Opinion
Aaron Stenzler Weiss, Steven Michael Blickensderfer, Carlton Fields Jorden Burt, P.A., Miami, FL, James Blaker Baldinger, Jennifer A. Yasko, Carlton Fields PA, West Palm Beach, FL, for Plaintiff.
ORDER GRANTING TRACFONE’S MOTION FOR LIMITED EXPEDITED DISCOVERY
Jonathan Goodman, UNITED STATES MAGISTRATE JUDGE
Plaintiff TracFone Wireless, Inc. filed a Motion for Limited Expedited Discovery. [ECF No. 5]. United States District Court Judge Cecilia M. Altonaga referred the motion to the Undersigned. [ECF No. 9]. For the reasons stated below, the Undersigned grants the motion.
FINDINGS OF FACT
1. 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.
2. 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.
3. The gravamen of TracFone’s allegations is that Defendants are engaging in a scheme whereby they purchase bulk quantities of subsidized TracFone devices, primarily popular iPhones, at big box retailers such as Walmart, whether in-store or online. 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. Defendants then resell the devices for profit domestically and abroad.
4. TracFone’s investigators purportedly witnessed Defendants making bulk sales of TracFone devices in recent months. TracFone’s evidence also includes evidence in the form of an affidavit from a known trafficker in Dubai showing that Defendants trafficked over 10,000 TracFone devices over three months in 2018. TracFone 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.
5. TracFone states that it seeks expedited discovery in this case before the parties’ scheduling conference under Federal Rule of Civil Procedure 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.
6. In particular, TracFone seeks permission to serve subpoenas directed to certain non-parties who 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 to other potential co-conspirators of Defendants.
7. TracFone’s request for expedited discovery is supported by a declaration from Kevin Wehling, TracFone’s Fraud Investigations Manager. Mr. Wehling’s declaration attests to how TracFone takes steps to combat fraud and the steps it took once it learned of Defendant’s alleged fraudulent activities. Mr. Wehling’s declaration further details how TracFone has attempted to gather information pertaining to the Defendants’ scheme from various non-parties (Apple, Best Buy, Walmart, UPS, and FedEx), and how those efforts have been frustrated due to the fact such non-parties are under no legal obligation to preserve and share their information.
CONCLUSIONS OF LAW
8. The Federal Rules of Civil Procedure provide that discovery may commence before the parties have engaged in a discovery conference if ordered by the court. Fed.R.Civ.P. 26(d) and (f) (emphasis added). Under the rules, "the control of discovery is committed to the sound discretion of the trial court." Mut. Serv. Ins. Co. v. Frit Indus., Inc., 358 F.3d 1312, 1322 (11th Cir. 2004). The court has "broad discretion" in the scheduling of discovery. Johnson v. Bd. of Regents, 263 F.3d 1234, 1269 (11th Cir. 2001).
9. Federal courts allow parties to conduct expedited discovery in advance of a Rule 26(f) conference where the party establishes "good cause" for such discovery. 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.
10. The record in this case, including the allegations in the complaint and Mr. Wehling’s supporting 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 in light of the credible showing TracFone has made 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 in consideration of the danger 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).
11. The Undersigned further finds that expedited discovery is warranted so that TracFone may mitigate any additional irreparable harm caused by Defendants’ ongoing alleged scheme. See 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 the relief TracFone seeks. See TracFone Wireless, Inc. v. Adams, 304 F.R.D. 672, 673 (S.D. Fla. 2015) (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. 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 (M.D. Fla. Jan. 26, 2010) (same); Tracfone Wireless, Inc. v. Wireless Ass’n LLC, No. 3-09-CV-2442-G, 2010 WL 11643273 (N.D. Tex. Feb. 3, 2010) (same). 12. 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 Undersigned finds that it is appropriate for TracFone to commence third-party discovery and that the third parties shall comply with the subpoenas. See, e.g., Adams, 304 F.R.D. at 674 (finding, in a similar factual situation, that third-party discovery was appropriate).
13. 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, the overwhelming weight of authority from federal courts in Florida support the position that Rule 45 does not require personal service, but rather requires service reasonably calculated to ensure receipt of the subpoena by the witness. See 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); S.E.C. v. Rex Venture Grp., LLC, No. 5:13-MC-004-WTH-PRL, 2013 WL 1278088, at *3 (M.D. Fla. Mar. 28, 2013); TracFone Wireless, Inc. v. Does, 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). The Undersigned agrees with these cases and thus orders that service of the subpoenas can be made by a method other than personal delivery.
The Court notes that it is referring to the express mail service operated by FedEx Corporation. Some opinions refer to that company as "Federal Express," but that actually is not the name of the company. See https://about.van.fedex.com/our-story/history-timeline/history/.
The Court notes that the contrary position -- Rule 45 requires personal service -- was reached in Johnson v. Petsmart, Inc., No. 606CV1716ORL31UAM, 2007 WL 2852363, at *2 (M.D. Fla. Oct. 2, 2007). In addition to noting that Johnson is against the weight of authority, the Undersigned also associates itself with Judge Cristol’s analysis of Johnson, where he noted that it "appears that the authority upon which the Johnson court relies [actually] supports the position that proper service under Rule 45 is not strictly limited to personal service." In re Falcon Air, 2008 WL 2038799, at *2.
14. 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 Tim Hortons USA, Inc. v. Singh, No. 16-23041-CIV, 2017 WL 1326285, at *9 (S.D. Fla. Apr. 5, 2017); TracFone Wireless, Inc. v. Hernandez, 126 F.Supp.3d 1357, 1363-64 (S.D. Fla. 2015); Mainstream Media, EC v. Riven, No. C 08-3623 PJH, 2009 WL 2157641, at *3 (N.D. Cal. July 17, 2009); Warsteiner Importers Agency, Inc. v. Republic Nat. Distrib. Co., LLC., No. 808CV1156T24TGW, 2008 WL 4104568, at *6 (M.D. Fla. July 31, 2008); Ehrenfeld v. Salim a Bin Mahfouz, No. 04 CIV. 9641 (RCC), 2005 WL 696769, at *3 (S.D.N.Y. Mar. 23, 2005). 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 ensure receipt of the subpoena by the witness which the Undersigned finds is the appropriate standard under Rule 45.
RELIEF
For the previous reasons, the Undersigned 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 according to this Order are expressly ordered to accept service of the same via FedEx or UPS. iii. TracFone shall serve a copy of this Order on Defendants by FedEx or UPS and then promptly shall file a notice of service of the same after the Order is served.
DONE AND ORDERED in Chambers, in Miami, Florida, on January 11, 2019.