Morningware, Inc. v. Hearthware Home Products, Inc.

Filing 229

WRITTEN Opinion entered by the Honorable Amy J. St. Eve on 10/6/2011: The Court grants Morningware's Motion to Compel Hearthware's Production of Documents Relating to SKE 200 , but denies its request for attorneys' fees. Specificall y, the Court orders Hearthware to send written correspondence by 10/10/11, with a copy to Morningware's counsel, to SKE's successor granting permission to produce the documents at issue directly to Morningware instead of Hearthware. The Co urt further directs Morningware to provide a complete copy to Hearthware of all of the documents it receives from SKE within three business days of receipt. To the extent it has not already done so, Hearthware must produce any documents in its possession that are responsive to Morningware's document requests relating to SKE. [For further details see minute order.] Mailed notice(kef, )

Order Form (01/2005)

United States District Court, Northern District of Illinois
Name of Assigned Judge
or Magistrate Judge

Amy J. St. Eve

CASE NUMBER

09 C 4348

CASE
TITLE

Sitting Judge if Other
than Assigned Judge

DATE

10/6/2011

Morningware, Inc vs. Hearthware Home Products, Inc.

DOCKET ENTRY TEXT

The Court grants Morningware’s Motion to Compel Hearthware's Production of Documents Relating to SKE
[200], but denies its request for attorneys’ fees. Specifically, the Court orders Hearthware to send written
correspondence by October 10, 2011, with a copy to Morningware’s counsel, to SKE’s successor granting
permission to produce the documents at issue directly to Morningware instead of Hearthware. The Court
further directs Morningware to provide a complete copy to Hearthware of all of the documents it receives
from SKE within three business days of receipt. To the extent it has not already done so, Hearthware must
produce any documents in its possession that are responsive to Morningware’s document requests relating to
SKE.
O[ For further details see text below.]

Notices mailed by Judicial staff.

STATEMENT
Before the Court is Morningware’s motion to compel Hearthware’s Production of Documents relating
to SKE. For the following reasons, the Court grants Morningware’s motion to compel and denies its request
for attorneys’ fees.
BACKGROUND
On July 20, 2009, Plaintiff Morningware, Inc. (“Morningware”), filed its Complaint against
Hearthware Home Products, Inc. (“Hearthware”), alleging that Hearthware had commercially disparaged
Morningware’s goods, had committed the common-law tort of unfair competition, and had violated the
Deceptive Trade Practices Act of Illinois, as well as the unfair competition and product-disparagement
provisions of the Lanham Act. (R. 1, Complaint.) Separately, Hearthware brought an action against
Morningware alleging that Morningware’s use and sale of the Halogen Convection Oven Model H0-1200
infringed Hearthware’s U.S. Patent No. 6,201,217 (“the ‘217 patent”). (IBC-Hearthware, Inc. v.
Morningware, Inc., No. 09-CV-4903 (N.D. Ill.) (R. 1).) The Court consolidated both cases on August 26,
2009. (Id., R. 19.)

Courtroom Deputy
Initials:

KF

Morningware served document requests on Hearthware, seeking documents relating to communications
09C4348 Morningware, Inc vs. Hearthware Home Products, Inc.

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and agreements with SKE. (R. 200-2, Hearthware’s Objs. and Resps. to Morningware’s First RFP.) SKE, a
Korean corporation, manufactured countertop ovens for Hearthware for sale in North America. (R. 200,
Hearthware’s Mot. at 2-3; R. 200-1, Supply Agreement at 1.) Unsatisfied with what Hearthware produced in
response to that request, Morningware attempted to obtain additional information from SKE “informally.”
(Hearthware’s Mot. at 3.) SKE thereafter told Morningware that it was ready to forward all documents regarding
its relationship with Hearthware. (Id.) In an October 22, 2009 letter, Morningware’s counsel notified
Hearthware’s counsel that SKE was ready to produce documents pending Hearthware’s approval, which
Morningware requested. (Id.; R. 200-3, Oct. 22, 2009 letter from Nicolas Lee to David Farnum.) Hearthware’s
counsel responded the next day, stating that he was “deeply concerned” by Morningware’s statements that SKE
has documents that Morningware believes are responsive and that Hearthware must approve the release of such
documents. (R. 200-4, Oct. 23, 2009 letter from Mr. Farnum to Mr. Lee and Edward Bishop.) He further stated
that he was in the process of investigating “whether SKE’s continued possession of Hearthware’s confidential
information and apparent disclosure to Morningware and you is in violation of its agreements with Hearthware.”
Id.
On November 13, 2009, SKE wrote to Morningware’s counsel, stating that it could not provide the
requested documents because of a contractual obligation with Hearthware.1 (Morningware’s Mot. at 3; R. 200-6,
Nov. 13, 2009 letter from SKE to Morningware.) Hearthware subsequently changed counsel, and on January 13,
2010, Morningware renewed its request that Hearthware approve SKE’s release of the responsive documents.
(Morningware Mot. at 3; R. 200-7, January 13, 2010 letter from Mr. Lee to Lewis T. Steadman, Jr.; R. 200-8, Jan.
20, 2010 letter from Mr. Lee to Andrew S. Dallmann.) In a subsequent letter, Hearthware’s counsel confirmed
that it would attempt to obtain and review SKE’s documents for responsiveness by February 22, 2010, and it
expected SKE to produce responsive documents shortly thereafter. (R. 200-9, Feb. 22, 2010 letter from Mr.
Dallman to Messrs. Bishop and Lee.) Thereafter, Hearthware’s counsel sent a letter to SKE instructing SKE not
to produce documents directly to Morningware and to instead produce them to Hearthware. (R. 200-10, Feb. 25,
2010 letter from Mr. Steadman to Brian Koo.) The letter also stated that Morningware’s counsel agreed that
Hearthware’s counsel could review the documents to determine whether they relate to this lawsuit. Id.
Morningware denies that it entered into such an agreement. (Morningware Mot. at 4.)
On March 4, 2010, Morningware served a document subpoena on Cuckoo Co. Ltd, SKE’s successor,
requesting documents relating to Hearthware and the Convection Oven SCO-1200, Eugene Song, and IMEX
Corporation.2 (Id.) On March 12, 2010, after a meet and confer with Hearthware’s counsel, Morningware’s
counsel sent yet another letter to Hearthware’s counsel regarding SKE documents. (R. 200-11, Mar. 12, 2010
letter from Mr. Lee to Mr. Dallman.) Morningware’s counsel took issue with what it perceived as Hearthware’s
interference with Morningware’s ability to obtain responsive documents from SKE, as well as Hearthware’s
counsel’s representation to SKE that Morningware had agreed to allow Hearthware to review the documents prior
to SKE producing them to Morningware. (Id.)

1

The Supply Agreement between SKE and Hearthware contains a confidentiality
provision, in which SKE agreed that “during and after the termination or expiration of This
Agreement, [it] will not disclose to anyone in any matter whatsoever, any [confidential
information Hearthware delivered to it] including without limitation, information relating to the
PRODUCT [defined in Section 3 of the agreement as the “household electric cooking oven
developed by [Hearthware]”]. . . .” (Supply Agreement §§ 3, 14.)
2

Morningware did not provide the Court with a copy of the subpoena, and therefore the
Court cannot discern precisely which documents the subpoena seeks.
09C4348 Morningware, Inc vs. Hearthware Home Products, Inc.

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To date, SKE has not produced any documents responsive to Morningware’s subpoena. (Morningware
Mot. at 4.)
LEGAL STANDARD
The federal discovery rules are liberal in order to assist in the preparation for trial and settlement of
litigated disputes. See Bond v. Utreras, 585 F.3d 1061, 1075 (7th Cir. 2009); see also Kodish v. Oakbrook
Terrace Fire Prot. Dist., 235 F.R.D. 447, 450 (N.D. Ill. 2006) (“the scope of discovery should be broad in order
to aid in the search for truth”). Pursuant to Federal Rule of Civil Procedure 26(b)(1), “[p]arties may obtain
discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense .... Relevant
information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the
discovery of admissible evidence.” Fed.R.Civ.P. 26(b)(1). “The burden rests upon the objecting party to show
why a particular discovery request is improper.” Kodish, 235 F.R.D. at 450. In the context of motions to compel,
the Seventh Circuit instructs that a “district court may grant or deny the motion in whole or in part, and similar to
ruling on a request for a protective order under Rule 26(c), the district court may fashion a ruling appropriate for
the circumstances of the case.” Gile v. United Air Lines, Inc., 95 F.3d 492, 496 (7th Cir. 1996). As with all
discovery matters, district courts have broad discretion in determining motions to compel. See Peals v. Terre
Haute Police Dep’t, 535 F.2d 621, 629 (7th Cir. 2008).
ANALYSIS
Hearthware argues that it has complied with Morningware’s requests by asking SKE to produce
responsive documents to Hearthware and that Morningware’s motion to compel production of SKE documents is
inappropriate because “Hearthware is not in the ‘possession, custody or control’ of those documents.”3 (R. 207,
Hearthware Resp. at 3-5 (citing Fed.R.Civ.P. 34(a)(1)).) Morningware counters that Hearthware is in control of
SKE’s documents as evidenced by its request to SKE to produce the documents to Hearthware for review before
producing the documents to Morningware. (R. 210, Morningware’s Reply at 2.)
Hearthware states in its response brief that it never received documents from SKE. (Hearthware’s Resp.
at 4.) Therefore, the SKE documents are not in Hearthware’s custody. It is possible that least some of the SKE
documents are, however, within Hearthware’s control because Hearthware has the legal right, pursuant to the
Supply Agreement, to demand that SKE return to Hearthware documents it provided to SKE. See Supply
Agreement §§ 3, 14; United States v. Approximately $7,400 in U.S. Currency, 274 F.R.D. 646, 647 (E.D. Wis.
2011) (“Federal courts have consistently held that documents are deemed to be within the possession, custody or
control for purposes of Rule 34 if the party has actual possession, custody or control, or has the legal right to
obtain the documents on demand.”) (citations and internal quotation marks omitted); see also Cohn v. Taco Bell
Corp., No. 92 C 5852, 1994 WL 383983, at *4 (N.D. Ill. July 20, 1994) and Preservation Prods., LLC v.
Nutraceutical Clinical Labs. Int’l, 214 F.R.D. 494, 495 (N.D. Ill. 2003). As to documents in SKE’s possession
that Hearthware did not provide to SKE, it does not appear that Hearthware has a legal right to demand SKE to
return such documents. Moreover, the Court cannot order SKE or its successor to comply with the subpoena
since SKE is a Korean company that does not, based on the information before the Court, have an office in the
Northern District of Illinois. See Fed.R.Civ.P. 45(a)(2)(C). It appears from the parties’ briefs, however, that SKE
has agreed to produce responsive documents in any event.

3

Hearthware asks the Court to order the deposition of Mr. Lee, one of Morningware’s
attorneys. (Hearthware’s Resp. at 6.) Despite a careful review of Hearthware’s argument, the
Court cannot discern why Hearthware needs to take Mr. Lee’s deposition or how taking his
deposition relates in any way to Morningware’s motion. The Court denies Hearthware’s request.
09C4348 Morningware, Inc vs. Hearthware Home Products, Inc.

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Hearthware does not dispute that SKE should produce the documents. The real dispute between the
parties is whether Hearthware must withdraw its instruction to SKE to produce the documents to Hearthware,
instead of Morningware, in order to allow Hearthware to review the documents for confidentiality before
producing them to Morningware.
Hearthware’s stated concern with SKE producing the documents directly to Morningware is its inability to
review the documents for confidentiality concerns and the possibility that SKE will produce documents that are
unrelated to this lawsuit. The fact that a responsive document may be confidential (pursuant to the terms of the
Supply Agreement or otherwise) does not mean that those documents are exempt from disclosure. The Court has
entered a protective order in this case, which governs the treatment of the parties’ confidential documents. (R.
52.) Morningware has indicated that it will agree to classify initially all of SKE’s documents as “Highly
Confidential” under that protective order. (Morningware’s Reply at 2.) Morningware further represents that, if
necessary, it will request at a later time that the documents be re-classified to a lower confidentiality designation
using the procedure in the protective order. (Id.) Morningware also states that it will provide a copy to
Hearthware of all SKE documents it receives from SKE. Those representations appropriately address
Hearthware’s confidentiality concerns. The possibility that SKE may produce documents unrelated to this case to
Morningware does not necessitate Hearthware’s pre-review of third party documents. Hearthware’s concern is
not unique in the context of third party discovery. Moreover, Morningware’s agreement to treat all of SKE’s
documents as “highly confidential” under the protective order resolves any concerns about potential misuse of
those documents.4
CONCLUSION
For the reasons stated above, the Court grants Morningware’s motion to compel, but denies its request for
attorneys’ fees. Specifically, the Court orders Hearthware to send written correspondence by October 10, 2011,
with a copy to Morningware’s counsel, to SKE’s successor granting permission to produce the documents at issue
directly to Morningware instead of Hearthware. The Court further directs Morningware to provide a complete
copy to Hearthware of all of the documents it receives from SKE within three business days of receipt. To the
extent it has not already done so, Hearthware must produce any additional documents in its possession that are
responsive to Morningware’s document requests relating to SKE.

4

Additionally, Morningware states in its reply that SKE ceased manufacturing ovens for
Morningware “years before Morningware subpoenaed SKE or sought its documents.”
(Morningware’s Reply at 3.) Morningware, however, supplies no factual citation for this
statement. If true, however, that fact mitigates against Hearthware’s concern.
09C4348 Morningware, Inc vs. Hearthware Home Products, Inc.

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