Articles

A Sword, Not A Shield: Section 2019.210

Originally Published May 2006 in Orange County Lawyer

Conventional wisdom instructs defense counsel, when dealing with “hide-the-ball” plaintiffs, to file all necessary motions to compel compliance with the area of law or discovery that is not being fearfully obeyed. The theory, of course, is that diligent defense counsel must not leave a stone unturned and must also bring its adversary’s improper tactics to the court’s attention at each and every instance.

In trade secret litigation, the conventional wisdom is no different. California Code of Civil Procedure section 2019.210 requires that “before commencing discovery . . . the party alleging the misappropriation [of trade secrets] shall identify the trade secret with reasonable particularity.” (Emphasis added). Accordingly, diligent defense counsel will refuse to move forward with discovery until the plaintiff has fully complied with this requirement. In the event defense counsel is not satisfied with the plaintiff’s description, it will bring a motion to compel so that the Court will issue an order that the plaintiff provide the requisite particularity of the trade secret’s description.

This strategy makes sense. After all, one of the purposes behind Section 2019.210 is to “enable defendants to form complete and well-reasoned defenses, ensuring that they need not wait until the eve of trial to effectively defend against charges of trade secret misappropriation.” Computer Economics, Inc. v. Gartner Group, Inc., 50 F. Supp. 2d 980, 985 (S.D. Cal. 1999).

Of course, employing the above strategies generally results in nothing more than compliance with Section 2019.210. In some fortunate cases, monetary sanctions may be awarded. Meanwhile, the plaintiff’s counsel has been given a primer as to what must be alleged and proven once discovery actually commences to prevail in its claims that a trade secret actually exists and was misappropriated.

One alternative strategy that strays from the conventional wisdom can do much more damage to a plaintiff’s trade secret case. As explained in greater detail below, Section 2019.210 can be used as a weapon to devastate a plaintiff’s case. However, as with all powerful weapons, patience and deliberation must be used before it is employed. As explained below, in the litigation context, it must be briefly showcased at the outset of the case and then kept hidden until it is time for summary judgment.

STEP ONE: LAY THE FOUNDATION

In order to set the case up for summary judgment, it is imperative that defense counsel put the plaintiff on notice of its obligations according to Section 2019.210. Rather than bring a motion, or even threaten to bring a motion, a non-threatening letter advising opposing counsel of Section 2019.210’s requirements is sufficient. For example, a letter that innocuously states the following is effective: “I wanted to highlight your attention to California Code of Civil Procedure Section 2019.210, which requires that in any action alleging the misappropriation of a trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity before commencing discovery. While Plaintiff's Complaint describes in general some information relating to trade secrets, this description is insufficient. Therefore, before next week's depositions begin, please forward to me Plaintiff's Section 2019.210 statement.” Plaintiff’s counsel will either comply or, more likely, rely on its “hide-the-ball” tactics and respond with the argument that its description in the complaint was sufficient.

In the latter scenario, it is tempting for defense counsel to file a motion and have the Court admonish the plaintiff’s counsel for its shenanigans. Since admonitions do not win lawsuits, wise counsel must exercise one of the most underutilized skills in modern advocacy: patience.

STEP TWO: BUILD THE TRAP

Without mentioning the plaintiff’s counsel’s failure to comply with Section 2019.210, the next step is to move forward with discovery. Specifically, taking the depositions of various plaintiff witnesses is necessary to have each witness describe “in their own words,” the information that the plaintiff contends is a protected trade secret. Even the most prepared witnesses will be inconsistent in their descriptions of the allegedly proprietary information. Inconsistent testimony is especially common when the plaintiff’s counsel has already failed to describe the trade secret with reasonable particularity because the witnesses will have nothing to read and memorize.

STEP THREE: WIELD THE SWORD

Once the depositions are complete, the plaintiff’s case is extremely vulnerable to summary judgment on the grounds that the plaintiff failed to comply with Section 2019.210. Specifically, the defendant can argue that the plaintiff, not only failed to describe the alleged trade secret with any particularity, but that the plaintiff also (per the deposition testimony) failed to describe the alleged trade secret with any consistency.

As recent case law makes clear, a plaintiff’s failure to adequately designate an alleged trade secret constitutes a failure to carry their burden on this necessary element of their claim and is grounds for summary judgment. See Imax Corp. v. Cinema Technologies, Inc., 152 F.3d 1161, 1164-65 (9th Cir. 1998) (affirming summary judgment against plaintiff who failed to identify its alleged trade secrets with particularity); Universal Analytics, Inc. v. MacNeal-Schwendler Corp., 707 F.Supp. 1170, 1177 (C.D. Cal. 1989) (granting summary judgment in trade secrets case where defendant established that plaintiff failed to describe allegedly misappropriated trade secrets).

Recently, in Advanced Modular Sputtering, Inc. v. Superior Court, the Court of Appeal “h[e]ld that Code of Civil Procedure section 2019.210. . . is not limited in its application to a cause of action under the Uniform Trade Secrets Act (UTSA)) . . . for misappropriation of the trade secret, but extends to any cause of action which relates to the trade secret.” 132 Cal. App. 4th 826, 830 (2005)(emphasis added). Put another way, exposing a plaintiff’s failure to comply with Section 2019.210 at the right time can be devastating the plaintiff’s case.

Opposing the motion for summary judgment is equally problematic for the plaintiff. As an initial matter, there are little (if any) factual disputes in the motion because the defendant will be relying exclusively on the plaintiff’s allegations and admissions. Moreover, the plaintiff cannot defeat summary judgment by providing further details not included in its section 2109.210 statement. See Pixion, Inc. v. Placeware, Inc., 2005 WL 88968, at *7, *11 (N.D. Cal. 2005)(granting summary judgment, in part, based on plaintiff’s failure to describe alleged web conferencing technology trade secrets with reasonable particularity in its section 2019(d) statement which identified six features of its invention).

CONCLUSION

Section 2019.210 is an available weapon that becomes even more powerful the longer defense counsel can wait before using it to expose the plaintiff’s failed compliance. Instead of using it to win a discovery battle, defendants would be well advised to wait and use it to achieve full victory.

For more info contact David R. Sugden