Case 5:15-cv-01370-EJD Document 1116 Filed 10/14/22 Page 1 of 6
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
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`BLADEROOM GROUP LIMITED, et al.,
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`Plaintiffs,
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`v.
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`EMERSON ELECTRIC CO, et al.,
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`Defendants.
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`Case No. 5:15-cv-01370-EJD
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`ORDER GRANTING IN PART
`MOTION TO COMPEL
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`Docket No. 1083
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`Pursuant to Federal Rules of Civil Procedure 26(b)(1) and 37, Defendants Emerson
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`Electric Co. and Emerson Network Power Solutions, Inc. and Defendant Liebert Corporation (now
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`known as Vertiv Corporation) (collectively, “Emerson”) move to compel production of the
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`Settlement Agreement (“Agreement”) between Plaintiff BladeRoom and Facebook, Inc.
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`(“Facebook”) now rather than later. Dkt. No. 1083. BladeRoom filed an opposition (Dkt. No.
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`1086), which Meta Platforms Inc. (“Meta”), formerly Facebook, joined (Dkt. No. 1089), and
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`Emerson filed a reply (Dkt. No. 1090). For the reasons stated below, the motion to compel
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`production is granted in part.
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`I.
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`BACKGROUND
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`BladeRoom initiated this action for misappropriation of trade secrets and breach of
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`contract in March of 2015. BladeRoom’s complaints include allegations that Emerson and
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`Facebook conspired to misappropriate trade secrets. See Second Amended Complaint (“SAC”) ¶
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`136, Dkt. No. 107; Ex. A.
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`Jury selection commenced on April 3, 2018, with all named parties participating in the
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`proceedings. Dkt. No. 747. Days later, on April 9, 2018, BladeRoom and Facebook entered the
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`Case No.: 5:15-cv-01370-EJD
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`Case 5:15-cv-01370-EJD Document 1116 Filed 10/14/22 Page 2 of 6
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`Agreement. Dkt. No. 770. The next day the Court dismissed Facebook from the case with
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`prejudice. Dkt. No. 772. The case proceeded to trial as to Emerson.
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`On May 10, 2018, the jury ultimately awarded BladeRoom $10 million in lost profits
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`damages and $20 million in unjust enrichment damages for both of its claims against Emerson.
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`Dkt. No. 867. Post trial, Emerson moved to compel production of the Agreement, asserting that
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`under California Code of Civil Procedure section 877, the settlement should be offset against its
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`liability. Dkt. No. 891. Section 877 provides that when one joint tortfeasor settles, that settlement
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`“shall reduce the claims against the other[] [tortfeasor] in the amount [of the settlement].” Cal.
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`Civ. Proc. § 877. Before ruling on the motion, the Court requested and received further briefing
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`on four issues:
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`1. Are unjust enrichment damages subject to offset under California Civil Code §
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`877?
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`2. Does Civil Code § 877 apply to claims for breach of contract, when the defendants
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`are not “co-obligors mutually subject to contribution rights?
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`3. Is it correct or incorrect to find that despite the separate claims alleged in the
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`Second Amended Complaint, Facebook and Emerson caused BladeRoom only one
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`indivisible injury: the unauthorized and uncompensated appropriation of
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`BladeRoom’s confidential information?
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`4. What evidence, with citations made to the record, shows that BladeRoom was
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`injured in multiple ways by Emerson alone and Facebook alone? Conversely, what
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`evidence, with citations made to the record, shows that BladeRoom suffered only
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`one indivisible injury?
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`Dkt. Nos. 931, 938, 939, 940. After considering the parties’ submissions, the Court denied
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`Emerson’s motion, reasoning that (1) section 877 was inapplicable to breach of contract damages
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`because Facebook and Emerson were not co-obligors on the contract at issue; (2) there was no
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`chance of double recovery as to the unjust enrichment damages (which were measured based on
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`Emerson’s profits) and therefore there was no need to apply section 877 to those damages; and (3)
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`Case 5:15-cv-01370-EJD Document 1116 Filed 10/14/22 Page 3 of 6
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`there was no way to calculate an offset because the jury’s verdict did not apportion damages
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`between the breach of contract and misappropriation of trade secret claims. Order Denying
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`Defendant’s Motion To Compel Settlement Agreement (“Order”), Dkt. No. 945. Emerson raised
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`the offset issue twice more. Dkt. Nos. 957, 969. The Court denied both motions. Dkt. Nos. 964,
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`985.
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`Emerson appealed the judgment and other pre-and post-trial rulings, including the Court’s
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`rulings relating to production of the Agreement and offset. The Ninth Circuit reversed and
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`remanded for a new trial. BladeRoom Grp. Ltd. v. Emerson Elec. Co., 11 F.4th 1010 (9th Cir.
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`2021). The new trial will decide whether Emerson’s alleged breach of contract and
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`misappropriation of trade secrets occurred during the term of the Confidentiality Agreement, i.e.,
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`prior to August 2013. The panel did not address Emerson’s arguments relating to production of
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`the Agreement and offset. Judge Rawlinson wrote a concurring opinion that discussed the
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`Agreement’s discoverability:
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`BladeRoom concedes that Facebook and Emerson were joint
`tortfeasors and that they “conspired” to misappropriate
`BladeRoom’s trade secrets. With that concession, California law
`required an offset. See Calif. Civ. Proc. Code § 877(a); see also
`Dell’Oca Bank of NY Trust Co., N.A., 159 Cal. App. 4th 531, 561,
`71 Cal. Rptr. 3d 737 (2008). In the event a retrial results in the
`imposition of damages against Emerson, the court should apply an
`offset for the amount of the settlement between BladeRoom and
`Facebook. See Calif. Civil Proc. Code § 877(a) (providing that when
`one tortfeasor settles a case, that settlement “shall reduce the claims
`against the other[ ] [tortfeasor] in the amount [of the settlement]”);
`see also Dell’Oca, 159 Cal. App. 4th at 561, 71 Cal. Rptr. 3d 737
`(construing § 877 broadly to allow “an offset for sums paid to settle
`plaintiffs’ claims against the other defendants”).
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`Correspondingly, Emerson would be entitled to discovery of the
`settlement terms. . . . Any concerns regarding unauthorized
`disclosure of the settlement terms may be addressed by a protective
`order fashioned by the district court.
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`Id. at 1028 (citations omitted). No other member of the panel joined Judge Rawlinson’s
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`concurrence.
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`II.
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`DISCUSSION
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`As an initial matter, BladeRoom contends that Emerson is required, but has failed, to show
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`Case 5:15-cv-01370-EJD Document 1116 Filed 10/14/22 Page 4 of 6
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`good cause to reopen discovery. Opp’n at 6. The Court disagrees. There is good cause to reopen
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`discovery for the limited purpose Emerson proposes because the Ninth Circuit has remanded the
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`case for retrial.
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`Turning to the merits, Federal Rule of Civil Procedure 26 authorizes discovery of “any
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`nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs
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`of the case.” Fed. R. Civ. P. 26(b)(1). Here, the Agreement has relevance to a potential offset
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`under California Code of Civil Procedure section 877 in light of BladeRoom’s conspiracy
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`allegations and the impending retrial of all of BladeRoom’s claims. See Burke v. Regalado, 935
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`F.3d 960, 1048 (10th Cir. 2019) (finding “the settlement agreement is not only relevant but also is
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`necessary to resolving the setoff issue,” and ordering the district court to compel production of the
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`agreement upon remand). “Information within this scope of discovery need not be admissible in
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`evidence to be discoverable.” Fed. R. Civ. P. 26(b)(1). Further, the confidentiality of the
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`Agreement does not bar its discovery. See Phillips ex rel. Ests. of Byrd v. Gen. Motors Corp., 307
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`F.3d 1206, 1212 (9th Cir. 2002) (indicating that confidential settlement information may be
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`produced under appropriate circumstances and explaining that courts have “broad discretion . . . to
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`decide when a protective order is appropriate and what degree of protection is required”);
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`DIRECTV, Inc. v. Puccinelli, 224 F.R.D. 677, 684-85 (D. Kan. 2004) (“[A] general concern for
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`protecting confidentiality does not equate to privilege.”); White v. Kenneth Warren & Son, Ltd.,
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`203 F.R.D. 364, 369 (N.D. Ill. 2001) (compelling disclosure of confidential settlement agreement
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`subject to a protective order and with instruction the parties not discuss or further disclose the
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`agreement absent an order from the court); St. Bernard Par. v. Lafarge N. Am., Inc., 914 F.3d 969,
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`975 (5th Cir. 2019) (explaining that “discovery of confidential settlement agreements is generally
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`available under an appropriate protective order”).
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`Although the Agreement is discoverable, the Court declines to order production before the
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`case proceeds to trial. First, the Court continues to be mindful “of the policy in favor of protecting
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`settlement negotiations from being admitted as evidence, thus serving to encourage settlements.”
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`Advanced Cardiovascular Sys. Inc. v. Medtronic, Inc., 265 F.3d 1294, 1308 (Fed. Cir. 2001).
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`Case No.: 5:15-cv-01370-EJD
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`Northern District of California
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`Case 5:15-cv-01370-EJD Document 1116 Filed 10/14/22 Page 5 of 6
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`Second, as Judge Rawlinson noted, offset is available “[i]n the event a retrial results in the
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`imposition of damages against Emerson.” BladeRoom, 11 F.4th at 1028. Thus, it would be
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`premature to order production of the Agreement unless and until BladeRoom presents evidence of
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`two predicates to offset: evidence of Emerson and Facebook’s alleged conspiracy to
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`misappropriate BladeRoom’s trade secrets and evidence of lost profits damages. See Order at 6
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`(only one of BladeRoom’s two claims could possibly qualify for offset, i.e., trade secret
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`misappropriation, and only one category of damages could possibly qualify for an offset, i.e. lost
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`profits). Before the case proceeds to trial there is at least a theoretical possibility that BladeRoom
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`may choose to limit its case to evidence of only Emerson’s alleged misappropriation and resulting
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`profits. If this occurs, the Agreement would no longer be relevant to any issue in the case, and
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`therefore not subject to discovery.
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`Emerson asserts that the Agreement has evidentiary value independent of damages to show
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`potential bias of Facebook trial witnesses and whether BladeRoom witnesses are incrementally
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`more biased and more motivated to attribute greater responsibility for alleged misconduct to
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`Emerson than Facebook. However, it is not necessary to disclose the terms of the Agreement to
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`probe bias. Rather, it is sufficient for cross-examination purposes for Emerson to introduce
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`evidence of the fact of the Agreement. See In re: Cathode Ray Tube (CRT) Antitrust Litigation,
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`2016 WL 6216664, at *8 (N.D. Cal. Oct. 25, 2016) (“Defendants will be permitted to introduce
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`evidence or argument regarding the fact of settlement . . . .”). Before Emerson does so, however,
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`it must alert BladeRoom and the Court, outside the presence of the jury, of its intent to do so.
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`Lastly, Emerson contends that the Agreement should be produced to “level the strategic
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`playing field so Emerson, like BladeRoom, can factor the Agreement into trial and settlement
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`strategy.” Reply at 1. The Court is unpersuaded that there is any unfairness in maintaining the
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`confidentiality of the Agreement unless and until BladeRoom introduces evidence at trial to
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`establish a basis for offset.
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`III. CONCLUSION
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`For the reasons discussed above, the motion to compel is GRANTED in part. The Court
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`Case 5:15-cv-01370-EJD Document 1116 Filed 10/14/22 Page 6 of 6
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`finds that the Agreement is discoverable. However, BladeRoom is not required to produce the
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`Agreement at this time.
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`IT IS SO ORDERED.
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`Dated: October __, 2022
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`EDWARD J. DAVILA
`United States District Judge
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