Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-01022/USCOURTS-cand-5_05-cv-01022-16/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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 Also, the Court has received the parties’ joint letter reporting on their efforts to agree to a

protocol for the previously-ordered inspection of Advante’s hard drives, and notes their successes in

that matter.

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*E-FILED 12/6/06*

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

ADVANTE INTERNATIONAL CORP. et al., 

Plaintiffs,

 v.

MINTEL LEARNING TECHNOLOGY, et al.,

Defendants. /

NO. C 05-01022 JW (RS)

ORDER GRANTING IN PART

AND DENYING IN PART

MOTION TO COMPEL

INTRODUCTION

Before the Court is a motion to compel brought by plaintiff Advante International Corp. 

After the motion was filed, the Court directed the parties to engage in further meet and confer

discussions regarding all of their then-pending discovery disputes. Those efforts are appreciated, as

they substantially limited the number of items remaining to be decided in this motion.1

 The matter

having now been fully briefed and argued, the motion will be granted in part and denied in part. 

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United States District Court

For the Northern District of California

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 The factual background of this action has been discussed in prior orders and will not be

repeated here.

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DISCUSSION2

A. Tax Returns

While tax returns are not absolutely privileged, Heathman v. District Court, 503 F.2d 1032

(9th Cir. 1974), public policy discourages unnecessary public disclosure of tax returns. Premium

Service Corp. v. Sperry & Hutchinson Co., 511 F.2d 225, 229 (9th Cir. 1975). Accordingly, a party

seeking production of tax returns must show: (1) they are relevant to the action and (2) there is a

compelling need for them because the information sought is not readily available from another

source. Aliotti v. Senora, 217 F.R.D. 70 (N.D. Cal. 2003). 

Here, although the parties vigorously contest the extent to which Mintel has been able to

produce other documents and information regarding relevant aspects of its financial condition,

Advante has adequately shown that both that complete financial information is relevant to defending

against Mintel’s damages claims and that deficiencies in Mintel’s other financial records create a

compelling need for disclosure of the tax returns.

B. Monthly Head Count

At the hearing, the parties reported that this issue had been resolved.

C. David Wilson Deposition

David Wilson was the first expert consultant retained by Mintel in this action. He apparently

performed a “line-by-line” comparison of the parties’ source codes and did not find many

similarities. He has no ongoing relationship with Mintel and will not be called to testify at trial.

When Mintel retained Gordon Pelton, its current expert, it told Pelton that it believed

Advante was “litigation savvy” and probably had substantially re-written the code to conceal

misappropriation. Mintel encouraged Pelton to look at the algorithms, rather than doing a

“superficial comparison” like Wilson’s.

Pelton never met or spoke with Wilson and never looked at any of Wilson’s work. That

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notwithstanding, Advante contends that Pelton “relied on” Wilson’s prior work in that Pelton chose

not to do a line-by-line comparison of the code in part because he had been told that a prior expert

had done so. Advante argues therefore Pelton’s work is “based on” Wilson’s work, such that Wilson

can be deposed even though he will not be testifying.

Mintel has adequately shown that Pelton did not base any of his analysis or conclusions on

Wilson’s work. The fact that Pelton chose not to do a line by line comparison means only that his

report and conclusions are not based on any such comparison, not that his report and conclusions are

based on Wilson’s work.

D. Mintel’s investigation into recent activities of James Liu 

Through an interpreter, Mintel’s current CEO, Qi Yu, testified at deposition that Mintel has

conducted some sort of investigation of suji99.com, JiSharp, and ScoreMax, each of which

apparently is a company founded by Mintel’s former CEO, James Liu. Although Qi Yu initially

testified that at least some of the investigative efforts were instigated by Mintel personnel, he

subsequently corrected his testimony and has provided a declaration to clarify that all investigation

work had been initiated by and done under the direction of counsel. 

Rule 26 (b) (3) of the Federal Rules of Civil Procedure provides, in pertinent part:

[A] party may obtain discovery of documents and tangible things otherwise

discoverable under subdivision (b)(1) of this rule and prepared in anticipation of

litigation or for trial by or for another party or by or for that other party's

representative (including his attorney, consultant, surety, indemnitor, insurer, or

agent) only upon a showing that the party seeking discovery has substantial need of

the materials in the preparation of his case and that he is unable without undue

hardship to obtain the substantial equivalent of the materials by other means. In

ordering discovery of such materials when the required showing has been made, the

court shall protect against disclosure of the mental impressions, conclusions,

opinions, or legal theories of an attorney or other representative of a party concerning

the litigation.

Advante’s motion on this subject was primarily premised on its argument that the work

product doctrine is inapplicable in light of Qi Yu’s initial statement that the investigation had been

initiated by Mintel itself. On reply and at the hearing, Advante effectively conceded that Qi Yu’s

subsequent declaration is sufficient to correct the record on that point, although Advante questions

its credibility. Advante contends that it is nevertheless entitled to any facts that may have been

uncovered in the investigation, including any “verbatim witness statements.” Advante recites a

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 Mintel also argues that Advante’s willingness to permit the Wei and Zhang depositions to

go forward after Mintel had cut off Dr. Yang’s deposition at four and a half hours belies the

existence of any agreement. Whether Advante chose to go forward with the Wei and Zhang

depositions out of a desire to limit the controversies between the parties or for any other reason, the

fact remains that the email record clearly reflects Mintel’s agreement to make Dr. Yang available for

up to seven hours.

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number of document requests it claims would reach such information, but it does not discuss those

requests or describe any responses Mintel may have provided to them. Under these circumstances,

Advante has not shown that Mintel has refused to provide information under an unfounded claim of

work product protection or that Advante has a “substantial need” for materials that exist in Mintel’s

possession, and that it cannot obtain “the substantial equivalent” of any such materials without

undue hardship.

E. Further Deposition of Dr. Yang

The parties reached an agreement, memorialized in email, that Advante would produce two

witnesses (Wei and Zhang) for 3.5 hours each and that Mintel would produce Dr. Yang for further

deposition. Counsel for Advante stated, “I’ll try to finish in 4.5 hours, but you’ll give me the whole

day (7.0 hours if needed).” Mintel’s counsel responded, “Sounds good to me. I will talk to Dr. Yang

tomorrow about it.” See Cole Reply Decl., Exh. C. At the hearing, counsel for Mintel suggested

that he may have failed to read the entire email before agreeing to the terms proposed.3

Be that as it may, Mintel’s agreement to make Dr. Yang available for a full seven hours is

enforceable. The parties are directed to meet and confer in an effort to schedule any further

deposition of Dr. Yang at a time when he would otherwise be traveling to this country. Advante is

also encouraged to consider carefully whether it has a substantial need for further testimony from

Dr. Yang, both in light of the materials that may be produced as a result of this order and in light of

all other circumstances.

F. EDD Issue

Certain Advante employees contend they heard Dr. Yang brag that he submitted false

information to the California EDD to collect unemployment. At Yang’s deposition, he refused to

answer a question as to whether he has ever claimed unemployment insurance at any time since

October 2001. Advante acknowledges that the only relevance to this line of inquiry is the potential

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for gathering possible impeachment evidence. Advante relies on a five-factor test set forth in

Davidson Pipe Co. v. Laventhol and Horwath, 120 F.R.D. 455 (S.D.N.Y 1988), as to when

discovery into such matters may be appropriate. Although some of those factors are satisfied,

Advante concedes that there is no significant nexus between the purported fraud and the issues of

this action. While that is not necessarily dispositive, the circumstances here suggest that allowing

the inquiry sought by Advante would only spawn protracted discovery proceedings on ancillary

subjects with no substantial probability that admissible evidence will be uncovered.

G. Mintelusa.com

Advante seeks to take a deposition under Rule 30 (b) (6) of the Federal Rules of Civil

Procedure to learn more details about a mail server Mintel once used named “mintelusa.com”.

At the hearing, Mintel stipulated that Advante may subpoena the third party that hosted the mail

server, and that Mintel will consent under the Federal Stored Communications Act 18 U.S.C. §§

2701, et seq. to the disclosure of information that the third party may still possess. Apart from that,

Mintel asserts that it has provided all the responsive information it currently possesses regarding the

server in its response to an interrogatory on the topic. Although that interrogatory response is not

wholly consistent with prior deposition testimony on the issue, it purports to represent the most

complete and accurate information Mintel was able to compile. As such, there is an insufficient

basis to warrant a further deposition.

CONCLUSION

Advante’s motion to compel is granted to the extent set forth above and is otherwise denied. 

Mintel shall produce any additional documents within 20 days of the date of this order.

IT IS SO ORDERED.

Dated: December 6, 2006 

RICHARD SEEBORG

United States Magistrate Judge

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United States District Court

For the Northern District of California

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THIS IS TO CERTIFY THAT NOTICE OF THIS ORDER HAS BEEN GIVEN TO:

Chien-Ju Alice Chen achen@Fenwick.Com, dyoungman@fenwick.com

Rodger R. Cole rcole@fenwick.com, vpieretti@fenwick.com

Songmee L. Connolly SConnolly@Fenwick.com, lrubinstein@fenwick.com

J. James Li lij@howrey.com, schantellk@howrey.com; ew@howrey.com

Ryan Jared Marton rmarton@fenwick.com,

Counsel are responsible for distributing copies of this document to co-counsel who have not

registered for e-filing under the Court's CM/ECF program. 

Dated: 12/6/06 Chambers of Judge Richard Seeborg

By: /s/ BAK 

Case 5:05-cv-01022-JW Document 240 Filed 12/06/06 Page 6 of 6