A federal judge from the Eastern District of Pennsylvania has denied Nike, Inc.’s motion for sanctions against plaintiff Lontex Corporation in a contentious case involving alleged trademark violations.
Nike sought sanctions after counsel for Lontex sent letters and trial subpoenas to professional sports team trainers, seeking their testimony. Nike alleged that the letters violated the court’s discovery order and deadline.
By way of background, Lontex obtained five declarations from former MLB and NFL team trainers regarding their knowledge of Lontex’s use of the trademarks, which are at issue in the litigation. Lontex spoke to each of these individuals about their relevant knowledge and then sent them draft declarations, which the declarants edited and signed. These individuals were not provided with subpoenas. In the spring of 2020, Lontex and Nike made a voluntary exchange of all declarations and Lontex, including those above.
In June 2020, Lontex sent letters to additional professional sports team trainers seeking their testimony. The letters were sent “c/o” team counsel. Each letter was also sent via e-mail to team counsel. A trial subpoena was attached so that the trainers could plan their schedule in advance. The letters asked the trainers to accept service but noted that was not required and stated if “you are unwilling to accept service of this subpoena; we will have the subpoena served on you in accordance with Fed. R. Civ. P. 45(b)(1).”
The letters went on to explain that a draft declaration was attached, which could make their presence as a trial witness unnecessary. In response to the letters, Lontex received three signed declarations.
Nike argued that the declarations were gathered after the discovery deadline. Specifically, it claimed that the court extended the discovery deadline from the spring of 2020 to August 31, 2020, but only to resolve “outstanding” discovery, not to initiate new discovery.
When Nike got word of the three signed declarations, it filed a motion for sanctions. After entertaining the written arguments, the court summarized the arguments.
“Nike argues that counsel for Lontex has violated Rules 45, 30, and 26,” it wrote.
Rule 45 (c)(1)(A) provides that “[a] subpoena may command a person to attend a trial, hearing, or deposition only . . . within 100 miles of where the person resides, is employed, or regularly transacts business in person.”
Furthermore, Rule 45 (d)(1) states that “a party or attorney responsible for issuing and serving a subpoena must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena. The court for the district where compliance is required must enforce this duty and impose an appropriate sanction—which may include lost earnings and reasonable attorney’s fees—on a party or attorney who fails to comply.”
Nike argued that Lontex violated Rule 45 “by issuing subpoenas to individuals outside the authority of this court and improperly pressured the recipients of the June 25 letters by issuing trial subpoenas primarily to individuals, rather than team counsel, to create the impression that these non-parties were required to appear before this Court (or for a video-taped trial deposition), during the COVID crisis, in the middle of the upcoming NFL and MLB seasons absent signing a declaration that the plaintiff had drafted for them, without having conducted an interview to obtain personal knowledge of the witness.”
Nike based its argument on four cases, all of which failed to impress the court.
“While there is some dispute about what discovery was still pending after the March 13 conference, it is clear that fact discovery was still open at the time and that Lontex did not violate any court orders. Thus, the conduct in the cases cited by Nike is not comparable.”
The court also shot down the “impression that these non-parties were required to appear before this court argument. … This is misleading. The letters were sent via email to team counsel and hard copies mailed ‘care of’ team counsel. They were not presented directly to team trainers in such a manner that would have been misleading.”
Nike also argued that Lontex violated Rule 30 by seeking to take depositions in excess of the permitted number and failing to provide it notice. This argument failed because discovery had not closed.
Lastly, Nike argued that the Lontex was supposed to identify its witnesses, in advance, pursuant to Rule 26, and that its failure meant that the witness should be excluded. This caused Nike to be “harmed by the failure to disclose.”
The court wrote that the cases that Nike “relies on either concern more serious or flagrant violations of the rules. … Those circumstances are not present here, where the court has already stated that it finds Lontex’s explanation to be credible.” There also is “little to no prejudice against Nike which had a list of all the individuals to whom the June 25 letters were sent, well before the deadline for dispositive motions and could seek to take their depositions, as necessary.”
In summary, the court said it would deny Nike’s motion for sanctions.
“There are two overriding factors that the court finds warrant this conclusion, in addition to the above distinctions with the cases cited by Nike,” wrote the court. “The first is that Nike appears to assume that any investigation by one party or another is ‘discovery,’ which is confined by a court’s deadlines. However, investigation by one party in seeking out witnesses without using formal discovery procedures, is not necessarily bound by scheduling deadlines. This court did not make any restrictions on a party’s use of Rule 45 third-party subpoenas to help ensure attendance of witnesses that Lontex located, by its own investigation, at trial. Nike does not cite any case supporting the proposition that Lontex’s conduct in seeking out fact witnesses has violated any discovery deadlines. Indeed, this court finds that any party in litigation is entitled to seek out witness by its own investigation strategies and techniques, as long as they are lawful. Lontex interviewed various individuals with potential knowledge about the facts of this case and did not violate any court orders or procedural rules in doing so. There is nothing to stop Nike from engaging in similar behavior.
“The second consideration is the COVID-19 pandemic. courts throughout the United States have recognized the difficulties of obtaining discovery and completing investigations in a timely manner, given the difficulties of travel and communications and workplace access.”
Lontex Corporation, v. NIKE, INC.; E.D. Pa.; CIVIL ACTION NO. 18-5623; 11/18/20
