Judge Elaine Lu, Case 22STCV34229 2023-03-07 Tentative Ruling

On October 24, 2022, Plaintiffs Elysian Health LLC (“Elysian”), Modern Management Solutions, Inc. (“MM”) and Zachary Ament (“Ament”) (collectively “Plaintiffs”) filed the instant breach of fiduciary action regarding the management of Elysian.

On November 3, 2022, Plaintiffs filed the operative First Amended Complaint (“FAC”) against Defendants Justin White (“White”), Applied Approach Services, Inc., Gerry Van Nortwick, Deena Manion, David Bifulco, and Priya Martindale (collectively “Defendants”). The FAC asserts twelve causes of action for (1) Breach of Fiduciary Duty, (2) Enforcing Manager/Member Rights and Inspection Rights, (3) Transfer of Ownership of Company Assets, (4) Challenging Election of Director, (5) Compel Payment of Lawfully Declared or Paid Dividends, (6) Appointment of Provisional Director, (7) Removal of Dishonest and Fraudulent Member and Director, (8) Accounting, (9) Declaratory Relief, (10) Reformation, (11) Cancellation of Instruments, and (12) Defamation. On February 28, 2022, the Court sustained Defendants’ demurrer to the FAC with leave to amend. (Order 2/28/23.)

On February 7, 2023, Defendant White filed the instant motion to compel Plaintiff Ament to submit to deposition and to produce documents in conjunction with the deposition notice. On February 22, 2023, Plaintiffs filed an opposition. On February 28, 2023, Defendant White filed a reply.

“Any party may obtain discovery . . . by taking in California the oral deposition of any person, including any party to the action. The person deposed may be a natural person, an organization such as a public or private corporation, a partnership, an association, or a governmental agency.” (CCP § 2025.010.)

Code of Civil Procedure § 2025.450(a) provides: “If, after service of a deposition notice, a party to the action . . . , without having served a valid objection under Section 2025.410, fails to appear for examination, or to proceed with it, or to produce for inspection any document . . . described in the deposition notice, the party giving the notice may move for an order compelling the deponent’s attendance and testimony, and the production for inspection of any document . . . described in the deposition notice.”

Code of Civil Procedure § 2025.450(b) provides: “A motion under subdivision (a) shall comply with both of the following:

Code of Civil Procedure § 2025.450(c) provides, “(1) If a motion under subdivision (a) is granted, the court shall impose a monetary sanction . . . in favor of the party who noticed the deposition and against the deponent or the party with whom the deponent is affiliated, unless the court finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.”

Under Code of Civil Procedure § 2023.030(a), “[t]he court may impose a monetary sanction ordering that one engaging in the misuse of the discovery process, or any attorney advising that conduct, or both pay the reasonable expenses, including attorney’s fees, incurred by anyone as a result of that conduct. . . . If a monetary sanction is authorized by any provision of this title, the court shall impose that sanction 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.” Failing to respond or to submit to an authorized method of discovery is a misuse of the discovery process. (CCP § 2023.010(d).)

Code of Civil Procedure § 2025.450(b)(2) requires the motion to be accompanied by a meet and confer declaration under Code of Civil Procedure § 2016.040,[1] or, “when the deponent fails to attend the deposition and produce the documents, electronically stored information, or things described in the deposition notice, by a declaration stating that the petitioner has contacted the deponent to inquire about the nonappearance.” (CCP § 2025.450(b)(2).)

On November 17, 2022, Defendant White served the first deposition notice seeking production of documents and to take Plaintiff Ament’s deposition on December 6, 2022. (Burns Decl. ¶ 2, Exh. 2.) On December 5, 2022, Defendant White’s Counsel contacted Plaintiffs’ Counsel to confirm the deposition notice. Plaintiffs’ Counsel responded that Plaintiff Ament had not received a deposition notice. (Burns Decl. ¶ 3, Exh. 3.)

On December 6, 2022, Defendant White served an amended notice of deposition of Plaintiff Ament set for January 5, 2023. (Burns Decl. ¶ 4, Exh. 4.) Defendant White’s Counsel also emailed Plaintiff’s Counsel regarding the amended deposition notice. (Burns Decl. ¶ 5, Exh. 3.) The same day, Plaintiffs’ Counsel responded that the deposition was premature in light of the one deposition rule because not all parties had yet appeared. Plaintiffs’ Counsel also noted that Plaintiff Ament needed documents from Defendants to properly respond to deposition questions. (Burns Decl., Exh. 3.) Plaintiffs’ Counsel further noted that he would be unavailable on January 5, 2023 but was available to confer to discuss a suitable date after resolving the above issues. (Burns Decl., Exh. 3.) On January 2, 2023, Plaintiff Ament served a formal objection to the amended deposition notice and included an email reasserting the above issues. (Burns Decl. ¶¶ 6-7, Exhs. 5-7.) Defendant White’s counsel responded “stating that plaintiff would not be given access to his prior company-owned e-mail account as a condition of the deposition, and that counsel had failed to serve documents as promised in the responses to the RFP which contained identical demands to those in the deposition notice.” (Burns Decl. ¶ 7, Exh. 7.) On January 19, 2023, Plaintiff served supplemental responses to the requests for production of documents which were produced on January 30, 2023. (Burns Decl. ¶¶ 8, 10, Exh. 8.)

On January 29, 2023, Plaintiffs’ Counsel sent a meet and confer letter noting that the issue regarding the one deposition rule had been resolved because all parties had appeared. Plaintiffs’ Counsel requested that Defendant White produce Plaintiff Ament’s emails so that the parties could proceed with the deposition. (Burns Decl. ¶ 9, Exh. 9.) On February 2, 2023, Defendant White’s Counsel refused to provide such documents as a prerequisite to set Plaintiff’s deposition and then filed the instant motion. (Burns Decl. ¶ 11, Exh. 10.)

The Court finds that the meet and confer effort was insufficient. Defendant White’s Counsel’s own declaration reflects that Plaintiff was clearly willing to appear for deposition after all parties appeared and after Defendant White produced Plaintiff’s Ament emails. Planitiffs articulated reasons for these requests -- to avoid prejudice to the then non appearing Defendant Gerry Van Nortwick and so that Plaintiff Ament could fully respond to deposition questions. (See e.g., Burns Decl., Exh. 3.) Defendant White’s Counsel failed to discuss or address these issues in any manner. (See e.g., Burns Decl. ¶ 11, Exh. 10.)

Despite the lack of sufficient meet and confer, the Court will consider the instant motion on the merits.

In response to the amended deposition notice, Plaintiff served general objections on the grounds that (1) not all parties have yet appeared in the action, and taking Plaintiff’s deposition prior to the appearance of all parties would likely lead to a violation of the one-deposition rule, (2) Plaintiff Ament has been denied access to his email account which houses a wealth of information, correspondence and communications, most of which are germane to the issues in this case, and which Defendant White was wrongfully retaining, (3) the deposition was unilaterally set, and (4) Plaintiffs incorporated their objections in Plaintiff Ament’s response to Defendant’s request for production of documents, which requested identical documents as the deposition notice. As of this hearing, these objections are inapplicable.

Objections to a notice of the deposition are very limited and may only pertain to errors or irregularities in the deposition notice itself. (CCP § 2025.410, [“Any party served with a deposition notice that does not comply with Article 2 (commencing with Section 2025.210) waives any error or irregularity unless that party promptly serves a written objection specifying that error or irregularity at least three calendar days prior to the date for which the deposition is scheduled, on the party seeking to take the deposition and any other attorney or party on whom the deposition notice was served.].) Article 2 which consists of Code of Civil Procedure §§ 2025.210-2025.295 provide specific requirements that a deposition notice must satisfy.

As noted above, all parties have now appeared and thus Plaintiff Ament’s objection that not all parties have appeared no longer holds true.

Plaintiff Ament’s remaining objections are improper as they are not objections to any irregularity of the deposition notice. The unilateral setting of a deposition under Los Angeles County Superior Court Rule, Local Rule 3.26 is also not a basis for an objection to the notice because all local rules are preempted as to discovery. (Cal. Rules of Court, Rule 3.20(a).)[2] Similarly, Plaintiff’s objection based on denial of access to Plaintiff Ament’s emails is not a valid objection to the notice of deposition.

To the extent that Plaintiff Ament wishes to limit the scope of the examination to certain matters or prevent inquiry into certain matters, Plaintiff must seek a protective order. (CCP § 2025.420(b)(9-10).) However, the Court can enter such an order only by noticed motion or by stipulation of the parties. (See e.g., St. Paul Fire & Marine Ins. Co. v. Superior Court (1984) 156 Cal.App.3d 82, 85-86.)

Moreover, as a practical matter, such a motion for protective order is unnecessary. To the extent that Plaintiff Ament needs documents which are in Defendants’ possession in order to fully answer certain questions at his deposition, Plaintiff Ament need only answer each question to the full extent possible at his deposition, and if applicable, include in his response that he cannot fully respond to the respective deposition question without such documents.

As to Plaintiffs’ objections to the document production requested in the deposition notice, such objections to the notice of deposition are unnecessary and improper. A request for production of documents in a deposition notice identifies the documents that the deponent must produce at the deposition. (CCP § 2025.220(a)(4).) A request for documents in a deposition notice is not the equivalent of a Request for production of documents under Code of Civil Procedure section 2031.010 et seq. It is unnecessary and improper for the deponent to object prior to the deposition to the categories of documents identified in the notice of deposition. There is no statutory basis for any written response to the categories of documents in a deposition notice in advance of the deposition. Rather, objections are timely raised during the deposition or are waived. (See CCP § 2025.460.) Here, no deposition has yet occurred. Thus, Plaintiff’s objections to the request to produce documents in the deposition notice is premature, and Plaintiff may make the objections at the deposition. Further, if Plaintiff fails to produce the documents at the deposition, Defendant White may then move to compel Plaintiff Ament to produce the documents if such documents are relevant to the deposition or instant action. (See CCP § 2025.480; see also CCP §2025.460(e).)

Thus, Plaintiff’s objections to the categories of documents to be produced at the deposition are premature. Similarly, it is premature to compel production of the documents because the deposition has not yet occurred. However, to avoid additional motion practice the Court addresses specific objections below to the deposition notice requests still at issue – i.e., 1-3, 5, 6, 9, and 59.

The right of privacy in the California Constitution (art. I, § 1), “protects the individual's reasonable expectation of privacy against a serious invasion.” (Puerto v. Superior Court (2008) 158 Cal.App.4th 1242, 1250 [italics in original]; See Williams v. Superior Court (2017) 3 Cal.5th 531, 552 [“In Hill, we established a framework for evaluating potential invasions of privacy. The party asserting a privacy right must establish a legally protected privacy interest, an objectively reasonable expectation of privacy in the given circumstances, and a threatened intrusion that is serious. The party seeking information may raise in response whatever legitimate and important countervailing interests disclosure serves, while the party seeking protection may identify feasible alternatives that serve the same interests or protective measures that would diminish the loss of privacy. A court must then balance these competing considerations.”].)

As the Supreme Court has “previously observed, the right of privacy extends to sexual relations (Vinson v. Superior Court, supra, 43 Cal.3d at p. 841, 239) and medical records (Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 41.).” (John B. v. Superior Court (2006) 38 Cal.4th 1177, 1198.) Similarly, the constitutional right to freedom of association requires protection of a person’s membership in associations, whether they pertain to religious, political, economic, or even purely social matters. (Britt v. Superior Court (1978) 20 Cal.3d 844, 852; see also Pacific-Union Club v. Superior Court (1991) 232 Cal.App.3d 60, 71.) Further, “‘Courts have frequently recognized that individuals have a substantial interest in the privacy of their home.’ [Citation.]” (Puerto, supra, 158 Cal.App.4th at p.1252.)

In establishing a privacy interest “the burden [is] on the party asserting a privacy interest to establish its extent and the seriousness of the prospective invasion, and against that showing must weigh the countervailing interests the opposing party identifies, as Hill requires.” (Williams, supra, 3 Cal.5th 531, 557.) “Only obvious invasions of interests fundamental to personal autonomy must be supported by a compelling interest.” (Ibid.)

Critically, however, “[t]he constitutional provision simply does not apply to corporations. The provision protects the privacy rights of people.” (Roberts v. Gulf Oil Corp. (1983) 147 Cal.App.3d 770, 791.) However, while no constitutional right of privacy exists as to corporations, “‘the nature and purposes of the corporate entity and the nature of the interest sought to be protected will determine the question whether under given facts the corporation per se has a protectible privacy interest....’ [Citation] It is clear to us that the law is developing in the direction that the strength of the privacy right being asserted by a nonhuman entity depends on the circumstances. Two critical factors are the strength of the nexus between the artificial entity and human beings and the context in which the controversy arises.” (Ameri-Medical Corp. v. Workers' Comp. Appeals Bd. (1996) 42 Cal.App.4th 1260, 1288.)

Here, as to each of the at issue requests Plaintiff Ament objects based on privacy. Many of the requests relate to Plaintiff MM – a corporation. As a corporation, MM does not have a constitutional right to privacy absent a clear an unequivocal showing of the privacy interest sought to be protect and an individual such as Plaintiff Ament. In the current objections this privacy interest has not been shown. Moreover, much of the documents would not have a strong privacy interest – if at all. Bylaws of a corporation, meeting minutes, or even shareholder agreements would not generally be subject to privacy protects. The only privacy interest that would likely exist is the privacy interest in the financial documents requested. (See Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652, 655; see also Burrows v. Superior Court (1974) 13 Cal.3d 238, 243, [“A bank customer's reasonable expectation is that, absent compulsion by legal process, the matters he reveals to the bank will be utilized by the bank only for internal banking purposes.”]; see e.g. Gov. Code, § 7460, [California Right to Financial Privacy Act].) However, the sought documents do appear to relate to Plaintiffs’ claims for lost dividends. Moreover, to the extent that the financial information sought invades Plaintiff’s privacy it is unclear why simple redactions of the confidential information such as all but the last four digits of Plaintiff Ament’s social security number and account number(s) would not suffice. Given that the documents appear to be relevant and Plaintiff Ament has not yet supported his privacy objections these objections would likely be overruled.

Here, sanctions were not requested in the notice. Therefore, no sanctions can be awarded. (CCP § 2023.040, [“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.”].)

Based on the foregoing, the demurrer by Defendant Justin White motion to compel the deposition of Plaintiff Zachary Ament is GRANTED.

Plaintiff Zachary Ament is ordered to appear for a deposition within thirty (30) days of notice of this order at a date and time noticed by Defendant Justin White.

[1] . (CCP § 2025.450.) Code of Civil Procedure § 2016.040 provides that “[a] meet and confer declaration in support of a motion shall state facts showing a reasonable and good faith attempt at an informal resolution of each issue presented by the motion.” (CCP § 2016.040.) “[W]

[2] While not a basis for objection to the notice of a deposition, this is a basis for sanctions as misuse of discovery. (CCP § 2023.010.)

Superior Court of California

County of Los Angeles

Department 26