Nutrition Distribution LLC v. DeGrave et al

Filing 8

ORDER Granting Motion To Conduct Discovery On Damages (Dkt # 6 ). Signed by Magistrate Judge William V. Gallo on 9/7/2017. (mdc)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 NUTRITION DISTRIBUTION LLC, an Arizona Limited Liability Company, 15 16 ORDER GRANTING MOTION TO CONDUCT DISCOVERY ON DAMAGES Plaintiff, 13 14 Case No.: 17-CV-843-WQH-WVG v. NATHAN DEGRAVE, an individual d/b/a POWERSUPPS, et al, [ECF NO. 6] Defendants. 17 18 19 I. INTRODUCTION 20 Presently before the Court is Plaintiff Nutrition Distribution LLC’s ex parte Motion 21 to Conduct Discovery on Damages. (ECF No. 6.) Defendants did not file an Opposition to 22 the Motion. For the reasons that follow, Plaintiff’s Motion is GRANTED. 23 II. BACKGROUND 24 On April 25, 2017, Plaintiff filed a Complaint alleging the false advertising of 25 Defendant’s prohormone products in violation of the Lanham Act, 15 U.S.C. § 26 1125(a)(1)(B). (ECF No. 1.) On June 5, 2017, the Clerk of the Court entered an Entry of 27 Default against Defendants based on their failure to plead or otherwise defend in this action 28 as directed by the Summons and as provided for by the Federal Rules of Civil Procedure. 1 17-CV-843-WQH-WVG 1 (ECF No. 5.) Plaintiff now seeks leave to conduct discovery on the limited issue of 2 damages pursuant to the Entry of Default. 3 4 5 6 7 8 9 10 11 12 13 II. LEGAL STANDARD The scope and limitations of discovery are set forth by the Federal Rules of Civil Procedure. Rule 26 provides in pertinent part that: Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged 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. Information within this scope of discovery need not be admissible in evidence to be discoverable. 14 Fed. R. Civ. P. 26(b)(1). 15 District courts have broad discretion in granting or denying discovery. Hallett v. 16 Morgan, 296 F.3d 732, 751 (9th Cir. 2002) (“broad discretion is vested in the trial court to 17 permit or deny discovery, and its decision to deny discovery will not be disturbed except 18 upon the clearest showing that denial of discovery results in actual and substantial prejudice 19 to the complaining litigant”). 20 Generally, Rule 26(d)(1) provides that “[a] party may not seek discovery from any 21 source before the parties have conferred as required by Rule 26(f), except ... when 22 authorized by these rules, by stipulation, or by court order.” Fed. R. Civ. P. 26(d). Courts 23 apply a “good cause” standard in considering motions to expedite discovery. Semitool, Inc. 24 v. Tokyo Electron Am., Inc., 208 F.R.D. 273, 276 (N.D. Cal. 2002); see also Am. LegalNet, 25 Inc. v. Davis, 673 F. Supp. 2d 1063, 1066 (C.D. Cal. 2009); In re Countrywide Fin.Corp. 26 Derivative Litig., 542 F. Supp. 2d 1160, 1179 (C.D. Cal. 2008). Good cause may be found 27 where the need for expedited discovery, in consideration of the administration of justice, 28 outweighs the prejudice to the responding party. Semitool, 208 F.R.D. at 276. 2 17-CV-843-WQH-WVG 1 Good cause for expedited discovery is frequently found in cases in cases where a 2 defendant has failed to appear, resulting in the entry of default against the defendant, and 3 the plaintiff is in need of evidence to establish damages. See Sheridan v. Oak Street Mortg., 4 LLC, 244 F.R.D. 520, 522 (E.D. Wis. 2007); Twitch Interactive, Inc. v. Johnston, No. 16- 5 CV-03404, 2017 WL 1133520, at *4 (N.D. Cal. 2017); Adobe Sys. Inc. v. Max Bunhey, et 6 al., No. 131365, 2013 WL 12140304, at *2 (C.D. Cal. Oct. 29, 2013). 7 On June 5, 2017, default was entered against Defendants for failing to plead or 8 otherwise defend in this action. Plaintiff claims, and the Court agrees, a plaintiff may 9 recover defendant’s profits, any damages sustained, and the costs of the action in false 10 advertisement claims made pursuant to the Lanham Act. See 15 U.S.C. § 1117(a). In this 11 Motion, Plaintiff seeks discovery from payment gateway services and financial institutions 12 of Defendants, one of which is Paypal. (ECF No. 6-1 at 3:18-4:2.) However, since 13 Defendants have refused to participate in this action, Plaintiff cannot conduct traditional 14 discovery. 15 Accordingly, the Court finds that Plaintiff has established good cause to warrant 16 expedited discovery in this matter in order to support an anticipated motion for entry of 17 default judgment and claim for damages. Semitool, Inc., 208 F.R.D. at 276. 18 IV. CONCLUSION 19 Based on the foregoing, the Court GRANTS Plaintiff’s ex parte Motion. Plaintiff 20 may seek immediate discovery of information sufficient to identify Defendants’ profits 21 derived from sales of prohormone products from Defendants’ electronic gateway services 22 and financial institutions (“Third-Party Entities”). 23 It is further ORDERED that Plaintiff must serve a copy of this order on Third-Party 24 Entities when discovery is served. Third-Party Entities that wish to file a motion to quash 25 a subpoena or to serve objections, must do so before the return date of the subpoena, which 26 shall be no less than twenty-one (21) days from the date of service of the subpoena. The 27 Third-Party Entity may use this time to attempt to notify the subscriber in question. Third- 28 Party Entities shall preserve any subpoenaed information or materials pending compliance 3 17-CV-843-WQH-WVG 1 2 3 with the subpoena or resolution of any timely objection or motion to quash. IT IS SO ORDERED. Dated: September 7, 2017 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 17-CV-843-WQH-WVG

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