Electronically FILED by Superior Court of California, County of Los Angeles on 06/09/2020 11:09 AM Sherri R.

Carter, Executive Officer/Clerk of Court, by A. Miro,Deputy Clerk

1 LYNNE C. HERMLE (STATE BAR NO. 99779)

lchermle@orrick.com
2 ORRICK, HERRINGTON & SUTCLIFFE LLP
1000 Marsh Road
3 Menlo Park, CA 94025-1015
Telephone: +1 650 614 7400
4 Facsimile: +1 650 614 7401
5 KAREN G. JOHNSON-MCKEWAN (STATE BAR NO. 121570)
kjohnson-mckewan@orrick.com
6 MICHAEL D. WEIL (STATE BAR NO. 209056)
mweil@orrick.com
7 ORRICK, HERRINGTON & SUTCLIFFE LLP
The Orrick Building
8 405 Howard Street
San Francisco, CA 94105-2669
9 Telephone: (415) 773-5700
Facsimile: (415) 773-5759
10
Attorneys for Defendant
11 Netflix, Inc.
12
SUPERIOR COURT OF THE STATE OF CALIFORNIA
13
COUNTY OF LOS ANGELES, CENTRAL DISTRICT
14

15
VIACOM INTERNATIONAL INC., a Case No. 18STCV00496
16 Delaware Corporation,
REDACTED FOR PUBLIC FILING
17 Plaintiff,
NETFLIX, INC.’S OPPOSITION TO
18 vs. PLAINTIFF VIACOM
INTERNATIONAL INC.’S MOTION
19 NETFLIX, INC., a Delaware corporation, TO COMPEL FURTHER RESPONSES
TO SPECIAL INTERROGATORIES
20 Defendant. (SET ONE)
21 Date: June 22, 2020
Time: 8:30 AM
22 Dept.: 17
Judge: Jon R. Takasugi
23
Complaint Filed: October 5, 2018
24
RES ID: 910279936135
25

26

27 REDACTED FOR PUBLIC FILING

28

4130-4316-1379
NETFLIX’S OPPOSITION TO VIACOM’S MTC FURTHER RESP. TO SROGS SET ONE
 1 I. INTRODUCTION.
2 Viacom International Inc. (“Viacom”) alleges that Netflix interfered with Momita
3 SenGupta’s non-competition and fixed-term employment contract by hiring her away from Viacom
4 before the end of her (illegal) agreement. Based only on this allegation, Viacom not only seeks
5 damages it allegedly suffered as a result of Ms. SenGupta’s early departure, but also asks the court
6 for a permanent injunction preventing Netflix from hiring any of its employees who are subject to
7 fixed-term employment contracts.
8 Although Viacom’s claims arise exclusively from Ms. SenGupta’s departure, Viacom now
9 seeks to compel Netflix to disclose the private compensation information of four other employees
10 who left Viacom to join Netflix: Phil Rynda, James Kukucka, Megan Casey, and Robert Natter.
11 Viacom’s complaint does not, however, even mention these individuals, and Viacom’s verified
12 interrogatory answers do not allege that it suffered any harm from their departures. These
13 employees, on the other hand, have legitimate privacy concerns regarding the disclosure of their
14 personal financial information that far outweigh Viacom’s relevance arguments.
15 Viacom posits that it can measure the “value” it loses when under-contract employees leave
16 early by calculating the difference between its departed employees’ below-market compensation at
17 Viacom and the sum Netflix pays those same people. However, what Netflix chooses to pay its
18 own employees has no bearing on Viacom’s harm, and Viacom cites no authority suggesting
19 otherwise. In any event, as none of these individuals are at issue in this case, their compensation
20 information sheds no light on whatever harm Viacom can conjure for its loss of Ms. SenGupta.
21 The interrogatories at issue in Viacom’s motion are wholly untethered to the allegations in
22 its operative pleading or, for that matter, any coherent argument that could justify the disclosure of
23 private financial information belonging to third parties. The Court should deny Viacom’s motion.
24 II. FACTUAL AND PROCEDURAL BACKGROUND.
25 A. Momita SenGupta.
26 Momita SenGupta, a production management executive, signed her first non-competition
27 and fixed-term employment contract with Viacom in June 2002. Fields Decl. Ex. 2 (SenGupta
28

4130-4316-1379 -1-
NETFLIX’S OPPOSITION TO VIACOM’S MTC FURTHER RESP. TO SROGS SET ONE
 1 2002 Contract).1 From that date, Ms. SenGutpa was bound by consecutive and overlapping fixed-

2 term employment contracts lasting until April 2020. Exs. 2-10 (SenGupta 2002 - 2017 Contracts);

3 Ex. 1 (Compl.) ¶ 19. Each contract contains an illegal Non-Competition provision prohibiting Ms.

4 SenGupta from competing with Viacom during the Contract Period or for 18 months after her

5 resignation or termination for cause (whichever is earlier). Exs. 2-10 (SenGupta 2002 - 2017

6 Contracts) § 6(a). The contracts also contain a “Resignation in Breach” provision that characterizes

7 Ms. SenGupta’s departure before the end of the contract term as a breach of contract. Exs. 6-10

8 (SenGupta 2008 - 2017 Contracts) § 12.2 In September 2018, after working for Viacom for 23

9 years, Ms. SenGupta resigned from her position at Viacom for a better opportunity at Netflix.
10 B. Viacom’s Complaint and Damages Theories Narrowly Focus on Momita
SenGupta’s Departure.
11

12 Viacom asserts two causes of action, both of which arise solely from Netflix’s hiring of Ms.
13 SenGupta from Viacom. In its First Cause of Action—Intentional Interference with Contractual
14 Relations—Viacom alleges that Netflix tortiously interfered with Ms. SenGupta’s 2017 fixed-term
15 employment contract (the “Agreement”) by “induc[ing] and encourag[ing]” Ms. SenGupta to
16 “breach her Employment Agreement with Viacom in order to accept employment at Netflix.”
17 Ex. 1 (Compl.) ¶ 18; see also id. ¶¶ 24-29. Viacom further alleges that Netflix “deliberately and
18 maliciously acted to lure Viacom’s executive [Ms. SenGupta] despite her contractual obligation to
19 exclusively provide services to Viacom and not to compete against Viacom until at least April 30,
20 2020.” Id. ¶ 18.
21 Viacom’s Second Cause of Action for Unfair Competition in violation of Business and
22 Professions Code §§ 17200 et. seq., is based entirely on the facts underlying its First Cause of
23 Action, i.e., Netflix’s hiring of Ms. SenGupta. Id. ¶ 32 (“By the foregoing alleged acts, Netflix has
24 perpetrated business acts and practices that are unlawful and unfair in violation of California’s
25
1
26 All exhibit references are to the Declaration of Alexander Fields filed in support of this opposition.
2
This “Resignation in Breach” clause effectively gave Viacom control over whether Ms. SenGupta could
27 leave her position for any reason while the contract was in effect. By contrast, Viacom gave itself the right
to terminate Ms. SenGupta’s contract at any time for any reason or no reason at all. See, e.g., Ex. 10 (the
28 Agreement) § 11(a) (“Termination Without Cause. The Company may terminate your employment under
this Agreement without Cause at any time during the Contract Period by written notice to you.”).
4130-4316-1379 -2-
NETFLIX’S OPPOSITION TO VIACOM’S MTC FURTHER RESP. TO SROGS SET ONE
 1 Unfair Competition Law, Cal. Bus. & Prof. Code §§17200 et seq.”); ¶ 34 (“The unlawful and unfair

2 practices of Netflix, as described above…”). Viacom seeks “a permanent injunction against

3 Netflix, prohibiting Netflix from hiring any Viacom employees with term employment agreements

4 prior to the expiration of those terms.” Id. ¶ 37 (emphasis added). Viacom’s Complaint does not,

5 however, identify any Viacom employee other than Ms. SenGupta whom Netflix hired, let alone

6 explain how that hiring caused it any harm. Indeed, the Complaint focuses exclusively on the harm

7 Viacom allegedly suffered because Netflix hired Ms. SenGupta. Id. ¶ 29 (“Viacom has been

8 damaged in forms including, but not limited to, replacing Sengupta and restructuring and steadying

9 the Production Management and Operations Group to account for her departure, lost and delayed
10 business opportunities and initiatives, and the destabilization that occurs to a business when other
11 contractual employees observe an executive flagrantly ignoring her obligations”).
12 Similarly, when asked in interrogatories about the harm Viacom suffered as a result of
13 Netflix’s alleged conduct,3 Viacom stated only that Netflix had hired Ms. SenGupta.4 Although
14 Viacom answered the interrogatory by asserting that
15 Viacom did not identify
16 any employee other than Ms. SenGupta who had departed Viacom for Netflix, or any alleged
17 damages resulting from any other employee’s departure.5
18
19 3
Netflix propounded the following interrogatory: “Describe ANY injuries YOU contend YOU have suffered
that are RELATED to or are the result of NETFLIX’s unlawful and unfair business acts and practices in
20 violation of California’s Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq., as alleged in the
second cause of action in the COMPLAINT, including ANY facts, DOCUMENTS, or testimony in support
21 of YOUR contention.” Ex. 11 (11/14/2019 Supp. Resp. to SROGs, Set 1) at No. 2.
22 4
Viacom answered Special Interrogatory No. 2 as follows:
23
24
25
26
27 Ex. 11 (11/14/2019 Supp. Resp. to SROGs, Set 1) at No. 2. (emphasis
added).
28
5
Even if Viacom did not limit its damages claim to Ms. SenGupta’s departure, its entire damages theory
4130-4316-1379 -3-
NETFLIX’S OPPOSITION TO VIACOM’S MTC FURTHER RESP. TO SROGS SET ONE
 1 C. Viacom Propounded Special Interrogatories Seeking Private Information
About Other Employees.
2

3 Viacom served its first set of special interrogatories on Netflix on November 14, 2019,

4 seeking information about the total compensation Netflix paid four former Viacom employees: Phil

5 Rynda, James Kukucka, Megan Casey, and Robert Natter. Viacom did not make any allegations

6 about these individuals in its Complaint and did not claim in any discovery response that it suffered

7 either “lost income” or “value” from these individuals’ departures from Viacom. Netflix asserted

8 objections to Viacom’s interrogatories on the grounds that the interrogatories seek private

9 information from individuals who are not parties to this case, and the information is irrelevant.

10 Deserio Decl. Ex. B. As explained below, Netflix’s objections were well-placed, and the Court

11 should deny Viacom’s motion to compel.

12 III. ARGUMENT.
13 A. Disclosure of Individual Employees’ Compensation Would Violate Their
Constitutional Privacy Rights.
14
15 Courts sustain privacy objections where there is (1) a legally protected privacy interest, (2)

16 an objectively reasonable expectation of privacy in the given circumstances, and (3) a threatened

17 intrusion that is serious. Williams v. Superior Court, 3 Cal. 5th 531, 552 (2017). All of these

18 elements are present here.

19 First, Viacom’s interrogatories, which seek the specific compensation that Netflix paid to

20 four employees, no doubt implicate legally protected privacy interests. Look v. Penovatz, 34 Cal.

21 App. 5th 61, 73 (2019) (“[I]ndividuals have a legally recognized privacy interest in their personal

22
makes so little sense that Viacom should not be allowed to conduct a damages-related fishing expedition
23 into the private information of any individuals other than Ms. SenGupta. As noted above in footnote 3,

24
25
26
27
28 See Ex. 12 (12/9/19 Delich Dep. Tr.) at 391:6-
395:25.
4130-4316-1379 -4-
NETFLIX’S OPPOSITION TO VIACOM’S MTC FURTHER RESP. TO SROGS SET ONE
 1 financial information.”); see also Williams, 3 Cal. 5th at 554 (employees have a “bona fide interest

2 in the confidentiality” of their “financial data”).

3 Second, as third parties to this lawsuit who are not even named in the complaint, Ms. Casey,

4 and Messrs. Rynda, Kukucka, and Natter have objectively reasonable expectations that Netflix

5 would not disclose their compensation information to third parties outside the organization. In fact,

6 it is Netflix’s company policy to maintain employee compensation information internally and not

7 to permit disclosure of such information externally, except, of course, if an individual employee

8 voluntarily chooses to disclose his or her own information. Declaration of Mike Madeiros ¶¶ 2-5.

9 Third, the threatened disclosure of these individuals’ compensation information is serious.

10 Indeed, financial information is among the most sensitive information recognized by the privacy

11 case law. Pioneer Elecs. (USA), Inc. v. Superior Court, 40 Cal. 4th 360, 372 (2007) (recognizing

12 that personal financial information is “particularly sensitive”). The compensation information

13 Viacom seeks does not just include base salary, but any merit bonuses each received, which

14 necessarily implicates their job performance and therefore privacy rights. See, e.g., Life Techs.

15 Corp. v. Superior Court, 197 Cal. App. 4th 640, 652 (2011) (third party personnel file information

16 falls within recognized zone of privacy) (overruled on other grounds by Williams, 3 Cal. 5th at 557

17 n.8). Netflix’s privacy objection was appropriate and meritorious.

18 Viacom cannot justify this intrusion into these individuals’ privacy. Viacom’s sole

19 argument is that the protective order in this case provides adequate protection for their privacy. If

20 that were sufficient to overcome the individuals’ privacy rights, then no privacy objection would

21 ever be meritorious in a case with a protective order. But that is not the law (and Viacom cites

22 none). Moreover, while Viacom now argues that the protective order in this case is sufficient to

23 protect individuals’ privacy interests, Viacom took the opposite tack when opposing Netflix’s

24 motion to compel its fixed-term employment contracts. Indeed, based on Viacom’s privacy

25 objection, the Court allowed it to redact “identifying information,” including compensation

26 information, from its contracts prior to production. Ex. 13 (2/21/2020 Notice of Ruling). Netflix’s

27 requests, unlike Viacom’s here, did not seek financial information about any of Viacom’s

28 employees. Viacom cannot have it both ways: either the protective order is sufficient to protect

4130-4316-1379 -5-
NETFLIX’S OPPOSITION TO VIACOM’S MTC FURTHER RESP. TO SROGS SET ONE
 1 individual employee privacy rights, or it is not. The Court should sustain Netflix’s privacy

2 objection.

3 B. The Requested Information Is Irrelevant.

4 “In the face of an objection based on privacy, the party seeking discovery of the information
5 must show that the information is ‘directly relevant’ to a cause of action or defense, such that
6 disclosure is ‘essential to the fair resolution of the lawsuit.’” Look, 34 Cal. App. 5th at 73. Viacom
7 cannot meet that standard. Indeed, the information Viacom seeks is not relevant at all.
8 Viacom attempts to establish relevance by a convoluted argument that it lost “income” in
9 an amount measured by the difference between the compensation Netflix decided to pay these
10 employees and the substantially lower amount Viacom paid those same individuals. According to
11 Viacom, “lost income” really means “lost value,” which is somehow related to the injury Viacom
12 must prove to establish standing under its Business & Professions Code section 17200 cause of
13 action. This argument is nonsense, for a host of reasons.6
14 First, as explained above, Viacom’s Complaint does not even mention Messrs. Rynda,
15 Kukucka, or Natter or Ms. Casey, much less claim that Viacom suffered any harm from their
16 departures for Netflix. On that basis, alone, the information is irrelevant and does not outweigh the
17 privacy rights at stake. See Singer v. Superior Court, 54 Cal. 2d 318, 323 (1960) (“interrogatories,
18 in order to be proper, must, of necessity, ‘pertain to the pleadings’”); Columbia Broad. Sys., Inc. v.
19 Superior Court, 263 Cal. App. 2d 12, 19 (1968) (the pleadings frame the appropriate scope of
20 discovery requests). Indeed, Viacom conceded that these individuals’ compensation was not
21 relevant. As also noted above, Viacom’s verified responses to Netflix’s interrogatories asking for
22 damages facts (for the First Cause of Action) or injury facts (for the Second Cause of Action), make
23 no claim that Viacom ever suffered any damages or harm from the departures of any of these
24 individuals. Ex. 11 (11/14/2019 Supp. Resp. to SROGs, Set 1) at Nos. 1-2.
25 Second, the individuals’ compensation information is irrelevant for the independent reason
26 that even if Viacom had alleged it suffered harm from Netflix’s hiring of those individuals (which
27
6
Viacom cannot recover damages under its Section 17200 claim because injunctive relief and restitution are
28 the only available remedies and Viacom has not pled a claim for restitution (nor could it). See Cal. Bus. &
Prof. Code § 17203.
4130-4316-1379 -6-
NETFLIX’S OPPOSITION TO VIACOM’S MTC FURTHER RESP. TO SROGS SET ONE
 1 it did not), their compensation at Netflix is still irrelevant to proving standing under Viacom’s unfair

2 competition claim. Establishing standing requires that a party “(1) establish a loss or deprivation

3 of money or property sufficient to qualify as injury in fact, i.e., an economic injury, and (2) show

4 that that economic injury was the result of, i.e., caused by, the unfair business practice . . . that is

5 the gravamen of the claim.” Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 322 (2011); Bus. &

6 Prof. Code § 17204. Under the UCL, an “economic injury” must consist of either a loss or

7 deprivation of either (1) money or (2) property. Troyk v. Farmers Grp., Inc., 171 Cal. App. 4th

8 1305, 1348 n.31 (2009) (“Proposition 64, in effect, added a requirement that a UCL plaintiff’s

9 ‘injury in fact’ specifically involve ‘lost money or property.’”); Kwikset, 51 Cal. 4th at 323.

10 What Netflix decided to pay these employees does not represent or stand as a measure of

11 Viacom’s purported loss of either money or property, no matter how hard Viacom presses its

12 semantically and logically indefensible argument otherwise. Viacom’s employees are not its

13 “property,” and Viacom cites no authority supporting its argument that it can show harm or standing

14 through losing “the value” of an employee. See U.S. Const. amend. XIII; see also Brandt v. nVidia

15 Corp. (In re 3dfx Interactive, Inc.), 389 B.R. 842, 881, 2008 Bankr. LEXIS 1516 *95-96 (Bankr.

16 N.D. Cal., 2008) (in a fraudulent transfer case, court refused to place a value on newly hired

17 employees as “intangible assets” or the embodiment of goodwill of the former employer). Nor can

18 Viacom’s damages be measured by the amount Netflix chose to compensate them. If anything, to

19 the extent Netflix paid these employees more than Viacom did, it simply underscores that Viacom

20 underpaid them, which explains, at least in part, why they may have wanted to leave.7 Moreover,

21 to the extent Viacom suggests its harm should be measured by Netflix’s gain, that is an unjust
22 enrichment or non-restitutionary disgorgement theory, which is unavailable under Business &
23 Professions Code section 17200. See In re Tobacco Cases II, 240 Cal. App. 4th 779, 801-02 (2015)
24
7
25 Viacom argues in footnote 5 of its brief that Netflix’s discovery positions are “inconsistent” because Netflix
produced Ms. SenGupta’s compensation information “without objection.” False. Netflix objected to
26 Viacom’s requests for production based on, among other things, relevance and privacy, but produced Ms.
SenGutpa’s compensation information because such information was reflected in her Netflix offer letter and
27 the offer letter itself was relevant and responsive to Viacom’s requests. Viacom did not, however, propound
a separate interrogatory asking Netflix to identify Ms. SenGupta’s compensation information; nor did
28 Netflix ever admit or otherwise acknowledge that Ms. SenGupta’s Netflix compensation is in any way
relevant to Viacom’s damages—it is not.
4130-4316-1379 -7-
NETFLIX’S OPPOSITION TO VIACOM’S MTC FURTHER RESP. TO SROGS SET ONE
 1 (“without any showing of loss to plaintiffs, there can be no restoration of money ‘which may have

2 been acquired by means of such unfair competition.’”).

3 Not surprisingly, Viacom cites no binding, or even relevant, precedent to support its

4 position. Instead, Viacom relies heavily on an unreported federal magistrate judge’s order in SHC

5 Servs., Inc. v. All Health Servs., which has no precedential value and is wholly inapposite. The

6 plaintiff in SHC Services sued three former employees and its competitor, All Health, alleging that

7 the employees and All Health had all colluded to misappropriate SHC’s trade secrets—allegations

8 that have nothing to do with the claims in this case. SHC Servs., Inc. v. All Health Servs., No.

9 1:06cv0761 AWI DLB, 2007 WL 430657, at *1 (E.D. Cal. Feb. 6, 2007). The court held that the

10 possible inflated compensation All Health paid the individuals named as defendants in the

11 complaint was potentially probative of All Health’s intent in hiring them to obtain the plaintiff’s

12 trade secrets. Id. at *3. Viacom, however, has not alleged any trade secret misappropriation claims.

13 Nor has it named its former employees (Ms. Casey or Messrs. Rynda, Kukucka, or Natter) as

14 individual defendants or even mentioned them in the Complaint. SHC Services thus does not

15 support Viacom’s argument, and Viacom points to no authority (because there is none) holding that

16 an employer is somehow entitled to “value” employees like chattel, and then seek compensation

17 for that “value” if the employee leaves.

18 The Court should deny Viacom’s motion.

19 C. Netflix Acted with Substantial Justification in Opposing Viacom’s Motion,

but Viacom Should Be Sanctioned for Bringing This Motion.
20

21 Because Viacom’s motion seeks irrelevant information the disclosure of which would
22 violate third party privacy rights, Netflix is substantially justified in opposing Viacom’s motion and
23 sanctions would therefore be improper. See Doe v. U.S. Swimming, Inc., 200 Cal. App. 4th 1424,
24 1434 (2011) (substantial justification exists when the justification is “well-grounded in both law
25 and fact”).
26 Viacom’s motion, by contrast, is not well-grounded in either the law or the facts of this
27 case. Therefore, Netflix requests that the Court sanction Viacom in the amount of $6,862 for filing
28 this meritless motion to compel. Civ. Proc. Code § 2030.300(d) (the Court should sanction any

4130-4316-1379 -8-
NETFLIX’S OPPOSITION TO VIACOM’S MTC FURTHER RESP. TO SROGS SET ONE
 1 party who unsuccessfully makes a motion to compel without “substantial justification”); see also

2 Fields Decl. ¶¶ 15-17.

3 IV. CONCLUSION.
4 Netflix respectfully requests that the Court deny Viacom’s motion.
5
Dated: June 9, 2020
6 ORRICK, HERRINGTON & SUTCLIFFE LLP
7

8 By: /s/ Karen G. Johnson-McKewan

KAREN G. JOHNSON-McKEWAN
9 Attorneys for Defendant
NETFLIX, INC.
10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4130-4316-1379 -9-
NETFLIX’S OPPOSITION TO VIACOM’S MTC FURTHER RESP. TO SROGS SET ONE