Racies v. Quincy Bioscience, LLC ( 2020 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 PHILLIP RACIES, Case No. 15-cv-00292-HSG 8 Plaintiff, ORDER ON PLAINTIFF’S MOTION TO REOPEN DISCOVERY AND 9 v. ADMINISTRATIVE MOTION TO FILE UNDER SEAL 10 QUINCY BIOSCIENCE, LLC, Re: Dkt. Nos. 238, 239 11 Defendant. 12 13 Plaintiff filed a motion to reopen discovery to depose a Rule 30(b)(6) witness regarding 14 Defendant’s sales of Prevagen to California consumers. Dkt. No. 239 (“Mot.”). Because Plaintiff 15 fails to establish good cause to reopen discovery, the Court DENIES Plaintiff’s motion. 16 I. BACKGROUND 17 A. Procedural Background 18 This dispute stems from Plaintiff’s second motion in limine, which the Court denied on the 19 record at the December 17, 2019 pretrial conference. Plaintiff’s second motion in limine sought to 20 preclude Defendant from contesting the dollar amount paid by Class Members for Prevagen 21 Products during the Class Period. See generally Dkt. No. 199. Defendant argued that Plaintiff 22 was improperly trying to shift his burden to prove damages onto Defendant. Dkt. No. 213 at 2. 23 The Court agreed and denied the motion, since Plaintiff has the burden of proving damages at trial. 24 Dkt. No. 244 at 8:1–9; see also Lambert v. Nutraceutical Corp., 870 F.3d 1170, 1184 (9th Cir. 25 2017), rev’d and remanded on other grounds, 139 S. Ct. 710 (2019) (burden is on plaintiff to 26 prove “damages to a reasonable certainty on the basis of his full refund model”). 27 Defendant also claimed that the figures it had provided to Plaintiff were not “reasonable 1 its own customers, which are third-party retailers and wholesalers. Dkt. No. 213 at 2–3. As such, 2 Defendant would not stipulate to these figures as the actual dollar amount paid by Class Members. 3 Id. at 3. At the pretrial conference, Plaintiff’s counsel claimed that Defendant had made 4 misrepresentations about the nature of the provided California sales figures and thus requested that 5 he be allowed to depose a Rule 30(b)(6) witness regarding the figures. Dkt. No. 244 at 10:10– 6 12:9, 14:2–10. Defendant objected on the basis that Plaintiff could have made this request during 7 discovery. Id. at 14:11–15:5. 8 To resolve the newly-raised dispute, the Court directed Plaintiff to file a motion with the 9 specific relief sought and supporting authority, now presently before the Court. See id. at 16:20– 10 17:9. 11 B. Discovery Concerning California Sales Figures 12 In 2016, Plaintiff served interrogatories on Defendant, seeking the following information 13 regarding sales: (1) the number of wholesale and retail units sold; (2) “net sales attributable to 14 Your Product in each of the Class States”; (3) the “gross profit margin for Your Product in each of 15 the Class States”; (4) the average “wholesale price, manufacturer suggested retail price, [and] the 16 average retail price for Your Product sold in each of the Class States”; and (5)“the number of each 17 Product sold.” Dkt. No. 239-2, Ex. A at 10–13. Defendant responded with boilerplate objections, 18 and also represented that it would produce documents “from which [Plaintiff] may ascertain” 19 some of the requested information. With respect to the request for information on net sales, 20 Defendant responded that it would produce documents “from which [Plaintiff] may ascertain the 21 gross sales revenue of each of [Defendant’s] products on an annual nationwide basis.” Id. at 11. 22 Defendant produced the “requested sales information” on September 7, 2017, and supplemented 23 the “estimated California sales” information on November 13, 2019. Dkt. No. 239-5, Ex. D; Dkt. 24 No. 239-7, Ex. F. 25 On October 13, 2017, in support of Defendant’s opposition to Plaintiff’s motion for class 26 certification, Mark Y. Underwood, then President of Quincy, submitted a declaration explaining 27 the produced sales information. Dkt. No. 128-1, Declaration of Mark Y. Underwood In Support 1 Specifically, Mr. Underwood explained that “the vast majority of Quincy’s sales are currently to 2 third-party retailers and distributors, and Quincy has no way of identifying consumers who 3 purchased Prevagen from those retailers and distributors.” Id. ¶ 10. According to Mr. 4 Underwood, in 2015 and 2016, direct sales to individual consumers constituted less than 20% of 5 Quincy’s sales revenues, and before then, direct sales constituted about half of all sales in 6 California. Id. In addition, Mr. Underwood made clear that the sales information Defendant 7 produced to Plaintiff on September 7, 2017, “included direct and wholesale sales, not retail sales 8 as Plaintiff’s Motion asserts. Quincy does not have retail sales information for third-party 9 retailers.” Id. ¶ 11. 10 II. MOTION TO REOPEN DISCOVERY 11 A. Legal Standard 12 Federal Rule of Civil Procedure 16 provides that “[a] schedule may be modified only for 13 good cause and with the judge’s consent.” Fed. R. Civ. P. 16. “Rule 16(b)’s ‘good cause’ 14 standard primarily considers the diligence of the party seeking the amendment.” Johnson v. 15 Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir.1992); see also Fed. R. Civ. P. 16 16 Advisory Committee’s Notes (1983 amendment) (noting court may modify schedule “if it cannot 17 reasonably be met despite the diligence of the party seeking the extension”). Thus, “Rule 16(b)’s 18 ‘good cause’ standard primarily considers the diligence of the party seeking the amendment.” Id.; 19 see also Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 2000). Where the moving 20 party has not been diligent, the inquiry ends, and the motion should be denied. Zivkovic v. S. Cal. 21 Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002); Johnson, 975 F.2d at 609. Whether or not to 22 reopen discovery is in the discretion of the district court: the district court has “wide latitude in 23 controlling discovery.” United States v. Reliance Ins. Co., 799 F.2d 1382, 1387 (9th Cir. 1986). 24 B. Discussion 25 Plaintiff seeks the following “sanctions” from the Court: (1) the Court “order Defendant to 26 produce for deposition, before trial, a Rule 30(b)(6) corporate designee who is knowledgeable and 27 prepared to testify as to Defendant’s California sales during the Class Period … and will produce 1 figure disclosed by Quincy and its counsel … will be taken as established for purposes of the trial 2 of this class action.”1 Mot. at 8. According to Plaintiff, sanctions are necessary because 3 Defendant failed to timely disclose relevant “California sales” information to Plaintiff and “admit 4 the veracity of the information it has produced through its counsel.” Id. Plaintiff’s counsel stated 5 that based on Defendant’s 2017 and 2019 responses, he “made the strategic decision, in reliance 6 upon the numbers being verified, to accept these numbers as the damages amount as it simplified 7 what might otherwise be more a complicated presentation to and decision for the Jury.” Dkt. No. 8 239-8, Declaration of Stewart M. Weltman ¶ 7. Plaintiff’s counsel further asserts that he “had no 9 way of knowing, until recently, that Quincy and its counsel would disavow the fact that the sales 10 figures they were producing, both in 2017 and 2019, were ‘California sales figures.’” Mot. at 7. 11 The Court is not persuaded. Defendant is not “disavowing” that the figures are “California 12 sales figures,” but rather disputes Plaintiff’s characterization that the figures represent California 13 retail sales figures to individual consumers (in other words, to Class Members). See Dkt. No. 249 14 (“Opp.”) at 6. Even if Defendant initially may have been vague in its discovery responses, the 15 critical fact is that since at least October 13, 2017, Plaintiff has been on notice that the provided 16 figures were mainly comprised of Prevagen sales to third-party retailers and distributors, and that 17 Quincy did not have retail information from its third-party retailers. Once Plaintiff became aware 18 of this, he could have sought third-party discovery from the retailers, conducted expert discovery, 19 deposed a Rule 30(b)(6) witness, or requested any other relief available to him. Plaintiff’s failure 20 to do anything in over two years is fatal to his motion, as Plaintiff clearly was not diligent.2 21 At trial, Plaintiff may present whatever admissible evidence he has to prove his damages 22 theory, including calling Mr. Underwood to testify about the significance of the provided sales 23 information. But he may not reopen discovery, nor will the Court impose any type of sanctions on 24 1 The Court already denied Plaintiff’s second request, which was the subject of Plaintiff’s second 25 motion in limine, and will not revisit the issue. 2 Mr. Underwood’s declaration from October 2017 directly contradicts Plaintiff’s assertion that 26 “no one from Quincy, neither its counsel nor Mr. Underwood, took issue with the [ ] number for California sales that was cited by Plaintiff to this Court in support of class certification.” See Mot. 27 at 5. Clearly that was not the case, as Mr. Underwood made clear that the sales information 1 Defendant for Plaintiff’s lack of diligence. More than two years later at the eve of trial, Plaintiff 2 asks the Court to make up for his failure to diligently conduct discovery on damages. But that 3 decision falls on Plaintiff alone. 4 Because Plaintiff was not diligent in seeking to reopen discovery, the Court DENIES 5 Plaintiff’s motion. Defendant is on notice that, should any defense witness contradict prior 6 representations regarding what the produced figures are, the Court may allow Plaintiff to cross- 7 examine defense counsel regarding any discrepancies. 8 III. ADMINISTRATIVE MOTION TO FILE UNDER SEAL 9 The Court now turns to Plaintiff’s administrative motion to file under seal the unredacted 10 version of his motion to reopen discovery and supporting documents. Dkt. No. 238. 11 A. Legal Standard 12 Courts generally apply a “compelling reasons” standard when considering motions to seal 13 documents. Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010) (quoting Kamakana 14 v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006)). “This standard derives from the 15 common law right ‘to inspect and copy public records and documents, including judicial records 16 and documents.’” Id. (quoting Kamakana, 447 F.3d at 1178). “[A] strong presumption in favor of 17 access is the starting point.” Kamakana, 447 F.3d at 1178 (quotations omitted). To overcome this 18 strong presumption, the party seeking to seal a judicial record attached to a dispositive motion 19 must “articulate compelling reasons supported by specific factual findings that outweigh the 20 general history of access and the public policies favoring disclosure, such as the public interest in 21 understanding the judicial process” and “significant public events.” Id. at 1178–79 (quotations 22 omitted). “In general, ‘compelling reasons’ sufficient to outweigh the public’s interest in 23 disclosure and justify sealing court records exist when such ‘court files might have become a 24 vehicle for improper purposes,’ such as the use of records to gratify private spite, promote public 25 scandal, circulate libelous statements, or release trade secrets.” Id. at 1179 (quoting Nixon v. 26 Warner Commc’ns, Inc., 435 U.S. 589, 598 (1978)). “The mere fact that the production of records 27 may lead to a litigant’s embarrassment, incrimination, or exposure to further litigation will not, 1 Records attached to nondispositive motions must meet the lower “good cause” standard of 2 Rule 26(c) of the Federal Rules of Civil Procedure, as such records “are often unrelated, or only 3 tangentially related, to the underlying cause of action.” Jd. at 1179-80 (quotations omitted). This 4 || requires a “particularized showing” that “specific prejudice or harm will result” if the information 5 is disclosed. Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1210-11 (9th 6 || Cir. 2002); see also Fed. R. Civ. P. 26(c). “Broad allegations of harm, unsubstantiated by specific 7 || examples of articulated reasoning” will not suffice. Beckman Indus., Inc. v. Int’l Ins. Co., 966 8 F.2d 470, 476 (9th Cir. 1992) (quotation omitted). 9 B. Discussion 10 Plaintiffs sealing request seeks to seal information materially identical to prior sealing 11 requests, which the Court granted. See Dkt. No. 227. Plaintiff requests to seal the Prevagen 12 || California sales information referenced in his motion to reopen discovery, the supporting 5 13 || declarations, and Exhibits C and F. Dkt. No. 238. Defendant filed its supporting Rule 79-5 14 || declaration reaffirming that the sales information contained sensitive and confidential information 3 15 “not known to the public or competitors of Defendant,” and disclosure of such information would 16 || injure its business interests. Dkt. No. 250 at 4] 11. The Court previously held the information was 3 17 sealable, and sees no reason why it should here find that the information no longer meets the 18 “good cause” standard. See Dkt. No. 227 at 2-3. Plaintiffs administrative motion to file under 19 seal is GRANTED. 20 IV. CONCLUSION 21 The Court DENIES Plaintiff's motion to reopen discovery, Dkt. No. 239, and GRANTS 22 the administrative motion to seal, Dkt. No 238. Pursuant to Civil Local Rule 79-5((1), 23 || documents filed under seal as to which the motion is granted will remain under seal. The public 24 || will have access only to the redacted versions accompanying the administrative motion. 25 IT IS SO ORDERED. 26 || Dated: 1/4/2020 Alar 5 HAYWOOD S. GILLIAM, JR. 28 United States District Judge