Doug's Word Clocks.com Pty Ltd v. Princess International, Inc. et al
OPINION AND ORDER re: 45 MOTION for Sanctions Against Defendants Princess International, Inc., Jospeh Friedman, Camelot SI, LLC, and Hammacher, Schlemmer & Co., Inc., filed by Doug's Word Clocks.com Pty Ltd. In light of the for egoing, Doug's Word's motion for sanctions is GRANTED. Specifically, exercising its broad discretion to craft appropriate sanctions, the Court strikes the Answers of both Princess International and Friedman and deems the following facts t o be established: (1) that all clocks sold by Princess International to G&G were sold on Amazon for $85.67; (2) that the unaccounted-for $11,569.50 payment by Princess International to its manufacturer was payment for 615 clocks that wer e sold by Princess International for $85.67 each; and (3) that all word clocks produced or sold by all four Defendants were model # 1 clocks. Additionally, Defendants shall reimburse Doug's Word for its "reasonable expenses, includin g attorney's fees," caused by their failures to comply with the Court's Orders and their discovery obligations. Counsel shall confer in an effort to reach agreement on what constitutes "reasonable expenses" caused by Defend ants' failures. Barring agreement, Doug's Word shall submit a fee application, supported by contemporaneous billing records, no later than thirty days from this Opinion and Order; Defendants shall file any opposition within two weeks of any application. Absent leave of Court, Doug's Word may not file a reply. The suspension of litigation pending resolution of this motion (see Docket No. 41) is hereby lifted. Given that Defendants Princess International Friedman have new coun sel, the Court hereby ORDERS the parties to appear for a conference on October 4, 2017, at 4:15 p.m., in Courtroom 1105 of the Thurgood Marshall Courthouse, 40 Centre Street, New York, New York. By Thursday the week prior to the conference, the pa rties shall file on ECF a joint letter, not to exceed three (3) pages, regarding the status of the case and any matters that should be discussed at the conference. The letter should include any information that the parties believe may assist the C ourt in advancing the case to settlement or trial. The Clerk of Court is directed to terminate Docket No. 45. (Status Conference set for 10/4/2017 at 04:15 PM in Courtroom 1105, 40 Centre Street, New York, NY 10007 before Judge Jesse M. Furman.) (Signed by Judge Jesse M. Furman on 9/14/2017) (ras)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
DOUG’S WORD CLOCKS.COM PTY LTD.,
PRINCESS INTERNATIONAL, INC. et al,
OPINION AND ORDER
JESSE M. FURMAN, United States District Judge:
Plaintiff Doug’s Word Clocks.Com (“Doug’s Word”), a manufacturer of electronic
clocks that display the time in a word format, brings intellectual property claims against various
Defendants, including Princess International, Inc. (“Princess International”), Joseph Friedman,
Hammacher, Schlemmer & Co., Inc. (“Hammacher Schlemmer”), and Camelot Venture Group
LLC, (“Camelot”), relating to the manufacture and sale of allegedly infringing clocks. Doug’s
Word now moves, pursuant to Rule 37 of the Federal Rules of Civil Procedure, for sanctions
against those Defendants based on a series of alleged discovery violations. 1 For the reasons set
forth below, Doug’s Word’s motion is GRANTED.
The Case Management Plan and Scheduling Order in this action, entered on December 8,
2016, provided that Defendants would provide Doug’s Word with “sales and profits”
information by January 20, 2017. (Docket No. 21 (“Case Management Plan”) ¶ 12(a)).
Additionally, Doug’s Word served its first request for production of documents on December 9,
Doug’s Word’s motion appears to be limited to Princess International, Friedman,
Hammacher Schlemmer, and Camelot, and does not seek relief with respect to the other
Defendants. (Docket No. 45). References to “Defendants” throughout this Opinion are therefore
limited to the four Defendants at issue in the motion.
2016, and its first set of interrogatories on December 20, 2016. (Docket No. 46 (“Levenson
Decl.”) ¶¶ 12, 13). Princess International was the only Defendant to respond, but its responses
were far from comprehensive. (Id. ¶¶ 14, 15). For example, while Princess International
initially stated that a number of documents were “being produced,” the company did not actually
hand over any responsive documents, including sales agreements or invoices. (Id. ¶ 15).
Princess International’s responses to Doug’s Word’s interrogatories were similarly incomplete.
(Id. ¶ 18). Most notably, for example, Interrogatory No. 8(c) asked each Defendant for
information about the various clock models that it had sold. (Id.). Princess International’s
response was merely “See documents produced,” but it did not actually produce the information
or documents requested. (Id.). On top of that, Princess International’s interrogatory responses
— indeed, the interrogatory responses of each Defendant in the case — were not properly
verified under oath. See Fed. R. Civ. P. 33(b)(3). (Levenson Decl. ¶ 45).
After many futile communications — by both letter and telephone — from Doug’s
Word’s counsel detailing the insufficiencies in Defendants’ responses, Doug’s Word, on January
30, 2017, filed a letter motion to compel Defendants to respond to its discovery requests. (Id. ¶¶
15-17, 19-21; Docket No. 22 (“Pl.’s Motion to Compel”)). The Court scheduled a conference for
February 2, 2017, but, on the eve of the conference, the parties entered into a stipulation in which
Defendants agreed to provide supplemental interrogatory responses and sales and profits
information by February 12, 2017. (Docket Nos. 25, 27, 28). Following Defendants’ failure to
provide that information, not to mention two additional telephone calls and a letter from counsel,
Doug’s Word filed a second motion to compel on March 1, 2017. (Docket No. 29). The Court
scheduled a conference for the following day, at which Defendants’ counsel assured the Court
that “[Doug’s Word] has all the sales that Princess [International] made to its customers. He has
all that.” (Levenson Decl., Ex. 10 (“Mar. 2, 2017 Conf. Tr.”), at 4). The Court nevertheless
provided Defendants until March 10, 2017, to provide the missing discovery and warned
Defendants that they would face sanctions if they did not comply by that deadline. (See Mar. 2,
2017 Conf. Tr., at 13-14 (“Mr. Sutton, I hope you hear me loud and clear. If you don’t produce
everything that you need to produce by [March 10, 2017], there will be trouble to pay, by you, by
your clients, by both. I hope you hear me.”)). Shortly after the conference, Doug’s Word’s
counsel e-mailed defense counsel a detailed letter identifying Defendants’ outstanding discovery
obligations. (Levenson Decl., Ex. 11).
Remarkably, Defendants failed to respond to all of Doug’s Word’s outstanding discovery
requests by the March 10th deadline. Instead, Defendants served on Doug’s Word (but did not
file) a document akin to a summary judgment brief that, for the first time, acknowledged that
“Princess [International] is the exclusive distributor for the Clocks and sells them at Amazon and
Wal-Mart.” (Levenson Decl., Exhibit 12 (“Defs.’ Mar. 7, 2017 Ltr.”), at 21). The same day,
Princess International produced two responsive e-mails (concerning changes made to the clock’s
software code) that appeared to be incomplete as they contained “Re:” or “Fw:” in the subject
lines, indicating they were parts of longer chains that were not produced. (Id.). (Levenson Decl.,
Ex. 16 (“Redacted E-mails”), at 1-2). In response, Doug’s Word, once again, requested a
conference, this time to discuss the imposition of sanctions. (Docket No. 34). Shortly after that
request, Defendants Camelot, Hammacher Schlemmer, and Princess International provided
additional interrogatory responses, but, once again, Doug’s Word’s requests were not fully
addressed. For example, Princess International responded to Interrogatory No. 8(c) — which, as
noted above, requested information about clock models sold — by stating: “See response to
Number 7 above.” (Levenson Decl., Ex. 13 (“Princess International’s First Interrogatory
Resp.”), at 4). Princess International’s response to Interrogatory No. 7, however, was merely a
list of witnesses. (Id. at 3). Princess International also noted in its response that “Princess
[International] does not sell to Amazon” (id. at 4), a response that contradicted the company’s
earlier representations. (Defs.’ Mar. 7, 2017 Ltr. 21).
Following another letter from Doug’s Word’s counsel noting the inadequacy of
Defendants’ responses, the Court scheduled a conference for March 16, 2017. (Docket Nos. 34,
35). At the conference, the Court directed the parties to confer on the outstanding discovery
issues by March 21, 2017, and, if the discovery was not provided thereafter, gave Doug’s Word
until April 7, 2017, to file a formal motion for sanctions. (Levenson Decl., Ex. 18 (“Mar. 16,
2017 Conf. Tr.”), at 19-20). Once again, the Court warned Defendants in no uncertain terms that
sanctions would be imposed if they failed to cure their discovery deficiencies. (Id. at 19 (“And if
you can’t provide [sales information about clock models and prices], then we are not going to
average the prices. I’m going to make an assumption or make a finding that every single unit
was sold at the highest possible price, and I am going to make other inferences and grant other
inferences against you.”)). Thereafter, Defendants Hammacher Schlemmer and Camelot
produced their second set of interrogatory responses, and Princess International provided its third
set of responses. (Levenson Decl., Exs. 20-22). Once again, however, none of these responses
adequately addressed Doug’s Word’s request in Interrogatory No. 8(c); additionally, Princess
International denied selling to Amazon for the second time. (Id.). Princess International also
produced a report, Document 1100, titled “Sales Information By Princess International.”
(Levenson Decl., Ex. 23 (“Document 1100”). The report confirmed that Princess International
had failed to disclose hundreds of sales to previously unidentified customers since January 2017,
and noted that Princess International had sold a total of 6,626 clocks (6,339 clocks through midJanuary 2017 and an additional 287 after that date). (Id.).
Meanwhile, on March 23, 2017, Doug’s Word subpoenaed Amazon itself for documents
relating to Princess International’s clock sales. (Levenson Decl., Ex. 24). On March 28, 2017,
no doubt prodded by the subpoena, Princess International produced an additional twelve pages of
documents confirming that it had shipped 3,432 clocks to Amazon as sold to “Gifts & Gadgets
Online” (“G&G”), for a total of $130,416. (Levenson Decl., Ex. 25 (“Amazon Documents”)).
Notably, however, the Amazon subpoena returns, which Doug’s Word received only after filing
the instant motion, make clear that G&G sold an additional 1,135 clocks to Amazon that were
unreported by Princess International. (Docket No. 63 (“Amazon Returns”), at 1). 2
In addition to these unreported clock sales, Princess International and Joseph Friedman,
the company’s Chief Executive Officer, have made conflicting statements regarding the
ownership and status of G&G. For example, in their Answer, Defendants admitted that
Friedman is an individual “doing business as ‘Gifts & Gadgets Online.’” (Docket No. 18
(“Answer”) ¶ 9). Yet, in his declaration, Friedman tells a different story: “Gifts & Gadgets
Princess International attributes the discrepancy between sales reflected in the Amazon
Documents (3,432) and in the Amazon Returns (4,567) to four things: (1) sales of 300 clocks
after the March 2017 production of the Amazon Documents; (2) defective returns; (3) Amazon’s
double-counting returned clocks; and (4) Amazon’s inclusion of 600 model # 3 clocks. (Docket
No. 67 (“Princess’ May 25, 2017 Ltr.”), at 1-2). These explanations are unsatisfactory. First, to
the extent that there were additional sales after Princess International produced the Amazon
Documents, the company had an obligation to supplement its earlier production. See, e.g., In re
Sept. 11th Liab. Ins. Coverage Cases, 243 F.R.D. 114, 124 (S.D.N.Y. 2007) (“The duty to
disclose that arises under Rule 26 does not terminate after the first responsive answer or
production, but is a continuing obligation.”). Second, Princess International provides no proof
— from Amazon or otherwise — for its assertion that Amazon’s numbers are inflated due to
defective returns and the double-counting of returned clocks. Finally, the Complaint expressly
alleges that model #3 clocks are also infringing and Doug’s Word specifically requested
discovery for sales of all versions of the clocks, including the model # 3 clock. (See Docket No.
1 ¶¶ 34, 60-63; Pl.’s Motion to Compel, Ex. 1, at 7).
Online is a company owned by Princess International, not Mr. Friedman personally…” (Docket
No. 49 (“Friedman Decl.”) ¶ 3) (emphasis added)). Tellingly, the sales documents produced by
Princess International confirm that the address provided for G&G (and for Princess International)
is Friedman’s residence. (Compare Amazon Documents at 1112, with Answer ¶ 9). And on top
of all that, it appears that there is no company registered as “Gifts & Gadgets” with the New
York State Department of State Division of Corporations. (Levenson Decl. ¶ 48).
Finally, on April 6, 2017, the day before Doug’s Word’s deadline to file the present
motion, Princess International produced bank records for purchase orders between the company
and its factory in China totaling $182,052.50. (Levenson Decl. ¶ 52). The initial purchase
orders that were produced by Princess International in January, however, totaled only $170,484.
(Levenson Decl. ¶ 51). In his Declaration, Friedman attributes the $11,569.50 difference to sales
for unrelated products — and claims to be providing the documents to support that contention —
but his numbers do not correspond to the missing $11,569.50. (See Friedman Decl. ¶ 5 (invoices
for unrelated products adding up to $15,612)). 3
Rule 37 of the Federal Rules of Civil Procedure permits a court to impose a variety of
sanctions for discovery-related abuses, and “affords the court ‘broad discretion in fashioning an
appropriate sanction.’” Linde v. Arab Bank, PLC, 269 F.R.D. 186, 195 (E.D.N.Y. 2010)
(quoting Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 101 (2d Cir. 2002)).
The range of sanctions available to a court includes — but is not limited to — “orders deeming
certain facts established; permitting an adverse inference instruction; striking pleadings;
prohibiting the ‘disobedient’ party from making specific claims or introducing certain matters
After the present motion was fully briefed, Defendants Princess and Friedman substituted
new counsel for the counsel that had represented them throughout discovery, Ezra Sutton.
(Docket Nos. 77-78). Mr. Sutton appears to still represent all other Defendants.
into evidence; dismissing a claim or the entire action or granting default judgment against the
disobedient party; or entering an order of contempt.” Id. Where, as here, a party alleges that the
opposing party failed to disclose documents it was required to produce, the “moving party bears
the burden of showing that its adversary failed timely to disclose information required by Rule
26.” In re Sept. 11th Liab. Ins. Coverage Cases, 243 F.R.D. at 125. To satisfy this burden, the
moving party must demonstrate: “(1) that the party having control over the evidence had an
obligation to timely produce it; (2) that the party that failed to timely produce the evidence had ‘a
culpable state of mind’; and (3) that the missing evidence is ‘relevant’ to the party’s claim or
defense such that a reasonable trier of fact could find it would support that claim or defense.” Id.
(quoting Residential Funding, 306 F.3d at 107).
Here, there is no dispute that the “missing evidence” is relevant and would support
Doug’s Word’s claims, as the number and type of the allegedly infringing clocks produced and
sold by Defendants is central to this case. (See, e.g., Docket No. 1 (“Compl.”) ¶¶ 33, 38, 52).
Additionally, Doug’s Word has made the other two showings required for sanctions. First,
Princess International and Friedman plainly had an obligation to produce the requested materials
under their control. The Court-ordered Case Management Plan and Scheduling Order explicitly
provided that Defendants would provide Doug’s Word with “sales and profits” information by
January 20, 2017. (Case Management Plan ¶ 12(a)). Moreover, in its first request for production
of documents on December 9, 2016, Doug’s Word made specific requests for such materials.
(Levenson Decl., Ex. 1). But despite those requests; multiple telephone calls and letters from
counsel; conferences with, and admonitions from, the Court; and several Court Orders, Princess
International and Friedman failed to produce highly relevant documents relating to the sale of
thousands of clocks from Princess International to G&G until March 28, 2017 — and even then
provided incomplete records. (See, e.g., Levenson Decl. ¶¶ 17, 20, 21, 28, 36, 38, 43; see also
Amazon Returns 1). Even more significantly, Princess International and Friedman have still not
produced documents concerning G&G’s sales on Amazon; the documentation they produced is
limited to sales from Princess International to G&G. (Id. ¶¶ 5, 43, 45).
In response, Defendants make two factual assertions: first, that “documents showing sales
on Amazon were produced early during discovery” and, second, that the sales were actually
conducted by G&G, not by Princess International or Friedman, and thus not subject to
production here. (Friedman Decl. ¶¶ 2-3; Levenson Decl., Ex. 28). These two assertions are, of
course, in tension (if not conflict) with one another. But more fundamentally and troublingly,
they are demonstrably false. The first flies in the face of Princess International’s repeated
denials that it conducted any business on Amazon, not to mention the proof obtained through the
Amazon Returns that Defendants still have not produced all Amazon sales information. (See
Levenson Decl. ¶¶ 32, 40). And Defendants’ efforts to distance themselves from G&G are
undermined by, among other things, (1) Princess International’s admission that it does, in fact,
sell to Amazon through G&G (Levenson Decl. ¶ 30; Amazon Documents 1112); (2) Princess
International’s admission that it has possession of records relating to G&G sales on Amazon
(Levenson Decl. ¶ 49); (3) Princess International’s admission that payments flow “from Amazon
to Princess [International]” for word clocks, among other products (id., Ex. 29, at 1); (4) Princess
International’s admission that it pays G&G’s tax bill (Docket No. 53 (“Defs.’ Sur-Reply”) ¶ 3);
(5) the fact that Princess International, G&G, and Friedman all share an address (Answer ¶ 9;
Amazon Documents 1112); and, last but certainly not least, (6) Defendants’ admission in their
Answer — to which they are bound, see, e.g., Gibbs ex rel. Gibbs v. Cigna Corp., 440 F.3d 571,
578 (2d Cir. 2006) — that Friedman does business as G&G. (Answer ¶ 9).
In any event, Defendants’ failings do not stop there. First and most glaring, Doug’s
Word represents, without dispute, that Friedman has failed to produce a single document or to
respond to a single interrogatory, whether in his individual capacity or through G&G. (Levenson
Decl. ¶ 5). Second, none of the four Defendants has adequately responded to Interrogatory No.
8(c), which relates to the number of clocks Defendants sold containing each software model. (Id.
¶ 7). Notably, Defendants do not argue otherwise, but insist that they produced an e-mail, titled
Document No. 1380, showing that only 432 model #1 clocks were produced. (Friedman Decl.
¶ 4). But that e-mail apparently refers to only one of seven shipments and, thus, is not proof with
respect to the total number of clocks involved. (See Mar. 16, 2017 Conf. Tr. 12 (explaining that
the first of seven shipments included model #1 clocks)). And in any event, production of the email does not satisfy Defendants’ obligation to respond to Doug’s Word’s interrogatories
through sworn and signed responses. See Fed. R. Civ. P. 33(b)(1), (3), (5). Defendants’ failure
to respond in the proper manner is particularly bewildering given that the Court explicitly
warned Defendants about the need to respond in accordance with the Rules. (See Mar. 16, 2017
Conf. Tr. 18 (“This is not a casual exercise of litigation. You don’t just get to say, ‘There are
only 432 clocks, I told you that, and that’s the end of the matter.’ There are formal ways of
providing information in the form of interrogatories, in the form of document requests, and in the
form of documents.”)).
Third, Doug’s Word has established that Princess International failed to produce
complete versions of e-mails with the company’s factory in China. (See Redacted E-mails 1-2).
Princess International asserts that it produced the two e-mails as they were received (see
Friedman Decl. ¶ 2), but, notably, the company has failed to produce electronic versions of the emails, as Doug’s Word requested. (Docket No. 50 (“Levenson Reply Decl.”) ¶ 10). And finally,
Princess International has failed to account for why its payments to its manufacturer for clocks
exceeded the manufacturer’s invoices by $11,569.50. (Compare (Levenson Decl. ¶ 52) (noting
that the bank records for purchase orders between Princess International and its factory in China
totaled $182,052.50), with (Levenson Decl. ¶ 51) (noting that the purchase orders that produced
by Princess International totaled only $170,484)). Princess International claims that the
$11,569.50 was for unrelated products identified as “cry baby toys” and “gift card mazes.”
(Friedman Decl. ¶ 5). But that claim is belied by the invoices it produced for those unrelated
products, which add up to $15,612 rather than $11,569.50. Accordingly, Princess International
has not actually accounted for its payment of $11,569.50 to its manufacturer.
The final requirement for sanctions — that the non-complying party had a culpable state
of mind — is also easily satisfied. At a minimum, all four Defendants were plainly negligent in
failing to produce responsive documents or to respond to interrogatories in a timely, thorough,
and proper manner. See Short v. Manhattan Apartments, Inc., 286 F.R.D. 248, 254 (S.D.N.Y.
2012) (finding that the defendant’s “repeated refusal to turn over relevant documents — in direct
violation of three separate Court orders — [was] enough to establish culpability.”); R.F.M.A.S.,
Inc. v. So, 271 F.R.D. 13, 23 (S.D.N.Y. 2010) (“In the Second Circuit, negligence is sufficient to
establish culpability.” (citing Residential Funding, 306 F.3d at 108)). But Princess International
and Friedman’s conduct went beyond that and can only be described as willful. Those two
Defendants not only flouted their discovery obligations despite multiple admonitions and Orders
from the Court, but — making matters worse — they also repeatedly made material
misrepresentations to Doug’s Word and the Court. For example, weeks before sending over new
documents reflecting Princess International’s sales on Amazon through G&G, Defendants’
counsel told the Court that “[Doug’s Word’s counsel] has all the sales that Princess
[International] made to its customers. He has all that.” (Mar. 2, 2017 Conf. Tr. 4; see also Mar.
16, 2017 Conf. Tr. 7 (“With regard to Princess [International] . . . I served [Doug’s Word’s
counsel] all of the sales documents.”)). Similarly, on April 21, 2017, Friedman inaccurately
claimed that “[a]ll sales of word clocks sold on Amazon have been provided.” (Friedman Decl.
¶ 2; but see Amazon Returns 1). And Princess International repeatedly claimed — until it was
forced to admit otherwise — that it did not sell clocks on Amazon. (Compare Princess
International’s First Interrogatory Resp. 4 (“Princess [International] does not sell to
Amazon.com.”), with Defs.’ Mar. 7, 2017 Ltr. 21 (“Princess [International] is the exclusive
distributor for the Clocks and sells them at Amazon and Wal-Mart.”)). Princess International’s
and Friedman’s “repeated failure to either produce relevant documents or a credible story
regarding their whereabouts — despite the admonitions of this Court and repeated requests from
the plaintiff — can only be interpreted as an intentional and willful act.” PSG Poker, LLC v.
DeRosa-Grund, No. 06 CIV. 1104 (DLC), 2008 WL 190055, at *12 (S.D.N.Y. Jan. 22, 2008).
Most egregiously perhaps, Princess International provided Doug’s Word with Document
1100, which reported that the company had sold 6,626 clocks, when the true total was at least
9,062 clocks. (See Document 1100; Levenson Decl. ¶¶ 41, 43; Levenson Decl., Ex. 30
(“Princess International’s Total Sales Spreadsheet”), at 3). Conspicuously, Defendants fail to
dispute, or even mention, Doug’s Word’s contention that the figures in Document 1100 were
false insofar as they did not account for the clocks reflected in the Amazon Documents. (Docket
No. 47 (“Pl.’s Mem.”) at 6 (“Princess [International] not only failed to produce these sales,
Princess [International] appears to have manufactured Document 1100. . . .”); Docket No. 51
(“Pl.’s Reply”) 6) (“Princess [International] does not dispute that the sales data provided . . . in
[D]ocument 1100 was false . . . .”)). And this was no insignificant omission: G&G appears to be
Princess International’s largest “customer,” accounting for over one third of the total clocks sold
in the company’s three-year existence. (See Levenson Decl. ¶ 43; see also Princess
International’s Total Sales Spreadsheet). It strains credulity to believe that Friedman and
Princess International mistakenly or inadvertently failed to account for all of the sales that were
made to (or through G&G). Accordingly, the Court finds that Friedman and Princess
International acted with willful intent in shirking their discovery obligations.
Thus, the Court concludes that sanctions are warranted. In determining what sanctions to
impose, the Court must consider “(1) the willfulness of the non-compliant party or the reason for
noncompliance; (2) the efficacy of lesser sanctions; (3) the duration of the period of
noncompliance[;] and (4) whether the non-compliant party had been warned of the consequences
of . . . noncompliance.” Agiwal v. Mid Island Mortg. Corp., 555 F.3d 298, 302-03 (2d Cir. 2009)
(internal quotation marks omitted). The Court must also consider the extent to which the
prevailing party has been prejudiced by the defaulting party’s noncompliance, see
Anthropologie, Inc. v. Forever 21, Inc., No. 07 Civ. 7873 (RJS) (MHD), 2009 WL 690126, at *3
(S.D.N.Y. Mar. 13, 2009), and must ensure that any sanction imposed is “just and commensurate
with the failure to comply,” Biosafe-One, Inc. v. Hawks, 639 F. Supp. 2d 358, 370 (S.D.N.Y.
2009). Extreme sanctions, such as striking a pleading or entering judgment against the offending
party, are “pungent, rarely used, and conclusive. A district judge should employ [them] only
when he is sure of the impotence of lesser sanctions.” Ocello v. White Marine, Inc., 347 F.
App’x 639, 641 (2d Cir. 2009) (internal quotation marks omitted).
Considering those factors here, the Court concludes that the answers of Princess
International and Friedman should be stricken. 4 First, as noted above, those two Defendants
That said, Friedman remains bound by his judicial admission in the Answer that he does
business as G&G. It would be a perverse result indeed if the sanctions imposed on Friedman
demonstrated a blatant and willful disregard for the discovery process and the Orders of the
Court, including by apparently manufacturing a report that purposefully omitted over 3,000 clock
sales made through Amazon. Second, any lesser sanction would be inadequate. From the outset
of discovery, both parties have refused to respond in any meaningful way to Doug’s Word’s
requests or to heed the Court’s admonitions and deadlines. Friedman, for his part, has not
produced a single document or answered a single interrogatory — despite multiple opportunities
and deadlines to do so. Third, the period of non-compliance spanned discovery and appears to
continue to this day, as Princess International and Friedman have yet to produce information or
documents regarding G&G’s sales on Amazon. See Agiwal, 469 F. App’x at 70 (affirming
dismissal of an action as a sanction for willful noncompliance with discovery orders for more
than three months). Fourth, Princess International and Friedman were put on notice by the Court
— on more than one occasion — that their refusal to respond to Doug’s Word’s requests would
expose them to sanctions. (See, e.g., Mar. 2, 2017 Conf. Tr. 13-14 (“Mr. Sutton, I hope you hear
me loud and clear. If you don’t produce everything that you need to produce by [March 10,
2017], there will be trouble to pay, by you, by your clients, by both. I hope you hear me.”); see
also Mar. 16, 2017 Conf. Tr. 18 (“And if you have not provided [the missing documents], I am
going to entertain a motion for sanctions from [Doug’s Word]. I think based on what I’ve heard,
it’s amply justified at this point.”). And finally, Doug’s Word has demonstrated that it has been
— and continues to be — prejudiced by Princess International’s and Friedman’s noncompliance. Among other things, without accurate sales information, Doug’s Word will be
unable to establish Defendants’ gross revenues from sales of the allegedly infringing clocks.
actually benefitted him.
By contrast, the Court concludes that such a harsh sanction is unwarranted with respect to
Hammacher Schlemmer and Camelot, whose sole alleged violation is their failure to adequately
respond to Interrogatory No. 8(c), which called for information regarding the model type of all
clocks produced or sold. Instead, the Court concludes that the appropriately tailored sanction
with respect to those two Defendants is to deem all word clocks sold model #1 clocks, as those
are indisputably the most infringing of the clocks at issue. A fortiori, that sanction applies also to
Princess International and Friedman, who also failed to adequately answer Interrogatory No.
8(c). In addition, the Court concludes that certain other facts should be deemed established with
respect to Princess International and Friedman — namely, that all clocks sold by Princess
International to G&G were sold on Amazon for at least $85.67 and that the unaccounted-for
$11,569.50 payment by Princess International to its manufacturer was payment for 615 clocks
that were sold by Princess International for $85.67 each. The former is appropriate because
Princess International and Friedman still have not produced G&G’s sales information, even
though Princess International admits that it receives payments from Amazon for clock sales.
(See Levenson Decl. ¶ 49). 5 The latter is necessary given Princess International’s failure (or
inability) to account for the missing $11,569.50 in merchandise. (See Levenson Decl. ¶ 6).
Finally, the four Defendants shall reimburse Doug’s Word for its reasonable expenses,
including attorney’s fees, caused by Defendants’ failures and violations. See Fed. R. Civ. P.
16(f)(1)-(2) (“On motion or on its own, the court may issue any just orders . . . if a party or its
attorney . . .fails to obey a scheduling or other pretrial order . . . [and] the court must order the
$85.67 is the average price for the clocks sold by G&G on Amazon. (Amazon Returns
2). Princess International argues that the Court should factor in discounted prices, Amazon’s
commission, and other costs before arriving at an average price. (Princess’ May 25, 2017 Ltr. 1).
But by withholding vital information regarding the relevant transactions for months — and by
continuing to withhold information regarding G&G’s transactions on Amazon — Princess
International and Friedman have forfeited their rights to introduce evidence on that score.
party, its attorney, or both to pay the reasonable expenses — including attorney’s fees —
incurred because of any noncompliance with this rule, . . .” (emphasis added)); Fed. R. Civ. P.
37(b)(2)(C) (“[T]he court must order the disobedient party, the attorney advising that party, or
both to pay the reasonable expenses, including attorney’s fees, caused by the failure [obey an
order to provide or permit discovery].” (emphasis added)). To be clear, Doug’s Word is not
entitled to reimbursement of “all costs and attorney’s fees incurred in connection with the
discovery process,” as it seems to suggest. (Pl.’s Mem. 13 (emphasis added)). After all, there
are several Defendants who are not alleged to have committed discovery violations, and Doug’s
Word would have incurred expenses in connection with discovery even in the absence of
Defendants’ violations. Instead, reimbursement is limited to those expenses “caused by”
Defendants’ failures, Fed. R. Civ. P. 37(b)(2)(C), including the expenses associated with Doug’s
Word’s letter motions, discovery-related conferences, and the present motion. Additionally, the
Court concludes that liability for the expenses should be apportioned among the offending
Defendants in proportion to their culpability. Accordingly, Princess International and Friedman
shall each be jointly and severally liable for reimbursement of all eligible expenses, while
Hammacher Schlemmer and Camelot shall each be jointly and severally liable for reimbursement
of five percent of all eligible expenses.
In light of the foregoing, Doug’s Word’s motion for sanctions is GRANTED.
Specifically, exercising its broad discretion to craft appropriate sanctions, the Court strikes the
Answers of both Princess International and Friedman and deems the following facts to be
established: (1) that all clocks sold by Princess International to G&G were sold on Amazon for
$85.67; (2) that the unaccounted-for $11,569.50 payment by Princess International to its
manufacturer was payment for 615 clocks that were sold by Princess International for $85.67
each; and (3) that all word clocks produced or sold by all four Defendants were model # 1
clocks. Additionally, Defendants shall reimburse Doug’s Word for its “reasonable expenses,
including attorney’s fees,” caused by their failures to comply with the Court’s Orders and their
discovery obligations. Counsel shall confer in an effort to reach agreement on what constitutes
“reasonable expenses” caused by Defendants’ failures. Barring agreement, Doug’s Word shall
submit a fee application, supported by contemporaneous billing records, no later than thirty
days from this Opinion and Order; Defendants shall file any opposition within two weeks of any
application. Absent leave of Court, Doug’s Word may not file a reply.
The suspension of litigation pending resolution of this motion (see Docket No. 41) is
hereby lifted. Given that Defendants Princess International Friedman have new counsel, the
Court hereby ORDERS the parties to appear for a conference on October 4, 2017, at 4:15 p.m.,
in Courtroom 1105 of the Thurgood Marshall Courthouse, 40 Centre Street, New York, New
York. By Thursday the week prior to the conference, the parties shall file on ECF a joint letter,
not to exceed three (3) pages, regarding the status of the case and any matters that should be
discussed at the confernce. The letter should include any information that the parties believe
may assist the Court in advancing the case to settlement or trial.
The Clerk of Court is directed to terminate Docket No. 45.
Dated: September 14, 2017
New York, New York
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