VALCOR ENGINEERING CORP. v. PARKER HANNIFIN CORP Case No. 8:16-cv-00909-JVS-KESx United States District Court, C.D. California Filed August 01, 2018 Counsel Alexander P. Swanson, Dhananjay S. Manthripragada, Jared Scott Greenberg, Patrick Ward Dennis, Perlette Michele Jura, Thomas Frasca Cochrane, Gibson Dunn and Crutcher LLP, Los Angeles, CA, Jeffrey H. Reeves, Kevin Neal Royer, Michael Ethan Bareket, Scott K. Behrendt, Seth M. Goldstein, Theodora Oringher, Costa Mesa, CA, for Valcor Engineering Corp. Lauren E. Grochow, Nicholas Joseph Schuchert, Peter N. Villar, Paul L. Gale, Troutman Sanders LLP, Irvine, CA, for Parker Hannifin Corp. Scott, Karen E., United States Magistrate Judge Order Granting in Part Valcor's Motion to Compel Production of Documents (Dkt. 335) I. BACKGROUND *1 This case is set for trial in early January 2019. The cut-off for non-expert discovery other than depositions passed on July 20, 2018. The cut-off for all non-expert discovery (including depositions) is September 25, 2018. (See Dkt. 271, 274 [scheduling orders].) The deadline to file motions to compel the production of documents expired on July 30, 2018. (Dkt. 271 at 3 ¶ E [“Any motion respecting the inadequacy of responses to discovery must be filed and served not later than ten (10) days after the discovery cut−off date.”] ). In the present motion, Valcor moves to compel Parker to produce “documents relating to early returns of non-Valcor air separation modules (‘ASMs’) used by Parker in fuel tank inerting systems on aircraft comparable to the Boeing 737NG.” (Dkt. 335 [notice of motion]; Dkt. 353-1 [“Joint Stipulation” or “JS”] at 2.[1]) Valcor initially filed the motion unilaterally, contending that Parker had failed to timely serve its portion of the JS. (Manthripragada Decl. ¶¶ 2-3, Dkt. 335-1 at 2.) Parker later filed a complete version of the JS containing Parker's arguments. (Dkt. 353-1.) Valcor also filed a supplemental memorandum. (Dkt. 368-1 [“Valcor Supp. Memo”].) The Court held a hearing on the motion on July 31, 2018. II. DISCUSSION A. Discovery Requests at Issue At issue in the present motion are Valcor's third set of requests for production (“RFPs”), which were served in November 2017. (Swanson Decl. Ex. 1, Dkt. 335-4 [Set 3 RFPs]; JS at 8-11, 16 [identifying relevant RFPs as 144-45, 149-56, and 161-63].) Parker responded to the Set 3 RFPs on January 17, 2018, and objected to all of the RFPs at issue on the basis of relevance and proportionality. (Swanson Decl. Ex. 1, Dkt. 335-4 at 45-46, 49-51, 53-54; see also Valcor Supp. Memo at 5.) At the July 31st hearing, Valcor's counsel clarified that Valcor is only seeking documents and communications related to the ASM for the Airbus A320 aircraft. B. Timing Parker complains that Valcor has had the Parker documents on which this motion relies since December 2016, and that Valcor is seeking “to massively expand the scope of discovery” on the eve of the written discovery cut-off date, July 20, 2018. (JS at 5.) Valcor argues that it has been diligently pursuing this discovery, but Parker has been delaying in an attempt to run out the clock. (Valcor Supp. Memo at 5-6.) A review of the parties' written correspondence submitted with this motion indicates that the parties have been discussing the relevance of these documents for some time. The Court does not see evidence of bad faith delay on either side, and the motion was timely filed under the governing scheduling orders. Thus, the Court declines to deny the motion on this basis. C. Relevance The Court finds that Valcor has shown that some documents related to the A320 ASM may be relevant to the claims and defenses asserted in this case and are therefore discoverable.[2] *2 Parker argues that these documents are not relevant because the A320 ASM is “dissimilar” and was designed to meet different “service life specifications” for different airplanes. (JS at 6, 18-19, 24-26.) Based on documents already produced by Parker, however, it appears that [redacted] (See Swanson Decl. Ex. 11, Dkt. 364 at 48-68 [redacted] Swanson Decl. Ex. 9, Dkt. 364 at 19, 21, 30 [redacted] ) Thus, some documents related to the A320 ASMs may be relevant to determining the cause of the 737NG ASM failures, a factual issue that is material to both parties' breach of contract claims. At the July 31st hearing, Parker predicted that if Valcor concludes (from documents responsive to the present requests) that the A320 ASM problems are different than the 737NG ASM problems, Valcor will reverse its position and argue that the two types of ASMs are fundamentally different. This argument implicitly concedes the relevance of the documents. That the documents may later be deemed unhelpful to Valcor's case—based on their content, which Valcor is currently unable to review—does not undermine the documents' relevance to the parties' claims and defenses. See generally Fed. R. Civ. P. 401 (“Evidence is relevant if (a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action.”); C&C Jewelry Mfg., Inc. v. West, No. 09-01303, 2010 WL 3943673 at *1 (N.D. Cal. Oct. 7, 2010) (“relevance is construed more broadly for discovery purposes than for trial”). Additionally, documents demonstrating that other ASMs were experiencing similar problems and demonstrating what efforts Parker was making to fix those problems (in comparison to the efforts Parker was making to fix the 737NG ASM problems) may be relevant to Valcor's fraud claim. Parker argues that Valcor's fraud claim is narrow and is “not based on Parker engaging Air Products to develop a replacement ASM, but is based on Parker's alleged failure to disclose ‘the in-service operating data [for the Boeing 737]’, which allegedly ‘obstructed Valcor's ability to improve the service life of the ASMs’....” (JS at 7.) Valcor responds, “One of Valcor's principle contentions is that Parker falsely blamed Valcor's manufacturing process for the ASM service life problems as a pretext to dump Valcor for a more profitable relationship with Air Products. ... That is why Parker claimed, in bad faith, that it was [redacted] ” (Valcor Supp. Memo at 3.) Valcor's characterization of its fraud claim is more accurate. Although Valcor's First Amended Complaint does allege that Parker breached the SPA by failing to provide in-service operating data, it also asserts that Parker breached the SPA by working with Valcor's competitor Air Products to develop a new ASM, and fraudulently concealed this new relationship from Valcor. (See Dkt. 112 at 39 ¶ 134 [alleging that “Parker secretly approached Air Products to sign an exclusivity agreement to provide ASMs for all Boeing 737 programs”]; id. at 39-40 ¶ 135 [alleging that Parker “materially breach[ed] the SPA by working with Air Products to terminate the SPA and replace Electroid” and the fact that Parker was doing so was a “material fact[ ] which Parker concealed”]; id. at 40 ¶ 137 [alleging Parker “was scouring the SPA for an excuse to terminate Electroid”].) D. Burden and Proportionality Although the Court finds that some documents related to the Airbus A320 ASM may be relevant to the case, most of Valcor's RFPs are overbroad and not “proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). *3 The Court finds that RFP 153—which seeks the “technical specifications for the [ASM] that Parker provides for the A320 aircraft, including specifications for the membrane provided by the Parker Fluid Systems Division”—is not overbroad. The other RFPs at issue are overbroad and not proportional to the needs of the case. They seek “all documents and communications related to” the following issues: • “the 1) service life, 2) airplane hours, 3) take-off and landing cycles, and 4) total flight hours for the [ASM] that PARKER provides for the A320 aircraft” (RFP 144); • “the epoxy or epoxy formulations for the membrane provided by the Parker Fluid Systems Division for the [ASM] for the A320 aircraft, including any changes made to increase service life of the air separation module or membrane” (RFP 145); • “identification and evaluation of ‘alternate tube sheet materials with more robust mechanical properties to increase tube sheet durability and ASM life,’ as set out in PARKER00000545” (RFP 149); • “the root cause of ‘the PFS tube sheet failures which have occurred under laboratory test conditions,’ as set out in PARKER00000545” (RFP 150); • “any failures, including any failures to meet an expected service life, of the membrane provided by the Parker Fluid Systems Division for the [ASM] for the A320 aircraft, including any tubesheet cracks or fiber separation” (RFP 151); • “any failures, including any failures to meet an expected service life, of the [ASM] module for the A320 aircraft, including any failures due fully or partially to fuel contamination” (RFP 152); • “any root cause analysis performed on the [ASM] that PARKER provides for the A320 aircraft” (RFP 154); • “any root cause analysis performed on the membrane provided by the Parker Fluid Systems Division for use in the air separation module for the A320 aircraft” (RFP 155); • “the ‘RCCA for the SA ASMs in service failures,’ as set out in PARKER00049779” (RFP 156); • “any RCCA performed on ‘Gen 6’ ASM, ‘Gen 7’ ASM, ‘Gen 8’ ASM, or ‘GEN 2X’ ASM, as set out in PARKER00000178”[3] (RFP 161); • “service life failures or other failures for the ‘Gen 6’ ASM, ‘Gen 7’ ASM, ‘Gen 8’ ASM, or ‘GEN 2X’ ASM, as set out in PARKER00000178” (RFP 162); and • “showing or evidencing that fuel contamination was partially or fully responsible for service life or other failures, or the return of, the ‘Gen 6’ ASM, ‘Gen 7’ ASM, ‘Gen 8’ ASM, or ‘GEN 2X’ ASM, as set out in PARKER00000178” (RFP 163). (Swanson Decl. Ex. 1, Dkt. 335-4 at 45-54; see also JS at 16 [identifying the RFPs at issue].) The Court can imagine many documents, for example, that are “related to” the “airplane hours” for the A320 ASMs or are “related to” “any failures” of the A320 ASMs that are not relevant to the issues in this case. The Court nevertheless agrees with Valcor that there may be some relevant documents that did not hit on the prior search terms employed by Parker. (See Swanson Decl. Ex. 6, Dkt. 335-9 at 4-20 [Parker's Dec. 2016 search terms list].) Based on the Parker documents Valcor cites in support of its motion, the best source of relevant documents and communications appears to be those of the Parker R&D team that investigated ASM failures. (See Swanson Decl. Ex. 9, Dkt. 364 at 30 [redacted].) It appears that some of the members of this team have been designated as custodians. (See Swanson Decl. Ex. 6, Dkt. 335-9 [Parker's Dec. 16, 2016 letter identifying its designated custodians, including Brian Ault and Bryan Jensen].) Rather than conducting broad new searches for “all documents and communications related to” the above issues, the parties should focus on documents and communications generated by this team. III. CONCLUSION *4 Based on the foregoing, IT IS HEREBY ORDERED that, on or before August 6, 2018, Parker should provide Valcor with: (1) an explanation of who was on this R&D team, (2) what each member of the team was assigned to investigate or work on, and (3) whether those members have already been designated as document custodians. IT IS FURTHER ORDERED that, on or before August 8, 2018, the parties shall meet-and-confer on the best way to identify documents and communications generated by this R&D team that are relevant to the issues identified in the above RFPs, i.e., (1) the similarities and differences between the Boeing 737NG ASM and the Airbus A320 ASM, (2) conclusions the team reached about the root cause of the A320 ASM failures, and (3) changes the team recommended to the A320 ASM to address the failures.[4] IT IS FURTHER ORDERED that, on or before August 8, 2018, Parker shall provide Valcor with documents responsive to RFP 153. IT IS FURTHER ORDERED that, within two (2) weeks of the parties' meet-and-confer (or by another date mutually agreed upon by the parties), Parker shall produce the documents agreed upon. IT IS FURTHER ORDERED that Valcor's request for an award of expenses or sanctions (JS at 29) is DENIED. Parker's position regarding the relevance of the documents sought was “substantially justified.” Fed. R. Civ. P. 37(a)(5)(A)(ii). Footnotes [1] All page citations refer to the pagination imposed by the Court's electronic filing system, CM/ECF. [2] The Court disagrees that this is a case where “relevancy [was] plain from the face of the request[s],” meaning that Parker (rather than Valcor) bore “the burden to show that discovery should not be allowed...” (JS at 12, citing Brownfield v. Flowers Baking Co. of Cal., LLC, No. 15-cv-2034, 2016 WL 6988679 at *1 (E.D. Cal. Nov. 28, 2016)). “[I]n general the party seeking to compel discovery bears the [initial] burden of showing that his request satisfies the relevance requirement of Rule 26....” Soto v. City of Concord, 162 F.R.D. 603, 610 (N.D. Cal. 1995). Valcor has met that burden with respect to this motion. [3] (See also Swanson Decl. Ex. 9, Dkt. 364 at 23 [redacted].) [4] The Court expects that Parker will be able to identify many of these documents without running new ESI searches, now that the Court has limited the source of the documents to this R&D team. The Court expects the parties to work in good faith to reach a compromise; Valcor will not receive all of the documents it seeks in the RFPs.