TERESA J. JAMES, Magistrate Judge.
This matter is before the Court on Plaintiff's Motion to Compel (ECF No. 100). Pursuant to Fed. R. Civ. P. 37, Plaintiff asks the Court to overrule the objections and order Defendant ShipMate, Inc. to provide answers responsive to Plaintiff U, Inc.'s First Interrogatories to ShipMate and produce documents responsive to Plaintiff U, Inc.'s First Request for Production of Documents to ShipMate, Inc. ShipMate opposes the motion. As set forth below, ShipMate's objections to the discovery requests are overruled and Plaintiff's motion is granted.
On April 14, 2015, the Court held a telephone conference with counsel to discuss an email message that Plaintiff's counsel submitted prior to filing a motion to compel, along with ShipMate's response thereto.
Plaintiff served its First Interrogatories and First Request for Production of Documents on Defendant ShipMate on January 5, 2015.
Pursuant to the briefing schedule the Court set, Plaintiff filed its supplemental memorandum (ECF No. 100) on April 21, 2015.
Plaintiff requests in its motion that the Court order ShipMate to answer the 31 interrogatories it propounded and to produce documents responsive to its 23 requests for production. Throughout counsel's written exchange since Plaintiff served its discovery requests, ShipMate has not withdrawn any of its objections. Accordingly, the Court has examined those objections and Plaintiff's responses thereto. The Court is now prepared to rule on the disputes at issue in Plaintiff's motion to compel.
Plaintiff brought this action against Defendants ShipMate and the Coordinating Committee for Automotive Repair ("CCAR"), alleging that they misappropriated Plaintiff's electronically stored confidential and propriety trade secret information, specifically Plaintiff's customer and prospective customer information. Plaintiff alleges that Defendants knowingly and with intent to defraud Plaintiff accessed, downloaded and used Plaintiff's information for their own business purposes. Plaintiff and CCAR had a license agreement granting CCAR limited authorized use of Plaintiff's information, which Plaintiff alleges CCAR breached by downloading and disclosing the information to ShipMate. Plaintiff asserts claims against ShipMate for violation of the Computer Fraud and Abuse Act, misappropriation of trade secrets, false advertising, interference with current and prospective business advantage, and trademark infringement.
In its Answer, ShipMate raises a number of affirmative defenses including unclean hands, fair use, failure to mitigate, laches, estoppel, and license.
ShipMate argues that it should not be required to produce information going back to 2007 because the parties' business relationship did not begin to deteriorate until October, 2013, thereby rendering both irrelevant and unduly burdensome the request for documents from six years earlier. ShipMate recently amended its Rule 26 disclosures to omit any reference to Plaintiff's alleged infringement of ShipMate's copyrights and trademarks, which ShipMate contends makes discovery on any such infringement wholly irrelevant.
Federal Rule of Civil Procedure 26(b)(1) sets out the general scope of discovery. It provides that the parties "may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense — including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter."
When the discovery sought appears relevant, the party resisting discovery has the burden to establish the lack of relevancy by demonstrating that the requested discovery (1) does not come within the scope of relevancy as defined under Fed. R. Civ. P. 26(b)(1), or (2) is of such marginal relevancy that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure.
In this action, the Court finds that the relevancy of the discovery called for by Plaintiff's opening interrogatories and request for production of documents is apparent on its face. The requests directly relate to the claims Plaintiff asserts or to the defenses raised by ShipMate or CCAR. While ShipMate takes the position that it should not be required to produce documents relating to issues between Plaintiff and CCAR, the Court rejects this argument because the scope of Rule 26 reaches "any matter relevant to the subject matter involved in the action."
ShipMate argues that much of the outstanding discovery that Plaintiff is seeking is irrelevant to what it describes as primarily a misappropriation of trade secrets case. ShipMate vigorously denies that this case in any way involves issues related to ShipMate's claim (asserted in the California action) that Plaintiff infringed on ShipMate's copyrights to certain course material that Plaintiff had hosted on its LMS. Plaintiff responds by challenging the viability of the California action, which Plaintiff contends should be dismissed because it is a compulsory counterclaim to this action. The Court will not presume any future rulings by the presiding judge in the California action, and will not assess relevancy on that basis. The Court notes, however, that ShipMate includes in its Answer to Plaintiff's Amended Complaint the affirmative defense that Plaintiff's claims are barred by the doctrine of fair use.
ShipMate also asserts the affirmative defense of unclean hands. The unclean hands doctrine provides that a party cannot obtain affirmative relief in equity with respect to a transaction in which the party has been guilty of inequitable conduct.
In their briefing, Plaintiff addresses ShipMate's objections categorically and ShipMate responds in kind. Accordingly, the Court will fashion its analysis in the same manner.
Plaintiff asserts that ShipMate has stated conditional objections across the board which violate both the letter and spirit of Sprint Communications Co., L.P. v. Comcast Cable Communications, LLC.
Judge O'Hara has written a thoughtful examination of conditional objections which catalogs the reasons various courts have given as to why such objections are invalid and unsustainable.
The Court finds that ShipMate has waived its objections to Interrogatory Numbers 1-12, 14-19, and 21, and to Request for Production Numbers 1-7, 9-12, 14-21, and 26-31, and the Court grants Plaintiff's motion with respect to those responses.
Plaintiff next addresses the group of discovery requests to which ShipMate refused to produce any documents or limited its responses to documents from October 2013 forward, despite those requests having sought documents from and after January 1, 2007. Plaintiff points out that it entered into a License and Services Agreement with CCAR in 2007 which allowed CCAR access to Plaintiff's customer and prospective customer information from Plaintiff's LMS, or learning management system. Under the Agreement, CCAR had a limited license to provide certain marketing services for Plaintiff's S/P2 courses, and towards that end CCAR had access to information about Plaintiff's customers, their purchase histories, their passwords and PINS, account IDs, training records, and contact information. Also beginning in 2007, CCAR marketed some of ShipMate's HazmatU courses, and at CCAR's request Plaintiff agreed to provide and deliver HazmatU to Plaintiff's customers through Plaintiff's LMS. ShipMate was to have no rights in any of the information on Plaintiff's LMS, no access to confidential customer and potential customer information on the LMS and no access to the purchase histories, passwords, PINS, account IDs, training records, and contact information.
Plaintiff asserts that it terminated its relationship with CCAR in October, 2013, but the parties were trying to work out differences with a new contract. Plaintiff allowed CCAR to continue marketing ShipMate's HazmatU courses on Plaintiff's LMS, but only certain individuals at CCAR had permission to access Plaintiff's LMS. In addition, CCAR had a continuing obligation to protect the confidentiality of Plaintiff's information.
Plaintiff alleges that CCAR misappropriated and provided to ShipMate extensive trade secret information from Plaintiff's confidential LMS, including purchase histories of Plaintiff's products, passwords, PINS, account IDs, and other Confidential Information. Plaintiff alleges that ShipMate incorporated Plaintiff's trade secret information into a separate LMS that ShipMate and CCAR used to launch a competing product in May of 2014. Plaintiff further alleges that ShipMate and CCAR have marketed the competing product to Plaintiff's customers using Plaintiff's confidential and trade secret information.
ShipMate takes the position that because it has only been accused of misappropriating Plaintiff's alleged trade secrets and has not actually been found liable, Plaintiff should have to identify the misappropriated customer and other information rather than use discovery to find it. ShipMate also argues that because the dispute between Plaintiff and Defendants arose in 2014, it is unreasonable to seek documents which predate the alleged wrongdoing by seven years. ShipMate's arguments do not address the relevant issues and reveal a complete lack of understanding of the scope of discovery. Under Plaintiff's theory of the case, ShipMate had access to Plaintiff's confidential and trade secret information beginning in 2007. Plaintiff is entitled to conduct discovery to learn what, when, and how ShipMate allegedly obtained Plaintiff's information, both for purposes of liability and for damages.
Insofar as ShipMate objects to producing information from and after January 1, 2007 on the grounds that it is irrelevant, or that the discovery request is vague, ambiguous, and overbroad, the objection is overruled.
ShipMate also asserted the unsupported objection that such requests are burdensome. In the briefing for this motion, ShipMate submits the affidavit of its president, Steven Hunt, concerning the cost and burden that would be involved if ShipMate were to have to review its records for information dating back to 2007. Mr. Hunt addresses the amount of time and the expense it would take for him to find emails dating back to 2007. Emails do not constitute all of the documents Plaintiff seeks. As Plaintiff points out, ShipMate identified the following categories of information in its Rule 26 disclosures as being "within its possession, custody, or control."
The Court does not find persuasive ShipMate's argument that producing responsive documents from and after January 1, 2007 would be unduly burdensome, and its objection on that basis is overruled.
The Court overrules ShipMate's objections to Interrogatory numbers 13, 22 and 23, and to Request for Production numbers 13, 22, and 23.
ShipMate asserts that it should not be required to produce documents dated after May, 2014, because that is when it commenced selling a competing product and the information Plaintiff seeks would include information that is proprietary and confidential. ShipMate argues that Plaintiff should not be permitted to use this lawsuit to obtain irrelevant but highly proprietary confidential information from ShipMate concerning its new product. Plaintiff contends that, on the contrary, ShipMate's sale of a competing product provides a basis for it to be able to discover the requested information. Plaintiff alleges that ShipMate and CCAR misappropriated Plaintiff's confidential and proprietary information which they used in marketing ShipMate's competing product, and that the information is relevant to a calculation of Plaintiff's damages.
The Court finds that ShipMate does not have a valid objection which would allow it to withhold requested documents dated after May, 2014 in responding to the discovery requests at issue. Plaintiff seeks damages for misappropriation of trade secrets, which may include either actual loss or a reasonable royalty.
ShipMate has objected to producing documents concerning its GHS Hazard Communication Course, arguing that the facts and circumstances regarding it are not the subject of and are irrelevant to Plaintiff's claims and ShipMate's defenses in this action. Plaintiff describes the GHS Hazard Communication Course as the competing product ShipMate launched in May, 2014.
The Court finds that, as with ShipMate's objection to producing documents dated after May, 2014, the requested information is relevant to both liability and damages. Plaintiff's theory is that the launch of the new product on ShipMate's LMS involved trade secret information misappropriated from Plaintiff. Plaintiff is entitled to discovery on ShipMate's GHS Hazard Communication Course, and the Court overrules ShipMate's objections to Request for Production numbers 8, 25, and 28.
On July 28, 2014, at the parties' request, the Court entered a Protective Order in this case.
In response to Plaintiff's opening discovery, ShipMate has repeatedly objected on the ground that Plaintiff is a direct competitor of ShipMate, and the protective order does not contain an "Attorney's Eyes Only" provision. In its response to Plaintiff's golden rule letter, ShipMate states that the protective order was entered long before it became apparent to ShipMate the scope of information Plaintiff would seek. In its response to the instant motion, ShipMate requests that it be allowed to negotiate an "Attorney's Eyes Only" protective order with Plaintiff and CCAR.
Plaintiff objects to the entry of a more restrictive "Attorney's Eyes Only" protective order, particularly when the parties could have addressed such a provision when they were negotiating the protective order nearly one year ago. Plaintiff contends that the existing order provides the parties with adequate protection, which is supported in part by the fact that both Plaintiff and CCAR have produced all of their documents and information in discovery under the protection of the existing order. Plaintiff also asserts that one of its own employees is likely to provide expert testimony, and that Plaintiff would be disadvantaged if it were unable to share with its expert all of the evidence in the case. Finally, Plaintiff's counsel states that he does not have the knowledge and background to understand and assess information ShipMate would produce in a manner that would make it useful to his client.
"A party seeking that its information only be revealed in a certain way, such as limiting who can view or access the materials, under . . . Rule 26(c)(1)(G) must first establish that the information sought is a trade secret or other confidential research, development, or commercial information."
Even if ShipMate had met its burdens, the Court finds that entering an "Attorney's Eyes Only" protective order would hamper Plaintiff's ability to prosecute its case.
The Court will not enter another protective order or require Plaintiff and/or CCAR to negotiate a more restrictive protective order before ShipMate provides the discovery the Court is ordering it to produce.
IT IS HEREBY ORDERED that Plaintiff's Motion to Compel (ECF No. 100) is GRANTED. Within 14 days of the date of this order, Defendant ShipMate, Inc. shall provide answers responsive to Plaintiff U, Inc.'s First Interrogatories to ShipMate and produce documents responsive to Plaintiff U, Inc.'s First Request for Production of Documents to ShipMate, Inc.
IT IS SO ORDERED.