Matthew Ardent et al v. HMS Holding Corp, et al.		CASE NO. 114CV272380
DATE: 31 October 2014	TIME: 9:00	LINE NUMBER: 27

This matter will be heard by the Honorable Judge Socrates Peter Manoukian in Department 19 in the Old Courthouse, 2nd Floor, 161 North First Street, San Jose. Any party opposing the tentative ruling must call Department 19 at 408.808.6856 and the opposing party no later than 4:00 PM Thursday 18 September 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 31 October 2014, the Petitioners’ Motion to Quash Subpoena in the action pending outside of California was argued and submitted.[1]

Respondents filed formal opposition to the motion.[2]

All parties are reminded that all papers must comply with Rule of Court 3.1110(f).[3]

1. Statement of Facts.

This action arises from two pending actions in New York and Texas (“the pending actions”) regarding allegations of misappropriation of confidential, proprietary and trade secret information, as well as employee and client relationships.  Respondent HMS Holding Corporation (“HMS”) is a provider of cost containment solutions that benefit government and commercial healthcare programs.  Petitioners are five former employees of HMS who left for the employ of former HMS teaming partner, now competitor Public Consulting Group, Inc. (“PCG”).  Among other things, the actions allege that Petitioners, in coordination with PCG, used their personal email addresses to plan for and misappropriate HMS’ proprietary and confidential information in breach of their contractual and fiduciary obligations.

On 19 August 2014, HMS filed the pending actions against Petitioners and PCG.  The actions included requests for temporary and permanent injunctions enjoining Petitioner defendants and PCG from continuing to breach their common law, contractual, and fiduciary obligations to HMS.

1. Discovery Dispute.

A temporary injunction hearing in the Texas Action is currently scheduled for 14 November 2014.  In the related New York case, the New York Court agreed to schedule the preliminary injunction hearing following the Texas hearing.  In connection with the upcoming hearings, the parties agreed to an expedited discovery schedule, providing for the exchange of written discovery and the opportunity for each party to notice and conduct up to twelve depositions in advance of the November 14th hearing.

On 12 September 2014, counsel for HMS served a Subpoena on Google pursuant to the Interstate and International Depositions and Discovery Act, Cal. Code Civ. Proc. §§ 2029.100 – 2029.900 (“Subpoena”).  The Subpoena requested Google provide information regarding the allegedly improper communications sent via personal email correspondence between Petitioners and PCG.

On 21 September 2014, HMS received a letter from Google objecting to the Subpoena, claiming the Stored Communications Act, 18 U.S.C. §2702 (“SCA”) prohibited Google from disclosing the content of electronic communications pursuant to a civil discovery subpoena.  On 30 September 2014, Defendant petitioners sent an objection to the Subpoena via letter to HMS counsel.

On 8 October 2014, following meet and confer with counsel for the Petitioners, Respondents HMS contacted Google and requested Google produce only non-content data “sufficient to show the recipient(s), sender, date sent, date received, date read and date deleted of all Documents and Communications sent or received by individuals listed in the Google Subpoena and containing the search terms described therein from June 1, 2012 through the present.”

On 10 October 2014, Google emailed HMS and agreed to produce “header information” pursuant to the search requested in the Subpoena calling for emails between the individual Defendants.  On 14 October 2014, HMS sent a letter to Google requesting they also produce non-content data relating to communications between the individual Defendants and PCG.  On 17 October 2014, during a telephone conversation with Petitioner Defendants’ counsel, HMS informed Defendants’ counsel that Google accepted service of the Subpoena and agreed to produce documents responsive to the narrow request for non-content data.

On 24 October 2014, Petitioners filed the present Motion to Quash the California Subpoena pursuant to Cal. Code Civ. Proc. §2029.600.  In support of their motion, Petitioners argue that the Subpoena: is procedurally defective; seeks documents and communications in violation of the Stored Communications Act, 18 U.S.C. § 2702; is overbroad, duplicative, and seeks irrelevant information; and constitutes an invasion of Petitioner’s privacy rights.  Since Petitioners did not meet and confer on the motion and failed to include a hearing date in the petition, the earliest possible date to hear the motion would be November 17, 2014.

On 28 October 2014, Respondents HMS filed an Ex Parte Application for an order shortening time to hear the motion to quash the Google Subpoena.  Respondents claimed they would be unduly prejudiced if the application was denied because HMS would be unable to conduct relevant discovery in preparation of the November 14th temporary injunction hearing.  After hearing argument on the application, this Court granted Respondent’s Ex Parte Application and set hearing for the present Motion to Quash for 31 October 2014.

Again, on 28 October 2014, Respondents filed an Opposition to the Motion to Quash.  In their opposition, Respondents argue Petitioner’s motion should be denied as procedurally defective for failing to notice a hearing date pursuant to Cal. Code Civ. Proc. § 2029.630, and for failing to include a separate statement as required by California Rule of Court, rule 3.1345(a).  HMS further argues that the narrowly sought non-content data does not violate the SCA or Petitioners’ privacy rights.  Lastly, HMS argues that any procedural objections raised by Petitioners should fail because the burden of production is on Google, who has already accepted service of the Subpoena and agreed to the modified terms.

III.     Discussion:

1. Motion to Quash.

A motion to quash a subpoena may be made by a party or a consumer of the served third party.  (CCP § 1987.1(b).)  A consumer includes any “individual, partnership of five of fewer persons, association, or trust which has transacted business with, or has used the services of, the witness or for whom the witness has acted as agent or fiduciary.”  (CCP § 1985.3(a)(2).)

 

A motion to quash a subpoena for the production of documents must include a notice of motion stating, among other things, the grounds on which the motion is based.  (California Rule of Court, Rule 3.1110(a), 3.1112(d)(3).)  A memorandum of points and authorities must also support the motion.  (California Rule of Court, Rule 3.1112(a)(3).)  This memorandum must be supported with evidence, usually in the form of a declaration.  (See California Rule of Court, Rule 3.1112(b).)  A motion to quash must also contain a separate statement.  (Cal Rules of Court, Rule 3.1345(a)(5).)

California Rule of Court, Rule 3.1345 states “any motion involving the content of a discovery request or the responses to such a request must be accompanied by a separate statement.”  (Cal Rules of Court, Rule 3.1345(a).) The word “must” indicates the inclusion of a separate statement is not optional or a suggestion.  “The separate statement is not merely a technical requirement; it is an indispensable part of the summary judgment or adjudication process.  Separate statements are required not to satisfy a sadistic urge to torment lawyers, but rather to afford due process to opposing parties.”  (United Community Church v.  Garcin (1991) 231 Cal.App.3d 327, 335; Whitehead v. Habig  (2008) 163 Cal.App.4th 896, 902; Magana Cathcart McCarthy v. CB  Richard Ellis (2009) 174 Cal.App.4th 106, 117.)  The court has discretion, but is not required, to deny a discovery motion for failure to provide a code-compliant separate statement. (See Mills v. U.S. Bank (2008) 166 Cal.App.4th 871, 893.)

In the Mills case, Plaintiffs filed a motion to compel requested documents from Defendant U.S. Bank.  (Mills, 166 Cal.App.4th at 879.)  Defendant opposed the motion claiming, among other things, that Plaintiffs failed to include a full and complete separate statement in support of the motion to compel in violation the California Rules of Court, [former] Rule 335.  (Id.)  The trial court denied the motion on both substantive and procedural grounds.  (Id.)  From a procedural standpoint, the court held all separate statements must comply with [former] Rule 335.  (Id.)  The Court of Appeal for the Fourth District affirmed.

In upholding the trial court’s decision, the Court of Appeal reiterated the requirements for a properly filed separate statement under [former] Rule 335. (Id. at 892.)  Rule 335(c) stated the separate statement “shall be full and complete so that no person is required to review any other document in order to determine the full request and the full response.”  (Id.; Former rule 335(c).)  In order for a separate statement to be deemed “full and complete” under former rule 335(c), each discovery request requiring further action be taken by the non-moving party needed to include the following: (1) the text of the specific discovery request; (2) the text of each response to the discovery request; (3) a statement of the factual and legal arguments for compelling further responses, answers, or production regarding each matter in dispute; (4) any definitions, instructions, or other matters required to understand the particular discovery request; (5) any other discovery requests and responses which the discovery request at issue is deemed dependant upon or necessary to understand the reasoning behind the request; and (6) a summary of any pleadings, other discovery, or other file documents that are relevant to the motion.  (Id.)  Having failed to meet the above standard, the Court of Appeal held the trial court was within its discretion to deny the motion.  (Id. at 893.)

Today, former rule 335 is California Rules of Court, Rule 3.1345.  As stated above, Rule 3.1345 requires a separate statement accompany “any motion involving the content of a discovery request or the responses to such a request.”  (Cal Rules of Court, Rule 3.1345(a).)  The requirements for determining whether a separate statement is “full and complete” are the same as former Rule 335(c). (Cal Rules of Court, Rule 3.1345(c).)  Material cannot be incorporated into the separate statement by reference, and the separate statement must meet all six requirements outlined above.  (Id.)

1. Third-Party E-mail Production.

While this Court has some discretion in looking past the failure of Petitioners to provide a separate statement, the more bad behavior the court tolerates in discovery matters the more it will encounter.  Thus, Petitioner’s Motion to Quash would normally be denied solely based on their failure to provide a separate statement.  However, it is established that denying a petition to quash where it requires a party to violate the Stored Communications Act (SCA) is a “manifest abuse of discretion.” (See Negro v. The Super. Ct. of Santa Clara Cnty. (2014) Cal.App.6th No. 1-13-CV239634 at 14.)

 

The Stored Communications Act (SCA) states that a provider of an “electronic communication service [ECS] . . .shall not knowingly divulge . . . the contents of a communication while in electronic storage by that service.” (Id. at 8; 18 U.S.C. § 2702(a)(1).) Similarly, a provider of “remote computing service” (RCS) generally “shall not knowingly divulge . . . the contents of any communication which is carried or maintained on that service.” (Id.; 18 U.S.C. § 2702(a)(2).) The scope of protection varies with the service being offered: A message stored in the course of ECS is protected from disclosure only during “electronic storage by that service” (Id.; 18 U.S.C. § 2702(a)(1)), which means “temporary, intermediate storage . . . incidental to . . .electronic transmission” of the message (Id.; 18 U.S.C. § 2510(17)(A)), or “storage of such communication . . . for purposes of backup protection (Id.; 18 U.S.C. § 2510(17)(B)). Communications stored in the course of RCS receive generally broader protection. (Id.; 18 U.S.C. § 2702(a)(2).)

The exception to the rules provided in the SCA is where specified users give “lawful consent” to disclosure.  (Id.; 18 U.S.C. § 2702(b)(3).) Consent is effective if given by “the originator or an addressee or intended recipient of such communication.” (Id.; 18 U.S.C. § 2702(b)(3).) In the case of RCS, consent is also effective when given by the “subscriber.” (Id.)

“A subpoena is not enforceable if compliance would violate the SCA. Any disclosure violates the SCA unless it falls within an enumerated exception to general prohibition.” (O’Grady v. Superior Court (2006) 139 Cal.App.4th 1423, 1441, 44 Cal.Rptr.3d 72, 85 as modified (June 23, 2006).)

Thus, the questions raised by the Petitioner’s motion are two-fold: (1) Does the material requested under the subpoena qualify under the scope of the SCA as “the contents of any communication which is carried or maintained on that service;” and (2) If the headers fall within the scope of the SCA, has there been consent such as to qualify for the exception 18 U.S.C. § 2702(b)(3).

1. Scope

The SCA establishes that a provider such as Google may disclose non-content information about a subscriber regardless of consent. (See 18 U.S.C. § 2702(c)(6).)  In determining the scope of what constitutes content information, the SCA refers to the definitions of the Wiretap Act. (See 18 U.S.C. § 2711(1).)  The Wiretap Act itself describes contents as follows: “[C]ontents”, when used with respect to any wire, oral, or electronic communication, includes any information concerning the substance, purport, or meaning of that communication. (See 18 U.S.C. § 2510(8).)

The material that is being requested by Respondent via subpoena requests Google to: “provide HMS with documents sufficient to show the recipient(s), sender, date sent, date received, date read and date deleted of all Documents and Communications sent or received by the individuals listed in the Google Subpoena and containing the search terms described therein. (Pet. Ex. E.)  Google has stated that they will be providing header information in response to this request which includes: the sender, recipient, date sent, and subject line of the email. (Pet. Ex. H.)

This Court can see a situation where much of this material would constitute non-content information.  However, at a minimum, the subject line and search terms both raise a content information issue.  The subject of an email clearly is information concerning the substance of the underlying email as it is designed to be a brief summary of the email’s contents.  This assertion is supported both by common sense and previous California Court rulings. (See Optiver Australia Pty. Ltd. & Anor. v. Tibra Trading Pty. Ltd. & Ors., (N.D. Cal. Jan. 23, 2013) No. C 12-80242 EJD PSG, 2013 WL 256771, at 2.)  The same case and logic apply to search terms.  The fact that a document contains search terms necessarily means that the search terms are included in the content of the underlying communication and thus are clearly relevant to the substance of that communication.

1. Consent

The “lawful consent” exception to the SCA (18 U.S.C. § 2702(b)(3)) is not satisfied by consent that is “merely constructive, implied in law, or otherwise imputed to the user by a court.”  (Negro at 9.)  All cases applying the “prior consent” exceptions to the conceptually related anti-wiretapping statute (18 U.S.C. § 2511(c), (d)) have concluded that while the statute allows consent to be “implied,” the consent required is not “constructive consent” but rather “consent in fact.” (Id. at 9,10 (citing Williams v. Poulos (1st Cir. 1993) 11 F.3d 271, 281; United States v. Lanoue (1st Cir.1995) 71 F.3d 966, 981; Griggs-Ryan v. Smith (1st Cir.1990) 904 F.2d 112, 116-117; United States v. Amen (2d Cir. 1987) 831 F.2d 373, 378; Walden v. City of Providence (D.R.I. 2007) 495 F.Supp.2d 245, 262).)

This Court can see no reason to posit a less protective standard under the SCA than is provided in the Wiretap Act.  What’s more, even were implied consent to be acceptable in this instance, this Court sees no evidence sufficient to support such an assertion.  However, this does not mean that the Court does not have the power to compel the actual consent of the subscribers in this matter via a subpoena.  In fact the Court in Negro v. The Superior Court of Santa Clara County has established that the opposite is true.

[W]here users are also parties to civil litigation, the court has the means to compel them to give their actual consent. Those observations came in response to a contention that the SCA cannot have been intended to categorically foreclose the discovery of e-mail messages in civil litigation. We observed that the Act was “not so restrictive” as this argument portrayed it to be: “Copies may still be sought from the intermediary [i.e., service provider] if the discovery can be brought within one of the statutory exceptions—most obviously, a disclosure with the consent of a party to the communication. (18 U.S.C. § 2702(b)(3).) Where a party to the communication is also a party to the litigation, it would seem within the power of a court to require his consent to disclosure on pain of discovery sanctions. (Negro at 10.)

In this situation, where there is no actual consent currently from the subscribers whose email content is being subpoenaed, the subpoena fails to qualify for the legal consent exception.  However, this Court does not believe that Petitioner should be excused for their failure to comply with the express requirement of the California Code of Civil Procedure.

Thus, this order has two parts.  First, this Court orders that Petitioners give their actual consent to the above-discussed production by Google.  This order is to be complied with within 30 calendar days on penalty of evidentiary sanctions.  Second, the Petitioners’ Motion to Quash is stayed until Petitioner’s provide actual consent to Google.  Upon grant of actual consent by Petitioners, Petitioners’ Motion to Quash is DENIED.

1. Duplication of Discovery

Petitioners also make an argument that the discovery in question is duplicative of discovery requested in other actions.  “In short, as Justice Murphy said for the court in Hickman v. Taylor, 329 U.S. 495, 507 [91 L.Ed. 451, 460, 67 S.Ct. 385], ‘discovery, like all matters of procedure, has ultimate and necessary boundaries.’”  (Columbia Broadcasting System, Inc. v. Superior Court of Los Angeles County (1968) 263 Cal. App. 2d 12, 19.)  When asserting undue burden in response to a motion to compel, respondent has the burden of providing detailed evidence of how much work is required to answer the question.  (West Pico Furn. Co. v. Superior Court (1961) 56 Cal. 2d 407, 418.)

This Court is unable to accurately assess this issue.

1. Order.

Accordingly, this Court orders that Petitioners give their actual consent to the above-discussed production by Google.  This order is to be complied with within 30 calendar days on penalty of evidentiary sanctions.

Petitioners’ Motion to Quash is stayed until Petitioners provide actual consent to Google.  Upon grant of actual consent by Petitioners, Petitioners’ Motion to Quash is DENIED.

 

________________­­­____________ DATED:

_________________________­­­________________________ HON. SOCRATES PETER MANOUKIAN Judge of the Superior Court County of Santa Clara

[1] Rule of Court 3.1345(d) states: “A motion concerning interrogatories, inspection demands, or admission requests must identify the interrogatories, demands, or requests by set and number.”

[2] “The failure to file a written opposition or to appear at a hearing or the voluntary provision of discovery shall not be deemed an admission that the motion was proper or that sanctions should be awarded.”  Rule of Court 3.1348(b).

[3] “Each exhibit must be separated by a hard 81/2 x 11 sheet with hard paper or plastic tabs extending below the bottom of the page, bearing the exhibit designation. An index to exhibits must be provided. Pages from a single deposition and associated exhibits must be designated as a single exhibit.”