In the hotly contested case of Calendar Research LLC v. StubHub, Inc. et al., which is venued in the Central District of California, the plaintiff alleges misappropriation of trade secrets. Recently, the federal judge overseeing the litigation ruled that a source code expert, who had served very early in the litigation as a neutral evaluator for the parties to determine whether the defendant’s source code was based on Plaintiff’s misappropriated code, was disqualified from being used as an expert witness by defendant, StubHub, at trial.

On September 22, 2017, Hon. Stephen V. Wilson of the U.S. District Court for the Central District of California ruled on plaintiff Calendar Research LLC’s motion to disqualify tech expert Dr. Cynthia Lee from serving as an expert witness for defendant StubHub, Inc. at trial.

The District Court noted in its opinion that early in the case, the parties had agreed to retain Dr. Lee as a neutral evaluator to analyze source code from all parties related to Calendar Research’s arguments that its former employee, Michael Gray, had stolen its trade secrets, including the source code of its primary product—a smartphone application called “Klutch.” That product purports to simplify scheduling of business meetings and meetups. As part of her evaluation, Dr. Lee had entered into confidentiality agreements with the parties, received proprietary source code from the parties, and ultimately provided the parties with a written report of findings. Months later, StubHub designated Dr. Lee as its expert for the case, a designation which Calendar Research immediately challenged.

The District Court explained that federal courts have a so‑called “bright-line” rule requiring the disqualification of any expert witness who has switched sides in a case. The Court reasoned that “an expert who switches sides during the same dispute jeopardizes the fundamental fairness and integrity of the judicial process.” In this case, Dr. Lee had received confidential source code from Calendar Research “in reliance on the expectation that she would keep the source code, and her analysis, in confidence.” The Court therefore held that by abandoning her initial posture as a third-party neutral in favor of an adversarial role on StubHub’s behalf, Dr. Lee had “effectively switched sides” and was thus disqualified from serving as StubHub’s expert witness.

This decision serves as a reminder for parties facing the prospect of litigation—particularly cases involving significant technical issues, such as trade secret claims—that although early evaluation of a neutral “expert” can be very helpful to resolve the dispute, the parties should be mindful to ensure that they precisely agree as to the scope of the role of the neutral, including what use of the information the third-party neutral can make of the information shared, whether such information may be used in the litigation, and whether the neutral has a role beyond the early settlement negotiations.