JUUL Labs, Inc. v. Chou
JUUL Labs, Inc. v. Chou
2022 WL 2165411 (C.D. Cal. 2022)
February 11, 2022
Donahue, Patricia, United States Magistrate Judge
Summary
The Court granted a protective order in part and ordered that the depositions of four witnesses take place in Singapore, and the deposition of one witness take place remotely in Macau. Additionally, the Court ordered Plaintiff to provide responses to ROG 9 and produce all documents in its control, custody or possession that are responsive to RFP 9, which are limited to internal communications and documents related to negative views of JUUL's goodwill and reputation from 2019 to present.
Additional Decisions
JUUL Labs Inc.
v.
Andy Chou et al
v.
Andy Chou et al
Case No. 2:21-cv-03056-DSF-PD
United States District Court, C.D. California
Filed February 11, 2022
Counsel
Gabriella A. Wilkins, Stephen C. Steinberg, Bartko Zankel Bunzel and Miller APC, San Francisco, CA, for JUUL Labs, Inc.Katja M. Grosch, Theodore Scott Lee, William R. Walz, InHouse Co Law Firm, Irvine, CA, Lei Mei, Guang-Yu Zhu, Pro Hac Vice, Laurence Michael Sandell, Philip Andrew Riley, Pro Hac Vice, Mei and Mark LLP, Washington, DC, Alejandro S. Angulo, Bradley A. Chapin, Kathryn Diane Zajec Domin, Rutan and Tucker LLP, Irvine, CA, Alexander Chen, Inhouse Co Law Firm Legal Department, Irvine, CA, John Karl Buche, Buche and Associates PC, Los Angeles, CA, Man Li, Mei and Mark LLP, Beverly Hills, CA, Neal G. Massand, Pro Hac Vice, Stevenson Moore, V, Pro Hac Vice, Timothy T. Wang, Pro Hac Vice, Tong Jin, Pro Hac Vice, Ni, Wang and Massand, PLLC, Dallas, TX, for Andy Chou.
Katja M. Grosch, Theodore Scott Lee, William R. Walz, InHouse Co Law Firm, Irvine, CA, Lei Mei, Guang-Yu Zhu, Pro Hac Vice, Laurence Michael Sandell, Philip Andrew Riley, Pro Hac Vice, Mei and Mark LLP, Washington, DC, Alejandro S. Angulo, Bradley A. Chapin, Kathryn Diane Zajec Domin, Rutan and Tucker LLP, Irvine, CA, Alexander Chen, Inhouse Co Law Firm Legal Department, Irvine, CA, John Karl Buche, Buche and Associates PC, Los Angeles, CA, Man Li, Mei and Mark LLP, Beverly Hills, CA, Neal G. Massand, Pro Hac Vice, Stevenson Moore, V, Pro Hac Vice, Timothy T. Wang, Pro Hac Vice, Tong Jin, Pro Hac Vice, Ni, Wang and Massand, PLLC, Dallas, TX, for Andy Chou.
Lei Mei, Pro Hac Vice, Guang-Yu Zhu, Pro Hac Vice, Laurence Michael Sandell, Philip Andrew Riley, Pro Hac Vice, Mei and Mark LLP, Washington, DC, Alejandro S. Angulo, Bradley A. Chapin, Rutan and Tucker LLP, Irvine, CA, Alexander Chen, Theodore Scott Lee, William R. Walz, Inhouse Co Law Firm Legal Department, Irvine, CA, John Karl Buche, Buche and Associates PC, Los Angeles, CA, Kathryn Diane Zajec Domin, Rutan and Tucker LLP, Irvine, CA, Man Li, Mei and Mark LLP, Beverly Hills, CA, Neal G. Massand, Pro Hac Vice, Stevenson Moore, V, Pro Hac Vice, Timothy T. Wang, Pro Hac Vice, Tong Jin, Pro Hac Vice, Ni, Wang and Massand, PLLC, Dallas, TX, for Defendant CJ Fulfillment Corp.
Donahue, Patricia, United States Magistrate Judge
Proceedings: (In Chambers) Order Granting in Part and Denying in Part Defendants' Motion for Protective Order and Granting in Part Defendants' Motion to Compel
*1 Before the Court is the Motion for Protective Order and to Compel filed by defendants Andy Chou, Yiwu Cute Jewelry Co., Ltd., Yiwu Xite Jewelry Co., Ltd., CJ Fulfillment Corp., CJ Trade Corp., and Yiwu Promotional Trade Co., Ltd. (“Defendants”). [Dkt. No. 132.] Defendants seek: (1) a protective order pursuant to Rule 26(c) of the Federal Rules of Civil Procedure requiring that the depositions noticed by Plaintiff JUUL Labs, Inc. (“Plaintiff”) of five witnesses who reside in China take place remotely in Macau rather than the locations noticed by Plaintiff; and (2) an order compelling Plaintiff's production in response to Defendants' amended Request for Production No. 9 (“RFP 9”) and compelling Plaintiff's response to Defendants' Interrogatory No. 9 (“ROG 9”). For the reasons set forth below, the motion for a protective order is granted in part and denied in part, and the motion to compel responses is granted in part.
I. Pertinent Background
This case arises from the listing of counterfeit products bearing one or more of Plaintiff's registered “JUUL” trademarks for sale on a website operated by Defendants. [See Dkt. No. 103 at 2-7.] In July 2021, Plaintiff filed a motion for summary judgement on liability for all claims and damages. [Dkt. No. 77.] On August 30, 2021, the Court granted summary judgment as to liability but denied it as to damages because there are outstanding issues of material fact, including whether the sales of the infringing goods were willful. [Dkt. No. 103 at 16.] Thus, the only remaining issue in this matter is damages, which Plaintiff has elected to seek pursuant to 15 U.S.C. § 1117(c).
Section 1117(c) provides that in cases “involving the use of a counterfeit mark ... in connection with the sale, offering for sale, or distribution of goods or services,” the plaintiff may elect to recover statutory damages in the amount of “not less than $1,000 or more than $200,000 per counterfeit mark per type of goods” or, if the use is found to be willful, “not more than $2,000,000 per counterfeit mark per type of goods.” Id. § 1117(c).
Pertinent to the instant motion are the temporary restraining order and preliminary injunction entered in this matter on April 13, 2021, and June 9, 2021, respectively. [Dkt. Nos. 31, 65.] The former ordered an asset freeze and required Defendants to provide a full accounting of the restrained assets within three business days of receipt of the order. [Dkt. No. 31 at 28-29.] Plaintiff served Defendants the order on April 22, 2021, and Defendants withdrew tens of thousands of dollars from their financial accounts on April 23 and April 25. [Dkt. No. 103 at 8.] Further, Defendants failed to meet the deadline to provide the accounting of the restrained assets, eventually providing it on May 7, 2021, which listed ten accounts, one piece of real estate, and one automobile. [Id. at 8-9.] The preliminary injunction instructed Defendants to provide Plaintiff with a full accounting of their assets no later than June 12, 2021. [Dkt. No. 65 at 28-29.] On June 14, 2021, Defendants provided Plaintiff a “Supplemental Accounting” that identified seventy accounts (totaling at the time approximately $2.63 million), three parcels of real estate, and one automobile. [Dkt. No. 103 at 9.] Plaintiff later discovered that the Supplemental Accounting failed to include at least a dozen accounts with small amounts of money, or that were inactive or empty. [Id. at 9.]
II. Procedural History of the Two Discovery Disputes at Issue
*2 On November 22, 2021, the parties' sent a joint email to the Court outlining 13 discovery disputes. On December 3, 2021, the Court held an informal discovery conference and heard argument from the parties regarding their positions. That same day, it issued an order that contained its conclusions and ordered the parties to further meet and confer in good faith to resolve any remaining disputes. The parties were informed that they were to notify the Court if they could not reach an agreement and the Court would set a briefing schedule. [Dkt. No. 121.]
The parties notified the Court that the issues of the instant motion remained outstanding and a briefing schedule was set. [Dkt. No. 128.] The Court takes this matter under submission without oral argument. See Fed. R. Civ. P. 78; L.R. 7-15. In addition to presiding over the informal discovery conference, the Court has reviewed all briefing provided by both parties regarding the requested protective order and the contested discovery requests. [Dkt. Nos. 132, 135, 139.]
III. Protective Order
A. Depositions Noticed by Plaintiff
Plaintiff noticed the depositions of the following five individuals:
1. Andy Chou. Mr. Chou is the owner and CEO of the corporate defendants and is named as a defendant individually. He resides in Zhejiang province, located on mainland China, and has received the Anhui Zhifei vaccine. Mr. Chou has also been designated as a witness pursuant to Fed. R. Civ P. 30(b)(6) for all of the corporate defendants.
2. Lynn Lee. Ms. Lee is married to Mr. Chou and is his executive assistant. She resides in Zhejiang province and has not received any vaccinations for COVID-19. According to her declaration, she delivered a baby in January 2021 and is currently nursing her child.
3. Wang Huiyun. Ms. Wang is the head of the IP Enforcement Unit of Defendant Yiwu Cute Jewelry Co., Ltd., which is based in China. She lives in Zhejiang Province and has received the Sinovac vaccine for COVID-19. According to her declaration, to avoid placing herself at increased risk of COVID-19 and to avoid quarantine requirements, she would quit her job rather than travel to Singapore or the United States to be deposed.
4. Gen Yu Wu. Ms. Wu is the head of the financing department of Defendant Yiwu Cute Jewelry Co., Ltd. and has received the Sinopharm vaccine. She resides in Zhejiang province. Ms. Wu declared that to avoid contracting COVID-19 and to avoid quarantine requirements, she would quit her job rather than travel to Singapore or the United States to be deposed.
5. “Gringer,” a/k/a Xinhui Lou. Mr. Lou is a sales chat agent for Defendants and has received the Sinopharm vaccine. He resides in Zhejiang province. According to his declaration, he would quit his job rather than travel to Singapore or the United States to avoid increased COVID-19 exposure and be subjected to quarantine requirements.
[Dkt. No. 132-1 at 7-8.]
The parties have extensively discussed a suitable location to depose each of the witnesses but have been unable to reach agreement. Plaintiff contends that it needs to depose these witnesses in person to assess their credibility adequately because Defendants have previously lied under oath in this case. Plaintiff originally noticed the depositions to take place in Los Angeles in November 2021. [Dkt. No. 135-2.] Plaintiff subsequently proposed Singapore as a suitable location for all five depositions. [Dkt. No. 135 at 9.] Citing the ongoing COVID-19 pandemic and the health risks and quarantine requirements posed by travel, Defendants seek a protective order that the depositions be conducted remotely, with the witnesses in Macau.
B. Legal Standard
*3 Rule 26(c) authorizes the issuance of a protective order restricting or limiting discovery upon a showing of good cause. For good cause, courts may issue a protective order “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense” by placing limitations on discovery. Fed. R. Civ. P. 26(c)(1).
“[T]he party seeking protection bears the burden of showing specific prejudice or harm [that] will result if no protective order is granted.” Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 1210-11 (9th Cir. 2002) (citation omitted); Kamakana v. City and Cnty. of Honolulu, 447 F.3d 1172, 1176 (9th Cir. 2006) (Rule 26(c) requires a “particularized showing” of good cause for the entry of a protective order). If the moving party meets this burden, the court must then balance the interests involved. See Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir. 1992).
Courts have wide discretion in determining whether good causes exists and in fashioning a protective order that provides the appropriate degree of protection. Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984). “If a motion for a protective order is wholly or partly denied, the court may, on just terms, order that any party or person provide or permit discovery.” Fed. R. Civ. P. 26(c)(2).
As with deciding whether good cause exists to support a protective order, courts have broad discretion in determining the time and place of depositions. See Hyde & Drath v. Baker, 24 F.3d 1162, 1165 (9th Cir. 1994) (citation omitted); see also Swenson v. GEICO Cas. Co., 336 F.R.D. 206, 209 (D. Nev. 2020) (ordering remote depositions). Rule 30(b)(4) provides that the parties may stipulate, or the court may order on motion, “that a deposition be taken by telephone or other remote means.” Fed. R. Civ. P. 30(b)(4). Courts within the Ninth Circuit have observed that leave to take depositions remotely should be granted liberally. See Pruco Life Ins. Co. v. Cal. Energy Dev. Inc., 2021 WL 5043289, at *14 (S.D. Cal. 2021); Swenson, 336 F.R.D. at 209; Lopez v. CIT Bank, N.A., 2015 WL 10374104, at *2 (N.D. Cal. 2015).
The party seeking a remote deposition pursuant to Rule 30(b)(4) must first establish a legitimate reason. Kaseberg v. Conaco, LLC, 2016 WL 8729927, at *5 (S.D. Cal. 2016) (citation omitted). The burden then shifts to the opposing party to show prejudice if the motion is granted. Id. at *6. Some courts in this Circuit have observed that the opposing party must make a “particularized showing” of prejudice. See Schoonover v. Iovate Health Scis. U.S.A. Inc., 2020 WL 7094061, at *1 (C.D. Cal. 2020); Hernandez v. Bobst Grp. N. Am., 2020 WL 6063143, at *2 (E.D. Cal. 2020).
C. Analysis
1. Legitimate Reason for Remote Depositions
Defendants cite the ongoing, global COVID-19 pandemic and the increased health risks and quarantine requirements posed by travel as the reason why the Court should order a remote deposition. [Dkt. No. 132-1 at 10.] Plaintiff does not contest that Defendants have established a legitimate reason for remote depositions. [See Dkt. No. 135 at 10.] Since the beginning of the pandemic, numerous courts around the country have found the obvious health risk it poses to be sufficient reasoning for remote depositions. See Richmond v. Reefer Sys., Inc, 2020 WL 9074805, at *6 (C.D. Cal. 2020); Hernandez, 2020 WL 6063143 at *3; Swenson, 336 F.R.D. at 210-11; Patterson Dental Supply, Inc. v. Pace, 2020 WL 10223626, at *4 (D. Minn. 2020); Sonrai Sys., LLC v. Romano, 2020 WL 3960441, at *3 (N.D. Ill. 2020); In re Terrorist Attacks on September 11, 2001, 337 F.R.D. 575, 578 (S.D.N.Y. 2020). The Court agrees and finds that the global COVID-19 pandemic and the increased health risks posed to the five witnesses listed above establish a legitimate reason for remote depositions pursuant to Rule 30(b)(4).
2. Prejudice to Plaintiff Caused By Remote Depositions
*4 The burden now shifts to Plaintiff to establish prejudice. See Schoonover, 2020 WL 7094061, at *1. Plaintiff argues that a protective order requiring the depositions to be held remotely in Macau would prejudice it due to witness credibility issues, the importance of the witnesses, and the extreme time difference between the witnesses' location in Macau and the attorneys' locations in California and New Jersey. [Dkt. No. 135 at 10-14.] For the following reasons, the Court finds that Plaintiff has established that it would be prejudiced by remote depositions of four of the five witnesses. As to Mr. Chou, Ms. Wang, Ms. Wu, and Mr. Lou, the prejudice outweighs Defendants' legitimate reasons for remote depositions, and the Court will order that their depositions take place in person, as discussed below. As to Ms. Lee, who is unvaccinated and nursing her child, the Court finds that the prejudice to Plaintiff does not outweigh the legitimate reasons and orders that her deposition occur remotely.
Plaintiff's witness credibility concern arises from Defendants' misleading sworn statements about dissipating assets, in violation of the TRO and preliminary injunction. In his declaration regarding compliance with the TRO, Defendant (and noticed deponent) Andy Chou stated under oath that “all Defendants have refrained from secreting assets, and from transferring or conveying any assets [ ] since the issuance of the Order.” [Dkt. No. 55-8, ¶ 4.] In fact, as the Court found, bank records revealed that after Defendants were served with the TRO, they dissipated assets, which Plaintiff claims included millions of dollars received in and transferred out of their PayPal accounts. [Dkt. Nos. 65 at 25-26, 78-1, ¶¶ 15-21.] Mr. Chou also declared that he had provided a “full accounting” of all relevant assets pursuant to the TRO. [Dkt. No. 55-8, ¶ 5.] Plaintiff argues that Defendants actually concealed sixty accounts and two parcels of real estate. [See Dkt. No. 135 at 11.]
In opposing the preliminary injunction, Mr. Chou declared that he “personally verified that the only Juul products that have ever been sold in the history of CJ's operations are the products that Juul's investigator secured during his pre-litigation investigation.” [Dkt. No. 51-1, ¶ 5.] According to Plaintiff, subsequent discovery has shown that Defendants sold other counterfeit JUUL products to other end customers in 2019, and Defendants still have yet to account for the 10,000+ units of such products that they previously had in their inventory. [Dkt. Nos. 135 at 11, 135-1, ¶¶ 9-10.] For these reasons, Plaintiff is adamant that its counsel must assess the witnesses' credibility in person.
Plaintiff further contends that credibility assessment concerns are heightened when the deponent is an important witness. See Welsh v. Safeco Ins. Co. of Am., 2021 WL 5566009, at *2 (D. Utah 2021). As one of the factors in the determination of damages is willfulness, the anticipated testimony from these witnesses could be highly relevant. See Starbuzz Tobacco, Inc. v. Gold Star Tobacco Inc., 2020 WL 1162702, at *4 (C.D. Cal. 2020) (rejecting deposition by videoconference where witness, though not the most crucial, could testify directly to the issues of the case); Huddleston v. Bowling Green Inn of Pensacola, 333 F.R.D. 581, 586 (N.D. Fla. 2019) (observing that relatively unimportant witnesses can be typically be deposed telephonically or via videoconference but the testimony at issue would likely be a “key piece of evidence for both parties”).
“[W]illful infringement is a question of fact that turns on the defendant's state of mind, and is often accompanied by questions of intent, belief, and credibility.” Adidas-America, Inc. v. Payless Shoesource, Inc., 546 F.Supp.2d 1029, 1046 (D. Or. 2008) (internal quotation marks and citation omitted). Mr. Chou, Ms. Wang, and Ms. Wu all submitted declarations in connection with the opposition to the preliminary injunction motion. As discussed above, Mr. Chou stated that he had personally verified that the only JUUL products sold from the website were to Plaintiff's investigator. Ms. Wang described Defendants' IP enforcement program as “robust” and that “JUUL” had not been registered in the system because it was not known worldwide nor did any of the enforcement employees use e-cigarettes. [Dkt. No. 51-15, ¶ 4, ¶ 12.] Plaintiff contends that Ms. Wang lied about Defendants' efforts to identify intellectual property infringement on the website. Specifically, they assert that Ms. Wang lied when she stated that trademark trading cards were distributed to team members and updated every month. [Dkt. Nos. 135 at 12, 51-15, ¶ 6.] Ms. Wu's declaration described her role as the head of the financing department and responsibilities such as auditing and accounting. [Dkt. No. 51-20, ¶ 7.] Mr. Lou is a fact witness who directly communicated via chat and Skype with Plaintiff's investigator about the counterfeit JUUL products the investigator purchased on Defendants' website. According to the declaration of Plaintiff's investigator, Mr. Lou never represented that the products were being advertised or sold by any entity other than Defendants. [Dkt. No. 77-36, ¶¶ 41-42.]
*5 The depositions of Mr. Chou, Ms. Wu and Mr. Lou could reveal more about Defendants' knowledge of JUUL products in their inventory and breadth of sales, which would tend to show willfulness. Defendants have already made representations about both, which Plaintiff disputes and contends that subsequent discovery has shown to be untrue. [Dkt. No. 135 at 11-12.] Additionally, Plaintiff could inquire further about the IP enforcement protocols to show that the infringement was not an isolated incident but “knowing conduct” or an act committed with an “an aura of indifference to plaintiff's rights.” Philip Morris USA Inc. v. Liu, 489 F.Supp.2d 1119, 1123 (C.D. Cal. 2007) (quotation marks and citations omitted). Plaintiff may be able to elicit testimony from Mr. Chou and Ms. Wang that would support the argument that Defendants' IP enforcement was not robust, or even inadequate to a degree that it constituted willful blindness. See Y.Y.G.M. SA v. Redbubble, Inc., 2020 WL 3984528, at *7 (C.D. Cal. 2020) (“A company ... could hypothetically maintain a state of ‘willful blindness’ simply by understaffing its marketplace integrity organization relative to the amount of content on its site.”).
Additionally, at least one court has commented on the necessity to conduct in-person depositions where there was “an exceedingly high level of distrust among all parties.” Pruco, 2021 WL 5043289, at *3 (citing “near-constant stream of accusations of bad faith and dishonest conduct”). Based upon the multiple discovery conferences held in this matter and arguments related to Defendants' post-injunctive relief conduct, mistrust appears to be firmly rooted. Indeed, Plaintiff's opposition to the instant protective order asserts that Defendants have lied under oath and Defendants counter that Plaintiff's fears of witness coaching are feigned. [Dkt. Nos. 135 at 11-12, 139 at 11.]
Defendants argue that other courts have found that in-person depositions do not aid in assessing witness credibility. They also assert that Macau is the only reasonable location for the depositions given the vaccination statuses and other concerns raised by travel and quarantine. [Dkt. No. 132-1 at 11-20.] During the pandemic, courts have wrestled with the argument that counsel is better able to assess credibility in person. See Rubio v. City of Visalia, 2022 WL 193072, at *2 (E.D. Cal. 2021) (observing that in-person depositions allow for assessment of credibility and presentation at trial, and COVID-19 precautions could be taken where discovery date was four months away); Kirkland v. City of Maryville, 2020 WL 12863656, at *3 (E.D. Tenn. 2020) (rejecting on the basis that attorneys all over the country are adapting to new practice of deposing virtually). As Defendants pointed out, courts have noted that the common signs of dishonesty would be less obvious in person because the witness likely will be wearing a mask. Mosiman v. C & E Excavating, Inc., 2021 WL 1100597, at *3 (N.D. Ind. 2021) (“By eliminating the mask, the examiner can observe the full face of the witness, which may aid in assessing credibility.”); Sonrai Sys., LLC, 2020 WL 3960441, at *4 (“[The] ability to assess witness credibility would arguably be enhanced if the depositions are conducted via video because masks would not be necessary and counsel will be able to observe the experts' facial expressions and non-verbal responses during their testimony.”); Anderson v. Raymond Corp., 2020 WL 8082416, at *1 (S.D. Ill. 2020) (use of facemasks would “limit[ ] counsel's ability to fully assess the witness”). The likelihood that the witnesses will wear masks during these deposition is great.
Plaintiff also contends that the time difference involved in a remote deposition would be prejudicial. The Court does not find this reasoning so compelling that it tips the balance, particularly since Defendants have outlined a potential schedule in which depositions could start at 2:00 p.m. Pacific Standard Time. The use of an interpreter will increase the length of the deposition, but that is so whether the depositions are remote or in person. The parties may also choose to schedule the depositions in blocks over multiple days. See In re Terrorist Attacks on September 11, 2001, 337 F.R.D. at 580; Sec. and Exch. Comm'n v. Aly, 320 F.R.D. 116, 120 (S.D.N.Y. 2017).
*6 The Court does not weigh the risks of an in-person proceeding lightly. However, the facts, procedural history, and other circumstances of this case distinguish it from others during the pandemic where the Court has ordered remote depositions. Notably, even if the depositions were conducted remotely pursuant to the proposed protective order, the witnesses would nonetheless travel two-and-a-half hours by plane from mainland China to Macau.[1] Traveling to a location other than Macau imposes an additional hardship on the witnesses, as they would be subject to quarantine. There is no quarantine before or after travel from mainland China to Macau. [Dkt. No. 132-1 at 8.] However, that concern does not outweigh the prejudice that Plaintiff has shown would result from remote depositions.
Based on Plaintiff's specific showing of Defendants' prior conduct in this case and its argument that it must assess the deponents' credibility in person, the Court concludes that Defendants are not entitled to a protective order that the depositions be conducted pursuant to Rule 30(b)(4). The unique circumstances present here warrant in-person depositions of four noticed deponents (excluding Lynn Lee) if Plaintiff's counsel so elects. See Welsh, 2021 WL 5566009, at *2 (“The difference in holdings is not surprising because courts have wide discretions in selecting the place of a deposition, and unique factors in each case support decisions.”) (citation omitted); In re Broiler Chicken Antitrust Litig., 2020 WL 3469166, at *6 (N.D. Ill. 2020) (“Cases in this area are heavily fact dependent.”).
Accordingly, the proposed protective order [Dkt 132-2 at 2], is denied in part as to conducting the personal depositions of Andy Chou (and Rule 30(b)(6) deposition), Gen Yu Wu, Xinhui Lou and Wang Huiyun via remote means. The proposed protective order is granted in part as to conducting the personal deposition of Lynn Lee via remote means.
D. Location of Deposition
Defendants also move for an order requiring the depositions be conducted in Macau. They carry the initial burden to establish specific prejudice or harm if the order is not granted. See Phillips, 307 F.3d at 1210-11. Defendants argue that requiring the deponents to appear in the noticed-location, Los Angeles, would cause specific harm to the deponents and prejudice Defendants. They note that Mr. Chou and Ms. Lee are unable enter the United States due to their vaccination status. [Dkt. No. 132-1 at 14.] The witnesses who are vaccinated and thus could enter the United States would have to quarantine for 21 days upon their return to China. The Court finds that Defendants have shown that they and the deponents would be prejudiced if the proposed order is denied and the deponents are required to appear in Los Angeles, the location noticed by Plaintiff. Defendants also argue that Plaintiff did not have the legal basis to notice depositions under Rule 45(c)(1) for Ms. Wu, Ms. Wang, Mr. Lou, and Ms. Lee in California because they live and work in China and do not regularly transact business in person in California, a point which Plaintiff does not contest. [Dkt. No. 132-1 at 15.]
However, the balance of interests does not favor Macau as the location for the deposition, as it would cause significant prejudice to Plaintiff. The deponents are Chinese citizens and would travel to Macau from Zhejiang province in China. They would take a two-and-a-half hour flight and obtain a permit, which is available to Chinese citizens regardless of vaccination status. They would not need to be subjected to quarantine on either side. [Dkt. Nos. 132-22 at 2, 132-32 at 2.] Defendants' counsel plans to appear remotely and contends that Plaintiff's counsel should do the same. However, in response to Plaintiff's adamant position that Plaintiff's counsel conduct the deposition in person, Defendants suggest in a footnote that they would facilitate the scheduling in Macau for Plaintiff's counsel to travel there. Counsel traveling from the United States could not fly directly to Macau but would be required to complete a mandatory 21-day quarantine in mainland China first. [Dkt. Nos. 132-1 at 16 n.7, 132-19 at 8, 13.] Even if they were prepared to complete the quarantine, it is not clear that counsel could obtain a visa to enter China, which is only allowing foreign nationals to enter the country under “very limited conditions,” none of which appear to apply to these circumstances. [Dkt. Nos. 135-11 at 6, 135-12 at 8.] Then, counsel would have to apply for another visa to enter Macau. [Dkt. No. 135-13 at 3.] In short, depositions in Macau would significantly burden Plaintiff while causing little burden to the witnesses.
*7 Plaintiff has offered to take the depositions in Singapore. [Dkt. No. 135 at 9.] Defense counsel could proceed remotely, and both Plaintiff's counsel and the witnesses would travel to Singapore. Of all the possibilities presented to the Court, this result most fairly allocates the burdens upon both parties. First, entry into Singapore for all travelers involved is less arduous than Macau (for Plaintiff's counsel) or the United States (for any deponent), requiring: (1) registration to obtain either an Air Travel Pass (for Chinese citizens) or a Vaccinated Travel Lane Pass (for vaccinated American citizens); (2) a negative PCR or ART test within two days of departure; (3) a PCR test administered at the arrival airport in Singapore and self-isolation until receipt of the results, usually within 24 hours; and for Chinese citizens, (4) a visa and continuous presence within an approved country, which includes China, for 14 days prior to departure for Singapore. [Dkt. Nos. 135-15, 135-16, 135-18.][2]
Defendants' primary concerns are that the length of the flight from China to Singapore will heighten the risk of contracting COVID-19 and that the witness will be required to quarantine for 21 days upon return to China. [Dkt. Nos. 132-1 at 15, 132-8 at 4.] According to Defendants, a direct flight to Singapore takes “more than twice as long” as the flight to Macau and connecting flights, which fly more frequently, are 7.5 hours. [Dkt. No. 132-1 at 8.] However, the flight from China to Singapore is significantly shorter than from China to Los Angeles. Additionally, it is not so long to outweigh the burden to Plaintiff's counsel who will be flying from the United States to Singapore. Though flying to Singapore and quarantine upon return will undoubtedly burden the witnesses, this result is more fairly balanced than granting the protective order and setting Macau as the location. The witnesses' potential decisions to quit so that they would not have to attend their depositions do not counsel a different outcome. The Court repeatedly urged the parties to meet and confer in order to reach a suitable agreement to avoid this very intervention. Plaintiff has advanced its position with the knowledge that one or more deponent may quit their job and not appear in Singapore for the deposition.
Defendants' remaining arguments related to Mr. Chou are premised upon the Apex doctrine and Cadent Ltd. v. 3M Unitek Corp., 232 F.R.D. 625, 628-29 (C.D. Cal. 2005), and are unpersuasive. Under the Apex doctrine, Courts may limit discovery for the deposition of a high-level executive after considering whether the deponent has first-hand, non-repetitive knowledge of the facts at issue and whether the party seeking the deposition has exhausted less intrusive methods. Apple Inc. v. Samsung Elecs. Co., Ltd., 282 F.R.D. 259, 263 (N.D. Cal. 2012). Mr. Chou is not just a high-level executive. He is the owner and CEO of all the corporate defendants. According to his declaration, he personally verified that the sale of JUUL products was limited to Plaintiff's investigator. He also stated that a key individual, Celia Yang, was not an employee of any of the corporate defendants when she acted as a sales agent for Plaintiff's investigator. [Dkt. No. 51-1, ¶ 24.] Plaintiff contends that this is not true and that the name “Celia” is used by many of Defendants' sales agents. [Dkt. No. 135 at 11-12.] This issue was one of the outstanding material facts that precluded summary judgment on damages, as any willfulness by Ms. Yang could not be imputed to Defendants if she was not their employee or agent. [Dkt. No. 103 at 19.] Because Mr. Chou's knowledge is directly at issue, the Court sees no reason to apply the Apex doctrine. Cadent is also inapplicable because its factors concern the location of a Fed. R. Civ. P. 30(b)(6) deposition, but Plaintiff has noticed Mr. Chou's personal deposition as well. It would be illogical to assume that merely because Defendants have designated Chou as the sole Rule 30(b)(6) witness that Cadent requires taking his individual and corporate designee deposition at Defendants' principal place of business.
*8 To fashion a solution to the deposition locations, the Court has sought to balance the burdens on all parties and counsel. In ordering the depositions to proceed with the witnesses in Singapore, the Court finds that it balances the competing interests. In its review of the cases, including those cited by counsel, the Court has found no case where counsel offered to fly internationally to a location more convenient to the deponents in order to conduct depositions in person during the pandemic. The Court has not been presented, nor has it found, any examples involving a compromise similar to what Plaintiff now proposes in attempting to conduct these depositions in person.
Finally, the Court's analysis has not included Ms. Lee, who is unvaccinated and nursing her child. Plaintiff suggests that a different arrangement can be found Ms. Lee, even perhaps delaying her deposition until after the close of discovery but before trial should she get vaccinated. This Court does not have the authority to authorize discovery, including depositions, to occur after the discovery cut-off date, nor can it extend that date. Upon weighing Ms. Lee's circumstances against the potential to Plaintiff, the Court orders that her deposition be taken remotely in Macau.
Accordingly, upon balancing the interests and exercising its discretion, the Court will not grant the portion of the protective order requiring the depositions to be conducted in Macau. Instead, it orders that all of the depositions at issue, except that of Ms. Lee's, take place in Singapore. In exercising its discretion in this matter, the Court recognizes that the most just determination requires an order setting the same location and means of deposing for the majority of the witnesses.
IV. Defendants’ Motion to Compel
Defendants propounded amended discovery requests after further meeting and conferring with opposing counsel as ordered by the Court. Plaintiff objected, claiming the requests were not meaningfully narrowed after the Court's post-informal discovery conference order and do not meet the Rule 26 requirements of relevancy and proportionality to the needs of the case. [Dkt. No. 135 at 21-22.]
A. ROG 9 and RFP 9
Defendants' amended ROG 9 and RFP 9 relate to the same subject area and use the same language in describing the scope of the inquiry. They state as follows:
ROG 9: Identify and describe all internal Communications and Documents, within your possession, custody, knowledge, or control relating to negative views of Juul's goodwill and reputation, including, but not limited to, losses in goodwill or reputation associated with youth vaping and Juul's alleged role in facilitating increases in youth vaping. Your response should include the Person or Persons with the most knowledge responsive to this Interrogatory.
RFP 9: All internal documents and things relating to negative views of Juul's goodwill and reputation, including but not limited, to losses in goodwill or reputation associated with youth vaping and Juul's alleged role in facilitating increases in youth vaping.
[Dkt. No. 132-1 at 20-21.]
Plaintiff objects on the grounds that the discovery requests seek irrelevant materials, are overbroad and are not proportional to the needs of the case. After the discovery conference, Plaintiff offered to “produce all documents concerning any valuation of JLI's trademark as impacted by youth vaping litigation, to the extent any exist, in their possession custody or control.” [Dkt. No. 135 at 22.]
B. Legal Standard
“A party seeking discovery may move for an order compelling an answer [or] production.” Fed. R. Civ. P. 37(a)(3)(B). “[A]n evasive or incomplete disclosure, answer, or response must be treated as a failure to disclose, answer or respond.” Fed. R. Civ. P. 37(a)(4). “Upon a motion to compel discovery, the movant has the initial burden of demonstrating relevance. In turn, the party opposing discovery has the burden of showing that discovery should not be allowed, and also has the burden of clarifying, explaining and supporting its objections with competent evidence.” U.S. v. McGraw-Hill Cos., Inc., 2014 WL 1647385, at *8 (C.D. Cal. 2014) (citations and quotation marks omitted).
C. Analysis
*9 Plaintiff has elected to pursue statutory damages pursuant to § 1117(c), which provides that it may recover an amount of “not less than $1,000 or more than $200,000 per counterfeit mark per type of goods” or, if the use is found to be willful, “not more than $2,000,000 per counterfeit mark per type of goods.” It contends that Defendants acted willfully in infringing on its trademark and seeks the maximum $2,000,000 for each of the 14 marks infringed upon, in total $28,000,000. [Dkt. No. 77-1 at 27-28.] The Court evaluates Plaintiff's objections in light of its demand for the maximum award.
In rewarding statutory damages, many courts look to the caselaw addressing 17 U.S.C. § 504(c), the analogous statute for copyright infringement, and use the following factors to determine a reasonable award: (1) the expenses saved and the profits reaped; (2) the revenues lost by the plaintiff; (3) the value of the trademark; (4) the deterrent effect on others besides the defendant; (5) whether the defendant's conduct was innocent or willful; (6) whether a defendant has cooperated in providing particular records from which to assess the value of the infringing material produced; and (7) the potential to discourage the defendant. Bob and Me Prods., Inc. v. Lemon Leaf Café, LLC, 2020 WL 6468406, *6 (C.D. Cal. 2020) (citation omitted); UL LLC v. Space Chariot Inc., 250 F.Supp.3d 596, 614 (C.D. Cal. 2017) (citations omitted); Nike, Inc. v. Washington, 2009 WL 10672344, at *3 (C.D. Cal. 2009) (citation omitted).
The statutory damages determination is guided by “what is just in the particular case, considering the nature” of the mark, and “the circumstances of the infringement and the like.” Peer Int'l Corp. v. Pausa Recs., Inc., 909 F.2d 1332, 1336 (9th Cir. 1990) (quoting F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 232 (1952)). Courts have “wide discretion in determining the amount of statutory damages to be awarded, constrained only by the specified maxima and minima.” See Harris v. Emus Recs. Corp., 734 F.2d 1329, 1335 (9th Cir. 1984) (citing L.A. Westermann Co. v. Dispatch Printing Co., 249 U.S. 100, 107 (1919)). Some courts consider whether the amount awarded under § 1117(c) is plausibly related to the actual damages. See Capbran Holdings, LLC v. Tri Locus Int'l, LLC, 2017 WL 11631504, at *5 (C.D. Cal. 2017) (“[C]ourts often consider whether the amount of damages requested bears a plausible relationship to Plaintiff's actual damages.”) (internal quotation mark and citations omitted); Coach, Inc. v. Diva Shoes & Accessories, 2011 WL 1483436, at *6 (N.D. Cal 2011) (to satisfy the reasonableness requirement, the amount awarded in statutory damages should “bear some relation to actual damages”). Importantly, “[b]ecause a key purpose of § 1117(c) is to provide a monetary remedy in cases of amorphous damage, courts assessing statutory damages must exercise discretion in examining whatever facts and considerations are available in a setting of limited information.” UL LLC, 250 F.Supp.3d at 615 (emphasis added) (quoting Sara Lee Corp. v. Bags of New York, Inc., 36 F.Supp.2d 161, 166 (S.D.N.Y. 1999)).
Defendants state that “ ‘goodwill and reputation’ are inextricably linked with the ‘value of the trademark,’ ” which is one of the § 504(c) factors. [Dkt. No. 132-1 at 22] (citing Ironhawk Techs v. Dropbox, Inc., 994 F.3d 1107, 1117 (9th Cir. 2021)). They also note that Plaintiff has asserted that the goodwill and reputation of its marks justify the maximum statutory damages award. [Dkt. No. 132-1 at 22.] Plaintiff counters that the cases cited by Defendants are inapposite because they involved liability and actual, not statutory, damages, and that documents related to youth vaping are irrelevant because this is not a case about youth vaping.
*10 While Plaintiff is correct that Defendants cited cases were not related to statutory damages, some courts have considered goodwill and reputation in awarding statutory damages. See Amazon.com, Inc. v. Expert Tech Rogers Pvt. Ltd., 2021 WL 4461601, at *9, (N.D. Cal. 2021) (rejecting goodwill argument in awarding less than maximum statutory damages); Coach Servs., Inc. v. YNM, Inc., 2011 WL 1752091, at *5-6 (C.D. Cal. 2011) (citing rationale of Playboy Enters., Inc. v. Baccarat Clothing Co., 692 F.2d 1272 (9th Cir. 1982), that harm to goodwill and reputation requires an adequate judicial response); see also Ideavillage Prods. Corp. v. Aarhus, 2019 WL 2290514, at *7 (S.D.N.Y. 2019) (assessing value of trademark for statutory damages based on worldwide recognition, awareness, and goodwill).
Information and documents related to negative views of Plaintiff's goodwill and reputation, including those in the youth vaping context, are relevant to the value of the trademark and deterrent effect upon others besides the defendant. Defendants cite a need for the documents and information on the ground that the value of Plaintiff's marks decreased recently due to adverse publicity from targeting youth in its marketing. They point to a 2020 annual report of Altria, which as of December 31, 2020 owned a 35% stake in Plaintiff. [Dkt. No. 132-26 at 6.] The report notes that adverse publicity due to underage use of e-vapor products could affect the valuation of Altria's investment in Plaintiff. [Id. at 17.] In 2019, Plaintiff ceased sales of cartridge-based, flavored e-vapor products which the Food and Drug Administration targeted with regulations to address youth e-vapor use. [Id. at 40.] Without reintroduction of flavors other than tobacco and menthol, Altria concluded that its investment could be adversely affected. [Id.] Evidence possessed by Plaintiff tending to show any decrease in value, caused by youth vaping or by other means, during the period Defendants' infringement occurred could thus support Defendants' position that Plaintiff's demanded damages are unreasonable.
Additionally, a mark's high goodwill may be relevant in showing willfulness or lack thereof. In discussing whether the equitable defense of laches is available in a trademark infringement case, the Ninth Circuit observed that the doctrine does not apply where the infringement was willful. See DC Comics v. Towle, 802 F.3d 1012, 1026 (9th Cir. 2015) (citing Evergreen Safety Council v. RSA Network, Inc., 697 F.3d 1221, 1228 (9th Cir. 2012)). “Willful trademark infringement occurs when the defendant's actions are willfully calculated to exploit the advantage of an established mark.” Id. (citations omitted); see also Philip Morris USA Inc. v. Liu, 489 F.Supp.2d 1119, 1123 (C.D. Cal. 2007) (defendant willfully infringed upon trade when it acted knowingly or “willfully blinded himself to facts that would put him on notice that he was infringing another's trademarks.”). In DC Comics v. Towle, a case involving the willful use of well-known Batman trademarks, the panel cited to Conan Props., Inc. v. Conans Pizza, Inc., 752 F.2d 145, 151 n.2 (5th Cir. 1985), for the proposition that the issue of willfulness turns on whether the defendants “intended to derive benefit from and capitalize on [the plaintiff's] goodwill by using the mark.” 802 F.3d at 1026 (alteration in original).
Plaintiff's internal communications and documents concerning the potential decline of the brand's goodwill and reputation would tend to aid the factfinder in assessing whether Defendants acted with the required intent and award damages appropriately. For example, if the evidence shows that Plaintiff's mark possessed significant goodwill and an outstanding reputation, and that any adverse publicity made little to no impact, then Plaintiff could more persuasively argue that Defendants infringed with the intent to capitalize and seek higher damages. See Chanel Inc. v. Yang, 2013 WL 5755217, at *13 (N.D. Cal. 2013) ($105,000 in statutory damages was reasonable where plaintiff alleged intent to capitalize on reputation and goodwill). Conversely, negative views which drastically diminished the mark's goodwill and reputation would tend to show it was less likely Defendants' infringement was due to their intent to capitalize on the good will of Plaintiff's marks.
*11 Plaintiff's internal, non-public information could assist in fairly evaluating these qualities, which Plaintiff tacitly concedes are amorphous. [Dkt. No. 135 at 25-26.] For example, the Altria report contained an internal study related to the impact on the value of its investment that became public in that form only because Altria released the report. Section 1117(c) recognizes that there are infringement cases that result in amorphous damage and courts must exercise discretion in examining the limited information available. See UL LLC, 250 F.Sup.3d at 615. Plaintiff may internally possess relevant information in a form that may more clearly and accurately assess the value of the both categories.
It bears repeating that Plaintiff seeks the maximum allowable reward under § 1117(c). Defendants are entitled to seek information relevant to arguing that the amount is unreasonable and courts use many different factors, including relation to actual damages, in making that determination. Moreover, even if the Court finds that Defendants' infringement was willful, the Court would not be required to award the maximum. See e.g., Amazon.com, Inc., 2021 WL 4461601, at *6 (“Defendants' scheme did plausibly harm Amazon via lost goodwill, but, without further explanation, the Court is not convinced that lost goodwill approximates $4,000,000.”); Adobe Sys. Inc. v. Johnson, 2015 WL 12681313, at *6 (C.D. Cal. 2015) (awarding $80,000 instead of request for $2,150,000 where defendants realized only $193,035 in gross revenue and sum would both deter and compensate for loss of reputation); Coach, Inc., 2011 WL 1483436, at *6-8 (awarding $140,000 on a request of $1,000,000 where reward was double actual damages, would be significant enough to deter others, and was consistent with cases for similar products in district); cf. Philip Morris USA, Inc. v. Castworld Products, Inc., 219 F.R.D. 494, 500-02 (C.D. Cal. 2003) (awarding maximum because defendant imported “large, commercial quantities” of counterfeit products that had a street value of millions and the amount would deter future illegal conduct). With this in mind, the discovery requests seek information that is not disproportionate to the needs of the case.
Plaintiff claims the requests are overbroad and should be limited to “all documents concerning any valuations of [its] trademark as impacted by youth vaping litigation, to the extent any exist.” [Dkt. No. 135 at 24.] It argues that documents or communications in its control merely discussing the impact of youth vaping on goodwill and reputation go beyond valuing the trademark. Plaintiff's proposal limits the scope of discovery to youth vaping, whereas Defendants seek any internal documents and communications regarding goodwill and reputation. As explained above, considerations of goodwill and reputation are relevant to damages, including value of the mark and willfulness.
However, the Court agrees with Plaintiff that Defendants failed to meaningfully narrow the original requests. As drafted, ROG 9 and RFP 9 would force Plaintiff to produce every memorialization of a negative view of Plaintiff's reputation expressed by any of its employees. Opinions of lower level employees would not be relevant to establishing an internal valuation of the trademark, which Defendants state is the purpose of these discovery requests. [Dkt. No. 132-1 at 24.] The request should be limited to internal Communications by or among Plaintiff's leadership and Documents within the possession, custody, knowledge, or control of Plaintiff's leadership relating to negative views of JUUL's goodwill and reputation, including, but not limited to, losses in goodwill or reputation associated with youth vaping and JUUL's alleged role in facilitating increases in youth vaping.
*12 The Court also previously expressed that the original requests were overbroad in part because they did not have any temporal limitation. The revised requests did not limit the scope to any time period. Plaintiff discovered the infringing products on Defendants' website in 2019 and 2020. [Dkt. No. 103 at 4.] Thus, the request should be limited to materials which reflect the goodwill and reputation of the mark no earlier than 2019, when Defendants began the infringement. Such materials will still satisfy Defendants' intent to “develop a comprehensive, independent valuation” of the trademarks in arguing that maximum statutory damages are unreasonable. [Dkt. No. 132-1 at 24.]
Plaintiff's objections that the discovery would be cumulative and duplicative because it has already produced evidence of the value of the mark are not compelling. Plaintiff's discovery relates to valuing the mark in relation to settlement and licensing agreements while the requested discovery falls into the entirely different category that may not be reflected in the produced materials.
V. Order
Based on the information provided to the Court, Defendants' motion for a protective order is denied in part. Pursuant to Rule 26(c)(2), the Court finds that the most just terms on which four of the depositions can be taken is Singapore.
For the foregoing reasons, the Court issues the following Order:
1. Defendants' request for a protective order is granted in part and denied in part.
a. If Plaintiff intends to conduct in person depositions of Mr. Chou (individually and as the Rule 30(b)(6) designee), Wang Huiyun, Gen Yu Wu, and Xinhui Lou, the depositions shall take place in Singapore at a noticed time which must occur prior to the discovery cut-off date.
b. Given the unique concerns surrounding Ms. Lee, the Court orders that her deposition be taken remotely and in Macau.
2. Plaintiff shall provide responses to ROG 9 and produce all documents in its control, custody or possession that are responsive to RFP 9. The response and production is limited to a period from 2019 to present and shall reflect only internal Communications by or among Plaintiff's leadership and Documents within the possession, custody, knowledge, or control of Plaintiff's leadership relating to negative views of JUUL's goodwill and reputation, including, but not limited to, losses in goodwill or reputation associated with youth vaping and JUUL's alleged role in facilitating increases in youth vaping.
IT IS SO ORDERED.
Footnotes
Defendants do not dispute Plaintiff's contention that taking the depositions in mainland China, even remotely, without the permission of the Chinese government would violate Article 277 of Civil Procedure Law of the People's Republic of China and subject participants to criminal liability. [Dkt. No. 135 at 15]; see also Inventus Power v. Shenzhen Ace Battery, 339 F.R.D. 487, 500 (N.D. Ill. 2021) (Article 277 extends to bar remote depositions when any of the participants are located in mainland China).
Defendants dispute this and assert that it is unclear if a visitor to Singapore from mainland China who is not fully vaccinated would be subjected to an extended quarantine or other requirements. The evidence they submit does not support that contention. [Dkt. No 132-1 at 8.]