Certified Nutraceuticals Inc. v. The Clorox Company

District Court, S.D. California·Decided July 28, 2020·No. 3:18-cv-00744·Unknown

Opinion

1 2 3 4 5 6 7 10 11 CERTIFIED NUTRACEUTICALS, INC., Case No.: 3:18-cv-00744-W-KSC 12 Plaintiff, ORDER ON JOINT MOTION FOR 13 v. DETERMINATION OF DISCOVERY DISPUTE; ORDER DENYING AS 14 THE CLOROX COMPANY, a Delaware MOOT MOTION TO SEAL 15 corporation; NEOCELL [Doc. Nos. 93, 94, 95] CORPORATION, a California 16 corporation; NEOCELL HOLDING 17 COMPANY, a Delaware limited liability company; NUTRANEXT, a Delaware 18 corporation; AVICENNA 19 NUTRACEUTICAL, LLC, a Georgia limited liability company, 20 Defendants. 21 22 23 24 Before the Court is the parties’ Joint Motion for Determination of Discovery 25 Dispute Regarding Plaintiff’s Interrogatories 13-17 to Clorox, Interrogatories 16-19 to 26 Nutranext, Requests for Production 26-30 to Clorox, and Requests for Production 34-38 27 to Nutranext (the “Joint Motion”). Doc. Nos. 94 (under seal), 95 (public version). The 28 Court held conferences with counsel regarding the present dispute on June 5, 2020, and 1 June 22, 2020. Pursuant to the Court’s order (Doc. No. 86), the parties then submitted 2 the Joint Motion on June 30, 2020, wherein plaintiff moves to compel further responses 3 to interrogatories and requests for production. Plaintiff also moves for an award of his 4 attorneys’ fees incurred in bringing the Joint Motion. The parties jointly move to seal 5 several exhibits to their Joint Motion, and portions of the Joint Motion which describe or 6 quote from those exhibits (the “Motion to Seal”). Doc. No. 93. Having considered the 7 parties’ submissions, and for the reasons set forth below, the Court DENIES plaintiffs’ 8 Motion to Compel further discovery responses; DENIES plaintiff’s request for attorneys’ 9 fees; and DENIES AS MOOT the parties’ Motion to Seal. Within 4 days of the date of 10 this Order, defendants may file a renewed motion to seal as set forth herein. 12 A. Background 13 Plaintiff Certified Nutraceuticals, Inc. (“plaintiff”) imports, sells, licenses and 14 distributes ingredients for nutraceutical companies, among which are collagen products, 15 and in particular a type of collagen ingredient known as Chicken Sternum Collagen Type 16 II. See Third Amended Complaint (the “Complaint”), Doc. No. 50, ¶14. According to 17 plaintiff, Chicken Sternum Collagen II has unique properties that lend themselves to 18 therapeutic and nutritional uses. Id., ¶16. Plaintiff alleges that defendants deceptively 19 market and falsely label products made from inferior-quality, lower-priced chicken 20 carcasses as containing Chicken Sternum Collagen Type II, in violation of the Lanham 21 Act. Id., ¶¶1, 2, 18-22; 30-40. 22 Plaintiff served interrogatories and requests for production on defendants Clorox 23 Company (“Clorox”) and Nutranext (“Nutranext,” and, with Clorox, “defendants”)1 on 24 April 10, 2020. The discovery requests at issue are included verbatim in the Joint 25

26 1 Also named in the Complaint are Avicenna Nutraceutical, LLC, a supplier of raw ingredients, and 27 Neocell Corporation and Neocell Holding Company, which were acquired by Nutranext and, later, Clorox. These defendants are not parties to the present discovery dispute. 28 1 Motion, so the Court will not reproduce them here. See Jt. Mot. at 2-3. Broadly, plaintiff 2 seeks information and documents related to defendants’ unit sales, revenues, profits, costs 3 and expenses related to the sale of the deceptively-labeled collagen products. Id. 4 According to plaintiff, this information is “directly relevant” to its ability to establish 5 damages, because “defendant’s profits” are recoverable under the Lanham Act. Id. at 4 6 (citing 15 U.S.C. §1117(a)). 7 Defendants served objections and verified responses to plaintiff’s discovery on 8 May 11, 2020. Defendants objected that the discovery was cumulative, duplicative, 9 disproportional to the needs of the case, and overbroad. Defendants also represented that 10 plaintiff sought information that did not exist – specifically, plaintiff had requested 11 financial information “by product line,” but defendants did not maintain their financial 12 records at that level of detail. Id. at 16-17. Notwithstanding their objections, defendants 13 compiled a spreadsheet of financial information which was produced to plaintiff shortly 14 after the parties’ first conference with the Court. Id. at 17. Defendants represent that the 15 spreadsheet encompasses all the financial information in their control, which begins with 16 Clorox’s acquisition of Nutranext in April 2018. Id. at 17. 17 B. Legal Standard 18 “Unless otherwise limited by court order, the scope of discovery is as follows: 19 Parties may obtain discovery regarding any non-privileged matter that is relevant to any 20 party’s claim or defense and proportional to the needs of the case, considering the 21 importance of the issues at stake in the action, the amount in controversy, the parties’ 22 relative access to relevant information, the parties’ resources, the importance of the 23 discovery in resolving the issues and whether the burden or expense of the proposed 24 discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). 25 If a party fails to answer written interrogatories or produce documents in response 26 27 28 1 to written requests, the party seeking discovery may move for an order compelling 2 disclosure. Fed. R. Civ. P. 37(a)(3) & (4). “While the party seeking to compel discovery 3 has the burden of establishing that its request satisfies relevancy requirements, the party 4 opposing discovery bears the burden of showing that discovery should not be allowed, 5 and of clarifying, explaining, and supporting its objections with competent evidence.” 6 Lofton v. Verizon Wireless (VAW) LLC, 308 F.R.D. 276, 281 (N.D. Cal. 2015). The 7 Court “must limit” any proposed discovery if it determines that the discovery sought is 8 “unreasonably cumulative or duplicative” or “outside the scope permitted by Rule 9 26(b)(1),” or where the propounding party “has had ample opportunity to obtain the 10 information by discovery in the action.” Fed. R. Civ. P. 26(b)(2)(C)(i)-(iii). “District 11 courts have broad discretion” in making this determination. Surfvivor Media, Inc. v. 12 Survivor Prods., 406 F.3d 625, 635 (9th Cir. 2005); see also U.S. Fid. and Guar. Co. v. 13 Lee Inv. LLC, 641 F.3d 1126, 1136 n. 10 (9th Cir. 2011) (“‘District courts have wide 14 latitude in controlling discovery[.]’”) (citation omitted). 15 C. Discussion 16 1. Timeliness of the Joint Motion 17 Defendants raise two arguments regarding the timeliness of the Joint Motion. First, 18 Defendants request that the Motion to Compel be denied in its entirety because “this 19 discovery dispute was brought to the [C]ourt after the discovery cutoff of June 15, 2020.” 20 Jt. Mot. at 10 n.23. That is incorrect. The Court’s first pre-motion conference with the 21 parties concerning this dispute took place on June 5, 2020, ten days before the deadline to 22 complete fact discovery. Furthermore, the discovery at issue was served on April 10, 23 2020, well before the fact discovery cutoff. See Jensen v. BMW of North America, LLC, 24 No. 18-cv-103-WQH-NLS, 2018 WL 5389628, at *1 (S.D. Cal. Oct. 29, 2018) (finding 25 discovery dispute raised after the fact discovery cutoff was timely where “the discovery 26 itself was timely”).

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Certified Nutraceuticals Inc. v. The Clorox Company, (S.D. Cal. 2020).

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