BladeRoom Group Limited et al v. Facebook, Inc.

Filing 778

ORDER granting 775 Motion to Clarify. Signed by Judge Edward J. Davila on 4/16/2018. (ejdlc1S, COURT STAFF) (Filed on 4/16/2018)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 BLADEROOM GROUP LIMITED, et al., Case No. 5:15-cv-01370-EJD Plaintiffs, 9 ORDER GRANTING DEFENDANTS’ MOTION TO CLARIFY v. 10 11 EMERSON ELECTRIC CO, et al., Re: Dkt. No. 775 United States District Court Northern District of California Defendants. 12 Emerson moves for clarification of the order granting in part and denying in part Plaintiffs’ 13 14 15 Motion in Limine No. 8. Dkt. No. 775. I. BACKGROUND Emerson’s Interrogatory Responses 16 A. 17 Plaintiffs served special interrogatories on Emerson during discovery. Interrogatory No. 18 20 asked Emerson to “[i]dentify each defense, if any, you assert against Plaintiffs’ 19 misappropriation of trade secrets claim and any facts, documents, or witnesses that support or 20 contradict each identified defense.” Dkt. No. 365, at Exs. 64-66. 21 Emerson provided initial and supplemental responses. Among its objections, Emerson 22 noted that it interpreted “the phrase ‘defense’ to mean affirmative defenses.” It then identified 23 “Readily Ascertainable/Fair Use/Justification” as a defense. Additionally, Emerson identified the 24 following witnesses between its two responses: David Gerhart, Eric Wilcox, Denis Rancic, Viktor 25 Petik, and the “Emerson Croatia Team,” which includes Stjepan Sinkovic. 26 B. 27 Plaintiffs sought through Motion in Limine No. 8 to preclude certain Emerson witnesses 28 Motion in Limine No. 8 Case No.: 5:15-cv-01370-EJD ORDER GRANTING DEFENDANTS’ MOTION TO CLARIFY 1 1 from testifying at trial. Dkt. No. 610. As relevant here, Plaintiffs argued that Emerson failed to 2 disclose witnesses other than Gerhart, Wilcox, Rancic, Petik, and Sinkovic to support an 3 Independent Development/Fair Use/Justification defense. Plaintiffs also argued that Jason 4 Gloekner, Lorenz Hofmann, John Hoeffner, Richard Jamison, David Klusas, Steve Madara and 5 Craig Shores should not be permitted to testify at all. In its ruling on the motion, the court agreed with Plaintiffs’ position that Emerson failed to 6 7 adequately disclose other witnesses for an Independent Development/Fair Use/Justification 8 defense, and issued an exclusion order under Federal Rule of Civil Procedure 37. Dkt. No. 737. 9 The court also found that Gloekner and Jamison should be excluded because Emerson failed to properly identify them in Rule 26 disclosures. The court denied the motion as to Hofman, 11 United States District Court Northern District of California 10 Hoeffner, Klusas, Madara and Shores, however, because Emerson listed those witnesses in 12 supplemental disclosures. 13 II. LEGAL STANDARD “A court may clarify its order for any reason.” Wahl v. Am. Sec. Ins. Co., No. C 08-0555 14 15 RS, 2010 WL 2867130, at *3 (N.D. Cal. July 20, 2010). This type of request “invite[s] 16 interpretation, which trial courts are often asked to supply, for the guidance of the parties.” 17 Bordallo v. Reyes, 763 F.2d 1098, 1102 (9th Cir. 1985). 18 The clarification of limine rulings is a particularly crucial exercise given their importance 19 to the evidentiary record at trial. See Luce v. United States, 469 U.S. 38, 40 n.2 (1984) (defining 20 in limine motions as “any motion, whether made before or during trial, to exclude anticipated 21 prejudicial evidence before the evidence is actually offered”). Moreover, “even if nothing 22 unexpected happens at trial, the district judge is free, in the exercise of sound judicial discretion, to 23 alter a previous in limine ruling.” Id. at 41-42. 24 III. DISCUSSION 25 Emerson argues the ruling on Motion in Limine No. 8 is a narrow one, such that it does not 26 prevent testimony from witnesses other than Gerhart, Wilcox, Rancic, Petik, and Sinkovic to show 27 that Emerson developed a different data center structure and cooling solution for Lulea 2 without 28 Case No.: 5:15-cv-01370-EJD ORDER GRANTING DEFENDANTS’ MOTION TO CLARIFY 2 1 using Plaintiffs’ trade secrets. The requested clarification is warranted. 2 Under CUTSA, Plaintiffs must prove (1) they owned a trade secret, (2) Emerson acquired, 3 disclosed, or used their trade secret through improper means, and (3) Emerson’s actions damaged 4 Plaintiffs. Cytodyn, Inc. v. Amerimmune Pharms., Inc., 160 Cal. App. 4th 288, 297 (2008). For 5 the second element, “improper means” includes “theft, bribery, misrepresentation, breach or 6 inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other 7 means” but excludes “[r]everse engineering or independent derivation alone.” Cal. Civ. Code § 8 3426.1(a). The burden of proof (which is synonymous with the burden of persuasion) on the 9 elements of trade secret misappropriation does not shift during trial; it remains with Plaintiffs at all 10 times. Sargent Fletcher, Inc. v. Able Corp., 110 Cal. App. 4th 1658, 1667 (2003). United States District Court Northern District of California 11 If Plaintiffs produce sufficient evidence to make out a prima facie misappropriation claim, 12 the burden of producing evidence - not the burden of proof - shifts to Emerson to refute Plaintiffs’ 13 prima facie case. Id. at 1668. Despite the shift, Emerson can choose not to offer any counter- 14 evidence because Plaintiffs are still obligated to persuade the jury. Id. at 1667-68 (describing the 15 burden of proof, also known as the burden of persuasion, as “the notion that if the evidence if 16 evenly balanced, the party that bears the burden of persuasion must lose”). But if Emerson 17 chooses to submit counter-evidence, it can refute Plaintiffs’ prima facie case by showing it 18 independently derived its own data center technology, without use of Plaintiffs’ trade secrets. Id. 19 at 1669. 20 Independent derivation under CUTSA, therefore, is not an affirmative defense and a 21 “defendant does not have a ‘burden of proof’ to make that showing.” Id. The California Court of 22 Appeal has explained: 23 24 25 26 27 28 [T]he two claims (improper use and denial of such use) are opposite sides of the same coin. The plaintiff’s proof that another party used plaintiff’s trade secret, to which another party gained access . . . and that the party’s identical or similar product incorporates the same design, is a prima facie showing that the party did not independently derive or reverse engineer the product. Evidence of independent derivation . . . directly refutes the element of use through improper means. Thus, a party that claims it independently derived . . . a component does not introduce ‘new matter’ or an affirmative Case No.: 5:15-cv-01370-EJD ORDER GRANTING DEFENDANTS’ MOTION TO CLARIFY 3 defense, but a traverse. 1 2 Id. at 1669-70. This distinction between an Independent Development/Fair Use/Justification affirmative 3 4 defense, on which Emerson would have the burden of proof, and a theory of non-use directly 5 refuting Plaintiffs’ misappropriation claim, on which Emerson has the burden of producing 6 evidence, makes a difference for this motion. The two concepts exist independently under 7 California law. Emerson’s responses to Special Interrogatory No. 20 only provided information 8 about affirmatives defenses, and there is no evidence Plaintiffs took action during the discovery 9 period to demonstrate a different understanding of its own interrogatory. Since the ruling on Motion in Limine No. 8 was based on an examination of Emerson’s interrogatory responses, it 11 United States District Court Northern District of California 10 must reflect the same limitation: the exclusion of witnesses other than Gerhart, Wilcox, Rancic, 12 Petik, and Sinkovic applies only to an Independent Development/Fair Use/Justification affirmative 13 defense, not to a responsive theory of non-use. Plaintiffs’ arguments in response to the Motion to Clarify do not persuade the court 14 15 otherwise. They cite Garter-Bare Company v. Munsingwear Inc., 723 F.2d 707 (9th Cir. 1984), 16 for the proposition that the burden of proof shifts to the defendant to show non-use, whether or not 17 that theory is presented as an affirmative defense. But Garter-Bare does not actually say that. 18 Rather than conducting a thorough analysis of burdens, the Garter-Bare court merely noted the 19 burden shifted to the defendant once the plaintiff successfully established a prima facie case. 20 Garter-Bare, therefore, is not inconsistent with the discussion recited above. 21 Nor does UniRAM Technology, Inc v. Taiwan Semiconductor Manufacturing Company, 22 No. C-04-1268 VRW, 2007 WL 2572223 (N.D. Cal. Sept. 5, 2007), assist Plaintiffs. There, the 23 exclusion of a fact witness was justified because his identity was not disclosed until after the close 24 of discovery. No similar issue is presented here. As far as the court understands the issue, 25 Emerson does not propose to present the testimony of witnesses who were never disclosed in this 26 case. 27 28 Finally, Plaintiffs’ characterization of the non-use theory as a significant change to this Case No.: 5:15-cv-01370-EJD ORDER GRANTING DEFENDANTS’ MOTION TO CLARIFY 4 1 action rings hollow. Emerson’s response to Special Interrogatory No. 20 incorporated the 2 following statement: “[Emerson] disputes that Plaintiffs can satisfy their burden of proof with 3 respect to each and every element of their claim for misappropriation of trade secrets.” Plaintiffs 4 were therefore notified well before trial that Emerson intended to challenge their ability to satisfy 5 the burden of proof. And since § 3426.1(a) lists only two exclusions to the definition of “improper 6 means,” how Emerson might go about doing so is not a great mystery. Accordingly, Emerson’s Motion to Clarify (Dkt. No. 775) is GRANTED, and the ruling on 7 8 Motion in Limine No. 8 is clarified according to the preceding discussion. 9 IT IS SO ORDERED. 10 United States District Court Northern District of California 11 12 13 Dated: ______________________________________ EDWARD J. DAVILA United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case No.: 5:15-cv-01370-EJD ORDER GRANTING DEFENDANTS’ MOTION TO CLARIFY 5

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