Tessera, Inc. v. Sony Corporation

Filing 123

ORDER denying 95 Motion for Relief from Non-Dispositive Pretrial Order of Magistrate Judge. The court schedules this case for a Status Conference on 12/14/2012 at 10:00 a.m. On or before 12/7/2012, the parties shall file Joint Status Conference Statement which describes the parties' agreement in connection with the discovery at issue, or if one has not been reached, describes the parties' respective positions on the issue. Signed by Judge Edward J. Davila on 11/26/2012. (ejdlc1, COURT STAFF) (Filed on 11/26/2012)

Download PDF
1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE NORTHERN DISTRICT OF CALIFORNIA 9 SAN JOSE DIVISION CASE NO. 5:11-cv-04399 EJD TESSERA, INC., 11 ORDER DENYING DEFENDANT’S MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER OF MAGISTRATE JUDGE Plaintiff(s), For the Northern District of California United States District Court 10 12 13 v. SONY CORPORATION, 14 [Docket Item No(s). 95] Defendant(s). 15 16 / Presently before the court is Defendant Sony Corporation’s (“Defendant”) motion pursuant 17 to Civil Local Rule 72-2 for relief from a non-dispositive discovery ruling issued by Magistrate 18 Judge Howard R. Lloyd. See Docket Item No. 95. Plaintiff Tessera, Inc. (“Plaintiff”) has filed 19 written opposition to the motion according to this court’s briefing order. See Docket Item No. 121. 20 For the reasons explained below, Defendant’s motion will be denied. 21 22 I. BACKGROUND The action underlying this dispute is one for breach of contract and breach of the covenant of 23 good faith and fair dealing. The subject contract is a License Agreement between Plaintiff and 24 Defendant, pursuant to which Defendant was obligated to pay certain royalties to Plaintiff in 25 exchange for the use of Plaintiff’s technology. The agreement also provided Plaintiff with the right 26 to examine Defendant’s records. Plaintiff conducted an audit of Defendant’s records in 2011 for the 27 years 2006 through June 2010. According to Plaintiff, the audit revealed additional royalties 28 1 CASE NO. 5:11-cv-04399 EJD ORDER DENYING DEFENDANT’S MOTION FOR RELIEF FROM NON-DISPOSITIVE PRETRIAL ORDER OF MAGISTRATE JUDGE 1 payable by Defendant. Plaintiff also contends that Defendant did not permit the auditors to inspect 2 all relevant records. necessary to calculate damages, including information about products made by third-parties which 5 carry Defendant’s brand name. Defendant objected to the requests as overbroad and burdensome 6 based on its interpretation of key language in the License Agreement, which Defendant believes 7 limits royalty payments to products made by Defendant or designed by Defendant but manufactured 8 by others. The parties could not informally resolve their dispute and presented it to Magistrate 9 Judge Lloyd. After briefing and hearing on the matter, Judge Lloyd first recommended the parties 10 reach an agreement limiting the scope of production, but ultimately ordered Defendant to comply 11 For the Northern District of California In discovery, Plaintiff sought documents and information from Defendant it believed 4 United States District Court 3 with Plaintiff’s discovery requests no later than November 8, 2012. See Docket Item No. 83. Judge 12 Lloyd thereafter denied Defendant’s motion for leave to file a motion for reconsideration of the 13 discovery order. See Docket Item No. 103. Defendant now seeks relief from this court. 14 II. LEGAL STANDARD 15 The district court must consider any timely objections to a magistrate’s order on a 16 nondispositive motion and “modify or set aside any part of the order that is clearly erroneous or is 17 contrary to law.” Fed. R. Civ. P. 72(a); see also 28 U.S.C. § 636(b)(1)(A). This is a deferential 18 standard. See Grimes v. City & County of San Francisco, 951 F.2d 236, 241 (9th Cir. 1991). 19 Indeed, “[t]he reviewing court may not simply substitute its judgment for that of the deciding court” 20 or subject the magistrate judge’s ruling to a de novo review. Id. 21 Defendant assigns error to a decision concerning discovery and essentially seeks a protective 22 order limiting production to its interpretation of the contract. Subject to the court’s inherent power 23 to control the proceedings before it, “parties may obtain discovery regarding any nonprivileged 24 matter that is relevant to any party’s claims or defense.” Fed. R. Civ. P. 26(b). “Relevant 25 information need not be admissible at the trial if the discovery appears reasonably calculated to lead 26 to the discovery of admissible evidence.” Id. However, “[t]he court may, for good cause, issue an 27 order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or 28 2 CASE NO. 5:11-cv-04399 EJD ORDER DENYING DEFENDANT’S MOTION FOR RELIEF FROM NON-DISPOSITIVE PRETRIAL ORDER OF MAGISTRATE JUDGE 1 expense.” Fed. R. Civ. P. 26(c)(1). The requisite ‘good cause’ maybe shown “by demonstrating 2 harm or prejudice that will result from the discovery.” Rivera v. NIBCO, Inc., 364 F.3d 1057, 1063 3 (9th Cir. 2004). In this circuit, “[a] party asserting good cause bears the burden, for each particular 4 document it seeks to protect, of showing that specific prejudice or harm will result if no protective 5 order is granted.” Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1130 (9th Cir. 2003). 6 Generalizations are not enough. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 7 1992) (“Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning, do 8 not satisfy the Rule 26(c) test” (citation and quotation marks omitted)). 9 III. DISCUSSION In light of the broad standard for relevancy applied in discovery proceedings, the order 11 For the Northern District of California United States District Court 10 compelling Defendant to comply with the discovery requests was neither clearly erroneous nor 12 contrary to law. As Judge Lloyd appropriately recognized, Plaintiff is entitled to reasonable 13 damages discovery based on its interpretation of key language in the License Agreement. Although 14 Defendant disagrees with Plaintiff’s interpretation, neither Judge Lloyd nor this court can determine 15 the appropriate interpretation of contract language within the context of this discovery dispute. At 16 this point, that particular issue appears intertwined with the ultimate question presented by this case: 17 whether Defendant breached the License Agreement by failing to pay royalties according to its 18 terms. In that regard, Plaintiff has posited one interpretation of the key language; Defendant has 19 posed another. One may be more extreme, but it is not so extreme so as to be inconceivable. 20 Assuming the parties cannot resolve this action themselves, the court will eventually need to 21 determine which party has put forth the better argument. But that decision is not one that can be 22 accomplished now without the benefit of a more suitable motion addressing the merits of the 23 interpretation conflict. 24 The same is true of Defendant’s contention that Plaintiff’s discovery requests are overbroad 25 as to time. Judge Lloyd found that Plaintiff was entitled to information dating back to when the 26 License Agreement was executed in 1997 because the correct application of contract terms could not 27 be decided as part of a discovery disagreement. Again, both parties have proposed distinct, yet 28 3 CASE NO. 5:11-cv-04399 EJD ORDER DENYING DEFENDANT’S MOTION FOR RELIEF FROM NON-DISPOSITIVE PRETRIAL ORDER OF MAGISTRATE JUDGE 1 possible, ways to apply the License Agreement. That being the case, this court agrees with Judge 2 Lloyd that Plaintiff can obtain the information sought. 3 Finally, Defendant argues that the order compelling production could impose an extreme 4 burden, perhaps requiring Defendant to spend thousands of hours researching hundreds of thousands 5 of third-party products. Judge Lloyd found this contention unconvincing because Defendant could 6 not describe the process that would involved in such an undertaking, but nonetheless provided the 7 parties an opportunity to ease any potential burden by reaching an agreement to limit the production 8 to certain representative products. Procedure 26(b)(2)(C) (“[T]he court must limit the frequency or extent of discovery otherwise 11 For the Northern District of California While this court is certainly mindful of the directive contained in Federal Rule of Civil 10 United States District Court 9 allowed by these rules or by local rule if it determines that . . . the burden or expense of the proposed 12 discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, 13 the parties’ resources, the importance of the issues at stake in the action, and the importance of the 14 discovery in resolving the issues.”), it is also true that “[t]he party who resists discovery has the 15 burden to show that discovery should not be allowed, and has the burden of clarifying, explaining, 16 and supporting its objection.” Oakes v. Halvorsen Marine Ltd., 179 F.R.D. 281, 283 (C.D. Cal. 17 1998). Defendant has not met its burden here. Just as before Judge Lloyd, Defendant frames its 18 claim of undue burden only with generalities based on the entire universe of third-party products 19 manufactured for Defendant. But as Plaintiff points out, the discovery requests at issue pertain to 20 certain products containing ball grid array and land grid array packages, and Defendant’s motion as 21 well as the accompanying declaration of its general manager, Shinji Ina, are each silent as to this 22 categorical limitation. Moreover, Ina himself is only able to speculate as to the extent of any burden 23 (“Because Sony has so many products that contain chips, it is difficult to quantify the work that 24 would be involved in exhaustively searching each product.”). That is not enough. 25 In sum, Defendant’s did not establish the good cause required for the type of order it seeks, 26 particularly when Judge Lloyd provided an explicit mechanism to ameliorate Defendant’s concern 27 through an agreement narrowing the scope of production. In any event, the deferential standard 28 4 CASE NO. 5:11-cv-04399 EJD ORDER DENYING DEFENDANT’S MOTION FOR RELIEF FROM NON-DISPOSITIVE PRETRIAL ORDER OF MAGISTRATE JUDGE 1 which applies to these types of motions preclude this court from subjecting Judge Lloyd’s order to a 2 de novo review based on declarations presented for the first time in this motion even if this court 3 were inclined to decide the matter differently. 4 IV. ORDER 5 6 Based on the foregoing, Defendant’s motion is DENIED and all objections to Judge Lloyd’s order are OVERRULED. 7 Due to the delay caused by this proceeding, the court finds it appropriate to extend the that the parties reach an agreement defining a fair selection of products for which information will 10 be produced. Accordingly, the parties shall meet and confer on this issue forthwith, and the court 11 For the Northern District of California deadline for Defendant’s production. The court also strongly approves Judge Lloyd’s suggestion 9 United States District Court 8 schedules this case for a Status Conference on December 14, 2012, at 10:00 a.m. in order to 12 determine the parties’ progress in that regard. On or before December 7, 2012, the parties shall file 13 Joint Status Conference Statement which describes the parties’ agreement in connection with the 14 discovery at issue, or if one has not been reached, describes the parties’ respective positions on the 15 issue. 16 Defendant shall thereafter make its production - whether for agreed-upon products or for all 17 products absent an agreement - no later than December 31, 2012. 18 IT IS SO ORDERED. 19 20 Dated: November 26, 2012 EDWARD J. DAVILA United States District Judge 21 22 23 24 25 26 27 28 5 CASE NO. 5:11-cv-04399 EJD ORDER DENYING DEFENDANT’S MOTION FOR RELIEF FROM NON-DISPOSITIVE PRETRIAL ORDER OF MAGISTRATE JUDGE

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?