Softketeers, Inc. v. Regal W. Corp.
Softketeers, Inc. v. Regal W. Corp.
2020 WL 4342850 (C.D. Cal. 2020)
June 3, 2020
Selna, James V., United States District Judge
Summary
The Court appointed a Special Master to assist in resolving discovery disputes. The Special Master recommended that Softketeers be required to make Duong available for a deposition. The Court overruled Defendants' objections to the Special Master's report and compelled Softketeers to disclose Duong's address. On April 7, Softketeers provided Defendants with Duong's address.
Additional Decisions
Softketeers, Inc.
v.
Regal West Corporation et al
v.
Regal West Corporation et al
Case No. SACV 19-519 JVS (JDEx)
United States District Court, C.D. California
Signed June 03, 2020
Counsel
Michael I. Katz, Erynn Leong Embree, Jared J. Braithwaite, Lannie Rex Sears, Maschoff Brennand Laycock Gilmore Israelsen and Wright PLLC, Irvine, CA, for Plaintiffs.Don Mai, for pro se.
Christopher M. Bruno, Nicole M. Jantzi, Paul M. Schoenhard, Sarah P. Hogarth, McDermott Will and Emery LLP, Washington, DC, Elham Ellie Hourizadeh, McDermott Will and Emery LLP, Los Angeles, CA, Jodi L. Benassi, McDermott Will and Emery LLP, San Francisco, CA, Mary D. Hallerman, Snell and Wilmer LLP, Washington, DC, for Defendants.
Selna, James V., United States District Judge
Proceedings: [IN CHAMBERS] Order Regarding Motion for Reconsideration
*1 Defendant and Counterclaimants Regal West Corporation, Vu Ho Inc., Thai Tran Inc., Randy Neeves, Vu Ho, Thai Quoc Tran, and Trung Ngoc Doan (together – “Defendants”) move for an order reconsidering the Court's April 3, 2020 Order overruling their objections to the February 9, 2020 Report of the Special Master, or in the alternative, for sanctions under Rule 37(c)(1). Mot., Dkt. No. 464 (sealed at 466). Plaintiff and Counterdefendant Softketeers, Inc. (“Softketeers”) opposes. Opp'n, Dkt. No 477. Defendants replied. Reply, 491.
For the following reasons, the Court GRANTS the motion.
I. BACKGROUND
The background of this case is familiar to the parties and the Court, and detailed extensively in the Court's prior orders. The Court includes factual and procedural background only as relevant to the instant motion.
Softketeers hired Nam Duong to surveil Regal software contractor VTSWay's office in Vietnam. See Declaration of Jessica D. Garcia, Dkt. No. 176-3, Exs. 11-12 (Nam Duong Decl.). Duong declared that Softketeers hired him to locate Vu Ho, Thai Quoc Tran, Trung Ngoc Doan, and Don Mai in Vietnam. Id. ¶ 3. On August 23, 2019, he went to VTSWay “to investigate,” and took photos of a computer screen there. Id. ¶¶ 46-52.
Softketeers used Duong's declaration in support of its motion for terminating and contempt sanctions on September 23, 2019, arguing that Defendants were violating the preliminary injunction order in this case by continuing to use Softketeers' source code. Dkt. No. 159.
In mid-November 2019, Defendants requested that Softketeers supplement its initial disclosures under Rules 26(e)(1) and 26(e)(1)(A)(i) to include Duong's address. Declaration of Paul M. Schoenhard (“Schoenhard Decl.”), Dkt. No. 464-1, Ex. 1. Defendants explained that Duong's address was necessary for the letter rogatory to Duong they intended to ask the Court to issue. Id. Softketeers refused, claiming that it did not know Duong's address.[1] Schoenhard Decl., Exs. 3, 4. Softketeers offered to facilitate a video deposition. Id. Softketeers also stated that it was not comfortable providing Duong's address “due to safety concerns.” Id., Ex. 4. On December 20, 2019, Softketeers supplemented its initial disclosures under Rule 26(e)(1)(A)(i) and listed Duong's address as unknown. Id., Ex. 6. Softketeers stated that Duong was likely to have information about “Defendants' continued possession of Softketeers source code,” and about the “[authenticity of photographs and video obtained at VTSWay.” Id.
On December 12, 2019, the Court appointed the Hon. James L. Smith to serve as Special Master to assist the Court in resolving discovery disputes in this case. Dkt. No. 258. The parties submitted various motions for the Special Master's consideration. Defendants sought to preclude Softketeers from relying on Duong's declaration and its attached evidence and preclude his testimony at trial. See Dkt. No. 321. At issue in the instant motion is Regal's motion for a preclusion sanction against Softketeers under Federal Rule of Civil Procedure 37(c)(1) for failing to disclose Duong's address.
*2 After conducting a hearing on January 31, 2020, the Special Master issued his Report & Recommendation (“R&R”) on February 9, 2020, which the parties received and filed on February 13, 2020. Dkt. No. 316. The Special Master recommended that Defendants' motion be held in abeyance, and that Softketeers be required to make Duong available for a deposition within 10 days, at a mutually agreeable time and place, but that “[f]ailing such agreement, the scheduling of the deposition should be submitted to the Special Master with direction and authorization to establish the time and place of the deposition without further order of Court.” R&R at 10-11. The Special Master's rationale was that Softketeers was not obligated to disclose Duong's address, because it had claimed it did not know the address. See, e.g., Dkt. No. 357 at 18 (“Softketeers has no duty to disclose an address it does not know.”).
On April 3, 2020, the Court overruled Defendants' objections to the Special Master's report regarding Defendants' requested preclusion sanction and held any award of sanctions in abeyance. The Court compelled Softketeers to disclose Duong's address, reasoning that once Duong's address was disclosed, the parties could agree upon the details of his deposition. The Court added that if Softketeers did not perform, the Special Master could still take action, as he detailed in his Report.
On April 7, Softketeers provided Defendants with Duong's address. Schoenhard Decl., Ex. 7.
COVID-19 restrictions in Viet Nam do not allow Mr. Duong to travel for deposition at present, and for the time being, Vietnamese law does not permit private attorneys to take testimony under oath. However, as we reported before, on March 4, 2020, Viet Nam signed onto the Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters, with an effective date of May 3, 2020, see https://www.hcch.net/en/instruments/conventions/status-table/?cid=82. So it may be that by the time restrictions lift, it will be possible to take Mr. Duong's deposition in Vietnam. Or, after restrictions lift, he could travel to Thailand or the United States. Please let us know how and when you would like to proceed.
Id. However, Defendants continue to suggest that taking a deposition of a Vietnamese national outside of Vietnam would violate Vietnamese law. Id., Ex. 9.
Now, Defendants ask that the Court either reconsider its prior order or issue a further decision on their motion for preclusion sanctions (held in abeyance), based on the argument that Softketeers has no intention of complying with the Order by producing Duong for a deposition. See generally Mot., Dkt. No. 466.
II. LEGAL STANDARD
The grounds for reconsideration are set forth in Local Rule 7-18, which provides:
A motion for reconsideration of the decision on any motion may be made only on the grounds of (a) a material difference in fact or law from that presented to the Court before such decision that in the exercise of reasonable diligence could not have been known to the party moving for reconsideration at the time of such decision, or (b) the emergence of new material facts or a change of law occurring after the time of such decision, or (c) a manifest showing of a failure to consider material facts presented to the Court before such decision. No motion for reconsideration shall in any manner repeat any oral or written argument made in support of or in opposition to the original motion.
L.R. 7-18.[2] The Court has discretion in determining whether to grant a motion for reconsideration. See Navajo Nation v. Confederated Tribes & Bands of the Yakima Indian Nation, 331 F.3d 1041, 1046 (9th Cir. 2003).
III. DISCUSSION
*3 Defendants ask the Court to preclude Duong from supplying evidence under Rule 37(c)(1). See generally, Mot., Dkt. No. 466. They also ask the Court to issue sanctions under Rule 37(c)(1)(A) or (C). See id. Defendants suggest that Softketeers' representations that it could facilitate Duong's deposition have proven to be false and that Softketeers has “no feasible plan” to meet its obligations under the Court's prior Order. Id. at 10. They note that they “never had the opportunity to follow the sole appropriate legal process for attempting to obtain documents from Nam Duong or to examine Nam Duong under penalty of perjury,” in connection with Softketeers' two rounds of contempt motions regarding preliminary injunction compliance. Id. And, Defendants suggest that even if travel restrictions stemming from COVID-19 ease, they likely would not be able to depose Duong outside of Vietnam without violating Vietnamese law. Id. Accordingly, the argue that the Court should now reconsider its prior Order or issue a preclusion sanction, based on Softketeers' failure to make the required disclosures about Duong or supplement those disclosures in a timely fashion. Id. They again ask the Court to award them attorney's fees under Rule 37(c)(1)(A) “for the now pointless effort to obtain Nam Duong's address.” Id. at 11.
Softketeers suggests that Defendants could have taken Duong's deposition – either by video, or in person – sometime in December until March but did not take the opportunity to do so. Opp'n at 2. Because travel restrictions are gradually being eased, Softketeers suggests that a deposition is still possible. Id. at 3-4. Softketeers also disputes that it would be illegal for an American attorney to take a Vietnamese national's deposition in the United States, based on its reading of a United States Department of State advisory, which states that “Vietnamese authorities do not permit foreign persons, such as American attorneys, to take depositions for use in a court in the United States.” Id. at 6. Softketeers additionally suggests that Defendants' motion for reconsideration was misdirected to this Court and should have been presented to the Special Master.
The Court finds that Defendants did not improperly present their motion to this Court, given that the Court had held an award of sanctions in abeyance. As Defendants argue, their “original motion remains pending with this Court,” and under Local Rule 7-17 their motion for reconsideration is also properly before this Court. Reply at 4. However, the Court notes that per the Report and Recommendation of the Special Master, Defendants could have also asked the Special Master to handle the details of the deposition, based on Softketeers' non-performance. See R&R.
It now appears to be impossible for Defendants to depose Duong, given legal questions and pandemic-related travel issues. The Court agrees with Defendants that under Rule 26 Softketeers had a duty of reasonable investigation regarding Duong's address, and that Softketeers unduly delayed providing it to Defendants. Reply at 5. This undue delay inhibited Defendants' ability to send a letter rogatory, an issue Softketeers did not seriously address in its opposition. Id. at 6-9; see Schoenhard Decl., Ex. 9. After the Court's April 3, 2020 Order issued, Softketeers seemed to acknowledge that an in-person deposition in Thailand or the United States is not possible, and Defendants present other reasons why it is not likely. Schoenhard Decl., Ex. 7; Reply at 6-8.
The Court finds that an automatic preclusion sanction under Rule 37(c)(1) is appropriate, and that Softketeers is no longer able to rely on Duong's testimony. Softketeers has not demonstrated that the failure to disclose Duong's address early enough in the discovery process was substantially justified or harmless. See R&R Sails, Inc. v. Ins. Co. of Pennsylvania, 673 F.3d 1240, 1246 (9th Cir. 2012). Indeed, the Court is persuaded by Defendants' arguments regarding prejudice resulting from not being able to question Duong about the contents of his declaration. Accordingly, the Court grants Defendants' motion, but declines to grant Defendants attorney's fees.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS the motion.
*4 The Court finds that oral argument would not be helpful in this matter. Fed. R. Civ. P. 78; L.R. 7-15.
The Court asks the parties to meet and confer and notify the Court which parts of the order should be redacted within 7 days.
IT IS SO ORDERED.
Footnotes
Defendants express skepticism that Softketeers could not know Duong's address, noting in opposition to Softketeers' renewed motion for contempt sanctions that Minh Nguyen had a pre-existing personal relationship, and even a business relationship, with Duong. SeeDkt. No. 398; see also Schoenhard Decl., Ex. 5. Defendants submitted evidence that Duong was an employee of Nguyen's other business, the Retail Exchange Network (RXN). Id.
See also School Dist. No. 1J, Multnomah Cnty. V. AcandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993) (reconsideration appropriate if the movant demonstrates clear error, manifest injustice, newly discovered evidence, or an intervening change in controlling law).