Preview
ELECTRONICALLY FILED
Superior Court of California
County of Santa Barbara
1 Shayna Balch Santiago (SBN 304802) Darrel E. Parker, Executive Officer
E-Mail: ssantiago@fisherphillips.com 2/10/2022 6:27 PM
2 FISHER & PHILLIPS LLP
3200 North Central Avenue, Suite 1550 By: Narzralli Baksh, Deputy
3 Phoenix, Arizona 85012-2487
Telephone: (602)281-3400
4 Facsimile: (602)281-3401
5 Kathryn M. Evans (SBN 323190)
E-Mail: kmevans@fisherphillips.com
6 FISHER & PHILLIPS LLP
4747 Executive Drive, Suite 1000
7 San Diego, California 92121
Telephone: (858)597-9600
8 Facsimile: (858)597-9601
Attorneys for Defendants, UCOMMG, LLC; Unified Communications Group, Inc.; Kenneth
9 W. Newbatt; Bianca Newbatt; Mitchell C. Lipkin; Michael J. Bellas; Jimmie Garrett Baker, Jr.;
WesTele Utility Solutions, LLC; and Cynthia Baker
10
11 SUPERIOR COURT OF THE STATE OF CALIFORNIA
12 FOR THE COUNTY OF SANTA BARBARA - ANACAPA DIVISION
13 BUTLER AMERICA, LLC, a Delaware CASE NO.: 20CV03877
limited liability company, [Unlimited Jurisdiction]
14
Plaintiff, Assigned for all purposes to the Honorable
15 Donna D. Geck, Department 4
v.
16 DEFENDANTS’ REPLY IN SUPPORT OF
UCOMMG, LLC, a Nevada limited liability MOTION FOR TERMINATING
17 company; UNIFIED COMMUNICATIONS SANCTIONS OR, IN THE
GROUP, INC., a dissolved Washington ALTERNATIVE, MOTION FOR
18 corporation; KENNETH W. NEWBATT, an PROTECTIVE ORDER AND REQUEST
individual; BIANCA NEWBATT, an FOR MONETARY SANCTIONS
19 individual; MITCHELL C. LIPKIN, an
individual; MICHAEL J. BELLAS, an [Filed concurrently with the Declaration of
20 individual; JIMMIE GARRETT BAKER, JR., Kathryn M. Evans]
an individual; WESTELE UTILITY
21 SOLUTIONS, LLC, a California limited DATE: February 18, 2022
liability company; and DOES 1 through 50, TIME: 10:00 a.m.
22 inclusive, Complaint Filed: November 20, 2020
Removal Filed: January 4, 2021
23 Defendants. FAC Filed: April 16, 2021
SAC Filed: November 15, 2021
24 Trial Date: Not Set
25 I. INTRODUCTION
26 Defendants’ Motion for Terminating Sanctions or. in the Alternative, Motion for
27 Protective Order and Request for Monetary Sanctions should be granted. Unfortunately,
28 Defendants had no choice but to seek the Court’s intervention to curtail Plaintiff Butler America,
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FP 43074905.1
1 LLC’s discovery abuses. Unless the Court intervenes, Plaintiff will continue its modus operandi
2 of misusing the discovery process as a means to harass Defendants and cause Defendants to spend
3 money filing motions, such as the instant Motion, just to preserve their rights.
4 Two weeks after Defendants filed the instant Motion, Plaintiff, in a blatant attempt to
5 avoid its trade secret disclosure obligations under Code of Civil Procedure section 2019.210,
6 filed a Second Amended Complaint (“SAC”) removing its trade secret cause of action, adding
7 causes of action for conversion and intentional interference with contractual relations (both of
8 which had previously been asserted in Plaintiff’s original Complaint and removed when Plaintiff
9 filed its First Amended Complaint), and replacing references to the term “trade secrets” with the
10 term “confidential information.” Plaintiff’s improper filing of its SAC does not alleviate Plaintiff
11 of its mandatory obligation to comply with Section 2019.210.
12 The law is clear that Code of Civil Procedure section 2019.210 applies to cases that do
13 not expressly allege misappropriation of trade secrets where there is an equivalent claim. Indeed,
14 as this Court expressly explained in its December 3, 2019 ruling: “Thus, eliminating the
15 misappropriation of trade secret claims from the SAC does not necessarily imply that the
16 limitation of section 2019.210 does not apply to the remaining causes of action.”
17 (Supplemental Declaration of Kathryn M. Evans (“Supp. Evans Decl.”) ¶6, Ex. A.) Plaintiff
18 ignores both case law and this Court’s order on this topic and instead repeatedly asserts that this
19 Motion is moot due to the filing of the SAC. Plaintiff’s arguments are wholly without merit.
20 II. SECTION 2019.210 CONTINUES TO APPLY DESPITE PLAINTIFF’S
21 ABANDONMENT OF ITS TRADE SECRET CAUSE OF ACTION
22 Plaintiff’s abandonment of its trade secret misappropriation cause of action does not
23 excuse it from complying with its mandatory obligations under Section 2019.210. Notably,
24 Plaintiff provided zero authority for its argument that removing the trade secret cause of action
25 means that Section 2019.210 does not apply.
26 However, as thoroughly briefed in Defendants’ moving papers, Section 2019.210 is not
27 cause of action specific. In other words, if any claim relates to a misappropriation of a trade
28 secret—which all of Plaintiff’s causes of action do—Plaintiff cannot seek discovery without first
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1 complying with Section 2019.210. (Advanced Modular Sputtering, Inc. v. Super. Ct. (2005)
2 132 Cal.App.4th 826, 834.)
3 Plaintiff’s breach of contract and breach of implied covenant of good faith and fair dealing
4 causes of action are explicitly based on trade secret misappropriation allegations. Plaintiff’s SAC
5 alleges that Defendants Lipkin and Bellas breached their employment agreements “including by
6 misappropriating Plaintiff’s trade secrets, disclosing Plaintiff’s trade secrets to third
7 parties and/or using Plaintiff’s trade secrets to directly compete against Plaintiff.” (SAC
8 ¶¶59, 65, 70, 75.)
9 Neothermia Corp. v. Rubicor Med., Inc. (N.D. Cal. 2004) 345 F.Supp.2d 1042, is directly
10 on point. In Neothermia, the District Court held Section 2019.210 applied despite the plaintiff’s
11 failure to allege a claim for misappropriation of trade secrets, instead alleging a claim for a breach
12 of a non-disclosure agreement. There, the plaintiff alleged that the defendant “obtained
13 proprietary information in the course of business negotiations and used and revealed the
14 information in [the defendant’s] own patent application.” (Id. at p. 1043.) The District Court
15 held that “[s]ection 2019[.210] thus applies not only to theft of trade secrets, but also to disclosure
16 of secrets in violation of a nondisclosure agreement as alleged [by the plaintiff].” (Id at p. 1044
17 [emphasis added].) The same as Neothermia, Plaintiff alleged breach of contract causes of action
18 based on misappropriation of trade secrets, and Section 2019.210 applies in this matter.
19 Moreover, Plaintiff’s other four causes of action for conversion, intentional interference
20 with contractual relations, intentional interference with prospective economic advantage, and
21 unfair competition are no more than thinly veiled misappropriation claims. In Interserve,
22 Inc. v. Fusion Garage PTE, Ltd. (N.D. Cal. April 9, 2010) No. C 09-0512 JW (PVT), 2010 WL
23 1445553, *1, the plaintiff brought claims for misappropriation of business ideas, false
24 advertising, breach of fiduciary duty, and fraud but did not allege a misappropriation of trade
25 secrets claim. The defendant argued that the plaintiff was required to comply with
26 Section 2019.210 because it was using its common law claims to prosecute a “thinly-veiled
27 misappropriation of trade secrets claim.” (Ibid.) The District Court agreed, applied
28 ///
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1 Section 2019.210, and explained Section 2019.210’s procedures would serve the same beneficial
2 functions for the causes of action asserted by the plaintiff as they do in trade secrets cases. (Ibid.)
3 Plaintiff cannot dispute that its common law causes of action are not thinly veiled
4 misappropriation claims. Indeed, Plaintiff’s only change to these causes of action from the
5 original Complaint and FAC was to change the references to “trade secrets” in these causes of
6 action to references to “confidential information.” Moreover, the employment agreements
7 incorporated by reference in the SAC define “confidential information” the same as trade
8 secrets - as “information and documents that are valuable to Butler America and not generally
9 available to the public.” (SAC ¶¶25, 37.) In sum, the “confidential information” at issue here is
10 defined in terms of trade secrets. No amount of repackaging or spin, or unsupported insistence
11 that a new title brings a new meaning, can change that fact. Therefore, Section 2019.210 also
12 applies to Plaintiff’s remaining causes of action.
13 Thus, Plaintiff is required to identify the confidential information and trade secrets it
14 alleges Defendants misappropriated with reasonable particularity. The fact that Plaintiff has
15 resisted providing these disclosures at every turn is telling. If Plaintiff had a reasonable basis for
16 its claims, Plaintiff should have no problem making these disclosures and allowing the case to
17 proceed. Instead, Plaintiff refuses to abide by its mandatory obligations under Section 2019.210
18 and opposes Defendants’ attempts to understand what is at issue in this lawsuit. Plaintiff’s
19 gamesmanship should not be tolerated.
20 III. PLAINTIFF HAS SOUGHT DISCOVERY DIRECTLY RELATED TO ITS
21 CLAIMS THAT DEFENDANTS MISAPPROPRITAED PLAINTIFF’S TRADE
22 SECRETS AND “CONFIDENTIAL INFORMATION”
23 Plaintiff’s assertion that the only discovery it has propounded has been jurisdictional
24 discovery is completely inaccurate. First and foremost, Plaintiff propounded discovery requests
25 on two of the California--based Defendants - Cynthia Baker and WesTele Utility Services, Inc.
26 (Evans Decl. ¶19.) Defendants Baker and WesTele are not a part of the Motion to Quash Service
27 of Summons and the discovery propounded on these two Defendants had nothing to do with
28 ///
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1 jurisdiction. Plaintiff notably failed to mention these discovery requests in its Opposition.
2 Accordingly, Plaintiff cannot argue that it has only sought jurisdictional discovery.
3 Moreover, the discovery requests propounded on the other Defendants, UCOMMG, LLC,
4 Unified Communications Group, Inc., Kenneth Newbatt, Mitchell Lipkin, and Michael Bellas
5 are not limited to jurisdictional inquiries and instead seek information and documents directly
6 relevant to Plaintiff’s substantive claims that Defendants’ allegedly misappropriated Plaintiff’s
7 trade secrets and “confidential information.” For example, in the SAC, Plaintiff alleges that
8 Defendants unfairly obtained business from Plaintiff’s clients, including Frontier, using
9 Plaintiff’s “confidential information.” (SAC 3, 21, 40, 44, 55.)
10 In turn, and without limitation, Plaintiff’s discovery requests have sought information and
11 documents relating to:
12 All communications between Defendants and Frontier Communications;
13 All contracts and agreements between Defendants and Frontier Communications;
14 All contracts and agreements that Defendants have entered into with businesses
15 with one more locations in California;
16 All contracts and agreements that Defendants entered into with California
17 persons; and
18 All documents relating to every client or customer that is or was headquartered,
19 located, residents of, or does business in California.
20 (Totten Decl. Exs. A-D, I-N.)
21 Plaintiff cannot allege with a straight face that the discovery requests do not overlap with
22 its substantive allegations in the SAC. Plaintiff’s discovery responses either directly overlap
23 (i.e., every discovery request relating to Frontier Communications) or are so patently overbroad
24 that they are nothing more than an impermissible attempt to circumvent the requirements of
25 Section 2019.210 and go on a fishing expedition as to Defendants’ trade secret and/or
26 confidential information. Plaintiff’s discovery requests effectively request access to every single
27 scrap of paper and electronic file relating to Defendants’ business. Section 2019.210 was enacted
28 specifically to prevent fishing expeditions like the one Plaintiff is attempting to engage in.
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DEFS’ REPLY IN SUPPORT OF MTN FOR TERMINATING SANCTIONS
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1 (Perlan Therapeutics, Inc. v. Super. Ct. (2009) 178 Cal.App.4th 1333, 1343.) Absent an order
2 for terminating sanctions, or in the alternative, a protective order requiring Plaintiff to identify
3 the alleged trade secrets and confidential information at issue, Plaintiff will obtain Defendants’
4 confidential and trade secret information and then seek to claim ownership of such information
5 and re-cast itsclaims. Notably, when asked by Defendants to confirm that Plaintiff will not
6 simply re-allege its trade secret cause of action in the future (as Plaintiff has already dismissed
7 and subsequently re-added two causes of action), Plaintiff would not conclusively state that it
8 would not try to plead a trade secret cause of action in the future. (Supp. Evans Decl. ¶14, Ex. G.)
9 Defendants tried to meet and confer with Plaintiff on why Plaintiff’s discovery is
10 expressly barred by Section 2019.210. (Supp. Evans Decl. ¶¶7-13.) Indeed, Defendants
11 responded to the few discovery requests that sought purely jurisdictional information. However,
12 Plaintiff has continued to refuse to provide any disclosures pursuant to Section 2019.210 and
13 instead filed Motions to Compel on the inappropriate discovery requests described above.
14 Plaintiff must provide its Section 2019.210 disclosures before Defendants’ opposition on
15 Plaintiff’s Motions to Compel are due. Plaintiff’s insistence that the Court must wait until the
16 hearing on its Motions to Compel to address the issue of Plaintiff’s failure to provide
17 Section 2019.210 disclosures is meritless. A motion for protective order is the appropriate
18 avenue for the Court to address whether a plaintiff has adequately complied with
19 Section 2019.210. (See Perlan Therapeutics, Inc. v. Superior Court (2009)
20 178 Cal.App.4th 1333, 1352 [hearing trade secret plaintiff’s petition for writ on trial court’s grant
21 of motion for protective order based on inadequate trade secret disclosure and denying relief from
22 the writ, holding “a court does not abuse itsdiscretion by compelling a plaintiff to produce a
23 clear, nonevasive trade secret statement”].) Moreover, Plaintiff’s mandatory disclosures will
24 help to frame the issues on Plaintiff’s Motions to Compel. If Plaintiff continues to refuse to
25 provide its disclosures, its claims should be dismissed in their entirety.
26 ///
27 ///
28 ///
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DEFS’ REPLY IN SUPPORT OF MTN FOR TERMINATING SANCTIONS
FP 43074905.1
1 IV. TERMINATING SANCTIONS ARE WARRANTED BECAUSE DEFENDANTS
2 HAVE EXHAUSTIVELY REQUESTED PLAINTIFF PROVIDE ITS SECTION
3 2019.210 DISCLOSURES AND PLAINTIFF HAS REPEATEDLY REFUSED
4 Over the course of the last year, Defendants have repeatedly requested Plaintiff provide
5 its Section 2019.210 disclosures. Plaintiff has refused to do so. The Declaration of Kathryn M.
6 Evans in Support of the Motion (“Evans Decl.”) details the specifics of Defendants’ attempts to
7 obtain the mandatory disclosures from Plaintiff. The Declaration details no less than twelve
8 specific instances in which Defendants requested Plaintiff provide its Section 2019.210
9 disclosures. (Evans Decl. ¶¶2-20.) Defendants made multiple additional requests for Plaintiff to
10 provide its disclosures after Defendants filed the moving papers in this Motion. Despite
11 Defendants’ efforts, Plaintiff has refused to comply with its mandatory obligations under
12 Section 2019.210.
13 Terminating sanctions are reasonable and appropriate when a party persists in violating
14 discovery obligations. (See Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 787;
15 Hartbrodt v. Burke (1996) 42 Cal.App.4th 168, 175; Laguna Auto Body v. Farmers Ins.
16 Exchange (1991) 231 Cal.App.3d 481, 488.) As detailed at length in the Evans Declaration and
17 Defendants’ moving papers, Plaintiff has persisted in violating its discovery obligations by
18 failing to abide by its statutory obligations. Plaintiff is the one that chose to file this action and
19 has then disregarded its mandatory obligations in discovery for over a year and forced Defendants
20 to incur unnecessary expenses in order to protect their rights. Plaintiff’s actions warrant an order
21 for terminating sanctions or, at the very least, protective order requiring Plaintiff to comply with
22 its obligations under Section 2019.210 and prohibiting further discovery until Plaintiff does so.
23 V. PLAINTIFF’S RULE 26 DISCLOSURES ARE WHOLLY INADEQUATE TO
24 COMPLY WITH SECTION 2019.210
25 Lastly, in its Opposition, Plaintiff now claims that it complied with its obligations under
26 Section 2019.210 when it provided its Rule 26 disclosures in Federal Court. Not only is this the
27 first time Plaintiff has made such an assertion (as detailed in the Evans Declaration, Plaintiff
28 never made this statement in any of the numerous times Defendants’ requested Plaintiff’s
7
DEFS’ REPLY IN SUPPORT OF MTN FOR TERMINATING SANCTIONS
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1 Section 2019.210 disclosures), but this assertion is at odds with Plaintiff’s other statements made
2 throughout this litigation. Namely, after providing its Rule 26 disclosures, Plaintiff stated that
3 any trade secret information had been redacted from the disclosures, that there were additional
4 trade secrets at issue that were not included in the disclosures, and that Defendants were “free to
5 pursue discovery” to determine the trade secrets at issue. (Evans Decl. ¶¶10-11.)
6 Regardless, Plaintiff’s Rule 26 disclosures are entirely inadequate to satisfy Plaintiff’s
7 burden under Section 2019.210. Plaintiff’s initially filed Rule 26 disclosures did not identify or
8 even mention Plaintiff’s trade secret or confidential information. (Evans Decl. Ex. F.) Plaintiff’s
9 May 7, 2021 document production consisted of haphazard internal e-mails between employees
10 of Plaintiff, form documents, and fully redacted pages. (Supp. Evans Decl. ¶2.) This document
11 production hardly rises to the level of identifying the trade secrets and confidential information
12 at issue “with reasonable particularity” as required by Section 2019.210 and Defendants continue
13 to be completely in the dark as to what trade secrets and confidential information were
14 supposedly misappropriated. Accordingly, Defendants’ Motion should be granted.
15 VI. CONCLUSION
16 Based on the foregoing, Defendants respectfully request the Court grant their Motion for
17 terminating sanctions against Plaintiff. In the alternative, Defendants respectfully request the
18 Court issue a protective order requiring Plaintiff to comply with its obligations under
19 Section 2019.210 and prohibiting further discovery until Plaintiff does so, and for sanctions in
20 the amount of $6,150.
21 DATE: February 10, 2022 FISHER & PHILLIPS LLP
22
23 By:
l
Shayna Balch Santiago
24 Kathryn M. Evans
Attorneys for UCOMMG, LLC; Unified
25 Communications Group, Inc.; Kenneth W. Newbatt;
Bianca Newbatt; Mitchell C. Lipkin; Michael J.
26 Bellas; Jimmie Garrett Baker, Jr.; WesTele Utility
Solutions, LLC; and Cynthia Baker
27
28
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DEFS’ REPLY IN SUPPORT OF MTN FOR TERMINATING SANCTIONS
FP 43074905.1
1 PROOF OF SERVICE
(CCP §§1013(a) and 2015.5)
2
I, the undersigned, am at least 18 years old and not a party to this action. I am employed
3 in the County of San Diego with the law offices of Fisher & Phillips LLP and its business address
is 4747 Executive Drive, Suite 1000, San Diego, California 92121.
4
On February 10, 2022, I served the following document(s) DEFENDANTS’ REPLY IN
5 SUPPORT OF MOTION FOR TERMINATING SANCTIONS OR, IN THE
ALTERNATIVE, MOTION FOR PROTECTIVE ORDER AND REQUEST FOR
6 MONETARY SANCTIONS on the person(s) listed below by placing
copy thereof enclosed in sealed envelope(s) addressed as follows: □ the original a true
7
Paul P. Young Telephone: (626)744-1838
8 Joseph Chora Facsimile: (626)744-3167
Cameron H. Totten E-Mail: paul@cym.law; joseph@cym.law;
9 Armen Manasserian cameron@cym.law; armen@cym.law;
Scott O’Halloran scott@cym.law
10 CHORA YOUNG LLP Attorneys for Butler America, LLC
650 Sierra Madre Villa Avenue, Suite 304
11 Pasadena, California 91107
[by MAIL] - I enclosed the document(s) in a sealed envelope or package addressed to
12 the person(s) whose address(es) are listed above and placed the envelope for collection
and mailing, following our ordinary business practices. I am readily familiar with this
13 business’s practice for collecting and processing correspondence for mailing. On the
same day that correspondence is placed for collection and mailing, it is deposited in the
14 ordinary course of business with the United States Postal Service in San Diego California,
in a sealed envelope with postage fully prepaid.
15 [by FAX] - Based on an agreement of the parties to accept service by fax transmission,
I faxed the document(s) to the person(s) at fax number(s) listed above from fax number
16 (858) 597-9601. The fax reported no errors. A copy of the transmission report is attached.
[by OVERNIGHT DELIVERY] - I enclosed the document(s) in an envelope or package
17 provided by an overnight delivery carrier and addressed to the person(s) at the address(es)
listed above. I placed the envelope or package for collection and overnight delivery at an
18 office or a regularly utilized drop box of the overnight carrier.
[by ELECTRONIC SERVICE] - Based on a court order or an agreement of the parties
19 to accept service by electronic transmission, I electronically served the document(s) to
the person(s) at the electronic service address(es) listed above.
20 [by ELECTRONIC SERVICE] – Pursuant to California Code of Civil Procedure
§1010.6(e)(1), I electronically served the document(s) to the person(s) at the electronic
21 service address(es) listed above.
22 I declare under penalty of perjury, under the laws of the State of California, that the
foregoing is true and correct.
23
Executed February 10, 2022, at San Diego, California.
24
Susan E. Valle By:
25 Print Name Signature
26
27
28
1
PROOF OF SERVICE
FP 43074905.1
Preview
ELECTRONICALLY FILED Superior Court of California County of Santa Barbara 1 Shayna Balch Santiago (SBN 304802) Darrel E. Parker, Executive Officer E-Mail: ssantiago@fisherphillips.com 2/10/2022 6:27 PM 2 FISHER & PHILLIPS LLP 3200 North Central Avenue, Suite 1550 By: Narzralli Baksh, Deputy 3 Phoenix, Arizona 85012-2487 Telephone: (602)281-3400 4 Facsimile: (602)281-3401 5 Kathryn M. Evans (SBN 323190) E-Mail: kmevans@fisherphillips.com 6 FISHER & PHILLIPS LLP 4747 Executive Drive, Suite 1000 7 San Diego, California 92121 Telephone: (858)597-9600 8 Facsimile: (858)597-9601 Attorneys for Defendants, UCOMMG, LLC; Unified Communications Group, Inc.; Kenneth 9 W. Newbatt; Bianca Newbatt; Mitchell C. Lipkin; Michael J. Bellas; Jimmie Garrett Baker, Jr.; WesTele Utility Solutions, LLC; and Cynthia Baker 10 11 SUPERIOR COURT OF THE STATE OF CALIFORNIA 12 FOR THE COUNTY OF SANTA BARBARA - ANACAPA DIVISION 13 BUTLER AMERICA, LLC, a Delaware CASE NO.: 20CV03877 limited liability company, [Unlimited Jurisdiction] 14 Plaintiff, Assigned for all purposes to the Honorable 15 Donna D. Geck, Department 4 v. 16 DEFENDANTS’ REPLY IN SUPPORT OF UCOMMG, LLC, a Nevada limited liability MOTION FOR TERMINATING 17 company; UNIFIED COMMUNICATIONS SANCTIONS OR, IN THE GROUP, INC., a dissolved Washington ALTERNATIVE, MOTION FOR 18 corporation; KENNETH W. NEWBATT, an PROTECTIVE ORDER AND REQUEST individual; BIANCA NEWBATT, an FOR MONETARY SANCTIONS 19 individual; MITCHELL C. LIPKIN, an individual; MICHAEL J. BELLAS, an [Filed concurrently with the Declaration of 20 individual; JIMMIE GARRETT BAKER, JR., Kathryn M. Evans] an individual; WESTELE UTILITY 21 SOLUTIONS, LLC, a California limited DATE: February 18, 2022 liability company; and DOES 1 through 50, TIME: 10:00 a.m. 22 inclusive, Complaint Filed: November 20, 2020 Removal Filed: January 4, 2021 23 Defendants. FAC Filed: April 16, 2021 SAC Filed: November 15, 2021 24 Trial Date: Not Set 25 I. INTRODUCTION 26 Defendants’ Motion for Terminating Sanctions or. in the Alternative, Motion for 27 Protective Order and Request for Monetary Sanctions should be granted. Unfortunately, 28 Defendants had no choice but to seek the Court’s intervention to curtail Plaintiff Butler America, 1 DEFS’ REPLY IN SUPPORT OF MTN FOR TERMINATING SANCTIONS FP 43074905.1 1 LLC’s discovery abuses. Unless the Court intervenes, Plaintiff will continue its modus operandi 2 of misusing the discovery process as a means to harass Defendants and cause Defendants to spend 3 money filing motions, such as the instant Motion, just to preserve their rights. 4 Two weeks after Defendants filed the instant Motion, Plaintiff, in a blatant attempt to 5 avoid its trade secret disclosure obligations under Code of Civil Procedure section 2019.210, 6 filed a Second Amended Complaint (“SAC”) removing its trade secret cause of action, adding 7 causes of action for conversion and intentional interference with contractual relations (both of 8 which had previously been asserted in Plaintiff’s original Complaint and removed when Plaintiff 9 filed its First Amended Complaint), and replacing references to the term “trade secrets” with the 10 term “confidential information.” Plaintiff’s improper filing of its SAC does not alleviate Plaintiff 11 of its mandatory obligation to comply with Section 2019.210. 12 The law is clear that Code of Civil Procedure section 2019.210 applies to cases that do 13 not expressly allege misappropriation of trade secrets where there is an equivalent claim. Indeed, 14 as this Court expressly explained in its December 3, 2019 ruling: “Thus, eliminating the 15 misappropriation of trade secret claims from the SAC does not necessarily imply that the 16 limitation of section 2019.210 does not apply to the remaining causes of action.” 17 (Supplemental Declaration of Kathryn M. Evans (“Supp. Evans Decl.”) ¶6, Ex. A.) Plaintiff 18 ignores both case law and this Court’s order on this topic and instead repeatedly asserts that this 19 Motion is moot due to the filing of the SAC. Plaintiff’s arguments are wholly without merit. 20 II. SECTION 2019.210 CONTINUES TO APPLY DESPITE PLAINTIFF’S 21 ABANDONMENT OF ITS TRADE SECRET CAUSE OF ACTION 22 Plaintiff’s abandonment of its trade secret misappropriation cause of action does not 23 excuse it from complying with its mandatory obligations under Section 2019.210. Notably, 24 Plaintiff provided zero authority for its argument that removing the trade secret cause of action 25 means that Section 2019.210 does not apply. 26 However, as thoroughly briefed in Defendants’ moving papers, Section 2019.210 is not 27 cause of action specific. In other words, if any claim relates to a misappropriation of a trade 28 secret—which all of Plaintiff’s causes of action do—Plaintiff cannot seek discovery without first 2 DEFS’ REPLY IN SUPPORT OF MTN FOR TERMINATING SANCTIONS FP 43074905.1 1 complying with Section 2019.210. (Advanced Modular Sputtering, Inc. v. Super. Ct. (2005) 2 132 Cal.App.4th 826, 834.) 3 Plaintiff’s breach of contract and breach of implied covenant of good faith and fair dealing 4 causes of action are explicitly based on trade secret misappropriation allegations. Plaintiff’s SAC 5 alleges that Defendants Lipkin and Bellas breached their employment agreements “including by 6 misappropriating Plaintiff’s trade secrets, disclosing Plaintiff’s trade secrets to third 7 parties and/or using Plaintiff’s trade secrets to directly compete against Plaintiff.” (SAC 8 ¶¶59, 65, 70, 75.) 9 Neothermia Corp. v. Rubicor Med., Inc. (N.D. Cal. 2004) 345 F.Supp.2d 1042, is directly 10 on point. In Neothermia, the District Court held Section 2019.210 applied despite the plaintiff’s 11 failure to allege a claim for misappropriation of trade secrets, instead alleging a claim for a breach 12 of a non-disclosure agreement. There, the plaintiff alleged that the defendant “obtained 13 proprietary information in the course of business negotiations and used and revealed the 14 information in [the defendant’s] own patent application.” (Id. at p. 1043.) The District Court 15 held that “[s]ection 2019[.210] thus applies not only to theft of trade secrets, but also to disclosure 16 of secrets in violation of a nondisclosure agreement as alleged [by the plaintiff].” (Id at p. 1044 17 [emphasis added].) The same as Neothermia, Plaintiff alleged breach of contract causes of action 18 based on misappropriation of trade secrets, and Section 2019.210 applies in this matter. 19 Moreover, Plaintiff’s other four causes of action for conversion, intentional interference 20 with contractual relations, intentional interference with prospective economic advantage, and 21 unfair competition are no more than thinly veiled misappropriation claims. In Interserve, 22 Inc. v. Fusion Garage PTE, Ltd. (N.D. Cal. April 9, 2010) No. C 09-0512 JW (PVT), 2010 WL 23 1445553, *1, the plaintiff brought claims for misappropriation of business ideas, false 24 advertising, breach of fiduciary duty, and fraud but did not allege a misappropriation of trade 25 secrets claim. The defendant argued that the plaintiff was required to comply with 26 Section 2019.210 because it was using its common law claims to prosecute a “thinly-veiled 27 misappropriation of trade secrets claim.” (Ibid.) The District Court agreed, applied 28 /// 3 DEFS’ REPLY IN SUPPORT OF MTN FOR TERMINATING SANCTIONS FP 43074905.1 1 Section 2019.210, and explained Section 2019.210’s procedures would serve the same beneficial 2 functions for the causes of action asserted by the plaintiff as they do in trade secrets cases. (Ibid.) 3 Plaintiff cannot dispute that its common law causes of action are not thinly veiled 4 misappropriation claims. Indeed, Plaintiff’s only change to these causes of action from the 5 original Complaint and FAC was to change the references to “trade secrets” in these causes of 6 action to references to “confidential information.” Moreover, the employment agreements 7 incorporated by reference in the SAC define “confidential information” the same as trade 8 secrets - as “information and documents that are valuable to Butler America and not generally 9 available to the public.” (SAC ¶¶25, 37.) In sum, the “confidential information” at issue here is 10 defined in terms of trade secrets. No amount of repackaging or spin, or unsupported insistence 11 that a new title brings a new meaning, can change that fact. Therefore, Section 2019.210 also 12 applies to Plaintiff’s remaining causes of action. 13 Thus, Plaintiff is required to identify the confidential information and trade secrets it 14 alleges Defendants misappropriated with reasonable particularity. The fact that Plaintiff has 15 resisted providing these disclosures at every turn is telling. If Plaintiff had a reasonable basis for 16 its claims, Plaintiff should have no problem making these disclosures and allowing the case to 17 proceed. Instead, Plaintiff refuses to abide by its mandatory obligations under Section 2019.210 18 and opposes Defendants’ attempts to understand what is at issue in this lawsuit. Plaintiff’s 19 gamesmanship should not be tolerated. 20 III. PLAINTIFF HAS SOUGHT DISCOVERY DIRECTLY RELATED TO ITS 21 CLAIMS THAT DEFENDANTS MISAPPROPRITAED PLAINTIFF’S TRADE 22 SECRETS AND “CONFIDENTIAL INFORMATION” 23 Plaintiff’s assertion that the only discovery it has propounded has been jurisdictional 24 discovery is completely inaccurate. First and foremost, Plaintiff propounded discovery requests 25 on two of the California--based Defendants - Cynthia Baker and WesTele Utility Services, Inc. 26 (Evans Decl. ¶19.) Defendants Baker and WesTele are not a part of the Motion to Quash Service 27 of Summons and the discovery propounded on these two Defendants had nothing to do with 28 /// 4 DEFS’ REPLY IN SUPPORT OF MTN FOR TERMINATING SANCTIONS FP 43074905.1 1 jurisdiction. Plaintiff notably failed to mention these discovery requests in its Opposition. 2 Accordingly, Plaintiff cannot argue that it has only sought jurisdictional discovery. 3 Moreover, the discovery requests propounded on the other Defendants, UCOMMG, LLC, 4 Unified Communications Group, Inc., Kenneth Newbatt, Mitchell Lipkin, and Michael Bellas 5 are not limited to jurisdictional inquiries and instead seek information and documents directly 6 relevant to Plaintiff’s substantive claims that Defendants’ allegedly misappropriated Plaintiff’s 7 trade secrets and “confidential information.” For example, in the SAC, Plaintiff alleges that 8 Defendants unfairly obtained business from Plaintiff’s clients, including Frontier, using 9 Plaintiff’s “confidential information.” (SAC 3, 21, 40, 44, 55.) 10 In turn, and without limitation, Plaintiff’s discovery requests have sought information and 11 documents relating to: 12 All communications between Defendants and Frontier Communications; 13 All contracts and agreements between Defendants and Frontier Communications; 14 All contracts and agreements that Defendants have entered into with businesses 15 with one more locations in California; 16 All contracts and agreements that Defendants entered into with California 17 persons; and 18 All documents relating to every client or customer that is or was headquartered, 19 located, residents of, or does business in California. 20 (Totten Decl. Exs. A-D, I-N.) 21 Plaintiff cannot allege with a straight face that the discovery requests do not overlap with 22 its substantive allegations in the SAC. Plaintiff’s discovery responses either directly overlap 23 (i.e., every discovery request relating to Frontier Communications) or are so patently overbroad 24 that they are nothing more than an impermissible attempt to circumvent the requirements of 25 Section 2019.210 and go on a fishing expedition as to Defendants’ trade secret and/or 26 confidential information. Plaintiff’s discovery requests effectively request access to every single 27 scrap of paper and electronic file relating to Defendants’ business. Section 2019.210 was enacted 28 specifically to prevent fishing expeditions like the one Plaintiff is attempting to engage in. 5 DEFS’ REPLY IN SUPPORT OF MTN FOR TERMINATING SANCTIONS FP 43074905.1 1 (Perlan Therapeutics, Inc. v. Super. Ct. (2009) 178 Cal.App.4th 1333, 1343.) Absent an order 2 for terminating sanctions, or in the alternative, a protective order requiring Plaintiff to identify 3 the alleged trade secrets and confidential information at issue, Plaintiff will obtain Defendants’ 4 confidential and trade secret information and then seek to claim ownership of such information 5 and re-cast itsclaims. Notably, when asked by Defendants to confirm that Plaintiff will not 6 simply re-allege its trade secret cause of action in the future (as Plaintiff has already dismissed 7 and subsequently re-added two causes of action), Plaintiff would not conclusively state that it 8 would not try to plead a trade secret cause of action in the future. (Supp. Evans Decl. ¶14, Ex. G.) 9 Defendants tried to meet and confer with Plaintiff on why Plaintiff’s discovery is 10 expressly barred by Section 2019.210. (Supp. Evans Decl. ¶¶7-13.) Indeed, Defendants 11 responded to the few discovery requests that sought purely jurisdictional information. However, 12 Plaintiff has continued to refuse to provide any disclosures pursuant to Section 2019.210 and 13 instead filed Motions to Compel on the inappropriate discovery requests described above. 14 Plaintiff must provide its Section 2019.210 disclosures before Defendants’ opposition on 15 Plaintiff’s Motions to Compel are due. Plaintiff’s insistence that the Court must wait until the 16 hearing on its Motions to Compel to address the issue of Plaintiff’s failure to provide 17 Section 2019.210 disclosures is meritless. A motion for protective order is the appropriate 18 avenue for the Court to address whether a plaintiff has adequately complied with 19 Section 2019.210. (See Perlan Therapeutics, Inc. v. Superior Court (2009) 20 178 Cal.App.4th 1333, 1352 [hearing trade secret plaintiff’s petition for writ on trial court’s grant 21 of motion for protective order based on inadequate trade secret disclosure and denying relief from 22 the writ, holding “a court does not abuse itsdiscretion by compelling a plaintiff to produce a 23 clear, nonevasive trade secret statement”].) Moreover, Plaintiff’s mandatory disclosures will 24 help to frame the issues on Plaintiff’s Motions to Compel. If Plaintiff continues to refuse to 25 provide its disclosures, its claims should be dismissed in their entirety. 26 /// 27 /// 28 /// 6 DEFS’ REPLY IN SUPPORT OF MTN FOR TERMINATING SANCTIONS FP 43074905.1 1 IV. TERMINATING SANCTIONS ARE WARRANTED BECAUSE DEFENDANTS 2 HAVE EXHAUSTIVELY REQUESTED PLAINTIFF PROVIDE ITS SECTION 3 2019.210 DISCLOSURES AND PLAINTIFF HAS REPEATEDLY REFUSED 4 Over the course of the last year, Defendants have repeatedly requested Plaintiff provide 5 its Section 2019.210 disclosures. Plaintiff has refused to do so. The Declaration of Kathryn M. 6 Evans in Support of the Motion (“Evans Decl.”) details the specifics of Defendants’ attempts to 7 obtain the mandatory disclosures from Plaintiff. The Declaration details no less than twelve 8 specific instances in which Defendants requested Plaintiff provide its Section 2019.210 9 disclosures. (Evans Decl. ¶¶2-20.) Defendants made multiple additional requests for Plaintiff to 10 provide its disclosures after Defendants filed the moving papers in this Motion. Despite 11 Defendants’ efforts, Plaintiff has refused to comply with its mandatory obligations under 12 Section 2019.210. 13 Terminating sanctions are reasonable and appropriate when a party persists in violating 14 discovery obligations. (See Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 787; 15 Hartbrodt v. Burke (1996) 42 Cal.App.4th 168, 175; Laguna Auto Body v. Farmers Ins. 16 Exchange (1991) 231 Cal.App.3d 481, 488.) As detailed at length in the Evans Declaration and 17 Defendants’ moving papers, Plaintiff has persisted in violating its discovery obligations by 18 failing to abide by its statutory obligations. Plaintiff is the one that chose to file this action and 19 has then disregarded its mandatory obligations in discovery for over a year and forced Defendants 20 to incur unnecessary expenses in order to protect their rights. Plaintiff’s actions warrant an order 21 for terminating sanctions or, at the very least, protective order requiring Plaintiff to comply with 22 its obligations under Section 2019.210 and prohibiting further discovery until Plaintiff does so. 23 V. PLAINTIFF’S RULE 26 DISCLOSURES ARE WHOLLY INADEQUATE TO 24 COMPLY WITH SECTION 2019.210 25 Lastly, in its Opposition, Plaintiff now claims that it complied with its obligations under 26 Section 2019.210 when it provided its Rule 26 disclosures in Federal Court. Not only is this the 27 first time Plaintiff has made such an assertion (as detailed in the Evans Declaration, Plaintiff 28 never made this statement in any of the numerous times Defendants’ requested Plaintiff’s 7 DEFS’ REPLY IN SUPPORT OF MTN FOR TERMINATING SANCTIONS FP 43074905.1 1 Section 2019.210 disclosures), but this assertion is at odds with Plaintiff’s other statements made 2 throughout this litigation. Namely, after providing its Rule 26 disclosures, Plaintiff stated that 3 any trade secret information had been redacted from the disclosures, that there were additional 4 trade secrets at issue that were not included in the disclosures, and that Defendants were “free to 5 pursue discovery” to determine the trade secrets at issue. (Evans Decl. ¶¶10-11.) 6 Regardless, Plaintiff’s Rule 26 disclosures are entirely inadequate to satisfy Plaintiff’s 7 burden under Section 2019.210. Plaintiff’s initially filed Rule 26 disclosures did not identify or 8 even mention Plaintiff’s trade secret or confidential information. (Evans Decl. Ex. F.) Plaintiff’s 9 May 7, 2021 document production consisted of haphazard internal e-mails between employees 10 of Plaintiff, form documents, and fully redacted pages. (Supp. Evans Decl. ¶2.) This document 11 production hardly rises to the level of identifying the trade secrets and confidential information 12 at issue “with reasonable particularity” as required by Section 2019.210 and Defendants continue 13 to be completely in the dark as to what trade secrets and confidential information were 14 supposedly misappropriated. Accordingly, Defendants’ Motion should be granted. 15 VI. CONCLUSION 16 Based on the foregoing, Defendants respectfully request the Court grant their Motion for 17 terminating sanctions against Plaintiff. In the alternative, Defendants respectfully request the 18 Court issue a protective order requiring Plaintiff to comply with its obligations under 19 Section 2019.210 and prohibiting further discovery until Plaintiff does so, and for sanctions in 20 the amount of $6,150. 21 DATE: February 10, 2022 FISHER & PHILLIPS LLP 22 23 By: l Shayna Balch Santiago 24 Kathryn M. Evans Attorneys for UCOMMG, LLC; Unified 25 Communications Group, Inc.; Kenneth W. Newbatt; Bianca Newbatt; Mitchell C. Lipkin; Michael J. 26 Bellas; Jimmie Garrett Baker, Jr.; WesTele Utility Solutions, LLC; and Cynthia Baker 27 28 8 DEFS’ REPLY IN SUPPORT OF MTN FOR TERMINATING SANCTIONS FP 43074905.1 1 PROOF OF SERVICE (CCP §§1013(a) and 2015.5) 2 I, the undersigned, am at least 18 years old and not a party to this action. I am employed 3 in the County of San Diego with the law offices of Fisher & Phillips LLP and its business address is 4747 Executive Drive, Suite 1000, San Diego, California 92121. 4 On February 10, 2022, I served the following document(s) DEFENDANTS’ REPLY IN 5 SUPPORT OF MOTION FOR TERMINATING SANCTIONS OR, IN THE ALTERNATIVE, MOTION FOR PROTECTIVE ORDER AND REQUEST FOR 6 MONETARY SANCTIONS on the person(s) listed below by placing copy thereof enclosed in sealed envelope(s) addressed as follows: □ the original a true 7 Paul P. Young Telephone: (626)744-1838 8 Joseph Chora Facsimile: (626)744-3167 Cameron H. Totten E-Mail: paul@cym.law; joseph@cym.law; 9 Armen Manasserian cameron@cym.law; armen@cym.law; Scott O’Halloran scott@cym.law 10 CHORA YOUNG LLP Attorneys for Butler America, LLC 650 Sierra Madre Villa Avenue, Suite 304 11 Pasadena, California 91107 [by MAIL] - I enclosed the document(s) in a sealed envelope or package addressed to 12 the person(s) whose address(es) are listed above and placed the envelope for collection and mailing, following our ordinary business practices. I am readily familiar with this 13 business’s practice for collecting and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the 14 ordinary course of business with the United States Postal Service in San Diego California, in a sealed envelope with postage fully prepaid. 15 [by FAX] - Based on an agreement of the parties to accept service by fax transmission, I faxed the document(s) to the person(s) at fax number(s) listed above from fax number 16 (858) 597-9601. The fax reported no errors. A copy of the transmission report is attached. [by OVERNIGHT DELIVERY] - I enclosed the document(s) in an envelope or package 17 provided by an overnight delivery carrier and addressed to the person(s) at the address(es) listed above. I placed the envelope or package for collection and overnight delivery at an 18 office or a regularly utilized drop box of the overnight carrier. [by ELECTRONIC SERVICE] - Based on a court order or an agreement of the parties 19 to accept service by electronic transmission, I electronically served the document(s) to the person(s) at the electronic service address(es) listed above. 20 [by ELECTRONIC SERVICE] – Pursuant to California Code of Civil Procedure §1010.6(e)(1), I electronically served the document(s) to the person(s) at the electronic 21 service address(es) listed above. 22 I declare under penalty of perjury, under the laws of the State of California, that the foregoing is true and correct. 23 Executed February 10, 2022, at San Diego, California. 24 Susan E. Valle By: 25 Print Name Signature 26 27 28 1 PROOF OF SERVICE FP 43074905.1