Case Number: BC533312 Hearing Date: August 04, 2015 Dept: 78
Superior Court of California
County of Los Angeles
Department 78

LISET VIAMONTES,
Plaintiff
v.
ADRIANA’S INSURANCE SERVICES, INC., et al.,
Defendants. Case No.: BC533312
Hearing Date: Tuesday, August 4, 2015

[TENTATIVE] RULING RE:
Defendants Adriana’s Insurance Services, Inc., Leon Fregoso, and Adriana Gallardo’s Motion for Protective Order Preventing the Depositions of Leon Fregoso and Adriana Gallardo.

Defendants Adriana’s Insurance Services, Inc. (“AIS”), Leon Fregoso (“Fregoso”), and Adriana Gallardo’s (“Gallardo”) Motion for Protective Order Preventing the Depositions of Leon Fregoso and Adriana Gallardo is DENIED to the extent it seeks to bar the taking of the depositions, but is GRANTED to limit the scope of the depositions.

FACTUAL BACKGROUND

This case involves various claims by plaintiff Liset Viamontes (“Viamontes”) against two groups of defendants; Veronica’s Auto Insurance Services, Inc. (“VAIS”) and VAIS’s sole owner and shareholders Veronica Gallardo (collectively, “VAIS defendants”), and Adriana’s Insurance Services, Inc. (“AIS”) and AIS’s two sole shareholders Fregoso and Adriana Gallardo (“Gallardo”) (collectively, “AIS defendants.”) Viamontes claims that she was discriminated against by both sets of defendants because of her pregnancy and related heart and blood pressure conditions, leading to a change in schedule, several transfers to distant offices, and a failure to re-instate her as a full-time employee. (Complaint ¶¶ 17–67.) Viamontes was employed by VAIS; however, VAIS used the trade name “Adriana’s Insurance Services.” AIS argues that VAIS was operating under a License Agreement (Exhibit K to Motion) under which AIS granted VAIS the license to use the trade name. AIS and its owners Fregos and Adriana Gallardo argue further that they had no authority over VAIS employees, including Viamontes, and have filed a motion for summary judgment on this basis

PROCEDURAL HISTORY

Viamontes filed her complaint on January 16, 2014, which alleges the following causes of action against all defendants:

1. Violation of California Fair Employment and Housing Act — Disability Discrimination, Retaliation, Failure to Make Reasonable Accommodation, Failure to Engage in Interactive Process, Failure to Take All Steps Necessary to Prevent Discrimination (Cal. Gov. Code § 12940)
2. Violation of California Fair Employment and Housing Act — Medical Condition Discrimination, Retaliation, Failure to Make Reasonable Accommodation, Failure to Engage in Interactive Process, Failure to Take All Steps Necessary to Prevent Discrimination (Cal. Gov. Code § 12940)
3. Violation of of California Fair Employment and Housing Act – Sex Discrimination, Failure to Take All Steps Necessary to Prevent Discrimination
4. Wrongful Constructive Discharge in Violation of Public Policy
5. Violation of Labor Code § 98.6
The complaint alleges that AIS defendants were joint employers of Viamontes, along with the VAIS defendants, and that both VAIS and AIS are alter-egos of the individual defendants. (Complaint ¶¶ 6–13.)
AIS, Fregoso, and Gallardo filed their Motion for Summary Judgment on April 3, 2015. On June 30, 2015, the hearing date for this motion was continued until September 16, 2015 so that this motion for a protective order could be heard prior to the motion for summary judgment.

On July 1, 2015, Defendants Adriana’s Insurance Services, Inc., Leon Fregoso, and Adriana Gallardo’s filed their Motion for Protective Order Preventing the Depositions of Leon Fregoso and Adriana Gallardo. Viamontes filed her Opposition to the protective order on July 13, 2015. On July 17, 2015, AIS, Fregoso, and Gallardo filed their Reply.
MEET-AND-CONFER DISCUSSIONS PRE-FILING MOTION
Counsel for AIS defendants, Craig Robson, states in his declaration that on June 1, 2015, he substituted into this case, and after discussing the pending deposition of Fregoso with Viamontes’ counsel, had the deposition taken off calendar, and agreed to have the motion for summary judgment brought by the AIS defendants continued from June 30, 2015 until July 15, 2015. (Robson Decl. ¶ 2.) On June 5, 2015, Viamontes’ counsel sent an email to AIS requesting dates for the depositions of Gallardo and Fregoso. (Robson Decl. ¶ 3.)

On June 10, 2015, Veronica Gallardo was deposed, and testified that Adriana Gallardo had no information regarding the allegations in the complaint, and that VAIS and AIS are completely separate entities with separate bank accounts and no comingling of funds or assets. (Robson Decl. ¶ 4.) In light of this testimony, AIS informed Viamontes that they would not be producing Fregoso or Gallardo, and Robson sent a meet-and-confer letter on June 11, 2015. (Robson Decl. ¶ 5.) This letter argues that Fregoso and Gallardo are “apex deponents,” and that Viamontes is therefore required to demonstrate good cause for their depositions by showing that they have unique or superior knowledge of the subject matter to be explored and that all less intrusive means to obtain the information sought have been exhausted. (Robson Decl. ¶ 5.)

On June 24, 2015, Viamontes responded, arguing that the depositions are necessary so that Viamontes can fully investigate the bases for AIS defendants’ motion for summary judgment, including several categories of specific information to be sought in the depositions. (Robson Decl. ¶ 6.) On June 29, 2015, AIS responded that it believed Viamontes had failed to meet the standard for taking a deposition of the apex deponents, and stated that AIS would file the instant motion for a protective order. (Robson Decl. ¶ 7.)

On April 29, 2015, Viamontes deposed AIS’ Person Most Qualified, Souhela Hernandez. (Robson Decl. ¶ 8.) Both Fregoso and Gallardo have been served, and responded to, Form Interrogatories – Employment. (Robson Decl. ¶ 10.) These responses state that AIS is not and has never been Viamontes’ employer. (Robson Decl. ¶ 10.)

DISCUSSION

I. Evidentiary Objections

A. AIS’s Evidentiary Objections

Objections Nos. 1, 8 and 10 are OVERRULED
Objections Nos. 2–7 and 9 are SUSTAINED as hearsay. Viamontes has failed to provide the transcript from the Hernandez or Veronica Gallardo depositions.

II. Motion For Protective Order

“Before, during, or after a deposition, any party, any deponent, or any other affected natural person or organization may promptly move for a protective order.” (Code Civ. Proc., § 2025.420, subd. (a).) A court may issue a protective order to limit, modify, or prohibit a deposition only “for good cause shown.” Cal. Code Civ. Proc. § 2025.420, subd. (b). The moving party has the burden of establishing “good cause” for the requested relief. (Fairmont Insurance Co. v. Superior Court (2000) 22 Cal.4th 245, 255.) “Where a party must resort to the courts, ‘the burden is on the party seeking the protective order to show good cause for whatever order is sought. [Citation.]’ [Citation.]” (Nativi v. Deutsche Bank National Trust Company (2014) 223 Cal.App.4th 261, 318.)

AIS argues that the requested depositions of Fregoso and Gallardo are “strongly disfavored” because they are “apex” officers of AIS. (Motion for Protective Order (“MPO”) at p. 7–9.) They then argue that Fregoso and Gallardo do not possess unique or superior personal knowledge of discoverable information in this case because that information is held by AIS’s Person Most Qualified (“PMQ”), Souhela Hernandez. (MPO at p. 10–11.) AIS then argues that Viamontes has not exhausted less intrusive methods of discovery in this matter because the information sought is perfectly suited for written discovery, and Viamontes has failed to exhaust the depositions of all lower level employees. (MPO at pp. 11–14.) Finally, AIS argues that the testimony sought from Fregoso and Gallardo is not relevant to AIS’ motion for summary judgment. (MPO at p. 14–15.)

A. Depositions of “Apex” Corporate Officers

A corporate president or officer who is at the “apex” of a corporate hierarchy may be prohibited from being deposed through a protective order where it is shown that the corporate officer lacks knowledge of the facts at issue, or involvement in the litigation is sought before the plaintiff exhausts less intrusive means of discovery. (Liberty Mutual Insurance Co. v. Superior Court (1992) 10 Cal.App.4th 1282, 1287–1288 (“Liberty Mutual”).) The Court of Appeals reasoned that such depositions:

. . . raise a tremendous potential for discovery abuse and harassment. Vast numbers of personal injury claims could result in the deposition of the president of a national or international company whose product was somehow involved. It would be unreasonable to permit a plaintiff to begin discovery by deposing, for instance, the chief executive officer of a major automobile manufacturer when suing over a design flaw in a brake shoe — especially if we were to accept real party’s argument that the mere act of copying the chief executive officer with a few pieces of correspondence creates “constructive notice” justifying the deposition.

(Liberty Mutual Insurance Co. v. Superior Court, supra, 10 Cal.App.4th at p. 1287.) Trial courts, in determining whether to grant a protective motion for such a deposition:

“should first determine whether the plaintiff has shown good cause that the official has unique or superior personal knowledge of discoverable information. If not, as will presumably often be the case in the instance of a large national or international corporation, the trial court should issue the protective order and first require the plaintiff to obtain the necessary discovery through less intrusive methods. These would include interrogatories directed to the high-level official to explore the state of his or her knowledge or involvement in plaintiff’s case; the deposition of lower level employees with appropriate knowledge and involvement in the subject matter of the litigation; and the organizational deposition of the corporation itself, which will require the corporation to produce for deposition the most qualified officer or employee to testify on its behalf as to the specified matters to be raised at the deposition. [Citation.] Should these avenues be exhausted, and the plaintiff make a colorable showing of good cause that the high-level official possesses necessary information to the case, the trial court may then lift the protective order and allow the deposition to proceed.”
(Id., supra (10 Cal.App.4th at p. 1289.)

There is a dearth of California decisions interpreting Liberty Mutual, but as the court in that case pointed out itself, “‘[b]ecause the 1986 [Discovery] Act brings California into closer alignment with the Federal Rules [citation], federal cases are likely to play an even more prominent role in the future.’ [Citation.]” (Id. at p. 1288.)
In Folwell v. Hernandez (M.D.N.C. 2002) 210 F.R.D 169, 173–175, the court permitted a deposition of an “apex” officer regarding corporate relationships, even though the officer had no personal knowledge of the underlying personal injury incident. Furthermore, an “apex” officer’s mere affidavit that he or she lacked information pertinent to a lawsuit does not conclusively close off a plaintiff’s ability to depose them; a plaintiff is entitled to “test” a professed lack of knowledge. (Rolscreen Co. v. Pella Products of St. Louis, Inc. (S.D. Iowa 1992) 145 F.R.D. 92, 97.)

The AIS defendants have, at least initially, shown good cause for a protective order because Fregoso and Gallardo are the “apex” officers of AIS. They are AIS’s sole shareholders, and neither appears to have any personal knowledge of the underlying allegations regarding discrimination in Viamontes’ complaint.
However, the court finds that Viamontes has shown good cause that Fregoso and Gallardo have unique or superior personal knowledge of discoverable information. Viamontes requests the depositions in order to discover the following categories of information:

1. When AIS obtained the trade name “Adriana’s Insurance Services”;
2. Whether Ms. Gallardo ever held herself out to be personally responsible for AIS’s debts;
3. What were the sources of capital that were contributed to defendant AIS for its initial capitalization in 2000;
4. What VAIS was able to do under the License Agreement;
5. How many times VAIS asked for authorization to use AIS’s logo;
6. Whether certain employment records for Viamontes are authorized uses of AIS’s logo; and
7. Whether Adriana Gallardo and Veronica Gallardo held meetings or had phone conversations regarding the business operations of AIS.
(Lee Decl. Ex. N.)

Viamontes has shown that Gallardo and Fregoso have unique or superior personal knowledge regarding these requests. Adriana Gallardo has unique knowledge regarding her own conversations with Veronica Gallardo about AIS business operations, or whether she held herself out as personally liable for AIS’s debts. Similar to Falwell, Gallardo and Fregoso are not protected from a deposition regarding their knowledge of the corporate relationship between AIS and VAIS. Indeed, Fregoso, as President of AIS, verified each of AIS’s discovery responses, showing that he has knowledge as to the questions asked. (See Lee Decl., Exs. B, C, D.)

Additionally, in PMQ Hernandez’s deposition, when asked if she knew if AIS ever used a specific article in its marketing, she said that she didn’t know, but that Fregoso or Gallardo would know. (Robson Decl. Ex. F, 169:2–169:9.) The Court notes that Lee in her declaration identifies other areas where Hernandez states that either Veronica Gallardo or Fregoso had knowledge regarding the inquiry, but the court has sustained the objections to these statements because the actual deposition transcript is not provided.

Under the Liberty Mutual analysis, a motion for a protective order will be denied if the plaintiff shows good cause that the “apex” officers have unique knowledge. Because Viamontes has shown that Fregoso and Gallardo do possess unique or superior knowledge regarding the sought after information, the court need not inquire into whether Viamontes has exhausted less intrusive means of obtaining this discovery. Moreover, the Court notes that Viamontes did attempt to obtain this information through written discovery, but AIS responded that AIS was not Viamontes’s employer and therefore has no information to respond to the discovery. (See Exs. B, C, D to Lee Decl.) Viamontes cannot both refuse to answer written discovery and argue that Viamontes should be barred from taking the depositions of Gallardo and Fregoso until it seeks to obtain the information through written discovery.

B. Relevance of Summary Judgment Declarations

In their declaration made in support of their motion for summary judgment, Fregoso and Gallardo state that:
• AIS does not and has not owned any interest in VAIS. (Hernandez Decl. ¶ 4.)
• Neither Fregoso, Gallardo, nor AIS has ever paid any compensation benefits to Viamontes. (Hernandez Decl. ¶¶ 9–17; Fregoso Decl. ¶ 4; Gallardo Decl. ¶ 4.)
• On November 28, 2008, AIS granted VAIS a non-exclusive license to use the name “Adriana’s Insurance Services, Inc.” (Hernandez Decl. ¶ 6.) This licensing agreement states that there is no employer-employee relationship between AIS and VAIS, nor does the licensing agreement form a joint venture or partnership. (Hernandez Decl. ¶¶ 7, 8.)
• All the offices at which Viamontes worked were owned and operated by VAIS, not AIS. (Veronica Gallardo Decl. ¶ 11.)
• All the individuals named in the complaint are employees of VAIS, not AIS. (Veronica Gallardo Decl. ¶ 12.)

Viamontes is also entitled to depose Fregoso and Gallardo regarding their declarations made in support of their motions for summary judgment. Both Fregoso and Gallardo have unique knowledge regarding their declarations, which formed the main evidentiary basis for their motion for summary judgment. While the listed categories of inquiry in above section II(A) do not directly relate to the issue of whether AIS employed Viamontes, it is clear that if AIS is going to rely on the declarations of Fregoso and Gallardo in their motion for summary judgment, they must be available for a deposition so that Viamontes can investigate their statements.

The Motion for a Protective Order is DENIED to the extent it seeks to prevent the taking of the depositions. However, the Protective Order is granted to limit the scope of the depositions to questions regarding (1) the relationship between VAIS and AIS, including whether AIS is an alter ego of VAIS; (2) the questions in section II(A) above, except for questions 3 and 4; and (3) statements made by Gallardo and Fregoso in their declarations submitted in support of AIS’s motion for summary judgment.

Counsel for Defendants to provide Notice.

Dated: August 4, 2015

__________________________________________
Hon. Gail Ruderman Feuer
Judge of the Superior Court