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Global Development Strategies, Inc.; Global Distribution Services, Inc v. Mobile Motion

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA


May 19, 2011

GLOBAL DEVELOPMENT STRATEGIES, INC.; GLOBAL DISTRIBUTION SERVICES, INC., PLAINTIFFS,
v.
MOBILE MOTION, INC.; DORON KIM; E DATING FOR FREE, INC., DEFENDANTS.

ORDER

This matter is before the undersigned pursuant to Local Rule 302(c)(1), pursuant to 28 U.S.C. § 636(b)(1). On April 11, 2011, defendants Mobile Motion, Inc., Doron Kim, and E Dating For Free, Inc. filed this miscellaneous action and a motion to quash third-party subpoenas issued by plaintiffs Global to Google, Inc. ("Google"), Microsoft Corporation ("Microsoft"), and Rackspace, Inc. ("Rackspace"). Dckt. No. 1. Defendants noticed the motion for hearing before the undersigned on May 25, 2011. Dckt. No. 3. Plaintiffs oppose the motion. Dckt. No. 4. After reviewing the motion, the opposition, and all related papers, the court reserves ruling on the merits of the motion and instead transfers the motion to the Central District of California.

BACKGROUND

In March 2011, plaintiff filed a complaint against defendants in the Central District of California, alleging (1) cybersquatting under the Lanham Act, 15 U.S.C. § 1125(d); (2) breach of oral contract; (3) breach of implied-in-fact contract; (4) breach of the implied covenant of good faith and fair dealing; (5) conversion; and (6) fraud. Decl. of Karl Kronenberger, Ex. A (Compl.), Dckt. No. 1-4. Plaintiffs are sellers and installers of overhead garage doors and defendants Mobile Motion, Inc. and its President and CEO Doron Kim are internet marketers that provide online services to clients, including search engine optimization ("SEO") services and Pay-Per-Click advertising. Id. ¶¶ 18, 19; Mot. to Quash, Dckt. No. 1-1 at 2. According to the complaint, as well as defendants' motion to quash, plaintiffs and defendants Mobile Motion and Kim entered into an oral agreement in 2003 for those defendants to provide internet marketing services to plaintiffs in exchange for a monetary commission of a percentage of the revenue plaintiffs generated through the internet services provided by defendants. Id. ¶¶ 21-22; Dckt. No. 1-1 at 3. The complaint alleges that defendants breached the oral agreement by registering certain domain names, which plaintiffs paid for, in Mobile Motion's name rather than plaintiffs' and by transferring some of those domain names to defendant E Dating For Free, Inc. Id. ¶¶ 1, 30, 31. Plaintiffs also contend that defendants Kim and Mobile Motion have log-in access to plaintiffs' Pay-Per-Click accounts and refuse to turn the accounts over to plaintiffs. Id.

¶ 2. Plaintiffs seek to have defendants transfer the domain names to plaintiffs, including website content that defendants contend they developed and designed, as well as defendants' Google and Microsoft Pay-Per-Click campaigns. Id. ¶ 2; Dckt. No. 1-1 at 4. Defendants argue that "[i]n other words, Plaintiff seeks to obtain all of the benefits of the oral agreement without having to pay Mobile Motion the agreed-upon commission," and contend that "under the oral agreement, Mobile Motion is the proper owner of the Domains, the website content, and the PPC campaigns." Dckt. No. 1-1 at 4.

On March 8, 2011, concurrent with the filing of their complaint, plaintiffs filed an Ex Parte Application for Leave to Take Immediate Discovery in the Central District of California action. Kronenberger Decl. ¶ 3. The court granted plaintiffs' request, and issued an order to that effect on March 8, 2011. Id., Ex. B, Dckt. No. 1-4 at 41-43. The order authorized plaintiffs to serve immediate discovery on a variety of third party providers, including Google, Microsoft, and Rackspace. Id. Specifically the order provided that plaintiffs could serve subpoenas on those providers to "seek information sufficient to (1) identify the true registrant of each and every domain name that should rightfully be registered to Plaintiffs and (2) to obtain all account information related to accounts which Defendants have improperly denied Plaintiffs[] access which [they seek] recovery under the Complaint before the same is destroyed by Defendants." Id.

On March 17, 2011, plaintiffs issued the subpoenas to Google, Microsoft, and Rackspace that are at issue herein, and then re-issued the subpoenas on March 23, 2011. Kronenberger Decl. ¶ 4. The Google, Microsoft, and Rackspace subpoenas were all issued from this court and were served on the companies' respective registered agents in Sacramento, California. Id. ¶¶ 5-7 & Exs. C-E.

ANALYSIS

Pursuant to Federal Rule of Civil Procedure 45(c)(3), defendants now move to quash the three subpoenas at issue, arguing that they "exceed the bounds" of both the order issued in the underlying Central District of California action and the Federal Rules of Civil Procedure since "they overtly seek disclosure of Defendant's 'trade secret[s] or other confidential research, development, or commercial information.'" Dckt. No. 1-1 at 6 (quoting Fed. R. Civ. P. 45(c)(3)(B)(I)). The motion to quash was properly filed in this district because the subpoenas were all issued from this court. See Fed. R. Civ. P. 45(c)(3)(A) (authorizing "the issuing court" to quash or modify a subpoena).

Defendants request that this court transfer the instant motion to the Central District of California "as an alternative to quashing the Google, Microsoft, and Rackspace subpoenas." Dckt. No. 1-1 at 6. Defendants acknowledge that there is "a split of authority as to whether the court which issued a subpoena can transfer a motion to quash to the court with underlying jurisdiction over the case . . . ." Id. (quoting IO Group v. J.W., 2011 WL 240706 (N.D. Cal. Jan. 24, 2011)).

Although the Ninth Circuit has not decided whether Rule 45 motions may be transferred, the Eighth and Tenth Circuits and district courts in the Fourth and Second Circuits have read Rule 45 to allow transfers of motions to quash. See IO Group, Inc. v. Does 1-9, 2010 WL 5071605, at *3-4 (N.D. Cal. Dec. 7, 2010) (citing United States v. Star Scientific, 205 F. Supp.2d 482, 485 n.4, 487 (D. Md. 2002), which noted that courts in the Eighth and Tenth Circuits have supported such transfers, while courts in the Seventh and D.C. Circuits have found transfer of discovery disputes inappropriate); but see Wells v. GC Servs., LP, 2007 WL 1068222, at *1 (N.D. Cal. Apr. 10, 2007) ("this court is not the proper court to quash or modify the subpoenas, which all issued from other courts."). In Star Scientific, the District of Maryland considered transferring a Rule 45 motion proper, when the court of underlying litigation was "plainly better situated to resolve the discovery dispute." 205 F. Supp.2d at 487-88 (quoting In re Sealed Case, 141 F.3d 337, 343 (D.C. Cir. 1998)). Additionally, in Heroic Era, Ltd. v. Evony, LLC, 2011 WL 308468 (W.D. Wash. Jan. 27, 2011), the Western District of Washington recently transferred a motion to quash to the Northern District of California, noting that "[b]ecause ruling on the motion requires familiarity with the case as a whole, the Northern District of California is 'more plainly suited' to deciding it than a court whose involvement with the case begins and ends with issuing a subpoena."

Here, defendants contend that the subpoenas violate an order issued by the Central District of California. On the other hand, plaintiffs argue that the discovery is specifically authorized by that order. Dckt. No. 4 at 16. The one thing that is not disputed is that analysis of the merits of defendants' motion requires interpretation of that order.*fn1 Of course, the Central District of California is better suited than this court to interpret its own orders. Additionally, the core dispute on this motion is whether the information sought by the subpoenas constitutes confidential and proprietary information, including trade secrets. It appears from the parties' briefs that resolution of that issue may have a significant bearing on the scope of discovery in this action generally, may require weighing of the overall course and merits of the case, and may ultimately affect the case's outcome. See Dckt. No. 1-1 at 7 ("The Google and Microsoft subpoenas seek detailed information that would permit Plaintiffs to recreate the PPC campaigns that Defendants have spent seven years developing, honing, and protecting from public disclosure."); see also Dckt. No. 4 at 16 ("granting this Motion to Quash would completely prevent Plaintiffs from proving its claims"). In light of the parties representations in that regard, this court finds that the Central District is the best court to determine whether the information sought by the subpoenas constitutes confidential and proprietary information, including trade secrets.

The court ordinarily would look with disfavor on a request to transfer a motion to quash. Under the circumstances of this case, where the intent of the earlier order issued by the Central District of California is disputed, and the parties each argue that resolution of the issue concerning trade secrets could affect the overall course and merits of the case, transfer in this instance is appropriate. Therefore, this court finds that principles of comity support a transfer of the motion to quash to the Central District of California.*fn2

CONCLUSION

Accordingly, IT IS HEREBY ORDERED that:

1. Defendants' motion to quash is transferred to the Central District of California; and

2. The Clerk is directed to close this miscellaneous case.

SO ORDERED.


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