuals Beauty, 2007 WL 4357672, at *3 ("I don't know how [the defendant's waiver affirmative defense] can be decided without understanding who the supplier is to defendant.") (quoting a magistrate ...

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