Empire Indus. Inc. v. Winslyn Indus., LLC
| Decision Date | 30 June 2019 |
| Docket Number | Case No. 18 C 698 |
| Parties | EMPIRE INDUSTRIES INC., Plaintiff, v. WINSLYN INDUSTRIES, LLC, NIKO (INT) LTD., THE FIRECLAY FACTORY LLC, and IMPERIAL PACIFIC TRADING, LLC, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Empire Industries Inc. alleges that three of the parties it sued in this case—Winslyn Industries, LLC, The Fireclay Factory LLC, and Imperial Pacific Trading, LLC—have violated the preliminary injunction the Court entered against Winslyn in June 2018. Empire has also moved to modify the preliminary injunction and to compel Winslyn to respond to certain discovery requests.
The Court assumes familiarity with its prior written rulings in this case. See Empire Indus. Inc. v. Winslyn Indus., LLC (Preliminary Injunction Ruling), 327 F. Supp. 3d 1101 (N.D. Ill. 2018); Empire Indus. Inc. v. Winslyn Indus., LLC (Ruling on Motions to Dismiss), No. 18 C 698, 2019 WL 339544 (N.D. Ill. Jan. 28, 2019). What follows is a brief synopsis of the procedural history.
Empire is a New Jersey company that manufactures and distributes bathroom and kitchen products. In January 2018, it filed this suit against Winslyn, another seller of kitchen products based in Illinois. Empire alleges that Winslyn tortiously interfered with Empire's contract with a third company, The Fireclay Factory LLC.
Fireclay, which is based in the United Arab Emirates, manufactures "fireclay-style" sinks, which are formed from clay fired at very high temperatures. Empire contends that in 2016 it designed new models of fireclay sinks and that Fireclay agreed to manufacture these sinks exclusively for Empire. Empire alleges that in early 2017, Winslyn unlawfully interfered with that agreement by seeking to distribute and sell the sinks Fireclay agreed to manufacture exclusively for Empire.
In April 2018, Empire moved for a preliminary injunction to bar Winslyn from interfering with the exclusivity agreement. After an evidentiary hearing, the Court granted the motion and issued the following injunction:
[T]he Court enjoins Winslyn Industries, LLC and anyone affiliated or acting in concert with it, pending the trial or other disposition of this case, from purchasing, marketing, or selling sinks obtained from The Fireclay Factory, LLC based on plaintiff Empire Industries, LLC's Olde London and Sutton Place designs, including Winslyn's BTL041, 43, 50, and 52 models.
Preliminary Injunction Ruling, 327 F. Supp. 3d at 1118. Winslyn then moved to clarify the injunction order, arguing that the phrase "based on" was insufficiently precise. In July 2018, the Court granted that motion in part and modified the injunction to encompass only the purchase, marketing, or sale of sinks "identical to or visually indistinguishable from" Empire's sinks. Dkt. no. 105.
In its initial complaint, Empire named only Winslyn as a defendant. On May 15,2018—after it filed the preliminary injunction motion was filed but before the Court entered the injunction—Empire amended its complaint to join as defendants Fireclay and an associated entity, Niko (INT) Ltd. It alleged that both entities caused a breach of Empire's contract with Fireclay and participated in a civil conspiracy.1
In October, Empire again amended its complaint to add as a defendant Imperial Pacific Trading, LLC, a company based in Atlanta that sells sinks, faucets, and drains. Empire alleged that Imperial Pacific participated in the conspiracy by purchasing Empire's sinks from either Winslyn or Fireclay.
Niko and Imperial Pacific each moved to dismiss the complaint for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). In its response brief, Empire argued that the Court has specific jurisdiction over both defendants based on their alleged contacts with Illinois. Empire also contended that the Court could exercise jurisdiction over Imperial Pacific because it conspired with the other defendants to violate the preliminary injunction by purchasing sinks from Fireclay that Winslyn originally intended to buy.
The Court granted the motions to dismiss in part. It rejected Empire's arguments for personal jurisdiction, reasoning that Empire had not alleged that either Niko or Imperial Pacific had sufficient contacts with Illinois to permit Empire to assert direct claims against them here. But the Court noted that it could exercise jurisdiction over Imperial Pacific for the limited purpose of determining whether it should be held in contempt for allegedly acting in concert with Winslyn to violate the preliminaryinjunction. See Ruling on Motions to Dismiss, 2019 WL 339544, at *4 (citing SEC v. Homa, 514 F.3d 661, 674-75 (7th Cir. 2008)).
In February 2019, Empire moved for an order to show cause why Imperial Pacific should not be held in contempt based on its alleged efforts to assist Winslyn's violation of the preliminary injunction. In that same motion, Empire also requested expedited discovery in anticipation of an evidentiary hearing on the alleged violation.
Less than two weeks later, Empire filed another motion regarding the preliminary injunction, this one directed at Fireclay. Empire alleges that it owns the molds that Fireclay had used to physically produce Empire's sinks and that Fireclay continues to use those molds to manufacture different models of sinks that it then sells to Winslyn. On this basis, Empire seeks to modify the scope of the preliminary injunction to encompass not only the designs that Empire developed but also the use of its molds. In addition, Empire argues that the Court should hold Fireclay in contempt of the existing preliminary injunction for the same conduct described in Empire's motion against Imperial Pacific.
In March 2019, Empire moved to compel Winslyn to produce additional documents and provide updated interrogatory answers. In its motion, Empire alleges that Winslyn had participated in the conspiracy to sell Empire's sinks to Imperial Pacific. Empire seeks discovery that it contends will prove the existence of this conspiracy.
In June 2019, Empire moved for an order to show cause why Winslyn should not be held in contempt. It alleges that Winslyn had engaged in the same conspiratorial conduct described in the motions against Imperial Pacific and Fireclay, and it points tonew evidence that it says establishes the existence of an agreement among the defendants to violate the preliminary injunction. Empire also argues that this new evidence shows that Winslyn withheld evidence during discovery relevant to Empire's motion to compel.
The Court will first consider Empire's contempt motions against Winslyn, Fireclay, and Imperial Pacific, followed by the motion to compel and the motion to modify the preliminary injunction.
"[C]ivil contempt may be imposed if proven by clear and convincing evidence." Lightspeed Media Corp. v. Smith, 830 F.3d 500, 508 (7th Cir. 2016). In general, "civil contempt should not be resorted to where there is [a] fair ground of doubt as to the wrongfulness of the defendant's conduct." Taggart v. Lorenzen, 139 S. Ct. 1795, 1801 (2019) (alteration in original) (internal quotation marks omitted).
Empire alleges that Winslyn, Fireclay, and Imperial Pacific conspired to violate the preliminary injunction by arranging to have Imperial Pacific buy the sinks that Winslyn was prohibited from purchasing. The parties agree that the injunction directly binds Winslyn and not Fireclay or Imperial Pacific, and thus that Fireclay and Imperial Pacific may be liable for contempt only if they acted in concert with Winslyn to violate the injunction. See Fed. R. Civ. P. 65(d)(2); see also Nat'l Spiritual Assembly of the Baha'is of the U.S. under Hereditary Guardianship, Inc. v. Nat'l Spiritual Assembly of the Bahais of the U.S., Inc., 628 F.3d 837, 848 (7th Cir. 2010) (). The Court will consider first whether Empire has shown by clear and convincing evidence that Winslyn violated the injunction and then will discuss the contempt motions against Fireclay and Imperial Pacific.
In its motion for an order to show cause why Winslyn should not be held in contempt, Empire points to three documents that it contends evince an agreement between Winslyn, Fireclay, and Imperial Pacific to circumvent the preliminary injunction. First, Empire cites an invoice, dated August 14, 2018 and obtained from Werner Global Logistics US, LLC, regarding a shipment of stone sinks. The invoice identifies Fireclay as the shipper, Imperial Pacific as the consignee, and Winslyn as the party to be billed. Second, Empire cites an e-mail chain from July 2018 in which an employee of Niko, the entity affiliated with Fireclay, wrote to Werner Global Logistics that Winslyn would bear any additional costs incurred in reconsigning the shipment to Imperial Pacific. Empire argues that these two documents are proof of an agreement between the three parties to have Imperial Pacific, instead of Winslyn, buy Empire's sinks from Fireclay after the preliminary injunction issued.
Third, Empire cites a February 15, 2019 e-mail from a Niko employee to a representative of Mr. Direct, a brand associated with the American plumbing distributor Elkay. The subject of the e-mail is "Fireclay sink," and the body of the message contains only a hyperlink to one of Empire's sinks on the website of a popular online retailer of home goods. Empire alleges that Elkay's representative informed Empire of the provenance of this e-mail: Fireclay had failed to deliver a sink to Mr. Direct in time for a trade show and sent the link to Empire's product so that Mr. Direct could order thesink as a replacement. Empire argues that this...
To continue reading
Request your trial