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Kische USA LLC v. Simsek

United States District Court, W.D. Washington, Seattle

November 2, 2017

KISCHE USA LLC, Plaintiff,
ALI SIMSEK, et al., Defendants.




         Before the court are three discovery-related matters raised by Plaintiff Kische USA LLC (“Kische”) and Defendants JD Stellar LLC (“JD Stellar”), Ali Simsek, and Diane Walker (collectively, “Defendants”). (See Pl. Statement (Dkt. # 113); Defs. Statement (Dkt. # 112).) The court has reviewed the parties' statements, the relevant portions of the record, and the applicable law. The court also heard from the parties at a discovery conference. (See 11/2/17 Min. Entry (Dkt. # 114).) Being fully advised, the court rules as follows.


         This case involves allegations that Mr. Simsek and Ms. Walker abused their positions with Kische to misappropriate Kische's assets and form JD Stellar, a competing business. (See SAC (Dkt. # 75); id. ¶ 4.4, Ex. 3 (“OA”) (Dkt. # 75-1) at 11.) During the relevant period, Kische-formed by Mehmet Uysal, who resided in Turkey-“engaged in the business of importing high quality and widely known wom[e]n's apparel to the United State[s] since its formation in 2007.” (SAC ¶ 1.1.) Kische brings claims for trademark infringement in violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114(1); common law trademark infringement; common law unfair competition; breach of contract; breach of fiduciary duty; tortious interference with business relations; conversion; and unjust enrichment. (SAC ¶¶ 5.1-12.4.) On September 6, 2017, the court granted summary judgment in Kische's favor on the duty and breach elements of the contract and fiduciary duty claims against Mr. Simsek.[1] (See 9/6/17 Order (Dkt. # 95).)

         On October 31, 2017, the parties identified three discovery-related issues: (1) Kische's Request for Production No. 1 (“RFP No. 1”) to which Defendants object as overly broad, unduly burdensome, and not within the scope of discovery; (2) Defendants' claimed inadvertent disclosure of JD Stellar's business records; and (3) Kische's request to appoint a special master to oversee discovery until the December 11, 2017, cutoff. (See Pl. Statement at 1-2; Defs. Statement at 2-4; see also Sched. Order (Dkt. # 78) at 1.) The court ordered the parties to appear for an in-court discovery conference on November 2, 2017. (Id. at 1-2.) The court now addresses the three issues.

         III. ANALYSIS

         A. RFP No. 1

         Kische's RFP No. 1 requests that Defendants “produce all records, documents . . . and electronically stored information which they received or came to possess in the course of their work for Kische or JD Stellar.”[2] (Pl. Statement at 2 (ellipsis in original).) In its statement to the court, Kische further explains that through this request it seeks “accountings, emails, inventories, and electronic data interchange (EDI) records used by retailers, importers, and manufacturers in the fashion industry, ” “Quickbooks files, ” the passwords for those files, credit card bills, “sales data, ” and other records. (Id. at 1-2.) Defendants object to RFP No. 1 as unreasonable, overly burdensome, and outside the scope of litigation. (Defs. Statement at 2.) At the discovery conference, Kische's counsel focused on EDI records, Quickbooks files, passwords for those files, and sales data for both Kische and JD Stellar. Accordingly, the court construes the parties' dispute regarding RFP No. 1 as limited to those categories of documents.

         A party may “obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case.” Fed.R.Civ.P. 26(b)(1). Whether discovery is proportional to the needs of the case hinges on “the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Id. The court has “broad discretion to limit” discovery that is not proportional to the needs of the case. Romero v. Securus Techs., Inc., No. 16-cv-1283-JM-MDD, 2017 WL 4621223, at *1 (S.D. Cal. Oct. 16, 2017).

         Based on the foregoing standard, the court finds that RFP No. 1 as written and as later narrowed by Kische's counsel is unduly burdensome and not proportional to the needs of the case. Accordingly, Defendants need only produce EDI records, [3]Quickbooks files, [4] passwords for those files, and sales data for JD Stellar if those documents are relevant to the claims that remain at issue in this case: trademark infringement, unfair competition, tortious interference with business relations, conversion, and unjust enrichment.[5] (See SAC; 9/6/17 Order (granting summary judgment on the duty and breach elements of breach of contract and fiduciary duty claims).) However, to the extent Defendants have retained any of those materials that belong to Kische-and thus are not JD Stellar's documents-Defendants must return all such property regardless of the cost to do so.

         The parties also raise two other issues related to discovery requests. First, Kische contends that certain evidence has been destroyed or is otherwise missing and requests that the court order Defendants to produce it. (Pl. Statement at 2-3.) Kische bases its contention on the following facts and assumptions: (1) forensic computer experts identified some missing or deleted files, (2) Mr. Simsek and Ms. Walker should have certain passwords because of the positions they held at Kische, and (3) because Kische purchased 20 computers in 2012 and Defendants turned over only six computers, another 14 computers must be missing. (See, e.g., id.) However, at the conference, the court extensively questioned counsel about the allegedly missing evidence, and Defendants' counsel represented that Defendants do not have any of the missing files or passwords and have produced all Kische computers that Defendants had in their possession. Despite Kische's wishes, the court cannot order Defendants to produce materials that do not exist. Instead, Kische must seek an appropriate remedy for spoliation of evidence. See, e.g., Apple Inc. v. Samsung Elec. Co., Ltd., 888 F.Supp.2d 976, 989 (N.D. Cal. 2012) (stating that spoliation occurs when a party “destroys or alters material evidence or fails to preserve” evidence when the party is under a duty to preserve it); Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006) (“There are two sources of authority under which a district court can sanction a party who has despoiled evidence: the inherent power of federal courts to levy sanctions in response to abusive litigation practices, and the availability of sanctions under [Federal Rule of Civil Procedure] 37 against a party who fails to obey an order to provide or permit discovery.”). The court therefore grants the parties leave to file appropriate discovery motions no later than November 11, 2017.[6](See Sched. Order at 1-2.) The parties must file any motion in accordance with the Local Civil Rules of the Western District of Washington and set forth the factual basis for the motion and the applicable legal standard.

         Second, Defendants state that Kische has requested additional discovery through informal means. (See Defs. Statement at 2-3.) Informal discovery requests are inappropriate, and the court orders that all requests be made formally and in accordance with the Federal Rules of Civil Procedure.

         B. ...

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