Goken America, LLC v. Bandepalya et al

Filing 66

OPINION AND ORDER granting in part and denying in part 43 Motion to Quash Defendants' Subpoenas. Signed by Judge Algenon L. Marbley on 12/29/2014. (pes1)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
GOKEN AMERICA, LLC,
Plaintiff,
v.
NAVEEN BANDEPALYA, et. al.,
Defendants.

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Case No. 2:14-CV-1445
JUDGE ALGENON L. MARBLEY
Magistrate Judge Elizabeth P. Deavers

OPINION AND ORDER
This matter comes before the Court on Plaintiff Goken America, LLC (“Goken”)’s
Motion to Quash Defendants’ Subpoenas. (Doc. 43). For the following reasons, Defendants’
motion is hereby GRANTED in part and DENIED in part.
I. BACKGROUND
Plaintiff Goken America, LLC (“Goken”) is an Ohio engineering firm that employed
defendant, Naveen Bandepalya (“Bandepalya”), from September 2010 until January 2014.
Goken promoted Bandepalya to a supervisory position in October 2012 and issued Bandepalya a
company laptop and iPhone. In April 2013, Bandepalya requested access to a “Business
Development” subfolder within a larger “Admin” folder. Goken CEO, Doug Smith (“Smith”),
gave Bandepalya access to the entire “Admin” folder on his Goken laptop because it would have
been logistically difficult to give Bandepalya restricted access to just the “Business
Development” subfolder.
Bandepalya quit his job at Goken in January 2014. He returned his Goken-issued laptop
and iPhone during his exit interview, but both devices had been wiped clean of all Bandepalya’s
files and restored to default settings. A forensic investigator determined in December 2013,

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Bandepalya copied 8,659 files, the entire contents of the restricted “Admin” folder, onto his
company laptop and then onto an external hard drive. Bandepalya confirmed that he copied
those files, but he stated that he only meant to take his personal files and presentations that he
prepared during his employment at Goken. He testified that he did not open any of Goken’s files
after downloading them onto the external hard drive. Plaintiff’s forensic investigator testified
that Goken files from the “Admin” folder had been viewed at least 69 times from the external
hard drive while it was in Bandepalya’s possession.
Both parties agree that there was no non-compete contract in effect when Bandepalya
was employed at Goken. Goken published a handbook of employee expectations, and that
handbook included a confidentiality clause, which Bandepalya signed. His signature affirmed
that he read and understood the policies but not that he agreed to be bound by the policies.
Bandepalya stated that he knew that the information on the “Admin” folder was not to be shared
with people outside the company.
While working at Goken, Bandepalya supervised ongoing projects with a valuable client,
Honda R&D Americas, Inc. (“Honda”). Bandepalya currently works for Defendant American
Hydrostatics (“AH”) and was contracted out to its subsidiary, Defendant Cresttek, LLC
(“Cresttek”), both of which are Goken competitors. Bandepalya’s duties at Cresttek are similar
to his prior responsibilities at Goken.
On October 15, Defendants served subpoenas on FirstMerit Financial Group LLC and
Net Gain Information systems. These organizations are not parties to the lawsuit, but have a
business relationship with Goken: FirstMerit does financial services for Goken; and Net Gain
does network support for Goken. Net Gain’s business relationship with Goken includes
preparation for this litigation. The FirstMerit subpoena requested:

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A. All correspondence exchanged with Plaintiff Goken America LLC regarding a line of
credit or loan(s);
B. Any and all documents submitted by Plaintiff Goken America LLC for the purpose of
obtaining financing, including, but not limited to, financial statements, tax returns with all
schedules and attachments and profit and loss statements; and
C. Any and all documents contained in such financing package, including, but not limited
[to] loan agreements, and guarantees.
The Net Gain subpoena requested:
A. All correspondence exchanged with Plaintiff Goken America LLC;
B. All agreements with Goken re: computer support and network services;
C. Any and all documents regarding Goken’s data storage and protection, including
backups; and
D. All forensic images of Goken’s network or servers.
Goken filed its Motion to Quash on October 24, 2014. (Doc. 43). All parties took part in
a telephone conference on October 27, in which the parties agreed to send a letter to the
subpoenaed third parties, instructing them temporarily to disregard the subpoenas. (Doc. 44).
During that conference, Goken agreed to revisit the issue with Defendants during the week of
November 17, after the preliminary injunction hearing. Defendants motioned the Court to allow
a late responsive filing, and the court granted that request. (Docs. 53, 55). Defendants
responded on November 21, 2014. (Doc. 54). Goken filed its reply on December 10, 2014, in
accordance with this Court’s deadline. (Doc. 61). Parties remain subject to this Court’s
Protective Order. (Doc. 13).
II. LAW & ANALYSIS
In its Motion to Quash, Goken provided four reasons that this Court should quash
Defendants’ subpoenas. But in its reply brief, Goken refined its arguments because Defendants
“stipulate[ed] that this Court’s Protective Order of September 9, 2014[,] applies to subpoenaed
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documents.” (Doc. 61 at 1). This Court will therefore address the refined arguments presented
in Goken’s reply brief in the interest of expediency.
A.

Goken Argues That Defendants Did Not Provide Notice Before Serving Subpoenas
Although Defendants violated Federal Rule of Civil Procedure 45(a)(4) if they did not

serve the subpoenas on Goken’s counsel before sending them to third parties, this Court will not
take the drastic step of quashing the subpoenas because of this technical oversight. The rule
states that “a notice and a copy of the subpoena must be served on each party” “before it is
served on the person to whom it is directed.” Fed.R.Civ.P. 45(a)(4).
It is undisputed that Defendants sent notice of the subpoenas to Goken’s counsel the same
day that they went out to the third parties. Defendants state that they served the subpoenas on
Goken’s counsel by electronic mail prior to serving the subpoenas on the third parties later that
same day. Even if Defendants served the subpoenas on the third parties before serving them on
Goken’s counsel, Goken suffered no material prejudice because no documents have yet been
produced in relation to those subpoenas - FirstMerit and Net Gain have not yet responded to the
subpoenas. The Court will therefore not quash the subpoenas.
B.

Goken Asserts That The Subpoenas Involve Privileged/Private Information
“Parties may obtain discovery regarding any nonprivileged matter that is relevant to any

party’s claim or defense—including the existence, description, nature, custody, condition, and
location of any documents or other tangible things.” Fed.R.Civ.P. 26(b). “Relevant information
need not be admissible at the trial if the discovery appears reasonably calculated to lead to the
discovery of admissible evidence.” Id. The scope of discovery under the Federal Rules is broad.
Conti v. Am. Axle & Mfg., Inc., 326 F. App'x 900, 904 (6th Cir. 2009); Lewis v. ACB Bus. Servs.,
Inc., 135 F.3d 389, 402 (6th Cir. 1998).

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One exception to this broad rule is when a party seeks to discover documents protected
under the work-product doctrine. “Ordinarily, a party may not discover documents and tangible
things that are prepared in anticipation of litigation or for trial by or for another party or its
representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or
agent).” Fed.R.Civ.P. 26(b)(3)(A). But if the materials are otherwise discoverable and the party
shows substantial need and cannot obtain their equivalent through other means, then they are
discoverable. Id.
1.

FirstMerit Subpoena

Defendants’ request for documents related to (1) obtaining financing or (2) contained in a
financing package survives Goken’s challenge, but the (3) request for correspondence must fail.
Defendants state that the FirstMerit subpoena requests are “relevant to Plaintiff’s damages in this
matter” and “is likely to contradict the allegations… that Plaintiff suffered in excess of $75,000
in damages as a result of Defendants’ actions.” (Doc 54 at 4). Goken challenges the request for
all documents submitted by Goken to obtain financing. (Doc. 61 at 10). Because these
documents could include things like profit and loss statements, financial statements, and tax
returns, they are reasonably calculated to lead to the discovery of admissible evidence. Goken
also disputes the propriety of Defendants’ request for documents contained in any financing
package. (Doc. 61 at 10). These documents could include the same type of information as well
as loan agreements and guaranties. These documents are also reasonably calculated to lead to
the discovery of admissible evidence. Thus Goken’s motion to quash these two requests is
DENIED, though production is subject to this Court’s Protective Order.
On the other hand, Goken challenges Defendants’ request for all correspondence
regarding credit or loans because it is overbroad and not relevant to the damages issue. The

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Court agrees. Despite the liberal discovery rules of the Federal Rules, a request for all
correspondence between the financial institution and Goken is likely to either be duplicative of
information from the two requests this Court upheld or not likely to lead to admissible evidence.
Goken’s motion to quash this request for correspondence is GRANTED.
2.

Net Gain Subpoena

The Net Gain subpoena survives Goken’s motion, but does not require production of any
materials that were prepared in anticipation of litigation, even if they are responsive to the
discovery requests. Defendants seek materials from Net Gain in order to “discredit Plaintiff’s
allegations that it takes steps to keep its Business and Trade Secret Information protected and
confidential, that Defendants misappropriated Plaintiff’s Business and Trade Secret Information
located in the Admin folder on Plaintiff’s computer network, and that Defendant Naveen
Bandepalya exceeded his access to same.” (Doc. 54 at 5). Goken argues that the information is
protected as work product under Federal Rule 26 because “much of the information generated by
Net Gain was generated ‘in anticipation of litigation.” (Doc. 61 at 2-3). Even if Net Gain
qualifies as an agent of Goken, the language of Rule 26 only protects materials prepared in
anticipation of litigation. And Goken itself admits that only “much of the information” that Net
Gain generated was in anticipation of litigation. So even if most of the materials that Net Gain
created for Goken were in anticipation of litigation, the remaining materials are discoverable.
This Court therefore DENIES Goken’s Motion to Quash the Net Gain subpoena with the caveat
that Net Gain shall not produce documents that it prepared in anticipation of litigation even if
they are otherwise responsive to the subpoena requests.
IV. CONCLUSION
Based on the foregoing, Goken’s Motion to Quash the FirstMerit and Net Gain subpoenas

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is, therefore, GRANTED in part and DENIED in part. The Court hereby ORDERS as follows:
A.

FirstMerit shall produce:
1. Any and all documents submitted by Plaintiff Goken America LLC for the purpose of
obtaining financing, including, but not limited to, financial statements, tax returns with all
schedules and attachments and profit and loss statements; and
2. Any and all documents contained in such financing package, including, but not limited
[to] loan agreements, and guarantees; and

B.

Net Gain shall produce:
1. All correspondence exchanged with Plaintiff Goken America LLC;
2. All agreements with Goken re: computer support and network services;
3. Any and all documents regarding Goken’s data storage and protection, including
backups; and
4. All forensic images of Goken’s network or servers that have not been created or
prepared in anticipation of litigation.

Production shall be in accordance with this Court’s Protective Order. (Doc. 13).
IT IS SO ORDERED.

s/ Algenon L. Marbley
ALGENON L. MARBLEY
UNITED STATES DISTRICT JUDGE
DATED: December 29, 2014

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