Nanjing CIC International Co., Ltd. v. Schwartz
6:20-cv-07031
W.D.N.Y.Jun 17, 2025Background
- Nanjing CIC International Co., Ltd. (Plaintiff) sued Foundry Associates, Inc. and its president, James Schwartz (Defendants), alleging breach of fiduciary duty and unjust enrichment over alleged theft of Plaintiff's U.S. customer base, in coordination with a former employee, E. Chen.
- The parties agreed to a Protective Order with "Confidential" and "Attorneys’ Eyes Only" (AEO) designations for sensitive discovery material.
- Plaintiff sought to remove the AEO designation from certain documents, including 2023 and 2024 sales reports and specific invoice information, alleging these were improperly designated and necessary for both this case and related Chinese litigation.
- An October 2023 order previously resolved similar disputes, directing certain information to be de-designated and redacted, but left other information protected as AEO.
- Both sides now sought sanctions and cost-shifting: Plaintiff sought fees for alleged improper designations; Defendants sought to shift production costs associated with multiple document versions to Plaintiff.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| De-designation of 2023-24 sales reports | October 2023 order required de-designation and marking as "For Litigation Only"; AEO protection improper | AEO designation proper to protect commercially sensitive information about unrelated customers; order did not require further de-designation | AEO designation on these reports is proper; no further de-designation required |
| De-designation of invoice information (date, number, amount) | Info is not competitively sensitive; necessary to assess damages; similar info already deemed not AEO | Info reveals procurement habits/business patterns; disclosure risks competitive harm | Defendants showed good cause for AEO designation; no de-designation ordered |
| Plaintiff’s request for fees/costs | Defendants' improper AEO designations warrant sanctions under Rule 37 | Proper designation and compliance; fees/costs unwarranted | Request denied as Plaintiff’s motion to de-designate also denied |
| Defendant’s cost-shifting motion | Cost-shifting improper; Defendants’ repetitive productions due to own designations | Plaintiff’s requests necessitated multiple versions; cost-shifting would incentivize restraint | Cost-shifting not warranted; no undue burden shown |
Key Cases Cited
- Seattle Times Co. v. Rhinehart, 467 U.S. 20 (discusses the standard for issuing protective orders under Rule 26).
- Dove v. Atl. Capital Corp., 963 F.2d 15 (discretion of district court in good cause determinations for protective orders).
- Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340 (addresses presumption that responding party bears discovery costs).
- Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110 (standards for sealing court records and protecting confidential business information).