Interserve, Inc. et al v. Fusion Garage PTE. LTD

Filing 53

First MOTION to Compel and to Enforce Subpoena filed by CrunchPad, Inc., Interserve, Inc.. Motion Hearing set for 5/11/2010 10:00 AM in Courtroom 5, 4th Floor, San Jose. (Attachments: # 1 Bloch Declaration, # 2 Proposed Order)(Scherb, Matthew) (Filed on 4/5/2010)

1 2 3 4 5 6 7 8 9 10 11
101 California Street San Francisco, CA 94111-5894

Andrew P. Bridges (SBN: 122761) [e-mail] David S. Bloch (SBN: 184530) [e-mail] Matthew A. Scherb (SBN: 237461) [e-mail] WINSTON & STRAWN LLP 101 California Street, 39th Floor San Francisco, CA 94111-5802 Telephone: [phone] Facsimile: [phone] Attorneys for Plaintiffs INTERSERVE, INC., dba TECHCRUNCH and CRUNCHPAD, INC.

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

Winston & Strawn LLP

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PS'. MOT. TO COMPEL & ENFORCE
SF:278690.3

INTERSERVE, INC., dba TECHCRUNCH, ) a Delaware corporation, and CRUNCHPAD, ) INC., a Delaware corporation, ) ) Plaintiffs, ) ) vs. ) ) FUSION GARAGE PTE. LTD., a Singapore ) company, ) ) Defendant. ) ) )

Case No. CV-09-5812 RS (PVT) PLAINTIFFS' MOTION (1) TO COMPEL DEFENDANT'S PRODUCTION AND (2) TO ENFORCE SUBPOENA TO MCGRATH POWER Date: May 11, 2010 Time: 10:00 A.M. Place: Courtroom 5, 4th Floor, San Jose (motion to shorten time pending)

Case No. 09-CV-5812 RS (PVT)

1 2 3 4 5 6 7 8 9 10 11
101 California Street San Francisco, CA 94111-5894

NOTICE OF MOTION TO ALL PARTIES AND THEIR COUNSEL OF RECORD: Plaintiffs will present Plaintiffs' Motion to Compel Defendant's Production and Enforce Subpoena to McGrath Power on May 11, 2010 at 10:00 A.M., or on April 7, 2010 or other date and time this week convenient to the Court (as requested in Plaintiffs' concurrently-filed cross-motion to shorten time before the Honorable Patricia V. Trumbull, presiding in Courtroom 5, 4th Floor, of the above-named court located at 280 South First Street, San Jose, California 95113. To support their motion, Plaintiffs rely on the following Memorandum of Points and Authorities, the declaration of David S. Bloch, Proposed Order, and other pleadings and papers filed in the case, the proceedings at oral argument, and any other matter that the Court deems appropriate.

Winston & Strawn LLP

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -1PS'. MOT. TO COMPEL & ENFORCE
SF:278690.3

Case No. 09-CV-5812 RS (PVT)

1 2 3 4 5 6 7 8 9 10 11
101 California Street San Francisco, CA 94111-5894

STATEMENT OF THE ISSUES 1. Whether the Court should compel Defendant to produce documents given the pending preliminary injunction motion, upcoming deposition of Defendant's principal, its failure to produce more than 50 pages to date, and given Plaintiffs' own production and planned productions. 2. Whether the Court should compel McGrath Power to produce documents responsive to TechCrunch's subpoena. MEMORANDUM OF POINTS AND AUTHORITIES In this case, TechCrunch and Defendant Fusion Garage collaborated for more than a year to produce a cheap tablet computer, the CrunchPad. In November 2009, Fusion Garage aborted the partnership and usurped the project to manufacture, market, and sell the CrunchPad, using the name "JooJoo." TechCrunch filed suit in early December (Dkt. No. 1) and promptly moved for expedited discovery to support a contemplated preliminary injunction motion to impound Fusion Garage's revenues from the CrunchPad/JooJoo device. (Dkt. No. 11.) The Court granted TechCrunch's motion on January 7, 2010, noting that "[e]xpedited discovery will allow plaintiff to determine whether to seek an early injunction." (Dkt. No. 19 at 4.) Fusion Garage has stonewalled ever since, and Plaintiffs have received virtually no documents. While Fusion Garage may have been first to file its motion to compel (Dkt. No. 47), it is Fusion Garage's own failure to produce documents that requires Court intervention. Despite the Court's order granting expedited discovery, Fusion Garage has produced a grand total of 50 pages of documents to date.1 (Declaration of David Bloch in Support of Motion to Compel ("Bloch Decl.") ¶ 2.) Further, third-party PR agency McGrath Power--also represented by Fusion Garage's counsel-has failed to produce any documents despite TechCrunch's service of a Rule 45 subpoena for documents on January 7, 2010, almost three months ago, and despite an express promise to produce document once a protective order was entered. Id. ¶ 3 & Exh. C ("McGrath will be making a

Winston & Strawn LLP

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

For its part, TechCrunch already has produced nearly 400 pages of highly-relevant documents, will be producing the rest of Mr. Arrington's documents (several thousand pages) on Tuesday, April 6, and expects to process the remaining production in rolling fashion on a custodian-by-custodian basis. -2Case No. 09-CV-5812 RS (PVT) PS'. MOT. TO COMPEL & ENFORCE
SF:278690.3

1

1 2 3 4 5 6 7 8 9 10 11
101 California Street San Francisco, CA 94111-5894

production. But we should meet and confer about the objections. Among other things, it doesn't want to produce anything without a protective order."). The Court entered the stipulated protective order on March 11, Dkt. No. 35, yet McGrath Power still has produced nothing. TechCrunch asks the Court to order production, by Friday, April 9, 2010 of all agreed-upon documents in the possession, custody, or control of the company; its principal, Chandrasekar Rathakrishnan; and McGrath Power. TechCrunch urgently needs these documents. Because Fusion Garage is now collecting revenues flowing from its breach of fiduciary duty and other violations, and is in a position to dissipate its illegal gains, the need for an order imposing a constructive trust is compelling. TechCrunch was forced to file its motion for a preliminary injunction without benefit of Fusion Garage's documents. (Dkt. No. 26.) In support of that motion (and also to oppose Fusion Garage's motion to dismiss, (Dkt. No. 20), TechCrunch has noticed the deposition of Mr. Rathakrishnan for April 14, 2010. (Bloch. Decl. ¶ 4.) Fusion Garage is in sole possession of the documents showing why, how and with whose cooperation Fusion Garage decided to hijack the CrunchPad venture for itself. What it did behind TechCrunch's back to cheat TechCrunch and deceive the public is available only in discovery from Fusion Garage, which makes TechCrunch's need for documents even more pressing than Defendant's. The requests for production for which Fusion Garage has agreed to produce documents2 all seek highly relevant documents concerning the parties' relationship and Fusion Garage's exploitation of the CrunchPad venture for its own gain. These issues directly relate to TechCrunch's claims. The Parties' Relationship. Requests 1-3 seek documents concerning and communications with or about TechCrunch and its key personnel. Request 6-8 seek documents sufficient to identify Fusion Garage agreed to produce documents responsive to several requests for production in its written responses that it served on February 5, 2010. (See Bloch Decl. ¶ 2 & Exh. A.) Fusion Garage also agreed to supplement its written responses to agree to produce documents responsive to the following requests during conferences of counsel on March 18 and March 23, 2010: RFPs 2-3, 78, 21-22 (for now, public marketing materials, pending ruling on "trade secret" protective order motion), 25 (pending ruling, documents constituting or concerning communications with Pegatron not containing trade secrets) 26-27, 29, 30-31, 34, 36, 39, and 41. Id. ¶ 2. -3Case No. 09-CV-5812 RS (PVT) PS'. MOT. TO COMPEL & ENFORCE
SF:278690.3
2

Winston & Strawn LLP

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

1 2 3 4 5 6 7 8 9 10 11
101 California Street San Francisco, CA 94111-5894

Fusion Garage personnel and those people who worked on the CrunchPad or JooJoo tablet computers at issue in the case. Requests 9-11 seek documents concerning Fusion Garage complaints, if any, that TechCrunch was not providing sufficient resources to Fusion Garage and concerning TechCrunch's promises, if any, to Fusion Garage and fulfillment of them. Requests 2627 seek documents concerning the failed merger between Fusion Garage and CrunchPad, Inc. Request 41 seeks drafts and internal Fusion Garage communications leading up to the November 17, 2009 email that signaled the end of the joint venture. Fusion Garage's Exploits Related to the CrunchPad and JooJoo. Request 29 seeks documents concerning communications with Fusion Garage creditors that discuss or refer to the CrunchPad, JooJoo, and similar relevant topics. Requests 30-31 seek documents concerning communications with highly-involved third parties PayPal (processes payments for Fusion Garage) and McGrath Power (Fusion Garage's PR firm). Request 34 seeks documents concerning contracts, agreements, or understandings concerning the CrunchPad or the project to develop it. Request 36 seeks information about sales and order of the JooJoo. Request 39 seeks documents concerning the selection of the JooJoo brand name. Pending a ruling on its "trade secret" protective order motion, Fusion Garage agreed to produce public marketing materials for the CrunchPad and JooJoo in response to Requests 21-22. Similarly, for Request 25, Fusion Garage agreed to produce documents not containing its trade secrets that were communications with manufacturer Pegatron. There is no dispute over the relevance or burden of these requests. Fusion Garage has already agreed to produce responsive documents. It simply refused to do so in a timely fashion. Similarly, Fusion Garage's PR firm, McGrath Power, through Fusion Garage's counsel, agreed to produce documents that TechCrunch sought by subpoena once the Court entered a protective order. The Court has done so. The subpoena seeks just three categories of documents: those concerning Fusion Garage and its personnel from late 2008 to the present, those concerning TechCrunch and the CrunchPad project, and those concerning publicity, marketing, and communications about Fusion Garage's tablet computer. (See Bloch Decl. ¶ 3 & Exh. B.) McGrath has produced not a single document to date. -4PS'. MOT. TO COMPEL & ENFORCE
SF:278690.3

Winston & Strawn LLP

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Case No. 09-CV-5812 RS (PVT)

1 2 3 4 5 6 7 8 9 10 11
101 California Street San Francisco, CA 94111-5894

One, but only one, of Fusion Garage's excuses to avoid producing any additional materials is Fusion Garage's dilatory motion for protective order ­ a motion in which Fusion Garage seeks to avoid producing so-called "trade secret" information despite the facts that there is a comprehensive stipulated protective order in place and there are no trade secret causes of action that would require a staggered approach to discovery. The Court took the matter under submission on March 17. (Dkt. No. 36.) Fusion Garage's motion for protective order is dilatory, but even aside from that issue Fusion Garage is withholding large number of documents that the motion does not implicate. Fusion Garage has no basis whatsoever for failing to produce these documents at once. In any case, the Court should order production of all documents responsive to the requests for production that Fusion Garage has erroneously termed "trade secret" requests. Fusion Garage raised no other objection to responding to these requests in its protective order motion other than its "trade secrets" argument, and production is now proper, overdue, and necessary. These requests, Nos. 4-5, 12-25, 32-33, 35, 37-38, and 43-46, seek documents concerning Fusion Garage's work on a tablet computer before and after its venture with TechCrunch and key design documents for the CrunchPad and JooJoo. These documents are relevant and Fusion Garage must produce them at once. For the sake of the upcoming preliminary injunction motion, and TechCrunch's reply deadline of April 22, 2010, as well the April 14, 2010 deposition of Fusion Garage's principal, the Court should order Fusion Garage's immediate production of documents and grant this motion. Dated: April 5, 2010 WINSTON & STRAWN LLP

Winston & Strawn LLP

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

By:

/s/ Andrew P. Bridges David S. Bloch Matthew A. Scherb Attorneys for Plaintiffs

-5PS'. MOT. TO COMPEL & ENFORCE
SF:278690.3

Case No. 09-CV-5812 RS (PVT)