Judge: Joseph Lipner, Case: 21STCV0825, Date: 2024-05-16 Tentative Ruling

Case Number: 21STCV0825    Hearing Date: May 16, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendant and Cross-Claimant C J Concrete Construction Inc. (“CJ”) moves for sanctions against Plaintiff and Cross-Defendant Debra Felipe and Cross-Defendant Construction Paper, Inc. (“Construction Paper”) (collectively, “Cross-Defendants”). Defendant seeks issue sanctions, evidentiary sanctions, and monetary sanctions consisting of $8,910.00 in attorney’s fees.

The Court CONTINUES CJ’s motion for terminating sanctions to June 18, 2024. If Plaintiff does not comply with all previous discovery orders and sanctions by that time, the Court will issue terminating sanctions.

The Court GRANTS CJ’s request for monetary sanctions in the amount of $3,645.00. Plaintiff shall pay this amount to CJ’s counsel within 30 days of the issuance of this order.

Background

This action arises out of Plaintiff’s employment at CJ.

Plaintiff filed this action on March 3, 2021 against Defendants CJ and John C. Sarno (collectively, “Defendants”), stating claims for (1) wrongful termination in violation of public policy; (2) retaliation; (3) failure to pay wages due on termination; (4) failure to pay hourly and overtime wages in violation of the California Labor Code; (5) failure to pay overtime wages in violation of the Fair Labor Standards Act; (6) failure to provide meal periods; (7) failure to provide rest periods; (8) violation of Business and Professions Code section 17200, et seq.; (9) failure to issue accurate itemized wage statements; (10) intentional infliction of emotional distress; and (11) fraud.

Defendants filed an answer on April 13, 2021.

CJ filed a cross-complaint against the Cross-Defendants on April 12, 2021. The operative cross-complaint is now the First Amended Cross-Complaint (“FACC”), filed on May 28, 2021, which alleges (1) fraudulent concealment; (2) fraud and deceit; (3) violation of the Consumer Legal Remedies Act; (4) breach of fiduciary duty; (5) negligent misrepresentation; (6) conversion; and (7) violation of Business & Professions Code section 17200, et seq.

The causes of action in the cross-complaint arise out of Plaintiff’s employment with CJ and her operation of Construction Paper. CJ alleges that Plaintiff used her position at CJ to channel money from CJ to Construction Paper.

This motion concerns Cross-Defendants’ destruction of electronically stored information (“ESI”) stored on servers previously operated by Construction Paper.

Between 2018 and 2021, Cross-Defendants maintained on-premises servers (the “Servers”) run by MicroNet Computer Consultants, Inc. (“Micronet”).

On June 14, 2021, approximately 60 days after CJ filed its cross-complaint against Felipe and Construction Paper, Felipe asked MicroNet to shut down the Servers. MicroNet repeatedly suggested that Felipe back up the email records on the server elsewhere, but Felipe did not do so.

On June 28, 2021, CJ’s counsel sent Cross-Defendants a notice to preserve the electronically stored information (“ESI”), stating that it expected that it anticipated that their phone, email, and banking records would be important in this litigation.

On July 20, 2021, Plaintiff gave the server away without backing up the data or migrating it elsewhere. As a result, Cross-Defendants are unable to produce emails from the Servers.  

On November 14, 2023, the Court ordered Plaintiff to produce her tax returns and related documents.

On December 5, 2023, the Court denied CJ’s request for terminating sanctions relating to Plaintiff’s failure to preserve the ESI, but granted a number of issue and evidentiary sanctions, a jury instruction on spoliation of evidence, and $8,910.00 in monetary sanctions.

Plaintiff still has not provided her tax returns or paid the monetary sanctions. (Liao Decl. ¶ 14.) On January 31, 2024 and February 6, 2024, Plaintiff’s counsel stated that he was not able to get into contact with Plaintiff and that she was not returning counsel’s calls or emails.

CJ filed this motion on March 27, 2024. Cross Defendants did not file an opposition.

Legal Standard

Where a party misuses the discovery process, courts have discretion to impose terminating, issue, evidence, or monetary sanctions. (Code Civ. Proc. §§ 2023.010(g), 2030.290(c); R.S. Creative, Inc. v. Creative Cotton, Ltd. (1999) 75 Cal.App.4th 486, 495.) Misuse of the discovery process includes failure to respond to an authorized method of discovery or disobeying a court order to provide discovery. (Code Civ. Proc., §§ 2023.010(d), (g).)      

Monetary sanctions may be imposed “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…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.” (Code of Civ. Proc., § 2030.030, subd. (a).) 

Ultimate discovery sanctions are justified where there is a willful discovery order violation, a history of abuse, and evidence showing that less severe sanctions would not produce compliance with discovery rules. (Van Sickle v. Gilbert (2011) 196 Cal.App.4th 1495, 1516.) “[A] penalty as severe as dismissal or default is not authorized where noncompliance with discovery is caused by an inability to comply rather than willfulness or bad faith.” (Brown v. Sup. Ct. (1986) 180 Cal.App.3d 701, 707.) Further, preventing parties from presenting their cases on the merits is a drastic measure; terminating sanctions should only be ordered when there has been previous noncompliance with a rule or order and it appears a less severe sanction would not be effective. (Link v. Cater (1998) 60 Cal.App.4th 1315, 1326.) 

Before any sanctions may be imposed the court must make an express finding that there has been a willful failure of the party to serve the required answers. (Fairfield v. Superior Court for Los Angeles County (1966) 246 Cal.App.2d 113, 118.) Lack of diligence may be deemed willful where the party understood its obligation, had the ability to comply, and failed to comply. (Deyo v. Killbourne (1978) 84 Cal.App.3d 771, 787.) The party who failed to comply with discovery obligations has the burden of showing that the failure was not willful. Id. at 788.) 

Discussion

Cross-Defendants do not contest any of the foregoing facts and concede that sanctions for spoliation of evidence are appropriate, disputing only the type and severity of the sanctions.

Terminating Sanctions

            As discussed above, terminating sanctions are justified where there is a willful discovery order violation, a history of abuse, and evidence showing that less severe sanctions would not produce compliance with discovery rules. (Van Sickle v. Gilbert, supra, 196 Cal.App.4th at p. 1516.) Furthermore, terminating sanctions should only be ordered when there has been previous noncompliance with a rule or order and it appears a less severe sanction would not be effective. (Link v. Cater, supra, 60 Cal.App.4th at p. 1326.) 

“[T]he trial court may impose terminating sanctions as a first measure in extreme cases, or where the record shows lesser sanctions would be ineffective. (Department of Forestry & Fire Protection v. Howell (2017) 18 Cal.App.5th 154, 191–192.) In Department of Forestry & Fire Protection v. Howell, the trial court found that “[plaintiff’s] willful, repeated and egregious misuses of the discovery process permeated nearly every single significant issue in this case to an extent that threatened the integrity of the judicial process and made it implausible that defendants could ever receive a fair trial. (Id. at 197 [internal quotations omitted].)

The Court previously found that Cross-Defendants’ conduct was not so extreme as to warrant terminating sanctions in the first instance. Cross-Defendants admitted that their conduct was wrongful and acknowledged that sanctions are appropriate. The Court found, at the time, that Cross-Defendants’ conduct was not the kind of severe and incorrigible behavior that terminating sanctions are meant to respond to. The fact that Cross-Defendants had previously served late and incomplete discovery responses on Defendants did not elevate their conduct to “willful, repeated and egregious misuses of the discovery process” “permeat[ing] every single significant issue in this case.” (Department of Forestry & Fire Protection v. Howell, supra, 18 Cal.App.5th at 197.) Similarly, although Cross-Defendants disregarded Defendants’ instruction to preserve ESI, that instruction was not a court order.

            The situation has further deteriorated since then. Plaintiff has now disobeyed two further court orders, including the previous sanctions order. Plaintiff’s failure to pay the monetary sanctions, as well as her failure to respond to her attorney’s communications, are strong indicators that lesser sanctions – many of which the Court has now applied in some form – will not induce Plaintiff to comply with the discovery process. The Court believes that terminating sanctions are warranted. However, out of an abundance of caution, the Court will continue the hearing on this motion for approximately 30 days to give Plaintiff as much of an opportunity as possible to comply with the prior orders.

Attorney’s Fees

CJ requests attorney’s fees in the amount of $3,645.00 for the time spent on this motion. Terence Liao has a billing rate of $405.00 per hour and anticipates spending a total of 13 hours on this motion, 4 of which consist of preparing a reply and attending the hearing. (Liao Decl. ¶ 20.) Because no opposition or reply were filed, the Court reduces these hours to 10, or $4,050.00. However, CJ’s requested amount is still less than this, so the Court grants the requested amount of $3,645.00 in full.