BladeRoom Group Limited et al v. Facebook, Inc.

Filing 795

ORDER denying 788 Motion to Strike. The hearing on this motion scheduled for 5/2/2018 is VACATED. Signed by Judge Edward J. Davila on 5/1/2018. (ejdlc1S, COURT STAFF) (Filed on 5/1/2018)

Download PDF
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 DENYING DEFENDANTS’ MOTION TO STRIKE v. 10 11 EMERSON ELECTRIC CO., et al., Re: Dkt. No. 788 United States District Court Northern District of California Defendants. 12 Emerson moves to strike the damages of opinions of Plaintiffs’ expert, Michael Wagner, as 13 14 15 based on unsupported factual assumptions. Dkt. No. 788. This motion will be denied. I. LEGAL STANDARD The assumptions underlying an expert’s opinion must be supported by specific facts. See 16 17 United States v. Various Slot Machs. on Guam, 658 F.2d 697, 700 (9th Cir. 1981); see also 02 18 Micro Intern. Ltd. v. Monolithic Power Sys., Inc., 399 F. Supp. 2d 1064, 1076-77 (N.D. Cal. 19 2005). Without such supporting facts, an expert’s opinion is not helpful to the jury and can be 20 excluded. See Fed. R. Evid. 702(a). 21 22 II. DISCUSSION A plaintiff must prove three elements to sustain a claim for misappropriation of trade 23 secrets under CUTSA: “(1) the plaintiff owned a trade secret, (2) the defendant acquired, 24 disclosed, or used the plaintiff’s trade secret through improper means, and (3) the defendant’s 25 actions damaged the plaintiff.” Cytodyn, Inc. v. Amerimmune Pharms., Inc., 160 Cal. App. 4th 26 288, 297 (2008). The standard elements a plaintiff must satisfy to prove breach of contract are 27 “‘(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s 28 Case No.: 5:15-cv-01370-EJD ORDER DENYING DEFENDANTS’ MOTION TO STRIKE 1 1 breach, and (4) damage to plaintiff therefrom.’” Wall St. Network, Ltd. v. New York Times Co., 2 164 Cal. App. 4th 1171, 1178 (2008) (quoting Regan Roofing Co. v. Super. Ct., 24 Cal. App. 4th 3 425, 434-35 (1994)). 4 The third element of trade secret misappropriation and the fourth element of breach of contract, both of which require evidence that the defendant’s conduct caused any purported 6 damages, are at issue. To that end, Emerson argues Plaintiffs failed to present sufficient evidence 7 to support the causation assumptions on which Wagner’s lost profits and unjust enrichment 8 opinions rest. In essence, Emerson believes it is appropriate for the court to determine the issue of 9 causation as a matter of law for these categories of damages because undisputed evidence shows 10 that Plaintiffs cannot meet the applicable standard. See Kurinj v. Hanna & Morton, 55 Cal. App. 11 United States District Court Northern District of California 5 4th 853, 864 (1997) (“The issue of causation may be decided as a question of law only if, under 12 undisputed facts, there is no room for a reasonable difference of opinion.”). 13 14 Because the relevant evidence of causation is not undisputed, the court must decline Emerson’s motion. 15 A. 16 “Determining whether a defendant’s misconduct was the cause in fact of a plaintiff’s injury Authority Governing Damages Causation 17 involves essentially the same inquiry in both contract and tort cases.” Tribeca Cos., LLC v. First 18 Am. Title Ins. Co., 239 Cal. App. 4th 1088, 1103 (2015). 19 “‘The test for causation in a breach of contract . . . action is whether the breach was a 20 substantial factor in causing the damages.’” Id. (quoting US Ecology v. California, 129 Cal. App. 21 4th 887, 909 (2005)). “Similarly, in tort cases, ‘California has definitively adopted the substantial 22 factor test.’” Id. (quoting Rutherford v. Owens-Illinois, Inc., 16 Cal. 4th 953, 968-69 (1997)). 23 Under that test, “‘a cause in fact is something that is a substantial factor in bringing about the 24 injury.’” Id. (quoting Rutherford, 16 Cal.4th at 968-69). 25 “The term ‘substantial factor’ has not been judicially defined with specificity, and indeed it 26 has been observed that it is ‘neither possible nor desirable to reduce it to any lower terms.’” 27 Rutherford, 16 Cal. 4th at 696. The California Supreme Court has suggested, however, “[u]ndue 28 Case No.: 5:15-cv-01370-EJD ORDER DENYING DEFENDANTS’ MOTION TO STRIKE 2 1 emphasis should not be placed on the term ‘substantial.’” Id. But at the same time, “a force which 2 plays only an ‘infinitesimal’ or ‘theoretical’ part in bringing about injury, damages or loss is not a 3 substantial factor.” Id. 4 5 6 B. Application i. Lulea 2 Proposal Emerson argues its alleged conduct could not have cost Plaintiffs the contract to design and construct Facebook’s Lulea 2 data center because undisputed evidence shows that Plaintiffs 8 ultimately declined to offer a “full solution” proposal and took themselves out of consideration. 9 Though Emerson recognizes that Plaintiffs submitted a proposal for Lulea 2 in July, 2012, 10 Emerson states it “was not in response to a request for proposal and instead was part of an 11 United States District Court Northern District of California 7 informal cost study Facebook’s Tin Tse was conducting as part of his research and development.” 12 Emerson contends that when Facebook’s Marco Magarelli actually asked Plaintiffs for a proposal 13 that would accommodate Sweden’s arctic conditions, Plaintiffs “elected to advise Facebook that 14 [Plaintiffs] would not submit a proposal because [Plaintiffs] did not have a ‘full solution’ for those 15 arctic conditions.” On that basis, Emerson surmises that Plaintiffs’ “August 2013 decision to not 16 bid on Lulea 2 severed any causal link between anything Emerson did and [Plaintiffs’] non-receipt 17 of a Lulea 2 contract.” 18 The trial record does not support Emerson’s characterization of the evidence as undisputed. 19 As an initial matter, Trial Exhibit 1457 does not unequivocally establish that the proposal 20 Plaintiffs submitted to Facebook in July, 2012, was something other than a “full solution” 21 proposal for the design and construction of Lulea 2. Though Facebook’s Tse internally 22 characterized the proposal as “an extension” of a research and development project to other 23 Facebook employees, Plaintiffs’ Barnaby Smith did not characterize it that way in his initiating 24 email. To the contrary, Smith described the document as “the proposed design to meet the full 25 30MW requirement for 4 No. 7 data halls, a technical specification, commercials and an outline 26 programme for how we will deliver the requirement in a fast, scalable way.” Smith also testified 27 that he sent the email at Trial Exhibit 1457 with a “full proposal for the data center” after 28 Case No.: 5:15-cv-01370-EJD ORDER DENYING DEFENDANTS’ MOTION TO STRIKE 3 1 Facebook asked Plaintiffs to submit a proposal for Lulea 2 following the meeting in the United 2 Kingdom in June, 2012. Tr., 1117:20-1118:8; 1193:1-13. Nor does the admitted evidence establish that Facebook requested an additional proposal in 3 4 August, 2013, or that Plaintiffs declined that request. Reviewing his email dated August 9, 2013, 5 at Trial Exhibit 1469, Facebook’s Magarelli testified he was “pretty confident” he was not asking 6 Plaintiffs for another Lulea 2 proposal on that date, but was asking for “customization of their 7 design to meet our requirements” for Lulea 2. Id. at 2712:19-2713:2. In addition, Plaintiffs’ 8 Smith testified that Plaintiffs did not decline a request for proposal in August, 2013, due to “artic 9 conditions.” Id. at 1235:25-1236:13. Smith stated Plaintiffs had designed around those conditions, but were waiting for further detail from Facebook on the Lulea 2 project. Id. at 11 United States District Court Northern District of California 10 1236:7-1237:17. As such, there is evidence in the record upon which a reasonable jury could find that 12 13 Plaintiffs did, in fact, submit a proposal for the design and construction of Lulea 2 to Facebook. 14 To that extent, Wagner’s lost profits and unjust enrichment opinions are not inadmissible merely 15 because those opinions are based on the assumption that Plaintiffs submitted a proposal for Lulea 16 2. 17 18 ii. Prime Contractor Role Alternatively, Emerson argues that undisputed evidence proves “that Emerson was ready, 19 willing and able to serve as prime contractor even if Facebook hired someone else to build the data 20 hall” at Lulea 2, and that Plaintiffs were not able to serve as the prime contractor but were only 21 interested in designing and constructing the data hall. Emerson contends that it would have been 22 selected for that role since it was the only bidder for that work, and that Wagner failed to account 23 for that fact when calculating his unjust enrichment opinion. 24 But again, the evidence on this issue is not undisputed. As Emerson points out, 25 Facebook’s Tse testified that Emerson was the only company being considered for “everything 26 else” - the portion of Lulea 2 other than the data hall. Id. at 1527:22-1529:8. Tse also testified, 27 however, that Emerson had not built any modular data centers as of June, 2012, and did not offer a 28 Case No.: 5:15-cv-01370-EJD ORDER DENYING DEFENDANTS’ MOTION TO STRIKE 4 1 modular product, but that a modular solution was one of the design requirements for the Lulea 2 2 data center. Id. at 1401:6-12; 1442:8-11; 1502:7-1503:24. Moreover, Emerson’s Pouchet testified 3 that Facebook would not award the Lulea 2 project to Emerson unless it provided the design that 4 Facebook wanted. Id. at 1707:20-1708:20. A reasonable jury could therefore find that Emerson’s alleged misappropriation was a 5 6 “substantial factor” in obtaining any role in the design and construction of Lulea 2, including as 7 prime contractor, because Facebook required a modular solution. Wagner’s unjust enrichment 8 opinion is therefore not inadmissible for relying on this assumption without apportioning for 9 “landing Facebook as client in the prime contractor role, without the data hall.” 10 United States District Court Northern District of California 11 12 III. ORDER Emerson’s Motion to Strike (Dkt. No. 788) is DENIED. The hearing on this motion scheduled for May 2, 2018, is VACATED. 13 14 15 16 17 IT IS SO ORDERED. Dated: May 1, 2018 ______________________________________ EDWARD J. DAVILA United States District Judge 18 19 20 21 22 23 24 25 26 27 28 Case No.: 5:15-cv-01370-EJD ORDER DENYING DEFENDANTS’ MOTION TO STRIKE 5

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?