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Hilderman v. Enea Teksci

January 8, 2010

VANCE HILDERMAN, AN INDIVIDUAL; HIGH RELY INC., A DELAWARE CORPORATION, PLAINTIFFS,
v.
ENEA TEKSCI, INC., DBA ENEA EMBEDDED TECHNOLOGY, A WASHINGTON CORPORATION, DEFENDANTS.
ENEA TEKSCI, INC., DBA ENEA EMBEDDED TECHNOLOGY, A WASHINGTON CORPORATION, COUNTERCLAIMANT AND THIRD-PARTY PLAINTIFFS.
v.
VANCE HILDERMAN, AN INDIVIDUAL AND RESIDENT OF CALIFORNIA; AND HIGHRELY, INC., A DELAWARE CORPORATION, COUNTERDEFENDANTS, AND MOHAMMED TURAJ (TONY) BAGHAI AND LEILA HOSSEINIZADEH, HUSBAND AND WIFE AND RESIDENTS OF ARIZONA, THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

ORDER RE MOTIONS IN LIMINE

On January 4, 2010, the Court held a hearing on the parties' motions in limine. For the reasons discussed on the record, the Court rules as follows:

1. Enea's motion to exclude evidence that Baghai's Employment Agreement or HIlderman's Severance Agreement violates Cal. Bus. & Prof. Code § 16600 [Doc. # 139] is DENIED without prejudice as premature. Issues regarding the applicability of Cal. Bus. & Prof. Code § 16600 or Arizona law governing non-competition clauses are legal matters, not evidentiary ones, and are best left for resolution at the appropriate time.

2. Enea's motion to exclude any expert opinion of Alan Hoffman and Nietin Gupta [Doc. # 139-1] is GRANTED.

3. Enea's motion to exclude evidence that Hilderman had a right to solicit Enea customers and employees [Doc. # 139-2] is DENIED without prejudice. Specific objections regarding this issue may be raised at trial.

4. Enea's motion to exclude evidence that trade secrets cannot be derived from matters in the public domain [139-3] is DENIED without prejudice. The circumstances under which a trade secret can be based on matters in the public domain can be addressed in the jury instructions.

5. Enea's motion to exclude evidence that Enea did not suffer monetary loss [139-4] is DENIED without prejudice. Enea may make specific objections regarding this issue at trial.

6. The Court defers ruling on Counter-Defendants' motion to limit Enea's trade secret evidence and argument [Doc. # 140].

Counter-Defendants seek to exclude evidence of trade secrets not identified by Enea in its "Trade Secret Disclosure." Cal. Civ. Proc. Code § 2019.210 provides:

In any action alleging the misappropriation of a trade secret under the Uniform Trade Secrets Act (Title 5 (commencing with Section 3426) of Part 1 of Division 4 of the Civil Code), before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under Section 3426.5 of the Civil Code. (Emphasis added.) The California Court of Appeal explains, "Before a defendant is compelled to respond to a complaint based upon claimed misappropriation or misuse of a trade secret and to embark on discovery which may be both prolonged and expensive, the complainant should describe the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons who are skilled in the trade, and to permit the defendant to ascertain at least the boundaries within which the secret lies." Diodes, Inc. v. Franzen, 260 Cal. App. 2d 244, 253 (1968).

On April 3, 2006, Enea served a Trade Secret Disclosure on Counter-Defendants. The Disclosure identified the following trade secrets: (1) Enea employee internal and private e-mail addresses; (2) Enea's customers and potential customers obtained by HighRely; and (3) DO178B Critical Processes and Checklists and referenced processes and checklists. Counter-Defendants argue that Enea is bound by its disclosure and is prohibited from introducing evidence/argument regarding other alleged trade secrets such as pricing information, vendor leads, and employee leads. However, for the reasons discussed below, the Court concludes that Cal. Civil. Proc. Code § 2019.210 does not govern this federal action.

In determining whether a state rule applies, the court must initially determine if the state rule conflicts with an applicable Federal Rule of Civil Procedure. Hanna v. Plumer, 380 U.S. 460, 471 (1965). If it does, then the Federal Rule governs unless it has been promulgated outside the scope of the Rules Enabling Act or is otherwise unconstitutional. Id. If there is no conflict, the court applies the Erie analysis (Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)), to determine if the state rule should be enforced.

The Ninth Circuit has not decided whether Cal. Civil. Proc. Code § 2019.210 applies to actions in federal court. The district courts have reached different conclusions. In Computer Economics, Inc. v. Gartner Group, Inc., 50 F. Supp. 2d 980 (S.D. Cal. 1999), the court held that § 2019.20 applied and that the defendant was entitled to refuse to produce discovery because plaintiff had not complied with § 2019(d). The court concluded that § 2019.20 did not conflict with any provisions of Fed. R. Civ. P. 26.

Courts in the Eastern District have reached the opposite conclusion. See Funcat Leisure Craft, Inc. v. Johson Outdoors, Inc., 2007 WL 273949 (E.D. Cal. Jan. 29, 2007) (holding that § 2019.210 does not apply to a federal action - "[U]nless stipulated otherwise or ordered after stipulation pursuant to case management orders, it is not within the discretion of the court to willy nilly apply bits and pieces of the discovery civil procedure codes of the various states, even the state in which the district court sits."); Proven Methods Seminars, LLC v. American Grants & Affordable Housing Institute, 2008 WL 282374 (E.D. Cal. Jan. 31, 2008). Other courts have applied § 2019.210 without engaging in an analysis under Hanna. See, e.g., Pixion, Inc. v. PlaceWare, Inc., 421 F. Supp. 2d 1233, 1242 (N.D. ...


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