Free Objection to Appeal of Magistrate Judge Decision - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-617-LTB-BNB POLYROCK TECHNOLOGIES, LLC, a Colorado limited liability company, Plaintiff, v. GENERAL STEEL DOMESTIC SALES, LLC, et. al. Defendants.

P A N IFSOPPOSITION TO L I TF ' DEFENDANTS' B E T O T MA IT A ESO D RO O T B R1,05 O JC IN O G S R T ' R E F C O E 220

Defendants General Steel, Genstone and Jeff Knight object to an Order of Magistrate Judge Boland concerning a discovery matter. Defendants fail to show clear error in any of the rulings they challenge and the Court should therefore decline to overturn them. Moreover, on November 1, 2005, defendants served amended discovery responses in which they responded to the interrogatories and agreed to produce documents in response to the requests that were at issue it Mair e ug'O drr dr moot their objection. nh e g t tJde re e e sa s , n ing BACKGROUND This discovery dispute arose when defendants broadly objected and moved for a protective order permitting them to avoid or delay responding t e h o P l oksn e o i t f oy c' i g R n interrogatories and to 14 o P l oks requests for production. In their motion, defendants f oy c'22 R argued that P l oksr us d nt ekr eatnom t no alternatively, that the o R c' e et i o se e vn i r ao r, y q s d l f i Court should adopt a phased approach to discovery in which PolyRock would have to disclose its

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t d sc t bfr df dn w r r u e t r pn t P l okspni d cvr r e er s e e e nat e e i d o e od o oy c' ed g i oey a e o e s e qr s R n s r us .O O t e 1, 05 Mair eJdeB l dcnut aha n o df dn ' e et n c br 2 20, g t t ug o n odc d er g n e nat q s o sa a e i e s motion in which he rejected defendants'objections and ordered them to fully respond to
1 P l oks i oey o R c'd cvr. y s

In support of their relevance objection, defendants argued that PolyRock cannot prevail on its claims for trade secret misappropriation; therefore, defendants should not have to respond to discovery in support of those claims. The Magistrate Judge rejected this argument as

improperly seeking a summary judgment-like determination in the guise of a discovery motion. (10/12/05 Hearing Tr. at 9:21-10:13, att. as Tab 1.) In support of their alternative proposal for a phased approach to discovery, defendants a udt thycu ntepn t P l oks i oe r us wt u fs ko i i re h t g a e ol o r od o o R c' d cvr e et i otit nwn n d s y s y q s h r g detail the matters that PolyRock claims to be trade secrets. In response, PolyRock pointed out that the First Amended Complaint generally describes the manufacturing process and identifies the products with respect to which PolyRock claims trade secret protection. The Magistrate Jdecnl e t t o R c' d cvry requests seek relevant information because they ug oc dd h P l oks i oe u a y s focus on the products and processes alleged in the Complaint to violate its trade secrets. F r e bcueP l oksd cvr r us se i om t nr a i df dn ' w ut r eas oy c' i oe e et ek n r ao e r n e nat o n h, R s y q s f i gdg e s products and processes, e natd nt edfr e dtl cne i P l oks lm d df dn o o ne ut r e i ocr n oy c' c i e e s h as ng R a trade secrets in order to respond. (Hearing Tr. 58:20-59:4.) The Magistrate Judge also

concluded that df dn ' rpsl e nat pooawould eradicate the existing discovery and pretrial deadlines e s

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With respect to defendant Charles Demarest, who joined in the initial motion but has not oj t t t Mair eJde O drt C ut a o e oeo P l oks eus fr b cdoh ee e g t t ug' re h ornr w d n f o R c' r et o sa s , e r y q s pout n N pr hs hlne t tset fh Mair e ug'rl g rdco. o a y a caegdh apco t i t l a e g t tJde u n. sa s i 2

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and that defendants had not shown any valid reason to depart from the normal schedule and sequence of discovery followed in this District and previously agreed to by the parties and adopted in the Scheduling Order. (Hrg. Tr. 29:1-4.) STANDARD OF REVIEW Pursuant to FED. R. CIV. P. 72(a), the decision of a magistrate judge on a nondispositive matter such as a discovery dispute should be set aside or modified only if the district court finds the decision to be clearly erroneous or contrary to law. Toth v. Gates Rubber Co., No. 99-1235, 2000 WL 796073, at * 2 (10th Cir. June 21, 2000) (unpublished opinion attached as Tab 2.) Under Rule 72(a), the district court should affirm t m g t t j g'rl g n s " with h air eu e u n ul s left e sa d s i e the definite and firm conviction tht m s k hsbe cm ie. Center for Biological a a iae a en o m td t t " Diversity v. Norton, 336 F.Supp.2d 1155, 1158 (D. N.M. 2004), quoting Ocelot Oil Corp. v. Sparrow Indus., 847 F.2d 1458, 1461-62 (10th Cir. 1988). ARGUMENT As an initial matter, defendants'objections are mooted by their amended discovery responses. But even if the Court were to overlook the mootness and address the substance of df dn ' b cosd e nat oj t n,efendants merely reiterate the arguments made previously to Magistrate e s ei Judge Boland. They fail to show that the Magistrate Judge made any clearly erroneous finding of fact or committed an error of law. For this reason as well, th C uthu r et e nat e orsol e cdf dn ' d j e s oj t n ad fr t Mair e ug'rl g. b cos n a i h ei fm e g t tJde u ns sa s i I. D F N A T ' B E T O SA EMO T E E D N SO JC IN R O . On November 1, 2005, defendants served amended discovery requests in which they purport to fully and substantively respond to the eight interrogatories (Nos. 1-4 and 6-9) and

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agree to produce documents responsive to the production requests (Nos. 4, 6, 8-18 and 20) to which they previously objected.2 (See Tab 3.) In these circumstances, it appears that

df dn ' b cos r n l gr ts e n that there is no reason for the Court to address e nat oj t n a o o e ai u ad e s ei e n s t m D f dn ' b cos rt r oe otn sold be rejected for this reason alone. h . e nat oj t n a h e rm o ad hu e e s ei e ef II. DEFENDANTS' E E A C A G ME T F I . R L V N E R U N S AL D f dn r ett i a u ett tP l oksd cvr r us d ntse e nat e a h r r m n h o R c' i oey e et o o ek e s p e g a y s q s information relevn t P l oksc i sbcuePolyRock allegedly disclosed the trade at o o R c' lm eas y a secrets at i u i t s aei apt t plao pb se pi t P l oks i l uet s e n h cs n a n ap ct n ulhd r ro oy c' d c sr o s i e i i i o R so defendants. PolyRock vigorously disputes this assertion, both factually and legally.3 But as P l okso e i i opsi t df dn 'm t nfrpo cv oder, and as the o R c hw d n t poio o e nat o o o rt t e r y s tn e s i ei Magistrate Judge concluded, defendants cannot use a motion for protective order as a vehicle to otna u n o t m rs f o R c'c i s b i rl g n h e to P l oks lm .(Dkt # 85 at 9-10; Hrg. Tr. 9:21-25, 57:23a i e i y a 58:14); Velasquez v. Frontier Medical, Inc., 229 F.R.D. 197, 201 nn. 2-3 (D. N.M. 2005) (i oe m t n ot "prpie eie t dc e e ti u)CHARLES ALAN WRIGHT, d cvr o o nth apor tvh l o ei m rss e s y i e a c" d i s ;

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P l okhs o hdt opr n yt r i df dn ' m ne d cvr r pne i oy c a nt a h pot i o e e e nat a edd i oe e ossn R e ut vw e s s y s detail and has not received the documents that defendants agree to produce. PolyRock therefore epess ov w aot ht r e nat a eddd cvr r pne a sfc n ad xr e n i bu w e e df dn ' m ne i oe e oss r uf i t n s e h e s s y s e ie r e e a r h t se t r eyayi uf i c si n f di df dn 'a edd e r s l i t o ek o e d n n fc ni d ti n e nat m ne sv l gs m s ie e e ie e s responses. 3 Specifically, PolyRock disputes that the trade secrets at issue in this litigation were disclosed in a published foreign patent application prior to their disclosure to defendants. Moreover, the courts recognize that a party who obtains trade secrets under a restriction of nondisclosure or nonuse (as defendants did here) may be held liable regardless of whether the information was available in a foreign patent. See Pa tf O psi T D f dn 'Ji Mo o Fr ln fs poio o e nat o t t n o i i' tn e s n i Protective Order at 10-11, Dkt # 85; Julius Hyman & Co. v. Velsicol Corp., 123 Colo. 563, 60506, 233 P.2d 977, 999-1000 (1951); Mineral Deposits Ltd. v. Zigan, 773 P.2d 606, 608 (Colo. Ct. App. 1988); see also Goldberg v. Medtronic, Inc., 686 F.2d 1219, 1227-28 (7th Cir. 1982) (defendant liable where it relied o t pi t nt ul, i l ue f ln fsr e er ) n h r a , o pb cd c sr o p i i't d sc t e ve i so a tf a e; ROGER M. MILGRIM, MILGRIM ON TRADE SECRETS, §1.06 at 1-267. 4

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ARTHUR R. MILLER & RICHARD L. MARCUS, FEDERAL PRACTICE AND PROCEDURE § 2008 (2d ed. 19) " i oeyi ntob dn dbecause it relates to a claim or defense that is being 94 ( s vr s o t e ei Dc e caegda i uf i t) Is a, n m t nd et a t m rs f oy oks lm hlne s n fc n " nt d ay o o i c d th e t o P l c' c i s l s ie .. e i r e e i R a will be governed by Rule 56 and is subject to the procedural requirements and safeguards that the rule affords. Defendants also persist in their vague, broad-brush attack that P l oksd cvr o R c' i oe y s y requests are overly broad in general, failing to specify the manner in which any particular request is objectionable. The authority that defendants themselves cite, however, recognizes the

inadequacy of generalized objections that discovery requests are overly broad or irrelevant. St. Paul Reinsurance Co., Ltd., 198 F.R.D. at 511-1 ( j t g"o e le b cos t tae 2 r e i bir a oj t n" h f l e cn lp t e i a id t "pc y]hw ec r us frpout n i df i t ;see also Roesberg v. Johnso sei [ o ah e et o rdco s e c n ) f q i ie " Manville, Corp., 85 F.R.D. 292, 296-97 (E.D.Pa. 1980). For these reasons, the Court should nt iubt Mair eJde cnl i sht odt h s r e g t t ug' oc s n t sa s uo a P l oks i oey eus at issue seek relevant, discoverable information. o R c'd cvr r et y s q s III. D F N A T ' E U S F RP A E D S O E YA S F I S E E D N S R Q E T O H S D IC V R L O A L . Defendants also repeat their argument that they should not be required to respond to P l oksd cvr ut P l ok d c sst dtl o t t d sc t i c i s o R c' i oe n l o R c i l e h e i f h r e er s t lm y s y i y so e as e a e a defendants misappropriated. As with their unsuccessful request to the Magistrate Judge,

defendants ask the Court to relieve them from their own failure to serve discovery on PolyRock seeking the information they now ask the Court to require PolyRock to disclose as a predicate to obtaining discovery. The Court should refuse, as the Magistrate Judge did, to rescue defendants from their own failings.

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Defendants also fail to show that the Magistrate Judge erred in declining their proposal to phase discovery. Defendants fail, as they did before the Magistrate Judge, to explain why they ne dtl aotP l oks t d sc t t udrad d cvr r us t tse ed e i bu o R c' r e er s o ne t as y a e s n i oe e et h ek s y q s a i om t naot e nat own products and processes. (Hrg. Tr. 58:20-59:4.) Indeed, n r ao bu df dn ' f i e s defendants have now served amended discovery requests in which they respond to the discovery requests at issue, showing that they in fact did not need any further information to do so. (See Tab 3.) As they did before the Magistrate Judge, defendants fail to point to any authority in this District or Circuit to support their argument that PolyRock must specify its misappropriated trade secrets in detail (without even a discovery request from defendants seeking such disclosure) in order to obtain discovery. Defenat cssa f m o e j i ii si o eehr e dn ' ae, l r t ru s co ,n l i e vr s l o h rd t n v v t y complex factual situations in which detailed disclosure of the claimed trade secrets was required in order to understand and fairly respond to the claim, see . eo C r..n l u. e,., rx op vIt B sMach. gX ' Corp., 64 F.R.D. 367 (S.D. N.Y. 1974); Del Monte Fresh Produce Co. v. Dole Food Co., Inc., 148 F.Supp.2d 1322, 1326 (S.D. Fla. 2001); Porous Media Corp. v. Midland Brake Inc., 187 F.R.D. 598, 600 (D. Minn. 1999), or where a California statute that mandated detailed disclosures of claimed trade secrets as a requirement to bring a claim based upon trade secret misappropriation, see, e.g., Computer Economics, Inc. v. Gartner Group, Inc., 50 F.Supp. 2d 980, 983-85 (S.D. Cal. 1999). None of the cases found a general obligation under the Federal Rules of Civil Procedure that require a plaintiff to disclose its trade secrets in detail as a prerequisite to seeking discovery. Defendants also fail to address or demonstrate any error in the Mair eJde c g t t ug' onclusion that staggering discovery in the manner they suggest is not sa s

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generally followed in this District and that their proposal would prevent the case from meeting the discovery and trial readiness deadlines that the parties agreed upon and the Court adopted in the Scheduling Order. (Hrg. Tr. 29:12-14. 58:6-13; Dkt # 62.) In sum, defendants fail to offer any basis upon which to conclude that the Magistrate Judge erred, factually or legally, in declining their request to phase discovery by requiring PolyRock to disclose the details of its trade secrets before defendants were required to provide d cvr r pne. h C uthu t r oe vr ldf dn ' b cos n h bs a i oe e oss T e orsol h e r oe u e nat oj t n o t s ai s s y s d ef re e s ei i s well. CONCLUSION For all of the reasons stated, the Court should affirm t Mair eJde Order of h e g t t ug' sa s October 12, 2005. DATED: November 7, 2005. Respectfully submitted,

s/John A. DeSisto John A. DeSisto FEATHERSTONE DESISTO LLP 600 17th Street, #2400 Denver, CO 80202 Telephone: 303 626-7100 Facsimile: 303 626-7101 e-mail: [email protected] Attorney for Plaintiff PolyRock Technologies, LLC

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CERTIFICATE OF SERVICE I hereby certify that on November 7, 2005, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the following e-mail addresses: Susan M. Hargleroad Pendleton, Friedberg, Wilson & Hennessey, P.C. [email protected] Kurt S. Lewis Lewis Scheid LLC [email protected] David S. Fein Lewis Scheid LLC [email protected]

s/ John A. DeSisto

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