GG Insurance Services Incorporated v. Johnson

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 GG Insurance Services Incorporated, No. CV-23-01964-PHX-KML

10 Plaintiff, ORDER

11 v.

12 Myles Johnson, et al.,

13 Defendants. 14 15 Defendant Myles Johnson believes he and plaintiff GG Insurance Services, Inc. 16 (“GG”) reached a settlement agreement long before GG filed this suit, so he filed a motion 17 to enforce that alleged settlement agreement. GG believes defendants Johnson, John J. 18 Kresevic, Turbo Insurance Group, LLC (“Turbo”), and the seven other related defendants 19 (collectively, “defendants”) erased a laptop that contained relevant evidence before this 20 lawsuit began, so GG filed a motion for spoliation sanctions. The parties also filed a joint 21 statement regarding discovery disputes. 22 Johnson’s motion to enforce settlement agreement and GG’s motion for spoliation 23 sanctions are denied. As for the parties’ discovery dispute, GG must provide definitive 24 answers to some of defendants’ interrogatories and requests for production (“RFPs”). 25 I. Background 26 In 2004, Dan Garzella launched an insurance agency. (Doc. 143-2 at 4.) In 2011, he 27 hired Johnson, who was eventually promoted to vice president with an equity stake in GG. 28 (Doc. 143-2 at 6.) In 2014, Garzella’s company became GG, which is “an independent 1 insurance agency that facilitates the sale of personal and business insurance between 2 insurers and insureds.” (Doc. 143-2 at 4.) Beginning in 2020, Garzella helped design 3 unique insurance software called Quote Monkey (“QM”), for which GG holds copyright 4 registrations. (Doc. 143-2 at 4–5.) Johnson allegedly “worked with and had intimate 5 knowledge of QM.” (Doc. 143 at 4.) 6 Johnson has been friends with Kresevic since 2005. (Doc. 143-2 at 38) Kresevic 7 was serving as CEO of the mortgage broker JFQ in 2019. (Doc. 143-2 at 6.) In the summer 8 of 2019, GG and JFQ contemplated starting a joint venture but ultimately decided not to. 9 (Doc. 143-2 at 6.) In 2020, Kresevic expressed interest in starting a company with Johnson. 10 (Doc. 143-2 at 41.) Their efforts to form a company together appear to have become more 11 serious in the spring and summer of 2021. In March 2021, “Johnson uploaded a folder to 12 his Garzella Group OneDrive storage titled ‘Quote Monkey’ that contained the complete 13 QuoteMonkey app and all associated files.” (Doc. 143-3 at 104.) Between March 2020 and 14 December 2021, Johnson uploaded “over 11,000 other files and folders to his Garzella 15 Group OneDrive cloud storage,” some of which contained information regarding 16 “customers/clients” of GG. (Doc. 143-3 at 104.) And in July 2021, while Johnson was still 17 at GG, he emailed himself a non-disclosure agreement he signed with Turbo. (Doc. 143-2 18 at 51–26.) 19 In August 2021, Kresevic sent Johnson a text stating he needed to get Johnson a 20 laptop and telling him not to use his current GG laptop. (Doc. 143-2 at 45.) Kresevic made 21 the laptop ready for Johnson shortly afterwards. (Doc. 143-2 at 46.) 22 In October 2021, Johnson and Kresevic were preparing an investor deck and 23 Johnson asked if “[f]rom a legal standpoint” the deck would ever become public. (Doc. 24 143-2 at 47.) If not, he would “throw out [his] big boy accomplishments but wouldn’t want 25 to get sued saying [he was] using GG [intellectual property (‘IP’)] at Turbo.” (Doc. 143-2 26 at 47.) Kresevic responded that the “[i]nvestor deck can get out[,] don’t talk about that 27 stuff . . . How you will use what you have done verbally not in writing.” (Doc. 143-2 at 28 47.) 1 In the October investor presentation, Kresevic mentioned Turbo “want[ed] to take 2 a lot of public data that is already readily available, build some proprietary technology that 3 [Johnson] ha[d] already built at his own insurance agency, and take that and leverage it to 4 make [an insurance] process a lot easier.” (Doc. 143-3 at 19, 21.) 5 In December 2021, Johnson texted Kresevic about “getting legal representation in 6 the event GG chose to sue me and Turbo.” (Doc. 143-2 at 48.) Kresevic responded that GG 7 “can’t sue Turbo” but “it can sue [Johnson] – which if [Johnson has] been working with 8 Jess [allegedly Johnson’s legal counsel] and doing exactly what she says that’s good.” 9 (Doc. 143-2 at 48.) Later that month, Johnson officially left GG and began working for 10 Turbo. (Doc. 143 at 8.) 11 Around when Johnson left GG in December 2021, GG sent him a draft of a general 12 release regarding the purchase back of his non-voting shares. (Doc. 152 at 3.) The release 13 also contained an agreement by GG to waive the restrictive covenants in Johnson’s 14 employment agreement. (Doc. 152 at 3.) The parties exchanged multiple drafts and 15 according to Johnson, that process culminated in he and GG entering into a binding 16 settlement agreement in June 2022. (Doc. 152 at 7–8.) He brings a motion to enforce that 17 agreement 32 months after it was allegedly reached and seventeen months after GG filed 18 its complaint against him. (See Docs. 1 at 76, 152 at 7, 17.) 19 Johnson provides a detailed timeline of events related to the agreement that in his 20 view would require the claims GG has asserted against him to be dismissed. (Doc. 152 at 21 2–9.) The relevant discussions began in October 2021 when Johnson notified Garzella that 22 he intended to resign and work for Turbo. (Doc. 152-1 at 3.) In response, Garzella asked 23 to discuss the potential of purchasing back the company shares Johnson owned. (Doc. 152- 24 1 at 3.) Garzella also said he would waive the restrictive covenants in Johnson’s 25 employment agreement so Johnson could work for Turbo. (Doc. 152-1 at 4.) Johnson and 26 GG then engaged in conversations that took place between December 30, 2021, and at least 27 June 17, 2022, regarding the terms of an agreement that would result in GG buying back 28 Johnson’s shares, allowing him to work for Turbo, and releasing all claims GG could assert 1 against him. (Doc. 152 at 1–8.) During this time frame, the parties exchanged numerous 2 draft agreements. (Doc. 152 at 1–8.) Up until June 15, 2022, material terms were still being 3 discussed such as the payment structure for the buyback of Johnson’s shares. (Doc. 152 at 4 7.) Significant changes were still being discussed on June 16 when Johnson’s counsel 5 pointed out the portion of the agreement discussing the release of claims against Johnson 6 was ambiguous. (Doc. 152 at 7.) 7 On June 17, 2022, GG emailed Johnson’s counsel a revised agreement with the 8 changes Johnson’s counsel had agreed to the day before and one additional modification. 9 (Doc. 152 at 7.) In the email, GG’s counsel asked Johnson’s counsel to “either (i) let me 10 know if this is good or (ii) your suggested modifications, if any.” (Doc. 152-1 at 81.) A 11 redlined Microsoft Word document of the agreement was attached. (Doc. 184-1 (non- 12 electronic exhibit); see also Doc. 152-1 at 87–90 (the redlined Microsoft Word document).) 13 Three days later, Johnson’s counsel apparently accepted the redline, Johnson signed the 14 agreement, and Johnson’s lawyer sent it to GG’s counsel indicating she “look[ed] forward 15 to receiving the countersigned version.” (Doc. 152-1 at 92–97.) Johnson acknowledges GG 16 did not return a signed copy of the agreement and never paid Johnson for the repurchase of 17 his stock pursuant to its terms. (Doc. 152 at 8 (citing Doc. 152-1 at 4).) But he maintains a 18 valid agreement was formed and that GG’s current claims against him are “for a litany of 19 alleged violations of law that were released by the agreement.” (Doc. 152 at 8 (citing Doc. 20 152-1 at 4).) 21 In February 2022, Johnson returned the temporary laptop Kresevic had given him. 22 (Doc. 143-3 at 16.) In October 2022, Turbo’s Information Technology department wiped 23 the laptop to remove certain hardware restrictions and gave it to another Turbo employee. 24 (Doc. 143-3 at 16.) Consistent with its usual practices, Turbo copied the laptop’s contents 25 to its One Drive account before wiping it. (Doc. 143-3 at 16.) 26 II. Discussion 27 A. Motion to Enforce Settlement Agreement 28 Johnson’s motion to enforce settlement agreement requires the June 17, 2022, email 1 from GG transmitting a redlined version of the agreement be deemed a settlement offer. 2 But GG never made a settlement offer and Johnson’s actions in the two-and-a-half years 3 after the purported settlement offer demonstrate he understood that. 4 1. Legal Standard 5 “A federal district court has inherent authority to enforce agreements that settle 6 litigation before it.” Benge v. Ryan, No. CV-14-00402-PHX-DGC-BSB, 2017 WL 588706, 7 at *2 (D. Ariz. Feb. 14, 2017) (citing In re City Equities Anaheim, Ltd., 22 F.3d 954, 957 8 (9th Cir. 1994)). A motion to enforce a settlement agreement is “essentially . . . an action 9 to specifically enforce a contract.” Adams v. Johns-Manville Corp., 876 F.2d 702, 709 (9th 10 Cir. 1989). “The movant has the burden of demonstrating that the parties formed a legally 11 enforceable settlement agreement.” Benge, 2017 WL 588706, at *2 (citing In re Andreyev, 12 313 B.R. 302, 305 (B.A.P. 9th Cir. 2004)). “For an enforceable contract to exist, there must 13 be an offer, acceptance, and consideration.” Tabler v. Indus. Comm’n of Arizona, 47 P.3d 14 1156, 1158 (Ariz. Ct. App. 2002) 15 2. Analysis 16 Johnson claims the email GG’s counsel sent his lawyer on June 17, 2022, was a 17 settlement offer. “An offer is the manifestation of willingness to enter into a bargain, so 18 made as to justify another person in understanding that his assent to that bargain is invited 19 and will conclude it.” Yahweh v. City of Phoenix, 400 P.3d 445, 447 (Ariz. Ct. App. 2017) 20 (quoting Restatement (Second) of Contracts § 24 (1981)). “[W]hether an offer has been 21 made does not depend on the offeree’s understanding of the terms of the offer, but instead 22 on whether a reasonable person would understand that an offer has been made and that, 23 upon acceptance, the offeror would be bound.” Ballesteros v. Am. Standard Ins. Co. of 24 Wis., 248 P.3d 193, 196 (Ariz. 2011) (collecting cases). Courts may rely on objective 25 evidence to determine whether an offer was made. See Schade v. Diethrich, 760 P.2d 1050, 26 1058 (Ariz. 1988) (quoting Restatement § 33(3)) (“[T]he actions of the parties may show 27 conclusively that they have intended to conclude a binding agreement.”). 28 The email at issue here asked Johnson’s counsel to “either (i) let me know if this is 1 good or (ii) your suggested modifications, if any.” The email attached a redlined Microsoft 2 Word document. (Doc. 152-1 at 81.) The court need not resolve whether this email on its 3 own would be sufficient for a reasonable person to understand an offer was being made 4 because taken together with the surrounding objective circumstances, no reasonable person 5 would conclude an offer was made or accepted. 6 First, the fact that the version of the agreement GG sent over contained redlines cuts 7 in favor of finding it did not constitute an offer. See Schade, 760 P.2d at 1058 (quoting 8 Restatement § 33(3)) (“The fact that one or more terms of a proposed bargain are left open 9 or uncertain may show that a manifestation of intention is not intended to be understood as 10 an offer or as an acceptance.”); see also Day v. LSI Corp., 174 F. Supp. 3d 1130, 1154 (D. 11 Ariz. 2016), aff’d, 705 F. App’x 539 (9th Cir. 2017) (same). 12 Separately, the parties’ behavior after June 17 shows neither party believed they had 13 reached an agreement. Parties’ subsequent conduct is often relevant to determining whether 14 a contract has been formed. See Davsko v. Golden Harvest Prods., Inc., 965 F. Supp. 1467, 15 1472–73 (D. Kan. 1997) (quoting King v. Wenger, 549 P.2d 986, 989 (Kan. 1976)) 16 (subsequent conduct “may be decisive of the question of whether a contract has been 17 made”); Koleinimport “Rotterdam” N. V. v. Foreston Coal Exp. Corp., 283 F. Supp. 184, 18 186 (S.D.N.Y. 1968) (citing Gordon v. Vincent Youmans, Inc., 358 F.2d 261, 264 (2d Cir. 19 1965); 1 Corbin, Contracts §§ 95, 101 (1963)) (the parties’ subsequent communications 20 are relevant to the question of whether a contract has been formed). 21 GG focuses on three aspects of the parties’ subsequent behavior as establishing no 22 agreement was reached: (1) negotiations were still ongoing five months later, including 23 discussions regarding the possibility of a mediation (Doc. 175 at 6–7); (2) Johnson did not 24 demand the money the alleged agreement required GG to pay for his company stock until 25 he filed counterclaims against GG, 938 days after the agreement was supposedly reached 26 (Doc. 120 at 65); and (3) Johnson first moved to enforce the purported settlement 27 agreement two-and-a-half years after it was allegedly reached, only after this lawsuit was 28 filed. (Doc. 120 at 66–68.) Johnson does not explain why he waited so long to try and 1 enforce the purported agreement and no reasonable person would fail to demand the 2 $111,302.57 payout the agreement required or litigate for more than two years before filing 3 a motion if he believed a binding settlement had been reached. 4 Additionally, it is undisputed GG never signed the purported agreement. (Doc. 180 5 at 5.) This factor is not dispositive because a valid contract can be found even without one 6 party’s signature. See Muchesko v. Muchesko, 955 P.2d 21, 24 (Ariz. Ct. App. 1997). But 7 “the failure of one party to execute an instrument usually renders it incomplete[.]” Id. A 8 contract may still be found, however, “where all the parties, including the non-signers, by 9 their actions recognize the validity of the agreement and acquiesce in its performance[.]” 10 Id. (quoting Modular Sys., Inc. v. Naisbitt, 562 P.2d 1080, 1083 (Ariz. Ct. App. 1977). As 11 previously stated, that is not the case here. Negotiations between the parties continued for 12 five months after the purported agreement was reached, Johnson never sought the payment 13 the agreement would have required, and Johnson did not seek to enforce the agreement for 14 over two-and-a-half years after it was allegedly reached. 15 Johnson also argues the language in the June 17 agreement allowed for a contract 16 to be formed without GG’s signature. (Doc. 180 5–6.) But the language he cites does 17 require GG’s signature for an agreement to be formed. It states the agreement “may be 18 executed in one or more counterparts . . . and shall become effective when one or more 19 counterparts have been signed by each of the parties hereto.” (Doc. 152-1 at 97 (emphasis 20 added).) Johnson claims this shows the contract “does not require signature, but rather 21 permits signature in multiple counterparts.” (Doc. 180 at 5.) But a plain reading of the 22 language makes clear GG is still required to sign the contract, it may just do so in “one or 23 more counterparts.” (Doc. 152-1 at 97.) For this additional reason, a valid contract was not 24 formed between the parties on June 17. 25 Johnson cites a District of Utah case which he claims found a valid offer under 26 similar circumstances. But in that case, the plaintiff sent an email containing a settlement 27 agreement “and asked for either redlines or a return of signed documents,” noting it “would 28 ‘handle the filing’” if the defendant returned signed documents without modification. Hope 1 Int’l Hospice Inc. v. Net Health Sys., Inc., No. 2:22-CV-00656-DBB, 2023 WL 5508840, 2 at *5 (D. Utah Aug. 25, 2023) (footnote omitted). That clear offering language is different 3 from that in GG’s June 17 email. GG’s question whether the agreement was “good” did 4 not invite acceptance by returning a signed document and instead indicated negotiations 5 were ongoing. Nor was there evidence in Hope that the parties proceeded for years through 6 litigation before the defendant attempted to enforce the agreement. (Doc. 152-1 at 81.) 7 It is Johnson’s burden to show a legally enforceable settlement agreement was 8 reached, Benge, 2017 WL 588706, at *2, and he has not met that burden. Johnson’s motion 9 to enforce settlement agreement is denied. 10 B. Motion for Spoliation Sanctions 11 GG seeks spoliation sanctions based on defendants wiping Johnson’s laptop before 12 this case began. Defendants did not have a duty to preserve evidence when they wiped 13 Johnson’s laptop, so there can be no related sanctions. 14 1. Legal Standard 15 Before issuing sanctions under Fed. R. Civ. P. 37(e), a court must determine whether 16 “(1) the [electronically stored information (‘ESI’)] should have been preserved in the 17 anticipation or conduct of litigation; (2) the ESI is lost because a party failed to take 18 reasonable steps to preserve it; and (3) the ESI cannot be restored or replaced through 19 additional discovery.” Burris v. JPMorgan Chase & Co., 566 F. Supp. 3d 995, 1011 (D. 20 Ariz. 2021), aff’d, No. 21-16852, 2024 WL 1672263 (9th Cir. Apr. 18, 2024) (citation and 21 quotation marks omitted). The duty to preserve “arises when litigation is reasonably 22 foreseeable and the party knows or should know ESI may be relevant to pending or future 23 litigation.” Fast v. GoDaddy.com LLC, 340 F.R.D. 326, 337 (D. Ariz. 2022). If the court 24 finds a party “acted with the intent to deprive another party of the information’s use in the 25 litigation,” it may issue sanctions. Fed. R. Civ. P. 37(e)(2). 26 2. Analysis 27 GG alleges Johnson and Kresevic intentionally wiped Johnson’s laptop to delete 28 evidence that could be used against them in this lawsuit. (Doc. 143 at 10–11.) GG moves 1 for an adverse inference instruction and default judgment sanctions on GG’s copyright 2 claim. (Doc. 143 at 3.) It is undisputed Johnson’s laptop was wiped in October 2022. But 3 defendants argue they did not have a duty to preserve the laptop when it was wiped. (Doc. 4 161 at 5–10.) If they are correct, the court may not issue spoliation sanctions against them. 5 See Burris, 566 F. Supp. 3d at 1011. 6 GG puts forth four pieces of evidence it claims show defendants reasonably 7 anticipated litigation before the laptop was wiped: (1) Johnson told Kresevic before the 8 investor presentation in October 2021 that he “wouldn’t want to get sued [by GG] saying 9 I’m using GG IP at Turbo[;]” (2) Kresevic told Johnson he needed to get him a laptop and 10 that he should not use his GG laptop; (3) Kresevic told Johnson to discuss the technology— 11 allegedly similar to QM—he planned to develop at Turbo “verbally” at the investor 12 presentation, “not in writing;” and (4) Johnson mentioned getting legal representation to 13 Kresevic “in the event GG chose to sue me and Turbo.” (Doc. 166 at 1–2.) 14 The duty to preserve evidence “begins when litigation is pending or reasonably 15 foreseeable.” Milke v. City of Phoenix, 497 F. Supp. 3d 442, 464 (D. Ariz. 2020), aff’d, No. 16 20-17210, 2022 WL 259937 (9th Cir. Jan. 27, 2022) (quoting Micron Tech., Inc. v. Rambus 17 Inc., 645 F.3d 1311, 1320 (Fed. Cir. 2011)). Whether litigation is “reasonably foreseeable” 18 is a “flexible fact-specific standard that allows a district court to exercise the discretion 19 necessary to confront the myriad factual situations inherent in the spoliation inquiry.” Id. 20 (quoting Micron Tech., Inc., 645 F.3d at 1320). 21 That GG indisputably did not ask defendants to preserve evidence until it sent them 22 a litigation hold on January 4, 2023 (Doc. 161-1 at 6–10)—after defendants had wiped the 23 laptop—tilts in favor of not imposing spoliation sanctions.1 See Prewitt v. United States, 24 No. 10 C 102, 2012 WL 5381281, at *5 (N.D. Ill. Oct. 31, 2012) (“Courts have held that 25 no duty to preserve evidence inheres to a defendant if the plaintiff does not specifically ask 26 the defendant to preserve the evidence before it is destroyed in the ordinary course of

27 1 As does the fact that a backup of the laptop appears to have been produced in discovery— meaning GG suffered no prejudice by the laptop’s deletion, see Fast, 340 F.R.D. at 341— 28 despite GG’s unsupported contention the backup is not an “adequate forensic substitute for analyzing” the laptop “in its pre-wiped state.” (Doc. 166 at 11.) 1 business.”); Trask-Morton v. Motel 6 Operating L.P., 534 F.3d 672, 681 (7th Cir. 2008) 2 (“courts have found a spoliation sanction to be proper only where a party has a duty to 3 preserve evidence because it knew, or should have known, litigation was imminent” and 4 defendants “had no reason to suspect litigation until—at the earliest—[plaintiff’s] attorney 5 sent [defendant] a demand letter”). Given the four pieces of evidence GG has presented, 6 there is no question Johnson thought litigation against him was possible, but that does not 7 demonstrate a duty to preserve. Recognizing a possibility of litigation is not the same as 8 recognizing a reasonably foreseeable likelihood of litigation. See Realnetworks, Inc. v. 9 DVD Copy Control Ass’n, Inc., 264 F.R.D. 517, 526 (N.D. Cal. 2009) (finding defendants’ 10 statements about a possible threat of copyright action insufficient to trigger a duty to 11 preserve evidence because “[a] general concern over litigation does not trigger a duty to 12 preserve evidence.”) A party does not have a duty to preserve relevant documents or 13 evidence until a potential claim is identified or they know future litigation is probable rather 14 than possible. Id. GG’s evidence here amounts only to Johnson acknowledging litigation 15 against him was possible, which is insufficient to give defendants a duty to preserve 16 evidence before they wiped Johnson’s old laptop. 17 GG cites a case saying evidence must be preserved “[a]s soon as a potential claim 18 is identified[.]” Apple Inc. v. Samsung Electronics Co., Ltd., 888 F. Supp. 2d 976, 991 19 (N.D. Cal. Aug. 21, 2012). But a potential claim was not identified against Johnson at the 20 time his old laptop was wiped in the same way potential claims were identified against 21 Samsung in Apple. There, Apple “confronted Samsung with ‘a comprehensive summary 22 of its specific patent infringement claims against specific Samsung products’” in a 23 presentation. Id. at 990. The presentation’s identification of “specific Apple intellectual 24 property and specific Samsung devices” that infringed on Apple’s IP qualified as a 25 “potential claim” that imputed to Samsung a duty to preserve. Id. at 991. Here, Johnson 26 merely worried IP litigation against him was possible; GG had not indicated it intended to 27 sue Johnson or Turbo for specific IP-related reasons like Apple did. Nor did Johnson 28 articulate what sort of IP suit he thought might be leveled against him or Turbo and on 1 what basis such a claim would arise. Apple is inapposite. 2 In its reply, GG presents a new argument based on newly-submitted evidence: a 3 privilege log claiming work product privilege over a November 29, 2021 text exchange 4 (before Johnson’s old laptop was wiped). This claim of work product privilege is relevant, 5 GG argues (Doc. 166 at 5), because claiming a communication is protected by the work 6 product doctrine necessarily implies that communication is “tied to [an] adversarial 7 process.” In re Grand Jury, 23 F.4th 1088, 1093 (9th Cir. 2021). So, GG argues, the 8 privilege log means Johnson was discussing litigation with his attorney fourteen months 9 before his laptop was wiped (Doc. 166 at 5). Defendants move to strike the new exhibit or 10 for leave to file a sur-reply to address the new issues and evidence. Briggs v. Montgomery, 11 No. CV-18-02684-PHX-EJM, 2019 WL 13039282, at *2 (D. Ariz. Mar. 19, 2019) 12 (recognizing “a reply brief that introduces new issues or new evidence . . . may justify 13 allowing a sur-reply to address the new issues or evidence”). 14 Striking the exhibit or allowing a sur-reply is unnecessary here, however, because 15 defendants have persuasively argued the new evidence is irrelevant to the resolution of the 16 motion for sanctions. Specifically, defendants argue they erred while preparing the 17 privilege log and now claim the communications were subject to the attorney-client 18 privilege but not the work product protection. In support, defendants waived attorney-client 19 privilege and produced some of the communications. (Doc. 190-1 at 1.) Having reviewed 20 the unredacted communications, they do not discuss impending litigation, and therefore 21 did not create a duty for defendants to preserve evidence. (Doc. 190-1 at 1.) 22 Because defendants did not have a duty to preserve evidence before they wiped 23 Johnson’s old laptop, they cannot be sanctioned for spoliation of that evidence. Because 24 the exhibit defendants want stricken does not change the court’s analysis, their motion to 25 strike is denied as moot. 26 27 28 1 III. Discovery Disputes 2 The parties have also filed a joint statement regarding four discovery disputes. This 3 is yet another of many tiresome discovery disputes filed so far in this case. The parties are 4 reminded to meet and confer to attempt to cooperatively resolve all discovery disputes. 5 There are other cases on the court’s docket and it is ill-advised for any party to use the 6 court as a discovery babysitter, as both parties have repeatedly done here. 7 A. In Camera Review of Attorney-Client Privileged Messages 8 GG discovered defendants improperly withheld several text messages on the basis 9 of the work product doctrine. (Doc. 189 at 2.) Defendants said they erroneously marked 10 some messages as work product that were actually attorney-client privileged. (Doc. 189 at 11 2.) GG is concerned defendants are “retroactively changing these designations” after GG 12 points out the designation is inconsistent with defendants’ position on other matters. (Doc. 13 189 at 2.) 14 Defendants recently re-designated fifteen text messages as attorney-client 15 privileged. (Doc. 189 at 2.) They then retracted all privilege designations for eight of those 16 text messages. (Doc. 189 at 2.) GG has reason to doubt these messages are privileged 17 because no attorney appears on any of them, and one of these fifteen re-designated text 18 messages that it saw did not, in GG’s view, meet the attorney-client privilege criteria. (Doc. 19 189 at 2.) GG asks the court to conduct an in camera review of the remaining re-designated 20 text messages to determine if they are attorney-client privileged. (See Doc. 189 at 2–3.) 21 The Supreme Court has “le[ft] the decision of whether to conduct an in camera 22 review within ‘the sound discretion of the district court.’” In re Napster, Inc. Copyright 23 Litig., 479 F.3d 1078, 1096 (9th Cir. 2007) (quoting United States v. Zolin, 491 U.S. 554, 24 572 (1989)), abrogated on other grounds by Mohawk Indus., Inc. v. Carpenter, 558 U.S. 25 100 (2009). In camera review should be exercised judiciously. Id. And “the party seeking 26 in camera review must make an initial showing of ‘a factual basis adequate to support a 27 good faith belief by a reasonable person’ that the materials at issue are being improperly 28 withheld as privileged.” In re Soc. Media Adolescent Addiction/Pers. Inj. Prods. Liab. 1 Litig., No. 22-MD-03047-YGR (PHK), 2025 WL 782733, at *2 (N.D. Cal. Mar. 12, 2025) 2 (quoting Zolin, 491 U.S. at 572). 3 GG has not met its burden of providing “a good faith belief . . . that the materials at 4 issue are being improperly withheld as privileged.” Id. Its only factual basis for this claim 5 is that GG redesignated work product protected materials as attorney-client privileged and 6 that it believes one of those text messages was not protected by the attorney-client 7 privilege. (Doc. 189 at 2–3.) Mere suspicion that material may not be privileged is 8 insufficient to warrant in camera review. See Rock River Commc’ns, Inc. v. Universal 9 Music Grp., Inc., 745 F.3d 343, 353 (9th Cir. 2014) (“[Plaintiff’s] belief that the documents 10 are not privileged appears to be based on little more than unfounded suspicion, and the 11 district court correctly concluded that [plaintiff] had not made the requisite factual showing 12 to justify an in camera review.”) (citation omitted). Accordingly, GG’s request for in 13 camera review is denied. 14 B. Review of Documents Marked Attorneys’ Eyes Only 15 Defendants requested software development emails between GG and the company 16 that helped it develop QM—“the software that is the central subject of this [intellectual 17 property]/trade secret litigation”—which GG marked as “Confidential – For Counsel 18 Only.” (Doc. 189 at 4–5.) Defendants claim a “blanket” attorneys’ eyes only (“AEO”) 19 designation of 52,000 consecutive pages of documents falls far short of th[e] good faith 20 standard” required by this court’s protective order. (Doc. 189 at 7; see also Doc. 52 at 2–3 21 (“Any party may designate information as ‘CONFIDENTIAL’ only if, in the good faith 22 belief of such party and its Counsel, the unrestricted disclosure of such information could 23 be harmful to the business or operations of such party.”).) 24 GG has established a “good faith belief” that “the unrestricted disclosure” of its 25 emails with the company that helped it develop QM would “be harmful to [its] business.” 26 (See Doc. 52 at 3.) The emails designated AEO “describe QM’s development process, 27 contain code, and discuss competitive secrets. Disclosure of these materials to Turbo would 28 result in severe competitive harm to GG (especially handing this information over to Turbo, 1 a direct competitor).” (Doc. 189 at 4.) GG also correctly points out that the protective order 2 in this case still allows defendants to give all of these materials to defendants’ retained 3 computer code expert. (Doc. 189 at 4.) Turbo’s attempt to de-designate these materials as 4 AEO so it can give them to its in-house software developer—who GG claims “created 5 Turbo’s in-house code that is derivative and infringing on QM”—further supports GG’s 6 argument that de-designating the disputed materials could cause it severe harm. (Doc. 189 7 at 4.) GG has adequately put forth a good faith basis for its AEO designation, so defendants’ 8 request that those materials be de-designated is denied. 9 C. Request to Supplement Damages Calculation 10 Defendants seek supplemental discovery responses to eight interrogatories related 11 to GG’s damages. (Doc. 189 at 5.) In many of these interrogatories, GG claims “[d]iscovery 12 is still ongoing, and [it] reserves the right to supplement this response.” (See e.g., Doc. 189- 13 1 at 6, 10, 11, 12.) Defendants claim these responses are “improper . . . and should [be] 14 supplemented so that, at a minimum, Defendants are provided with the amount of [GG’s] 15 alleged damages.” (Doc. 189 at 5.) 16 A party is required to provide other parties with “a computation of each category of 17 damages claimed by the disclosing party.” Fed. R. Civ. P. 26(a)(1)(A)(ii). GG claims it did 18 so by disclosing in September 2024 through an expert report that it had “$5,000,000+ in 19 damages.” (Doc. 189 at 3.) GG also claims it “is diligently calculating damages based on 20 information it recently received . . . and [it] will supplement when its calculations are 21 complete.” (Doc. 189 at 4.) That is not how the discovery process works, as evidenced by 22 Rule 26. GG must now provide a concrete answer to defendants’ interrogatories. It may 23 later supplement that answer if it wishes to do so. 24 Defendants also request a supplemental response “to Defendant Johnson’s 25 Interrogatories 7 and 13” “because [GG] has not provided a substantive response” to them. 26 (Doc. 189 at 6.) GG does not argue it has provided a substantive response to these 27 interrogatories, so, to the extent it has not, it is ordered to do so. 28 1 D. Request to Supplement RFPs 2 Defendants seek supplemental responses to eight of its RFPs, seven of which “seek 3 documents supporting the damages alleged in paragraphs of [GG’s] Second Amended 4 Complaint.” (Doc. 189 at 6.) Similar to its responses to the disputed interrogatories, GG’s 5 RFP responses state it “is presently analyzing appropriate methodologies for calculating 6 these damages, and that methodology may impact what documents are responsive to this 7 request.” (See e.g., Doc. 189-1 at 34, 35, 36, 41.) Defendants argue these responses are 8 insufficient and that GG must state whether they have any responsive documents other than 9 those previously produced. (Doc. 189 at 6.) 10 A response to RFPs “must either state that inspection and related activities will be 11 permitted as requested or state with specificity the grounds for objecting to the request, 12 including the reasons.” Fed. R. Civ. P. 34(b)(2)(B). Defendants acknowledge GG could 13 validly respond that it “presently has no documents responsive to these requests[.]” (Doc. 14 189 at 6.) But defendants want to require GG to state as much if that is the case, “with the 15 understanding that [it] can supplement its response in accordance with [Rule] 26.” (Doc. 16 189 at 6.) GG is ordered to provide a definitive statement regarding the documents 17 defendants asked for in the disputed RFPs or provide the documents those RFPs seek. 18 IV. Conclusion 19 Johnson’s motion to enforce settlement agreement is denied because GG never 20 made him a settlement offer. GG’s motion for spoliation sanctions is denied because 21 defendants did not have a duty to preserve evidence before they wiped Johnson’s laptop. 22 Defendants’ motion to strike is denied as moot because considering the exhibit at issue did 23 not change the outcome of the motion for spoliation sanctions. As to the parties’ discovery 24 dispute, GG is ordered to provide definitive answers to some of defendants’ interrogatories 25 and RFPs. 26 / 27 / 28 / 1 Accordingly. 2 IT IS ORDERED Johnson’s motion to enforce settlement agreement (Doc. 152) is 3|| DENIED. 4 IT IS ORDERED GG’s motion for spoliation sanctions (Doc. 143) is DENIED. 5 IT IS ORDERED defendants motion to strike (Doc. 171) is DENIED as moot. 6 IT IS ORDERED the parties shall comply with the discovery rulings set forth 7\| above. 8 Dated this 4th day of June, 2025. 9 10 4 {if Vo Vy f oy G. / ,

Honorable Krissa M. Lanham 12 United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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