BidPrime v. SmartProcure
BidPrime v. SmartProcure
2018 WL 6588574 (W.D. Tex. 2018)
November 13, 2018
Pitman, Robert, United States District Judge
Summary
The court granted both parties' requests for ESI, ordering SmartProcure to produce the full chat log between Rubenstein and Kras, the Slack bot messages, and a redacted version of the software requirements document stored on Google Drive, and ordering BidPrime to respond to SmartProcure's requests for production, but with the ability to redact privileged information.
BIDPRIME, LLC, Plaintiff,
v.
SMARTPROCURE, INC., d/b/a SmartProcure, and Jeffrey Rubenstein, Defendants
v.
SMARTPROCURE, INC., d/b/a SmartProcure, and Jeffrey Rubenstein, Defendants
1:18-CV-478-RP
United States District Court, W.D. Texas, Austin Division
Signed November 13, 2018
Counsel
Santosh Aravind, Stephanie Kover, Cynthia Lyons Saiter, Scott Douglass & McConnico LLP, Austin, TX, for Plaintiff.Jason Scott Boulette, Michael Dennis Marin, Steven H. Garrett, Boulette Golden & Marin L.L.P., Jared Landon Byrd, Gordon Rees Scully Mansukhani, Jeffrey R. Lilly, Gordon & Rees, LLP, Austin, TX, for Defendants.
Pitman, Robert, United States District Judge
ORDER
*1 Before the Court are cross-motions to compel discovery filed by Plaintiff BidPrime, LLC (“BidPrime”) and Defendant SmartProcure, Inc. (“SmartProcure”). (Dkts. 51, 53). Having considered the motions, the parties' responsive briefing, the evidence, and the relevant law, the Court will grant and deny each motion in part.
I. LEGAL STANDARDS
The scope of discovery is broad. Crosby v. La. Health Serv. and Indem. Co., 647 F.3d 258, 262 (5th Cir. 2011). Federal Rule of Civil Procedure 26 provides that, unless otherwise limited by court order, parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Fed. R. Civ. P. 26(b)(1). “A discovery request is relevant when the request seeks admissible evidence or ‘is reasonably calculated to lead to the discovery of admissible evidence.’ ” Crosby, 647 F.3d at 262 (quoting Wiwa v. Royal Dutch Petrol. Co., 392 F.3d 812, 820 (5th Cir. 2004) ). A party seeking discovery may file a motion to compel after conferring in good faith to secure that discovery without court action. Fed. R. Civ. P. 37(a). If the motion is filed and granted, the Court must order the resisting party to pay the movant's reasonable expenses incurred in making the motion, including attorney's fees. Fed. R. Civ. P. 37(a)(5).
“Once a party moving to compel discovery establishes that the materials and information it seeks are relevant or will lead to the discovery of admissible evidence, the burden rests upon the party resisting discovery to substantiate its objections.” Hobbs v. Petroplex Pipe & Constr., Inc., No. MO:17-CV-00030-DC, 2018 WL 3603074, at *2 (W.D. Tex. Jan. 29, 2018); see also McLeod, Alexander, Powel and Apffel, P.C. v. Quarles, 894 F.2d 1482, 1485 (5th Cir. 1990). “A party objecting to discovery must state with specificity the objection and how it relates to the particular request being opposed, and not merely that it is overly broad and burdensome or oppressive or vexatious or not reasonably calculated to lead to the discovery of admissible evidence.” Id.; see also Carr v. State Farm Mut. Auto. Ins. Co., 312 F.R.D. 459, 469 (N.D. Tex. 2015) (stating that the party resisting discovery has the burden to “specifically object”) (citing McLeod, 894 F.2d at 1485).
II. BIDPRIME'S MOTION
In its motion, BidPrime asks the Court to compel production of several pieces of evidence. First, BidPrime seeks the complete UpWork chat between SmartProcure CEO Jeffrey Rubenstein (“Rubenstein”) and software developer Michael Kras (“Kras”). (BidPrime Mot. Compel, Dkt. 51, at 10–12). Second, BidPrime seeks internal and external GitHub and Slack communications made by SmartProcure employees. (Id. at 12–13). Third, BidPrime seeks Google Docs and other cloud-stored documents containing responsive information. (Id. at 13–14). Finally, BidPrime challenges SmartProcure's designation of a number of documents as “attorneys' eyes only” (“AEO”) under the Court's protective order. (Id. at 14–16). BidPrime opposes most of these requests. (Resp. BidPrime Mot. Compel, Dkt. 56). The Court will address each in turn.
*2 UpWork is a freelancing website that SmartProcure used to hire Kras. (BidPrime Mot. Compel, Dkt. 51, at 3). BidPrime seeks the “complete chat log that exists on UpWork between Michal Kras and Jeffrey Rubenstein.” (Id. at 17). BidPrime alleges that SmartProcure produced an incomplete chat log between Rubenstein and Kras. (Id. at 6). SmartProcure produced a message sent June 6, 2018, and another set of messages sent between May 9 and May 12, 2018. (Id.; see also UpWork Chat Log, Dkt. 51-7). SmartProcure admits that it has not produced the full chat log, but responds that it has produced every part of the chat log that relates to BidPrime. (Resp. BidPrime Mot. Compel, Dkt. 56, at 6–7). SmartProcure argues that it is allowed to omit irrelevant information from the chat log. (Id. at 7).
BidPrime has met its burden to establish that the chat log between Rubenstein and Kras is relevant; those communications may bear, for example, on the intent element of BidPrime's Computer Fraud and Abuse claim. (See BidPrime Mot. Compel, Dkt. 51, at 11). SmartProcure calls BidPrime's discovery request facially overbroad but has not met its burden to articulate specific reasons that the omitted UpWork communications are irrelevant. (Resp. BidPrime Mot. Compel, Dkt. 56, at 6). Rather than deeming a portion of the chat log nonresponsive and omitting it, SmartProcure should produce the full chat log. See Samsung Elecs. Am., Inc. v. Yang Kun Chung, 321 F.R.D. 250, 299 (N.D. Tex. 2017) (“[A] responding party ... cannot redact nonprivileged information from any responsive document because the information is not itself responsiv[e] ....”). SmartProcure must produce the full chat log between Rubenstein and Kras.
GitHub and Slack are messaging platforms that SmartProcure employees use to communicate with one another and with third-party software developers. (BidPrime Mot. Compel, Dkt. 51, at 12). BidPrime seeks “all responsive documents, including communications and documents housed in GitHub or Slack accounts.” (Id. at 17). SmartProcure has agreed to produce GitHub documents to resolve that portion of BidPrime's motion. (Resp. BidPrime Mot. Compel, Dkt. 56, at 5). As for Slack communications, SmartProcure represents that it has produced all relevant communications other than “automated ‘bot’ messages related to script development that mention BidPrime.” (Id.). SmartProcure avers that these bot messages are not related to the pending motion for preliminary injunction without explaining why. (Id.). SmartProcure does not offer any other reason that it should not have to produce the bot messages. Because these messages refer to BidPrime, they may be relevant and SmartProcure has not provided a specific objection to the contrary. SmartProcure must produce the Slack bot messages.
Google Docs and Sheets are files stored on remote third-party servers; Google Drive is a third-party file storage service. (BidPrime Mot. Compel, Dkt. 51, at 13). BidPrime argues that SmartProcure has not produced potentially relevant documents stored on these third-party services. (Id. at 14).[1] BidPrime seeks “all responsive documents, including Excel files, Google Docs, Google Sheets, and other documents stored in Google Drive.” (Id. at 17). SmartProcure has agreed to produce a number of documents stored on these services, but has not agreed to produce a software requirements document that discusses requirements for scripts developed by SmartProcure, including scripts produced to BidPrime. (Resp. BidPrime Mot. Compel, Dkt. 56, at 5–6). While the Court agrees that SmartProcure's general software development requirements are not relevant, SmartProcure has not offered a specific, persuasive argument that its development requirements for the script produced to BidPrime are not relevant to BidPrime's claims. SmartProcure must produce a redacted version of the software requirements document; the redacted document must display the two pages discussing the requirements for the script that SmartProcure has produced to BidPrime.
*3 The parties have designated certain documents AEO pursuant to the Court's protective order. (See BidPrime Mot. Compel, Dkt. 51, at 8). BidPrime objects to SmartProcure's AEO designation of documents that (1) contain information about web-scraping software that SmartProcure developed to obtain data from BidPrime.com and (2) the output SmartProcure obtained after testing and running that script. (Id.). BidPrime asks the Court to order the AEO designations on these documents removed. (Id. at 17).
BidPrime argues that the iterative development of SmartProcure's scraping program is relevant to SmartProcure's lack of authorization to access BidPrime.com, its knowledge of BidPrime.com's terms of service, and the effort needed to obtain BidPrime's data. (Id. at 15). BidPrime contends that its counsel lacks the technical expertise to assess the software and understand its full relevant to BidPrime's claims. (Id.).
However, Rule 37 requires that a party seeking to compel discovery must confer in good faith before seeking court intervention. Fed. R. Civ. P. 37(a). The Court's protective order contains the same requirement. (Prot. Order, Dkt. 28, at 7). Correspondence between the parties indicates that defense counsel asked plaintiff's counsel to explain the basis for disclose the AEO material to BidPrime or removing the AEO designation. (Emails, Dkt. 57-2). BidPrime does not dispute that their counsel failed to respond. (See Reply BidPrime Mot. Compel, Dkt. 59). Accordingly, the Court will not order that the AEO designations for these documents be removed.
III. SMARTPROCURE'S MOTION
In its motion, SmartProcure asks the Court to compel discovery relating to: (1) BidPrime's asserted trade secrets; (2) BidPrime authorizing SmartProcure to access BidPrime.com so that it could bait SmartProcure with fake data and BidPrime's modification of its terms of service; (3) BidPrime's engagement letter and billing records; (4) BidPrime's damages; and (5) BidPrime's communication with others regarding its allegations and claims. (SmartProcure Mot. Compel, Dkt. 53, at 1). The Court will address each in turn.
In an interrogatory, SmartProcure asked BidPrime to identify and describe each bid source that SmartProcure downloaded from BidPrime.com, including the URLs of those sources. (Id.). BidPrime responded by stating that SmartProcure downloaded approximately 10,525 bid sources but provided no URLs. (Id. at 2). SmartProcure asks the Court to compel disclosure of the bid-source URLs, (id. at 3), so that “a reviewer could understand how each alleged trade secret differs from public domain information,” (id. at 2).
SmartProcure cites several district court cases requiring the plaintiff reasonably identify each alleged trade secret prior to discovery. E.g., Zenimax Media, Inc. v. Oculus Vr, Inc., No. 3:14-CV-1849-P (BF), 2015 WL 11120582, at *1 (N.D. Tex. Feb. 13, 2015). But even those courts admit that plaintiffs in this jurisdiction are not required to allege trade secret claims “with a particular level of detail.” Id.; see also GlobeRanger Corp. v. Software AG United States of Am., Inc., 836 F.3d 477, 492 (5th Cir. 2016) (stating that, at trial, evidence of a trade secret need not be any more concrete than sufficient to allow a jury to reasonably conclude that at least some portion of the alleged trade secret constituted a trade secret). SmartProcure does not articulate why the URLs are relevant to determining whether BidPrime's database of bid sources constitutes a trade secret,[2] especially when BidPrime admits that each individual bid source is public information. The Court will not compel BidPrime to produce the original URLs relating to each individual bid source scraped by SmartProcure.
*4 SmartProcure also requested that BidPrime produce documents evidencing the effort made and expense incurred to obtain the data forming the basis of BidPrime's claims. (SmartProcure Mot. Compel, Dkt. 53, at 4). This request goes to the heart of BidPrime's trade secrets claim, as it seeks evidence relating to one of the factors used to determine the existence of a trade secret. GlobeRanger Corp., 836 F.3d at 492. BidPrime objects that responding would require it to disclose its entire business to a rival company. (Resp. SmartProcure Mot. Compel, Dkt. 58, at 6). BidPrime suggests that SmartProcure can simply depose the witnesses who will testify as to effort and expense at the preliminary injunction hearing, but the Court does not agree that SmartProcure's discovery should be so limited. BidPrime must respond to SmartProcure's RFP No. 21. (SmartProcure Mot. Compel, Dkt. 53, at 4). If SmartProcure does, in fact, insist on obtaining “every communication [BidPrime] has,” BidPrime may argue in a separate motion that such a request is burdensome. In the meantime, the Court finds that the existing protective order, (Dkt. 28), adequately protects BidPrime's business interests.
SmartProcure used an account belonging to a fake identity (“Chris Edward”) to access BidPrime.com over Memorial Day Weekend in 2018. (SmartProcure Mot. Compel, Dkt. 53, at 6). SmartProcure recently learned that the data obtained were fake and that BidPrime allowed SmartProcure to access BidPrime.com over Memorial Day Weekend so that it would download the fake data. (Id. at 6–7). SmartProcure seeks documents related to this action. (Id. at 8). SmartProcure also seeks documents related to BidPrime's decision to modify the terms of service for its website. (Id. at 9). BidPrime represents that it has produced or will produce all responsive and non-privileged documents relating to these requests. (Resp. SmartProcure Mot. Compel, Dkt. 58, at 7). In light of BidPrime's representations, the Court denies SmartProcure's request without prejudice. If SmartProcure has objections to BidPrime's responses or assertions of privilege, it may raise them in a subsequent motion.[3]
SmartProcure seeks to compel responses to its requests for production (“RFP”) 99 and 100. (SmartProcure Mot. Compel, Dkt. 53, at 11). Those requests seek documents concerning the date on which BidPrime first engaged counsel regarding this action and documents concerning BidPrime's attorney's fees. (SmartProcure RFPs, Dkt. 53-2, at 63). Specifically, SmartProcure seeks BidPrime's engagement letter from its current counsel and billing records from that counsel. (SmartProcure Mot. Compel, Dkt. 53, at 11). SmartProcure argues that the letter and billing records are necessary to determine the validity of BidPrime's assertion of attorney-client privilege with respect to SmartProcure's terms-of-service discovery requests. (Id. at 11–12). The Court finds that BidPrime's attorney's fees are not relevant to the preliminary injunction hearing and will not compel BidPrime to respond to SmartProcure's RFP No. 100. However, the date that BidPrime retained counsel may be relevant to its assertion of privilege, so it must respond to SmartProcure's RFP No. 99, but may in doing so redact responsive documents to protect privileged information not necessary to establishing the date of engagement.
*5 SmartProcure's RFPs No. 84 and 87 request documents concerning BidPrime's monthly average new sales and monthly average renewals from April 2017 to March 2018. (SmartProcure Mot. Compel, Dkt. 53, at 14). BidPrime responded only with documents from January 2018 to March 2018, (id. at 15), and argues that SmartProcure has not articulated a need for a full year of sales and renewal data, (Resp. SmartProcure Mot. Compel, Dkt. 58, at 10). The Court agrees with SmartProcure that a greater sample of sales and renewal data may bear on whether the alleged decline in April 2018 is attributable to SmartProcure's actions or other cyclical factors. BidPrime must fully respond to SmartProcure's RFPs No. 84 and 87.
Around the time BidPrime filed its complaint, it issued a security update and press release to its customers describing the allegations in this action. (SmartProcure Mot. Compel, Dkt. 53, at 16). SmartProcure requested documents related to those communications and any related subsequent communications and states that BidPrime did not produce anything in response. (Id.). BidPrime responds that it produced the security update, press release, and related communications, but will not produce copies of identical communications sent to thousands of customers because doing so would provide BidPrime's secret customer list to a rival. (Resp. SmartProcure Mot. Compel, Dkt. 58, at 10). SmartProcure argues that it is entitled to know if those communications are consistent with BidPrime's witnesses' testimony in this action. (Id. at 17). Producing identical copies of the security update and press release is not necessary to this purpose, nor is producing customers' responses to those communications, nor is it necessary to identify those customers. BidPrime must respond to SmartProcure's RFP No. 70 and 75 to the extent that those requests concern third-party communications in which BidPrime made representations about the conduct alleged in this action, but they need not reveal the identity of those third parties. The Court will not order BidPrime to respond to SmartProcure's RFPs No. 69, 71–74, or 76–80 beyond what it has already produced.
IV. CONCLUSION
For the reasons given above, IT IS ORDERED that Plaintiff BidPrime, LLC's Motion to Compel Production of Documents, (Dkt. 51), is GRANTED IN PART AND DENIED IN PART. Specifically, the Court grants BidPrime the following relief:
• SmartProcure must produce the full chat log between Rubenstein and Kras.
• SmartProcure must produce the Slack bot messages.
• SmartProcure must produce a redacted version of the software requirements document stored on Google Drive that displays the two pages discussing the requirements for the script that SmartProcure has produced to BidPrime.
All other relief not expressly granted to BidPrime is denied.
*6 IT IS FURTHER ORDERED that Defendant SmartProcure, Inc.'s Motion to Compel or, in the Alternative, to Exclude Evidence, (Dkt. 53), is GRANTED IN PART AND DENIED IN PART. Specifically, the Court grants SmartProcure the following relief:
• BidPrime must respond to SmartProcure's RFP No. 21.
• BidPrime must respond to SmartProcure's RFP No. 99, but may in doing so redact responsive documents to protect privileged information not necessary to establishing the date of engagement.
• BidPrime must fully respond to SmartProcure's RFPs No. 84 and 87.
• BidPrime must respond to SmartProcure's RFP No. 70 and 75 to the extent that those requests concern third-party communications in which BidPrime made representations about the conduct alleged in this action, but they need not reveal the identity of those third parties.
All other relief not expressly granted to SmartProcure is denied.
Footnotes
BidPrime also avers that Rubenstein had stored these responsive documents on his laptop, but that they were erased on the day BidPrime filed his complaint. (BidPrime Mot. Compel, Dkt. 51, at 7).
“Texas courts weigh six factors... to determine whether a trade secret exists: (1) the extent to which the information is known outside of the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken to guard the secrecy of the information; (4) the value of the information to the business and to its competitors; (5) the amount of effort or money expended in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.” GlobeRanger Corp. v. Software AG United States of Am., Inc., 836 F.3d 477, 492 (5th Cir. 2016) (citing In re Union Pac. R.R. Co., 294 S.W.3d 589, 592 (Tex. 2009) ).
SmartProcure argues that BidPrime has waived attorney-client privilege through offensive use of the doctrine. (SmartProcure Mot. Compel, Dkt. 53, at 12–14). Because this evidence pertains to both federal and state claims, the Court applies federal law to determine the scope of the privilege in this action. Garza v. Scott & White Mem'l Hosp., 234 F.R.D. 617, 625 (W.D. Tex. 2005); Apex Mun. Fund v. N-Grp. Sec., 841 F. Supp. 1423, 1431 (S.D. Tex. 1993). Under federal law, “the attorney-client privilege is waived when a litigant places information protected by it in issue through some affirmative act for his own benefit, and to allow the privilege to protect against disclosure of such information would be manifestly unfair to the opposing party.” Conkling v. Turner, 883 F.2d 431, 434 (5th Cir. 1989) (cleaned up). Regarding allowing access to its website or modifying its terms of service, BidPrime has not made its confidential communications a material issue in this proceeding. Moreover, the Court does not find that it would be manifestly unfair to allow BidPrime to assert privilege over its communications related to these allegations. BidPrime has admitted that it allowed access to SmartProcure through the Chris Edward account, (SmartProcure Mot. Compel, Dkt. 53, at 6–7), and SmartProcure can obtain relevant, nonprivileged evidence of these alleged facts.