United States District Court, D. South Carolina, Florence Division
KAYMANI D. WEST, Magistrate Judge.
This matter is before the court on the Motion to Compel ("Motion") filed by Plaintiff, ECF No. 65, to which Defendant filed a response, ECF No. 69, and Plaintiff replied, ECF No. 73. The court held a hearing on May 20, 2014, at which time the Motion was taken under advisement. On June 9, 2014, Plaintiff filed a supplement to its Motion. ECF No. 79. Having considered the parties' arguments as well as their briefs and related filings, the court grants Plaintiff's Motion as set forth herein.
I. General Background
Plaintiff Sonoco Products Company ("Sonoco" or "Plaintiff"), a South Carolina corporation headquartered in Hartsville, South Carolina, brought this lawsuit against Defendant Levent Güven ("Guven" or "Defendant") in June 2011, alleging the following causes of action: breach of the fiduciary duties of loyalty arising out of his employment relationship; breach of a written contract; and misappropriation of trade secrets. Compl., ECF No. 1-1. The case was served on Defendant in February 2012 and removed to this court on March 19, 2012. ECF No. 1. These claims stem from an employment agreement entered into between Sonoco and Guven in which Sonoco contends that Guven, a Turkish national lawfully admitted for permanent residence in the United States, violated the employment agreement with Sonoco when he formed and operated Konfida Ambalaj Tekstil San. Ve Tic. Ltd. Sti. ("Konfida") using Sonoco's trade secrets to be a direct competitor with Sonoco Ambalaj Sanayi ve Ticaret A.S. ("Sonoco Turkey"). Sonoco Turkey is a wholly-owned subsidiary of Plaintiff. See Order denying Mot. Dism., ECF No. 52 (denying Guven's Motion to Dismiss for Forum Non Conveniens or, in the Alternative, to Stay). Litigation between Guven, his business partner, Adem Gurarda, and Sonoco Turkey is also pending in Turkey. See id. at 2.
At issue are Defendant's responses to Plaintiff's First Set of Interrogatories and First Set of Requests for Production, both served on Defendant in December 2012. See ECF Nos. 65-2, 65-3. Defendant served several sets of responses to these interrogatories and requests for production. First Answers (Feb. 15, 2013), ECF Nos. 65-4, 65-5; Am. and Suppl. Answers (July 1, 2013), ECF Nos. 65-6, 65-7; Second Am. Resp. Reqs. Prod. (Oct. 29, 2013), ECF No. 65-8; Second Am. and Suppl. Answers (Dec. 20, 2013), ECF Nos. 65-9, 65-10; Third Am. and Suppl. Answers (Feb. 14, 2014), ECF Nos. 65-11, 65-12.
Prior to filing the Motion to Compel, the parties had an informal conference with United States District Judge R. Bryan Harwell regarding discovery disputes. Unable to resolve the disputes informally, Plaintiff filed the instant Motion on March 13, 2014.
Parties in civil litigation generally enjoy broad discovery. See Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Murray Sheet Metal Co., Inc., 967 F.2d 980, 983 (4th Cir. 1992) ("[T]he discovery rules are given a broad and liberal treatment.'") (quoting Hickman v. Taylor, 329 U.S. 495, 507 (1947)). In defining the breadth of discovery, Federal Rule of Civil Procedure 26(b)(1) provides the following guidance:
Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense-including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action.
Fed. R. Civ. P. 26(b)(1). If a party declines to answer an interrogatory or request for production, the serving party "may move for an order compelling an answer, designation, production, or inspection." Fed.R.Civ.P. 37(a)(3)(B). An evasive or incomplete disclosure, answer, or response, "must be treated as a failure to disclose, answer or respond." Fed.R.Civ.P. 37 (a)(4). "The scope and conduct of discovery are within the sound discretion of the district court." Columbus-Am. Discovery Grp. v. Atl. Mut. Ins. Co., 56 F.3d 556, 568 n.16 (4th Cir. 1995) (citing Erdmann v. Preferred Research, Inc. of Ga., 852 F.2d 788, 792 (4th Cir. 1988)). It is against this backdrop that the court considers Plaintiff's Motion.
In a nutshell, Plaintiff's requested relief concerns two broad areas: Defendant's discovery responses concerning Konfida information and documents arguably within Plaintiff's control as one of two managing partners of Konfida; and responses concerning information and documents Defendant within Plaintiff's personal knowledge including such information and documents purportedly obtained from Plaintiff. The court considers these in turn.
A. Konfida Information and Documents
The crux of much of Plaintiff's Motion concerns Defendant's position that some of the information requested from him is not his to provide, rather, he submits it is information belonging to nonparty Konfida. Although Defendant generally concedes that, as one of two managers of Konfida, he has access to the requested information and documents, he submits he is unable to provide the information lest he become subject to potential civil liability and criminal consequences in Turkey. These requests seek information about Konfida's vendors, suppliers, customers, and other information Plaintiff seeks to prove both liability and damages in this matter.
In response to some requests, Defendant has objected, claiming information related to Konfida is unavailable because "Konfida is not a party to this action and no veil piercing theory has been raised." See, e.g., Def.'s 2d Am. and Suppl. Answers 9, ECF No. 65-9. Similarly, in objecting to some requests, Defendant indicated he had not personally maintained the potentially relevant documents. See., e.g., Def.'s Am. Resps. 9, ECF No. 65-7 (responding to request for bills, correspondence, and similar items sent by Defendant or Konfida to any current or former Sonoco customer; in addition to other objections and responses, noting Defendant "has not personally maintained any such documents."). In his objections, Guven argues Konfida has two owners-himself and Gurarda-and that Gurarda is responsible for the manufacturing side, including vendors and salaries. See Def.'s 3d and Am. Answers 13-17, ECF No. 65-11.
In seeking to compel responses, Plaintiff argues the objection is invalid, and it is of no moment that no veil-piercing theory has been raised. Pl.'s Mem. 9-10. Plaintiff cites several persuasive cases in which courts required a defendant to respond to discovery regarding information held by a corporation in which the defendant was an officer or played a similar role, despite defendant's argument he did not have "control" of the documents. Pl.'s Mem. 9-11. Defendant responds, arguing he need not provide the information sought regarding Konfida's information about vendors, revenue, and the like because the information contains "confidential, commercial documents" and Guven is the only Defendant in this action, and in the course of his work, he does not have personal access to the documents requested." Def.'s Mem. 7, ECF No. 69 (emphasis added).
Of particular relevance to the issue of what documents and information Guven may be compelled to provide, the court notes the following from a recent case:
[A] party answering interrogatories "is charged with knowledge of... what is in records available to it." [8B] Wright, Miller, Kane & Marcus, Federal Practice and Procedure, ] § 2177 [(3d ed. 1998]. A party responding to requests for production must produce any documents in its possession, custody, or control. Fed.R.Civ.P. 34(a). Control does not require legal ownership or actual physical possession of documents at issue; rather "documents are considered to be under a party's control when that party has the right, authority, or practical ability to obtain the documents from a non-party to the action." Goodman v. Praxair Servs., Inc., 632 F.Supp.2d 494, 515 (D. Md. 2009) (internal quotations omitted).
Grayson v. Cathcart, 2:07-00593-DCN, 2013 WL 1401617 (D.S.C. Apr. 8, 2013) (emphases added).
1. Evidence and Argument Concerning Guven's "Control" Over Certain Corporate Information and Documents
In addition to statements in responses to discovery, Defendant argues that, "[a]ccording to Turkish counsel, [Defendant] could be subjected to criminal or civil penalties for providing the requested Konfida information and documents." Def.'s Mem. 8, ECF No. 69. Defendant explains, as follows:
Unlike other foreign jurisdictions where protection of commercial secrets is regulated under separate regulations, in Turkey, commercial secrets are protected under the unfair competition section (No. 6102) of the Turkish Commercial Code (the "TCC"). According to Article 55 (d) of the TCC, illegal disclosure of production or commercial secret of the producer; particularly, disclosure or exploitation of such secrets obtained secretly or without permission of the right holder or any other illegal ways are against the principle of good faith and constitutes unfair competition. Article 62 of the TCC then provides that those who (i) intentionally commit the acts of unfair competition stipulated in Article 55; (ii) intentionally provide false or misleading information relating to its personal situation, products, business products, commercial activities and activities in order that its offers and proposal be given preference above its competitors; (iii) entice employees, officers or other workers to disclose their employers' or customers' production or commercial secrets; or (iv) have not prevented a punishable act of unfair competition performed by their employees, workers or representatives, and/or have not restored the action of the misrepresentation, will be punished by two years of imprisonment, or will be fined, accordingly. The civil consequence of disclosing commercial secrets is indemnification, which, as provided in Article 56 of the TCC, may occur via a declaratory action, a specific action to prevent the unfair competition, an action for restitution, and/or an action for compensation of damages.5 Moreover, information related to customers, contracts, commitments, vendors or contractors, or revenues relate to the protections provided in Article 55 of the TCC.
5 In these actions, the Turkish Court may award payment of a specific amount for damages, condemnation of the act, and announcement of the decision by way of media.
Def.'s Mem. 8-9, ECF No. 69.
Against that backdrop, Defendant argues he is not the "right holder for Konfida's information and documents." Def.'s Mem. 9. He states although he and Gurarda own equal percentages of Konfida, Gurarda is responsible for the manufacturing side of the business (including vendor and salary information). Defendant states that, per Turkish law, the Turkish Trade Counsel "decides who the managing partner' is when there are only two members of the Board, and that member has the deciding vote." Id. (citing Turkish Trade Council law, No. 1-602, Article 624). Defendant attaches a translated version of the October 8, 2012 "Decision" of the Turkish Trade Counsel that "appointed Gurarda as that managing partner[, ]" Def.'s Mem. 9, ECF No. 69; Decision, ECF No. 69-1, explaining this appointment means "any decisions made on behalf of Konfida ultimately are made by Gurarda." Def.'s Mem. 9. Defendant also states "Gurarda has made it clear that he would not agree to this production." Def.'s Mem. 9. Without the agreement of "right-holder" Gurarda, Defendant argues he "may not provide such information and documents." Id.
In its Reply, Plaintiff provided the declaration of its Turkish lawyer, Murat Karkin, to take issue with Defendant's arguments about control, ECF No. 73-3; after that, Defendant filed the declaration of Attorney Goksel to support Defendant's argument and to rebut Karkin, ECF No. 76-1. Attorney Karkin first responds to Defendant's argument that the "Document" naming Gurarda as Konfida's Chairman of the Board is not an official appointment by a "trade council, " as Defendant's memorandum indicated. Rather, Karkin explains that:
[U]nder Turkish law and corporate procedure, the Decision document evidences only that Levent Guven and Adem Gurarda, as sole shareholders/managers, convened a meeting of their own "Assembly" for the company they own, each as co-equal shareholder, and voted to appoint Adem Gurarda as the chairman of board of managers of the company. The "Decision document does not reflect any official status conferred by any public or governmental body of or in Turkey. It simply means that Adem Gurarda is the Chairman of a "board" that has two members -Guararda and Guven.
Karkin Decl. ¶ 3. Karkin notes the document was voted on and filed October 8, 2012,  several months after this litigation had been filed and served on Guven. Id. ¶ 4. Karkin reviewed Turkish trade records that revealed Guven and Gurarda have 50/50 ownership of Konfida. Id. ¶ 5. Karkin indicated that, under Turkish law, both are authorized to "represent and bind Konfida with their individual signatures, for a term of three (3) years starting from May of 2012." Id. Because they can severally bind Konfida, Karkin noted that a "claim of confidentiality breach can only be brought by either Guven or Adem Gurarda, not someone else. Adem Gurarda also knows the dispute from the beginning who acted together with Guven." Id. As a "manager, " Guven is entitled to access and may review any of Konfida's business records. Id. ¶ 6. Under Turkish law, these rights cannot be taken away. Id.
Karkin further declares that the document appointing Gurarda as Chairman confers only some administrative tasks upon him; it "does not subtract from Guven's plenary rights as manager of the company." Id. ¶ 7 (emphasis in original). Karkin offers the legal opinion that "[t]he statement in Defendant's Memorandum that Gurarda is the sole right holder' with respect to documents and records of Konfida is entirely inaccurate." Id. Karkin opines, "based on [his] experience and training and to a reasonable degree of certainty, the statement in Defendant's Memorandum that Gurarda may prevent Guven from accessing the Company's records and documents is entirely inaccurate under Turkish law." Id.
Karkin continues by opining that, under Turkish law, accessing information for the purpose of responding to a court's request is not "unfair competition or a violation of Article 55(d) of the [TCC]." Id. ¶ 8. Karkin explains that Article 55(d) is the unfair competition law and does not apply to the case of trade secrets in the situation of a company owner or manager providing documents pursuant to court order. Id. Karkin opines, again based on experience and training and to a reasonable degree of certainty, that "Guven would not violate Article 55(d) of the [TCC] by disclosing the information in question in response to a Court order in the United States. The information required to be produced would not be obtained secretly or by improper means but by legitimate legal process." Id. Karkin concludes the declaration by noting the court could protect the produced information with the confidentiality order. Id. ¶ 9.
Relying on Karkin's declared opinions regarding Turkish law and the failings in Defendant's argument concerning the impact of Turkish law on his ability to respond to discovery concerning Konfida, Plaintiff submits Defendant has been unable to make a showing that he cannot produce the requested information. Pl.'s Mem. 12. Specifically, Defendant has not demonstrated the requested documents are "production or business secrets" subject to the TCC. Even if they were considered to fall under the TCC, Plaintiff argues production of the information would not amount to unfair competition because the information would not have been gained "secretly" or in an unauthorized manner. Id.
In response to Karkin's Declaration, Defendant filed the declaration of his Turkish counsel, Bige Goksel, on May 12, 2014. Goksel Decl. ECF No. 76. Responding to the Karkin Declaration, Goksel "clarifies" Karkin's interpretation of Article 55(d) of the TCC and its applicability to information provided to a court. Id. ¶ 14. Goksel indicates the "correct statement should be: [i]t [Article 55(d) of the TCC] does not apply to the case of the owner and manager of providing information under the supervision of a TURKISH court or when ordered by a TURKISH court to produce the information.'" Id. (footnote omitted; emphasis in original). Goksel continues by explaining that, "as a company incorporated under the laws of the Republic of Turkey, [Konfida] is only bound by the orders of Turkish Courts, not U.S. Courts. Therefore if the court is a Turkish court, Guven will not violate Article 55(d) of the [TCC] by disclosing information due to a court order." Id.; compare with Karkin Decl. ¶ 8. Goksel explains that "as a matter of sovereignty, the powers of a court in a specific country may be exercised only over the citizens of the said country." Goksel Decl. ¶ 15. He submits an interim decision from a U.S. Court is not enforceable in Turkey and a U.S. Court order is not "binding" on Konfida, unless it is recognized and enforced by Turkish courts. Id. 
Goksel then addresses the portions of Karkin's Declaration concerning the "Decision" filed with the Turkish Trade Counsel and Gurarda's being named Chairman of the Konfida Board. Goksel Decl. ¶¶ 17-20; compare with Karkin Decl. ¶¶ 3-5, 7. Addressing Karkin's point that the Decision was entered after this litigation had been filed and served, Goksel states that the timing of Gurarda as Konfida's Chairman does not matter. Goksel Decl. ¶ 17. Because the documents are being sought now, it matters only that Gurarda is Chair now. Id. Goksel opines that "production of Konfida documents to the U.S. Court is something that requires the approval of the council of directors." Id. ¶ 17. Goksel acknowledges that both Guven and Gurarda have the authority to represent/bind Konfida. Id. ¶ 18. He opines, however, that the decision to disclose confidential documents is a "managerial/administrative issue, necessitating resolution of the counsel of directors." Id. ¶ 18. Because Konfida's council of directors is comprised of only Guven and Gurarda, "Gurarda's vote, as chairman thereof, will supersede Guven's vote if they are in disagreement." Id. ¶ 18. Goksel notes that Karkin is correct in stating Guven can "control and examine" the Konfida documents when he wants to do so. Id. ¶ 19. However, Goksel opines that disclosure of confidential documents ...