NRD GP LLC, et al. v. Centiva Capital, LP

Background

NRD GP LLC and Nebula Research & Development LLC, collectively called “Nebula,” sued Centiva Capital, LP over alleged misappropriation of confidential information involving quantitative trading strategies. Nebula asserted claims under the federal Defend Trade Secrets Act, trade-secret misappropriation, tortious interference, unfair competition, and breach of contract. The allegations concerned software, algorithms, data sets, and other information allegedly taken by former Nebula employee and minority equity owner Colin McCarthy as part of an effort involving Centiva.

Centiva filed two motions. First, it moved to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction and under Rule 12(b)(6) for failure to state a claim. Second, it moved to compel production of 27 communications that Nebula had withheld or redacted based on attorney-client privilege, which generally protects confidential communications made to obtain or provide legal advice, and work-product protection, which generally protects materials prepared because of anticipated litigation.

Motion to Dismiss

The court denied the motion to dismiss. Centiva argued that Nebula had not adequately alleged that its purported trade secrets were connected to a product or service used in, or intended for use in, interstate or foreign commerce, as required by the Defend Trade Secrets Act. The court held that Nebula’s allegations concerning trading in U.S. equities, global equities, and futures, along with its description of the information used in that trading, were sufficient at the pleading stage.

Centiva also argued that Nebula had not described its trade secrets specifically enough. The court disagreed. It found that Nebula had identified five categories with sufficient detail: source code for its automated trading system; selected data sets with predictive value concerning securities prices; quantitative trading algorithms and models; simulation results used to identify high-return portfolios; and daily profit-and-loss information used to evaluate trading strategies. The court stated that Nebula did not need to plead every factor used to assess whether information qualifies as a trade secret, and that factual disputes about those factors were not properly resolved on a motion to dismiss.

Motion to Compel

The court held that all of the disputed communications were relevant and that production would be proportional to the needs of the case. It then evaluated the claimed protections document by document after reviewing the materials privately.

The court ordered production of Document 1136 because disclosure to Vincent Ji, a recruiting professional, was not shown to be necessary for Nebula to obtain legal advice, and Ji was not shown to be the functional equivalent of a Nebula employee. The court allowed Nebula to withhold Document 1545 as work product because it concerned litigation strategy and disclosure to Cynthia Barron did not materially increase the risk of disclosure to an adversary.

For Document 1931, the email was not privileged and had to be produced, but the attached draft complaint was protected work product and could be withheld. The emails and media-strategy materials in Entries 1932, 1933, 1934, 1938, 1941, 1949, 1950, 1951, 1952, 1954, and 1955 had to be produced because they concerned public-relations strategy rather than legal strategy. The draft letters in Entries 1942 and 1943 could be withheld as work product. Document 1968 had to be produced because neither attorney-client privilege nor work-product protection applied.

For Entries 1969, 1974, 1976, 1977, 1981, 1983, 1984, 1985, and 1986, the court allowed specified portions reflecting attorneys’ opinions and litigation strategy to remain protected or be redacted, while requiring production of the remaining portions. Document 1957 was no longer disputed because it had already been produced.

Disposition

The court denied Centiva’s motion to dismiss and granted in part and denied in part Centiva’s motion to compel. Nebula was ordered to produce the disputed documents by October 14, 2025, in the manner and to the extent specified in the opinion. The court declined to impose sanctions or fees, finding that Nebula’s positions were taken in good faith in a complex area.