Cloudera, Inc. v. Databricks, Inc.
| Decision Date | 30 August 2021 |
| Docket Number | 21-cv-01217-HSG |
| Court | U.S. District Court — Northern District of California |
| Parties | CLOUDERA, INC., Plaintiff, v. DATABRICKS, INC., et al., Defendants. |
ORDER DENYING MOTION TO STAY AND GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS
Re: Dkt. Nos. 26, 57
Pending before the Court is Defendant Databricks, Inc. (“Databricks”)'s motion to dismiss Plaintiff Cloudera, Inc. (“Cloudera”)'s complaint, Dkt Nos. 26 (“Mot”), 46 (“Opp.”), 48 (“Reply”), and its motion to stay the case pending arbitration of Cloudera's claims against Defendant Richard Doverspike (“Doverspike”), Dkt Nos. 26, 46, 48. The parties submitted supplemental briefing on the motion to stay to address new allegations and subsequent proceedings. See Dkt. Nos. 91, 93, 95. Having carefully considered the parties' arguments, the Court DENIES the motion to stay and GRANTS IN PART and DENIES IN PART the motion to dismiss.
On January 8, 2021, Cloudera filed an initial complaint against Databricks and Doverspike in the District Court of the Northern District of Georgia. Dkt. No. 1. On January 13, 2021, Doverspike moved to compel Cloudera to arbitrate its claims against him and stay the remaining proceedings against him. Dkt. No. 20. Doverspike argued that Cloudera entered a binding Mutual Arbitration Agreement (“MAA”) requiring claims arising out of or relating to his employment to be submitted to JAMS. Dkt. No. 20-1 at 3, 16. The next day, Databricks moved to stay the case pending the outcome of arbitration between Cloudera and Doverspike, or alternatively requested to transfer the case to the Northern District of California. Dkt. No. 26.
On January 27, 2021, Cloudera filed its first amended complaint alleging four causes of action against Databricks and five causes of action against Doverspike. Dkt. No. 49 (“FAC”) ¶¶ 150-235. Specifically, Cloudera alleges that Databricks and Doverspike violated the federal Defend Trade Secrets Act (“DTSA”) and the Georgia Trade Secrets Act (“GTSA”). Id. at ¶¶ 178- 227. Cloudera also brings two tortious contract interference claims against Databricks alleging that it “induced Doverspike and dozens of other employees to breach their contractual obligations with Cloudera to gain access to Cloudera's confidential, proprietary, and trade secret information” and “induced [John] Nieters and dozens of other Cloudera employees to breach their contractual obligations with Cloudera to recruit current Cloudera employees, such as Doverspike.” Id. at ¶¶ 165, 173. Lastly, Plaintiff alleges that Doverspike violated the Computer Fraud and Abuse Act and the Georgia Computer Systems Protection Act and breached the non-disclosure and customer non-solicitation provisions of the Proprietary Information and Inventions Agreement & Non-Compete Agreement (“PIIA”). Id. at ¶¶ 150-61, 220-35.
On February 10, 2021, Databricks moved to dismiss the FAC. Dkt. No. 57. On February 18, 2021, the Georgia district court granted Doverspike's motion to compel arbitration and stayed Cloudera's claims against Doverspike pending the outcome of arbitration. Dkt. No. 59 at 18. Additionally, it granted Databricks's motion to transfer the claims against it to the Northern District of California and deferred ruling on Databricks's motion to stay. Id.
The case was assigned to the undersigned on February 24, 2021. Dkt. No. 65. On February 26, 2021, JAMS began arbitration proceedings between Cloudera and Doverspike. Opp. at 5. On March 17, 2021, Databricks re-noticed its motion to dismiss and its motion to stay. Dkt. Nos. 71-72.
A district court's “power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). To determine whether a Landis stay is warranted, courts consider: (1) “the possible damage which may result from the granting of a stay, ” (2) “the hardship or inequity which a party may suffer in being required to go forward, ” and (3) “the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay.” CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962) (citing Landis, 299 U.S. at 254-55). “[I]f there is even a fair possibility that the stay for which [the requesting party] prays will work damage to [someone] else, ” then the party seeking a stay “must make out a clear case of hardship or inequity in being required to go forward.” Landis, 299 U.S. at 255. A district court's decision to grant or deny a Landis stay is a matter of discretion. Dependable Highway Express, Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007).
Databricks moves to stay the case in its entirety pending the ongoing JAMS arbitration between Cloudera and Doverspike. Databrick contends that there is a significant risk of inconsistent rulings if this case proceeds before the Doverspike arbitration is complete, and that the arbitration will simplify legal and factual issues. Cloudera opposes any stay because, among other reasons, it “faces significant potential harm” from an indefinite stay and because all claims against Databricks will proceed regardless of the outcome in the arbitration. Dkt. No. 93 at 6-7, 11.
As to the first factor, Databricks argues that Cloudera will not be harmed by a stay because the JAMS arbitration “has been proceeding diligently for many months and is likely to conclude in a reasonable time frame.” Dkt. No. 91 at 11. Databricks also argues that Cloudera's two-year delay in filing suit “undermines” any asserted harm from a “short stay.” Id. To support its claim of “significant potential harm, ” Cloudera contends that a stay creates “a risk of spoilation by Databricks and the approximately 20 or more employees that violated their contracts and misappropriated Cloudera's trade secrets, ” that injunctive relief claims are pending, and that Databricks requests an “indefinite and lengthy stay.” Dkt. No. 93 at 6-8. Cloudera argues that its forensic examination showed that former employees “took active measures to destroy, delete, overwrite, and otherwise alter forensic and electronic evidence in the days and weeks immediately before the devices . . . were to be surrendered to Cloudera's forensic expert.” Id. at 6 (citing FAC ¶¶ 136-41). It further argues that Databricks recently “restarted its campaign to poach Cloudera employees and misappropriate its trade secrets.” Id. at 8 (citing FAC ¶¶ 144-45).
Though Databricks itself is obligated to preserve evidence, the Court finds that Cloudera has demonstrated a fair possibility of harm due to the potential for loss of evidence based on former employees' actions. For example, Cloudera argues that one employee “went so far as to overwrite his laptop's hard drive with hundreds of copies of the movie ‘WALL-E.'” Id. at 6 (citing FAC ¶ 137). Additionally, the Court is unpersuaded by arguments relating to any purported delay given that Cloudera filed suit shortly after learning that Databricks allegedly “resumed” its unlawful practices. See FAC ¶ 144.
Given that Cloudera has demonstrated a “fair possibility” of harm, Databricks is required to “make out a clear case of hardship or inequity in being required to go forward.” See Landis, 299 U.S. at 255. The Court finds it has not done so. Databricks contends there is a significant risk of inconsistent rulings on overlapping questions of law and fact. Dkt. No. 91 at 5. Cloudera responds that “Databricks fails to appreciate the scope of Cloudera's claims against it.” Dkt. No. 93 at 9. As discussed below, Plaintiff alleges Databricks is vicariously liable for the alleged misappropriation of several other departing employees apart from Doverspike, including at least three named employees. See, e.g., FAC ¶¶ 187, 195, 214. And regardless of the amount of overlap, as the Court advised during the hearing, inconsistent rulings may result even if the Court were to grant the stay. For the same reason, the Court finds that the likelihood of any simplification of the case is slight. Accordingly, Databricks also has not shown that a stay would promote the orderly course of justice. The Court finds that a stay is not warranted under the circumstances and DENIES the motion to stay. III.MOTION TO DISMISS
A. Legal Standard
Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). A defendant may move to dismiss a complaint for failing to state a claim upon which relief can be granted under Rule 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff need only plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when a plaintiff pleads “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
In reviewing the plausibility of a complaint, courts “accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nevertheless, courts do not “accept as...
To continue reading
Request your trial