Proofpoint, Inc. v. Vade Secure, Inc.

PROOFPOINT, INC., et al., Plaintiffs, v. VADE SECURE, INCORPORATED, et al., Defendants.

Case No. 19-cv-04238-MMC (RMI)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA EUREKA DIVISION

April 20, 2020

ORDER ON DEFENDANTS' MOTIONS FOR RECONSIDERATION AND MOTION FOR A PROTECTIVE ORDER

Re: Dkt. Nos. 121, 128, 145, 146

Now pending before the court are Defendants' motion (dkt. 121) for reconsideration of a previous court order (dkt. 112) directing the parties to conduct discovery under the Federal Rules of Civil Procedure, rather than under the evidentiary exchange procedures of the Hague Convention of 1970, as well as Defendants' motion (dkts. 128, 145) for a protective order barring discovery until such time that Plaintiffs have "adequately identified the purported trade secrets that have allegedly been misappropriated." See Joint Ltr. Br. of March 30, 2020 (dkt. 145) at 1. For the reasons discussed below, both of Defendants' motions are denied.

DEFENDANTS' RECONSIDERATION MOTION

On January 31, 2020, in resolving a series of discovery disputes between the parties, the undersigned found that discovery in this case should be conducted under the Federal Rules of Civil Procedure rather than under the procedures outlined in the Hague Convention of 1970. See Order of January 31, 2020 (dkt. 112). Thereafter, on February 14, 2020, Defendants simultaneously moved the undersigned for reconsideration of that order, appealed that order and sought relief from the district judge, and moved for a stay of discovery pending the outcome of the appeal. See Defs.' Mots. (dkts. 121, 122, 123). On February 19, 2020, given the fact that Defendants had attempted to both seek reconsideration by the undersigned and an order from the district judge granting relief, Judge Chesney found Defendants' motion seeking vacatur (dkt. 122) to be premature and denied the same without prejudice to refiling after the resolution of the motion for reconsideration. See Order of February 19, 2020 (dkt. 125) at 1. Thereafter, given that Defendants' motion for a stay of discovery (dkt. 123) remained pending, the undersigned construed it as a motion to stay compliance with the discovery order of January 31, 2020 (dkt. 112), until after the resolution of the still-pending reconsideration motion. See Order of March 11, 2020 (dkt. 132).

Defendants' reconsideration motion argues that the undersigned erred by failing to "consider dispositive facts and arguments," which Defendants claim they were previously hindered from submitting due to the fact that a general standing order issued by the undersigned requires discovery disputes to be submitted by letter brief, without exhibits or attachments. See Defs.' Mot. (dkt. 121) at 3. While Defendants have now filed a variety of such documents, much of the substance of what Defendants characterize as "dispositive facts and arguments" was in fact proffered by Defendants at the hearing of January 31, 2020 (see generally Tr. (dkt. 115)), and subsequently considered by the undersigned. Defendants also assign error to the fact that the undersigned previously found that it was unclear if some or all of the information sought in discovery was simply now stored in France, or if it originated in France. See Defs.' Mot. (dkt. 121) at 4. Defendants' portion of the letter brief, through which this dispute was initially presented, explained that "[u]under French law, a party is prohibited from disclosing information that originated in France for use in a non-French proceeding . . ." See Letter Br. of January 6, 2020 (dkt. 91) at 5 (emphasis added). Of course, the reason that the undersigned previously criticized Defendants' "generalized" assertions and found that they had failed to meet their burden in demonstrating that French law clearly applied to the discovery sought was because Defendants' counsel stated at one point during the hearing of January 31, 2020, that "the vast majority of all of Defendants' documents and information are maintained and stored in France or, to some extent, originated from France." See Tr. (dkt. 115) at 4 (emphasis added); see also Letter Br. of January 6, 2020 (dkt. 91) at 5 ("As a result, with limited exceptions, Defendants' documents and informationoriginate from France, and in most instances, are being stored on servers and equipment located in France."). Since then, Defendants have changed their position on this point several times. See e.g., Tr. (dkt. 115) at 32 ("We have an opinion from a French lawyer who has also reviewed the request and is willing to attest that the documents and information sought here originated in France . . ."); see also Seguy Decl., Defs.' Mot. (dkt. 121-10) at 2 (wherein Defendants' Chief Financial Officer declares that "[c]ompany documents and information for VSS and VSI responsive to the Discovery Requests are maintained and stored on servers located in France and/or originate from France.") (emphasis added). Thus, because Defendants continue to waffle and hedge as to the question of what portion of the information sought here in discovery has in fact originated in France, it is still unclear whether or not French law applies to all of the information subject to the currently pending discovery requests.

In any event, Defendants have now had ample opportunity to present a detailed reconsideration motion (dkt. 121); a declaration from one of their attorneys, Mark Ratway (dkt. 121-1); a highlighted copy of a transcript from the January 31st hearing (dkt. 121-2); a lengthy opinion on the French Blocking Statute authored by Antoine Gaudemet (hereafter, the "Gaudemet Opinion") (dkt. 121-3); certain correspondence between counsel for the parties in this case (dkt. 121-4, 121-6); certain correspondence from the French Ministry of Justice addressed to Defendants' counsel (dkt. 121-5); a series of draft proposed orders providing for discovery under Hague Convention procedures (dkt. 121-7, 121-8); another opinion letter authored by a different French attorney, Jean-Dominique Touraille (hereafter, the "Touraille Declaration") (dkt. 121-9); a declaration from one of Defendants' corporate officers, Romain Seguy (hereafter, the "Seguy Declaration") (dkt. 121-10); a detailed reply brief (dkt. 130); a second declaration authored by Jean-Dominique Touraille (hereafter, the "Second Touraille Declaration") (dkt. 130-1); a colorful 32-page illustrated and highlighted document that is entirely in French (dkt. 130-2); a detailed sur-sur reply brief (dkt. 138); a declaration from a third French attorney, Christian Curtil (hereafter, the "Curtil Declaration") (dkt. 138-1); and, another opinion letter about the French Blocking Statute from Noelle Lenoir, another French attorney (dkt. 138-2). Thereafter, on March 20, 2020, the undersigned conducted a hearing on Defendants' reconsideration motion. See Tr. (dkt. 143).Following the hearing, the parties presented a jointly-filed post-hearing letter brief through which additional arguments were presented in light of the global pandemic and associated travel restrictions currently in place (dkt. 146), to which Defendants attached yet another declaration from Jean-Dominique Touraille (hereafter, the "Third Touraille Declaration") (dkt. 146-1), as well as certain correspondence which is entirely in French (dkt. 146-3), and, there was also a press release from the French Ministry of Justice dated March 15, 2020 (dkt. 146-4). With the exception of the materials that are not in English, the undersigned has carefully reviewed and considered each of the above-described submissions.

When this dispute was originally presented, Defendants' principal argument was that "if a party produces documents or information in violation of French law, that party exposes itself to both civil and criminal penalties." See Letter Br. of January 6, 2020 (dkt. 91) at 5. Additionally, with regards to the analysis of the relevant factors to be considered, Defendants relied heavily on Salt River Project Agric. Improvement & Power Dist. v. Trench Fr. SAS, 303 F. Supp. 3d 1004, 1005 (D. Ariz. 2018). See Letter Br. of January 6, 2020 (dkt. 91) at 5-7 nn. 4, 8, 19. Presently, Defendants' reconsideration motion does little more than to repeat - no less than sixteen times - that Defendants were previously prohibited by a general standing order from providing "material facts or dispositive legal arguments" that would have, or should have, tipped the analysis in Defendants' favor. See generally Defs.' Mot. (dkt. 121) at 2-9. For the reasons set forth below, the undersigned disagrees.

First, Defendants have filed the Ratway Declaration, to which they have attached a highlighted copy of the transcript of the January 31, 2020, hearing before the undersigned, the Gaudamet Opinion, a series of correspondence of little import, and certain draft proposed orders. See Ratway Decl. (dkt. 121-1). The Gaudamet Opinion explains that the French Blocking Statute, Article 1 bis of Law No. 68-678 of 26 July 1968, provides that "[s]ubject to international treaties or agreements and the laws and regulations in force, all persons are prohibited from requesting, seeking or disclosing, in writing, orally or in any other form, economic, commercial, industrial, financial or technical documents or information with a view to establishing evidence in foreign judicial or administrative proceedings in relation thereto." Gaudamet Op. (dkt. 121-3) at 24.Further, Article 1 of the same law seeks to preclude disclosure of such information if "the disclosure [] would prejudice the sovereignty, security or essential economic interests of France or public policy, as specified to the extent required by the administrative authority." Id. at 26. The Gaudamet Opinion then concluded that "[c]onsequently, the disclosure of documents sought [here] . . . could 'prejudice the sovereignty, security or essential economic interests of France or public policy' within the meaning of Article 1 of Law No. 68-678 of 26 July 1968." Id...