Plus One, LLC v. Capital Relocation Services L.L.C.

Background

Plus One, LLC sued Capital Relocation Services L.L.C. for alleged misappropriation of trade secrets, breach of contract, tortious interference with contract, tortious interference with business opportunity, and other claims. Plus One alleged that Capital Relocation misappropriated trade secrets from its Point C employee-relocation-benefits-management software to develop the competing CompanionFlex product, which Capital Relocation used to solicit business from Walmart and other potential customers. The breach-of-contract claim is based on a nondisclosure agreement under which Plus One shared trade-secret information with Capital Relocation.

Both parties moved to compel discovery. Capital Relocation sought additional answers to Interrogatories Nos. 2 and 12 and a protective order staying depositions until Plus One identified its trade secrets with reasonable particularity. Plus One sought documents responsive to Requests for Production Nos. 9, 10, and 30.

Capital Relocation’s Motion

At a hearing, Capital Relocation clarified that it wanted Plus One to identify each distinct trade secret and the source code for each claimed trade secret. Plus One stated that it was asserting 16 trade secrets: seven distinct trade secrets and one combination trade secret, each with two parts. Eight were source-code-based and eight were not.

The court previously denied the motion as to Interrogatory No. 12 and held the rest in abeyance. It also stayed depositions until further order, effectively granting the protective-order request. Plus One later produced a 104-page chart describing its trade secrets, allowed Capital Relocation and its expert to inspect the Point C product and source-code library, and identified documents connected to the asserted trade secrets. Plus One also indicated that it intended to narrow and further specify its trade-secret disclosures.

The court explained that a plaintiff in a trade-secret case must identify the information it seeks to protect with the level of specificity expected at summary judgment or trial. For software, that can include source code and the specific designs, methods, and processes underlying public functionality. The plaintiff must distinguish secrets from non-secrets, identify what was allegedly taken, and describe what the trade secrets are—not merely what they do.

Because Plus One had supplemented its disclosures and intended to do so again, the court denied as moot Capital Relocation’s request to compel further supplementation. The court stated that it would not review each version of Plus One’s disclosure to decide whether it met Capital Relocation’s sufficiency standards.

Plus One’s Motion to Compel

Federal Rule of Civil Procedure 26 permits discovery of nonprivileged information that is relevant to a claim or defense and proportional to the needs of the case. Under Rule 37, a party may ask the court to compel discovery after showing that the requested information is relevant. The opposing party may then show that the discovery is irrelevant or unduly burdensome.

Request for Production No. 9

Request No. 9 sought a list of all Capital Relocation prospective or targeted customers for CompanionFlex, including when each customer was identified and contacted. Plus One argued that the list was relevant to its trade-secret, contract, and damages claims.

The court denied the motion as to Request No. 9. It reasoned that a potential customer who had not been contacted had not received CompanionFlex information, making that customer’s identity irrelevant to the needs identified by Plus One. Communications with contacted customers were covered by Request No. 10.

Request for Production No. 10

Request No. 10 sought documents and communications showing Capital Relocation’s efforts to solicit CompanionFlex to customers or prospective customers, including agreements, requests for proposals, and licenses.

The court granted the motion as to Request No. 10 for Plus One’s breach-of-contract claim. Communications with prospective customers could show that Capital Relocation disclosed Plus One’s confidential or trade-secret information in violation of the nondisclosure agreement. The court found the discovery relevant and proportional because the communication containing an alleged unauthorized disclosure would itself be the evidence of the breach.

The court did not find the request relevant or proportional to the trade-secret-misappropriation claim or damages. It stated that discovery for the misappropriation claim may be limited to customers reasonably believed to have been obtained because of the alleged wrongful conduct, while Request No. 10 was not so limited. The court also found that Plus One had not shown how communications reflecting a prospective customer’s valuation of a CompanionFlex feature would establish damages. It stated that lost-profit or unjust-enrichment damages would be measured by actual loss or revenue obtained, rather than by the prospective customer’s valuation of a feature.

The court found that the responsive documents would likely contain highly sensitive business information. It directed the parties to meet and confer about adding an “Outside Counsel’s Eyes Only” provision to the amended protective order and to submit a stipulation and proposed protective order within 14 days. Materials with that designation would be available only to outside counsel and experts, not to the parties’ designated representatives.

Request for Production No. 30

Request No. 30 sought marketing presentations and business proposals developed by Capital Relocation or JK Moving that mentioned, related to, referenced, or described CompanionFlex’s benefits, along with related documents and communications.

The court granted the motion as to Request No. 30 for the breach-of-contract claim. Marketing materials or business proposals could show that Capital Relocation disclosed Plus One’s confidential or trade-secret information in violation of the nondisclosure agreement. The court found the discovery relevant and proportional because the marketing material or proposal containing an alleged unauthorized disclosure would itself be the evidence.

The court did not find Request No. 30 relevant or proportional to the trade-secret-misappropriation claim or damages. The request was not limited to materials provided to customers allegedly obtained through misappropriation or to materials mentioning or using Plus One’s asserted trade secrets. Plus One also had not shown how the materials would be relevant to damages. The outside-counsel-only protection would apply to documents produced under Request No. 30.

Order

The court ordered the following: