Judge: Robert S. Draper, Case: 21STCV40546, Date: 2023-03-30 Tentative Ruling
Case Number: 21STCV40546 Hearing Date: March 30, 2023 Dept: 78
21STCV40546 CREATIVE
RESONANCE, INC. vs SOUND NUTRITION, INC.
Background
Plaintiff CREATIVE RESONANCE, INC.,
an Illinois corporation, filed its Third
Amended Complaint for damages and
injunctive relief against Defendants SOUND NUTRITION, INC.; a Delaware
corporation; SOUND (ABC), LLC, a California limited liability company; DON
DILLON, an individual; WILSON SONSINI GOODRICH & ROSATI, a California
professional corporation; ROBERT KORNEGAY, an individual; ZACHARY MYERS, an
individual; and DOES 1-10, inclusive on January 13, 2023, alleging 12 causes of
action arising from an alleged breach of contract. Specifically, plaintiff alleges defendants
attempted to deprive it of $1.5 million promised for its transfer of
intellectual property and specialized culinary machinery to Defendant Sound
Nutrition, Inc. (“SNI”). SNI is a snack
bar company founded by CRI’s owner and founder, Roberto Capodieci (“Capodieci”)
and Defendant Don Dillon (“Dillon”).
This
hearing is set to resolve disputes over six sets of propounded discovery.
TENTATIVE RULINGS
1. PLAINTIFF CREATIVE RESONANCE, INC.’S
MOTION TO COMPEL DEFENDANT SOUND NUTRITION, INC.’S FURTHER RESPONSES TO
REQUESTS FOR PRODUCTION, SET ONE; REQUESTS FOR SANCTIONS (Res. 426160878405)
Request For Production No. 8:
All asset purchase agreement(s) RELATING TO any acquisition of SNI’s assets
included in the ABC (the general assignment for the benefit of creditors).
Sound Nutrition responded by
objecting “to this request to the extent it seeks documents or information that
are protected by the attorney-client privilege, the attorney-work product
doctrine and/or any other applicable privilege or doctrine. Further, the
request is overly broad, vague, ambiguous and not clearly intelligible.
Respondent also objects on the ground that requested documents are subject to
contractual confidentiality.”
Sound
Nutrition requests sanctions in the amount of $4,054.50. As this motion is moot and should have been
taken off calendar, defendant’s request for sanctions is granted.
2. PLAINTIFF CREATIVE RESONANCE, INC.’S
MOTION TO COMPEL DEFENDANT DON DILLON’S FURTHER RESPONSES TO REQUESTS FOR
PRODUCTION, SET ONE; REQUESTS FOR SANCTIONS (Res. 010437913582)
TENTATIVE
RULING:
Plaintiff’s motion to compel further responses and for sanctions is
DENIED.
Request
For Production No. 8:
All asset purchase agreement(s) RELATING TO any acquisition of SNI’s
assets included in the ABC. “ABC” shall refer to the general assignment for the
benefit of creditors [Don Dillon] initiated on behalf of SNI.
Mr. Dillon objected to this
Request on the grounds that it is overbroad and irrelevant, insofar as it seeks
documents executed after the ABC occurred. Mr. Dillon further objected to this
Request to the extent it calls for documents that are protected by the
attorney-client privilege, the attorney work-product doctrine, and third party
privacy rights. Mr. Dillon further objected to this Request because its burden
and intrusiveness outweighs any purported need for the information sought of
Treadstone. Mr. Dillon further objected to this Request on the grounds that it
is not reasonably calculated to discover admissible evidence. Mr. Dillon
further objected to this Request on the grounds that the term “agreement(s)” is
vague and ambiguous.
On March 17, 2023, the Court
granted Sound (ABC)'s Motion for Protective Order allowing production of the
Asset Purchase Agreement which mooted this dispute.
3. PLAINTIFF
CREATIVE RESONANCE, INC.’S MOTION TO COMPEL DEFENDANT DON DILLON’S FURTHER
RESPONSES TO SPECIAL INTERROGATORIES, SET ONE; REQUESTS FOR SANCTIONS (Res. 482896523709)
TENTATIVE RULING:
Plaintiff’s motion to compel further responses
and for sanctions is DENIED.
Special Interrogatory No. 4:
IDENTIFY any and all PERSONS with whom YOU had COMMUNICATIONS with RELATING
TO the ABC. “ABC” shall refer to the
general assignment for the benefit of creditors [Don Dillon] initiated on
behalf of SNI. “YOU” shall refer to DON DILLON, an individual, named as a
Defendant in the caption of this action.
Mr.
Dillon objected “to the extent this Interrogatory seeks information that is protected
under the attorney-client privilege, the attorney work product doctrine, or any
other applicable privilege. Subject to and without waiving the foregoing
objections, Mr. Dillon states that he did not communicate with anyone other
than his counsel about Sound (ABC) in his personal capacity.”
This
is a code compliant response in the context of the definitions contained in the
instructions to the Special Interrogatories.
4. PLAINTIFF
CREATIVE RESONANCE, INC.’S MOTION TO COMPEL DEFENDANT WILSON SONSINI GOODRICH
& ROSATI’S FURTHER RESPONSES TO REQUESTS FOR PRODUCTION, SET ONE; REQUESTS
FOR SANCTIONS (Res. 218002853275)
TENTATIVE RULING:
The motion to compel further responses is GRANTED. Defendant is ordered to produce all
responsive documents within 30 days. To
the extent defendant claims a privilege or asserts a right to privacy over any
of the responsive documents or information, defendant shall simultaneously
serve a privilege log with the document production that, at a minimum,
identifies each document for which a privilege or privacy right is claimed, its
author, recipients, date of preparation, and the specific privilege or privacy
right claimed. Defendant and its and his
attorney of record, jointly and severally, are ordered to pay sanctions to Plaintiff,
by and through counsel of record, in the amount of $5,511.65, within twenty
days.
Request For Production No. 5:
All COMMUNICATIONS between YOU and DILLON RELATING TO YOUR REPRESENTATION
of SNI. “REPRESENTATION” shall refer to
YOUR legal representation of SNI (previously named Keto Nutrition, Inc. and
Ketobolic, Inc.) during the time period of March 1, 2017, through October 15,
2021.
This
response is code compliant, but the protective order entered
in this case is limited to the ABC, defendant has not sought a protective order,
and has not produced the documents it stated it would produce. Moreover, defendant’s privilege log is insufficient
in that it fails to, at
a minimum, identify each document for which a privilege or privacy right is
claimed, its author, recipients, date of preparation, and the specific
privilege or privacy right claimed.
Request
For Production No. 7:
All COMMUNICATIONS between YOU and SNI RELATING TO YOUR REPRESENTATION
of SNI. “REPRESENTATION” shall refer to YOUR legal representation of SNI
(previously named Keto Nutrition, Inc. and Ketobolic, Inc.) during the time
period of March 1, 2017, through October 15, 2021.
Defendant
asserted objections and responded:
“Without waiving the foregoing objections, Responding Party responds as
follows: Responding Party will produce
non-privileged documents responsive to this Request in its possession, custody
or control to which no objection is being made. The only documents that are
being withheld responsive to this request are privileged documents, which will
be listed in its forthcoming privilege log. At no point will Responding Party
produce documents before the entry of a mutually agreeable protective order.”
This response is code compliant,
but the protective order entered in this case is limited to the ABC, defendant
has not sought a protective order, and has not produced the documents it stated
it would produce. Moreover, defendant’s
privilege log is insufficient in that it fails to, at a minimum, identify each
document for which a privilege or privacy right is claimed, its author,
recipients, date of preparation, and the specific privilege or privacy right
claimed.
5. MOTION
OF DEFENDANT WILSON SONSINI GOODRICH & ROSATI TO COMPEL FURTHER RESPONSES
TO SPECIAL INTERROGATORIES (Res. 843230455747)
TENTATIVE RULING:
The motion to compel further responses is GRANTED. Plaintiff is ordered to serve verified, code
compliant responses to requests 2, 3, 4, 5, and 8 within 20 days.
Special Interrogatory No. 2:
State how YOU classified the equipment transferred to SNI for tax
purposes.
Special Interrogatory No. 2 asks
Plaintiff how it classified the equipment transferred to SNI for tax purposes.
Plaintiff refused to provide information related to tax filings on the basis of
“financial privacy” and “relevance.” The protection afforded under a right to
privacy is not absolute and requires a balance of privacy against the need for
disclosure. Britt v. San Diego Unified Port Dist., 20 Cal. 3d 844, 852-864
(1978). Further, the right to privacy is limited for businesses and weighs in
favor of disclosure. See Roberts v. Gulf Oil Corp. 147 Cal.App.3d 770 (1983).
Here, Plaintiff’s classification of
the equipment for tax purposes is relevant to showing Plaintiff’s valuation of
the assets it provided to Sound Nutrition, Inc. (“SNI”), and to disprove its damages
allegations. Specifically, Plaintiff’s damages theory rests on the assumption
that the equipment is worth $1.5 million, which WSGR strongly doubts.
Accordingly, the tax treatment (including, for example, depreciation) would be
relevant to disputing Plaintiff’s damages theory.
Finally, the tax treatment is also
relevant to show what value Plaintiff believed the assets it sold worth, and
whether Plaintiff had a good faith belief that the equipment was worth $1.5 million
in value. Accordingly, Plaintiff should be ordered to supplement its response
to this interrogatory.
Special Interrogatory No. 3:
From January 1, 2015 to present, for each time you have obtained legal
advice, describe the circumstances that led you to believe the applicable
attorney was providing such legal advice as your attorney, including but not limited
to, whether you signed an engagement agreement, whether you specifically
requested legal advice, whether you paid an attorney, and whether the attorney
confirmed they were acting as your attorney.
The
operative complaint alleges “Capodieci, a non-native English speaker with no
legal training, entrusted Dillon and Defendant Wilson Sonsini Goodrich &
Rosati (“Wilson Sonsini”) to draft agreements” (P 7) and that “Wilson Sonsini (by and through its
agents, Robert Kornegay and Zachary Myers) knew that neither CRI nor Capodieci
had counsel with respect to the agreements, as attorneys from that firm
repeatedly reassured CRI that its interests would be protected.” (P 10).
Plaintiff’s
understanding of how an attorney-client relationship is formed is relevant.
Further, Wilson Sonsini believes Plaintiff retained an attorney during the time
it allegedly represented plaintiff.
Special Interrogatory No. 4:
IDENTIFY ALL attorneys YOU have ever retained in any matter.
Special Interrogatory No. 5:
For ALL attorneys identified in YOUR responses to Special Interrogatory
No. 4, state the dates YOU retained each attorney identified.
This information is relevant to
showing Plaintiff’s understanding of how an attorney-client relationship is
formed. In addition, Wilson Sonsini believes Plaintiff retained an attorney
during the time Plaintiff allegedly represented CRI. The information called for
by this interrogatory is relevant to that belief.
Special Interrogatory No. 8:
State ALL facts associated with YOUR retention of WSGR, as YOU allege in
YOUR First Amended Complaint, including but not limited to when WSGR was retained,
and how YOU retained WSGR.
After meeting and conferring,
Plaintiff provided the following substantive response: In or around early 2018, Responding Party was
introduced to Wilson Sonsini Goodrich & Rosati (“WSGR”) (by and through
Robert Kornegay and Zachary Myers) by Mr. Dillon and thereafter came to the
understanding that WSGR would provide legal services to Responding Party, to
aid in the formation of Sound Nutrition, Inc., and other transactions related
to Responding Party’s intellectual property and other assets. WSGR began
providing legal services to Responding Party. Beyond this, the answer to this
Interrogatory would necessitate the preparation or the making of a compilation,
abstract, audit, or summary of or from Plaintiff’s Second Amended Complaint,
which Defendant is in possession of.”
As an initial matter, the Second
Amended Complaint is not the operative complaint. More importantly, it is not a verified
complaint. Defendant is entitled to
responses verified under penalty of perjury.
6. DEFENDANT
WILSON SONSINI GOODRICH & ROSATI’S MOTION TO COMPEL FURTHER RESPONSES TO
REQUESTS FOR PRODUCTION (Res. 269686515048)
TENTATIVE RULING: The motion to compel further
responses is GRANTED IN PART. Plaintiff
is ordered to serve verified, code compliant responses to request 70 within 20
days and to produce all responsive documents within 30 days. To the extent Plaintiff claims a privilege or
asserts a right to privacy over any of the responsive documents or information,
Plaintiff shall simultaneously serve a privilege log with the document
production that, at a minimum, identifies each document for which a privilege
or privacy right is claimed, its author, recipients, date of preparation, and
the specific privilege or privacy right claimed.
Request For
Production No.
70: ALL non-privileged DOCUMENTS REFLECTING the
names of attorneys YOU have retained since January 1, 2017.
Plaintiff takes the position that
it believed it had entered an attorney-client relationship with WSGR, even
though it did not enter an engagement agreement or make any payments to WSGR.
Accordingly, WSGR seeks information regarding Plaintiff’s past experiences in
retaining attorneys.
WSGR seeks all non-privileged
documents sufficient to show the names of the attorneys hired by Plaintiff—WSGR
is not seeking privileged information and it is not seeking all documents
related to Plaintiff’s past legal representatives. Plaintiff’s past experiences are relevant to
Plaintiff’s claim that it believed WSGR represented it.
Requests For Production No. 75 – 81:
YOUR tax returns from 2015- 2021.
Defendant argues Plaintiff’s classification
of equipment for tax purposes is relevant to showing Plaintiff’s valuation of
the assets it provided to SNI, and to disprove its damages allegations.
Further, Defendant argues tax
treatment is also relevant to show what value Plaintiff believed the assets it sold
worth, and whether Plaintiff had a good faith belief that the equipment was
worth $1.5 million.
Determining the value of the transferred
equipment can be achieved through other, less intrusive means that would
obviate the need for the disclosure of presumptively privileged tax returns.