Medimpact Healthcare Systems, Inc. v. IQVIA Holdings Inc.

• Court: District Court, S.D. California
• Decided: November 25, 2019
• Docket: 3:19-cv-01865
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MEDIMPACT HEALTHCARE Case No.: 19cv1865-GPC-LL SYSTEMS, INC.; 12 MEDIMPACT INTERNATIONAL LLC; ORDER GRANTING IN PART AND 13 MEDIMPACT INTERNATIONAL DENYING IN PART PLAINTIFFS’ HONG KONG LTD , MOTION FOR EXPEDITED OR 14 EARLY DISCOVERY Plaintiffs, 15 v. [ECF Nos. 11, 12] 16 IQVIA HOLDINGS, INC.; 17 IQVIA INC.; 18 IQVIA AG; OMAR GHOSHEH; 19 AMIT SADANA, 20 Defendants. 21 22 23 Currently before the Court is Plaintiffs’ October 3, 2019 motion for permission to 24 serve expedited or early discovery pursuant to Federal Rule of Civil Procedure 26(d)(1) on 25 Defendants IQVIA Holdings, Inc. and IQVIA Inc. [ECF Nos. 11 (sealed), 12-1 (“Mot.”)], 26 Defendants IQVIA Holdings, Inc. and IQVIA Inc.’s (collectively “IQVIA US” or 27 “Defendants”) November 1, 2019 opposition [ECF Nos. 29 (sealed), 30 (“Oppo.”)], and 28 Plaintiffs’ November 8, 2019 reply [ECF No. 36 (“Reply”)]. For the reasons set forth 1 below, the Court GRANTS IN PART and DENIES IN PART Plaintiffs’ motion for 2 expedited or early discovery. 3 I. BACKGROUND 4 Plaintiffs MedImpact Healthcare Systems, Inc., MedImpact International, LLC, and 5 MedImpact International Hong Kong, Ltd. (collectively “MedImpact” or “Plaintiffs”) are 6 in the business of providing services to health plans, third-party administrators, self-funded 7 employers, and governments. Mot. at 7. Plaintiffs’ main product is its “pharmacy benefit 8 management (“PBM”) platform that enables patients and pharmacies to efficiently obtain 9 insurance approvals for prescribed medicines.” Id. Defendants IQVIA US are a “global 10 provider of advanced analytics, technology solutions, healthcare data and contract research 11 services to the life sciences industry.” Id. at 8. 12 On September 26, 2019, Plaintiffs filed a complaint against Defendants alleging 13 (1) misappropriation of trade secrets under California Uniform Trade Secrets Act, 14 (2) misappropriation of trade secrets under Defend Trade Secrets Act, 18 U.S.C. § 1836, 15 (3) intentional interference with prospective economic relations, (4) negligent interference 16 with prospective economic relations, (5) intentional interference with a contractual 17 relationship, (6) inducing breach of contract, (7) unfair competition in violation of 18 California Business & Professions Code section 17200, (8) violation of Racketeer 19 Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c), (9) unjust enrichment, 20 (10) civil conspiracy, and (11) conversion.1 ECF No. 1. 21 On October 3, 2019, Plaintiffs filed the instant motion for expedited discovery 22 requesting: (1) five Requests for Production of documents, (2) two Interrogatories, and 23 (3) one deposition of IQVIA US. Mot. at 15. The proposed discovery “seeks the 24 identification of claim adjudication/processing and PBM services/products offered by 25

26 27 1 The complaint also alleges breach of fiduciary duties and duty of loyalties owed to the joint venture and MedImpact, against Defendants Omar Ghosheh and Amit Sadana only. 28 1 IQVIA [US] from February 2019 to the present, identification of the entities it was offered 2 to, and the related documents” and the documents received from Dimensions Healthcare, 3 LLC from February 2019 to the present relating to claim adjudication/processing and PBM 4 services/products. Id.; ECF Nos. 12-9 at 8–9, 12-10 at 7–8. The Court issued a briefing 5 schedule on October 18, 2019. ECF No. 19. Defendants timely filed an opposition and 6 Plaintiffs timely filed a reply. Oppo., Reply. 7 On October 17, 2019, the district judge granted IQVIA US’s request to extend their 8 time to file a responsive pleading to Plaintiff’s complaint by sixty days, from October 21, 9 2019 to and including December 20, 2019. ECF No. 18. 10 II. LEGAL STANDARD 11 Federal Rule of Civil Procedure 26(d) states that a party “may not seek discovery 12 from any source” prior to the conference required by Rule 26(f), which must take place at 13 least twenty-one days before the initial Case Management Conference.2 Fed. R. Civ. P. 14 26(d), (f). Discovery may commence prior to the Rule 26(f) meeting if allowed by court 15 order or agreement of the parties. Fed. R. Civ. P. 26(d)(1). Courts in the Ninth Circuit 16 permit early discovery if the requesting party demonstrates good cause. Semitool, Inc. v. 17 Tokyo Electron Am., Inc., 208 F.R.D. 273, 276 (N.D. Cal. 2002). “Good cause may be 18 found where the need for expedited discovery, in consideration of the administration of 19 justice, outweighs the prejudice to the responding party.” Id. In determining whether good 20 cause justifies expedited discovery, courts commonly consider the following non- 21 exhaustive factors: “(1) whether a preliminary injunction is pending; (2) the breadth of the 22 discovery requests; (3) the purpose for requesting the expedited discovery; (4) the burden 23 on the defendants to comply with the requests; and (5) how far in advance of the typical 24 discovery process the request was made.” Am. LegalNet, Inc. v. Davis, 673 F. Supp. 2d 25 1063, 1067 (C.D. Cal. 2009) (citation omitted); Synopsys, Inc. v. AzurEngine Techs., Inc., 26 27 28 2 1 No. 19cv1443-LAB (AGS), 2019 WL 3842996, at *5 (S.D. Cal. Aug. 15, 2019) (quoting 2 Am. LegalNet, Inc. v. Davis, 673 F. Supp. 2d at 1067). 3 III. DISCUSSION 4 A. Parties’ Positions 5 Plaintiffs argue in their motion that (1) “there is reason to believe that [Defendants] 6 [are] actively causing MedImpact irreparable harm in various international markets” [Mot. 7 at 5–6]; (2) “expedited discovery may help to prevent potential spoliation” [id. at 6–7]; and 8 (3) Plaintiffs’ “requested discovery is narrowly tailored in scope and breadth and will not 9 be an undue burden” on Defendants [id. at 7]. Plaintiffs further argue that good cause exists 10 for expedited discovery because (1) the express purpose of the request is to determine 11 whether Plaintiffs must seek a preliminary injunction, which “is a less disruptive approach 12 than seeking a preliminary injunction in the first instance” [id. at 14, 15]; (2) the limited 13 discovery requested is a subset of the same discovery Defendants will need to respond to 14 during the litigation [id. at 16]; and (3) Plaintiffs “simply cannot wait for regular discovery 15 timeframes without potentially risking irreparable harm” [id. at 17]. 16 Defendants argue that (1) Plaintiffs’ complaints have already been resolved in 17 binding arbitration between Plaintiffs and a subsidiary of Defendants [Oppo. at 6; ECF No. 18 29 (sealed) at 6;]; (2) the only support Plaintiffs offer for their claims that Defendants are 19 likely misappropriating Plaintiffs’ trade secrets are unavailing because they do not indicate 20 that Defendants are engaging in PBM services [Oppo. at 7–8]; and (3) Plaintiffs have not 21 shown that emergency circumstances exist that require expedited discovery [id. at 8–9]. 22 Defendants further contend that good cause does not exist for expedited discovery because 23 (1) currently, there is no pending motion for preliminary injunction [id. at 10–11]; (2) 24 Defendants anticipate filing motions to dismiss Plaintiffs’ complaint “on numerous 25 grounds, including failure to state a claim and lack of personal jurisdiction,” which makes 26 expedited discovery premature [id. at 13–14]; (3) the proposed written discovery requests 27 are overly broad, unduly burdensome, costly, and disruptive to business operations because 28 it “could potentially require canvassing business operations across 100 countries” 1 [id at 14]; (4) the proposed deposition is “a disruptive and burdensome task on the 2 business” at this stage of the proceeding when Plaintiffs have “not put forth any evidence 3 to support its baseless allegations” [id.]; (5) Plaintiffs waited over eight months to bring 4 the instant motion after learning of the alleged potential trade secrets misappropriation [id. 5 at 15–16]; (6) Plaintiffs do not “provide any evidence to support its speculation that it may 6 suffer some future harm that changes the status quo ante” [id. at 18]; and (7) Plaintiffs have 7 provided “no basis for any claim that IQVIA US has or would destroy evidence” 8 [id. at 19]. 9 In their Reply, Plaintiffs argue that (1) “while IQVIA argues there is no evidence 10 thus far that its US entities are providing PBM services, IQVIA makes no representation 11 that the myriad entities it controls around the world are not doing so” [Reply at 2]; 12 (2) Defendants carefully avoid stating that they and their subsidiaries “are bound by and in 13 compliance with the permanent injunction the Tribunal entered” [id.]; (3) evidence shows 14 that Defendants’ subsidiary has passed Plaintiffs’ trade secrets to Defendants [id. at 5–6]; 15 (4) Plaintiffs did not delay because “[t]he requested expedited discovery is intentionally 16 not related to the acts MedImpact learned about during the arbitration proceedings (which 17 occurred prior to February 2019) and is expressly seeking on an expedited basis only recent 18 information” [id. at 9–10]; and (5) “if Defendants are not engaged in PBM services as they 19 claim, then the answer to the discovery is not burdensome or disruptive because it is easily 20 answered with a ‘no’” [id. at 10–11]. 21 B. Analysis 22 Upon review of the parties’ briefing and arguments and the relevant legal standard, 23 the Court finds that Plaintiffs have demonstrated good cause to conduct some, but not all, 24 of the requested expedited discovery. 25 1. Preliminary injunction 26 Plaintiffs indicate that the purpose of the expedited discovery request is to determine 27 whether they should move for preliminary injunction. The absence or presence of a pending 28 motion for preliminary injunction is not dispositive toward a finding of good cause. See 1 Citizens for Quality Educ. San Diego v. San Diego Unified Sch. Dist., No. 17-CV-1054- 2 BAS-JMA, 2018 WL 1150836, at *2 (S.D. Cal. Mar. 5, 2018) (“But the mere fact that party 3 has moved for a preliminary injunction does not thereby entitle the party to receive 4 expedited discovery. Any discovery sought for a preliminary injunction must be evaluated 5 against the purpose of a preliminary injunction, i.e., to preserve the status quo.” (citations 6 omitted)); Apple Inc. v. Samsung Elecs. Co., No. 11-CV-01846-LHK, 2011 WL 1938154, 7 at *2 (N.D. Cal. May 18, 2011) (“[C]ourts have found that expedited discovery may be 8 justified to allow a plaintiff to determine whether to seek an early injunction.”). The fact 9 that there is currently no pending motion for preliminary injunction weighs against 10 expedited discovery because its absence lessens the urgency for early discovery. 11 2. Breadth of the discovery requests 12 Plaintiffs contend that the proposed discovery is narrowly targeted to determine the 13 extent, if any, to which their trade secrets may have flowed from Defendants to its other 14 subsidiaries around the world over the last nine months. Reply at 9. Defendants make only 15 one conclusory statement regarding the scope of the proposed discovery requests: that it is 16 “overly broad.” Oppo. at 14. Otherwise, they attack the scope as unnecessary and as an 17 impermissible request for merits discovery. Oppo. at 12–14. 18 The Court finds this factor weighs in favor of expedited discovery. Plaintiffs’ 19 proposed discovery requests are narrowly tailored with respect to the time period because 20 they seek responsive documents and information from February 2019 to the present. 21 Plaintiff’s complaint alleges misappropriation “beginning in at least mid-2017,” so the 22 timing is tailored to address new instances of misappropriation. See ECF No. 1 at 28. The 23 two Interrogatories seek identification of all “services, technology, systems, products and 24 processes offered by [Defendants] from February 2019 to the present, relating to claim 25 adjudication, claim processing, pharmacy benefit management, medicine/drug utilization 26 review, or clinical edits” and identities of the entities it was offered to. ECF No. 12-10 at 27 7–8. The scope of the Interrogatories and the deposition appears narrowly tailored for a 28 determination of whether to grant or deny a preliminary injunction. The scope of the 1 Requests for Production also appears narrowly tailored in seeking documents and things 2 related to allegedly infringing services or products offered, given, or received by 3 Defendants since February 2019. The temporal limitation combined with the narrow scope 4 distinguishes these requests from a premature merits-based request. See Citizens for 5 Quality Educ. San Diego v. San Diego Unified Sch. Dist., No. 17-CV-1054-BAS-JMA, 6 2018 WL 1150836, at *4 (S.D. Cal. Mar. 5, 2018) (“The hallmark of an impermissible 7 merits discovery request—although framed as a limited discovery request necessary to 8 establish a factual record for a preliminary injunction—is the request’s overbreadth.”). 9 3. Purpose for requesting expedited discovery 10 The Court finds this factor weighs in favor of expedited discovery because Plaintiffs 11 seek it to determine whether Defendants are presently engaging in misappropriation of their 12 trade secrets. See Apple Inc. v. Samsung Elecs. Co., 2011 WL 1938154, at *2 (finding 13 good cause for expedited discovery in part because the purpose was “to prevent alleged 14 infringement of its intellectual property and to forestall allegedly irreparable harm 15 associated with a loss of market share and consumer good will”); Semitool, Inc. v. Tokyo 16 Electron Am., Inc., 208 F.R.D. at 276 (“It should be noted that courts have recognized that 17 good cause is frequently found in cases involving claims of infringement and unfair 18 competition.”). The Court finds no support for Plaintiffs’ allegations of potential spoliation. 19 The Court is also unpersuaded by Defendants’ arguments of a lack of indication of future 20 harm and delay. Although the Court makes no opinion on the merits of Plaintiffs’ claims 21 or their potential motion for preliminary injunction, they have proffered evidence that a 22 subsidiary of Defendants misappropriated Plaintiffs’ trade secrets and that Defendants in 23 turn misappropriated the same trade secrets beginning in 2017. Future harm is possible if 24 Plaintiff’s allegations are true because as Defendants state, they have “business operations 25 across 100 countries” and could have recently disclosed Plaintiffs’ trade secrets with any 26 of those operations. See Oppo. at 14. 27 / / / 28 / / / 1 4. Burden on Defendants to comply with the requests 2 The Court finds that this factor weighs against expedited discovery as to some of the 3 proposed discovery. The document requests at this early stage would be burdensome 4 because they would require Defendants to conduct a wide-ranging investigation for 5 documents and things “related to” pharmacy benefit management services offered, given, 6 or received by Defendants. ECF No. 12-9 at 8–9; see Apple Inc. v. Samsung Elecs. Co., 7 2011 WL 1938154, at *3 (finding requests for production in an expedited discovery motion 8 to be unduly burdensome in part because “it would require [defendant] to undertake a wide- 9 ranging investigation to determine whether any such documents exist”). Likewise, the 10 deposition of Defendants at this procedural stage—before Defendants have even responded 11 to the complaint—would be burdensome because the representative may not have 12 sufficient time or information to prepare. See Semitool, Inc. v. Tokyo Electron Am., Inc., 13 208 F.R.D. at 277 (granting expedited discovery in part because it did not involve a request 14 for “a free ranging deposition for which a representative of Defendants may not have had 15 sufficient time or information with which to prepare”). The Court finds the two 16 Interrogatories are not unduly burdensome because they are sufficiently limited. To the 17 extent that Defendants claim that canvassing its numerous business operations around the 18 globe is a burdensome and disruptive task, the Court finds current technology is sufficient 19 to respond to these narrow requests. See id. (granting expedited discovery for production 20 of documents in a foreign country in part because any logistical inconvenience was 21 overcome by current communication technology and the narrow requests). 22 5. Divergence from typical discovery process 23 The Court finds this factor weighs slightly against expedited discovery because in 24 the normal course, discovery in this case would begin in approximately two months if 25 Defendants file an answer, or possibly months later if Defendants file a motion to dismiss, 26 which is what they indicate they will do. A pending motion to dismiss is not dispositive to 27 a finding of good cause for expedited discovery. See Hardie v. N.C.A.A., No. 13CV346- 28 W DHB, 2013 WL 1399333, at *2 (S.D. Cal. Apr. 5, 2013) (recognizing that motion to 1 ||dismiss may weigh against expedited discovery in some cases, but granting expedited 2 || discovery request even with a pending motion to dismiss); Quintero Family Tr. v. Onewest 3 || Bank, F.S.B., No. 09cv1561 IEG AJB, 2009 WL 3381804, at *1—2 (S.D. Cal. Oct. 16, 4 2009) (granting expedited discovery request when a motion to dismiss was pending). 5 C. ‘Finding 6 Weighing all the factors and considering whether the need for expedited discovery 7 || outweighs the prejudice to the responding party, the Court finds Plaintiffs have shown good 8 || cause for the following expedited discovery requests: Interrogatory No. | and Interrogatory 9 2. See Semitool, Inc. v. Tokyo Electron Am., Inc., 208 F.R.D. 273 at 276. The Court 10 || finds Plaintiffs have not shown good cause for the following expedited discovery requests: 11 || all five Requests for Production and a deposition of Defendants. Id. 12 ||IV. CONCLUSION 13 For the reasons set forth above, the Court GRANTS IN PART and DENIES IN 14 PART Plaintiffs’ motion for expedited or early discovery as follows: 15 e Defendants are ORDERED to respond to Interrogatory No. 1 and 16 Interrogatory No. 2 [ECF No. 12-10] propounded by Plaintiffs on or before 17 December 30, 2019. 18 IT IS SO ORDERED. 19 ||Dated: November 25, 2019 MNO 20 CE | 21 Honorable Linda Lopez 59 United States Magistrate Judge 23 24 25 26 27 28