Case Number: KC070481 Hearing Date: November 28, 2018 Dept: O

Defendants KL Global International Corp. and Kevin Liao’s motion to quash/modify plaintiff’s subpoena for production of business records to custodian of records for Bank of America, N.A. is GRANTED in part, and DENIED in part.

Defendants KL Global International Corp. and Kevin Liao (“Defendants”) move to quash Plaintiff Deshnok Overseas Company’s (“Plaintiff”) subpoena pursuant to Code of Civil Procedure Section 1987.1:

If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by any person described in subdivision (b), or upon the court’s own motion after giving counsel notice and an opportunity to be heard, may make an order quashing the subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as the court shall declare, including protective orders. In addition, the court may make any other order as may be appropriate to protect the person from unreasonable or oppressive demands.

(CCP § 1987.1.)

Initially, defendants contend they “never received” the subpoena dated July 24, 2018. (See Declaration of Jonathan Fang (“Fang Decl.”) ¶ 4.) However, the proof of service dated July 24, 2018 shows that the subpoena was properly “served” on defense counsel. (See Fang Decl., Exhibit C.) Merely stating that defendants “never received” the subpoena does not constitute invalid “service” in light of the proof of service stating otherwise. Further, defendants admit that they received a subpoena dated July 20, 2018, which is identical to the July 24, 2018 subpoena, and they also admit that they eventually obtained a copy of the July 24, 2018 subpoena from the bank. The Court finds that these objections do not amount to lack of notice in time to object.

Consumer Notice

Defendants also contend the subpoena fails to comply with the “consumer” notice provision of Code of Civil Procedure Section 1985.3. However, the operative section defines a consumer as “any individual, partnership of five or fewer persons, association, or trust which has transacted business with, or has used the services of, the witness or for whom the witness has acted as agent or fiduciary.” (CCP § 1985.3(a)(2).) The subpoena seeks documents related to entity defendant “KL Global International Corp.,” a California corporation and not a “consumer” as defined by Code of Civil Procedure Section 1985.3(a)(2).

Privacy

Next, defendants contend that the subpoena violates their right of privacy.

The constitutional right of privacy is not absolute; it may be abridged when there is a compelling state interest. The burden is on the party seeking the constitutionally protected information to establish direct relevance. (Harris v. Superior Court (1992) 3 Cal.App.4th 661, 665.) Even when discovery of private information is found directly relevant to the issues of ongoing litigation, it will not be automatically allowed; there must then be a “careful balancing” of the compelling public need for discovery against the fundamental right of privacy. If an intrusion on the right of privacy is deemed necessary under the circumstances of a particular case, any such intrusion should be the “least intrusive means” to satisfy the interest. (Lantz v. Superior Court (1994) 28 Cal.App.4th 1839, 1854-1855.)

Here, the subpoena seeks “any and all business records of KL Global… from January 1, 2017 to present.” KL Global is a business entity. The right of privacy contained in Article 1 Section 1 of the California Constitution is limited to natural persons and does not apply to corporations. (Roberts v. Gulf Oil Corp. (1983) 147 Cal.App.3d 770, 791, 196-797 (“Corporations can claim no equality with individuals in the enjoyment of a right to privacy. There is no need for the meticulous and careful scrutiny that is accorded more fundamental interests. Accordingly, the compelling state interest test is not appropriate.”))

Further, KL Global’s reliance on Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652 is misplaced because there, the right of privacy was one belonging to an individual. Here, the documents relate to an entity defendant “KL Global International Corp.”

Further, even if the corporate entity has established any right of privacy in the financial documents, the subpoena is directly relevant to the issues in this complaint. Plaintiff has alleged a cause of action for fraud. Plaintiff is entitled to discover, inter alia, whether defendant was undercapitalized at the time it contracted with plaintiff, whether “KL Global International Corp.” had any intent to perform, and/or whether they had the financial ability to pay.

Protective Order

Nevertheless, to ensure the least intrusive means to satisfy the public interest and safeguard defendants’ concern over the disclosure of unrelated business activities, a protective order will issue. Any identifying information such as individual or entity names will be redacted. Account numbers will be redacted except for the last 4 digits. Any personal identifying information contained in the bank records will also be redacted. The Court will hear if there are any additional safeguards to include in the protective order.

Accordingly, the motion is GRANTED in part, and DENIED in part. The request to quash the entire subpoena is denied. Instead, the bank is ordered to produce the documents, subject to this Court’s protective order.