Sound Around, Inc. v. Friedman

Background

Sound Around, Inc. alleges that Moises Friedman and Shulim Eliezer Ilowitz, along with ML Imports, Inc., CYRF, Inc., LRI Group, LLC, MDF Marketing, Inc., and World Group Import, LLC, misused proprietary information entrusted to them while Friedman and Ilowitz performed services for Sound Around. The complaint asserts 22 causes of action, including claims involving trademarks, trade dress, false designation of origin, unfair competition, misappropriation of confidential information, breach of loyalty and fiduciary duties, unjust enrichment, breach of contract, fraud, conversion, and federal civil racketeering claims.

Sound Around served substantially similar document requests on the individual and corporate defendants. The requests concerned alleged competing businesses, alleged kickbacks, alleged theft of Sound Around funds, alleged theft of confidential information and trade secrets, alleged trademark infringement, and tax returns. The defendants largely withheld documents, asserting that the requests were overly broad and sought irrelevant information. They also said they had identified some responsive documents but were withholding them until the court ruled on their motion.

Legal standard

Under Federal Rule of Civil Procedure 26, discovery may cover nonprivileged information relevant to a claim or defense and proportional to the needs of the case. Rule 34 requires document requests to describe the materials sought with reasonable particularity and requires specific objections. Rule 26 also permits a court to issue a protective order to prevent undue burden or expense and to limit discovery that is cumulative, duplicative, or outside the permitted scope.

Ruling on the discovery requests

The court granted in part and denied in part the defendants’ motion for a protective order. It found that both sides had failed to meet and confer adequately. The court criticized the defendants for refusing to produce documents they had already identified as responsive and relevant, while also finding that Sound Around had served requests that were too broad and redundant.

The court narrowed the definition of “Competing Brands” in the requests to the two brands identified in the complaint, Bakken-Swiss and LifeMaster. It limited otherwise unrestricted requests to the period from January 2019 through February 2024. Requests referring to “products” were generally limited to the 50 potentially competing products identified by the defendants, although contracts between the defendants and Sound Around had to be produced regardless of those limitations. The court also limited communications, vendor materials, and general brand information to specified categories of relevant information.

For alleged kickbacks, the court limited production to materials such as bank statements, accounting records, online payment records, and communications directing, transmitting, confirming, or requesting payments involving vendors or manufacturers of the 50 products. It struck requests seeking broader information about how the defendants funded their competing business when those requests sought redundant or disproportionate information.

For alleged theft of funds, the court ordered production of documents showing travel costs, related expenses, reimbursement requests, and supporting materials. For alleged theft of confidential information, trade secrets, or licenses, the defendants had to produce Sound Around documents or devices still in their possession, documents concerning licenses for the 50 products, and materials concerning the procurement of certain online-sales accounts or licenses. For alleged trademark infringement, production was limited primarily to materials concerning the SCOOTKID mark, including representative packaging and inserts and documents supporting any claim that the defendants owned the mark or contested its validity.

The court also ordered production of the individual and corporate defendants’ tax returns because the defendants intended to make their alleged independent-contractor status relevant and the returns contained information not otherwise readily available. Personal identifying information of dependents could be redacted. The court also ordered production of applicable Internal Revenue Service Forms 1099 or W-2.

Disposition

The defendants had two weeks from the date of the order to produce the documents required by the ruling. The remaining requests were stricken to the extent stated in the order. The court did not shift fees or costs because it found both sides equally responsible for failing to meet and confer in good faith and to tailor their discovery requests and responses.