Ezfauxdecor, LLC et al v. Smith et al
MEMORANDUM AND ORDER denying 81 Motion for Protective Order; granting 83 Motion for Protective Order; granting in part and denying in part 87 Motion for ESI protocol; granting in part and denying in part 88 Motion for ESI protocol; granting 98 Motion for Extension of Time to File Discovery Motion. The Court will enter the Protective Order as a separate entry in the Court's docketing system. Signed by Magistrate Judge Kenneth G. Gale on 3/6/17. (df)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
EZFAUXDECOR, LLC, et al.,
ALISON SMITH, et al.,
Case No. 15-9140-CM-KGG
ORDER ON PENDING MOTIONS
Now before the Court are the parties’ dueling motions requesting the entry
of a Protective Order (Docs. 81, 83) as well as the parties’ dueling motions
regarding an ESI protocol for the case (Docs. 87, 88). For the reasons set forth
herein, Defendants’ motion for a Protective Order (Doc 81) is DENIED and
Plaintiffs’ competing motion (Doc. 83) is GRANTED. The parties’ competing
motions for an ESI protocol (Docs. 87, 88) are GRANTED in part and DENIED
in part as more fully set forth below.
Also pending is Defendants’ motion for extension of time to file a motion to
compel, to which Plaintiffs filed no response. (Doc. 98.) This motion is
GRANTED as uncontested.1
The parties in this lawsuit are competing on-line retailers selling adhesive
coverings for household appliances and countertops. (See Doc. 86, at 1-2.)
Plaintiffs bring claims against Defendants for false advertising, tortious
interference with business relations, commercial disparagement, and false or
fraudulent trademark registration. (See generally Doc. 96.) Additionally, Plaintiffs
seek a cancellation of Defendants’ trademark registrations and request a
declaratory judgment “of its continued right to use the phrases ‘instant stainless,’
‘instant stainless steel,’ and ‘instant granite,’ as such or in combination with other
words to describe Plaintiffs’ products, all free and clear of interference or
harassment by Defendants and without any obligation or liability to Defendants.”
(Id., at 13-18.)
Currently pending before the Court are the parties competing motions,
enumerated supra. The motions will be addressed by subject matter.
Defendants’ Motion for Protective Order (Doc. 81) and Plaintiffs’
Motion for Protective Order (Doc. 83).
See D. Kan. Rule 6.1(d)(1), D. Kan. 7.4.
The parties agree that a Protective Order is necessary in this case, but have
been unable to agree on its particulars. Because the parties are competitors in a
“small market segment” (Doc. 82, at 13), Defendants request two-tiered protection,
which would include a second level of protection for documents designated
“attorneys’ eyes only.” This would be reserved for customer-identifying
information, vendor information, and private financial information. (Id., at 12.)
Defendants also request additional protections to “reduce the risk that
documents designated Attorneys’ Eyes Only may be disclosed to Plaintiffs again.”
(Id., at 14.)
Defendants’ protective order in Exhibit A would require
Defendants to produce financial summaries of
confidential financial information (designated
“Attorneys’ Eyes Only”), without having to produce it in
its full, native format. Plaintiffs’ counsel would be
permitted to verify the accuracy of this summarized
information by inspecting Defendants’ private financial
records in their full, native form, but Plaintiffs’ counsel
will not have unrestricted access to, or a permanent copy
of, such financial information in its full, native format.
(“Measure (3)”) In the alternative to Measure (3),
Defendants’ proposed protective order in Exhibit B
would permit the withholding of their confidential
financial information in native format until thirty (30)
days prior to the proposed Pretrial Order deadline
(Id., at 14-15.) Defendants provide examples of events that justify this type of
protection, including an instance when Plaintiffs’ counsel allegedly showed
Plaintiff certain documents marked “Confidential – Counsel Eyes Only” pursuant
to a pre-mediation agreement. (Id., at 15.)
Plaintiffs contend that the protections proposed by Defendants go beyond
any that have been allowed in this District or the Tenth Circuit as a whole and
“would prevent a plaintiff in a Lanham Act unfair competition case from obtaining
evidence required by statute and necessary to the elements of their claim.” (Doc.
86, at 1.) Plaintiffs object to three aspects of Defendants’ proposed Orders:
Prohibiting necessary experts from viewing
Permitting Defendants to merely show financial
information to the Plaintiffs in lieu of producing
the requested financial information and prohibiting
experts from viewing the financial information.
(Dft’s Measure 3)
Permitting Defendants to withhold financial
information until 30 days before trial and after the
deadline for designating experts has run. (Dft’s
(Doc. 86, at 13.) Plaintiffs have filed a competing Motion for Protective Order
(Doc. 83; section 2, infra).
Plaintiffs propose using the model Protective Order available from the
Court’s website. (See Doc. 84, at 2.) Plaintiffs propose two “specific and narrow
categories of information” to be protected:
Documents or records containing financial
information about a party;
Documents or records containing customer names,
phone numbers, addresses, email addresses, or
credit card information.
(Id.) Plaintiffs contend that they will need to have the identities of, and obtain
testimony from, Defendants’ customers to prove damages. (Id., at 3.)
Defendants respond that
Plaintiffs’ proposal affords only a single designation of
confidentiality that would allow the parties to access and
possess each other’s trade secrets, including, for instance,
customer identities, profit margins, and vendors. The
disclosure of that information would provide Plaintiffs
with an unfair competitive advantage to the damage of
(Doc. 89, at 2.) According to Defendants, the two-tiered Protective Order they
proposed (see section 1, supra) “would enhance protection to discrete categories of
information that constitute trade secrets.” (Id.)
“The court has broad discretion ‘to decide when a protective order is
appropriate and what degree of protection is required.’” MGP Ingredients, Inc. v.
Mars, Inc., 245 F.R.D. 497, 500 (D. Kan. 2007) (quoting Seattle Times Co. v.
Rhinehart, 467 U.S. 20, 36, 104 S.Ct. 2199, 81 L.Ed.2d 17 (1984)); see also
Layne Christensen Co. v. Purolite Co., 271 F.R.D. 240, 244 (D. Kan. 2010).
Additionally, “a court may be as inventive as the necessities of a particular case
require” in fashioning an appropriate protective order. 8 Charles Alan Wright,
Arthur R. Miller & Richard L. Marcus, Federal Practice & Procedure § 2036, at
489 (2d ed.1994).
The law requires that the proposed protection be balanced between the
confidentiality concerns/potential injury to Defendants versus the need for
Plaintiffs to be able to prosecute its case.
Where the protection sought is only to prevent certain
identified individuals from viewing the materials, such as
in-house counsel . . . , the court must balance the risk of
inadvertent disclosure of trade secrets to competitors
against the risk to the other party that protection of these
trade secrets will prejudice its ability to prosecute or
defend the present action.
In weighing these competing interests, the court
should consider whether the individual to be prohibited
from accessing the information would be virtually unable
to compartmentalize the information and not use the
information to seek to gain an unfair competitive
advantage. The court should also consider whether
prohibiting the individual’s access to the information
would hamper the party's ability to assess the merits of
the litigation. This involves considering the individual’s
specific role in the litigation, whether his or her expertise
is specialized and not widely available through the
retention of other experts, and whether this specialized
expertise is essential to the proper handling of the
Layne Christensen Co., 271 F.R.D. at 249-50 (internal citations omitted).
The Court finds that Plaintiffs’ approach strikes the appropriate balance. It
would be virtually impossible for Plaintiffs to prosecute this sort of action if they
were prohibited from seeing the relevant financial information and their expert was
prohibited from seeing the customer information.
The Court thus approves Plaintiffs’ proposed Protective Order,
GRANTING Plaintiffs’ motion (Doc. 83) and DENYING Defendants’ motion
(Doc. 81). The Court will, however, amend Plaintiffs’ proposed Protective Order
to restrict the limitation of customer information to attorneys and experts only.
Defendants’ Motion to Adopt Defendants’ ESI Protocol (Doc. 87) and
Plaintiffs’ Motion to Adopt ESI Plan (Doc. 88).
Defendants request that the Court “issue its protocol governing the form and
manner of electronically stored information (“ESI”) during the course of litigation.
(Doc. 87, at 1.) The parties have discussed this issue but disagree on the following
Categories of ESI most relevant to parties’ claims
or defenses (paragraph 4). (Doc. 87, at 2.)
Third-parties likely to have relevant ESI
(paragraph 6). Defendants want to include the
statement that such ESI is “not relevant or may be
disproportionate to the needs of the case.” (Doc.
87, at 2.)
Third-party web pages (paragraphs 13 and 15).
Defendants contend that some of this information
may no longer exist or may not be Defendants’
control. According to Defendants, “[i]t is not
technologically feasible to preserve them in the
manner Plaintiffs have identified. Requiring
forensic reconstruction of historical versions of
web pages would be wildly out of proportion to the
issues and amount at stake in this case.” (Doc. 87,
Structured data in report format (paragraph 16).
According to Defendants, Plaintiffs propose that if
the exchange of this type of information is
insufficient, “the parties would be required to
identify the databases or systems incorporating
databases that will require raw data production.”
(Doc. 87, at 3.) Defendants suggest that if that
occurs, “the parties negotiate in good faith about
the reasonable methods of production and in a
manner that is proportional to the needs of the
Language regarding improper dissemination of
information (paragraph 18). Defendants contend
that this is “important” because of “the issues
discussed in the Defendants’ Motion for Protective
Order . . . .” (Doc. 87, at 3.)
Attachments to e-mails (paragraph 22).
Defendants propose that attachments “shall not be
eliminated from the parent e-mail” except as a
result of privilege. (Doc. 87, at 3.)
Plaintiffs have filed a competing motion relating to ESI. (Doc. 88.)
Plaintiffs contend their proposed ESI plan is more consistent with the Sedona
Conference than Defendants’ proposal. (Doc. 88, at 1-2.) According to Plaintiffs,
[t]he core of the disagreements between Plaintiffs and
Defendants is that Defendants’ proposals mix matters
more appropriate to a protective order with the limited
scope of a [sic] ESI plan. An ESI plan concerns the
format of production – a protective order concerns the
limits to production or dissemination of material.
(Id., at 2.) Plaintiffs also complain that “Defendants had a duty to preserve their
own websites and seller’s pages,” which is “common in litigation.” (Id.) They
contend that they have not sought the production of third-party websites “except
for the content to which Defendants linked their own websites.” (Id.)
The Court finds that the elements to which the parties have agreed create the
structure for an appropriate ESI protocol. The protective order-type elements of
Defendants’ proposal do not belong in an ESI protocol. The parties are thus
instructed to jointly compose a revised ESI protocol adhering to the elements on
which they have expressed agreement in their respective motions. To the extent
additional elements proposed by either party are excluded by this Order, such is
without prejudice to revisiting these as they may relate to specific discovery. The
proposed, jointly composed protocol shall be submitted to the Court for approval
within thirty (30) days of the date of this Order.
The Court also mandates the following revisions or additions to the protocol.
As discussed in paragraph 4 of Defendants’ motion,
Plaintiffs propose that if issues in the case make
exchange of structured data in a report format
insufficient, the parties would be required to identify the
databases or systems incorporating databases that will
require raw data production. Conversely, Defendants
suggest that in that event, the parties negotiate in good
faith about the reasonable methods of production and in a
manner that is proportional to the needs of the case.
(Doc. 87, at 3.) The Court finds that these concepts proposed by Defendantshould
be incorporated. Further, Defendants’ proposal that attachments to e-mails shall
not be eliminated from the parent e-mail (except to the extent that they are subject
to withholding for privilege, work product, or a similar protection) shall be
included in the protocol.
IT IS THEREFORE ORDERED that Defendants’ motion for a Protective
Order (Doc 81) is DENIED and Plaintiffs’ competing motion (Doc. 83) is
IT IS FURTHER ORDERED that the parties’ motions for an ESI protocol
(Docs. 87, 88) are GRANTED in part and DENIED in part as set forth herein.
IT IS FURTHER ORDERED that Defendants’ motion to extend their
deadline to file a motion to compel Plaintiffs’ responses to Defendants’ first
discovery requests is GRANTED as uncontested. Therefore, any such discovery
motion relating to Plaintiffs’ responses to Defendants’ first discovery requests shall
be filed within sixty (60) days of the date of this Order.
IT IS SO ORDERED.
Dated at Wichita, Kansas, on this 6th day of March, 2017.
S/ KENNETH G. GALE
KENNETH G. GALE
United States Magistrate Judge
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