United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
SIDNEY I. SCHENKIER, Magistrate Judge.
Plaintiff Trading Technologies, International, Inc. ("TT") has filed a motion seeking leave to serve Rule 45 document and deposition subpoenas on (1) attorney Nina Wang and her law firm, who were trial counsel for defendants CQG, Inc. and CQGT, LLC (collectively, "CQG") from 2006 to 2012; and (2) a third-party, Peter Hwang, who practices astrology and who has given litigation and other advice to CQG based on astrological considerations (doc. # 488). The motion has been fully briefed ( see docs. ## 529, 544).
With respect to Ms. Wang, TT seeks documents and testimony "relating to her communications with CQG about the operation of the accused products and infringement issues as they relate to the claim term static'" (doc. # 488: TT's Mot. at 1). TT contends that this information is "relevant" to its claims of CQG's willfulness and indirect infringement, and that "[t]o the extent that the discovery sought might otherwise have been subject to the attorney-client or work product privilege, that privilege has been waived" ( Id. ). For the reasons set forth below, we deny TT's motion insofar as it seeks discovery from Ms. Wang or her firm.
The request as to Mr. Hwang stands on a different footing. In an earlier order, we ruled that no privilege attaches to communications between Mr. Mather (defendants' founder and principal shareholder) and Mr. Hwang (doc. # 550: 11/04/2013 Order, at 6). We therefore required CQG to produce communications with Mr. Hwang. In this motion, TT seeks leave to serve a subpoena on Mr. Hwang for documents and a deposition (TT's Mot. at 30-31 and Ex. 46). We grant that part of the motion, but limit the scope of the subpoena as explained below.
We first address the timing of TT's motion. CQG argues that TT's motion for discovery comes too late, because discovery closed on September 20, 2013, but TT did not file the instant motion until October 12, 2013 (doc. # 529: CQG's Resp. at 2-3). CQG relies on Federal Rule of Civil Procedure 6(b),  and Brosted v. Unum Life Ins. Co. of Am., 421 F.3d 459 (7th Cir. 2005), which affirmed the district court judge's denial of the plaintiff's motion to extend the time for discovery. In Brosted, the Seventh Circuit explained that because the motion for an extension was not filed until a month after the discovery deadline had passed, Rule 6(b)(2) - now Rule 6(b)(1)(B) - applied, which permits a court to grant the motion for good cause if the moving party failed to comply with the discovery deadline because of "excusable neglect." Brosted, 421 F.3d at 464. In Brosted, the moving party did not show that excusable neglect existed. Id.
To establish excusable neglect, the moving party must demonstrate that its failure to meet the discovery deadline was due to neglect - i.e., "a simple, faultless omission to act, or because of carelessness, " and that the failure to act was excusable in light of all relevant circumstances, including "the danger of prejudice to the non-moving party, the length of the delay and its impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith." Zingerman v. Freeman Decorating Co., 99 Fed.App'x 70, 72 (7th Cir. 2004) (internal quotations and citations omitted).
TT contends that it has demonstrated good cause for filing its motion because CQG did not complete its production of discovery relevant to the instant motion until fact discovery was almost closed (doc. # 544: TT's Reply at 2-3). CQG, on the other hand, contends that TT had the discovery it needed to file its motion since at least August 2013, and thus any neglect on TT's part was not excusable (CQG's Resp. at 3). The parties also trade accusations of bad faith in delaying filing the motion and producing certain discovery underlying it ( see CQG's Resp. at 4; TT's Reply at 2-3). These arguments largely rehash the "barbs and accusations on the question of why so much discovery took place so late" that the parties briefed on an earlier motion filed by TT to take discovery after the cut-off date (11/04/2013 Order, at 1).
Although this is TT's third motion to take additional discovery after the close of discovery, the filing of this motion should have come as no surprise to CQG. TT has made multiple representations to CQG and this Court of its intent to move for discovery into certain communications CQG had with Ms. Wang. CQG's argument that TT had enough discovery to file its motion since August 2013 is unpersuasive because discovery closed soon after that date, and the instant motion was filed a short time later. And, as to Mr. Hwang, we considered (and granted) a separate, contemporaneously-filed motion by TT to require CQG to produce communications with him over the assertion by defendant of privilege (11/04/2013 Order at 4-6). Thus, we find the timing of the current motion is no bar to TT's request to seek information directly from Mr. Hwang.
"[M]agistrate and district courts enjoy extremely broad discretion in controlling discovery." Jones v. City of Elkhart, Ind., 737 F.3d 1107, 1115 (7th Cir. 2013). We use our discretion under Rule 6(b) and our inherent broad discretion in discovery matters to consider the entirety of TT's motion despite it having been filed after the close of discovery. See Zingerman, 99 Fed.App'x at 72 (it was within the district court's discretion to grant an extension of discovery deadline under Rule 6(b)).
We briefly describe the evidence (and the parties' conflicting interpretations of it) relevant to this motion.
As early as 2006, CQG represented to TT, its trial counsel Ms. Wang, and the district court that CQG's product - futures trading software (with hundreds of versions) - did not have "static" functionality, a claim term in a TT patent relating to users' ability to keep price displays frozen on their screen (TT's Mot. at 1). Rather, CQG represented that its software displayed prices automatically (and automatically repositioned displayed prices), and thus, price displays could not be controlled by users. TT claims that in 2010, after observing CQG's software, TT discovered that from 2004 to 2010, one version of CQG's software had the ability to become static if a user completely disabled the CQG "market window" ( Id. at 12-13). Further, TT asserts that an entry from an April 2006 CQG spreadsheet shows that CQG was aware of this functionality at that time ( Id. at 9-13). TT claims that from 2004 to 2005 and from 2009 to 2010, another version of CQG's software made the price appear static even when the market window functionality was not disabled ( Id. at 10-12). TT contends that CQG also knew of this functionality, but failed to inform the district court ( Id. ). TT also claims that a "price hold" option in one version of CQG's software falls under the claim term "static" ( Id. at 10-11).
TT contends that CQG intentionally concealed the static functionality of its products to Ms. Wang, TT, and the district court in order to fraudulently procure a stay in this case from 2007 to 2012, during the pendency of the "eSpeed" appeal, another patent infringement suit brought by TT. TT argues that it would not have agreed to a stay in the case if it had known that CQG had been misrepresenting the functionality of its product as similar to the eSpeed product ( i.e., not static). CQG acknowledges that some of the statements it made in support of its summary judgment briefing in 2007 and, in the alternative, in support of a stay in the case were inaccurate. However, CQG maintains that its management made these statements to the best of its knowledge at the time, and that CQG promptly cured any inadvertent misstatements upon discovering them (CQG's Resp. at 9). Both parties point to emails from 2010 and 2011 between CQG employees as purportedly demonstrating CQG's intent, or lack thereof, to defraud. These emails describe the static functionality of the CQG product as a "defect" that CQG fixed ...