Judge: Donald F. Gaffney, Case: Asics America Corporation v. Shoebacca Ltd., Date: 2023-07-26 Tentative Ruling
TENTATIVE RULING:
Having reviewed Plaintiff Asics America Corporation’s Objection to the Report and Recommendations of Discovery Referee on Matters Heard March 24, 2023, including the Report and Recommendations of Discovery Referee on Matters Heard March 24, 2023 (Exhibit 1 to Declaration of Collin P. Wedel), the Court overrules Plaintiff’s objections to the Discovery Referee’s rulings to Request for Production nos. 209-211 and 214-215.
(a) Unless otherwise directed by the court, the referees or commissioner must report their statement of decision in writing to the court within 20 days after the hearing, if any, has been concluded and the matter has been submitted.
(b) A referee appointed pursuant to Section 638 shall report as agreed by the parties and approved by the court.
(c) A referee appointed pursuant to Section 639 shall file with the court a report that includes a recommendation on the merits of any disputed issue, a statement of the total hours spent and the total fees charged by the referee, and the referee's recommended allocation of payment. The referee shall serve the report on all parties. Any party may file an objection to the referee's report or recommendations within 10 days after the referee serves and files the report, or within another time as the court may direct. The objection shall be served on the referee and all other parties. Responses to the objections shall be filed with the court and served on the referee and all other parties within 10 days after the objection is served. The court shall review any objections to the report and any responses submitted to those objections and shall thereafter enter appropriate orders. Nothing in this section is intended to deprive the court of its power to change the terms of the referee's appointment or to modify or disregard the referee's recommendations, and this overriding power may be exercised at any time, either on the motion of any party for good cause shown or on the court's own motion.
(Code Civ. Proc., § 643.)
(a) In the case of a consensual general reference pursuant to Section 638, the decision of the referee or commissioner upon the whole issue must stand as the decision of the court, and upon filing of the statement of decision with the clerk of the court, judgment may be entered thereon in the same manner as if the action had been tried by the court.
(b) In the case of all other references, the decision of the referee or commissioner is only advisory. The court may adopt the referee's recommendations, in whole or in part, after independently considering the referee's findings and any objections and responses thereto filed with the court.
(Code Civ. Proc., § 644.) [See ROA # 346, ¶¶ 14-16 (while the parties stipulated to the appointment of a discovery referee, they also agreed they could object to the discovery referee’s findings).]
Analysis
“The court has broad discretion to determine the best method for considering a party’s challenges to the referee’s findings, and the court is not required to hold a hearing or conduct a de novo analysis of the underlying arguments. [Citations.] In its review, the court should give the referee’s findings ‘ “great weight” ’ and focus on the parties’ objections to those findings. [Citation.] We examine the trial court’s decision to accept the referee’s recommendation for an abuse of discretion. [Citation.]” (Lopez v. Watchtower Bible & Tract Society of New York, Inc. (2016) 246 Cal.App.4th 566, 589.) “Absent a contrary indication on the record, we are required to accept the court’s statements and presume the court complied with its statutory duties.” (Id. at p. 190; accord, Cornerstone Realty Advisors, LLC v. Summit Healthcare Reit, Inc. (2020) 56 Cal.App.5th 771, 799.)
A motion to compel further responses to RFP’s “shall set forth specific facts showing good cause justifying the discovery sought by the demand.” (§ 2031.310, subd. (b)(1).)
“ ‘Although the scope of civil discovery is broad, it is not limitless.’ [Citation.] Discovery devices must ‘be used as tools to facilitate litigation rather than as weapons to wage litigation.’ [Citation.] A party seeking to compel discovery must therefore ‘set forth specific facts showing good cause justifying the discovery sought.’ [Citations.] To establish good cause, a discovery proponent must identify a disputed fact that is of consequence in the action and explain how the discovery sought will tend in reason to prove or disprove that fact or lead to other evidence that will tend to prove or disprove the fact.” (Digital Music News LLC v. Superior Court (2014) 226 Cal.App.4th 216, 224, disapproved, on other grounds, as discussed in Williams v. Superior Court (2017) 3 Cal.5th 531, 557, fn. 8 [disapproving line of cases, including Digital Music, to the extent they held a party seeking discovery of private information must always establish compelling interest or compelling need without regard to other considerations as stated in Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 34-35].)
RFP nos. 209-211
RFP nos. 209-211 seek documents and communications sufficient to identify all of Defendant’s, Nafta Traders, Inc., and Gatt Trading, Inc.’s employees. (Exhibits 31-32 to Declaration of Collin P. Wedel in Support of Objection.)
Defendant objected to each of these three RFP’s, objecting on the basis that each request: (1) was overbroad, (2) sought irrelevant information; and (3) invaded its employees’ privacy rights. In its responses, Defendant explained it had more than 200 employees, the vast majority of whom had no involvement in, and possessed no knowledge of, any of the events or transactions underlying the claims in this action. (Exhibit 32 to Wedel Declaration; see also Exhibit 33 to Wedel Declaration [Defendant argued why the motion should be denied].)
Defendant further explained the names of any employees who had any involvement in this lawsuit had already been disclosed in prior document productions. In addition, Defendant pointed out this dispute arises out of contracts that involved only Plaintiff and Defendant, not Nafta or Gatt. (Exhibit 32 to Wedel Declaration.)
In the discovery hearing, Plaintiff reiterated its position as to why the identity of Defendant’s, Nafta’s, and Gatt’s employees were subject to discovery. (Exhibits 33-34 to Wedel Declaration.) In turn, Defendant argued that whether Defendant did business with Nafta and/or Gatt was not the basis for these requests. It also disputed Plaintiff’s contention that Defendant and its affiliated companies commingled money. Instead, it argued, while the parties may do business together, they separately accounted for the transactions, just as Plaintiff surely does with its affiliated companies, including its parent company in Japan.
The Discovery Referee considered the parties’ arguments, and it ultimately found Defendant’s relevance, privacy, and overbroad objections were all well-taken.
Further, in reviewing Plaintiff’s Complaint, nowhere does it allege Defendant fabricated its financial statements in order to induce Plaintiff into entering into either the Agreement or the Hash Agreement. While Plaintiff’s Answer to the Cross-Complaint includes an affirmative defense of fraud, that affirmative defense only applies to the drafting of the definition of “Hash Footwear.” [ROA # 348] The Answer also asserts that it was Defendant who breached the subject contracts. However, again, there are no assertions that Defendant’s breaches were related in any way to commingling of funds, or fraud on its part.
In other words, while Plaintiff may believe Defendant commingled assets with related companies to inflate its financials, documents that reveal the identities of all of Defendant’s, Nafta’s, and Gatt’s employees, even those who have no involvement or knowledge of the issues of this case, have little, if any, relevance to Plaintiff’s case in chief, or its defense to the operative Cross-Complaint.
While discovery statutes must be construed liberally so they may accomplish their purpose, the trial court properly exercises its discretion in refusing to compel further responses where the discovery calls for the disclosure of matters so remote from the subject matter of the action as disclosed by the issues framed by the pleadings. (Columbia Broadcasting System, Inc. v. Superior Court for Los Angeles County (1968) 263 Cal.App.2d 12, 18-19.) “ ‘[D]iscovery, like all matters of procedure, has its ultimate and necessary boundaries.’ ” (Id. at p. 19; see Rodriguez v. Knight (E.D. Cal., May 19, 2023, No. 2:19-CV-02552-DJC-DB) 2023 WL 3570612, at *3 [right to discovery, even plainly relevant discovery, is not limitless, as the court must also consider the remoteness of discovery].)
Since RFP nos. 209-211 seek, at best, remotely relevant documents, the court agrees with the Discovery Referee’s finding that Defendant’s relevance, privacy, and overbroad objections were all well-taken. Thus, Plaintiff did not establish good cause to compel the production of such documents. However, as the Discovery Referee explained, the denial is without prejudice, which allows Plaintiff to propound more narrow and tailored requests.
a. RFP nos. 214-215
RFP nos. 214-215 seek all documents and communications relating to PPP loans Nafta Traders, Inc. and Gatt Trading, Inc. may have requested or received. (Exhibit 31 to Wedel Declaration
In response, Defendant objected that these requests were irrelevant and not likely to lead to the discovery of admissible evidence. It also objected that these requests were overbroad and unduly burdensome. Again, Defendant explained neither Nafta nor Gatt were parties to any of the transactions or events underlying the Complaint and Cross-Complaint. (Exhibit 32 to Wedel Declaration.)
As with RFP nos. 209-211, Plaintiff does not allege in its Complaint, and it does not claim in its Answer to the operative Cross-Complaint, that it was induced into entering into either the Agreement or Hash Agreement by way of fraud, namely, the manipulation of financial documents through the commingling of funds between Defendant and its affiliated companies.
In its Objection, Plaintiff dedicates much of its time to claiming Defendant provided fraudulent financial statements to increase its credit limit with Plaintiff. However, whether or not Defendant falsified financial statements is only remotely relevant to whether Defendant breached the original Agreement between Plaintiff and Defendant. Plaintiff need only establish Defendant breached the Agreement by failing to pay Plaintiff. Plaintiff need not establish any fraud on the part of Defendant.
As the Discovery Referee found, these requests were both irrelevant and overbroad. More importantly, Plaintiff did not establish good cause to compel the production of documents related to PPP loans obtained by Nafta or Gatt.
The court further finds that the Discovery Referee did not apply an incorrect and untenable standard of relevance. Instead, as discussed, the Discovery Referee correctly found the disputed discovery called for the production of documents “so remote from the subject matter of the action as disclosed by the issues framed by the pleadings….” (Columbia, supra, 263 Cal.App.2d 12, 19.)
For the foregoing reasons, the Court overrules Plaintiff’s objection to the Discovery Referee’s Order.
Defendant to give notice.