Case Name: BrightEdge Technologies v Martinez
Case No: 113CV256794

Plaintiff filed a Motion for A Protective Order seeking an order that it does not hav
e to answer more than 35 of the 251 special interrogatories defendant propounded. Plaintiff also filed a Motion to Amend its Complaint to add defendants and several causes of action.
Defendant opposes both motions.

Defendant did not oppose Plaintiff’s Motion to Seal which the Court grants, making the requisite findings under CRC 2.550 and 2.551 as set forth in Plaintiff’s moving papers.

I. Statement of Facts.

This action arises from allegations Defendant absconded with Plaintiff’s confidential information and trade secrets when he left Plaintiff’s employ and went to work for a business competitor, Searchmetrics, Inc. (“Searchmetrics”). Plaintiff filed this action against Martinez on November 26, 2014, asserting claims for breach of contract and trade secret misappropriation as to 22 separate trade secrets.

As part of Defendant’s hiring, he signed an agreement to maintain secrecy of BrightEdge’s proprietary information. (Foster Decl. ¶ 13). Plaintiff states this included customer information. (Id.)
Plaintiff alleges there is forensic evidence demonstrating Defendant accessed and downloaded substantial amounts of BrightEdge information shortly after he gave notice he was leaving the company on April 8, 2013. (Livingston Decl. ¶ 7a). Defendant allegedly emailed himself a list of all BrightEdge’s revenue producing customers. (Boggs Decl.). Plaintiff argues that the information taken represents a trade secret.

Defendant began working for Plaintiff’s competitor, Searchmetrics, on April 22, 2013—shortly after leaving Brightedge. (Wolf Decl. ¶ 7). Plaintiff alleges that while working for Searchmetrics, Defendant used trade secret information to contact BrightEdge customers. (Foster Decl. ¶ 17.)

II. Dispute.

Plaintiff has identified its trade secrets under CCP § 2019.210. On Jan 20, 2015, the Court confirmed the sufficiency of these trade secrets. (Plaint. Ex. F to Motion for Protective Order).
On December 19, 2014, Defendant Martinez propounded 251 special interrogatories. On January 26, 2015, Plaintiff filed Motion asking the court for a protective order to protect Plaintiff from unduly burdensome discovery on the basis that CCP § 2030.030 allows for only 35 special interrogatories. The Defendant replied on February 11, 2015 opposing the motion for the protective order on the basis that the interrogatories are reasonable and do not create an undue burden on the Plaintiff. The Plaintiff filed a reply brief in support of their motion on February 19, 2015. Along with their reply brief Plaintiff filed their response to the first 35 of the special interrogatories.

On January 26, 2015 Plaintiff filed Notice of Motion for Leave to Amend Complaint. Defendant responded to the proposed motion on February 11, 2015 and asked that it be denied on the grounds that Plaintiff failed to state a cause of action, Plaintiff’s claims were preempted, and that the proposed amendments were prejudicial to the Defendant. Plaintiff filed a reply brief in support of their motion on February 19, 2015.

III. Protective Order Analysis.

A. Meet and Confer

A code-compliant attempt to meet and confer is an explicit prerequisite in many situations including protective orders. (Code Civ. Proc. § 2017.020(a)) Under California Code of Civil Procedure § 2016.040, “a meet and confer declaration in support of a motion shall state facts showing a reasonable and good faith attempt at an informal resolution of each issue presented by the motion.” The failure to attempt to meet and confer where required is an explicitly named misuse of the discovery process. (See Code Civ. Pro. § 2023.010(i)).

Here, Plaintiff has made a sufficient attempt to meet and confer prior to the filing of their motion. (Def. Ex. E to Opposition to Motion for Protective Order.)

B. Protective Order

“Before, during, or after a deposition, any party, any deponent, or any other affected natural person or organization may promptly move for a protective order.” (CCP, § 2025.420, subd. (a); cf. CCP, § 2031.060, subd. (a).) “The court, for good cause shown, may make any order that justice requires to protect any party, deponent, or other natural person or organization from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense.” (CCP, § 2025.420, subd. (b); cf. CCP, § 2031.060, subd. (b).) CCP sections 2025.420, subdivision (b) and 2031.060, subdivision (b), provide nonexclusive lists of permissible directions that may be included in a protective order, and such as the direction that “a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only to specified persons or only in a specified way.” (CCP, §§ 2025.420, subd. (b)(13) & 2031.060, subd. (b)(5).) A protective order may also provide that certain matters not be inquired into at a deposition, or that the scope of the examination be limited to certain matters. (CCP, § 2025.420, subd. (b)(9-10).) The issuance and formulation of protective orders are largely discretionary. (Raymond Handling Concepts Corp. v. Super. Ct. (1995) 39 Cal.App.4th 584, 588, citing Coalition Against Police Abuse v. Super. Ct. (1985) 170 Cal.App.3d 888.) The moving party generally bears the burden to show good cause for whatever order is sought. (See Fairmont Ins. Co. v. Super. Ct. (2000) Cal.4th 245, 255.)

However, Plaintiff BrightEdge is requesting a protective order stating that they are only required to respond to the first 35 special interrogatories of the 251 special interrogatories propounded on Brightedge by Defendant Martinez. CCP § 2030.030(a)(1) allows for only 35 interrogatories. CCP § 2030.040 further states:

Subject to the right of the responding party to seek a protective order under Section 2030.090, any party who attaches a supporting declaration as described in Section 2030.050 may propound a greater number of specially prepared interrogatories to another party if this greater number is warranted because of any of the following: (1) The complexity or the quantity of the existing and potential issues in the particular case. (2) The financial burden on a party entailed in conducting the discovery by oral deposition. (3) The expedience of using this method of discovery to provide to the responding party the opportunity to conduct an inquiry, investigation, or search of files or records to supply the information sought. (b) If the responding party seeks a protective order on the ground that the number of specially prepared interrogatories is unwarranted, the propounding party shall have the burden of justifying the number of these interrogatories.
Thus, pursuant to CCP § 2030.040(b), the burden of justifying the number of interrogatories in this case rests on Defendant Martinez.

In support of the propriety of the number of interrogatories they have propounded, Defendant argues that 132 of the interrogatories are justified in order to explore the six elements of each trade secret misappropriation allegation. In support of this assertion, Defendant cites Hagen v Hickenbottom as supporting the proposition that all facts supporting the element of a claim are standard for interrogatories. Hagen supports the propriety of interrogatories requesting a party to state all facts in support of a position. (See Hagen v. Hickenbottom (1995) 41 Cal. App. 4th 168, 186, 48 Cal. Rptr. 2d 197). It does not deal with justifying more interrogatories than are allowed by CCP § 2030.030(a)(1). (See Generally Hagen).

They further argue, citing Burke v. Superior Court of Sacramento County (1969) 71 Cal. 2d 276, that contention interrogatories are a proper basis for special interrogatories and thus 86 of the interrogatories are proper. Once again, Berke does not deal with whether the propriety of contention interrogatories should allow for greater than the 35 interrogatories allowed by 2030.030(a)(1). However, Berke does stand for the proposition that contention interrogatories are proper subject matter. (Id. at 281.)

Defendant includes with their opposition papers a Declaration Regarding Additional Discovery. In this declaration they properly argue, as required by 2030.040(b), that the complexity and quantity of the existing and potential issues in this case are so great as to justify the number of interrogatories they have propounded. They argue that the sheer number of contentions and identified trade secrets show that the complexities of this case require more interrogatories than 35. This argument is well taken. Defendant’s cases do not directly support the assertion that the use of contention or state all facts interrogatories can independently establish that allowing an exception to the 35 interrogatory cap is appropriate. However, they do support the propriety and importance of such interrogatories generally where the facts of the case require a substantial number of these types of questions be asked. As stated in Berke, it is reasonable to address contentions made by Plaintiff in interrogatories. (Id. at 281.) Thus, due to the sheer number of contentions in this case, it is appropriate to allow interrogatories addressing all of these claims. While the Defendant’s requests regarding the elements of each trade secret claim could have been more appropriately condensed into a single state all facts interrogatory for each individual trade secret, the interrogatories as written essentially amount to the same thing. Thus, given the substantial number of trade secrets in this case, Defendants arguments for complexity on this issue are also appropriate.

Accordingly, Plaintiff’s Motion for a Protective Order is DENIED.

C. Monetary Sanctions

Plaintiff requests monetary sanctions in the amount of $14,771.83. The request is not code-compliant.
Code of Civil Procedure, § 2023.040 states: “A request for a sanction shall, in the notice of motion, identify every person, party, and attorney against whom the sanction is sought, and specify the type of sanction sought. The notice of motion shall be supported by a memorandum of points and authorities, and accompanied by a declaration setting forth facts supporting the amount of any monetary sanction sought.” (See Rule of Court 2.30). The party’s motion must also state the applicable rule that has been violated. (Id.).
In support of their request, Plaintiff cites CCP § 2030.090(d). CCP § 2030.090(d) states:

The court shall impose a monetary sanction under Chapter 7(commencing with Section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion for a protective order under this section, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.
In this case, Defendant has successfully opposed Plaintiff’s motion. Thus, Plaintiff’s reliance on CCP § 2030.090(d) is inappropriate.

Accordingly, Plaintiff’s request for monetary sanctions in the amount of $14,771.83 is DENIED.

IV. Motion to Amend

A court may, in its discretion, allow amendments to pleadings “in furtherance of justice.” (Cal. Civ. Proc. § 473.) California law provides “great liberality” in permitting amendments to the complaint at any stage of the proceeding. (See Higgins v. Del Faro (1981) 123 Ca.3rd 558, 564.) “If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend where the refusal also results in a party being deprived of the right to assert a meritorious cause of action.” (Morgan v. Superior Court of Los Angeles County (1959) 343 P.2d 62, 64.) In addition to prejudice against the opposing party, leave to amend may not need to be granted where a complaint, as amended, fails to state a valid cause of action. (California Casualty General Ins. Co v. Superior Court (1985) 173 Cal. App. 3d 274, 280-81.)

A. Preemption Based Upon Misappropriation of Trade Secrets

The Defense argues Plaintiff should not be given leave to amend the intentional interference with contract, intentional interference with economic advantage, and unfair competition causes of actions because California’s Uniform Trade Secret Act (CUTSA) preempts them. As granting leave to amend is not necessary when a cause of action fails to state a valid cause of action, See Id., this Court will review the Defendant’s argument. The CUTSA includes a specific provision concerning preemption. As is relevant here, part (b) states “[t]his title does not affect . . . (2) other civil remedies that are not based upon misappropriation of a trade secret.” (Emphasis added.) (Cal. Civ. Code § 3426.7.) Therefore, the CUTSA implicitly preempts alternative civil remedies based on trade secret misappropriation. (Angelica Textile Services, Inc. v. Park (2013) 220 Cal. App. 4th 495, 505.) In making a determination whether a civil remedy is based upon misappropriation of a trade secret, courts use a fact-based test: “Section 3426.7 preempts common law claims that are based on the same nucleus of facts as the misappropriation of trade secrets claim for relief.” (K.C. Multimedia v. Bank of America Technology & Operations, Inc. (2009) 171 Cal. App. 4th 939, 958; Silvaco Data Systems v. Intel Corp. (2010) 184 Cal. App. 4th 210, 232.) However, where a claim has “some other basis in fact or law on which to predicate the requisite property right,” the claim is not preempted by the CUTSA. (Silvaco 184 Cal. App. 4th at 238-39.)

In these cause of actions, the Plaintiff alleges that their claims arose out of Defendant’s breach of their PIIAs, inducement of the breach of their PIIAs, and the Defendants theft and disclosure of information. The Plaintiff argues “proprietary information” and “confidential information” are not limited to trade secret information and thus have property rights beyond those implicit to their trade secret cause of action. The Defendant argues that this case in analogous to K.C. Multimedia and that the gravamen of the wrongful conduct was the misappropriation of trade secrets. They further argue that these acts are derived from the same nucleus of fact as Plaintiff’s misappropriation of trade secret cause of action.

The Plaintiff incorrectly assumes, that by using the language “proprietary information” and “confidential information” it can sidestep the proper preemption test of whether there is the same nucleus of facts as used in the misappropriation claim. (K.C. Multimedia 184 Cal. App. 4th at 232.) Here, “proprietary information” and “confidential information” rest upon the same nucleus of facts as the “trade secret” and therefore the Court sees no reason to find an additional right. While the Plaintiff could have correctly amended these claims so that they did not include trade secret misappropriation, see Silvaco 184 Cal. App 4th at 241, they have not done so here.

The Plaintiff’s Motion for Leave to Amend as to cause of actions 3, 5 and 8 are DENIED, without prejudice.

B. Valid Causes of Actions

Defendant additionally argues that Plaintiff failed to state actionable causes of actions as to actions 1, 2, 4, 6, and 9. In support of their argument, Defendant argues leave to amend may not need to be granted where a complaint, as amended, fails to state a valid cause of action. (California Casualty General 173 Cal. App. 3d at 280-81.) The Defense’s authority fails to be persuasive concerning this motion to amend. As the Plaintiff points out, the most appropriate application of not granting leave to amend is “in cases in which the insufficiency of the proposed amendment is established by controlling precedent and where the insufficiency could not be cured by further appropriate amendment.” (Id.)

A “trial court abuses its discretion if it denies leave to amend when there is a reasonable possibility the defect in the pleading could be cured by amendment.” (Bettencourt v. Hennessy Indus., Inc (2012) 205 Cal. App. 4th 1103, 1111.) Here, there is a reasonable possibility that if there are any defects as to actions 1, 2, 4, 6, and 9 that the Plaintiff will be able to cure. Additionally, the liberal policy in permitting amendments is generally allowed, even where a motion for judgment on the pleadings may properly be granted. (Olson v. County of Sacramento (1969) 274 Cal. App. 2d 316, 329.) The Defendant still has the opportunity to request a demurrer as to the causes of actions under California Rule of Court 3.1320.

C. Prejudice.

“Liberality in allowance of amendment to pleading is rule rather than exception; and incase where amendment can be made in furtherance of justice without jeopardizing rights of the adverse party, it should be allowed. (Abbott v. Limited Mut. Compensation Insc. Co. (1938) 30 Cal. App. 2d 157, 162-63.) Here, the Defendant argues that allowing additional defendants will result in prejudice through juror confusion and juror bias. In making their argument for juror confusion, Defendant argues the jury will be required to address the unique defenses asserted by each unique defendant. Additionally, the Defendant argues that there is a “tremendous danger” that the addition of defendants McApline and Siler could bias the jury against the Defendant with respect to specific claims against him. The Court finds Defendant’s lack of faith in jurists disturbing. Jurists are capable of making such determinations, and in addition, attorneys representing the parties, the judge, and jury instructions will guide jurists through trial and deliberation.

Plaintiff’s Motion for Leave to Amend is Granted as to Causes of Action 1, 2, 4, 6, 7, 8 and 9.

V. Order.

Plaintiff’s Motion for a Protective Order is DENIED. Plaintiff shall respond to all interrogatories within 30 days of the date of this order.
Plaintiff’s request for monetary sanctions in the amount of $14,771.83 is DENIED.
Plaintiff’s Motion for Leave to Amend is GRANTED as to causes of action 1, 2, 4, 6, 7, and 9.
Plaintiff’s Motion for Leave to Amend as to cause of actions 3, 5 and 8 are DENIED, without prejudice.
Plaintiff’s Motion to Seal is UNOPPOSED and GRANTED.