Management Registry, Inc. v. A.W. Companies, Inc.

Background

The order addressed issues Management Registry, Inc. raised informally during a recorded telephone conference on January 24, 2020. The issues concerned the defendants’ response to the Second Amended Complaint and discovery required by earlier court orders. The opinion does not decide the parties’ underlying claims.

Response to the Second Amended Complaint

The defendants had moved to dismiss all claims in the Second Amended Complaint for failure to state a claim, but had not filed a response or counterclaim. The parties were awaiting a ruling on the defendants’ objections to a recommendation that the motion to dismiss be denied.

Management Registry argued that the defendants’ deadline to file a response, including any counterclaim, had expired. The court disagreed. It concluded that the deadline had not passed because the same timing principle that pauses the deadline after a motion to dismiss also applies when the motion responds to an amended complaint. The court ordered the defendants to file a response within seven days after the District Court ruled on their objections to the September 12, 2019 recommendation, unless the District Court set a different time.

The court stated that this ruling would not prevent Management Registry from challenging any additional counterclaim or third-party claim at the proper time. It also encouraged Management Registry to consider withdrawing or voluntarily dismissing its indemnification claim and encouraged the defendants to maintain their representation that they would not bring an additional counterclaim unrelated to that claim. The parties were directed to meet and confer about the issue.

Discovery rulings

The court ordered the defendants to take one of two actions concerning the March 2018 data capture by February 11, 2020: produce all previously unproduced information from that capture, if efficient, or reproduce the entire database. The parties represented that the database contained approximately 160,000 documents and that approximately 140,000 had been produced.

The court rejected Management Registry’s argument that a computer expert was required to conduct the defendants’ searches. But it ruled that an interested party should not have primary responsibility for deciding what information is relevant and responsive. The court required defense attorney Alex Loftus to oversee compliance with the November 15, 2019 discovery order and provide an affidavit or declaration describing missing potentially responsive information, search terms, search methods, searched email accounts and other electronic locations, and documents withheld and the reasons for withholding them. Wendy Brown was separately required to provide an affidavit or declaration describing her search terms, searched locations, and search methods. Both sets of materials were due to Management Registry’s counsel by February 11, 2020.

The parties were ordered to meet and confer by February 7, 2020 about personal email accounts of the defendants’ employees. If they could not agree, Management Registry could file a motion to compel by February 14, 2020; any response was due February 21, 2020. The court stated that it would decide any such motion from the written submissions without a hearing.

Regarding redacted text messages, the court noted that redacting material claimed to be irrelevant is generally not permitted, although it had not received briefing on how that principle applies to text messages. By February 11, 2020, the defendants were required either to produce their text messages completely unredacted or to produce 10 messages on each side of every message containing an agreed search term. If the defendants chose the second option, the parties had to meet and confer by February 18, 2020, and any motion to compel or for a protective order had to be filed by February 25, 2020.

Finally, the court ordered the defendants to comply by February 11, 2020 with the earlier requirement to produce financial reports, tax returns, bank statements, earning records, invoices, and other documents reflecting A.W. Companies, Inc.’s income and earnings. The court stated that the defendants could not withhold responsive documents because they were poorly organized, kept in an unusual way, or stored only on paper. It warned that failure to comply with the deadline and the scope of the November 15, 2019 order could warrant sanctions.

Disposition and classification

This was a procedural case-management and discovery order. Judge Katherine Menendez set deadlines and required discovery steps but did not rule on the merits of the claims or enter a disposition of the defendants’ motion to dismiss.