Dismissal Denied in California DTSA Case Involving Production of Alleged Trade Secret Documents in Discovery

Holland & Knight LLP

Holland & Knight LLP

The U.S. District Court for the Central District of California recently denied a motion to dismiss a claim brought under the Defend Trade Secrets Act (DTSA). In Falcon Woods, LLC v. Gooding & Co., Case No. 2:20-cv-02226-SVW, 2020 WL 5898805 (C.D. Ca. July 6, 2020), the alleged violation concerned the defendant providing the plaintiff's confidential list of its extensive collection of high-value vehicles to a third party as part of discovery in a separate litigation taking place in the District of Arizona.

The defendant moved to dismiss the DTSA claim on two grounds: California's litigation privilege, and the Noerr-Pennington doctrine. With respect to the first ground, the court held that because the sole claim at issue arose out of the DTSA, federal law governed any claim of privilege. California's litigation privilege has not been adopted into federal common law and, therefore, was unavailing to the defendant.

Next, the court declined to apply the Noerr-Pennington doctrine for two separate reasons. For readers unfamiliar, the Noerr-Pennington doctrine generally immunizes activity done in petitioning the government for redress. However, the court noted that this doctrine is primarily rooted in protection from antitrust liability, and has never been applied to trade secret laws, and declined to do so here. Further evaluating the claim, the court held that even if Noerr-Pennington reached trade secret laws, the conduct in question in this case did not satisfy its requirements. Specifically, discovery is communication between parties, not a communication to the court, and therefore cannot be a petition to any governmental agency.

The primary takeaway from this decision is that parties engaged in litigation should ensure that any outgoing discovery documents are adequately reviewed for third-party trade secrets and appropriate protections considered.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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