East West Bank v. Shanker
- William Orrick
- 3:20-cv-07364
- U.S. District Court · Northern District of California
- 9
In East West Bank v. Shanker, Judge Orrick granted leave to amend and ruled on three sealing motions, including one granted in part and denied in part.
East West Bank; Sukeert Shanker and Aeldra Financial, Inc.; proposed defendants Venkat Gopalakrishnan, Blue Ridge Bank N.A., and Fenway Summer Vector LLC; and the parties seeking to seal court materials.
What happened
In East West Bank v. Shanker, East West Bank sought permission to add Venkat Gopalakrishnan, Blue Ridge Bank N.A., and Fenway Summer Vector LLC as defendants. The bank said it learned through documents, press releases, and court filings that these parties may have participated in the alleged misuse of its trade secrets.
Shanker and Aeldra Financial, Inc. opposed the amendment, arguing that East West Bank had delayed, acted improperly, lacked facts supporting its claims, and would prejudice them. The court found that East West Bank acted diligently, had good cause for missing the amendment deadline, and had alleged enough facts for the proposed claims to proceed at that stage.
Judge Orrick granted East West Bank’s motion for leave to amend and ordered it to file its Second Amended Complaint. He granted East West Bank’s two sealing requests, but granted the defendants’ sealing request in part and denied it in part, requiring narrower redactions and unsealing one exhibit.
The detailed version
- East West Bank v. Shanker · No. 3:20-cv-07364
- William Orrick
- Aug. 6, 2021
Background
East West Bank alleged that Sukeert Shanker misappropriated its trade secrets to create Aeldra Financial, Inc., which East West Bank described as a direct competitor to its Velo mobile-banking platform. East West Bank moved for leave to file a Second Amended Complaint adding Venkat Gopalakrishnan, Blue Ridge Bank N.A., and Fenway Summer Vector LLC as defendants.
East West Bank said it learned about the proposed defendants’ alleged involvement at different times: it learned on April 5, 2021, that Shanker had forwarded its Velo Product Map to Gopalakrishnan; it learned from a May 20, 2021 press release about Blue Ridge Bank’s role in providing banking services for Aeldra; and it learned from a June 9, 2021 filing that Fenway Summer Vector had allegedly built Aeldra’s banking-compliance systems. The deadline to amend East West Bank’s pleadings had been April 14, 2021.
Leave to Amend
Because the amendment deadline had passed, the court applied Federal Rule of Civil Procedure 16(b), which requires “good cause” to modify a scheduling deadline, and Rule 15(a), which generally directs courts to freely allow amendments when justice requires. The Rule 15 factors include bad faith, undue delay, prejudice, futility, and whether the party previously amended its pleading.
The court found good cause under Rule 16 because East West Bank acted diligently and any delay resulted from information it received later or from discovery disputes. The court found no undue delay because East West Bank moved to amend relatively soon after learning the relevant information. It also found no prejudice, noting that Blue Ridge Bank had notice of the case and that fact discovery would remain open until January 24, 2022.
The court rejected the argument that the amendment would be futile. At this stage, East West Bank did not have to prove its claims. The proposed complaint alleged that Gopalakrishnan received East West Bank’s trade-secret information from Shanker and used it in developing Aeldra, and that Fenway Summer Vector and Blue Ridge Bank received and used the information in connection with creating Aeldra. The court held that these allegations could support the proposed trade-secret claims if proved.
The court also rejected the arguments that East West Bank acted in bad faith or that the amendment would be prejudicial. It found that East West Bank had offered a satisfactory explanation for waiting until it had information supporting the proposed claims. East West Bank’s motion for leave to amend its First Amended Complaint was GRANTED, and the court ordered East West Bank to file the Second Amended Complaint by August 16, 2021.
Motions to Seal
The court addressed three motions to seal. It GRANTED East West Bank’s motion to seal portions of its First Amended Complaint, proposed Second Amended Complaint, and an exhibit, because the information involved material the court had sealed in earlier orders.
The court GRANTED in part and DENIED in part the defendants’ motion to seal portions of their opposition and exhibits 5 through 7 of the Pfeffer Declaration. It allowed sealing of highlighted language in exhibits 5 and 6 because that material concerned compensation information previously sealed. It denied the request to seal portions of the opposition and all of exhibit 7, directed the clerk to unseal the relevant docket entry, and ordered the defendants to file a new copy of exhibit 7 with narrowly tailored redactions.
The court also GRANTED East West Bank’s motion to seal portions of its reply and an exhibit to the Jackson Declaration because the information concerned material previously sealed and proprietary information about Fenway Summer Vector’s operations. The court vacated the scheduled August 11, 2021 hearing and stated that the order resolved the motions at Docket Nos. 80, 87, and 99.
Disposition
This was a procedural order addressing amendment of the pleadings and access to court records. The court did not decide whether the alleged trade-secret misappropriation occurred.
Read the full 9-page opinion on CourtListener, the free public archive maintained by the Free Law Project.