Global Development Strategies, Inc. et al v. Mobile Motion, Inc. et al

Filing 8

ORDER signed by Magistrate Judge Edmund F. Brennan on 5/19/11, ORDERING that defendants' 1 Motion to Quash is transferred to the Central District of CA; and this case is CLOSED. (Kastilahn, A)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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GLOBAL DEVELOPMENT
STRATEGIES, INC.; GLOBAL
DISTRIBUTION SERVICES, INC.,

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Plaintiffs,

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No. Misc. S-11-0038 KJM EFB

vs.
MOBILE MOTION, INC.; DORON
KIM; E DATING FOR FREE, INC.,

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Defendants.

ORDER
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This matter is before the undersigned pursuant to Local Rule 302(c)(1), pursuant to 28

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U.S.C. § 636(b)(1). On April 11, 2011, defendants Mobile Motion, Inc., Doron Kim, and E

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Dating For Free, Inc. filed this miscellaneous action and a motion to quash third-party subpoenas

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issued by plaintiffs Global to Google, Inc. (“Google”), Microsoft Corporation (“Microsoft”),

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and Rackspace, Inc. (“Rackspace”). Dckt. No. 1. Defendants noticed the motion for hearing

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before the undersigned on May 25, 2011. Dckt. No. 3. Plaintiffs oppose the motion. Dckt. No.

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4. After reviewing the motion, the opposition, and all related papers, the court reserves ruling on

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the merits of the motion and instead transfers the motion to the Central District of California.

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BACKGROUND

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In March 2011, plaintiff filed a complaint against defendants in the Central District of

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California, alleging (1) cybersquatting under the Lanham Act, 15 U.S.C. § 1125(d); (2) breach of

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oral contract; (3) breach of implied-in-fact contract; (4) breach of the implied covenant of

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good faith and fair dealing; (5) conversion; and (6) fraud. Decl. of Karl Kronenberger, Ex. A

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(Compl.), Dckt. No. 1-4. Plaintiffs are sellers and installers of overhead garage doors and

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defendants Mobile Motion, Inc. and its President and CEO Doron Kim are internet marketers

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that provide online services to clients, including search engine optimization (“SEO”) services

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and Pay-Per-Click advertising. Id. ¶¶ 18, 19; Mot. to Quash, Dckt. No. 1-1 at 2. According to

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the complaint, as well as defendants’ motion to quash, plaintiffs and defendants Mobile Motion

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and Kim entered into an oral agreement in 2003 for those defendants to provide internet

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marketing services to plaintiffs in exchange for a monetary commission of a percentage of the

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revenue plaintiffs generated through the internet services provided by defendants. Id. ¶¶ 21-22;

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Dckt. No. 1-1 at 3. The complaint alleges that defendants breached the oral agreement by

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registering certain domain names, which plaintiffs paid for, in Mobile Motion’s name rather than

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plaintiffs’ and by transferring some of those domain names to defendant E Dating For Free, Inc.

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Id. ¶¶ 1, 30, 31. Plaintiffs also contend that defendants Kim and Mobile Motion have log-in

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access to plaintiffs’ Pay-Per-Click accounts and refuse to turn the accounts over to plaintiffs. Id.

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¶ 2.

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website content that defendants contend they developed and designed, as well as defendants’

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Google and Microsoft Pay-Per-Click campaigns. Id. ¶ 2; Dckt. No. 1-1 at 4. Defendants argue

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that “[i]n other words, Plaintiff seeks to obtain all of the benefits of the oral agreement without

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having to pay Mobile Motion the agreed-upon commission,” and contend that “under the oral

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agreement, Mobile Motion is the proper owner of the Domains, the website content, and the PPC

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campaigns.” Dckt. No. 1-1 at 4.

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Plaintiffs seek to have defendants transfer the domain names to plaintiffs, including

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On March 8, 2011, concurrent with the filing of their complaint, plaintiffs filed an Ex

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Parte Application for Leave to Take Immediate Discovery in the Central District of California

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action. Kronenberger Decl. ¶ 3. The court granted plaintiffs’ request, and issued an order to that

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effect on March 8, 2011. Id., Ex. B, Dckt. No. 1-4 at 41-43. The order authorized plaintiffs to

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serve immediate discovery on a variety of third party providers, including Google, Microsoft,

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and Rackspace. Id. Specifically the order provided that plaintiffs could serve subpoenas on

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those providers to “seek information sufficient to (1) identify the true registrant of each and

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every domain name that should rightfully be registered to Plaintiffs and (2) to obtain all account

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information related to accounts which Defendants have improperly denied Plaintiffs[] access

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which [they seek] recovery under the Complaint before the same is destroyed by Defendants.”

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Id.

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On March 17, 2011, plaintiffs issued the subpoenas to Google, Microsoft, and Rackspace

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that are at issue herein, and then re-issued the subpoenas on March 23, 2011. Kronenberger

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Decl. ¶ 4. The Google, Microsoft, and Rackspace subpoenas were all issued from this court and

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were served on the companies’ respective registered agents in Sacramento, California. Id. ¶¶ 5-7

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& Exs. C-E.

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ANALYSIS
Pursuant to Federal Rule of Civil Procedure 45(c)(3), defendants now move to quash the

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three subpoenas at issue, arguing that they “exceed the bounds” of both the order issued in the

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underlying Central District of California action and the Federal Rules of Civil Procedure since

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“they overtly seek disclosure of Defendant’s ‘trade secret[s] or other confidential research,

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development, or commercial information.’” Dckt. No. 1-1 at 6 (quoting Fed. R. Civ. P.

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45(c)(3)(B)(I)). The motion to quash was properly filed in this district because the subpoenas

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were all issued from this court. See Fed. R. Civ. P. 45(c)(3)(A) (authorizing “the issuing court”

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to quash or modify a subpoena).

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Defendants request that this court transfer the instant motion to the Central District of

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California “as an alternative to quashing the Google, Microsoft, and Rackspace subpoenas.”

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Dckt. No. 1-1 at 6. Defendants acknowledge that there is “a split of authority as to whether the

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court which issued a subpoena can transfer a motion to quash to the court with underlying

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jurisdiction over the case . . . .” Id. (quoting IO Group v. J.W., 2011 WL 240706 (N.D. Cal. Jan.

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24, 2011)).

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Although the Ninth Circuit has not decided whether Rule 45 motions may be transferred,

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the Eighth and Tenth Circuits and district courts in the Fourth and Second Circuits have read

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Rule 45 to allow transfers of motions to quash. See IO Group, Inc. v. Does 1-9, 2010 WL

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5071605, at *3-4 (N.D. Cal. Dec. 7, 2010) (citing United States v. Star Scientific, 205 F. Supp.2d

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482, 485 n.4, 487 (D. Md. 2002), which noted that courts in the Eighth and Tenth Circuits have

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supported such transfers, while courts in the Seventh and D.C. Circuits have found transfer of

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discovery disputes inappropriate); but see Wells v. GC Servs., LP, 2007 WL 1068222, at *1

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(N.D. Cal. Apr. 10, 2007) (“this court is not the proper court to quash or modify the subpoenas,

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which all issued from other courts.”). In Star Scientific, the District of Maryland considered

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transferring a Rule 45 motion proper, when the court of underlying litigation was “plainly better

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situated to resolve the discovery dispute.” 205 F. Supp.2d at 487-88 (quoting In re Sealed Case,

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141 F.3d 337, 343 (D.C. Cir. 1998)). Additionally, in Heroic Era, Ltd. v. Evony, LLC, 2011 WL

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308468 (W.D. Wash. Jan. 27, 2011), the Western District of Washington recently transferred a

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motion to quash to the Northern District of California, noting that “[b]ecause ruling on the

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motion requires familiarity with the case as a whole, the Northern District of California is ‘more

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plainly suited’ to deciding it than a court whose involvement with the case begins and ends with

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issuing a subpoena.”

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Here, defendants contend that the subpoenas violate an order issued by the Central

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District of California. On the other hand, plaintiffs argue that the discovery is specifically

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authorized by that order. Dckt. No. 4 at 16. The one thing that is not disputed is that analysis of
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the merits of defendants’ motion requires interpretation of that order.1 Of course, the Central

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District of California is better suited than this court to interpret its own orders. Additionally, the

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core dispute on this motion is whether the information sought by the subpoenas constitutes

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confidential and proprietary information, including trade secrets. It appears from the parties’

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briefs that resolution of that issue may have a significant bearing on the scope of discovery in

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this action generally, may require weighing of the overall course and merits of the case, and may

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ultimately affect the case’s outcome. See Dckt. No. 1-1 at 7 (“The Google and Microsoft

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subpoenas seek detailed information that would permit Plaintiffs to recreate the PPC campaigns

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that Defendants have spent seven years developing, honing, and protecting from public

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disclosure.”); see also Dckt. No. 4 at 16 (“granting this Motion to Quash would completely

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prevent Plaintiffs from proving its claims”). In light of the parties representations in that regard,

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this court finds that the Central District is the best court to determine whether the information

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sought by the subpoenas constitutes confidential and proprietary information, including trade

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secrets.

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The court ordinarily would look with disfavor on a request to transfer a motion to quash.

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Under the circumstances of this case, where the intent of the earlier order issued by the Central

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District of California is disputed, and the parties each argue that resolution of the issue

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concerning trade secrets could affect the overall course and merits of the case, transfer in this

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instance is appropriate. Therefore, this court finds that principles of comity support a transfer of

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the motion to quash to the Central District of California.2

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Defendants also challenge the propriety of that order. Dckt. No. 1-1 at 5, n.1.

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The court also notes that to the extent there is a split in authority as to the propriety of
transferring a motion to quash under Rule 45, some courts have construed the motion to quash as
a motion for a protective order pursuant to Rule 26. See IO Group, Inc. v. Does 1-19, 2010 WL
5071605 at *2 (citing Wells v. GC Servs., LP, 2007 WL 1068222 (N.D. Cal. Apr. 10, 2007)).
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CONCLUSION

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Accordingly, IT IS HEREBY ORDERED that:

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1. Defendants’ motion to quash is transferred to the Central District of California; and

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2. The Clerk is directed to close this miscellaneous case.

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SO ORDERED.

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DATED: May 19, 2011.

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