Actuate Corporation v. Finiti LLC
Filing
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ORDER RE DISCOVERY DISPUTE JOINT REPORTS #1-2 39 . Signed by Magistrate Judge Howard R. Lloyd on 1/31/12. (hrllc1, COURT STAFF) (Filed on 1/31/2012)
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** E-filed January 31, 2012 **
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California
NOT FOR CITATION
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United States District Court
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SAN JOSE DIVISION
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ACTUATE CORPORATION,
Plaintiff,
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v.
No. C10-02797 JW (HRL)
ORDER RE DISCOVERY DISPUTE
JOINT REPORTS #1 AND #2
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FINITI LLC; and DOES 1-10,
[Re: Docket No. 39]
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Defendants.
____________________________________/
Plaintiff Actuate Corporation (“Actuate”) brings suit against Finiti LLC (“Finiti”) for breach
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of contract and copyright infringement, claiming that Finiti has exceeded the number of “named
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user” licenses it purchased for Actuate’s software. Dkt. No. 1 (“Complaint”). The software in
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question is used to “pull information from databases, organize that information into reports, and
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then distribute that information to end users.” Dkt. No. 39, p. 2. Finiti uses the software to provide
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financing entities with products related to real estate sales and refinancing transactions. In broad
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terms, Actuate contends that Finiti purchased 400 “Named User” licenses and was only permitted to
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allow one individual per license to access the software or view reports generated by the software,
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but that Finiti far exceeded its licenses by sending reports to over 2,000 users total.
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Two discovery disputes have now arisen, so, pursuant to this Court's Standing Order re:
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Civil Discovery Disputes, the parties filed two separate Discovery Dispute Joint Reports (“DDJRs”)
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seeking judicial intervention. Dkt Nos. 39, 39 Exh. 1.
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DISCUSSION
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I.
Discovery Dispute Joint Report #1
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In the first DDJR, the parties disagree over Finiti’s response to Actuate’s Interrogatory No.
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2. See Dkt. No. 39, (“DDJR #1”). Actuate argues that Finiti’s response is insufficient and that Finiti
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has misconstrued the appropriate standard for determining the scope of discovery. Id. pp. 4-6. Finiti
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argues that the information requested is not relevant, and contends that Actuate must show “that it is
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actually entitled to control the content” generated using its software before it can seek the requested
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information Id. pp. 8-10.
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Actuate’s Interrogatory No. 2 asks Finiti to “IDENTIFY each person or entity who received
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content generated by the ACTUATE SOFTWARE YOU licensed from the time YOU first acquired
For the Northern District of California
United States District Court
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the ACTUATE SOFTWARE to the present.” DDJR #1, Exh. A at 4. In essence, Actuate is
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attempting to discover how many individuals actually received content generated by Actuate
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software because it contends that the applicable license agreement defines a “named user” as anyone
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who receives any report produced by the software. DDJR #1, p. 2-3. Finiti objected to the request on
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several boilerplate grounds (that it is overbroad, burdensome and oppressive, and vague and
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ambiguous), and argues that (1) the information sought is not relevant; and (2) Actuate must show
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“good cause” for the discovery request before Finiti has a duty to respond. DDJR #1, Exh. A at 4.
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Finiti assumed that “content” referred to in the interrogatory “is more complex than retrieved data,”
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and accordingly, responded to the interrogatory with “none.” Id. at 3-4.
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Fed. R. Civ. P. 26(b)(1) defines the scope of discovery as “any nonprivileged matter that is
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relevant to any party’s claim or defense—including . . . the identity and location of persons who
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know of any discoverable matter.” Under the standards imposed by the 2000 amendments to Rule
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26, a party may now only seek discovery of material relevant to any party’s claim or defense. This is
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narrower than the pre-2000 Rule, which permitted discovery of “any matter relevant to the subject
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matter involved in the action.” Fed. R. civ. P. 26(b)(1). However, Rule 26 expressly permits the
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courts to restore the pre-2000 standard “upon a showing of good cause.” Id.; see also Bernstein v.
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Travelers Ins. Co., 447 F. Supp. 2d 1100, 1102 (N.D. Cal. 2006).
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1. Relevance
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Finiti argues that the information sought is not relevant to Actuate’s claim. Actuate alleges in
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its complaint that Finiti purchased 400 “Named User” licenses, and that such licenses limit the
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purchaser from distributing reports generated by Actuate’s software to more users than the number
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of licenses purchased. See Dkt. No. 1, pp. 4-5 (“Complaint”). Actuate states that it served
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Interrogatory No. 2 because “the number and identity of the individuals receiving content . . . is the
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central material fact necessary to establish Finiti’s breach . . . .” DJR No. 1; p. 4. Finiti contends that
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the information sought is irrelevant because not all recipients of reported generated by Actuate
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software are Named Users. In essence, Finiti disagrees with Actuate’s construal of the license
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agreement and the term “Named User” and believes that it can avoid responding to the discovery
For the Northern District of California
United States District Court
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request as a result of that disagreement.
Under Rule 26, the test for relevance is simply “whether there appears to be a sufficient
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connection between the target of the discovery probe and the issues to be litigated” to support the
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conclusion that the requesting party will either uncover evidence or information that will help it find
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evidence. Bernstein, 447 F. Supp. 2d at 1105. That Finiti disagrees with Actuate’s depiction of the
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contract does not eliminate its duty to respond to discovery requests seeking information relevant to
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the claim Actuate has stated. This court will not take on the task of determining which party’s
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reading of the contract is correct. Rather, the court concludes that there is a sufficient connection
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between Interrogatory No. 2, which seeks the number of individuals who received Actuate software-
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generated content, and its claim for breach of the license agreement, which rests on Actuate’s ability
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to prove that Finiti exceeded the scope of the agreement. However, the interrogatory requests the
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identity of all users; it is not as clear whether such specificity is relevant. Actuate does not seem to
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distinguish in its complaint between Finiti employees who used Actuate software and Finiti
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customers who received reports generated by the software. Instead, Finiti argues, “the only
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information . . . relevant to Actuate’s claim would be the number of recipients.” DDJR No. 1; p. 8
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(emphasis added). Finiti states that it originally offered to produce the number, but then withdrew
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that offer. Id.
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Accordingly, the court finds that Actuate’s Interrogatory No. 2 is relevant insofar as it seeks
the number of individuals who received content generated by Actuate’s software from Finiti.
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2. Showing of Good Cause
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Finiti further argues that Actuate must “establish good cause through at least a prima facie
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showing that it is actually entitled to control the content generated by Finiti.” DDJR No. 1, p. 9.
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Finiti offers no authority to support this argument, and the court does not know of any that so holds.
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Rather, Actuate seems to have misconstrued the parameters of Rule 26. A showing of good cause is
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only required if a party seeks discovery beyond what is relevant to a “claim or defense,” and instead
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requests that the court permit it to discover information “relevant to the subject matter involved in
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the action.” Fed. R. Civ. P. 26(b). That is not the case here. The undersigned has determined that
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Actuate’s request, in part, does seek information relevant to its claim of breach of contract.
For the Northern District of California
United States District Court
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Therefore, no showing of good cause is required.
In addition, the court finds that Finiti’s objections that the request is overbroad, unduly
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burdensome, vague, and ambiguous are not persuasive. Finiti itself acknowledges that it was, at one
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point, willing to reveal the number of individuals who received reports. The argument that the
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request is “unduly burdensome” appears to relate only to the difficulty of providing identifying
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information for each individual. Finiti provides no support for its objections that the request is
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“vague and ambiguous” or “overbroad,” and the court finds those objections to be without merit.
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Accordingly, Finiti must reveal the number of individuals who received content generated by
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Actuate software, but it need not identify each of those individuals. Finiti shall have 14 days from
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the date of this order to do so.
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II.
Discovery Dispute Joint Report #2
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In the second DDJR, the parties argue over Finiti’s response to Actuate’s Request for
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Production #3 (“RFP”). Dkt. No. 39, Exh. 1 (DDJR No. 2), p. 1. Actuate argues that Finiti’s
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response is insufficient, and to the extent Finiti agreed to comply with the request, it has failed to
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produce the promised documents. Id. p. 4. It further contends that the RFP seeks relevant
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information tending to show (1) how Finiti used the Actuate software; and (2) who received content
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generated by the software. Id. Finiti argues that it has already provided an adequate response to the
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RFP and that any more detailed response would violate the privacy rights of its customers. Id. p. 6.
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Actuate is willing to limit the scope of its request but still seeks more documents than Finiti has
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provided. Id. p. 5. Finiti wishes for the court to order Actuate to use other discovery means, such as
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Rule 30 depositions, before compelling any further production. Id. p. 8.
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Actuate’s RFP No. 3 seeks “ALL DOCUMENTS that constitute, refer, or relate to any
objecting that the request is overbroad, vague, and ambiguous; but agreed to “produce documents
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sufficient to show the types of documents which resulted from Finiti’s use of the Actuate software at
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issue.” Id. at 3-4. Finiti asserts that it has provided blank template forms of all five types of
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document it has created using the Actuate software, as well as actual, completed forms that were
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redacted to protect the privacy of the individuals whose forms they were. Id. p. 6. Further, it
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For the Northern District of California
content generated by ACTUATE SOFTWARE.” DDJR No. 2, p. 3. Finiti responded to the RFP by
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United States District Court
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contends that complete compliance with the request would require it to produce 1.5 million
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documents, the entirety of the reports it produced over the two-year period that it used Actuate
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software. Id. p. 7.
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A party may seek “any nonprivileged matter that is relevant to any party’s claim or defense.”
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Fed. R. Civ. P. 26(b). In addition, “district courts have broad discretion to limit discovery where the
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discovery sought is ‘unreasonably cumulative or duplicative, or can be obtained from some other
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source that is more convenient, less burdensome, or less expensive.’” Uriarte v. Schwarzenegger,
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2011 U.S. Dist. LEXIS 111748, *4 (S.D. Cal. Sept. 29, 2011) (citing Fed. R. Civ. P. 26(b)(2)(C)).
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Moreover, a district court may balance the need for discovery against a claimed privacy right, but
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privacy “is not an absolute right, but a right subject to invasion depending upon the circumstances.”
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Ragge v. MCA/Universal, 165 F.R.D. 601, 604 (C.D. Cal. 1995).
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Here, the relevance of the requested documents is not at issue. Thus, the court will consider
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only whether and to what extent Actuate’s request should be limited to prevent unreasonable
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duplication of information or violation of privacy rights. As the parties have provided no authority
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to guide this court in its balancing of Actuate’s need for discovery with the risk of unreasonable
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duplication and Finiti’s alleged privacy concerns, the court will exercise the discretion permitted by
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Rule 26.
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First, the court will address the issue of unreasonable duplication of documents. The parties
appear to agree, at least to some extent, that production of every report Finiti generated using
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Actuate software would be unnecessary and burdensome. See DDJR No. 2, pp. 5, 7. Actuate has
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suggested that, instead of all documents Finiti ever produced using Actuate software, it would be
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willing to accept only those documents issued during a two-month period of Finiti’s “peak usage” of
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the software, which the parties could jointly identify. Id. p. 5. Finiti argues that even limiting
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production to a two-month period will lead to hundreds of duplicative records. Id. p. 7. The court
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concludes that while Finiti is likely correct that many documents will be duplicative in form, it is
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reasonable to permit discovery of a representative sample of the materials produced using Actuate
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software. The two month period suggested by Actuate is significantly narrower than its original
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request, and should adequately inform Actuate of the variety and frequency of documents Finiti
For the Northern District of California
United States District Court
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produces using Actuate software.
Next, the court considers the issue of privacy. The data sought appears to be limited to
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financial information, though Finiti has not described the private material and has not offered any
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argument that it should be treated as “especially private,” which would tend to strengthen its
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objection. See Kaufman & Broad Monterey Bay v. Travelers Prop. Cas. Co. of Am., 2011 U.S. Dist.
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LEXIS 59724, *11 (N.D. Cal. 2011). Actuate does not offer any argument regarding the
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discoverability of customers’ private information. Therefore, in the interest of protecting Finiti’s
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customers, who are not parties to this action and may have no knowledge that reports detailing their
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real estate transactions are at issue in this request, the court finds that some privacy protection is
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warranted. Finiti has not convinced the court that it is necessary to redact all customer information
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from its documents before production. Instead, the court orders Finiti to redact only such
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information as would reveal the identities of the customers who received the reports, such as social
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security numbers, full names, and addresses.
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Finally, the court addresses a point that is mentioned only in passing in the DDJR. Actuate
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states in its “most reasonable proposal” that Finiti must be made to produce “original electronic
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copies” of documents “so that the metadata stored in those documents can show what programs
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created the document.” DDJR No. 2, p. 5. Apparently, this is relevant to address Finiti’s claim that
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its “proprietary work flow” program, Skipjack, also participates in the generation of reports. Id. p. 7.
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Neither party addresses, and this court does not know, whether it would be possible to produce
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original electronic copies of documents while still redacting identifying customer information.
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Therefore, the court will not rule on this request of Actuate’s until and unless it receives further
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briefing from the parties on the feasibility of such an order.
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Accordingly, the parties shall meet and confer within 14 days of the date of this order to
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establish an appropriate two-month-long “peak usage” period, for which Finiti shall produce all
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reports generated using Actuate software. In the same time frame, the parties shall also consider the
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feasibility of producing “original electronic copies” of reports that will allow Actuate to confirm that
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the reports came from its software while protecting Finiti’s customers’ private data. Finiti shall have
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30 days from the date the parties agree on the peak usage period to produce the documents. In
For the Northern District of California
United States District Court
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addition, Finiti may redact information necessary to protect the identities of its customers, such as
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social security numbers, full names, and addresses. Should the parties require an order from this
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court regarding the production of documents in a particular format, they may address their request to
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the undersigned in the form of a further Discovery Dispute Joint Report.
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CONCLUSION
Within 14 days of the date of this order:
1. Finiti shall produce the total number of individuals who ever received reports generated
by Actuate software; and
2. the parties shall meet and confer to:
a. set a two-month “peak usage period” for which Finiti shall produce all reports
generated using Actuate software; and
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b. determine the feasibility of producing “original electronic copies” that will show
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Actuate software was used to create the documents while still permitting Finiti to
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redact the private information detailed above.
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3. Finiti shall have 30 days from the date the parties come to a decision regarding the two
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issues outlined about to produce the necessary documents. Finiti may redact such
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information as is necessary to protect the identity of its customers, such as social security
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numbers, full names, and addresses.
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IT IS SO ORDERED.
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Dated: January 31, 2012
HOWARD R. LLOYD
UNITED STATES MAGISTRATE JUDGE
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For the Northern District of California
United States District Court
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C10-02797 JW (HRL) Notice will be electronically mailed to:
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James Lee
Daniel Taylor
Enoch Liang
Jeffrey Lowenthal
Edward Smith
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jml@ltlcounsel.com
dt@ltlcounsel.com
ehl@ltlcounsel.com
jlowenthal@steyerlaw.com
esmith@steyerlaw.com
Counsel are responsible for distributing copies of this document to co-counsel who have not
registered for e-filing under the court’s CM/ECF program.
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For the Northern District of California
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