MicroVention, Inc. v. Balt USA, LLC
MicroVention, Inc. v. Balt USA, LLC
2022 WL 17222225 (C.D. Cal. 2022)
October 12, 2022
Scott, Karen E., United States Magistrate Judge
Summary
The court sustained Balt's objections to the disputed RFPs based on relevancy and disproportionality/burden. The court found that MVI had not provided sufficient evidence to show that Balt had played a large enough role in post-misappropriation updates to the Magic, Eclipse, and Hybrid product lines to establish a probability that the updates implicate MVI's trade secrets. As a result, the court did not order Balt to provide additional discovery related to the Electronically Stored Information.
Additional Decisions
MICROVENTION, INC.
v.
BALT USA, LLC
v.
BALT USA, LLC
Case No. 8:20-cv-02400-JLS-KESx
United States District Court, C.D. California
Filed October 12, 2022
Counsel
Callie A. Bjurstrom, Michelle A. Herrera, Pillsbury Winthrop Shaw Pittman LLP, San Diego, CA, Chaz Matthew Hales, Chloe Stepney, Evan Finkel, Michael S Horikawa, Pillsbury Winthrop Shaw Pittman LLP, Los Angeles, CA, for Plaintiff.Alexander Ding Zeng, Knobbe Martens Olson and Bear LLP, Los Angeles, CA, Nicholas Andrew Belair, Knobbe Martens Olson and Bear LLP, San Francisco, CA, Paul A. Stewart, William Oscar Adams, Sheila N. Swaroop, Knobbe Martens Olson and Bear LLP, Irvine, CA, for Defendant Balt USA, LLC.
Mark A. Finkelstein, Molly J. Magnuson, Ellen Sooyoun Kim, Umberg Zipser LLP, Irvine, CA, for Defendant David Ferrera, Nguyen Jake Le, Michelle Tran.
Scott, Karen E., United States Magistrate Judge
PROCEEDINGS (IN CHAMBERS): Order DENYING Plaintiff's Motion to Compel Discovery (Dkt. 190, 192)
I. BRIEFING.
*1 On August 26, 2022, the Court conducted a telephonic discovery hearing on a motion filed by Plaintiff MicroVention, Inc. (“Plaintiff” or “MVI”) to compel Defendant Balt USA, LLC (“Defendant” or “Balt”) to provide additional discovery. (Dkt. 200 [minutes].) The Court directed the parties to provide further briefing regarding Issue No. 4 listed in Plaintiff's August 25, 2022 Letter Brief to the Court (Dkt. 192). That issue relates to Plaintiff's request that Defendant produce financial documents and other documents relating to all Balt products in response to Requests for Production (“RFPs”) 161, 165, 169, 173, 177, 181, 200, 204, 208, 212, 216, 220, 224, 229, 233, 237, 241, 245, 249, 250, 254, and 263.[1] While Balt provided responses to these RFPs as to some products, it objected to providing discovery about a group of products defined as the “Other Balt Products”[2] on grounds of relevance and disproportionality/burden, generally arguing that based on the timing and location of the development of the Other Balt Products (e.g., years ago and by Defendant's parent company in France), the Other Balt Products cannot have incorporated trade secrets allegedly misappropriated from Plaintiff. The Court ordered further briefing because this is a fact-intensive relevancy dispute addressed in only a few sentences in the parties' original letter briefs.
Consistent with the Court's instructions, the parties filed a Joint Brief on September 2, 2022. (Dkt. 203.) It consists of exhibits, Defendant's briefing in support of its relevancy objection (Dkt. 203-1), and Plaintiff's responding brief raising new relevancy arguments (Dkt. 203-5), including a supporting expert declaration.
After the Joint Brief was filed, Defendant filed a request for a hearing. (Dkt. 204.) Defendant contends that “MVI relied upon eight new exhibits to argue that Balt's personnel were involved in the design or development of products that were actually designed and developed by Balt's parent in France. See Dkt. 203-5 at 2 of 4. Balt could explain at a discovery conference how MVI is misconstruing its eight new exhibits ....” (Id. at 2.) Defendant also requests to address the new theory of relevance offered through Plaintiff's expert's declaration and how “MVI is misconstruing the contents of the website, which is the website of the entire Balt group of companies, including Balt's parent in France.” (Id. at 3.)
*2 While the Court had intended to take the matter under submission based on the first Joint Brief, the Court was troubled by Defendant's contentions that the current briefing contained inadvertent factual misstatements and/or misinterpretations of Defendant's documents. The Court, therefore, denied Defendant's request for a hearing but authorized supplemental briefing. (Dkt. 205.) Consistent with this order, on September 16, 2022, the parties filed a Second Joint Brief. (Dkt. 208 [redacted].)
II. SUMMARY OF THE PARTIES' ARGUMENTS.
MVI's initial relevancy argument for the disputed RFPs was as follows:
Balt has failed to produce documents identifying the Other Balt Products and has thus deprived MVI of the ability to assess whether they are subject to MVI's misappropriation claims. ... Moreover, even if such products are not directly implicated by MVI's misappropriation claims, financial information pertaining to them, e.g. profitability and margin, is relevant to the comparative value of the products that are directly implicated by MVI's misappropriation claims.
(Dkt. 192 at 4.)
Balt contended that the Other Balt Products were irrelevant as products that (1) preexisted the alleged misappropriation; (2) were developed by Balt's parent company based in France; and/or (3) were “categorically different from any MVI product implicated in the allegedly misappropriated documents.” (Dkt. 194 at 3.) In the first Joint Brief, Balt made the following arguments as to why RFP responses for each of the Other Balt Products was not relevant:
Product Magic Eclipse2L Hybrid Squid Argument “The only specific assertion of relevance MVI offered during the August 26 hearing was that Balt had recently applied to the FDA for approval of a new Magic catheter. MVI hypothesized, without evidence, that Balt may have funneled MVI's alleged trade secrets to Balt's parent in France to improve the Magic catheter. But the referenced FDA filings relate to the introduction of a Magic catheter having a smaller diameter than the original catheter (see Ex. B (FDA 510k Summary No. K202366)) and a version having the same design, but with an expanded indication of use compared to the original (see Ex. C (FDA 510k Summary No. K213435)). Although Balt USA assisted with the regulatory submissions for these versions, they were designed and developed by Balt's parent. MVI has never alleged that the diameter of a catheter – a feature readily apparent upon inspection of the product – is somehow an MVI trade secret.” (Dkt. 203-1 at 2.) “[T]he Eclipse double lumen balloon was developed by Balt's parent in France in 2015, before Balt even acquired Blockade (now Balt USA).” (Dkt. 203-1 at 3.) “Balt's Hybrid guidewire was introduced by Balt's parent company in France in 2010, before the formation of either Blockade or Balt USA, and thus before either of these two entities could have engaged in any alleged misappropriation.” (Id.) “Squid is a more recent product that is currently in clinical trials in the U.S. It is a liquid embolic agent. None of the documents MVI contends Balt misappropriated relates to the design or development of liquid embolic agents.” (Id.)
MVI responded as to Magic that Balt was working closely with its parent company to develop recent changes that “may very well have benefited from the use MVI's stolen trade secrets. For example, MVI's catheter coating recipe and application process is a key trade secret in this case, and Magic is a coated catheter product. To claim that the Magic catheter should be taken off the table for discovery because it cannot possibly be related to MVI's trade secret misappropriation claims strains credulity.” (Dkt. 203-5 at 3.)
*3 MVI cited eight exhibits produced by Balt (the “Eight Exhibits”) and argued they showed that Balt had a larger and more recent role in the development of the Other Balt Products than Balt had represented in its briefing. MVI also submitted a declaration from damages expert Patrick Kennedy. The gist of that declaration is that “comparing development costs, manufacturing costs, profits and sales of products that allegedly benefited from use of MVI's trade secrets with products sold by [Balt] in the same space that did not use [MVI's] trade secrets can be useful in calculating [Balt's] unjust enrichment.” (Id.)
In the Second Joint Brief, Balt discusses each of the Eight Exhibits and argues MVI misconstrued them, because they do not actually show Balt played a broader or more recent role in the development of the Other Balt Products. (Dkt. 208 at 4-5.) Balt also challenges the Kennedy declaration as “proposing a meaningless comparison,” because (1) Balt USA does not have development or manufacturing costs associated with the Magic, Eclipse 2L, and Hybrid product lines; and (2) the disputed RFPs are far broader than the materials Dr. Kennedy identified as potentially relevant. (Dkt. 208 at 6.)
III. DISCUSSION.
The Court SUSTAINS Balt's objections to the disputed RFPs based on relevancy and disproportionality/burden.
As to the Squid products, MVI has not pointed to evidence to dispute Balt's evidence that this product line is categorically different, and that none of the documents MVI contends Balt misappropriated relates to the design or development of liquid embolic agents.
As to the Magic, Eclipse, and Hybrid product lines, Balt has presented evidence that these products were developed by its parent in France before the alleged misappropriation of MVI's documents/trade secrets. MVI's countervailing evidence (i.e., the Eight Exhibits) does not show that Balt played a large enough role in post-misappropriation updates to these products to establish a probability that the updates implicate MVI's trade secrets. Even if there is some minimal possibility that this occurred, the discovery sought through the disputed RFPs would not be justified under Rule 26's proportionality factors. The RFPs, as summarized in footnote 1, seek many different kinds of records over a long period of time. Such extensive discovery cannot be justified without a greater reason to think that the documents will contain relevant information.
*4 As for Dr. Kennedy's declaration, it does not establish the relevance of all (or even most) of the documents sought in the disputed RFPs which include requests for office expenses, timesheets, budgets, consumer surveys, etc. Relying on his expertise and records from MVI, Dr. Kennedy can offer opinions about what it cost MVI to develop MVI's trade secrets and how Balt was unjustly enriched if it brought to market products that incorporate MVI's trade secrets without expending such research/development costs. He does not need documents responsive to the disputed RFPs to conduct such an analysis. The Court is not persuaded that using a categorically different kind of products (like the Squid) in a comparative analysis would provide a relevant comparator for calculating damages. Even if Balt could get old product development and manufacturing costs for catheter products from its French parent, Dr. Kennedy's declaration does not persuasively establish that such information would be relevant. If Balt misused MVI's trade secrets as alleged, it did so at a different time and in a different country, making any comparisons, if not completely meaningless, still of too limited value to justify compelling Balt to respond to the expansive RFPs.
Footnotes
Defendant summarized the disputed RFPs as follows: “documentation of research and development costs (RFPs 161, 200), market analyses (RFP 165), advertising (RFP 169), agreements regarding marketing or sale (RFP 173), business plans and related documents (RFPs 177, 181), budgets, timesheets, and financial plans for internal and external personnel (RFP 204), budgets and payments for work with third parties (RFP 212), historic price lists (RFP 216), evidence of the “financial impact” of the products (RFP 220, 245), monthly, quarterly, and annual financial statements (RFP 224), detailed income statements showing operating expenses including salaries, benefits, office expenses, and utilities (RFP 229), monthly financial reports reflecting costs and profits (RFP 233, 241, 250), audited and unaudited financial documents (RFP 249), and market studies, surveys, reports, customer responses, and analyses regarding competition, pricing, market share, and market size (RFP 254).” (Dkt. 203-1 at 2.)
The term “Other Balt Products” refers to the Magic, Eclipse2L, Hybrid, and Squid product lines.