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Under Armour Juggling Legal Battle, Sneaker Recall

Under Armour and Multiple Energy Technologies (MET) just wrote a new chapter in their two-year legal dispute over trade secrets surrounding a key “recovery enhancing” material.

Under Armour recently submitted a brief in support of its motion to compel regarding the unresolved discovery disputes referenced in the special master’s Nov. 8 report and recommendation.

In 2020, MET, a company dedicated to researching, developing and marketing products and technologies that are powered for health and wellness, sued the Baltimore-based athletic apparel giant for trying to curb competition in the market for a “recovery enhancing” material called bio-ceramic powder.

For the past two years, the two companies have been engaged in antitrust lawsuit back-and-forth, as both are players in the marketplace for clothing containing recovery enhancing bio-ceramics (CCREB).

MET asserted three principal claims against Under Armour: that the Stephen Curry partner allegedly destroyed MET’s business by falsely advertising products containing the bio-ceramic powder of MET’s competitor, Hologenix; that MET has been “largely foreclosed” from the CCREB marketplace by way of an industry-wide “boycott” of MET enforced by Under Armour’s alleged “strong-arming” of MET’s existing and prospective business partners into refusing to do business with MET; and that Under Armour improperly disclosed MET’s trade secrets to Hologenix to assist the rival with manufacturing competing products.

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In a Nov. 30 court document, Under Armour denied all three of these claims and sought discovery to refute the claims that MET has placed itself at issue by initiating action.

For instance, Under Armour requested the production of formal written discovery and deposition transcripts from two other lawsuits—also initiated by MET—in which MET alleged that false advertising by other entities, not by Under Armour, caused fatal harm to its business. Those cases involved the same counsel for MET, the same claims, and many of the same witnesses as the case against Under Armour. Thus, Under Armour asserted that sworn statements made in written discovery responses and during depositions are relevant in this case. But MET has yet to produce any such materials.

Similarly, Under Armour has requested records demonstrating that, despite MET’s claims of a “boycott” and complete “foreclosure” from the marketplace, MET has engaged in negotiations with multiple companies regarding developing products containing its bio-ceramic powder without any apparent interference from Under Armour. MET contended that it has already produced documents sufficient to show its relationship with those companies.

After one of MET’s witnesses testified about the purported trade secrets that Under Armour allegedly misappropriated, Under Armour asked MET for permission to disclose that testimony to the Under Armour employee with whom those trade secrets were reportedly shared. (Under Armour needs permission to disclose that testimony because it has been designated “confidential attorney eyes only” under the protective order in this case.) MET is blocking these attempts.

Finally, the court filing stated that Stu Williams, an owner and principal investor in MET, has “refused to respond to a narrowly tailored document subpoena” Under Armour issued nearly two years ago. This issue was previously raised with the court, which ordered Williams to conduct a preliminary, “manual” search of his files to assist the parties in narrowing the scope of an electronically stored information (ESI) search. After failing to produce non-ESI documents because a manual search wasn’t “feasible,” Williams now insists that Under Armour agree to pay more than $70,000 before he complies with the subpoena.

Under Armour is entitled to discovery to support its defenses, the filing said. The athletic wear company submits that court intervention is required considering MET’s continued refusal to disclose information relevant to the claims to which it has subjected Under Armour.

But how did the case get to this point?

Under Armour served requests for production on MET on July 21, Aug. 1 and Aug. 25. The first of those requests pertains to discovery from the Hologenix litigation, where MET sued the competitor and alleged that its business suffered irreparable harm because of allegedly false statements made by Hologenix about its competing bio-ceramic powder, Celliant. Notably, MET alleged that Hologenix’s purported false advertising campaign caused Under Armour and another former MET customer, American Textile, to switch to Hologenix after working with MET for years. Now, in this case, MET claimed that it suffered irreparable harm because of allegedly false statements that Under Armour made about Celliant, including the loss of its business relationship with American Textile.

Because MET’s allegations in the Hologenix litigation substantially overlap with MET’s claims against Under Armour, Under Armour initially requested the production of all written discovery and deposition transcripts from it. The court denied this request because it would involve tens of thousands of pages but permitted Under Armour to make a more focused request. So, Under Armour eliminated the request. On Aug. 10, MET served its responses, in which it maintained its previous objections. On Nov. 1, following a conference with the special master, Under Armour further narrowed its request to only written interrogatories and requests for admission as well as specific deposition transcripts. MET has yet to produce a single responsive document as of Nov. 30.

In the next set of document requests, Under Armour similarly and narrowly sought the production of the deposition transcripts and formal written discovery from another parallel case, the Casden litigation. Seth Casden is Hologenix’s founder and principal. The Casden litigation involves similar claims by MET, advanced by the same lawyers representing MET here; namely, that MET suffered irreparable harm because of allegedly false statements Casden made about Celliant. MET served its objections and responses to these requests on Aug. 15 and has again since refused to produce any responsive documents.

Under Armour’s final set of requests sought documents and communications reflecting negotiations or agreements between MET and companies that, according to MET’s witnesses, had actual or prospective business relationships with MET; records of any sales by MET to those companies; and specific documents referenced during the depositions of MET’s witnesses. MET served its objections and responses on Sept. 26. “MET’s responses were evasive and, in some cases, nonsensical,” the filing read.

Under Armour also seeks to disclose its non-attorney witness, Dr. Trexler, limited portions of Alan Letton’s deposition transcript that MET had designated as “confidential” and for “attorney eyes only” (AEO). Dr. Trexler is Under Armour’s principal of technology validation; Dr. Letton is MET’s former CEO. Under Armour wants to disclose portions of Letton’s transcript discussing the trade secrets that MET purportedly shared with Under Armour so that Trexler and Under Armour can knowledgeably respond to Letton’s testimony on that issue. Even though MET itself contends that most of the AEO-designated information from the Letton deposition was already shared with Trexler, MET refused Under Armour’s informal request to share this information with Trexler. On Nov. 14, Under Armour made a formal request under the protective order for MET to change these designations from “confidential, attorney eyes only” to “confidential,” but MET has not responded.

Under Armour is also seeking the court’s intervention on two principal issues relating to the Williams subpoena. Under Armour requests an order compelling Williams to produce documents responsive to the subpoena. Under Armour has yet to receive a single document in response to the subpoena and has spent considerable resources attempting to enforce the subpoena over the last 18 months. Under Armour also requests the denial of Williams’s “inflated” demand for costs relating to compliance with the subpoena. Specifically, Williams’s insistence that Under Armour pays for his attorneys to conduct a privilege review (which comprises $66,000 of the $76,000 in purported costs that Williams claims are required for him to comply with the subpoena) is wrong, the court document reads. Williams is a part-owner of MET, and Under Armour submits that his position constitutes a transparent effort to impose unreasonable expense on a litigation opponent.

Neither Under Armour nor MET immediately responded to Sourcing Journal’s request for comment.

Litigation aside, Under Armour saw its UA Hovr and Flow running shoes in 11 styles recalled in Australia earlier this month.

The shoes were sold in June without a warning that the right shoe contains a button battery that is sealed within a pod and embedded in the shoe. Australian Product Safety stated consumers may be unaware of this button, and young children who access and ingest the button batteries are likely to suffer severe internal burn injuries, which can result in serious injury or death. The buttons also pose a choking hazard to young children. Consumers who purchased these shoes are encouraged to contact UA Australia for a copy of a warning about the button battery and advice about their consumer guarantee rights under Australian consumer law.