8:08-cv-00136-JFB-FG3 Doc # 94 Filed: 09/18/09 Page 1 of 11 - Page ID # 514
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF NEBRASKA
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`8:08CV136
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`MEMORANDUM AND
`ORDER
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`))))))))))))))
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`PLAN PROS, INC.,
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`Plaintiff,
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`vs.
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`WILLIAM J. TORCZON; INFINITY
`HOMES, INC.; COBBLESTONE HOMES,
`INC.; BRIAN W. TORCZON; DARLENE
`M. TORCZON; CHRIS WILDRICK;
`EDWARD BLAINE; and NP DODGE
`REAL ESTATE SALES, INC.,
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`Defendants.
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`This matter is before the magistrate judge on the motion (Filing 63) of Plan Pros, Inc. ("PPI")
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`to compel discovery from defendants William J. Torczon, Brian W. Torczon, Darlene M. Torczon,
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`Infinity Homes, Inc. and Cobblestone Homes, Inc. (together, "Torczons"). The motion has been fully
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`briefed. The court has reviewed Filings 63, 64, 65, 66, 67, 68, 69, 70 and 73, and plaintiff's
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`supplemental evidence index, Filing 91.
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`BACKGROUND
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`Plaintiff ("PPI") is engaged in the business of the publishing and licensing of architectural
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`designs. On May 21, 2009, plaintiff filed an amended complaint (Doc. 79) for copyright
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`infringement, alleging that Infinity Homes, Inc. and Cobblestone Homes, Inc. created infringing
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`copies of PPI's house plans, and built one or more infringing structures in this district. Torczons are
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`all principals of Infinity and Cobblestone and allegedly directed and/or assisted in the infringing
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`activities. PPI seeks injunctive and declaratory relief, and damages for both willful and non-willful
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`8:08-cv-00136-JFB-FG3 Doc # 94 Filed: 09/18/09 Page 2 of 11 - Page ID # 515
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`infringement of two copyrights. PPI further demands an accounting by the defendants of their
`1
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`activities in connection with the alleged infringements and the defendants' gross profits and revenue
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`attributable to said infringements; recovery of all direct and indirect profits attributable to the alleged
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`infringements; attorney's fees and court costs; and, in the alternative, statutory damages up to
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`$150,000 per infringement.
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`The Torczon defendants deny infringing PPI's copyrights and, by counterclaim (Doc. 26 at
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`¶¶ 59, et seq.), seek declarations of noninfringement and invalidity of PPI's copyrights. Torczons
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`have also raise 13 affirmative defenses, including allegations that they were granted a license to use
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`PPI's work; PPI's claims are barred by the statute of limitations; PPI's claims are barred by the
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`doctrines of acquiescence, estoppel, waiver, unclean hands, or laches; and PPI failed to mitigate its
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`damages.2
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`In October 2008, PPI served interrogatories and requests for production of documents on the
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`Torczon defendants. The discovery requests at issue in this motion were served on William J.
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`Torczon, Brian W. Torczon and Darlene M. Torczon, who served responses on December 19, 2008.
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`Plaintiff has complied with the requirements of NECivR 7.1(i) and Fed. R. Civ. P. 37(a)(1).
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`LAW
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`Under Fed. R. Civ. P. 26(b)(1), the parties to a lawsuit may obtain "discovery regarding any
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`matter, not privileged, that is relevant to the claim or defense of any party." Relevant information
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`PPI alleges that it owns certain rights in and to Blueprint Copyright Registration Number VA1-173-508
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`and Architectural Works Copyright Registration Number VA1-180-762.
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`See Answer to Plaintiff's Amended Complaint, Doc. 87 at ¶¶ 44-56, and Amended Answer and
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`Counterclaim, Doc. 26 at ¶¶ 43-58.
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`8:08-cv-00136-JFB-FG3 Doc # 94 Filed: 09/18/09 Page 3 of 11 - Page ID # 516
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`need not be admissible at trial "if the discovery appears reasonably calculated to lead to the discovery
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`of admissible evidence." Id. "Relevancy is broadly construed, and a request for discovery should
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`be considered relevant if there is 'any possibility' that the information sought may be relevant to the
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`claim or defense of any party. A request for discovery should be allowed 'unless it is clear that the
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`information sought can have no possible bearing' on the claim or defense of a party." Moses v.
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`Halstead, 236 F.R.D. 667, 671 (D. Kan. 2006) (footnotes omitted).
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`All discovery is subject to the limitations imposed by Rule 26(b)(2), and the court must limit
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`discovery if it determines that:
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`(i) the discovery sought is unreasonably cumulative or duplicative, or is
`obtainable from some other source that is more convenient, less burdensome, or less
`expensive;
`(ii) the party seeking discovery has had ample opportunity by discovery in the
`action to obtain the information sought; or
`(iii) the burden or expense of the proposed discovery outweighs its likely benefit,
`taking into account the needs of the case, the amount in controversy, the parties'
`resources, the importance of the issues at stake in the litigation, and the importance
`of the proposed discovery in resolving the issues.
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`Fed. R. Civ. P. 26(b)(2)(C).
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`This court has previously taken the position that when the discovery sought appears relevant
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`on its face, the party resisting discovery has the burden to establish that the discovery is not relevant,
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`or is "of such marginal relevance that the potential harm occasioned by the discovery would
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`outweigh the ordinary presumption in favor of broad disclosure." Moses v. Halstead, 236 F.R.D. at
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`671. If the relevancy of the discovery request is not readily apparent, the party seeking the discovery
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`has the burden to show the relevancy of the request. Id.
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`8:08-cv-00136-JFB-FG3 Doc # 94 Filed: 09/18/09 Page 4 of 11 - Page ID # 517
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`A. Request for Production No. 11, for "Originals of all blueprints, sketches, line
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`drawings, and all other layouts of floor plans for every house [Torczons] have built – as well as those
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`planned to be built, but were not built, since January 1, 1998." Doc. 91-4 at pp. 3-4.
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`As a result of Judge Strom's orders on similar issues in Plan Pros, Inc. v. Zych, Case No.
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`8:08CV125, the defendants ultimately agreed to produce these items for inspection on September
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`1, 2009. Doc. 90 at p. 2, ¶ 4; Doc. 92 at p. 1, ¶ 1. The motion will be denied as moot as to Request
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`No. 11.
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`B. Request for Production No. 6 and related Interrogatory No. 2. Plaintiff requested
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`"Originals of all documents relating to and/or concerning all facts supporting each and every
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`affirmative defense raised" by Torczons. The related interrogatory provides:
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`Identify each and every document and tangible thing reviewed or relied upon in the
`preparation of answers to the interrogatories directed to you, Infinity Homes, Inc.,
`and Cobblestone Homes, Inc., and as to each such document or item so identified,
`indicate the specific interrogatory or interrogatories with respect to which said
`3
`document(s) or item(s) was/were reviewed and/or relied upon.
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`In response, the Torczons objected to the document request as "premature" because PPI had
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`not yet responded to their discovery requests. Torczons then"refer[red] Plaintiff to the documents
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`produced in response to Plaintiff's Request for Production and in conjunction with Defendants' Rule
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`26 Disclosures." As to the interrogatory, the Torczons also "refer[red] Plaintiff to the documents
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`PPI's Interrogatory No. 9 directs the defendants to "Describe – in as much detail as you ever intend to
`3
`use in this case – all facts supporting each affirmative defense raised by you." The Torczons objected to
`Interrogatory No. 9 as premature pursuant to "Fed. R. Civ. P. 33(c)." Doc. 91-3 at p. 4. The current version
`of Rule 33(c), which became effective December 1, 2007, provides: "An answer to an interrogatory may be
`used to the extent allowed by the Federal Rules of Evidence." The court assumes that the Torczons' objection
`is based on a superseded version of Rule 33. Rule 33(a)(2) now provides, in part, that "the court may order
`that the interrogatory need not be answered until designated discovery is complete ... or some other time."
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`8:08-cv-00136-JFB-FG3 Doc # 94 Filed: 09/18/09 Page 5 of 11 - Page ID # 518
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`previously identified in connection with Defendants' Rule 26 Disclosures [and] to the documents
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`identified in response to Plaintiff's First Request for Production of Documents."
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` Fed. R. Civ. P. 34(b)(2) governs responses and objections to requests for production of
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`documents. The rule provides:
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`(E) Producing the Documents or Electronically Stored Information. Unless
`otherwise stipulated or ordered by the court, these procedures apply to producing
`documents or electronically stored information:
`(i) A party must produce documents as they are kept in the usual course
`of business or must organize and label them to correspond to the categories in
`the request;
`(ii)
`If a request does not specify a form for producing electronically
`stored information, a party must produce it in a form or forms in which it is
`ordinarily maintained or in a reasonably usable form or forms; and
`(iii) A party need not produce the same electronically stored information
`in more than one form.
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`There is simply no legal basis for Torczons' summary dismissal of PPI's request as
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`"premature." "[D]iscovery by one party does not require any other party to delay its discovery." Fed.
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`R. Civ. P. 26(d)(2)(B). Torczons are advised that their obligation to respond to PPI's discovery
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`requests is not contingent on PPI's responding to Torczons' discovery requests. PPI simply requested
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`identification and production of documents relating to the factual basis for Torczons' affirmative
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`defenses, assuming that there is a factual basis for the affirmative defenses, see Fed. R. Civ. P. 11(b).
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`Torczons' objections to Request No. 6 and Interrogatory No. 2 as being "premature" are denied.
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`Apparently, PPI has identified 11 allegedly infringing structures, and the Torczons have
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`produced "the file for each house identified in Plaintiff's Complaint" in the same manner and order
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`that the documents appear in each file. Rule 34(b)(2)(E)(i) does allow a party to produce documents
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`as they are kept in the usual course of business; however, the language of Torczons' response to
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`8:08-cv-00136-JFB-FG3 Doc # 94 Filed: 09/18/09 Page 6 of 11 - Page ID # 519
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`Request No. 6, and particularly the statement that the request was "premature," suggests that the
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`house files are not fully responsive to PPI's request. For example, based on the information
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`contained in the Declaration of William J. Torczon (Doc. 69-2), it does not seem likely that the
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`individual house files he produced would contain information relating to Torczons' being granted
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`a license to use PPI's work; why PPI's claims are barred by the statute of limitations; why PPI's
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`claims are barred by the doctrines of acquiescence, estoppel, waiver, unclean hands, or laches; and
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`how PPI failed to mitigate its damages. Torczons' written arguments rely entirely on Rule 34 and
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`contain no discussion of their obligation under Fed. R. Civ. P. 33 to answer PPI's Interrogatory No.
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`2. The court notes that defense counsel took the position in a letter dated January 29, 2009 (Doc.
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`65-4) that since counsel "did not review any specific documents for the purpose of responding to any
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`specific interrogatory," the Torczons were absolved of any obligation to meaningfully respond to
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`Interrogatory No. 2 by identifying the documents specifically relating to their affirmative defenses.
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`But cf. Fed. R. Civ. P. 26(g) (requiring counsel to conduct a reasonable inquiry before objecting to
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`an interrogatory or document request).
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`Undoubtedly, the Torczons have produced many documents as they are kept in the usual
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`course of business; however, the Torczons do not appear to state that the individual house files
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`constitute their complete response to PPI's request No. 6. Although Torczons vaguely referred PPI
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`(and the court) to their Rule 26(a)(1) initial disclosures as being responsive, it does not appear that
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`the initial disclosures consisted of documents produced as they are kept in the usual course of
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`business. The arguments presented in the Torczons' briefs do not address their obligation under Fed.
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`R. Civ. P. 33(a)(2) to answer contention interrogatories. The Torczons have failed to persuade this
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`8:08-cv-00136-JFB-FG3 Doc # 94 Filed: 09/18/09 Page 7 of 11 - Page ID # 520
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`court that they should be allowed to respond to PPI's Interrogatory No. 2 by producing business
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`records pursuant to Fed. R. Civ. P. 33(d).
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`Torczons' affirmative defenses were first raised in their Amended Answer on July 28, 2008.
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`Again, the court presumes that the Torczons raised these defenses in compliance with Fed. R. Civ.
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`P. 11(b). As of February 4, 2009, however, the Torczons advised opposing counsel that they were
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`"still in the process of developing those facts that will support our various affirmative defenses."
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`Counsel did volunteer the information that "all of the documents produced support the affirmative
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`defenses listed in Paragraphs 44, 45 and 46 of the Amended Answer." Doc. 66-3 at p. 2.
`4
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`The issues in this case involve more than the 11 individual houses identified to date. Under
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`the circumstances, the court agrees with PPI that the Torczons' "7800 page document dump" does
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`not satisfy their obligations under Rules 26, 33 and 34 to conduct a reasonable inquiry and fully
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`respond to PPI's Request No. 6 and Interrogatory No. 2.
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`Torczons are directed to immediately conduct a reasonable inquiry and to serve supplemental
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`responses to PPI's Request No. 6 and Interrogatory No. 2 specifically identifying the documents that
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`relate to their affirmative defenses, and the affirmative defense to which each document relates. The
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`supplemental responses shall be served no later than October 5, 2009. Failure to timely serve
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`supplemental responses may, upon proper motion, result in the court imposing sanctions such as
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`4
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`The relevant paragraphs of the Amended Answer (Doc. 26) provide:
`44. Plaintiff fails to state a claim upon which relief can be granted.
`45. Defendants did not copy the Plaintiff's work.
`46. Defendants have not infringed, and are not infringing the Plaintiff's copyright either directly,
`contributorily, by inducement, or otherwise.
`These affirmative defenses were reasserted at paragraphs 45, 46 and 47 of Torczons' Answer to Plaintiff's
`Amended Complaint (Doc. 87).
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`8:08-cv-00136-JFB-FG3 Doc # 94 Filed: 09/18/09 Page 8 of 11 - Page ID # 521
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`striking the Torczons' affirmative defenses or prohibiting Torczons from introducing evidence in
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`support of their affirmative defenses. See Fed. R. Civ. P. 37(b)(2) & (c)(1).
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`
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`C. Request for Production No. 21, for
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`A detailed transaction report (i.e. – income/cost/expense ledger) for each and every
`house you, or any entity with which you have been affiliated have built (whether sold
`or not) from January 1, 2003 – present. This request seeks production of all digital
`accounting data on a project-by-project, house-by-house basis, such as Microsoft
`XLS, Sage Peachtree Software, Intuit Quickbooks/Quickpay, and the like, and
`includes any and all such data spreadsheets with which you sought or acquired loans.
`Please produce this information on CD-ROM, as well as paper printed "hard" copies.
`[If you wish, a reasonably-worded confidentiality agreement or order will be
`considered for these documents.]
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`Filing 91-4 at p. 6. The Torczon defendants agreed to produce responsive documents for the 11
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`houses specifically at issue in this case, but otherwise objected to the request as overbroad, unduly
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`burdensome, and not reasonably calculated to lead to the discovery of relevant information.
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`In Plan Pros, Inc. v. Zych, 2009 WL 2020787, No. 8:08CV125 (D. Neb.,July 8, 2009), Judge
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`Strom held that a similar request for amounts paid to the defendant designer/builder for work done
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`on all other projects was irrelevant to the issues in the case "unless and until those projects are shown
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`to infringe copyrights." In this case, I find that PPI's Request No. 21 should be limited to the 11
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`allegedly infringing structures that have been identified to date.
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`PPI specifically requested "digital accounting data on a project-by-project, house-by-house
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`basis, such as Microsoft XLS, Sage Peachtree Software, Intuit Quickbooks/Quickpay, and the like..."
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`The record shows that the spreadsheets provided by the Torczons were not produced "as they are
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`kept in the usual course of business," and the information was not produced in the form or forms in
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`which it was ordinarily maintained. See Fed. R. Civ. P. 34(b)(2)(E). The record shows that
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`8:08-cv-00136-JFB-FG3 Doc # 94 Filed: 09/18/09 Page 9 of 11 - Page ID # 522
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`Torczons allowed their attorney access to their computer files. Counsel states that he "obtained
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`digital versions" of the "financial reports / spreadsheets" for each of the houses identified in the
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`complaint. The data was generated "by a Quickbooks program in Microsoft Excel format." The
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`converted data was transferred onto a CD and given to plaintiff's attorney. Doc. 69-3, Declaration
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`of Patrick S. Cooper at ¶¶ 6-7.
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`PPI objects to the production of this data in Microsoft Excel format instead of its original
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`Quickbooks format because "[t]he electronic data within QuickBooks is filled with metadata, which
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`can inform PPI of when the expenses for the accused structures were input, and will provide hyper
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`links to the source data for the income and expense figures on the spreadsheet." Doc. 64, Plaintiff's
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`Brief at pp. 15-16 (emphasis in original). "When the conversion [to Microsoft Excel] is made, all
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`functionality including links to source documents are lost, and the document becomes as static as
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`an Adobe PDF." Doc. 73, Plaintiff's Reply Brief at p. 6.
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`PPI has demonstrated that Torczons' production, while in a digital format, was essentially
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`redacted by counsel and was not produced in the form or forms in which it was ordinarily
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`maintained. The reason given for providing redacted information was that Mr. William J. Torczon
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`objected to producing "other financial data maintained in Quickbooks" which would entail the
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`disclosure of detailed financial information about his entire business since its inception. As
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`discussed above, the court has limited PPI's request to the 11 structures now at issue. Torczons have
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`not argued that it is not possible to produce responsive information regarding the 11 contested
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`structures in the original Quickbooks format.
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`8:08-cv-00136-JFB-FG3 Doc # 94 Filed: 09/18/09 Page 10 of 11 - Page ID # 523
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`The motion to compel is granted, in part, as to PPI's Request No. 21. Torczons are ordered
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`to produce responsive financial records, in the original Quickbooks format, pertaining to the 11
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`contested structures. If the Quickbooks records are not be produced by October 5, 2009, defense
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`counsel shall show cause on that date, by written affidavit, why the records cannot be produced in
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`their original format.
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`D.
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`Interrogatory No. 18 provides:
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`Identify each and every house plan book, including promotional materials if
`they included floor plans that you ... have possessed, whether purchased, received as
`a gift or on loan, in the past five (5) years. Provide the date purchased,
`place/business where purchased, title, date of publication, ISBN, and publisher's
`name and address.
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`The Torczons did not object to this interrogatory, and provided the following response:
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`The Torczon Defendants receive hundreds of plan books and promotional materials
`in the mail each year but do not routinely keep copies of those materials. The only
`responsive materials currently in the possession of Bill Torczon are (1) a book from
`Design Basics obtained in the late 1990's; and (2) annual magazines from the Kansas
`City Parade of Homes for approximately the past five years.
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`The interrogatory did not ask whether the Torczons routinely kept copies of plan books and
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`promotional materials, and the interrogatory is not limited to the materials currently in their
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`possession. The response is silent as to defendants Brian W. Torczon and Darlene Torczon, to
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`whom the request was specifically directed, and does not demonstrate that a reasonably inquiry was
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`conducted.
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`The Motion to Compel is granted as to Interrogatory No. 18. Torczons are ordered to
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`conduct a reasonable inquiry to identify the plan books and promotional materials that have been in
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`the possession of Mr. Bill Torczon, Mr. Brian Torczon and Ms. Darlene Torczon during the five (5)
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`8:08-cv-00136-JFB-FG3 Doc # 94 Filed: 09/18/09 Page 11 of 11 - Page ID # 524
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`years preceding the filing of the complaint. They shall then supplement their responses to
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`Interrogatory No. 18, under oath, as required by Fed. R. Civ. P. 33(b)(3), no later than October 5,
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`2009.
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`For the reasons discussed above,
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`ORDER
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`IT IS ORDERED that the plaintiff's Motion to Compel (Doc. 63) is granted in part, and
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`denied in part, as follows:
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`1. The motion is denied as moot as to plaintiff's Request for Production No. 11.
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`2. The motion is granted as to plaintiff's Request for Production No. 6 and Interrogatory
`No. 2. Torczons shall immediately conduct a reasonable inquiry and shall serve supplemental
`responses to PPI's Request No. 6 and Interrogatory No. 2, specifically identifying the documents that
`relate to their affirmative defenses, and the affirmative defense to which each document relates. The
`supplemental responses shall be served no later than October 5, 2009.
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`3. The motion is granted in part, and denied in part, as to as to PPI's Request No. 21.
`Torczons are ordered to produce responsive financial records, in the original Quickbooks format,
`pertaining to the 11 contested structures. If the Quickbooks records are not produced by October
`5, 2009, defense counsel shall show cause on that date, by written affidavit, why the records cannot
`be produced in their original format.
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`4. The motion is granted as to Interrogatory No. 18. The defendants shall conduct a
`reasonable inquiry and shall then supplement their responses to Interrogatory No. 18, under oath, as
`required by Fed. R. Civ. P. 33(b)(3), no later than October 5, 2009.
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`DATED September 18, 2009.
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`BY THE COURT:
`
`s/ F.A. Gossett
`United States Magistrate Judge
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`-11-