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acknowledging further that "there is little binding authority on the issue of expedited discovery in the Sixth Circuit, and district courts are split on the appropriate standard"
Summary of this case from Johansen v. Blue Raven Solar, LLCOpinion
Case No. 1:14-cv-581
09-12-2014
LUXOTTICA RETAIL NORTH AMERICA, INC., Plaintiff, v. VISION SERVICE PLAN, Defendant.
Magistrate Judge Stephanie K. Bowman
ORDER: (1) OVERRULING DEFENDANT'S OBJECTIONS (Doc. 15); AND (2) DENYING NON-PARTY MICHAEL HANSEN'S MOTION FOR PERMISSION TO FILE A RESPONSE (Doc. 22)
This civil action is before the Court on Defendant's Objections to the Magistrate Judge's Order (Doc. 15) and the parties' responsive memoranda (Docs. 18, 20). The Court stayed the Magistrate Judge's Order pending resolution of Defendant's Objections and ordered expedited briefing. The matter is now ripe for decision.
I. RELEVANT BACKGROUND
Plaintiff Luxottica Retail North America, Inc. ("LRNA") brings suit against Defendant Vision Service Plan ("VSP") alleging claims for violation of the Ohio Uniform Trade Secrets Act, tortious interference with business relations, conversion, unjust enrichment, common law unfair competition, and injunctive relief. (Doc. 1). This action stems from VSP's September 2013 hiring of Michael Hansen as its President of Global Retail Development while he was employed by LRNA as its Senior Vice President for Strategic Environments. (Id. at ¶¶ 2, 31).
A. Facts as Alleged by LRNA
LRNA is an indirect, wholly-owned subsidiary of Luxottica Group S.p.A. ("Luxottica Group"), a publicly traded company based in Milan, Italy. (Doc. 1 at ¶ 19). Luxottica U.S. Holdings Corp. is the domestic owner of LRNA and Luxottica USA LLC ("Luxottica USA"). (Id. at ¶ 22). Luxottica Group companies design, manufacture, distribute, and market prescription frames and sunglasses. (Id. at ¶ 19). LRNA owns and operates eyewear retailers such as LensCrafters, Pearle Vision, Sears Optical, Target Optical, Sunglass Hut, and ILORI (Id. at ¶ 20). LRNA also owns EyeMed Vision Care, LLC ("EyeMed"), which provides vision care benefits to approximately 35 million members in the United States. (Id. at ¶ 21). Luxottica USA is a wholesale seller of eyewear frames. (Id. at ¶ 22).
VSP designs and sells managed vision care plans. (Doc. 1 at ¶ 24). VSP maintains a large network of practicing optometrists who offers services to members of VSP benefit plans, but VSP does not currently operate retail stores. (Id. at ¶¶ 24, 27). VSP also owns Altair Eyewear and Marchon, wholesale sellers of eyewear. (Id. at ¶ 26). Altair, Marchon, and Luxottica USA are competitors in the wholesale eyewear market. (Id. at ¶ 27). VSP and EyeMed are competitors in the market for vision care plans. (Id. at ¶ 25).
In January 2014, VSP announced the creation of a Global Retail Development Division, with Hansen as its President, to develop retail stores and compete with LRNA. (Doc. 1 at ¶ 27). Hansen worked for LRNA and affiliated companies for over twenty-five years. (Id. at ¶ 31). In July 2013, Hansen communicated with several VSP employees about a position with VSP. (Id. at ¶¶ 45-53, Ex. D). Hansen spoke with VSP Chief Executive Officer Rob Lynch by telephone on August 7, 2013, and met in person with Lynch and several other VSP executives the following week. (Id. at ¶¶ 57-61, Ex. E). Hansen signed a non-disclosure agreement before his meeting with VSP executives on August 12, 2013. (Id. at ¶¶ 58-60, Exs. G, H). Following the meeting, Hansen sent emails to Lynch and Kate Renwick-Espinosa, VSP's Chief Marketing Officer, in which Hansen referenced VSP's decision to enter the retail market and expressed interest in joining VSP. (Id. at ¶¶ 62-64, Exs. I, J).
Hansen officially accepted the newly-created position of President of Global Retail Development with VSP on September 5, 2013. (Doc. 1 at ¶ 67, Exs. K, L). Hansen did not inform LRNA that he accepted a position with VSP; rather, he told LRNA that he wished to retire because of health problems and a desire to spend more time with his family. (Id. at ¶¶ 70-72). Hansen remained in touch with VSP executives during the pendency of his employment with LRNA, including forwarding a November 1, 2013 email to Lynch, Renwick-Espinosa, and another VSP executive. (Id. at ¶ 82, Ex. N).
In November 2013, Hansen emailed an LRNA document to his personal email account and saved approximately 200 files from his LRNA-issued laptop to an external hard drive. (Doc. 1 at ¶¶ 87-91, Ex. P; Doc. 18, Ex. 1 at ¶¶ 11-13). Some of these files contained LRNA and EyeMed strategic plans, finances, retail strategies, business plans, sales and profitability figures, and other information. (Doc. 1 at ¶¶ 89-91; Doc. 18, Ex. 1 at ¶ 13). Hansen's final day of employment with LRNA was December 2, 2013. (Doc. 1 at ¶ 95). Before signing a separation agreement that day, Hansen forwarded an email and attached document to his personal email account that contained information regarding LRNA's retail stores. (Id. at ¶ 95, Ex. Q).
Hansen began his employment with VSP in the first week of January 2014. (Doc. 1 at ¶ 104). Hansen attended a management team meeting on January 6, 2014 with several other VSP executives to discuss strategic planning for the year. (Doc. 1 at ¶ 106, Ex. R at ¶ 7; Doc. 15, Ex. 2 at ¶ 2). During the meeting, Renwick-Espinosa made a comment regarding the difficulty of finding an effective process for preparing an institutional strategic plan. (Doc. 15, Ex. 2 at ¶ 2). On January 8, 2014, Hansen emailed Renwick-Espinosa two documents that he obtained during his tenure at LRNA. (Doc. 1, Ex. R at ¶¶ 8-10). These attachments were named "2014 Luxottica shared service 3-year Planning templates" and "2014 Luxottica shared service 3-year Plans actuals." (Doc. 15, Ex. 2 at ¶ 6, Ex. 4 at ¶ 4). Renwick-Espinosa forwarded Hansen's email and the two attached documents to Lynch on January 14, 2014. (Doc. 15, Ex. 2 at ¶ 9, Ex. 3 at ¶ 2, Ex. 4 at ¶ 5).
In sworn affidavits, Renwick-Espinosa and Lynch provided that they only briefly reviewed Hansen's email and the attachments, and believed them to be blank templates for a strategic planning process Hansen used at LRNA. (Doc. 15, Ex. 2 at ¶ 6, Ex. 3 at ¶ 5). Further, both stated that they did not view the email or attachments again. (Id., Ex. 2 at ¶ 6, Ex. 3 at ¶ 5).
B. Related Action Against Hansen
LRNA filed suit against Hansen in this Court on April 29, 2014, seeking only injunctive relief to preserve its position before submitting its claims to arbitration pursuant to an arbitration clause allegedly entered into by the parties. Luxottica Retail North America, Inc. v. Hansen, 1:14-cv-346 (S.D. Ohio). On May 13, 2014, LRNA filed a motion for a temporary restraining order and preliminary injunction (Doc. 10) and a motion for expedited discovery (Doc. 11). Pursuant to an agreement between the parties, the Court entered an Agreed Order granting LRNA's motion for temporary restraining order and preliminary injunction and motion for expedited discovery. (Doc. 15). This enjoined Hansen from using or disclosing "strategic plans, retail strategies, performances metrics, revenue projections, business methods, sales information, profitability data, costs, margins, and other trade secrets and confidential information" obtained during his employment with LRNA and enjoining Hansen from using or relying upon such information in developing optical retail stores for VSP. (Id. at 1-2). Hansen also agreed to respond to written discovery requests within twenty-one days, submit to a deposition within forty-five days, and produce his personal electronic devices, including computers and external hard drives, for forensic imaging within fourteen days. (Id. at 3).
Citations in this subsection are to the record in case number 1:14-cv-346.
The parties entered a stipulation governing the forensic imaging process and a protective order. (Doc. 16). Pursuant to the Agreed Order granting the preliminary injunction and expedited discovery, Hansen produced his personal computer, iPad, and a zip drive for forensic analysis by an independent expert. (Id. at 2). LNRA subsequently propounded written discovery requests and Hansen submitted to thirteen hours of deposition testimony across two days. (Doc. 18 at 3-4).
C. LRNA's Motion for Expedited Discovery
LRNA filed this new and separate action against VSP on July 14 and moved for expedited discovery regarding its claim for injunctive relief on August 8, 2014. (Doc. 6). Specifically, LRNA sought to serve expedited written discovery requests, to require VSP to produce a forensic image of any relevant electronic devices, and to depose VSP executives and corporate representatives in Ohio. (Id. at 6). The Magistrate Judge held a telephone conference on August 19, 2014 to hear oral argument on the motion. Subsequently, the Magistrate Judge granted the motion for expedited discovery on the condition that the parties submit a joint proposed Protective Order to the Court within fourteen days. (Doc. 13). The Magistrate Judge deferred setting a location for the depositions after the parties indicated they would confer on the matter.
VSP filed its Objections to the Magistrate Judge's Order and Request for Stay on September 3, 2014. (Doc. 15). LRNA submitted its proposed Protective Order the next day. (Doc. 17). The Court stayed the Magistrate Judge's Order and expedited briefing on VSP's Objections. The matter is now ripe for decision.
II. STANDARD OF REVIEW
The Order at issue involves a non-dispositive matter. Therefore, the Court applies the "clearly erroneous" or "contrary to law" standard of review set forth in Rule 72(a) in evaluating the decision of the Magistrate Judge. A Magistrate Judge's factual finding is "clearly erroneous" only when, after reviewing the evidence, the court "is left with the definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948). A court will overturn a Magistrate Judge's legal conclusions only where those conclusions "contradict or ignore applicable precepts of law, as found in the Constitution, statutes, or case precedent." Gandee v. Glaser, 785 F. Supp. 684, 686 (S.D. Ohio 1992).
Pursuant to Rule 26(d), the Court may order discovery prior to the Rule 26(f) conference. Expedited discovery may be granted upon a showing of good cause, which the moving party bears the burden of demonstrating. Best v. AT&T, Inc., No. 1:12-cv-564, 2014 WL 1923149, at *1 (S.D. Ohio May 14, 2014). "Good cause may be found where the need for expedited discovery, in consideration of the administration of justice, outweighs the prejudice to the responding party." Arista Records, LLC v. Does 1-15, 2:07-cv-450, 2007 WL 5254326, at *2 (S.D. Ohio May 17, 2007). Good cause is often found in cases alleging infringement, unfair competition, or where evidence may be lost or destroyed with time. Caston v. Hoaglin, No. 2:08-cv-200, 2009 WL 1687927, at *2 (S.D. Ohio June 12, 2009). The scope of the requested discovery is also relevant to a good cause determination. Russell v. Lumpkin, No. 2:10-cv-314, 2010 WL 1882139, at *2 (S.D. Ohio May 11, 2010). Ultimately, the Court retains broad discretion in establishing the timing and scope of discovery. Lemkin v. Bell's Precision Grinding, No. 2:08-cv-789, 2009 WL 1542731, at *2 (S.D. Ohio June 2, 2009).
III. ANALYSIS
VSP's Objections contend that the Magistrate Judge's Order is clearly erroneous because LRNA did not support its motion for expedited discovery with "actual evidence," it has not moved for a preliminary injunction, the expedited discovery is not narrowly tailored and will prove unduly burdensome, and because LRNA seeks expedited discovery for an improper purpose. VSP advanced these same arguments during the telephone conference on August 19, 2014. (Doc. 19).
As the cited cases reveal, there is little binding authority on the issue of expedited discovery in the Sixth Circuit, and district courts are split on the appropriate standard. Caston, 2009 WL 1687927, at *2; Arista Records, 2007 WL 5254326, at *2. Rather, the "conduct of discovery [is] committed to the sound discretion of the district court." Medison Am., Inc. v. Preferred Med. Sys., LLC, 357 F. App'x 656, 661 (6th Cir. 2009) (quoting In re Air Crash Disaster, 86 F.3d 498, 516 (6th Cir. 1996)).
VSP does not demonstrate that the Magistrate Judge's Order is clearly erroneous or contrary to law. LRNA submitted several pieces of evidence that support expedited discovery related to its claim for injunctive relief. First, a sworn statement from Hansen confirms that he sent VSP's Chief Marketing Officer two documents obtained from his employment with LRNA. (Doc. 1, Ex. R at ¶¶ 8-10). LRNA also provided multiple emails in which Hansen forwarded other LRNA documents from his LRNA email to his personal email during the waning days of his employment. (Id., Exs. P, Q). Further, other emails support the allegation that Hansen discussed VSP's creation of a retail division with VSP executives while he remained employed with LRNA, that he accepted the position of President of Global Retail Development several months before he departed LRNA, and that he communicated with VSP executives about LRNA matters during the remainder of his employment. (Id., Exs. I, J, K, L, N, O).
Finally, the Magistrate Judge did not grant unfettered expedited discovery as VSP alleges. The Magistrate Judge ordered that expedited discovery occur subject to an agreed Protective Order and made the commencement of discovery conditioned on its entry. As LRNA conceded during the telephone conference, VSP can produce confidential information and also review the Hansen depositions transcripts subject to the terms of the Protective Order. (Doc. 19 at 16, 20). The scope of the expedited discovery is not unduly burdensome on its face. (Doc. 6 at 5; Doc. 18 at 33-34 & n.10). Accordingly, the Magistrate Judge acted within her discretion in granting expedited discovery.
Additional briefing and filings will not aid in the resolution of Defendant's Objections. Accordingly, Hansen's Motion for Permission to File a Response (Doc. 22) is DENIED. The Court will address Hansen's Motion to Intervene (Doc. 14) upon the completion of briefing.
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IV. CONCLUSION
For these reasons, Defendant's Objections (Doc. 15) are OVERRULED. The Magistrate Judge's Order granting Plaintiff's Motion for Expedited Discovery (Doc. 13) is AFFIRMED.
The Magistrate Judge ordered the parties to submit a joint proposed Protective Order; however, only LRNA submitted its proposed version. (Doc. 17). Accordingly, the parties are ORDERED to submit a joint proposed protective order within TWO DAYS of the entry of this Order. If the parties are unable to agree, VSP shall submit its proposed version for the Court's review by the same date. Expedited discovery remains STAYED pending the entry of a Protective Order. The location of depositions will be determined by the parties.
IT IS SO ORDERED. Date: 9/12/14
s/ Timothy S. Black
Timothy S. Black
United States District Judge