Case Name: Christopher K. Harris, et al v. D’Railed Beauty Trolley LLC, et al.
Case No.: 2015-1-CV-286792

I. Background and Discovery Dispute

This is an action for judicial dissolution of a mobile salon business brought by Christopher K. Harris and Emily J. Harris as trustees for the Harris Revocable Trust (collectively, “Plaintiffs”) against defendants D’Railed Beauty Trolley LLC (“DBT”), Velia E. Dance (“Dance”), and Monina N. Wright (“Wright”) (collectively, “Defendants”).

DBT is a mobile salon business formed by Plaintiffs, Dance, and Wright. Plaintiffs contributed nearly all of the capital to launch DBT while Dance and Wright were responsible for the day-to-day operations of DBT and contributing clients and the goodwill generated by their past professional experience in the beauty industry. Plaintiffs allege Dance and Wright mismanaged the business and failed to contribute clients and generate revenue for DBT as promised because they devoted their time to developing their own independent beauty businesses at the expense of DBT. Based on these allegations, Plaintiffs filed the complaint alleging causes of action against Defendants for dissolution and accounting and against Dance and Wright for breach of fiduciary duty.

In the operative second amended cross-complaint, Defendants allege Plaintiffs, at some unspecified point in time, took control of DBT’s website, appointment software, and domain name. Defendants claim this interfered with their ability to provide mobile salon services and to fulfill their contractual obligations to provide such services. On this basis, Defendants assert causes of action against Plaintiffs for: (1) conversion; (2) intentional interference with contractual relations; (3) intentional interference with prospective economic advantage; (4) breach of contract; (5) breach of the implied covenant of good faith and fair dealing; (6) judicial dissociation; and (7) declaratory relief.

Plaintiffs served Wright with special interrogatories, set one (“SI”) on March 14, 2016. (Faucette Decl., ¶ 2.) The interrogatories pertain to Plaintiffs’ claim that Wright devoted time to her personal business, Moderne Beauty, at the expense of DBT. Specifically, SI Nos. 6-8 asked Wright to describe the work she performed for Moderne Beauty in 2015, state the number of hours she worked on behalf of Moderne Beauty for each month in 2015, and state the income she earned from Moderne Beauty in 2015. (Faucette Decl., Exh. 1.)

Wright served objection-only responses to SI Nos. 6-8 on April 15, 2016. (Faucette Decl., Exh. 1.) Wright interposed identical objections to each request on the grounds of relevance and privacy. (Faucette Decl., Exh. 1.)

After receiving Wright’s objection-only responses, Plaintiffs’ counsel sent a detailed meet and confer letter to Wright’s counsel specifically addressing the reasons why Wright’s objections to these interrogatories purportedly lacked merit. (Faucette Decl., Exh. 2.) Wright’s counsel’s response to that letter did not directly address the points raised by Plaintiffs’ counsel. (Faucette Decl., Exh. 3.) Rather, Wright’s counsel simply insisted the information sought by SI Nos. 6-8 was irrelevant before launching into a lengthy diatribe discussing Wright’s defense to Plaintiffs’ claim for breach of fiduciary duty. (Faucette Decl., Exh. 3.) Plaintiffs’ counsel sent follow-up correspondence and attempted to elicit a response addressing the substance of his arguments as to why Wright’s objections lacked merit, but was unsuccessful. (Faucette Decl. ¶¶ 5-8, Exh. 4.) The parties were unable to informally resolve their discovery dispute.

Currently before the Court is Plaintiffs’ motion to compel further responses to SI Nos. 6-8 and an accompanying request for monetary sanctions. Plaintiffs filed their motion on June 6, 2016. That same day, Wright served Plaintiffs with supplemental responses to SI Nos. 6 and 7. (Fox Decl., Exh. 3.) Wright opposes Plaintiffs’ motion and requests an award of monetary sanctions in opposition.

II. Motion to Compel Further Responses

Plaintiffs argue they are entitled to further responses to SI Nos. 6-8 because Wright’s objections lack merit.

A. Mootness re: SI Nos. 6-7

First, Wright argues the Court should deny as moot Plaintiffs’ motion as to SI Nos. 6-7 because she served supplemental responses to these interrogatories.

When a party serves supplemental responses after a motion to compel further responses has been filed, a court has substantial discretion in deciding how to rule in light of the particular circumstances presented. (Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4th 390, 408.) For example, a court has discretion to deny the motion as moot, rule on the merits of the motion, or “deny the motion to compel responses as essentially unnecessary, in whole or in part, and just impose sanctions.” (Id. at 409.)

Here, Wright served supplemental responses containing substantive answers to these two interrogatories after Plaintiffs’ motion was filed and Plaintiffs concede their motion is moot as to these requests. The motion to compel further responses to SI Nos. 6-7 will thus be deemed moot.

B. Merits of Objections re: SI No. 8

1. Relevance Objection

Plaintiffs argue Wright’s relevance objection to SI No. 8, which asks her to identify the income she derived from Modern Beauty for each month in 2015, lacks merit because this request seeks information relevant to their breach of fiduciary duty claim and defense to Defendants’ allegations in their cross-complaint that they harmed and diminished the value of DBT themselves.

As an initial matter, Wright misrepresents the parties’ relative burdens on the motion, stating Plaintiffs must make a threshold showing of relevance for the discovery sought. There is no threshold showing of good cause required for a motion to compel further responses to interrogatories. (Compare Code Civ. Proc., § 2031.310, subd. (b)(1) [motion to compel further response to inspection demand.]) The propounding party may move for an order compelling further responses to interrogatories if it deems an objection interposed thereto is too general or lacks merit. (Code Civ. Proc, § 2030.300, subd. (a)(3).) The responding party bears the burden of justifying its objections to the interrogatories when opposing a motion to compel further responses. (Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 255, citing Coy v. Superior Court (1962) 58 Cal.2d 210, 220-21.) Accordingly, as the responding party, it is Wright’s burden to justify her objections to SI Nos. 6-8.

Wright argues in support of her relevance objection that SI No. 8 seeks information beyond the scope of discovery as set forth in Code of Civil Procedure section 2017.010.

Discovery is allowed for any matters not privileged that are either relevant to the subject matter involved in the action or reasonably calculated to lead to the discovery of admissible evidence. (Code Civ. Proc., § 2017.010.) Courts liberally construe section 2017.010, and any doubts as to whether a request seeks information within the scope of discovery are generally resolved in favor of discovery. (Colonial Life & Accident Ins. Co. v. Superior Court. (1982) 31 Cal.3d 785, 790.) Information is relevant to the subject matter if it might reasonably assist a party in evaluating its case, preparing for trial, or facilitating settlement. (Gonzalez v. Superior Court (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.” (Ibid., original italics.)

Wright argues SI No. 8 seeks irrelevant information because she was not prohibited from operating Moderne Beauty pursuant to the operating agreement for DBT. By making this argument, it appears Wright intends to demonstrate the quality and quantity of work she performed for Moderne Beauty and income she generated thereby are not relevant because she did not violate the operating agreement by performing this work. In other words, she is essentially trying to present a defense going to the merits of the case. In so doing, she has effectively bolstered Plaintiffs’ claim that SI No. 8 seeks relevant information by showing her work for Moderne Beauty is material to claims and defenses in this case. Moreover, information responsive to these interrogatories appears likely to show whether Wright’s work for Moderne Beauty negatively impacted DBT or whether, as she claims, the quality or quantity of her work for Moderne Beauty did not actually interfere with her obligation to manage DBT. Additionally, by showing whether Wright’s conduct breached her duty to DBT and diminished its value, the information requested may prove or disprove whether Plaintiffs diminished the value of DBT through their own conduct, as relevant to allegations in the cross-complaint. Wright’s argument therefore lacks merit.

Wright does not otherwise articulate how SI No. 8 seeks irrelevant information beyond the flawed argument discussed above. Wright has therefore failed to justify her objection on the ground of relevance and it is overruled.

2. Privacy Objection

Plaintiffs argue Wright’s privacy objection lacks merit because SI No. 8 does not seek protected information. In opposition, Wright insists her right to privacy is implicated and absolute.

The right to privacy protects an individual’s “reasonable expectation of privacy against a serious invasion.” (Pioneer Electronics, Inc. v. Superior Court (2007) 40 Cal.4th 360, 370.) The right to privacy extends to a person’s work history, including income information. (See Alch v. Superior Court (2008) 165 Cal.App.4th 1412, 1426-27, 1433.)

Nonetheless, the right to privacy is not absolute. (See Vinson v. Superior Court (1987) 43 Cal.3d 833, 842.) “On occasion [a party’s] privacy interest may have to give way to [an] opponent’s right to a fair trial.” (Ibid.) “Thus courts must balance the right of civil litigants to discover relevant facts against the privacy interests of persons subject to discovery.” (Ibid.)

To overcome a privacy objection, the proponent of the discovery must demonstrate the information sought is directly relevant to a claim or defense and essential to the fair resolution of the lawsuit. (Alch v. Superior Court, supra, 165 Cal.App.4th at p. 1425.) If direct relevance is shown, the court must carefully balance the right to privacy on the one hand and the right to discovery on the other, and should consider whether there are less intrusive means of obtaining the information sought in determining whether to permit discovery. (El Dorado Savings & Loan Association v. Superior Court (1987) 190 Cal.App.3d 342, 346.)

Here, given SI No. 8 requests employment information including income earned, Wright’s privacy interests are clearly implicated. Even so, contrary to Wright’s assertion, her right to privacy is not absolute. As discussed above, these requests are directly relevant to Plaintiffs’ breach of fiduciary duty claim and Wright’s defense thereto. Given the information sought by SI No. 8 is directly relevant to the central claims and defenses at the heart of this action, the Court must balance Wright’s privacy interest against Plaintiffs’ need for the discovery, including whether there are less intrusive means available for obtaining this information.

The Court observes the discovery at issue is limited in scope because it is restricted to the year 2015, seeks discretely identified information, pertains only to Wright’s Moderne Beauty business, and does not request information from or about third parties. Additionally, Plaintiffs requested this information through written discovery requests directed to Wright, the individual whose privacy is implicated, and did not seek this information through a third party deposition subpoena, a discovery method that is both more intrusive and resource intensive. These facts and circumstances suggest the intrusion upon Wright’s privacy and the means Plaintiffs selected to obtain this information are quite limited and do not outweigh their need for the information.

Turning to the need for this discovery, Plaintiffs’ need appears great as the information sought by these requests may show whether and to what extent Wright invested her time and energy in her own personal business at the expense of DBT, the business she agreed to manage and develop for the benefit of the LLC and its members. Denying Plaintiffs access to this information would substantially inhibit their ability to marshal evidence in support of their breach of fiduciary duty claim and assess the credibility of Wright’s defense based on her assertion she did not harm DBT through the development of her own personal business.

The only argument Wright presents in opposition to the motion that is germane to the balancing of the interests is that Plaintiffs failed to articulate a compelling state interest outweighing her right to privacy. “The compelling countervailing state interest at issue in this case is reflected in California’s broad discovery statutes.” (Planned Parenthood Golden Gate v. Superior Court (2000) 83 Cal.App.4th 347, 359.) There is a well-established compelling state interest in “‘facilitating the ascertainment of truth in connection with legal proceedings.’” (Id. at 359-60, quoting Moskowitz v. Superior Court (1982) 137 Cal.App.3d 313, 316.) “The state has an interest in ‘making certain that parties . . . disclose relevant information to the fullest extent allowable,’ and in ‘ensuring that those injured by the actionable conduct of others receive full redress of those injuries.’” (Planned Parenthood Golden Gate v. Superior Court, supra, 83 Cal.App.4th at p. 360, quoting Johnson v. Superior Court (2000) 80 Cal.App.4th 1050, 1071.) Plaintiffs clearly articulated this interest and their need for the discovery in their motion and Wright otherwise fails to address how her privacy interest outweighs the compelling state interest in allowing broad discovery to facilitate the ascertainment of truth and resolution of legal proceedings. Wright’s argument therefore lacks merit and her objection on the ground of privacy is overruled.

Towards the end of her separate statement, Wright asks the Court to issue a protective order in the event it permits discovery of her financial information. She proposes a protective order with extensive limitations including, but not limited to: (1) “limiting discovery of financial information until after Harris makes a prima facie showing of Wright’s liability,” (2) “saving disclosure of financial information until a time closer to trial to forestall the possibility of use for an ulterior purpose,” and (3) “limiting the scope of discovery.” (Opp. Sep. Stat. at pp. 41-42.) These proposed protections are overbroad, not tailored to the narrow scope of the discovery at issue, and appear designed to inhibit Plaintiffs’ ability to prepare for trial rather than protect Wright’s personal information.

Nonetheless, requiring the disclosure of Wright’s financial information will necessarily result in some degree of intrusion into her privacy. “If intrusion is limited and confidential information is carefully shielded from disclosure except to those who have a legitimate need to know, privacy concerns are assuaged.” (See Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 38.) Accordingly, to assuage Wright’s concerns, the Court will order Plaintiffs, their attorneys, and agents, to refrain from disseminating this information to any non-party except for use in the present litigation.

C. Conclusion

Based on the foregoing, Plaintiffs’ motion to compel further responses is DENIED as moot with respect to SI Nos. 6-7 and GRANTED with respect to SI No. 8. Wright shall serve a verified further response, without objections, to SI No. 8 within 20 calendar days of this order. Each answer in response to an interrogatory must be as complete and straightforward as the information reasonably available to the responding party permits. (Code Civ. Proc., § 2030.220, subd. (a).) Plaintiffs, their attorneys, and agents, are hereby ordered to refrain from disseminating Wright’s financial information to any non-party except for use in the present litigation.

III. Requests for Monetary Sanctions

Plaintiffs request an award of monetary sanctions against Wright and her counsel in the amount of $5,360.00 pursuant to Code of Civil Procedure section 2030.300, subdivision (d) which states: “The court shall impose a monetary sanction under Chapter 7 (commencing with Section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel a further response to interrogatories, 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.” As a threshold matter, Wright unsuccessfully opposed the instant motion to compel. Plaintiffs are therefore entitled to sanctions unless Wright was substantially justified in opposing the motion or other circumstances make the imposition of sanctions unjust.

In opposition, Wright argues the imposition of sanctions would be unjust because she did not know Plaintiffs intended to file the instant motion, has generally complied with her discovery obligations by producing documents and responding to requests, and served supplemental responses. Wright also argues she was justified in opposing the motion because her objections were meritorious.

First, Wright’s assertion she was unaware of an impending motion to compel would appear to be false given Plaintiffs’ counsel asked Wright’s counsel to confirm his availability for a hearing on a motion to compel in the event the parties could not informally resolve their discovery dispute. Additionally, Wright’s assertion is flawed as she does not explain and it is not otherwise apparent how lack of advance notice of a motion to compel, other than the notice of motion required by statute, is somehow unjust.

Second, Wright’s argument as to her fulfillment of her discovery obligations through responding and producing documents is non-responsive because it does not address her responses to the SI at issue.

Third, Wright’s service of supplemental responses does not render the imposition of monetary sanctions unjust because she did not serve supplemental responses to each request at issue, interposed identical objections in her supplemental responses, and waited to serve them until the last day Plaintiffs could move to compel further responses. This conduct did not, as Wright contends, obviate the need for Plaintiffs’ motion, which they had already prepared and filed by the time she served her supplemental responses. Additionally, it does not appear Wright clearly made her intent to serve supplemental responses known to Plaintiffs’ counsel based on her statement that she was “working on the remaining discovery issues.” Nothing in the record before the Court suggests Plaintiffs had any indication as to what “the remaining discovery issues” were given these three interrogatories are a fraction of the parties’ ongoing discovery efforts. Wright’s argument therefore lacks merit.

Finally, Wright was not substantially justified in opposing the instant motion. As discussed above, Wright’s objections lack merit. Additionally, the arguments she makes in support of her objections, both as presented during the parties’ meet and confer efforts and in opposition to the motion, are either non-responsive or based on misstatements of law. Specifically, Wright insisted on standards for relevance and privacy that were not novel interpretations of these standards, but were simply incorrect. Wright did not attempt to justify her misrepresentations as to the appropriate legal standards and failed to respond to the substance of the arguments presented by Plaintiffs’ counsel during the parties’ meet and confer discussions. Wright was therefore not substantially justified in opposing Plaintiffs’ motion.

Plaintiffs are therefore entitled to sanctions as Wright was not substantially justified in opposing the motion and there are no circumstances that would otherwise make the imposition of sanctions unjust. The Court thus considers the amount of monetary sanctions to be awarded.

The requested amount of $5,360.00 consists of the $60 filing fee and $5,300.00 of attorney time at a rate of $495 per hour. Plaintiffs’ counsel states he spent 4.5 hours preparing the motion to compel and anticipates spending an additional 4 hours preparing a reply and attending the hearing on the motion. Plaintiffs’ counsel also states he spent 5.1 hours reviewing and drafting discovery responses and meet and confer correspondence.

As an initial matter, the Court observes the amount requested by Plaintiffs does not add up given $5,300.00 could only represent 10.7 hours of attorney time at a rate of $495 per hour and the request is for 13.6 hours of attorney time. This discrepancy is ultimately inconsequential as the Court does not award sanctions for time spent meeting and conferring or for expenses not yet incurred. (See Code Civ. Proc., § 2023.030, subd. (a); see also Tucker v. Pacific Bell Mobile Services (2010) 186 Cal.App.4th 1548, 1551.) Accordingly, Plaintiffs recovery would be limited to the $60 filing fee and $2,227.50 representing 4.5 hours of attorney time at a rate of $495 per hour spent preparing the motion to compel. The Court finds these expenses to be reasonable.

In conclusion, Plaintiffs’ request for monetary sanctions is GRANTED IN PART. Wright and her counsel shall pay $2,287.50 to Plaintiffs’ counsel within 20 calendar days of this order.

Wright requests an award of monetary sanctions in opposition to Plaintiffs’ motion. She did not prevail in opposing the motion and is therefore not entitled to an award of monetary sanctions. Wright’s request for monetary sanctions is therefore DENIED.

Finally, Wright’s counsel is directed to review and comply with the Santa Clara County Bar Association’s Code of Professionalism, adopted by the Judges of the Santa Clara Superior Court by standing order, a copy of which is appended to the Local Rules of Court.