Stemcell Technologies Canada Inc. v. StemExpress, LLC

Background

STEMCELL Technologies Canada Inc. and StemExpress, LLC had a business relationship under which StemExpress supplied cell products to STEMCELL. After the relationship ended, the parties sued each other over claims including breach of contract. StemExpress also alleged that STEMCELL obtained and misappropriated trade secrets during quality audits of StemExpress’s facilities to establish a competing business called Canventa, in violation of the California Uniform Trade Secrets Act.

STEMCELL brought three discovery disputes. It sought to compel: (1) testimony from a corporate representative under Federal Rule of Civil Procedure 30(b)(6); (2) responses to document requests; and (3) responses or supplemental responses to interrogatories. STEMCELL also sought attorney’s fees under Rule 37(a)(5)(A). StemExpress mainly objected based on relevance and proportionality, meaning whether the requested discovery’s likely benefit justified its burden or expense.

Rule 30(b)(6) deposition

The court directed the parties to work out a deposition date themselves. If they could not do so, the deposition date would be three weeks after they brought a renewed dispute to the court. The court rejected StemExpress’s position that it necessarily had to review STEMCELL’s document production first, while directing the parties to confer about any remaining document production and the time needed before a productive deposition.

For most disputed topics—topics 4–5, 13, and 15–21—the court found contention interrogatories more appropriate than a deposition. Contention interrogatories are written questions seeking a party’s factual or legal positions. StemExpress had agreed to provide complete, good-faith responses, which the court found to be a reasonable compromise. For topic 6, StemExpress had agreed to determine whether it could designate a witness, and the court found that compromise reasonable. For topics 1 and 2, StemExpress proposed designating a witness after reviewing STEMCELL’s documents, and the court found that compromise reasonable. The court found topic 14 relevant and not overbroad or burdensome, and noted that the protective order provided a process for disclosing nonparty information.

The court could not address topics 7–8, 23–25, and 34–36 because they appeared in the letter but not in the accompanying chart. More generally, the court said issues it did not address were denied without prejudice and could be raised again in properly prepared discovery letters.

Document requests

StemExpress had agreed to produce all nonprivileged responsive documents for requests 29 and 30. The court stated that StemExpress must respond to requests 5–6, 9–11, 22, 28–31, and 42. For requests 4, 13–15, 17–19, 21, and 25, the court directed the parties to confer about the time needed to review records and finalize responses. The court viewed requests 26 and 34 as apparently resolved because STEMCELL had agreed to provide a narrower date range. The court could not decide requests 1–3 because STEMCELL omitted them from its chart.

The court found request 23, seeking internal communications about STEMCELL’s orders from January 1, 2017, through December 31, 2021, relevant, but observed that email production might be more useful later after the parties identified more targeted periods. Request 41, seeking information identifying customers who purchased certain products during a specified period, appeared relevant but raised substantial confidentiality and burden concerns. For requests 32 and 33, seeking certain nondisclosure agreements, the court found that the relevance did not justify the burden as framed and suggested that representative agreements might provide a possible compromise. The court found that StemExpress had not sufficiently explained burden or proportionality for request 39, and suggested that the parties consider a narrower approach for request 40. The parties’ dispute about limiting the requests to the contractual relationship appeared moot because they had agreed to that limitation.

Interrogatories

StemExpress had agreed to answer interrogatories 1 through 9, so the court said it must provide those responses. The court denied the motion to compel responses to interrogatories 10 and 11 for now because StemExpress had agreed to review the burden of responding and the parties’ further discussions might resolve the dispute. Those interrogatories sought customer identities relevant to STEMCELL’s claimed damages from alleged shipment delays and diversion of sales. The parties’ dispute over limiting the interrogatories to the contractual period appeared moot because they had agreed to that limitation.

Attorney’s fees and disposition

Rule 37(a)(5)(A) generally requires reasonable costs, including attorney’s fees, when a motion to compel is granted, subject to stated exceptions. The court denied STEMCELL’s fee request because both parties had failed to cooperate reasonably in handling the discovery disputes, making an award unjust on the record. The order resolved the disputes in ECF Nos. 103, 104, and 105. Magistrate Judge Laurel Beeler issued the order on June 14, 2022.