Annie Sloan Interiors, Ltd. v. Jolie Design & Decor, Inc.
Filing
310
ORDER AND REASONS: Denying 293 Motion to Quash. CounterTake shall produce the requested documents, provided that Defendants may impose confidentiality designations pursuant to the Protective Order and may redact pricing information from the invoices and purchase orders produced. The documents shall be produced to ASI within ten days. Oral Argument set for 12/19/2018, is CANCELLED. Signed by Magistrate Judge Janis van Meerveld on 12/18/2018. (ajn)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ANNIE SLOAN INTERIORS, LTD.
* CIVIL ACTION NO. 17-11767
*
* SECTION: “S”(1)
VERSUS
*
* JUDGE MARY ANN VIAL LEMMON
JOLIE DESIGN & DÉCOR, INC., AND *
JOLIE HOME, LLC
* MAGISTRATE JUDGE
* JANIS VAN MEERVELD
************************************ *
ORDER AND REASONS
Before the Court is the Motion to Quash Subpoena filed by defendants Jolie Design &
Décor, Inc. (“JDD”), Jolie Home, LLC (“JHL”), and Lisa Rickert. (Rec. Doc. 293). The subpoena
at issue was served by plaintiff Annie Sloan Interiors, Inc. (“ASI”) on non-party CounterTake,
LLC. Because the subpoena seeks relevant documents that will not be burdensome for
CounterTake to produce and because the confidentiality concerns raised by the Defendants can be
addressed by use of the attorneys’ eyes only designation procedure provided for by the Protective
Order in this case, the Motion to Quash is DENIED. CounterTake shall produce the requested
documents, provided that Defendants may impose confidentiality designations pursuant to the
Protective Order and may redact pricing information from the invoices and purchase orders
produced. The documents shall be produced to ASI within ten days. Oral argument set for
December 19, 2018, is CANCELLED.
Background
ASI designs and manufactures paints and associated products under the trademarks ANNIE
SLOAN® and CHALK PAINT®. Beginning in 2010, JDD, a company founded by Lisa Rickert,
served as ASI’s exclusive distributor of CHALK PAINT® in the United States. That relationship
deteriorated over time. ASI filed this lawsuit in November 2017, seeking, among other things, a
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declaration that the distributorship agreement between ASI and JDD was terminable upon
reasonable notice. Following the District Court’s May 4, 2018, summary judgment ruling agreeing
with ASI’s interpretation of the agreement, ASI notified JDD that the distributorship agreement
would be terminated on November 5, 2018.
By June 2018, Ms. Rickert had formed the new entity, defendant JHL. ASI began to suspect
that JDD and Jolie Home were competing or preparing to compete directly with ASI. They
believed that Ms. Rickert was recruiting stockists to represent competing paint products and that
JDD has stopped using the ANNIE SLOAN® mark in conjunction with the CHALK PAINT®
mark on social media. On July 24, 2018, ASI filed a Motion for Preliminary Injunction, asking the
court to issue an order prohibiting the Defendants from engaging in a list of activities in violation
of the distributorship agreement and ASI’s trademark rights and preventing JDD from sharing
ASI’s business relationships and confidential information with JHL and other competitors.
On October 12, 2018, the District Court granted ASI’s motion and issued a preliminary
injunction. In summary, the court ordered the Defendants to cease advertising JHL’s products with
materials that represent ASI products as JHL products; to warehouse any inventory of ASI
products that had been labeled with JHL labels; to cease using labels for JHL’s products stating or
implying that JHL has been selling paint prior to November 5, 2018, or that JHL has been selling
the same formula or the exact same product since any date prior to November 5, 2018; to cease
using or creating advertising or labels for JHL’s products using ASI’s trademarks or trade dress;
to store all advertising materials implicated by the order pending ruling on the merits of the case;
to issue notice to stockists, suppliers, and public relations firms that Defendants have been enjoined
from using advertising materials as described in the court’s order; and to cancel or transfer to ASI
any domain names incorporating ASI’s trademarks.
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Trial is set to begin June 10, 2019, and the discovery deadline is March 12, 2019.
Defendants have recently filed a motion to continue the trial date or stay the proceedings (other
than those necessary to enforce the Court’s outstanding orders) pending their appeal of the
preliminary injunction.
At issue now is a subpoena served by ASI on CounterTake, a company that assisted JHL
in August 2018 with creating a brand video, video tutorials, and cut down versions of both to use
in advertisements. In summary, the subpoena seeks: (1) communications between CounterTake
and the Defendants or their affiliates (the “Entities”) pertaining to video or photographic content
created for those entities or to the court’s preliminary injunction order; (2) documents or
communications exchanged with the Entities including the phrases “chalk paint,” “chalkpaint,”
“Annie Sloan,” “Jolie Décor,” “JDD,” “Jolie Home,” or “joliehome;” (3) invoices and purchase
orders exchanged with the Entities; and (4) all video and/or photographic content created for the
referenced Entities that display any paint products and/or painting techniques as well as all
communications with the Entities that shares or discusses such content.
JHL admits that some of the footage shot by CounterTake displays the Jolie label that has
been enjoined by the court and furniture painted with paint from ASI branded cans. Apparently,
the majority of this footage was not salvageable following the preliminary injunction, and JHL
hired CounterTake to re-shoot all video tutorials and digitally create the furniture and product used
in the brand film. JHL asserts that the new footage does not contain any enjoined materials and
that no footage has been released to date.
JHL has moved to quash the subpoena, arguing that the requested information would reveal
trade secrets that would give ASI a competitive advantage. It also argues that the material sought
is moot due to the preliminary injunction or premature because it concerns unreleased materials.
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Law and Analysis
1. Scope of Discovery and Standard for Challenging a Subpoena
The Federal Rules of Civil Procedure provide that “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.” Fed. R. Civ. Proc. 26(b)(1). Of note, with the 2015 amendment to Rule 26, it
is now clear that “[i]nformation within this scope of discovery need not be admissible in evidence
to be discoverable.” Id. In assessing proportionality of discovery, the following should be
considered: “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.” Id.
Under Rule 45, the Court may quash or modify a subpoena that “(i) fails to allow a
reasonable time to comply; (ii) requires a person to comply beyond the geographical limits
specified in rule 45(c); (iii) requires disclosure of privileged or other protected matter, if no
exception of waiver applies; or (iv) subjects a person to undue burden.” Fed. R. Civ. Proc. 45(d)(3);
see Wiwa v. Royal Dutch Petroleum Co., 392 F.3d 812, 817–18 (5th Cir. 2004). The Fifth Circuit
has held that a party cannot challenge subpoena issued to a third party where they were not “in
possession of the materials subpoenaed and have not alleged any personal right or privilege with
respect to the materials subpoenaed.” Brown v. Braddick, 595 F.2d 961, 967 (5th Cir. 1979); see
Frazier v. RadioShack Corp., No. CIV.A. 10-855-BAJ-CN, 2012 WL 832285, at *1 (M.D. La.
Mar. 12, 2012) (“[A] plaintiff cannot challenge a Rule 45 subpoena directed to a third party on the
basis that . . . the subpoena is overly broad, or that the subpoena seeks information that is irrelevant
because only the responding third party can object and seek to quash a Rule 45 subpoena on those
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grounds”); 9A Charles Alan Wright & Arthur R. Miller et al., Federal Practice and Procedure §
2463.1 (3d ed.) (“Numerous cases have held that a party lacks standing to challenge a subpoena
absent a showing that the objecting party has a personal right or privilege regarding the subject
matter of the subpoena.”). Thus, courts have required parties to show “a personal right or privilege
in respect to the subject matter of the subpoena or a sufficient interest in it.” Kiger v. Plaisance
Dragline, No. CIV A 04-3153, 2006 WL 3228289, at *1 (E.D. La. Nov. 2, 2006). For example, a
party has standing to challenge a subpoena seeking his financial and medical information because
a party “has sufficient personal right and interest” in his financial and medical information. Mims
v. B&J Martin, Inc., No. CV 17-07324, 2018 WL 1064411, at *2 (E.D. La. Feb. 25, 2018).
Further, courts have held that a party “has standing to move for a protective order pursuant
to Rule 26(c) seeking to limit the scope of discovery, even if the party does not have standing
pursuant to Rule 45(d) to bring a motion to quash a third-party subpoena.” Bounds v. Capital Area
Family Violence Intervention Ctr., Inc., 314 F.R.D. 214, 218–19 (M.D. La. 2016). Rule 26(c)
provides that the Court “may, for good cause,” protect a party from “annoyance, embarrassment,
oppression, or undue burden or expense” by issuing an order “forbidding inquiry into certain
matters, or limiting the scope of disclosure or discovery to certain matters.” Fed. R. Civ. Proc.
26(c)(1)(D). To satisfy “good cause,” “[t]he burden is upon the movant to show the necessity of
its issuance, which contemplates a particular and specific demonstration of fact as distinguished
from stereotyped and conclusory statements.” In re Terra Int'l, Inc., 134 F.3d 302, 306 (5th Cir.
1998) (quoting United States v. Garrett, 571 F.2d 1323, 1325–26 n. 3 (5th Cir. 1978).
2. Defendants’ Confidentiality Concerns and Standing
Defendants argue the subpoena should be quashed because the materials it seeks would
reveal JHL’s trade secrets and confidential information. Without further explanation, ASI argues
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that the Defendants lack standing to challenge the subpoena. However, ASI has previously argued
that the Defendants’ interest in the confidentiality of marketing materials could not establish
standing. Here, because the parties are direct competitors, the court finds that the Defendants have
standing to challenge the subpoena based on their interest in the documents. Nonetheless, the court
agrees with ASI’s proposal. The Protective Order in this case provides for documents to be
produced with an attorneys’ eyes only designation to protect competitive marketing materials from
being shared with the parties themselves. This protection is sufficient to alleviate the Defendants’
concerns that ASI may benefit from discovering the content in the video footage that ASI has
requested, such as brand content and story lines. Although in some cases a protective order may
not be able to protect documents from future disclosure, the court finds no reason to suspect that
the protections of the Protective Order would not be sufficient here. Accordingly, the subpoena
will not be quashed on the basis of confidentiality concerns.
3. Relevance of the Requested Materials
Defendants also ask that the subpoena be quashed because it seeks irrelevant materials.
They argue that because the preliminary injunction has already issued “ASI does not need to
conduct additional discovery” with regard to the contents of the preliminary injunction. They add
that they are complying with the injunction. And they submit that ASI is unlikely to have suffered
any monetary damages from Defendants’ representation of a product that was not yet on the
market. Thus, they argue ASI’s requests are disproportional with the needs of the case. Further,
they argue that ASI’s request for invoices is even less relevant because the cost of creating the
content has no relevance to the content itself. Defendants argue that the request for video content
seeks material that is enjoined from being released and which Defendants do not intend to release.
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They add that because this material is not on the market, it cannot have damaged ASI. At best,
they say, this request is premature.
ASI submits that even if Defendants have standing, they cannot challenge the relevance
or proportionality of the requested information. Nonetheless, ASI argues that the requested
materials are relevant and proportional to the case.
With regard to proportionality, ASI points out that Defendants are in no position to raise
issues regarding the burden to be suffered by CounterTake in responding to the subpoena.
Importantly, ASI and CounterTake have discussed the costs of production and ASI has already
delivered a check to CounterTake to cover the invoiced costs. The court finds that undue burden
is not an issue here.
As to relevance, ASI argues that video evidence and related communications remain
relevant to its claims and the preliminary injunction has no effect on its ability to obtain it. The
court agrees. The merits trial is forthcoming, and additional discovery on the issues addressed by
the preliminary injunction is not barred by the issuance of the injunction.
ASI also argues that the fact that the materials have not been released does not make their
discovery premature. ASI insists that it be allowed to test Defendants’ purported compliance with
the injunction—especially while they have a pending motion for contempt that challenges the way
that JHL is now displaying photographic content to mimic ASI’s trade dress. The court agrees that
these materials are relevant and must be produced.
As to the invoices and purchase orders, ASI argues that these are relevant to showing that
the videos were made while the distributorship agreement was in place and at what cost. It says
that invoices after the date of the preliminary injunction will allow ASI to test Defendants’
compliance with the injunction. The court agrees that the dates on which the video footage was
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commissioned and paid for could be relevant. Invoices and purchase orders are an important way
to determine those dates. It remains unclear why the cost of such work is relevant, however. Thus,
at this time, the invoices and purchase orders may be produced with redaction of costs.
Conclusion
For the foregoing reasons, the Motion to Quash (Rec. Doc. 293) is DENIED. CounterTake
shall produce the requested documents, provided that Defendants may impose confidentiality
designations pursuant to the Protective Order and may redact pricing information from the invoices
and purchase orders produced. The documents shall be produced to ASI within ten days.
New Orleans, Louisiana, this 18th day of December, 2018.
Janis van Meerveld
United States Magistrate Judge
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