Judge: Mark A. Young, Case: 23SMCV00732, Date: 2024-11-27 Tentative Ruling
Case Number: 23SMCV00732 Hearing Date: November 27, 2024 Dept: M
CASE NAME: Aspire North
America LLC v. Cookies Retail Products LLC, et al.
CASE NO.: 23SMCV00732
MOTION: Motion
to Compel Further Responses
HEARING DATE: 11/27/2024
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.) Section 2017.020(a) vests the Court with authority to
limit the scope of discovery if the burden, expense, or intrusiveness of the
discovery sought “clearly outweighs the likelihood that the information sought
will lead to the discovery of admissible evidence.” CCP § 2019.030 directs the Court to consider
the needs of the case, amount in controversy, and the importance of the issues
at stake in the litigation, and to consider whether the discovery being sought
is unreasonably cumulative or duplicative, or is obtainable by a more
convenient or less expensive or less burdensome way, when deciding whether to
restrict the frequency of extent of use of an authorized discovery method.
CCP 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 CCP 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 CCP §§
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. (Code Civ. Proc., § 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. (See 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
Plaintiff/Judgment
Creditor Aspire North America LLC (“JC”) moves to compel further discovery
responses from Defendant/Judgment Debtor Cookies Retail Products LLC (“JD”) as
to the first set of post-judgment discovery, including Requests for Production
of Documents (“RPDs”) nos. 1-21 and Special Interrogatories (“SROGs”) nos.
1-35. JC also seeks sanctions against JD and its counsel of record in the
amount of $25,585.63.
Based on
the supplemental production and the parties’ arguments, the Court determines
that only SROG nos. 27, 28 and 31 are in dispute. The entirety of the RPDs
remain in dispute.
Separate Statement
Motions to compel further responses
must always be accompanied by a separate statement containing the requests and
the responses, verbatim, as well as reasons why a further response is
warranted. (CRC, Rule 3.1345(a).) The separate statement must also be complete
in itself; no extrinsic materials may be incorporated by reference. (CRC, Rule
3.1345(c).)
Here,
there is no separate statement. The Court therefore has the discretion to deny
the motion. The Court will exercise its discretion to consider the moving
papers as an outline of the discovery requests at issue. (CRC Rule
3.1345(b)(2).)
SROG Nos. 27 and 28
These SROGs pertain to JD’s assets.
No. 27 seeks identification of “the locations of all ASSETS” and No. 28 seeks
the “value of all ASSETS that” CRP owns.
JD’s responses to nos. 27 and 28
are evasive. As to no. 27, JD identified “First Republic Bank for Cash, unknown
for accounts receivables as its going to be written off [as] non-collected,
only inventory remaining is GVB/22nd Century and COOKIES, IP is held digitally
with COOKIES for designated CRP items.” (Emphasis Added.) JD thus claims that
it does not know where its accounts are because they’re going to be written
off. This statement is non-sensical. JD does not explain how it could not know
the location of its account receivables if it is planning on writing them off.
Further, JD’s plan on “writing off” the account receivables suggests that JD
reasonably knows the location of the account receivables. Thus, this response
is evasive.
As to no. 28, JD also provides an
evasive answer. JD listed $500.60 in “Cash, checking and savings accounts,” “Over
$1 million” in “accounts receivable,” “Under $1 million” in inventory,
and an unknown amount of IP. (Emphasis added.) The open-ended valuations
of “over” or “under” $1 million are evasive and not straightforward responses.
As observed by JC, this response could mean essentially any value. JD is able
to provide a proper valuation because it reasonably has access to its books to
determine the value of its accounts receivables and inventory.
JC observes that Defendant’s
provide further details regarding how the claimed $4.6 million was spent (cf.
SROG no. 22 with nos. 27-28), broken down by category. Yet, JC does not explain
why JD would have to provide such information in response to the instant SROGs.
JC does not identify which SROG that called for such a response. The Court
observes no interrogatories which ask for a categorized or detailed breakdown
of expenditures. Thus, this level of detail is not required.
Accordingly,
further responses are required for nos. 27-28.
SROG no. 31
SROG no. 31 asks Defendant to
“identify the reasons for all transfers of all ASSETS made by COOKIES
RETAIL PRODUCTS, LLC in the past three years.” (Emphasis added.)
JD responds fully with the reasons
that it transferred assets: “For business operations, employee labor payments,
travel lodging meals and expenses, tradeshow exhibition and marketing costs,
royalty and licensing fees, design and web development costs, manufacturer and
supplier payments, legal and accounting, bank fees, litigation and court costs,
collections costs, and other costs and distributions.” This answer fully
complies with no. 31’s request.
JC argues that the response fails
to identify specific asset transfers or their purposes. However, the SROG did
not request JD identify “specific asset transfers or their purposes.” The SROG
only asked for the “reasons” of “all” asset transfers without further
specificity.
Accordingly, no further response is
required as to SROG no. 31.
For the
first time in reply, JC also requests further responses as to SROG nos. 29, 30,
and 32. That request is untimely.
RDPs
JD objects to the RPDs on the basis
that it does not have to respond to the RPDs within 120 days after having
responded to previously-served interrogatories or demands, or within 120
days after the JD has been examined. (CCP §§ 708.020(b) & 708.030(b).)
JD fails to explain how these sections apply to the RPDs at hand. JD does not
show that it has responded to previous inspection demands within 120 days prior
to serving the instant RPDs, or has been examined at all. JD claims that it
responded to interrogatories in August 2024, along with supplemental responses
on September 3, 2024, both of which are after the service of the subject
RPDs. JD apparently believes that these sections hold that JD only had to
respond to either the RPDs or SROGs and could disregard one or the other at its
leisure. JD posits no authority for this interpretation of section 708.020. Again,
the instant RPDs are the first set of RPDs, served at the same time as
the first set of SROGs. Since there were no “previously served” demands
and responses within 120 days of that service, JD had to respond to the subject
RPDs.
JD fails to meet its burden to
justify their other blanket objections. For instance, JD cites its financial privacy
concerns. 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. (Hill
v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 35-37.) 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. (Id. at 37–40.) Courts
must carefully balance a right of privacy against the interest in having just
litigation. (Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40
Cal.4th 360, 371.) If there is a serious invasion of a constitutional right to
privacy, the party seeking the 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. (Williams
v. Superior Court (2017) 3 Cal.5th 531, 552.)
However, corporate entities such as
JD enjoy no right to financial privacy under the United States Constitution. (United
States v. Morton Salt Co. (1950) 338 U.S. 632, 652 [“[C]orporations can claim no equality with
individuals in the enjoyment of a right to privacy”]; see also First
National Bank of Boston v. Bellotti (1978) 435 U.S. 765, 778-79 n.14 [“Corporate identity has been determinative
in several decisions denying corporations certain constitutional rights, such
as . . . equality with individuals in the enjoyment of a right to
privacy[.]”].) Neither do they enjoy a right to financial privacy under the
California Constitution: “The [California] constitutional provision [concerning
the right to privacy] simply does not apply to corporations. The provision
protects the privacy rights of people.” (Roberts v. Gulf Oil Corp.
(1983) 147 Cal. App. 3d 770, 791.) Simply put: the corporate right to privacy
is a lesser right than that held by human beings and is not considered a
fundamental right. (Ameri-Medical Corp. v. Workers' Comp. Appeals Board
(1996) 42 Cal.App.4th 1260, 1287-1288.)
Because the corporate privacy right
is not constitutionally protected, the issue presented in determining whether
the requests for production infringe that right is resolved by a balancing
test. (Hecht, Solberg, Robinson, Goldberg & Bagley v. Superior Court
(2006) 137 Cal.App.4th 579, 594-595.) The discovery's relevance to the subject
matter of the pending dispute and whether the discovery appears reasonably
calculated to lead to the discovery of admissible evidence is balanced against
the corporate right of privacy. (Ibid.) Doubts about relevance generally
are resolved in favor of permitting discovery. (Ibid.)
JD’s privacy concerns are
outweighed by JC’s need for information directly relevant to enforcing its
judgment. The requested information and documents on JD’s assets directly
assist in collecting the judgment here. The record does not show that there are
any other reasonably accessible sources of this information. Moreover, caselaw
recognizes that obtaining information to collect on a judgment is “a valid
significant interest.” (SCC Acquisitions, Inc. v. Superior Ct., (2015) 243
Cal. App. 4th 741, 755.)
Otherwise, JD does not show that it
would be burdensome or oppressive to respond to the RPDs. JD does not explain
the basis for its privilege objections or supply a compliant privilege log. As
such, JD has failed to substantiate its objections and responses are ordered.
Sanctions
JC requests the Court impose
sanctions in the total amount of $25,585.63 against JD and its counsel of
record, Leech Tishman Fuscaldo & Lampl Inc. Sanctions are mandatory. The Court must
sanction any party that unsuccessfully makes or opposes a motion to compel a
further response, “unless it finds that the one subject to the sanction acted
with substantial justification or that other circumstances make the imposition
of the sanction unjust.” (See, e.g., CCP, § 2030.300(d).)
JC’s
counsel states that Plaintiff incurred a total of $19,561.00 in attorney fees
plus $5,024.63 in costs. This accounts for approximately 27.5 hours of
attorney-time at $710/hr. The Court finds these fees to be unreasonable in
light of the complexity of the issues and the mixed success on the motion.
Moreover, the entirety of the hours and costs do not appear to be directly
related to the instant discovery motion. Based on the totality of the record,
the Court finds that a reasonable attorneys’ fee in this instance would be $7,160.00.
Conclusion
Accordingly, the motion is GRANTED
as to SROG nos. 27-28 and RPD nos. 1-21. Sanctions are imposed against JD and its
counsel of record in the total amount of $7,160.00, inclusive of costs.
Sanctions are to be paid to JC’s counsel within 30 days. Further responses are also ordered within 30
days.