I. INTRODUCTION
This case is before me on a motion (Doc. No. 62) for preliminary injunction and motion (Doc. No. 65) to exclude expert opinions, testimony and evidence by plaintiffs TrueNorth Companies, L.C., and TrueNorth Principals, L.C. (collectively TrueNorth). Defendant TruNorth Warranty Plans of North America, LLC (TN Warranty) has filed resistances to both, see Doc. Nos. 88 and 89, along with a sealed supplemental resistance. See Doc. No. 96. TrueNorth has submitted replies. Doc. Nos. 100 and 105.
Also before me are TN Warranty's motions (Doc. Nos. 90, 91) to amend/correct the protective order and extend pre-trial deadlines. TrueNorth has filed resistances (Doc. Nos. 101 and 103) and TN Warranty has filed replies (Doc. Nos. 114 and 115).
I held a hearing on the motions on October 26, 2018, and allowed the parties to submit supplemental exhibits. See Doc. Nos. 121, 122, 123. TrueNorth followed up with a motion (Doc. No. 124) to strike the exhibits filed as Doc. Nos. 122-1, 122-2, and portions of Doc. No. 123-1. TN Warranty filed a third set (Doc. No. 125) of
II. FACTUAL AND PROCEDURAL BACKGROUND
A. Procedural Background
TrueNorth filed its original complaint (Doc. No. 2) on March 28, 2017, alleging two counts of trademark infringement, one count of mark dilution,
Plaintiffs':
Defendant's:
On November 27, 2017, TrueNorth amended its complaint to add two new counts: Count VI for false advertising under the Lanham Act and Count VII for unfair competition under the Lanham Act and common law. The parties then submitted a joint motion (Doc. No. 47) for revised deadlines, which Judge Williams granted. See Doc. Nos. 47, 48. The order established July 9, 2018, as the deadline for disclosure of defendant's expert witnesses. See Doc. No. 48 at 3. This deadline was later extended to July 30, 2018. Doc. No. 61.
On August 20, 2018, TrueNorth filed its motion for a preliminary injunction and motion to exclude TN Warranty's expert. It seeks a preliminary injunction to stop
B. Nature of the Parties' Businesses
TrueNorth was formed in August 2000 by the merger of three financial services entities. See Doc. No. 68 at 2. It provides financial and insurance services to a variety of clients nationwide including comprehensive property and casualty insurance, risk management and underwriting services. Id. at 2, 4. It also provides other specialized products and services to commercial transportation companies and individual drivers including transportation risk management, transportation property insurance and transportation equipment insurance. Id. TrueNorth originated in eastern Iowa and now has offices in Tennessee, Texas, Illinois, Michigan and Colorado.
TN Warranty was formed on September 1, 2015, to market and sell commercial truck warranties. See Doc. No. 88 at 4. Its products provide extended warranty services for mechanical components for used commercial vehicles manufactured by others whose original manufacturer's warranty has expired. Id. at 5. It markets its services through a network of independent truck dealers or "authorized retailers," who purchase and resell its warranty products. Id. The end user of TN Warranty's products is a truck owner or fleet owner who owns the truck(s) covered by the warranties. Id. TN Warranty estimates that approximately 80 percent of its authorized retailers are used truck dealers who sell TN Warranty products at the point of sale at or near the same time they close a deal for the sale of a used truck. Id. It estimates that approximately 15 percent of its warranties are sold by finance companies that provide the financing for the truck and approximately 5 percent of its warranties are sold by repair facilities. Id. It states that in rare circumstances (a fraction of one percent of sales), TN Warranty sells a warranty directly to an end consumer. Id. at 6.
TN Warranty has six sales representatives who work directly with its authorized retailers. The representatives are assigned geographic regions and are encouraged to travel regularly to visit the authorized retailers in person. Id. TN Warranty relies heavily on word of mouth and invests substantial resources into making sure its sales team meets face-to-face with dealers and retailers to discuss and educate them about TN Warranty's products. Id. When recruiting new authorized retailers, TN Warranty states it makes in-person visits to explain, in detail, who it is, what it does and what it offers. Id. TN Warranty provides training to authorized retailers about its products and TN Warranty's expectations in selling its products. Id. at 7.
TN Warranty advertises and markets its products to truck dealers. Id. It states its largest marketing investment is in travel for its sales representatives. Id. Additional marketing includes direct emails to authorized retailers, its website and branding and marketing at the annual gathering of the Used Truck Association. Id. Dealers around the country attend this event and not individual truckers. Id. at 7-8.
TN Warranty states it does not market or sell insurance products. Id. at 8. It states that in training new authorized retailers, it emphasizes that it is not selling insurance, but a limited warranty. It does not compete with providers of insurance products and does not market its warranty
TN Warranty works directly with the authorized retailer when one of its products is sold. It invoices the authorized retailer and the authorized retailer pays TN Warranty. Id. The authorized retailer will pay for the cost of the warranty in one lump sum and often for a package of several different warranty products for different trucks at one time. A used truck dealer or finance company may finance the resale cost of the warranty with the price of the truck such that the customer may pay for the warranty through monthly payments. Id. at 9. All warranties require an inspection of the truck and TN Warranty's approval. TN Warranty may ask the authorized retailer to provide more information about a truck, such as a photo or a correction in the application prior to issuing a warranty.
Authorized retailers market TN Warranty's product to two classes of customers: large operators who have a fleet of trucks and independent owner/operators. Authorized retailers answer customer questions regarding the warranty options. Id. at 10. TN Warranty states that most customers are interested in coverage, cost and convenience rather than the provider of the warranty. Id.
C. History of the Parties' Marks
TrueNorth Principals, L.C. has three registered trademarks. Doc. No. 68 at 2. On December 11, 2001, it received Registration Number 2,517,502 for the logo below:
Id. at 3. On September 26, 2006, it received Registration Number 3,149,332 for the text "TRUENORTH." Id. On October 10, 2006, it received Registration Number 3,154,664, which covers TRUENORTH and the design shown below:
The history of TN Warranty's mark begins in 2015. Doc. No. 88 at 10. At that time, Carrbridge Berkshire Group, Inc. (Carrbridge) began marketing warranty products through its division Berkshire Fleet Services (Berkshire Fleet). The warranty products themselves were provided by CompassOne Warranty Plans of North America LLC (an offshoot of a family of companies under the umbrella The Compass Group, Inc., founded by William "Kirk" Eskridge in 2002). Id. at 11. Eskridge, who was the chief executive of Carrbridge, formed CompassOne Warranty in April 2015. Id. CompassOne Warranty used the following mark to market its warranty products.
Id. TN Warranty contends that from 2002 through 2012, The Compass Group, Inc. owned and used a Vector Compass mark created by a digital marketing firm hired by Compass Group. Id. It states that CompassOne Warranty's graphic was derived from the Vector Compass mark. Id. at 12.
On March 30, 2015, American Guardian Warranty Services, Inc. (American Guardian) filed a lawsuit against Carrbridge and Berkshire Fleet claiming that the use of the term "Compass" infringed on American Guardian's intellectual property rights. Id. American Guardian claimed it had been using its Compass mark since in or around 2005. Eskridge agreed to change the name and mark and ceased operating CompassOne Warranty.
Id.
TN Warranty filed an application to register its mark with the United States Patent and Trademark Office (USPTO) on February 5, 2016. Id. at 14. On October 31, 2016, TrueNorth filed an opposition to the application. Doc. No. 68 at 5. On December 20, 2016, the USPTO issued a notice of default regarding TN Warranty's application because it failed to answer TrueNorth's opposition. Id. On February 16, 2017, the USPTO entered a judgment by default against TN Warranty, sustaining TrueNorth's opposition and denying TN Warranty's application for a trademark. Id.
D. History of Dispute Between Parties
In September 2015, TrueNorth learned of TN Warranty's mark when Joe Hoovestol of Lone Mountain Leasing in Carter Lake, Iowa, forwarded an email he had received from Rick VanHove, a Regional Sales Director for TN Warranty. Doc. No. 68 at 5. On January 19, 2016, TrueNorth sent a cease and desist letter to Eskridge, TN Warranty's CEO, demanding that TN Warranty stop using the word "TRÜNORTH" or the logo stating that it infringed on TrueNorth's marks. Id. On August 23, 2016, TrueNorth received an application for insurance from one of its clients in the trucking industry. Id. at 6. Among the forms submitted with the application included a Component Breakdown Limited Warranty Agreement form for TRÜNORTH™. Id. TrueNorth ultimately filed this action on March 28, 2017.
After TrueNorth filed suit, TN Warranty attempted to reach a negotiated arrangement but those efforts were not successful. Id. at 17. TN Warranty states that it then voluntarily redesigned its mark as follows:
TN Warranty provides additional background concerning a non-party, Gateway Management Services, Ltd., d/b/a Premium 2000+ (Premium 2000+), and its President and Chief Executive Officer, Lynn Murphy. Id. at 17. TN Warranty states that Murphy and Eskridge were business partners at one time but are now rivals and competitors. Id. It alleges that Murphy (and affiliates) have filed various lawsuits against Eskridge and his affiliates. Id. at 18-19. With regard to this lawsuit, TN Warranty claims that Premium 2000+ has offered to do business with TrueNorth, but has cited TN Warranty's name and mark as a "road block" to doing business. Id. at 20 (citing Doc. No. 85-9 consisting of emails from Premium 2000+'s attorney to counsel for TrueNorth). See also Doc. No. 123-1 (excerpts from Murphy's deposition). Essentially, TN Warranty contends that this evidence suggests that TrueNorth's lawsuit is premised more on Murphy's animosity towards Eskridge rather than on true confusion in the marketplace. See id. at 17-22.
TrueNorth has provided a detailed summary of emails and phone calls
E. TN Warranty's Expert Disclosures
TrueNorth's other motion (Doc. No. 65) concerns TN Warranty's expert, Christopher King. TrueNorth states that with respect to damages, it relies on an unjust enrichment/profit disgorgement theory pursuant to
TN Warranty states it had legitimate and serious concerns regarding confidentiality when it produced King's expert report, which is why it withheld commercial and financial information in connection with that report. Doc. No. 89 at 1. It states that it proposed creating additional confidentiality safeguards before producing the information and extending the deadline for TrueNorth to depose King and submit any rebuttal expert report.
TN Warranty's alleged confidentiality concerns stem from its history with Premium 2000+ and Murphy.
Prior to serving King's expert report, TN Warranty states that it conferred with opposing counsel by phone about its confidentiality concerns regarding Premium 2000+. Counsel for TrueNorth stated that it was contemplating filing a motion to compel or motion to exclude.
TN Warranty acknowledges it has not yet produced the financial records, but intends to do so, along with the supplement to the King report.
III. APPLICABLE STANDARDS
A. Preliminary Injunction
The purpose of a preliminary injunction is to "preserve the relative positions of the parties until a trial on the merits can be held." Univ. of Texas v. Camenisch ,
1. the threat of irreparable harm to the movant2. the state of the balance between this harm and the injury that granting the injunction will inflict on other parties
3. the probability that the movant will succeed on the merits
4. the public interest
Dataphase Systems, Inc. v. C L Systems, Inc. ,
B. Expert Witness Disclosures
Federal Rule of Civil Procedure 26(b)(4)(C) provides:
(C) Trial-Preparation Protection for Communications Between a Party's Attorney and Expert Witnesses. Rules 26(b)(3)(A) and (B) protect communications between the party's attorney and any witness required to provide a report under Rule 26(a)(2)(B), regardless of the form of the communications, except to the extent that the communications:
(i) relate to compensation for the expert's study or testimony;
(ii) identify facts or data that the party's attorney provided and that the expert considered in forming the opinions to be expressed; or
(iii) identify assumptions that the party's attorney provided and that the expert relied on in forming the opinions to be expressed.
Fed. R. Civ. P. 26(b)(4)(C). There is also a duty to supplement expert disclosures:
(2) Expert Witness. For an expert whose report must be disclosed under Rule 26(a)(2)(B), the party's duty to supplement extends both to information included in the report and to information given during the expert's deposition. Any additions or changes to this information must be disclosed by the time the party's pretrial disclosures under Rule 26(a)(3) are due.
Fed. R. Civ. P. 26(e)(2).
A party's violation of the discovery rules may result in a sanction under Rule 37(c)(1), which 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. In addition to or instead of this sanction, the court on motion and after giving an opportunity to be heard:
(A) may order payment of the reasonable expenses, including attorney's fees, caused by the failure;
(B) may inform the jury of the party's failure; and
(C) may impose other appropriate sanctions, including any of the order listed in Rule 37(b)(2)(A)(i)-(vi).
Fed. R. Civ. P. 37(c)(1).
IV. DISCUSSION
A. The Post-Hearing Motions
1. Motion to Strike Supplemental Exhibits
At the time of oral argument, TN Warranty had a pending motion (Doc. No. 117)
TrueNorth submitted multiple sealed exhibits that TN Warranty produced the day before the hearing. See Doc. No. 121. These documents consist of various communications related to previous trademark applications from Eskridge's companies, including TN Warranty.
TN Warranty also submitted deposition excerpts from Thurm and Rings in addition to Lynn Murphy, corporate designee of Gateway/Premium 2000+ and Jacob Pipkin, team leader for TrueNorth's transportation division. See Doc. No. 122. Additionally, it submitted its PowerPoint presentations for the pending motions, answers to interrogatories and communications between counsel.
TrueNorth then filed an objection and motion (Doc. No. 124) to strike three exhibits submitted by TN Warranty. These include: TN Warranty's PowerPoint presentations, and portions of Murphy's deposition. TrueNorth argues that the deposition excerpts relate to the motion to exclude, rather than the motion for preliminary injunction and that supplemental evidence was limited to the motion for preliminary injunction.
On October 31, 2018, TN Warranty submitted another supplement (Doc. No. 125) including final versions of the Pipkin deposition excerpts and exhibits referenced in the Murphy and Rings depositions or in TN Warranty's reply brief in support of its motion to amend the protective order. It further submitted exhibits from the depositions of Todd Amen and Thurm. On November 2, 2018, TN Warranty filed a resistance (Doc. No. 126) to TrueNorth's motion to strike.
Clearly, I do not consider TN Warranty's PowerPoint presentations to be actual evidence. With regard to the excerpts from Murphy's deposition, TN Warranty argues these excerpts are relevant to both motions. I did not specify at the hearing whether the supplemental exhibits referenced by the parties had to relate solely to the motion for preliminary injunction. Indeed, the hearing was set for both motions, see Doc. No. 106, but time constraints allowed me to hear only arguments as to the motion for preliminary injunction. TN Warranty referenced Murphy's deposition during its argument. I will consider the Murphy deposition excerpts to the extent they are relevant to either motion. TrueNorth's motion (Doc. No. 124) to strike is denied.
2. TN Warranty's Motion to Supplement Resistance
On November 13, 2018, 18 days after the preliminary injunction hearing, TN Warranty moved to supplement its resistance to show that TrueNorth did not, as it has claimed, send a second cease and desist letter to TN Warranty. Doc. No. 127. TrueNorth resists but acknowledges that - despite numerous representations to the contrary - no such letter was sent. Doc. No. 128. Having reviewed the parties' filings,
B. The Motion for Preliminary Injunction
While likelihood of success on the merits is often described as the most significant factor in a preliminary injunction analysis, a failure to show irreparable harm may be dispositive. Therefore, I will start my analysis there. See Roudachevski v. All-American Care Centers, Inc. ,
1. Is There a Presumption of Irreparable Harm?
The parties disagree over whether there is a presumption of irreparable harm based on evidence of a likelihood of confusion. TrueNorth argues that irreparable harm may be presumed if it shows a likelihood of consumer confusion. See Doc. No. 68 at 27. TN Warranty argues that after the Supreme Court's decision in Winter v. Nat. Res. Def. Council, Inc. ,
Two years earlier, in eBay Inc. v. MercExchange, L.L.C. ,
Other courts have interpreted Winter , in conjunction with the Supreme Court's decision in eBay , to mean that a plaintiff may not rely on a presumption to establish this irreparable harm, but must make a showing as required for all other factors. See, e.g. , Ferring Pharms., Inc. v. Watson Pharms., Inc. ,
Without additional guidance from the Eighth Circuit on this issue, I find it prudent to consider irreparable harm under the traditional analysis (requiring plaintiff to show more than a possibility of harm), without allowing for a presumption based on likelihood of success. See Salinger v. Colting ,
2. Has TrueNorth Shown Irreparable Harm?
TN Warranty argues that TrueNorth cannot demonstrate irreparable harm because: (1) it waited 17 months to
TrueNorth argues it faces irreparable harm to its reputation by TN Warranty's use of its name. Doc. No. 68 at 27. It notes that TN Warranty has received negative consumer reports from the Better Business Bureau and Trucker's Report (an online forum used by truck drivers). TrueNorth states that truck drivers frequently complain about TN Warranty denying claims and that negative customer reviews have a significant impact on TrueNorth because truck drivers believe that TN Warranty products come from TrueNorth. It further notes that some if its trucking industry partners have contacted TrueNorth on behalf of drivers with warranty claims in an attempt to resolve warranty issues.
TrueNorth explains that its delay in seeking a preliminary injunction stems from an increase in calls about warranties that it received in 2018. See Doc. No. 105 at 19. TrueNorth started recording calls in January 2018 due to the "increasing number of calls and other instances of confusion among TrueNorth customers." Doc. No. 97 at 6. TrueNorth recorded six calls in February 2018, four calls in March 2018, one call in April 2018, three calls in May 2018, no calls in June 2018, two calls in late July 2018 and six calls in August 2018. Id. at 7. At the hearing, TrueNorth emphasized that the irreparable harm is to its reputation and goodwill in that customer dissatisfaction with TN Warranty is being directed at and attributed to TrueNorth. Following the hearing, TrueNorth submitted excerpts from Rings' deposition in which he described the damage to TrueNorth's reputation with Lone Mountain Leasing as follows: "Just verbal communications that have been relayed to me that they think that the presence of having su[ch] a similar logo is creating challenges and confusion that is disruptive to our working together to market to owner operators and truck lessees." See Doc. No. 121-8 at 6-7. Rings went on to further describe the situation as creating challenges with how TrueNorth tries to market to leasing companies and that continuing to have this be a discussion topic is disruptive to business. Id. Rings could not provide any specific examples and was not aware of any specific loss of business with Lone Mountain. Id.
After reviewing all the evidence and supplemental evidence submitted by the parties, I find that TrueNorth has failed to demonstrate irreparable harm. This factor requires a party to show that "the harm is certain and great and of such imminence that there is a clear and present need for equitable relief." Roudachevski ,
With regard to whether the alleged harm is "great," TrueNorth does not provide any context regarding how many calls its customer service representatives receive in a day. TN Warranty has submitted excerpts from the deposition of Pipkin, who testified that each of the 28 to 30 individuals who take calls in TrueNorth's call center receive 25 to 30 calls per day (and up to 100 calls per day during peak season).See Doc. No. 123-3 at 7-10, 27-28. Six calls per month is hardly so disruptive that TrueNorth is suffering irreparable harm that cannot be addressed through monetary means.
TrueNorth has also failed to demonstrate that the alleged harm is more than a possibility. See Brady v. Nat'l Football League ,
While there is possibility that these upset TN Warranty customers tell fellow truck drivers to avoid business with "True North" or fail to go to TrueNorth for insurance based on a negative impression stemming from their warranty, the record lacks any evidence to suggest that this is more than a speculative possibility and is negatively affecting TrueNorth's business in an irreparable way. See Novus Franchising, Inc. v. Dawson ,
Aside from the individual callers, the only other entities TrueNorth references in showing harm to its reputation are Lone Mountain Leasing (which alerted TrueNorth to TN Warranty's logo) and Premium 2000+ (which competes with TN Warranty and has its own arguable agenda for pursuing business with TrueNorth).
With regard to Premium 2000+, Rings testified that Premium 2000+ was pursuing a business relationship with TrueNorth, but discontinued that in March 2017, when it specifically referenced TN Warranty and cited confusion in the marketplace. Doc. No. 123-2 at 92-94. However, he also stated that TrueNorth had never determined that it wanted to do business with Premium 2000+. Id. Murphy also testified that TrueNorth was the one who alerted him to the purported confusion, yet Murphy is the one who sought out TrueNorth regarding a business relationship with the arguable intention of teaming up against Eskridge. See Doc. No. 119 at 2 ("Q: Other than those instances that Mr. Pipkin or someone at TrueNorth Iowa discussed with you, do you have any other personal knowledge of confusion in the marketplace? A: Not to my recollection."); Doc. No. 125-1 (emails exchanged between Murphy and another Premium 2000+ employee and Pipkin regarding setting up a business relationship with TrueNorth targeted at Eskridge). Premium 2000+ and Murphy's reason for declining to do business with TrueNorth is questionable based on the record. See Doc. No. 125-1 at 5 (stating in an email from Murphy to another Premium 2000+ employee on March 6, 2017, "[h]ope [TrueNorth] gets[s] serious about laying Eskridge away. They will need to before we can do anything with them!"). The harm to TrueNorth's reputation based on these limited examples appears to be non-existent and certainly nothing more than a possibility. TrueNorth has demonstrated only that its affiliates have acknowledged the presence of another entity named "True North."
This is not True North's first experience dealing with an entity with an identical name. See Doc. No. 85-10 (listing other registered "True North" marks). Indeed, TrueNorth has previously entered into Co-Existence Agreements with two other "True North" entities - one providing financial consulting services to large banks and credit reporting agencies and the other providing advertising and public relations services. See Doc. Nos. 96 and 105 at 14. These agreements state the parties have concluded their respective uses of "True" and "North" and trademarks are "in separate industries, targeting distinct groups of consumers, via separate channels of trade, and therefore [are] not likely to cause confusion." Doc. No. 96-1. TrueNorth's willingness to co-exist with other entities using the same name, albeit in arguably different industries, tends to lessen the alleged harm.
TrueNorth's delay in seeking relief also weighs against a finding of irreparable harm. While delay does not preclude relief, it does suggest that the harm is not imminent or great. See Iowa Utils. Bd. ,
The Eighth Circuit has repeatedly recognized that "[f]ailure to show irreparable harm is an independently sufficient ground upon which to deny a preliminary injunction." Grasso Enterprises, LLC v. Express Scripts, Inc. ,
C. Motion to Exclude TN Warranty's Damages Expert
1. Overview of Events
The relevant timeline is as follows:
August 16, 2017 The court approves and enters the parties' stipulated protective order (Doc. No. 36).9
May 4, 2018 TrueNorth timely identifies its expert witnesses, providing expert reports and disclosing the information required by Federal Rule of Civil Procedure 26(b)(4)(C). One of TrueNorth's experts, Eric Engstrom, is a damages expert who provided opinions based on TN Warranty's reported sales. At this time, TN Warranty's expert witness disclosure deadline was July 9, 2018. See Doc. No. 48.
June 15, 2018 The parties file a joint motion (Doc. No. 57) to extend certain deadlines, including TN Warranty's expert witness deadline. The motion contains no indication that TN Warranty is concerned about any potential violation of the protective order and intends to withhold information.
June 22, 2018 An order (Doc. No. 59) is entered that, inter alia , extends TN Warranty's expert witness disclosure deadline to July 23, 2018.
July 17, 2018 TN Warranty files an unresisted motion (Doc. No. 60) for afurther extension of deadlines, including its expert witness deadline. Again, this motion contains no indication that TN Warranty is concerned about any potential violation of the protective order and intends to withhold information.
July 19, 2018 An order (Doc. No. 61) is entered that, inter alia , extends TN Warranty's expert witness disclosure deadline to July 30, 2018.
July 30, 2018 TN Warranty serves its expert disclosures, including disclosures concerning King, a damages expert who provides opinions that respond to Engstrom's opinions by describing various costs TN Warranty incurred in generating its sales revenues. See Doc. No. 69 at 6-57. At this time, TrueNorth's deadline for disclosing rebuttal expert information was August 31, 2018. Doc. No. 61.
August 20, 2018 After various communications between counsel concerning TN Warranty's withholding of certain information relating to King's opinions, TrueNorth files its motion to exclude expert opinions, testimony and evidence concerning King. Doc. No. 65.
Sept. 21, 2018 TN Warranty files a resistance to the motion to exclude expert opinions and a motion to amend the protective order to provide that certain information could be designated in such a manner as to prevent its disclosure to the receiving party's in-house counsel. Doc. Nos. 90, 91.
2. TN Warranty's Withholding of Information
It is undisputed that on July 30, 2018, when disclosing expert witness information, TN Warranty withheld financial information relevant to the issue of damages. TrueNorth states when TN Warranty submitted King's expert report, it expressed concerns that TrueNorth was colluding with one or more third parties and would not abide by the protective order. Doc. No. 65 at 2. TrueNorth assured TN Warranty it was committed to complying with the protective order and requested that TN Warranty produce financial and cost information, along with all other information required by Rule 26 and that TrueNorth had previously requested. TN Warranty continued to withhold the information. Id. at 3.
TN Warranty's alleged confidentiality concerns stem from its history with Premium 2000+ and Murphy.
Prior to serving King's expert report, TN Warranty states that it conferred with opposing counsel by phone about its confidentiality concerns regarding Premium 2000+. Counsel for TrueNorth stated that it was contemplating filing a motion to compel or motion to exclude.
TN Warranty acknowledges it has not yet produced the financial records, but intends to do so, along with a supplement to the King report. Id. at 12. It states that four days after TrueNorth filed its motion to exclude, TN Warranty proposed, via letter, a resolution to the discovery dispute in the form of additional protections for the financial documents.
TN Warranty contends that it proposed a reasonable solution by suggesting certain confidentiality provisions be added to the protective order at which point it would produce the requested information and agree to extend the deadline for TrueNorth to depose King and submit any expert rebuttal report. Doc. No. 89 at 2. TN Warranty further contends that King himself did not review the contested financial information at issue before drafting his expert report, which includes the following statement:
I did not review tax returns or similar financial documents because TN Warranty was unwilling to provide them as a result of concerns they have that Plaintiffs, who as I understand it are believed to be working closely with one or more of TN Warranty's competitors to harm TN Warranty, including through this litigation would not abide by the terms of the Protective Order in this case with respect to maintaining the confidentiality of documents designated as confidential or highly confidential. As such I am relying on the representations made to me with regard to certain financial information contained in this report. In the event that additional information is subsequently made available to me, I will supplement this Report accordingly.
Doc. No. 70 at 5.
TrueNorth points out that TN Warranty had substantial time to seek a court-approved
3. Applicable Legal Standards
Federal Rule of Civil Procedure 26(a) states as follows, in relevant part:
(2) Disclosure of Expert Testimony.
(A) In General. In addition to the disclosures required by Rule 26(a)(1), a party must disclose to the other parties the identity of any witness it may use at trial to present evidence under Federal Rule of Evidence 702, 703, or 705.
(B) Witnesses Who Must Provide a Written Report. Unless otherwise stipulated or ordered by the court, this disclosure must be accompanied by a written report-prepared and signed by the witness-if the witness is one retained or specially employed to provide expert testimony in the case or one whose duties as the party's employee regularly involve giving expert testimony. The report must contain:
(i) a complete statement of all opinions the witness will express and the basis and reasons for them;
(ii) the facts or data considered by the witness in forming them;
(iii) any exhibits that will be used to summarize or support them;
(iv) the witness's qualifications, including a list of all publications authored in the previous 10 years;
(v) a list of all other cases in which, during the previous 4 years, the witness testified as an expert at trial or by deposition; and
(vi) a statement of the compensation to be paid for the study and testimony in the case.
* * *
(D) Time to Disclose Expert Testimony. A party must make these disclosures at the times and in the sequence that the court orders. Absent a stipulation or a court order, the disclosures must be made:
(i) at least 90 days before the date set for trial or for the case to be ready for trial; or
(ii) if the evidence is intended solely to contradict or rebut evidence on the same subject matter identified by another party under Rule 26(a)(2)(B) or (C), within 30 days after the other party's disclosure.
(E) Supplementing the Disclosure. The parties must supplement these disclosures when required under Rule 26(e).
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. In addition to or instead of this sanction, the court on motion and after giving an opportunity to be heard:
(A) may order payment of the reasonable expenses, including attorney's fees, caused by the failure;
(B) may inform the jury of the party's failure; and
(C) may impose other appropriate sanctions, including any of the order listed in Rule 37(b)(2)(A)(i)-(vi).
Fed. R. Civ. P. 37(c)(1). In deciding whether to apply a sanction pursuant to Rule 37(c)(1), I must consider (1) the reason for noncompliance, (2) the surprise and prejudice to the opposing party, (3) the extent to which allowing the information or testimony would disrupt the order and efficiency of the trial and (4) the importance of the information or testimony in determining an appropriate sanction or remedy. Wegener v. Johnson ,
4. Analysis
If TrueNorth prevails on the merits at trial, it seeks damages pursuant to
Pursuant to Section 1117(a), TN Warranty has retained King to provide opinions as to costs or other amounts that should be deducted from TN Warranty's revenues to determine TN Warranty's profits. The problem is that as of its expert disclosure deadline of July 30, 2018, TN Warranty had not even provided its own expert with the financial information he needed to arrive at final opinions. Thus, as King wrote in his report, he had to rely "on the representations made to me with regard to certain financial information contained in this report." Doc. No. 69 at 10, ¶ 11. Only after TrueNorth filed its motion to exclude did TN Warranty provide King with the actual financial information necessary for him to prepare a final (or "supplemental," as TN Warranty calls it) report. As noted above, TN Warranty has yet to provide this information to TrueNorth, despite the requirements of Rule 26 and the fact that TrueNorth specifically requested such information in October 2017. See Doc. No. 103-1.
There is no doubt that TN Warranty violated the expert disclosure requirements of Rule 26(a)(2) by failing to produce the financial information its own expert must rely upon to form opinions
Instead, TN Warranty engaged in extra-judicial self-help, taking it upon itself to decide what information to disclose while holding other evidence hostage in an effort to force TrueNorth to agree to its terms. This conduct is particularly egregious in light of the lack of evidence supporting Eskridge's alleged concern. Eskridge supposedly believed that Rings, a licensed attorney,
None of this supports TN Warranty's purely-speculative concern that Rings might violate the existing protective order. Nor does it justify TN Warranty's intentional disregard of this court's scheduling order and brazen, dilatory conduct. TN Warranty and its counsel exercised incredibly poor judgment in electing to violate the scheduling order and disregard TN Warranty's expert disclosure obligations without even attempting to obtain relief from the court. TN Warranty's non-compliance was not substantially justified.
Nor was it harmless. As TrueNorth points out, its rebuttal expert disclosure deadline was August 31, 2018. Given that TN Warranty did not produce the actual financial information it apparently relies upon to support the amount of "all elements of cost or deduction claimed" pursuant to Section 1117(a), TrueNorth's expert could not possibly have studied the necessary data and provided rebuttal opinions by that date (or, for that matter, by today's date). The only factor that weighs in TN Warranty's favor here is that trial is not scheduled to begin until July 2019 - seven months from now. Thus, ample time remains to cure the harm TN Warranty has caused. This will begin with TN Warranty's
Thus, I find that TN Warranty's failure to disclose the financial information necessary to evaluate "all elements of cost or deduction claimed" pursuant to Section 1117(a) was neither substantially justified nor harmless. As such, its conduct is sanctionable. While this finding would permit exclusion of all or part of King's testimony at trial, I have discretion to impose other sanctions "[i]n addition to or instead of this sanction." Fed. R. Civ. P. 37(c)(1). One alternative sanction is an order directing "payment of the reasonable expenses, including attorney's fees, caused by the failure." Fed. R. Civ. P. 37(c)(1)(A). I find this remedy, along with adjustments to the scheduling order as set forth below, to be appropriate to address TN Warranty's non-compliance.
V. CONCLUSION
For the reasons stated herein:
1. TrueNorth's motion (Doc. No. 62) for preliminary injunction is denied .
2. TrueNorth's motion (Doc. No. 65) to exclude expert opinions, testimony and evidence is granted in part and denied in part , as follows:
a. The motion is denied to the extent that it seeks entry of an order excluding expert opinion, testimony and evidence.
b. However, pursuant to Federal Rule of Civil Procedure 37(c)(1)(A), the motion is granted with regard to the alternative sanction of an award of TrueNorth's reasonable expenses, including attorney's fees. TrueNorth shall submit, on or before January 4, 2019 , an itemized statement, with supporting evidence, reflecting the reasonable expenses, including attorney's fees, it incurred due to TN Warranty's failure to provide timely expert witness disclosures pursuant to Federal Rule of Civil Procedure 26. TN Warranty may file a response on or before January 18, 2019 , and TrueNorth may file a reply on or before January 25, 2019 . Upon review of the parties' submissions, I will determine whether oral argument is appropriate.
3. TN Warranty's motion (Doc. No. 90) to amend the protective order is denied.
4. TN Warranty's motion (Doc. No. 91) to extend deadlines is granted . The new deadlines are as follows:
a. Defendant's "Supplemental" Expert Witness Report for Christopher King: December 17, 2018 b. Plaintiffs' Rebuttal Expert Witnesses: January 18, 2019 c. Completion of Expert Discovery: February 8, 2019 d. Dispositive Motions: March 1, 2019 e. Trial Ready: July 1, 2019
5. TrueNorth's motion (Doc. No. 124) to strike exhibits is denied .
6. TN Warranty's motion (Doc. No. 127) for leave to supplement resistance to the motion for preliminary injunction is granted .
7. Trial remains scheduled for July 8, 2019 .
IT IS SO ORDERED.
Notes
See, e.g. , https://en.wikipedia.org/wiki/Yogi_Berra
The only other pending motion is TN Warranty's motion (Doc. No. 133) to compel that was filed on December 5, 2018, and has been referred to Judge Mahoney.
On February 8, 2018, I granted TN Warranty's motion for judgment on the pleadings as to this claim and dismissed it with prejudice. See Doc. No. 55.
TrueNorth points out that Eskridge did not stop using the CompassOne mark until after American Guardian had obtained a permanent injunction and Eskridge was ordered to by the United States District Court for the Northern District of Illinois following contempt proceedings. See Doc. No. 68 at 19-21; Doc. No. 62-2 at 78-79.
TrueNorth did not start recording calls until January 2018. It collected 24 recordings in the six-month period prior to filing its motion for preliminary injunction. Doc. No. 105 at 6.
TN Warranty filed its motion to amend the protective order on September 21, 2018, after TrueNorth filed its motion to exclude on August 20, 2018.
Rings also mentioned Zurich in his deposition. However, he offered little detail and testified that the relationship was "the same" as far as he knew. Doc. No. 123-2 at 111-12.
TN Warranty's motion (Doc. No. 90) to amend the protective order and motion (Doc. No. 91) to extend deadlines, is essentially a response to TrueNorth's motion (Doc. No. 65) to exclude TN Warranty's expert. I will consider all three motions in this section.
The Stipulated Protective Order describes two levels of confidentiality - "confidential" and "highly confidential," which is limited to review by counsel, including in-house counsel.
TN Warranty filed its motion to amend the protective order on September 21, 2018, after TrueNorth filed its motion to exclude on August 20, 2018.
TrueNorth notes that TN Warranty's proposed resolution regarding an amendment to the protective order and extension of deadlines was not made until August 24, 2018, nearly a month after TN Warranty failed to produce the documents and after TrueNorth filed its motion to exclude. See Doc. No. 100 at 3.
TrueNorth disputes that the withheld information is solely supplemental. See Doc. No. 100 at 2. Following the submission of King's original report, TrueNorth noted it was missing several documents King said he had considered, but TN Warranty had not produced, and that were responsive to TrueNorth's previous requests for production. See Doc. No. 65-2 at 3-4; Doc. No. 103-2 at 21-22.
On February 23, 2018, TN Warranty did provide some responsive information consisting of a spreadsheet listing revenue received from selling warranties. Doc. No. 103 at 2. TrueNorth followed up on March 7, 2018, seeking documents related to profits or expenses that TN Warranty would use to offset its revenue. Id. at 2-3 (citing Doc. No. 103-3). It agreed to wait for this information as part of TN Warranty's expert disclosures since it would be TN Warranty's burden to prove deductions to its revenue for purposes of disgorgement. Id.
I take judicial notice of Iowa court records demonstrating that Rings has been licensed to practice law in Iowa since 1996 and has not been subject to any disciplinary action. See https://www.iacourtcommissions.org/icc/ViewLawyer.do?id=10856.
TN Warranty's invocation of Rule 26(e) to call King's forthcoming report a "supplemental" report is incorrect. Rule 26(e) creates a "limited exception" that "permits supplemental reports only for the narrow purpose of correcting inaccuracies or adding information that was not available at the time of the initial report." Minebea Co., Ltd. v. Papst ,
I further find that TN Warranty has not shown good cause for either (1) amending the protective order or (2) waiting until long after its expert disclosure deadline to file a motion to amend the protective order. As such, its motion (Doc. No. 90) will be denied.