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IHS Global Ltd. v. Trade Data Monitor LLC

United States District Court, D. South Carolina, Charleston Division

December 23, 2019




         The following matter is before the court on plaintiffs IHS Global Limited and IHS Global, Inc's (collectively, “plaintiffs”) motion to compel, ECF No. 117. For the reasons set forth below, the court grants the motion.

         I. BACKGROUND

         This case arises out of a variety of disputes between two competing companies. Plaintiffs own and operate a database called Global Trade Atlas (“GTA”). GTA provides comprehensive merchandise trade statistics, including monthly import and export data for more than 95 countries and annual import and export data for more than 180 countries. Defendant C. Donald Brasher, Jr. (“Brasher”) and his brother created GTA through their company, Global Trade Information Services, Inc. (“GTIS”). On August 1, 2014, plaintiffs acquired GTIS, including GTA, through a Stock Purchase Agreement (“SPA”). Under the SPA, Brasher and his affiliates were prohibited from using any confidential or proprietary information related to GTIS, including GTA, for three years-until August 1, 2017- and “until such information can no longer be reasonably considered to be a Trade Secret.” ECF No. 25 ¶ 22. The SPA defines “Trade Secret” as “confidential and proprietary information, including trade secrets, know-how, processes, schematics, business methods, formulae, drawings, prototypes, models, designs, databases, customer lists and supplier lists.” Id.

         After selling GTIS to plaintiffs, Brasher worked as a consultant for plaintiffs. Pursuant to this arrangement, Brasher entered into a consulting agreement (“Consulting Agreement”) where he promised not to use plaintiffs' confidential and proprietary information. Plaintiffs allege that while working both for GTIS and for plaintiffs, Brasher had “extensive access to and knowledge of GTIS's and now [plaintiffs'] trade secrets.” Id. ¶ 36. Plaintiffs also allege that Brasher had access to this information on his laptop, which he used during his time at GTIS and retained after his consulting period ended in May 2015.

         Plaintiffs allege that soon after Brasher stopped working as a consultant for plaintiffs, he began to work on the Trade Data Monitor Product (“TDM Product”), a “copycat version” of the GTA product. Id. ¶ 45. Plaintiffs allege that defendant Trade Data Monitor LLC (“TDM”) was formed by Brasher on May 2, 2016 as ANH Enterprises LLC, although today it is known as TDM. Plaintiffs then allege that in November and December 2016, TDM filed trademarks for “TRADE DATA MONITOR” and “TDM, ” both of which are described as providing search engines for global import and export data. According to the amended complaint, Brasher and TDM began contacting suppliers around mid-2016 to obtain data for the TDM Product and began to develop the TDM Product around October 2016. Then, plaintiffs allege, Brasher launched the TDM Product around August 1, 2017, the day after Brasher's non-competition agreement expired.

         Plaintiffs allege that defendants used plaintiffs' product, supplier, and customer trade secrets to create the TDM Product. In addition, plaintiffs allege that defendants have been using plaintiffs' confidential customer information, including contact information, pricing arrangements, and subscription preferences, to create business for TDM. In particular, plaintiffs allege that defendants used plaintiffs' trade secrets about when plaintiffs' customers' subscriptions to GTA were up for renewal in order to strategically and timely solicit plaintiffs' customers.

         Plaintiffs filed this case on April 16, 2018. The operative complaint is plaintiffs' amended complaint, which alleges various breaches of contracts between the parties, a violation of The Defend Trade Secrets Act, a violation of the Uniform Trade Secrets Act of Colorado and South Carolina, and several tort claims. On November 27, 2019, plaintiffs filed a motion to compel the forensic inspection of Brasher's laptop. ECF No. 117. Defendants responded to the motion on December 11, 2019, ECF No. 126, and plaintiffs filed a reply on December 17, 2019, ECF No. 127. The court held a hearing on the motion on December 19, 2019.

         II. STANDARD

         Pretrial discovery is governed by Rule 26 of the Federal Rules of Civil Procedure. Parties are permitted to “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). In determining proportionality, a court should consider “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. When a party fails to respond to a discovery request or responds in an incomplete manner, the party seeking discovery may file a motion to compel discovery responses. Fed.R.Civ.P. 37(a)(3)(B); Fed.R.Civ.P. 37(a)(4).


         Plaintiffs ask the court to compel a forensic inspection of Brasher's laptop. Brasher used his laptop while working for both plaintiffs and TDM, and plaintiffs allege that Brasher misused plaintiffs' proprietary information that he accessed on his laptop. During the course of discovery, Brasher has produced documents from his laptop, some of which include information about plaintiffs' customer history and contact information. The parties disagree about whether this information is properly classified as “trade secrets, ” but plaintiffs contend that the information produced includes their proprietary information and trade secrets. Now plaintiffs want to conduct a forensic inspection of the laptop to see what documents are and previously were on the laptop as well as how and when Brasher and others accessed, modified, copied, or used those documents. Plaintiffs argue that this request will impose a minimal burden on defendants because defendants have already made a forensically sound image of the laptop, and that defendants can just allow plaintiffs' forensic imager to inspect and make a copy of the forensic image.

         Defendants[1] respond by arguing that the request is overbroad and seeks irrelevant and potentially privileged material. Defendants argue that plaintiffs have failed to set forth sufficient reasoning for the extraordinary request of a forensic image. They explain that they have already produced the responsive and nonprivileged documents from Brasher's laptop, and that absent any claim of wrongdoing, a forensic image of the laptop is not warranted. Defendants also argue that plaintiffs' request is untimely because defendants have always been clear that they only intended to produce responsive documents from the laptop and yet plaintiffs are just now requesting a forensic inspection after discovery has been ongoing for over a year.

         The court addresses defendants' timeliness argument first. Pursuant to Local Rule 37, motions to compel discovery must be filed within 21 days after receipt of the discovery responses to which the party challenges. Local Civ. Rule 37.01 (D.S.C.). Defendants responded to plaintiffs' request for a forensic inspection on November 22, 2019. Plaintiffs filed their motion to compel five days later. Therefore, plaintiffs' motion is timely, and the court can consider it. To the extent that defendants argue that the motion is untimely because plaintiffs waited over a year into discovery to request a forensic inspection, that argument is unconvincing. Discovery is still ...

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