considering whether or not to bifurcate: convenience, the avoidance of prejudice, expedition and
economy. Fed. R. Civ. P. 42(b).

The Court has the inherent power to control its docket. Separating the issues of liability
and damages for the purposes of discovery will avoid unnecessary time and expense and further
the interest of expedition by expediting the decision on liability. A verdict of no liability for
infringement would render discovery on the damages issue unnecessary. In the instant case, this
Court has already found, with regard to the preliminary injunction, that, “[t]he record in this
case...presents substantial issues which bear on Ocean Atlantic’s likelihood of proving
infringement .. . .” Ocean Atl. Woodland Corp. v. DRH Cambridge Homes, Inc., No. 02 C 2523,
2003 WL 22225594, at *2 (N.D. Ill. Sept. 24, 2003). Thus, should plaintiff fail to establish
liability in this case, the savings in time and costs with regard to discovery and discovery
management would benefit both the parties and the Court.

It is clear, based on the breadth of the discovery requests, that the defendants would
expend substantial amounts of time and resources responding to the discovery requests on
damages. Continuation of discovery on the issue of damages would necessitate considerable
operating costs in hiring accountants, researching, and calculating at a time when the
development site is not even complete. Because, as noted above, the distinct possibility exists
that the issue of damages will never be reached, bifurcating discovery as to liability from that of
damages will serve the goals of convenience, expedition and economy. Moreover, evidence
necessary to establish liability will nominally, if at all, overlap with evidence relating to damages
and therefore the risk of duplication and delay is minimal.

Accordingly, the discovery of this case will be bifurcated into two phases. In the first, all

discovery on liability will be completed. The defendants have already notified this Court that


the issues of damages is stayed pending the resolution of liability as discussed supra. Therefore,
Magistrate Judge Bobrick’s ruling regarding alternative designs is neither clearly erroneous nor

contrary to law and accordingly will not be disturbed.

2. INinois Uniform Deceptive Trade Practices Act, 815 ILCS 510/1, et seq.; Minois
Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, et seq.

Additionally, Ocean Atlantic claims that Magistrate Judge Bobrick’s denial of
information regarding Cambridge’s customer identities and communications ignores the fact that
Ocean Atlantic has also alleged violations of the INinois Uniform Deceptive Trade Practices Act
and the Illinois Consumer Fraud and Deceptive Business Practices Act. (Pl.’s Objections at 14.)
Magistrate Judge Bobrick found that the interrogatories seeking information regarding the
customers and potential customers of the Liberty Grove development were burdensome,
unproductive, and of no useful purpose. Ocean Atl., 262 F. Supp. 2d at 930.

In support of its assertion, Ocean Atlantic cites Sullivan’s Wholesale Drug Co., Inc., v.
Faryl’s Pharmacy, Inc., 573 N.E.2d 1370, 1376 (I. App. Ct. 1991). In Sullivan, the court found
that the protections of the Illinois Consumer Fraud and Deceptive Business Practices Act are
afforded “to include any corporation, company or business entity.” Jd. (citing ILL. REv. STAT.
1983, ch. 121 %, par. 261(c)).

The Sullivan court also explained that “{nJo allegation of public injury is required to
recover money damages under the Consumer Fraud Act.” Jd. at 1378 (citing Duncavage v.
Allen, 147 Il. App. 3d 88, 102 (1986)); see Warren v. LeMay, 491 N.E.2d 464, 475 (Ill. App. Ct.
1986) (single transaction sufficient); Tague v. Molitor Motor Co., 487 N.E.2d 436, 438 (Ill. App.
Ct. 1985) (action not defeated on grounds it constituted only private wrong); see also ILL. REV.

STAT. 1989, ch. 121 %, par. 270a(a) (“Proof of a public injury, a pattern, or an effect on


§ 636(b)(1). Magistrate Judge Bobrick’s May 22, 2003 Memorandum Order pertained to pre-
trial motions which were not “dispositive of a claim or defense” within the meaning of Rule
72(b). Accordingly it was within Magistrate Judge Bobrick’s mandate to rule upon the said
motions which will only be reversed if the ruling is “clearly erroneous or contrary to law.”” The
Seventh Circuit has interpreted the clear error standard to mean that, “the district court can
overturn the magistrate judge’s ruling only if the district court is left with the definite and firm
conviction that a mistake has been made.” Weeks v. Samsung Heavy Indus. Co., Lid., 126 F.3d

926, 943 (7th Cir. 1997); see also Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985).

A. Documents Used by Defendants in Responding to Ocean Atlantic’s Interrogatories
Ocean Atlantic requested defendants produce all documents used in responding to Ocean
Atlantic’s interrogatories. (Pl.’s Objections at 9.) Ocean Atlantic asserts that “[bJased on
Defendants’ responses to those interrogatories, such documents obviously included Defendants’
plans related to the Liberty Grove development.” Jd. It is Ocean Atlantic’s contention that
Magistrate Judge Bobrick has mistakenly ruled that some of defendants’ plans relating to the
development need not be produced because they conform to the plans in the annexation
agreement, and are not copies of them. Jd. Magistrate Judge Bobrick found that the two
documents attached to the Annexation Agreement need be produced. Ocean Atl., 262 F. Supp.

2d at 931.

? Ocean Atlantic has mistakenly asserted that “it is impermissible for Judge Bobrick to rule on the scope or type of
available damages.” (PI.’s Objections Magistrate Bobrick’s Discovery Order (hereinafter “PI.'s Objections”) at 2
n.3.) In support of this assertion, Ocean Atlantic cites to Alpern v. Lieb, 38 F.3d 933, 935 (7th Cir. 1994), which
states, [t]he power to award sanctions, like the power to award damages, belongs in the hands of the district judge.”
Jd. at 935. However, in contrast to the instant case, in A/pern the magistrate judge entered an order requiring Alpem
to pay Rule 11 monetary sanctions after the case had been dismissed on the merits, /d. at 934-35. Furthermore,
unlike Alpern, the matters at issue here do not involve the actual award of damages. Accordingly, Alpern is
distinguishable from the discovery motions at issue here.


they will seek summary judgment as soon as discovery is complete. Therefore, discovery on

damages is stayed pending resolution of the issue of liability.

Il. Objections to Magistrate Judge Bobrick’s Discovery Order

Under Federal Rule of Civil Procedure 72(a) a magistrate judge “to whom a pretrial
matter not dispositive of a claim of defense of a party is referred to hear and determine shall
promptly conduct such proceedings as are required and when appropriate enter into the record a
written Order setting forth the disposition of the matter.” Fed. R. Civ. P. 72(a). Section 636(b)
authorizes a magistrate judge to make independent decisions on “any pretrial matter” with the
exception of eight specified matters.' Although the list of eight dispositive motions under
section 636(b) is not exclusive, in “[rJeading section 636(b) and Federal Rule 72 together, the
term ‘dispositive’ in Rule 72(b) generally refers to those orders resolving these eight listed
matters.” See Adkins v. Mid-American Growers, Inc., 143 F.R.D. 171, 175 n.3 (N.D. IH. 1992).

Routine discovery motions are considered to be “nondispositive” within the meaning of

Rule 72(a). Jd.; see also, e.g., Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 525 (2d
Cir. 1990); Johnson v. Old World Craftsmen, Ltd., 638 F. Supp. 289, 291 (N.D. Iil. 1986). The
Federal Rules of Civil Procedure grant magistrate judges broad discretion in resolving discovery
disputes. Heyman v. Beatrice Co., No. 89 C 7381, 1992 WL 245682, at *2 (N.D. Ill. Sept. 23,
1992). A magistrate judge’s ruling on a nondispositive matter may only be reversed on a finding
that the ruling is “clearly erroneous or contrary to law.” Fed. R. Civ. P. 72(a); see also 28 USC.
" geotion 636(6)(1(A) provides:

[A] judge may designate a magistrate [magistrate judge] to hear and determine any pretrial matter pending

before the court, except a motion for injunctive relief, for judgment on the pleadings, for summary judgment,

to dismiss or quash an indictment or information made by the defendant, to suppress evidence in a criminal

case, to dismiss or permit maintenance of a class action, to dismiss for failure to state a claim upon which relief

can be granted, and to involuntarily dismiss an action. A judge of the court may reconsider any pretrial matter

under this subparagraph (A) where it has beeu shown that the magistrate’s {magistrate judge’s] order is clearly
erroneous or contrary to law.


as discussed below with the exception of the documents attached to the Annexation Agreement.
It is logical that the appropriate request would be for the development plans the defendants have
used/are using in their development of Liberty Grove. To this extent we find Magistrate Judge

Bobrick’s ruling is not clearly erroneous.

B. Other Objections
The remaining objections to Magistrate Judge Bobrick’s rulings generally lack merit and

will only briefly be addressed here.

1, Alternative Designs

Ocean Atlantic farther contends, contrary to Magistrate Judge Bob rick’s ruling, that
information regarding alternative designs for the Liberty Grove development is relevant to the
following issues: (1) Cambridge’s motive for copying; (2) Cambridge’s current position that, at
all relevant times, it believed it had the right to use Ocean Atlantic’s plans and always intended
to do so; and (3) damages, given that alternative designs would help demonstrate the exact
amount of money Cambridge saved by copying and using Ocean Atlantic’s designs. (PI.’s
Objections at 11.)

The elements of copyright infringement have been discussed above, Ocean Atlantic
urges this Court to believe that Cambridge’s motive or belief is relevant to Ocean Atlantic's
claim of copyright infringement. It is well-accepted that innocent infringement, as well as
willful infringement, is actionable. See generally Columbia Pictures Indus., Inc. v. Zakarian,
No. 90 C 4057, 1991 WL 93889, at *13 (N.D. Ill. May 28, 1991), Thus Cambridge’s motive or

belief is not relevant. Moreover, the issue of the production of alternative designs as relevant to


-

x

“lB oe Form (06/97;

United States District Court, Northern District of Illinois
Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge Ronald A. Guzman than Assigned Judge
CASE NUMBER 02 C 2523 DATE 3/22/2004
CASE Ocean Atlantic Woodland Corporation vs. DRH Cambridge Homes, Inc.
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.)
DOCKET ENTRY:
(63) QO Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
@) o Answer brief to motion due. . Reply to answer brief due.
(4) Oo Ruling/Hearing on set for at
(5) a Status hearing[held/continued to] [set for/re-set for] on set for at
(©) Oo Pretrial conference[held/continued to] [set for/re-set for] on set for at ‘
) D Trial(set for/re-set for] on at
(8) oO [Bench/Jury trial] [Hearing] held/continued to at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) COLocal Rule 41.1 COFRCP41(a)(1) (1 FRCP41(a)(2).
(10) (Otherdocketentry] For the foregoing reasons, this court stays Ocean Atlantic’s objections relating
to damages until after resolution of the issue of liability and rejects Ocean Atlantic’s remaining objections
(Doc. no. 116). The Court orders bifurcation of discovery. Enter memorandum opinion and order.
ai) @ [For further detail see order attached to the original minute order.]
No notices required, advised in open court. Document
No notices required. Nomber
umber of notices
Notices mailed by judge’s staff.
Notified counsel by telephone.
a | Docketing to mail notices.
Man AO 480 form 1409 jolvLsid 's'n
Copy to judge/magistrate judge. EES
courtroom BE id So GH ALe
SLB deputy's
initials
Date/time received in,
central Clerk's Offi



issue of laches which Ocean Atlantic inappropriately details in its objections relating to the
former motion for a preliminary injunction. Ocean Atlantic goes even further by arguing the
issue of public interest with regard to the denial of the preliminary injunction. These issues were
addressed by this Court in its September 24, 2003 Memorandum Opinion and Order adopting
Magistrate Judge Bobrick’s Report and Recommendation dated September 25, 2002 and will not

be discussed again here.

Cc Specific Rulings on Ocean Atlantic’s Objections
Ocean Atlantic’s objections relating to damages are stayed until after the resolution of the
issue of liability and the remaining objections are denied. Discovery on the issues of damages
will be addressed in full, if necessary, at a later date. Essentially, although under different
reasoning due to the bifurcation of discovery as set forth above, Judge Bobrick’s rulings will
stand in full with the exception of the following:
d. Ocean Atlantic’s Second Set of Interrogatories to Cambridge
a, Interrogatory Nos. 6, 8 are stayed pending resolution of the issue of liability.
b. Interrogatory No. 20 is stayed with regard to documents that might identify
the documents’ [attached to the annexation agreement] cash value pending

resolution of the issue of liability.

2. Ocean Atlantic’s Second Set of Interrogatories to Cowhey

p

Interrogatory Nos. 2, 5, 7 are stayed pending resolution of the issue of
liability.

3. Ocean Atlantic's Second Set of Requests for Production to Cowhey

a. Interrogatory No. 9 is stayed with regard to the production of documents that
identify any saved costs in the use the development plans.

il


consumers generally shall not be required.”). Therefore the information sought is unnecessary
and Magistrate Judge Bobrick’s finding is not clearly erroneous.

The same reasoning applies with respect to the Illinois Uniform Deceptive Trade
Practices Act. Under the Illinois Uniform Deceptive Trade Practices Act:

A person is engaged or engages in a deceptive trade practices when, the in
the course of his business vocation or occupation, he:

(1) passes off goods or services as those of another;

(2) causes likelihood of confusion or of the misunderstanding as to the source,
sponsorship, approval or certification of good or services;

(3) causes likelihood of confusion or of misunderstanding as to affiliation,
connection or association with or certification by another.

In order to prevail in an action under this Act, a plaintiff need not prove
competition between the parties or actual confusion or misunderstanding.

815 ILL. Comp. Stat. 510/2 (West 1992),

It is clear from the plain language of both Acts that proof of actual confusion or public
injury is not essential to the causes of action. Magistrate Judge Bobrick’s determination was not
clearly erroneous. This Court agrees with Magistrate Judge Bobrick that such discovery into the
communications the defendants shared with their potential consumers is unnecessary and

burdensome.

3. Preliminary Injunction

Finally, Ocean Atlantic attempts to bring several issues to the table that are outside of the
current discovery order. First, Ocean Atlantic argues that the authors of the development plans
hired by Ocean Atlantic expressly prohibited the defendants from using the plans and therefore a
former motion for a preliminary injunction should have been granted. (P1.’s Objections at 11-

12.) This issue is irrelevant with regard to the instant discovery dispute. The same applies to the


To establish a prima facie case of copyright infringement, “two elements must be proven:
(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are
original.” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991); Susan
Wakeen Doll Co., Inc. v. Ashton-Drake Galleries, 272 F.3d 441, 450 (7th Cir. 2001). Direct
evidence of copying is usually unavailable and therefore, “copying may be inferred where the
defendant had access to the copyrighted work and the accused work is substantially similar to the
copyrighted work. Susan Wakeen Doll Co., 272 F.3d at 450 (quoting Atari, Inc. v. N. Am.
Philips Consumer Elecs. Corp., 672 F.2d 607, 614 (7th Cir. 1982). The test in the Seventh
Circuit for determining whether there is “substantial similarity” is that of an ordinary observer:
“whether the accused work is so similar to the plaintiffs work that an ordinary reasonable
person would conclude that the defendant unlawfully appropriated the plaintiff's protectable
expression by taking material of substance and value.” Wildlife Express Corp. v. Carol Wright
Sales, Inc., 18 F.3d 502, 509 (7th Cir. 1994),

It is undisputed that Ocean Atlantic owns a copyright in the development plans and that
the defendants had access to the development plans. Therefore the relevant evidence would
pertain to whether the accused work is substantially similar to the copyrighted work. Ocean
Atlantic maintains that the defendants allegedly infringed upon their copyrighted development
plans attached to the annexation agreement for Liberty Grove.

The exact nature of the documents Ocean Atlantic is seeking, and objecting to, is vague
and therefore this Court will set the general parameters of relevance in which the documents
requested must conform. To the extent that Ocean Atlantic seeks documents detailing
alternative designs considered by the defendants, this is denied as discussed below. To the

extent that Ocean Atlantic seeks documents regarding the defendants’ customers, this is denied


issue here are Ocean Atlantic’s objections to Magistrate Judge Bobrick’s Memorandum Order
granting in part and denying in part the motion for protective order and the motion to compel

answers.

DISCUSSION
L Bifurcation of Discovery

On November 26, 2002, the defendants filed a motion pursuant to Rule 42(b) requesting
the court to bifurcate liability and damages discovery. The defendants requested that the Court
decline to allow the parties to enter into damages discovery until liability issues were
determined. (Defs.’ Joint Mot. Protective Order, Bifurcation Disc. Other Relief (“Defs.’ Joint
Mot.”) at 6.) On December 20, 2002 the defendants’ motion relating to bifurcation of discovery
was denied. This Court now reconsiders sua sponte the December 20, 2002 ruling denying
bifurcation of discovery and grants bifurcation of discovery.

Whether to bifurcate discovery is a matter committed to the discretion of the trial court.
Moriarty v. LSC Il. Corp., No. 98 C 7997, 1999 WL 1270711, at *7 (N.D, Ill. Dec. 29, 1999);
see generally Sattar v. Motorola, Inc., 138 F.3d 1164, 1171 (7th Cir. 1998) (“district courts have
broad discretion in matters related to discovery”); Priority Records, Inc, v. Bridgeport Music,
Inc., 907 F, Supp. 725, 734 (S.D.N.Y. 1995) (recognizing that district judge has discretion to
bifurcate discovery); 4m. Nurses Ass'n. v. State of Ill, No. 84 C 4451, 1986 WL 10382, at *2
(N.D. Ill. Sept. 12, 1986) (‘the decision to bifurcate discovery is within the discretion of the
district court and depends on the circumstances of the individual case”). In accordance with the
broad language of Rule 42(b), the district court is vested with discretion in determining whether
to try issues separately, Keyes Fibre Co. v. Packaging Corp. of Am., 763 F. Supp. 374, 375

(N.D. Hl. 1991) (internal citations omitted). Rule 42 specifies the factors to be weighed when


interrogatories; (3) objections to the denial of production of documents relating to the existence
of other possible design plans considered by Cambridge for the development site; (4) objections
to the denial of the identities and communications conceming Cambridge’s customers and
potential customers for the developments site. For the reasons provided in this Memorandum
Opinion and Order the Court stays Ocean Atlantic’s objections to Magistrate Judge Bobrick’s
Memorandum Order relating to damages until after resolution of the issue of liability, rejects
Ocean Atlantic’s remaining objections to the Memorandum Order, and sua sponte orders

bifurcation of discovery.

FACTS
The factual background of this case has been described by this Court in detail in Ocean

Atl, Woodland Corp. v. DRH Cambridge Homes, Inc., No. 02 C 2523, 2003 WL 1720073, at *1
(N.D. Ill. Mar, 31, 2003). Therefore, the facts here will be limited to those necessary to
understand the basis of this ruling.

On April 9, 2002 Ocean Atlantic acquired copyright ownership in two development plans
for the Liberty Grove development in the Village of Plainfield. These development plans were
previously incorporated into the annexation agreement for the Liberty Grove development by the
Village of Plainfield. Ocean Atlantic lost its right to develop the land under the development
plans when it attempted to close on the sale of the land late. See Elda Arnhold & Byzantio,
L.L.C. v. Ocean Atl. Woodland Corp., 284 F.3d 693, 710 (7th Cir. 2002). Ocean Atlantic now
asserts copyright infringement of the development plans by the defendants in their development
of Liberty Grove.

Before Magistrate Judge Bobrick were defendants’ motion for a protective order and

Ocean Atlantic’s motion to compel answers to interrogatories and production of documents. At


~

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DISTRICT
- q ve
pathel?

OCEAN ATLANTIC WOODLAND

CORPORATION, a Virginia Corporation, 004
MAR 2 3
Plaintiff,
v. 02 C 2523
DRH CAMBRIDGE HOMES, INC., Judge Ronald A. Guzman

a California Corporation, COWHEY,
GUNDMUNDSON, LEDER, LTD., an Illinois
Corporation, and PUGSLEY & LAHAIE, LTD.,
an IHinois Corporation,

ee SS Se eer

Defendants.

MEMO) D) OPINION AND

Ocean Atlantic Woodland Corporation (“Ocean Atlantic”) has sued DRH Cambridge
Homes, Inc. (“Cambridge”), Cowhey, Gundmundson, Leder, Ltd. (“Cowhey”), and Pugsley &
LaHaie, Ltd (“Pugsley”) (collectively “defendants”) alleging copyright infringement, unfair
competition and deceptive trade practices, false designation of origin, conversion and unjust
enrichment. This Court referred all discovery matters to Magistrate Judge Bobrick. Defendants
filed a joint motion for protective order, bifurcation of discovery, and for other relief. Magistrate
Judge Bobrick denied the motion to bifurcate and granted in part and denied in part defendants’
joint motion for protective order and Ocean Atlantic’s motions to compel. Ocean Atlantic timely
filed objections to Magistrate Judge Bobrick’s Memorandum Order. Presently pending before
this Court are Ocean Atlantic’s objections to Magistrate Judge Bobrick’s order, which include:
(1) objections to the discovery rulings limiting the scope of potential damages; (2) objections to

the denial of production of all documents used by defendants in responding to Ocean Atlantic’s

| re


b. Interrogatory No. 12 is stayed with regard to documents that might identify
the documents’ [attached to the annexation agreement] cash value pending
resolution of the issue of liability.

4, Ocean Atlantic ’s Second Set of Interrogatories to Pugsley
a. Interrogatory Nos. 5, 7 are stayed pending resolution of the issue of liability.

b. Interrogatory No. 12 is stayed with regard to the production of documents that
identify any saved costs in the use the development plans.

CONCLUSION
For the foregoing reasons, this Court stays Ocean Atlantic’s objections relating to
damages until after resolution of the issue of liability and rejects Ocean Atlantic’s remaining
objections (doc. no. 116]. The Court hereby orders bifurcation of discovery.

SO ORDERED ENTERED:

MAR 22 2004

HON. RONALD A. GU:
United States Judge

12