Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

MOVING PARTY: Plaintiff David Carter  

 

RESPONDING PARTY: Defendant Yuan Shi 

 

BACKGROUND 

This case arises from a dispute between two former partners in a venture capital business called Zuma Partners.  (Compl. ¶2.)  Plaintiff David Carter claims that Defendant Yuan Shi misappropriated his name, photograph and likeness to launch a new venture capital fund called AI List.  (Compl. ¶3.)  Defendant allegedly raised money for his new fund by using Plaintiff’s identity to raise money from many of the same investors who had invested with Zuma Partners.  (Compl. ¶3.)  The operative complaint alleges claims for (1) violation of Civ. Code §3344, (2) invasion of privacy based on misappropriation of identity, (3) unjust enrichment and (4) injunctive relief.  

This hearing is on Plaintiff’s motions for a protective order, for issue sanctions and to compel further discovery responses.  As to the motion for protective order, Plaintiff argues a protective order is warranted to protect confidential materials that may be produced including bank records and trade secrets.  Plaintiff also seeks issue sanctions because it claims Defendant has repeatedly and willfully failed to comply with two separate discovery orders issued by the Court.  Finally, as to the motions to compel further discovery responses, Plaintiff argues Defendant has failed to timely respond to discovery, and accordingly, has waived all objections and must provide further responses with no objections.   

DISCUSSION 

Motion for Protective Order 

The court has discretion to grant a protective order on the court’s determination that “justice so requires.”  The motion is directed to the court’s inherent power to control the proceedings before it.  The granting or denial of relief therefore lies within the sound discretion of the court and is reviewable only for abuse.  Greyhound Corp. v. Sup. Ct. (1961) 56 Cal.2d 355, 389-381 (superseded by statute on other grounds). 

The burden is on the party seeking the protective order to show “good cause” for whatever order is sought.  (Fairmont Ins. Co. v. Sup. Ct. (2000) 22 Cal.4th 245, 255.)  A party seeking a protective order must show good cause for issuance of the order by a preponderance of the evidence.  (Stadish v. Sup. Ct. (1991) 71 Cal.App.4th 1130, 1145.)    

Here, Plaintiff has shown good cause for a protective order, given (1) Defendant has conditioned his discovery responses on entry of a protective order (Grivakes Decl. ¶11), and (2) Plaintiff is seeking confidential materials (including bank records and investor lists), and a protective order is needed to mitigate any intrusion into any investor’s or AI List’s right to privacy or to address other confidentiality concerns.  Moreover, the proposed protective order is based on a model form, and Defendant does not argue there is anything objectionable in the language of the proposed protective order.   

Instead, Defendant argues that “Plaintiff has provided no statutory authority that it can force Defendant into providing its trade secrets or private financial documents subject to its unilaterally proposed protective order.”  (Opp. at 3.)  But the granting of the protective order is a separate issue from whether Defendant should be compelled to produce trade secrets or private financial documents.  The granting of the protective order does not mean any particular category of documents should or should not be produced.     

Accordingly, the Court grants the motion for protective order and issues the protective order proposed by Plaintiff, which is based on the Los Angeles County model form.  (Ex. 8 to Grivakes Decl.)  Further, given Defendant’s resistance to reasonable efforts to finalize the protective order after conditioning his responses on such an order, the Court finds that sanctions are warranted.  Defendant’s actions forced Plaintiff to unnecessarily incur the cost of bringing this motion and resulted in a waste of judicial resources.  The Court will award sanctions in the amount of $1,390, representing two hours spent on the motion at an hourly rate of $695.  The Court denies Defendant’s request for monetary sanctions.   

Motion for Issue Sanctions 

California discovery law authorizes a range of penalties for conduct amounting to “misuse of the discovery process.” (Code Civ. Proc., § 2023.030; Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1, 12.)  As relevant here, misuses of the discovery process include “[f]ailing to respond or to submit to an authorized method of discovery” (Code Civ. Proc., § 2023.010, subd. (d)); “[m]aking an evasive response to discovery” (id., § 2023.010, subd. (f)); and “[d]isobeying a court order to provide discovery” (id., § 2023.010, subd. (g)).  

Code of Civil Procedure § 2025.450, subdivision (d) authorizes a trial court to impose an issue, evidence, or terminating sanction under Code of Civil Procedure § 2023.030 if a party or party-affiliated deponent “fails to obey an order compelling attendance, testimony, and production.” Section 2023.030 authorizes a trial court to impose monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions against “anyone engaging in conduct that is a misuse of the discovery process.” 

As to issue sanctions, subdivision (b) of Code of Civil Procedure § 2023.030 provides: “The court may impose an issue sanction ordering that designated facts shall be taken as established in the action in accordance with the claim of the party adversely affected by the misuse of the discovery process. The court may also impose an issue sanction by an order prohibiting any party engaging in the misuse of the discovery process from supporting or opposing designated claims or defenses.” 

The trial court has broad discretion in selecting discovery sanctions, subject to reversal only for abuse. (Reedy v. Bussell (2007) 148 Cal.App.4th 1272, 1293; Miranda v. 21st Century Ins. Co. (2004) 117 Cal.App.4th 913, 928–929.)  The trial court should consider both the conduct being sanctioned and its effect on the party seeking discovery and, in choosing a sanction, should “attempt[] to tailor the sanction to the harm caused by the withheld discovery.” (Do It Urself Moving & Storage, Inc. v. Brown, Leifer, Slatkin & Berns (1992) 7 Cal.App.4th 27, 36.) 

The discovery statutes evince an incremental approach to discovery sanctions, starting with monetary sanctions and ending with the ultimate sanction of termination.  “Discovery sanctions should be appropriate to the dereliction, and should not exceed that which is required to protect the interests of the party entitled to but denied discovery.” (Laguna Auto Body v. Farmers Ins. Exchange, 231 Cal.App.3d at p. 487.)  If a lesser sanction fails to curb misuse, a greater sanction is warranted; continuing misuses of the discovery process warrant incrementally harsher sanctions until the sanction is reached that will curb the abuse.  (Doppes v. Bentley Motors, Inc. (2009) 174 Cal. App. 4th 967, 992.) 

Here, Plaintiff seeks issue sanctions because Defendants have refused to comply with two prior orders to compel and to pay monetary sanctions.  The Court agrees that issue sanctions are warranted here.   

The Court issued two orders to compel: (1) a July 26, 2022 order compelling responses to Plaintiff’s first set of special interrogatories, without objection, within 10 days and ordering the payment of sanctions, and (2) an August 2, 2022 order compelling responses to Plaintiff’s first set of requests for production, without objection, within 20 days and ordering the payment of sanctions.   

Defendant violated the Orders in multiple respects.  First, Defendant did not serve the responses within the time mandated in the Orders.  Second, Defendant served multiple sets of successive responses that continued to assert lengthy objections in violation of the Orders.  Defendant claims he should be relieved from waiver of his objections as a result of mistake, inadvertence and excusable neglect of his counsel who failed to properly calendar the response dates.  (Rios Decl. ¶5.)  Assuming this is true, Defendant should have sought a motion for relief from waiver of objections which he failed to do, and absent that, he should have sought a motion for reconsideration of the Court’s Orders, rather than unilaterally deciding to ignore the Orders.  His time to bring any such motions have long since passed.  Third, as to the special interrogatories, Defendant was asked to identify investors in his AI LIST fund.  He first claimed not to be able to identify the investors, and later identified only one investor without further providing the investor’s contact information, as requested by the interrogatory.  Defendant’s response that he is unable to identify his own investors lacks credibility.  Defendant was also asked to identify each WeChat address he used to transmit documents to investors in AI List.  Defendant’s response was evasive, stating only that Defendant’s “personal WeChat was used for the transmission.”  The response does not provide the requested WeChat address.  Fourth, as to the requests for production, Defendant was asked to produce “all Powerpoint decks prepared for AI LIST from 2017 through 2021, that contain a reference to [Plaintiff].”  Defendant stated he would produce communications with investors, but no documents were produced.  Defendant also claimed to have produced all Powerpoint decks to investors, but he has only produced one deck even though his response to another interrogatory identified eleven different Powerpoint decks that contained Plaintiff’s image.  Fifth, both orders required Defendant and his counsel to pay sanctions.  The sanctions have not been paid. 

Although not required to do so, Plaintiff engaged in several meet and confers with Defendant to obtain compliance with the Orders, to no avail.  Defendant’s successive responses after each meet and confer continued to violate the Orders.  Plaintiff also scheduled an informal discovery conference (”IDC”) to resolve the dispute.  At the IDC, Defendant agreed he would fully comply with the Orders.  But he has failed to do so.         

It is clear therefore that less severe sanctions, including monetary sanctions, have not deterred Defendant from misusing the discovery process.  Issue sanctions are therefore warranted.   

Plaintiff seeks the following issue sanctions:  

(1) the issue of whether Defendant is the manager of defendant AI List GP 1, LLC, itself the general partner of defendant AI List Capital 1, LP, is decided in favor of Plaintiff,  

(2) the issue of whether Defendant sent Powerpoint decks containing Plaintiff’s name, photo and biography to all of the investors in AI List Capital 1, LP, is decided in favor of Plaintiff;    

(3) the issue of whether all of the investors in AI List Capital 1, LP relied on the Powerpoint decks containing Plaintiff’s name, photo and biography in making their investments in AI List Capital 1, LP, is decided in favor of Plaintiff; 

(4) the issue of whether all of the investors agreed to allocate to the general partner of AI List Capital 1, LP, a share of the profits equal to 20% of the increase in value of their investments after the investors had received a 100% return on their investments, is decided in favor of Plaintiff, and 

(5) the issue of whether Plaintiff is entitled to all of the general partner’s profits from all the investments made by AI List Capital 1, LP, is decided in favor of Plaintiff.   

The Court grants issue sanctions (2) and (3) but denies the remainder, as they bear no relationship to the underlying discovery.  (Mastagni Holstedt v. Ellis Law Group LLP, 2019 Cal. Super. LEXIS 39032 at *5 (denying issue sanctions where issues sought to be admitted bear no relationship to the underlying discovery requests).  

Plaintiff’s reliance on Rutledge v. Hewlett Packard Co., 238 Cal.App.4th 1163 (2015) is unavailing.  There, the court refused to award evidence sanctions against Hewlett Packard because it would have provided a windfall, by putting the moving party in a better position than if he or she had obtained the discovery sought.  (Id. at 1195.)  Here, the issue sanctions are tailored to the particular discovery sought -- powerpoint slides and other communications with investors that would have shown the extent to which Plaintiff was the reason for their investment.  The sanctions imposed do not place Plaintiff in a better position than if the discovery had been provided.   

Plaintiff also seeks monetary sanctions in the amount of $11,120, representing 16 hours at the hourly rate of $695.  As the Court has awarded issue sanctions, it declines to impose further monetary sanctions for Defendant’s failure to comply with the discovery orders.  The Court also denies Defendant’s competing request for monetary sanctions.             

Motion to Compel Further Discovery Responses 

Plaintiff argues Defendant was served with requests for production (set two) and special interrogatories (set two) on October 13, 2022, and responses were due by November 14, 2022.  Defendant did not serve responses until December 21, 2022, thereby waiving any objections.    Defendant argues, however, that the discovery was not served until November 21, 2022, and therefore, their responses on December 21, 2022 were timely served.     

As the Court cannot determine who is right, it will err on the side of caution and against a finding that Defendant waived their objections.  Further, as to Plaintiff’s motions are motions to compel further responses, they must comply with this department’s rules, requiring that the parties must provide a joint statement consisting of four columns: the first column will identify the number of the discovery request; the second, the text of the discovery request; the third, the text of the response, and the fourth, brief bullet-point statements, one from each party as to why a further response should or should not be compelled.  The Court, therefore, denies the motions to compel without prejudice.  The Court also denies each party’s motion for sanctions.   

CONCLUSION 

Based on the foregoing, the Court GRANTS Plaintiff’s motion for protective order, GRANTS IN PART and DENIES IN PART Plaintiff’s motion for issue sanctions, and DENIES without prejudice Plaintiff’s motions to compel further discovery responses and for monetary sanctions.  On the motion for protective order, the Court awards sanctions to Plaintiff in the amount of $1,390 to be paid by Defendant and his counsel.  The Court denies all other requests for sanctions.     

 

IT IS SO ORDERED. 

 

DATED: March 7, 2023 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court