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Pyro Spectaculars North, Inc. et al v. Steven Souza

February 8, 2012

PYRO SPECTACULARS NORTH, INC. ET AL., PLAINTIFFS,
v.
STEVEN SOUZA, DEFENDANT.



The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge

ORDER

This action was recently filed on February 3, 2012. (Dkt. No. 2.) Presently pending before the court is plaintiffs Pyro Spectaculars, Inc.; Pyro Spectaculars North, Inc.; and Pyro Events, Inc.'s ("PSI") ex parte application for leave to conduct expedited discovery, filed on the same day as PSI's complaint. (Dkt. No. 3.) By order dated February 6, 2012, the court specially set a hearing on the ex parte application for February 7, 2012; ordered PSI to immediately serve the complaint, ex parte application, and the court's order on defendant; and ordered defendant to abide by the document preservation provisions outlined in that order. (Dkt. No. 7.) Furthermore, by minute order dated February 6, 2012, the district judge referred the case to the undersigned for all scheduling purposes. (Dkt. No. 9.)

At the hearing on PSI's ex parte application, Jennifer Holly appeared on behalf of PSI and Heather Messenger appeared on behalf of defendant. Thus, the hearing was no longer ex parte. All parties consented on the record to the jurisdiction of the undersigned pursuant to 28 U.S.C. § 636(c) and signed the appropriate consent forms. (Dkt. Nos. 12, 13.) After considering the court's record in this matter and the oral arguments by counsel, the court now issues the following order regarding preliminary scheduling and expedited discovery. This order supersedes any schedule setting or other matter which may have been tentatively set or discussed at hearing insofar as there is any inconsistency.

BACKGROUND

On February 3, 2012, PSI filed the instant action against defendant, asserting claims for violation of the Computer Fraud and Abuse Act; violation of California Penal Code section 502; breach of contract; breach of loyalty; breach of the implied covenant of good faith and fair dealing; misappropriation of trade secrets; tortious interference with prospective economic relationship and economic advantage; unfair business practices; and conversion. (Dkt. No. 2.)

PSI alleges that defendant, a former sales executive and employee of PSI, downloaded and transferred PSI's confidential documents and information prior to his resignation and is now using that proprietary information to solicit PSI's customers in his new position as Vice President of the West Coast Region for current employer J&M Displays West ("J&M"). Also alleged is that defendant, after downloading certain information, caused his PSI computer to be "wiped" in order to obscure what he might have downloaded. Furthermore, PSI contends that defendant's wife, Sherry Souza, called PSI's phone service provider (AT&T) and transferred defendant's PSI-assigned office voice and facsimile lines to defendant's personal numbers. Although PSI eventually succeeded in having the office voice line transferred back to PSI, PSI was unable to regain possession of the facsimile line, and defendant allegedly continues to intercept facsimile communications intended for PSI.

As to the allegedly downloaded information, PSI states that its computer forensics expert, Mr. Don Vilfer, was able to verify names of some of the files that were transferred, which included files regarding PSI's customers and projects. However, he was unable to verify the exact details of those files, and PSI also does not know whether defendant has disclosed the allegedly misappropriated information to his new employer or other third parties. Nonetheless, according to PSI, it was informed by numerous customers that defendant had sent solicitation letters and/or financial proposals to them, and some of the customers indicated that they would no longer be using PSI's services.

PSI asserts that "[i]n the absence of leave to pursue immediate discovery, Defendant's dissemination of PSI's confidential information may continue unabated, crucial evidence will likely be destroyed, and Defendant will continue utilizing PSI's valuable, confidential work in direct competition with PSI." (Dkt. No. 3 at 3.) PSI contends that expedited discovery is needed to fully consider the necessity of a motion for a preliminary injunction.

DISCUSSION

At hearing, the court and the parties extensively discussed preliminary scheduling of the case and the contours of expedited discovery to be conducted in anticipation of a potential motion for a preliminary injunction. The court's findings and orders with respect to these issues are outlined below.

Service of Process

The parties indicated that service of process on defendant has been completed. Accordingly, no further service is permitted except with leave of court, good cause having been shown.

Joinder of Parties/Amendments

The parties do not currently anticipate joinder of any additional parties. Therefore, no further joinder of parties or amendment to pleadings is permitted except with leave of court, good cause having been shown.

Responsive Pleadings/Motions

If defendant elects to answer PSI's complaint, the answer shall be filed and served no later than March 15, 2012. If defendant instead opts to file a motion to dismiss PSI's complaint, such a motion shall be noticed for hearing on March 15, 2012 at 1:30 p.m. in Courtroom 9 before the undersigned. The briefing ...


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