Better Meat Co. v. Emergy, Inc.

District Court, E.D. California·Decided July 28, 2022·No. 2:21-cv-02338·Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 BETTER MEAT COMPANY, No. 2:21-cv-02338-KJM-CKD 12 Plaintiff, 13 v. ORDER 14 EMERGY, INC., dba MEATI FOODS, et al., 15 Defendants. 16

17 18 Plaintiff Better Meat Company (“Better Meat”) moves for an order compelling discovery, 19 including depositions and further production of documents, including attorney-client privileged 20 documents. (ECF No. 70.) The parties appeared for a hearing on this matter via videoconference 21 on July 27, 2022. Counsel Jeffrey Theodore and Eric Scott Schlabs appeared for Better Meat, 22 Jeffrey Daniel Smyth, David Mroz, and Sonja Sahlsten for defendant Emergy, Inc. (“Emergy”), 23 and Michael Jones and Kate McKenney for Bond Capital Management LP and Paul Vronsky 24 (“Bond defendants”). 25 I. BACKGROUND 26 Better Meat alleges it invented a meat substitute called “Rhiza,” whose underlying 27 technology resulted from “extensive time, effort, and resources devoted by [Better Meat] to 28 researching mycelium- and mycoprotein-based foods.” (Compl. ¶¶ 16–17, ECF No. 1.) In 1 connection with Rhiza and its underlying technology, a patent issued to Better Meat in July 2021. 2 (Id. ¶¶ 18–19.) Augustus Pattillo, Better Meat’s co-founder and former Chief Technology Officer, 3 was listed as the sole inventor. (Id. ¶¶ 30, 69.) 4 Three days after Better Meat obtained its patent, Emergy, a competitor in the animal-free 5 meat business, sent “twin letters” to Better Meat and Pattillo. (Id. ¶ 30; ECF No. 33-9 & 10.) The 6 letters asserted Pattillo had worked for Emergy and had used and disclosed Emergy’s confidential 7 and proprietary information to develop and patent Better Meat’s products. (Id.) Emergy accused 8 Better Meat and Pattillo of trade secret misappropriation and unfair competition and demanded 9 Better Meat withdraw Rhiza from the market, “correct” the patent, and assign ownership to 10 Emergy. (Id.) Better Meat refused and denied Emergy’s allegations but offered to consider 11 whatever evidence Emergy could offer. (See ECF No. 33-11.) Emergy responded but Better Meat 12 was unmoved. (See ECF Nos. 33-12, 33-13.) 13 In late November 2021, Better Meat formally engaged with potential investors in a “Series 14 A financing round.” (Compl. ¶¶ 36–38.) Better Meat hoped to secure funding to build a facility 15 capable of commercial-scale production. (Id. ¶ 38.) To those ends, Better Meat signed a term 16 sheet with a “lead investor” for the Series A investment round, a “prominent and well-regarded 17 California private equity investor with many years in the industry and extensive contacts and 18 name recognition.” (Id. ¶ 39.) Better Meat “used that investor’s name while soliciting further 19 investors to fill out the round, including other investors in California.” (Id.) Then, on December 20 15, 2021, Emergy and one of its investors, Paul Vronsky, sent the two communications that 21 spurred this litigation. (See id. ¶¶ 41–51.) Mr. Vronsky is a partner at defendant Bond Capital 22 Management LP, an Emergy investor. (See id. ¶ 46; ECF No. 33-15.) 23 First, Emergy sent Better Meat a letter reiterating its accusations of trade-secret 24 misappropriation and unfair competition. (See ECF No. 33-14.) Emergy expressed its intent to 25 “move forward with legal action” and “fil[e] a complaint . . . in the immediate future.” (Id.) 26 Emergy further stated it would seek an order “directing the Director of the United States Patent 27 and Trademark Office to correct the inventorship” of Better Meat’s patent by naming Emergy’s 28 founders as the rightful inventors. (Id.) Second, thirteen minutes after Emergy’s counsel sent his 1 letter, Vronsky sent Better Meat’s “lead investor” the following email: 2 I wanted to give you a heads up that one of our portfolio companies, [Emergy], is in a pretty significant trade secret and patent dispute 3 with a company you might be evaluating, The Better Meat Co. I don’t know really more than that but as a matter of friendship and courtesy, 4 I thought I would reach out and let you know. I’m happy to connect with your counsel if that is helpful. 5 6 (Vronsky Email at 2.) 7 Better Meat filed this lawsuit against Emergy, Bond Capital, and Vronsky two days later, 8 seeking a declaratory judgment of inventorship, and asserting state-law claims for tortious 9 interference and unfair competition under California Business & Professions Code section 17200 10 et seq. (ECF No. 1.) Better Meat alleges the Emergy and Vronsky communications were sent with 11 the “sole intent” of forcing Better Meat to “disclose Emergy’s baseless allegations to potential 12 investors as a means of suppressing [Better Meat’s] fundraising.” (Id. ¶ 4; see also id. ¶ 50.) 13 Emergy filed a separate lawsuit against Better Meat and Pattillo ten days later (see ECF 14 No. 33-1); it also filed an anti-SLAPP motion to strike Better Meat’s state-law claims, arguing the 15 communications at issue are protected by California’s litigation privilege as a matter of law (ECF 16 No. 31).1 Better Meat requested and was granted an opportunity to conduct expedited discovery 17 to oppose the anti-SLAPP motion. (ECF No. 66 at 7.)2 The May 25, 2022, order granting 18 expedited discovery states as follows: 19 The court grants Better Meat’s request for discovery. Better Meat may conduct expedited discovery, including making targeted 20 document requests and taking the deposition of Tyler Huggins, narrowly focused on the question whether Emergy had a good-faith 21 intent of filing a lawsuit at the time of the contested communications. 22 (Id.) 23 On July 6, 2022, Better Meat filed the instant motion to compel. (ECF No. 70.) The 24 parties filed a joint statement addressing the discovery dispute on July 13, 2022. (ECF No. 73.)

25 1 The anti-SLAPP motion was set for a hearing to take place on July 29, 2022. (ECF No. 66.) On July 25, 2022, the court vacated the hearing and deemed the motion submitted without oral 26 argument. (ECF No. 78.) 27 2 Citations to page numbers in CM/ECF documents refer to the page number at the top of the 28 document assigned by CM/ECF. 1 II. LEGAL STANDARDS 2 Under Federal Rule of Civil Procedure 26(b)(1), parties 3 May obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs 4 of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to 5 relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense 6 of the proposed discovery outweighs its likely benefit. 7 Fed. R. Civ. Pro. 26(b)(1). “The party seeking to compel discovery has the burden of establishing 8 that its request satisfies the relevancy requirements of Rule 26(b)(1). Thereafter, the party 9 opposing discovery has the burden of showing the discovery should be prohibited, and the burden 10 of clarifying, explaining or supporting its objections.” Bryant v. Ochoa, 2009 WL 1390794 at *1 11 (S.D. Cal. May 14, 2009) (citations omitted). 12 Under Rule 37, a party seeking discovery may move for an order compelling production if 13 the responding party fails to produce documents responsive to a discovery request. Fed. R. Civ. P. 14 37(a)(3)(B). Local Rule 251 requires the parties to submit a Joint Statement re Discovery 15 Disagreement in support of any motion to compel containing all arguments and briefing relevant 16 to the motion. E.D. Cal. Local Rule 251(c).

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Better Meat Co. v. Emergy, Inc., (E.D. Cal. 2022).

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