Judge Gary Y. Tanaka, Case 22TRCV00231 2023-05-10 Tentative Ruling

LOS ANGELES SUPERIOR COURT – SOUTHWEST DISTRICT

Honorable Gary Y. Tanaka Wednesday, May 10, 2023

Department B Calendar No. 8

1. Pacific Coast Co., Ltd. dba Brincfi’s Motion for an Order Compelling Daniel Choi’s Further Responses to Requests for Production of Documents, Set One, and Special Interrogatories, Set One

Pacific Coast Co., Ltd. dba Brincfi’s (“Brincfi”) Motion for an Order Compelling Daniel Choi’s Further Responses to Requests for Production of Documents, Set One, and Special Interrogatories, Set One is denied, in part, and granted, in part.

Plaintiff filed the Complaint on March 28, 2022, and the First Amended Complaint on June 10, 2022. Plaintiff alleges the following facts. In December 2020, Defendant Choi approached Luke Shim, Plaintiff Brincfi’s CEO. Defendant was interested in becoming Brincfi’s head of engineering. Defendant falsely represented to Shim that he was legitimately interested in working for Brincfi and in providing engineering services. Brincfi entered into an agreement with Defendant Choi in January 2021 and appointed him head of engineering. Defendant had access to the source code of Brincfi’s smart contract system. Defendant modified the system to steal digital tokens deposited by Brincfi’s customers into his personal accounts. On or about December 14, 2021, Choi transferred approximately $1,104,602 worth of tokens into his own accounts. Defendant then laundered the money. Plaintiff alleges the following causes of action: 1. Conversion; 2. Intentional Fraud; 3. Breach of Contract; 4. Breach of Covenant of Good Faith and Fair Dealing; 5. Unjust Enrichment.

On March 30, 2023, Defendant filed a Cross-Complaint alleging the following causes of action: 1. Breach of Contract; 2. Breach of the Implied Covenant of Good Faith and Fair Dealing; 3. Fraud; 4. Conversion; 5. Unjust Enrichment; 6. Common Count.

Motion to Compel Further Responses to Requests for Production of Documents and Special Interrogatories, Set One

Where responses to interrogatories have been served but the requesting party believes that they are deficient because the answers are evasive or incomplete, or, because an objection is without merit, that party may move for an order compelling a further response. CCP § 2030.300(a). Notice of the motion must be given within 45 days after service of verified responses in question, or any verified supplemental responses. CCP § 2030.300(c). The motion must be accompanied by a meet and confer declaration in compliance with CCP § 2016.040. CCP § 2030.300(b).

A party responding to an inspection demand shall respond to each demand with one of the following: a statement the party will comply with the demand, a representation the party lacks the ability to comply with the demand, or an objection. (Code Civ. Proc., § 2031.210, subd. (a).) A response to an inspection demand may be inadequate because it is evasive or incomplete; contains an incomplete statement of compliance; an inadequate, incomplete, or evasive representation of inability to comply; or meritless or overly general objections to a demand. (Code Civ. Proc., § 2031.310, subd. (a).)

If a demanding party believes the responding party responded inadequately, the demanding party may move for an order compelling further response. (Code Civ. Proc., § 2031.310, subd. (a).) “Unless notice of this motion is given within 45 days of the service of the verified response, or any supplemental verified response, or on or before any specific later date to which the demanding party and the responding party have agreed in writing, the demanding party waives any right to compel a further response to the demand.” (Code Civ. Proc., § 2031.310, subd. (c).)

Defendant set forth a meet and confer declaration in substantial compliance with CCP §§ 2030.300(b), 2031.310(b)(2) and 2016.040. (Declaration, Christopher J. Lee, ¶ 8.)

Plaintiff moves to compel further responses from Defendant to Request for Production of Documents, Set One, and Special Interrogatories, Set One. The parties engaged in an IDC and a subsequent further meet and confer process. The parties could not agree on any of the items at issue in the original motion. Thus, Plaintiff moves to compel further responses to Requests for Production of Documents 2, and 4 to 8, and Special Interrogatories 2, 3, 4, and 7.

“The state Constitution expressly grants Californians a right of privacy. (Cal. Const., art. I, §1.) Protection of informational privacy is the provision’s central concern.” Williams v. Superior Court (2017) 3 Cal.5th 531, 552. “[W]hen a discovery request seeks information implicating the constitutional right of privacy, to order discovery simply upon a showing that the Code of Civil Procedure section 2017.010 test for relevance has been met is an abuse of discretion.” Williams v. Superior Court, supra, 3 Cal.5th at 556 (citations omitted).

In Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 35-37, the California Supreme Court “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.” Williams v. Superior Court, supra, 3 Cal.5th at 552 (citations omitted). In Hill, the Court “explained that not ‘every assertion of a privacy interest under article I, section 1 must be overcome by a “compelling interest.” . . . . A ‘“compelling interest”’ is still required to justify ‘an obvious invasion of an interest fundamental to personal autonomy.’” Id. at 556.

Disclosure depends upon balancing the need for discovery against the need for confidentiality. “Courts must instead place the burden 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 v. Superior Court (2017) 3 Cal.5th 531, 557.

The Court notes that much of the information sought deals with items that are protected by Defendant’s right of financial privacy including bank account information, tax returns, and transactions involving cryptocurrency. However, the financial right of privacy is not absolute. “Where the only reason for seeking such financial information is to give a tactical edge to the party who has obtained discovery of the information by allowing that party the benefit of pressure in settlement negotiations by threat or implication of disclosure, [. . .] the party against whom the discovery is sought should be afforded the full benefit of Civil Code section 3295, including a protective order limiting access to such information. Where, however, the financial information goes to the heart of the cause of action itself, a litigant should not be denied access so easily.” Rawnsley v. Superior Court (1986) 183 Cal.App.3d 86, 91 (internal citation omitted).

“There is no recognized federal or state constitutional right to maintain the privacy of tax returns. California courts, however, have interpreted state taxation statutes as creating a statutory privilege against disclosing tax returns. The purpose of the privilege is to encourage voluntary filing of tax returns and truthful reporting of income, and thus to facilitate tax collection. But this statutory tax return privilege is not absolute. The privilege will not be upheld when (1) the circumstances indicate an intentional waiver of the privilege; (2) the gravamen of the lawsuit is inconsistent with the privilege; or (3) a public policy greater than that of the confidentiality of tax returns is involved. This latter exception is narrow and applies only when warranted by a legislatively declared public policy.” Weingarten v. Superior Court (2002) 102 Cal.App.4th 268, 274 (internal citations and quotations omitted).

As to Requests for Production of Documents 2, 4, and 5, the motion is denied. The requests are overly broad. These requests state as follows:
“ALL DOCUMENTS RELATING TO YOUR employment with PLAINTIFF, or any effort to seek employment with PLAINTIFF. ALL COMMUNICATIONS with any individual RELATING TO PLAINTIFF. ALL DOCUMENTS RELATING TO any investigation or analysis you have conducted RELATING TO the exploit against PLAINTIFF in December 2021.” These requests are far too overly broad, and would essentially seek every document in the possession of Defendant “relating” to his employment with Plaintiff. The motion to compel further responses to these requests is denied.

As to Request 6 which states: “Bank statements from January 1, 2021 to present RELATING TO any bank account,” and Special Interrogatory 4 which states: “Identify all bank accounts owned by YOU,” the motion is denied. The request is overly broad, and Defendant’s financial right of privacy outweighs Plaintiff’s asserted interest in this information. The entirety of Defendant’s bank account information is not at issue in this action.

As to Request 7 which seeks Defendant’s 2021 tax returns, the motion is denied. Similar to Request 6, Defendant’s financial right of privacy outweighs Plaintiff’s asserted interest to know every intricate detail included in, essentially, the entirety of Defendant’s financial information, which would be revealed in the tax returns.

As to Request 8 and Special Interrogatories 2 and 3, the motion is granted. These discovery requests deal specifically with the sale and purchase of cryptocurrency which is an issue directly at the heart of this action. While Defendant still maintains a financial right of privacy to this information, the Court finds that Plaintiff’s asserted need for this information outweighs Defendant’s right of privacy.

As to Special Interrogatory 7, the motion is granted. Special Interrogatory 7 states: “If you identified a PERSON in response to INTERROGATORY NO. 6, describe in detail all facts that support your contention that that PERSON was responsible for the exploit against PLAINTIFF in December 2021.” Defendant identified an individual in the response to Special Interrogatory 6 but instead of providing a substantive response to Special Interrogatory 7, Defendant merely set forth boilerplate objections.

To the portions of the motion which were granted, Defendant is ordered to serve a further response within 10 days of this date.