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The Active Network, Inc v. Monster Worldwide

May 15, 2012

THE ACTIVE NETWORK, INC.,
PETITIONER,
v.
MONSTER WORLDWIDE, INC., RESPONDENT.



The opinion of the court was delivered by: Hon. Mitchell D. Dembin U.S. Magistrate Judge

ORDER DENYING MOTION TO QUASH (Doc. No. 1)

Before this Court is the motion of Petitioner The Active Network, Inc. ("Active") to quash third-party subpoenas issued to Active by Respondent Monster Worldwide, Inc. ("Monster"). Active also moves to disqualify the law firm Jones Day, which represents Monster, from engaging in any discovery from Active.

Background

The underlying lawsuit was filed on December 16, 2011, in the Southern District of New York and carries Case Number 11-civ-9262. In the underlying case, Monster has sued Darko Dejanovic, Monster's former Chief Information Officer now employed by Active, alleging that he violated certain non-solicitation agreements made with Monster. Active is not a party in the underlying case. The subpoenas at issue were obtained in this District, where Active is headquartered, pursuant to Fed.R.Civ.P. 45.

Active filed the instant motion on March 30, 2012. (Doc. No. 1). On April 13, 2012, Monster filed a response in opposition, contending that this Court lacks jurisdiction to decide the motion, and, in the alternative, that the subpoenas are proper. (Doc. No. 7). Active replied on April 23, 2012. (Doc. No. 8).

Discussion

1. Motion to Quash

Fed.R.Civ.P. 45(c)(3), provides that it is the issuing court that has the authority to modify or quash subpoenas. The instant subpoenas were issued from the United States District Court for the Southern District of California. Consequently, this Court has jurisdiction to consider the motion to quash. Rule 45(c)(1) requires that "A party or attorney responsible for issuing and serving a subpoena must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena." The subpoena must be modified or quashed by the Court if it subjects a person to undue burden. Rule 35(c)(3)(iv).

Active asserts that compliance would be an undue burden because of a conflict of interest between Active and Jones Day. Active contends that Jones Day acquired confidential information about Active when a Jones Day attorney, Mr. Howard, represented Active and its employee, Ms. Roland, in a substantially similar matter. Although Mr. Howard is not involved in the underlying case between Monster and Mr. Dejanovic, Active contends that Mr. Howard's knowledge of Active's confidential information should be imputed to Jones Day. Accordingly, Active seeks to disqualify Jones Day from seeking discovery from Active in connection with the underlying lawsuit. Monster counters that Mr. Howard neither formed an attorney-client relationship with Active nor acquired confidential information from Active.

When a lawyer obtains confidential information from a previous client, he may not later represent a client whose interests are adverse to the former client. Cal. R. Prof. Conduct 3-310(E). The Court agrees that it would pose an undue burden for an attorney with a clear conflict of interest to seek discovery from a former client. Accordingly, the Court must proceed to determine if such a conflict exists in the present case.

First, it must be determined whether there was a "direct professional relationship" between Active and Jones Day. City and County of San Francisco v. Cobra Solutions, 135 P.3d 20, 25 (Cal. 2006). If Jones Day neither represented Active nor obtained confidential information from Active, there is no conflict of interest. In its motion, Active contends that Mr. Howard formed a direct professional relationship with Ms. Roland when he dispensed legal advice to Ms. Roland in both her personal capacity and as an employee of Active. Petitioner provides the sworn declaration of Ms. Roland, in which she explains:

Because I had signed certain agreements with Visual Sciences that purported to restrict me from soliciting employees to join Active and/or that could expose Active to liability for such solicitation, I decided to consult legal counsel about the non-solicitation restrictions, compliance with those restrictions, and Active's potential exposure for hiring employees in light of those restrictions. (Roland Decl. ¶ 3). Ms. Roland asserts that she contacted Mr. Howard for legal advice "about the scope of our non-solicitation obligations." Id. at ¶4. Ms. Roland asserts that although she does not recall the entirety of the conversation, she does recall that Mr. Howard advised her regarding the scope of the "non-solicitation obligations and how Active should operate its business in light of those obligations and on a going forward basis regarding other similar situations." Id. at ¶5. Ms. Roland asserts that she has put into practice the advice she received on how to "deal with employees who join Active and who are subject to employee non-solicitations with prior employers." Id. Ms. Roland understood that this legal advice was to be kept confidential and not used against her in the future. Id.

Monster counters that there was no prior relationship between Mr. Howard and Active. (Doc. No. 7 at 6). Mr. Howard states in his declaration that his discussions with Ms. Roland involved her non-solicitation agreement with Visual, an agreement to which Active was not a party. (Howard Decl. ¶ 3). Mr. Howard claims that his contemporaneous written notes of their conversations support his assertion. Monster also contends that Ms. Roland's declaration confirms that the topic of the conversation was her contract with Visual. (Roland Decl. ¶ 3).

According to Mr. Howard, the only time Active was discussed during his conversations with Ms. Roland was with regard to whether Active could be compelled to indemnify Ms. Roland if she was sued by Visual for violation of her non-solicitation agreement. (Howard Decl. ΒΆ 3). As Monster notes, Ms. Roland's interests in that matter would potentially be adverse to Active. (Doc. No. 7 at 7). Monster acknowledges that Mr. Howard offered to represent both Active and Ms. Roland if they should be sued by Visual, and that Mr. Howard sent an engagement letter to Active. Id. Active, however, chose not to sign the engagement letter and has not retained Jones Day for any purposes. Id. Mr. Howard also gave a 30-45 minute presentation to Active employees at Ms. Roland's request. Id. at 8. The presentation was on general ...


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