Judge: Frank M. Tavelman, Case: 23BBCV02356, Date: 2025-03-07 Tentative Ruling

Case Number: 23BBCV02356    Hearing Date: March 7, 2025    Dept: A

MOTION FOR TERMINATING SANCTIONS

NOTICE:

The Court is not requesting oral argument on this matter.  The Court is guided by California Rules of Court, Rule 3.1308(a)(1) whereby notice of intent to appear is requested.  Unless the Court directs argument in the Tentative Ruling, no argument is required and any party seeking argument should notify all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  The tentative ruling will become the ruling of the court if no argument is received.  

Notice may be given either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412.

ALLEGATIONS: 

Complete Gym Solutions, LLC (Complete Gym) brings this action against Lance Zavela (Zavela) and Ryde Enterprises, LLC (Ryde). Plaintiff alleges Zavela, its former National Sales Manager, misappropriated trade secrets. Specifically, Plaintiff alleges Zavela utilized Plaintiff’s confidential customer database to convince Plaintiff’s customers to rent equipment from Zavela’s new employer, Ryde.

Before the Court is Complete Gym’s motion seeking terminating sanctions against Zavela and Ryde. Zavela and Ryde oppose the motion, Complete Gym replies.

ANALYSIS: 

I.                    LEGAL STANDARD 

Where a party fails to obey an order compelling answers to discovery, “the court may make those orders that are just, including the imposition of an issue sanction, an evidence sanction, or a terminating sanction.” (C.C.P. §§ 2030.290(c), 2023.010(c); R.S. Creative, Inc. v. Creative Cotton, Ltd. (1999) 75 Cal. App. 4th 486, 495.) Terminating sanctions are appropriate when a party persists in disobeying the court’s orders. (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 795-796.)

A terminating sanction is a “drastic measure which should be employed with caution.” (Id. at 793.) “A decision to order terminating sanctions should not be made lightly. But where a violation is willful, preceded by a history of abuse, and the evidence shows that less severe sanctions would not produce compliance with the discovery rules, the trial court is justified in imposing the ultimate sanction.” (Mileikowsky v. Tenet Healthsystem (2005) 128 Cal. App. 4th 262, 279-280.)

While the court has discretion to impose terminating sanctions, these 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.” (Deyo supra, 84 Cal. App. 3d at 793.)

II.                 PROCEDURAL HISTORY

April 19, 2024 Court Order for Further Production

On February 2, 2024, Complete Gym filed the following two discovery motions:

·         A motion to compel Ryde’s further responses to Complete Gym’s RFPD Set One Nos. 1-14, 19-21, 25-32, 40-43, 45-49, 51-53, 55-59, 64, 66-69, 75 and 77- 81.

·         A motion to compel Zavela’s further responses to Complete Gym’s RFPD Set One Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 21, 22, 23, 24, 25, 26, 27, 28, 30, 31, 32, 33, 34, and 36

After these motions were filed, the parties engaged the Court in an Informal Discovery Conference, which was unable to resolve all the issues presented by the motions. On April 19, 2024, the motions came on for hearing, oral argument was heard, and the Court took the matter under submission. On April 22, 2024, the Court issued its final ruling and ordered Ryde and Zavela to do the following:

• Provide further responses to Requests for Production Nos. 1-14, 19-21, 25-32, 40-43, 45-49, 51-53, 55- 59, 64, 66-69, 75, and 77-81 as served on Ryde (the “Ryde Requests”)

• Provide further responses to Requests for Production Nos. 1-10, 21-28, 30-34, and 36 as served on Zavela (the “Zavela Requests”);

This production was due within 30 days. The Court additionally ordered Ryde and Zavela to pay monetary sanctions to Plaintiff.

September 6, 2024 Hearing on First Terminating Sanctions Motion

On August 7, 2024, Complete Gym filed a motion seeking evidentiary, issue, and terminating sanctions against Ryde and Zavela. Complete Gym maintained that Ryde and Zavela willfully violated the Court’s order to produce further responsive documents.

On September 6, 2024, the motion came on for hearing. At this time, the Court noted that Complete Gym’s motion failed to comply with the procedure for a motion seeking sanctions for discovery abuse, in that it did not include a separate statement. In the Court’s view a separate statement was necessary for its review of an already complicated discovery dispute. The Court ordered the motion continued and ordered Complete Gym file a separate statement outlining the issues to be adjudicated. The Court granted leave to Ryde and Zavela to respond with a separate statement in responses to the extent they saw fit to do so.

Thereafter, Ryde and Zavela both filed additional declarations in opposition to the motion which were not authorized by the Court’s September 6 order. The Court clarified at an October 10, 2024, hearing that it only sought separate statements from the parties, not additional or revised argument. The Court then took the matter under submission.

November 7, 2024 Order re: First Motion for Terminating Sanctions

On November 7, 2024, the Court issued its final ruling and order regarding Complete Gym’s motion for sanctions. As a brief summary, the Court ordered the following:

·         Ryde and Zavela shall produce any remaining items that were subject to the Court’s order (referring to the April 19, 2024 order) within 10 court days – to the extent it exists.

·         Ryde and Zavela are prohibited from presenting any responsive evidence that was not turned over and was the subject of the Court’s prior discovery order. Furthermore, such evidence will not be permitted to rebut evidence presented by the Complete Gym.

·         Ryde and Zavela are barred from presenting any documents or information directly or indirectly derived from documents they assert do not exist or were not provided pursuant to the Court’s prior discovery order. This included any motion for Summary Judgement/Adjudication as well as any eventual trial.

·         To the extent necessary, the Court will conduct an evidentiary hearing to determine if a specific document or other evidence directly or indirectly derives from a document that was improperly withheld by Ryde and Zavela.

·         Should the case go to jury trial, the Court will consider an instruction concerning undisclosed evidence which was requested in discovery. The instruction will permit, but not obligate the jury, to take an adverse inference against Ryde and Zavela for evidence that should have been disclosed but was not.

·         If after additional discovery and depositions, Complete Gym provides further evidence concerning a willful violation, the Court may reconsider this order and impose further sanctions, including issue sanctions or other appropriate sanctions.

III.              DISCOVERY ISSUES

RFPD in Dispute

While the Court’s April 19, 2024 order directed Ryde and Zavela further respond to a number of RFPD, there are three RFPD which remain principally in dispute. These are as follows:

·         RFPD No. 24 to Zavela: All communications and documents (including e-mails and attachments) between you and any current customers of CGS, from January 1, 2023 to the present.

·         RFPD No. 27 to Ryde: All communications and documents (including e-mails and attachments) between YOU and anyone, concerning any current customer of CGS, from January 1, 2023 to the present.

·         RFPD No. 64 to Ryde: All your internal communications and documents (including but not limited to proposals, sales quotations and price lists) provided to or concerning any present or former customer of CGS.

While these three RFPD represent the issues at play, they are of course not exhaustive given the Court ordered further production as to all RFPD contained in Complete Gym’s initial discovery motions. Given this discovery dispute has now persisted for over a year, the Court finds little value in analyzing the issues through the frame of Complete Gym’s original RFPD. To this end the Court endeavors to provide a brief summary below of the distinct discovery issues relevant to this motion for terminating sanctions.

Issues in Dispute

Documents and Data Stored in Ryde’s Customer Databases

As early as the Informal Discovery Conference the Court and the parties were in discussion about Ryde’s production of information from its customer databases. In its Minute Order for the IDC the Court specifically remarked, “The parties agreed to meet and confer and file a stipulation and order concerning the hiring and access of an Information Technology expert to examine Defendant-Ryde’s database and email accounts for discovery compliance.” (March 19, 2024 Minute Order). To the Court’s knowledge, no such stipulation was ever filed.

The Court’s April 19, 2024 Minute Order did not include an analysis as to Ryde’s database specifically. This was because the Court ordered further production of ALL responsive documents, which incorporated any information present on Ryde’s database. The Court considered Ryde’s objections and argument that the requests were overbroad or unduly burdensome and found them to be without merit.

In its November 7, 2024 order, the Court specifically considered that good cause has been demonstrated as to Ryde’s database. The Court found persuasive the Second Declaration of Danielle Rivera in which she describes in detail the existence and use of the RGE program by Ryde and Zavela and her own involvement in inputting CGS’s confidential information and then contacting Plaintiff’s clients on behalf of Ryde and Zavela. As such, the Court believed good cause continued to exist to compel Ryde to produce information contained in its database as to Complete Gym clients.

As a result of Ryde’s supplemental production from its databases, Complete Gym has obtained the following documents: 

• Documents and information contained in the “RGE”, (short for Rental Gym Equipment or a similar acronym) program.

• A rudimentary version of Salesforce, wherein Danielle Rivera (“Rivera”) and others are alleged to have input all of CGS’s confidential information including, without limitation, client names, addresses, contact information, quotes/bids, equipment rented, and pricing, and which program keeps track of Ryde and Zavela’ communications, including solicitations, bids, and invoices, with prospective and actual clients, inclusive of entities that Ryde and Zavela knew were Plaintiff’s clients at the time Ryde and Zavela solicited them.

Complete Gym currently maintains that despite this production, there remains information present in Ryde’s databases pertaining to Complete Gym Clients which have not been produced. Despite the Court’s clear ruling to the contrary on several occasions, Ryde maintains its refusal to have its database observed by any independent technological expert on grounds that Complete Gym’s requests are overbroad.

Documents and Communications between Zavela and Complete Gym Clients

As with any responsive information in Ryde’s databases, communications between Zavela and Complete Gym clients have been repeatedly ordered turned over by the Court. The Court has repeatedly found good cause for their production. Ryde/Zavela appear to have complied with the order for further production to some extent, as Complete Gym now has:

·         Photos and screenshots taken by Zavela of Plaintiff’s proprietary database, which screenshots were, among other things, emailed by Zavela from his personal Gmail account.

·         Communications with a subset of Complete Gym clients Ryde and Zavela contacted after Zavela left Plaintiff’s employ.

Complete Gym maintains that there are several Complete Gym clients which have been identified as being contacted by Ryde/Zavela, but for which communications have not been produced. In making its November 7, 2024 ruling, the Court specifically mentioned Exhibit F to the Austin Hai declaration. Exhibit F is a pdf of an excel spreadsheet produced by Ryde and Zavela in discovery. Complete Gym maintains that, despite this clear record, Ryde/Zavela have not produced their communications with several of the Complete Gym clients identified in this exhibit. The Court’s Order additionally noted that the Rivera declarations identified a great deal more of Complete Gym’s clients which were entered into Ryde’s database for potential contact, yet no communications had been produced as to many of them.

Ryde and Zavela maintain that they have produced all documents responsive to Complete Gym’s RFPD and that any further requests by Complete Gym are an unauthorized fishing expedition. This position fundamentally misstates the dispute. The issue is Ryde/Zavela have been ordered, several times, to produce ALL documents responsive to Complete Gym’s request. Ryde/Zavela contend that they have done so, and Complete Gym claims that they have not. Thus far, the evidence presented to the Court has demonstrated Complete Gym’s position to be the more meritorious of the two.

IV.              DISCUSSION

The above procedural and factual background having been conducted; the Court turns to the instant Motion for Terminating Sanctions. This is the second such motion, with Complete Gym’s previous request for terminating sanctions having been denied by the Court. The Court’s November 7, 2024 order was a final determination on the issue of terminating sanctions encompassing every allegation of discovery abuse by Ryde/Zavela up to that point. The Court found that considering all of those elements in their totality, terminating sanctions were not warranted.

The Court explicitly stated the following in its November 7, 2024 order:

If after additional discovery and depositions the Plaintiff provides further evidence concerning a willful violation, the Court may reconsider this order and impose further sanctions, including issue sanctions or other appropriate sanctions.

As such the question posed by Complete Gym’s second motion for terminating sanctions is, “What evidence of willful violation has been uncovered by Complete Gym in its additional discovery?” If Complete Gym has produced such evidence, the question then becomes, “Does this newly revealed evidence warrant terminating sanctions?”

Complete Gym’s Evidence of Willful Violation

Complete Gym’s evidence of willful violation in support of this motion is simple. Complete Gym states that on December 27, 2024, they served the Golden Rain Foundation of Laguna Woods (Laguna Woods) with a subpoena requesting any communications between themselves and Ryde or Zavela. (Kamorsky Decl. Exh. 14.) Laguna Woods is indisputably identified as a Complete Gym client in the aforementioned Exhibit F to the Hai Declaration (a document produced by Ryde/Zavela in discovery).

On December 23, Laguna Woods responded to the subpoena and produced the following:

·         6/13/2023 e-mail from Zavela to representatives of Laguna Woods. (Kamorsky Decl. Exh. 6.)

·         6/20/2023 e-mail from Zavela to representatives of Laguna Woods. (Kamorsky Decl. Exh. 7.)

·         6/22/2023 e-mail from Zavela to representatives of Laguna Woods. (Kamorsky Decl. Exh. 8.)

·         8/30/2023 e-mail from Zavela to representatives of Laguna Woods. (Kamorsky Decl. Exh. 9.)

·         1/24/2024 e-mail from Zavela to representatives of Laguna Woods attaching two quotes. (Kamorsky Decl. Exh. 10.)

·         1/25/2024 e-mail from Zavela to representatives of Laguna Woods attaching a revised quote. (Kamorsky Decl. Exh. 10.)

·         2/17/2024 e-mail from Zavela to representatives of Laguna Woods attaching a revised quote. (Kamorsky Decl. Exh. 12.)

·         3/11/2024 e-mail from Zavela to representatives of Laguna Woods. (Kamorsky Decl. Exh.13.)

The Court views the above as clear evidence of Ryde and Zavela’s willful violation of the order to turn over all responsive communications with Complete Gym clients. The facts are plain to see. Ryde/Zavela claimed they had no further responsive communications and yet Complete Gym has clearly obtained them.  Complete Gym has previously argued that they do not want to subpoena more clients for additional proof of violation as such action may jeopardize their relationship with those clients.   Document demands on third parties not part of the litigation, especially those which are clients is not without inconvenience to those entities and costs.  Their argument is well taken.

The court finds Ryde and Zavela’s arguments in opposition to be insufficient to negate the clear showing of willful violation. Ryde and Zavela argue that, despite the fact that the scope of discovery has been continuously clarified for them over the course of a year, they did not understand that communications to Laguna Woods and other clients identified were subject to production. This argument is unacceptable. Ryde and Zavela themselves produced a spreadsheet of Complete Gym clients upon which explicitly included Laguna Woods. They cannot now, eight months later, claim that they did not understand they had to produce these communications because the term “client” was unclear.

In his opposition declaration, Zavela states that after being served with the instant motion he conducted a search of his emails and found an additional 170 pages of communications to the following entities: Bell Canyon, Waterfront at Catalina Landing, Sheraton Universal Hotel Westside Habitats, LLC, Cahuenga Hills HOA Laguna Woods, Yardi Systems, 910 Grandview Apartments; Pacific Beacon, Job Corps, and Olentangy Village. (Zavela Decl. ¶ 5, Exh. A.) Zavela states all these communications were turned over to Complete Gym on February 21, 2025. (Id.)

Zavela’s subsequent production of communications which he and Ryde insisted did not exist for over a year does not mitigate Complete Gym’s showing of a willful violation. A Court order is just that, an order;  it is not an invitation to comply if so desired. The Court did not suggest that Ryde and Zavela turn over these documents, it ordered they do so. If Ryde and Zavela were genuinely confused about the scope of the production, they had a significant amount of time to seek clarification from both Complete Gym and the Court. If they were concerned that the information contained highly confidential information that they did not wish to disclose to a competitor, they could have sought a protective order for redactions.  On two occasions now this clarification was provided by yet another order of the Court. There is no good faith argument to be made that Ryde and Zavela did not know these 170 pages were subject to production under the Court’s order. Their violation was undoubtedly willful.

Terminating Sanctions

As concerns the propriety of terminating sanctions, the Court finds they are indeed warranted as less draconian sanctions, both financial and evidentiary, have not resulted in compliance.

“The trial court may order a terminating sanction for discovery abuse ‘after considering the totality of the circumstances: [the] conduct of the party to determine if the actions were willful; the detriment to the propounding party; and the number of formal and informal attempts to obtain the discovery.’” (Los Defensores, Inc. v. Gomez (2014) 223 Cal.App.4th 377, 390 quoting Lang v. Hachman (2000) 77 Cal.App.4th 1225, 1246).) “Generally, a decision to order terminating sanctions should not be made lightly. But where a violation is willful, preceded by a history of abuse, and the evidence shows that less severe sanctions would not produce compliance with the discovery rules, the trial court is justified in imposing the ultimate sanction.’” (Los Defensores supra, 223 Cal.App.4th at p. 390 [citation and question marks omitted].)

Here, the Court finds the evidence clearly indicates that lesser sanctions would be insufficient to curb Ryde and Zavela’s habitual evasion of the discovery process. The Court has already leveled monetary sanctions, after which the discovery abuses persisted. The Court then issued evidentiary sanctions and raised the possibility of an adverse jury instruction. Despite these increased sanctions, Ryde and Zavela still refused to produce responsive communications which were undoubtedly in their possession.

By Zavela’s own admission, these additional communications were not turned over until Complete Gym brought this motion. Ryde and Zavela did not produce these documents out of a good faith effort to comply with the discovery process and the Court’s orders, they produced them because Complete Gym had finally obtained irrefutable proof of their existence. This indicates to the Court that any sanctions lesser than terminating would be ineffective to prevent further gamesmanship by Ryde and Zavela. Ryde and Zavela have demonstrated to the Court that they will continue their elusive discovery practices until such time as they can do so no longer, regardless of legally binding Court orders to the contrary. In the Court’s eyes this is exact sort of behavior which warrants the remedy of terminating sanctions.

C.C.P. §2023.030(d) provides that a court may impose terminating sanctions by, inter alia, an order striking out the pleadings or part of the pleadings of any party.  C.C. P. §2023.030(d)(1). As such, the motion for terminating sanctions is GRANTED and the Court strikes Defendants’ answer as a terminating sanction for repeated discovery violations.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records. 

ORDER 

Complete Gym Solutions, LLC’s Motion for Terminating Sanctions came on regularly for hearing on March 7, 2025, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows: 

THE MOTION FOR TERMINATING SANCTIONS IS GRANTED.  THE COURT STRIKES DEFENDANTS’ ANSWER.

PLAINTIFF TO GIVE NOTICE.

IT IS SO ORDERED.