1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 COOL RUNNINGS INTERNATIONAL, Case No. 1:21-cv-00974-DAD-HBK INC., 12 PRELIMINARY CASE MANANGEMENT Plaintiff, AND LIMITED DISCOVERY ORDER 13 v. 14 ANDRONICO ADAN GONZALEZ, 15 ABIMAEL LUPIAN UTRERA, JOSE OLIVARES LUPIAN and DRC 16 CONTRACTING, LLC, 17 Defendants. 18 19 The Court held a telephonic scheduling conference with Plaintiff Cool Runnings 20 International, Inc. (“Plaintiff” or “Cool Runnings”) and Defendant DRC Contracting, LLC 21 (“Defendant” or “DRC”) (collectively referred to as “the parties”) on February 17, 2022. (Doc. 22 No. 71). The parties agreed an order scheduling a period of limited discovery would benefit the 23 case, particularly for purposes of trying to reach a resolution at a settlement conference or at 24 mediation. As directed by the Court, the parties filed a Joint Report proposing a Limited 25 Discovery Plan on February 24, 2022. (Doc. No. 72, “Joint Discovery Report”). 26 The Joint Discovery Report reveals the parties agree to all dates and matters for discovery. 27 (See generally Id.). The parties dispute when discovery should commence. Plaintiff requests 28 discovery to immediately commence. Defendant requests discovery to commence 14 days after 1 Plaintiff discloses its asserted trade secrets and supporting documents consistent with California 2 Code of Civil Procedure § 2019.210. (Id. at 4). Defendant set forth this argument in the 3 February 10, 2022 Joint Scheduling Report. (Doc. No. 68 at 10-11). In response, Plaintiff 4 countered it is not clear whether § 2019.210 even applies to actions in federal courts. (Id. at 10) 5 (citing E&J Gallo Winery v. Institutt Voor Landbouw-en Visserijonderzoek, Case No. 1:17-cv- 6 00808-DAD-EPG (E.D. Cal. June 18, 2018) (stating Ninth Circuit has not determined this issue). 7 Plaintiff further argued Defendant may properly seek this information in discovery, as opposed to 8 requiring it be disclosed at the outset. (Id.). Defendant offers to submit supplemental briefing on 9 the issue if the Court so requires. (Doc. No. 72 at 4). 10 I. Plaintiff need not further define trade secrets before limited discovery commences 11 Defendant cites California Civil Code of Procedure § 2019.210 providing: 12 In any action alleging misappropriation of a trade secret under the Uniform Trade Secret Act (Title 5 (commencing with Section 34236) 13 of Part I of Division 4 of the Civil Code), before commencing discovery relating to the trade secret, the party alleging 14 misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under 15 Section 3426.5 of the Civil Code. 16 (Doc. No 68. at 10). Defendant argues the Court should rely on its inherent power to require 17 Plaintiff at the outset of discovery to “adequately disclose the nature and basis of its asserted trade 18 secrets, along with supporting documents” to avoid “gamesmanship.” (Id. at 11). Defendant 19 maintains that a disclosure “will facilitate the orderly progress of this litigation by defining the 20 contours of the trade secret claims against which DRC must defend.” (Id.). Defendant proffers 21 that requiring Plaintiff to disclose this information at the outset will “avoid the default path of 22 defining the asserted trade secrets through the standardless interrogatory process.” (Id.). 23 In support, Defendant cites to Agency Solutions.com, LLC v. Trizetto Grp., Inc., 819 24 F.Supp.2d 1001, 1015 (E.D. Cal. 2011) and E&J Gallo Winery v. Instituut Voor Landbouw-En 25 Viserijonderzoek, Case No. 1:17-cv-00808-DAD-EPG, 2018 WL 3062160 at *4 (E.D. Cal. June 26 19, 2018). (Id. at 10-11). Plaintiff also relies on E&J Gallo Winery noting that the Ninth Circuit 27 has not yet determined whether Rule 2019.210 even applies in the federal courts. 28 The Court finds both cases cited by Defendant distinguishable from the present case. E&J 1 Gallo Winery involved a defendant’s motion for a protective order to stay discovery pending 2 plaintiff’s compliance with Rule 2019.210. Plaintiff points out that the E&J Gallo Wine court 3 recognized that federal courts arrive at different conclusions as to whether Rule 2019.210 applies 4 in federal court (specifically whether the rule constitutes either a procedural or a substantive rule, 5 triggering application or not of the Erie1 doctrine). 2018 WL 3062160 *3 (citations omitted) (J. 6 Grosjean). The dispute there involved alleged misappropriation of trade secrets for a food drying 7 device (assembly, exhaust system, designs for various components. (Id. at *1). Ultimately, under 8 its inherent authority, the E&G Gallo Winery court granted defendants’ motion for a protective 9 order and required plaintiff to “identify their trade secrets with reasonable particularity” for 10 efficacy purposes and to narrow the issues, noting that plaintiff had initially agreed to provide 11 more specific information under Rule 2019.210 only later to disagree it applied in federal court. 12 (Id. at *4). Additionally, unlike the present case, the parties in E&G Gallo Winery had already 13 exchanged information directed at identifying trade secrets by interrogatories and the defendants 14 contended plaintiff’s interrogatory responses were insufficient. Here, the parties have not yet 15 exchanged any interrogatories, including interrogatories directed at identifying the trade secrets at 16 issue. 17 Agency Solutions.Com, LLC. was before the court on plaintiff’s motion for a preliminary 18 injunction. (819 F.Supp.2d 1001). The case involved a dispute between two software 19 developers: one that developed software for the front-end of the health insurance industry and the 20 other who developed software for the back end of the industry. (Id. at 1005-1006). There, the 21 district court denied plaintiff’s motion for a preliminary injunction finding plaintiff did not meet 22 its burden on each requisite element for issuance an injunction. (Id. at 1031). 23 Here, the dispute is between Plaintiff Cool Runnings and its former employees who left to 24 form a new competing company, Defendant DRC. According to the complaint and as discussed 25 in the district court’s order granting Plaintiff’s motion for a preliminary injunction, the named 26 Defendants, while working for Cool Runnings, downloaded Cool Runnings’ documents on 27
28 1 Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). 1 external storage devices, before resigning and starting to work for Defendant DRC. (Doc. No. 59 2 at 11-13) (thoroughly reviewing details of project order form and noting California law has 3 routinely found price lists to be trade secrets). 4 Unlike Agency Solutions.Com, LLC., the district court here granted Plaintiff’s motion for a 5 preliminary injunction. (Id.). In other words, the district court found the current record before it 6 contained sufficient description of trade secrets at issue to warrant the issuance of a preliminary 7 injunction. The order discussed at length the “project materials order form,” and the CRI shared 8 drive where bid proposals were maintained, noting that Defendants Gonzalez, Utrera, and former- 9 Defendant Lupian who had resigned from Cool Runnings and began working with Defendant 10 DRC had successfully bid on two projects against their former employer and, on at least one bid, 11 had attached the former employer’s form still bearing Cool Running’s logo. (Id. at 2-5).
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 COOL RUNNINGS INTERNATIONAL, Case No. 1:21-cv-00974-DAD-HBK INC., 12 PRELIMINARY CASE MANANGEMENT Plaintiff, AND LIMITED DISCOVERY ORDER 13 v. 14 ANDRONICO ADAN GONZALEZ, 15 ABIMAEL LUPIAN UTRERA, JOSE OLIVARES LUPIAN and DRC 16 CONTRACTING, LLC, 17 Defendants. 18 19 The Court held a telephonic scheduling conference with Plaintiff Cool Runnings 20 International, Inc. (“Plaintiff” or “Cool Runnings”) and Defendant DRC Contracting, LLC 21 (“Defendant” or “DRC”) (collectively referred to as “the parties”) on February 17, 2022. (Doc. 22 No. 71). The parties agreed an order scheduling a period of limited discovery would benefit the 23 case, particularly for purposes of trying to reach a resolution at a settlement conference or at 24 mediation. As directed by the Court, the parties filed a Joint Report proposing a Limited 25 Discovery Plan on February 24, 2022. (Doc. No. 72, “Joint Discovery Report”). 26 The Joint Discovery Report reveals the parties agree to all dates and matters for discovery. 27 (See generally Id.). The parties dispute when discovery should commence. Plaintiff requests 28 discovery to immediately commence. Defendant requests discovery to commence 14 days after 1 Plaintiff discloses its asserted trade secrets and supporting documents consistent with California 2 Code of Civil Procedure § 2019.210. (Id. at 4). Defendant set forth this argument in the 3 February 10, 2022 Joint Scheduling Report. (Doc. No. 68 at 10-11). In response, Plaintiff 4 countered it is not clear whether § 2019.210 even applies to actions in federal courts. (Id. at 10) 5 (citing E&J Gallo Winery v. Institutt Voor Landbouw-en Visserijonderzoek, Case No. 1:17-cv- 6 00808-DAD-EPG (E.D. Cal. June 18, 2018) (stating Ninth Circuit has not determined this issue). 7 Plaintiff further argued Defendant may properly seek this information in discovery, as opposed to 8 requiring it be disclosed at the outset. (Id.). Defendant offers to submit supplemental briefing on 9 the issue if the Court so requires. (Doc. No. 72 at 4). 10 I. Plaintiff need not further define trade secrets before limited discovery commences 11 Defendant cites California Civil Code of Procedure § 2019.210 providing: 12 In any action alleging misappropriation of a trade secret under the Uniform Trade Secret Act (Title 5 (commencing with Section 34236) 13 of Part I of Division 4 of the Civil Code), before commencing discovery relating to the trade secret, the party alleging 14 misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under 15 Section 3426.5 of the Civil Code. 16 (Doc. No 68. at 10). Defendant argues the Court should rely on its inherent power to require 17 Plaintiff at the outset of discovery to “adequately disclose the nature and basis of its asserted trade 18 secrets, along with supporting documents” to avoid “gamesmanship.” (Id. at 11). Defendant 19 maintains that a disclosure “will facilitate the orderly progress of this litigation by defining the 20 contours of the trade secret claims against which DRC must defend.” (Id.). Defendant proffers 21 that requiring Plaintiff to disclose this information at the outset will “avoid the default path of 22 defining the asserted trade secrets through the standardless interrogatory process.” (Id.). 23 In support, Defendant cites to Agency Solutions.com, LLC v. Trizetto Grp., Inc., 819 24 F.Supp.2d 1001, 1015 (E.D. Cal. 2011) and E&J Gallo Winery v. Instituut Voor Landbouw-En 25 Viserijonderzoek, Case No. 1:17-cv-00808-DAD-EPG, 2018 WL 3062160 at *4 (E.D. Cal. June 26 19, 2018). (Id. at 10-11). Plaintiff also relies on E&J Gallo Winery noting that the Ninth Circuit 27 has not yet determined whether Rule 2019.210 even applies in the federal courts. 28 The Court finds both cases cited by Defendant distinguishable from the present case. E&J 1 Gallo Winery involved a defendant’s motion for a protective order to stay discovery pending 2 plaintiff’s compliance with Rule 2019.210. Plaintiff points out that the E&J Gallo Wine court 3 recognized that federal courts arrive at different conclusions as to whether Rule 2019.210 applies 4 in federal court (specifically whether the rule constitutes either a procedural or a substantive rule, 5 triggering application or not of the Erie1 doctrine). 2018 WL 3062160 *3 (citations omitted) (J. 6 Grosjean). The dispute there involved alleged misappropriation of trade secrets for a food drying 7 device (assembly, exhaust system, designs for various components. (Id. at *1). Ultimately, under 8 its inherent authority, the E&G Gallo Winery court granted defendants’ motion for a protective 9 order and required plaintiff to “identify their trade secrets with reasonable particularity” for 10 efficacy purposes and to narrow the issues, noting that plaintiff had initially agreed to provide 11 more specific information under Rule 2019.210 only later to disagree it applied in federal court. 12 (Id. at *4). Additionally, unlike the present case, the parties in E&G Gallo Winery had already 13 exchanged information directed at identifying trade secrets by interrogatories and the defendants 14 contended plaintiff’s interrogatory responses were insufficient. Here, the parties have not yet 15 exchanged any interrogatories, including interrogatories directed at identifying the trade secrets at 16 issue. 17 Agency Solutions.Com, LLC. was before the court on plaintiff’s motion for a preliminary 18 injunction. (819 F.Supp.2d 1001). The case involved a dispute between two software 19 developers: one that developed software for the front-end of the health insurance industry and the 20 other who developed software for the back end of the industry. (Id. at 1005-1006). There, the 21 district court denied plaintiff’s motion for a preliminary injunction finding plaintiff did not meet 22 its burden on each requisite element for issuance an injunction. (Id. at 1031). 23 Here, the dispute is between Plaintiff Cool Runnings and its former employees who left to 24 form a new competing company, Defendant DRC. According to the complaint and as discussed 25 in the district court’s order granting Plaintiff’s motion for a preliminary injunction, the named 26 Defendants, while working for Cool Runnings, downloaded Cool Runnings’ documents on 27
28 1 Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). 1 external storage devices, before resigning and starting to work for Defendant DRC. (Doc. No. 59 2 at 11-13) (thoroughly reviewing details of project order form and noting California law has 3 routinely found price lists to be trade secrets). 4 Unlike Agency Solutions.Com, LLC., the district court here granted Plaintiff’s motion for a 5 preliminary injunction. (Id.). In other words, the district court found the current record before it 6 contained sufficient description of trade secrets at issue to warrant the issuance of a preliminary 7 injunction. The order discussed at length the “project materials order form,” and the CRI shared 8 drive where bid proposals were maintained, noting that Defendants Gonzalez, Utrera, and former- 9 Defendant Lupian who had resigned from Cool Runnings and began working with Defendant 10 DRC had successfully bid on two projects against their former employer and, on at least one bid, 11 had attached the former employer’s form still bearing Cool Running’s logo. (Id. at 2-5). 12 Further, as noted in the district court’s order: 13 Plaintiff identifies the following information as trade secrets that are contained in files allegedly downloaded, copied, and retained by 14 defendants… 15 [T]echnical plans; engineering information; designs, compilations, methods and processes, customer, supplier and vendor information; 16 pricing structure and information; materials and construction costs particular to different geographic areas; and Cool Runnings’ bid 17 matric algorithms, in which Cool Runnings has complied, summarized and synthetized its proprietary information over the 18 course of years. 19 (Id. at 10) (citing Doc. Nos. 1 at 4;; 6-1 at 32). Additionally, the district court noted Plaintiff 20 “sets out example embodiments of its alleged trade secrets” contained on its CRI Share drive, 21 including: Cool Runnings’ bid matrix algorithms, including Cool Runnings 22 Project Materials Order Form, past bid proposals, in-process future bid proposals, customer information, project specifications, 23 documents containing pricing, materials and construction costs information, design plans, technical plans, and engineering 24 information. 25 (Id.) (citing Doc. Nos. 1 at 7; 6-1 at 32-33). 26 While the district court was “inclined to agree that the Project Materials Order Form is the 27 only alleged trade secret stated by [P]laintiff with sufficient particularity,” (id. at 10, n. 4), there 28 was nevertheless sufficient allegations to warrant granting a preliminary injunction. The district 1 court’s order specifically enjoined and restrained Defendant DRC from using Cool Runnings 2 Project Materials Order Form and directed Defendant DRC to return “all documents, materials or 3 information, which constitute, contain, or summarize the Cool Runnings Project Materials Order 4 Form.” (Id. at 26-27). 5 Consequently, at this time, the Court will not direct additional briefing or survey Ninth 6 Circuit case law to determine whether California Code of Civil Procedure § 2019.210 applies in 7 the federal courts, or whether the Court should exercise its inherent authority to first direct 8 Plaintiff to specify all trade secrets at issue in this action, particularly when only limited 9 discovery is scheduled to take place at this time, and the parties have not yet exchanged 10 interrogatories which can be tailored to address these issues. 11 Accordingly, the Court ORDERS the parties to immediately commence the limited 12 discovery, as stipulated in the Joint Discovery Report and set forth below. 13 II. Limited Discovery Scheduling Order 14 A. Discovery Requests 15 To be completed within 60 days: 16 (1) Requests for Production: Each party up to a maximum of 25 17 (2) Requests for Admission: None 18 (3) Depositions: None 19 (4) Interrogatories: The parties shall be permitted a maximum of 15 Interrogatories, which 20 will count against the 25 interrogatory limit imposed by Fed. R. Civ. P. 33(a)(1) for the entire 21 case. 22 B. Subject Matters For Limited Discovery Period 23 Each party is permitted to seek discovery on the following topics during the Limited 24 Discovery Period: 25 (1) Ownership/Structure. Discovery regarding the ownership and business structure of 26 DRC, including its Operating Agreement and any agreements with or among its co- 27 owners and/or its leadership. Discovery regarding the organizational chart of Cool 28 Runnings, the relationship between Defendants Gonzalez and Utrera and Cool 1 Runnings, any agreements between Defendants Gonzalez and Utrera and Cool 2 Runnings, and any personnel files if applicable. 3 (2) Financials. Financial documents including any tax returns, profit and loss statements 4 and their supporting documentation, documents showing revenues and profits, 5 projected and realized, from PriceSmart projects, including documents related to the 6 parties’ respective bid proposals for PriceSmart projects in 2020-2021 in Portmore, 7 Jamaica; La Vega, the Dominican Republic; Bucaramanga, Colombia; and Medelin, 8 Colombia. The discovery requests will be limited by date ranges appropriate for each 9 request. Where appropriate, the parties may produce requested information in 10 summary form and/or on a “sufficient to show” basis. 11 (3) Electronic Information Storage. Discovery to understand how each party stores 12 electronic information, what electronic devices are used, what cloud-based storage 13 platforms are used, and lists of folders, subfolders, and files in any cloud-based 14 storage platform that DRC and Cool Runnings use for their respective businesses. 15 (4) Communications. The following non-privileged communications (including e-mails, 16 text messages, and in-app messaging platforms) that are relevant to a case issue: 17 (a) Internal communications of DRC and of Cool Runnings concerning the other party 18 and/or Defendants Gonzalez or Utrera; 19 (b) Communications between DRC and PriceSmart or between Cool Runnings and 20 PriceSmart regarding (i) the bids and/or proposals each party submitted to PriceSmart 21 regarding the Portmore, La Vega, Bucaramanga, or Medelin projects for PriceSmart, 22 and (ii) PriceSmart’s decision to stop accepting proposals from DRC on account of the 23 Court’s order granting Cool Running’s preliminary injunction motion, if any such 24 communications exist. 25 C. General Parameters 26 (1) All discovery requests will be limited by date ranges appropriate for each request. 27 (2) Cool Runnings may also seek discovery regarding any documents in the possession, 28 1 custody or control of DRC2 that were created by Cool Runnings, obtained from Cool Runnings, 2 or that originated with Cool Runnings. 3 (3) DRC may seek discovery regarding Cool Runnings’ asserted trade secrets, any 4 security measures with regard to the trade secrets, evidence of misappropriation of the trade 5 secrets, and Cool Runnings’ damages theories. 6 (4) Each party has the right to lodge objections to the requests for production and 7 interrogatories as actually drafted, as would be done in the normal course of discovery. 8 D. Informal Discovery Conference Prior to Filing Motion to Compel 9 The parties jointly stipulated and filed the Joint Discovery Report and shall continue to 10 comply with the spirit and intent of the discovery rules. In the event a discovery motion is 11 necessary, prior to filing a discovery motion under Fed. R. Civ. P. 37, a party must receive 12 permission from the Court, which the Court will grant following an informal discovery 13 conference. The parties should refer to the undersigned’s “Case Management Procedures” 14 included under the “Civil Procedures” tab on the undersigned’s webpage.3 A party requesting an 15 informal discovery conference should contact Chambers for available dates. The Court will 16 schedule the conference as soon as possible, taking into consideration the urgency of the issue. 17 Before contacting the Court, the parties must meet and confer by speaking in a person, over the 18 telephone, or via video conference in attempt to resolve the dispute. 19 At least 24-hours before the conference, each party shall simultaneously submit a letter 20 brief, outlining their position regarding the dispute. The letter briefs shall be no longer than three 21 (3) pages in length. Letter briefs should not be filed but shall be emailed to Chambers at 22 hbkorders@edca.uscourts.gov. 23
24 2The parties dispute whether Defendants Gonzalez and Utrera, or any individual representatives of entities having a membership interest in DRC who have knowledge, information, documents, within their 25 possession, custody or control responsive to discovery requests directed to DRC, as co-owners of DRC, should participate in discovery. All parties and non-parties may participate in discovery in accordance 26 with the Federal Rules of Civil Procedure. And this Court has repeatedly held that documents are deemed within a party’s possession, custody, or control if the party has actual possession, custody, or control 27 thereof, or the legal right to obtain the property on demand. Allen v. Woodford, 2007 WL 309945, at *2 (E.D. Cal. 2007) (emphasis added). 28 3 Available at http://www.caed.uscourts.gov/caednew/index.cfm/judges/all-judges/502311/. 1 E. Motions to Compel 2 Following the informal discovery conference set forth above, the parties must conduct at 3 || least one additional telephonic or video call as part of their obligations to meet and confer in 4 | good faith to resolve their discovery dispute prior to seeking judicial intervention. If a party files 5 || motion to compel under Fed. R. Civ. P. 37, the parties must prepare and file a Joint Statement 6 | Regarding Discovery Disagreement in compliance with Local Rule 251. Failure to comply with 7 | Local Rule 251 will result in the Court denying the motion without prejudice and dropping the 8 | motion from calendar. In addition to filing a Joint Statement electronically, a copy of the Joint 9 | Statement, in Word format, shall also be sent to Chambers by email to 10 | hbkorders @caed.uscourts.gov. 11 F. Mediation 12 Prior to the close of discovery, but no later than 90 days after the date on this Order, the 13 || parties shall meet and confer and, if appropriate, file a Stipulation and Order* reflecting referral to 14 | the Court’s Voluntary Dispute Resolution Program (VDRP) pursuant to Local Rule 271(d)(1)(A). 15 || Ifthe parties agree to referral to the Court’s VDRP, the parties may identify a mediator from the 16 | Panel of Neutrals previously emailed to counsel on February 24, 2022. See Local Rule 271(e). 17 | Dated: _ March 3, 2022 Mile. Wh fareh Zaskth 19 HELENA M. BARCH-KUCHTA UNITED STATES MAGISTRATE JUDGE
21 22 23 24 25 26 27 | + A copy of a sample stipulation is located under “Attorney Info” tab on the Court’s website. 2g https://www.caed.uscourts.gov/caednew/index.cfm/attorney-info/vdrp/