MANHATTAN (LN) — The Second Circuit on Tuesday ruled for Thom Browne in its trademark fight with adidas, holding for the first time in the circuit that a negligent discovery failure — even one that kept damaging internal emails out of a jury's hands — does not rise to "misconduct" under Federal Rule of Civil Procedure 60(b)(3) and cannot unwind a final judgment.
The decision, written by Circuit Judge Park and joined by Judges Cabranes and Robinson, affirms Southern District Judge Jed Rakoff's denial of adidas's motion for a new trial after the sportswear giant learned that Thom Browne's counsel, Wolf Greenfield, had failed to produce four internal emails during discovery in the underlying trademark case.
The emails were notable. In a December 2016 exchange, Emily Maturo, a Senior Men's Account Manager at Thom Browne, wrote that the company tried "to avoid rows of 4 bar armband on the racks so as to not look like Adidas." In a November 2018 exchange, Thi Wan, then Thom Browne's Head of Menswear, wrote to designer Thom Browne himself that "it is inevitable that our 4bar in white be read as adidas stripes, especially on accessories." And in an August 2019 chain, Browne wrote that he thought a colleague had already said that the company should not use the four bar because of adidas.
The emails surfaced not in the New York litigation but in a separate proceeding between the two companies in the United Kingdom, while adidas's first appeal was still pending. A jury had already found Thom Browne not liable on all counts of trademark infringement, trademark dilution, and unfair competition after hearing sixteen witnesses and reviewing over four hundred exhibits.
The Second Circuit agreed with Rakoff that the emails probably would not have changed that verdict under Rule 60(b)(2). The panel noted that the emails addressed formalwear and accessories designed for FC Barcelona — not the activewear line at issue in the New York case — and that the jury had already rejected more direct consumer-confusion evidence, including an adidas survey.
The more consequential holding came on Rule 60(b)(3). The circuit resolved what it described as an open question, concluding that "misconduct" in the rule — which sits alongside "fraud" and "misrepresentation" — requires more than mere negligence. Drawing on Rule 37's framework for discovery sanctions, the panel observed that the most severe sanctions available for failure to preserve electronically stored information require a finding that "the party acted with the intent to deprive another party of the information's use in the litigation." Vacating a final judgment, the court reasoned, is at least as drastic a remedy and demands at least as high a threshold.
The panel held that Wolf Greenfield's failure traced to a paralegal who had carried out a mass edit on documents hitting the search term "adidas" — including the four emails — changing their responsiveness, privilege, and confidentiality fields to "needs further review," which inadvertently excluded them from the e-discovery vendor's saved privilege-review search. A subsequent quality-control check by an associate was supposed to catch exactly that kind of slip, but the associate never opened the flagged emails. The court characterized that failure as negligent, but noted that Wolf Greenfield had taken the "widely-recognized step" of reviewing potentially responsive documents and simply missed some — conduct that fell short of the recklessness or gross negligence courts typically find when parties skip basic litigation-hold procedures entirely.
The ruling parts ways with the First Circuit's 1988 decision in Anderson v. Cryovac, which had concluded that "misconduct" cannot require proof of nefarious intent because that reading would render the term redundant with "fraud" and "misrepresentation." The Second Circuit rejected that logic, concluding that intentional acts not involving deception or false statements can still qualify as misconduct, preserving meaningful work for the term without sweeping in garden-variety negligence.
Adidas's counsel at Kilpatrick Townsend & Stockton did not immediately respond to a request for comment.
The four emails that Wolf Greenfield never produced — and that a jury never saw — described Thom Browne's own executives expressing concern, in writing, that their four-bar designs could be read as adidas stripes. They were not enough to reopen the case.