North Atlantic Operating Company, Inc. v. EBay Seller dealz_f0r_you, et al

Filing 100

ORDER GRANTING Plaintiff's 95 Motion Limited Expedited Discovery--Signed by Magistrate Judge Anthony P. Patti. (MWil)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
NORTH ATLANTIC OPERATING
COMPANY, INC.; NATIONAL
TOBACCO COMPANY, L.P.,

Case No. 2:17-10964
District Judge Linda V. Parker
Magistrate Judge Anthony P.
Patti

Plaintiffs
v.
EBAY SELLER DEALZ_FOR_YOU, et
al.,
Defendants.
___________________________________/

ORDER GRANTING PLAINTIFFS’ EX PARTE MOTION FOR LIMITED
EXPEDITED DISCOVERY (DE 95)
On March 28, 2017, Plaintiffs North Atlantic Operating Company, Inc. and
National Tobacco Company, L.P. (“Plaintiffs”) filed this lawsuit against
Defendants, alleging claims under the Lanham and Copyright Acts as well as
Michigan state law. In their Complaint, Plaintiffs claim that Defendants have been
manufacturing, distributing, and selling counterfeit versions of Plaintiffs’ ZIGZAG® brand cigarette paper products in Michigan and nationwide. Plaintiffs
argue that the products are inferior cigarette paper products, “sold without any
known quality control or authorization.” (DE 1 at 5.) On May 3, 2017, following
an ex parte hearing, the Court entered an Order granting Plaintiffs’ ex parte motion

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for a temporary restraining order, preliminary injunction, and other relief,
including: an account and asset freeze order; an order permitting alternative
service; and, an order granting expedited discovery from Defendants and thirdparty e-commerce platforms. (DE 16.) The expedited discovery order required
operators of e-commerce platforms to cooperate with this lawsuit by, among other
things, sharing information with North Atlantic about the true names and identities
of the counterfeiters, and their purchase and sales history over several years. (Id. at
17-18.)
Plaintiffs state that while most e-commerce platforms cooperated with the
expedited discovery order, DHgate, DHport, DHlink, DHpay, and others within the
Dunhuang Group of e-commerce companies (“DHgate Parties”) did not “because
of a mistaken belief that the ex parte expedited discovery order expired with the ex
parte temporary restraining order in May 2017.” (DE 95 at 2-3; DE 96 at 3.)
Accordingly, Plaintiffs filed the instant Ex Parte Motion for Limited Expedited
Discovery, seeking to serve a “targeted Rule 45 subpoena on the DHgate Parties
before the Rule 26(f) conference.” (DE 95.) Plaintiffs assert that the DHgate
Parties’ cooperation with discovery is crucial for confirming the non-cooperating
Defendants’ identities and counterfeiting via DHgate, which Plaintiffs assert is by
far the most popular e-commerce platform for U.S. counterfeiters to buy
counterfeit ZIG-ZAG® Orange from China. (DE 95 at 14.) Plaintiffs contend that
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the DHgate Parties’ opposition to discovery is untenable because: (1) the Court
granted expedited discovery pursuant to Fed. R. Civ. P. 26, which has no automatic
expiration date; (2) the Court expressly extended the TRO, stating it “remains in
full force and effect until further Order of this Court” (DE 25); and, (3) there has
been no further order vacating the injunction or the expedited discovery provisions.
(Id.) Although these arguments appear to have some merit at first blush, the Court
will refrain from a more in-depth analysis of them, since there is an alternative
basis for providing the requested relief: Plaintiff’s request should be granted
pursuant to Fed. R. Civ. P. 26(d)(1).
Pursuant to Federal Rule of Civil Procedure 26(d)(1), parties can begin
discovery before their Rule 26(f) conference if a district court authorizes them to
do so upon a showing of good cause. Fed. R. Civ. P. 26(d)(1); see Dessault
Systemes, S.A. v. Childress, No. 09-10534, 2009 WL 3602084, at *4 (E.D. Mich.
Oct. 27, 2009). Plaintiffs, as the party seeking expedited discovery, bear the
burden of demonstrating good cause. Best v. Mobile Streams, Inc., No. 1:12-cv564, 2012 WL 5996222, at *1 (S.D. Ohio Nov. 30, 2012) (citing Quest Commc’ns
Int’l Inc. v. Worldquest Networks, Inc., 213 F.R.D. 418, 419 (D. Colo. 2003)).
“Good cause for expedited discovery exists when the need for the expedited
discovery outweighs the prejudice to the responding party, based on the entirety of

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the record to date and the reasonableness of the request in light of the surrounding
circumstances.” 6-26 Moore’s Federal Practice - Civil § 26.121 (2016).
The Court in North Atlantic Operating Co. v. JingJang Huang, 194
F.Supp.3d 634 (E.D. Mich. 2016) (Berg, J.) considered a similar ex parte motion
for expedited limited discovery in a near-identical online counterfeiting case, in
which the same plaintiff, North Atlantic, requested to serve limited expedited
discovery on the same third party, DHgate, “to establish with greater certainty the
DHGate.com Defendants’ identities and addresses as well as the locations of their
counterfeiting operations.” Id. at 637. The Court found good cause for expedited
discovery against DHGate, noting that “[w]ithin this Circuit, district courts have
found good cause for granting expedited discovery when the true identities of the
defendants are unknown, when the moving party alleges infringement, when the
scope of the discovery sought is narrow, and when expedited discovery would
substantially contribute to moving the case forward.” Id. (citation omitted). The
Court found that “[g]iven the limited scope and time-sensitive nature of this
discovery request, and Plaintiffs’ offer to post a $10,000 bond with the Court to
compensate for any damages suffered as a result of any wrongful restraint under
this order, the Court will grant this relief.” Id.
The Court agrees that Plaintiffs here have shown good cause and that their
motion should similarly be granted. Plaintiffs have shown that the limited
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discovery sought is essential to help identify all accounts involved in Defendants’
alleged counterfeiting schemes. (DE 95 at 14, 17.) Plaintiffs have further
demonstrated that the requested discovery is reasonable in scope, is similar to
expedited discovery this Court has already ordered, and that the discovery will not
overburden the DHgate Parties. (Id. at 18-19.) Further, Plaintiffs have established
that the discovery must be granted ex parte to prevent non-cooperating Defendants
and known sources of counterfeit ZIG-ZAG® Orange from moving, concealing,
hiding, or destroying electronic evidence. (Id. at 20.) Finally, the Court further
notes that Plaintiffs here were previously ordered to post a $10,000 bond with the
Court to compensate for any damage suffered as a result of any wrongful restraint
under the TRO and that they have done so. (DE 19; DE 25 at 20-21.)
Accordingly, Plaintiff’s ex parte motion for limited expedited discovery (DE
95) is GRANTED and Plaintiffs may serve the proposed Rule 45 subpoena (DE
96-2) on the DHgate Parties. The DHgate Parties must, within fourteen (14) days
of service of the subpoena, respond and produce to Plaintiffs the information
requested.
IT IS SO ORDERED.
Dated: December 7, 2017

s/Anthony P. Patti
Anthony P. Patti
UNITED STATES MAGISTRATE JUDGE

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Certificate of Service
I hereby certify that a copy of the foregoing document was sent to parties of record
on December 7, 2017, electronically and/or by U.S. Mail.
s/Michael Williams
Case Manager for the
Honorable Anthony P. Patti

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