Proofpoint, Inc. v. Vade Secure, Incorporated
- Maxine Chesney
- 3:19-cv-04238
- U.S. District Court · Northern District of California
- 11
Proofpoint v. Vade Secure: Judge Illman enforced discovery orders with coercive sanctions and denied Vade’s request to send source code abroad.
Proofpoint, Inc. and the other plaintiffs received enforcement of prior discovery orders, while Vade Secure, Inc. and Vade SASU faced conditional daily sanctions and could not require the plaintiffs to send source code to the United Kingdom for inspection.
What happened
In Proofpoint, Inc. v. Vade Secure, Incorporated, the plaintiffs sought Vade’s source code through discovery. Vade initially relied on French-law and privacy objections, later raised other objections, and eventually withheld portions of the code after agreeing to produce it.
The court concluded that Vade had waived or abandoned its objections by failing to raise and support them when opposing the original request to compel. Vade also asked to inspect Proofpoint’s source code through an expert in the United Kingdom, while Proofpoint raised concerns about protecting its highly confidential code outside the United States.
Magistrate Judge Robert M. Illman granted the plaintiffs’ request to enforce the earlier discovery orders and imposed conditional daily sanctions of $2,500 on Vade. He denied Vade’s motion to send Proofpoint’s source code to the United Kingdom; Vade could instead bring its expert to the United States or choose another expert.
The detailed version
- Proofpoint, Inc. v. Vade Secure, Incorporated · No. 3:19-cv-04238
- Maxine Chesney
- Nov. 11, 2020
Background
The plaintiffs served Vade with requests for production seeking, among other things, complete copies of source code for Vade’s O365 and MTA products. Vade initially opposed production based on a French blocking statute and European Union privacy law. It did not raise relevance objections in its opposition to the plaintiffs’ motion to compel.
On January 31, 2020, the court granted the plaintiffs’ motion to compel. Vade later sought reconsideration and relief from that order, adding an argument that the plaintiffs had not sufficiently identified their alleged trade secret. The undersigned denied reconsideration, and Judge Maxine Chesney denied Vade’s later motions for relief and a stay on May 12, 2020.
After further disputes, Vade agreed in a stipulation to provide all code responsive to the relevant requests. The court approved that stipulation and terminated the then-pending motions. Vade later withheld portions of the source code again, relying on new relevance objections. The plaintiffs renewed their request to enforce the prior orders and sought coercive sanctions, attorneys’ fees, and costs. The court had separated the enforcement issue from the later consideration of fees and costs.
Court’s analysis
The court held that objections to discovery generally must be timely asserted and supported when a party opposes a motion to compel. It found that Vade had abandoned objections it had mentioned initially but did not present or explain in opposing the motion to compel. Objections not raised at all in that opposition were deemed waived. Because Vade’s objections concerning the relevant requests were waived, abandoned, or rejected in the earlier orders, Vade was required to produce responsive information without raising additional objections piecemeal.
The court found that Vade had violated the prior discovery orders since May 12,
- It ordered a coercive sanction—a payment designed to force compliance—of $2,500 for each weekday from November 12 through November 20, 2020, until Vade’s chief executive officer and counsel certified in writing that the required materials had been produced. Payment of the accrued sanctions was stayed until noon on November
- If Vade complied and filed the certification by then, the accrued payment obligation would be vacated. If it did not, Vade was ordered to pay $17,500 and would continue to face daily sanctions through November
- The court stated that it would then certify the civil-contempt issue to Judge Chesney and recommend an instruction allowing the jury to draw an adverse inference about missing evidence.
The court separately considered Vade’s request to transmit the plaintiffs’ sensitive source code to the United Kingdom for review by Vade’s foreign-based expert. The court rejected Vade’s argument that refusing this request would disqualify the expert. It found that Vade could bring the expert to the United States or select another expert, and that Vade had not shown a concrete basis for sending the code abroad or adequately assured the court that its protective order could be enforced and policed outside the United States.
Ruling
Magistrate Judge Robert M. Illman granted the plaintiffs’ motion to enforce the court’s prior discovery orders and impose coercive sanctions. He denied Vade Secure, Inc. and Vade SASU’s motion to compel production of the plaintiffs’ source code for inspection by a foreign-based expert. The order did not itself impose a civil-contempt finding; it provided that the issue could be certified to Judge Chesney if Vade failed to comply by the specified deadline.
Read the full 11-page opinion on CourtListener, the free public archive maintained by the Free Law Project.