Becton, Dickinson and Co. v. Superior Court CA4/1 ( 2014 )


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  • Filed 10/7/14 Becton, Dickinson and Co. v. Superior Court CA4/1
    NOT TO BE PUBLISHED IN OFFICIAL REPORTS
    California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
    publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
    or ordered published for purposes of rule 8.1115.
    COURT OF APPEAL, FOURTH APPELLATE DISTRICT
    DIVISION ONE
    STATE OF CALIFORNIA
    BECTON, DICKINSON AND                                            D066518
    COMPANY,
    (San Diego County
    Petitioner,                                             Super. Ct. No. 37-2013-00071216-CU-
    CO-CTL)
    v.
    THE SUPERIOR COURT OF SAN
    DIEGO COUNTY,
    Respondent;
    QUIDEL CORPORATION,
    Real Party in Interest.
    PROCEEDINGS in mandate after superior court granted motion to enforce third
    party subpoena. Timothy Taylor, Judge. Petition granted.
    Raymond W. Bertrand, Paul Hastings LLP, for Petitioner.
    No appearance for Respondent.
    Julie R. Trotter, Call & Jenson, for Real party in interest.
    Petitioner Becton, Dickinson and Company (BD) challenges an order granting the
    motion of real party in interest Quidel Corporation to compel responses to its subpoena of
    BD's business records. BD contends the order compels it to produce documents
    containing trade secret information to its direct competitor and seeks to stay the order
    until after respondent court hears and decides BD's pending motion for a protective order.
    We grant the petition.
    FACTUAL AND PROCEDURAL BACKGROUND
    Quidel filed a civil suit against its former employee John Andrew Hoffman after
    Hoffman resigned from Quidel and began working for Quidel's competitor, BD. BD is
    not a party to this action. Quidel and BD both produce and sell a new type of influenza
    test and share distributors, customers and "key opinion leaders" (described by Quidel as
    doctors and professionals that influence sales of their products). In October 2013 Quidel
    filed a complaint against Hoffman asserting a single cause of action for breach of
    contract. Quidel alleges Hoffman breached his confidentiality agreement with Quidel by
    disclosing or using its confidential information and trade secrets in his employment with
    BD.
    The parties have been engaged in discovery since the complaint was filed. On
    February 6, 2014, the court entered a protective order (Quidel/Hoffman Protective Order)
    allowing either party or a third party to designate documents as "confidential
    information" or "confidential-for counsel only." The order does not distinguish between
    outside and in-house counsel, and therefore permits attorneys employed by Quidel access
    to any information that is designated by Hoffman or a third party, such as BD, as
    confidential.1
    1      Under the Quidel/Hoffman Protective Order, a document designated as
    confidential can lose that designation only if a non-producing party successfully
    challenges the designation by motion.
    2
    On February 2, 2014, Quidel issued a subpoena to BD seeking the production of
    certain business records. BD timely served its objections to the requested documents,
    including on the ground that the subpoena sought confidential information protected by
    the trade secret privilege. Thereafter BD and Quidel engaged in meet and confer
    discussions concerning the production. Throughout those discussions BD maintained its
    objection to producing documents containing trade secrets. BD agreed to produce some
    of the requested documents and did so in April and June. Quidel was dissatisfied with
    the production and on July 16, 2014, filed a motion to compel additional documents
    responsive to its subpoena against BD. A hearing on the motion was scheduled for
    August 15, 2014.2
    In its motion to compel against BD, Quidel contended BD's production of over
    800 pages of documents was insufficient because the documents that were produced were
    missing pages and heavily redacted, and also because BD failed to include requested
    2       On May 23, 2014, Quidel filed a separate motion to compel production of
    documents against Hoffman. In opposition, Hoffman contended Quidel sought the
    production of BD's business records containing BD's confidential trade secret
    information. Citing a letter he received from BD's counsel cautioning him against
    production, Hoffman asserted that producing the requested documents would constitute a
    breach of his confidentiality agreement with BD. At the August 8, 2014, hearing on the
    motion, the court rejected Hoffman's assertion that the court had to apply a heightened
    level of scrutiny to the information requested, stating: "What you're trying to do . . . is
    engraft onto the breach of contract case the kind of discovery protections that the
    legislature felt were appropriate in trade secret litigation. [Quidel] didn't sue your client
    for violating trade secrets. It's a straight breach of contract." At the conclusion of the
    hearing the court granted Quidel's motion and ordered Hoffman to produce documents by
    August 28, 2014. The order states "Hoffman apparently contends that just because his
    new employer thinks the documents sought are secret, he may lawfully resist discovery.
    Not so. The court finds that Quidel has requested documents which are or may lead to
    admissible evidence, and that Quidel has otherwise justified the demands in question."
    Hoffman filed a petition for writ of mandate directing the trial court to vacate the August
    8, 2014 order and we issued an order to show cause on September 12, 2014. (Case No.
    D066513.)
    3
    documents. Quidel asserted the Hoffman/Quidel Protective Order negated any concern
    BD might have over the disclosure of BD's trade secret or confidential information. In its
    opposition to the motion, BD asserted Quidel sought the production of documents that
    contained its trade secrets (including, among other things, marketing and sales strategies
    for its competing product) and that Quidel failed to meet the heightened showing required
    for the discovery of such information. BD also contended the Quidel/Hoffman Protective
    Order was not sufficient protection because the order would permit Quidel executives to
    view documents containing its trade secrets.
    Before the hearing on Quidel's motion to enforce its subpoena, BD brought a
    competing motion for a protective order for the documents sought by the subpoena issued
    on February 2, 2014 and a second subpoena issued to it by Quidel on July 18, 2014. BD
    contended both subpoenas sought documents containing its confidential trade secret
    information. BD argued Quidel had not made the heightened showing required for the
    discovery of BD's trade secret information and sought an order relieving it from
    disclosure of privileged information. BD set its motion for hearing on the earliest date
    available, October 31, 2014.
    At the August 15, 2014 hearing on Quidel's motion to enforce its February 2, 2014
    subpoena, BD asked the court to advance the hearing on its motion for a protective order
    so that it could be heard before the court ruled on Quidel's motion. The court denied the
    request. The court also rejected BD's argument that the information sought was entitled
    to trade secret protection, stating "I had this conversation just last week, okay? And I
    thought I made my thoughts on that subject quite clear, that you can't [e]ngraft that whole
    [trade secret] construct on a straight-up breach-of-contract case."
    4
    BD reiterated its concern at the hearing that the Hoffman/Quidel Protective Order
    was not sufficient to protect its trade secrets, explaining Quidel's general counsel also
    serves as the firm's senior vice president of business development. Therefore, even at the
    "confidential-for counsel only" level of protection, a Quidel business executive would
    gain access to its confidential information. The court responded by stating that "someone
    better make a motion to modify the protective order" and suggested Quidel revise the
    Hoffman/Quidel Protective Order to exclude Quidel's general counsel. BD's counsel then
    reminded the court it had a motion for a protective order on calendar and again requested
    Quidel's motion to compel be deferred until the court ruled on that motion. The court
    denied the request.
    After the hearing, the court granted Quidel's motion to compel on the grounds the
    documents were discoverable under Code of Civil Procedure section 2017.010. The
    order states that to "the extent [BD] believes [Quidel's] request seeks private, privileged,
    and confidential commercial, financial, and/or other proprietary business
    information . . . , those concerns can be addressed by the [Hoffman/Quidel Protective
    Order], which [BD] has failed to utilize." The order directed BD to produce the
    requested documents by August 29, 2014.
    On August 26, 2014, BD filed a petition for writ of mandate seeking an immediate
    stay of the August 15th order until its motion for protective order is adjudicated. In its
    petition, BD contends the court erred by ordering it to produce confidential and trade
    secret information without conducting the required balancing test for the discovery of
    such information. BD also asserts the current protective order is insufficient to protect its
    5
    proprietary information because, even at its highest level of protection, Quidel's senior
    vice president of business development may view the document production.
    We issued the requested stay temporarily, requested an informal response to the
    petition and issued Palma notice. (Palma v. U.S. Industrial Fasteners, Inc. (1984) 
    36 Cal. 3d 171
    , 178.) Quidel filed an informal response to the petition on September 5, 2014.
    DISCUSSION
    I
    Evidence Code section 1060 creates a privilege for trade secrets and authorizes the
    owner of a trade secret to refuse to disclose the secret "if the allowance of the privilege
    will not tend to conceal fraud or otherwise work injustice." In Bridgestone/Firestone,
    Inc. v. Superior Court (1992) 
    7 Cal. App. 4th 1384
    (Bridgestone) the court of appeal
    applied Evidence Code section 1060 in the context of civil discovery. The Bridgestone
    court held that it would be error to order disclosure of a trade secret simply because such
    information would be discoverable under the general standard for discovery of matter that
    " 'appears reasonably calculated to lead to the discovery of admissible evidence.' "
    
    (Bridgestone, supra
    , at p. 1390.) The standard set forth by Code of Civil Procedure
    section 2017.010 applies to matters that are not privileged.3 
    (Bridgestone, supra
    , at pp.
    1390-1391.)
    3       Code of Civil Procedure section 2017.010 provides, in pertinent part: "Unless
    otherwise limited by order of the court in accordance with this title, any party may obtain
    discovery regarding any matter, not privileged, that is relevant to the subject matter
    involved in the pending action or to the determination of any motion made in that action,
    if the matter either is itself admissible in evidence or appears reasonably calculated to
    lead to the discovery of admissible evidence." (Code Civ. Proc., § 2017.010, emphasis
    added.)
    6
    Evidence Code section 1060 requires the court to apply a heightened standard
    before compelling the disclosure of documents containing trade secrets. 
    (Bridgestone, supra
    , 7 Cal.App.4th at p. 1393.) Under this standard, the party claiming the privilege
    must first establish the information sought is privileged. (Ibid.) If it does, then the "party
    seeking discovery must make a prima facie, particularized showing that the information
    sought is relevant and necessary to the proof of, or defense against, a material element of
    one or more causes of action presented in the case, and that it is reasonable to conclude
    that the information sought is essential to a fair resolution of the lawsuit." (Ibid.) If that
    showing is made, the burden shifts to "the holder of the privilege to demonstrate any
    claimed disadvantages of a protective order." (Ibid.)
    II
    BD contends the respondent court erroneously concluded no trade secrets were at
    issue because Quidel's only cause of action against Hoffman was for breach of contract.
    As a result, the court incorrectly applied the general standard for discovery of Code of
    Civil Procedure section 2017.010 rather than the heightened scrutiny required for
    protected trade secrets. We agree the trial court erred by summarily concluding no trade
    secrets were at issue and by failing to conduct the heightened review required for the
    production of such information.
    Rather than determine if the trade secret privilege applied, the trial court
    concluded trade secrets were not at issue because Hoffman's only claim was for breach of
    contract. A claim of trade secret privilege, however, is not determined based on the
    claims asserted by the plaintiff. (See 
    Bridgestone, supra
    , 7 Cal.App.4th at p. 1388
    [applying trade secret privilege to information sought in wrongful death action based on
    7
    claim of negligent design and manufacture of tires]; and Citizens of Humanity, LLC v.
    Costco Wholesale Corp. (2009) 
    171 Cal. App. 4th 1
    , 7 [applying privilege in case alleging
    the sale of stolen property under Penal Code section 496].)
    Once BD asserted the requested information contained trade secrets, the trial court
    was required to determine whether it did.4 
    (Bridgestone, supra
    , 7 Cal.App.4th at p.
    1393.) If the documents contain protected trade secrets, then disclosure could be
    compelled only if Quidel demonstrated the information "is relevant and necessary to the
    proof of a material element" of its claim against Hoffman and that the information "is
    essential to a fair resolution of the lawsuit." 
    (Bridgestone, supra
    , at p. 1393.) Here,
    rather than conduct this analysis, the court erroneously applied the general standard for
    discovery under Code of Civil Procedure section 2017.010.
    The court's finding that any privileged information could be protected by the
    Hoffman/Quidel Protective Order was not an adequate substitute for use of the balancing
    test required under Evidence Code section 1060 for the disclosure of trade secrets. While
    a protective order is relevant to the determination of whether trade secret information is
    ultimately discoverable, the party seeking the protected information must first establish
    the information is directly relevant and necessary to its claims.5 
    (Bridgestone, supra
    , 7
    Cal.App.4th at p. 1393.) The court abused its discretion by requiring disclosure of the
    documents by BD subject to the Hoffman/Quidel Protective Order without first
    4       While we express no opinion on the subject, many of the disputed requests, on
    their face, appear to seek information subject to the trade secret privilege. Notably,
    Quidel does not dispute the information it seeks is protected.
    5     By suggesting the need for modification of the existing order, the court itself
    appears to have tacitly recognized its shortcomings.
    8
    conducting the analysis required for the disclosure of information protected by the trade
    secret privilege.
    We also reject Quidel's contentions, set forth in its informal response to BD's writ
    petition, that (1) BD's motion for protective order is not relevant to the challenged order
    because BD's motion addresses only Quidel's July 18, 2014, subpoena and that (2) BD
    waived its right to seek a protective order because it did not seek an order at the outset of
    negotiations over the requested documents. Neither of these contentions is supported by
    the record before this court. BD's motion for a protective order explicitly refers to both
    subpoenas. Additionally, BD did not waive its right to seek a protective order. Rather, it
    maintained its objection to producing confidential trade secret information throughout its
    negotiations with Quidel.
    Because the relief BD seeks will become moot if the protective order is heard
    before this court rules on its petition and because BD's entitlement to relief is clear and
    the law well-settled, we conclude a peremptory writ in the first instance is proper. (Code
    Civ. Proc., § 1088; Alexander v. Superior Court (1993) 
    5 Cal. 4th 1218
    , 1222-1223; Ng v.
    Superior Court (1992) 
    4 Cal. 4th 29
    , 35.)
    9
    DISPOSITION
    Let a writ of mandate issue directing respondent to stay its order of August 15,
    2014, until after it has heard and decided petitioner's pending motion for a protective
    order. The stay previously issued by this court is vacated.
    IRION, J.
    WE CONCUR:
    McCONNELL, P. J.
    BENKE, J.
    10
    

Document Info

Docket Number: D066518

Filed Date: 10/7/2014

Precedential Status: Non-Precedential

Modified Date: 4/18/2021