CHUBB INA HOLDINGS INC. et al v. CHANG et al
MEMORANDUM ORDER denying the 20 MOTION to Expedite Discovery filed by CHUBB INA HOLDINGS INC., FEDERAL INSURANCE COMPANY. Signed by Magistrate Judge Douglas E. Arpert on 6/24/2016. (jjc)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
CHUBB INA HOLDINGS INC., et al.
MICHAEL CHANG, et al.
Civil Action No. 16-2354 (FLW)(DEA)
This matter comes before the Court on a motion [ECF No. 20] by Plaintiffs Chubb
INA Holdings, Inc. (f/k/a The Chubb Corporation) and Federal Insurance Company
(collectively “Chubb” or “Plaintiff”) to expedite discovery. Defendants oppose the motion.
The Court decides the matter without oral argument pursuant to Federal Rule of Civil
Procedure 78 and Local Civil Rule 78.1. For the reasons below, the motion is denied.
I. Background 1
This action arises out of allegations that Defendants Michael Chang, former President
of Chubb’s Real Estate and Hospitality Division, and Endurance Services Ltd. (“Endurance”)
improperly targeted and solicited employees of Chubb for employment with Endurance.
Chang left Chubb for employment with Endurance on or about February 9, 2016. It is alleged
that in violation of a non-solicitation provision in an agreement with Chubb, Chang indirectly
solicited Chubb employees by assisting Endurance’s Senior Vice President of Human
Resources, Tony Chimera, in recruiting Chubb personnel. Plaintiffs believe that Chang
identified for Chimera a number of his former colleagues who had the skills and experience
The factual allegations recited herein are taken from Plaintiff’s Amended Complaint (ECF No. 7) unless
otherwise specified. They do not represent any factual findings on the part of the Court.
that Endurance needed. After “perfunctory telephone emails and without the benefit of
resumes,” Endurance made employment offers to certain Chubb employees. ECF No. 7 at ¶
5. The compensation Endurance offered was allegedly greatly in excess of market rates and,
in some cases, almost double the employees’ current compensation.
Ultimately, Endurance made employment offers to fourteen Chubb employees in the
Real Estate and Hospitality Division, and eleven accepted (the “Former Chubb Employees”).
The Former Chubb Employees all notified Chubb of their resignations on April 22, 2016.
Plaintiff alleges that this mass resignation was coordinated and designed to cripple Chubb’s
Real Estate and Hospitality Division.
Additionally, Plaintiff alleges that several of the Former Chubb Employees, as well as
defendants Chang and Bentley Betts, have in their possession confidential information
belonging to Chubb. For example, Chubb alleges that certain former employees accessed
Chubb’s computer system prior to their resignations and removed Chubb’s “confidential
business records.” ECF No. 7 at ¶ 8. The Amended Complaint sets forth the following
1. In February, March and April 2016, Bentley Betts sent 17 emails to his personal
account containing Chubb’s “confidential information.” 2 ECF No. 7 at ¶ 65.
2. Michael Chang sent emails to his personal account twice in December 2015 and
once in January 2016 containing Chubb’s “confidential information.” Id.
These emails as well as those sent by Chang are attached as Exhibits to the Declaration of Nicholas J. Pappas
(ECF No. 20-3). However, the emails have been redacted and the attachments have been omitted, so the Court is
unable to discern from the emails themselves the exact nature of the communications.
3. Three of the Former Chubb Employees accessed and saved files from Chubb’s
internal network onto a personal hard drive or cloud storage. Chubb alleges upon information
and belief that these files contained Chubb’s confidential information.
According to the Amended Complaint, it is Chubb’s policy not to permit an employee
to remove confidential information from Chubb offices, except when necessary to perform his
or her job responsibilities. Chubb further contends that these employees’ transfer of
confidential information was not done for a valid business reason on behalf of Chubb, but
solely for their own personal benefit and/or for the benefit of Endurance.
The Amended Complaint contains nine counts: (1) Breach of Contract against Chang;
(2) Breach of Fiduciary Duty against Chang and Betts; (3) Aiding and Abetting Breach of
Fiduciary Duty against Endurance; (4) Misappropriation and Misuse Of Trade Secrets and
Confidential Information in violation of New Jersey Trade Secrets Act, N.J.S.A. 56:15-1, et
seq. (“NJTSA”) against all Defendants; (5) Tortious Interference With Existing and
Prospective Contractual and Business Relationships against all Defendants; (6) Civil
Conspiracy against all Defendants; (7) Unfair Competition against all Defendants; (8) Unjust
Enrichment against all Defendants; (9) Violation of the Computer Fraud and Abuse Act, 18
U.S.C. § 1030, against all Defendants.
The parties conferred on April 28 and 29, 2016 regarding the issue of expedited
discovery. As a result, Defendants agreed to provide the following materials to Chubb on an
expedited basis: (1) email communications between the Endurance Human Resources
executive, Tony Chimera, and the Former Chubb Employees concerning their recruitment by
Endurance; (2) email communications between Chang and the Former Chubb employees; and
(3) Chimera’s file regarding the recruitment of the Chubb employees. Defendants declined to
provide the additional discovery that Chubb sought on an expedited basis.
Chubb raised the issue of expedited discovery with the Court, and on May 11, 2016,
the Court held a telephone conference. In response to Chubb’s expressed concerns about the
misappropriation and misuse of Chubb’s confidential information, Defendants did not deny
that the Former Chubb Employees may have Chubb information in their possession, but rather
indicated that to the extent that any such information was in their possession, it was obtained
in the ordinary course of their employment with Chubb. Defendants further advised that they
were taking steps to ensure that no Chubb information would reach Endurance. For example,
the Former Chubb Employees executed acknowledgements that they would not bring or
disclose any Chubb information to Endurance. In addition, Defendants’ counsel advised that
it was in the process of collecting any hard copy Chubb documents and identifying any
material in electronic form still in the Former Chubb Employees’ possession. Further,
Defendants stated that there were no additional Chubb employees in the hiring “pipeline.” Tr.
The Court deferred Chubb’s request for leave to file a motion for expedited discovery
until after production of (1) the acknowledgements signed by the Former Chubb Employees;
(2) a signed acknowledgement by Chimera that there are no additional Chubb employees in
the hiring “pipeline”; and (3) the three categories of documents that the Defendants had
already agreed to produce. The Court noted that if, after receiving these items, Chubb
remained unsatisfied, Chubb was permitted to file its motion. The Court concluded the
conference with a recommendation that the parties work together to develop a protocol
pursuant to which Chubb could examine data on various portable electronic devices in
possession of the Former Chubb Employees.
According to Defendants, immediately after execution of the Stipulated Discovery
Confidentiality Order on May 13, 2016, Defendants produced the acknowledgements and the
three categories of documents. See ECF No. 41-2 at Ex. A (signed acknowledgements). On
May 16, 2016, Defendants provided a declaration from Chimera stating that “Endurance has
not hired, and is not currently seeking to hire, any other Chubb employees. There are
currently no applications under consideration from, and no offers outstanding to, anyone
currently employed by Chubb. At the present time, Endurance is not responding to inquiries
or expressions of interest from current Chubb employees.” ECF No. 41-3.
Also, on May 13th, Defendants returned to Chubb all of the hard copy documents that
remained in the possession of the Former Chubb Employees following their resignations.
ECF No. 41-1 at ¶ 8. According to Chubb, the documents produced “include[d] various
categories of confidential materials, including but not limited to documents reflecting: clientspecific policy information, data, and risk analyses, service plan proposals, client relationship
chronologies, copies of insurance policies, and Chubb business strategies.” ECF No. 20-3 at ¶
9. Shortly thereafter, on May 16, 2016, Chubb filed the instant motion.
By way of the instant motion, Plaintiff seeks to expedite certain discovery.
Specifically, Plaintiff seeks, on an expedited basis, to take five depositions --Chang, Betts,
and Chimera, as well as two Federal Rule of Civil Procedure 30(b)(6) depositions
(specifically, “two individuals most knowledgeable about the hiring of Michael Chang and the
newly formed business of Global Risk Solutions”) -- and to propound requests for production
of documents and things on Defendants, nonparty former Chubb employees involved in the
mass resignation, and on telephone and email service providers, for telephone and cellular
phone records, text messages, emails, calendars, and files contained on hard drives and other
data storage devices and cloud storage platforms, concerning or evidencing the following
categories, for the time period December 1, 2015 through the present:
1. The planning and events leading up to the simultaneous resignations of the Former
Chubb Employees on April 22, 2016, without notice to Chubb;
2. The Former Chubb Employees’ use or disclosure of Chubb’s confidential
information both before and after their separation from employment at Chubb;
3. Documents, information, or things obtained by the Former Chubb Employees as a
result of their employment with Chubb that they failed to return to Chubb upon their
separation from employment;
4. Chang’s and Betts’ hiring and recruitment by Endurance and the terms and
conditions of their employment with Endurance, including any expectation of moving and
inducing Chubb’s clients to follow either of them to Endurance; and
5. Communications by Chang, Betts, or anyone directly acting on behalf of either
individual, with the clients and/or brokers whom Chang and Betts previously serviced at
Chubb, including but not limited to documents concerning Chang’s meetings and/or
discussions with clients and/or brokers at the 2016 Risk Management Society (RIMS)
Conference. (ECF No. 20-1 at 4-5).
Chubb contends that this expedited discovery is necessary to preserve evidence and
determine the extent of the alleged harm, and because Chubb “has reasons to believe there are
grounds for a preliminary injunction,” and this discovery will better “enable this Court to
judge the parties’ interests and respective chances for success on the merits at a preliminary
injunction hearing.” ECF No. 20-1 at 2, 12.
Under the Federal Rules of Civil Procedure, the parties “may not seek discovery from
any source” until after the Rule 26(f) conference without a stipulation or court order. Fed. R.
Civ. P. 26(d)(1). However, courts have broad discretion to manage the discovery process and
can expedite or otherwise alter the timing and sequence of discovery. See id. In Techtronic
Indus. N. Am., Inc. v. Inventek Colloidal Cleaners LLC, the Court noted that courts addressing
the issue generally apply one of two standards to determine if expedited discovery is
appropriate. No. 13-4255, 2013 WL 4080648, at *1 (D.N.J. Aug. 13, 2013). The first
standard, discussed in Notaro v. Koch, 95 F.R.D. 403 (S.D.N.Y. 1982), analyzes requests for
expedited discovery using factors similar to those used in reviewing a request for injunctive
relief. Kone Corp. v. Thyssenkrupp USA, Inc., No. 11-465, 2011 WL 4478477, at *3 (D. Del.
Sept.26, 2011). Under the Notaro standard the moving party must demonstrate “(1)
irreparable injury, (2) some probability of success on the merits, (3) some connection between
the expedited discovery and the avoidance of irreparable injury, and (4) some evidence that
the injury that will result without expedited discovery looms greater than the injury that the
defendant will suffer if the expedited relief is granted.” Sawhorse Enterprises, Inc. v. Church
& Dwight Co., No. 12-6811, 2013 WL 1343608, at *4 (D.N.J. Apr. 3, 2013) (quoting Notaro,
95 F.R.D. at 405).
A second and significantly less stringent standard (and the standard cited by the parties
in their briefing) is the “reasonableness” or “good cause” standard, under which the movant
must show that the request for expedited discovery is reasonable and appropriate under the
circumstances. Kone Corp., 2011 WL 4478477at *4. “Under the reasonableness standard,
the court examines the appropriateness of a request for expedited discovery by weighing the
need for the discovery at that point in the litigation with the breadth of the discovery
requests.” Sawhorse Enterprises, 2013 WL 1343608, at *5. In evaluating whether good
cause exists to permit expedited discovery, a court considers factors such as “how far in
advance of the formal start of discovery the request is made, whether the discovery requests
are narrowly tailored, the purpose of the requested early discovery, whether the discovery
burdens the defendants, and whether the defendants are able to respond to the requests in an
expedited manner.” Id. at *5. Whether a preliminary injunction hearing is pending is another
factor to be evaluated by the Court. Id. at *4. In cases where a plaintiff is seeking injunctive
relief, “[e]xpedited discovery has been ordered where it would better enable the Court to
judge the parties’ interests and respective chances for success on the merits at a preliminary
injunction hearing.” Sawhorse Enterprises, 2013 WL 1343608, at *4 (quotations omitted). If
narrowly tailored to fit the needs of a preliminary injunction hearing, leave to conduct
expedited discovery should be granted. Id. (citing Entertainment Technology, Corp. v. Walt
Disney Imagineering, No. 03-3546, 2003 WL 22519440 at *3 (E.D. Pa. October 2, 2003)).
Where the requests are overly broad and extend beyond the needs of the preliminary
injunction, leave should be denied. Id.
Here, the Court shall apply the second standard as it was the legal standard briefed by
the parties and the less stringent of the two. Chubb argues that good cause exists for the
expedited discovery it is requesting because: (1) Chubb has reasons to believe there are
grounds for a preliminary injunction; (2) Chubb is seeking discovery of a reasonable scope;
(3) the purpose for requesting expedited discovery is to determine the nature and extent of the
misappropriation of Chubb’s confidential information, the extent of Defendants Chang’s and
Endurance’s unlawful solicitation of Chubb employees and clients, and the substance of
Chang’s and Endurance’s communications with them; (4) the burden on Defendants is
allegedly slight, as the documents and depositions requested are easily accessible and
appropriately limited; (5) a number of the Former Chubb Employees wiped their devices
clean of data and there is a legitimate risk of ongoing loss of information; and (6) such
discovery is critical to any preliminary injunction hearing. Defendants counter that expedited
discovery is inappropriate because it contends that (1) Chubb’s allegations of wrongdoing are
speculative; (2) Chubb has not moved for any preliminary relief; (3) Chubb is essentially
seeking plenary discovery across a broad array of topics going to the ultimate issues in the
case; (4) Chubb has no serious irreparable injury claim; (5) a dispositive motion is pending
(specifically, Defendants have moved to dismiss the Complaint and have opposed Chubb’s
motion to amend the Complaint).
Having carefully examined the relevant factors and considered the totality of the
circumstances, the Court finds that Chubb has not established good cause for the expedited
discovery it seeks. One significant factor weighing against a finding of good cause is that
Chubb has not filed a motion for any preliminary relief but rather has merely stated that it
“believe[s] there is evidence that would support a motion for [a] preliminary injunction.”
ECF No. 26 at 6-7. While it is true, as Chubb asserts, that courts have found good cause for
expedited discovery when such discovery is “reasonably necessary to enable this Court to
judge the parties’ interests and respective chances for success on the merits at a preliminary
injunction hearing”, ECF No. 20-1 at 12 (emphasis added) (citing Nest Int'l, Inc. v. Balzamo,
No. 12-2087 JBS, 2012 WL 1584609, at *2 (D.N.J. May 3, 2012), here there is no such
hearing pending. Absent a motion, which would presumably set out in detail the areas of
discovery that would be required in advance of a hearing, the Court cannot conclude that the
discovery sought by Chubb is reasonably necessary for any potential motion hearing. Indeed,
as one court in another district has noted, “without a pending motion for preliminary
injunctive relief, [movant’s] discovery request lacks a frame of reference, which makes it
difficult, at best, to determine the degree to which it is directed towards an acceptable
purpose.” Wilcox Industries v. Hansen, 29 F.R.D. 64, 71 (D.N.H. 2012). See also Momenta
Pharm., Inc. v. Teva Pharm. Indus. Ltd., 765 F. Supp. 2d 87, 89 (D. Mass. 2011) (observing
that “[t]he majority of courts have held … that the fact that there was no pending preliminary
injunction motion weighed against allowing plaintiff's motion for expedited discovery.”).
The absence of a preliminary injunction motion is not, however, dispositive of
Chubb’s motion. Other factors similarly weigh against granting the motion. For example, the
discovery sought does not appear narrowly tailored to meet the needs of a potential
preliminary injunction hearing or to prevent any particular alleged harm. Rather, the
discovery sought is broad based and seems directed to the ultimate merits of the case. Chubb
seeks discovery from defendants Chang, Betts, and Endurance (including two Endurance
representatives and employee Tony Chimera), as well as the ten non-party Former Chubb
Employees and an unspecified number of telephone and email service providers. As
Defendants point out, that is fifteen individuals, a corporate entity and numerous telephone
and email service providers which provided services to the Former Chubb Employees. The
discovery sought could potentially involve dozens of nonparties, and several courts have
found that requests for expedited discovery from third parties were overbroad. See, e.g.,
Entertainment Tech. Corp., 2003 WL 22519440, at *5 (“To the extent that Plaintiff seeks
documents from third parties at this early stage, the requests may be overbroad.”)
Chubb also seeks discovery of electronic files contained on an array of devices,
including “hard drives and other data storage devices” as well as “cloud storage platforms,”
ECF No. 20-1 at 4. Chubb makes no distinction as to whether the target devices/accounts are
business or personal, nor does Chubb limit its request to only those devices/accounts that it
has reason to believe contain specific information relevant to a preliminary injunction motion
and/or that contain Chubb’s confidential business information. Thus, the request is
overbroad. Additionally, as such discovery would potentially involve forensic examinations
of nonparties’ personal electronic devices, the Court finds it would be unduly burdensome to
proceed on an expedited basis at this stage in the litigation.
Further, Chubb has set few meaningful limits to scope of the requested discovery. For
example, one broad topic is “the planning and events leading up to” the Former Chubb
Employees’ resignations. Defendants note that this would cover every aspect of each
individual Former Chubb Employees unique decision to leave Chubb and accept employment
with Endurance, as well as Endurance’s plan to expand and begin competing with Chubb.
Chubb also seeks testimony under Rule 30(b)(6) about the broad topic of Endurance’s
“newly-formed business of Global Risk Solutions.” Another topic involves Chang’s
recruitment and hiring by Endurance, even though there is no allegation in this action that
there was anything improper about Chang leaving Chubb for employment with Endurance.
Overall, the Court finds the discovery sought by Chubb to be overly broad for the
purposes of expedited discovery as it does not appear to be narrowly tailored to flesh out
essential facts. The Court agrees with Defendants that, given such circumstances, to force
them to participate in discovery involving the production of large quantities of documents and
the depositions of five central witnesses under severe time pressure and without the benefit of
reciprocal discovery would unduly prejudice Defendants. The Court finds, therefore, that a
departure from the normal discovery protocol is not warranted at this juncture. Accordingly,
IT IS on this 24th day of June 2016,
ORDERED that the motion to expedite discovery [ECF No. 20] is DENIED.
/s/ Douglas E. Arpert
DOUGLAS E. ARPERT
United States Magistrate Judge
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