NetApp, Inc. v. Nimble Storage, Inc., et al.		CASE NO. 114CV265454
DATE: 7 November 2014	TIME: 9:00	LINE NUMBER: 12

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 408.882.2310 and the opposing party no later than 4:00 PM Thursday 6 November 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 7 November 2014, the motion of plaintiff NetApp, Inc. to compel further responses by defendant Nimble Storage, Inc. to Demand for Production of Documents, Set One, was argued and submitted.  Defendant Nimble Storage, Inc. filed formal opposition to the motion.

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

1. Statement of Facts

This is an action for trade secret misappropriation and breach of contract.  According to the allegations of plaintiff NetApp, Inc.’s (“Plaintiff”/”NetApp”) Complaint, defendant Nimble Storage, Inc. (“Nimble”) engaged in a plot to target for hiring (and subsequently did hire) teams of Plaintiff’s employees for the purpose of utilizing Plaintiff’s proprietary information to obtain a competitive advantage in the data storage industry, where the parties are direct competitors with one another.

On May 16, 2014, Plaintiff filed the Complaint asserting the following causes of action: (1) trade secret misappropriation (against Nimble and others); (2) breach of contract (against defendant Weber); (3) breach of contract (against defendant Klute); (4) breach of contract (against defendant Binning); (5) breach of contract (against defendant Glick); (6) breach of contract (against defendant Alduino); (7) intentional interference with contract and contractual relations (against Nimble and defendant Weber); and (8) unfair competition (Bus. & Prof. Code § 17200, et seq.) (against all defendants).

On July 22, 2014, the Court (Hon. Elfving) sustained without leave to amend demurrers by Nimble and the individually named defendants to the 7^th and 8^th causes of action.

1. Discovery Dispute

On June 2, 2014, Plaintiff served Nimble with Demand for Production of Documents and Tangible Things for Inspection (“RPD”), Set One.  (See Declaration of Karineh Khachatourian in Support of Plaintiff’s Motion to Compel (“Khachatourian Decl.”), ¶ 6 and Exhibit E.)

On July 7, 2014, Nimble served its responses, which, with respect to RPD Nos. 2-6, 25-26 and 30-31, consisted solely of objections.  Nimble agreed to produce documents responsive to RPD Nos. 1, 10-19 and 32.  (Khachatourian Decl., ¶ 7 and Exhibit F.)  However, Nimble conditioned its agreement to produce responsive documents upon “reaching agreement” with Plaintiff on a list of “document custodians to be searched and search terms to be applied to these custodians’ data.”  (Id.)

On September 5, 2014, believing Nimble’s responses to be deficient, Plaintiff’s counsel sent a meet and confer letter identifying purportedly problematic responses and requesting that they be supplemented.  (Khachatourian Decl., ¶ 10 and Exhibit I.)

After receiving a responsive letter on September 11, 2014, Plaintiff’s counsel sent further correspondence asking, among other things, whether Nimble intended to seek a protective order to block trade secret discovery.  (Khachatourian Decl., ¶ 13 and Exhibit K.)

On September 18 and 25, 2014, counsel for both parties participated in approximately four hours of conference calls in order to address and dispose of outstanding discovery issues.  (Khachatourian Decl., ¶ 13.)  After Plaintiff’s counsel noted that Nimble had improperly conditioned its agreement to comply with certain demands, Nimble agreed to amend its responses to provide a proper statement of compliance.  (Id. at ¶ 14.)  Despite this agreement, no amended responses or responsive items were produced.

Nimble’s counsel contended that Plaintiff’s Amended Trade Secret Designation was insufficient to provide notice of Plaintiff’s trade secret claims and indicated that a revised designation that identified the documents allegedly taken by each trade secret defendant and that corresponded to each listed trade secret would clarify it.  (Khachatourian Decl., ¶ 15.)  Plaintiff subsequently served Nimble with its Corrected Second Amended Trade Secret Designation (the “Designation”).  (Id. and Exhibit L.)

On October 2, 2014, Plaintiff’s counsel sent a letter to opposing counsel confirming Plaintiff’s proposal to narrow certain demands for production and requesting that Nimble reconsider its position relative to RPD, Set One.  (Khachatourian Decl., ¶ 17 and Exhibit M.)  Plaintiff’s counsel sent an additional letter noting Plaintiff’s compliance with Nimble’s request to revise the Designation yet Nimble continued refusal to produce responsive documents.

On October 8, 2014, Nimble’s counsel sent a letter to counsel for Plaintiff indicating that Nimble was still not satisfied with the Designation.  Counsel further advised that Nimble would not amend its responses or produce documents unless Plaintiff further amended the Designation.  (Khachatourian Decl., ¶¶ 18, 19 and Exhibits O.)  In emails exchanged later that day, the parties agreed to an extension of applicable motion to compel deadlines.  (Id. and Exhibit P.)

On October 14, 2014, Plaintiff’s counsel responded via letter to the October 8^th correspondence, explaining why the Designation was sufficiently particularized and did not require any further amendment.  (Khachatourian Decl., ¶ 20 and Exhibit Q.)

On October 16, 2014, Plaintiff filed the instant motion to compel further responses.  On October 27, 2014, Nimble filed its opposition.  Plaintiff filed its reply on October 31, 2014.[1]

• Discussion

Plaintiff moves to compel further responses, without objection (except on the basis of privilege or work product) or conditions to RPD, Set One, Nos. 1-6, 10-19, 25-26 and 30-32.  If a party demanding a response to request for production deems: (1) a statement of compliance with the demand as incomplete; (2) a representation of inability to comply as inadequate, incomplete, or evasive; or (3) an objection in the response to be without merit or too general, that party may move for an order compelling further response.  (Code Civ. Proc., § 2031.310.)

1. Trade Secret Designation

As an initial matter, Nimble contends that Plaintiff has failed to disclose its trade secrets with reasonably particularity under Code of Civil Procedure section 2019.210 and therefore its motion to comply should be denied in its entirety on that basis.  Plaintiff conversely asserts that not only is the trade secret designation sufficient, but Nimble has waived any potential objection to the designation to begin with.

First, with regard to the issue of waiver, Plaintiff cites to no authority which supports the proposition that Nimble’s participation in discovery and its promises to comply with various responses resulted in a waiver of any objection to the Designation.  Importantly, Nimble expressly cited to Code of Civil Procedure section 2019.210 in its responses to the subject discovery, and at no point in the meet and confer process did it indicate to Plaintiff that it was satisfied with the Designation.  Therefore, Nimble has not waived its objections based on Code of Civil Procedure section 2019.210 and Court will evaluate the sufficiency of the Designation.

In its Corrected Second Amended Designation of Trade Secret Materials, i.e., the “Designation,” Plaintiff identifies 13 categories of information which each refer to various Bates-stamped documents that it produced in discovery.  Nimble contends that the categories listed by Plaintiff lack sufficient particularity and that its references to particular documents do not clearly identify trade secret information and contain surplusage.

Conversely, Plaintiff argues that the Designation satisfies the reasonably particularity requirement because the descriptions are detailed and tied to particular documents that it contends have been misappropriated.  Plaintiff submits the declaration of its expert, Brian A Berg, who opines that the Designation “identifies the trade secrets in a straightforward manner, with clarity, and also with enough particularity that a person with knowledge of the technical, sales or marketing aspect of the [data storage] industry would be able to understand them.”  (See Declaration of Brian A. Berg in Support of Plaintiff’s Motion to Compel (“Berg Decl.”), ¶ 5.)  He further states that the trade secret descriptions are “supported by and consistent with the contents of the cited documents.”  (Id.)

Code of Civil Procedure section 2019.210 provides that “[i]n any action alleging the misappropriation of a trade secret …, 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.” Listing general categories of information is sufficient if the categories distinguish between secret information and information publicly disclosed.  (See Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4^th 1443, 1452-1454.)  The statute requires a plaintiff to identify or designate the trade secrets at issue with sufficient particularity to limit the permissible scope of discovery by distinguishing the trade secrets from matters of general knowledge in the trade or of special knowledge of those persons skilled in the trade.  (See Advanced Modular Sputtering, Inc. v. Superior Court (2005)132 Cal.App.4^th 826, 833-836.)  Reasonable particularity means that “the plaintiff must make some showing that is reasonable, i.e., fair, proper, just and rational … under all of the circumstances to identify its alleged trade secrets in a manner that will allow the trial court to control the scope of the subsequent discovery, protect all parties’ proprietary information, and allow them a fair opportunity to prepare and present their best case or defense at a trial on the merits.”  (Id. at 836.)  The trade secret designation mandated by the statute is not itself a pleading, but functions like one in a trade secret case because it limits the scope of discovery in much the same way as the allegations of a complaint limit discovery in other types of civil actions.  (Advanced Modular, supra, 132 Cal.App.4^th at 835.)  Also similarly to a pleading, the trade secret designation is to be “liberally construed, and reasonable doubts regarding its adequacy are to be resolved in favor of allowing discovery to go forward.”  (Brescia v. Angelin (2009) 172 Cal.App.4^th 133, 138.)

Upon review, the Court finds that Plaintiff’s trade secret designation identifies the trade secrets at issue with sufficient particularity.  Plaintiff’s expert articulates with respect to each trade secret how the documents cited provide the details necessary to understand what trade secrets are alleged to have been misappropriated by the defendants.  “Where … credible experts declare that they are capable of understanding the designation and of distinguishing the alleged trade secrets from information already known to persons in the filed, the designation should, as a general rule, be considered adequate to permit discovery to commence.  Our discovery statutes are designed to ascertain the truth, not suppress it.  Any doubt about discovery is to be resolved in favor of disclosure. [Citation.]”  (Advanced Modular, supra, 132 Cal.App.4^th at 836-837.)  Notably, while Nimble submits opposing declarations, none are by individuals with a stated expertise in the data storage industry like Plaintiff’s expert, Mr. Berg.  The declaration primarily relied on by Nimble is that of Mr. Joel Brillhart, a certified computer forensics examiner.  However, there is no indication that Mr. Brillhart has any expertise in or knowledge of the data storage industry such that he can opine as to whether or not the trade secrets are described with sufficient particularity in the Designation.  Further, as articulated in Advanced Modular, mere disagreement among experts is not enough to halt discovery, so long as Plaintiff’s expert states that he is capable of understanding the designation and distinguishing the alleged trade secrets from information generally known.  (Id.)  Mr. Berg’s declaration is satisfactory in this regard.

Accordingly, the Court finds that Nimble’s objection that Plaintiff’s trade secret designation lacks the requisite particularity is without merit. The Court will therefore address the sufficiency of Nimble’s responses to the subject requests.

1. Sufficiency of Responses
2. RPD Nos. 1 and 2

These requests seek “all documents concerning strategies, plans, initiatives or directives related to” (a) “hiring or employment that contain the word NetApp” (RPD No. 1) and (b) “competing with NetApp” (RPD No. 2).  Nimble responded identically to these requests, objecting that they seek information which is not relevant, are overly broad, unduly burdensome, vague and ambiguous, fail to specify the requested information with reasonable particularity, and seek information that is protected by the attorney-client privilege and the attorney work product doctrine as well as confidential and proprietary information.  Nimble further objected that Plaintiff failed to adequately disclose its trade secrets under Code of Civil Procedure section 2019.210.  Plaintiff argues that all of the foregoing objections are without merit.

On a motion to compel further responses to requests for production, it is the moving party’s burden to first demonstrate good cause for the discovery sought.  (See Kirkland v. Superior Court (2002) 95 Cal.App.4^th 92, 98.)  This requires demonstrating both (1) relevance to the subject matter and (2) specific facts justifying discovery.  (Id.)  Once good cause has been shown, the burden shifts to the responding party to justify any objections or failure to provide a code-compliant response.  (id. at 98.)

In attempting to demonstrate the existence of good cause, Plaintiff first notes that the scope of discovery is broad.  Indeed, a party may obtain discovery regarding “any matter, not privileged, that is relevant to the subject matter involved in the pending action … if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence …”  (Code Civ. Proc., § 2017.010.)  The “relevance to the subject matter” and “reasonably calculated to lead to discovery of admissible evidence” standards are applied liberally with any doubt generally resolved in favor of discovery.  (Colonial Life & Acc. Ins. Co. v. Superior Court (1982) 31 Cal.3d 785, 790.)  Moreover, for discovery purposes, information is “relevant to the subject matter” if it might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement thereof.  (Gonzalez v. Superior Court (1995) 33 Cal.App.4^th 1539, 1546.)

Plaintiff argues that there is good cause for these requests because they seek information which relates to its allegations that Nimble misappropriated its trade secrets in connection with the hiring of former NetApp employees and that each of the individual defendants breached their contract with NetApp relating to its proprietary information- either through misappropriation of trade secrets or failure to return proprietary information or destruction of such material.

While it is likely that these requests will obtain relevant information given Plaintiff’s allegations that Nimble misappropriated Plaintiff’s trade secrets in connection with the hiring of former NetApp employees and that each of the individual defendants breached their contracts with NetApp relating to its proprietary information, the requests as currently written are extraordinarily overbroad.  Critically, there is no temporal or custodial limitation on these requests, despite the events of the Complaint having purportedly taken place over a set period of time and involving particular people, namely, the individual defendants.  During meet and confer, Plaintiff proposed limiting RPD No. 2 to documents concerning Nimble’s strategies, plans, initiatives for competing with NetApp that contain the word “NetApp” and that the individual defendants or former NetApp employees sent, received, created, copied, accessed or provided input for between January 1, 2011 to present.  While the Court agrees that a limitation on the time period applicable to both RPD Nos. 1 and 2 is necessary and appropriate, Plaintiff provides no explanation for the date it has selected and the Court is unable to discern the relevance of January 1, 2011, especially in light of the fact that the events upon which Plaintiff’s Complaint is predicated took place in late 2012/early 2013.  The Court further agrees with Nimble that a limitation on the scope of former NetApp employees involved beyond the named individual defendants is appropriate as Plaintiff has not articulated any facts justifying production of documents involving any and all Nimble employee who previously worked for NetApp.  While Plaintiff offers to further limit the scope of this request to 38 former employees whom the parties have apparently considered for preservation purposes, this offer appears for the first time in Plaintiff’s reply.  In the interest of fairness and due process, the Court will not opine on the appropriateness of this limitation given the fact that Nimble was not provided with an opportunity to respond to it.

Based on the foregoing, the Court finds Plaintiff has failed to demonstrate good cause justifying the breadth of RPD Nos. 1 and 2.  Accordingly, further responses to these requests are not warranted.

2. RPD Nos. 3-6

These requests seek all documents that contain the word “NetApp” (RPD No. 6) and words “NetApp” and “Confidential (RPD No. 3), “NetApp” and “Proprietary” (RPD No. 4) and “NetApp” and “Internal” (RPD No. 5).  Nimble responded the same way to these requests as it did to RPD Nos. 1 and 2.

With respect to good cause, these requests as currently written suffer from the same over breadth as RPD Nos. 1 and 2, above.  During the meet and confer process, Plaintiff proposed limiting RPD Nos. 3-6 to documents that contain the terms “NetApp” within 5 words of “internal,” “confidential,” or “proprietary” between January 1, 2011 and the present.  As with RPD Nos. 1 and 2, Plaintiff provides no explanation or justification for the temporal limitation it suggests.  Further, while Plaintiff offers to limit the scope of this request in terms of custodians, specifically the 38 former individuals whom the parties purportedly considered for preservation purposes, this offer appears for the first time in reply.  The Court therefore finds that Plaintiff has failed to demonstrate good cause justifying the breadth of RPD Nos. 3-6.  Accordingly, further responses to these requests are not warranted.

3. RPD Nos. 10-19

These requests seek the following items:

• All communications between Nimble and defendant Klute from December 1, 2012 to June 19, 2013 (RPD 10);
• All documents concerning Klute from December 1, 2012 to June 19, 2013 (RPD 11);
• All communications between Nimble and defendant Weber from August 1, 2012 to February 23, 2013 (RPD 12);
• All documents concerning Weber from August 1, 2012 to February 23, 2013 (RPD 13);
• All communications between Nimble and defendant Binning from August 1, 2012 to February 9, 2013 (RPD 14);
• All documents concerning Binning from August 1, 2012 to February 9, 2013 (RPD 15);
• All communications between Nimble and defendant Glick from November 1, 2012 to May 4, 2013 (RPD 16);
• All documents concerning Glick from November 1, 2012 to May 4, 2013 (RPD 17);
• All communications between Nimble and defendant Alduino from May 1, 2013 to November 21, 2013 (RPD 18);
• All documents concerning Alduino from May 1, 2013 to November 21, 2013 (RPD 19)

Nimble responded identically to each of the foregoing requests, asserting the same objections as those set forth in its responses to RPD Nos. 1 and 2, but then stating an intention to comply subject to its objections and it “reaching an agreement with Plaintiff concerning document custodians to be searched and search terms to be applied to these custodians’ data.”  Plaintiff contends that Nimble’s objections are without merit and that its stated intention to comply, because it is subject to certain limitations, is not code-compliant.

Despite Nimble’s protestations to the contrary, it is readily apparent, based on the allegations of the Complaint, that good cause exists for each of the 10 requests listed above.  Each individually named defendant is accused of trade secret misappropriation and/or breach of contract by “(a) failing to return, and/or deleting, making unrecoverable, inaccessible, or unavailable NetApp Company Documents and Materials prior to [his or her] termination from NetApp; and (b) breaching [his or her] contractual duty of loyalty to NetApp by taking actions for the benefit of Nimble while still employed at NetApp.”  (See Complaint, e.g., at ¶¶ 69, 84 (emphasis added).)  Thus, Nimble’s contention that pre-hiring communications are irrelevant is demonstratively false.  As good cause for these items exists, the burden shifts to Nimble to justify its objections to the requests.  (See Kirkland, supra, 95 Cal.App.4^th at 98.)

The only objections that Nimble attempts to justify are those based on the purported insufficiency of the trade secret designation, relevance, over breadth and undue burden.  Consequently, its objections based on vagueness, ambiguity and lack of particularity, i.e., those objections that Nimble makes no effort to justify or explain, are without merit.

The Court finds that Nimble’s remaining objections are also without merit.  For the reasons articulated above, the Court finds that Plaintiff’s trade secret designation contains sufficient particularity.  Additionally, as good cause exists for the items being sought by these 10 requests, Nimble’s insistence that they seek irrelevant materials is not persuasive.  Finally, Nimble fails to demonstrate that responding to these requests places upon it an undue burden which should relieve it of its obligation to produce responsive documents.  In order to justify an objection based on undue burden, the objecting party must make a particularized showing of facts demonstrating hardship.  (See West Pico Furniture Co. v. Superior Court (1961) 56 Cal.2d 407, 417-418.)  These facts include how much work, time and expense is required in order to answer or produce all responsive documents.  (Id. at 418.)  Here, Nimble provides no specific facts regarding the time or expense required to produce items which are responsive to RPD Nos. 10 through 19 and thus fails to justify its undue burden objection.

While Nimble did state an intention to comply, its statement was not, as Plaintiff contends, code-compliant.  When a party responds to a request for production with an agreement to comply, in order to be code-complaint, the response must state that the “production, inspection, copying, testing, or sampling, and related activity demanded, will be allowed either in whole or in part, and that all documents or things in the demanded category that are in the possession, custody, or control of that party and to which no objection is made will be included in the production.”  (Code Civ. Proc., § 2031.220.)  Nimble stated a close variation of the foregoing but then conditioned its obligation to comply upon reaching an agreement with Plaintiff regarding document custodians to be searched and search terms to be applied, rendering its agreement to comply not code-compliant.  Nimble has not justified the suggested conditions or limitations in its opposing papers.  Accordingly, further, code-complaint responses to these requests are warranted, without objections, except for those based on privilege or work product.

4. RPD Nos. 25 and 26

These requests are very similar to RPD Nos. 1 and 2 in seeking “all documents concerning” (a) “marketing strategies, plans, initiatives or directives that contain the word ‘NetApp’” (RPD No. 25) and (b) “sales strategies, plans, initiatives or directives that contain the word ‘NetApp’” (RPD No. 26).  Nimble responded the same way to these requests as it did to RPD Nos. 1 and 2.

These requests suffer from the same deficiency with respect to RPD Nos. 1 and 2, namely, over breadth.  Plaintiff proposes limiting these requests in the same way as RPD Nos. 1 and 2 (i.e., both temporally and to the individual defendants and former NetApp employees), but again fails to demonstrate why January 1, 2011 is an appropriate start date for a temporal limitation.  The Court therefore finds that Plaintiff has failed to demonstrate good cause justifying the breadth of RPD Nos. 25 and 26.  Accordingly, further responses to these requests are not warranted.

5. RPD Nos. 30 and 31

These requests seek all documents exchanged between Nimble and any Nimble customer (RPD No. 30) or prospective Nimble customer “concerning NetApp.”  Nimble’s responses to these requests were comprised entirely of objections that are the same as those asserted in response to RPD Nos. 1 and 2.

Plaintiff proposed during meet and confer, and proposes in its memorandum in support of the instant motion, that these requests be limited to documents exchanged between Nimble and any customer/prospective customer concerning NetApp and to which one of the individual defendants or former NetApp employees was a party from January 1, 2011 to present.  Plaintiff provides no explanation or justification for the temporal limitation that it suggests.  The Court therefore finds that Plaintiff has failed to demonstrate good cause justifying the breadth of RPD Nos. 30 and 31.  Accordingly, further responses to these requests are not warranted.

6. RPD No. 32

This request seeks all communications between Nimble and JobScore concerning any applicant then-employed by NetApp.

In its response to this request, Nimble asserted the same objections as those set forth in its responses to RPD Nos. 1 and 2 but then stated an intention to comply subject to its objections and it reaching an agreement with Plaintiff “concerning document custodians to be searched and search terms to be applied to these custodians’ data.”

Nimble argues that a further response to this request should not be compelled because Plaintiff has failed to establish that good cause exists for the items that it seeks.  This contention is well-taken.  Plaintiff provides no specific explanation as to why communications between Nimble and JobScore are relevant to its claims for trade secret misappropriation and breach of contract and it is not otherwise apparent from the allegations of the Complaint.  In fact, the Court is only aware of what JobScore is due to information provided by Nimble in its opposition and supporting documents.  Because Plaintiff has not demonstrated the relevancy of the requested documents and thus, that good cause for them exists, a further response to this request from Nimble is not warranted.

1. Conclusion and Order

The motion is GRANTED IN PART.  The motion is GRANTED with respect to RPD, Set One, Nos. 10-19 and otherwise DENIED.  Plaintiffs shall respond to the discovery without objection (except for those based on privilege and attorney work product) or limitation within 20 days of the date of the filing of this Order.

 

 

________________­­­____________ DATED:

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

[1] Both parties make objections to declarations submitted by the opposing party.  However, there is no authority for the proposition that a court must rule on evidentiary objections made in connection with a motion other than a motion for summary judgment or an anti-SLAPP motion.  Accordingly, the Court declines to rule on the parties’ objections.