SUPERIOR COURT OF JUSTICE - ONTARIO

CITATION: Teti v. Mueller Water Products Inc., 2015 ONSC 2289

COURT FILE NO.: CV-13-489853

DATE HEARD: April 8, 2015

ENDORSEMENT RELEASED: April 9, 2015

RE: ROBERT TETI and ITET CORPORATION v. MUELLER WATER PRODUCTS INC., MUELLER CO., MUELLER CANADA LTD., and MUELLER INTERNATIONAL, LLC.

BEFORE: Master R. Dash

COUNSEL: Joseph Etigson and Paul Lomic, for the plaintiffs

Kenneth D. Hanna, for the defendants

REASONS FOR DECISION

[1] This is a motion by the plaintiffs inter alia for a discovery plan, a further and better affidavit of documents and an assignment of the action to case management.

[2] The plaintiffs’ motion for a discovery plan is dismissed without prejudice for several reasons. Firstly a discovery plan, particularly a detailed discovery plan dealing with contested issues respecting scope of discovery and who can be discovered on behalf of the parties, should not be imposed on the parties until all pleadings are finalized: In-Store Products Ltd. v. Zuker, 2013 ONSC 7091 at para. 15. There is a partial summary judgment motion scheduled to be heard on June 5, 2015 that could have the effect of removing two of the defendants from the action. There is a motion to amend the statement of defence to remove what may be seen as an admission that Mueller Systems (a non-party) (“Systems”) is a division of the defendant Mueller Water Products Inc. (“Water”) which could affect whether Thomas Cullinan, Vice President of Engineering for Systems could be compelled as a discovery witness for Water. That motion is scheduled for May 29, 2015 but a new date will have to be chosen because of prior commitments of plaintiffs’ counsel (who had not agreed to the date). There is no evidence that short delay in settling the discovery plan will prejudice the plaintiffs.

[3] Secondly, the proposed discovery plan calls for specific discovery witnesses on behalf of the defendants. They include Mr. Cullinan as well as Marty Ball and Scott Linkel (the “inventors”). Since the plaintiffs’ right to these discovery witnesses is contested, the issues should be decided by an appropriate motion, with appropriate evidence and on proper notice. A motion for a discovery plan is not the appropriate place to determine contested Rule 31 issues.

[4] Thirdly, under rule 29.1.03 the obligation is on the parties to “agree to a discovery plan”, although the court may impose a discovery plan upon a party who is unwilling to agree to a plan: Telus Communications Co. v. Sharp, 2010 ONSC 2878, (2010), 102 O.R. (3d) 93 (SCJ – Master) at para. 17. However, “the ability of a party to bring a motion every time disagreement arises in the creation of a discovery plan undermines the obligations of the parties under this rule. Except in exceptional circumstances, that obligation should remain on the parties and result in the dismissal of such a motion”: Dewan v. Burdet, 2012 ONSC 4465, [2012] O.J. No. 3672 (S.C.J.) at para. 3; In-Store Products Ltd. v. Zuker, supra, at para. 30.

[5] It is unclear why the parties cannot consent to a discovery plan that sets out at least those matters that can be agreed upon and reference unresolved matters as “to be determined by further negotiations or by court order” possibly with a deadline.

[6] In this case the plaintiffs did not send a proposed discovery plan to the defendants until November 12, 2014 (although requested about 10 months earlier). There was a partial response a few weeks later. When there was no agreement the plaintiffs served a six volume motion record on January 26, 2015. In my view the parties have not yet had sufficient opportunity to work out details of a discovery plan by themselves. Terms will be set later in this endorsement to assist the parties to comply with their responsibility under rule 29.1.03.

[7] Nonetheless there are some orders that would otherwise be in the discovery plan that are appropriate to make at this time. I have also provided some guidance on matters that must proceed by motion.

[8] The defendants plead that there was no breach of the confidentiality agreement between Mueller Canada and the plaintiffs and in any event the defendants’ 420 RDM was independently created by Systems. It is clear that Cullinan is the person with the most knowledge of independent creation. Furthermore, he was put forward by the defendants as their affiant on the motion for a protective order and was cross-examined. The defendants claim he cannot be compelled as a discovery witness for the defendants as he is an employee of Systems, who is not a party. There must be a specific motion to require his examination as the representative of the defendants under rule 31.03(2)(a). There should be, in response, evidence from a senior representative of the current defendants, particularly Water, that Cullinan is not an employee or director or officer of any of the defendants, supported by a corporate organizational chart of the group of Mueller companies, and that the remaining defendants do not have the ability to compel Cullinan as their discovery witness. The plaintiffs may also be seeking an order to examine both Cullinan and Douglas Wiley (a signatory to the agreement with the plaintiffs on behalf of Mueller Canada Ltd.) on very different issues, as set out in the proposed discovery plan. This would require a motion under rule 31.01(2)(b) in consideration of the factors in rule 31.03(4). The plaintiffs indicates however they would abandon his request to examine Wiley if he was permitted to examine Cullinan. It would behoove the defendants to consider rule 1.04(1) and (1.1) in regard to these issues and facilitate rather than obstruct Cullinan’s discovery.

[9] If it turns out that Cullinan cannot be examined on behalf of the defendants under rule 31.03, there is an option to move for his examination as a non-party under rule 31.10, but it is unlikely that such order could be made until the criteria under rule 31.10(2)(a) have been met, including the examination for discovery of Wiley. To force the plaintiffs to strictly comply with this rule however would not be the most expeditious, least expensive and proportional method of proceeding with the discovery stage of this action. I may be prepared to entertain a request to apply rule 2.03 and dispense with compliance with rule 31.10(2)(a) in the interests of justice in all of the circumstances.

[10] Any motion to examine Cullinan, whether under rule 31.03 or under rule 31.10 must be on notice to Cullinan. Service on Cullinan may be made by serving the motion record on Systems, unless the lawyer for the defendants agrees to accept service on his behalf.

[11] As for the inventors, while it would be very useful to the search for the truth to have them examined by the plaintiffs, they are clearly non-parties to this action and are not affiliated with or employed by any of them. A motion would be required under rule 31.10 to compel their examination unless they agreed to be examined. Such motion must be on notice to the inventors.

[12] In the proposed discovery plan, the plaintiffs requested 14 hours in total to examine Wiley and Cullinan but with no specified time limits set out for the inventors, although they now says they will restrict themselves to 7 hours for Cullinan and not examine Wiley. If the parties are unable to agree on the total time for examinations for discovery in the discovery plan and if any party requests in excess of 7 hours in total for the examination of all “parties or other persons to be examined”, a motion under rule 31.05.1(1) will be required supported by evidence reflecting the factors in rule 31.05.1(2).

[13] All issues relating to persons to be discovered and time limits for discovery may be brought in one motion.

[14] There is also a provision in the proposed discovery plan to require the defendants to ask various persons, including the inventors, to produce relevant documents made during the course of inventing the 420 RDM. Counsel for the defendants does not object to making that request although he states that the discovery plan should not be determined piecemeal. I disagree. They are important documents that will advance the litigation. The production will not be affected by the defendants’ motions to amend and for partial summary judgment. If the inventors refuse the request (and their position is not yet known), the foundation for a rule 30.10 non-party production motion will have been established. Such motion will need to be on notice to the inventors. There is a similar request for Systems’ documents but it appears that has already been done, with most of them subject to Confidential Information or Highly Confidential Information (“HCI”) (counsel and expert eyes only) designations.

[15] There is no opposition to including preservation of documents in the discovery plan. Despite the defendants’ concern about piecemeal orders, it is important that a preservation order be made now as it may yet be some time before the discovery plan issue is resolved and destruction of paper or electronic documents, perhaps as part of normal business operations, should be avoided. The defendants should make a request at this time for Systems, the inventors and Leo Fleury, a former employee of the defendants, to preserve their documents as well. The order made today will incorporate some of the general provisions of the draft discovery plan but without some of the specific persons mentioned. This will be subject to negotiating or ordering a broader or narrower term in the final discovery plan or at any time.

[16] There is also an issue whether Mr. Teti should be examined for discovery before he is given access to any of the HCI documents in order that he not tailor his evidence, particularly as he has produced no technical or other documents constituting the “confidential information” he says was divulged or used as a springboard in the development of the Mueller 420 RDM, although the defendants have a prototype. The plaintiffs suggest the challenge to the HCI designations should proceed first and it would be unfair to Mr. Teti to give evidence without having first seen all of the defendants’ documents to which it is determined that he will be entitled. It may be that if the plaintiff is discovered first, the defendants will take a less restrictive view of what documents Mr. Teti can see so that he can instruct counsel at the subsequent examination for discovery of the defendants and at trial and for settlement purposes. This issue arose in the context of the defendants having served a notice of examination on Mr. Teti to examine him for discovery on March 31, while this motion for a discovery plan was outstanding. In any event the issue of when Mr. Teti is to be examined cannot be decided today as there is no evidentiary foundation and was not referenced in any of the versions of the discovery plan.

[17] The plaintiffs suggest that the parties prepare and exchange contextual information including organizational corporate charts. I support this in order to promote an efficient, effective and shorter examination for discovery and such term should be in the discovery plan and information exchanged prior to examinations for discovery (and should be put in evidence on the motion to compel the examination for discovery of Cullinan), but I make no order at this time.

[18] As the defendants have sworn that no relevant privileged documents exist, the plaintiffs withdraw their request for a privilege log. No order is necessary to quash the notice of examination of Mr. Teti for March 31, 2015 as the defendants told Mr. Teti he need not attend, there will be an order that there be no examinations for discovery until a discovery plan is agreed or ordered and I accept the defendants’ undertaking that they will not rely on any certificate of non-attendance on March 31 for any purposes in this action.

[19] This case cries out for case management. Although at different times both the plaintiffs and the defendants have attempted to work out for example terms of the discovery plan or the HCI designations, they have by and large been talking at cross purposes and been co-operative only at times convenient to them. As noted, the defendants inappropriately served a notice of examination to discover the plaintiffs while the discovery plan issue was before the court. Both parties have destroyed a forest of trees assembling correspondence and other evidence respecting the failure of the other side to co-operate or to set dates without consultation. The plaintiffs consented to and then revoked their consent to a protective order, resulting in a contested motion. The parties have been unable to agree to a discovery plan or to the designation of HCI documents, although there have been some attempts. There will be a number of motions within the jurisdiction of a master that would benefit from one judicial officer having been familiar with the procedural background and substantive issues in the action.

[20] Given the scarce resources in the Toronto masters’ office, case management should be awarded sparingly. However given the complexity of the issues and the animosity between the parties and the required level of judicial involvement, this case is one where those resources should be utilized, provided it is used reasonably and the master is not called upon to resolve every petty dispute that the parties with some sense of co-operation should be able to work out by themselves. The parties should not abuse this opportunity by coming to the master and attaching a trail of correspondence every time there is a complaint for example about how long it is taking for a party to respond to a letter.

[21] There is clearly no conflict with the order of Spence J. dated March 30, 2015 that provided restricted case management only “to apply to the partial summary judgment motion of the defendants.” If the parties require assistance on issues connected to the summary judgment motion or the timetable in place for that motion they may make an appointment in Civil Practice Court. I would however, if directed by a judge in Practice Court, offer assistance to the parties on issues that arise prior to the hearing of the motion, other than any request to adjourn the fixed motion date which can be granted only by a judge.

[22] In all other respects the action will be case managed by me. I will be available to reasonable requests for a case conference and will hear all motions within the jurisdiction of a master. The only exception is with respect to any motion to challenge the HCI designations pursuant to the provisions of the protective order. In my view, as I suggested to counsel, the designation challenges should be heard by an arbitrator with appropriate expertise – whether it be an engineer or a lawyer who practises in the field. I do not however have power to order an arbitration of the issue and if the parties cannot agree on a method to resolve the designation dispute I will make that determination at a case conference or motion scheduled for that purpose.

[23] That said, I do have broad powers under rule 77.04(1)(e) to “make orders, impose terms, give directions and award costs as necessary to carry out the purposes of this Rule.”

[24] In my view before the court imposes a discovery plan, not only must the outstanding partial summary judgment and pleading amendment motions be dealt with, but the parties must make further efforts to create their own plan. As I indicated in court I would require the parties to meet and if unable to come to an agreement on their own, they must attempt to mediate the issue with a mediator to be chosen by the parties before I would again consider imposing a court ordered discovery plan. Neither party took objection to the requirement to meet and to then mediate if there is no agreement.

[25] If it is necessary to bring back on the motion for a discovery plan, both parties will be required to serve and include with their motion material their final version for a form of discovery plan and a brief statement of objections made to the other party’s draft plan and the court shall choose one or the other of the versions without amendment. It is hoped that facing such a determination, the parties will be reasonable in what they propose.

[26] I had considered terms to curtail the plethora of motions, such as requiring leave from me before bringing a motion. I have decided however that that level of micromanagement is not appropriate at this time, but any abuse in bringing unnecessary or precipitous motions could result in such an order.

ORDER

[27] I hereby order as follows:

(1) This action shall be assigned to case management under Rule 77 to be managed by Master Dash.

(2) The defendants’ motion to amend the statement of defence, currently scheduled for May 29, 2015, shall be rescheduled to be heard by me on a date convenient to both counsel. Counsel shall attend at or otherwise communicate with the motions scheduling unit to book the motion on one of my regular motions lists if the motion can be heard in under two hours, or shall request a case conference with me to fix a special appointment if over two hours.

(3) Master Dash shall be available for case conferences and shall hear all motions within the jurisdiction of a master.

(4) The plaintiffs’ motion to impose a discovery plan is dismissed without prejudice to move again if the parties are unable to agree on a discovery plan in accordance with the terms of this order.

(5) Counsel for all parties are ordered to meet in person within 14 days to discuss resolution of terms for a discovery plan and any challenges to HCI designations and to continue to meet until one of the parties agrees that one or the other issue cannot be resolved.

(6) If counsel are unable to agree on terms for a discovery plan they shall forthwith agree upon the appointment of a mediator and date for mediation to assist the parties in resolving the discovery plan. At the option of either party the issue of HCI designations may also be subject to the mediation. If counsel cannot agree on a mediator or mediation date I will fix both at a case conference convened for that purpose.

(7) If the issue of the discovery plan still cannot be resolved I will convene a case conference to set a date and terms for a motion before me to determine the issue.

(8) If the issue of the challenges to the HCI designation still cannot be resolved I will convene a case conference to discuss, and if necessary determine, a method for resolving the issue.

(9) The defendants or their lawyer shall forthwith write to Marty Ball and Scott Linkel and request that they (a) preserve and (b) produce copies of all documents related to the invention of the Mueller 420 RDM. The defendants shall upon receipt provide a supplementary affidavit of documents listing the documents with any appropriate confidentiality designations and provide copies to plaintiffs’ counsel in accordance with the protective order dated February 2, 2015.

(10) The parties shall comply with a preservation order that shall, unless the parties agree to a different form of preservation order, be in the terms set out as section 4 in the proposed discovery plan marked as Schedule A to the amended notice of motion except that:

(a) in subsection 4(1) all words following “to obtain” in line 6 shall be deleted and the following substituted: “from employees and former employees and affiliated companies” and

(b) in the box on page 17 all words following “name of person” shall be deleted and the following substituted: “Mueller Systems, LLC, Marty Scott Ball, Scott Aron Linkel and all current and former employees of the parties involved with the creation of the ITET Digital Water System and the Mueller 420 RDM or with the negotiation, implementation or termination of the April 9, 2002 Confidentiality Agreement or the September 2, 2009 ITET Digital Water System Agreement.”

(11) Unless the parties agree or the court orders otherwise there shall be no examinations for discovery conducted until after a discovery plan is agreed or ordered and the partial summary judgment motion is determined.

COSTS

[28] If the parties are unable to agree on the costs of this motion and of the defendants’ motion for a protective order decided on February 2, 2015, I am prepared to receive brief costs submissions supported by a Costs Outline (Form 57B) and redacted dockets within 14 days from the date of this endorsement from any party requesting costs and any responding submissions within 10 days thereafter. My preliminary view is that costs for both motions be in the cause.

Master R. Dash

DATE: April 9, 2015