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Ferguson v. Ferrante

United States District Court, S.D. New York

April 3, 2014

DOUGLAS FERGUSON, Plaintiff/Counter-Defendant,
MATTHEW FERRANTE, Individually, and AURORA INFORMATION SECURITY & RISK, LLC, Defendants/Counter-Claimants.


VALERIE CAPRONI, District Judge.

This discovery dispute stems from litigation over alleged mutual noncompliance with a settlement agreement between an employer and its former employee. The Court assumes the parties' familiarity with the facts, history, and procedural posture of the case. In a letter dated March 21, 2014, the defendants moved to compel Ferguson's compliance with certain of the defendants' interrogatories and document requests. Ferguson responded by letter on March 25, 2014, arguing that the disputed interrogatories are overly broad or pertain to matters not in dispute in this case.[1] For the following reasons, the defendants' request is DENIED as to Interrogatories 7, 9, and 15 and Document Requests 8, 9, 12, and 13. The defendants' request is GRANTED and the plaintiff is ORDERED to comply with Interrogatories 5, 8, 16, and 17 (as they are modified below), and Document Requests 7 (in full), 10, and 11 (as they are modified below). The defendants' request for costs and attorneys' fees is DENIED.


Local Civil Rule 33.3 governs the use of interrogatories in the Southern District of New York. It permits interrogatories as to the identification of witnesses, the computation of damages, the existence of documents, any information that can best be obtained through interrogatory rather than document request or deposition, and any other information that a Court orders discoverable through interrogatory.[2] Although the defendants note that they do not understand the interplay between Rule 33.3 and Federal Rule of Civil Procedure 33(a)(2), they do not challenge the propriety of the Local Rule. See Doc. 28 at 3 n.2. Local Rule 33.3 therefore guides the Court's analysis of the various disputed interrogatories.

Interrogatory 5

Interrogatory 5 asks Ferguson: "Following the termination of [y]our relationship with Aurora, and concerning [y]our work for Aurora, identify all [p]ersons or entities to whom [y]ou have given, shared, sold, or described [y]our work product to [sic] while [y]ou were at Aurora." Doc. 28 Ex. A at 4. Although the interrogatory is oddly worded, the defendants have clarified that it applies only to Ferguson's communications after his employment at Aurora was terminated. Doc. 28 at 3. Thus, the Court understands the interrogatory to be: "For the period from January 12, 2012, to the present, identify all persons or entities other than those affiliated with Accuvant, McAfee, and Barclays, to whom you gave, shared, sold or described your Aurora work product." The defendants contend that this information is relevant to their "assert[ion] that plaintiff breached the NDA as well as his duty of loyalty arising from his contractual commitments to Aurora as well as that which arises at common law." Id. (citing Defendants' Answer, Defenses and Counterclaims ("Counterclaims")).

The defendants' fifth counterclaim asserts that "[t]he terms of Ferguson's contractual arrangement with Aurora imposed on him a duty of loyalty." Counterclaims ¶ 145. Although the pleadings do not clearly identify the source of this duty of loyalty, the defendants argue that such a duty stemmed from Paragraph 5 of the Non-Disclosure Agreement ("NDA"), which prohibited Ferguson from, inter alia, "directly or indirectly[] solicit[ing] any individuals or business who were customers or clients of" Aurora. This obligation was modified by the Settlement Agreement, which permitted Ferguson to assume and to solicit business from McAfee, Accuvant, and Barclays Bank. Settlement Agreement ¶¶ 2-3. The Settlement Agreement was clear that it modified but did not "replace" the NDA. Id. ¶ 2.

For the purposes of this discovery dispute, the defendants have sufficiently pled the existence of some duty not to indirectly solicit former Aurora clients other than McAfee, Accuvant, and Barclays Bank. The motion to compel the plaintiff to respond to the inquiry as restated above is therefore GRANTED.[3]

Interrogatories 7, 8, and 9

These interrogatories are all related to Ferguson's receipt of money from business relationships. Interrogatory 8 asks Ferguson to identify third parties that have paid Ferguson, Pharos Security, or any other entity owned by Ferguson since 2010. This interrogatory is a very practical way of identifying witnesses who might have information relevant to the defendants' fifth counterclaim. Accordingly, this interrogatory is consistent with Local Rule 33.3(a) and (b). Business that was obtained from customers who were not previously Aurora clients, however, is irrelevant to any alleged breach of any existing "duty of loyalty" arising from the NDA. Accordingly, the defendants' motion to compel a response to Interrogatory 8 is GRANTED IN PART and DENIED IN PART. The plaintiff must respond to Interrogatory 8 but only insofar as it seeks information regarding payments received from persons or entities who are or were previously customers or clients of Aurora.

Interrogatories 7 and 9 both request identifying information of certain bank accounts. This information can efficiently be obtained from Ferguson at a deposition. The Court takes no position whether a motion to quash a third-party subpoena served on Ferguson's banks for detailed banking information covering the same period would be successful - the resolution to that question may depend, in part, on responses to the other interrogatories submitted and to the precise information that might be sought from the banks. For now, the defendants' motion to compel responses to Interrogatories 7 and 9 is DENIED. See, e.g., J. Goldman & Co., L.P. v. Kowal, No. 96-cv-7868(DAB)(HBP), 1997 WL 452332, at *1 (S.D.N.Y. Aug. 8, 1997) ("To the extent the interrogatories seek information beyond the identification of persons and transactions, depositions are more practical vehicles for obtaining the information."); see also In re Weatherford Int'l Sec. Litig., No. 11-cv-1646(LAK)(JCF), 2013 WL 5788680, at *2-3 (S.D.N.Y. Oct. 28, 2013).

Interrogatories 15, 16, and 17

These interrogatories seek information relating to Ferguson's claims against the defendants for the misappropriation and conversion of trade secrets and confidential business information. See First Am. Compl. ¶¶ 91-97. The First Amended Complaint and Ferguson's subsequent submissions to this Court highlight several Aurora products that Ferguson alleges incorporate his trade secrets. Id. ¶ 92, Doc. 31 at 5. Those submissions do not, however, clarify "with particularity the specific trade secrets and confidential business information' mentioned in [two clauses of] the Amended Complaint that Ferrante and Aurora allegedly appropriated and converted." Interrogatory 16. Judge Failla recently explained the importance of pleading trade secrets with particularity; without knowing the specific secrets at issue, the defendants run the risk of re-using the secrets and the Court is unable to evaluate whether and to what extent they are doing so. See Big Vision Private Ltd. v. E.I. DuPont De Nemours & Co., ___ F.Supp.2d ___, 2014 WL 812820, at *23-27 (S.D.N.Y. March 3, 2014). Insofar as Interrogatories 16 and 17 require Ferguson particularly to identify the allegedly stolen trade secrets, the defendants' motion to compel a response is GRANTED. Ferguson's response must contain more than a mere naked assertion that such secrets are used in specific Aurora products. On the other hand, to the extent Interrogatories 16 and 17 seek "the full basis for the belief" that the identified information constitutes a trade secret, this can be obtained at Ferguson's deposition. In short, the defendants' motion to compel responses to Interrogatories 16 and 17 is GRANTED in part and DENIED only as to the requirement that Ferguson "state the full basis for these beliefs."

Interrogatory 15 asks Ferguson to identify and specifically describe any use that Ferguson has made of the identified trade secrets since he left Aurora. The Court fails to understand how Ferguson's use of Ferguson's alleged trade secrets is relevant to this action, and the defendants have argued only that knowing this information will help them to identify the trade secrets at issue. Because the identification of the trade secrets will be provided through ...

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