Cannoid, LLC v. Entourage Nutritional Distrib., LLC
Cannoid, LLC v. Entourage Nutritional Distrib., LLC
2017 WL 11547023 (D. Colo. 2017)
August 22, 2017
Wang, Nina Y., United States Magistrate Judge
Summary
The court ordered Whole Hemp to respond to the subpoena for ESI no later than August 29, 2017, and to do so with particularity. The court also noted that the Stipulated Protective Order in this case applies to nonparties. The court declined to sanction Whole Hemp at this time, but noted that such a ruling is without prejudice to Plaintiffs renewing their request at a later date.
CANNOID, LLC and WILLIAM ARNOLD, Plaintiffs / Counterclaim Defendants,
v.
ENTOURAGE NUTRITIONAL DISTRIBUTORS, LLC, Defendant / Counterclaim Plaintiff
v.
ENTOURAGE NUTRITIONAL DISTRIBUTORS, LLC, Defendant / Counterclaim Plaintiff
Civil Action No. 16-cv-02848-RM-NYW
United States District Court, D. Colorado
Filed August 22, 2017
Counsel
Alyssa R. Watzman, Jeffrey H. Kass, Lewis Brisbois Bisgaard & Smith, LLP, Denver, CO, for Plaintiffs / Counterclaim Defendants.Jared Michel Haynie, Reid John Allred, Cambridge Law LLC, Denver, CO, for Defendant / Counterclaim Plaintiff
Wang, Nina Y., United States Magistrate Judge
ORDER ON MOTION TO COMPEL
*1 This matter comes before the court on Plaintiffs’ Motion to Compel Production (“Motion to Compel”). [#45, filed July 17, 2017]. The Motion to Compel is before the undersigned Magistrate Judge pursuant to the Order Referring Case dated November 23, 2016 [#7] and the memorandum dated July 18, 2017 [#46]. After carefully reviewing the Motion and related briefing, the entire case file, and the applicable case law, IT IS ORDERED that the Motion to Compel is GRANTED.
PROCEDURAL AND FACTUAL BACKGROUND
Plaintiffs Cannoid, LLC (“Cannoid”) and William Arnold (“Mr. Arnold”) (collectively “Plaintiffs”) initiated this civil action on November 21, 2016, by filing a Complaint asserting trademark infringement, unfair competition, counterfeiting, and related state law claims against Defendant Entourage Nutritional Distributors, LLC (“Entourage” or “Defendant”). [#1]. Cannoid is a Colorado company engaged in the manufacture and sale of products made from imported industrial hemp that are sold for the purpose of alleviating anxiety, stress, insomnia, and other ailments. [#27 at 2]. Mr. Arnold, Cannoid’s sole owner, asserts ownership of an exclusive license to use the marks ENTOURAGE, ENTOURAGE HEMP, and ENTOURAGE HEMP E, which Cannoid has used in connection with the sale of the above-described products since May 2014. [Id.] Entourage is also a company engaged in the business of selling cannabis and industrial hemp-related products for the same applications for which Cannoid’s products are sold. [Id.] Plaintiffs allege that Entourage has been selling its products under the trademarks ENTOURAGE, ENTOURAGE E and ENTOURAGE NUTRITIONAL DISTRIBUTORS since approximately May 2016, and that it uses “a strikingly similar ‘E’ logo to sell its competing products.” [Id.]
Plaintiffs assert that Entourage’s use of these marks in direct competition with Cannoid has caused actual confusion in the marketplace and is likely to cause additional confusion. Plaintiffs seek injunctive relief and monetary damages. On January 17, 2017, Entourage filed an Answer and asserted three counterclaims styled as (1) Cancellation of U.S. Registration No. 5,057,965 under 15 U.S.C. §§ 1064 and 1119, (2) Rejection of U.S. Application No. 86887213 under 15 U.S.C. §§ 1064 and 1119, and (3) Declaratory Relief under 28 U.S.C. §§ 2201 - 2202. [#14]. Plaintiffs filed an Answer on February 7, 2017. [#24]. The court has jurisdiction over this action pursuant to 28 U.S.C. § 1331.
On February 27, 2017, this court held a Scheduling Conference at which the undersigned set certain pretrial dates and deadlines, including a deadline of April 24, 2017 by which to join parties and amend pleadings, and September 29, 2017 by which to complete discovery. [#26, #27]. On April 24, 2017, Plaintiffs filed a motion to amend, seeking to add Whole Hemp Company, LLC (“Whole Hemp”) as an additional defendant along with related allegations. [#32]. Plaintiffs argued that they first learned of the nature of the relationship between Whole Hemp and Entourage through Defendant’s responses to their written discovery requests concerning gross and net profits, marketing and development expenses, and sales. Following briefing on the motion to amend, this court issued a Recommendation that the presiding judge, the Honorable Raymond P. Moore, grant the motion. See [#38]. Entourage filed an objection on June 21, 2017, [#42], Plaintiffs filed a response two days later, [#43], and Entourage filed a reply the same day, [#44]. The Recommendation remains pending.
*2 On July 17, 2017, Plaintiffs filed the instant Motion to Compel, asking the court to compel Whole Hemp to comply with a subpoena duces tecum and to award attorney fees and costs associated with the Motion. [#45]. Whole Hemp filed a Response on August 7, 2017, [#48], and Plaintiffs filed a Reply on August 14, 2017, [#49].
LEGAL STANDARDS
I. Scope of Discovery
Rule 26(b)(1) governs the scope of discovery in this action and provides that unless otherwise limited by court order:
Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.
Fed. R. Civ. P. 26(b)(1). Under this District’s applicable case law, the party seeking discovery has the burden of establishing that the information sought is relevant to a claim or defense in the case. Once established that the discovery sought appears relevant, the party resisting the discovery has the burden to demonstrate lack of relevance or that the information is of such marginal relevance that the potential harm occasioned by the discovery outweighs the benefit of production. See Simpson v. University of Colorado, 220 F.R.D. 354, 359-59 (D. Colo. 2004).
II. Subpoenas
Rule 45 of the Federal Rules of Civil Procedure governs the use of subpoenas. In relevant part, Rule 45 permits a party to an action to serve a nonparty with a subpoena commanding the nonparty to produce designated documents within that nonparty’s possession, custody, or control. See Fed. R. Civ. P. 45(a)(1)(A)(iii). The nonparty on whom a subpoena is served to produce documents or tangible things may serve on the party or attorney designated in the subpoena “a written objection to inspecting, copying, testing, or sampling any or all of the materials or to inspecting the premises--or to producing electronically stored information in the form or forms requested,” and “[t]he objection must be served before the earlier of the time specified for compliance or 14 days after the subpoena is served.” Id. at (d)(2)(B). Upon receiving the objection, the serving party may move the court for the district where compliance is required for an order compelling production, as Plaintiffs have done here. Id. at (d)(2)(B)(i).
A subpoena served on a third party pursuant to Rule 45 is considered discovery within the meaning of the Federal Rules of Civil Procedure, Rice v. United States, 164 F.R.D. 556, 556–57 (N.D. Okla. 1995), and thus must comply with the same standards that govern discovery between the parties: to be enforceable, a subpoena must seek information that is relevant to a party’s claims or defenses, and is proportional to the needs of the case. Fed. R. Civ. P. 26(b)(1). See also Transcor, Inc. v. Furney Charters, Inc., 212 F.R.D. 588, 591 (D. Kan. 2003) (citing Fed. R. Civ. P. 45(d)(1) advisory committee’s note to the 1970 Amendment) (observing that it is “well-settled” that the scope of discovery under a subpoena is the same as the scope of discovery under Rule 26(b) of the Federal Rules of Civil Procedure).
ANALYSIS
*3 Plaintiffs ask the court to compel nonparty Whole Hemp to comply with a subpoena for production of documents served on May 26, 2017. [#45]. Plaintiffs assert that the requested documents are highly relevant to this action “as Whole Hemp is closely connected to Entourage and is the entity that receives all of the revenue from use of the infringing mark at issue and has used the infringing mark at trade shows and the like.” [Id. at 5]. Additionally, Plaintiffs assert, the requested documents are critical to their ability to prove their claims for infringement and associated damages. Finally, Plaintiffs assert that “Whole Hemp’s counsel agreed to treat the Subpoena as a Request for Documents if Whole Hemp were to be added as a party but then got cute and argued that Plaintiffs have no document requests remaining.” [#45-2]. Plaintiffs also ask for an award of attorney fees and costs incurred in the preparation and filing of the Motion to Compel.
In response, Whole Hemp notes that Entourage’s objection to this court’s Recommendation seeks only to “clarify and object to specific factual findings” made therein, and that, as a result, Whole Hemp is a de facto party to the case. [#48 at 2]. Whole Hemp argues that a Rule 45 subpoena is thus inapplicable to it, because subpoenas under that Rule may be served on nonparties only. Instead, Whole Hemp contends, Plaintiffs should have served it with requests for production of documents under Rule 34, and that it would be unfair to require Whole Hemp to respond to the Rule 45 subpoena when it will be required to respond to Rule 34 requests once it becomes a party. Whole Hemp suggests that it simply respond to the 35 requests for production that Plaintiffs served on Entourage in February 2017, and that providing responses to the requests for production rather than the subpoena is procedurally accurate and will not cause prejudice to Plaintiffs.[1] Finally, Whole Hemp argues in the alternative that it served Plaintiffs with specific objections to the subpoena.
In reply, Plaintiffs argue that Whole Hemp was a nonparty to the litigation when they served the subpoena and remains a nonparty to date, and that Entourage is “a company that, by its own admission, is closely related to Whole Hemp,” and that “vehemently opposed Plaintiffs’ efforts to add Whole Hemp as a party.” [#49 at 2]. Plaintiffs represent that the information the subpoena seeks “is largely (although not entirely) duplicative of the information” sought by the 35 requests for production of documents, “and thus Whole Hemp would in no way be responding twice.” [Id.] Plaintiffs further represent that they “will not be issuing an additional set of document requests to Whole Hemp once added as a party,” and “[t]he subpoena covers the documents Plaintiffs need from Whole Hemp based on the information available to date.” [Id. at 3]. Plaintiffs note that Whole Hemp’s proposal was not satisfactory because Plaintiffs had already incurred “thousands of dollars in fees” in pursuing the Motion to Compel, and Plaintiffs’ counsel drafted the subpoena after Plaintiffs had learned “that Defendant had obscured the importance of Whole Hemp to this case and after additional investigation took place, so [the subpoena] included requests not part of the original requests for documents.” [Id.] Finally, with respect to Whole Hemp’s objections, Plaintiffs argue that Whole Hemp failed to engage in a meet and confer process and rather refused to produce any responsive documents, and that the objections “are not well-founded,” in any event. [Id. at 5].
The court finds the arguments furthered by Whole Hemp unpersuasive for the following reasons. As an initial matter, discovery closes September 29, 2017, and the operative Scheduling Order binds only Plaintiffs and Entourage as Parties. See [#27]. This court entered the Scheduling Order before Plaintiffs had knowledge of Whole Hemp’s alleged role; indeed, it was only through the discovery process that Plaintiffs learned of Whole Hemp. See [#45-6 at 3]. When Plaintiffs moved to amend their pleading to add Whole Hemp as a party, Entourage objected on the bases of undue delay and futility. See [#35]. Plaintiffs served the subpoena on Whole Hemp following Entourage’s opposition to the motion to amend. See [#45-8]. As Plaintiffs note, Whole Hemp was a nonparty when it received service of the subpoena and it remains a nonparty at this time. Neither the Federal Rules of Civil Procedure nor the Local Rules of this District contemplate that a nonparty may decline to respond to a subpoena on anticipation that it may become a party in the future. Nor does Whole Hemp cite to any authority that allows it to unilaterally refuse to respond to a subpoena on the expectation of becoming a party to this action. See generally, [#48].
*4 While Whole Hemp is entitled to object to the subpoena in the ordinary course of litigation, its objections as reflected in [#48-6] are inadequate. First, a general argument such as “all of the individual document requests, or virtually all of them, require Whole Hemp to disclose trade secrets or other confidential information,” [#48-6 at 2], is inadequate. The court has entered a Stipulated Protective Order in this case, which has a provision that applies to nonparties. See [#30 at 11]. Similarly, any argument that providing a response to the subpoena is burdensome is equally unavailing as it lacks the specificity necessary for the court to undertake a meaningful analysis pursuant to Rule 26(b)(1). Whole Hemp has identified no reasonable objection by which to withhold all documents, and this court declines to permit Whoe Hemp to avoid any discovery based merely on the objections raised to date. In light of this Order, Whole Hemp is expected to respond with particularity to each of the subpoena topics. To the extent Entourage or Whole Hemp harbors concern about duplicative or cumulative discovery, the court may address the specifics of those concerns during a Status Conference after a meaningful meet and confer between all Parties.
Finally, this court declines to sanction Whole Hemp at this time with an award of fees to Plaintiffs, but notes that such a ruling is without prejudice to Plaintiffs renewing their request at a later date should a pattern of evasive behavior develop during the remainder of the discovery period suggesting that Whole Hemp and/or Defendant is engaging in dilatory tactics with respect to discovery. Accordingly, IT IS ORDERED that:
(1) Plaintiffs’ Motion to Compel Production [#45] is GRANTED; and
(2) Whole Hemp is required to RESPOND to the subpoena no later than August 29, 2017, consistent with its obligations under the Federal Rules of Civil Procedure.
Footnotes
The Parties appear to agree that Entourage indicated in response to “roughly half” of the 35 requests that there were no responsive documents, “largely because [Entourage] does not sell products or generate revenue,” and that Whole Hemp is better situated to provide responsive documents. [#48 at 3-4]. See [#45 at 2].