Snow v. Align Technology, Inc.

Filing 355

Discovery Order re 352 Letter Brief. Signed by Judge Thomas S. Hixson on 5/2/2023. (tshlc1, COURT STAFF) (Filed on 5/2/2023)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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MISTY SNOW, et al.,
Plaintiffs,

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DISCOVERY ORDER

v.

Re: Dkt. No. 352
ALIGN TECHNOLOGY, INC.,
Defendant.

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United States District Court
Northern District of California

Case No. 21-cv-03269-VC (TSH)

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This order follows up on the Court’s Discovery Order at ECF No. 339. In that order the

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Court noted that it has issued several orders requiring SmileDirectClub (“SDC”) to produce

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materials from the multiple Align-SDC arbitrations. These orders allowed SDC to redact

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information that is competitively sensitive and irrelevant to the Section 1 claim. The Court’s view

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is that for relevant materials, any concerns about competitive sensitivity can be addressed by the

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existing protective order in this case. But the Court also explained that a non-party should not

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have to suffer the production of its competitively sensitive materials in the absence of a showing

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of relevance.

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In ECF No. 339, the Court determined that four categories of redactions made by SDC

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were improper. As relevant here, the Court determined that SDC’s business model and corporate

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organization (category two) and the way SDC uses doctors in its business model (category three)

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were relevant and therefore that redactions of that information were inappropriate. The Court

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explained that “the Section 1 claim in this case is that Align and SDC allocated the DTC market to

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SDC so that it could earn supracompetitive profits, which Align would reap the benefit of through

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its ownership stake in SDC. Align says it wants to have evidence about SDC’s business model to

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show if it actually did make supracompetitive profits. SDC opposes, observing that the Court has

United States District Court
Northern District of California

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already ordered it to produce documents that show the basis for its product pricing.” ECF No. 339

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at 3.

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The Court explained that it “agrees with Align’s second relevance argument. Documents

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that show the basis for product pricing tend to assume the existence of a business – how it is run,

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how it is structured, what it sells, what its expenses are, what pressures there are to reduce

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expenses, and so on. That’s the stuff Align needs to have to be able to develop any sort of

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argument that SDC was trying very hard to sell a low cost product (if that is what the evidence

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shows), not to earn supracompetitive profits. To shroud SDC’s internal business operations in

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redactions threatens to kneecap Align’s ability to argue (if the evidence will support it) that the

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antitrust injury is made up.” Id. The Court explained that “even though SDC is not a party to this

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case, it is Align’s alleged co-conspirator. All of the alleged antitrust injury occurred through

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SDC’s business operations and pricing.” Id.

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The Court ended its order by observing that “Align has moved on categories of redactions

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but not on specific documents.” Id. at 4. Accordingly, the Court ordered the parties to meet and

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confer regarding the application of ECF No. 339 to specific documents and to file a further joint

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discovery letter brief by yesterday if they could not reach agreement. They did file one. ECF No.

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352. Thankfully, there are disputes about redactions in only one document – the Final Award in

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the Swift Arbitration – and only five redactions in dispute in that document. At SDC’s suggestion,

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the Court reviewed the redacted information in camera to determine if the redactions comply with

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the Court’s order at ECF No. 339.

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They do not. The redacted information is relevant to whether SDC was running its

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business as cheaply as possible to sell a low cost product, as opposed to earning supracompetitive

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profits. This information is therefore relevant to whether Plaintiffs suffered any antitrust injury at

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all. And it’s not at or near the outer bounds of relevance, either. While Judge Chhabria on class

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certification, and the trier of fact at trial, will have to decide how much weight to give to any

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particular piece of evidence, the redacted information is sufficiently relevant that it would be

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unfair to deny Align the ability use it in litigation. Accordingly, the Court ORDERS SDC to

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produce SDC_SNOW_00009573 without the challenged redactions. As a reminder, this doesn’t
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mean that the information is public because SDC can still designate it under the protective order in

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this case.

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IT IS SO ORDERED.

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Dated: May 2, 2023

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THOMAS S. HIXSON
United States Magistrate Judge

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United States District Court
Northern District of California

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