GT Crystal Systems, LLC and GT Solar Hong Kong, Ltd. Chandra Khattak, Kedar Gupta, and Advanced RenewableEnergy Co., LLC. NO.
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1 MERRIMACK, SS SUPERIOR COURT GT Crystal Systems, LLC and GT Solar Hong Kong, Ltd. v. Chandra Khattak, Kedar Gupta, and Advanced RenewableEnergy Co., LLC. NO CV-332 ORDER The Defendants Advanced RenewableEnergy Co., LLC. ( ARC ), Chandra Khattak ( Khattak ), and Kedar Gupta ( Gupta ) have moved to compel the Plaintiffs GT Crystal Systems, LLC ( GT Crystal ) and GT Solar Hong Kong, Ltd. ( GT Solar ), collectively referred to as ( GT ) to produce a witness to testify, pursuant to Standing Order 7 of the Business and Commercial Dispute Docket ( BCDD ), concerning any information that suggests, shows, or proves that the Plaintiffs alleged trade secrets were used and/or misappropriated by one or more of the Defendants, including facts the Plaintiffs obtained during discovery. For the reasons stated in this Order, the Motion to Compel is GRANTED. The Plaintiffs shall produce a witness, in accordance with Standing Order 7 of the BCDD, who is prepared to testify regarding topics one and two of the Attachment to the Notice of Deposition served on Plaintiffs on October 21, I The history and allegations of this case have been set forth in prior orders, including the Court s order dated January 30, Essentially, the Plaintiffs allege that ARC and GT Crystal manufacture sapphire and beryllium crystals, which are used in
2 light-emitting diode ( LED ) lighting. Dr. Gupta founded GT Solar and served as CEO until he retired in Dr. Khattak worked for an entity called Crystal Systems, Inc. ( CSI ) from 1977 through 2006 and GT Solar from 2006 until he was terminated in Plaintiffs allege that Khattak is subject to a ten year non-compete agreement that he entered into with CSI in CSI was acquired by GT Solar and eventually became GT Crystal. In addition to signing the non-compete agreement, Khattak also signed confidentiality and non-disclosure agreements. Khattak has been employed by ARC since The Plaintiffs assert that CSI produced sapphire crystals for use in fabricating LEDs that took 30 years to develop. They argue in their papers that neither Gupta nor ARC could have discovered how to make high quality sapphire crystals without using CSI s trade secrets. The Defendants dispute that claim. Discovery in this case has continued since 2012, and the Notice of Deposition that forms the basis of the instant motion was filed on October 22, Trial was scheduled for April 2014 but has been delayed, due to the pendency of this motion, and trial is now scheduled for the week of July 7, The current dispute arises out of the Defendants attempt to determine precisely what the Plaintiffs allege that the Defendants have misappropriated. In March of 2012, Plaintiffs filed a Motion to Sequence Discovery, seeking that the Defendants be required to answer interrogatories directed at identifying Plaintiffs documents and information in the Defendants possession. Additionally, the Plaintiffs, through the Motion to Sequence Discovery, requested that this Court permit them to inspect the Defendants 1 The parties have agreed to modify the schedule to the extent necessary as a result of the delay caused by - 2 -
3 equipment and facilities before disclosure of what confidential trade secrets they claim had been misappropriated. By order dated March 30, 2012, the Court denied the Plaintiffs motion, noting that a plaintiff alleging trade secret misappropriation must state with particularity what it alleges has been misappropriated at the outset of discovery. (Order, March 30, 2012 at 4 5.) In accordance with that order, Plaintiffs served a document titled Plaintiffs Specification Of Trade Secrets on April 30, 2012, which contained 49 topics that the Plaintiffs claim to be actual trade secrets. The Defendants assert that the specification is general and specifies information that is publicly available, or otherwise known, to those skilled in the art of crystal growth. Accordingly, on October 22, 2013, the Defendants served a Notice of Deposition pursuant to Standing Order 7 of the BCDD, which required the Plaintiffs to designate corporate representatives to testify to the topics set forth in the Notice. Topics one and two of the Notice are the subject of the current dispute and seek the following information: 1. The identity and content of the alleged trade secrets disclosed in Plaintiffs amended specification of trade secrets; and 2. Referring to Paragraph No. 1 hereof, any information that suggests, shows or proves that any such trade secrets were used and/or misappropriated by one or more of the Defendants. (Notice, Attachment A, Topics 1, 2.) The Plaintiffs identified four Standing Order 7 deponents Dr. David Joyce, Fred Schmid, Kurt Schmid, and Hoil Kim and topics to which each individual was prepared to testify. Dr. Joyce was the corporate designee for topics one and two of the Notice, and he was subsequently deposed on October 31, The Defendants assert that Dr. Joyce the instant Motion to Compel
4 was not properly prepared to testify about the facts supporting the Plaintiffs claims of misappropriation. The transcript of the deposition shows that the Plaintiffs took the position that they were not required at this stage of the litigation to prepare a designee to respond to questions that they characterized as contention interrogatories. They amplify this position in their objection: It is undisputed (and undisputable) that Plaintiffs primary evidence of misappropriation in this case has been discovered, to date, in documents and testimony previously known only to and controlled by Defendants.... The fact that Plaintiffs misappropriation evidence assembled to date has been (and continues to be) found in documents created by and therefore known only to Defendants themselves, together with the fact that the discovery of additional misappropriation evidence is on-going, weighs heavily against any suggestion as is urged by Defendants in their Motion to Compel that Plaintiffs are required, at this point, to present a 30(b)(6) witness (or witnesses) with encyclopedic knowledge of all misappropriation evidence, discovered and yet to be discovered, residing in Defendants files. (Pls. Obj. to Defs. Mot. to Compel 4.) The Court disagrees. II The Defendants Motion to Compel is based upon the fact that the deposition at issue was noticed in accordance with Standing Order 7 of the BCDD. Standing Order 7 governs depositions of corporations and other entities, and reads as follows: In a notice of deposition or subpoena, a party may name as the deponent a public or private corporation, a partnership, an association, a government agency or other entity, and describe with reasonable particularity the matters for the examination. The named organization must then designate one or more officers, directors, or managing agents, or designate other persons who consent to testify on its behalf; and it may set out the matters on which each person designated will testify. A subpoena must advise a non-party organization of its duty to make this designation. The person or persons designated must testify about any information known or reasonably available to the organization
5 The Comment to the Order provides that [t]his rule is essentially a cognate of Federal Rule of Civil Procedure [( FRCP )] 30(b)(6) and is designed to reduce delay and expense. Case law governing FRCP 30(b)(6) should govern interpretation of this standing order. Both parties have appropriately filed memoranda addressing the issue to be resolved by citation to federal cases interpreting FRCP 30(b)(6). It is not literally possible to take the deposition of a corporation. 8A Charles Alan Wright et al., Federal Practice and Procedure 2103 (3d ed. 2013) (hereinafter Wright & Miller ). FRCP 30(b)(6) was created to avoid the problem of bandying, by which officers or managing agents of the corporation are deposed in turn but each disclaims knowledge of facts that are clearly known to persons in the organization, and thereby to it. Id. FRCP 30(b)(6) is a critical tool that allows litigators to determine the facts supporting an opponent s position without undue expense. See id. To this end, the law surrounding the Rule has developed in a way that emphasizes the corporation s obligation to present its position through a designated individual at an appropriately noticed deposition. See id. The testimony elicited at a FRCP 30(b)(6) deposition represents the knowledge of the corporation and not of the individual deponent. Int l Assoc. of Machinists & Aerospace Workers v. Werner-Masuda, 390 F. Supp. 2d 479, 487 (D. Md. 2005). A corporation responding to such a notice must provide a knowledgeable designee. See id. Thus, the duty to prepare and present a 30(b)(6) designee goes beyond matters personally known to that designee or matters in which that designee was personally involved. Buycks Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 338, 343 (N.D. Ill. 1995). If the persons designated by the corporation do not possess personal knowledge - 5 -
6 of the matters set out in the deposition notice, the corporation is obligated to prepare the designees so that they may give knowledgeable answers binding on the corporation. Int l Assoc. of Machinists & Aerospace Workers, 390 F. Supp. 2d at 487 (citing Dravo Corp. v. Liberty Mut. Ins. Co., 164 F.R.D. 70, 75 (D. Neb. 1995)). The designee must not only testify about facts within the corporation s knowledge but also its subjective beliefs and opinions. United States v. Taylor, 166 F.R.D. 356, 361 (M.D.N.C. 1996). The designated individual must review all matters known or reasonably available to the corporation in order to make the deposition a meaningful one and to prevent the sandbagging of an opponent by conducting half-hearted inquiries before the deposition but a thorough and vigorous one before the trial. Paul Revere Life Ins. Co. v. Jafari, 206 F.R.D. 126, 128 (D. Md. 2002) (citing and quoting Taylor, 166 F.R.D. at ). The Plaintiffs do not seriously quarrel with this formulation of the law; instead, they assert that a 30(b)(6) deposition is not the appropriate means of obtaining the information the Defendants seek. The Plaintiffs argue that [i]n this technically complex case, Plaintiffs cannot reasonably be required to produce a witness prepared to testify... concerning any information Plaintiffs claim supports their allegations of misappropriation, including the substance and import of Defendants own documents. (Pls. Obj. to Defs. Mot. to Compel 8) (italics in the original). However, the authority they cite in support of this proposition is simply inapposite. For example, the Plaintiffs assert that E3 Biofuels, LLC v. Biothane, LLC, No. 11- CV-44, 2013 U.S. Dist. LEXIS , at *5 (D. Neb. Aug. 15, 2013) supports their position. There, the court stated that the party seeking the deposition had failed to reasonably particularize the areas of inquiry by setting forth a request for testimony - 6 -
7 regarding plaintiff s claims as set forth in its amended complaint. Id. However, the case before that court involved the construction of a multi-million dollar Ethanol Plant. Id. at *6. The notice sought testimony about the engineering completed for this plant from 2004 to the present date. Id. The court noted that in a facility of this size and nature, there were undoubtedly numerous engineering activities involved in the design and construction of each component of the plant. Id. As such, [i]t would be nearly impossible for [p]laintiff to designate and fully prepare a corporate representative with knowledge regarding this topic as noticed. Id. The notice in E3 Biofuels, LLC is in stark contrast to the notice in the instant action. Here, the Notice simply asks for what the Defendants have sought since the beginning of the case: what specific trade secrets do the Plaintiffs claim the Defendants have misappropriated? Unlike the notice in E3 Biofuels, LLC, the Notice in this case describes, with reasonable particularity, the subjects of inquiry. As such, the case the Plaintiffs cite to support their argument is distinguishable from the facts in the present action. Similarly, the Plaintiffs reliance on McCormick-Morgan, Inc. v. Teledyne Industries, Inc., 134 F.R.D. 275 (N.D. Cal. 1991) is also misplaced. In that case, the court held that a FRCP 30(b)(6) deposition would not be appropriate and that the claims of patent infringement could best be resolved through contention interrogatories. In its analysis, the court noted that in previous decisions, it had expressed considerable skepticism regarding whether the use of contention interrogatories at the earlier stages of litigation was appropriate. Id. at 286. Yet in reaching its conclusion, the court provided two principled concerns that were unique to the specific facts of that case
8 First, the court noted it was concerned that no human being could set forth an account of all the bases for the contentions made and positions taken by the plaintiff. Id. Second, the court determined that the subject matter of the case also gave rise to the use of contention interrogatories: In a patent case like this, the bases for contentions do not consist exclusively of relatively straightforward facts or evidence, as might be true, by contrast, in a case arising out of a traffic accident.... A non-lawyer deponent might have great knowledge about the products in issue here, but be quite ill-equipped to reason reliably about the legal implications of the relationship between those products, or their components, and the various claims of the patent in suit or of other patents or prior art. Id. at 287. With these considerations in hand, the court found that subject matter of the claims, as well as the breadth of the contentions made by the plaintiff, rendered contention interrogatories a more suitable means of obtaining the information sought by the defendants. Despite the Plaintiffs argument that McCormick-Morgan, Inc. is analogous, the concerns set forth in that case are clearly distinguishable from the concerns in the instant action. The instant action is not a patent case. Although admittedly a complex cause of action, the case before this Court does not involve the same conceptually dense dynamic that the court saw in McCormick-Morgan, Inc. See id. at Thus, this case fails to support the Plaintiffs position here. Additionally, the Plaintiffs complain that the Defendants improperly seek facts produced in discovery. (Pls. Obj. to Defs. Mot. to Compel ) At the outset, the Court finds it difficult to understand how the Plaintiffs can take the position that the evidence of misappropriation in this case has been discovered, to date, in documents and testimony previously known only to and controlled by Defendants, (id. at 4), and - 8 -
9 then take the position that they are not required to disclose what information they believe exists. However, in any event: The courts have consistently held that the work product concept furnishes no shield against discovery, by interrogatories or by deposition, of the facts that the adverse party s lawyer has learned, or the person from whom he has learned such facts, or the existence or nonexistence of documents, even though the documents themselves may not be subject to discovery. State Farm Mut. Auto. Ins. Co. v. New Horizont, Inc., 250 F.R.D. 203, 214 (E.D. Pa. 2008) (quoting 8 Wright & Miller, supra, 2023). There is simply nothing wrong with asking for facts from a deponent even though those facts may have been communicated to the deponent by the deponent s counsel. Id. at 214 (quoting In re Linerboard Antitrust Litig., 237 F.R.D. 373, 384 (E.D. Pa. 2006)). As a result, the Plaintiffs argument that the Defendants improperly seek facts produced in discovery is without merit. III In conjunction with the preceding arguments, the Plaintiffs assert that contention interrogatories are more appropriate due to the complex nature of this matter. While it is, of course, true that the court has discretion to allow discovery to proceed through contention interrogatories rather than deposition, such discretion is not without limitations. The issue of what sort of discovery is appropriate is fact sensitive and must be made on a case-by-case basis. See Taylor, 166 F.R.D. at 363 n.7. In this case, the Defendants request is relatively circumscribed and goes to the heart of the case; that is, the Defendants seek to ascertain what trade secrets the Plaintiffs allege that the Defendants have misappropriated. While such a claim undoubtedly requires technical testimony, it does not involve the intricacies and - 9 -
10 conceptually dense subject matter common in a patent case that may require a lawyer s testimony. See McCormick-Morgan, Inc., 134 F.R.D. at 287. Moreover, it does not encompass every facet of a complex class action, see Phillips v. Philip Morris Cos., No. 10-CV-1741, 2013 U.S. Dist. LEXIS 74150, at *23 (N.D. Ohio May 24, 2013), nor does it involve the nearly impossible task of designating and preparing a corporate representative to testify, as required by the notice, to every claim in a complex, multimillion dollar construction case, see E3 Biofuels, LLC, 2013 U.S. Dist. LEXIS , at *5. The Plaintiffs do not seek to defer the 30(b)(6) deposition; rather, they seek to avoid it altogether, a solution which is not favored even in the cases they cite. See United States Equal Empl. Opportunity Commission v. Source One Staffing, Inc., No. 11-C- 6754, 2013 U.S. Dist. LEXIS 361, at *19 (N.D. Ill. Jan. 2, 2013). There is no doubt that conducting an appropriate 30(b)(6) deposition in this case will be time-consuming. The Plaintiffs may need to educate or produce multiple witnesses to respond to the subject matter of the Notice. 2 Moreover, objections may be necessary to protect work product privilege; a party is not required to disclose the mental impressions of its attorney at a deposition. See, e.g., Sporck v. Peil, 759 F.2d 312, 316 (3d Cir. 1985). However, the law does not support the proposition that a fact is not discoverable solely because a lawyer communicated that fact to the client. See Protective Nat l Ins. Co. v. Commonwealth Insurance Co., 137 F.R.D. 267, 279 n. 1 (D. Neb. 1989). Questions regarding what secrets have been misappropriated are likely proper as they seek facts only reasonably available to the Plaintiffs and are not counsel s mental impressions. State Farm Mut. Auto. Ins. Co., 250 F.R.D. at Such testimony is not tantamount to a judicial admission and if altered, it may be explained and
11 The critical fact in this case is that discovery has almost concluded, and the case will be tried in the relatively near future. The Plaintiffs may have believed when they brought their suit that the evidence that will prove their case is in the hands of the Defendants; indeed, that is often the case. At some point though, they will need to present more than supposition to a trier of fact. In light of the considerations set forth more fully above, the Plaintiffs must, therefore, provide a witness, in accordance with Standing Order 7, who can attest to the information sought by the Defendants in their Notice. For these reasons, the Motion to Compel must be GRANTED. SO ORDERED 1/6/14 s/ Richard B. McNamara DATE Richard B. McNamara, Presiding Justice RBM/ explored on cross-examination. Taylor, 166 F.R.D. at 362 n
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