Storz Management Company et al v. Carey et al

Filing 20

ORDER signed by District Judge Troy L. Nunley on 2/8/18 DENYING 16 Ex Parte Application for expedited discovery. (Kaminski, H)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 STORZ MANAGEMENT COMPANY, a California Corporation, and STORZ REALTY, INC., 13 14 15 16 17 Plaintiffs, v. No. 2:18-cv-00068-TLN-DB ORDER DENYING PLAINTIFFS’ EX PARTE APPLICATION FOR EXPEDITED DISCOVERY ANDREW CAREY, an individual, and MARK WEINER, an individual, Defendants. 18 19 This case involves alleged trade secret misappropriation and breach of duties by former 20 officers in Storz Management Company. Plaintiffs Storz Management Company and Storz 21 Realty, Inc.’s (collectively “Plaintiffs”) move ex parte for expedited discovery. (ECF No 16.) 22 Plaintiffs served Defendants Andrew Carey and Mark Weiner (jointly “Defendants”) on January 23 12, 2018. (ECF Nos. 5 & 6.) However, Defendants have yet to make an appearance or file an 24 answer in the given matter. 25 Plaintiffs seek expedited discovery in support of their pending motion for preliminary 26 injunction filed on January 30, 2018. (ECF No. 8.) Plaintiffs seek to conduct expedited 27 discovery as follows: collect information regarding the identity and location of Storz property in 28 Defendants’ possession, Defendants’ communications with Plaintiffs’ customers and employees, 1 1 documents relating to Defendants’ communications with mobile home parks, ledgers for 2 Defendants’ company, an accounting of the companies’ property, cellphone records of 3 Defendants in connection with their businesses, all records to support a full and complete 4 investigation into Defendants’ companies’ activities, images of the computers used by Defendants 5 and the company, identification of all persons whom Defendants have contacted regarding their 6 company, personal tax returns for Defendants appropriately redacted, Company tax returns, and 7 immediate depositions of Defendants and two former employees of Storz. (ECF No. 16-1 at 4– 8 5.) 9 A party may not seek discovery from any source before the Rule 26(f) conference unless 10 otherwise authorized by the rules, by stipulation, or by court order. Fed. R. Civ. P. 26(d)(1). In 11 determining whether to grant expedited discovery, courts in the Ninth Circuit apply the “good 12 cause” standard and find good cause “where the need for expedited discovery, in consideration of 13 the administration of justice, outweighs the prejudice to the responding party.” Semitool, Inc. v. 14 Tokyo Electron America, Inc., 208 F.R.D 273, 276 (N.D. Cal. 2002). Courts consider the 15 following factors when determining whether good cause justifies expedited discovery: “(1) 16 whether a preliminary injunction is pending; (2) the breadth of the discovery requests; (3) the 17 purpose for requesting the expedited discovery; (4) the burden on the defendants to comply with 18 the requests; and (5) how far in advance of the typical discovery process the request was made.” 19 Apple Inc. v. Samsung Elec. Co., Ltd., 2011 WL 1938154, at *1 (N.D. Cal. May 18, 2011) 20 (quoting Am. Legal Net, Inc. v. Davis, 673 F. Supp. 2d 1063, 1067 (C.D. Cal. 2009)). 21 Good cause for expedited discovery has been found in cases involving claims of unfair 22 competition or in cases where the plaintiff seeks a preliminary injunction. Palermo v. 23 Underground Solutions, Inc., 2012 WL 2106228, at *2 (S.D. Cal. June 11, 2012). In cases where 24 a preliminary injunction is pending, courts often permit expedited discovery designed to obtain 25 information required for the preliminary injunction. Id. The discovery request must be narrowly 26 tailored to obtain information relevant to a preliminary injunction determination. Dimension 27 Data N. Am. V. NetStar–1, Inc., 226 F.R.D. 528, 532 (E.D. N.C. 2005). Expedited discovery may 28 be denied where the expedited discovery goes to the merits of the plaintiff’s claim. Am. Legal 2 1 Net, Inc., 673 F. Supp. 2d at 1069. 2 Plaintiffs assert good cause exists to permit expedited discovery. (ECF No. 16-1 at 6–7.) 3 Plaintiffs contend the pending motion for preliminary injunction and the fact that the discovery is 4 directed at issues raised in the preliminary injunction motion warrant granting expedited 5 discovery. (ECF No. 16-1 at 6.) Plaintiffs further contend Defendants have already destroyed 6 evidence by removing data from their Storz computers prior to leaving. (ECF No. 16-1 at 6.) 7 Plaintiffs argue expedited discovery is crucial to prevent the further destruction of evidence and 8 to provide more support for their pending motion for preliminary injunction. (ECF No. 16-1 at 9 6.) 10 Plaintiffs’ application mostly asserts a need for discovery to support its pending motion 11 for preliminary injunction. However, Plaintiffs motion for preliminary injunction belies that 12 contention. Plaintiffs mention a need for expedited discovery in only one instance. (ECF No. 8-1 13 at 16.) Plaintiffs state that Defendants removed from their offices key missing files which 14 support their cause of action under the Defend Trade Secrets Act. (ECF No. 8-1 at 16.) Plaintiffs 15 then state in a footnote that expedited discovery including the deposition of Robert Domingo, the 16 person allegedly enlisted to remove the information from Storz’s offices after Defendants’ 17 termination, will provide crucial information relating to the key missing files. (ECF No. 8-1 at 16 18 n.6.) This single instance is contradicted by the continuous remarks throughout the ex parte 19 application that “Defendants’ destruction of evidence makes knowing more impossible.” (See, 20 e.g., ECF No. 8-1 at 16.) Even if the Court were inclined to find a single instance of need 21 sufficient to demonstrate good cause, the discovery sought is overly broad for this purpose. 22 Plaintiffs seek accounting documents, tax documents, contact information, and computer pictures, 23 which would not determine what missing files Defendants actually possess. (ECF No. 16-a at 4– 24 5.) 25 Furthermore, Plaintiffs offer contradictions in their two moving papers. In their motion 26 for preliminary injunction, Plaintiffs state “Storz has established [Defendants] are liable, that 27 Storz has suffered indefinable losses as a result of these thefts and data destruction, and that Storz 28 is likely to prevail on the merits of its CFAA claims, entitling it to full return of all removed files 3 1 and documents, and all of the expedited discovery it requests.” (ECF No. 8-1 at 18.) However, in 2 their ex parte application, Plaintiffs assert expedited discovery is necessary to support their 3 motion for preliminary injunction and prevent the destruction of evidence. It is clear from 4 Plaintiffs’ statement in their motion for preliminary injunction that they do not believe the 5 evidence is necessary to support their preliminary injunction. Rather, Plaintiffs’ statement 6 suggests Plaintiffs feel they are entitled to expedited discovery because they have shown a 7 likelihood of success on the merits of their Computer Fraud and Abuse claim. This is not the 8 standard. Based on the above, the Court finds Plaintiffs’ request goes to the merits of the 9 complaint rather than in support of their motion for preliminary injunction and thus must be 10 11 12 13 denied. For the reasons set forth above, the Court hereby DENIES Plaintiffs’ ex parte application for expedited discovery. IT IS SO ORDERED. 14 15 Dated: 2/8/2018 16 17 18 19 Troy L. Nunley United States District Judge 20 21 22 23 24 25 26 27 28 4

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