Judge: Elaine W. Mandel, Case: 22SMCV01367, Date: 2023-12-19 Tentative Ruling

Case Number: 22SMCV01367    Hearing Date: December 19, 2023    Dept: P

Tentative Ruling

Yu v. Rari Capital Infrastructure, LLC, Case No. 22SMCV01367

Hearing Date December 19, 2023

Plaintiff Yu’s Motion to Compel Further Responses to Requests for Production of Documents

Plaintiff Yu alleges defendants Rari Capital Infrastructure, Longarzo and Fei Labs misappropriated 70,000 RGT cryptocurrency tokens from his digital wallet and converted them into TRIBE tokens. On March 17, 2023 Yu served requests for production of documents on defendants Rari Capital Infrastructure, Longarzo and Fei Labs; defendants responded with objections on April 19, 2023. Yu alleges on May 17, 2023 defendants agreed to supplement the production and waive objections except attorney-client privilege, then served supplemental responses consisting only of objections without any new document production.

On August 9, 2023 the parties held an informal discovery conference, after which defendants promised to supplement responses. Defendants have not produced responsive documents, and Yu moves to compel production.

While all three motions state 121 requests are at issue, each separate statement includes only a subset of the requests propounded on each defendant. The court will only rule on those requests included in the separate statement.

Waiver

Yu argues defendants waived their right to object to written discovery, since responses were due April 18, 2023 but served April 19. Responses were served a few minutes after midnight on April 18 due to a technical issue. Norris decl. ¶¶6-7. This de minimis delay does not waive objections.

Motion to Compel—Fei Labs

Cryptocurrency Requests (requests 35 and 37-41)

These requests deal with tokens Yu alleges defendants stole. Yu requests documents related to the “current disposition” of the tokens, communications referencing them, documents indicating defendants were permitted to possess or withhold them from Yu, documents indicating they were formally swapped for TRIBE tokens and subject to a new 5-year vesting period and documents relating to a “smart contract’ holding TRIBE and linked to plaintiff’s wallet.

The alleged theft of the tokens is the heart of this lawsuit, so plaintiff has the right to conduct discovery as to their status and/or conversion into TRIBE tokens. Fei argues the requests are “unintelligible,” and based on “faulty assumptions.” In opposition, they state that the requests must be rephrased before defendants can respond. Norris decl. pg. 5.

The requests are concise and the terms they use are defined. Fei does not specify which terms they are unable to parse. Additionally, if requests are based on “faulty assumptions” and no responsive documents exist, Fei must so state. The objections are without merit.

GRANTED. Fei to respond within 15 days. If no responsive documents exist, Fei is to provide a verified statement saying so.

Corporate Structure Requests (requests 28-31)

These requests seek information related to Fei’s corporate structure, employees, contractors, incorporation documents and relationship with defendant Santoro. Fei objects the requests are irrelevant, overbroad and seek information protected by the attorney-client privilege or third-party privacy rights.

These objections have merit. While some discovery regarding Fei’s corporate structure is appropriate to determine whether Fei and/or Rari merged or were acting on one another’s behalf the requests as framed are overbroad. Yu seeks all documents related to Fei’s incorporation, all documents listing its employees, and all documents listing its contractors, without regard to time or relevance. Full compliance with these requests would likely result in voluminous production of irrelevant materials, as well as production that unjustifiably intrudes into the third-party privacy rights of Fei’s employees and contractors. Yu has not adequately shown the relevance of the requested materials outweighs the privacy interests of third parties. DENIED. Yu may resubmit narrowed versions of these requests.

Requests related to PEGEXCHANGER Contract (Requests 32-34)

Requests seek documents related to the “PEGEXCHANGER Contract.” Fei objects that any responsive documents have either already been produced or are publicly available. To the extent the documents have been produced, the issue is whether Fei possesses relevant, previously unproduced documents. To the extent Fei claims responsive documents are publicly available, if they are in Fei’s possession, they must be produced. If there are no responsive documents in Fei’s possession, it must amend its responses to say so. GRANTED in part and DENIED in part.

Rari Capital Infrastructure, LLC

Cryptocurrency Requests (Requests 56, 58-69, and 71)

As with the Fei requests, these requests are relevant to whether defendants wrongfully appropriated RGT tokens. Even if requested documents are publicly available, if they are in Rari’s possession, they must be produced. Although some requests (63, 65) potentially implicate third-party privacy rights, they are narrowly tailored and sufficiently relevant to be discoverable. The court will consider a protective order to shield disclosure of third-party information.

GRANTED. If Rari contends the requests are based on “faulty assumptions,” it must state that no responsive documents exist. If it is Rari’s contention that the documents are publicly available, but it does not possess them, it must say so.

Vicarious/Successor Liability Documents (Requests 30-54)

These requests seek documents related to Rari’s corporate structure, allegedly to determine the relationship between Rari and Fei and to determine whether defendant Rari is separate from other nonparty Rari entities.

Many requests seek documents related to Rari’s internet and social media and presence, including YouTube, Twitter, Fuse, Medium, Snapshot Voting accounts/activity.

Requests 30-32 and 54 are overbroad and not relevant as phrased, seeking documents identifying all Rari’s employees and contractors as well as all documents relating to Rari’s legal formation. While Yu is entitled to conduct discovery to test Rari’s contentions regarding other Rari entities, these requests are unlimited as to time and scope, and are likely to lead to production of mostly irrelevant information. They must be narrowed. Further, Yu has not adequately shown how documents related to Rari’s use of the social media platforms and websites identified above are relevant to any of the issues in this case. DENIED. Yu may re-file narrower versions of these requests seeking only relevant information.

Documents Relating to Rari’s Defenses (Requests 58 and 67-69)

These requests ask for documents supporting Rari’s contentions and defenses. As such, they are relevant and discoverable. Rari objects that the requests are unintelligible. The requests are brief and straightforward, with specific terms defined. Rari objects that the requests seek publicly available information. Any publicly available information in its possession is not shielded from production. To the extent the requests “assume facts not in evidence,” Rari must respond by stating that it has diligently searched for responsive documents and found none. GRANTED.

Documents Related to Previously Produced Materials (Requests 56, 57, 59-61, 66)

These requests identify various documents already produced by Rari and seek further documents clarifying or supporting statements in the production. These requests are relevant, since they seek further information related to documents that have already been deemed relevant and disclosed.

The requests are brief and straightforward, with specific terms defined. Rari objects that the requests seek publicly available information. Any publicly available information in its possession is not shielded from production. Finally, to the extent that no responsive documents exist, Rari must respond by stating so. GRANTED.

Jack Longarzo

Communications Relating to Plaintiff (Requests 5-8)

These requests seek all communications between Longarzo and Rari/Rari Capital relating to Yu. Longarzo properly objects that the requests are overbroad. They contain no limitation as to time or topic of communication, and a complete response would likely include a large proportion of materials irrelevant to this lawsuit. DENIED. Yu may re-formulate these requests with narrower parameters.

Requests Relating to Cryptocurrency (Requests 9-15, 19-24)

Longarzo objects as overbroad. The requests are narrowly tailored to seek only documents directly related to tokens allocated to Yu or to the vesting contract that allocated tokens to Yu., Longarzo argues the documents are protected by attorney-client and/or work product. He must identify the protected documents using a privilege log. Longarzo argues the requests are redundant because other defendants already produced responsive documents. This does not relieve Longarzo of his duty to produce relevant documents in his possession. GRANTED.  

Requests Related to Corporate Structure/Vicarious Liability (Requests 1-4, 25-44)

As above, some discovery related to Rari’s corporate structure and Longarzo’s role within the companies is relevant. However, the requests as phrased seek irrelevant information. Requests 1-4 are overbroad as to time and subject matter, likely to sweep in a large proportion of irrelevant material. Additionally requests 25-44 deal with Rari’s websites and social media pages. These requests are overbroad, and Yu failed to establish that their relevance outweighs privacy concerns. DENIED. Yu may re-serve narrowed versions of these requests.

Requests Relating to Previously Produced Materials (49 to 51)

Requests for documents based on material contained in already produced documents are relevant. Further production in response to requests 49 through 51 is required, to the extent the requested documents exist. GRANTED

Sanctions

The motion was granted in part and denied in part, neither party prevailed entirely. While some of defendants’ objections were rejected, they were nonetheless substantive and made in good faith. No sanctions will issue.