Bogard Constr., Inc. v. Oil Price Info. Serv., LLC

Decision Date31 May 2022
Docket NumberCase Nos. 22-mc-80104-JSC,22-mc-80107-JSC
Citation604 F.Supp.3d 895
Parties BOGARD CONSTRUCTION, INC., et al., Plaintiffs, v. OIL PRICE INFORMATION SERVICE, LLC, Defendant.
CourtU.S. District Court — Northern District of California

Adam L.D. Stempel, Covington & Burling LLP, Washington, DC, Jeffrey Michael Davidson, Amy S. Heath, Covington & Burling LLP, San Francisco, CA, for Plaintiff SK Energy Americas Inc.

Adam L.D. Stempel, Covington & Burling LLP, Washington, DC, for Plaintiff Vitol Inc.

Matthew Stephen Lee Cate, Seth D. Berlin, Pro Hac Vice, Ballard Spahr LLP, Washington, DC, Colin Kass, Proskauer Rose LLP, Washington, DC, for Defendant.

ORDER RE: OPIS SUBPOENAS
Re: Dkt. Nos. 1, 4, 22

JACQUELINE SCOTT CORLEY, United States District Judge In the underlying putative antitrust class action, Plaintiffs allege that Defendants Vitol Inc. and SK Energy conspired to manipulate the benchmark price published by non-party Oil Price Information Servce, LLC (OPIS). See In Re: California Gasoline Spot Market Antitrust Litigation , No. 20-cv-3131 JSC (N.D. Cal.). Plaintiffs and Defendants in that action issued document and (in the case of Defendants) deposition subpoenas to OPIS. OPIS refused to comply. Now pending before the Court are Plaintiffs’ and Defendantsmotions to compel OPIS to comply with the subpoenas, and OPIS's counter-motions to quash. (No. 22-mc-80104, Dkt. Nos. 1, 4, 22; No. 22-mc-80107, Dkt. No. 1.) After carefully considering the parties’ written submissions, and having had the benefit of oral argument on May 11, 2022, the Court GRANTS the motions to compel and DENIES the motions to quash. This Court has subject matter jurisdiction of the underlying action, Rule 45 does not require Plaintiffs to pay OPIS a substantial licensing fee for published material, and the Maryland Shield Law governs the privilege dispute and does not bar production of OPIS's unpublished material.

BACKGROUND

The underlying complaint's allegations are recited in the Court's order denying Defendantsmotions to dismiss. In re California Gasoline Spot Mkt. Antitrust Litig. , No. 20-CV-03131-JSC, 2021 WL 1176645, at *1 (N.D. Cal. Mar. 29, 2021). OPIS resists the subpoenas on three grounds: (1) the Court lacks subject matter jurisdiction of the underlying California law antitrust action; (2) Rule 45 requires Plaintiffs to pay market rate for OPIS's published information; and (3) California's Shield Law governs and bars production of OPIS's unpublished information.

I. Subject Matter Jurisdiction

OPIS first argues that this Court does not have subject matter jurisdiction of the underlying action because the Court dismissed the Sherman Act claim—the only federal claim—on standing grounds. Subject matter jurisdiction, however, is now premised on the Class Action Fairness Act (CAFA), not federal question jurisdiction. (Dkt. No. 16, Ex. A). "Federal jurisdiction under CAFA has three elements: (1) there must be minimal diversity of citizenship between the parties, (2) the proposed class must have at least 100 members and (3) the amount in controversy must ‘exceed[ ] the sum or value of $5,000,000.’ " Kuxhausen v. BMW Fin. Servs. NA LLC , 707 F.3d 1136, 1139 (9th Cir. 2013) (citing 28 U.S.C. § 1332(d) ). There is no dispute that this case satisfies those elements.

Next, OPIS argues that the "local controversy" exception to CAFA jurisdiction deprives this Court of subject matter jurisdiction of the entire case. (Dkt. No. 40 at 6.) OPIS is wrong. The Ninth Circuit has squarely held that CAFA's "local controversy" exception is not jurisdictional. Visendi v. Bank of Am., N.A. , 733 F.3d 863, 869 (9th Cir. 2013). Thus, this Court has subject matter jurisdiction.

Finally, OPIS insists that the Court must decline to exercise its subject matter jurisdiction pursuant to the "local controversy" exception to CAFA jurisdiction and therefore dismiss the entire case. See 28 U.S.C. § 1332(d)(4). But it fails to show that a non-party has any standing to raise whether the Court should exercise its subject matter jurisdiction. Its reliance on U.S. Catholic Conference v. Abortion Rights Mobilization, Inc. , 487 U.S. 72, 108 S.Ct. 2268, 101 L.Ed.2d 69 (1988), is misplaced. There the court held that "if a district court does not have subject-matter jurisdiction over the underlying action, and [ ] process was not issued in aid of determining that jurisdiction, then the process is void." Id. at 76, 108 S.Ct. 2268. And further, that the non-party subject to the process can challenge the lack of subject matter jurisdiction. Id. This Court has subject matter jurisdiction. Thus, U.S. Catholic Conference does not support the right of non-party OPIS to challenge the Court's exercise of its subject matter jurisdiction.

OPIS's emphasis on the local controversy exception's mandatory language—the court "shall decline to exercise jurisdiction" if the local controversy requirements are met, 28 U.S.C. § 1332(d)(4) —is no more persuasive. OPIS still does not have standing to assert—and attempt to prove—that the exception applies. "Although CAFA carves out exceptions to the district court's exercise of jurisdiction, the obligation to raise and prove that those exceptions apply—even the mandatory ‘local controversy’ and ‘home-state controversy’ ones—rests on the party seeking remand." Kuxhausen , 707 F.3d at 1140 n.1 ; see also Kendrick v. Conduent State & Loc. Sols., Inc. , 910 F.3d 1255, 1260 (9th Cir. 2018) (observing that the purpose of the local controversy exception is to ensure that class actions with a local focus remain in state court rather than being removed to federal court because state courts have a strong interest in resolving local dispute). This case was filed in this District, and after dismissal of the federal claim, no party to this action sought remand. That is the end of the matter.

II. RULE 45 SUBPOENA
A. Published Information

Plaintiffs in the underlying action seek transactional data showing gasoline purchases on the (1) spot market, (2) rack market, and (3) retail market from January 1, 2008 through December 31, 2020. OPIS is willing to produce the data provided the parties pay what OPIS contends it would charge any customer seeking such data.

If a Rule 45 subpoena requests "commercial information," a court may quash or modify the subpoena. Fed. R. Civ. P. 45(d)(3)(B)(i). In the alternative, the court may order production of the commercial information under specified conditions if the requesting party "(i) shows a substantial need for the testimony or material that cannot be otherwise met without undue hardship; and (ii) ensures that the subpoenaed person will be reasonably compensated." Fed. R. Civ. P. 45(d)(3)(C). There is no dispute that the data the parties seek is commercial information protected by Rule 45(d)(3)(B)(i). The question, then, is whether the Court should nonetheless order it produced under conditions and with the payment of reasonable compensation.

1. Substantial Need or Undue Hardship

Plaintiffs have shown a substantial need for the data. The data is relevant, indeed critical, to Plaintiffs’ damages analysis. By comparing the spot market data from before the alleged price-fixing conspiracy (the clean period) to the period during and after, Plaintiffs intend to show how Defendants’ alleged manipulation of the spot market impacted the prices paid by the putative class. They have met their burden of showing substantial need. See In re W. States Wholesale Nat. Gas Antitrust Litig. , No. 03-CV-01431 PMP-PAL, 2009 WL 10692733, at *15 (D. Nev. Aug. 14, 2009). They have not, however, offered evidence explaining the need for data going back to 2008. At oral argument they offered to submit a declaration from their expert identifying more precisely the data needed and why. They shall do so.

The Court need not find the substantial license fee is an undue hardship as Rule 45(d)(3)(C)(i) contains alternatives: the court may order production under specified conditions if the requesting party "shows a substantial need for the testimony or material that cannot be otherwise met without a substantial hardship." Fed. R. Civ. P. 45(d)(3)(C)(i) (emphasis added).

2. Reasonable Compensation

The primary dispute is what is reasonable compensation for production of this data. OPIS contends Plaintiffs should pay what any customer of OPIS would pay for the data. Plaintiffs respond that they should be ordered to pay what it costs OPIS to comply with the subpoena request, not what a customer would pay. The Eleventh Circuit is the only Court of Appeals to have addressed whether "reasonable compensation" in Rule 45(d)(3)(C)(ii) means paying the producing party what the information would fetch in the open market. It held that it did not.

The gain to the party seeking confidential information through a subpoena is not the measure of compensation reasonably owed to the owner of that information. The measure is the loss to the owner of the property. If the enforcement of a subpoena under Rule 45(c)(3)(B) causes no loss, then the amount of compensation reasonably owed will be zero. If the loss to the owner of the information is substantial, then so will be the amount of compensation even if the gain to the taker of the information is slight.

Klay v. All Defendants , 425 F.3d 977, 985 (11th Cir. 2005). Applying this "loss to the owner" interpretation, the court held that the requesting party did not have to pay the license fee sought by the producing American Medical Association (AMA) because the AMA did not suffer any loss by providing the data to the requesting party. Id. at 985-86 ; see also United States Willis v. SouthernCare, Inc. , No. CV 410-124, 2015 WL 5604367, at *11 (S.D. Ga. Sept. 23, 2015) (holding that in light of protective order that limited use of third party's data to the underlying litigation, "reasonable compensation" under Rule 45 meant compensating third party for out-of-pocket expenses but no more was required since third party did not suffer loss to its property...

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