Retail Service Systems, Inc. v. Carolina Bedding Direct, LLC et al

Filing 20

ORDER permitting discovery to begin before a Rule 26(f) conference of the parties. Signed by Magistrate Judge Mark R. Abel on 2/7/2014. (Abel, Mark)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Retail Service Systems, Inc.,
Plaintiff

:

Carolina Bedding Direct, LLC, et al.,
Defendants

Civil Action 2:13-cv-00994

:

v.

:

Judge Smith

:

Magistrate Judge Abel

:

Scheduling Conference Order
On February 7, 2014, counsel for the parties participated in a telephone scheduling conference with the Magistrate Judge. During the conference, the Magistrate Judge
ordered that the parties may proceed with discovery now without holding a Rule 26(f)
conference of the parties. Rule 26(d), Fed. R. Civ. P.
Allegations in the complaint. Retail Service Systems, Inc. (“RSS”) brings this
action asserting defendants Carolina Bedding Direct, LLC, Mattress By Appointment,
LLC, and Doe Defendants 1 through 50 violated Ohio's Uniform Trade Secrets Act,
Ohio Revised Code §§ 1333.61 et seq., and engaged in a civil conspiracy. Jurisdiction is
alleged under 28 U.S.C. § 1332.
The complaint (doc. 1) alleges the following facts. PMD and PMD Furniture
Direct, Inc. (collectively “PMD”) developed a unique, comprehensive marketing
program for the sale of bedding and furniture through small warehouses, using
classified advertising, detailed telephone and sales scripts, and specific marketing

techniques and sales approaches. Complaint, ¶ 11. In June 2013, PMD sold all its
licenses, accounts receivable, judgments, and intellectual property (including trade
secrets) to RSS. Id., ¶ 3
From early 2000 to April 2003, Darren Conrad was first an assistant to PMD’s
president and, later, a PMD dealer, manager, and dealer trainer. Id., ¶ 13. When he left
PMD in April 2003, Conrad signed a 3-year non-compete. Id., ¶ 15. Nonetheless, he
went into business in competition with PMD, using PMD’s confidential materials to
train his dealers. Id., ¶¶ 18-20.
In February 2004, PMD sued Conrad in the Franklin County Common Pleas
Court for breach of a license agreement and separation agreement. Id., ¶ 22. The Common Pleas Court issued a preliminary injunction and, later, a permanent injunction Id.,
¶¶ 23 and 32-34. The judge found that Conrad violated the non-compete and the Uniform Trade Secrets Act. Id., ¶¶ 32-23. The non-compete was extended an additional 15
months from the date of the 2009 judgment. Id., ¶ 35. During the course of that litigation
and after, Conrad continued to operate his businesses in violation of the injunctions and
final judgment. Id., ¶¶ 27 and 37.
Additional information provided by counsel during the February 7 telephone
conference. Counsel said there were three entities RSS believes have violated the Ohio
Trade Secrets Act: Carolina Bedding Direct of North Carolina, LLC, Carolina Bedding
Direct of Florida, LLC, and Mattress By Appointment, LLC. Further, Carolina Bedding
Direct of North Carolina, LLC filed a dissolution with the North Carolina Secretary of
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State before this lawsuit was filed. RSS asserts that Carolina Bedding Direct of Florida,
LLC and/or Mattress By Appointment, LLC are successor limited liability companies of
Carolina Bedding Direct of North Carolina, LLC. A judgment against Carolina Bedding
Direct of North Carolina, LLC would be good against them.
Plaintiff’s counsel said that the 2009 judgment against Conrad now amounts to
more than $650,000. RSS seeks money damages and a permanent injunction against
defendants enjoining them from use its “play book,” i.e., its marketing program, advertising, scripts, and other confidential information.
Service of process. Defendants maintain that plaintiff has not obtained service on
them. (January 30, 2014 motion to set aside default judgment (doc. 18)). Defendants’
counsel offered to accept service of summons and complaint for their clients. Plaintiff’s
counsel responded that RSS believes it has good service on defendants and that any
judgment against Carolina Bedding Direct of North Carolina, LLC may be executed on
against Carolina Bedding Direct of Florida, LLC and/or Mattress By Appointment,
LLC.
Discovery. Plaintiff’s December 31, 2013 motion to compel discovery (doc. 14)
was denied because a Rule 26(f) conference had not been held, the parties had not
agreed to the discovery, and the court had not ordered it. Rule 26(d), Fed. R. Civ. P.
(January 31, 2014 Order (doc. 19).) Plaintiff RSS seeks leave to take discovery. It is
ORDERED that the parties may proceed with merits discovery, including third-party
discovery, and discovery related to whether the court has personal jurisdiction over
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defendants. Defendants who assert lack of personal jurisdiction may be served with
requests for merits discovery by subpoenas under Rule 45. They are, however, required
to respond to any party discovery regarding personal jurisdiction. Plaintiff RSS is
ORDERED to serve on defendants’ all subpoenas previously served on third parties and
all responses made to those subpoenas.
Rule 16 scheduling conference. Counsel should consult about their availability
for a Rule 16 scheduling conference and advise me at the February 14 hearing on
plaintiff’s motion for default judgment against defendant Carolina Bedding Direct, LLC
the dates they are available for the conference.

s/Mark R. Abel
United States Magistrate Judge

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