EXPERIAN INFORMATION SOLUTIONS, INC. v. LIST SERVICES DIRECT, INC.

Filing 144

OPINION & ORDER, that Plaintiff's 124 Appeal Magistrate Judge Decision to District Court is DENIED; and Plaintiff's 125 Motion to Stay pending this appeal is MOOT; etc. Signed by Judge John Michael Vazquez on 08/21/2018. (sms)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

EXPERIAN INFORMATION SOLUTIONS,
INC.,
Plaintiff

Civil Action No. 15-3271
OPINION & ORDER

V.

LIST SERVICES DIRECT, INC.,
Defendant.

John Michael Vazguez, U.S.D.J.
This matter comes before the Court on an appeal from Magistrate Judge Mark Falk’s ruling
compelling Plaintiff to disclose source information for its database. Judge Falk granted Defendant
List Services Direct, Inc.’s (“Defendant” or “LSDI”) informal motion to compel during a hearing
held on April 20, 2018 (“Hearing (2018)”), D.E. 1242.1 Plaintiff Experian Information Solutions,
Inc. (“Plaintiff’ or “Experian”) then filed the current appeal. D.E. 124. Defendant filed a brief in
opposition, D.E. 130, to which Plaintiff replied, D.E. 132.2 The Court reviewed all submissions
and considered the motion without oral argument pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R.
78.1(b). For the reasons that follow, Plaintiffs appeal is DENIED.

A transcript of the April 20, 2018 hearing can be found at D.E. 124-2, pg. 291-3 13.
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Plaintiffs brief in support (D.E. 124) of its appeal will be referred to as “P1. Brf.” Defendant’s
brief in opposition (D.E. 130) will be referred to as “Def. Opp.” Plaintiffs reply (D.E. 132) in
will be referred to as “P1. Rep.”

I.

RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
This case arises out of a copyright infringement dispute.

Plaintiff Experian provides

“marketing services to direct marketers using information derived from its proprietary database
made of consumer information known as the ConsumerView Database.” Complaint (“Cornpl.”)

¶J 3-4; D.E.

1. Defendant LSDI also “sells or licenses consumer information to other companies

for marketing purposes.” Id.

¶J 5,

32.

In 2013, Experian filed a complaint in the United States District Court for the District of
Arizona against Nationwide Marketing Services, Inc. (d/b/a “Natirnark”) for copyright
infringement, asserting that Natimark had copied and sold consumer data from Experian’s database
(“CVD”). See Experian Info. Sols., Inc. v. Nationwide Mktg. Servs., Inc., No. CV-13-00618, 2016
WL 11414803, at *2 (D. Ariz. Sept. 30, 2016) (history omitted). The Arizona district judge granted
Natimark summary judgment on Experian’s claim for misappropriation of a trade secret. Id. at
*10. Experian appealed
Experian filed this matter against LSDI on May 11, 2015. D.E. 1. Experian brought suit
after learning that LSDI was the source from which Natimark received the allegedly
misappropriated consumer information. Compl.

¶ 32.

The central dispute here is whether LSDI

committed copyright infringement and trade secret misappropriation when it allegedly copied and
sold part of Experian’s database to other marketers, including Natimark.
On February 27, 2018, Judge Falk ordered that LSDI could submit an infonrial letter brief
requesting to compel outstanding discovery and that, after full briefing, there would be hearing to
resolve any discovery disputes. D.E. 119. On April 20, 2018, Judge Falk held a hearing on
outstanding discovery disputes. As noted, Judge Falk granted Defendant’s motion to compel.
Hearing (2018) at 20:16-17; D.E. 123-2.

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Before addressing Judge Falk’s reasons for granting LSDI’s request, the Court notes that
on June 27, 2018, the Ninth Circuit addressed Experian’s appeal from the Arizona decision in
Experian Information Solutions, Inc. v. Nationwide Marketing Services, Inc., 893 F.3d 1176, 1179
(9th Cir. 201$). The Ninth Circuit’s decision was several months after Judge Falk’s decision. The
Ninth Circuit disagreed with the district court, finding that compilations of names and addresses
are copyrightable. Id. at 1186. Nevertheless, the Circuit affirmed the district court’s grant of
summary judgment on the copyright infringement claim because Experian had not shown that
Natimark infringed on the copied material. Id. However, the Circuit reversed and remanded on
the trade secret claim, finding that triable issues of fact existed as to Natimark’s knowledge of
misappropriation. Id. at 1189-90. Both parties submitted letters to the Court representing that the
Ninth Circuit’s decision supported their positions. D.E. 140, 141.
Turning to this appeal, Judge Falk noted that he had “twice before” infonnally directed
Experian to produce the infonTlation LSDI sought to compel. Hearing (2018) at 14:22-23. Judge
Falk summarized the relevant discovery as Experian identifying, by name, source information for
the CVD and Experian disclosing “the percentage of the name and address pairs in the CVD which
were at any time provided to Experianby such source.” Id. at 14:16-20.
In granting LSDI’s motion, Judge Falk delineated several reasons in support. Judge Falk
first ruled that “a deadline in the scheduling order for raising discovery disputes is not a bar.” Id.
at 16:24-25. He explained that courts possess broad discretion over discovery, including managing
the timeliness of discovery, and that parties should not be penalized for first trying to resolve
discovery disputes without court intervention. Id. at 17:1-13 (citing Kane v. il/Ian ufacturers Life
Ins. Co., No. CVO$45$1, 2011 WL 13238408, at *1 (D.N.J. Aug. 2,2011); Blackboard, Inc. v.
Desire2Learn, Inc., No. 9:06-CV-00155, 2007 WL 3389968, at *1 (E.D. Tex. Nov. 14, 2007)).

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Further, Judge Falk found that both parties had continued discovery beyond the scheduling
deadlines, and that given the history of the case, it was not unreasonable for LSDI to raise
outstanding discovery disputes at this time. Id. at 17:14-21.
Judge Falk next found that Experian’s confidentiality concerns were not a valid reason to
withhold discovery.

Id. at 17:23-25. While acknowledging the importance of confidentiality,

Judge Falk noted that the point of a discovery confidentiality order is to allow for litigation to
proceed even when sensitive information is at issue. Id. at 18:8-13. Judge Falk assured Experian
that if he found “a deliberate, flagrant violation of such an order, [he] would use the full power of
the Court to remedy [the violation].” id. at 18:13-15. Judge F alk added that Plaintiff had put the
discovery at issue. He stated, “when plaintiff initiated litigation claiming that defendant’s database
was essentially stolen from its own database.

.

.

there had to be an expectation that this issue would

be explored in discovery.” Id. at 18:16-20.
Judge F alk also found that the sought discovery was relevant. Id. at 19:5. Judge Falk noted
that Federal Rule of Civil Procedure 26(b)(1) allows for “discovery regarding any nonprivileged
matters that is relevant to the parties’ claim or defenses and proportional to the needs of the case.”
Id. at 19:6-8. Given that Experian based its allegations that L$DI improperly obtained data from

the CVD on the high match rate between Experian’s and L$DI’s databases, Judge Falk reasoned
that LSDI was entitled to challenge that allegation. Judge Falk added that LSDI was entitled,
within reason, to choose how it defended itself

Id. at 19:9-21. Judge F alk concluded that

conducting discovery on whether the parties used common sources was reasonable and within the
scope of Rule 26. Id. at 19:24-25.
Finally, Judge Falk found no basis for allowing Experian to only disclose the most recent
sources of CVD’s information. Judge Falk reasoned that “LSDI seeks information from Experian

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sufficient to allows LSDI to detennine the number of names in Experian’s CVD, that each source
provided to Experian, not merely the most recent source of the information.” Id. at 20: 2-5. After
explaining why only disclosing the most recent source would not reach “the big picture,” Judge
F alk denied Experian’s requested disclosure restriction. Id. at 20: 5-15.
II.

LEGAL STANDARD
A magistrate judge may hear and determine any non-dispositive pretrial matter pursuant to

2$ U.S.C.

§

636(b)(l)(A). A district court may only reverse a magistrate’s decision on these

matters if it is “clearly erroneous or contrary to law.” 2$ U.S.C.

§

636(b)(1)(A); fed. R. Civ. P.

72(a); L. Civ. R. 72.1 (c)( 1 )(A). “[A] finding is ‘clearly erroneous’ when although there is evidence
to support it, the reviewing court on the entire evidence is left with the definite and finn conviction
that a mistake has been committed.” Anderson v. City ofBessemer City, N.C., 470 U.S. 564, 573
(1985) (quoting United States v. United States Gypsitm Co., 333 U.S. 364, 395 (1948) (internal
quotation omitted)). Under this standard, a district court “will not reverse the magistrate judge’s
determination even if the court might have decided the matter differently.” Bowen v. Parking
Auth. of City of Camden, No. 00-5765, 2002 WL 1754493, at *3 (D.N.J. July 30, 2002). The
district court will, however, “conduct a de novo review of a magistrate judge’s legal conclusions.”
Cooper Hosp./Univ. Med. Ctr. v. Sullivan, 183 F.R.D. 119, 127 (D.N.J. 199$). “Where the appeal
seeks review of a matter within the exclusive authority of the Magistrate Judge, such as a discovery
dispute, an even more deferential standard, the abuse of discretion standard, may be applied.”
Miller v. P.G. Lewis & Assocs., Inc., No. 05-5641, 2006 WL 2770980, at *1 (D.N.J. Sept. 22,

2006).

An abuse of discretion occurs “when the judicial action is arbitrary, fanciful or

unreasonable, which is another way of saying that discretion is abused only where no reasonable

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[person] would take the view adopted by the trial court.” Ebert v. Twp. ofHamilton, No. 15-733 1,
2016 WL6778217,at*2(D.N.J.Nov. 15,2016).
IlL

LEGAL ANALYSIS

Plaintiff argues the Judge Falk’s order granting Defendant’s motion to compel was
untimely because Defendant’s motion was filed four months afier the deadline for discovery
disputes. Id. In support, Plaintiff cites to several authorities, including Santiago v. New York &
New Jersey PortAuthority, No. 2:l1-CV-04254 WJM, 2015 WL 1107344, at *2 (D.N.J. Mar. 11,
2015).

Plaintiff also asserts that Judge Falk’s granting of Defendant’s motion is unfairly

prejudicial because discovery is now closed and, therefore, Plaintiff cannot “conduct its own
inquiry into the validity of LSDI’s new defense.” P1. Brf. at 7. Finally, Plaintiff argues that the
information sought is not relevant or proportionate to the needs of the case and, therefore, not
within the bounds of Rule 26(b)(1). Id. at 9
Rule 26(b)(1) of the federal Rules of Civil Procedure provides:
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.
It is well settled that “Rule 26 vests the trial judge with broad discretion to tailor discovery
narrowly and to dictate the sequence of discovery.” Crawford-El v. Britton, 523 U.S. 574, 598
(1998). That discretion extends to the “timing and sequence of discovery.” Id. A court’s discovery
rulings will only be overturned upon a showing of an abuse of discretion.

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Sttmmy-Long v.

Pennsylvania State Univ., 715 F. App’x 179, 184 (3d Cir. 2017); Wisniewski v. Johns-Manville
Corp., 812 F.2d 81, 90 (3d Cir. 1987).
During the 2018 Hearing, Judge F alk provided numerous convincing reasons for why he
was granting Defendant’s motion to compel. He explained that the law provides courts with broad
discretion on how to manage various aspects of discovery, including the timeliness of discovery
requests. Hearing (2018) at 17:1-13 (citing Kane v. Manufacturers Life Ins. Co., No. CVO$458 1,
2011 WL 13238408, at *1 (D.N.J. Aug. 2, 2011)). He also noted that confidentiality concerns
were not a valid reason to deny a discovery request and explained the safety mechanisms in place
to ensure that confidentiality is maintained throughout the litigation process. Hearing (2018) at
17:23-25. Judge Falk then held that Plaintiffs allegations against Defendant had put the matter of
the discovery dispute at issue, Id. at 18:16-20, and, therefore, the discovery Defendant sought to
compel was relevant to LSDI’s ability to defend itself. Id. at 19:6-8.
Plaintiffs arguments on appeal are unconvincing. Plaintiff loses sight of its burden to
appeal a magistrate judge’s ruling on a discovery matter in an attempt to re-argue its original
opposition to Defendant’s motion to compel. Plaintiff needs to demonstrate that Judge F alk’s
order was “arbitrary, fanciful or unreasonable.” Ebert, 2016 WL 6778217, at *2. It has not done
so.
The cases Plaintiff cites do not require a different result. For example, Plaintiff relies on
Santiago, 2015 WL 1107344, at *2, for the proposition that “LSDI’s protracted tardiness alone
mandates denial of its motion.” P1. Brf. at 5. In Scintiago, Judge Martini denied an appeal from a
ruling by Judge Falk, in which he held that a party had not shown good cause to extend discovery.
2015 WL 1107344, at *4 Judge Martini reasoned that “Federal Rule of Civil Procedure 16 vests
a court with broad discretion to control and manage discovery.” Id. at *2. Judge Martini found

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that Judge Falk’s ruling was neither clearly erroneous or contrary to law. Id. Thus,

Santiago

does

not stand for a “mandate” that all untimely discovery requests must be denied. To the contrary,
the case highlights the discretion a magistrate judge possesses to conduct discovery as he deems
appropriate based on the particular case, facts, and circumstances pending before him.
Therefore, the Court finds that Judge Falk’s granting of Defendant’s informal motion to
compel was not an abuse of discretion. Judge Falk had twice before informally ordered Plaintiff
to produce the CVD’s source information. After Plaintiff failed to produce the discovery and
Defendant protested, Judge Falk allowed the parties to brief the matter and appear for oral
argument. The transcript of the 201$ Hearing shows that Judge Falk carefully considered the
parties’ arguments before ruling. Further, the transcript illustrates that Judge Falk had several clear
and valid reasons for granting Defendant’s motion to compel. Judge Falk was best positioned to
decide this motion as the magistrate handling discovery since February 2016. See D.E. 36. Judge
Falk’s decision was far from an abuse of discretion. Plaintiffs appeal is denied.
IV.

CONCLUSION

For the reasons stated above, and for good cause shown,
IT IS on this 21st day of August, 201$,
ORDERED that Plaintiffs appeal (D.E. 124) is DENIED; and it is further
ORDERED that Plaintiffs motion to stay (D.E. 125) pending this appeal is MOOT.

(ThQQQ- jy__/
John Michael Vazqu,iiJi5J

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