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In re Subpoena Duces Tecum to Dunhuang Group

United States District Court, E.D. Michigan, Southern Division

May 17, 2019

In re Subpoena Duces Tecum to Dunhuang Group d/b/a DHgate, DHport, DHlink, and Dhpay.




         The instant miscellaneous action was initiated to resolve issues related to Petitioners' subpoena duces tecum seeking discovery from third-party Dunhuang Group[1], a collection of China-based, e-commerce websites-DHgate, DHport, DHlink, and DHpay. Petitioners, makers of ZIG-ZAG® Orange cigarette paper, filed the underlying action against numerous (many anonymous) online sellers alleging violations of the Latham Act and Michigan law-i.e., trademark infringement, trade dress infringement, copyright infringement, improper use, and unfair competition. (North Atlantic Operating Co., Inc., et al. v. EBay Seller dealz_f0r_you, et al., Case No. 17-cv-10964, ECF No. 1.)

         Presently before the Court is Petitioners' Motion to Hold Third-Party Dunhuang Group in Contempt, ECF No. 17, for violating this Court's October 11, 2018 Order, ECF No. 12, compelling Dunhuang Group to produce the identities of anonymous merchants engaging in the alleged underlying counterfeiting scheme in accordance with its December 8, 2017 Subpoena Duces Tecum (the “Subpoena”) pursuant to Federal Rule of Civil Procedure 45. The motion has been fully briefed. (ECF Nos. 17, 28 & 41.) Also, Respondents Shiji Fuxuan Technology Development Limited, owner and operator of the e-commerce websites of concern, filed a Motion to Reconsider Judge Patti's denial of its Motion to Vacate the Order granting Petitioners' Motion to Compel, which has also been fully briefed. (ECF Nos. 46 & 51.) Finding the briefs sufficient, the Court is dispensing with oral argument pursuant to Local Rule 7.1(f)(2). For the reasons that follow, the Court grants Petitioners' motion and denies Respondent's motion.

         I. Factual and Procedural History

         On May 3, 2017, this Court granted Petitioners' motion for a temporary restraining order and request for expedited discovery, which required “Third Party Providers, ” including DHgate or any other payment processing service providers, to provide Petitioners with the requested discovery “within five (5) days after actual notice of [the] Order”. (Case No. 17-cv-10964, ECF No. 16 at 17, PgID 1780 (emphasis added).) Seven months later, on December 7, 2017, Magistrate Judge Patti granted Petitioners' Ex Parte Motion for Limited Expedited Discovery, which permitted Petitioners' to serve a Rule 45 Subpoena Duces Tecum (the “Subpoena”) on third-party Dunhuang Group seeking that it identify all accounts used by Defendants in their alleged counterfeiting scheme in the United States. (Case No. 17-cv-10964, ECF No. 100.) Furthermore, Judge Patti required Dunhuang Group, “within fourteen (14) days of service of the subpoena, to respond and produce . . . the information requested.” (Id. at 5, PgID 2823.)

         The following day, on December 8, 2017, Petitioners' issued the Subpoena, which was served upon an individual serving as the registered agent of Dunhuang Group's payment processor, DHpay, Inc.[2], in Delaware. (ECF No. 10.) Additionally, Petitioners' served the Subpoena via email on Dunhuang Group in accordance with this Court's May 3, 2017 Order. (Case No. 17-cv-10964, ECF No. 16 at 10, PgID 1773.) On January 21, 2018, Cui Zeyi of DHgate informed Petitioners' counsel of their “opinion” that DHGate had no legal obligation to comply with the Subpoena as a result of improper service, lack of personal jurisdiction, and conflicts with Chinese law. (Case No. 18-mc-51051, ECF No. 10 at 3-5, PgID 79-81; see also ECF No. 28 at 8-10, PgID 286-288, and ECF No. 35-3 at 169-70, PgID 1743-44.) Given actual notice, acknowledgement thereof, and its stated objections, DHgate did not move to quash or seek a protective order from this Court.

         Because DHgate refused to comply with this Court's May 3, 2017 Order, Petitioners' filed a motion to compel against Dunhuang Group in the District of Delaware-DHpay's jurisdiction of compliance-on May 14, 2018. (Case No. 1:18-mc-00154-LPS, ECF No. 1.) Chief Judge Stark entered a memorandum order acknowledging that DHpay's dissolution did not affect this Court's ability to enforce a subpoena against DHpay and transferring Petitioners' motion to compel to this Court. (Id., ECF No. 2.) Subsequently, on September 14, 2018, the Court entered an order requiring Respondents to show cause why Petitioners' proposed order granting its motion to compel should not enter, to which Respondents neither appeared nor responded despite the docket not indicating that the order was returned as undeliverable[3]. (Case No. 18-mc-51051, ECF No. 11.)

         On October 11, 2018, the Court entered an Order granting Petitioners' Motion to Compel and requiring complete production within thirty (30) days of entry. (Id., ECF No. 12.) The Order required, inter alia, Dunhuang Group to pay Petitioners' attorney fees and costs. (Id.) Dunhuang Group received actual notice of Petitioners' motion to compel, evidenced by its October 18, 2018 email from Frank Niu, counsel for Dunhuang Group, informing Petitioners' counsel that Dunhuang Group reviewed the motion, still believe it to have no obligation to comply[4], and offering to “quiet the matter if plaintiff agrees to forgo its effort to compel the production”. (Id., ECF No. 35-10 at 2, PgID 865.) In response, on October 20, 2018, Petitioners' argued that Dunhuang Group's objections were “meritless” and “already rejected by the Court” and urged Dunhuang Group to “apply to the Court” if it desired relief from the Court's Order. (Id., ECF No. 35-11 at 2, PgID 869.)

         On November 11, 2018, via email, Dunhuang Group provided a “response in satisfaction of [the] requests.” (Id.; see also ECF No. 35-13 at 11-12, PgID 897- 98.) Petitioners responded with a letter identifying alleged deficiencies. (Id., ECF No. 35-12.) On December 6, 2018, Frank Niu, counsel for DHGate, informed Petitioners' counsel that “DHgate will produce the information after the parties agree on the fees and expenses issue.” (Id., ECF No. 35-13 at 3-4, PgID 889-90.) Apparently coming to no agreement, on January 10, 2019, third-party Respondent, Shiji Fuxuan Technology Development (Beijing) Limited, owner and operator of the Dunhuang Group websites, filed a motion to vacate this Court's October 11, 2018 Order and seeking to quash the Subpoena. (Id., ECF No. 26.) On March 19, 2019, Magistrate Judge Patti denied Respondent Shiji's motion to vacate. (Id., ECF No. 44.) Petitioners' instant motion filed December 19, 2018[5] seeks to hold Dunhuang Group in contempt for violations of the Court's standing October 11, 2018 Order granting Petitioners' Motion to Compel. (Id., ECF No. 17.)

         II. Applicable Law & Analysis

         A. The Court's Authority and Personal Jurisdiction

         United States courts have the power to “punish by fine or imprisonment, or both, at its discretion, such contempt of its authority” resulting from “disobedience or resistance to its lawful writ, process, order, rule, decree, or command.” 18 U.S.C. § 401; see Elec. Workers Pension Trust Fund of Local Union |58, IBEW v. Gary's Elec. Serv. Co., 340 F.3d 373, 378 (6th Cir 2003). The validity of any court order depends upon the court having jurisdiction over the parties. LGT Enters., LLC v. Hoffman, 614 F.Supp.2d 825, 832-33 (citing Days Inns Worldwide, Inc. v. Patel, 445 F.3d 899, 903 (6th Cir.2006) (citation omitted)); see also Oberlies v. Searchmont Resort, Inc., 633 N.W.2d 408, 412 (Mich. Ct. App. June 15, 2001) (“Before a court may obligate a party to comply with its orders, the court must have in personam jurisdiction over the party.”). To exercise personal jurisdiction over a non-resident party[6], “‘the court must be satisfied that Michigan law would authorize [the state] court to exercise jurisdiction, and the exercise must comport with the Due Process Clause of the United States Constitution.'” 614 F.Supp.2d at 834-35 (citations omitted).

         Pursuant to Mich. Comp. Laws § 600.705(1), the “slightest act of business in Michigan” or “doing or causing an act to be done . . . in the state resulting in an action for tort” is sufficient to give the state courts authority to exercise limited personal jurisdiction. Id. (citations omitted). Because Michigan's long-arm statute is coterminous with Federal Due Process, this Court must only determine whether its exercise of jurisdiction comports therewith. Id. at 836 (citation omitted). Therefore, Petitioners must demonstrate “ ‘certain minimum contacts with [Michigan] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.' ” Music City Metals Co., Inc. v. Jingchang Cai, No. 3:17-cv-766, 2017 WL 4641866, at *5 (M.D. Tenn. October 17, 2017) (citations omitted). Under the present circumstances, Petitioners need only demonstrate specific jurisdiction, [7] for which the Sixth Circuit has established a three-part test to determine its consistency with the principles of due process, requiring a court to find: (1) purposeful availment of or causing a consequence in the forum state, (2) a ...

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