Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_13-cv-05658/USCOURTS-cand-5_13-cv-05658-5/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 12:635 Breach of Insurance Contract

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Case No. 5:13-cv-05658-LHK

ORDER GRANTING-IN-PART MOTIONS TO COMPEL

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION

SILICON STORAGE TECHNOLOGY, INC.,

 Plaintiff,

 v. 

NATIONAL UNION FIRE INSURANCE CO. 

OF PITTSBURGH, PA., et al., 

 Defendants. 

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Case No. 5:13-cv-05658-LHK

ORDER GRANTING-IN-PART 

MOTIONS TO COMPEL 

(Re: Docket Nos. 68, 74) 

Defendant National Union Fire Insurance Co. moves to compel Plaintiff Silicon Storage 

Technology, Inc. to respond further to National Union’s first set of requests for production by 

producing amended written responses, withheld responsive documents and an index detailing 

SST’s production thus far. National Union also moves for an extension of the discovery deadline. 

National Union’s motions to compel are GRANTED-IN-PART. Its request to extend the discovery 

deadline is DENIED. 

I.

 SST purchased insurance policies from National Union and Defendant XL Specialty 

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Insurance Co. that covered liability for claims arising from SST employees’ wrongful acts.1 Only 

SST employees are insured under the policy, although SST itself is covered to the extent it 

indemnifies its employees.2 

In 2011, Xicor, LLC sued SST and two SST employees, Bing Yeh and Amitay Levi, for 

misappropriation of trade secrets.3 Separate and apart from the trade secret litigation, Xicor and 

SST were entwined in a patent infringement suit.4 At the same time, SST’s parent—Microchip

Technology Inc.—had instituted a patent action against Xicor’s parent—Intersil Corp.—before the 

International Trade Commission.5 Following mediation, SST, Yeh, Levi and Xicor settled the 

trade secret action.

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 Soon after, SST, Xicor, Microchip and Intersil settled their respective patent 

suits with a single cross-licensing agreement.7 

SST brought this suit after National Union and XL refused to cover the settlement payment 

on the grounds that some portion of the payment was consideration for settling the patent 

infringement suits, which fall outside the coverage of SST’s insurance policy.8

 

II.

This court has jurisdiction under 28 U.S.C. § 1332. The undersigned was assigned 

discovery matters in this case pursuant to Fed. R. Civ. P. 72(a).

 

1 See Docket No. 1 at ¶ 8. 

2 See id. at ¶¶ 9-10. 

3 See id. at ¶ 2.

4 See Docket No. 81-3 at ¶ 2. 

5 See id. at ¶ 3. 

6 See Docket No. 1 at ¶¶ 30-32. 

7 See Docket No. 81-3 at ¶ 7. 

8 See Docket No. 1 at ¶ 34; Docket No. 15 at ¶¶ 48-49. 

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III.

National Union is entitled to relief, but not nearly the full scope of the relief that it seeks.

First, National Union is not entitled to amended responses and further production 

responsive to RFP Nos. 43, 47-48, 50, 56-61 and 72. Through this subset of RFPs, National Union 

sought information it claims is necessary to assess the value of the cross-licensing agreements that 

settled the previous patent actions.9

 SST objected to each RFP as overbroad, but agreed to produce 

any responsive documents exchanged in discovery during the previous patent actions.10 National 

Union now argues SST improperly limited the scope of its production in response to National 

Union’s RFPs relating to SST and Microchip’s previous patent actions.11

Fed. R. Civ. P. 26(b) enables parties to obtain discovery on “any non-privileged matter that 

is relevant to any party’s claim or defense.” While Rule 26(b) is liberally interpreted, courts may

limit discovery when it is “unreasonably cumulative or duplicative” or “the burden or expense of 

the proposed discovery outweighs its likely benefit.”12 

Here, National Union’s RFPs are indeed overbroad and unduly burdensome; most of the 

RFPs seek “any and all” documents or communications “referring or relating” to broad subjects 

including all products accused of infringing any of 12 patents13 and all SST communications about 

the licensing of any of 12 patents.14 Even National Union’s RFPs for specific types of documents 

are overbroad. For example, while National Union attempts to frame RFP No. 72 as seeking 

 

9 See Docket No. 68 at 7. 

10 See Docket No. 68-4 at 28-29, 32-34, 38-41, 47. 

11 See Docket No. 68 at 6-8. 

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

13 See id. at 32-33. 

14 See id. at 40. 

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presentations to SST investors and potential investors about SST’s patent rights,15 the RFP

encompasses all presentations to investors or potential investors regardless of subject matter.16

Moreover, SST has already produced over one million pages of documents exchanged 

during the previous patent actions.17 The parties to those actions considered the exchanged 

documents a sufficient basis for negotiating and entering into their settlement agreements.18 For 

National Union’s stated purpose—assessing the value of the settlement agreements—the 

previously exchanged documents would appear to be adequate. Rather than point to any specific 

document or category of documents SST has withheld, National Union speculates that some

relevant information may not have been exchanged in the prior litigation.19 Mere speculation 

cannot justify the added expense of such discovery. 

All that being said, RFP No. 71 is a different story altogether. It seeks information about 

SST and its employees unrelated to the previous patent actions: “[a]ny and all DOCUMENTS that 

identify the number of shares and/or options of Silicon Storage Technology, Inc. or Microchip 

Technology, Inc. stock owned, exercised, or sold each year for LEVI and YEH by YOU.”20 

As an initial matter, the information National Union seeks is clearly relevant. Whether SST 

or its employees earned a profit from misappropriating trade secrets could affect the estimated 

liability or the scope of SST’s insurance coverage.

21 Moreover, none of SST’s objections are 

 

15 See Docket No. 68 at 7 (“Request No. 72 related to information provided to investors or potential 

investors concerning the value of SST’s patent rights.”). 

16 See Docket No. 68-4 at 47 (“Any and all DOCUMENTS referring or relating to presentations to 

investors or potential investors in Silicon Storage Technology, Inc. stock”). 

17 See Docket No. 68-1 at ¶ 7. 

18 See Docket No. 81-3 at ¶¶ 7-9. 

19 See Docket No. 68 at 7-8 ([B]ut SST has given National Union no reason to believe that all of 

the requested information was exchanged by the parties in the underlying cases.”). 

20 See Docket No. 68-4 at 46. 

21 See Docket No. 15 at ¶ 52. 

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persuasive; they are merely boilerplate assertions that the RFP is irrelevant, vague and overbroad.22 

Each term of RFP No. 71 has a clear meaning or is defined, and that the RFP is limited to two 

discreet employees’ stock interests in only two companies shows that the RFP is narrowly drawn. 23 

SST cannot argue that any resulting production will be unduly burdensome. It must produce any 

document responsive to RFP No. 71, subject to valid privilege objections, if any. 

Second, National Union is not entitled to production of certain documents that were 

properly withheld under California’s mediation privilege. California’s mediation privilege statute 

provides “[n]o writing . . . that is prepared for the purpose of, in the course of, or pursuant to, a 

mediation or a mediation consultation, is admissible or subject to discovery.”24 Fed. R. Evid. 501 

provides “in a civil case, state law governs privilege regarding a claim or defense for which state 

law supplies the rules of decision.” This case is a diversity action governed by California law. 25 

As such, the court applies California’s law as to the scope of the mediation privilege.26 

Fed. R. Evid. 408 provides more limited protections for mediation communications than 

California’s privilege, allowing statements and documents made during mediation for some 

purposes.27 National Union suggests using Rule 501 as a vehicle to apply California’s mediation 

privilege necessarily conflicts with Rule 408. But courts in the Ninth Circuit consistently apply

California’s mediation privilege through Rule 501 in diversity actions.28 To advocate breaking 

 

22 See Docket No. 68-4 at 46. 

23 See id.; Docket No. 68 at 2 n.1, 5 n.6. 

24 Cal. Evid. Code § 1119(b). 

25 See Docket No. 1 at ¶ 6. 

26 Communications that fall under this privilege remain confidential even after mediation ends. See 

Cal. Evid. Code § 1126. 

27 See Fed. R. Evid. 408(b) (“The court may admit this evidence for another purpose, such as 

proving a witness’s bias or prejudice, negating a contention of undue delay, or proving an effort to 

obstruct a criminal investigation or prosecution.”). 

28 See Goerner v. Axis Reinsurance Co., 400 Fed. Appx. 226, 228 (9th Cir. 2010) (treating 

admission of a mediation brief as error under Cal. Evid. Code § 1119); Doublevision Entm’t, LLC 

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with circuit precedent, National Union cites to dictum in a footnote of Milhouse v. Travelers 

Commercial Ins. Co. that raises the question of whether California’s mediation privilege might 

conflict with Rule 408.29 The Milhouse court, however, explicitly declined to answer that 

question,30 and numerous courts since Milhouse have continued to apply California’s mediation 

privilege through the lens of Rule 501.31 Ultimately, precedent overwhelmingly shows that Rule 

408 functions as a floor for mediation protections in federal court rather than as a bar precluding

application of more protective state mediation statutes.

32 

National Union also argues that a due process exception to California’s mediation privilege

entitles it to discover SST’s mediation communications because those communications are 

important to National Union’s defense. But California’s mediation protections are not so easily 

circumvented. California’s legislature intended to encourage “candid disclosures and assessments” 

during mediation by providing “maximum protection for the privacy of communications in the 

mediation context.”33 The California Supreme Court “has refused to judicially create exceptions to 

 

v. Navigators Spec. Ins. Co., Case No. 14-cv-02848, 2015 U.S. Dist. LEXIS 10425, at *4-10 (N.D. 

Cal. Jan. 28, 2015) (applying Cal. Evid. Code § 1119 et seq. to determine the scope of mediation 

privilege in a diversity action); Haskins v. Employers Ins. of Wausau, Case No. 14-cv-01671, 2015 

U.S. Dist. LEXIS 10645, at *7-11 (N.D. Cal. Jan. 28, 2015) (same); Chavez v. PVH Corp., Case 

No. 13-cv-01797, 2014 WL 6617142, at *6 n.4 (N.D. Cal. Nov. 20, 2014) (same); State Nat’l Ins. 

Co. v. Khatri, Case No. 13-cv-00433, 2014 U.S. Dist. LEXIS 64549, at *19-23 (N.D. Cal. May 9, 

2014) (same). 

29 See 982 F.Supp.2d 1088, 1105 n.10 (C.D. Cal. 2013).

30 See id. (“The Milhouses’ untimely objection presents a seemingly rare, but serious tension 

between the dictates of Federal Rule of Evidence 408 and Rule 501. . . . [T]he question need not 

be resolved here”). 

31 See Goerner, 400 Fed. Appx. at 228; Doublevision Entm’t, LLC, 2015 U.S. Dist. LEXIS 10425, 

at *4-10; Haskins, 2015 U.S. Dist. LEXIS 10645, at *7-11; Chavez, 2014 WL 6617142, at *6 n.4; 

State Nat’l Ins. Co., 2014 U.S. Dist. LEXIS 64549, at *19-23. 

32 The Insurers also argue Rule 501 does not support application of California’s mediation 

protections because the statutes creating those protections are not in the division of the California 

Evidence Code that governs privilege. The many courts applying California mediation protections 

through Rule 501 demonstrate that the formalist criterion of statute placement does not control 

what constitutes a privilege within the scope of Rule 501. See id.

33 Cassel v. Superior Court, 51 Cal. 4th 113, 132-33 (2011). 

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the statutory scheme, even in situations where justice seems to call for a different result.”34 At the 

heart of this refusal to deviate from the statutory scheme “is the premise that the mere loss of 

evidence pertinent to the prosecution of a lawsuit for civil damages does not implicate such a 

fundamental interest” to warrant such an exception.35 While the court is sympathetic to National 

Union’s defense-related concerns about settlement negotiations during mediation, National Union’s 

desire to bolster its defense in a civil suit does not justify a due process exception to California’s 

mediation privilege.

National Union’s reliance on Milhouse to support an extension of this due process 

exception is unpersuasive. In Milhouse, the plaintiffs accused the defendant of acting in bad faith 

during mediation.36 The court held that due process entitled the defendant to admit evidence of its 

own conduct during the mediation to rebut the plaintiffs’ accusations.37 The Milhouse court’s

holding appears to be in conflict with the California Supreme Court’s decision in Cassel that loss 

of evidence relevant to a civil suit never implicates interests sufficient to trigger the due process 

exception to California’s mediation privilege.38 Milhouse also is distinguishable from the present 

case. Unlike the defendant in Milhouse, National Union seeks to discover another party’s 

mediation statements rather than to admit evidence of its own conduct. The Milhouse rule that 

allows a defendant to admit its own mediation statements at trial may not discourage candid 

mediation discussion because parties retain control over disclosure of their own statements. The 

same cannot be said of a rule that allows defendants to discover other parties’ mediation 

 

34 Wimsatt v. Superior Court, 61 Cal. Rptr. 3d 200, 210 (2007).

35 Cassel, 51 Cal. 4th at 135 (2011). 

36 See Milhouse, 982 F.Supp.2d at 1106. 

37 See id. at 1106-08. 

38 See 51 Cal. 4th at 1095 (“[A]pplication of the mediation confidentiality statutes to legal 

malpractice actions does not implicate due process concerns so fundamental that they might 

warrant an exception on constitutional grounds. . . . [T]he mere loss of evidence pertinent to the 

prosecution of a lawsuit for civil damages does not implicate such a fundamental interest.”). 

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statements. Parties that believe their statements can be discovered by others and potentially used 

against them in future civil suits are far less likely to speak openly during mediation. The 

undersigned’s own experience certainly suggests that the last thing we need in mediation is less 

candor. National Union’s proposed extension of the due process exception would directly 

contradict the mediation privilege’s purpose of facilitating candid discussion.39 Here, SST 

properly withheld communications and documents falling within California’s mediation 

privilege.40

Third, it was proper for SST to withhold production of communications between SST’s 

attorneys and its employees’ attorneys based on the joint defense privilege.41 The joint defense 

privilege is an exception to the general rule that disclosure of communications to third parties 

waives privilege protections.42 It applies to communications between parties that “have in 

common an interest in securing legal advice related to the same matter” when the communication 

is designed to further that interest.43 

Here, the documents that SST withheld were exchanged between SST’s attorneys and its 

employees’ attorneys while SST and its employees were co-defendants in the trade secret litigation. 

At that time, SST and its employees shared a common interest in defending themselves against 

trade secret misappropriation claims. SST even signed joint defense agreements with both 

employees.

44 The communications also were designed to further an interest in securing legal 

 

39 See id. at 132-33. 

40 The mediation privilege granted here only extends as far as Judge Koh’s order that settlementrelated documents created after August 16, 2012 are not privileged. See Docket No. 38. To the 

extent SST believes Judge Koh’s order is inconsistent with California law, SST must seek relief 

from Judge Koh. 

41 The joint defense privilege is also referred to as the common interest doctrine. 

42 See OXY Res. California LLC v. Superior Court, 9 Cal. Rptr. 3d 621, 633 (2004). 

43 Id. at 636-37. 

44 See Docket No. 93 at 17 n.2. 

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advice; they contain legal analysis related to the underlying trade secret litigation.45 

Fourth, National Union is not entitled to in camera review of the documents SST withheld 

on the basis of mediation and joint defense privilege. In United States v. Zolin, the Supreme Court 

recognized excessive court inspection of privileged documents may discourage the very

communications such privileges are designed to protect.46 Accordingly, in camera review is only 

appropriate if the party moving for inspection presents evidence that supports a reasonable belief 

that in camera review may establish that the privilege does not apply.47 Even after such a showing, 

the court retains discretion to determine whether in camera review is appropriate based on the

“facts and circumstances of the particular case.”48 This, National Union has not done. National 

Union has not given the court any reason to believe that SST’s privilege log or its privilege 

designations are improper. Nor has National Union put forth any evidence suggesting that the 

timing of mediation-related communications withheld under the joint defense privilege in any way 

implicates their privilege status. 

Fifth, to the extent SST has not already complied with the requirements of 

Fed. R. Civ. P. 34(b), SST must provide an index of its produced documents that satisfies SST’s 

obligations under the Federal Rules. Rule 34(b)(2)(E)(i) requires responding parties to produce 

 

45 See Docket No. 74-7. National Union also contends SST has not met its burden of proving that 

each withheld communication advanced a common interest. While a party asserting privilege has 

the burden of proving the privilege’s applicability, that burden can be satisfied through creation of 

a privilege log. See In re Grand Jury Investigation, 974 F.2d 1068, 1070-71 (9th Cir. 1992) (“We 

have previously recognized a number of means of sufficiently establishing the privilege, one of 

which is the privilege log approach.” (citations omitted)). SST’s privilege log identifies the parties 

to each communication, each communication’s creation date and broadly describes the contained 

legal analysis. See Docket No. 74-7. This level of detail is sufficient for SST to make a prima 

facie showing that privilege applies. See In re Grand Jury Investigation, 974 F.2d at 1071 (holding 

a privilege log identifying the nature of the document, all persons shown on the document to have 

received or sent the document, the document’s creation date and information on each document’s 

subject matter satisfies a party’s burden to demonstrate privilege applicability).

46 See 491 U.S. 554, 570-71. 

47 See id. at 574-75. 

48 See id. at 572. 

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documents “as they are kept in the usual course of business” or to “organize and label them to 

correspond to the categories in the request.”49 A party electing the former method “must do more 

than merely represent to the court and the requesting party that the documents have been produced 

as they are maintained.”50 “Providing information about how documents and ESI are kept under 

subsection (i) ‘[a]t a minimum . . . mean[s] that the disclosing party should provide information 

about each document which ideally would include, in some fashion, the identity of the custodian or 

person from whom the documents were obtained, an indication of whether they are retained in hard 

copy or digital format, assurance that the documents have been produced in the order in which they 

are maintained, and a general description of the filing system from which they were recovered.’”51 

SST produced 14 volumes of documents.52 Volumes 2-8 and 10-13 contain documents 

exchanged during the previous trade secret and patent litigation.53 Volume 1 consists of discovery 

requests and responses, public pleadings and hearing transcripts from the underlying actions.54 

Those documents were produced here as they were produced in the prior litigation and National 

Union appears satisfied with these productions.55 Only volumes 9 and 14 contain newly collected 

 

49 Rule 34(b)(2)(E)(i). 

50 See Pass & Seymour, Inc. v. Hubbell Inc., 255 F.R.D. 331, 334 (N.D.N.Y. 2008) (citing Johnson 

v. Kraft Foods N. Am., Inc., 236 F.R.D. 535, 540-41 (D. Kan. 2006); Cardenas v. Dorel Juvenile 

Group, Inc., 230 F.R.D. 611, 618 (D. Kan. 2005)); see also Google, Inc. v. Am. Blind & Wallpaper 

Factory, Inc., Case No. 03-cv-05340, 2006 WL 5349265, at *3 (N.D. Cal. Feb. 8, 2006). 

51 See Venture Corp. Ltd. v. Barrett, Case No. 13-cv-03384, 2014 WL 5305575, at *3 (N.D. Cal. 

Oct. 16, 2014) (citing Pass & Seymour, Inc., 255 F.R.D. at 337). 

52 See Docket No. 68-5 at 2-4. 

53 See id. at 3. 

54 See id. at 2. 

55 In its meet and confer letter criticizing SST’s production, National Union sought a corrected 

production according to Rule 34(b)(2)(E)(i) for documents “other than those marked in the 

underlying lawsuits.” See Docket No. 682-2 at 40. In the same letter, National Union requested a 

different organizational guide for the documents exchanged in the earlier lawsuits, see id. at 40-41, 

that SST eventually provided. See Docket No. 68-5 at 2. National Union’s brief focuses on 

deficiencies in the organizational information provided for volumes 9 and 14. See Docket No. 68 

at 14. 

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