Abbott Labs. v. H&H Wholesale Servs., 2024 U.S. App. LEXIS 24436 (2d Cir. Sept. 26, 2024) (unpublished):

*1 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the District Court is AFFIRMED.

Defendants-Appellants H&H Wholesale Services, Inc., Howard Goldman, and Lori Goldman (collectively, the “H&H Defendants”) appeal from a March 29, 2023 judgment of the United States District Court for the Eastern District of New York (Amon, J.) imposing, after entry of a default judgment, $33,471,224 in damages for trademark infringement. Specifically, the H&H Defendants all challenge the District Court’s award of damages without a jury trial. Lori Goldman alone also separately challenges the entry of default judgment against her. We assume the parties’ familiarity with the underlying facts and the record of prior proceedings, to which we refer only as necessary to explain our decision to affirm.

In 2015 Abbott Laboratories, Abbott Diabetes Care Inc., and Abbott Diabetes Care Sales Corporation (collectively, “Abbott”) sued hundreds of defendants for, among other things, trademark infringement under the Lanham Act, 15 U.S.C. § 1125(c). Five years into the litigation, the District Court granted Abbott’s motion for case-ending sanctions against the H&H Defendants for repeatedly withholding responsive documents and providing misleading and inconsistent testimony in depositions and court filings. The District Court then held an inquest on damages, awarding $33,471,224 plus post-judgment interest to Abbott. Abbott’s lawsuit against many of the remaining defendants is ongoing.¹

1. Right to a Jury Trial on Damages

On appeal, the H&H Defendants argue that they were entitled to a jury trial on the issue of damages even after the District Court entered default judgment. Abbott argues that we need not reach the merits of this argument because the H&H Defendants waived their right to a jury trial. We agree with Abbott.

“[T]he right of jury trial is fundamental,” Heyman v. Kline, 456 F.2d 123, 129 (2d Cir. 1972) (quotation marks omitted), but it “may be waived by conduct of the parties,” Royal Am. Managers, Inc. v. IRC Holding Corp., 885 F.2d 1011, 1018 (2d Cir. 1989). A party waives its right to a jury trial if, with “notice that the trial court [i]s planning to adjudicate the dispositive issues of fact,” it “participate[s] in a [nonjury proceeding] without objection.” Id. at 1018 (quotation marks omitted); accord Sacerdote v. N.Y. Univ., 9 F.4th 95, 117–18 (2d Cir. 2021) (holding that participation “in a bench trial without objection” is enough to “constitute[ ] waiver of the jury trial right”).

*2 Initially, in the complaint and answer, both Abbott and the H&H Defendants demanded a jury trial. Once the District Court began considering Abbott’s motion for case-ending sanctions, however, the H&H Defendants acquiesced to a damages inquest instead. Before the District Court imposed case-ending sanctions, counsel for the H&H Defendants stated that any trial on damages for the other defendants should not include the H&H Defendants. After the District Court granted the motion for case-ending sanctions, it requested that the parties address “the sequencing of a damages inquest against the H&H Defendants and a trial against the remaining defendants,” Joint App’x 274, thereby putting the H&H Defendants on notice that it intended to hold an inquest on damages rather than a jury trial. But the H&H Defendants did not once argue that they had the right to a jury trial on damages. Instead, they argued that the damages inquest should follow any jury trial for the remaining defendants. They proposed as an alternative that the damages inquest be consolidated with a jury trial for the remaining defendants. Even as to this alternative scenario, however, the H&H Defendants suggested that the District Court, rather than a jury, could determine the amount of damages. The H&H Defendants thereafter participated in the damages inquest without objecting that they were entitled to a jury trial.

On appeal, the H&H Defendants describe their proposal to consolidate the inquest with a jury trial but to have Judge Amon decide their damages as a compromise, maintaining that their true request was to have a jury hear and decide their damages. The record is to the contrary. The H&H Defendants’ primary request was for the damages inquest to follow a jury trial for the non-defaulting defendants, and in making that request, the H&H Defendants clearly acquiesced to a nonjury proceeding for determination of the damages they owed.

Based on this record, we conclude that the H&H Defendants waived their right to a jury trial on damages.

1. Case-Ending Sanctions

Individually, Ms. Goldman appeals the merits of the District Court’s decision to impose case-ending sanctions against her. We review the District Court’s imposition of sanctions for abuse of discretion, Rossbach v. Montefiore Med. Ctr., 81 F.4th 124, 141 (2d Cir. 2023), though our review is “more exacting than under the ordinary abuse-of-discretion standard” because the District Court “is accuser, fact finder and sentencing judge all in one,” Wolters Kluwer Fin. Servs., Inc. v. Scivantage, 564 F.3d 110, 113–14 (2d Cir. 2009) (quotation marks omitted). Here, the District Court imposed sanctions under its inherent powers, requiring it to find “clear and convincing evidence of bad faith.” Yukos Cap. S.A.R.L. v. Feldman, 977 F.3d 216, 235 (2d Cir. 2020).

Ms. Goldman argues that the District Court abused its discretion because it imposed sanctions without first finding that she personally committed a fraud on the court and did so in bad faith. See Wolters Kluwer, 564 F.3d at 114 (explaining that, in the context of sanctions, “[b]ad faith is personal” (quotation marks omitted)). We disagree.

In the Report and Recommendation adopted by the District Court, Magistrate Judge Bloom identified multiple instances in which Ms. Goldman misled Abbott and the court by falsely claiming that she had no role at H&H and no responsive documents to produce. Indeed, the record establishes that Ms. Goldman continued to assert throughout the litigation that she had no meaningful involvement with the business activities at H&H, even though emails that she was eventually required to produce revealed that she maintained an office at H&H, attended management meetings, and handled various aspects of the business. She used these misrepresentations to gain a litigation advantage: In response to Abbott’s motion for a preliminary injunction, she argued that its claims against her were frivolous and sanctionable because she had no role at H&H. Abbott thereafter withdrew its motion for a preliminary injunction against her. Finally, as the District Court noted, Ms. Goldman was individually responsible for meeting her discovery obligations and for attempting to cover up the discovery violations. The District Court therefore did not abuse its discretion when it concluded that Ms. Goldman had personally acted in bad faith. See Penthouse Int’l, Ltd. v. Playboy Enters., Inc., 663 F.2d 371, 387–88 (2d Cir. 1981).

*3 Ms. Goldman’s arguments to the contrary are unavailing. First, she attempts to blame the discovery failures on her former lawyers and other H&H employees. Her effort fails not only because a client can be held to account for the “acts and omissions” of her counsel in connection with her discovery violations, see Cine Forty-Second St. Theatre Corp. v. Allied Artists Pictures Corp., 602 F.2d 1062, 1068 & n.10 (2d Cir. 1979), but also because Ms. Goldman is responsible for her false testimony to the District Court and at her deposition. In any event, there is no evidence in the record that her lawyers or other H&H employees prevented her from producing responsive documents. See id. Second, she argues that the District Court abused its discretion by declining to hold an evidentiary hearing on Abbott’s motion for sanctions. But the District Court need not conduct an evidentiary hearing when, as here, “sanctions are based entirely on an established record.” Schlaifer Nance & Co. v. Est. of Warhol, 194 F.3d 323, 335 (2d Cir. 1999). Finally, she contends that the District Court failed to satisfy its obligation to consider lesser sanctions before dismissal. See Shepherd v. Annucci, 921 F.3d 89, 97 (2d Cir. 2019). But the District Court acted within its discretion in concluding that lesser sanctions would be ineffective given the record of repeated discovery abuses, misrepresentations to the court, and the prejudice to Abbott. See S. New Eng. Tel. Co. v. Glob. NAPs Inc., 624 F.3d 123, 148 (2d Cir. 2010) (holding that the district court is not “required to exhaust possible lesser sanctions before imposing dismissal or default if such a sanction is appropriate on the overall record”).

We have considered the Defendants’ remaining arguments and conclude that they are without merit. For the foregoing reasons, the judgment of the District Court is AFFIRMED.