IntusCare, Inc. v. RTZ Associates, Inc.

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United States District Court
Northern District of California
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
INTUSCARE, INC.,
Plaintiff,
v.
RTZ ASSOCIATES, INC.,
Defendant.
Case No. 24-cv-01132-JST
ORDER DENYING MOTION FOR
RELIEF FROM NON-DISPOSITIVE
PRETRIAL ORDER
Re: ECF No. 124
Before the Court is Plaintiff IntusCare, Inc.’s motion for relief from a non-dispositive
pretrial order of a magistrate judge. ECF No. 124. Intus seeks relief from Magistrate Judge Tse’s
order requiring Intus to “produce all non-privileged documents in its possession, custody, and
control that are responsive to RFPs 66–84.” ECF No. 117 at 1. The magistrate judge previously
determined that such documents are relevant to Defendant RTZ Associates, Inc.’s counterclaims:
Intus reads the counterclaims too narrowly. RTZ alleges not only
that Intus caused system strain by accessing RTZ’s PACECare
system without authorization, but also that Intus “used such
unauthorized access to mine other valuable data from the PACECare
system . . . to expedite and refine its own development of a
competing [electronic medical record] system.” Dkt. 41,
Counterclaim ¶ 53. That competing electronic medical record
system is Intus’s CareHub. And because CareHub is one of the
fruits of Intus’s alleged unauthorized access of PACECare,
CareHub’s development, functionality, and use are relevant to
damages. Even though RTZ isn’t pursuing intellectual-property
claims, CareHub is still relevant to damages for RTZ’s
unauthorized-access claims.
Nineteen of RTZ’s RFPs relate to CareHub’s development,
functionality, and use. See Dkt. 94 at 12–24, RFPs 66–84. All of
these RFPs seek relevant documents. The Court accordingly
overrules Intus’s relevance objection.
ECF No. 96 at 1 (citations omitted). He subsequently concluded:
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United States District Court
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Intus cannot withhold responsive documents based on its contention
that RTZ cannot recover damages on a misappropriation theory. As
RTZ’s supplemental letter brief reveals (dkt. 112), Judge Chhabria
held that such a theory may be actionable under the CDAFA
[California’s Comprehensive Computer Data Access and Fraud
Act]. See Lineberry v. AddShopper, Inc., No. 23-cv-01996-VC,
2025 WL 551864, at *2 (N.D. Cal. Feb. 19, 2025) (“The statute does
not define ‘damage or loss’ and the plain reading of ‘damage or loss
by reason of a violation’ of CDAFA is that any loss due to the
CDAFA violation is cognizable. . . . [P]laintiffs may allege damage
or loss from the misappropriation of their data, so long as they
articulate that theory of loss a concrete way.”) (quoting Cal. Penal
Code § 502(e)(1)). Intus insists that Judge Chhabria’s position is a
minority view that shouldn’t be adopted, or if adopted, that RTZ
flunks the second part of Judge Chhabria’s test: RTZ hasn’t
identified its loss in “a concrete way.” Id.; see Dkt. 116 at 3. Intus
may make these arguments at trial, but RTZ gets discovery on its
misappropriation theory.
ECF No. 117 at 1–2.
“A non-dispositive order entered by a magistrate must be deferred to unless it is ‘clearly
erroneous or contrary to law.’” Grimes v. City and County of San Francisco, 951 F.2d 236, 241
(9th Cir. 1991) (quoting Fed. R. Civ. P. 72(a); 28 U.S.C. § 636(b)(1)(A)). The district court “may
not simply substitute its judgment” for that of the magistrate judge. Id. This “deferential standard
. . . indicates that decisions by the magistrate judge on nondispositive matters are essentially final
decisions of the district court which may be appealed in due course with other issues.” United
States v. Abonce-Barrera, 257 F.3d 959, 968-69 (9th Cir. 2001) (citation modified). “The ‘clearly
erroneous’ standard applies to the magistrate judge’s findings of fact; legal conclusions are freely
reviewable de novo to determine whether they are contrary to law.” Wolpin v. Philip Morris Inc.,
189 F.R.D. 418, 422 (C.D. Cal. 1999). Under the “clearly erroneous” standard, “the district court
may only set aside [a magistrate judge’s] factual determinations if it is left with a definite and firm
conviction that a mistake has been committed.” EEOC v. Peters’ Bakery, 301 F.R.D. 482, 484
(N.D. Cal. 2014) (quotation marks and citation omitted). “A decision is ‘contrary to law’ if it
applies an incorrect legal standard or fails to consider an element of the applicable standard.”
Ingram v. Pac. Gas & Elec. Co., No. 12-cv-02777-JST, 2013 WL 6174487, at *2 (N.D. Cal.
Nov. 25, 2013) (quoting Conant v. McCoffey, No. C 97-0139-FMS, 1998 WL 164946, at *2 (N.D.
Cal. Mar. 16, 1998)).
Intus argues that the magistrate judge’s ruling is contrary to law because it relies on an
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incorrect interpretation of available damages under CDAFA. The Court disagrees. CDAFA
provides:
In addition to any other civil remedy available, the owner or lessee
of the computer, computer system, computer network, computer
program, or data who suffers damage or loss by reason of a violation
of any of the provisions of subdivision (c) may bring a civil action
against the violator for compensatory damages and injunctive relief
or other equitable relief. Compensatory damages shall include any
expenditure reasonably and necessarily incurred by the owner or
lessee to verify that a computer system, computer network,
computer program, or data was or was not altered, damaged, or
deleted by the access.
Cal. Penal Code § 502(e)(1). Intus characterizes the second sentence as “unambiguous language
limiting CDAFA damages to actual harm to a computer system or network.” ECF No. 124 at 4.
However, the “statement is best read as ensuring one type of damage is cognizable, not limiting
damages to that alone.” Lineberry, 2025 WL 551864, at *2. “Further, to show ‘damage or loss’
under CDAFA, a plaintiff need not have suffered a corresponding loss, as ‘California law
recognizes a right to disgorgement of profits resulting from unjust enrichment.’” Rodriguez v.
Google LLC, No. 20-cv-04688-RS, 2024 WL 38302, at *6 (N.D. Cal. Jan. 3, 2024) (quoting In re
Facebook, Inc. Internet Tracking Litig., 956 F.3d 589, 599–600 (9th Cir. 2020)). In addition,
RTZ’s counterclaims allege:
Specifically, through its unauthorized access of PACECare, Intus
achieved two goals: (i) it can extract PACE Data to fulfill its data
synthesis/dashboard services to common PACE facility customers;
and (ii) it exploits such access to view and assess the PACECare
system to accelerate its own EMR system research and development
efforts. By accessing PACECare without authorization, Intus
exploited the wrongful access to investigate and learn about the
functionality, operability, layout, interfaces, data presentation and
report-generating capabilities of the PACECare system. In so doing,
Intus used such unauthorized access to expedite and refine its own
development of a competing EMR system.
ECF No. 41, Countercl. ¶ 45. Intus has not persuaded the Court that this is insufficient to allege
RTZ’s harm. Intus may believe that it will prevail on the counterclaims, but this discovery dispute
is not the forum for resolving that merits question. The magistrate judge’s ruling that the
discovery sought is relevant to RTZ’s counterclaims was not contrary to law.
Intus also argues that the discovery sought by RTZ is “expansive” and implies that it is not
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“proportional to the needs of the case.” ECF No. 124 at 6 (citation omitted). But, as was the case
before the magistrate judge, Intus continues to offer no “evidence of the ‘burden or expense’ of
production.” ECF No. 117 at 1 (quoting Fed. R. Civ. P. 26(b)(1)).
For all of the above reasons, Intus’s motion for relief from the magistrate judge’s discovery
order is denied.
IT IS SO ORDERED.
Dated: May 11, 2026
______________________________________
JON S. TIGAR
United States District Judge
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