TB Holding Company LLC v. J&S Siding

Filing 107

MEMORANDUM DECISION AND ORDER - IT IS ORDERED that: Defendant's motion to compel (Dkt. 90 ) is GRANTED IN PART and DENIED IN PART. Signed by Senior Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (hs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
TB HOLDING COMPANY LLC, a
Colorado limited liability company,

Case No. 4:22-cv-000307-BLW
MEMORANDUM DECISION
AND ORDER

Plaintiff,
v.
J and S SIDING COMPANY, LLC,
an Idaho limited liability company,
Defendant.

INTRODUCTION
Before the Court is J&S Siding Company’s motion to compel (Dkt. 90). For
the reasons described below the Court will grant the motion in part and deny the
motion in part.
BACKGROUND
This motion arises from one of the many discovery disputes in this case. In
2022, TB Holding Company filed a Complaint against J&S alleging infringement
of three patents covering a simulated log-siding panel and the machine attachment
used to create it. Complaint, Dkt. 1. The Court entered a scheduling order setting
the close of discovery for June 2023. Scheduling Order, Dkt. 27. That deadline was

MEMORANDUM DECISION AND ORDER - 1

ultimately pushed back until February 21, 2024. Amended Scheduling Order, Dkt.
40. Despite this deadline, the parties agreed to conduct J&S’s 30(b)(6) deposition
of TB Holding and its 30(b)(1) deposition of Ted Baum on February 23rd—after
the close of discovery. Pl.’s Ex. U, Dkt. 89-3. That deposition is the main source of
the current dispute for several reasons. First, on the day of the deposition, TB
Holding provided a complete copy of an exclusive license agreement between it
and North American Machine of Colorado (“NAMC”) for the first time. Motion at
3, Dkt. 90. Second, TB Holding changed its corporate representative for the
deposition minutes before the deposition was set to start. Id. at 4. A third issue
relates to a subpoena J&S intends to serve on NAMC that it first provided to TB
Holding on February 21, 2024, a few days before the deposition. Def. Ex. D, Dkt.
90-5.
The exclusive license agreement was previously produced by TB Holding in
February 2023 and, again, in January 2024, however, both copies were incomplete.
Pl.’s Ex. A, Dkt. 89-2; Pl.’s Ex. C, Dkt. 89-2. J&S never asked TB Holding for the
complete version, although it is plain from the face of the document that pages are
missing—for example, it skips from page 1 to page 10. Id. The morning of the
30(b)(6) deposition of TB Holding, February 23, 2024, counsel for TB Holding
realized the exclusive license agreement was never produced in its complete form

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and provided a copy of the complete, but not signed, agreement to J&S.1 It also
provided a copy of TB Holding’s Operating Agreement. Seventh Camacho Decl. ¶
4, Dkt. 89-1. J&S did not review either document before or during the deposition.
Motion at 4, Dkt. 90.
Additionally, when counsel arrived at the deposition site, counsel for TB
Holding informed J&S that Ryan Reed-Baum rather than Ted Baum would be TB
Holding’s corporate witness. Id. TB Holding had previously indicated that Ted
Baum would serve as TB Holding’s representative, but “reserve[d] the right to
change” their witness. Pl.’s Ex. R, Dkt. 89-3.
During the 30(b)(6) deposition, counsel for J&S asked Mr. Reed-Baum
about TB Holding’s statement in the Complaint that it “manufactures, distributes,
and sells elongated metal simulated log siding panel in the state of Colorado.”
Complaint at ¶ 4, Dkt. 1. Mr. Reed-Baum clarified this statement was not accurate
because “TB Holding Company LLC is a holding company of patents that are
exclusively licensed to North American Machine of Colorado.” Def. Ex. C at 20:419, Dkt. 90-4. Counsel also asked a few questions about NAMC but did not ask
about the operating agreement or the exclusive license agreement. See Pl.’s Ex. M,

1

TB Holding later produced the complete and signed version of the agreement. Pl.’s Ex.
F, Dkt. 89-2.

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Dkt. 89-3. J&S explains that counsel did not have time to review the documents
because counsel needed to adjust deposition outlines and complete two depositions
before 5 p.m. due to time restrictions at the deposition site. Motion at 4, Dkt. 90.
After the deposition, counsel for J&S requested that TB Holding consent to
an extension of fact discovery into NAMC, not oppose J&S pursuing NAMC’s
compliance with the subpoena, and, at TB Holding’s expense, provide a 30(b)(6)
witness for a second deposition to testify about the operating agreement and
NAMC. Def. Ex. D, Dkt. 90-5. TB Holding did not consent, and J&S raised the
issue with the Court. Pl.’s Ex. Q, Dkt. 89-3. The Court’s clerk conducted an
informal mediation session; however, it was clear the parties were unlikely to reach
any resolution. The Court then granted J&S permission to file this motion to
compel.
ANALYSIS
J&S requests that the Court: (1) reopen discovery on the issue of whether
NAMC is a necessary party to this litigation; (2) prohibit TB Holding from
opposing J&S seeking NAMC’s compliance with a third-party subpoena; and (3)
compel a second 30(b)(6) deposition, at TB Holding’s expense, on the operating
agreement, the relationship between TB Holding and NAMC, and the Rule 11
basis for statements made in the Complaint. The Court will address each request in

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turn.
A.

Reopening Discovery

J&S requests the Court reopen discovery on the issue of whether NAMC is a
necessary party pursuant to Federal Rule of Civil Procedure 19. The Court is
concerned that this issue is only first raised now, over 18 months after the
Complaint was filed. Nonetheless, the Court will grant the request.
The deadline for completing discovery was February 21, 2024, which has
now passed. Once a deadline set forth in the Case Management Order has passed, a
party must show good cause to justify amending the Order. Fed. R. Civ. P. 16(b).
When considering a motion to amend a scheduling order to reopen discovery the
Ninth Circuit has instructed district courts to consider the following factors:
1) whether trial is imminent, 2) whether the request is opposed, 3)
whether the non-moving party would be prejudiced, 4) whether the
moving party was diligent in obtaining discovery within the
guidelines established by the court, 5) the foreseeability of the need
for additional discovery in light of the time allowed for discovery by
the district court, and 6) the likelihood that discovery will lead to
relevant evidence.
City of Pomona v. SQM North America Corporation, 866 F.3d 1060, 1066 (9th
Cir. 2017). Although the request is opposed, trial has yet to be scheduled. The
parties had a lengthy discovery period including an eight-month extension of the
original deadline. J&S’s failure to conduct further discovery into NAMC does raise

MEMORANDUM DECISION AND ORDER - 5

some questions about its diligence. It was aware of NAMC and was, seemingly,
aware that TB Holding produced incomplete agreements. Yet, J&S did not to bring
these deficiencies to either TB Holding’s or the Court’s attention.
That said, the Court cannot ignore that TB Holding failed to produce the full
agreement until after the close of discovery. This failure is compounded with the
inaccurate statement in the Complaint that TB Holding manufactures, distributes,
or sells simulated log siding when, in fact, it licensed those rights to NAMC. While
J&S certainly knew of NAMC, 2 it’s hard to see how J&S should have known that
NAMC was TB Holding’s exclusive licensee, when the Complaint suggested
otherwise. Thus, it was not necessarily foreseeable to J&S that additional discovery
was required on the issue of joinder.
Ultimately, the prejudice to TB Holding is minimal, and its responsibility for
the requested reopening is clear. TB Holding did not completely produce
documents and it failed to correct a misstatement in its Complaint. The discovery
will be limited by subject and will only be reopened for a short period of time.

2

For one, the incompletely produced document did include the signature page where Ted
Baum signed on behalf of NAMC. Pl.’s Ex. A, Dkt. 89-2. Request for Production No. 16, served
in January 2024, requested communications between TB Holding and NAMC. Def.’s Ex. B, Dkt.
90-4. Finally, J&S acknowledges that all of the licensing agreements produced by TB Holding
listed NAMC as the licensor, not TB Holding. Motion at 7, Dkt. 90.

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Determining whether NAMC is a necessary party is an important issue that
implicates TB Holding’s standing. Aspex Eyewear, Inc. v. Miracle Optics, Inc.,
434 F.3d 1336, 1344 (Fed. Cir. 2006) (“For the same policy reasons that a patentee
must be joined in any lawsuit involving his or her patent, there must be joinder of
any exclusive licensee.”). TB Holding suggests that this can be resolved simply by
looking to the agreement itself, which did not transfer to NAMC the right to
enforce the patents. See Pl.’s Ex. F, Dkt. 89-2. While the right to enforce a patent is
a “key factor,” it does not necessarily resolve whether an exclusive licensee is a
necessary party. 3 See Luminara Worldwide, LLC v. Liown Electronics Co. Ltd.,
814 F.3d 1343, 1350 (Fed. Cir. 2016). In light of TB Holding’s misstatement in the
Complaint, J&S should have some opportunity to investigate this issue. As such,
the Court will reopen discovery, but limited to the issue of whether NAMC is a

3

TB Holding transferred NAMC the right to make, use, and sell the simulated log-siding
but retained the right to enforce the patents. Pl.’s Ex. F, Dkt. 89-2. “When there is an exclusive
license agreement, as opposed to a nonexclusive license agreement, but the exclusive license
does not transfer enough rights to make the licensee the patent owner, either the licensee or the
licensor may sue, but both of them generally must be joined as parties to the litigation.” Alfred E.
Mann Foundation for Scientific Research v. Cochlear Corp., 604 F. 3d 1354, 1360 (Fed. Cir.
2010); see also Princeton Digital Image Corp. v. Hewlett-Packard, No. 12 Civ. 779 (RJS), 2013
WL 1454945, at *2 (S.D.N.Y. Mar. 21, 2013) (“[A]n exclusive licensee that possess
exclusionary rights, but less than all substantial rights, has constitutional standing to sue but may
not do so without joinder of the patentee as a necessary party. Similarly, a patentee that has
transferred some but not all substantial rights retains constitutional standing to sue but may be
required to join its exclusive licensee.”).

MEMORANDUM DECISION AND ORDER - 7

necessary party. All discovery must be complete within 45 days of the issuance of
this order.
B.

Prohibit TB Holding from Opposing the Subpoena

J&S requests that the Court prohibit TB Holding from opposing J&S
seeking NAMC’s compliance with a third-party subpoena. It argues third-party
discovery on the issue of joinder is necessary given TB Holding’s misstatement in
the Complaint. The Court will deny this request.
Neither party submitted a copy of the subpoena, so the Court has not
reviewed the subpoena. It would be inappropriate to prohibit TB Holding from
opposing the subpoena when the Court does not even know what the subpoena
requests. 4 It also appears likely that some of the requests in the subpoena do not
relate to the issue of joinder because J&S first provided a copy of the subpoena on
February 21st, before it knew the content of the exclusive license agreement or of
TB Holding’s misstatement in the Complaint. Presumably, the requests in the
subpoena do not relate to the issue of joinder because J&S claims it was not aware

4

There is, of course, a question about whether TB Holding would have standing to object
to the subpoena or if only NAMC could object. See e.g., FemtoMetrix Inc. v. Huang, No. 23-mc80332-TSH, 2024 WL 396186, at * 5 (N.D. Cal. Feb. 1, 2024) (“[A] party generally has no
standing to quash a subpoena served upon a third party unless the party claims a personal right or
privilege with respect to the documents requested in the subpoena.” (internal quotation marks
omitted)). That issue, however, is not before the Court.

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of that issue until February 23rd. That said, this order does not prohibit J&S from
serving a subpoena on NAMC provided that the requests relate only to the limited
issue to be explored in reopened discovery. The Court, however, will not prohibit
TB Holding from challenging that subpoena if warranted. Accordingly, J&S’s
request is denied.
C.

Second 30(b)(6) Deposition

Finally, J&S requests the Court compel TB Holding to produce a witness for
a second a 30(b)(6) deposition. J&S explains this deposition is necessary to obtain
information about whether NAMC is a necessary party, information about TB
Holding’s damages contentions, and the Rule 11 basis for statements made in the
Complaint.
It seems that there are several factors that contributed to J&S’s inability to
cover the topics it wanted to at the 30(b)(6) deposition. First, counsel for J&S
decided to conduct a 30(b)(6) deposition of TB Holding and 30(b)(1) deposition of
Ted Baum concurrently to save J&S the expense of two depositions. Pl. Ex. M at
137:25–138:1, Dkt. 89-3. By choosing to do this, J&S placed certain limitations on
itself—it could have taken two separate depositions. Second, J&S noticed the
depositions for a date it knew would not work, so the depositions had to be

MEMORANDUM DECISION AND ORDER - 9

rescheduled for after the close of discovery. 5 Pl.’s Exs. S & U, Dkt 89-3. It also
noticed the depositions for Idaho Falls when the deponent lived in Colorado and
counsel indicated Ted Baum would not be in Idaho Falls. Id. Finally, counsel never
looked at the exclusive licensing agreement or operating agreement even after it
received copies of the documents on the day of the deposition.
At the same time, TB Holding unilaterally determined that a deposition
could occur, at the earliest, 14 days after J&S provided notice of the deposition
under Federal Rule of Civil Procedure 32(A)(5). Pl.’s Ex. S, Dkt. 89-3. This is not
necessarily the case. See Eberlein v. Michels Corporation, No. 2:22-cv-1827, 2023
WL 6959290, at *3 (W.D. Wash. Oct. 20, 2023) (“Federal courts have held that 14,
10, 8, and even 5 days is reasonable notice under specific circumstances.”). TB
Holding also indicated that Mr. Baum would likely be the 30(b)(6) witness and did
not provide notice to J&S that the witness would instead be Mr. Reed-Baum until
the start of the deposition.
Consistent with reopening discovery on the issue of whether NAMC must be

5

The parties have differing views on the reason the deposition could not occur on the
noticed date. J&S argues it was due to TB Holding’s counsel’s travel schedule. TB Holding
argues that J&S had already provided those dates as possible dates for TB Holding’s 30(b)(6)
deposition of J&S. Regardless of why the exact reason, J&S knew the date it noticed did not
work.

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joined, the Court will grant J&S leave to conduct a second 30(b)(6) deposition.
J&S shall bear its own costs and the deposition shall be limited to three and a half
hours. The deposition shall not cover the Rule 11 basis for statements made in the
Complaint. J&S asked Mr. Reed-Baum about the Complaint and could have asked
about any Rule 11 basis at that time. The Court sees no reason to permit J&S to ask
additional questions on this topic. J&S shall timely serve a notice detailing with
more specificity the topics to be covered at this deposition so that TB Holding can
prepare a witness.
D.

Amendment

J&S, somewhat belatedly, also requests the Court require TB Holding to
amend its Complaint to correct any statements that are inaccurate or incorrect and
allow J&S to file an amended answer. The Court will deny this request. If either
party wishes to amend their pleadings in response to this misstatement, the Court
would be inclined to grant leave to amend. 6
E.

Motion for Fees

J&S may bring a motion for reasonable attorneys’ fees related to this

6

To the extent J&S seeks to amend its Complaint to add other affirmative defenses the
Court has deemed waived, the Court would deny that request. Any amendment must be related to
the misstatement that TB Holding “manufactures, distributes, and sells elongated metal
simulated log siding panel in the state of Colorado.”

MEMORANDUM DECISION AND ORDER - 11

motion. See Fed. R. Civ. P. 37(5)(A). Any motion must be filed within 30 days of
the issuance of this order.
ORDER
IT IS ORDERED that:
1.

Defendant’s motion to compel (Dkt. 90) is GRANTED IN PART

and DENIED IN PART.
2.

J&S is granted leave to conduct limited additional discovery for the

purpose of establishing whether NAMC is a necessary party. Any discovery shall
be completed within 45 days of the issuance of this order.
3.

J&S may also conduct a second 30(b)(6) deposition of TB Holding.

Any deposition shall not exceed three and a half hours and J&S shall bear its own
costs.
4.

J&S may file a motion for fees related to this motion. Any motion

must be filed within 30 days of this order with the regular briefing schedule to
follow.

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DATED: May 8, 2024
_________________________
B. Lynn Winmill
U.S. District Court Judge

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