MPD Accessories B.V. v. Urban Outfitters, Inc. et al

Filing 112

MEMORANDUM AND ORDER: The plaintiff failed to establish that its motion to compel was substantially justified. The plaintiff is liable to the defendants for reasonable attorneys fees and expenses, pursuant to Rule 37(a)(5)(B) of the Federal Rules of Civil Procedure. It is ORDERED that: on or before July 30, 2013, the defendants file evidence, via affidavit or other means, of the reasonable attorneys fees and expenses they incurred in responding to the plaintiffs motion to compel; on or before Au gust 13, 2013, the plaintiff file any challenge to the reasonableness of the attorney's fees and expenses sought by the defendants; and on or before August 20, 2013, the defendants may file any reply. SO ORDERED. (Signed by Magistrate Judge Kevin Nathaniel Fox on 7/22/2013) (rsh)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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MPD ACCESSORIES, B.V.,
:
Plaintiff,
-againstURBAN OUTFITTERS, INC.,
GMA ACCESSORIES INC. d/b/a/ CAPELLI
NEW YORK, and ABC CORPS 1-5,

:
:
:

MEMORANDUM AND ORDER
12 Civ. 6501 (LTS) (KNF)

:

Defendants.
:
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KEVIN NATHANIEL FOX
UNITED STATES MAGISTRATE JUDGE
On May 24, 2013, the Court denied the plaintiff’s motion to compel discovery, made
pursuant to Rule 37 of the Federal Rules of Civil Procedure, and directed the plaintiff to address
the issue of whether any exception exists to awarding mandatory attorney’s fees to the
defendants, pursuant to Rule 37(a)(5)(B). Before the Court is the plaintiff’s memorandum of
law in compliance with the May 24, 2013 order, the defendants’ response to it and the plaintiff’s
reply.
Plaintiff’s Contentions
The plaintiff contends that its motion to compel discovery was substantially justified
because it was based upon a reasonable belief that the information and documents sought
existed. According to the plaintiff, communications between the defendants and among the
defendants and third parties related to the designs at issue in this action were requested “because
of their relevance to the question of whether the Defendants had knowledge as early as May
2012 of the Plaintiff’s claim of copyright infringement of the Designs.” The plaintiff contends
that the information sought in Interrogatory No. 1 was based on the testimony of George Altirs,

who “admitted during his deposition that GLG Investment Group, Inc. was a customer of GMA
Accessories.” Thus, “[s]ince GMA Accessories sold the Designs to Urban Outfitters, Urban
Outfitters UK Ltd. and GLG Investment Group, Inc., it is reasonable to believe that it had
contacts at each of those entities.” Moreover, the plaintiff asserts, understanding
communications between the defendants and among the defendants and third parties is important
in ascertaining who had knowledge of the plaintiff’s copyright infringement claim. “Although
perhaps not most eloquently explained or articulated,” the plaintiff’s motion had “a reasonable
basis in law and fact.”
Concerning Document Request No. 1, the plaintiff contends:
Plaintiff communicated with Urban Outfitters UK Ltd. regarding the Designs as early
as May 2012, before a majority of the sales of the Designs were made in the United
States by Defendants. See [Matthew J.] Weldon [Decl.], Exhibit A.1 These
communications were sent to Boyes Turnes LLP, counsel for Urban Outfitters UK
Ltd., and the letter provided by the Plaintiff to the Court referenced a communication

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Exhibit A to the declaration by the plaintiff’s counsel Matthew J. Weldon (“Weldon”),
submitted in support of the plaintiff’s motion to compel, consists of three pages, the first of
which appears to be a letter, dated May 29, 2012, from Margot Span, at “Koster Advocaten
N.V., on behalf of Suzan Houben-van Geldorp,” to Holly Strube, at Boyes Turner LLP, “Re:
MPD Accessories/Urban Outfitters.” The letter states at the first page:
Dear Madam, Sir,
Reference is made to your letter of 28 May 2012. The arguments raised in your
letter are no reason for my client to not further pursue this matter. The fact that your
client indicates that it has bought the Colour Block Stripe Scarf from its supplier in
good faith has no significance given the fact that your client, as a professional player
in the fashion industry has the obligation to not purchase and sell goods or designs
that are a clear infringement of my clients’ unregistered community design and
copyrights. Your client is liable for the damages sustained by my client because of
these evident infringements and my client is entitled to the undertakings as
mentioned in the cease and desist declaration by no later than 30 May 2012. In the
event that your company fails to comply with this request my client instructed me
to immediately commence legal proceedings against your client. MPD reserves all
rights and in particular the right to file more drastic claims than may be deduced
from the contents of the cease and desist declaration.
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from that law firm for Urban Outfitters UK Ltd. dated May 28, 2012. Id. The May
28 letter, and any other communication related to same, was not produced. The
reference to the May 28, 2012 letter is uncontested evidence that such
communication exists, but it was not produced.

The plaintiff contends that the defendants did not produce any communication: (a) to the
plaintiff; (b) “to or from Urban Outfitters”; and (c) “to or from GMA Accessories.” It maintains
that “George Altirs admitted e-mail communication with Hangzhou Tongshi Silk Co., Ltd.
wouldn’t come directly to him, but that he only reviewed certain emails,” and he “implied that
there was e-mail communication with buyers from Urban Outfitters UK, Ltd., either together
with US buyers or separately.” The plaintiff asserts it is implausible that “zero communication
exists,” and it is “not even clear to Plaintiff that the Defendants have taken that position.”
According to the plaintiff, it was unable to identify adequately the documents it was
seeking in its motion to compel because “it has been blocked from the information required to
make a better description of such documents.” For example, the defendants blocked the
questioning of George Altirs about e-mail communication the plaintiff requested, despite their
awareness of his communications with a “Chinese factory and Urban Outfitters.” Moreover, the
plaintiff contends, “as shown by Weldon [Decl.], Exhibit E,2 Plaintiff was not permitted to query
Frank Conforti, Urban Outfitters’ witness who submitted an affidavit regarding Urban Outfitter’s
net income calculations, about Urban Outfitters’ communications” because “it was contemplated

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Exhibit E, to the Weldon declaration, consists of two e-mail messages. Only the e-mail
message from Conor Donnelly to Weldon, dated “March 15, 2013 9:28 AM,” mentions Frank
Conforti; it does so in the following paragraph:
I am still waiting for you to advise as commemorated below and discussed on March
13, whether you are interested in witnesses to cover any other topics other than the
subjects contained in the Urban Outfitters, Inc. Declaration that was executed by its
CFO Mr. Conforti. I can then propose dates for all of the Urban Outfitters
depositions.
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by Plaintiff and Urban Outfitters that another witness would be deposed with regard to any other
topics.” However, “[t]his never happened, and Plaintiff was blocked from obtaining information
needed to identify more particularly the communications to or from Urban Outfitters.”
The plaintiff also contends that additional circumstances would make an award of
sanctions unjust. For example, it asserts that despite the parties’ “meet and confer,” the
defendants “unilaterally operated under the assumption that Plaintiff was only seeking a very
limited scope of e-mails, which was not the case.” When the defendants represented in their
letter to the Court that “no emails existed between GMA and its factory in China that enclosed
the purchase orders,” they failed to “address the deficiency that Plaintiff identified to Defendants
in two separate letters and during two separate conferences. Defendants’ statement only address
[sic] one narrow category of e-mails that GMA may have, those attaching invoices, but no other
categories; and the statement fails to address the production of Urban Outfitters entirely.” The
plaintiff contends that, inasmuch as it had a reasonable belief that communications exist to or
from the defendants and that the defendants “have not denied that such communications are in
[their] control,” awarding attorney’s fees to the defendants would be unjust.
Defendants’ Contentions
The defendants contend that the plaintiff attempts to reargue its motion to compel and its
memorandum of law contains “additional arguments not contained anywhere in Plaintiff’s
original papers.” Moreover, despite quoting from it, the plaintiff provides no transcript from
George Altris’ deposition, using instead footnotes and “snippets of [his] testimony that Plaintiff
believes supports the arguments that were contained in its April 17 Motion.” According to the
defendants, the plaintiff’s counsel did not include the transcript from George Altirs’ testimony
because, “if he included the testimony that the designs were purchased in person, he would not
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be able to argue that the purchases were made by email.” The defendants contend that the
plaintiff failed to seek, through its motion to compel, the production of emails and it failed to
discuss with the defendants the information it claims it still needs. Moreover, the only good
faith conference, held on April 8, 2013, “was focused on whether emails existed between GMA
Accessories, Inc. and its factory in China.”
The defendants maintain that the plaintiff’s arguments purporting to show substantial
justification “are nothing more than what appears to be a disagreement with the findings” in the
May 24, 2013 order. According to the defendants, “[t]he fact remains that Plaintiff did not
discuss with counsel the murky discovery requests that are eluded to in its April 17 Motion” and
it disregarded federal and local rules.
Plaintiff’s Reply
The plaintiff contends that the defendants “wrongly assert in their opposition that
Plaintiff’s Motion to Compel was denied because Plaintiff failed to ‘meet and confer’ as required
by the relevant procedural rules.” According to the plaintiff, the defendants’ failure “to produce
one single communication is not an isolated incident in this litigation,” which is an issue “worth
considering in the evaluation of whether an award of attorneys’ fees would be unjust here.”
Legal Standard
If a motion to compel discovery is denied, “the court must, after giving an opportunity to
be heard, require the movant, the attorney filing the motion, or both to pay the party or deponent
who opposed the motion its reasonable expenses incurred in opposing the motion, including
attorney’s fees. But the court must not order this payment if the motion was substantially
justified or other circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(a)(5)(B).
The Supreme Court has interpreted the phrase “substantially justified” to mean “‘justified in
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substance or in the main’—that is, justified to a degree that could satisfy a reasonable person,”
which is “more than merely undeserving of sanctions for frivolousness.” Pierce v. Underwood,
487 U.S. 552, 565-66, 108 S. Ct. 2541, 2550 (1988).
Application of Legal Standard
The plaintiff’s memorandum of law contains arguments not contained in its motion to
compel, as well as footnotes and “snippets” of testimony the plaintiff believes supports its
arguments. The plaintiff’s attempt, in its opposition to the imposition of mandatory attorney’s
fees, to justify bringing its motion to compel by presenting new arguments and contentions in
support of those arguments is meritless, because the reasons for bringing the motion to compel
must be able to be ascertained from the motion to compel, not from additional arguments and
contentions that could have been, but were not made through that motion. Even assuming it is
proper to consider the plaintiff’s new arguments and contentions in ascertaining whether its
motion to compel was substantially justified to a degree that could satisfy a reasonable person,
they do not aid the Court in determining whether the motion to compel was substantially
justified. For example, the plaintiff argues that Exhibit E attached to Weldon’s declaration
shows that the plaintiff “was not permitted to query Frank Conforti . . . about Urban Outfitters’
communications.” Although none of the present contentions related to Frank Conforti was
raised in the plaintiff’s motion to compel, this argument is erroneous because nothing in Exhibit
E supports it. Thus, this new argument does not aid the Court in determining whether the
plaintiff’s motion to compel was substantially justified. Similarly, the plaintiff’s contention that
Exhibit A to Weldon’s declaration containing “[t]he reference to the May 28, 2012 letter”
between the plaintiff and the purported counsel to Urban Outfitters UK Ltd., shows that “such
communication exists, but it was not produced,” was not made in the plaintiff’s motion to
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compel. This failure is highlighted in the Court’s May 24, 2013 finding that the plaintiff failed
to comply with Local Civil Rule 37.1 because it did not set forth the grounds upon which it was
entitled to prevail on its motion. Although the plaintiff’s motion to compel was accompanied by
Weldon’s declaration to which Exhibits A through O are attached, none of the exhibits is
referenced in the motion and no argument(s) was made based on any of the exhibits.
Accordingly, contending now what could have been contended in the motion to compel does not
show that the motion was substantially justified. It would be unfair to the defendants to permit
the plaintiff to make new arguments and contentions now in support of its motion to compel,
which was denied. Showing that the motion to compel was substantially justified cannot be
satisfied by making new arguments in its support.
The plaintiff contends that its motion to compel was “perhaps not most eloquently
explained or articulated,” because the motion’s “lack of specificity as to what communications
Plaintiff was seeking . . . was due to the Defendants’ blocking the Plaintiff from receiving the
information it needed in order to be more specific.” However, the plaintiff does not explain why
its motion to compel did not contain arguments and contentions raised here—for the first time—
or how the new arguments and contentions support its position that the motion to compel was
substantially justified, given the plaintiff’s position that “[z]ero communication had been
produced by Defendants.” Thus, the arguments and contentions being made now by the plaintiff
were also available to the plaintiff when the motion to compel was made; making them now, for
the first time, does not show that the motion to compel was substantially justified.
Moreover, the plaintiff’s contention that special circumstances militate against awarding
attorney’s fees to the defendants because the plaintiff “followed all the rules related to the
dispute and exhausted all of the procedures absent a Motion to Compel to resolve the dispute” is
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meritless. As explained in the Court’s May 24, 2013 denial of the motion to compel, the
plaintiff failed to comply with Local Civil Rule 37.1 of this court because it did not set forth the
grounds upon which it was entitled to prevail as to each request or response. It appears that is
what the plaintiff is attempting to do here by raising new arguments and contentions that were
not raised in its motion to compel. The plaintiff’s purported challenge to the Court’s finding that
it failed to follow the local rule is not contemplated as a special circumstance warranting the
finding that the motion to compel was substantially justified. Showing that special
circumstances make an award of expenses unjust cannot be satisfied by rearguing the motion to
compel with new arguments and contentions; it would create a result that is unfair to the
defendants and not contemplated by Rule 37(a)(5)(B) of the Federal Rules of Civil Procedure.
The plaintiff’s memorandum of law appears to be nothing more than an attempt to
reargue its motion to compel, but it falls short of convincing the Court that the motion was
substantially justified to a degree that could satisfy a reasonable person. Therefore, the plaintiff
failed to sustain its burden of showing that an exception to awarding mandatory attorney’s fees
to the defendants exists.
Conclusion
The plaintiff failed to establish that its motion to compel was substantially justified. The
plaintiff is liable to the defendants for reasonable attorney’s fees and expenses, pursuant to Rule
37(a)(5)(B) of the Federal Rules of Civil Procedure. It is ORDERED that:
(A)

on or before July 30, 2013, the defendants file evidence, via affidavit or other
means, of the reasonable attorney’s fees and expenses they incurred in responding
to the plaintiff’s motion to compel;

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(B)

on or before August 13,2013, the plaintiff file any challenge to the
reasonableness of the attorney's fees and expenses sought by the defendants; and

(C)

on or before August 20,2013, the defendants may file any reply.
SO ORDERED:

Dated: New York, New York
July 22,2013

1~~MdW:

KEVIN NATHANIEL FOX
UNITED STATES MAGISTRATE JUDGE

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