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American Hardware Manufacturers Association v. Reed Elsevier

June 16, 2008

AMERICAN HARDWARE MANUFACTURERS ASSOCIATION, PLAINTIFF,
v.
REED ELSEVIER, INC., ET AL., DEFENDANTS.
REED ELSEVIER, INC., A MASSACHUSETTS CORPORATION, COUNTERPLAINTIFF,
v.
AMERICAN HARDWARE MANUFACTURERS ASSOCIATION, A DELAWARE NOT-FOR-PROFIT CORPORATION, TIMOTHY S. FARRELL, AND WILLIAM FARRELL, COUNTERDEFENDANTS.



The opinion of the court was delivered by: Judge James B. Moran

Magistrate Judge Susan E. Cox

MEMORANDUM OPINION AND ORDER

There are three discovery matters before the court brought by defendants, Reed Elsevier, Inc. ("Reed") and Freeman Decorating Co. and Freeman Decorating Services, Inc., (collectively referred to as "Freeman") against plaintiff, American Hardware Manufacturers Association ("AHMA"): (1) Joint Motion for Leave to Conduct Limited Discovery Related to 2004 Research Commissioned by AHMA [dkt 761]; (2) Motion for Leave to Depose Peter Schwartz and Cordell Overgaard [dkt 763]; and (3) Reed's and Freeman's Joint Motion to Compel Houlihan Lokey to Produce Documents [dkt 766]. Discovery in this case closed, for the final time, on April 25, 2008. From the date of the initial discovery schedule, entered on January 12, 2006, the parties have requested and received discovery extensions ten times. Defendants now request additional extensions.

The motions before the Court today deal only with matters surrounding discovery, therefore, the facts of the underlying dispute in this case are largely irrelevant. They will only be briefly summarized as follows. The litigation arises from AHMA and Reed's relationship and involvement with the trade show known as the National Hardware Show. In 1981, defendant Freeman started working as the National Hardware Show contractor. Then, in 1998, Freeman began acting as a general service contractor at each of the trade shows that Reed owns and/or manages in the United States, including the National Hardware Show. Sometime in the late 1990s Reed and AHMA's relationship deteriorated and in 2003, both parties executed a separation agreement. AHMA's complaint alleges that Reed breached the various agreements between the parties, among other claims, and alleges a claim for civil conspiracy against Freeman. Reed and Freeman also each filed counterclaims.

I. Joint Motion for Leave to Conduct Limited Discovery Related to 2004 Research Commissioned by AHMA [dkt 761]

In this motion, defendants Reed and Freeman request a limited deposition of Randy Gross, a former employee of eBrain, and request documents from the Consumer Electronic Association ("CEA"), the parent company to eBrain. In 2004, eBrain conducted a Competitive Evaluation survey on AHMA's behalf, of which Mr. Gross was the lead analyst. Defendants claim that the CEA Rule 30(b)(6) witness, Timothy Herbert, was not able to fully answer questions on the topic of the survey because CEA did not contact Mr. Gross prior to the deposition, which, according to defendants, was because AHMA was attempting to thwart defendants' investigation.

On April 16, 2008, after argument on this precise issue, the Court recommended that defendants simply attempt to interview Mr. Gross. Defendants contend that they, in fact, repeatedly tried to do so. But defendants claim that Mr. Gross has refused to be interviewed because he fears AHMA will claim that he breached his confidentiality obligations.

What defendants, however, failed to mention in their motion is that the Court also recommended that defendants ask Mr. Gross's attorney whether he had the information defendants were seeking. Specifically, during argument in open court the Court stated, it just seems like the only possible relevance this witness has at this point is to help you further or attempt to authenticate this document which you would like to use to address the competition point. If he doesn't have that, then this is just a complete waste of time ... if the lawyer comes back and says, you know what, he doesn't have anything else to add to what Mr. Herbert has already said, then I'm basically ordering a deposition which is pointless at a point in time when discovery is ... done.*fn1

The Court then asked defendants to "do one more step" and contact Mr. Gross's attorney. Apparently defendants did this. AHMA attached to their response a May 14, 2008 letter confirming a conversation between Mr. Gross's attorney and defendants that stated Mr. Gross had "absolutely no recollection of any work he may have performed related to the 2004 AHMA Hardware Show ... and ... any competitive surveys that may have been prepared by eBrain related to that show." This letter appears to answer the precise question posed by the Court. Defendants argue that the letter provides no indication that Mr. Gross reviewed reports Reed's counsel provided to CEA to refresh his recollection and, thus, he may still have relevant testimony. But the Court refuses to take that leap. Attorneys are officers of the court and we take their word as sufficient. As stated by the very judge in this case, Judge Moran, "there will always be additional persons to interview and additional documents to discover... we must, however, put an end to discovery at some point..."*fn2 Therefore, because Mr. Gross's attorney has represented that Mr. Gross would not be able to provide any additional information that defendants seek, as this Court previously stated, there is no reason to extend the already over-extended discovery schedule for this deposition. With respect to defendants' document requests, specifically their request for: (1) written correspondence among and between CEA, eBrain, and AHMA relating to the survey; (2) CEA/eBrain accounting records showing billing for the survey; and (3) demographic and survey data collected by CEA, eBrain or AHMA relating to 2004 research performed on behalf of AHMA, the same principle applies. There is no such thing as perfect discovery and this case is no exception.

II. Motion for Leave to Depose Peter Schwartz and Cordell Overgaard [dkt 763]

Up against an already closed discovery schedule and Judge Mason's previous ruling that the Court would "not consider any more motions for leave to take additional depositions," defendant Reed seeks leave to depose two additional individuals.*fn3 Reed explains that due to Judge Mason's admonition to engage in "targeted discovery," they did just that and dropped Peter Schwartz from its deposition list for the following reasons: (1) he was subject to the district court's subpoena power; (2) he was expected to cooperate with Reed in appearing at trial; and (3) other material witnesses resided outside the court's subpoena power. Mr. Schwartz, however, is now moving to New Jersey and will no longer be subject to the Court's subpoena power.

Reed argues that Mr. Schwartz is a key witness because AHMA alleges that Reed violated its non-compete agreement through its involvement with the National Hardware Show, and Mr. Schwartz was a former chief executive officer of the Home Builders Association of Greater Chicago ("HBAGC"), which was the local trade association that developed the Midwest Builders Show. Reed already has an Affidavit from Mr. Schwartz attesting that the Midwest Builders Show does not compete with the National Hardware Show, but now requests a deposition to preserve his testimony and argues good cause exists as a result of his impending move. AHMA argues, in response, that Reed has failed to establish good cause for Mr. Schwartz's deposition because discovery already closed, several times, and Mr. Schwartz has always cooperated with Reed so there is no reason to believe he will not continue to do so.

When considering limiting discovery, the court must evaluate factors such as timeliness, good cause, utility, and materiality.*fn4 As discussed above, the timeliness factor weighs against Reed in this matter. The Court also finds that Reed has not presented good cause to once again open up discovery. The benefit to Reed must be weighed against the cost and burden to all parties in the case. Here, Reed is essentially asserting, without any evidence to establish its position, that because Mr. Schwartz is moving he will no longer be cooperative. As AHMA notes, Mr. Schwartz has been cooperative for over three years. There is no reason to believe that he will not continue to be cooperative and Reed has not presented such to the Court. As stated with respect to Reed's request to depose Mr. Gross, with no indication that Mr. Schwartz will refuse to cooperate in the future, it is possible that ordering a deposition now would be an unnecessary burden.

It should be noted that the Court acknowledges that a discovery deadline should not prohibit, in every circumstance, the taking of a deposition. And many times the good cause shown could be a witness's move outside the court's subpoena power. This case, however, presents a long and arduous discovery period with multiple orders reminding the parties that "under no circumstances will the discovery deadlines be extended," and "the parties must carefully select who will sit for a deposition."*fn5 Because this case is one where, if the ...


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