Judge Mark A. Young, Case 21SMCV01472 2023-02-24 Tentative Ruling

Judge: Mark A. Young, Case: 21SMCV01472, Date: 2023-02-24 Tentative Ruling

Case Number: 21SMCV01472 Hearing Date: February 24, 2023 Dept: M

CASE NAME: Strategic Law Practices, APC, v. Consumer Law Experts PC

CASE NO.: 21SMCV01472

MOTION: Motion to Compel Further Responses

HEARING DATE: 2/24/2023

BACKGROUND

This action arises from alleged misappropriation of trade secrets and proprietary information. Plaintiff SLP and CLE are California-based consumer litigation law firms that represent clients against auto manufacturers. SLP alleges that CLE solicitated its employees to gain access to SLP’s proprietary and confidential business information. The SAC defines SLP’s “confidential and proprietary information” as follows:

SLP client intakes, the number of cases being handled by the firm, client case records, client names and addresses, client phone numbers, payment records, communications, histories, correspondence, reports, office forms, advertising methods, internal vehicle defect lists, material and manuals, financial records, financial information, case results, and all other confidential information related to SLP’s legal practice and manner of operation and all other confidential data of any kind, nature or description.

(SAC ¶ 30.) SLP alleges that Defendants breached their contractual and fiduciary duties by divulging the confidential information to CLE, encouraging other SLP employees to do the same, and using such information to solicit current or prospective clients to leave SLP for CLE.

Legal Standard

In the absence of contrary court order, a civil litigant’s right to discovery is broad. “[A]ny party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action . . . if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (CCP § 2017.010; see Davies v. Superior Court (1984) 36 Cal.3d 291, 301.) Code of Civil Procedure section 2030.220(a) requires that “[e]ach answer in a response to interrogatories shall be as complete and straightforward as the information reasonably available to the responding party permits.” Pursuant to section 2030.300, a party may move to compel further responses to a form interrogatory if the other party’s answer is “evasive or incomplete.” The responding party has the burden of justifying the objections to the form and special interrogatories. (Coy v. Superior Court (1962) 58 Cal.2d 210, 220-221.)

If a party to whom a demand for inspection, copying, testing, or sampling is directed fails to serve a timely response, the propounding party may move for an order compelling response to the demand. (CCP § 2031.300(b); see Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4th 390, 403-404.) However, when responses are served, the proper motion is a motion to compel further responses, which is governed by Code of Civil Procedure §§ 2030.300 and 2031.310. A motion to compel further responses must set forth specific facts showing “good cause” justifying the discovery sought by the demand and must be accompanied by a declaration showing a “reasonable and good faith attempt” to resolve the issues outside of court. (CCP §§ 2016.040, 2031.310(b)(2).)

A motion to compel further responses to a demand for inspection or production of documents may be brought based on: (1) incomplete statements of compliance; (2) inadequate, evasive or incomplete claims of inability to comply; or (3) unmerited or overly generalized objections. (CCP, § 2031.310(c).) A motion for order compelling further responses “shall set forth specific facts showing good cause justifying the discovery sought by the demand.” (CCP § 2031.310(b)(1).) Absent a claim of privilege or attorney work product, the moving party meets its burden of showing good cause by a fact-specific showing of relevance. (Kirkland v. Superior Court (2002) 95 Cal.App.4th 92, 98.) If the moving party has shown good cause for the RPDs, the burden is on the objecting party to justify the objections. (Ibid.)

Analysis

On January 27, 2023, SLP filed motions to compel further discovery responses from CLE as to 1) special interrogatories, set one, nos. 1-22; and 2) requests for production of documents, set 2, nos. 1-18, 20, 23, & 25-26.

SROGs

With the interrogatories, SLP seeks information pertaining to claims and cases pursued by CLE prior to, and after, July 2018, including party names, case names, makes/models of the vehicles which were the subject of the claims, and the dates of the corresponding client retainer agreements. SLP seeks to demonstrate a shift in CLE’s business and strategy after soliciting SLP’s employees away from them in July 2018, including whether CLE targeted specific defects in select make/models of vehicles, the timing and substance of pre-litigation demands, or CLE’s claims against various car manufacturers. SLP also seeks this discovery to defeat Defendants’ pending motions for summary judgment. SLP wishes to examine the combinations of the types of vehicles and their defects that CLE was pursuing prior to SLP’s former employees joining CLE versus afterwards. SLP contends that the July 2018 date is the central date to this discovery because Defendant Beck, a former employee, started working at CLE on July 9, 2018. SLP also alleges that Defendants Beck and Kim emailed many SLP files to themselves on their exit from SLP.

The Court concurs that answers to these interrogatories would tend to show whether and to what extent CLE replicated SLP’s pre-litigation and litigation strategies against specific auto manufacturers for certain makes/models of vehicles after Defendants Beck and Kim moved from SLP to CLE. While it is true that a mere shift in business volume would not directly evidence misappropriation of confidential information, this does not mean that the RPDs/SROGs would not have a reasonable possibility to lead to admissible evidence. Questions as as to the substance of demand letters would tend to show whether CLE replicated any proprietary information. This means that the SROGs are generally reasonably calculated to lead to the discovery of admissible evidence and are appropriate discovery questions.

CLE has the burden to substantiate their blanket objections. CLE only attempts to substantiate their objections regarding the breadth and burden of responding fully, and privacy concerns. (See Anvar Decl., ¶¶ 7-12) As to privacy, CLE only provides a perfunctory argument regarding privacy concerns, and therefore does not meet their burden to show how the client’s names would seriously violate any privacy rights. (Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 35-37 [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]; accord Williams v. Superior Court (2017) 3 Cal.5th 531, 552 if the discovery risks a serious invasion of a protected privacy right, evidence must establish that the information sought is not only essential and directly relevant, but also that this information could not be discovered through less intrusive means]; see also Opp. at p. 7.)

As to burden and breadth of the interrogatories, CLE argues that to respond fully to the SROGs, each of CLE’s client files (almost 14 years of files) would need to be individually analyzed. (Anvar Decl., ¶ 8.) CLE estimates that on average, CLE signed 100 new clients per month for the subject time period. Therefore, CLE would have to analyze approximately 1,200 client files for SLP’s proposed narrower period of a year before and after July 2018. The analysis requested would take approximately 45–60 minutes per file, which is equivalent to 900–1,200 hours. (Id.) CLE assets that this would be unduly burdensome when weighed against any relevance.

The Court concurs that any response should be limited in some respects. SLP asserts it needs sufficient information to examine the combinations of the types of vehicles and their defects that CLE was pursuing prior to SLP’s former employees joining CLE versus afterwards. The dates reach too far in the past to be relevant to this purpose. In the moving papers, SLP acknowledges this issue and offers to limit the requests to between July 9, 2017 and July 9, 2019. The Court finds that this time period is still too long with respect to CLE’s burden, and would encompass time periods that would not be reasonably calculated to lead to the discovery of admissible evidence. To find this alleged shift in business practices, SLP would only need to examine data for a few months before the alleged misappropriation to create a baseline for CLE’s business. SLP could also examine a few months after the misappropriation to show a shift in these business practices. Anything beyond that time period would be cumulative and have no tendency to substantiate a shift in business practices or use of any further proprietary information.

The Court will therefore limit the responses to a total one-year period: six months prior to July 9, 2018 and six months following July 9, 2018 -- January 9, 2018, through January 9, 2019. The Court finds that this date range ameliorates any undue burden on CLE in responding to this discovery. Accordingly, Plaintiff’s motion to compel further responses is GRANTED as discussed above.

RPDs

SLP requests documents which establish various aspects of cases taken by CLE before and after the alleged misappropriation of proprietary information, including party names, case names, make/model of the vehicles which were the subject of claims, and dates of the corresponding client retainer agreements. Generally, RPD nos. 1-18, 20, and 23 request documents that identify Defendant’s cases, documents created, drafted, or in the possession of Plaintiff’s former employees, and CLE’s policies, practices, and procedures.

More specifically, RPDs nos. 3 and 6 relate to retainer agreements signed by clients before and after July 2018. RPDs nos. 7-11, 13, 15, and 17 request documents related to “pre-litigation” cases. Those RPDs target documents which would show the “year, make and model of the vehicles involved;” “the date the retainer agreement was signed by the client(s);” and cases involving vehicles manufactured by specified manufacturers (e.g., BMWs from 2016 to 2019). RPDs nos. 1-6, 12, 14 and 16 relate to cases filed in court, rather than pre-litigation cases. RPD no. 23 relates to policies, practices and/or procedures for new case or client intake, case evaluation and case management for the period of 2016 through 2019.

CLE objected to these RPDs on the grounds that they are “overbroad, unduly burdensome, harassing, and requests information that is not relevant or reasonably calculated to lead to the discovery of admissible evidence,” the phrase “pre-litigation cases” is vague, ambiguous and calls for speculation, attorney-client privilege, and privacy rights including confidential and proprietary information.

The Court agrees that the document requests meet the broad standard of discovery for the same reasons discussed as the SROGs. Indeed, responsive documents would tend to show a shift in CLE’s business and strategy from before versus after obtaining Plaintiff’s purported confidential business information, as well possible direct evidence that CLE used the specific proprietary information. (See SAC ¶30.) For instance, if the documents demonstrated no shift in business strategy (i.e., no changed forms, merely targeting the same manufacturers for the same defects, etc.), this would lead to an inference that no proprietary information was stolen. Conversely, the documents may show SLP’s proprietary information, corresponding shifts in strategy, which would substantiate SPL’s claims. If so, the documents would indirectly refute CLE’s claim that they never received or used any of Plaintiff’s alleged confidential/proprietary information even if there were other reasonable or alternative explanations.

As with the SROGs, CLE does not attempt to justify all of their blanket objections. For instance, Defendants do not justify any objection based on attorney-client privileged documents or attorney work product. Instead, Defendants focus on the fact that they do not believe that this discovery will verify Plaintiff’s claim. Indeed, they argue that it will not. As noted above, even if the discovery would tend to favor CLE’s theory, this would still mean that the requests were reasonably calculated to lead to the discovery of admissible evidence.

That said, the RPDs are overbroad and unduly burdensome in the same way as the SROGs: the time period is simply too long to be reasonably calculated to lead to the discovery of admissible evidence, which further creates an undue burden on CLE to respond. The Court finds that production should be limited to a one-year period total, i.e., a six-month period prior to July 9, 2018, and a six-month period following July 9, 2018.

Additionally, RPD no. 20 requests documents that were “originally created by or drafted by or in the possession of an employee of SLP while they were employed at SLP.” RPDs nos. 25-26 request all documents taken from SLP by Beck and Kim. RPD nos. 20, and 25-26 are also reasonably calculated to lead to the discovery of admissible evidence. CLE objects on the grounds that this request is overbroad, harassing, vague, duplicative, ambiguous, calls for speculation and seeks documents that are equally available to the requesting party from other parties to this action. Based on the foregoing objections, CLE indicates that it “lacks the ability to comply with the request.” In opposition, CLE attempts to justify their inability to comply by asserting that it would not know what documents, if any, were originally created by an SLP employee while employed by SLP or which documents, if any, Beck and Kim took from SLP, because Beck and Kim are no longer employed by CLE. (Anvar Decl. ¶ 17.) The Court recognizes that Beck and Kim have taken the position that they cannot respond (in part) because these documents are with CLE. Obviously, Defendant’s must make a diligent search to locate these documents. If these documents are not in Defendants’ custody or control, then Defendants should provide that code-compliant response.

Accordingly, Plaintiff’s motion to compel further responses is GRANTED.