R. R. Donnelley & Sons Co. v. Pappas

Opinion

R. R. DONNELLEY & SONS No. 2:21-cv-00753 DJC AC COMPANY, a Delaware corporation, Plaintiffs, v. JOHN PAPPAS III, an individual, MERILIZ,INC., dba DOME PRINTING, PM CORPORATE GROUP, INC. dba PM PACKAGING, LLC and DOES 1-10, Defendants.

This matter is before the court on multiple discovery motions. Plaintiff brings four motions to compel against defendants Dome Printing (ECF Nos. 128, 129) and PM Corporate Group (ECF Nos. 130, 131). Joint statements to each of these motions were filed as attachments to ECF No. 137. Defendant Dome Printing brings two motions to compel against plaintiff. ECF Nos. 144, 145. A consolidated joint statement for these motions is filed at ECF No. 148. All motions were taken under submission. For the reasons stated below, the court DENIES each motion. //// //// I. Relevant Background This action was filed on April 26, 2021, and the operative Third Amended Complaint was filed under seal on April 17, 2023. ECF No. 104. In the Third Amended Complaint, plaintiff R.R. Donnelley & Sons Company (“RRD”), a global integrated communications provider, asserts that it filed this case “to prevent John Pappas III, a former senior, long-tenured, and highly compensated RRD employee, and his new employer, Meriliz Inc., dba Dome Printing (“Dome”) (which was recently acquired by PM Corporate Group, Inc., through its wholly-owned subsidiary Defendant Dome Printing and Packaging LLC) from using multiple proprietary and confidential documents that Pappas was entrusted to hold in confidence and use for the benefit of only RRD. RRD also seeks to prevent Pappas and Dome from reaping the benefits of Pappas’ multiple breaches of the duty of loyalty that he owed to RRD as one of its employees.” ECF No. 79 at 3. Plaintiff alleges that Pappas solicited clients to move from RRD to Dome and provided Dome with RRD’s confidential and proprietary documents. Id. Plaintiff alleges Dome, which is a direct competitor to plaintiff, was aware of and involved in Pappas’ misconduct, and awareness extended to Dome’s then-president Misha Pavlov. Id. at 3. This ongoing case has been before multiple judges and has a complex procedural history. In January 2021, Pappas terminated his employment at RRD to pursue a job opportunity at Meriliz, Inc dba Dome Printing (“Meriliz”). On April 1, 2022, Meriliz entered into an Asset Purchase Agreement (“APA”) with Dome Printing & Packaging LLC (“DPP”). ECF No. 137-1 at 4. DPP is a wholly owned subsidiary of PM Corporate Group, dba PM Packaging (“PMC”). Id. On April 6, 2022, plaintiff filed a motion for contempt asserting Pappas intentionally spoliated evidence. ECF No. 47. The motion for contempt was set to be heard by District Judge John A. Mendez. Id. Subsequently, plaintiff moved for leave to amend the complaint to add PMP as a defendant, asserting it was the purchaser of Dome. ECF No. 71. Defendants Merlitz/Dome filed a statement of non-opposition to the motion to amend. ECF No. 73. On July 1, 2022, discovery //// //// closed as to defendants Meriliz and Pappas. ECF No. 27 at 5.1 On October 24, 2022, the court granted a motion from plaintiff to file an amended complaint naming PMP as a defendant-open discovery, but only on the issue of PMP’s liability. ECF No. 78. On April 29, 2023, a minute order was issued transferring this case to Chief District Judge Kimberly J. Mueller in light of Judge Mendez taking senior status, and the motion for contempt was submitted on the papers before Judge Mueller. ECF Nos. 53, 70. On August 29, 2022, a minute order issued reassigning this case to District Judge Dale A. Drozd. ECF No. 74. On October 10, 2022, Judge Drozd issued a minute order vacating all pending hearings on civil motions. ECF No. 77. On October 24, 2022, Judge Drozd issued an order allowing plaintiff to file the operative Second Amended Complaint, and not substantively addressing the motion for contempt. ECF No. 78. On March 7, 2023, the parties filed a stipulation to dismiss PMP and add as defendant PM Corporate Group (“PMC”) because PMP was a defunct entity and PMP was the correct defendant. This case was again re-assigned, to District Judge Daniel J. Calabretta, on April 6, 2023. ECF No. 104. On April 13, 2023, Judge Calabretta granted the stipulation to dismiss PMP and add PMC. ECF No. 105. Plaintiffs filed the operative Third Amended Complaint under seal at ECF No. 106. Judge Calabretta ordered the parties to file a status report, and a status report was filed on April 26, 2023. ECF No. 107. In that report, plaintiff noted that the motion for contempt remained pending. ECF No. 107 at 3. On October 16, 2023, Judge Calabretta issued a revised scheduling order closing fact discovery on January 12, 2024. ECF No. 127. This order states this discovery extension is limited in scope and shall address only “whether and to what exten[t] Dome Printing and Packaging, LLC and/or PM Corporate Group, Inc., may be liable for Plaintiff’s causes of action.” Through all these procedural twists and turns, discovery was progressing between the plaintiff and the various defendants. Many motions to compel discovery were noticed and then withdrawn. ECF Nos. 39 and 41; 64 and 67; 119 and 123; 120 and 124. Against that background, five motions for discovery are now before the undersigned.

1 Discovery remains closed as to these defendants. II. Motion to Compel A. Standard on Motion to Compel The scope of discovery in federal cases is governed by Federal Rule of Civil Procedure 26(b)(1). The current Rule states: Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable. Fed. R. Civ. P. 26(b)(1). Evidence is relevant if: (a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action. Fed. R. Evid. 401. Relevancy to the subject matter of the litigation “has been construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). Relevance, however, does not establish discoverability; in 2015, a proportionality requirement was added to Rule 26. Under the amended Rule 26, relevance alone will not justify discovery; discovery must also be proportional to the needs of the case. A party seeking to compel discovery has the initial burden to establish that its request is proper under Rule 26(b)(1). If the request is proper, the party resisting discovery has the burden of showing why discovery was denied; they must clarify and support their objections. Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir.1975). General or boilerplate objections, without explanation, are not prohibited but are insufficient as a sole basis for an objection or privilege claim. Burlington Northern & Santa Fe Ry. v. United States Dist. Court, 408 F.3d 1142, 1149 (9th Cir.2005). //// B. Motion to Compel DPP’s Responses to Special Interrogatories (ECF No. 128) Plaintiff moves to compel supplemental responses to two special interrogatories, which read as follows: Interrogatory 12: “Identify ALL entities that appear in the customer list labeled DOME0000585 that YOU contend were pre-existing in YOUR systems at the time PAPPAS uploaded the list to what were then DOME PRINTING’s systems.” Interrogatory 13: “Identify the amount of business YOU did since January 1, 2018, with each of the entities YOU identified in response to Interrogatory No. 13.” ECF No. 137-1 at 11-19. The court and parties presume that Interrogatory No. 13 intended to reference, in its body, Interrogatory 12 rather than itself. Id. at 19. DPP initially objected on several grounds and responded that it could not answer because DOME00000585 does not contain a customer list. Id. at 12. It subsequently amended its response to note that in meet and confer efforts plaintiff stated the interrogatory was intended to reference DOME00000588, and to avoid a discovery dispute, DPP agreed to amend its response to address that document instead. Id. at 13. In DPP’s amended response, it stated that while the document at issue contained 649 contacts, it “only addresses those contacts with which it did business during the applicable time frame” which it asserted began on April 1, 2022, the date DPP purchased the assets of Merlitz. ECF No. 137-1 at 13. Plaintiff argues that DPPs “response identifying only ‘contacts with which it did business during the applicable time frame’ is insufficient. For example, it does not include customers that DPP tried to do business with but was unsuccessful... Even if that information has not been used to obtain business yet does not mean that it will not be used to DPP’s benefit tomorrow. RRD wants its information back and needs to know what information was preexisting on DPP’s systems about these customers, if any, so that it can identify what needs to be remediated and deleted going forward. This information is highly relevant and within the scope of discovery into Defendants’ liability.” ECF No. 137-1 at 15. Upon full review of the interrogatories and responses, the court finds that there is nothing to compel because the responses fully address the interrogatories as asked (and even beyond what was asked, by addressing the 588 document, which was not expressly referenced in the interrogatories). DPP did identify all entities with which it did business in the list of 641 contacts – this is what the interrogatory asks for. Defendant then indicates that all of these entities were previously known to Defendant, just as requested in the interrogatory. The court finds there is nothing more to compel and this motion is DENIED. C. Motion to Compel DPP’s Responses to Requests for Production (ECF No. 129) According to defense counsel’s declaration, several of the disputes as to RFPs addressed in this motion have been mooted by a subsequent production. Richard Decl. Ex. 23. The resolved disputes include those relating to RFPs 11, 13, 14, 15, 16, 20, and 40. ECF No. 137 at 4- 21. The motion is therefore DENIED as moot as to RFPs 11, 13, 14, 15, 16, 20, and 40. Remaining requests for production at issue include RFPs 21-26, which are variations of the same interrogatory with different redacted names. These RFPs each request “ALL DOCUMENTS, including but not limited to bids, proposals, or requests for proposals or invoices, from January 1, 2022, to the present date, between YOU and [redacted] including ANY principal, representative or agent thereof.” The parties’ arguments with respect to each of these RFPs are the same. Defendant initially objected on the grounds of burden and relevancy, and argued that that Merlitz was not purchased until April 2022 and therefore the request was not narrowly tailored. ECF No. 137 at 12. Plaintiff counters that the “objection that only information from before DPP purchased Meriliz is relevant is [meritless because] RRD was damaged by the use of its information and needs to calculate those damages. RRD contends that DPP is liable both as a successor to Meriliz and directly based on its continuing misconduct.” ECF No. 137 at 13. In its opposition to the motion to compel, DPP argues the RFP is egregiously overbroad because it seeks “all documents” pertaining to a mutual customer without limitation. ECF No. 137 at 14. Defendant argues that Meriliz already responded to identical requests in February of 2022, and that plaintiff’s argument that it needs to know whether any information is “still in use” by DPP is disingenuous when it doesn’t identify whether any probative information was uncovered from Meriliz. The court agrees with DPP. At a minimum, having the responses from Meriliz should have allowed plaintiff to narrow these requests. As they stand, they are unduly burdensome and disproportionate to the needs of the case. The motion is therefore DENIED as to RFPs 21, 22, 23, 24, 25 and 26. Remaining are disputes as to RFPs No. 59 and 63. RFP No. 59 requests “Any and all DOCUMENTS demonstrating YOUR reports to members, partners, shareholders, or other similar documents prepared by YOU and relating to YOUR financial condition for the years 2019 to the present.” ECF No. 137 at 22. Defendant raised various objections including relevance (arguing its financial condition is not related to any claim and defense), burden, and unreasonableness of time and scope. Id. at 22-23. Plaintiff argues in the joint statement that this request is “directly relevant to the claims and defenses asserted in this case and are directly in the spotlight of the limited discovery being conducted as they relate to DPP and PMC’s liability and punitive damage,” and provides the following example: “if DPP was not adequately capitalized by PMC, this weighs in favor of successor liability and shows that it would be unjust to treat PMC and DPP as separate entities.” ECF No. 137 at 23.2 Plaintiff asserts that discovery into DPP’s financial records “go directly to RRD’s alter ego allegations against both DPP and PMC, DPP and PMC’s continuing liability, and to RRD’s damages.” ECF No. 137 at 23. DPP argues that because there is no alter-ego theory alleged in the complaint, this request is beyond the scope of permissible discovery. Id. at 24. Upon a review of the operative Third Amended Complaint, the court agrees that these requests are beyond the scope of claims asserted against DPP. ECF No. 106 (sealed). As to punitive damages, defendant is correct that“[a] request for non-current financial information is irrelevant to a punitive damages determination. Even where a claim for punitive damages has some factual support, discovery related to financial status should be limited to net worth and the production of an annual or period balance sheet under an appropriate protective order.” E.E.O.C. v. California Psychiatric Transitions, 258 F.R.D. 391, 394 (E.D. Cal. 2009). The request is overbroad, unduly burdensome, and not relevant to claims or defenses. The motion to compel is DENIED as to RFP 59. The final RFP, No. 63, requests “Any and all DOCUMENTS demonstrating PAPPAS’ compensation, including bonuses and commissions, from the beginning of his employment with YOU to the present.” ECF No. 137 at 25. DPP objected to this RFP on grounds of overbreadth 2 DPP also argues it was not created until March of 2022, and so the request dating back to 2019 is necessarily overbroad. ECF No. 137 at 24-25. and relevance. Id. RDD argues that this RFP is appropriate because if “Pappas is receiving compensation for his sales to the customers, he stole information about, that would show DPP’s approval of Pappas’ actions and establish DPP’s liability (as well as contempt of the injunction currently in place).” The court finds this justification inadequate. As DPP points out, discovery as to Pappas is closed, and the connection between this RFP and DPP’s liability is tenuous at best. Thus, the motion is DENEID as to RFP No. 63. D. Motion to Compel PMC’s Responses to Special Interrogatories (ECF No. 130) Plaintiff moves to compel amended responses to several interrogatories issued to PMC. First, plaintiff seeks to compel an amended response to Interrogatory No. 1, which reads: “Describe PAPPAS’ employment relationship with PMP, including but not limited to employment start date, job title, and job duties.” ECF No. 137-2 at 3. Defendant PMC responded: “PAPPAS is not employed by PM Corporate Group, Inc. Defendant advises Propounding Party to refer to the concurrently served responses of Dome Printing and Packaging, LLC, the party best situated to provide a response to this request and purchaser of Meriliz Inc’s asset.” Id. at 4. Plaintiff argues this response is unacceptable because PMC “states it does not employ [Pappas], and defers to DPP (which claims that it employs Pappas), but that is not sufficient, especially given that the evidence suggests that Pappas does have an employment relationship with PMC.” ECF No. 137-2. Plaintiff’s argument is unpersuasive. Disagreement with an answer is not grounds to compel an amended answer. PMC answered the question as asked and the motion as to Interrogatory No. 1 is DENIED. The remaining interrogatories at issue are related to those at issue in the motion to compel amended interrogatory responses from DPP, addressed above. They read as follows: No. 11: “Identify ALL customers or businesses YOU contacted that appear on the customer list PAPPAS uploaded to what were then DOME PRINTING’s systems on or about January 7, 2021, labeled DOME00000585, including when you contacted them.” No. 12: “Identify ALL entities that appear in the customer list labeled DOME0000585 that YOU contend were pre-existing in YOUR systems at the time PAPPAS uploaded the list to what were then DOME PRINTING’s systems.” No. 13: “Identify the amount of business YOU did since January 1, 2018, with each of the entities YOU identified in response to Interrogatory No. 13.” ECF No. 137-2 at 12-19. As with the dispute between plaintiff and DPP, PMC agreed during meet and confer “to amend to reference DOME00000588 in each response where DOME00000585 was referenced.” ECF No. 137-2 at 15. PMC raises the unique consideration that although responding to these interrogatories requires PMC “to analyze the information contained on the document bates labeled DOME00000588[,] Plaintiff has taken the position that PMC cannot review the information in that document and has threatened a contempt motion against PMC for testimony demonstrating its Rule 30(b)(6) deponent reviewed the document in preparation for deposition topics that cite to it.” Id. The court agrees with PMC that for this reason, the request to compel amended responses should be denied; PMC cannot be required to provide information related to a document it is not allowed to view. Further, the court reviewed PMC’s responses, which the court finds fully responsive. PMC explained it “was never in possession of any RRD information including the information allegedly contained in DOME00000588. PM Corporate Group Inc. never operated or controlled Meriliz’s systems.” Id. at 17. The responses are adequate and the motion to compel amended responses is DENIED. E. Motion to Compel PMC’s Responses to Requests for Production (ECF No. 131) RRD served Requests for Production on PMC on April 20, 2023. PMC responded on June 5, 2023, and following meet and confer discussions, served amended responses to some of those requests on September 11, 2023. Plaintiff alleges PMC’s “responses remain deficient as to the following requests, which are relevant to the issue of unity and identity of interest of PMC with respect to DPP.” ECF No. 137-3 at 3. Several of the RFPs at issue are related to PMC’s finances. RFP No. 7 reads: “YOUR financial statements, from June 1, 2021, to the present date, including documents sufficient to show PMP’s current assets, accounts receivable, amounts owing to ANY of PMP’s creditors, and PMP’s income and profits.” ECF No. 137-3 at 3. An additional RFP at issue, RFP No. 56, seeks similar documents: “Any and all DOCUMENTS relating to YOUR balance sheets, profit and loss statements, asset and liability statements, annual reports, financial statements, books of account, and other similar documents reflecting YOUR financial condition from 2019 to the present.” Id. at 17. Finally, RFP No. 59 reads “Any and all DOCUMENTS demonstrating YOUR reports to members, partners, shareholders, or other similar documents prepared by YOU and relating to YOUR financial condition for the years 2019 to the present.” Id. at 22. With respect to each of these RFPs, plaintiff makes the same arguments as in the motion discussed above regarding alter ego theory and punitive damages. Again here, the court agrees with defendant that the requests are overbroad, irrelevant, and unduly burdensome. Again, there is no alter-ego theory alleged in the operative complaint, thus the requests are beyond the scope of permissible discovery. ECF No. 137-3 at 6. As to punitive damages, defendant is correct that“[a] request for non-current financial information is irrelevant to a punitive damages determination.” California Psychiatric Transitions, 258 F.R.D. at 394. The motion to compel is DENIED as to RFP Nos. 7, 56, and 59. Two additional RFPs at issue seek financial information, but in the form of tax documents. RFP No. 57 reads “Any and all DOCUMENTS demonstrating YOUR corporate tax returns filed by YOU for the years 2019 to the present” and RFP No. 58 reads “Any and all DOCUMENTS demonstrating YOUR federal tax form 1040 Schedule Cs filed by YOU for the years 2019 to the present.” Id. at 18-21. The court agrees with defendant that amended responses to these requests should not be compelled for the reasons discussed above. Further the court notes that The Ninth Circuit recognizes “a public policy against unnecessary public disclosure [of tax returns, which] arises from the need, if the tax laws are to function properly, to encourage taxpayers to file complete and accurate returns.” Premium Serv. Corp. v. Sperry & Hutchinson Co., 511 F.2d 225, 229 (9th Cir.1975). The motion to compel is DENIED as to RFP Nos. 57 and 58. Plaintiff’s RFP No. 52 reads “ALL DOCUMENTS reflecting YOUR knowledge of the above-entitled action prior to YOUR acquisition of DOME PRINTING and/or its assets on or about April I, 2022.” ECF No. 137-3 at 8. In PMP’s amended response, it made a production and stated “[a]dditional responsive documents are being withheld pursuant to attorney client privilege documents identified above and will be identified in a privilege log. Defendant has produced all responsive non-privileged documents in its possession, custody, or control.” ECF No. 137-3. Having made this statement that all non-privileged responsive documents have been produced, the court takes defendant at its word and finds there is nothing to compel. The motion is DENIED as to RFP No. 52. Plaintiff’s RFP No. 53 reads “ALL DOCUMENTS identified in YOUR responses to RRD’s Special Interrogatories, Set One, to YOU, served concurrently with these requests.” ECF No. 137-3 at 15. Again, PMP submitted an amended response that made a production and stated that other “responsive documents are being withheld pursuant to attorney client privilege documents identified above and will be identified in a privilege log. Defendant has produced all responsive non-privileged documents in its possession, custody, or control.” Id. at 16. Having made this statement that all non-privileged responsive documents have been produced, the court takes defendant at its word and finds there is nothing to compel. The motion is DENIED as to RFP No. 53. F. Motion to Compel Production of Documents (ECF No. 144) Defendant DPP filed a motion to compel documents from plaintiff and noticed the motion for January 10, 2024. ECF No. 145. Defendant DPP argues that plaintiff “has refused to produce responsive documents to request for production of documents. Plaintiff has refused to produce responsive documents despite stating that it would produce documents.” ECF No. 149 at 2. Pursuant to the October 16, 2023 Scheduling Order, fact discovery is to be completed by January 12, 2023. ECF No. 127. That order specifies, “The parties are advised that motions to compel must be filed in advance of the discovery completion deadlines so that the Court may grant effective relief within the allotted discovery time. A party’s failure to have a discovery dispute heard sufficiently in advance of the discovery cutoff may result in denial of the motion as untimely.” Id. at p. 3, fn. 1. Defendant acknowledges that plaintiff’s responses were served as of November 2023, and the parties were in meet and confer discussions during that time. ECF No. 149 at 5. Despite that, defendant noticed this motion for two days before the discovery cutoff, which makes the motion untimely. Because the motion is untimely, it is DENIED. //// HI. Conclusion Plaintiff's motion to compel Dome’s amended response to requests for production at ECF No. 129 is DENIED. Plaintiff's motion to compel Dome’s amended responses to special interrogators at ECF No. 128 is DENIED. Plaintiffs motion to compel PM Corporate Group’s amended responses to special interrogatories at ECF NO. 130 is DENIED. Plaintiff's motion to compel PM Corporate Group’s amended responses to requests for production at ECF No. 131 is DENIED. Defendant DPP’s motion to compel at ECF No. 144 is DENIED. DATED: January 11, 2024 ~ Ahur—Clore ALLISON CLAIRE UNITED STATES MAGISTRATE JUDGE 12