The Katiroll Company, Inc. v. Kati Roll and Platters Inc.

Filing 141

MEMORANDUM OPINION filed. Signed by Chief Judge Garrett E. Brown, Jr on 8/3/2011. (eaj)

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
__________________________________________
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Plaintiff,
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v.
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KATI ROLL AND PLATTERS, INC. AND
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NIRAJ JIVANI,
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Defendants.
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_________________________________________ )
THE KATIROLL COMPANY, INC.,

Civil Action No. 10-3620 (GEB)

MEMORANDUM OPINION

BROWN, Chief Judge
This matter comes before the Court on a motion by Plaintiff for spoliation sanctions and
to compel discovery (Doc. No. 108). The Court has considered the parties’ submissions and
decided the motion without oral argument pursuant to Federal Rule of Civil Procedure 78. For
the reasons set forth below, that motion is denied in part and granted in part.
I.

BACKGROUND
This is a trademark infringement case involving two restaurants that sell a similar type of

food called katirolls. Plaintiff originally brought this action on March 3, 2010, in the Southern
District of New York alleging, among other things, infringement of their distinctive trade dress.
(Compl.; Doc. No. 1). The Southern District of New York transferred the case to New Jersey
based on a lack of personal jurisdiction. (Memorandum Order dated July 9, 2010; Doc. No. 31).
Shortly after the transfer, this Court granted a motion for a preliminary injunction after a
two-day evidentiary hearing. After setting forth its findings of fact and conclusions of law, this
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Court found that Plaintiff was entitled to a preliminary injunction on its trade dress claims but
found that it had not carried its burden on infringement of the trademark. (Doc. Nos. 72, 73).
This motion focuses on the discovery positions of the parties. Particularly, this motion
focuses on whether Defendants’ fact discovery has been late forthcoming and whether
Defendants purposely and deliberately destroyed important discoverable information. Fact
discovery in this case is ongoing and does not close until September 30, 2011. (Doc. No. 110).

II.

SPOILATION SANCTIONS AND MOTION TO COMPEL
A.

Standard of Review

Parties to litigation often are required to preserve litigation evidence. This duty “arises
when the party in possession of the evidence knows that litigation by the party seeking the
evidence is pending or probable and the party in possession of the evidence can foresee the harm
or prejudice that would be caused to the party seeking the evidence if the evidence were to be
discarded.” Kounelis v. Sherrer, 529 F. Supp. 2d 503, 518 (D.N.J. 2008). If the party does not
so preserve the evidence, they are said to have spoliated that evidence, which can give rise to
sanctions. “In determining whether spoliation sanctions are appropriate, the two key
considerations are the ‘degree of fault of the party who altered or destroyed the evidence’ and
‘the degree of prejudice suffered by the opposing party.’” Id. (quoting Schmidt v. Milwaukee
Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir. 1994)).
Sanctions for spoliation include: “dismissal of a claim or granting judgment in favor of a
prejudiced party; suppression of evidence; an adverse inference, referred to as the spoliation
inference; fines; and attorneys’ fees and costs.” Id. A spoliation inference is the mildest sanction
and “permits a jury to draw an adverse inference that the spoliated evidence might or would have
been unfavorable to the position of the offending party.” Veloso v. Western Bedding Supply Co.,
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Inc., 281 F.Supp.2d 743, 746 (D.N.J. 2003) (internal quotation marks omitted). To qualify for a
spoliation inference, the movant must show at least four things: “First, it is essential that the
evidence in question be within the party’s control. Second, it must appear that there has been
actual suppression or withholding of the evidence. Third, the evidence destroyed or withheld
was relevant to claims or defenses. And fourth, it was reasonably foreseeable that the evidence
would later be discoverable.” Mosaid Tech., Inc. v. Samsung Elec. Co., Ltd., 348 F.Supp.2d 332,
336 (D.N.J. 2004).
There is a split in this district’s jurisprudence as to the fault required to support the
second factor – the suppression or withholding of the evidence. Some courts have required that
spoliation to be the result of intentional conduct before giving an adverse inference instruction.
Veloso v. Western Bedding Supply Co., 281 F.Supp.2d, 743, 746-49 (D.N.J. 2003); Costello v.
City of Brigantine, No. 99-4072, 2001 WL 732402, at *26 (D.N.J. Jun. 28, 2001). Others have
held that the inference is justified where the party possessing the evidence destroyed it
negligently. Kounelis, 529 F. Supp. 2d at 518 (appropriate where either negligently or
intentionally destroyed, but balancing the degree of fault with the prejudice produced); Mosaid
Techn., Inc. v. Samsung, 348 F.Supp.2d 332, 337-38 (D.N.J. 2004); Scott v. IBM Corp., 196
F.R.D. 233, 249 (D.N.J. 2000) (finding that spoliations might be appropriate where there was
nothing to indicate documents were intentionally destroyed).
This Court concludes that the best rule is to use the amount of prejudice to the opposing
party to help to determine the degree of fault required: Where there is substantial prejudice to
the opposing party, negligence may be sufficient to warrant a spoliation inference. Where there
is minimal prejudice to the opposing party, intentional conduct is required.

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B.

Application

The Plaintiff complains to this Court about a series of discovery abuses that allegedly
require a spoliation inference. However, the Court concludes in its discretion that, as to some
conduct, the prejudice to Plaintiff of the alleged destruction of evidence is minimal and that it
was partially at fault. Thus, no spoliation inference is appropriate. In other instances, the Court
lacks sufficient information to make a determination but is troubled by aspects of Defendants’
failed disclosures. While the Court finds it is premature to enter a spoliation inference in these
instances, the Court is open to spoliation sanctions in the future and grants the motion to compel
in some instances. In still other instances, the Court determines that a spoliation instruction is
warranted.
1.

The Appearance of the Restaurant

This Court’s February 1, 2011 order gave Defendants twenty days to change the
infringing color of the restaurant from orange to another color. (Doc. No. 73). Thereafter,
Defendants’ counsel agreed that Defendants would leave the restaurant in its current condition
until February 4, 2011, so that Plaintiff could take video and pictures of the restaurant in its
infringing form. However, Plaintiff complains that the Defendants painted a few test patches of
new colors on the wall prior to the pictures. (Pl.’s Br. at 11).
There is little question that the change in the appearance of the restaurant fits the first,
third and fourth criterion for the spoliation instruction: the appearance was within the
Defendants’ control, it was ultimately changed before evidence could be taken, and Defendants
knew that Plaintiff wanted to take pictures of the restaurant. The only real question is about the
intentionality of the conduct and the prejudice to the Plaintiff.

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Plaintiff has suffered little prejudice from this action, and Defendants are minimally at
fault for the issue. See Kounelis, 529 F. Supp. 2d at 519. First, Plaintiff has suffered minimal if
any prejudice. Defendants’ counsel represented that the test patches of a gold color were 2 feet
by 1 foot, and were small compared to the size of the restaurant; Plaintiff has submitted no
evidence to contradict this. As such, the jury will not have difficulty imagining the entire
restaurant was orange rather than orange with two small test patches of gold on either the video
or the pictures taken on the day of inspection. This is particularly true in light of Plaintiff’s prior
assertion before this Court that Mr. Jivani’s use of gold is so similar to orange that for certain
lightings and on certain computer screens, it will appear as orange. Further, Plaintiff is in
possession of pictures of the restaurant prior to the change, so the evidence is somewhat
cumulative. (Dolich Decl. at Ex. E).
Second, while Mr. Jivani was at fault for painting prior to the video and pictures, such
fault was minimal because the painting was undertaken to comply with this Court’s preliminary
injunction order. Such conduct was not intentional. Thus, the fault and prejudice do not weigh
in favor of a spoliation sanction and the Court will not order one.
After Plaintiff realized that Mr. Jivani had painted the test patches, Plaintiff requested the
security surveillance video taken prior to the repainting, which the Defendants agreed to provide.
Defendants claim that they were unable to save the video but cite no support for that statement.
(Defs.’ Br. at 11). As the Court acknowledged above, there is minimal prejudice to Plaintiff
because the video that Plaintiff could have taken during the inspection would have been
sufficient. However, the Court is not satisfied with Defendants’ explanation and finds it highly
suspect. Indeed, after having represented that they had the video, Defendants somewhat lamely
state that they were unable to save the video. (Id.). As such, the Court orders Defendants to

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provide it with a full, sworn explanation of what happened to the surveillance video from each
person involved in its preservation. If the Court is not satisfied with that explanation, it will
conclude that the noncompliance is intentional and grant a spoliation inference.
2.

Mr. Jivani’s Old Facebook Pages

Plaintiff asks for a spoliation sanction as a result of Mr. Jivani’s failure to preserve his
Facebook pages in their original state – in other words, Plaintiff wanted PDFs of these pages
prior to their being taken down. (Pl.’s Br. at 5-6). However, Plaintiff does not dispute that
Facebook took these pages down because of its own take-down request. (See Dolich Decl. at Ex.
B). To hold Defendants responsible for this subsection of pages would be unjust. 1
Plaintiff also requests that the Court create an inference of spoliation based upon Mr.
Jivani changing his profile picture on Facebook from a picture displaying the infringing trade
dress without preserving that evidence. Defendants, for their part, claim that Plaintiff is in
possession of all relevant posts prior to the change. Both parties agree that changing the user’s
Facebook profile picture changes the picture associated with each and every post that user has
made in the past.
There is little question that the evidence fulfills the third requirement, but the other
requirements are at issue.
Defendants argue that the Court should not impose a spoliation inference because the
website was public and Plaintiff could have printed the website itself. This seems to be directed
at the first requirement, that the discovery be in Defendants’ control. However, Courts in this
district have still found public websites to be within the control of parties who own them.
Arteria Property Pty Ltd. v. Universal Funding V.T.O., Inc., 2008 WL 4513696 at *5 (D.N.J.

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The fact that it was not legally improper for Plaintiff to serve this notice (as acknowledged in this Court’s prior
opinion), does not undermine the fact that it was the primary and but-for cause of the spoliation.
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2008). Further, this is an attempt to “pass the buck” to Plaintiff to print websites that
Defendants are obliged to produce. Given that Defendants have a discovery obligation to
produce them and that only Defendants knew when the website would be changed, it is more
appropriate for Defendants to have that burden. Thus, the Court concludes that the first factor,
Defendants’ control, is present.
The presence of remaining two factors is less than clear. As to the forseeability of the
discoverability of the evidence, the Court notes that the change of a profile picture on Facebook
is a common occurrence. Active users often change their profile pictures weekly. 2 Therefore, it
is hardly surprising that Mr. Jivani has changed his profile picture during the pendency of this
litigation. Further, while Mr. Jivani was on notice that he had to preserve evidence, it would not
have been immediately clear that changing his profile picture would undermine discoverable
evidence. As such, the Court determines that this spoliation was unintentional; however, it
nonetheless concludes that the loss of this evidence is somewhat prejudicial to Plaintiff. See
Mosaid Tech., Inc. v. Samsung Elec. Co., Ltd., 348 F.Supp.2d at 336.
Given these considerations of fault, the Court determines that a less imposing alternative
is the best solution. Mr. Jivani must to coordinate with Plaintiff’s counsel to change the picture
back to the allegedly infringing picture 3 for a brief time so that Plaintiff may print whatever posts
it thinks are relevant – such action shall not be considered an additional act of infringement. The
Court however, determines that it is incumbent on Plaintiff to, during the appointed time, print

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Further, the Court notes that it may even be somewhat misleading to have printouts of Defendant’s posts with the
infringing picture, as if they always appeared that way. Indeed, it is likely that many posts existed for a substantial
portion of their lifetime without the allegedly infringing photograph. This is an issue that can be resolved in the
proper questioning of witnesses.
3
These photographs have not been destroyed, they been attached in several PDFs to this Court. It would be a simple
process to recover the photograph from those PDFs. Then, Plaintiff may print the posts it thinks are relevant to the
case.
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such posts as it thinks are necessary to make its case. Thereafter, Mr. Jivani must immediately
change his profile picture back to his noninfringing picture.

3.

Documents from Defendants’ Website

Plaintiff complains that it does not have a copy of the Defendants’ website showing what
the restaurant looked like prior to its repainting. Defendants respond that Plaintiff is in
possession of pictures showing the restaurant prior to repainting, which are sufficient for Plaintiff
to make its case. Again, the first, third, and fourth elements of the test are met. The question
revolves around the second element, whether such evidence was destroyed intentionally or
negligently, and what prejudice accrued to Plaintiff as a result.
Essentially, this is Plaintiff’s complaint about Defendants’ repainting prior to the
inspection again. As discussed, Plaintiff had the opportunity to take pictures and video of the
restaurant with a minor change. The Court does not know whether Plaintiff took advantage of
that opportunity but, as discussed, the minor change in appearance was not very prejudicial to
Plaintiff (particularly in light of the fact that Plaintiff has maintained that the gold color of the
test patches is similar to the original orange). Consequently, Plaintiff suffered minimal
prejudice.
However, the Court concludes that it is implausible that Mr. Jivani has no other electronic
copies of these pictures on his hard drive or in emails to his web developer, etc. As such, Mr.
Jivani is directed to search his home computer and any other computers he frequently uses and
disclose any pictures he has of the restaurant prior to its repainting. The Court directs Defense
counsel to remind Mr. Jivani of the consequences of destroying evidence before a tribunal.

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The Court also determines that, without the printout of the website, the evidence will be
insufficient to show that the website itself embodied pictures of the infringing restaurant and
substantial prejudice has accrued to Plaintiff’s ability to show that website itself infringed its
trade dress. As such, on this limited issue, the Court will grant a spoliation instruction unless
Defendants produce an image of the portion of the website that included the photographs within
one week of the order accompanying this opinion.
4.

Annual Report

Plaintiff claims that a spoliation inference should result from Defendants’ failure to
provide its 2010 annual report. Plaintiff requested the report to confirm Defendants’
representation that Rasik Jivani was no longer a shareholder of the corporation because he had
transferred the stock to Niraj Jivani. Defendants claimed that they were unable to produce the
report because it was no longer in their possession, despite the fact that they filed it during the
pendency of this litigation. (See Doc. No. 59, Ex. A, p. 1). Defendants did provide documents
related to the transfer of stock and stock certificates and corporate bylaws. (Defs.’ Br. at 12).
It does appear that Defendants were at the very least grossly negligent in failing to keep a
copy of a report that they agreed to provide to opposing counsel and the Court. Mosaid Tech.,
348 F.Supp.2d at 336 ; (See Doc. No. 57-1, ¶3). However, apparently this is a public document
available from the New Jersey Secretary of State. As a result, the Court cannot see any prejudice
that accrues from the failure to produce it – it is still available to both parties.
Indeed, the Court observes that it would have been easier for Plaintiff to request the filing
than to draft this portion of the motion. The Court further observes that it would have been
easier for Defendants to request the filing than to respond to this portion of the motion. Given
the lack of prejudice to Plaintiff, the Court finds that a spoliation sanction is inappropriate,

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despite Defendants’ fault in not preserving their copy of the report. See Kounelis, 529 F. Supp.
2d at 519.
However, counsel for Defendants is directed to request the report from the Secretary of
State and provide it to Plaintiff if it has not already so provided.
5.

Emails Between Mr. Jivani and the Web Developer

According to Mr. Jivani’s testimony, in October of 2011, Mr. Jivani hired a web
developer for his website. Mr. Jivani, in failing to comply with this Court’s preliminary
injunction order, alleged that he was unable to contact the developer to put the disclaimer on the
website and change the color. (4/4/11 tr. at 12-13). Plaintiff requested the emails between Mr.
Jivani and his web developer to confirm that he did indeed hire the developer as of October.
(Pl’s. Br. at 14). Plaintiff asserts that Defendants never produced the emails. Defendants claim
that all of the emails in their possession were produced and that all other communication took
place in person or by telephone.
The emails produced consist of one exchange, where, on February 8, 2011, Mr. Jivani’s
web developer sent him a copy of the image of his home page prior to adding the disclaimer:
Hi Niraj,
As per your phone request, Please see your website’s home page’s html file, in
the attachment. (Before adding the disclaimer part in the ‘Home Page’).
Best Regards,
Dr. Hema, Phd.
Nadiyam Technologies, Inc.
(Dolich Decl. at Ex. G) (emphasis added). Mr. Jivani did not reply to the substance of this
email, but replied on a related topic on March 16, 2011 (and immediately forwarded the reply
email to counsel):

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Hema I have called you on March 3rd and 4th to change the colors[.] I am on a
court order [as] I have told you before . . . you MUST change the color[.]
[T]his is horrible service being a few weeks that have gone by and no action
has been taken to change the colors!
(Id.) (ellipsis in original, emphasis added).
There is no doubt that Dr. Hema Latha’s email and Niraj Jivani’s email reflect that
telephone conversations had taken place between the two of them. As such, if the emails have
not been altered or somehow fabricated, it is clear that some communication took place by
telephone. Therefore, there may be no emails to be had.
However, there may be emails that were not produced or deleted. It seems suspicious
that a person with as active an online persona as Mr. Jivani only ever sent one email to his web
developer, an email happens to cast him in a positive light. Indeed, the Court wonders how Dr.
Latha came into possession of the photographs that were allegedly posted on the website if there
were no emails or other electronic communication between the two. 4 Further, there are relatively
easy ways to confirm these questions that do not require a spoliation sanction at this juncture.
In order to confirm whether Mr. Jivani sent other emails, the Court directs Defendants as
follows:
(1) Mr. Jivani shall allow his counsel to conduct a search of each of his email
accounts, particularly “[e-mail]” for emails from his
web developer; defense counsel shall conduct such a search and turn over any
emails procured; 5
(2) Mr. Jivani will request, via a signed request communicated through
counsel, that Dr. Hema Latha forward to defense counsel directly, any emails
that Mr. Jivani and Dr. Latha have exchanged, assuming he has not deleted
them;

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It would have been possible to transfer such things in person. It is also possible that the pictures were on the
website prior to Dr. Latha starting his work with the website. However, both of these possibilities seem less likely
than an email.
5
See Local Civil Rule 26.1(d)(1). The Court also notes that “archive” is the primary email management function on
“Gmail.” As such, it is unusual though not unheard of, for users to actually delete emails.
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(3) Mr. Jivani shall have no contact, except through counsel, with Dr. Latha
until such time as Dr. Latha has responded to the request for emails;
(4) Mr. Jivani, with the assistance of counsel, is to request phone records for
each phone on which he made these calls for the months of October, 2010, and
February and March of 2011 to confirm Mr. Jivani’s alleged calls to Dr. Latha,
to be delivered, if possible, directly to his counsel; such records shall be
produced to the Court with appropriate redactions of calls not to Dr. Latha.
Counsel for the Defendants shall report every week to Judge Bongiovanni by a brief letter
submission on the progress of these investigations and file, as an attachment, any resulting
emails or phone records, appropriately redacted or under seal. Counsel may choose the day that
he will consistently place such a letter on the docket. If no emails are recovered and Mr. Jivani
is unable to produce records of phone calls or text messages to Dr. Latha (or alleges that such
phone calls were made on the phones of any third parties or pay phones), the Court will consider
sanctions against him. As of now, the existence of such emails is too hypothetical to impose
sanctions.
7.

Defendants’ New Facebook Page

Plaintiff argues that Defendants made a new Facebook page and did not disclose its
existence in a discovery response. The Court agrees that Defendants should have disclosed its
existence, but because Plaintiff has found the page independently and Defendants created the
page in order to comply with this Court’s preliminary injunction, sanctions are not appropriate.
See Kounelis, 529 F. Supp. 2d at 519 (prejudice to discovering party considered when imposing
sanctions).

8.

Financial Documents

Plaintiff requested that Defendants produce restaurant sales reports as well as other
financial data. Plaintiff does not complain about the production of many of these items.
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However, Plaintiff does complain that it has not received the point of sale reports, hand logs for
cash transactions, that the corporation’s tax returns were unsigned, the corporation’s bank
account statements redacted several ATM transactions (which may be relevant for piercing
analysis), and that Defendants did not produce a copy of their insurance policy.
Defendants respond that the proprietary point of sale software has created problems for
such production, that counsel is investigating the redaction to the bank account statements, and
that they did produce the copy of the insurance policy. Defendants make no representations
about the hand logs or tax returns. Nor do Defendants argue that the requests are in any way
overbroad.
The Court finds that these are run-of-the-mill discovery issues, on which the parties
should confer to resolve. The Court does not believe a sanction or order compelling production
is appropriate at this juncture. There has yet to be a litigation in which every document was
produced in a timely fashion. The Court also sees no reason why Defendants must produce
electronic records of their bank accounts to Plaintiff or need bear the cost of putting the data into
a spreadsheet. Defendants’ counsel shall address each of these discovery issues in his weekly
report until they are resolved.
9.

Deposition of Niraj Jivani

While both parties agree that Plaintiff will have another opportunity to depose Niraj
Jivani, Plaintiff argues that it should be compensated for the costs of the additional deposition.
Plaintiff suggests that this is justified because Defendants were late in the production of several
items, including their insurance policy, prior to Mr. Jivani’s deposition. The Court disagrees.
As suggested by Defense counsel, the need for a supplemental deposition was also
necessitated by Plaintiff’s insistence on taking Mr. Jivani’s deposition only a few weeks after

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new counsel arrived on the case, without the opportunity for that counsel to come up to speed
with the discovery requested. Further, it appears that Plaintiff has four more hours of questions,
not all of which can be related to the insurance policy. As such, Plaintiff would have had to
schedule an additional day of deposition anyway. Thus, the Court awards no fees for the
additional deposition.
10.

Counsel Are Directed to Conduct Themselves with the Collegiality and
Good Faith that is Befitting of New Jersey Attorneys

The Court reminds counsel that attorneys in this jurisdiction are expected to conduct
themselves with professionalism, to creatively find solutions to common problems, and to
cooperate with each other. The email and other correspondence that has appeared before the
Court do not reflect these high standards. Emails accusing opposing counsel of ethical
violations, resistance to simple requests, attempts to pass responsibility to the other party for
simple discovery requests, and inflexibility are reflected in many recent communications in this
case. (See, e.g., Dolich Ex. I; Doc. No. 114; Doc. No. 117; Doc No. 108-2; Doc. No. 118; Doc.
129 Ex. 2). The Court also reminds the parties that their attempts to pass the burden of discovery
to each other often result in more work in emails than the work it would take to obtain the
document themselves.
The Court understands that there is animosity between the parties. The testimony at the
preliminary injunction hearing was enough to make that abundantly clear. However, despite the
animosity between their clients, attorneys before this Court are expected to confer in good faith
prior to bringing issues before the Court.

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III. CONCLUSION
For the foregoing reasons, the Court grants in part and denies in part the request for
spoliation sanctions and grants certain requests for the production of documents. The Court files
an appropriate order concurrent with this opinion.

Dated: August 3, 2011
/s/ Garrett E. Brown, Jr.
GARRETT E. BROWN, JR., U.S.D.J.

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