Motion for Spousal Support in Trace3, LLC v. Sycomp, A Technology Company, Inc., et al.| Trellis.Law

On May 12, 2023 a Party Statement was filed involving a dispute between Trace3, Llc, and Devin Tomcik, Geoffrey Peterson, John Barnes, Lilian Elias, Sycomp A Technology Company, Inc., Timothy Cordell, for Business Tort/Unfair Bus Prac Unlimited (07) in the District Court of Santa Clara County.

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NICOLE PHILLIS (State Bar No. 291266)
nicolephillis@dwt.com
DAVIS WRIGHT TREMAINE LLP
865 South Figueroa Street, 24th Floor
Los Angeles, California 90017-2566
Telephone: (213) 633-6800
Fax: (213) 633-6899

JEREMY MERKELSON (Admitted Pro Hac Vice)
jeremymerkelson@dwt.com
DAVIS WRIGHT TREMAINE LLP
1301 K Street NW, Suite 500 East
Washington, D.C., 20005
Telephone: (202) 973-4200
Fax: (202) 973-4499

Attorneys for Plaintiff TRACE3, LLC

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF SANTA CLARA

TRACE3, LLC a California limited liability Case No. 23CV415833
corporation,
PUBLIC/REDACTED VERSION –
Plaintiff, UNREDACTED VERSION LODGED
CONDITIONALY UNDER SEAL
vs. PURSUANT TO SPO ¶ 12.3(A); R. CT. 2.550,

SYCOMP A TECHNOLOGY COMPANY,
INC., a California corporation; TIMOTHY PLAINTIFF TRACE3, LLC’S
CORDELL, an individual; LILIAN ELIAS, an SUPPLEMENTAL JOINT STATUS
individual; GEOFFREY PETERSON, an REPORT RE SPOUSAL PRIVILEGE
individual; DEVIN TOMCIK, an individual; OBJECTIONS
and DOES 1-10, inclusive;
Declarations of Sergio Kopelev and Nicole
Defendants. Phillis filed concurrently herewith]

Assigned to Hon. Sunil R. Kulkarni
Dept. 1

Date: August 28, 2023
Action Filed: May 12, 2023

PUBLIC - REDACTED – PLAINTIFF TRACE3, LLC’S SUPPLEMENTAL JOINT STATUS REPORT RE
SPOUSAL PRIVILEGE OBJECTIONS
TABLE OF CONTENTS

Page

I. INTRODUCTION .............................................................................................................. 5

II. ARGUMENT ...................................................................................................................... 6

A. The Crime-Fraud Exception Applies. ..................................................................... 6

1. The Crime-Fraud Exceptions Applies to Mr. Cordell and Ms.
Thompson’s Communications about Use and Access of Trace3
Systems, Including Dropbox and Power BI. ............................................... 8

2. The Crime-Fraud Exceptions Applies to Mr. Cordell and Ms.
Thompson’s Communications about Implementation of the Use of
Two-Factor Authentication. ...................................................................... 10

10 B. Ms. Thompson Has No Expectation of Privacy as to Mr. Cordell’s Use of
Trace3’s Dropbox Account, Which Was Subject to Trace3’s AUP. .................... 12
11
C. Ms. Thompson and Mr. Cordell Waived Their Spousal Privilege With
12 Their Testimony at Deposition. ............................................................................ 13

13 III. CONCLUSION ................................................................................................................. 15

19
20

Page(s)

Cases

Abbott v. Superior Court
(1947) 78 Cal.App.2d 19 .......................................................................................................... 8

Feldman v. Allstate Ins. Co.
(9th Cir. 2003) 322 F.3d 660 .................................................................................................. 15

Fremont Indemnity Co. v. Superior Court
(1982) 137 Cal.App.3d 554 .................................................................................................... 15

Hiott v. Superior Court
(1993) 16 Cal.App.4th 712 ..................................................................................................... 14
10
Nowell v. Superior Court
11
(1963) 223 Cal.App.2d 652 ...................................................................................................... 7
12
People v. Cleveland
13 (2004) 32 Cal.4th 704 ............................................................................................................. 13

14 People v. Gomez
(1982) 134 Cal.App.3d 874 .................................................................................................... 13
15
People v. Santos
16 (1972) 26 Cal.App.3d 397 .................................................................................................... 7, 8
17
People v. Von Villas
18 (1992) 11 Cal.App.4th 175 ............................................................................................. 7, 8, 14

19 Roman Catholic Archbishop of Los Angeles v. Superior Court
(2005) 131 Cal.App.4th 417 ................................................................................................... 15
20
Solon v. Lichtenstein
21 (1950) 39 Cal.2d 75 ................................................................................................................ 13
22 State Farm Fire & Cas. Co. v. Superior Court
23 (1997) 54 Cal.App.4th 625 ....................................................................................................... 7

24 Steiny & Co., Inc. v. California Electric Supply Co.
(2000) 79 Cal.App.4th 285 ..................................................................................................... 15
25
Statutes
26
Comment Evid. Code § , 912 .................................................................................................. 14, 15
27

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PUBLIC-REDACTED PLAINTIFF TRACE3, LLC’S SUPPLEMENTAL JOINT STATUS REPORT
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RE SPOUSAL PRIVILEGE OBJECTIONS (213) 633-6800
Fax: (213) 633-6899
Evidence Code
§ 912(a) ................................................................................................................................... 14
§ 973........................................................................................................................................ 15

Penal Code
§ 135.......................................................................................................................................... 8
§ 502 (Comprehensive Computer Data Access and Fraud Act) ............................................... 9
§ 981...................................................................................................................................... 7, 8

Regulations

Phillis Declaration, Exhibit A at 54:3–57:23 ................................................................................ 11
Exhibit D at 14:22–16:8 .......................................................................................................... 13
Exhibit D at 56:15–17 ............................................................................................................. 15

19
20

INTRODUCTION

After months of stonewalling, Plaintiff Trace3, LLC (“Trace3”) has finally begun to gain

visibility into the systemic and willful misappropriation of its trade secrets by Defendant Sycomp

A Technology Company, Inc. (“Sycomp”) and former Trace3 employees, Timothy Cordell, Devin

Tomcik, and Geoffrey Peterson. The results confirm Trace3’s fears. Specifically, Trace3

uncovered evidence that establishes (1) the crime-fraud exception applies to Mr. Cordell’s

communications with Ms. Thompson regarding their shared use of Trace3 devices, cloud storage

programs, and Trace3 software to access Trace3 trade secrets and confidential information, which

they used together to abuse access to Trace3’s systems to divert Trace3 business to Sycomp using

Trace3 trade secrets; (2) in any event Mr. Cordell and Ms. Thompson had no expectation to

privacy regarding their use of Trace3 devices, cloud storage programs, and software access

because Trace3’s WISP specifically provides that no such expectation of privacy exists as to those

devices’ use, so they have not made the required prima facie showing to even invoke the spousal

privilege under § 980; and (3) even if the privilege was properly invoked and the crime-fraud

exception did not apply, both Mr. Cordell and Ms. Thompson waived the spousal privilege by

disclosing those communications for their and Sycomp’s benefit at deposition.

Specifically, Trace3 learned that Mr. Cordell was working on a Trace3 deal with a long

time Trace3 client, and that on April 11, Mr. Cordell asked Ms. Thompson to

pull a report for historic 2021 and 2022 Trace3 sales histories and pricing for

Forensic evidence confirms that Ms. Thompson almost immediately pulled a far broader search

than even necessary to satisfy Mr. Cordell’s initial request from Trace3’s proprietary database.

On April 12, Mr. Cordell met online with John Barnes, a current Sycomp and former Trace3

employee, using his Trace3 computer for at least 30 minutes after 5:00 PM PT. Mr. Cordell

testified at deposition that he could not recall that meeting at all. The day after Mr. Cordell met

with Mr. Barnes, on April 13, Mr. Barnes was inexplicably copied into the very same email chain

that Mr. Cordell had been working at Trace3 pertaining to the client whose Ms. Thompson pulled

for Mr. Cordell using Trace3’s proprietary database. Trace3 subsequently lost the deal for the

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deal on which Mr. Cordell had been working to Sycomp. Even worse,

specifically as to Dropbox, Ms. Thompson unreasonably delayed providing her log in credentials

for the Dropbox account associated with her Yahoo email address to Trace3’s forensic examiner

for weeks, which directly resulted in the permanent deletion of the files that her domestic partner,

Timothy Cordell, admitted to spoliating late in the evening of his first day on the job at Sycomp—

April 24.

These facts alone more than establish the prima facie showing required for Trace3 to

invoke the crime-fraud exception to Ms. Thompson’s and Mr. Cordell’s attempt to invoke the

spousal communication privilege. Because the crime-fraud exception applies and the parties have

waived the privilege (to the extent it was properly invoked at all), this Court should overrule both

Ms. Thompson and Mr. Cordell’s spousal privilege objections to questions about (1) Ms.

Thompson and Mr. Cordell’s combined use, access, and communications about accessing

Trace3’s computer systems, including Dropbox; and (2) Ms. Thompson and Mr. Cordell’s spousal

privilege objections about the implementation of and communications related to the

implementation of two-factor authentication for the Trace3 Dropbox account associated with Ms.

Thompson’s Yahoo email address.

II. ARGUMENT

A. The Crime-Fraud Exception Applies.

Evidence Code § 981 provides that the confidential marital communication does not apply

“if the communication was made, in whole or in part, to enable or aid anyone to commit or plan to

commit a crime or a fraud.” (Evid. Code § 981; see also People v. Von Villas (1992) 11

Cal.App.4th 175, 222–223; People v. Santos (1972) 26 Cal.App.3d 397, 402–403.) Thus, the

confidential spousal communication privilege does not apply to attempts to obstruct justice,

including the destruction of evidence and aiding and abetting after the fact. Generally speaking, a

party invoking the crime-fraud exception to a confidential communication privilege must only

make a prima facie showing to invoke that exception. (State Farm Fire & Cas. Co. v. Superior

Court (1997) 54 Cal.App.4th 625, 643 [to invoke the crime/fraud exception to the attorney-client

privilege requires a prima facie showing]; Nowell v. Superior Court (1963) 223 Cal.App.2d 652,

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657 [evidence should be presented to make a prima facie showing the purpose of the

communication was to enable or aid a crime]; Abbott v. Superior Court (1947) 78 Cal.App.2d 19,

21 [applying prima facie standard to crime/fraud exception].)

Both Von Villas and Santos are instructive because both cases confirm the applicability of

the crime-fraud exception upon a prima facie showing that spouses conspired with each other to

commit fraud and/or obstruct reasonable inquiry into relevant evidence. In Von Villas, the

husband advised his wife to throw away personal letters and destroy evidence. (Id., supra, 22

Cal.App.4th at 222.) When the husband attempted to invoke marital privilege over those

communications, the Court of Appeal held “[t]hese statements can easily be construed as attempts

10 to obstruct justice, which would warrant application of the ‘crime or fraud’ exception to the

11 marital privilege.” Similarly, in People v. Santos, the Court of Appeal held that a conversation

12 about destroying evidence was not protected by the marital communication privilege, explaining

13 “the privilege does not cover communications made to enable the other to commit a crime [citing

14 Evidence Code section 981], destruction or concealment of evidence being a crime [citing Penal

15 Code section 135].)” (People v. Santos (1972) 26 Cal.App.3d 397, 402-403.)

16 Here, the crime-fraud exception applies to communications between Mr. Cordell and Ms.

17 Thompson regarding: (1) their shared use and access of Trace3 devices, including Trace3’s

18 Dropbox account associated with Ms. Thompson’s Yahoo email address, for the benefit of

19 Sycomp and (2) regarding the implementation of two-factor authentication on Dropbox after Mr.

20 Cordell deleted responsive, relevant evidence from Dropbox because Trace3 has made a prima

21 facie showing that those communications were (1) made to either fraudulently conceal the identity

22 of who was actually accessing Trace3 information, and for what purpose, while diverting the

23 Trace3 information to Sycomp, which Cordell and Thompson appear to have conspired to do, or

24 (2) reflect efforts to obstruct, destroy, and/or spoliate evidence of Mr. Cordell’s misappropriation

25 of Trace3 confidential and trade secret information by implementing technical protocols (namely,

26 two-factor authentication), which delayed Trace3’s ability to access and preserve evidence that

27 was already deleted by Mr. Cordel in the first instance. (See, e.g., Von Villas, supra, 11

28 Cal.App.4th at 222 [crime-fraud exception applied to communications made between husband and

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wife advising one to destroy evidence in furtherance of efforts to obstruct justice; crime-fraud

exception also applied to notes made at husband’s request where wife subsequently attempted to

hide notes].)

The Crime-Fraud Exceptions Applies to Mr. Cordell and Ms. Thompson’s

Communications about Use and Access of Trace3 Systems, Including Dropbox

and Power BI.

The crime-fraud exception applies to Mr. Cordell and Ms. Thompson’s communications

about the use and access of Trace3 devices and storage systems because Trace3 has made, and in

fact, exceeded the prima facie showing to establish that Mr. Cordell and Ms. Thompson conspired

to abuse Ms. Thompson’s access to Trace3 information to divert business from Trace3 to

Sycomp, in violation of both civil and criminal statutes. Specifically, Trace3 alleged that the

Individual Defendants, including Timothy Cordell, violated Penal Code § 502 (Comprehensive

Computer Data Access and Fraud Act) by abusing access to Trace3’s computer systems:

While employed at Trace3 and potentially thereafter, the Individual
Defendants abused their access to Trace3’s computer systems by
engaging in the intentional copying, movement, and deletion of
Trace3 Trade Secret and Confidential Information from Trace3’s
Box drive and other storage media, both physical and in the cloud,
in violation of Trace3’s applicable policies
See Compl. ¶¶ 109–117.) Ms. Thompson appears to have been an accessory to Mr. Cordell’s

violation of Penal Code § 502 (and a currently unnamed co-conspirator) by using her access to

Trace3 systems to generate historical reports of Trace3 information that Mr. Cordell appears to

have used in connection with another Sycomp employee, John Barnes, to move an

deal that Mr. Cordell had been working on while at Trace3 to Sycomp.

Specifically, the evidence to date shows:

On April 11, 2023, a vendor, emails Trace3 client,

copying Timothy Cordell at Trace3 requesting feedback on a quote (Phillis

Decl., Ex. A [SYCOMP0002803]);

On April 11, 2023, at approximately 5:26 PM PT (12:26 AM on 4/12/23 UTC), Timothy

Cordell asked Renata Elias via Slack message to run a report for in 2021 and 2022

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showing how many had bought via Trace3 (Phillis Decl., Ex.

B);

On the same day, Ms. Elias informed Mr. Cordell that such reports were available via

“Power BI,” which Mr. Cordell stated that he could ask Ms. Thompson to run for him

Id.);

Forensic evidence shows that Ms. Thompson then extracted that report related to

2021 and 2022 sales and pricing history from Power BI and emailed

it to Mr. Cordell approximately 30 minutes after the conversation with Ms. Elias on April

11 (8/28/23 Kopelev Decl., Ex. B at ¶¶ 6–10) ;

Within 24 hours of Ms. Thompson pulling that report regarding at Mr.

Cordell’s apparent behest, Mr. Cordell had a meeting with John Barnes at Sycomp on

April 12, commencing at 5:13 PM PT (4/13/23 at 12:13 AM UTC), which lasted at least

half an hour (Phillis Decl. Ex. C [TRACE30023727]);

After testifying initially under oath that he had never met with Mr. Barnes while Mr.

Barnes was employed by Sycomp and Mr. Cordell was employed at Trace3, when

confronted with the digital record of an online meeting on April 12, Mr. Cordell

acknowledged the digital record of such a meeting and testified that he was unable to

recall what, if anything he discussed with Mr. Barnes during that meeting (Phillis Decl.,

Ex. D [Cordell Tr.] at 36:9–39:25);

April 13, 2023 at 4:12 PM PT, the same vendor who copied in Timothy Cordell

inexplicably copies in John Barnes to the quote, after dropping

Timothy Cordell from the email (Id., Ex. A [SYCOMP0002802];

Trace3 loses the same business that Timothy Cordell had been working

on in the chain to Sycomp.

The report Ms. Thompson extracted contains Trace3 historic sales and pricing information from
2021 and 2022 for a specific Trace3 client and falls within the scope of Category No. 4 on
Trace3’s Amended Trade Secret Identification.
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In addition to this evidence, both Mr. Cordell and Ms. Thompson provided conflicting

testimony about who used Ms. Thompson’s Trace3 laptop to access the file, Tim MDF.xlsx,

which was one of the files that Mr. Cordell misappropriated from Trace3 in preparation for

joining Sycomp. Specifically, forensic examination of Stacy Thompson’s laptop (“ES0034”)

revealed Dropbox-related web activity on April 7, 2023 of a document entitled: “Tim MDF.xlsx.”

(7/7/23 Kopelev Ex. A at ¶ 13.) Notably, April 7 was the date on which Mr. Cordell received his

offer to join Sycomp. (5/19/23 T. Cordell Decl., Ex. A.)

When questioned about whether she accessed this file from her Trace3 desktop, Ms.

Thompson testified unequivocally that she had never seen or accessed that document and that she

10 did not access documents related to Mr. Cordell on Dropbox. (7/17 N. Phillis Decl., Ex. A at

11 74:5–14.) She also testified that she did not provide Mr. Cordell with her credentials for her

12 Trace3 laptop. (Id., Ex. A at 105:15–23.) For his part. Mr. Cordell testified that he could not

13 recall ever accessing this document on Ms. Thompson’s laptop and that he did not have any

14 reason to access this document from her laptop and that he never had requested that Ms.

15 Thompson access this document for him in April 2023. (Phillis Decl , Ex. A at 54:3–57:23.)

16 This evidence well exceeds the required prima facie showing required to establish the

17 applicability of the crime-fraud exception to Mr. Cordell and Ms. Thompson’s communications

18 about the use and sharing of Trace3 information on Trace3 devices to conceal who was accessing

19 Trace3’s confidential information on their computer systems, including Ms. Thompson’s

20 computer and the Dropbox account associated with her Yahoo email address.

21 2. The Crime-Fraud Exceptions Applies to Mr. Cordell and Ms. Thompson’s

22 Communications about Implementation of the Use of Two-Factor

23 Authentication.

24 Separately, the crime-fraud exception also applies to pierce any purported privilege over

25 Mr. Cordell and Ms. Thompson’s communications about two-factor authentication because it

26 appears that one of those parties enabled two-factor authentication to delay Trace3’s ability to

27 access the Dropbox account before the files that Mr. Cordell deleted would be permanently

28 unrecoverable.

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On May 19, 2023, Mr. Cordell submitted a declaration admitting that on April 24, 2023

late in the evening after his first day of work at Sycomp and after he had received Trace3’s cease

and desist letter—he “immediately deleted three files [from Dropbox] because I knew I should not

have them… All of the files and folders I saw remain in my Dropbox account, including the three

files I deleted, which are retrievable for 30 days in Dropbox.” At the hearing on Trace3’s ex parte

application for temporary restraining order, this Court specifically admonished the Individual

Defendants as to the importance of their preservation obligations and specifically noted in his

order:
The Court notes that Sycomp ordered a litigation hold about a
month ago. If it hasn’t happened already, the Court orders a
litigation hold for the individual Defendants (the Court is confident
10 that counsel for the individual Defendants will discuss this issue
with their clients). These litigation holds should maintain the status
11 quo, pending the preliminary injunction hearing.
12 (5/24/23 Order at ¶ 1.)

13 On the same day that the Court’s order came out (May 24) and relying upon the

14 expectation that the Individual Defendants were, in fact, preserving the status quo, Trace3

15 requested that Ms. Thompson provide the consent form for forensic examination of her devices,

16 including the Dropbox account associated with her Yahoo email address. (Phillis Decl., Ex. E.)

17 Trace3’s counsel had to follow up no less than six times on May 26, May 30, May 31, and June 1

18 just to obtain Ms. Thompson’s consent to image the devices and the Dropbox account. (Id., ¶ 8 &

19 Ex. F.) Ms. Thompson’s counsel did not provide the Dropbox credentials for her Dropbox until

20 June 2, claiming initially that Ms. Thompson “did not know the password” because it was saved

21 to her Trace3 computer. (Id., ¶ 9.) Then, after Ms. Thompson’s credentials were finally provided,

22 Trace3 confirmed that the account now had multi-factor authentication enabled, with passcodes

23 sent to Ms. Thompson’s Yahoo email account, which further delayed Stroz Friedberg’s ability to

24 timely obtain and preserve Ms. Thompson’s information. (Id.) As a direct result of Mr. Cordell’s

25 deletion and the delays caused by Ms. Thompson’s failure to consent to the imaging and the

26 unexplained implementation of two-factor authentication, Trace3 was not able to access the

27 Dropbox account for preservation purposes until June 15—long after the 30-day expiration date of

28 May 24, 2023, which Mr. Cordell knew about when he submitted his May 19 declaration.

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When Trace3’s counsel attempted to question Ms. Thompson about the implementation of

two-factor authentication at deposition and whether she had shared authentication codes with Mr.

Cordell, Ms. Thompson testified that she had not changed the two-factor authentication

requirements associated with the Dropbox account and that she could not recall any instance of

providing Mr. Cordell with the two-factor authentication code for her account, but assumed she

“must have” if he had access. (7/17 Phillis Decl., Ex. A at 104:25–105:23.) For his part, Mr.

Cordell testified that he could not ever recall being provided with “two factor authentication

codes” for Ms. Thompson’s account. (Phillis Decl., Ex. D at 14:22–16:8.) Again, Ms. Thompson

and Mr. Cordell’s inconsistent testimony about the implementation of two-factor authentication

10 and the specific delay it caused, resulting in the permanent spoliation of the exact documents Mr.

11 Cordell deleted from Dropbox, underscores their apparent coordination in spoliating evidence of

12 Mr. Thompson’s misappropriation and constitutes an independent basis on which to overrule

13 spousal privilege objections related to the same.

14 B. Ms. Thompson Has No Expectation of Privacy as to Mr. Cordell’s Use of Trace3’s

15 Dropbox Account, Which Was Subject to Trace3’s AUP.

16 Even if the crime-fraud exception did not apply here (which it should), this Court should

17 overrule both Mr. Cordell and Ms. Thompson’s spousal privilege objections regarding their

18 shared use of Trace3 devices because they had no reasonable expectation to privacy regarding

19 their use of Trace3 accounts, programs, and information repositories.

20 “While a communication between a husband and wife is presumed to be confidential, if

21 the facts show that the communication was not intended to be kept in confidence, the

22 communication is not privileged.” (People v. Cleveland (2004) 32 Cal.4th 704, 744 (citing

23 People v. Gomez (1982) 134 Cal.App.3d 874, 879.) A communication can be shown to not be

24 intended to be confidential where a spouse made the same communication to others. (People v.

25 Gomez (1982) 134 Cal.App.3d 874, 879 [defendant made same communications to numerous

26 other parties]; Solon v. Lichtenstein (1950) 39 Cal.2d 75, 80 [communications are not

27 confidential when made to other people].)

28 Here, Ms. Thompson and Mr. Cordell waived the privilege because neither Mr. Cordell

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nor Ms. Thompson had any reasonable expectation of privacy as to their use of Trace3 devices,

storage programs, and software, including Dropbox, because Trace3 paid for it and it was subject

to Trace3’s AUP and Written Information Security Policy (“WISP”), which provides in relevant

part: “I have been informed that Trace3 has the right to monitor all communications and data that

are transmitted or stored on company owned resources in accordance with applicable laws, and

that I do not have a reasonable expectation of privacy associated with use of those company-

owned resources.” Thus, any communications about their use of Trace3 devices, programs, and

software should not be shielded as confidential marital communications because both Ms.

Thompson and Mr. Cordell never had a reasonable expectation of privacy as to the use of those

10 programs vis-à-vis Trace3. Because there was no reasonable privacy expectation relating to

11 Dropbox under the WISP and AUP, Ms. Thompson’s and Mr. Cordell’s attempts to invoke

12 spousal privilege on this topic fail. (Von Villas, supra, 11 Cal.App.4th at 221.)

13 C. Ms. Thompson and Mr. Cordell Waived Their Spousal Privilege With Their

14 Testimony at Deposition.

15 Lastly, both Ms. Thompson and Mr. Cordell waived the spousal communication privilege

16 as to their communications with each other about the use of Trace3 devices, information,

17 software, and programs by testifying about the same in deposition.

18 There is no privilege against disclosure of a communication made between spouses if the

19 marital communication was disclosed by the spouse. Evidence Code section 912(a) provides in

20 pertinent part: “[T]he right of any person to claim a privilege provided by Section … 980

21 (privilege for confidential marital communications) … is waived with respect to a

22 communication protected by the privilege if any holder of the privilege, without coercion, has

23 disclosed a significant part of the communication or has consented to disclosure made by

24 anyone.” (Evid. Code section 912(a).) The Law Revision Commission Comment explains why

25 disclosure waives the privilege: “The theory underlying the concept of waiver is that the holder

26 of the privilege has abandoned the secrecy to which he is entitled under the privilege.” (Law

27 Revision Commission, Cmt. Evid. Code §, 912.) It thus follows that a disclosure of a privileged

28 communication waives the privilege. (Hiott v. Superior Court (1993) 16 Cal.App.4th 712, 719.)

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Such a disclosure constitutes a waiver of the privilege because it manifests a nonconfidential

intent by the privilege holder. (Roman Catholic Archbishop of Los Angeles v. Superior Court

(2005) 131 Cal.App.4th 417, 441 [knowledge that communications likely would be transmitted

to a third person vitiated privilege, or alternatively, constituted waiver of privilege].)

At deposition, Mr. Cordell testified—without objection—that he had never “request[ed]”

that Ms. Thompson access a proprietary and specific report related to sales

history in April 2023. (Phillis Decl., Ex. D at 56:15–17.) Beyond Mr. Cordell’s apparent

waiver, Sycomp also examined Ms. Thompson about (1) her communications with Mr. Cordell

and their shared use of the Trace3 Dropbox and (2) whether Mr. Cordell ever used the Dropbox

to transfer Trace3 trade secrets to himself personally or to Sycomp. In declining to object, Ms.

Thompson waived any objection on the basis of a spousal communication or otherwise.

Defendants cannot use Ms. Thompson’s and Mr. Cordell’s spousal communication

privilege as both a shield and a sword by first opening the door to defensive testimony about Ms.

Thompson and Mr. Cordell’s roles in the misappropriation of Trace3 trade secrets and then

joining in Ms. Thompson’s objections to Trace3’s examination on the same subject matter.

(Evid Code., § 912; Steiny & Co., Inc. v. California Electric Supply Co. (2000) 79 Cal.App.4th

285, 292 [“Where privileged information goes to the heart of the claim, fundamental fairness

requires that it be disclosed for the litigation to proceed.”]; Fremont Indemnity Co. v. Superior

Court (1982) 137 Cal.App.3d 554, 560 [finding privilege waiver where individual put at issue

the factual issues in prior pleading]; see also Evid. Code, § 973; Southern Cal. Gas Co. supra

50 Cal.3d at 45; Wellpoint supra 59 Cal.App.4th at 128; Mitchell, supra, 37 Cal.3d at 604.)

Thus, regardless of whether this Court finds that the crime-fraud exception applies or

whether Ms. Thompson and Mr. Cordell had a reasonable expectation of privacy, the door has

been opened on topics concerning Mr. Cordell’s use of the Dropbox account that Ms. Thompson

controlled on behalf of Trace3, and Ms. Thompson did not object, she waived the spousal

privilege. (Feldman v. Allstate Ins. Co. (9th Cir. 2003) 322 F.3d 660, 669 [confidential marital

communication privilege waived at deposition].) Thus, this Court should overrule the objections.

14 RIGHT REMAINE LLP
865 S. FIGUEROA ST, SUITE 2400
PUBLIC-REDACTED PLAINTIFF TRACE3, LLC’S SUPPLEMENTAL JOINT STATUS REPORT
LOS ANGELES, CALIFORNIA 90017-2566
RE SPOUSAL PRIVILEGE OBJECTIONS (213) 633-6800
Fax: (213) 633-6899
III. CONCLUSION

For the reasons and on the grounds set forth above, Trace3 respectfully requests that the

Court overrule both Ms. Thompson and Mr. Cordell’s spousal privilege objections. To the extent

formal briefing is required, Trace3 requests the opportunity to brief the Court on the crime-fraud

exception and its applicability here before the continued deposition of Ms. Thompson (and Mr.

Cordell) to ensure that Trace3 does not have to incur additional discovery expense due to

anticipated spousal privilege objections, which the parties have not been able to resolve.

DATED: August 28, 2023 AVIS RIGHT REMAINE LLP
JEREMY MERKELSON
NICOLE PHILLIS
10
By:
11 Nicole Phillis

12 Attorneys for Plaintiff
TRACE3, LLC
13

19
20

15 AVIS RIGHT REMAINE LLP
865 S. FIGUEROA ST, SUITE 2400
PUBLIC-REDACTED PLAINTIFF TRACE3, LLC’S SUPPLEMENTAL JOINT STATUS REPORT
LOS ANGELES, CALIFORNIA 90017-2566
RE SPOUSAL PRIVILEGE OBJECTIONS (213) 633-6800
Fax: (213) 633-6899
THIRD-PARTY DEFENDANT STACY THOMPSON’S SECTION

The parties participated in an informal discovery conference on August 7, 2023 to address

Trace3’s contention that Stacy Thompson is precluded from asserting the spousal communication

privilege in a second deposition of Thompson sought by Trace3. Following that conference

Trace3 ceased it efforts to depose Thompson for a second time and has not conferred with

Thompson regarding a second deposition.

DATED: August 28, 2023 ORENSEN AW ROUP
ROD SORENSEN

10 By:
Rod Sorensen
11
Attorneys for Third-Party STACY
12 THOMPSON
13

19
20

25
This language was provided by Ms. Thompson’s counsel, Rod Sorensen, via email at 11:24 a.m.
26 Trace3 attempted to meet and confer with Ms. Thompson’s counsel regarding the contents of
Trace3’s report, but was unable to because of Mr. Sorensen’s unavailability. Trace3 submits this
27 information as directed by Ms. Thompson’s counsel, who confirmed via email at 12:04 p.m. that
the above statement reflected Ms. Thompson’s insert: “I will not have the opportunity to properly
28 responds to Trace3’s latest claims, whatever they may be. Per the emails below, it will be a
simultaneous exchange and the insert I provided below will be the insert you should include.”
16 AVIS RIGHT REMAINE LLP
865 S. FIGUEROA ST, SUITE 2400
PUBLIC-REDACTED PLAINTIFF TRACE3, LLC’S SUPPLEMENTAL JOINT STATUS REPORT
LOS ANGELES, CALIFORNIA 90017-2566
RE SPOUSAL PRIVILEGE OBJECTIONS (213) 633-6800
Fax: (213) 633-6899
PROOF OF SERVICE
STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

I am employed in the County of Los Angeles, State of California. I am over the age of 18
and not a party to the within action; my business address is 865 S. Figueroa Street, Suite 2400,
Los Angeles, CA 90017.

On August 28, 2023, I served the document described as “PLAINTIFF TRACE3, LLC’S
SUPPLEMENTAL JOINT STATUS REPORT RE SPOUSAL PRIVILEGE
OBJECTIONS” upon the interested parties in this action addressed as follows:

Rajiv Dharnidharka Attorneys for Defendant
Micah Chavin SYCOMP A TECHNOLOGY COMPANY,
Jeanette.Barzelay INC.
Erin Heiferman
DLA Piper
10 2000 University Ave
East Palo Alto, CA 94303
11 Tel: 650-833-2322
Email: Rajiv.Dharnidharka@us.dlapiper.com
12 Micah.Chavin@us.dlapiper.com
Jeanette.Barzelay@us.dlapiper.com
13 Erin.Heiferman@us.dlapiper.com
14 Lyn R. Agre Attorneys for Individual Defendants
Edward E. Shapiro TIMOTHY CORDELL, LILIAN ELIAS,
15 Lesa Libatique (Paralegal) GEOFFREY PETERSON, DEVIN TOMCIK
Glenn Agre Bergman & Fuentes
16 44 Montgomery Street, Suite 2410
San Francisco, CA 94104
17 Telephone: 415.599.0880
E-Mail: lagre@glennagre.com
18 eshapiro@glennagre.com
llibatique@glennagre.com
19
Rod Sorensen
20
303 Twin Dolphin Drive, Suite 600
21 Redwood City, Ca 94065
Telephone: 650.269.7450
22 rsorensen@SorensenLawGroup.com
23 X (VIA EMAIL) By forwarding a portable document file to the electronic mail address(es)
above from electronic mail address linapearmain@dwt.com, at Suite 2400, 865 South
24
Figueroa Street, Los Angeles, California.
25

17 AVIS RIGHT REMAINE LLP
865 S. FIGUEROA ST, SUITE 2400
PUBLIC-REDACTED PLAINTIFF TRACE3, LLC’S SUPPLEMENTAL JOINT STATUS REPORT
LOS ANGELES, CALIFORNIA 90017-2566
RE SPOUSAL PRIVILEGE OBJECTIONS (213) 633-6800
Fax: (213) 633-6899
Executed on August 28, 2023, Los Angeles, California.

X (State) I declare under penalty of perjury under the laws of the State of California that the
above is true and correct.

LINA PEARMAIN

19
20

18 AVIS RIGHT REMAINE LLP
865 S. FIGUEROA ST, SUITE 2400
PUBLIC-REDACTED PLAINTIFF TRACE3, LLC’S SUPPLEMENTAL JOINT STATUS REPORT
LOS ANGELES, CALIFORNIA 90017-2566
RE SPOUSAL PRIVILEGE OBJECTIONS (213) 633-6800
Fax: (213) 633-6899

Case Info

Judge

Beth A. R. McGowen Track Judge’s New Case

Case No.

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Document Filed Date

August 28, 2023

Case Filing Date

May 12, 2023

County

Parties

Devin Tomcik Defendant
Geoffrey Peterson Defendant
John Barnes Defendant
Lilian Elias Defendant
Lyn Robyn Agre Attorney For The Defendant
Nicole Susan Phillis Attorney For The Plaintiff
Rajiv Sajjan Dharnidharka Attorney For The Defendant
Rodney Brandon Sorensen Attorney
Stacy Thompson Thompson Interested Party
Superior Court of CA, County of Santa Clara Attorney
Superior Court of California Notice
Sycomp a Technology Company, Inc. Defendant
Timothy Cordell Defendant
Trace3, LLC Plaintiff
Edward Shapiro Attorneys for Defendants
Micah Chavin Attorneys for Defendants
Heather Canner Attorneys for Plaintiffs
Erin Heiferman Attorneys for Defendants
Megan Reilly Attorneys for Defendants
Joseph Schultz Attorney
Jibraun Riaz Attorneys for Plaintiffs
Neal Callahan Attorney

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Party Statement: Trace3, LLC v. Sycomp, A Technology Company, Inc., et al.

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