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Alexander Interactive, Inc. v. Adorama, Inc.

United States District Court, Second Circuit

December 4, 2013

ALEXANDER INTERACTIVE, INC., ALEXANDER SCHMELKIN, and JOSH LEVINE, Plaintiffs,
v.
ADORAMA, INC., ADORAMA ENTERPRISES LLC, EUGENE MENDLOWITS, and MENDEL MENDLOWITS, Defendants. MENDEL MENDLOWITS, ADORAMA ENTERPRISES LLC, ADORAMA, INC., and EUGENE MENDLOWITS, Counter Claimants,
v.
ALEXANDER INTERACTIVE, INC, JOSH LEVINE, and ALEXANDER SCHMELKIN, Counter Defendants.

MEMORANDUM AND ORDER

JAMES C. FRANCIS, IV, Magistrate Judge.

The plaintiffs, Alexander Interactive, Inc., Alexander Schmelkin, and Josh Levine (collectively, "Alexander Interactive") have filed an omnibus discovery motion seeking (1) to compel production of documents from the defendants, Adorama, Inc., Adorama Enterprises, LLC, Eugene Mendlowits, and Mendel Mendlowits (collectively, "Adorama") and from non-party Magento, Inc. ("Magento"); (2) for in camera review of all of the documents on Magento's privilege log; (3) to extend the duration of certain depositions, some of which have already been taken; (4) to extend discovery deadlines; and (5) for sanctions.[1] The motion is granted in part and denied in part.

Background[2]

The plaintiffs allege that retailer Adorama retained Alexander Interactive, a web design and engineering firm, in connection with re-engineering Adorama's website, which was to run on a Magento ecommerce platform. (Second Amended Complaint ("2d Am. Compl."), ¶¶ 9-10, 15, 19). Alexander Interactive performed preliminary work on the redesign project pursuant to the Master Services Agreement (the "Adorama Agreement"). (Plaintiffs' Motion (I) to Compel Production of Documents (II) to Re-Produce Witnesses and Extend Deposition Durations (III) for In Camera Inspection of Alleged Privileged Documents (IV) to Extend Fact Discovery Deadline and (V) for Sanctions under FRCP 37(a)(5)(A) ("Pl. Memo.") at 3; 2d Am. Compl., ¶¶ 15-16; Schedule A dated June 2, 2010, attached as Exh. B to 2d Am. Compl., § 2). The parties later amended the Adorama Agreement, expanding Alexander Interactive's scope of work for the project and requiring additional payments from Adorama. (Pl. Memo. at 4; Schedule B dated Dec. 21, 2010, attached as Exh. C to 2d Am. Compl., § 6 & App. C; Escrow Agreement dated Dec. 21, 2010, attached as Exh. D to 2d Am. Compl.). During the course of its work, Alexander Interactive executed a Custom Services Agreement with Magento (the "Magento Agreement"), by which Magento would provide consulting and other services, including coding assistance and review. (2d Am. Compl., ¶¶ 20, 24; Magento Custom Services Agreement dated Nov. 10, 2010, attached as Exh. E to 2d Am. Compl.; Pl. Memo. at 9).

Alexander Interactive asserts that Magento employee Vitaliy Korotun performed the work contemplated in the Magento Agreement, "programming the architectural interface (i.e. the foundation) for the Adorama website." (Pl. Memo. at 9). Alexander Interactive developed the "Architectural Documents, " which "comprised the Front-end and Back-end [] of the proposed new Adorama website, " and then began writing code. (Certification of Alex Schmelkin dated Oct. 15, 2013 ("Schmelkin Cert."), attached as Exh. A to Pl. Memo., ¶¶ 7-8 & nn.1-6).

The relationship degenerated from there. The plaintiffs contend that Adorama repeatedly requested changes to the site that were outside the agreed-upon scope of work, failed to pay incurred charges, and refused to perform user acceptance testing on the "Code Deliverables" that Alexander Interactive designed and delivered. (Schmelkin Cert., ¶¶ 9-11; 2d Am. Compl., ¶¶ 31-35). For its part, Adorama asserts that Alexander Interactive mismanaged the project, failed to meet deadlines, and delivered shoddy work that had not been quality-tested. (Declaration of Glen Holman dated October 28, 2013 ("Holman Decl."), ¶ 10; Answer, Affirmative Defenses and Counterclaims ("Answer"), ¶¶ 213, 215, 217-20, 228, 230-34, 253-58). In March 2012, Alexander Interactive sent Adorama a termination notice. (2d Am. Compl., ¶¶ 37-39; Letter of Alexander Schmelkin dated March 13, 2012, attached as Exh. G to 2d Am. Compl.). In order to stave off termination of the contract, the parties agreed that Magento would audit Alexander Interactive's work. (Holman Decl., ¶ 11). The audit found significant problems with the work performed, which Alexander Interactive blames, in part, on code written by Mr. Korotun. (Pl. Memo. at 2).

Ultimately, Adorama launched a revamped website and solicted Magento to perform certain services originally covered by the Adorama Agreement. (2d Am. Compl., ¶¶ 48, 60; Pl. Memo. at 5, 9-10). Alexander Interactive alleges that Adorama "stole the frontend and back-end of the... [s]ite developed by [Alexander Interactive], " and infringed its intellectual property in various other ways. (Pl. Memo. at 5; 2d Am. Compl., ¶¶ 44-57, 61-65).

Discussion

A. Meet and Confer Obligations

The defendants contend that there was no attempt to meet and confer to resolve this dispute. (Defendants' Memorandum of Law in Opposition to Plaintiffs' (I) Motion to Compel Production of Documents, (II) to Re-Produce Witnesses and Extend Depositions, (III) to Extend Fact Discovery Deadline and (IV) for Sanctions under FRCP 37(a)(5)(A) ("Def. Memo.") at 2, 15-19).

When a party moves for an order compelling disclosure or discovery, Rule 37(a)(1) of the Federal Rules of Civil Procedure requires that the motion "include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action." See Debellis v. Bize, No. 11 Civ. 7113, 2013 WL 935764, at *1 (S.D.N.Y. March 11, 2013). The certification must

set forth... essential facts sufficient to enable the court to pass a preliminary judgment on the adequacy and sincerity of the good faith conferment between the parties[, ] such as the names of the parties who conferred or attempted to confer, the manner by which they communicated, the dispute at issue, as well as the dates, times, and results of their discussions, if any.

AIU Insurance Co. v. TIG Insurance Co., No. 07 Civ. 7052 , 2008 WL 4067437, at *4 (S.D.N.Y. Aug. 28, 2008) (alterations in original) (internal quotation marks omitted). Here, the certification is deficient, merely stating:

The Plaintiffs hereby certify, pursuant to FRCP 26(c)(1) [sic] that they, on the one hand, and the Defendants, Magento and Samsung, on the other hand, respectively [sic], have engaged in good faith efforts to resolve these discovery issues via a series of meetings and conferences in connection therewith in an effort to resolve these discovery disputes without Court Action.

(Pl. Memo. at 17).

Nevertheless, Rule 37 is satisfied as long as the parties have in fact met and conferred, even if they fail to submit a proper certification. See Care Environmental Corp. v. M2 Technologies Inc., No. 05 CV 1600 , 2006 WL 1517742, at *3 (E.D.N.Y. May 30, 2006) (citing Matsushita Electronic Corp. of America v. 212 Copiers Corp., No. 93 Civ. 3243, 1996 WL 87245, at *1 (S.D.N.Y. Feb. 29, 1996)) (affirming order compelling discovery where plaintiff had met and conferred with defendant but did not submit certification to that effect). The parties comply with the rule's obligations when they

meet, in person or by telephone, and make a genuine effort to resolve the dispute by determining... what the requesting party is actually seeking; what the discovering party is reasonably capable of producing that is responsive to the request; and what specific genuine issues, if any, cannot be resolved without judicial intervention.

AIU Insurance Co. , 2008 WL 4067437, at *3 (alteration in original) (quoting Prescient Partners, L.P. v. Fieldcrest Cannon, Inc., No. 96 Civ. 7590 , 1998 WL 67672, at *3 (S.D.N.Y. Feb. 18, 1998)). "A live exchange of ideas and opinions is required." Prescient Partners , 1998 WL 67672, at *2 (internal quotation marks omitted). From the materials submitted here, it is clear that the parties did not meet and confer in good faith.

To be sure, the parties exchanged numerous letters and e-mails regarding discovery issues. The problem is that the plaintiffs' communications do not show a willingness to compromise or find solutions. For example, in an e-mail dated September 20, 2013, the plaintiffs demanded production of the "[f]ull source code of Adorama's present site, " among other materials. (E-mail of Denise L. Savage dated Sept. 20, 2013, attached as Exh. C to Declaration of Matthew Sheppe dated Oct. 28, 2013 ("Sheppe Decl.")). The defendants pointed out, repeatedly, that the parties had agreed that the plaintiffs would hire a third party to review the source code at Adorama's headquarters and had memorialized that agreement in a joint letter to the Honorable P. Kevin Castel, U.S.D.J., in May 2013. (Letter of Daniel J. Brown dated Sept. 25, 2013, attached as Exh. E to Sheppe Decl., at 2; E-mail of Daniel J. Brown dated Oct. 3, 2013, attached as Exh. F to Sheppe Decl., at 2; Letter of Daniel J. Brown dated Oct. 11, 2013, attached as Exh. J to Sheppe Decl., at 1; Letter of Daniel J. Brown dated May 7, 2013 ("May 7 Joint Letter"), attached as Exh. A to Sheppe Decl., at 7). Rather than addressing this agreement and explaining why they should no longer be bound by it, the plaintiffs' responses simply ignore its existence, demand production of the source code, and threaten to file a motion to compel.[3] (E-mail of Denise L. Savage dated Oct. 4, 2013 ("Savage 10/4/13 E-mail"), attached as Exh. G to Sheppe Decl., at 1-2; E-mails of Denise L. Savage dated Oct. 10, 2013 ("Savage 10/10/13 E-mails"), attached as Exh. I to Sheppe Decl.). The plaintiffs followed a similar strategy with regard to the other documents at issue here, refusing to engage in a "live exchange of ideas and opinions, " Prescient Partners, 1996 WL 67672, at *2, with the defendants to resolve the disputes (Savage 10/4/13 E-mail; Savage 10/10/13 E-mails). That is not conferring in good faith.

While failure to meet and confer in good faith is sufficient reason to deny a motion to compel, courts have recognized that the merits of a discovery motion may be addressed "where the meet-andconfer would have been futile." Gibbons v. Smith, No. 01 Civ. 1224, 2010 WL 582354, at *2 (S.D.N.Y. Feb. 11, 2010); see also Prescient Partners , 1998 WL 67672, at *3 (collecting cases). While this is a close case, the papers submitted with this motion indicate that both sides have dug in - indeed, the defendants now seem to take the (untenable) position that the plaintiff is not entitled to the source code at all, having titled one section in their opposition "Plaintiffs Are Not Entitled to Adorama's Source Code." (Def. Memo. at 8). Ordering the parties to meet and confer is unlikely to resolve these disputes. See Time Inc. v. Simpson, No. 02 Civ. 4917, 2002 WL 31844914, at *2 (S.D.N.Y. Dec. 18, 2002) ("[Meet and confer] requirements are designed to promote efficiency in litigation, and that goal would not be advanced by further delay in resolving these issues on the merits.").

B. Motion to Compel Adorama to Produce Documents

Alexander Interactive seeks four categories of documents: (1) the aforementioned source code; (2) configuration files - that is, "files setting forth initial settings, server processes and operating system settings" (Def. Memo. at 11) - for Adorama's AS400 System, which "contains all of Adorama's accounting, financial, inventory control, [and] warehouse management... information" (Def. Memo. at 11); (3) configuration files for Adorama's Endeca database and search engine, which "interact with the website platform to provide [an] end user [who has searched for a product on the website] with the appropriate search results" (Def. Memo. at 12); and ...


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