General Steel Domestic Sales, LLC v. Chumley et al

Filing 318

ORDER. Defendants' motion in limine 298 is granted. General Steel may not rely upon evidence regarding "uniform sales practices" to support its false advertising claim. Plaintiff's renewed motion in limine 306 is GRANTED. Armstrong may not present evidence of "unclean hands" in defense of General Steel's request for disgorgement of profits pursuant to its trademark and false advertising claim. By Judge Philip A. Brimmer on 7/3/12.(pabsec)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 10-cv-01398-PAB-KLM
GENERAL STEEL DOMESTIC SALES, LLC,
d/b/a General Steel Corporation, a Colorado limited liability company,
Plaintiff,
v.
ETHAN DANIEL CHUMLEY, individually, and
ATLANTIC BUILDING SYSTEMS, LLC, a Delaware corporation,
doing business as Armstrong Steel Corporation,
Defendants.

ORDER

Plaintiff General Steel Domestic Sales, LLC (“General Steel”) and defendants
Ethan Daniel Chumley and Atlantic Building Systems, LLC, doing business as
Armstrong Steel Corporation (collectively, “Armstrong”) are competitors in the
prefabricated steel building business. General Steel has trademark and unfair
competition claims as well as a false advertising claim still pending against Armstrong
and seeks disgorgement of profits and an injunction on its claims. A bench trial is
scheduled to commence on July 9, 2012.
This matter is before the Court on defendants’ motion in limine [Docket No. 298]
and plaintiff’s renewed motion in limine [Docket No. 306].
I. ARMSTRONG’S MOTION IN LIMINE
In its trial brief, General Steel asserts that its “false advertising claim covers not
only the false written website advertising by Defendants, but their commercial speech –

uniform sales presentations, which are within the scope of Plaintiff’s Lanham Act claim
under § 1125(a)(1)(B).” Docket No. 288 at 2. Armstrong contends that, by referencing
“uniform sales presentations,” General Steel is expanding its false advertising claim, as
its pleadings focused entirely on the substance of Armstrong’s website. In response,
General Steel relies upon the following allegation in its amended complaint:
“Defendants have made false or misleading descriptions of fact or false
. . . representations of fact in their commercial advertising about their products or
services as described above including but not limited to the allegations of paragraph 50
above.” See Docket No. 21 at 15, ¶ 68. Paragraph 50 of General Steel’s amended
complaint, however, is limited entirely to alleged misrepresentations on Armstrong’s
website. See Docket No. 21 at 10-11, ¶ 50. To the extent General Steel attempted to
leave the door open to later expansion of its claim by including the “not limited to”
language in paragraph 68, there is no inclusion of “uniform sales presentations” in the
description of General Steel’s false advertising claim in the Final Pretrial Order.1 See
Docket No. 119 at 2-3; see id. at 8 (“[T]his Final Pretrial Order will control the

1

Although General Steel did contend in the Final Pretrial Order that it was
seeking disgorgement of profits resulting from Armstrong’s “false and misleading sales
scripts,” Docket No. 119 at 3, it is not clear whether this is meant to refer to “uniform
sales presentations.” In any event, as discussed below, even though General Steel
may have developed facts relating to “uniform sales presentations,” it did not
specifically advance them as an additional basis for its false advertising claim, a fact it
essentially admits. See generally Docket No. 315; see id. at 3 (“Plaintiff is not required
to give Defendants a preview of their trial brief, or to give Defendants a flowchart about
how their case analytically operates.”); cf. Cine Forty-Second St. Theatre Corp. v. Allied
Artists Pictures Corp., 602 F.2d 1062, 1063 (2d Cir. 1979) (“The Federal Rules of Civil
Procedure carried the discovery principles of Equity into the nation's courts of law in the
hope of expediting the litigation process and of transforming the sporting
trial-by-surprise into a more reasoned search for truth.”).
2

subsequent course of this action and the trial, and may not be amended except by
consent of the parties and approval of the court or by order of the court to prevent
manifest injustice. The pleadings will be deemed merged herein.”).2
General Steel has not sought leave to amend its pleadings or the final pretrial
order and, on that basis alone, there are grounds to prevent it from including the new
factual allegations within its claim. Furthermore, it is too late in the game for General
Steel to be significantly redefining the scope of its claims. See Minter v. Prime Equip.
Co., 451 F.3d 1196, 1206 (10th Cir. 2006) (“Courts will properly deny a motion to
amend when it appears that the plaintiff is using Rule 15 to make the complaint ‘a
moving target,’ to ‘salvage a lost case by untimely suggestion of new theories of
recovery,’ to present ‘theories seriatim’ in an effort to avoid dismissal, or to ‘knowingly
delay[ ] raising [an] issue until the “eve of trial.”’”) (citations omitted); Roberts v. Ground
Handling, Inc., 2007 WL 2753862, at *5 (S.D.N.Y. Sep. 20, 2007) (“To require
defendant to incur additional costs and to change its strategy on the eve of trial
because plaintiff has concocted a new theory three years into the litigation is simply not
fair and would, in a real sense, unduly prejudice defendant.”).3 Because General Steel
provided Armstrong with no notice that it would be supporting its false advertising claim
with facts regarding anything other than the substance of Armstrong’s websites, despite

2

In the Final Pretrial Order, General Steel includes websites created after the
commencement of this case as relevant to its false advertising claim. See Docket No.
119 at 3. Armstrong has not sought to exclude such evidence in its motion.
3

The Court notes that it is not entirely clear what General Steel means by
“uniform sales presentations,” a fact that only further renders it unfair to permit it to
present evidence regarding such presentations as a basis for its false advertising claim.
3

a more than adequate opportunity to do so, the Court will grant Armstrong’s motion in
limine.
II. GENERAL STEEL’S RENEWED MOTION IN LIMINE
General Steel seeks to prevent Armstrong from asserting evidence in support of
an “unclean hands” defense that it contends is now moot.4 Armstrong’s unclean hands
defense is moot to the extent it was asserted against General Steel’s now-dismissed
Colorado Consumer Protection Act claim. Armstrong, however, contends that it should
be permitted to assert the defense in light of General Steel’s attempt to expand its false
advertising claim. As stated above, General Steel will not be permitted to expand its
false advertising claim.
Armstrong also argues that it should be able to assert evidence of “unclean
hands” because General Steel is seeking disgorgement of profits, which is an equitable
remedy. See Western Diversified Serv. Inc. v. Hyundai Motor America, Inc., 427 F.3d
1269, 1273 (10th Cir. 2005) (“[A]n award of profits involves a two-step process: (1) a
finding of willfulness or bad faith; and (2) a weighing of the equities.”); see also Mr.
Elec. Corp. v. Khalil, 2010 WL 2607214, at *2 (D. Kan. June 22, 2010) (“When weighing
the equities, the court considers factors such as (1) the degree of certainty that the
defendant benefitted from the unlawful conduct; (2) availability and adequacy of other
4

General Steel contends that its motion is a renewal of the motion in limine
[Docket No. 203] that it filed on April 18, 2012. The April 18 motion was a renewal of
plaintiff’s April 13, 2012 motion in limine [Docket No. 189], which the Court struck for
failure to comply with D.C.COLO.LCivR 7.1A and § III.A of my Practice Standards
[Docket No. 191]. The present motion again violates D.C.COLO.LCivR 7.1A. General
Steel construes D.C.COLO.LCivR 7.1A as not applying to “renewed” motions,
see Docket No. 314 at 1, an unsupported reading of the Local Rule. Despite General
Steel’s failure to comply, the Court will consider its arguments.
4

remedies; (3) the role of a particular defendant in effectuating the infringement; (4)
plaintiff's laches; and (5) plaintiff’s unclean hands.”). Although Armstrong originally pled
the “unclean hands” defense to all claims, see Docket No. 23 (Defs’ Answer) at 14, ¶ 9,
it thereafter directed the defense to General Steel’s now-dismissed Colorado Consumer
Protection Act claim. See generally Docket No. 103 (where Armstrong did not argue, in
response to General Steel’s motion for partial summary judgment on its unclean hands
defense, that the defense applied to any claim other than General Steel’s CCPA claim);
see id. at 8 (“General’s CCPA claim should be barred by the doctrine of unclean
hands.”); Docket No. 198 at 1-2 (where Armstrong identified “unclean hands” as a
defense to General Steel’s CCPA claim); Docket No. 230 (Defs’ First Trial Br.) at 7
(“[E]ven in the unlikely event that General Steel’s CCPA claim survives Fed. R. Civ. P.
56 and 50 motions, it is barred by General Steel’s unclean hands.”). Furthermore, the
Court treated the defense as being so limited, see Docket No. 234 (denying General
Steel’s motion for partial summary judgment on Armstrong’s “unclean hands” defense
as moot in light of the dismissal of General Steel’s CCPA claim); Docket No. 235 at 1-2
(denying as moot General Steel’s motion in limine requesting exclusion of certain
evidence supporting Armstrong’s “unclean hands” defense because “the Court
dismissed plaintiff’s CCPA claim, which mooted defendants’ ‘unclean hands’ defense”);
Docket No. 242 at 2 (“On April 26, 2012, the District Judge entered summary judgment
in favor of Armstrong on General Steel’s CCPA claim, and denied General Steel’s
motion for partial summary judgment on the unclean hands defense as moot.
Accordingly, the basis for Defendants’ use of the affidavits and testimony at issue no
longer exists, and the Motion to preclude their use is also moot.”) (citations omitted),
5

over no objection from Armstrong.5
Armstrong seems to be attempting to do what it accuses General Steel of doing,
i.e., recasting claims and defenses. Specifically, Armstrong appears to be trying to
transform its defense to the now-dismissed CCPA claim as a basis to defend against
disgorgement of profits. General Steel has been seeking disgorgement of profits as
relief for its trademark and false advertising claims since the initiation of this case. See
Docket No. 1 at 21, 23. Yet, as noted above, Armstrong never indicated (until now) that
it would seek to defend against that equitable relief through presentation of “unclean
hands” evidence. See Docket No. 309 at 5 (referring to “Defendants’ defense of
‘unclean hands’ to the CCPA claim” to explain why the unclean hands defense should
apply to General Steel’s attempted uniform sales presentation claims) (emphasis
added).
Armstrong realized, or should have realized, that the Court and General Steel
were proceeding with the understanding that its unclean hands defense was limited to
the CCPA claim. If Armstrong wished to pursue the defense in relation to General
Steel’s trademark and false advertising claims, it should not have waited until its June
28, 2012 filing to announce that fact. See Docket No. 309. That is particularly true
given that General Steel had argued, in the event the defense was not mooted, many of
Armstrong’s “unclean hands” witnesses should be excluded due to untimely disclosure.

5

Armstrong has shown no hesitation to bring to the Court’s attention those issues
it believes were decided incorrectly. See Docket Nos. 71, 156 (Defs’ Motions for
Reconsideration); Docket No. 268 (Defs’ Motion for Reconsideration of Order Denying
Motion for Reconsideration).
6

See Docket No. 108;6 Docket No. 229 (Pl.’s First Trial Brief) at 7-9;7 Docket No. 314 at
3.
In light of the foregoing, the Court concludes that Armstrong’s “unclean hands”
defense is now moot and that Armstrong shall not be permitted, at this late stage of the
proceedings, to recast its defense as applicable to General Steel’s trademark and false
advertising requests for relief.
Therefore, it is
ORDERED that defendants’ motion in limine [Docket No. 298] is GRANTED.
General Steel may not rely upon evidence regarding “uniform sales practices” to
support its false advertising claim. It is further
ORDERED that plaintiff’s renewed motion in limine [Docket No. 306] is
GRANTED. Armstrong may not present evidence of “unclean hands” in defense of
General Steel’s request for disgorgement of profits pursuant to its trademark and false
advertising claim.

DATED July 3, 2012.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge
6

In this motion, General Steel sought to exclude certain “unclean hands”
witnesses. The magistrate judge denied the motion as moot on May 4, 2012 [Docket
No. 242].
7

General Steel represents that it did not include the untimely disclosure argument
in its second trial brief [Docket No. 288] because of the intervening decision mooting
the “unclean hands” defense.
7