Judge: Martha K. Gooding, Case: 2022-01245812, Date: 2022-10-31 Tentative Ruling
Motion to Quash
Before the Court is a motion to quash a subpoena issued on May 26, 2022 by Ernest Schroeder to MUFG Union Bank, N.A. (Albrecht Decl. ¶2 and Exhibit A thereto).
The Motion to Quash brought by Defendants Paul and Cathy Schroeder is GRANTED, pursuant to Code of Civil Procedure (“CCP”) section 987.1. The Motion is also GRANTED as to non-party Schroeder Farms, LLC pursuant to CCP section 2017.020. Sanctions are awarded as set forth below.,
As an initial matter, the Motion is properly brought by Defendants Paul and Cathy Schroeder pursuant to Code of Civil Procedure (“CCP”) section 1987.1, which permits a motion to quash by parties to an action. (CCP §1987.1(a) and (b).) However, non-party Schroeder Farms, LLC is not authorized to move under CCP section 1987.1, as it is neither a party, witness, consumer or employee, nor an individual exercising free speech rights, as contemplated by section 1987.1(b). Significantly, the term “consumer” is defined to refer only to non-corporate entities. (CCP §1985.3(a)(2)).
Nonetheless, pursuant to CCP §2017.020(a), a court may limit discovery “pursuant to a motion for protective order by a party or other affected person.” Because the subject subpoena includes requests that target Schroeder Farms, LLC, this entity qualifies as an “affected person.” Consequently, the Court finds that it may limit discovery as to all movants.
Having reviewed the subject subpoena, the Court GRANTS the Motion in its entirety.
First, the Court notes that requesting party failed to provide Notices of Consumer to Asia Pham and Terry Hardisty.
Pursuant to CCP section1985.3(b), “[p]rior to the date called for in the subpoena duces tecum for the production of personal records, the subpoenaing party shall serve or cause to be served on the consumer whose records are being sought a copy of the subpoena duces tecum, of the affidavit supporting the issuance of the subpoena, if any, and of the notice described in subdivision (e)…”
Notably, “[f]ailure to comply with this section shall be sufficient basis for the witness to refuse to produce the personal records sought by a subpoena duces tecum.” (C.C.P. §1985.3(k)).
A “consumer” includes any individual “which has transacted business with, or has used the services of, the witness…” (CCP §1985.3(a)(2)). Additionally, “personal records” includes bank records. (CCP §1985.3(a)(1)).
Here, moving parties assert that Asia Pham and Terry Hardisty qualify as “consumers” becaues they are included within the definition for “SMC” in the subpoena. The subpoena states: “The term ‘SMC’ shall mean and refer to Schroeder Management Company, Inc. and shall include all of its representatives, agents, employees, independent contractors, attorneys (to the extent not covered by the attorney-client privilege), and anyone else acting on its behalf or under its control including, but not limited to PAUL, PHAM and HARDISTY.” (Albrecht Decl. ¶2 and Exhibit A thereto, at ¶11 of Definitions).
Thereafter, multiple requests seek records “associated with SMC.” (Id. at Requests Nos. 1-3). Additionally, the subpoena requests communications between the bank, SMC, Pham and Hardisty, “related to SMC’s accounts” or concerning discussions about SMC. (Id. at Requests Nos. 10-11).
In effect, because “SMC” is defined to include Asia Pham and Terry Hardisty, the subpoena includes requests for the bank records of these individuals. Consequently, these individuals qualify as “consumers” under CCP §1985.3, such that notices were required.
Both Pham and Hardisty declare that they were not provided a Notice to Consumer. (Pham Decl. ¶4; Hardisty Decl. ¶2). The failure to provide Notices to Asia Pham and Terry Hardisty is a sufficient basis upon which to quash Requests Nos. 1 through 3, 10 and 11.
Additionally, the Court finds that Requests Nos. 1 through 3, 10 and 11 are overbroad and seek irrelevant information, given the sweeping definition for “SMC” discussed above. As “SMC” has been defined to include several individuals, as well as unidentified agents, employees, attorneys and contractors, the requests effectively seek a wide range of records that have no apparent relevance to this action, including, e.g., financial records of Asia Pham, Terry Hardisty, and records of independent contractors and attorneys.
Next, Requests Nos. 4 through 6 seek statements, deposits and withdrawals from the “Schroeder Farms Account” from January 1, 2017 to the present. (Albrecht Decl. ¶2 and Exhibit A thereto). The “Schroeder Farms Account” is defined as a specific account named “Schroeder Farms LLC.” (Id. at ¶13 of Definitions).
Similarly, Requests Nos. 7 through 9 seek bank statements, deposits and withdrawals from January 1, 2017 to the present for the “Paul Account,” which is defined as a specific account held in the name of Paul Schroeder. (Albrecht Decl. ¶2 and Exhibit A thereto).
The Court finds these requests are also overbroad and seek irrelevant information.
A review of the Complaint reveals allegations that an account for Schroeder Farms was “improperly connected” or “inexplicably linked” to SMC corporate accounts. (¶5 and ¶62 of FAC (ROA No. 38)). Similarly, the Complaint alleges that Paul’s account was in some unexplained way “linked to SMC’s accounts.” (¶5 and ¶62 of FAC). No further allegations could be located in the Complaint that would make the above accounts relevant. At most, the Complaint alleges Defendants “unilaterally institute[ed] substantial transfers of funds out of SMC’s Union Bank account for unknown purposes…” (¶124(vii) of FAC); however, the allegations do not identify the Schroeder Farms or Paul Account as destinations for these transfers.
The Court finds the above allegations are insufficient to demonstrate relevance, as to the entirety of the bank statements, deposits and withdrawals of the Schroeder Farms or Paul Accounts.
Further, the above requests violate privacy rights.
As explained by the California Supreme Court in Williams v. Superior Court (2017) 3 Cal.5th 531, “[t]he 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.” (Id. at 552). “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.” (Id.).
“Personal financial information comes within the zone of privacy protected by article I, section 1 of the California Constitution,” (Harris v. Superior Court (1992) 3 Cal.App.4th 661, 664 [disapproved on other grounds in Williams v. Superior Court (2017) 3 Cal.5th 531); See also Sacramento County Employee’s Retirement System v. Superior Court (2011) 195 Cal.App.4th 440, 468).
Additionally, as explained by the Court in SCC Acquisitions, Inc. v. Superior Court (2015) 243 Cal.App.4th 741, “[b]ecause the corporate privacy right is not constitutionally protected, the issue presented in determining whether…requests for production infringe that right is resolved by a balancing test.” (Id. at 756). “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.” (Id.) “Doubts about relevance generally are resolved in favor of permitting discovery.” (Id.).
Here, the subject subpoena seeks the entirety of the bank records relating to accounts held by Schroeder Farms, LLC and Paul Schroeder; however, there has been no showing of relevance as to the same. At best, the Complaint vaguely alleges some kind of a “link” between these accounts and the accounts of SMC. (FAC ¶¶ 5, ¶62 (ROA No. 38)). But the Complaint does not allege that funds have been improperly transferred from SMC into the above accounts. Moreover, although the Complaint alleges Defendants “unilaterally institute[ed] substantial transfers of funds out of SMC’s Union Bank account for unknown purposes,” (FAC ¶124(vii)), a review of SMC’s own account would be sufficient to identify such transfers.
Based on the above, the Court finds the balance weighs readily in favor of privacy and, consequently, Requests Nos. 4 through 9 are quashed.
Finally, as noted by the moving parties, the subpoena at issue herein includes five pages of definitions and instructions that precede the actual document requests. The Court in Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, noted that the “employment of six pages of ‘definitions’ and ‘instructions’ is particularly obnoxious,” as it “in effect, turns each of the…requests into a complicated ‘category’ described in more than 6 pages.” (Id. at 223). “The statute does not expressly prohibit the practice of expanding on categories with respect to requests for production in this manner. However, the prohibition on discovery which is ‘unduly burdensome’…if not providing a blanket prohibition for a limited use of some incorporation of external definitions, should be employed to greatly limit the scope of this practice.” (Id.). “In this case, the grossly excessive use of ‘definitions’ and ‘instructions,’ in and of itself, makes the subpoena unduly burdensome.” (Id.).
Here, the length of the definitions and instructions is comparable to the length discussed in Calcor. The Court additionally finds the subpoena is unduly burdensome on this basis.
Finally, Plaintiff Ernie Schroeder and his counsel of record, Michael E. Bareket, Esq. of Theodora Oringher PC, are jointly ordered to pay sanctions in the amount of $2,310.00 to Paul and Cathy Schroeder within 30 days of notice of this order. (CCP §§ 1987.2, 2017.020(b), 2023.030(a) and 2023.010(c).)