Masimo Corporation v. Sotera Wireless et al

Filing 88

ORDER on Joint Motion for Determination of Discovery Dispute No. 3 (ECF No. 85 ). Masimo's motion to compel is granted. Signed by Magistrate Judge Nita L. Stormes on 11/16/20. (jmo)

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Case 3:19-cv-01100-BAS-NLS Document 88 Filed 11/16/20 PageID.17088 Page 1 of 5 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MASIMO CORPORATION, Case No.: 19cv1100-BAS (NLS) Plaintiff, 12 13 v. 14 ORDER ON JOINT MOTION FOR DETERMINATION OF DISCOVERY DISPUTE NO. 3 SOTERA WIRELESS; HON HAI PRECISION INDUSTRY CO., LTD., 15 Defendants. 16 17 18 19 20 21 22 23 24 25 26 27 28 [ECF No. 85] Before the Court is the parties’ Joint Motion for Determination of Discovery Dispute No. 3, wherein Plaintiff Masimo Corporation (“Masimo”) seeks to compel Defendant Sotera Wireless Inc. (“Sotera”) to produce emails of its former CEO Francis Chen (“Mr. Chen”). ECF No. 85. After due consideration and for the reasons discussed below, the Court GRANTS the motion to compel. I. BACKGROUND In its complaint, Masimo alleges that Sotera is infringing nine of its patents with its ViSi Mobile Monitoring System. ECF No. 52. Masimo also alleges that Sotera is Defendant Hon Hai Precision Industry Co.’s (“Foxconn”) alter ego because the two share a unity of interest and ownership. Id. at ¶¶ 20-23. Masimo alleges that Foxconn and Sotera commingle their employees, including Mr. Chen, whose emails are the subject of 1 19cv1100-BAS (NLS) Case 3:19-cv-01100-BAS-NLS Document 88 Filed 11/16/20 PageID.17089 Page 2 of 5 1 this dispute. Id. at ¶¶ 24-36. Further, Masimo alleges that Sotera is an agent of Foxconn 2 and Foxconn has control over the day to day operations of Sotera. Id. at ¶¶ 38-52. 3 The discovery at issue in this motion is a request in Masimo’s first set of email 4 requests, propounded on July 23, 2020, seeking Mr. Chen’s emails. Specifically, the 5 request was propounded under the parties’ agreed upon Order Governing Discovery of 6 Electronically Stored Information (“ESI Order”) (ECF No. 39). The request asks for: Masimo’s ESI Request. CUSTODIAN: Francis Chen; SEARCH TERMS: 1. Masimo!; 2. “Hon Hai” OR HonHai OR Foxconn; 3. Patent!; 4. (alarm limit!) OR (alarm threshold); 5. “Terry Guo” OR “T. Guo” OR “Guo, Terry”; TIMEFRAME: 2013-present. 7 8 9 10 ECF No. 85 at 7. The parties provide the following hit counts for these initial search 11 terms:1 12 Search Term Unique Emails Unique Emails with Families 13 Masimo* 1,161 1,896 14 “Hon Hai” OR HonHai OR Foxconn Patent* AND [full patent numbers] “alarm limit” OR “alarm threshold” “Terry Guo” OR “T. Guo” OR “Guo, Terry” TOTAL 3,253 5,096 < 155 155 140 488 9 27 <4,718 7,662 15 16 17 18 19 20 21 22 23 ECF No. 85 at 3. The search term that is in dispute between the parties is the second 24 term, “Hon Hai” OR HonHai OR Foxconn. For this term, Sotera informed Masimo that 25 “Hon Hai” OR HonHai yielded 37 unique emails (67 with families) and Foxconn yielded 26 27 28 1 Masimo agreed to further limit the Patent* search term during meet and confers. 2 19cv1100-BAS (NLS) Case 3:19-cv-01100-BAS-NLS Document 88 Filed 11/16/20 PageID.17090 Page 3 of 5 1 the remaining 3,343 unique emails (5,231 with families). 2 II. 3 The dispute between the parties centers on the “Hon Hai” OR HonHai OR DISCUSSION 4 Foxconn search term—specifically, the inclusion of the Foxconn term, which Sotera 5 claims is too broad and thus, too burdensome to review and produce. 6 Masimo argues that this search string is aimed to target relevant documents that 7 would go towards establishing Foxconn’s infringement, as well as Foxconn’s relationship 8 with Sotera. ECF No. 85 at 3. It argues that these emails from Mr. Chen are important 9 given his position with both companies. Id. at 1-2, 10-12. Furthermore, Masimo argues 10 that the hit counts are not too burdensome given the scope of this litigation. Id. at 4, 12. 11 Sotera counters that this search term is too broad, and searching for a term as broad 12 as “Foxconn” is of minimal relevance in a patent litigation lawsuit. Id. at 4, 14-15. It 13 argues that it would cost over $18,000 to review documents from just this one term, and 14 this is burdensome in the broad scope of discovery because Masimo has propounded 15 additional discovery, including other ESI terms that have generated significant hit counts 16 as well. Id. at 4, 16. 17 While this is a primarily a patent litigation lawsuit, Masimo has asserted alter ego 18 and agency claims against Foxconn. Masimo alleges that Foxconn has invested in Sotera 19 in a manner suggesting that the two share a unity of interest and ownership. ECF No. 52 20 at ¶ 20. As examples, Masimo points to large investments in Sotera by Foxconn, 21 resulting in a two-thirds equity stake in Sotera and two board seats. Id. at ¶¶ 20, 22. 22 Masimo alleges that Foxconn exercises controlling authority over Sotera, for example by 23 deploying its employees to work with Sotera in the United States and negotiating the 24 terms of a potential sale of Sotera. Id. at ¶¶ 22-23. Masimo alleges that employees are 25 shared between the two companies, including Mr. Chen and several other employees that 26 served roles on both companies at the same time. Id. at 24-30. For many of these same 27 reasons, Masimo also alleges that Sotera acts like an agent for Foxconn because Foxconn 28 has effectively taken over day to day operations at Sotera. Id. at 38-52. Thus, 3 19cv1100-BAS (NLS) Case 3:19-cv-01100-BAS-NLS Document 88 Filed 11/16/20 PageID.17091 Page 4 of 5 1 information regarding Foxconn and Sotera’s relationship would be relevant to these 2 claims. 3 Furthermore, this search term targets Mr. Chen’s emails and he does appear to 4 have had a significant role at the relevant time period before he resigned. Mr. Chen held 5 several executive level positions at Foxconn before he was appointed to be CEO of 6 Sotera from 2017 to mid-2020, even though he continue to reside in Taiwan. Id. at ¶ 24; 7 ECF No. 85 at 10. Masimo alleges that Mr. Chen publicly stated that he was holding the 8 simultaneous roles of “Chief Investment Officer, Healthcare Business Group” at Foxconn 9 and “Chief Executive Officer” at Sotera between June 2017 and July 2018. ECF No. 52 10 at ¶ 24. Masimo alleges it had communications with Mr. Chen, where Mr. Chen 11 represented that Foxconn had taken control of Sotera after it emerged from bankruptcy, 12 had changed the Sotera management team, was eager to have a healthcare company and 13 use Sotera technology in Taiwan, and had authority to resolve the trade secret dispute 14 between Masimo and Sotera. Id. at ¶¶ 32-36. The term “Foxconn” has been used to 15 represent Hon Hai as a registered trade name and on its corporate website and annual 16 reports. ECF No. 85 at 11. 17 The Court does acknowledge that the search term including Foxconn is fairly 18 broad. However, this must be balanced against the breadth of evidence that is relevant to 19 and can be used towards establishing an alter ego or agency theory. Masimo is entitled to 20 discovery that could go towards helping it establish these claims—claims which Sotera 21 denies. See ECF No. 61 at ¶¶ 20-52. It does not appear that either party has presented 22 any suggestion for how to tailor this term further. In the absence of further tailoring and 23 in light of Mr. Chen’s unique and central position, the Court finds that the balance tips in 24 favor of production of these emails from Mr. Chen. 25 26 Accordingly, the Court will GRANT the motion to compel and compel Sotera to review and produce Mr. Chen’s emails responsive to the search term, including Foxconn. 27 // 28 // 4 19cv1100-BAS (NLS) Case 3:19-cv-01100-BAS-NLS Document 88 Filed 11/16/20 PageID.17092 Page 5 of 5 1 III. 2 For the reasons stated above, Masimo’s motion to compel is GRANTED. 3 IT IS SO ORDERED. 4 CONCLUSION Dated: November 16, 2020 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 19cv1100-BAS (NLS)

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