Micron Technology, Inc. et al v. Factory Mutual Insurance Company et al, No. 3:2018cv07689 - Document 245 (N.D. Cal. 2022)
Court Description: Order denying in part and granting in part Motion for Reconsideration (ECF No. 234). (lblc4, COURT STAFF) (Filed on 8/3/2022)
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1 2 3 4 5 6 United States District Court Northern District of California 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 San Francisco Division 11 MICRON TECHNOLOGY, INC., et al., 12 Plaintiffs, v. 13 14 FACTORY MUTUAL INSURANCE COMPANY, 15 Defendant. Case No. 3:18-cv-07689-LB ORDER DENYING IN PART AND GRANTING IN PART FACTORY MUTUAL’S MOTION FOR RECONSIDERATION Re: ECF No. 234 16 17 INTRODUCTION Factory Mutual moved for reconsideration of the court’s order (ECF No. 229) compelling it to 18 19 respond to Micron’s discovery requests seeking information about claims made by other insureds 20 involving losses under the same or similar policy language to that governing Micron’s claimed 21 loss here.1 Factory Mutual brought its motion under Civil Local Rule 7-9 and Federal Rule of 22 Civil Procedure 54(b).2 It argues that reconsideration is warranted because the court did not 23 properly weigh the relevancy of the information against the burden on Factory Mutual and non- 24 25 26 27 28 Req. for Leave to File Mot. for Recons. – ECF No. 234 (filed under seal at ECF No. 233-10). Citations refer to material in the Electronic Case File (ECF); pinpoint citations are to the ECFgenerated page numbers at the top of documents. 1 2 Id. at 6. ORDER – No. 18-cv-07689-LB United States District Court Northern District of California 1 party insureds.3 Factory Mutual also argues that new facts have emerged concerning the burden on 2 Factory Mutual. Factory Mutual specifically cites objections it has received from its insureds and 3 details concerning the time spent on reviewing the subject claim files.4 Alternatively, Factory 4 Mutual asks the court to certify the discovery order for interlocutory appeal under 28 U.S.C. § 5 1292(b).5 6 The court can decide the motion for reconsideration without oral argument. N.D. Cal. Civ. 7 L.R. 7-1(b). The court denies Factory Mutual’s request to generally relieve it of the obligation to 8 produce responsive claim files of other insureds. But the court amends its earlier order by (1) 9 further limiting the scope of the production to documents that involve the interpretation or 10 application of policy language and (2) providing the non-party insureds fourteen days to review 11 their documents before production. To the extent the non-party insureds still object to the 12 production of responsive documents after reviewing the documents, the parties are ordered to meet 13 and confer regarding (1) modifications to the existing protective order or, failing that, (2) an 14 agreement to redact trade secrets that the non-party insureds contend cannot be adequately 15 shielded by a protective order. STATEMENT 16 In the underlying discovery dispute, Micron sought documents about “other claims” after 17 18 January 1, 2014, involving comparable losses, specifically including the following: (1) claims 19 arising from certain faults or malfunctions, for example, claims involving safety interlocks, control 20 systems, or level transmitters (see Micron’s Requests for Production Nos. 62–67); (2) claims 21 involving the invocation of certain exclusions, such as exclusions for losses while stock or 22 material is being “worked on” or for losses based on “inherent vice or latent defect” (see Micron’s 23 Requests for Production Nos. 68–74); and (3) losses at certain times and places, for instance, an 24 Intel claim for damage to a “semiconductor fab” in Ireland in 2020 or 2021 and a claim by Fushun 25 26 3 Id. at 14–15. 27 4 Req. for Leave to File Mot. for Recons. (Sealed) – ECF No. 233-10 at 7–11. 28 5 Req. for Leave to File Mot. for Recons. – ECF No. 234 at 20–21. ORDER – No. 18-cv-07689-LB 2 United States District Court Northern District of California 1 Ethylene in China in 1997 (see Micron’s Requests for Production Nos. 75–78).6 The court ordered 2 Factory Mutual to produce all documents responsive to Micron’s Requests for Production Nos. 3 62–78 for claims in the semiconductor industry (meaning semiconductor fabrication plants).7 4 Factory Mutual cites technical problems it has encountered while preparing the other claim 5 files for production, the number of hours its attorneys have spent reviewing the claim files, and 6 objections it received from its insureds concerning the production of claim files.8 Factory Mutual 7 claims that the objections it received from its insureds are “new facts” because, even though it 8 anticipated receiving these objections, the fact that they have actually occurred is a “new fact” 9 warranting reconsideration.9 10 Factory Mutual has asked the court to amend its prior order by (1) denying Micron’s request 11 for the claim files of other insureds, (2) relieving Factory mutual of its obligation to produce the 12 claim files of any objecting insured, or (3) “set[ting] an appropriate schedule that allows for 13 addressing insureds’ objections before any production to Micron is required, including appropriate 14 adjustments to the case schedule that protect the rights of the non-party other insureds.”10 15 LEGAL STANDARDS 16 17 1. Motion for Reconsideration This district’s local rules provide that a motion for reconsideration must be based on one of the 18 19 following: (1) “a material difference in fact or law” relative to that “which was presented to the 20 Court before entry” of the subject order, (2) “[t]he emergence of new material facts or a change of 21 law,” or (3) “[a] manifest failure by the Court to consider material facts or dispositive legal 22 arguments which were presented to the Court.” N.D. Cal. Civil L.R. 7-9(b). 23 24 See Req. for Prod., Ex. A to Admin. Mot. (Sealed) – ECF No. 219-2 at 7–10; Resp. to Req. for Prod., Ex. B to Admin. Mot. (Sealed) – ECF No. 219-3 at 5–14. 6 25 7 Order – ECF No. 229. 8 Req. for Leave to File Mot. for Recons. (Sealed) – ECF No. 233-10 at 8–11. 27 9 Reply – ECF No. 243 at 5. 28 10 26 Req. for Leave to File Mot. for Recons. – ECF No. 234 at 21. ORDER – No. 18-cv-07689-LB 3 1 A district court can also “reconsider” non-final judgments pursuant to Federal Rule of Civil 2 Procedure 54(b) and the court’s “inherent power rooted firmly in the common law” to “rescind an 3 interlocutory order over which it has jurisdiction.” City of Los Angeles v. Santa Monica 4 Baykeeper, 254 F.3d 882, 887 (9th Cir. 2001). Reconsideration is appropriate when (1) the court is 5 presented with newly discovered evidence, (2) the underlying decision was in clear error or 6 manifestly unjust, or (3) there is an intervening change in controlling law. See Sch. Dist. No. 1J, 7 Multnomah Cnty., Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). “There may also be 8 other, highly unusual, circumstances warranting reconsideration.” Id. 9 10 United States District Court Northern District of California 11 2. Certification for Interlocutory Review Section 1292(b) provides a means for litigants to bring an immediate appeal of a non- 12 dispositive order with the consent of both the district court and the court of appeals. 28 U.S.C. § 13 1292(b); In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1981). A district court may 14 certify an interlocutory appeal pursuant to § 1292(b) “only in exceptional situations in which 15 allowing an interlocutory appeal would avoid protracted and expensive litigation.” Id. (citing U.S. 16 Rubber Co. v. Wright, 359 F.2d 784, 785 (9th Cir. 1966). 17 The district court may certify an order for interlocutory appellate review under § 1292(b) if the 18 following three requirements are met: (1) there is a “controlling question of law;” (2) there are 19 “substantial grounds for difference of opinion;” and (3) “an immediate appeal may materially 20 advance the ultimate termination of the litigation.” Id. 21 The Ninth Circuit defines a controlling question as one in which the “resolution of the issue on 22 appeal could materially affect the outcome of litigation in the district court.” Id. A question may 23 be controlling even though its resolution does not determine who will prevail on the merits. Id. at 24 1026–27. But it is not controlling simply because its immediate resolution may promote judicial 25 economy. Id. at 1027. 26 Regarding the second factor, “[c]ourts traditionally will find that a substantial ground for 27 difference of opinion exists where the circuits are in dispute on the question and the court of 28 appeals of the circuit has not spoken on the point, if complicated questions arise under foreign ORDER – No. 18-cv-07689-LB 4 1 law, or if novel and difficult questions of first impression are presented.” Couch v. Telescope Inc., 2 611 F.3d 629, 633 (9th Cir. 2010) (cleaned up). 3 Finally, the Ninth Circuit has not expressly defined material advancement of the ultimate 4 termination of the litigation. Still, an immediate appeal will not materially advance the ultimate 5 termination of litigation where the appeal might postpone the scheduled trial date. See Shurance v. 6 Plan. Control Int’l, Inc., 839 F.2d 1347, 1348 (9th Cir. 1988). 7 ANALYSIS 8 9 1. Reconsideration As noted above, there are, in general, three possible grounds for reconsideration: (1) United States District Court Northern District of California 10 11 differences in fact or law relative to what the court previously considered; (2) new facts or law; 12 and (3) the failure to consider dispositive legal arguments. N.D. Cal. Civ. L.R. 7-9(b); see also 13 Sch. Dist. No. 1J, Multnomah Cnty., Or., 5 F.3d at 1263. There has been no change in controlling 14 law. And the court has already considered the issues of relevancy and burden, which the parties 15 presented in the underlying discovery dispute.11 Accordingly, the issue is whether (1) the time 16 Factory Mutual has spent preparing the production or (2) the concerns of non-party insureds 17 warrant reconsidering the court’s prior order. The court has already ruled that material in the claims files may be relevant to the 18 19 interpretation and application of policy language.12 See also Pac. Hide & Fur Depot v. Great Am. 20 Ins. Co., No. CV-12-36-BU-DLC, 2013 WL 11029340, at *3 (D. Mont. July 31, 2013) (“[T]his 21 Court finds that claims between Defendant and other insureds with policies similar to Plaintiff’s 22 policy [are] relevant and discoverable.”); Ivy Hotel San Diego, LLC v. Hous. Cas. Co., No. 23 10cv2183-L (BGS), 2011 WL 13240367, at *6 (S.D. Cal. Oct. 20, 2011) (“Discovery of other 24 insureds’ claims files is relevant to show the insurer’s interpretation of the policy language at 25 issue.”). That said, where courts have ordered the production of other insureds’ claims files, courts 26 27 11 Joint Disc. Ltr. – ECF No. 218. 28 12 Order – ECF No. 229 at 5. ORDER – No. 18-cv-07689-LB 5 United States District Court Northern District of California 1 have closely limited the scope of the production. For example, in Ivy Hotel San Diego, LLC, the 2 court limited the production “to non-privileged documents from claims files that involve an 3 express contract or other similarly worded exclusion” and ordered the parties to “meet and confer 4 and determine the specific types of documents that [the plaintiff insured] wants produced.” 2011 5 WL 13240367, at *7. 6 As Factory Mutual points out, the 2015 amendments to Rule 26 changed the rule to emphasize 7 proportionality such that it was no longer “good enough to hope that the information sought might 8 lead to the discovery of admissible evidence.”13 Gilead Scis., Inc. v. Merck & Co., No. 5:13-cv- 9 04057-BLF, 2016 WL 146574, at *1 (N.D. Cal. Jan. 13, 2016). But Micron has done more than 10 merely speculate that the information in the claim files may be relevant. Micron has, for example, 11 asserted that “Benjamin Lin, [Factory Mutual’s] supervising claim adjuster for the Micron claim, 12 testified that he shared and discussed with the [Factory Mutual] adjuster handling the Intel claim 13 the reports of the consultants [Factory Mutual] retained to support [Factory Mutual’s] denial of 14 coverage for Micron’s claim.”14 Additionally, the fact that Micron has not identified a particular ambiguity is not — as Factory 15 16 Mutual maintains — grounds to deny its request for information concerning other claims. Ivy 17 Hotel San Diego, LLC, 2011 WL 13240367, at *3 (“Whether or not the contract is ambiguous is 18 not the inquiry at the discovery stage.”). Furthermore, Factory Mutual’s reliance on W. Marine 19 Prods., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA for its position that Micron’s failure to 20 identify a specific ambiguity in the insurance contract bars it from obtaining extrinsic evidence in 21 discovery is misplaced.15 572 F. Supp. 3d 841 (N.D. Cal. 2021). In that case, the court held that 22 “[t]he policies at issue . . . [were] not ambiguous” while considering a motion to dismiss and 23 denied the plaintiff’s request to explore the “theoretical possibility that extrinsic evidence may 24 exist that could expose an ambiguity in the policies at issue” through discovery. Id. at 848. The 25 26 13 Req. for Leave to File Mot. for Recons. – ECF No. 234 at 20. 27 14 Joint Disc. Ltr. – ECF No. 218 at 2. 28 15 Req. for Leave to File Mot. for Recons. – ECF No. 234 at 18–19. ORDER – No. 18-cv-07689-LB 6 1 context here is different. This is a discovery dispute, not a motion to dismiss, and the court has not 2 held that the subject policy is unambiguous. Factory Mutual’s reliance on Northfield Ins. Co. v. 3 Pizano is similarly unpersuasive because that case involved a request to conduct additional 4 discovery under Rule 56(d) in opposition to a motion for summary judgment.16 No. 2:19-cv- 5 01198-TLN-JDP, 2022 WL 104262, at *6 (E.D. Cal. Jan. 11, 2022). Thus, there is no reason to 6 reconsider the court’s prior determination on relevancy. Concerning the burden on Factory Mutual and its insureds, Factory Mutual has presented new United States District Court Northern District of California 7 8 details concerning the time that was required to prepare the claims files for production and the 9 nature of the objections it has received from its insureds. For example, Factory Mutual states that 10 its attorneys have spent many hours on the production and expect to spend many more hours.17 In 11 the underlying discovery dispute, it estimated that pre-production document review “would require 12 significant manpower and resources, likely well in excess of 200 manhours.”18 These facts 13 concerning the specific amount of time spent do not warrant reconsideration because they are not 14 new or different facts relative to what the court previously considered. And — as the court noted 15 in its order — burdens that resulted from Factor Mutual’s own record-keeping practices cannot be 16 used to shield it from discovery.19 Lou v. Ma Lab’ys, Inc., No. 12-cv-05409 WHA (NC), 2013 WL 17 12328278, at *2 (N.D. Cal. Mar. 28, 2013), clarified on denial of reconsideration, No. 12-cv- 18 05409 WHA (NC), 2013 WL 1615785 (N.D. Cal. Apr. 15, 2013) (“[D]efendants are the master of 19 their own record keeping.”). 20 Factory Mutual has also provided new details concerning objections it has received from non- 21 party insureds regarding the disclosure of the claim files. For instance, the insureds have (1) asked 22 to review the files before production, (2) expressed concerns about disclosing information to 23 Micron even under the protective order based on their commercial relationship with Micron, and 24 25 16 Id. at 19. 17 Munro Decl. (Sealed) – ECF No. 233-8 at 4 (¶¶ 4–5). 27 18 Joint Disc. Ltr. – ECF No. 218 at 5. 28 19 Order – ECF No. 229 at 6. 26 ORDER – No. 18-cv-07689-LB 7 United States District Court Northern District of California 1 (3) stated that they are considering direct intervention to object to the production.20 That said, one 2 non-party insured contends that its files do not need to be produced because its claim falls outside 3 the scope of the discovery order “because [the insured’s] claim does not involve a ‘semiconductor 4 fabrication plant.’”21 Accordingly, the burden on the non-party insureds may not be as great as 5 Factory Mutual contends given that the court already limited the scope of Micron’s requests to 6 “claims in the semiconductor industry (meaning semiconductor fabrication plants).”22 7 Moreover, Micron has been amenable to modifying the existing protective order and has 8 submitted a declaration describing efforts to negotiate amendments to the protective order with 9 Intel and Samsung.23 Protective orders with attorneys’-eyes-only (or AEO) provisions help courts 10 “balance the risk of inadvertent disclosure of trade secrets to competitors against the risk that the 11 protection of such information will impair a plaintiff’s ability to prosecute its case.” Pinterest, Inc. 12 v. Pintrips, Inc., No. 13-cv-04608-RS (KAW), 2014 WL 5364263, at *3 (N.D. Cal. Oct. 21, 2014) 13 (denying request to nominate the plaintiff’s Deputy General Counsel as “Designated House 14 Counsel” under the stipulated protective order because his interest in the protected attorneys’- 15 eyes-only information went beyond the subject litigation). But protective orders are not always a 16 cure-all when it comes to non-party discovery. Waymo LLC v. Uber Techs., Inc., No. 17-cv- 17 00939-WHA (JSC), 2017 WL 3581171, at *1 (N.D. Cal. Aug. 18, 2017) (holding that attorneys’- 18 eyes-only protective orders “do not guarantee that the information will not be disclosed” and 19 “there is no rule that a competitor has to reveal its trade secrets merely because they are produced 20 subject to a protective order”). To address the new information regarding the specific burdens on Factory Mutual and its non- 21 22 party insureds, and the limited ability of protective orders to shield non-parties’ trade secrets, the 23 court modifies its prior order by (1) limiting the scope of the required production to documents 24 25 26 Correspondence from Insureds, Exs. A–D to Brooslin Decl. (Sealed) – ECF Nos. 233-4 at 3, 233-5 at 3, 233-6 at 3–4, 233-7 at 3. 20 21 Correspondence from Insureds, Ex. C to Brooslin Decl. (Sealed) – ECF No. 233-6 at 3–4. 27 22 Order – ECF No. 229 at 7. 28 23 Rizk Decl. – ECF No. 242-1 at 4 (¶¶ 11–15). ORDER – No. 18-cv-07689-LB 8 1 that involve the interpretation or application of policy language and (2) expressly permitting the 2 insureds fourteen days to review any documents before production. To the extent the non-party 3 insureds still object to the production documents after reviewing the documents, the parties are 4 ordered to meet and confer regarding (1) modifications to the existing protective order or, failing 5 that, (2) an agreement to redact trade secrets that the non-party insureds contend cannot be 6 adequately shielded by a protective order. 7 8 9 10 2. Certification for Interlocutory Appeal Factory Mutual’s alternative request for certification under § 1292(b) is denied as moot given the above-noted modifications to the court’s prior order. United States District Court Northern District of California 11 CONCLUSION 12 13 The court amends its prior order (ECF No. 229) as follows. Factory Mutual is ordered to 14 produce all documents responsive to Micron’s Requests for Production Nos. 62–78 that (1) 15 involve claims in the semiconductor industry (meaning semiconductor fabrication plants) and (2) 16 include the interpretation or application of policy language. The responsive documents should be 17 provided to the non-party insureds for review within fourteen days of the date of this order and the 18 non-party insureds must be provided with an additional fourteen days to review any documents 19 before production. 20 To the extent the non-party insureds still object to the production after reviewing the 21 documents, the parties are ordered to meet and confer regarding (1) modifications to the existing 22 protective order or, failing that, (2) an agreement to redact trade secrets that the non-party insureds 23 contend cannot be adequately shielded by a protective order. 24 This resolves ECF No. 234. 25 IT IS SO ORDERED. 26 Dated: August 3, 2022 27 ______________________________________ LAUREL BEELER United States Magistrate Judge 28 ORDER – No. 18-cv-07689-LB 9
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