Case Name: Garden City, Inc., et al. v. Swallow, et al.
Case No.: 16-CV-295297

This action initiated by plaintiffs Garden City, Inc. (“GCI”), Peter V. Lunardi III, and Jeanine Lunardi against defendants Eric Swallow (“Swallow”), Team View Player Associates, LLC (“Team View”), and others arises out of a dispute between business partners.
According to the third amended complaint (“TAC”), GCI operates a licensed card room in San Jose, California. (TAC, ¶ 1.) From 2007 to June 26, 2016, Swallow was a director and secretary of GCI. (Id. at ¶ 5.) In addition, until June 9, 2017, Swallow held 12,500 shares in GCI, equaling fifty percent of the outstanding shares. (Ibid.) At that time, Peter V. Lunardi III and Jeanine Lunardi (collectively, “the Lunardis”), on behalf of the Lunardi Family Living Trust (the “Trust”), owned the remaining fifty percent of shares in GCI and served as its directors. (Id. at ¶¶ 2-3.)

As a shareholder, officer, and director of a licensed card room, Swallow was required to hold two gaming licenses, one issued by the State of California and another issued by the City of San Jose. (TAC, ¶ 13.) On May 2, 2014, the Bureau of Gambling Control (“Bureau”), an arm of the California Department of Justice, issued an “Accusation” against Swallow, GCI and the Lunardis. (Id. at ¶ 14.) The Accusation alleged Swallow engaged in a variety of acts that are antithetical to the privilege of holding a gaming license in the State of California. (Ibid.) Amongst other relief, the Accusation prayed for the revocation of Swallow’s license, which would prevent him from continuing to own shares in GCI. (Ibid.)

GCI, the Lunardis, and Swallow all retained counsel in response to the Accusation. (TAC, ¶ 15.) The attorney’s fees incurred by each party were initially covered by GCI’s insurance or paid by GCI. (Ibid.) While GCI has paid a portion of Swallow’s attorney’s fees, he has many outstanding attorney’s bills, which he demands be paid by GCI. (Ibid.)

GCI and the Lunardis settled with the Department of Justice, thereby resolving the Accusation. (TAC, ¶ 16.) The settlement required them to pay a fine and comply with certain regulatory requirements. (Ibid.) On the other hand, Swallow was unable to reach a settlement with the Department of Justice and the Accusation proceeded to trial against him. (Id. at ¶ 17.) The Administrative Law Judge subsequently rendered her proposed decision, finding Swallow received illegal kickbacks from multiple vendors, including Team View. (Ibid.) The Lunardis then learned Swallow instructed current and former employees of GCI to alter and falsify company records to assist his defense of the Accusation. (Id. at ¶ 18.) For example, Swallow instructed a current GCI employee to allow a former vendor to access the computer network to alter digital records, intending to use those records to mislead the Administrative Law Judge. (Ibid.)

Thereafter, the California Gambling Control Commission (the “Commission”) issued its “Decision and Order After Nonadoption” (the “Commission Order”), which constituted the final decision on the Accusation. (TAC, ¶ 21.) The Commission Order determined that Shallow was not suitable to hold a gaming license, revoked his existing license, and imposed a financial penalty of over $13.6 million. (Ibid.)
During the pendency of the Accusation proceedings, GCI was subject to an “Amended Emergency Order” which precluded payment of shareholder distributions to Swallow, except those for payment of taxes which were subject to preapproval. (TAC, ¶ 22.) During that time, GCI held $12,521,580.00 (the “Fund”) as distributions attributable to Swallow’s shares, which he is not entitled to now obtain. (Id. at ¶¶ 24-5.)
There is also a dispute over the sale of Swallow’s shares. Prior to this dispute, the Lunardis and Swallow entered into an agreement governing the transfer of shares in GCI and including a right of first refusal in the event a shareholder desired to sell their shares to a third party (“Buy-Sell Agreement”). (TAC, ¶ 26.) After the Accusation proceeding and in disregard of that agreement, Swallow entered into a stock purchase agreement with John Park (“Park Agreement”) to sell his shares and refused to sell them to the Lunardis. (Id. at ¶¶ 27-28.) The parties thereafter stipulated to expedited arbitration, which concluded with the arbitrator finding the Buy-Sell Agreement was fully enforceable and Swallow failed to comply with its terms in bad faith. (Id. at ¶¶ 29-30.) Following receipt of the arbitration award, Swallow amended the Park Agreement, increasing the selling price and requiring that a substantial sum be paid in cash. (Id. ¶¶ 32-33.) Once again, the Lunardis gave written notice they intended to exercise their right of first refusal, to which Swallow objected. (Id. at ¶ 34.) The parties went to arbitration for a second time, where Swallow was again ordered to sell his shares to the Lunardis. (Id. at ¶ 35.)

GCI and the Lunardis assert six causes of action for breach of fiduciary duty, indemnity and reimbursement, fraud, “tort of another,” declaratory relief, and breach of contract.

Swallow filed a cross-complaint against GCI and the Lunardis. The operative first amended cross-complaint (“FACC”) sets forth six causes of action for: (1) breach of fiduciary duty; (2) breach of contract; (3) aiding and abetting breach of fiduciary duty; (4) fraud; (5) indemnification; and (6) accounting. Swallow alleges several bases for these claims. First, Swallow alleges that he and the Lunardis, after receiving the Accusation, formed a litigation group to present a joint defense. (FACC, ¶ 33.) To that end, the parties entered into a common interest agreement (“Common Interest Agreement”), ensuring they did not waive any privilege as to any communication or work product protection in connection with the ongoing litigation. (Id. at ¶ 34.) The Lunardis purportedly violated this agreement by revealing certain confidential information. Second, the Lunardis and GCI purportedly induced Swallow’s wife into making certain false representations about him in connection with the ongoing Accusation proceeding. (Id. at ¶ 55.) Third, the Lunardis and GCI paid a former GCI employee, Bryan Roberts (“Roberts”), to provide a declaration to the Administrative Law Judge unfavorably depicting Swallow. (Id. at ¶ 42.) Last, the Lunardis and GCI refuse to disburse the Fund to Swallow. (Id. at ¶ 60.)

The present matter involves a discovery dispute. Swallow served requests for production, set one (“RPD”) on Peter V. Lunardi III (“Lunardi”) and GCI, to which the parties timely responded. (Vakili Decl., ¶¶ 2, 3.) Swallow considered the responses deficient and attempted to informally resolve the dispute, but these efforts were unsuccessful. (Id. at ¶¶ 4-8.)

Currently before the Court are Swallow’s motion to compel Lunardi to further respond to the RPD and his separate motion to compel GCI to further respond to the RPD. Swallow seeks an order imposing monetary sanctions in connection with both motions. Lunardi and GCI filed a joint opposition to the motions, in which they also seek an order imposing monetary sanctions.

I. Request for Judicial Notice

In support of his reply, Swallow requests judicial notice of a memorandum of points and authorities in support of a motion filed by GCI in Garden City, Inc. dba Casino M8trix, Case No. YC 063964, filed in the Los Angeles Superior Court. This document is a proper subject of judicial notice pursuant to Evidence Code section 452, subdivision (d), which authorizes a court to judicially notice court records. Additionally, the memorandum is relevant to an issue raised herein. (See People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 [any matter to be judicially noticed must be relevant to a material issue].) Accordingly, the request for judicial notice is GRANTED.

II. Motion as to Lunardi

Swallow moves to compel further responses to RPD Nos. 2-33. Code of Civil Procedure section 2031.310 provides a propounding party may move for an order compelling a further response to an inspection demand if that party considers the substantive responsive to be deficient or an objection without merit. The propounding party must make a threshold showing of good cause for the discovery sought. (Code Civ. Proc., § 2031.310, subd. (b)(1).)

A. Good Cause and Relevance Objection

Swallow asserts good cause exists for the discovery sought because all subject requests seek information relating to his claims. To establish good cause, the moving party must make “a fact-specific showing of relevance.” (Glenfeld Development Corp. v. Superior Court (1997) 53 Cal.App.4th 1113, 1117.) Discovery is generally allowed for any non-privileged matters that are relevant to the subject matter involved in the action “if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (Code Civ. Proc., § 2017.010.) Information is relevant to the subject matter if it might reasonably assist a party in evaluating its case, preparing for trial, or facilitating settlement. (Gonzalez v. Superior Court (1995) 33 Cal.App.4th 1539, 1546.) Courts liberally construe the relevance standard, and any doubts as to whether a request seeks information within the scope of discovery are generally resolved in favor of allowing discovery. (Colonial Life & Accident Ins. Co. v. Superior Court (1982) 31 Cal.3d 785, 790.)
In opposition, Lunardi contends good cause is lacking for various reasons that mirror the arguments he advances in support of his non-relevance objections. For example, he contends good cause does not exist because the requests are vague and ambiguous. That argument is misguided because it does not relate to good cause. As stated above, good cause requires a fact-specific showing of relevance. (Glenfeld Development Corp. v. Superior Court, supra, 53 Cal.App.4th at p. 1117.) Even assuming the objection has merit, whether the requests are vague and ambiguous has no bearing on the relevance of the information sought. In addition, Lunardi asserts good cause does not exist to compel the production of certain documents because he already produced nonprivileged and responsive documents. Once again, that argument is off point as it does not relate to the relevance of the information sought. Lunardi otherwise objected to RPD Nos. 8-33 on the ground of relevance, but only attempts to justify his objection as to RPD Nos. 25 and 26. As such, the relevance objection is overruled as to the remaining requests. (See Kirkland v. Superior Court (2002) 95 Cal.App.4th 92, 98 (“Kirkland”) [objecting party must justify its objections].) The Court will now address whether good cause exists and the objections to RPD Nos. 25 and 26.

RPD Nos. 2-7 seek the production of communications between Lunardi or anyone acting on his behalf and Roberts or anyone acting on his behalf, documents relating to Roberts, and payments made to Roberts. As aptly argued by Swallow, good cause exists for the discovery of these documents. One central allegation of the FACC is that the Lunardis paid Roberts to provide testimony against Swallow in the Accusation proceeding. Documents relating to Roberts and communications to him may lead to information reflecting the purpose of his testimony and whether his testimony was truthful, which Swallow contends it was not. In addition, the FACC alleges the Lunardis provided Roberts confidential information in violation of the Common Interest Agreement. Thus, all communications to Roberts and documents concerning him would potentially lead to the discovery of admissible evidence.

RPD Nos. 8-24 seek communications between Lunardi or anyone acting on his behalf and various third parties, such as the Bureau, the Commission, the Attorney General, Patrick Tierney (“Tierney”), as well as documents relating to these individuals and/or entities. Swallow persuasively argues these documents are relevant because they will help him prove elements of his claims. Specifically, the Bureau and Attorney General issued the Accusation against Swallow, and the Commission presided over the proceedings. Any communications with these entities and individuals and documents relating to them would help Swallow evaluate his claims as well as the claims asserted against him. Additionally, Tierney allegedly attempted to purchase Swallow’s stock, which transactions are also at issue in both pleadings. Consequently, good cause exists for the discovery sought by RPD Nos. 8-24.

RPD Nos. 25 and 26 seek communications between Lunardi or anyone acting on his behalf and Ryan Stone (“Stone”) and Park or anyone acting on their behalf. These are the only requests to which Lunardi attempted to justify his relevance objection. In support, Lunardi simply argues these individuals are not connected to this litigation. As to Park, this argument is not well-taken as he allegedly attempted to purchase Swallow’s stock, which transaction is at issue in this case. As such, there is good cause for seeking communications with him relating to the sale of stock and the relevance objection to RPD No. 26 is overruled. In contrast, as persuasively argued by Lunardi, good cause does not exist for the discovery of Lunardi’s communications with Stone. Stone is not mentioned anywhere in the pleadings and Swallow does not identify him in his papers. As persuasively argued by Lunardi, it is unclear how Stone might be related to this action; the Court is unaware of who he is and why he is implicated here. As such, Swallow fails to establish good cause for the discovery sought, and the relevance objection to RPD No. 25 is sustained.

RPD Nos. 27-30 seek communications and documents relating to Swallow’s wife. As argued by Swallow, these documents are relevant because the FACC alleges the Lunardis induced Swallow’s wife to provide a misleading and inaccurate declaration to be used in the Accusation proceeding. As such, good cause exists for the discovery sought.

Last, RPD Nos. 31-33 seek communications and documents between Lunardi or anyone on his behalf and Comerica Bank. Swallow correctly argues the documents submitted to the bank relating to the purchase of GCI stock may be relevant to his claims as they would provide information relating to the valuation of GCI stock and prove he transferred them to the Lunardis. There is thus good cause for the discovery sought.

B. Remaining Objections

Since Swallow established good cause exists for the discovery sought, the burden shifts to Lunardi to justify any objections. (See Kirkland, supra, 95 Cal.App.4th at p. 98.)

1. Vagueness, Ambiguity, and Overbreadth

Lunardi objected to all RPD at issue on the basis they are “vague, ambiguous, and overbroad.” Although Lunardi frames the “vague, ambiguous, and overbroad” objection as a single objection, vagueness/ambiguity and overbreadth are distinct objections. An ambiguity objection should be sustained only when the nature of the information sought is not apparent. (See Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 783; Standon v. Superior Court (1990) 225 Cal.App.3d 898. 903 [stating that a vague and ambiguous frequently considered a nuisance objection].) “[W]here the question is somewhat ambiguous, but the nature of the information sought is apparent, the proper solution is to provide an appropriate response.” (Deyo v. Kilbourne, supra, 84 Cal.App.3d at p. 783; see also Cembrook v. Superior Court (1961) 56 Cal.2d 423, 430.) It appears from Lunardi’s argument that this objection is actually intended to be one for overbreadth and not of vagueness and ambiguity. Lunardi’s argument is focused on the broad scope of information sought, not whether it is impossible to discern the nature of the information actually sought. To the extent Lunardi did intend to object on the ground of vagueness/ambiguity, the objection is not substantiated as it is readily apparent what information Swallow seeks. Consequently, to the extent Lunardi objected to each RPD on the ground of vagueness and ambiguity, the objection is overruled.

Turning to the ground of overbreadth, Lunardi first contends Swallow’s definition of “you” and “your” is too broad because it includes his agents, representatives, officers, shareholders, employees, attorneys, accountants, and investigators. These terms appear in the majority of the RPD at issue. Lunardi does not further elaborate on why documents or communications from his agents, representatives, or others would render this request overbroad. Generally speaking, it cannot be definitively concluded that the terms “you” and “your” render the requests overbroad standing alone. It would be necessary to examine each request to see if, for example, the requests are otherwise limited by subject matter relating to the case. Lunardi does not engage in such analysis in addressing the definition of “you” and “your.”

Lunardi has not substantiated his objection on this discrete basis. Lunardi otherwise advances arguments with respect to particular requests at issue that will be discussed in turn below.

RPD Nos. 2, 4-8, 11, 12, 15, 16, 18, 21, 22, and 27-30 seek documents or communications relating to an individual or entity. For instance, RPD No. 8 seeks all communications between Lunardi and the Commission. By way of another example, RPD No. 5 seeks all documents relating to Roberts. Lunardi insists these requests are overbroad because they are not limited by subject matter relevant to this litigation and presumably seek all communications between himself and the identified individual and/or entity, regardless of whether the communications or documents relate to any claims being asserted in this action. These requests are clearly overbroad as they are not limited by subject matter whatsoever. For example, there could be any number of documents relating to Roberts that are completely unrelated to the issues raised in this action as he was a prior employee of GCI, such as wage information and performance evaluations. As such, these requests are impermissibly overbroad. If Swallow seeks information relating to these entities and/or individuals, he must propound more narrowly tailored requests relating to the subject of this litigation.

RPD Nos. 9, 13, 17, 19, 23-26, and 31-33 seek communications or documents relating to certain individuals and/or entities about the sale of GCI stock. For example, RPD No. 23 seeks all communications between Lunardi and Tierney relating to the purchase or sale of any shares of GCI stock. Lunardi contends these requests are overbroad because they are virtually unlimited in scope and may encompass thousands of irrelevant documents. This argument is not well-taken. These requests are not overbroad, in contrast to the previous group of requests, because they are limited by the subject matter of the sale or purchase of GCI stock. The pleadings allege Swallow attempted to sell his stock twice after the Accusation proceedings. There is no information in the parties’ declarations suggesting there were any other contemplated sales of GCI stock. The alleged sale of stock is a central issue of this litigation because the parties dispute who may purchase the stock and whether Swallow impermissibly raised the price of the stock after offering it to Park.

Lunardi’s assertion that documents relating to GCI stock are no longer relevant does not support a contrary conclusion. This assertion is based on the fact that, since this lawsuit was initiated, the parties entered into an arbitration agreement by which he and his wife could purchase Swallow’s remaining stock. This argument is off point as it is directed to the relevance of the material sought, not the breadth of the material. In any event, information relating to GCI stock is clearly relevant because the parties dispute the appropriate price of the sale and whether Swallow breached the Buy-Sell Agreement by refusing to initially sell it to the Lunardis. As such, the objection of overbreadth is not sustainable as to RPD Nos. 9, 13, 17, 19, 23-26, and 31-33.

RPD Nos. 3, 10, 14, and 20 seek documents or communications with individuals and/or entities relating to Swallow. For example, RPD No. 10 seeks all communications between Lunardi and the Commission relating to Swallow. Lunardi aptly contends these requests are impermissibly overbroad because Swallow was a director of GCI for a number of years and the requests do not have any subject matter limitation. As worded, these requests could encompass numerous documents that are unrelated to this litigation, particularly as RPD Nos. 10, 14, and 20 are not limited by time.

In sum, the overbreadth objection is sustained as to RPD Nos. 2-8, 11-12, 14-16, 18, 20-22, and 27-30, and overruled as to RPD Nos. 9, 13, 17, 19, 23-26, and 31-33.

2. Gambling Control Act Privilege

Lunardi objected to RPD Nos. 8-25 and 31 on the basis the requests seek documents that fall within the protections of the Gambling Control Act.

Business and Professions Code section 19828, subdivision (a) (“Section 19828”), a provision of the Gambling Control Act, states that “any communication or publication from, or concerning, an applicant, licensee, or registrant . . . is absolutely privileged and so shall not form a basis for imposing liability for defamation or constitute a ground for recovery in any civil action” under the following three circumstances: (1) the communication “was made or published by an agent or employee of the department or commission in the proper discharge of official duties or in the course of any proceeding under this chapter;” (2) “[i]t was required to be made or published to the department or commission, or any of their agents or employees, by law, regulation, or subpoena of the department or the commission;” and (3) “[i]t was, in good faith, made or published to the department or the commission for the purpose of causing, assisting, or aiding an investigation conducted pursuant to this chapter.” Section 19828, subdivision (c) further provides that the department, commission, their agents, and their employees “shall not release or disclose any information, documents, or communications provided by an applicant, licensee, or other person, that are privileged pursuant to Division 8 . . . of the Evidence Code, or any other provision of law, without the prior written consent of the holder of the privilege, or pursuant to lawful court order after timely notice of the proceedings has been given to the holder of the privilege.”

The parties disagree as to how to interpret Section 19828. On one hand, Lunardi contends any communication between and him and the Attorney General, the Commission, or the Bureau is privileged and cannot be disclosed. On the other hand, Swallow takes the position that the statute does not create a new privilege and is limited to preventing the Commission and the Department of Justice from disseminating documents related to an application for a gambling license. Swallow further asserts Section 19828 does not prevent the applicants or licensees from disseminating any documents that were provided to these entities. On that basis, Swallow concludes Section 19828 does not prevent Lunardi from disclosing documents relating to these entities.

As persuasively argued by Swallow, Section 19828 does not create a new evidentiary privilege. While subdivision (a) does use the term “privilege,” it does not refer to an evidentiary privilege. Rather, it provides that certain documents are “privileged and so shall not form a basis” for a defamation claim or otherwise constitute a ground for recovery. (Bus. & Prof. Code, § 19828, subd. (a), italics added.) The term “and so” makes clear that the privilege is connected to precluding liability. The privilege set forth in Section 19828 is akin to the litigation privilege, which bars claims based on communications made in a judicial or quasi-judicial proceeding. (See Civ. Code, § 47; see also Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1241 [explaining litigation privilege].) Relative to the litigation privilege, “[a]lthough the protection afforded . . . is commonly denominated a ‘privilege,’ which creates a ‘privileged communication,’ [it] . . . does not create an evidentiary privilege that protects a communication from compelled disclosure.” (Moore v. Conliffe (1994) 7 Cal.4th 634, 638, original italics.) Thus, the term “privilege” as used in connection with the litigation privilege relates to prohibiting liability. (Silberg v. Anderson (1990) 50 Cal.3d 205, 213.) Similarly, here, Section 19828 does not create a new evidentiary privilege that protects documents from compelled disclosure. None of the other provisions of Section 19828 support a contrary conclusion. In fact, as emphasized by Swallow, subdivision (c) merely states the Commission and Department of Justice cannot disclose any information qualifying as privileged under the Evidence Code and does not provide that any other evidentiary privilege exists. The statute even contemplates that disclosure of documents that are protected by an evidentiary privilege could occur because it specifically refers to disclosure by court order.

As such, the privilege described in Section 19828 does not bar discovery and the objection is overruled as to RPD Nos. 8-25 and 31.

3. Privacy

Lunardi objected to RPD Nos. 8-25 and 31-33 on the ground they seek documents protected by his financial right to privacy.
The right to privacy protects an individual’s “reasonable expectation of privacy against a serious invasion.” (Pioneer Electronics, Inc. v. Superior Court (2007) 40 Cal.4th 360, 370.) A party seeking to prevent discovery on the basis of the right of privacy must demonstrate that a legally protected privacy interest exists, there is a reasonable expectation of privacy under the particular circumstances, and the disclosure of the information would constitute a serious invasion of that interest. (Alch v. Superior Court (2008) 165 Cal.App.4th 1412, 1423 (“Alch”).) Where a serious invasion of the right to privacy is shown, the proponent of the discovery must demonstrate the information sought is directly relevant to an issue in the litigation. (Britt v. Superior Court (1978) 20 Cal.3d 844, 850.) Once direct relevance has been shown, the proponent of discovery must demonstrate the information sought is not available through less intrusive means. (Allen v. Superior Court (1984) 151 Cal.App.3d 447, 449.) In order to fairly balance the competing interests, courts must weigh the party’s privacy interest against the requesting party’s need for the information, the state’s interest, if any, and any other relevant interests presented. (Alch, supra, 165 Cal.App.4th at pp. 1432-1434.)

RPD Nos. 8-25 and 31-33 seek documents and/or communications from Lunardi to the Commission, Bureau, Attorney General, Stone, Tierney, and Comerica Bank. Lunardi aptly describes these requests as, in part, seeking financial information. As explained by Lunardi, many of the communications and/or documents relate to the sale of GCI stock, and thus likely reveal his financial information. (See Harrington Decl., ¶ 12.) This is particularly true as to RPD Nos. 31-33, which seek all documents from Comerica Bank related to the sale of GCI stock.

It is well-settled law that the right to privacy protects a party’s financial information from disclosure. (Burkle v. Burkle (2006) 135 Cal.App.4th 1045, 1063.) Therefore, the requests seek information posing a serious invasion to Lunardi’s privacy. As Lunardi establishes a privacy right is implicated, Swallow must demonstrate the information sought is “directly relevant” to a claim or defense and “essential to the fair resolution of the lawsuit.” (Alch, supra, Cal.App.4th at p. 1425.) To establish direct relevance, “[i]t is not enough that the information might lead to relevant evidence,” which could be sufficient to establish general relevance for discovery purposes absent a privacy objection. (Binder v. Superior Court (1987) 196 Cal.App.3d 893, 901.) “Mere speculation as to the possibility that some portion of the records might be relevant to some substantive issue does not suffice.” (Davis v. Superior Court (1992) 7 Cal.App.4th 1008, 1017.)
Swallow fails to meet this standard. Swallow simply states the financial information sought is directly relevant to the claims without providing a single reason as to why. Moreover, even if Swallow had established the information sought is directly relevant to his claims, he completely neglects to discuss whether there are less intrusive means to obtain that information. (See Allen v. Superior Court, supra, 151 Cal.App.3d at p. 449.) Instead, he immediately attempts to balance the interests of the parties, forgetting a crucial step of the privacy analysis. Swallow’s omission precludes him from establishing he is entitled to discovery of the constitutionally protected documents. Thus, for the purposes of the tentative ruling, the privacy objection is SUSTAINED.

4. Attorney-Client Privilege and Attorney Work Product Doctrine

Lunardi objected to RPD Nos. 2-25 and 27-30 on the grounds of attorney-client privilege and the attorney work product doctrine. In an attempt to justify his objections, Lunardi discussed both grounds together and did not distinguish between them; it appears he intended his arguments to apply equally to both grounds. The Court notes that it has sustained other objections to all RPD at issue here. However, as to RPD Nos. 13, 17, 19, 23, 24, and 31-33, the only objection sustained thereto was the privacy objection. The Court will therefore address the attorney-client privilege and attorney work product in relation to these requests.

The attorney-client privilege is “codified in Evidence Code section 954, [which] provides in pertinent part: ‘. . . the client, whether or not a party, has a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer[.]” (Southern Cal. Gas Co. v. Public Utilities Com. (1990) 50 Cal.3d 31, 37, internal citations omitted.) “Evidence Code section 952 defines the term ‘confidential communication between client and lawyer’ as ‘information transmitted between a client and his lawyer in the course of that relationship and in confidence by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship.’” (Mitchell v. Superior Court (1984) 37 Cal.3d 591, 600, citations omitted.) “‘The party claiming the privilege has the burden of establishing the preliminary facts necessary to support its exercise, i.e., a communication made in the course of an attorney-client relationship.’” (DP Pham, LLC v. Cheadle (2016) 246 Cal.App.4th 653, 665, citations omitted.)

The attorney work product doctrine is codified in Code of Civil Procedure section 2018.030 and precludes the discovery of a writing that reflects an attorney’s impressions, conclusions, opinions, theories, or legal research. This information is absolutely protected and may not be discovered under any circumstances. (Code Civ. Proc., § 2018.030.) This statute also provides that there is a qualified privilege; it prevents the discovery of other attorney work product not specifically identified in section 2018.030 unless the denial of discovery will unfairly prejudice the party seeking the discovery. (Code Civ. Proc., § 2018.030, subd. (b); Fireman’s Fund Ins. Co. v. Superior Court (2011) 196 Cal.App.4th 1263, 1282.) The attorney work product doctrine evolved from the protection “against invading the privacy of an attorney’s course of preparation[.]” (Coito v. Superior Court (2012) 54 Cal.4th 480, 490, citations omitted.) A consequence of allowing the opposing party to obtain attorney work product would be that “[a]n attorney’s thoughts, heretofore inviolate, would not be his own.” (City of Long Beach v. Superior Court (1976) 64 Cal.App.3d 65, 72, citations omitted.) “The party asserting a privilege has the burden of proving the essential elements of the privilege.” (BP Alaska Exploration, Inc. v. Superior Court (1988) 199 Cal.App.3d 1240, 1252.)

As to all requests at issue, Lunardi insists these privileges are implicated because the definition of “you” and “your” includes his attorney. Lunardi is correct that RPD Nos. 13, 17, 19, 23, and 31-33 use the terms “you” and “your.” In addition, RPD No. 24, which does not specifically seek an attorney communication and/or document, appears to encompass potential attorney work as it seeks all documents relating to the purchase of GCI stock. The fact that the purported privileged information was disseminated to a third party does not mean that information is not privileged. (See Behunin v. Superior Court (2017) 9 Cal.App.5th 833, 844–845 [privilege exists when confidential information is disclosed if it is to further the interest of the client]; OXY Resources California LLC v. Superior Court (2004) 115 Cal.App.4th 874, 891 [attorney work product doctrine attaches to information disclosed to third parties unless the disclosure is wholly inconsistent with the purpose of the privilege].) Privileges are strongly implicated.

On the other hand, these requests also are so broadly worded that they also necessarily seek information not covered by either the attorney-client privilege or the attorney work product doctrine. Lunardi apparently concedes that a large portion of the responsive documents are not protected by either privilege as he emphasizes that his objection is only made “to the extent” the requests call for privileged materials. Lunardi did not submit a privilege log or describe with any detail what documents he contends are privileged. Because insufficient detail is provided to describe the application of the attorney-client privilege and the attorney work product doctrine here, the Court is unable to rule on the merits of the objections. (See Catalina Island Yacht Club v. Superior Court (2015) 242 Cal.App.4th 1116, 1129 (“Catalina”) [court may not overrule privilege objection unless it receives sufficient information to decide whether it has merit].)

This objection will be deemed preserved and Lunardi will be ordered to provide a privilege log to Swallow identifying the documents he contends are responsive and privileged. Contrary to Lunardi’s arguments, a privilege log is necessary in this circumstance. Where, as here, “the response . . . fail[s] to provide sufficient information to allow the trial court to rule on the merits, the court may order the responding party to provide a further response by serving a privilege log or, if one already has been served, a supplemental privilege log that adequately identifies each document the responding party claims is privileged and the factual basis for the privilege claim.” (Catalina, supra, 242 Cal.App.4th at p. 1127.) In providing a privilege log, Lunardi shall identify the documents in a sufficiently specific manner to allow a determination of whether each document is or is not privileged. (Wellpoint Health Networks, Inc. v. Superior Court (1997) 59 Cal.App.4th 110, 129–130.)

C. Substantive Responses

A party may respond to an inspection demand by: (1) stating it will comply with the particular request; (2) stating it is unable to comply; or (3) objecting. (Code Civ. Proc., § 2031.210, subd. (a).) Swallow contends Lunardi’s substantive responses were defective.
The only RPD at issue to which objections were not sustained is RPD No. 26 , to which Lunardi responded that he “cannot respond to this request as stated.” While unclear, this is presumably a statement of inability to comply. Swallow asserts this response is not a code-compliant representation of an inability to comply. This argument is well-taken. If a party represents he or she is unable to comply, he or she must indicate a diligent search and reasonable inquiry was undertaken, state the reason the documents could not be located (e.g., lost, destroyed, never existed), and identify any individuals he or she believes might have the requested documents. (Code Civ. Proc., § 2031.230.) Lunardi failed to adhere to this standard as he simply stated he could not respond to the request. As such, a further response is warranted.

D. Conclusion

In light of the above, Swallow’s motion to compel further responses is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to RPD No. 26. The remainder of the motion is DENIED. To the extent the motion is granted, Lunardi must provide further verified, code-compliant further responses, without objection, and serve any responsive documents within 20 days of this Order.

III. Motion as to GCI

GCI moves to compel further responses to RPD Nos. 2-25. The discovery at issue here is identical to the discovery discussed above relative to Lunardi. The only differences are that there are fewer requests at issue here and the requests are not in the same order as above. For example, RPD No. 2 propounded on Lunardi seeks all communications between him and Roberts, whereas RPD No. 2 propounded on GCI seeks all communications between Lunardi and the Commission relating to the purchase or sale of Swallow’s stock in GCI. Although the RPD numbers are different, the analysis here is nearly identical.

As stated above, a propounding party may move for an order compelling a further response to an inspection demand if that party considers the substantive responsive to be deficient. (Code Civ. Proc., § 2031.310, subd. (a).) The propounding party must make a threshold showing of good cause for the discovery sought. (Code Civ. Proc., § 2031.310, subd. (b)(1).)

A. Good Cause and Relevance

Swallow and GCI advance the same arguments here as to good cause as they did relative to the Lunardi motion. In addition, although GCI objected to RPD Nos. 2-8 and 14-25 on the ground of relevance, it only attempts to justify its relevance objection as to RPD Nos. 20 and 21 in opposition. For the same reasons discussed above, good cause exists for all discovery sought for all RPD at issue with the exception of RPD No. 20, which seeks information relating to Stone. As such, the relevance objection is sustained as to RPD No. 20 and overruled as to RPD No. 21.

B. Remaining Objections

As good cause exists for the discovery sought, GCI must justify its objections. (See Kirkland, supra, 95 Cal.App.4th at p. 98.) The majority of GCI and Swallow’s arguments are identical to those advanced in the Lunardi motion. The only significant difference is the privacy objection, which is discussed in detail further below.

For the same reasons discussed above, the overbreadth objection is overruled as to RPD Nos. 2-7, 20-21, and 23-25 and sustained as to RPD Nos. 8-19, and 22; the objection on the grounds of the attorney-client privilege and the attorney work product doctrine are preserved; and the objection on the ground that the information sought is privileged pursuant to the Gambling Control Act is overruled.
As to the privacy objection, GCI objected to RPD Nos. 2-7, 14-20, and 23-25 on the basis they seek constitutionally protected financial information. As noted by Swallow, GCI’s privacy objection is explicitly predicated on Article I, Section 1 of the California Constitution. Swallow insists the Constitution does not apply to corporations.

Swallow is correct. The prevailing view is that corporations do not have a constitutional right to privacy. (SCC Acquisitions, Inc. v. Superior Court (2015) 243 Cal.App.4th 741, 755 [“corporations do not have a right of privacy protected by the California Constitution”]; see also Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 878 [“It is generally agreed that the right to privacy is one pertaining only to individuals, and that a corporation cannot claim it as such.”].)

In opposition, GCI clarifies that its objection is only to the extent the requests implicate the financial privacy rights of its employees, particularly Lunardi. GCI reasons the definitions of “you” and “your” as used in the requests specifically include them. This argument is well-taken. The requests appear to seek some documents that would relate to Lunardi. Thus, to the extent the requests seek Lunardi’s financial information, the objection is sustained in part for the same reasons stated above. Because the objection is only to a portion of the request, further responses are still warranted.

C. Substantive Responses

As stated above, a party may respond to an inspection demand by: (1) stating it will comply with the particular request; (2) stating it is unable to comply; or (3) objecting. (Code Civ. Proc., § 2031.210, subd. (a).) Swallow contends GCI’s substantive responses were defective.

The only RPD at issue to which objections were not sustained or partially sustained are RPD Nos. 2-7, 21, and 23-25. GCI responded either that it “cannot respond to this request as stated” or that it would “not produce any documents in response to this request.” These responses are deficient because they do not indicate a diligent search and reasonable inquiry was undertaken, state the reason the documents could not be located (e.g., lost, destroyed, never existed), and identify any individuals GCI believes might have the requested documents. (See Code Civ. Proc., § 2031.230.) As such, further responses to RPD Nos. 2-7, 21, and 23-25 are warranted.

D. Conclusion

Accordingly, Swallow’s motion to compel further responses is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to RPD Nos. 2-7, 21, and 23-25. The remainder of the motion is DENIED. To the extent the motion is granted, GCI must provide further verified, code-compliant further responses, without objection (except for objections on the grounds of attorney-client privilege and attorney work product doctrine, which are preserved), and serve any responsive documents within 20 days of this Order.

In addition, if GCI withholds any documents on the grounds of the attorney-client privilege or attorney work product doctrine, it must provide a privilege log providing sufficiently specific facts to allow a determination of whether each document is privileged or not. (Catalina, supra, 242 Cal.App.4th at p. 1127 [where response fails to provide sufficient information to rule on the merits, the court may order the service of a privilege log].)

IV. Requests for Sanctions

A. Swallow’s Request

In connection with both motions, Swallow requests an award of monetary sanctions pursuant to Code of Civil Procedure sections 2031.310, subdivision (h), which provides that sanctions shall be imposed against any party who unsuccessfully makes or opposes a motion to compel a party to serve further responses to inspection demands unless the party subject to sanctions acted with substantial justification or other circumstances would make imposing sanctions unjust.

Swallow is not entitled to an award of monetary sanctions as he was not substantially successful in his motions. Accordingly, the request for sanctions is DENIED.

B. Lunardi and GCI’s Request

Lunardi and GCI jointly request an award of monetary sanctions. Lunardi and GCI fail to substantiate their request as they provide no statutory basis or legal authority authorizing an award of sanctions here. (See People v. Dougherty (1982) 138 Cal.App.3d 278, 282 [“Where a point is merely asserted by counsel without any argument of or authority for its proposition, it is deemed to be without foundation and requires no discussion.”].) The request for sanctions is therefore DENIED.

The Court shall prepare the Order.