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Nexpay Inc v. Comdata Network Inc.

United States District Court, M.D. Tennessee, Nashville Division

October 6, 2017

NEXPAY, INC., Plaintiff,
v.
COMDATA NETWORK, INC., Defendant.

          Trauger Judge

          ORDER

          ALISTAIR E. NEWBERN United States Magistrate Judge

         Pending before the Court is a motion to compel filed by Plaintiff NexPay, Inc. (NexPay) (Doc. No. 99) to which Defendant Comdata Network, Inc. (Comdata) has responded (Doc. No. 106). This matter has been referred to the undersigned magistrate judge for resolution. (Doc. No. 92.) At the parties' request, the magistrate judge held a hearing on NexPay's motion to compel on August 23, 2017. The magistrate judge has also held several telephone conferences with the parties regarding related discovery issues. Based upon the parties' filings and their arguments made in court and in discovery conferences, NexPay's motion to compel (Doc. No. 99) is GRANTED IN PART AND DENIED IN PART WITHOUT PREJUDICE.

         I. Background

         The underlying facts of this matter are familiar to the parties and to the Court. For purposes of resolving this discovery issue, it is sufficient to establish that, in 2012, NexPay and Comdata held confidential discussions regarding joining forces to provide virtual payment processing services to ECHO Health, Inc. (Doc. No. 43.) NexPay claims that it developed a proprietary funding-at-authorization payment process to meet ECHO Health's specialized service demands.

         Comdata provided credit card processing services, which ECHO Health also required. NexPay shared the funding-at-authorization model with Comdata pursuant to confidentiality agreements in negotiating the terms of their partnership. (Id.) NexPay now alleges that Comdata misappropriated that proprietary funding-at-authorization model to contract directly with ECHO Health. (Id.) Comdata denies that it misappropriated NexPay's proprietary model and counterclaims that it independently developed a funding-at-authorization process and that it was NexPay who wrongfully appropriated Comdata's proprietary information. (Doc. No. 46.)

         II. Analysis

         The trial court may determine the proper scope of discovery, guided by Rule 26(b)'s direction that parties may discover “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). “Although a plaintiff should not be denied access to information necessary to establish her claim, neither may a plaintiff be permitted ‘to go fishing and a trial court retains discretion to determine that a discovery request is too broad and oppressive.'” Surles ex rel. Johnson v. Greyhound Lines, Inc., 474 F.3d 288, 305 (6th Cir. 2007) (quoting Marshall v. Westinghouse Elec. Corp., 576 F.2d 588, 592 (5th Cir. 1978)). Rule 37 authorizes the filing of a motion to compel a discovery response when a party provides an “evasive or incomplete” answer to an interrogatory served under Rule 33. Fed.R.Civ.P. 37(a)(3)(B), 37(a)(4).

         In its motion to compel, NexPay asks the Court to order Comdata's response to six interrogatories. (Doc. No. 101.) The Court addresses these interrogatories as follows.

         A. Interrogatory 3 and Interrogatory 5

         Interrogatories 3 and 5 ask Comdata to “[i]dentify all facts upon which [it] relied” in two allegations of its counterclaim against NexPay. Interrogatory 3 addresses the allegation that “NexPay uses ‘technology that mirror Comdata's Intellectual Property in many ways'.” (Doc. No. 101, PageID# 1078.) Interrogatory 5 addresses the allegation that “‘NexPay does not appear to have used such technology prior to its relationship with Comdata'.” (Id.)

         After the hearing on NexPay's motion to compel, Comdata moved to dismiss its counterclaim voluntarily and without prejudice. (Doc. No. 119.) NexPay opposes that motion. (Doc. No. 127.) The resolution of Comdata's motion for voluntary dismissal will materially affect NexPay's motion to compel with regard to Interrogatories 3 and 5. NexPay's motion is therefore DENIED WITHOUT PREJUDICE TO RENEWAL after disposition of Comdata's motion to voluntarily dismiss its counterclaim, which will be addressed separately.

         B. Interrogatories 7-10

         NexPay's Interrogatories 7, 8, 9, and 10 seek information regarding Comdata's business and profits that NexPay states is relevant to its damages claims. (Doc. No. 101.) Specifically, the following ...


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