Neo Ivy Capital Management LLC v. Savvysherpa LLC
0:18-mc-00094
| D. Minnesota | Mar 8, 2019Background
- Neo Ivy (quant hedge fund) seeks to enforce AAA arbitration third-party subpoenas served on Savvysherpa and UnitedHealth Group (UHG) for documents relating to former Neo Ivy employee Yinglong (Guo).
- Guo left Neo Ivy for Savvysherpa; Neo Ivy counterclaimed in arbitration alleging misappropriation of trade-secret source code and breach of a non-compete.
- Arbitrator issued subpoenas to Savvysherpa and UHG; both timely objected but did not move to quash before the subpoenas’ return date; Neo Ivy then filed this enforcement action under the FAA.
- Subpoenas were broad, covering hiring, H-1B transfer, work product, investment activity (2015–present), machine‑learning/AI research, and any computer code/software created or provided by Guo.
- District court treated the motion as a Report & Recommendation because deciding enforcement would effectively resolve the petition; court deferred to arbitrator on materiality but considered non‑party burden and Rule 45 obligations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Savvysherpa/UHG waived right to seek quash/modify by not moving before return date | Defendants waived because they only served objections and did not move to quash by return date | Objections preserved; Rule 45 does not fix a strict deadline and motions would be pointless delay here | No waiver; objections preserved and court may consider burden on non‑parties despite arbitrator’s issuance of subpoenas |
| Requests Nos. 1–2 (hiring & H‑1B transfer for Guo) | Necessary; should be produced | Agreed to produce; no dispute | Ordered produced (by March 15, 2019) |
| Request No. 3 (UHG hiring of Guo / acquisition communications) | Relevant to whether UHG had any role or communications about Guo during acquisition | UHG says it did not hire Guo but may have internal acquisition communications | Produce UHG documents discussing Savvysherpa employees/Guo during acquisition (by March 15, 2019) |
| Request No. 4 (all documents relating to work Guo performed) | Needed to show use of Neo Ivy source code at Savvysherpa/UHG | Overbroad (would capture essentially all Guo emails; massive burden/cost) | Narrowed: produce internal communications/docs that discuss/compare/contrast Guo’s work at Savvysherpa/UHG with his prior Neo Ivy work (by March 20, 2019) |
| Request No. 5 (investment activity 2015–present, incl. UHG/Optum Ventures) | Bears on whether Defendants compete with Neo Ivy | Overbroad, unduly burdensome, includes proprietary info; little relevance pre‑July 2017 | Limited: produce documents reflecting Savvysherpa/Optum Ventures investment or consideration of investment in specific companies identified by Neo Ivy (July–Dec 2017); Neo Ivy must provide target list within one week |
| Request No. 6 (ML/AI research and pattern recognition) | Relevant to competitive overlap | Seeks highly confidential, enterprise‑wide proprietary info; undue burden and remote relevance | Denied as overbroad and unduly burdensome |
| Request No. 7 (any computer code/software created or provided by Guo) | Plaintiffs seek source code to test misappropriation claim | Vast quantity of code (18.6 GB); highly confidential; Plaintiffs offered no way to target search | Denied as overbroad; court will enforce targeted production if Plaintiffs supply information permitting a narrow inquiry |
Key Cases Cited
- In re Security Life Ins. Co. of Am., 228 F.3d 865 (8th Cir.) (district court enforces subpoenas issued by arbitrator but should not reassess arbitrator’s materiality determination)
- Misc. Docket Matter #1 v. Misc. Docket Matter #2, 197 F.3d 922 (8th Cir.) (heightened concern for burden on non‑party subpoena recipients; Rule 45 duties to avoid undue burden)
- In re Remington Arms Co., 952 F.2d 1029 (8th Cir.) (party seeking confidential proprietary discovery must show need outweighs injury from disclosure)