TomGal LLC v. Castano

Background

The defendants requested a conference about several discovery disputes. The plaintiffs responded that they had adequately complied with the outstanding requests and asserted that the defendants had also failed to meet their discovery obligations. The court held a conference under Local Civil Rule 37.2 and noted that the parties had resolved some issues but that discovery remained outstanding.

Discovery Deadline and General Information Requests

The court extended the discovery deadline to October 1, 2024. The parties were required to file a joint letter updating the court on the case by that date, and they could jointly request another extension if needed.

The defendants identified nine categories of information they claimed the plaintiffs had not adequately produced. These categories concerned alleged trade secrets, the plaintiffs’ research and development, their product-testing methodology, employees involved in that methodology, pricing, alleged use of trade secrets by Castano, use of a product code, consumer safety and quality testing, and alleged efforts to harm the plaintiffs’ relationships with distributors and retailers.

The plaintiffs said these issues could be explored during depositions. The court agreed that depositions first could help focus any later document discovery without prejudicing the defendants. The parties were ordered to confer and jointly propose a schedule for completing the depositions by September 6, 2024. The court stated that the witnesses could be questioned about all nine categories and that the parties could seek permission for additional document discovery or a second deposition round if necessary.

Financial Materials

The defendants sought financial records, including state and federal tax returns and related materials from 2019 through the present, asserting that the records were important to calculating the plaintiffs’ alleged damages. The plaintiffs argued that their existing production supplied the relevant financial information and that the tax-return request was inappropriate.

The court stated that a party seeking tax returns must show a compelling need, even when the returns are relevant, and that a compelling need is not established when the information can readily be obtained from a less intrusive source. Because other discovery avenues had not been exhausted, the court denied the request for tax documents without prejudice.

The plaintiffs represented that they were seeking lost-profit damages only for alleged tortious interference involving a Puerto Rico distributor. For other territories, counsel stated that the damages measure was based on the defendants’ sales during the relevant year rather than sales the plaintiffs had lost. Based on that representation, the court ordered the plaintiffs to provide underlying financial documents for the Puerto Rico distributor from 2017 through 2022. The defendants were required to provide backup financial documents for all locations, but only for October 1, 2021, through October 31, 2022.

The defendants also requested the identities of all the plaintiffs’ manufacturers and distributors. Because the plaintiffs said they did not have a complete vendor list, the court ordered the plaintiffs to provide one invoice for each distributor and manufacturer, with sufficient identifying information. The defendants could seek additional documents after the depositions if needed.

Third-Party Discovery and Deposition Scheduling

The defendants claimed that counsel for the plaintiffs represented third parties who had received document subpoenas but had not responded to them, and that the plaintiffs had refused to schedule depositions. The plaintiffs said they wanted to complete first-party discovery before proceeding with those depositions and third-party discovery.

The court held that the plaintiffs had no right to require a particular sequence of discovery. It ordered the parties to confer and jointly propose, by September 6, 2024, a schedule for completing the depositions and producing documents sought through the third-party subpoenas.

Metadata

The defendants claimed that the plaintiffs’ initial production was in bulk portable-document format and lacked metadata, despite promises to correct it. The plaintiffs said that emails, attachments, and spreadsheet documents had been produced in their original formats with the required metadata. The court ordered the parties to confer and jointly propose, by September 6, 2024, a deadline for completing production in the proper format with the requested metadata.

Plaintiffs’ Discovery Issues

The plaintiffs alleged that the defendants had failed to produce basic discovery about their business and might have destroyed or withheld evidence. They pointed to a production by Zizo USA, Inc., described in the opinion as one of the defendants’ distributors, that contained 22 documents responsive to the plaintiffs’ requests, including communications with the defendants that were absent from the defendants’ production.

The defendants said they were investigating the alleged deficiencies and would produce additional documents if they found any that had not been produced. The court ordered the parties to confer and jointly propose, by September 6, 2024, a deadline for completing production of the requested documents.

Disposition

This was a discovery-management order, not a decision on the underlying claims. The court extended the discovery deadline, denied the tax-document request without prejudice, and issued directions concerning depositions, third-party subpoenas, financial records, invoices, metadata, and the defendants’ document production.