Judge: Kevin C. Brazile, Case: 21STCV34627, Date: 2022-08-17 Tentative Ruling

Hearing Date: August 17, 2022

Case Name: Digital Dolphin Supplies, LLC v. Cotton, et al.

Case No.: 21STCV00223

Matter: Motion to Compel Compliance

Moving Party: Defendants Justin Cotton and Quire Office Products LLC

Responding Party: Plaintiff Digital Dolphin Products, LLC

Ruling: The Motion to Compel Compliance is granted in part.

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly 

encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic. 

On January 5, 2021, Plaintiff Digital Dolphin Products, LLC filed the operative Complaint against Defendants Justin Cotton and Quire Office Products LLC for (1) breach of fiduciary duty, (2) misappropriation of trade secrets, (3) breach of contract, (4) interference with contractual relations, and (5) interference with prospective economic advantage.  Plaintiff alleges that Defendants stole Plaintiff’s trade secrets and created a competing business while still employed by Plaintiff. 

On April 15, 2022, Justin Cotton and Quire Office Products LLC, individually and on behalf of others similarly situated, filed a Second Amended Cross-Complaint against Digital Dolphin Products, LLC, a California LLC, and Digital Dolphin Products, LLC, a Nevada LLC, for (1) violation of Bus. & Prof. Code § 17200, (2) declaratory relief, (3) breach of contract, (4) violation of Penal Code § 496, (5) fraud, (6) fraudulent concealment, and (7) nonpayment of wages.  Among other things, Cross-Complainants allege that the Digital Dolphin entities fraudulently underpaid commissions on sales of personal protective equipment (“PPE”).  

 Defendants Justin Cotton and Quire Office Products LLC now seek to compel Digital Dolphin Products, LLC, a California LLC, to comply with its response to request for production no. 114.  Specifically, Defendants contend that while Plaintiff agreed to produce commission-related reports, Plaintiff failed to produce reports that were complete.  That is, the reports that were produced omitted large numbers of sales that could be verified through other means.  Defendants contend that Plaintiff agreed to produce supplemental reports by May 2022, but never did.

Plaintiff contends that the reports at issue do not exist; Plaintiff must specially prepare reports that have all the information requested; and while Plaintiff tried to have this done by May 2022, its counsel suffered a stroke, which set production back significantly.

Request no. 114 seeks, “DOCUMENTS sufficient to show all of the following for all DIGITAL DOLPHIN’s sales of PPE AND CLEANZGUARD PRODUCTS during the CLASS PERIOD: (i) the date of the sale, (ii) the name of the product(s) sold, (iii) the quantity of the product(s) sold, (iv) the sale price, (v) all DIGITAL DOLPHIN’s costs associated with the sale, (vi) the name(s) of the DIGITAL DOLPHIN employee(s) who made the sale, and (vii) the commission paid to the DIGITAL DOLPHIN employee(s) for the sale.”

Plaintiff responded, “Responding Party does not have and the software system that it uses, Salesforce (a Customer Relationship Management (‘CRM’)), does not keep and store historical data or otherwise allow retrieval of the information requested for ‘all . . . costs associated with the sale.’ UNIT COST changed over time based on a variety of factors, including but not limited to different shipments and storage and related costs in the warehouse in Chicago for certain PPE products (‘PPE WAREHOUSE PRODUCTS’). The UNIT COST for PPE WAREHOUSE PRODUCTS was determined based on a variety of factors/costs, including: 1. vendor price 2. international shipping costs 3. US Customs duties, fees and tariffs 4. Domestic warehouse storage charges 5. Freight forwarder charges 6. Re-boxing and labelling fees 7. Contingent costs (e.g., Responding Party was unable to ever ascertain a true cost per item as it was required to buy and store large lots, was unable to ascertain exactly how long product would need to be stored before sold, etc. – unlike pre-pandemic orders for toner or other related products, which were drop-shipped by the respective vendor.) The UNIT COST for FAMCO PRODUCTS (Cleanzguard products) was determined based on vendor cost plus an estimated shipping and handling fee based on the vendor’s anticipated shipping cost to the furthest location in Florida. Responding Party does not have and never had documents that will [s]how actual or true cost of PPE WAREHOUSE PRODUCTS as all of those products have not been sold and there are ongoing costs associated with major lot orders of products stored in the warehouse. Responding Party can search its records and produce documents that will reflect date of sale, product identification, quantity, sale price, name of account executive, and corresponding commission of PPE and CLEANZGUARD PRODUCTS during the CLASS PERIOD.”

“If a party filing a response to a demand for inspection, copying, testing, or sampling under Sections 2031.210, 2031.220, 2031.230, 2031.240, and 2031.280 thereafter fails to permit the inspection, copying, testing, or sampling in accordance with that party’s statement of compliance, the demanding party may move for an order compelling compliance.”  (Code Civ. Proc. § 2031.320(a).)

To the extent that further reports do not exist that contain all of the information requested, the Court does not believe that Plaintiff has any obligation to prepare special reports for Defendants.  Rather, Plaintiff should produce all documents or data containing some of the information requested.  That is, to the extent feasible, Plaintiff should produce the documents/data it would have relied on to prepare reports for Defendants.  Alternatively, Plaintiff can provide a specially prepared report if it so chooses.  Either way, it seems further production is due because the information sought by Defendants does exist in Plaintiff’s databases, even if not in one place.  After all, Plaintiff stated it would “search its records and produce documents that will reflect date of sale, product identification, quantity, sale price, name of account executive, and corresponding commission of PPE and CLEANZGUARD PRODUCTS during the CLASS PERIOD.”

The Motion to Compel Compliance is granted in part as set forth herein.  Further production is due within 45 days.  

Moving party to give notice.

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.