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Samuel, Son & Co. Inc. v. Beach

United States District Court, W.D. Pennsylvania

October 9, 2014

SAMUEL, SON & CO. INC. d/b/a FRONTIER STEEL COMPANY, Plaintiff,
v.
ERIK BEACH, ESMARK-EXCALIBUR, LLC and ERIC A. HOOVER, Defendants.

MEMORANDUM ORDER

NORA BARRY FISCHER, District Judge.

This matter once again comes before the Court on continuing discovery disputes between the parties in this action involving alleged trade secret misappropriation and tortious inference with contractual relations claims. The parties were initially ordered to conduct limited discovery in relation to a Motion for Preliminary Injunction filed by Plaintiff and after receiving an extension, participated in limited discovery for a period of almost four months, (i.e., from 9/26/13 to 1/17/14). (Docket No. 37). Despite the Court's Orders, the parties made little progress during this four month period of limited discovery, reporting that they exchanged some written discovery but took no depositions, and at the conclusion of the extended period, Plaintiff notified the Court that it no longer intended to pursue a preliminary injunction against Defendants. (Docket Nos. 42, 50). At that juncture, this Court convened a case management conference on February 10, 2014 and entered a Case Management Order stating that fact discovery in the case was ordered to close as of July 30, 2014. (Docket No. 54). During discovery, and with consent of the parties, a number of contested discovery motions were forwarded to Court-appointed Special Master Gary Hunt, Esquire, and his Report and Recommendation on those matters (Docket No. 75), was adopted as the Opinion of the Court on June 4, 2014, (Docket No. 76), as neither party lodged any objections to same. Under this Order, both parties were directed to produce certain documents to their opponents. (Docket Nos. 75, 76). Among other things, Plaintiff was ordered to produce communications and other documents pertaining to a Group of 19 customers with whom Plaintiff contends Defendants tortiously interfered. ( Id. ).

As the discovery deadline approached, the parties advised the Court via an email status report on July 30, 2014 that they had a number of additional discovery disputes and requested an opportunity to meet and confer regarding their disputes. See 7/30/14 Email from M. Betts, Esquire to Law Cler k. In response to this communication, the Court entered a Text Order on 7/30/14 granting them one week to meet and confer in an effort to narrow their disputes and requested a follow-up status report by August 5, 2014. See Text Order 7/30/14. Plaintiff's counsel provided the Court with the status report as requested in an email dated August 5, 2014, stating the following:

For the updated Joint Status Report required by the Court's July 30, 2014 Order, counsel advise that they have narrowed the remaining discovery issues through a meet and confer session held on August 1, 2014 and further communications. Provided that the parties comply with the commitments they have made with respect to other issues, each party now has only one discovery issue to present. The parties request referral to the Special Master for resolution of these disputes.

See 8/5/14 Email from L. Imbrogno to Law Clerk. The Court then entered another Text Order, setting a briefing schedule "on the one discovery dispute per side" and referring "such discovery disputes" to Mr. Hunt to prepare another Report and Recommendation. See Text Order 8/5/14.

Pursuant to the Court's Order, the parties filed cross-motions on contested discovery matters with Defendants filing their Motion for Sanctions and Brief in Support on August 14, 2014, (Docket Nos. 80, 81), and Plaintiff following with its Motion to Compel Information and Documents on August 15, 2014, (Docket No. 82). The parties filed timely opposition briefs to the respective motions on August 22, 2014. (Docket Nos. 83, 84). Special Master Hunt filed his Report and Recommendation initially on September 8, 2014, (Docket No. 86), and later filed an amended Report and Recommendation on September 10, 2014, (Docket No. 87), correcting an inadvertent error in the initial report.

In brief summary, Special Master Hunt recommended that both Motions be granted, in part and denied, in part. (Docket No. 87). As to Defendants' Motion for Sanctions, the Special Master found that Plaintiff had violated the holding of the earlier Report and Recommendation, which was adopted as the Opinion of the Court, by failing to produce certain documents to Defendants concerning its own communications with the Group of 19 customers for the time period of April 23, 2013 until the present. ( Id. ). Specifically, the Special Master held that:

[Plaintiff's] argument gives too narrow a reading of the scope of discovery. The record of dealings and communications between Plaintiff and the Group of 19 after the individual Defendants left the employ of Plaintiff could bear directly upon both the merits of the tortious interference claims of the Plaintiff and the defenses of the Defendants. Furthermore, those records could specifically address the damage claims being made by the Plaintiff.

(Docket No. 87 at 5). The Special Master continued that Plaintiff's interpretation of a second document request was also too narrow and would render the interrogatory a nullity. ( Id. at 6). However, rather than recommend the sanctions requested by Defendants, (i.e., an order precluding Plaintiff from introducing evidence in support of its tortious interference claim), the Special Master instead recommended the alternative sanction that the responsive documents be produced and that Defendants be afforded an additional 30 days of follow-up discovery related to any matters stemming from the forthcoming production of documents by Plaintiff. ( Id. ).

With respect to Plaintiff's Motion to Compel, the Special Master found that Plaintiff was entitled to only Sales Order Acknowledgements as to a single customer, specifically, Kasgro Rail ("Kasgro"), because the discovery requests as to Kasgro sought discovery which was not at issue in the first round of discovery motions and was timely served on Defendants. ( Id. ). The Special Master noted that Plaintiff stated in its Motion to Compel that it had agreed to narrow its request for Kasgro documents to the Sales Order Acknowledgements and that Defendants agreed to produce such documents during the meet and confer held on August 1, 2014. ( Id. ). The Special Master further recommended that the discovery requested as to 10 additional customers was untimely served on Defendants because Plaintiff served this discovery on July 11, 2014, which did not permit Defendants the full 30 days to respond as is set forth under the Federal Rules, prior to the close of discovery on July 30, 2014. ( Id. ). Finally, the Special Master recommended that Plaintiff be ordered to produce to Defendants records of communications between Plaintiff and Kasgro Rail under a "linked exchange" pursuant to which the parties would exchange their respective communications as to each of the customers at issue. ( Id. at 11).

Defendants did not file any objections to the Report and Recommendation. Presently before the Court are Plaintiff's Objections to Special Master's Report and Recommendation (Docket No. [88]), and Defendants' Response in Opposition thereto (Docket No. [89]). The Court has fully considered the parties' positions and conducted a de novo review of the competing motions addressed in the latest Special Master's Report and Recommendation. The Court now turns to its analysis of Plaintiff's objections, starting with the relevant legal standards.

1. Relevant Legal Standards

Issues relating to the scope of discovery permitted under the Federal Rules of Civil Procedure rest in the sound discretion of the court. Harris v. Pa. Bd. of Prob. & Parole, Civ. No. 3:12-cv-0674, 2013 WL 5551206, *2 (M.D. Pa. Oct. 8, 2013) (citing Wisniewski v. Johns-Manville Corp., 812 F.2d 81, 90 (3d Cir. 1987)). Generally, discovery may be had of "any matter relevant to the subject matter involved in the action" and "[r]elevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." FED. R. CIV. P. 26(b)(1).

A party moving to compel discovery bears the initial burden of proving the relevance of the requested information. Bracey v. Harlow, No. 11-04, 2012 WL 4857790 (W.D. Pa. Oct. 12, 2012) (Kelly, M.J.); see also Thomas v. Lawler, No. 10-2437, 2013 WL 949483 (M.D. Pa. Mar. 11, 2013). Once that initial burden is met, "the party resisting the discovery has the burden to establish the lack of relevance by demonstrating that the requested discovery (1) does not come within the broad scope of relevance as defined under FED. R. CIV. P. 26(b)(1), or (2) is of such marginal relevance that the potential harm occasioned by ...


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