Brady et al v. Grendene USA, Inc., No. 3:2012cv00604 - Document 336 (S.D. Cal. 2015)

Court Description: ORDER Granting In Part and Denying In Part 194 Joint Motion to Compel Responsive Rule 30(b)(6) Testimony and Other Issues. Signed by Magistrate Judge Karen S. Crawford on 7/24/2015. (srm)

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Brady et al v. Grendene USA, Inc. Doc. 336 .' FIL.L.[) 1 OOj [ " 2 ')1 L'·! 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 CASE NO. 12cv604-GPC(KSC) JAMES W. BRADY and PATRICIA M.BRADY, 12 vs. 13 ORDER GRANTING IN PART AND DENYING IN PART JOINT MOTION TO COMPEL RESPONSIVE RULE 30(b)(6) TESTIMONY AND OTHER ISSUES Plaintiff, 14 15 16 GRENDENE USA INC. a Delaware corporation, and GRENnENE S.A., a Brazil corporation, [Doc. 194] Defendant. 17 18 19 20 21 22 23 24 25 26 27 Before the Court is a Joint Motion filed by the defendants on March 3, 2015. 1 [Doc. 194] By way of background, the parties have now filed 15 Motions and Joint Motions and more than 3,100 pages of briefing and exhibits on substantive discovery disputes in this case. [Docs. 34, 68, 70, 74, 78, 88,143,161, 162, 172, 176, 179, 186, 194,243] The instant Joint Motion presents the defendants' request for a Court Order compelling the plaintiffs to produce: 1) an additional Rule 30(b)(6) witness for the plaintiffs' company, Made In Brazil, Inc. ("MIB"); 2) the home address of the plaintiffs' daughter; 3) the plaintiffs' litigation costs and fees since May 2014; 4) tax On June 3, 2015, the District Court issued an Order granting summary 28 judgment for the defendants. [Doc. 295] Because a judgment has not been entered, however, this Court resolves the pending discovery dispute between the parties. I - 1- 12cv604-GPC(KSC) Dockets.Justia.com 1 records relating to MIB's sales and operations in 2013; and 5) communications with 2 MIB's Social Media Manager, Gabriela Moreno. Id. The defendants also request 3 4 attorneys' fees. Id. at 38. The plaintiffs oppose the defendants' requests. The scope of discovery under Rule 26(b) is broad: "Parties may obtain discovery 5 regarding any matter, not privileged, which is relevant to the claim or defense of any 6 party involved in the pending action. Relevant information need not be admissible at 7 trial if the discovery appears reasonably calculated to lead to the discovery of 8 admissible evidence." FED. R. Cry. P. 26(b). This Court has broad discretion when 9 determining relevancy for discovery purposes. See Hallett v. Morgan, 296 F.3d 732, 10 751 (9 th Cir. 2002) ("Broad discretion is vested in the trial court to permit or deny 11 discovery, and its decision to deny discovery will not be disturbed except upon the 12 clearest showing that denial of discovery results in actual and substantial prejudice to 13 the complaining litigant.") (internal citations omitted). However, this discretion should 14 be balanced with the obligation to interpret the Rules in order to secure a ''just, speedy, 15 and inexpensive determination" of the action. FED. R. Cry. P. 1. 16 For the reasons stated below, the Court GRANTS IN PART and DENIES IN 17 PART the defendants' requests in the Joint Motion. This Court will consider each of 18 the defendants' five requests, and the plaintiffs' opposition thereto, in tum. The Court 19 declines to award attorneys' fees. I. DEFENDANTS' MOTION TO COMPEL ADDITIONAL RULE 30(b)(6) TESTIMONY 20 21 A. Background 22 On May 15, 2014, the defendants noticed the deposition of the plaintiffs' 23 company, Made in Brazil, Inc., ("MIB") pursuant to Rule 30(b)(6) ofthe Federal Rules 24 of Civil Procedure. [Doc. 194-2, Ex. A, p. 2] The notice identified 30 deposition topics 25 26 27 including, inter alia: Topic 1: YOUR sale of PLAINTIFFS ' GOODS in the United States from January 1,2006, through the present. 28 -2- 12cv604-GPC(KSC) 1 2 Topic 3: YOUR licensing, distribution, sales, design, manufacturing AND/OR marketing of PLAINTIFFS' GOODS from January 1,2006, through the present. 3 4 5 6 7 8 9 Topic 5: Gross revenues and net profits from sales of PLAINTIFFS' GOODS in the United States by product type, from January 1, 2006, through the present. Topic 8: YOUR annual advertising and marketing expenditures from each year from January 1,2006, to the present. Topic 10: All products bearing PLAINTIFFS' MARKS that YOU sold, distributed, manufactured, AND/OR marketed from January 1, 2006, through the present. 10 11 12 13 [Doc. 194-2, Ex. A, pp. 6-7] The plaintiffs designated James Brady to testify as the Rule 30(b)(6) representative for MIB, and his deposition commenced on January 8, 2015. 2 [Doc. 194- 14 2, Ex. B (sealed)] In the deposition, Mr. Brady was unable to answer questions about 15 certain business activities of MIB in the 2014-2015 year, including: 1) how many 16 swimsuits MIB delivered or shipped to stores or purchasers, id. at 6-7; 2) how many 17 online orders for swimsuits MIB received, id. at 8; 3) how many online orders for 18 swimsuits MIB fulfilled, id.; 4) whether and when MIB sold products on consignment, 19 id. at 23; 5) how many "pop-up shops" MIB operated to sell its items to individuals, 20 id. at 24-25; and 6) what expenses were incurred for each "pop-up" shop, id. 21 Throughout the deposition, Mr. Brady repeatedly stated that his daughter, Patricia M. 22 Brady ("Ms. Brady"), an employee of the company, would be the person most 23 knowledgeable to answer questions aboutthese and other topics. !d. at 8, 9,13, 18,21, 24 25 As discussed in this Court's March 27, 2015, Order, the parties improperly combined the individual and Rule 30(b)(6) depositions of certain witnesses, including 26 Mr. Brady. [Doc. 209, p. 7] (citing [Doc. 187, p. 3]). The Court has reviewed the 27 portions of the Mr. Brady's deposition transcript that are at issue in this dispute, and concludes that at all relevant times Mr. Brady was questioned in his capacity as the 28 Rule 30(b)(6) designee for MIB. See [Doc. 194-2, Ex. B (sealed)]("I would like to ask about certain activities of Made In Brazil, Inc .... ") 2 -3- 12cv604·GPC(KSC) 1 22, 23, 25. Mr. Brady was also unable to provide the gross sales figures for MIB in 2 2014, id. at 26, which the plaintiffs now state is because the gross sales figures for 3 2014 were unavailable by the date of Mr. Brady's deposition in early January. [Doc. 4 194, p. 29] 5 In the instant Joint Motion, the defendants ask this Court to compel the plaintiffs 6 to produce their daughter to testify about the five above-referenced Rule 30(b)(6) 7 topics for which they feel Mr. Brady was unprepared. [Doc. 194, p. 2] While the 8 plaintiffs concede that Mr. Brady was unable to answer some of the questions 9 identified above, they posit that the defendants did not provide reasonable notice that 10 they expected Mr. Brady to answer specific questions about MIB's shipping orders, 11 online orders, or consignment sales. Id. at 28. The plaintiffs argue that the defendants' 12 request should be denied because the questions Mr. Brady could not answer were not 13 within the scope of a noticed topic. !d. at 31. 14 The parties met and conferred telephonically about this dispute on February 2, 15 2015. [Doc. 195, p. 5] The plaintiffs offered to produce Ms. Brady to testify for one 16 hour as an additional Rule 30(b)(6) designee for MIB. [Doc. 194, p. 30; Doc. 195, p. 17 6] However, the plaintiffs' offer was conditioned upon the defendants agreeing to make 18 their two Rule(b)( 6) witnesses available for three additional hours each. 3 [Doc. 194, p. 19 30; Doc. 195, p. 6] The defendants would not so agree, and the instant Joint Motion 20 followed. 21 B. Discussion 22 Rule 30(b)(6) provides that, "[i]n its notice or subpoena, a party may name as the 23 deponent a public or private corporation, a partnership an association, a governmental 24 agency, or other entity and must describe with reasonable particularity the matters for 25 examination. The named organization must then designate one or more officers, 26 3 The plaintiffs' request to reconvene the depositions of the defendants' Rule 30(b)(6) depositions was the subject ofa separate Joint Motion that was pending at the 28 time the instant Joint Motion was filed. See [Doc. 186] The plaintiffs' request was subsequently denied by this Court in an Order dated March 27,2015. [Doc. 209] 27 -4- 12cv604·GPC(KSC) I directors, or managing agents, or designate other persons who consent to testifY on its 2 behalf1.]" FED. R. CIV. P. 30(b)(6). "The corporation has a duty to educate its witnesses 3 so they are prepared to fully answer the questions posed at the deposition." Louisiana 4 Pac. Corp. v. Money Market 1 Inst. Inv. Dealer, 285 F.R.D. 481, 486 (N.D. Cal. 2012) 5 (citations omitted). 6 A party noticing a deposition pursuant to Rule 30(b)(6) must describe with 7 reasonable particularity the matters on which the examination is requested. FED. R. 8 CIV. P. 30(b)(6). "However, the 'reasonable particularity' requirement of Rule 30(b)(6) 9 cannot be used to limit what is asked of a designated witness at a deposition. The 10 30(b)(6) notice establishes the minimum about which the witness must be prepared to II testifY, not the maximum." Louisiana Pac. Corp., 285 F.R.D. at 486 (citations 12 omitted). 13 Contrary to the plaintiffs' assertions, this Court finds that the questions which 14 Mr. Brady was unprepared to answer are directly relevant to the 30 topics noticed by 15 the defendants. Questions about MIB's online orders and consignment sales fall under 16 the category of sale of plaintiffs' goods (topics one, ten); questions about MIB's 17 shipping fall under the category of the distribution of plaintiffs' goods (topics three, 18 ten); and questions about pop-up shops and their expenses fall under the category of 19 marketing and annual advertising expenditures (topics three, eight). The defendants 20 are also entitled to an answer about the 2014 gross sales ofMIB (topic five), now that 21 the information is presumably available. 22 This Court orders the plaintiffs to produce the person most knowledgeable 23 ("PMK") to testifY about the five deposition topics referenced above. This Court will 24 not order the plaintiffs to produce Ms. Brady, as it is within the discretion of the 25 corporate entity to select their Rule 30(b)(6) designee. See FED. R. CIV. P. 30(b)(6). 26 However, this Court finds it telling that Mr. Brady reported that his daughter would be 27 the PMK on the questions that he was unable to answer. During the reconvened Rule 28 -5- 12cv604·GPC(KSC) 1 30(b)(6) deposition, the defendants are limited to asking questions that are related to 2 the five deposition topics that are the subject of this Order. Having found that the defendants are entitled to additional deposition time, the 3 4 question now is how much additional time they should be granted. Rule 30(d)(1) 5 states, "[t]he court must allow additional time consistent with Rule 26(b)(2) if needed 6 to examine the deponent[.]" FED. R. CIV. P. 30(d)(I). After reviewing the transcript of 7 Mr. Brady's January 8, 2015, deposition, and in light ofthis Court's familiarity with 8 the parties and issues in this case, this Court ascertains that two hours should be 9 sufficient to complete the Rule 30(b)(6) deposition ofMIB. 10 In conclusion, the Court GRANTS the defendants' request to compel the 11 continued deposition ofMIB for a period of two hours. The plaintiffs are to produce 12 a witness who is the PMK to testifY about the five topics at issues in this Order. The 13 deposition is to take place no later than August 14.2015. or on a later date mutually 14 agreed upon by the parties prior to the Pre-Trial Conference. 4 The parties are to evenly 15 split the cost of the continued deposition, as both parties bear responsibility for the 16 events giving rise to this dispute. 5 17 II 18 / / 19 20 21 22 The parties may wish to postpone taking additional deposition testimony in light of Judge Curiel's recent Order granting summary judgment and the pending Motion for Reconsideration. [Doc. 305] The parties may do so without seeking leave of this Court. 4 The plaintiffs bear responsibility for inadequately preparing Mr. Brady to testifY on the 30(b)(6) topics noticed by the defendants. The defendants, however, 24 have repeatedly demonstrated throughout this case that they are unwilling to 25 compromise on even minor issues. The defendants have repeatedly filed voluminous motions (including those raising disputes that have already been decided by the Court, 26 see [Docs. 74, pp. 13-24; Doc. 161; Doc. 162]) that tax the plaintiffs' and this Court's resources. Were the defendants more inclined to compromise, the instant dispute 27 would likely have been resolved by the plaintiffs' offer to produce Ms. Brady to testifY 28 for one additional hour of Rule 30(b)(6) testimony. The Court concludes that the parties share equal responsibility for the instant dispute. 23 5 -6- 12cv604·GPC(KSC) 1 2 II. DEFENDANTS' MOTION TO COMPEL PRODUCTION OF Ms. BRADY'S HOME ADDRESS The defendants seek a Court Order compelling the plaintiffs to release the home 3 address of their daughter, Ms. Brady, ostensibly on the grounds that she testified that 4 she sold swimsuits through "pop-up shops" operated out of her home. [Doc. 194, p. 14] 5 6 The defendants have failed to show how Ms. Brady's specific street address is relevant 7 find Ms. Brady's privacy interests outweigh any possible benefit the defendants might to defending the litigation. Even if the information were relevant, this Court would 8 derive from the information. 6 This request is DENIED. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 III. DEFENDANTS' REQUEST FOR INFORMATION REGARDING LITIGATION FEES AND COSTS The defendants request a Court Order compelling the plaintiffs to produce the costs and fees they have incurred in this litigation since May 2014, and the manner in which the plaintiffs are billed by their counsel. [Doc. 194, p. 15] The defendants assert that this information is relevant and discoverable because the plaintiffs are seeking to recover their costs and fees in this litigation. Id. While the plaintiffs agree that they will seek recovery of their costs and fees should they prevail in the litigation, they assert that the defendants' request is premature. Id. at 32. This Court agrees with the plaintiffs. Under Rule 54(d) ofthe Federal Rules of Civil Procedure, claims for attorneys' fees in cases ofthis nature are made by motion following trial. FED. R. Cry. P. 54(d)(2)(A). At this stage in the litigation, the plaintiffs are not a prevailing party. After trial, if the plaintiffs prevail, they may then formally move to recover their costs and fees. The defendants may, at that time, apply to this Court to open discovery on the issue. This request is DENIED. This Court's decision is informed by defense counsel's admission at the Mandatory Settlement Conference that immediately before the conference, he and his 26 client representatives showed up unannounced at Ms. Brady's place of work - a retail 27 shop that is not yet open to the public. Counsel actually entered the space while the other men looked through the window and remained just outside the shop while Ms. 28 Brady was inside alone, until a male acquaintance of Ms. Brady's asked the men to leave. This conduct was confrontational and unnecessary. 6 -7- 12cv604·GPC(KSC) 1 IV. DEFENDANTS' REQUEST FOR MIB'S 2014 TAX RECORDS 2 A. Background 3 In their second set of Requests for Production served upon the plaintiffs on 4 November 20,2014, the defendants request MIB's tax records for 2013 and "records 5 of employment taxes relating to plaintiffs' daughter Patricia Brady." [Doc. 194-6, Ex. 6 E, pp. 71-72] The defendants objected to these requests on an unknown date on 7 relevance and privacy grounds. [Doc. 194, p. 17] The parties met and conferred on 8 January 8, 2015, but were unable to resolve their disagreement. [Doc. 194-10, Ex. I] 9 The defendants assert (and the plaintiffs do not dispute) that in May 2013, the 10 plaintiffs affirmed under oath to the U.S. Patent and Trademark Office ("USPTO") that 11 they continuously used their Ipanema and Girl from Ipanema trademarks. [Doc. 194, 12 p. 18] In purported contrast to their assertion of continued use to the USPTO, however, 13 the plaintiffs took the position in this litigation (at least initially) that they made no 14 sales of their trademarked products in 2013. See [Doc. 74, p. 5] (Joint Motion for 15 Determination of Discovery Dispute in which plaintiffs admit no sales of swimsuits 16 under the Ipanema mark in 2013). Changing course again, in November 2014, Ms. 17 Brady testified in a deposition that in fact she did sell a number of swimsuits and other 18 items on behalf ofMIB during the 2013 year. [Doc. 203, Ex. C, p. 40 (sealed)] She 19 testified that these sales were made to friends or friends offriends, in cash, and without 20 documentation, but that she reported the sales to her parents. Id. at 40-41. 21 When deposed in January 2015, Mr. Brady affirmed that Ms. Brady had sold a 22 number of items on behalf of MIB in 2013. [Doc. 203, Ex. B, pp. 13-14 (sealed)] 23 However, he testified that he had only learned of those sales since Ms. Brady's 24 deposition two months prior. Id. He further reported that MIB's 2013 tax return 25 reflects no sales of products for the 2013 year, and to date he has not filed an amended 26 tax return. [Doc. 208, Ex. A, p. 7 (sealed)] 27 Today, the defendants seek a Court Order compelling the plaintiffs to produce 28 MIB's 2013 tax records. [Doc. 194, pp. 17-24] The defendants assert that these tax -8- 12cv604-GPC(KSCj 1 records will show that the plaintiffs' statements to the USPTO were false, which will 2 support an unclean hands defense or, in the alternative, a suit to cancel the plaintiffs' 3 marks. Id. at 18-19. The plaintiffs respond that disclosure ofMIB' s tax records would 4 be contrary to public policy and irrelevant, as the defendants have obtained the 5 information they seek through Mr. Brady's sworn testimony. Id. at 34-36. Neither 6 party disputes that it is relevant that the Bradys reported no sales in their 2013 tax 7 returns. The question before this Court is whether the defendants are entitled to the 8 actual hard-copy 2013 tax return, or whether they should be limited to recovering the 9 information through Mr. Brady's deposition testimony. 10 The defendants also seek a Court Order compelling the plaintiffs to produce 11 employment tax records relating to Ms. Brady. [Doc. 194, pp. 17-24] Again, the 12 defendants assert that these records are relevant to the question ofwhether the plaintiffs 13 continued to use the challenged marks during 2013. Id. at 21. Ms. Brady testified at 14 her deposition in November 2014 that she sold a certain number of swimsuits and 15 dresses to friends and friends of friends. [Doc. 203, Ex. C, p. 40 (sealed)] She testified 16 that the sales were for cash and none were documented. /d. The defendants now 17 challenge whether Ms. Brady sold those products in 2013 as an employee of MIB, or 18 whether she made those sales in her own name. [Doc. 194, p. 21] They assert that 19 MIB' s employment tax records are relevant to determining the capacity in which Ms. 20 Brady conducted the sales. Id. The plaintiffs respond that Ms. Brady's status as an 21 employee versus independent contractor is irrelevant to whether the Ipanema product 22 name was in use in commerce in 2013. /d. at 19. 23 B. Discussion 24 The plaintiffs correctly point out that federal law recognizes a privilege that 25 protects tax returns from disclosure, although that privilege is not absolute. Premium 26 Servo Corp. V. Sperry & Hutchinson Co., 511 F.2d 225,229 (9th Cir. 1975). The Ninth 27 Circuit recognizes "a public policy against unnecessary public disclosure [that] arises 28 from the need, if the tax laws are to function properly, to encourage taxpayers to file -9- 12cv604-GPC(KSC) 1 complete and accurate returns." Id. (citations omitted). However, as now-ChiefJudge 2 Moskowitz of this District recognized, "[u]nder federal law, tax returns are generally 3 discoverable where necessary in private civil litigation. " Young v. United States, 149 4 F.R.D. 199,201 (S.D. Cal. 1993). 5 Interpreting Premium Service, courts in this Circuit have formulated a two-prong 6 test for deciding whether to compel the production of tax records in discovery. See, 7 e.g., Dunfee v. Truman Capital Advisors, LP, 12cvl925-BEN (DRB), 2013 WL 8 6118361 (S.D. Cal. Nov. 20, 2013); Zuniga v. Western Apartments, 13cv4637-JFW 9 (Jcx), 2014 WL 2599919 (C.D. Cal. March 25,2014). But see Advanced Microtherm, 10 Inc. v. Norman Wright Mech. Equip. Corp., 04cv2266-JW (PVT), at *1, 2009 WL 11 3320421 (N.D. Cal., Oct. 9, 2009) (rejecting two-prong test). To ensure a proper 12 balance between the liberal scope of discovery and the policy favoring the 13 confidentiality of tax returns, courts generally inquire, first, whether "the returns are 14 relevant to the subject matter of the action," and, second, whether "there is a 15 compelling need for the returns because the information contained therein is not 16 otherwise readily obtainable." A. Farber & Partners, Inc., v. Garber, 234 F.R.D. 17 186,191 (C.D. Cal. 2006). One court in this District has held that "[t]he party seeking 18 production has the burden of showing relevancy, and once that burden is met, the 19 burden shifts to the party opposing production to show that other sources exist from 20 which the information is readily obtainable." Dunfee, 2013 WL 6118361, at *4 21 (citations omitted). 22 Adopting this legal standard as interpreted by other courts, this Court finds that 23 the defendants have met their burden of demonstrating that MIB' s 2013 tax returns are 24 relevant. Whether or not MIB sold products under the challenged marks in 2013 bears 25 directly upon Grendene's defenses in this case, and MIB's tax return is probative 26 evidence ofthe company's 2013 sales. Furthermore, this Court finds thatthe plaintiffs 27 have not met their burden of showing that the information sought by the defendants is 28 sufficiently available from other sources. The plaintiffs urge the Court to find that the - 10- 12cv604·GPC(KSC) 1 information contained in the tax records may be found in Mr. Brady's sworn deposition 2 testimony - in which he admitted that MIB's 2013 tax returns reported no sales. 3 However, the defendants have successfully demonstrated numerous inconsistencies 4 between Mr. and Ms. Brady's testimony about the 2013 sales that cast doubt on Mr. 5 Brady's credibility or his ability to recall such details. 7 This Court concludes that the 6 sales information contained in MIB' s 2013 tax records is not readily obtainable from 7 other sources, and thus that production of these records to the defendants is 8 appropriate. 9 Under the broad scope of Rule 26, this Court also finds that the defendants have 10 shown the relevance ofMIB's 2013 employment tax records relating to Ms. Brady. 11 Ms. Brady testified that she sold numerous items under the Ipanema mark in 2013. 12 [Doc. 203, Ex. C, pp. 39-40] These are the only items that the plaintiffs claim were sold 13 under their mark during 2013. The defendants now challenge whether Ms. Brady sold 14 those items as an employee of her parents' company or in her own personal capacity. 15 Ms. Brady is not a named plaintiff in this case, nor is it alleged that she personally 16 owns the challenged trademarks. If Ms. Brady sold the Ipanema products as an 17 employee of her parents' company, it would tend to strengthen their argument that they 18 continuously used the Ipanema mark throughout 2013. Though Ms. Brady today 19 asserts that she is an employee ofMIB, see [Doc. 198, p. 2] the Court finds that the 20 circumstances of the 2013 sales (all cash, undocumented, perhaps not even reported to 21 her parents until November 2014) raise a doubt as to whether she was acting as an 22 agent of her parents' company at the time. The Court concludes that the employment 23 24 For example, Ms. Brady's deposition testimony implies that she reported the 2013 swimsuit sales to her parents early enough that they could have included the sales 26 in their 2013 tax returns. See [Doc. 203, Ex. C, p. 41 (sealed)]. Mr. Brady asserts that 27 he did not learn ofthe sales until after his daughter was deposed in November 2014. [Doc. 203, Ex. B, pp. 13-14 (sealed)] Mr. Brady notes that his daughter's recollection 28 ofthe relevant facts contradicts his own. Id. at 14 ("[S]he told me she believed she had informed me earlier, and I did not recall having been informed."). 25 7 - 11 - 12cv604-GPC(KSC) 1 records that the defendants seek are reasonably calculated to lead to the discovery of 2 relevant evidence on this issue, and orders the plaintiffs to produce them. 3 Accordingly, the defendants' request to compel production ofMIB's 2013 tax 4 records and 2013 employment tax returns relating to Ms. Brady is GRANTED. The 5 documents are to be produced no later than August 14. 2015. or on a later date 6 mutually agreed upon by the parties prior to the Pre-Trial Conference. 8 Information 7 contained in these returns that is unrelated to MIB's 2013 sales and Ms. Brady's status 8 as an employee with the company may be redacted. To further protect the parties' 9 privacy, these records may be designated confidential under the Court's Protective 10 Order. V. DEFENDANTS' REQUEST FOR COMMUNICATIONS WITH GABRIELA MORENO OR PRODUCTION OF COMPUTERS FOR 12 FORENSIC INSPECTION OR ADMISSION THAT DOCUMENTS HAVE BEEN DESTROYED 13 A. Background 11 14 15 16 17 18 19 20 21 22 23 24 Gabriela Moreno, the Social Media Manager for MIB, testified in a deposition that she communicated with Ms. Brady about the MIB business by email or phone. [Doc. 194-5, Ex. D, p. 20] When asked how many emails per day she sent to Ms. Brady, she responded, "from none to three." Id. at 21. In their Second Set of Requests for Production dated November 20, 2014, the defendants requested, inter alia, all communications with Gabriela Moreno concerning MIB and the marketing, sales, design and distribution ofthe plaintiffs' goods. [Doc. 194-6, Ex. E, p. 9] The plaintiffs indicate that they are willing to produce the communications, but the majority of the responsive communications between Ms. Brady and Ms. Moreno cannot be retrieved. See [Doc. 194, pp. 36-38] 25 26 The parties may wish to postpone taking additional deposition testimony in 27 light of Judge Curiel's recent Order granting summary judgment and the pending 28 Motion for Reconsideration. [Doc. 305] The parties may do so without seeking leave of this Court. 8 - 12 - 12cv604-GPC(KSC) 1 Plaintiff s counsel informed defense counsel in a telephonic meet-and-confer on 2 February 2, 2015, that Ms. Brady and Ms. Moreno were unable to locate any emails 3 responsive to the defendants' request. [Doc. 195, p. 5] On an unknown date after the 4 meet and confer, the plaintiffs produced three emails that Ms. Moreno reportedly 5 recently located. [Doc. 194, p. 26; Doc. 199, p. 2] Today, the plaintiffs take the position 6 that Ms. Brady and Ms. Moreno infrequently communicated by email, and instead 7 relied primarily on text messages and a smartphone application called WhatsApp. [Doc. 8 194, pp. 36-38] They assert that they are unable to retrieve the text or WhatsApp 9 messages today because the three phones that Ms. Brady and Ms. Moreno used to send 10 the messages have been destroyed, stolen or lost. Id. 9 Ms. Moreno states in a 11 Declaration dated February 20, 2015, that she "misspoke" when she testified in her 12 deposition that she communicated with Ms. Brady primarily by email. [Doc. 199, p. 2] 13 The defendants discount Ms. Moreno's Declaration testimony that she 14 "misspoke" in her deposition about sending up to three emails per day to Ms. Brady. 15 [Doc. 194, p. 26] They believe that Ms. Moreno and Ms. Brady exchanged far more 16 emails than the three that have been produced, and they urge this Court to order a 17 forensic examination of the plaintiffs' computer to retrieve any email messages that 18 have not been produced. Id. In the alternative, the defendants urge this Court to 19 compel the plaintiffs to admit that they failed to preserve any such communications "so 20 that Grendene may seek appropriate relief." Id. at 28. By contrast, the plaintiffs urge 21 this Court to accept the testimony of Ms. Brady and Ms. Moreno and deny the 22 23 Ms. Brady testified in a Declaration dated February 20, 2015, that she accidentally dropped the mobile phone she used to communicate with Ms. Moreno in a hot tub on October 7,2014. [Doc. 198, p. 2] Ms. Moreno testified in a Declaration dated February 20, 2015, that the first mobile phone she used to communicate with Ms. Brady was stolen on March 19, 2014 (an email to the New York Police Department regarding her stolen phone is attached as Exhibit B to the Declaration). [Doc. 199, p. 3] She states that the second mobile phone that she used to send these messages was lost in July 2014. Id. 9 24 25 26 27 28 - 13 - 12cv604-GPC(KSC) 1 defendants' Motion on the grounds that all relevant emails have been produced, and 2 all telephonic communications are unretrievable due to circumstances outside the 3 plaintiffs' control. /d. at 38. 4 5 B. Discussion Given the legitimate privacy and other interests at issue, absent "specific, 6 concrete evidence of concealment or destruction of evidence," courts are generally 7 cautious about granting a request for a forensic examination of an adversary's 8 computer. Advante Int 'I Corp. v. Mintel Learning Tech., 05-01022 JW (RS), 2006 WL 9 1806151, at *1 (N.D. Cal.June 29, 2006); JohnB. v. Goetz, 531 F.3d 448,460 (6th Cir. 10 2008). "[M]ere skepticism that an opposing party has not produced all relevant 11 information is not sufficient to warrant drastic electronic discovery measures." John 12 B., 531 F.3d at 460 (citing McCurdy Group, LLC v. Am. Biomedical Group, Inc., 9 Fed. 13 Appx. 822, 831 (10th Cir. 2001)). 14 This Court finds that the defendants have demonstrated more than just "mere 15 skepticism" that Ms. Brady and Ms. Moreno exchanged more than three relevant 16 emails during the months that Ms. Moreno worked as MIB's social media manager. 17 Not only did Ms. Moreno originally testify that she sent up to three emails per day to 18 Ms. Brady aboutMIB and the Ipanema brand, [Doc. 194-5, Ex. D, p. 21] but this Court 19 has also carefully reviewed the three emails that have been produced and concludes 20 that they suggest a larger conversation that took place over email. lO All three emails 21 were authored by Ms. Moreno; none of Ms. Brady's responses were produced. All 22 three emails were also sent in a span of 48 hours (two less than 35 minutes apart), and 23 24 10 For example, the Court has compared the three produced emails with an email 25 written by Ms. Moreno to the New York Police Department about her lost cell phone. [Doc. 199-3, Ex. B, p. 2] Ms. Moreno's email to the NYPD begins with a salutation 26 ("Hi,") and ends with her full signature. Id. Ms. Moreno's emails to Ms. Brady do not 27 contain these stylistic hallmarks, which suggest that the three emails produced in discovery may be part of an ongoing conversation rather than stand-alone messages. 28 - 14 - 12cv604·GPC(KSC) 1 this Court is skeptical that Ms. Moreno would send three emails in 48 hours and no 2 other emails for the rest ofthe time during her employment with MIB. 3 The plaintiffs have also failed to persuade this Court that their self-directed 4 efforts to retrieve and retain relevant emails have been effective. On February 5, 2015, 5 - more than two months after the defendants served their Second Set of Requests for 6 Production - plaintiffs' counsel notified defense counsel that no responsive emails had 7 been found. [Doc. 194-20, Ex. S, p. 2] Days later, however, plaintiffs' counsel 8 produced three responsive emails from Ms. Moreno's account. [Doc. 194,p.5,nA; 9 Doc. 208-1 (sealed)] This suggests that the plaintiffs' initial search methods were either 10 untimely or inadequate. Furthermore, the plaintiffs have not explained why Ms. Brady 11 was unable to find any record of Ms. Moreno's emails in her own account. Finally, the 12 Court is incredulous that all three cell phones that Ms. Brady and Ms. Moreno used to 13 communicate about the business have been lost, stolen or destroyed. 14 circumstances demonstrate that the plaintiffs have not reliably retained 15 communications relevant to this litigation or to the operations of their business. 16 These In conclusion, the defendants have met their burden of showing that the plaintiffs 17 have not produced all relevant communications between Ms. Brady and Ms. Moreno 18 regarding MIB and the Ipanema brand. If the plaintiffs had these documents in their 19 possession, the Court would compel them to produce them to the defendants. 20 However, this Court accepts the plaintiffs' representations that the bulk of these 21 communications cannot be retrieved at this time. This Court is now tasked with 22 identifYing a remedy for the situation that is not unduly burdensome or costly and 23 which furthers the goal of a "just, speedy, and inexpensive determination" of the action. 24 FED. R. Cry. P. 1. 25 The defendants have suggested two different remedies for the plaintiffs' failure 26 to produce the communications. [Doc. 194, p. 28] After reviewing the briefing 27 28 - 15 - 12cv604·GPC(KSC) 1 submitted by the parties, however, the Court is not persuaded that either remedy is 2 appropriate at this time. The defendants first suggest that the Court order a forensic 3 examination of Ms. Brady's computer. Id. The defendants have not established 4 through declaration or exhibit, though, that such an examination is likely to yield 5 emails that have been deleted or purged. The defendants have also not established that 6 the missing emails are so central to their defense of this case as to require the extreme 7 remedy of a forensic examination, as opposed to, for example, sanctions. ll The 8 defendants secondarily suggest that the Court compel the plaintiffs to admit that they 9 failed to preserve the communications in question "so that Grendene may seek 10 appropriate relief." Id. The defendants have not cited to any case law, however, to 11 support their assertion that the plaintiffs should have served Ms. Moreno with a 12 litigation hold notice. See id. at 27. 13 The plaintiffs have not responded to the defendants' arguments that Ms. Moreno was under legal obligation to preserve the 14 communications in question. Id. at 36-38. 15 This Court is also mindful that Judge Curiel's recent Order granting summary 16 judgment may render this dispute moot. Accordingly, at this time, the Court finds good 17 cause to DENY the defendants' request for relief. This ruling is made without 18 prejudice to the defendants filing supplemental briefing at a later point in the litigation, 19 if the dispute is no longer mooted by Judge Curiel's recent Order - even if the 20 subsequent filing falls outside ofthe 45-daytimeframethattypically governs discovery 21 disputes. See CRAWFORD CHAMBERS RULE V.A. Any additional briefing should be 22 submitted in the form of a supplemental Joint Motion that incorporates the position 23 statements of both parties. 24 25 To date, the defendants have only articulated a remote need for the emails. If, going forward, the defendants are able to demonstrate that the missing emails are 26 centrally relevant to their case, this Court's analysis may change. II 27 28 - 16 - 12cv604-GPC(KSC) VI. CONCLUSION 1 2 3 4 In conclusion, the Court GRANTS IN PART and DENIES IN PART the defendants' requests in this Joint Motion. In accordance with this Order: (1) The plaintiffs are to produce a person most knowledgeable to continue the 5 Rule 30(b)(6) deposition ofMIB for a total oftwo additional hours oftestimony, with 6 costs to be split equally between the parties. The defendants' request is GRANTED. 7 (2) The defendants' request for Ms. Brady's home address is DENIED. 8 (3) The defendants' request for the plaintiffs' attorneys fees, costs, and billing 9 arrangement is DENIED. 10 (4) The plaintiffs are to produce MIB's 2013 tax returns and 2013 employment 11 tax records relating to Ms. Brady, though the documents may be redacted and produced 12 under the Protective Order as outlined above. The defendants' request is GRANTED. 13 (5) The defendants' request to compel a forensic computer examination or an 14 admission that the plaintiffs destroyed relevant communications is DENIED 15 WITHOUT PREJUDICE to the parties supplying additional briefing on the issue, as 16 outlined above. 17 Subsequent production of witnesses and evidence should occur by August 14. 18 2015. though the parties may postpone this production by mutual agreement without 19 seeking the Court's approval in light of Judge Curiel's Order granting summary 20 judgment. [Doc. 295] Because the Court finds that both parties contributed to the 21 events giving rise to the Joint Motion, the Court declines to award attorneys' fees. 22 IT IS SO ORDERED. 23 24 Date: July 2.1 ,2015 25 Unite States Magistrate Judge 26 27 28 - 17 - 12cv604-GPC(KSC)

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