TimesLines, Inc v. Facebook, Inc.
Filing
84
MEMORANDUM by Facebook, Inc. in Opposition to motion for miscellaneous relief 76 from the Protective Order (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C)(Willsey, Peter)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
TIMELINES, INC.
Plaintiff,
v.
FACEBOOK, INC.
Defendant.
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Civil Action No.: 11 CV 6867
Jury Trial Demanded
DEFENDANT FACEBOOK, INC.’S OPPOSITION TO PLAINTIFF TIMELINES, INC.’S
MOTION FOR RELIEF FROM THE PROTECTIVE ORDER
I.
INTRODUCTION
In its motion seeking relief from the protective order (the “Motion”), Plaintiff Timelines,
Inc. (“Plaintiff”) requests an order permitting Mr. Brian Hand, Plaintiff’s Chairman, Co-Founder,
and sole employee, to review some of the most highly confidential financial information
disclosed by Defendant Facebook, Inc. (“Facebook”) in this action – i.e., (a) internal financial
spreadsheets containing granular data associated with Facebook’s revenue (Bates Nos.
FB_TL_0011912 and 119191), and (b) expert reports and exhibits assessing the same.
With the parties’ stipulation, the Court entered a protective order (the “Protective Order”)
on April 24, 2012, to shield a producing party in this action from the disclosure of such highly
confidential, commercially sensitive information to employees of the other party. In the Motion,
Plaintiff has not articulated a legitimate reason why the Court should now reverse course and
permit Mr. Hand to review such information.
Further, Plaintiff failed to mention in the Motion the fact that Facebook previously agreed
to disclose to Mr. Hand almost the entirety of the expert reports and the exhibits at issue,
provided that Mr. Hand execute a non-disclosure agreement (“NDA”).
Plaintiff rejected
Facebook’s attempt to reach a compromise regarding this issue, instead choosing to burden this
Court and Facebook with another discovery dispute that could have been resolved without
judicial intervention. As discussed below, Facebook is still willing to allow Mr. Hand to review
portions of the expert reports and the exhibits thereto if he executes an NDA.
II.
BACKGROUND
In or about November 2012, Plaintiff’s counsel first requested that Facebook waive the
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Plaintiff requests the disclosure of “FB-TL 0011912 - 11919” to Mr. Hand in the Motion. In subsequent
correspondence with Plaintiff’s counsel, however, counsel has clarified that Plaintiff seeks the disclosure of
FB_TL_00011912 and 11919 -- i.e., the two financial spreadsheets produced by Facebook, not all of the documents
within the identified Bates range.
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“Highly Confidential-Outside Counsel Only” designation of the opening damages expert reports
of both Plaintiff’s expert, Mr. David A. Haas, and Facebook’s expert, Mr. Christopher J.
Bokhart, in order to allow Mr. Hand to review the reports in full. After counsel met and
conferred regarding this issue, Facebook agreed that if Mr. Hand executed an NDA, Facebook
would consent to the disclosure of the bodies of the expert reports as well as most of the exhibits
to the reports. (See correspondence attached as Exhibit A.) Under Facebook’s proposal, Mr.
Hand would not be able to review the most granular, highly confidential information that formed
the basis for the damages expert reports; however, he would be able to review the entirety of the
experts’ analyses and conclusions as well as detailed charts and graphs pertaining to the same.
The purposes of the proposed draft NDA were twofold:
(1) to comply with the
provisions of the Protective Order requiring the parties to enter into a written agreement before
disclosing highly confidential information to individuals like Mr. Hand, i.e., those outside the
scope of the Protective Order; and (2) to provide Facebook with an added measure of protection
for the highly sensitive financial information to be disclosed to Mr. Hand. (See copy of proposed
NDA attached as Exhibit B.) The NDA essentially only required Mr. Hand to maintain the
confidentiality of the disclosed financial information.
On December 14, 2012, Plaintiff’s counsel sent an email to Facebook’s counsel refusing
to disclose portions of the experts reports and exhibits to Mr. Hand in a “piecemeal” manner, and
claimed that he would prepare a motion seeking an exception from the Protective Order for Mr.
Hand. (Ex. A.) Plaintiff’s counsel stated that Facebook’s counsel could “take a look at the
motion and then let me know if [F]acebook objects.” (Id.) Plaintiff’s counsel never shared his
draft motion with Facebook’s counsel. In fact, until the filing of the present Motion, Facebook’s
counsel had not heard from Plaintiff’s counsel about this matter since his December 14 email.
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III.
ARGUMENT
Pursuant to Paragraph 5 of the Protective Order, a party may designate as “Highly
Confidential-Outside Counsel Only” any document or piece of information that “it reasonably
and in good faith believes is of such a . . . commercially or competitively sensitive nature that
disclosure to persons other than those [specified in the Order] could reasonably be expected to
result in injury to that Party.” (Docket No. 55 ¶ 5.) The Protective Order specifically identifies
“financial data, reports or analysis” as one category of confidential information that may be
designated as “Highly Confidential-Outside Counsel Only.”
Facebook produced the financial spreadsheets at issue (Bates Nos. FB_TL_0011912 and
11919) in response to Plaintiff’s discovery requests. At the time of production, Facebook
designated the spreadsheets as “Highly Confidential-Outside Counsel Only” because the
spreadsheets contain commercially and competitively sensitive information associated with
Facebook’s revenue.
Specifically, the spreadsheets together disclose Facebook’s revenue
figures relating to advertising impressions on the profile and timeline pages of Facebook’s
website on a monthly basis from September 2010 to September 2012 – which constitutes a
period of time both before and after Facebook became a publicly traded company. In addition,
one of the spreadsheets provides granular revenue, impression, and click data associated with
advertising relating to Facebook’s “profile” and “timeline” pages, broken down by various
Facebook advertisement products. This information is highly competitively sensitive and the
“Highly Confidential-Outside Counsel Only” designation for the information remains reasonable
and appropriate.
Both damages experts executed the undertaking attached to the Protective Order before
reviewing any confidential documents in this action. In assessing Plaintiff’s damages or lack
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thereof, both experts relied heavily on Facebook’s “Highly Confidential-Outside Counsel Only”designated financial spreadsheets.
Thus, the experts designated their reports as “Highly
Confidential – Outside Counsel Only” at the time of disclosure.
In its Motion, Plaintiff does not challenge the commercially sensitive nature of the
financial documents at issue and the related expert reports and exhibits. Instead, Plaintiff
speculates that the documents may not warrant protection under the Protective Order because the
data contained in the documents “may already be public, or may soon become public.” (Pl.’s
Mem. in Supp. Mot., p. 3, Dkt. No. 78.) As Timelines is well aware, however, the documents
produced contain unaudited financials (Dep. Tr. of Mr. Samuel Lessin 198:9-11), and
Facebook’s public disclosures are not made at anything approaching the level of detail contained
in these confidential documents. (See excerpts from Form 10-k, filed February 1, 2013, attached
as Exhibit C; also available online at http://investor.fb.com/results.cfm). Accordingly, Facebook
appropriately designated the spreadsheets as “Highly Confidential-Outside Counsel Only” at the
time of production and that designation remains appropriate; likewise, Mr. Haas and Mr. Bokhart
appropriately designated their expert reports at the time of disclosure.
Plaintiff contends that Mr. Hand needs to review Facebook’s financial spreadsheets and
the related expert reports “because his knowledge of the same is critical to his ability to continue
overseeing this case and participating in the trial.” (Pl.’s Mem. in Supp. Mot., p. 3, Dkt. No. 78.)
Yet the monthly total revenue figures and granular data relating to advertising revenue,
impressions, and clicks have no bearing on whether Mr. Hand is able to manage this litigation or
participate in the trial. Mr. Hand can assess the merits of the claims and defenses in this matter
without such information. Further, to the extent either party finds it necessary to rely on such
granular data at trial, the parties can address the treatment of such information in their pretrial
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motions and during the pretrial conference. It is premature for the parties and the Court to
address that issue now while Facebook’s summary judgment motion is pending.
Furthermore, through its counsel, Facebook has already notified Plaintiff that Facebook
will consent to the disclosure of portions of the expert reports and the exhibits thereto, provided
that Mr. Hand executes an NDA. Plaintiff’s unwillingness to have Mr. Hand execute an NDA to
date is at odds with Plaintiff’s cursory contention in its Motion that “Mr. Hand would of course
keep the information confidential.” (Pl.’s Mem. in Supp. Mot., p. 4, Dkt No. 78.)
In a further effort to resolve this discovery dispute, Facebook proposes that if Mr. Hand
executes Facebook’s proposed NDA, Facebook will agree to the disclosure of the bodies of the
expert reports of Mr. Haas (both opening and rebuttal) and Mr. Bokhart, as well as the exhibits
thereto, with the exception of: (a) Exhibits 3.1 and 3.2 and Amended Exhibits 3.1 and 3.2 of Mr.
Haas’s expert report and (b) Exhibit 4 of Mr. Bokhart’s expert report. Facebook’s financial
spreadsheets are reproduced or otherwise incorporated in Exhibits 3.1 and 3.2 and Amended
Exhibits 3.1 and 3.2 of Mr. Haas’s report, as well as Exhibit 4 of Mr. Bokhart’s report.
Facebook should not have to disclose such highly confidential material to Mr. Hand under the
Protective Order.
IV.
CONCLUSION.
For the reasons stated above, Facebook respectfully requests that the Court deny
Plaintiff’s Motion.
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Dated: February 5, 2013
Respectfully submitted,
By:
/s/ Peter J. Willsey
Peter J. Willsey (pro hac vice)
Brendan J. Hughes (pro hac vice)
COOLEY LLP
1299 Pennsylvania Ave., NW, Suite 700
Washington, DC 20004
Phone: (202) 842-7800
Fax: (202) 842-7899
Email: pwillsey@cooley.com
bhughes@cooley.com
Michael G. Rhodes (pro hac vice)
COOLEY LLP
101 California Street, 5th Floor
San Francisco, CA 94111-5800
Phone: (415) 693-2000
Fax: (415) 693-2222
Email: rhodesmg@cooley.com
Steven D. McCormick (IL Bar No. 1824260)
KIRKLAND & ELLIS LLP
300 North Lasalle
Chicago, IL 60654-3406
Tel: (312) 862-2000
Fax: (312) 862-2200
Email: smccormick@kirkland.com
Counsel for Defendant-Counterplaintiff
FACEBOOK, INC.
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CERTIFICATE OF SERVICE
The undersigned, an attorney, hereby certifies that he served the foregoing
DEFENDANT FACEBOOK, INC.’S OPPOSITION TO PLAINTIFF TIMELINES, INC.’S
MOTION FOR RELIEF FROM THE PROTECTIVE ORDER by means of the Court’s
CM/ECF System, which causes a true and correct copy of the same to be served electronically on
all CM/ECF registered counsel of record, on February 5, 2013.
Dated: February 5, 2013
/s/ Brendan J. Hughes
Peter J. Willsey (pro hac vice)
Brendan J. Hughes (pro hac vice pending)
COOLEY LLP
1299 Pennsylvania Ave., NW, Suite 700
Washington, DC 20004
Phone: (202) 842-7800
Fax: (202) 842-7899
Email: bhughes@cooley.com
Counsel for Defendant-Counterplaintiff
FACEBOOK, INC.
184280 /DC
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