The Active Network, Inc. v. Monster Worldwide, Inc.

Filing 13

ORDER denying 1 Motion to Quash. Signed by Magistrate Judge Mitchell D. Dembin on 5/15/12. (Dembin, Mitchell)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 THE ACTIVE NETWORK, INC., CASE NO. 12cv785-CAB (MDD) Petitioner, 12 ORDER DENYING MOTION TO QUASH vs. 13 14 (Doc. No. 1) MONSTER WORLDWIDE, INC., Respondent. 15 16 Before this Court is the motion of Petitioner The Active Network, Inc. 17 (“Active”) to quash third-party subpoenas issued to Active by Respondent Monster 18 Worldwide, Inc. (“Monster”). Active also moves to disqualify the law firm Jones Day, 19 which represents Monster, from engaging in any discovery from Active. 20 Background 21 The underlying lawsuit was filed on December 16, 2011, in the Southern 22 District of New York and carries Case Number 11-civ-9262. In the underlying case, 23 Monster has sued Darko Dejanovic, Monster’s former Chief Information Officer now 24 employed by Active, alleging that he violated certain non-solicitation agreements 25 made with Monster. Active is not a party in the underlying case. The subpoenas at 26 issue were obtained in this District, where Active is headquartered, pursuant to 27 Fed.R.Civ.P. 45. 28 Active filed the instant motion on March 30, 2012. (Doc. No. 1). On April 13, -1- 12cv785-CAB (MDD) 1 2012, Monster filed a response in opposition, contending that this Court lacks 2 jurisdiction to decide the motion, and, in the alternative, that the subpoenas are 3 proper. (Doc. No. 7). Active replied on April 23, 2012. (Doc. No. 8). Discussion 4 5 1. Motion to Quash 6 Fed.R.Civ.P. 45(c)(3), provides that it is the issuing court that has the 7 authority to modify or quash subpoenas. The instant subpoenas were issued from the 8 United States District Court for the Southern District of California. Consequently, 9 this Court has jurisdiction to consider the motion to quash. Rule 45(c)(1) requires 10 that “A party or attorney responsible for issuing and serving a subpoena must take 11 reasonable steps to avoid imposing undue burden or expense on a person subject to 12 the subpoena.” The subpoena must be modified or quashed by the Court if it subjects 13 a person to undue burden. Rule 35(c)(3)(iv). 14 Active asserts that compliance would be an undue burden because of a conflict 15 of interest between Active and Jones Day. Active contends that Jones Day acquired 16 confidential information about Active when a Jones Day attorney, Mr. Howard, 17 represented Active and its employee, Ms. Roland, in a substantially similar matter. 18 Although Mr. Howard is not involved in the underlying case between Monster and 19 Mr. Dejanovic, Active contends that Mr. Howard’s knowledge of Active’s confidential 20 information should be imputed to Jones Day. Accordingly, Active seeks to disqualify 21 Jones Day from seeking discovery from Active in connection with the underlying 22 lawsuit. Monster counters that Mr. Howard neither formed an attorney-client 23 relationship with Active nor acquired confidential information from Active. 24 When a lawyer obtains confidential information from a previous client, he 25 may not later represent a client whose interests are adverse to the former client. Cal. 26 R. Prof. Conduct 3-310(E). The Court agrees that it would pose an undue burden for 27 an attorney with a clear conflict of interest to seek discovery from a former client. 28 Accordingly, the Court must proceed to determine if such a conflict exists in the -2- 12cv785-CAB (MDD) 1 present case. 2 First, it must be determined whether there was a “direct professional 3 relationship” between Active and Jones Day. City and County of San Francisco v. 4 Cobra Solutions, 135 P.3d 20, 25 (Cal. 2006). If Jones Day neither represented Active 5 nor obtained confidential information from Active, there is no conflict of interest. In 6 its motion, Active contends that Mr. Howard formed a direct professional relationship 7 with Ms. Roland when he dispensed legal advice to Ms. Roland in both her personal 8 capacity and as an employee of Active. Petitioner provides the sworn declaration of 9 Ms. Roland, in which she explains: 10 11 12 13 Because I had signed certain agreements with Visual Sciences that purported to restrict me from soliciting employees to join Active and/or that could expose Active to liability for such solicitation, I decided to consult legal counsel about the non-solicitation restrictions, compliance with those restrictions, and Active’s potential exposure for hiring employees in light of those restrictions. (Roland Decl. ¶ 3). Ms. Roland asserts that she contacted Mr. Howard for legal 14 advice “about the scope of our non-solicitation obligations.” Id. at ¶4. Ms. Roland 15 asserts that although she does not recall the entirety of the conversation, she does 16 recall that Mr. Howard advised her regarding the scope of the “non-solicitation 17 obligations and how Active should operate its business in light of those obligations 18 and on a going forward basis regarding other similar situations.” Id. at ¶5. Ms. 19 Roland asserts that she has put into practice the advice she received on how to “deal 20 with employees who join Active and who are subject to employee non-solicitations 21 with prior employers.” Id. Ms. Roland understood that this legal advice was to be 22 kept confidential and not used against her in the future. Id. 23 Monster counters that there was no prior relationship between Mr. Howard 24 and Active. (Doc. No. 7 at 6). Mr. Howard states in his declaration that his 25 discussions with Ms. Roland involved her non-solicitation agreement with Visual, an 26 agreement to which Active was not a party. (Howard Decl. ¶ 3). Mr. Howard claims 27 that his contemporaneous written notes of their conversations support his assertion. 28 Monster also contends that Ms. Roland’s declaration confirms that the topic of the -3- 12cv785-CAB (MDD) 1 conversation was her contract with Visual. (Roland Decl. ¶ 3). 2 According to Mr. Howard, the only time Active was discussed during his 3 conversations with Ms. Roland was with regard to whether Active could be compelled 4 to indemnify Ms. Roland if she was sued by Visual for violation of her non-solicitation 5 agreement. (Howard Decl. ¶ 3). As Monster notes, Ms. Roland’s interests in that 6 matter would potentially be adverse to Active. (Doc. No. 7 at 7). Monster 7 acknowledges that Mr. Howard offered to represent both Active and Ms. Roland if 8 they should be sued by Visual, and that Mr. Howard sent an engagement letter to 9 Active. Id. Active, however, chose not to sign the engagement letter and has not 10 retained Jones Day for any purposes. Id. Mr. Howard also gave a 30-45 minute 11 presentation to Active employees at Ms. Roland’s request. Id. at 8. The presentation 12 was on general wage and hour issues, not about hiring or non-solicitation 13 agreements. Id. According to Mr. Howard, at no point did he obtain confidential 14 information about or from Active. (Howard Decl. ¶¶ 8, 9).1 15 Active has not met its burden of establishing that a direct professional 16 relationship existed between Mr. Howard and Active. Ms. Roland’s statements 17 indicating that Mr. Howard provided advice to Active are countered by Mr. Howard’s 18 declaration that he did not. Active declined to sign a letter of engagement with Mr. 19 Howard or retain him or Jones Day for any purpose following Mr. Howard’s 20 consultation with Ms. Howard. Furthermore, Mr. Howard states that he did not 21 receive any confidential information from or about Active at any time. Active’s 22 motion ultimately rests on the idea that the subpoenas at issue are unduly 23 burdensome because Jones Day is in possession of confidential information about 24 Active provided either by Ms. Roland or by Active. Mr. Howard’s sworn statements 25 alleviate that concern. 26 27 28 1 Monster also notes that Mr. Howard did not bill for the advice he rendered to Ms. Roland or the presentation, and that he only spent a couple hours speaking with Ms. Roland during their meeting, and less than an hour giving the presentation. Id. at 7-8. Neither factor, however, prevents the formation of an attorney-client relationship. -4- 12cv785-CAB (MDD) 1 While it is likely that Mr. Howard had a professional relationship with Ms. 2 Roland, that does not automatically impute the relationship to Active, especially in 3 light of Ms. Roland and Active’s potentially adverse interests regarding indemnity. 4 According to Mr. Howard, his offer to represent both if Visual threatened suit was 5 based upon the assumption that the potential adversity could be resolved. (Howard 6 Decl. ¶6). As there is no previous professional relationship between Active and Jones 7 Day, the Court need not examine whether Active has met its burden of showing that 8 the representation concerned a substantially similar matter. 9 Accordingly, because Active is not a former client of Mr. Howard or Jones Day 10 and because the Court is satisfied that Mr. Howard did not obtain any confidential 11 information from or about Active during his relationship with Mr. Roland or while 12 providing a general wage and hour presentation to Active. The Court finds that it is 13 not unduly burdensome for Active to respond to the subpoenas. The motion to quash 14 is DENIED. 15 2. Motion to Disqualify 16 In their pleadings, the parties discuss whether this Court has jurisdiction to 17 consider Active’s motion to disqualify Jones Day from seeking discovery from Active 18 in connection with the underlying lawsuit. Active contends that the Court can 19 exercise its inherent authority to decide the motion. In opposition, Monster contends 20 that the court lacks jurisdiction because the motion requires the Court to issue an 21 order beyond the scope of Rule 45. Monster notes that Rule 45 only provides 22 authority to quash or modify a subpoena, not to disqualify a law firm from a case or 23 from discovery. Monster contends that it would be inappropriate for the Court, when 24 utilizing the narrow jurisdiction provided under Rule 45, to exercise its “inherent 25 authority” and decide a motion to disqualify. (Doc. No. 7). In its reply, Active re- 26 asserts that the Court has an independent obligation to enforce ethical rules. 27 28 The Court need not reach the issue. Active contends that disqualification is warranted because of a conflict of interest. As discussed above, this Court has found -5- 12cv785-CAB (MDD) 1 the Active has not sustained its burden, under Rule 45, to show that such a conflict 2 exists. 3 Even if the Court were to find a conflict, it would not necessarily require that 4 the Court disqualify Jones Day from seeking further discovery from Active. This 5 Court could satisfy its obligation by quashing the subpoena, thereby ending any 6 threat of immediate, unethical action. The Southern District of New York, where this 7 case is being litigated, would then be the proper venue to determine if further 8 protective measures are required.2 Accordingly, Active’s motion to disqualify is 9 DENIED WITHOUT PREJUDICE. Conclusion 10 11 12 13 Petitioner’s motion to quash is DENIED. Petitioner’s motion to disqualify is DENIED WITHOUT PREJUDICE. IT IS SO ORDERED. 14 15 DATED: May 15, 2012 16 17 Hon. Mitchell D. Dembin U.S. Magistrate Judge 18 19 20 21 22 23 24 25 26 2 27 28 It is also important to note that nothing in the pleadings suggests a wilful or gross violation of ethical rules, such that this Court would be required to immediately take action in order to uphold the integrity of the Courts. At most, Active’s pleadings suggest negligence on the part of Jones Day in failing to discover that an employee of a non-party was briefly the client of an attorney in a separate office. -6- 12cv785-CAB (MDD)

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