FastTrac Transportation, LLC, Plaintiff, v. Pedigree Technologies, LLC, Defendant Case No. 3:22-cv-53 United States District Court, D. North Dakota Filed March 08, 2024 Counsel Marianne Robak, Pro Hac Vice, Saad Abdul Aziz, Pro Hac Vice, Shackelford, Bowen, McKinley & Norton, LLP, Houston, TX, Tatiana Pauwels Lutomski, Pro Hac Vice, Shackelford, Bowen, McKinley & Norton, LLP, Houston, TX, William A Gage Jr., Buck Keenan LLP, Houston, TX, Bradford James Brown, Crowley Fleck, PLLP, Bozeman, MT, Erik J. Edison, Crowley Fleck PLLP, Bismarck, ND, Tatum O'Brien, Timothy M. O'Keeffe, O'Keeffe O'Brien Lyson Ltd., Fargo, ND. for Plaintiff. Abigale Raye Griffin, Aubrey J. Zuger, Matthew P. Kopp, Fredrikson & Byron, P.A., Fargo, ND, Todd Wind, Pro Hac Vice, Fredrikson & Byron, P.A., Minneapolis, MN, for Defendant. Senechal, Alice R., United States Magistrate Judge ORDER *1 Plaintiff FastTrac Transportation, LLC, asks the court to reconsider an earlier order denying a motion to compel defendant Pedigree Technologies, LLC, to produce software source code, asserting the source code is the “only objective and conclusive evidence” of whether Pedigree had the capabilities to fulfill certain representations it made to FastTrac. (Doc. 84). Alternatively, FastTrac seeks an order to compel Pedigree to produce two “snapshots” of the source code. Id. at 3. Pedigree opposes the motion, arguing FastTrac has not shown reason for reconsideration of two prior decisions denying FastTrac's request for production of the source code, the source code is neither relevant nor necessary to FastTrac's claims, and disclosure of the source code would be “severely disproportionate to the needs of the case.” (Doc. 89). Pedigree also seeks an award of the fees and costs it incurred in responding to the motion. Background FastTrac describes itself as a “leader in the transportation of equipment, materials, and supplies throughout the United States,” with a fleet operating throughout the country 24 hours per day, 365 days per year. (Doc. 49, p. 2). In 2019, FastTrac entered into a 36-month “OneView Contract Agreement” with Pedigree for certain equipment and access to Pedigree's OneView platform. (Doc. 1-1). Pedigree describes itself as a software company, with its flagship product being its “OneView platform [that] enhances operational data visibility to assist companies with such things as monitoring and tracking the location of equipment, monitoring equipment diagnostics/behavior and assisting customers track and record information pertaining to drivers’ hours and vehicle inspection reports.” (Doc. 50, p. 10). As summarized in an earlier order: FastTrac's complaint alleges it purchased 750 forward-facing dash cameras and 750 electronic touchscreen tablets from Pedigree, along with access to Pedigree's web-based platform for a period of 36 months. FastTrac further alleges the products did not perform as Pedigree had represented, resulting in FastTrac needing to purchase replacement products. Pedigree moved to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). On August 1, 2022, the presiding district judge granted the motion in part, dismissing FastTrac's claims of breach of implied warranties, fraud/fraudulent misrepresentation, and products liability. The motion to dismiss FastTrac's claims of breach of contract and breach of express warranties was denied. (Doc. 38, p. 1). In denying Pedigree's motion to dismiss FastTrac's breach of contract claim, the district judge wrote: Put simply, FastTrac has alleged that Pedigree did not provide dash cams that complied with the certain provisions of the Agreement, that Pedigree refused to correct the issues with their products as promised in the Agreement, and as a result, it was forced to purchase replacement goods. This is sufficient factual matter, accepted as true, to state a claim for breach of contract under North Dakota law, and the Court denies Pedigree's motion to dismiss as to this claim. *2 (Doc. 15, p. 5).[1] After the order dismissing certain of FastTrac's claims—without prejudice—was entered, the parties proceeded to discovery and a dispute about production of Pedigree's source code soon developed. Attempts at informal resolution of the dispute were not successful, and FastTrac filed its first motion to compel production of Pedigree's source code on January 27, 2023. In response to FastTrac's January 2023 motion, Pedigree argued FastTrac's discovery requests had not encompassed the source code FastTrac was seeking. (Doc. 42). In an order of March 7, 2023, this court found FastTrac's discovery requests could not reasonably be interpreted to have included a request for Pedigree's source code, that even if the discovery requests were interpreted that way, FastTrac had not shown the source code was relevant to its claims or necessary to the action, and that production of the source code would not meet proportionality standards of Federal Rule of Civil Procedure 26. (Doc. 48, p. 25). The March 7 order, however, permitted FastTrac to amend its complaint to add claims of fraud and fraudulent misrepresentation (which were previously dismissed without prejudice) and to conduct discovery limited to those claims. In allowing the amendment, this court stated it did not view the limited additional discovery as including production of Pedigree's source code. Id. FastTrac then filed an amended complaint, adding a claim for actual fraud/fraudulent misrepresentation. (Doc. 49, pp. 19-21). FastTrac appealed this court's March 7 order to the presiding district judge, characterizing the statement that the additional discovery was not viewed as including production of Pedigree's source code as an impermissible advisory opinion. In rejecting that argument and affirming denial of FastTrac's January 2023 motion to compel, the district judge's July 7, 2023 order stated The factual allegations related to claims of fraud and fraudulent misrepresentation were presented as part of the discovery dispute. Indeed, FastTrac's briefing related to the discovery dispute lists numerous alleged factual misrepresentations claimed to implicate the source code in support of its argument that the code should be discoverable. These purported misrepresentations form the basis for FastTrac's clams of fraud and fraudulent misrepresentation in the amended complaint. No hypothetical disputes were analyzed because FastTrac suggested the source code is necessary to its fraud claims. [The magistrate judge] simply rejected that position. .... On these facts, the source code is not central to the claims for fraud and fraudulent misrepresentation. Said another way, the Court agrees with [the magistrate judge] that FastTrac did not show that production of the source code would meet the proportionality standards of Federal Rule of Civil Procedure 26. Based [on] the facts discussed above, and the Court's broad power to limit discovery, [the magistrate judge's] order limiting discovery related to the source code was not clearly erroneous or contrary to law. *3 (Doc. 57, pp. 3-4). On July 26, 2023, FastTrac served a Request for Production: ... Produce the Source Code for the Pedigree System and any changes, revisions, or updates You made to the Source Code. In answering this request please include (a) the original version of the Source Code for the Pedigree System as it existed at the time of the contract's execution between FastTrac and Pedigree Technologies LLC in or around May 29, 2019. Please ensure this includes any and all functionalities represented to FastTrac at that time, including but not limited to those represented to FastTrac at the May 29, 2019 Meeting, in the PED000029 presentation, and PED002414 data sheet; and (b) any and all iterations of the Source Code for the Pedigree System subsequent to the Contract execution date, chronologically organized, each distinctly marked with the exact date and time of its creation. These should include, but not be limited to, the versions of the Source Code that correspond to any point in time where features or capabilities of the Pedigree System provided to FastTrac were changed, revised, updated, modified, added, or removed after the Contract date. (Doc. 84, p. 2; Doc. 85-1, p. 2). Pedigree objected, arguing (1) this court's March 7 order, as affirmed in the district judge's July 7 order, had determined Pedigree was not required to produce its source code; (2) the source code is a trade secret; (3) the request did not meet proportionality standards of Federal Rule of Civil Procedure 26; (4) the request was overly broad and unduly burdensome; and (5) demands for organization and categorization of the production were unreasonable. (Doc. 84). Pursuant to Civil Local Rule 37.1, the parties participated in an informal conference with the court to attempt to resolve the dispute. That attempt was not successful, and the court authorized FastTrac to file its current motion. As an alternative to production of the entirety of the source code, FastTrac requests “narrowly tailored source code snapshots from two separate and significant dates”: May 29, 2019, which FastTrac describes as the date Pedigree “made numerous representations” about functionalities of the Pedigree product, and December 31, 2019, which FastTrac describes as the date by which Pedigree represented certain features of its product would be available. (Doc. 85, p. 4 n.2). Law and Discussion 1. Request for Reconsideration Pedigree argues FastTrac has not shown sufficient reason to warrant reconsideration of the March 7 order. Pedigree argues Federal Rule of Civil Procedure 60(b) requires FastTrac to show “exceptional circumstances” in order for the court to reconsider the order and contends FastTrac has not met that standard. To support its position, Pedigree cites Broadway v. Norris, 193 F.3d 987 (8th Cir. 1999), which recognized the federal rules do not mention motions for reconsideration but construed a motion to reconsider a ruling on a motion to dismiss as a Rule 60(b) motion. (Doc. 89, p. 6). The appellate court determined it had jurisdiction to review that ruling only insofar as it addressed a qualified immunity issue. Broadway, 193 F.3d at 989. *4 Because FastTrac's request for reconsideration does not involve a dispositive order, this court is guided by Federal Rule of Civil Procedure 54(b), rather than Rule 60(b). Rule 54(b) provides that any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities. Other district courts in this circuit have found Rule 54(b) gives greater discretion to reconsider an interlocutory order than does Rule 60(b). See Disc. Tobacco Warehouse, Inc. v. Briggs Tobacco and Specialty Co., Inc., No. 3:09-CV-05078, 2010 WL 3522476, at *2 (W.D. Mo. Sept. 10, 2010); Garrett v. Albright, No. 4:06-CV-4137, 2008 WL 268993, at *2 n.2 (W.D. Mo. Jan. 30, 2008); Vosdingh v. Qwest Dex, Inc., No. Civ. 03-4284, 2005 WL 1323007, at *1 (D. Minn. June 2, 2005). Under Rule 54(b), a court “may reconsider an interlocutory order only if the moving party demonstrates (1) that it did not have a fair opportunity to argue the matter previously, and (2) that granting the motion is necessary to correct a significant error.” Disc. Tobacco Warehouse, 2010 WL 3522476, at *2. To support its request for reconsideration, FastTrac puts considerable weight on recent deposition testimony of Josh DeCock, Pedigree's Vice President of Product Management, which was taken after the decision FastTrac asks the court to reconsider. FastTrac asserts DeCock's deposition testimony shows he was not qualified to make statements he made in a February 6, 2023 declaration opposing FastTrac's first motion to compel and argues the court should disregard that declaration. DeCock's declaration described his responsibilities as overseeing development and maintenance of software source code for the Pedigree system at issue in this litigation. DeCock described the software as a “closely guarded trade secret” without which Pedigree would not exist. (Doc. 43, pp. 1-2). He stated there were dozens of changes made in the source code during the relevant time period. DeCock described precautions Pedigree viewed as required to safeguard the source code during a third party's review of the source code for legal purposes, including purchase of “a special locked down standalone computer with no internet capability and no external USB port” onto which Pedigree would upload its source code, with a Pedigree representative present when FastTrac's expert accessed and reviewed the source code. Id. at 3. The declaration estimated the cost of arranging for and allowing FastTrac's expert to review the source code as $8,000 to $20,000. Id. at 4. In reply to DeCock's declaration, FastTrac filed a February 13, 2023 declaration of Mahdi Eslamimehr, a software engineer FastTrac retained as an expert in this litigation. Eslamimehr's declaration described a process he would use to examine the Pedigree source code, where the source code would be “cloned” from Pedigree's proprietary repository and transmitted to Eslamimehr for analysis via an encrypted file, Eslamimehr would use his company's secure dedicated code review room to conduct the review, and the clone of the Pedigree source code would be “thoroughly wiped out with special tools from [his] analysis machine” at the conclusion of the litigation. (Doc. 44-1, pp. 5-6). Eslamimehr stated he would analyze the source code on a machine used specifically for that purpose, using “curated tools which objectively analyze many different metrics from the software development process.” Id. at 6. *5 In its reply supporting its January 2023 motion to compel, FastTrac discounted DeCock's declaration as providing only an estimate of time required to produce the source code in a secure manner and pointed to the declaration including no evidence DeCock was qualified or experienced in the process of source code review. (Doc. 44, p. 4). The March 7 order, however, stated, “DeCock's declaration describes him as responsible for overseeing development and maintenance of Pedigree's source code and describes tasks a software developer would take in preparing the source code for review by a third party. The court considers DeCock sufficiently qualified to address the matters addressed in his declaration.” (Doc. 48, p. 12). In its current motion, FastTrac argues DeCock's deposition testimony demonstrates he is “not competent to testify on the matter of Pedigree's source code, particularly regarding the feasibility of producing it in a secure method.” (Doc. 85, p. 10). Citing Federal Rules of Evidence 401, 402, and 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), FastTrac asks the court to act as a gatekeeper, to ascertain whether DeCock's testimony is both relevant and reliable. In FastTrac's view, the court should disregard DeCock's February 2023 declaration because his later deposition testimony shows (1) he is not a computer programmer by trade or experience, (2) he had no role in development or maintenance of Pedigree's source code, (3) he did not have personal knowledge of some statements he made in the declaration, and (4) he “[did] not even know the name of the repository where Pedigree is currently storing its source code.” (Doc. 85, pp. 5, 10). In his deposition testimony, DeCock acknowledged some statements in his February 2023 declaration were not based on his personal knowledge but were made in consultation with other Pedigree employees. He testified computer programming is not his primary skill, it has never been a part of his work at Pedigree, and he does not specialize in software security or storage. (Doc. 91, pp. 101-03, 105-06). To support its current motion, FastTrac filed a second declaration of Eslamimehr, dated February 9, 2024. (Doc. 97-3). The declaration criticizes portions of DeCock's deposition testimony and gives more detail than Eslamimehr's February 2023 declaration about the process he proposes to use in analyzing Pedigree's source code in a secure manner. Eslamimehr also explains why he views the source code as necessary to FastTrac's case: Pedigree has argued that source code would not assist in establishing the performance of the dash cams. This is misguided. Source code can show whether the appropriate features and structures required to capture the information from the hardware are present at the times represented by Pedigree. Every feature of software, from small to large, is written in code. A feature cannot exist without proper code, and reviewing the code can verify the existence and functionality of a feature. Again, that is a matter of simple review and static analysis of the source code release at the time the listed functionality should have existed. That same static analysis can confirm whether features and functions which had been promised to FastTrac existed or were built after the stated availability dates. Id. at 4-5. In response to FastTrac's July 2023 request for production, Pedigree states it produced documents demonstrating various “alternative sources,” such as Pedigree's release notes and FastTrac's own historical data, “that would allow FastTrac to determine whether a specific feature existed at a certain time.” (Doc. 89, p. 4); (see also Doc. 90-2). FastTrac contends those documents are wholly inadequate. *6 With that background, the court considers whether FastTrac has met Rule 54(b)’s requirements for reconsideration of the March 7 order. Under that standard, FastTrac must show (1) that it did not have a fair opportunity to argue the matter previously and (2) that reconsideration is necessary to correct a significant error. Disc. Tobacco Warehouse, 2010 WL 3522476, at *2. FastTrac has not suggested it could not have presented the opinions in Eslamimehr's February 2024 declaration when it filed its first motion to compel. Nor has FastTrac advanced arguments in support of the current motion that it did not advance in support of its January 2023 motion. As to FastTrac's request to reconsider the court's ruling on production of Pedigree's source code in its entirety, the motion will be denied for failure to show FastTrac did not have a fair opportunity to argue the matter previously and failure to show that reconsideration is necessary to correct a significant error. 2. Alternative Motion FastTrac's alternative request, for production of the source code only as it existed on two specific dates, could be considered a different request than that on which the court ruled previously. The court will therefore consider FastTrac's alternative request on its merits. FastTrac's alternative motion, like its original motion, is governed by Federal Rule of Civil Procedure 26. Under Rule 26(b)(1), parties are entitled to discover any nonprivileged matter that is relevant to any party's claims or defenses and proportional to the needs of the case. Factors to be considered in determining proportionality include the importance of the issues at stake, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. As the moving party, FastTrac has the burden to establish its requests come within the scope of Rule 26(b). Rychner v. Cont'l Res., Inc., No. 1:19-cv-71, 2021 WL 2211110, at *2 (D.N.D. June 1, 2021) (stating the proponent must make a threshold showing of relevance); InCompass IT, Inc. v. Dell Inc., Civ. No. 11-0629, 2012 WL 13027072, at *3 (D. Minn. June 29, 2012) (stating the moving party has the burden to show why the non-moving party must be compelled to respond to discovery). If the court concludes the source code is relevant to FastTrac's claims, the court must then determine whether production of the source code would be proportional to the needs of the case. FastTrac characterizes the source code as “the sole objective means of proving that Pedigree misrepresented to FastTrac the functions and abilities of its product.” (Doc. 85, p. 1). In FastTrac's view, “It is impossible for this production to not be proportional to the needs of the case. This production resolves the case. Nothing could be more critical.” Id. at 8. FastTrac argues access to Pedigree's source code is essential to FastTrac's expert forming opinions about capabilities of Pedigree's system and contends denial of access to the source code would be highly prejudicial to FastTrac. FastTrac acknowledges the source code is a trade secret but contends a protective order could make the danger of disclosing any trade secret information “non-existent.”[2] Id. Further, FastTrac argues the court could order production of the source code in a secure neutral environment. Id. at 11. Courts have established a higher burden to obtain discovery of trade secret information, where a moving party is required to demonstrate both the relevance of the requested information and how the information is necessary to the action. That burden-shifting framework arises from Rule 26(c)(1)(G), which provides a court may enter a protective order requiring that a trade secret “not be revealed or be revealed only in a specified way.” In light of that rule, the Eighth Circuit has described a framework for reconciling the competing interests involved in trade secret discovery disputes. First, the party opposing discovery must show the information is a trade secret and its disclosure would be harmful to the party's interest. If the opposing party makes the requisite showing, the burden shifts to the party seeking discovery to show that the “information is relevant to the subject matter of the lawsuit and is necessary to prepare the case for trial.” In re Remington Arms Co., Inc., 952 F.2d 1029, 1032 (8th Cir. 1991); Chairez v. AW Distrib., Inc., No. 20-CV-1473, 2023 WL 2071375, at *4 (D. Minn. Feb. 17, 2023). Having acknowledged the source code is a trade secret, under the framework of Remington Arms, FastTrac must show the source code “snapshots” are both relevant and necessary to proof of its claims. *7 In the March 7 order, this court stated [T]o prove its breach of contract claim, FastTrac must prove the dash cameras did not comply with the parties’ agreement, and FastTrac has identified no portion of the agreement that concerns Pedigree's source code. Nor has FastTrac explained how the source code would show the dash cameras did not function in a manner that met contract requirements. If, in fact, the dash cameras did not perform as agreed, the deficient performance might have resulted from problems with the source code. But FastTrac must prove how—not why—the dash cameras did not meet requirements of the agreement. FastTrac has not suggested the source code would assist it in establishing deficient performance of the dash cameras. Apart from the breach of contract claim, the only remaining claim is one of express warranty, and that claim includes a one-year warranty covering only hardware. FastTrac has not suggested how the source code might be relevant to the hardware warranty claim or necessary to proof of that claim. FastTrac has not met its burden under Remington Arms. (Doc. 48, pp. 10-11) (citation omitted). After that order was issued, FastTrac was allowed to amend its complaint to again bring a claim of actual fraud/fraudulent misrepresentation. But as the district judge's July 7 order recognized, FastTrac presented allegations related to fraud and fraudulent misrepresentation in arguing its first motion. Nonetheless, this court considers whether FastTrac has made a sufficient showing that the source code snapshots are relevant to its claim of actual fraud/fraudulent misrepresentation. In sum, FastTrac argues Pedigree fraudulently represented, on May 29, 2019, that the Pedigree system could perform functions that had not yet been incorporated into the system, specifically functionality of the dash cameras. But Pedigree states “it is undisputed that the camera system functionality did not exist on May 29, 2019, and thus the source code as of that date would not be helpful.” (Doc. 89, p. 6; Doc. 90-2, pp. 2-3). And, as Pedigree asserts, the alleged misrepresentations concern the software's functionalities and not the source code itself. Even if the court were to conclude the source code snapshots are relevant to FastTrac's claims, under Remington Arms, FastTrac would need to show the source code is necessary to prove its claims. FastTrac has not shown there are no other means available to prove its claims. And if FastTrac had shown the source code snapshots are both relevant and necessary, the court would need to determine that production of the source code snapshots would meet proportionality standards of Rule 26. As to production of the source code as it existed on a certain date, DeCock testified, Q. What if, what if – there's a representation that on a certain day Pedigree says, our software will enable you to, to pull video for 24 hours, I've, I've got to go to that software on that date and see if the software had that capability, right? A. I mean, I guess, you know, you can't prove a negative, so -- you can prove if it did happen, then you'd know it was possible. If it didn't happen, it doesn't mean it isn't possible. So then you could -- if there was something that you could not find in historical data in the -- that had been done, then the only way to reproduce it would be to, to try and rebuild the software from that date and try to do it. *8 (Doc. 91, pp. 117-118). Eslamimehr has a different view: Mr. DeCock has argued that the software source code would have to be rebuilt by a Pedigree developer to indicate whether certain functionality existed at a certain date in time. His argument demonstrates his lack of knowledge about the independent software review process. In cases where certain software features are disputed, having access to the source code repository allows for static analysis of the source code as it existed at a point in time to confirm that the specified functions existed. At no point would I suggest, as Mr. DeCock suggested in his deposition, that the source code needs to be rebuilt to running order to confirm specific features and functionalities at a particular point in time. (Doc. 97-3, pp. 2-3) (footnotes omitted). Eslamimehr describes static analysis as “one of the most reliable code analysis techniques in both industry and academia, because it can detect errors and vulnerabilities in the development cycle without executing the code.” Id. at p. 3 n.3. But the court has no evidence of the time required for the different examination methodologies DeCock and Eslamimehr describe. Regardless of a method of examination, significant precautions would be necessary to protect the source code. The court cannot determine whether production of one or more of the requested source code snapshots would be less burdensome than production of the entirety of the source code. Thus, even if the requested source code snapshots were determined to be both relevant and necessary, the court cannot conclude that production of those snapshots would meet Rule 26’s proportionality standards. 3. Pedigree's Request for Expenses Pedigree seeks an award of expenses it incurred in opposing the motion, arguing the motion was not substantially justified within the meaning of Federal Rule of Civil Procedure 37(a)(5)(B). In Pedigree's view, FastTrac's motion was not substantially justified because it seeks relitigation of the March 7 and July 7 orders. Under Rule 37(a)(5)(B), if a motion to compel discovery is denied, the moving party or its attorney is required to pay the opposing party's reasonable expenses, including attorney fees, unless the court finds the motion was substantially justified “or other circumstances make an award of expenses unjust.” Since the court has considered FastTrac's alternative motion to be different from its original motion, the court will not order that FastTrac pay Pedigree's expenses in opposing the motion. Conclusion For the reasons discussed, FastTrac's motion for reconsideration and alternative motion to compel, (Doc. 84), are DENIED. The court finds FastTrac has not met the requirements of Federal Rule of Civil Procedure 54(b) for reconsideration of the earlier order denying its motion to compel. As to FastTrac's alternative motion for source code snapshots, even if the information FastTrac seeks is determined to be relevant, FastTrac has not shown the information is necessary for proof of its claims. And if FastTrac were considered to have met the Remington Arms requirement to show necessity, this court would nonetheless find the request does not meet proportionality standards of Rule 26. Finally, Pedigree's request for an award of expenses is DENIED. *9 IT IS SO ORDERED. Dated this 8th day of March, 2024. Footnotes [1] Pedigree asserts a counterclaim for breach of contract, unjust enrichment, and conversion. (Doc. 50, pp. 12-14). [2] In addition to objecting on trade secret grounds, Pedigree raised objections of burden, breadth, and unreasonable demands for organization of requested documents. In responding to those objections, FastTrac argues Pedigree's reliance on DeCock's declaration is misplaced because his deposition testimony casts doubt on the foundation of statements he made in his declaration.