Judge: Frank M. Tavelman, Case: 21GDCV00283, Date: 2023-05-05 Tentative Ruling

SUBMITTING
ON THE TENTATIVE

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Case Number: 21GDCV00283    Hearing Date: May 5, 2023    Dept: A

/LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTIONS TO COMPEL FURTHER DISCOVERY RESPONSE

ALLEGATIONS: 

Plaintiff Ross Felix ("Felix") filed suit against Defendants Medversant Technologies, LLC ("Medversant") and Matthew Haddad ("Haddad", and together, "Defendants"), alleging that Medversant employed Felix from January of 2014 to April of 2020; Medversant then terminated Felix. Felix alleges that Medversant and Haddad, as the sole manager and CEO, committed numerous labor code violations during this time.

On November 15, 2021, Felix filed a Second Amended Complaint (“SAC”) alleging 12 causes of action: (1) Retaliation; (2) Wrongful Discharge; (3) Failure to Pay Wages; (4) Failure to Pay Overtime; (5) Record Violations; (6) Pay-Stub Violations; (7) Waiting Time Penalties; (8) Unfair Business Practices; (9) Failure to Produce; (10); Failure to Indemnify; (11) LC §2699 PAGA Claims; and (12) Fraud.

On November 23, 2021, Medversant filed a Cross-Complaint (“MXC”) against Felix alleging three causes of action: (1) Breach of Fiduciary Duty; (2) Misappropriation of Trade Secrets (Uniform Trade Secrets Act); and (3) Violation of Computer Fraud and Abuse Act 18 U.S.C. § 1030 et seq.

Medversant moves to compel Felix’s further response to Medversant’s Request for the Production of Documents (“RFPD”) (Set Two). Medversant also requests sanctions be granted in the amount of $2,160.

Felix moves to compel Medversant’s further response to Felix’s Special Interrogatories (Set Two). Felix also requests sanctions be granted in the amount of $8,032.50.

HISTORY: 

On March 14, 2023, Medversant filed its motion to compel further responses. On April 3, 2023, Felix filed his opposition. On April 7, 2023, Medversant filed their reply. Medversant’s motion was continued from April 14, 2023.

On April 5, 2023, Felix filed his own motion to compel further discovery responses. On April 24, 2023, Medversant filed its opposition. On April 28, 2023, Felix filed his reply.

The Court notes the two motions center on the same issue; whether Medversant adequately identified the trade secret Felix allegedly misappropriated. The Court also notes a protective order, granted February 6, 2023, is in place with respect to any information to be produced by Medversant which is deemed Confidential Material or Attorney’s Eyes-Only Material.

ANALYSIS: 

I.                    LEGAL STANDARD 

A motion to compel further responses to a demand for inspection or production of documents (“RFPD”) may be brought based on: (1) incomplete statements of compliance; (2) inadequate, evasive, or incomplete claims of inability to comply; or (3) unmerited or overly generalized objections.  (C.C.P. § 2031.310(c).) 

A motion to compel further production must set forth specific facts showing good cause justifying the discovery sought by the inspection demand. (See C.C.P. § 2031.310(b)(1).) In Digital Music News LLC v Superior Court (2014) 226 Cal.App.4th 216 at 224, the Court defined “good cause” as a showing that there “a disputed fact that is of consequence in the action and the discovery sought will tend in reason to prove or disprove that fact or lead to other evidence that will tend to prove or disprove the fact.”  

If the moving party has shown good cause for the requests for production, the burden is on the objecting party to justify the objections. (Kirkland v. Sup.Ct (2002) 95 Cal. App.4th 92, 98.) 

"The court shall limit the scope of discovery if it determines that the burden, expense, or intrusiveness of that discovery clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence." (C.C.P. § 2017.020(a).) Generally, objections on the ground of burden require the objecting party to produce evidence of (a) the propounding party's subjective intent to create burden or (b) the amount of time and effort it would take to respond. (See West Pico Furniture Co. of Los Angeles v. Superior Court in and For Los Angeles County (1961) 56 Cal.2d 407, 417.) However, no such evidence is necessary where discovery is obviously overbroad on its face. (See Obregon v. Superior Court (1998) 67 Cal.App.4th 424, 431.)  

II.                 MERITS

Felix’s Motion to Compel Further

Felix moves to compel further responses to his Special Interrogatories (Set Two) Nos. 43, 45, 49, and 52. These Special Interrogatories read as follows:

43.  Please identify each and every trade secret of yours that you contend plaintiff ross Felix misappropriated.

45.  Please describe each and every document relating to the facts set forth in your response to special interrogatory number 43 above.

49.  Please describe each and every document relating to the facts set forth in your response to special interrogatory number 46 above.

52.  Please describe each and every document relating to the facts set forth in your response to special interrogatory number 50 above.

Medversant objects to further production arguing they have appropriately identified the trade secret pursuant to Code of Civil Procedure (“CCP”) § 2019.210. Medversant argues the law does not require they identify the trade secret with exacting detail.

CCP § 2019.210 reads as follows:

In any action alleging the misappropriation of a trade secret under the Uniform Trade Secrets Act (Title 5 (commencing with section 3426) of Part 1 of Division 4 of the Civil Code), before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under Section 3426.5 of the Civil Code.

Legislative history reveals that CCP § 2019.210 was intended to codify the ruling in Diodes, Inc. v. Franzen (1968) 260 Cal.App.2d 244.  The two most notable cases regarding identification of trade secrets are Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th 826 (“Advanced Modular”) and Brescia v. Angelin (2009) 172 Cal.App.4th 133 (“Brescia”).

In Advanced Modular the court held that the "reasonable particularity" required by CCP § 2019.210 does not mean the party alleging misappropriation has to define every minute detail of its claimed trade secret at the outset of the litigation and does not require a trial court to conduct a miniature trial on the merits of a misappropriation claim before discovery may commence. (Advanced Modular, supra, 132 Cal.App.4th 826, 835.)

The plaintiff in Advanced Modular claimed a total of eight trade secrets were at issue. (Id. at 832.) The discovery referee claimed that six of these trade secrets claims only amalgamated features which plaintiffs suggested were unique to its equipment and process, and that these descriptions lacked sufficient particularity. (Id.) The court acknowledged that the definition of “reasonable particularity” under CCP § 2019.210 was malleable to allow for judicial interpretation. (Id. at 835.) The court found, “The degree of ‘particularity’ that is ‘reasonable’ will differ, depending on the alleged trade secrets at issue in each case. Where, as here, the alleged trade secrets consist of incremental variations on, or advances in the state of the art in a highly specialized technical field, a more exacting level of particularity may be required to distinguish the alleged trade secrets from matters already known to persons skilled in that field.” (Id. at 836.) Ultimately, the Advanced Modular court found plaintiff has sufficiently evidenced it showing of a trade secret by describing how its unique processes combined to form a trade secret. (Id.) The court in Advanced did rely upon the declaration of experts produced by plaintiffs that testified as to the unique nature of these processes. (Id.) 

In Brescia plaintiff claimed trade secrets in his pudding production process. (Brescia supra, 172 Cal.App.4th 133, at 151.) The court found plaintiff had sufficiently identified his trade secret by claiming his formula produced a unique high-protein, low carbohydrate pudding unlike any other healthy alternative pudding on the market. (Id.) Brescia cited Advanced Modular in holding “The nature of the identification required in any particular case need only be reasonable under the circumstances. It cannot be divorced from the statutory goals which it is intended to serve. The identification is to be liberally construed, and reasonable doubts concerning its sufficiency are to be resolved in favor of allowing discovery to commence.” (Id. at 152.)

Medversant relies on the ruling in Perlan Therapeutics, Inc. v. Superior Court (2009) 178 Cal.App.4th 1333 (“Perlan”), which discussed both Advanced Modular and Brescia. Medversant points to the holding in Perlan that not all trade secret claims require the depth of identification that Brescia did. (Perlan supra, 178 Cal.App.4th 1333, 1349.)

The statement of trade secret is Perlan was as follows:

On or about December 2001, while [Fang] was an officer and director of Perlan, another senior scientist working at Perlan, Dr. Catherine Charles, developed a protein-based therapeutic that includes a heparin binding peptide to prevent and treat respiratory tract viral infections (hereinafter referred to as the ‘Charles Invention’). Heparin binding peptide is a short segment of protein that preferentially attaches to heparin sulfate, a type of glycosaminoglycan that is ubiquitously present on cell membrane as well as on the surface of respiratory epithelium. The Charles Invention constituted part of Perlan's intellectual property and trade secret information.

(Id. at 1338.)

The Court in Perlan expressed that Advanced Modular and Brescia do not present clear answers to when a trade secret is identified. (Id.) However, the court still ruled Perlan had not sufficiently identified trade secrets with the above statement. (Id. at 1350.)

In reviewing Medversant’s trade secret statements, the Court finds they are insufficient as per the principles in Advanced Modular, Brescia, and Perlan.

On February 22, 2023, Medversant served further supplemental responses to Felix’s Special Interrogatories (Set Two). (Felix Decl. Exh. 13, “Exh. 13”.)  These responses have been filed under seal. Attached to these responses are exhibits which purport to identify each trade secret misappropriated. These exhibits are separated into categories as follows:

·         “Customer and Client Information”

·         “Pricing Information and Methodologies”

·         “Strategies”

·         “Financial Information and Business Investors”

·         “Proprietary Processes and Procedures”

·         “Graphical Interfaces, Presentation Materials, Templates, and Designs”

·         “Source Code, algorithms, and Software Development”

With respect to “Customer and Client Information” the document merely avers Medversant has a proprietary interest in its client information. (Exh. 13(b).) There is no description of a trade secret in this exhibit. There is also no description of what Medversant does with its client information that is separable from industry standards. Medversant’s only states they have clients, and the information of those clients is confidential. There is no allegation of a trade secret in this production.

The statement with respect to “Pricing information and Methodologies” suffers similar defects. (Exh. 13(c).) Medversant alleges that it maintains pricing information and formulas for pricing models, but it does not detail any way in which this is a trade secret. Medversant simply states its pricing information is separable from general field knowledge because it has allowed them to remain ahead of the competition. This argument does not comport. Medversant may be able to remain ahead of the competition because of its trade secrets, but that does not explain why they are trade secrets to begin with.

In terms of “Strategies” Medversant claims its strategy of requiring clients to sign NDAs allows it to identify provider information with greater speed. (Exh. 13(d).) Medversant does not endeavor to explain how this is this case or whether the requirement to sign an NDA deviates from the industry standard such as to put it beyond the realm of general knowledge. Medversant is not required to provide exacting detail of the contents of the NDA it requires, but it must provide some explanation of how this requirement qualifies as a trade secret. The same can be said for Medversant’s description of its pricing strategies and software design. Medversant only states these strategies were developed in house and kept strictly confidential. Confidentiality alone does not constitute a trade secret, an explanation must be provided as to why the pricing strategies and software designs are separable from common industry knowledge. Further it is not clear which part of the pricing algorithm or software designs qualify as trade secrets. It is unclear if Medversant claims Felix misappropriated all the pricing and software design, or only certain facets.

In the statement labeled “Proprietary Processes and Procedures” Medversant claims its employs automation and patented algorithms to produces superior data accuracy and separate Medversant from its competition. (Exh. 13(f).) Medversant does not aver as to what these algorithms are, how they are used, or what sets them apart from industry standard. Further, many companies have turned to automation to increase productivity, Medversant is not unique in this regard. Medversant may utilize automation in a way which constitutes a trade secret, but they haven’t explained how that is the case.

Medversant’s statement about “Graphical Interfaces, Presentation Materials, Templates, and Designs” merely avers that the information is produced in house and kept confidential. (Exh. 13(g).)  Medversant does not explain what interfaces, presentation materials, templates, or designs are trade secrets,  or why they are separable from general knowledge of the industry. Medversant’s production with respect to Source Code, Algorithms, and Software Development” is much the same. (Exhibit 13(h).)

In short, none of the documents produced by Medversant have sufficiently identified a trade secret that Felix is proposed to have appropriated. Medversant is a company which practices in a highly specialized technical field as per Advanced. While Medversant is correct they do not have to provide exacting detail of their trade secrets, they must at least provide some. Medversant’s statements make only broad claims that they develop their own proprietary workflow and keep that workflow confidential through use of NDAs. The Court does not find this is sufficiently identifying a trade secret within the meaning of C.C.P. § 2019.210.

As such, the motion to compel further responses is GRANTED.

Medversant’s Motion to Compel Further

Medversant moves to compel further answers to its RFPD (Set Two) Nos. 22-34. Felix object to each of these requests on grounds Medversant has not appropriately identified its trade secrets before beginning discovery. As discussed above, the Court finds merit in these objections.

Medversant argues these requests have relevance to claims outside those of misappropriation of trade secrets. Medversant argues these requests are also relevant to its claims for violation of the Computer Fraud and Abuse Act and Breach of Fiduciary Duty. Medversant does not individually identify which request is relevant to which claims, only stating that the requests relate to Felix’s alleged abuse of a company laptop. (Oppo. pg. 7.)

The documents Medversant requests are not neatly separable by their claims. Medversant clearly desires each of these documents for prosecuting its trade secret claim. The fact that the documents may have other uses does not allow Medversant to circumvent the C.C.P.  § 1290.210 requirement.

As such, Medversant’s motion to compel further responses is DENIED without prejudice.

Sanctions

Both parties request sanctions against the other. Both requests are premised on failure to render code compliant responses to the Special Interrogatories and RFPDs. The Court finds both Medversant and Felix presented reasonable arguments as to the sufficiency of trade secret identification and it was reasonable for both parties to request Court intervention in the matter. As such, the Court declines to award sanctions to either party.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records. 

ORDER 

Medversant Technologies & Ross Felix’s Motion to Compel Further Discovery Responses came on regularly for hearing on May 5, 2023, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows: 

ROSS FELIX’S MOTION TO COMPEL FURTHER RESPONSES IS GRANTED.

MEDVERSANT’S MOTION TO COMPEL FURTHER RESPONSES IS DENIED WITHOUT PREJUDICE.

ROSS FELIX TO GIVE NOTICE.