Case Name: Yahoo Holdings, Inc., et al. v. Mozilla Corporation, et al.

Case No.: 17CV319921

(1) Defendant and Cross-Complainant Mozilla Corporation’s Motion to Compel Plaintiff and Cross-Defendant Yahoo Holdings, Inc. to Provide Further Responses to Request for Production (Set 1)
(2) Defendant and Cross-Complainant Mozilla Corporation’s Motion to Compel Plaintiff and Cross-Defendant Oath (EMEA) Ltd. to Provide Further Responses to Request for Production (Set 1)
(3) Defendant and Cross-Complainant Mozilla Corporation’s Motion to Compel Plaintiff and Cross-Defendant Yahoo! Singapore Digital Marketing Pte. Ltd. to Provide Further Responses to Request for Production (Set 1)
(4) Motion to File Under Seal Portions of Defendant and Cross-Complainant Mozilla Corporation’s Documents ISO Motions to Compel Plaintiffs and Cross-Defendants Yahoo Holdings, Inc., Oath (EMEA) Ltd., and Yahoo! Singapore Digital Marketing Pte. Ltd. to Provide Further Responses to Requests for Production (Set 1)

Factual and Procedural Background

According to the allegations of a redacted complaint, defendant Mozilla Corporation (“Mozilla”) terminated a long-term Strategic Agreement with plaintiffs Yahoo Holdings, Inc. (“YHI”), Oath (EMEA) Ltd. (“Oath”), and Yahoo! Singapore Digital Marketing Pte. Ltd. (“Yahoo Singapore”) (collectively, “Yahoo”) following the sale of Yahoo’s operating business to Verizon Communications, Inc. (“Verizon”). (Complaint, ¶8.) On November 10, 2017, Mozilla sent a letter terminating the Strategic Agreement effective immediately. (Complaint, ¶18.) Yahoo demanded Mozilla rescind its termination but Mozilla refused to do so. (Complaint, ¶20.)

On December 1, 2017, Yahoo filed a complaint against Mozilla asserting claims for: (1) breach of contract; and (2) breach of covenant of good faith and fair dealing.

On December 5, 2017, Mozilla filed a redacted cross-complaint against Yahoo. By its cross-complaint, Mozilla seeks to obtain payments it is owed under the Strategic Agreement. (Cross-Complaint, ¶¶1 and 4.) Under the Strategic Agreement, Mozilla made Yahoo the default search engine for its web browser, Firefox, in the U.S. market. (Id.) In June 2017, Yahoo sold its operating business to Verizon. (Cross-Complaint, ¶15.) The sale to Verizon triggered the change of control provisions under the Strategic Agreement. (Cross-Complaint, ¶16.) Mozilla evaluated whether it should exercise its change of control rights and ultimately decided to exercise its right to terminate the Strategic Agreement on November 10, 2017. (Cross-Complaint, ¶¶17 – 19.)

Mozilla’s cross-complaint asserts causes of action for:

(1) Declaratory Relief
(2) Breach of Contract Re Payments
(3) Breach of Contract Re Search Performance

On January 4, 2018, Yahoo filed an answer to the cross-complaint.

On January 5, 2018, Mozilla filed an answer to the complaint.

Discovery Dispute

On February 13, 2018, Mozilla served YHI, Oath, and Yahoo Singapore each with an identical request for production of documents (“RPD”), set one.

On March 19, 2018, YHI, Oath, and Yahoo Singapore each served a separate response to Mozilla’s RPD, set one.

Between April 3, 2018 and May 18, 2018, Mozilla’s counsel and Yahoo’s counsel exchanged communications in an effort to meet and confer with regard to Yahoo’s responses to Mozilla’s RPD, set one.

On May 21, 2018, Mozilla filed the three motions now before the court, motions to compel YHI, Oath, and Yahoo Singapore’s further responses to Mozilla’s RPD, set one, numbers 12 – 28 and 40 – 41.

I. Meet and confer.

As a preliminary matter, Yahoo contends Mozilla did not adequately meet and confer prior to the filing of this motion. A motion to compel further response to a demand for inspection “shall be accompanied by a meet and confer declaration under Section 2016.040.” (Code Civ. Proc., §2031.310, subd. (b)(2).) “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.” (Code Civ. Proc., §2016.040.) A reasonable and good faith attempt at informal resolution requires that the parties present the merits of their respective positions with candor, specificity, and support. (Townsend v. Super. Ct. (1998) 61 Cal.App.4th 1431, 1435, 1439.) The level of effort at informal resolution which satisfies the “reasonable and good faith attempt” standard depends upon the circumstances of the case. (Obregon v. Super. Ct. (1998) 67 Cal.App.4th 424, 431.)

In opposition, Yahoo contends Mozilla’s meet and confer efforts were inadequate because Mozilla did not raise certain arguments now being asserted in this motion until May 18, 2018, only three days prior to the filing of the instant motions to compel. Yahoo contends the parties did not have an opportunity to meet and confer with regard to these new arguments. In reviewing the May 18, 2018 correspondence from Mozilla’s counsel, the court notes Mozilla’s counsel declared the parties to be at impasse with regard to RPD, set one, numbers 12 – 27 and 40 – 41. With regard to RPD, set one, number 28, Mozilla invited Yahoo to extend the deadline for a motion to compel.

Although the parties could have met and conferred further and while it is always the court’s preference for more, rather than less, informal efforts at resolution, the court finds Mozilla made a reasonable and good faith attempt under the circumstances. The court will reach the merits of Mozilla’s motion.

II. Merits.

Upon receipt of a response to a demand for inspection, including requests for the production of documents, the demanding party may move for an order compelling further response to the demand if the demanding party deems that any of the following apply:

1. A statement of compliance with the demand is incomplete.
2. A representation of inability to comply is inadequate, incomplete, or evasive.
3. An objection in the response is without merit or too general.

(Code Civ. Proc., §2031.310, subd. (a)(1) – (3).)

The motion for order compelling further responses “shall set forth specific facts showing good cause justifying the discovery sought by the inspection demand.” (Code Civ. Proc., §2031.310, subd. (b)(1); Kirkland v. Sup. Ct. (2002) 95 Cal.App.4th 92, 98 (Kirkland).) To establish “good cause,” the burden is on the moving party to show both relevance to the subject matter (e.g., how the information in the documents would tend to prove or disprove some issue in the case) and specific facts justifying discovery (e.g., why such information is necessary for trial preparation or to prevent surprise at trial). (Glenfed Develop. Corp. v. Sup. Ct. (1997) 53 Cal.4th 1113, 1117.) Where the moving party establishes “good cause,” the burden shifts to the responding party to justify its objections. (Kirkland, supra, 95 Cal.App.4th at p. 98.)

A. RPD, set one, numbers 12 – 22 and 40.

RPD, set one, number 12 asks each of the Yahoo entities to produce “All DOCUMENTS RELATING TO the value of the YAHOO ACQUIRER brand from 2014 to present, including but not limited to consumer perception (whether negative or positive) of the YAHOO ACQUIRER brand.” The term “YAHOO ACQUIRER” is defined by Mozilla to mean “Verizon Communications, Inc. and its subsidiary Oath, Inc., and, where appropriate in the context, each of their current or former agents, employees, shareholders, officers, former employees, former officers, directors, subsidiaries, parent corporations, attorneys or other persons or entities acting on their behalf.”

Yahoo’s complaint alleges, in relevant part, that the parties entered into a Strategic Agreement which required Mozilla to set Yahoo as the default search options for users of the Mozilla Firefox browser in certain markets. (Complaint, ¶8.) The Strategic Agreement provides, in relevant part, at Section 9.1.1(b) that, “Upon a Yahoo Change of Control, Mozilla shall, at its sole option, within a 6 month period commencing on the effective date of such Yahoo Change of Control either elect to: (i) continue with the Agreement or (ii) if, after seeking reassurances from the Acquirer, Mozilla reasonably believes that the Acquirer’s identity or business practices are likely to harm the Mozilla brand and/or believes that the Acquirer intends to operate Yahoo’s Operating Business in a manner that will harm the quality of the web search or other content experience offered by Yahoo Related Parties to Mozilla or users of Mozilla products, then Mozilla may terminate the Agreement.” (Complaint, ¶19.)

Yahoo alleges, “Following the sale of Yahoo’s operating business to Verizon Communications Inc. (‘Verizon’), Mozilla terminated” the Strategic Agreement relying on section 9.1.1(b)(ii), but Mozilla “failed to seek such assurances from Verizon, and it did not develop the reasonable belief required by the parties’ contract, before terminating its performance.” (Complaint, ¶¶8, 18, 27(a), and 33.)

In moving to compel a further response, Mozilla argues, “The value of, and consumer perception of, the YAHOO ACQUIRER brand directly relates to users’ perceptions of the YAHOO ACQUIRER’s identity and business practices and the potential impact of the YAHOO ACQUISITION on the Mozilla brand. Furthermore, documents responsive to this Request are likely probative of the reasonableness of Mozilla’s belief that YAHOO ACQUIRER’s identity or business practices were likely to harm the Mozilla brand. In addition, documents responsive to this Request are likely to contain information supporting the credibility of Mozilla’s beliefs regarding the YAHOO ACQUIRER’s identity and business practices.” (See p. 4, lines 20 – 27 of Mozilla’s Separate Statement ISO Motion to Compel.)

In this court’s opinion, Mozilla has not sufficiently demonstrated how the information sought by this request would have any tendency to prove or disprove some issue in this case. The purportedly relevant issue is whether Mozilla properly invoked section 9.1.1 to terminate the Strategic Agreement. In that regard, one sub-issue is whether Mozilla “reasonably believed that the Acquirer’s identity or business practices are likely to harm the Mozilla brand.” To have a “reasonable belief,” Mozilla must have a subjective belief but that belief must also be objectively reasonable. Mozilla’s subjective belief would be based upon information available to Mozilla at the time it formed its belief. In determining whether Mozilla’s subjective belief was objectively reasonable, a trier of fact must decide if a reasonable person/ entity, having the same information that Mozilla had, would have formed the same belief. The court agrees with Yahoo that information which was not available to Mozilla in forming its belief is not relevant. Information unavailable to Mozilla at the time it formed its belief cannot serve as a post hoc rationalization for Mozilla’s decision to terminate.

If Mozilla held some suspicion (prior to forming a belief) that the Acquirer’s identity or business practices were likely to harm the Mozilla brand, Mozilla could have made an inquiry to Yahoo requesting information. A subsequent refusal by Yahoo to provide information could be viewed as objective evidence in support of Mozilla’s reasonable belief. In such a circumstance, it is the refusal to provide information that lends credence to Mozilla’s suspicion. However, Mozilla’s suspicion in the first instance would have to be based on information then available to Mozilla. Again, Information unavailable to Mozilla at the time it formed its suspicion cannot serve as a post hoc rationalization for Mozilla’s actions.

For the same reason, the court finds Mozilla has not sufficiently demonstrated good cause for the information sought by RPD, set one, numbers 13 – 22 and 40. Accordingly, Mozilla’s motion to compel YHI, Oath, and Yahoo Singapore to provide further responses to RPD, set one, numbers 12 – 22, is DENIED.

B. RPD, set one, numbers 23 – 28 and 41.

RPD, set one, number 23 asks each of the Yahoo entities to produce “All DOCUMENTS RELATING TO YAHOO’s solicitation of investors or acquirers between January 1, 2014 and June 13, 2017, including but not limited to presentations prepared by or at the direction of YAHOO, pitch books, confidential information memorandums, investment prospectuses, or similar investment proposals or COMMUNICATIONS with financial advisers (including bankers).”

In addition to improperly terminating the Strategic Agreement, Yahoo’s complaint alleges Mozilla breached sections 3.1.3 and 2.2.2 of the Strategic Agreement by “intentionally removing Yahoo Search as the default search provider for its Firefox browser in the United States and elsewhere, replacing it with Google” and “by failing to cooperate in good faith on additional ways to generate additional revenue for the parties.” (Complaint, ¶¶15, 17, and 27.)

To the extent Mozilla contends the information sought by this request is relevant to whether it properly invoked section 9.1.1, the court incorporates its discussion from above.

In moving to compel a further response, Mozilla contends further that, “Documents relating to YAHOO’s solicitation of investors or acquirers are likely to include information regarding whether Mozilla collaborated in good faith on additional ways to promote Yahoo Search and whether Mozilla used commercially reasonable efforts to generate additional revenues for the parties. Furthermore, documents relating to YAHOO’s solicitation of investors or acquirers are likely to include information regarding whether YAHOO used commercially reasonable efforts to meet general product parity with the Search Market Leader and/or whether YAHOO implemented the required technical requirements in accordance with the STRATEGIC AGREEMENT. See Cross-Compl. ¶¶6, 136. In addition, documents relating to YAHOO’s solicitation of investors or acquirers are also likely to include information regarding whether Mozilla sought reassurances from the YAHOO ACQUIRER, the persons whom Mozilla was directed to speak with on behalf of the YAHOO ACQUIRER, and whether the YAHOO ACQUIRER or persons acting on behalf of the YAHOO ACQUIRER were aware of or responded to Mozilla’s attempts to seek reassurances from the YAHOO ACQUIRER and/or Mozilla’s complaints regarding the quality of YAHOO SEARCH. Finally, documents relating to YAHOO’s solicitation of investors or acquirers are likely to include information regarding YAHOO’s interpretation and understanding of its obligations under the STRATEGIC AGREEMENT, including whether any potential transaction or acquisition would trigger any change of control rights under the STRATEGIC AGREEMENT and YAHOO’s or the YAHOO ACQUIRER’s obligations respecting such rights.”

In this court’s opinion, Mozilla has not sufficiently demonstrated how the information sought by this request would have any tendency to prove or disprove some issue in this case. Mozilla’s cross-complaint alleges Yahoo “breached the terms and conditions of the Strategic Agreement by failing to ‘use commercially reasonable efforts to meet general product parity with the Search Market Leader … and by failing to ‘achieve the Post Launch Criteria and Ongoing Review …,’ including to ‘provide a search product competitive with the Search Market Leader’ …” (Cross-Complaint, ¶136.) The court agrees with Yahoo that Mozilla has not provided any factual explanation as to how or why such information would be contained in documents regarding solicitation. Moreover, as Yahoo points out, documents related to Mozilla’s cross-claim for breach are being provided pursuant to RPD, set one, numbers 1 – 2.

As indicated above, section 9.1.1 of the Strategic Agreement allows Mozilla the option to terminate following a change of control by Yahoo if “after seeking reassurances from the Acquirer, Mozilla reasonably believes that the Acquirer’s identity or business practices are likely to harm the Mozilla brand…” Thus, another sub-issue is whether Mozilla sought reassurance from the Acquirer. Here again, the court agrees with Yahoo that Mozilla has not sufficiently demonstrated good cause. Mozilla has not made a fact specific showing that such information would be contained in documents regarding solicitation.

Similarly, with regard to interpretation of the Strategic Agreement, Mozilla has not sufficiently demonstrated good cause. Mozilla has not made a fact specific showing that such information would be contained in documents regarding solicitation. Moreover, as Yahoo points out, documents related to interpretation of the Strategic Agreement are being provided pursuant to RPD, set one, number 35.

For the same reasons, the court finds Mozilla has not sufficiently demonstrated good cause for the information sought by RPD, set one, numbers 24 – 28 and 41. Accordingly, Mozilla’s motion to compel YHI, Oath, and Yahoo Singapore to provide further responses to RPD, set one, numbers 23 – 28 and 41, is DENIED.

III. Motion to Seal.

A court has the authority to order that a record be filed under seal only if it expressly finds facts that establish:

1. there exists an overriding interest that overcomes the right of public access to the record;
2. the overriding interest supports sealing the record;
3. a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed;
4. the proposed sealing is narrowly tailored; and
5. no less restrictive means exist to achieve the overriding interest.

(Cal. Rules of Court, Rule 2.550.)

The California Rules of Court do not define what constitutes an “overriding interest.” Instead, this has been left to case law. Different “[c]ourts have found that, under appropriate circumstances, various statutory privileges, trade secrets, and privacy interests, when properly asserted and not waived, may constitute overriding interests.” (In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 298, fn.3 (quoting Judicial Council advisory committee comment to [former] Rule 243.1) (affirming lower court order unsealing certain records over defendants’ objection that the materials contained proprietary trade secrets); see also NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1222, fn.46 (overriding interests found in various cases include: protection of minor victims of sex crimes from further trauma and embarrassment, privacy interests of a prospective juror during individual voir dire, protection of witnesses from embarrassment or intimidation so extreme that it would traumatize them or render them unable to testify, protection of trade secrets, protection of information within the attorney-client privilege, and enforcement of binding contractual obligations not to disclose, safeguarding national security, ensuring the anonymity of juvenile offenders in juvenile court, ensuring the fair administration of justice, and preservation of confidential investigative information).)

A declaration supporting a motion to seal should be specific, not conclusory, as to the facts supporting the overriding interest. If the court finds that the supporting declarations are conclusory or otherwise unpersuasive, it may conclude that the moving party has failed to demonstrate an overriding interest that overcomes the right of public access. (In re Providian Credit Card Cases, supra, 96 Cal.App.4th at pp. 301, 305.)

Further, where some material within a document warrants sealing but other material does not, the document should be edited or redacted if possible, to accommodate the moving party’s overriding interest and the strong presumption in favor of public access. (Cal. Rules of Court, Rule 2.550, subd. (e)(1)(B); see In re Providian Credit Card Cases, supra, 96 Cal.App.4th at p. 309.) In such a case, the moving party should take a line-by-line approach to the information in the document, rather than framing the issue to the court on an all-or-nothing basis. (In re Providian Credit Card Cases, supra, 96 Cal.App.4th at p. 309.)

Defendant/cross-complainant Mozilla’s motion to seal is unopposed. Defendant/cross-complainant Mozilla requests sealing:

(1) Portions of Mozilla’s Memorandum of Points and Authorities in Support of Its Motion to Compel Plaintiff and Cross-Defendant Yahoo Holdings, Inc. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018;
(2) Portions of Mozilla’s Memorandum of Points and Authorities in Support of Its Motion to Compel Plaintiff and Cross-Defendant Oath (EMEA) Ltd. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018;
(3) Portions of Mozilla’s Memorandum of Points and Authorities in Support of Its Motion to Compel Plaintiff and Cross-Defendant Yahoo! Singapore Digital Marketing Pte. Ltd. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018;
(4) Portions of Mozilla’s Separate Statement of Items in Dispute in Support of Its Motion to Compel Plaintiff and Cross-Defendant Yahoo Holdings, Inc. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018;
(5) Portions of Mozilla’s Separate Statement of Items in Dispute in Support of Its Motion to Compel Plaintiff and Cross-Defendant Oath (EMEA) Ltd. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018;
(6) Portions of Mozilla’s Separate Statement of Items in Dispute in Support of Its Motion to Compel Plaintiff and Cross-Defendant Yahoo! Singapore Digital Marketing Pte. Ltd. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018;
(7) Portions of Exhibits 1 – 7, 9, and 12 to the Declaration of Kristin J. Madigan in Support of Mozilla’s Motions to Compel Plaintiffs and Cross-Defendants Yahoo Holding, Inc., Oath (EMEA) Ltd., and Yahoo! Singapore Digital Marketing Pte. Ltd. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018.

as they contain information which was previously ordered sealed by this court. The request appears to be narrowly tailored.

Accordingly, the Motion to File Under Seal Portions of Defendant and Cross-Complainant Mozilla Corporation’s Documents ISO Motions to Compel Plaintiffs and Cross-Defendants Yahoo Holdings, Inc., Oath (EMEA) Ltd., and Yahoo! Singapore Digital Marketing Pte. Ltd. to Provide Further Responses to Requests for Production (Set 1) is GRANTED. The court finds: (1) there exists an overriding interest that overcomes the right of public access to the record; (2) the overriding interest supports sealing the record; (3) a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) the proposed sealing is narrowly tailored; and (5) no less restrictive means exist to achieve the overriding interest.

The court clerk is directed to seal the following unredacted documents and no public access to the unredacted documents will be allowed without further order from this court:

(1) Portions of Mozilla’s Memorandum of Points and Authorities in Support of Its Motion to Compel Plaintiff and Cross-Defendant Yahoo Holdings, Inc. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018;
(2) Portions of Mozilla’s Memorandum of Points and Authorities in Support of Its Motion to Compel Plaintiff and Cross-Defendant Oath (EMEA) Ltd. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018;
(3) Portions of Mozilla’s Memorandum of Points and Authorities in Support of Its Motion to Compel Plaintiff and Cross-Defendant Yahoo! Singapore Digital Marketing Pte. Ltd. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018;
(4) Portions of Mozilla’s Separate Statement of Items in Dispute in Support of Its Motion to Compel Plaintiff and Cross-Defendant Yahoo Holdings, Inc. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018;
(5) Portions of Mozilla’s Separate Statement of Items in Dispute in Support of Its Motion to Compel Plaintiff and Cross-Defendant Oath (EMEA) Ltd. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018;
(6) Portions of Mozilla’s Separate Statement of Items in Dispute in Support of Its Motion to Compel Plaintiff and Cross-Defendant Yahoo! Singapore Digital Marketing Pte. Ltd. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018;
(7) Portions of Exhibits 1 – 7, 9, and 12 to the Declaration of Kristin J. Madigan in Support of Mozilla’s Motions to Compel Plaintiffs and Cross-Defendants Yahoo Holding, Inc., Oath (EMEA) Ltd., and Yahoo! Singapore Digital Marketing Pte. Ltd. to Provide Further Responses to Requests for Production (Set 1), filed May 21, 2018

Counsel for moving party must contact clerk to facilitate the sealing of said documents.