On March 17th Silversurfer posted:

I doubt we'll see any new lawsuits for awhile.  DM has a lot on their plate with the seven recent defendants they filed on.  There is a new digEcor filing today (Doc152) where digEcor asks for an extension of time to reply to e.Digital's motion to quash the subpoenas (sp?).  The Court granted them until this Friday.  I uploaded Doc152.

I'm not sure we can draw any conclusions from the fact that Wencor never replied even though they filed for an extention. What might this mean?

Here's the full document 150 which basically says what they did by subponaeing our customers is illegal. You can get the gist by basically skimming and reading the titles and conclusions. I guess what I'm getting at is this.  Could it be that Wencor's lawyers and Woods might be having a problem agreeing on how to reply? I doubt if the subpoenas were their law firms idea in the first place. It gives them more of a black eye than Woods. They are supposed to know better!

For better or worse, they missed the extention deadline!

Larry

 Defendant e.Digital hereby submits its Motion to Quash or Modify Subpoenas or for Protective Order, regarding the subpoenas issued by digEcor to non-parties Malaysia Airlines, Air France, Alitalia Airlines, and Lufthansa.

INTRODUCTION

Defendant digEcor recently issued subpoenas duces tecum to four airlines who are not parties to this case. All four are valued e.Digital customers, and all four possess sensitive commercial information related to e.Digital’s business, which would be of great commercial interest to e.Digital’s competitors. Perhaps cognizant of this fact, digEcor drafted its subpoenas

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so broadly as to effectively require production of every single document— including contracts, correspondence, purchase orders and technical materials— in the possession of these companies that relates in any way to e.Digital.

Despite the unlimited breadth of these requests for sensitive business information pertaining to e.Digital, digEcor did not deem it necessary to give prior notice to e.Digital of the subpoenas to e.Digital’s business partners. This failure violates the federal and local rules governing notice of subpoenas.

digEcor’s subpoenas are impermissible due to digEcor’s failure to give prior notice, the subpoenas’ overbreadth, the undue burden they impose on the non-parties, and the sensitivity of the commercial information they seek. Because of these flaws, the Court should quash the subpoenas, significantly modify them to limit their scope and burden, or enter a protective order governing the use of the resulting production.1

ARGUMENT

I. DIGECOR DID NOT NOTIFY E.DIGITAL PRIOR TO THE ISSUANCE OF ITS THIRD-PARTY SUBPOENAS, IN VIOLATION OF THE FEDERAL AND LOCAL RULES

digEcor issued subpoenas duces tecum to four non-party airlines on February 7, 2008. See Subpoenas, attached as Exhibits 1-4. All of these airlines are valued clients of e.Digital’s, which gives e.Digital a special interest both in safeguarding sensitive information the non-parties may possess, and in protecting its relationships with such companies. However, e.Digital did not receive any prior notice of these subpoenas. Rather, it received the subpoenas after they had

1 As part of its motion, e.Digital also seeks an order allowing e.Digital the opportunity to review and make confidentiality designations of any documents already received by digEcor in response to its four non-party subpoenas.

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already been formally issued. This failure of notice both violates the procedural rules governing the issuance of non-party subpoenas and unfairly prevents e.Digital from protecting its interests and those of its customers against unfair and overly burdensome intrusions.

On the subject of notice of subpoenas, Fed. R. Civ. P. 45(b)(1) requires the following: "If the subpoena commands the production of documents, electronically stored information, or tangible things or the inspection of premises before trial, then before it is served, a notice must be served on each party." The District of Utah has elaborated on this rule as follows:

The notice of issuance of subpoena with a copy of the proposed subpoena that is (i) directed to a nonparty, and (ii) commands production of documents and things or inspection of premises before trial shall be served on each party as prescribed by Fed. R. Civ. P. 45(b)(1). Service under Fed. R. Civ. P. 5(b)(2)(A) shall be made at least five (5) days prior to service of the subpoena on the nonparty. Service on parties under Fed. R. Civ. P. 5(b)(2)(B), (C) or (D) shall be made at least eight (8) days prior to service of the subpoena on the non party.

DUCivR 45-1. digEcor has clearly failed to comply with the explicit notice requirements of these rules.

digEcor’s violation of Rule 45 and its corresponding local rule are not simple technical violations without consequence. Potomac Elec. Power Co. v. Elec. Motor Supply, Inc., 190 F.R.D. 372, 379 (D. Md. 1999) ("compliance with the notice requirement is not a mere formality."). Rather, the failure of notice undermines a fundamental purpose protected by these rules. The Eastern District of Pennsylvania summarized this purpose succinctly:

The risks attached to the misuse of the subpoena power are great. Under this delegation of public power, an attorney is licensed to access, through a non-party with no interest to object, the most personal and sensitive information about a party. By failing to receive prior notice of the information sought from the non-party, a party is deprived of its greatest safeguard under the Rule, i.e., the ability to object to the release of information prior to its disclosure.

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Spencer v. Steinman, 179 F.R.D. 484, 489 (E.D. Pa. 1998).

If e.Digital’s clients are forced to respond to digEcor’s surprise subpoenas, digEcor will be rewarded for its failure to follow these rules, and for forcing e.Digital to scramble to object to the subpoenas before the non-parties should respond. e.Digital is entitled to prior notice of all third-party subpoenas, but in a case like this, where the subpoenas seek highly sensitive commercial information from companies that share close business relationships with e.Digital, that interest is heightened, and is pivotal to e.Digital’s position in this case. digEcor should not be permitted to gain from its violations of the federal and local rules, and its subpoenas should therefore be quashed.

II. DIGECOR’S SUBPOENAS SHOULD BE QUASHED OR MODIFIED DUE TO THEIR BREADTH AND THE BURDENS THEY IMPOSE

A. e.Digital Has Standing to Challenge digEcor’s Non-Party Subpoenas, Due to its Rights in the Requested Documents

While generally only the recipient of a non-party subpoena may challenge the subpoena, the federal courts have carved out an important exception "where the party seeking to challenge the subpoena has a personal right or privilege with respect to the subject matter requested in the subpoena." Smith v. Midland Brake, Inc., 162 F.R.D. 683, 685 (D. Kan. 1995); see also Abbott Diabetes Care, Inc. v. Roche Diagnostics Corp., Slip Copy, 2007 WL 2255236, *1, n. 1 (N.D. Cal. 2007) (stating that the federal rules "allow[] a party to file a motion to quash a third-party subpoena so long as the party demonstrates some right or interest in the documents requested.").

e.Digital has strong rights in the information sought from its clients. Every request in the subpoenas seeks documents related to e.Digital, many of which contain sensitive commercial information related to its business models, its relationships with its customers, its technology,

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and its pricing structure. For example, request number 17 requests the quantity of eVU’s purchased by each customer, the price per unit, and all content related to such sales. e.Digital has refused to provide this information based on several objections. That dispute is before the court in digEcor’s pending Motion to Compel. digEcor has determined that it may most easily obtain this sensitive business information by sidestepping this ongoing dispute and simply forcing non-parties to divulge the information. Nearly every request seeks documents that digEcor has requested from e.Digital, but to which e.Digital has stated well-founded objections. digEcor’s subpoenas represent a simple means of outflanking the entire discovery system, by forcing disinterested third parties to disclose confidential business information that cannot be extracted within the confines of discovery.

If digEcor is permitted to obtain proprietary business information using the semi-official apparatus of subpoenas, without having given prior notice to e.Digital of its intention to do so, e.Digital will be badly prejudiced in this litigation and, what is worse, injured in its competitive market position. e.Digital’s strong interests in the information digEcor seeks from e.Digital’s customers give e.Digital standing to object to these subpoenas. Therefore, this motion should be considered on its merits, as discussed below. See Richards v. Convergys Corp., Slip Copy, 2007 WL 474012, *1 (D. Utah 2007) (finding that defendant had standing to challenge non-party subpoenas seeking his personnel records); Transcor, Inc. v. Furney Charters, Inc., 212 F.R.D. 588, 590-91 (D. Kan. 2003) (holding that party had standing to object to non-party subpoena seeking its financial information); Broadcort Cap. Corp. v. Flagler Securities, Inc., 149 F.R.D. 626, 628 (D. Colo. 1993) (finding that defendants had standing to object to non-party subpoena as "persons affected by the subpoena.").

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B. DigEcor’s Subpoenas Should Be Quashed As Overly Broad, Unduly Burdensome, and Seeking Disclosure of Confidential Commercial Information.

Rule 45(c)(3)(A)(iv) of the Federal Rules of Civil Procedure requires a court to quash or modify a subpoena that "subjects a person to undue burden." Further, the rule states that subpoenas may be quashed or modified where they require: "disclosing a trade secret or other confidential research, development, or commercial information." Fed. R. Civ. P. 45(c)(3)(B)(i). Federal courts consistently enforce these rules to quash or modify subpoenas that are unduly burdensome, (see Linder v. Calero-Portocarrero, 1995 WL 901765, *1 (D.D.C. 1995)), unlimited in time and scope, (see Convergys Corp., Slip Copy, 2007 WL 474012, *1 (D. Utah 2007)), or which require disclosure of confidential information. See Mannington Mills, Inc. v. Armstrong World Indus., 206 F.R.D. 525 (D. Del. 2002). digEcor’s non-party subpoenas are subject to all three of these grounds for objection.

1. The Four Subpoenas Impose Inordinate Burdens on the Non-Party Recipients, and Are not Limited in Time or Scope.

To determine whether a subpoena is unduly burdensome, Tenth Circuit courts generally balance several factors, including the relevance of the requested information, the requesting party’s need for the information, the breadth of the requests, and the burden imposed by the subpoena. See The Goodyear Tire & Rubber Co. v. Kirk’s Tire & Auto Servicenter of Haverstraw, Inc., 211 F.R.D. 658, 662-63 (D. Kan. 2003). If the subpoena is directed toward a non-party, like those at issue here, the "status of a person or entity as a non-party is a factor which weighs against disclosure." Echostar Comm’s. Corp. v. News Corp. Ltd., 180 F.R.D. 391, 394 (D. Colo. 1998).

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All of these factors, combined with the heightened scrutiny applied on non-party subpoenas, weigh against digEcor’s subpoenas. The most pronounced are digEcor’s "need" for the requested documents, the breadth of its requests, and the burden imposed on the non-parties. First, digEcor does not "need" the information requested of the non-parties, since all of the sought-for documents may be obtained from e.Digital, assuming they are properly a part of this case. Almost every one of digEcor’s requests to the non-parties duplicates a request made to e.Digital in the normal course of discovery. For example, digEcor asks each airline to provide every communication it has ever had with e.Digital regarding any digital video player. See Subpoenas, request 5. Yet it has already requested from e.Digital "All documents reflecting, memorializing or pertaining to each and every communication [e.Digital] has made to solicit sales of the eVU or any content related thereto." See digEcor’s First Set of Interrogatories and Requests for Production, Request No. 42, attached as Exhibit 5.

Nearly every one of digEcor’s requests to the non-parties duplicates a request it has already made to e.Digital. Thus, as to every request, digEcor has received all possible responsive documents, or e.Digital has made valid objections. The duplication of these requests will avail digEcor only to receive documents it already has, or documents it is not entitled to under the regular rules of discovery. digEcor simply does not "need" the documents requested of the non-parties, because all requests pertain to documents that would also be in the possession of e.Digital, and could therefore be obtained from e.Digital, assuming they are appropriately subject to discovery. Given the duplicity of the subpoena requests, one likely purpose of these subpoenas is that of harassing e.Digital’s loyal customers, which is another valid reason for

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quashing or modifying a non-party subpoena. Graham v. Casey’s General Stores, 206 F.R.D. 251, 256 (S.D. Ind. 2002).

More importantly, digEcor’s requests to the non-parties are exceedingly broad. The subpoenas do not offer any limitation on time and scope, but aggregately pose the task of producing every single document related in any way to e.Digital, on any subject and at any point in time. See Subpoenas, requests 5, 7, 8, 10, 11, 18. Indeed, in case any such document might have fallen through the cracks in all of the combined requests, digEcor includes a final catch-all request, seeking every single document relating in any way to the eVU or e.Digital. See id., request 20. In short, in order to comply with the subpoenas, each non-party e.Digital customer must produce every single document it has ever received from or sent to e.Digital, and every single document that mentions e.Digital or its products, or otherwise pertains in any way to e.Digital or its products. This is the definition of "overly broad," especially when considered in light of the fact that all such documents have already been requested from e.Digital. Convergys Corp., Slip Copy, 2007 WL 474012, *1 (D. Utah 2007) (holding that "a blanket request for all documents regarding [Plaintiff’s] employment is overbroad.").

Not only does this unlimited scope give digEcor access to great quantities of documents which are certainly not relevant to these proceedings (without the inconvenience of letting e.Digital filter and object based on their irrelevance), it also imposes a crushing burden on the non-parties. Each airline, having forged relationships with e.Digital partly due to the efficiency and convenience of working with e.Digital, must now comb its files, electronic media, and document databases for every document it has ever received or generated regarding e.Digital. Given that e.Digital has close and longstanding relationships with some of the non-parties, this

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task could produce a great volume of documents, most of which would bear no relevance whatsoever to this dispute.

2. digEcor’s subpoenas inappropriately seek confidential commercial information.

As stated above, digEcor’s subpoenas seek documents on a broad range of topics, many of which are extremely sensitive in the climate in which e.Digital and digEcor compete with one another. If a company in this industry were to draft a list of things it would like to know about its competitors in order to gain a business advantage over them, the list would look very similar to the requests set forth in these non-party subpoenas. Such a wish list would likely include access to the other party’s contracts with its customers, (see Subpoenas, Requests 11, 12), all financial data related to the competitor’s products, including pricing, profit margins, and cost information, (see Id., Requests 17, 18), all documents describing the company’s relationships with its customers, (see Id., Request 10), and all correspondence and promotional communications sent to customers. See Id., Requests 3-7.

While the mere sensitivity of information does not alone prohibit its discovery in litigation, the Federal Rules of Civil Procedure provide for protection of such information when subpoenaed from non-parties, where the interested party lacks ability to properly object and withhold or move to protect sensitive and privileged documents. See Fed. R. Civ. P. 45(c)(3)(B)(i) (permitting protection against subpoenas that compel production of "confidential research, development, or commercial information."). Federal courts have defined "commercial information" to include "information which, if disclosed would cause substantial economic harm

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2 The advisory committee makes clear that the protection offered in Rule 45(c)(3)(B)(i) is available both to the person subject to the subpoena and to those others who are "affected by" the subpoena, extending the commercial information protection to non-subpoenaed parties whose information is at stake. See Fed. R. Civ. P. 45, 1991 Cmte. Notes.

to the competitive position of the entity from whom the information was obtained."2 Transcor, Inc., 212 F.R.D. 588 at 592. This protection is heightened where the subpoenaed information will be disclosed to a competitor. See Falicia v. Advanced Tenant Serv’s., Inc., 235 F.R.D. 5, *7 (D.D.C. 2006).

In applying this rule, where good cause is shown, a court "may make any order which justice requires including that the disclosure or the discovery not be had and/or that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a designated way." Insulate America v. Masco Corp., 227 F.R.D. 427, 432 (W.D.N.C. 2005) (quashing subpoenas seeking third-party business and financial information) (citation and ellipsis omitted); see also Anderson, Greenwood & Co. v. Nibsco Supply, Inc., 1996 WL 377205 (W.D.N.Y. 1996) (modifying subpoena seeking confidential business information from competitor).

If e.Digital’s client airlines are forced to disclose all documents they possess pertaining in any way to e.Digital, e.Digital’s competitive position in the marketplace will be put in serious jeopardy. The fact that such documents would be produced directly to digEcor severely enhances this concern. In light of this risk, and pursuant to the clear authority of Rule 45(c)(3)(B)(i), e.Digital moves the Court to quash the four non-party subpoenas, modify them to remove the requests for all sensitive commercial information, or impose a strict protective order limiting review of such documents solely to digEcor’s counsel.

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CONCLUSION

If digEcor believes that the non-parties in question might possess a specific kind or category of documents that are relevant to this case, it is permitted under the rules to request them. However, the law is clear that "fishing expeditions" are not allowed, especially in the instance of subpoenas served on non-parties. See Convergys Corp., Slip Copy, 2007 WL 474012, *1 (D. Utah 2007); Jackson v. AFSCME Local 196, 246 F.R.D. 410, 415 (D. Conn. 2007). digEcor has served, without notice, and on four of e.Digital’s valued customers, a set of requests seeking every document in the e.Digital universe in the hopes of finding anything at all relevant to the limited facts in question here. These requests impose an enormous burden, are far too broad in scope and time, and require the disclosure of confidential commercial information. For all of these reasons, the subpoenas should be quashed or substantially modified, or an acceptable protective order put in place. DATED this 28th day of February, 2008.

/s/ Ryan B. Bell

James S. Jardine

Samuel C. Straight

Ryan B. Bell

Attorneys for Defendant e.Digital Corporation

970926

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CERTIFICATE OF SERVICE

I hereby certify that on this 28th day of February, 2008, I electronically filed the foregoing MEMORANDUM IN SUPPORT OF MOTION TO QUASH OR MODIFY SUBPOENAS OR FOR PROTECTIVE ORDER with the Clerk of Court using the CM/ECF System which sent notification of such filing to the following:

David W. Tufts

DURHAM JONES & PINEGAR

111 E. Broadway, Suite 900

Salt Lake City, Utah 84111

/s/ Lisa Bonnell

970926

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