Telswitch, Inc. v. Billing Solutions Incorporated et al

Filing 53

ORDER RESETTING FURTHER CMC FROM 11/9/12 TO 12/14/12 AT 10:30 A.M. Case Management Statement due by 12/7/2012. Further Case Management Conference set for 12/14/2012 10:30 AM in Courtroom 5, 17th Floor, San Francisco.. Signed by Judge Edward M. Chen on 11/6/12. (bpf, COURT STAFF) (Filed on 11/6/2012)

1 Eric J. Sinrod (SBN 122868)
Suzanne R. Fogarty (SBN 154319)
2 E.J. Kim (SBN 250062)
DUANE MORRIS LLP
3 One Market, Spear Tower, Suite 2200
San Francisco, CA 94105-1104
4 Telephone: [phone]
Facsimile: 415.957.3001
5 E-Mail: [e-mail]
[e-mail]
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Attorneys for Defendants and Counter-Claimants,
7 BILLING SOLUTIONS INCORPORATED, SEAN
DUNLEA, TIM PORTLEY, DARIO J. SAAL, and
8 SAAL CONSULTING INC.
9

Joshua A. Ridless (SBN 195413)
Eugene Y. Kim (SBN 253113)
Ridless Law Office
244 California Street, Suite 300
San Francisco, CA 94111
Telephone: [phone]
Facsimile: 415.480.1398
E-Mail: [e-mail]
[e-mail]
Attorneys for Plaintiff and CounterDefendants, TELSWITCH, INC.,
AARON WOOLFSON, JERRY
MERKT, and MERKT-WOOLFSON

UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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Case No. CV 12 0172 EMC

TELSWITCH, INC.,
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Plaintiff,
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JOINT CASE MANAGEMENT
CONFERENCE STATEMENT

v.
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BILLING SOLUTIONS INCORPORATED, an
15 Illinois corporation, SEAN DUNLEA, an individual,
TIM PORTLEY, an individual, DARIO J. SAAL, an
16 individual, SAAL CONSULTING INC., a Florida
corporation and DOES ONE THROUGH
17 TWENTY, inclusive,
Defendants.

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ORDER RESETTING FURTHER CMC

Date:
Time:
Dept:

November 9, 2012
10:30 a.m.
5 – 17th Floor

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20 BILLING SOLUTIONS INCORPORATED, an
Illinois corporation, SEAN DUNLEA, an individual,
21 and TIM PORTLEY, an individual,
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Counter-claimants,
v.

24 TELSWITCH, INC., MERKT-WOOLFSON,
AARON WOOLFSON, JERRY MERKT and ROES
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Counter-defendants.

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JOINT CASE MANAGEMENT STATEMENT, CV 12 0172 EMC

Plaintiff and Counter-Defendant TelSwitch, Inc. (“TelSwitch”) and Counter-Defendants

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2 Merkt-Woolfson, Aaron Woolfson and Jerry Merkt (collectively, “Plaintiff/Counter-Defendants) and
3 Defendants and Counter-Claimants Billings Solutions, Inc. (“BSI”), Sean Dunlea, Tim Portley,
4 Dario Saal and Saal Consulting (collectively, “Defendants/Counter-Claimants,” and collectively
5 with Plaintiff/Counter-Defendants, the “Parties”) hereby submit this joint report.
6 II.

PLAINTIFF/COUNTER-DEFENDANTS’ STATEMENT

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A. Plaintiff’s Trade Secret Disclosure is Adequate

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On September 6, 2012, Magistrate Judge Beeler held a discovery hearing on the adequacy of

9 Plaintiff’s trade secret disclosure under California Code of Civil Procedure § 2019.210. After
10 hearing the arguments of the Parties, the court ordered that: (1) Plaintiff’s trade secret disclosure is
11 adequate, (2) the scope of Plaintiff’s trade secret claim is limited to the precise database structure
12 disclosed in the Entity Relationship Diagram submitted with the disclosure, and (3) the disclosure
13 may not be amended. (Docket 48).
Plaintiff disputes Defendants’ characterization that Judge Beeler’s order somehow opines

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15 that “the ERD does not depict anything that can be considered a trade secret.” Judge Beeler simply
16 stated at the hearing (and reiterated in her order) that the ERD standing alone did not give her
17 adequate insight into the scope of TelSwitch’s claimed trade secret. That is, the ERD alone was
18 insufficient to allay Judge Beeler’s initial concern that TelSwitch might have been attempting to
19 claim trade secret rights in the concept of relational databases generally. But with the clarification
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20 that the scope of TelSwitch’s claim is limited to the precise database structure disclosed in the ERD,

21 Judge Beeler ruled that TelSwitch had adequately identified its trade secret claim.
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B. ADR

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The Parties have agreed upon and set a date for early mediation with Judge Warren on

24 November 27, 2012.
C. Discovery

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TelSwitch previously offered to make this concession (i.e., limiting its trade secret claim to the
precise database structure disclosed in the ERD) during the meet and confer process, but Defendants
27 refused to accept this limitation of scope as sufficient to satisfy California Code of Civil Procedure §
2019.210 until Judge Beeler ordered that it was indeed sufficient.
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JOINT CASE MANAGEMENT STATEMENT, CV 12 0172 EMC

1

At the previous case management conference on July 20, 2012, this Court ordered that

2 written discovery shall be limited to narrowly tailored discovery necessary to facilitate mediation.
3 (Docket 43). Defendants contested the adequacy of Plaintiff’s trade secret disclosure and took the
4 position that Plaintiff’s trade secret misappropriation claim was not yet ripe for mediation. As a
5 result, Plaintiff was unable to begin propounding discovery relating to its trade secret
6 misappropriation claim until just recently, when Magistrate Judge Beeler ruled that Plaintiff’s trade
7 secret disclosure was adequate.
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Plaintiff has served limited discovery requests and anticipates that Defendants’ responses

9 will identify additional parties who will need to be added to the action—specifically, Defendants’
10 clients who have used BSI’s BankVOD system, which was built around the trade secret database
11 structure that Defendants misappropriated.
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D. Scheduling

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Plaintiff requests that the Court defer setting other dates until after the mediation with Judge

14 Warren on November 27, 2012.
15 II.

DEFENDANTS AND COUNTER-CLAIMANTS’ STATEMENT

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A. TelSwitch’s Trade Secret Claim Fails As A Matter of Law

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At the hearing before Magistrate Beeler on September 6, 2012, TelSwitch conceded that it

18 would limit the scope of its trade secret claims to the precise database structure disclosed in the ERD
19 attached to its June 22, 2012 trade secret disclosure. (Transcript pg. 6:3-6) Based on that
20 concession, which Magistrate Beeler described as a “big concession” (Transcript 15:12-14), she held
21 that TelSwitch’s disclosure was sufficient for purposes of California Code of Civil Procedure Code
22 §2019.210 and that TelSwitch cannot amend its disclosure again. (Doc. 48)
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The record makes it clear that Judge Beeler viewed TelSwitch’s concession that its trade

24 secret claim is limited to the “precise database structure depicted on its ERD” as “big” because the
25 ERD does not depict anything that can be considered a trade secret. Magistrate Beeler said:
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And I see tables and fields that seem pretty generic; date, city, type;
some that are most specific. I don't see anything in this that gives me
any insight into why, standing alone, why this database structure is any
kind of a trade secret… it’s just a bunch of tables… And so, it’s just -it was very hard for me to conceptualize, based on this, why this
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JOINT CASE MANAGEMENT STATEMENT, CV 12 0172 EMC

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database – was a trade secret. You know, what made it – so I was
having a tough time just using common sense…
(Transcript pg. 3:24-4:12; 10:4-11)
Magistrate Beeler echoed her findings in her September 6, 2012 Order:

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The ERD has tables and fields that describe functions (some generic
and obvious like “date,” “city,” or “type,” and others that are more
specific. But there is nothing about the ERD standing alone that
explains what type of data is contained in particular tables and fields.
Nor does the ERD distinguish between the configuration of tables,
field, and joins that constitutes TelSwitch’s claimed trade secret and
those configurations that are commonly used in databases. Instead, the
Disclosure states only that “we claim trade secrets in the database
structure depicted by the ERD.”
(Doc. 48, pg. 6:24-7:3)
Magistrate Beeler’s opinions regarding TelSwitch’s trade secret disclosure are consistent
with the undisputed facts and law. Defendants intend to file a motion for summary judgment on
TelSwitch’s trade secret claim early in the litigation. Defendants believe that summary judgment on
TelSwitch’s trade secret claim will resolve most of TelSwitch’s other claims as well based on
preemption or other grounds. Defendants, however, respectfully request that the Court allow them
to file a subsequent summary judgment motion if there are any remaining issues left to be resolved.
B. ADR
The Parties have agreed upon and set a date for early mediation with Judge Warren on
November 27, 2012.
C. Discovery
BSI has served initial written discovery on TelSwitch. BSI recently discovered that
TelSwitch’s document production is incomplete and does not include many relevant emails sent by
its principal Aaron Woolfson, among other things. BSI has sent a meet and confer letter asking
TelSwitch to supplement its production to include all relevant responsive documents that it
committed to produce in its written discovery responses. If TelSwitch does not cure the defects with
its production, BSI intends to raise the issue with the Court, if necessary.
D. Scheduling
Defendants and Cross-claimants agree that the Court should defer setting other dates until

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JOINT CASE MANAGEMENT STATEMENT, CV 12 0172 EMC

1 after the mediation with Judge Warren on November 27, 2012. However, if the case is not resolved,
2 Defendants and Cross-Complainants will request an early trial.
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RIDLESS LAW OFFICE

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7 DATED: November 1, 2012

____/s/ Joshua A. Ridless__________________
Attorneys for Plaintiff and Counter-Defendants
TELSWITCH, INC., MERKT-WOOLFSON, AARON
WOOLFSON and JERRY MERKT

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DUANE MORRIS LLP

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12 DATED: November 1, 2012

_______/s/ Eric J. Sinrod______________
Attorneys for Defendants and Counter-Claimants
BILLING SOLUTIONS INCORPORATED, SEAN
DUNLEA, TIM PORTLEY, DARIO J. SAAL, and
SAAL CONSULTING INC.,

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IT IS SO ORDERED that the futher CMC is reset from 11/9/12 to 12/14/12 at 10:30 a.m. An
updated joint CMC Statement shall be filed by 12/7/12.

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Edward M. Chen
U.S. District Judge

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JOINT CASE MANAGEMENT STATEMENT, CV 12 0172 EMC