Case Number: 19STCV14477 Hearing Date: February 10, 2020 Dept: 47

Adam Devone, et al. v. Morgan Stanley & Co., LLC, et al.

MOTION TO QUASH DEPOSITION SUBPOENA FOR PRODUCTION OF BUSINESS RECORDS TO G.W. SHERWOLD ASSOCIATES, INC.

MOVING PARTY: Plaintiffs Adam Devone, Mario Frank Voce, and Julia Voce, as co-trustees; and Adam Voce, as personal representative to Maurice Voce

RESPONDING PARTY(S): Defendants Morgan Stanley & Co., LLC and John R. Privitelli

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is an action for breach of fiduciary duty and financial elder abuse.

Plaintiffs move to quash a deposition subpoena for the production of business records from third party G.W. Sherwold Associates, Inc.

TENTATIVE RULING:

Plaintiffs’ motion to quash deposition subpoena for production of business records to G.W. Sherwold Associates, Inc. is DENIED AS MOOT as to Request Nos. 1 through 6 and 10 through 15.

The motion is GRANTED IN PART as to Request Nos. 7 and 8. The motion is GRANTED as to these requests as to any documents after the Voce Trusts were transferred to G.W. Sherwold to avoid capturing non-responsive, purely business communications and is otherwise DENIED.

The motion is GRANTED as to Request No. 9.

Plaintiffs’ request for sanctions is DENIED.

DISCUSSION:

Motion To Quash

Plaintiffs move to quash a subpoena for the production of documents that was directed to the custodian of records of G.W. Sherwold Associates, Inc., on the grounds that the subpoena seeks private financial information, information protected by attorney-client privilege and/or the work-product doctrine, and irrelevant information. They also argue that the required consumer notice was not properly given and that the subpoena is harassing.

If a subpoena requires the attendance of a witness or the production of books, documents, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by any person described in subdivision (b), or upon the court’s own motion after giving counsel notice and an opportunity to be heard, may make an order quashing the subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as the court shall declare, including protective orders. In addition, the court may make any other order as may be appropriate to protect the person from unreasonable or oppressive demands, including unreasonable violations of the right of privacy of the person.

(CCP § 1987.1(a).)

There is no meet and confer requirement set forth in CCP § 1987.1. However, there is a separate statement requirement:

(a) Separate statement required

Any motion involving the content of a discovery request or the responses to such a request must be accompanied by a separate statement. The motions that require a separate statement include a motion:

. . .

(5) To compel or to quash the production of documents or tangible things at a deposition . . . .

(CRC Rule 3.1345(a)(5) (bold emphasis added.)

The required separate statement must include the following information:

The text of the request, interrogatory, question, or inspection demand;

The text of each response, answer, or objection, and any further responses or answers.

A statement of the factual and legal reasons for compelling further responses, answers, or production as to each matter in dispute;

If necessary, the text of all definitions, instructions, and other matters required to understand each discovery request and the responses to it;

If the response to a particular discovery request is dependent on the response given to another discovery request . . . , the other request and the response to it must be set forth; and

If the pleadings, other documents in the file, or other items of discovery are relevant to the motion, the party relying on them must summarize each relevant document.

(CRC 3.1345(c) (bold emphasis added).)

Although Plaintiffs’ initial separate statement did not comply with these requirements, Plaintiffs have now filed an amended separate statement that does, mostly. It still does not set forth Defendant’s arguments, and therefore it is not “full and complete so that no person is required to review any other document” to resolve the motion. (CRC 3.1345(c).) Nevertheless, the Court will consider the arguments set forth in the amended separate statement and G.W. Sherwold’s separate statement in response to Defendant’s motion to compel, which incorporated Defendant’s arguments.

Of the 15 requests discussed in Plaintiffs’ amended separate statement, Plaintiffs indicate that Request Nos. 1 through 6 and 10 through 15 are now moot, given that G.W. Sherwold has now served code-compliant responses to those requests. Accordingly, the motion is DENIED AS MOOT as to Request Nos. 1 through 6 and 10 through 15.

That leaves Requests 7 through 9.

¿ Request No. 7 (“ANY DOCUMENTS, including but not limited to, ANY COMMUNICATION between YOU and ANY PERSON, RELATING TO ANY payment YOU made to Adam Devone.”): GRANTED IN PART.

Plaintiffs argue that this request seeks irrelevant, personal, and private financial records of Adam Devone and that Defendants failed to provide Plaintiffs with the required consumer notice.

Although Defendants lump the requests at issue (7 through 9) together, they appear to argue that this Request seeks documents reflecting commissions Devone was paid from the Voce Trusts. They argue that these documents are relevant to a key issue in this case: Plaintiffs’ and Maurice’s knowledge of an alleged harm in the form of excessive commissions, which is the foundation of Plaintiffs’ claims. Defendants also argue that they gave the required notice under CCP § 1985.6 by providing Plaintiffs’ counsel with a copy of the subpoena and a Notice to Consumer served on the only impacted third party, Stella Voce, under CCP § 1985.3.

Defendants have submitted evidence that they did serve the required consumer notice on Stella Voce and on Plaintiffs’ counsel. (Declaration of Kyle Jacob in support of Defendant’s Opposition, 2nd Exhibit labeled “Exhibit A.”) Thus, this does not appear to be a valid basis on which to object to this request.

As to relevance, Defendants have also shown that documents in this category may lead to the discovery of admissible evidence (though not, perhaps, unlimited in time, as discussed below). These documents, if limited to the relevant time period, would relate to the remuneration Devone received from the Voce Trusts, which Plaintiffs have put at issue, inter alia, by alleging that Plaintiffs suffered losses as a result of Defendants’ “excessive trading costs.” (1AC ¶ 12.)

Defendants have not shown, however, that these communications are relevant as to any and all time periods. Indeed, Defendants have apparently offered to limit the scope of the subpoena “by only seeking responsive communications up until the point that the Voce Trusts were transferred to G.W. Sherwold to avoid capturing non-responsive, purely business communications.” (Jacob Decl. ¶ 3.) Thus, to the extent that the motion to quash is denied as to this request, it will be limited in time as described.

As for Plaintiffs’ privacy objection, in ruling upon a privacy objection in the context of discovery, the party asserting a privacy right must establish a legally protected privacy interest. (Williams v. Superior Court (2017) 3 Cal.5th 531, 552.) The party asserting a privacy right must also establish an objectively reasonable expectation of privacy in the given circumstances. (Id.) Further, the party asserting a privacy right must establish a threatened intrusion that is serious. (Id.) The Court need not proceed to the fourth step of balancing competing interests if all three of the above are not satisfied. (Id. at 555.) If the Court reaches the fourth step, the Court must balance these competing considerations: The party seeking information may raise whatever legitimate and important countervailing interests disclosure serves. (Id. at 552.) The party seeking protection may identify feasible alternatives that serve the same interests or protective measures that would diminish the loss of privacy. (Id.) Courts may not require the party seeking discovery to demonstrate a “compelling need” simply because discovery of any facially private information is sought. (Id. at 556-557.)

Financial information is protected by an individual’s right of privacy under article I, section 1 of the California Constitution. (Hooser v. Superior Court (2000) 84 Cal.App.4th 997, 1003, overruled in part by Williams v. Superior Court (2017) 3 Cal.5th 531, 557 and n. 8.[1]) However, that protection is not absolute and must be balanced against the countervailing public interest in disclosure, such as the ascertainment of truth in connection with legal proceedings, obtaining just results in litigation, and facilitating the enforcement of judgments. (Hooser, supra, 84 Cal.App.4th at 1004.) “[I]f an intrusion on the right of privacy is deemed necessary under the circumstances of a particular case, any such intrusion should be the minimum intrusion necessary to achieve its objective.” (Lantz v. Superior Court (1994) 28 Cal.App.4th 1839, 1855, overruled in part by Williams v. Superior Court (2017) 3 Cal.5th 531, 557 and n. 8.)

Here, Plaintiffs have alleged injuries based on Defendants’ excessive commissions, as discussed above. A party may conduct discovery directed toward ascertaining the truth of allegations. “[T]he discovery statutes . . . are intended, among other things, to assist the parties and the trier of fact in ascertaining the truth; to encourage settlement by educating the parties as to the strengths of their claims and defenses; to expedite and facilitate preparation and trial; to prevent delay; and to safeguard against surprise.” (Beverly Hospital v. Superior Court (1993) 19 Cal. App. 4th 1289, 1294.)

Accordingly, the motion to quash is GRANTED IN PART as to Request No. 7. The motion is GRANTED as to any documents after the Voce Trusts were transferred to G.W. Sherwold and is otherwise DENIED.

¿ Request No. 8 (“ANY DOCUMENTS, including but not limited to, ANY COMMUNICATION between YOU and ANY PERSON, RELATING TO contracts RELATING TO Adam Devone that YOU entered.”): GRANTED IN PART.

As with the previous request, Plaintiffs argue that this request seeks irrelevant, personal, and private financial records of Adam Devone and that Defendants failed to provide Plaintiffs with the required consumer notice.

For the reasons discussed in connection with Request No. 7, the motion is GRANTED IN PART as to Request No. 8. The motion is GRANTED as to any documents after the Voce Trusts were transferred to G.W. Sherwold and is otherwise DENIED.

¿ Request No. 9 (“The complete employment file of Adam Devone, including all DOCUMENTS and COMMUNICATION relating to YOUR employment of Adam Devone.”): GRANTED.

Plaintiffs argue that this request seeks irrelevant, personal, and private financial and personnel records of Adam Devone and that Defendants failed to provide Plaintiffs with the required consumer notice.

Defendants have submitted evidence that they did serve the required consumer notice on Stella Voce and on Plaintiffs’ counsel. (Declaration of Kyle Jacob in support of Defendant’s Opposition, 2nd Exhibit labeled “Exhibit A.”) Thus, this does not appear to be a valid basis on which to object to this request.

As to relevance, Plaintiffs have shown that Devone’s employment records are not relevant to the subject matter of this litigation. Unlike the communications in the previous requests, which could lead to discovery of admissible evidence as to Plaintiffs’ specific allegations, Defendants have not shown any valid basis on which Devone’s employment records are relevant here. Accordingly, the motion is GRANTED as to Request No. 9.

In addition, even if these documents were arguably relevant, at least marginally, Plaintiffs’ privacy objections would outweigh the need for them.

In ruling on a privacy objection in the context of discovery, the party asserting a privacy right must establish a legally protected privacy interest. (Williams v. Superior Court (2017) 3 Cal.5th 531, 552.) The party asserting a privacy right must also establish an objectively reasonable expectation of privacy in the given circumstances. (Id.) Further, the party asserting a privacy right must establish a threatened intrusion that is serious. (Id.) The Court need not proceed to the fourth step of balancing competing interests if all three of the above are not satisfied. (Id. at 555.) If the Court reaches the fourth step, the Court must balance these competing considerations: The party seeking information may raise whatever legitimate and important countervailing interests disclosure serves. (Id. at 552.) The party seeking protection may identify feasible alternatives that serve the same interests or protective measures that would diminish the loss of privacy. (Id.) Courts may not require the party seeking discovery to demonstrate a “compelling need” simply because discovery of any facially private information is sought. (Id. at 556-557.)

Financial information is protected by an individual’s right of privacy under article I, section 1 of the California Constitution. (Hooser v. Superior Court (2000) 84 Cal.App.4th 997, 1003, overruled in part by Williams v. Superior Court (2017) 3 Cal.5th 531, 557 and n. 8.[2]) However, that protection is not absolute and must be balanced against the countervailing public interest in disclosure, such as the ascertainment of truth in connection with legal proceedings, obtaining just results in litigation, and facilitating the enforcement of judgments. (Hooser, supra, 84 Cal.App.4th at 1004.) “[I]f an intrusion on the right of privacy is deemed necessary under the circumstances of a particular case, any such intrusion should be the minimum intrusion necessary to achieve its objective.” (Lantz v. Superior Court (1994) 28 Cal.App.4th 1839, 1855, overruled in part by Williams v. Superior Court (2017) 3 Cal.5th 531, 557 and n. 8.)

In addition, the constitutional right of privacy protects documents and communications in one’s employment files. (Board of Trustees v. Superior Court of Santa Clara County (1981) 119 Cal. App. 3d 516, 528.) Moreover, although there may be an implicit partial waiver of the right of privacy in bringing suit, “the scope of such waiver must be narrowly, rather than expansively construed, so that plaintiffs will not be unduly deterred from instituting lawsuits by fear of exposure of private activities. . . . An implicit waiver of a party’s constitutional rights encompasses only discovery directly relevant to the plaintiff’s claim and essential to the fair resolution of the lawsuit.” (Davis v. Superior Court (1992) 7 Cal. App. 4th 1008, 1014 (italics in original, bold emphasis added).)

Here, Plaintiffs have established a legally protected, objectively reasonable expectation of privacy in Devone’s employment records, and as to this Request, Plaintiffs have established that the intrusion would be serious. Defendants, on the other hand, have not articulated any important countervailing interest that would be served by disclosure.

Accordingly, the motion to quash is GRANTED as to Request No. 9.

Sanctions

Plaintiffs’ request for sanctions is DENIED. Plaintiffs’ motion was only partially successful, and the Court finds that the motion was not opposed in bad faith or without substantial justification. (CCP § 1987.2(a).)

Moving party to give notice, unless waived.

IT IS SO ORDERED.

Dated: February 10, 2020 ___________________________________

Randolph M. Hammock

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.

[1]

To the extent prior cases require a party seeking discovery of private information to always establish a compelling interest or compelling need, without regard to the other considerations articulated in Hill v. National Collegiate Athletic Assn., supra, 7 Cal.4th 1, they are disapproved.

(Williams v. Superior Court (2017) 3 Cal.5th 531, 557.)

[2]

To the extent prior cases require a party seeking discovery of private information to always establish a compelling interest or compelling need, without regard to the other considerations articulated in Hill v. National Collegiate Athletic Assn., supra, 7 Cal.4th 1, they are disapproved.

(Williams v. Superior Court (2017) 3 Cal.5th 531, 557.)