LA Gem & Jewelry Design, Inc. v. Groupon, Inc.
| Decision Date | 10 September 2020 |
| Docket Number | Case No. 2:19-cv-00035-ODW (PLAx) |
| Court | U.S. District Court — Central District of California |
| Parties | LA GEM and JEWELRY DESIGN, INC., Plaintiff, v. GROUPON, INC.; GROUPON GOODS, INC., et al. Defendants. |
Plaintiff LA Gem and Jewelry Design, Inc. ("LA Gem") filed a copyright infringement suit against Groupon, Inc., Groupon Goods, Inc. (collectively, "Groupon") and several jewelry businesses. Pending before the Court is LA Gem's Motion for Summary Judgment. (Mot. for Summ. J. ("Mot."), ECF No. 120.)1 For the following reasons, the Court GRANTS in part DENIES in part LA Gem's Motion.
On January 3, 2019, LA Gem filed its initial Complaint against Defendants alleging direct, contributory, and vicarious copyright infringement against all Defendants. (Compl. ¶¶ 70-82, ECF No. 1.) Since then, LA Gem has settled its claims with all Defendants except Golden Moon Inc. ("Golden Moon"), David Khafif, and Groupon. (See Order of Partial Dismissal, ECF No. 46; Order Granting Dismissal, ECF No. 115; Order Granting Dismissal, ECF No. 116.)
LA Gem is a jewelry company in Los Angeles, California, that employs designers and sells unique jewelry pieces in retail and e-commerce stores like Macy's, J.C. Penney, and Amazon. (Pl.'s Statement of Undisputed Facts ("PSUF")2 ¶¶ 1-2, ECF No. 120-1.) LA Gem asserts that Golden Moon, Khafif, and Groupon (collectively, "Defendants") infringed two of its copyrighted designs. (First Am. Compl. ("FAC") ¶¶ 35-53, ECF No. 36; PSUF ¶¶ 3-5.) LA Gem owns U.S. Copyright Registration Nos. VA 1-889-369 (the "Mom Design") and VA 1-916-408 (the "Crescent Design") (together, "Copyrighted Designs"). (PSUF ¶¶ 10, 12; Decl. of Paul Heimstadt Ex. 3 ("Copyright Registration of Mom Design"), ECF No. 122-1; Decl. of Paul Heimstadt Ex. 1 ("Copyright Registration of Crescent Design"), ECF No. 122-1.) The two Copyrighted Designs have been distributed worldwide since2013. (PSUF ¶¶ 9, 11.) The Copyrighted Designs and the infringing jewelry pieces are attached as Exhibit C to the Declaration of Jonathan Ross.
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(Decl. of Jonathan Ross Ex. C, ECF No. 130-2.)
Defendants contend that the phrase "I love you to the moon and back" first appeared in a children's book and thus, is not an original phrase created by LA Gem. (Defs.' Statement of Undisputed Facts ("DSUF") ¶ 74.) Defendants also indicate that the combination of a crescent moon and a circle and a crescent moon with the phrase "to the moon and back" is present in other jewelry designs. (DSUF ¶¶ 75-76.) This pre-existing use was not identified in LA Gem's copyright registrations. (DSUF ¶ 77.)
Golden Moon sells jewelry but does not manufacture or design it. (PSUF ¶¶ 20, 21.) Instead, Golden Moon frequents trade shows to select designs it wishes to copy. (PSUF ¶ 22; Decl. of Jonathan J. Ross Ex. G ("Khafif Dep.") 35:7-12.)Specifically, an employee of Golden Moon walks through the trade shows with employees of its Chinese manufacturer and points out designs at booths to order similar pieces. (PSUF ¶¶ 22, 29; Khafif Dep. 68:18-69:3.) Relevant here, Golden Moon attended the JCK trade show in Las Vegas between 2013 and 2019, where LA Gem had a booth during those years and displayed the Crescent Design and Mom Design every year since 2015. (PSUF ¶ 30.)
LA Gem claims that Khafif—President, shareholder, and primary bookkeeper of Golden Moon—approved orders of jewelry infringing the Copyrighted Designs in 2016. (PSUF ¶¶ 18, 24-25.) Golden Moon sold pendants copying the Crescent Design and earrings copying the Mom Design only through Groupon. (PSUF ¶¶ 33, 36.) Groupon approved the two products for sale and issued purchase orders. (PSUF ¶ 37.) Prior to selling the products, neither Golden Moon nor Khafif ordered a copyright search or conducted a due diligence investigation to that end. (PSUF ¶¶ 41, 42.)
Groupon Inc. is an e-commerce retailer and Groupon Goods Inc. is a subsidiary of Groupon Inc. that negotiates with and advises vendors on product prices and sales timeline. (PSUF ¶¶ 43, 46.) Both share a website, employees, officers, and offices. (PSUF ¶ 44.) Vendors may partner with Groupon to sell their products on its platform provided that the vendor satisfies Groupon's vetting process. (PSUF ¶¶ 48, 49.) For instance, a potential vendor may be designated as a "first-party vendor" after contacting Groupon with a proposed product and meeting with Groupon to determine product fit. (PSUF ¶ 63.) Here, Groupon's representative, Jason Stutzman, visited Golden Moon's office in New York ten to fifteen times and interacted with Golden Moon at Groupon's Chicago office. (PSUF ¶ 50.) Stutzman was aware that Golden Moon acquired jewelry from international supply channels and did not manufacture the products. (PSUF ¶ 51.) Golden Moon was approved as a first-party vendor. (PSUF ¶ 63.)
As required by the Groupon Goods Vendor Guide, Golden Moon represented that it had the rights to sell the infringing products. (PSUF ¶ 62.) However, LA Gem never authorized Golden Moon, Khafif, or Groupon to copy, reproduce, manufacture, duplicate, disseminate, or distribute the Copyrighted Designs. (PSUF ¶ 8.) In total, Groupon sold 38,963 jewelry pieces infringing the Crescent Design and 664 jewelry pieces infringing the Mom Design, all supplied by Khafif and Golden Moon. (PSUF ¶¶ 13-14, 16-17, 72-73.) Groupon accepted payment from consumers and retained a portion of the revenue. (PSUF ¶¶ 67, 72.) Groupon also determined the retail sales price and sold the infringing products on groupon.com and livingsocial.com. (PSUF ¶¶ 52-58.)
Defendants object to LA Gem's evidence. (Defs.' Evid. Obj., ECF No. 129-2.) First, Defendants assert that LA Gem's declarations of Joe Behney and Paul Heimstadt should not be considered as LA Gem failed to send anyone to its noticed deposition under Rule 30(b)(6). (Defs.' Evid. Obj. 2.) "The court where the action is pending may, on motion, order sanctions if: (i) a party or a party's officer, director, or managing agent--or a person designated under Rule 30(b)(6) or 31(a)(4)--fails, after being served with proper notice, to appear for that person's deposition;" Fed. R. Civ. P. 37(d) (emphasis added). Here, the Court extended the deadline for discovery several times from the original deadline of February 28, 2020 to May 20, 2020. (Scheduling and Case Management Order 24, ECF No. 63; Order, ECF No. 109.) On March 16, 2020, Defendants contacted LA Gem to reschedule the deposition which was, at that time, noticed for March 19, 2020, due to concerns related to the ongoing pandemic. (Ex Parte Appl. 3, ECF No. 117.) Defendants explained that it failed to reschedule the deposition because of the continuing circumstances and sought to extend the May 20, 2020 deadline to June 22, 2020. (Ex Parte Appl. 4.) LA Gem opposed the extension and indicated that Defendants had noticed a deposition for May22, 2020, which LA Gem had agreed to despite the discovery deadline. (Opp'n to Ex Parte 2, ECF No. 118.) Thus, the Court denied the ex parte application for an extension, finding that Defendants had created their crisis. (Order, ECF No. 119.)
The Court ordered that "[a]ll depositions shall be scheduled to commence sufficiently in advance of the discovery cut-off date to permit their completion and to permit the deposing party enough time to bring any discovery motions concerning the deposition prior to the cutoff date." (Scheduling and Case Management Order 3.) Defendants knew well before the original deadline in February that it wished to depose LA Gem. Yet, they failed to notice a deposition within the discovery period. Additionally, a court order based on a showing of "good cause" is required to depose a witness after the discovery cut-off ordered by the court; parties' stipulation is not sufficient. Fed. R. Civ. P. 29(b). Thus, the deposition was not properly noticed, and LA Gem was under no obligation to attend. Accordingly, the Court will not sanction LA Gem for Defendants' delay and the Court OVERRULES the objection. Nevertheless, the Court notes that it has not relied on any specific statements made in either declaration to which Defendants object.
Defendants also object to several separate statement paragraphs on relevance grounds. As the Court does not consider the facts Defendants contest in the disposition of this Motion, the Court OVERRULES Defendants' objections.
Defendants seek an order denying the Motion without prejudice under Rule 56(d) and compelling LA Gem to appear for its deposition. (Opp'n to Mot. 6, ECF No. 129.) Rule 56(d) permits a continuance where the requesting party provides a declaration adequately explaining that "additional discovery would reveal specific facts precluding summary judgment." Tatum v. City of San Francisco, 441 F.3d 1090, 1101 (9th Cir. 2006). Defendants fail to meet this burden. Additionally, as previously discussed, the Court extended the discovery cut-off for several months, yet Defendants noticed LA Gem's deposition beyond the May 20, 2020 deadline. Thus,the Court DENIES Defendants' request to deny the instant Motion pursuant to Rule 56(d).
A Court "shall grant summary judgment if 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). Courts must view the facts and draw reasonable inferences in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007). A disputed fact is "material" where the resolution of that fact might affect the outcome of the suit under the governing law, and the dispute is "genuine" where "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)....
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