Judge: Anne Richardson, Case: 21STCV41934, Date: 2023-10-17 Tentative Ruling

Case Number: 21STCV41934    Hearing Date: October 17, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Pleadings

Plaintiff Carlos Navarro sues his former employers, Defendants Yunmin Corporation dba Miracle Market and Roseyun Corporation dba DND Market, as well as Miracle Market and DND Market’s alleged owner and operator, Defendant Ray Sik Yun (Yun), pursuant to an August 26, 2022 First Amended Complaint (FAC) alleging claims of: (1) Discrimination (Govt. Code § 12940(a)); (2) Failure to Accommodate (Gov. Code § 12940(m)); (3) Failure to Engage in the Interactive Process (Govt. Code § 12940(n)); (4) Retaliation (Govt. Code § 12940(h)); (5) Harassment based on Sex (Gov’t Code § 12940 (k)); (6) Retaliation (Labor Code § 1102.5); (7) Unpaid Wages (Labor Code § 201); (8) Unpaid Overtime Wages (Labor Code §§ 510, 1194); (9) Failure to Provide Meal Periods (Labor Code §§ 226.7 and 512); (10) Failure to Provide Rest Periods (Labor Code § 226.7); (11) Failure to Provide Accurate Itemized Wage Statements (Labor Code § 226); (12) Waiting Time Penalties (Labor Code § 203); and (13) Failure to Produce Personnel and Payroll Records (Labor Code § 1198.5)

The claims arise from various groups of allegations pleaded in the FAC. For example, the FAC’s FEHA claims arise, in part, from allegations that (1) throughout his employment with Yunmin and DND Markets, a “Mr. Choi”—co-employee of Plaintiff’s and family member to Defendant Yun—would repeatedly grope Plaintiff Navarro’s genitals and buttocks and attempt to kiss Navarro and (2) Plaintiff’s employers failed to take seriously, accommodate, or comply with work restrictions related to two injuries suffered by Plaintiff Navarro in the workplace.

Defendant Yun is tied to the 13 causes of action not through conduct that he himself engaged in, but rather, through allegations that Miracle Market (Defendant Yunmin) and DND Market (Defendant Roseyun) operate as mere alter egos of Yun.

Motion Before the Court

On July 26, 2023, Plaintiff Navarro took the deposition of Defendant Yun. On the advice of counsel, Defendant Yun did not answer certain questions at deposition. The deposition was ultimately suspended at 5 PM based on Defendant Yun’s counsel having a “hard stop” time of 5 PM.

Between July 27, 2023 and August 1, 2023, counsel for these parties met and conferred regarding the further deposition of Defendant Yun but failed to reach an agreement.

On August 24, 2023, Plaintiff Navarro made a motion to compel deposition answers from Defendant Yun. The motion also seeks sanctions against Defendant Yun and his counsel.

On October 4, 2023, Defendant Yun opposed the motion.

On October 10, 2023, Plaintiff Navarro replied to the opposition.

Plaintiff Navarro’s motion is now before the Court.

Motion to Compel Deposition Answers and Sanctions

Legal Standard

If [1] a deponent [2] fails to answer any question or to produce any document, electronically stored information, or tangible thing [3] under the deponent’s control [4] that is specified in the deposition notice or a deposition subpoena, [5] the party seeking discovery may move the court for an order compelling that answer or production.” (Code Civ. Proc., § 2025.480, subd. (a).)

This motion shall be made no later than 60 days after the completion of the record of the deposition and shall be accompanied by a meet and confer declaration under Section 2016.040. (Code Civ. Proc., § 2025.480, subd. (b).) The record is completed once the entire inspection at issue is finished, including the raising of objections during that process. (Unzipped Apparel, LLC v. Bader (2007) 156 Cal.App.4th 123, 134.)

Notice of this motion shall be given to all parties and to the deponent either orally at the examination, or by subsequent service in writing. If the notice of the motion is given orally, the deposition officer shall direct the deponent to attend a session of the court at the time specified in the notice. (Code Civ. Proc., § 2025.480, subd. (c).)

If a deposition transcript is available, it must also be filed with the Court not less than five days prior to the hearing on this motion. (Code Civ. Proc., § 2025.480, subd. (h); Unzipped Apparel, LLC v. Bader, supra, 156 Cal.App.4th at p. 135 [deposition transcript need not be lodged when motion to compel involves failure to produce documents requested in business-records subpoena because no part of transcript will be relevant].)

If the court determines that the answer or production sought is subject to discovery, it shall order that the answer be given or the production be made on the resumption of the deposition. (Code Civ. Proc., § 2025.480, subd. (i).)

If the proposed deponent made some response to the deposition notice, then a separate statement must accompany any motion to compel deposition attendance or production. (See Cal. Rules of Court, rule 3.1345, subd. (b).)

Order Compelling Deposition Answers: GRANTED.

I. Procedural Requirements

The Court initially notes that this motion is timely because it was made well within 60 days of the completion of the record. Here, during the deposition on July 26, 2023, objections were made by Defendant Yun’s counsel and Defendant Yun failed to answer certain questions pursuant to counsel’s objections. This motion was brought on August 24, 2023, less than 30 days later. (Code Civ. Proc., § 2025.480, subd. (b); Unzipped Apparel, LLC v. Bader, supra, 156 Cal.App.4th at p. 134; see Mot., Notice, p. 1.)

Plaintiff Navarro gave proper notice of this motion on August 24, 2023. (Code Civ. Proc., § 2025.480, subd. (c); see Mot., Notice, pp. 1-2.)

Plaintiff Navarro also made the deposition transcript available to the Court not less than five days prior to this hearing, i.e., by attaching the deposition transcript to the August 24, 2023 motion. (Code Civ. Proc., § 2025.480, subd. (h); see Mot., Chami Decl., Ex. A.)

Last, Plaintiff Navarro properly attaches a separate statement to this motion. (Cal. Rules of Court, rule 3.1345, subd. (b); see Mot., Separate Statement.)

II. Substantive Requirements

A. Answers to Capitalization

After review, the Court finds more than ample grounds to grant Plaintiff’s motion as to further testimony from Defendant Yun relating to the five capitalization questions. (See Mot., Separate Statement, Question Nos. 2-6.)

Defendant Yun has characterized capitalization questions as a fishing expedition or questions lacking foundation. (Opp’n, p. 4; Opp’n, Separate Statement, p. 8.) The Court strongly disagrees.

Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 838-840 (Associated Vendors) provides over 20 factors that courts may consider relating to whether alter ego liability should exist. Some of those factors include “the failure to adequately capitalize a corporation[] [and] the total absence of corporate assets, and undercapitalization [citations].” (Associated Vendors, supra, at p. 839.) While “[e]vidence of inadequate capitalization is, at best, merely a factor to be considered by the trial court in deciding whether or not to pierce the corporate veil[,] …, it is an important factor.” (Id. at pp. 841-842.)

Here, the five questions regarding capitalization to which objections were lodged involved the sources and amounts of capitalization to fund Yunmin and the sources and amounts of subsequent capitalization of Yunmin. (See Mot., Separate Statements, Question Nos. 2-6.) The FAC explicitly alleges that Yunmin was undercapitalized and is the alter ego of Defendant Yun. (FAC, ¶ 27; see FAC, ¶¶ 10-29.) Regardless of whether Defendant Yun has produced evidence relating to other factors of the alter ego determination, capitalization evidence remains relevant to a determination on the FAC’s alter ego claims through undercapitalization.

The Court also finds no merit to Defendant Yun’s argument based on privacy or the argument that liability must precede alter ego discovery.

First, the Court notes that corporations have a limited right to privacy compared to individuals. (Ameri-Med Corp. v. Worker’s Comp. Appeals Bd. (1996) 42 Cal.App.4th 1260, 1286-1287 (Ameri-Med) [corporation has no standing to assert a constitutional right to privacy but has a general right to privacy that depends on the circumstances, including the strength of the nexus between the artificial entity and human beings and the context in which the controversy arises].) The factors in Ameri-Med are easily met here where the nexus between Yunmin and Defendant Yun is the alter ego liability advanced by Plaintiff Navarro, and where the context of the controversy is one in which Plaintiff Navarro alleges that Defendant Yun uses Yunmin to escape liability for his own wrongdoing. (FAC, ¶¶ 4, 22, 27, 28.)

Moreover, in the face of an objection based on privacy, the party that is seeking discovery of another party’s financial information must show that this information is directly relevant to a cause of action or defense, such that the disclosure is essential to a fair resolution of the lawsuit. (Look v. Penovatz (2019) 34 Cal.App.5th 61, 73.) Here, a fair resolution of the case necessarily involves a determination of whether, if Yunmin is found liable to Plaintiff Navarro, Defendant Yun should also be found liable to Plaintiff because Defendant Yun used Yunmin as a mere shell to shield himself from direct liability from Plaintiff.

Last, arguendo, even if Plaintiff needed to show a compelling need to overcome the right to privacy here (see Williams v. Superior Court (2017) 3 Cal.5th 531, 556 [compelling need must be shown where invasion of a privacy interest is fundamental to the holder’s personal autonomy]), the Court finds that such a need exists here: the need to determine liability against Plaintiff Yun based on alter ego liability, specifically, through undercapitalization of Yunmin.

As to whether alter ego discovery/liability should follow rather than precede a final determination on liability, the Court finds that Defendant Yun has provided no authority to this effect. The scope of discovery is broad. (Code Civ. Proc., § 2017.010.) Such scope does not limit alter ego liability to post-judgment proceedings.

Plaintiff Navarro’s motion is thus GRANTED as to Question Nos. 2-6.

B. Answers Relating to Defendant Yun’s First Wife

The Court similarly finds that deposition answers are merited as to the identity of Defendant Yun’s first wife. (Mot., Separate Statement, Question No. 1.)

As argued by Plaintiff Navarro, the FAC specifically alleges sexual harassment of Plaintiff at the hands of a “Mr. Choi,” who is alleged to be a relative of Defendant Yun. (FAC, ¶¶ 46-51; see Mot., p. 8.) Plaintiff’s motion represents—admittedly with no declaration to support the representation—that “Defendant Yun has failed to properly respond to any of [Plaintiff’s] discovery requests regarding family members who worked at Yunmin or Roseyun.” (Mot., p. 8; see Reply, p. 5 [Yun has refused to provide Mr. Choi’s full name].) In turn, the opposition does not dispute this position, and the opposition separate statement focuses on the right to privacy and relevance of Defendant Yun’s first wife, whom Yun married “more than 22 years” ago. (Opp’n, Separate Statement, Question No. 1.)

Based on these circumstances, the Court determines that the identity of Plaintiff’s first wife is relevant because Mr. Choi may be a relation of hers, and identification of Defendant Yun’s first wife could be reasonably calculated to lead to the identification of Mr. Choi. Such information is therefore relevant.

The Court briefly notes that while the opposition separate statement raises the right to privacy in the identity of Defendant Yun’s first wife, the type of privacy right at issue is not specified by Defendant Yun. To the extent that such a right exists, the Court adopts the thrust of the discussion in Section II.A. above to find that because the information at issue is relevant to this cause of action, it overcomes the right to privacy that Defendant Yun has in that information.

Plaintiff Navarro’s motion is thus GRANTED as to Question Nos. 2-6.

C. Answers Relating to the Purchase and Sale of Defendant Yunmin

The Court last finds that there are sufficient grounds to compel further deposition answers as to the purchase and sale of Defendant Yunmin by Defendant Yun. (Mot., Separate Statement, Question Nos. 7-8; see FAC, ¶ 32 [Yunmin has operated as Liquorama Market].) Information related to the purchase of Yunmin is relevant to the determination of the relationship between Yunmin and Defendant Yun. Information related to the sale of Yunmin is relevant to a determination of alter ego liability because Defendant Yun’s sale of his assets could support a finding of alter ego liability by showing that Defendant Yun is disposing his assets prior to a determination in this action, particularly where the FAC alleges that Yunmin has been used to shield Defendant Yun from liability. (FAC, ¶¶ 22, 28.)

Any right to privacy objections raised by Defendant Yun lack merit. Yun’s relationship with Yunmin is critical to an alter ego determination. Whether based on the circumstances of this case or a compelling need for the discovery, the Court adopts its discussion in Section II.A. above to find that any right to privacy that Defendant Yun has in his purchase or sale of Yunmin should be discoverable.

Plaintiff Navarro’s motion is thus GRANTED as to Question Nos. 7-8.

Sanctions: GRANTED, in Part.

The court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel an answer or production, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust. (Code Civ. Proc., § 2025.480, subd. (j).)

Here, Plaintiff’s motion was granted in full. Defendant Yun thus unsuccessfully opposed the motion. The Court also finds that Defendant Yun did not act with substantial justification because his objections lacked merit, for which reason imposition of sanctions (in costs and fees) is not unjust.

However, the Court finds it proper to limit sanctions to Mr. Baik (Defendant Yun’s counsel), who is the practitioner that advised Defendant Yun not to answer relevant questions at deposition and who raised the non-meritorious objections.

Sanctions are thus GRANTED, in Part, in the amount of $7,104.70, but only as against John A.S. Biak, counsel for Defendant Yun. The Court also notes that the $2,844.70 in court reporter costs are recoverable against Mr. Baik based on his objections, and that the $4,260 in attorney’s fees and costs associated with this motion are reasonable in light of Plaintiff’s counsel’s declaration. (See Mot., Chami Decl., ¶¶ 20-22, Ex. D.) 

Conclusion

Plaintiff Carlos Navarro’s Motion to Compel Defendant Ray Sik Yun to Answer Questions in Deposition is GRANTED.

Defendant Ray Sik Yun is ORDERED to answer Question Nos. 1-8 discussed above on the resumption of his deposition. (Code Civ. Proc., § 2025.480, subd. (i).)

The parties are ORDERED to meet and confer regarding a new deposition date and provide that new date to the Court at a status conference to be held on October 24, 2023 at 8:30 AM. If no deposition date is set by that time, the Court will set the date of deposition.

Plaintiff Carlos Navarro’s Request for Monetary Sanctions in the Amount of $7,104.70 Against Defendant and His Counsel of Record is GRANTED, in Part, only as to John A.S. Biak, counsel for Defendant Yun.

John A.S. Biak, Esq. is ORDERED to pay Plaintiff Carlos Navarro $7,104.70 in monetary sanctions within 30 days of this ruling.