Worldwide Distribution LLLP v. Everlotus Industries Corp. et al

Filing 10

Memorandum of Opinion and Order granting plaintiff's Motion to compel production of documents from the American Brass Company (Related Doc # 1 ). Plaintiff's request for attorneys' fees and expenses in making the motion is denied because American Brass's opposition to the motion was substantially justified. Judge Patricia A. Gaughan 2/9/17(C,KA)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

Worldwide Distribution, LLLP,
Plaintiff,
Vs.
Everlotus Industries Corp, et al.,
Defendants.

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CASE NO. 1:16 MC 67
JUDGE PATRICIA A. GAUGHAN

Memorandum of Opinion and Order

INTRODUCTION
This matter is before the Court upon Plaintiff’s Motion to Compel Production of
Documents from the American Brass Company (Doc. 1). Plaintiff initiated this action to compel
The American Brass Company d/b/a The Empire Brass Company (“American Brass”) to produce
documents in response to a subpoena that relates to an action pending in the United States
District Court for the Middle District of Florida (“Florida Action”). American Brass, located in
this district, is not a party to the Florida Action. For the reasons that follow, the motion is
GRANTED.

BACKGROUND
Plaintiff is in the business of importing products from suppliers around the world and
reselling and distributing the products to recreational vehicle manufacturers. (Florida Action,
Compl. ¶12). The Florida Action involves a dispute between Plaintiff and two of its former
suppliers (“Defendants”). In that action, Plaintiff alleges, among other things, that Defendants
tortiously interfered with Plaintiff’s business and contractual relationships. In its motion to
compel, Plaintiff states that it believes Defendants may have conducted the interference through
third parties such as American Brass. On March 29, 2016, Defendants moved to dismiss the
Florida Action for lack of personal jurisdiction. The Florida court denied Defendants’ motion on
September 14, 2016, without prejudice and ordered the parties to complete jurisdictional
discovery. In its order, the court authorized Plaintiff to serve a subpoena duces tecum without
deposition on American Brass requesting communications between American Brass and
Defendants and American Brass and Dehco, Inc.1 The court determined that such
communications “are relevant to whether Defendants engaged in tortious conduct that occurred
either in Florida, or with effects that were felt in Florida.”
Plaintiff issued a subpoena to American Brass on October 3, 2016, requesting the
following information:
a. All communications, including, but not limited to, all correspondence, e-mail,
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According to Plaintiff’s allegations in the Florida Action, Dehco is Plaintiff’s
customer. Dehco and Plaintiff entered into a non-circumvention agreement that
prohibits the parties from negotiating or participating in any transaction with
either party’s contacts without the permission of the other party. Plaintiff alleges
that Defendants began contacting Dehco with the intention of convincing Dehco
to deal directly with Defendants instead of buying goods through Plaintiff.
(Florida Action, Compl. ¶¶ 80-84).
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text messages, transmittal pages, memoranda, or notes of telephone or in-person
communication between The American Brass Company d/b/a The Empire Brass
Company (“Empire Brass”) and Everlotus Industries Corp., Wellmade Faucets
Corp., and Fengyu Wu a/k/a Gary Wu, from January 2014 to February 2016; and
b. All communications, including, but not limited to, all correspondence, e-mail,
text messages, transmittal pages, memoranda, or notes of telephone or in-person
communication, between Dehco, Inc., or any of its affiliates and Empire Brass
from January 2014 to February 2016.
American Brass moved to quash the subpoena in the Florida Action. The Florida court denied the
motion with leave to re-file in the correct court. The parties then unsuccessfully attempted to
resolve the issue before seeking this Court’s intervention. Plaintiff now moves to compel
American Brass to produce the documents requested in the October 3 subpoena. American Brass
opposes the motion.
LAW AND ANALYSIS
When a party objects to a subpoena, “the serving party may move the court for the district
where compliance is required for an order compelling production or inspection.” Fed. R. Civ. P.
45(d)(2)(B)(ii). The scope of discovery under a subpoena is the same as the scope of discovery
under Federal Rule of Civil Procedure 26. Medical Ctr. at Elizabeth Place, LLC v. Premier
Health Partners, 294 F.R.D. 87, 92 (S.D. Ohio 2013). Rule 26(b)(1) sets forth the permissible
scope of discovery:
Parties may obtain discovery regarding 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 of 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)(1). The scope of discovery is within the broad discretion of the trial court.
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Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389, 402 (6th Cir. 1998).
Where, as here, a party objects to a subpoena on the basis that the information sought is
confidential, a court engages in three inquiries: (1) whether the objecting party has shown that the
information sought is proprietary and that its disclosure might be harmful; (2) whether the party
seeking discovery has established that the information is relevant and necessary to the underlying
action; and (3) whether the need for discovery outweighs the harm that will result from
disclosure. Id. When discovery is sought from a non-party, a court “should be particularly
sensitive to weighing the probative value of the information sought against the burden of
production on the non-party.” Medical Ctr. at Elizabeth Place, 294 F.R.D. at 92.
Here, the Florida court has already determined that the information Plaintiff seeks from
American Brass is relevant to the issue of personal jurisdiction. In its opposition brief, American
Brass does not dispute the relevancy of the information. In addition, Plaintiff states that it cannot
obtain the information from Defendants because all communications between Defendants and
American Brass were deleted from Defendants’ email server. Indeed, Plaintiff has moved to
compel the information at issue from Defendants in the Florida Action, and in opposing that
motion, Defendants have informed the Florida court that any additional search for the
communication would be futile. Thus, Plaintiff has met its burden of establishing relevancy and
need.
With respect to the proprietary nature of the information and the harm it will cause,
American Brass states that it is a direct competitor of Plaintiff and that Defendants are suppliers
to both Plaintiff and American Brass. (McConville Aff. ¶ 3). It claims that the requested material
contains information that would identify the prices American Brass pays its suppliers and that
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American Brass derives economic value from keeping this information confidential. (Id. ¶ 4). It
maintains that providing such confidential and proprietary information to Plaintiff could
jeopardize or alter its supply costs should Plaintiff interfere in its relationship with its suppliers.
It also argues that Dehco is a potential customer of Plaintiff and that the requested information
could give Plaintiff a competitive edge that would allow it to undercut American Brass’s pricing
in an effort to entice Dehco to become Plaintiff’s customer. Finally, American Brass argues that
requiring it to produce the information would be unduly burdensome because the information can
be obtained from Defendants in the Florida Action. It asks that this Court hold Plaintiff’s motion
to compel in this matter in abeyance until the Florida court rules on Plaintiff’s motion to compel
pending before that court.
American Brass has produced some evidence–though it is quite conclusory–that the
information at issue is confidential and proprietary. In balancing the harm that American Brass
might suffer from disclosure with Plaintiff’s need for the information, the Court finds that the
information should be produced. Any harm to American Brass is mitigated to a significant extent
because Plaintiff does not seek current pricing information. Any pricing or other confidential
information that is contained in the requested material would be historical as Plaintiff only seeks
communications through February of 2016. In addition, American Brass has not shown, or even
argued, that producing the requested information would be unduly burdensome, time-consuming,
or expensive. Finally, contrary to American Brass’s assertions, it appears that Plaintiff will not be
able to obtain the information that it seeks from another source. As noted above, Defendants
have stated that they have none of the communications at issue.
Out of an abundance of caution, however, the Court finds that a protective order is
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appropriate, particularly in this situation where the information is being sought from a non-party.2
Where “good cause” exists, Rule 26 allows a court to issue a protective order requiring that
confidential information “not be revealed or be revealed only in a specified way.” If a court
determines that confidential information is relevant and necessary, “the appropriate safeguards
that should attend their disclosure ... are ... within the trial court’s discretion.” R.C. Olmstead,
Inc. v. CU Interface, LLC, 606 F.3d 262 (6th Cir. 2010) (quotations omitted).
Courts frequently use “attorneys’ eyes only” protective orders when confidential
information is to be provided to a competitor. See E3 Biofuels, LLC v. Biothane Corp., 2013 WL
3778804, *1 (S.D. Ohio July 18, 2013) (noting that courts “routinely” enter attorneys’ eyes only
protective orders when confidential or sensitive information may be disclosed and would cause
competitive harm); Westbrook v. Charlie Sciara & Son Produce Co., No. 07 2657 MA/P, 2008
WL 839745, at *4 (W.D. Tenn. Mar. 27, 2008) (citing numerous cases where attorneys’ eyes
only protective orders were imposed when confidential information would be produced to a
competitor but finding a standard protective order was sufficient because parties were not
competitors). Because the requested discovery contains confidential information that may cause
competitive harm to American Brass, a non-party to the underlying action, the Court finds that
good cause exists for a protective order. The discovery must be produced subject to a protective
order prohibiting the use of the information for any purpose other than the underlying litigation
and providing that any pricing information be designated attorneys’ eyes only.

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Plaintiff suggested that the Court enter a protective order in the event that it finds
the requested information is confidential or proprietary. American Brass does not
dispute that a protective order would protect the confidential and proprietary
material at issue.
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CONCLUSION
For the foregoing reasons, Plaintiff’s Motion to Compel Production of Documents from
the American Brass Company (Doc. 1) is GRANTED. The requested discovery is to be produced
in accordance with this Order. Plaintiff’s request for attorneys’ fees and expenses in making the
motion is denied because American Brass’s opposition to the motion was substantially justified.
IT IS SO ORDERED.

Dated:

2/09/17

/s/Patricia A. Gaughan
PATRICIA A. GAUGHAN
United States District Judge

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