United States District Court, W.D. Kentucky, Louisville Division
PHOENIX PROCESS EQUIPMENT CO. PLAINTIFF
CAPITAL EQUIPMENT & TRADING CORP., et al. Defendants
MEMORANDUM OPINION AND ORDER
S. Edwards, Magistrate Judge
Phoenix Process Equipment Company has filed a Motion to
Compel Discovery. (DN 119). Defendants Capital Equipment
& Trading Corporation, Alexander Chudnovets, and Coralina
Engineering, LLC, have responded in opposition (DN 120).
Plaintiff has replied. (DN 123). For the following reasons,
Plaintiff's Motion is granted in part and denied in part.
Phoenix Process Equipment Co. (“Phoenix”) is a
Kentucky-based company that designs, engineers, manufactures,
and services machinery and equipment used for recycling water
and other materials used to wash coal. (DN 40, at ¶ 10).
Since 1997, Phoenix has had its products distributed in
Russia, Ukraine, and other Eastern European countries by an
assortment of companies. (Id. at ¶ 11). In May
of 2009, Phoenix entered into a three-year distribution
agreement with Defendant Capital Equipment & Technology
Corporation (“Technology”). (Id. at
¶¶ 12-14). The agreement granted Technology an
exclusive territory to market and sell Phoenix's
products. (Id. at ¶ 11). Defendant Alexander
Chudnovets (“Chudnovets”), the CEO of Technology,
signed the distribution agreement on the company's behalf
after meeting with Phoenix employees in their Kentucky and
Indiana facilities. (Id. at ¶¶ 12-14).
parties dispute the events following the 2009 distribution
agreement. Technology dissolved in October of 2011; however,
Phoenix claims it was unaware of the dissolution because it
continued doing business with a company referred to as CETCO.
(DN 57, at p. 2). Instead of Technology, Phoenix claims it
was unknowingly doing business with Defendant Capital
Equipment and Trading Corporation (“CETCO” or
“Trading Corp.”), headquartered in Texas, and
Defendant Coralina Engineering, LLC (“Coralina”),
a limited liability corporation under Russian law.
(Id.). On July 6, 2012, Phoenix and CETCO entered
into what Phoenix believed was a “renewal” of the
2009 distribution agreement. (DN 57, at p. 2). The 2012
agreement was executed by Maria Roberson, the president of
CETCO. (Id.). Defendants assert that this agreement
was not a “renewal” of the 2009 agreement because
Phoenix entered into the earlier agreement with “an
altogether different entity.” (DN 120, at p. 5).
Defendants further argue that Phoenix cannot “feign
confusion” over which Defendant it was doing business
with prior to the 2012 agreement because CETCO issued
purchase orders with its name clearly set forth and made
millions of dollars of payments in its name to Phoenix.
(Id. at p. 4).
continued to receive purchase orders following the alleged
renewal of the distributor agreement from Vadim Novak, a
Coralina employee. (DN 57, at p. 2). But at some point after
entering into the 2012 distributor agreement, Phoenix
allegedly obtained information that products very similar to
its own were being sold and distributed in the region
assigned to CETCO by Coralina and Electrogorsk Metal Factory,
a Russian limited liability corporation doing business as
Elemet. (Id. at p. 3). Phoenix believed
that CETCO and Coralina violated the distributor agreements
by conducting business with Elemet and selling Elemet's
allegedly pirated equipment. (DN 40, at ¶¶ 20-22).
on this information, Phoenix brought suit in Jefferson
Circuit Court in November of 2015, which Defendants timely
removed to this Court. (See DN 1; DN 1-1). Phoenix's
Amended Complaint asserted five claims: (1) breach of
contract; (2) unfair competition or “passing
off;” (3) violation of the Kentucky Uniform Trade
Secrets Act (KUTSA); (4) civil conspiracy; and (5) fraud or
fraud in the inducement. (DN 40, at ¶¶ 32-51).
Phoenix further claims that CETCO and Coralina are
“alter ego” companies because Chudnovets served
as CEO and on the board of directors at CETCO and was the
sole member of Coralina and because the two companies share
the same employees and offices. (Id. at ¶¶
18-20, 25-28). According to Phoenix, Coralina branded itself
through its website, business cards, and communications with
Phoenix as CETCO-Coralina. (Id. at ¶¶ 25,
28, 30). Defendants “emphatically deny” that they
participated in any reverse engineering of Phoenix's
products or furnished any confidential design information
that would allow anyone else to do so. (DN 120, at p. 6).
Defendants also state that CETCO, Coralina, and Chudnovets
hold no ownership of, affiliation with, or control over
Elemet and that Elemet is a “separate and independent
Court previously dismissed Phoenix's claims for unfair
competition and “passing off, ” fraud and fraud
in the inducement, and conspiracy because such claims are
preempted by the KUTSA. (DN 57, at pp. 18-20). Almost a
year-and-a-half later, Phoenix filed a Second Motion to Amend
Complaint, seeking to remove its KUTSA claim and replead its
previously dismissed claims. (DN 110). This Court recently
denied Phoenix's Second Motion to Amend as
futile. (DN 125).
parties have struggled with cooperative discovery for months.
During their Rule 26(f) planning conference, the parties
agreed that “[e]ach party shall be allowed a maximum of
thirty (30) interrogatories . . . . [e]ither party may ask
the Magistrate Judge for an additional fifteen (15)
interrogatories.” (DN 90, at ¶ 3(D)). On November
16-17, 2017, Phoenix propounded its first written discovery,
including 28 interrogatories on CETCO, 30 interrogatories on
Coralina, and 26 interrogatories on Chudnovets, totaling
eighty-four interrogatories, not counting subparts. Because
Phoenix did not comply with their agreement to propound a
maximum of forty-five interrogatories, the Defendants sought
a telephonic conference with the Court. Following this first
teleconference, Magistrate Judge Dave Whalin struck a
compromise, allowing Phoenix to issue forty-five
interrogatories to Trading Corp. (CETCO) and Coralina
together and thirty interrogatories to Chudnovets. (DN 97).
The Court further directed the parties to continue efforts at
resolving the numerosity issues with Phoenix's
interrogatory subparts over the next month. (Id.).
to Defendants, Phoenix continued to issue interrogatories to
CETCO and Coralina that exceeded the additional amount
granted by the Court. (DN 120, at p. 9). Defendants sought a
second teleconference with the Court, where Magistrate Judge
Whalin again gave the parties additional time to resolve
their dispute without court intervention. (DN 104). When the
parties still failed to reach an agreement following the two
telephonic conferences with the Court and face-to-face
meetings among themselves, the Court authorized the parties
to file appropriate motions to resolve the dispute. (DN 108).
filing a motion with the Court, Defendants responded to
Phoenix's most-recent (third) discovery requests and
issued objections. (DN 119-3). Phoenix then sent Defendants a
twenty-seven-page letter outlining perceived deficiencies
with their responses. (DN 119-5). Defendants responded with a
thirty-nine-page letter, explaining that Phoenix still
exceeded the numerical limit for its interrogatories to CETCO
and Coralina together and providing additional explanation
for their objections. (DN 120-2).
has now filed a Motion to Compel, seeking responses to its
third set of discovery. (DN 119). Phoenix broadly focuses on
two alleged deficiencies in Defendants' responses. First,
Phoenix alleges that Defendants have “improperly and
unilaterally divided” its interrogatories into subparts
to increase its total No. of interrogatories. (Id.
at p. 5). Second, Phoenix claims that Defendants have failed
to produce any internal communications between themselves and
third-parties related to the suit, including records,
agreements, contracts, purchase orders, invoices, and other
courts have wide discretion in dealing with discovery
matters. See S.S. v. E. Ky. Univ., 532 F.3d 445, 451
(6th Cir. 2008); Chrysler Corp. v. Fedders Corp.,
643 F.2d 1229, 1240 (6th Cir. 1981). The “scope of
discovery” encompasses “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). Relevance is to be construed broadly to include
“any matter that bears on, or that reasonably could
lead to other matter that could bear on” any
party's claim or defense. Oppenheimer Fund, Inc. v.
Sanders, 437 U.S. 340, 351, 98 S.Ct. 2380, 57 L.Ed.2d
253 (1978) (citation omitted). In analyzing proportionality,
the Court must consider the need for the information sought
based upon “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 discovery in resolving the
issues, and whether the burden or expense of the proposed
discovery outweighs its likely benefit.” Fed.R.Civ.P.
Rule of Civil Procedure 37 allows a party to move for an
order compelling disclosure or discovery when “a party
fails to answer an interrogatory submitted under Rule
33” or “fails to produce documents . . . as
requested under Rule 34.” Fed.R.Civ.P. 37(a)(3)(iii),
(iv). Under Rule 37, 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). When an objection to relevance is raised, the party
seeking discovery must demonstrate that the requests are
relevant to the claims or defenses in the action.
Anderson v. Dillard's, Inc., 251 F.R.D. 307,
309-10 (W.D. Tenn. 2008). If that party demonstrates
relevancy, the burden shifts to the party resisting discovery
to demonstrate why the information or documents are not
discoverable under the Federal Rules. Id.
Numerosity of Interrogatories
provides that unless otherwise stipulated and ordered by the
court, a party may serve on another party “no more than
25 written interrogatories, including all discrete
subparts.” Fed.R.Civ.P. 33(a)(1). Neither Rule 33 nor
this Circuit identifies a precise formulation for determining
when discrete, separate subjects should be treated as
multiple interrogatories. See Perez v. KDE Equine, LLC,
No. 3:15-CV-00562-CRS, 2017 WL 56616, at *3 (W.D. Ky.
Jan. 4, 2017) (citing State Farm Mut. Auto Ins. Co. v.
Pain & Injury Rehabilitation Clinic, Inc., No.
07-CV-15129, 2008 WL 2605206, at *2 (E.D. Mich. June 30,
courts and treatise writers have formulated various tests for
defining “discrete subparts.” One test asks
whether a subpart of an interrogatory “introduces a
line of inquiry that is separate and distinct from the
inquiry made by the portion of the interrogatory that
precedes it.” Ott v. Mortgage Investors Corp. of
Ohio, Inc., No. 3-14-cv-645, 2015 WL 691643, at *1 (D.
Or. Feb. 17, 2015); Kline v. Berry, 287 F.R.D. 75,
79 (D.D.C. 2012). This test, however, essentially restates
the term “discrete subpart” and “does not
add much by way of resolving power.”
Erfindergemeinschaft Uropep GbR v. Eli Lilly &
Co., 315 F.R.D. 191, 195 (E.D. Tex. 2016).
courts have invoked the “common theme” standard,
developed from a leading treatise. See In re Lithium Ion
Batteries Antitrust Litig., No. 13-md-2420, 2015 WL
1221924, at *2 (N.D. Cal. Mar. 17, 2015); Pouncil v.
Branch Law Firm, 277 F.R.D. 642, 646 (D. Kan. 2011).
This treatise states that “an interrogatory containing
subparts directed at eliciting details concerning a common
theme should be considered a single question.” 8B
Charles Alan Wright, Arthur R. Miller & Richard L.
Marcus, Federal Practice & Procedure § 2168.1, at
39-40 (2010). There are two main problems with this test.
First, what constitutes “a common theme” is
subject to widely divergent views. Eli Lilly & Co., 315
F.R.D. at 196. Second, if “a common theme” is
broadly interpreted, there could be limitless use of multiple
subparts qualifying as a single interrogatory. Id.
courts have followed the “related question”
approach. This test generally states that subparts that are
“logically or factually subsumed within and necessarily
related to the primary question should not be treated as
separate interrogatories.” Kendall v. GES
Exposition Servs., Inc., 174 F.R.D. 684, 685 (D. Nev.
1997) (citation omitted); see also Gilmore v. Lockard,
No. 1:12-cv-925, 2015 WL 5173170, at *8 (E.D. Cal. Sept.
3, 2015); Klein v. Fed. Ins. Co., No. 7:03-cv-102,
2014 WL 3408355, at *6 (N.D. Tex. July 14, 2014); Perez
v. Aircom Mgmt. Corp., No. 12-60322, 2012 WL 6811079, at
*1 (S.D. Fla. Sept. 24, 2012). Courts have further
articulated this approach as: “if the first question
can be answered fully and completely without answering the
second question” then the second question is totally
independent of the first and not factually subsumed within
it. Paananen v. Cellco Partnership, No. Co8-1042
RSM, 2009 WL 3327227, at *2 (W.D. Wash. Oct. 8, 2009)
(quoting Estate of Manship v. United States, 232
F.R.D. 552, 555 (M.D. La.2005)); see also F.T.C. v. Think
All Pub., L.L.C., No. 4:07-cv-011, 2008 WL 687455, at *1
(E.D. Tex. Mar. 11, 2008).
of which verbal formulation of “discrete
subparts” is used, these tests must be tempered by a
“pragmatic approach” that asks whether an
interrogatory “threatens the purpose of Rule 33”
by combining several lines of inquiry into one interrogatory.
Warren v. Bastyr Univ., No. 2:11-cv-1800, 2013 WL
1412419, at *1 (W.D. Wash. Apr. 8, 2013). Under this
pragmatic approach, courts must evaluate “discrete
subparts” by balancing the competing purposes of Rule
33(a)(1): allowing reasonable latitude in formulating an
inquiry to elicit as complete an answer as possible, while at
the same time not allowing the multiplication of
interrogatories which would defeat the purposes of Rule
33's limits. Eli Lilly & Co., 315 F.R.D. at 196-97
(citing Williams v. Bd. of Cty. Comm'rs of the
Unified Gov. of Wyandotte Cty. & Kan. City, Kan.,
192 F.R.D. 698, 701 (D. Kan. 2000)).
Perez v. KDE Equine, this Court discussed the various
“discrete subparts” tests utilized by district
courts but declined to adopt a single approach. 2017 WL 56616, at
*3 (citing Paananen, 2009 WL 3327227, at *2; Singleton v.
Hedgepath, No. 1:08-cv-00095, 2011 WL 1806515, at *7
(E.D. Cal., May 10, 2011); Estate of Manship, 232 F.R.D. at
555). Here, after comprehensively reviewing these tests, the
Court finds the “related question” approach,
combined with pragmatic considerations, will allow for the
most faithful adherence to the policies of Rule 33. See,
e.g., Eli Lilly & Co., 315 F.R.D. at 197. The Court
acknowledges, however, that the issue of counting
“discrete subparts” cannot reliably be captured
in a verbal formula and must be assessed based on the
particular circumstances in a case. See Allen v.
Mill-Tel, Inc., 283 F.R.D. 631, 637 (D. Kan. 2012).
Analysis of Challenged Interrogatories to CETCO and Coralina
the Court permitted Phoenix to tender 45 interrogatories to
CETCO and Coralina together. (DN 97). Phoenix's third
production of discovery included 20 numbered interrogatories
to CETCO and 17 numbered interrogatories to Coralina. (See DN
119-2; DN 119-3). Defendants refused to answer Interrogatory
Nos. 7-17 to Coralina based on their “Universal
Objection 12, ” which states that the interrogatories
“exceed the numerical limitations” set by the
Court. (DN 119-3, at p. 5). This objection further states
that by answering all of Phoenix's interrogatories to
CETCO, which totaled 37 interrogatories (including subparts),
Defendants would only respond to the first 8 of Phoenix's
interrogatories containing subparts to Coralina.
Motion to Compel, Phoenix explains why it believes Defendants
improperly treated Interrogatory Nos. 2, 7, 8, 9, 10, 11, 13,
15 and 16 to CETCO as containing discrete subparts. (DN 119,
at pp. 8-13). Phoenix claims that these Interrogatories
“describe details sought in the original
question” and that each interrogatory is “based
upon a common theme.” (Id. at pp. 7-8).
Defendants defend their decision not to answer Phoenix's
final ten interrogatories to Coralina by explaining why each
of the above Interrogatories was appropriately divided into
discrete subparts. (DN 120, at pp. 14-17). The Court will
address these disputed interrogatories in turn.
both Capital Equipment and Trading Company and Capital
Equipment and Trading Corporation, state all trade names or
assumed names by which each has ever been known and identify
the names of all affiliate, parent, and subsidiary
organizations. (DN 119-2, at p. 7). Defendants assert that
the “potential trade names or assumed names” of
and “the identity of any affiliate, parent, or
subsidiary organization” are stand-alone questions,
independent of one another. (DN 120, at p. 14). This Court
does not agree. These questions are both related to corporate
structure and are meant to clarify whether other businesses
are merely connected to CETCO v. identical to CETCO. Because
these two inquiries are logically subsumed, the Court counts
Interrogatory No. 2 as a single inquiry.
explain Alexander Chudnovets' status and role at CETCO
since 2009, including his employment status, job title(s),
ownership interest, and his relationship and/or employment
history with any other Defendant in this lawsuit. As part of
your answer, please fully explain Chudnovets' role and
job duties at CETCO in relation to Phoenix. (DN 119-2, at p.
argue this Interrogatory contains three discrete subparts:
(1) Chudnovets' status and role at CETCO . . .; (2) his
relationship and/or employment history with any other
Defendant in this lawsuit; and (3) his role and job duties at
CETCO relating to Phoenix. (DN 120, at pp. 14-15). Defendants
are correct. The first question asks for general information
regarding Chudnovets' status and role at Trading Corp.
(CETCO). The second question, “his relationship and/or
employment history with any other Defendant, ” is not
necessarily related to the primary inquiry. While Phoenix may
believe that Chudnovets' role at Trading Corp. is
factually related to his role with other Defendants in the
lawsuit, the Court finds the primary inquiry can be answered
fully and completely without answering this secondary
inquiry. Likewise, the second sentence of the Interrogatory,
asking for a full explanation of Chudnovets' role and job
at Trading Corp. “in relation to Phoenix” is
independent from the first inquiry because Defendants could
fully answer the initial inquiry without any reference to
Phoenix. This Interrogatory, therefore, will be counted as
the nature and extent of Capital Equipment and Trading
Company's and Capital Equipment and Trading
Corporation's business activities since 2009, including
all of their business functions and activities, as well as
the locations of each of the business operations/facilities
and/or offices. (DN 119-2, at p. 11).
one Interrogatory. The primary question asks for the nature
and extent of CETCO's business activities. The clause
that Defendants argue constitutes an independent inquiry,
“the locations of each business operations/facilities
and/or offices” seeks additional explanation or detail
for the original information sought. A full description of a
business's “nature” and extent” would
logically include the location of such business.
state all facts, evidence, and list all documents upon which
you rely for the statement in your Answer to Phoenix's
First Amended Complaint that CETCO and Capital Equipment and
Technology Corporation were and always have been separate
legal entities and your denial that there is a
predecessor/successor relationship between the CETCO and
Capital Equipment and Technology Corporation. (DN 119-2, at
p. 12). Defendants argue that an interrogatory asking for
information related to an event and then also requesting
documents or evidence pertaining to that event constitute two
discrete requests. (DN 120, at pp. 13-14). Courts are divided
on this issue. See Engage Healthcare Comms., LLC v.
Intellisphere, LLC, No. 12-cv-00787(FLW)(LHG), 2017 WL
2371834, at *6 (D.N.J. Feb. 10, 2017). As Defendants assert,
several courts have found that a demand for information and a
demand for documents pertaining to that information should be
counted as two separate interrogatories. See, e.g., Cook
v. City of Dallas, No. 3:12-CV-3788-N, 2017 WL 9534098,
at *2 (N.D. Tex. Apr. 10, 2017); Smith v. Café
Asia, 256 F.R.D. 247, 254 (D.D.C. 2009); Banks v.
Office of Senate Sergeant-at-Arms, 222 F.R.D. 7, 10
(D.D.C. 2004). One court noted that interrogatories seeking
both facts and documents are “really a fugitive request
for production of documents” and discovery would be
better served in that format. Kendall v. GES Exposition
Servs., Inc., 174 F.R.D. 684, 686 (D. Nev. 1997). But
other courts have found that this type of interrogatory
should not be divided into discrete subparts because the
facts and documents regarding a specific contention or
affirmative defense are “logically or factually
related.” See, e.g., Engage Healthcare, 2017
WL 2371834, at *6-7; Synopsys, Inc. v. A TopTech,
Inc., 319 F.R.D. 293, 297 (N.D. Cal. 2016).
the Court is more persuaded by the second line of cases.
Phoenix has not asked Defendants to produce evidence or
documents in this Interrogatory. Phoenix, instead, seeks
Defendants “state” the facts and evidence and
“list” the documents it relied on for a specific
contention from their Answer. To conclude they are discrete
subparts would hamstring this complex case. This conclusion
allows reasonable latitude for Phoenix to formulate an
inquiry to elicit as complete an answer as possible. See Eli
Lilly Corp., 315 F.R.D. at 197. Although Phoenix's
Interrogatory relates to both Defendants' contention that
CETCO and Technology were always separate legal entities and
their denial that a predecessor/successor relationship exists
between the two, because the same facts, evidence, and
documents would likely be used to respond to both inquiries,
this Interrogatory is considered one for purposes of Rule 33.
Court, accordingly, counts this as one interrogatory because
the “facts, evidence, and documents” are subsumed
within the interrogatory as logically related to its primary
topic, e.g., the basis for Defendants' contention that
CETCO and Technology Corp. are separate entities. See
Synopsys, Inc., 319 F.R.D. at 299.
list all business addresses, phone numbers, fax numbers, and
website domains that CETCO has used at any time since 2009
and for each identify the dates of usage. (DN 119-2, at p.
Defendants explain in their response that they only counted
Phoenix's Interrogatory No. 10 as one interrogatory, the
parties no longer ...