IQ Products Company v. Onyx Corporation

• Court: Court of Appeals for the Fifth Circuit
• Decided: August 28, 2002
• Docket: 01-20364
• Status: Unpublished

Opinion

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 01-20364

IQ PRODUCTS COMPANY,

Plaintiff-Appellant,

VERSUS

ONYX CORPORATION; ONYX LABORATORIES INC.,

Defendants-Appellees.

Appeal from the United States District Court For the Southern District of Texas (H-99-CV-239)

August 23, 2002 Before DUHÉ, DeMOSS and CLEMENT, Circuit Judges.

DUHÉ, Circuit Judge:1

This appeal arises out of several alleged abuses of discretion

by the district court before and during a jury trial which IQ

Products Company (“IQ”) argues prejudiced it such that a new trial

is warranted. Because we find no abuse of discretion, no new trial

is warranted and we AFFIRM the judgment of the district court.

FACTUAL AND PROCEDURAL BACKGROUND

IQ manufactures and sells, among other things, nail polish

1 Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. remover products. Onyx Corporation and Onyx Laboratories

(collectively “Onyx”) sell nail care products, including nail

polish remover products. Onyx labels its nail polish removers 100%

Pure Acetone, Salon Formula, and Non Acetone. Wal-Mart carries

Onyx’s Salon Formula and Non Acetone, but none of IQ’s competing

products. IQ sought to discredit Onyx, and informed Wal-Mart of

tests showing that Onyx’s Non Acetone in fact contained acetone.

Upon learning this, Onyx changed Non Acetone to an acetone-free

formula.

IQ filed suit in January 1999 claiming that Onyx sold nail

polish removers to Wal-Mart in violation of the Lanham Act.

Specifically, IQ claims Onyx made two false or misleading

statements of fact about Non Acetone: that it did not contain

acetone (when, in fact, it was at least 9% acetone), and that it

did not contain water (when, in fact, it was at least 24% water);

and one false or misleading statement of fact about Salon Formula:

that it did not contain water (when, in fact, it was at least 20%

water). IQ claims Onyx would not have been successful in selling

its products to Wal-Mart (to the exclusion of IQ’s products) but

for the false advertising and false labeling. IQ claims it suffered

damages when its competing nail polish removers were kept off of

Wal-Mart’s shelves.

The case was originally scheduled for trial in the May/June

2000 term, but following the filing of a third-party complaint in

September 1999, the district court entered several amended

2 scheduling orders. The amended scheduling order entered on January

20, 2000 set the case for trial during the January/February 2001

trial term.

On August 11, 2000, IQ moved to amend its pleadings to expand

its Lanham Act claims concerning nail polish removers, and to

assert new claims concerning other products. When that motion had

not been acted upon by November 22, (after the discovery deadline

had passed, and only eight days before the Joint Pretrial Order was

due), IQ moved to stay and terminate deadlines. On November 30, the

district court granted IQ’s motion to amend only with regard to

nail polish removers, and denied its motion to stay and terminate

deadlines. IQ filed its First Amended Complaint the following day.

Onyx moved to strike the testimony of IQ Chief Executive

Officer (“CEO”) P. Yohanne Gupta (“Gupta”). The district court

referred that motion to a magistrate judge on February 2, 2001. On

Friday, February 9, the district court set the case for trial on

Monday, February 12. Both IQ and Onyx moved for a continuance on

February 9, and the court denied those motions. Also that day, the

district court vacated its order referring the motion to strike

Gupta’s testimony to the magistrate judge. IQ renewed its motion

for continuance on February 12, which the court denied. The jury

trial ended in a verdict for Onyx and IQ timely appeals.

DISCUSSION

IQ argues that the district court abused its discretion, and

that the abuses of discretion, individually and cumulatively,

3 deprived IQ of a fair trial and substantially prejudiced IQ’s

preparation and presentation of its case. Abuse of discretion is

the appropriate standard of review of each alleged error. We will

address each alleged abuse of discretion in turn.

Denial of Motion for Continuance

IQ sought to continue the trial because its CEO and sole

expert witness, Gupta, was unavailable. He was in India at the

bedside of his father, who was suffering from congestive heart

failure. IQ interpreted the district court’s referral of Onyx’s

motion to strike Gupta’s testimony to a magistrate judge, with a

submission date of February 20, as an indication that trial would

not be set prior to February 20. IQ therefore allowed Gupta to

leave the country on February 7, with an expected return date of

February 17.

When, as here, a continuance is requested because a witness is

unavailable, the movant must show (1) due diligence was exercised

to obtain the attendance of the witness, (2) the witness would

tender substantial favorable evidence, (3) the witness would be

available and willing to testify, and (4) denial of the continuance

would materially prejudice the movant. United States v. Olaniyi-

Oke, 199 F.3d 767, 771 (5th Cir. 1999). Because IQ did not exercise

due diligence to obtain Gupta’s attendance or to ameliorate the

effect of his absence, its argument fails.

IQ failed to keep Gupta available while its case was on the

4 trial docket. IQ argues that it did not anticipate, nor did it have

reason to anticipate, that the case would go to trial before

February 20. This is incorrect. This case was scheduled for the

January/February 2001 docket. Because of the large number of

criminal cases in the Southern District of Texas, which are

governed by the Speedy Trial Act of 1974, 18 U.S.C. § 3161 et seq.,

civil cases are slated for a two-month docket and litigants must be

prepared to go to trial as soon as there is an opening in the

schedule during those two months. IQ was fully prepared for trial

before Gupta left for India. IQ’s responsibility was to be prepared

for trial in the entire January/February term, and by allowing

Gupta to leave the country without ensuring it would remain ready

for trial, it failed.

IQ had many options available. It could have moved the

district court for a continuance before Gupta left the country, to

ensure its case would not go to trial without Gupta. IQ could have

moved to take a supplemental deposition of Gupta before allowing

him to leave the country, to ensure his testimony would be heard.

However, IQ did not fully exercise its responsibilities, and we

will not reward its failures with a new trial.2

IQ claims it should have been granted a continuance due to

2 IQ cites a case of another circuit, which has been vacated, as support for its argument. See Grochal v. Aeration Processes, Inc., 797 F.2d 1093, 1097 (D.C. Cir. 1986), vac’d per settlement, 812 F.2d 745 (D.C. Cir. 1987) (per curiam). This is not governing law, and moreover is based on a distinguishable factual situation.

5 “court-induced confusion”. Specifically, IQ claims the district

court’s referral of the motion to strike and its subsequent

decision to vacate that order caused confusion. However, the fact

that IQ was confused does not make the decision to deny the

continuance an abuse. If IQ was confused, it should have contacted

the district court for clarification as to the status of the trial.

IQ cites two Seventh Circuit cases as support for its “court-

induced confusion” argument. Neither is relevant. In Ellingsworth

v. Chrysler, 665 F.2d 180 (7th Cir. 1981), the Seventh Circuit

ruled that court-created confusion that forced a delay in trial

excused counsel’s failure to appear for trial and warranted relief

from an adverse judgment. Id. at 184. That case is inapposite.

There, the parties conferred with the court, which led to

confusion. Here, IQ never conferred with the court. While the

reference of the motion to the magistrate judge may have confused

IQ, IQ made no effort to clear that confusion up with the court.

IQ further likens its case to Leong v. Railroad Transfer

Serv., Inc., 302 F.2d 555 (7th Cir. 1962), where the Seventh

Circuit reversed the district court’s failure to vacate a default

judgment entered against a party who failed to appear due to

confusion about the trial date. Id. at 557. This too is inapposite.

There, the Seventh Circuit held that it was an abuse of discretion

for the district court to refuse to listen to reasons why the

attorneys for both sides were absent from court, when that failure

to attend was due to confusion about whether they would be summoned

6 to court. Here, only IQ was confused, and it did not attempt to

timely explain or clarify its confusion with the court.

IQ finally claims the district court’s reasons for denial of

its motion for continuance were erroneous.3 However, there is no

precedent for our reliance on this to reverse the district court.

We may only reverse the district court if we find that it abused

its discretion, and these potentially mistaken statements do not

rise to that level.

For the foregoing reasons, the district court’s denial of IQ’s

motion for continuance is not an abuse of discretion.

Refusal to Permit Deposition of Todd Matherly

IQ claims the district court erred in fashioning the scope of

discovery by refusing to permit it to take the oral deposition of

Todd Matherly (“Matherly”), a buyer at Wal-Mart. IQ makes no

colorable argument that the court’s decision, while certainly

harmful to its case, was an abuse of discretion, therefore, it

cannot prevail. The reason proffered for failure to notice

Matherly’s deposition before the discovery cut off (that IQ needed

a ruling first on its motion to amend its complaint) is not

persuasive. It could have deposed Matherly about the products at

issue and those that would have been placed at issue if its motion

to amend was thereafter allowed.

3 IQ claims the district court wrote that it had extended the trial date three times, and that no motion for continuance had been filed prior to February 9, and that both of these statements are false.

7 Quashing the Trial Subpoena Served on Edward A. Blair

IQ argues that the district court erred in quashing the trial

subpoena it served on Edward A. Blair (“Blair”). A subpoena can be

quashed for being untimely if it is in effect a motion at trial for

more discovery. Comeaux v. Uniroyal Chem. Corp., 849 F.2d 191, 194

(5th Cir. 1988), abrogation on other grounds recognized, Carroll v.

General Acc. Ins. Co. of Am., 891 F.2d 1174, 1176 (5th Cir. 1990).

Onyx delivered Blair’s expert witness report to IQ on December

27, 2000. IQ served a subpoena on Blair at trial requiring him to

produce allegedly relevant documents that it claims would have

enabled it to impeach Onyx’s damages expert. Onyx moved to quash

the subpoena, arguing that IQ was trying to engage in discovery at

the time of trial. IQ claimed it served the subpoena at trial

because that was the first time it became clear that IQ would be

unable to rebut Blair’s testimony with that of Gupta, its own

expert. The district court quashed IQ’s subpoena on February 13.

IQ claims this was an abuse of discretion, as taking a

deposition is not a predicate to serving a trial subpoena. However,

trial subpoenas are not intended as a backdoor for discovery that

could have been obtained before trial. Given IQ’s failure to seek

Blair’s deposition before trial, the district court acted within

its discretion. While different district court judges may

reasonably have differed on whether to allow this subpoena, this

judge’s quashing of it was not an abuse of discretion.

8 Refusal to Limit Blair’s Testimony

IQ argues that the district court erred by permitting Blair to

testify at trial about opinions not expressed in his expert witness

report.

The district court offered IQ the opportunity to depose Blair

before he testified regarding his supplemental opinions, an

opportunity IQ declined. Having done that, IQ cannot now succeed in

its request for a new trial on the basis of Blair’s testimony.

Denial of Injunctive Relief

IQ claims the district court erred in denying it injunctive

relief. IQ sought a permanent injunction prohibiting Onyx from

continuing to falsely label its products, first in its First

Amended Complaint and again at the close of evidence. The district

court reserved ruling until the jury completed deliberation. After

the jury verdict in favor of Onyx, the district court entered a

final judgment in favor of Onyx that did not address the claim for

injunctive relief, but necessarily denied it.

IQ’s claim for injunctive relief was an equitable issue, and

therefore to be decided by the court and not the jury. Federal Rule

of Civil Procedure 52(a) provides that “[i]n all actions tried upon

the facts without a jury or with an advisory jury, the court shall

find the facts specially and state its conclusions of law

thereon....” Therefore, IQ argues the court’s failure to issue

findings of fact or conclusions of law on that claim was error.

9 However, this court recently held that “a claim becomes moot

when the issues presented are no longer live or the parties lack a

legally cognizable interest in the outcome.” Piggly Wiggly

Clarksville, Inc. v. Mrs. Baird’s Bakeries, 177 F.3d 380. 383 (5th

Cir. 1999). Even if it was error for the district court not to rule

specifically on the motion for injunctive relief, or state findings

and conclusions, the jury found that Onyx’s advertising, whether

false/misleading or not, did not damage IQ. Thus, the parties lack

a legally cognizable interest.4

Denial of Motion for New Trial

IQ contends that the district court’s denial of its motion for

a new trial was error.

Despite the fact that some of the district court’s decisions

could reasonably have gone either way, we hold that none of them

are an abuse of discretion. Absent abuse of discretion there can

4 We do not accept Onyx’s argument that the injunction is moot because it voluntarily changed its labels. As this court recently stated in Pederson v. Louisiana State University, 213 F.3d 858, 874 (5th Cir. 2000),

it is well established that the voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear and determine the case, i.e., does not make the case moot. But jurisdiction, properly acquired, may abate if the case becomes moot because (1) it can be said with assurance that there is no reasonable expectation... that the alleged violation will recur, and (2) interim relief or events have completely and irrevocably eradicated the effects of the alleged violation. When both conditions are satisfied it may be said that the case is moot because neither party has a legally cognizable interest in the final determination of the underlying questions of fact and law. The burden of demonstrating mootness is a heavy one.

10 be no new trial.

CONCLUSION

While this case may not have been managed ideally, none of the

district court’s rulings rise to the level of abuse of discretion.

Because we find no abuse of discretion, we AFFIRM the decision of

the district court.

AFFIRMED.