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  • Shelly Albaum

Wrong Briefing Schedule!


I mentioned in passing on Wednesday that I thought Judge Carney had gotten the briefing schedule backwards. I said,

It's not clear to me why Elysium goes first, given that the majority of Judge Carney's questions were posed to ChromaDex, not Elysium....I guess that's why I'm not a federal judge.

ChromaDex noticed the same thing, and late yesterday filed an ex parte objection pointing out that, consistent with custom and fairness, ChromaDex should have the opening and reply briefs on questions put to ChromaDex, and Elysium should have the opening and reply briefs on questions put to Elysium.

Predictably, Elysium was not moved by an appeal to custom and fairness, and lodged its angry opposition earlier today.

You can read both briefs here:

ChromaDex's ex parte request to modify the briefing schedule

Elysium's ex parte opposition to modifying the briefing schedule

ChromaDex's brief does a good job explaining exactly where we are right now:

The Court has posed several questions to ChromaDex regarding its damages claims and causation.These questions are readily answered with evidence that ChromaDex has submitted to the Court, additional evidence it will submit, and still more evidence that it would prove at trial but will advance now in response to the Court’s order. This evidence is overwhelming, and will prove beyond doubt that Morris and Elysium’s theft of ChromaDex’s confidential information and trade secrets—framed by Morris’s pledge to “destroy” ChromaDex in order to benefit Elysium’s founders, to whom he promised “unconditional loyalty” while he was still a ChromaDex executive—materially and economically benefitted Elysium and Morris and hurt ChromaDex. And all of these issues, and the Court’s questions, must be evaluated and addressed in a way that is faithful to clear authority establishing the parties’ respective burdens at summary judgment and at trial, the importance of circumstantial evidence in precisely this type of case, and the reluctance expressed by most courts to reward wrongdoers who steal trade secrets and confidential information only to cover their tracks once it is safely in their hands and capable of being deployed in multiple, creative, and secretive ways.

This is a case concerning trade secrets, confidential information, and breach of fiduciary duty. It is not simply a breach of contract case. The text messages alone are extraordinarily powerful evidence that defendant Morris and defendant Elysium conspired to steal both confidential information and trade secrets from ChromaDex, conspired to hide their conduct, and conspired to use that information to help Elysium “destroy” ChromaDex—Morris’s word, not ChromaDex’s—with its investors, its supplier, and its intellectual property partners. One does not steal information in order to destroy a company and then decide never to use the stolen information. Morris and Elysium are not bank robbers who held up the teller, took the money, got in the getaway car, and then inexplicably decided never to spend their ill-gotten proceeds. And ChromaDex will prove their misuse of the information at trial with overwhelming evidence of their strategic and calculated perfidy.

For present purposes, the point is that the Court’s pointed but readily answerable questions concerning causation have been put to ChromaDex, not Defendants, notwithstanding that it is Defendants’ burden to show both that there is no genuine dispute as to any material fact and that they are entitled to judgment as a matter of law. As such, ChromaDex respectfully submits that it should have the opening brief and reply on those questions....

ChromaDex also points out that both the New York and Delaware actions are stayed pending resolution of the California claims, and that further delay only benefits Elysium.

In response, Elysium mostly argues that the Court asked the parties to show OR TO DISPROVE each of the contentions, so Elysium should go first since it has the burden of proof anyway, and it can use the extra pages to disprove ChromaDex's ability to provide the evidence that the Court has requested.

Elysium also complains that ChromaDex's ex parte motion reiterates some of this morning's press release. This strikes me as profoundly irrelevant, and I'm not sure even sure what implication we are supposed to draw.

Analysis

I was already on record as saying that the Court's briefing schedule made no sense, and that it was essentially requiring Elysium to prove a negative, and to respond to evidence and argument before ChromaDex offered it. That's obviously so.

The confusion seems to be that Elysium bears the burden of showing no triable fact for the jury, whereas the Court has specifically asked CHROMADEX to prove that there IS a triable fact for the jury. In other words, the court's briefing schedule conforms to the correct burden of proof, but the substance of the things being briefed does not.

How is such a problem resolved?

ChromaDex is taking a pragmatic approach, suggesting that the briefing schedule conform to the questions asked. This is the correct answer, under the circumstances. What the Court proposed, and what Elysium wants to see instead, is the scenario where the Court demands that ChromaDex prove its case, then hands the microphone to Elysium. It's nonsense.

Further proof of nonsense is that the Court has asked ChromaDex to answer five fact-intensive questions -- just one for Elysium -- and yet given Elysium most of the pages.

What SHOULD happen? Judge Carney should resolve the motions based on the evidence already submitted. There's plenty of evidence there. He doesn't need supplemental briefing; he needs more time.

Barring that, if Judge Carney doesn't want to do all that reading, and he wants ChromaDex to spell it out for him, then ChromaDex should have a new opening brief to do that. These were cross-motions for summary judgment, so the supplemental briefing should be cross-briefs as well. There is no good reason to give either party the opening brief on the other's issues.

Finally, there is an important disagreement between the parties about what this case is about.

ChromaDex says, "This is a case concerning trade secrets, confidential information, and breach of fiduciary duty. It is not simply a breach of contract case."

Elysium says, "This case is a straightforward breach of contract action and not a complicated, multimillion-dollar tort, unfair competition, and antitrust one.” [That is especially rich coming from Elysium, which has been persistently flogging its own Patent Misuse claim, which is the ONLY source of antitrust law in this case.]

You'd think that after almost three years Judge Carney would have a stronger sense of what this case is about.

Since Judge Carney has not been following along (which sort of makes sense, because Magistrate Judge McCormick has been handling discovery), and wants to have it spelled out, he should give the parties space to do that. Each one should have its own opening brief on the issues where Judge Carney wants more clarity from that party.

But I predict it won't happen.

The problem with ChromaDex's motion isn't that it isn't consistent with law, custom, and fairness -- not to mention common sense. Nor is the problem that it would put the parties on an equal footing and give both parties exactly the same amount of pages to address their respective issues. The problem with ChromaDex's motion is that it will increase the total amount of briefing that Judge Carney has to read, from 65 pages to 80 pages. You think that might not happen? I think that might not happen.

I don't think this litigation is showing off Judge Carney in his best light. As soon as you have one company pledging to "destroy" the other -- and executing a plan intended to do so! -- then this quite obviously is no longer a "straightforward breach of contract case."

However, there is a chance for Judge Carney to redeem himself. It is at least possible that part of the problem has to do with staffing at the Court. Judge Carney doesn't have to read all the exhibits and pleadings; the clerk has to do that. And clerks typically serve for just one year. Since this case is approaching its third year, we are probably on our third clerk -- each one having to get up to speed on a giant file that grows more complicated by the month. For all we know -- and I do NOT know -- they just switched clerks this month, and the new clerk needs time to get up to speed, and that's what this is about.

Whatever it's about, it is not currently looking like the judiciary is prepared to recognize and check the kind of bad commercial behavior that is the very reason for the judiciary's existence -- to prevent civil disputes from devolving into conflicts where they parties attempt to destroy each other.

Judge Carney, we need you to engage here with the case as it is, and don't get fooled when Elysium, which is asserting a claim that involves antitrust law, tells you the case is not about antitrust law.

I wonder how long we'll have to wait for Judge Carney to rule on the ex parte motion? My intuition is that it won't be too long. In fact, let me just right now check the docket one more time...There it is!

#ChromaDex #ElysiumHealth #CDXC #Litigation

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