Court File and Parties
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: RINGCENTRAL INC., Applicant
AND:
BARUCH LABUNSKI dba RANK SECURE, Respondent
BEFORE: Justice Patrick Hurley
COUNSEL: Ryan T. Evans for the Applicant Albert Pelletier for the Respondent Maureen Ward for Nextiva Inc.
HEARD: March 12 and 23, 2021
ENDORSEMENT
Introduction and Background
1This is an application by RingCentral Inc. to enforce a Letter of Request (“LOR”) issued on January 8, 2021 by The Honourable Nathanael M. Cousins, a Magistrate Judge of the United States District Court for the Northern District of California.
2The applicant and a company called Nextiva Inc. are competitors in the market for cloud based communication services. The applicant claims Nextiva and a group of defendants described as “DOES 3-19” engaged in an unlawful scheme to harm its business and reputation, primarily through fabricated reviews on the internet which were critical of the applicant and laudatory of Nextiva. The causes of action identified in the Third Amended Complaint are: Interference with Prospective Economic Advantage; Trade Libel; Defamation: Libel and Libel Per-Se; Cybersquatting; and Unfair Competition. The trial is scheduled to start July 12, 2021.
3The applicant and Nextiva requested the LOR from Judge Cousins, who is managing the litigation, in early January after Nextiva produced 257,497 pages of new documents. In their request, which is called a “Stipulation” they stated that these documents revealed facts not previously disclosed during the discovery process and also that Mr. Labunski and Rank Secure had “highly relevant information not identified during fact discovery”.
4In the LOR, Mr. Labunski is identified as the owner or principal of Rank Secure. He and the business are alleged to have been involved in the wrongful scheme that is the foundation of the lawsuit. The nature and extent of their involvement and their connection to Nextiva is disputed.
5The application unfolded in an unusual way. Despite jointly seeking the LOR, Nextiva brought an urgent motion for leave to intervene in the application seeking a postponement of it pending a further hearing before Judge Cousins because the applicant had purportedly made an unlawful agreement with Mr. Labunski about his deposition and trial testimony. In its notice of motion, Nextiva also complained that the applicant was seeking to examine Mr. Labunski for two days which was contrary to the Stipulation that had been presented to Judge Cousins.
6Because there was a prospect that Judge Cousins might rescind or vary the LOR, I granted a brief adjournment after being advised that he would likely rule on this issue in the next few days. I scheduled a telephone conference with counsel for March 17 at which time I was advised that he had decided that any ostensive collusion between the applicant and Mr. Labunski would be dealt with at trial. I was not provided with a copy of his decision. What I do know is that he did not amend the LOR.
Legal Framework
7A LOR issued by an American court should be enforced if the documents and information sought are relevant; the evidence is necessary for trial and will be adduced at trial, if admissible; the evidence is not otherwise obtainable; the order sought is not contrary to public policy; the documents are identified with reasonable specificity; and the order would not be unduly burdensome, bearing in mind what the witness would be required to do, and produce, if the action were to be tried in Ontario: Treat Canada Limited v. Leonidas, 2012 ONCA 748 at para. 19; Presbyterian Church of Sudan v. Rybiak, 2000 CanLII 32746 (ON CA) at para. 20. These are intended to be “useful guideposts, not rigid preconditions to the exercise of a judge’s discretion”: Perlmutter v Smith, 2020 ONCA 570 at para. 25.
Documentary Discovery
8The respondent says he should be examined for only one day. He raises the following objections to the documentary discovery:
i. It is overly broad.
ii. The requested information is unnecessary because it is available elsewhere or has already been produced in the U.S. litigation.
iii. The documentary production would be unduly burdensome.
9The respondent did not deliver a respondent’s application record as he was entitled to do under rule 38.09 (3.1) of the Rules of Civil Procedure. As a result, I do not have any evidence before me about how onerous the requested documentary production might be. Nor do I have any evidence from the respondent to support his assertions that the information is unnecessary for the purposes of the U.S. litigation, the documents are obtainable from other sources or they have already been produced. I can glean from the LOR that some documents which implicated Mr. Labunski and Rank Secure have been obtained by third parties but it was not until recently that Nextiva produced a large tranche of documents which revealed that he and his business were more extensively involved in the alleged wrongful conduct.
10Schedules A and B to the LOR identify the topics for the depositions of the Mr. Labunski and Rank Secure, and Schedule C identifies the documents which are to be produced by them. The documents are restricted to those in their possession, custody or control and which are not privileged under Canadian or U.S. law.
11As stated by the Court of Appeal in Treat American Limited v. Nestlé Canada Inc., 2011 ONCA 560 at para. 19, the requesting court’s decision is entitled to considerable deference and I do not sit in appeal from its decision.
12The terms of the LOR are comparable to what a judge of the Superior Court of Justice could order under rules 30.10 and 31.10 in a motion brought for leave to examine a non-party if this was an action being tried in Ontario. On the evidentiary record before me, I find that the applicant has met the requirements for an order enforcing the LOR in respect of the documentary discovery.
Depositions
13Although not a party to the application, counsel for Nextiva, with the consent of the parties, made submissions at the hearing and joined with the respondent in objecting to two days of depositions. According to both Nextiva and the respondent, it was intended to be only be one day and that was the agreement of the applicant and Nextiva when they asked Judge Cousins to issue the LOR.
14On its face, the LOR contemplates two depositions – one of Mr. Labunski and the second of an “adequate representative” of Rank Secure. The applicant wishes to proceed with two depositions. Nextiva now disputes what its agreement with the applicant was but it is the decision of Judge Cousins that matters, not the parties’ differing interpretations of their agreement. Moreover, Nextiva could have asked Judge Cousins to amend or clarify the LOR in this regard when it sought an order from him postponing the enforcement of the LOR pending an investigation into the allegation of witness tampering.
15As indicated above, the LOR states that Mr. Labunski is the principal or owner of Rank Secure but it does not describe what kind of legal entity Rank Secure is. The applicant filed an affidavit which confirms that it is a business name used by Mr. Labunski but it is neither a registered business name nor a registered corporation either in Ontario or in Canada. One conclusion that can be drawn from this is that Mr. Labunski operates it as a sole proprietorship. As a result, both he and Nextiva argue there should be only one deposition because Mr Labunski and Rank Secure are one and the same.
16That is something which can only be sorted out at the depositions. Mr. Labunski could be a one-man shop or Rank Secure might have many employees or subcontractors and, while Mr. Labunski would be an adequate representative of the business, he may have to inform himself of any relevant information or documents they have in order to properly answer questions on behalf of Rank Secure. My decision on this issue may have been different had Mr. Labunski delivered an affidavit which explained how he operated the business. The lawyers should be able to resolve any squabbles over questions or documents at the depositions and, if they cannot, they can seek a ruling from Judge Cousins.
Terms of the Order
17The application is granted and an order will go enforcing the LOR.
18At the conclusion of the hearing, I asked the parties to send me their proposed orders.
19In his draft order, the respondent limited his objections to items 2, 4, 5, 7 and 8 in Schedule C; documents which predate January 1, 2018; and any documents which are privileged under Canadian or U.S. law. All of the documents described in the numbered paragraphs appear relevant based on the allegations made in the pleadings. Because the overt acts are supposed to have started in mid-2018 (see para. 21 of the Third Amended Complaint), the respondent submits any documents before January 1, 2018 would be irrelevant. I disagree. Documents which predate the actual commencement of the internet skullduggery could be relevant and limiting the order to those from January 1, 2017 onwards is reasonable. The LOR states that privileged documents do not have to be produced.
20With respect to the depositions, the respondent objects to answering questions in relation to items 11, 13 and 17 under Schedule A and 11, 12 and 13 under B. I find that these are relevant areas of questioning based on the pleadings.
21The respondent asks that he have until April 15, 2021 to produce the documents. The applicant prefers the date of April 9. Mr. Labunski agrees that he can attend his deposition on April 23. Given the upcoming religious holidays, April 15 is a reasonable date for the production of the documents and the depositions shall take place on April 22 and 23 unless the parties agree to other dates. It would make sense that Mr. Labunski be examined in his personal capacity on April 22 because it may result in the lawyers reaching an agreement that he does not have to be examined as a representative of Rank Secure or that examination can be narrowed to certain discrete issues.
22The respondent requests that he be compensated for the expenses that he will incur in complying with the production of documents at the rate of $100/hour to a maximum of 20 hours. The applicant does not object to this payment
Costs
23The costs of the application is a contentious issue. The respondent submitted a costs outline in which he is seeking $7,034.25 calculated on a partial indemnity basis, payable forthwith. The applicant contends that each party should bear their own costs, complaining that the respondent opposed the application without good cause, relying on bald assertions and conjecture.
24As the Court of Appeal recently observed in Perlmutter, there is no bright line rule when it comes to awarding costs on applications to enforce letters of request. The respondent obtained a small measure of success but the same result could likely have been achieved by negotiation instead of a contested hearing. The respondent was unsuccessful on the central issues in the application. I consider a fair and reasonable amount of costs to be $3500 inclusive of HST and disbursements, payable by the applicant to the respondent within 30 days.
25Except as noted, the order should be in the form proposed by the applicant. The order should be submitted to me for signature after counsel approve it. It should be entitled a judgment and be in Form 59B.
______________________________ Hurley, J
Date: March 25, 2021