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Reed Construction Data Inc v. the Mcgraw-Hill Companies

April 15, 2013

REED CONSTRUCTION DATA INC., PLAINTIFF,
v.
THE MCGRAW-HILL COMPANIES, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Pitman, United States Magistrate Judge:

OPINION AND ORDER

I. Introduction

This matter has been referred to me to resolve a dispute resulting from plaintiff's failure to identify some of the factual and legal bases for its damages claims in a timely manner.

II. Facts

A. Nature of the Action

This is a business tort action grounded in plaintiff's allegations that defendants have improperly obtained and misused plaintiff's confidential business information.*fn1 The parties are in the business of providing news concerning construction projects to building supply manufacturers, contractors and others in related industries. The parties' customers use this information to identify potential sources of business and, at times, to prepare and submit bids. The scope of the information the parties provide can be uniquely tailored to fit the nature of a customer's business. For example, a fabricator of stained-glass windows or pews might limit its subscription to notices concerning the construction of houses of worship. Subscriptions can also be limited geographically. Plaintiff bills for its services by charging both a basic subscription fee and a "seat charge" based on the number of individuals within an organization who have access to the information provided by plaintiff. The greater the number of people with access, the higher the aggregate seat charge will be.

Because public dissemination of the parties' information would destroy their businesses, subscribers are required to agree that they will hold the information provided in confidence, not disclose it to third parties and will not use it for improper purposes.

Plaintiff alleges that defendant hired nominees to pose as legitimate participants in the construction industry and to subscribe to plaintiff's service. These nominees allegedly passed plaintiff's information on to defendants who used the information to prepare allegedly unfair comparisons of plain-tiff's and defendants' services. Defendants allegedly used the comparisons as a marketing tool to divert customers from plaintiff, secure new customers that may have been considering plain-tiff's service and maintain existing customers.

B. Relevant Procedural History

This action was commenced on October 8, 2009. The complaint has been amended three times, and the schedule for the completion of pretrial proceedings has been extended five times (see Docket Items 46, 62, 81, 102 and 125).

C. The Present Dispute

The present dispute relates to plaintiff's untimely disclosure of the factual and legal bases for two aspects of its damages claims.

Among other classes of damages, plaintiff seeks damages for the loss of customers and prospective customers as a result of defendants' allegedly unfair competition. As of the close of fact discovery on July 27, 2012, plaintiff had identified 221 customers and prospects that it lost as a result of defendants' alleged acts. On February 1 and March 1, 2013 -- more than a month after all expert reports had been exchanged -- plaintiff amended this aspect of its damages claim by dropping 198 allegedly lost customers and prospects and adding 26 new ones. If permitted, this amendment will leave plaintiff with a claim for damages based on the loss of 49 customers and prospects. There is no dispute that documents have been produced with respect to 23 of the 49 (i.e., the allegedly lost customers and prospects that have always been in the case); the parties dispute whether complete document production has been made with respect to the remaining 26.

In addition to amending the bases for its lost customer revenue claim, plaintiff has recently disclosed that it will attempt to seek damages for lost seat charges. That is, it will seek to recover the seat charges it would have imposed had it known that defendants' nominees were granting access to plain-tiff's information to other individuals within defendants' organization. Although initial expert disclosures were ...


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