COACH, INC. and Coach Services, Inc., Plaintiffs, v. SWAP SHOP, INC. et al., Defendants CASE NO. 12-60400-CIV-DIMITROULEAS/Snow Signed July 17, 2013 Counsel George G. Mahfood, David B. Rosemberg, Broad and Cassel, Miami, FL, for Plaintiffs. Bruce S. Rogow, Bruce S. Rogow PA, Fort Lauderdale, FL, Steven Harris Osber, Plantation, FL, David B. Rosemberg, George G. Mahfood, Broad and Cassel, Miami, FL, for Defendants. Snow, Lurana S., United States Magistrate Judge ORDER *1 THIS CAUSE is before the Court on the Motion to Compel Compliance with Court Ordered Discovery and for Sanctions (DE 149), which was referred to Lurana S. Snow, United States Magistrate Judge. The motion is ripe for consideration and a hearing was held before the undersigned on July 16, 2013. This Order memorializes the Court's ruling from the bench. The Plaintiffs' (“Coach”) Second Amended Complaint alleges contributory trademark and vicarious copyright infringement under federal law. According to Coach, the Defendants, individually and/or collectively, own, operate, control and manage a large flea market in Fort Lauderdale, Florida known as the Swap Shop. This action arises out of Coach's claims that Swap Shop vendors sell counterfeit Coach products. The instant motion concerns Coach's considerable, thus far largely unsuccessful, efforts to obtain relevant, discoverable material from the Defendants. On June 6, 2013, the Court entered an order granting in part three motions to compel filed by the Plaintiffs. (DE 135) The Order required the Defendants to produce documents responsive to Requests 8, 9, 10, 11, 12, 19, 28, 33, 34, 25, 40, 41, and 42 from Coach's First Request for Production of documents within ten days[1]. It also required Defendant, Preston Henn to appear for Deposition on June 11 and 12, 2013, to be deposed as corporate representative for non-parties, 3290 Sunrise Investments, Inc. and 3291 Sunrise Investments, Inc. and for the Swap Shop corporate entities, as well as in his individual capacity. The Defendants were directed to produce any leases maintained by the non-parties which are between the non-parties and any of the Defendants to the extent that such leases exist. Because the Defendants had not produced any electronically stored information (ESI), they were directed to determine whether any responsive ESI existed, and either produce it within ten days, or affirmatively state that no such ESI exists. Finally, the Defendants were directed to produce all documents reflecting compensation paid by the corporate defendants to any co-defendants or to any third parties, and their tax returns.[2] As of June 20, 2013, the date Coach filed the instant motion, the Defendants had produced only two paper documents. Coach argues that the appropriate sanction for the Defendants' disregard of the Court's discovery Order is the striking of the Defendants' Answer and Affirmative Defenses. In their response to the motion which the Defendants filed on July 2, 2013, they represented that they had, belatedly, fully complied, (or were in the process of fully complying), with the Court's June 6, 2013 Order. For the first time the Defendants revealed the existence of 5000 e-mails[3], which they indicated they had recently obtained. The Defendants represented that the e-mails would, without reservation, be produced on July 3, 2013[4]. They acknowledged the delay, and blamed it on the fact that the Swap Shop is overseen by Mr. Henn, who is elderly. According to counsel, the offices where records are maintained are a disorganized mess. They asserted that the delay was not willful, and urged the Court to deny the Plaintiffs' request for sanctions. *2 On July 9, 2013, Coach filed a reply brief indicating that the Defendants had still not produced anything, including the newly discovered e-mails. Just prior to the hearing the Defendants filed a Supplemental Response to Plaintiff's First Request for Production of Documents (DE 171) indicating that they had produced documents responsive to Requests 2 and 3 from the First Request to Produce which asked for W-2s and 1099s for tax years 2007 to date. At the hearing, Coach's counsel reported several things which are of concern to the Court. First, ESI was not disclosed until after the deposition of Daphne Fitzpatrick on June 19, 2012. Ms. Fitzpatrick revealed that her grandfather, Mr. Henn regularly instructs his managers to communicate with him via e-mail. The Court's June 6, 2013 Order directed the Defendants to forthwith determine whether responsive electronic communications existed and if so produce them within ten days. This directive was ignored. Although 21,000 e-mails have been located, as of the date of the hearing, none had been produced to Coach. Second, Coach's counsel revealed that although the Defendants recently produced some 1099s, they have not produced any W-2s. The few Payroll documents that have been produced appear to be incomplete. Third, during the course of his deposition as corporate representative for 3290 Sunrise Investments on June 11, 2013, Mr. Henn repeatedly testified that he could not answer questions. He grew frustrated, and walked out of the deposition before 1:00 p.m. claiming to not feel well. Mr. Henn then went back to his office and sent an e-mail to Coach complaining about their attorney. He failed to appear for his scheduled deposition on June 12, 2013, and refuses to make himself available as corporate representative until after Coach's corporate representative is deposed. To his credit, Defendants' counsel agreed that Coach is entitled to the discovery at issue. He represented to the Court that his firm has gone through Herculean efforts to sort through Swap Shop records to identify responsive documents. Counsel has not been provided any leases for 3291 and 3290 Sunrise Investments, and at present, is unaware of the existence of any. Defendants have hired a certified public accountant to assist in looking for financial documents at the Swap Shop offices, and are willing to agree to a request that the July 31, 2013 discovery cut-off be extended, if necessary. Counsel represented to the Court that he hoped the remaining responsive documents could be produced by the end of the week, although he conceded that he was being optimistic. The Court finds that under the circumstances, sanctions are warranted. Although Mr. Henn is indeed elderly, he is also a sophisticated business man. While the Swap Shop offices may be disorganized, the discovery requests at issue were served more than seven months ago, and more than a month has passed since the Court's deadline for producing the documents pursuant to its June 6, 2013 Order. Significantly, Defendants have never disputed the relevance of the requested materials. Nevertheless, the Court will give the Defendants a final opportunity to fully comply with its June 6, 2013 Order before it will entertain the severe sanction of striking the Defendants' Answer and Affirmative Defenses. Being fully advised, it is hereby ORDERED AND ADJUDGED that the Plaintiffs' Motion to Compel Compliance with Court Ordered Discovery and for Sanctions (DE 149) is GRANTED IN PART as follows: *3 1. The Defendants shall produce all materials compelled by this Court's June 6, 2013 Order, on or before July 26, 2013. The failure to do so will result in a recommendation that the Defendants' Answer and Affirmative Defenses be stricken. 2. The Defendants shall produce corporate representative(s) for deposition. If Mr. Henn is designated, he shall sit for the entire deposition(s). Because Mr. Henn prematurely terminated the deposition of 3290 Sunrise Investments, and did not appear for the Swap Shop corporate defendants' depositions, these depositions shall occur prior to that of Coach's corporate representative. 3. The Defendants shall compensate Coach for the reasonable attorneys' fees and expenses incurred in pursuing the motions giving rise to the June 6, 2013 Order, as well as, their fees and expenses in connection with the instant motion. On or before July 24, 2013, Coach shall file its attorneys' fee motion pursuant to S.D. Local Rule 7.3. The Defendants may then file a response to the motion. DONE AND ORDERED at Fort Lauderdale, Florida, this 17th day of July, 2013. Footnotes [1] The First Request for Production of Documents was served on January 9, 2013. These were all documents the Defendants agreed to produce when they served their response to the Requests on February 22, 2013. [2] The Defendants have appealed the portion of the Order directing them to produce their tax returns. [3] At the hearing, the Defendants revised their estimate of the amount of e-mails to 21,000. [4] On July 8, 2013, the Defendants amended their response to the motion to delete the words “without reservation.” They indicated the necessity to conduct a review of the e-mails for privileged communications prior to producing them.