Solarcity Corp. v. Doria

SOLARCITY CORPORATION, Plaintiff, v. DANIEL DORIA, Defendant.

Case No.: 16cv3085-JAH (RBB)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

September 4, 2018

REPORT AND RECOMMENDATION DENYING DEFENDANT'S MOTION FOR TERMINATING SANCTIONS AND ORDER:

(1) DENYING PLAINTIFF'S REQUESTS TO STAY DISCOVERY-RELATED MOTIONS AND FIND DEFENDANT IN CONTEMPT, DEFENDANT'S MOTIONS TO STRIKE HIS DEPOSITION TESTIMONY AND TO APPOINT COUNSEL, AND PLAINTIFF'S AND DEFENDANT'S RESPECTIVE REQUESTS FOR SANCTIONS;

(2) DENYING AS MOOT DEFENDANT'S MOTION TO CROSS-EXAMINE HIMSELF; AND

(3) GRANTING IN PART PLAINTIFF'S REQUEST TO STRIKE [ECF NOS. 113, 145]

On February 5, 2018, Defendant Daniel Doria filed a Motion for Contempt Sanctions (the "Motion for Contempt") [ECF No. 113]. The action was stayed on February 20, 2018, and the stay was lifted on May 2, 2018 [ECF Nos. 123, 139]. On May 16, 2018, the Motion for Contempt was referred to this Court [ECF No. 141]. Pursuant to the Court's briefing schedule, Plaintiff SolarCity Corporation ("SolarCity") filed an Opposition to the motion on May 31, 2018 [ECF Nos. 143, 145]. On June 7, 2018, Defendant submitted his Reply, which the Court accepted on discrepancy on June 12, 2018 [ECF Nos. 149, 150].

For the reasons discussed below, Doria's motion for terminating sanctions, (Mot. Contempt Sanctions 3, ECF No. 113), should be DENIED. The Court DENIES Plaintiff's requests to stay discovery-related motions and to find Defendant in contempt, (Opp'n 4, 9-10, ECF No. 145), Defendant's motions to strike his deposition testimony and to appoint counsel, (see Mot. Contempt Sanctions Attach. #1 Mem. P. & A. 17, ECF No. 113; Reply 12, ECF No. 150), and Plaintiff's and Defendants' respective requests for sanctions, (see Mot. Contempt Sanctions Attach. #1 Mem. P. & A. 5, 16, ECF No. 113; Opp'n 10, ECF No. 145; Reply 12, ECF No. 150). Doria's motion to cross-examine himself is DENIED as moot (Mot. Contempt Sanctions Attach. #1 Mem. P. & A. 6-8, ECF No. 113). The Court GRANTS IN PART SolarCity's request to strike, (Opp'n 9, ECF No. 145).

I. FACTUAL BACKGROUND

Plaintiff SolarCity, a manufacturer and seller of solar energy products and services, employed Defendant Daniel Doria as a sales representative from May 2015, until his termination on October 21, 2016. (Compl. 2-4, ECF No. 1.) On December 23, 2016, SolarCity filed this action alleging that "[o]n at least five separate occasions while Doria was still employed by SolarCity, Doria stole SolarCity's confidential customer information . . . ." (Id. at 2.) Plaintiff claims that Defendant stole contact information for at least 1,343 customers by accessing its confidential customer database, copying the information, and sending it to his personal e-mail address. (Id.) SolarCity alleges Doria "used that confidential information to send the solar warning email to an unknownnumber of SolarCity customers in an attempt to dissuade them from entering into a contract with SolarCity or to terminate their existing contracts with SolarCity." (Id. at 8.) Plaintiff contends its reputation and relationships with existing and potential customers were damaged, it lost business, and Defendant's conduct violated his employment agreements with Plaintiff. (See id. at 3, 8-11.) SolarCity asserts causes of action for violations of the Defend Trade Secrets Act and the California Uniform Trade Secrets Act, and breach of contract. (Id. at 2, 12-16.)

II. PROCEDURAL BACKGROUND

On December 27, 2016, Plaintiff filed an Application for Temporary Restraining Order and Request for Order to Show Cause re Preliminary Injunction [ECF No. 3]. United States District Judge John A. Houston granted the application on January 11, 2017, and enjoined Doria from (1) "altering, destroying, or disposing of any evidence or other materials" related to this action; (2) "failing to take all necessary steps to preserve documents, data," and other materials relating to the action; and (3) "directly or indirectly accessing, using, disclosing, or making available" SolarCity's customer data. (See Order Granting Pl.'s Appl. TRO 2-3, ECF No. 15.) On January 31, 2017, Judge Houston issued an Order Granting Plaintiff's Motion for Preliminary Injunction with the same restrictions [ECF No. 22].

Doria answered SolarCity's Complaint on February 21, 2017 [ECF No. 28]. The Court subsequently issued a Scheduling Order Regulating Discovery and Other Pre-trial Proceedings [ECF No. 39]. Defendant's Motion for Leave to File Amended Answer and [Counterclaim] and Application for Temporary Restraining Order and Request for Order to Show Cause re Preliminary Injunctive Relief were filed nunc pro tunc to May 3, 2017 [ECF No. 37]. On August 30, 2017, Judge Houston granted the motions and enjoined SolarCity's "senior and upper level management" from "making disparaging remarks or causing others to make any disparaging remarks regarding the pending case, Defendant, or Defendant's business." (Order Granting Prelim. Inj. 2, ECF No. 56.)

Doria's Amended Answer and [Counterclaim] for Declaratory Judgment Demand for Damages was filed nunc pro tunc to October 16, 2017. (Am. Answer & Countercl. 1, ECF No. 67.) He alleged claims against SolarCity for (1) breach of contract, (2) employer retaliation in violation of the Fair Labor and Standards Act ("FLSA"), (3) violation of the Federal Trade Commission ("FTC") Act, (4) violation of the Work Adjustment and Retraining Notification ("WARN") Act, (5) civil conspiracy, and (6) violation of California Civil Code sections 45 and 46. (Id. at 24-37.)

On October 19, 2017, Plaintiff asked Defendant about his availability for a deposition. (Opp'n Attach. #1 Decl. Mack 2, ECF No. 145.) Doria responded that he was not available until January 1, 2018, in light of the commitments at his new job, and Plaintiff noticed the deposition for January 5, 2018.¹ (Id.; see also id. Attach. #2, 2.) On November 8, 2017, SolarCity filed a Motion to Dismiss Doria's counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6) [ECF No. 78].

On November 9, 2017, Defendant Doria filed an Amended Motion for Summary Judgment [ECF No. 81]. District Judge Houston denied the motion without prejudice pursuant to Rule 56(d) of the Federal Rules of Civil Procedure on December 12, 2017. (Order Denying Def.'s Mot. Summ. J., ECF No. 92.)

On January 5, 2018, Defendant was deposed. (Opp'n Attach. #1 Decl. Mack 2, ECF No. 145.) The parties took at least nine breaks during the deposition, the facility where the deposition was conducted had to close at 5:30 p.m., and the deposition was suspended at the end of the day. (Id. at 2-3.) Between January 7 and January 9, 2018, the parties corresponded regarding scheduling Doria's continued deposition, but were unable to reach an agreement, in part because Doria refused to be deposed remotely, andSolarCity's counsel had a pre-planned trip out of the country. (Id. at 3; see also id. Attach. #2, 15-19, 22.)

On February 20, 2018, Judge Houston granted Plaintiff's Ex Parte Application to Stay Action Pending Motion to Enforce Settlement [ECF No. 123]. Judge Houston initially granted Plaintiff's motion to enforce the parties' purported settlement agreement, but after further briefing, denied the motion [ECF Nos. 126, 138]. The stay was lifted on May 2, 2018 [ECF No. 139].

SolarCity's motion to dismiss Doria's counterclaims was granted on May 16, 2018 [ECF No. 142]. Defendant's claims for breach of contract, employer retaliation in violation of the FLSA, violations of the FTC and WARN Acts, and civil conspiracy were dismissed with prejudice. (Order Granting Counter-Def.'s Mot. Dismiss 3-10, 12-13, ECF No. 142.) Doria's claim for libel and slander in violation of California Civil Code sections 45 and 46 was dismissed without prejudice. (Id. at 10-13.)

On May 23, 2018, Judge Houston issued an Order Amending Preliminary Injunction. (See Order Amending Prelim. Inj., ECF No. 144.) The August 30, 2017 injunction in favor of Defendant remained in effect. (Id. at 2.) In addition, Doria was enjoined "from making disparaging remarks or causing others to make any disparaging remarks regarding SolarCity, SolarCity's businesses, its agents, employees or assigns regarding the pending case and related business practices." (Id.) The injunction, as amended, applied to "any and all communications, including communications made in person, via the internet, or any other media[,]" and precluded Doria from sharing or disseminating "any personally identifying information of SolarCity customers, including but not limited to, customer names, street addresses, and telephone numbers." (Id.)

On June 8, 2018, Doria filed a Second Amended Answer and [Counterclaim] and Request for Reconsideration. (See Second Am. Answer & Countercl. 6-15, ECF No. 147.) He alleged a cause of action for defamation, and he attempted to reallege claims for breach of contract, retaliation in violation of the FLSA, and violation of the WARN Act. (See id. at 6-15.) On June 25, 2018, Plaintiff filed a Motion to Strike and DismissSecond Amended [Counterclaim] [ECF No. 152], which Judge Houston granted on August 28, 2018 [ECF No. 155].

III. LEGAL STANDARDS

A. Terminating Sanctions

Rule 37 of the Federal Rules of Civil Procedure authorizes the Court to issue orders that may include the following sanctions against a party that fails to obey an order to provide or permit discovery: (i) "directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims"; (ii) "prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence"; (iii) "striking pleadings in whole or in part"; (iv) "staying further proceedings until the order is obeyed"; (v) "dismissing the action or proceeding in whole or in part"; (vi) "rendering a default judgment against the disobedient party"; or (vii) "treating as contempt of...