United States District Court, D. Oregon
ST. JUDE MEDICAL S.C., INC., Plaintiff,
LOUISE MARIE JANSSEN-COUNOTTE, Defendant, and BIOTRONIK, INC., Third-Party Subpoena Recipient.
Paul A. C. Berg, COSGRAVE VERGEER KESTER LLP, Portland, OR; Stephen M. Nickelsburg and Roni Bergoffen, CLIFFORD CHANCE U.S. LLP, Washington, DC; M. Scott Incerto and James I. Hughes, NORTON ROSE FULBRIGHT U.S. LLP, Austin, TX; Layne E. Kruse and Darryl W. Anderson, NORTON ROSE FULBRIGHT U.S. LLP, Houston, TX. Of Attorneys for Plaintiff.
Sean Donahue, DONAHUE & ASSOCIATES, Portland, OR; James Maldonado, Corporate Counsel, BIOTRONIK, INC. Of Attorneys for Third-Party Subpoena Recipient Biotronik, Inc.
No appearance was entered by Defendant Louise Marie Janssen-Counotte.
OPINION AND ORDER
ON MOTION TO COMPEL COMPLIANCE WITH THIRD-PARTY SUBPOENA (PRINCIPAL CASE PENDING
IN U.S. DISTRICT COURT, WESTERN DISTRICT OF TEXAS, AUSTIN DIV., CASE NO.
MICHAEL H. SIMON, District Judge.
There are two threshold issues presented in the pending motion to compel compliance with a third-party subpoena that need to be resolved before it is appropriate to turn to the more specific objections raised by the subpoena recipient. The first concerns the circumstances under which a domestic corporate entity that has been served with a third-party subpoena must also search for responsive records held by legally-distinct but affiliated entities in other countries. The second concerns the circumstances under which a plaintiff alleging misappropriation of trade secrets may proceed with formal discovery, notwithstanding the assertion by a third-party subpoena recipient that the plaintiff has failed to describe with particularity the trade secrets at issue. After resolving these two issues, the Court will explain why it is appropriate in this case to appoint a special master for third-party discovery to address the remainder of the pending discovery dispute.
In a case pending in federal court in Austin, Texas, Plaintiff has sued Defendant for theft and threatened misappropriation of trade secrets and other confidential information, among other claims. Defendant was a high-ranking officer and employee of Plaintiff's European affiliate. On July 1, 2014, Defendant left her employment with Plaintiff's affiliate in Europe to become the President for U.S. operations in the U.S. affiliate of one of Plaintiff's principal global competitors. In a forensic review of the computer equipment used by Defendant shortly before she left Plaintiff's employ, Plaintiff discovered evidence that Defendant had copied, emailed, and downloaded what Plaintiff contends are among its most competitively sensitive trade secrets and other confidential information. Pursuant to Rule 45 of the Federal Rules of Civil Procedure, Plaintiff served on Defendant's new employer, the U.S. affiliate of Plaintiff's global competitor, a third-party subpoena for documents and electronically-stored information ("ESI"). Plaintiff now moves for an order compelling compliance with that subpoena. The third-party subpoena recipient, Defendant's new employer, objects on several grounds. As explained below, Plaintiff's motion to compel is granted in part. In addition, pursuant to Rule 53 of the Federal Rules of Civil Procedure, the Court will appoint a special master, as more fully set forth in a separate order.
A. The Parties
1. Plaintiff, St. Jude Medical S.C., Inc.
Plaintiff, St. Jude Medical S.C., Inc. ("St. Jude S.C."), is a Minnesota corporation headquartered in Austin, Texas. St. Jude S.C. is a subsidiary of the global medical technology company St. Jude Medical, Inc. ("St. Jude Inc."). St. Jude S.C. is the U.S. sales and marketing arm of St. Jude Inc. and markets St. Jude Inc.'s products, including cardiac rhythm management ("CRM") devices, in the United States. The global company, St. Jude Inc., also is the ultimate owner of St. Jude Medical International, Inc., which wholly owns SJM International Holding, S.a.r.l. That company, SJM International Holding, owns St. Jude Medical Luxembourg, S.a.r.l., which wholly owns both St. Jude Belgium and St. Jude Netherlands. These latter two companies own, respectively, SJM Coordination Center BCVA (a Belgium company) and St. Jude Medical Netherland BV (a Dutch company) (collectively, "St. Jude Belgium/Netherlands"). St. Jude Med. S.C., Inc. v. Louise Marie Janssen-Counotte, 2014 WL 7237411, at *1 n.1 (W.D. Tex. Dec. 17, 2014).
2. Defendant, Louise Marie Janssen-Counotte
Defendant, Louise Marie Janssen-Counette ("Janssen"), was previously employed in Belgium and the Netherlands by St. Jude Belgium/Netherlands, where she served as a vice president and focused on St. Jude Inc.'s European operations. Id. at *1. In the underlying action pending in federal court in Texas, the Court describes Janssen's alleged activities at issue in the that lawsuit as follows:
As an employee of St. Jude Belgium/Netherlands, Janssen attended a three-day meeting in Dallas, Texas from June 2-4, 2014 (the "Dallas Conference"), designed to bring together high-level executives from St. Jude Inc.'s various sub-entities in order to discuss company development and strategy. Over the course of the three days, the attendees were exposed to hundreds of slides, and the presentations included confidential information. In particular, Janssen participated in the development of a five-year global strategic plan (the "Strat Plan") for competing against other medical technology companies, and this Strat Plan was one of the focuses of the Dallas Conference.
On June 27, 2014, Janssen announced she was leaving St. Jude Belgium/Netherlands, and although she initially would not disclose her new employer for claimed reasons of confidentiality, Janssen ultimately disclosed on September 8, 2014 she had joined Biotronik, Inc., a competitor of St. Jude S.C, as President of U.S. operations. St. Jude S.C. became concerned Janssen's behavior had been improper and conducted forensic investigations of Janssen's company computer and phone. Based on its research, St. Jude S.C. alleges Janssen began employment negotiations with Biotronik prior to attending the Dallas Conference, and she used removable media devices from late May through her departure from St. Jude Belgium/Netherlands on July 1, 2014, to collect confidential information and trade secrets, including portions of the Strat Plan, to take with her to Biotronik.
In its motion to compel Biotronik, Inc. to comply with St. Jude S.C.'s third-party subpoena served on Biotronik, Inc., St. Jude S.C. adds further detail to its allegations. As St. Jude S.C. explains, based on the deposition testimony given by Janssen in the underlying case, the owner of the global Biotronik group of entities (Max Schaldach) and another high-ranking Biotronik European executive (Christian Bluemel) asked Janssen, during the week of May 19, 2014, about her joining Biotronik either in Europe or the United States. The following Saturday, May 24, she emailed her St. Jude contracts and benefits information to her personal email address. The following Monday, May 26, she inserted 41 separate removable media devices ( e.g., thumb drives) into her St. Jude computer. Before attending St. Jude's Dallas Conference on June 2-4, Janssen also exchanged text messages with her "former" boss at Biotronik. Janssen left St. Jude Inc. on July 1, 2014.
3. Third-Party Biotronik, Inc.
Third-party subpoena recipient Biotronik, Inc. is a competitor of Plaintiff St. Jude S.C., including in the CRM industry, in the United States. Biotronik, Inc. is a Delaware corporation with its headquarters in Oregon. Biotronik SE & Co. KG ("Biotronik SE") is a German company with its headquarters in Berlin. Among other things, Biotronik SE manufactures and sells CRM devices from Germany to customers worldwide, including Biotronik, Inc. Biotronik SE and Biotronik, Inc. are sister companies. They are both owned by the same parent, MS Holding II SE, which also is a German company. See JMA, Inc. v. Biotronik SE & Co. KG, 2013 WL 1402322, at *1 (S.D. Fla. Apr. 5, 2013). According to a declaration filed by its Corporate Counsel, Biotronik, Inc. does not share computer databases with any of its European affiliates, is a separate legal entity from its European affiliates, and "does not share the same Board of Directors, officers, or internal legal group with any of its European affiliates." Dkt. 6-1.
B. The Underlying Federal Lawsuit in Texas
Plaintiff, St. Jude S.C., commenced the underlying lawsuit against Janssen in federal court in Texas on September 16, 2014. St. Jude Med. S.C., Inc. v. Louise Marie Janssen- Counotte, Case No. A-14-CA-877-SS (W.D. Tex., Austin Div.). Plaintiff alleges claims of theft and threatened misappropriation of trade secrets and other confidential information in violation of the Texas Uniform Trade Secrets Acts ("TUTSA"), conversion, and violation of the federal Computer Fraud and Abuse Act, 15 U.S.C. § 1030. Plaintiff seeks money damages, a declaratory judgment, and preliminary and permanent injunctive relief.
Plaintiff moved for a temporary restraining order and preliminary injunction. Defendant, Janssen, moved to quash service of process and further moved to dismiss the complaint, arguing lack of personal jurisdiction, failure to join indispensable parties, improper venue, and failure to state a claim. On December 17, 2014, the Court in the underlying case, the Hon. Sam Sparks, entered an Order denying all of these motions, both Plaintiff's and Defendant's. St. Jude Med. S.C., Inc., 2014 WL 7237411.
Of specific relevance to the pending discovery dispute involving Biotronik, Inc., Judge Sparks wrote, denying Janssen's motion to dismiss for failure to state a claim:
Concerning St. Jude S.C.'s theft and threatened misappropriation of trade secrets and confidential information claims under the TUTSA, Janssen's grounds for dismissal amount to premature arguments on the merits For instance, whether the information at issue actually constitutes trade secrets, whether St. Jude S.C. adequately protected those alleged trade secrets, whether Janssen acquired any alleged trade secrets improperly, and whether Janssen has disclosed or will disclose the alleged trade secrets are fact questions to be resolved on a full evidentiary record. St. Jude S.C.'s pleadings, however, clearly allege a cause of action under the TUTSA and satisfy Rule 12.
Id. at *12.
Judge Sparks denied Plaintiff's motion for a preliminary injunction on the grounds that, among other things, St. Jude S.C. had not met its burden to show a substantial likelihood of success on the merits. Relevant to the pending discovery dispute, Judge Sparks wrote:
St. Jude S.C. has presented a large amount of evidence supporting its allegations of misappropriation. For instance, St. Jude S.C. has cited evidence in the record suggesting, among other things: (1) Janssen was unhappy at St. Jude Belgium/Netherlands as early as May 2014; (2) Janssen was in employment discussions with Biotronik prior to the Dallas Conference; (3) Janssen sent emails to herself reflecting her intent to leave St. Jude Netherlands/Belgium prior to the Dallas Conference; (4) Janssen attended the Dallas conference without disclosing her intent to leave; (5) Janssen participated in preparing and viewed the Strat Plan at the Dallas Conference; (6) Janssen was not entirely forthcoming about her plans to leave and her negotiation timeline with Biotronik; (7) Janssen deleted texts, phone contacts, and emails related to ...