1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6

7 EHEALTHINSURANCE SERVICES, INC., Case No. 21-cv-4061-YGR

8 Plaintiff, ORDER GRANTING PRELIMINARY

INJUNCTION AND DIRECTING EXPEDITED

9 v. DISCOVERY; DIRECTING FURTHER

STATEMENT RE: MOTION TO COMPEL

10 HEALTHPILOT TECHNOLOGIES LLC, ARBITRATION

DAVID FRANCIS, HARPAL HARIKA, ERIC

11 HOWELL, SETH TEICH, GUANGNIAN (Dkt. No. 2)

ZHANG, DAVID NICKLAUS AND HIMANSHU

12 RASTOGI, 13 Defendants.

14 Plaintiff eHealthinsurance Services, Inc. (“eHealth”) filed a complaint alleging breach of 15 contract and trade secret misappropriation, as well as a motion for preliminary injunction and a 16 request for expedited discovery against defendants Healthpilot Technologies LLC (“Healthpilot”), 17 David Francis, Harpal Harika, Eric Howell, Seth Teich, Guangnian Zhang, David Nicklaus and 18 Himanshu Rastogi. (Dkt. Nos. 1, 2, 4.) 19 On July 13, 2021, eHealth’s motion came on for hearing. The Court directed the parties to 20 file supplemental submissions regarding their positions on a protocol for discovery and handling 21 of electronically stored information, which they filed on July 14, 2021. (Dkt. No. 55.) Plaintiff 22 was also directed to submit a statement on its position as to the pending motion to compel 23 arbitration, filed by defendants on July 12, 2021. (Dkt. No. 50.) Plaintiff filed its statement on 24 July 15, 2021. (Dkt. No. 56.) 25 The Court, having carefully considered the papers and pleadings on file, the evidence 26 submitted in support and in opposition, and the arguments of the parties, and for the reasons stated 27 on the record and below, GRANTS a Preliminary Injunction on the terms set forth herein. 1 relief in order to prevent irreparable injury. To establish a right to a preliminary injunction, a 2 plaintiff must demonstrate that: (1) it is likely to succeed on the merits; (2) it is likely to suffer 3 irreparable harm absent preliminary relief; (3) the balance of equities tips in its favor; and (4) the 4 injunction is in the public interest. Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). 5 The Court finds that eHealth has established each element required for a preliminary injunction. 6 eHealth has presented substantial evidence establishing a likelihood of success on its 7 claims that the Individual Defendants breached their employment agreements, misappropriated 8 eHealth’s trade secrets, and used eHealth’s confidential and trade secret information. 9 Defendants Harpal Harika, Eric Howell, David Francis, Seth Teich, Himanshu Rastogi, 10 Guangnian Zhang, and David Nicklaus (collectively, “the Individual Defendants”) entered into 11 Proprietary Information and Inventions Agreements that required them to keep eHealth’s 12 confidentiality and proprietary information confidential, not to use or disclose eHealth’s 13 confidential and proprietary information except for the benefit of eHealth, and to return eHealth’s 14 property and information at the end of their employment with eHealth. (Billings Decl., ¶ 8, Exhs. 15 1-6.) 16 eHealth presented evidence that the Individual Defendants breached their employment 17 agreements by copying and/or sharing eHealth’s proprietary information for their own use and 18 purpose, by failing to return those materials to the company upon termination of their 19 employment, and in some cases by disclosing and using that information in a manner adverse to 20 eHealth. (See Ackert Decl., ¶¶ 20-23; Hannan Decl., ¶¶ 9-13, Exhs. A-F.; Supp. Hannan ¶¶ 9, 10, 21 Exh. 1.) 22 Plaintiff eHealth further offered evidence that the materials taken by Individual Defendants 23 contained trade secret information. To prevail on the merits of a trade secret misappropriation 24 claim, a plaintiff must demonstrate that it has protectable trade secrets and that defendant 25 misappropriated those trade secrets. See MAI Sys. Corp. v. Peak Computer, 91 F.2d 511, 522 (9th 26 Cir. 1993); AMN Healthcare, Inc. v. Aya Healthcare Servs., Inc., 28 Cal.App.5th 923, 942 (2018) 27 (“A cause of action for misappropriation of trade secrets requires a plaintiff to show the plaintiff 1 defendant improperly acquired, used, or disclosed the trade secret; the plaintiff was harmed; and 2 the defendant's acquisition, use, or disclosure of the trade secret was a substantial factor in causing 3 the plaintiff harm.”); Cal. Civ. Code § 3426.1; 18 U.S.C. § 1839. Here, the Court finds that 4 eHealth has described its trade secrets in detail, including by specifically identifying documents 5 downloaded or saved in internet-based storage. (See Hannan Decl., ¶¶ 4-5, 9(a)-(c), 12, 13, Exhs. 6 A-F; Chau Decl., ¶¶ 2, 4, Exhs. A and B; Shasha Decl., ¶ 5, Exh. A; Ackert Decl., ¶ 22(b)); 7 Romeo Decl. Exh. 1 [Section 2019.210 disclosure statement].) eHealth has also offered evidence 8 that it uses reasonable measures to keep this information confidential. (Billings Decl., ¶¶ 7-8.) 9 Further, eHealth has offered evidence to show that the individual defendants took eHealth’s trade 10 secrets without authorization and, in some cases, shared and disclosed that information, apparently 11 for the benefit of defendant Healthpilot. (Hannan Decl., ¶¶ 9-13, Exhs. A-C, F; Chau Declaration, 12 ¶¶ 4-5, Exhs. A-B; Billings Decl., ¶ 9(c); Shasha Decl., ¶ 5, Exh. A; Ackert Decl., ¶ 22(b).) 13 eHealth has further presented evidence to show that it would be irreparably harmed in the 14 absence of an injunction. eHealth’s evidence indicates that the Individual Defendants took 15 significant amounts of confidential and proprietary information that could be used by them and 16 defendant Healthpilot, their current employer, to compete unfairly against eHealth. Indeed, 17 defendants concede that at least some of plaintiff’s information has been used to inform its 18 competing business. (See Oppo. at 7:1-15 [eHealth’s guide for onboarding insurance carriers was 19 taken by defendant Nicklaus and shared with defendants Francis, Teich, and Healthpilot].) 20 Accordingly, the Court finds that eHealth is likely to succeed on its breach of contract and 21 trade secret misappropriation claims and that eHealth is likely to suffer irreparable harm absent 22 preliminary relief. 23 The Court further finds that the balance of the equities and public interest factors favor 24 preliminary injunctive relief. eHealth has made an unrebutted showing that the Individual 25 Defendants have no right to possess, use, or disclose its confidential and trade secret information 26 and have a contractual duty to return such information to the company. Here, the preliminary 27 injunction would require Defendant to do “no more than abide by trade laws and the obligations of 1 F.Supp.3d 1072, 1077-78 (N.D. Cal. 2016) (finding “public interest is served when defendant is 2 asked to do no more than abide by trade laws and the obligations of contractual agreements signed 3 with her employer”); Comet Techs. United States of Am. Inc. v. Beuerman, No. 18-CV-01441- 4 LHK, 2018 WL 1990226, at *5 (N.D. Cal. Mar. 15, 2018) (balance of the equities favors plaintiff 5 where injunctive relief “‘would essentially only require him to abide by existing law regarding the 6 unauthorized use of another’s trade secrets’”) (quoting Pyro Spectaculars N., Inc. v. Souza, 861 F. 7 Supp. 2d 1079, 1092 (E.D. Cal. 2012)). 8 Based upon the foregoing, the motion for preliminary injunction and for expedited 9 discovery is GRANTED. 10 Because the order here enjoins defendants from using or disclosing eHealth’s confidential 11 and proprietary information and to work in good faith to restore that confidential and proprietary 12 information to eHealth, the Court finds that the likelihood of loss or damage to defendants on 13 account the injunction is not likely to be high if the injunction is later determined to have been 14 granted improvidently. Therefore, a bond of $10,000, to account of costs incurred in complying 15 with the ESI protocol is sufficient. 16 PRELIMINARY INJUNCTION 17 IT IS HEREBY ORDERED THAT: 18 1. Defendants, and those acting in concert with them, are hereby enjoined from: (i) 19 using, disclosing, exploiting, transmitting, copying, or accessing, either directly or indirectly, any 20 eHealth confidential, proprietary, and/or trade secret information (collectively the “Confidential 21 Information”) in any way, regardless of where stored or copied; and (ii) deleting or manipulating 22 any Confidential Information or other data copied or taken from eHealth, regardless of whether it 23 is stored on an electronic device, internet or cloud-based storage or email account, or in any other 24 format. 25 2. Defendants are ordered, within five (5) days, to: (i) immediately turn over to 26 eHealth any and all hard copies of any documents containing any eHealth Confidential 27 Information in their possession, custody, or control; (ii) make available all of their electronic data 1 those computers issued by eHealth), hard drives, USB storage devices, cloud based data storage 2 systems, smart phones, and any other electronic storage device(s) (together with log-ons and 3 passwords for each) to an independent third party forensic analyst to create a forensic image to (a) 4 preserve data; and (b) verify if the Individual Defendants and/or Healthpilot are in possession, 5 custody, or control of eHealth’s Confidential Information, and to determine whether and how such 6 information may have been copied, altered, used, or deleted. The forensic examination shall be 7 conducted pursuant to the Order Re: Discovery of Electronically Stored Information and Forensic 8 Inspection Protocol, entered by the Court this date. 9 3. Defendants are ordered to preserve all evidence, whether electronic or otherwise, 10 related in any way to this matter. 11 4. Within three (3) days of the issuance of this Order, eHealth shall post a bond in the 12 amount of $10,000.00 and file with the Court proof of issuance of such bond. The injunction 13 described above shall be effective immediately upon the posting of this bond. 14 EXPEDITED DISCOVERY 15 The Court directs the parties to engage in expedited discovery pursuant to the Fed. R. Civ. 16 P. 34. Specifically, eHealth is entitled to expedited discovery as follows: 17  One set of fifteen document inspection requests total, with no subparts to which defendants 18 shall provide substantive responses within seven (7) days of service; and 19  One set of fifteen interrogatories total, with no subparts, to which defendants shall provide 20 substantive responses within seven (7) days of service. 21  Defendants each shall submit to depositions of no more than four hours each within 22 fourteen (14) days of issuance of this Order or on such dates agreed to by the parties. 23 To the extent this matter is compelled to arbitration, the arbitrator shall have the authority 24 to modify this order for expedited discovery without further Order of the Court.

FURTHER ORDERS

25 6. Plaintiff eHealth has indicated in its filing of July 15, 2021 that it “may be willing 26 to agree to a voluntary global arbitration of all claims after the Preliminary Injunction is issued” 27 ] final agreement.” (Dkt. No. 56.) Plaintiff eHealth is ORDERED to file a supplemental notice or 2 || stipulation regarding the pending motion to compel arbitration within three (3) business days of 3 issuance of this Order. 4 This terminates Docket No. 2. 5 IT Is SO ORDERED. 6 || Dated: July 20, 2021 7

YVONNE GONZALEZ ROGER

8 NITED STATES DISTRICT COURT JUDGE 9 10 1] 12

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