Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_04-cv-05232/USCOURTS-cand-5_04-cv-05232-8/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1331 Fed. Question

---

U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

DAN L. WHITNEY, JANET R. HADLEY,

MARGARET A. KORNOW-BROWN and ERIC

BRELLE,

Plaintiffs,

 v.

CHARLES WURTZ, VERISCAPE, INC.,

RENEE TADLOCK, REGINA RYGELIS, WILL

ARNTZ, SAM JACOBS, GARY BERKOWITZ

and BRIAN ROE,

Defendants.

 ____/

AND RELATED CROSS-CLAIMS

_______________________________________/

No. C-04-05232 PVT

ORDER GRANTING PLAINTIFFS' 

MOTION TO COMPEL FURTHER

PRODUCTION OF DOCUMENTS;

ORDER GRANTING IN PART AND

DENYING IN PART FURTHER

INTERROGATORY RESPONSES;

ORDER DENYING PLAINTIFFS'

MOTION FOR SANCTIONS

[Re Docket Nos. 46, 47, 48]

INTRODUCTION

Plaintiffs Dan L. Whitney, Janet R. Hadley, Margaret A. Kornow-Brown and Eric

Brelle (collectively "Plaintiffs") move to compel initial disclosures from defendants Charles

Wurtz, Renee Tadlock, Veriscape, Inc., Regina Rygelis and Brian Roe. Additionally,

Plaintiffs move to compel further production of documents and further interrogatory

responses from defendant Veriscape, Inc. ("Veriscape"). Defendant Veriscape opposes the

motions for further production of documents and further interrogatory responses. On

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 1 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1 The holding of this court is limited to the facts and the particular circumstances underlying the present

motion.

2

February 28, 2006, the parties appeared for hearing. Having reviewed the papers and

considered the arguments of counsel and for the reasons set forth below, the court grants

Plaintiffs' motion to compel further production of documents and grants in part and denies in

part Plaintiffs' motion to compel further interrogatory responses and denies Plaintiffs' motion

for sanctions.1 Plaintiffs' motion to compel initial disclosures is moot.

BACKGROUND

Veriscape, Inc. ("Veriscape") is a high technology start-up company that markets its

Intellicat software product to larger companies seeking to improve their various electronic

procurement functions. Intellicat is designed as an add-on software product that Veriscape

customizes to accommodate pre-existing software platforms. Generally, the technical

configuration process may require one to six months for complete installation and integration

of the Intellicat software product. 

On February 1, 2002, Plaintiffs entered into their respective employment agreements

with Veriscape. Defendant Charles Wurtz ("Wurtz"), Chairman and Chief Executive Officer

of Veriscape from May 1999 to June 2004, negotiated and executed the individual

employment agreements on behalf of Veriscape with each plaintiff. Pursuant to an

employment agreement dated February 1, 2002, Veriscape employed plaintiff Dan L.

Whitney ("Whitney") as a corporate sales officer. ("Whitney Employment Agreement"). 

Plaintiffs allege that Veriscape employed Whitney from June 1, 2001 until June 18, 2004. 

Whitney alleges that he facilitated sales of the Intellicat product to customers, including the

Bank of Montreal, Pfizer and Unilever. As a result, Whitney alleges he was entitled to

certain sales commissions. Whitney further alleges that he sought to enforce payment of his

salary and sales commissions and was terminated on June 18, 2004. Without providing any

specific reasons, Veriscape informed Whitney that there were "solid grounds" for his

termination. Whitney alleges that at the time he was undertaking an effort to facilitate sales

of Intellicat to Ariba and/or ePlus, his employment was abruptly terminated. During his term

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 2 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

of employment, Whitney alleges he was never compensated in salary, commissions or stock

options. To date, Whitney alleges Veriscape has failed to provide him any compensation

whatsoever. 

Whitney had broken his neck in the past. As a result, Whitney suffers from severe

physical disabilities that limit his mobility and restrict use of his right hand. Upon hiring

Whitney, Veriscape allegedly promised to provide him with an assistant and health insurance

coverage. Whitney alleges that Veriscape failed to pay his assistant and never provided him

with health insurance coverage. Additionally, Veriscape made certain demands on Whitney

to travel, to attend meetings and to produce last-minute reports which strained, and perhaps

exacerbated, some of his physical disabilities. 

Pursuant to an employment agreement dated February 1, 2002, Veriscape employed

plaintiff Janet R. Hadley ("Hadley") as a sales associate and senior content specialist. 

("Hadley Employment Agreement"). Plaintiffs allege that Veriscape employed Hadley from

February 1, 2002 until September 22, 2004 and that defendants constructively terminated her

by, inter alia, failing to provide her with any compensation. On September 22, 2004, Hadley

resigned from the company.

Pursuant to an employment agreement dated February 1, 2002, Veriscape employed

Margaret A. Kornow-Brown ("Kornow-Brown") as the director of product marketing and

strategic sales relationships. ("Kornow-Brown Employment Agreement"). Plaintiffs allege

that Veriscape employed Kornow-Brown from February 1, 2002 until June 2003 and that she

too, was constructively terminated. Veriscape failed to compensate Kornow-Brown during

the entire term of her employment. In June 2003, Kornow-Brown resigned from the

company. 

Pursuant to an employment agreement dated February 1, 2002, Veriscape employed

plaintiff Eric Brelle ("Brelle") as a west coast sales and technology manager and executive

administrator. ("Brelle Employment Agreement"). Plaintiffs allege that Veriscape employed

Brelle from February 1, 2002 until May 6, 2003. Plaintiffs allege that Veriscape

constructively terminated Brelle and failed to compensate him during the entire term of his

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 3 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

employment. On May 6, 2003, Brelle resigned from the company.

Plaintiffs allege defendants breached their respective employment agreements by

failing to pay them any compensation whatsoever.

On April 19, 2005, Plaintiffs filed an amended complaint. On September 23, 2005,

defendants Charles Wurtz, Gary Berkowitz, Regina Rygelis, Brian Roe and Veriscape filed

their answer and cross-claims against cross-defendants Janet Hadley, Richard Dodd, United

Airlines and Southwest Airlines. On December 22, 2005, Plaintiffs filed these motions to

compel initial disclosures from defendants Charles Wurtz, Renee Tadlock, Regina Rygelis,

Gary Berkowitz, Brian Roe and Veriscape, further production of documents and further

interrogatory responses from defendant Veriscape. On February 8, 2006, defendants Charles

Wurtz, Renee Tadlock, Regina Rygelis, Gary Berkowitz, Brian Roe and Veriscape filed their

initial disclosures and defendant Veriscape filed its oppositions to the motions to compel

further production of documents and further interrogatory responses. On February 14, 2006,

Plaintiffs filed their reply briefs.

ANALYSIS

A. Standard

Under the Federal Rules of Civil Procedure,

[p]arties may obtain discovery regarding any matter, not

privileged, that is relevant to the claim or defense of any party . . .

. relevant information need not be admissible at the trial if the

discovery appears reasonably calculated to lead to the discovery

of admissible evidence.

Fed. R. Civ. P. 26(b)(1). As emphasized in the Advisory Committee Notes, the language of 

Rule 26(b) "make[s] clear the broad scope of examination and that it may cover not only

evidence for use at trial but also inquiry into matters in themselves inadmissible as evidence

but which will lead to the discovery of evidence." Fed. R. Civ. P. 26 advisory committee

notes on 1946 amendments.

A court, however, has discretion to limit discovery if:

(i) the discovery sought is unreasonably cumulative or duplicative, or is

obtainable from some other source that is more convenient, less

burdensome, or less expensive;

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 4 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2 On its face, it is not immediately obvious that the initial disclosures were served on behalf of defendants

Charles Wurtz, Veriscape, Inc., Regina Rygelis, Gary Berkowitz, Renee Tadlock and Brian Roe. Although defendants'

caption indicates that counsel represents defendants Charles Wurtz, Veriscape, Inc., Regina Rygelis, Gary Berkowitz, Renee

Tadlock and Brian Roe, it was signed on behalf of defendant Veriscape only. Nonetheless, plaintiffs have acknowledged

service of the initial disclosures on behalf of defendants Charles Wurtz, Veriscape, Inc., Regina Rygelis, Gary Berkowitz,

Renee Tadlock and Brian Roe. Plaintiffs' Reply Regarding Motion to Compel Initial Disclosures ("Reply") at 1. Instead,

Plaintiffs comp lain the initial disclosures are "skeletal and inadequate" and insufficiencies may be addressed in further

motions. Id. 

5

(ii) the party seeking discovery has had ample opportunity by discovery in

the action to obtain the information sought; or

(iii) the burden or expense of the proposed discovery outweighs its likely

benefit, taking into account the needs of the case, the amount in controversy, the parties'

resources, the importance of the issues at stake in the litigation, and the importance of the

proposed discovery in resolving the issues.

Fed. R. Civ. P. 26(b)(2).

1. Initial Disclosures

"A party must, without awaiting a discovery request, provide to other parties . . .

[initial disclosures] at or within 14 days after the Rule 26(f) conference unless a different

time is set by stipulation or court order, or unless a party objects during a conference that

initial disclosures are not appropriate in the circumstances of the action and states the

objection in the Rule 26(f) discovery plan." Fed. R. Civ. P. 26(a).

Although the parties held a conference on April 6, 2005 and filed a report pursuant to

Rule 26(f), Plaintiffs allege that defendants Charles Wurtz, Renee Tadlock, Regina Rygelis,

Gary Berkowitz, Brian Roe and Veriscape had not yet served their initial disclosures. 

Indeed, Plaintiffs allege that as a professional courtesy they provided numerous extensions

for these defendants to serve their initial disclosures. Most recently, Plaintiffs had extended

the deadline for the above-named defendants to serve their initial disclosures to September

23, 2005. On December 22, 2005, Plaintiffs filed their motion to compel initial disclosures. 

On February 8, 2006, defendants Charles Wurtz, Renee Tadlock, Regina Rygelis,

Gary Berkowitz, Brian Roe and Veriscape served their initial disclosures (along with

Veriscape's oppositions to the other discovery motions discussed herein).2 As the abovenamed defendants have now served their initial disclosures, the court finds Plaintiffs' motion

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 5 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

to compel initial disclosures is moot.

2. Document Requests

Plaintiffs initially propounded twenty-one document requests. On November 17,

2005, defendant Veriscape produced documents. Plaintiffs allege that Veriscape produced

documents responsive to only four of their document requests. The two boxes of documents

produced by Veriscape, included various correspondence between Veriscape and each of the

plaintiffs. Apparently the documents produced were responsive to document request nos. 9,

10, 11 and 12. Plaintiffs allege that Veriscape failed to produce any other responsive

documents. Plaintiffs further allege that defendant Veriscape did not serve any written

responses to the document requests. Additionally, Plaintiffs allege that defendant Veriscape

never responded to their efforts to negotiate a stipulated protective order. 

In opposition, defendant Veriscape contends that it has already produced documents

responsive to document request nos. 18-21. Defendant Veriscape produced these documents

as part of their initial production of 6,000 documents to plaintiffs. Defendant Veriscape

further contends that there are no documents responsive to document request nos. 13, 14, 16

and 17. Defendant Veriscape contends that it has located documents responsive to document

request nos. 5, 8 and 15, which will be produced shortly. However, defendant Veriscape

objects to producing documents responsive to document request nos. 1, 2, 3, 4, 6 and 7 on the

grounds that the requests seek confidential business information. Specifically, defendant

Veriscape contends that its contracts and agreements with customers, including Bank of

Montreal, Pfizer, Unilever and ePlus, contain certain non-disclosure provisions. 

Defendant Veriscape contends that a protective order would not adequately protect its

confidential business information contained in the documents because plaintiff Whitney has

been shown to have engaged in illegal activities in the past. Defendant Veriscape alleges that

plaintiff Whitney improperly recorded and later disclosed a private conversation he had with

defendant Wurtz about a potential customer. During the conversation which occurred in or

around June 2004, defendant Veriscape alleges that in a flash of anger and moment of

frustration defendant Wurtz physically threatened a potential customer. Defendant Veriscape

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 6 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

alleges that plaintiff Whitney's improper disclosure of his private conversation with

defendant Wurtz to a board member and the actual customer was retaliatory and potentially

exposed Veriscape to significant liability. As a result, defendant Veriscape contends a

protective order would do little to ensure its confidential business information remained so. 

Notwithstanding assurances by defendant Veriscape that it has produced documents

responsive to document request nos. 18, 19, 20 and 21, that there are no documents

responsive to document request nos. 13, 14, 16 and 17, that documents responsive to

document request nos. 5, 8 and 15 will be produced shortly, and that only document request

nos. 1, 2, 3, 4, 6 and 7 are at issue, defendant Veriscape still has not served any written

responses to the Plaintiffs' document requests. Defendant Veriscape's responses to specific

document requests contained in its opposition are inadequate and do not satisfy the

requirements of Rule 34. Because of defendant Veriscape's failure to serve any written

responses, the court reviewed document requests nos. 1-8 and 13-21 as Plaintiffs have

requested. 

The document requests seek documents related to, inter alia, Veriscape's contracts and

agreements with customers regarding the sale, lease or use of the Intellicat product (i.e.,

document request nos. 1, 2, 3 and 4), Veriscape's contracts and/or agreements with each

plaintiff (i.e., document request no. 5), Veriscape's financial statements from 2002-2004 (i.e.,

document request no. 6), cash payments made by customers to Veriscape from 2002-2004

(i.e., document request no. 7), plaintiffs' individual personnel files (i.e., document request no.

8), Veriscape's charitable contributions (i.e., document request nos. 13 and 14), Veriscape's

bylaws effective from 2002-2004 (i.e., document request no. 15), shareholder meeting

minutes from 2002-2004 (i.e., document request no. 16), minutes of board of directors's

meetings from 2002-2004 (i.e., document request no. 17), correspondence by and between

the board of directors and Veriscape's officers regarding any of the plaintiffs and their

compensation (i.e., document request nos. 18 and 19) and correspondence by and between

Veriscape's board of directors and officers regarding the sale, use or lease of Intellicat to any

customer (i.e., document request nos. 20 and 21). 

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 7 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

Based on a review of the document requests, the court finds that document requests

nos. 1-8 and 13-21 conform to the relevancy requirements of Fed. R. Civ. P. 26. Agreements

and other documents evidencing any customers' purchase, lease or use of the Intellicat

software product are relevant to Plaintiffs' claims that they are entitled to certain

commissions. Plaintiffs' contracts, agreements, personnel files and correspondence related to

Plaintiffs and their compensation are relevant to Plaintiffs' claims involving their

employment relationships. Financial statements and other documents are relevant to

Plaintiffs' claims that defendant Veriscape had cash resources but nevertheless failed to pay

their salaries and re-pay plaintiff Whitney's loan to the company. Minutes from shareholder

meetings and board of directors meetings are relevant in determining, inter alia, the viability

of the company at any given time. Additionally, it does not appear that the discovery sought

is unreasonably cumulative or duplicative, or is obtainable from some other source that is

more convenient, less burdensome or less expensive, or that the burden or expense of the

proposed discovery outweighs its likely benefit, taking into account the needs of the case, the

amount in controversy, the parties' resources and the importance of the proposed discovery in

resolving the issues. See, Fed. R. Civ. P. 26(b)(2).

Plaintiffs further allege that defendant Veriscape's failure to provide a written

response to its document requests and the additional delay in producing responsive

documents has resulted in a waiver of any objections to these requests. Rule 34 states in

pertinent part that "[t]he party upon whom the request is served shall serve a written response

within 30 days after the service of the request, but that a shorter or longer time may be

directed by the court, or, in the absence of such an order, agreed in writing by the parties,

subject to Rule 29. The response shall state, with respect to each item or category, that

inspection and related activities will be permitted as requested, unless the request is objected

to, in which event the reasons for the objection shall be stated." Fed. R. Civ. P. 34(b)

(emphasis added). During a meet and confer between the parties held on August 23, 2005,

the parties had agreed to extend the deadline to September 23, 2005 for defendant Veriscape

to respond to the document requests. The record contains no further evidence that any

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 8 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3 The purpose of a stipulated protective order is to provide special protection to confidential, proprietary or

private information from public disclosure and from use for any purpose other than the prosecution of the litigation. See,e.g.,

Stipulated Protective Order at <www.cand.uscourts.gov>. The stipulated protective order allows for different designations

of certain confidential, proprietary or private information. For example, parties may designate extremely sensitive

confidential information or items "Highly Confidential-Attorney's Eyes Only." Alternatively, parties may designate less

sensitive information and items that still require protection under the standards set forth in Fed. R. Civ. P. 26(c) as

"Confidential."

9

further extensions were agreed to by the parties. No matter whether September 23, 2005 is

viewed as the appropriate deadline, defendant Veriscape has failed to respond to the

document requests in a timely manner. Failing to respond to a Rule 34 request within the

time permitted waives all objections thereto. See, Richmark Corp. v. Timber Falling

Consultants, 959 F. 2d 1468, 1473 (9th Cir. 1992) ("It is well established that a failure to

object to discovery requests within the time required constitutes a waiver of any objection."). 

A court may grant relief from waiver upon a proper showing. See, In re Uranium Antitrust

Litig., 480 F. Supp. 1138, 1149 (N.D. Ill. 1979). By failing to serve any responses to

Plaintiffs' document requests, defendant Veriscape has made no showing that would warrant

relief from the waiver rule. 

Defendant Veriscape shall serve a written response to plaintiffs' document request

within ten (10) days of the date of this order. With respect to defendant Veriscape's concerns

regarding disclosure of its confidential business information, the parties are ordered to meet

and confer on a proposed stipulated protective order and file the proposed order with the

court for approval no later than March 21, 2006.3 In the event, the parties are unable to agree

on a proposed stipulated protective order, the parties may appear before the court to obtain a

ruling on a protective order. Accordingly, Plaintiffs' motion to compel defendant Veriscape

to produce documents responsive to document request nos. 1-8 and 13-21 is granted.

3. Interrogatories

Plaintiffs seek to compel defendant Veriscape to further respond to interrogatories

nos. 2, 4, 12 and 13. Despite the parties' efforts to meet and confer on interrogatories nos. 2

and 4, plaintiffs allege that defendant Veriscape continues to object to the information sought

by the interrogatories. Plaintiffs allege that defendant Veriscape had previously agreed to

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 9 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10

provide responses to interrogatories nos. 12 and 13 (which plaintiffs later modified) but have

not yet responded.

a. Interrogatories Nos. 2 and 4 

Interrogatories Nos. 2 and 4 are as follows:

Interrogatory No. 2:

State the terms of the contract for the sale, use or lease of

Intellicat to ePlus.

Response to Interrogatory No. 2:

Defendant objects to this interrogatory on the basis that it

is not relevant to this lawsuit in that the only such agreement was

signed with ePlus in March 2005, some nine months after

Whitney's employment was terminated, and the terms of the

agreement constitute confidential business arrangements,

disclosure of which could, and would significantly effect

Veriscape's operations adversely.

Plaintiffs contend that the interrogatory is relevant because plaintiff Whitney has

alleged that defendant Veriscape terminated him to avoid paying certain commissions,

including on the ePlus account. Therefore, Plaintiffs contend the information sought by the

interrogatory is necessary to determine whether a sale was made and to calculate the amount

of commission.

Defendant Veriscape objects to interrogatory no. 2 on the grounds that the information

sought is not relevant to the claims as asserted in the amended complaint. First, defendant

Veriscape contends that plaintiff Whitney is not entitled to any commissions on the ePlus

account because Intellicat was not sold to ePlus. Rather, the parties entered into a licensing

agreement for the Intellicat software product. Second, the parties executed the licensing

agreement nine months after plaintiff Whitney was terminated from Veriscape. Third,

defendant Veriscape contends that the information sought is confidential business

information and defendant Veriscape reiterates its concerns whether plaintiff Whitney would

abide by a protective order if specific terms of the ePlus licensing agreement were disclosed

to him. Finally, defendant Veriscape contends that the licensing agreement itself contains a

non-disclosure provision.

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 10 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

11

As plaintiff Whitney's claims relate to his alleged entitlement to certain commissions,

including the ePlus account, the information sought is relevant. Although the licensing

agreement was executed nine months following plaintiff Whitney's termination, he may have

had a role in defendant Veriscape eventually obtaining the licensing agreement with ePlus. 

Therefore, Plaintiffs' motion to compel a further response to interrogatory no. 2 is granted. 

Interrogatory No. 4:

For each employee identified in no. 3, state how much

compensation that employee was paid during each year the

employee worked at Veriscape.

Response to Interrogatory No. 4:

Defendant objects to providing this information on the

grounds that this interrogatory is overly broad and that providing

this information would violate the privacy and confidentiality

interests of the employee.

Plaintiffs argue that information regarding Veriscape's compensation to other

employees in the company is relevant to establish that despite defendant Veriscape's

assertions that it had insufficient funds to compensate Plaintiffs, there were sufficient funds

to compensate some of the other employees.

Defendant Veriscape objects that the company has never claimed that other employees

were never compensated during the time Plaintiffs were employed. Rather, defendant

Veriscape states that Plaintiffs were engaged to license the Intellicat software product in

California. From the beginning of Plaintiffs' employment with the company, Veriscape states

it informed Plaintiffs they would be paid only if sufficient licensing fees were paid by

customers for their commissions. Defendant Veriscape states that Plaintiffs did not execute

any licensing agreements for the Intellicat software product in California and therefore,

Plaintiffs were not entitled to any commisions and the salaries of other employees is

irrelevant. Defendant Veriscape further objects because the salaries of other employees is

confidential business information. Moreover, each employment agreement contains nondisclosure provisions. 

Since the issue of whether defendant Veriscape was able to compensate Plaintiffs

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 11 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

12

relates to certain claims in the amended complaint, the interrogatory is relevant. Defendant

Veriscape shall provide the salaries of its other employees without revealing the identities of

the individual employees. For example, defendant Veriscape may identify the employees as

numbered 1 through 10 and set forth the respective salaries for each employee. Therefore,

Plaintiffs' motion to compel a further response to interrogatory no. 4 is granted. 

b. Interrogatories No. 12 and 13

Interrogatories 12 and 13 are as follows:

Interrogatory No. 12:

Identify all companies by name, address, phone number

and contact person, that Veriscape is currently in

communication with for the sale, use or lease of Intellicat.

Response to Interrogatory No. 12:

Defendant objects to this interrogatory on the grounds that

the companies Veriscape is currently communicating with

regarding lease of Intellicat is not relevant to the time the

plaintiffs were employed by Veriscape. Defendant also

objects on the grounds that the identities of such

companies are confidential business secrets.

Plaintiffs contend that plaintiff Whitney was hired because if his extensive customer

contacts in the e-commerce industry. As a result, plaintiffs contend they may be entitled to

certain commissions on accounts which are currently pending at Veriscape. After a meet and

confer between the parties, Plaintiffs later modified this interrogatory so that plaintiff

Whitney would provide defendant Veriscape with a list of customers and potential customers

that he had contacted while employed at the company. In turn, defendant Veriscape had

agreed to identify, any of the customers on the list provided by plaintiff Whitney, by name,

address, telephone number and contact that the company was currently dealing with for the

sale, lease or use of the Intellicat software product.

Defendant Veriscape argues that plaintiff Whitney provided a list of customers and

potential customers that included 186 companies. Defendant Veriscape argues that it is

difficult to fathom that the four plaintiffs were involved in discussions with that many

companies during their period of employment with the company. Defendant Veriscape

points out that during their terms of employment, Plaintiffs demonstrated the Intellicat

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 12 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

13

product to less than a dozen companies. Oftentimes, a product demonstration is arranged

only when a customer or potential customer has significant interest in the product. As such,

defendant Veriscape argues the list of customers and potential customers was not provided in

good faith and was merely an effort to circumvent the agreement reached by counsel during

their meet and confer. Lastly, defendant Veriscape argues that in their amended complaint

Plaintiffs have not sought commissions from licensing agreements only commissions from

sales of the Intellicat software product. 

As the parties had agreed to a modification of the interrogatory wherein plaintiff

Whitney later provided a list of 186 customers and potential customers to which defendant

Veriscape would respond, plaintiffs' motion to compel a further response to interrogatory no.

12 is granted. 

Interrogatory No. 13:

State all sources of capital Veriscape had during 2002,

2003, and 2004.

Response to Interrogatory No. 13:

Interpreting the word "capital" as meaning capital

investment in the company, which is the usual business meaning

of the term, there were no capital investments made in the

company during 2002, 2003 and 2004.

Plaintiffs argue that the parties had agreed that the term capital would encompass all

sources of money obtained by the company, including any investment money, cash loans or

gifts, income derived from the sale or lease of the Intellicat software product, asset sales,

reimbursements or refunds or money obtained from other sources.

Based on common usage of the term "capital," defendant Veriscape contends that it

did respond to the interrogatory. Defendant Veriscape contends that later counsel did discuss

a newly expanded definition of "capital" to encompass all sources of money obtained by the

company. However, counsel for defendant Veriscape also contends that it qualified any

agreement with Plaintiffs by stating that it required express approval from the company. As

defendant Veriscape did not approve of the newly expanded definition, it objects to the

interrogatory. Defendant Veriscape further objects to the disclosure of confidential business

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 13 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4 This is generally not permitted under the Civil Local Rules, which require that a motion for sanctions under

Fed. R. Civ. P. 37 be made separately from a motion to compel. N.D. Civil Local Rules 37-2 and 7-8.

14

information.

As stated in the interrogatory, the court finds that the term "capital" is vague. 

Therefore, Plaintiffs' motion to compel further response to interrogatory no. 13 is denied.

B. Plaintiffs' Motion for Sanctions

1. Initial Disclosures

As part of their motion to compel initial disclosures, Plaintiffs move for sanctions in

the amount of $1,680.4 Based on the amount of time spent conferring with opposing counsel,

drafting letters, conducting legal research, drafting motion papers and the time anticipated in

reviewing opposition papers, drafting a reply and attending the hearing, Plaintiffs' counsel

calculates seven hours of time at an hourly billing rate of $240 totaling $1,680 in attorneys'

fees. Of this time plaintiffs' counsel estimates three hours to review defendants' opposition,

draft a reply and attend a motion hearing. Alternatively, Plaintiffs seek evidence, issue

and/or terminating sanctions. 

Plaintiffs' motion for sanctions is denied. Additionally, Plaintiffs' motion for

evidence, issue and/or terminating sanctions is denied. 

2. Document Requests

Plaintiffs further move for sanctions in the amount of $1,440. As part of their motion

to compel further production of documents, Plaintiffs seek an award based on the amount of

time counsel has spent conferring with opposing counsel, drafting letters, conducting legal

research, drafting motions and assembling relevant exhibits. Plaintiffs' counsel calculates six

hours of time at an hourly billing rate of $240 totaling $1,440. Alternatively, Plaintiffs seek

evidence, issue and/or terminating sanctions. 

Plaintiffs' motion for sanctions is denied. Plaintiffs' motion for evidence, issue and/or

terminating sanctions is also denied. 

3. Interrogatories

Plaintiffs move for sanctions in the amount of $1,560. Based on the amount of time

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 14 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

15

spent meeting and conferring with counsel, drafting correspondence, conducting legal

research, drafting motion papers and assembling exhibits, Plaintiffs seek sanctions as part of

their motion to compel further interrogatory responses. Plaintiffs calculate 6.5 hours of time

at a $240 hourly billing rate. Alternatively, Plaintiffs seek evidence, issue and/or terminating

sanctions. Here, the court finds that sanctions are unwarranted and Plaintiffs' motion is

denied. Plaintiffs' motion for evidence, issue and/or terminating sanctions is also denied. 

CONCLUSION

For the foregoing reasons, Plaintiffs' motion to compel further production of

documents is granted. Defendant Veriscape shall serve a written response to Plaintiffs'

document request within ten (10) days of the date of this order. Defendant Veriscape shall

produce non-privileged documents within ten (10) days of the date of this order. The parties

shall meet and confer on a proposed stipulated protective order and file with the court the

proposed order no later than March 21, 2006. Any documents subject to a proposed

stipulated protective order shall be produced within ten (10) days of the court's approval of

such an order. Plaintiffs' motion to compel further interrogatory responses is granted in part

and denied in part. Plaintiffs' motion to compel initial disclosures is moot. Plaintiffs'

motions for sanctions are denied.

IT IS SO ORDERED.

Dated: 3/1/2006 

PATRICIA V. TRUMBULL

United States Magistrate Judge 

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 15 of 16
U

nite

d

States District C

o

u

rt

For the Northern District of California 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

16

Case 5:04-cv-05232-PVT Document 105 Filed 03/01/06 Page 16 of 16