Judge: Michael E. Whitaker, Case: 2STCV39105, Date: 2024-01-03 Tentative Ruling

Case Number: 2STCV39105    Hearing Date: January 3, 2024    Dept: 207

TENTATIVE RULING

BACKGROUND

Plaintiff Michael Landver (“Plaintiff”) initiated this action on October 22, 2021, by bringing a Complaint in his individual capacity and derivatively on behalf of nominal defendant, United Clinical Research, Inc. (“United”).  Plaintiff brings this action against Defendant Matrix Clinical Research, Inc. (“Matrix”) and individual Defendants Faramarz Shamam, Peyman Banooni, and Stan Gershovich (the “Individual Defendants”) (collectively, “Defendants”).  

Plaintiff alleges Plaintiff and the Individual Defendants previously formed United, a company that conducts clinical trials for drug development, in which Plaintiff claims a 25% ownership interest. Plaintiff alleges the Individual Defendants later stopped working with Plaintiff and formed their own company, Defendant Matrix, to conduct such clinical trials.  In so doing, Plaintiff alleges the Individual Defendants misappropriated United’s business, employees, revenue, contracts, and trade secrets which they used to start Defendant Matrix so they would no longer have to share profits with Plaintiff.

The Court has twice previously held that Defendants’ objections to Plaintiff’s discovery requests were unmeritorious and twice ordered Defendants to submit code-compliant responses, as well as to pay monetary sanctions.  (See April 4, 2023 and August 22, 2023 Minute Orders.)

Defendants now move for a protective order to prevent the disclosure of their trade secrets; proprietary, commercial and financial information; and confidential research and development.  Plaintiff opposes the motion and Defendants reply.

ANALYSIS

            Protective Order

“The court, for good cause shown, may make any order that justice requires to protect any party or other natural person or organization from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense.”  (Code Civ. Proc., §§ 2030.090, subd. (b); 2031.060, subd. (b); 2033.080, subd. (b).)   The protective order may include direction that the subject discovery request need not be answered, or that items demanded need not be produced or made available at all.  (Code Civ. Proc., §§ 2030.090, subd. (b)(1); 2031.060, subd. (b)(1); 2033.080, subd. (b)(1).)  A party seeking a protective order must show good cause for issuance of the order by a preponderance of the evidence.  (Stadish v. Superior Court (1999) 71 Cal.App.4th 1130, 1145.) 

            Defendants seek a protective order precluding the disclosure or production of their “trade secret” information, including “(1) all clinical research contracts, (2) all employees rendering services related to the field of pharmaceutical clinical trials, (3) all bids for clinical research contracts, (4) all clinical research contracts entered into by MATRIX, (5) all sponsors as that term is commonly used in the field of pharmaceutical clinical trials, (6) all communications between sponsors, MATRIX and other clinical staff, (7) all pharmaceutical clinical trials, (8) all companies, clinics, laboratories, and any other entities or persons affiliated with MATRIX or the other Defendants that involve pharmaceutical clinical trials, and (9) all financial information related to clinical trials in any manner.” 

            Defendants argue that clinical trials inherently involve confidential information, as they are conducted “blind” wherein placebo versus dosage information is kept from both the participants and the medical professionals conducting the studies.  Defendants contend that disclosure of the requested information would undermine the integrity and trustworthiness of Defendant Matrix and potentially jeopardize public health. 

            Plaintiff contends that Plaintiff does not seek patient information or the technical aspects of the clinical studies; rather, Plaintiff seeks information regarding the number of clinical studies Matrix has engaged in, the identity of Matrix’s employees (to determine whether these employees are also United employees), and Matrix’s financial information.

            The Court agrees with Plaintiff.  Defendants have not met their burden to establish that any confidential or trade secret information has been requested.  Defendants have not identified for the Court any specific requests they believe require disclosure of any such confidential patient or trade secret technical information.  It is not even clear from the moving papers whether interrogatories, requests for production, requests for admission, and/or deposition subpoenas, or which statutory law supports Defendants’ request.

            Moreover, the categories of information Defendants seek to protect from disclosure do not, on their face, appear to implicate any such confidential or trade secret information.  For example, the identities of Matrix’s employees does not implicate confidential patient information or trade secret technical aspects of Matrix’s clinical studies.  Similarly, contract bids, the identity of sponsors, the identity of clinical trials, and the identity of companies, clinics, laboratories, and other entities Matrix contracts with, as well as Matrix’s financial information do not implicate confidential patient information or trade secret information.  Similarly, Defendants have not established that any of the contracts or communications between Matrix and its sponsors would contain confidential patient information, especially in light of the blindness of the studies.  Moreover, to the extent the contracts and/or communications included technical “trade secret” information, such disclosure to the sponsors would mean it was no longer a “secret” trade practice warranting protection. 

            Sanctions

A trial court may sanction a party for engaging in the misuse of discovery, which includes: failure to respond or submit to an authorized method of discovery; making an evasive response to discovery; making, without substantial justification, an unmeritorious objection to discovery; and making or opposing, unsuccessfully and without substantial justification, a motion to compel or to limit discovery. (Code Civ. Proc., § 2023.010; see also Code Civ. Proc., §§ 2030.090, subd. (d), 2031.060, subd. (h), 2033.080, subd. (d).)

Plaintiff seeks monetary sanctions against Defendants and counsel Russel Behjatnia.  The Court finds Defendants did not act with substantial justification in bringing the instant motion, and grants Plaintiff’s request for monetary sanctions.

Accordingly, the Court will impose monetary sanctions against Defendants and their counsel of record at the time the motion was filed, Russell Behjatnia, in the amount of $3570.00, which represents six hours of attorney time to prepare the opposition papers and attend the hearing at $595 per hour.   

CONCLUSION AND ORDER

            Therefore, the Court denies Defendants’ motion for a protective order.  In short, the Court determines that Defendants have not established good cause for issuance of the protective order by a preponderance of the evidence, including the Declarations of Stan Gershovich and Peyman Banooni, M.D.

            Further, the Court orders Defendants and their counsel of record Russel Behjatnia, jointly and severally, to pay monetary sanctions in the amount of $3570.00 to Plaintiff, by and through counsel for Plaintiff, within 20 days of the date of this order. 

Defendants shall provide notice of the Court’s ruling and file proof of service of such.

DATED: January 3, 2023                                           ___________________________

                                                                                    Michael E. Whitaker

                                                                              Judge of the Superior Court