Eurofins Electrical and Electronic Testing NA, LLC v. SGS North America Inc.

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 EUROFINS ELECTRICAL AND Case No. 5:24-cv-06340-EJD ELECTRONIC TESTING NA, LLC, 9 ORDER GRANTING MOTION TO Plaintiff, EXPEDITE DISCOVERY; SETTING 10 PRELIMINARY INJUNCTION v. HEARING; EXTENDING TRO 11 SGS NORTH AMERICA INC., et al., Re: Dkt. No. 4 12 Defendants.

13 On October 8, 2024, the Court held a further status conference to discuss the scope of 14 expedited discovery and set a preliminary injunction hearing schedule. For the reasons explained 15 below, the Court: (1) GRANTS Eurofins’s Motion to Expedite Discovery, ECF No. 4; (2) SETS a 16 preliminary injunction hearing at 10:00 a.m. on November 19, 2024; and (3) EXTENDS the 17 existing TRO to expire at 11:59 p.m. on November 19, 2024. 18 I. EXPEDITED DISCOVERY 19 “[D]istrict judges have broad discretion to manage discovery and to control the course of 20 litigation.” Avila v. Willits Env't Remediation Tr., 633 F.3d 828, 833 (9th Cir. 2011). Courts in 21 the Ninth Circuit may allow expedited discovery prior to a Rule 26(f) conference upon finding 22 good cause. See Rovio Ent. Ltd. v. Royal Plush Toys, Inc., 907 F. Supp. 2d 1086, 1099 (N.D. Cal. 23 2012); see also Fed. R. Civ. P. 26(d)(1), 33(b)(2), and 34(b). Good cause exists where the moving 24 party shows that “the need for expedited discovery, in consideration of the administration of 25 justice, outweighs the prejudice to the responding party.” Rovio, 907 F. Supp. 2d at 1099. Courts 26 generally consider five factors to determine whether good cause exists: “(1) whether a preliminary 27 injunction is pending; (2) the breadth of the discovery requests; (3) the purpose for requesting the 1 expedited discovery; (4) the burden on the defendants to comply with the requests; and (5) how far 2 in advance of the typical discovery process the request was made.” Am. LegalNet, Inc. v. Davis, 3 673 F. Supp. 2d 1063, 1067 (C.D. Cal. 2009) (internal quotation marks omitted) (quoting 4 Disability Rts. Council of Greater Washington v. Washington Metro. Area Transit Auth., 234 5 F.R.D. 4, 6 (D.D.C. 2006)). “The good cause standard may be satisfied where a party seeks a 6 preliminary injunction,” although the presence of a preliminary injunction does not on its own 7 create good cause. Qwest Commc'ns Int'l, Inc. v. WorldQuest Networks, Inc., 213 F.R.D. 418, 419 8 (D. Colo. 2003) (collecting cases). 9 Here, having considered all papers filed1 in connection with the Motion to Expedite 10 Discovery and hearing argument from counsel on multiple occasions, the Court finds good cause 11 to order expedited discovery. As discussed in greater detail below, a preliminary injunction is now 12 pending, and the Court has limited the scope of discovery requests so that they are narrowly 13 tailored to the subject matter at issue in the preliminary injunction hearing. Not only will limited 14 expedited discovery aid the Court in determining whether a preliminary injunction is appropriate 15 here, but it will also be particularly useful clarify for the parties whether there was, in fact, a 16 misappropriation of trade secrets—i.e., whether Defendant SGS North America Inc. (“SGS”) is 17 using any of the materials identified in the Complaint, ECF No. 1, to open its new Milpitas 18 laboratory; or whether Defendants Jose Eleazar Zuniga Juarez (“Zuniga”) and Duong Duong 19 (“Duong”) used or shared Eurofins’s trade secrets in their new roles at SGS. And while 20 Defendants have not specifically identified any burdens that expedited discovery would cause here, 21 the Court finds any conceivable burden outweighed by the importance of expedited discovery. 22 Therefore, for these reasons and all other reasons stated on the record, the Court GRANTS 23 Eurofins’s Motion to Expedite Discovery. 2 24

25 1 Filings considered include: Mot. to Expedite Disc., ECF No. 4; Opp’n to Mot. to Expedite Disc., ECF No. 36; Joinders to Opp’n to Mot. to Expedite Disc., ECF Nos. 40, 41, 42; Reply in Supp. of 26 Mot. to Expedite Disc., ECF No. 43; Suppl. Opp’n to Mot. for TRO, ECF No. 56; Response to Suppl. Opp’n, ECF No. 57; Status Report, ECF No. 58. 27 2 The expedited discovery order applies to all Defendants, including Defendant Duong. The Court 1 Pursuant to the parties’ agreements, see Status Report, ECF No. 58, and modifications 2 discussed during the October 8, 2024, status conference, the Court permits Eurofins to serve the 3 following document requests: 4 • All communications between Duong and Zuniga that were made between 5 December 29, 2023, and May 31, 2024, excluding solely personal emails.3 6 • All communications between Gary Chou (“Chou”) and Zuniga that were made 7 between December 29, 2023, and September 1, 2024, excluding solely personal emails. 8 9 • Identification of customers from the 17 customers named in Eurofins’s pleadings with whom SGS has entered into an agreement(s) to provide wireless testing 10 services at its Milpitas laboratory/facility. 11 • All communications Zuniga sent from his personal email address to his SGS email 12 address, or from his personal email address, his SGS email address or by text 13 message, to anyone else at SGS (including but not limited to Fred Yang, Eddie 14 Parsons and/or Jay Suh), between December 29, 2023, and September 1, 2024, 15 forwarding and/or containing any information he had received from Chou, Duong, 16 or anyone else at Eurofins. 17 The Court also permits Defendants to serve the following document requests: 18 • All internal documents and communications concerning Zuniga after Zuniga left 19 Eurofins’s employ from the following custodians: Alberto Saldivar, Otoniel 20 Velazquez, Cathy Palacios, Nathaneal (Nate) Park, Gary Chou, and David 21 22

23 finds that Duong failed to show how Duong’s arbitration clause mandates that he be relieved of expedited discovery obligations. See Suppl. Opp’n to Appl. for TRO and PI, at 4–5, ECF No. 56 24 (arguing only that the streamlined discovery process is one of the primary benefits of arbitration).

25 3 Eurofins raised concerns that some of this information may be subject to various customers’ non- disclosure agreements. See Status Report. As discussed in the October 8, 2024, status conference, 26 the Protective Order, ECF No. 51, should be sufficient to protect any confidential information, but in the event that Eurofins seeks to keep confidential specific items subject to specific non- 27 disclosure agreements, the Court directs the parties to meet and confer and seek resolution of any dispute with the Court as necessary. Trevayne-Smith. 1 2 • All internal documents and communications concerning Eddie Parsons (“Parsons”) after Parsons left Eurofins’s employ from the following custodians: Alberto 3 Saldivar, Otoniel Velazquez, Cathy Palacios, Nathaneal (Nate) Park, Gary Chou, 4 and David Trevayne-Smith. 5 • All documents and communications between Eurofins and Zuniga after Zuniga left 6 Eurofins’s employ. 7 • All documents and communications between Eurofins and Parsons after Parsons 8 left Eurofins’s employ. 9 The parties will continue to meet and confer regarding narrowing the following discovery 10 requests4: 11 • Documents and communications relating to the specifications for the OTA test 12 chambers at Defendant SGS North America Inc.’s (“SGS”) Milpitas wireless 13 testing laboratory/facility. 14 • All communications with any vendor or third party, including the one client 15 referred to in the Trevayne-Smith Declaration (ECF No. 3-4, ¶ ¶ 9, 27), and any 16 other clients, concerning the design, specification, and/or build of Eurofins’s Santa 17 Clara OTA and EMC chambers. 18 • All communications between Eurofins and any customers identified in Eurofins’s 19 unredacted documents that concern the Santa Clara lab personnel’s experience and 20 expertise from December 29, 2023, to September 9, 2024. 21 • Identification of all current Eurofins Santa Clara clients and contact information, 22 including but not limited to the information for the one client referred to in the Trevayne-Smith declaration (ECF No. 3-4, ¶¶ 9, 27). 23 24

25 4 The Court emphasizes the importance of discovery related to the specifications at Eurofins’s and SGS’s chambers so the parties can compare the two and determine whether SGS’s laboratory is 26 using any of Eurofins’s specifications; but as written, the Court finds these requests too broad. The Court directs the parties to narrow these requests with the understanding that the attorneys’ 27 eyes only designations in the Protective Order, ECF No. 51, should satisfy any concerns regarding the parties from SGS or Eurofins viewing or sharing this information produced. • All communications between Zuniga and Duong during their employment at 1 Eurofins concerning the companies identified in Exhibit 10 of the Complaint. 2 The parties will continue to meet and confer regarding the appropriate amount of hours to 3 allot for initial depositions and the scope of a second round of discovery, if necessary. Should 4 additional issues arise, the parties may seek the Court’s assistance at the next scheduled status 5 conference. 6 The Court enters the following expedited discovery schedule pursuant to the parties’ 7 stipulation: 8 9 Event Deadline 10 Document Requests Finalized October 8, 2024 11 Document Production October 14, 2024 12 Depositions October 17–23, 2024 13 Meet and Confer on Further Discovery October 28, 2024 14 Status Conference October 24, 2024, at 1:30 p.m. 15 Joint Status Report5 October 19, 2024, at 4:00 p.m. 16 II. PRELIMINARY INJUNCTION HEARING 17 The Court SETS a preliminary injunction hearing at 10:00 a.m. on November 19, 2024. 18 This will not be an evidentiary hearing. The parties are ordered to submit a proposed briefing 19 schedule ahead of the preliminary injunction hearing to address any new information uncovered 20 from expedited discovery, with all briefing to be concluded at the latest by 4:00 p.m. on November 21 12, 2024. 22 III. EXTENDING TRO 23 The Court EXTENDS the TRO pending expedited discovery and the preliminary 24 injunction hearing. The Court finds good cause to extend all terms of the TRO. The TRO 25 26

27 5 The parties shall indicate in their Joint Status Report whether it is necessary to keep the October 24, 2024, status conference on calendar. 1 narrowly requires that the parties adhere to the law and their contractual obligations, and it 2 || remains necessary to maintain the status quo while the parties engage in expedited discovery. 3 The TRO will still apply to all Defendants, including Defendant Duong. While Duong 4 || contests the TRO terms originally requested by Eurofins, the operative TRO excludes many of 5 || Eurofins’s original requests, and counsel for Duong represented at the October 8, 2024, status 6 || conference that Duong does not contest the terms of the TRO as written pending arbitration. See 7 also Suppl. Opp’n to Appl. for TRO and PI, at 4-5, ECF No. 56 (raising no arguments regarding 8 || the operative TRO). Therefore, the Court finds no reason to modify the TRO or disrupt its prior 9 finding as to Duong at this time. Duong also requested in his supplemental arguments that the 10 Court compel arbitration and dismiss Duong from the case, id., at 8; however, Duong has yet to 11 file proper motions seeking this relief, therefore the Court will not enter any additional orders as to 12 || Duong at this time. 5 13 The TRO will also still apply to the information Eurofins identified as trade secret in its 14 || Complaint, including Exhibits 1 and 2 of the Complaint. SGS argues that this information is 3 15 publicly available and therefore not trade secret. See Status Report, at 4. While the parties will 16 ultimately need to litigate whether this information is, in fact, trade secret, the Court finds that the 3 17 newly unredacted documents do not disturb the Court’s prior finding that Eurofins has met its 18 || burden to show likelihood of success on the merits at this time. The parties may raise additional 19 arguments relevant to this dispute based on any new evidence uncovered in expedited discovery at 20 || the preliminary injunction hearing. 21 The TRO as outlined in ECF No. 26 will now expire at 11:59 p.m. on November 19, 22 || 2024. 23 IT IS SO ORDERED. 24 Dated: October 8, 2024 25

EDWARD J. DAVIL 27 United States District Judge 28 || Case No.: 5:24-cv-06340-EJD ORDER GRANTING MOT. TO EXPEDITE DISC.; SETTING PI HEARING; EXTENDING TR‘