360 Mortgage Group, LLC v. Stonegate Mortgage Corporation et al

Filing 152

ORDER denying as moot 108 Motion to Strike and 110 Motion to Compel, denying 146 Motion to Strike and granting 118 Motion to Seal. The court shall hold a status conference on January 7, 2015 at 10:00 a.m. to address Defendant's motion for extension of time [DE-97], Defendant's motion to compel [DE-102], and Plaintiff's motion to compel [DE-142]. Signed by Magistrate Judge Robert B. Jones, Jr. on 12/14/2015. (Grady, B.)

IN THE UNITED STATES DISTRICT COURT· .
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No: 5:14-CV-310-F
360 MORTGAGE GROUP, LLC,

)
)
)
)

Plaintiff,

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~

STONEGATE MORTGAGE CORPORATION,
et al.,
Defendants.

ORDER

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)

This matter is before the court with regard to the following motions: Defendant Stonegate

Mortgage Corporation's ("Defendant" or "Stonegate") motion for extension of Le

[DE~97];

Defendant's motion to compel discovery [DE-102]; Plaintiff 360 Mortgage foup, LLC's
("Plaintiff' or "360 Mortgage") first motion to strike [DE-108]; Defendant Lisa B. Glenn's
("Glenn") frrstmotion to compel discovery [DE-ll 0]; Plaintiffs motion to seal [DE-118]; Plaintiffs
motion to compel [DE-142]; and Plaintiffs second motion to strike [DE-146]. All rotions have
been fully briefed or the time for filing a response has expired and are thus ripe for decision.

I. BACKGROUND

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360 Mortgage filed this action in Texas state court against its former emplo ee Glenn and

her new employer Stonegate, alleging that Glenn and Stonegate conspired to steal 3

Jo Mortgage's

trade secrets and to l1Se the information to take 360 Mortgage's customers. [DE-1]. Jhe matter was
removed to federal court in the Western District of Texas on September 20, 2013, Jn the basis of
diversityjurisdiction. !d. On May 19, 2014, after the parties engaged in jurisdictional discovery and
extensive motion practice regarding venue, Glenn was dismissed for lack ofpersonal jurisdiction and

on Stonegate's motion the matter was transferred to this district. [DE-51]. On July :21, 2014, the
court entered a scheduling order approving the discovery plan proposed by 360 1ortgage and
Stonegate and setting the following critical deadlines: expert reports due from Plaintif]no later than
February 20, 2015 and from Defendant no later than March 16, 2015; discovery and mediation to
be completed no later than June 10, 2015; potentially dispositive motions due no later ~han June 15,
2015; and the trial to be held during Judge Fox's September 28,2015 term of court.,DE-67]. On
November 14,2014, the court allowed 360 Mortgage's consent motion to add Glenn as a party [DE72] and Plaintiff filed an amended complaint [DE-73]. Afterreceiving an extension

~time, Glenn

answered the amended complaint on January 21, 2015. [DE-81]. The parties rbcipated in
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mediation on May 5, 2015, which resulted in an impasse. [DE-89]. On May 20, 2015, the court
amended the scheduling order as follows: all discovery to be completed by SeptembJ 10, 2015; all
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dispositive motions to be filed by October 9, 2015; and the trial continued to Judge 'ox's January
25, 2016 term of court. [DE-94].
On August 25, 2015, Defendant filed the instant motion to extend the case .d adlines [DE97], and sought expedited review [DE-99], which Plaintiff opposed [DE-l 00]. The bourt allowed
expedited review [DE-1 0 1]. On August 31, 20 15, Glenn filed response to the motio1 for extension
oftime. [DE-l 05]. That same day, Plaintiff filed a response to the motion for extensi~n oftime, and
also moved to strike Glenn's response, which Glenn opposed. [DE-l 06, -108, -112]. On September

motion to strike. [DE-113].
On August 28, 2015, Defendant filed a motion to compel [DE-102], to lhich Plaintiff
responded in opposition [DE-116]. Plaintiff also filed several proposed sealed exhi its along with

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its response [DE-117], and moved to seal those exhibits [DE-118]. On September 1, 2015, Glenn
filed a motion to compel discovery from Plaintiff. [DE-110]. Plaintiff moved for three extensions
oftime to respond to Glenn's motion to eompel [DE-115, -121, -13 2], which the court 1lowed [DE120, -122, -13 3]. On September 21, 2015, Plaintiff filed a motion to dismiss Glenn [bE-125] and
requested expedited review [DE-127], which the court allowed [DE-129]. Glenn Jd Defendant
Stonegate responded to the motion to dismiss [DE-131, -136] and Plaintiff filed a rJly [DE-140],

141].
Defendant Stonegate and Glenn filed a status report requesting a telephonic coriference [DE137], which the court held on October 6, 2015 [DE-139] and then ordered that Je dispositive
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motions deadline be tolled pending the court's ruling on pending motions. On Octolber 13, 2015,
Plaintiff filed a motion to compel [DE-142], to which Defendant responded in opposition [DE-145].
Plaintiff then moved to strike Defendant's response [DE-146], to which Defendant relponded [DE148]. On December 8, 2015, the court ordered that the trial date be stayed pending resolution of
currently-pending motions. [DE-151].

II. DISCUSSION
A.

Plaintiff's First Motion to Strike [DE-108] and Glenn's Motion to Compel [DE110]

On September 1, 2015, Plaintiff filed a motion to strike Glenn's respons~ [DE-105] to
Stonegate's motion for extension oftime. [DE-108]. In support of its motion, Plaintiff argues that
Glenn's filing is not a response to Stonegate's motion, but is "either a supplemental b lief or a veiled

second motion of Glenn's own for a continuance albeit under a difference name." Id. Further,

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Plaintiff argues that Glenn was not entitled to respond to Stone gate's motion for extension oftime,
Glenn and Defendant Stonegate aCted in tandem to deprive Plaintiff of time and Jportunity to
respond to the substance of Glenn's filing, and Glenn's response was untimely and

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violation of

.

the local rules. Id.

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In response, Glenn argues that the Local Rules permit her response to

Stonegate's motion, Plaintiffs motion to strike is essentially an impermissible reply, and Plaintiff
has mischaracterized Glenn's filings as gamesmanship in an attempt to inflame the court. [D E-112].
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On September 1, 2015, Glenn filed motion to compel, seeking an order requiring Plaintiff
to fully and completely answer Glenn's First Set of Interrogatories and producl documents
responsive to Glenn's First Request for Production of Documents, arguing that Plaink s answers
and responses were deficient and unresponsive. [DE-ll 0]. Plaintiff moved for three :extensions of
time to respond to Glenn's motion to compel [DE-115, -121, -132], which the court allowed [DE120, -122, -133]. As the basis for its request for extensions oftime, Plaintiffassertld that it was
contemplating filing a motion to dismiss its claims against Glenn.
On September 21,2015, Plaintiff filed amotion to dismiss its claims against <Glenn without
prejudice [i)E-125], which the court granted on October 9, 2015 [DE-141]. Accordjgly, as Glenn
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is no longer a party to this case, both Plaintiffs first motion to strike [DE-l 08] and Glenn's motion
to compel [DE-110] are denied as moot.

B.

Plaintifrs Second Motion to Strike [DE-146]

On November 4, 2015, Plaintiff filed amotion to strike Defendant's response [DE-145] to
Plaintiffs motion to compel, arguing that Defendant's response was untimely and DJfendant failed
to seek an extension oftime in which to respond. [DE-146]. Plaintiff argued that as Je Local Rules
provide that responses to discovery motions must be filed within fourteen (14) days,
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~efendant was

required to file a response to the motion to compel no later than October 27, 2015, as re motion to
compel was filed on October 13,2015. Jd. Defendant's response, filed October 30, 2!015, must be
stricken as untimely. Jd. In response, Defendant argues that Plaintiffs motion to strike is without
merit, as Defendant's response was timely filed. [DE-148].
Local Civil Rule 7.1 (e) dictates that responses to discovery motions must be filed within
fourteen (14) days after service of the discovery motion, unless a different briefJ schedule is
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ordered by the court. Rule 5 of the Federal Rules of Civil Procedure governs service o£ motions, and
provides that for parties represented by an attorney, service must be made upon the attorney, and
where a person has consented in writing to receive electronic service, such serice may be
accomplished by a court's transmission facilities if so authorized by the local rules.
5(b)(l), (b)(2)(E), (b)(3).

ed. R. Civ. P.

Local Civil Rule 5.1(e) authorizes this practice, stating that

"[t]ransmission of the NEF that is automatically generated by CM/ECF ... constitutes service of the
filed document on registered party users." See also Standing Order 06-PLR-2 (E.D.N.C. Oct. 1,

2005) (noting that the Local Rules discussing the electronic filing system "allowO ples to use the
court's transmission facilities to make service when appropriate"). Further, Local Rul5 .1 (b) states
that an attorney's registration for CM/ECF "constitutes written consent to service of

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documents

by electronic means as provided by the Federal Rules and the Policy Manual."
Rule 6 of the Federal Rules of Civil Procedure governs computing arid extending time, and
applies "in computing any time period specific in these rules, in any local rule or coL order, or in
any statute that does not specizy a method of computing time." Fed. R. Civ. P. 6(a). tWhen a party
may or must act within a specified time after service and service is made under Rule 5(b)(2)(C), (D),
(E), or (F), 3 days are added after the period would otherwise expire[.]" Fed. R. CiJ. P. 6(d). The

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Court's CM/ECF Policy Manual.expressly addresses electronic service, stating thatJ'[ s]ervice by
electronic means shall be treated the same as service by mail for the purpose of adding hree (3) days
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to the prescribed period pursuant to Rule 6(d) of the Federal Rules of Civil Procedure~.]" CM/ECF

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Policy Manual§ F(6). Additionally, in order to be deemed timely filed, a document bust be filed
and transmission completed prior to midnight Eastern Time. Id. §§ E(3); (G).

Here, the parties agree that service ofPlaintiffs motion to compel was effec ated through
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electronic filing on October 13,2015. See [DE-142] at4 (certificate of service attached to Plaintiffs
motion to compel stating that "the foregoing document was served by CM/ECF"). AcLrdingly, per
the Local Rules, Federal Rules, and the Policy Manual, Defendant had fourteen ( 14)

da~s to respond,

with an additional three (3) days added based on the electronic service, for a total of slventeen (17)
days to file a response to Plaintiffs motion to compel. Local Civil Rule 7.1(e); Fed.

J.

Civ. P. 6(d);

CMIECF Policy Manual § F(6). Thus, in order to be timely filed, Defendant's responsl to Plaintiffs

motion to compel was due by midnight on October 30, 2015. Fed. R. Civ. P. 6(d); CrCF Policy
Manual§§ E(3); (G). Defendant's response was filed at 5:24p.m. on October 30,2015. NEF [DE145].

Accordingly, Defendant's response was timely filed, and Plaintiffs mJion to strike

Defendant's response as untimely is without merit. Plaintiffs second motion to striJe [DE-146] is
denied.

C.

Plaintiff's Motion to Seal [DE-118]

On September 12, 2015, Plaintiff filed a motion to seal, seeking to seal Exhibits A-G attached
to the Declaration of Andrew W eissMalik, filed as an exhibit to Plaintiffs responJ in opposition
to Defendant's motion to compel. Mot. to Seal [DE-118]; WeissMalik Dec!. [DE-ll b_2]. Exhibits
A -G are separately filed as a proposed sealed exhibit. [DE-ll 7]. Plaintiff asserts thJ these exhibits
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should be sealed as they consist of information that is "highly confidential and pro~rietary and a
trade secret of 360 Mortgage." [DE-118] at 2. Further, Plaintiff asserts that its
interest in keeping its documents confidential outweighs any public right to access
because the document contains (1) confidential factual information as w6n as
proprietary commercial information disclosure of which may harm Pla~tiff s
business; (2) the instant case involves claims of misappropriation of trade sec~ets; it
does not involve allegations of criminal misconduct or claims attempting to restrict
the media or press; and the relief sought is strictly monetary and does not, in an~ way,
involve or affect a public interest.
Id at 5. Defendant did not file a response to Plaintiffs motion to seal within the allJtted time.
The Fourth Circuit has directed that before sealing publicly filed documents the court must
first determine if the source of the public's right to access the documents is derLed from the
common law or from the First Amendment. Stone v. Univ. ofMd, 855 F.2d 178, 180 (4th Cir.
1988). The fact that the documents sought to be sealed are subject to a protective order by the court
does not relieve the parties or the court from the obligation to comply with the Fohrth Circuit's
.

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sealing regimen. See Hall v. United Air Lines, Inc., 296 F. Supp. 2d 652, 679-80 (E.ID.N.C. 2003);
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see also Volumetrics Med Imaging, LLCv. ToshibaAm. Med Sys., Inc., No.

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1:05CV~55,

2413404, at *5 (M.D .N.C. Junel 0, 2011) (unpublished) (citations omitted).

2011 WL

"[T]h~ common law

presumption in favor of access attaches to all 'judicial records and documents,' [wlnle] the First
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Amendment guarantee of access has been extended only to particular· judicial records and
documents[,]" such as those filed in connection with a motion for summary judgmett Stone, 855
F.2d at 180 (quoting Nixon v. Warner Commc 'ns, Inc., 435 U.S. 589, 597 (1978) & citing Rushford
v. New Yorker Magazine, Inc., 846 F.2d 249,253 (4th Cir. 1988); In re Washington Post Co., 807
F.2d 383, 390 (4th Cir. 1986)). Here, the documents Plaintiff seeks to seal relate t~ Defendant's
motion to compel discovery, rather than to motions seeking dispositive relief, and theFefore the right
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of access at issue arises under the common law. 1 See Covington v. Semones," No.7 :06C~00614, 2007

WL 1170644, at *2 (W.D. Va. Apr. 17, 2007) (unpublished) ("In this instance, as tlie exhibits at
issue were filed in connection with a non-dispositive motion, it is clear there is no FirJ Amendment
right of access.").
The presumption of access under the common law is not absolute and its scope is a matter
left to the discretion of the district court. Va. Dep 't of State Police v. Washington Pbst, 386 F.3d
567, 575 (4th Cir. 2004). This presumption '"can be rebutted if countervailing intlests heavily
outweigh the public interests in access,' and ' [t ]he party seeking to overcome the presLption bears
the burden of showing some significant interest that outweighs the presumption."' !d. (quoting
Rushford, 846 F.2d at 253). Some factors for consideration when analyzing the rrnrnon law

presumption of access "include whether the records are sought for improper purposes, such as
promoting public scandals or unfairly gaining a business advantage; whether felease loUld enhance

the public's understanding of an important historical event; and whether the public has already had
access to the information contained in the records." ld. (quoting In re Knight Pub/ 'g

fo .,

743 F .2d

231, 235 (4th Cir. 1984)). Here, the documents in question contain "information regarding
extremely sensitive aspects of [Plaintiffs] business and operations particuhirly regardJg its relations
with its brokers and its account executives" [DE-119] at 2, and further constitutL the type of
confidential information Plaintiff claims was wrongfully misappropriated by Defendlt in this case.
These documents are of utmost importance to the parties, but are not generally alailable to the
public. Based on this showing, the court determines that the common law presumptiol of access has

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Plaffitiff &gues that the exlnbils at is.ue "'' not judicial "cord,, md ace govornod by tlre lod caueo
standard set forth in Rule 26(c) of the Federal Rules of Civil Procedure. [DE-119] at 4. The court nbed not reach
this issue as the same result is reached under either standard.

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been overcome.

In addition, the public must be given notice of a request to seal and a reasonable opportunity
to challenge the request. In re Knight, 74 3 F .2d at 23 5 (citing In re Knoxville News-Lntinel Co.,
723 F .2d 4 70, 4 74-76 (6th Cir. 1983)). Here, Plaintiff's motion to seal was filed on

S~tember

12,

2015. [DE-118]. No oppositiOn to themotwnhas been filed by Defendant or any non-party, despite
a reasonable time in which to do so.
Finally, the court is obligated to consider less drastic alternatives to sealing, and where a
court decides to seal documents, it must "state the reasons for its decision. to seal supported by
specific findings, and the reasons for rejecting alternatives to sealing in order to providl an adequate
record for review." In re Knight, 74 3 F .2d at 23 5 (citation omitted). Because, as desLbed above,
the exhibits in question contain confidential information and consist of sensilive business
information that is not generally available to the public, the court determines that Jternatives to
sealing do not exist at the present time. Accordingly, Plaintiffs Exhibits A-G to thl WeissMalik
Declaration (located at DE-117) shall be sealed in accordance with Local Civil Rule 79 .2.

D.

Defendant's Motion for Extension of Time [DE-97], Defendant's Motion to
Compel (DE-102], and Plaintiff's Motion to Compel (DE-142]

The remaining motions before the court are Defendant's motion for extension oftime [DE97], Defendant's motion to compel [DE-l 02] and Plaintiff's motion to compel [DE-l f2]. Based on
the briefing, the status of these discovery requests is unclear to the court. For exam_Rle, Defendant
moved to compel a response to its Request for Production #30, but in responding to the motion to
compel, Plaintiff stated that the parties agreed on a more limited production and Plaintiff actually
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produced those documents to Defendant. Pl.'s Mem. [DE-116] at 4-5. Additionally, Defendant

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argues that Plaintiffs motion to compel should be denied for failure to meet and confer as to the vast
majority ofthe issues presented in Plaintiffs motion to compel. Def.'s Mem. [DE-lf5]. Further,
as to some disputed phone records, Defendant indicates that the records would be produced as soon
as they are obtained. Jd. at 5. It is unclear to the court whether those records have already been
exchanged.
Accordingly, the court will hold a status conference to rule on the motions o compel on
Thursday, January 7, 2015 at 10:00 a.m. in Courtroom 3 of the Alton Lennon Fedr Building
located at 2 Princess Street, Wilmington, North Carolina. Local counsel are directed to appear in
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person at the status conference, and out-of-state counsel may attend via telephone (Dial-in No.: 888557-8511, Access Code: 8673312). The parties are directed to meet and confer in

a~vance of the

conference, and to file a joint status report, no later than December 31, 2015, laJg out briefly
which, if any, of the discovery disputes have been resolved, and which are still out.Lding.

III. CONCLUSION
For the foregoing reasons, Plaintiffs first motion to strike [DE-108] and Glenn's motion to
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compel [DE-ll OJ are DENIED AS MOOT; Plaintiffs second motion to strike [DE-146] is DENIED;
Plaintiff's motion to seal [DE-118] is GRANTED and Plaintiffs Exhibits A-G to

il

W eissMalik

Declaration (located at DE-ll 7) shall be sealed in accordance with Local Civil Rnle 7r-2. The court
shall hold a status conference on January 7, 2015 at 10:00 a.m. to address Defend,t's motion for
extension of time [DE-97], Defendant's motion to compel [DE-102], and Plaintiffs motion to
compel [DE-142].

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SO ORDERED, the 14th day ofDecember 2015.

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Rcl);~f.__

__

United States Magistrate Judge

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