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North American Lubricants Company v. Shane A. Terry

November 18, 2011


The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge


Presently before the court is defendants' motion to compel further initial disclosures and further response to defendants' Interrogatory No. 1, which was filed on October 27, 2011 and came on regularly for hearing on November 17, 2011. (Dkt. No. 31.)

On November 10, 2011, for reasons discussed below, defendants filed their statement regarding the discovery disagreement pursuant to E.D. Cal. L.R. 251(d). (Dkt. No. 33.) Plaintiff failed to meaningfully participate in the creation of the joint statement regarding the discovery disagreement and failed to file its own timely statement. Instead, plaintiff filed an opposition brief and declaration six days after the joint statement was due (see E.D. Cal. L.R. 251(a)) and one day before the hearing on this matter. (Dkt. No. 36.) Accordingly, plaintiff's opposition will be stricken and disregarded.

At the hearing, Matthew Ruggles and Eric Ostrem appeared on behalf of defendants. Plaintiff's counsel failed to appear at the hearing. Having reviewed the papers in support of the motion and the court's record in this matter, and for good cause appearing, the court now issues the following order.


Facts Giving Rise to the Litigation

The background facts are taken from the operative complaint filed on May 13, 2011. (Dkt. No. 1.) Plaintiff North American Lubricants Company ("NALC") is a manufacturer and wholesale distributor of lubricating oils, primarily passenger car motor oil in the "do it for me" market. (See Complaint, Dkt. No. 1 ["Compl."] ¶ 31.) NALC services its customers through a network of authorized blenders, distributors and/or dealers of its products and services. (Compl. ¶ 44.) These customers market, sell, install, and maintain plaintiff's products for their customers, but these entities may also market, sell, install, and maintain products manufactured by plaintiff's competitors. (Id.)

Defendant Shane Terry was the president of NALC from November 2005 until he resigned on January 26, 2011 and formed a new company, defendant United Petroleum Company, LLC ("UPC"), which offers products and/or services that compete with NALC. (Compl. ¶¶ 8, 45, 45, 47, 49.) At least two of NALC's former national account sales managers, defendants Goldman and Hensing, also joined UPC in the first half of 2011. (Compl. ¶¶ 10, 11.) The remaining defendants are other executives, members, and/or directors of UPC. (Compl. ¶¶ 13-16.)

In this action, NALC alleges that defendants committed a variety of wrongful conduct, including defendants Terry, Goldman, and Hensing accessing and transmitting NALC's confidential information to one or more of defendants before leaving their employment with NALC; soliciting NALC's employees and customers; using NALC's customer contact information, customer account information, and sales and pricing data; and using logos, advertising, and trade dress for UPC products that are confusingly similar to NALC's trademark and advertising. (Compl. ¶¶ 47-48, 59, 99-101, 109, 116.) NALC asserts the following causes of action: (1) violation of the Computer Fraud and Abuse Act; (2) violation of the Arizona Trade Secrets Act; (3) misappropriation/conversion; (4) breach of contract; (5) breach of implied covenant of good faith and fair dealing; (6) tortious interference with contract; (7) unfair competition (Lanham Act sections 32 and 43(A)); (8) unfair competition (common law); (9) unfair business practices; and (10) breach of fiduciary duty by corporate officers/managers. (Compl. ¶¶ 94-172.)

Facts Related to the Discovery Dispute/Meet-and-Confer Efforts On October 27, 2011, defendants filed the instant motion to compel. Defendants seek an order compelling NALC to supplement its initial disclosures and serve an amended response to Defendants' Interrogatory No. 1. Defendants also request an award of sanctions in the amount of defendants' attorneys' fees related to bringing this motion.

The parties' meet-and-confer efforts were detailed in defendants' statement and the Declaration of Eric R. Ostrem. (Dkt. Nos. 33, 34.) After NALC served its response to defendants' Interrogatory No. 1 on October 4, 2011, defendants sent a detailed letter to NALC's counsel on October 13, 2011, explaining the alleged deficiencies in NALC's response and requesting that NALC amend its response. (See Declaration of Eric R. Ostrem, Dkt. No. 34 ["Ostrem Decl."] ¶¶ 3-4, Ex. B.) NALC did not respond to this letter. (Ostrem Decl. ¶ 4.) Despite having agreed to exchange initial disclosures on September 28, 2011, NALC did not do so until October 21, 2011. (Ostrem Decl. ¶¶ 5-6, Ex. C.) After reviewing the disclosures, on October 24, 2011, defendants again sent NALC a detailed letter outlining the alleged deficiencies in the initial disclosures and requesting a response from NALC by close of business October 27, 2011 with respect to both the initial disclosures and Interrogatory No. 1. (Ostrem Decl. ¶ 7, Ex. D.) Defendants again received no response from NALC, prompting them to file a Notice of Motion to Compel after close of business on October 27, 2011. (Ostrem Decl. ¶ 8.)

It was only after the motion to compel was noticed that NALC responded via e-mail and a telephonic conference was scheduled for November 2, 2011. (Ostrem Decl. ¶¶ 8-9, Ex. E.) During the phone conference, NALC's counsel agreed to review NALC's responses and disclosures and get back to defendants regarding whether NALC would amend or supplement them. Defendants' counsel reminded NALC's counsel that the joint statement regarding the discovery dispute was due on November 10, 2011. (Ostrem Decl. ¶ 9, Ex. F.) On November 7, 2011, after hearing nothing further from NALC's counsel, defendants e-mailed NALC's counsel asking for a response and reminding her of the upcoming deadline. (Ostrem Decl. ¶ 10, Ex. G.) On November 8, 2011, defendants' counsel followed up with two phone calls, received no answer, and left voicemails. That evening, he sent NALC's counsel another e-mail, to which she responded that she had been traveling and would respond the following day. (Ostrem Decl. ¶ 11, Exs. H and I.)

On November 9, 2011, NALC's counsel sent a letter to defendants' counsel at 4:17 p.m. outlining NALC's position on the discovery dispute. Defendants' counsel then called NALC's counsel, but the parties were unable to resolve their disagreement during the teleconference or in the course of further e-mail correspondence. (Ostrem Decl. ¶ 12, Exs. J, K, and L.)

On November 10, 2011, the day the joint statement was due, the parties exchanged early drafts of the joint statement. Defendants' counsel had informed NALC's counsel that he needed to leave the office at 6 p.m. At 4:51 p.m., NALC's counsel sent defendants' counsel an unsigned version with red-line edits. The accompanying e-mail stated: "I haven't had a chance to revise but if you insist on filing tonight this will have to do and we'll deal with corrections before the hearing." Defendants' counsel reviewed that version, and at 5:38 p.m., e-mailed a signed version of the joint statement, with minor edits, to NALC's counsel for her signature. (Ostrem Decl. ΒΆ 13, Exs. M, N, and O.) After that, defendants' counsel did not hear from NALC's counsel until 9:18 p.m., when she asked what happened and stated that she had had to leave for another meeting. She subsequently wrote that she would try to get to a computer, but that she was comfortable with what she had given defendants' counsel earlier that afternoon. Finally, at 9:55 p.m., NALC's counsel indicated that it was "simply too late in the evening" ...

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