EpicentRx, Inc. v. Carter

• Court: District Court, S.D. California
• Decided: March 30, 2021
• Docket: 3:20-cv-01058
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 EPICENTRX, INC. Case No.: 20cv1058-TWR (LL)

12 Plaintiff, ORDER ON MOTIONS TO 13 v. STRIKE OR SEAL

14 COREY A. CARTER [DOCKET NUMBERS 7, 27, 34, 15 Defendant. 41, 62, 67, and 74.]

17 18 Plaintiff EpicentRx, Inc. filed its complaint, raising ten claims. The claims 19 arise from Defendant Dr. Corey Carter’s employment with EpicentRx, and his 20 alleged misappropriation of its trade secrets. After filing its complaint, EpicentRx 21 brought a motion for a temporary restraining order. The Court denied the 22 restraining order but treated the motion as seeking a preliminary injunction. Carter 23 also filed a motion to strike a portion of the complaint. 24 The parties then filed a series of motions and related documents that can 25 fairly be described as excessive. In particular EpicentRx’s motion to disqualify 26 opposing counsel has been briefed in piecemeal fashion, with multiple related ex 27 parte motions related to it. The Court eventually ordered the parties to stop filing 28 briefing on most issues, until it could decide a motion for disqualification of counsel. 1 (Docket no. 48.) The Court permitted the parties to continue briefing pending 2 motions, however, and the parties filed even more motions. Eventually the Court 3 suspended briefing on the pending motions altogether. (Docket no. 76.) 4 This case was selected for transfer to the newly-appointed District Judge 5 Todd Robinson. The undersigned judge transferred the case to Judge Robinson, 6 but retained jurisdiction over motions pending as of October 14, 2020. The 7 motions, most of which are related, are as follows: 8 1. Carter’s Motion to Strike (Docket no. 7); 9 2. EpicentRx’s Motion for Preliminary Injunction (Docket no. 16); 10 3. EpicentRx’s Ex Parte Motion for Leave to File a Reply Brief in Support of 11 the Motion for Preliminary Injunction (Docket no. 25); 12 4. EpicentRx’s Ex Parte Motion to Seal a Previously-filed Document (Docket 13 no. 27); 14 5. EpicentRx’s Ex Parte Motion to Strike EpicentRx’s Own Objection (Docket 15 no. 34); 16 6. EpicentRx’s Motion to Disqualify Defendant’s Counsel (Docket no. 40); 17 7. EpicentRx’s Ex Parte Motion to File Documents Under Seal (Docket no. 18 41); 19 8. EpicentRx’s Motion to Dismiss Carter’s Counterclaim (Docket no. 44); and 20 9. EpicentRx’s Motion for Leave to Supplement the Motion to Disqualify 21 Counsel (Docket no. 55). 22 Following transfer, several other motions relating to the pending motions were also 23 filed. These are: 24 10. EpicentRx’s Ex Parte Motion to Seal a Previously Filed Document 25 (Docket no. 62); 26 11. EpicentRx’s Ex Parte Motion for Leave to File Excess Pages in its 27 Reply to Carter’s Opposition to the Motion to Disqualify Counsel (Docket 28 no. 65); 1 12. EpicentRx’s Amended Ex Parte Motion for Leave to File Excess Pages 2 (Docket no. 66); 3 13. EpicentRx’s Ex Parte Motion for Leave to File Documents Under Seal 4 (Docket no. 67); 5 14. EpicentRx’s Amended Ex Parte Motion to Seal a Previously Filed 6 Document (Docket no. 74); and 7 15. EpicentRx’s Ex Parte Motion for Rulings on the Previously-Filed 8 Motions, and to Lift the Suspension on Briefing (Docket no. 82). 9 Other motions were also pending before transfer, but the Court has ruled on them. 10 Other pending motions are all new matters assigned to Judge Robinson. The listed 11 motions are the only ones which remain pending and over which the undersigned 12 Judge has retained jurisdiction. 13 In view of the number of motions and the volume of briefing on those 14 motions, this Order necessarily addresses the issues summarily, rather than 15 discussing them at length. The Court has, however, considered the parties’ 16 arguments and the relevant legal standards. 17 This order addresses only motions to strike and motions to seal. Three other 18 substantial motions (Docket nos. 16, 40, and 44) remain to be ruled on, along with 19 procedural motions relating to them. These will be addressed in separate orders. 20 EpicentRx’s Motion to Strike Its Own Filing (Docket no. 34) 21 EpicentRx filed an objection to a document filed by Carter. (Docket no. 32.) 22 That same day it filed a notice of withdrawal, followed by an ex parte motion to 23 strike its own objection. (Docket no. 34.) It has since filed a redacted objection. 24 The unopposed motion to strike is GRANTED, and the Clerk is directed to remove 25 the withdrawn objection (Docket no. 32) from the docket. 26 Carter’s Motion to Strike (Docket no. 7) 27 Carter asks the Court to strike paragraph 30 and Exhibit A of the Complaint, 28 as irrelevant, impertinent, and scandalous under Fed. R. Civ. P. 12(f). The Court’s 1 exercise of its authority to strike material from a complaint is discretionary. See 2 Nurse v. United States, 226 F.3d 996, 1000 (9th Cir. 2000). The function of a 3 motion to strike is to avoid the expenditure of time and money involved in litigating 4 spurious issues; it is not the proper vehicle to seek resolution of substantial 5 disputed factual or legal issues. Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 6 970, 973 (9th Cir. 2010). 7 Paragraph 30 alleges that Carter was a Physician Officer and oncologist in 8 the Navy from 1999 through 2018, but that he “ignominiously left the military under 9 a cloud of suspicion and accusations” pertaining to misuse of drugs, 10 unprofessional conduct, and conflicts of interest. The complaint alleges that the 11 allegations “are entirely consistent with Dr. Carter’s performance at EpicentRx” and 12 that they would not have hired him had they known this. Exhibit A is a copy of a 13 document that Carter submitted in his defense. Carter argues that the accusations 14 were unfounded and arose out of an acrimonious divorce. Whether the allegations 15 are true is not properly decided in a motion to strike. 16 The allegations are at least somewhat related to EpicentRx’s claims of 17 Carter’s malfeasance. While they do not form part of EpicentRx’s claim, they 18 render it somewhat more plausible. If, as EpicentRx alleges, the claims — or at 19 least some of them — were well-founded, it is somewhat more plausible that he 20 might have engaged in the wrongful conduct they accuse him of. The Court is not 21 deciding whether he did, of course, but merely whether EpicentRx is allowed to 22 make such an allegation. 23 While the accusations are negative, they do not in the Court’s judgment arise 24 to the level of being scandalous. Paragraph 30 is fairly general, and not overly 25 provocative. Most of the specifics are found in Exhibit A, which gives Carter’s 26 response to the accusations. Taken together, the allegations and exhibit show that 27 Carter denied and attempted to rebut the accusations, but that EpicentRx believes 28 that at least some of them are true. While a number of the accusations have little 1 to do with this case, some of them — if true — would shed light on Carter’s 2 professionalism and possible motive. For example, some of the accusations 3 involve alleged conflicts of interest, in the form of dealings with outside companies 4 (including EpicentRx). Carter’s response also says that the investigation would 5 make it difficult for him to find post-service employment, which tends to support 6 EpicentRx’s contention that the accusations are germane to his employment. 7 The Court concludes that the challenged portions of the Complaint do not fall 8 within the rationale of Fed. R. Civ. P. 12(f). Accordingly, the motion to strike is 9 DENIED. 10 Motions to Seal 11 Legal Standards for Sealing 12 Two different standards govern whether documents may be filed under seal, 13 depending on whether the motion they are filed in support of is dispositive or non- 14 dispositive. Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 15 2006)). The analysis starts with the “strong presumption” favoring public access to 16 court records. Foltz v. State Farm Mut. Auto Ins. Co., 331 F.3d 1122, 1135 (9th 17 Cir. 2003). In general, a party seeking to seal a judicial record bears the burden of 18 overcoming this presumption by meeting the “compelling reasons” standard. 19 Kamakana, 447 F.3d at 1178. This standard is met where the Court finds 20 compelling reasons and articulates the factual basis for its rulings. Id. at 1179. 21 Assuming that hurdle is surmounted, the Court then balances the public’s interest 22 against the party’s private interest. Id. Even if documents are confidential or subject 23 to a privilege, sealing is not automatic; compelling reasons must still be shown. 24 Estate of Nunez by and through Nunez v. Cnty. of San Diego, 386 F. Supp. 3d 25 1334, 1337 (S.D. Cal., 2019). See also Kamakana, 447 F.3d at 1179 (holding that 26 “compelling reasons” must still be shown even if documents are subject to a 27 protective order, or were previously sealed). 28 / / / 1 The Ninth Circuit recognizes an exception to this general rule for materials 2 attached to motions unrelated to the merits of the case. See Phillips ex rel. Estates 3 of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1213–14 (9th Cir. 2002); Foltz, 331 4 F.3d at 1135. In such an instance, the “good cause” standard applies. Id. This 5 standard is based on Fed. R. Civ. P. 26(c)’s provision authorizing courts to fashion 6 appropriate protective orders. Phillips, 307 F.3d at 1213. 7 Some of the documents for which sealing are requested are offered in 8 connection with a motion for preliminary injunction, or a motion to strike the 9 counterclaim. Because a motion for preliminary injunction is related to merits of the 10 case, the higher “compelling reasons” standard applies. See generally Center for 11 Auto Safety v. Chrysler Group, LLC, 809 F.3d 1092 (9th Cir. 2016) (holding that 12 district court should apply “compelling reasons” standard before sealing 13 documents offered in support of motion for preliminary injunction). Courts in this 14 circuit apply the “compelling reasons” standard for motions to seal a complaint, 15 because the complaint is the foundation of the lawsuit. See In re Google Inc. Gmail 16 Litig., 2013 WL 5366963, at *3 (N.D. Cal., Sept. 25, 2013) (collecting cases). The 17 rationale applies equally to counterclaims. In light of the underlying presumption in 18 favor of access, the Court concludes that the “compelling reasons” test should 19 apply to statements in the counterclaim. 20 Other documents are offered in connection with EpicentRx’s motion to 21 disqualify counsel. A motion to disqualify is generally treated as nondispositive, 22 and the “good cause” standard is applied. See WhatsApp Inc. v. NSO Group 23 Technologies Ltd., 2020 WL 7133773, slip op. at *9 (N.D. Cal., June 16, 2020) 24 (treating motion to disqualify as “only tangentially related to the merits of the case” 25 and applying the “good cause” standard); Hologram USA, Inc. v. Pulse Evolution 26 Corp., 2015 WL 105793, at *1–2 (D. Nev., Jan 7, 2015) (applying “good cause” 27 standard to motion to seal documents in support of motion to disqualify counsel). 28 / / / 1 One point that the briefing occasionally loses sight of is the fact that sealing 2 is not the same as striking or disregarding a document. While sealed documents 3 are removed from public view, the Court still gives them due consideration when 4 making its rulings. 5 First Motion to Seal Previously-Filed Documents (Docket no. 27) 6 EpicentRx asks the Court to seal information in Carter’s counterclaim, and 7 documents attached to his opposition to the motion for preliminary injunction. 8 (Docket no. 27.) The “compelling reasons” standard applies to these. 9 EpicentRx argues that the information it seeks to have sealed was either 10 privileged, or subject to confidentiality agreements. Privilege applies, it argues, 11 because Carter was acting as an agent for EpicentRx at the time he participated 12 in communications with EpicentRx’s counsel. 13 The two paragraphs of Carter’s counterclaim do not appear to contain 14 privileged material — or, if there is something privileged, there does not appear to 15 be a compelling reason to seal it. Paragraph 25 merely says EpicentRx’s counsel 16 told Carter that an emergency board meeting would be postponed because of 17 calendar conflicts, even though the matters involved were serious. Paragraph 27 18 alleges what Carter believes took place at a different board meeting where board 19 members with their attorney’s assistance developed a strategy to terminate Carter. 20 Carter, in his opposition, argues that he is alleging what he believes took place 21 there, and the counterclaim itself makes clear he was not present. 22 The documents offered in support of Carter’s opposition to the motion for 23 preliminary injunction likewise do not appear to contain privileged material. Even 24 assuming it is privileged, there does not appear to be a compelling reason to seal 25 any of it. The first two documents are Carter’s declaration (Docket no. 23-2), which 26 is similar to his counterclaim, and a series of emails from Carter to board members 27 calling for a board meeting to address alleged misconduct (Docket no. 23-4). 28 / / / 1 While Docket no. 23-11 includes communications between Carter and 2 EpicentRx’s general counsel Sarah Hibberd, the two are discussing proposals for 3 installing an alarm to restrict access to the company’s laboratory. 4 Docket no. 23-14 is an email from Carter to Aronsky, with EpicentRx’s 5 counsel cc’d. The email recounts Carter’s own position on whether Aronsky could 6 properly cancel the board meeting, and accuses Aronsky of acting inappropriately 7 to cover up his own wrongdoing. Even assuming that cc’ing counsel on the email 8 creates a privilege, the content is essentially the same as other non-privileged 9 materials. It is clear Carter’s position, even apart from this email, was that Aronsky 10 had been committing malfeasance, that a board meeting should be held to address 11 it, and that Aronsky should not have been permitted to cancel the board meeting. 12 Docket no. 23-15 is an email from Carter to board members announcing his 13 intent to hold the board meeting as originally scheduled. This email chain includes 14 the previous email. (Docket no. 23-14.) 15 Docket no. 23-16 is an email from EpicentRx’s counsel Stephen Davis, 16 saying there had been no attempt to cover up misconduct, and that Davis did not 17 know until a few minutes before sending the email of certain facts suggesting 18 malfeasance. Of all documents the motion addresses, this comes closest to being 19 a privileged document. Nevertheless, it is unclear what compelling reasons would 20 require its sealing, particularly because Carter’s allegations raise similar points. 21 Docket nos. 23-17 and 23-18 are both long email chains discussing business 22 matters. These are different in character from the other documents EpicentRx 23 seeks to have sealed. Some sections of the emails include contract negotiations 24 and discussions among attorneys about the drafting of agreements and similar 25 legal matters. A good portion of these documents include what appear to be 26 confidential details of how EpicentRx does business. While some of this 27 information may have leaked out as soon as Carter filed it, it is part of a large filing 28 and thus has probably not been noticed. The proprietary information, if known by 1 competitors, could be used to EpicentRx’s detriment. The release of trade secrets 2 is a compelling reason sufficient to outweigh the right of public access. Kamakana, 3 447 F.3d at 1179. Because the privileged and proprietary information can be 4 redacted, it is unnecessary to seal both documents in their entirety. See id. at 1183 5 (noting that redactions are preferable to outright sealing). The Court therefore finds 6 that the “compelling reasons” standard is met as to the proprietary or privileged 7 portions of documents 23-17 and 23-17, and that redacted versions of these 8 documents should replace the unredacted versions currently in the docket. 9 Second Motion to Seal a Previously Filed Documents (Docket no. 62) 10 These documents were filed in support of Carter’s opposition to EpicentRx’s 11 motion to disqualify counsel. The “good cause” standard applies to this and the 12 remaining motions to seal. EpicentRx seeks to seal certain deposition testimony 13 by attorney Sarah Hibbard pertaining to communications between her and defense 14 counsel at a time when defense counsel was retained to represent EpicentRx in a 15 different matter. It also seeks to seal product development information that is 16 subject to a separate confidentiality agreement. 17 EpicentRx’s counsel objected during Hibbard’s testimony, though she was 18 permitted to answer. The highlighted portions of her testimony appear to be 19 privileged. The proprietary information also appears to have been designated as 20 confidential, and is the type of material that could damage EpicentRx’s interests if 21 made available to its competitors. Carter’s opposition appears to focus on whether 22 the information is germane to the motion, though this issue does not seem to be 23 contested. The question is not whether it is relevant or should be considered, but 24 whether it should be sealed. The Court finds good cause to seal the designated 25 information, and the motion is GRANTED. 26 Third Motion to Seal a Previously Filed Documents (Docket no. 74) 27 Although this is styled as an amended motion, it supplements the previous 28 motion (Docket no. 62), rather than replacing it. EpicentRx seeks to redact from 1 the record the amount of debt MultiVir owed EpicentRx, which is mentioned in 2 Carter’s opposition to the motion to disqualify counsel. It argues that Carter in spite 3 of being contractually obligated to keep this information confidential, included the 4 information in his public filing. The motion shows that the information is 5 confidential, and appears only tangentially related to the motion to disqualify. 6 Additionally, the redactions are narrow. 7 For the same reasons as discussed previously, the Court finds good cause 8 for sealing the information, and the motion is GRANTED. 9 Motions to File Portions of Documents Under Seal 10 Motion to Seal Portions of Motion to Disqualify (Docket no. 41) 11 EpicentRx filed a redacted version of its motion to disqualify counsel (Docket 12 no. 40), and seeks authorization for the redaction. The portions to be redacted 13 concern the retainer agreement or are privileged communications, and are very 14 limited in scope. 15 For the same reasons as discussed previously, the Court finds good cause 16 for sealing the redacted portions, and the motion is GRANTED. 17 Motion to File Exhibits Under Seal (Docket no. 67) 18 EpicentRx filed this motion, seeking leave to file 21 different documents or 19 parts of documents. Almost all are exhibits offered in support of the motion to 20 disqualify counsel. One is a portion of EpicentRx’s reply to Carter’s opposition to 21 the motion to disqualify. The motion also seeks to seal portions of the Stirn 22 Declaration in support of the motion, and also one line of EpicentRx’s response to 23 Carter’s objection and request to strike the Stirn Declaration. 24 Several of the documents are covered by confidentiality agreements, and the 25 remainder are all privileged communications among counsel. For the reasons 26 / / / 27 / / / 28 / / / 1 ||discussed previously, the Court finds good cause to seal these materials, and the 2 ||motion is GRANTED. 3 4 IT IS SO ORDERED. 5 ||Dated: March 30, 2021 6 ( Me 4. (Bay nly 7 Honorable Larry Alan Burns 8 United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28