Nike, Inc. v. Wu

• Decision Date: 19 November 2018
• Docket Number: 13 Civ. 8012 (CM)
• Citation: 349 F.Supp.3d 346
• Parties: NIKE, INC. and Converse Inc., Plaintiffs, v. Maria WU d/b/a www.shoecapsxyz.com, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

349 F.Supp.3d 346

NIKE, INC. and Converse Inc., Plaintiffs,

v.Maria WU d/b/a www.shoecapsxyz.com, et al., Defendants.

13 Civ. 8012 (CM)

United States District Court, S.D. New York.

Signed November 19, 2018

Howard Sean Hogan, Gibson, Dunn & Crutcher, LLP, Washington, DC, Jana Nicole Checa, Jennifer Colgan Halter, Robert L. Weigel, New York, NY, for Plaintiffs.

Bruce Stephen Kaplan, Friedman, Kaplan, Seiler and Adelman, Geoffrey Cajigas, John Nicholas Orsini, Friedman Kaplan Seiler & Adelman LLP, New York, NY, for Defendants.

ORDER DENYING NONPARTY BANKS' OBJECTIONS AND AFFIRMING ORDER OF THE MAGISTRATE JUDGE DENYING MOTION TO QUASH AND GRANTING CROSS-MOTION TO COMPEL

McMahon, C.J.Apparel and footwear companies NIKE, Inc. and Converse, Inc. sued over six hundred online retailers for selling products that infringed their trademarks. After the defendants predictably failed to appear, NIKE and Converse won a default judgment for $1.8 billion, which they assigned to an investment firm. The investment firm sought to enforce the judgment by, among other things, subpoenaing six nonparty Chinese banks for account information related to the defendants. The banks moved to quash the subpoenas, and the investment firm moved to compel. The Magistrate Judge, who was supervising post-judgment discovery, denied the banks' motion, finding that the court had jurisdiction over the nonparty banks and that the Hague Evidence Convention did not offer any a viable alternative to discovery. This Court now affirms that order.

I. Factual Background and Procedural History

Plaintiffs NIKE, Inc. and Converse Inc. ("Plaintiffs") brought an action for trademark infringement against several hundred online retailers, the majority of them located in China. On August 20, 2015, this Court entered a default judgment in favor of Plaintiffs (the "Judgment"). (Dkt. No. 49.) Plaintiffs subsequently assigned their interest in the Judgment to Next Investments, LLC (the "Assignee"), (Dkt. No. 50), who moved to enforce the Judgment by, in part, issuing subpoenas to six nonparty Chinese banks¹ relating to the online retailer defendants' assets (the "Subpoenas"). (See, e.g. , Decl. of Jacqueline L. Chung, dated Feb. 14, 2018, Dkt. No. 72 Ex. 11.) The Banks moved to quash the Subpoenas, and the Assignee cross-moved to compel production pursuant to the Subpoenas. (Dkt. No. 70.)

On September 11, 2018, Magistrate Judge Debra Freeman entered a memorandum opinion and order denying the Banks' motion to quash the Subpoenas and granting Assignee's cross-motion to compel the production of documents pursuant to the Subpoenas. Nike, Inc. v. Wu , No. 13-cv-8012, 349 F.Supp.3d 310, 318, 2018 WL 4907596, at *2 (S.D.N.Y. Sept. 11, 2018). The Banks were ordered to produce documents in response to the Subpoenas by November 12, 2018. (Dkt. Nos. 149, 150.)

On October 10, 2018, the Banks filed two sets of objections to the Magistrate Judge's order, one from ABC and another from the other five banks. (Dkt. No. 156 ("Banks Obj.") and Dkt. No. 163 ("ABC Obj.") (collectively, the "Objections").) ABC wrote "separately to highlight factual issues that pertained specifically to ABC as opposed to the [o]ther banks," including allegedly de minimis contacts with the forum state. (ABC Obj. at 3 n.2.) However, ABC joined the objection of the other five banks "in its entirety." (Id. at 2 n.1.)

That same day, the Banks also submitted a letter asking the Court to stay the discovery deadline pending a resolution of the Objections, (Dkt. No. 154 at 2.) After allowing the Assignee to respond, this Court agreed with the Banks that a stay of the discovery deadline pending a resolution of the Objections avoided unduly prejudicing the Banks and, accordingly, granted their request to stay discovery. (Dkt. No. 168,)

The Assignee filed a combined opposition to the Objections. (Dkt. No. 169 ("Next Opp.").)

Ruling on the Banks' Objections, this Court now finds that the Magistrate Judge's order was neither clearly erroneous nor contrary to law and AFFIRMS the order. This Court also hereby lifts the discovery stay entered on October 15, 2018 (Dkt. No. 168), and ORDERS that the Banks have twenty-eight (28) calendar days from the date of this order to comply with the Subpoenas. The deadline for compliance is hereby set as Monday, December 17, 2018.

Finally, this Court will simultaneously enter an order referring any subsequent discovery disputes to the Magistrate Judge.

II. Legal Standard

Upon objection to a magistrate judge's order on a non-dispositive matter, the district court may modify or set aside any portion of the order which it finds to be clearly erroneous or contrary to law. Fed. R. Civ. P. 72(a) ; 28 U.S.C. § 636(b)(1)(A). The district court does not conduct a de novo review of a non-dispositive order; rather, it applies a deferential standard under which the moving party must show that the magistrate judge order is "clearly erroneous or contrary to law." Fed. R. Civ. P. 72(a) ; see Thomas E. Hoar, Inc. v. Sara Lee Corp. , 900 F.2d 522, 525 (2d Cir. 1990). However, a magistrate judge's recommendation on a dispositive action must be reviewed by the district court de novo in the face of an objection. Fed. R. Civ. P. 72(b) ; 28 U.S.C. § 636(b)(1).

The Banks urge this Court to review the Magistrate Judge's order de novo because the "effect of the ruling is dispositive on the Banks." (Banks Obj. at 4; see also ABC Obj. at 8–9.) In response, the Assignee argues that the motion is non-dispositive as to the underlying cause of action and should therefore be reviewed under Rule 72(a)'s "clearly erroneous or contrary to law" standard. (Next Opp. at 9.)

The list of dispositive motions at 28 U.S.C. § 636(b)(1)(A) is not exhaustive. Williams v. Beemiller, Inc. , 527 F.3d 259, 265 (2d Cir. 2008). However, the Second Circuit has ruled that motions to compel or quash subpoenas are properly classified as non-dispositive, even when the subpoena seeks information from a nonparty. "A motion to quash a subpoena in an action seeking relief other than production of the subpoenaed information is not normally a dispositive motion." Arista Records, LLC v. Doe 3 , 604 F.3d 110, 116 (2d Cir. 2010) ; see also JPMorgan Chase Bank, N.A. v. Reifler , No. 11-cv-4016, 2016 WL 10570981, at *2 (S.D.N.Y. July 14, 2016) (motion to quash subpoena of bank records on privacy grounds during judgment enforcement proceedings was non-dispositive); Peterson v. Katonah Lewisboro Sch. Dist. , No. 13-cv-51, 2014 WL 3891253, at *1 (S.D.N.Y. June 27, 2014) (motion to compel nonparty subpoenas was non-dispositive); Allen v. Devine , No. 09-cv-668, 2011 WL 505007, at *2 (E.D.N.Y. Feb. 9, 2011) (same).

The cases cited by the Banks are distinguishable, as the very causes of actions in those cases sought relief in the form of the production of the subpoenaed information. For example, in NLRB v. Frazier , the Third Circuit held that a proceeding to enforce a subpoena ad testificandum brought pursuant to a specific provision of the National Labor Relations Act, 29 U.S.C. § 161, was a separate proceeding. 966 F.2d 812, 817 (3d Cir. 1992). Accordingly, the Third Circuit found that when the magistrate judge denied the National Labor Relations Board's motion to enforce the subpoena, the district judge should have reviewed that order de novo . Id. As that case acknowledged, "While a motion to enforce a subpoena arising in a civil action would be a routine matter which a magistrate judge could dispose of as a non-dispositive motion, the Board's enforcement proceeding was not part of a larger case before the court." Id. The other case cited by the Banks likewise involves a separate civil action to enforce an administrative subpoena. EEOC v. Sterling Jewelers Inc. , No. 11-mc-28, 2011 WL 5282622, at *1 (W.D.N.Y. Nov, 2, 2011). In that case, the magistrate judge elected sua sponte to treat the EEOC's administrative subpoena as dispositive and to style his opinion as a report and recommendation. Id. at *1 n.2.

This Court therefore reviews the Magistrate Judge's order under the "clearly erroneous or contrary to law" standard under Rule 72(a). An order is "clearly erroneous" when the entire evidence leaves the district court "with the definite and firm conviction that a mistake has been committed." FDIC v. Providence Coll. , 115 F.3d 136, 140 (2d Cir. 1997) (quoting United States v. U.S. Gypsum Co. , 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948) ; see also LaVigna v. State Farm. Mut. Auto. Ins. Co. , 736 F.Supp.2d 504, 509-10 (N.D.N.Y. 2010) (district court will generally defer to magistrate judge and overrule only if discretion is clearly abused). An order is "contrary to law" when it "fails to apply or misapplies relevant statutes, case law or rules of procedure." Thompson v. Keane , No. 95-cv-2442, 1996 WL 229887, at *1 (S.D.N.Y. May 6, 1996). A magistrate judge's resolution of discovery disputes deserves substantial deference. Thompson , 1996 WL 229887, at *1.

Finally, courts in this circuit generally follow the rule that a district court reviewing an appeal of a non-dispositive motion from a magistrate judge may not look beyond the factual record presented to the magistrate judge. See, e.g. , Thai Lao Lignite (Thai.) Co. v. Laos , 924 F.Supp.2d 508, 511 (S.D.N.Y. 2013) (" Rule 72(a) precludes the district court from considering factual evidence that was not presented to the magistrate judge."). Thai Lao Lignite relied on a Third Circuit case, Haines v. Liggett Group , which reviewed the legislative history of the Federal Magistrates Act to conclude that, "[b]y statute, the district court was not allocated the competence to do more than perform the clearly erroneous review function" for non-dispositive motions. 975 F.2d 81, 93 (3d Cir. 1992). In addition, courts in this circuit "generally do not entertain new legal arguments not presented to the magistrate judge." Anderson v. Phoenix Beverage Inc. , No. 12-cv-1055, 2015 WL 737102, at *3 (E.D.N.Y. Feb. 20, 2015) (colle...