Case Name: Mirapath, Inc. v. Jessica Ly, et al.
Case No.: 16-CV-296779

I. Background and Discovery Dispute

This is an action for misappropriation of trade secrets brought by plaintiff Mirapath, Inc. (“Plaintiff”) against defendants Rahi Systems, Inc. (“RSI”) and Jessica Ly (“Ly”), Plaintiff’s former employee.

Plaintiff “is a solutions provider for data centers and lab infrastructure.” (Compl., ¶ 7.) Plaintiff provides services including “data center infrastructure design, hardware, software, and installation.” (Compl., ¶ 7.) In August 2011, Plaintiff hired Ly to work in its sales department where she served as an Inside Sales Representative and eventually as a Strategic Account Executive. (Compl., ¶ 8.) Her job duties in both positions involved completing sales, soliciting new business, and maintaining relationships with existing clients. (Compl., ¶ 16.) Upon hiring, Ly signed an agreement to maintain the confidentiality of Plaintiff’s proprietary information, which included: customer and vendor information, business plans, and marketing materials. (Compl., ¶ 9; see also Compl., Exh. A.) Plaintiff alleges, however, that Ly began using this proprietary information to solicit its customers on behalf of her own business, JevarTech LLC (“JevarTech”), and to contact its vendors to fulfill orders placed with JevarTech. (Compl., ¶¶ 17-20.) Ly also attempted to form another competing business with an employee of one of Plaintiff’s competitors. (Compl., ¶¶ 25-28.)

In May 2016, following the events described above, Ly resigned at the prompting of Plaintiff’s Chief Executive Officer. (Compl., ¶¶ 31-32.) Before her last day, Ly downloaded all of her work email, which included Plaintiff’s proprietary information, and forwarded emails to her personal email account. (Compl., ¶¶ 29-30.) Ly also downloaded Plaintiff’s proprietary information to a thumb drive and her personal laptop. (Compl., ¶¶ 36-37.) Ly wiped her work smartphone and laptop prior to returning them to Plaintiff, which it alleges was to cover up her improper retention of its proprietary information. (Compl., ¶¶ 33-35.)

Following her resignation, Ly began working for Plaintiff’s competitor, RSI, as Director of Sales and Business Development. (Compl., ¶ 38.) Ly helped RSI solicit Plaintiff’s customers and employees. (Compl., ¶ 38.) Plaintiff sent cease and desist letters to Ly and RSI. (Compl., ¶¶ 39-41.) Subsequently, Plaintiff commenced this action by filing a complaint asserting causes of action for: (1) fraud (against Ly); (2) constructive fraud (against Ly); (3) negligent misrepresentation (against Ly); (4) intentional interference with prospective economic advantage (against Ly and RSI); (5) negligent interference with prospective economic advantage (against Ly and RSI); (6) breach of fiduciary duty (against Ly); (7) breach of covenant not to compete (against Ly); (8) tortious interference (against RSI); (9) unjust enrichment (against Ly); (10) misappropriation of trade secrets (against Ly and RSI); (11) violation of the Computer Fraud and Abuse Act (against Ly); and (12) unfair competition (against Ly and RSI).

On August 17, 2016, RSI served Plaintiff with special interrogatories, set one (“SI”), Nos. 1-8. (Guggenheim Decl., Exh. A.) SI Nos. 1-8 seek information about the nature, storage, and maintenance of Plaintiff’s trade secrets. (Guggenheim Decl., Exh. A.) On September 21, 2016, Plaintiff served RSI with objection-only responses to all of these requests with the exception of SI Nos. 6-8, to which partial substantive responses were provided. (Guggenheim Decl., Exh. B.) RSI sent Plaintiff a meet and confer letter explaining the purpose of the interrogatories was to obtain its trade secret disclosure pursuant to Code of Civil Procedure section 2019.210. (Guggenheim Decl., Exh. C.) RSI offered to execute a stipulated protective order maintaining the confidentiality of any substantive responses served to supplement the initial objection-only responses and limiting the use of the responses to this case. (Guggenheim Decl., Exh. C.) Plaintiff rejected RSI’s offer stating the proposal provided insufficient protection for its trade secrets. (Guggenheim Decl., Exh. D.)

Plaintiff provided RSI with a proposed protective order with a procedure for designating information as “Attorneys’ Eyes Only.” (Guggenheim Decl., Exh. D.) RSI’s counsel proposed several changes, including the elimination of this particular designation, stating he could not defend his client if he was unable to show discovery materials to employees. (Guggenheim Decl., Exh. E.)

The parties could not reach an agreement as to the protective order, and in turn, SI Nos. 1-8. Consequently, on November 8, 2016, Plaintiff filed a motion for protective order. On November 9, 2016, RSI filed a motion to compel further responses to SI Nos. 1-8.

The Court intends to grant Plaintiff’s motion, as specified below. Also to be heard is RSI’s motion to compel Plaintiff to provide further responses to SI Nos. 1-8 and the accompanying requests for monetary sanctions by both parties.

II. Motion for Protective Order

As noted, Plaintiff seeks a protective order that includes an Attorneys’ Eyes Only category of protection.

Defendant first argues that Plaintiff has not established that is has any trade secrets and the motion should be denied. However, in a trade secrets action, a Plaintiff is presumptively entitled to a protective order before it is required to disclose its trade secrets. (See Code of Civ. Proc. sec. 2019.210 that requires identification of trade secrets, “subject to any orders that may be appropriate under Section 3426.5 of the Civil Code.” Section 3426.5 in turn provides that
“the court shall preserve the secrecy of an alleged trade secret by reasonable means, which may include granting protective orders in connection with discovery proceedings…”)

The Court will grant Plaintiff’s motion and will issue a protective order that will include an Attorneys’ Eyes Only (“AEO”) provision, except that the Defendant may designate up to two employees of the Defendant RHI, who may not be employed in sales or business development, and who shall be entitled to review such information only in the offices of counsel, and who shall not be provided any copies of such material. Before any AEO information is shown to any RHI employee, that employee shall be identified to Plaintiff’s counsel and that individual shall sign the Affidavit attached to the Protective Order. Any dispute over the individual or individuals identified shall be resolved before any AEO information is shown to that individual. This provision shall be mutual.

However, the Court will not sign a form of protective order based on versions adopted for use in Federal Court. The proposed version of the protective order fails to even mention California state law. The Court refers the parties to and directs preparation of a protective order consistent with and based on the Model Confidentiality Order issued by the Santa Clara County Complex Litigation Department, with AEO provisions added. The most recent version of the Order is dated July 30, 2015. The Court can provide the form if counsel cannot locate it.

The order shall also include the following language:
This Stipulated Protective Order creates no right to file Confidential Information under seal. The California Rules of Court set forth procedures that must be followed when a party seeks permission to file material under seal. The procedures for dealing with Confidential Information at trial shall be determined by the trial judge.
Finally, the Court will not sign any order that does not include at least two lines of text on the page that the Court signs. (See Local Rule 10.) As it does not appear that this order will be stipulated (or even if it is), the signature line for the Court should be placed immediately after the final provisions of the order, with at least some text on the signature page. The parties shall meet and confer over the final language of the order, but if agreement is not reached, Plaintiff shall submit a proposed order with any comments or alternate orders received. This is an action for misappropriation of trade secrets brought by plaintiff Mirapath, Inc. (“Plaintiff”) against defendants Rahi Systems, Inc. (“RSI”) and Jessica Ly (“Ly”), Plaintiff’s former employee.

III. Motion to Compel Further Responses

SI No. 1 asks Plaintiff to identify its trade secrets with reasonable particularity as required by Code of Civil Procedure section 2019.210. (Guggenheim Decl., Exh. A.) As related thereto, SI Nos. 2-5 ask Plaintiff to identify the documents and databases where the trade secrets were stored, what information was stored in each document or database, how the trade secret information was compiled, and how the documents or databases were maintained. (Guggenheim Decl., Exh. A.) SI Nos. 6-8 are simple contention interrogatories seeking the facts supporting Plaintiff’s misappropriation claim, the documentary evidence supporting those facts, and witnesses with knowledge of those facts. (Guggenheim Decl., Exh. A.)

Plaintiff objected to every request on the grounds they called for confidential information and an improper legal conclusion. Plaintiff also objected to SI Nos. 2 and 4-7 on the ground of vagueness and ambiguity. Plaintiff objected to SI No. 3 on the ground it is compound and SI Nos. 6-7 on the grounds of undue burden and the attorney-client privilege.

If a party demanding responses to interrogatories maintains that an objection is without merit or too general or an answer is evasive or incomplete, it may move for an order compelling a further response. (Code Civ. Proc., § 2030.300, subd. (a)(1), (3).) The responding party bears the burden of justifying its objections. (Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 255.) Thus, the Court will first address Plaintiff’s objections before considering whether its substantive responses to SI Nos. 6 and 8 are code-compliant.

A. Objections

Plaintiff bears the burden of substantiating its objections. (Coy v. Superior Court (1962) 58 Cal.2d 210, 220-21.) Objections for which no justifications are provided are deemed abandoned. (Ibid.) Plaintiff does not actually attempt to justify any of its objections. Instead, it focuses on the necessity of implementing a protective order in this case. Nonetheless, the Court will briefly address Plaintiff’s undefended objections to forestall gamesmanship, reduce the likelihood of court intervention in the future, and provide a primer on discovery practice and procedure.

1. Improper Legal Conclusion

Plaintiff generically objected to SI Nos. 1-8 on the ground each called for an improper legal conclusion as to what a trade secret is. A party may propound interrogatories asking whether the opposing party “makes a particular contention, either as to the facts or as to the possible issues in the case.” (Burke v. Superior Court (1969) 71 Cal.2d 276, 281.) Thus, “when a party is served with a request [ ] concerning a legal question properly raised in the pleadings he [or she] cannot object simply by asserting that the request calls for a conclusion of law.” (Id. at p. 282.) In other words, the use of a legal term of art or legal definition in an interrogatory does not automatically render an interrogatory objectionable on the ground it calls for a legal conclusion. (Ibid.) While Plaintiff’s objections apparently lack merit because they are based on the use of the term “trade secret,” without more, Plaintiff does not attempt to substantiate its objections on this basis. Plaintiff’s objections to SI Nos. 1-8 on the ground they call for an improper legal conclusion are therefore overruled.

2. Compound

Plaintiff objected to SI No. 2 on the ground it is compound and contains subparts. While SI No. 2 only covers one subject, where the trade secrets were kept, Plaintiff presumably objected because it asks for the “documents and databases” where the trade secrets were kept. (Guggenheim Decl., Exh. A.) First, as a general matter, “objections [ ] to the form of the question are for the protection of a witness on oral examination.” (West Pico Furniture Co. of Los Angeles v. Superior Court (“West Pico”) (1961) 56 Cal.2d 407, 421.) “When [ ] the answer is to be made in writing, after due time for deliberation and consultation with counsel, an answer may be framed which avoids the pitfalls, if any, inherent in the form of the question.” (Ibid.) Consequently, objections to written interrogatories on the ground they are compound are disfavored. Second, while “[n]o specially prepared interrogatory shall contain subparts, or a compound, conjunctive, or disjunctive question,” courts have interpreted this provision as prohibiting a party from propounding special interrogatories that cover more than one subject. (Code Civ. Proc., § 2030.060, subd. (f); see also Clement v. Alegre (2009) 177 Cal.App.4th 1277, 1291.) Thus, courts look to the subject matter of the interrogatory, not grammar and use of conjunctive words such as “and.” (See Clement v. Alegre, supra, 177 Cal.App.4th at p. 1291.) Plaintiff does not argue SI No. 2 covers more than one subject or otherwise attempt to substantiate its objection on this basis. This objection is therefore overruled.

3. Vagueness and Ambiguity

Plaintiff objected to various terms in SI Nos. 2 and 4-7, such as “compiled” and “maintained,” on the ground of vagueness and ambiguity. To justify an objection on the ground of vagueness or ambiguity, a party must demonstrate the discovery request is so vague and ambiguous that it is unintelligible and the party is unable to meaningfully respond. (See Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 783.) “Indeed, where the question is somewhat ambiguous, but the nature of the information sought is apparent, the proper solution is to provide an appropriate response.” (Ibid.) Here, it is unclear whether Plaintiff selected terms at random as the terms to which it objected do not create any ambiguity. It is obvious RSI is inquiring as to how the proprietary information was compiled as pertinent to whether the information is proprietary at all. Moreover, given Plaintiff asserts claims for misappropriation of trade secrets and violation of the Computer Fraud and Abuse Act, the method it used to store or maintain its proprietary information is germane to whether it will be able to prove, through forensic analysis of its network and employee devices, the manner and extent to which Ly accessed this information. Plaintiff does not attempt to explain how any of the purportedly objectionable terms prevented it from responding to these questions. Plaintiff’s objections to SI Nos. 2 and 4-7 on the ground of vagueness and ambiguity are therefore overruled.

4. Undue Burden

Plaintiff objected to SI Nos. 6-8 on the ground of undue burden; however, “some burden is inherent in all demands for discovery.” (West Pico, supra, 56 Cal.2d at pp. 417-18.) “The objection of burden is valid only when that burden is demonstrated to result in injustice.” (Ibid.) In justifying an objection on the ground of undue burden and oppression, the responding party must articulate specific facts demonstrating the amount of time and effort required to comply with each request are incommensurate with the importance or value of the requested discovery. (Ibid.) Plaintiff does not actually raise the issue of the burden or expense of responding to these two discovery requests. Rather, in making its objections, Plaintiff asserted these interrogatories seeking all documents or facts supporting its misappropriation claim were unduly burdensome because it was still investigating its claim. Plaintiff essentially asserts it cannot completely respond because it does not have all of the requisite information, which does not in any way address whether the interrogatories are unduly burdensome. Consequently, while Plaintiff fails to justify its objections on this basis, its own stated reason for making this objection undermines its position. Plaintiff’s objections on this ground to SI Nos. 6-8 are therefore overruled.

5. Attorney-Client Privilege

Plaintiff objected to SI Nos. 6-7 on the ground of the attorney-client privilege. These interrogatories are basic contention interrogatories that ask Plaintiff to identify all facts that support its contention that Ly and RSI misappropriated trade secrets and all documents evidencing those facts. It is unclear how the attorney-client privilege is in any way implicated. Even so, a boilerplate objection on the ground of the attorney-client privilege does not result in waiver of the privilege. (See Best Products, Inc. v. Superior Court (2004) 119 Cal.App.4th 1181, 1189-90.) Plaintiff’s objections on the ground of the attorney-client privilege, although undefended, are preserved. (Ibid.)

6. Confidential Information

As to SI Nos. 1-8, Plaintiff objected “to the extent [each] interrogatory seeks confidential, proprietary, or trade secret information.” (Guggenheim Decl., Exh. B.) Despite interposing this objection to each discovery request at issue, Plaintiff does not actually attempt to justify its objections on this basis. Bizarrely enough, Plaintiff argues in opposition to the motion that RSI’s discussion “regarding the applicability of the trade secret privilege is a red herring.” (Opp. at p. 6:2-3.) RSI’s discussion of the trade secret privilege in its motion is proper given Plaintiff’s objections on that basis. In any event, Plaintiff does not explain how each interrogatory seeks protected information. Moreover, it does not appear Plaintiff could substantiate its objection on this basis as to SI Nos. 2 and 4-8 as only SI Nos. 1 and 3 could reasonably be interpreted as calling for trade secret information.

It appears Plaintiff’s true objection to SI Nos. 1-8 was the absence of a protective order in this case. Specifically, Plaintiff argues RSI’s “reason [for compelling a further response] is deficient because it ignores the ‘general objection’ [ ] lodged regarding the need for a protective order pursuant to California Civil Code § 3426.5.” (See, e.g. Pl. Sep. Stat. at p. 5:19-21.)

In fact, Plaintiff filed a motion for a protective order; thus, the parties briefed the issues specifically with respect to that motion. Additionally, general objections are improper because objections must be stated separately and must bear the same number and letter as the request to which they are directed. (See Code Civ. Proc., §§ 2030.210, subd. (c), 2030.240, subd. (b); see also Smith v. Superior Court (1961) 189 Cal.App.2d 6, 13.) Because Plaintiff chose to make a general objection rather than clearly stating its objection on this basis to each interrogatory, a motion on the ground its objections lack merit would, as here, necessarily focus on the objections actually made to each individual discovery request.

Turning to the merits of the issue at the heart of Plaintiff’s opposition, as noted above, Civil Code section 3426.5 states “a court shall preserve the secrecy of an alleged trade secret by reasonable means, which may include granting protective orders in connection with discovery proceedings. . . .” Additionally, Code of Civil Procedure section 2019.210 authorizes the pre-discovery disclosure of trade secrets “subject to any orders that may be appropriate under Section 3426.5.” The language of section 2019.210 thus clearly contemplates and presumes the implementation of a protective order prior to the mandatory trade secret disclosure. (See, e.g., Loop AI Labs, Inc. v. Gatti (N.D.Cal. July 6, 2016, No. 15-CV-00798-HSG (DMR)) 2016 WL 3654378, citing Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th 826, 831, fn. 2.)

Although improperly presented, Plaintiff’s objection to disclosing its trade secrets in the absence of a protective order is sound as a matter of law, and it is the Court’s intention to grant its motion. Responses to the interrogatories will not be due until after entry of the protective order.

B. Substantive Responses

Plaintiff provided substantive responses to SI Nos. 6 and 8 only. When providing a substantive response to an interrogatory, the party must give a straightforward answer that contains the information sought. (Code Civ. Proc., § 2030.210, subd. (a); see also Deyo v. Kilbourne, supra, 84 Cal.App.3d at pp. 783-84 [“Answers must be complete and responsive.”])

First, Plaintiff responded to these two interrogatories “subject to and without waiving” its objections. (Guggenheim Decl., Exh. B.) By responding in this manner, Plaintiff fails to provide a straightforward answer because such language obfuscates whether its responses are complete and the extent to which it is withholding information based on an objection.

Second, the actual answers provided are not code-compliant. As to SI No. 6, Plaintiff responded by referring RSI to the allegations in the complaint. “[I]t is not proper to answer by stating ‘see [document.]’” (Deyo v. Kilbourne, supra, 84 Cal.App.3d at p. 783.) “[I]f a question does require the responding party to make reference to a pleading or document, the pleading or document should be identified and summarized so the answer is fully responsive to the question.” (Id. at p. 784.) Moreover, this response appears to be incomplete on its face as Plaintiff does not identify in the FAC, even in general terms, the trade secrets purportedly misappropriated. Consequently, a further response to SI No. 6 is warranted.

As to SI No. 8, Plaintiff identified two individuals with knowledge of facts supporting its misappropriation claim, but did so with the express caveat that its response was not complete. Specifically, Plaintiff stated responsive individuals included but were not limited to the two people it identified. Plaintiff’s incomplete response to SI No. 8 therefore is not code-compliant and a further response thereto is warranted.

As to the remaining interrogatories, further responses are warranted because Plaintiff did not provide any substantive responses.

C. Conclusion

Based on the foregoing, the motion to compel further responses to SI Nos. 1-8 is GRANTED. Plaintiff shall serve RSI with verified, code-compliant further responses to SI Nos. 1-8, without objections (except for objections on the ground of the attorney-client privilege), within 20 calendar days after entry of the protective order referenced above.

III. Requests for Monetary Sanctions

RSI requests an award of monetary sanctions in the amount of $1,060.00, representing the attorney’s fees and costs incurred in bringing the motion. Pursuant to Code of Civil Procedure section 2030.300, subdivision (d): “The court shall impose a monetary sanction [ ] against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel a further responses to interrogatories, unless it finds the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.”

RSI successfully brought this motion and is therefore entitled to sanctions unless Plaintiff was substantially justified in opposing it or circumstances would make the imposition of sanctions unjust. Here, Plaintiff’s decision to seek a protective order prior to responding to some of the interrogatories was defensible. Given there was no protective order in place, however, it would be unjust to sanction Plaintiff for failing to disclose its trade secrets. RSI therefore is not entitled to an award of monetary sanctions and its request is DENIED.

Plaintiff also requests an award of monetary sanctions in the amount of $5,695.00, representing 17 hours of attorney time spent preparing the opposition to the motion. This amount is not reasonable. Moreover, Plaintiff did not successfully oppose the motion, did not seek an award of monetary sanctions on its motion for protective order, and therefore is not entitled to an award of monetary sanctions. Plaintiff’s request for monetary sanctions is therefore DENIED.

The Court will prepare the order.