Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-04435/USCOURTS-cand-3_06-cv-04435-19/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE

COMMISSION,

Plaintiff,

 v.

GREGORY L. REYES, et al.,

Defendants. /

No. C 06-04435 CRB

ORDER

Plaintiff has filed a motion to compel the production of all materials generated or

reviewed by Dr. David Gulley and Dr. Steven Stanton, two expert witnesses whose

testimony has been offered in support of Defendant’s pending motion for partial summary

judgment. On March 30, 2007, this Court entered an order requiring Defendant to disclose

some of these materials and to submit other materials for in camera review. See Docket No.

211 (redacted); Docket No. 212 (unredacted). This second set of materials relates to the socalled “Grant-Date Probability Project” and the “Money-Left-on-the-Table Project,” both of

which were conducted by Dr. Gulley in connection with this case. 

Having reviewed the materials, the Court concludes that the materials related to the

“Grant-Date Probability Project” are sufficiently related to Dr. Gulley’s testimony that their

disclosure is required. Plaintiff’s motion to compel is therefore GRANTED as to these

materials. The Court further concludes, however, that the materials related exclusively to the

Case 3:06-cv-04435-CRB Document 219 Filed 04/10/07 Page 1 of 3
United States District Court

For the Northern District of California

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“Money-Left-on-the-Table Project” are not related to Dr. Gulley’s testimony. Plaintiff’s

motion to compel is therefore DENIED as to these materials.

Defendant argues that none of the documents or materials withheld actually relate to

Dr. Gulley’s opinion, which is based almost exclusively on an analysis of the various

financial statements, disclosures, and restatements issued by Brocade. The rules of

discovery, however, require parties to disclose more than just the materials on which an

expert actually relies. Instead, an expert’s proponent must hand over “the data or other

information considered by the witness in forming the opinions.” Fed. R. Civ. P. 26(a)(2)(B). 

See also B.C.F. Oil Refining, Inc. v. Consol. Edison Co. of New York, 171 F.R.D. 57, 61-62

(S.D.N.Y. 1997) (stating that an expert’s proponent need not produce “documents having no

relation to the expert’s role as [witness]” (emphasis added)). 

This Court cannot conclude that the documents related to the “Grant-Date Probability

Project” are unrelated to Dr. Gulley’s testimony. To the contrary, these materials relate

directly to the scope of the alleged misrepresentation that he claims had an immaterial effect

on the share of Brocade’s stock price. It is at least arguable that the scope or nature of an

alleged misrepresentation is relevant to the question of whether the misrepresentation was

material. In his testimony, Dr. Gulley never asserts that misrepresentations about non-cash

expenditures such as employee stock options can never be material to a reasonable investor. 

Thus, although it is true that Dr. Gulley’s proposed testimony does not assert any view about

the actual scope of any misrepresentations that might have occurred, it is also not

unreasonable to think that his consideration of that subject could affect his view on how a

reasonable investor would have viewed Brocade’s alleged non-disclosures. Dr. Gulley

conducted an exhaustive analysis about the potential scope of alleged backdating before

offering his testimony on the question of whether investors founds such backdating relevant

to their decision about whether to buy or sell shares of stock in the company. Plaintiff is

therefore entitled to review these materials, too, and to ask Dr. Gulley why they did or did

not influence his view on the issue of materiality. United States v. City of Torrance, 163

F.R.D. 590, 593 (C.D. Cal. 1995) (noting that the purpose of civil discovery is to allow an

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G:\CRBALL\2006\4435\order7.wpd 3

adversary “to expose whatever weaknesses, unreliabilities, or biases might infect the

opinions of testifying experts called by [an] adverse party,” and holding that discovery

“should not be limited to documents relied on by the expert in support of his opinions, but

should extend to documents considered but rejected by the testifying expert in reaching

opinions”). 

The Court therefore holds that Defendant must disclose the following materials: (1) all

withheld materials that relate exclusively to the “Grant Date Probability Project,” (2) all

withheld materials that relate both to the “Money-Left-on-the-Table Project” and the “Grant

Date Probability Project,” and (3) all redacted materials, but only insofar as they set forth Dr.

Gulley’s or Navigant’s analysis of the “Grant Date Probability Project.” The Court holds

that materials relating exclusively to the “Money-Left-on-the-Table Project,” whether

redacted or withheld entirely, are irrelevant to the experts’ testimony and are therefore

protected by the work-product privilege. The Court further holds that the material redacted

from a document described as a “meeting agenda” (REYES-SEC 00022467-00022468) is

irrelevant to the experts’ testimony and therefore need not be disclosed.

Defendant shall make his production to Plaintiff not later than Thursday, April 12,

2007. Plaintiff’s opposition shall be filed not later than Wednesday, April 25, 2007. 

Defendant’s reply shall be filed not later than Friday, May 4, 2007. Defendant’s motion for

partial summary judgment shall be heard, as previously scheduled, on Friday, May 11, 2007.

IT IS SO ORDERED.

Dated: April 10, 2007 

CHARLES R. BREYER

UNITED STATES DISTRICT JUDGE

Case 3:06-cv-04435-CRB Document 219 Filed 04/10/07 Page 3 of 3