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Select Comfort Corporation v. Tempur Sealy International, Inc.

United States District Court, District of Minnesota

November 3, 2014

Select Comfort Corporation, Plaintiff/Counter-Defendant,
v.
Tempur Sealy International, Inc., doing business as Tempur-Pedic, Defendant/Counter-Claimant, Mattress Firm Holding Corp., doing business as Mattress Firm, Defendant

Andrew S. Hansen, Dennis E. Hansen, Samuel R. Hellfeld, and Elizabeth A. Patton, Esqs., Oppenheimer Wolff & Donnelly LLP, Minneapolis, Minnesota, for Plaintiff.

Arthur S. Beeman, Esq., Arent Fox LLP, San Francisco, California, for Defendant Tempur Sealy International, Inc.

John W. Ursu, Robert J. Gilbertson, and X. Kevin Zhao, Esqs., Greene Espel PLLP, Minneapolis, Minnesota, for Defendant Tempur Sealy International, Inc.

Matthew Wright and Pamela M. Deese, Esqs., Arent Fox LLP, Washington, District of Columbia, for Defendant Tempur Sealy International, Inc.

Brian D. Roche, Jennifer DePriest, Jillian Burstein, Vanessa Marti Heftman, and William Weltman, Esqs., Reed Smith LLP, Chicago, IL, for Defendant Mattress Firm Holding Corp.

David T. Schultz and Michael C. McCarthy, Esqs., Maslon Edelman Borman & Brand, LLP, Minneapolis, MN, for Defendant Mattress Firm Holding Corp.

ORDER

STEVEN E. RAU, United States Magistrate Judge.

The above-captioned case comes before the undersigned on Plaintiff Select Comfort Corporation's (" Select Comfort") Motion to Compel Discovery from Defendant Tempur Sealy International, Inc., doing business as Tempur-Pedic (" Tempur-Pedic") (" Motion to Compel--Tempur-Pedic") [Doc. No. 81] and Motion to Compel Discovery from Defendant Mattress Firm Holding Corp., doing business as Mattress Firm (" Mattress Firm") (" Motion to Compel--Mattress Firm") [Doc. No. 88].[1] This matter has been referred for the resolution of pretrial matters pursuant to 28 U.S.C. § 636(b)(1)(A) and District of Minnesota Local Rule 72.1. For the reasons stated below, the Motion to Compel--Tempur-Pedic is granted and the Motion to Compel--Mattress Firm is granted in part and denied in part.

I. BACKGROUND

This case arises out of the competition between Select Comfort's " m series" Sleep Number beds and Tempur-Pedic's " Tempur-Choice" mattresses. See (Am. Compl.) [Doc. No. 8 ¶ 20-21]. Select Comfort accuses Tempur-Pedic of disseminating " false, misleading, disparaging, and deceptive advertisements directly to consumers in [an] attempt to divert consumers from Select Comfort to Tempur-Pedic." ( Id. ¶ ¶ 22-33). Mattress Firm is a retailer that sells Tempur-Pedic products and uses Tempur-Pedic's allegedly " false, misleading, disparaging[, ] and deceptive advertising and training materials." ( Id. ¶ ¶ 34-35). The Motions to Compel arise out of Select Comfort's claims for false advertising against both Tempur-Pedic and Mattress Firm (collectively " Defendants").[2] See (Mots. to Compel).

The Honorable Donovan W. Frank preliminarily enjoined Mattress Firm from making certain representations about Select Comfort and its products and services. See (Order Dated Dec. 23, 2013) [Doc. No. 59]. Judge Frank also dismissed claims for violations of the Minnesota Unlawful Trade Practices Act (" MUTPA"), violations of the Minnesota False Statement in Advertising Act (" MFSAA"), and violations of the Minnesota Consumer Fraud Act (" MCFA") against Mattress Firm. See (Order Dated Apr. 8, 2014) [Doc. No. 74]. Tempur-Pedic makes counterclaims against Select Comfort for unfair competition, false advertising, trade and product disparagement, and tortious interference with prospective economic advantage. (Tempur-Pedic's Am. Answer & Countercls., " Answer & Countercls.") [Doc. No. 72 ¶ ¶ 162, 176-99].

Select Comfort filed the Motions to Compel on August 29, 2014, and oral argument was heard on September 12, 2014. See (Mots. to Compel); (Minute Entry Dated Sept. 12, 2014) [Doc. No. 110]. Mattress Firm and Select Comfort provided additional information to the Court in October 2014. See (Mattress Firm's Notice Regarding Select Comfort's Supplemental Interrog. Resp. Related to Pre-2012 Conduct, " Mattress Firm's Notice") [Doc. No. 116]; (Pl.'s Resp. to Mattress Firm's Notice Regarding Select Comfort's Supplemental Interrog. Resp. Related to Pre-2012 Conduct, " Select Comfort's Resp. to Mattress Firm's Notice") [Doc. No. 119]. The Court addresses each Motion to Compel in turn.

II. MOTION TO COMPEL--TEMPUR-PEDIC

Select Comfort seeks an order compelling discovery from Tempur-Pedic in three categories: financial information, information regarding Tempur-Pedic's claim that its foam is proprietary, and information regarding Tempur-Pedic's claim that Sleep Number beds hammock. (Pl.'s Mem. of Law in Supp. of its Mot. to Compel--Tempur-Pedic, " Mem. in Supp.--Tempur-Pedic") [Doc. No. 83 at 5-12]. These claims relate to Select Comfort's allegation that Tempur-Pedic engaged in false advertising with respect to Select Comfort's Sleep Number beds and Tempur-Pedic's Tempur-Choice beds. ( Id. at 2-4).

A. Financial Information

1. The Parties' Arguments

Select Comfort seeks information regarding Tempur-Pedic's sales and expenses from January 1, 2011, to the present. See (Mem. in Supp.--Tempur-Pedic at 5-8).[3] Select Comfort argues it needs information on all lines of Tempur-Pedic's beds because Tempur-Pedic has put its financial gains and losses at issue in its counterclaim and because consumers may have purchased a competing mattress--other than the Tempur-Choice line--as a result of Tempur-Pedic's alleged false advertising. ( Id. at 5, 15). Additionally, Select Comfort argues it needs financial information dating back to 2011 because it needs context to " properly evaluate any boost in Tempur-Pedic's sales as a result of its conduct." ( Id. at 15). Finally, Select Comfort argues Tempur-Pedic must produce sales information broken down into sales by product and retailer so that Select Comfort can analyze the effect of false advertising, and Tempur-Pedic must produce expense information broken down into categories of advertising and marketing, direct sales, and overhead. ( Id. at 16-17); see also (Interrog. No. 13).

Tempur-Pedic objects for several reasons: As an initial matter, Tempur-Pedic argues this information is " confidential commercial information" entitled to the same protection as trade secrets. (Def. Tempur-Pedic's Mem. in Opp'n to Pl.'s Mot. to Compel Disc., " Tempur-Pedic's Mem. in Opp'n") [Doc. No. 96 at 15]. Tempur-Pedic next argues that only the Tempur-Choice mattress and an advertisement used during part of 2013 are at issue, and therefore, discovery about all of Tempur-Pedic's products since 2011 is irrelevant. ( Id. at 16-17). More specifically, Tempur-Pedic argues it did not put other lines of Tempur-Pedic beds at issue in its counterclaim and financial information from the period before January 2013 is not necessary to provide context for Select Comfort's damages. ( Id. at 18-20). Tempur-Pedic also argues that any reliance on allegedly false advertising could not have taken place before 2013, when the Tempur-Choice bed was introduced. ( Id. at 20-21).

2. Analysis

The Federal Rules permit " discovery regarding any nonprivileged matter that is relevant to any party's claim or defense--including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter." Fed.R.Civ.P. 26(b)(1). " Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Id.

Nevertheless, discovery is not boundless, and must be limited if:

(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, ...

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