Stemcell Technologies Canada Inc. v. StemExpress, LLC ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 San Francisco Division 11 STEMCELL TECHNOLOGIES CANADA Case No. 21-cv-01594-VC (LB) INC., et al., 12 Plaintiffs, DISCOVERY ORDER 13 v. Re: ECF No. 123 14 STEMEXPRESS, LLC, et al., 15 Defendants. 16 17 INTRODUCTION 18 In this case, two biotech companies that previously had a business relationship sued each other 19 for breach of contract and theft of trade secrets, among other claims.1 STEMCELL moved (1) to 20 compel responses or supplemental responses to eight interrogatories, and (2) for attorney’s fees 21 incurred in bringing the motion. In response, StemExpress requested (1) a protective order for the 22 interrogatories and (2) sanctions against STEMCELL.2 The court can decide the issues without oral 23 argument. N.D. Cal. Civ. L.R. 7-1(b). The court denies STEMCELL’s motion to compel further 24 25 26 1 First Am. Compl. – ECF No. 20; First Am. Countercls. – ECF No. 51. Citations refer to material in the Electronic Case File (ECF); pinpoint citations are to the ECF-generated page numbers at the top of 27 documents. 2 Joint Disc. Letter – ECF No. 123. StemExpress filed an objection to the letter brief, but did not 1 responses to Interrogatories Nos. 1–2, 6, and 9 but orders further responses to Interrogatories Nos. 2 4–5 and 10–11. 3 STATEMENT 4 In the parties’ previous business relationship, StemExpress supplied cell products (sometimes 5 referred to by the parties as “leukopak” products) to STEMCELL. The relationship was governed 6 by a contract that had confidentiality provisions. When the relationship ended, the parties sued 7 each other for, among other claims, breach of contract. StemExpress also claimed that through 8 STEMCELL’s quality audits of StemExpress’s facilities, STEMCELL gained access to and 9 misappropriated StemExpress’s trade secrets to start STEMCELL’s own competing business 10 (called Canventa), in violation of the California Uniform Trade Secrets Act (CUTSA).3 The trial 11 court referred all discovery disputes to the undersigned.4 12 13 ANALYSIS 14 Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s 15 claim or defense and proportional to the needs of the case, considering the importance of the issues at 16 stake in the action, the amount in controversy, the parties’ relative access to relevant information, the 17 parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or 18 expense of the proposed discovery outweighs its likely benefit. Information within this scope of 19 discovery need not be admissible in evidence to be discoverable. Fed. R. Civ. P. 26(b). 20 STEMCELL challenges StemExpress’s responses to its Interrogatories Nos. 1–2, 4–6, and 9–11.5 21 These eight interrogatories were the subject of a previous discovery order of June 14, 2022, after 22 which StemExpress served amended responses on July 6, 2022.6 StemExpress generally argues that 23 24 25 3 First Am. Compl. – ECF No. 20; First Am. Countercls. – ECF No. 51. 26 4 Order of Reference – ECF No. 52. 27 5 Joint Disc. Letter – ECF No. 123 at 1–3. 6 Order – ECF No. 108 at 9–10; StemExpress’s Am. Resps. to STEMCELL’s First Set of Interrogs., 1 those amended responses are detailed and sufficient.7 The court denies STEMCELL’s motion to 2 compel further responses to Interrogatories Nos. 1–2, 6, and 9. The court orders further responses to 3 Interrogatories Nos. 4–5 and 10–11, except that the court limits the date range for those 4 interrogatories to the period of the parties’ contractual relationship (2014–2018). 5 Interrogatories Nos. 1–2 ask StemExpress to distinguish the trade secrets from “information in 6 the public domain” and “matters of general knowledge in the trade and of special knowledge of 7 persons skilled in the trade.”8 The court previously struck one of StemExpress’s trade secret 8 designations and upheld the other ten.9 StemExpress’s responses to Interrogatories Nos. 1–2 9 provided twenty-seven pages of further detail on those ten trade secrets.10 For example, 10 StemExpress distinguished its “process for screening potential biospecimen donors for inclusion 11 within its donor pool” from information in the public domain. Although “portions of [that process] 12 may be publicly available,” the process “as a whole [is not] publicly known,” because “[o]ver 13 time, StemExpress developed and modified publicly available . . . processes for screening 14 potential biospecimen donors . . . based on considerations of demographic and health information 15 of the donor as well as StemExpress’ own eligibility, exclusion, and deferral criteria.”11 16 In challenging StemExpress’s amended responses to Interrogatories Nos. 1–2, STEMCELL 17 argues only in generalities, asserting that “[a] specific identification of claimed trade secrets is 18 required when ownership of the claimed trade secret is not obvious.”12 As StemExpress points out, 19 STEMCELL has “failed to properly . . . articulate” what is inadequate about StemExpress’s amended 20 responses.13 The court thus denies the motion to compel further responses to Interrogatories Nos. 1–2. 21 Khalilpour v. CELLCO P’ship, No. C 09-02712 CW MEJ, 2010 WL 1267749, at *1 (N.D. Cal. Apr. 22 23 7 Joint Disc. Letter – ECF No. 123 at 3–5. 24 8 Statement of Unresolved Disputes, Ex. A to Joint Disc. Letter – ECF No. 123 at 9, 11. 9 Order – ECF No. 80 at 7–13. 25 10 StemExpress’s Am. Resps. to STEMCELL’s First Set of Interrogs., Ex. A to Quinto Decl. – ECF 26 No. 123-2 at 3–30. 11 Id. at 4. 27 12 Statement of Unresolved Disputes, Ex. A to Joint Disc. Letter – ECF No. 123 at 9–13. 1 1, 2010) (a party opposing discovery “can meet its burden by demonstrating . . . that the person 2 seeking discovery fails to show need for the information”). 3 In any event, the court already held that StemExpress’s trade secret designations are sufficient. 4 Where that is the case, a trade-secret-misappropriation plaintiff is not required, through interrogatory 5 responses, to identify its trade secrets with greater particularity. See Soc. Apps, LLC v. Zynga, Inc., 6 No. 4:11-CV-04910 YGR, 2012 WL 2203063, at *2 (N.D. Cal. June 14, 2012) (CUTSA trade-secret 7 designations “define[] the trade secrets at issue in the litigation with sufficient specificity that the 8 defendant, as well as the court, is notified of the scope of the matters relevant to the claims”). 9 Interrogatory No. 4 asks StemExpress to “identify each person or entity to whom or to which 10 [StemExpress] ha[s] disclosed” its trade secrets.14 StemExpress has apparently limited its response to 11 outside consultants to whom it disclosed the trade secrets, and not customers, on the ground that the 12 parties agreed to such a limitation during meet-and-confer. STEMCELL denies such an agreement 13 and points out that whether StemExpress’s “[trade] secrets were subject to reasonable measures to 14 protect their secrecy” is a relevant topic of discovery.15 StemExpress must amend its response to 15 Interrogatory No. 4 by identifying any customers to whom it disclosed its trade secrets. Cal. Civ. 16 Proc. Code § 3426.1(d)(1) (a trade secret must be “the subject of efforts that are reasonable under the 17 circumstances to maintain its secrecy”). 18 Interrogatory No. 5 is about how each of StemExpress’s trade secrets “derive[] independent 19 economic value from not being known to” others.16 StemExpress did not provide responses specific 20 to each trade secret.17 California law makes specific responses relevant. Id. § 3426.1(d)(1) (a trade 21 secret must “[d]erive[] independent economic value . . . from not being generally known to the public 22 or to other persons who can obtain economic value from its disclosure or use”); Altavion, Inc. v. 23 Konica Minolta Sys. Lab’y, Inc., 226 Cal. App. 4th 26, 62 & n.26 (2014). StemExpress must amend 24 25 14 Statement of Unresolved Disputes, Ex. A to Joint Disc. Letter – ECF No. 123 at 14. 26 15 Id. 27 16 Id. at 15. 17 StemExpress’s Am. Resps. to STEMCELL’s First Set of Interrogs., Ex. A to Quinto Decl. – ECF 1 its response to Interrogatory No. 5 by explaining how each of its ten trade secrets derive economic 2 value from not being known to others. 3 Interrogatory No. 6 asks for “all facts that show . . . [that each cross-defendant] has used” each of 4 StemExpress’s trade secrets. StemExpress contends that its eleven-page response is sufficient, and 5 STEMCELL counters that the response explains only “that STEMCELL might have wanted to use 6 StemExpress’s purported trade secrets,” not that STEMCELL actually used them.18 Nonetheless, the 7 court has no reason to believe that StemExpress’s response is incomplete. The motion to compel is 8 denied as to Interrogatory No. 6. 9 Next, Interrogatory No. 9 seeks “what confidential, but non-trade secret information . . . was 10 allegedly misused by” STEMCELL and Canventa. STEMCELL asserts StemExpress’s responses to 11 be inadequate because they “merely rephrased [StemExpress’s] claimed trade secrets.”19 Again, the 12 court has no reason to believe that StemExpress’s response is incomplete; as StemExpress contends, 13 the issue “is whether StemExpress properly responded to the request, not the ultimate merits of 14 whether StemExpress’[s] confidential information qualifies for protection.”20 The motion to compel a 15 further response to Interrogatory No. 9 is denied. 16 As to Interrogatories Nos. 10 and 11, which ask for the identities of StemExpress customers who 17 purchased certain cell products, the court previously held that these interrogatories are relevant but 18 left open the question of whether they are proportional as phrased.21 Now, STEMCELL seeks to 19 compel responses within the date range January 1, 2017, to December 31, 2020, while StemExpress 20 contends that “a scope of four full years is not narrowly tailored or reasonable.”22 The court limits the 21 date range to January 1, 2017, to December 31, 2018, as explained below. The motion to compel is 22 granted as to Interrogatories Nos. 10 and 11 within that date range. 23 24 25 18 Statement of Unresolved Disputes, Ex. A to Joint Disc. Letter – ECF No. 123 at 16–17. 26 19 Id. at 17–19. 20 Id. at 19. 27 21 Order – ECF No. 108 at 9–10. ] The parties also dispute whether STEMCELL’s interrogatories should be limited to the duratio 2 || of the parties’ contractual relationship (2014—2018).** The court previously noted, and the parties 3 have already represented to the court, that they “agreed to limit the scope of all requests to [that] 4 || duration.”*4 Thus, for those interrogatories as to which STEMCELL’s motion to compel is granted 5 (Nos. 4-5 and 10-11), StemExpress need only provide responses within the date range January 1, 6 2014, to December 31, 2018. 7 STEMCELL also seeks attorney’s fees incurred in connection with raising the dispute over its 8 interrogatories.”> In response, StemExpress requests sanctions against STEMCELL.”® The court 9 || has previously noted that “both parties have failed to cooperate reasonably” in discovery.”” That 10 || trend continues unabated. The court denies attorney’s fees and sanctions on this record. The court 11 adds that the district’s letter-brief process is designed to have the parties work out solutions 12 || collaboratively and to get earlier intervention (if possible) than the ordinary five-week process for 13 noticed motions. The court also generally (but not always) reserves sanctions and fees issues for 14 || the end of discovery, when the parties’ conduct is illuminated fully. o 16 CONCLUSION 17 This resolves the dispute in ECF No. 123. 18 IT IS SO ORDERED. LAE 19 Dated: September 3, 2022 LAUREL BEELER 20 United States Magistrate Judge 21 22 23 24 25 || 3 Id. at 26-27. 4 Order — ECF No. 108 at 10 (quoting Statement of Unresolved Issues — ECF No. 104-1 at □□□□□□ °5 Statement of Unresolved Disputes, Ex. A to Joint Disc. Letter — ECF No. 123 at 27-28. 27 6 Joint Disc. Letter - ECF No. 123 at 3. 28 || 7’ Order — ECF No. 108 at 10.