SACKS HOLDINGS, INC. v. GRIN NATURAL USA LIMITED

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

SACKS HOLDINGS, INC., )

)

Plaintiff, )

)

v. ) 1:23cv1058

)

GRIN NATURAL USA LIMITED, et al., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

This case comes before the Court on “Sacks Holdings, Inc.’s

Motion to Exclude Untimely Produced Evidence” (Docket Entry 108

(the “Evidence Motion”) at 1 (all-cap and bold font omitted))1 and

“Sacks Holdings, Inc.’s Motion to Strike Untimely Expert Report”

(Docket Entry 110 (the “Expert Report Motion”) at 1 (all-cap and

bold font omitted)). For the reasons that follow, the Court will

grant the Evidence Motion and the Expert Report Motion

(collectively, the “Motions”).

BACKGROUND

Asserting various state and federal claims arising from

alleged trademark infringement, Sacks Holdings, Inc. (the

“Plaintiff” or “Sacks”) sued Grin Natural USA Limited, Grin

Holdings Limited, Grin Natural US Limited, and Grin Natural

Products Limited (collectively, the “Defendants” or “Grin”) for,

1 Given the parties’ pending sealing motions, this Opinion

confines its quotations to material that clearly does not qualify

for sealing. [Docket Entry page citations utilize the CM/ECF

footer’s pagination.]

inter alia, trademark infringement under the Lanham Act, 15 U.S.C.

§ 1114. (See generally Docket Entry 1.) Asserting priority rights

to the disputed mark, Defendants filed state and federal

counterclaims against Plaintiff, including for trademark

infringement under the Lanham Act, 15 U.S.C. § 1114. (See

generally Docket Entry 16.) In their respective pleadings,

Plaintiff and Defendants asserted entitlement to recovery of any

profits attributable to the infringement. (See, e.g., Docket Entry

1, ¶ 65 (“Plaintiff is entitled to, among other relief, injunctive

relief and an award of actual damages, Defendants’ profits,

enhanced damages and profits, reasonable attorneys’ fees, and costs

of the action under Sections 34 and 35 of the Lanham Act, 15 U.S.C.

§§ 1116, 1117, together with prejudgment and post-judgment

interest.”); Docket Entry 16 at 40 (“Grin is entitled to its

damages, Sacks’ profits, and attorneys’ fees, in an amount to be

determined. Grin is also entitled to the trebling of any damages

award as allowed by law.”).)

On February 29, 2024, the parties jointly submitted a Rule

26(f) Report (Docket Entry 22) (the “Joint Rule 26(f) Report”),

which noted that “[d]iscovery will be needed on” (id. at 1), inter

alia, “the parties’ alleged damages” (id. at 2). The parties

proposed that discovery commence on February 29, 2024, and that

they exchange initial disclosures under Rule 26(a) of the Federal

Rules of Civil Procedure (the “Rules”) on March 8, 2024. (Id. at

2

1.) The parties proposed August 30, 2024, as the deadline for

completing “[n]on-expert fact discovery,” and “December 6, 2025”

[sic], as the deadline for completing “expert discovery.” (Id. at

2.) They also proposed September 2, 2024, as the deadline for

initial reports from “retained expert witnesses under Rule

26(a)(2),” with “[r]esponse/rebuttal reports by September 27,

2024,” and “[s]upplementation . . . due as provided in Rule 26(e)

or as otherwise ordered by the Court.” (Id.) The Court

adopt[ed the] Joint Rule 26(f) Report, with the following

clarifications: (1) the deadlines . . . regarding service

of reports from retained experts under [Rule] 26(a)(2)(B)

also apply to any expert disclosures under [Rule]

26(a)(2)(C)[ and] (2) the deadline for the completion of

expert discovery is [December 6, ]2024 (not 2025) . . . .

(Text Order dated Mar. 2, 2024 (the “Scheduling Order”).)

Also on February 29, 2024, Plaintiff served written discovery

requests on Defendants. (See Docket Entry 52-1.) As relevant to

the Motions, these discovery requests included the following

Requests for Production of Documents (each, a “Request”) and

Interrogatories:

Request No. 28: Documents sufficient to show the volume

(in U.S. dollars and units), by month, of sales of all

goods or services sold or licensed under or in connection

with Defendants’ use of the GRIN mark for each of the

last seven years in the United States.

Request No. 29: Documents sufficient to show, by month

for each of the last seven years, all costs and amounts

expended by any Defendant or its licensee(s) to promote,

market, and advertise goods or services actually or

planned or intended to be sold, offered, distributed,

provided, or licensed under or in connection with the

“GRIN” mark in the United States.

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Request No. 30: Documents sufficient to show, by month

for each of the last seven years, all profits realized by

any Defendant or its licensee(s) based on the promotion,

marketing, advertising, offer for sale, and sale of goods

or services actually or planned or intended to be sold,

offered, distributed, provided, or licensed under or in

connection with the “GRIN” mark in the United States.

(Id. at 20.)

Interrogatory No. 10: Identify and describe the nature

and amount of profits derived from the sale in the United

States of any goods under or in association with the

“GRIN” mark, by month, describing with particularity the

methodology used to compute or otherwise arrive at each

element and the total amount thereof.

Interrogatory No. 11: For each of the last seven years,

describe all costs and amounts expended by Defendants or

its licensee(s) to promote, market, and advertise goods

or services actually or planned or intended to be sold,

offered, distributed, provided, or licensed under or in

connection with the “GRIN” mark just in the United

States, including but not limited to dollars (USD) spent

on advertising and marketing in the United States and a

listing of all meetings (virtual or otherwise) with

retailers in the United States.

(Id. at 8-9.)

On April 1, 2024, Defendants responded to Plaintiff’s

discovery requests. (See Docket Entry 52-2.) Defendants lodged

various objections to the foregoing Requests and Interrogatories

(see id. at 11-12, 37-38), but agreed, “[s]ubject to and without

waiving [their] objections,” to “produce non-privileged documents

in its [sic] custody and/or control responsive to th[e relevant

R]equest” (id. at 37-38) or from which Plaintiff could obtain

information responsive to those two Interrogatories (see id. at 11-

12). Defendants further promised to “supplement their response to

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th[e relevant] Interrogatory with the identification of the

production range for any documents produced that are responsive to

th[e] Interrogatory.” (Id.)

On June 7, 2024, Plaintiff moved to compel responses to its

discovery requests, including to the above-listed Requests and

Interrogatories. (See Docket Entry 77 (the “Motion to Compel”).)

In opposing the Motion to Compel, Defendants maintained that

Defendants have produced documents sufficient to

show all sales into the US of products bearing its GRIN

Marks through 2020. Defendants’ counsel is working with

Defendants to produce additional sales documents through

the present and will produce those documents by next

Friday, June 28th. . . .

As for request no. 29, Defendants do not keep

documents showing costs by month for each of the last

seven years to market, promote and advertise its goods in

the US. Defendants have produced what they maintain in

the ordinary course of business. Similarly, as for

request no. 30, Defendants do not maintain documents

limited exclusively to profits and losses for sales into

the United States, rather it has generally been on a

worldwide basis. Defendants will amend its responses

accordingly.

(Docket Entry 80 at 7-8.)

Defendants further asserted:

For interrogatories nos. 8 and 10, requests to state

for each jurisdiction the suggested or expected wholesale

price and retail price (whichever is applicable, or both)

of the good or service, specifying the currency if not in

U.S. dollars, and to describe the nature and amount of

profits derived from the sale in the US of any goods

associated with the GRIN mark, by month, “describing with

particularity the methodology used to compute or

otherwise arrive at each element and the total amount

thereof[,]” are better answered through documents

requests and/or at deposition. Defendants have objected

to these interrogatories to the extent they involve sales

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outside the US and that the request is overly broad and

unduly burdensome and oppressive to the extent it seeks

profits by month, and further seeks “methodology used to

compute” such profits. Id. Defendants intend to produce

documents that are responsive to this request on or

before June 28th, well in advance of Defendants’ noticed

deposition.

Plaintiff claims that [Defendants’ response to]

interrogatory no. 11 — a request to describe all costs

and amounts expended by Defendants to promote, market,

and advertise goods or services actually or planned or

intended to be sold, offered, distributed, provided, or

licensed under or in connection with the “GRIN” mark in

the United States over the last 7 years — is deficient

because the documents identified do not reflect meetings

with retailers or communications with contractors.

Defendants fail to see how communications would reflect

amounts expended. . . . Moreover, Plaintiff has an

opportunity to pose these questions to Defendants during

deposition.

(Id. at 10-11.)

On June 26, 2024 (see Docket Entry 123, ¶ 4), Defendants

produced “Grin’s USA Sale Transaction spreadsheet, 2017-2024”

(Docket Entry 124, ¶ 4), “which reflects Grin’s U.S. sales” (Docket

Entry 123, ¶ 4), and which begins with “bates number GRIN_00004567”

(Docket Entry 124, ¶ 4). (See Docket Entry 131-2 (the “Sales

Spreadsheet” or “Grin 4567”) at 2.) Two days later (see Docket

Entry 123, ¶ 5), Defendants produced “Grin’s USA Expense

Transaction spreadsheet, 2017-2024” (Docket Entry 124, ¶ 5), “which

reflects Grin’s expenses and costs related to its U.S. sales”

(Docket Entry 123, ¶ 5), and which begins with “bates number

GRIN_00007924” (Docket Entry 124, ¶ 5). (See Docket Entry 131-3

(the “Expense Spreadsheet” or “Grin 7924”) at 2.) On July 10,

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2024, and July 11, 2024, Plaintiff deposed Xiaohang “Tara” Tan

individually and as Defendants’ Rule 30(b)(6) witness. (See Docket

Entry 113-3 at 6, 16, 29-30.) At the deposition, Tan confirmed

that the Sales Spreadsheet reflects Defendants’ sales in the United

States through April 2024. (See id. at 17-19.) Tan further

indicated her belief that it includes a profit and loss report that

“reflect[ed] all of Grin Natural USA [L]imited income and expenses

for 2021 through April of 2024.” (Id. at 21.) When asked,

“[w]here are the expenses in this table,” Tan replied: “The

expenses are in here. Because this is a summary of revenue we did

it doesn’t really have any information about the expenses.” (Id.

at 21-22.)

Tan further confirmed that the Expense Spreadsheet contains

Defendants’ expenses. (See id. at 23-24.) When asked about the

fact that the Expense Spreadsheet’s summary page does not list any

expenses related to sales into the United States for the years

2017, 2018, and 2019, and specifically whether it “[i]s . . .

accurate that no expenses were attributed to U.S. sales for those

years,” Tan explained: “[i]t’s because before 2019, we didn’t split

these expenses by different markets and record them.” (Id. at 24.)

As such, Tan noted, “there were expenses for Grin . . . . New

Zealand,” “[w]hich is . . . . Grin Natural Products Limited.”

(Id.) She testified that “[t]here were definitely” expenses for

Grin Natural Products Limited, but when asked, “[b]ut none that you

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have attributed exclusively to the U.S.,” she responded: “[b]ecause

we recorded them all under one account because we were really small

back then, we didn’t have enough human resources or materials to do

this.” (Id.)

When asked whether the “tab USA Expense Summary[] . . .

represent[s] the expenses for Grin Natural USA Limited for the

years at least beginning April 2021 through April 2024,” Tan

responded: “Yes. But I need to emphasize that this does not

include the expenses for personal [sic] functions in other markets.

So the expenses would only include investment into marketing

essentially. And I also need to double check whether this includes

the shipping. It looks like it doesn’t include shipping.” (Id. at

26.) In response, Plaintiff’s counsel asked, “would you include

shipping expenses in an expense summary for Grin Natural USA

Limited,” to which question Tan replied, “I need to double check

about this.” (Id. at 27.)

Thereafter, at the Court’s direction (see Text Order dated

Aug. 7, 2024), “the parties met and conferred to determine what

issues remained unresolved relating to [the M]otion to [C]ompel”

(Docket Entry 123, ¶ 6). At that meeting, Defendants “agreed to

amend [their ]response to Interrogatory No. 10, among others, to

ensure completeness.” (Id.) The parties then filed a joint notice

“setting out the issues, if any, that remain for resolution by the

Court.” (Docket Entry 90 (the “Notice”) at 1 (internal quotation

8

marks omitted).) Per that Notice (filed on August 23, 2024 (see

id. at 6)):

Following the close of briefing on the Motion[ to

Compel], Defendants completed a substantial document

production of documents by June 28, 2024. Defendants

further supplemented their production on July 10, 2024.

Plaintiff accepts Defendants’ representations that

Defendants’ document production is substantially complete

at this time. Following the conclusion of document

production, Defendants served a privilege log. Plaintiff

accepts that the privilege log is substantially complete

at this time. Defendants also served their Fourth

Amended and Supplemental Interrogatory responses on July

10, 2024.

Pursuant to the Court’s Text Order, the parties met

and conferred on August 21, 2024, regarding outstanding

issues raised in the [M]otion to [C]ompel. Plaintiff

raised continued concerns with Interrogatory Responses 8,

10, and 12. Defendants proffered forthcoming

supplementation which will resolve Plaintiff’s remaining

concerns.

Accordingly, Plaintiff no longer requests that the

Court order production of documents and accepts that

Defendants’ document production is substantially

complete. Plaintiff expects Defendants to continue to

comply with their obligations under [Rule] 26 to

supplement as necessary, but such supplementation is

beyond the scope of the Motion[ to Compel]. Further,

Plaintiff accepts Defendants[’] assurances of forthcoming

supplemental interrogatory responses and assuming such

responses are complete prior to any hearing on this

matter, Plaintiff no longer requests that the Court order

further supplementation of Defendants’ interrogatory

responses.

(Id. at 2-3.)

On August 26, 2024, Defendants served their “Fifth

Supplemental and Amended Responses and Objections” (Docket Entry

109-4 at 2 (all-caps and bold font omitted)) to Plaintiff’s written

discovery. (See id. at 19.) For Interrogatory 10, Defendants

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identified various documents, including the Sales Spreadsheet and

Expense Spreadsheet (see id. at 15), and for Interrogatory 11,

Defendants identified material located at three different bates

number ranges, which did not include the Sales Spreadsheet or

Expense Spreadsheet (see id. at 16).

Meanwhile, in July 2024, Defendants’ counsel contacted

Julianne “Juli” Saitz at FTI Consulting (see, e.g., Docket Entry

148-1 at 2), asking her “to take a look at” the instant “trademark

infringement dispute,” as well as to “give [defense counsel

Saitz’s] thoughts on potential damages.” (Docket Entry 113-9 at

16.) Although she considered herself “just a consultant” when she

“first spoke with [defense counsel] about the matter,” Saitz

considered herself “a potentially testifying expert” “by August

9th” (id. at 32), when defense counsel sent her an email indicating

that “[t]he [expert] report is due September 2, 2024” (Docket Entry

148-1 at 2). (See Docket Entry 113-9 at 32-33.) Pursuant to the

parties’ “Stipulated Protective Order and Electronically Stored

Information Agreement” (Docket Entry 56 (the “Stipulated Protective

Order”) at 1 (all-cap and bold font omitted)),

[e]xcept for non-testifying experts, five (5) business

days prior to disclosure to any potential testifying

expert, Counsel for the party seeking disclosure of

“CONFIDENTIAL” or “HIGHLY CONFIDENTIAL ATTORNEYS [sic]

EYES ONLY” information, shall provide, subject to

subparagraphs 14 (b-e) to opposing counsel and to any

non-party from which the material originated, if

applicable, the name, address, and present employer of

such expert. Opposing counsel and/or such non-party

shall then have a period of five business (5) days after

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receipt of such information to challenge the disclosure

of “CONFIDENTIAL” or “HIGHLY CONFIDENTIAL ATTORNEYS [sic]

EYES ONLY” information to such person in this action, by

serving a written statement of the challenge upon the

party seeking to make such disclosure.

(Id. at 8 (all-cap font in original).)

The Stipulated Protective Order also obliged retained experts

to complete a nondisclosure agreement (the “NDA”) prior to

receiving confidential information. (See id. at 7-8.) Saitz

executed the NDA on Wednesday, August 14, 2024 (see Docket Entry

124-5 at 3), and defense counsel transmitted the NDA to Plaintiff’s

counsel shortly after 9:40 a.m. on Thursday, August 22, 2024,

through an email saying “[p]lease find the attached NDA for the

[d]efendants’ expert” (Docket Entry 111-1 at 2). Approximately one

hour later, Plaintiff’s counsel sent a response email that, as

relevant to the Motions, states:

This appears to be an attempt to disclose a

testifying expert. If that’s the case, please provide

“the name, address, and present employer of such expert”

consistent with the requirements of Para. 14(a) of the

protective order in this case. See Dkt. 56. Once we

have that information, we will consider the 5-day period

for review, and if necessary any challenge, to have

begun.

(Docket Entry 111-2 at 2.)

Just before noon on Monday, August 26, 2024, defense counsel

sent the necessary information, commencing the five-business-day

notice period, which, due to the Labor Day holiday, ended on

September 3, 2024. (See Docket Entry 111-3 at 2-3.) On Monday,

September 2, 2024, Saitz served her expert report (see generally

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Docket Entry 142-1 (the “Initial Report”)), which indicates that

Saitz

ha[s] been retained by [defense counsel] to prepare

certain analyses in order to assist the Court in

considering the type and amount of economic damages that

Plaintiff may recover from [Defendants] should the Court

find Defendants liable for the various causes of action.

[She] ha[s] also been retained to prepare certain

analyses in order to assist the Court in considering the

type and amount of economic damages that Defendants may

recover from [Plaintiff] should the Court find

[Plaintiff] liable under Defendants’ counterclaims.

(Id. at 5.) The Initial Report opines solely on Plaintiff’s and

Defendants’ sales (see id. at 2-13) and provides the following

“Summary of Opinions” (id. at 6 (all-cap and bold font omitted)):

A. Counterclaims Asserted by Grin

12. Based on my professional experience, it is my

understanding that should the Court rule in favor of Grin

in this matter regarding the counterclaims at issue, Grin

may be entitled to monetary remedies by law. The

analyses I intend to present are applicable to the claims

relating to [Plaintiff’s] alleged violation of the Lanham

Act. It is my understanding that pursuant to the Lanham

Act, if successful in establishing liability, Grin may

recover both a disgorgement of [Plaintiff’s] profits on

the sale of the products bearing the trademark found

under the ‘196 Registration (“Sacks Holdings’ Accused

Products”), and its own actual damages due to

[Plaintiff’s] allegedly infringing conduct, so long as

such recovery does not constitute an impermissible double

recovery.

13. I have been asked by Counsel at this time to

prepare an affirmative calculation of [Plaintiff’s] sales

of Sacks Holdings’ Accused Products. Sales of Sacks

Holdings’ Accused Products from November 2020 through

February 2024 are approximately . . . . [S]hould

[Plaintiff] (or their expert) present calculations

related to the deduction of costs and expenses related to

their accused sales, I reserve the right to review and

comment on such calculations as appropriate.

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14. I reserve the right to update and/or supplement

my opinions should Plaintiff’s expert witness offer a

reply to this report or should additional information

become available.

B. Claims Asserted by [Plaintiff]

15. Based on my professional experience, it is my

understanding that should the Court rule in favor of

[Plaintiff] in this matter regarding the claims at issue,

[Plaintiff] would be entitled to the same monetary

remedies by law as Grin under the Lanham Act, including

both [Grin’s] profits and [Plaintiff’s] own actual

damages, so long as such recovery does not constitute an

impermissible double recovery. These remedies would be

based on the sale of the products bearing Grin’s

trademark under the ‘028 Registration (“Grin Accused

Products”).

16. Although it is not yet clear whether [Plaintiff]

is pursuing recovery of damages based on an accounting of

Grin’s profits, I have been asked by Counsel at this time

to prepare a preliminary calculation of Grin’s profits

generated by the Grin Accused Products in the United

States from April 2017 through April 2024. I have

calculated Grin’s sales of the Grin Accused Products to

be . . . . I have not received information containing

Grin’s related and deductible costs as of the date of

issuance of this report. Once that information is made

available to me I am prepared to update my analysis to

calculate Grin’s profits.

17. I reserve the right to update and/or supplement

my opinions should Plaintiff’s expert witness offer a

reply to this report or should additional information

become available.

(Id. at 6-8 (footnotes omitted) (bold font in original).)

The Initial Report further states:

[I]t is [Plaintiff’s] responsibility to prove all

elements of costs and deductions being claimed.

Nonetheless, I note that as of the date of this report,

I have not had the ability to review sufficient

documentation to calculate the costs and expenses

associated with Sacks Holdings’ Accused Products, as it

has not been produced. If additional documentation is

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produced, I am prepared to evaluate it, and if

[Plaintiff’s] expert submits a calculation of

[Plaintiff’s] profits, I am prepared to evaluate it to

determine proper deducting of the costs and expenses.

(Id. at 10-11.)

In actuality, however, “[o]n August 25, 2024, [Plaintiff had]

produced documents responsive to Defendants’ discovery requests

related to [Plaintiff’s] costs, expenses, and profits.” (Docket

Entry 109-2, ¶ 8.) Thus, in her subsequent deposition, Saitz

clarified that “better wording in the [Initial R]eport probably

would have been produced to me,” as she does not know “if it was

produced,” only that “it was not produced to [her].” (Docket Entry

113-9 at 37-38.)

According to an affidavit from Plaintiff’s counsel,

[b]ased on Defendants’ financial information known

to [Plaintiff] at the close of fact discovery, and

especially in view of the absence of detailed cost and

expense information, as well as based on the

representations made throughout the course of the

litigation regarding Defendants’ discovery productions

and responses, [Plaintiff] elected not to request its

damages expert to provide an initial expert report on

September 2, 2024.

(Docket Entry 109-2, ¶ 7.) Instead, on September 27, 2024,

Plaintiff produced a rebuttal report from its expert, Graham

Rogers. (See Docket Entry 113-6 (the “Rogers Report”).) The

Rogers Report opines on Plaintiff’s sales and profits and

Defendants’ sales, noting that the Initial Report potentially

slightly miscalculates Defendants’ sales. (See id. at 2-20.)

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At 8:12 p.m. on Wednesday, October 30, 2024, Defendants

produced a second expert report from Saitz (Docket Entry 142-2)

(the “New Report”) as well as certain documents (Docket Entry 113-

1) (the “New Evidence”) that contain “information relied on by []

Saitz in forming her opinions.” (Docket Entry 109-7 at 2.)

According to the New Report, “[s]ince the date of [her] Initial

Report, [Saitz] received and reviewed the profit and loss

statements (‘P&L’) for [Plaintiff] and Grin, as well as additional

financial information provided by Grin. [She] also reviewed the

[Rogers] Report . . . .” (Docket Entry 142-2 at 4.) The New

Report further notes that, “[s]ince the date of issuance of [her]

Initial Report[, Saitz] had the opportunity to review P&Ls for Grin

US Limited and Grin USA Limited, as well as sales and cost

information for TJX sales in the United States that are recorded as

part of the Grin Natural Products Limited entity.” (Id. at 10.)

Plaintiff deposed Saitz on Monday, November 4, 2024.

(See Docket Entry 113-9 at 3.) At her deposition, Saitz indicated

that she “ha[d] not” (id. at 12) “spoken with anyone at any of the

defendant entities” (id.). As for the New Evidence, Saintz

explained that it, inter alia, segregates certain sales linked to

the American market in “an attempt to split out financial

information” for that market as, “prior to 2020 there was no

separate reporting for U.S. sales,” but, during that period, “sales

into the U.S. could be determined by looking at certain TJX sales,

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TJ Maxx companies.” (Id. at 45.) When asked if she “kn[e]w how

the defendants went back to segregate out that financial data,”

however, Saitz said she did not “know how they did it,

specifically.” (Id. at 46.) She also did not know when Defendants

compiled that information. (See id. at 45.)

According to an affidavit from defense counsel,

[w]hile preparing her initial expert report, [] Saitz

noticed that the financial statements previously produced

by Grin were missing some costs and expenses associated

with the sales of the goods in the U.S. She instructed

me that she would consider deducting additional costs

from Grin’s sales, such as the “costs of goods sold” and

freight and shipping fees, but she did not have that

information.

After several rounds of back and forth with []

Saitz’s team at FTI and Grin’s staff, Grin was able to

compile updated financial statements that included the

detail she required on Grin’s expenses and costs for U.S.

sales. Grin finished compiling the information [] Saitz

requested on October 15, 2024.

(Docket Entry 123, ¶¶ 10-11 (paragraph numbering omitted).)

On Tuesday, November 26, 2024, counsel met and conferred

regarding Plaintiff’s objections to the New Report and New

Evidence. (See id., ¶ 12; Docket Entry 109-2, ¶ 3.) At that

meeting, defense counsel “discussed the possibility of making Tara

Tan available for another deposition for the limited purpose of

answering questions on Grin’s updated financial information.”

(Docket Entry 123, ¶ 12.) Plaintiff’s counsel “said he would take

it under consideration, but then never indicated that [Plaintiff]

wanted to take the deposition.” (Id.) Instead, the following

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week, Plaintiff filed the Motions. (See Docket Entries 108, 110.)

Through the Motions, Plaintiff seeks to exclude the New Evidence

and strike the New Report. (See id.) Defendants oppose both

Motions. (See, e.g., Docket Entries 120, 121.) Shortly after they

finished briefing the Motions and associated motions to seal, on

the deadline for dispositive motions (see Docket Entry 22 at 3

(reflecting dispositive motion deadline of January 6, 2025)), the

parties moved for summary judgment. (See Docket Entries dated Dec.

6, 2024, to Jan. 6, 2025.)

DISCUSSION

I. Lanham Act Damages

Under the Lanham Act, when a plaintiff (or counter-plaintiff)

establishes infringement of its trademark,

the plaintiff shall be entitled, subject to the

provisions of sections 1111 and 1114 of [Title 15], and

subject to the principles of equity, to recover

(1) defendant’s profits, (2) any damages sustained by the

plaintiff, and (3) the costs of the action. The [C]ourt

shall assess such profits and damages or cause the same

to be assessed under its direction. In assessing profits

the plaintiff shall be required to prove defendant’s

sales only; defendant must prove all elements of cost or

deduction claimed. In assessing damages the [C]ourt may

enter judgment, according to the circumstances of the

case, for any sum above the amount found as actual

damages, not exceeding three times such amount. If the

[C]ourt shall find that the amount of the recovery based

on profits is either inadequate or excessive the [C]ourt

may in its discretion enter judgment for such sum as the

[C]ourt shall find to be just, according to the

circumstances of the case.

15 U.S.C. § 1117.

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In calculating profits for trademark infringement, “[t]he net

profits for which the actor is liable . . . are his gross income

earned by means of the conduct which subjects him to liability less

the allowable costs incurred by him in earning that income.”

Restatement (First) of Torts § 748 (1938). “When the defendant is

shown to have earned income by means of the conduct which subjects

him to liability, the burden is on him to establish that this

income does not represent his net profits and what deductions

should be made in order to ascertain his net profits.” Id. cmt. a.

“The cost of the material consumed in the manufacture of goods or

the performance of services from the disposal of which income was

derived and the cost of the mechanical power and the labor involved

therein are deductible from the gross income,” id. cmt. b, as are

“[s]elling costs,” including “transportation costs incurred by the

seller,” id. cmt. c.

II. Relevant Standards

Under Rule 26, “a party must, without awaiting a discovery

request, provide to the other parties,” inter alia, “a copy — or a

description by category and location — of all documents,

electronically stored information, and tangible things that the

disclosing party has in its possession, custody, or control and may

use to support its claims or defenses.” Fed. R. Civ. P.

26(a)(1)(A)(ii). “In addition to the disclosures required by Rule

26(a)(1), a party must disclose to the other parties the identity

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of any [expert] witness it may use at trial to present evidence

. . . .” Fed. R. Civ. P. 26(a)(2)(A). “Unless otherwise

stipulated or ordered by the [C]ourt, this disclosure must be

accompanied by a written report — prepared and signed by the

witness — if the witness is one retained or specially employed to

provide expert testimony in the case . . . .” Fed. R. Civ. P.

26(a)(2)(B). “The report must contain: (i) a complete statement of

all opinions the witness will express and the basis and reasons for

them[ and] (ii) the facts or data considered by the witness in

forming them . . . .” Id. “A party must make these disclosures at

the times and in the sequence that the [C]ourt orders.” Fed. R.

Civ. P. 26(a)(2)(D). Additionally, “[t]he parties must supplement

these disclosures when required under Rule 26(e).” Fed. R. Civ. P.

26(a)(2)(E).

“A party who has made a disclosure under Rule 26(a) — or who

has responded to an interrogatory, request for production, or

request for admission — must supplement or correct its disclosure

or response,” inter alia, “in a timely manner if the party learns

that in some material respect the disclosure or response is

incomplete or incorrect, and if the additional or corrective

information has not otherwise been made known to the other parties

during the discovery process or in writing.” Fed. R. Civ. P.

26(e)(1)(A). “For an expert whose report must be disclosed under

Rule 26(a)(2)(B), the party’s duty to supplement extends both to

19

information included in the report and to information given during

the expert’s deposition.” Fed. R. Civ. P. 26(e)(2). Further,

[i]f a party fails to provide information or

identify a witness as required by Rule 26(a) or (e), the

party is not allowed to use that information or witness

to supply evidence on a motion, at a hearing, or at a

trial, unless the failure was substantially justified or

is harmless.

Fed. R. Civ. P. 37(c)(1). “In addition to or instead of this

sanction, the [C]ourt, on motion and after giving an opportunity to

be heard” may, inter alia, “order payment of the reasonable

expenses, including attorney’s fees, caused by the failure” and

“impose other appropriate sanctions, including any of the orders

listed in Rule 37(b)(2)(A)(i)-(vi).” Fed. R. Civ. P. 37(c)(1)(A)

& (C).

As the United States Court of Appeals for the Fourth Circuit

has noted,

Rule 26 disclosures are often the centerpiece of

discovery in litigation that uses expert witnesses. A

party that fails to provide these disclosures unfairly

inhibits its opponent’s ability to properly prepare,

unnecessarily prolongs litigation, and undermines the

district court’s management of the case. For this

reason, [the Fourth Circuit] give[s] particularly wide

latitude to the district court’s discretion to issue

sanctions under Rule 37(c)(1).

Wilkins v. Montgomery, 751 F.3d 214, 221 (4th Cir. 2014) (internal

quotation marks omitted). However:

[I]n exercising its broad discretion to determine whether

a nondisclosure of evidence is substantially justified or

harmless for purposes of a Rule 37(c)(1) exclusion

analysis, a district court should be guided by the

following factors: (1) the surprise to the party against

whom the evidence would be offered; (2) the ability of

20

that party to cure the surprise; (3) the extent to which

allowing the evidence would disrupt the trial; (4) the

importance of the evidence; and (5) the nondisclosing

party’s explanation for its failure to disclose the

evidence.

Southern States Rack & Fixture, Inc. v. Sherwin-Williams Co., 318

F.3d 592, 597 (4th Cir. 2003). The first four “factors — surprise

to the opposing party, ability to cure that surprise, disruption of

the trial, and importance of the evidence — relate mainly to the

harmlessness exception, while the remaining factor — explanation

for the nondisclosure — relates primarily to the substantial

justification exception.” Id. “The burden of establishing these

factors lies with the nondisclosing party.” Wilkins, 751 F.3d at

222. In deciding whether to exclude evidence under Rule 37(c),

district courts “[are] not required to tick through each of the

Southern States factors.” Id. (emphasis in original).

Separately, “[o]n motion or on its own, the [C]ourt may issue

any just orders, including those authorized by Rule

37(b)(2)(A)(ii)-(vii), if a party or its attorney,” inter alia,

“fails to obey a scheduling or other pretrial order.” Fed. R. Civ.

P. 16(f)(1)(C). “Instead of or in addition to any other sanction,

the [C]ourt must order the party, its attorney, or both to pay the

reasonable expenses — including attorney’s fees — incurred because

of any noncompliance with this [R]ule, unless the noncompliance was

substantially justified or other circumstances make an award of

expenses unjust.” Fed. R. Civ. P. 16(f)(2). “The Court has broad

21

discretion in employing sanctions.” Akeva L.L.C. v. Mizuno Corp.,

212 F.R.D. 306, 311 (M.D.N.C. 2002). Nevertheless, “[p]reclusion

of the introduction of untimely disclosed information is the

‘baseline rule’ in the ordinary case.” Thomasville Furniture

Indus., Inc. v. Pulaski Furniture Corp., No. 1:09cv591, 2011 WL

13239926, at *2 (M.D.N.C. Dec. 1, 2011). In assessing sanctions

for noncompliance with a pretrial scheduling order, courts consider

various factors, including “(1) the explanation for the failure to

obey the order; (2) the importance of the expert opinion; (3) the

prejudice to the opposing party by allowing the disclosures; and

(4) the availability of alternative or lesser sanctions,” as well

as (5) “the interest in expeditious resolution of litigation;

([6]) [the C]ourt’s need to manage its docket; and ([7]) public

policy favoring disposition of cases on the merits.” Akeva, 212

F.R.D. at 311. Notably, “[t]he factors involving docket control

planning are sufficiently important to alone justify the exclusion

of an untimely disclosed expert report or opinion even in absence

of prejudice to the opposing party.” Id.

III. New Evidence

Defendants maintain that the New Evidence constitutes a timely

supplementation or, alternatively, that it “was substantially

justified or harmless” (Docket Entry 120 at 16 (bold and

capitalized font omitted)). (See id. at 1-23.) Those contentions

lack merit.

22

As an initial matter, Defendants seem to suggest that their

objections to the relevant discovery requests somehow justified

their disclosure of the New Evidence after fact discovery closed.

(See, e.g., id. at 4-5 (emphasizing objections to relevant

discovery requests), 14 (“Sacks wrongly seems to believe that its

requests for financial information in fact discovery entitled it to

every financial detail available in Grin’s records without regard

to the standards governing fact discovery, such as those concerning

burden, proportionality, and reasonableness, and without regard to

Grin’s specific objections to the discovery demands. Here, Grin

objected to Sacks’ requests on grounds of vagueness and burden.

Grin also objected to the requests to the extent they required the

creation of documents not kept in the ordinary course of Grin’s

business.”), 15 (“Without waiving those objections, Grin still

conducted a diligent search of its financial records to produce

responsive financial documents.”).) This argument misses the mark.

As most relevant to the Motions, Plaintiff sought information

regarding Defendants’ profits throughout the discovery period,

including in particular through Interrogatory 10 and Request 30.

As noted above, Interrogatory 10 required identification of profits

“derived from the sale in the United States of any goods under or

in association with the ‘GRIN’ mark, by month” (Docket Entry 109-4

at 14) and Request 30 required production of “[d]ocuments

sufficient to show, by month for each of the last seven years, all

23

profits realized by any Defendant . . . based on the . . . sale of

goods . . . in connection with the ‘GRIN’ mark in the United

States” (Docket Entry 124-1 at 21-22). In addition to a litany of

“General Objections” that purportedly “apply to each of the

discovery requests” (Docket Entry 124-1 at 3; see also Docket Entry

109-4 at 3 (“Grin makes the following general objections . . .,

which apply to all the Interrogatories.”)), Defendants provided the

following responses to Interrogatory 10 and Request 30:

Response to Interrogatory No. 10: Defendants object

to this Interrogatory as vague and ambiguous to the

extent it uses the terms “nature and amount of profits”

without defining the terms and requiring Defendants to

speculate about what information is responsive to

Plaintiff’s interrogatory. Defendants further object to

this request as overly broad and unduly burdensome and

oppressive to the extent it seeks profits by month, and

further seeks “methodology used to comput” [sic] such

profits. Further, Defendants object to this

Interrogatory as overly broad to the extent it consists

of at least 2 discrete (2) subparts. Subject to and

without waiving the foregoing objections, Defendants

respond to this Interrogatory as follows:

Defendants will produce, to the extent any exist,

non-privileged documents in its [sic] possession, custody

or control from which the answer to this Interrogatory

can be determined, pursuant to Fed. R. Civ. P. 33(d).

Defendants will supplement their response to this

Interrogatory with the identification of the production

range for any documents produced that are responsive to

this Interrogatory.

Supplemental Response to Interrogatory No. 10: Bates

Nos. GRIN_00000112-GRIN_00000171

Second Supplemental Response to Interrogatory No.

10: Bates Nos. GRIN_00003092, GRIN_00003146,

GRIN_00003214, GRIN_00004567, GRIN_00007924

(Docket Entry 109-4 at 14-15 (bold font in original).)

24

Response to Request No. 30: Grin objects to this

request on the grounds that it is overbroad, unduly

burdensome, harassing, and seeks documents which are

irrelevant and not proportionate to the needs of the case

insofar as it seeks the last seven years of profits.

Grin objects to this request on the grounds that it seeks

discovery of confidential commercial, business,

proprietary or competitively sensitive information

regarding internal business practices.

Subject to and without waiving the foregoing

objections, Grin will produce non-privileged documents in

its custody and/or control responsive to this request.

(Docket Entry 124-1 at 22 (bold font in original).)

Defendants’ discovery responses and objections suffer from

serious defects, “including assertion of impermissible general and

boilerplate objections, provision of answers ‘subject to and

without waiving’ said objections, and failures to ‘state whether

any responsive materials [were] being withheld on the basis of any

objection,’” Glaston Corp. v. Salem Fabrication Techs. Grp., Inc.,

No. 1:21cv942, 2024 WL 3161621, at *8 (M.D.N.C. June 25, 2024)

(brackets omitted) (quoting Fed. R. Civ. P. 34(b)(2)(C)). (See

Docket Entries 109-4, 124-1.) “As this Court has previously

explained, general or ‘boilerplate’ objections to discovery

requests are invalid. Similarly, promising to provide documents

‘subject to’ objections is improper.” Glaston, 2024 WL 3161621, at

*8 (brackets, ellipses, and certain internal quotation marks

omitted); see also Brown v. Experian Info. Sols., Inc., No.

3:16cv670, 2017 WL 11632852, at *2 (E.D. Va. Apr. 17, 2017)

(explaining that “the practice of providing answers ‘subject to’

25

objections is confusing and misleading” and “amounts to no answer

at all, for it says, essentially, ‘here is some information, but

there could be more that you are not getting’” (certain internal

quotation marks omitted)).

Further, although “it is not per se unreasonable for a party

to object on the basis that a request is overly broad, burdensome,

or seeks irrelevant information, the objecting party has an

obligation to show specifically why responding to the request would

create a burden or how the request is overly broad in relation to

the claims and defenses presented in the litigation.” Patrick v.

Teays Valley Trs., LLC, 297 F.R.D. 248, 256 (N.D. W. Va. 2013).

Moreover, a party objecting on vagueness grounds bears “the burden

of explaining the specific and particular way in which each request

is vague after exercising reason and common sense to attribute

ordinary definitions to terms and phrases utilized in the requests

and, if necessary, including any reasonable definition of the term

or phrase at issue.” Brown, 2017 WL 11632852, at *3 (brackets and

internal quotation marks omitted). Defendants have not satisfied

either burden.

To begin, it has long been established that, in ascertaining

damages for trademark infringement, a defendant may be able to

deduct from its revenue certain “joint expenses,” but “[t]he

apportionment made on the defendant’s books is not necessarily

determinative,” as “[a]ccountants may use one of several methods in

26

apportioning such expenses, the choice depending largely on the

needs or convenience of the particular business.” Restatement

(First) of Torts § 748 (1938) cmt. i. Importantly, though,

the apportionment in an accounting for profits under the

rule stated in this Section is made on a special basis

determined by the theory of the liability for profits.

The purpose of the apportionment is not business

convenience or business policy but an accounting by the

wrongdoer for the total gains from his wrongdoing.

Consequently the accounting for profits seeks to

determine as accurately as possible what part of the

joint expenses was incurred in the manufacture or

marketing of the infringing goods and what part would

have been incurred if the infringing goods had not been

manufactured or marketed. If the manufacture and

marketing of the infringing goods causes no increase in

the general expense, no part of it is to be allocated to

them, even though such a practice would be bad from the

point of view of cost accounting or business policy.

Only when the manufacture or marketing of the infringing

goods increases the joint expenses is it proper to

allocate a part of them to these goods.

Id. Accordingly, the accounting method employed in calculating

profits bears clear relevance to calculation of profits for

purposes of a trademark infringement claim. See, e.g., id.; see

also Carter Prods., Inc. v. Colgate-Palmolive Co., 214 F. Supp.

383, 389, 400-07 (D. Md. 1963) (analyzing profit calculation

dispute arising from differing accounting methods), opinion adhered

to on denial of reh’g, No. 6924, 1963 WL 105143 (D. Md. Mar. 5,

1963).

Additionally, “it is undisputed” both “that the plaintiff,

Sacks, filed an application to register the ‘Grin’ mark on August

1, 2017” and “that[,] on two separate occasions before August 1,

27

2017, defendant Grin Natural Products Limited shipped a few tubes

of toothpaste and a couple of toothbrushes to customers in the

United States who ordered the items from the Grin Natural’s New

Zealand (.nz) website.” (Docket Entry 202 at 2 (citing document

“showing sales on April 16, 2017, and July 13, 2017”).) It is

further undisputed that Defendants had “two other small sales to

the same U.S. customer in 2017 after . . . [P]laintiff’s trademark

filing, both from its website.” (Id. at 4.) The parties conducted

fact discovery in this case between February 29, 2024, and August

30, 2024 (see, e.g., Docket Entry 22 at 1-2), roughly seven years

after the alleged infringement began. Defendants’ assertion that

Request 30 “is overbroad, unduly burdensome, harassing, and seeks

documents which are irrelevant and not proportionate to the needs

of the case insofar as it seeks the last seven years of profits”

(Docket Entry 124-1 at 22) thus warrants no relief.

Similarly, Defendants have not shown why providing profits by

month and explaining the methodology used to compute such profits

qualifies as “overly broad and unduly burdensome and oppressive”

(Docket Entry 109-4 at 14) in a trademark infringement case. Nor

have they explained why, using “reason and common sense,” Brown,

2017 WL 11632852, at *3 (internal quotation marks omitted), “the

terms ‘nature and amount of profits’” in Interrogatory 10 qualify

as “vague and ambiguous” (Docket Entry 109-4 at 14). Moreover,

Defendants have not shown why, given the Stipulated Protective

28

Order, Request 30 qualifies as objectionable even assuming that it

“seeks discovery of confidential commercial, business, proprietary

or competitively sensitive information regarding internal business

practices” (Docket Entry 124-1 at 22). Defendants also failed to

“state whether any responsive materials are being withheld on the

basis of th[eir] objection[s],” Fed. R. Civ. P. 34(b)(2)(C), to

Request 30. (See Docket Entry 124-1 at 22.)

“By failing to present valid objections to these discovery

requests, [Defendants] waived any legitimate objection they may

have had.” Kinetic Concepts, Inc. v. ConvaTec Inc., 268 F.R.D.

226, 247 (M.D.N.C. 2010) (brackets and internal quotation marks

omitted). Defendants thus cannot rely on their discovery

objections to justify their belated production of the New Evidence

(or New Report (see Docket Entry 121 at 13 n.3 (noting that

Defendants objected to discovery requests))).

Defendants next assert that they lacked awareness about the

missing expenses and promptly supplemented their discovery

responses when their retained expert alerted them to this omission.

(See, e.g., Docket Entry 120 at 2 (“Sacks apparently believes that

Grin: knew its costs, expenses, and profits for its U.S. sales

during the fact discovery period; hid this information despite this

knowledge; misrepresented to the Court its knowledge of this

financial information; and then, in an apparent effort to gain some

sort of unclear advantage, suddenly revealed the financial

29

information at issue during the expert discovery period. This is

not what happened. As shown by the declarations filed with this

opposition, Grin did not know how to derive the sort of technical

financial information required to show U.S. profits until it

received guidance from . . . Saitz and her team . . . . Once Grin

was in possession of that information, it timely disclosed it as

required by Rule 26(e) . . . .”), 14 (“By the plain language of

[Rule] 26(e), Grin fulfilled its obligations and timely produced

the [New Evidence] once it became aware that it had new and

complete financial information.”), 22 (“Grin needed the guidance of

its damages expert to understand what additional cost and expense

information to collect.”).)

In Defendants’ view, “Sacks claims that [Defendants’

discovery] efforts were not good enough because ultimately Grin

learned that there existed other categories of costs and expenses

not accounted for in the financial records produced during fact

discovery. But certainly Grin was not aware that these other cost

and expense details were missing.” (Id. at 15.) According to

Defendants:

While preparing her initial expert report, [] Saitz

noticed that the financial statements previously produced

by Grin were missing some costs associated with the sales

of the goods in the U.S. She instructed Grin’s counsel

that she would consider deducting additional costs from

Grin’s sales, such as the “costs of goods sold” and

freight and shipping fees, but she did not have that

information. After several rounds of back and forth with

[] Saitz’s team at FTI and Grin’s staff, Grin was able to

compile updated financial statements that included the

30

detail she required on Grin’s expenses and costs for U.S.

sales. Grin finished compiling the information [] Saitz

requested on October 15, 2024.

(Id. at 11 (citations omitted) (citing Docket Entry 123, ¶¶ 10-

11).) This argument warrants no relief.

To begin, Defendants’ discovery productions omitted basic

information — “‘costs of goods sold’ and freight and shipping fees”

(Docket Entry 123, ¶ 10) — long identified as potentially

deductible expenses in ascertaining profits for a trademark

infringement claim, see, e.g., Restatement (First) of Torts § 748,

cmts. a-c (1938), not esoteric information whose relevance remained

unknown until they “received guidance from [their] damages expert”

(Docket Entry 120 at 2). Moreover, despite their protestations to

the contrary, Defendants knew about the omission of this

information at least seven weeks before fact discovery closed.

(See, e.g., Docket Entry 113-3 at 26 (Defendants’ Rule 30(b)(6)

witness testifying in early July 2024 that Expense Spreadsheet

“looks like it doesn’t include shipping”).) Further, the fact that

Defendants did not create the New Evidence until after fact

discovery closed does not excuse their failure to timely provide

the information contained therein to Plaintiff in response to

Interrogatory 10, which obliged Defendants to “[i]dentify and

describe the nature and amount of profits derived from the sale in

the United States of any goods under or in association with the

31

‘GRIN’ mark” (Docket Entry 52-1 at 8-9).2 Explaining that the

absence of expenses “attribut[able] to U.S. sales” in various years

arose from Defendants’ bookkeeping practices, in which “[they]

didn’t split the[ir] expenses by different markets and record them”

(Docket Entry 113-3 at 24), rather than a mere oversight in their

production, Defendants repeatedly represented to Plaintiff and the

Court that they had fully produced the information responsive to,

inter alia, Interrogatory 10 and Request 30 (see, e.g., Docket

Entry 90 at 2-3).

In sum, the New Evidence does not qualify as supplementation

under Rule 26. See Therapure Biopharma Inc. v. DynPort Vaccine

Co., LLC, Civ. Action No. 19-2092, 2021 WL 2719060, at *2 (D. Md.

June 30, 2021) (“Rule 26(e) imposes a requirement to supplement; it

does not create a right to produce information in a belated

fashion.” (internal quotation marks omitted)). Defendants

alternatively maintain that their belated production of the New

Evidence qualifies as substantially justified or harmless. That

contention misses the mark.

2 Notably, the New Evidence appears to qualify as evidence

subject to disclosure under Rule 26(a), which would have required

its disclosure by March 8, 2024, had it then existed. See Fed. R.

Civ. P. 26(a)(1)(A)(ii). In any event, absent an extension,

Defendants needed to produce the information contained therein in

response to Interrogatory 10 no later than April 1, 2024. See Fed.

R. Civ. P. 33(b)(2)(“The responding party must serve its answers

and any objections within 30 days after being served with the

interrogatories.”).

32

As an initial matter, Defendants have not demonstrated

substantial justification for their belated production of the New

Evidence. According to Defendants:

For the reasons explained above, Grin did not

realize it had omitted some categories of expenses from

its financial documents until it learned from [] Saitz

what additional information she would seek. After

several rounds of back and forth, Grin was able to derive

the information [] Saitz requested and supplied it to

her. Two weeks later, Grin produced the [New Evidence]

to Sacks with [] Saitz’s supplemental expert report. The

omission of the additional cost and expense information

from the financial statements produced in fact discovery

was inadvertent. This explanation provides substantial

justification for any delay.

(Docket Entry 120 at 21.) For the reasons discussed above, that

argument lacks merit.

Defendants likewise fail to establish harmlessness. According

to Defendants, the New Evidence “should have come as no surprise to

Sacks” because (i) Defendants objected to Plaintiff’s discovery

requests, (ii) during her deposition, “Tan signaled that Grin’s P&L

statements may still not include every expense,” and (iii) the

Initial Report “included an explicit disclaimer that [Saitz] was

still waiting on supplemental financial information.” (Id. at 17.)

This argument “misunderstands the nature of ‘surprise’ in this

context, which comes not from learning [that Defendants incurred

expenses related to their U.S. sales], but from learning that

[Defendants] intend[] to use [those previously undisclosed

expenses] in support of [their] version of the facts.”

Intercollegiate Women’s Lacrosse Coaches Ass’n v. Corrigan Sports

33

Enters., Inc., 694 F. Supp. 3d 625, 652 (M.D.N.C. 2023). “Here,

[Plaintiff] clearly faces surprise if [Defendants] could present

evidence of [previously undisclosed expenses].” Intercollegiate

Women’s Lacrosse Coaches Ass’n v. Corrigan Sports Enters., Inc.,

698 F. Supp. 3d 814, 819 (M.D.N.C. 2023) (“IWLCA”). “Further,

[Plaintiff] took steps during discovery to procure this [evidence],

but to no avail, even though the burden was solely on Defendants to

disclose it.” Id. at 819-20; see also 15 U.S.C. §$ 1117 (“In

assessing profits the plaintiff shall be required to prove

defendant’s sales only; defendant must prove all elements of cost

or deduction claimed.”). “This suggests an inability to cure on

the part of [Plaintiff].” IWLCA, 698 F. Supp. 3d at 820.

Defendants maintain, though, that “Sacks has ample time to

cure any surprise due to the [New Evidence]” (Docket Entry 120 at

18), on the theory that “Sacks has had a reasonable opportunity to

prepare for cross examination and arrange for expert testimony from

its rebuttal expert, [] Rogers” (id.) and Defendants’ counsel “also

discussed making [] Tan available for a deposition on the updated

financial statements” (id. at 18 n.5). First, Defendants provided

the New Evidence less than three business days before Saitz’s

deposition (see Docket Entry 109-7 at 2; Docket Entry 113-9 at 3),

and at that deposition, Saitz confirmed that she had not discussed

the New Evidence with Defendants (see Docket Entry 113-9 at 12) and

did not know how Defendants compiled that information (see id. at

34

46), seriously compromising Plaintiff’s ability to test the

validity of the New Evidence and Saitz’s associated calculations.

Defendants also provided the New Evidence nearly two months after

the initial expert report deadline and more than a month after the

rebuttal expert report deadline, belying their assertion that

Plaintiff possessed “a reasonable opportunity” (Docket Entry 120 at

18) to “arrange for expert testimony” (id.), particularly given

that Plaintiff decided to forego its own initial expert report

because of the simplicity of calculating Defendants’ financial

position based on the evidence that Defendants produced during fact

discovery (see Docket Entry 109-2, ¶ 7). Finally, “discuss[ing]

the possibility” — two days before Thanksgiving, the week before

the close of expert discovery, and just over a month before the

deadline for dispositive motions — “of making [Defendants’ Rule

30(b)(6) witness] available for another deposition for the limited

purpose of answering questions on Grin’s updated financial

information” (Docket Entry 123, ¶ 12) does not cure the surprise of

this belated disclosure, particularly given that Plaintiff had

already conducted the only deposition of Saitz allowed under the

Scheduling Order (see Docket Entry 22 at 3).

Defendants next maintain that the New Evidence will not

disrupt the trial, asserting that it does not impact Defendants’

damages theory and only provides more details on issues where

Defendants bear the burden. (See Docket Entry 120 at 19-20 (“Sacks

35

claims that the [New Evidence] has ‘shifted the entire damages

allegations in this case.’ Not so. Sacks has been on notice that

[Defendants] seek[] disgorgement of Sacks’ profits since the filing

of the Counterclaims. Neither the [New Evidence] nor [New Report]

changes [that] damages theory. All the [New Evidence] does is

provide more detail on [Defendants’] costs and expenses — the very

elements that [Defendants] bear[] the burden to prove.” (brackets

and citations omitted)).) As for the importance factor, Defendants

assert, in full:

The [New Evidence] is important as it speaks to

[Defendants’] damages, but for the reasons discussed

above, the [New Evidence] concerns costs and expenses

that [Defendants] bear[] the burden to prove at trial and

goes to the fullness of the damages assessment. It does

not change any theory in the case.

(Id. at 20.)

According to Saitz’s calculations, the New Evidence would

yield more than a four-fold reduction in the damages that Plaintiff

could recover for Defendants’ revenue. (Compare Docket Entry 142-1

at 7 (calculating Defendants’ sales), with Docket Entry 142-2 at 13

(calculating Defendants’ profits by subtracting expenses from

sales).) This evidence thus qualifies as important, but

“importance cuts in both directions here, as admission of important

undisclosed evidence prejudices [Plaintiff] as well,” IWLCA, 698 F.

Supp. 3d at 820. See also Southern States, 318 F.3d at 598-99

(“The fact that the expert’s testimony regarding the paint formula

might have been helpful to [the plaintiff’s] case in the eyes of

36

the jury also points out why it should have been disclosed in a

timely manner to [the defendant].”). Moreover, “[a]llowing the

[New E]vidence would . . . delay and disrupt trial[, currently

scheduled for August 4, 2025 (see Docket Entry 195 at 1),] by

requiring further time for [Plaintiff] to assess how to meet this

evidence and further discovery,” IWLCA, 698 F. Supp. 3d at 820, as

well as the reopening of the expert discovery period to allow

Plaintiff to obtain an initial expert report from its damages

expert in light of the upending of its understanding of Defendants’

financial situation.

Defendants thus fail to establish either harmlessness or

substantial justification for their belated production of the New

Evidence.3 As such, Defendants may not “use th[e New Evidence] to

supply evidence on a motion, at a hearing, or at [the] trial.”

Fed. R. Civ. P. 37(c)(1).4

IV. New Report

Defendants similarly contend that the New Report qualifies as

a “timely and proper” supplementation. (Docket Entry 121 at 2; see

id. at 1-18.) As Defendants tell it, “after submitting her

3 This conclusion moots Plaintiff’s alternative request for

sanctions. (See Docket Entry 109 at 22 (“Even if the Court

concludes that Defendants’ untimely disclosure was harmless or

substantially justified under the [Rules], the Court should still

exclude this evidence under its inherent authority based on

Defendants’ course of conduct during discovery and past

misrepresentations regarding this evidence.”).)

4 Thus, Saitz cannot rely on the New Evidence either.

37

original expert report, Saitz received information regarding both

parties’ costs and expenses that made her initial calculations as

to damages incomplete. In such circumstances, [Rule] 26(e) does

not just permit supplementation — it requires it.” (Id. at 9.) In

the alternative, Defendants maintain that, “[e]ven if this Court

finds there has been a violation of [Rule] 26(e) and/or [Rule]

16(£), [Defendants] ha[ve] shown good cause.” (Id. at 13.) These

assertions lack merit.

Rule 26(e) requires a party to “supplement or correct its

disclosure or response . . . if the party learns that in some

material respect the disclosure or response is incomplete or

incorrect.” Fed. R. Civ. P. 26(e) (1) (A) (emphasis added).°

Notably, “[R]lule [26] does not create a right to produce

information in a belated fashion.” EEOC v. Freeman, 961 F. Supp.

2d 783, 797 (D. Md. 2013) (internal quotation marks omitted), aff’d

sub nom. E.E.0O.C. v. Freeman, 778 F.3d 463 (4th Cir. 2015); accord

Reid v. Lockheed Martin Aeronautics Co., 205 F.R.D. 655, 662 (N.D.

Ga. 2001) (“In short, Rule 26 imposes a duty on [parties]; it

grants them no right to produce information in a belated fashion.”

5 ‘“[A] disclosure is incomplete or incorrect in some material

respect if there is an objectively reasonable likelihood that the

additional or corrective information could substantially affect or

alter the opposing party’s trial preparation . .. .” North

Carolina State Conf. of the NAACP v. Cooper, No. 1:18cv1034, 2024

WL 1860243, at *4 (M.D.N.C. Apr. 29, 2024) (ellipsis and internal

quotation marks omitted), opinion clarified sub nom. North Carolina

State Conf. of the NAACP v. Hirsch, No. 1:18cv1034, 2024 WL 1974504

(M.D.N.C. May 4, 2024).

38

(emphasis in original)). “Supplementation of an expert report

permits a party to correct inadvertent errors or omissions.

Supplementation, however, is not a license to amend an expert

report to avoid [an adverse ruling].” Gallagher v. Southern Source

Packaging, LLC, 568 F. Supp. 2d 624, 630 (E.D.N.C. 2008); see also

Akeva, 212 F.R.D. at 310 (“Plaintiff does not argue that Mr.

Fredericksen’s initial opinion was incorrect, but appears to argue

that it was incomplete. The Court cannot accept a definition of

supplementation which would essentially allow for unlimited

bolstering of expert opinions.”).

“Courts distinguish ‘true supplementation’ (e.g., correcting

inadvertent errors or omissions) from gamesmanship, and have

therefore repeatedly rejected attempts to avert [an adverse ruling]

by ‘supplementing’ an expert report with a ‘new and improved’

expert report.” Gallagher, 568 F. Supp. 2d at 631; see also, e.g.,

Thomasville Furniture, 2011 WL 13239926, at *2 (“In this case, the

June 8 supplemental report is not a proper supplemental report

pursuant to Rule 26(e). [The d]efendant is not attempting to

correct the original expert report because it is misleading.

Rather, [the d]efendant seeks to add information that is missing

from the original report.”). “To construe Rule 26(e)

supplementation to apply whenever a party wants to bolster or

submit additional expert opinions would wreak havoc [o]n docket

control and amount to unlimited expert opinion preparation.”

39

Campbell v. United States, 470 F. App’x 153, 157 (4th Cir. 2012)

(brackets and internal quotation marks omitted); accord Akeva, 212

F.R.D. at 310.

According to Defendants,

[they] fulfilled [their] obligations and timely served

Saitz’s [New] Report, under [Rule] 26(e), before the

close of expert discovery and prior to Saitz’s

deposition, because [the New Report] relied upon new and

complete financial information that was material to

Saitz’s [I]nitial [R]eport. Saitz’s [New] Report is

therefore proper. Since there was no violation of [Rule]

26(e), there can be no violation of the [Joint Rule]

26(f) Report and no [Rule] 16(f) violation of the

[S]cheduling [O]rder.

Sacks, however, seeks to subvert the plain language

of [Rule] 26(e) by characterizing the [New] Report as

offering “new” opinions. ECF No. 114 at 16-18. Such a

statement has no basis in reality. Saitz’s [New] Report

is a clear continuation of the analysis presented in

Saitz’s Initial Report. In her Initial Report, Saitz

establishes [Defendants’] intent to seek disgorgement of

profits and opines on the parties’ total sales — a

necessary step to calculate profits — based on the

information she had to date. She makes clear that if she

received further information on the parties’ deduction of

costs and expenses related to their sales, she would

update her analysis. ECF No. 113-5 at 9-10. Her [New]

Report updates her earlier profits calculations with new

information provided to her regarding costs and expenses

derived by the parties, referencing her Initial Report

throughout. ECF No. 113-8. Saitz’s [New] Report does

not offer “new opinions.” The report simply offers more

details on her prior calculations.

(Docket Entry 121 at 8-9.) This argument misses the mark.

To begin, as Defendants tacitly concede, the Initial Report

opines solely on the parties’ sales, whereas the New Report

additionally opines on the parties’ profits. (See Docket Entries

142-1, 142-2.) Thus, the New Report offers “new opinions” and

40

calculations; it does not merely “offer[] more details on [Saitz’s]

prior calculations” (Docket Entry 121 at 9 (internal quotation

marks omitted)) or otherwise supplement her prior opinions. That

Saitz allegedly lacked the information “needed to complete her

opinion” (id. at 11; see id. (“This is not a situation where the

information or know-how Saitz needed to complete her opinion was in

her control, as in Akeva or Thomasville Furniture Industries. In

this case, the documents that Saitz needed to complete her opinion

were not available to her at the time of the Initial Report due to

the timing of events discovery and other factors.”)) until after

the Initial Report deadline does not salvage her New Report under

Rule 26(e). Rule 26(e) requires supplementation “if the party

learns that in some material respect the disclosure or response is

incomplete or incorrect,” not if an expert learns of such

situation. Fed. R. Civ. P. 26(e)(1)(A) (emphasis added). As

discussed above, prior to the expert report deadline, Defendants

knew (i) that they lacked information regarding their U.S.

expenses, (ii) that they had not provided Saitz with necessary

information — which Defendants possessed — regarding Plaintiff’s

expenses, and thus (iii) that Saitz could opine only on sales, not

profits, in her expert report. As such, the New Report does not

qualify as a Rule 26(e) supplementation.

“Because [the New R]eport is not authorized under Rule 26(e),

it is an untimely expert report and violates Rule 26(a)(2)(D) and

41

the Court’s pretrial [S]cheduling [O]rder. Rule 16(f) is therefore

implicated.” Thomasville Furniture, 2011 WL 13239926, at *2.

Defendants maintain, however, that they “ha[ve] shown good cause”

for the belated disclosure. (Docket Entry 121 at 13.) Defendants

offer three grounds for this assertion. (See id. 13-14.)

“First,” Defendants contend, “once [they] retained Saitz as a

testifying expert, [they] honored the five-day waiting period for

Sacks to raise any objections to Saitz’s review of Sacks [sic]

financial statements designated as [attorney’s eyes only] before

sending that information to Saitz, as per the Stipulated Protective

Order,” during which period “the deadline for initial expert

reports . . . passed.” (Id. at 13.) In Defendants’ view, they

“did what [they] could do in that situation: [they] timely

submitted Saitz’s Initial Report relying on information that Saitz

had previously reviewed while also adhering to the terms of the

Stipulated Protective Order.” (Id.) This argument warrants no

relief, as regardless of whether Defendants should have officially

“retained Saitz as a testifying expert” (id.) earlier in the

discovery process, Defendants retained Saitz as a testifying expert

by August 22, 2024 (see Docket Entry 111-1 at 2). Defendants just

failed to provide the (basic) information necessary to begin the

five-day objection window until August 26, 2024 (see Docket Entry

111-2 at 2; Docket Entry 111-3 at 2-3), a delay that extended the

objection window beyond the expert report deadline (see Docket

42

Entry 22 at 2). Defendants’ own dilatory actions do not establish

good cause.°®

“Second,” Defendants maintain, they “created new financial

statements after receiving guidance from Saitz on the details of

costs and expense information necessary from deduction of sales to

determine profits. That effort took until October.” (Docket Entry

121 at 14 (citation omitted).) For all the reasons discussed above

regarding Defendants’ improper post-fact-discovery production of

the New Evidence, this argument does not show good cause. “Third,”

Defendants assert, they “did not receive a copy of [] Chodorow’s

final deposition transcript until after the deadline for Saitz’s

initial report. Saitz relied on [] Chodorow’s transcript

extensively in the [New] Report to understand Sacks’ financial

statements.” (Id. (emphasis added); see also id. at 6 (asserting

that “Chodorow’s final deposition transcript .. . became available

after September 2” (emphasis added)).) Defendants provide no

evidence regarding the date when Chodorow’s deposition transcript

became available (see id. at 6, 14; see also Docket Entries 123,

124), let alone evidence that the only version of Chodorow’s

deposition transcript became available after the expert report

deadline. See, e.g., United States v. White, 366 F.3d 291, 300

6 That Defendants started collaborating with Saitz in July

2024 and entertained designating her as a testifying expert by

August 9, 2024, merely reinforces the responsibility that

Defendants bear for Saitz’s inability to review Plaintiff’s

financial information prior to the expert report deadline.

43

(4th Cir. 2004) (explaining that “an attorney’s unsworn argument

does not constitute evidence”); Bayer CropScience Inc. v. Syngenta

Crop Prot., LLC, No. 1:13cv316, 2013 WL 12137000, at *1 (M.D.N.C.

Dec. 12, 2013) (observing that “[s]tatements in a brief are not

evidence”).7 Accordingly, Defendants have not established good

cause for their untimely disclosure of the New Report.

“Having found a violation of Rule 16(f), the next issue is

what kind of sanctions to impose, if any.” Akeva, 212 F.R.D. at

311. Defendants maintain that “the Aveka [sic] factors weigh in

[their] favor” and thus that “the Court should still permit the

[New] Report pursuant to the Aveka [sic] factors.” (Docket Entry

121 at 14 (bold and capitalized font omitted).) This argument

falls short.

For the first factor, their “explanation for the failure to

obey the [Scheduling O]rder,” Akeva, 212 F.R.D. at 311, Defendants

assert solely that they “ha[ve] provided a good faith explanation

for the timing of the [New] Report, as discussed in [the] section

[of their memorandum dealing with good cause]” (Docket Entry 121 at

7 It also bears mention that the five-day objection window

likely would have precluded Saitz’s review of Chodorow’s deposition

testimony prior to the expert report deadline, given Defendants’

contention that “Saitz relied on [] Chodorow’s transcript

extensively in the [New] Report to understand Sacks’ financial

statements” (Docket Entry 121 at 14), which Saitz could not review

until after the expert report deadline. Thus, the timing of

Defendants’ receipt of “Chodorow’s final deposition transcript”

(id.) appears to have little, if any, impact on Saitz’s inability

to opine on Plaintiff’s profits in the Initial Report.

44

14). As discussed above, that contention lacks merit. Regarding

the second factor, “the importance of the expert opinion,” Akeva,

212 F.R.D. at 311, Defendants assert: “the [New] Report is

important to [Defendants’] case as it supports [their] claim for

damages and goes to the fullness of the damages assessment.

Without Saitz’s [New] Report, [Defendants] may not be able to

satisfy [their] burden to prove [their] costs and expenses at

trial.” (Docket Entry 121 at 14-15.) The exclusion of the New

Evidence independently necessitates exclusion of those portions of

the New Report that rely thereon, and the determination that

Plaintiff possesses priority rights to the disputed mark (see

Docket Entry 202 at 5) lessens the importance of the New Report’s

calculation of Plaintiff’s profits to resolution of this action.

Thus, the second factor militates against Defendants.

As for the third factor, “the prejudice to the opposing party

by allowing the disclosures,” Akeva, 212 F.R.D. at 311, Defendants

contend that “there is little prejudice to Sacks by permitting the

[New] Report” because “Sacks received the [New Evidence] prior to

Saitz’s deposition and had the opportunity to and did question

Saitz on her updated analysis.” (Docket Entry 121 at 15.) For the

fourth factor, “the availability of alternative or lesser

sanctions,” Akeva, 212 F.R.D. at 311, Defendants propose, “as an

alternative to excluding the [New] Report, the Court could permit

Rogers to submit a second rebuttal report to respond to Saitz’s

45

updated profit calculations.” (Docket Entry 121 at 15.) These

contentions fare no better applied to the New Report than to the

New Evidence.

For the fifth and sixth factors, “the interest in expeditious

resolution of litigation[ and the C]ourt’s need to manage its

docket,” Akeva, 212 F.R.D. at 311, Defendants limit their arguments

to Plaintiff’s alternative request for additional discovery if the

Court denied the Motions. (See Docket Entry 121 at 16

(“[Plaintiff] is using this Motion as leverage . . . to seek a

‘redo’ of its claims, fact discovery, and expert discovery. . . .

If this Court were to grant [the Expert Report] Motion, [Plaintiff]

would ensure that this case is delayed for several more months, if

not years.”).) This case, filed more than seventeen months ago,

goes to trial in less than three months and even Defendants’

proposed alternative sanction “of permitting Rogers to submit a

second rebuttal report” (id.) would interject further delay into

these proceedings. Accordingly, these factors also counsel

exclusion of the New Report.

As for the final factor, “public policy favoring disposition

of cases on the merits,” Akeva, 212 F.R.D. at 311, Defendants

contend:

The dispositive issue in the case is whether Grin was the

first party to sell its products bearing the Grin mark in

U.S. commerce, trumping Sacks’ other perceived rights to

the Grin mark. This issue can be decided on summary

judgment without resolution of the [Expert Report]

Motion. With the deadline for dispositive motions

46

quickly approaching, the Court has an opportunity to hear

Grin’s forthcoming motion for summary judgment, resolving

this case on the merits in an efficient manner. Sacks,

by contrast, seeks to prolong the action indefinitely by

revisiting its prior unsuccessful motion to amend,

reopening fact discovery, and resetting expert deadlines.

(Docket Entry 121 at 16-17.) Although Defendants correctly

predicted that the Court could resolve the parties’ summary

judgment motions prior to resolution of the Motions (see Docket

Entry 202 at 1-5), that development provides little help to

Defendants. Given the exclusion of the New Evidence and the

conclusion that Plaintiff possesses priority rights to the disputed

mark, exclusion of the New Report will have little, if any, impact

on the merits of this action.

In sum, Defendants failed to establish good cause for their

belated production of the New Report in violation of Rule 16(f),

and the Akeva factors counsel exclusion of the New Report. The

Court will accordingly grant Plaintiff’s request to exclude the New

Report and any associated testimony from Saitz.

V. Attorney’s Fees

Plaintiff also requests an award of attorney’s fees for the

Motions. (See Docket Entry 108 at 1; Docket Entry 110 at 1.)

Defendants oppose the request for attorney’s fees, maintaining that

they did not violate the Rules. (See Docket Entry 120 at 23;

Docket Entry 121 at 18.) Alternatively, Defendants contend that

“any failure [regarding the New Evidence] was substantially

justified or harmless” (Docket Entry 120 at 23) and that, for the

47

New Report, “lesser consequences” (Docket Entry 121 at 18), namely

“permit[ting] Rogers to submit a second rebuttal report to respond

to Saitz’s updated profit calculations” (id. at 15), “are more

appropriate” (id. at 18). For the reasons discussed above, these

contentions lack merit. The Court will therefore award Plaintiff

its reasonable attorney’s fees for the Motions. See Indura S.A. v.

Engineered Controls Int’l Inc., No. 1:10cv457, 2011 WL 3862083, at

*9 (M.D.N.C. Sept. 1, 2011) (“Instead of or in addition to any

other sanction, the court must order the party, its attorney, or

both to pay the reasonable expenses — including attorney’s fees —

incurred because of any noncompliance with [Rule 16], unless the

noncompliance was substantially justified or other circumstances

make an award of expenses unjust.” (emphasis in original); Fed. R.

Civ. P. 37(c)(1)(A) (specifying that, “[i]n addition to or instead

of [excluding belatedly disclosed evidence], the [C]ourt, on motion

and after giving an opportunity to be heard . . . may order payment

of the reasonable expenses, including attorney’s fees, caused by

the failure [to comply with Rule 26(a) or Rule 26(e)]”).

CONCLUSION

Without justification, Defendants failed to timely produce the

New Evidence, the belated disclosure of which qualifies as harmful.

Similarly without justification, Defendants failed to timely

disclose the New Report, violating the Scheduling Order.

48

IT IS THEREFORE ORDERED that the Motions (Docket Entries 108,

110) are GRANTED as follows: (i) Defendants may not use the New

Evidence (or New Report) in any proceedings in this matter;

(ii) the New Report is STRICKEN; (iii) Saitz may not testify

regarding the New Evidence or any opinions in the New Report that

do not specifically and fully appear in the Initial Report; and

(iv) Plaintiff is awarded its reasonable attorney’s fees for the

Motions. On or before May 30, 2025, Plaintiff shall serve

Defendants with a notice of the reasonable expenses, including

attorney’s fees, that Plaintiff incurred in bringing the Motions.

On or before June 6, 2025, the parties shall meet and confer

in-person or by video-conference about that notice. On or before

June 13, 2025, Defendants shall file either a notice stating that

the parties have resolved all issues regarding the amount of the

reasonable expenses, including attorney’s fees, that Defendants

must pay Plaintiff or objections (spanning no more than 10 pages

exclusive of attachments) to the amount of the reasonable expenses,

including attorney’s fees, claimed by Plaintiff. On or before June

20, 2025, Plaintiff shall file any response (spanning no more than

10 pages exclusive of attachments) to any such objections.

This 9th day of May, 2025.

/s/ L. Patrick Auld

L. Patrick Auld

United States Magistrate Judge

49