Cisco Systems, Inc. et al v. Chung et al

Filing 126

ORDER RE 114 115 118 MOTIONS TO DISMISS, 92 MOTION TO STAY OR, IN THE ALTERNATIVE, FOR A PROTECTIVE ORDER, AND 93 MOTION FOR ENTRY OF A PROTECTIVE ORDER by Judge Phyllis J. Hamilton. (pjhlc2S, COURT STAFF) (Filed on 8/5/2020)

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 1 of 28

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6
7

CISCO SYSTEMS, INC., et al.,

v.

9

12

ORDER RE MOTIONS TO DISMISS
SECOND AMENDED COMPLAINT,
MOTION TO STAY DISCOVERY OR,
IN THE ALTERNATIVE FOR A
PROTECTIVE ORDER LIMITING
DISCOVERY, AND MOTION FOR
ENTRY OF A PROTECTIVE ORDER

13

Re: Dkt. Nos. 92, 93, 110, 114, 115, 118

10

WILSON CHUNG, et al.,
Defendants.

11

United States District Court
Northern District of California

Case No. 19-cv-07562-PJH

Plaintiffs,

8

Before the court are defendants Plantronics Inc.’s (“Plantronics” or “Poly”) and

14
15

Thomas Puorro’s (“Puorro”) combined motion to dismiss and strike (Dkt. 114) and motion

16

to stay discovery or, in the alternative, for a protective order (Dkt. 92), defendant Wilson

17

Chung Ph.D.’s (“Chung”) motion to dismiss (Dkt. 115) and joinder to Plantronics’ motion

18

to stay (Dkt. 99), and defendant James He’s (“He”) motion to dismiss (Dkt. 118) and

19

joinder to Plantronics’ motion to stay (Dkt. 100) (collectively, “defendants”). Also before

20

the court is plaintiff Cisco Systems, Inc.’s (“plaintiff”) motion for entry of a protective order

21

(Dkt. 93).1
Having read the parties’ papers and carefully considered their argument and the

22
23

relevant legal authority, and good cause appearing, the court hereby GRANTS IN PART

24

and DENIES IN PART Plantronics’ motion to dismiss, DENIES Plantronics’ motion to

25

strike, DENIES Chung’s motion to dismiss, DENIES He’s motion to dismiss, DENIES

26

Plantronics’ motion to stay, GRANTS Plantronics’ alternative motion for a protective

27
28

To simplify, the court will refer only to “Plantronics” when discussing both its and
Puorro’s combined briefing on the above motions.
1

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 2 of 28

1

order, and DENIES plaintiff’s motion for entry of a protective order.
BACKGROUND

2

This order decides the second round of defendants’ motion to dismiss briefing in a

3

purported trade secrets misappropriation action. In its May 26, 2020 order (the “May 26

5

order” or “prior order”), the court held that plaintiff’s first amended complaint (“FAC”)

6

failed to adequately allege that (1) the information purportedly misappropriated by Chung

7

and He maintained independent economic value, Dkt. 97 at 34-36; and (2) the FAC failed

8

to allege an intentional interference with contract claim that arises out of a set of facts

9

distinct from those relied upon to support its trade secrets misappropriation claims (“trade

10

secrets claims”), id. at 44-45. The court allowed plaintiff a single opportunity to amend to

11

United States District Court
Northern District of California

4

cure those deficiencies. Id. at 46. Taking up that opportunity, plaintiff filed its second

12

amended complaint (“SAC”) on June 12, 2020. Dkt. 108. With that amended pleading in

13

hand, the court now primarily considers whether the SAC’s amendments cured the FAC’s

14

shortcomings.

15

In its May 26 order, the court expressly limited plaintiff’s SAC amendments to the

16

two issues noted above. Dkt. 97 at 46-47. Accordingly, it need not recount this action’s

17

overarching factual background and will detail that background, as well as the SAC’s

18

amendments, as necessary in its analysis below.
DISCUSSION

19
20

A.

Legal Standard

21

1.

Rule 12 (b)(6) Motion to Dismiss

22

A motion to dismiss under Rule 12(b)(6) tests for the legal sufficiency of the claims

23

alleged in the complaint. Ileto v. Glock, 349 F.3d 1191, 1199-1200 (9th Cir. 2003). Rule 8

24

requires that a complaint include a “short and plain statement of the claim showing that

25

the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Under Rule 12(b)(6), dismissal “is

26

proper when the complaint either (1) lacks a cognizable legal theory or (2) fails to allege

27

sufficient facts to support a cognizable legal theory.” Somers v. Apple, Inc., 729 F.3d 953,

28

959 (9th Cir. 2013). While the court is to accept as true all the factual allegations in the
2

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 3 of 28

1

complaint, legally conclusory statements, not supported by actual factual allegations,

2

need not be accepted. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). The complaint

3

must proffer sufficient facts to state a claim for relief that is plausible on its face. Bell

4

Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 558-59 (2007).

5

2.

Rule 12(f) Motion to Strike

6

Federal Rule of Civil Procedure 12(f) provides that the court “may strike from a
pleading any insufficient defense or any redundant, immaterial, impertinent, or

8

scandalous matter.” Fed. R. Civ. P. 12(f). “The function of a [Rule] 12(f) motion to strike

9

is to avoid the expenditure of time and money that must arise from litigating spurious

10

issues by dispensing with those issues prior to trial.” Whittlestone, Inc. v. Handi-Craft

11

United States District Court
Northern District of California

7

Co., 618 F.3d 970, 973 (9th Cir. 2010).
Motions to strike are not favored and “should not be granted unless it is clear that

12
13

the matter to be stricken could have no possible bearing on the subject matter of the

14

litigation.” Colaprico v. Sun Microsystem, Inc., 758 F. Supp. 1335, 1339 (N.D. Cal. 1991).

15

When a court considers a motion to strike, it “must view the pleadings in light most

16

favorable to the pleading party.” Uniloc v. Apple, Inc., 2018 WL 1640267, at *1 (N.D. Cal.

17

Apr. 5, 2018). A court must deny the motion to strike if there is any doubt whether the

18

allegations in the pleadings might be at issue in the action. In re 2TheMart.com, Inc.,

19

Sec. Litig., 114 F. Supp. 2d 955, 965 (C.D. Cal. 2000). However, a motion to strike is

20

proper when a defense is insufficient as a matter of law. Chiron Corp. v. Abbot Labs.,

21

156 F.R.D. 219, 220 (N.D. Cal. 1994). Ultimately, the decision “to grant a motion to strike

22

lies within the sound discretion of the district court.” Rees v. PNC Bank, N.A., 308 F.R.D.

23

266, 271 (N.D. Cal. 2015).

24

B.

25
26
27
28

Analysis
1.

Plaintiff Adequately Alleged the Independent Economic Value of Some
of the Information Purportedly Misappropriated by Chung and He

In its May 26 order, the court set forth the standard for alleging independent
economic value within the meaning of Title 18 U.S.C. § 1839(3)(A)-(B) and California
3

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 4 of 28

1
2
3
4
5
6
7
8
9
10

United States District Court
Northern District of California

11
12

Civil Code § 3426.1(d)(1)-(2), namely:
“‘To have independent economic value, a trade secret must be
sufficiently valuable and secret to afford an actual or potential
economic advantage over others.’ . . . A plaintiff may show
independent economic value ‘by circumstantial evidence of the
resources invested in producing the information, the
precautions taken to protect its secrecy, and the willingness of
others to pay for its access.’” Dkt. 97 at 34 (citing Calendar
Research LLC v. StubHub, Inc., 2017 WL 10378336, at *3 (C.D.
Cal. Aug. 16, 2017)).
The court added, however, that:
“Although ‘the standard to show that trade secrets derive
[independent] economic value is not a high standard’ . . . courts
recognize that merely reciting this element in a pleading is
insufficient to state a claim for trade secret misappropriation,”
Dkt. 97 at 34 (citing Acrisure of Ca. v. So. Cal. Commc’l Ins.
Servs., Inc., 2019 WL 4137618, at *4 (C.D. Cal. Mar. 27,
2019)).
In that order, the court concluded that plaintiff failed to adequately allege that the

13

information purportedly misappropriated by Chung and He maintained independent

14

economic value. Chiefly, the court concluded that the allegations proffered by plaintiff

15

only generally relate to the economic value of its collaboration platform as opposed to

16

that of “the categories of information purportedly misappropriated by Chung or He that

17

concern the handful of subject matter that plaintiff alleged with sufficient particularity,” id.

18

at 35-36, and that Chung’s and He’s confidentiality obligations themselves “say nothing

19

about the economic value of the particular information at issue,” id. at 36. The court also

20

rejected plaintiff’s assertion that Chung’s and He’s decision to “risk” their careers to

21

access the information they purportedly misappropriated establishes such value, id.

22

In its SAC, plaintiff attempts to remedy its FAC’s shortcomings on this element by

23

adding allegations regarding the three circumstantial methods outlined by the court in

24

Calendar Research for showing independent economic value with respect to the

25

information purportedly misappropriated by Chung and He. The court analyzes those

26

amendments as they relate to each defendant below.

27
28
4

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 5 of 28

1
2
3

a.

Some of the Information Purportedly Misappropriated by Chung
Maintains Independent Economic Value

In its opening brief, Plantronics asserts that “the majority of the SAC consists of

4

broad references to entire swaths of documents” and thus “prevent[] defendants from

5

discerning any possible ‘nexus’ between an alleged trade secret and the categories of

6

alleged independent economic value.” Dkt. 114 at 14-15. On the other end of the

7

spectrum, plaintiff asserts that “[i]n its May 26 Order, the Court explained that while

8

Cisco’s prior pleading described the economic value of information related to its

9

collaboration products generally, it did not address the independent economic value of
the Chung/He Trade Secrets. In view of that guidance, Cisco provided new allegations in

11

United States District Court
Northern District of California

10

the SAC that specifically set forth the independent economic value of each category of

12

the Chung/He Trade Secrets to satisfy the Calendar Research standard.” Dkt. 121 at 7.

13

Both parties overstate the import of the SAC’s additions. As an initial matter,

14

plaintiff mischaracterizes the court’s May 26 order. As noted above, in it, the court held

15

that the FAC’s allegations of independent economic value of the information purportedly

16

misappropriated by Chung “only generally relate to plaintiff’s collaboration platform,” but

17

“they say nothing about the economic value of the categories of information purportedly

18

misappropriated by Chung or He that concern the handful of subject matter that

19

plaintiff alleged with sufficient particularity.” Dkt. 97 at 35-36 (emphasis added).

20

Plaintiff’s argument that the SAC “sets forth the independent economic value of

21

each category of the Chung/He Trade Secrets,” Dkt. 121 at 7, means nothing if such

22

categories do not specifically concern the qualifying subject matters of the categories of

23

information that allowed this court to determine in the first instance that plaintiff described

24

the information purportedly misappropriated by Chung with sufficient particularity. Absent

25

such qualification, the court has no plausible basis to impute the economic value of the

26

categories of information in general to such categories of information as applied to the

27

referenced subject matters in particular. Significantly, those categories may not even

28

discuss the referenced subject matters and, even if they did, it is possible that, when
5

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 6 of 28

1

taken together an entire category might be valuable, but the information concerning a

2

particular subject matter might not. Failure to account for this possibility presents the

3

same sort of logic problem (attributing the value of the whole to each constituent part)

4

that the court rejected in its prior order. Dkt. 97 at 36 (“While that subject matter may

5

serve as constituent parts falling under the umbrella of plaintiff’s ‘collaboration platform,’

6

that relationship does not compel a reasonable inference that any information about such

7

particular subject matter is itself economically valuable.”).

8

To be sure, there was no ambiguity about the meaning or import of the term
“subject matter” when used by the court in its prior order. Literally three pages before it

10

concluded that the FAC’s independent economic value allegations were insufficient, the

11

United States District Court
Northern District of California

9

court specifically enumerated each such subject matter (indeed, using plaintiff’s own

12

words). Dkt. 97 at 32-33 (“As argued by plaintiff, such subject matter includes ‘Cisco’s

13

contribution to 5G technology. . . These subject matters qualifications again allow

14

defendant a ‘level of detail that is sufficient to ascertain at least the boundaries within

15

which the secrets lie and the scope of appropriate discovery.”) (emphasis added).

16

While plaintiff is correct that “[t]he Court has already determined that Cisco

17

‘described the trade secret information purportedly misappropriated by Chung [and He]

18

with sufficient particularity,’” it is plaintiff, not defendants, that “miss[es] the point,” Dkt.

19

121 at 12, when construing the court’s prior order. Plaintiff must allege not only the

20

purportedly misappropriated information with sufficient particularity but also that such

21

information maintains independent economic value. Stated differently, any allegations of

22

the economic value of various categories of information—untethered to the enumerated

23

subject matters that allowed this court to conclude that plaintiff satisfied the sufficient

24

particularity requirement in the first instance—does not give rise to an actionable trade

25

secret.

26

Here, while the parties spill a lot of ink arguing whether plaintiff adequately alleged

27

the independent economic value of the information purportedly misappropriated by

28

Chung and He, the court’s determination of that issue is straightforward. First, in its prior
6

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 7 of 28

1

order, the court concluded that plaintiff described the trade secrets information

2

purportedly misappropriated by Chung with sufficient particularity. Dkt. 97 at 31-33. To

3

support that conclusion, the court relied upon two sets of allegations: (1) the categories

4

of information allegedly misappropriated; and (2) the subject matter of the information

5

allegedly misappropriated. Id. at 32. When viewed in light of that justification, then,

6

plaintiff adequately alleged that Chung misappropriated certain categories of

7

information—namely “design specifications, schematics, source code, product market

8

analyses, and vendor contract details,” SAC ¶ 27 (FAC ¶ 26), as well as “user feedback

9

[and] design documentation,” id. ¶ 214 (FAC ¶ 199)—that concerns the particular subject

10

matters enumerated by the court in its prior order, namely the following:

United States District Court
Northern District of California

11

•

Cisco’s contribution to 5G technology.

12

•

Pre-release video conferencing display prototypes.

13

•

Debugging a user interface.

14

•

Sound bar products.

15

•

Plaintiff’s communications product portfolio.

16

•

Strategy and costs for a pre-release video conferencing display product.

17

•

Plaintiff’s marketing position in the collaboration space.

18

•

Component specifications and competitive differentiators for plaintiff’s current

19

and unreleased hardware products (reflected in the so-called “EA document”).

20

Dkt. 97 at 32-33.

21

Second, having identified the universe of trade secrets information purportedly

22

misappropriated by Chung that plaintiff described with sufficient particularity in its FAC,

23

the next question is whether the SAC adequately alleges that the categories of

24

information (e.g., design specifications) concerning each of the bulleted subject matters

25

(e.g., contributions to 5G technology) maintain independent economic value.

26

The court concludes that the SAC adequately alleges such value with respect to

27

some categories concerning some subject matters but not for those concerning others.

28

With respect to design specifications and schematics for its pre-release video
7

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 8 of 28

conferencing prototype, plaintiff alleges that the resources invested in this information

2

include a “careful orchestration” of the prototype’s “component selection and layout,”

3

which “require[s] the coordinated efforts of a team of engineers for many months” and

4

allows plaintiff “to manufacture [its pre-release video conferencing products] for resale at

5

a scale at a competitive cost.” SAC ¶ 99. Based on this alleged effort and resulting

6

manufacturing advantage, the court concludes that plaintiff adequately alleged

7

independent economic value with respect to this category of information concerning this

8

subject matter. Relatedly, because plaintiff’s design details and specifications for its

9

sound bar products generally follow the process for the pre-release video conferencing

10

prototype and result in a similar manufacturing advantage, id., the court also concludes

11

United States District Court
Northern District of California

1

that plaintiff adequately alleged that this category of information concerning this subject

12

matter maintains independent economic value.
Separately, with respect to the EA document, plaintiff alleges that this document

13
14

identifies “more than two dozen Cisco collaboration products by code name” and that

15

“[f]or each product, it identifies critical component selection choices made by Cisco’s

16

design team in the course of product development.” Id. Plaintiff further adds that this

17

document “reflects thousands of hours of engineers’ labor in making these decisions.” Id.

18

Based on this document’s purported identification of plaintiff’s various collaboration

19

products’ component selection decisions and the engineering efforts that went into

20

making those decisions, the court concludes that plaintiff also adequately alleged that EA

21

document reflects information that maintains independent economic value.

22

Lastly, with respect to its emerging business opportunities in the collaboration

23

space, plaintiff alleges that the resources invested in this information include “market

24

research,” “direct customer engagement,” and developing “long-term relationships” with

25

customers and partners. Id. ¶ 134.2 Plaintiff alleges that this information is “valuable to

26
27
28

2

It appears plaintiff mistakenly included this allegation of independent economic value
under those concerning the information purportedly misappropriated by He. To avoid
future motion practice related to this apparent mistake, the court will construe it as
intended to concern the information purportedly misappropriated by Chung.
8

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 9 of 28

1

Cisco because it identifies customers and targeted deals, allowing Cisco . . . to target

2

previously identified commercial opportunities to maximize efficiencies.” Id. Based on

3

this alleged effort and sales advantage, the court concludes that plaintiff adequately

4

alleged independent economic value with respect to the above referenced categories of

5

information concerning this subject matter.

6

In their briefing, Plantronics and Chung raise two remaining arguments in

7

opposition to plaintiff’s additional allegations of the independent economic value of the

8

information purportedly misappropriated by Chung. First, plaintiff failed to establish that

9

third parties were willing to pay for access to its alleged trade secrets. Dkt. 123 at 4.
Second, plaintiff failed to show that the information purportedly misappropriated by

11

United States District Court
Northern District of California

10

Chung derives economic value from its secrecy, Dkt. 115 at 7-8; Dkt. 123 at 6. These

12

arguments do not alter the above conclusions.

13

First, based on the allegations describing the impact of the above information upon

14

plaintiff’s business, the court finds it plausible that third parties would be willing to pay for

15

information detailing plaintiff’s collaboration products’ codenames, their underlying

16

components and such components’ placements, and the best marketing opportunities to

17

target. At minimum, it appears that such information would allow a competitor insight to

18

an exemplar of how to design and economically manufacture like products and where or

19

with whom to market them.

20

Second, plaintiff alleges at least four different ways that it attempts to maintain the

21

secrecy of its information, including without limitation the specifications, schematics, EA

22

document, and that information concerning the emerging business opportunities

23

referenced above. In particular, plaintiff alleges that such methods include (1) requiring

24

Chung to agree to his Proprietary Information and Invention Agreement (“PIIA”) as a

25

condition of employment, (2) requiring Chung to annually certify that “he would not use

26

Cisco assets for non-company purposes,” (3) monitoring Chung’s (and seemingly all of its

27

employees) network activity, and (4) restricting access to its offices and data systems. Id.

28

¶ 100. As concluded by the court in its prior order, these sorts of precautions “support[]
9

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 10 of 28

1

the inference that information reviewed by Chung . . . in the course of [his] employment is

2

valuable,” but “say[] nothing about the economic value of the particular information at

3

issue.” Dkt. 97 at 36. That conclusion remains true: secrecy itself does not establish

4

value. However, these precautions show that the subject information is not “generally

5

known” by others. Incident to plaintiff’s exclusive possession of that information, which

6

plaintiff circumstantially showed the value of through investing in its development, plaintiff

7

might enjoy a marginal economic advantage in manufacturing that others do not. That

8

said, plaintiff failed to adequately allege the independent economic value of any category

9

of information concerning the remaining subject matters—namely, its contributions to 5G
technology, communications product portfolio, strategy and costs for the pre-release

11

United States District Court
Northern District of California

10

video conferencing display product, and component specification and competitive

12

differentiators for its other unspecified products (outside of the EA document).

13

Instead, plaintiff alleges that “[t]he trade secrets misappropriated by Dr. Chung

14

have independent economic value,” SAC ¶ 98, because, principally, it has “invested

15

significant resources in the creation of these particular trade secrets,” id. ¶ 99. Plaintiff

16

then alleges the resources invested in its general categories of information—namely,

17

artwork prototypes, user experience design documentation, user interview feedback, and

18

source code—without expressly conditioning such alleged investments with respect to

19

any of the remaining subject matters. While plaintiff does allege that its “misappropriated

20

source code” reflects engineers development efforts, including “testing and debugging,”

21

id., plaintiff neglects any explanation about how its source code for debugging a user

22

interface itself maintains independent economic value.

23

In the alternative, plaintiff argues that it separately showed the independent

24

economic value of the information purportedly misappropriated by Chung (1) “by

25

describing the precautions taken to protect that information’s secrecy,” particularly

26

Chung’s PIIA and plaintiff’s physical and electronical restrictions to access, Dkt. 121 at 8-

27

9, and (2) “through evidence that others (i.e., Poly) were willing to pay for that

28

information,” id. at 9.
10

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 11 of 28

The court rejects both grounds. Plaintiff’s first alternative ground runs into another

1
2

logic problem: merely because the information purportedly misappropriated by Chung

3

might qualify as “proprietary” under contract does not establish that that information

4

satisfies the statutory definition of a “trade secret.” Plainly, a lot of information may be

5

proprietary (i.e., owned) but not economically valuable. Additionally, security precautions

6

are common across companies. Adopting plaintiff’s rationale on this issue (i.e., if the

7

information is subject to a security measure, then it maintains independent economic

8

value) would result in overly inclusive findings of what qualifies as economically valuable.

9

Accordingly, plaintiff’s first alternative ground fails to establish that the information
purportedly misappropriated by Chung, as a categorical matter, maintains independent

11

United States District Court
Northern District of California

10

economic value.
To substantiate its second alternative ground, plaintiff cites to the court’s prior

12
13

order’s recognition that “employment comes with certain monetary benefits . . . which,

14

plainly, are economically valuable,” Dkt. 97 at 37, and then reasons that because “Chung

15

was also hired by Poly . . . proceeded to use Cisco’s trade secrets in the course of his

16

employment . . . and was paid by Poly for doing that work,” the information he purportedly

17

misappropriated, too, must have maintained independent economic value, Dkt. 121 at 9;

18

Dkt. 119 at 8.

19

Plaintiff again mischaracterizes this court’s prior order. The court previously found

20

that it could infer that the information purportedly misappropriated by Williams maintained

21

independent economic value because, in part, plaintiff alleged a detailed several month

22

long series of communications between Williams and Puorro prior to Williams’ offer to join

23

Plantronics that suggested a quid pro quo scheme between the two. Dkt. 97 at 37.

24

Plaintiff failed to allege any such scheme with respect to Chung’s employment. Given

25

that distinction, the court may not infer that others, including Plantronics, were willing to

26

pay for all of the information purportedly misappropriated by Chung.3 Accordingly,

27
28

Plaintiff also points to Chung’s alleged “use” of the purportedly misappropriated
information in his employment at Plantronics as a further basis to support its second
11
3

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 12 of 28

1

plaintiff’s second alternative ground fails to establish that the information purportedly

2

misappropriated by Chung, as a categorical matter, maintains independent economic

3

value.

4

In short, the court concludes that plaintiff adequately alleged that the design

5

specifications and schematics of its pre-release video conferencing prototype and sound

6

bar products, its EA document, and information concerning its emerging business

7

opportunities in the collaboration space maintain independent economic value. However,

8

with respect to any category of information concerning the remaining subject matters, the

9

court concludes that plaintiff failed to allege their independent economic value. Such

10

information may not serve as a basis for plaintiff’s trade secrets claims.
b.

United States District Court
Northern District of California

11

Some of the Information Purportedly Misappropriated by He
Maintains Independent Economic Value

12
13

To determine whether plaintiff adequately alleged the independent economic value

14

of the information purportedly misappropriated by He, the same framework applies. In its

15

May 26 order, the court determined that plaintiff described that information with sufficient

16

particularity by alleging that He misappropriated “design and architectural documents,

17

hardware diagrams, schematics, source code stacks, and engineering specifications

18

relating to existing and future Cisco products, and non-public financial information” that

19

concerns the following:

20

•

An unreleased headset concept and like prototypes.

21

•

Vendor roadmaps for plaintiff’s products.

22

•

An unreleased IP telephone project.

23
24
25
26
27
28

alternative ground of independent economic value. However, in its SAC, plaintiff bases
such use upon Chung’s “email[ing] and upload[ing] the EA document to his Plantronics
email and the Plantronics’ internal Sharepoint, as well as Chung’s “retain[ing] and
refus[ing] to return” the Second Seagate Drive, “which, on information and belief,”
contains the various categories of information noted above. SAC ¶ 101. Given that the
court already concluded that the EA document maintains independent economic value, it
need not consider this alternative ground. With respect to the information contained on
the Second Seagate Drive, the court has either already concluded that such information
does maintain independent economic value or lacks a qualifying subject matter.
12

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 13 of 28

1
2
3

•

Full engineering specifications for a next-generation conference room
collaboration device. Dkt. 97 at 33-34.
The court concludes that the SAC adequately alleges independent economic value

4

with respect to some categories concerning some subject matters purportedly

5

misappropriated by He but not for those concerning others. With respect to design

6

documents and hardware diagrams for headset prototypes, plaintiff alleges that the

7

resources invested in this information include a “careful orchestration” of the prototypes’

8

“component selection and layout,” which “require[s] the coordinated efforts of a team of

9

engineers for many months” and allows plaintiff “to manufacture [its headset products] for
resale at a scale at a competitive cost.” SAC ¶ 134. Based on this alleged effort and

11

United States District Court
Northern District of California

10

resulting manufacturing advantage, the court concludes that plaintiff adequately alleged

12

independent economic value with respect to this category of information concerning this

13

subject matter.

14

In their briefing, He and Plantronics advance arguments on this issue similar to

15

those previously raised with regard to Chung. First, they argue that plaintiff failed to

16

establish that third parties were willing to pay for access to its alleged trade secrets. Dkt.

17

123 at 4. Second, they argue that plaintiff failed to show that the information purportedly

18

misappropriated by He is, in fact, secret or derives economic value from its secrecy, Dkt.

19

123 at 6; Dkt. 118 at 4-8.

20

These arguments fail for the same reasons described in Section B.1.a. above with

21

respect to the specifications, EA document, and collaboration opportunities information

22

purportedly misappropriated by Chung. Separately, He relies upon circular logic when

23

characterizing the headset prototype designs as public information. Dkt. 118 at 5 (“This

24

information is simple public knowledge as people in the industry already know this.”).

25

And even if, as He contends, this information were founded upon “standard concepts” of

26

physics and sound, id., the specific application of those concepts to the designs at issue

27

may still be secret. In any event, whether the headset designs purportedly

28

misappropriated by He qualify as matters within the public knowledge is a question of fact
13

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 14 of 28

1

better suited for a summary judgment motion. Accordingly, these residual challenges do

2

not alter the above conclusion that plaintiff adequately alleged the independent economic

3

value of its design documents and hardware diagrams for headset prototypes.
Separately, with respect to its vendor product roadmaps, plaintiff alleges that the

4

resources invested in this information include its “buying power” and “extensive

6

purchasing history with [its] vendors,” and that it values this information “because it

7

facilitates product development planning.” Id. Stated differently, it appears plaintiff’s

8

theory of investment with respect to this information rests upon its role as a historically

9

major purchaser in the electronic components market. Plaintiff fails to offer any

10

explanation about how such industry status itself qualifies as a viable theory of

11

United States District Court
Northern District of California

5

investment in its development of the subject information.4 Accordingly, the court finds

12

this theory of investment implausible and concludes that plaintiff failed to allege the

13

independent economic value of this information.
Plaintiff also failed to adequately allege the independent economic value of the

14
15

categories of information concerning the remaining subject matters previously determined

16

as described with sufficient particularity. First, while plaintiff alleges that its full

17

engineering specifications “reflect the materials that Cisco sends to its manufacturing

18

partners to enable them to physically make the products without duplicating Cisco’s

19

iterative design process,” id ¶ 134, plaintiff neglects any explanation about how its full

20

engineering specifications for a next-generation conference room collaboration

21

device itself maintains independent economic value. Similar to its allegations about the

22

independent economic value of its source code purportedly misappropriated by Chung,

23

allegations of the value of this category of information not expressly tethered to a

24
25
26
27
28

4

In any event, the court also questions whether plaintiff may maintain any trade secret
right in the product development plans of the third-party vendors who manufacture those
input components. Based on plaintiff’s description of that information, SAC ¶ 134
(“vendors . . . provide information about their own product pipelines before that
information becomes publicly available) (emphasis added), it appears that that
information, while shared with plaintiff for product development purposes, is actually
owned by the vendors.
14

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 15 of 28

1

particular subject matter at issue is insufficient.

2

Second, with respect to design details and schematics for its unreleased IP

3

telephone project, plaintiff summarily alleges that it “invests heavily” in this project,

4

including in its work on IP telephone products that “do not become commercially

5

available.” Id. ¶ 134. Plaintiff adds that as with its “commercially available products,

6

Cisco’s unreleased products require thousands of hours of engineering time . . . [and]

7

reflect negative know-how . . . Thus, design details and schematics for the unreleased IP

8

telephone project are valuable at least because they embody know-how that is part of the

9

corpus of engineering knowledge that Cisco uses to develop its cutting-edge
collaboration product portfolio.” Id. While plaintiff may dedicate significant engineering

11

United States District Court
Northern District of California

10

time to its “unreleased products” in general, plaintiff fails to allege that it dedicates such

12

engineering resources to its unreleased IP telephone project in particular. Accordingly,

13

the court concludes that plaintiff failed to allege the independent economic value of this

14

information.

15

Separately, plaintiff advances the same two alternative grounds to show the

16

independent economic value of the information purportedly misappropriated by He that it

17

relied upon with respect to Chung. First, plaintiff takes precautions to protect the secrecy

18

of the information purportedly misappropriated by He. Dkt. 121 at 11; Dkt. 120 at 9-10.

19

Second, as shown by Plantronics’ decision to hire He and his use of the information

20

purportedly misappropriated by him while at Plantronics, others were willing to pay for

21

access to such information. Dkt. 121 at 12; Dkt. 120 at 10.

22

The court already rejected each of these arguments. While plaintiff does allege

23

that He used its trade secrets at Plantronics, plaintiff extrapolates that conduct from He’s

24

“accessing” the subject information. SAC ¶ 136 (“In particular, Mr. He used the trade

25

secrets in the course and scope of his employment at Poly, for which he was paid a

26

salary. For example, while employed and paid by Poly, Mr. He accessed at least the

27

schematic for . . . “). Without more, such access, unspecified in scope, does not compel

28

the inference that others would pay for the accessed information. Accordingly, these
15

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 16 of 28

1

grounds do not provide a basis to conclude that the information purportedly

2

misappropriated by He, as a categorical matter, maintain independent economic value.

3

In short, the court concludes that plaintiff adequately alleged that the design

4

documents and hardware diagrams for its headset prototypes maintain independent

5

economic value. However, with respect to any category of information concerning the

6

remaining subject matters, the court concludes that plaintiff failed to allege their

7

independent economic value. Again, such information may not serve as a basis for

8

plaintiff’s trade secrets claims.

9
10

United States District Court
Northern District of California

11
12
13

2.

Plaintiff Adequately Alleged that It Suffered Harm as a Result of He’s
Purported Misappropriation

He separately argues that plaintiff failed to allege harm as a result of the
information that he allegedly misappropriated. Dkt. 118 at 8-9.
a.

He Did Not Waive His New Argument

14

As a threshold matter, He did not raise this argument in his initial motion to

15

dismiss. Given that, plaintiff contends that he may not do so now. The court disagrees.

16
17
18
19
20

In relevant part, Rule 12(g) states that the following:
“Except as provided in Rule 12(h)(2) or (3), a party that makes
a motion under this rule must not make another motion under
this rule raising a defense or objection that was available to the
party but omitted from its earlier motion.” Fed. R. Civ. Pro.
12(g)(2).
As used in Rule 12, a “defense” includes the various challenges listed at Rule

21

12(b)(1)-(7), including, for example, failure to state a claim. Fed. R. Civ. Pro. 12(b) (“But

22

a party may assert the following defenses by motion . . .”). Rule 12 does not define,

23

albeit expressly or contextually, what qualifies as an “objection.” Plaintiff failed to proffer

24

any authority for the proposition that He’s new argument, which challenges the adequacy

25

of the factual allegations, is a “defense or objection” that is subject to waiver within the

26

meaning of Rule 12(g). Fed. R. Civ. Pro. 12(g)(2).

27
28

Plaintiff’s reliance upon to Hernandez v. City of San Jose, 241 F. Supp. 3d 959
(N.D. Cal. 2017) does not remedy that shortcoming. In relevant part, that decision
16

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 17 of 28

1

involved a municipal defendant’s attempt to raise an immunity defense under the

2

California Government Code for certain discretionary acts of its employees. 241 F. Supp.

3

3d at 984-85, aff'd in part, dismissed in part, 897 F.3d 1125 (9th Cir. 2018) (“Thus, if the

4

defense of § 820.2 immunity was available to the City Defendants in the first motion to

5

dismiss and the City Defendants failed to raise the defense in the first motion to dismiss,

6

then the City Defendants may not raise the defense in the instant second-round motion to

7

dismiss.”). Given that plaintiff failed to show that He waived his new argument by not

8

raising it in the first motion, the court will consider its merits.

9

b.

He’s New Argument Fails on the Merits

“California courts have presumed irreparable harm when proprietary information is

11

United States District Court
Northern District of California

10

misappropriated.” Albert's Organics, Inc. v. Holzman, 2020 WL 1332074, at *5 (N.D. Cal.

12

Mar. 23, 2020).

13

Here, the court concludes that plaintiff adequately alleged that it suffered harm as

14

a result of He’s alleged conduct. On May 30, 2019, He obtained the subject information

15

by copying “Confidential Materials, including architectural design documents relating to

16

Cisco’s unreleased headset concepts to a LaCie external hard drive . . . (‘LaCie Drive’).”

17

SAC ¶¶ 109, 120. In his opening brief, He acknowledges that the information he

18

“downloaded” qualifies as “proprietary” under his PIIA. Dkt. 118 at 3. He does not

19

expressly challenge the adequacy of the allegations that he misappropriated the subject

20

information. Instead, He characterizes the SAC as alleging only mere possession. Id. at

21

9. He challenges the sufficiency of the misappropriation allegations as a subtle and

22

improper invocation of the debunked “inevitable disclosure doctrine.” Id.

23

The court disagrees. He left plaintiff’s employment on June 21, 2019. Id. ¶ 121.

24

At that time, He “retained” the LaCie Drive, id. ¶ 121, and, on multiple occasions following

25

that date, accessed its contents. Id. ¶¶ 124-26. While made on information and belief,

26

plaintiff alleges that He accessed the subject information “for his own benefit, and for the

27

benefit of Poly, to Cisco’s detriment.” Id. ¶ 127. Contrary to He’s characterization, these

28

allegations amount to more than mere possession. Because He failed to challenge his
17

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 18 of 28

1

alleged misappropriation on any other basis, the court concludes that plaintiff has

2

adequately alleged misappropriation and, thus, presumes harm.

3

He also argues that plaintiff proffered only conclusory allegations that it suffered
harm as a result of his conduct. Dkt. 118 at 8. That argument misses the point. Absent

5

a challenge to the sufficiency of plaintiff’s misappropriation allegations, the court may

6

presume harm when proprietary information is misappropriated. In any event, the level of

7

detail necessary to satisfactorily allege harm is not demanding. Mintel Learning Tech.,

8

Inc. v. Ambow Educ. Holding Ltd., 2012 WL 762126, at *3 (N.D. Cal. Mar. 8, 2012)

9

(allegations of “lost profit” and “unjust enrichment” resulting from alleged misappropriation

10

suffice); Top Agent Network, Inc. v. Zillow, Inc., 2015 WL 10435931, at *4 (N.D. Cal. Aug.

11

United States District Court
Northern District of California

4

6, 2015) (“While later crossroads in this case will no doubt demand of [plaintiff] a more

12

particularized showing of damages, its present allegations that it ‘suffered significant

13

harm, both financially and to its goodwill and reputation,’ while [defendant] enjoyed a

14

surge in stock price and market value ‘due in large part to the launch of its competing

15

product,’ are not so vague that this claim should fail to advance.”).

16

Here, plaintiff alleges that “if [the information misappropriated by He] were to

17

become public, competitors could exploit them to shorten their own development

18

timelines” and that knowledge of Cisco’s designs would enable a competitor to “tailor its

19

own solutions to anticipate Cisco’s product roadmap,” which would deprive it of a “first-

20

mover advantage.” SAC ¶ 137. These allegations are sufficiently detailed to support

21

plaintiff’s assertion that He’s alleged misappropriation has caused or will continue to

22

cause it “detriment.” Id. ¶¶ 127, 262, 269. At this juncture in the litigation, plaintiff has

23

adequately shown harm on this separate ground.

24
25
26

3.

Plaintiff Failed to Allege a Cognizable Basis for Its Intentional
Interference with Contract Claim

California Civil Code § 3426.7(b) “preempts common law claims that are based on

27

the same nucleus of facts as the misappropriation of trade secrets claim for relief.” K.C.

28

Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc., 171 Cal. App. 4th 939, 958
18

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 19 of 28

1

(2009).
In its prior order, the court concluded that “plaintiff failed to allege an intentional

2
3

interference with contract claim that arises out of a set of operative facts distinct from

4

those relied upon to support its trade secrets misappropriation claims.” Dkt. 97 at 44. To

5

support that conclusion, the court reasoned that plaintiff relied upon the same sort of

6

communications between Williams and Puorro to support both sets of claims. Id. at 44-

7

45. In relevant part, the court expressly compared plaintiff’s reliance upon Williams’

8

communication concerning customers available for poaching (proffered to support the

9

intentional interference with contract claim) with its citation to FAC paragraph 258 to
support its trade secrets claims. Id. at 45 n.14. Significantly, that allegation, now detailed

11

United States District Court
Northern District of California

10

at SAC ¶ 273, provides that the categories of information purportedly misappropriated by

12

Williams “include Cisco’s . . . sales opportunities and customer lists . . .” Dkt. 108-1 at 52

13

(comparing FAC ¶ 258 to SAC ¶ 273). Earlier in its May 26 order, the court also

14

determined that plaintiff alleged the information purportedly misappropriated by Williams

15

with sufficient particularity because plaintiff qualified these categories of information to

16

subject matters concerning, in part, “plaintiff’s collaboration business” and “certain

17

marketing opportunities,” Dkt. 97 at 29-30.5

18

In its SAC, plaintiff added six paragraphs of allegations in its attempt to proffer a

19

set of facts in support of its intentional interference claim that is distinct from their trade

20

secrets claims counterparts. Those allegations concern Williams’ purported attempts to

21

solicit the business of a then-existing Cisco customer, ReadyRoom, during a meeting

22

with its chief executive officer, Aaron McCardle (“McCardle”), on September 3, 2019.

23

SAC ¶¶ 179-183, 325. Plaintiff alleges that Williams informed Puorro that “he was

24

meeting with a Cisco partner named RoomReady (also known as ‘Zeller Digital’ or ‘ZDI’)

25

and said that he was ‘[l]ooking at them from the Cisco lens. I could easily change that

26
27
28

In its briefing in opposition to Plantronics’ first motion to dismiss, plaintiff characterized
the information purportedly misappropriated by Williams as including “Cisco’s future plans
for particular collaboration products.” Dkt. 51 at 13 (citing FAC ¶ 169).
19
5

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 20 of 28

1

lens though.’” Id. ¶ 179. On information and belief, plaintiff then alleges that Williams and

2

Puorro “agreed” that Williams “would pursue the RoomReady opportunity on Poly’s

3

behalf despite the fact that Mr. Williams was still employed by Cisco.” Id. Williams

4

allegedly put a then-consultant (presently Plantronics’ Chief Revenue Officer) in contact

5

with McCardle and, on information and belief, those latter two then discussed partnership

6

opportunities. Id. ¶ 182. Plaintiff alleges that, through his participation in the above

7

events, Puorro “induc[ed] Mr. Williams to breach his duty of loyalty to Cisco.” Id. ¶ 325.

8

Here, the court again concludes that plaintiff failed to allege an intentional

9

interference with contract claim that arises out of a set of facts distinct from those relied
upon to support its trade secrets claims. Throughout its additions, plaintiff generally

11

United States District Court
Northern District of California

10

describes its intention toward RoomReady as an “opportunity,” SAC ¶¶ 179,182-83, and

12

its relationship with RoomReady as a partnership, id. ¶¶ 179-83. In one instance, though,

13

plaintiff cites Williams’ description of RoomReady as a “[c]ollaboration” partner, id. ¶ 180,

14

which is the same adjective that plaintiff used to qualify the products forming the subject

15

matter of the “sales opportunities and customer lists” category of information that it also

16

alleges Williams misappropriated. Dkt. 97 at 29 (citing Dkt. 51 at 13 (“Within those

17

categories of information, Cisco alleges with particularity the subject matter of specific

18

trade secrets that Mr. Puorro induced Mr. Williams to take. . . . Additionally, the FAC

19

alleges that Mr. Puorro induced Mr. Williams to misappropriate information about . . .

20

Cisco’s future plans for particular collaboration products.”)) (emphasis added). When

21

analyzed along with plaintiff’s other allegations (and its prior representations to this

22

court), the court concludes that the SAC’s additions amount to nothing more than a

23

specific instance of Williams’ alleged misappropriation of sales opportunities concerning

24

plaintiff’s plans for its collaboration products.

25

Other circumstances surrounding the RoomReady incident support this

26

conclusion. Significantly, that incident occurred on September 3, 2019, which is in the

27

middle of Williams’ and Puorro’s alleged several month scheme to misappropriate

28

plaintiff’s trade secrets. Additionally, the purported benefactor of Williams’ alleged breach
20

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 21 of 28

1

of his PIIA and duty of loyalty are the same persons—Puorro and Plantronics, and,

2

however labeled, the subject of both the alleged misappropriation and the alleged

3

intentional interference concerns plaintiff’s business opportunities with third parties.

4

Further, the unidentified “Consultant” that Williams put McCardle in contact with appears

5

to be the same person to whom Williams emailed certain “market and strategy data”

6

relating to plaintiff’s “collaboration business” on June 11, 2019. SAC ¶ 164. When

7

reviewed collectively, these shared circumstances in the events underlying the trade

8

secrets claims and the intentional interference claim vitiates the plausibility that the

9

RoomReady incident qualifies as a distinct basis in support of the latter claim.

10

Plaintiff’s counterarguments do not change the court’s conclusion. First, plaintiff

United States District Court
Northern District of California

11

argues that the two sets of subject claims are distinct because it “has not alleged that

12

either Mr. Williams or Mr. Puorro used or in any way relied on Cisco’s trade secrets in

13

their pursuit of RoomReady on Poly’s behalf.” Dkt. 121 at 15. That argument is

14

misplaced. As shown above, sales opportunities, including those obtained through

15

partnerships, served as one of the sorts of trade secrets purportedly misappropriated by

16

Williams. It was Williams’ act of pursuing that opportunity on behalf of Plantronics that

17

qualified as the alleged misappropriation.

18

Second, plaintiff argues that the RoomReady incident could not qualify as a

19

misappropriation of its customer lists. Plaintiff reasons that such lists “are eligible for

20

trade secret protection because they are compilations of information that are not in the

21

public domain and that reflect investments in customer development from which their

22

owners may gain a competitive advantage.” Id. (emphasis in the original).

23

This argument fails for two reasons. First, plaintiff fails to proffer any authority

24

acknowledging that a trade secrets claim may not extend to the use of only a single

25

contact in a customer list. Second, whatever the merits of that proposition, a “customer

26

list” concerning plaintiff’s future plans for its collaboration products is not the only relevant

27

category of information that Williams purportedly misappropriated. As detailed at length

28

above, plaintiff specifically included “sales opportunities” concerning that same subject
21

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 22 of 28

1

matter. Given that, the RoomReady incident remains legally indistinct from the purported

2

misappropriation of the sales opportunities category of information concerning plaintiff’s

3

plans for its collaboration products.
Lastly, any ex post attempt by plaintiff to recast Williams’ alleged involvement in

4
5

helping Plantronics poach existing clients as a breach of his “duty of loyalty,” Dkt. 121 at

6

14-16, is irrelevant here. That theory, while perhaps accurate as a matter of law, does

7

not itself change the underlying factual basis of the intentional interference claim. This

8

court’s recent decisions are in-line with that conclusion.6
The court has already allowed plaintiff an opportunity to amend its pleadings to

9

allege a set of facts in support of its intentional interference claim that is distinct from that

11

United States District Court
Northern District of California

10

relied upon to support its trade secrets claims. Rather than identify a qualifying set of

12

facts, plaintiff merely provided a specific example of Williams’ purported misappropriation

13

of some of the information at issue in the trade secrets claims. Given that failure, it

14

appears plaintiff cannot save this claim by further amendment. Therefore, the court

15

dismisses the intentional interference claim with prejudice. As an incident to such

16

dismissal, the court denies as moot defendant’s alternative request that the court strike

17

the allegations (SAC ¶¶ 7, 18, 179-83, 325) proffered in support of this claim.
4.

18

Allegations

19

Plantronics argues that the court should strike various sets of allegations in the

20
21

The Court Denies Defendant’s Motion to Strike the Remaining

SAC. The court considers each remaining challenge in turn.

22
23
24
25
26
27
28

6

Five Star Gourmet Foods, Inc. v. Fresh Express, Inc., , 2020 WL 513287, at *14 (N.D.
Cal. Jan. 31, 2020) (“For example, a claim alleging a violation of a duty of loyalty is not
displaced by CUTSA where the duty of loyalty would be violated by undertaking
competitive acts, regardless of whether any proprietary information was implicated. . . .
However, ‘where the allegation is that [a defendant] breached his duty of loyalty by
disclosing trade secrets, the claim for breach of fiduciary duty is based on the same
operative facts and is therefore preempted by CUTSA.’”) (emphasis in the original);
Albert's Organics, Inc., 2020 WL 1332074, at *6 (“Plaintiff's sixth and seventh claims are
based on Akagaki and Laffer's fiduciary duty to Albert's. The alleged breach of their
fiduciary duty was broader than disclosing trade secrets or confidential information and
included a duty not to compete against one's current employer (i.e., a duty of loyalty).”)
(emphasis added).
22

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 23 of 28

1
2

a.

The Court Declines to Strike SAC Paragraphs 99 and 134

Plantronics argues that the court should strike SAC paragraphs 99 and 134 on

3

various grounds. First, Plantronics argues that those paragraphs violate Rule 10(b). Dkt.

4

114 at 15 n.3; id. at 16 n.5. In relevant part, that rule provides the following:

5

“A party must state its claims . . . in numbered paragraphs, each
limited as far as practicable to a single set of circumstances. . .
. If doing so would promote clarity, each claim founded on a
separate transaction or occurrence . . . must be stated in a
separate count or defense.” Fed. R. Civ. Pro. 10(b).

6
7
8
9

The court is well-aware that neither SAC paragraph 99 nor 134 is “limited to a
single set of circumstances, but, rather, includes five separate alleged categories of
independent economic value, each separated by bullet points with formless blocks of

11

United States District Court
Northern District of California

10

text, one of which is comprised of over 20 lines of text.” Dkt. 114 at 15 n.3; id. at 16 n.5.

12

That said, the court has expended significant resources on both its prior order and the

13

instant order and finds that striking those paragraphs, only to allow plaintiff the

14

opportunity to refile a third-amended complaint, which might then generate further motion

15

practice, is simply unwarranted. As alleged, these paragraphs are sufficiently clear to

16

permit defendants to defend against plaintiff’s claims. In some ways, plaintiff’s bullet-

17

pointed pleading per category of information referenced throughout these paragraphs

18

assisted the court in its determination of the underlying issues presented. Accordingly,

19

the court will exercise its discretion to deny defendant’s motion to strike these paragraphs

20

on Rule 10(b) grounds. Rees v. PNC Bank, N.A., 308 F.R.D. at 271.

21

Second, Plantronics argues that the court should strike SAC paragraphs 99 and

22

134 because they “provide vague descriptions of a variety of alleged trade secrets in

23

impermissibly broad categories that fail to meet the appropriated threshold.” Dkt. 114 at

24

16. The court analyzed at length the allegations of independent economic value in each

25

of those paragraphs in Section B.1.a.-b. above. As indicated in those subsections, some

26

allegations sufficiently allege the independent economic value of certain categories of

27

information concerning certain subject matters (decided in the court’s prior order as

28

described with sufficient particularity) while others do not. At its conclusion of each
23

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 24 of 28

1

subsection, the court expressly warned plaintiff against advancing its trade secrets claims

2

under any theory premised upon any information concerning any subject matter for which

3

it failed to adequately allege the independent economic.
That said, while those allegations of independent economic value are insufficient

4
5

to support a cognizable trade secret contained within the remaining categories of

6

information, the court cannot conclude that they clearly have “no possible bearing on the

7

subject matter of the litigation.” Colaprico, 758 F. Supp. 1335 at 1339. Given that low

8

bar and that plaintiff may base its trade secrets claims on only the information discussed

9

at Section 1.a. above, the court will exercise its discretion to deny the motion to strike on

10

these grounds as well.
b.

United States District Court
Northern District of California

11

The Court Declines to Strike SAC Paragraphs 27-137, 212-70,
298-321, and 329-56

12

Plantronics argues that the court should strike the trade secrets claims that are

13
14

based upon the alleged misappropriation by Chung and He, as well as such claims’

15

supporting allegations (SAC ¶¶ 27-137, 212-70, 298-321, and 329-56), because “under

16

Rule 10(b) those claims should have been pleaded as separate causes of actions.” Dkt.

17

114 at 17. As noted above, Rule 10(b) does require a plaintiff to break-out its claims as

18

separate counts “if doing so would promote clarity.” Fed. R. Civ. Pro. 10(b). While

19

specifying state and federal trade secrets claims against Plantronics premised on the

20

purported misappropriation of each co-defendant (Williams, Chung, and He) would

21

promote clarity, it would also make the operative pleading unnecessarily longer. Given

22

that whatever net gains to clarity have already been diminished by the parties’ extensive

23

motion practice,7 the significant judicial resources expended to settle the pleadings in this

24
25
26
27
28

In its May 26 order, the court explained that because the FAC “failed to adequately
allege that the information purportedly misappropriated by Chung and He maintained
independent economic value,” plaintiff failed to allege any trade secrets claim against
Plantronics premised upon the purported misappropriation of information by Chung and
He. Dkt. 97 at 41 n.12. As decided above, plaintiff cured that failure with respect to
certain of that information. In its opening brief, Plantronics failed to alternatively argue
that it may not be held liable for such misappropriation. Given that, plaintiff may also
pursue its trade secrets claims against Plantronics upon such bases.
24
7

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 25 of 28

1

action, and the need to prevent further expenditure on a potential third round of motion to

2

dismiss briefing, the court denies the motion to strike the above referenced paragraphs

3

on this separate ground.

4

5.

Other Outstanding Items in This Litigation

5

Shortly before this court issued its prior order, on May 20, 2020, Plantronics
moved to stay discovery and, in the alternative, for a protective order. Dkt. 92. Chung

7

and He joined in that motion. Dkt. 99; Dkt. 100. Plaintiff opposed that motion. Dkt. 102.

8

At core, that motion requests that (1) the court stay discovery pending its resolution of the

9

instant second round of motions to dismiss, Dkt. 92 at 8-11, and (2) in the event the court

10

denies that request, it enter a protective order limiting the scope of the discovery requests

11

United States District Court
Northern District of California

6

previously served by plaintiff, id. at 11-15.

12

On May 21, 2020, plaintiff filed a similarly styled motion for entry of a protective

13

order. Dkt. 93. In it, plaintiff moves the court to require the parties to comply with

14

plaintiff’s preferred 32-page protective order (Dkt. 93-2) concerning how they handle the

15

information subject to this litigation. According to plaintiff, its proposed protective order is

16

based upon this district’s model protective order for litigation involving patents, highly

17

sensitive confidential information and/or trade secrets. Dkt. 93 at 2. Plaintiff previously

18

submitted a redline of its proposed protective order against the above referenced model

19

protective order of this district (Dkt. 81-3 at 33). Dkt. 93 at 5. Plantronics opposed this

20

motion, Dkt. 104, which Chung and He also joined, Dkt. 105; Dkt. 106.

21

At the parties’ May 28, 2020 case management conference, the court stayed

22

discovery pending its resolution of the instant motions. Dkt. 98. At that conference, the

23

court directed defendants to file their own proposed protective order as part of their

24

opposition to plaintiff’s motion for entry of a protective order and stated that if the parties

25

were unable to stipulate to a protective order, it would choose between the better of the

26

two proffered by defendants and plaintiff. Id. Par for the course, the parties did not

27

stipulate and, as directed, defendants filed their proposed protective order (Dkt. 104-2).

28

According to defendants, their proposed protective order is also based upon this district’s
25

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 26 of 28

1

model protective order for litigation involving patents, highly sensitive confidential

2

information and/or trade secrets. Defendants also submitted a redline of their proposed

3

protective order against this district’s model protective order (Dkt. 104-4). Dkt. 104 at 5.

4

The court notes its decision on each of these requests immediately below.
a.

5

Here, because the instant order resolves the second round of motions to dismiss,

6
7

the court denies defendants’ requested discovery stay as moot. 8
With respect to the alternative requests for a protective order limiting the discovery

8
9

Discovery May Proceed Once Plaintiff Serves Its Disclosure

already served by plaintiff, the court agrees with defendants that, at this juncture, the
requested discovery is procedurally premature. Plaintiff has not yet served its California

11

United States District Court
Northern District of California

10

Code of Civil Procedure § 2019.210 trade secret disclosure (“CCP § 2019.210 trade

12

secret disclosure”). Accordingly, defendants need not respond to discovery until it has

13

been served with that CCP § 2019.210 trade secret disclosure.
b.

14

The Court Adopts Defendants’ Proposed Protective Order

In relevant part, Rule 26(c) provides that “[a] party . . . from whom discovery is

15
16

sought may move for a protective order in the court where the action is pending . . . The

17

court may, for good cause, issue an order to protect a party or person from annoyance,

18

embarrassment, oppression, or undue burden or expense, including . . . requiring that a

19

trade secret or other confidential research, development, or commercial information not

20

be revealed or be revealed only in a specified way.” Fed. R. Civ. Pro. 26(c)(1). This

21

district’s model protective orders “set forth presumptively reasonable conditions regarding

22

the treatment of highly confidential information.” In re Litihium Ion Batteries Antitrust

23

Litig., 2017 WL 930317, at *3 (N.D. Cal. Mar. 9, 2017) (Magistrate Judge Ryu).
Here, the court will adopt the protective order proffered by defendants. As an

24
25

initial matter, that order makes only four sorts of changes to the model protective order,

26
27
28

8

Plaintiff also filed an administrative motion for leave to file a supplemental brief in
opposition to Plantronics’ motion to stay discovery. Dkt. 110. Given that this order on the
second round of motions to dismiss resolves the defendants’ stay request, the court
denies as moot plaintiff’s administrative motion for leave.
26

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 27 of 28

1

namely: (1) deleting the order’s source code designation, (2) deleting the “designated

2

house counsel” procedures, (3) adding mock jurors to the list of persons who might

3

receive highly confidential information, provided certain protections and (4) permitting

4

disclosure of confidential information to experts without prior notice to the opposing party,

5

provided certain protections. Dkt. 104-4 (redline). Given this court’s orders on the

6

motions to dismiss, those changes are reasonable under the circumstances.

7

The court cannot say the same about all of plaintiff’s proposed changes. For

8

example, plaintiff attempts to shift the burden of proving the legitimacy of a confidentiality

9

designation to the challenging party (as opposed to the designating party) following the
“first instance” that parties cannot a resolve a designation without court intervention. Dkt.

11

United States District Court
Northern District of California

10

93-2 at 10; Dkt. 81-3 at 42 (redline). Absent a reason to think that defendants would

12

abuse this process, plaintiff’s burden-shifting modification overreaches. Given that, as

13

well as the breadth of plaintiff’s other changes, the court finds that more closely adhering

14

to this district’s model protective order better suits the needs of this litigation.

15

The court understands that, as part of its reply, plaintiff attaches what it describes

16

as a “compromise” protective order (Dkt. 109-2). Dkt. 109 at 2. The court declines

17

plaintiff’s last-minute proffer of a third option. Plaintiff could have offered this version in

18

initial support of its motion for entry of a protective order. It did not, so defendant did not

19

have the opportunity to reply to this version. Moreover, on June 4, 2020, after the parties

20

had the opportunity to review and potentially adjust their positions on the scope of

21

protections necessary in this litigation, the court allowed them an additional day to file

22

their opposition and reply on the subject motion to “negotiate entry of a stipulated

23

protective order.” Dkt. 103. They failed to negotiate such entry. Based on that failure,

24

the court infers that defendants disagree with plaintiff’s eleventh-hour proposal. In any

25

event, certain changes proffered by plaintiff in this version, including, for example, its re-

26

inclusion of provisions concerning source code, do not appear necessary under the

27

circumstances of this case. As decided above, plaintiff failed to allege the independent

28

economic value of its source code for debugging user interface, which, based on
27

Case 4:19-cv-07562-PJH Document 126 Filed 08/05/20 Page 28 of 28

1

plaintiff’s additions in its SAC, appears to have been the only source code that it

2

described with sufficient particularity and alleged to maintain independent economic

3

value. Accordingly, the court orders that the parties must, except as modified by the

4

court,9 comply with the protective order proffered by defendants (Dkt. 104-3), which the

5

court files concurrently with this order.
CONCLUSION

6

For the above reasons, the court rules as follows:

7

•

8

Plantronics’s and Puorro’s motion to dismiss is GRANTED IN PART and
DENIED IN PART.

9
•

Chung’s motion to dismiss is DENIED.

11

United States District Court
Northern District of California

10

•

He’s motion to dismiss is DENIED.

12

•

Plantronics’ motion to stay discovery is DENIED and, in the alternative, for
a protective order is GRANTED.

13
•

14

IT IS SO ORDERED.

15
16

Plaintiff’s motion for entry of a protective order is DENIED.

Dated: August 5, 2020
/s/ Phyllis J. Hamilton
PHYLLIS J. HAMILTON
United States District Judge

17
18
19
20
21
22
23
24
25
26
27
28

It appears defendants mistakenly failed to remove paragraph 8 “Prosecution Bar” from
their proposed order. Dkt. 104-3 at 13 (highlighting this section as “optional’). Given that,
the court will strike that paragraph in its entirety.
28
9