*1 Before the court is Plaintiff Zunum Aero, Inc.’s (“Zunum”) motion to compel discovery. (Mot. (Dkt. ## 145 (sealed), 186 (redacted)); see also Reply (Dkt. ## 176 (sealed), 174 (redacted)).) Defendants The Boeing Company and Boeing HorizonX Ventures, LLC (collectively, “Boeing”) oppose the motion. (Resp. (Dkt. # 167).) The court has considered the parties’ submissions, the relevant portions of the record, and the governing law. Being fully advised,[1] the court GRANTS in part Zunum's motion.

This case arises out of Zunum's allegations that Boeing misappropriated its trade secrets. Zunum, an upstart entrant in the aerospace industry, developed proprietary technology that, it asserts, could enable hybrid-electric or all-electric aircraft to be viable decades before the aerospace industry had previously thought possible. (2nd Am. Compl. (Dkt. # 60) ¶ 2.) Zunum alleges that its innovations included novel aircraft designs, propulsion systems, and electronic systems that could make air travel greener, faster, and less expensive. (Id. ¶ 3.)

In 2016, Zunum identified Boeing as a potential investor. (Id. ¶¶ 91, 93-94, 96.) Zunum and Boeing entered into a non-disclosure agreement (“NDA”) “pursuant to which Zunum shared information constituting trade secrets, and Boeing agreed to use the information only for limited purposes.” (Mot. at 1.) Between summer 2016 and early 2017, Boeing conducted due diligence to evaluate the potential for a partnership with Zunum. (2nd Am. Compl. ¶ 105.) On March 17, 2017, Boeing invested $5 million in Zunum. (Id. ¶ 125.) Along with that investment came the right for Boeing to appoint an observer on Zunum's board of directors. (Id. ¶ 126.) There were also mechanisms for Boeing to provide technical guidance and expertise to Zunum. (Id. ¶ 127.) The partnership did not pan out, and Zunum stopped operating in November of 2018. (Mot. at 1-2.) According to Zunum, between mid-2016, when the parties began to discuss Boeing's potential investment, and November 2018, when the parties’ partnership disintegrated, “Boeing misappropriated Zunum's trade secrets for Boeing's internal use and interfered with its business prospects.” (Id. at 2.)

On December 16, 2019, counsel for Boeing sent Zunum a letter as part of its attempt to collect $10,214,948.67 in payments for Zunum's failure to repay two promissory notes. (9/19/23 Danner Decl. (Dkt. # 146) ¶ 62, Ex. 32 (Dkt. # 161) (sealed).) In that letter, Boeing wrote that it would “proceed with all remedies available, including possible legal action,” if Zunum failed to respond with a check or payment plan. (Id.) Zunum responded, emphasizing “the materiality of threats of legal action” and informing Boeing that, “despite repeated damaging reversals by Boeing that interfered with [its] prior financing,” the company was in discussions with investors that would enable it to repay the notes. (9/19/23 Danner Decl. ¶ 63, Ex. 33 (Dkt. # 162) (sealed) at 1, 3.)

*2 Today, Zunum blames Boeing for effectively destroying its company. (Reply at 6.) It filed this lawsuit against Boeing on November 23, 2020. (Removal Ntc. (Dkt. # 1) at 2.) The case is currently in discovery, and the present motion concerns two issues related to Boeing's document productions and responses to Zunum's interrogatories.

Zunum raises two primary issues in its motion. First, Zunum asserts that Boeing deleted five relevant custodians’ files and claims to have identified multi-year gaps in three other custodians’ files. (Mot. at 1.) Second, Zunum argues that Boeing has failed to fully respond to its interrogatories 4 through 6,[2] which ask Boing to identify the employees who accessed certain categories of Zunum's confidential documents, because Boeing has so far only provided information relating to the “first wave” of possible recipients. (Id. at 12.) As a result, Zunum contends that it is unable to determine the extent to which its confidential materials have been disseminated within Boeing. (Id.) To remedy these concerns, Zunum asks this court to (1) permit inquiry into Boeing's discovery process to determine whether spoliation has occurred, and (2) compel Boeing to supplement its responses to Zunum's interrogatories 4 through 6. The court concludes that Zunum is entitled to limited discovery on Boeing's discovery process and supplemental responses to interrogatories 4 through 6.

A. Discovery on Boeing's Discovery Process

First, Zunum asks for leave to seek discovery regarding Boeing's document preservation policies in order to determine whether spoliation occurred when Boeing deleted certain employees’ files. It asserts that it need only demonstrate “reasonable grounds to believe discovery misconduct may have occurred” to justify conducting such discovery. Id. at 11. Boeing counters that it had no obligation to preserve the employees’ files before Zunum filed its complaint in this case and that the facts here do not constitute the “rare circumstances” warranting this sort of discovery. (Resp. at 10.)

1. Legal Standard

It is not improper for a company to destroy documents according to its document preservation policy or in the normal course of business. United States v. $40,955.00 in U.S. Currency, 554 F.3d 752, 758 (9th Cir. 2009). But a party commits spoliation when it destroys or fails to preserve evidence that is “potentially relevant” to future litigation. Dickinson Frozen Foods, Inc. v. FPS Food Process Sols. Corp., No. 22-35832, 2023 WL 6866273, at *2 (9th Cir. Oct. 18, 2023) (quoting Ryan v. Editions Ltd. W., Inc., 786 F.3d 754, 766 (9th Cir. 2015)). For a court to find spoliation, the future litigation must be “reasonably foreseeable” at the time the documents are destroyed; it need not be “immediate or certain.” Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336, 1346-47 (Fed. Cir. 2011); see also Apex Abrasives, Inc. v. WGI Heavy Mins., Inc., 737 F. App'x 325, 327 (9th Cir. 2018) (finding no spoliation because the “litigation was not reasonably foreseeable at the time [the] records were destroyed”). Litigation becomes reasonably foreseeable when “a potential claim is identified.” Karma Auto. LLC v. Lordstown Motors Corp., No. 8:20-cv-02104-JVS-DFMx, 2021 WL 4691908, at *2 (C.D. Cal. Sept. 16, 2021) (quoting Apple, Inc. v. Samsung Elecs. Co., 888 F. Supp. 2d 976, 991 (N.D. Cal. 2012)). Generally, demand letters and threats of litigation identify potential claims and therefore trigger the duty to preserve potentially relevant documents. See Stevenson v. City & Cnty. of S.F., No. C 11 4950 MMC, 2015 WL 6177363, at *4 (N.D. Cal. Oct. 21, 2015) (citing In re Ethicon, Inc. Pelvic Repair Sys. Prod. Liab. Litig., 299 F.R.D. 502, 512 (S.D.W.V. 2014) (collecting cases)).

*3 When “there is some indication that a party's discovery has been insufficient or deficient” due to spoliation, courts may permit “discovery into a party's discovery process.” Anstead v. Va. Mason Med. Ctr., No. C21-0447JCC-JRC, 2022 WL 1641425, at *5 (W.D. Wash. May 24, 2022). Such “discovery on discovery” is disfavored, and requests for this information are “closely scrutinized.” Id. “Mere speculation about missing evidence is insufficient to allow discovery on discovery,” and the party requesting such discovery “bears the burden of producing specific and tangible evidence of a material failure of an opponent's obligation[s].” LKQ Corp. v. Kia Motors Am., Inc., No. 21 C 3166, 2023 WL 4365899, at *7 (N.D. Ill. July 6, 2023); see also Jensen v. BMW of N. Am., LLC, 328 F.R.D. 557, 566 (S.D. Cal. 2019) (requiring “particularized reason[s]” for why discovery on discovery should be ordered). If the party seeking discovery on discovery meets its burden, the “court should select the narrowest discovery tool possible to avoid side-tracking the discovery process and to adhere to the principles outlined in Rule 1 of the Federal Rules of Civil Procedure.” LKQ, 2023 WL 4365899, at *7; see also Fed. R. Civ. P. 1 (“These rules ... should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.”).

2. Application

Zunum has made a sufficient factual showing to indicate that Boeing may have failed to preserve documents in anticipation of litigation. Boeing admits that it “deleted the files of” former employees Shailesh Atreya, Russell Higgins, John Langford, Mark Liffring, and Mithra Sankrithi. (Resp. at 4; see also Mot. at 4; 9/19/23 Danner Decl. ¶¶ 11, 16 (identifying the dates Boeing informed Zunum that these documents were deleted).) It also concedes that it deleted some, but not all, of Logan Jones's files after his departure. (Resp. at 9; Hunter Decl. (Dkt. # 168) ¶ 9.) And, according to Zunum, there are gaps between mid-2016 and October 2018 with essentially zero files from Greg Hyslop and Michael Sinnett, executives who were still at Boeing when Zunum filed its lawsuit. (Mot. at 3; 9/19/23 Danner Decl. ¶¶ 5, 23, 31, 37 (describing production gaps).) Boeing argues that it “had no obligation” to preserve its former employees’ files before Zunum filed its complaint in November 2020 and that any supposed gaps in Mr. Hyslop's and Mr. Sinnett's emails are “easily explained” because they were placed on an unrelated litigation hold in November 2018, meaning it is “not surprising that the number of documents from before November 2018 is lower than the number from after.” (Resp. at 4, 8-9.)

Although Boeing asserts that it was under no obligation to preserve its former employees’ documents, all but Mark Liffring were still at Boeing when it sent the December 16, 2019 letter demanding over $10,000,000 and threatening litigation. (9/19/23 Danner Decl. ¶ 20 (listing departure dates). See generally Ex. 32.) That letter established that litigation over Zunum's failure to repay promissory notes was reasonably foreseeable as of December 2019, and Boeing was thereafter under a duty to preserve evidence that it “knew or should have known was relevant or may be relevant to future litigation.” Karma Auto, 2021 WL 4691908, at *2. It does not appear that Boeing implemented any litigation hold after sending the letter. Boeing argues that its failure to do so, however, is immaterial to this matter because any litigation threat concerned, at most, Zunum's “fail[ure] to repay promissory notes,” which “is an entirely different issue from Zunum's trade secrets claims” and “has nothing to do with” the former employees. (Resp. at 5.) But Boeing “cannot argue that documents were irrelevant if the documents were destroyed.” Allied Prop. v. Zenith Aviation, Inc., No. 1:18-cv-00264 (AJT/IDD), 2019 WL 10960568, at *2 (E.D. Va. Feb. 8, 2019). Relevance is not determined by Boeing's own subjective, retrospective assessment, and the fact that Boeing destroyed documents related to Zunum's business after threatening to sue Zunum is, at the very least, concerning.

*4 Boeing's explanation of the gaps in Mr. Hyslop's and Mr. Sinnett's emails is also concerning. Boeing represents its document destruction policy to be that, “[u]pon an employee's departure, Boeing does not preserve any of that individual's emails, documents, or other data.” (Hunter Decl. ¶ 4.) As Zunum points out, however, Boeing's argument concerning an unrelated November 2018 litigation hold “only explains why documents after that date exist—not why documents before that date were deleted.” (Reply at 3.) Mr. Hyslop is Boeing's former Chief Technology Officer, and Mr. Sinnett was Vice President of Product Development. (Mot. at 3.) Boeing's inability to produce pre-November 2018 emails from these individuals warrants examination into its document retention policies.

The court will not, however, open the floodgates to unlimited discovery on discovery. To address Zunum's concerns, the court ORDERS Boeing to: (1) describe and produce all document preservation policies, from November 2018 to the present, that were or are applicable to any of Shailesh Atreya's, Russell Higgins's, John Langford's, Mark Liffring's, Mithra Sankrithi's, Logan Jones's, Greg Hyslop's, or Michael Sinnett's documents; (2) identify the number of documents collected for Logan Jones, Greg Hyslop, and Michael Sinnett by month and year; (3) describe Boeing's deduplication process and produce metadata sufficient to demonstrate which of Logan Jones's, Greg Hyslop's, and Michael Sinnett's documents Boeing processed for multiple custodians, in a manner typically found in fields labeled “All Custodians” or “Custodians with Duplicates”; (4) identify all litigation holds Boeing has implemented as a result of or in anticipation of litigation with Zunum; (5) identify the dates Shailesh Atreya's, Russell Higgins's, John Langford's, Mark Liffring's, Mithra Sankrithi's, and Logan Jones's documents were destroyed, and describe the circumstances of that document destruction; (6) identify the dates of all litigation holds to which Shailesh Atreya, Russell Higgins, John Langford, Mark Liffring, Mithra Sankrithi, Logan Jones, Greg Hyslop, and Michael Sinnett were subjected on or after December 16, 2019; and (7) state whether any of Greg Hyslop's or Michael Sinnett's documents from June 2016 to November 2018 were permanently destroyed and, if so, identify the dates of destruction, describe the circumstances of that destruction, and describe and produce any document preservation policies that allowed for or did not allow for that destruction. Boeing must do so by no later than December 15, 2023. The court now turns to Zunum's request for supplemental interrogatory responses.

B. Supplemental Interrogatory Responses

Second, Zunum seeks to compel Boeing to supplement its responses to interrogatories 4 through 6, which ask Boeing to identify its employees who accessed sensitive Zunum documents. Boeing argues that it has sufficiently responded to these interrogatories at a cost exceeding $740,000. (Resp. at 12 (citing Fursevich Decl. (Dkt. # 169) ¶¶ 7-8).) It identified 31 individuals who accessed Zunum's confidential documents—as well as the specific documents those individuals accessed—by searching 26 custodial files, amounting to over 4.8 million documents, for 91 documents that Zunum claims contain its trade secrets. (Id. (citing 9/19/23 Danner Decl. ¶ 49, Ex. 30, at App'x A; Fursevich Decl. ¶ 11).) Boeing asserts that Zunum's demand for Boeing “to explore the possibility that there were other Boeing recipients of” those documents violates foundational principles of discovery because “it seeks to impose tremendous burdens on Boeing based on nothing but speculation.” (Id. at 12-13.) The court is sympathetic to both parties on this issue and will, for the reasons explained below, permit limited inquiry into additional custodial files.

1. Legal Standard

*5 Federal Rule of Civil Procedure 26 provides that “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering,” among other factors, “whether the burden or expense of the proposed discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). A party “seeking to compel discovery has the burden of establishing that its request satisfies the relevancy requirements of Rule 26(b)(1).” La. Pac. Corp. v. Money Mkt. 1 Institutional Inv. Dealer, No. C. 09-03529 JSW (LB), 2012 WL 5519199, at *3 (N.D. Cal. Nov. 14, 2012). The burden then shifts to the opposing party to “show[ ] that discovery should not be allowed” and “support[ ] its objections with competent evidence.” McEwan v. OSP Grp., L.P., No. 14-cv-2823-BEN (WVG), 2016 WL 1241530, at *4 (S.D. Cal. Mar. 30, 2016) (quoting La. Pac. Corp., 2012 WL 5519199, at *3). The opposing party is “required to carry a heavy burden of showing why discovery [should be] denied.” Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975).

2. Application

To begin, Zunum has met its burden of showing that the discovery is relevant to its claims. Count I of Zunum's complaint alleges that Boeing breached the parties’ nondisclosure agreement “by disseminating the information widely within Boeing and disclosing the information that Zunum shared with it with third parties.” (2nd Am. Compl. ¶ 423.) As Zunum argues, “identifying Boeing personnel who had access to Zunum's proprietary information is crucial to the merits of this case.” (Mot. at 12; see also 9/19/23 Danner Decl. ¶¶ 46-61 (describing correspondence related to interrogatories 4 through 6).)

Boeing does not dispute the potential relevance of this evidence. Instead, it argues that the collection, processing, and storage of 20 additional custodians’ files in the manner Zunum requests “would cost about $500,000” and thus impose an undue burden that is not proportional to the needs of the case. (Resp. at 13-14 (citing Fursevich Decl. ¶ 13).) Zunum counters that Boeing's number is inflated because it assumes prolongated storage costs and that, even if Boeing were to incur those costs, they would still be proportional given the relevance. (Reply at 6.) Zunum further argues that Discovery has already “proved that a Boeing employee distributed Zunum's information internally without safeguarding confidentiality, including by stripping off the ‘Confidential’ legend that identified Zunum's proprietary information under the governing NDA.” (Id. at 5 (quoting 10/6/23 Danner Decl. (Dkt. # 175) ¶ 3, Ex. 37 (Dkt. # 177) (sealed) at 381:22-25 (“Q. So this is another example of you taking slides from Zunum decks and passing them along internally to Boeing without attribution; right? A. It appears so.”)).)

In light of evidence that Boeing employees internally disseminated Zunum's proprietary information in potential violation of an NDA, Zunum's demand to know the extent of that internal dissemination is not a call for speculation. At a certain point, however, identifying every Boeing employee who potentially encountered confidential Zunum documents becomes an exercise in diminishing returns and imposes a burden on Boeing that would not be proportional to the needs of this case. Zunum knows 31 Boeing employees who came into contact with at least one of its confidential documents; through depositions and review of document productions, it may be able to identify others who did or likely would have encountered those documents. Thus, in an attempt to reach a middle ground, the court ORDERS the following: Zunum may, no later than 45 days before the close of discovery, (1) select up to five additional custodians whose records it wants Boeing to search, and (2) identify up to 20 documents that Boeing must search for in those custodians’ records. No later than 30 days after Zunum provides this information to Boeing, Boeing must identify which of the five employees, if any, had access to one or more of the 20 documents, and which documents they had access to. If the results show that Boeing did in fact disseminate Zunum's confidential information beyond a “first wave” of recipients, Zunum may be permitted to present that fact at trial.

*6 Because this order relies on sealed materials, the court DIRECTS the Clerk to provisionally file this order under seal. The court ORDERS the parties to meet and confer regarding which, if any, portions of this order they seek to redact. Counsel must then submit one joint statement or, if they cannot agree on a joint statement, competing statements indicating the portions of the order they seek to have redacted and on what basis. See Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1179-80 (9th Cir. 2006). The statement or statements must attach a proposed redacted order that incorporates the redactions requested in the corresponding statement. The parties must file any such statement by no later than November 17, 2023. The court will consider the parties’ redaction requests, if any, and then file the order on the docket with any necessary redactions.

For the foregoing reasons, the court GRANTS in part Zunum's motion to compel (Dkt. # 145) and ORDERS Boeing to provide discovery about its discovery process and its dissemination of Zunum documents as set forth above. The parties must file either a joint statement or competing statements concerning redactions to this order as described above no later than November 17, 2023. The court DIRECTS the Clerk to provisionally file this order under seal.

Dated this 13th day of November, 2023.