CPI Card Group, Inc. et al v. Dwyer et al

Filing 676

ORDER granting in part and denying in part 570 Motion to Compel; granting in part and denying in part 579 Motion to Compel; granting in part and denying in part 603 Motion to Compel; granting in part and denying in part 619 Motion to Compel. (Written Opinion) Signed by Magistrate Judge Becky R. Thorson on 11/13/2018. (MSK)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

CPI Card Group, Inc. et al.,

Civ. No. 17-3983 (SRN/BRT)

Plaintiffs,
v.
John Dwyer, et al.,

ORDER ON MOTIONS TO COMPEL
Defendants.

Adam Gregory Chandler, Esq., Charles B. Rogers, Esq., James J. Long, Esq., Karen D.
McDaniel, Esq., Mira Vats-Fournier, Esq., and William Fitzsimmons, Esq., Briggs &
Morgan, PA, counsel for Plaintiffs.
Richard R. Voebel, Esq., Ryan, A. Olson, Esq., and Scott D. Blake, Esq., Felhaber,
Larson, Fenlon & Vogt, PA, counsel for Defendant Dwyer.
A. Robert Fischer, Esq., Gina K. Janeiro, Esq., and Janet M. Olawsky, Esq., counsel for
Defendants Multi Packaging Solutions, Inc., John Searfoss, and Ken Glinert.

Now before the Court are several motions: (1) The MPS Defendants’ Motion to
Compel Supplementation of Discovery Responses and Damages Information (Doc. No.
570); (2) Defendant Dwyer’s Motion to Compel Concerning Written Discovery (Doc.
No. 579); (3) Plaintiffs’ Motion to Compel Discovery (Doc. No. 603); (4) Dwyer’s
Motion to Compel Concerning Custodians, Search Terms, and an Amended Protective
Order (Doc. No. 619); and (5) Unresolved Issues Raised in the October 24, 2018 Status
Call. (Doc. No. 617.) The Court held a hearing on these motions on November 9, 2018.
(Doc. No. 673.)

BACKGROUND
Magistrate Judge Franklin Noel issued the original Scheduling Order on January
16, 2018. (Doc. No. 227.) This case was reassigned to the undersigned on May 7, 2018
(Doc. No. 299), and an Amended Scheduling Order was issued on May 15, 2018. (Doc.
No. 319.) The parties were required to update their initial disclosures by January 19,
2018. (Doc. No. 319.) The Amended Pretrial Scheduling 1 Order provided that fact
discovery must be commenced in time to be completed by October 1, 2018. (Id.) Expert
discovery was scheduled to follow the completion of fact discovery. (Id.) A Third
Amended Scheduling Order was entered on October 5, 2018. (Doc. No. 568.) This order
confirmed that the deadline had passed for all written discovery and document
production, but that the time for taking fact depositions would be extended to December
17, 2018. (Id.) A Fourth Amended Scheduling Order was entered on October 26, 2018.
(Doc. No. 612.) To accommodate settlement discussions, the Court agreed to extend the
date for supplementation of discovery responses, including the production of actual
documents, to November 19, 2018. (Id.) In addition, the Court extended the deadline for
the completion of deposition fact discovery to January 18, 2019. (Id.) Expert deadlines
were adjusted to ensure that the experts had the benefits of fact discovery to prepare
expert reports. (Id.) The Court also set the deadlines for the submission of motions
regarding written fact discovery, ESI, the protective order, and upcoming fact

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The Third Amended Scheduling Order also provided: “If any party seeks to amend
the scheduling order to allow for any additional written discovery, they must show good
(Footnote Continued on Next Page)
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depositions. (Id.) The Fourth Amended Scheduling order alerted that parties that any
discovery ordered pursuant to motions to compel would be due on a fast track. (Doc. No.
612 at 2.)
APPLICABLE LAW GOVERNING DISCOVERY
The parties have utilized various discovery tools to obtain factual information
from other parties and third parties. These discovery tools include interrogatories,
requests for the production of documents, and depositions. Federal Rule of Civil
Procedure 26 governs discovery in federal court. Fed. R. Civ. P. 26(b)(1):
Parties 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.
Discovery under the Federal Rules of Civil Procedure, however, is not without
bounds, even if relevance is shown. Federal Rule of Civil Procedure 26(b)(2)(C)
provides:
(C) When Required. On motion or on its own, the court must limit the
frequency or extent of discovery otherwise allowed by these rules or by
local rule if it determines that:
(i) the discovery sought is unreasonably cumulative or duplicative,
or can be obtained from some other source that is more convenient,
less burdensome, or less expensive;
(Footnote Continued From Previous Page)
cause and, because the deadline has passed, extraordinary circumstances.” (Doc. No.
568.)
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(ii) the party seeking discovery has had ample opportunity to obtain
the information by discovery in the action; or
(iii) the proposed discovery is outside the scope permitted by Rule
26(b)(1).
ANALYSIS
I.

The MPS Defendants’ Motion to Compel Supplementation of Discovery
Responses and Damages Information (Doc. No. 570)
Since the filing of their motion, CPI has produced, or has agreed to produce, the

information requested in Paragraph 2(a)-2(f) of the Proposed Order from January 1, 2016
to the present. The remaining issues are addressed below. MPS’s motion is granted in
part and denied in part.
A.

Motion to Compel Responses to RFPs

This Court notes that the Proposed Order corresponds to MPS’s motion to compel
documents responsive to MPS RFP Nos. 12-13 and Glinert/Searfoss Nos. 5-6. (Doc. No.
578.) Essentially, MPS seeks discovery reciprocal to the scope of what CPI is receiving
in response to its document requests; however, the discovery requests are not the same:

CPI’s Requests (Subject to Past
MPS’s Requests (Subject to This Motion)
Motion to Compel)
Set III, RFP 1. All communications
[MPS] REQUEST NO.
(orally, via letter, email, power point,
12: All Documents which
etc.) between MPS and any of the
relate in any way to the
Specified Parties after January 1,
financial loss and/or
2017 relating to potential work on
damages you claim was
Transaction Cards, including but not
caused by MPS as alleged
limited to request for proposals and
in the Complaint.
responses to same.
Set III, RFP 2. All Master Service
[GLINERT/SEARFOSS2]
Agreements, Statements of
REQUEST NO. 5: All
Work, or agreements pursuant to
Documents which relate in
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which work is performed
between MPS and any of the
Specified Parties since January 1,
2017, relating to Transaction Cards.

any way to the financial
loss and/or damages you
claim was caused by the
acts of [Glinert/Searfoss] as
alleged in the Complaint.

Set III, RFP 3. All MPS reports that
show sales in dollars and units,
costs of manufacture/production,
and gross profits earned by
customer project and/or program
relating to Transaction Cards, by
fiscal periods of quarter and year
from January 1, 2015 to present.
Set III, RFP 6. All MPS documents
and reports that show a(ny)
discounts, deviation, or variation
related to pricing Transaction Cards
quoted or offered to each of the
Specified Parties

[MPS] REQUEST NO.
13: All Documents which
relate in any way to efforts
you have made to mitigate
the damages you allege to
be caused by MPS.
[GLINERT/SEARFOSS]
REQUEST NO. 6: All
Documents which relate in
any way to efforts you
have made to mitigate the
damages you allege to be
caused by
[Glinert/Searfoss].

Set II, RFP 6. All documents
relating to MPS’s plans, pursuit or
solicitation of, or current or
prospective business with, any of
CPI’s current or former customers,
or CPI prospects as identified in the
December 14, 2017 letter of Janet
Olawsky to Karen McDaniel,
attached hereto.
CPI aimed its requests at specific types and categories of documents. The requests at
issue in MPS’s motion are aimed at discovering documents that relate to CPI’s damages
claims. If MPS wanted types or specific categories of documents, it could have more
directly targeted the documents sought, rather than ask CPI to identify documents CPI

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believed “relate” to claims and efforts to mitigate. Moreover, requests seeking documents
that relate “in any way” are overbroad.
With that said, however, Plaintiffs should not assume that they may reserve the
right to “subsequently rely” on discovery that they do not produce by the deadlines set
forth in this Court’s orders. (See Doc. No. 665, Declaration of Donald A. Gorowsky
(“Gorowsky Decl.”) ¶ 19 (“If I were to subsequently rely on financial data or projects
before January 1, 2015, it is my understanding that CPI would produce such financial
data or projects.”).) The scheduling orders were prepared consistent with Rules 1 and 16
and tailored to allow experts for both sides to consider the relevant factual information
before expert reports were due. If CPI wishes to potentially rely on any financial data or
projects that predates January 1, 2015, it should produce documents for the corresponding
years by the deadline set forth in this Order by November 30, 2018 or proceed at its
peril. 2
In addition to what has been agreed to by the parties, CPI must produce the
information listed in Paragraph 2(a)-2(f) of the Proposed Order from January 1, 2015 to
January 1, 2016.
As to the information listed in Paragraph 2(g)-2(j) of the Proposed Order for any
time period, MPS’s motion is denied. Further, it is premature to order the discovery of the

2

This Court’s Order on this discovery dispute is non-dispositive and should not be
interpreted to suggest that the undersigned is making any determination of dispositive
issues or is previewing any decisions regarding potential disputes regarding the
introduction of certain evidence or preclusion of evidence.

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amount of attorney fees to be claimed. See Newman v. Union Pacific R. Co., No. 122518-JTM-KGG, 2013 WL 1308977, at *1 (D. Kansas March 29, 2013).
CPI must produce any documents that have not yet been produced but have been
provided to CPI’s damage experts (disclosed and undisclosed) by November 30, 2018 as
these would relate to damages or mitigation claims.
B.

Supplementation

CPI must update their production to include documents from July 1, 2017 to
October 31, 2018 3 as to MPS RFP Nos. 4, 12, 13, 15, 16, and 17 and Searfoss/Glinert
RFP Nos. 2, 3, 4, 5, and 6. Such supplementation does not mean that additional discovery
may open or that any depositions may be rescheduled. A full supplementation as to MPS
RFP No. 2 is denied as unduly burdensome given the broad scope of the Request, which
asks for “[a]ll documents which relate in any way to your claims against
[Glinert/Searfoss] or any other defendant in this case.” A full supplementation of
Searfoss/Glinert RFP No. 7 is also denied as unduly burdensome given the broad scope
of the Request (See RFP No. 7 (“All non-privileged Documents, including those with a
third party, regarding your claims against [Glinert/Searfoss].”).) If CPI has identified or
collected additional documents responsive to MPS RFP No. 2 or Searfoss/Glinert RFP
No. 7, such documents must be produced by November 30, 2018.

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Ongoing supplementation “to the present” will collide with Rule 1. Accordingly,
the Court has selected a recent end of month date to work from in order to satisfy the
November 30, 2018 deadline for the production of documents subject to this Order.
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II.

Defendant Dwyer’s Motion to Compel Concerning Written Discovery (Doc.
No. 579)
Since the filing of their motion, the parties have resolved disputes regarding

Defendant Dwyer’s request for information and/or documents regarding the six common
Prohibited Accounts; Defendant Dwyer’s Request for Production Nos. 6, 8, 11, 14 and
15; Defendant Dwyer’s request for missing email attachments in Plaintiffs’ document
production; and Defendant Dwyer’s request for un-redacted documents.
The parties also resolved the dispute regarding Defendant Dwyer’s request that
Plaintiffs supplement their document production by producing text messages. With
regard to the resolution of the text message dispute, the parties must file a stipulation
reflecting their agreement by November 19, 2018. As part of the resolution of the text
message dispute, the parties also resolved the remaining ESI dispute regarding custodians
and search terms. The stipulation will include the parties’ agreement on those issues as
well. MPS’s motion is granted in part and denied in part. The remaining issues are
addressed below.
A.

Interrogatory No. 10: Denied

Defendant Dwyer requests that Plaintiffs supplement their Answer to Interrogatory
No. 10. Defendant Dwyer clarified that he sought supplementation relating to CPI’s claim
for attorney fees. Dwyer’s motion is denied as premature. See Newman, 2013 WL
1308977, at *1.

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B.

Supplementation (confirmation) as to Interrogatories 12, 13, 14 and 16:
Granted

Interrogatory Nos. 12 and 13 warrant further discussion because of their
relationship to disputed RFP No. 12 below. Defendants are entitled to discover whether
CPI has shared the types of information CPI contends is confidential or trade secret
protected with third parties. Searches of a limited number of custodians pursuant to the
parties’ agreement on custodians and search terms, as discussed at the hearing, does not
satisfy CPI’s obligation to respond to interrogatories. Consistent with the foregoing
authority, “[a] company has a duty to conduct a reasonable investigation, make
reasonable inquiries of its employees, and fully respond to the interrogatories posed to
the company.” Morris v. Low’s Home Centers, No. 1:10CV388, 2012 WL 5347826, at *4
(M.D.N.C. Oct. 26, 2012) (citing 3M Innovative Props. Co. v. Tomar Elecs., Civil No.
05–756 (MJD/AJB), 2006 WL 2670038, at *10 (D. Minn. Sept. 18, 2006) (emphasis
added). See also Gonzales v. City of Albuquerque, No. CIV 09–0520 JB/RLP, 2010 WL
553308, at *8 (D.N.M. Feb. 9, 2010) (“The Defendants must make a reasonable effort to
answer these interrogatories, including talking to employees and looking at documents.”);
Hickman v. Wal–Mart Stores, Inc., 152 F.R.D. 216, 223 (M.D.Fl.1993)(“[The defendant]
has a duty to make a reasonable search of its business records and make a reasonable
inquiry of its employees and agents in order to obtain the information asked in Plaintiff's
interrogatories.”). If CPI satisfies its obligation to respond pursuant to Rule 33, then CPI
will be able to identify any corresponding documents in response to RFP No. 12 without
undue burden.
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C.

Defendant Dwyer’s Request for Production: Granted in Part and
Denied in Part

Several of the remaining disputes between the parties relate the scope of discovery
of CPI’s financial information. Dwyer argues that CPI has improperly limited its
responses to the production of documents that CPI intends to rely on to support its
damages claim. The Court agrees that Defendants were entitled to seek discovery beyond
what Plaintiffs might choose to rely on to support their damages claim. 4 See hibu Inc. v.
Peck, Case No. 16-cv-1055-JTM-TJJ, 2017 WL 2472548, at *2–3 (D. Kan. June 8, 2017)
(finding that defendant is entitled to conduct discovery into the basis for plaintiff’s
damages calculations, including discovery which may permit rebuttal.) This obviously
assumes that a particular discovery request has been made and is within the scope of Rule
26.

4

Rule 26(a)(1) requires the parties to disclose the identities of the witnesses and
documents that they “may use to support [their] claims and defenses, unless the use
would be solely for impeachment.” It is important to note that the initial disclosure
requirements were narrowed in 2000 to “cover only information that the disclosing party
may use to support its position.” See Comments, 2000 Amendment. After 2000, a “party
is no longer obligated to disclose witnesses or documents whether favorable or
unfavorable, that it does not intend to use.” Id. “As case preparation continues, a party
must supplement its disclosures when it determines that it may use a witness or document
that it did not previously intend to use.” Id. There is a significant difference between what
a party is required to disclose in their Rule 26(a) initial disclosures and what a party is
permitted to inquire into pursuant to Rule 26(b). To highlight this point, a party may not
intend to “use” an unfavorable document “to support [their] claims and defenses.” Id.
That same party, however, may have to produce the unfavorable document if it is sought
through a Rule 34 document request, assuming the request seeks discovery within the
scope of Rule 26. While a party’s initial disclosures may help to frame the scope, they do
not set the boundaries. In the end, “[m]utual knowledge of all of the relevant facts
gathered by both parties is essential to proper litigation.” Hickman v. Taylor, 329 U.S.
495, 507 (1947).
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CPI insists that any discovery should not reach to CPI Card Group, Inc.,
explaining that its “current damages claim” is isolated to lost profits in its U.S. Prepaid
Debit business segment for specific customers and projects. (See Doc. No. 664 at 9–10;
see also Gorowsky Decl. ¶ 10.) According to the Defendants, however, CPI has taken the
position that its damages claim reaches beyond the single business entity to the CPI Card
Group Inc., opening the door to discovery of CPI Card Group’s financial data.
Specifically, with respect to RFP No. 9, Defendant seeks the non-consolidated financial
statements for CPI Card, Inc.
With the above framework, the Court addresses the remaining disputes regarding
the Dwyer’s RFPs.
• RFP No. 5. Granted.
• RFP No. 9. Granted. Dwyer has established relevance. CPI has not, at least
at this point, shown a lack of relevance. 5 Further, in opposing Dwyer’s
motion, CPI has not shown burden or lack of proportionality regarding the
production of CPI Card, Inc.’s “non-consolidated financial statements.”
(See Doc. 664 at 9–10.)
• RFP No. 12. Granted. See above. The Court notes that responsive
documents, if they exist, could potentially correspond to the answer to
Interrogatories 12 and 13.

5

Counsel for CPI agreed to consult with the CPI entities to confirm Plaintiffs’
position regarding damages. Dwyer concedes that these documents need not be produced
“unless CPI can clarify that the other CPI entity is not claiming that it suffered financial
harm as a result of Dwyer.” (Doc. No. 581 at 16.) If the parties reach an agreement that is
different from this Court’s Order, they must file a joint stipulation that memorializes the
agreement. Either way, documents ordered or agreed to must be produced by the
November 30, 2018 deadline set forth in this Order.

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• RFP No. 16. Granted in part and denied in part as overly broad as drafted.
CPI must produce decks (PowerPoint), presentations, and other marketingrelated Documents presented or provided to Prohibited Accounts from
January 2016 to the present.
• RFP No. 20. Granted. As discussed above, initial disclosure documents are
often produced even without a request. Here, however, a corresponding
written discovery request was made.
III.

Plaintiffs’ Motion to Compel Discovery (Doc. No. 603)
Plaintiffs’ Motion is already subject to past orders. Responsive information and

documents subject to past orders must be produced by November 19, 2018.
IV.

Dwyer’s Motion to Compel Concerning Custodians, Search Terms and An
Amended Protective Order (Doc. No. 619)
A.

Custodians and Search Terms

The disputes relating to custodians and search terms was resolved prior to the
hearing. As discussed above a joint stipulation reflecting the agreement must be filed by
November 19, 2018.
B.

AEO Designations/Protective Order

A separate Amended Protective Order will be issued.
V.

Unresolved Issues Raised in the October 24, 2018 Status Call (Doc. No. 617)
A.

Fact Depositions

CPI seeks additional time to conduct a second deposition of the individually
named defendants and to complete the 30(b)(6) deposition of MPS. The parties had
agreed that a second deposition could be taken, however, they did not agree to exceed the
time limit set forth in Rule 30. The request for additional time to depose the individually
named defendants is denied for lack of good cause. The request for additional time to
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complete the 30(b)(6) deposition is granted in part and denied in part. An additional 2
hours will be permitted. No expansion of the topics is allowed. Further, MPS is not
required to produce any particular individual as its designee 6 and the 30(b)(6) designee is
not subject to an individual deposition unless already noticed. MPS must comply with
Rule 30(b)(6) and the designee must be prepared on the topics to be covered. The topics
must be confirmed in a meet and confer between counsel prior to the deposition.
Unless already agreed to, the parties may not seek the depositions of any other fact
witnesses unless they were noticed by the deadlines set forth in this Court’s scheduling
orders. If the parties have reached an agreement regarding fact depositions, they must file
a joint stipulation that memorializes their agreement by November 19, 2018.
B.

AEO Designations/Protective Order

As noted above, a separate Amended Protective Order will be issued.
ORDER
1.

As provided by the Fourth Amended Scheduling Order, written

discovery—including actual documents—already ordered to be completed pursuant to
this Court’s prior orders must be produced no later than November 19, 2018. All
discovery—including actual documents—ordered pursuant to this Order must be
produced no later than November 30, 2018;

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CPI complains that it was not made aware of the identity of MPS’s financial
records custodian. CPI, however, has not established that it made a discovery request to
learn the identity of the financial records custodian and that this information was
withheld, preventing CPI from timely noticing an individual fact deposition. As discussed
(Footnote Continued on Next Page)
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2.

All stipulations required to be filed pursuant to this Order must be filed by

November 19, 2018;
3.

The MPS Defendants’ Motion to Compel Supplementation of Discovery

Responses and Damages Information (Doc. No. 570) is GRANTED IN PART and
DENIED IN PART;
4.

Defendant Dwyer’s Motion to Compel Concerning Written Discovery

(Doc. No. 579) is GRANTED IN PART and DENIED IN PART;
5.

Plaintiffs’ Motion to Compel Discovery (Doc. No. 603) is GRANTED IN

PART and DENIED IN PART; and
6.

Dwyer’s Motion to Compel Concerning Custodians, Search Terms, and an

Amended Protective Order (Doc. No. 619) is GRANTED IN PART and DENIED IN
PART.

Date: November 13, 2018.
s/ Becky R. Thorson
BECKY R. THORSON
United States Magistrate Judge

(Footnote Continued From Previous Page)
above, MPS was not required to identify fact witnesses that it does not intend to offer as
part of their initial disclosures.
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