Summary
finding that "good cause exists for expedited discovery into Defendants' alleged unlawful activity and the harm such alleged activity has caused TracFone."
Summary of this case from TracFone Wireless v. CNT Wireless LLCOpinion
James Blaker Baldinger, Jennifer A. Yasko, Carlton Fields Jorden Burt, P.A., West Palm Beach, FL, Steven Michael Blickensderfer, Aaron Stenzler Weiss, Carlton Fields P.A., Miami, FL, for Plaintiff.
ORDER GRANTING TRACFONE’S MOTION FOR LIMITED EXPEDITED DISCOVERY
Jonathan Goodman, UNITED STATES MAGISTRATE JUDGE
This matter is before the Undersigned on Plaintiff TracFone Wireless, Inc.’s ("TracFone") Motion for Limited Expedited Discovery (the "Motion"). [ECF No. 5]. United States District Judge Marcia G. Cooke referred the motion to the Undersigned. [ECF No. 7]. Upon review of the Motion and supporting record, for the reasons set forth below, the Motion is GRANTED.
BACKGROUND
In TracFone’s complaint and the Motion, TracFone alleges that Defendants are engaged in an unlawful trafficking scheme, whereby Defendants purchase specially manufactured subsidized TracFone wireless devices, unlock them, and resell them at a higher price to "steal" subsidies that TracFone invests in their devices, in violation of the terms and conditions accompanying the devices as well as state and federal law. [ECF No. 1].
TracFone alleges that it filed this action for damages against Defendants as a result of Defendants’ business enterprise that TracFone alleges is unlawful and willfully infringes on TracFone’s incontestable trademarks and other rights related to TracFone’s prepaid wireless telephone service. TracFone alleges that Defendants’ conduct is causing TracFone to suffer substantial monetary losses and has caused TracFone injury.
The gravamen of TracFone’s allegations is that Defendants are engaging in a scheme whereby they acquire bulk quantities of subsidized TracFone Devices, primarily popular iPhones, by purchasing them at big box retailers such as Walmart in store or online, or by stealing them. TracFone alleges that Defendants then unlock the devices, which are otherwise locked to TracFone’s wireless service by special proprietary software developed and owned by TracFone. According to TracFone’s allegations, Defendants then resell the devices for profit domestically and abroad, including to locations outside of the area where TracFone’s wireless network provides service.
TracFone’s Motion indicates that its investigations have revealed Defendants making bulk sales of TracFone devices in recent months. TracFone supports its motion with reference to two declarations from a known international cellphone trafficker in Dubai (Sair Ali) which state that Defendants trafficked over 1,000 TracFone devices over a six-week period in 2018. TracFone states that it believes Defendants have trafficked substantially more devices to date and continue to engage in this scheme. TracFone further alleges that it has reason to believe that Defendants have enlisted the help of friends, family and other as-yet-unknown co-conspirators to effectuate their scheme.
TracFone indicates that it seeks expedited discovery in this case prior to the parties’ scheduling conference pursuant to Fed.R.Civ.P. 26(f), so it can learn the full extent of the nature and scope of Defendants’ alleged ongoing unlawful conduct as quickly as possible to stop Defendants’ alleged misconduct. TracFone also indicates that it seeks expedited discovery to mitigate any additional harm Defendants’ alleged improper activities have caused to TracFone’s customers. TracFone further argues that it has a strong interest in learning the identities of its legitimate customers whom Defendants have allegedly defrauded so TracFone can take steps to make these customers whole.
In particular, TracFone seeks permission to serve subpoenas directed to certain non-parties who it believes are likely in possession of information relating to Defendants’ scheme but are not under any obligation to preserve or produce such information, such as Apple, Best Buy, Walmart, UPS and FedEx. TracFone also requests permission to serve subpoenas directed on other potential co-conspirators of Defendants.
In addition to the Declarations of Sair Ali [ECF Nos. 1-3; 1-4], TracFone’s request for expedited discovery is also supported by a declaration from Kevin Wehling, TracFone’s Fraud Investigations Manager [ECF No. 5-1]. Mr. Wehling’s declaration attests to how TracFone takes steps to combat fraud and the steps it took once it learned of Defendants’ alleged fraudulent activities. Mr. Wehling’s declaration further details how TracFone has attempted to gather information pertaining to Defendants’ scheme from various non-parties, such as Walmart, and how those efforts have been frustrated due to the fact that such non-parties are under no legal obligation to preserve and share their information.
CONCLUSIONS OF LAW
Control over the course of discovery and scheduling is committed to the "broad discretion" of the court. Johnson v. Bd. of Regents, 263 F.3d 1234, 1269 (11th Cir. 2001); Mut. Serv. Ins. Co. v. Frit Indus., Inc., 358 F.3d 1312, 1322 (11th Cir. 2004). Pursuant to Rule 26(d) and (f), federal courts in their discretion may allow parties to conduct expedited discovery in advance of a Rule 26(f) conference where "good cause" for such discovery is shown. See, e.g., Semitool, Inc. v. Tokyo Electron Am., Inc., 208 F.R.D. 273, 275-76 (N.D. Cal. 2002); Qwest Comm. Int’l Inc. v. WorldQuest Networks, Inc., 213 F.R.D. 418, 419 (D. Colo. 2003). "Good cause may be found where the need for expedited discovery, in consideration of the administration of justice, outweighs the prejudice to the responding party." Semitool, 208 F.R.D. at 276.
Here, TracFone requests permission to serve subpoenas on third parties that it reasonably believes may have information relating to the case, including Apple, FedEx, UPS, Walmart and other potential co-conspirators of Defendants. The Court finds that it is appropriate for TracFone to commence third-party discovery and that the third parties shall comply with the subpoenas.
The record in this case, including the allegations in the complaint, the Ali Declarations, and the Wehling Declaration, sufficiently demonstrate that good cause exists for expedited discovery into Defendants’ alleged unlawful activity and the harm such alleged activity has caused TracFone. This is particularly true considering TracFone’s showing that third parties potentially in possession of relevant information are under no duty to preserve that information. See Manny Film, LLC v. Doe, No. 2:15-CV-1053, 2015 WL 12732854, at *1 (S.D. Ohio Mar. 27, 2015) (granting expedited discovery directed to an internet service provider in consideration, inter alia, of "the danger that the ISP will not preserve the information sought"); Arista Records, LLC v. Does 1-4, No. 1:07-CV-1115, 2007 WL 4178641, at *1 (W.D. Mich. Nov. 20, 2007) (finding that good cause to order expedited discovery is typically found upon allegations of infringement and a danger that third parties "will not preserve the information sought"); Capitol Records, Inc. v. Doe, No. CIV. 07CV1570JMPOR, 2007 WL 2429830, at *1 (S.D. Cal. Aug. 24, 2007) (finding expedited discovery was proper due to the risk that the University of California, San Diego, a third party in possession of potentially important information, would not preserve the information that the plaintiffs sought).
The Court further finds that expedited discovery is warranted so that TracFone may mitigate any additional irreparable harm caused by Defendants’ alleged ongoing scheme. See, e.g., United States v. Mayer, No. CIV 8:03CV415T26TGW, 2003 WL 1950079, at *1-2 (M.D. Fla. Feb. 20, 2003) (ordering expedited civil discovery due to the risk of irreparable injury); Twentieth Century Fox Film Corp. v. Mow Trading Corp., 749 F.Supp. 473, 475 (S.D.N.Y. 1990) (granting plaintiff expedited discovery in copyright infringement case so that factual inquiries could be made to avoid further irreparable harm).
Indeed, in similar cases, courts in this district and others have granted TracFone the relief it is seeking. See, e.g., TracFone Wireless, Inc. v. Nektova Group, LLC, 328 F.R.D. 664, 668 (S.D. Fla. 2019) (finding that "good cause exists for expedited discovery into Defendants’ alleged unlawful activity and the harm such alleged activity has caused TracFone"); TracFone Wireless, Inc. v. Adams, 304 F.R.D. 672, 673 (S.D. Fla. 2015) (same); TracFone Wireless, Inc. v. Holden Prop. Servs., LLC, 299 F.R.D. 692, 694 (S.D. Fla. 2014) (same); TracFone Wireless, Inc. v. Nat’l Wireless Wholesale, Inc., No. 3:09-CV-1164-J-34TEM, 2010 WL 11639978, at *1 (M.D. Fla. Jan. 26, 2010) (same); TracFone Wireless, Inc. v. Wireless Ass’n LLC, No. 09-CV-2442-G, 2010 WL 11643273, at *1 (N.D. Tex. Feb. 3, 2010) (same).
TracFone also requests permission to serve its third-party subpoenas via FedEx or UPS, as opposed to by personal delivery. While the Eleventh Circuit has not weighed in on this issue, substantial recent authority from federal courts in Florida support that Rule 45 does not require personal service; rather, it requires service reasonably calculated to ensure receipt of the subpoena by the witness. See, e.g., Nektova, 328 F.R.D. at 667; In re MTS Bank, No. 17-21545-MC, 2018 WL 1718685, at *4 n.3 (S.D. Fla. Mar. 16, 2018); Bozo v. Bozo, No. 12-CV-24174, 2013 WL 12128680, at *1 (S.D. Fla. Aug. 16, 2013); In re Falcon Air Exp., Inc., No. 06-11877-BKC-AJC, 2008 WL 2038799, at *1, *4 (Bankr. S.D. Fla. May 8, 2008); TracFone Wireless, Inc. v. Does 1-5, No. 11-CV-21871-MGC, 2011 WL 4711458, at *4 (S.D. Fla. Oct. 4, 2011); Codrington v. Anheuser-Busch, Inc., No. 98-2417-CIV-T-26F, 1999 WL 1043861, at *1 (M.D. Fla. Oct. 15, 1999); S.E.C. v. Rex Venture Grp., LLC, No. 13-MC-004-WTH-PRL, 2013 WL 1278088, at *3 (M.D. Fla. March 28, 2013) (finding the decisions in TracFone v. Does 1-5 , Falcon Air, and Codrington v. Anheuser-Busch "persuasive, especially since it is clear that [the subpoenaed non-party] received the subpoena both by federal express and certified mail").
The Undersigned agrees with these cases and thus orders that service of the subpoenas can be made by method other than personal delivery.
The Undersigned is mindful of the contrary authority on this issue that Rule 45 requires personal service.
As for the request to serve the subpoenas by FedEx or UPS, the Undersigned notes that courts in this district and others frequently find FedEx or UPS service appropriately safeguards notice requirements in construing the Federal Rules of Civil Procedure and even private contracts. See, e.g., Warsteiner Importers Agency, Inc. v. Republic Nat. Distrib. Co., LLC, No. 808CV1156T24TGW, 2008 WL 4104568, at *6 (M.D. Fla. July 31, 2008); Tim Hortons USA, Inc. v. Singh, No. 16-23041-CIV, 2017 WL 1326285, at *9 (S.D. Fla. Apr. 5, 2017); Mainstream Media, EC v. Riven, No. C 08-3623 PJH, 2009 WL 2157641, at *3 (N.D. Cal. July 17, 2009) (noting that service via FedEx comported with due process); Ehrenfeld v. Salim a Bin Mahfouz, No. 04-Civ-9641(RCC), 2005 WL 696769, at *3 (S.D.N.Y. Mar. 23, 2005) (service via FedEx comported with due process); TracFone Wireless, Inc. v. Hernandez, 126 F.Supp.3d 1357, 1363-64 (S.D. Fla. 2015). The Undersigned agrees and finds that service of the third-party subpoenas permitted under this order may be made by FedEx or UPS, as such methods are reasonably calculated to insure receipt of the subpoena by the witness, which the Undersigned finds is the appropriate standard under Rule 45.
RELIEF
Accordingly, for the foregoing reasons, it is ORDERED that Plaintiff’s Motion for Expedited Discovery is GRANTED. The Court ORDERS that:
i. TracFone may serve subpoenas duces tecum on third parties it reasonably believes may have information relating to the case in a form that substantially complies with the law of this jurisdiction and the Federal Rules of Civil Procedure.
ii. Any third parties served with subpoenas duces tecum shall respond within fourteen days. TracFone may serve the third-party subpoenas duces tecum via FedEx or UPS and any third parties so served with subpoenas duces tecum pursuant to this Order are expressly ordered to accept service of the same via FedEx.
iii. Within three days of the entry of this order, TracFone shall send a copy of this Order to Defendants via FedEx or UPS and then promptly shall file a notice of service of the same after the Order is served.
DONE and ORDERED.
See, e.g. Johnson v. Petsmart, Inc., Falcon Air Johnson Harrison v. Prather, Falcon Air Harrison In re Falcon Air Exp., Inc. Harrison Rex Venture Grp. Ott v. City of Milwaukee,