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Progress Solar Solutions, LLC v. Fire Protection, Inc.

United States District Court, E.D. North Carolina, Western Division

September 17, 2019

PROGRESS SOLAR SOLUTIONS, LLC, Plaintiff,
v.
FIRE PROTECTION, INC. dba FPI ENVIRONMENTAL; JOHN DOE, AS EXECUTOR OR ADMINISTRATOR OF THE ESTATE OF NORMAN STEPHEN VAN VALKENBURGH; JEFFREY VAN VALKENBURGH, AS TRUSTEE FOR THE NORMAN STEPHEN VAN VALKENBURGH IRREVOCABLE LIVING TRUST; MIKEL BILLS; MICHAEL D. LONG; and SOLAR MOD SYSTEMS, INC., Defendants.

          ORDER

          James E. Gates United States Magistrate Judge

         This case comes before the court on two motions: (1) a motion (D.E. 99) by plaintiff Progress Solar Solutions, LLC ("Progress Solar") to compel defendant Solar Mod Systems, Inc. ("SMS") and defendant Michael D. Long ("Long") to produce additional documents sought in Progress Solar's second set of document requests to them and for related relief; and (2) Progress Solar's motion (D.E. 114) for the same relief against defendant Mikel Bills ("Bills") relating to Progress Solar's second set of document requests to Bills. The motion seeking relief against SMS and Long is opposed and has been fully briefed, and the motion seeking relief against Bills is unopposed. For the reasons set forth below, the motions will be allowed in part and denied in part.

         I. BACKGROUND

         A. Progress Solar's Allegations and Claims

         In its second amended complaint, Progress Solar alleges as follows: This lawsuit arises from a contractual and business relationship between Progress Solar and defendant Fire Protection, Inc. d/b/a FPI Environmental ("FPI"). 2d Am. Compl. (D.E. 89) ¶¶ 2, 18. Progress Solar manufactures solar-powered portable light towers. Id. ¶ 15. It conducts sales in the United States and internationally. Id. ¶ 16. Most of Progress Solar's products sold internationally are for ultimate use by the United States military. Id. In 2012, FPI began operating as a dealer for Progress Solar's solar light towers and was under a dealer agreement to hold Progress Solar's confidential information in confidence. Id. ¶¶ 18, 19. Progress Solar pioneered a proprietary method for managing financing obligations for military contracts, and shared that information with FPI and Long, FPI's agent. Id. ¶¶ 27, 31. In 2015, Long was given significant access to Progress Solar's manufacturing facilities and signed, on behalf of himself and FPI, a nondisclosure agreement with Progress Solar that contained nondisclosure and noncompetition terms. Id. ¶¶ 32, 35-38.

         In January of 2016, Long formed SMS in order to manufacture competing portable solar light towers that relied on Progress Solar's proprietary information and trade secrets. Id. 40. Because Long was SMS's sole shareholder and decision maker, SMS was subject to the s nondisclosure and noncompetition terms of the nondisclosure agreement. Id. ¶ 41. During visits overseas as FPI's agent, Long made contact with Progress Solar's customers and encouraged them to place orders for SMS's competing portable solar light tower. Id. ¶ 43.

         FPI unfairly competed with Progress Solar by acquiring and taking advantage of its confidential and proprietary information and trade secrets. Id. ¶¶ 2, 40. Bills is a former employee i of FPI who now serves as an agent for SMS. Id. ¶¶ 9, 73. The remaining defendants are or were employees or officers of FPI or SMS who allegedly benefited from FPI's conduct or otherwise unfairly competed with Progress Solar. Id. ¶¶ 3-11, 53, 56.

         Progress Solar asserts claims for breach of the nondisclosure agreement, id. ¶¶ 74-79; trade secret misappropriation in violation of federal law, id. ¶¶ 80-97; misappropriation of proprietary information and trade secrets under North Carolina law, id. ¶¶ 98-106; misappropriation of proprietary information and trade secrets under Texas law, id. ¶¶ 107-18; unfair and deceptive trade practices under North Carolina law, id. ¶¶ 119-22; unfair competition, id. ¶¶ 123-29; tortious interference with business relationships and prospective economic advantage, id. ¶¶ 130-37; false advertising under federal law, id. ¶¶ 138-46; false association under federal law, id. ¶¶ 147-52; civil conspiracy, id. ¶¶ 153-56; disgorgement of profits, id. ¶¶ 157-60; unjust enrichment, id. ¶¶ 161-63; and injunctive relief, id. ¶¶ 164-70.

         The defendants other than the John Doe defendant have answered (D.E. 90; 91; 92; 93 at pp. 1-26; $4), denying the material allegations of Progress Solar's second amended complaint, and FPI and SMS have asserted counterclaims (D.E. 12; 93 at pp. 27-33). Progress Solar denies the material allegations of the counterclaims. D.E. 21, 98.

         B. Discovery to SMS and Long

         On 15 June, 2018, Progress Solar served on SMS and Long its second set of document requests. Progress Solar Reqs. to SMS (D.E. 99-2); Progress Solar Reqs. to Long (D.E. 99-4). SMS and Long served responses, including objections, to the second set of document requests on 16 August 2018. SMS Resps. (D.E. 99-3); Long Resps. (D.E. 99-5). The requests to both parties were nearly identical, as were the responses.[1] SMS and Long jointly produced a total of 184 documents on 8 October 2018, all with an "Attorneys' Eyes Only" designation pursuant to the Protective Order (D.E. 98) in this case. Progress Solar Mot. re SMS and Long (D.E. 99) 3 ¶ 4. Following conferral, SMS and Long continued to assert objections to 29 document requests (although they agreed to supplement answers to interrogatories Progress Solar had served on them). Id. at 4 ¶¶ 10-11. SMS and Long served supplemental responses to the document requests on 1 November 2018. SMS Supp. Resps. (D.E. 106-7); Long Supp. Resps. (D.E. 106-8). Progress Solar now moves to compel SMS and Long to produce additional documents in response to numerous document requests, to overrule several objections asserted by them, and to compel them to provide a log of any withheld documents. Progress Solar has adequately demonstrated that it attempted to resolve without court intervention the matters at issue on its motion relating to SMS and Long. Progress Solar Mot. re SMS and Long ¶¶ 10, 47; Fed.R.Civ.P. 37(a)(1); Local Civ. R. 7.1(c), E.D. N.C.

         C. Discovery to Bills

         On 15 June 2018, Progress Solar served on Bills its second set of document requests. Progress Solar Reqs. to Bills (D.E. 114-1). Bills served responses, including objections, to the second set of document requests on 16 August 2018. Bills Resps. (D.E. 114-2). Bills did not provide any documents in response to the requests, but indicated "relevant and otherwise non-objectionable documents" would be provided in response to a number of the requests. See, e.g., Bills Resps. Nos. 3-7, 10, 19-20, 23-34. As of the date of the motion, Bills had produced no documents. Progress Solar now moves to compel Bills to produce documents in response to numerous document requests, to overrule several objections asserted by him, and to compel him to provide a log of any withheld documents. Progress Solar has adequately demonstrated that it attempted to resolve without court intervention the matters at issue on its motion relating to Bills. Progress Solar Mot. re Bills (D.E. 114) ¶¶ 10, 47; Fed.R.Civ.P. 37(a)(1); Local Civ. R. 7.1(c), E.D. N.C.

         II. APPLICABLE LEGAL PRINCIPLES

         The Federal Rules of Civil Procedure enable parties to obtain information by serving requests for discovery on each other, including requests for production of documents. See generally Fed. R. Civ. P. 26-37. Rule 26 provides for a broad 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 district court has broad discretion in determining relevance for discovery purposes. Seaside Farm, Inc. v. United States, 842 F.3d 853, 860 (4th Cir. 2016); Watson v. Low country Red Cross, 974 F.2d 482, 489 (4th Cir. 1992). The party resisting discovery bears the burden of establishing the legitimacy of its objections. Eramo v. Rolling Stone LLC, 314 F.R.D. 205, 209 (W.D. Va. 2016) ('"[T]he party or person resisting discovery, not the party moving to compel discovery, bears the burden of persuasion.'" (quoting Kinetic Concepts, Inc. v. ConvaTec Inc., 268 F.R.D. 226, 243 (M.D. N.C. 2010))); Brey Corp. v. LQ Mgmt., L.L.C., No. AW-1 l-cv-00718-AW, 2012 WL 3127023, at *4 (D. Md. 26 Jul. 2012) ("In order to limit the scope of discovery, the 'party resisting discovery bears the burden of showing why [the discovery requests] should not be granted."' (quoting Clere v. GC Servs., L.P., No. 3:10-cv-00795, 2011 WL 2181176, at *2 (S.D. W.Va.3June2011))).

         Rule 34 governs requests for production of documents. A party asserting an objection to a particular request "must specify the part [to which it objects] and permit inspection of the rest." Fed.R.Civ.P. 34(b)(2)(C). When a party withholds information on the basis of a claim of privilege or protection as trial-preparation material pursuant to the work-product doctrine, it must expressly assert the claim in response to the particular discovery request involved. Fed.R.Civ.P. 26(b)(5)(A). In addition, the party must serve with its discovery responses a privilege log in conformance with Rule 26(b)(5)(A). See id.

         Rule 37 allows for the filing of a motion to compel discovery responses. See Fed. R. Civ. P. 37(a)(3)(B). It also requires that the moving party be awarded expenses when a motion to compel discovery is granted except when the movant filed the motion without attempting in good faith beforehand to obtain the discovery without court intervention, the opposing party's opposition to the discovery was substantially justified, or other circumstances would make an award of expenses unjust. Fed.R.Civ.P. 37(a)(5)(A). If a motion to compel is denied, expenses must be awarded to the person opposing the motion except when the motion was substantially justified or other circumstances would make an award of expenses unjust. Id. (a)(5)(B). If a motion to compel is allowed in part and denied in part, the court may apportion the expenses for the motion. Id. (a)(5)(C).

         III. PRODUCT DIFFERENCE AND TIME LIMITATION OBJECTIONS BY SMS, LONG, AND BILLS, AND PROGRESS SOLAR'S LOG REQUEST

         The court turns first to two objections to Progress Solar's document requests repeatedly asserted by SMS, Long, and Bills, and Progress Solar's request that each of these defendants produce a log of all documents it has withheld from production.

         A. Objection Based on Differences Between the ...


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