Contour Data Sols. LLC v. Gridforce Energy Mgmt., LLC
Contour Data Sols. LLC v. Gridforce Energy Mgmt., LLC
2022 WL 3907530 (E.D. Pa. 2022)
July 25, 2022
Rufe, Cynthia M., United States District Judge
Summary
The Court found that the ESI related to Contour's migration of customer data from Netrepid's systems to Contour's systems was relevant to Gridforce's contractual defenses against Contour's new claims. The Court denied Contour's motion to quash the subpoena and enter a protective order, and Gridforce was allowed to access the information.
Additional Decisions
CONTOUR DATA SOLUTIONS LLC, Plaintiff,
v.
GRIDFORCE ENERGY MANAGEMENT, LLC et al., Defendants
v.
GRIDFORCE ENERGY MANAGEMENT, LLC et al., Defendants
CIVIL ACTION NO. 20-3241
United States District Court, E.D. Pennsylvania
Filed July 25, 2022
Rufe, Cynthia M., United States District Judge
ORDER
*1 Defendant Gridforce Energy Management, LLC (“Gridforce”) has served a subpoena on nonparty Annagen, LLC d/b/a Netrepid (“Netrepid”), asking Netrepid to produce various documents and communications related to Contour's migration of customer data from Netrepid's systems to Contour's systems.[1] Plaintiff Contour Data Solutions LLC (“Contour”) has moved under Federal Rule of Civil Procedure 45 to quash this subpoena. In the alternative, Contour asks the Court to enter a protective order under Rule 26 relieving Netrepid from its obligation to respond.[2] Gridforce opposes this motion. Netrepid has made no filings in this matter but has fully complied with Gridforce's subpoena without objection.[3]
As an initial matter, Gridforce argues that Contour's motion has been rendered effectively moot because Netrepid has already produced the requested documents.[4] However, a motion to quash a nonparty subpoena is not rendered moot solely by the nonparty's compliance with the subpoena, because “[w]hile a court may not be able to return the parties to the status quo ante ... a court can fashion some form of meaningful relief” by requiring that produced materials be returned.[5] As the Court retains the power to fashion meaningful relief, it will turn to the substance of Contour's motion.
I. Standing to Quash the Subpoena under Rule 45
Contour moves to quash Gridforce's subpoena under Rule 45. Gridforce argues that Contour lacks standing to challenge the subpoena, which was directed at Netrepid and not Contour. “As a general rule, a motion to quash a third-party subpoena must be brought by the third party itself.”[6] “An exception exists, however, where a party claims ‘some personal right or privilege in respect to the subject matter of a subpoena duces tecum directed to a nonparty.’ ”[7]
Contour claims, without specificity, that Netrepid “may ... produce some unrelated documents which may include Contour's and/or Contour's Customer Highly Confidential information/documents.”[8] Contour does not elaborate on this, and these claims are hard to square with Contour's claims that Netrepid is a direct competitor of Contour, that “at no time did Annagen, LLC d/b/a Netrepid migrate any customer data/services to Contour,” and that “there are no responsive documents.”[9] However, the mere speculation that Contour may have a personal right in some documents produced is not sufficient to establish standing to quash a subpoena under Rule 45.[10] In addition, the parties have agreed to a Stipulated Protective Order governing discovery.[11] Contour has not argued that the Stipulated Protective Order would be ineffective with respect to Netrepid's documents,[12] and its existence further undermines the speculative interest that Contour claims.[13] For this reason, Contour lacks standing to quash Gridforce's subpoena to Netrepid under Rule 45.
II. Motion for Protective Order Under Rule 26
*2 In the alternative, Contour moves for a protective order under Rule 26(c) relieving Netrepid from the obligation to respond to Gridforce's subpoena. Unlike Rule 45, Rule 26(c) grants nonproducing parties standing to move for a protective order.[14]
Contour's motion argues that Gridforce's subpoena is “completely irrelevant to any claim or defense to [Contour]'s three new claims,” and that the Court has limited discovery to such material.[15] Rule 26(b)(1) limits civil discovery to “nonprivileged matter[s]” that are “relevant to any party's claim or defense and proportional to the needs of the case.”[16] “A party seeking discovery bears the initial burden of demonstrating the requested discovery is relevant to its claim or defense.”[17] “Relevance in this context has been ‘construed broadly to encompass any matter that could bear on, or that could reasonably lead to other matter that could bear on any issue that is or may be in the case.’ ”[18]
Gridforce argues that its requests to Netrepid will produce documents that show Contour's “familiarity with industry practices that concern commercial data migration,” and may show how Contour interpreted similar clauses granting authority to migrate data.[19] Gridforce supports this argument by reference to Maryland law, which governs the contract between the parties (the “MMSA”), and which provides that “a usage of trade of which both parties ‘are or should be aware’ may supplement the terms of an agreement.”[20]
Contour claims in response that “the Court has already found the MMSA to be unambiguous and readily understood without any, even highly relevant extrinsic evidence.”[21] This is a misstatement of the Court's earlier findings of fact and conclusions of law surrounding Plaintiff's Motion for a Preliminary Injunction. In those findings and conclusions, the Court explicitly cites to testimony about the parties' intentions to aid its interpretation of the MMSA.[22] In fact, Maryland law requires a court interpreting disputed contractual provisions to consider them in context, “which includes not only not only the text of the entire contract but also the contract's character, purpose, and the facts and circumstances of the parties at the time of execution.”[23] Contour points to no authority suggesting otherwise. Thus, Gridforce has met its burden of showing that the discovery it seeks from Netrepid is relevant to its contractual defenses against Contour's new claims.
*3 AND NOW, this 25th day of July 2022, upon consideration of Plaintiff's Motion to Quash Third Party Subpoena or, in the Alternative, Motion for Protective Order [Doc. No. 211] and the related briefing, and for the foregoing reasons, it is hereby ORDERED that Plaintiff's Motion is DENIED.
It is so ORDERED.
BY THE COURT:
Footnotes
Ex. A to Pl.'s Mot. Quash [Doc. No. 211-1] at ECF page 11.
Pl.'s Mot. Quash [Doc. No. 211] at ECF pages 1–2.
Gridforce's Sur-Reply Pl.'s Mot. Quash [Doc. No. 222] at 1.
Gridforce's Sur-Reply Pl.'s Mot. Quash [Doc. No. 222] at 1.
Church of Scientology of Cal. v. United States, 506 U.S. 9, 12 (1992) (emphasis original).
Malibu Media, LLC v. Doe, No. 15-2281, 2016 WL 524248, at *2 (M.D. Pa. Feb. 10, 2016).
Davis v. Gen. Acc. Ins. Co., No. 98-4736, 1999 WL 228944, at *2 (E.D. Pa. Apr. 15, 1999) (quoting Dart Indus., Inc. v. Liquid Nitrogen Proc. Corp. of Cal., 50 F.R.D. 286, 291 (D.Del. 1970)); see also Mann v. Univ. of Cincinnati, 114 F.3d 1188 (6th Cir. 1997) (same); United States v. Raineri, 670 F.2d 702, 712 (7th Cir. 1982) (holding, in a criminal appeal, that “[a] party has standing to move to quash a subpoena addressed to another if the subpoena infringes upon the movant's legitimate interests.”).
Pl.'s Mot. Quash [Doc. No. 211] at ECF page 6.
Pl.'s Mot. Quash [Doc. No. 211] at ECF page 6.
See, e.g., DVM Mfg., LLC v. Gallagher, No. 16-6369, 2017 WL 3401279, at *2 (E.D. Pa. Aug. 8, 2017) (emphasis original) (holding that a plaintiff had no standing to challenge a third-party subpoena where “Plaintiff does not assert that it has a personal right or privilege in the subject matter, and instead raises the possibility of such a right.”).
As drafted, the Stipulated Protective Order does not allow a party to place a confidentiality designation as-of-right on material that they did not produce. However, § B allows any party to dispute the designation of discovery material.
See Gallagher, 2017 WL 3401279, at *2 (finding that the existence of a protective order undermined a party's claim to standing based on a “potential” claim of privilege); see also First Sealord Sur. v. Durkin & Devries Ins. Agency, 918 F. Supp. 2d 362, 383–84 (E.D. Pa. 2013) (denying a motion to quash where, while a party had standing to quash a third-party subpoena “as it legitimately claim[ed] a personal right or privilege,” the party had not “articulate[d] a specific harm that might arise from the production” and “a protective order could be requested to manage [any such] risks.”).
Rule 26(c) provides in relevant part that “[a] party or any person from whom discovery is sought may move for a protective order.” Fed. R. Civ. P. 26(c)(1). “The explicit mention of ‘a party’ in the rule has been interpreted to provide standing for a party to contest discovery sought from third-parties.” Underwood v. Riverview of Ann Arbor, No. 08-11024, 2008 WL 5235992, at *2 (E.D. Mich. Dec. 15, 2008). See, e.g., In re Actiq Sales & Mktg. Pracs. Litig., No. 07-4492, 2011 WL 5509434, at *3 (W.D. Pa. Nov. 10, 2011) (holding that while a plaintiff lacked standing to quash a third-party subpoena under Rule 45, the plaintiff retained standing to move for a protective order under Rule 26).
Pl.'s Mot. Quash [Doc. No. 211] at ECF page 5.
Fed. R. Civ. P. 26(b)(1).
First Sealord, 918 F. Supp. at 382.
United States v. Abbott Lab'ys, No. 09-4264, 2016 WL 4247429, at *2 (E.D. Pa. Aug. 11, 2016) (quoting Oppenheimer Funds v. Sanders, 437 U.S. 340, 351 (1978)).
Gridforce's Resp. Opp'n Mot. Quash [Doc. No. [219] at 4–5.
Wright v. Com. & Sav. Bank, 464 A.2d 1080, 1084 (1983). While the statute cited by the Maryland court, Md. Code, Comm. L. § 1-205, was amended on June 1, 2012, the relevant language surrounding “usage of trade” was incorporated into § 1-303(c).
Pl.'s Resp. Supp. Mot. Quash [Doc. No. 221] at 2.
Ocean Petroleum, Co. v. Yanek, 5 A.3d 683, 691 (2010) (citation and quotation omitted).