WalkMe Ltd., an Israeli company v. Whatfix, Inc., a Delaware corporation

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 WALKME LTD., AN ISRAELI Case No. 23-cv-03991-JSW COMPANY, et al., 8 Plaintiffs, ORDER GRANTING IN PART 9 MOTION TO STAY DISCOVERY v. 10 Re: Dkt. No. 116 WHATFIX, INC., A DELAWARE 11 CORPORATION, et al.,

Defendants. 12 13 Now before the Court for consideration is the motion to stay discovery filed by 14 Defendants, which is scheduled for a hearing on June 7, 2024. The Court has considered the 15 parties’ papers, relevant legal authority, and the record in this case, and it finds the motion is 16 suitable for disposition without oral argument. The Court VACATES the hearing and GRANTS 17 the motion, in part. 18 On April 12, 2024, Plaintiffs filed their Second Amended Complaint. Defendants moved 19 to dismiss Plaintiffs’ claims for misappropriation of trade secrets under federal and state law, 20 violations of the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. section 1030(a)(2), and 21 violations of the California Computer Data Access and Fraud Act, California Penal Code section 22 502 (the “Section 502 claim”). 23 Federal Rule of Civil Procedure 26(c) provides that a court may “for good cause, issue an 24 order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or 25 expense” by, inter alia, forbidding discovery or by specifying terms, including time and place, for 26 disclosure or discovery. Fed. R. Civ. Proc. 26(c)(1)(A)-(B). The Court has discretion to stay 27 discovery pending the resolution of motions to dismiss. See, e.g., Jarvis v. Regan, 833 F.2d 149, 1 stay discovery may exist where a court is “convinced that the plaintiff will be unable to state a 2 claim for relief”). “A party seeking a stay of discovery carries the heavy burden of making a 3 ‘strong showing’ why discovery should be denied.” Gray v. First Winthrop Corp., 133 F.R.D. 39, 4 40 (N.D. Cal. 1990) (quoting Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975)). 5 “The moving party must show a particular and specific need for the protective order, as opposed to 6 making stereotyped or conclusory statements.” Id. (citations omitted). 7 In determining whether to grant a protective order to stay discovery pending resolution of 8 dispositive motions, the Court considers the following two factors: (1) whether the pending 9 motion is potentially dispositive of the entire case, or at least dispositive on the issue at which 10 discovery is directed; and (2) whether the pending dispositive motion can be decided absent 11 additional discovery. The Pacific Lumber Co. v. National Union Fire Ins. Co. of Pittsburgh, PA, 12 220 F.R.D. 349, 352 (N.D. Cal. 2003) (internal citations omitted); see also In re Nexus 6p Prod. 13 Liab. Litig., No. 17-cv-2185-BLF, 2017 WL 3581188, at *1 (N.D. Cal. Aug. 18, 2017) (citing 14 cases). If the two above questions are answered affirmatively, the court may issue a protective 15 order. Pac. Lumber Co., 220 F.R.D. at 352. “However, if either prong of this test is not 16 established, discovery proceeds.” Id. There is no dispute that the motion to dismiss can be 17 resolved without further discovery. Therefore, Defendants satisfy the second prong of the Pacific 18 Lumber test. 19 Turning to the first prong, Plaintiffs do not oppose staying discovery on the trade secret 20 claims. Accordingly, the Court GRANTS the motion to stay discovery on those claims. 21 Defendants also acknowledge that Plaintiffs’ claim for false advertising will proceed, and the 22 Court DENIES the motion to stay discovery on that claim and on the unfair competition claim but 23 only to the extent it is derivative of the false advertising claim. 24 The Court has taken a preliminary look at the arguments raised in Defendants’ latest 25 motion to dismiss the CFAA and Section 502 claims. Notwithstanding the Court’s prior order, it 26 concludes Defendants have shown that a ruling on the motion would be dispositive of the issues at 27 which discovery would be directed, and it finds good cause to stay discovery on those claims ] discovery on those two claims. 2 IT IS SO ORDERED.

3 || Dated: May 29, 2024 fo lod 4 J . WHITE © 5 (pe tes District Judge 6 / at 7 8 9 10 1] as 12

2 «14

Oo Z 18 19 20 21 22 23 24 25 26 27 28