Bona Fide Conglomerate, Inc. v. Sourceamerica
| Decision Date | 16 August 2016 |
| Docket Number | Case No.: 3:14-cv-00751-GPC-DHB |
| Parties | BONA FIDE CONGLOMERATE, INC., Plaintiff, v. SOURCEAMERICA, Defendant. SOURCEAMERICA, Counterclaimant. v. BONA FIDE CONGLOMERATE, INC. and RUBEN LOPEZ, Counterdefendants. |
| Court | U.S. District Court — Southern District of California |
ORDER ADOPTING IN PART AND DECLINING TO ADOPT IN PART MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION
[ECF Nos. 251, 288, 327] Before the Court are objections to a Magistrate Judge's Report and Recommendation ("Report") (ECF No. 288) regarding Defendant SourceAmerica's ex parte motion: (1) to disqualify Plaintiff Bona Fide's counsel; (2) to revoke pro hac vice admission of Daniel J. Cragg; (3) for protective order; and (3) for expedited discovery. (ECF Nos. 296, 297.) Based on a review of the Parties' extensive briefing, the record, and the applicable law, the Court ADOPTS IN PART and DECLINES TO ADOPT IN PART the Report.
As set forth in prior orders in this case, this action arises out of the AbilityOne Program ("AbilityOne" or "Program"), a government procurement system for goods and services from designated non-profits ("Affiliates") that substantially employ blind or severely disabled persons. (FAC ¶ 2, ECF No. 128.) Services provided by Affiliates to the Federal Government include custodial/janitorial, grounds maintenance, information technology, and total facilities management. (Id. ¶ 50.) Plaintiff is one such Affiliate of the AbilityOne Program. (Id. ¶ 17.)
The AbilityOne Program has selected SourceAmerica as the Central Non-Profit Agency ("CNA") responsible for allocating procurement opportunities for services by the severely disabled among its more than 1,200 member Affiliates. (Id. ¶¶ 4, 72.) As the CNA, SourceAmerica develops opportunities and selects Affiliates, and then recommends to an AbilityOne Commission that the service and Affiliate be added to a Procurement List. (Id. ¶¶ 38, 44-45.) Once a service is added to the Procurement List, a federal agency must procure that service from the designated Affiliate unless the Affiliate cannot meet the agency's demand. (Id. at ¶ 38.) The AbilityOne Commission ultimately determines which services are added to the Procurement List based on SourceAmerica's recommendations. (Id. ¶¶ 44-45.) However, the AbilityOne Commission does not oversee SourceAmerica's allocation.
// Bona Fide alleges a history of disputes between Plaintiff and SourceAmerica over the allocation of AbilityOne opportunities. Plaintiff initially brought several antitrust claims against SourceAmerica and other entities, alleging Defendants rigged the process through which service providers compete for contracts through the AbilityOne Program. (Id. ¶¶ 331-403.) Plaintiff also brought a breach of contract claim against SourceAmerica based on a July 27, 2012 settlement agreement between the parties stemming from a previous bid protest. (Id. ¶¶ 405-414.) Plaintiff's antitrust claims have been dismissed, and only the breach of contract claim remains against SourceAmerica. (ECF Nos. 189, 212.) SourceAmerica has also filed counterclaims for violation of the California Privacy Act (CIPA), Cal. Penal Code § 630 et seq., Unfair, Unlawful, and/or Fraudulent Business Practices, California Business & Professions Code Section 17200 et seq., and breach of contract. (ECF No. 308.)
The Magistrate Judge's Report contains a thorough and accurate recitation of the factual and procedural history underlying the instant motion. This Order incorporates the background as set forth therein in addition to developments occurring after the Report's issuance.
On July 27, 2012, Plaintiff and SourceAmerica entered into a Settlement Agreement to resolve an earlier lawsuit filed by Plaintiff based on a bid protest. (Mot. Disqualify, Ex. G ("Settlement Agreement"), ECF No. 251-10.) Pursuant to that agreement, SourceAmerica agreed that it would "through its Office of General Counsel, reasonably monitor Bona Fide's participation in the AbilityOne Program for a period of three (3) years from the date a Bona Fide representative signs this Agreement." (Id. at 4.)
According to Lopez, Robinson began making reports to him in the fall of 2012 as part of the reasonable monitoring procedures under the Settlement Agreement. (Opp'n, Decl. of Ruben Lopez ("Lopez Decl.") ¶ 5, ECF No. 259-2.)
On May 5, 2013, Lopez began recording Robinson at a conference they both attended in San Antonio, Texas. (Id. ¶ 9.) Lopez subsequently recorded every conversation he had with her until July 2014, when Robinson's tenure at SourceAmerica ended. (Id. ¶¶ 5, 6, 11.) Some of the recorded conversations took place in person, others were over the telephone. Based on the information before the Court, it appears Lopez recorded Robinson over 25 times. (Mot. Disqualify, Ex. I, ECF No. 251 -12.) It also appears that some of the recordings may have been made while Lopez was in California. (ECF No. 253-1 at 27-28 35, 46.)
On August 7, 2013, the first transcript of the recordings was prepared. (Mot. Disqualify, Ex. E, ECF No. 251-8.) Recordings from May 5 and 8, 2013, and July 23, 2013 were transcribed. (Id.) Plaintiff's counsel commissioned the transcripts. (Id.)
On September 26, 2013, a second transcript was prepared. The transcript included recordings from September 5, 6, and 16, 2013. (ECF No. 253-1 at 25-31.)
A third transcript was prepared on December 10, 2013. Recordings from November 18 and 19, 2013 were transcribed. (ECF No. 253-1 at 50-54.)
On December 14, 2013, a fourth transcript was made of a September 25, 2013 recording. (ECF No. 251-9.)
On January 21, 2014, a fifth transcript was prepared. Three recordings from December 12, 2013 and January 3 and 6, 2014 were transcribed. (ECF No. 253-1 at 40-48.)
On April 1, 2014, Plaintiff initiated this action. (ECF No. 1.)
On September 19, 2014, Plaintiff filed a First Amended Complaint ("FAC"). (ECF No. 128.) In the FAC, Plaintiff referred to three of the Robinson Tapes—from May 5, 2013, May 8, 2013 and September 25, 2013—in support of its federal antitrust claims.
On October 6, 2014, SourceAmerica sent a letter to Plaintiff's counsel to notify Plaintiff that based on the recording cited in the FAC, SourceAmerica believed Plaintiffhad privileged information in its possession. (Mot. Disqualify, Decl. of Kevin Alexander ("Alexander Decl"), Ex. A, ECF No. 251-20.) SourceAmerica demanded return of the information. (Id.)
On October 8, 2014, Plaintiff's attorney, Daniel J. Cragg ("Cragg") responded, stating that Plaintiff did not have any of SourceAmerica's privileged information, and asserted Robinson had waived any privilege in the information she disclosed to Lopez based on the July 27, 2012 Settlement Agreement. (Id., Ex. B, ECF No. 251-21.)
SourceAmerica replied on October 9, 2014, and stated the Settlement Agreement did not authorize Robinson to reveal any privileged information. (Id., Ex. C, ECF No. 251-22.) SourceAmerica demanded that Plaintiff's counsel provide copies of all recordings made by Lopez of conversations with Robinson. (Id.) It does not appear that Plaintiff's counsel responded to the request.
On October 16, 2014, SourceAmerica filed a Motion for Expedited Discovery regarding the recordings that were referenced in the FAC. (ECF No. 131.) SourceAmerica also filed a Motion to Dismiss and Motion to Strike the references to the Robinson Tapes in the FAC. (ECF Nos. 139, 141.)
The Magistrate Judge granted SourceAmerica's request for expedited discovery on November 7, 2014, and required Plaintiff to produce the recordings that were cited in the FAC. (ECF No. 161.)
On January 6, 2015, this Court issued an order granting in part and denying in part, SourceAmerica's Motion to Dismiss. (ECF No. 189.) The Court dismissed Plaintiff's federal antitrust claims with leave to amend denied SourceAmerica's Motion to Strike as moot. (Id.) Plaintiff's breach of contract claim remained. (Id.)
On January 23, 2015, a sixth transcript was prepared. Recordings from November 7, 2013, January 1, 22, 28, 30, 2014, and February 6, 2014 were transcribed. (ECF No. 253-1 at 33-38.)
On March 4, 2015, SourceAmerica filed a motion to seal the three Robinson Tapes that were referenced in the FAC. (ECF No. 207.) Lopez states that he shared the Robinson Tapes with another participant in the AbilityOne Program on March 6, 2015. (ECF No. 214-2 ¶ 21.) Lopez does not specify which tapes he shared.
On March 19, 2015, Plaintiff filed a Notice of Intent not to file a Second Amended Complaint, and elected to proceed solely on its breach of contract claim. (ECF No. 212.)
On June 1, 2015, the Court denied SourceAmerica's Motion to Seal. (ECF No. 233.) The Court found that Plaintiff failed to establish the three Robinson Tapes were privileged under the federal standard, and that even if the tapes were privileged, SourceAmerica had waived any privilege because it was dilatory in seeking to protect the information. (Id.)
On September 11, 2015, the Virginia Circuit Court of Fairfax County issued a permanent injunction preventing Robinson from disclosing SourceAmerica's privileged and/or confidential information.1 (Alexander Decl., Ex. J, ECF No. 251-29.)
In September 2015, SourceAmerica states it learned for the first time that there were additional Robinson Tapes, aside from the three recordings that were referenced in the FAC. (Alexander Decl. ¶ 6, ECF No. 251-19.) SourceAmerica discovered the information when a declaration signed by Lopez was filed in NTI v. United States, 15cv293 (Ct. Fed. Claims), which is a case arising from a bid protest filed by another participant in the AbilityOne Program. (Id. ¶¶ 7-8.) The Lopez declaration attached transcript excerpts from the Robinson Tapes.
On October 2, 2015, SourceAmerica sent a letter Plaintiff's counsel stating the Robinson Tapes filed in the NTI matter contained privileged information, and demanded their return. (Alexander Decl., Ex. F, ECF No. 251-25.) Plaintiff's counsel responded onOctober 9, 2015, and...
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