Neighborhood Networks Publishing, Inc. v. Lyles

CourtDistrict Court, E.D. North Carolina
DecidedFebruary 1, 2021
Docket7:19-cv-00089
StatusUnknown

This text of Neighborhood Networks Publishing, Inc. v. Lyles (Neighborhood Networks Publishing, Inc. v. Lyles) is published on Counsel Stack Legal Research, covering District Court, E.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Neighborhood Networks Publishing, Inc. v. Lyles, (E.D.N.C. 2021).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA SOUTHERN DIVISION No. 7:19-CV-89-BO

NEIGHBORHOOD NETWORKS ) PUBLISHING, INC. and N2 ) FRANCHISING, LLC, ) Plaintiffs, V. ORDER JACQUELINE MARIE LYLES and LIFESTYLE PUBLICATIONS, LLC, ) Defendants.

This cause comes before the Court on defendant Lifestyle Publication’s motion for summary judgment and plaintiffs’ motion to modify scheduling order, motion for extension of time, motion for sanctions, motion for leave to file sur-reply, and motion for privilege determination. The appropriate responses or replies have been filed and the matters are all ripe for ruling. BACKGROUND Plaintiffs Neighborhood Networks Publishing, Inc. and N2 Franchising, LLC own and publish magazines focused on specific communities and neighborhoods. N2 franchises the opportunity to publish these magazines. Defendant Jacqueline Lyles was a franchisee who operated in the Atlanta, Georgia area from February 1, 2016 to August 31, 2018. Lyles signed an agreement with plaintiffs in which she agreed not to compete with plaintiffs and not to solicit plaintiffs’ customers for two years after the expiration, termination, or transfer of her franchise agreement. On August 31, 2018, Lyles sold her franchise, with N2’s consent, to Craig O’Neal.

Through March 2019, she still had access to N2’s cloud-based software systems that franchisees used to manage and process advertising contracts and orders and upload and manage files for publications in N2’s magazines, and she used her N2-supplied credentials to access these systems and help O’Neal. In February 2019, Lyles began working as an independent contractor for Lifestyle Publications S.E., LLC (Publications S.E.), a publisher of four magazines and an independent contractor of defendant Lifestyle Publications. Plaintiffs filed suit against Lyles and defendant Lifestyle in New Hanover County, North Carolina, alleging that after Lyles had transferred her franchise agreement she breached her contract with plaintiffs, misappropriated plaintiffs’ trade secrets, committed computer trespass, engaged in unfair and deceptive trade practices, sought a constructive trust, and engaged in fraudulent misrepresentation/fraudulent concealment. Plaintiffs alleged claims for misappropriation of trade secrets, computer trespass, unfair and deceptive trade practices, constructive trust, and fraudulent misrepresentation or concealment against defendant Lifestyle, as well as a claim for tortious interference with contract. Plaintiffs sought punitive damages and further filed a request for temporary restraining order. [DE 1-4]. A temporary restraining order was entered by the Superior Court judge presiding. [DE 1-6]. In May 2019, Lifestyle removed the case from Superior Court based upon this Court’s diversity jurisdiction.' Lifestyle answered the complaint [DE 5] and defendant Lyles filed a motion to dismiss or stay and compel arbitration. [DE 10]. A scheduling order was entered, setting a discovery deadline of June 4, 2020 and a motions-filing deadline of July 7, 2020. [DE 29]. Lyles’s motion to dismiss was later withdrawn with the consent of plaintiffs, to be replaced by an amended motion to dismiss. [DE 30]. Lyles filed a motion to dismiss pursuant to Rule 12(b)(6), and on

' Following the removal of the case, plaintiffs did not seek any extension of the temporary restraining order or file a motion for preliminary injunction.

February 10, 2020, Lyles filed a joint motion for entry of judgment pursuant to Rule 54(b). [DE 40]. That motion was granted, and a consent judgment and permanent injunction was entered against Lyles on February 14, 2020. [DE 41]. The judgment “‘acts[ed] as a final judgment only as to Plaintiffs’ first and second claims for relief against Defendant Lyles. All remaining claims against Defendant Lyles—Plaintiffs’ third, fifth, sixth, seventh, and eighth claims—[were] dismissed with prejudice.” /d. Plaintiffs’ second, fourth, fifth, sixth, and seventh claims for relief against Lifestyle remain pending. /d. Sometime between July 29 and December 5, 2019, an assistant for defendant Lifestyle deleted Lyles’s email account. It is alleged that Jim Newman, the owner of Publications S.E., asked the assistant to delete Lyles’s email account to save the cost of maintaining the account, but that DeLand Shore, defendant Lifestyle’s chief financial officer, never received notification of the proposed deletion and therefore never approved it, as required by defendant Lifestyle’s established procedures. On December 12, 2019, plaintiffs sent Publications S.E. a subpoena duces tecum. On March 24, 2020, plaintiff N2 filed a motion to compel in the United States District court for the Northern District of Georgia requesting that court to enter an order compelling Publications S.E.’s compliance with the subpoena. The court granted that motion on May 11, 2020 and directed Publications S.E. to fully respond within seven days of the date of the order. After receiving some documents, plaintiff N2 filed a motion to show cause in the Northern District of Georgia. Subsequently, in June 2020, Publications S.E. provided over 150 pages of documents responsive to the subpoena. On July 10, 2020, plaintiffs filed a motion for sanctions based on the deletion of Lyles’s email account and the extended efforts required for compliance with the subpoena. [DE 53].

On June 4, 2020, defendant Lifestyle filed a motion for summary judgment. [DE 42]. On June 5, 2020, plaintiffs filed a motion to modify the scheduling order, which was corrected on June 8, 2020. [DE 45]. On June 8, 2020, plaintiffs filed a motion for extension of time to respond to defendant Lifestyle’s motion for summary judgment. [DE 46]. On July 17, 2020, plaintiffs filed a motion for leave to file a sur-reply in opposition to defendant’s motion for summary judgment. [DE 55]. As part of its June 2020 document production, Publications S.E. produced emails between Publications S.E., defendant Lifestyle, and defendant Lifestyle’s counsel of record. Plaintiff N2 filed six emails in its response to defendant Lifestyle’s motion to dismiss that defendant Lifestyle argues are privileged attorney-client communications because they are between defendant Lifestyle and its counsel and contain legal advice for defendant Lifestyle’s benefit. Plaintiffs have filed a motion for privilege determination under Rule 26(b)(5)(B) of the Federal Rules of Civil Procedure. [DE 58]. DISCUSSION Motion for Leave to File Sur-Reply Plaintiffs have filed a motion for leave to file a sur-reply to defendant Lifestyle’s reply in support of its motion for summary judgment. Plaintiffs argue that a sur-reply is warranted because defendant Lifestyle’s counsel admitted in recent correspondence that Publications S.E., and consequently Lyles, are agents of defendant Lifestyle. Plaintiffs further argue that a sur-reply is warranted to correct alleged misrepresentations and accusations made by defendant that some of plaintiff N2’s responsive documents contained privileged communications and that plaintiff N2 cannot use testimony from Nicole Geraghty and Kathryn Miyahira because they are undisclosed witnesses.

“Neither the Federal Rules of Civil Procedure nor this court’s local rules of procedure provides for the filing of surreply briefs.” Spivey v. Research Triangle Reg’l Pub. Transp. Auth., 2015 U.S. Dist. LEXIS 124775, at *26 (E.D.N.C. Aug. 10, 2015) (citation omitted). In fact, this Court’s local rules “discourage[s]” sur-reply briefs. Local Civil Rule 7.1(g)(1). ‘“[C]ourts generally allow a party to file a surreply ‘only when fairness dictates based on new arguments raised in the previous rely.’” /d. at *27 (citations omitted).

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Bluebook (online)
Neighborhood Networks Publishing, Inc. v. Lyles, Counsel Stack Legal Research, https://law.counselstack.com/opinion/neighborhood-networks-publishing-inc-v-lyles-nced-2021.