Arthur J. Gallagher etc. v. Charles Griswold et al.		CASE NO. 112CV230466
DATE: 25 April 2014	TIME: 9:00	LINE NUMBER: 6

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 24 April 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 25 April 2014, the motion of defendant McSherry & Hudson and defendant and cross-complaintant Charles M. Griswold (“Defendants”), to compel further responses to Special Interrogatories, Set Two, Request for Production of Documents, Set Three, from plaintiff Arthur J. Gallagher & Co. Insurance Brokers of California, Inc., (“Plaintiff” or “AJG”) and for monetary sanctions was argued and submitted.

Plaintiffs filed formal opposition to the motion.

I.  Background

Plaintiff has brought this lawsuit against its former employees, defendants Charles M. Griswold, Vincent Scolari, and Felicia Gardner and their new employer, McSherry & Hudson.  Plaintiff alleges the individual defendants copied information that Plaintiff claims are trade secrets and shared them with competitors.

A trial date of 23 June 2014 is set for this matter.

A.  Discovery Dispute

On 30 January 2014, Defendants propounded Special Interrogatories (“SI”), Set Two, consisting of thirteen (13) specific interrogatories and Request for Production of Documents, Set Three.  On 10 March 2014, Plaintiffs responded to each of the Special Interrogatories with identical boilerplate objections.  Counsel for Defendants’ sent an email requesting Plaintiff to supplement its responses by March 14, 2014.[1]

On 14 March 2014, Defendants sent an eight page meet and confer letter, asking Plaintiff to serve supplemental responses by March 21, 2014.

The parties in this matter have already entered into an enforceable protective order, allowing parties responding to discovery to designate information as “confidential” or “attorney’s eyes only.”  See Declaration of Charles G. Smit ¶ 9.)

               B.  Definitions, Explanations, and Abbreviations

The discovery propounded by Defendants make reference to terms regularly used by the parties in the context of the insurance brokers who regularly deal with contractors and subcontractors.  The following terms have been explained to the Court in the following manner:  (See Declaration of Frank E. Cook, ¶4.)

(a) “Certificate of Insurance” is typically a one page document, provided by an entity like Plaintiff, at the request and direction of the account to contractors, subcontractors, property owners and lenders in order for the account to confirm for the business for which it is providing services that it is properly insured.  (See Declaration of Frank E. Cook, Exh. A.)

(b) “Insurance policy endorsements” are the endorsements, which typically indicate the scope and/or limits of coverage for the insured.  (See Declaration of Frank E. Cook, Exh. A.)

(c) “OCIP” is an acronym for Owner Controlled Insurance Program, which is either managed directly by the owner of a particular project or a third party Administrator on behalf of the owner.  An OCIP effectively allows the owner to oversee and control insurance costs for a particular project including the coverages for the contractors, subcontractors, and vendors who are providing services or materials for a construction project.

(d) “CCIP” is an acronym for Contractor Controlled Insurance Program, and serves the same function as an OCIP except that it is administrated by the General Contractor for a particular project rather than the project owner.

(e) “Template for insurance proposals” is a document used by AJG which contains allegedly confidential financial and underwriting information of the insured account as well as presentation formatting and proprietary language which was drafted, modified, and refined over the years by AJG.  The contents of, which, were purportedly drafted by AJG and its legal counsel and subsequently edited and revised by AJG over time.

II.  Discussion

As a general matter the use of a “boiler plate” objections lacking the specificity as required by statute may warrant sanctions against the party asserting the objections.  Korea Data Systems Co. v. Superior Court (1997) 51 Cal.App.4th 1513, 1516.

In addition, failing to respond in good faith to meet and confer letters is included as a misuse of the discovery process under Code of Civil Procedure § 2023.010(i).  Under Code of Civil Procedure § 2023.030(a), the Court may impose a monetary sanction against a party engaging in the misuse of the discovery process.  Counsel for Plaintiff admits to not having responded to opposing counsel’s meet and confer efforts, but submits this was not done in bad faith.  Counsel for Plaintiff was engaged in a non-related legal case in Ventura, California when meet and confer efforts were made.

A.  Defendants’ Motion to Compel Further Responses to Special Interrogatories, Set Two.

Pursuant to Code of Civil Procedure § 2030.300(a), the propounding party of interrogatories may move for an ordering compelling a further response if the propounding party deems that any of the following apply: (1)  an answer to a particular interrogatory is evasive or incomplete; (2) an exercise of the option to produce documents under Section 2030.230 is unwarranted or the required specification of those documents is inadequate; or (3) an objection to an interrogatory is without merit or too general.

Here, Defendants assert that the objections raised by Plaintiff are without merit and/or are too general.  Plaintiff responded to each Special Interrogatory in Set Two with the following:

Objection: This request is vague and ambiguous, burdensome and oppressive, overbroad in time and scope, calls for speculation, seeks proprietary and confidential information, violates privacy rights of others, causes undue burden and expense with respect to retrieval of electronically stored and/or dissemintated information, and seeks information which is neither relevant nor reasonably calculated to lead to the discovery of admissible evidence.

Counsel for Defendants sent emails requesting supplemental responses in an effort to resolve the discovery dispute informally.  (See Declaration of Charles G. Smith Exh. 6.)

B.  The Merits of Plaintiff’s Boiler Plate Objections.

Defendants’ Special Interrogatories is limited in scope from the period of December 1, 2010 to January 31, 2012.  The SIs seek information relating to Plaintiff’s “Accounts,” “Clients,” “Administrators,” or “Contractors” and requests names, identities, addresses, as well as the certificates of insurance.  After reviewing Defendants’ SIs, the Court overrules the following objections.  (Listed as subsections 1-4.)

1.  Objections as to Form.

Plaintiff has made objections as to form in asserting vague, ambiguous, and calls for speculation.  Objections raised to the form of the question are generally appropriate for the protection of a witness during oral examination.  Such objections are often not appropriate for written discovery, where a party has the advantage of deliberation and consultation with counsel.  West Pico Furniture Co. of Los Angeles v. Superior Court, 56 Cal.2d (1961) 407, 421.

2.  Objections Towards Interrogatories Seeking Proprietary and Confidential Information.

Plaintiff’s objections claiming the SIs seekproprietary and confidential information is without merit.  The parties have entered into an enforceable protective order, where the responding party may elect to label information as “CONFIDENTIAL” or “ATTORNEYS’ EYES ONLY.”  The protective order is sufficient to overrule this objection.

3.  Objections Based on Relevance.

The “relevance to the subject matter” and “reasonably calculated to lead to discovery of admissible evidence” standards are applied liberally with any doubt generally resolved in favor of discovery.  (Colonial Life & Acc. Ins. Co. v. Super. Ct. (1982) 31 Cal.3d 785, 790.)  For discovery purposes, information is “relevant to the subject matter” if it might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement thereof.  TGB Insurance Services Corp. v. Superior Court, (2002) 96 Cal.App.4th 443, 448.

Here, the documents being referenced including the Certificates of Insurance are specifically identified as some of the key documents that Plaintiff alleges Defendant has misappropriated.  For this reason the Court overrules, Plaintiff’s relevancy objections.

4.  Objections With Regard to Scope.

The Court overrules Plaintiff’s objections with regard to scope.  Defendants have limited the scope of their interrogatories to a time period of December 1, 2010 to January 31, 2012.

1. C.     The Burdens, Oppression, and Undue Burden and Expense of Defendants’ SIs.

The Court is currently considering the merits of Plaintiff’s burdensome and burden of expense with respect to retrieval of electronically stored information (“ESI”).   The Court notes Plaintiff’s claims of undue burden and expense.  Plaintiff claims that a “conservative estimate of the man-hours required to accomplish this task (identifying parties/producing OCIP’s and/or CCIP’s) is at least 100 hours and the yield in scope of documents would easily reach 200,000 to 300,000 pages.”  (See Declaration of Frank E. Cook, ¶ 6.)  Defendants contend that such estimates are an overexaggeration and suggest that there are other simpler means to respond to the discovery requests.  (See Defendants’ Reply Memorandum.)

Plaintiff has not provided an estimation of the costs involved with the retrieval of the discovery sought.  (See, discussion in subd. D.)

When an objection is made as to burden, the burden must be sustained by evidence showing the quantum of work required.  West Pico Furniture Company of Los Angeles v. Superior Court, (1961) 56 Cal.2d 407, 471.

When an objection is made as to oppression, there must be some showing either of an intent to create an unreasonable burden or that the ultimate effect of the burden is incommensurate with the result sought.  Id.

With regard to burden and oppression, the Court notes the following.  Based on Plaintiff’s representations for the interrogatories and RPDs referencing OCIPs and CCIPs alone, could result in 100 man hours of work.  Defendants dispute Plaintiff’s representations of man hours.

Also, the Court questions the benefits of such discovery for Defendants.  The relevance of such documents is without question.  Plaintiff asserts specific allegations that certain documents were misappropriated.  The discovery requested, address the type of documents, which Plaintiff alleges were misappropriated.  However, the deposition of Ronald G. Speno, tends to establish that Plaintiff is required to submit these same documents to competitors in the course of doing business.[2]

This fact goes to the very heart of Defendants’ defense, but does not appear to be a fact that is in dispute.  The parties do not disagree that these documents are regularly turned over to competitors during the course of business, but the parties do not agree whether these documents are considered trade secrets under the statute.

Defendants should take into consideration that “[s]ome burden is inherent in all demands for discovery. The objection of burden is valid only when that burden is demonstrated to result in injustice. Hence, the trial court is not empowered to sustain an objection in toto, when the same is predicated upon burden, unless such is the only method of rendering substantial justice.”  West Pico, at 418.

1. D.     Defendants Motion to Compel Further Responses to Requests for Production of Documents, Set Three.

Pursuant to Code of Civil Procedure § 2031.310(a), “[o]n receipt of a response to a demand for inspection, . . . the demanding party may move for an order compelling further response to the demand if the demanding party deems that any of the following apply: . . . (3)  An objection in the response is without merit or too general.”

As with Plaintiff’s responses to SI, Set Two, Plaintiff raised the same boiler-plate objections in response to Defendants’ RPD, Set Three.  Much like Plaintiff’s responses to Defendants’ SIs, Set Two, the Court is unimpressed with Plaintiff’s use of boiler-plate objections.

However, under Code of Civil Procedure 2031.310(d), “the production of electronically stored information, the party or affected person objecting to or opposing the production, . . . of electronically stored information on the basis that the information is from a source that is not reasonably accessible because of the undue burden or expense shall bear the burden of demonstrating that the information is from a source that is not reasonably accessible because of the undue burden or expense.  Thus Plaintiff bears the burden to show that the information is from a source not reasonably accessible.  Under those circumstances, Code of Civil Procedure § 2031(f), the Court may allocate the expense of the discovery.

Plaintiff has yet to meet their burden with a declaration stating the estimated costs involved with providing this discovery.  In addition, Plaintiff has not specifically stated the source of the ESI requested, including what format the information is stored as or if there is any need to convert the information into a readable format.

Defendants suggest that the information could be retrieved from a simple search found in the program of Microsoft Outlook or email software of similar nature.

If Plaintiff can meet its burden, the Court will consider granting Defendants’ motion, but with Defendants bearing the expense.  Toshiba America Electronic Components Inc. v. Superior Court, (2004) 124 Cal.App. 4th 762, 772.

1. E.      Monetary Sanctions.

Defendants make a request for monetary sanctions under Code of Civil Procedure §§ 2030.300 and 2031.310.  The Court finds that Plaintiff has acted with substantial justification.  Thus no monetary sanctions will be imposed.

Accordingly, Defendants’ request for monetary sanctions is DENIED.

III.  Conclusion.

The parties are to appear before the Court.  Plaintiff is to establish for the Court’s benefit the costs that would be associated with the production of the ESI requested by Defendants.  Plaintiff should also clarify for the Court the format, which the ESI is currently held and whether there would be any costs associated in translating such documents into a readable form.

Defendants are to clarify into what format they wish the ESI to be converted.  (eg. PDF or Word.)

Defendants are to clarify as to what disputed question of fact would the propounded discovery resolve.  Both parties would likely benefit from more meet and confer efforts to resolve these issues.

Currently, the Court is considering granting Defendants’ motions to compel further responses, but requiring Defendants to bear the costs.

Defendants’ requests for monetary sanctions is DENIED.