Opinion
99 Civ. 12002 (BSJ)(FM)
November 13, 2001
MEMORANDUM DECISION AND ORDER
I. Introduction
In this trademark action, plaintiff Festina Lotus, S.A. ("Festina Lotus") has moved, pursuant to Federal Rule of Civil Procedure 36(b), to withdraw three of its prior admissions. The defendants ("Defendants") oppose this motion, arguing, among other things, that the amended responses would be untruthful and would cause them prejudice. For the reasons stated below, Festina Lotus's motion to withdraw its admissions is granted.
II. Factual Background
According to the Verified First Amended Complaint ("Complaint" or "Compl."), Festina Lotus is the exclusive licensee entitled to use United States Trademark No. 1,219,068 (the "`068 Registration") in connection with watches bearing the "Jaguar" mark. (Compl. ¶ 3). Festina Lotus contends that the Defendants infringed that registered trademark by advertising their own "Jaguar" watches for sale in the United States. (Id. ¶¶ 23, 25, 27).
Festina Lotus has represented that it is the successor by merger to plaintiff Manufacturas de Montres Jaguar, S.L., and the exclusive licensee of plaintiff Manufacture Des Montres Jaguar, S.A. ("MMJ-Switzerland"), for the use of the disputed trademark in connection with watches. (See Compl. ¶¶ 1-6). To simplify the discussion in this Memorandum Decision and Order, all three entities are referred to collectively as "Festina Lotus."
In their Answer, the Defendants deny that Festina Lotus has any exclusive right to use the Jaguar mark. (Defs.' Answer ¶ 25). The Defendants further allege that Festina Lotus is not a valid assignee of the `068 Registration, having acquired its interest through an improper assignment in gross unaccompanied by a transfer of goodwill. (Id. at 8, 22) (Second Affirmative Defense and First Counterclaim).
More specifically, the Defendants argue that Festina Lotus's predecessors in interest never engaged in the sale of Jaguar watches which were the same as the Jaguar watches presently sold by Festina Lotus and therefore transferred their interests in the `068 Registration without a transfer of assets or goodwill."A trademark can lose its protectable status when it is assigned to another without a corresponding transfer of assets or good will because use of the mark on a different product or service may act to defraud the purchasing public." Becoming, Inc. v. Avon Prods., Inc., No. 01 Civ. 5863, 2001 WL 930794, at *5 (S.D.N.Y. Aug. 15, 2001) (Martin, J.).
On January 26, 2001, the Defendants served Festina Lotus with a set of Requests for Admissions pursuant to Rule 36 of the Federal Rules of Civil Procedure. (See Decl. of Joseph J. Villapol, Esq., dated Aug. 17, 2001 ("Villapol Decl."), Ex. A) (Def. Jaguar Cars Ltd.'s First Set of Reqs. for Admiss.). The first three requests, in substance, sought admissions that the Jaguar watches "marketed" by Festina Lotus in the United States shared no "common material or labor content" with any Jaguar watches marketed in the United States by Michael Anthony Jewelers, Inc. ("Michael Anthony") or any of Festina Lotus's other predecessors in title to the `068 Registration. (Id.) The issue of common material or labor content is relevant to the Defendants' contention that the assignment of the `068 Registration was defective. (See n. 2, supra).
The text of the requests for admissions is as follows:
REQUEST FOR ADMISSION NO. 1
The watches marketed under the JAGUAR mark in the United States by plaintiffs have no common material or labor content with any watches marketed under the JAGUAR mark in the United States by Michael Anthony Jewelers, Inc.
REQUEST FOR ADMISSION NO. 2
The watches depicted in the advertising materials of Exhibit A to the Verified Complaint For Trademark Infringement And Unfair Competition have no common material or labor content with any watches marketed under the JAGUAR mark in the United States by Michael Anthony Jewelers, Inc.
REQUEST FOR ADMISSION NO. 3
The watches marketed under the JAGUAR mark in the United States by plaintiffs have no common material or labor content with any watches marketed under the JAGUAR mark in the United States by any predecessor-in-title to U.S. Reg. No. 1,219,068.
(Villapol Decl. Ex. A at 2).
On February 28, 2001, Festina Lotus served its response to the Requests for Admissions. In its response, Festina Lotus objected that the first three requests were "vague and ambiguous" insofar as they incorporated the phrase "common material or labor," and sought information that was neither relevant nor reasonably calculated to lead to the discovery of admissible evidence. (Id. Ex. B (Festina Lotus's Resps. to Def. Jaguar Cars Ltd.'s First Set of Reqs. for Admiss.) at 3-4). Subject to these objections, however, Festina Lotus admitted the truth of the statements set forth in the requests. (Id.).
In or around March 2001, Festina Lotus' counsel traveled to Europe to review certain documents. (See id. ¶ 4). In the course of that review, counsel learned of some documents which suggested that Festina Lotus had supplied Jaguar watches to Jaguar Gold Products Corp. ("Jaguar Gold"), another of its predecessors in title to the `068 Registration. (Id.). This, in turn, led to a reexamination of documents previously produced in discovery by Festina Lotus. (Id. ¶ 5). From their review of the two groups of documents, Festina Lotus's counsel concluded that Festina Lotus had, in fact, supplied Jaguar watches not only to Jaguar Gold, but to Michael Anthony as well. (Id. ¶¶ 4, 5). Festina Lotus's counsel therefore wrote to the Defendants' counsel to request that the defendants consent to the filing of amended responses to these requests. (Id. ¶ 8 Ex. G (letter from Joseph J. Villapol, Esq. to Robert C.J. Tuttle, Esq., dated Mar. 28, 2001) at 3).
Thereafter, the parties took a number of depositions, portions of which related to the assignment in gross issue. For example, Paul Krauskopf, Vice President of Michael Anthony, testified at his deposition that Michael Anthony had shown the Jaguar watches supplied by Festina Lotus to a major retailer in New Jersey and other retailers at a jewelry trade show in Las Vegas, Nevada. (Id. Ex. H (Dep. of Paul Krauskopf, taken on Apr. 5, 2001) at 35-38). Mr. Krauskopf testified further that Michael Anthony never secured a distributorship, but did eventually sell its own employees a few of the sample Jaguar watches that had been supplied to it. (Id. at 38, 108).
Additionally, Miguel Rodriguez, who appeared as a Rule 30(b)(6) witness on behalf of Festina Lotus, testified that Pan American Diamond Corp. ("Pan American"), the parent of Jaguar Gold, had utilized the same suppliers as Festina Lotus for certain parts of Jaguar watches that Pan American manufactured. (Id. Ex. J (Dep. of Miguel Rodriguez, taken on May 7, 2001) at 62). Although Festina Lotus cites this testimony as substantiation for its argument that the assignment of the `068 Registration was not "in gross," Mr. Krauskopf, who was familiar with the Pan American "Jaguar" watches, testified that they shared such common components as crystals and casings, but that "the components themselves were completely different." (Defs.' Br. Ex. F at 76-77).
III. Discussion
Rule 36(b) of the Federal Rules of Civil Procedure provides that a court
may permit withdrawal or amendment [of an admission under Rule 36(a)] when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice that party in maintaining the action or defense on the merits.
Accordingly, pursuant to the Rule, a court may not excuse a party from the consequences of its admissions unless the presentation of the merits of the case will be aided and the party that obtained the admissions will not be prejudiced. Donovan v. Carls Drug Co., Inc., 703 F.2d 650, 652 (2d Cir. 1983); Weinberger v. Provident Life Casualty Ins. Co., No. 97 Civ. 9262, 1999 WL 225537, at *1 (S.D.N.Y. Apr. 19, 1999) (Pitman, Mag. J.); Local Union No. 38 Sheet Metal Workers' Int'l Ass'n, AFL-CIO v. Tripodi, 913 F. Supp. 290, 294 (S.D.N.Y. 1996) (Conner, J.). Even when that required showing has been made, however, whether a party should be allowed to withdraw its admissions remains a matter committed to the court's discretion. Donovan, 703 F.2d at 652.
In this case, both sides apparently agree that the extent to which Festina Lotus's predecessors in title "marketed" Jaguar watches will be one of the central issues at trial. They part company in their interpretation of the admissions that Festina Lotus now seeks to disown. Thus, the Defendants read the three contested admissions as a concession that Festina Lotus's predecessors never sold any watches that had common labor or material content with the watches presently being sold by Festina Lotus. (Defs.' Br. at 4-6, 8-10). Although that may, in fact, be an accurate statement, Festina Lotus argues that it nevertheless should be permitted to withdraw its admissions because they offer to sell Jaguar watches that had a common labor or material component. (Festina Webster's Third New International Dictionary defines the verb "market" to mean, among other acts, both "go[ing] to market to buy or sell" and "expos[ing] for sale Webster's Third New Int'l Dict. 1383 (1993). Similarly, the online version intr market, buy and sell; to go to market with produce; to purchase provisions" and "2. Oxford English ___ (2d Ed.) ___, ___, ___). alternative definitions, it is possible to "market" a product without actually offering it for
In connection with the present motion, Festina Lotus has at least two First, it appears that Michael Anthony did sell a small quantity of Jaguar watches, albeit determine whether there was a market for commercial quantities of Jaguar watches, even could be described as the "marketing" of Jaguar watches. Unless Festina Lotus is permitted to withdraw its admissions, however, the trial court may not be in a position to consider whether either or both of these activities is sufficient to overcome the Defendants' defenses and counterclaims. Festina Lotus therefore has met the first branch of the test set forth in Rule 36(b). See Tripodi, 913 F. Supp. at 294 (allowing withdrawal of admission because the "presentation of the merits clearly would be served . . . by permitting defendant to dispute a central issue in this case"); Weeks Stevedoring Co., Inc. v. Raymond Int'l Builders, Inc., No. 88 Civ. 3865, 1995 WL 766309, at *10 (S.D.N Y Dec. 28, 1995) (Lowe, J.) (permitting amendment of admissions when crucial to defendant's defense); Westmoreland v. Triumph Motorcycle Corp., 71 F.R.D. 192, 193 (D.Conn. 1976) (holding that "[t]he first half of the [Rule 36(b)] test is clearly satisfied since the effect of upholding the admissions would be to practically eliminate any presentation of the merits.").
Under the second branch of Rule 36(b), the party requesting the admissions has the burden of demonstrating that their withdrawal will be prejudicial. Weeks, 1995 WL 766309, at *10; Upchurch v. USTNET, Inc., 160 F.R.D. 131, 132 (D.Or. 1995). Such prejudice exists when that party will be "`less able to obtain the evidence required to prove the matters which had been admitted' than he would have been at the time that the admission was made." United States v. One 1984 Chevrolet Trans Star, 623 F. Supp. 625, 627 (D.Conn. 1985) (Cabranes, J.) (quoting Westmoreland, 71 F.R.D. at 193). Conversely, when the party that obtained the admissions is able to prove the admitted matter through other evidence, there is no prejudice. See Local Union, 913 F. Supp. at 294. already served and filed a motion for summary judgment which addresses their invalid assignment and defective trademark title defenses and counterclaims. (Defs.' Br. at 12). The papers submitted by the Defendants in support of that motion, however, do not See, , Defs.' Local Civil Rule 56.1 Stmnt.). Moreover, even if the Defendants were able to show that alone would not be sufficient to demonstrate prejudice. See Fed. Deposit Ins. Corp. v. Prusia reliance upon an erroneous admission does not constitute prejudice"); Tower Partners, ______________, No. 7:95-CV-64-BR3, 1996 WL 578517, at *4 (E.D.N.C. May 16, 1996) ("the mere fact that Plaintiff has prepared a summary judgment motion
Moreover, the Defendants do not appear to have abandoned any area of discovery as a result of the admissions. Indeed, Festina Lotus's counsel put the March 2001 even though the formal motion to withdraw the admissions was not made until relatively late in the discovery process. (Villapol Decl. ¶ 8; Ex. G at 3). After counsel's letter was sent, the Defendants apparently questioned Messrs. Krauskopf and relevant to the issues that the Requests for Admissions were intended to address.
Finally, the Defendants contend that they will be prejudiced because they "cannot depose Jaguar Gold Products Corp., or its parent Pan American Diamond Corp., because both are bankrupt and their assets have been liquidated." (Defs.' Br. at 13). While this is literally true, both companies in fact were dissolved long before this action was filed. (See Rule 56.1 Stmnt. ¶¶ 4, 5, 9-10). The Defendants therefore are in no worse position with respect to these companies than they were prior to Festina Lotus's admissions. They consequently cannot claim that their ability to obtain evidence from these predecessors in title would be adversely affected by the withdrawal of the admissions.
The only other argument advanced by the Defendants in opposition to the motion is that Festina Lotus's proposed denials would be untruthful. Cf. Baker v. Dorfman, No. 99 Civ. 9385, 2000 WL 420551, at *6 (S.D.N.Y. Apr. 17, 2000) (Cote, J.) (denying application to submit belated response to request for admissions because movants failed to show that their denials would be truthful). This argument proceeds on the assumption that the word "marketed" necessarily means "sold." As shown above, however, this term can also reasonably be interpreted to incorporate the act of merely bringing or exposing goods to a market. The Defendants consequently have not shown that Festina Lotus's denials of the first two Requests for Admissions, which relate to Michael Anthony, would necessarily be false. Similarly, with respect to the third Request for Admission, Mr. Krauskopf's testimony suggests that there is no factual basis for Festina Lotus's claim that the "Jaguar" watches previously manufactured by Pan currently sells. Nevertheless, the third Request, by its terms, applies to every in title to Festina Lotus and is not restricted to Pan American. Accordingly, because the third request also addresses Michael Anthony's activities, Festina Lotus can truthfully
IV. Conclusion
admissions of the truthfulness of the Defendants' first three Requests for Admissions is granted.