| Rosario Nativi et al. v. Deutsche Bank National Trust Co. | CASE NO. 109CV158254 | |
| DATE: 11 September 2014 | TIME: 9:00 | LINE NUMBER: 3 |
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 Wednesday 10 September 2014. Please specify the issue to be contested when calling the Court and counsel.
On 11 September 2014, the motion of defendants Deutsche Bank National Trust Company as Trustee for American Home Mortgage Assets Trust 2007-5 Mortgage-Backed, Pass-Through Certificates, Series 2007-5 (“Bank”), and Homeward Residential Inc. f.k.a. American Home Mortgage Servicing, Inc. (“AHMSI”) (collectively, “Defendants”) for a protective order prohibiting depositions and the production of documents and for monetary sanctions was argued and submitted. Plaintiffs Rosario Nativi (“Nativi”) and Jose Perez (“Perez”) (collectively, “Plaintiffs”) filed a formal opposition to the motion.
Also on 11 September 2014, the motion of AHMSI for a protective order prohibiting Plaintiffs from disclosing and or disseminating documents produced in discovery and for monetary sanctions was argued and submitted. Plaintiffs filed a formal opposition to the motion.
All parties are reminded that all papers must comply with California Rules of Court (“CRC”), rule 3.1110(f).[1]
I. Statement of Facts
This is a wrongful eviction action brought by Nativi and her son, Perez. In the second amended complaint (“SAC”), Plaintiffs allege the following: Beginning on June 1, 2007, Plaintiffs rented an apartment on property (“the Property”) owned by Daisy Cazzali. Their most recent lease commenced on 1 June 2009, for a one-year term. In or around August 2009, unbeknownst to Plaintiffs, Bank acquired the Property in a foreclosure proceeding and contracted with AHMSI to service the property. AHMSI hired a local real estate company, XL Advisors, Inc. dba Advisors Real Estate Group (“AREG”), to assist in preparing the Property for sale. In early August 2009, a real estate agent with AREG notified Plaintiffs of the foreclosure. Plaintiffs informed the agent that they were tenants, and subsequently contacted AREG to reiterate the same. At no time did Plaintiffs receive formal notice from Bank of the foreclosure proceeding or their rights as tenants under the federal Protecting Tenants in Foreclosure Act (“PTFA”).
At the end of September 2009, Perez returned home from a trip to find all of Plaintiffs’ belongings thrown out of their apartment into the backyard. Police were called to the property, and Ms. Diaz, a real estate agent with AREG, instructed the police to exclude Perez from the property. Perez contacted Ms. Diaz the next day and requested that possession of the property be restored, but she did not accommodate the request.
Next, at the end of October 2009, Nativi returned home from a trip to discover she and her son had been barred from the Property and that all of their belongings had been thrown into the backyard and/or destroyed, including priceless family mementos and photographs. When Nativi tried to gain entry, the police were notified and instructed by Ms. Diaz to exclude Nativi from the property.
On November 2, 2009, Nativi’s representative contacted Ms. Diaz and requested that possession of the premises be restored to her. Ms. Diaz refused and referred the matter to Bank, but Bank refused to acknowledge Plaintiffs’ tenancy. As a result of being locked out and having their belongings destroyed, Plaintiffs became homeless.
The SAC states the following causes of action: (1) wrongful eviction, (2) breach of the covenant of quiet enjoyment (express), (3) breach of the implied covenant of quiet enjoyment (implied), (4) illegal entry by landlord (Civ. Code §1954), (5) illegal lockout (Civ. Code § 789.3), (6) unfair business practices in violation of the unfair competition law (“UCL”) (§17200), (7) conversion, and (8) declaratory and injunctive relief.
II. Discovery Dispute
Plaintiffs served their first notice of deposition (“First AHMSI Notice”) on AHMSI on 13 April 2011, seeking the deposition testimony of AHMSI’s person most qualified (“PMQ”) of certain matters and the production of documents, including Request for Production of Documents (“RPD”) Nos. 4-6, which seek the production of AHMSI’s policies and procedures regarding its management and sale of post-foreclosure bank-owned property, also known as “real estate owned” (“REO”) properties.
On 19 April 2011, Defendants filed a motion for summary judgment.
Subsequently, AHMSI objected to the discovery sought by the First AHMSI Notice, and Plaintiffs moved to compel compliance with the First AHMSI Notice and other outstanding discovery requests on 29 June 2011.
On 22 July 2011, Judge Monahan entered an order (“Order Re: Motion to Compel”) granting in part Plaintiffs’ motion to compel compliance with the First AHMSI Notice. The motion was granted to the extent Plaintiff sought the deposition testimony of AHMSI’s PMQ and the production of documents responsive to RPD Nos. 4-6. (Order Re: Motion to Compel, at p. 2:11-17.)
On 16 August 2011, AHMSI caused its PMQ of matters described in the First AHMSI Notice to appear for a deposition and produced documents responsive to RPD Nos. 4-6.
Thereafter, AHMSI moved for a protective order to preclude Plaintiffs from disseminating the documents produced in response to RPD Nos. 4-6, requiring Plaintiffs to lodge those documents or any papers containing information from those documents under seal in any court proceeding, and requiring Plaintiffs to destroy all of those documents at the conclusion of this litigation.
On 15 November 2011, Judge Monahan entered an order granting summary judgment for Defendants (“Order Re: Summary Judgment”). Judge Zepeda entered an order granting AHMSI’s motion for a protective order (“Order Re: Protective Order””) the same day. Tenants appealed both rulings.
In a published decision, the Court of Appeal reversed the Order Re: Summary Judgment and the Order Re: Protective Order on 23 January 2014, finding that triable issues of material fact remained in this action, and AHMSI had not shown good cause for a protective order. (Nativi v. Deutsche Bank National Trust Co. (2014) 223 Cal.App.4th 261 [“Nativi”].) A remittitur was filed on 5 May 2014.
On 23 May 2014, Plaintiffs served a second deposition notice on AHMSI (“Second AHMSI Notice”) and a deposition notice on Bank (“Bank’s Notice”) (collectively, “2014 Notices”) seeking testimony persons most qualified (“PMQ”) of the policies and procedures with respect to REO properties that were in effect from 1 January 2011 to the present, and the production of documents concerning the same policies and procedures.
On 4 June 2014, Defendants served written objections to the 2014 Notices, and their counsel advised Plaintiffs’ counsel that their PMQs would not appear for depositions.
Plaintiffs’ counsel initiated meet and confer negotiations with Defendants’ counsel, and the parties’ counsel met and conferred several times, but were unable to informally resolve their dispute as to whether Plaintiffs may obtain the discovery sought by the 2014 Notices.
AHMSI seeks a protective order that is, in effect, the same as the protective order it sought in 2011. (See McKenna decl., at Ex. A [proposed protective order].) According to AHMSI, the Court of Appeal did not prohibit it “from re-filing the motion for [sic] protective order,” and this “motion remains necessary, being as Plaintiffs have not withdrawn their intent to publicly disseminate” documents responsive to RPD Nos. 4-6 in the First AHMSI Notice.
On 1 August 2014, Defendants filed this motion for a protective order to prohibit the depositions of their PMQs of matters described in the 2014 Notices and to preclude the production of documents sought by the 2014 Notices.
The same day, AHMSI filed its motion for a protective order to prevent the dissemination of documents it previously produced.
Plaintiffs filed their oppositions to both motions on 28 August 2014.
On 4 September 2014, the parties filed their respective replies to the two motions.
III. Discussion
A. Defendants’ Motion for a Protective Order Prohibiting Depositions and the Production of Documents
Defendants move for a protective order prohibiting the depositions of their PMQs of matters described in the 2014 Notices and precluding the production of documents responsive to the 2014 Notices. They also request an award of monetary sanctions against Plaintiffs and their counsel.
Plaintiffs oppose the motion, and request an award of monetary sanctions against Defendants.
B. Defendants’ Motion for a Protective Order
The Bank’s Notice seeks the appearance and deposition testimony of Bank’s PMQ of matters concerning Bank’s policies and procedures regarding tenants in foreclosed homes in California from 1 January 2011 to the present, Bank’s hiring, contracting, or supervision of any servicing agent, including AHMSI and its successors in interest, from 1 January 2011 to the present, and any planned changes or additions to Bank’s policies and/or procedures in response to the Court of Appeal’s decision in Nativi.
The Bank’s Notice also seeks the production of documents created on or after 1 January 2011, pertaining to the customary process or actions taken when Bank acquires an occupied residential property through foreclosure in California and with regard to the marketing, management, or sale of such properties, the customary hiring, contracting, and supervision of any real estate agent, REO specialist or other agent or broker, manager, servicing agent, or service provider with respect to occupied residential properties in California acquired through foreclosure, and planned changes or additions to Bank’s policies and procedures for servicing REO properties for lenders in California in response to the Court of Appeal’s decision in Nativi.
The Second AHMSI Notice seeks the appearance and deposition testimony of AHMSI’s PMQ of AHMSI’s and/or its successor in interests’ policies or procedures regarding servicing REO properties for lenders and evicting and/or ejecting tenants of REO properties in California under written servicing agreements from 1 January 2011 to the present, and planned changes or additions to such policies and procedures in response to the Court of Appeal’s decision in Nativi.
The Second AHMSI Notice also seeks the production of documents created on or after 1 January 2011, pertaining to policies and procedures with respect to the servicing, marketing, sale, ejectment/eviction of tenants, and third-party management of REO properties on behalf of the owners under servicing agreements in California, and planned changes or additions to those policies and procedures.
Defendants asserted written objections to each matter for the PMQs’ testimony and to each RPD set forth in the 2014 Notices on the grounds of relevance, vagueness and ambiguity, overbreadth, undue burden, and confidential proprietary information protected by the right to privacy.
Defendants’ PMQs did not appear for their respective depositions to provide testimony and produce documents.
Defendants argue that a protective order precluding their PMQs from appearing for depositions and providing the testimony sought by the 2014 Notices, and precluding the production of documents responsive to the 2014 Notices, is necessary because the discovery sought is not relevant, compliance with the 2014 Notices would impose an undue burden on them, and the discovery sought encompasses their “sensitive” commercial and trade secret information.
Plaintiffs contend that the discovery sought is relevant to this action, and Defendants have failed to demonstrate that the discovery sought is confidential or proprietary information or a trade secret, thus warranting a protective order.
1. Legal Standard
“Before, during, or after a deposition, any party, any deponent, or any other affected natural person or organization may promptly move for a protective order.” (CCP, § 2025.420, subd. (a); cf. CCP, § 2031.060, subd. (a).) “The court, for good cause shown, may make any order that justice requires to protect any party, deponent, or other natural person or organization from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense.” (CCP, § 2025.420, subd. (b); cf. CCP, § 2031.060, subd. (b).) CCP sections 2025.420, subdivision (b) and 2031.060, subdivision (b), provide nonexclusive lists of permissible directions that may be included in a protective order, and such as the direction that “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.” (CCP, §§ 2025.420, subd. (b)(13) & 2031.060, subd. (b)(5).) A protective order may also provide that certain matters no be inquired into at a deposition, or that the scope of the examination be limited to certain matters. (CCP, § 2025.420, subd. (b)(9-10).) The issuance and formulation of protective orders are largely discretionary. (Raymond Handling Concepts Corp. v. Super. Ct. (1995) 39 Cal.App.4th 584, 588, citing Coalition Against Police Abuse v. Super. Ct. (1985) 170 Cal.App.3d 888.) The moving party bears the burden to show good cause for whatever order is sought. (Fairmont Ins. Co. v. Super. Ct. (2000) Cal.4th 245, 255.)
2. Analysis
Defendants assert that they have good cause for a protective order prohibiting the depositions of their PMQs and preventing them from producing documents responsive to the 2014 Notices because the discovery sought is not relevant to this case, it would be unduly burdensome and oppressive to compel them to provide the discovery sought, and the discovery sought encompasses their privileged trade secrets.
i. Relevance
Discovery is allowed for any matters that are not privileged and relevant to the subject matter, and a matter is relevant if it appears reasonably calculated to lead to the discovery of admissible evidence. (CCP §2017.010.) The “relevant to the subject matter” and “reasonably calculated to lead to the discovery of admissible evidence” standards are applied liberally in favor of discovery. (Colonial Life & Accident Ins. Co. v. Superior Court (1982) 31 Cal.3d 785, 790.) For discovery purposes, information is relevant if it might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement. (Gonzalez v. Super. Ct. (1995) 33 Cal.App.4th 1539, 1546.) “Admissibility is not the test and information, unless privileged, is discoverable if it might reasonably lead to admissible evidence.” (Id., citing Davies v. Superior Court (1984) 36 Cal.3d 291, 301.) Therefore, fishing expeditions are permissible. (Id., citing Greyhound Corp. v. Superior Court (1961) 56 Cal.2d 355, 385 [although fishing may be improper or abused in some cases, that “is not of itself an indictment of the fishing expedition per se”].)
Defendants first contend that the discovery sought is not part of the “relevant timeframe” because the Court of Appeal’s decision limited the scope of permissible discovery in this case to Defendants’ actions and policies in effect while Plaintiffs lived at the Property.
The Court of Appeal’s decision does not limit the issues in this litigation or the scope of discovery. Defendants moved for summary judgment—as opposed to summary adjudication—and therefore, the Court of Appeal’s decision does not dispose of any of Plaintiffs’ claims. (Compare CCP, § 437c, subd. (c) [“summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and the moving party is entitled to judgment as a matter of law”], with id., at subd. (f)(1) [“summary adjudication shall be granted only if it complete disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty”].)
Moreover, the Court of Appeal did not consider whether discovery should be allowed for information regarding Defendants’ policies and procedures from after 1 January 2011. The Court of Appeal’s reversal was unqualified, i.e. without direction to the trial court. (Nativi, supra, at p. 319.) “Such a reversal remands the case for a new trial and places the parties in the same position as if the case had never been tried.” (Weightman v. Hadley (1956) 138 Cal.App.2d 831, 836.) Thus, the parties may present evidence not initially submitted in connection with the motion for summary judgment. (See id.) Also, an unqualified reversal reopens discovery. (Fairmont Ins. Co. v. Super.Ct. (Stendell) (2000) 22 C4th 245, 247.)
Thus, Defendants’ assertion that the Court of Appeal’s decision somehow affects the scope of discovery in this matter lacks merit.
Next, Defendants contend that the discovery sought is not relevant because Plaintiffs allegedly resided at the Property in 2009, and therefore, information about their policies and procedures from after that date is of no consequence.
The Court of Appeal found that the conduct of third parties could be attributable to Bank, thereby demonstrating that Bank acted in bad faith and should be liable for constructively evicting Plaintiffs. (Nativi, supra, at pp. 311-313.) The Nativi decision therefore suggests that evidence regarding Defendants’ policies and procedures with respect to REO properties is relevant to the issue of whether Defendants acted in bad faith and should be liable for constructively evicting Plaintiffs.
Furthermore, Plaintiffs seek punitive damages against Defendants. The recidivism of Defendants’ conduct is relevant to the reprehensibility of their conduct and may be considered in determining a punitive damages award. (See Johnson v. Ford Motor Co. (2005) 35 Cal.4th 1191, 1213.) “To the extent the evidence shows the defendant had a practice of engaging in, and profiting from, wrongful conduct similar to that which injured the plaintiff, such evidence may be considered on the question of how large a punitive damages award due process permits.” (Id.) The discovery sought by the 2014 Notices would likely show whether Defendants continued to use the same (or similar) policies and procedures that were in effect when Plaintiffs were evicted, and if so, for how long those policies remained in effect. This information is reasonably calculated to lead to the discovery of admissible evidence concerning the scale of Defendants’ allegedly wrongful conduct.
Defendants cite Civil Code section 3295 and assert that Plaintiffs cannot obtain discovery in support of their punitive damages claim at this juncture. However, that provision only limits the pretrial discovery of a defendant’s profits and financial condition (Civ. Code, § 3295), and Plaintiffs do not seek to discover information about Defendants’ financial condition or profits. Rather, the discovery sought by the 2014 Notices concerns the reprehensibility of Defendants’ alleged conduct.
Therefore, the discovery sought by the 2014 Notices is relevant to the issue of punitive damages.
Lastly, Defendants assert that the discovery sought by the 2014 Notices is not relevant because Bank sold the Property in 2011, and AHMSI was acquired by another company in 2012. However, the fact that Bank does not own the Property or AHMSI was acquired by another company is of no consequence, since the discovery sought is still reasonably calculated to lead to the discovery of admissible evidence pertaining to Plaintiffs’ punitive damages claim. Defendants’ assertion is therefore not well-taken.
In sum, the discovery sought by the 2014 Notices is relevant to this lawsuit, and Defendants have not shown good cause for a protective order on the ground that the discovery sought is not relevant.
ii. Undue Burden & Oppression
Defendants argue that to comply with the 2014 Notices would impose an undue burden on them.
A party claiming that requested discovery is unduly burdensome must make a particularized showing of facts demonstrating hardship. (West Pico Furniture Co. v. Super. Ct. (1961) 56 Cal.2d 407, 417-418.) Defendants have not made a particularized showing or otherwise explained how producing the documents responsive to the 2014 Notices and causing their PMQs to appear for a deposition would be unduly burdensome and oppressive.
Thus, Defendants have not demonstrated good cause for a protective order based on undue burden or oppression.
iii. Confidential Proprietary Information & Trade Secrets
Finally, Defendants assert that the discovery sought by the 2014 Notices is confidential proprietary information and/or trade secrets.
Refusing to provide discovery on the ground that it is “confidential” is generally improper, since the objecting party could simply seek a protective order limiting the use and dissemination of confidential information. (Columbia Broadcasting System, Inc. v. Superior Court (1968) 263 Cal.App.2d 12, 23.) Thus, Defendants’ assertion that the discovery sought is “confidential proprietary information” is insufficient to demonstrate good cause for a protective order that would prohibit the depositions of their PMQs and the production of documents.
To demonstrate good cause for a protective order on the ground that the discovery sought is a trade secret, Defendants have the burden of establishing the existence of a protected trade secret. (Bridgestone/Firestone, Inc. v. Superior Court (1992) 7 Cal.App.4th 1384, 1393 [a party relying on the qualified privilege afforded to trade secrets who refuses to respond to a discovery request must establish the existence of a trade secret and his ownership thereof].) A “trade secret” is information, including a formula, pattern, compilation, program, device, method, technique, or process, that (1) derives independent economic value, actual or potential, from not being generally known to the public or to others who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. (Civ. Code, § 3426.1, subd. (d).)
Defendants do not suggest that the discovery sought includes information that derives any actual or potential economic value. Accordingly, they have not met their burden to show that the discovery sought includes any trade secret information.
Therefore, Defendants’ assertion that the discovery sought should be prohibited on the ground that it encompasses confidential proprietary information and trade secrets is unavailing.
3. Conclusion
In sum, Defendants have failed to demonstrate good cause for a protective order that would preclude them from causing their PMQs to appear for a deposition and provide testimony on the matters described in the 2014 Notices and producing documents responsive to the 2014 Notices.
Accordingly, Defendants’ motion for a protective order is DENIED.[2]
C. Requests for Monetary Sanctions
1. Defendants’ Request
Defendants make a code-compliant request for an award of monetary sanctions against Plaintiffs and their counsel in the amount of $11,275.
The court shall impose a monetary sanction against any part, person, or attorney who unsuccessfully makes or opposes a motion for a protective order, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust. (CCP, § 2025.420, subd. (h).)
Since Plaintiffs’ opposition to the motion was successful, an award of monetary sanctions against them and their counsel is not warranted.
Defendants’ request for an award of monetary sanctions is accordingly DENIED.
2. Plaintiffs’ Request
Plaintiffs make a code-compliant request for an award of monetary sanctions against Defendants in the amount of $7,500 for (1) bringing this motion without substantial justification, and (2) failing to meet and confer in good faith before bringing this motion.
With respect to Plaintiffs’ first basis for seeking an award of monetary sanctions, Defendants’ motion was not successful, and they did not act with substantial justification. (See CCP, § 2025.420, subd. (h), supra.) The Court finds no other circumstances exist that would make the imposition of a sanction unjust. Thus, an award of monetary sanctions against Defendants for bringing this motion is warranted.
In addition, the court shall impose a monetary sanction ordering that any party or attorney who fails to confer as required pay the reasonable expenses, including attorney’s fees, incurred by anyone as a result of that conduct. (CCP, § 2023.020.) A motion for a protective order must be accompanied by a meet and confer declaration under CCP section 2016.040, and that provision requires a meet and confer declaration to state facts showing a reasonable and good faith attempt at an information resolution of each issue presented by the motion. (CCP, §§ 2016.040, 2025.420, subd. (a), & 2031.060, subd. (a).)
Defendants’ counsel submits a declaration stating that he and Plaintiffs’ counsel conducted exhaustive meet and confer efforts, but were unable to informally resolve the dispute as to whether Plaintiffs could obtain the discovery sought. (McKenna decl., at ¶ 8.) He also attaches copies of the correspondence exchanged between the parties and describes the issues orally discussed. (Id.) The Court finds that Defendants’ counsel’s declaration indicates that he made a reasonable and good faith attempt to informally resolve each issue presented by the motion. The Court will therefore not impose monetary sanctions against Defendants for failing to meet and confer.
Courts will only award monetary sanctions in the amount of “reasonable expenses . . . incurred by anyone as a result of [the sanctionable] conduct.” (CCP, § 2023.030, subd. (a).)
Plaintiffs’ counsel declares that she spent 12.75 hours preparing the opposing papers at a rate of $585 per hour. (Spelman decl., at ¶¶ 3 & 5.) She further declares that before being served with this motion, she “spent 1.5 hours conducting research related to Plaintiffs’ anticipated motion to compel” Defendants to comply with the 2014 Notices, and she “used the results of that research in opposition” to Defendants’ motion for a protective order. (Id., at ¶ 4.)
The time that Plaintiffs’ counsel spent preparing a separate motion to compel is not time that was “incurred” within the meaning of CCP section 2023.030, subdivision (a). (See Tucker v. Pacific Bell Mobile Services (2010) 186 Cal.App.4th 1548, 1551 [anticipated expenses are not “incurred” and therefore not recoverable as part of an award of monetary sanctions].) In addition, the Court finds the amount of time counsel spent preparing the opposing papers and counsel’s hourly rate to be unreasonable. The Court finds 5 hours to be a reasonable amount of time to have spent preparing the motion, and $300 per hour to be a reasonable rate for counsel to charge for this straightforward discovery matter.
Thus, Plaintiffs’ request for an award of monetary sanctions against Defendants is GRANTED IN PART in the amount of $1,500.
IV. AHMSI’s Motion for a Protective Order Regarding the Dissemination and Use of Documents
AHMSI moves for a protective order prohibiting Plaintiffs from using or disseminating documents that it produced in response to RPD Nos. 4-6 in the First AHMSI Notice.[3]
Plaintiffs oppose the motion and request an award of monetary sanctions against AHMSI and its counsel.
A. Motion for a Protective Order
AHMSI bring this motion for a protective order that would require the following:
- All documents labeled as “Confidential Documents”[4] may only be used by Plaintiffs solely for the purpose of this case and shall not be disseminated or disclosed publicly.
- Except with the prior written consent of AHMSI or upon the prior court order, the documents labeled as “Confidential documents” shall not be disclosed to any person other than: (a) the parties’ counsel, (b) employees of the parties’ counsel, (c) officers or employees of any party to the extent disclosure is deemed necessary by the parties’ counsel, and (d) the court.
- Any person receiving documents designated as “Confidential Documents” shall not reveal or disclose such information to or with any person who is not entitled to receive such information.
- If Plaintiffs seek to incorporate any document that AHMSI labeled as “Confidential Documents,” or any information derived from such documents, into any “future pleading” shall submit the documents and/or information to the court under seal and thereafter such records shall be opened only by order of the court pursuant to CCP sections 2025.420, subdivision (b) and 2031.060, subdivisions (a) and (b)(5-6), and CRC, rule 2.551(b).
- All provisions of the protective order restricting communication or use of the documents deemed “Confidential Documents” shall continue to be binding after the conclusion of the litigation, unless otherwise agreed or ordered. Upon conclusion of the litigation, a party in possession of Confidential Documents shall destroy such documents within 30 days and immediately thereafter certify in writing that the documents have been destroyed.
- The inadvertent disclosure or production of documents labeled “Confidential Documents” shall not constitute or be deemed a waiver of any protecting covering the inadvertently disclosed information provided that the disclosing party notify the recipient promptly after discovery of the inadvertent disclosure.
(McKenna decl. at ¶ 3 & Ex. 1 [proposed protective order].)
AHMSI argues that such a protective order is warranted because (1) the documents it produced in response to RPD Nos. 4-6 consist of confidential, proprietary, and trade secret commercial information in which Defendants have a protectable interest, and (2) Defendants will be harmed unless the Court issues the proposed protective order.
Plaintiffs oppose the motion on the ground that it was not promptly filed, it is essentially an improper motion for reconsideration of the Order Re: Protective Order and the Court of Appeal’s reversal of that order, and AHMSI has not met its burden to demonstrate good cause for the order sought.
1. Legal Standard
“Before, during, or after a deposition, any party, any deponent, or any other affected natural person or organization may promptly move for a protective order.” (CCP, § 2025.420, subd. (a); cf. CCP, § 2031.060, subd. (a).) “The court, for good cause shown, may make any order that justice requires to protect any party, deponent, or other natural person or organization from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense.” (CCP, § 2025.420, subd. (b); cf. CCP, § 2031.060, subd. (b).) CCP sections 2025.420, subdivision (b) and 2031.060, subdivision (b), provide nonexclusive lists of permissible directions that may be included in a protective order, and such as the direction that “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.” (CCP, §§ 2025.420, subd. (b)(13) & 2031.060, subd. (b)(5).) The issuance and formulation of protective orders are largely discretionary. (Raymond Handling Concepts Corp. v. Super. Ct. (1995) 39 Cal.App.4th 584, 588, citing Coalition Against Police Abuse v. Super. Ct. (1985) 170 Cal.App.3d 888.) The moving party bears the burden to show good cause for whatever order is sought. (Fairmont Ins. Co. v. Super. Ct. (2000) Cal.4th 245, 255.)
2. Analysis
i. Promptness
CCP section 2025.420, subdivision (b) provides that a motion for a protective order must be filed “promptly,” but provides no specific statutory deadline by which such a motion must be filed. The determination of whether a motion for a protective order has been promptly filed is a fact specific inquiry entrusted to the discretion of the Court. (Nativi, supra, at p. 316.)
Plaintiffs argue that the Court should deny AHMSI’s motion because AHMSI did not “promptly” move for a protective order after the Court of Appeal filed its remittitur on 5 May 2014.
Given that the motion was filed about six weeks following the parties’ first case status review conference after the Court of Appeal’s decision became final, the motion is sufficiently “prompt.”
Accordingly, Plaintiffs’ assertion that the merits motion should not be heard because AHMSI did not promptly file it is unavailing.
ii. Order Re: Protective Order and the Court of Appeal’s Reversal
Plaintiffs maintain that AHMSI’s instant motion for a protective order is improper and should be summarily denied because it is an improper motion for reconsideration.
By the instant motion, AHMSI seeks essentially the same protective order as it sought in its first motion for a protective order filed in 2011. However, the instant proposed protective order is significantly shorter and does not impose quite as many restrictions on the use of the subject documents.
Judge Zepeda originally granted AHMSI’s first motion for a protective order, and did not provide any analysis in support of her ruling. (Order Re: Protective Order.) The Court of Appeal reversed that decision, finding (a) “AHMSI made no factual showing that (1) the documents that it had been ordered to produce contained confidential commercial information or information in which it had any protectable interest or (2) dissemination of the documents to the public would result in injury,” (b) the proposed order “went far beyond restricting disclosure of those documents in advance of trial,” and (c) AHMSI did not show good cause “for issuance of the sweeping protective order” and “its issuance was an abuse of discretion.” (Nativi, supra, at pp. 318-319.)
“Litigants are not free to continually reinvent their position on legal issues that have been resolved against them by an appellate court.” (Yu v. Signet Bank/Virginia (2002) 103 Cal.App.4th 298, 312.) “Where an appellate court states in its opinion a principle or rule of law necessary to its decision, that principle or rule becomes the law of the case.” (Santa Clarita Organization for Planning the Environment v. County of Los Angeles (2007) 157 Cal.App.4th 149, 156, citing Clemente v. State of California (1985) 40 Cal.3d 202, 211.) “The law of the case must be adhered to both in the lower court and upon subsequent appeal.” (Id.) “This is true even if the court that issued the opinion becomes convinced in a subsequent consideration that the former opinion is erroneous.” (Id.)
While the Court is bound by the principles or rules of law in the Court of Appeal’s decision, the Court may nevertheless consider the factual evidence submitted by AHMSI in support of this motion that AHMSI apparently did not present in connection with the first motion.
Therefore, the Court will not summarily deny the instant motion for a protective order simply because AHMSI previously sought a similar order in a prior motion.
iii. Good Cause
To demonstrate good cause for the protective order sought, “assuming California trial courts may in appropriate circumstances issue an umbrella protective order that allows the parties to designate as confidential documents produced in discovery (but see Stadish v. Superior Court (1999)71 Cal App.4th 1130, 1144 [trial court impermissibly ‘delegated to the parties the responsibility of determining which items of discovery contained trade secrets’]) and specifies the permissible use of those designated documents, the declaration submitted in support” must not be conclusory and must contain specific facts showing (1) that the documents at issue contain confidential commercial information or information in which the moving party has a protectable interest and (2) that dissemination of the documents to the public would result in injury. (Nativi, supra, at p. 318, citing People v. Superior Court (1967) 248 Cal.App.2d 276, 281-282, In re Roman Catholic Archbishop of Portland in Oregon (9th Cir. 2011) 661 F.3d 417, 424, and Fed. Rules of Court, rule 26(c).) The moving party must also show good cause for the exact terms of the protective order which it seeks. (Id., at pp. 318-319.)
AHMSI argues that the discovery produced in response to RPD Nos. 4-6 in the First AHMSI Notice are confidential and proprietary business information or trade secrets. It proffers a declaration by Crystal Kearse (“Kearse”), a senior loan analyst in the law department of Ocwen Financial Corporation (“Ocwen”),[5] in support of its position.
Kearse’s declaration is insufficient for AHMSI to meet their initial burden to show that the discovery at issue is subject to a protectable interest because his description of the supposedly confidential and proprietary information is vague and conclusory. She merely describes the subject documents as consisting of a “business plan, processes and techniques for marketing and selling REO,” and asserts that they are “proprietary” and “confidential” because Ocwen and/or AHMSI has designated them as such. (Kearse decl. at ¶¶ 11-12.) These statements are “conclusionary and lacking in helpful specifics” and therefore insufficient for AHMSI to satisfy the good cause requirement. (See In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 305 [finding that declarations “directed at satisfying the statutory definition of a trade secret as undisclosed information possessing economic value” did not satisfy the good cause requirement for a protective order]; see also Nativi, supra, at p. 318 [“the declaration submitted in support of AHMSI’s motion for such a protective order was entirely conclusory and lacked any factual specificity”].)
Turning to the issue of harm that will result from dissemination, Kearse declares that since Ocwen continues to use the information in the documents at issue to serve and manage some properties, the “disclosure of this information without protection exposes proprietary data to the competitors of Ocwen and [AHMSI], placing them at a competitive disadvantage which, in turn, will harm their relationships with subsequent owners, servicers, and property preservation agents, among others.” (Kearse decl. at ¶ 11.) “Public disclosure of this information will enable competitors and other market participants to use such information to their advantage against Ocwen and [AHMSI] in their course-of-dealing and performance of their existing REO contracts, and negotiations of future REO contracts involving the sale and marketing of REO properties under competitor servicing agreements.” (Id.)
Kearse does not specifically identify which competitors will supposedly misuse the subject documents or how those documents would be misused. Therefore, AHMSI’s supporting facts are too conclusory and lack sufficient factual information to satisfy the good cause requirement. (See In re Providian Credit Card Cases, supra, at p. 305.) Accordingly, AHMSI has not proffered sufficient evidence to demonstrate that dissemination of the subject documents would cause it harm.
Kearse’s declaration is also insufficient for AHMSI to meet its initial burden to show that the broad protective order that it seeks is necessary to protect its interests. The Court of Appeal previously held that “[g]ood cause was not shown for issuance of the sweeping protective order” because the protective order required Plaintiffs to file records under seal and “went far beyond restricting disclosure of those documents in advance of trial.” (Nativi, supra, at p. 318.)
Here, AHMSI still fails to present the specific facts necessary to demonstrate good cause for the proposed protective order, which is essentially the same as the protective order in effect when the Court of Appeal held that the trial court abused its discretion by issuing that order. For example, the proposed protective order would require all documents submitted to the court to be filed under seal. In order for the Court to impose such a requirement, AHMSI must present sufficient factual evidence for the court to expressly find that there exists an overriding interest that overcomes the right of the public to access the record, the overriding interest supports sealing the record, a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed, the proposed sealing is narrowly tailored, and no less restrictive means exist to achieve the overriding interest. (See CRC, rules 2.550(d) [requirements for sealed records] & 2.551(b)(1) [the moving party must submit a supporting declaration containing facts sufficient to justify the sealing].)
AHMSI does not proffer any evidence or argument indicating that such a sealing is narrowly tailored and that no less restrictive means exists to achieve the overriding interest. Therefore, even if AHMSI had demonstrated that the discovery sought was encompassed by a protectable interest and the disclosure of those documents would cause it harm, AHMSI nevertheless has not shown good cause for the broad “umbrella” protections contained in the proposed protective order.
In sum, AHMSI has not presented the requisite specific factual information to demonstrate good cause for the issuance of the proposed protective order. AHMSI’s motion for a protective order is therefore without merit.
3. Conclusion
In light of the foregoing, AHMSI’s motion for a protective order preventing Plaintiffs from using or disseminating certain documents is DENIED.
B. Requests for Monetary Sanctions
1. AHMSI’s Request
AHMSI makes a code-compliant request for an award of monetary sanctions against Plaintiffs and their counsel in the amount of $16,175.
Since Plaintiffs’ opposition to the motion was successful, an award of monetary sanctions against them is not warranted. (See CCP, § 2025.420, subd. (h), supra.)
Accordingly, AHMSI’s request for an award of monetary sanctions is DENIED.
2. Plaintiffs’ Request
Plaintiffs make a code-compliant request an award of monetary sanctions against AHMSI and its counsel in the amount of $8,000.
Here, AHMSI was unsuccessful in its motion. (See CCP, § 2025.420, subd. (h), supra.) Since the Court of Appeal previously held that it had not made the requisite good cause showing in support of its first motion for a protective order, and since the instant motion is essentially the same as the first motion, AHMSI did not act with substantial justification. The Court finds no other circumstances that make the imposition of the sanction unjust. Therefore, an award of monetary sanctions against AHMSI and its counsel is warranted.
Courts will only award monetary sanctions in the amount of reasonable expenses incurred as a result of the sanctionable conduct. (CCP, § 2023.030, subd. (a).)
Plaintiffs’ counsel declares to have spent 22.5 hours preparing the opposition at a rate of $750 per hour. The number of hours spent preparing the opposition and counsel’s hourly rate are unreasonable. The Court finds 5 hours to be a reasonable amount of time to have spent preparing the motion, and $300 per hour to be a reasonable rate for counsel to charge for this straightforward discovery matter, especially since it is largely duplicative of AHMSI’s first motion for a protective order.
Thus, Plaintiffs’ request for an award of monetary sanctions against AHMSI and its counsel is GRANTED IN PART in the amount of $1,500.
V. Conclusion and Order
Defendants’ motion for a protective order precluding them from causing their PMQs to appear for depositions and provide deposition testimony of matters described in the 2014 Notices and from producing documents responsive to the 2014 Notices is DENIED.
Accordingly, within 20 days of the date of the filing of this Order, or on another mutually agreeable date, at a time mutually agreed upon by the parties:
- Bank shall cause its PMQ(s) of matters described in the Bank Notice to appear for a deposition and provide testimony, and produce all documents responsive to the Bank Notice, and
- AHMSI shall cause its PMQ(s) of matters described in the Second AHMSI Notice to appear for a deposition and provide testimony, and produce all documents responsive to the Second AHMSI Notice.
Defendants’ request for an award of monetary sanctions against Plaintiffs and their counsel in connection with the motion for a protective order regarding the 2014 Notices is DENIED.
Plaintiffs’ request for an award of monetary sanctions against Defendants in connection with the motion for a protective order regarding the 2014 Notices is GRANTED IN PART in the amount of $1,500. Accordingly, within 20 days of the date of the filing of this Order, Defendants shall pay $1,500 to Plaintiffs’ counsel.
AHMSI’s motion for a protective order regarding the use and dissemination of documents previously produced is DENIED.
AHMSI’s request for an award of monetary sanctions against Plaintiffs and their counsel in connection with its motion for a protective order regarding the use and dissemination of documents previously produced is DENIED.
Plaintiffs’ request for an award of monetary sanctions against AHMSI and its counsel in connection with AHMSI’s motion for a protective order regarding the use and dissemination of documents previously produced in discovery is GRANTED IN PART in the amount of $1,500. Accordingly, within 20 days of the date of the filing of this Order, AHMSI and its counsel shall pay $1,500 to Plaintiffs’ counsel.
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DATED: |
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HON. SOCRATES PETER MANOUKIAN Judge of the Superior Court County of Santa Clara |
[1] “Each exhibit must be separated by a hard 8½ x 11 sheet with hard paper or plastic tabs extending below the bottom of the page, bearing the exhibit designation. An index to exhibits must be provided. Pages from a single deposition and associated exhibits must be designated as a single exhibit.”
[2]Plaintiffs request that, in the event Defendants’ motion is denied, the Court order Defendants to provide the discovery sought by the 2014 Notices. “If the motion for a protective order is denied in whole or in part, the court may order that the deponent provide or permit the discovery against which protection was sought on those terms and conditions that are just.” (CCP, § 2025.420, subd. (g).)
Given that the discovery sought by the 2014 Notices is relevant to this litigation, compliance with the 2014 Notices would not be unduly burdensome or oppressive to Defendants, and the discovery sought is not protected from discovery by Defendants’ assertion that it encompasses confidential proprietary information and trade secrets, the Court will order Defendants to provide the discovery sought by the 2014 Notices.
[3] With their reply papers, Defendants assert evidentiary objections to Plaintiffs’ counsel’s declaration. There is no authority holding that the Court must rule on an evidentiary objection made in connection with a discovery motion. Thus, the Court declines to rule on Defendants’ evidentiary objections.
[4] The proposed protective order states that the term “Confidential Documents” is defined in the moving papers, but the moving papers do not define that term. Since many of the arguments in the moving papers specifically refer to documents responsive to RPD Nos. 4-6, the Court presumes that the proposed protective order is limited to those documents that are responsive to RPD Nos. 4-6 which AHMSI considers to contain confidential and/or proprietary information.
[5] Ocwen acquired AHMSI on or about 27 December 2012, and since then, AHMSI’s servicing duties have been transferred to Ocwen, and Ocwen applies AHMSI’s policies and procedures with respect to the serving and management of REO properties to loans and REO properties that were previously serviced by AHMSI. (Kearse decl. at ¶¶ 7-8.)
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