Elysium Trounced on Discovery Motion
We haven't been covering the Discovery disputes as closely as before, partly because there are so many of them, and partly because we can't see much about them -- the parties have been filing letter briefs with the Magistrate Judge without entering them on the docket, so we literally cannot see, let alone evaluate, the arguments.
But this one is a little different.
Elysium was urgently upset and hopping mad about an adverse ruling by Magistrate Judge McCormick, and asked Judge Carney to overrule the Magistrate. Instead, Judge Carney said the Magistrate got it right.
That's a simple enough plot. What makes it interesting is how much energy Elysium brought to the issue, and the amount of risk they took by challenging the order the way they did. Because that energy and risk suggests that the stakes were pretty high, we'll try to figure out why this was so important.
As we all know by know, Elysium accidentally produced a huge number of non-privileged text messages last year, and tried to claw them back. Some of those text messages proved so relevant to the litigation, that Judge Carney quoted them extensively in his recent order mostly granting ChromaDex's summary judgment motions and mostly denying Elysium's summary judgment motions.
There is something called a "Protective Order" which embodies the parties' agreement about how broadly discovery materials can be shared. The Protective Order is issued by the Magistrate Judge.
In November, ChromaDex asked the Magistrate Judge to modify the protective order so that anything already produced in California could be used in New York. The general idea was that the
the same parties represented by the same attorneys should be allowed to use discovery materials produced in related cases that involve overlapping facts and issues, rather than having to request the materials again and have them produced again (or not produced, and then having to fight about that).
On December 6th, at a Discovery Hearing, Magistrate Judge McCormick granted ChromaDex's request. His Honor thought it was an "easy" call.
We have the transcript from that hearing.
Baker Hostetler's attorney said,
"...This is really an attempt by [ChromaDex] to get a series of documents that were inadvertently produced by Elysium that we previously litigated before your Honor back in February. They know those documents are not responsive; they know they will not be produced in the SDNY, and this was an -- an attempt to modify the protective order and get those documents in the SDNY action so they can continue to harass our clients with them without going before the SDNY to actually argue a motion to compel..."
To which His Honor replied,
"We’ve been around the bend on those documents a number of times before, and as I [said]...there’s just no way to claw back documents that shouldn’t have been produced in the first place....If they’re documents that are purely harassing, et cetera, then they presumably wouldn’t be relevant...We should modify the protective order to permit the use of the documents that were produced here in what is at the very least collateral litigation in New York. I mean, it is not like that litigation there is some different species of case; it’s part of what is essentially a litigation battle between the parties. So, if ChromaDex submits to me a modified protective order, I will sign it...I think that the cases are related and collateral, and will handle it thus."
Elysium did not like that, and on December 20 asked Judge Carney to overrule the Magistrate Judge. Elysium wrote,
"The Modification Order purports to allow the use of all discovery from this action in an unrelated action now pending in the United States District Court for the Southern District of New York (the “SDNY Action”), without regard to the discovery material’s relevance to or discoverability in that action. The Magistrate Judge does not have the authority to govern discovery in the SDNY Action or to control the scope and content of discovery in that case...
"ChromaDex’s attempted “subversion of limitations on discovery in the” SDNY Action is readily apparent...ChromaDex decided to bypass establishing relevancy before the SDNY Court by instead turning to the Magistrate Judge in this action. Under the guise of a routine modification of a protective order under Foltz, ChromaDex in fact sought permission to use all of the California discovery material—both relevant and irrelevant alike—in the SDNY Action. ChromaDex’s forum shopping paid off when Magistrate Judge McCormick modified the protective order, preempting the dispute resolution process in the SDNY Action and purporting to authorize ChromaDex to use all of the discovery from this action in the SDNY Action, without regard to the relevance and discoverability threshold mandated by Foltz...
"As a result, on the face of the modified Protective Order, all of the California discovery—approximately 92,500 of the parties’ documents, 3200 third- party documents, and 22 deposition transcripts—would appear to now be able to be used in the SDNY Action regardless of the SDNY Court’s performance of its gatekeeping function under Foltz...The Modification Order is therefore contrary to controlling Ninth Circuit law and should be vacated. The blank check provided by the Magistrate Judge in purporting to authorize the use of the entirety of the discovery in this case in the SDNY Action also is contrary to Federal Rule 26...The Court must therefore sustain Defendants’ objections and vacate the Modification Order..."
This is fairly extreme argument, and what makes it extreme is that usually Baker Hostetler is complaining that Cooley has done some outrageous or illegal thing, but it's different when you say that the Magistrate Judge has behaved badly. Judge Carney will take that seriously, but you kinda better be right if you're going to say it.
And when you read ChromaDex's opposition brief, it doesn't look like Baker Hostetler is right:
Foltz instructs lower courts to “[a]llow the fruits of one litigation to facilitate preparation in other cases” in order to “advance the interests of judicial economy by avoiding the wasteful duplication of discovery.” Id. at 1131. That is precisely what Magistrate Judge McCormick allowed by adopting the Second Amended Protective Order. Foltz and the cases applying it in similar situations to this one are as plain as day; so plain, in fact, that Magistrate Judge McCormick found this matter “easy” to decide.
Defendants did not inform ChromaDex that they intended to move this Court for review of Magistrate Judge McCormick’s modification, did not provide ChromaDex with a copy of their newly-proposed protective order beforehand, and did not request a conference of counsel under Local Rule 7-3...
Defendants’ objection to Magistrate Judge McCormick’s Second Amended Protective Order should be overruled, and their Motion denied, for two primary reasons: (1) Defendants waived their central arguments by failing to raise them before Magistrate Judge McCormick, and (2) Defendants fail to show, as is their burden, that Magistrate Judge McCormick abused his discretion in modifying the protective order.
ChromaDex's opposition brief is solidly built; Cooley sets the nails about a half-inch apart, and there's really no getting around the argument. Specifically, ChromaDex shreds every case cited by Elysium.
ChromaDex then requested that Judge Carney award attorney fees for its having to deal with Elysium's "hasty Motion" that was " both legally meritless and factually unsupported." Specifically, Elysium "(1) failed to comply with the Local Rules in bringing the Motion, (2) failed to present the entire record to the Court, (3) based the Motion on waived arguments, and (4) failed to address pertinent legal authority cited by ChromaDex before Magistrate Judge McCormick."
Elysium's Reply Brief was unrepentant, repeating its initial argument:
The key problem with the Modification Order is that on its face it purports to permit ChromaDex to “use” any materials produced in this litigation as though they had been produced in New York, even if the New York court would have otherwise determined that the discovery requests in response to which those documents were produced were not relevant or proportional to the claims or defenses at issue in the New York litigation...
Then Elysium goes entirely unhinged, accusing the Magistrate of having done something "radical" for which there is no legal support, and committing an act of "unprecedented interference" with another court:
ChromaDex offers no legal support—because there is none—for the radical proposition that it can modify a protective order in a California federal district court in order to prevent a New York federal district court from addressing threshold issues of relevance and discoverability in an entirely separate litigation. ChromaDex effectively seeks to remove the ability of the Chief Judge of the Southern District of New York to control her own courtroom, in violation of all precedent and comity. This is a straightforward attempt to nullify the live discovery dispute pending in the SDNY Action as to the discoverability of the California documents, because ChromaDex fears the outcome of that dispute. This Court should not permit such subterfuge...
"The case law does not support the Magistrate Judge’s unprecedented interference in a sister court’s administration of discovery matters before it..."
That's just so shrill.
Now compare that with the opinion that Judge Carney wrote a couple days later denying Elysium's challenge:
Judge McCormick...determined that this case and the New York Action are “related and collateral.” This was correct. There is significant overlap in both the parties involved and the facts and issues between this case and the New York Action...
Elysium misunderstands Judge McCormick’s order. Judge McCormick did not order that ChromaDex may use every document produced in discovery in this case in the New York Action. Indeed, he said explicitly that if any of the inadvertently-produced documents “are purely harassing” or similar, the New York court will not find them relevant, and ChromaDex therefore will not be able to use them in the New York Action...
The Court agrees with Judge McCormick that the disposition of the motion to amend the protective order was “easy,” and finds its decision on this motion to be similarly easy. The Court is also concerned with some of the failings ChromaDex points out. However, the Court is not persuaded that an award of fees is appropriate at this time.
That was a remarkably graceful dismissal of Elysium's overwrought argument. Judge Carney essentially says that he is not impressed with all this noise, but he is not going to impose fees.
So what does it mean, all this Elysium sound and fury, in the end signifying nothing?
Well, first, it means that EVERYTHING already produced is available in the New York action, and if it is relevant to an issue in that case (which case involves Elysium's alleged attempts to unfairly compete against ChromaDex by stealing ChromaDex's pedigree) then it will be admissible.
Based on the amount of energy Elysium spent trying to prevent this outcome, it's a fair guess that some of the materials are highly damning and arguably relevant. So that's great news.
Second, Elysium is not cast in a flattering light before the jurists when Elysium rages in its briefs and the Court says, "You have have misunderstood the Court's order." The Courts have so far had a hit-and-miss record in deploying their bullshit detector when a large law firm makes a specious argument that is difficult to unravel. Now maybe everyone's bullshit detectors are properly calibrated. That would be good news.
Third, with a little luck, Judge Carney will now approve Baker Hostetler's withdrawal from the case. I won't miss them, and I specifically won't miss their spittle-spray, kitchen-sink approach to litigation. I am hoping that Williams Cohen will be more professional and more disciplined, and will focus on teeing up legal arguments that the Court should take seriously, instead of pumping out obfuscatory ink-clouds like a squid.
I can dream.