Court Opinion

ID: 3000543
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:06:04.969492+00
Date Added: 2024-06-11T18:01:56.170905
License: Public Domain

NONPRECEDENTIAL DISPOSITION
                        To be cited only in accordance with
                                Fed. R. App. P. 32.1

            United States Court of Appeals
                              For the Seventh Circuit
                              Chicago, Illinois 60604

                                Argued May 12, 2006
                                Decided May 2, 2007

                                        Before

                           Hon. DANIEL A. MANION, Circuit Judge

                           Hon. MICHAEL S. KANNE, Circuit Judge

                           Hon. ILANA DIAMOND ROVNER, Circuit Judge

No. 05-4263

AUTOMATED SOLUTIONS CORP.,                       Appeal from the United States District
             Plaintiff-Appellee,                 Court for the Northern District
                                                 of Illinois, Eastern Division.
      v.
                                                 No. 05 C 4429
PARAGON DATA SYSTEMS, INC.,
           Defendant-Appellant.                  Elaine E. Bucklo,
                                                 Judge.

                                      ORDER

   The parties are before the court on an appeal of a decision by the district court to
quash a subpoena. We remanded the case to the district court so that the court could
provide an explanation for her decision in accordance with Circuit Rule 50. The district
court provided an explanation on September 28, 2006. We invited the parties to submit
supplemental briefs.

   The parties have been engaged in two lawsuits in Ohio for a number of years. In
Automated Solutions Corp. v. Paragon Data Sys., Inc., 856 N.E.2d 1008 (Oh. Ct. App.
2006), the Ohio Court of Appeals affirmed the state trial court’s judgment in favor of
Automated Solutions Corp. (ASC) on questions of breach of contract and ownership of
the software at issue in that case. The Ohio Supreme Court declined to hear an appeal
No. 05-4263                                                                      Page 2

of that decision. Automated Solutions Corp. v. Paragon Data Sys., Inc., 858 N.E.2d 818
(Oh. 2006). While the state court action was pending, the parties found themselves in
the United States District Court for the Northern District of Ohio, arguing questions
of copyright. Pursuant to that federal case, Paragon sought to subpoena from the
Chicago Tribune Company any software sold or provided by ASC and any documents
in the Tribune’s possession related to that software. ASC moved the district court to
quash the subpoena and issue a protective order. The district court granted ASC’s
motion on October 7, 2005, and has since explained her reasoning as follows:

      I concluded that the subpoena sought documents that did not bear a
      reasonable nexus to the lawsuit brought by Automated against Paragon
      in Ohio. The software sold by Automated to the Tribune is not an issue
      in the case. The case concerns the allegations that certain software sold
      by Paragon was improperly copied and sold from Automated. Paragon’s
      defense is that it independently developed the software that it was
      selling. In response to the motion to quash, Paragon claimed that the
      Tribune might have a copy of the original copyrighted version of the
      software at issue, as well as documents related to the work’s
      development. It did not explain how such documents could be at all
      relevant to the lawsuit, and I concluded they were not. In addition, the
      copyrighted version of the software is publicly available.

   We review the district court’s decision to quash a subpoena for abuse of discretion.
Todd v. Merrell Dow Pharm., Inc., 942 F.2d 1173, 1178 (7th Cir. 1991). A district
court’s order limiting discovery constitutes an abuse of discretion only where: the
record contains no evidence upon which the court could have rationally based its
decision, the decision is based on an erroneous conclusion of law, the decision is based
on clearly erroneous factual findings, or the decision appears completely arbitrary.
Stagman v. Ryan, 176 F.3d 986, 993-94 (7th Cir. 1999). Paragon argues that the
district court’s decision was unsupported by any evidence, was based on an incorrect
conclusion of law, and was arbitrary. We disagree.

   The Ohio federal lawsuit involves a claim of copyright infringement by ASC against
Paragon. Paragon has counterclaimed against ASC alleging that it has independently
developed another software program, distinct from the one that the Ohio state courts
have ruled belongs exclusively to ASC, and that ASC has committed a number of
common law torts by informing people that Paragon copied ASC’s software. The district
court had before it the complaint, answer, and counterclaims from the Ohio federal
lawsuit. It also had before it excerpts of the state proceedings and the copies of the
subpoenas that Paragon sought to serve on the Tribune.

   The district court noted that the record shows that the competing software
programs that are the subject of the litigation are publicly available. Like the district
court, we are at a loss to see how the Tribune’s software could possibly be relevant to
No. 05-4263                                                                      Page 3

this lawsuit. See Fed. R. Civ P. 26(b)(1) (limiting discovery to “any matter, not
privileged, that is relevant to the claim or defense of any party . . . [but] need not be
admissible at trial if the discovery appears reasonably calculated to lead to the
discovery of admissible evidence.”). Paragon does not claim that the Tribune is in
possession of any software that Paragon independently developed. The question of the
ownership of the software in use by the Tribune was decided by the Ohio state courts.
Nor does Paragon claim that the Tribune is in possession of any software that ASC
might have illegally derived from Paragon’s independently developed software. Given
that the record contained ample evidence of the scope of the Ohio lawsuits, the district
court’s entry of September 28, 2006 makes it clear that the court correctly considered
the evidence about the scope of the lawsuit, the items sought from the Tribune, and the
nexus between the two. There was adequate evidence in the record to support the
district court’s decision.

   Because the district court’s decision is supported by evidence in the record, did not
make any erroneous conclusions of law, and was not arbitrary, we AFFIRM the
decision of the district court to quash the subpoena.