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Kische USA LLC v. Simsek

United States District Court, W.D. Washington, Seattle

September 6, 2017

KISCHE USA LLC, Plaintiff,
v.
ALI SIMSEK, et al., Defendants.

          ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT

          JAMES L. ROBART, UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Before the court is Plaintiff Kische USA LLC's (“Kische”) motion for partial summary judgment against Defendant Ali Simsek. (Mot. (Dkt. # 82).) The court has considered the parties' submissions in support of and in opposition to the motion, the relevant portions of the record, and the applicable law. Being fully advised, [1] the court grants in part and denies in part Kische's motion for the reasons set forth below.

         II. BACKGROUND

         This case involves allegations that Mr. Simsek abused his position as Kische's Chief Executive Manager.[2] (See SAC (Dkt. # 75); id. ¶ 4.4, Ex. 3 (“OA”) (Dkt. # 75-1) at 11.) During the relevant period, Kische-formed by Mehmet Uysal, who resided in Turkey-“engaged in the business of importing high quality and widely known wom[e]n's apparel to the United State[s] since its formation in 2007.” (SAC ¶ 1.1.) Kische brings claims for trademark infringement in violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114(1); common law trademark infringement; common law unfair competition; breach of contract; breach of fiduciary duty; tortious interference with business relations; conversion; and unjust enrichment. (SAC ¶¶ 5.1-12.4.) At issue here are the breach of contract and breach of fiduciary duty claims. (See Mot.)

         On February 8, 2010, Mr. Uysal, Kische's sole member, and Mr. Simsek executed an amended operating agreement (“the Operating Agreement”).[3] (OA at 30-31; Herschlip Decl. (Dkt. # 83) at 2, Ex. G (“Simsek Dep.”) at 103:23-104:3.)[4] The Operating Agreement appointed Mr. Simsek as Kische's Chief Executive Manager and delegated “day-to-day management” of Kische's operations to him. (OA at 11.) The Operating Agreement also called for Mr. Simsek to: (1) work exclusively for Kische (id.); (2) “act in the highest good faith at all times when carrying out his duties and responsibilities” (id. at 11-12); (3) obtain Mr. Uysal's prior written approval before entering into any contract with “aggregate liability or exposure” exceeding $10, 000.00 or for “[a]ny act, transaction, or occurrence not in the course of [Kische's] ordinary business” (id. at 12-13); (4) give 30 days' notice before resigning (id. at 22); and (5) “maintain complete and accurate books and records of [Kische's] business and affairs” and promptly provide those records to Mr. Uysal (id. at 23).[5]

         While acting as Kische's Chief Executive Manager, Mr. Simsek formed JD Stellar, LLC (“JD Stellar”), another women's clothing company; transferred the registration of a Kische design trademark-the Marseille mark-from Kische to JD Stellar; and amended the lease of Kische's warehouse space to name JD Stellar as the tenant. (Simsek Dep. at 31:11-13 (confirming that he was Kische's manager in October of 2013), 62:3-8 (confirming that at the time of the transfer of the Marseille mark to JD Stellar, Mr. Simsek acted as a manager for both JD Stellar and Marseille); SAC ¶ 4.38, Ex. 32 (Dkt. # 75-2) (“Lease”) at 1-2.) These acts form the basis of Kische's breach of contract and fiduciary duty claims.

         According to Mr. Simsek's version of events, Kische began to experience business difficulties in 2012, and Mr. Simsek had no choice but to take those actions. (Simsek Decl. (Dkt. # 89) ¶¶ 19, 34 (“I started JD Stellar . . . . This was our contingency plan, should Kische totally collapse.”); see also Walker Decl. (Dkt. # 90) ¶ 9.) Specifically, Mr. Uysal lost control of the entity that manufactured clothing for Kische in Turkey, which made fulfilling clothing orders difficult for Kische. (Id.; Foreman Decl. (Dkt. # 91) ¶ 8, Ex. D (“Uysal Dep.”) at 74-1:2.) Although Mr. Uysal partnered with another manufacturer, Sharda, that partnership proved difficult because Sharda had little experience manufacturing clothing (Simsek Decl. ¶ 25), and the relationship ended in September 2013 (id. ¶ 27). Afterwards “over 100 Kische clothing orders went undelivered and unpaid for” in 2013 and 2014. (Id. ¶ 29.) Mr. Simsek tendered his resignation on March 17, 2014, but helped Kische fulfill orders for a period of time after that. (SAC ¶ 4.44, Ex. 24 (Dkt. # 75-2) (“Letter”) at 3-5; Simsek Decl. ¶ 42.)

         Kische moves for summary judgment on the duty and breach elements of its contract and fiduciary duty claims and Mr. Simsek's affirmative defenses to those claims. (Mot. at 3-4.) Mr. Simsek opposes the motion. (Resp. (Dkt. # 88).)

         III. ANALYSIS

         The parties first raise a number of evidentiary objections, which the court addresses before turning to the merits of Kische's motion.

         A. Evidentiary Objections

         1. Privileged Communications

         First, Mr. Simsek requests that the court strike as privileged Exhibits B and C to the declaration of Kische's counsel, Dubs Ari Tanner Herschlip.[6] (Resp. at 7 n.1; Herschlip Decl. at 2, Exs. B, C.) In its motion, Kische relies on these exhibits to demonstrate a valid contract between Kische and Mr. Simsek. (See Mot. at 4-5, 16.) Mr. Simsek, however, contends that the exhibits contain privileged communications between him and his attorney. (Resp. at 7 n.1.)

         “The attorney-client privilege protects confidential disclosures made by a client to an attorney in order to obtain legal advice” and “an attorney's advice in response to such disclosures.” United States v. Ruehle, 583 F.3d 600, 607 (9th Cir. 2009). The privilege is strictly construed because “it may impede full and free discovery of the truth.” Skansgaard v. Bank of Am., N.A., No. C11-0988RJB, 2013 WL 828210, at *1 (W.D. Wash. Mar. 6, 2013). The party asserting the privilege bears the burden of proving an attorney-client relationship and that the communications at issue are privileged. Ruehle, 583 F.3d at 607. Communications are privileged “(1) [w]here legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by a client, (6) are at [the client's] instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) unless the protection [is] waived.” Id. (internal quotation marks omitted).

         Mr. Simsek has not put forth sufficient argument or evidence demonstrating that the attorney-client privilege protects the communications Kische references. Indeed, Mr. Simsek raises the issue only in a short footnote without addressing the eight elements required to show that the privilege applies. (See Resp. at 7 n.1.) Thus, the court cannot conclude that the email exchanges are privileged. However, because neither party disputes the validity of the Operating Agreement and Kische has not properly authenticated the exhibits, the court does not consider the supposedly privileged communications in ruling on the motion for summary judgment. See infra § III.B.2; (see also Mot. at 4-5, 16 (citing the communications only to demonstrate that Kische and Mr. Simsek formed a valid contract).)

         2. Authentication

         Mr. Simsek further contends that Kische has not submitted a declaration “to authenticate the email records submitted in [its] Exhibits A, B, C, H, and I.”[7] (Resp. at 28 n.4.) The first three exhibits are the emails between Mr. Simsek and his attorney, and the fourth and fifth exhibits are emails involving Mr. Simsek. (See Herschlip Decl. at 2-3, Exs. A, B, C, H, I.) Because neither the sender nor a recipient of the emails authenticates them, Mr. Simsek objects to the court considering them on summary judgment. (Resp. at 28 n.4.)

         In ruling on a motion for summary judgment, the court may not consider unauthenticated exhibits. See Canada v. Blain's Helicopters, Inc., 831 F.2d 920, 925 (9th Cir. 1987) (“It is well settled that unauthenticated documents cannot be considered on a motion for summary judgment.”); Fed.R.Evid. 901(a) (“To satisfy the requirement of authenticating or identifying an item of evidence, the proponent must produce evidence sufficient to support a finding that the item is what the proponent claims it is.”). “An attorney may submit a declaration as evidence to a motion for summary judgment.” Clark v. Cty. of Tulare, 755 F.Supp.2d 1075, 1083 (E.D. Cal. 2010). However, the attorney's declaration must be made on personal knowledge, and the attorney must be competent to testify to the matters stated therein. Fed.R.Civ.P. 56(c)(4) (stating that a “declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the . . . declarant is competent to testify on the matters stated”). “Declarations by attorneys are sufficient only if the facts stated are matters of which the attorney has knowledge, such as matters occurring during the course of the lawsuit . . . .” Tulare, 755 F.Supp.2d at 1084. “It is insufficient for a party to submit, without more, [a declaration] from her counsel . . . stating that [a document] is a ‘true and correct copy.'” Orr v. Bank of Am., NT & SA, 285 F.3d 764, 773 (9th Cir. 2002).

         In support of the motion for summary judgment, Mr. Herschlip provides a declaration in which he attests that Exhibits A, B, C, H, and I are “true and correct” copies of the various email exchanges involving Mr. Simsek. (See Herschlip Decl. at 1-2.) Mr. Herschlip is not, however, a party to any of the emails, and there is no indication that he otherwise has personal knowledge regarding their subject matter. (See id, Exs. A, B, C, H, I.) Thus, although he can attest that the emails exist, he is not competent to testify that the exhibits are true and correct copies of the emails. Orr, 285 F.3d at 773; Tulare, 755 F.Supp.2d at 1084. The court concludes that Kische has not properly authenticated the emails and will not consider them as evidence in support of Kische's motion.

         3. Motion to Strike

         For its part, Kische moves to strike a number of statements as “immaterial, impertinent, scandalous, and . . . alleged solely to create prejudice.” (Reply (Dkt. # 92) at 12.) Specifically, Kische requests that the court strike the following statements from Mr. Simsek's declaration and his response to the summary judgment motion:

• “In or about January 2014, I received a phone call informing me that Mr. Uysal had been shot in Turkey. I was told that this happened due to his unpaid debts.” (Simsek Decl. ¶ 36.)
• “The last time I spoke with Mr. Uysal was in March 2014, when Mr. Uysal's wife threatened to have my legs broken through her mafia connections.” (Id.)
• “Based on the Turkish records I have seen showing his extensive debts and Mr. Uysal's insistence that we not send money transfers to Turkey under his name, I know now that Mr. Uysal was unable to own a company in Turkey, so he opened a new company named Capraz in the name of his father-in-law, Abdullah Kagitkeser.” (Id. ¶ 21.)
• “In October 2012, Mr. Uysal unexpectedly informed me that Capraz needed to close, offering no further details. I know now, after viewing Turkish records showing that Mr. Kagitkeser lost his ownership in the company, that again, the company's assets were seized by Turkish authorities because of extensive debts.” (Id. ¶ 22.)
• “ . . . Mr. Uysal's misconduct in Turkey . . . .” (Resp. at 17.)
• “Kische's owners' illegal actions in Turkey rendering Kische unable to legally do its business . . . .” (Id. at 16.)
• “Ms. Walker also received several threatening emails and phone calls from Mr. Uysal.” (Id. at 13.)

         Kische invokes Federal Rule of Civil Procedure 12(f) as its basis for striking these statements and contends that they are inadmissible under Federal Rules of Evidence 402, 403, 404, 701, 802, and 1002. (Reply at 13); see also Fed. R. Evid. 402 (stating that “[i]rrelevant evidence is not admissible”); Fed.R.Evid. 403 (stating that relevant evidence may be excluded where its probative value is substantially outweighed by the danger of a number of factors); Fed.R.Evid. 404 (stating that “[e]vidence of a person's character . . . is not admissible to prove that on a particular occasion the person acted in accordance with the character”); Fed.R.Evid. 701 (stating the requirements for opinion testimony by a lay witness); Fed.R.Evid. 802 (stating the rule against hearsay); Fed.R.Evid. 1002 (stating the best evidence rule).

         Rule 12(f) provides that a court “may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). Here, Kische “has fallen victim to one of the classic blunders: attempting to extend Rule 12(f)'s striking power beyond pleadings.” United Nat'l Ins. Co. v. Assurance Co. of Am., No. 2:10-CV-01086-JAD, 2014 WL 4960915, at *1 (D. Nev. June 4, 2014). “Rule 12(f) cannot serve as the procedural vehicle for striking language contained in motion papers.” Parker v. CMRE Fin. Servs., Inc., No. 07cv1302 JM(AJB), 2007 WL 3276322, at *4 (S.D. Cal. Nov. 5, 2007) (citing Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885-86 (9th Cir. 1983) (stating that “[u]nder the express language of the rule, only pleadings are subject to motions to strike”)). In addition, the Federal Rules of Evidence provide no basis for striking the challenged statements in Mr. Simsek's briefing because arguments made in opposition to a motion for summary judgment are not evidence. See Estrella v. Brandt, 682 F.2d 814, 819-20 (9th Cir. 1982) (“Legal memoranda . . . are not evidence . . . .”); Barcamerica Int'l USA Tr. v. Tyfield Imps., Inc., 289 F.3d 589, 593 n.4 (9th Cir. 2002) (“[A]rguments and statements of counsel are not evidence . . . .”).

         Kische may, however, object to evidence submitted in response to a motion for summary judgment. See Fed. R. Civ. P. 56(c)(2) (“A party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.”). On summary judgment, the court focuses on the admissibility of the proffered evidence's contents, rather than its form. See Norse v. City of Santa Cruz, 629 F.3d 966, 973 (9th Cir. 2010) (“[T]he evidence presented at the summary judgment stage does not yet need to be in a form that would be admissible at trial.”). The court therefore addresses each of Kische's evidentiary objections. Because Kische cites several grounds for the objections but does not clearly tie any of those grounds specifically to the challenged statements, the court where necessary infers to the best of its ability upon which grounds Kische objects to each statement. (See Reply at 14.)

         a. Relevance

         Kische's objections to the statements on the basis of Federal Rules of Evidence 401, 402, and 403 are “inapplicable at the summary judgment stage.” Montoya v. OrangeCty. Sheriff's Dep't, 987 F.Supp.2d 981, 994 (C.D. Cal. 2013); see also City of Tombstone v. United States, No. CV-11-00845-TUC-FRZ, 2015 WL 11120851, at *3 (D. Ariz. Mar. 12, 2015) (same); Lindsey v. Clatskanie People's Util. Dist., 140 F.Supp.3d 1077, 1096 (D. Or. 2015) (holding that objections under Rules 401, 402, and 403 are “duplicative of the summary judgment standard”). Because a court may grant summary judgment only when there is no genuine dispute of material fact, “relevance objections are redundant.” Burch v. Regents of Univ. of Cal., 433 F.Supp.2d 1110, 1119 (E.D. Cal. ...


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