Cornaby's v. Carnet et al
MEMORANDUM DECISION denying 103 Motion for Summary Judgment. Carnets request to depose Janet Stocks and David Cornaby regarding the trademark transfer documents attached to their respective affidavits in response to the motion for summary judgment is GRANTED. Janet and David shall make themselves available to be deposed on a mutually agreed upon date and location by May 5, 2017. The depositions shall be limited to questions regarding the documents attached to their affidavits. If Carnet elects to take the depositions, and then decides to move to dismiss based upon statements made in the depositions, it shall do so by May 19, 2017.Carnets request for discovery sanctions in the form of a fee award is DENIED. Signed by Judge Jill N. Parrish on 4/21/17. (jlw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
MEMORADUM DECISION AND ORDER
DENYING MOTION TO DISMISS AND
GRANTING FURTHER DISCOVERY
Case No. 2:14-cv-00462-JNP
CARNET, LLC and CARMA
District Judge Jill N. Parrish
Before the court is Carnet, LLC’s motion for summary judgment regarding Cornaby’s
LLC’s lack of standing. [Docket 103]. But courts may not adjudicate claims—summarily or
otherwise—based upon a lack of standing; they may only dismiss the claims of a party that lacks
standing. Common Cause of Penn. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009) (“Absent
Article III standing, a federal court does not have subject matter jurisdiction to address a
plaintiff's claims, and they must be dismissed.” (citation omitted)). The court therefore treats
Carnet’s motion as a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1)
of the Federal Rules of Civil Procedure. See Lance v. Coffman, 549 U.S. 437, 439 (2007) (per
curiam) (“Article III of the Constitution limits the jurisdiction of federal courts to ‘Cases’ and
‘Controversies.’ One component of the case-or-controversy requirement is standing . . . .”);
Colorado Envtl. Coal. v. Wenker, 353 F.3d 1221, 1227 (10th Cir. 2004) (treating a dismissal for
lack of standing as a Rule 12(b)(1) dismissal).
The court DENIES Carnet’s motion to dismiss. The court, however, GRANTS Carnet’s
request to reopen discovery so that it can depose David Cornaby and Janet Stocks regarding the
At the hearing for the many assorted motions pending before the court, Carnet argued for
the first time that this court does not have standing to adjudicate Cornaby’s causes of action
because it acquired the Ultra Gel trademark only after it filed this lawsuit. See Gaia Techs. Inc. v.
Recycled Prod. Corp., 175 F.3d 365, 369 (5th Cir. 1999) (“[I]n order to have standing under the
federal infringement statutes, [a plaintiff] must prove that it owned the relevant . . . trademark
when it filed suit . . . .”); Niemi v. Lasshofer, 728 F.3d 1252, 1261 (10th Cir. 2013) (“[S]tanding
to pursue a claim must normally exist by the time a lawsuit is filed.”). Carnet subsequently filed
a motion requesting dismissal of Cornaby’s claims for lack of standing. [Docket 103].
Cornaby’s responded to the motion by providing an affidavit signed by Janet and an
affidavit signed by David. Attached to both affidavits, are copies of a purchase agreement and a
trademark assignment agreement that clearly show that Janet assigned whatever rights she had in
the Ultra Gel trademark to Cornaby’s well before this suit was initiated. [Docket 110-4, 110-8].
Carnet’s reply did not challenge the authenticity of the trademark transfer documents
produced by Cornaby’s. Instead, Carnet argued that this court should ignore these documents for
two reasons: (1) the documents were not produced before the discovery cutoff and (2) David’s
affidavit and attached documents should be disregarded because the affidavit contradicts his
deposition testimony. In the alternative, Carnet asked for sanctions and an opportunity to depose
David and Janet at Cornaby’s expense. [Docket 116].
CARNET’S MOTION TO DISMISS FOR LACK OF STANDING
Standing is a jurisdictional issue that may be raised at any time. United States v.
$148,840.00 in U.S. Currency, 521 F.3d 1268, 1273 (10th Cir. 2008) (“Whether a claimant has
constitutional standing is a threshold jurisdictional question” that may be raised at any time.). A
motion to dismiss for lack of jurisdiction under Rule 12(b)(1) may take one of two forms. A party
may make a facial challenge to the allegations contained in the plaintiff’s complaint, or a party
may mount a factual challenge by asserting that the underlying facts of the case do not support
the jurisdiction of the court. United Tribe of Shawnee Indians v. United States, 253 F.3d 543, 547
(10th Cir. 2001).
By arguing that Cornaby’s did not own the Ultra Gel trademark when it filed this suit,
Carnet challenges the factual basis for Cornaby’s standing. “In addressing a factual attack, the
court . . . ‘has wide discretion to allow affidavits, other documents, and a limited evidentiary
hearing to resolve disputed jurisdictional facts under Rule 12(b)(1).’” Id. (citation omitted).
Cornaby’s has produced conclusive documentary evidence that it owned the Ultra Gel
trademark before it filed this suit. Carnet does not directly challenge the authenticity of these
documents, but instead argues that this court should ignore the documents produced by
Cornaby’s for two reasons: as a discovery sanction or under the sham affidavit rule. The court
rejects both of these arguments for excluding these documents from its consideration, but grants
Carnet’s alternative request to depose David and Janet regarding the authenticity of the transfer
First, Carnet argues that the court should disregard the trademark transfer documents
because they were not produced during discovery. It argues that these documents were
responsive to the stipulated Rule 26 disclosures and that Cornaby’s failed to provide them before
the close of fact discovery. Therefore, Carnet asserts that Rule 37(c)(1) requires the exclusion of
these documents. This rule provides: “If a party fails to provide information or identify a witness
as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to
supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially
justified or is harmless.” FED. R. CIV. P. 37(c)(1).
The court concludes that Rule 37(c)(1) does not prevent this court from considering the
trademark transfer documents because Cornaby’s failure to produce them was harmless. “In
determining whether the failure to comply with Rule 26(a) is justified or harmless, courts weigh
four factors: (1) the prejudice or surprise to the party against whom the testimony is offered; (2)
the ability of the party to cure the prejudice; (3) the extent to which introducing such testimony
would disrupt the trial; and (4) the moving party’s bad faith or willfulness.” ClearOne
Commc'ns, Inc. v. Biamp Sys., 653 F.3d 1163, 1176 (10th Cir. 2011).
Under the first factor, the production of the transfer documents after the close of
discovery prejudiced Carnet because it was not able to depose Janet and David to probe the
documents’ authenticity. But under the second factor, Carnet may cure this prejudice. Because a
motion to dismiss for lack of standing may be made at any time, this court has broad discretion
to craft procedures to resolve jurisdictional facts, see United Tribe of Shawnee Indians, 253 F.3d
at 547, including the authority to allow discovery concerning the recently produced transfer
documents. Moreover, a trial date has not been set, allowing time to resolve the independent
standing issue before trial. Because any prejudice caused by the late disclosure is curable, the
second factor weighs heavily against exclusion.1 The third factor regarding potential disruption
of trial has no application here because trial has not commenced and because it is the court—not
a jury—that must resolve the issue of standing. Finally, the fourth factor regarding bad faith
weighs against exclusion. Cornaby’s failure to provide the transfer documents during discovery
does not rise to the level of willfulness or bad faith. Indeed, Cornaby’s had nothing to gain by
failing to disclose the documents.
Weighing these factors in light of this court’s broad authority to reopen discovery and
take evidence to determine Cornaby’s standing to bring suit, the court determines that Cornaby’s
failure to produce the transfer documents prior to the discovery cutoff date was harmless. The
court, therefore, shall not disregard the documents under Rule 37(c)(1) when determining
whether Cornaby’s has standing.2
At the hearing, when the court raised the possibility of reopening discovery to permit Carnet the
chance to depose Janet and David about the transfer documents, Carnet responded that it
preferred exclusion of the documents to an opportunity to conduct discovery. [Docket 106, pp.
115–16]. A party, however, may not willfully refuse a chance to cure the prejudice caused by an
untimely disclosure in order to bolster its claim for exclusion.
As the court noted during the hearing, it harbors some doubt as to whether Rule 37(c)(1) can
require this court to disregard competent evidence when it performs its constitutionally mandated
duty to assure itself of its jurisdiction to hear the claims raised by a litigant. On one hand, Rule
37(c)(1) broadly declares that belatedly disclosed evidence shall be excluded “on a motion, at a
hearing, or at trial, unless the failure [to disclose] was substantially justified or is harmless.” On
the other hand, this court “has wide discretion to allow affidavits, other documents, and a limited
evidentiary hearing to resolve disputed jurisdictional facts under Rule 12(b)(1).” United Tribe of
Shawnee Indians, 253 F.3d at 547 (citation omitted). Given that a standing challenge may be
brought at any time—even after trial—such broad authority seems necessary to adequately carry
out the court’s constitutional duty to decide whether a party has standing. Moreover, arriving at a
manifestly incorrect conclusion concerning this court’s jurisdiction to hear a claim based upon
the exclusion of documents that conclusively prove either the presence or absence of standing is
a troubling outcome. Because the court concludes that Rule 37(c)(1) does not require the
exclusion of the transfer documents, it need not grapple with this question, which was not briefed
by the parties.
The Sham Affidavit Rule
Carnet also argues that David’s affidavit and the attached trademark transfer documents
[Docket 110-8], which were filed as an exhibit to Cornaby’s response to the motion to dismiss,
should be disregarded because the affidavit contradicts his prior deposition testimony. In David’s
deposition, he was asked when a written assignment of trademark rights had been executed.
[Docket 103-3, p. 27]. He responded by referencing a “Confirmatory Trademark Assignment,”
which purported to confirm a prior assignment of Janet’s trademark rights. [Docket 103-4]. The
Confirmatory Trademark Assignment was executed shortly after Cornaby’s initiated this lawsuit.
In David’s affidavit filed with Cornaby’s response, he asserted that he executed the trademark
transfer documents in early February 2010, well before this lawsuit had been filed.
Under the sham affidavit rule, a court may disregard an affidavit that contradicts prior
deposition testimony. Knitter v. Corvias Military Living, LLC, 758 F.3d 1214, 1218 n.3 (10th Cir.
2014). But the threshold requirement of a contradiction between deposition testimony and a
subsequent affidavit has not been satisfied here. David did not testify that the exclusive
trademark assignment agreement was the post-lawsuit Confirmatory Trademark Assignment.
Thus, the subsequent assertion in his affidavit that he executed pre-lawsuit trademark assignment
documents does not directly contradict his deposition testimony. Moreover, Carnet provides no
authority for the proposition that the sham affidavit rule may be extended to exclude not only
assertions in an affidavit, but also documents attached to an affidavit.
Finally, the court notes that the resolution of Carnet’s sham affidavit argument has no
effect on the evidence that may properly be considered by this court. The same trademark
transfer documents that were attached to David’s affidavit were also attached to Janet’s affidavit
in support of Cornaby’s response to the motion to dismiss. [Docket 110-4]. Because there is an
independent source for the transfer documents, it makes no difference whether the court excludes
the documents attached to David’s affidavit.
Findings of Fact and Conclusions of Law
Cornaby’s has proffered documents signed by Janet and David that purport to transfer the
Ultra Gel Trademark from Janet to Cornaby’s in February of 2010—before this lawsuit was filed.
Carnet has not provided any evidence to contradict these documents. The court therefore finds
that Cornaby’s obtained whatever rights Janet had to the Ultra Gel trademark by February, 2010.3
Because Cornaby’s acquired Janet’s trademark rights before this suit was filed, it has standing to
assert its trademark infringement claims.
CARNET’S REQUEST TO DEPOSE JANET AND DAVID AND FOR
As an alternative to dismissal, Carnet requested in its reply brief that it be given an
opportunity to depose Janet and David at Cornaby’s expense and that the court sanction
Cornaby’s by ordering it to pay for Carnet’s attorney fees related to its mislabeled motion for
summary judgment. [Docket 116, p. 10]. Normally, the court would not address what amounts to
a motion for discovery sanctions imbedded in a reply brief. See DUCivR 7-1(b)(1)(A) (“No
motion . . . may be included in a response or reply memorandum.”). But, as noted above, an
opportunity to cure any prejudice caused by a failure to produce the trademark transfer
documents during discovery is integral to this court’s determination that the documents should
not be disregarded when deciding whether Cornaby’s has standing. See supra, PART I.A. In
order to alleviate any potential prejudice associated with the failure to produce the documents,
Cornaby’s has asserted at some points in this lawsuit that it acquired Janet’s trademark rights at
an earlier date. For the purposes of resolving Carnet’s challenge to Cornaby’s standing, it is
sufficient to find that the transfer occurred at least by February, 2010.
the court exercises its discretion to order Janet and David to submit to depositions that shall be
limited to questions regarding the transfer documents.
The court, however, denies Carnet’s request to shift the entire cost of the depositions and
the motion for summary judgment to Cornaby’s. After the close of discovery, Carnet filed a
motion requesting an order to disclose documents evidencing the “chain-of-title” of Cornaby’s
trademark rights. [Docket 47, p. 2]. The magistrate denied this discovery request, noting that
Carnet never objected to Cornaby’s initial disclosure during discovery and reasoning that the
parties’ agreement to produce “representative writings” regarding trademark ownership could not
be used to compel Cornaby’s to produce all writings on the subject. [Docket 55]. Given that
Carnet’s belated request for these documents was denied, this court cannot sanction Cornaby’s
for failing to produce the documents. Therefore, Carnet’s request for discovery sanctions is
denied. Each party shall bear its own costs associated with the depositions and this motion.
Carnet’s motion for summary judgment on the issue of standing [Docket 103], which the
court treats as a motion to dismiss under Rule 12(b)(1), is DENIED.
Carnet’s request to depose Janet Stocks and David Cornaby regarding the trademark
transfer documents attached to their respective affidavits in response to the motion for summary
judgment is GRANTED. Janet and David shall make themselves available to be deposed on a
mutually agreed upon date and location by May 5, 2017. The depositions shall be limited to
questions regarding the documents attached to their affidavits.
If Carnet elects to take the depositions, and then decides to move to dismiss based upon
statements made in the depositions, it shall do so by May 19, 2017.
Carnet’s request for discovery sanctions in the form of a fee award is DENIED.
Signed April 21, 2017.
BY THE COURT
Jill N. Parrish
United States District Court Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?