Judge: Monica Bachner, Case: 20STCV33078, Date: 2023-05-10 Tentative Ruling

Department 71: Attorneys who elect to submit on these published tentative rulings, without making an appearance at the hearing, may so notify the Court by communicating this to the Department's staff at (213) 830-0771 before the set hearing time.  See, e.g., CRC Rule 324(b).   All parties are otherwise encouraged to appear by Court Call for all matters.

Case Number: 20STCV33078    Hearing Date: May 10, 2023    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Moving Defendants/Cross-Complainants Jon Gimbel’s, Anthony Guagliano’s, and Gallant Capital Partners, LLC’s, unopposed motion for a protective order is granted prohibiting Plaintiffs from enforcing the subpoenas they have issued to the nonparty investors in Moving Defendants’ fund, and barring Plaintiffs from serving subpoenas to any similarly situated nonparty absent Moving Defendants’ consent or an order of the Court.

          Moving Defendants/Cross-Complainants Jon Gimbel (“Gimbel”), Anthony Guagliano (“Guagliano”), and Gallant Capital Partners, LLC (“Gallant”) (collectively, “Moving Defendants”) move unopposed for a protective order (i) prohibiting Plaintiffs The Gores Group, LLC (“TGG”) and AEG Holdings, LLC (“AEGH”) (collectively, “Plaintiffs”) from enforcing the subpoenas they have issued to Barings, LLC; Brown Legacy Group; Aalok Jain of Banyan Square Partners; Jim McGovern of Franklin Park, LLC; Charles Cocuzza of GoldPoint Partners/New York Life Insurance Co., all of whom are nonparty investors in Defendants’ fund; and (ii) barring Plaintiffs from serving additional subpoenas to any similarly situated nonparty absent Defendants’ consent or an order of the Court.  (Notice of Motion, pg. 2; C.C.P. §2025.420.)

          Background

Plaintiffs’ operative second amended complaint (“SAC”) alleges four causes of action against Defendants: (1) breach of the covenant of good faith and fair dealing, (2) quantum meruit, (3) unjust enrichment, and (4) breach of contract arising from an alleged breach of agreement between Plaintiffs, a global investment fund and its affiliate, and Defendants, comprised of individual former TGG employees and the private equity fund they formed after leaving TGG, as memorialized in a letter agreement (“Letter Agreement”) dated January 30, 2018.

          On January 13, 2023, Plaintiffs served a third-party subpoena to Jim McGovern (“McGovern”), an employee of Franklin Park, LLC.  (Decl. of Greer, Exh. 1.)  Franklin Park is an investor in Defendant Gallant’s first investment fund. The subpoena seeks production of seven broad categories of documents and requires McGovern to sit for a deposition.  (Decl. of Greer, Exh. 1.)

Following service of McGovern’s subpoena, Plaintiffs served another four third-party subpoenas on other investors in Defendant Gallant’s inaugural fund: Aalok Jain, of Banyan Square Partners; Charles Cocuzza, of GoldPoint Partners/New York Life Insurance Co.; the person most knowledgeable for Brown Legacy Group; and the person most knowledgeable for Barings, LLC.  (Decl. of Greer, Exhs. 2, 5-7.)  The document requests for each of these subpoenas are identical to the requests contained in the Franklin Park subpoena.  (Compare Decl. of Greer, Exh. 1 with Exhs. 2, 5-7.)  Each subpoena also requires each investor to sit for a deposition, with several subpoenas indicating that the deposition will continue “day-to-day until said deposition is complete.”  (Decl. of Greer, Exhs. 1-2, 5-7.)  Plaintiffs also served a third-party subpoena on Lazard, Freres & Co. LLC. (Decl. of Greer, Exh. 8.)

Moving Defendants filed the instant motion on February 17, 2023.  As of the date of this hearing Plaintiffs have not filed an opposition.

Meet and Confer

          Moving Defendants’ counsel declares he met and conferred telephonically with Plaintiffs’ counsel on February 14, 2023, about the third-party subpoenas at issue and the instant motion.  (Decl. of Greer ¶¶2-3.)  Moving Defendants’ counsel declares the parties were unable to resolve their differences during the meet and confer and Plaintiffs were unwilling to withdraw the subpoenas, necessitating the instant motion.  (Decl. of Greer ¶4.)  The Court finds Moving Defendants’ declaration states facts showing a “reasonable and good faith attempt” to resolve the matter outside of court.  (C.C.P. §2025.420(a).)

Legal Standard

“The court, for good cause shown, may make any order that justice requires to protect any party or other person from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense.”  (C.C.P. § 2031.060(a).)  Such a motion will include a meet and confer declaration pursuant to C.C.P. § 2016.040. (Id.)  Protective orders may be also granted on motion of the deponent or any party, or any third person who could be affected by the disclosure (e.g., a nonparty whose privacy would be impaired).  (C.C.P. § 2025.420(a).)  The motion must be accompanied by a declaration stating facts showing a “reasonable and good faith attempt” to resolve the matter outside of court.  (Id.)

The decision upon whether to enter a protective order lies within the sound discretion of the court. (Raymond Handling Concepts Corp. v. Superior Court (1995) 39 Cal.App.4th 584, 588, 591; Meritplan Insurance Co. v. Superior Court (1981) 124 Cal.App.3d 237, 242.) Moving parties have the burden to show good cause for protective order.  (Emerson Electric Co. v Superior Court (1997) 16 Cal.4th 1101, 1110.)   

          Discussion

Moving Defendants’ motion for protective order is granted.  Moving Defendants move for a protective order from Plaintiffs’ subpoenas to Defendant Gallant’s investors because they do not seek legitimate discovery, but represent an abuse of the discovery rules, for at least three reasons: (1) the subpoenas are designed to disrupt Moving Defendants’ business relationships and ongoing fundraising efforts for Defendant Gallant’s second fund, (2) they are grossly overbroad, and (3) they seek documents that should be sought from Moving Defendants rather than from third parties.  (Motion, pg. 11)

Plaintiffs’ subpoenas require non-parties to compile and produce documents that are not relevant to the central issue of this case pertaining to parties’ compliance with their obligations under the Letter Agreement.  Further, the subpoenas seek the production of documents from nonparties that should be sought from Moving Defendants.  (See Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 225 [“As between parties to litigation and nonparties, the burden of discovery should be placed on the latter only if the former do not possess the material sought to be discovered.”].)  Plaintiffs’ subpoenas requirement that third-parties sit for depositions, coupled with the document requests, is unduly burdensome, and Plaintiffs have not affirmatively demonstrated the relevance and necessity for each deposition.  (See Decl. of Greer, Exh. 2 at Attach. 4; Exh. 7 at Attach. 4.)

Based on the foregoing, Moving Defendants’ motion for protective order is granted prohibiting Plaintiffs from enforcing the subpoenas they have issued to the nonparty investors in Moving Defendants’ fund, and barring Plaintiffs from serving subpoenas to any similarly situated nonparty absent Moving Defendants’ consent or an order of the Court.

Dated: May _____, 2023

Hon. Daniel M. Crowley

Judge of the Superior Court