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Luminara Worldwide, LLC v. Liown Electronics Co. Ltd.

United States District Court, D. Minnesota

May 27, 2015

Luminara Worldwide, LLC, Plaintiff,
v.
Liown Electronics Co. Ltd., Liown Technologies/Beauty Electronics, LLC, Shenzhen Liown Electronics Co. Ltd., Boston Warehouse Trading Corp., Abbott of England (1981), Ltd., BJ's Wholesale Club, Inc., Von Maur, Inc., Zulily, Inc., Smart Candle, LLC, Tuesday Morning Corp., Ambient Lighting, Inc., The Light Garden, Inc., and Central Garden & Pet Co., Defendants. Liown Electronics Co. Ltd., Liown Technologies/Beauty Electronics, LLC, Shenzhen Liown Electronics Co. Ltd., Boston Warehouse Trading Corp., Abbott of England (1981), Ltd., BJ's Wholesale Club, Inc., Von Maur, Inc., Zulily, Inc., Smart Candle, LLC, Tuesday Morning Corp., Ambient Lighting, Inc., The Light Garden, Inc., and Central Garden & Pet Co., Counterclaim Plaintiffs,
v.
Luminara Worldwide, LLC, QVC, Inc., Darice, Inc., Bed Bath & Beyond, Inc., Williams-Sonoma Stores, Inc., PC Treasures, Inc., and Brookstone Stores, Inc., Counterclaim Defendants.

Daniel R. Hall, Joseph W. Anthony, and Courtland C. Merrill, Anthony Ostlund Baer & Louwagie PA, 90 South 7th Street, Suite 3600, Minneapolis, MN 55402; Ryan S. Dean, Fish & Tsang LLP, 2603 Main Street, Suite 1000, Irvine, CA 92614, for Plaintiff and Counterclaim Defendant Luminara Worldwide LLC, and Counterclaim Defendants QVC, Inc., Darice, Inc., Bed Bath & Beyond, Inc., Williams-Sonoma Stores, Inc., PC Treasures, Inc., and Brookstone Stores, Inc.

Devan V. Padmanabhan, Erin O. Dungan, Nadeem Schwen, Brooks F. Poley, Lukas Dustin Jonathon Toft, and Paul J. Robbennolt, Winthrop & Weinstine, PA, 225 South 6th Street, Suite 3500, Minneapolis, MN 55402-4629; Thomas Nathan Millikan, Perkins Coie LLP, 11988 El Camino Real, Suite 350, San Diego, CA 92130-2594, for Defendants and Counterclaim Plaintiffs Liown Electronics Co. Ltd. and Liown Technologies/Beauty Electronics, LLC.

Devan V. Padmanabhan, Erin O. Dungan, Nadeem Schwen, Brooks F. Poley, Lukas Dustin Jonathon Toft, and Paul J. Robbennolt, Winthrop & Weinstine, PA, 225 South 6th Street, Suite 3500, Minneapolis, MN 55402-4629; Thomas Nathan Millikan and Joseph P. Reid, Perkins Coie LLP, 11988 El Camino Real, Suite 350, San Diego, CA 92130-2594, for Defendant and Counterclaim Plaintiff Shenzhen Liown Electronics Co. Ltd.

Devan V. Padmanabhan, Nadeem Schwen, Brooks F. Poley, Lukas Dustin Jonathon Toft, and Paul J. Robbennolt, Winthrop & Weinstine, PA, 225 South 6th Street, Suite 3500, Minneapolis, MN 55402-4629; Thomas Nathan Millikan, Perkins Coie LLP, 11988 El Camino Real, Suite 350, San Diego, CA 92130-2594, for Defendants and Counterclaim Plaintiffs Boston Warehouse Trading Corp., Abbott of England (1981), Ltd., Von Maur, Inc., Zulily, Inc., Smart Candle, LLC, Tuesday Morning Corp., The Light Garden, Inc., Central Garden & Pet Co., and BJ's Wholesale Club, Inc.

Lukas Dustin Jonathon Toft and Paul J. Robbennolt, Winthrop & Weinstine, PA, 225 South 6th Street, Suite 3500, Minneapolis, MN 55402-4629; Thomas Nathan Millikan, Perkins Coie LLP, 11988 El Camino Real, Suite 350, San Diego, CA 92130-2594, for Defendant and Counterclaim Plaintiff Ambient Lighting, Inc.

MEMORANDUM OPINION AND ORDER

SUSAN RICHARD NELSON, District Judge.

I. INTRODUCTION

This matter is before the Court on (1) the Liown Defendants' Motion to Modify and to Stay the Preliminary Injunction Pending Reconsideration or Appeal [Doc. No. 166], and (2) Plaintiff's Motion to Strike Memoranda of Law Filed in Violation of Local Rule 7.1 [Doc. No. 187]. For the reasons set forth below, the Court (1) grants, in part, and denies, in part, the Liown Defendants' Motion, and (2) denies Plaintiff's Motion.

II. BACKGROUND

The Court has thoroughly detailed the facts of this case in its previous orders. Thus, the Court only recounts facts relevant to the pending motions.

On April 20, 2015, the Court issued an order granting Plaintiff's Motion for Preliminary Injunction. The Court ruled that "Defendants [were] enjoined from manufacturing, distributing, offering for sale, selling, or importing moving flameless candles to Plaintiff's customers." (4/20/15 Order at 55 [Doc. No. 147].) Additionally, the Court ordered Defendants to "recall any and all moving flameless candles currently in Plaintiff's customers' stores or distribution centers." (See id.) The Court also ruled that, pursuant to Fed.R.Civ.P. 65(c), Plaintiff was required to "post a bond with the Clerk of the Court in the amount of $100, 000 for the payment of such costs and damages as may be incurred or suffered by Defendants in the event Defendants are found to have been wrongfully enjoined or restrained." (See id.)

On May 4, 2014, the Liown Defendants (Defendants Liown Electronics Co. Ltd., Liown Technologies/Beauty Electronics, LLC, and Shenzhen Liown Electronics Co. Ltd.) filed a Motion to Modify and to Stay the Preliminary Injunction Pending Reconsideration or Appeal [Doc. No. 166]. Defendants sought: (1) clarification about which customers are enjoined by the Court's April 20, 2015 order; (2) modification of the bond amount; and (3) a stay of the Court's preliminary injunction. (See generally Defs.' Mem. [Doc. No. 168].) During a telephonic conference on May 6, 2015, the Court clarified that any of Defendants' arguments pertaining to reconsideration of the merits of the Court's April 20, 2015 Order would not be permitted. Therefore, the only proper issues before the Court are the three issues outlined above.

Plaintiff filed a response memorandum on May 12, 2015, addressing these three issues [Doc. No. 184]. On the same day, Defendant The Light Garden, Inc. [hereinafter, "The Light Garden"] and Defendant Central Garden & Pet Co. (GKI) [hereinafter, "GKI"] filed their own separate briefs [Docs. No. 185, 186], in support of the Liown Defendants' Motion.

In response to The Light Garden's and GKI's briefs, Plaintiff filed a Motion to Strike Memoranda of Law Filed in Violation of Local Rule 7.1 [Doc. No. 187]. Luminara argues that The Light Garden's and GKI's briefs were untimely and "constitute an impermissible attempt to file... otherwise prohibited memorand[a] of law." (See Pl.'s Mem. in Supp. of Mot. to Strike at 2 [Doc. No. 188].) The Court heard oral argument on the pending issues on May 14, 2015. At the hearing, the Court sought clarification and further briefing on the issue of (1) whether The Light Garden should properly be considered a "customer" of Luminara's, and (2) whether Luminara could satisfy purchase orders from The Light Garden going forward. (See Minutes [Doc. No. 192].) The parties duly filed these briefs on May 18, 2015 [Docs. No. 199, 201].

III. MOTION TO STRIKE

Plaintiff moves the Court, pursuant to District of Minnesota Local Rule 7.1, to strike GKI's and The Light Garden's briefs [Docs. No. 185, 186]. (See Pl.'s Mot. to Strike [Doc. No. 187].) Plaintiff claims that the briefs filed by GKI and The Light Garden are untimely and are in violation of District of Minnesota Local Rule 7.1(b)(3), which prohibits reply briefs "in support of non-dispositive motions, " and Local Rule 7.1(i), which prohibits briefs that are not "expressly allowed." See D. Minn. L.R. 7.1(b)(3), (i); (Pl.'s Mem. in Supp. of Mot. to Strike at 2 [Doc. No. 188].)

Although GKI's and The Light Garden's briefs appear to be memoranda that were not expressly allowed by the Court, for the sake of undertaking a full and complete review of Defendants' arguments and submissions, the Court denies Plaintiff's request to strike these briefs. See, e.g., VanDyke v. Minneapolis Police Dep't, No. 14-cv-224 (SRN/SER), 2015 WL 138060, *2 n.5 (D. Minn. Jan. 7, 2015) (explaining that although the plaintiff's reply was filed in contravention to Local Rule 7.1(i), the Court considered the plaintiff's reply "to the extent it [was] helpful to explain [his legal position]"); Augustine v. United States, No. 13-cv-1417 (DWF/LIB), 2014 WL 1386378, *1 n.2 (D. Minn. Feb. 20, 2014) report and recommendation adopted, No. 13-cv-1417 (DWF/LIB), 2014 WL 1028358 (D. Minn. Mar. 14, 2014) (noting that although "[m]oving parties are not traditionally afforded the opportunity to submit reply memoranda for the Court's consideration of non-dispositive motions, " the plaintiff was permitted to do so in this case "for the sake of undertaking a full and complete review of [the p]laintiff's arguments and submissions"); George v. Uponor, Inc., 290 F.R.D. 574, 575 n.1 (D. Minn. 2013) (permitting a party to file a reply brief for a non-dispositive motion without prior permission from the court). Therefore, Plaintiff's Motion to Strike is denied.

IV. CLARIFICATION OF PRELIMARY INJUNCTION ORDER

The Liown Defendants request clarification of the Court's order as to which "customers" are enjoined. (See Liown Defs.' Mem. at 2-5 [Doc. No. 168].) Luminara does not object to clarification of the Court's preliminary injunction order to reflect the identity of Luminara's customers. (See Pl.'s Mem. in Opp'n at 2 [Doc. No. 184].) During the hearing, the parties purported to present a joint stipulation seeking to clarify the scope of the Court's April 20, 2015 preliminary injunction order. However, Defendant The Light Garden opposed this joint stipulation, and argued that it was not properly considered a "customer" of Luminara's, and therefore should not be included in the list of customers that are enjoined. (See Defs.' Joint Supp. Briefing at 2-4 [Doc. No. 201].)

In contrast, Luminara claims that because The Light Garden continued to submit purchase agreements throughout 2014, The Light Garden is properly considered a "customer" of Luminara's. (See Pl.'s Supp. Mem. at 1 [Doc. No. 199].) In fact, according to The Light Garden's own records, The Light Garden submitted eight purchase orders for Luminara candles from February 18, 2014, to June 11, 2014. (See Padmanabhan Decl., Ex. A [Doc. No. 202-1].) These purchase orders amounted to over [REDACTED\] in moving flameless candles and related accessories. (See Pl.'s Supp. Mem. at 1 [Doc. No. 199].) Additionally, Plaintiff contends that although Luminara could not currently sell moving flameless candles to The Light Garden, The Light Garden would be able to purchase candles from Counterclaim Defendant Darice, Inc, Luminara's new exclusive distributor. (See id. at 4.)

The Court finds that because The Light Garden continued to submit purchase orders to Luminara for several months in 2014, The Light Garden is properly considered a "customer" of Luminara's for purposes of the preliminary injunction. While The Light Garden was subject to a restrictive covenant with Luminara until December 31, 2014, the remainder of the distribution agreement between the parties expired on December 31, 2013.[1] (See Cain Decl., Ex. B "The Light Garden Distribution Agreement" ยงยง 10.01, 2.04 [Doc. No. 53-1].) In other words, The Light Garden was not obligated to purchase moving flameless candles from Luminara after December 31, 2013, but The Light Garden was prohibited from purchasing "confusingly similar" candles from any other supplier until December 31, 2014. (See id.) Nonetheless, The Light Garden continued to purchase products from Luminara well into 2014, even though it was not contractually obligated to do so.

The Light Garden argues that because it stopped buying candles from Luminara after June 2014, it should not be considered Luminara's current customer. (See The Light Garden's Mem. at 5-6 [Doc. No. 186].) The Court finds that this recent change in buying habits does not negate The Light Garden's status as Luminara's "customer." Based on the face of the agreement between The Light Garden and Luminara, The Light Garden was not contractually permitted to purchase moving flameless candles from Liown or any supplier other than Luminara; and therefore, it appears that The Light Garden's purchases from Liown violated the restrictive covenant it had with Luminara. Accordingly, had it not been for Liown's alleged infringement and sale of allegedly infringing candles, The Light Garden would have only purchased moving flameless candles from Luminara in 2014.

Plaintiff's counsel argued during the hearing that a contract requiring an entity to place purchase orders need not exist in order for an entity to be considered Luminara's "customer." As an example of this, Plaintiff's counsel pointed out that Defendant Ambient did not have a contract with Luminara, but was merely buying candles from Luminara in 2013, until Ambient began purchasing candles from Liown. Because Defendants do not contend that Ambient is not considered Luminara's customer, and Ambient has not purchased candles from Luminara since 2013, then The Light Garden is necessarily also considered a customer of Luminara's because it continued to buy candles from Luminara through 2014.

Thus, the Court uses its equitable powers to include The Light Garden in the list of Luminara's customers.[2] Consequently, the Court's grants Defendant's Motion insofar as it seeks clarification of the preliminary injunction order. The preliminary injunction order is clarified as follows:

Plaintiff's Motion for Preliminary Injunction [Doc. No. 50] is GRANTED:

a. Defendants are enjoined from manufacturing, distributing, offering for sale, selling, or importing moving flameless candles to the following customers of Plaintiff Luminara:
1. Ambient Lighting, Inc.;
2. Balsam Hill Christmas Tree Co.;
3. Bed Bath & Beyond, Inc.;
4. Brookstone Stores, Inc.;
5. Costco Wholesale co.;
6. Darice, Inc./Lamrite West, Inc.;
7. Frontgate;
8. GKI/Bethlehem Lighting;
9. Kohl's Corp.;
10. The Light Garden;
11. Lowe's Companies, Inc.;
12. One King's Lane, ...

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