Armstrong Pump, Inc. v. Hartman et al

Filing 220

DECISION AND ORDER granting in part and denying in part 198 Motion to Compel; granting in part and denying in part 198 Motion for Discovery.Signed by Hon. Hugh B. Scott on 12/9/2014. (GAI)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

ARMSTRONG PUMP, INC.,
Plaintiff,

DECISION AND ORDER
10-CV-446S

v.
THOMAS HARTMAN d/b/a
The Hartman Company and
OPTIMUM ENERGY LLC,
Defendants.

I) INTRODUCTION
Pending before the Court is a motion (Dkt. No. 198) by defendant Optimum
Energy LLC (“Optimum”) for miscellaneous discovery relief, including 1) further
responses to discovery requests that it served on plaintiff Armstrong Pump, Inc.
(“Armstrong”); 2) an extension of discovery deadlines for the case; 3) an
additional deposition of a witness named Peter Thomsen (“Thomsen”); and 4)
sanctions for failure to produce discovery earlier. Optimum argues that the July
25, 2014 deposition of Thomsen and the documents that Armstrong has provided
since then indicate that still other documents exist that would be responsive to
Optimum’s discovery requests; and that the documents that Armstrong furnished
in the last few weeks and months should have been furnished a few years ago.
Armstrong counters that Optimum should not have filed the motion before
reviewing all of the documents produced; that Armstrong has complied with all of

its discovery obligations; and that at least some of Optimum’s representations
about discovery failures are false.
The Court had scheduled oral argument on October 23, 2014. That day,
the parties requested additional briefing instead. The Court now deems the
motion submitted on papers under Rule 78(b) of the Federal Rules of Civil
Procedure. For the reasons below, the Court grants Optimum’s motion in part
and orders additional discovery as explained below.
II) BACKGROUND
A)

Optimum’s Claims

For the sake of brevity, the Court presumes general familiarity with the
docket and focuses only on background information pertinent to Optimum’s
pending motion. On February 4, 2005, defendant Thomas Hartman (“Hartman”)
and Armstrong entered a License Agreement concerning three patents that
Hartman owned. 1 (See, e.g., Dkt. No. 55-1.) Section 1 of the License
Agreement contains definitions for several terms, including the terms “factory
implementation” and “field implementation.” “‘Factory Implementation’ means
implementing the Licensed Technologies into chiller, pumping, control systems
and/or tower products as a part of the factory production process.” (Id. at 3.)
“‘Field Implementation’ means implementing the Licensed Technologies into the
chiller, pumping, control systems and/or tower products after the products have

1

The reader can find extensive detail about Hartman’s patents at Docket No. 136.

2

been delivered to the site.” (Id.) Put another way, to the Court’s best
understanding, factory implementation means that an HVAC product rolls out of
Armstrong’s factory with Hartman’s patent technology fully installed and ready for
use. Field implementation, in contrast, means that an HVAC product rolls out of
Armstrong’s factory fully compatible with Hartman’s patent technology, but that
the technology would be added to the product at the place where the product
would be installed. Section 2.1 of the License Agreement gave Armstrong “a
license, to make, have made, use, sell, and otherwise distribute factory packaged
chilled water systems, pumping and/or other mechanical products that
incorporate the Licensed Technologies at the factory implementation level, and to
use and otherwise practice the Licensed Technologies in Licensed
Products.” (Id.) Under Section 3.3(c), Armstrong, without special permission
from Hartman, “has no rights granted under this agreement to field implemention
of the Licensed Technologies (e.g. implementing the Licensed technologies
without an integrated equipment/control package).” (Id. at 5.)
The restriction that the License Agreement imposed on Armstrong
regarding field implementation served as the basis for Optimum’s counterclaims
in this case. Optimum filed an answer to Armstrong’s first amended complaint on
March 22, 2011 (Dkt. No. 57); the answer included five counterclaims. Three of
the counterclaims pertain more to the patent-related history of this case and are
not relevant here. The first and fifth counterclaims are particularly relevant to the
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pending motion. In the first counterclaim, Optimum asserted that “[u]pon
information and belief, Armstrong has committed multiple breaches of the
Armstrong License Agreement.” (Id. at 15.) Optimum then specified several
projects involving Armstrong that went beyond factory implementation into field
implementation:
• Field implementation at the Erieview office building and retail mall in
downtown Cleveland, Ohio in 2009;
• Sales of Armstrong’s IPC 11550 Control System for the Massachusetts
College of the Arts project in Cambridge, Massachusetts in 2010;
• Marketing of the IPC 11550 Control System for three real estate projects
on Binney Street in Cambridge, Massachusetts, the marketing apparently
having occurred in late 2010; and
• General sales and marketing of the IPC 11550 Control System on a “stand
alone” basis, that is, selling the control system apart from a fully factoryassembled HVAC product.
(Dkt. No. 57 at 15–17.) In the fifth counterclaim, Optimum accused Armstrong of
“actively engag[ing] in activities directed toward making, using, offering for sale,
and selling the IPC 11550 as a stand-alone product in a manner that is outside
the limited scope of its license rights under the Licensed Patents, and which
therefore breaches and / or threatens to breach the [License Agreement].” (Id. at
22.)
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B)

The Parties’ Discovery Requests

Among other actions that it may have taken to explore its counterclaims for
breach of the License Agreement, Optimum served Armstrong with two sets of
discovery requests. Optimum served the first set of discovery requests on April
20, 2011. (Dkt. No. 99-2.) Generally, the 16 numbered requests asked, inter
alia, for “all documents” pertaining to the License Agreement, communications
between Hartman and Armstrong, the alleged field implementations mentioned in
the counterclaims, and the IPC 11550 Control System. After a dispute over
document production prompted Optimum to file a motion to compel (Dkt. No. 99),
the Court granted the motion on June 11, 2012 (Dkt. No. 114) and cautioned
Armstrong “not to engage in piecemeal production of materials it has located that
are responsive to Optimum Energy’s unobjectionable requests. For example,
responsive documents from correspondence of other plaintiff’s employees should
be produced, if it has not been produced already. Plaintiff has not filed a motion
for a Protective Order.” (Id. at 10.) Optimum served the second set of discovery
requests on August 3, 2012. The second set included requests for documents
concerning marketing efforts and customers that might yield relevant information
regarding Optimum’s counterclaims. The second set of discovery requests
appears not to have generated any motion practice before now, though the
parties traded other motions to compel (Dkt. Nos. 176, 180) that led to another
order from the Court requiring discovery production (Dkt. No. 191).
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C)

Optimum’s Pending Motion

The latest discovery dispute contains allegations of delays, omissions, and
misrepresentations, and threatens to make this case more about document
production than about a breach of a contract. According to Optimum, after the
Court’s June 11, 2012 Order, “Armstrong made at least nine separate document
productions in August and November 2012, January and November 2013, and
February and March 2014. Armstrong eventually produced over 34,000
documents 2 prior to the first deposition in this case on July 25, 2014.” (Dkt. No.
203 at 8.) In that first deposition, Optimum questioned Thomsen, who was
Armstrong’s Global Director of the Systems Customer Solutions Group for at
least some of the relevant timeline for this case. Among other information from
the deposition, Thomsen allegedly revealed to Optimum for the first time that any
Armstrong product using the patents relevant to this case—collectively known as
“Hartman LOOP Technology”—went through a five-step development process
known as a “[REDACTED]” 3 process. Thomsen summarized the [REDACTED]
process as follows:
[REDACTED]
(Dkt. No. 203 at 10.)

2

The record is not clear as to whether Optimum means 34,000 pages of documents, or 34,000
distinct documents that might total more than 34,000 pages.
3
In an abundance of caution to protect the parties’ confidentiality arrangements, the Court has
redacted the name of the process in question and the block quote two lines later that describes
it. The Court will file an unredacted version of this Decision and Order under seal.

6

To summarize a series of contentious correspondence, the Thomsen
deposition prompted Optimum to accuse Armstrong of withholding documents
showing how many products had something to do with the Hartman LOOP
Technology, and withholding information about the [REDACTED] process for
these products. Presumably, details of the [REDACTED] process would reveal
the extent to which Armstrong directly or indirectly marketed the Hartman LOOP
Technology to potential clients. Optimum accused Armstrong also of
underestimating the number of employees who might have had something to do
with marketing products that somehow incorporated the Hartman LOOP
Technology. Armstrong pushed back, contending that Optimum was both
downplaying the amount of discovery provided already and exaggerating as to
how many Armstrong employees had useful information concerning Optimum’s
claims. Armstrong did not deny making nine separate document productions
since the Court’s June 11, 2012 Order.
The correspondence between the parties eventually led to the pending
motion. In support of the motion, Optimum argues that documents provided
recently were responsive to discovery requests and orders served as early as
2011 and should have been provided much earlier than now. Thomsen and
other employees, according to Optimum, need to undergo further depositions
that reflect the additional information that Optimum has received. Optimum
argues further that much of the discovery that Armstrong provided recently
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provides just a window into an extensive marketing process, including the
[REDACTED] process, that Armstrong used for each new product that it
developed and sold. Optimum concludes that Armstrong is hiding or at least
delaying information about unauthorized sales that violate the License
Agreement, and that Armstrong’s conduct warrants both sanctions and an order
to compel further responses. Optimum also is resisting any call to proceed with
any more depositions until Armstrong produces all responsive documents.
Armstrong opposes Optimum’s motion and challenges Optimum’s
characterization of its conduct. Armstrong claims that it has been fulfilling its
discovery obligations by producing documents following searches of specific
products and specific employees whom Optimum has identified. In fact,
Armstrong criticizes Optimum for filing the pending motion the same day when
Armstrong provided an additional few thousand pages of documents and for filing
without reviewing that batch of discovery. (See Dkt. No. 204 at 5–6 (“Armstrong
has also produced more than 2,500 additional documents that defendants
received only today, August 19, and have not yet had an opportunity to
review.”).) In its second set of discovery requests, Optimum had requested,
albeit for patent-related purposes, “all documents concerning any Product made,
customized or altered for a particular Customer, group of Customers or any
potential Customer or group of Customers.” Nonetheless, Armstrong asserts that
“Optimum did not request documents concerning the advertising, sale,
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installation and servicing of the IPC 11000 product” and that it “had no
knowledge that responsive documents were located under the IPC 11000
product name or filed in the laptop hard drive, then diligently searched for any
responsive [REDACTED] documents, and produced responsive documents in
three batches within three weeks of notification.” (Dkt. No. 206 at 6.) With
respect to employee files, Armstrong asserts that it searched the employee files
for the 22 employees that Optimum considered connected to the License
Agreement and products using the Hartman LOOP Technology. Armstrong sees
no reason to search employee files of hundreds of other employees who had
nothing to do with the Hartman LOOP Technology. Armstrong also argues that
Optimum did not follow Rule 37 of the Federal Rules of Civil Procedure by
meeting with Armstrong to confer about its concerns prior to filing the pending
motion. Finally, Armstrong argues that it already has offered to produce
Thomsen for a second deposition, albeit a limited deposition that prevents
Optimum from having a second chance at exploring topics that, in Armstrong’s
view, have been covered.
Just as briefing for the pending motion ended and the Court was ready to
proceed with oral argument and a decision, the parties decided that the pending
motion—with its hundreds of pages of arguing over three-year-old discovery
requests never quashed by protective order—had proceeded much too civilly and
needed to fall more in line with this case’s history of nasty conduct. On October
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21, 2014, two days before the oral argument scheduled for the motion, the Court
received an unsolicited 12-page letter from Armstrong. (Dkt. No. 213.) Among
other points, Armstrong asserted that Optimum was wrong to suggest that it had
no document retention policy; that Optimum was trying “to confuse the Court” by
blurring the distinction between two different products, the IPC 11550 and the
IPP 11000; and that Optimum mischaracterized deposition testimony, raising
new issues and prejudicing Armstrong in the process. On this basis, Armstrong
asked to have Optimum’s reply papers stricken or at least to have the chance to
file a sur-reply. At oral argument, the parties bickered about misrepresentations
in each other’s papers, the need for sur-replies, and who would get the last word.
The Court permitted Armstrong to file a sur-reply and Optimum to file a response.
In its sur-reply, Armstrong accused Optimum of false and misleading
representations based on the points in its prior letter and the contention that
Optimum claimed falsely that Armstrong never produced its Leadership Board
meeting minutes. Armstrong concluded that Optimum’s motion is nothing more
than the proverbial fishing expedition tainted by “a casual disregard for the truth
and accuracy of its representations to this court.” (Dkt. No. 217 at 7.) Curiously,
Armstrong’s sur-reply contains citations to the Rules of Professional Conduct and
to Kleehammer v. Monroe Cnty., No. 09-CV-6177-CJS, 2013 WL 1182968
(W.D.N.Y. Mar. 20, 2013), along with Rankin v. City of Niagara Falls, No. 09-CV00974A, 2012 WL 3886327 (W.D.N.Y. Sept. 6, 2012), report and
10

recommendation adopted in part, rejected in part, 293 F.R.D. 375 (W.D.N.Y.
2013), cases involving a local attorney suspended by the New York State
Supreme Court, Appellate Division. The Court interprets these cites as a
disingenuous hint that Optimum’s counsel warrants suspension without actually
saying so; numerous other cases would have contained the same principles
about alleged misrepresentations. 4
In its response, Optimum clarified that Armstrong produced a grand total of
one meeting’s worth of minutes and questions why no other meeting minutes had
been produced. Optimum addressed the issue of records custodians by
asserting that it named current or former employees based on names that
actually appeared in those [REDACTED] reports that Armstrong produced. As
for product distinction, Optimum argued that it has sought documents pertaining
to the IPC 11000 controller, which “will heavily leverage the Hartman Loop
technology for its market launch/release and it[s] strategic positioning against
competitive alternates.” (Dkt. No. 198 Ex. J at ARM00034820, filed manually).
These arguments dovetail with Optimum’s insistence that Armstrong’s discovery
responses cannot be complete when, inter alia, it produces reports for only one
or two stages of the [REDACTED] process for certain products; and when it has
4

As just one example, see U.S. v. Int’l Bd. of Teamsters, Chauffeurs, Warehousemen & Helpers
of Am., AFL-CIO, 948 F.2d 1338, 1344 (2d Cir. 1991) (“Pleadings, motions, and other papers
must be justifiable at the time they are signed; this Court will not countenance belated
rationalizations concocted to conceal chicanery.”) (citation omitted).

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not fully identified each employee’s possible role in improper field
implementation.
III) DISCUSSION
The Court notes its frustration with the continual and growing animosity
between the parties, an animosity that has slowed the progress of the case and
that has required repeated judicial intervention. This case is about 4-1/2 years
old. During the history of the case, the parties have generated hundreds of
pages of motion papers relating to discovery obligations and the failure to fulfill
them. The Court granted a motion to compel twice before and specifically
warned Armstrong to avoid piecemeal production of documents. The Court also
has had to manage the parties’ inclinations to raise the stakes. At various times,
the Court had to consider amended pleadings to transform this contract case into
a patent infringement case; to hold claim construction hearings that lacked expert
testimony and wasted the Court’s time (see Dkt. No. 136 at 4 (“The hearing itself,
however, lasted little more than two hours and featured no proffers, arguments,
or testimony concerning any of the terms disputed in the parties’ briefing.”); and
to resist belated attempts to amend pleadings that could have sent the case back
to the proverbial Square One after years of proceedings (see generally Dkt. No.
150). Four and a half years later, discovery is far from complete, depositions
have barely begun, and this case is nowhere near ready for trial.

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Now, Armstrong would have the Court overlook that it has ignored the
explicit prohibition on piecemeal discovery and excessive delay. The parties also
would have the Court ignore that no one, in the history of the case, has objected
to any discovery requests enough to make a motion for a protective order under
Rule 26(c). 5 Cf. Travel Sentry, Inc. v. Tropp, 669 F. Supp. 2d 279, 286 (E.D.N.Y.
2009) (affirming a discovery sanction and noting that, in a discovery dispute, “no
reasonable person, especially an attorney, could dispute that the initial step in
resolving any such conflict would be to seek the guidance of the Court rather
than pick a route of its own unilaterally.”). Nor has any party foregone passiveaggressive snarking and filed a formal motion under Rule 11 or 28 U.S.C. § 1927
to complain about material misrepresentations in motion papers. Instead, the
parties would prefer that the Court forget what the actual claims are in this case
and start obsessing over details such as the number of meeting minutes that
should be produced; whether one product were of the same “line” as another
product, regardless of the real issue of field implementation; and whether a fivestep product development process doesn’t really count as a five-step
5

For purposes of this discussion, the Court is disregarding the meaningless boilerplate
objection that all pretrial discovery in all civil litigation is “overly broad” and “unduly
burdensome.” (Dkt. No. 99-3 at 6 and passim.) Cf. Freydl v. Meringolo, No. 09 CIV. 07196
BSJ, 2011 WL 2566087, at *3 (S.D.N.Y. June 16, 2011) (“Boilerplate objections that include
unsubstantiated claims of undue burden, overbreadth and lack of relevancy while producing no
documents and answering no interrogatories are a paradigm of discovery abuse.”) (internal
quotation and editorial marks omitted); see also Fed. R. Civ. P. 37(a)(4) (“For purposes of this
subdivision (a), an evasive or incomplete disclosure, answer, or response must be treated as a
failure to disclose, answer, or respond.”). The Court also is not counting the Joint Protective
Order (Dkt. No. 66) that the parties entered to address confidentiality and not discovery
requests in themselves.

13

development process if some employees weren’t involved, and maybe some
other employees have changed employment, and maybe some additional reports
will show up in some future document dump.
Enough. “A lawsuit is supposed to be a search for the truth, and the tools
employed in that search are the rules of discovery. Our adversary system relies
in large part on the good faith and diligence of counsel and the parties in abiding
by these rules and conducting themselves and their judicial business honestly.”
Metro. Opera Ass’n, Inc. v. Local 100, Hotel Employees & Rest. Emps. Int’l
Union, 212 F.R.D. 178, 181 (S.D.N.Y. 2003) (internal quotation marks and
citations omitted). Rule 37 helps enforce proper conduct. “Rule 37 sanctions
serve a threefold purpose: (1) To ensure that a party not profit from failure to
comply with discovery obligations; (2) To specifically deter parties from avoiding
discovery obligations and ensure compliance with a particular order; and (3) To
provide general deterrence to other parties in the same or different litigation
considering similar behavior.” Air-India v. Goswami, No. 91 CIV. 7290 (JSM),
1993 WL 403999, at *6 (S.D.N.Y. Oct. 5, 1993) (citations omitted).
Fundamentally, Optimum’s contract-related counterclaims accuse Armstrong of
field implementation and stand-alone sales without Optimum’s permission.
Optimum’s counterclaims also suggest that Armstrong might have contemplated
field implementation and stand-alone sales even while negotiating the License
Agreement. Optimum has the right to explore these allegations and, through its
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prior motions to compel and its email correspondence since the Thomsen
deposition, has made a good-faith effort the last several years to address
deficiencies in Armstrong’s discovery. Cf. U.S. Bancorp Equip. Fin., Inc. v.
Babylon Transit, Inc., 270 F.R.D. 136, 140–41 (E.D.N.Y. 2010) (finding that email
exchanges and other communications can fulfill the “meet and confer”
requirement of Rule 37). Meanwhile, Armstrong has not sufficiently explained its
continuation of piecemeal discovery in the face of a Court order, including the
disclosure in 2014 of [REDACTED] reports dated in 2004 and 2005. In
response, the Court now will fashion a new and simpler approach to discovery
that keeps the core of Optimum’s counterclaims in mind. In the various discovery
documents attached to the motion papers, the Court has noticed that certain
phrases appear that inevitably refer to or hint at the Hartman LOOP Technology:
• Hartman
• Hartman Loop
• Hartman Loop Technology
• Loop Technology
• Integrated plant control
• Integrated operation
• Integrated mechanical control systems
• IPC
15

• IPC controller
• Variable speed
• Variable frequency drives
• Natural curve
• Natural curve sequencing
These phrases open the door to a more objective discovery process that
leaves Armstrong no room for gamesmanship. For a period starting from
January 1, 2004 through the present time, Armstrong must search ALL corporate
documents, files, communications, and recordings for EACH of the above
phrases. Armstrong will maintain a list of every server, computer, file room, or
other place searched, and a list of all positive search results. For each positive
result, Armstrong will procure a full copy of the document in question. Armstrong
also will furnish a complete and sworn description of its document retention
policies, if any, from January 1, 2004 through the present time. In the specific
instance of [REDACTED] reports, if for any reason a product did not have a
written report for a certain stage or did not go through all five stages then
someone at Armstrong with appropriate knowledge or expertise will provide a
sworn statement explaining why. When the search is complete, a representative
of Armstrong and all of Armstrong’s counsel of record will file a sworn statement
confirming that Armstrong made a good-faith effort to identify sources of
documents; that a complete search of those sources for each of the above
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phrases occurred; and that the search results have been furnished to Optimum.
All of this must occur on or before April 1, 2015, with absolutely no exceptions or
extensions. Failure to comply will lead to sanctions under Rule 37(b)(2)(A).
The Court is focusing on Armstrong for now because it is ruling on
Optimum’s motion, but Optimum is hereby on notice that the Court will not
hesitate to apply the same approach to its document production. On or before
January 14, 2015, all counsel of record for Optimum will either 1) file a joint
sworn statement that Optimum has fulfilled ALL outstanding discovery requests
from Armstrong; or 2) file a motion for a protective order to quash any
outstanding discovery requests that Optimum opposes.
A status conference will occur on April 15, 2015 at 10:00 AM to plan how
to start all over with depositions and how to set further scheduling. Any counsel
who wish to participate must attend in person.
IV) CONCLUSION
For all of the foregoing reasons, the Court grants Optimum’s motion to
compel (Dkt. No. 198) in part, to the extent that it has ordered further discovery
as explained above. The Court denies Optimum’s motion to the extent that it
seeks any other relief.
SO ORDERED.
__/s Hugh B. Scott______
__
HONORABLE HUGH B. SCOTT
UNITED STATES MAGISTRATE JUDGE
DATED: December 9, 2014
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