Health & Beauty Technologies, Inc et al v. Merz Pharma GmbH KgaA et al

Filing 197

ORDER - Defendants' objection 195 to the magistrate judge's December 5, 2018, order is OVERRULED and the magistrate judges order is AFFIRMED, subject to plaintiffs' agreement to confer in good faith regarding custodians and search terms as set forth herein. The deadline for compliance with the magistrate judge's order remains January 22, 2019. The parties are DIRECTED to file, upon close of jurisdictional discovery period, or by February 22, 2019, wh ichever is earlier, a notice setting forth the parties' proposed deadlines for completion of briefing on motions to dismiss filed at 191 and 193 , accompanied by proposed order if agreed. Signed by District Judge Louise Wood Flanagan on 1/15/2019. (Collins, S.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
NO. 7:18-CV-117-FL
HEALTH & BEAUTY
TECHNOLOGIES, INC.; and MEDIBUILD INTERNATIONAL, CORP.,
Plaintiffs,
v.
MERZ PHARMA GMBH KGAA; and
MERZ NORTH AMERICA, INC.,
Defendants.

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ORDER

This matter is before the court on defendants’ objection (DE 195) to order by United States
Magistrate Judge Robert B. Jones, Jr. (DE 190), granting in part and denying in part plaintiffs’
motion to compel production (DE 170). Plaintiffs responded to defendants’ objection. In this
posture the issues raised are ripe for ruling. For the following reasons, defendants’ objection is
overruled and the magistrate judge’s order is affirmed, subject to plaintiffs’ agreement set forth
herein to confer in good faith regarding custodians and search terms.
BACKGROUND
As pertinent to the instant objections, on August 8, 2018, the court directed defendants to
respond to plaintiffs’ Second Request for Production of Documents, filed at DE 151-3. On August
20, 2018, the court adopted the parties’ proposed schedule for timing of jurisdictional discovery,
under which defendants will produce documents within 45 days of the court’s ruling on any
discovery motion regarding defendants’ responses to plaintiff’s Second Request for Production of
Documents. (See Notice (DE 166) at 2; Order (DE 167)). In addition, the court adopted the parties’

proposed schedule for depositions to take place within four weeks of the production of documents.
(Id.). Furthermore, “deadlines for plaintiffs’ opposition to any renewed motion to dismiss, and
defendants’ reply thereto, are STAYED until completion of jurisdictional discovery.” (Order (DE
167)). The parties suggest that, upon completion of jurisdictional discovery, the parties shall then
“propose a schedule for completion of briefing on the issue of personal jurisdiction over Merz
Pharma.” (Notice (DE 166) at 2).
On September 24, 2018, plaintiffs filed the instant motion to compel production that is
subject of the magistrate judge order. On October 24, 2018, the court confirmed its prior orders
regarding the stay of briefing imposed due to period of jurisdictional discovery, despite filing of
motions to amend complaint. On November 28, 2018, the court granted plaintiffs’ motion to amend
complaint, and plaintiffs filed a second amended complaint on that date.
On December 5, 2018, the magistrate judge granted in part and denied in part plaintiffs’
motion to compel. In particular, the magistrate judge rejected defendants’ objections to requests 5,
7, 8, 9, 13, 14, 15, and 17, on the grounds of relevance. The magistrate judge ordered defendants
to fully respond to such requests, except to the extent that those requests are duplicative, as
previously resolved in the court’s August 8, 2018, order, and except to the extent requests 7 and 8
reference unspecified “Merz entities” as discussed in the magistrate judge order. (Order (DE 190)
at 10). The magistrate judge limited request 1, 2, 3, 4, 12, and 18, per modification suggested by
plaintiffs or as clarified in the magistrate judge order. (Id. at 10-15). The court ordered compliance
with the order by January 22, 2019, consistent with this court’s August 20, 2018, order.
On December 12, 2018, defendants filed motions to dismiss the second amended complaint.
Per the court’s August 20, 2018, and October 24, 2018, orders, briefing on such motions is stayed

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pending completion of jurisdictional discovery.
On December 19, 2018, defendants filed the instant objection to the magistrate judge’s
December 5, 2018, order, specifically to that portion requiring full compliance with requests for
production 5, 9, 13, 14, and 15. Defendants expressly do not object to any other aspect of the
magistrate judge’s order. Defendants rely upon an attached case, Valencell, Inc. v. Apple Inc., No.
5:16-CV-1-D (E.D.N.C. April 17, 2017). Plaintiffs responded on December 31, 2018, relying upon
the declaration of one of plaintiffs’ counsel in this action Aaron Tandy.
COURT’S DISCUSSION
A.

Standard of Review
For non-dispositive pretrial matters, “[t]he district judge in the case must consider timely

objections and modify or set aside any part of [a magistrate judge] order that is clearly erroneous
or is contrary to law.” Fed. R. Civ. P. 72(a); see 28 U.S.C. § 636(b)(1)(A).
B.

Analysis
Defendants object to the magistrate judge order, with respect to requests for production 5,

9, 13, 14, and 15, on the basis of relevance and proportionality. The court addresses each basis for
objection in turn.
1.

Relevance

Defendants argue that the information requested in requests for production 5, 9, 13, 14, and
15, is not relevant to the issue of personal jurisdiction. The magistrate judge thoroughly and
cogently addressed the relevance of these requests for production, and the court previously
addressed issues of relevance in its August 8, 2018, order. Defendants have not demonstrated that
the analysis of the magistrate judge is clearly erroneous or contrary to law. Upon careful review of

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the record and the magistrate judge’s order, the court overrules that part of defendants’ objection
based upon relevance.
2.

Proportionality

Defendants argue that production in accordance with requests 5, 9, 13, 14, and 15, is
disproportionate to the needs of the case. For example, defendants contend that “[a]t least sixty-five
employees of both Defendants could be considered relevant custodians,” and that for one employee
alone defendants estimate that there are at least 11,217 documents that hit on the search term
“Ulthera” or other names used for the company. (Obj. (DE 195) at 10). Defendants propose a
limitation to documents “sufficient to show” they collaborated in North Carolina to acquire Ulthera,
or documents that reference brokerage fees and brokerage commissions. (Id. at 11).
Defendants’ objections based upon proportionality are unavailing. As an initial matter,
defendants did not raise before the magistrate judge information now raised about the number of
custodians or number of documents responsive to the challenged requests. Moreover, “Plaintiffs
have agreed to cooperate with Defendants in good faith to limit the number of records custodians
and applicable search terms for purposes of jurisdictional discovery.” (Pls’ Resp. (DE 196) at 9).
It is incumbent upon plaintiffs to confer with defendants in an effort to do so. Further limitation,
however, on the basis proposed by defendants is not required. Defendants have not demonstrated
that a subject matter limitation to documents “sufficient to show” they collaborated in North
Carolina to acquire Ulthera, or documents that reference brokerage fees and brokerage commissions,
is warranted in light of the court’s relevance determinations. In sum, the court overrules that part
of defendant’s objection based upon proportionality, subject to plaintiffs’ agreement to confer in
good faith as set forth herein.

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CONCLUSION
Based on the foregoing, defendants’ objection (DE 195) to the magistrate judge’s December
5, 2018, order is OVERRULED and the magistrate judge’s order is AFFIRMED, subject to
plaintiffs’ agreement to confer in good faith regarding custodians and search terms as set forth
herein. The deadline for compliance with the magistrate judge’s order remains January 22, 2019.
The parties are DIRECTED to file, upon close of jurisdictional discovery period, or by February
22, 2019, whichever is earlier, a notice setting forth the parties’ proposed deadlines for completion
of briefing on motions to dismiss filed at DE 191 and 193, accompanied by proposed order if agreed.
SO ORDERED, this the 15th day of January, 2019.
_____________________________
LOUISE W. FLANAGAN
United States District Judge

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