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finding that an arbitrary mark could be classified as weak in the face of extensive third-party use of similar marks on similar goods
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CASE NO. SACV-03-601-CJC-(JTLX)
May 8, 2003
ORDER GRANTING MOTION FOR SANCTIONS IN PART AND DENYING MOTION FOR SANCTIONS IN PART
On December 30, 2002, Toyota Motor Sales, USA, Inc. ("TMS") moved this Court to compel Matrix Motor Co., Inc. ("Matrix") to produce responsive documents to TMS's First Request for Production of Documents and Things. TMS also sought attorney's fees that it incurred in bringing the Motion to Compel. On January 22, 2003, the Court granted the Motion to Compel, ordering Matrix to produce all responsive documents by February 21, 2003. The Court, however, denied TMS's request for attorney's fees.
Despite the Court's Order, Matrix failed to comply with the February 21, 2003 deadline. Instead, Matrix waited until March 3, 2003 to produce responsive documents. Consequently, TMS filed a Motion for Sanctions, seeking, among other things, monetary compensation for the costs that it has incurred in trying to enforce the Court's January 22, 2003 Order.
In its Motion for Sanctions, TMS suggests that Matrix's March 3, 2003 document production was incomplete. But TMS has not filed a motion to compel further production. Rather, the current motion seeks only sanctions for Matrix's failure to comply with the Court's January 22, 2003 Order. Accordingly, the Court shall not address the sufficiency of Matrix's production.
Federal Rule of Civil Procedure 37(b)(2) permits the Court to impose a variety of sanctions against a party that fails to comply with a valid Court order. See Fed.R.Civ.P. 37(b)(2). Among those, the Court may impose monetary sanctions against a disobedient party. See United States for Use and Benefit of P.W. Berry Co. Inc. v. General Elec. Co., 158 F.R.D. 161, 165 (D. Or. 1994) (awarding defendant reasonable attorney's fees for plaintiff's failure to comply with court's discovery order). Indeed, except in limited circumstances, Rule 37(b)(2) requires the court to order the noncompliant party or its attorneys, or both, to pay any reasonable fees that the opposing party incurs resulting from the disobedient party's noncompliance:
[T]he court shall require the party failing to obey the order or the attorney advising that party or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust.
Here, Matrix has offered no legitimate reason to justify its failure to comply with the Court's January 22, 2003 Order or to explain how awarding expenses for its noncompliance would be unjust. Matrix complains that granting TMS's motion for sanctions would only punish Matrix and its current counsel for the mistakes of its prior counsel. According to Matrix, its prior counsel, Mitchell N. Reinis, withheld documents from TMS and refused to respond to Matrix's inquiries about the status of the case. Matrix asserts that Reinis's actions prevented Matrix from learning that it had failed to produce responsive documents to TMS's discovery requests. Similarly, Matrix claims that Reinis's mismanagement of the litigation made complying with the Court's January 22, 2003 Order impossible. Matrix's replacement counsel, Irwin M. Friedman, declared under penalty of perjury that he was "shocked" by just how little Reinis had done in this case. (Plaintiff's Response to Motion for Sanctions, Friedman Decl. at ¶ 5). Thus, Matrix concludes that granting TMS's Motion for Sanctions would only punish the innocent victims of Reinis's malfeasance.
The Court disagrees. First, the record indicates that Matrix — not Reinis — should bear the blame for Matrix's failure to diligently prosecute this matter. Indeed, District Judge Margaret M. Morrow recently determined as much in her Order Denying [Matrix's] Motion to Continue Trial Date: "[T] he record supports an inference that Reinis' [s] inability to comply with [TMS's] discovery requests was a product of his inability to communicate with his client, not a product of gross negligence on his part." (Aug. 25, 2003 Order Denying Motion to Continue Trial Date at 14).
Substantial evidence supports this finding. For example, Reinis declared under penalty of perjury that Matrix's CEO, Louis Beuzieron, repeatedly ignored Reinis's attempts to consult with him about the litigation. (See Motion to Withdraw as Counsel, Reinis Decl. ¶ 3). In fact, Reinis stated that Beuzieron had refused to return Reinis's calls for over four straight months, (See Motion to Withdraw as Counsel, Reinis Decl. ¶ 3). Reinis further declared that this lack of communication with Beuzieron prevented Reinis from responding to TMS's discovery requests. (See Motion to Withdraw as Counsel, Reinis Decl. ¶ 3).
District Judge Morrow further noted that Matrix "offer[ed] absolutely no evidence contradicting" Reinis's account of the attorney-client relationship. (Aug. 25, 2003 Order Denying Motion to Continue Trial Date at 14). Beuzieron took no action that would demonstrate any dissatisfaction with Reinis's performance before Reinis withdrew as counsel. In contrast, Reinis did take actions that support his version of the relationship: namely, he withdrew his representation of Matrix, Thus, Beuzieron's after-the-fact accusations ring hollow.
Second, even assuming Matrix's prior counsel had mismanaged the case, his mismanagement did not relieve Matrix from complying with a Court order issued after Matrix had obtained replacement counsel. Reinis moved to withdraw as counsel on December 18, 2003. Irwin Friedman then replaced Reinis as Matrix's counsel. The exact date that Friedman took over as counsel is unknown; however, it could not have been later than January 20, 2003. (See Substitution of Attorney, bearing Friedman's undated signature and facsimile date of January 20, 2003). Thus, Friedman was Matrix's counsel before the Court issued its January 22, 2003 Order compelling responses to TMS's discovery requests. Nevertheless, Matrix failed to comply with the Court's Order.
Matrix claims that Friedman lacked sufficient time to simultaneously rectify prior counsel's mistakes and meet the Court's deadline to produce documents. This argument, however, fails for two reasons. First, the Court's January 22, 2003 Order allowed Matrix thirty (30) days to produce documents responsive to TMS's requests. Thus, giving Matrix the benefit of the doubt that Friedman took over as counsel on the latest possible date, Friedman still had over one month to prepare a response to the Court's January 22, 2003 Order. Yet, he failed to prepare any timely response. Second, Friedman could have sought an extension of time to respond to the Court's Order. Instead, he allowed the Court's deadline to slip by without taking any action. This failure to make even the slightest effort to comply with Court's Order justifies the imposition of sanctions in this case.
Accordingly, the Court GRANTS TMS's Motion in part, and DENIES the Motion in part. Matrix and its counsel shall reimburse TMS for the reasonable expenses, including attorney's fees, that TMS incurred in bringing the current Motion for Sanctions. TMS is ordered to provide a declaration detailing the costs associated with the Motion for Sanctions within thirty (30) days of this Order. In the declaration, TMS should include, among other relevant information, the amount of attorney time spent on preparing and filing the Motion for Sanctions, the rates at which that time was billed, and the nature of the services that each contributing attorney provided.
TMS also seeks three additional types of sanctions for Matrix's misconduct. As discussed below, the Court finds no merit in any of these additional requests. First, TMS asks the Court to order Matrix to pay TMS's costs in bringing its successful Motion to Compel Production of Documents and its costs in trying to confer with Matrix to resolve the discovery dispute. But the Court already denied TMS's motion to recover the attorneys's fees it paid to bring its successful Motion to Compel. (See Order, dated January 22, 2003). And to the extent that TMS seeks compensation under Rule 37(b) (2) for costs associated with obtaining the January 22, 2003 Order, the Court lacks authority to award such costs. See Toth v. Trans World Airlines. Inc., 863 F.2d 1381, 1386 n. 2 (9th Cir. 1988) ("[Rule] 37(b)(2) `must be distinguished from Rule 37(a), which provides for the award of expenses resulting from efforts to secure an order compelling discovery.' Thus, "attorney-time before and during' a hearing in which a court order is imposed is `not attorney-time incurred on account of [appellants'] failure to obey an order,'").
Second, TMS seeks an evidentiary sanction waiving all of Matrix's objections to TMS's First Set of Requests for Production and precluding any evidence that Matrix developed after the February 21, 2003 deadline. The Courts finds this request excessive. Matrix's conduct, while troubling, has not caused the requisite prejudice to TMS to justify the requested evidentiary sanctions. "Exclusion sanctions based on alleged discovery violations are generally improper absent undue prejudice to the opposing side." Amersham Pharmacia Biotech. Inc. v. Perkin-Elmer Corp., 190 F.R.D. 644, 648 (N.D. Cal. 2000) (citing Wendt v. Host International Inc., 1254 F.3d 806, 814 (9th Cir. 1997)).
Here, TMS makes numerous allegations of prejudice resulting from Matrix's failure to comply with the Court's January 22, 2003 Order. In particular, TMS states that Matrix's late production of documents forced TMS's attorney to cancel and reschedule a properly noticed 30(b)(6) deposition. Consequently, TMS's attorneys wasted valuable time preparing for, and traveling to and from, the canceled deposition. TMS also argued at the hearing that defendants have been unable to adequately prepare for trial. The Court agrees that plaintiff's actions have prejudiced TMS to some extent. But plaintiff did eventually comply with the Court's Order and this Court finds that TMS has not suffered such extreme prejudice to warrant an evidentiary sanction.
For the same reason, the Court finds it unnecessary at this time to warn Matrix that any further misconduct will result in a dismissal of its lawsuit. Under Rule 37(b)(2)(C), if a party fails to obey an order to provide discovery, the Court may dismiss the action, "rendering a judgment by default against the disobedient party." Fed.R. Civ, P. 37 (b)(2)(C). But courts generally impose this drastic sanction in only "extreme circumstances" where the disobedient party flagrantly and repeatedly disregards a court's discovery order. Cf. In Re Exxon Valdez, 102 F.3d 429, 432 (9th Cir. 1996) (affirming dismissal sanction where noncompliant party totally failed to respond to all discovery). Indeed, courts will usually impose a dismissal sanction only when all other less drastic sanctions have failed to make the disobedient party comply with the court's discovery orders. See, e.g., FDIC v. Conner, 20 F.3d 1376, 1380 (5th Cir. 1994) (describing dismissal sanction as "draconian remedy," as "remedy of last resort," and as "lethal weapon").
In this case, there is no question that Matrix has failed to satisfy the discovery deadline in the Court's January 22, 2003 Order. Nevertheless, it has produced responsive documents in compliance with that Order, albeit late. Moreover, Matrix has produced, or agreed to produce, several of its witnesses for depositions. In short, these facts do not implicate the possibility of a dismissal sanction at this time. This, of course, is not to say that the Court would not consider Matrix's current actions in light of continued misconduct to determine whether further sanctions are appropriate. Indeed, subsequent misconduct by Matrix could result in host of sanctions, including additional monetary sanctions and evidentiary sanctions. At this time, however, the Court shall assume that Matrix and its counsel will conduct themselves in a professional and ethical manner as it relates to this litigation.
Accordingly, the Court DENIES each of these additional requests for sanctions.
IT IS SO ORDERED.