Intex Recreation Corp. et al v. Bestway USA Inc et al Case No. LA CV16-3300 JAK (Ex) United States District Court, C.D. California Filed May 02, 2023 Counsel Andrew M. McCoy, Pro Hac Vice, Joshua DeAmicis, Pro Hac Vice, Matthew James Spegele, Pro Hac Vice, R. Trevor Carter, Pro Hac Vice, Reid E. Dodge, Pro Hac Vice, Faegre Drinker Biddle and Reath LLP, Indianapolis, IN, Doowon R. Chung, Pro Hac Vice, Faegre Drinker Biddle and Reath LLP, Minneapolis, MN, Luke E. Steffe, Pro Hac Vice, Zach D. Kachmer, Pro Hac Vice, Faegre Drinker Biddle and Reath LLP, Denver, CO, Tarifa Belle Laddon, Faegre Drinker Biddle and Reath LLP, Los Angeles, CA, for Intex Recreation Corp. Andrew M. McCoy, Pro Hac Vice, R. Trevor Carter, Pro Hac Vice, Reid E. Dodge, Pro Hac Vice, Faegre Drinker Biddle and Reath LLP, Indianapolis, IN, Zach D. Kachmer, Pro Hac Vice, Faegre Drinker Biddle and Reath LLP, Denver, CO, Tarifa Belle Laddon, Faegre Drinker Biddle and Reath LLP, Los Angeles, CA, for Intex Marketing Ltd. Stephen M. Lobbin, SML Avvocati PC, Los Angeles, CA, Steven A. Caloiaro, Dickinson Wright PLLC, Reno, NV, Ariana Deskins Pellegrino, Pro Hac Vice, Dickinson Wright PLLC, Troy, MI, Ben M. Davidson, Davidson Law Group ALC, Calabasas, CA, John S. Artz, Pro Hac Vice, Jonathan D. Nikkila, Pro Hac Vice, Sharae L. Williams, Pro Hac Vice, Dickinson Wright PLLC, Ann Arbor, MI, for Bestway USA Inc. Stephen M. Lobbin, SML Avvocati PC, Los Angeles, CA, Steven A. Caloiaro, Dickinson Wright PLLC, Reno, NV, Ariana Deskins Pellegrino, Pro Hac Vice, Dickinson Wright PLLC, Troy, MI, Ben M. Davidson, Davidson Law Group ALC, Calabasas, CA, Jonathan D. Nikkila, Pro Hac Vice, Sharae L. Williams, Pro Hac Vice, Dickinson Wright PLLC, Ann Arbor, MI, for Bestway Hong Kong International Ltd., Bestway Inflatables and Materials Corporation. Kronstadt, John A., United States District Judge Proceedings: (IN CHAMBERS) ORDER RE PLAINTIFF'S MOTION FOR REVIEW OF MAGISTRATE JUDGE'S DISCOVERY ORDER (DKT. 301) I. Introduction *1 In this action, Intex Recreation Corp. and Intex Marketing Ltd. (collectively, “Plaintiffs” or “Intex”) allege that Bestway (USA), Inc., Bestway (Hong Kong) International, Ltd., and Bestway Inflatables & Materials Corporation (collectively, “Defendants” or “Bestway”) have infringed U.S. Patent No. 9,254,240 (the “'240 Patent”). Complaint, Dkt. 1. See also Intex Recreation Corp. et al v. Bestway USA Inc et al, 2:16-cv-03950-JAK-(E) (“Second Consolidated Case”), Dkt.1. Plaintiffs move for review and reconsideration of the Magistrate Judge's Discovery Order (“MJ Order,” Dkt. 296). See “Motion” (Dkt. 301). Defendants opposed the Motion (“Opposition” (Dkt. 309)). Plaintiffs filed a reply brief (“Reply” (Dkt. 315)). Based on a review of the briefing, it was determined that the Motion is appropriate for decision without oral argument. Therefore, the May 8, 2023 hearing is vacated and no appearance by counsel is necessary. See Fed. R. Civ. P. 78; Local Rule 7-15. For the reasons stated in this Order, the Motion is DENIED. II. Factual and Procedural Background The general procedural history of this action is described in the Order Regarding Claim Construction (“Claim Construction Order” (Dkt. 181 at 1–2)). That discussion is incorporated here by this reference. The Motion arises from a dispute concerning whether Plaintiffs may obtain data underlying the expert report by Defendant's expert as to the claimed infringement. Plaintiffs moved to compel “production of the data underlying Dr. Ali M. Sadegh's finite element analysis (‘FEA’) – including ... the .inp files (‘Input Decks’ or ‘Input Files’) and .obd files (the ‘Output Files’...”). MJ Order at 1 (quotation marks omitted). Defendants opposed producing the native data. The MJ Order ruled that the FEA data “including the Input Files and Output Files, constitute facts or data considered by Dr. Sadegh in forming his opinions, within the meaning of Rule 26(a)(2)(B)(ii).” Id. (quotations omitted) (citing Pertile v. General Motors, 2017 WL 11543175, at *7-9 (D. Colo. May 8, 2017), aff'd, 2017 WL 3767780 (D. Colo. Aug. 31, 2017); Advisory Committee's Note to 2010 Amendment of Fed. R. Civ. P. 26)). Based on that determination, the MJ Order considered whether “[p]roduction of the data” would “involve any significant risk to, or burden on, Defendant[s],” and found that it would not. Id. at 1-2. The MJ Order also considered whether “alternative methods of access to the subject data proposed by Defendant[s],” such as requiring Plaintiffs' counsel to travel to review the data on a controlled computer terminal, “could entail significant practical limitations on Plaintiff[s'] ability to use the subject data for purposes of analyzing the expert opinions and preparing to cross examine Dr. Sadegh.” Id. at 2. The MJ Order concluded that, “[u]nder the circumstances presented, access through the production requested in the Motion [i.e., native files] would be less burdensome and more reasonable than the alternative methods proposed by Defendant[s] [i.e., traveling to a computer terminal].” Id. (citing Pertile, 2017 WL 3767780, at *10-11 (affirming magistrate judge's order requiring production of FEA model and rejecting proposed access through partially encrypted files produced on a hard drive)). *2 The MJ Order did not “attempt to determine the likelihood Plaintiff[s] will use the subject data for the purpose posited by Defendant[s].” Id. at 2. Rather, the MJ Order stated that, “[i]f and when Plaintiff[s] use[ ] the subject data to generate new expert opinions untimely or otherwise improper under the Court's scheduling orders, the District Judge can, if appropriate, exclude any such new opinion from evidence during the pretrial conference, on motion in limine or at trial.” Id Defendants seek review of the MJ Order on two grounds. First, they argue the MJ Order reflects error in the finding that “alternative methods of access to the subject data proposed by Defendant could entail significant practical limitations on Plaintiff's ability to use the subject data for purposes of analyzing the expert opinions and preparing to cross examine Dr. Sadegh.” Mot. at 2. Second, they argue that the MJ Order reflects error in ruling that, “[i]f and when Plaintiff uses the subject data to generate new expert opinions untimely or otherwise improper under the Court's scheduling orders, the District Judge can, if appropriate, exclude any such new opinion from evidence during the pretrial conference, on motion in limine or at trial.” Id. III. Analysis A. Legal Standards When a district court reviews a non-dispositive decision by a magistrate judge, the applicable standards are whether the order is “clearly erroneous” or “contrary to law.” Fed. R. Civ. P. 72(a); accord 28 U.S.C. § 636(b)(1)(a); see also United States v. Abonce-Barrera, 257 F.3d 959, 969 (9th Cir. 2001) (“[T]he magistrate judge's decision in ... nondispositive matters is entitled to great deference by the district court.”). The standard that applies in reviewing a finding of fact is whether there was “clear error” by the magistrate judge; it is not whether the district judge would have made a different determination based on the same evidence. Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985). A factual finding by a magistrate judge is “clearly erroneous” only when the reviewing court is “left with the definite and firm conviction that a mistake has been committed.” United States v. Hinkson, 585 F.3d 1247, 1260 (9th Cir. 2009) (en banc) (internal quotation marks omitted). The determination of legal issues by a magistrate judge is reviewed de novo, under the “contrary to law” standard. See China Nat. Metal Products Import/Export Co. v. Apex Digital, Inc., 155 F. Supp. 2d 1174, 1177 (C.D. Cal. 2001). B. Analysis The MJ Order is correct that the native FEA files constitute “facts or data considered by” Dr. Sadegh within the meaning of Rule 26(a)(2)(B)(ii). Defendants do not contest this ruling. Nor do they challenge relevance or proportionality. Rather, as stated, they contest the finding relating to balancing burdens and the ruling on Defendants' request prophylactically to limit Plaintiffs' use of the data. Defendants have not shown any clearly erroneous factual findings or legal rulings that are contrary to law. Consequently, the MJ Order is affirmed and the Motion is denied. 1. Burden Balancing Defendants argue that the MJ Order provided no rationale or facts to support the conclusion that giving Plaintiffs access to the data “through the production requested in the Motion would be less burdensome and more reasonable than the alternative methods proposed by Defendant.” Motion at 6 (citing MJ Order at 1-2). Specifically, Defendants argue that the MJ Order did not identify the practical limitations, or balance them against the risk Defendants believe will be presented. Id. at 7. Although no trade secrets are at issue, Defendants argue that the “risk” of producing the data in native form includes the possibility that Plaintiffs will misuse the data to disclose new opinions, thereby necessitating another motion to strike. Id. at n.2. *3 Plaintiffs respond that the Motion fails to identify a fact or law in the MJ Order that is “clearly erroneous” or “contrary to law” under Rule 72. Opposition at 9. Plaintiffs argue that the Magistrate Judge properly considered the “significant practical limitations” on Plaintiffs, as detailed in Plaintiffs' Motion to Compel (see Dkt. 284, at 13:1-13), and thus it was “entirely reasonable” for the Magistrate Judge to find no significant risk on Defendants. Id. at 10. The MJ Order properly considered whether producing the data considered by the expert would present “any significant risk to, or burden on” Defendants. MJ Order at 1. For example, the MJ Order reviewed authority recognizing that such a burden may be present if producing the data would reveal trade secrets, which is not an issue here. Id. (comparing Schmidt v. Navistar, Inc., 2020 WL 5548837, at *8-9 (D. N.M. Sept. 16, 2020) (denying discovery of FEA models because of defendant's significant trade secret concerns where the models would have been of only marginal utility to plaintiff's expert)). In contrast, the MJ Order found that the “alternative methods of access[ing]” the data proposed by Defendants, which included having Plaintiffs and their expert travel to a standalone computer terminal maintained by Defendants each time they would like to inspect the data, “could entail significant practical limitations on Plaintiff[s'] ability to use the subject data for purposes of analyzing the expert opinions and preparing to cross examine Dr. Sadegh.” Id. Defendants have not shown that this factual finding is clearly erroneous. Rather, the conclusion that requiring Plaintiffs and their expert to travel to review data would limit their ability to analyze and use that data, rather than having a copy of that data where providing a copy does not present a risk to Defendants, was very reasonable. Where the MJ Order “could and did weigh” any significant risks to or burden on Defendants against the practical limitations for Plaintiffs, it is not clearly erroneous. See In re Toyota Motor Corp. Hybrid Brake Mktg., Sales, Practices and Products Liab. Litig., 2:10-CV-00946-CJC-RNBx, 2011 WL 13130898 (C.D. Cal. Dec. 2, 2011) (magistrate judge considered countervailing arguments); see also Hinkson, 585 F.3d at 1260 (no “definite and firm conviction that a mistake has been committed”). 2. Request for Limiting Order Defendants next argue the MJ Order reflects error by declining Defendants' request to enter a prophylactic ruling to limit Plaintiffs' use of the data. Specifically, Defendants argue that the MJ Order reflects error by deferring this issue as follows: “If and when Plaintiff[s] use[ ] the subject data to generate new expert opinions untimely or otherwise improper under the Court's scheduling orders, the District Judge can, if appropriate, exclude any such new opinion from evidence during the pretrial conference, on motion in limine or at trial.” MJ Order at 2. Defendants seek an order limiting Plaintiffs' use of the data only for cross-examination, which they argue will avoid the need for further motion practice. Motion at 5-8. Plaintiffs respond that Defendants argument should be rejected because it is based on hypothetical motion practice and speculative use of judicial resources. Opp. at 11. Plaintiffs contend that they have been clear about their intended use of the underlying data, and for this reason no “additional guardrails” are needed. Id. (citing Dkt. 294 at 4:5-9). Plaintiffs argue that Defendants' decision to file the Motion does not promote judicial economy because it does not satisfy Rule 72(a). Id. Finally, Plaintiffs contend that Defendants did not substantially meet and confer, violating Local Rule 7-3; and they failed to produce the underlying data by April 3, 2023, as ordered, violating Local Rule 72-2.2. Id. at 12. *4 The MJ Order does not show error by concluding that any challenge to Plaintiffs' hypothetical future use of the data was not ripe and that any future challenge could be addressed at the appropriate time if necessary. This was not a ruling that is contrary to the law. Although judicial and party economy are important goals, advisory orders arising from speculation about what a party may do in the future is not a ground to find the MJ Order is clearly erroneous or contrary to law under Rule 72(a). Further, this case is unlike, Pertile, 2017 WL 3767780, at *8-9, in which the plaintiff expressly suggested it wanted to use the information for purposes other than exploring the expert opinion of an adverse witness, including to demonstrate that the defendant knew of a safer vehicle design. In this case Plaintiffs have explained that they want to use the data to explore Dr. Sadegh's opinion, which is appropriate. See Dkt. 294 at 4:5-9 (“Intex has explained that its request for the Input Deck and Output Files is so that it may understand and analyze the inputs and assumptions underlying Dr. Sadegh's opinions and prepare for Dr. Sadegh's deposition, use this information in motion practice, and/or cross examination at trial.”). For the foregoing reasons, Defendants have not presented any basis on which to find the MJ Order included clearly erroneous factual findings or rulings contrary to law. Therefore, the Motion is DENIED. 3. Procedural Challenges The parties disagree whether the meet and confer requirement of L.R. 7-3 applies to a motion requesting review of the ruling of a Magistrate Judge. Because the rule applies to filing “any motion,” its scope includes the present Motion. See L.R. 7-3 (“In all cases not listed as exempt in L.R. 16-12, and except in connection with discovery motions (which are governed by L.R. 37-1 through 37-4) and applications under F.R.Civ.P. 65 for temporary restraining orders or preliminary injunctions, counsel contemplating the filing of any motion must first contact opposing counsel to discuss thoroughly, preferably in person, the substance of the contemplated motion and any potential resolution.”) (emphasis added). This shortcoming notwithstanding, for completeness and efficiency, the merits of the Motion have been reviewed. In light of the procedural history, it appears unlikely that a meet and confer process would have resulted in the resolution of the present dispute. The parties also disagree whether Defendants violated L.R. 72-2.2 because they neither produced the data by April 3, 2023, as required by the MJ Order, nor obtained a stay of the MJ Order. “Regardless of whether a motion for review has been filed, the Magistrate Judge's ruling remains in effect unless the ruling is stayed or modified by the Magistrate Judge or the District Judge.” L.R. 72-2.2. Defendants included the following request in the Conclusion of the Motion: “Bestway further requests that its performance of the Magistrate's order be stayed pending review by this Court.” Mot. at 4. However, this is not the same as seeking a stay before the effective date of the challenged order. Defendants are advised that any future request for a stay should be filed as ex parte application, either to the Magistrate Judge or District Judge, before the effective date of the order for which a stay is sought. Defendants are also reminded to review the requirements of Rule 72(a) before filing any further motions to review an order by the Magistrate Judge. Future non-compliance with the Local Rules could result in the imposition of sanctions. IV. Conclusion *5 For the reasons stated in this Order, the Motion is DENIED. IT IS SO ORDERED.