Chartwell Studio, Inc. v. Team Impressions, Inc.

• Decision Date: 14 February 2023
• Docket Number: 19-cv-06944
• Parties: CHARTWELL STUDIO, INC., Plaintiff, v. TEAM IMPRESSIONS, INC. and THE PEEL PEOPLE, LLC, Defendants.
• Court: U.S. District Court — Northern District of Illinois

CHARTWELL STUDIO, INC., Plaintiff,
v.
TEAM IMPRESSIONS, INC. and THE PEEL PEOPLE, LLC, Defendants.

No. 19-cv-06944

United States District Court, N.D. Illinois, Eastern Division

February 14, 2023

MEMORANDUM OPINION AND ORDER

MARY M. ROWLAND United States District Judge

Plaintiff Chartwell Studio, Inc. alleges that Defendants Team Impressions, Inc. and the Peel People, LLC infringed its trade dress, misappropriated its trade secrets and interfered with its relationship with the Dollar Tree Store. Before the Court are cross motions for summary judgment and three Daubert motions. For the reasons stated below, Defendants' motion to bar expert Mark Partridge [87] is denied in large part, Defendants' motion to bar expert David Duski [88] is denied in large part, Chartwell's motion to bar expert Sarah Butler [92] is denied, Defendants' motion for summary judgment [85, 86] is granted in part and denied in part, and Plaintiff's motion for partial summary judgment [89, 91] is denied.

SUMMARY JUDGMENT STANDARD

Summary judgment is proper where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A genuine dispute as to any material fact exists if “the evidence is such that a

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reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The substantive law controls which facts are material. Id. After a “properly supported motion for summary judgment is made, the adverse party ‘must set forth specific facts showing that there is a genuine issue for trial.'” Id. at 250 (quoting Fed.R.Civ.P. 56(e)).

The Court “consider[s] all of the evidence in the record in the light most favorable to the non-moving party, and [ ] draw[s] all reasonable inferences from that evidence in favor of the party opposing summary judgment.” Logan v. City of Chicago, 4 F.4th 529, 536 (7th Cir. 2021) (quotation omitted). The Court “must refrain from making credibility determinations or weighing evidence.” Viamedia, Inc. v. Comcast Corp., 951 F.3d 429, 467 (7th Cir. 2020) (citing Anderson, 477 U.S. at 255). In ruling on summary judgment, the Court gives the non-moving party “the benefit of reasonable inferences from the evidence, but not speculative inferences in [its] favor.” White v. City of Chicago, 829 F.3d 837, 841 (7th Cir. 2016) (internal citations omitted). “The controlling question is whether a reasonable trier of fact could find in favor of the non-moving party on the evidence submitted in support of and opposition to the motion for summary judgment.” Id.

On cross motions for summary judgment, the Court draws all reasonable inferences in favor of “the party against whom the motion at issue was made.” Woodring v. Jackson Cty. Ind., 986 F.3d 979, 984 (7th Cir. 2021) (quotations and internal citation omitted). See also First State Bank of Monticello v. Ohio Cas. Ins. Co., 555 F.3d 564, 567 (7th Cir. 2009) (on cross-motions for summary judgment the

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court “construe[s] all facts and inferences therefrom in favor of the party against whom the motion under consideration is made.”) (internal quotation marks omitted).

BACKGROUND^[1]

Plaintiff Chartwell is an Illinois corporation that was formed in 2002 and is wholly owned by Neil McCallum. DSOF ¶ 3. Neil's mother, Jan McCallum, was founder of Chartwell and also previously a consultant for Team Impressions, Inc. (Team). Id. Since at least 2005, Chartwell has sold printed peel and stick wall decor decals under the brand name Main Street Wall Creations. PSOAF ¶ 1. From its founding until 2017, Chartwell used Team to print certain wall decor products sold at Dollar Tree. Id. Team is a corporation that manufactures sticker products including wall decor sticker products. DSOF ¶ 1. The Peel People, LLC (TPP), a Delaware limited liability company, sells peel and stick items, including wall decor, to consumer retailers and value stores. Id. ¶ 2. Team manufactures all of the items sold by TPP. Id.

Chartwell has registered trademarks for its “Wall:Wear”, “Scamper Studio” and “Main Street” brands; this lawsuit addresses only Chartwell's sale of “Main Street” wall decor products sold to Dollar Tree. DSOF ¶¶ 4, 5. Chartwell had no written agreement with Dollar Tree other than purchase orders, and Dollar Tree could cease issuing any purchase orders at any time. Id. Wall decor are generally wall safe, removable and repositionable stickers. Id. ¶ 7. Wall decor products have historically been printed on either paper (the “Paper Product”) or a clear film. Id. Chartwell's

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product does not contain any outer packaging (no bag, box, etc.), and is sold primarily at Dollar Tree retail stores, where it hangs in customized display racks. PSOF ¶ 9.

On December 9, 2003, Team submitted its first budget to Chartwell for Christmas wall decor using an 80#/50# Pressure Sensitive Material manufactured by Wausau Coated. DSOF ¶ 9. These were the first wall decor products manufactured by Team for Chartwell. Id. Team manufactured wall decor products for Chartwell from 2004 through September 2017. Id. ¶ 11. Team generally used Pressure Sensitive Material purchased from supplier CES Designs, Inc. (CES) for Chartwell's Paper Product (and for the paper wall decor products of numerous other customers). Id.^[2]

In 2017, Neil McCallum requested price reductions from Team due to price pressure from Dollar Tree, but Team refused. Id. ¶ 12. Chartwell's last purchase order for wall decals to Team was dated September 7, 2017. Id. On December 22, 2017, Thomas Cipriani, general manager of Team, sent Chartwell an email stating that he was surprised to find Chartwell wall decal product at a Dollar Tree store that had not been manufactured by Team. Id. According to Neil McCallum, Chartwell switched from Team to other manufacturers because of pricing pressure from the buying group at Dollar Tree. Id. At the end of 2017, Cipriani told Mark Meccia (one of the TPP owners) that Chartwell was no longer a customer of Team Impressions, and at that point, Defendants determined to go after Chartwell's business at Dollar Tree. PSOF ¶ 32. In 2018, TPP sold six SKUs of wall decal products consisting of

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515,000 units to Dollar Tree for a total of $164,800. DSOF ¶ 13. Throughout the duration of the business relationship between Team and Chartwell, Mr. Cipriani never told Jan or Neil McCallum that he had an ownership stake in TPP, though he disclosed that relationship with TPP to numerous other customers. PSOAF ¶ 17.

Chartwell claims a protected trade dress in its “Main Street” brand product, consisting of a combination of seven elements. DSOF ¶ 15. Since at least 2017, along with Chartwell's Main Street Creations wall decor, the same wall decor racks at Dollar Tree stores contained wall decals branded #1 Dollar Decorators and York Wallcoverings. Id. ¶ 16. Dollar Tree regularly brings in competitors of existing suppliers to reduce the price on an existing program with the incumbent supplier. Id. ¶ 30. Dollar Tree bought Family Dollar chain of stores in 2014 or 2015. Id. ¶ 66. In 2018, both TPP and Chartwell competed for the Family Dollar wall decor business. Id. The Family Dollar buyer put pressure on Chartwell for lower prices. Id. TPP ultimately won the wall decor business at Family Dollar. Id.

In this case, Chartwell's remaining claims against Defendants are: trade dress infringement (Count I), violation of the Illinois Trade Secrets Act (Count III), and tortious interference (Count V).^[3] The Court begins below with the Daubert motions and then addresses Chartwell's claims.

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ANALYSIS

I. Daubert Motions

Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) govern the admissibility of expert testimony. Expert testimony is admissible under Rule 702 if technical or specialized knowledge “will assist the trier of fact to understand the evidence or to determine a fact in issue.” The Court assesses (1) whether the witness is qualified; (2) whether the expert's methodology is scientifically reliable; and (3) whether the testimony will assist the trier of fact to understand the evidence or to determine a fact in issue. Myers v. Ill. Cent. R. Co., 629 F.3d 639, 644 (7th Cir. 2010). District courts act as gatekeepers and must ensure that expert testimony “is not only relevant, but reliable.” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999) (quotation omitted). Relevant factors in this determination include testing, peer review, error rates, and acceptance by the relevant expert community. See Daubert, 509 U.S. at 593-94. The reliability inquiry is flexible, however, and not all of these factors will apply in every case. See Kumho, 526 U.S. at 141.

In assessing the admissibility of expert opinions, courts do not focus on “the ultimate correctness of the expert's conclusions,” Schultz v. Akzo Nobel Paints, LLC, 721 F.3d 426, 431 (7th Cir. 2013), but “solely on principles and methodology,” Daubert, 509 U.S. at 595. The “soundness of the factual underpinnings” and “correctness of the expert's conclusions” may affect any ultimate determination on the merits, but do not govern admissibility. Smith v. Ford Motor Co., 215 F.3d 713, 718-19 (7th Cir. 2000).

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The expert must explain his or her methodology and cannot “simply assert a bottom line.” Metavante Corp. v. Emigrant Sav. Bank, 619 F.3d 748, 761 (7th Cir. 2010) (internal quotation marks and citation omitted). Finally, the expert “may be qualified by ‘knowledge, skill, experience, training, or education.'” Smith, 215 F.3d at 718 (quoting Fed.R.Evid. 702). District courts have “great latitude in determining not only how to measure the reliability of the proposed expert testimony but also whether the testimony is, in fact, reliable.” United States v. Pansier, 576 F.3d 726, 737 (7th...