ANTHROPOLOGIE, INC., Plaintiff, v. FOREVER 21, INC., Do Won Chang, Jin Sook Chang, One Clothing, Inc., Original Inc., Salt & Pepper, Steps of Ca, Uno Textile, and Concord Venture, Defendants No. 07 Civ. 7873(RJS)(MHD) United States District Court, S.D. New York March 13, 2009 Dolinger, Michael H., United States Magistrate Judge MEMORANDUM & ORDER *1 Plaintiff Anthropologic, Inc. has sued defendants for repeated infringements of plaintiff's copyrighted patterns and designs and for unfair competition. Plaintiff now moves for discovery relief in the form of an order (1) requiring the production by defendants of several categories of documents pertaining to the allegedly infringing products, and (2) authorizing plaintiff to copy and inspect the hard drives of computers used by defendant Forever 21. The record before us demonstrates that defendant Forever 21 is in violation of its discovery obligations and of our order dated August 29, 2008, which required defendants to produce all documents responsive to plaintiff's long-outstanding discovery requests. Moreover, defendants' responses both to these requests and to the motion reflect a troubling degree of disingenuousness. As a result we are compelled to grant plaintiff a substantial portion of the relief that it now seeks. For the reasons that follow, the motion is granted on specified conditions. The Facts Plaintiff commenced this lawsuit on September 6, 2007, and thereafter filed two versions of an amended complaint, It alleges that defendant Forever 21 has purchased and marketed a number of garments that feature patterns protected by copyrights held by the plaintiff. Anthropologie therefore asserts claims under the Copyright Act for infringement, as well as claims under the Lanham Act and New York State law for unfair competition. In its amended pleadings, it added a number of defendants who allegedly supplied or manufactured the allegedly infringing clothing. On January 28, 2008 plaintiff served its First Request for Documents on Forever 21. (Decl. of Vanessa Hew, Esq., executed Dec. 8, 2008 (“Hew Decl.”) ¶ 7 & Ex. A). Among the requests, plaintiff sought documents pertaining to (1) the creation and/or selection of the infringing garments, (2) the marketing and distribution of the infringing clothing by Forever 21, (3) the sales of these garments by Forever 21, and (4) the profits earned by Forever 21 from the sale of the infringing garments. (Id. Ex. A). Before defendants supplied any response to plaintiff's document requests, the parties apparently engaged in unsuccessful settlement discussions. In the course of those discussions, an attorney for defendants sent plaintiff a letter in which he summarized what he claimed were the sales and profits derived from eight of the garments in question. (See Reply Decl. of Vanessa Hew, Esq., executed Dec. 16, 2008 (“How Reply Decl.”) ¶ 5 & Ex. C). He did not supply any documentation and provided the purported numbers for settlement purposes only. (Id.). Defendants served their written response to plaintiff's Rule 34 request on June 2, 2008. (Hew Decl. ¶ 8 & Ex. B). This response was accompanied by the production of only seven pages of documents. (Id.) On August 15, 2008, we issued an order directing all parties, including Forever 21, to produce all remaining documents responsive to outstanding discovery requests by August 29, 2008 and setting a deadline of December 1, 2008 to complete fact discovery. (Order dated Aug. 15, 2008 ¶¶ 1, 3). On August 29, Forever 21 provided a supplemental production of fifty-two pages of documents. (Hew Decl. ¶ 11). These documents related almost exclusively to purchases by Forever 21 of garments for resale, including purchase orders, shipping documents, and invoices, together with a few e-mails concerning those purchases. (Id.). The production included no documents responsive to (1) the creation and/or selection of the infringing garments, (2) the marketing and distribution of the infringing clothing by Forever 21, (3) the sales of these garments by Forever 21, and (4) the profits earned by Forever 21 from the sale of the infringing garments. (Id.).[1] *2 On September 9, 2008, counsel for defendants offered to provide some summary documents, apparently prepared for the attorney, reflecting data on sales and product information for each allegedly infringing garment, but conditioned that offer on an agreement that these summaries be used solely for settlement purposes. (Hew Decl. ¶ 12; Decl. of Hewson Chen, Esq., executed Dec. 10, 2008 (“Chen Decl.”) ¶ 4). From the record before us, we are uncertain as to plaintiff's response to this offer, but in any event, on October 15, 2008, defendants' attorney supplied, by e-mail, a list of certain data for four of the garments at issue, including the number purchased, sold, and in inventory, together with cost and retail price. (Hew Reply Decl. ¶ 3 & Ex. A). This e-mail did not provide any of the documentation on which these numbers were based, and proffered the data on a “for settlement purposes only” basis. (Id. Ex. A). Similarly, on October 23, 2008 defendants' counsel sent an e-mail providing, on the same “settlement only” basis, some data concerning the purchase by Forever 21 of nine infringing garments and some sales and inventory data concerning one garment. (Id. ¶ 4 & Ex. B). Again, defendants proffered no documentation for this data. Despite efforts by plaintiff to obtain full compliance with its document requests (see, e.g., Hew Decl. ¶ 13 & Ex. C), defendants failed to comply, apparently claiming, among other things, that it did not maintain sales documents or that it would be unduly burdensome to locate them. (Id. ¶ 14 & Ex. D). This stalemate led to a request by plaintiff for a conference, which we conducted by telephone on December 4, 2008. (Id. ¶ 15). The day before the conference, defendants turned over to plaintiff's counsel, again on a “settlement only” basis, a set of ten spreadsheets, corresponding to each of the allegedly infringing garments. (See Hew Reply Decl. ¶ 16 & Ex. F; Chen Decl. ¶ 5 & Ex. B). Each of these sheets, supposedly prepared only for defendants' counsel, listed a figure for the cost and official retail price of the garment, the number of such garments purchased and sold, the number in inventory, the total paid for the garment by Forever 21, the gross revenues from their sale, and a so-called distribution summary, listing the number of stores to which the garment was distributed, categorized by the retail prices actually charged (which seemingly varies from the official retail price). (Id.). Again, defendants did not provide the underlying documentation on the basis of which these statistics had been compiled. During our conference on December 4, 2008, defendants' counsel reiterated the contention that it lacked sales documents, a representation that plaintiff contested. We directed that the parties were promptly to confer about this and other disagreements about defendants' production and, if they could not resolve these issues, plaintiff was free to move to compel. (Order dated Dec. 4, 2008 ¶ 2). *3 One day after the conference, defendants provided another eleven pages of documents, although these documents did not address the matters at issue on the current motion except for “I.B.D. Cost Sheets” from defendant Concord Ventures, a vendor located in the United Arab Emirates, which had supplied one of the allegedly infringing garments. (Chen Decl. ¶¶ 6–7 & Ex. C; Hew Reply Decl. Ex. E). Plaintiff filed the current motion three days later. Plaintiff's Motion and Later Developments On December 8, 2008 plaintiff sought relief from the court. Principally, Anthropologie seeks an order compelling defendants to provide the documents in issue, including all such documents in electronic storage. Plaintiff also asks for an order permitting it to appoint an expert to copy and review the hard drives of the computer system utilized by Forever 21 for its business in order to search for the categories of documents that defendant has contended it does not keep, particularly documentation of its sales of the infringing garments and resulting profits. More than a week after completion of the briefing of plaintiff's motion, defendants served and filed, without permission, a set of sur-reply papers. In the course of thus submission defendants alluded to a still further production, made on December 17 and 18, after the full briefing of the motion, which they contend moots plaintiff' application. (Sur–Reply Decl. of Hewson Chen, Esq., executed Dec. 23, 2008 (“Chen Sur–Reply Decl.”) ¶¶ 3–4 & Exs. A–B; Defs.' Sur–Reply Mem. 3). Plaintiff in turn submitted a letter response, dated December 29, 2008, asking the court to strike defendants' unauthorized filing and further taking issue with the contention that the most recent production had mooted the motion. (Dec. 29, 2008 letter to the Court from Gregory P. Gulia, Esq.). ANALYSIS Plaintiff has sought a set of documents plainly pertinent to the claims in this case—principally involving sales of infringing garments and profits—and for a period of approximately one year it has waited to receive them. To date, it is still waiting. Instead, Forever 21 has, over an extended period of time, insisted that it did not have such documents or lacked ready access to them, representations that are incredible on their face. Moreover, at the same time—and in plain contradiction of these representations—this defendant offered to provide cumulated data, solely for settlement purposes, that it plainly could only have derived from underlying documentation that defendant was claiming either did not exist or was not accessible. Given the scale of defendants' business, it is virtually inconceivable that it does not keep records—whether hard copies or in electronic storage—reflecting the detailed data involved in purchasing, distributing, and selling each of these garments. Now defendants' own conduct in discovery—including its proffer of summaries of that data—conclusively demonstrates the falsity of its prior representations. Moreover, its effort to shield even its summaries from the discovery process (by designating them as “for settlement purposes only”) reflects a refusal to comply with even the minimal requirements of the governing discovery rules. *4 Apart from defendants' deceit and its violation both of its discovery obligations and this court's prior discovery order, this conduct has had serious consequences for the litigation. Defendants have caused substantial delays in the completion of plaintiff's discovery in the case, and have imposed unnecessary expenses because of both the prolongation of that process and the plain necessity for the current motion to obtain even the most grudging and incomplete disclosure by defendants. In seeking to defend against the motion. Forever 21 offers a string of frivolous arguments. Thus, it first asserts that the motion should be rejected because it was filed one day late under the Court's December 4, 2008 schedule (see Dec. 9, 2008 letter to the Court from James A. Gibson, Esq.; Defs.' Mem. 1), a proposition. of considerable irony considering defendants' performance in this case to date. Then they claim that plaintiff has never made clear what data it wants and its relevance (see, e.g., Defs.' Mem. 1, 9), even though the discovery demands are crystal-clear and plainly pertinent to the infringement claims and measurement of potential recovery. They also suggest that by producing summary reports created for settlement purposes they have fulfilled their discovery-obligations even though they have refused to provide the underlying documentation for the summaries. (Id. at 4–6). They further assert at one point that plaintiff should be denied the discovery it seeks because it has not accepted what defendants characterize as a generous settlement offer. (Id. at 2). They also insist that plaintiff's application is premature because depositions will somehow substitute for document production (id. at 10), and finally they suggest, in an unauthorized sur-reply filing, that the application is moot since they have produced—eleven months after service of the Rule 34 request—a set of documents again summarizing the data that plaintiff has been seeking since early 2008. (Defs.' Sur–Reply Mem. 2–4). Delays aside, the proffer by defendants of summaries (even if not limited to settlement purposes) is not a substitute for production of the raw data on which the summaries are based. Plaintiff is not required to take such summaries—apparently prepared exclusively for the litigation—on faith. Moreover, while this proposition is true in all cases, it is especially so here, where the credibility of defendants is in serious question. As plaintiff has documented, the small number of each of the allegedly infringing garments that Forever 21 has admitted ordering (and selling) seems highly questionable in view of the hundreds of stores that the company supplies. (See Reply Decl. of Gregory Gulia, Esq., executed Dec. 16, 2008 ¶¶ 6–7). Moreover, the three different sets of summaries supplied by defendants (all but the last solely for settlement, and not for discovery) are inconsistent with each other, raising further questions as to their accuracy. (See Hew Reply Decl. ¶¶ 6–18). In addition, as noted, defendants have made a series of manifestly false statements over a period of many months about the non-existence or inaccessibility of essential corporate records involving documentation of purchases, distribution, and sale of the allegedly infringing garments—and this too puts in serious question the trustworthiness of their representations as to the accuracy of their data. Finally, we note the extraordinary litigating history of this company, which raises the most serious question as to whether it is a business that is predicated in large measure on the systematic infringement of competitors' intellectual property. (See Mem. & Order (regarding Defs.' Motion for a Protective Order) dated March 10, 2009 at 3 (citing Decl. of Vanessa Hew, Esq., executed Dec. 24, 2008 ¶ 5)). *5 The foregoing makes it manifest that defendants must turn over to plaintiff's counsel forthwith the data and documentation on the basis of which they prepared each of the summaries that they have proffered to plaintiff between last April and the end of December. They must also provide any additional documents in their custody and control that refer to (1) the creation and/or selection of the infringing garments, (2) the marketing and distribution of the infringing clothing by Forever 21, (3) the sales of these garments by Forever 21, and (4) the profits earned by Forever 21 from the sale of the infringing garments. Furthermore, this production is to include not only hard-copy documents, but any electronically stored data that comes even arguably within the scope of these four categories. To facilitate this requirement, plaintiff is to provide to defendants' counsel within seven days the specifications for formatting any such electronically stored data to facilitate its use by plaintiff. The production is to be made within seven days thereafter. Plaintiff further asks for authorization to copy the hard drives on the computer system of Forever 21 to ascertain definitively whether all documents have been produced. Although such court-ordered on-site inspections are not routinely granted, they may well be justified where there is considerable doubt about the completeness of a litigant's production and the information in question goes to the heart of the claims in the case. See, e.g., Shira A. Scheindlin et al., Electronic Discovery and Digital Evidence: Cases & Materials 271–75 (West 2009) (discussing cases). In this case defendants' performance to date appears to justify the use of such a procedure if it can be performed without undue delay and burden. In this regard, however, we note that plaintiff has not proffered the specifics of what it proposes to do and how, nor has it documented its best estimate of how complicated and extended a process would be involved. By the same token, although Forever 21 asserts in its opposition to the motion that such a process would take weeks and gravely harm its business, it has proffered no evidentiary support for that contention.[2] Given the need to complete the discovery process without further undue delay and expense, we direct that the production that we have ordered from Forever 21 proceed first. Once that production has been made, we authorize plaintiff, if it wishes, to submit the declaration of a forensic specialist proffering a specific proposal for conducting such a search, with a further explanation by plaintiff of the need for it in light of the document productions made to date. That submission is to be made within seven days after receipt of defendants' documents. Defendants' response will be due within three days thereafter. Finally, in view of the delay and expense occasioned by defendants' course of conduct in discovery, plaintiff is authorized to apply, pursuant to Rule 37(a)(4), for an award of the expenses of its motion, including reasonable attorneys' fees. CONCLUSION *6 For the reasons noted, plaintiff's motion to compel is granted on the terms noted. Footnotes [1] We subsequently refer to these four categories as the “documents in issue.” [2] We note that in defendants' unauthorized sur-reply they sought to fill that gap by proffering the transcript of a deposition of Forever 21's in-house Network and Systems Assistant Manager. (Chen Sur-reply Decl. Ex. C). That submission was improper, as it was done without court permission, and we therefore disregard any evidentiary submission that it contains, particularly since this manner of proceeding, besides being contemptuous of court rules, deprives the other side of an opportunity to respond.