Judge Walter P. Schwarm, Case 30-2021-01191524 2022-12-20 Tentative Ruling

Judge: Walter P. Schwarm, Case: 30-2021-01191524, Date: 2022-12-20 Tentative Ruling

The court has labeled the below Motions as Motion Nos. 6 and 7 to maintain consistency with the labeling in the court’s 9-6-22 and 10-25-22 Minute Orders.

Motion No. 6:

Plaintiff’s (Aramark Management, LLC) Motion to Compel Defendant The Ensign Group, Inc. to Provide Further Responses and Documents Responsive to Aramark’s First Set of Request for Production of Documents (Motion), filed on 6-20-22 under ROA No. 301, is GRANTED in part and DENIED in part. The Notice for this Motion was filed on 6-20-22 under ROA No. 327.

The court DENIES Plaintiff’s Request for Judicial Notice, (filed on 6-20-22 under ROA No. 307) and Defendant’s (The Ensign Group, Inc.) Request for Judicial Notice (filed on 8-23-22 under ROA No. 444) as immaterial to the court’s decision. (Silverado Modjeska Recreation & Parks District v. County of Orange (2011) 197 Cal.App.4th 282, 307, fn. 18.)

The Joint Status Report Regarding Status of Pending Motions to Compel (JSR), filed on 8-30-22 under ROA No. 515, indicates that only Request for Production (RFP) Nos. “. . . 3, 6, 16, 20, and 22 remain at issue. The parties agree that the motion is moot as to Request for Production Numbers 1, 2, and 24.” (JSR; 2:26-27.) Therefore, the court will address only address RFP Nos. 3, 6, 16, 20, and 22.

The court’s 9-20-22 Minute Order states, “On 9-6-22, the court took Motion No. 6 under submission for the purpose of addressing RFP No 16 as to whether Plaintiff provided “. . . good cause justifying the discovery sought by the demand . . .” (9-6-22 Minute Order; Code Civ. Proc., § 2031.310, subd. (b)(1).) Digital Music News LLC v. Superior Court (2014) 226 Cal.App.4th 216, 224 (disapproved on other grounds in Williams v. Superior Court (Williams) (2017) 3 Cal.5th 531, 557, fn. 8), states, ‘To establish good cause, a discovery proponent must identify a disputed fact that is of consequence in the action and explain how the discovery sought will tend in reason to prove or disprove that fact or lead to other evidence that will tend to prove or disprove the fact.” fact.’ [¶] The Motion and Plaintiff’s Separate Statement (PSS), filed on 6-20-22 under ROA No. 305 (PSS; 12:5-17) do not appear to set forth good cause for RFP No. 16 under Digital Music News LLC v. Superior Court. Plaintiff’s Reply (Reply), filed on 8-29-22 under ROA No. 487, states, ‘This request seeks documents relating to budgets or financial projections for Beacon since July 2018 that are in the possession of Ensign Group. This information is necessary for Aramark’s damages analysis.’ (Reply; 4:16-18.) Since Defendant (The Ensign Group, Inc.) did not have an opportunity to address Plaintiff’s theory of good cause in its Opposition, the court finds that there is good cause to vacate Motion No. 6 pursuant to California Rules of Court, rule 2.900(b), to allow the Defendant to address the theory of good cause in Plaintiff’s Reply. The court sets Motion No. 6 for a hearing on October 25, 2022 at 9:00 a.m. in DATE: 09/20/2022 MINUTE ORDER DEPT: C32 Calendar No. Page 1 CASE TITLE: Aramark Management, LLC vs. The Ensign Group, Inc. CASE NO: 30-2021-01191524-CU-BT-CJC Department C32. Defendant shall file supplemental briefing addressing Plaintiff’s theory of good cause no later than October 7, 2022. The supplemental briefing is not to exceed three pages, and is limited to the issue of good cause as to RFP No. 16. Unless the court gives its ruling on October 25, 2022, the matter will be resubmitted on October 25, 2022.” Based on the court’s 9-20-22 Minute Order, the court will address RFP No. 16.

Code of Civil Procedure section 2031.310 provides: “(a) On receipt of a response to a demand for inspection, copying, testing, or sampling, the demanding party may move for an order compelling further response to the demand if the demanding party deems that any of the following apply: [¶] (1) A statement of compliance with the demand is incomplete. [¶] (2) A representation of inability to comply is inadequate, incomplete, or evasive. [¶] (3) An objection in the response is without merit or too general. [¶] (b) A motion under subdivision (a) shall comply with each of the following: [¶] (1) the motion shall set forth specific facts showing good cause justifying the discovery sought by the demand. [¶] (2) The motion shall be accompanied by a meet and confer declaration under Section 2016.040. . . [¶] (c) Unless notice of this motion is given within 45 days of the service of the verified response, or any supplemental verified response, or on or before any specific later date to which the demanding party and the responding party have agreed in writing, the demanding party waives any right to compel a further response to the demand.”

Fairmont Insurance Company v. Superior Court (2000) 22 Cal.4th 245, 255, explains, “Or a party may object to a particular discovery request, placing the burden on the party seeking discovery to enforce discovery through a motion to compel.” Williams v. Superior Court (2017) 3 Cal.5th 531, 541, states, “While the party propounding interrogatories may have the burden of filing a motion to compel if it finds the answer it receives unsatisfactory, the burden to justify any objection and failure to respond remains at all times with the party resisting an interrogatory. [Citation.]”

On 10-25-22, the court previously ruled on the Motion. (10-25-22 Minute Order.) On 10-31-22, the court vacated its 10-25-22 Minute Order pursuant to Defendants’ Ex Parte to Vacate Order and Consider Late-Filed Supplemental Briefing, filed 10-31-22 under ROA No. 737. (10-31-22 Minute Order.) The court has reviewed Defendants’ (The Ensign Group, Inc. and Ensign Services, Inc.) Supplemental (DSupp.), filed 10-28-22 under ROA No. 743, and Plaintiff’s Supplemental Reply (Supp. Reply) filed 11-30-22 under ROA No. 774.

RFP No. 3:

RFP No. 3 states, “For the period between January 1, 2017 and July 2, 2018, all Communications and/or Documents that hit on any one or more of the following search terms: . . .” (Plaintiff’s Separate Statement (PSS) filed on 6-20-22 under ROA No. 305; 7:14-8:8.) RFP No. 3 then lists twenty search terms.

The court DENIES the Motion as to RFP No. 3. Although Plaintiff provides an explanation as to why one of the twenty search terms is relevant, this explanation does not cover the remaining listed terms or explain what kind of a search Aramark seeks to have Defendant (The Ensign Group, Inc.) conduct.

RFP No. 6:

RFP No. 6 states, “For the period between January 1, 2017, and July 2, 2018, all Communications, including but not limited to all Documents attached to any such Communications, with any actual or potential investors, banks, customers, vendors and/or business partners relating to the formation of a group purchasing organization and/or Beacon.”

The Second Amended Complaint (SAC), filed on 3-14-22 under ROA No. 171, pleads, that Defendant aided and abetted the Borgquists in their breach of fiduciary duty “. . . to divert HPSI’s customers . . . .” (For example, see SAC, at ¶¶ 8 and 116-125.) Communications with potential investors are relevant (Code of Civ. Proc., § 2017.010) to Plaintiff’s aiding and abetting theory. Therefore, the court GRANTS the Motion as to RFP No. 6.

RFP No. 16:

RFP No. 16 states, “For the period since July 1, 2018, all budgets and/or financial projections relating to Beacon.” (PSS; 11:17.)

Plaintiff’s Reply (Reply), filed on 8-29-22 under ROA No. 487, states, “This information is necessary for Aramark’s damages analysis.” (Reply; 4:17-18.)

Defendants state, “In short, Beacon’s budgets and financial projections for the years 2018 through 2022 are not necessary or even relevant to any damages analysis in this case. Plaintiffs have long had all the documents that were necessary for their damages analysis. Moreover, at this point they are clearly precluded from trying to obtain a more favorable result in this case than what they obtained in the Borgquist Lawsuit, and they have received full satisfaction of the compensatory damages awarded in that case. There is simply no good cause justifying their demand for TEG and ESI to search for and produce four years’ worth of budgets and financial projections.” (DSupp.; 4:4-10.)

Plaintiff responds, “Defendants’ argument reflects a myopic view of the scope of discovery that is inconsistent with Code of Civil Procedure section 2017.010. Budgets and projections, of course, may reveal a host of information that would not be reflected in “actual revenues and costs” and that bear on the issue of Defendants’ role in the diversion of customers including, but not limited to, information concerning why certain customers were projected to become Beacon customers or increase their business with Beacon . . . . Ensign Group and Ensign Services were not defendants in the Borgquist Lawsuit and, therefore, the ‘issue’ of their interference with Plaintiffs’ contractual relationships has never been decided. Moreover, contrary to Defendants’ contentions, neither the compensatory damages nor other aspects of the judgment have been fully satisfied. [citation] Simply put, there are no ‘issue preclusion’ or ‘double recovery’ issues here that bear on this discovery motion.” (Supp. Reply; 2:2-26.)

Plaintiff’s Supp. Reply does not address the damages issue that the Plaintiff raised as the basis for good cause under Code of Civil Procedure section 2031.310, subdivision (b)(1). Plaintiff’s Supp. Brief does not explain how this discovery will tend to prove damages or lead to other evidence that will tend to prove Plaintiff’s damages. Although such evidence may be relevant (Code Civ. Proc., § 2017.010) to aiding and abetting, Plaintiff did not advance this theory as the basis for good cause under Code of Civil Procedure section 2030.310, subdivision (b)(1). Therefore, the court DENIES the Motion as to RFP No. 16.

RFP No. 20:

RFP No. 20 states, “For the time period since January 1, 2018, all Communications, including any and all attachments to Communications, between You and any one or more partners, associates, of counsel, paralegals and/or employees of any of the following law firms that relate in any way to Steve Borgquist, Brent Borgquist and/or Beacon Purchasing: (a) Sheppard Mullin; (b) Ostergar Lattin Julander LLP (including the Ostergar Law Group and any other predecessor firms); (c) the Law Offices of Matthew Borgquist; and/or (d) Garcia Rainey Blank & Bowerbank LLP.”

Plaintiff’s Reply (Reply), filed on 8-29-22 under ROA No. 487, states, “Aramark is willing to compromise on the timeframe, to end on October 1, 2018 . . . .” (Reply; 5:1-2.)

The requested documents are relevant (Code of Civ. Proc., § 2017.010) to Plaintiff’s aiding and abetting theory because they may tend to show the aiding and abetting between Defendant and the Borgquists in terms of the formation of Beacon. Therefore, the court GRANTS the Motion as to RFP No. 20 but limits the scope in terms of time to October 1, 2018.

RFP No. 22:

RFP No. 22 states, “For the period since January 1, 2018, all Documents comprising or relating to any business plans, strategies, sources of capital, loan applications, forecasts, projections, investor materials, operating agreements, member agreements, buy/sell agreements, shared services agreements, lease terms for office space and office equipment, debt instruments and/or other documents relating in any way to partnering with the Borgquists on a Group Purchasing Organization, pursuing an investment in Beacon, creating Banner Holdings and/or loaning money to Banner Holdings, Beacon and/or the Borgquists.” (PSS; 14:8-14.)

The requested documents are relevant (Code Civ. Proc., § 2017.010) to Plaintiff’s aiding and abetting theory in terms of Defendant’s connection to Beacon or Banner Holding. Therefore, the court GRANTS the Motion to RFP No. 22, and also limits the scope to October 1, 2018.

Based on the above, the court DENIES Plaintiff’s (Aramark Management, LLC) Motion to Compel Defendant The Ensign Group, Inc. to Provide Further Responses and Documents Responsive to Aramark’s First Set of Request for Production of Documents, filed on 6-20-22 under ROA No. 301, as to RFP No. 3. The court is GRANTS the Motion as to the remaining RFPs at issue as set forth above. The court ORDERS Defendant to provide a verified, Code of Civil Procedure response to RFP Nos. 6, 16, 20, and 22 no later than 30-days from the date of service of the notice of the court’s ruling.

Plaintiff is to give notice.

Motion No. 7:

Plaintiff’s (Aramark Management, LLC) Motion to Compel Defendant Ensign Services, Inc. to Provide Further Responses and Documents Responsive to Aramark’s First Set of Request for Production of Documents (Motion), filed on 6-20-22 under ROA No. 313, is GRANTED in part and DENIED in part. The Notice for this Motion was filed on 6-20-22 under ROA No. 331.

The court DENIES Plaintiff’s Request for Judicial Notice, (filed on 6-20-22 under ROA No. 317) and Defendant’s (Ensign Services, Inc.) Request for Judicial Notice (filed on 8-23-22 under ROA No. 440) as immaterial to the court’s decision. (Silverado Modjeska Recreation & Parks District v. County of Orange (2011) 197 Cal.App.4th 282, 307, fn. 18.)

The Joint Status Report Regarding Status of Pending Motions to Compel (JSR), filed on 8-30-22 under ROA No. 515, indicates that only Request for Production (RFP) Nos. “. . . 3, 6, 16, and 20 remain at issue. The parties agree that the motion is moot as to Request for Production Numbers 1, 9, and 24.” (JSR; 3:4-5.) Therefore, the court will address only address RFP Nos. 3, 6, 16, and 20.

The court’s 9-20-22 Minute Order states, “On 9-6-22, the court took Motion No. 7 under submission for the purpose of addressing RFP No 16 as to whether Plaintiff provided ‘. . . good cause justifying the discovery sought by the demand . . .’ (9-6-22 Minute Order; Code Civ. Proc., § 2031.310, subd. (b)(1).) Digital Music News LLC v. Superior Court (2014) 226 Cal.App.4th 216, 224 (disapproved on other grounds in Williams v. Superior Court (Williams) (2017) 3 Cal.5th 531, 557, fn. 8), states, ‘To establish good cause, a discovery proponent must identify a disputed fact that is of consequence in the action and explain how the discovery sought will tend in reason to prove or disprove that fact or lead to other evidence that will tend to prove or disprove the fact.” fact.’ [¶] The Motion and Plaintiff’s Separate Statement (PSS), filed on 6-20-22 under ROA No. 315 (PSS; 12:9-21) do not appear to set forth good cause for RFP No. 16 under Digital Music News LLC v. Superior Court. Plaintiff’s Reply (Reply), filed on 8-29-22 under ROA No. 479, states, ‘This request seeks documents relating to budgets or financial projections for Beacon since July 2018 that are in the possession of Ensign Group. This information is necessary for Aramark’s damages analysis.’ (Reply; 4:21-23.) Since Defendant (Ensign Services, Inc.) did not have an opportunity to address Plaintiff’s theory of good cause in its Opposition, the court finds that there is good cause to vacate Motion No. 6 pursuant to California Rules of Court, rule 2.900(b), to allow Defendant to address the theory of good cause in Plaintiff’s Reply. The court sets Motion No. 7 for a hearing on October 25, 2022 at 9:00 a.m. in Department C32. Defendant shall file supplemental briefing addressing Plaintiff’s theory of good cause no later than October 7, 2022. The supplemental briefing is not to exceed three pages, and is limited to the issue of good cause as to RFP No. 16. Unless the court gives its ruling on October 25, 2022, the matter will be resubmitted on October 25, 2022.” Based on the court’s 9-20-22 Minute Order, the court will address RFP No. 16.

RFP No. 3:

RFP No. 3 states, “ For the period between January 1, 2017 and July 2, 2018, all Communications and/or Documents that hit on any one or more of the following search terms: . . .” (Plaintiff’s Separate Statement (PSS) filed on 6-20-22 under ROA No. 305; 7:14-8:8.) RFP No. 3 then lists twenty search terms.

The court DENIES the Motion as to RFP No. 3 for the same reasons as stated in denying RFP No. 3 in Motion No. 6.

RFP No. 6:

The court GRANTS the Motion as to RFP No. 6 for the same reasons as stated in granting RFP No. 6 in Motion

No. 6.

RFP No. 16:

RFP No. 16 states, “For the period since July 1, 2018, all budgets and/or financial projections relating to Beacon.”

As of 10-7-22, Defendant has not filed the supplemental brief the court requested. Budgets and financial projections are relevant (Code of Civ. Proc., § 2017.010) to Plaintiff’s aiding and abetting theory because they may tend to show the diversion of business, and Defendant’s role, in any, in the diversion of customers. Based on Plaintiff’s previously filed Motion and Reply, the court GRANTS the Motion as to RFP No. 16.

RFP No. 20:

The court GRANTS the Motion as to RFP No. 20 for the same reasons as stated in granting RFP No. 20 in Motion No. 6.

Based on the above, the court DENIES Plaintiff’s (Aramark Management, LLC) Motion to Compel Defendant Ensign Services, Inc. to Provide Further Responses and Documents Responsive to Aramark’s First Set of Request for Production of Documents (Motion), filed on 6-20-22 under ROA No. 313, as to RFP No. 3. The court is GRANTS the Motion as to the remaining RFPs at issue as set forth above. The court ORDERS Defendant to provide a verified, Code of Civil Procedure response to RFP Nos. 6, 16, and 20 no later than 30-days from the date of service of the notice of the court’s ruling.

Plaintiff is to give notice.