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Court Grants Performance Pulsation Control’s Motion to Compel in Part, Ordering Defendants to Produce Certain Requested ESI

Posted on March 23rd, 2018

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In Performance Pulsation Control, Inc. v. Sigma Drilling Technologies, LLC, No. 4:17-CV-00450, (E.D. Tex. Jan. 23, 2018), Performance Pulsation Control, Inc., (“PPC”) alleges that Justin Manley (“J. Manley”), a former employee, formed a competing company, Sigma Drilling Technologies, LLC (“Sigma”), to market and sell pulsation control products that he developed within the course of his employment with PPC. Specifically, PPC claims that J. Manley misappropriated PPC’s trade secrets and confidential information while acting as the Director of Sales and Marketing for PPC. As a result, PPC filed suit seeking declaration that it is the owner of such intellectual property, as well as injunctive relief and monetary damages for breach of contract, breach of fiduciary duty, misappropriation, and unfair competition.

In August of last year, the parties exchanged their Initial Rule 26 Disclosures. PPC contends that Sigma and its co-defendants failed to produce any of the materials they generally described in their disclosures or state when they intended to produce such materials. In September of 2017, PPC sent more than 850 Requests for Production to Defendants. On October 16, 2017, Defendants objected and responded to PPC’s requests.

Rule 37 of the Federal Rules of Civil Procedure allows a discovering party, on notice to other parties and all affected persons, to move for an order compelling disclosure or discovery. The moving party bears the burden of showing that the materials and information sought are relevant to the action or will lead to the discovery of admissible evidence. Once the moving party establishes that the materials requested are within the scope of permissible discovery, the burden shifts to the party resisting discovery to show why the discovery is irrelevant, overly broad, unduly burdensome or oppressive, and thus should not be permitted. Federal Rule of Civil Procedure 34 governs requests for production of documents, electronically stored information, and tangible things. Rule 34 requires responses to either state that inspection and related activities will be permitted as requested or state with specificity the grounds for objecting to the request, including the reasons. An objection to the entire request must state whether any responsive materials are being withheld on the basis of that objection. The federal rules follow a proportionality standard for discovery with the burden falling on both parties and the court to consider the proportionality of all discovery in resolving discovery disputes.

In its motion, PPC seeks an order compelling Defendants to produce four general categories of documents and tangible items from time periods before, during, and after J. Manley’s employment. Specifically, PPC seeks: (1) Emails and documents sent to or received from any “PPC Contact” and relevant third parties. (2) Emails and documents relating to PPC trade secrets, specific pulsation control products, and pulsation control generally. (3) Emails and documents relating to Defendants’ scope of work with PPC, information owned by PPC, and emails to and from PPC.m(4) Emails and documents relating to Defendants’ competitive business.

Defendants claim that, in response to Plaintiff’s 850 separate requests for production, they provided Plaintiff with written responses to the requests and objected where necessary to preserve the protected status of their trade secrets. As such, Defendants claim that the only documents they did not produce are: (a) documents they do not possess; and (b) Defendants’ proprietary and confidential trade secrets, the discovery of which is protected under substantive Texas law.  The Court ruled as follows:

As to PPC request 1: The Court finds that to the extent Defendants have not already done so, they must produce documents sent to or received from any “PPC Contact” or “third party” as limited in the conference letter. However, the Court narrows such production to documents and communications dated during and after the time of Defendants’ employment.

As to PPC request 2: The Court finds production of such information and documents is warranted, with the exception that it is narrowed to documents and communications dated during or after Defendants’ employment with PPC. Further, if Defendants are concerned about the preservation of such information, the Court reminds Defendants that it can produce information subject to the Court’s protective order labeling documents ‘Attorneys Eyes Only.’

As to PPC request 3: The Court finds that to the extent that Defendants have not produced such information, they must do so. However, any production is limited to information dated or obtained during and after Defendants’ employment with PPC. Further, to the extent Defendants are concerned that any information is confidential or relates to any trade secrets, the Court reiterates Defendants’ ability to produce any information pursuant to the Court’s Protective Order and/or in a reasonably redacted format.

As to PPC request 4: The Court finds to the extent Defendants have not already done so, they must produce all emails and documents related to Defendants’ formation documents, corporate governance documents, revenues and net profits earned, employees, agreements with third parties, contacts, and types of work. However, such production is limited to during and after Defendants’ employment with PPC.

 

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