Newmark Realty Capital, Inc. v. BGC Partners, Inc. et al

Filing 98

ORDER DENYING 78 MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER OF MAGISTRATE JUDGE. Signed by Judge Beth Labson Freeman on 8/7/2017. (blflc4, COURT STAFF) (Filed on 8/7/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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NEWMARK REALTY CAPITAL, INC.,
Plaintiff,

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v.

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BGC PARTNERS, INC., et al.,

ORDER DENYING MOTION FOR
RELIEF FROM NONDISPOSITIVE
PRETRIAL ORDER OF MAGISTRATE
JUDGE

Defendants.

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United States District Court
Northern District of California

Case No. 16-cv-01702-BLF

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Plaintiff Newmark Realty Capital, Inc., a mortgage brokerage and banking firm, owns a

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family of trademarks for use in the field of commercial real estate. Compl. ¶¶ 16-17, ECF 1.

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Claiming to be the rightful owner of the trademark “Newmark Realty Capital,” as well as other

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“Newmark” marks, Plaintiff asserts that Defendants are infringing on these marks, and further

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seeks to enjoin Defendants from using the marks. Id. ¶¶ 17-20, 50 et seq. Before the Court is

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Defendants’ motion for relief from a protective order (“Order”) issued by Magistrate Judge Susan

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van Keulen. Mot., ECF 78; see Order, ECF 74. The Court has considered Judge van Keulen’s

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Order, and the parties’ submissions in connection with this motion. For the reasons discussed

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below, the motion is DENIED.

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I.

LEGAL STANDARD
A district court may refer nondispositive pretrial matters to a magistrate judge under 28

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U.S.C. § 636(b)(1)(A). The district court “may reconsider any pretrial matter under this

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subparagraph (A) where it has been shown that the magistrate judge’s order is clearly erroneous or

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contrary to law.” 28 U.S.C. § 636(b)(1)(A); see also Fed. R. Civ. P. 72(a). On review of a

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nondispositive order, “the magistrate’s factual determinations are reviewed for clear error, and the

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magistrate’s legal conclusions are reviewed to determine whether they are contrary to law.” Perry

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v. Schwarzenegger, 268 F.R.D. 344, 348 (N.D. Cal. 2010). This standard is highly deferential –

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the district judge may not simply substitute his or her judgment for that of the magistrate judge.

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Grimes v. City and Cnty. of San Francisco, 951 F.2d 236, 241 (9th Cir. 1991).

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II.

DISCUSSION
Judge van Keluen issued the protective order in response to the parties’ dispute over

whether Defendants’ in-house counsel can have access to materials designated as “HIGHLY

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CONFIDENTIAL – ATTORNEYS’ EYES ONLY” (“AEO materials”). See Order, ECF 74.

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Three of the attorneys representing Defendants are employed by Cantor Fitzgerald Securities (the

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“Cantor attorneys”), an affiliate of Defendant Newmark & Company Real Estate, Inc. Mot. 1,

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ECF 78. Plaintiff initially sought to preclude all of Defendants’ in-house counsel, including the

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United States District Court
Northern District of California

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Cantor attorneys, from accessing any AEO materials. In response, Defendants requested Judge

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van Keulen to permit access by designated in-house counsel under certain conditions. ECF 69.

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Defendants further urged Judge van Keulen to name the Cantor attorneys as designated in-house

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counsel under the protective order because they are not involved in competitive decision-making

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for Defendants. See id. at 2. To aid Judge van Keulen in that decision, the parties submitted

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additional briefing on whether the three Cantor attorneys to whom Defendants want to give access

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to Plaintiff’s AEO materials are engaged in competitive decision-making. ECF 69.

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On July 18, 2017, Magistrate Judge van Keulen issued the protective order. See Order,

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ECF 74; see also Order on Protective Order Dispute, ECF 73. The protective order includes a

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provision regarding “Designated House Counsel,” as requested by Defendants. However, based

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on the parties’ supplemental submissions describing Defendants’ in-house litigation model and the

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roles and responsibilities of the Cantor attorneys, Judge van Keulen also incorporated additional

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safeguards to protect Plaintiff from possible harm stemming from allowing the Cantor attorneys to

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access the AEO materials. For example, the relevant restrictions would bar the Cantor attorneys

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for two years after termination of this case from advising Defendants on “strategic or operational

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decision making related to their businesses,” among other activities set forth in paragraph 7.4(d),

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without Plaintiff’s written consent. See Order ¶ 7.4(d).

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In filing this motion for relief, Defendants requests this Court to eliminate these additional
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safeguards set forth in paragraph 7.4(d) of the protective order. Proposed Protective Order, ECF

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78-2. Defendants claim that the restrictions are overly burdensome and essentially restrict

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Defendants’ choice of counsel. Mot. 3-4. According to Defendants, such restrictions are also not

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narrowly tailored, because the protective order applies to all Defendants and their businesses

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regardless of whether the issue concerns Plaintiff or this trademark dispute. Id. at 4. Defendants

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further aver that Plaintiff is a competitor only with Defendant Newmark & Company Real Estate,

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Inc., but not with other named defendants. Id. In response to Defendants’ motion, Plaintiff argues

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that the safeguards built into paragraph 7.4(d) are necessary. Response 1, ECF 81. Plaintiff

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believes that the Cantor attorneys, including Mr. Michael Popok, are involved in competitive

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decision-making. Id. Without these safeguards, Plaintiff fears that the Cantor attorneys could

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United States District Court
Northern District of California

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move into a competitive decision-making role shortly after learning Plaintiff’s trade secrets. Id. at

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3.

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The Court does not find Judge van Keulen’s Order to be clearly erroneous or contrary to

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law. Judge van Keulen recognized the importance of balancing the interests and risks to the

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parties when allowing in-house counsel access to AEO materials. Order on Protective Order

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Dispute 1. Even though she determined that the Cantor attorneys should be able to access the

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AEO materials, she incorporated certain safeguards for Plaintiff’s trade secrets based on the

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declaration of Mr. Popok, a Cantor attorney. For example, Mr. Popok declared that the Cantor in-

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house litigation team does not advise Defendants on strategic or operational decision making

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related to their businesses, but instead works exclusively on litigation matters and certain

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employment matters. Id. at 2. The protective order merely sets forth this and other safeguards

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based on Mr. Popok’s own declaration. The table below, reproduced from Plaintiff’s response,

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illustrates that each restriction in paragraph 7.4(d) corresponds to what Mr. Popok declared not to

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be the role and responsibilities of the Cantor attorneys.

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Safeguards set forth in the protective order,
¶ 7.4(d)

Declaration of Michael Popok, ECF 70-1

Designated House Counsel shall not “(1) advise
Cantor Fitzgerald, BCG [sic], or [NGKF] on
strategic or operational decision-making related

“We do not advise Cantor Fitzgerald, BGC, or
[NGKF] on strategic or operational decision3

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United States District Court
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to their businesses”

making related to their businesses.”

Designated House Counsel shall not “(2) render “I do not render advice on or participate in
advice on or participate in competitive decision- competitive decision-making at Cantor
making at Cantor Fitzgerald, BCG, or [NGKF]” Fitzgerald or its affiliated entities, including
BGC and [NGKF].”
Designated House Counsel shall not “(3) play
any role in any decision of BCG or [NGKF]
relating to business strategy, pricing, marketing
strategies, product or service development,
sales, product or service expansion, geographic
expansion, acquisitions (aside from assisting
with litigation-related diligence), or any
competitive analysis outside of litigation”

“I play no role in any of BGC’s, [NGKF]’s
decisions relating to business strategy, pricing,
marketing strategies, product or service
development, sales, product or service
expansion, geographic expansion, acquisitions
(aside from occasionally assisting with
litigation-related diligence), or any competitive
analysis.”

Designated House Counsel shall not “(4)
supervise any personnel engaged in activities
identified in items (1)-(3) above”

“I do not supervise any personnel engaged in
such activities.”

Designated House Counsel shall not “(5) sit on
any business councils for Cantor Fitzgerald,
BCG, or [NGKF]”

“Nor do I sit on any business councils for
Cantor Fitzgerald or any of its affiliated
entities.”

Designated House Counsel shall not “(6) render
advice on or participate in trademark decisions,
including decisions relating to the adoption of
names or trademarks, by Cantor Fitzgerald,
BCG, or N&C, except in pending litigation.”

“I do not render advice on or participate in
Cantor Fitzgerald’s, BGC’s, or [NGKF]’s
trademark decisions—outside of pending
litigation. Except as my litigation judgment, just
like any outside litigator’s judgment, may bear
on their decisions, I do not advise Cantor
Fitzgerald’s, BGC’s, or [NGKF]’s management
in any decisions relating to the adoption of
names or trademarks.”

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As seen above, the activities prohibited by the protective order are very similar, if not
identical, to activities the Cantor attorneys are already refrained from engaging. As such, the
restrictions required by the protective order should have little to no impact on the roles and
responsibilities of the Cantor attorneys. Defendants thus fail to show why the restrictions would
be overly burdensome or would deprive Defendants of their choice of counsel. Accordingly, the
motion for relief from Judge van Keulen’s protective order is DENIED.
Nonetheless, the Court is concerned that this dispute over the protective order and
counsel’s opportunity to make AEO designations will itself spawn side litigation over the scope of
every AEO designation. To the extent the Court determines that overbroad AEO designations are
being made as tactical ploys, the parties are advised that they risk the Court determining that
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nothing in a document will be approved by the Court as AEO or subject to sealing. Counsel must

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be aware that the Court will not necessarily allow a more narrowly tailored redaction if the first

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designation is overbroad.

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IT IS SO ORDERED.

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Dated: August 7, 2017
______________________________________
BETH LABSON FREEMAN
United States District Judge

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United States District Court
Northern District of California

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