Case Name: Aemetis, Inc. v. Edeniq, Inc., et al.

Case No.: 16CV299385

I. Factual Background

This action concerns a failed merger and is filed by plaintiff Aemetis, Inc. (“Plaintiff”), a publicly traded biotechnology company, against defendants Edeniq, Inc. (“Edeniq”), a privately held biofuel company specializing in cellulosic ethanol technology, and its Chief Executive Officer, Brian D. Thome (“Thome”).

As alleged in the second amended complaint (“SAC”), in 2012, Plaintiff and Edeniq entered into a written agreement whereby the parties would undertake a joint feasibility study for the conversion of cellulosic and other biomass to ethanol. (SAC, ¶ 21.) Under this agreement, Edeniq was required to obtain the U.S. Environmental Protection Agency’s (“EPA”) approval of its technology. (Id. at ¶ 23.) However, it was consistently unable to obtain this approval. (Id. at ¶ 25.) Consequently, in 2016, Plaintiff and Edeniq executed a merger agreement during which time Thome requested Plaintiff’s assistance in obtaining EPA approval. (Id. at ¶ 28.) Plaintiff’s CEO then went to great lengths to expedite the EPA approval process, scheduling numerous meetings and utilizing his EPA connections to negotiate a final approval of Edeniq’s technology. (Id. at ¶ 32.) When the EPA approval was finally granted and Edeniq no longer needed Plaintiff’s resources, Thome and Edeniq terminated the merger. (Id. at ¶ 34.)

Currently before the Court is Plaintiff’s motion to compel additional deposition testimony and the production of documents requested in a deposition notice served on Daniel Weiss (“Weiss”). Weiss is a member of Edeniq’s board of directors as well as a principal and managing partner at Angeleno Group (“Angeleno”), one of Edeniq’s primary investors.

The record reflects that, around August 2017, Plaintiff served Weiss with a deposition notice that included eight requests for production of documents (“RPD”). (Bonnel-Rogers Decl., Exh. A.) Edeniq’s counsel coordinated with Weiss and Angeleno to obtain and produce 88 documents, and Weiss appeared for his deposition. (Berces Decl., ¶ 4.) Around October 2017, Plaintiff served Weiss with a notice of continued deposition that included the previous RPD along with four additional requests. (Bonnel-Rogers Decl., Exh. B.) Edeniq’s counsel coordinated again with Weiss and Angeleno to collect responsive documents and produced 202 documents before Weiss appeared for his second deposition. (Berces Decl., ¶ 5.) At no point did Weiss or Edeniq’s counsel object to any of the documents requested. (Bonnel-Rogers Decl., ¶ 5.)

At the second deposition, Plaintiff’s counsel questioned Weiss in detail regarding the method by which he searched for, collected and produced documents responsive to the deposition notice’s requests. (Id. at ¶ 6.) Weiss testified that he had not read the deposition notice but asked his staff at Angeleno to coordinate with Edeniq’s counsel to collect and produce all responsive documents. (Bonnel-Rogers Decl., ¶ 4; see also Plaintiff’s Sep. Stmt. at p. 7.)

The day after the deposition, Plaintiff’s counsel sent Edeniq’s counsel a meet and confer letter, claiming Weiss’s document production was “missing large categories” of responsive documents. (Bonnel-Rogers Decl., Exh. C.) She did not identify the specific RPD at issue but stated that, among other things, documents relating to Angeleno’s financing of Edeniq were missing. (Ibid.) She also asserted Weiss’s lack of knowledge regarding the documents requested and the process by which they were produced demonstrated he failed to diligently search for the documents. (Ibid.) In response, Edeniq’s counsel disputed the assertion the document search was inadequate and outlined in detail the process by which she worked with Angeleno’s chief operating officer and internet technology consultant to procure responsive documents. (Id., Exh. D.) It does not appear further meet and confer discussions occurred at this time.

Two months later, Plaintiff’s counsel sent Edeniq’s counsel an e-mail reiterating her belief Weiss failed to comply with his obligation to diligently search for the documents requested in the deposition notice. (Ford Decl., Exh. E.) She again did not specify the RPD at issue but stated Plaintiff would refrain from filing a motion to compel if Weiss provided supplemental document production along with a declaration stating he had personally searched for the documents sought in the deposition notice. (Ibid.) Edeniq’s counsel agreed to this request and, a month and a half later, provided a declaration by Weiss stating he had “personally reviewed each and every document request…[and had] produced all relevant documents within [his] possession, custody or control to [his] knowledge.” (Id., Exh. F, ¶¶ 8-9.) He also provided an additional text message that had not been previously produced to Plaintiff. (Id. at ¶ 5.)

However, Plaintiff’s counsel continued to insist the document production was incomplete. (Id., Exh. G.) Specifically, she asserted that RPD No. 9 requested all documents relating to Angeleno’s financial contribution and/or investment in Edeniq but no documents responsive to this request were produced. (Ibid.) In response, Edeniq’s counsel pointed out that 111 documents responsive to this request had previously been produced, identifying each document by bates number. (Ibid.) Plaintiff’s counsel then revised her position to state she “would expect there to be a lot more than 111 documents relating to the investment” but did not have time to further meet and confer as the deadline for filing a motion to compel was that day. (Ibid.) Plaintiff proceeded to file the present motion to compel.

After the motion was filed, the parties’ counsel continued to meet and confer regarding the sufficiency of Weiss’s document production. During these discussions, Plaintiff’s counsel raised an additional issue regarding the absence of internally created documents relative to Angeleno’s investment in Edeniq, which she expected to be in the production. (Berces Decl., Exh. 9.) In response, Edeniq’s counsel conferred with Weiss who indicated that Angeleno’s investment in Edeniq originated with its prior investment in Altra Biofuels, from which Edeniq spun off in February 2008. (Id., Exh. 9.) As this investment decision predated the merger agreement by nearly a decade, any related documents would have been created at a time prior to the date range within which Edeniq’s counsel searched for responsive documents. (Id. at ¶ 11; Exh. 10.)

In light of this new information, Edeniq’s counsel proposed conducting an additional review of the documents it obtained from Angeleno with a broadened date range to see if there were any documents that should have been produced in response to RPD No. 9 but were not. (Id., Exh. 10.) In response, Plaintiff’s counsel stated it was amenable to this proposal but clarified its motion to compel was not limited to RPD No. 9. (Id., Exh. 10.) Counsel for both parties continued to meet and confer regarding the methods by which Edeniq previously searched for and obtained documents responsive to all the RPD. (See Supp. Ford Decl., Exh. I.) At some point during these discussions, Edeniq’s counsel offered to run an additional search across a separate e-mail server that would likely not yield new documents but could help ensure all responsive documents had been produced. (Ibid.) She also requested the present motion be taken off calendar while the parties continued their meet and confer efforts but Plaintiff’s counsel refused to do so until further documents were produced. (Ibid.)

II. Motion to Compel Additional Testimony and Document Production

Plaintiff moves to compel a further deposition of Weiss for the limited purpose of inquiring about the document production. It also seeks the production of documents. Its motion is brought pursuant to Code of Civil Procedure section 2025.450 (“Section 2025.450”), which permits a party to move for an order compelling the production of documents for inspection if the party who was served with a deposition notice fails to produce the requested documents. (See Code Civ. Proc., § 2025.450, subd. (a).) Edeniq opposes the motion. Both parties request an award of sanctions.

At the outset, in light of the ongoing meet and confer discussions between the parties, it appears a ruling on Plaintiff’s motion to compel would be premature.

It is unclear at this juncture if Weiss actually failed to produce documents requested in the deposition notice. (See Code Civ. Proc., § 2025.450, subd. (a).) The record reflects and the parties do not appear to dispute that Weiss produced more than 200 documents in response to the RPD in the two deposition notices. (See Berces Decl., ¶¶ 4-5.) Subsequently, he also provided Plaintiff with a declaration attesting to the fact that, to his knowledge, he had produced all relevant documents within his possession, custody and control. (See Ford Decl., Exh. F.) Plaintiff’s motion to compel also does not appear to be predicated on anything other than its suspicion and belief the document production was incomplete. (See, e.g., Mtn. at p. 1:24-25 [“It is not possible that no responsive document would exist between a sophisticated investor and Edeniq.”]; see also Mtn. at p. 8:2-12 [“It is also suspected that Mr. Weiss has failed to produce complete sets of documents pertaining to the following [list of issues].”].)

With that said, based on the meet and confer discussions that occurred between the parties’ counsel after the motion was filed, it seems additional searches could result in the discovery of more responsive documents. Specifically, Edeniq’s counsel later learned from Weiss that Angeleno’s investment in Edeniq originated from its prior investment in Altra Biofuels, the company it spun off from in 2008, but documents in this timeframe may not have been captured in the original document search. (See Berces Decl., Exhs. 9, 10.) Thus, Edeniq’s counsel has proposed conducting an additional review to determine if more responsive documents exist. (Id., Exh. 10 at p. 3.) In response to other concerns expressed by Plaintiff’s counsel regarding the means by which the original search was conducted, Edeniq’s counsel has further offered to conduct an additional search across a separate e-mail server to determine if documents were missed in the prior production. (Supp. Ford Decl., Exh. I at p. 4.)

As these additional searches would seemingly have the potential to narrow or even resolve the issues raised in the present motion and Plaintiff’s counsel otherwise appears amenable to these proposals (see Id., Exh. I), the Court declines to rule on the merits of the motion at this time. The hearing on the motion will be CONTINUED to July 19, 2018 at 9:00 a.m. and the parties are ordered to further meet and confer regarding this matter. In the Court’s opinion, there is no reason the parties should not be able to resolve this discovery dispute. If the parties resolve this matter in full, they are directed to notify the Court prior to the hearing that the motion is taken off calendar. On the other hand, if the parties do not fully resolve the matter or only resolve it in part, their counsel shall file a joint declaration no later than June 28, 2018, describing their further meet and confer efforts and specifying what issues, if any, were successfully resolved. If Plaintiff continues to assert the document production is incomplete, it shall file a supplemental brief enumerating the specific RPD that are still at issue, explain why good cause exists for each individual request, and further state the factual basis for its belief the production in response to those particular requests is incomplete. Any supplemental brief must be filed no later than June 28, 2018 and any supplemental brief in response must be filed no later than July 5, 2018.