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E. DA YID MARKS (SBN 136567)
KATHRYN C. CURRY (SBN 157099)
2 GCA LAW PARTNERS LLP ELECTRONICALLY
2570 W. El Camino Real, Suite 400
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Mountain View, CA 94040
F I L E D
Superior Court of California,
Telephone: (650) 428-3900 County of San Francisco
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Facsimile: (650) 428-3901 06/17/2020
5 Email: dmarks@gcalaw.com Clerk of the Court
BY: RONNIE OTERO
kcurry@gcalaw.com Deputy Clerk
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Attorneys for Plaintiff
7 NEXTPULSE, LLC,
successor to NETPULSE, INC.
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0... 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA
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11 IN AND FOR THE COUNTY OF SAN FRANCISCO
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UNLIMITED JURISDICTION
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NEXTPULSE, LLC, a Delaware Limited
--4 implied covenant of good faith and fair dealing, and fraud.
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~ E Brunswick filed a cross-complaint on July 8, 2019 against Nextpulse only and, as such,
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0.... first and then a second amended cross-complaints have been filed since then, but only after the
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<( ; discovery requests at issue had already been propounded.
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u B. Brunswick's Request for Production, Set One
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Brunswick's Request for Production, Set One was served on July 8, 2019, but was not
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served by its counsel ofrecord. (Declaration of E. David Marks [Marks Deel.] Ex. A.) Ms.
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Peden served a change of address on June 9, 2019. (Request for Judicial Notice ("RJN") Ex. A).
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However, Brunswick's counsel of record as of July 8, 2019 was LeClairRyan. Brunswick
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document request was signed by Patricia Peden, who was no longer with LeClairRyan and served
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from the offices of Burke, Williams & Sorenson at 1901 Harrison Street, Oakland, California.
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(Id.) Nextpulse repeatedly asked for a substitution to be filed and an explanation of how Ms.
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Peden had standing to serve the discovery requests. (Marks Deel.~ 3.)
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Brunswick first attempted to file a substitution of attorneys three weeks later on August 1,
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2019. The substitution, however, was defective because it was not signed by Brunswick and
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instead was signed by general counsel for Life Fitness, LLC who is not a party to this case. (RJN,
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OPPOSITION TO MOTION TO COMPEL- CASE NO. CGC-18-571065
1 Ex. B) A proper substitution was not filed until October 24, 2019. 1 (RJN, Ex. D)
2 Brunswick's Request for Production of Documents, Set One included 169 requests. Even
3 though the discovery was not properly served, in good faith, Nextpulse responded to a majority of
4 the request, but reserved its objections.
5 The following four requests are at issue in this motion:
6 13. DOCUMENTS sufficient to IDENTIFY ALL NETPULSE's assets from its inception
7 to the present.
8 24. ALL COMMUNICATIONS CONCERNING ALL revenue received for
9 advertisement displayed on an electronic console manufactured by or for Life Fitness which
0.. 10 attaches to Life Fitness exercise equipment including the application developed by Life Fitness to
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11 operate in connection with advertising services.
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documents, all tax returns, all documents provided to any venture capital companies for any
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reason, the backup for all engineering and other costs, and all Virtual Active Documents even
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u 16 those relating to other Nextpulse customers. (Marks Deel. Ex. B)
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17 On November 18, 2019, Nextpulse's counsel responded that the requests were improper
18 because they were not propounded by Brunswick's counsel of record when served. The requests
19 also improperly sought privileged documents including personnel files and personal financial
20 information. Requests 13 and 30 were unlimited in time and scope, the documents sought were
21 not narrowly tailored, were overbroad, and sought irrelevant, private, and privileged information.
22 Request Number 24 was also overly broad and unduly burdensome. Request Number 158 was
23 also overly broad, not narrowly tailored, and included a request for privileged, private, and
24 irrelevant information. In this letter, Counsel explained the heightened level of scrutiny imposed
25 on a party requesting confidential and financial information . (Marks Deel., Ex. C)
26 On November 25, 2019, Brunswick responded. Regarding Request Number 30,
27 Brunswick stated:
28 IfNextpulse claims to have lost revenue, we are entitled to see what
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OPPOSITION TO MOTION TO COMPEL- CASE No. CGC-18-571065
assets it has to generate revenue. To the best of our knowledge,
Nextpulse holds no asset other than the choices [sic] of action that
2 were transferred to it when Netpulse was sold to eGym. We are
entitled to documents to show whether Nextpulse is capable of
3 generating revenue.
4 (Marks Deel., Ex. D)
5 With respect to Request Number 24, Counsel limited the request to include
6 communications concerning revenue for advertisements displayed on Life Fitness equipment.
7 Request Number 158 was not specifically addressed. Brunswick, however, continued to
8 improperly demand all documents relating to Netpulse's and Nextpulse's operating capital, profit
9 and loss statements, and taxes. Counsel claimed it was entitled to all of the financial records in
0.. 10 order "to undertake our own evaluation of what, if any, lost revenues are tied to the agreements in
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r.r.l '2 12 On December 10, 2019, Nextpulse's counsel sent another letter in advance ofa telephonic
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~-?> 13 meet and confer. Based on Brunswick's clarification of Request Number 24, Nextpulse's counsel
advised that there were no documents responsive to the request and agreed to revise that
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~j 14 requesting information about tax treatment of a write off and for Dunn & Bradstreet documents.
"' 14 Court issued a writ compelling the lower court to "deny as untimely real party's motion to compel
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~§ 14 Request No 24: ALL COMMUNICATIONS CONCERNING ALL revenue received for
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~~ ~ 15 advertisement displayed on an electronic console manufactured by or for Life Fitness which
u-< 16 attaches to Life Fitness exercise equipment including the application developed by Life Fitness to
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17 operate in connection with advertising services.
18 Nextpulse agreed to supplement the response to state that there were no documents
19 responsive to the request based on the clarification provided by Brunswick during the meet and
20 confer process.
21 Request No. 30. ALL COMMUNICATIONS CONCERNING transfer of ANY assets
22 from NETPULSE to NEXTPULSE.
23 In addition to the documents relating to the asset sale to eGym, Nextpulse has produced
24 the documents relating to the creation of Nextpulse, including the merger documents for
25 Nextpulse and Netpulse, which describe the transaction and identify the assets transferred. There
26 are no other responsive, non-privileged documents. (Marks Deel. 112)
27 Request No. 158. DOCUMENTS sufficient to IDENTIFY YOUR [including eGym]
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OPPOSITION TO MOTION TO COMPEL- CASE NO. CGC-18-571065
annual profits for the prior five years.
2 Nextpulse produced the documents responsive to this request. Nextpulse produced
3 Netpulse's monthly financials, including Income Statement (which shows profit), Balance Sheet
4 (which shows assets, liabilities, and shareholder equity), and Cash Flow Statement for every
5 month from December 2009 through April 2018 (the last month ofNetpulse's existence). It has
6 also produced limited QuickBook records and Dunn & Bradstreet records. Nextpulse also
7 produced the engineering and other costs for the Life Fitness projects with records from payroll,
8 the documents provided to VCs, Netpulse's advertising projections for the Life Fitness projects,
9 actual adve1iising revenue received from other companies, financial spreadsheets, revenue
10 projections and spreadsheets; all invoices and credit memos; the QuickBooks repo1is showing all
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11 journal entries related to Life Fitness until the eGym purchase. (Marks Deel. Ex. G, H, I and K)
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D. The Requests are Overly Broad.
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14 seeking additional documents, the requests are overly broad and improper. Document requests
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....:i 15 must be stated with specificity. Indeed, it is within the Code itself. The requesting party
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17 reasonably particularizing each category of item." (Cod Civ. P. § 2031.030(c)(l).) The
18 requesting party must make a "fact-specific showing of relevance" as to each document request
19 for the case at hand. ( Glenfed Development Corp. v.Superior Court (1997) 53 Cal.App.4th 1113,
20 1117.) In sum, "to secure discovery, there must be a showing of more than a wish for the benefit
21 of all the information in the adversary's files."
22 The requests are oppressive on their face due to the overly broad and overly inclusive
23 definitions. For instance, "Nextpulse" is defined to include "Netpulse and eGym." "'Oppression'
24 means the ultimate effect of the burden of responding to the discovery is 'incommensurate with
25 the result sought."' (People v. Sarpas, 225 Cal. App. 4th 1539, 1552 (2014).)
26 E. Brunswick Has Not Met the Heightened Level of Scrutiny to Obtain Additional
27 Confidential Financial Information
By this motion, Brunswick seeks all financial documents of any kind for Netpulse and
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OPPOSITION TO MOTION TO COMPEL- CASE NO. CGC-18-571065
Nextpulse without limitation. It is not entitled to them. Not only are the requests overly broad,
2 requests seeking private and confidential information require a heightened showing of relevance,
3 which Brunswick has not shown. While privacy rights are not absolute, overcoming them
4 requires more than the typical "reasonably calculated to reveal admissible evidence" standard.
5 (Bridgestone I Firestone, Inc. v. Superior Court (1992) 7 Cal.App.4th 1384 (the Court ruled that
6 although disclosure of various trade secrets would be "helpful," said disclosures were not
7 necessary for Plaintiffs to make their prima facie case and, therefore, did not order the
8 disclosure); Marylander v. Superior Court (2000) 81 Cal.App.4th 1119. Should a court find
9 disclosure of financial information is necessary, the request for such a disclosure must be precise
0.. 10 and narrowly drawn to insure maximum protection of the privacy right. (Save Open Space Santa
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11 Monica Mountains v. Superior Court (2001) 84 Cal.App.4th 235; Britt, supra, 20 Cal.3d at 856
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......12 15 also show a particularized need; the Court must be convinced the information is essential to
u-< 16 determining the truth of the matters in dispute. (Britt v. Superior Court (1978) 20 Cal.3d 844,
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17 859-862; Harris v. Superior Court (1992) 3 Cal.App.4th 661, 665.) Corporations also have a
18 general right of privacy. (Roberts v. Gulf Oil Corp. (1983) 147 Cal.App.3d 770, 795.) When the
19 right to discovery conflicts with a privileged right, the court is required to carefully balance the
20 right of privacy with the need for discovery. ( Valley Bank of Nevada v. Superior Court ( 1975) 15
21 Cal.3d 652, 657.)
22 Brunswick raises two reasons it is entitled to the requested documents: (1) they are
23 relevant to analyze Nextpulse's damages; and (2) these documents will support their claims for
24 alter ego and de facto merger. The actual facts do not support these arguments. The moving
25 papers are misleading and omit key relevant facts.
26 Nextpulse sued Brunswick for breaching certain contracts with Netpulse, for breaching
27 the implied covenant of good faith and fair dealing, and for fraud in entering into and performing
28 the contracts. In this action, Nextpulse seeks damages for reimbursement of development costs,
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OPPOSITION TO MOTION TO COMPEL- CASE No. CGC-18-571065
the return of unearned rebates taken by Brunswick, and lost advertising revenue based on
2 Brunswick's refusal to enable Netpulse's advertising platform on its fitness consoles. Nextpulse
3 has repeatedly stated its damages in various responses to discovery. (See Response to Form
4 Interrogatory Number 8.7, 8.8, 9.1, and the Exhibits thereto; Supplemental Responses to
5 Interrogatory Number 11 and the Exhibits thereto) ("Marks Deel." Exs. L and M) Nextpulse has
6 produced all financial documents relevant to its claims and more.
7 The document requests are also not relevant to Brunswick's alter ego and merger doctrine
8 claims. The discovery requests at issue were served on July 8, 2019. The cross-complaint to add
9 eGym and Tom Proulx as cross-defendants was not filed until May 10, 2019. Indeed, at the time
0... 10 the requests were served, there was no de facto merger allegations or any alter ego claims. These
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11 claims did not exist, and Brunswick came up with this argument after the fact because it knew
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define, and speculate as to the meaning of Brunswick's poorly-worded requests is improper and
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