Progress Solar Solutions, LLC v. Fire Protection, Inc. et al

Filing 117

ORDER - Progress Solar's motion to compel (D.E. 72 ) is ALLOWED to the extent of the relief provided for herein. The motion is otherwise DENIED without prejudiceto Progress Solar's seeking relief with respect any supplemental production by defendants. Signed by US Magistrate Judge James E. Gates on 2/25/2019. (Sellers, N.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
5:17-CV-152-D
PROGRESS SOLAR SOLUTIONS, LLC,
Plaintiff,
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FIRE PROTECTION, INC. dba FPI
ENVIRONMENTAL; JOHN DOE, AS
·EXECUTOR OR ADMINISTRATOR OF.
THE ESTATE OF NORMAN STEPHEN
VAN VALKENBURGH; JEFFREY VAN
VALKENBURGH,ASTRUSTEEFOR
THE NORMAN STEPHEN VAN
VALKENBURGHIRREVOCABLE
LIVING TRUST; MIKEL BILLS;
MICHAEL D. LONG; and SOLAR MOD
SYSTEMS, INC.,
Defendants.

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ORDER

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This case comes before the court on a motion (D.E. 72) by plaintiff Progress Solar
Solutions, LLC ("Progress Solar") requesting an order compelling defendant Fire Protection, Inc.
d/b/a/ FPI Environmental ("FPI") and defendant Jeffrey Van Valkenburgh, as Trustee for the
Noman Stephen Van Valkenburgh Irrevocable Living Trust ("Van Valkenburgh") (collectively
"defendants" and individually "defendant"), to produce the documents in the respective sets of
production requests served by Progress Solar on each of these defendants. Defendants filed a joint
response in opposition to the motion. D.E. 78. For the reasons and on the terms set forth below,
the motion will be allowed in part and denied in part.

I.

PROGESS SOLAR'S CLAIMS
Progress Solar alleges in its second amended complaint (D.E. 89) as follows: This lawsuit

arises from contractual and other business relationships between Progress Solar and FPL 2d Arn.
Compl. ,, 2, 18. Progress Solar manufactures solar p9wered portable light towers. Id , 15. It
markets and sells the light towers in the United States and internationally. Id, 15. Most of its
international sales are for ultimate use by departments of the United States military. Id, 16.
In 2012, FPI entered into an agreement with Progress Solar to serve as a dealer for Progress
Solar's light towers, which required FPI to hold Progress Solar's confidential information in
confidence. Id ,, 18, 19. Progress Solar pioneered a proprietary method for managing financing
obligations for military contracts, and shared that information with FPI and defendant Michael
Long ("Long"), FPI' s agent. Id ,, 27, 31. In 2015, Progress Solar gave Long significant access
to its manufacturing facilities, but beforehand Long signed an agreement with Progress Solar that
contained non-disclosure and non-competition terms, on his own behalf and on behalf of FPL Id
,, 32, 35-38.
In January of2016, Long, a resident of Texas, formed defendant Solar Mod Systems, Inc.
("SMS") under Texas law, in order to manufacture competing portable solar light towers that relied
on Progress Solar's proprietary information and trade secrets. Id ,, 10, 11, 40. During visits
overseas as FPI's agent, Long made contact with Progress Solar's customers and encouraged them
to place orders for SMS's competing portable solar light tower. Id , 43.
Progress Sol~ asserts the following claims: breach of the nondisclosure agreement, id,,
74-79; trade secret misappropriation under 18 U.S.C. § 1836, id ,, 80-97; misappropriation of
proprietary information and trade secrets under N.C. Gen. Stat. §§ 66-152, et seq., id ,, 98-106;
misappropriation of proprietary information and trade secrets under Tex. Civ. Prac. & Rem. Code

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§ 134A.001, et seq., id. iii! 107-18; unfair and deceptive trade practices under N.C. Gen. Stat.§ 751.1, et seq., id

iii!

119-22; common law unfair competition, id

iii!

with business relationships and prospective economic advantage, id.
under 15 U.S.C. § l 125(a), id
52; civil conspiracy, id.

123-29; tortious interference

iii! 130-37; false advertising

iii! 138-46; false association under 15 U.S.C. § l 125(a), id. iii! 147-

iii! 153-56; disgorgement of profits, id iii! 157-60; unjust enrichment, id

iii! 161-63; and injunctive relief, id. iii! 164-70.
II.

APPLICABLE LEGAL PRINCIPLES
The Federal Rules of Civil Procedure enable parties to obtain information by serving

requests for discovery on each other, including requests for production of documents.

See

generally Fed. R. Civ. P. 26-37. Rule 26 provides for a broad scope of discovery:
Parties may obtain discovery reg¥ding 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 ~f 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.
Fed. R. Civ. P. 26(b)(l).
The district court has broad discretion in determining relevance for discovery purposes.
Seaside Farm, Inc. v. United States, 842 F.3d 853, 860 (4th Cir. 2016); Watson v. Lowcountry Red
Cross, 974 F.2d 482, 489 (4th Cir. 1992). The party resisting discovery bears the burden of
establishing the legitimacy of its objections. Eramo v. Rolling Stone LLC, 314 F.R.D. 205, 209
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(W.D. Va. 2016) ("[T]he party or person resisting discovery, not the party moving to compel
discovery, bears the burden of persuasion." (quoting Kinetic Concepts, Inc. v. ConvaTec Inc., 268
F.R.D. 226, 243 (M.D.N.C. 2010))); Brey Corp. v. LQ Mgmt., L.L.C., No. AW-l l-cv-00718-AW,
2012 WL 3127023, at *4 (D. Md. 26 Jul. 2012) ("In order to limit the scope of discovery, the

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'party resisting discovery bears the burden of showing why [the discovery requests] should not be
granted."' (quoting Clere v. GC Servs., L.P., No. 3:10-cv-00795, 2011 WL 2181176, at *2 (S.D.
W. Va. 3 June 2011))).
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Rule 34 governs requests for production of documents. A party asserting an objection to a
particular request "must specify the part [to which it objects] and permit inspection of the rest."
Fed. R. Civ. P. 34(b)(2)(C). When a party withholds information on the basis of privilege,
including work-product protection, it must expressly assert the privilege objection in response to
the particular discovery request involved. Fed. R. Civ. P. 26(b)(5)(A). In addition, the party must
serve with its discovery responses a privilege log in conformance with Rule 26(b)(5)(A). See id.
Rule 37 allows for the filing of a motion to compel discovery responses. See Fed. R. Civ.
P. 37(a)(3)(B). It requires that the moving party be awarded expenses when a motion to compel
discovery is granted except when the movant filed the motion without attempting in good faith
beforehand to obtain the discovery without court intervention, the opposing party's opposition to
the discovery was substantially justified, or other circumstances would make an award of expenses
unjust. Fed. R. Civ. P. 37(a)(5)(A). If a motion to compel is denied, expenses must be awarded
to the person opposing the motion except when the motion was substantially justified or other
circumstances would make an award of expenses unjust. Jd(a)(S)(B). If a motion to compel is
allowed in part and denied in part, the court may apportion the expenses for the motion.
Jd.(a)(S)(C).

III.

DISCOVERY PROCEEDINGS
A.

FPI

On 8 September 2017, Progress Solar served on FPI a set of 30 production requests. Mot.
1~1.

FPI served its response on 10 November 2017, which included numerous objections to the

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production requests, including overbreadth, undue burden, and lack of proportionality to the needs
of the case. FPI Resp. to Prod. Reqs. (D.E. 72-1). FPI did not produce any documents with its
response. Mot. 1-2 if 1. During conferral with FPI, Progress Solar learned that Van Valkenburgh
had recently notified FPI employees that FPI was ceasing to do business and that some FPI
personnel had removed computers and files relating to the production requests. Id at 2 if 3. While
defendant Mikel Bills ("Bills"), who Progress Solar alleges is the national sales manager for FPI
(2nd Am. Compl. if 9), produced certain documents on 20 February 2018, the production does not
appear to be on FPI's behalf and FPI did not so confirm to Progress Solar. Id at 3 ifif 7, 8; 4 if 9.
As noted, Progress Solar seeks by its motion to compel FPI to produce all the documents
sought in its production requests to FPL 1 FPI has responded that it will produce documents
responsive to Requests Nos. 1, 2, and 16 whose production it does not deem

ot~erwise

objectionable after entry of a protective order. As to the remaining requests, FPI contends that "no
documents responsive to said requests are currently known and within the possession, custody,
and control of FPL" Defs.' Mem. 3. Progress Solar challenges this latter contention by FPL

B.

Van Valkenburgh

On 21 December 2017, Progress Solar served on Van Valkenburgh a set of seven
production requests. Progress Solar Prod. Reqs. to Van Valkenburgh (D.E. 72-5). As of the date
of Progress Solar's motion, Van Valkenburgh had not responded to the production requests,
despite being reminded to do so in a 4 March 2018 letter from Progress Solar's counsel. Mot. 4

ifif 12, 13.

Van Valkenbugh did ultimately serve a response to Progress Solar' s production requests

as an exhibit to his memorandum in opposition to the instant motion. See Van Valkenburgh Resp.

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Progress Solar has adequately demonstrated that it attempted to resolve the matters at issue in its motion without
court intervention. Mot. 5 ~ 16; see Fed. R. Civ. P. 37(a)(l); Local Civ. R. 7.l(c), E.D.N.C.

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to Prod. Reqs. (D.E. 78-2). The response includes numerous objections to th~ production requests.

See id
As with FPI, Progress Solar seeks by its motion to compel Van Valkenburgh to produce
all the documents sought in its production requests to Van Valkenburgh. Van Valkenburgh has
responded that it will produce documents responsive to Requests Nos. 1 to 3 and 5 whose
production it does not deem otherwise objectionable after entry of a protective order. As to the
remaining requests, Van Valkenburgh states that "[n]o documents responsive to this request are
currently known and within the possession, custody, or control of [Van Valkenburgh]." Van
Valkenburgh Resp. to Prod. Reqs. Nos. 4, 6, 7.

IV.

ANALYSIS
A.

Production

As noted, defendants have indicated they would produce documents whose production they
did not deem otherwise objectionable in response to certain production requests after entry of a
protective order-namely, Requests Nos. 1, 2, and 16 to FPI and Requests Nos. 1 to 3 and 5 to
Van Valkenburgh. A protective order (D.E: 98) has now been entered. The court assumes that
defendants have therefore already produced to Solar Progress the documents they promised to
produce in response to these requests. To the extent a defendant has not already done so, the
defendant shall produce to Progress Solar no later than 4 March 2019 the documents the defendant .
promised to produce along with a supplemental response to each production request that seeks
such documents identifying the documents being produced. 2

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If under the tenns of this Order more than one supplemental response is required to be served in response to a
particular production request, a single supplemental response may be served provided that it contains all the
infonnation required to be included in the multiple supplemental responses.

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It is unclear whether defendants are not producing certain documents sought in the
foregoing requests on the grounds that they are not within their possession, custody, or control.
Defendants do, of course, expressly make that contention with respect to all the other production
requests. The court cannot compel defendants to produce documents that are not within their
possession, custody, or control. See Mach. Sols., Inc. v. Doosan lnfracore Am. Corp., 323 F.R.D.
522, 530 (D.S.C. 2018) (holding that court could not compel a party to provide information it does
not possess).
Nonetheless, to the extent that a defendant claims the inability to produce documents in
response to any production request on the grounds that the documents are not within the
defendant's possession, custody, or control, the defendant shall (1) serve a supplemental response
to each such production request stating that after reasonable inquiry the defendant has determined
that the documents requested are not within the defendant's possession, custody, or control and (2)
support the response with a declaration providing a detailed summary of the steps the defendant

h,as taken to obtain such documents. Each such supplemental response and the supporting
declaration shall be served on Progress Solar by 4 March 2019.
Each defendant shall serve on Progress Solar by 11 March 2019, pursuant to Rule 26(e),
any documents sought in any of Progress Solar's production requests that have come within the
defendant's possession, custody, or control since the defendant's last production to Progress Solar.
Each defendant shall by the same date serve on Progress Solar a supplemental response to each
production request that seeks such documents identifying the additional documents produced.
Unless and until otherwise ordered by the court, each defendant shall continue in the future to
supplement the defendant's responses and the associated production in accordance with Rule 26(e)
without regard to the now-stale supplementation deadline of 28 April 2018 in the Discovery Plan

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(D.E. 34 if 3.j). 3 See Sched. Ord. (D.E. 36) 1 (adopting supplementation provisions in Discovery
Plan).
Turning to the objections by defendants to Progress Solar's production requests other than
lack of possession, custody, or control of the documents sought, the court finds that defendants
have failed in their response to Progress Solar's motion or otherwise to demonstrate that any of
these objections have merit. Nonetheless, in its discretion, the court will permit each defendant to
withhold from production documents on the grounds of privilege and the attorney work-product
doctrine subject to timely production of a privilege log, as provided below. A defendant may not
withhold documents from production in the defendant's possession, custody, or control on any
other grounds. Each defendant shall produce to Progress Solar by 11 March 2019 any documents
in the defendant's possession, custody, or control previously withheld on grounds other than
privilege or the attorney work-product doctrine along with a supplemental response to each
production request that seeks such documents identifying the documents being produced.
To the extent a defendant has not already done so, the defendant shall serve on Progress
Solar by 11 March 2019 a privilege log for all documents the defendant has withheld from
production on the grounds of privilege or the attorney work-product doctrine. To the extent that a
defendant in the future withholds documents from production on the grounds of privilege or the
attorney work-product doctrine, the defendant shall timely serve on Progress Solar a duly signed
privilege log for the documents meeting the requirements of Rule 26(b)(5)(A). Failure by a
defendant to timely serve a duly signed privilege log meeting the requirements of Rule 26(b)(5)(A)
shall be deemed a waiver of the privilege or work-product protection otherwise claimed.

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This same extension of the supplementation obligation applies to all other parties in this case as well.

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Nothing in this Order shall be deemed to limit Progress Solar's right to seek appropriate
relief by motion in the event that it obtains information demonstrating that a defendant has not
made reasonable efforts to obtain documents Progress Solar requested in its production requests
or that doquments within the scope of discovery in this case have been wrongfully destroyed or
have otherwise been wrongfully made unavailable for this litigation.

B.

Expenses

The court finds that the award of expenses would be unjust as to FPL Progress Solar shall
therefore bear its own expenses, including attorney's fees, incurred on the motion as to FPL See
Fed. R. Civ. P. 37(a)(5)(A)(iii), (C).
Van Valkenburgh, however, has failed to justify his extended delay in responding to
Progress Solar's production requests. It was only after Progress Solar filed its motion to compel
th~t

Van Valkenburgh finally responded. The court therefore preliminarily finds that Progress

Solar should be awarded the expenses, including reasonable attorney's fees, it incurred on its
motion as to Van Valkenburgh. See Fed. R. Civ. P. 37(a)(5)(C). The award may apply to Van
Valkenburgh and/or his counsel.
Progress Solar shall file by 11 March 2019 proof of the expenses it claims as to Van
Valkenburgh and a supporting memorandum. Because Progress Solar chose to seek relief as to
both FPI and Van Valkenburgh in the same motion, Progress Solar must demonstrate that any
expenses it claims as to Van Valkenburgh are attributable to him and not solely to FPL Van
Valkenburgh may file a memorandum with supporting evidence in response to Progress Solar's
submission no later than 25 March 2019. The court will issue a final ruling on the award of
expenses to Progress Solar as to Van Valkenburgh and/or his counsel after reviewing the parties'
submissions on the issue.
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V.

CONCLUSION
For the reasons set forth above, Progress Solar's motion to compel (D.E. 72) is ALLOWED

to the extent of the relief provided for herein. The motion is otherwise DENIED without prejudice
to Progress Solar' s seeking relief with respect any supplemental production by defendants.
SO ORDERED, this 25th day of February 2019.

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