Judge Mitchell L. Beckloff, Case 20STCP01863 2023-05-17 Tentative Ruling

Judge: Mitchell L. Beckloff, Case: 20STCP01863, Date: 2023-05-17 Tentative Ruling

Petitioners, Maricopa Orchards, LLC; Kamm Pistachios, LLC; Derrick Pistachios, LLC; Three Rocks Pistachios, LLC; 104 Pistachios, LLC; ACDF, LLC; Granville Farms, LLC; Sommerville Farms, LLC; Tuscan Farms, LLC; Waterford Farms, LLC; Cantua Orchards, LLC; and Sageberry Farms, LLC, through their second amended verified petition for writ of mandate and complaint (petition) seek the following relief from Respondents, Wonderful Growers Cooperative (WGC), Wonderful Almond Cooperative (WAC), Cal Pure Produce Inc. (Cal Pure), The Wonderful Company LLC (TWC), Wonderful Pistachios & Almonds LLC (WP&A):

“For a peremptory Writ of Mandate or other court order compelling WAC and Cal Pure to comply with Petitioners Maricopa Orchards, LLC and Sageberry Farms, LLC’s demand for an accounting as members of WAC, and appointing one or more competent inspectors or accountants to audit and investigate WAC and Cal Pure’s books, property, and affairs as the Court sees fit.

For a peremptory Writ of Mandate or other court order compelling WGC and Cal Pure to comply with Petitioners’ demand for an accounting as members of WGC, and appointing one or more competent inspectors or accountants to audit and investigate WGC and Cal Pure’s books, property, and affairs as the Court finds appropriate.” (Petition, Prayer ¶¶ 1, 2.)

Petitioners rely upon Corporations Code sections 1601 (Section 1601) and 1603 (Section 1603) as their basis for relief.

Petitioners also seek a court order appointing Hemming Morse, LLP, an accounting firm, to audit the books and records of WGC, WAC and Cal Pure at the location in the state where those records are kept pursuant to Section 1603, subdivision (a).

Petitioners allege Respondents have violated their statutory and common-law rights to inspect Respondents’ “accounting books, records, and minutes.” (Section 1601.)

Respondents are agricultural non-profit cooperatives controlled by TWC. The cooperatives has a two-tier structure. Petitioners are members of WGC and WAC. WGC and WAC, not Petitioners, are members of Cal Pure.

“A shareholder has recourse to the courts if a corporation does not comply with a lawful demand for inspection of corporate records.” (Singhania v. Uttarwar (2006) 136 Cal.App.4th 416, 431 [citing § 1603 and Code Civ. Proc., § 1085].)

Judicial review here is proper under Code of Civil Procedure section 1085. Under Code of Civil Procedure section 1085, a writ:

“may be issued by any court to any . . . board . . . to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station, or to compel the admission of a party to the use and enjoyment of a right or office to which the party is entitled, and from which the party is unlawfully precluded by such inferior tribunal, corporation, board, or person.” (Code Civ. Proc., § 1085, subd. (a).)

“To obtain a writ of mandate under Code of Civil Procedure section 1085, the petitioner has the burden of proving a clear, present, and usually ministerial duty on the part of the respondent, and a clear, present, and beneficial right in the petitioner for the performance of that duty.” (Marquez v. State Dept. of Health Care Services (2015) 240 Cal.App.4th 87, 103.)

Petitioners argue Respondents have not complied with their obligations under Section 1601. Petitioners seek relief pursuant to Sections 1601 and 1603. (SAP ¶¶ 1, 56, 76, 80, 86.)

“The accounting books, records, and minutes of proceedings of the shareholders and the board and committees of the board of any domestic corporation, and of any foreign corporation keeping any records in this state or having its principal executive office in this state, or a true and accurate copy thereof if the original has been lost, destroyed, or is not normally physically located within this state shall be open to inspection at the corporation's principal office in this state, or if none, at the physical location for the corporation's registered agent for service of process in this state, upon the written demand on the corporation of any shareholder or holder of a voting trust certificate at any reasonable time during usual business hours, for a purpose reasonably related to the holder's interests as a shareholder or as the holder of a voting trust certificate.” (§ 1601, subd. (a)(1).)

Further, the right of inspection under Section 1601 extends to the records of each “subsidiary” of a corporation subject to the statute. (§ 1601, subd. (a)(3).)

The case authority discussing Section 1601 is limited. Nonetheless, the plain language of the statute read in the context of the surrounding statutory scheme makes clear shareholder inspection is limited in scope. That is, under Section 1601, shareholders are expressly limited to inspection of “accounting books, records, and minutes of proceedings of the shareholders and the board and committees of the board.” (§ 1601, subd. (a)(1).) In contrast, directors may request “all books, records and documents of every kind” and may “inspect the physical properties of the corporation . . . .” (Corp. Code, § 1602 [emphasis added].)[1]

On December 1, 2022, Respondents made a production of their accounting books and records to Petitioners. Thereafter, Respondents requested Petitioners dismiss this proceeding as moot. Petitioners declined Respondents’ request. Instead, Petitioners requested additional accounting records addressing: (1) whether the cooperatives are accurately and properly distributing all proceeds to their members; (2) the source of the cooperatives’ revenues and the payors; (3) the expenses of the cooperatives and the payees; (4) the assets held with an identification of each asset; (5) the liabilities held with an identification of each liability; (6) any loans, obligations or indebtedness, or third-third party funding or payments; (7) the fixed expenses including salaries and the identity of those payees; and (8) any other retained funds and the reason for such fund retention.

In response to Petitioners’ request, Respondents made another production of documents on January 27, 2023.

Through their productions, Respondents produce evidence they provided the following records to Petitioners for inspection:

1. On December 1, 2022, WGC produced the following to Petitioners: (a) all of WGC’s board minutes from 2010 to 2022; (b) all of WGC’s state and federal tax returns from 2010 to 2020; (c) WGC’s independent auditor’s reports from 2010 to 2022. On January 27, 2023, WGC produced the following additional documents to Petitioners: (a) WGC’s Trial Balance-Balance Sheet for tax year ending 2011-2021; (b) WGC’s Trial Balance-Income Statement for tax year ending 2011-2021; (c) WGC’s Patronage vs. Non Patronage-Pistachios for tax year ending 2011-2021; and (d) WGC’s Pistachio Distribution Allocation for tax year ending 2011-2021. (Moran Decl., ¶ 3.)

2. On December 1, 2022, WAC produced the following to Petitioners: (a) all of WAC’s board minutes from 2014 to 2022; (b) all of WAC’s state and federal tax returns from 2014 to 2020; and (c) WAC’s independent auditor’s reports from 2014 to 2022. On January 27, 2023, WAC produced the following additional documents to Petitioners: (a) WAC’s Trial Balance-Balance Sheet for tax year ending 2015-2021; (b) WAC’s Trial Balance-Income Statement for tax year ending 2015-2021; (c) WAC’s Patronage vs. Non Patronage-Almonds for tax year ending 2015-2021; and (d) WAC’s Almond Distribution Allocation for tax year ending 2017-2021. (Moran Decl., ¶ 4.)

3. On December 1, 2022, Cal Pure produced the following to Petitioners: (a) all of Cal Pure’s board minutes from 2010 to 2022; (b) all of Cal Pure’s state and federal tax returns from 2010 to 2020; and (c) Cal Pure’s independent auditor’s reports for 2016-2017, 2019 and 2021-2022 and balance sheets for 2010-2013. On January 27, 2023, Cal Pure produced the following additional documents to Petitioners: (a) Cal Pure’s Balance Sheet for tax year ending 2011-2021; (b) Cal Pure’s Profit and Loss for tax year ending 2011-2021 (c) Cal Pure’s Patronage vs. Non Patronage-Almonds for tax year ending 2011-2021; (d) Cal Pure’s Patronage vs. Non Patronage Pistachios for tax year ending 2011-2021; (e) Cal Pure’s Distribution Allocation-Almonds for tax year ending 2011-2021; and (f) Cal Pure’s Distribution Allocation-Pistachios for tax year ending 2011-2021. (Moran Decl., ¶ 2.)

Petitioners argue the records produced are riddled with deficiencies. Petitioners complain about the general ledgers and trial balances and contend Respondents have failed to produce service agreements, grower statements and loan agreements. The crux of the dispute is Petitioners’ belief the records produced do not provide sufficient information about the various transactions. For example, Petitioners report truncated entries in Respondents’ general ledgers “cut off the Name and Description columns of the entries, resulting in a loss of information necessary to understand the entries and their significance.” (Opening Brief 15:16-17.) Petitioners also complain entries on the general ledger “appear often to be distillations of data from other sources—identified on the general ledgers as, for example, ‘Spreadsheet.’ ” (Opening Brief 15:21-22.) Petitioners also suggest they cannot complete their inspection of records without certain secondary or source documents—underlying service agreements, grower statements detailing bonuses and loan agreements. (Opening Brief 16:15-17:23.)

Petitioners argue more accounting information is required from Respondents to “understand[] the means by which Respondents use (or abuse) the contributions of grower members to the cooperatives and [] ascertain[] whether the final cash payments made to grower members represents a fair value for the crops delivered.” (Opening Brief 17:19-21.)

Petitioners makes several arguments in support of their petition. Their contentions largely rely on the declaration of their accounting expert, Susan Thompson. Importantly, Thompson misapprehends the scope of Section 1601 and appears to equate it with Section 1602. (Thompson Reply Decl., ¶ 5.) That is, Thompson appears to believe Petitioners are entitled to unfettered access to Respondents’ accounting materials.

Thompson first attests the documents produced “do not constitute the totality of [Respondents’] accounting books and records . . . and are insufficient to establish a clear understanding of Respondents’ accounting processes or the accounting of accurate and proper distribution of net proceeds of cooperatives to their grower members.” (Thompson Reply Decl., ¶ 2.)

For support, Thompson relies on the definition of “accounting records” defined by the American Institute of Certified Public Accountants (AICPA) Auditing Standards: “[t]he records of initial accounting entries and supporting records, such as checks and records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers; journal entries and other adjustments to the financial statements that are not reflected in journal entries; and records, such as work sheets and spreadsheets, supporting cost allocations, computations, reconciliations, and disclosures.” (Thompson Reply Decl., ¶ 4.) Based on the AICPA auditing standards, Petitioners argue accounting records includes “all original source documents that support the production of the financial statements.” (Thompson Reply Decl., ¶ 5.)

Petitioners therefore conclude they are entitled to any and all source documents from Respondents. They argue Respondents must be required to produce invoices, contracts, subsidiary ledgers, journal entries and other accounting information included within AICPA’s definition of accounting records.[2] Petitioners’ position about Section 1601 compliance appears clouded by their belief they are entitled to any and all records of Respondents, as if they were directors of Respondents. (See § 1602; Thompson Reply Decl., ¶ 6. [“Based on my review of Respondent’ document productions Respondents have never provided their full accounting records which would include, among other things, their invoices, contracts, subsidiary ledgers, journal entries, and other information described by the AICPA.”])

Respondents dispute Petitioners’ position. Respondents argue “Section 1601 does not require disclosure of every document from which Petitioners could glean information to resolve their supposed ‘concerns’ about the WGC, WAC and Cal Pure.” (Opposition 8:9-10.) The court agrees.

As of today’s date, the evidence is undisputed that Respondents have produced volumes of accounting books and records:

· state and federal tax returns for WGC (2010-2020), WAC (2014-2020) and Cal Pure (2010-2020);

· independent auditor reports for WGC (2010-2022), WAC (2014-2022) and Cal Pure (2016-2017, 2019, 2021-2022);

· trial balance-balance sheets for WGC (2011-2021), WAC (2015-2021) and Cal Pure (2011-2021);

· patronage versus non-patronage pistachios for WGC (2011-2021) and Cal Pure (2011-2021);

· patronage versus non-patronage almonds for WAC (2015-2021) and Cal Pure (2011-2021);

· pistachio distribution allocation for WAC (2011-2021) and Cal Pure (2011-2021); and

Respondents have also produced on three occasions their general ledgers. The parties dispute the extent of what Respondents provided to Petitioners.

Respondents produced the general ledgers for WGC, WAC and Cal Pure on February 24, 2023. (Hsiao Decl. ¶ 5.) According to Petitioners, Respondents’ first general ledgers contained “truncated and corrupted .txt files.” (Hsiao Decl. ¶ 5; see also Hohmann Depo. at 165:4-20.) Petitioners were able to convert these .txt files into legible portable document format (PDFs). The PDFs, however, retained their truncated entry form consistent with the original .txt files. (Hsiao Decl. ¶ 5; Hsiao Decl. Ex. E; see also Hohmann Depo. at 165:4-20.) The truncated entries on the general ledgers cut off the name and description columns of the entries. The truncated entries resulted in a loss of information necessary to understand the entries and their significance. (Hsiao Decl. ¶ 5; Thompson Decl. ¶ 3.)[3]

On April 7, 2023, Respondents produced a third iteration of their general ledgers. (Hsiao Reply Decl., ¶ 1.) According to Petitioners, problems persist; the general ledger produced now omits previously provided account balance information.[4]

According to Petitioners’ expert accountant, Respondents “have never [] produced a complete, accurate, and readable general ledger printed from their accounting system.” (Thompson Reply Decl., ¶ 7.) It is curious Thompson has qualified her statement. That the records produced may not have been printed directly from Respondents’ “accounting system,” does not inform on Section 1601 compliance. While Petitioners’ expert suggests the “manner of production makes the transaction information susceptible to adjustments, changes, deletions, and/or additions to the actual accounting entries,” such susceptibility does not demonstrate Respondents have made any adjustments, changes or deletions to the information.[5] (Thompson Reply Decl., ¶ 8.) Unlike Petitioners’ expert, the court cannot conclude Respondents have “manipulat[ed]” the information provided on the evidence before the court. (Thompson Reply Decl., ¶ 10.)

The three-time production of Respondents’ general ledgers in different formats appears to be a good faith attempt by Respondents to address Petitioners’ complaints about the production and provide complete general ledger information. (Moran Decl., ¶ 5.) The court finds the general ledger formatting issues raised by Petitioners do not demonstrate Respondents failed to comply with their obligations under Section 1601. In fact, based on Thompson’s qualification—"from their accounting system”—the court cannot find Respondents have not produced information representing complete general ledgers for WGC, WAC and Cal Pure.

Petitioners’ various complaints have been addressed through Respondents’ attempts to provide the information requested. While Respondents’ third attempt to provide complete information in the general ledger may have omitted balance information, if combined and considered with Respondents’ second production, Petitioners likely have complete general ledger information for WGC, WAC and Cal Pure.[6] That is, the different production versions provide a complete picture of the general ledgers. (See e.g., Thompson Reply Decl., ¶ 22.) Further, in the millions of transactions at issue, Petitioners appear to identify only a couple of pages of allegedly problematic entries. (Thompson Reply Decl., ¶ 9 [citation Hsiao Reply Decl., Exs. A-B].)[7] Finally, Thompson does not explain how the general ledgers are deficient as general ledgers. That the general ledgers do not “source” revenues or detail expenses does not alone demonstrate deficiency. (Thompson Reply Decl., ¶¶ 13, 21, 23, 24.)

Respondents have not had an opportunity to address Petitioners’ expert’s claims about their most recent production of the general ledgers. (See Thompson Reply Decl., ¶¶ 8-9 [“manipulation”].) Therefore, they are requested to do so during argument.

Petitioners contend they are entitled to additional records from Respondents. Petitioners’ expert asserts Petitioners are entitled to source documents for the entries in the records based on AICPA standards. (Thompson Reply Decl., ¶¶ 5, 6.) Petitioners therefore promote an interpretation of Section 1601 that would require all such source records be produced.

There is no dispute Respondents have additional corporate records they have not produced. Respondents’ only responsibility under Corporations Code section 1601, however, is to comply with the statute—to allow inspection of the “accounting books, records, and minutes of proceedings of the shareholders and the board and committees of the board of any domestic corporation . . . .” (§ 1601, subd. (a).)

As noted earlier, there are limits to shareholders’ access to documents. According to our Supreme Court, “ ‘a stockholder has an interest in the assets and business of the corporation and . . . inspection [of the books of the corporation] may be necessary or proper for the protection of his interest or for his information as to the condition of the corporation and the value of his interests therein.’ ” (Schnabel v. Superior Court (1993) 5 Cal.4th 704, 715-716.)

“The limitation on the right of inspection to a purpose reasonably related to the stockholder's interest is subject to judicial review to determine whether a lawful purpose exists, and inspection will be refused when the stockholder is merely on a fishing expedition.” (See 15 Cal. Jur. 3d Corporations § 350 [citing Dandini v. Superior Court in and for Alameda County (1940) 38 Cal.App.2d 32, 35].)

Respondents argue Petitioners request access to additional accounting records based upon nothing more than vague “concerns about the cooperatives and their accounting practices.” (Opposition 5:23-24.) Given the extent of records obtained, Petitioners’ claims do seem to lack any specificity: “Wonderful’s productions do show an accounting scheme by which it uses a shell game of intercompany transfers and loans to shift monies freely among themselves to hide their true financial accounting from its members . . . .” (Reply 4:13-15.) Petitioners appear to seek unfettered access to all of Respondents’ financial records.

Without question the records produced by Respondents to date have been extensive. Despite the production, Petitioners appear to propose an unreasonably exacting standard requiring verification by source documents (Thompson Reply Decl., ¶ 5) of each general ledger entry for more than a decade of business transactions. Petitioners contend to the extent they cannot determine certain accounting methodology they are entitled to source documents. (Thompson Reply Decl., ¶ 18.) They also assert they must—under Section 1601—be given access to source documents for expenses to determine the appropriateness of those expenses. (Thompson Reply Decl., ¶ 17.)

To justify an order compelling Respondents to produce additional records, Petitioners point to the following in the many years of general ledgers provided: (1) a single entry from August 20, 2019 referencing a “Journal Import Created”[8] (Hsaio Reply Decl., Ex. D; Thompson Reply Decl., ¶ 16); and (2) a single April 17, 2018 entry referencing an intercompany expense (Hsaio Reply Decl., Ex. D; Thompson Reply Decl., ¶ 18). They also complain that a general ledger does not provide them with the detail they desire.

There can be no question Petitioners have an interest in determining whether Respondents are properly crediting them with revenues related to the cooperatives’ sales of pistachios and almonds as well as the expenses. Given the volumes of information Respondents have provided, the court requests Petitioner specifically identify the accounting records they claim they have not received to address their interests in Respondents. As argued, it appears Petitioners are engaged in a fishing expedition.

To be clear, the court finds Petitioners’ stated purpose for the accounting books and records—to ensure “accurate and proper distribution of net proceeds of cooperatives to their grower members”—is a proper purpose. (Thompson Reply Decl., ¶ 2.) Petitioners do not seek corporate confidences or secrets. Having examined the extensive accounting books and records produced to date, Petitioners must specify the accounting books and records they are missing to allow them to evaluate their interests.[9]

“Upon refusal of a lawful demand for inspection, the superior court of the proper county, may enforce the right of inspection with just and proper conditions or may, for good cause shown, appoint one or more competent inspectors or accountants to audit the books and records kept in this state and investigate the property, funds and affairs of any domestic corporation or any foreign corporation keeping records in this state and of any subsidiary corporation thereof, domestic or foreign, keeping records in this state and to report thereon in such manner as the court may direct.” (Emphasis added.)

The court is inclined to find Respondents have complied with their obligations under Section 1601. As such, Petitioners are not entitled to relief under Section 1603.

Petitioners argue Respondents have indicated they will permit an audit of WGC, WAC and Cal Pure. Petitioners contend Respondents’ statement is a binding judicial admission from which they cannot retreat. (Fassberg Construction Co. v. Housing Authority of City of Los Angeles (2007) 152 Cal.App.4th 720, 752. [“[A] statement by counsel . . . is a binding judicial admission if the statement was an unambiguous concession of a matter then at issue and was not made improvidently or unguardedly.”])

Respondents’ counsel made the statement to “avoid trial.” (Opposition 7:8-12.) As the statement was conditional, there is no statement to which Respondents can be bound.

Given Respondents’ production of records, the court cannot find Respondents have refused “a lawful demand for inspection” to justify relief under Section 1603. Petitioners’ request for an order Respondents submit to an audit is denied.[10]

Finally, Petitioners extensively argue “Cal Pure, along with WGC and WAC, is part of a single enterprise headed by The Wonderful Company, such that each entity is an alter ego of the other.” (Opening Brief 7:17-18, 10:10-14:21; Reply 8:9-11:10.)[11]

Respondents report they produced the same accounting books and records for Cal Pure as WGC and WAC. Thus, from Respondents’ perspective any issue about alter ego is resolved—Petitioners obtained Section 1601 records from Cal Pure because Respondents treated Petitioners as if they were members of Cal Pure.

Petitioners contend Respondents proffer “the conclusory declarations of five individuals, including two of their lawyers, to claim that Respondents’ activities are ‘all legitimate transactions.’ ” (Reply 4:21-23 [citing Opposition at 13].) Petitioners argue Respondents produced the declarations after Respondents “instructed Mr. Hohmann not to answer any of these questions in discovery” and generally refused discovery on the topic. (Reply 4:19-5:4 [citing Hsiao Decl., Ex. B [Hohmann Depo. at 29:13-25; 39:7-40:14]].)

Even assuming Petitioners are correct about Hohmann’s deposition, the evidence does not inform on whether Respondents satisfied their statutory duties under Section 1601 for WGC, WAC and Cal Pure. The issue relates to discovery and alter ego. (See Opposition 13:16-24 [citing Hohmann Decl. ¶¶ 12-13, 32-33, 40, 42-43; Kalan Decl. ¶ 9; Howe Decl. ¶ 7; Cooper Decl., ¶ 10].) Given the production provided by Respondents for Cal Pure, the alter ego issue need not be addressed.[12]

Based on the foregoing, the petition is granted/denied. The court finds the matter moot given Respondents’ compliance with Section 1601.[13]

The court is authorized to award reasonable expenses, including attorneys’ fees, to a shareholder whose demand for inspection was refused without justification.(Corp. Code,

§ 1604.) Petitioners seek attorneys’ fees under this provision, arguing Respondents’ refusal to fully comply was “without justification.” Based on the court’s findings herein, the court finds Petitioners are not entitled to their reasonable expenses.

[1] While not controlling, the interpretation of Corporations Code section 6333—which contains nearly identical language—is instructive. With respect to this statute, in the context of non-profit corporations, courts have explained “although shareholders have some rights to corporate information not available to the general public, shareholder status does not in and of itself entitle an individual to unfettered access to corporate confidences and secrets.” (Goldstein v. Lees (1975) 46 Cal.App.3d 614, 621.) Further, “[i]t is clear from this provision that the Legislature did not intend to permit a shareholder to inspect, for example, the contract files or property files of the corporation or any files other than the accounting records.” (Marsh, et al., 2 Marsh’s California Corporation Law (4th ed. 2017) § 15.09[B].) Thus, this narrower definition of “accounting books and records” is consistent with Corporation Code section 6334, which provides more expansive rights to director of a non-profit, who has an absolute right at reasonable times to “inspect and copy corporate books, records, and documents of every kind, and to inspect physical property.” (Corp. Code, § 6334 [emphasis added] compared with Corp. Code, § 6333 [a member’s more limited rights].

[2] Thompsons’ position that “accounting records include[s] all original source documents that support the production of the financial statements” does not account for the limitations in Section 1601. (Thompson Reply Decl., ¶ 5.) As noted earlier, Corporations Code section 1602 would provide the source documents to directors of the corporation.

[3] The court has no evidence concerning the technology-related production issues. Absent evidence, the court cannot find (as suggested by Thompson’s characterization) Respondents have manipulated the data or (as suggested by Respondents’ counsel) Petitioners did not have the necessary software to view the complete production.

[4] It is not clear from Petitioners (or their expert) why account balances in the second production could not be used in conjunction with Respondents’ last production to obtain a complete understanding of Respondents’ general ledgers.

[5] It is unclear whether Respondents attested to the accuracy of the general ledgers provided in the third production.

[6] In fact, Thompson references using all of the documents produced by Respondents to reach her conclusions. (Thompson Reply Decl., ¶ 9.) Nonetheless, Thompson does not address whether the second and third productions provide complete general ledgers for WGC, WAC and Cal Pure.

[7] During the hearing on Respondents’ motion for summary judgment, the court expressed skepticism of Petitioners’ position Respondents failed to comply with their obligations where Petitioners cited only an accounting entry or two for support. Petitioners then represented many more issues than those cited existed. Again, the court is left with a few examples from a decade or more of accounting entries. (See Hsia Reply Decl., Exs. A, B.) From the court’s perspective, that Petitioners’ expert suggested she could provide more examples if permitted to testify is insufficient to demonstrate Respondent’s failure to comply with Section 1601. The court finds much of Petitioners’ expert’s opinion generalized and therefore unpersuasive. To wit, referencing Exhibits A and B of the Declaration of Peter Hsiao filed in support of Petitioners’ reply to point out “slightly different” information is unhelpful. Similarly, Petitioners’ expert’s opinion that Respondents’ third production of the general ledger is in a format “of little value in fully understanding the operations of the cooperatives, either in general or in any amount of detail for a specific accounting period” provides the court with minimal explanation. (Thompson Reply Decl., ¶ 11.) It is curious Petitioners’ expert does not describe how, if at all, all three productions can be used together to address Respondents’ compliance with Section 1601.

[8] Thompson attests “Respondents’ general ledgers are replete with these unexplained ‘Journal Import Created’ descriptions. (Thompson Reply Decl., ¶ 16.) She provides a single example.

[9] As noted, after Respondents’ initial production, Petitioners detailed further information they needed. Petitioners advised they needed accounting records addressing: (1) whether the cooperatives are accurately and properly distributing all proceeds to their members; (2) the source of the cooperatives’ revenues and the payors; (3) the expenses of the cooperatives and the payees; (4) the assets held with an identification of each asset; (5) the liabilities held with an identification of each liability; (6) any loans, obligations or indebtedness, or third-third party funding or payments; (7) the fixed expenses including salaries and the identity of those payees; and (8) any other retained funds and the reason for such fund retention. Most of the categories suggest a fishing expedition unrelated to accurate and proper distribution of proceeds to members.

[10] While the court does not intend to order an audit over Respondents’ objection, given the proper purpose of Petitioners’ request for accounting books and records as to proper distribution of proceeds, with the parties’ consent the court would consider the appointment of its own expert for purposes of providing the accounting to address Petitioners’ proper purpose.

[11] In the alternative, Petitioners ask the court to find that Cal Pure is a subsidiary of WGC and WAC.

[12] After reviewing the questions cited by Petitioners and asked during Hohmann’s deposition as well as the evidence proffered in the opposition declarations, the court cannot find Respondents introduced evidence they denied providing to Petitioners during discovery.

[13] The Opposition notes at minimum Respondents “TWC and WP&A should be dismissed from this case because Petitioners do not seek any relief against them and alter ego is now moot given Cal Pure dropped its defense.” (Opposition 5:24-25.)