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United States Court of AppealsFor the First Circuit
No. 12- 2403
BOSE CORPORATI ON,
Pl ai nt i f f , Appel l ee,
v.
SALMAN EJ AZ,
Def endant , Appel l ant .
APPEAL FROM THE UNI TED STATES DI STRI CT COURTFOR THE DI STRI CT OF MASSACHUSETTS
[ Hon. Deni se J . Casper , U. S. Di st r i ct J udge]
Bef or e
Lynch, Chi ef J udge, Tor r uel l a and Kayat t a, Ci r cui t J udges.
Emi l y E. Smi t h- Lee, wi t h whom Sana Abdul l ah and Smi t h LeeNebenzahl LLP wer e on br i ef , f or appel l ant .
J ef f r ey S. Pat t er son, wi t h whom Chr i st opher S. Fi nner t y,Morgan T. Ni cker son, and Nel son Mul l i ns Ri l ey & Scarborough LLPwer e on br i ef , f or appel l ee.
Oct ober 4, 2013
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LYNCH, Chief Judge. Pl ai nt i f f Bose Cor por at i on won
summary j udgment on i t s br each of cont r act and t r ademark cl ai ms
agai nst def endant Sal man Ej az. Bose Cor p. v. Ej az, No. 11- 10629,
2012 WL 4052861 ( D. Mass. Sept . 13, 2012) . Ej az admi t t ed t o
sel l i ng home theat er syst ems manuf actur ed by Bose f or use i n t he
Uni t ed St at es t o cust omer s i n ot her count r i es, sel l i ng t hemacr oss
i nt er nat i onal mar ket s t o t ake advant age of hi gher r et ai l pr i ces
abr oad. Bose asser t ed t hat Ej az sol d i t s Amer i can pr oduct s i n
Aust r al i a wi t hout Bose' s consent even t hough he had si gned a
set t l ement agr eement pr omi si ng not t o do so af t er he had made
si mi l ar sal es i n Eur ope. Ej az appeal s, and we af f i r m.
I .
Because t hi s case comes t o us f ol l owi ng Bose' s mot i on f or
summar y j udgment , we r eci t e t he f act s i n t he l i ght most f avor abl e
t o Ej az.
Ej az f i r st began sel l i ng Bose pr oduct s onl i ne t hr ough
eBay as ear l y as 2005. He was not an aut hor i zed r esel l er or
di st r i but or of Bose pr oduct s. Rat her , he sought t o t ake advant age
of t he f act t hat t he pr i ce of el ect r oni cs can var y si gni f i cant l y
bet ween di f f er ent count r i es, and woul d buy el ect r oni cs i n one
count r y and r esel l t hem i n anot her . Pr oduct s sol d i n t hi s way ar e
known as "gray market goods" because t he goods t hemsel ves ar e
l egi t i mat e and unal t er ed pr oduct s of t he cl ai med manuf act ur er , but
t hey ar e sol d out si de of t hei r i nt ended r et ai l mar ket s.
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Throughout 2005 and 2006, Ej az sol d Bose product s
desi gned f or use i n t he Uni t ed St at es t o cust omer s i n ot her
count r i es, most l y i n Eur ope. Bose soon became aware of Ej az' s
act i vi t i es and appr oached hi m i n l at e 2006 wi t h t hr eat s of l egal
act i on. At t hat t i me, Bose i ndi cat ed t hat Ej az coul d be l i abl e f or
r oughl y $250, 000 f or t r ademark i nf r i ngement based on hi s
unaut hor i zed sal es of Bose pr oduct s. Bose t hen went on t o of f er a
set t l ement : i n essence, Bose woul d dr op al l of i t s exi st i ng l egal
cl ai ms agai nst Ej az, i ncl udi ng a sui t t hat i t had al r eady f i l ed i n
t he Uni t ed Ki ngdom, and i n exchange, Ej az woul d not sel l Bose
pr oduct s wi t hout Bose' s per mi ssi on.
Negot i at i ons over t he set t l ement wer e t ense. Ej az chose
t o be unr epr esent ed and l at er st at ed t hat he f ound t he tact i cs
Bose' s l awyer s used "ver y pr essur i zi ng, ver y i nt i mi dat i ng. " He was
r ecent l y mar r i ed, and he and hi s wi f e wer e "anxi ous t o r esol ve t he
di sput e. " Ej az f el t as t hough Bose' s l awyer s wer e i mpl i ci t l y
suggest i ng t hr oughout t he negot i at i ons t hat he woul d go to j ai l i f
he di d not r each an agr eement wi t h Bose, al t hough he never cl ai ms
such t hr eat s of cr i mi nal pr osecut i on wer e act ual l y made. By
J anuar y of 2007, Ej az agr eed t o set t l e t he cl ai ms.
The agr eement was executed t hrough t wo document s. Fi r st ,
t he par t i es agr eed t o the t er ms of a wr i t t en Set t l ement Agr eement .
The Set t l ement Agreement r el eased al l of Bose' s preexi st i ng cl ai ms,
i ncl udi ng t hose not r el at ed t o t he U. K. l awsui t , and pr ohi bi t ed
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Ej az f r om sel l i ng Bose pr oduct s anywher e i n t he wor l d wi t hout
Bose' s pr i or consent . I t f ur t her pr ovi ded t hat Ej az woul d owe Bose
$50, 000 i n l i qui dat ed damages f or ever y vi ol at i on of t he Set t l ement
Agr eement . Ej az si gned t he Set t l ement Agr eement on J anuary 27,
2007. Bose si gned i t on Febr uar y 26, 2007, and i t t ook ef f ect on
t hat date. Second, t he Set t l ement Agr eement i ncl uded a Consent
Or der , t o be f i l ed i n t he Br i t i sh Hi gh Cour t of J ust i ce. The
Consent Or der was f i l ed wi t h that cour t on Febr uary 23, 2007, and
i ssued by t hat court on March 9, 2007. The Consent Or der
t er mi nat ed t he U. K. l awsui t i n exchange f or Ej az' s pr omi se t o st op
sel l i ng Bose pr oduct s i n t he Eur opean Uni on.
Not l ong af t er execut i ng t he Set t l ement Agr eement , Ej az
vi ol at ed i t . As he wr ot e i n an emai l , "gr eed got [ t he] bet t er of
[ hi m] , " and he st ar t ed sel l i ng Bose pr oduct s i n Aust r al i a. I n
r esponse, Bose i ni t i ated t he pr esent case. Bose sought damages
agai nst Ej az f or br each of t he Set t l ement Agr eement on seven
occasi ons. 1 I t al so added f ur t her cl ai ms, of whi ch onl y i t s cl ai m
f or t r ademar k i nf r i ngement i s r el evant her e.
Af t er di scovery, Bose moved f or summary j udgment . Ej az
opposed the mot i on, cl ai mi ng that t here were a number of di sput ed
mat er i al f act s rel at i ng t o sever al cont r act def enses. He f ur t her
1 By hi s own admi ssi on, Ej az sol d at l east seven uni t s i nAust r al i a. For pur poses of t hi s case, Bose has deci ded t o r el y ont hat admi ssi on and seek recover y f or seven vi ol at i ons of t heSet t l ement Agr eement r at her t han t r y t o pr ove a pot ent i al l y muchgr eat er number of sal es.
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mai nt ai ned t hat Bose had not car r i ed i t s bur den of pr ovi ng each
el ement of i t s t r ademar k cl ai m.
Ej az al so asked t he di st r i ct cour t t o ext end di scover y
bef ore r ul i ng on Bose' s mot i on f or summary j udgment . He compl ai ned
t hat Bose' s cor porate r epr esent at i ve had been unabl e t o answer
quest i ons on many of t he t opi cs f or whi ch he had been desi gnated t o
gi ve deposi t i on t est i mony on Bose' s behal f . That i nabi l i t y was
par t i cul ar l y pr obl emat i c, Ej az mai nt ai ned, because Bose had
pr evi ousl y opposed a mot i on to extend di scover y by expl ai ni ng that
Ej az woul d be abl e t o obt ai n al l t he i nf ormat i on he needed by
deposi ng i t s cor por at e r epr esent at i ve. Ej az ar gued t hat Bose had
t hus obst r uct ed hi s di scover y at t empt s, and t hat he shoul d be
gr ant ed mor e t i me f or di scovery as a resul t .
Wi t hout r ul i ng on t he mot i on t o extend di scover y, t he
di st r i ct cour t gr ant ed summar y j udgment i n f avor of Bose on i t s
br each of cont r act and t r ademar k i nf r i ngement cl ai ms. Ej az now
appeal s. He ar gues t hat t he Set t l ement Agr eement , or at l east i t s
l i qui dat ed damages pr ovi si on, i s unenf or ceabl e, and t hat t he
di st r i ct cour t er r ed i n hol di ng hi m l i abl e under i t on summar y
j udgment . He f ur t her ar gues t hat genui ne quest i ons of mat er i al
f act r emai n such t hat summary j udgment on t he t r ademark
i nf r i ngement cl ai mi s i nappr opr i at e. Fi nal l y, he cont ends t hat t he
di st r i ct cour t abused i t s di scret i on i n decl i ni ng t o ext end
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di scover y. We r ej ect t hese cl ai ms and af f i r mt he gr ant of summar y
j udgment .
I I .
We r evi ew t he di st r i ct cour t ' s grant of summary j udgment
de novo, dr awi ng al l r easonabl e i nf er ences i n f avor of t he
nonmovi ng part y. Rockwood v. SKF USA I nc. , 687 F. 3d 1, 9 ( 1st Ci r .
2012) . Summary j udgment i s appr opr i ate "when t here i s no genui ne
i ssue of mat er i al f act and t he movi ng par t y i s ent i t l ed t o j udgment
as a mat t er of l aw. " Cor t és- Ri ver a v. Dep' t of Cor r . & Rehab. of
P. R. , 626 F. 3d 21, 26 ( 1st Ci r . 2010) .
Accordi ng t o Sect i on 8. 4 of t he Set t l ement Agr eement ,
" i nt er pr et at i on and per f or mance of [ ] [ t he] Agr eement " i s gover ned
by Massachuset t s l aw. 2 Under Massachuset t s l aw, a br each of
cont r act cl ai m r equi r es t he pl ai nt i f f t o show t hat ( 1) a val i d
cont r act bet ween t he par t i es exi st ed, ( 2) t he pl ai nt i f f was r eady,
wi l l i ng, and abl e t o per f or m, ( 3) t he def endant was i n br each of
t he cont r act , and ( 4) t he pl ai nt i f f sust ai ned damages as a r esul t .
See Si ngar el l a v. Ci t y of Bost on, 173 N. E. 2d 290, 291 ( Mass. 1961) .
Ej az cont est s onl y t wo el ement s of Bose' s case: whet her a val i d
cont r act exi st ed and whet her t he cont r act ' s l i qui dat ed damages
cl ause i s enf or ceabl e.
2 The par t i es have not r ai sed any choi ce of l aw i ssues andi nst ead assume t hat Massachuset t s l aw appl i es. We wi l l do t hesame.
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A. Cont r act Val i di ty
Ej az of f er s f our ar gument s t o expl ai n why t he Set t l ement
Agr eement i s not a val i d cont r act : ( 1) t her e was no consi der at i on
suppor t i ng t he Set t l ement Agr eement , ( 2) t here was no meet i ng of
t he mi nds when t he part i es si gned t he Agr eement , ( 3) t he Set t l ement
Agr eement i s unconsci onabl e, and (4) he si gned t he Set t l ement
Agreement under dur ess .
1. Consi der at i on
Ej az ar gues t hat t he Set t l ement Agr eement l acked
consi der at i on because, al t hough i t pur por t ed t o r el ease Bose' s
l egal cl ai ms agai nst Ej az, t hat r el ease was i l l usor y, as t he
ear l i er Consent Or der i n t he Br i t i sh cour t s had al r eady r el eased
t hose same cl ai ms. Thi s ar gument i s cont r adi ct ed by t he f act s of
t he case i n t hr ee r espect s: t he Consent Or der was not an "ear l i er , "
separ at e agr eement , but r at her par t and par cel of t he Set t l ement
Agr eement ; t he act ual i ssuance of t he Consent Or der was not
ear l i er ; and t he r el eases wer e not coext ensi ve. Ej az si gned t he
Set t l ement Agr eement on J anuary 27, 2007 and has not i dent i f i ed any
r el eases predat i ng t hat agr eement . The Set t l ement Agr eement became
ef f ect i ve upon Bose' s si gni ng i t on Febr uar y 26, 2007. The Consent
Or der was not i ssued unt i l Mar ch 9, 2007, af t er bot h par t i es had
execut ed t he Set t l ement Agr eement . Addi t i onal l y, t he Consent Or der
r el eased onl y t hose l egal cl ai ms at i ssue i n t he U. K. l i t i gat i on,
whi l e t he Set t l ement Agr eement r el eased al l l egal cl ai ms,
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r egar dl ess of l ocat i on. Ej az di d r ecei ve consi der at i on f or hi s
pr omi ses i n t he Set t l ement Agreement .
2. Meet i ng of t he Mi nds
Ej az of f er s t wo ar gument s f or hi s cl ai mt hat t her e was no
meet i ng of t he mi nds. Fi r st , he cont ends t hat he subj ect i vel y
at t ached a di f f er ent under st andi ng t o the cont r act t han Bose di d:
Bose bel i eved, i n accor dance wi t h t he cont r act ' s expl i ci t l anguage,
t hat Ej az woul d be bar r ed f r om sel l i ng Bose pr oduct s anywher e
wi t hout per mi ssi on, whi l e Ej az bel i eved t hat he woul d be bar r ed
f r om sel l i ng Bose pr oduct s onl y i n t he Uni t ed St at es and Uni t ed
Ki ngdom, l eavi ng hi m f r ee t o sel l i n Aust r al i a. Second, he ar gues
on appeal t hat he never even saw t he t erms of t he Set t l ement
Agr eement bef or e si gni ng i t , and that i nst ead he was mer el y gi ven
a si gnatur e page t hat he t hought cor r esponded t o t he Consent Or der ,
whi ch he had pr evi ousl y r evi ewed.
Ej az ' s subj ect i ve bel i ef i s i nsuf f i ci ent t o i nval i dat e
t he cont r act . Absent f r aud, an i ndi vi dual "who si gns a wr i t t en
agr eement i s bound by i t s t erms whet her he r eads and under st ands
t hemor not . " Awuah v. Cover al l N. Am. , I nc. , 703 F. 3d 36, 44 ( 1st
Ci r . 2012) ( quot i ng St . Fl eur v. WPI Cabl e Sys. / Mut r on, 879 N. E. 2d
27, 35 ( Mass. 2008) ) ( i nt er nal quot at i on mar k omi t t ed) . Ej az f al l s
di r ectl y wi t hi n t he scope of t hi s r ul e.
Ej az' s second ar gument at t empt s t o avoi d t hat r ul e by
asser t i ng that he was def r auded, ar gui ng Massachuset t s bi nds an
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i ndi vi dual t o t he t er ms of t he cont r act he si gns onl y " i n t he
absence of f r aud. " Hauf l er v. Zotos, 845 N. E. 2d 322, 333 ( Mass.
2006) . But t hat argument i s compl etel y unsupport ed by t he r ecor d.
Fr aud i s an af f i r mat i ve def ense t hat must be pl eaded wi t h
par t i cul ar i t y, see Fed. R. Ci v. P. 9( b) , and Ej az f ai l ed t o do so.
I ndeed, hi s answer t o t he compl ai nt never even makes t he cont ent i on
t hat Ej az pr esses i n hi s br i ef , t hat Bose had Ej az si gn t he
Set t l ement Agr eement wi t hout hi s knowl edge; much l ess does i t gi ve
speci f i c det ai l s about any al l egedl y f r audul ent t r ansact i on.
Wi t hout t hose speci f i c det ai l s, Ej az' s f r aud cl ai mcannot pr evai l .
See N. Am. Cat hol i c Educ. Progr ammi ng Found. , I nc. v. Car di nal e,
567 F. 3d 8, 16 ( 1st Ci r . 2009) .
Addi t i onal l y, r egar dl ess of t he qual i t y of Ej az' s
pl eadi ngs, t he evi dence i n t he r ecor d shows t hat Ej az di d have t he
f ul l Set t l ement Agr eement and knew what he was si gni ng: he st ated
i n hi s deposi t i on t hat he "t r i ed [ hi s] best t o r ead i t " and si gned
i t on t he same day he r ecei ved i t ; t hat he had hi s wi f e r evi ew t he
document ; and that he "must ' ve read" t he whol e Set t l ement Agreement
when he si gned i t . As a r esul t , t he cont r act does not f ai l f or a
l ack of meet i ng of t he mi nds.
3. Unconsci onabi l i t y as Def ense t o t he Cont ract
Ej az cl ai ms t hat Bose' s l awyer s used heavy- handed t act i cs
t o get hi m, unr epr esent ed by counsel , t o si gn t he Set t l ement
Agr eement . Unconsci onabi l i t y i s an af f i r mat i ve def ense, pl aci ng
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t he bur den of pr oof on Ej az. See E. H. Ashl ey & Co. , I nc. v. Wel l s
Far go Al ar m Ser vs. , 907 F. 2d 1274, 1278 ( 1st Ci r . 1990) . Under
Massachuset t s l aw, unconsci onabi l i t y r equi r es a " t wo- par t i nqui r y, "
i n whi ch the def endant must pr ove both "pr ocedur al " and
"subst ant i ve" unconsci onabi l i t y. Tr ans- Spec Tr uck Ser v. , I nc. v.
Cat er pi l l ar I nc. , 524 F. 3d 315, 329 ( 1st Ci r . 2008) ( quot i ng
Zapat ha v. Dai r y Mar t , I nc. , 408 N. E. 2d 1370, 1377 n. 13 ( Mass.
1980) ) ( i nt er nal quot at i on mar ks omi t t ed) .
The evi dence does not show subst ant i ve unconsci onabi l i t y
as t o t he maki ng of t he cont r act her e. We di scuss l at er t he
di scr et e i ssue of t he l i qui dat ed damages cl ause. Cont r act s ar e
subst ant i vel y unconsci onabl e i f t hey show a "gr oss di spar i t y" i n
consi der at i on t hat makes themf aci al l y unf ai r . E. g. Wat er s v. Mi n
Lt d. , 587 N. E. 2d 231, 234 ( Mass. 1992) ( f i ndi ng "gr oss di spar i t y"
where annui t y wi t h $189, 000 i mmedi ate cash val ue was sol d f or
$50, 000, and ci t i ng as unconsci onabl e anot her case i n whi ch a t r ust
i nt er est wor t h $1, 100, 000 was sol d f or $66, 000) . The r ecor d i n
t hi s case shows t hat , at t he t i me he si gned t he agr eement , Ej az
under st ood t hat he woul d be r el i eved of l egal l i abi l i t y that coul d
have r eached $250, 000 i n t he U. K. l i t i gat i on al one. 3 Because t he
3 The r ecor d i s uncl ear as t o whet her t he $250, 000 f i gur er ef er s speci f i cal l y t o t he U. K. l i t i gat i on, whi ch was addr essed i nt he Consent Or der . But t hat di st i nct i on i s i mmat er i al , because t heSet t l ement Agr eement set t l ed al l cl ai ms, i ncl udi ng t hose cover ed byt he Consent Or der , and i ncor por at ed t he Consent Or der wi t hi n i t st erms.
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f i nanci al benef i t f or hi m was at l east a quar t er of a mi l l i on
dol l ar s i n l i abi l i t y avoi ded, no r easonabl e f act f i nder coul d
concl ude t hat Ej az has met hi s bur den of pr oof i n hi s at t empt t o
est abl i sh unconsci onabi l i t y.
4. Dur ess
Dur ess i s an af f i r mat i ve def ense f or whi ch Ej az must
pr ove t hr ee el ement s: " ( 1) he has been t he vi ct i mof some unl awf ul
or wr ongf ul act or t hr eat ; ( 2) t he act or t hr eat depr i ved hi m of
hi s f r ee or unf et t er ed wi l l ; and ( 3) due t o t he f i r st t wo f actor s,
he was compel l ed t o make a di sproport i onate exchange of val ues. "
Happ v. Cor ni ng, I nc. , 466 F. 3d 41, 44 ( 1st Ci r . 2006) . Ej az
cont ends t hat Bose act ed wr ongf ul l y by pr essur i ng and i nt i mi dat i ng
hi m usi ng what he says he per cei ved as t hr eat s of j ai l t i me, and
t hat Bose' s at t or neys vi ol at ed t he Massachuset t s Rul es of
Prof essi onal Conduct by advi si ng hi m, as an unr epr esent ed par t y, t o
si gn t he Set t l ement Agr eement . These act i ons, he cl ai ms,
const i t ut ed dur ess.
Ej az mi schar act er i zes t he f act s of t hi s case. Bose' s
l awyer s appr oached hi m, a savvy i nt ernet busi nessman wi t h t otal
annual eBay sal es near $75, 000 and gr owi ng qui ckl y, 4 t o of f er a
set t l ement agr eement t o avoi d a l awsui t . Those l awyer s, accor di ng
t o Ej az, t ol d hi m t hat t her e coul d be "r eper cussi ons" t o hi s
4 Ej az' s sal es t he pr evi ous year , 2005, wer e no hi gher t han$50, 000; by 2010, hi s f i nanci al r ecor ds showed sal es exceedi ng t womi l l i on Br i t i sh pounds annual l y.
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act i ons, whi ch Ej az t ook t o mean cr i mi nal sanct i ons. However , Ej az
does not asser t t hat Bose act ual l y made thr eat s, as opposed t o
st at ement s t hat he subj ect i vel y i nt er pr et ed t o be t hr eat eni ng.
I ndeed, as he descr i bed t he exchange i n hi s deposi t i on, Bose' s
l awyer "mi ght have sai d [ somet hi ng] al ong t he l i nes t hat peopl e do
end up goi ng t o j ai l but I don' t r emember hi m exact l y sayi ng t hat ,
but behi nd t he wor ds was t hat i mpl i cat i on. Or at l east I f el t t hat
way. " Ej az l at er st at ed i n hi s af f i davi t : "I do not r emember t he
pr eci se words t hat t hey used about t he consequences of not si gni ng
t he agr eement , but what I under st ood f r om t hose conver sat i ons i s
t hat I coul d f ace penal t i es of as much as $250, 000 and poss i bl e
i mpr i sonment i f I di d not agr ee t o what t hey were aski ng. " None of
t hese st atement s show t hat Ej az was ever act ual l y thr eat ened or
t hat Bose' s counsel del i ver ed any t hr eat s; r at her , t hey show onl y
t hat Ej az bel i eved he coul d pot ent i al l y f ace l egal penal t i es due t o
hi s unl awf ul sal es. Thi s i s f ar f r omt he "unl awf ul or wr ongf ul act
or t hr eat , " Happ, 466 F. 3d at 44, r equi r ed t o est abl i sh a dur ess
def ense.
Mor e i mpor t ant l y, Ej az has pr ovi ded no basi s t o bel i eve
t hat t he st at ement s by Bose' s counsel "depr i ved hi mof hi s f r ee or
unf et t er ed wi l l , " i d. , and f or ced hi m t o si gn t he cont r act.
I nst ead, t he f act s show t hat Ej az was abl e t o r evi ew t he pr oposed
agr eement at hi s own pace, was f r ee t o seek advi ce f r omot hers ( and
act ual l y di d seek advi ce f r omhi s wi f e) , and vol unt ar i l y si gned and
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r et ur ned i t . As l ong as t he opt i on t o r ej ect t he cont r act
r emai ned, Ej az di d not act under dur ess. I smer t & Assocs. , I nc. v.
New Eng. Mut . Li f e I ns. Co. , 801 F. 2d 536, 549- 50 ( 1st Ci r . 1986)
( not i ng t hat t he opt i on t o r ef use t o si gn a r el ease and t o l i t i gat e
i nst ead woul d def eat a cl ai m f or dur ess, and obser vi ng t hat "a
st r i ct i nt er pr et at i on" of t he concept of "no r eal choi ce" i s "what
t he Massachuset t s cour t s i nt end" as a pol i cy mat t er ) .
B. Enf or ceabi l i t y of Li qui dat ed Damages Cl ause
Apar t f r omt he val i di t y of t he ent i r e cont r act , Ej az al so
chal l enges t he Set t l ement Agr eement ' s l i qui dat ed damages cl ause i n
par t i cul ar . He ar gues t hat i t i s unenf or ceabl e because i t i s not
r easonabl y pr opor t i onal t o Bose' s ant i ci pat ed damages and
di f f i cul t i es of pr ovi ng l oss at t he t i me t he Set t l ement Agr eement
was execut ed. 5 Thi s i s a cl oser quest i on.
5 Ej az al so makes t wo ot her ar gument s, but bot h ar e easi l yr ej ect ed. Fi r st , he cl ai ms t hat t her e i s a di sput e over whet hert he par t i es i nt ended t he cl ause t o serve as l i qui dat ed damages oras a penal t y - - a genui ne di sput e of mat er i al f act t hat pr event s agrant of summar y j udgment . That argument i s si mpl y wr ong. Whet hera cl ause i mposes enf orceabl e l i qui dated damages or an unenf orceabl epenal t y i s a quest i on of l aw. NPS, LLC v. Mi ni hane, 886 N. E. 2d670, 673 ( Mass. 2008) . Even i f t he cl ause' s ef f ect wer e a quest i onof f act , Ej az poi nt s t o no r ecor d evi dence i ndi cat i ng t hat he
bel i eved at t he t i me of cont r act i ng t hat t he cl ause was i nt ended t obe a penal t y. Second, Ej az cl ai ms t hat t he cl ause i s unenf or ceabl ebecause i t i s di spr opor t i onat e to the damages Bose act ual l ysuf f er ed. But t hi s ar gument cannot squar e wi t h Kel l y v. Mar x, 705N. E. 2d 1114 ( Mass. 1999) , whi ch expl i ci t l y st at ed t hat t he damagesact ual l y suf f er ed have no bear i ng on t he enf or ceabi l i t y of al i qui dat ed damages cl ause. See i d. at 1117.
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Massachuset t s l aw al l ows enf or cement of a l i qui dat ed
damages cl ause "so l ong as i t i s not so di spr opor t i onat e t o
ant i ci pat ed damages as t o const i t ut e a penal t y. " TAL Fi n. Cor p. v.
CSC Consul t i ng, I nc. , 844 N. E. 2d 1085, 1093 ( Mass. 2006) . The
i nqui r y depends si gni f i cant l y on t he f act s of t he case, see Honey
Dew Assocs. , I nc. v. M&K Food Cor p. , 241 F. 3d 23, 28 ( 1st Ci r .
2001) , but i n gener al , a l i qui dat ed damages cl ause "wi l l usual l y be
enf or ced, pr ovi ded t wo cr i t er i a ar e sat i sf i ed": ( 1) t he act ual
damages woul d have been di f f i cul t t o ascer t ai n at t he t i me of
dr af t i ng, and ( 2) t he amount was a " r easonabl e f orecast " of damages
t hat woul d act ual l y occur i n a br each. NPS, LLC v. Mi ni hane, 886
N. E. 2d 670, 673 ( Mass. 2008) ( quot i ng Cummi ngs Pr ops. , LLC v. Nat ' l
Commc' ns Corp. , 869 N. E. 2d 617, 620 (Mass. 2007) ) ( i nt ernal
quot at i on mar k omi t t ed) . Ej az bear s t he bur den of pr ovi ng t hat t he
cl ause i s unenf or ceabl e, and r easonabl e doubt s ar e dr awn i n f avor
of Bose, as t he pr ovi si on' s pr oponent . See i d. at 673; Honey Dew,
241 F. 3d at 27.
1. Ascer t ai nabi l i t y
Ej az has not pr oduced any evi dence, or even argued i n hi s
br i ef , t hat Bose' s act ual damages woul d be r eadi l y ascert ai nabl e.
Fur t her , Bose showed t hat i t woul d be di f f i cul t t o cal cul at e i t s
act ual damages f r om a br each: i t i nt r oduced evi dence t hat Ej az' s
act i ons t hr eat ened Bose' s goodwi l l and br and i nt egr i t y, whi ch Bose
cal l s i t s " most i mpor t ant asset , " and showed t hat damage to
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goodwi l l and br and i nt egr i t y i s i nher ent l y di f f i cul t t o quant i f y.
The l aw support s Bose. See Soci et e Des Pr odui t s Nest l e, S. A. v.
Casa Hel vet i a, I nc. , 982 F. 2d 633, 640 ( 1st Ci r . 1992) ( "By i t s
ver y nat ur e, t r ademar k i nf r i ngement r esul t s i n i r r epar abl e har m
because the at t endant l oss of pr of i t s, goodwi l l , and r eput at i on
cannot be sat i sf act or i l y quant i f i ed and, t hus, t he t r ademar k owner
cannot adequatel y be compensat ed. " ) . The l i qui dat ed damages
pr ovi si on does not f ai l on t hi s gr ound.
2. Reasonabl e For ecast
Ej az has pr oduced no recor d evi dence suggest i ng t hat
$50, 000 per sal e was gr ossl y di spropor t i onat e t o or an unr easonabl e
f orecast of t he actual damages Bose woul d have expected. I nst ead,
he cl ai ms t hat t he st r uctur e of t he cl ause i t sel f , pr ovi di ng
$50, 000 i n damages f or ever y br each, wi t hout l i mi t , shows t hat t he
f or ecast i s unr easonabl e. But a hypot het i cal l ar ger r ange,
separ at ed f r om t he act ual f act s and t he amount sought , does not
make a cl ause unr easonabl e. Rather , cour t s exami ne f or
r easonabl eness t he amount of l i qui dated damages act ual l y sought .
See Space Mast er I nt ' l , I nc. v. Ci t y of Wor cest er , 940 F. 2d 16, 16-
17, 20 ( 1st Ci r . 1991) ( denyi ng summary j udgment mot i on of
def endant seeki ng to avoi d l i qui dated damages cl ause even t hough
cl ause pr ovi ded f or per - day l at e f ees wi t hout l i mi t ) ; Per f ect
Sol ut i ons, I nc. v. J er eod, I nc. , 974 F. Supp. 77, 85 ( D. Mass.
1997) ( denyi ng summary j udgment mot i on of def endant seeki ng t o
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avoi d l i qui dated damages cl ause even t hough cl ause pr ovi ded f or
per - vi ol at i on damages wi t hout l i mi t ) . 6
The Rest at ement al so adopts t hi s posi t i on, anal yzi ng
l i qui dat ed damages as t hey ar e act ual l y i mposed r at her t han i n
hypot het i cal s. See Rest at ement ( 2d) of Cont r act s § 356 cmt . b,
i l l us. 3 ( cont empl at i ng val i d enf or cement of l i qui dat ed damages
cl ause pr ovi di ng f or per - day l at e f ees even though f ees wer e
unl i mi t ed, wher e t en days of f ees are sought ) .
Bose ar t i cul at ed a ser i es of har ms showi ng t hat t he
l i qui dat ed damages cl ause i s r easonabl e i n t hi s case.
6 Cour t s i n ot her j ur i sdi ct i ons have f ol l owed t he sameappr oach. See, e. g. , Pr oTher apy Assocs. , LLC v. AFS of Bast i an,I nc. , 782 F. Supp. 2d 206, 218- 19 ( W. D. Va. 2011) ( al l owi ngenf orcement of l i qui dated damages pr ovi si on gr ant i ng uncappeddamages of $10, 000 per br each acr oss f i f t y- seven br eaches) ; El excoLand Servs. , I nc. v. Henni g, No. 11- CV- 00214, 2011 WL 9368970, at*6 ( W. D. N. Y. Dec. 28, 2011) ( r eservi ng deci si on of whet her
l i qui dated damages cl ause pr ovi di ng $25, 000 per br each i senf or ceabl e unt i l pl ai nt i f f act ual l y sought damages under t hecl ause) ; Mat t i ngl y Br i dge Co. v. Hol l oway & Son Const r . Co. , 694S. W. 2d 702, 704 ( Ky. 1985) ( al l owi ng enf orcement of l i qui dat eddamages provi si on gr ant i ng $750 damages per day l ate wi t hout l i mi tbut r educi ng r ecover y f r om unr easonabl e 193- day penal t y t or easonabl e 32 and 2/ 3- day damages) ; Bd. of Cnty. Comm' r s of AdamsCnt y. v. Ci t y & Cnt y. of Denver , 40 P. 3d 25, 32 ( Col o. App. 2001)( " I f a cont r act st i pul at es a si ngl e l i qui dat ed damage amount f orsever al possi bl e br eaches, t he damage pr ovi si on i s i nval i d as apenal t y i f i t i s unr easonabl y di spr opor t i onat e t o t he expect ed l osson t he very br each that di d occur and was sued upon. " ) ; Anonymous
v. Anonymous, 649 N. Y. S. 2d 665, 666- 67 ( N. Y. App. Di v. 1996)( l i qui dat ed damages pr ovi si on al l owi ng $500, 000 per br each of conf i dent i al i t y agr eement not , "i n and of i t sel f , " unenf or ceabl e asagai nst publ i c pol i cy) ; cf . Rex Tr ai l er Co. v. Uni t ed St at es, 350U. S. 148, 151- 152 ( 1956) ( uncapped st atut ory penal t y of $2000 pervi ol at i on enf or ceabl e as l i qui dat ed damages r at her t han cr i mi nalsancti on f or case of f i ve vi ol at i ons) .
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Speci f i cal l y, Bose i dent i f i ed as i t s pot ent i al har ms: l oss of
r evenue f r om each sal e ( Bose' s r et ai l pr i ce f or each uni t was
appr oxi mat el y $6500 (Aust r al i an) ) ; har m t o Bose' s br and name;
downst r eamef f ect s of har mt o the br and name, such as i nt er r upt i ng
Bose' s di st r i but i on chai n and di scour agi ng pur chases by t hi r d
par t i es; enf or cement cost s due t o t he possi bi l i t y t hat Ej az coul d,
per haps successf ul l y, evade l egal pr ocess, t her eby i ncr easi ng
Bose' s cost s ( Ej az had expl i ci t l y t ol d Bose' s l awyer s t hat he "wi l l
r un away f r om t he count r y i f t hey come af t er me f or any money") ;
and t he possi bi l i t y t hat Bose woul d not be abl e t o pr ove al l of
Ej az' s sal es i n cour t ( i n t hi s ver y case, Bose r el i es on pr oof of
seven vi ol at i ons but asser t s t hat t here may have been many more) .
The absence of af f i r mat i ve proof of unr easonabl eness i s
f at al t o Ej az' s ar gument because he bear s t he bur den of pr oof . See
NPS, 886 N. E. 2d at 673. Si nce Ej az has not i nt r oduced any evi dence
t o rebut Bose and show t hat $50, 000 f or each of seven vi ol at i ons
was an unr easonabl e f orecast , he r emai ns bound by the l i qui dated
damages cl ause. See Reed v. Zi pcar , I nc. , No. 12- 2048, 2013 WL
3744090, at *3 ( 1st Ci r . J ul y 17, 2013) ( "Reed' s compl ai nt cont ai ns
no al l egat i ons as t o what a reasonabl e est i mate of damages woul d
be. Thi s i s suf f i ci ent t o def eat [ Reed' s] cl ai m . . . . " ) .
I I I .
Ej az next chal l enges t he di st r i ct cour t ' s gr ant of
summary j udgment agai nst hi m on Bose' s t r ademark i nf r i ngement
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cl ai m. A pl ai nt i f f al l egi ng t r ademar k i nf r i ngement must pr ove t wo
el ement s: ( 1) t he t r ademar ks ar e "ent i t l ed t o t r ademar k
pr ot ecti on, " and ( 2) "t he al l egedl y i nf r i ngi ng use i s l i kel y t o
cause consumer conf usi on. " Bos. Duck Tour s, LP v. Super Duck
Tour s, LLC, 531 F. 3d 1, 12 ( 1st Ci r . 2008) . 7
Ther e i s no di sput e over t he f i r st el ement i n t hi s case.
Bose' s t r ademar ks ar e r egi st er ed on t he Pr i nci pal Regi st er of t he
Uni t ed St at es Pat ent and Tr ademar k Of f i ce. Regi st r at i on serves as
pr i ma f aci e evi dence t hat t he t r ademar ks ar e ent i t l ed t o
pr ot ect i on, see 15 U. S. C. § 1057( b) , and Ej az has not cont est ed
t hat evi dence.
On t he consumer conf usi on el ement , Ej az ar gues t hat t here
was a genui ne di sput e of mater i al f act over whet her hi s sal es of
Bose pr oduct s wer e l i kel y t o cause consumer conf usi on f or t wo
r easons: any di f f er ences bet ween t he pr oduct s sui t abl e f or use i n
par t i cul ar count r i es wer e t r i vi al , and hi s cust omer s on eBay woul d
have been aware of any di f f erences bef ore maki ng thei r pur chases of
pr oduct s meant f or use i n ot her count r i es. I n a gr ay mar ket goods
7 Bose st at ed cl ai ms under bot h f eder al st at ut or y l aw andst ate common l aw but di d not i dent i f y whi ch st ate' s common l awwoul d gover n. Regar dl ess, t he anal ysi s her e may be col l apsed i nt o
t he f ederal cl ai mst r uct ur e because t he common l aw t r ademark cl ai msi n both Massachuset t s and New J ersey - - Ej az' s home st ate and t heonl y ot her pl ausi bl e candi dat e f or t he choi ce of l aw her e - - bot hr equi r e t he same el ement s as t he f eder al cl ai m. See J enzabar , I nc.v. Long Bow Gr p. , I nc. , 977 N. E. 2d 75, 82 n. 11 ( Mass. App. Ct .2012) ; Bar r e- Nat ' l , I nc. v. Bar r Labs. , I nc. , 773 F. Supp. 735, 746( D. N. J . 1991) .
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case, "a mat er i al di f f er ence bet ween goods si mul t aneousl y sol d i n
t he same mar ket under t he same name cr eat es a pr esumpt i on of
consumer conf usi on as a mat t er of l aw. " Soci et e Des Pr odui t s
Nest l e, S. A. , 982 F. 2d at 640. Rel yi ng on t hi s pr esumpt i on, Bose
poi nt s t o sever al mat er i al di f f er ences bet ween i t s Aust r al i an
pr oduct s and t he Amer i can pr oduct s t hat Ej az sol d i n Aust r al i a.
Those di f f er ences i ncl ude r egi on codi ng, whi ch wi l l keep an
Amer i can DVD pl ayer f r om pl ayi ng Aust r al i an DVDs and vi ce ver sa;
el ect r i cal power r equi r ement s, whi ch pr event Amer i can el ect r oni cs
f r om f unct i oni ng on Aust r al i an power suppl i es and vi ce ver sa;
capabi l i t i es of t he r emot e cont r ol s; dur at i ons of t he pr oduct s'
war r ant i es; and t he desi gn and f unct i onal i t y of t he pr oduct s' r adi o
t uner s. 8 Evi dence i n t he r ecor d, such as Bose' s cor por at e
8 Ej az i ni t i al l y cont ended t hat evi dence of t hese di f f er enceswas not pr oper l y bef ore t he di st r i ct cour t on summary j udgment
because st at ement s f r om Bose' s cor por at e repr esent at i ve not madebased on per sonal knowl edge woul d not have been admi ssi bl e att r i al . See, e. g. , Novi el l o v. Ci t y of Bost on, 398 F. 3d 76, 84 ( 1stCi r . 2005) ; Fed. R. Ci v. P. 56( c) ( 2) ( "A par t y may obj ect t hat t hemat er i al ci t ed t o suppor t or di sput e a f act cannot be pr esent ed i na f or mt hat woul d be admi ssi bl e i n evi dence. ") . Speci f i cal l y, Ej azar gued t hat Bose' s onl y evi dence on t hi s poi nt came f r om i t s Fed.R. Ci v. P. 30( b) ( 6) cor por at e r epr esent at i ve; whi l e an opposi ngpar t y may or di nar i l y of f er t he cor por at e r epr esent at i ve' s t est i monyas a st at ement of a par t y- opponent , see Fed. R. Evi d. 801( d) ( 2) ,Ej az has argued i ncor r ect l y t hat Bose had pr esent ed no basi s f ormaki ng t he t est i mony of i t s own r epr esent at i ve admi ss i bl e, because
he was t est i f yi ng t o mat t er s out si de hi s per sonal knowl edge.However , t he evi dence shows t hat Bose' s r epr esent at i ve t est i f i ed onhi s per sonal knowl edge about di f f er ences i n t echni calspeci f i cat i ons and war r ant i es f or di f f er ent pr oduct s. Fur t her ,t her e was ot her r ecor d evi dence, such as Ej az' s own admi ssi ons,t hat at l east one of t he di f f er ences Bose i dent i f i ed - - t he vol t ager equi r ement s - - was i n f act a mat er i al di f f er ence.
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r epr esent at i ve' s t est i mony based on hi s per sonal exper i ence and
Ej az' s t est i mony i n hi s deposi t i on, as wel l as Ej az' s l at er
admi ssi ons, suppor t s t hat t her e ar e mat er i al di f f er ences i n t he
pr oduct s.
Ej az at t empt s t o mi ni mi ze t he evi dence of mater i al
di f f er ences by asser t i ng t hat hi s act ual consumer s wer e not i n f act
conf used. But t hat ar gument mi sses t he mark. The l aw r equi r es
onl y t hat t he i nf r i ngement i s l i kel y t o cause consumer conf usi on,
not t hat i t act ual l y does so. See Soci et e Des Pr odui t s Nest l e,
S. A. , 982 F. 2d at 640 ( " [ A] pl ai nt i f f need onl y show t hat a
l i kel i hood of conf usi on i s i n pr ospect ; a showi ng of act ual
conf usi on i s not r equi r ed. I ndeed, f eder al cour t s have r out i nel y
gr ant ed i nj unct i ons i n gr ay goods cases not wi t hst andi ng an absence
of evi dence of act ual consumer conf usi on. " ( ci t at i ons omi t t ed) ) .
To t hat end, Ej az cl ai ms t hat consumer s on eBay ar e l ess
suscept i bl e t o conf usi on t han consumer s i n t r adi t i onal st or es. Hi s
onl y evi dence i n suppor t of t hi s concl usi on i s hi s own af f i davi t ,
i n whi ch he assert ed t hat based on hi s exper i ence, eBay cust omers
ar e "pr i mar i l y bar gai n hunt er s, and under st and t hat i n exchange f or
si gni f i cant pr i ce savi ngs t hey ar e not pur chasi ng f r om aut hor i zed
r e- sel l er s or di st r i but or s. " That st at ement , however , does not
act ual l y suppor t hi s posi t i on because i t expl ai ns onl y t hat eBay
consumer s woul d not be conf used about t he i dent i t y of t he sel l er s
of t he pr oduct s t hey bought ; i t gi ves no r eason t o bel i eve t hat
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t hey woul d expect t he pr oduct s t o f unct i on di f f er ent l y f r om
pr oduct s sol d by aut hor i zed di st r i but or s. Addi t i onal l y, Ej az' s
gener al i zat i ons f ai l t o count er t he speci f i c pr oof Bose of f er ed, i n
t he f or m of an emai l t hr ead showi ng conf usi on by one of Ej az' s
act ual eBay cust omer s. I n l i ght of t he pr esumpt i on of consumer
conf usi on pl us Bose' s unr ebut t ed evi dence, no r easonabl e f act f i nder
coul d concl ude t hat Ej az had met hi s bur den of showi ng t hat t he
sal es i n quest i on wer e not l i kel y t o cause consumer conf usi on.
I V.
Ej az' s f i nal ar gument on appeal i s t hat t he di st r i ct
cour t er r ed by decl i ni ng t o extend di scover y bef or e gr ant i ng Bose' s
mot i on f or summar y j udgment .
The procedur al hi st or y of t he di scover y i n t hi s case i s
not compl i cat ed. The di st r i ct cour t set an i ni t i al di scover y
deadl i ne of December 23, 2011, and l ater ext ended i t t o J anuary 30,
2012. Ej az ser ved Bose wi t h not i ce of a deposi t i on of i t s
cor por at e repr esent at i ve on August 12, 2011, and act ual l y deposed
t he r epr esent at i ve on J anuar y 27, 2012. At t he deposi t i on, Ej az' s
counsel compl ai ned on t he r ecor d t hat Bose' s Fed. R. Ci v. P.
30( b) ( 6) r epr esent at i ve had not suf f i ci ent l y been abl e t o answer
her quest i ons about sever al t opi cs on whi ch he had been desi gnated
t o speak. Thr ee weeks l at er , on Febr uar y 18, 2012, Ej az f i l ed a
mot i on to reopen di scover y under Rul e 56( d) of t he Feder al Rul es of
Ci vi l Pr ocedur e, cl ai mi ng t hat Bose had obst r uct ed hi s ef f or t s t o
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obt ai n i nf or mat i on i n t he case by pr ovi di ng an i nsuf f i ci ent l y
pr epar ed r epr esent at i ve. The di st r i ct cour t di d not addr ess t he
mot i on t o reopen di scovery and i nst ead rul ed on t he summary
j udgment mot i on. Ej az ar gues t hat t he cour t er r ed i n doi ng so.
We r evi ew a di st r i ct cour t ' s r ef usal t o r eopen di scover y
f or abuse of di scr et i on. Vi neber g v. Bi ssonnet t e, 548 F. 3d 50, 55
( 1st Ci r . 2008) . The same st andar d of r evi ew appl i es to t he
deci si on t o pr oceed wi t h a summary j udgment mot i on whi l e a
di scover y r equest r emai ns out st andi ng. See Ni eves- Romer o v. Uni t ed
St at es, 715 F. 3d 375, 380 ( 1st Ci r . 2013) .
Her e, t he di st r i ct cour t was wel l wi t hi n i t s di scr et i on
i n r ul i ng on t he summary j udgment mot i on f i r st . A Rul e 56( d)
mot i on r equi r es i t s pr oponent t o show vi a "an af f i davi t or ot her
aut hor i t at i ve document " :
( i ) good cause f or hi s i nabi l i t y t o havedi scover ed or mar shal l ed t he necessar y f act sear l i er i n t he pr oceedi ngs; ( i i ) a pl ausi bl ebasi s f or bel i evi ng t hat addi t i onal f actspr obabl y exi st and can be r et r i eved wi t hi n ar easonabl e t i me; and ( i i i ) an expl anat i on of how t hose f act s, i f col l ect ed, wi l l suf f i ce t odef eat t he pendi ng summar y j udgment mot i on.
Ri ver a- Tor r es v. Rey- Her nandez, 502 F. 3d 7, 10 ( 1st Ci r . 2007) . I n
t hi s case, Ej az made no showi ng i n suppor t of t he thi r d r equi r ement
f or a 56( d) mot i on - - namel y, how any addi t i onal f act s he col l ect ed
woul d def eat t he pendi ng summary j udgment mot i on. I ndeed, Ej az
even suggest ed t hat no addi t i onal f act s wer e needed, not i ng i n hi s
br i ef opposi ng the mot i on f or summary j udgment t hat "Def endant
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cont ends t hat t he exi st i ng r ecor d i s suf f i ci ent t o deny Pl ai nt i f f ' s
mot i on i n i t s ent i r et y. " The di st r i ct cour t di d not abuse i t s
di scr et i on i n decl i ni ng t o act on t he 56( d) mot i on bef or e
consi der i ng t he summary j udgment mot i on.
V.
For t he r easons st at ed above, t he di st r i ct cour t ' s
deci si on i s AFFI RMED.
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