To Disclose or Not to Disclose: The Importance of Putting Everything in Writing

August 03, 2023

Section 3101(a) of the CPLR provides for the “full disclosure of all matter material and necessary in the prosecution or defense of an action.” This standard requires the disclosure “of any facts which will assist preparation for trial by sharpening the issues and reducing delay and prolixity” (Madia v CBS Corp, 146 AD3d 424, 424-425 [1st Dept 2017]). Under CPLR 3124, a party making a motion to compel discovery must demonstrate that the discovery sought is “material and necessary” and must meet the test of “usefulness and reason.” But, parties are at liberty to narrow the, otherwise, broad statutory discovery guidelines provided by the CPLR. A recent decision from Justice Robert Reed of the Manhattan Commercial Division in Latin Mkts. Brazil, LLC v McArdle reminds us that the court will abide by the terms of a voluntary waiver of discoverable materials absent any mistake, fraud, collusion, or accident.

Background

McArdle involved post-employment restrictive covenants that provided for “non-disclosure of confidential information, non-solicitation of employees and clients, and a non-compete clause” which Defendants Mr. Mallon and Mr. McArdle (collectively the “Defendants”) – former employees – signed upon their resignation from their Plaintiff-employer Markets Group (“Plaintiff” or “Company”).The duration of the non-solicit and non-compete clauses to which Defendants consented to lasted from July 2020 through July 2021.

Analysis

Plaintiff alleged that Defendants were in breach of the post-employment restrictive covenants because Defendants used confidential information to compete with Plaintiff and to tortiously interfere with Plaintiff’s business relationships. Plaintiff alleged that throughout document discovery, Defendants’ violation was demonstrated by documents showing their formation of the competing company while under Plaintiff’s employ; their downloading of confidential information before leaving the Company; and transferring this information to their personal email accounts. Plaintiff moved to compel the discovery of Defendants’ texts and social media messages from three-months prior and after the formation of Defendants’ competing company in July 2020.

Plaintiff argued that the communications sought were relevant to the adjudication of the case and are narrowly tailored to the needs of the case. Plaintiff contended that these communications were likely to show which of Plaintiff’s clients Defendants attempted to solicit and contact, as well as any other conversations of improperly utilizing Plaintiff’s confidential materials.

The ESI stipulation to which Plaintiff consented stated that “the following sources of ESI information do not warrant collection, search, review or production: (a) Voicemail, text messages, personal phones or tablets and instant messages.” The court, therefore, denied Plaintiff’s motion to compel because the ESI stipulation explicitly prohibited the disclosure that Plaintiff sought and because Plaintiff failed to demonstrate any mistake, fraud, duress or coercion that would call for the overturning of the stipulation.

Conclusion

While the CPLR provides broad statutory discovery guidelines, parties are free to limit the discovery sought. In sum, absent any mistake, fraud, duress or coercion, courts will adhere to the narrow scope of discovery consented to by the parties.