TGG Management Company, Inc. v. Petraglia ( 2021 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 TGG MANAGEMENT COMPANY, Case No.: 19cv2007-BAS(KSC) INC. (DBA TGG ACCOUNTING), 12 ORDER RE JOINT MOTION FOR Plaintiff, 13 DETERMINATION OF DISCOVERY v. DISPUTE RE PLAINTIFF’S 14 RESPONSES TO DOCUMENT JOHN PETRAGLIA; MEGAN ZERBA; 15 REQUESTS SAYVA SOLUTIONS, INC.; et al., 16 Defendants. [Doc. No. 134.] 17 18 Before the Court is a Joint Motion for Determination of Discovery Dispute 19 regarding plaintiff’s responses to Document Request Nos. 45, 46, 47, and 48 served by 20 defendants Sayva Solutions, Inc. and Holiday Foliage, Inc. For the reasons outlined more 21 fully below, the Court finds that defendants’ request for an order compelling plaintiff to 22 produce all documents responsive to these requests must be GRANTED. [Doc. No. 134.] 23 Background 24 Plaintiff provides accounting and business advisory services for business clients 25 and has developed an accounting and finance system referred to as “The TGG Way.” 26 The Complaint alleges that plaintiff discovered through forensic analysis that its former 27 employees misappropriated trade secrets by copying plaintiff’s proprietary information 28 and trade secrets before they left their employment with plaintiff. These employees then 1 went to work for defendant Sayva Solutions, Inc. (“Sayva”), an alleged competitor of 2 plaintiff, and allegedly used plaintiff’s confidential and proprietary information to build 3 an accounting division by improperly soliciting plaintiff’s clients. [Doc. No. 114, at pp. 4 1-2.] 5 Discussion 6 Defendants’ Document Request Nos. 45, 46, 47, and 48 seek disclosure of any 7 trade secrets that plaintiff believes defendants misappropriated. [Doc. No. 134, at p. 5.] 8 Plaintiff responded to these requests with boilerplate objections but also stated it would 9 “produce a list of all documents that [plaintiff] believes [defendants] misappropriated. 10 Discovery is continuing.” [Doc. No. 134, at p. 5.] 11 As defendants contend, it is plaintiff’s burden to identify any trade secrets that it 12 believes defendants misappropriated. [Doc. No. 134, at p. 6, citing MAI Systems Corp. v. 13 Peak Computer, Inc., 991 F.2d 511, 522 (9th Cir. 1993) (stating that “a plaintiff who 14 seeks relief for misappropriation of trade secrets must identify the trade secrets and carry 15 the burden of showing that they exist”). 16 There is no dispute between the parties as to the relevance and importance of the 17 documents defendants seek in response to Document Request Nos. 45, 46, 47, and 48. 18 [Doc. No. 134, at p. 7.] In the Joint Motion, plaintiff concedes that “[defendants’] 19 attorneys and experts should be afforded the opportunity to inspect the documents to 20 enable them to prepare their defense.” [Doc. No. 134, at p. 7.] 21 Plaintiff offers only two reasons it has not produced the documents. First, at the 22 time the Joint Motion was filed, a protective order had not yet been entered in the case to 23 protect confidentiality concerns. [Doc. No. 134, at p. 7.] A confidentiality Protective 24 Order is now in place [Doc. No. 140], so this reason is no longer a valid one. 25 Second, plaintiff contends that defendants “are already in possession of a majority 26 of the misappropriated documents,” and plaintiff “took great lengths to identify with 27 particularity the items that they deem trade secret via its Complaint” and other documents 28 previously filed in the case in connection with its Motion for Preliminary Injunction. 1 [Doc. No. 134, at p. 8.] In plaintiff’s view, it is “unreasonable and burdensome” for 2 defendants to expect plaintiff to produce documents that defendants “and their expert 3 already have in their possession and control.”1 [Doc. No. 134, at p. 8.] 4 Plaintiff’s contention that defendants already have most of the misappropriated 5 documents in their possession and control is apparently based on statements Sayva made 6 in a prior filing while plaintiff’s Motion for Preliminary Injunction was pending before 7 the District Court. [Doc. No. 134, at pp. 7, 9-10.] In this regard, Sayva filed an 8 Opposition to Plaintiff’s Motion for Expedited Discovery on November 20, 2019. [Doc. 9 No. 44.] In this Opposition, Sayva represented that it had retained a third-party vendor, 10 iDiscovery Solutions, to conduct a forensics investigation. The purpose of this 11 investigation was to “identify, preserve, and remediate all [of plaintiff’s] documents 12 copied by [defendants Petraglia and Zerba] . . . that reside on any computer, device, or 13 server used by [defendant Sayva] and its employees.” [Doc. No. 44, at p. 6.] Sayva’s 14 plan was to have iDiscovery Solutions isolate and remove any such documents from its 15 computer system and have them preserved for this litigation. [Doc. No. 44, at pp. 4-14.] 16 Statements made by Savya about the forensics investigation were also supported by 17 declarations. [Doc. Nos. 44-1, 44-2.] 18 Plaintiff did offer to produce “an example of each type of trade secret that was 19 misappropriated so that defendants can compare those documents to the documents 20 [defendants] produced to [plaintiff].” [Doc. No. 134, at p. 8.] Understandably, 21 22 23 1 Plaintiff also complains in the Joint Motion that it has “yet to see the universe of documents collected by iDS” and refers to other disputes over defendants’ responses to 24 plaintiff’s discovery requests. [Doc. No. 134, at pp. 10-12.] However, these issues are 25 not currently before the Court. The parties’ Joint Motion was filed to raise disputes related to plaintiff’s responses to defendants’ document requests, not to determine 26 whether defendants have satisfied their discovery obligations to plaintiff. Plaintiff’s 27 remedy, of course, is to meet and confer and follow the Chambers Rules to timely file its own joint motion if it is unable to resolve its disputes with defendants without the Court's 28 1 || defendants rejected plaintiffs offer “to produce exemplars of its trade secrets.” [Doc. 2 || No. 134-1, at p. 3.] Defendants explain their belief in the Joint Motion that many of the 3 ||documents at issue in the case, such as Excel workbooks and Excel formulas that are used 4 |/in general accounting, cannot constitute plaintiff's trade secrets. For their defense, it is 5 || therefore “critical” for plaintiff to specifically identify all documents believed to include 6 || trade secrets that were allegedly misappropriated by producing all documents responsive 7 Request Nos. 45, 46, 47, and 48. [Doc. No. 134, at p. 6.] Therefore, the Court finds 8 || that defendants are entitled to an order compelling plaintiff to produce all documents 9 || responsive to Document Request Nos. 45, 46, 47, and 48. 10 Conclusion 11 Based on the foregoing, IT IS HEREBY ORDERED that defendants’ request for 12 order compelling plaintiff to produce all documents responsive to Document Request 13 || Nos. 45, 46, 47, and 48 is GRANTED. Plaintiff must produce all documents responsive 14 Document Request Nos. 45, 46, 47, and 48 within ten (10) days of the date this Order 15 entered. 16 IT IS SO ORDERED. 17 Dated: May 12, 2021 A /; ) 18 WU LA _———_ 19 Hori. Karen S. Crawford United States Magistrate Judge 20 21 22 23 24 25 26 27 28