Case Name: Hee Ja Lee v. K&L Supply Company, Inc., et al.
Case No.: 17CV314431

This lawsuit is an extension of a larger dispute between Plaintiff Hee Ja Lee (“Plaintiff”) and her former husband Yeo Bai Lee. In this civil action Plaintiff alleges that Defendants K&L Supply Company, Inc. (a California corporation Plaintiff once served as a director for) and K&L Supply Korea Company, LTD (collectively “Defendants”) aided and abetted Yao Bai Lee in breaching fiduciary duties owed to Plaintiff.

Currently before the Court are two matters: 1) Defendants’ motion for protective order, opposed by Plaintiff, and; 2) Plaintiff’s motion to compel production of a privilege log, unopposed by Defendants. Plaintiff had initially set her motion to compel for this date and Defendants were permitted to add the motion for protective order to this hearing date pursuant to a stipulation signed by the Court (Hon. Rudy) on March 27, 2019. The stipulation (prepared by Defense Counsel) represented that the motion for protective order regarded “in part, the same discovery.” (March 27, 2019 stipulation & order at p. 1:21-22.)

1. Defendants’ Motion for Protective Order
Request for Judicial Notice
A precondition to judicial notice in either its permissive or mandatory form is that the matter to be noticed be relevant to the material issue before the Court. (Silverado Modjeska Recreation and Park Dist. v. County of Orange (2011) 197 Cal.App.4th 282, 307, citing People v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422 fn. 2.)

With her opposition to the motion for protective order Plaintiff has submitted a request for judicial notice of six documents (attached exhibits A-F) that complies with Rule of Court 3.1113(l). Exhibit A is a copy of a June 21, 2017 amended order of the Family Division of the Court (Judge Pro Tempore Berra) in the marital dissolution action between Plaintiff (as respondent in that action) and Yeo Bai Lee (case no. 6-10-FL-005204), granting sanctions against Mr. Lee. Among other things the Court granted the following issue sanction: “The Court has determined that Mr. Lee breached his fiduciary duty to Ms. Lee under Family Code Section 721 by failing to timely disclose the K&L Korea opportunity.” Exhibit B is a copy of another order from the Family division, dated September 13, 2018, issuing a monetary sanction in the amount of $33,937.50 against Mr. Lee. Exhibit C is a copy of a February 25, 2019 order of this Court (Hon. Pierce) granting Plaintiff’s motion to compel production of documents with a privilege log from non-party Walter Choi. Exhibit D is an excerpt from a declaration by Yeo Bai Lai filed more than year ago in this action in support of Defendants’ unsuccessful motion to dismiss this case for lack of subject matter jurisdiction. Exhibit E is a copy of another order of the Family Division of the Court (Judge Pro Tempore Berra) in the marital dissolution action, dated December 2, 2016, granting a motion to compel production of documents. Exhibit F is a copy of the transcript of the December 14, 2017 hearing in this Court (Hon. Zayner presiding) on Defendants’ unsuccessful motion to dismiss this action for lack of subject matter jurisdiction.

The request is GRANTED in part and DENIED in part. Notice is GRANTED of exhibits A-C, E & F pursuant to Evidence Code §452(d) (court records) only as §452(h) does not apply to any of the submitted documents. The court orders (exhibits A-C & E) are noticed as to their contents and legal effect. As for exhibit F, a court reporter’s transcripts of court hearings can be noticed as court records. (See Miller v. Superior Court (2002) 101 Cal.App.4th 728, 734 n.2 [court of appeal took judicial notice of superior court files and reporter’s transcript under Sections 452(d) and 459].)

Notice of Exhibit D is DENIED. Declarations cannot be noticed as to the truth of their contents. (See Intengan v. BAC Home Loans Servicing LP (2013) 214 Cal.App.4th 1047, 1057 [court may take judicial notice of existence of declaration but not of facts asserted in it]; Bach v. McNelis (1989) 207 Cal.App.3d 852, 865 [court may not notice the truth of declarations or affidavits filed in court proceedings].) The mere existence of the declaration has no relevance to the material issues before the Court.

Motion for Protective Order
Defendant moves for a protective order citing (former) CCP §2017(a) (which the Court will interpret as a citation to §2017.020) and CCP §2019.030(a)(2). (See Memo. of Points &Authorities at p. 9:7-16.) Section 2017.020 allows a party to move for a protective order to limit the scope of discovery when the burden, expense or intrusiveness of the discovery sought has been demonstrated to clearly outweigh the likelihood the information sought will lead to the discovery of admissible evidence. Section 2019.030(a)(2) provides that a court shall restrict the frequency or extent of use “of a discovery method,” not discovery in general, if the court determines that the specific selected method of discovery, not discovery in general, “is unduly burdensome or expensive.” The issuance and formation of protective orders are largely discretionary. (Raymond Handling Concepts Corp. v. Super Ct. (1995) 29 Cal.App.4th 584,588.) “[T]he burden is on the party seeking the protective order to show good cause for whatever order is sought.” (Nativi v. Deutsche Bank National Trust Company (2014) 223 Cal.App.4th 261, 318.) Where a protective order is sought pursuant to CCP §2019.030 the moving party bears the burden to demonstrate that the specific discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive, or that the selected method of discovery (not discovery in general) is unduly burdensome or expensive. (Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal App.4th390, 402.)

Defendants ask the Court to order that “any further discovery in this case should be limited to evidence bearing on the question of whether the company [K&L Supply Company, Inc.] would have been worth more than $12.5 million in December 2015, but for Mr. Lee’s alleged termination of the prior Chinese/Korean product supplier in the fall of 2014 and but for Mr. Lee’s alleged wrongful diversion of funds from K&L prior to December 2015,” and to preemptively declare that any and all discovery that Plaintiff might propound (by any method) “into the conduct of the business by Mr. Lee after January 1, 2016” would be so inherently burdensome, expensive and/or intrusive as to outweigh any likelihood that it would lead to the discovery of admissible evidence. (See Defendants Notice of Motion at p.3:6-14.)

Defendants’ motion is DENIED for failure to show good cause for the requested order restricting any and all hypothetical future discovery (by any method) to the issue of K&L Supply Company, Inc.’s worth in December 2015. Even if it were assumed for purposes of argument that Defendants had established that events after January 2016 were not relevant to any issues in this case (and Defendants have not established this), relevance is not the test for determining if discovery is permissible. Discovery is allowed for any matters not privileged that are either relevant to the subject matter involved in the action or reasonably calculated to lead to the discovery of admissible evidence. (CCP §2017.010.) Courts liberally construe the relevance standard, and any doubts as to whether a requests seeks information within the scope of discovery are generally resolved in favor of discovery. (Colonial Life & Accident Ins. Co. v. Super. Ct (1982) 31 Cal.3d 785, 790.)

A claimed lack of relevance is not a basis for a protective order under CCP §2019.030’s plain language. As for CCP §2017.020(a), Defendants have failed to demonstrate that any hypothetical future discovery into events after January 2016 would be so burdensome, expensive or intrusive as to “clearly outweigh” the likelihood that it would uncover information that may lead to the discovery of admissible evidence.

The only reference to a current discovery method being employed by Plaintiffs (as opposed to Defendants’ characterizations of past discovery) in Defendants’ motion appears to refer to Plaintiff’s motion to compel production of a privilege log. (See Memo. of P&As at p.10:4-15 [“And now the plaintiff’s attorneys are seeking an order from this court compelling production of 1900 pages of attorney-client privileged communications, none of which could have any relevance to the only two issues presented in this case. . . . [T]he only issues in this case are whether the termination of Steve Kim and ChangWoo . . and replacing them with K&L Korea, depreciated the value of the plaintiff’s’ stock before she was bought out for $12.5 million in December 2015. And whether Mr. Lee’s alleged diversion of funds from K&L before Mrs. Lee was bought out depreciated the value of her stock and resulted in her receiving less for the stock than she would have otherwise.”])

Again Defendants have failed to demonstrate that Plaintiff’s discovery in general, or a request for privilege log in particular, is irrelevant to the issues in this case and, to the extent they imply that producing a privilege log would be an undue burden, that is not a valid objection. (See Riddell, Inc. v. Superior Court (2017) 14 Cal.App.5th 755, 772 [“[T]he only argument in Riddell’s petition against providing a privilege log of documents Riddell has already undertaken is that it would be burdensome. Riddell cites no authority for such an exception to the statutory requirement or producing a privilege log and we are aware of none. Moreover, given that Riddell has already performed the document review necessary to produce the documents it has produced and withhold the documents it has withheld, the additional burden of producing a log of the withheld documents should be relatively light.”])

As no monetary sanctions were requested by Plaintiff in the opposition to this motion, none are awarded.

2. Plaintiff’s Motion to Compel Privilege Log
Plaintiff’s motion to compel production of privilege log is GRANTED. As noted above, no opposition to this motion was filed on or before April 10, 2019 and, to the extent that Defendants’ motion for protective order could be reasonably interpreted as addressing this motion, Defendants have failed to articulate any reason why they should not be ordered to produce a privilege log providing “sufficient factual information” to evaluate the merits of any privilege claimed as a basis for withholding documents from production or redacting their contents. (See CCP §2031.240(c).)

“A privilege log must identify with particularity each document the responding party claims is protected from disclosure by a privilege and provide sufficient factual information for the propounding party and court to evaluate whether the claim has merit. [Citations.] The precise information required for an adequate privilege log will vary from case to case based on the privileges asserted and the underlying circumstances. In general, however, a privilege log typically should provide the identity and capacity of all individuals who authored, sent, or received each allegedly privileged document, the document’s date, a brief description of the document and its contents or subject matter sufficient to determine whether the privilege applies, and the precise privilege or protection asserted.” (Catalina Island Yacht Club v. Superior Court (2015) 242 Cal.App.4th 1116, 1130.)

The Court notes that Plaintiff’s counsel request over $15,000 in monetary sanctions, an amount representing the amount of attorneys’ fees incurred, including “attorneys’ fees associated with the Request for Documents.” (See declaration of Kevin Rooney in support of Plaintiff’s motion at ¶16.)

A court may only award reasonable expenses incurred as a result of the misuse of discovery. (CCP, § 2023.030.) Here, that would include costs and expenses in bringing the current motion to compel a privilege log, but not expenses “associated” with the initial production of documents, or incurred while engaging in the required meet and confer process. The Court also does not award sanctions for anticipated expenses. (See Tucker v. Pacific Bell Mobile Services (2010) 186 Cal.App.4th 1548, 1551 [the court awards sanctions only for expenses actually incurred, not for anticipated expenses].)

Accordingly Plaintiff’s request for monetary sanctions is DENIED without prejudice to Plaintiff’s counsel submitting a further declaration specifying the attorneys’ fees incurred in bringing this motion.