Case 3:21-cv-00812-TWR-JLB Document 343 Filed 07/18/23 PageID.17226 Page 1 of 17
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`UNITED STATES DISTRICT COURT
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`SOUTHERN DISTRICT OF CALIFORNIA
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`TACTION TECHNOLOGY, INC.,
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`v.
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`APPLE INC.,
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`Plaintiff,
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`Defendant.
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`AND RELATED COUNTERCLAIMS.
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` Case No.: 21-cv-00812-TWR-JLB
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`PUBLIC VERSION
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`[REDACTED] ORDER GRANTING
`NON-PARTIES KENOSHA
`INVESTMENTS LP AND
`GRONOSTAJ INVESTMENTS
`LLC’S MOTION TO QUASH
`DEFENDANT’S SUBPOENAS
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`[ECF No. 149]
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`Before the Court is Kenosha Investments LP (“Kenosha”) and Gronostaj
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`Investments LLC’s (“Gronostaj1”) (collectively, “the Funders”) Motion to Quash
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`Defendant Apple Inc.’s (“Defendant”) Subpoenas. (ECF No. 149.) For the reasons stated
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`below, the Court GRANTS the Funders’ Motion to Quash and DENIES their request for
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`Defendant to pay their costs and fees.
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`1
`Gronostaj Investments LLC was formerly known as Roosevelt Investments Group,
`LLC. (ECF No. 149 at 4, n.1.) Accordingly, some prior filings and discovery refer to it as
`such.
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`1
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`Case 3:21-cv-00812-TWR-JLB Document 343 Filed 07/18/23 PageID.17227 Page 2 of 17
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`I.
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`BACKGROUND
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`Plaintiff Taction Technology, Inc. (“Plaintiff”) filed the underlying action against
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`Defendant on April 26, 2021, claiming that it is the owner of two utility patents
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`(collectively, the “Asserted Patents”) issued by the U.S. Patent and Trademark Office upon
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`which Defendant allegedly infringed with certain models of Defendant’s iPhones and
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`Apple Watches. (ECF No. 1.) On June 17, 2021, Defendant filed an answer denying
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`Plaintiff’s infringement allegations, along with various affirmative defenses and
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`counterclaims. (ECF No. 17.) Plaintiff filed an answer to Defendant’s counterclaims on
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`July 8, 2021. (ECF No. 24.)
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`The contested deposition subpoenas were issued on September 7, 2022.
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`(ECF No. 149 at 7. See ECF Nos. 149-2; 149-3.) The Funders and Defendant discussed
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`over telephone and e-mail the former’s objections to the subpoenas and their request for
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`the subpoenas to be withdrawn.2 (ECF Nos. 149 at 7; 156-5.) On November 21, 2022, the
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`Funders served their Responses and Objections to Defendant’s Subpoena. (ECF Nos. 156-
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`3; 156-4.)
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`That same day, the Funders filed the instant Motion to Quash Defendant’s Subpoena.
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`(ECF Nos. 149 (public); 153 (sealed).) On November 22, 2022, Plaintiff filed a Notice of
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`Joinder to the Funders’ Motion. (ECF No. 150.) Defendant filed an Opposition (ECF Nos.
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`156 (public); 160 (sealed)), to which the Funders replied (ECF Nos. 163 (public); 166
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`(sealed)).
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`On January 13, 2023, the Court held a Status Conference, in which it ordered the
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`Funders to produce a privilege log and requested the Funders lodge with the Court a sample
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`of representative documents from the privilege log. (See ECF No. 170.) On February 8,
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`2
`As part of those discussions, Defendant consented to extend the deadline for
`compliance with the subpoenas to November 21, 2022, in exchange for Gronostaj
`accepting delayed service of the subpoena on or around October 29, 2022. (ECF No. 156-
`5 at 3.)
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`Case 3:21-cv-00812-TWR-JLB Document 343 Filed 07/18/23 PageID.17228 Page 3 of 17
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`2023, Kenosha and Gronostaj provided Defendant with their privilege log. (ECF No. 199
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`at 2; see Exhibit A to this Order, (“Funders’ Priv. Log”).) On February 10, 2023, the Court
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`held a further Status Conference, after which it issued a supplemental briefing schedule
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`limited to arguments based on new information not previously received. (ECF No. 183.)
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`On February 17, 2023, Defendant filed its Supplemental Brief. (ECF Nos. 199
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`(public); 252 (sealed).) Both Plaintiff and the Funders filed Responses to Defendant’s
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`Supplemental Brief on February 24, 2023. (See ECF No. 260 and ECF Nos. 212 (public),
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`254 (sealed), respectively.)
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`On April 13, 2023, the Court ordered the Funders to file a supplement identifying
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`their relationship to Burford Capital LLC (ECF No. 263), which the Funders filed on April
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`19, 2023 (ECF Nos. 268 (public); 280 (sealed)).
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`II. LEGAL STANDARD
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`Federal Rules of Civil Procedure 26 and 45 govern discovery from non-parties by
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`subpoena. See Fed. R. Civ. P. 26(b) (scope and limits of discovery), 45(c)(1) (deposition
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`testimony). “Parties may obtain discovery regarding any nonprivileged matter that is
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`relevant to any party’s claim or defense and proportional to the needs of the case . . . .”
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`Fed. R. Civ. P. 26(b)(1). However, a subpoena that “requires disclosure of privileged or
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`other protected matter” or “subjects a person to undue burden” must be quashed or
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`modified. Fed. R. Civ. P. 45(d)(3)(A)(iii)–(iv).
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`“[A] deposition subpoena may only be challenged by moving to quash or modify the
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`subpoena pursuant to Federal Rule of Civil Procedure 45(c)(3)(A), or by moving for a
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`protective order pursuant to Rule 26(c).” HI.Q, Inc. v. ZeetoGroup, LLC, No. 22-cv-1440-
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`LL-MDD, 2022 WL 17345784, at *5 (S.D. Cal. Nov. 29, 2022); see also BNSF Ry. Co. v.
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`Alere, Inc., No. 18-cv-291-BEN-WVG, 2018 WL 2267144, at *7 (S.D. Cal. May 17, 2018)
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`(“[T]he only relief available to a nonparty when served with a subpoena to testify at a
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`deposition is to file a motion to quash or modify the subpoena[.]”).
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`///
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`Case 3:21-cv-00812-TWR-JLB Document 343 Filed 07/18/23 PageID.17229 Page 4 of 17
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`III. DISCUSSION
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`The Funders seek to quash Defendant’s subpoenas on two grounds: (1) all
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`information Defendant seeks is non-discoverable work product for which Defendant
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`cannot show the requisite substantial need and undue hardship to overcome,3 and (2) any
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`information not protected as work product is duplicative, cumulative, irrelevant, or unduly
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`burdensome. (ECF No. 149 at 9–13.)
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`A. Applicability of Work Product Doctrine
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`1.
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`Arguments
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`The Funders make two work-product arguments in the instant Motion. First, the
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`Funders assert Defendant seeks Plaintiff’s work product that the Court determined was
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`non-discoverable in its order addressing Defendant’s prior motion to compel.4 (ECF No.
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`Although Defendant dedicates almost its entire supplemental brief to arguing why
`attorney-client privilege does not apply or was waived, neither the Funders nor Plaintiff
`move to quash the subpoenas on the basis of attorney-client privilege. (Compare ECF Nos.
`149, 156, 212, 260 with ECF Nos. 156, 199.) Accordingly, the Court shall not address
`Defendant’s arguments against the applicability of attorney-client privilege.
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`On September 27, 2021, Defendant filed a motion to compel Plaintiff to respond to
`specific Requests for Production (“RFPs”) and Interrogatory No. 6 within its First Set of
`Discovery Requests (ECF No. 44), which Plaintiff opposed (ECF No. 52). On January 21,
`2022, the Court ordered Plaintiff to produce a privilege log to Defendant for all responsive
`documents withheld on the basis of privilege and to submit “any litigation funding
`agreement(s) for this litigation and any documents responsive to [the RFPs at issue] that
`address or reflect the valuation of the Asserted Patents, as well as any privilege log
`provided to Defendant regarding the discovery at issue” for an in camera review.
`(ECF No. 70 at 2.)
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`After holding a motion hearing (ECF No. 84), the Court narrowed the scope of the
`contested RFPs and found them to be relevant as narrowed (ECF No. 96 at 8–9). However,
`the Court then determined the documents, which included “litigation funding agreements,
`related supplemental documents and correspondence, and various memoranda and
`spreadsheets regarding valuations of this case and the Asserted Patents,” were indeed work
`product. (Id. at 12–13.) The Court similarly narrowed Interrogatory No. 6. (Id. at 9–10.)
`However, the Court ruled that the existence of litigation funders, litigation agreements, and
`documents related to patent valuation was not protected information under the work-
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`entries are not subject to any privilege because the entries lack an identified author or
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`recipient. (Id. at 6.)
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`2.
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`Legal Standard
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`“The work-product doctrine is a ‘qualified’ privilege that protects ‘from discovery
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`documents and tangible things prepared by a party or his representative in anticipation of
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`litigation.’” United States v. Sanmina Corp., 968 F.3d 1107, 1119 (9th Cir. 2020) (quoting
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`Admiral Ins. Co. v. U.S. Dist. Ct., 881 F.2d 1486, 1494 (9th Cir. 1989)). “To qualify for
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`work-product protection, documents must: (1) be prepared in anticipation of litigation or
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`for trial and (2) be prepared by or for [a] party or by or for that . . . party’s representative.”
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`United States v. Richey, 632 F.3d 559, 567 (9th Cir. 2011) (internal quotation marks and
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`citation omitted); Fed. R. Civ. P. 26(b)(3)(A). “A party asserting the work product doctrine
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`bears the burden of demonstrating that the protection applies.” Phoenix Techs. Ltd. v.
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`VMware, Inc., 195 F. Supp. 3d 1096, 1102 (N.D. Cal. 2016) (citing In re Grand Jury
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`Investigation, 974 F.2d 1068, 1071 (9th Cir. 1992)); see also Fed. R. Civ. P. 26(b)(5)(A)
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`(“When a party withholds information otherwise discoverable by claiming that the
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`information is privileged or subject to protection as trial-preparation material, the party
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`must: (i) expressly make the claim; and (ii) describe the nature of the documents,
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`communications, or tangible things not produced or disclosed—and do so in a manner that,
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`without revealing information itself privileged or protected, will enable other parties to
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`assess the claim.”).
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`First, “[w]hen a document was not prepared exclusively for litigation, it should be
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`deemed prepared ‘in anticipation of litigation’ and thus eligible for work product protection
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`if in light of the nature of the document and the factual situation in the particular case, the
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`document can be fairly said to have been prepared or obtained because of the prospect of
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`litigation.” Am. C.L. Union of N. Cal. v. U.S. Dep’t of Just., 880 F.3d 473, 485 (9th Cir.
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`2018) (internal punctuation and citation omitted). “In applying the ‘because of’ standard,
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`courts must consider the totality of the circumstances and determine whether the ‘document
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`was created because of anticipated litigation, and would not have been created in
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`substantially similar form but for the prospect of litigation.’” Richey, 632 F.3d at 568
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`(quoting In re Grand Jury Subpoena, Mark Torf/Torf Env’t Mgmt. (“Torf”), 357 F.3d 900,
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`908 (9th Cir. 2004)); see also Torf, 357 F.3d at 910 (holding documents are entitled to work
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`product protections where “their litigation purpose so permeates any non-litigation purpose
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`that the two purposes cannot be discretely separated from the factual nexus as a whole”).
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`Second, “the rule, on its face, limits its protection to one who is a party (or a party’s
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`representative) to the litigation in which discovery is sought.” In re Cal. Pub. Utils.
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`Comm’n, 892 F.2d 778, 781 (9th Cir. 1989).
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`3.
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`Documents Previously Addressed by the Court
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`As a threshold matter, the Funders’ privilege log includes sixteen entries of
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`documents that were on Plaintiff’s privilege log previously submitted to the Court for
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`review6, twenty-four entries of documents that are an identical match to documents the
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`Court determined were Plaintiff’s protected work product after prior in camera review7,
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`and twenty-nine entries of documents that are a 97% match to documents the Court
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`determined were Plaintiff’s protected work product after in camera review8. (See ECF No.
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`260 at 4–5.) In resolving Defendant’s prior motion to compel, the Court determined that
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`these documents qualified as Plaintiff’s work product. (See ECF No. 96 at 12–13.)
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`Defendant never moved for reconsideration of the Court’s prior ruling. In fact, in its
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`Opposition to the instant Motion, Defendant expressly disclaimed any intent to seek such
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`documents from the Funders. The Court finds no cause to reconsider its prior ruling.
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`4.
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`All Other Documents
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`Although none of the documents listed on the privilege log were created by the
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`Funders (see ECF No. 199 at 2; see generally Funders’ Priv. Log), the Funders’
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`See Funders’ Priv. Log, at entry nos. 2–6, 44–46, 59–63, 93, 98–99.
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`See Funders’ Priv. Log, at entry nos. 116, 199–201, 239–41, 244, 359, 363–66, 510–
`16, 568, 570, 572, 587.
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`See Funders’ Priv. Log, at entry nos. 109, 124, 194–95, 198, 238, 376, 381, 384,
`390, 393, 397, 402, 409, 414, 459–60, 500–01, 569, 571, 574, 577, 579, 581, 584–86.
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`supplemental brief disclosed its corporate structure and contractual relationships in
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`sufficient detail to demonstrate that the Funders have a direct connection to the documents
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`for which they and Plaintiff, by way of joinder, are claiming work product privilege. (See
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`ECF Nos. 268; 280.) Defendant argues that the “Funders have no privileged relationship
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`with any of [the] entities” identified on the privilege log. (ECF No. 199 at 2.) However,
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`Defendant’s argument misses the mark, as it addresses attorney-client privilege, not work
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`product protections.
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`Due to the nature of the Funders’ relationship to this case, the dates of the entries,
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`and the description associated with the entries, the Funders have met their burden of
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`demonstrating that the documents were created by or for Plaintiff or by or for Plaintiff’s
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`representatives in anticipation of litigation. Accordingly, the documents constitute work
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`product.
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`Further, Defendant’s assertions that the Funders failed to meet their burden for
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`entries lacking an author and recipient are unpersuasive because Defendant misstates the
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`requirements for asserting privilege. Under Rule 26(b)(5)(A), the party asserting the
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`privilege must describe the nature of the document in such a way that the claim of privilege
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`can be assessed. Fed. R. Civ. P. 26(b)(5)(A). On the Funders’ privilege log, there are sixty
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`entries that lack an author and a recipient.9 However, all of them provide sufficient
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`information from the date, subject, file name, and description to allow for an assessment
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`of the claim of work-product privilege. Additionally, twenty-seven of these entries were
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`previously determined by the Court to be work product.10
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`9
`See Funders’ Priv. Log, at entry nos. 1, 26, 32, 33, 98, 99, 144, 146, 151–52, 163,
`172, 182, 184, 186, 188, 190–91, 194–95, 198–201, 238, 244, 287, 291–92, 309, 324, 327,
`329, 331, 343, 359, 363–66, 569–588.
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`See Funders’ Priv. Log, at entry nos. 98–99, 194–95, 198–201, 238, 244, 359, 363–
`66, 569–572, 574, 577, 579, 581, 584–87.
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`patents by [the Funders]” among other analyses and decisions are “highly relevant to
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`damages” and only available from the Funders. (Id.) The Funders assert that Defendant
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`has failed to establish the “substantial need and undue hardship” required to overcome
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`work-product protection because Defendant can seek and has sought discovery relevant to
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`valuation from Plaintiff. (ECF Nos. 149 at 11–12; 163 at 5–8.)
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`2.
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`Legal Standard
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`Despite the applicability of work-product privilege, documents may still be
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`discovered if “(i) they are otherwise discoverable under Rule 26(b)(1); and (ii) the party
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`shows that it has substantial need for the materials to prepare its case and cannot, without
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`undue hardship, obtain their substantial equivalent by other means.”11 Fed. R. Civ. P.
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`26(b)(3)(A). “Substantial need for material otherwise protected by the work product
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`doctrine is demonstrated by establishing that the facts contained in the requested
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`documents are essential elements of the requesting party’s prima facie case.” Cont’l Cirs.
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`LLC v. Intel Corp., 435 F. Supp. 3d 1014, 1023 (D. Ariz. 2020) (quoting 6 Moore’s Federal
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`Practice - Civil § 26.70 (2019)); see also Fed. R. Civ. P. 26(b) advisory committee’s note
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`to 1970 amendment (explaining the “special showing” requirement to overcome work
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`product protection).
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`Rule 26(b)(3) distinguishes between ordinary work product and opinion work
`product. Compare Fed. R. Civ. P. 26(b)(3)(A) with Fed. R. Civ. P. 26(b)(3)(B). Ordinary
`work product is discoverable with a showing of substantial need and undue hardship. Fed.
`R. Civ. P. 26(b)(3)(A). However, “opinion work product is discoverable only ‘when
`mental impressions are at issue in a case and the need for the material is compelling.’”
`Sanmina Corp., 968 F.3d at 1125 (quoting Holmgren v. State Farm Mut. Auto. Ins. Co.,
`976 F.2d 573, 577 (9th Cir. 1992)); see also Fed. R. Civ. P. 26(b)(3)(B). The Funders
`assert Defendant seeks opinion work product. (ECF No. 163 at 6.) Because, as is addressed
`below, Defendant fails to meet the lower standard for obtaining ordinary work product, the
`Court need not parse between ordinary and opinion work product.
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`under what authority they bring their request, do not provide any legal analysis, and do not
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`substantiate their request with estimates or calculations for the Court to consider. (See ECF
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`Nos. 163 at 9; 212 at 3.)
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`“Rule 45(d) provides two related avenues by which a person subject to a subpoena
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`may be protected from the costs of compliance: sanctions under Rule 45(d)(1) and cost-
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`shifting under Rule 45(d)(2)(B)(ii).” Legal Voice v. Stormans Inc., 738 F.3d 1178, 1184
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`(9th Cir. 2013). Under Rule 45(d)(1), “[a] court may . . . impose sanctions when a party
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`issues a subpoena in bad faith, for an improper purpose, or in a manner inconsistent with
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`existing law.” Id. at 1185. In contrast, “Rule 45(d)(2)(B)(ii) requires the district court to
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`shift a non-party’s costs of compliance with a subpoena, if those costs are significant.” Id.
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`at 1184.
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`1.
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`Rule 45(d)(1) Sanctions
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`Beyond conclusory statements that the subpoenas were “unnecessary,” a “wild
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`goose chase,” and an “abuse of process,” the Funders fail to demonstrate that Defendant
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`acted in bad faith, for an improper purpose, or otherwise in a manner inconsistent with the
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`law. (ECF Nos. 163 at 9; 212 at 3.) Further, the Court finds the Funders’ citation to High
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`Tech unpersuasive as the facts are readily distinguishable from the instant case. In High
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`Tech, the court ordered sanctions because the defendant unreasonably refused a non-party’s
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`request to either narrow the scope of a subpoena duces tecum or to allow compliance with
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`the subpoena by delivering all responsive documents to the plaintiff’s litigation counsel for
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`review and production. High Tech, 161 F.R.D. at 87–88. Here, the Funders do not allege
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`they made any such requests to narrow the subpoenas or otherwise facilitate their
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`compliance. Rather, prior to filing the instant Motion, the Funders simply refused
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`production and requested the subpoenas be withdrawn. (ECF No. 153 at 7.) To the extent
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`the Funders rely on High Tech’s characterization of the Rule 45(d)(1) sanctions analysis,
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`the Funders’ reliance is similarly unpersuasive, as High Tech is an unpublished district
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`court case issued nearly two decades before the Ninth Circuit’s analysis of Rule 45(d)(1)
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`sanctions in Legal Voice.
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`2.
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`Rule 45(d)(2) Cost Shifting
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`Although the Court is required to protect non-parties from significant costs incurred
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`by compliance with a subpoena, cost-shifting is not applicable under the circumstances.
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`First, because the Court is granting the instant Motion to Quash, the Funders are not
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`compelled to comply with the subpoenas. See Stormans Inc. v. Selecky, No. C07-5374
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`RBL, 2015 WL 224914, at *5 (W.D. Wash. Jan. 15, 2015) (“It is a tenuous proposition, at
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`best, that attorneys’ fees incurred resisting a subpoena are expenses resulting from
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`compliance.”); see also Amazing Ins., Inc. v. DiManno, No. 219CV01349TLNCKD, 2020
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`WL 5440050, at *7 (E.D. Cal. Sept. 10, 2020) (“Because the court finds that the nonparties
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`are not required to comply with [the document request], the court need not decide whether
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`the cost of compliance should be shifted to defendants.”).
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`Second, even if the Funders had a legitimate basis to request recovery of the costs
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`of pursuing this Motion to Quash, the Funders have failed to make the requisite showing
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`for cost-shifting. Despite multiple rounds of briefing, conferences, and a hearing, the
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`Funders have made no factual showing in support of their request. See Balfour Beatty
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`Infrastructure, Inc. v. PB & A, Inc., 319 F.R.D. 277, 281–82 (N.D. Cal. 2017) (“[T]he
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`nonparty seeking cost shifting must demonstrate that its costs are reasonable and resulted
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`from compliance with the subpoena.”). As such, the Court has no way of knowing whether
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`the costs incurred were reasonable and significant. See Mi Familia Vota v. Hobbs, 343
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`F.R.D. 71, 101 (D. Ariz. 2022) (denying a non-party’s similarly cursory argument for cost-
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`shifting due its failure to “itemize[] (or even mention[]) its expenses”).
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`In conclusion, the Funders’ request for Defendant to pay their costs and fees is
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`DENIED.
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`IV. CONCLUSION
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`For the aforementioned reasons, the Court GRANTS the Funders’ Motion to Quash
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`and DENIES their request for Defendant to pay their costs and fees.
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`IT IS SO ORDERED.
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`Dated: July 17, 2023
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`EXHIBIT A
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`CASE PARTICIPANTS ONLY
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`21-cv-00812-TWR-JLB
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