Prudential Defense Solutions Inc. v. Graham

CourtDistrict Court, E.D. Michigan
DecidedFebruary 5, 2021
Docket3:20-cv-11785
StatusUnknown

This text of Prudential Defense Solutions Inc. v. Graham (Prudential Defense Solutions Inc. v. Graham) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Prudential Defense Solutions Inc. v. Graham, (E.D. Mich. 2021).

Opinion

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION ______________________________________________________________________

PRUDENTIAL DEFENSE SOLUTIONS, INC.,

Plaintiff,

v. Case No. 20-11785

JAKE W. GRAHAM, MARK SHEAHAN, and ROBERT CHARNOT

Defendants. __________________________________/

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART MOTION TO QUASH

Plaintiff Prudential Defense Solutions, Inc., brings this action asserting claims under the Michigan Uniform Trade Secrets Act (“MUTSA”), Mich. Comp. Laws § 445.1904, the federal Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836(b)(1), and for state law claims of breach of contract, breach of fiduciary duty, and civil conspiracy. (ECF No. 15, PageID.247-60.) Plaintiff alleges that, as its vice president, Defendant Jake W. Graham signed an agreement not to compete with Plaintiff, but thereafter established a competing private security company with Defendants Mark Sheahan and Robert Charnot, two nonemployees. Plaintiff also alleges that Defendants misappropriated Plaintiff’s proprietary information to use in their competing business. Plaintiff subpoenaed John Krupa, an attorney representing Defendants. The subpoena seeks documents and communications between Krupa and Defendants or entities controlled by Defendants (Great Lakes Security, Inc., and Great Lakes Doorman Services). Krupa has moved to quash the subpoena, arguing the information sought in the subpoena is privileged. (ECF No. 24.) The matter has been fully briefed. (ECF Nos. 27, 28.) The court has reviewed the record and does not find a hearing to be necessary. E.D. Mich. LR 7.1(f)(2). For the reasons provided below, the motion will be granted in part and denied in part.

I. BACKGROUND Krupa asserts he is an attorney for all three Defendants. (ECF No. 24, PageID.739; ECF No. 28, PageID.909-10.) On August 6, 2020, Defendant Graham emailed Defendants Sheahan and Charnot to discuss business opportunities. (ECF No. 24-1, PageID.745.) Plaintiff alleges that this proposed business venture would compete against Plaintiff as a private security services provider in the Chicago area.1 (Id.) Defendant Graham identified three potential “new clients” for Defendants to solicit. (Id.) The three potential clients were listed by name and addresses. (Id.) Defendant Graham wrote that the potential clients had given him “verbal commitments” earlier in the year, and that “[he] spoke with John Krupa” and “[Krupa] says go get them.” (Id.) The email

added that “[n]o contracts exist so Krupa say it’s all good news.” (Id.) To conclude the email, Defendant Graham described the profit margins Defendants could make, proposed labor costs, and the strengths of the relationships Defendant Graham had with the potential clients. (Id.) On October 5, 2020, Defendants produced the August 6 email to Plaintiff in response to discovery requests. (ECF No. 27-2.) On October 21, 2020, Plaintiff issued a subpoena to Krupa. The subpoena included four requests:

1 Plaintiff also alleges that Defendants’ competition was in breach of a non- compete agreement and that Defendants misappropriated trade secrets, among other claims. (ECF No. 15, PageID.247-60.) 1. Copies of engagement agreements between John A. Krupa and/or his law firm and Great Lakes Security, Inc., Great Lakes Doorman Services, Jake Graham, Mark Sheahan, and/or Robert Charnot.

2. All communications and documents exchanged between John A. Krupa and/or his law firm and Great Lakes Security, Inc., Great Lakes Doorman Services, Jake Graham, Mark Sheahan, and/or Robert Charnot.

3. All documents regarding or relating to Great Lakes Security, Inc., Great Lakes Doorman Services, Jake Graham, Mark Sheahan, Robert Charnot, [Plaintiff’s owners], Prudential Defense Solutions, Inc. (“PDS”), and/or [Plaintiff’s predecessor corporation], including without limitation, any communications or documents concerning any actions taken or contemplated as competitive or potentially competitive to PDS.

4. All documents or communications related to the topics and substance of the [August 6] email.

(ECF No. 24-1, PageID.743.) Krupa filed the motion to quash on November 9, 2020. (ECF No. 24.) II. STANDARD Plaintiff asserts in its complaint that the court has federal question jurisdiction. See Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368, 376 (2012) (quoting 28 U.S.C. § 1331) (“Congress granted federal courts . . . original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”). (ECF No. 15, PageID.226.) “Questions of privilege are to be determined by federal common law in federal question cases.” Reed v. Baxter, 134 F.3d 351, 355 (6th Cir. 1998) (citing Fed. R. Evid. 501). Plaintiff brings four state claims under the court’s supplemental jurisdiction. (ECF No. 15, PageID.226.) The court has supplemental jurisdiction over “‘other [state] claims’ in the same case or controversy as a claim within the district court[‘s] original jurisdiction.” City of Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156, 173 (1997) (quoting 28 U.S.C. § 1367(a)). Federal Rule of Evidence 501 states that, “in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.” While this language may appear to require that Plaintiff’s state claims be governed by state law of privilege, committee notes of the Federal Rules of Evidence

explain that “Federal law of privileges should be applied with respect to pendent State law claims when they arise in a Federal question case.” Fed. R. Evid. 501 advisory committee’s note to 1974 amendment. In cases presenting a federal question, “federal privilege law applies to all claims,” including claims brought under the court’s supplemental jurisdiction, “in order to avoid conflicting application in the same case.” UAW v. Honeywell Int’l, Inc., 300 F.R.D. 323, 327 (E.D. Mich. 2014) (Grand, M.J.); see also Hancock v. Dodson, 958 F.2d 1367, 1373 (6th Cir. 1992) (“[I]n federal question cases where pendent state claims are raised the federal common law of privileges should govern all claims of privilege raised in the litigation.”). The attorney-client privilege bars compelled disclosure of “confidential

communications between a lawyer and his client in matters that relate to the legal interests of society and the client.” In re Grand Jury Subpoena, 886 F.2d 135, 137 (6th Cir. 1989) (quotations removed). “The privilege's primary purpose is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and the administration of justice.” Ross v. City of Memphis,

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