L.A.C.C. Inc. dba L.A. Computer Company v. Apple, Inc.		CASE NO. 111CV207467
DATE: 5 September 2014	TIME: 9:00	LINE NUMBER: 5

This matter will be heard by the Honorable Judge Socrates Peter Manoukian in Department 19 in the Old Courthouse, 2nd Floor, 161 North First Street, San Jose. Any party opposing the tentative ruling must call Department 19 at 408.808.6856 and the opposing party no later than 4:00 PM Thursday 4 September 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 5 September 2014, the motion of Defendant to

1)      Compel Further Production of Plaintiff’s Customer Invoices

2)      Compel Further Production of Documents for Requests for Production, Set One, Nos. 2, 3, 9-17, 19, and 21

3)      Compel Further Responses to Requests for Admissions, Set One, Nos. 29-32, 36, and 45-47

was argued and submitted.

Statement of Facts

Plaintiff claims it was wrongfully terminated as an Apple reseller in 2008.  Plaintiff alleges that Defendant’s employees told Plaintiff that Plaintiff could ignore certain sections of the written terms between Plaintiff and Defendant, including the prohibition on sale of Apple products outside the United States.  Plaintiff seeks to recover damages based on an alleged decline in sales and profits after Plaintiff’s termination.

Defendant alleges Plaintiff was terminated for violating the contract between Defendant and Plaintiff, which prohibited the sale of Apple products outside the United States.

Discovery Dispute

On 23 October 2012, the parties agreed to a stipulated protective order, which the Court entered on 14 January 2014.  Among other terms, the protective order stipulates that no party will withhold discovery material based on privacy.

On 6 June 2013, Defendant served Requests for Production, Set One, and Requests for Admissions, Set One.  On 8 July 2013, Plaintiff responded with objections to the requests.

On 18 November 2013, Plaintiff began producing documents, including redacted customer invoices.  Plaintiff served further responses to Defendant’s Request for Production of Documents on 17 December 2013, and further responses to Defendant’s Request for Admissions on 7 January 2014.

On 8 January 2014, Defendant served Form Interrogatories, Set Two on Plaintiff, at Plaintiff’s request.

Between 22 January 2014 and 14 March 2014, Defendant served Deposition Subpoenas for Production of Business Records on third parties.  In March 2014 Plaintiff and Defendant agreed that the third party responses would first be reviewed by Plaintiff.  Plaintiff would then provide Defendant with discoverable documents and a log of withheld documents based on Plaintiff’s objections.  Three of the third parties delivered documents to Plaintiff by June 2014, and the rest stated they had no relevant documents.  Plaintiff has not produced any third party documents yet.

In March 2014, the parties agreed to extend the deadline for motions to compel to 15 August, 2014.

On 11 August 2014, Defendant filed this Motion to Compel.  First, Defendant wishes to compel Plaintiff to provide customer invoices without redaction, in order to compare customer lists pre and post termination.  Plaintiff does not wish to provide the invoices without redaction, and alleges Defendant violated a similar protective order in the past.

Second, Defendant requests complete responses to Defendant’s Requests for Admissions, Set One, Nos. 29-32, 36, and 45-47.  Defendant asserts that Plaintiff mischaracterizes those Requests for Admissions by denying unrelated statements or failing to respond to the request as written.

Third, Defendant requests Plaintiff produce the third party discovery Plaintiff agreed to review and produce.  Plaintiff had issues receiving the documents, and believes it will take 120 days to process them all.

Analysis

1. Defendant’s Motion to Compel Further Production of Documents

Defendant motions to compel further production of documents from Plaintiff.  Defendant requests Plaintiff’s customer invoices without redaction, and further production of documents for Defendant’s Requests for Production, Set One, Nos. 2, 3, 9-17, 19, and 21.  The motion is code-compliant.

A party propounding a request for production of documents may move for an order compelling further responses if it deems that an objection in the response is without merit. (Code Civ. Proc., § 2031.310, subd. (a).) A motion for an order compelling further responses to the request for production of documents “shall set forth specific facts showing good cause justifying the discovery sought by the inspection demand.” (Code Civ. Proc., § 2031.310, subd. (b)(1).) In order to establish good cause, the burden is on the moving party to show relevance to the subject matter and specific facts justifying the discovery. (See Glenfed Develop. Corp. v. Superior Court (1997) 53 Cal.App.4th 1113, 1117.) Once a showing of good cause is made, the burden shifts to the opposing party to justify his or her objections. (See Kirkland v. Superior Court (2002) 95 Cal.App.4th 92, 98.)  The motion must also be accompanied by a separate statement setting forth each request, the response given, and the factual and legal reasons for compelling a further response. (Rule of Court 3.1345(a)-(c)).

1. Timeliness

Here, the parties agreed to extend the deadline for a motion to compel on all active discovery to 15 August, 2014.  Therefore, Defendant’s Motion to Compel Discovery filed 11 August 2014 is timely.

2. Meet And Confer

A code-compliant attempt to meet and confer is an explicit prerequisite in many situations including: extending or reopening discovery (compelling further responses to inspection of documents (Code Civ. Proc. § 2031.310(b)); compelling further responses to requests for admissions (Code Civ. Proc. § 2033.290(b)). Under California Code of Civil Procedure § 2016.040, “a meet and confer declaration in support of a motion shall state facts showing a reasonable and good faith attempt at an informal resolution of each issue presented by the motion.”  The failure to attempt to meet and confer where required is an explicitly named misuse of the discovery process. (See Code Civ. Pro. § 2023.010(i)).

Here, the parties have shown ample evidence of multiple meet and confer sessions.

3. Defendant Requests Customer Invoices Without Redaction

Plaintiff makes two arguments in support of redacting customer identities from the invoices.  First, Plaintiff asserts that the redactions protect trade secrets and confidential customer information.  Second, Plaintiff is reluctant to share the customer identities with Defendant because Plaintiff asserts Defendant previously violated a similar protective order.

Defendant first argues that customer information is relevant because Plaintiff must show that Defendant’s actions caused Plaintiff’s profits to decline.  Defendant wishes to compare the sources of pre and post termination profits, such as showing returning customers despite the termination.  Second, Defendant argues that the information is not a trade secret.  Third, Defendant argues that the protective order addresses the concerns Plaintiff has about disclosing customer information, even if the information is a trade secret.

1. Relevance

Code of Civil Procedure § 2017.010 allows “discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence. Discovery may relate to the claim or defense of the party seeking discovery or of any other party to the action.”

The dividing line between information relevant to the claims and defenses and that which is relevant to the subject matter cannot be defined with precision.  The determination of relevance depends on reason, logic and common sense. (Lipton v. Superior Court (1996) 48 Cal. App. 4th 1599, 1612.)

Defendant is correct that this customer information is relevant.  Defendant is entitled to attempt to show that customers did not change their buying behavior and continued to purchase from Plaintiff despite the termination of the agreement between the parties.

1. Protective Order

Defendant is correct that the stipulated protective order covers this issue.  It explicitly addresses and requires that any material that would be objected to under the right to privacy shall be discoverable.  Furthermore, the order only requires that one party reasonably believe such material to be protected in order to designate it confidential.  The order then prohibits the use of all discovery materials for any purpose other than this or related litigation.  Furthermore, withhold information based on the assumption that one party will violate a protective order defeats the purpose of such an order.

Plaintiff is also reminded attorneys are held to a code of ethics.  Business & Professions Code, § 6068(f) states: “It is the duty of an attorney to do all of the following: . . . To advance no fact prejudicial to the honor or reputation of a party or witness, unless required by the justice of the cause with which he or she is charged.”  “As an officer of the court the lawyer should support the authority of the court and the dignity of the trial courtroom by strict adherence to the rules of decorum and by manifesting an attitude of professional respect toward the judge, opposing counsel, witnesses and jurors.”  (Hawk v. Superior Court (1974) 42 Cal. App. 3d 108, 123.)

Additionally, “[w[henever a judge has personal knowledge that a lawyer has violated any provision of the Rules of Professional Conduct, the judge shall take appropriate corrective action.”  Canon of Judicial Ethics,3D(2).  Furthermore, the following line was recently added to the oath administered to new attorneys: “[a]s an officer of the court, I will strive to conduct myself at all times with dignity, courtesy and integrity.”  Assuming opposing counsel will violate a protective order is not appropriate, and accusing an attorney of violating such an order is a serious matter.

The parties are also reminded that a protective order is applied narrowly to only protect information entitled to confidential treatment under existing California law.  Blanket designation of materials as confidential without regard to whether pieces of information within each document are subject to protection is prohibited, and the attorneys-eyes provision only applies to trade secret information.  (See GT, Inc. v. Superior Court (1984) 151 Cal.App.3d 748, 750 [“where good cause is shown, a trial court may prevent a party from viewing financial information even where the financial information is pertinent to the merits of the lawsuit”].)

1. Trade Secret

Evidence Code § 1060 establishes a privilege for trade secret information. For good cause shown, the court may enter a protective order related to an inspection demand indicating “[t]hat a trade secret or other confidential research, development, or commercial information not be disclosed, or be disclosed only to specified persons or only in a specified way.” (Code of Civil Procedure, § 2031.060, subd. (b)(5).)

The party claiming the trade secret privilege has the burden of establishing its existence.  (Bridgestone/Foirestone, Inc. v. Sup. Ct. (1992) 7 Cal.App.4th 1384, 1393 (“Bridgestone”).) To carry this burden, the party seeking the protective order must provide an affidavit or declaration listing the declarant’s qualifications to give an opinion, identifying the alleged trade secret, identifying the documents disclosing the trade secret, and presenting evidence that the secret qualifies as a “trade secret.” (See Stadish v. Sup. Ct. (1999) 71 Cal.App.4th 1130, 1144-1145].)

If the existence of the trade secret is established, the party seeking discovery must then make a prima facie particularized showing that the information sought is relevant and necessary to the proof of a material element of one or more causes of action and that it is reasonable to conclude that the information is essential to a fair resolution of the lawsuit. (Bridgestone, supra, 7 Cal.App.4th at p. 1393.) The holder of the privilege must then demonstrate any claimed disadvantages of a protective order. (Id.)

To qualify as a trade secret, the information must satisfy two requirements. First, it must derive independent economic value from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use. (Civ. Code, § 3426.1, subd. (d)(1).) Second, the information must be the subject of efforts that are reasonable under the circumstances to maintain its secrecy. (Civ. Code, § 3426.1, subd. (d)(2).) Furthermore, a trade secret must provide a substantial business advantage (Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1521-22.).  The mere identities and locations of customers which could easily be identified as potential customers is not enough. (Id.)

Defendant is correct that this information has not been proven a trade secret.  Plaintiff has not provided evidence that the customer identifiable information qualifies as a trade secret.  Even if this information was a trade secret, the stipulated protective order allows and has a specific procedure for the discovery of trade secrets.

Therefore, for the forgoing reasons, Defendant’s Motion Compel Further Production of Plaintiff’s Customer Invoices, without redaction, is GRANTED.  Plaintiff shall provide code-compliant responses, without redaction of customer identifying information, to Defendant within 20 calendar days.

4. Defendant Requests Further Responses to Defendant’s Requests for Production, Set One, Nos. 2, 3, 9-17, 19, and 21

Defendant objects to Plaintiff narrowing the scope of Defendant’s discovery by indicating that Plaintiff will only produce documents that support Plaintiff’s claims.  Defendant is entitled to any documents that may impeach or undermine Plaintiff’s claims.

Plaintiff argues that asking Plaintiff to produce documents that may impeach or undermine Plaintiff’s claim calls for speculation and Plaintiff’s legal conclusion regarding those documents.  However, Defendant is entitled to all documents that are relevant to Plaintiff’s claims, even if those documents undermine or negate Plaintiff’s claims.  This does not require Plaintiff to make and share a legal conclusion as to whether the documents undermine Plaintiff’s claim, but only whether the documents are in some way relevant to, or could lead to admissible evidence.  Of course, if Plaintiff has already produced all such documents, then the point is moot.

Therefore, Defendant’s Motion to Compel Further Responses to Defendant’s Requests for Production, Set One, Nos. 2, 3, 9-17, 19, and 21 is GRANTED.  Plaintiff shall provide code-compliant responses to Defendant within 20 calendar days.

5. Defendant Requests Production of Third Party Discovery

Defendant motions to compel production of third party discovery.  However, parties have a written agreement governing the process for production of said discovery.  This is allowed under Code of Civil Procedure § 2016.030, which states “[u]nless the court orders otherwise, the parties may by written stipulation modify the procedures provided by this title for any method of discovery permitted under Section 2019.010.”

The agreement between the parties appears in Exhibit I, in the emails dated between 25 March 2014 at 6:36 PM and 31 March 2014 at 7:08 PM.  The agreement directs the third parties to submit their subpoena responses to Plaintiff within 21 days.  Plaintiff then has 14 days to review those response, and then provided those responses to Defendant with a privilege log and any necessary redactions and objections.

Plaintiff appears to have received all third party responses by the end of June 2014.  However, Plaintiff has stated that it will take approximately 120 days to process the third party documents.  The accountant produced 18 boxes of hard copy documents, which Plaintiff scanned.  Plaintiff later learned that mixed in with Plaintiff’s documents were a substantial number of documents from the accountant’s other clients.  Plaintiff offered to provide documents to Defendant on a rolling basis, as review was completed.  Defendant refused.

While the Court is not unsympathetic to Plaintiff’s plight, 120 days is not a reasonable time period to sort through documents, even if there are thousands of pages.  Furthermore, Plaintiff has had these documents at least since July 2014.  While providing documents on a rolling basis is quite reasonable, taking 120 days, 4 months, is not.  30 days should be more than sufficient.

Therefore, Defendant’s Motion to Compel Production of Third Party Discovery is GRANTED.  Plaintiff shall provide Defendant with responses according to the agreement between the two parties within 30 calendar days.

1. Defendant’s Motion to Compel Further Responses to Defendant’s Requests for Admission, Set One, Nos. 29-32, 36, and 45-47

Defendant Motions to Compel Further Responses to Defendant’s Requests for Admission, Set One, Nos. 29-32, 36, and 45-47.  The motion is code-compliant.

Where responses to Requests for Admissions have been timely filed but are deemed deficient by the requesting party (e.g., because of objections or evasive responses), that party may move for an order compelling a further response.  (Code of Civil Procedure, § 2033.290(a); see Wimberly v. Derby Cycle Corp. (1997) 56 Cal.App.4^th 618, 636.)

A response is deficient if it is not code compliant.  Under the Civil Discovery Act, a code-compliant response to Request for Admissions is stated in Code of Civil Procedure, § 2033.220 and should include: “(a) Each answer in a response to requests for admission shall be as complete and straightforward as the information reasonably available to the responding party permits.”

The motion must include a declaration stating facts showing a reasonable, good faith attempt to informally resolve the issues presented in the motion through a meet and confer declaration as per California Code of Civil Procedure 2016.040. (CCP § 2033.290(b).)  (See Clement v. Alegre (2009) 177 Cal.App.4th 1277: The law requires that counsel attempt to talk the matter over, compare their views, consult, and deliberate).)  It must also be accompanied by a separate statement setting forth each request, the response given, and the factual and legal reasons for compelling a further response. (Rule of Court 3.1345(c)).

Unless notice of this motion is given within 45 days of the service of the verified response, or any supplemental verified response, or any specific later date to which the requesting party and the responding party have agreed in writing, the requesting party waives any right to compel further response to the requests for admission.  Code of Civil Procedure, § 2033.290(c).

Absent a claim of privilege or attorney work product, the party who seeks to compel a response has met his burden of showing good cause simply by a fact-specific showing of relevance. Once good cause was shown, the burden shifts to the responding party to justify the objection.  The requesting party must take the initiative to obtain a judicial determination of the validity of any objection by moving to compel a further response.  The objecting party has the burden of justifying the objection.  (Coy v. Superior Court (1962) 58 Cal 2d 210, 220-221; Kirkland v. Superior Court (2002) 95 Cal. App. 4th 92, 98; Civil Procedure Before Trial (The Rutter Group 2001) Discovery, PP 8:1495 to 8:1495.10, pp. 8H-24 to 8H-26.)

A court cannot order further responses to a request for admission where there has been an unqualifiedly denial even if the facts involved are unquestionably true.  See Holguin v.  Superior Court (1972) 22 Cal App 3d 812, 820 (“[A] court cannot force a litigant to admit any particular effect if he is willing to risk a perjury prosecution or financial sanctions” by denying them.”)

1. Defendant’s Request For Admission, Set One, Nos. 29-30

Here, Defendant’s Request for Admissions Nos. 29-30 ask Plaintiff to admit that Plaintiff sent and signed a letter to Defendant on 28 August 2008, stating that Plaintiff “no longer will ship any Apple, Inc. product out of the United States, including ‘End of Life’ product.”  Plaintiff’s response was “This responding party admits that it sent a letter to Apple on August 28, 2008.”

This response could have multiple meanings.  The response could be an unqualified admission, admitting that a letter with that content was signed and sent on that date.  It could also be a hybrid response, admitting that a letter was signed and sent, but contesting the contents of that letter.  However, without a clear denial of the content of the letter, interpreting this as a hybrid response is not code compliant under Code of Civil Procedure, § 2033.220(a).  This Court is forced to assume that the responses to Defendant’s Request for Admission, Set One, Nos. 29-30, are unqualified admissions.  If Plaintiff wishes to make a hybrid response, Plaintiff should submit a more clearly worded further response.

Therefore, the Court shall deem Defendant’s Request for Admission, Set One, Nos. 29-30 as unqualified admissions, and Defendant’s Motion to Compel Further Answers to Defendant’s Request for Admission, Set One, Nos. 29-30, is DENIED.

2. Defendant’s Request For Admission, Set One, Nos. 31-32

Here, Defendant’s Request for Admissions Nos. 31-32 ask the Plaintiff to admit to a specific set of actions Plaintiff undertook: the shipment of Apple, Inc. products outside the United States before and after the 28 August letter was signed and sent.  Plaintiff’s response admits to the actions, but denies it serves as a valid basis for termination of the agreement between the parties.

The validity or invalidity of the termination is irrelevant to a Request for Admission, which is simply meant to narrow the field to facts actually in contention, not to present legal arguments as to the meaning of those facts.  Plaintiff has admitted to the actions Defendant requested Plaintiff admit.  Therefore, this Court will deem Defendant’s Request for Admission, Set One, Nos. 31-32 as unqualified admissions.

Therefore, the Court shall deem Defendant’s Request for Admission, Set One, Nos. 31-32 as unqualified admissions, and Defendant’s Motion to Compel Further Answers to Defendant’s Request for Admission, Set One, Nos. 31-32, is DENIED.

3. Defendant’s Request For Admission, Set One, No. 36

Here, Defendant’s Request for Admission No. 36 asks Plaintiff to speculate on a course of action that might have been taken.  Specifically, it asks whether or not Plaintiff would have entered into the 2008 Agreement even if the alleged misrepresentations were not made (for instance, if Plaintiff understood that Plaintiff could not ship Apple products outside the United States).

Plaintiff is correct that this request is irrelevant and speculative.  This request is based on facts Plaintiff alleges in their complaint not having occurred.  Therefore, this request is not relevant to the facts at hand.  Proving or disproving that misrepresentations were made is one thing.  However, this is a round-about way of asking if Plaintiff thought the 2008 Agreement was a fair deal, which is not at issue.  Plaintiff is quite correct in comparing this to the expression “If my grandmother had wheels, she would be a wagon.”  If Plaintiff had entered into the 2008 Agreement sans alleged misrepresentations, there would be no claims.

Therefore, Defendant’s Motion to Compel Further Responses to Defendant’s Requests for Admissions, Set One, No. 36 is DENIED.  He

4. Defendant’s Request For Admission, Set One, Nos. 45-46

Here, Defendant’s Request for Admissions Nos. 45-46 ask the Plaintiff to admit to specific actions.  Request No. 45 asks Plaintiff to admit that before and after signing the 2008 Agreement, Plaintiff sold products branded by a list of named companies.  Request No. 46 asks Plaintiff to admit that prior to signing the 2008 Agreement, Plaintiff sold products made by companies other than Apple, Inc.  These questions are relevant as to the calculation of Plaintiff’s damages.

Plaintiff’s response does not answer Defendant’s Request for Admissions Nos. 45-46.  Instead, Plaintiff admits that the 2008 Agreement permitted Plaintiff to sell a small amount of product made by other companies.  Defendant is requesting an admission of actual acts, not whether or not Plaintiff was allowed to commit those acts under the 2008 Agreement.  Furthermore, Request No. 46 only asks about acts prior to the 2008 Agreement, so a response citing what that agreement allows is not relevant.  Therefore, Plaintiff’s responses to Defendant’s Request for Admissions Nos. 45-46 are not code-compliant.

Parties are also reminded that copy-pasting text without careful proof-reading can be problematic.  In “Reasons to Compel Further Production” for Admission No. 46, Defendant appears to state that Request No. 46 seeks an admission to acts both before and after the 2008 Agreement.  However, as mentioned above, Request No. 46 only asks about acts prior to the agreement. (Plaintiff’s Separate Statement of Items in Dispute, Page 77, Lines 10-20).

Therefore, Defendant’s Motion to Compel Further Responses to Defendant’s Request for Admissions Nos. 45-46 is GRANTED. Plaintiff shall provide code-compliant responses to Defendant within 20 calendar days.

Order

Defendant’s Motion Compel Further Production of Plaintiff’s Customer Invoices, without redaction, is GRANTED.  Plaintiff shall provide code-compliant responses, without redaction of customer identifying information, to Defendant within 20 calendar days.

Defendant’s Motion to Compel Further Responses to Defendant’s Requests for Production, Set One, Nos. 2, 3, 9-17, 19, and 21 is GRANTED.  Plaintiff shall provide code-compliant responses to Defendant within 20 calendar days.

The Court shall deem Defendant’s Request for Admission, Set One, Nos. 29-30 as unqualified admissions, and Defendant’s Motion to Compel Further Answers to Defendant’s Request for Admission, Set One, Nos. 29-30, is DENIED.

The Court shall deem Defendant’s Request for Admission, Set One, Nos. 31-32 as unqualified admissions, and Defendant’s Motion to Compel Further Answers to Defendant’s Request for Admission, Set One, Nos. 31-32, is DENIED.

Defendant’s Motion to Compel Further Responses to Defendant’s Requests for Admissions, Set One, No. 36 is DENIED.

Defendant’s Motion to Compel Further Responses to Defendant’s Request for Admissions Nos. 45-46 is GRANTED. Plaintiff shall provide code-compliant responses to Defendant within 20 calendar days.

 

 

 

________________­­­____________ DATED:

_________________________­­­________________________ HON. SOCRATES PETER MANOUKIAN Judge of the Superior Court County of Santa Clara