Metalab Design Ltd.
Filing
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ORDER by Judge Maria-Elena James denying without prejudice 1 Motion for Discovery. (mejlc2S, COURT STAFF) (Filed on 1/11/2018)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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METALAB DESIGN LTD.,
Plaintiff,
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United States District Court
Northern District of California
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v.
ZOZI INTERNATIONAL, INC.,
Case No. 17-mc-80153-MEJ
ORDER RE: APPLICATION FOR
DISCOVERY PURSUANT TO 28 U.S.C.
§ 1782
Re: Dkt. No. 1
Defendant.
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INTRODUCTION
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Petitioner MetaLab Design Ltd. filed this ex parte Application pursuant to 28 U.S.C.
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§ 1782 seeking an order to obtain discovery from Zozi International, Inc. for use in a Canadian
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proceeding. Appl., Dkt. No. 1. Having considered MetaLab‟s papers, the record in this matter,
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and the relevant legal authority, the Court issues the following order.
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BACKGROUND
MetaLab is a technology company. Wilkinson Decl. ¶ 5, Dkt. No. 2. MetaLab‟s
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Application relates to an action pending in the Supreme Court of British Columbia, Wood v.
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MetaLab Design Ltd. et al., Vancouver Registry No. VLC-S-S170686 (the “Canadian Action”).
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Appl. at 1. MetaLab has filed a counterclaim in the Canadian Action against plaintiff Adam
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Wood; his company, Bici Labs, Inc.; and a fictitiously-named entity, ABC Company. Wilkinson
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Decl. ¶ 2. Mr. Wood is MetaLab‟s former chief executive officer. See id. ¶ 3. MetaLab alleges
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that Mr. Wood, Bici Labs, and others conspired to “breach[] obligations to MetaLab while Wood
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was CEO through an Independent Contractor Agreement, and Mr. Wood‟s ongoing duties to
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MetaLab once his employment terminated.” Id. MetaLab‟s counterclaim seeks damages for
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breach of contract and breach of fiduciary duties. Id. ¶ 9.
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Zozi is MetaLab‟s former client. Id. ¶ 5. MetaLab alleges that in April 2016 and while
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acting as MetaLab‟s CEO, Mr. Wood attempted to convince Zozi, through its former CEO T.J.
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Sassani, to move Zozi‟s work with MetaLab to a new agency to be set up by Mr. Wood. Id. Mr.
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Wood made disparaging remarks about MetaLab‟s principals, which caused the relationship
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between MetaLab and Zozi to deteriorate. Id. ¶ 6. As a result of Mr. Wood‟s actions, Zozi
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demanded a 33% holdback on its fees, which MetaLab was forced to accept. Id. ¶ 7. MetaLab
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lost $503,398.69 with respect to the holdback and $306,947.25 with respect to unpaid invoices.
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Id.
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MetaLab seeks the production of correspondence (including e-mails, text messages, phone
records, messages sent via social media platforms) between Mr. Wood, Mr. Sassani, and Casey
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United States District Court
Northern District of California
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Wu (Zozi‟s chief financial officer at the time) in Zozi‟s possession, custody, or control. Zozi did
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not respond to the Application. See Docket; see also Dkt. No. 6 (certificate of service).
LEGAL STANDARD
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Section 1782(a) provides in relevant part that
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The district court of the district in which a person resides or is found
may order him to . . . produce a document or other thing for use in a
proceeding in a foreign or international tribunal . . . . The order may
be made . . . upon the application of any interested person and may
direct that the testimony or statement may be given, or the document
or other thing be produced, before a person appointed by the court.
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The purpose of this statute is “to provide federal-court assistance in gathering evidence for use in
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foreign tribunals.” Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 247 (2004).
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Before granting a § 1782 application, courts must first confirm three statutory requirements
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are present: “(1) the discovery sought is from a person residing in the district court to which the
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application is made; (2) the discovery is for use in a proceeding before a foreign tribunal; and (3)
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the application is a foreign or international tribunal or an interested person.” In re Ex Parte Apple
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Inc., 2012 WL 1570043, at *1 (N.D. Cal. May 2, 2012) (citation and internal quotation marks
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omitted).
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If these statutory requirements are present, courts have broad discretion to grant assistance
under § 1782. See United States v. Sealed 1, Letter of Request for Legal Assistance from the
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Deputy Prosecutor Gen. of the Russian Fed’n, 235 F.3d 1200, 1206 (9th Cir. 2000) (“The fact that
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§ 1782 authorizes assistance does not mean that the district court must exercise its discretion to
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grant such assistance.”). The Supreme Court has identified the following factors to aid courts in
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exercising their discretion: (1) whether “the person from whom discovery is sought is a participant
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in the foreign proceeding”; (2) “the nature of the foreign tribunal, the character of proceedings
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underway abroad, and the receptivity of the foreign government, court, or agency to federal-court
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judicial assistance”; (3) “whether the § 1782(a) request conceals an attempt to circumvent foreign
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proof-gathering limits or other policies of a foreign country or the United States”; and (4) whether
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the request is unduly intrusive or burdensome. Intel, 542 U.S. at 264-65.
Additionally, courts must exercise their discretion with the “twin aims” of § 1782 in mind:
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United States District Court
Northern District of California
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(1) “providing efficient assistance to participants in international litigation” and (2) “encouraging
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foreign countries by example to provide similar assistance to our courts.” Id. at 252 (internal
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quotation marks omitted).
While ex parte requests are generally disfavored because they disrupt the adversarial
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system, an ex parte application pursuant to § 1782 is an acceptable method for requesting
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discovery because it provides procedural safeguards. See In re Letters Rogatory from Tokyo Dist.,
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Tokyo, Japan, 539 F.2d 1216, 1219 (9th Cir. 1976) (ex parte application acceptable because
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subpoenaed parties may raise objections and exercise their due process rights by motioning the
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court to quash the subpoenas); IPCom GMBH & Co. KG v. Apple Inc., 61 F. Supp. 3d 919, 922
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(N.D. Cal. 2014) (“It is common for parties to file ex parte applications, as parties will be given
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adequate notice of any discovery taken pursuant to the request and will then have the opportunity
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to move to quash the discovery or to participate in it.” (footnote and internal quotation marks
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omitted)).
DISCUSSION
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A.
Statutory Requirements
MetaLab satisfies § 1782‟s statutory requirements. First, Zozi is incorporated in California
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and its headquarters are located in San Francisco. Appl. at 3. Second, MetaLab seeks the
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discovery to use in the Canadian Action. Third, as a litigant to the Canadian Action, MetaLab is
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an “interested person” within the meaning of § 1782. See Akebia Therapeutics, Inc. v. FibroGen,
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Inc., 793 F.3d 1108, 1110-11 (9th Cir. 2015) (a party to foreign proceedings “has a „reasonable
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interest‟ in obtaining judicial assistance and, therefore, may apply for judicial assistance pursuant
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to § 1782.”).
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B.
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Intel Factors
Having found the statutory requirements are satisfied, the Court considers whether to
exercise its discretion in light of the Intel factors. “Although the Court individually analyzes each
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discretionary factor, they are not stand-alone categorical imperatives but rather involve
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overlapping considerations, which are considered collectively by the [C]ourt.” In re Appl. of Joint
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Stock Co. Raiffeinsenbank, 2016 WL 6474224, at *4 (N.D. Cal. Nov. 2, 2016) (internal quotation
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United States District Court
Northern District of California
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marks and citation omitted).
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The first Intel factor is whether “the person from whom discovery is sought is a participant
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in the foreign proceeding.” 542 U.S. at 264. Foreign tribunals can compel discovery from parties
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appearing before them, obviating the need for U.S. judicial assistance; however, entities or persons
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outside a foreign tribunal‟s jurisdiction may possess evidence that is unobtainable absent § 1782
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aid. Id.
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Participant in the Foreign Proceeding
The record does not indicate whether Zozi is a party to the Canadian Action, and MetaLab
does not clarify the issue in its Application.
However, it appears MetaLab can obtain the discovery from a participant in the Canadian
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Action, namely, Mr. Wood. Courts have held that “[a]lthough the case law at times refers to
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whether the „person‟ is within the foreign tribunal‟s jurisdictional reach, the key issue is whether
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the material is obtainable through the foreign proceeding.” In re Judicial Assistance Pursuant to
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28 U.S.C. 1782 by Macquarie Bank Ltd. (“Macquarie Bank”), 2015 WL 3439103, at *6 (D. Nev.
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May 28, 2015) (citing In re Application of Ooo Promnefstroy, 2009 WL 3335608, *5 (S.D.N.Y.
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Oct. 15, 2009)); see In re Ex Parte Application of Qualcomm Inc., 162 F. Supp. 3d 1029, 1039
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(N.D. Cal. 2016) (“[C]ourts have interpreted this [first Intel factor] to focus on whether the
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evidence „is available to the foreign tribunal,‟ because in some circumstances, evidence may be
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available to a foreign tribunal even if it is held by a non-participant to the tribunal‟s proceedings.”
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(collecting cases)). “This factor militates against allowing § 1782 discovery when the petitioner
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effectively seeks discovery from a participant in the foreign tribunal even though it is seeking
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discovery from a related, but technically distinct entity.” Macquarie Bank, 2015 WL 3439103, at
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*6 (citing Schmitz v. Bernstein Liebhard & Lifshitz, LLP., 376 F.3d 79, 85 (2d Cir. 2004)).
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MetaLab asserts that because “the relevant documents are found in the United States,
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judicial assistance under § 1782 is the only practicable means of obtaining the requested
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information.” Appl. at 3; see id. at 5 (“[T]he non-privileged, relevant documents MetaLab seeks
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are located in the United States. . . .”). This ignores the fact that the documents may also be
available in Canada. MetaLab seeks communications that Mr. Wood sent or received. Mr. Wood
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United States District Court
Northern District of California
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is therefore likely to have the correspondence, or records thereof, in his possession or control. As
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a party to the Canadian Action, he is also under the Supreme Court of British Columbia‟s
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jurisdiction. See Intel, 542 U.S. at 264 (“[W]hen the person from whom discovery is sought is a
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participant in the foreign proceeding . . . the need for § 1782(a) aid generally is not as apparent as
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it ordinarily is when evidence is sought from a nonparticipant in the matter arising abroad.”).
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MetaLab conclusorily asserts “there is virtually no mechanism in Canada available to obtain the
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documents MetaLab seeks through this application.” Appl. at 3. But MetaLab does not explain
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why the Canadian court cannot compel the discovery, or why MetaLab cannot otherwise obtain
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the requested discovery directly from Mr. Wood.
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While it is unclear Zozi is a participant in the Canadian Action, MetaLab has not
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demonstrated it cannot obtain the discovery from Mr. Wood. Without more information regarding
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the limitations of the Canadian court‟s authority to compel discovery, the Court cannot find this
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factor favors granting § 1782 assistance.
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2.
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The second Intel factor contemplates “the nature of the foreign tribunal, the character of
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the proceedings underway abroad, and the receptivity of the foreign government, or the court or
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agency abroad to U.S. federal-court judicial assistance.” Intel, 542 U.S. at 264.
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The Foreign Tribunal and Proceedings
Nothing in the record suggests the Supreme Court of British Columbia would be
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unreceptive to the requested discovery. The Canadian Action is pending, and discovery is open.
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Wilkinson Decl. ¶ 4. MetaLab argues the correspondence “will show that Mr. Wood was
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attempting to convince Zozi to move its work with MetaLab to his new agency before his
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termination, contrary to the contractual and fiduciary duties he owed to MetaLab as CEO” and that
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Mr. Wood made disparaging remarks about MetaLab and its principals. Appl. at 4. Because this
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may be relevant to MetaLab‟s counterclaims, it is reasonable to believe the Canadian court would
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consider this evidence.1
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3.
Attempt to Circumvent Foreign Proof-Gathering Restrictions
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The third Intel factor is whether the § 1782 request is “an attempt to circumvent foreign
proof-gathering limits or other policies of a foreign country or the United States.” Intel, 542 U.S.
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United States District Court
Northern District of California
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at 264-65. Courts are not required to determine whether an applicant has exhausted its discovery
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attempts abroad; however, “a perception that an applicant has „side-stepped‟ less-than-favorable
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discovery rules by resorting immediately to § 1782 can be a factor in a court‟s analysis.” In re
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Cathode Ray Tube Antitrust Litig., 2013 WL 183944, at *3 (N.D. Cal. Jan. 17, 2013) (citing In re
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Appl. of Caratube Int’l Oil Co., 730 F. Supp. 2d 101, 107-08 (D.D.C. 2010)). Where a foreign
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court has requested the information, there is a presumption that the application is not an attempt to
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circumvent foreign proof-gathering procedure. See In re Request for Int’l Judicial Assistance from
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the Nat’l Court Admin. of the Republic of Korea, 2015 WL 1064790, at *2 (N.D. Cal. Mar. 11,
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2015) (“[T]he [foreign] court requested the information, so it is clear that it is receptive to this
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court‟s assistance and that the request is not an attempt to circumvent foreign proof-gathering
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restrictions or other policies of a foreign country or the United States.”); see also Digital Shape
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Techs., Inc. v. Glassdoor, Inc., 2016 WL 6995881, at *3 (N.D. Cal. Nov. 30, 2016) (“[T]he
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[foreign] court‟s order authorizing issuance of the subpoena demonstrates that the request is not an
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attempt to circumvent proof-gathering restrictions in either [the foreign jurisdiction] or the United
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States.”).
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Andrew Wilkinson, MetaLab‟s founder, declares this discovery “will allow MetaLab to defend
the Canadian Action[.]” Wilkinson Decl. ¶ 9. Because MetaLab does not describe the claims Mr.
Wood asserts against it, the Court cannot determine whether this is in fact the case.
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The record does not show the Supreme Court of British Columbia has requested the
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information MetaLab seeks, and, as noted, it appears MetaLab can seek the discovery from Mr.
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Wood through the Canadian Action. Nothing in the current record otherwise indicates MetaLab
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seeks to bypass proper proof-gathering policy or procedure in either Canada or the United States.
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Given that MetaLab need not exhaust all discovery attempts in the Canadian Action prior to
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seeking assistance here, the Court cannot find this factor weighs against granting the Application.
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4.
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The final Intel factor asks whether the discovery requested is “unduly intrusive or
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Undue Intrusion or Burden
burdensome.” 542 U.S. at 265. Discovery requests must be “proportional” considering “the
issues at stake in the action . . . the importance of the discovery in resolving the issues, and
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United States District Court
Northern District of California
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whether the burden or expense of the proposed discovery outweighs its likely benefit.” Fed. R.
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Civ. P. 26(b)(1). “[U]duly intrusive or burdensome requests may be rejected or trimmed.” Intel,
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542 U.S. at 265. “Requests are unduly intrusive and burdensome where they are not narrowly
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tailored, request confidential information and appear to be a broad „fishing expedition‟ for
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irrelevant information.” Qualcomm, 162 F. Supp. 3d at 1043 (citation omitted).
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At this point, there is nothing to suggest the communications or the records thereof are
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confidential. But MetaLab‟s request is overbroad temporally and in scope: it not limited to a
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specific time frame and requests all communications between Mr. Wood, Mr. Sassani, and Mr.
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Wu, regardless of format and whether they relate to the claims or counterclaims asserted in the
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Canadian Action. For instance, Mr. Wilkinson declares Mr. Wood attempted to convince Zozi to
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move its work to Mr. Wood‟s new agency in or around April 2016. Wilkinson Decl. ¶ 5.
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MetaLab does not explain why it needs pre-April 2016 communications or why production of
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such correspondence is proportional to the needs of the case. The Court therefore cannot find the
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request, as written, is not overbroad or unduly burdensome.
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5.
Summary
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On balance, the Court finds the Intel factors do not favor granting the Application.
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Although MetaLab requests documents from Zozi, MetaLab effectively seeks discovery from Mr.
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Wood, who is a party to the Canadian Action under that court‟s jurisdiction. This, coupled with
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the fact that the request is overbroad and unduly burdensome, leads the Court to conclude § 1782
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assistance is not required at this point.
CONCLUSION
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Although the statutory factors have been satisfied, the Court exercises its discretion under
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Intel and DENIES the Application. The denial shall be WITHOUT PREJUDICE to MetaLab
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renewing its request, provided it (1) can show why it cannot obtain the discovery in the Canadian
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Action and (2) either tailors its request or shows why it is not overbroad and unduly burdensome.
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IT IS SO ORDERED.
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United States District Court
Northern District of California
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Dated: January 11, 2018
______________________________________
MARIA-ELENA JAMES
United States Magistrate Judge
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