Monster Energy Company v. Vital Pharmaceuticals, Inc., et al Case No. 5:18-cv-01882-JGB-SHKx United States District Court, C.D. California Filed February 22, 2021 Counsel D. Castellanos, Deputy Clerk, Attorney(s) Present for Plaintiff(s): None Present Not Reported, Court Reporter, Attorney(s) Present for Defendant(s): None Present Kewalramani, Shashi H., United States Magistrate Judge Proceedings: ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO COMPEL KARMA DOCUMENTS [ECF NO. 312] *1 On December 8, 2020, following an informal telephonic hearing with this Court, Defendants Vital Pharmaceuticals, Inc. and John H. Owoc (together “VPX” or “Defendants”) filed the instant Motion to Compel (“Motion” or “Mot.”) Plaintiff Monster Energy Company (“Monster” or “Plaintiff”) to produce various “Karma” reports and surveys and the associated responses to the reports and surveys (collectively, “Karma Reports”). Electronic Case Filing Number (“ECF No.”) 312-1, Mot. On December 22, 2020, Plaintiff filed their Opposition to the Motion (“Opposition” or “Opp'n”). ECF No. 318, Opp'n. Shortly thereafter, on January 5, 2021, Defendants filed their Reply (“Reply”). ECF No. 320, Reply. Following the filing of the parties' briefs, the Court held a series of hearings regarding their discovery dispute on January 15, 19, and 25 of 2021. See ECF Nos. 327, Min.; 331, Min.; and 339, Min. During the most recent hearing, both parties confirmed that the matter stands ready for decision. See ECF No. 339, Min. After reviewing the parties' arguments from both the briefing, attachments, and hearings, for the reasons set forth below, the Court GRANTS IN PART AND DENIES IN PART Defendants' Motion. Plaintiff is ORDERED to produce the Karma Reports in accordance with the Court's instructions set forth in Section III. I. BACKGROUND Monster commenced this action in September 2018 against Defendants. ECF No. 1, Compl. On April 3, 2019, Monster filed its First Amended Complaint (“FAC”) against VPX alleging the following claims: (1) a violation of the Lanham Act; (2) unfair competition; (3) false advertising; (4) trade libel; (5) intentional interference with contractual relations; (6) intentional interference with prospective economic advantage; (7) conversion; (8) larceny; (9) false patent marking; (10) a violation of the California Uniform Trade Secrets Act; (11) a violation of the Defend Trade Secrets Act; and (12) a violation of the Computer Fraud and Abuse Act. ECF No. 61, FAC at 36-47. Monster is seeking, among other forms of relief, compensatory damages that Monster estimates to be “at least $300-400 million.” ECF No. 94, Joint Rule 26(f) Rep. at 8. Discovery in this matter has been ongoing for at least two years, with hundreds of thousands of documents produced from both sides. See ECF No. 312-1, Mot. at 22 (“Monster has produced more than 100,000 documents in this case ....”); ECF No. 18, Opp'n at 7-8 (“VPX has served more than 900 requests for production ... on Monster and Monster has served more than 400 [requests for production] on VPX.”). Additionally, both parties have engaged discovery vendors, see ECF No. 312-1, Mot. at 22 (“[T]he parties ... have employed specific document/discovery vendors to support [this action.]”), and have incurred considerable expenses, see, e.g., ECF No. 318, Opp'n at 7 (“Monster has incurred ... $463,337.74 in vendor and contract attorney fees, which does not include Monster's attorney's fees.”). On September 3, 2019, the parties entered into a joint Stipulated Order Regarding Discovery of Electronically Stored Information (“ESI Agreement”) that, among other things, governs discovery of electronically stored information (“ESI”), including identifying specific custodians for their ESI searches. ECF No. 126, ESI Agreement at 3. The ESI Agreement also permits the ESI Agreement to be “modified ... by the Court for good cause shown.” Id. at 4. *2 On October 16, 2020, VPX served a letter on Monster requesting the Karma Reports. See ECF No. 318-7, Ex. 6. The Karma Reports are produced by a software tool called “Karma”, created by Vermont Information Processing, Inc. (“VIP”). ECF No. 312-1, Mot. at 5. The Karma tool “allows Monster's field representatives to enter real-time sales point information through a mobile or tablet application, and then transmit electronically to other Monster employees.” Id. The Karma tool appears to be used in analyzing various data points of product sales, including “Monster's sales, retail presence, shelf space, location of products, and inventory[.]” Id. “Some surveys are also used to report on actions taken at the store with respect to products and displays, and may include photographs and communications with retailers.” Id. at 5-6. Monster uses the Karma tool and “generates reports with the responses from these surveys.” Id. at 5. VPX had subpoenaed VIP for the Karma Reports, and both Monster and VIP objected to the subpoena. ECF No. 320-1, Decl. of Joni B. Flaherty (“Flaherty Decl.”) at 3. VPX withdrew the subpoena and instead requested the documents directly from Monster. Id. The parties met and conferred regarding Monster producing the Karma reports, see ECF No. 318-1, Decl. of Sourabh Mishra (“Mishra Decl.”), and pursuant to the undersigned Magistrate Judge's rules, attended an informal discovery hearing on the matter, ECF No. 309, Min. Order. The Court ordered the parties to submit briefs to the Court. Id. After briefing was completed, the Court held a second hearing with the parties regarding the instant discovery dispute, which allowed the Magistrate Judge to better understand the type of information that could be included in Karma Reports and drawn from raw data maintained in the VIP databases. The parties also notified the Court that they wished to continue to meet and confer regarding search terms for the Karma reports. ECF No. 327, Min. Order. The Court held a third hearing following the parties' meet and confers, in which this Court ordered Monster to produce Karma Reports that were already identified and produced in Vital Pharmaceuticals Inc. v. Monster Energy, Inc., et al. (“Reign”), No. 0:19-cv-60809-RKA (S.D. Fla. Mar. 28, 2019), a separate trade dress action by VPX against Monster, and which were covered by a protective order in that case (“Reign Documents”). ECF No. 331, Min. Order. As indicated during the hearings, these Reign Documents were previously reviewed for privilege and other doctrines that would prevent their disclosure. However, VPX still seeks Karma Reports from lower-level Monster employees related to the claims in the instant action, as the Reign Documents were related to a trade dress claim not at issue here. Id. VPX argues that the Karma Reports are directly relevant to refuting or supporting Monster allegations of lost sales because of VPX's false advertising—specifically, issues such as “[t]he positioning of VPX's products relative to Monster's products, and whether consumers can find or view [VPX] products and labels based on placement[.]” ECF No. 320, Reply at 6. As the Magistrate Judge understands the issues, these documents relate to the issue of damages in this case as well as the intentional interference claims. The parties were ordered to continue to meet and confer to narrow the volume of documents sought by VPX. ECF No. 331, Min. Order. This Court held a final hearing with the parties on January 25, 2021 (“January 25 Hearing”). ECF No. 339, Min. II. LEGAL STANDARD A. Requirements And Scope Of Discovery Federal Rule of Civil Procedure (“Rule”) 26(b)(1) governs the scope of permissible discovery and provides: Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable. *3 Relevancy, for purposes of discovery, “has been construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.” Nguyen v. Lotus by Johnny Dung Inc., No. 8:17-cv-01317-JVS-JDE, 2019 WL 3064479, at *1 (C.D. Cal. June 5, 2019) (internal citations and quotation marks omitted). “Generally, the purpose of discovery is to remove surprise from trial preparation so the parties can obtain evidence necessary to evaluate and resolve their dispute.” Duran v. Cisco Sys., Inc., 258 F.R.D. 375, 378 (C.D. Cal. 2009) (internal citations and quotation marks omitted). Because discovery must be both relevant and proportional, the right to discovery, even plainly relevant discovery, is not limitless. See Fed. R. Civ. P. 26(b)(1); Nguyen, No. 8:17-cv-01317-JVS-JDE, 2019 WL 3064479, at *1. Consequently, the ability to seek discovery may be denied where: “(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or (iii) the proposed discovery is outside the scope permitted by Rule 26(b)(1).” Fed. R. Civ. P. 26(b)(2)(C). Additionally, Rule 26(b)(2)(B) places specific limitations on discovery of ESI, providing that: A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the court may nonetheless order discovery from such sources if the requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C). The court may specify conditions for the discovery. Fed. R. Civ. P. 26 (b)(2)(B). Parties may also stipulate to procedures governing or limiting discovery, and are encouraged to do so for efficiency or reduction of costs. See Fed. R. Civ. P. 29 (“Unless the court orders otherwise, the parties may stipulate that ... other procedures governing or limiting discovery be modified[.]”); Fed. R. Civ. P. 29 advisory committee's note to 1993 amendment (“Counsel are encouraged to agree on less expensive and time-consuming methods to obtain information, as through voluntary exchange of documents, use of interviews in lieu of depositions, etc.”). Requests for production of documents are governed by Federal Rule of Civil Procedure 34. See Fed. R. Civ. P. 34. “A party seeking discovery may move for an order compelling ... production, or inspection.” Fed. R. Civ. P. 37(a)(3)(B). “The party seeking to compel discovery has the burden of establishing that its request satisfies the relevancy requirements of Rule 26(b)(1). The party opposing discovery then has the burden of showing that the discovery should be prohibited, and the burden of clarifying, explaining or supporting its objections.” Bryant v. Ochoa, No. 07cv200 JM (PCL), 2009 WL 1390794 at * 1 (S.D. Cal. May 14, 2009). “The party opposing discovery is ‘required to carry a heavy burden of showing’ why discovery should be denied.” Reece v. Basi, No. 2:11-cv-2712 TLN ACP, 2014 WL 2565986, at *2 (E.D. Cal. June 6, 2014), aff'd, 704 F. App'x 685 (9th Cir. 2017) (quoting Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir.1975)). *4 “The district court enjoys broad discretion when resolving discovery disputes, which should be exercised by determining the relevance of discovery requests, assessing oppressiveness, and weighing these factors in deciding whether discovery should be compelled.” United States ex rel. Brown v. Celgene Corp., No. CV 10-3165 GHK (SS), 2015 WL 12731923, at *2 (C.D. Cal. July 24, 2015) (internal citations and quotation marks omitted). When considering a motion to compel, the Court has similarly broad discretion in determining relevancy for discovery purposes. Surfvivor Media, Inc. v. Survivor Productions, 406 F.3d 625, 635 (9th Cir. 2005) (citation omitted). III. DISCUSSION A. Relevance Of Documents Requested. The Court will first briefly address the threshold issue of whether the Karma Reports VPX still seeks are relevant and thus discoverable under Rule 26. As the Court indicated during one of the discovery hearings on this matter, the Karma Reports are reasonably related to both the claims and defenses under the Lanham Act claim, including the related damages claim, and the factual issues of product placement for the intentional interference with contractual relations. With regard to the Lanham Act claims, this Court agrees with VPX that the Karma Reports may provide evidence of the reasons why consumers chose VPX's product or Monster's product (e.g. the product placement). See ECF No. 312-1, Mot. at 10-12. And with regard to the intentional interference with contractual relations, the Karma Reports directly go towards whether VPX had taken up shelf spacing that was contractually reserved for Monster. See ECF No. 312-3, Ex. 3 at 2. Moreover, VPX is unable to obtain these documents from elsewhere as VIP objected to VPX's subpoena for the Karma Reports on the basis that the documents could be produced by Monster, which resulted in the instant Motion. See ECF No. 320-1, Flaherty Decl. at 3. The Court is cognizant that the parties had agreed to forego searching e-mails of lower-level employees as part of their ESI Agreement, see ECF No. 334, Hearing Tr. at 6:2-4, but given the direct relevance of and need for these Karma Reports, the Court finds good cause for the Karma Reports to be discoverable. See ECF No. 125, ESI Agreement at 4. B. Undue Burden Of Producing The Documents. The Court next turns to the crux of the instant discovery dispute, which is whether the scope of the Karma Reports that VPX is seeking is proportional to the burden of producing those documents. As an initial matter, Monster objects to running any of VPX's requested searches for the Karma Reports without any limitations, e.g. custodial limitations, on the basis that the searches are overbroad and burdensome. See ECF No. 329, Hearing Tr. at 55:7-14. Monster had noted during one of the hearings that Boolean searches on Monster's in-house systems were difficult, as “Monster does not have the capability to [remove duplicate] hit counts [to the searches]. [Monster would] have to export it to Relativity, [which is a document management and search platform,] and Relativity has to do it, and it takes about a week[.]” ECF No. 334, Hearing Tr. at 4:25-5:2. With the impending discovery deadline of May 17, 2021, see ECF No. 303, Order, Monster argues that any production of more than 10,000 documents is not feasible under the current timeline. ECF No. 334, Hearing Tr. at 20:18-23. During the January 25 Hearing, Monster informed the Court that, after running three narrower searches, the resulting document count was about 300,000, without including families and removing duplicates. ECF No. 340, Hearing Tr. 3:23-4:6. Specifically, Monster ran the following searches and their results (“Search Results”): *5 • “Karma & Bang & Facing*”, which resulted in 112,246 documents; • “Karma & Bang & Shel*”, which resulted in 97,435 documents; and • “Karma & Bang & Spac*”, which resulted in 102,270 documents. Id. at 5:17-6:8. In response to the number of documents, VPX proposed limiting the Search Results by “cross-referencing [the Search Results] with the stores that ... Monster is claiming VPX interfered with the contracts related to[.]” Id. at 9:9-14. Monster objected, arguing that they only provided VPX with the retailer and store contracts at issue, rather than the specific stores themselves, and to find the specific numbers correlating with the stores would not be feasible within a short period of time. Id. at 10:1-11. Additionally, VPX had also offered to run the Search Results with specific proximity connectors (e.g., Karma within 50 words of Bang) in order to narrow the search. Id. at 4:7-11. Monster stated that it tried to run the searches with the requested proximity connectors but could not have been able to do so without exporting the entire search to Relativity, which would take “several days of processing time[.]” Id. at 4:15-22. Based on the Search Results, the Court finds that the volume of Karma Reports that VPX is requesting Monster to produce is disproportional and clearly burdensome. VPX has not demonstrated how such a voluminous number of documents is not duplicative and is proportional to the needs of this case, especially in light of the fact that they have already received the Reign Documents and that Monster had produced over a hundred Karma reports prior to this dispute, see ECF No. 318-1, Mishra Decl. at 7. Not only has Monster faced technical difficulties running these searches, but they have also expended a considerable amount of costs for discovery—as Monster noted, $463,337.74 for vendor and contract attorney fees—that likely would significantly increase in order to review and produce the Karma Reports to VPX as quickly as possible. Additionally, with the impending discovery deadline, reviewing more than several thousand documents within the coming months would be overly burdensome and potentially duplicative because the Reign Documents already include around 10,000 Karma-related documents. See ECF No. 334, Hearing Tr. at 4:4-8. Moreover, Monster has been operating under the terms of the ESI Agreement reached between the parties, and discovery—including depositions—have taken place relying on the materials gathered under the ESI Agreement. Accordingly, although the Karma Reports are relevant and discoverable, the Court finds that the volume of the Karma Reports VPX seeks are overly burdensome on Monster and disproportional to the needs of the case. However, a subset of documents does seem appropriate and proportional to the needs of the case, considering the amount of damages sought in the matter and against which VPX must defend. Drawing the line on what is an appropriate limitation is difficult, as the Magistrate Judge explained during the hearings, and will require the Court to make its best guess based on the information provided by the parties. This best guess will also be imprecise because the parties have not provided an appropriate limitation but rather have taken all-or-nothing positions. *6 Therefore, based on the information provided and the discretion that the Court has in discovery matters, the following ESI searches shall be conducted applying the following parameters: 1. Monster is only required to produce Karma Reports within the time period between the date of the last document production in Reign to present; 2. The parties shall meet and confer within 5 days of this order and VPX shall provide the names of five (5) retailers, identified in responses by Monster to discovery related to the retailers that Monster claims form the basis for the intentional interference claims, and whose name (or other identifier corresponding to the particular retailer) shall be used in the searches; 3. If the resulting search of the five retailers produces less than 5,000 unique documents, Monster must produce the entirety of the resulting search to VPX; and 4. If the resulting search of the five retailers produces more than 5,000 unique documents, both parties must file a joint status report by a date to be set by the Court following a hearing on the matter. A follow up discovery status conference will be held on March 1, 2021 at 1 p.m. PST. The parties may contact the Court if the time is not possible and propose two other dates and times that allow the appropriately knowledgeable counsel on the issue to participate. IV. CONCLUSION For the reasons discussed above, the Motion [ECF No. 312] is GRANTED IN PART and DENIED IN PART. IT IS SO ORDERED.