Judge: Michelle Williams Court, Case: 22STCV06818, Date: 2022-08-24 Tentative Ruling
Case Number: 22STCV06818 Hearing Date: August 24, 2022 Dept: 74
22STCV06818 MITCH
JACOBS vs SCOTT COHEN
1. Plaintiff
Mitch Jacobs’s Motion to Compel Further Responses by Defendant Scott Cohen to
Special Interrogatories, Set One
The motion is GRANTED IN PART. The motion is GRANTED as to Special Interrogatories
Nos. 12, 13, 26-29, and 32-36, and DENIED as to Special Interrogatory No. 14,
31, and 37-42.
Civil Code Section 3295(c)
In
opposition, Defendant contends Special Interrogatories Nos. 14, 28-29, 31-32,
and 35-42 violate Civil Code section 3295(c). (Opp. at 9:14-12:11.) Civil Code
section 3295(a) provides: “[t]he court may, for good cause, grant any defendant
a protective order requiring the plaintiff to produce evidence of a prima facie
case of liability for damages pursuant to Section 3294, prior to the
introduction of evidence of: (1) The profits the defendant has gained by virtue
of the wrongful course of conduct of the nature and type shown by the evidence.
(2) The financial condition of the defendant.” Subsection (c) further states:
No pretrial discovery by
the plaintiff shall be permitted with respect to the evidence referred to in
paragraphs (1) and (2) of subdivision (a) unless the court enters an order
permitting such discovery pursuant to this subdivision. However, the plaintiff
may subpoena documents or witnesses to be available at the trial for the
purpose of establishing the profits or financial condition referred to in
subdivision (a), and the defendant may be required to identify documents in the
defendant's possession which are relevant and admissible for that purpose and
the witnesses employed by or related to the defendant who would be most
competent to testify to those facts. Upon motion by the plaintiff supported by
appropriate affidavits and after a hearing, if the court deems a hearing to be
necessary, the court may at any time enter an order permitting the discovery
otherwise prohibited by this subdivision if the court finds, on the basis of
the supporting and opposing affidavits presented, that the plaintiff has
established that there is a substantial probability that the plaintiff will
prevail on the claim pursuant to Section 3294.
(Civ.
Code § 3295(c).)
These
special interrogatories seek information regarding: the ownership percentages
of the owners of Straight Smile, (No. 14), Defendant’s interest in Straight
Smile, (No. 28), the terms of the sale of Defendant’s interest in Straight
Smile, (No. 29), identities of individuals with knowledge related to the sale,
(No. 31), identity of documents related to the sale, (No. 32), all
consideration Defendant received from the sale, (No. 35), funds received from
the sale, if different, (No. 36), the accounts to which Defendant transferred
the proceeds from the sale, (No. 37), Defendant’s disposition of the proceeds,
(No. 38), identities of individuals with knowledge of Defendant’s disposition
of proceeds, (No. 39), identity of all documents related to Defendant’s
disposition of proceeds, (No. 40), identities of individuals with knowledge of
Defendant’s use of the proceeds, (No. 41), and identity of all documents
related to Defendant’s use of the proceeds. (No. 42.)
Plaintiff’s
primary allegation in the complaint is that Defendant sold Straight Smile, also
known as Byte, without sharing the proceeds with Plaintiff as required by the
parties’ agreement. The Court finds Civil Code section 3295(c) does not bar the
discovery sought, which is limited solely to the issue of the sale of Straight
Smile and Byte. “Unlike the situation in which a plaintiff seeks to discover
defendant's financial status solely for the purpose of assessing a punitive
damages claim, the [information] sought by petitioner here are fundamental to
his case.” (Rawnsley v. Superior Court (1986) 183 Cal.App.3d 86, 91.)
Defendant
cites Farmers & Merchants Trust Co. v. Vanetik (2019) 33 Cal.App.5th
638, which did not address the proper scope of discovery and is therefore
inapplicable. Defendant also cites Kerner v. Superior Court (2012) 206
Cal.App.4th 84, which addressed a plaintiff’s motion pursuant to Civil Code section
3295 to conduct net worth discovery, which is not at issue here. The court in Kerner
noted “[p]retrial discovery of a defendant's financial condition in connection
with a claim for punitive damages is prohibited absent a court order permitting
such discovery.” (Id. at 119.) Defendant’s attempt to distinguish Rawnsley
is not persuasive. The Court does not agree that discovery must be
precluded because the parties can resolve “whether Plaintiff had an entitlement
to th[e] proceeds” without the discovery sought. (Opp. at 11:24-12:11.)
Plaintiff does not seek general financial discovery that would support a claim
for punitive damages, but rather discovery tailored to the primary transaction
at issue in this case. Defendant’s objection based upon Civil Code section 3295
is overruled.
Right to Privacy and Relevance
In
opposition, Defendant also contends Special Interrogatories Nos. 14, 28-29,
31-32, and 35-42 violate his right to privacy. (Opp. at 12:13-15:24.) “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.” (Williams v.
Superior Court (2017) 3 Cal.5th 531, 552.)
Defendant
correctly notes he has a legally protected privacy interest in his personal
financial dealings and has a reasonable expectation of privacy in his private
financial affairs. (Valley Bank of Nevada v. Superior Court (1975) 15
Cal.3d 652, 656 (“We may safely assume that the right of privacy extends to
one's confidential financial affairs as well as to the details of one's
personal life.”); Babcock v. Superior Court (1994) 29 Cal.App.4th
721, 726 (“It is elementary that a party has a privacy interest in his or her
personal financial records.”).) Disclosure of Defendant’s financial information
would result in a serious invasion of that right to privacy. While the parties’
protective order limits the intrusion to a degree, Plaintiff is not entitled to
all privacy protected information based solely upon the existence of a
protective order.
However,
special interrogatories seeking the identities of witnesses, (Nos. 31, 39, 41),
do not intrude upon any financial privacy and Defendant’s privacy objection as
to these interrogatories is overruled.
The
Court agrees the balance of interests weighs in favor of Defendant’s privacy
objection to Special Interrogatories Nos. 14, 37, 38, 40, and 42. Special
Interrogatory No. 14 seeks the private financial information of the other
owners of Straight Smile, who are non-parties to this litigation. Moreover,
their respective ownership percentages are entirely irrelevant to Plaintiff’s
claims. Plaintiff need only know Defendant’s ownership percentage to support
his damages claims. Special Interrogatories Nos. 37, 38, 40, and 42, seek
Defendant’s banking information and information about how he used the proceeds
from the sale. The Court agrees with Defendant that “the disposition of those
funds—i.e., how Cohen has chosen to hold or invest the funds—is plainly not
relevant to any issue in the case.” (Reply at 8:13-14.) Defendant’s account
information and movement of funds may become relevant in connection with the
collection of a judgment, but such discovery is premature. While Special
Interrogatories Nos. 39 and 41 do not involve a privacy interest, the identities
of individuals who know how Defendant used the proceeds from the sale are not
relevant to any issue in this action or reasonably calculated to lead to the
discovery of admissible evidence in connection with Plaintiff’s claims. The
motion is DENIED as to Special Interrogatories Nos. 14, 37-42.
The
balance of interests weighs in favor of disclosure of information regarding the
nature of Defendant’s interest in Straight Smile that he sold, (No. 28), the
terms of the sale, (No. 29), the identity of documents related to the sale,
(No. 32), and the consideration and funds received from the sale. (Nos. 35-36.)
This information is directly relevant to Plaintiff’s claims and Defendant’s
privacy interests are adequately protected by the parties’ protective order.
Defendant’s privacy objections are overruled and the motion is GRANTED as to
Special Interrogatories Nos. 28, 29, 32, and 35-36.
Undue Burden, Overbreadth, and
Relevance
Defendant
failed to justify his undue burden objection. (West Pico Furniture Co. of
Los Angeles v. Superior Court In and For Los Angeles County (1961) 56
Cal.2d 407, 417 (“The objection based upon burden must be sustained by evidence
showing the quantum of work required.”).)
As
noted above, the Court agreed with Defendant’s overbreadth and relevance
objections to Special Interrogatories Nos. 14 and 37-42.
Special
Interrogatory No. 31 seeks the identity of “all individuals with knowledge
RELATING TO the sale of YOUR interest in STRAIGHT SMILE.” The Court agrees with
Defendant that this interrogatory is impermissibly overbroad, such that a
further response is not warranted. As noted by Plaintiff, the sale was widely
reported. (Wargo Decl. ¶¶ 8-13. See also Opp. at 15:18-19 (noting a response
“would include every person with knowledge of the Byte sale.”).) Plaintiff must
propound a more narrowly tailored interrogatory that is limited to relevant
information about the sale, not a blanket request to identify any individual
with any knowledge thereof. The motion is DENIED as to Special Interrogatory
No. 31.
Special
Interrogatory No. 13 seeks the identity of all owners of Straight Smile prior
to its sale. Defendant identified two of the owners, but refused to identify
any others. While the Court agrees that the ownership percentages of other
owners are immaterial and privacy protected, their identities are not. These
individuals are potential witnesses and there is no basis to withhold their
identities. The motion is GRANTED as to Special Interrogatory No. 13.
Defendant
contends Special Interrogatories Nos. “12, 26-27, and 34 call for irrelevant
information about the involvement of third parties in the Byte sale.” (Opp. at
16:5-6.) Special Interrogatory No. 12 seeks “the date on or about which
negotiations for the sale of STRAIGHT SMILE to DENTSPLY began.” There is no
basis for Defendant not to provide this basic information regarding the primary
event in this action. The motion is GRANTED as to Special Interrogatory No. 12.
Special
Interrogatories Nos. 26 and 27 seek the identity of the individuals who
represented Straight Smile and DENTSPLY in the sale. These individuals are
similarly potential witnesses and therefore their identities must be provided,
to the extent known. Defendant’s response that he “does not know ‘all’
individuals who ‘represented’ Dentsply ‘relating to; its purchase, and as a
result, cannot meaningfully respond to this interrogatory” is evasive and
non-responsive. “Each answer in a response to interrogatories shall be as
complete and straightforward as the information reasonably available to the
responding party permits.” (Code Civ. Proc. § 2030.220(a).) The motion is
GRANTED as to Special Interrogatories Nos. 26-27.
Special
Interrogatory No. 34 seeks a description of JOHNSON’S involvement RELATING TO
the sale of YOUR interest in STRAIGHT SMILE. Johnson is the co-founder of
Straight Smile/Byte with Defendant. The Court is not persuaded by Defendant’s
summary relevance argument and the information is reasonably calculated to lead
to the discovery of admissible evidence. The motion is GRANTED as to Special
Interrogatory No. 34.
Finally,
Special Interrogatory No. 33 requests that Defendant “IDENTIFY all individuals
with whom YOU consulted RELATING TO the sale of YOUR interest in STRAIGHT
SMILE.” Defendant responded that he “consulted with attorneys, including but
not limited to those at Bodman PLC” and contends any further information is
“frivolous—Cohen’s communications with his attorneys are privileged, and
Plaintiff has no need for this information.” (Opp. at 17:1-2.) The Court agrees
with Plaintiff that “Special Interrogatory No. 33 does not seek disclosure of
any privileged communications, and Defendant’s attorneys may possess relevant
nonprivileged information.” (Reply at 14:11-13.) The motion is GRANTED as to
Special Interrogatory No. 33.
2. Plaintiff
Mitch Jacobs’ Motion to Compel Further Responses and Production of Documents by
Defendant Scott Cohen to Requests for Production of Documents, Set One
The motion is GRANTED IN PART. The motion is GRANTED as to Request Nos. 27,
29, 30, 32, and 33 and DENIED as to Request Nos. 5, 26, and 34. The motion is GRANTED
to Request No. 35, solely as to accountings related to Defendant’s receipt of
proceeds from the sale of his interest in Straight Smile.
Plaintiff also moves for an order compelling
further responses to Requests for Production Nos. 5, 26, 27, 29, 30, 32, 33, 34
and 35. Defendant responded to these requests solely with objections.
Defendant reiterates his argument regarding Civil
Code section 3295(c), (Opp. at 9:14-12:8.) As noted above, the Court does not
find Plaintiff’s requests barred by Section 3295(c). Requests Nos. 6, 27, 29,
30, 32, 33, 34 and 35 seek documents regarding the Straight Smile transaction
and Request No. 5 seeks contracts that are not related to Plaintiff’s punitive
damages claim or Defendant profits and his financial condition associated
therewith.
Defendant also reiterates his privacy objections
based upon his right to financial privacy as to Requests Nos. 2, 27, 29-30, and
32-35. (Opp. at 12:9-15:27. See (Valley
Bank, supra, 15 Cal.3d at 656 (“We may safely assume that the right of
privacy extends to one's confidential financial affairs as well as to the
details of one's personal life.”); Babcock, supra, 29 Cal.App.4th at 726 (“It is elementary
that a party has a privacy interest in his or her personal financial
records.”).) As noted above, the Court agrees Defendant has a right to privacy
in his financial information, there is a reasonable expectation of privacy in
those documents, and permitting discovery would be an invasion of those
interests. Accordingly, the Court balances the needs of the case with the
discovery sought.
Request No 5 seeks the production of every
partnership or joint venture agreement Defendant was a party to from January 1,
2016 to January 1, 2022. The Court agrees with Defendant that Plaintiff has not
demonstrated good cause for the production of these documents. Plaintiff
contends they are relevant to “whether Defendant considers himself a party to
other partnership and/or joint venture agreements that he did not sign.” (Mot.
at 13:21-26.) However, the enforceability of the agreement is a legal matter
and Plaintiff does not cite any authority establishing the enforcement of a
contract depends upon Defendant’s subjective belief or conduct in connection with
other contracts.
Plaintiff also contends the documents are “relevant
to Plaintiff’s claim that Defendant breached his obligations under the
Agreement by abandoning joint partnership projects in favor of other ventures
and failing to disclose the extent and nature of his other commitments.” (Mot.
at 13:27-14:3 citing Compl. ¶ 119(b) (“Cohen breached his fiduciary duties to
Jacobs by: . . . Effectively abandoning and forsaking joint Partnership
projects, including Agent 1099 and the potential profitable partnership with
Cutter Financial, in favor of pursuing his own interests with Byte for his sole
benefit.”).) Paragraph 119(b) only alleges Defendant “pursued interests Byte,”
which does not provide a basis for discovery of the contract terms of every partnership
and joint venture agreement to which Defendant was a party. Moreover, the terms
of these agreements are not relevant and the information Plaintiff seeks can be
discovered by less intrusive means that do not intrude upon Defendant’s privacy
rights. The motion is DENIED as to Request No. 5.
Request No. 26 seeks all communications between
Defendant and Johnson regarding Straight Smile. Plaintiff contends the
documents are “relevant to a number of issues in the case, including the terms
and timing of the sale of Straight Smile, the amount of proceeds Defendant
received from the sale of Straight Smile, and the extent, nature and timing of
the work Defendant did on behalf of Straight Smile.” (Sep. Stmt. at 9:21-23.)
The Court agrees with Defendant that this request is impermissibly overbroad.
Plaintiff acknowledges that Straight Smile was founded in 2017 by Defendant and
Johnson. (Mot. at 7:17-18.) A request for every communication between the
founders of the company throughout its existence is not narrowly tailored to
the issues presented in this case. The motion is DENIED as to Request No. 26
without prejudice to Plaintiff serving more narrowly tailored requests. The
Court notes Plaintiff’s Request No. 32 is one such request.
Request No. 27 seeks all documents and
communications related to the sale of Straight Smile. Request No. 29 seeks all
documents and communications regarding the valuation of Defendant’s interest in
Straight Smile. Request No. 30 seeks all documents and communications related
to the sale of Defendant’s interest in Straight Smile. Request No. 32 seeks all
documents and communications between Defendant and Johnson related to the sale
of Defendant’s interest in Straight Smile. Request No. 33 seeks all documents
and communications related to Defendant’s receipt of proceeds from the sale of
Defendant’s interest in Straight Smile. As noted above, the sale of Defendant’s
interest in Straight Smile and his receipt of proceeds therefrom is a core
issue in this action. The parties’ protective order limits Defendant’s privacy
concerns and Plaintiff’s need for the discovery outweighs Defendant’s interests
in preventing discovery. Defendant must provide substantive responses and
produce documents. The motion is GRANTED as to Requests Nos. 27, 29, 30, 32,
and 33.
Request No. 34 seeks all documents and
communications related to the disposition of any proceeds received by
Defendant. As noted above, the disposition of the proceeds is entirely
irrelevant to Plaintiff’s substantive claims and not reasonably calculated to
lead to the discovery of admissible evidence. Defendant admitted he did not
share the proceeds with Plaintiff. (Aronsohn Decl. Ex. 4 at 6:15-17.) There is no basis
for Plaintiff to obtain documents and communications related to Defendant’s
subsequent disposition of the funds. Defendant’s privacy interest in his
financial affairs outweighs Plaintiff’s need for these documents in this case.
The motion is DENIED as to Request No. 34.
Request No. 35 seeks any “accountings” related to
Defendant’s receipt and/or disposition of any proceeds received from the sale
by Defendant. As discussed above, documents related to Defendant’s receipt of
proceeds are directly relevant to Plaintiff’s claims and the issues in this
litigation. Defendant’s disposition of proceeds is not. Accordingly, the motion
is GRANTED as to Request No. 35, solely as to accountings related to
Defendant’s receipt of proceeds from the sale of his interest in Straight
Smile.
3. Defendant
Scott Cohen’s Motion to Compel Further Responses to Requests for Production of
Documents
The motion
is DENIED.
Fanbank
Documents – Request for Production Nos. 9, 41-43
Request for Production No. 9 seeks
“DOCUMENTS sufficient to show the organization of FANBANK, including ownership
and statements of information, from January 1, 2017 to the present.”
Defendant’s supplemental response asserted numerous objections and stated
“Without waiving and subject to the foregoing objections, Responding Party
responds to the extent he understands the request as follows: Responding Party
will produce all responsive nonprivileged documents presently in his
possession. Responding Party will not produce responsive documents belonging to
FANBANK that are not in presently in his possession, and which would require him
to access such documents in his capacity as an officer and/or employee of
FANBANK.”
Request for Production No. 41 seeks
“All valuations of FANBANK from December 1, 2016 to December 31, 2021.”
Defendant’s supplemental response asserted numerous objections and stated
“Without waiving and subject to the foregoing objections, Responding Party
responds to the extent he understands the request as follows: Responding Party
will produce all responsive nonprivileged documents presently in his
possession. Responding Party will not produce responsive documents belonging to
FANBANK that are not in presently in his possession, and which would require
him to access such documents in his capacity as an officer and/or employee of
FANBANK.”
Request for Production No. 42 seeks
“All DOCUMENTS and COMMUNICATIONS relating to FANBANK’s financial health from
January 1, 2017 through December 31, 2021.” Defendant’s supplemental response
asserted numerous objections and stated “Without waiving and subject to the
foregoing objections, Responding Party responds to the extent he understands
the request as follows: Responding Party will produce all responsive
nonprivileged documents presently in his possession. Responding Party will not
produce responsive documents belonging to FANBANK that are not in presently in
his possession, and which would require him to access such documents in his
capacity as an officer and/or employee of FANBANK.”
Request for Production No. 43 seeks
“The minutes of FANBANK’s board of directors meetings from January 1, 2017 to
December 31, 2021.” Defendant’s supplemental response asserted numerous
objections and stated “Without waiving and subject to the foregoing objections,
Responding Party responds to the extent he understands the request as follows:
Responding Party will produce all responsive nonprivileged documents presently
in his possession. Responding Party will not produce responsive documents
belonging to FANBANK that are not in presently in his possession, and which
would require him to access such documents in his capacity as an officer and/or
employee of FANBANK.”
Defendant contends there is good cause
for production because “Fanbank is at the core of the Complaint.” (Mot. at
3:16-17.) In opposition, Plaintiff argues there is no good cause for discovery
related to Fanbank because it is “is not a plaintiff or a party to the Agreement,
and Plaintiff does not seek any damages relating to any harm to Fanbank. (See
Complaint, ¶¶ 47-48, 106, 116, 122, 129). Nor was Fanbank one of the business
ventures subject to the Agreement. . . . Defendant cannot show specific facts
to justify requiring Plaintiff to produce the Fanbank Documents because
Defendant can obtain those documents directly from Fanbank by serving it with a
subpoena for business records.” (Opp. at 10:17-11:4.)
Plaintiff’s complaint alleges Plaintiff
founded Fanbank, a Delaware Corporation, (Compl. ¶¶ 4, 25, 51), Defendant
“received the right to participate in the proceeds from Fanbank, (Compl. ¶ 36),
the parties created and jointly managed Agent 1099, (Compl. ¶¶ 7, 53), and
“Agent 1099’s failure had a near catastrophic impact on Fanbank’s business.”
(Compl. ¶¶ 11, 80, 83.) Defendant’s alleged abandonment of Agent 1099 is used
to support Plaintiff’s breach of fiduciary duty claim. (Compl. ¶ 119(b).)
Plaintiff injected Fanbank into this litigation by repeatedly referencing it
and its financial struggles in the complaint. Accordingly, documents related
thereto fall within the scope of permissible discovery.
As to Plaintiff’s limitation of
production to solely documents in his possession, the Court finds Plaintiff
adequately supported this limitation. Plaintiff only owns 27% of the stock of
Fanbank through the separate entity TechonMain. (Wargo Decl. ¶ 5.) The other
shareholders are independent of Plaintiff and Plaintiff is the chairperson of
Fanbank’s three-member board. (Id. ¶¶ 5-6.) Plaintiff cannot act for Fanbank on
his own. (Wargo Decl. Ex. E, Article III, Section 10. See United Food and
Commercial Workers Union v. Zuckerberg (Del. Ch. 2020) 250 A.3d 862,
875–876 (“A cardinal precept of the General Corporation Law of the State of
Delaware is that directors, rather than shareholders, manage the business and
affairs of the corporation.”).)
Defendant does not provide any
authority demonstrating Plaintiff has sufficient control over Fanbank to be
required to produce documents it its possession. “Control is defined as the
legal right to obtain documents upon demand. . . . the Ninth Circuit has
explicitly rejected an invitation to define 'control' in a manner that focuses
on the party's practical ability to obtain the requested documents. Documents
are not discoverable under Rule 34 if the entity that holds them could
legally—and without breaching any contract—continue to refuse to turn over such
documents. The party seeking production of the documents bears the burden of
proving that the opposing party has such control.” (Matthew Enterprise, Inc.
v. Chrysler Group LLC (N.D. Cal., Dec. 10, 2015, No. 13-CV-04236-BLF) 2015
WL 8482256, at *3 (quotations omitted).)
Defendant cites Findleton v. Coyote
Valley Band of Pomo Indians (2021) 69 Cal.App.5th 736, 752, which merely
quoted a trial court discovery order. Moreover, the court noted “[i]n
connection with discovery proceedings, the superior court found the Tribe ‘has
the legal right to obtain upon demand of any and all responsive documents in
the possession of [CEDCO and CVEE] under the legal control test.’ The Tribe’s
chairman, the president of CEDCO and the president of CVEE at the time of the
asset transfer were one and the same person. CEDCO was wholly owned by the
Tribe. CVEE was a ‘subdivision’ of CEDCO.” (Id. at 759 n.8.) There is no
evidence to suggest that Plaintiff and Fanbank are one and the same and the
evidence indicates Plaintiff is a minority shareholder of Fanbank. Defendant
also cites Soto v. City of Concord (N.D. Cal. 1995) 162 F.R.D. 603, 620
which involved the production of “psychiatric evaluations conducted by the
non-party physician . . . . performed at the request of Defendant City of
Concord in the course of the City of Concord's hiring process.” The court found
that the City could obtain the evaluations on demand as the hiring party and
employees had a legal right to obtain information related to their employment
applications. Thus, Soto has no application here.
As noted by Plaintiff, courts decline
to compel corporate officers to attempt to obtain corporate documents from a
corporation, absent sufficient evidence of control or legal right. (See e.g. American
Maplan Corp. v. Heilmayr (D. Kan. 2001) 203 F.R.D. 499, 502 (“VET is not a
sole proprietorship and AMC has not alleged that defendant is the ‘alter ego’
of VET. There is simply no evidence or allegation that defendant and VET are
essentially one and the same. AMC's response to defendant's motion does not
address this argument in any way whatsoever. In sum, then, AMC cannot properly
seek to obtain from one entity or individual what belongs to another.”).) Shcherbakovskiy
v. Da Capo Al Fine, Ltd. (2d Cir. 2007) 490 F.3d 130, 139 (“If the district
court finds that, contrary to appellant's present claim, IPT is his alter ego
or his investment in it is sufficient to give him undisputed control of the
board, such a finding could support an order to produce. See 7 Moore's Federal
Practice § 34.14[2][c] (‘[W]hen an action is against an officer individually,
and not also against the corporation, production may be denied unless there is
evidence that the officer is the ‘alter ego’ of the corporation’).”).
Defendant’s attempt to distinguish
these cases in reply is unpersuasive. (Reply at 3:14-25.) In both cases, the
court addressed the issue of Russian law and Texas law in connection with
whether the responding party had a legal right to obtain non-party corporate
documents. While Defendant contends “Plaintiff cites no applicable California
or Delaware law preventing his compliance with the discovery procedures,”
(Reply at 3:24-25), Defendant bore the burden of establishing Plaintiff’s
control or legal right to third-party documents and failed to meet that burden.
(See e.g. Matthew Enterprise, supra, 2015 WL 8482256, at *3; U.S. v.
International Union of Petroleum and Indus. Workers, AFL-CIO (9th Cir.
1989) 870 F.2d 1450, 1452.) Plaintiff’s limitation on the production is upheld.
Defendant’s motion and separate
statement solely sought to compel a further response to Requests Nos. 9 and 41-43 on this basis.
(Mot. at 3:3-5:9, Sep. Stmt. at 3:15-4:5.) Accordingly, the motion is DENIED as
to Requests Nos. 9 and 41-43.
Request for Production No.
35
Request for Production No. 35 seeks
“DOCUMENTS sufficient to show your assets and liabilities from January 1, 2017
to the present.” Plaintiff’s response solely asserted objections and declined
to produce documents.
The Court agrees with Plaintiff that
documents evidencing his personal assets and liabilities for more than five
years is not narrowly drawn to seek relevant evidence or reasonably calculated
to lead to the discovery of admissible evidence. Additionally, the request is
impermissibly overbroad. Defendant contends he “expects that this evidence will
rebut Plaintiff’s allegations that Cohen caused Plaintiff to suffer a severe
financial hardship, including by causing ‘“significant negative impact’ on
Plaintiff’s company, Fanbank, and by causing Plaintiff to lose opportunities
with ‘moneymaking potential.’ Compl. ¶¶ 80-81. Moreover, Plaintiff’s assets and
liabilities are relevant to Plaintiff’s allegation that the parties agreed ‘to
mutually share in profits of existing projects’ and that Cohen “’was entitled
to share in the profits of [Plaintiff’s] separate ventures.’ Id. ¶¶ 5, 9,
33-41.” (Mot. at 5:19-24.) These allegations do not open Plaintiff’s entire
finances to discovery and Plaintiff’s personal finances are protected by a
privacy right that is not outweighed by Defendant’s needs for a response to Request
No. 35 as framed. (International Federation of Professional & Technical
Engineers, Local 21, AFL-CIO v. Superior Court (2007) 42 Cal.4th 319, 330
(“individuals have a legally recognized privacy interest in their personal
financial information.”).) As noted by Plaintiff, Defendant may take more
narrowly specified discovery to address lost profits or lost opportunities
expressly raised in the complaint. The motion is DENIED as to Request No. 35.