Brand Advantage Group, Inc. v. Henshaw

Background

Brand Advantage Group, Inc. (BAG) provides commercial printing services. Dave Henshaw worked for BAG as a sales representative until he resigned on December 13, 2019. Before working for BAG, Henshaw worked for Quality and Safeguard Business Systems, Inc. Safeguard Acquisitions, Inc. later purchased Quality’s assets, and BAG purchased Safeguard Acquisitions’ assets. BAG alleged that it acquired the rights to enforce Henshaw’s 1993 employment agreement.

The agreement contained a confidentiality provision that prohibited Henshaw from using or disclosing Quality’s proprietary information during or after the agreement’s term. It also contained noncompetition provisions with one-year limits. After leaving BAG, Henshaw began working for American Solutions for Business (ASB). BAG alleged that Henshaw solicited its customers and disclosed or used confidential information, including pricing, customer preferences, purchase history, costs, and profit margins.

BAG’s lawsuit originally asserted breach of contract, breach of the duty of loyalty, and tortious interference with business relations. Judge John R. Tunheim previously ruled that the employment agreement as a whole expired in 1994 but that the confidentiality provision survived. He allowed BAG’s confidentiality-based contract claim to proceed, dismissed the contract theories based on customer solicitation, providing services for a competitor, and diverting business or customers, and denied BAG’s request for a preliminary injunction.

Henshaw’s request to divide discovery and file an early summary-judgment motion

Henshaw sought permission to file an early partial motion for summary judgment, a motion asking the court to resolve a claim without a trial when there is no genuine dispute over the important facts. He proposed challenging whether he owed BAG a continuing duty to protect confidential information and whether BAG succeeded to obligations owed to Henshaw’s former employers. He also sought to divide discovery so that the parties would first address issues related to that proposed motion.

The court concluded that an early motion would address only the remaining contract claim and would not resolve the tort claims. Henshaw also did not show that deciding the contract claim early would significantly reduce discovery, narrow the trial issues, promote an early settlement, or otherwise improve efficiency. The court therefore denied the request to file an early partial summary-judgment motion, but denied it without prejudice if new circumstances or discovery later justified another request. Because the request to divide discovery depended on the proposed early motion, the court denied the motion to bifurcate.

The court also explained that Henshaw could not use a new motion to dismiss for failure to state a claim after filing his answer. The court did not decide the merits of any proposed amended claim based on a common-law duty of confidentiality.

BAG’s motion to compel

A motion to compel asks the court to require a party to provide discovery. The court applied the rule allowing discovery of nonprivileged information relevant to a claim or defense and proportional to the needs of the case.

The court granted BAG’s motion in part regarding Interrogatories 6 and 9 and Document Requests 1–5 and 7. As narrowed by BAG, those requests concerned communications with BAG customers and suppliers, including prices, comparisons between BAG and ASB prices, customers’ needs and preferences, purchasing histories, and references to BAG or its employees. Henshaw was ordered to answer the interrogatories and search for and produce responsive, nonprivileged documents in his possession, custody, or control, including documents on reasonably likely computers, portable media, and mobile devices. The court noted that competitively sensitive information could be produced under the existing protective order.

The court also ordered Henshaw to respond in full to BAG’s narrowed Request 25 for calendars, schedules, and diaries from November 1 through December 13, 2019, if he had the information in his possession, custody, or control. It ordered responses to Interrogatory 8 and Request 11 concerning Henshaw’s December 2019 business trip to Indiana and Kentucky. Request 11 was limited to documents and communications about the trip, the visits, and follow-up communications referring to or reflecting those visits or the trip.

The court further ordered Henshaw to respond to Interrogatory 12 and Document Requests 8, 9, 26, and 28, as narrowed, concerning communications with ASB about specified information relating to BAG and its customers. The court clarified that the requests could not be interpreted to cover the needs, preferences, or purchasing histories of customers who were not BAG customers. It rejected Henshaw’s objection that BAG exceeded the 25-interrogatory limit.

The court denied BAG’s motion at that time as to Interrogatories 10 and 16 and Document Requests 10, 12, and 13. Those requests sought Henshaw’s compensation, financial incentives, and employment agreements with ASB. The court found them overly broad and premature, while noting that BAG could renew or narrow the requests if later discovery produced evidence of specific customer solicitation before Henshaw left BAG or use of specific confidential BAG information to help move a customer to ASB.

For Document Request 14, concerning BAG documents that Henshaw had not returned and still possessed, the court did not order additional production based on the existing record. It stated, however, that Henshaw had to conduct a diligent search and promptly notify BAG and produce any additional responsive documents he later found or remembered.

Disposition

The order states that BAG’s Motion to Compel was granted in part and denied in part. Henshaw’s Motion to Bifurcate and Compel was denied as to bifurcation, denied without prejudice as to permission to file an early partial motion for summary judgment, and granted as to the motion to compel. The order was signed by Hildy Bowbeer, United States Magistrate Judge.