Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_13-cv-01946/USCOURTS-cand-5_13-cv-01946-7/pdf.json

Nature of Suit Code: 160
Nature of Suit: Stockholder's Suits
Cause of Action: 28:1332 Diversity-Stockholders Suits

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

FITEQ INC,

Plaintiff,

v.

VENTURE CORPORATION, et al.,

Defendants.

Case No. 13-cv-01946-BLF 

ORDER SETTING TELEPHONIC 

CONFERENCE REGARDING THE 

REOPENING OF FACT DISCOVERY; 

TENTATIVE RULINGS ON THE 

PARTIES' DISPUTES

[Re: ECF 214, 215, 220]

On January 16, 2015, the Court ordered the parties to meet and confer regarding a partial

reopening of fact discovery, having found inadequate Plaintiff’s disclosures of certain damages 

computations. See ECF 194 at 3. 

On January 29, 2015, Plaintiff provided Venture a supplemental damages disclosure of its 

damages computations. See ECF 220-2 Exh. B. In response, Venture has proposed a discovery 

plan. See ECF 220-1. Plaintiff has not agreed to a number of Venture’s proposed terms, and the 

parties have submitted a joint report to the Court outlining their disputes. ECF 214. The parties 

have agreed in principle that Venture will take two additional Rule 30(b)(6) depositions: one 

regarding Plaintiff’s alleged lost profits damages, the other regarding the valuation of the 

company. ECF 214 at 2. There remain, however, a number of disputes between the parties. 

Although the Court contemplated that its order re-opening discovery would entail 

significant additional discovery efforts, Venture’s proposed discovery plan appears out of 

proportion to the new damages calculations set forth in Plaintiff’s January 29 supplemental 

disclosure. The Court’s primary concern is that Venture’s proposed discovery plan lacks focus and 

justification. 

The parties are HEREBY ORDERED to appear for a telephonic conference on March 10, 

Case 5:13-cv-01946-BLF Document 226 Filed 03/04/15 Page 1 of 4
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2015 at 5 p.m. Pacific Time. This conference shall be off the record. The Court issues the 

following tentative rulings as to the parties’ disputes, which the parties should be prepared to 

discuss at the conference:

1. Third-party depositions regarding lost profits: Venture requests to take six new 

third-party depositions of banks and/or card testing companies: Discover Financial Services, 

Serve, Dynamics, Applus, Eclipse, and Mandiri Bank. See ECF 220-1 at 2-3. Plaintiff contends 

these depositions are duplicative and could have taken place earlier. ECF 215 at 11-14. 

Venture has not sufficiently explained the need for such expansive discovery other than to 

argue that it is proportional to Plaintiff’s increased damages request. The Court cannot assist the 

parties in fashioning an appropriate discovery plan without knowing why these third-party 

depositions were not of sufficient value previously in the litigation, but now are essential to 

Venture’s ability to defend itself. As such, the Court is inclined to deny Venture’s request to take 

these six third-party depositions. 

2. Third-party depositions regarding “contactless security protocol”: Venture states 

that it anticipates moving to exclude evidence regarding Plaintiff’s “contactless security protocol,” 

which it claims is related to Plaintiff’s $300 million valuation. Venture asks to take five thirdparty depositions regarding this protocol: Visa, MasterCard, American express, First Data , and 

Apple Corp. ECF 220-1 at 3. Venture states, however, that it wants to wait until after it takes any

lost profits depositions before “deciding whether to move to exclude [this evidence] or take 

additional discovery.” ECF 220-1 at 3. Plaintiff argues that it has already produced “voluminous 

discovery” regarding this contactless security protocol, and that Venture has previously deposed 

witnesses on this issue. See ECF 215 at 11-14.

The Court is inclined to agree with Plaintiff and deny Venture’s request to take these 

depositions as well. Though Venture argues that its proposed discovery is “proportional” to 

Plaintiff’s increased damages request, it has also not shown why these depositions were 

unnecessary at an earlier stage of the litigation but are now essential to its defense.

3. Deadline for Plaintiff’s list of previously-produced documents on which it bases its 

$300 million business valuation: The parties have agreed that Plaintiff, prior to the Rule 30(b)(6) 

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United States District Court

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deposition as to valuation, will produce a list of documents previously produced and on which it 

relied to reach its valuation estimate of $300 million. The Court is inclined to grant Plaintiff one 

week from the date of the telephonic conference to produce this list. 

4. Scheduling Venture’s deadline to file a motion for summary judgment: Venture has 

not yet filed a motion for summary judgment, which was previously due to be filed on February 

12, 2015. This deadline was obviated by the Court’s order granting Venture the opportunity to reopen fact discovery, as the Court noted at the January 16, 2015 hearing. See ECF 190 at 9. 

Plaintiff, however, contends that Venture should not have the opportunity to seek summary 

judgment on any issue other than damages. ECF 215 at 15-16. 

Plaintiff is incorrect – Venture will not be denied the chance to file a dispositive motion 

because it sought, successfully, to re-open fact discovery due to Plaintiff’s failure to provide 

adequate damages computations. As trial is scheduled to begin Monday, August 31, 2015, the 

Court will, at the telephonic conference, set a date on which Venture’s dispositive motion can be 

heard, and the parties should be prepared to offer dates for such a motion to be heard no less than 

60 days prior to the start of trial. 

5. Attorneys’ fees owed Venture for duplicative discovery: The Court previously 

ordered that Plaintiff would be liable for costs to Venture arising out of any duplicative discovery 

regarding damages calculations. See ECF 194 at 3. Venture may file with the Court a motion for 

costs for any duplicative discovery on damages following the completion of such new discovery, 

and Plaintiff may challenge that request on reasonableness grounds. 

6. Attorneys’ fees allegedly owed Venture for Plaintiff’s now-abandoned claim for $1 

billion in lost profits damages: Following the Court’s Order requiring further disclosure of 

Plaintiff’s damages computations, Plaintiff provided Venture with its January 29 supplemental 

disclosure. This disclosure included maximum lost profits damages amounting to over $1 billion. 

Venture states that it retained experts and engaged in discovery to address this increased damages 

amount. Then, on February 20, 2015, Plaintiff agreed to limit its lost profits damages claim to $78 

million. Venture now seeks fees related to the costs it incurred during the three week period

between Plaintiff’s $1 billion disclosure and its agreement to limit its lost profits damages to $78 

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million. 

Venture points to two cases, Nassiri, 2011 WL 2977127 (D. Nev. July 21, 2011), and R&R 

Sails, Inc., 251 F.R.D. 520 (S.D. Cal. 2008), which it contends support sanctioning Plaintiff. Both 

of these cases, however, involved the sanctioning of parties who failed to timely and adequately 

supplement their initial disclosures – parties in both cases were awarded fees related to bringing

motions requesting further supplemental damages calculations. The situation here is quite 

different: the Court has already ordered that Plaintiff will be liable to pay reasonable fees relating 

to any duplicative discovery regarding damages, see ECF 194, but Venture also wants additional 

fees because it expended resources to develop its strategy to defeat Plaintiff’s $1 billion damages 

request. Less than a month passed between the disclosure of this damages amount and Plaintiff’s 

limiting of its lost profits damages request to $78 million. Further, Venture does not state why the 

expenses it put forth to address the $1 billion damages amount are now rendered obsolete by 

Plaintiff’s still-substantial $78 million damages request. The Court is therefore not inclined to 

grant any fees requested by Venture related to costs incurred during the period of January 29 to 

February 20. 

The Court will issue its final rulings on these questions at the telephonic conference 

between the parties. The parties should be prepared to discuss the Court’s concerns raised above,

and to schedule all further dates for discovery and motion deadlines before trial. 

IT IS SO ORDERED.

Dated: March 4, 2015

______________________________________

BETH LABSON FREEMAN

United States District Judge

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