Multiple Energy Techs., LLC v. Under Armour, Inc.
Multiple Energy Techs., LLC v. Under Armour, Inc.
2023 WL 2529187 (W.D. Pa. 2023)
February 21, 2023
Ranjan, J. Nicholas, United States District Judge
Summary
The court ordered Under Armour to reimburse Mr. Williams for ESI-related costs of compliance, ensuring that he would not be unfairly burdened with the costs of collecting, storing, and reviewing the ESI. The court also granted in part and denied in part MET's and Under Armour's motions to compel, and denied all parties' requests for attorneys' fees in connection with bringing these motions.
MULTIPLE ENERGY TECHNOLOGIES, LLC, Plaintiff,
v.
UNDER ARMOUR, INC., Defendant
v.
UNDER ARMOUR, INC., Defendant
Docket No. 20-664
United States District Court, W.D. Pennsylvania
Filed February 21, 2023
Counsel
Nicole Sullivan, Pro Hac Vice, Thomas Butler, Pro Hac Vice, White and Williams, LLP, New York, NY, Thomas B. Fiddler, White and Williams LLP, Philadelphia, PA, for Plaintiff.Carolyn Owens Boucek, Eckert Seamans Cherin & Mellot, LLC, Pittsburgh, PA, Kevin P. Allen, Michael P. Pest, Duane Morris LLP, Pittsburgh, PA, for Defendant.
Ranjan, J. Nicholas, United States District Judge
REPORT AND RECOMMENDATION NO. 2 (Discovery Motions) [ELECTRONICALLY FILED]
I. INTRODUCTION
*1 This dispute involves multiple anti-competition, trade-secret, false-advertisement, and related commercial claims filed by plaintiff Multiple Energy Technologies, LLC, against Under Armour, Inc. The parties have engaged in discovery for some time. In addition, Under Armour has issued a subpoena directed to non-party Mr. Stu Williams. The parties have multiple disputes over discovery, and Under Armour and Mr. Williams have disputes over the subpoena. On September 16, 2022, the Court issued a notice (ECF 153) for the appointment of a special master to assist the parties with their discovery disputes. The parties consented to the appointment, (ECF 155, 156), and the Court appointed the undersigned as Special Master by order dated September 20, 2022 (ECF 157).
After numerous meetings among counsel, along with several conferences with the Special Master, the parties and Mr. Williams have narrowed the list of discovery issues for resolution. To that end, the Special Master issued Report and Recommendation No. 1 (ECF 163), approved by the Court without objection (ECF 164). The Special Master called for motions to compel and/or motions to quash or for protective orders (as the case may be for each party and non-party) together with supporting briefs to be filed by November 30, 2022, and briefs in opposition to be filed on or before December 14, 2022. The parties and Mr. Williams complied.
The motions are ripe for a decision. The record on these motions includes the pleadings; relevant opinions and orders of the Court and other relevant docket entries; briefs supporting prior motions to compel; correspondence with the Special Master; nine briefs submitted in connection with these motions; and roughly 1,400 pages of exhibits attached to the motions/briefs. An appendix accompanies this report and recommendation (cited as “RR App. __”).
II. RELEVANT BACKGROUND
The parties and the Court are familiar with the case, and I write primarily for them. In its third amended complaint, MET alleges that it developed a bioceramics powder (Redwave) and a proprietary process to incorporate bioceramics into clothing to enhance recovery after physical activity. See RR App. 4. MET and UA had a business relationship for a time until (as MET claims) Under Armour shared MET's technology with a competitor (Hologenix) to develop a competing product (Celliant); wrongly claimed that product was FDA-approved and therefore better than MET's product (Redwave); left MET behind; interfered with MET's other business relationships; and thereafter drove MET out of the market. See RR App. 10-14. MET claims breach of contract, violations of the Sherman Act and Lanham Act, trade secret misappropriation, interference with business relationships, among others. See RR App. 21-34. Under Armour, of course, denies all the allegations and raised defenses. See RR App. 37-68.
The parties have tested one another's claims and defenses through extensive written discovery and document productions thus far, and they are near the end of that process. As noted in the introduction, there are several disputes over document productions that remain unresolved as reflected in the motions. In summary:
*2 ■ MET requests production or further production of Under Armour's research regarding MET, Redwave, Celliant, and Under Armour's incorporation of bioceramics in textiles; wash tests conducted on textiles containing Redwave or Celliant and the results; results of micrograph and microscope images of textiles incorporating MET's bioceramics; x-ray testing of Under Armour's alternatives to MET including Redwave or Celliant; the composition of prototype samples of bioceramic textiles printed by Under Armour's printer (a separate entity named Beida); and documents sufficient to show the process applied by Under Armour for Redwave, Celliant, and ColdGear Infrared. See RR App. 135.
■ In turn, Under Armour requests production or further production from MET of all written discovery and fifteen deposition transcripts from two related cases involving MET (the Hologenix case and the Casden Case) and additional records regarding MET's business relationships. See RR App. 398.
■ In addition, Under Armour issued a subpoena directed to Mr. Williams, who is identified in the complaint as an investor in and principal of MET and also serves (along with his law firm, Wilson Sonsini Goodrich & Rosati, P.C.) as MET's counsel in other matters. The subpoena calls for records from Mr. Williams regarding his ownership interests in MET and various business-related records which, if they exist, would be stored electronically at his law firm. See RR App. 544-549.
The parties have filed competing motions to compel, together with briefs in support and in opposition. Under Armour's motion also includes (a) a request to re-designate certain “Confidential Attorney Eyes Only” (“AEO”) information as confidential; and (b) a request to compel Mr. Williams to produce documents in response to the subpoena. Mr. Williams filed a motion to quash the subpoena or for a protective order and, alternatively, requests ESI-related costs of compliance including attorneys’ fees for a privilege review.
III. SUMMARY OF RECOMMENDATIONS
As described in further detail below, I will recommend that the Court (a) grant in part and deny in part MET's motion to compel; (b) grant in part and deny in part Under Armour's motion to compel; (c) deny Under Armour's request to re-designate certain testimony that is currently designated as AEO; (d) grant in part and deny in part the competing motions of Mr. Williams and Under Armour; (e) grant Mr. Williams’ request for reimbursement of ESI-related costs; (f) deny Mr. Williams’ request for attorneys’ fees for a privilege review; and (g) deny all parties’ respective claims for attorneys’ fees in connection with bringing these motions.
IV. ANALYSIS
The general discovery rules are familiar to the parties and the Court. As a threshold matter, the scope of discovery in a case is framed by the pleadings McClendon v. Dougherty, 2011 WL 2014816 at *2 (W.D. Pa. May 23, 2011) (“The complaint and its claims circumscribe the scope of discovery. It is against these claims that discoverability is determined as to each discovery request made.”).
Rule 26(b)(1) provides that “[p]arties 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. Information within this scope of discovery need not be admissible in evidence to be discoverable.” See Fed. R. Civ. Pro. 26(b)(1); Prime Energy & Chem., LLC v. Tucker Arensberg, P.C., No. 2:18-CV-0345, 2022 WL 1642394, at *3 (W.D. Pa. May 24, 2022).
*3 Under Rule 34, a party may request documents and electronically stored information within the responding party's possession, custody, or control so long as they are within the scope of discovery under Rule 26. See Fed. R. Civ. Pro. 34(a)(1)(A). “An objection must state whether any responsive materials are being withheld on the basis of that objection.” See Fed. R. Civ. Pro. 34(b)(2)(C).
A party moving to compel discovery bears the initial burden of proving the relevance of the requested information. In re Milo's Kitchen Dog Treats Consol. Cases, 307 F.R.D. 177, 179 (W.D. Pa. 2015). 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 discovery would outweigh the ordinary presumption in favor of broad disclosure.” See, e.g., Rudolf v. Am. Int'l Grp., Inc., No. CV 19-1468, 2022 WL 2757684, at *1 (W.D. Pa. July 14, 2022) (cleaned up).
As it relates to subpoenas, Rule 45 provides that a party may serve a subpoena on a nonparty to produce documents, electronically stored information, or tangible things. See generally Fed. R. Civ. Pro. 45(a). A court must modify or quash such a subpoena if, among other things, it requires disclosure of privileged or other protected materials or subjects a person to undue burden. See Fed. R. Civ. Pro. 45(d)(3)(A)(iii), (iv). “In evaluating whether a subpoena is unduly burdensome, the court balances the burden imposed on the party subject to the subpoena by the discovery request, the relevance of the information sought to the claims or defenses at issue, the breadth of the discovery request, and the litigant's need for the information.” In re Auto. Refinishing Paint, 229 F.R.D. 482, 495 (E.D. Pa. 2005).
MET moves to compel production of its third set of document requests (“Third Set”) and fourth set of document requests (“Fourth Set”). As described below, I recommend that MET's motion be granted in part and denied in part.
1. Relevance
At the outset, MET argues throughout its brief that the Court already determined that documents requested in MET's Third Set and Fourth Set are relevant and should be produced without considering new objections raised by Under Armour following the Court's prior order. See RR App. 138-141.
Although I do not fault Under Armour for asserting objections together with its responses to the Third Set and Fourth Set, I otherwise agree with MET. In resolving MET's first motion, the Court stated that “the documents requested are relevant. Therefore, Under Armour is compelled to produce them.” Id. The Court already addressed relevance in its order.
To avoid any doubt, I find that MET's requests call for relevant documents. This dispute largely centers around bioceramics and the technical processes of applying them to clothing. The Third Set and Fourth Set call for documents that are relevant to that issue from the perspective of both MET and Under Armour. Whether or not the documents prove helpful to either party at summary judgment or trial is a matter for another day.
If Under Armour withheld any documents requested in MET's Third Set and Fourth Set based on relevance following the Court's order, Under Armour should produce them or represent to MET in writing as required by Fed. R. Civ. Pro. 34(b)(2)(C) that it is not withholding any documents requested based on relevance.
2. Executive Summaries (Third Set, Request No. 1)
*4 MET's Third Set, Request No. 1 calls for “[a]ll ‘executive summaries’ of Your [Under Armour's] research concerning MET, Redwave, Hologenix, and Celliant, and Under Armour's incorporation of bioceramics into textiles.” See RR App. 136-144. MET argues that Under Armour's production of one document labeled “executive summary” is insufficient and explained to Under Armour during meet-and-confer sessions that the request is broader than calling for documents expressly labeled “executive summary.” See RR App. 143-144. Under Armour argues that it produced the only document labeled “executive summary” in its possession and produced the entire (non-privileged) contents of a Dropbox folder identified by Under Armour's witness, Dr. Trexler, that contains Under Armour's research. See RR App. 597-598.
I acknowledge that Under Armour has produced documents in response to MET's request. MET deposed Dr. Trexler, who described research efforts and identified a Dropbox file where that research would be located. See RR App. 597-598. Although Dr. Trexler used the phrase “executive summaries” and MET used that phrase in its request, his testimony suggested that other research documents accompanied any executive summaries in that Dropbox file. See RR App. 598. Under Armour, in turn, departed from its initial, more narrow interpretation of the request and produced documents from the Dropbox file regardless of whether they are labeled “executive summary.” See RR App. 598 n.4.
I note, however, that MET's request calls for Under Armour's research, not necessarily the research of a specific individual. See RR App. 159. MET explained to Under Armour and the Special Master that the requests are broad enough to cover Under Armour's research concerning MET, Redwave, Hologenix, Celliant, and Under Armour's incorporation of bioceramics into textiles (regardless of whether a document is labeled “executive summary”). See RR App. 143-144. To the extent Under Armour has responsive research documents beyond this Dropbox folder, regardless of who authored them or how they are named (executive summary or not), it should produce them. If there are no more responsive documents to produce, Under Armour should confirm that in writing along with a Rule 34(b)(2)(C) confirmation that it is not withholding any other responsive documents based on objections.
Therefore, I recommend that MET's motion to compel the production of documents responsive to MET's Third Set, Request No. 1, as clarified, be granted and that Under Armour submit the written confirmations described above.
3. Wash Tests (Third Set, Request No. 2)
MET moves to compel the production of “wash tests” and the results of wash tests regarding Under Armour products that use Redwave, Celliant, or ColdGear Infrared. See RR App. 136. Under Armour acknowledges that it did not produce wash tests and argues that (a) the wash tests are only marginally relevant, (b) Dr. Trexler's testimony explained the results of certain wash tests, and (c) the burden to produce the wash tests outweighs their utility to MET. RR App. 599-600.
Although I take Under Armour's point that deposition transcripts contain information about the results of certain wash tests, the question here is whether documents reflecting the wash tests and test results that MET requested are subject to discovery. They are. As noted, the Court previously determined that the documents are relevant and ordered that they be produced. See ECF 142.
I acknowledge Under Armour's statement that it may be burdensome to compile wash tests or summaries of wash test results. Other than counsel's statement, however, I see nothing in the materials that producing wash tests poses an undue burden on Under Armour. Without any further explanation, I see no basis to deny MET's request particularly in light of the Court's prior order. Integral Scrap & Recycling, Inc. v. Conifer Holdings, Inc., No. 2:20-CV-00871-MJH, 2021 WL 826747, at *5 (W.D. Pa. Mar. 4, 2021) (“The mere statement that a discovery request is overly broad, burdensome oppressive and irrelevant is not adequate to voice a successful objection.”) (cleaned up).
*5 Therefore, I recommend that MET's motion to compel the production of wash tests (Third Set, Request No. 2) be granted.
4. Micrographs, Microscope Images and X-ray Fluorescence Testing (Third Set, Request Nos. 4 and 17)
Although I recognize that a court cannot compel the production of a document that does not exist, Sanchez v. Silbaugh, No. CV 20-1005, 2022 WL 2668545, at *5 (W.D. Pa. July 11, 2022), aff'd, No. CV 20-1005, 2022 WL 16950426 (W.D. Pa. Nov. 15, 2022), excerpts from Dr. Trexler's testimony suggest that responsive test results exist in a Dropbox folder. See RR App. 1150, 1164-1165. It is unclear whether the Dropbox folder that Under Armour already produced is the same one that Dr. Trexler identified in connection with his testimony about micrographs, microscope images, and x-ray fluorescence testing. If it is, Under Armour already represented here that MET has the all the discoverable contents of that folder. If not, Under Armour has an obligation to produce the documents requested and confirm in writing as required by Rule 34 that it is not withholding any micrographs, microscope images, or x-ray fluorescence testing based on any of its objections.
Therefore, I recommend that MET's motion to compel the production of micrographs, microscope images and x-ray fluorescence testing of Under Armour products (Third Set, Request Nos. 4 and 17) be granted in part as explained above and denied in all other respects.
5. Beida Documents (Third Set, Request Nos. 9-14)
MET moves to compel the production of various documents regarding the composition of prototype samples of bioceramic textiles printed by Under Armour's printer, Beida. See RR App. 136, 144. In response, Under Armour notes that Beida is a separate entity, points to deposition testimony indicating that no one at Under Armour would be privy to information that MET seeks through the documents requested, and argues that Under Armour already produced all documents regarding Beida in its possession that are responsive to MET's requests. MET disagrees, arguing that the documents Under Armour identified are not responsive and that additional documents reflecting this information are within Under Armour's control if not in its possession. See RR App. 601-602.
I agree in part with Under Armour. Rule 34 requires that a party produce documents in its possession, custody, or control. See Fed. R. Civ. Pro. 34(a)(1)(A). “Control” essentially means a party has the legal right or practical ability to obtain documents from a non-party on demand. See Mercy Catholic Med. Ctr. v. Thompson, 380 F.3d 142, 160 (3d Cir. 2004) (“In the context of Fed. R. Civ. P. 34(a), so long as the party has the legal right or ability to obtain the documents from another source upon demand, that party is deemed to have control.”).
Here, Beida is a third-party printer in Taiwan that Under Armour uses. See RR App. 210. Based on my review of the materials, there is no indication that Under Armour and Beida are affiliated in a way other than Beida serving as Under Armour's printer, and those parties (as expected) communicate regarding Beida's work for Under Armour. See RR App. 212, 220-358. But that alone does not establish Under Armour's “control” over potentially responsive documents in Beida's possession. If MET is asking the Court to compel Under Armour to demand from Beida responsive documents, the Court could not do so without more indication that Under Armour has “control” in the Rule 34 sense over documents that Beida may or may not have that may or may not be responsive.
*6 Moreover, Under Armour's witnesses testified that the information MET seeks through these document requests might be available from Beida, but not from anyone at Under Armour. See RR App. 601-602. Under Armour identified documents that it produced to MET regarding meetings between Under Armour and Beida; trial runs conducted by Beida; comparisons between Redwave and Celliant; and loading percentages utilized by Beida, and other topics. See RR App. 212, 220-358. Given that the documents produced demonstrate Under Armour and Beida working closely together on projects, Under Armour may have in its possession documents regarding Beida's determinations that MET seeks in its requests. If so, Under Armour should produce them. If not, Under Armour should confirm in writing to MET that it has no other documents in its possession responsive to MET's Third Set, Request Nos. 9-14 and that it is not withholding any responsive documents as required by Rule 34.
Therefore, I recommend that MET's motion to compel the production of additional documents regarding Bieda (Third Set, Request Nos. 9-14) be granted in part as explained above and denied in all other respects.
6. Hinged Printing (Fourth Set, Request Nos. 1-3)
Finally, MET moves to compel responses to three requests that relate to Under Armour's use of “hinged printing” with Redwave, Celliant, and Coldgear Infrared. See RR App. 137. In response, Under Armour notes that it complied with its obligations by producing documents sufficient to show the use of “hinged printing” and argues that the motion should be denied because MET appears to be asking for something different than what it originally requested based on several meet-and-confer sessions among counsel. See RR App. 605.
I acknowledge that Under Armour has produced documents sufficient to show Under Armour's use of “hinged printing” in response to MET's requests. Following that production, however, MET explained to Under Armour (and later to the Special Master) that it used the phrase “hinged printing” based on testimony and that MET's request sought documents sufficient to show the printing process applied by Under Armour for Redwave, Celliant, and ColdGear Infrared. See RR App. 602-606.
MET clarified its request to produce “documents sufficient to show the printing process applied by Under Armour for Redwave, Celliant, and ColdGear Infrared” in order to “probe the testimony that Under Armour used the same process for Redwave and Celliant as was used for its CodlGear application.” See RR App. 134. Although I acknowledge that MET used a specific phrase in its request, the meet-and-confer process that courts invariably require before filing discovery motions would have little value if lawyers are encouraged to discuss any confusion over document requests and then overlook those clarifications when attempting to resolve disputes. Moreover, but for the parties’ agreement that they will no longer serve new document requests, MET would have had the ability to modify and re-serve a document request consistent with the clarification it already provided to Under Armour, and Under Armour would be obligated to produce them because they are relevant and subject to discovery.
Therefore, I recommend that MET's motion to compel the production of documents in response to MET's Fourth Set, Request Nos. 1-3, as clarified by MET, be granted.
1. Hologenix/Casden Litigation (Sixth and Seventh Set)
First, Under Armour moves to compel the production to its Sixth Set and Seventh Set of requests for all written discovery exchanged and deposition transcripts for a total of 15 witnesses, 11 of whom testified in the Hologenix case and 4 of whom testified in the Casden case. In response, MET argues that the requests are overbroad and disproportionate to the needs of this case. RR App. 689-693.
*7 By way of supplemental brief, Under Armour identified a letter filed by MET in the Casden case describing the confidential and/or highly confidential testimony of MET corporate representatives (Mr. Williams and Dr. Shannon Vissman, another MET principal) regarding MET's business, company information, company finances, MET's application of Redwave, and MET's relationship with Under Armour. See RR App. 1708-1719. Under Armour argues that the testimony of these witnesses shows similarity among the cases, is relevant, and Under Armour will be disadvantaged if it cannot determine whether or not testimony is consistent among the cases. See RR App. 1708-1711.
Under Armour's requests raise the question of “cloned” or “piggyback” discovery. The Eastern District of Pennsylvania recently addressed the issue:
There is no established standard for assessing so-called “cloned” or “piggyback” discovery requests for all discovery produced in prior litigation or investigations. In a handful of cases cited by Defendants, courts found such discovery appropriate only when the fact that documents were previously produced has evidentiary significance in the pending case. See, e.g., TravelPass Grp., LLC v. Caesars Ent. Corp., No. 5:18-CV-153-RWS-CMC, 2020 WL 698538, at *6 (E.D. Tex. Jan. 16, 2020). In contrast, other courts allow such discovery where there is “significant factual and legal overlap” with a prior case and the request is not overbroad. See, e.g., Whitman v. State Farm Life Ins. Co., No. 3:19-CV-06025-BJR, 2020 WL 5526684, at *3 (W.D. Wash. Sept. 15, 2020); Peterson v. Wright Med. Tech., Inc., No. 11-1330, 2013 WL 655527, at *6 (C.D. Ill. Feb. 21, 2013).1 But similarities or overlap alone are insufficient to justify “a carte blanche production of all documents from the [previous] cases.” Chen v. Ampco Sys. Parking, No. 08-CV-0422-BEN (JMA), 2009 WL 2496729, at *2 (S.D. Cal. Aug. 14, 2009). The requesting party must still “make proper discovery requests, identifying the specific categories of documents sought, in order to obtain them—and each category must be relevant to its claims and defenses.” King Cnty. v. Merrill Lynch & Co., No. C10-1156-RSM, 2011 WL 3438491, at *3 (W.D. Wash. Aug. 5, 2011).
Allegheny Cnty. Employees’ Ret. Sys. v. Energy Transfer LP, No. CV 20-200, 2022 WL 17339035 (E.D. Pa. Nov. 30, 2022) (emphasis added).
Here, Under Armour has demonstrated substantial overlap among this case and the Hologenix and Casden cases, and I reject MET's arguments to the contrary that there must be a more perfect fit among the cases. I also acknowledge that Under Armour withdrew its request for “all documents” produced in the Hologenix or Casden cases and narrowed its list of transcripts to 15 (as opposed to all) witnesses following the Court's prior order at ECF 142.
However, Under Armour's requests otherwise do not identify specific categories of documents so the Court may evaluate relevance and proportionality issues. When the Court here denied Under Armour's prior motion to compel the Hologenix and Casden litigation documents, it did so without prejudice to re-serve specific, narrowly tailored, and proportionate requests. The court in Energy Transfer likewise made these types of distinctions when granting certain requests for production as sufficiently specific and denying certain others as too broad. Energy Transfer, supra, at *3-7. A blanket request for all written discovery and transcripts of more than a dozen witnesses who testified in another case, without more, does not give the Court the ability to determine whether the request is relevant and its scope is proportional to the needs of the case as required by Rule 26(b)(1). It also limits the Court's ability to thread the needle when attempting to reach compromises and resolve discovery disputes.
*8 Under Armour's supplemental brief does not change the analysis. Although there may be overlap with, and relevant information in, the Casden and Hologienix case as reflected in the topics identified in MET's letter, that is not enough. See Energy Transfer, supra, at *4 (“Although Plaintiffs can establish some relevance and overlap with the facts underlying the current action, a blanket request for all other documents produced to the District Attorney is overbroad and Plaintiffs have not met their burden of establishing relevance.”).
This Court has declined to order the production of deposition transcripts from witnesses in other cases. See, e.g., Alley v. MTD Prod., Inc., No. 3:17-CV-3, 2018 WL 4689112, at *4 (W.D. Pa. Sept. 28, 2018) (granting defendant's protective order and denying plaintiff's request for production of “all expert reports, deposition transcripts, and discovery responses generated in prior cases involving snowblowers that Defendants manufactured”). Despite research, I am unaware of case law that says a party nevertheless is entitled to deposition transcripts from other cases under Rule 34 in order to compare the testimony of those witnesses who may or may not testify at trial in the underlying case.
The needs of the case dictate against an order compelling production of all written discovery and multiple transcripts in the Casden and Hologenix cases. Under Armour already has access to ample information from the Casden and Hologenix cases, as the Court already has pointed out. See RR App. 71-72. MET also notes in its opposition that Under Armour already has discovered information on the topics covered in the Williams/Vissman transcripts through various witnesses who sat for depositions, and Under Armour has noticed a deposition for a corporate designee that will cover the same topics. See RR App. 1723.
Therefore, I recommend that Under Armour's motion to compel the production of all written discovery and deposition transcripts for 15 witnesses who testified in the Hologenix and Casden litigations (Sixth Set and Seventh Set) be denied.
2. MET Business Relationship Records (Eighth Set)
Next, Under Armour moves to compel certain records regarding MET's business relationship. See RR App. 404. Under Armour argues that although MET produced agreements with companies such as Nike, 18th Amendment, and D.J. Bennett, MET has not produced (1) any internal or external communications regarding a potential or actual business relationship with any of those entities; (2) any records of sales to any of those entities; or (3) any agreements with a company called Eleve. See RR App. 404. MET responds that it satisfied its obligations, Under Armour is not entitled to every possible responsive document, and already informed Under Armour that it does not have any documents responsive to certain requests. See RR App. 694-695.
I agree with Under Armour that the documents identified above are relevant to test MET's claims that Under Armour has foreclosed MET from the relevant market and led a boycott campaign against MET. I acknowledge MET's argument that it has identified numerous responsive documents. Given that Under Armour has identified these specific relevant documents that it has not received from MET, I will recommend that MET search for and produce them. If the documents do not exist, MET should confirm that in writing (to the extent it has not done so already regarding these specific documents) along with a statement that MET has not withheld responsive documents based on objections as required by Rule 34.
*9 Therefore, I recommend that Under Armour's motion to compel the production of MET's business relationship records (Eighth Set), limited to the documents identified above, be granted.
Under Armour moves to re-designate certain deposition testimony of MET's witness, Dr. Alan Letton, as confidential rather than confidential AEO as defined by the protective order in this case. See RR App. 405-406. Under Armour argues that it should have the ability to confer with Dr. Trexler about the alleged trade secrets that Dr. Letton described in his testimony in order to prepare for further proceedings and eventually for trial. See RR App. 405. In response, MET argues that it properly designated Dr. Letton's testimony as AEO and Under Armour has failed to establish that the testimony does not qualify for that designation. See RR App. 695-697.
Under the protective order, certain highly confidential information may be designated as “Confidential Attorney Eyes Only,” defined as follows:
“Confidential Attorney Eyes Only” shall mean that the document or other evidence is comprised of information that the producing party deems especially sensitive, which may include, but is not limited to, confidential research and development, financial, technical, marketing, or any other sensitive trade secret information such as account security protocols, or information capable of being utilized for the preparation or prosecution of a patent application dealing with such subject matter.
See RR App. 113.
The testimony that Under Armour seeks to redesignate qualifies as Confidential Attorney Eyes Only. Dr. Letton testified at length about MET's proprietary application processes. See RR App. 452-524. There is no indication in the record that MET failed to follow the procedures in the protective order to designate that testimony as AEO. Although I acknowledge Under Armour's desire to share Dr. Latton's testimony with Dr. Trexler, that desire is insufficient to change what is otherwise properly designated as AEO under the protective order.
Therefore, I recommend that Under Armour's motion to re-designate Dr. Latton's testimony as confidential rather than AEO be denied.
Both Under Armour and Mr. Williams filed competing motions regarding Under Armour's subpoena. Under Armour filed a motion to compel a response to the subpoena,[1] arguing that Mr. Williams has not produced any documents as yet and improperly seeks reimbursement of attorneys’ fees for a privilege review before producing documents. See RR App. 406-408. Mr. Williams filed a motion to quash, arguing that (a) Under Armour issued the subpoena knowing that Mr. Williams and his law firm represent MET; (b) Under Armour may request (and in some cases has received) documents from MET as a party to the case to avoid the undue burden that the subpoena imposes on Mr. Williams; and (c) to the extent the Court denies the motion to quash, Under Armour should bear ESI-related costs compliance, including predominately the cost of Mr. Williams’ attorneys to conduct a privilege review, before responding. See RR App. 553-562. I will address both motions together.[2]
1. Motion to Quash/Motion to Compel
*10 As a threshold matter, Mr. Williams argues that the subpoena should be quashed because it is directed to him and his law firm as counsel for MET. I disagree. The complaint identifies Mr. Williams as a principal and an investor in MET, see RR App. 2, and he has served as a corporate designee for MET in that capacity in connection with other litigation. See RR App. 639, 1714-1719. The subpoena is directed to Mr. Williams, not his law firm. See RR App. 544. Neither Mr. Williams nor his law firm represent MET in this case. The subpoena therefore must be evaluated through the lens of requesting documents in Mr. Williams’ capacity as a principal and an investor in MET and not in his capacity as a lawyer.
Mr. Williams also moves to quash the subpoena because (a) Under Armour failed to explain why it cannot or did not request the documents from MET; and (b) Under Armour already received or can pursue the same or similar documents from MET as a party to the case. See RR App. 556. Although I acknowledge Mr. Williams’ point, neither Rule 45 nor any other rule requires that a party explain why it cannot request documents from another party before issuing a third-party subpoena. Ceuric v. Tier One, LLC, 325 F.R.D. 558, 561-62 (W.D. Pa. 2018) (“Rule 45 does not require a party to demonstrate that information cannot be obtained from another party before subpoenaing it from a third party. Rather, it requires that the documents subpoenaed be within the control of the nonparty witness.”) (cleaned up).
To the extent Under Armour's subpoena calls for documents that may overlap with documents requested or received by Under Armour, that is not a sufficient ground to quash the subpoena in its entirety. Id. However, Mr. Williams has demonstrated that MET already produced documents in response to request 5 and 8 of the subpoena. See RR App. 558. In his brief, Mr. Williams writes:
MET produced 489 documents that are responsive Request No. 5, including copies of numerous general ledgers, financial statements, financial statement forecasts, balance sheets, and valuation analyses. Similarly, MET already produced copies of documents that are responsive to Request No. 8, such as G/L posting journals, MET inventory books, general journals and ledgers, “competitor” documents (including MET's competitor outlook and Redwave Business Deck), and a sports casuals payments analysis.
See RR App. 558.
Given Mr. Williams’ representations, he does not need to produce the documents Under Armour already received from MET that he identified in his motion. I will recommend that requests 5 and 8 be modified to exclude documents Mr. Williams identified in his motion that MET already produced to Under Armour and to produce responsive documents he has that MET did not produce, if they exist.
Next, Mr. Williams argues that the subpoena should be quashed because it calls for privileged documents. See RR App. 558-559. As noted, a subpoena must be quashed or modified if it calls for privileged or other protected information. See Fed. R. Civ. Pro. 45(d)(3)(A)(iii). Here, the requests as framed (and further modified by Under Armour, see RR App. 643) do not expressly call for privileged or protected information. See RR App. 548-549. Indeed, Under Armour expressly disclaimed any desire to seek privileged documents. See RR App. 641.
I note, however, that requests 6 and 7 of the subpoena call for communications involving Mr. Williams and his law firm with MET that could encompass privileged communications or work product. See RR App. 548. To illustrate:
■ As revised by Under Armour, see RR App. 643 n.6, request no. 6 of the subpoena calls for “[c]ommunications from you Wilson Sonsini, and/or any MET representative relating to MET's financial performance, operations (including, but not limited to, MET's e-commerce store; MET's sale of finished products to intermediaries and consumers directly, via Amazon, or via any other retail channels; and/or changes to MET's business model) prospective customers, and/or products.”
*11 ■ Request 7 of the subpoena calls for “[c]ommunications from you, Wilson Sonsini, MET, or any MET representatives that reference Under Armour, Hologenix, Celliant, Under Armour products that contain Celliant, Under Armour advertising, Hologenix advertising, and/or any actions by the FDA that refer or relate specifically to Hologenix or Celliant.” See RR App. 548.
I will recommend that requests 6 and 7 of the subpoena be modified to make clear that Mr. Williams should only produce documents reflecting his communications as a principal and investor in MET and not as counsel.
2. Costs
The question then becomes whether Under Armour should bear the burden of all ESI-related costs in connection with Mr. Williams’ compliance with the subpoena, including the costs of a privilege review. This is a difficult issue.
a. Privilege Review
“A nonparty responding to a subpoena is typically required to pay its own costs of production.” Miller v. Allstate Fire & Cas. Ins. Co., No. 07–260, 2009 WL 700142 (W.D. Pa. Mar. 17, 2009). Rule 45, however, states that orders to compel production must protect nonparties “from significant expense resulting from compliance.” See Fed. R. Civ. Pro. 45(c)(2)(A)(ii). To determine whether cost-shifting is appropriate, courts in their discretion consider “(1) whether the nonparty has an actual interest in the outcome of the case; (2) whether the nonparty can more readily bear the costs than can the requesting party; and (3) whether the litigation is of public importance.” Miller, 2009 WL 700142.
The limited case law regarding cost-shifting for privilege reviews is mixed. See, e.g., David K. Isom, Electronic Discovery Primer for Judges, 2005 FED. CTS. L. REV. 1, II.J.9 (2005). Some courts have awarded attorneys’ fees for privilege reviews as a subpoena-compliance cost. See, e.g., In re Asbestos Prod. Liab. Litig., No. 15-272, 2011 WL 4547960 (E.D. Pa. Oct. 3, 2011); In re Pet. of Frescati Shipping Co., Ltd., No. 05-305, 2006 WL 3544270 (E.D. Pa. Dec. 6 2006). Some have not. See, e.g., Steward Health Care System LLC v. Blue Shield of Rhode Island, No. 15-272, 2016 WL 8716426, at *4 (E.D. Pa. Nov. 4, 2016); Lefta Assocs. v. Hurley, No. 09-2487, 2011 WL 1793265, at *4 (M.D. Pa. May 11, 2011). The question is whether the privilege review benefits the requesting party (in which case some cost-shifting may be appropriate) or whether the non-party responding to the subpoena is conducting a privilege review to protect its interests (in which case cost-shifting may not be appropriate).
With those principles and cases in mind, I note at the outset that Mr. Williams has an interest in this litigation given his standing as a principal and investor in MET. That weighs against shifting costs to Under Armour. On the other hand, the estimated cost Mr. Williams submitted to conduct a privilege review (more than $66,000) presumably is more substantial for an individual than it might be for a large corporation. I also find that the case involves issues of public importance given the allegations that Under Armour has engaged in anti-competitive behavior that could affect the consuming public. The latter two factors tend to favor shifting the costs of compliance to Under Armour.
There are, however, several unusual factors here. Mr. Williams is a principal and investor in MET, but he is a lawyer, too, and a lawyer for MET as well (albeit not in this case). See RR App. 4. To the extent Mr. Williams has documents responsive to the subpoena, they are maintained at his law firm (as electronically stored information) and (presumably) intermixed with his and his law firm's files for MET and other clients or other business matters. See RR App. 109.
*12 The Southern District of New York encountered a similar situation in Rowe Entertainment, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421, 432-33 (S.D.N.Y. 2002). In that case, a party responding to discovery had confidential files (including electronically stored information) intermingled with other files and requested fees in connection with a privilege review as a cost of compliance to sort through the mixed files. The court held that the responding party should bear the cost of a privilege review, not the requesting party, reasoning as follows:
Apparently, the defendants retained privileged or confidential documents in electronic form but failed to designate them to specific files. This situation is analogous to one in which a company fails to shred its confidential paper documents and instead leaves them intermingled with non-confidential, discoverable papers. The expense of sorting such documents is properly borne by the responding party, and the same principle applies to electronic data. Accordingly, if any defendant elects to conduct a full privilege review of its e-mails prior to production, it shall do so at its own expense.
Id. at 432-33.
Although this is a close call, the factors weigh against shifting the costs of a privilege review to Under Armour. Under Armour subpoenaed Mr. Williams, not his law firm, and asked for relevant documents from him. To the extent Mr. Williams has responsive documents within his control and they are stored at his law firm, that is outside Under Armour's control. The privilege review of the magnitude suggested by Mr. Williams, in substantial part, is engendered by the location of responsive documents at his law firm and the fact that responsive documents (if they exist) are intermingled with privileged or other protected documents. In this way, the privilege review is for Mr. Williams’ benefit to assure he excludes any privileged or protected information of his clients (including MET, the plaintiff here) from his responsive business records in order to comply with the subpoena.
The resolution of the dispute over the scope and costs of compliance is intended to lessen the burden on Mr. Williams as a third party while giving Under Armour the opportunity to discover relevant documents that he possesses. To that end, it bears repeating that Mr. Williams is required to produce responsive documents solely in his capacity as an investor and owner of MET to the extent they exist within his files that are stored at the firm electronically or otherwise. Mr. Williams does not have an obligation to search the entire firm's records for responsive documents that do not have anything to do with him in his capacity as an MET principal and investor. Mr. Williams should proceed accordingly.
b. Other Costs
Finally, Mr. Williams has submitted a cost estimate for ESI-related searches and production. These include initial internal electronic data analyst costs estimated at $1,750.00; initial vendor data processing costs estimated at $2,400.00; data load file formatting and standardizing costs in the amount of $555.00; and recurring monthly hosting charges in the amount of $1,260.00 per month. Under Armour has indicated that it is willing to reimburse Mr. Williams for administrative costs of compliance. See RR App. 650. These costs of compliance with the subpoena are reasonable under the circumstances. I will recommend that the Court order Under Armour to reimburse Mr. Williams for ESI-related costs identified in his motion.
*13 Therefore, I recommend that the competing motions both be granted in part and denied in part as explained above and that Mr. Williams’ request for reimbursement of ESI-related costs of compliance be granted with the exception of attorneys’ fees incurred for his lawyers to conduct a privilege review.
MET, Under Armour, and Mr. Williams all request attorneys’ fees in connection with bringing their respective motions under Fed. R. Civ. Pro. 37. See RR App. 124, 386, 550.
Rule 37 calls for fee-shifting in connection with motions to compel unless the Court finds that the dispute is substantially justified. Fed. R. Civ. Pro. 37. “The test of substantial justification is satisfied if there is a genuine dispute concerning compliance.” Bracey v. Valencia, No. CV 19-1385, 2022 WL 1570812, at *14 (W.D. Pa. May 18, 2022) (cleaned up).
I have reviewed the arguments and authorities regarding attorneys’ fees and I find that all the participants’ positions in this discovery dispute were substantially justified. Each of the motions raised one or more difficult questions of law and fact regarding compliance that justified the need for input from a special master in the first instance and ultimately from the Court.
Therefore, I recommend that all requests to recover attorneys’ fees in connection with these motions be denied. However, I recommend denying the motions without prejudice so that MET, Under Armour, and Mr. Williams have an opportunity to file future motions engendered by non-compliance with any discovery order issued by the Court following this report and recommendation.
V. CONCLUSION
I recommend that the Court issue an order substantially as follows consistent with the foregoing report:
1. MET's motion to compel is granted in part and denied in part. Under Armour shall produce documents in response to MET's Third Set and Fourth Set consistent with the Special Master's report and recommendation. Under Armour also shall submit the written confirmations recommended by the Special Master where indicated in the report. MET's motion is denied in all other respects.
2. Under Armour's motion to compel is granted in part and denied in part. MET shall produce documents in response to Under Armour's Eighth Set consistent with the Special Master's report and recommendation. MET also shall submit the written confirmations recommended by the Special Master where indicated in the report. Under Armour's motion to compel MET's response is denied in all other respects.
3. Under Armour's motion to re-designate Dr. Letton's testimony as confidential as opposed to Confidential Attorney Eyes Only is denied.
4. The motion to quash and for protective order filed by Stu Williams is granted in part and denied in part. Under Armour's motion to compel a response to the subpoena is granted in part and denied in part. Requests 5, 6, 7, and 8 of the subpoena shall be modified consistent with the Special Master's report and recommendation. The request that Under Armour reimburse Mr. Williams for the costs of compliance is granted with respect to ESI-related costs but denied with respect to attorneys’ fees to conduct a privilege review.
5. All requests for attorneys’ fees under Rule 37 in connection with filing these motions are denied without prejudice.
6. All documents shall be produced within 45 days from the date of the order adopting this report and recommendation unless the Court indicates otherwise.
*14 Counsel should review the Court's order appointing the Special Master (ECF 157) for the abbreviated timing and procedures for filing objections to any report and recommendation.
Footnotes
Under Armour agreed to withdraw request 4 in the subpoena. The competing motions involve requests 1-3 and 5-8 of the subpoena.
Under Armour argues the motion to quash is untimely. Although significant time has passed since Under Armour issued the subpoena, the parties attempted to resolve the issues, they could not, and the Special Master ordered the parties to file motions. It would be incongruous to deny the motion as untimely under these circumstances.