DRAPER, INC. v. MECHOSHADE SYSTEMS, INC. et al
Filing
84
ORDER granting in part and denying in part Draper's 64 Motion to Compel. It is time to determine whether the Court has personal jurisdiction over MechoShade. MechoShade shall complete the productions ordered herein no later than February 24 , 2012. It shall make rolling productions as documents and summaries become ready to produce. Draper shall file its response to MechoShades Motion to Dismiss no later than March 14, 2012. MechoShade may file a reply no later than March 24, 2012. The parties should not expect to receive extensions of these deadlines (S.O.). Signed by Magistrate Judge Denise K. LaRue on 1/30/2012. (MAC)
UNITED STATES DISTRICT COURT
for the SOUTHERN DISTRICT OF INDIANA,
INDIANAPOLIS DIVISION
DRAPER, INC.,
)
)
)
)
) CAUSE NO. 1:10-cv-1443-SEB-DKL
)
)
)
)
Plaintiff,
vs.
MECHOSHADE SYSTEMS, INC.,
Defendant.
ORDER
Plaintiff’s Motion to Compel [doc. 64]
In response to Defendant MechoShade Systems, Inc.’s motion to dismiss this suit
for lack of personal jurisdiction, Plaintiff Draper, Inc. moved for a stay of the motion
and leave to conduct jurisdictional discovery. The parties briefed the standards for
general and specific jurisdiction and the propriety of the discovery that Draper
proposed to serve on MechoShade. The Court overruled MechoShade’s objections,
granted Draper’s motion for limited jurisdictional discovery, and stayed MechoShade’s
motion to dismiss pending the discovery. [Doc. 51.] The discovery served by Draper
on MechoShade consisted of 5 interrogatories, 15 requests for production, 1 Rule
30(b)(6) deposition, and 2 additional depositions.1 Dissatisfied with MechoShade’s
production, Draper filed the present motion to compel. The parties’ dispute concerns
Draper also undertook some third-party discovery, particularly of Interspec,
MechoShade’s Indiana representative.
1
1
the sufficiency of MechoShade’s responses to Draper’s requests for production and Rule
30(b)(6) deposition.
Draper contends that discovery obtained from third parties and other discovery
reveal that MechoShade is in possession of additional responsive documents and
information. MechoShade responds that (1) Draper’s discovery requests are overly
broad, reaching far beyond the limited jurisdictional discovery authorized by the Court;
(2) producing the additional material would be unduly burdensome and costly, and not
likely to lead to relevant information; and (3) Draper’s jurisdictional arguments
underlying the discovery it seeks to compel are collaterally estopped by a decision of
the United States District Court for the District of Colorado in a parallel case filed by
Draper. Draper also contends that MechoShade’s designated Rule 30(b)(6)
representative was unable to adequately testify regarding several of its noticed subjects
and it wants a supplemental deposition with a different representative.
The Court first dispenses with MechoShade’s collateral-estoppel argument.
Although the present parties were also parties in the Colorado suits, the issues decided
by the district court in Colorado pertained to whether that court had personal
jurisdiction over MechoShade based on its contacts with Colorado. Because the issue of
this Court’s jurisdiction over MechoShade based on its contacts with and activities in
Indiana were not before the Colorado court, its decision does not preclude any
arguments by Draper here. Furthermore, to the extent that MechoShade argues that the
2
Colorado District Court’s interpretations and applications of the governing law binds
this Court’s analysis, MechoShade is reminded that a district judge’s decision, especially
one from another district, has no precedential authority for any judge or court here.
See, e.g., Gould v. Bowyer, 11 F.3d 82, 84 (7th Cir. 1993) (“A district court decision binds
no judge in any other case, save to the extent that doctrines of preclusion (not stare
decisis) apply.”).
The Court agrees with MechoShade that what was intended to have been limited
jurisdictional discovery has become an expansive and expensive foray through its files.
Thousands of documents have been produced and likely thousands more are sought by
way of the current motion. Courts have discretionary power under the Federal Rules
and inherent power to limit and control jurisdictional discovery, and they should
exercise that authority to ensure that jurisdictional discovery does not conflict with the
purposes and protections of personal jurisdiction. Fed. R. Civ. P. 26(b)(2)(C). See York
v. Tropic Air, Ltd., Civ. A. No. V-10-55, Memorandum Opinion and Order, 2011 WL
5827299, *1 (S.D. Tex., Nov. 17, 2011); Nu Image, Inc. v. Does 1-23,322, 799 F.Supp.2d 34,
36-37 (D. D.C. 2011); Insubuy, Inc. v. Community Insurance Agency, No. 10 C 3925, 2010
WL 4659483 (N.D. Ill., Nov. 9, 2010) (“As with all discovery matters, district courts have
broad discretion in determining when additional jurisdictional discovery is
appropriate.”) (citing GCIU–Employer Retirement Fund v. Goldfarb Corp., 565 F.3d 1018,
1023, 1026 (7th Cir. 2009)); Himoinsa Power Systems, Inc. v. Power Link Machine Co., Ltd.,
3
No. 08-2601-MLB, Memorandum and Order, 2010 WL 2265160 (D. Kan., June 2, 2010).
It is well established that a federal district court has the power to
require a defendant to respond to discovery requests relevant to his or her
motion to dismiss for lack of personal jurisdiction. That much is evident
in Insurance Corp. of Ireland, and the circuit courts have frequently made
the point. E.g., Renner v. Lanard Toys Ltd., 33 F.3d 277, 283 (3d Cir. 1994)
(where facts relevant to jurisdiction were ambiguous, district court erred
in denying discovery); Edmond v. United States Postal Service General
Counsel, 949 F.2d 415, 425 (D.C. Cir. 1991) (district court erred in limiting
jurisdictional discovery where plaintiffs made specific allegations of
conspiracy to support personal jurisdiction); Theunissen v. Matthews, 935
F.2d 1454, 1465 (6th Cir. 1991) (court may permit discovery in aid of
deciding Rule 12(b)(2) motion, and scope of such discovery is committed
to district court's sound discretion); Butcher's Union Local No. 498 v. SDC
Investment, Inc., 788 F.2d 535, 540 (9th Cir.1986) (discovery should
ordinarily be granted where pertinent jurisdictional facts are disputed, but
district court has discretion to control scope of discovery); Wyatt v.
Kaplan, 686 F.2d 276, 283 (5th Cir. 1982); Fraley v. Chesapeake & Ohio Ry. Co.,
397 F.2d 1, 3–4 (3d Cir. 1968) (district court erred by refusing to require
defendant to answer interrogatories to explain ambiguous assertions in its
affidavits about scope of business activities within jurisdiction); Surpitski
v. Hughes–Keenan Corp., 362 F.2d 254, 255–56 (1st Cir. 1966) (where plaintiff
was “total stranger” to defendant, district court erred in dismissing for
lack of personal jurisdiction without giving plaintiff opportunity for
discovery).
However, a plaintiff is not always entitled to discovery to respond
to a motion to dismiss for lack of personal jurisdiction. Using their power
to control discovery, courts should take care to ensure that litigation of
the jurisdictional issue does not undermine the purposes of personal
jurisdiction law in the first place.
Ellis v. Fortune Seas, Ltd., 175 F.R.D. 308 (S.D. Ind. 1997) (emphases added). It is time
that control is exercised over jurisdictional discovery in this case and move this
preliminary phase of the litigation to completion.
The Court will separately address each category of documents that Draper seeks
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from MechoShade.
1. Commission Reports and Bookings Reports.2 Draper contends that, in its
financial-related productions, MechoShade focused only on direct sales to Indiana, but
that direct sales do not capture all of MechoShade’s “business” in Indiana.
MechoShade’s Commission Reports and Bookings Reports are the only documents
produced so far that capture all of its business activity in the state, according to Draper.
Commissions are paid to MechoShade’s representatives for (1) sales of products to
customers in Indiana, (2) sales of products to customers outside of Indiana when the
products will be installed in projects located in Indiana, and (3) products that are
specified3 in Indiana regardless of the location of the project in which the products will
be installed. “Thus,” Draper contends, “each time a MechoShade representative
receives a commission, MechoShade has some form of a business contact with the state
of Indiana. Accordingly, these Commission Reports are highly relevant to the
jurisdictional analysis.” (Brief in Support at 13).
Bookings Reports also capture commissions, but also “new bookings (i.e.,
potential projects) and budgets . . . .” (Id. at 14). They are a “much higher level of a
In this Order, the Court uses the shorthands and descriptors that are used by
the parties in their briefing.
2
Specification refers to the process of composing the detailed lists of materials,
products, dimensions, etc. of the components of a construction project that will
comprise the requirements for a solicitation of bids. Project specifications can be
written, at least in part, by architects, decorators, and dealers.
3
5
summary or review of MechoShade’s business activity in Indiana, but nonetheless are
clearly relevant to MechoShade’s business contacts in Indiana.” (Id.).
MechoShade produced Commission Reports and Bookings Reports only for its
Indiana representative, Interspec, Inc., for the period 2006-2010. It produced no Reports
for any other representative or MechoShade employee who was responsible for
MechoShade’s business in Indiana. Draper contends that these reports will show the
volume of MechoShade’s business activity in and contacts with Indiana, beyond just
sales to customers located in Indiana because the Reports will show the commissions
paid for products that were not sold to customers in Indiana but which represent
business activity in or contacts with Indiana. As an example, Draper asserts that the
Commission Reports for Interspec “show approximately $1,000,000 in sales related to
Indiana since 2006 that MechoShade did not identify in the other financial documents it
produced.” (Id. at 13-14).
Draper does not indicate which of its requests for production cover the reports
but contends that MechoShade “apparently does not dispute” that the reports are
covered because MechoShade produced the reports for Interspec from 2006-2010.
(Draper’s Brief in Support [doc. 66-1] at 12). It asserts only that the reports “relate to the
first general category of information relevant to the general jurisdictional analysis: the
volume of MechoShade’s business in Indiana.” (Id. at 12).
6
In its response, MechoShade directly addressed only the Bookings Reports, and
only as an example of its general objection that Draper has not shown a need for the
additional documents: it argues that the Bookings Reports “do not provide any
additional information concerning MechoShade’s in Indiana [sic] that Draper does not
already have. Nor has Draper met its burden of showing what additional information
the Bookings Reports will reveal beyond what Draper already has that would establish
general jurisdiction.” (Defendants’ Brief in Opposition [doc. 74] at 10.) Draper does not
address this objection in its reply. MechoShade also generally argues (with regard to all
of the categories of documents sought by Draper) that Draper’s discovery has already
become excessive, Draper has not shown that the additional materials that it seeks are
necessary for it to respond to the pending motion to dismiss, and that production of the
requested additional documents will be overly burdensome.
Production of the Commission Reports and Bookings Reports are not warranted
by Draper’s requests for production.4 Requests 1 and 2 ask for “All Documents
Relating to MechoShade’s sales of the ‘428 Products [and the “Trade Dress Products”] in
Indiana.” Draper argues that the Commission Reports and Bookings Reports will
capture all of MechoShade’s business and contacts in Indiana. They might, but these
Requests are limited to documents relating to sales of specific products in Indiana — they
MechoShade’s Responses to Draper’s First Set of Requests for Production, attached as
Exhibit 1 to the Declaration of Andrew M. McCoy [etc.] in support of Draper, Inc.’s Motion
to Compel [etc.] [doc. 65-1].
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do not encompass all of MechoShade’s contacts or other business activity relating to
Indiana or all of its products. Draper complains that the Reports produced for Interspec
show approximately $1,000,000 of “sales related to Indiana” that were not reflected in
MechoShade’s other financial production, but Draper has mistaken the relationship
required in Requests 1 and 2: both request documents relating to sales in Indiana, not
documents relating to sales relating to Indiana. While the Commission Reports record
commissions paid for products not sold in Indiana but installed or specified in Indiana,
and therefore can be argued to provide evidence of business activity affecting, and contacts
in, Indiana, that information is beyond the scope of Requests 1 and 2.
The Commission Reports also include commissions paid for sales in Indiana.
While an analysis of these sales commissions might tend to show the amount of
MechoShade’s Indiana sales for the identified products (depending on whether the
commissions are calculated in direct proportion to sales) and, thus, it can be argued that
the Reports fall within the literal scope of Requests 1 and 2, Draper has not shown good
cause to believe that the voluminous documents MechoShade has already produced do
not sufficiently show its sales in Indiana. MechoShade asserts that it has already
produced better and more direct evidence of its Indiana sales for the two categories of
products and Draper did not controvert the assertion. Thus, it appears, without more,
that Draper’s requests are duplicative.
Draper did not show how the additional information on “new bookings (i.e.,
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potential projects), and budgets” contained in the Bookings Reports is related to
MechoShade’s sales of the ‘428 or trade-dress products in Indiana, and a relationship is
not obvious.
Draper’s motion to compel MechoShade to produce its Commission Reports and
Bookings Reports for other representatives and employees is denied under Requests 1
and 2 because the documents are beyond the scope of the Requests and Draper has not
made a good-cause showing of need for them.
Request 3 asks for documents showing the number and gross revenue of any
product sold or offered for sale by MechoShade in the United States. Again, Draper
does not assert that MechoShade has failed to adequately responded with documents
showing the numbers of its products sold in the United States or the gross revenue
generated thereby.
Request 4 (marketing materials for products sold or offered for sale in Indiana),
Requests 5 and 6 (communications between MechoShade and third parties and
between MechoShade and Draper relating to Draper, the MechoShade patents,
MechoShade’s alleged trade dress, and the accused products), Requests 7 and 8 (license
agreements), Request 11 (assignments of the ‘428 patent), Requests 12 and 145
(documents used or referenced in declarations), and Request 15 (MechoShade’s bid
5
There is no Request 13.
9
protests) do not cover the Commission Reports and Bookings Reports.
The scope of Request 9’s request for “All Documents Relating to Any contacts
You have had with Any Person in Indiana in the last five (5) years” is too broad for the
limited purpose of jurisdictional discovery and will not be enforced as is. Draper did
not fully describe the nature of the Commission Reports or Bookings Reports, but they
appear to be internal records of MechoShade and not themselves communications or
contacts made with persons in Indiana. But they relate to contacts with persons in
Indiana — specifically, the payment of commissions to them — and, thus, could
indicate business activity by MechoShade in Indiana. Draper has not asserted that
MechoShade has failed to produce sufficient documents showing its sales in Indiana, so
it has not shown a need for documents relating to commissions in order to verify or
discover the amounts of MechoShade’s annual Indiana sales. However, Draper has
shown that commissions can be paid to persons in Indiana for non-sales activity,
namely, the specification in Indiana of MechoShade products for projects not located in
Indiana.
Therefore, MechoShade shall produce summaries for each year, beginning 2007
until the date of suit, showing the total annual number and total annual amount of
commissions paid to representatives in Indiana on account of (1) sales of MechoShade
products to customers in Indiana and (2) specifications in Indiana of MechoShade’s
products regardless of where the projects for which the specifications were made are
10
located. MechoShade need not produce the Commission Reports or Bookings Reports
or identify the representatives to whom the commissions were paid, the amount of each
commission, or the projects for which the commissions were paid. The accuracy of the
summaries shall be verified by affidavit or declaration.
Request 10 asks for all documents relating to any of MechoShade’s distributors,
dealers, retailers, and/or agents doing business in Indiana. This Request is overly
broad for the limited purpose of jurisdictional discovery if interpreted to include the
subject reports and will not be enforced as is. Draper has shown that commissions paid
to specifiers in Indiana of products not sold in Indiana are direct evidence of business
activity in Indiana (payments of commissions, promotions of sales) that is not captured
by in-state sales data and are, therefore, relevant to the jurisdictional analysis.
Production of this information is ordered above. Draper has also shown that
commissions paid to representatives outside of Indiana on account of products that are
sold to customers outside of Indiana but which are installed in Indiana are indirect
evidence of business activity (installations of products) in Indiana not captured by instate sales data. Draper has not shown how any other content of the Commission
Reports and Bookings Reports are likely to be relevant to the general-jurisdiction
analysis.6
The only content other than commissions that was described was that the
Bookings Reports contain information on “new bookings (i.e., potential projects), and
budgets.” (Brief in Support at 14). On its face, this content does not appear likely to
show business activity in Indiana and Draper offered no explanation. Any relationship
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11
Rather than order production of the Commission Reports as only indirect
evidence of in-state installations, and in the interest of controlling and streamlining this
stage of limited jurisdictional discovery, the Court prefers to order MechoShade to
produce direct information of in-state installations of products sold out-of-state.
Production is ordered below of information showing installations performed by
MechoShade in Indiana of ‘428 and trade-dress products. In response to Request 10,
MechoShade shall also produce annual summaries of installations in Indiana performed
by others of the same products that were sold outside of Indiana, as shown by the
Commission Reports and Bookings Reports. The summaries shall cover the period of
2007 until the date of suit, and shall show the number of installations and the dollar
value of the products installed, to the extent that this information is shown by the
Commission Reports and the Bookings Reports.7 The accuracy of the summaries shall
be verified by affidavit or declaration.
Time Period. Draper sought production of documents “since at least 2000” (and
presumably to the date of its filing suit). The reports that MechoShade produced
apparently dated “from 2006 to 2010.” Preliminary jurisdictional discovery should not
of information on potential future projects and budgets to actual business activity
conducted in Indiana appears too attenuated to warrant production of the Bookings
Reports.
Presumably, the commissions paid to out-of-state representatives are based on
the value of the products sold. Depending on the formula for calculating the
commissions, MechoShade will be able to give more or less accurate values for the
value of the in-state installed products.
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be allowed to take on a life of its own, overwhelming defendants with burdens that are
inconsistent with a limited appearance for the purpose of challenging jurisdiction.
Courts should also carefully monitor and control discovery of commercially sensitive
information to ensure that it is narrowly tailored and likely to lead to information
relevant to the jurisdictional issues at hand. For the purpose of establishing general
personal jurisdiction on the date of filing, discovery relating to the period of 2007 to the
filing of suit — three years and eleven months of data — should be sufficient to show
MechoShade’s relevant business activity in Indiana. In all of the productions ordered
herein, MechoShade is not required to produce responsive documents pertaining to any
period prior to 2007 or after the filing of this suit.
2. Communications with dealers, architects, and other specifiers, and end
users. Draper wants the Court to compel MechoShade to produce all documents
relating to its business contacts with dealers, specifiers,8 and end users in Indiana.
According to Draper, MechoShade focuses a substantial part of its business establishing
relationships with specifiers and dealers as a way to increase sales of its products. It
wants the Court to order MechoShade to produce “all documents relating to contacts it
has had with any dealer or specifier in Indiana.” (Brief in Support at 16).
Construction projects use specifications of project components that assist
dealers in bidding on the projects. MechoShade works with persons or entities that
write these specificactions (e.g., architects, interior designers, and dealers) in order to
encourage them to specify MechoShade products.
8
13
Draper asserts that “most of what it has learned about MechoShade’s business
model and its contacts with dealers and specifiers came from Interspec, which produced
ten times more e-mail correspondence than MechoShade.” (Brief in Support at 16).
Draper contends that the documents it seeks are covered by its Requests 1, 2, 3, 9, and
10.
Requests 1 and 2 ask for documents relating to sales of specified MechoShade
products, not all communications or contacts with dealers, specifiers, or end users. As
noted above, Draper has not shown that it does not already have sufficient information
showing MechoShade’s sales in Indiana. Thus, Draper has not shown that it needs
documents showing all contacts with dealers, specifiers, and end users for the purpose
of determining MechoShade’s Indiana sales. But Draper wants documents showing
these contacts in order to show MechoShade’s in-state activities directed to building
relationships with dealers, specifiers, and end users for the ultimate objective of
soliciting or promoting future in-state sales.9 While sales-solicitation and salespromotion activities do constitute business activity, they are not fairly within Requests
1's and 2’s scope of documents “relating to . . . sales of the ‘428 Products [and “Trade
Dress Products”] in Indiana.” These requests are properly construed as seeking
documents showing or providing evidence of the amount of MechoShades sales in
Thus, Draper’s request for documents relating to all contacts with dealers,
specifiers, and end users in Indiana is far too broad and not narrowly tailored to the
limited jurisdictional issues.
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Indiana, not documents having any tangential relation to the subject of sales, whether
marketing, advertising, customer development, or post-sale repairs, payment disputes,
bill collection, etc.
Draper’s assertion that Request 3 asks for “documents relating to sales and offers
to sell MechoShade’s products” is simply incorrect. The language of this Request asks
for “All Documents showing the number of products and gross revenue of Any product
sold or offered for sale by MechoShade in the United States.”10 (Emphasis added.) All
of MechoShade’s communications with dealers and specifiers is not reasonably likely to
show those facts — neither are MechoShade’s contacts with specifiers and dealers for
the purpose of soliciting or promoting sales. Draper did not assert that it does not
already have sufficient production which shows the number of products sold by
MechoShade in the United States or the gross revenue generated thereby.
Request 9 asks for all documents relating to any contacts Mechoshade has had
with any person in Indiana for the last five years. Request 10 is not restricted to
contacts but seeks documents relating in any way to MechoShade’s distributors,
dealers, retailers and/or agents doing business in Indiana. As such, both requests are
too broad for the limited purposes of jurisdictional discovery. Because they are not
narrowly tailored to obtain specific information likely to be relevant to the existence of
It is unclear what Draper means by documents relating to the number of
products and gross revenue of any such products offered for sale but not sold.
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general jurisdiction over MechoShade, these Requests will not be enforced as written.
However, MechoShade’s in-state sales-solicitation and sales-promotion contacts with
Indiana dealers and specifiers are relevant to the issue of general jurisdiction over
MechoShade.
Taking Requests 9 and 10 in combination, and giving them a proper scope, the
Court finds that Draper is entitled to production of documents showing or evidencing
sales-solicitation or sales-promotion contacts it has had in Indiana with any dealer or
specifier located in Indiana. In addition, consistent with the time frame set forth above,
MechoShade is entitled to such documents showing or evidencing such contacts that
occurred during the period of 2007 to the date of filing of this suit.
3. Marketing and advertisements that reached Indiana. Request 4 asks for “All
Documents Relating to Any marketing materials, advertisements, brochures, catalogs,
flyers, or commercials Related to Any product sold or offered for sale by MechoShade
in Indiana.” Draper asserts that, while MechoShade produced responsive documents,
Draper has discovered, from Interspec’s production, several e-mails sent to Interspec
from MechoShade’s marketing department. In the one e-mail that Draper submitted, a
MechoShade marketing intern forwards a potential-customer lead to Interspec,
specifically a person who viewed MechoShade postings on a third-party website and
took an online test. The e-mail asks the Interspec addressee to “contact the individual
as you would any lead that we may refer to you.” This e-mail is clearly not an
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advertisement, brochure, catalog, flyer, or commercial; if it is included within Request 4,
it can only be as “marketing material.” In the context of the other requests, it is
reasonable to construe “marketing material” as meaning pre-prepared materials
targeted at potential customers, not individually-generated, incidental communications
like periodic lead-referral e-mails.11 However, because MechoShade did not contest the
applicability of Request 4 to lead-referral e-mails, the Court will assume its applicability
in this instance. Draper asks the Court to order MechoShade to produce “all marketing
materials (including at least any e-mails and e-mail attachments sent from
MechoShade’s marketing e-mail addresses to Interspec and any other person or
company in Indiana) and documents relating to advertisements in any publication or
periodical that reaches Indiana.” (Brief in Support at 17).12
Granting that the lead-referral e-mail submitted by Draper qualifies as
“marketing material,” they tend to show MechoShade’s sales-solicitation or business
activity in Indiana and are, thus, relevant to the jurisdictional analysis. However,
“Marketing material” might differ from the other terms of the Request —
“advertisement, brochure, catalog, flyer, or commercial” — by encompassing, for
example, mass-distributed e-mails, expositions displays, individual DVDs.
11
Draper thus narrows the scope of Request 4. The Request does not ask for
marketing material, advertisements, etc. that are targeted at Indiana, or even that appear
“in any publication or periodical that reaches Indiana.” Rather, the Request broadly
seeks all marketing material, advertisements, etc. for products that are sold or offered for
sale by MechoShade in Indiana, regardless of whether the marketing material or
advertisements are specifically directed to Indiana or even reach Indiana, or whether a
lead-referral e-mail has an Indiana addressee or any relation to an Indiana lead.
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neither the precise dates of the leads, the addressees, the source of the lead, nor the
identifications of the leads is relevant. MechoShade must produce either (1) all leadreferral communications sent to a MechoShade representative or dealer in Indiana for
the time period 2007 to the date of suit, (2) redacted lead-referral communications for
the same time period with the irrelevant information removed, or (3) a summary
showing, for each year 2007 to the date of suit, the number of leads referred by
MechoShade to an Indiana representative (verified by affidavit or declaration).
MechoShade is not ordered to produce all e-mails sent from its marketing addresses to
any person or company in Indiana. Draper did not show that it is likely that
MechoShade failed to produce any responsive documents other than e-mails or other
documents containing lead-referral communications. MechoShade is reminded,
however, that any marketing materials, advertisements, brochures, catalogs, flyers, or
commercial advertisements in the form of, or attached to, an e-mail should be produced
in response to Request 4.
Draper also points to MechoShade’s Vice President’s testimony that
“MechoShade publishes ads in national publications that reach Indiana,” (Brief in
Support at 17), and asserts that such materials are relevant to the jurisdictional analysis,
(id.). It then asks the Court to order MechoShade to produce “documents relating to
advertisements in any publication or periodical that reaches Indiana.” (Id.). However,
Draper does not assert or show grounds to believe that responsive documents exist that
18
MechoShade has not produced. Moreover, a request for all documents relating to all
advertisements in any publication or periodical that reaches Indiana — including, e.g.,
communications with ad developers, billing correspondence, and internal planning
documents — is far too broad for the limited purposes of jurisdictional discovery.
Therefore, there is no basis for ordering MechoShade to produce additional documents
in response to this part of Request 4.
4. Project files, field reports, and related documentation. MechoShade
maintains “project files” consisting of records regarding construction projects in which
its products are installed. These files contain purchase orders, installation orders, work
orders, field reports, warranty/repair orders, call logs, and other communications
relating to each project. Draper complains that MechoShade has not produced a single
project file for any project in Indiana. It argues that the project files are covered by its
Requests for Production 1, 2, and 9.
As noted above, Requests 1 and 2 ask for documents relating to sales of
MechoShade’s ‘428 Patent and trade-dress products in Indiana. Draper has not shown
how the project files will give a more accurate account of MechoShade’s sales in Indiana
than do the productions that it has already received. Draper has also failed to show that
the files are likely to provide evidence of any business-solicitation activity by
MechoShade in Indiana. See Eli Lilly and Co. v. Mayne Pharma (USA) Inc., 504 F.Supp.2d
387, 394-95 (S.D. Ind. 2007); Fanimation Design & Manufacturing, Inc. v. NICOR, Inc., No.
19
IP 02-576-C-M/S, Order on Defendant’s Motion to Dismiss, 2003 WL 21766572 (S.D. Ind.,
July 17, 2003). Also as previously explained, Request 9’s scope is too broad to enforce
as is for the purposes of limited jurisdictional discovery.
However, the Court agrees with Draper that construction projects in Indiana for
which MechoShade performed the installation of its product13 or any later
warranty/repair work constitute relevant business activity for the purpose of the
general-jurisdictional analysis. Without stretching the legitimate scopes of Requests 1,
2, and 9 too far, and in the absence of specific contrary argument by MechoShade, the
Court concludes that Draper is entitled to information showing installations of ‘428 and
trade-dress products performed by MechoShade on projects in Indiana for the year 2007
to the date of suit. Similarly, Draper is entitled to information showing
warranty/repair work performed by MechoShade in Indiana on the same products
during the same time period. However, in exercise of its discretion and for the purpose
of controlling what was intended to be limited jurisdictional discovery, the Court does
not compel MechoShade to produce its project files but requires it to compile and
produce annual summaries of the relevant information showing the specified
installations and warranty/repair work. The summary shall include, for each Indiana
project and for each work visit, all of the dates on which the work was performed,
It was not clear from the cited evidence whether these installations generated
separate, additional revenue to MechoShade or were already incorporated into the
contract sales price for the project.
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whether the work was installation or warranty-repair work, and, if the work generated
additional revenue to MechoShade not already disclosed in its prior productions, the
amount of that additional revenue. The accuracy of the summaries shall be verified by
affidavit or declaration.
5. Communications with Technical Support and the Estimating Department.
For the same reasons as explained above for MechoShade’s installation and
warranty/repair work in Indiana, MechoShade shall produce annual summaries
identifying technical assistance and proposals that it provided during the period 2007
until the date of suit to its representatives, dealers, specifiers, and end users located (1)
in Indiana, regardless of the location of the projects for which the assistance was given,
and (2) outside of Indiana for projects located in Indiana. The summaries shall provide,
for each year, (a) the number of occasions that technical assistance was provided, (b) a
breakout showing the number of in-state and out-of-state projects for which the
assistance was provided, (c) the number of proposals that were provided, and (d) a
breakout of the number of in-state and out-of-state recipients of the proposals. The
accuracy of the summaries shall be verified by affidavit or declaration.
6. MechoWeb. Draper’s request for access to MechoShade’s intranet system
MechoWeb is denied. MechoShade is reminded that, if it has not done so already, it is
obligated to search all of its records, including those existing on MechoWeb, for
responsive documents.
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7. Business reports. Draper asserts that MechoShade “tracks” its top dealers,
specifiers, projects, and end users “in an effort to increase its presence in Indiana.”
(Brief in Support at 21). It also requires its representatives to produce and/or update
“business reports” which are weekly and monthly reports that “track[] various
construction projects in each representative’s territory.” These reports include Project
in Planning reports, Open Proposal reports, and Sales Objective reports. At least one of
these business reports “also tracks the most recent presentation MechoShade and/or its
representatives gave to a particular dealer or specifier.” (Id.) Draper contends that,
because these reports “are directly related to MechoShade’s activities in soliciting new
business in Indiana,” they are relevant to jurisdiction and should be produced. Draper
argues that the documents are covered by its Requests 1-3, 9, and 10.
In support of its request, Draper submitted examples of e-mails that MechoShade
sent to Interspec (and produced as part of Interspec’s production). These e-mails show
that show that the “tracking” that Draper describes is MechoShade’s request that each
of its representatives send to MechoShade weekly or monthly reports of the top dealers,
specifiers, architects, interior designers, projects, etc. in the representative’s territory. In
addition, MechoShade asks its representatives to send a “Sales Objective & Activities
Report” on which they record certain information for each “Firm” in their territories.
This information includes “Presentation Date,” “Presentation Type,” and “Presenter.”
Because the representatives’ reports of their “top lists” to MechoShade are not
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evidence of sales-solicitation or other business activity by MechoShade in Indiana, they
are irrelevant to the question of general jurisdiction. But presentations made by
MechoShade or its representatives to potential customers in Indiana — e.g., architects,
specifiers, decorators, dealers — clearly constitute sales-solicitation activity in Indiana
and are relevant to jurisdiction. However, because the rest of the information contained
on the representatives’ Sales Objectives and Activities Reports is irrelevant to the
inquiry, MechoShade is not ordered to produce these Reports. Instead, MechoShade
shall compile and produce summaries of the relevant information contained in these
reports. Specifically, MechoShade shall disclose, for each year from and including 2007
until the date of suit, (1) the number of presentations MechoShade or its representatives
gave to potential customers in Indiana regarding MechoShade’s products, and (2) if
available from the Sales Objectives and Activities Reports, the total number of customer
attendees. Neither the dates of the presentations, the identities of the presenters, nor
the identities of the attendees need be produced. The accuracy of the summaries shall
be verified by affidavit or declaration.
8. Lead generations / lead lists. For the same reasons explained above
regarding the third category of requests covering e-mailed lead referrals, MechoShade
shall also produce complete or redacted copies of any non-email lead-referral
documents or summaries thereof showing the same information required for the emailed referrals and for the time period.
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9. Continuing education presentations in Indiana. For the same reasons
explained above in regard to MechoShade’s “business reports,” continuing-education
presentations on MechoShade’s products given by MechoShade or its representatives in
Indiana to former, current, or potential customers, dealers, architects, decorators,
specifiers, etc. constitute relevant sales-solicitation activity in Indiana covered by a
properly limited construction of Requests 1, 2, 4, and 9. MechoShade shall compile and
produce a summary showing all such presentations, identifying for each year from and
including 2007 to the date of suit, the number of presentations and the number of
attendees. Neither the dates, locations, nor the attendees’ or presenters’ identities need
be provided. The accuracy of the summaries shall be verified by affidavit or
declaration.
10. Home Systems. MechoShade did not dispute Draper’s assertion that Home
Systems is a division of MechoShade, and MechoShade did identify Home Systems’
sales in Indiana in response to Draper’s requests. Draper asserts that its discovery
requests should apply equally to Home Systems and asks for production of all
responsive documents regarding Home Systems. But Draper does not assert or provide
any basis for finding or assuming that MechoShade has not already produced
conforming responsive documents. MechoShade is reminded that, if Home Systems is
a division through or by which it conducts business activity in Indiana, then it must
comply with Draper’s requests and this Order with respect to Home Systems’
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documents to the same extent as its own documents.
11. Custodians search, disclosure of searches, supplementation of responses.
Draper wants the Court to compel MechoShade to “adequately search the records of
specified custodians,” but it provides no basis for finding that it has not done so. We
assume that MechoShade is aware of and is committed to complying with its discovery
obligations and that, if it has discovered or has had pointed out to it any reason why a
more intensive search for responsive documents is necessary, it will undertake one.
Although MechoShade has stated that it has performed reasonable searches for
responsive documents and information, Draper wants the Court to compel it to identify
the searches that it has performed; otherwise, “it is unclear just how ‘reasonable’
MechoShade’s searches were.” (Brief in Support at 24). Because Draper has shown no
basis for finding that MechoShade’s searches were unreasonable or incomplete, its
request is denied. Finally, Draper wants the Court to compel MechoShade to
supplement its previous discovery responses with any necessary changes or additions
revealed by additional discovery ordered herein. Again, the Court assumes that
MechoShade is aware of its continuing duty to supplement and correct it discovery
responses.
12. Supplemental Rule 30(b)(6) deposition of Norman Rathfelder. Draper has
sufficiently shown that MechoShade’s designated Rule 30(b)(6) representative, Jan
25
Berman, was unprepared to adequately testify on the subjects that Draper noticed for
the deposition. Mr. Berman also identified Norman Rathfelder as the MechoShade
employee who is most knowledgeable about the subjects on which Mr. Berman could
not testify. Draper requests only a four-hour deposition of Mr. Rathfelder. (Reply at 9).
Because MechoShade did not designate a representative who was knowledgeable about
several noticed subject areas, and its designated representative identified Mr. Rathfelder
as the proper representative, the Court grants Draper’s request and orders MechoShade
to make Mr. Rathfelder available for a supplemental Rule 30(b)(6) deposition not to
exceed four hours.
Specific jurisdiction. Draper contends that sufficient forum contacts exist for
both specific and general jurisdiction over MechoShade. Because the contacts required
for specific jurisdiction are substantially less than for general jurisdiction, the parties are
encouraged to focus their discovery efforts on facts and circumstances that are relevant
to specific jurisdiction and to come to an agreement thereon if possible.14 However,
after examining the parties’ assertions and preliminary arguments regarding specific
jurisdiction, the Court concludes that a stay of general-jurisdiction discovery and
addressing the existence of specific jurisdiction is not warranted.
Draper asserts that, in addition to MechoShade’s cease-and-desist
Obviously, if the parties can yet come to an agreement on whether general
jurisdiction exists, much of the production ordered herein (and resulting costs) would
also be avoided.
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communications sent to Draper in Indiana, MechoShade also (1) informed some of
Draper’s customers that Draper was infringing MechoShade’s patent and trade dress
and that the customers might be caught up in a lawsuit, and (2) initiated two bid
protests against bids that included specifications for the allegedly infringing Draper
products. These actions were intended to stop or disrupt some of Draper’s business
activity involving the accused infringing products. MechoShade and Draper also
executed a “Rule 408 Settlement Negotiation Agreement” [doc. 22-4] and engaged in
settlement negotiations,15 however briefly, before this suit was filed. Cease-and-desist
contacts alone are insufficient for specific jurisdiction; there must be additional extrajudicial enforcement activity. Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d
1355, 1360 (Fed. Cir. 1998). While contacts with an alleged infringer’s customers for the
purpose of informing and/or threatening them regarding the alleged infringement, and
bid protests against an infringer’s products for the purpose of hindering the infringer’s
bid both qualify as extra-judicial enforcement activity supporting special jurisdiction,
Campbell Pet Co. v. Miale, 542 F.3d 879, 885-86, 997 (Fed. Cir. 2008) governing law from
the Court of Appeals for the Federal Circuit holds that all such extra-judicial activities
must occur in the forum state, not just have an effect on the alleged infringer’s business
activity in the forum state, Radio Systems Corp. v. Accession, Inc., 638 F.3d 785, 791-92
(Fed. Cir. 2011). The policy of encouraging settlements also argues against using
The content of the negotiations was not described. Certainly, they were geared
toward settlement of MechoShade’s infringement assertions and threats of litigation,
but it is unknown whether they also included licensing negotiations.
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negotiations, even when combined with license discussions, as extra-judicial
enforcement activities establishing special jurisdiction. See Autogenomics, Inc. v. Oxford
Gene Technology Ltd., 566 F.3d 1012, 1019 (Fed. Cir. 2009); Red Wing Shoe, 148 F.3d at
1361. It appears that none of the customer-contacts or bid protests described so far
occurred in Indiana. However, if the parties are aware of or become aware of
additional qualifying extra-judicial activity, they are encouraged to focus their
presentations to the Court on the present motion accordingly.
Conclusion
Draper’s Motion to Compel is GRANTED IN PART and DENIED IN PART as set
forth above. It is time to determine whether the Court has personal jurisdiction over
MechoShade. MechoShade shall complete the productions ordered herein no later than
February 24, 2012. It shall make rolling productions as documents and summaries
become ready to produce. Draper shall file its response to MechoShade’s Motion to
Dismiss no later than March 14, 2012. MechoShade may file a reply no later than March
24, 2012. The parties should not expect to receive extensions of these deadlines.
SO ORDERED.
Date: 01/30/2012
_______________________________
Denise K. LaRue
United States Magistrate Judge
Southern District of Indiana
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Distribution:
R. Trevor Carter
FAEGRE BAKER DANIELS LLP - Indianapolis
trevor.carter@faegrebd.com
Sid Leach
SNELL & WILMER, LLP
sleach@swlaw.com
Andrew M. McCoy
FAEGRE BAKER DANIELS LLP - Indianapolis
andrew.mccoy@faegrebd.com
Jonathan G. Polak
TAFT STETTINIUS & HOLLISTER LLP
jpolak@taftlaw.com
29
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