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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION DAN CERJANEC, RODRIGO BRAVO, MARK MODLIN, and WILLIAM WINFREY, on behalf of themselves and all others similarly situated, Plaintiffs, Case No. 17-10619 vs. Hon. Laurie J. Michelson ORAL ARGUMENT REQUESTED
FCA US LLC Defendant. AKEEL & VALENTINE, PLC Shereef H. Akeel (P54345) Hasan Kaakarli (P81099) Adam S. Akeel (P81328) 888 W Big Beaver Road, Suite 910 Troy, MI 48084 (248) 269-9595 shereef@akeelvalentine.com hasan@akeelvalentine.com adam@akeelvalentine.com PITT, McGEHEE, PALMER & RIVERS, PC Michael L. Pitt (P24429) Cary S. McGehee (P42318) Robert W. Palmer (P31704) Megan A. Bonanni (P52079) Beth M. Rivers (P33614) 117 W. Fourth Street, Suite 200 Royal Oak, MI 48067 248-398-9800 mpitt@pittlawpc.com cmcgehee@pittlawpc.com rpalmer@pittlawpc.com mbonanni@pittlawpc.com brivers@pittlawpc.com Attorneys for Plaintiffs
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C. Jerome R. Watson (P27082) M. Misbah Shahid (P73450) 150 West Jefferson, Suite 2500 Detroit, Michigan 48226 (313) 963-6420 / fax 313 496-7500 watson@millercanfield.com shahid@millercanfield.com LITTLER MENDELSON, P.C. Daniel E. Turner (Ga. Bar No. 719330) Jacqueline Phipps Polito (NY Bar No. 2582690) Tasha K. Inegbenebor (Ga. Bar. No. 382905) 3344 Peachtree Road N.E., Suite 1500 Atlanta, GA 30326 (404) 233-0330 dturner@littler.com jpolito@littler.com tinegbenebor@littler.com Attorneys for Defendant
Case 2:17-cv-10619-LJM-EAS ECF No. 82 filed 05/28/19
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DEFENDANT’S REPLY IN SUPPORT OF ITS MOTION TO STRIKE REFERENCES IN SECOND AMENDED COMPLAINT PURPORTEDLY BASED ON DOCUMENTS, DATA AND/OR PROPERTY UNLAWFULLY OBTAINED BY PLAINTIFFS
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Plaintiffs’ response actually concedes the essential points establishing FCA US LLC’s (“FCA US”) right to redress: (1) non-party Marlin Williams (“M. Williams”) improperly took from FCA US hundreds of company documents, including privileged documents, in direct violation of her obligations to the company – indeed, Plaintiffs repeatedly admit here that many of the stolen items were created at the request of M. Williams in the course of her employment with FCA US, underscoring that they are FCA US’ property; (2) Plaintiffs’ counsel have been using the stolen documents to support this action – they actually acknowledge that they created their complaint “with the additional data that had been compiled by Williams;” and (3) the Defend Trade Secrets Act (“DTSA”) has no applicability to a party’s exploitation of information stolen by a non-party. Plaintiffs’ emphasis on whether the stolen property they misused is privileged is a red herring – it clearly is non-public, confidential property that they know was stolen and they have no right to use or disclose here. FCA US’ motion is ripe for review and timely both under Rule 12 and the Court’s inherent powers to redress such striking misconduct and to prevent further unfair prejudice to FCA US. I.
PLAINTIFFS DO NOT DISPUTE M. WILLIAMS’ THEFT AND CONCEDE THAT THE DTSA DOES NOT APPLY Plaintiffs do not even attempt to respond to FCA US’ showing that during
her employment with FCA US, M. Williams signed confidentiality obligations that forbade her from using, retaining or disclosing any of FCA US’ “secrets, 1
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proprietary, or confidential information” (Dkt. 80-2, Ex. 1B, ¶ 5) and that FCA US’ explicit policies prohibited her from taking non-public FCA US information (Dkt. 80-2, Ex. 1D). Yet, and as Plaintiffs baldly admit, M. Williams took FCA US’ proprietary and confidential information, including attorney-client privilege and work product material, before she resigned from her employment with FCA US.
(Dkt. 81 at 4, 8-9, 16, 23; 81-2 ¶21).
Plaintiffs do not deny that she
improperly sent hundreds of FCA US documents from her FCA US email account to her private email accounts, including many documents clearly marked as confidential and others containing privileged information, and she “doubledeleted” those emails from her FCA US email account in an obvious attempt to cover up her misdeeds. Finally, Plaintiffs concede that M. Williams provided the stolen material to their counsel, who then used the stolen information: Plaintiffs admit their counsel created their complaint “with the additional data that had been compiled by Williams.”
(Dkt. 81 at 23).1
There simply is no dispute that
Plaintiffs’ counsel used the materials M. Williams stole to create the instant lawsuit. (Dkt. 81 at 4; 81-2 ¶¶ 21-23). 1
Plaintiffs’ assertion that they defined their collective action as “55 and older” due to the age of the employees who called their counsel rather than the contents of the stolen documents is incredible, inconsistent with the fact they represent numerous employees in other matters who are under the age of 55 and contrary to their admission elsewhere that they used the stolen documents in crafting their complaint. The selection of age 55 simply would not have been possible without review of the contents of the stolen documents. 2
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In addition to their dispositive admissions as to the facts, Plaintiffs do not even attempt to rebut FCA US’ showing that the DTSA does not protect their misuse of property stolen by a non-party. Their failure to present any opposition argument forecloses the issue. See Estate of Ardt by Parker v. Allstate Ins. Co., No. 09-14247, 2011 WL 13208693, at *1 (E.D. Mich. Nov. 9, 2011). II.
THE INSTANT MOTION IS RIPE FOR REVIEW AND TIMELY This court has “‘liberal discretion’ to strike [material in pleadings] as it
deems appropriate under Rule 12(f)” and may “strike matter from a complaint on its own initiative.” Johnson v. County of Macomb, 2008 WL 2064968, at *1-2 (E.D. Mich. May 13, 2008). “This judicial discretion is appropriate since in many instances a motion to strike . . . is designed to eliminate allegations from the pleadings that might cause prejudice at some later point in the litigation.” Hill v. Herbert Roofing & Insulation, Inc., 2014 WL 234217, at *1 (E.D. Mich. Jan. 22, 2014). “[T]he time limitations set out in Rule 12(f) should not be applied strictly when the motion to strike seems to have merit.” Id. at *2.2 FCA US has been and will continue to be prejudiced by the use and public mischaracterization of the stolen FCA US documents, data and/or property. 2
Plaintiffs’ attempts to distinguish the cases relied on by FCA US focus on immaterial factual differences. As discussed in FCA US’ Motion, each case shows that courts can and do use their authority to prevent the use and disclosure of wrongfully obtained confidential material. Dkt. 80 at 15-17. The circumstances of the misuse may vary, but the principle is consistent and supports relief here. 3
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Plaintiffs’ claimed subclass of employees age 55 and over directly derives from a misinterpretation of the stolen property.
Moreover, to allow Plaintiffs to use
information that is all proprietary and some that is privileged would put FCA US in the untenable and unjust position of being forced to waive privilege in order to respond. All of this would further victimize FCA US. This Court instead should remove the stolen property from this case and leave Plaintiffs to whatever devices they can employ legitimately. Plaintiffs’ criticism of the timing of the motion is misplaced. FCA US has been attempting to work with Plaintiffs’ counsel since learning of M. Williams’ misconduct to narrow the issues for the Court. Plaintiffs concede that M. Williams engaged in incremental and deceptive partial disclosure of more and more stolen information. (Dkt. 81 at 8). After it became clear that Plaintiffs’ counsel would not be forthcoming and provide a full accounting of what other documents, data and/or property are still in M. Williams’ or counsel’s possession, FCA US filed the instant motion.3 Plaintiffs essentially are trying to penalize FCA US for having tried to narrow the issues for the Court to address through consultation. (See Dkt. 80-3 through 80-12). 3
It bears noting that in Carthens, Plaintiffs argued that FCA US’ recent Motion to Strike was premature because the Court had not held a status conference on the matter, yet here Plaintiffs argue that it is too late despite the fact that the Court has not held a status conference in this case either. (Dkt. 81 at 12-13; Carthens, et al. v. FCA US LLC, Case No. 17-10097, Dkt. 56 at 9-10) 4
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Plaintiffs’ reference to FCA US’ prior motion to dismiss under Rule 12 is irrelevant, as circumstances have changed since that motion. The original motion to dismiss was filed while FCA US was in the midst of its efforts to have Plaintiffs’ counsel address and clarify M. Williams’ actions. (Dkt. 17). The full record of M. Williams’ misconduct and of Plaintiffs’ counsel’s unwillingness to cooperate was not available at that time. During those discussions, this case was stayed pending resolution of FCA US’ petition to the Sixth Circuit and FCA US promptly filed this motion after that stay was lifted in April 2019.4 III.
DOCUMENTS M. WILLIAMS STOLE CANNOT BE USED IN THE INSTANT CASE Plaintiffs cannot, and should not, benefit from the misappropriation of
documents, data and/or property stolen by a non-party.
In Yates v. Applied
Performance Technologies, Inc., the court was confronted with a similar situation and struck from the record confidential information improperly included in a court document. 205 F.R.D. 497, 500-01 (S.D. Ohio 2002). Plaintiffs had included in their opposition to a motion to dismiss portions of deposition testimony from another case that had been designated confidential and for use only in that case. Id. 4
See Toyz, Inc. v. Wireless Toyz, Inc., 799 F. Supp. 2d 737, 744 (E.D. Mich. 2011) (finding that the defendants had not waived their arguments on their second motion to dismiss where the court had not ruled on an issue pertinent to the defendants’ arguments raised in their second motion to dismiss. Because the issue “had not been decided when the original motion to dismiss was filed, [the] recent request [was] timely, and not waived as part of Fed. R. Civ. P. 12(g)(2).”). 5
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Although Rule 12(f) was not implicated because “a memorandum is not a ‘pleading,’” the court “refuse[d] to allow Plaintiffs to use the fruits of [the] violation [of a protective order] to their benefit in this litigation” and “str[uck] the deposition testimony… in its entirety. Id. The cases Plaintiffs cite are inapposite, as they dealt with information properly obtained through discovery.5 Here, the documents were stolen by a non-party. As previously mentioned, Plaintiffs’ attempts to distinguish the cases cited by FCA US are misguided. (Dkt. 80 at 15-17). Further, the cases cited by Plaintiffs to support their actions are inapplicable. Unlike the plaintiff in Bridge C.A.T. Scan Assocs. v. Technicare Corp., 710 F.2d 940 (2d Cir. 1983), M. Williams violated her confidentiality agreements with FCA US when she 5
Ward v. Ford Motor Co., 93 F.R.D. 579, 580 (D. Colo. 1982) (defendants sought to prevent the plaintiffs from disclosing to anyone the contents of documents received from the defendant during discovery in the instant litigation); Patterson v. Ford Motor Co., 85 F.R.D. 152, 154 (W.D. Tex. 1980) (noting that “there is nothing inherently culpable about sharing information obtained through discovery.”)(emphasis added); Williams v. Johnson & Johnson, 50 F.R.D. 31, 32 (S.D.N.Y. 1970) (Defendants moved for a protective order to forbid the plaintiffs or their attorneys from divulging any material obtained from defendants through discovery to any person or firm not directly connected with the case); Woodby v. Bradley Cty., Tenn., 2008 WL 5245361 (E.D. Tenn. Dec. 16, 2008) (wherein the court noted that it would consider a portion of a deposition of the plaintiff taken during discovery by defendants’ attorney in a state court case); Archey v. AT&T Mobility Servs. LLC, 2019 WL 1434654, at *4 (E.D. Ky. Mar. 29, 2019) (wherein the court considered deposition testimony which was taken during discovery in a separate action involving the same defendants but a different plaintiff); Kirshner v. Uniden Corp. of Am., 842 F.2d 1074 (9th Cir. 1988) (finding that the district court lacked power to issue a protective order to compel the return of documents obtained by an attorney through discovery in a separate action). 6
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misappropriated the documents, data and/or property that Plaintiffs’ rely upon in their SAC. The Bridge court noted that it would have considered equitable relief for the defendant if “a party has obtained [documents] by breaching its confidential [agreement].” Id. at 946. Other cited cases all dealt with documents wrongfully obtained outside the discovery process and the particular distinctions as to the type of wrongful conduct make no difference. The cases cited by Plaintiffs all affirm this Court’s power to act. For example, Spencer v. Pottstown Sch. Dist., 292 F. Supp. 3d 635 (E.D. Pa. 2018) ruled that a court may exercise its inherent equitable power to preclude use of evidence improperly obtained outside the discovery process, noting that it could compel the return of the improperly obtained evidence. Id. at 642-43. Similarly, the court in Fayemi v. Hambrecht & Quist, Inc., 174 F.R.D. 319, 324-325 (S.D.N.Y. 1997) distinguished Bridge, supra, and held that a court may exercise its inherent equitable powers to sanction a party that seeks to use wrongfully obtained evidence. Plaintiffs fail to identify a single case justifying Plaintiffs’ use of information stolen by a non-party. Respectfully submitted, /s/Jerome R Watson (P27082) Miller, Canfield, Paddock and Stone, P.L.C. Attorney for Defendant watson@millercanfield.com
/s/ Daniel E. Turner (Ga. Bar No. 719330) Littler Mendelson, P.C. Attorney for Defendant dturner@littler.com
May 28, 2019
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CERTIFICATE OF SERVICE I hereby certify that on May 28, 2019, I electronically filed the foregoing paper with the Clerk of the Court using the ECF system which will send notification of such filing to: Shereef H. Akeel Hasan Kaakarli Adam S. Akeel Michael L. Pitt Megan A. Bonanni Robert W. Palmer Carey S. McGehee Beth M. Rivers
shereef@akeelvalentine.com hasan@akeelvalentine.com adam@akeelvalentine.com mpitt@pittlawpc.com mbonanni@pittlawpc.com rpalmer@pittlawpc.com cmcgehee@pittlawpc.com brivers@pittlawpc.com /s/Jerome R Watson (P27082) Miller, Canfield, Paddock and Stone, P.L.C. Attorney for Defendant 150 West Jefferson, Suite 2500 Detroit, Michigan 48226 (313) 963-6420 watson@millercanfield.com
33668093.7\155704-00007
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