CQuest America, Inc. v. Yahasoft, Inc.

Filing 19

OPINION by U.S. Magistrate Judge Tom Schanzle-Haskins. Plaintiff's Emergency Motion to Compel 16 ALLOWED IN PART. See written order. (LB, ilcd)

E-FILED

Monday, 01 December, 2014 03:56:56 PM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS, SPRINGFIELD DIVISION

CQUEST AMERICA, INC.,

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Plaintiff,
v.
YAHASOFT, INC.,
Defendant.

No. 13-cv-3349

OPINION REGARDING PLAINTIFF’S EMERGENCY
MOTION TO COMPEL
TOM SCHANZLE-HASKINS, U.S. MAGISTRATE JUDGE:
Plaintiff CQUEST AMERICA, INC. (CQUEST) filed its Complaint for
Breach of Contract against Defendant YAHASOFT, INC. (YAHASOFT) on
August 21, 2013 in the Circuit Court for the Seventh Judicial Circuit,
Sangamon County. The case was removed to this Court on October 7,
2013, and comes before the Court on the Emergency Motion to Compel
(d/e 16) filed by CQUEST. YAHASOFT filed its Response (d/e 18) to the
Emergency Motion to Compel on Monday, November 24, 2014.
Plaintiff’s Complaint alleges breach of a written Software Services
Agreement between CQUEST and YAHASOFT. The Complaint alleges, in
part, that YAHASOFT failed to perform the services required under the

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contract in a competent, diligent, and timely manner. The Complaint further
alleges that YAHASOFT failed to provide implementation and
customization service as required by the contract and failed to complete the
services on or before June 30, 2012 as required by the contract. The
Complaint also alleges that YAHASOFT failed to specify services
performed on a monthly basis (Complaint, para. 10) and that YAHASOFT
has not implemented or customized software for functionality as required
by the agreement.
YAHASOFT denies the allegations of the Plaintiff’s Complaint and
has filed a Counterclaim (d/e 6) for breach of contract.
Plaintiff served the Defendant with written discovery on May 14,
2014, including a Request for Production of Documents (Request). In the
Request were certain specific requests made for the documents described
below in Request Nos. 16, 17, 18, and 19. On September 5, 2014,
substantially after the deadline for complying with the Request, YAHASOFT
filed the following responses to Requests Nos. 16, 17, 18, and 19:
REQUEST NO. 16: Any and all system application source
code, and all documents related to system application source
code, which the Defendant created, developed, worked on, or
modified in connection with the Software Services Agreement.
RESPONSE: To the extent they are in the possession of
Yahasoft, the requested documents will be made available for

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copying at a mutually agreed upon time and place by counsel
for both parties.
REQUEST NO. 17: All documents related to or reflecting
Illinois-specific database schema which the Defendant created,
developed, worked on, or modified in connection with the
Software Services Agreement.
RESPONSE: To the extent they are in the possession of
Yahasoft, the requested documents will be made available for
copying at a mutually agreed upon time and place by counsel
for both Parties.
REQUEST NO. 18: All documents containing or reflecting any
technical specifications which the Defendant used or referred to
when creating, developing, working on, or modifying source
code, database schema, or the Software.
RESPONSE: To the extent they are in the possession of
Yahasoft, the requested documents will be made available for
copying at a mutually agreed upon time and place by counsel
for both Parties.
REQUEST NO. 19: All documents containing or reflecting any
packaged executable which demonstrated the Software’s
capabilities, functions, and features as defined and required by
the contract. If the “packaged executable” is not a document
but a thing provide the “packaged executable” itself.
RESPONSE: To the extent they are in the possession of
Yahasoft, the requested documents will be made available for
copying at a mutually agreed upon time and place by counsel
for both Parties.
Plaintiff’s counsel contacted defense counsel to inquire regarding the
lack of production of the documents requested in Request Nos. 16, 17, 18,
and 19. In Plaintiff’s Emergency Motion to Compel, Plaintiff indicates that

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defense counsel, when asked about the non-production of the documents
claimed that the documents requested were “confidential”. By e-mail dated
October 29, 2014, Plaintiff’s counsel requested that the defense counsel
identify the contractual provisions which defense counsel believed made
the requested documents “confidential”. (Plaintiff’s Exhibit E, d/e 16-5, pg.
1) Plaintiff followed that e-mail with another e-mail again requesting
answers to the previously posed questions. (Plaintiff’s Exhibit F, d/e
16-6, pg. 1) On November 3, 2014, having received no answers to the
questions regarding confidentiality, Plaintiff’s counsel sent a letter asserting
that the confidentiality provisions in the agreement did not contain any
language preventing YAHASOFT from producing the documents requested
in Request Nos. 16, 17, 18, and 19. (Plaintiff’s Exhibit G, d/e 16-7, pg. 2)
On November 6, 2014, defense counsel finally responded that: “It is our
belief that those source codes and other related information are deemed
proprietary by the parties contract and should not be provided in this case.”
(Plaintiff’s Exhibit I, d/e 16-9, pg. 1)
In a November 3, 2014, letter from Plaintiff’s counsel, Plaintiff offered,
as is also offered in Plaintiff’s Emergency Motion to Compel, that a
protective order could alleviate the confidentiality concerns expressed by
defense counsel. In Defendant’s response to the Plaintiff’s motion, the

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Defendant points to the prohibitions contained in paragraph I(E) of the
Software Services Agreement set forth below to justify its claim for
confidentiality is as follows:
E.
Yahasoft gives CQuest the rights to use the software for
Illinois Early Intervention Program. Yahasoft reserves all other
rights. Unless otherwise provided by law, CQuest may use the
Software only as expressly permitted in this Agreement.
CQuest may not:
•
Reverse engineer, decompile or disassemble the
software, except and only to the extent that applicable law
expressly permits, despite this limitation;
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Publish the software for others to copy;

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Rent, lease, resell or lend the Software to entities
other than Illinois Early Intervention Program.

ANAYLSIS
As noted above, the responses to Plaintiff’s requests to produce the
documents specified in paragraphs 16, 17, 18, and 19, stated that
YAHASOFT would produce those documents in their possession
responsive to the requests for copying. No objection to production of the
requested documents was asserted.
Generally, failure to timely assert an objection to a request for
production is a waiver of that objection unless the Court finds good cause
and excuses the waiver. Bailey v. City of Daytona Beach Shores, 286

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F.R.D. 625, 627 (M.D. Fla. 2012). The Court finds no “good cause” to
excuse the waiver in this case.
Federal Rule of Civil Procedure 26(b)(1) allows parties to obtain
discovery regarding any matter, not privileged, which is relevant to the
claim or defense of any party. Relevant information need not be admissible
at trial if the discovery appears to be reasonably calculated to lead to the
discovery of admissible evidence. Federal Rule of Civil Procedure 33
allows parties to serve interrogatories inquiring into any matter within the
scope of Rule 26(b). Fed. R. Civ. P. 33(a). Similarly, Rule 34 allows a party
to serve requests for the production of documents that are within the scope
of Rule 26. Fed. R. Civ. P. 34(a). A party may seek an order compelling
disclosure when an opposing party fails to respond to discovery requests or
has provided evasive or incomplete responses. Fed. R. Civ. P.37(a)(3)
(B)(iii), (iv) & (a)(4). The Court has broad discretion when reviewing a
discovery dispute and “should independently determine the proper course
of discovery based upon the arguments of the parties.” Gile v. United
Airlines, Inc., 95 F.3d 492, 496 (7th Cir.1996). With these principles in
mind, the Court turns its attention to the contested discovery requests.
If the objections now belatedly offered by the Defendant had been
timely asserted, they would have been insufficient to justify non-production.

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The contractual language cited above limits the Plaintiff’s use of the
software covered by the agreement providing that the Plaintiff may not
attempt to take the software, or parts of it, and provide it to others whether
gratuitously or by rent, lease, resale, or loan. This language does not
provide a mutual agreement that the software provided is “confidential” and
shielded from discovery. As Plaintiff suggests, these confidentiality
interests can be protected by a protective order limiting the use of the
information.
The only “confidentiality agreement” in the contract at issue is that
which is attached to the contract at issue as Exhibit E (d/e 18-1, pgs. 4041). The clear language of this confidentiality agreement shows that it
protects only the information provided to Defendant YAHASOFT by Plaintiff
CQUEST.
Defendant’s argument that the information sought would not be
“usable” and could not run without significant additional hardware
installation and system configuration is irrelevant. The Plaintiff is seeking
the information to evaluate contract performance, not to determine whether
the software contracted for by the parties is usable with the material sought
in discovery.

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Counsel for the Plaintiff is to prepare a proposed protective order
protecting the documents described in Requests Nos. 16, 17, 18, and 19 of
Plaintiff’s Request from disclosure other than in conjunction with this
litigation. Counsel for Plaintiff is to submit the protective order to counsel
for Defendant within ten (10) days of the entry of this opinion. Within seven
(7) days of the receipt of the proposed protective order, counsel for
Defendant shall confer with the counsel for Plaintiff to determine if defense
counsel objects to the form of the order and/or proposes modifications. If
the parties cannot agree to the terms of a draft protective order, the
proposed order tendered by Plaintiff, as well as any objections by the
Defendant, shall be tendered to the Court on or before December 22, 2014.
The Defendant shall produce the responsive information within fourteen
(14) days after entry of the protective order. Plaintiff’s request for expenses
and attorney’s fees is denied.
CONCLUSION
Plaintiff’s Emergency Motion to Compel (d/e 16) is ALLOWED IN
PART as set forth above.
ENTER: December 1, 2014
s/ Tom Schanzle-Haskins
UNITED STATES MAGISTRATE JUDGE

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