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Steves and Sons, Inc. v. Jeld-Wen, Inc.

United States District Court, E.D. Virginia, Richmond Division

June 11, 2018

JELD-WEN, INC., Defendant.


          Robert E. Payne Senior United States District Judge.

         This matter is before the Court on COUNTERCLAIM DEFENDANT STEVES & SON'S INC., AND SAM STEVES AND EDWARD STEVES' MOTION FOR SANCTIONS UNDER RULE 37, INCLUDING A CONTINUANCE (ECF No. 1306). For the reasons set forth below, the motion was denied. See ECF No. 1469.


         The Court has described the factual background underlying this dispute at length in its recent opinion denying summary judgment on JELD-WEN, Inc.'s ("JELD-WEN") federal and state counterclaims for trade secret misappropriation. See Summary Judgment Op. (ECF No. 1424) at 2-7. However, procedural details relevant to this motion are provided here for context.

         On April 19, 2017, the Court ordered JELD-WEN to "identify the specific trade secrets that it proposes will be the subject of its counter claim and identify the witnesses it will use to support those claims'" ("the April 19 Order"). ECF No. 143 at 1-2. On April 26, JELD-WEN responded by filing: (1) a statement of misappropriated trade secrets, ECF No. 185 (Under Seal); and (2) a list of eleven witnesses who might "testify about facts that relate to JELD-WEN's trade secrets counterclaims'': Sam Steves, Edward Steves, John Ambruz, Gregory Wysock, John Pierce, Robert Merrill, Brooks Mallard ("Mallard"), Kirk Hachigian, John Jarosz, Jay Borrell ("Borrell"), and James Edward Reed ("Reed"), ECF No. 182-2.

         After Steves and Sons, Inc. ("Steves")[1] raised concerns about the vagueness of the descriptions in JELD-WEN's initial trade secrets statement, the Court noted that the trade secrets needed to be "specifically identified." Aug. 9, 2017 Transcript (ECF No. 350) at 131:17. JELD-WEN subsequently served Steves with an updated trade secrets statement in response to Steves' interrogatories. See ECF No. 357-2 (Under Seal). Steves then moved to strike portions of the updated statement that were imprecise, and the Court granted that motion in part on October 6. ECF No. 424. The Court also urged JELD-WEN to "err ... on the side of making [the statement] so crystal clear and so precise that there can be no room for contention that you are being vague and leaving the door open." Oct. 3, 2017 Transcript (ECF No. 420) at 22:6-8. Following those instructions, JELD-WEN filed an amended statement of misappropriated trade secrets on October 9 ("the Amended Statement"). ECF No. 428 (Under Seal). The Amended Statement contained a number of rows of trade secrets, but some rows included more than one paragraph of information.

         Steves then relied on the Amended Statement to conduct its Rule 30(b)(6) depositions of JELD-WEN through JELD-WEN's two corporate designees, Reed and Mallard. During those depositions, Steves' counsel asked the witnesses whether they understood certain rows to contain a single combination trade secret or multiple trade secrets. Testifying about different rows in the Amended Statement, Reed and Mallard both responded that JELD-WEN considers each individual item in the row to be confidential and a trade secret, and that the cumulative information in the whole row is also confidential and a trade secret. Reed also explained that JELD-WEN does not keep a list of trade secrets, considers all its information confidential, and does not separate that information into items or groups.

         On November 2, JELD-WEN filed an updated statement of misappropriated trade secrets to be asserted at trial ("the Trial Statement"). ECF No. 468 (Under Seal). The Trial Statement was filed in accordance with an earlier scheduling order, which set a date by which JELD-WEN had to eliminate trade secrets that it would not assert at trial. See ECF No. 3 74 at 2. Shortly thereafter, JELD-WEN moved for leave to add several trade secrets to the Trial Statement based on the declarations of two individuals, including JELD-WEN's industry expert James Morrison ("Morrison"), about other misappropriated trade secrets that those individuals discovered while reviewing documents produced by Steves. The Court granted the motion on November 27, ECF No. 581, and JELD-WEN filed an amended statement of misappropriated trade secrets for trial ("the Amended Trial Statement") on November 29. ECF No. 588 (Under Seal).

         At his subsequent deposition, Morrison testified about the information in the Amended Trial Statement, having been retained by JELD-WEN to express his expert opinion on whether that information was confidential, protected, and valuable to JELD-WEN. When asked whether certain information was an individual trade secret, Morrison said that it was a trade secret” [s]eparately and in combination." Morrison Dep. (ECF No. 884-5) (Under Seal) at 95:1-2. Morrison avoided answering that line of questioning by responding that JELD-WEN had not retained him to give an opinion on whether particular information constituted a trade secret. Id. at 96:4-13.[2] Morrison then numbered the rows in the Amended Trial Statement, showing that the document contained 28 rows of trade secrets. See Morrison Annotated Trial Statement (ECF No. 884-6) (Under Seal).

         After expert discovery was completed, Steves moved for summary judgment on January 24, 2018, ECF No. 885, and the motion became ripe on March 5, ECF No. 1124. Shortly thereafter, on March 15, after JELD-WEN's counsel advised that JELD-WEN would assert only one combination trade secret at trial, the Court ordered JELD-WEN to submit an updated trade secrets statement that delineated each trade secret and explained the source of the trade secret in more detail than in the Amended Trial Statement.[3] ECF No. 1199. In response, JELD-WEN filed an updated statement ("the Second Amended Trial Statement") on March 21. ECF No. 1218 (Under Seal) . That statement removed generalized information from several rows in the Amended Trial Statement and removed entirely the information constituting several trade secrets.

         At oral argument on Steves' summary judgment motion, Steves again expressed concern about the specificity of certain trade secrets in the Second Amended Trial Statement and Steves' inability to examine the information therein as part of its summary judgment motion. Sharing Steves' frustration with the vague testimony of JELD-WEN's witnesses, the Court said:

I've never ever seen a situation where there had been as flagrant a situation as here where the experts and the lay witnesses say it's both under the law without saying which one is. It's okay to say there are six parts and all six of them are individually and all six of them are in combination, but there are combinations within separate trade secrets here that are alleged, and it's nothing but the fault of people who have not obeyed the Court orders to do what they were told to do. . . .
[T] he lawyers could simply have told Mallard, Reed, and Morrison you can't testify that way except as to these, and these are the right ones, because they've dropped the combination ones now. So they obviously didn't have a combination claim for all of them. And that could have been done months ago.

Mar. 26, 2018 Transcript (ECF No. 1295) at 52:2-19. The Court restated its criticism of JELD-WEN's approach later in ...

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