Edgenet Inc v. The Home Depot USA Inc et al
Filing
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ORDER signed by Judge J P Stadtmueller on 9/16/09 denying 10 plaintiff's Motion for Expedited Discovery, and denying 12 plaintiff's Motion for Leave to File 3-Page Reply in Support of its Motion for Expedited Discovery. (cc: all counsel) (nm)
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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN
____________________________________________ E D G E N E T , INC, Plaintiff, v. H O M E DEPOT U.S.A., INC. and JAMES MUSIAL, Defendants. ____________________________________________ C a s e No. 09-CV-0747
ORDER
O n July 31, 2009, plaintiff Edgenet, Inc. ("Edgenet") brought a complaint a g a in s t defendants Home Depot U.S.A., Inc. ("Home Depot") and James Musial ("M u s ia l") raising seven different claims stemming from the defendant's alleged "theft a n d misuse" of the plaintiff's intellectual property. (Pl.'s Compl. 1). After stipulating to an extension of time for which defendants could answer the plaintiff's allegations (D o c k e t #5), on August 31, 2009, Edgenet brought a motion for expedited discovery p u rs u a n t to Fed. R. Civ. P. 26(d) and Civil L.R. 7.4. The defendants oppose the m o tio n in question.1 F e d . R. Civ. P. 26(d) provides that "except in categories exempted from initial d is c lo s u re [s ]...o r when authorized under these rules or by order or agreement of the
On Septem b e r 10, 2009, Edgenet subm itte d to this court a m o tio n for leave to file an additional three p a g e reply brief to Hom e Depot's response, together with the proposed reply brief, asking this court to forgive R u le 7.4's prohibition against reply briefs. Upon exam in in g the reply brief, this court concludes that m u c h of E d g e n e t's reply either parrots claim s m a d e in its original brief or discusses legal issues, including Edgenet's f i r s t attem p t s to discuss the legal standards for expedited discovery, that could easily have been included its o r ig in a l m o tio n . As such, the court will proceed based on the argum e n ts m a d e in Edgenet's m o tio n and in th e defendants' response.
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p a rtie s , a party may not seek discovery from any source before the parties have c o n fe r re d as required by Rule 26(f)." Here, the parties have not had a Rule 26(f) c o n fe r e n c e , nor has there been any scheduling order. As such, Edgenet may not c o m m e n c e discovery without the consent of the defendants or an order from this c o u rt. See Fed. R. Civ. P. 26(f)(1); Fed. R. Civ. P. 16(b)(2). No standard for the court's authority to allow expedited discovery exists within th e rules or its accompanying notes. Courts are split as to whether a party seeking e xp e d ite d discovery must satisfy a "good cause" or "reasonableness" standard or th e more stringent standard set forth in Notaro v. Koch, 95 F.R.D. 403, 405 (S .D .N .Y. 1982), which mirrors the standard required for obtaining a preliminary in ju n c tio n . See generally Sheridan v. Oak Creek Mortgage, LLC, 244 F.R.D. 520, 5 2 1 (E.D. W is . 2007). The reasonableness standard allows expedited discovery w h e n the need for the expedited discovery outweighs the prejudice to the responding p a rty, based on the "entirety of the record to date and the reasonableness of the re q u e s t in light of the surrounding circumstances." 6 James W m . Moore Moore's F e d e ra l Practice § 26.121 (2009). The Notaro standard requires the movant
d e m o n s tra te four elements to help the court decide whether to allow an expedited d is c o ve ry schedule: (1) irreparable injury; (2) some probability of success on the m e rits ; (3) some connection between the expedited discovery and the avoidance of irre p a ra b le injury; and (4) some evidence that the injury that will result without e xp e d ite d discovery is greater than the injury a party will suffer if the expedited relief is granted. Id. -2-
T h is district has applied the Notaro test in cases in which a party claims that "w ith o u t expedited discovery and the resulting earlier trial they [would] suffer irre p a ra b le damage."2 Centrifugal Acquisition Corp. v. Moon, No. 09-C-327, 2009 U .S . Dist. LEXIS 56170, at *2-3 (E.D. W is . May 6, 2009) (citing Notaro, 95 F.R.D. a t 405). Here, both parties acknowledge that the basis for Edgenet's motion is the a lle g e d "irreparable harm" that would result without expedited discovery. (Pl.'s Mot. ¶ 3); (Def's Resp. 2). Given that, coupled with the failure of Edgenet to cite any re le va n t authority in their motion to the court, the Notaro test will be applied here. The plaintiff broadly asserts that, "based on the facts set forth in" their motion 3 a n d in an affidavit signed by Edgenet's president, irreparable harm will arise without a n expedited discovery schedule. In its motion, Edgenet notes that Home Depot's in te n tio n to "cutover" from the plaintiff's service to "HomeDepotLink" on September 4 , 2009, and Home Depot's disclosure of Edgenet's intellectual property to third p a rtie s requires advancing the timeline for discovery in this case. (Pl. Motion at 2). In the accompanying affidavit, Edgenet President Tom Frederick explains that Home
The Centrifugal Acquisition Corp. court noted in a footnote that where there is a "pending m o tio n for a prelim in a r y injunction" the reasonableness test should be used, otherwise the prelim in a r y injunction analysis f a c to r s would be used "to determ in e the propriety of an expedited discovery request." Centrifugal Acquisition C o r p . , 2009 U.S. Dist. LEXIS 56170, at *4, n1. Here, as in Centrifugal Acquisition Corp., there is no pending m o tio n for a prelim in a r y injunction, and, as such, the Notaro test is appropriate. E d g e n e t also attem p t s to base the claim s in its m o t io n on everything that the plaintiff asserted in its o r ig in a l com p la in t (Docket #1). However, the plaintiff brings this m o tio n under Civil L.R. 7.4 for "Expedited N o n - D is p o s itiv e Motion Practice." Civil L.R. 7.4 lim its the num b e r of pages for an expedited m o tio n to three p a g e s and any accom p a n yin g affidavits to two pages, allowing parties to seek non-dispositive relief in a r e la t iv e ly speedy m a n n e r . To the extent that the plaintiff cites to its "com p la in t , " a docum e n t of over fifty p a g e s , to substantiate its claim s , the court sees this as an "end run" around the strictures of Civil L.R. 7.4, a n d , as such, any assertions not within the m o v a n t 's m o t io n or affidavit will not be entertained by this court. Efforts to "stretch the lim it s " of Civil L.R. 7.4 are m e t with resistance by this district's courts. See India B r e w in g , Inc. v. Miller Brewing Co., 237 F.R.D. 190, 195 (E.D. W is . 2006)
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D e p o t informed its suppliers on July 8, 2009, that on September 4, 2009, the d e fe n d a n t's suppliers must cease using Edgenet to provide product data to Home D e p o t and instead must use HomeDepotLink, the defendant's own product. (Exhibit A Pg 1). Furthermore, Frederick attests to his fears that the defendant's product was d e ve lo p e d by misappropriating Edgenet's intellectual property and, in implementing its new product, Home Depot is disclosing or will disclose Edgenet's knowledge base to third parties, including the plaintiff's competitors. (Exhibit A Pg. 2). In this case, based on an examination of the Notaro elements, Edgenet has n o t demonstrated a need for expedited discovery. Elements one and three weigh in favor of the non-moving party. Edgenet's motion does not indicate an irreparable in ju ry will result without expedited discovery. The date for the defendant's Even if
re q u ire m e n t that its suppliers begin using HomeDepotLink has passed.
e x p e d ite d discovery would have somehow alleviated the harm imposed on S e p te m b e r 4, 2009 a fact that is far from intuitive based on the plaintiff's motion there is nothing that expedited discovery can now do to prevent that harm. M o re o ve r, Edgenet has not shown that expedited discovery will prevent the harms is o la te d in the plaintiff's motion from occurring. The "implementation" of Home D e p o t's product did not begin on September 4, 2009. Even if all of the plaintiff's
a lle g a tio n s are true, the harms proposed by Edgenet in its motion to the court do not s te m primarily from the mere "use" of Home Depot's product by its suppliers. R a th e r, the alleged harms would have resulted from the disclosure of Edgenet's in te lle c tu a l property when Home Depot was implementing HomeDepotLink, harms, -4-
th a t while potentially actionable, are ones that expediting the discovery process will n o t help avoid. Additionally, Edgenet has not sought a preliminary injunction or a te m p o ra ry restraining order against Home Depot and, as such, the claim to expedite d is c o v e ry is premature, as Edgenet's end legal goal, as of now, is not to take e m e rg e n c y action to prevent the harms complained of in its motion. See Dimension D a ta N. Am., Inc. v. NetStar-1, Inc., 226 F.R.D. 528, 532 (E.D.N.C. 2005) (holding th a t a plaintiff who had not yet filed a temporary restraining order or a motion for p re lim in a r y injunction, "setting out in detail the areas in which discovery is necessary in advance of a determination of preliminary injunctive relief," was not entitled to e xp e d ite d discovery). Finally, this court finds the plaintiff's assertion regarding the u rg e n c y of the matter to border on the incredulous given their stipulation 4 to an e xten s io n of time for the defendants to file an answer to the complaint. (Docket #5). T h e fourth Notaro factor whether the injury that will result without expedited d is c o ve ry is greater than the injury the party will suffer if the expedited relief is g r a n te d weighs heavily in the defendants' favor. Edgenet's first proposed request fo r documents asks for nearly every document related to the claim at hand, and E d g e n e t's proposed order to the court would require the defendants to begin p ro d u c tio n within seven days of service with complete production within twenty-one d a y s of service. As this district has noted, courts have an obligation to protect
W h ile Edgenet stated in their stipulation that it was m a d e "without prejudice to its right to seek e x p e d ite d discovery," the plaintiffs still agreed to prolong the litigation. It is within this court's discretion to find t h a t such an action belies the basis for the current m o t io n regardless of Edgenet's attem p t e d condition on its s t i p u la t i o n .
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d e fe n d a n ts from unfairly expedited discovery. Centrifugal Acquisition Corp., 2009 U .S . Dist. LEXIS 56170 at *3. Here, given the broad scope of Edgenet's discovery re q u e s ts and the short time frame in which the defendants would be required to o b lig e the plaintiff's requests, this court can conclude that the injury resulting from e xp e d ite d relief outweighs any benefits received from the process. As the remaining Notaro element "some probability of success on the merits" was discussed only in the most broad terms by the plaintiff in the present motion, t h e court reasons that expedited discovery is not warranted at this stage of the l it i g a t i o n . Accordingly, IT IS ORDERED that plaintiff's Motion for Expedited Discovery (Docket #10) b e and the same is hereby DENIED. IT IS FURTHER ORDERED that plaintiff's Motion for Leave to File 3-Page R e p ly in Support of its Motion for Expedited Discovery (Docket #12) be and the s a m e is hereby DENIED. D a te d at Milwaukee, W is c o n s in , this 16th day of September, 2009. BY THE COURT:
J .P . Stadtmueller U .S . District Judge
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