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Entrata, Inc. v. Yardi Systems, Inc.

United States District Court, D. Utah, Central Division

October 11, 2018

Entrata, Inc. a Delaware Corporation, Plaintiff,
Yardi Systems, Inc., a California Corporation, Defendant.

          Clark Waddoups, District Judge


          Brooke C. Wells, United States Magistrate Judge

         This matter is referred to the undersigned in accordance with 28 U.S.C. § 636 (b)(1)(A).[1]Pending before the undersigned are three motions: (1) Plaintiff Entrata, Inc.'s Emergency Motion for Short Form Discovery;[2] (2) Defendant Yardi Systems, Inc.'s Motion for Protective order;[3]and (3) Defendant Yardi's Motion to Compel Testimony of David Bateman.[4] The court addresses the first two motions below and addresses the sealed motion in a separate order.[5]

         Briefly, this case involves a bitter dispute between two software and technology companies, Entrata and Yardi. Each “sells various competing property management software products.”[6] These software products allow “owners and managers of multiple rental and lease units to better manage their rental properties by offering functionality to perform accounting and management tasks ….”[7] Entrata claims Yardi has engaged in a pattern of unfair, unlawful and anti-competitive actions against it and other competitors. The current dispute centers on discovery issues, which have been very prevalent throughout the history of this case.[8] In fact, a special master, Matthew Lalli, has now been appointed by the court to assist in the discovery process.[9]

         Before turning to the respective motions, the court notes the standards for discovery set forth in the Federal Rules. Rule 26(b)(1) provides:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering 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. Information within this scope of discovery need not be admissible in evidence to be discoverable.[10]

         I. Emergency Motion for Short Form Discovery for Urgent Relief Re Violation of Court Order

         On May 4, 2018, Magistrate Judge Warner granted Entrata's motion for an order requiring Yardi “to produce all data from its client relations management database (yCRM) that is responsive to Entrata's requests for production.”[11] The order stated “Yardi shall produce any yCRM data that is responsive to Entrata's requests for production within fourteen (14) days of the date of this order.”[12] Yardi claims it complied with that order. Entrata, however, contends there is still missing information. Specifically, Entrata seeks the immediate production of “all responsive data, including explaining all the fields in yCRM and how [Yardi] selected the data it produced.”[13] And, the specific identification of data by file names, fields, columns and rows that is responsive to each document request within the prior court-ordered production. Finally, Entrata seeks an award of fees and costs for bringing the motion.

         Given Magistrate Judge Warner's rejection of Yardi's arguments against production of the yCRM data, the question now before the undersigned is whether Yardi complied with the prior order? Based on the materials before the court, and the arguments made during oral argument, the court is persuaded that Yardi has failed to fully comply with Magistrate Judge Warner's order. For example, at oral argument, Entrata cited to a lack of unit count data, the missing data from approximately 360 companies and a lack of product usage data. The yCRM data is contained within a large database that has variety of information, including information Yardi claims is not responsive to Entrata's requests. Such commingling of responsive and non-responsive data does not justify Yardi's failure to provide all court-ordered data. Further, differences between the Top Companies Report, which is a spread sheet, and the yCRM, which is a database do not justify noncompliance.

         Concerns with the production of electronic discovery is not a novel issue in the Federal Courts. For example, in Bergersen v. Shelter Mutual Insurance Company, [14] the court discussed difficulties that may be encountered when producing documents electronically. The court noted that when hard-copy documents are scanned onto a CD for production, “a receiving party may not be able to determine which specific images comprise a single document or attachments to a document since there are no staples which bind together the scanned images as they would hard copies in a file.”[15] Some courts, when faced with electronic discovery problems, have required the producing party “to label, organize or index documents being produced, if doing so is necessary to make the documents usable by the requesting party.”[16] At other times, the parties themselves have reached agreements regarding a procedure to make electronic discovery usable.[17]

         Similarly, the court in In re: Thomas Consolidated Industries, Inc., [18] pointed to the problems with the plaintiff's discovery production. The plaintiff responded to document requests by making available for inspection several file cabinets containing documents. The plaintiff failed to identify which documents were responsive to each document request and the court held such a response was inadequate. The court noted that while the federal rules allow a party to produce documents as they are kept in the ordinary course of business, the plaintiff remained “obligated to sort through the documents himself and then produce only those responsive to the documents requests.... It was insufficient for the plaintiff merely to provide defendants access to sort through plaintiff's documents in search of documents responsive to their document requests.”[19]

         The court finds the reasoning of these cases persuasive to the instant matter. Yardi may produce the yCRM data as it is kept in the ordinary course of business, but Yardi has a duty under the Federal Rules to sort through and produce the data ordered in the prior court order. In addition, Yardi must provide some sort of a framework for what is produced. Yardi cannot merely perform a document dump and expect to meet its discovery obligations.

         Accordingly, the court orders Yardi to produce all responsive data as set forth in the court-ordered production, including explaining the fields in the yCRM and how it selected such data. Further, Yardi is to specifically identify the data by file name, field, column and row that is responsive to the court-ordered production. Essentially Yardi is ordered to produce a road map to make the yCRM data usable by Entrata and Entrata's experts. The court is also persuaded that the filing of signed declarations will aide in resolving this dispute.[20] Yardi is ordered to file one or more signed declarations, within thirty (30) days from the date of this order, from individuals regarding the court-ordered production certifying that it is complete. These declarations are to include background into the methodology for the production and at least some are to come from individuals who are familiar with the yCRM database, such as Yardi employees, and not just attorneys. Finally, as set forth below, the court will order a 30(b)(6) deposition where Entrata may ask questions regarding the yCRM data, its production, methodology and questions regarding missing data following the production of any additional yCRM data by Yardi.

         II. Motion for a Protective Order

         Defendant Yardi seeks to enjoin Entrata from proceeding with its alleged improper third 30(b)(6) deposition notice. This notice was served on June 26, 2018. Fact discovery closed on May 21, 2018 and Yardi asserts “the parties' recent stipulation to extend certain discovery deadlines did not extend that cutoff.”[21] Yardi argues Entrata agreed not to reopen depositions following the yCRM production. Further, Entrata rejected Yardi's May 4, 2018, proposal to postpone the then calendared depositions until after the May 18, 2018, yCRM data production. Thus, Entrata waived its right to depose anyone about the yCRM data and the third notice is procedurally improper due to its timing. Additionally, Yardi argues the topics Entrata proposes in its third notice, are similar to those in its original 30(b)(6) notice, making the third notice duplicative and unnecessary. Finally, Yardi seeks $2, 475 for the fees and costs in bringing the motion. The court is not persuaded by these arguments.

         First, according to Yardi, the yCRM data was produced on Friday May 18, 2018, and fact discovery closed three days later, on Monday May 21, 2018. This three-day window, with two days being over the weekend, made scheduling a deposition about the yCRM data nearly impossible. Delays in producing discovery until the end of the fact discovery have been cited to as a basis for reopening depositions. For example, in Lauck v. Campbell Cnty.,[22] cited to by Entrata, the court looked to the Tenth Circuit's factors in considering whether the plaintiff's alleged violation of the discovery disclosure rules was justified or harmless.[23] The Lauck court found the late production of ...

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