Judge Yolanda Orozco, Case 20STCV04519 2022-08-12 Tentative Ruling

Judge: Yolanda Orozco, Case: 20STCV04519, Date: 2022-08-12 Tentative Ruling

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Case Number: 20STCV04519 Hearing Date: August 12, 2022 Dept: 31

MOTION TO COMPEL COMPLIANCE WITH SUBPOENA IS GRANTED

Background

On February 4, 2020, West Central Produce, Inc. (“Plaintiff”) initiated this action by filing a Complaint against Daniel Meza, Joseph Meza, and Mezpro, Inc. (collectively, “Defendants”).

On September 1, 2020, Plaintiff filed the operative First Amended Complaint against Defendants. Plaintiff’s First Amended Complaint alleges the following causes of action: (1) Violation of California Uniform Trade Secret Act; (2) Breach of Fiduciary Duty; (3) Intentional Interference with Contractual Relations; (4) Breach of Contract (Loan); (5) Breach of Contract (Confidentiality Agreement); (6) Unfair Competition; (7) Aiding and Abetting Breach of Fiduciary Duty; and (8) Intentional Interference with Prospective Economic Advantage.

Plaintiff’s First Amended Complaint arises from the following circumstances. Plaintiff is one of Southern California’s leading wholesale food distributors and produce delivery operators. (FAC, ¶ 2.) Plaintiff’s clients include restaurants, hotels, markets, and other food service participants. (Ibid.) Plaintiff offers a full range of products to its customers, including dry groceries, dairy products, fresh produce, organic produce, protein, specialty produces, paper goods, equipment and other supplied. (Ibid.) Defendant Daniel Meza previously was employed by Plaintiff as Plaintiff’s Company Executive. (Id. ¶ 12.) As Plaintiff’s Company Executive, Defendant Daniel Meza oversaw and managed Plaintiff’s produce department, and was responsible for all produce-related deals and purchases between Plaintiff and Plaintiff’s customers. (Id. ¶ 13.)

Subsequently, Defendant Joseph Meza, Defendant Daniel Meza’s son, began employment with Plaintiff as a sales representative. (Id. ¶ 14.) As Plaintiff’s employees, Defendants Daniel and Joseph Meza had access to and were provided with certain confidential and proprietary information of Plaintiff, such as the identity of Plaintiff’s vendors, the identity of Plaintiff’s customers, Plaintiff’s pricing information, Plaintiff’s purchasing history, and the requirements and tendencies of Plaintiff’s customers. (Id. ¶ 15.) Defendants Daniel and Joseph Meza, each, signed a Confidentiality Agreement with Plaintiff, agreeing to refrain from disclosing the proprietary and confidential information referenced to third-parties and using such information to assist Plaintiff’s competitors. (Id. ¶ 18.)

Plaintiff alleges Defendant Joseph and Daniel Meza became dissatisfied with Plaintiff and eventually decided they would leave Plaintiff’s company and join Plaintiff’s competitor, Non-Party Green Farms, California, LLC dba Worldwide Produce (“Non-Party Worldwide Produce”). (FAC, ¶ 19.) Plaintiff alleges, once Defendants Joseph and Daniel Meza knew they would be joining Non-Party Worldwide Produce, Defendants began disclosing Plaintiff’s confidential and proprietary information to Non-Party Worldwide Produce and used Plaintiff’s confidential and proprietary information to convince a number of Plaintiff’s longtime customers to stop purchasing from Plaintiff and, instead, start purchasing products from Non-Party Worldwide Produce. (Id. ¶¶ 20-21.) These events occurred while Defendants Joseph and Daniel Meza were still employed by Plaintiff. (Ibid.) Plaintiff alleges Defendant Joseph and Daniel Meza were successful, and approximately twenty-nine (29) customers have ceased ordering goods from Plaintiff and now order identical goods from Non-Party Worldwide Produce. (Id. ¶ 29.) On or about January 6, 2020, Defendants Joseph, and Daniel Meza informed Plaintiff they would each be leaving Plaintiff’s company and would be joining Non-Party Worldwide Produce. (Id. ¶ 23.)

On June 16, 2022, Plaintiff filed the present Motion to Compel Compliance with Subpoena to Non-Party Green Farms, California, LLC dba Worldwide Produce (previously referenced as, Non-Party Worldwide Produce) (“Motion”).

On August 3, 2022, Plaintiff’s Motion came before the Court for hearing. The Court identified two (2) procedural defects associated with Plaintiff’s Motion. Initially, the Court noted that Plaintiff had failed to file a Proof of Service with respect to the Deposition Subpoena, which was purportedly served upon Non-Party Worldwide Produce on March 11, 2022. While the accompanying Proof of Service was purportedly included within Exhibit 8 of the Declaration of Aaron Levine, Esq., the Court noted no such Proof of Service was included. The failure to proffer the aforementioned Proof of Service prevented the Court from determining if the subpoena was properly served upon Non-Party Worldwide Produce. Additionally, the Court noted Plaintiff had failed to comply with California Rules of Court, Rule 3.1346, which requires a “[a] written notice and all moving papers supporting a motion to compel an answer to a deposition . . . from a nonparty deponent must be personally served on the nonparty deponent . . . .” (Cal. Rules of Court, Rule 3.1346.) The present Motion was served upon Non-Party Worldwide Produce by e-mail, as opposed to personal service. After hearing from all parties, the Court continued Plaintiff’s Motion to August 12, 2022 for the purposes of allowing Plaintiff to file a Proof of Service. (Minute Order Re: Hearing on Motion to Compel Compliance with Third-Party Subpoena, filed August 3, 2022.)

On August 3, 2020, Plaintiff filed an amended Motion to Compel Compliance with Subpoena to Non-Party Green Farms, California, LLC dba Worldwide Produce (previously referenced as, Non-Party Worldwide Produce). Plaintiff’s amended Motion is now before the Court.

Legal Standard

“In California, discovery may be obtained from a nonparty through an oral deposition, a written deposition, or a deposition for the production of business records and things.” (Board of Registered Nursing v. Superior Court of Orange County (2021) 59 Cal.App.5th 1011, 1030, citing Code Civ. Proc., § 2020.010, subd. (a) [“Any of the following methods may be used to obtain discovery within the state from a person who is not a party to the action in which the discovery is sought: (1) An oral deposition under Chapter 9 (commencing with Section 2025.010). (2) A written deposition under Chapter 11 (commencing with Section 2028.010). (3) A deposition for production of business records and things under Article 4 (commencing with Section 2020.410) or Article 5 (commencing with Section 2020.510).”].)

“[T]he process by which a nonparty is required to provide discovery is a deposition subpoena.” (Code Civ. Proc., § 2020.010, subd. (b).) A deposition subpoena may command any of the following: (a) Only the attendance and the testimony of the deponent; (b) Only the production of business records for copying; or (3) The attendance and the testimony of the deponent, as well as the production of business records, other documents, electronically stored information, and tangible things. (Id. § 2020.020, subd. (a)-(c).)

“Personal service of any deposition subpoena is effective to require all of the following of any deponent who is a resident of California at the time of service: (1) Personal attendance and testimony, if the subpoena so specifies[; and] (2) Any specified production, inspection, testing, and sampling.” (Code Civ. Proc., § 2020.220, subd. (c)(1)-(2).) “Any person may serve the subpoena by personal delivery of a copy of it as follows: (a) If the deponent is a natural person, to that person. (2) If the deponent is an organization, to any officer, director, custodian of records, or to any agent or employee authorized by the organization to accept service of a subpoena.” (Id. § 2020.220, subd. (b)(1)-(2).)

“If a deponent fails to answer any question or to produce any document, electronically stored information, or tangible thing under the deponent's control that is specified in the deposition notice or a deposition subpoena, the party seeking discovery may move the court for an order compelling that answer or production.” (Code Civ. Proc., § 2025.480, subd. (a).) “This motion shall be made no later than 60 days after the completion of the record of the deposition, and shall be accompanied by a meet and confer declaration under Section 2016.040.” (Id. § 2025.480, subd. (b).)

Discussion

Plaintiff West Central Produce, Inc. (hereinafter, “Plaintiff”) moves for an Order compelling Non-Party Green Farms, California, LLC dba Worldwide Produce (hereinafter, “Non-Party Worldwide Produce” or “Non-Party”) to comply with the “Deposition Subpoena For Production of Business Records” served upon Non-Party’s Agent for Service of Process on March 11, 2022. (Notice of Motion, at p. 2:3-8.) Plaintiff moves for the aforementioned Order pursuant to Code of Civil Procedure section 2025.450. (Code Civ. Proc., § 2025.480, subd. (a).)

As noted within the “Background” Section of this Court’s Order, on August 3, 2022, the Court identified two (2) procedural deficiencies with respect to Plaintiff’s service of the present Motion upon Non-Party Worldwide Produce. Prior to delving into a substantive analysis of Plaintiff’s Motion, the Court will initially determine whether Plaintiff has corrected the two (2) procedural deficiencies previously identified by this Court.

1. Whether Plaintiff Has Corrected Service Deficiencies Identified During August 3, 2022 Hearing

The Court finds Plaintiff has sufficiently corrected the two (2) procedural deficiencies previously identified by this Court on August 3, 2022.

Initially, the Court finds Plaintiff has appropriately demonstrated the “Deposition Subpoena For Business Records” was served upon Non-Party Worldwide Produce on March 11, 2022, pursuant to personal service upon Non-Party’s Agent for Service of Process, CT Corporation. (Levine Decl., Ex. C [confirmation, pursuant to California Secretary of State website, that Non-Party’s Agent for Service of Process is “CT Corporation System” which is located at “330 N BRAND BLVD STE 700 GLENDALE, CA 91203”], Ex. B [Proof of Service accompanying Deposition Subpoena, stating Deposition Subpoena personally served upon CT Corporation at “330 NORTH BRAND BLVD., SUITE 700, GLENDALE, CA 91203”].) The amended Declaration of Aaron Levine, Esq., filed on August 3, 2022, includes the Proof of Service which was previously excluded from Plaintiff’s moving papers. (Ibid.)

Further, the Court finds Plaintiff has personally served the present Notice of Motion, Motion, accompanying Declaration, and Separate Statement upon Non-Party Worldwide Produce by personal service, in compliance with California Rules of Court, Rule 3.1346. (Cal. Rules of Court, Rule 3.1346 [“A written notice and all moving papers supporting a motion to compel an answer to a deposition question or to compel production of a document or tangible thing from a nonparty deponent must be personally served on the nonparty deponent unless the nonparty deponent agrees to accept service by mail or electronic service at an address or electronic service address specified on the deposition record.”].) The Proof of Service accompanying Plaintiff’s Motion, which was re-filed on August 3, 2022, confirmed Plaintiff served Non-Party with “all moving papers” by personal delivery upon Non-Party’s counsel, Omar H. Bengali, Esq. (See Notice of Motion and Motion, at p. 14 [Proof of Service]; Levine Decl., at p. 197 [Proof of Service]; Separate Statement, at p. 48 [Proof of Service].)

Accordingly, the Court finds the procedural defects previously identified by this Court have been sufficiently remedied by Plaintiff. The Court now addresses the substance of Plaintiff’s Motion.

2. Whether Plaintiff’s Motion May Sufficiently Compel Compliance with Deposition Subpoena Served Upon Non-Party Worldwide Produce

As noted previously, Plaintiff presently moves for an Order compelling Non-Party Worldwide Produce to comply with the “Deposition Subpoena For Production of Business Records” (hereinafter, “Business Records Subpoena”) served upon Non-Party’s Agent for Service of Process on March 11, 2022. (Notice of Motion, at p. 2:3-8.) The Business Records Subpoena requests only Non-Party’s production of business records (as opposed to an oral or written deposition), and specifically identifies thirty-six (36) categories of documents which should be produced no later than April 4, 2022. (Levine Decl., Ex. B [Declaration of Aaron Levine, Esq. filed on August 3, 2022].) Plaintiff’s accompanying Separate Statement clarifies Plaintiff does not seek the production of documents responsive to Category Nos. 9, 10, and 35. (Reply, at p. 7:3-5.)

Generally, Plaintiff’s Category Nos. 1 through 8, 11 through 34, and 36 request the following categories of documents and business records: (1) “all communications” between Defendants Daniel and Joseph Meza and Non-Party regarding Defendants’ decision to leave Plaintiff’s business and join Non-Party; (2) “all communications” between Defendants Daniel and Joseph Meza and Non-Party regarding Plaintiff’s business and Defendants’ employment responsibilities for Plaintiff’s business; (3) “all communications” between Defendants Daniel and Joseph Meza and Non-Party regarding Plaintiff’s own customers, operations, and pricing; (4) “all communications” from October 1, 2019 through February 1, 2020 between Defendants Daniel and Joseph Meza and Non-Party regarding the customers Plaintiff alleges Defendants’ persuaded to contract with Non-Party Worldwide Produce as opposed to Plaintiff; (5) “documents” Non-Party Worldwide Produce received from Defendants Daniel and Joseph Meza regarding Plaintiff; (6) “documents” evidencing the orders placed by Plaintiff’s prior customers to Non-Party Worldwide Produce; and (7) “all communications between Defendants Daniel and Joseph Meza and Non-Party regarding Plaintiff’s President, Michael Dodo. (Levin Decl., Ex. B at pp. 5-8 [Declaration of Aaron Levine, Esq. filed on August 3, 2022].)

Plaintiff moves for an Order compelling Non-Party Worldwide Produce’s compliance with the aforementioned Business Records Subpoena, pursuant to Code of Civil Procedure section Code of Civil Procedure section 2025.450. (Code Civ. Proc., § 2025.480, subd. (a).) Plaintiff contends the requested Order is warranted as Non-Party has failed to produce documents in compliance with the Business Records Subpoena, despite proper service of the Business Records Subpoena upon Non-Party. Further, Plaintiff contends Non-Party has waived any and all objections to the Business Records Subpoena because Non-Party failed to proffer such objections in a timely fashion. Specifically, Plaintiff contends, while Non-Party Worldwide Produce served a written objection to the Business Records Subpoena on April 20, 2022, such objections were served after the date of production as specified upon the Business Records Subpoena (the Business Records Subpoena required service of documents no later than April 4, 2022). (Levine Decl., ¶ 10, Ex. 10 [Original Declaration of Aaron Levine, Esq. filed on June 16, 2022].)

Conversely, Non-Party Worldwide Produce contends this Court should refrain from compelling compliance with the underlying Business Records Subpoena. Primarily, Non-Party Worldwide Produce contends the categories of documents requested by Plaintiff within the subject Business Records Subpoena are protected by Non-Party’s right to privacy, as such documents involve proprietary information and trade secrets.

The Court now considers the parties’ arguments.

Preliminarily, the Court notes that, as Non-Party Worldwide has been personally served with the relevant Business Records Subpoena, pursuant to personal service upon Non-Party’s Registered Agent for Service of Process (Levine Decl., Ex. B, C), such is effective to “require” Non-Party’s production of the categories of documents identified within the Business Records Subpoena. (Code Civ. Proc., § 2020.220, subd. (c)(1)-(2) [“Personal service of any deposition subpoena is effective to require all of the following of any deponent who is a resident of California at the time of service: (1) Personal attendance and testimony, if the subpoena so specifies[; and] (2) Any specified production, inspection, testing, and sampling.”].)

Additionally, despite Non-Party Worldwide Produce’s contentions, the Court finds Non-Party’s purported right to privacy in the documents requested by the Business Records Subpoena is insufficient to negate the requirement of Non-Party’s production of documents.

“[C]orporations do not have a right to privacy protected by the California Constitution. Article I, [S]ection 1 of the California Constitution protects the privacy rights of ‘people’ only. ‘ “[T]he constitutional provision simply does not apply to corporations.” ’ [Citations.] While corporations do have a right to privacy, it is not a constitutional right. The corporate right to privacy is a lesser right than that held by human beings and is not considered a fundamental right. [Citation.] Because the corporate privacy right is not constitutionally protected, the issue presented in determining whether [a discovery request] . . . infringe[s] on that right is resolved by a balancing test. The discovery’s relevance to the subject matter of the pending dispute and whether the discovery ‘ “appears reasonably calculated to lead to the discovery of admissible evidence” ’ is balanced against the corporate right of privacy. [Citation.] Doubts about relevance generally are resolved in favor of permitting discovery. [Citation.]” (SCC Acquisitions, Inc. v. Superior Court (2015) 243 Cal.App.4th 741, 755-756.)

Applying the “balancing test” contemplated by SCC Acquisitions, Inc., supra, 243 Cal.App.4th at p. 756, the Court finds any right to privacy purportedly held by Non-Party Worldwide Produce is outweighed by the direct relevance of the documents requested in the Business Records Subpoena. First, the Court is not persuaded that the documents requested by the Subpoena constitute Non-Party Worldwide Produce’s trade secrets. “ ‘[A] trade secret may consist of any formula, pattern, device or compilation of information which is used for one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device or a list of customers [citations].’ [Citation.]” (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 53.) The thirty-three (33) categories of records requested in the Subpoena merely request “communications” between Defendants Daniel and Joseph Meza and Non-Party Worldwide Produce regarding Plaintiff’s business operations (i.e., Defendants’ employment responsibilities for Plaintiff, Defendants’ decision to part ways from Plaintiff, and discussions concerning Plaintiff’s current and prior customers, operations, and pricing), and do not request any specific information with respect to Non-Party Worldwide Produce’s business operations. (Levin Decl., Ex. B at pp. 5-8 [Declaration of Aaron Levine, Esq. filed on August 3, 2022].)

In Opposition, Non-Party Worldwide Produce heavily relies on the documents requested within Category Nos. 9 and 10, which request “All COMMUNICATIONS, from October 1, 2019 through the present, between” Non-Party and Defendants regarding Non-Party’s “business, customers, operations or pricing.” (Opp., at p. 3:8-13.) However, while such documents might be considered trade secrets (i.e., requesting information concerning Non-Party’s own “business, customers, operations, or pricing”), Plaintiff “does not seek documents responsive to categories 9 [and] 10 . . . .” (Reply, at p. 7:3-5.) As the Business Records Subpoena does not contemplate discovery of Non-Party’s trade secrets, the Court is unpersuaded such may be grounds to prevent production in compliance with the Subpoena.

Further, even if Non-Party Worldwide Produce’s right to privacy was implicated by responding to the Subpoena, which the Court has found it does not, any such right is substantially outweighed by the direct relevance these documents have to this case. As more thoroughly explained in the “Background” Section of this Court’s Order, Plaintiff’s operative First Amended Complaint alleges Defendants Daniel and Joseph Meza and Non-Party Worldwide Produce engaged in a scheme, using Plaintiff’s customer lists, to persuade Plaintiff’s existing customers to abandon doing business with Plaintiff and, instead, contract with Non-Party Worldwide Produce for the provision of certain produce products. (FAC, ¶¶ 19-23.) The Business Records Subpoena moves to compel the production of documents which will directly shed light on this alleged scheme between Defendants and Non-Party. (Levin Decl., Ex. B at pp. 5-8 [Declaration of Aaron Levine, Esq. filed on August 3, 2022].) Plaintiff requests documents, inter alia, recounting conversations between Defendants and Non-Party concerning Plaintiff’s customer lists, prices, and business operations; Defendants’ decision to leave Plaintiff’s business and join Non-Party’s business; Defendants’ employment responsibilities for Plaintiff’s business; and orders placed by Plaintiff’s former customers with Non-Party Worldwide Produce. (Ibid.) This information falls squarely in the center of causes of action alleged by Plaintiff in the First Amended Complaint.

Based on the foregoing, the Court is persuaded compliance with the underlying Business Records Subpoena is required, and Non-Party Worldwide Produce’s opposing arguments are insufficient to defeat this motion.

Conclusion

Plaintiff West Central Produce, Inc.’s Motion to Compel Compliance with Subpoena to Non-Party Green Farms, California, LLC dba Worldwide Produce is GRANTED. Non-Party shall deliver all responsive documents within 30 days unless the parties agree on another date.

Plaintiff to give notice.

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