ZHENG LIU (SBN 229311) Menlo Park, California 94025 …...RIMON, P.C. By: /s/ Scott R. Raber Scott...

THIRD PARTY XMOTORS.AI INC.’S MOTION TO QUASH OR FOR PROTECTIVE ORDER & MPA

Tesla, Inc. v. Guangzhi Cao, (Case No. 19-CV-01463-VC)

ZHENG LIU (SBN 229311) [email protected] RIMON P.C. 800 Oak Grove Avenue, Suite 250 Menlo Park, California 94025 Telephone/Facsimile: (650) 461-4433 SCOTT R. RABER (SBN 194924) [email protected] RIMON P.C. One Embarcadero Center, Suite 400 San Francisco, California 94111 Telephone: 415.683.5472 Facsimile: 800.930.7271

Attorneys for Third Party XMOTORS.ai, INC.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

TESLA, INC., a Delaware corporation,

Plaintiff,

v.

GUANGZHI CAO, an individual

Defendant.

Case No. 19-cv-01463-VC THIRD PARTY XMOTORS.AI, INC.’S NOTICE OF MOTION AND MOTION TO QUASH OR, IN THE ALTERNATIVE, FOR PROTECTIVE ORDER REGARDING TESLA, INC.’S (1) SUBPOENA TO PRODUCE DOCUMENTS, INFORMATION, OR OBJECTS OR TO PERMIT INSPECTION OF PREMISES IN A CIVIL ACTION and (2) SUBPOENA TO TESTIFY PURSUANT TO FRCP 30(b)(6); MEMORANDUM OF POINTS & AUTHORITIES IN SUPPORT THEREOF Date: May 7, 2020 Time: 10:00 a.m. Dept.: Courtroom 4 – 17th Floor Judge: The Hon. Vince Chhabria

Case 3:19-cv-01463-VC Document 44 Filed 03/30/20 of 21

mailto:[email protected]

mailto:[email protected]

2 THIRD PARTY XMOTORS.AI INC.’S MOTION TO QUASH OR FOR PROTECTIVE ORDER & MPA


TO ALL PARTIES AND TO THEIR COUNSEL OF RECORD:

PLEASE TAKE NOTICE THAT on May 7, 2020 at 10:00 a.m., or as soon thereafter as

counsel may be heard, in the courtroom of the Honorable Vince Chhabria, Courtroom 4 – 17th

Floor, located in the United States Courthouse, 450 Golden Gate Avenue, San Francisco, California

94102, third-party XMotors.ai, Inc. (“XMotors”) will and hereby does move this Court to quash or,

in the alternative, for a protective order regarding Plaintiff Tesla, Inc.’s (1) Subpoena To Produce

Documents, Information, Or Objects Or To Permit Inspection Of Premises In A Civil Action and

(2) Subpoena to Testify Pursuant to Fed. R. Civ. P. 30(B)(6) (the “Motion”).

By this Motion, XMotors seeks an order (A) barring the production of (i) its autonomous

driving source code to Tesla, Inc. (“Tesla”); (ii) certain source-code related logs; (iii) forensic

images of workplace computers used by various XMotors employees whose duties and

responsibilities have no connection to Defendant Guangzhi Cao (“Dr. Cao”); (iv) forensic images

of workplace computers used by individuals who are not employees of XMotors; and (v)

confidential documents produced by XMotors in response to an unrelated criminal investigation

involving an individual formerly employed by XMotors; and (B) barring the testimony of an

XMotors witness concerning XMotors’ autonomous driving source code and information

concerning XMotors’ use and organization of such source code.

XMotors objects to discovery of the foregoing categories of information, and seeks to quash

or modify the portions of the subpoenas calling for them, on the ground that they pose an undue

burden under Fed. R. Civ. P. 45(d)(1); exceed the boundaries of permissible, proportional

discovery pursuant to Fed. R. Civ. P. 26(b)(1); and would impermissibly require the disclosure of

highly confidential, proprietary information to Tesla, a direct competitor of XMotors.

This Motion is based on this Notice of Motion, the attached Memorandum of Points and

Authorities; the Declarations of Scott R. Raber, Xinzhou Wu, and Guangzhi Cao filed concurrently

herewith; all of the pleadings, files, and records in this proceeding; all other matters of which the

Court may or must take judicial notice; and any argument or evidence that may be presented to or

considered by the Court prior to its ruling.




Dated: March 30, 2020 Respectfully submitted, RIMON, P.C.

By: /s/ Scott R. Raber Scott R. Raber

Zheng Liu Attorneys for Third-Party XMOTORS.AI, INC.


i THIRD PARTY XMOTORS.AI INC.’S MOTION TO QUASH OR FOR PROTECTIVE ORDER & MPA


TABLE OF CONTENTS

I. INTRODUCTION ................................................................................................................. 1

II. RELEVANT PROCEDURAL HISTORY AND BACKGROUND………………………...2

A. Tesla Does Not Allege Any Misconduct by XMotors………………………………2

B. XMotors Has Provided Information to Tesla Both Voluntarily and inResponse to a Prior Subpoena—With No Claim from Tesla of AnyWrongdoing…………………………………………………………………………4

III. TESLA’S CURRENT SUBPOENAS IMPROPERLY SEEK AN OVERBROADSWATH OF CONFIDENTIAL AND IRRELEVANT INFORMATION………………….6

IV. THE SUBPOENAS SHOULD BE QUASHED, OR ALTERNATIVELY APROTECTIVE ORDER SHOULD ISSUE, WITH RESPECT TO EACH OF THEDISPUTED CATEGORIES……………………………………………………………….10 A. The Relevant Standard For Tesla’s Subpoenas ....................................................... 10

B. Tesla Has Demonstrated No Basis For Obtaining Access To XMotors’Autonomous Driving Source Code Or Its Employees’ Computer Workstations ... 11

C. Tesla Has No Basis To Seek Confidential Documents Produced To TheGovernment By XMotors In Connection With An Unrelated Investigation ........... 13

D. Tesla Has No Basis For Deposing XMotors About Its Source Code And SourceCode-Related Activities ........................................................................................... 14

V. CONCLUSION.................................................................................................................... 15


ii THIRD PARTY XMOTORS.AI INC.’S MOTION TO QUASH OR FOR PROTECTIVE ORDER & MPA


TABLE OF AUTHORITIES

Page(s)

Cases

Atlas IP LLC v. Pacific Gas & Elec. Co., No. 15-cv-5469-EDL, 2016 WL 1719545 (N.D. Cal. Mar. 9, 2016) ...................................... 10

Chevron Corp. v. Donziger, No. 12–mc–80237 CRB (NC), 2013 WL 4536808 (N.D. Cal. Aug. 22, 2013) ...................... 10

Compaq Computer Corp. v. Packard Bell Elecs., Inc., 163 F.R.D. 329 (N.D. Cal. 1995) ............................................................................................. 11

Echostar Comms. Corp. v. News Corp., 180 F.R.D. 391 (D. Colo. 1998) .............................................................................................. 12

In re Ford Motor Co., 345 F3d 1315, 1317 ................................................................................................................. 13

Lemberg Law LLC v. Hussin, No. 16-mc-80066-JCS, 2016 WL 3231300 (N.D. Cal. Jun. 13, 2016) ................................... 11

Micro Motion, Inc. v. Kane Steel Co., Inc., 894 F.2d 1318 (Fed. Cir. 1990) ............................................................................................... 12

Mireskandari v. Daily Mail and General Trust PLC, No. CV 12-02943 MMM, 2013 WL 12114761 (C.D. Cal. Sept. 23, 2013) ............................ 13

Robert Half Int’l Inc. v. Ainsworth, No. 14-cv-3481-WQH (DHB), 2015 WL 4662429 (S.D. Cal. Aug. 6, 2015) ......................... 12

Source One Direct, Inc. v. Digitas, Inc., No. 1:11-cv-1262-JEC-AJB, 2011 WL 13319641 (N.D. Ga. Jun. 29, 2011) .......................... 13

United States v. C.B.S., Inc., 666 F.2d 364 (9th Cir. 1982) ................................................................................................... 11

Verinata Health, Inc. v. Sequenom, Inc., No. C 12–00865 SI, 2014 WL 1878822 (N.D. Cal. May 9, 2014) .......................................... 13

Other Authorities

Fed. R. Civ. Proc. 11...................................................................................................................... 12

Fed. R. Civ. Proc. 26................................................................................................................ 12, 13


iii THIRD PARTY XMOTORS.AI INC.’S MOTION TO QUASH OR FOR PROTECTIVE ORDER & MPA


Fed. R. Civ. P. 26(b)(1) ..................................................................................................... 10, 11, 12

Fed. R. Civ. Proc. 30(b)(6) .............................................................................................................. 6

Fed. R. Civ. Proc.45......................................................................................................................... 9

Fed. R. Civ. P. 45(3)(B)(i) ............................................................................................................. 10

Fed. R. Civ. P. 45(d)(1) ................................................................................................................. 10

Fed. R. Civ. P. 45(d)(3)(A)(iv) ...................................................................................................... 10

Wright & Miller, Federal Practice and Procedure § 2008 ........................................................... 12

192 F.R.D. 340, 389 (2000) ........................................................................................................... 13




MEMORANDUM OF POINTS & AUTHORITIES

I. INTRODUCTION

Third-party XMotors.ai, Inc. (“XMotors”) brings this Motion to rein in improper and unjustified

use of the discovery process by Tesla against its competitor. Although the case against Dr. Cao has been

pending for over a year—and XMotors has, in fact, already produced materials in response to a prior

subpoena from Tesla, such as forensic materials (including complete copies of entire repositories of its

source code) and thousands of pages information related to the allegations against Dr. Cao—Tesla has

declined to ever bring a single claim against XMotors. From the outset of this litigation through the

present, Tesla has not pointed—and still cannot point—to any evidence suggesting that XMotors ever

received any confidential Tesla information or source code at any time from Dr. Cao; ever induced Dr.

Cao to breach any confidentiality obligations that he owed to Tesla; or ever wrongfully used or disclosed

Tesla’s source code or confidential information to XMotors, or implemented such information into

XMotors’ operations.

Instead, Tesla’s stated justification for its latest subpoena requests is that it needs to “investigate”

and “confirm” whether any of its information “might” have been provided to XMotors. Tesla tries to

justify this intrusion into some of its competitor’s most sensitive business information based upon

hypothetical, unsworn, and unsubstantiated theories, irrespective of how fantastic or improbable they

may be. Importantly, Tesla’s subpoena thus does not relate to any allegation, claim, or defense actually

in the case, but instead improperly seeks to search for a potential claim against XMotors that Tesla

continues to have no good faith basis to assert under the Federal Rules of Civil Procedure. At best this is

a fishing expedition, and at worst, it is nothing more than an attempt to gain a competitive advantage or

to simply harass a competitor. In either case, the subpoenas should be quashed.

In seeking some of XMotors’ most sensitive operations and valuable proprietary information,

Tesla has made no serious effort to limit the discovery requests’ scope or demonstrate their relevance to

Tesla’s claims. Tesla unabashedly seeks:

• Direct access to all of XMotors’ autonomous driving-related source code, without limitation

or exclusion, dating back to long before XMotors even hired Dr. Cao and then continuing


2

THIRD PARTY XMOTORS.AI INC.’S MOTION TO QUASH OR FOR PROTECTIVE ORDER & MPA Tesla, Inc. v. Guangzhi Cao, (Case No. 19-CV-01463-VC)

through the present date, despite the fact that Dr. Cao has not had access to that code for a

year, and even though Tesla already has a copy of XMotors’ source code repository as of the

date it placed Dr. Cao on leave;

• Complete copies of forensic images of the entire hard drives of numerous XMotors’

employees (and non-employees’) work computers, irrespective of their actual job functions

and connection to Dr. Cao, and without any effort to exclude privileged or sensitive business

information that has no bearing on the claims in this case;

• Confidential information unrelated to any claim, defense, or party to this litigation, that was

previously produced to the United States Department of Justice in response to a grand jury

subpoena in an entirely unrelated criminal proceeding;

• Deposition testimony of an XMotors representative to testify broadly about all manner of

XMotors’ source code-related operations and organization.

Such unleashed discovery would be improper in the first instance even if XMotors were a party to this

case; it is even more inappropriate directed to a third-party.

It bears emphasis that this Motion is hardly preceded by a lack of disclosure to Tesla by

XMotors: to the contrary, XMotors voluntarily provided considerable information to Tesla early on in

the litigation, in an effort to resolve it promptly and in the interest of transparency. Since then, XMotors

has produced forensic materials and thousands more pages in response to XMotors’ two subpoenas at

considerable expense to the company. Yet, Tesla continues to dig as it seeks to leverage this lawsuit to

disrupt its competitor’s business operations rather than to obtain information relevant to its case against

Dr. Cao. Neither the Federal Rules of Civil Procedure, nor applicable law thereunder, requires XMotors,

especially as a third-party, to bear discovery burdens for claims and theories untethered to the actual

record. The Motion should be granted in its entirety.

II. RELEVANT PROCEDURAL HISTORY AND BACKGROUND

A. Tesla Does Not Allege Any Misconduct by XMotors

Tesla filed its Complaint against Dr. Cao on March 21, 2019, alleging that Dr. Cao improperly

copied Tesla’s Autopilot-related source code to his personal iCloud account before he started




employment with XMotors in January 2019. See Compl., ¶¶ 3, 6, 7 (Dkt. 1)

Although Dr. Cao has candidly acknowledged that he stored Tesla source code on a personal

computer while employed by Tesla, he vehemently denies that he has ever misused Tesla’s intellectual

property, or in any way transferred it to XMotors. See, e.g., Jt. CMC at 2 (Dkt. 30) Dr. Cao further

asserts that prior to his departure from Tesla, he diligently and earnestly attempted to remove any and all

Tesla intellectual property and source code from his own personal devices; that Tesla engineers

regularly stored such information on their own devices; and that Tesla routinely condoned employees’

placing work-related information, including sensitive or confidential information, on their own personal

devices. To the extent that any source code or other confidential information remained on Cao’s devices

subsequent to his departure, it was only as a result of inadvertence. Id.

XMotors likewise denies that it ever received any Tesla source code or other confidential

materials from Dr. Cao; denies that it ever encouraged Dr. Cao to transmit such information to anyone at

XMotors; and denies that it ever encouraged Dr. Cao to violate his agreements with Tesla. And, on

March 21, 2019, the day Tesla filed its lawsuit against Dr. Cao, XMotors placed Dr. Cao on

administrative leave until further notice, and instructed him not to use or access any XMotors-related

accounts or systems until further notice. See Declaration of Guangzhi Cao (“Cao Decl.”), ¶¶ 2-8;

Declaration Xinzhou Wu (“Wu Decl.”), ¶¶ 5-11, 13.

Tesla’s Complaint, which acknowledges that XMotors is a competitor in the field of autonomous

driving, attempts to impugn XMotors’ integrity through speculation, misinformation, and innuendo, but

the Complaint in this case contains absolutely no allegations of wrongdoing by XMotors, and Tesla will

be unable to offer any evidence of such wrongdoing in support of its overbroad subpoena. To be clear,

the Complaint contains no allegation that XMotors ever solicited, received, or used Tesla confidential

information, and it contains no allegation that Dr. Cao provided or disseminated such information to

anyone at XMotors at any time. (Dkt. 1) Notably, Tesla has never sought any temporary or preliminary

injunction against either Dr. Cao or XMotors.

Instead, Tesla merely alleges that Dr. Cao—who as Tesla well knows has been on leave from

XMotors since the filing of this action—“may be using” Tesla’s code improperly and that Tesla “must




learn what Cao has done with Tesla’s IP.” See Compl. ¶¶ 3,6, 7 (Dkt. 1) After over a year of litigation,

Tesla has been unable to muster any concrete evidence whatsoever to suggest that Dr. Cao ever used or

exploited Tesla’s source code for anyone else’s benefit, let alone for XMotors, or that XMotors ever

received or remains in possession of any confidential Tesla information.

B. XMotors Has Provided Information to Tesla Both Voluntarily and in Response to aPrior Subpoena—With No Claim from Tesla of Any Wrongdoing

After Tesla filed this case, XMotors voluntarily produced information to Tesla in response to

information requests by Tesla’s counsel—many months before Tesla ever issued a subpoena to

XMotors. See Declaration of Scott R. Raber (“Raber Decl.”), ¶¶ 3-10. Specifically, in June 2019, in an

effort to help resolve this matter, XMotors provided a forensic image of the entire hard drive of the

laptop computer that XMotors had issued to Dr. Cao. Id. Thus, Tesla and its discovery vendor have been

in possession of Dr. Cao’s XMotors hard drive—which includes most of Dr. Cao’s internal

communications at XMotors, as well as a complete copy of XMotors source code repositories that Dr.

Cao had downloaded onto his XMotors-issued laptop prior to being placed on leave and having his

access to XMotors’ systems restricted. Cao Decl., ¶ 7; Wu Decl., ¶¶ 5-9. Thus, Tesla has had a copy of

XMotors’ autonomous driving source code repositories for nine months, since June 7, 2019, and based

on this evidence, it has never so much as hinted that any copying of its source code occurred.

Throughout June and July 2019, XMotors acquiesced to additional demands from Tesla

regarding documents that XMotors would produce voluntarily. Raber Decl., ¶¶ 6-10. On July 10, 2019,

XMotors agreed to produce “all non-privileged, responsive email, WeChat messages, and associated

files (based on the key search terms) among those individuals in Mr. Cao’s work group from the date of

hire through and including March 21, 2019 (the date by which Dr. Cao no longer had access to any

XMotors communications tools).” Id., Ex. A. XMotors was exceedingly accommodating of Tesla’s

demands for any and all communications involving Dr. Cao. For example, after Tesla’s attorneys sent a

list of more than 50,000 search terms, XMotors informed Tesla that it would simply produce all non-

privileged emails and WeChat messages between Dr. Cao and his team members. XMotors did so

because it has nothing to hide in this litigation and because it believed that such transparency would

assist in the resolution of this case, given Tesla’s abject failure to unearth any evidence suggesting the




actual transfer of its source code or other information to XMotors. Id. In total, XMotors voluntarily

produced 12,257 pages of documents to Tesla on August 12, 2019—in addition to the forensic image of

Dr. Cao’s XMotors laptop, which had previously been produced.

Unsatisfied with these voluntary productions, Tesla issued its first document subpoena to

XMotors on November 6, 2019 (the “November 2019 Subpoena”), seeking an even broader array of

information from XMotors through fourteen document requests, for the period before Dr. Cao had

joined XMotors through 2019, including: forensic images of all electronic devices provided to Dr. Cao

during his employment; emails, texts, and instant messages involving Dr. Cao; information regarding

Dr. Cao’s compensation and employment terms with XMotors; Dr. Cao’s work product (including

presentations and source code created by him, whether or not related to the Tesla source code

repositories allegedly uploaded by him); any documents concerning Tesla’s Autopilot technology; and

all documents even mentioning an array of XMotors employees. Raber Decl., ¶¶11-12 & Ex. B.

From December 11, 2019 to December 24, 2019, XMotors produced a wide swath of responsive

documents: (1) all WeChat instant messages pertaining to Tesla, Autopilot or Dr. Cao’s work performed

for XMotors; (2) all emails received or sent by Dr. Cao in Dr. Cao’s work email account from January 1,

2019 to December 6, 2019 (a broader time period than had previously been produced); (3) all emails

from Dr. Cao’s personal email account to anyone at XMotors from January 1, 2019 to December 6,

2019; (4) all Dingtalk instant messages between Dr. Cao and his team members and direct reports from

January 1, 2019 to December 6, 2019 that were in XMotors’ possession; (5) all documents sufficient to

show Dr. Cao’s total compensation package; (6) all presentations authored or contributed by Dr. Cao

from January 14, 2019 to December 6, 2019; (7) all documents referring either to Dr. Cao and Tesla or

Dr. Cao and Autopilot that were created or modified between November 2018 and the present; and (8)

organizational charts and other information sufficient to identify the XMotors employees who directly or

indirectly reported to Dr. Cao or to whom Dr. Cao reported. In total, XMotors produced an additional

6,333 pages in response to the November 2019 Subpoena. Id., ¶¶ 13-14.

Despite the thousands of additional pages XMotors produced, and Tesla’s extensive forensic

analysis and deposition of Dr. Cao, Tesla still has never even suggested, let alone asserted, that it has




any good faith basis to assert a claim for trade secret misappropriation against XMotors, nor has it

offered any evidence suggesting that Dr. Cao transferred confidential material to XMotors at any time.

III. TESLA’S CURRENT SUBPOENAS IMPROPERLY SEEK AN OVERBROAD SWATHOF CONFIDENTIAL AND IRRELEVANT INFORMATION

On January 17, 2020, Tesla issued its second document subpoena to XMotors (the “January 2020

Subpoena”) and also a subpoena for deposition testimony pursuant to Fed. R. Civ. Proc. 30(b)(6) (the

“Deposition Subpoena”), which are at issue on this Motion. Raber Decl., ¶¶ 15-17.

Thereafter, the parties engaged in multiple hours of meet and confer discussions throughout

February and early March. The principal focus of these discussions concerned Tesla’s alleged

entitlement to review, and the method by which it might review, (a) aspects of the entire database of

XMotors’ autonomous driving source code from November 2018 (before Dr. Cao joined, or had even

interviewed with XMotors) through the present, and (b) forensic images of the entire hard drives of

laptops belonging to numerous employees of XMotors and employees of XMotors’ sister entity,

Xiaopeng Motors, in China. XMotors served formal written objections to the subpoenas on March 6,

2020. See, id., Exs B & C (XMotors’ Objections to Subpoenas). Although the parties reached agreement

with respect to production on ten of the sixteen requests in the January 2020 Subpoena, the following

categories remain in dispute:

Request No. 15 (All XMotors Autonomous Driving Source Code): This Request seeks “all source

code” drafted, tested, or used by XMotors for its autonomous vehicle technology from November 1,

2018 (well before Dr. Cao joined or even began interviewing with XMotors) through the present,

including all revisions, fixes, and updates (even though Dr. Cao was placed on leave and was restricted

from accessing or modifying XMotors’ source code after this lawsuit was filed on March 21, 2019).

XMotors objected to this Request on the ground that Tesla has not made any showing that would

warrant further access to or review of its source code repository. In the course of the parties’ meet and

confer discussions, XMotors also reminded Tesla that it already had a copy of XMotors’ source code

repository as of March, 2019 (subject to the parties’ existing protective order) by virtue of the laptop

image it had received in June 2019. Raber Decl., ¶18(a).




Tesla has attempted to justify this fishing expedition on the thinnest of circumstantial evidence.

Specifi cally, Tesla claims that a USB thumb drive that may have contained Tesla Autopilot source code

was ins erted into Dr. Cao’s personal laptop. Tesla further claims that a USB device manufactured by the

same c ompany, SanD isk, was inserted into Dr. Cao’s XMotors’ laptop. Raber Decl., ¶ 18. Tesla has

offered no proof whatsoever—and, indeed admits that it cannot prove that the two USB thumb drives

are the same device. Id. Moreover, Dr. Cao testified at deposition, and again attests in conjunction with

this Motion, that, in an effort to protect Tesla’s source code and to prevent its disclosure to unauthorized

parties, he destroyed the first USB drive in question before ever joining XMotors, and that he at no time

copied Tesla information to XMotors’ systems. See, e.g., Cao Decl., ¶¶ 2-5, Exs. A & B; Wu Decl., ¶ 12.

Given the sensitivity, confidentiality, and inherent value of the autonomous driving source code

to XMotors (as detailed in the accompanying Declaration of Xinzhou Wu), and the attenuated nature of

Tesla’s claims regarding the USB drives, XMotors disputes that Tesla has any basis to review the source

code directly. XMotors’ source code is highly confidential and of obvious importance to the business of

XMotors. See Wu Decl., ¶ 11. Substantial resources have been used to create the source code. An

average of 70 engineers worked on these codes for more than two years (including for an entire year

after Dr. Cao was placed on administrative leave and last had the ability to edit the repository). At a

minimum, tens of millions of dollars were spent creating, maintaining, and improving it. XMotors has

kept it as highly confidential at all times, and only discloses it to employees who have the need to access

or work with it. It is certainly not something the company would share with any third-party, much less a

competitor such as Tesla. Ibid.

XMotors further disputes that Tesla has any basis to review XMotors’ source code for the period

beyond the date that Dr. Cao was placed on leave and barred from accessing XMotors’ system (March

21, 2019). Likewise, Tesla has offered no meaningful justification about why it should now have direct

access to all of the current code (through the present), or why its own lawyers and vendors (as compared

to a neutral third party) should be given access to it.

When XMotors placed Dr. Cao on leave on March 21, 2019, it simultaneously collected Dr.

Cao’s personal and work-issued electronic devices and had them stored at XMotors’ office, effectively




depriving him of all access to XMotors’ systems. Wu Decl., ¶¶ 5-8; Cao Decl., ¶ 8. As of May 2019, Dr.

Cao had read-only access to part of XMotors’ system, where he could receive emails and Dingtalk

messages, but he could not send emails or Dingtalk messages or upload any documents or information

onto XMotors’ system. He could read other documents in the system but could not make any changes.

Dr. Cao also performed some discrete tasks which were unrelated to his former role as a technical lead

from June to August of 2019. The tasks consisted of providing guidance and feedback to engineers

working on an indoor self-parking feature. Other than that, Dr. Cao has not performed any work since

March 21, 2019, his access to XMotors’ systems has remained restricted at all times, and he remains on

administrative leave. Wu Decl., ¶¶ 5-8, 12; Cao Decl., ¶ 8.

Request No. 16-17 (Source Code-Related Logs and Work): Request Nos. 16 and 17 of the

January 2020 Subpoena seek additional documents such as control logs, revision logs or other

documents reflecting changes or edits to XMotors’ autonomous vehicle source code, as well as any code

that Cao reviewed, edited, wrote, or otherwise touched.

As with Request No. 15, XMotors objected to these requests as being overbroad both as to time

and scope. In the parties’ meet and confer discussions, XMotors proposed instead that it would produce

records of submission of source code and revisions and editing of source code by Dr. Cao only for the

period of time from January 14, 2019 (when he commenced employment with XMotors) to March 21,

2019, the last day he had access to XMotors’ source code repository system before he was placed on

administrative leave and had no access to XMotors’ systems. See Raber Decl., ¶ 18(b).

Tesla rejected this compromise out of hand, based on its belief that information “may” have been

introduced to XMotors through the destroyed USB thumb drive. Tesla’s counsel also justified this

intrusive demand based on his subjective disbelief of Dr. Cao’s deposition testimony. Id.

Request No. 18 (Forensic Images of Laptops): This request seeks a copy of the forensic image

of the work computers issued to a number of individuals purportedly employed by XMotors from

November 1, 2018 to the present. XMotors objected to this request on the ground that several of the

individuals whose work computers Tesla sought to image are not, in fact, XMotors employees, and

therefore are not subject to XMotors’ control. Additionally, XMotors’ counsel explained that several of




the individuals (Brian Gu, He Xiaopeng, Zhiguang Xiao) identified by Request 18 are not subject to the

Court’s Rule 45 jurisdiction in the first instance, because they work and reside in China. Additionally,

XMotors objected on the grounds that Junli Gu, a former employee, did not work with Dr. Cao. Raber

Decl., ¶ 18(c).

As with the other requests, Tesla claims that it is entitled to examine all of these individuals’

laptops (regardless of whether they had any working relationship with Dr. Cao) and all of the files

contained on these laptops (regardless of whether they have any connection to the subject matter of this

litigation). See Wu Decl., ¶¶ 5-10; Cao Decl., ¶ 8. Moreover, Tesla has insisted on the production of

these complete forensic images even though it has provided nothing more than supposition that the same

USB drive allegedly containing Tesla code may have been provided to one or more of the named

individuals. In short, Tesla’s demand for the entire contents of numerous employee laptops is based on

nothing more than rank speculation.

Request No. 30 (Documents Provided to the United States in Connection With Zhang Matter): This request seeks all documents produced by XMotors in connection with a criminal case originally

brought by the United States Department of Justice against Xiaolang Zhang in 2018. XMotors objected

to this request on the ground that it has no relevance or bearing on the present case. Tesla’s position, as

articulated in meet and confer discussions, is that it seeks to demonstrate a “pattern” of misconduct by

XMotors in connection with its operations and recruiting—again, notwithstanding the fact that XMotors

has not been accused of anything in this case. Tesla’s counsel admittedly has no information suggesting

that any facts or evidence from the Zhang matter bear any relationship or connection to the allegations in

this case. Raber Decl. ¶ 18(d). Likewise, there is no suggestion in the record that Dr. Cao knows or had

any contact whatsoever with Mr. Zhang. Rather, Tesla – consistent with its CEO’s past “tweets” – is

apparently more interested in obtaining this information simply to malign XMotors, not the actual

defendant in this case. Id., ¶ 24, Ex. E.

Tesla’s 30(b)(6) Deposition Notice: Topics 1 and 2 of the Deposition Subpoena seek testimony

concerning the same subjects called for by Request Nos. 15 and 16: namely, all manner of information

regarding XMotors’ source code, including its drafting, repositories, individuals working on or with


10


access to source code, and all other activities related to its use, maintenance, and creation.

XMotors objected to these topics for the same reasons as the grounds asserted in its objections to

the document requests described above: there is nothing in the record suggesting such far-flung inquiry

into XMotors’ confidential, proprietary information as to how it keeps, develops, and maintains source

code. Moreover, the two deposition requests list multiple categories of information that likely will

require testimony from several XMotors’ witnesses. The deposition subjects all bear directly on some of

XMotors’ most sensitive, confidential, and proprietary information—without any limitation as to time or

scope, and without regard to Tesla’s claims against Dr. Cao. Taken on their face, these deposition topics

are intended to provide Tesla carte blanche to inquire about all aspects of XMotors’ autonomous driving

source code, even though Dr. Cao has been on leave for months and indisputably had no access to

XMotors’ source code for over a year.

IV. THE SUBPOENAS SHOULD BE QUASHED, OR ALTERNATIVELY A PROTECTIVE ORDER SHOULD ISSUE, WITH RESPECT TO EACH OF THE DISPUTED CATEGORIES A. The Relevant Standard for Tesla’s Subpoenas

“A party or attorney responsible for issuing and serving a subpoena must take reasonable steps to

avoid imposing undue burden or expense on a person subject to the subpoena.” Fed. R. Civ. P.

45(d)(1). “The court for the district where compliance is required must enforce this duty and impose an

appropriate sanction--which may include lost earnings and reasonable attorney’s fees--on a party or

attorney who fails to comply.” Id. Thus, “[o]n timely motion, the court for the district where

compliance is required must quash or modify a subpoena that ... subjects a person to undue

burden.” Fed. R. Civ. P. 45(d)(3)(A)(iv). A subpoena may also be quashed or modified “if it requires

… disclosing a trade secret or other confidential research, development, or commercial information.”

Fed. R. Civ. P. 45(3)(B)(i).

The scope of discovery in civil cases has been narrowed so that it must be relevant to a party’s

“claim or defense,” not merely to the broad subject matter of a lawsuit. Fed. R. Civ. P. 26(b)(1); Atlas

IP LLC v. Pacific Gas & Elec. Co., No. 15-cv-5469-EDL, 2016 WL 1719545, *5 (N.D. Cal. Mar. 9,

2016). Thus, in response to a motion to quash, “the party issuing the subpoena must demonstrate that the


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discovery sought is relevant.” Chevron Corp. v. Donziger, No. 12–mc–80237 CRB (NC), 2013 WL

4536808, *4 (N.D. Cal. Aug. 22, 2013). “[I]f the sought-after documents are not relevant …, then any

burden whatsoever imposed ... would be by definition ‘undue.’” Compaq Computer Corp. v. Packard

Bell Elecs., Inc., 163 F.R.D. 329, 335-36 (N.D. Cal. 1995). Discovery must also be “proportional to the

needs of the case, taking into account a variety of factors including “whether the burden or expense of

the proposed discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1) (emphasis added).

In applying these principles, the Court should take note that “[t]he Ninth Circuit has long held

that nonparties subject to discovery requests deserve extra protection from the courts.” Lemberg Law

LLC v. Hussin, No. 16-mc-80066-JCS, 2016 WL 3231300, *5 (N.D. Cal. Jun. 13, 2016) (quotation

omitted). “Nonparty witnesses are powerless to control the scope of litigation and discovery, and should

not be forced to subsidize an unreasonable share of the costs of a litigation to which they are not a

party.” United States v. C.B.S., Inc., 666 F.2d 364, 371-72 (9th Cir. 1982).

Here, XMotors has already accommodated Tesla’s requests for extensive discovery, both

voluntarily and in response to a prior subpoena, which itself was extremely broad. In particular,

XMotors has provided thousands of pages of documents bearing on Dr. Cao’s communications with

XMotors before being placed on leave; documents pertaining to his recruitment and travel to China

during that process; and an image of his entire XMotors work computer, including the source code

repository that was copied onto it. The requests at issue in which motion, however, go well beyond any

proportionality limits. Moreover, it is not XMotors’ responsibility or obligation to “prove a negative”

while Tesla continues ad infinitum to float new and ungrounded potential theories of liability against Dr.

Cao (and XMotors by supposition).

B. Tesla Has Demonstrated No Basis for Obtaining Access to XMotors’ Autonomous Driving Source Code or Its Employees’ Computer Workstations

Discovery to date has revealed no evidence of wrongdoing whatsoever by either Cao or

XMotors. Absent actual evidence of wrongdoing, Tesla ventures completely into the realm of

unreasonable speculation. Specifically, Tesla wants to move beyond a review of Cao’s devices and work

product and gain access to (1) all of XMotors highly sensitive source code, even though Cao has not had

access to that code for over a year; and (2) complete forensic images of many other Xmotors employees’


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work computers, even though it has cited no conduct by any of these employees that would justify such

an examination.

Cao is the only named defendant in this action. Tesla has not alleged, much less produced, even a

shred of evidence to show that XMotors or any of its employees other than Cao had any direct access to

Tesla trade secrets, or that they wrongfully implemented those trade secrets in XMotors’ source

code. Tesla’s subpoena thus does not relate to any allegation actually at issue in the case, but instead

admittedly seeks to investigate a potential claim against XMotors that Tesla currently has no Rule 11

basis to assert. That is not a permissible use of discovery procedures.

A case similar to the instant matter, Robert Half Int’l Inc. v. Ainsworth, No. 14-cv-3481-WQH

(DHB), 2015 WL 4662429, *4 (S.D. Cal. Aug. 6, 2015), is instructive. There, plaintiff RHI issued a

broad subpoena to its competitor, Roth Staffing Companies, concerning claims RHI had brought against

several of its former employees. The court noted that the challenged subpoena was overbroad and sought

information beyond the scope of discovery permissible under Rule 26 because “the subpoena seeks, in

large part, discovery that goes beyond the claims or defenses of the parties, but to potential claims by

RHI against Roth.” Id., at In upholding a protective order, the court found “Roth, as a non-party, is

deserving of special protection” and did “not condone RHI’s admitted attempt to utilize the subpoena

process as a means to gather evidence against Roth in order to determine whether to name Roth as a

defendant.” Id. (emphasis in original). Accordingly, the court found no good cause under Rule 26(b)(1)

to expand the scope of discovery to any matter relevant to the subject matter of this lawsuit, and instead

that discovery should be limited to the claims and defenses of the parties. Id; see also, e.g., Micro

Motion, Inc. v. Kane Steel Co., Inc., 894 F.2d 1318, 1327 (Fed. Cir. 1990) (“The discovery rules are

designed to assist a party to prove a claim it reasonably believes to be viable without discovery, not to

find out if it has any basis for a claim.” (cit. om.)); Echostar Comms. Corp. v. News Corp., 180 F.R.D.

391, 395-96 (D. Colo. 1998) (denying discovery in view of party’s perceived “ulterior motive” of

seeking to generate evidence for a potential antitrust claim against the subpoenaed party); Wright &

Miller, Federal Practice and Procedure § 2008 (“The rule change signals to the court that it has the

authority to confine discovery to the claims and defenses asserted in the pleadings, and signals to the


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parties that they have no entitlement to discovery to develop new claims or defenses that are not already

identified in the pleadings.”) (quoting Committee Note, 192 F.R.D. 340, 389 (2000)).

Tesla’s wholly theoretical basis for seeking access to all of XMotors’ source code since

November 1, 2018 is plainly impermissible under the foregoing authorities: the company simply may

not use its existing claims against Dr. Cao—the actual party—to test the existence of new, hypothetical

claims against XMotors, a non-party. Likewise, Tesla has no basis for seeking full laptop images of

multiple individuals who had no relationship to Dr. Cao’s work.1 Such overreach directly flouts the

proportionality requirements of Rule 26, and will, based on prior experience to date, cause XMotors

substantial, unjustified burden and expense. Raber Decl., ¶¶ 22-23.

Finally, Tesla conveniently ignores that the subpoena overreaches because much of the source

code, computer images, and other information sought are actually held by XMotors’ sister company in

China. See Wu Decl., ¶¶ 4, 10. That company has no presence in the United States and is not subject to

the Federal Rules of Civil Procedure. If Tesla believes it has a basis to seek discovery from XMotors’

Chinese sister company, it should proceed via the Hague Convention. See, e.g., Verinata Health, Inc. v.

Sequenom, Inc., No. C 12–00865 SI, 2014 WL 1878822, *1 (N.D. Cal. May 9, 2014) (“if the witness is

located overseas, the procedures of the Hague Convention or other applicable treaty must be

utilized”); Mireskandari v. Daily Mail and General Trust PLC, No. CV 12-02943 MMM (FFMx), 2013

WL 12114761, *2 (C.D. Cal. Sept. 23, 2013) (party wishing to obtain evidence from foreign national

must comply with Hague Convention).

C. Tesla Has No Basis to Seek Confidential Documents Produced to the Government by XMotors in Connection With an Unrelated Investigation

Tesla further wishes to “try” XMotors in this case by seeking records that XMotors produced in

connection with a grand jury investigation into Xiaolang Zhang. Mr. Zhang started working at XMotors

1 Tesla’s request for additional computer images is independently objectionable because such discovery should be permitted only where there is evidence of discovery misconduct by the party from whom discovery is sought. See, e.g., Source One Direct, Inc. v. Digitas, Inc., No. 1:11-cv-1262-JEC-AJB, 2011 WL 13319641, *3-4 (N.D. Ga. Jun. 29, 2011) (citing In re Ford Motor Co., 345 F.3d 1315, 1317 (11th Cir. 2003)). Tesla has made no effort to show such misconduct, nor could it.


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on May 7, 2019 and was terminated on July 11, 2019. Wu Decl., ¶ 14. XMotors produced documents in

Mr. Zhang’s criminal case to the U.S. government pursuant to a grand jury subpoena as a third party.

XMotors has not been a party to the government’s criminal case against Mr. Zhang, and to the best of its

knowledge, there has been no investigation against XMotors in connection with that matter. Id.

Tesla’s position, as articulated in meet and confer discussions, is that it seeks to demonstrate a

“pattern” of misconduct by XMotors in connection with its operations and recruiting, even though no

such claims have been asserted against Dr. Cao or XMotors in this case. Nor has Tesla’s counsel

articulated any facts or evidence from the Zhang matter tying it to the allegations in this case. This

information is sought only to smear XMotors through false, misleading, and irrelevant implication.

D. Tesla Has No Basis for Deposing XMotors About Its Source Code and Source Code-Related Activities

Topics 1 and 2 in Tesla’s Deposition Subpoena will necessarily require expansive testimony

regarding XMotors’ source code that is highly confidential and critical to the business of XMotors, and

central to the operations of XMotors’ autonomous driving vehicles. As explained in Section III.B, supra,

substantial resources have been used to create the source code. Wu Decl., ¶ 11. XMotors maintains all

aspects of the source code repository and related logs as highly confidential at all times, and only

discloses it to employees who have the need to access or work with it. XMotors has its own proprietary

method of keeping track of any changes or updates to the source code and maintaining the source code.

Such method and record of who has access to XMotors’ source code, and the details of who makes

changes to which codes, is also highly confidential. Accordingly, this information is certainly not the

kind that the company would share with any third-party, much less a competitor such as Tesla. Id. These

topics should be quashed for the same reasons that Tesla’s document requests on these subjects are

improper.


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V. CONCLUSION

For the foregoing reasons, XMotors respectfully requests that its motion to quash, or

alternatively for a protective order, be granted.

Dated: March 30, 2020 RIMON, P.C.

By: Scott R. Raber____________ Scott R. Raber

Attorneys for Third Party Movant XMOTORS.AI, INC.


ZHENG LIU (SBN 229311) Menlo Park, California 94025 …...RIMON, P.C. By: /s/ Scott R. Raber Scott...

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