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Aviva Sports, Inc. v. Fingerhut Direct Marketing, Inc.

United States District Court, D. Minnesota

January 23, 2017

Aviva Sports, Inc., Plaintiff,
v.
Fingerhut Direct Marketing, Inc., Menard, Inc., Kmart Corporation, Wal-Mart Stores, Inc., and Manley Toys, Ltd., Defendants.

          ORDER

          JOAN N. ERICKSEN United States District Judge

         The Court entered judgment in favor of Aviva Sports, Inc., and against Manley Toys, Ltd., in the amount of $8, 588, 931.59. The amount comprised a portion of Manley Toys' profits from its falsely advertised products, an award under the Lanham Act of Aviva Sports' attorneys' fees and costs, and previously ordered sanctions against Manley Toys. Manley Toys appealed. The United States Court of Appeals for the Federal Circuit affirmed.

         In September and October 2015, Aviva Sports, now known as ASI, Inc., served discovery requests on Manley Toys. Manley Toys did not respond. Aviva Sports moved to compel Manley Toys to answer the discovery requests. In an Order dated January 4, 2016, the Honorable Janie S. Mayeron, United States Magistrate Judge, granted the motion to compel and ordered Manley Toys to serve its responses to Aviva Sports' First Set of Requests for Production in Aid of Execution and First Set of Interrogatories in Aid of Execution “on or before January 29, 2016, or within ten days after the date it receives a copy of this Order via U.S. mail, Certified Mail or Federal Express, whichever event occurs earlier.” Manley Toys failed to comply.

         In February 2016, Aviva Sports moved for sanctions against Manley Toys. The next month, foreign representatives of Manley Toys filed a Chapter 15 Petition for Recognition of a Foreign Proceeding in the United States Bankruptcy Court for the District of New Jersey. The bankruptcy court provisionally granted relief, including a stay of continued litigation against Manley Toys. In late March 2016, the Court cancelled the hearing on Aviva Sports' motion for sanctions. Several months later, in light of the ongoing proceedings before the bankruptcy court, the Court denied Aviva Sports' motion for sanctions without prejudice to the motion's renewal at an appropriate time.

         On October 25, 2016, the bankruptcy court granted in part and reserved in part Aviva Sports' Motion for Relief from Provisional Stay. The bankruptcy court stated in part:

5. Aviva is granted relief from the Provisional Stay to seek liquidation of the dollar amount of monetary sanctions against Manley in the Minnesota Action for violating the Minnesota Federal Court's post-judgment discovery orders, provided that Aviva will not seek to execute at this time on assets held in Manley's name.
6. The Provisional Stay does not apply, or is lifted to the extent it does apply, to requests for monetary, injunctive, or other sanctions against any person or entity, except Manley or the Liquidators (pending further order of the Court, as set forth below), for the person's or entity's involvement in violations of the Minnesota Federal Court's post-judgment discovery order or to compel compliance with such orders.
. . . .
10. The Court reserves judgment on all relief requested in Aviva's Motion for Relief from Provisional Stay not specifically addressed herein, including:
a. Whether Aviva may take post-judgment discovery from Manley or the Liquidators concerning the Manley Judgment . . .;
b. Whether Aviva may request from courts in the United States relief from Manley or the Liquidators to help ensure the preservation of evidence relating to the Manley Judgment . . .;
c. Whether Aviva may seek injunctive sanctions against Manley for violating the Minnesota Federal Court's post-judgment discovery orders or to compel compliance with such orders;
d. Whether Aviva may file and prosecute motions in the Minnesota Action or elsewhere, including but not limited to motions to amend the complaint and/or the judgment in the Minnesota Action, to hold Toy Quest Ltd., and/or other affiliates or agents of Manley or Toy Quest Ltd., liable for the Manley Judgment;
e. Whether Aviva . . . may assert claims in any appropriate forum that Toy Quest Ltd., and/or other affiliates or agents of Manley, Manley Toy Direct, or Toy Quest Ltd., are alter egos of Manley, and whether the Liquidators are estopped from arguing that this Chapter 15 proceeding or the Hong Kong ...

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