United States District Court, E.D. Michigan, Southern Division
STRATEGIC MARKETING AND RESEARCH TEAM, INC., Plaintiff/Counter-Defendant,
AUTO DATA SOLUTIONS, INC., Defendant/Counter-Plaintiff. # ADS's Request for Production Objection
OPINION AND ORDER GRANTING
DEFENDANT/COUNTER-PLAINTIFF'S MOTIONS TO COMPEL , FOR
LEAVE TO FILE SUR-REPLY , AND FOR LEAVE TO FILE AN
AMENDED COUNTERCLAIM , AND DENYING
PLAINTIFF/COUNTER-DEFENDANT'S MOTION TO DISMISS AND
HONORABLE STEPHEN J. MURPHY, III Judge
Strategic Marketing and Research Team, Inc.
("SMART") sued Defendant Auto Data Solutions, Inc.
("ADS") for alleged violations of Michigan law that
arose from the parties' business relationship. Defendant
filed a counterclaim and removed the action on July 31, 2015.
Before the Court are Defendants' motions to compel, for
leave to file a sur-reply, and for leave to file an amended
counterclaim, and Plaintiff's motion to dismiss and
remand the case for lack of subject matter jurisdiction. The
Court has reviewed the briefs, and finds that a hearing is
not necessary. See E.D. Mich. LR 7.1(f). For the
following reasons, the Court will grant ADS's motions and
deny SMART's motion.
is a Michigan-based company that uses consumer data to create
marketing programs for automobile dealers. ECF 1, PgID 12,
¶ 6. ADS is a California-based company that sells that
consumer data. Id. ¶ 7. In 2014, SMART
purchased a large amount of data from ADS ("the
Data"), along with "certain dispatch and reporting
services in conjunction with the Data." Id.
¶ 9-11. According to SMART, the Data was significantly
less accurate than what ADS guaranteed, and even fell below
industry standards. When ADS's allegedly evasive
responses and inaccurate billing practices compounded the
problems caused by the "junk" Data, SMART switched
to another data provider. Id. at PgID 13,
tells a different story. Rather than compiling the data
records itself, ADS claims it "purchases the records
from third-party vendors" and sells them to its
customers. ECF 1, PgID 33, ¶ 5. To protect its
relationships with those vendors and "prevent its
customers from undercutting it, " ADS enters into a
non-compete agreement with each customer, pursuant to which
the customer agrees not to purchase the data records from the
vendors directly. Id. ¶ 7.
claims that it executed a non-compete agreement with SMART in
2011 (referred to by ADS in its briefing as a
"Non-Disclosure and Non-Circumvention Agreement, "
or "NDA") and that SMART has a copy. Id.
¶ 8. The NDA provided that during the parties'
business relationship and for five years after termination of
the relationship, ADS would not market its records to
SMART's clients and SMART would not purchase data from
ADS's vendors. The parties' relationship carried on
for the next three years as ADS sold mail, email, and
telephone records to SMART.
claims it first assisted SMART with using the records to
"deploy" marketing emails in January 2014,
"when SMART tapped ADS to locate a vendor that would be
able to deploy conquest email addresses, " and ADS
engaged vendor Act-On Software to provide the services to
SMART. ECF 1, PgID 34, ¶ 10. SMART stopped purchasing
records from ADS in November 2014. According to ADS, SMART
purchased records from three of ADS's vendors during the
NDA's five-year post-relationship period: Act-On,
Innodatave, and DataShark (also known as Netunim LLP).
Id. ¶¶ 11-13. ADS also claims SMART still
owes payment for a "substantial amount of data"
purchased in 2014. Id. ¶ 14.
initiated the present litigation in Michigan's 52-4
District Court on June 26, 2015. ECF 1, PgID 11-18. In its
complaint, SMART brought state law claims of breach of
contract (Count I), breach of warranty (Count II),
quasi-contract (Count III), and negligence (Count IV), and
sought less than $25, 000 as relief. On July 29, 2015, ADS
filed an answer and a counterclaim for state law breach of
contract-payment (Count I), implied-in-fact contract (Count
II), unjust enrichment (Count III), breach of
contract-non-compete agreement (Count IV), and tortious
interference with a contract/business expectancy (Count V).
ECF 1, PgID 32-39. As relief, ADS sought $20, 364.00 in
unpaid invoices, and "an amount in excess of $75,
000" for the damages resulting from SMART's alleged
breach of the NDA. ADS removed the action to the Court two
days later, and SMART answered ADS's counterclaim.
September 23, 2015, the parties submitted a joint discovery
plan, and the Court issued a scheduling order, setting as
deadlines March 31, 2016 for discovery and April 29, 2016 for
dispositive motions. After two stipulated extensions, the
final scheduling order set as deadlines September 1, 2016 for
discovery and October 3, 2016 for dispositive motions. Ten
days before the discovery deadline, ADS filed a motion for
the Court to compel the production of "documents
responsive to [ADS's] Requests for Production Nos. 1-23
contained in [ADS's] First Set of Interrogatories and
First Set of Requests for Production, " and the
depositions of SMART representatives Katina and Michael
Uzelac. ECF 10, PgID 95-96. The Court subsequently adjourned
the remaining dates in the scheduling order to allow for
adequate time to address the motion. In its response brief,
SMART argued that ADS's motion to compel "brings
into focus a subject matter jurisdiction defect which ADS has
been trying to avoid." ECF 11, PgID 160.
November 10, 2016, SMART raised the jurisdictional issue in a
motion to dismiss and remand the case. ECF 14. After the
parties fully briefed the motion, ADS sought leave to file a
sur-reply to SMART's reply brief. The Court scheduled a
hearing for ADS's motion to compel and SMART's motion
to dismiss, and three days before the hearing, ADS filed the
instant motion for leave to file an amended counterclaim. The
Court cancelled the hearing; briefing for the motion for
leave to amend recently concluded.
parties' filings began with a discovery dispute and
snowballed into a challenge to the Court's jurisdiction
to hear the case, and a request to amend the counterclaim
that ADS relied on to remove the case. Specifically, the
parties' dispute centers on the existence and force of
the NDA, and the language of an unsigned version of the NDA
provided by ADS ("Unsigned NDA"). I. ADS's
Motion to Compel 
the Court will address ADS's motion for an order
compelling SMART to produce "documents responsive to
[ADS's] Requests for Production Nos. 1-23 contained in
[ADS's] First Set of Interrogatories and First Set of
Requests for Production, " and requiring SMART
representatives Katina and Michael Uzelac to sit for
depositions. ECF 10, PgID 95-96.
may obtain discovery regarding 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). If a party fails to respond to discovery, including
if that party's discovery response is evasive or