City Merchandise Inc. v. Tian Tian Trading Inc.

Background

City Merchandise Inc. brought a copyright-infringement action against Tian Tian Trading Inc. and Weiwei Lin. City Merchandise alleged that the defendants, without authorization, created, displayed, and sold souvenir baseball items bearing a design strikingly and substantially similar to City Merchandise’s copyrighted design.

The opinion describes repeated discovery problems. The defendants served initial disclosures and discovery responses late, and their responses were incomplete or deficient. Among other issues, they did not verify interrogatory responses, did not produce requested documents such as purchase orders and invoices, and allegedly supplied incomplete, illegible, or redacted materials. The court extended the fact-discovery deadline after City Merchandise raised these issues.

Defense counsel later moved to withdraw, stating that significant disagreements had arisen with the defendants and that he had been told he was no longer authorized to represent them. The court eventually allowed counsel to withdraw. It repeatedly warned Tian Tian Trading Inc. that, as a corporation, it could not proceed without a lawyer, and ordered the defendants to obtain substitute counsel by February 12, 2021. The same order required a joint status letter and attendance at a February 23, 2021 telephone status conference.

No substitute counsel appeared. The defendants did not participate in the required joint status letter, and no counsel appeared for either defendant at the status conference; Weiwei Lin also did not appear personally. City Merchandise then moved under Rules 16 and 37 of the Federal Rules of Civil Procedure to strike the defendants’ answers and direct the clerk to enter a default.

Court’s Analysis

Rule 16 allows a court to issue appropriate orders when a party fails to attend a pretrial conference or obey a scheduling or pretrial order. Rule 37 allows sanctions that can include striking pleadings or entering a default judgment against a party that disobeys a court order. The court explained that relevant considerations include whether the noncompliance was willful, whether lesser sanctions might work, how long the noncompliance lasted, and whether the party had been warned about the consequences.

The court found that the defendants had failed to comply with the order requiring substitute counsel, a joint status letter, and attendance at the status conference. It also noted that Tian Tian Trading Inc. had been warned multiple times that it could not represent itself and that the defendants had been warned that violating the order could lead to sanctions, including the loss of claims or defenses. The court stated that both defendants had effectively defaulted in their obligation to defend the claims.

Even so, the court declined to impose dispositive relief immediately. It reasoned that the defendants should receive one more opportunity to explain why they should not be sanctioned, particularly because courts generally give self-represented parties more than one warning before imposing severe sanctions.

Ruling and Further Proceedings

Judge Mary Kay Vyskocil denied without prejudice City Merchandise’s motion to strike the defendants’ answers and direct the clerk to enter a default. “Without prejudice” was the court’s stated term, meaning the ruling did not bar City Merchandise from pursuing the requested relief again.

The court ordered the defendants to appear and show cause on April 19, 2022, why an order should not be issued striking their answers and directing the clerk to enter default for failing to comply with the January 13, 2021 orders. It directed City Merchandise to personally serve the defendants with the order and specified earlier deadlines for opposition and reply papers. The court warned that failure to comply could result in sanctions, including striking the answers and entering a default judgment. The order did not decide the underlying copyright-infringement claims and did not enter a default judgment.