Case 1:11-cv-01793-JLK-KLM Document 28 Filed 04/02/12 USDC Colorado Page 1 of 19

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 11-CV-01793-JLK- KLM SCOTSMAN INDUSTRIES, INC.; and MILE HIGH EQUIPMENT, LLC, Plaintiffs, v. JOHN A. BROADBENT, Defendant.

STIPULATED SCHEDULING AND DISCOVERY ORDER

1. DATE OF CONFERENCE The scheduling conference was held on April 4, 2012 before Magistrate Judge Mix. 2. STATEMENT OF CLAIMS AND DEFENSES a. Plaintiffs: This action is brought to address Defendant accessing and s

downloading of electronic files containing a massive amount of Plaintiffsconfidential information onto a portable hard drive in the days prior to the resignation of his employment; his false and misleading representations regarding the copying, possession and return of those files, including the written representation that he had no portable storage devices containing Plaintiffsmaterials; and his impairment of the integrity of that information, including by subsequently transferring it to a laptop computer that was not issued or owned by Plaintiffs, but rather that Defendant was using for a new venture that,

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among other things, develops and markets technology to Plaintiffscompetitors (the Laptop ). Defendant massive downloading occurred well before he discussed with s Plaintiffs the possibility of acting as their consultant to complete important product development projects on which he had been working at the time of his resignation. Although Defendant was paid to make a presentation to his former colleagues in order to bring them up to speed regarding one such project, no agreement was reached regarding any further engagement. Just hours before he was scheduled to make that presentation, Defendant disclosed to Plaintiffs for the first time that he had downloaded files from the portable hard drive onto the Laptop. Although Defendant represented that the only files transferred to the Laptop related to his presentation, subsequent investigation has shown that this statement (like Defendant representations that he did not possess any works related files at the time of his resignation) was false, and that Defendant misrepresented both the number and subject matter of Plaintiffsfiles that he copied onto his Laptop before turning over the portable hard drive to Plaintiffs. Plaintiffs allege that this conduct violates the federal Computer Fraud and Abuse Act, 18 U.S.C. 1030 (the CFAA (Count I), breaches Defendant contractual ) s obligations (Count II) as well as his fiduciary duties and his duty of loyalty (Count III), and that it violates the Colorado Uniform Trade Secrets Act, Colo. Rev. Stat. Ann. 7-74101 et seq (Count IV). Plaintiffsrequested remedies include injunctive relief (including
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return of the downloaded files and any copies that Defendant may have made or permitted to be made, removal of the downloaded files from the computer to which Defendant transferred them, and a prohibition against his possession and use of that material), as well as damages such as the cost of investigating and responding to Defendant conduct. s

This Court has federal question jurisdiction over Count I CFAA claim pursuant s to 28 U.S.C. 1331 and supplemental jurisdiction over all other counts pursuant to 28 U.S.C. 1367.

b.

Defendant: Defendant disputes Plaintiffs statement of their claims and

denies that he unlawfully accessed and/or transferred confidential electronic or other files belonging to Plaintiffs. Until his resignation in January 2011, Defendant was a long-term employee of Plaintiff Mile High Equipment, LLC ( Mile High having been employed ), by Mile High 18 of the past 20 years. Defendant was the Vice President of Research and Development Americas at the time he tendered his resignation. Immediately after his employment concluded, Plaintiffs, through Mile High president, Kevin Fink, urged s Defendant to work as a consultant on their behalf and compensated him for such services. Beginning in or around late January 2011, Defendant began working as a consultant to Plaintiffs. Mr. Fink, as well as other of Plaintiffsrepresentatives, knew, understood and agreed that Defendant would need access to certain electronic files of Plaintiffs in order
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for Defendant to fulfill his responsibilities as a consultant. Consequently, Plaintiffs authorized Defendant possession and use of such files on his personal laptop computer. s Plaintiffs representatives even installed certain software on Defendant personal s computer known as SolidWorks. At no time did Mr. Fink (or anyone else from Scotsman/Mile High) notify Defendant that his work as a consultant had concluded or was otherwise terminated. Likewise at no time prior to initiation of this lawsuit did Mr. Fink or Plaintiffs request that Defendant delete any files from his computer that were necessary for Defendant use as a consultant. In short, at all times material, Defendant s was authorized to possess and use certain information which Plaintiffs allege belongs to them. Additionally, many of the files that are currently on Defendant personal computer s are not the property of Plaintiffs. Importantly, under no circumstance, did Defendant damage or impair the integrity of any electronic and/or confidential data belonging to Plaintiffs and he did not use such information for any improper purpose. Accordingly, Defendant contends that he is not liable on Plaintiffsclaims and he asserts the following defenses: (1) Plaintiffs have failed to mitigate their damages, if any; (2) some or all of the claims for relief asserted by Plaintiffs in their Complaint were originally brought or have been maintained, either in whole or in part, without substantial justification, and such claims, in whole or in part, are substantially frivolous, substantially groundless, and have been prosecuted and are being prosecuted in a substantially
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vexatious manner, entitling Defendant to an award of his attorneysfees in accordance with applicable law; (3) Plaintiffsclaims for relief are barred in whole or in part by the equitable doctrines of consent, waiver and/or estoppel and laches; (4) Plaintiffs have not suffered any actionable damage, as that term is defined in the Computer Fraud and Abuse Act (CFAA), much less the amount of damage necessary to assert a private right of action under the CFAA. Moreover, the CFAA is inapplicable to Plaintiffsclaims; (5) Plaintiffs failed to employ adequate or reasonable measures to protect the transfer of electronic files and/or to protect their trade secrets and/or confidential information; (6) Plaintiffs directed, ordered, approved and/or ratified the conduct of Defendant; (7) Some or all of Plaintiffs claims are barred in whole or in part because Defendant was authorized and/or granted permission by Plaintiffs or their representatives to possess and use electronic files and data of Plaintiffs; (8) some or all of Plaintiffsclaims are barred in whole or in part by the doctrine of unclean hands; (9) Plaintiffsclaims are barred because any actions taken by Defendant were privileged and/or taken in a good faith belief of their reasonableness, appropriateness and applicability to the particular situation at issue in this lawsuit; (10) Plaintiffs released and discharged Defendant from some or all of the claims asserted by Plaintiffs in this proceeding and they chose to accommodate, ignore and forgive Defendant transfer of certain electronic files; and (11) some or all of s Plaintiffsclaims are barred in whole or in part because the electronic files and data were not confidential or proprietary.
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3. UNDISPUTED FACTS The following facts are undisputed: a. In or around 2002, Defendant became Vice President of Engineering of

plaintiff Mile High Equipment LLC ( Mile High Plaintiff Mile High is a subsidiary of ). Scotsman Industries, Inc. ( ). SII b. In or around January 2010, Defendant became Vice President of Research

and Development Americas with research and development responsibility for both of SII ice machine equipment manufacturing companies in the United s States, including Mile High. c. d. matter. 4. COMPUTATION OF DAMAGES a. Plaintiffsclaims: The primary remedies sought by Plaintiffs in this suit Defendant resigned his employment in January 2011. This Court has jurisdiction over the parties personally and over the subject

are injunctive relief and compensation for the costs and fees incurred by Plaintiffs to respond to Defendant conduct, including to investigate and determine the nature, extent s and impact of that conduct and to determine which files were improperly downloaded, accessed and/or transmitted by Defendant, and what happened to them. These fees and costs are specifically provided for in the CFAA, 18 U.S.C. 1030(e)(11) and (g), and (to date) they total approximately $20,000. Further fees and costs will be incurred going
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forward, for example, to complete the forensics work necessary to locate and remove from Defendant Laptop the electronic files he downloaded from the plaintiff computer s s systems onto the Portable Hard Drive and then copied from the Portable Hard Drive onto his Laptop. Plaintiffs also may be entitled to damages for whatever additional injuries are shown in discovery to have resulted from Defendant wrongful conduct, including, for s example, any disclosure or use of the downloaded files or the information contained therein, as well as damages sufficient to compensate Plaintiffs for whatever unjust enrichment Defendant has obtained -- together with disgorgement of whatever benefits discovery reveals he has obtained -- as a result of his wrongful conduct. These amounts, if any, have not yet been determined, will require discovery, and are expected to be calculated within 30 days of the close of fact discovery. Plaintiffs also have sought prejudgment interest, attorneysfees and costs, and exemplary and punitive damages, as shall be proven appropriate at trial and/or in post-trial proceedings to determine them. b. Defendant claim: Defendant contends that Plaintiffsclaims and related s

allegations asserted in their Complaint lack any evidentiary support and have been made needlessly and/or for an improper purpose such as to harass, intimidate or to coerce Defendant. To the extent Plaintiffs claims have any factual support, there is no

cognizable basis in law for the claims. Defendant seeks an award of damages related to his counterclaim, including an award of his reasonable attorney fees and litigation

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expenses. Defendant damages have not been determined at this time, in part, because s such damages are continuing to accrue. 5. REPORT OF PRECONFERENCE DISCOVERY AND MEETING UNDER FED.R.CIV.P. 26(f) a. Date of Rule 26(f) meeting. The parties conferred by counsel on January 10 and 31, 2012, and on February 7 and 8, 2012 in advance of the initial scheduling conference before Judge Kane and also on April 2, 2012 regarding this proposed order in advance of the April 4, 2012 scheduling conference with Magistrate Judge Mix. The parties expect follow-up conferences about documentation and protection of information, including a stipulated protective order to replace the confidentiality undertaking via letter under which the parties and counsel have been working to date. b. Participants and parties represented. Each of the parties participated in the scheduling conference through their respective counsel, as follows: Attorneys for Plaintiffs: Linda K. Stevens SCHIFF HARDIN LLP 233 South Wacker Drive, Suite 6600 Chicago, Illinois 60606 312-258-5600 Nina Y. Wang FAEGRE BAKER DANIELS LLP 3200 Wells Fargo Center 1700 Lincoln Street Denver, Colorado 80203-4532 303-607-3500
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Attorneys for Defendant John A. Broadbent: Michael G. Bohn BOHN AGUILAR LLC 1670 Broadway Suite 3000 Denver, Colorado 80202 303-832-2494

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c.

Proposed changes, if any, in timing or requirements of disclosures

under Fed.R.Civ.P. 26(a)(1): see subpart regarding informal discovery below. e

d.

When initial Fed.R.Civ.P. 26(a)(1) disclosures are to be made:

The parties made their respective disclosures on Wednesday, January 24, 2012.

e.

Informal discovery: The parties have been working together to conduct

informal discovery of the contents of Defendant laptop computer, which he made s available, pursuant to an agreed protocol, for imaging and other work by Cyopsis, a thirdparty computer forensics firm in Denver. The protocol and other related agreements were memorialized in correspondence by and between counsel. The parties have discussed certain issues that have arisen based upon the work performed by Cyopsis to date, but have not been able to reach an agreement regarding those issues. The parties have also discussed the possible use of informal joint interviews of witnesses and staging of discovery as means of reducing the expense and complexity of discovery.

f.

Statement concerning any agreements or proposals regarding electronic discovery: See item above. e

g.

Statement concerning any other agreements or proposals to reduce discovery and other litigation costs:
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The parties have addressed various ideas and proposals for reducing discovery and other litigation costs and for resolving this case via settlement.

h.

Statement regarding use of the unified exhibit numbering system:

The parties understand and agree to use the unified exhibit numbering system.

i.

Cost of Litigation: a. Plaintiffsanticipated cost of litigation:

Task

Attorney time

Paralegal time

Travel etc. Other (Court Reporter & videographer etc.) 0 0

Dep. Preparation Depositions

$10,000

$500

Taking/Defending $8,000 the Deps

$400

$1800

$1200

Discovery Req (To Opposing s Side)

$5,000

$500 $1,200 $1,200

10

0 0 $900

0 0 0

Review of Discovery Responses $1,200 from opposing side Responding to Discovery Requests (reviewing $5,000

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documents, etc.) Trial preparation (pre-trial conf. etc.) Trial $40,000 $20,000 $3,000 $1200 $40,000 $20,000 $1,200 0

Total: $162,300

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b. Task Dep. Preparation (other depos) Other Depositions Discovery Req (To s Opposing Side)

Defendant anticipated cost of litigation: s Attorney time $7,500 Paralegal time 0 Travel etc. Other (Court Reporter, etc.)

$10,000 $3,500

$1500 $500

$3,500 Review of Discovery Responses from opposing side Responding to Discovery Requests Trial preparation (pre-trial conf. etc.) Trial $35,000 $2,500

$500

500

$45,000

500

Total: 110,500 6. CASE PLAN AND SCHEDULE a. b. Deadline for Joinder of Parties: May 18, 2012 Deadline to Amend Pleadings: May 18, 2012
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c. d. e.

Discovery Cut-off: January 13, 2013 Dispositive Motion Deadline: February 1, 2013 Expert Witness Disclosure (1) Anticipated fields of expert testimony: The parties anticipate that

there may be testimony from expert(s) in the area of computer forensics. Defendant may also use expert testimony related to adequacy of measures to protect confidential data.

(2)

Limits on the use or number of expert witnesses.

The parties

propose no limitations at this time.

(3)

Designation and Disclosure. The parties shall designate all experts

and provide opposing counsel and any pro se party with all information specified in Fed. R. Civ. P. 26(a)(2) on or before September 1, 2012.

(4)

Rebuttal. The parties will designate rebuttal experts, if any, and

provide opposing counsel with all information specified in Fed.R.Civ.P. 26(a)(2) on or before October15, 2012.

(5)

All designations of experts shall include a statement describing the Daubert/Kumho Tire motions

methodology to be used by the particular expert.

challenging any proposed methodology may be considered before the expert is deposed.
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Such a motion does not preclude the filing of any subsequent motions. The aim is to cut off faulty methodology before undertaking extensive discovery and may result in amended designation with a new expert, a revised methodology or both.

(6)

Notwithstanding the provisions of Fed. R. Civ. P. 26(a)(2), no

exception to the requirements of the rule will be allowed by stipulation of the parties unless the stipulation is approved by the court.

f.

Deposition schedule: The depositions currently anticipated by the parties

are set forth below. Each party reserves any and all objections to the depositions listed and/or requested by the other.

Plaintiffsschedule:

Name of Deponent

Date of Deposition

Time of Deposition

Expected Length of Deposition

John Broadbent at Faegre Baker Daniels in Denver

By the Discovery Cutoff

10:00 a.m.

7 hours, not including breaks

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Defendant s employers / principals Other depositions

By the Discovery Cutoff

10:00 a.m.

No more than 7 hours, not including breaks

At this time, the only deposition that Plaintiffs can identify as necessary is that of Defendant. If Defendant has been engaged to perform services for any person or entity engaged (or planning to become engaged) in the manufacture, design or sale of equipment for making, handling, transporting or dispensing ice, or the manufacture, design or sale of improvements to such equipment, Plaintiffs will likely wish to depose them as well. Plaintiffs may wish to depose others, depending upon the information learned in discovery and/or other sources, e.g., if Plaintiffs learn that Defendant has used or disclosed any of the information or files at issue.

Defendant schedule: s

Name of Deponent

Date of Deposition By the Discovery Cut-off

Time of Deposition 10:00 a.m.

Expected Length of Deposition No more than 7 hours, not including breaks

Kevin Fink at Bohn Aguilar in Denver

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Plaintiffsemployers / principals

By the Discovery Cut-off

10:00 a.m.

No more than 7 hours, not including breaks

g.

Interrogatory schedule: All interrogatories may be served no later than

forty five (45) days before the Discovery Cut-off, with response times to be governed by the Federal Rules of Civil Procedure.

h.

Schedule for Request for Production of Documents: All requests for

production of documents may be served not later than forty five (45) days before the Discovery Cut-off, with response times to be governed by the Federal Rules of Civil Procedure. i. (1) (2) Discovery limitations: Any limits any party proposes on the length of any deposition: None. Any modifications any party proposes on the presumptive numbers of depositions or interrogatories contained in the federal rules: None. Any limitations any party proposes on the number of requests for production of documents and/or requests for admissions: None.

(3)

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j.

Other Planning or Discovery Orders: The parties anticipate the entry of

a stipulated protective order.

7. SETTLEMENT

The parties, through counsel, certify that they have discussed the possibilities for a prompt settlement of this case. On March 26, 2012, a settlement conference was held with Magistrate Judge Mix, but no settlement was reached. The parties do not currently anticipate the need for further methods of alternative dispute resolution at this time.

8. OTHER SCHEDULING ISSUES

a.

There are currently no other discovery or scheduling issues on which the

parties were unable to reach an agreement.

b.

There are currently no motions that need to be brought to the Court s

attention at this time, although if the parties are unable to effectuate the removal of electronic files from Defendant computer, Plaintiffs anticipate filing a motion with s regard to such removal. A motion for entry of a stipulated protective order is also anticipated.

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c.

Both the Plaintiffs (in their complaint) and the Defendant (in his answer and

counterclaim) have requested a jury for all issues triable by a jury. The Plaintiffsrequest for injunctive relief, an accounting, and a constructive trust are appropriately addressed by the Court, as are the parties requests for attorneys fees. appropriately determined by a jury. All other issues are

d.

Other Planning or Discovery Orders: No opposed discovery motions are to

be filed with the Court until the parties comply with D.C.COLO.LCivR 7.1A. If the parties are unable to reach agreement on a discovery issue after conferring, they shall arrange a telephone hearing with Magistrate Judge Mix regarding the issue. Both of these steps must be completed before any contested discovery motions are filed with the Court.

9. AMENDMENTS TO DISCOVERY AND SCHEDULING ORDER

This Stipulated Scheduling and Discovery Order may be altered or amended only upon motion showing good cause and order entered thereon. As stated elsewhere herein, I will almost always grant stipulated motions for extensions of time and changes in deadlines up to and including the signing of a pretrial order. If the parties cannot agree on such extensions, my inclination is, in the absence of abuse, to be permissive. On the contrary, I am not permissive or lenient in changing trial dates.

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DATED this ____ day of _________________, 2012 BY THE COURT:

___________________________ Kristen Mix United States District Court Magistrate Judge STIPULATED SCHEDULING AND DISCOVERY ORDER APPROVED:

s/Nina Y. Wang Nina Y. Wang FAEGRE BAKER DANIELS LLP 3200 Wells Fargo Center 1700 Lincoln Street Denver, Colorado 80203-4532 303-607-3500 Kevin J. Byrne Linda K. Stevens SCHIFF HARDIN LLP 233 South Wacker Drive, Suite 6600 Chicago, Illinois 60606 312-258-5600 Attorneys for Plaintiffs

s/Michael G. Bohn Michael G. Bohn BOHN AGUILAR LLC 1670 Broadway Suite 3000 Denver, Colorado 80202 303-832-2494 Attorney for Defendant

CH2\11041252.3

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