Judge: Christopher K. Lui, Case: 21STCV19443, Date: 2024-01-08 Tentative Ruling

Case Number: 21STCV19443    Hearing Date: January 8, 2024    Dept: 76

            Plaintiffs entered into a distribution agreement with Defendants to manufacture and distribute hand sanitizers as a result of increased demand during the pandemic. Defendants failed to pay supply vendors, which caused Plaintiff Valley of the Sun Cosmetics, LCC to enter into settlement agreements with some of the vendors. This caused damage to Plaintiffs’ business reputation with the vendors.

Defendants filed a Cross-Complaint alleging that Cross-Defendants/Plaintiffs executed a Settlement Agreement that settled the claims alleged in the Complaint, and thus, breached the Settlement Agreement by filing this lawsuit.

Defendant Clean Beauty Concepts, LLC brings a motion to compel supplemental responses to special interrogatories and document requests, and requests sanctions.

Due to Defendant combining multiple motions, the Court staggered the hearing dates. The Court continued the hearing on the motion to compel further responses to request for production from Plaintiff Valley of the Sun Cosmetics, LLC was continued to this date.

RECOMMENDED TENTATIVE RULING

            Conditioned upon providing proof that an additional $60 filing fee was paid for this motion, Defendant Clean Beauty Concepts, LLC’s motion to compel further responses to requests for production of documents propounded upon Plaintiff Valley of the Sun Cosmetics is GRANTED as to requests Nos. 1 – 14. Further responses are due within 20 days.

            Defendant’s request for sanctions is DENIED.

Further, the parties are ordered to comply with the Order Re: Discovery Management which the Court will issue concurrently herewith, which prohibits the parties and their attorneys from using the CRS system to reserve any motions to compel, absent prior court approval of a hearing date or, alternatively, the scheduling of an informal discovery conference.

ANALYSIS

Motion To Compel Supplemental Responses To Document Requests

Due to Defendant combining multiple motions, the Court staggered the hearing dates. The Court continued the hearing on the motion to compel further responses to request for production from Plaintiff Valley of the Sun Cosmetics, LLC was continued to this date.

            Conditioned upon Defendant providing proof that an additional $60 filing fee was paid for this motion, the Court will proceed to rule on the continued motion.

(a) On receipt of a response to a demand for inspection, copying, testing, or sampling, the demanding party may move for an order compelling further response to the demand if the demanding party deems that any of the following apply:

(1) A statement of compliance with the demand is incomplete.

(2) A representation of inability to comply is inadequate, incomplete, or evasive.

(3) An objection in the response is without merit or too general.

(b) A motion under subdivision (a) shall comply with each of the following:

(1) The motion shall set forth specific facts showing good cause justifying the discovery sought by the demand.

(2) The motion shall be accompanied by a meet and confer declaration under Section 2016.040.

(3) In lieu of a separate statement required under the California Rules of Court, the court may allow the moving party to submit a concise outline of the discovery request and each response in dispute.

(c) Unless notice of this motion is given within 45 days of the service of the verified response, or any supplemental verified response, or on or before any specific later date to which the demanding party and the responding party have agreed in writing, the demanding party waives any right to compel a further response to the demand.

.  . .

(i) Except as provided in subdivision (j), if a party fails to obey an order compelling further response, the court may make those orders that are just, including the imposition of an issue sanction, an evidence sanction, or a terminating sanction under Chapter 7 (commencing with Section 2023.010). In lieu of, or in addition to, that sanction, the court may impose a monetary sanction under Chapter 7 (commencing with Section 2023.010).

.  .  .

     (Civ. Proc. Code § 2031.310.) 

Plaintiff Valley of the Sun Cosmetics served its responses to requests for production on September 14, 2023. (Declaration of Gregory Korn, ¶ 7; Exh. 6.) These motions were timely filed and served on October 6, 2023, before expiration of the 45-day deadline. 

Defendant’s counsel engaged in sufficient meet and confer efforts prior to bringing this motion. (Korn Decl., ¶¶ 19 – 22; Exh. 10.) 

            The Court addresses the requests for production set forth in the separate statement:

¿         Requests For Production Nos. 1 – 13: GRANTED IN PART.

            In the separate statement, Defendant has made a fact-specific showing of good cause for production of the category of documents requested, but not as to the scope of the request, i.e., from 2018.

            Plaintiff’s objection on the ground that the request is overbroad is SUSTAINED. The remainder of Plaintiff’s objections are OVERRULED. The privacy objection as to Plaintiff Ajmal Shehzad and his family members is not well-taken, as he could have given financial assistance to Plaintiff VOTS.

¿         Requests For Production Nos. 14: GRANTED IN PART.

In the separate statement, Defendant has made a fact-specific showing of good cause for production of the category of documents requested, but not as to the scope of the request, i.e., from 2018.

            Generally, tax returns are privileged from disclosure except in certain specified instances:

There is no recognized federal or state constitutional right to maintain the privacy of tax returns. (Citations omitted.) California courts, however, have interpreted state taxation statutes as creating a statutory privilege against disclosing tax returns. (Citations omitted.) The purpose of the privilege is to encourage voluntary filing of tax returns and truthful reporting of income, and thus to facilitate tax collection. (Citation omitted.)

But this statutory tax return privilege is not absolute. The privilege will not be upheld when (1) the circumstances indicate an intentional waiver of the privilege; (2) the gravamen of the lawsuit is inconsistent with the privilege; or (3) a public policy greater than that of the confidentiality of tax returns is involved. ( Schnabel v. Superior Court, supra, 5 Cal. 4th at p. 721.)  This latter exception is narrow and applies only "when warranted by a legislatively declared public policy." (Ibid.) A trial court has broad discretion in determining the applicability of a statutory privilege. (Citation omitted.)

(Weingarten v. Superior Court (2002)102 Cal. App. 4th 268, 274 [bold emphasis added].)

Here, the gravamen of Plaintiffs’ claim that they signed the settlement under economic duress is inconsistent with the tax privilege. However, Plaintiff need only produce tax returns from 2020 to the present.

            Request For Sanctions

            The request for sanctions is DENIED. The notice of motion request that the court order “Plaintiffs to pay, jointly and severally, sanctions in the amount of $15,632.” (Notice of Motion, page 2:18-19.) There is no basis to hold Plaintiffs jointly and severally liable for all four motions. Defendant should have separated out each sanction request, but failed to do so.

A request for a sanction shall, in the notice of motion, identify every person, party, and attorney against whom the sanction is sought, and specify the type of sanction sought. The notice of motion shall be supported by a memorandum of points and authorities, and accompanied by a declaration setting forth facts supporting the amount of any monetary sanction sought.

     (Civ. Proc. Code, § 2023.040.)