eDiscovery Assistant

Mobile Equity Corp. v. Walmart Inc.

2022 WL 36170 (E.D. Tex. 2022)

January 4, 2022

Payne, Roy S., United States Magistrate Judge

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Summary

The Court granted MEC's motions to compel discovery, ordering Walmart to produce documents and export code, supplement/answer interrogatories, and pay MEC $25,000 in fees. The Court also denied Walmart's motion to compel prosecution-related documents and granted-in-part Walmart's second motion to compel response to interrogatory no. 8. Lastly, the Court ordered Walmart to produce relevant Slack channels, but directed the parties to meet and confer and narrow the list.

MOBILE EQUITY CORP., Plaintiff,
v.
WALMART INC., Defendant

Case No. 2:21-cv-00126-JRG-RSP

United States District Court, E.D. Texas, Marshall Division

Signed January 04, 2022

Counsel

Christian J. Hurt, Ty William Wilson, William Ellsworth Davis, III, Rudolph Fink, IV, The Davis Firm, PC, Longview, TX, for Plaintiff.
Kathryn Riley Grasso, Damon Marcus Lewis, DLA Piper LLP, Washington, DC, Benjamin A. Yaghoubian, Pro Hac Vice, DLA Piper LLP, Los Angeles, CA, Christian Foster Chessman, DLA Piper LLP, East Palo Alto, CA, Debra Elaine Gunter, Eric Hugh Findlay, Findlay Craft PC, Tyler, TX, Edward H. Sikorski, DLA Piper US LLP, San Diego, CA, Jackob Ben-Ezra, DLA Piper Usa LLP, Houston, TX, for Defendant.

Payne, Roy S., United States Magistrate Judge

MEMORANDUM ORDER

On December 29, 2021, the Court held a hearing on a series of motions to compel (Dkt. Nos. 62, 65, 66, 72, 75, 80) filed by Plaintiff Mobile Equity Corp. (“MEC”) and two motions to compel (Dkt. Nos. 56, 77) filed by Defendant Walmart Inc. This Order summarizes and memorializes the Court's rulings and reasons. While this Order memorializes such rulings, it in no way limits or constrains the Court's rulings as announced into the record from the bench. Unless otherwise stated, all additional production ordered herein is due by January 10, 2022. Accordingly, it is hereby ORDERED as follows:

Plaintiff's Motions to Compel

1. MEC's Second Motion to Compel Discovery (Dkt. No. 62)

During the hearing the parties represented they were likely able to reach an agreement with respect to the substance of this motion. The motion is now DENIED AS MOOT.

2. MEC's Third Motion to Compel Discovery (Dkt. No. 65)

MEC's Third Motion to Compel Discovery is GRANTED. MEC moves the Court to compel Walmart to produce Mr. Mike Cook for deposition. Dkt. No. 65 at 2. Defendant objects and argues that Mr. Cook is an apex witness. The Court finds Mr. Cook is not an apex witness and must be produced for deposition. Being one of 110 senior vice presidents does make him presumptively an apex witness. Additionally, any such presumption would be overcome since there are other witnesses who have identified Mr. Cook as having unique knowledge. In particular, Mr. Cook appears to have unique first-hand knowledge regarding events that are directly relevant to MEC's damages claims as well as relevant to rebut assertions about the availability of non-infringing alternatives.

Due to the closing of Walmart's fiscal year (January 31, 2022), Walmart has indicated that it may be difficult to produce Mr. Cook for deposition. However, MEC has requested to depose Mr. Cook for several months. Walmart, however, has delayed Mr. Cook's deposition causing whatever prejudice may exist. It is ORDERED that Mr. Cook be produced for deposition no later than January 20, 2022. The Court, however, directs MEC to be as accommodating to Mr. Cook's schedule as is feasible, but to be clear—he is to be produced no later than January 20, 2022.

3. MEC's Fourth Motion to Compel Discovery (Dkt. No. 66)

MEC's Fourth Motion to Compel Discovery is GRANTED-IN-PART. MEC moves the Court to compel Walmart to answer interrogatory nos. 4 and 7, and to produce documents pursuant to its document requests. Dkt. No. 66 at 2. Walmart is directed to supplement its response to MEC's interrogatory no. 4 and give a definite statement with respect to any arbitration and administrative proceedings, as well as produce any accompanying documents. As written, MEC's interrogatory no. 7 is too broad and does not warrant Walmart to undertake additional search efforts.

4. MEC's Motion to Reopen Hearing on its First Motion to Compel (Dkt. No. 72)

MEC's Motion to Reopen Hearing on its First Motion to Compel is GRANTED. Plaintiff moves the Court to compel Walmart to produce additional source code information, Slack channels, and additional JIRA documentation. The Court is gravely concerned about the continuing resistance—and perhaps defiance—Walmart has shown with respect to the full production of its source code and accompanying documentation. For instance, the Court previously ordered “Walmart to produce any source code contained in [the “Store Services”] module.” Dkt. No. 55. Walmart did not. Plaintiff has demonstrated there is additional source code in the “Store Services” module that Walmart failed to produce, despite this Court's order.

Walmart is ORDERED to export all code in the “github” directory for “Store Services.” Walmart is further ORDERED to produce all JIRA documents described on Plaintiff's Hearing Slide 20 in native format. Walmart is also ORDERED to produce relevant[1] Slack channels.

5. MEC's Fifth Motion to Compel Discovery (Dkt. No. 73)

MEC's Fifth Motion to Compel Discovery is GRANTED. MEC moves the Court to compel Walmart to supplement/answer its interrogatories nos. 2 and 3, and to produce documents pursuant to its document requests. MEC's Interrogatory no. 2 states:

Describe in detail your data on the usage of the Accused Products in the United States, including, identifying at least (on a monthly basis) for the Accused Products: the data fields you record related to the Accused Products; the number of unique users; the number of transactions[1]; the total transaction dollar value[2]; the amounts paid in transaction fees; the average, median, mean transaction values and amounts for transaction fees; and the sources, documents, and/or systems you use to record and determine this usage.

Dkt. No. 73 at 5. Walmart answered this interrogatory using Rule 33(d). Walmart choose to produce the daily total of Walmart Pay transactions for each of its thousands of stores, instead of a monthly company-wide total as requested. Thus, one day of transactions consumed approximately sixty pages having thousands of data entries.

This is an abusive and improper use of Rule 33(d). It is beyond belief that any Walmart executive takes these documents and manually tabulates them every day. Obviously, Walmart is in a much better position than MEC to accurately answer Plaintiff's interrogatory no. 2. Practices such as this cause the Court to ignore Walmart's reliance on huge numbers of documents produced as a sign of good faith efforts to respond to discovery. Walmart is ORDERED to fully answer interrogatory no. 2 and any accompanying document requests. Walmart shall provide a table that accurately answers each section of MEC's interrogatory.

Interrogatory no. 3 states:

Describe in detail the terms of each relationship, including identifying the terms of agreements (e.g., financial, security, or other material terms), that you have with any payment provider you accept or have accepted for the Accused Products (e.g., “any major card, including VISA, MasterCard, AMEX, and Discover,” Chase Pay), including the differences, if any, between the terms (e.g., financial terms, security, or other material terms) relating to the Accused Products compared to other ways customers may make purchases in your stores (e.g., swiping / inserting / tapping a card at a point-of-sale terminal or online) from January 2015 and the present.

Id. at 4. Walmart's main argument appears to be that these documents are too sensitive to reveal. See generally Dkt. No. 89. These agreements are highly relevant for MEC to explore what, if any, benefit Walmart may have obtained with card network providers in the development of the accused product. Given the highly relevant nature of the documents and the minimal burden of production, along with the protective order in place to protect Walmart, Walmart is ORDERED to answer interrogatory no. 3 and produce any accompanying documents, as described in MEC's document requests.

6. MEC's Sixth Motion to Compel Discovery (Dkt. No. 80)

MEC's Sixth Motion to Compel Discovery is GRANTED-IN-PART. MEC seeks the production of “three ‘buckets’ of topics: 1) Walmart's marketing, benefits, or cost savings from the accused products; 2) Walmart's non-infringing alternatives (“NIAs”); and 3) Walmart's documents related to willfulness.” Dkt. No. 80 at 2.

Walmart's production of marketing documents is seriously deficient. After review, the Court is convinced there are far more relevant documents that Walmart has not produced. This is particularly true in the “finance and treasury” sources. Walmart is ORDERED to search and produce documents related to marketing and costs in the marketing and “finance and treasury” sources.

Walmart has agreed to produce documents related to operational costs of maintaining the accused product. Walmart is ORDERED to produce operational cost documents as far back as December 2015 by January 10, 2022.

As for for non-infringing alternatives, Walmart is ORDERED to supplement its answer to interrogatory no. 16, but the motion is otherwise DENIED.

As for documents related to willfulness, Walmart is ORDERED to conduct the further search agreed at the hearing for IP policies and Corporate Development Team emails. Walmart also has not produced a definitive statement on its data retention policy. Walmart is ORDERED to produce all relevant data retention policies.

Defendant's Motions to Compel

1. Walmart's Motion to Compel Prosecution-Related Documents for Asserted Patents (Dkt. No. 56)

Walmart's Motion to Compel Prosecution-Related Documents is DENIED. Walmart moves to compel Plaintiff to produce “complete prosecution histories for international patent applications that are related to the patents asserted in this case.” Dkt. No. 56 at 2. Based on the briefing and the argument presented, the Court is satisfied that MEC has produced all the relevant non-privileged documents in its possession.

2. Walmart's Second Motion to Compel Response to Interrogatory No. 8 (Dkt. No. 77)

Walmart's Second Motion to Compel Response to Interrogatory No. 8 is GRANTED-IN-PART. Walmart's interrogatory no. 8 asks for, among other things, offers to license. MEC did not adequately respond to the “offers” portion of Walmart's interrogatory no. 8 and is ordered to do so.

Fees

Rule 37(a)(5)(A) provides that the Court “must” assess fees to the losing party unless to do so would be unjust. The Court finds that Walmart was not substantially justified in failing to provide complete discovery responses and that $25,000 is the reasonable award of fees to Plaintiff under the circumstances taking into account the multiple motions and hearings required. Accordingly, Walmart is ORDERED to pay MEC, through its counsel, the sum of $25,000 no later than January 31, 2022.

SIGNED this 4th day of January, 2022.

Footnotes

[1]

There are roughly forty Slack channels Plaintiff identified as relevant. The Court is sensitive to the burden that Walmart would incur if all forty channels are ordered to be produced. The parties are ORDERED to meet and confer and narrow the list of forty channels. The Court is hesitant to place a limit on the number of channels that are to be produced but will resolve any dispute remaining after the parties’ efforts.