A headline-making case between adidas and Thom Browne is not over yet. A year after a federal appeals court rejected Adidas’ challenge to a jury verdict clearing Thom Browne’s four-bar designs from infringement claims, the German sportswear giant was back before the Second Circuit – this time asking for a do-over under Federal Rule of Civil Procedure 60(b). The crux of adidas’ appeal argument: Thom Browne failed to produce four internal emails during discovery, which later surfaced in parallel litigation in the U.K.
During a hearing on Tuesday, a three-judge panel for the Court of Appeals for the Second Circuit pressed both sides on how Rule 60(b)(2) and 60(b)(3) – which respectively allow a court to reopen a judgment due to “newly discovered evidence” and “fraud, misrepresentation, or misconduct by an opposing party – fit together. The judges also focused on what level of culpability 60(b)(3) requires and whether SDNY Judge Jed Rakoff’s post-trial order – which found no actionable negligence on Thom Browne’s part and denied relief – deserves deference or reversal.
Mistake v. Misconduct
Adidas’ argument on appeal is not about relitigating likelihood of confusion between its wares and those of Thom Browne. Instead, the company claims that the four emails at issue – written by senior Thom Browne executives – would have undercut the company’s defense. The documents were collected and flagged for further review by Thom Browne’s counsel and e-discovery vendor but were never actually reviewed or produced, adidas argued. On those facts, adidas argues the lapse is at least negligence and amounts to “misconduct” under Rule 60(b)(3). Even if negligence were required (some circuits accept even innocent nonproduction), adidas maintains that Judge Rakoff erred in treating this as “excusable neglect.”
Thom Browne advanced a different position: Rule 60(b) relief is disfavored and strictly construed. Read alongside “fraud” and “misrepresentation,” the term “misconduct” should require at least recklessness, if not intent, the company argued. And in large-scale e-discovery, ordinary mistakes do not justify disturbing a final judgment, it asserted, particularly where Judge Rakoff found the emails marginal and the jury’s swift defense verdict turned on visual comparison of the designs and a battle of experts.
In court on October 28, the judges focused heavily on negligence. One concern was that if mere negligence qualifies as “misconduct” under Rule 60(b)(3), losing parties could sidestep Rule 60(b)(2)’s stricter requirement (that new evidence likely would have changed the verdict) by simply recasting discovery errors as misconduct. But if 60(b)(3) requires intent or recklessness, another judge asked, why should the fairness remedy depend on mental state rather than on whether the lapse actually hindered the losing party’s case?
Adidas argued that “misconduct” should be read broadly as a failure to meet discovery obligations, citing cases that treat even inadvertent nonproduction as qualifying. Thom Browne countered that expanding “misconduct” to cover negligence would erode finality and blur the line between 60(b)(2) and 60(b)(3). Even if negligence were enough, it said, its document review process – using a reputable vendor and a manual “to-be-reviewed” check – was reasonable, and any miss was an understandable slip in a million-document review.
One judge was unconvinced, asking pointedly: if documents were tagged for review and never reviewed, “if that’s not negligence, what is?”
The Nature of the Emails
The temperature of the four emails also drew scrutiny. Adidas cast them as high-value impeachment, pointing to one executive’s statement that given adidas’ dominance in sport, “it is inevitable that our four-bar in white be read as adidas stripes,” at least on accessories. Those statements, adidas argued, would have strengthened cross-examination on confusion and bad faith and satisfied Rule 60(b)(3)’s substantial-interference standard regardless of intent.
Counsel for Thom Browne downplayed the significance of the emails, noting that three of them concerned FC Barcelona and arose after adidas had already sent its demand letter, and that the “inevitable” remark referred to accessories, not the products at issue. The company argued that the jury saw the designs, heard the experts, and swiftly rejected Adidas’ claims. Judge Rakoff, who presided over the trial, reached the same conclusion – finding the emails marginal and unlikely to have changed the outcome under Rule 60(b)(2). Adidas replied that Rule 60(b)(3) turns not on outcome but on whether withheld material impeded its ability to present its case.
The case is adidas America, Inc., et al., v. Thom Browne, Inc., 1:21-cv-05615 (SDNY).
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