Epic Communications, Inc., et al. v. Yi-Ching Pao, et al.		CASE NO. 113CV251544
DATE: 19 December 2014	TIME: 9:00	LINE NUMBER: 15

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 408.882.6856 and the opposing party no later than 4:00 PM Thursday 18 December 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 19 December 2014, the motions of plaintiffs Epic Communications, Inc. (“Epic Communications”) and EpicCom, Inc. (“EpicCom”) (collectively “Plaintiffs”) (1) to compel defendants Yi-Ching Pao (“Mr. Pao”) and OEpic Semiconductors, Inc. (“OSI”) (collectively “Defendants”) to provide further responses to requests for admission and for monetary sanctions, (2) to compel Defendants to provide further responses to form and special interrogatories and for monetary sanctions, and (3) to compel Defendants to provide further responses to requests for production of documents and for monetary sanctions were argued and submitted.  Defendants filed a consolidated, formal opposition to the motions, in which they request monetary sanctions.

1. Statement of Facts

This action arises out of Mr. Pao’s alleged misappropriation of assets belonging to Epic Communications and EpicCom from approximately 2005 to 2013, for his own personal benefit through improper deferred salary arrangements and short term loans, among other acts, and concealing such conduct from the shareholders and board members of both companies.  (See Second Amended Complaint (“SAC”), ¶¶ 21-97.)

At all relevant times, Mr. Pao was an interested director, officer, and shareholder of both EpicCom and OSI.  (See SAC, ¶¶ 12-17.)  Epic Communications and OSI both trace their origins to OEpic, Inc. (“OEpic”), which was in the business of developing and marketing high speed integrated circuits and optical communication semiconductor devices.  (See SAC, ¶ 7.)  OEpic was formed in 2000 as a Delaware corporation and formed a subsidiary in Taiwan in 2002.  (See id.)  In 2004, OEpic “dissolved and spun off … into different entities[:]” Epic Communications, which was formed out of OEpic’s Taiwan subsidiary and was in the business of the design, development and testing of power amplifiers, front-end modules and other electronic components for mobile wireless; and OSI, which was formed in 2004 and is a foundry service for optoelectronic components.  (See SAC, ¶¶ 7-9.)  EpicCom was subsequently formed in February 2005 and Epic Communications is its sole shareholder.  (See SAC, ¶ 10.)

On May 27, 2014, Plaintiffs filed the operative second amended complaint (“SAC”) against Defendants, asserting the following causes of action: (1) Violation of Corp. Code § 310: The Development Agreement (against Defendants); (2) Violation of Corp. Code § 310: The Addendum and Transfer Agreement (against Defendants); (3) Intentional Interference with Contractual Relations (against Defendants); (4) Violation of Corp. Code § 310: The Manufacturing Agreement (against Defendants); (5) Violation of Corp. Code § 310: Salary Deferment Agreement and Mr. Pao’s Unauthorized Compensation (against Mr. Pao); (6) Violation of Corp. Code § 310: Unauthorized Short Term Loans (against Mr. Pao); (7) Declaratory Relief: The “Rent Defer Agreement” (against Defendants); (8) Declaratory Relief Regarding Disputed Ownership over Personal Property (against OSI); (9) Breach of Fiduciary Duty (against Mr. Pao); (10) Unjust Enrichment (against Mr. Pao); (11) Fraud (against Mr. Pao); (12) Negligent Misrepresentation (against Mr. Pao); (13) Conversion (against Defendants); (14) Unfair Competition (Bus. & Prof. § 17200) (against Defendants); and (15) Accounting (against Defendants).

Defendants filed a cross-complaint against Plaintiffs on 1 July 2014, asserting causes of action for: (1) breach of contract; (2) conversion; (3) unpaid wages (violation of Labor Code section 201); (4) money had and received; and (5) intentional interference with contract.

1. Discovery Dispute

In August 2014, EpicCom served Defendants with its first sets of discovery, including demands for inspection (“DFI”) to Mr. Pao, DFI to OSI, special interrogatories (“SI”) to Mr. Pao, SI to OSI, form interrogatories (“FI”) to Mr. Pao, FI to OSI, requests for admission (“RFA”) to Mr. Pao, and RFA to OSI.  (See Kao Dec., Ex. B.)  Epic Communications also served Defendants with its first sets of discovery, including DFI to Mr. Pao, SI to Mr. Pao, SI to OSI, and RFA to Mr. Pao.  (See id.)

In October 2014, Defendants served Plaintiffs with their responses to the discovery requests.  (See Kao Dec., Ex. C.)  Defendants provided substantive responses to many of the requests and also asserted numerous objections, including objections based on relevance, over breadth, undue burden, privacy, vagueness, and ambiguity.

From 17 October 2014 to 21 November 2014, Plaintiffs’ counsel and Defendants’ counsel exchanged numerous meet and confer letters regarding Defendants’ responses to the discovery requests and engaged in a telephone conference in an attempt to resolve disputes regarding the sufficiency of Defendants’ responses.  (See Kao Dec., ¶¶ 6-7, Exs. D-K.)  Despite their meet and confer efforts, the parties were unable to resolve their disputes.

On 25 November 2014, Plaintiffs filed the instant motions to compel Defendants to provide further responses to the discovery requests.  Defendants filed papers in opposition to the motions on 8 December 2014.  Plaintiffs filed a reply on 12 December 2014.

III.           Discussion

Plaintiffs move to compel further responses to: RFA Nos. 17-20, FI Nos. 8.3, 8.4, 8.7, and 17.1 as to RFA Nos. 17-20, SI No. 25, and DFI Nos. 11-15, 18-19, 30-31, and 33 propounded by EpicCom to Mr. Pao; RFA No. 11, SI Nos. 6-8, and DFI Nos. 1-3, 10, and 14 propounded by Epic Communications to Mr. Pao; FI No. 15.1, SI Nos. 13, 19, and 32, and DFI Nos. 11-13, 17-19, and 31 propounded by EpicCom to OSI; and SI Nos. 16, 18-19, 23, and 25 propounded by Epic Communications to OSI.[1]

1. Separate Statement

As a preliminary matter, although not addressed by the parties, Plaintiffs’ separate statement regarding the DFI is deficient.

A motion to compel further responses to inspection demands must be supported by a separate statement providing all the information necessary to understand each request and response at issue.  (See Cal. Rule Court, rule 3.1345(a)(2), (c).)  “The separate statement must include-for each discovery request … to which a further response, answer, or production is requested-the following: (1) [t]he text of the … inspection demand; (2) [t]he text of each response, answer, or objection, and any further responses or answers; [and] (3) [a] statement of the factual and legal reasons for compelling further responses, answers, or production as to each matter in dispute.”  A court has discretion, but is not required, to deny discovery when a separate statement fails to complies with the California Rules of Court.  (See Mills v. U.S. Bank (2008) 166 Cal.App.4th 871, 894.)

While Plaintiffs state in their notice of motion regarding the DFI that they move to compel further responses to DFI Nos. 11, 14, 18, and 30-31 propounded by EpicCom to Mr. Pao, DFI Nos. 11, 18-19, and 31 propounded by EpicCom to OSI, and DFI Nos. 3 and 14 propounded by Epic Communications to Mr. Pao, they do not include in their separate statement the text of those requests, Defendants’ responses to those requests, or their reasons why further responses to those requests should be compelled.

Even though Plaintiffs provide the Court with copies of the discovery requests and Defendants’ responses to the same such that the Court can determine the full text of the requests and responses that were omitted from Plaintiffs’ separate statement, the Court still cannot discern Plaintiffs’ factual and legal reasons for compelling further responses to those requests.  In their memorandum of points and authorities regarding the DFI, Plaintiffs assert only general arguments as to why the Court should compel further responses to the DFI and do not indicate which requests their arguments apply to or provide specific arguments with respect to particular discovery requests.  (See Plaintiffs’ Motion Re DFI, p. 5:1-3 [“Pursuant to California Rules of Court Rule 3.1345, EPIC has concurrently filed a Separate Statement of Items in dispute, which details the specific reasons to compel further responses from [Defendants”] for the categories in dispute.”] [emphasis added].)  Given the substantial number of requests at issue and the various types of documents sought by the requests, it is not feasible for the Court to sift through Plaintiffs’ memorandum of points and authorities and speculate as to which arguments Plaintiffs might have asserted with respect to the requests that were omitted from the separate statement.

In light of the foregoing, Plaintiffs’ motion to compel further responses is DENIED as to DFI Nos. 11, 14, 18, and 30-31 propounded by EpicCom to Mr. Pao, DFI Nos. 11, 18-19, and 31 propounded by EpicCom to OSI, and DFI Nos. 3 and 14 propounded by Epic Communications to Mr. Pao.

1. Legal Standard

If a party demanding a response to an interrogatory or request for admission deems an answer to a particular interrogatory or request for admission as incomplete or evasive, or an objection to be without merit or too general, that party may move for an order compelling further response.  (See Code Civ. Proc., §§ 2030.300, 2033.290.)  The objecting party bears the burden of explaining and justifying any objection.  (See Fairmont Ins. Co. v. Super. Ct. (2000) 22 Cal 4th 245, 255, citing Coy v. Super. Ct. (1962) 58 Cal. 2d. 210, 220-221.)

Additionally, if a party demanding a response to a request for production of documents deems that a statement of compliance with the demand is incomplete, a representation of inability to comply is inadequate, incomplete, or evasive, or an objection in the response is without merit or too general, that party may move for an order compelling further response.  (See Code Civ. Proc., § 2031.310, subd. (a).)  On a motion to compel further responses to requests for production, it is the moving party’s burden to demonstrate good cause for the discovery sought.  (See Kirkland v. Super. Ct. (2002) 95 Cal.App.4th 92, 98.)   Good cause is established simply by a fact-specific showing of relevance.  (See id. [noting that to show good cause a party must demonstrate both relevance to the subject matter and specific facts justifying discovery].)  Once good cause has been shown, the burden shifts to the responding party to justify any objections or failure to provide a code-compliant response.  (See id.)

1. Remaining Requests at Issue

The requests that remain at issue are: RFA Nos. 17-20, FI Nos. 8.3, 8.4, 8.7, and 17.1 as to RFA Nos. 17-20, SI No. 25, and DFI Nos. 12, 13, 15, 19, and 33 propounded by EpicCom to Mr. Pao; RFA No. 11, SI Nos. 6-8, and DFI Nos. 1-2 and 10 propounded by Epic Communications to Mr. Pao; FI No. 15.1, SI Nos. 13, 19, and 32, and DFI Nos. 12-13 and 17 propounded by EpicCom to OSI; and SI Nos. 16, 18-19, 23, and 25 propounded by Epic Communications to OSI.

1. The RFA

RFA Nos. 17-20 propounded by EpicCom to Mr. Pao ask Mr. Pao to admit that he entered into and prepared a written agreement with OSI for deferred salary and at least one written agreement with OSI for an interest-free loan.  (See Sep. Stmt. Re RFA, pp. 1-7.)  RFA No. 11 propounded by Epic Communications to Mr. Pao asks Mr. Pao to admit that on or around 28 February 2002, his salary with OSI was $129,500 per year.  (See Sep. Stmt. Re RFA, p. 7.)  Mr. Pao provided objection-only responses to the requests, objecting to the requests on the grounds of relevancy and privacy.  (See id.)

In their opposition, Defendants argue that Mr. Pao’s salary with OSI and whether he entered into or prepared agreements with OSI regarding deferred salary or interest free loans is irrelevant because Mr. Pao’s salary with OSI was independent from his salary with Plaintiffs and the discovery does not relate to the allegations in the SAC (i.e., that Mr. Pao misappropriated money from Plaintiffs and entered into improper deferred salary and interest free loan agreements with Plaintiffs).

Plaintiffs contend that the discovery sought is relevant because Mr. Pao’s starting salary with EpicCom is in dispute and there is an email linking Mr. Pao’s starting salary at EpicCom to his salary at OSI.  Plaintiffs further contend that the discovery sought is relevant because: there is a dispute as to whether Mr. Pao was authorized to take deferred salary and short term, interest free loans from EpicCom; “[a]ny short term loans [Mr. Pao] took from OSI relate to [Mr. Pao’s] pattern and provide the context and the extent to which [Mr. Pao] took unearned compensation whether it be from [Plaintiffs], OSI, or both”  and “[their] coexistence during the same time period would shed light on the interpretation of their alleged ‘terms’ and enforceability;” “[a]greements on behalf of OSI relate to [Mr. Pao’s] pattern [of drafting his own legal documents], the extent of [Mr. Pao’s] experience in drafting contracts, and the extent of [Mr. Pao’s] understanding and compliance with California’s Corporations Code by obtaining so-called proper approval of agreements that involved his material, financial interests;” and Mr. Pao is alleged to have back-dated documents and the discovery relates to the integrity of his record keeping.  (Sep. Stmt. Re RFA, pp. 3-4.)

Here, whether Mr. Pao entered into or prepared written agreements for OSI regarding deferred salary or interest free loans is irrelevant.  Plaintiffs allege in the SAC that Mr. Pao’s starting salary with EpicCom was $129,500 per year and Mr. Pao improperly entered into a “Salary Defer and Stock Conversion Agreement” with EpicCom in 2005.  (See SAC, ¶ 21.)  Additionally, Plaintiffs allege that Mr. Pao improperly caused interest free loans to be made by EpicCom to him from April 2009 to April 2012. (See SAC, ¶¶ 35-46.)  The fact that Mr. Pao may have entered into or prepared written agreements for OSI regarding deferred salary or interest free loans does not bear on whether he improperly entered into the “Salary Defer and Stock Conversion Agreement” with EpicCom or improperly received interest free loans from EpicCom.

Plaintiffs’ argument that the discovery sought might demonstrate that Mr. Pao had a modus operandi or pattern of entering into or preparing agreements by which he received unearned compensation appears to be pure speculation as there are no allegations in the SAC that Mr. Pao misappropriated funds from OSI or engaged in improper conduct with respect to OSI and Plaintiffs do not submit any evidence demonstrating that Mr. Pao engaged in such conduct.  Thus, this argument lacks merit.

Moreover, the SAC does not allege that Mr. Pao’s deferred salary with EpicCom was related or tied to his deferred salary with OSI and Plaintiffs do not submit evidence establishing the same.  The email that Plaintiffs cite in their papers actually supports Defendants’ assertion that Mr. Pao’s deferred salaries with OSI and EpicCom are unrelated as Mr. Pao states in the email that his “arrangement with [OSI] is independent from Epicom” and his “[OSI] compensation is totally independent and separated from [the] calculation” of his deferred salary with “Epicom.”   (Irion Dec., Ex. A.)  The portion of the email that Plaintiffs focus on indicates only that prior to 2005, Mr. Pao’s deferred salary was split between OEpic and “Epicom.”  (See id.)  Thus, the email does not support the assertion that Mr. Pao’s deferred salary was split between OSI and Plaintiffs.  Thus, the Court finds that Mr. Pao’s objection to the RFA on the ground of relevancy has merit and is sustained.

Accordingly, no further responses are warranted to RFA Nos. 17-20 propounded by EpicCom to Mr. Pao and RFA No. 11 propounded by Epic Communications to Mr. Pao.  Consequently, Plaintiffs’ motion to compel further responses to the same is DENIED.

2.             The FI and SI
3.             FI No. 17.1 as to RFA Nos. 17-20 Propounded by EpicCom to Mr. Pao

FI No. 17.1 asks Mr. Pao for: (a) the identification of all responses to the RFA that are not unqualified admissions; (b) all facts on which an identified response is based; (c) all persons with knowledge of those facts; and (d) all documents that support an identified response.  In his response to FI No. 17.1 as to RFA Nos. 17-20, Mr. Pao stated “N/A” because he asserted relevancy and privacy objections in response to those RFA.

In their opposition, Defendants argue that Mr. Pao’s response to FI No. 17.1 as to RFA Nos. 17-20 was adequate because their objections to the RFA were appropriate.

As articulated above, Mr. Pao’s relevancy objection to RFA Nos. 17-20 has merit and is sustained.  As Mr. Pao properly objected to the RFA, his response to FI No. 17.1 indicating that no response was warranted was appropriate.  Thus, there is no need for Mr. Pao to provide a further response to FI No. 17.1 for those RFA.

8. FI No. 8.3 and 8.4 Propounded by EpicCom to Mr. Pao and SI No. 6 Propounded by Epic Communications to Mr. Pao

FI No. 8.3 asks Mr. Pao to state the last date before the incident that he worked for compensation.  FI No. 8.4 asks Mr. Pao to state his monthly income at the time of the incident and how the amount was calculated.  SI No. 6 asks Mr. Pao to summarize his employment history between 15 February 2002 and 31 March 2013.  Mr. Pao provided an objection-only response to FI No. 8.3, objecting to the request as unintelligible and irrelevant.  Mr. Pao provided objection-only responses to FI No. 8.4 and SI No. 6, objecting to the requests on the grounds of relevance and privacy.

Mr. Pao does not attempt to defend his objections to the requests in his opposition.  Since Mr. Pao does not attempt to justify his objections, they lack merit and are overruled.  (See Coy v. Super. Ct., supra, 58 Cal.2d at p. 220-221.)  In his declaration, Plaintiff’s counsel declares that Mr. Pao’s responses “[arose] from a mis-reading of form interrogatories 8.3 and 8.4, and special interrogatory 6” and Mr. Pao “is willing to amend these three responses to help articulate his unpaid wages damages.”  (Irion Dec., ¶ 21.)

Accordingly, further responses to FI Nos. 8.3 and 8.4 and SI No. 6 are warranted.

8. FI No. 8.7 Propounded by EpicCom to Mr. Pao

FI No. 8.7 asks Mr. Pao to state the total income that he has lost to date as a result of the incident and how the amount was calculated.  In his response, Mr. Pao objected to the request as unintelligible.  Without waiving his objection, he provided a substantive response stating “[n]ot applicable to this case other than unpaid wages at the time of [Mr. Pao’s ] resignation as alleged in Paragraph 21 of Respondent’s cross-complaint.”  (Plaintiffs’ Sep. Stmt. Re FI, p. 14:13-16.)

Defendants do not address Mr. Pao’s response to FI No. 8.7 in their opposition.  Since Mr. Pao does not attempt to justify his objections, they lack merit and are overruled.  (See Coy v. Super. Ct., supra, 58 Cal.2d at p. 220-221.)

Plaintiffs persuasively argue that Mr. Pao’s response to the request is incomplete because it does not state Mr. Pao’s total lost income or the how the amount of unpaid wages were calculated despite the fact that it admits that the information sought is relevant to the allegations of the cross-complaint.  (See Code Civ. Proc., § 2030.220, subd. (a) [“Each answer in a response to interrogatories shall be as complete and straightforward as the information reasonably available to the responding party permits.”].)

Accordingly, a further response to FI No. 8.7 is warranted.

5. FI No. 15.1 Propounded by EpicCom to OSI

FI No. 15.1 asks OSI to provide facts, persons with knowledge of facts, and documents supporting its denials of any material allegations of the complaint and their affirmative defenses.  OSI objected to the request as overbroad and unduly burdensome.  OSI also provided a lengthy substantive response to the request, setting forth facts supporting his denials of the allegations of the complaint and his first through thirteenth affirmative defenses.

Defendants do not address OSI’s response to FI No. 15.1 in their opposition.  Since OSI does not attempt to justify its objections, they lack merit and are overruled.  (See Coy v. Super. Ct., supra, 58 Cal.2d at p. 220-221.)

Plaintiffs argue that OSI’s substantive response to the request is deficient because OSI fails to clearly identify the documents that support its affirmative defenses and merely provide generalized descriptions of categories of documents.  Plaintiffs also argue that the response is deficient because OSI does not identify each person in possession of the responsive documents.

Plaintiffs’ arguments have merit.  While OSI generally identifies broad categories of documents that support its position, it does not identify the documents with sufficient specificity for Plaintiffs to determine which particular documents OSI contends are responsive to the request.  (See e.g. Kao Dec., Ex. C, OSI Response to FI No. 15.1, p. 21:1-4 [“[d]ocuments related to these actions include, but are not limited to, board minutes for each plaintiff, notes of board members, accountancy and audit reports, 2009 Technical Service Agreement, emails between Ken Tai and Pao, emails between Cindy Yuen and Pao, and internal emails between persons working for or on behalf of plaintiffs.’].)  Additionally, the request asks OSI to identify the persons who have each document that is responsive to the request, but OSI’s response does not provide any information regarding such persons.

Accordingly, a further response to FI No. 15.1 is warranted.

1. SI No. 13 Propounded by EpicCom to OSI

SI No. 13 asks OSI to state all facts in support of its contention that “EpicCom continued to breach the agreement and the rent defer Agreement by failing to pay monthly rent, failing to pay accruing interest, and failing to maintain the security it had granted to [OSI] on the premises while in default’, as alleged in paragraph 41 of Defendants’ Cross Complaint.”  (KAO Dec., Ex. 3, OSI Resp. to SI No. 13, p. 8:14-19.)

OSI provided a substantive response to the request, stating: “Beginning September, 2012, EpicCom failed to pay any rent. Since EpicCom took away all financial data, documents, and files thus defendants have no access to EpicCom’s rent payment records. OSI did not receive any rent or rent related payments since September 2012 until the day EpicCom moved out on August 6, 2013. See Cindy Yuen’s closure note. See also Thomas Caudill’s August 15th, 2013 letter to Chris Kao, and Chris Kao’s rely letter dated August 21, 2013.”  (Plaintiffs’ Sep. Stmt. Re SI, p. 16:11-17.)

Defendants do not address OSI’s response to the request in their opposition.

Plaintiffs argue that OSI’s response is deficient because OSI “refused to address its contention that [EpicCom] failed to ‘maintain the security it had granted to OSI on the premises’ and narrowly addressed ‘rent or rent related payments.’”  (Plaintiffs’ Sep. Stmt. Re SI, p. 16:18-22.)

While OSI’s response states facts that support its contention that EpicCom breached the rental agreement by failing to pay rent, the response appears to be incomplete because it does not address its contention that EpicCom breached the rental agreement by failing to “maintain the security it had granted to [OSI].”

Accordingly, a further response to SI No. 13 is warranted.

1. SI No. 19 Propounded by EpicCom to OSI

SI No. 19 asks OSI to state all facts in support of its contention alleged in paragraph 30 of the cross-complaint that: “Epic’s chairman instructed [Mr. Pao] to begin a program to facilitate the synergy of Epic with [OSI] by way of the development program with an eye towards a possible reverse merger of [OSI] into Epic.  The Fab-related program was developed by [Mr. Pao] under the chairman’s express instruction, and focused on matters related to Epic’s business interests (BAR, IPD, GaN and solder bump)…Reports were regularly made to Epic.”  (Kao Dec., Ex. 3, OSI Resp. to SI No. 19, p. 10:8-15.)

In response to the request, OSI objected on the grounds of compound and overbroad.  Without waiving its objections, OSI also provided a substantive response with detailed facts supporting its contentions that Plaintiffs’ chairman instructed Mr. Pao to create a program to develop “synergy” between the companies and Mr. Pao subsequently created such a program.

Defendants do not address OSI’s response to the request in their opposition.  Since OSI does not attempt to justify its objections, they lack merit and are overruled.  (See Coy v. Super. Ct., supra, 58 Cal.2d at p. 220-221.)

Plaintiffs argue that OSI’s substantive response is deficient because OSI “failed to identify and describe all reports that were ‘regularly made to Epic.”  (Plaintiffs’ Sep. Stmt. Re SI, p. 18:4-6.)

While OSI’s response states facts that support its contentions that Plaintiffs’ chairman instructed Mr. Pao to create a program to develop “synergy” between the companies and Mr. Pao subsequently created such a program, the response appears to be incomplete because it does not address its contention that reports were regularly made to Plaintiffs.

Accordingly, a further response to SI No. 19 is warranted.

1. SI No. 25 Propounded by EpicCom to Mr. Pao and SI No. 32 Propounded by EpicCom to OSI

SI Nos. 25 and 32 are identical and ask Defendants to state all facts in support of their understanding that “‘EpicCom’s role’ under the ‘RDA Agreement,’ was limited to ‘… the latter stage, doing filter design and simulation’ and ‘from its inception, the proceeds split from that agreement, provided for the lion’s share of the money to go to [OSI]’ as the quoted phrases are used in paragraph 33 of [the] Cross Complaint.”  (Plaintiffs’ Sep. Stmt. Re SI, p. 14-15.)  Defendants provided substantive responses, stating: “Compare the two SOW’s between RDA Manufacturing and Service Agreement and OSI sub-contracting Manufacturing and Service Agreement, the difference is what EpicCom’s role is.”  Mr. Pao also provided a further substantive response to SI No. 25 stating,”[a]n email from Cindy Yuen on January 10, 2013 stated clearly ECI/EpicCom’s role in the RDA-BAR program.”

Defendants do not address Mr. Pao and OSI’s responses to the requests in their opposition.

Plaintiffs argue that Defendants’ responses are deficient because they “[do] not address (1) its understanding of EpicCom. Inc’s role and why it was limited to certain operations and; (2) its understanding that from the RDA Agreement’s inception, the ‘lion’s share of the money’ would go to OSI.”  (Plaintiffs’ Sep. Stmt. Re SI, p. 15:13-16.)

Defendants’ responses to the requests are incomplete and evasive because they do not state the facts that support Defendants’ contention that EpicCom’s role under the RDA Agreement was limited in some fashion, but merely instruct Plaintiffs to compare two “statement of work” documents and review an email from Cindy Yuen.  (See Code Civ. Proc., § 2030.220, subd. (a) [“Each answer in a response to interrogatories shall be as complete and straightforward as the information reasonably available to the responding party permits.”].)

Accordingly, further responses to SI Nos. 25 and 32 are warranted.

1. SI Nos. 8 to Mr. Pao Propounded by Epic Communications and SI Nos. 16, 18-19, and 25 to OSI Propounded by Epic Communications

SI Nos. 8 asks Mr. Pao and SI Nos. 16, 18-19, and 25 ask OSI to: identify any agreements evidencing monetary loans involving Mr. Pao and OSI from 15 February 2002 to 31 March 2013; describe in detail OSI’s knowledge of any monetary transactions relating to Mr. Pao, including any of OSI’s money that Mr. Pao transferred, ordered transferred, or received between 15 February 2002 and 31 March 2013, such as salary pay, hardship pay, loans, etc.; describe all of Mr. Pao’s income that OSI reported to tax authorities in Taiwan and the United States from 2002 to 2013, including salary pay, hardship pay, loans, etc.; identify all writing relating to financial transactions involving Mr. Pao from 15 February 2002 to 31 March 2013, including any income that Mr. Pao received from OSI; and any agreements reflecting monetary loans involving Mr. Pao and OSI from 15 February 2002 to 31 March 2013.

Defendants provided objection-only responses to the requests, objecting to the requests on the grounds of relevancy and privacy.

In their opposition, Defendants argue that Mr. Pao’s salary with OSI and whether he received loans from OSI is irrelevant because Mr. Pao’s salary with OSI was independent from his salary with Plaintiffs and the discovery does not relate to the allegations in the SAC (i.e., that Mr. Pao misappropriated money from Plaintiffs and entered into improper deferred salary and interest free loan agreements with Plaintiffs).

As previously indicated, Mr. Pao’s salary with OSI and whether he received loans from OSI is irrelevant to this litigation because the SAC alleges only that Mr. Pao misappropriated money from and entered into improper loan agreements with Plaintiffs and there is no indication that Mr. Pao’s salary with OSI relates in any way to the compensation he received from Plaintiffs.

Therefore, Defendants’ relevancy objections are sustained and no further responses are warranted to SI Nos. 8 to Mr. Pao and SI Nos. 16, 18-19, and 25 to OSI.

1. SI No. 7 Propounded by Epic Communications to Mr. Pao

Plaintiffs initially moved to compel a further response to SI No. 7 propounded by Epic Communication to Mr. Pao, but they state in their reply that they are withdrawing their motion to compel a further response to the request.

Accordingly, a ruling does not need to be provided for this request.

1. SI No. 23 Propounded by Epic Communications to OSI

SI No. 23 asks OSI to identify “each person who created or approved the meeting minutes for the board of directors of OSI from February 15, 2002 to an including March 31, 2013, including who authored the 2005 Meeting Minutes attached hereto as Exhibits A and B.”  (Plaintiffs’ Sep. Stmt. Re SI, p. 19:5-8.)  In response, OSI objected to the request as irrelevant.  OSI also provided a substantive response to the request, stating “[e]xhibits A and B of Plaintiffs’ special interrogatory have nothing to do with OSI” as “[t]hey were documents of EpicCom only.”  (Plaintiffs’ Sep. Stmt. Re SI, p. 19:10-17.)

Defendants do not address OSI’s response to the request in their opposition.  Since OSI does not attempt to justify its objections, they lack merit and are overruled.  (See Coy v. Super. Ct., supra, 58 Cal.2d at p. 220-221.)

Plaintiffs persuasively argue that OSI’s response to the request is incomplete because it does not identify any person who approved or created the meeting minutes that were attached to the SI.  (See Code Civ. Proc., § 2030.220, subd. (a) [“Each answer in a response to interrogatories shall be as complete and straightforward as the information reasonably available to the responding party permits.”].)

Accordingly, a further response to SI No. 23 is warranted.

1. Conclusion

Accordingly, Plaintiffs’ motion to compel further responses to the FI and SI is DENIED IN PART and GRANTED IN PART.  The motion is DENIED as to SI Nos. 7-8 propounded by Epic Communications to Mr. Pao, SI Nos. 16, 18-19, and 25 propounded by Epic Communications to OSI, and FI No. 17.1 as to RFA Nos. 17-20 propounded by EpicCom to Mr. Pao. The motion is GRANTED as to SI No. 6 propounded by Epic Communications to Mr. Pao, SI No. 23 propounded by Epic Communications to OSI, FI No. 8.3, 8.4, and 8.7 and SI No. 25 propounded by EpicCom to Mr. Pao, and FI No. 15.1 and SI Nos. 13, 19, and 32 propounded by EpicCom to OSI.

3. The DFI
4. DFI Nos. 12-13, 15, 33 Propounded by EpicCom to Mr. Pao, DFI No. 13 Propounded by EpicCom to OSI, and DFI No. 2 Propounded by Epic Communications to Mr. Pao

DFI Nos. 12-13, 15, 33 propounded by EpicCom to Mr. Pao, DFI No. 13 propounded by EpicCom to OSI, and DFI No. 2 propounded by Epic Communications to Mr. Pao ask Defendants to produce: all writings relating to Mr. Pao’s income from OSI from 15 February 2002 to 31 March 2013; all communications involving Mr. Pao and David Wang from 15 February 2002 to 31 March 2013, in which a topic of the communications is Mr. Pao’s income from OSI; all communications involving OSI and Cindy Yuen from 15 February 2002 to 31 March 2013, in which a topic of the communications is Mr. Pao’s income from OSI; and all writing that OSI relied on to prepare its tax records from 2002 to 2013, in which a topic of the writing was Mr. Pao’s salary, loans, bonuses, etc.

Plaintiffs contend that there is good cause for discovery sought because Mr. Pao’s starting salary with EpicCom is in dispute and there is an email linking Mr. Pao’s starting salary at EpicCom to his salary at OSI.

Defendants contend that there is no good cause for the discovery sought because Mr. Pao’s salary with OSI is independent from and unrelated to his salary with Plaintiffs and the SAC alleges only that Mr. Pao received an improper salary from Plaintiffs.

As previously discussed, Plaintiffs have failed to demonstrate how Mr. Pao’s salary with OSI is relevant to the instant litigation given the allegations in the SAC and the fact that the only item of evidence submitted by Plaintiffs supports Defendants’ contention that Mr. Pao’s salary with OSI was unrelated to his salary with Plaintiffs.  Thus, Plaintiffs have not established good cause for the discovery sought.

Accordingly, further responses are not warranted to DFI Nos. 12-13, 15, 33 propounded by EpicCom to Mr. Pao, DFI No. 13 propounded by EpicCom to OSI, and DFI No. 2 propounded by Epic Communications to Mr. Pao.

1. DFI No. 19 Propounded by EpicCom to Mr. Pao

DFI No. 19 to Mr. Pao propounded by EpicCom asks Mr. Pao to produce all agreements, including any agreements for monetary loans, that he prepared from 15 February 2002 to 31 March 2013, on behalf of OSI.

Mr. Pao provided an objection-only response to the request, objecting to the request on the grounds of relevance and privacy.

Plaintiffs contend that there is good cause for the discovery sought because agreements regarding Mr. Pao’s salary with OSI or loan agreements that Mr. Pao entered into with OSI are relevant to establish his salary with Plaintiffs and tend to show his “pattern” for entering into agreements for unearned compensation.

As previously indicated, whether Mr. Pao entered into or prepared written agreements for OSI regarding deferred salary or interest free loans is irrelevant because the fact that Mr. Pao may have entered into or prepared written agreements for OSI regarding deferred salary or interest free loans does not bear on the allegations in the SAC that he improperly entered into the “Salary Defer and Stock Conversion Agreement” with EpicCom or improperly received interest free loans from EpicCom.  Moreover, Plaintiffs’ argument that the discovery sought might demonstrate that Mr. Pao had a modus operandi or pattern of entering into or preparing agreements by which he received unearned compensation appears to be pure speculation as there are no allegations in the SAC that Mr. Pao misappropriated funds from OSI or engaged in improper conduct with respect to OSI.  Lastly, there are no allegations in the SAC that Mr. Pao’s salary with OSI is related in any way to his salary with Plaintiffs or any evidence establishing the same.  Thus, Plaintiffs have not established good cause for the discovery sought.

Accordingly, no further response is warranted to DFI No. 19.

1. DFI No. 1 to Mr. Pao Propounded by Epic Communications and DFI No. 17 to OSI Propounded by EpicCom

DFI No. 1 to Mr. Pao propounded by Epic Communications and DFI No. 17 to OSI propounded by EpicCom ask Defendants to produce all of OSI’s corporate meeting minutes from 15 February 2002 to 31 March 2013, which refer or relate to Mr. Pao, Epic Communications, and EpicCom.

In his response DFI No. 1, Mr. Pao objected to the request on the grounds of relevance, privacy, confidentiality, and trade secret/proprietary information.  Without waiving his objections, Mr. Pao agreed to produce all non-privileged documents relating only to Epic Communications and EpicCom in his possession custody, or control, “which appear on their face to be responsive” to the demand.

In its response to DFI No. 17, OSI objected to the request on the grounds of undue burden, relevance, privacy, confidentiality, and trade secret/proprietary information.  Without waiving its objections, OSI agreed to produce all non-privileged documents relating only to Epic Communications and EpicCom in its possession custody, or control, “which appear on their face to be responsive” to the demand.

Although Plaintiffs do not address in their papers whether there is good cause for the discovery sought, it is self-evident that there is good cause for OSI’s corporate minutes pertaining to Epic Communications and EpicCom because it is alleged in the SAC that Mr. Pao caused Epic Communications to enter into several agreements with OSI, such as the Development and Manufacturing Services Agreement and RDA Agreement Addendum, for his and OSI’s benefit and OSI’s corporate minutes may contain information about the terms, consideration, and approval of these agreements.

In contrast, good cause is not apparent for OSI’s corporate minutes that pertain solely to Mr. Pao because they may involve irrelevant subject matter, such as Mr. Pao’s compensation with OSI, and OSI’s corporate minutes are only relevant to the extent that they may reveal information about Mr. Pao’s interaction with or conduct toward Plaintiffs.

However, as there is good cause for some of the documents sought by the request, rather than denying the discovery altogether due to the lack of good cause for OSI’s corporate minutes pertaining solely to Mr. Pao, the Court limits the requests to OSI’s corporate meeting minutes from 15 February 2002 to 31 March 2013, which refer or relate to Epic Communications and EpicCom.

In their opposition, Defendants only attempt to justify their objections as they pertain to corporate minutes involving Mr. Pao alone.  Since the Court limits the requests to OSI’s corporate meeting minutes referring or relating to Epic Communications and EpicCom and Defendants do not attempt to justify their objections with respect to that portion of the requests, their objections are overruled.  (See Coy v. Super. Ct., supra, 58 Cal.2d at p. 220-221.)

Defendants persuasively assert that their substantive responses to the requests are sufficient because they agreed to produce all corporate minutes pertaining to Epic Communications or EpicCom in their possession, custody, or control and withheld only those pertaining to Mr. Pao alone.  (See Code Civ. Proc., 2031.220 [“A statement that the party to whom a demand for inspection, copying, testing, or sampling has been directed will  comply with the particular demand shall state that the production, inspection, copying, testing, or sampling, and related activity demanded, will be allowed either in whole or in part, and that all documents or things in the demanded category that are in the possession, custody, or control of that party and to which no objection is being made will be included in the production.”].)

Accordingly, further responses are not warranted to DFI Nos. 1 and 17.

1. DFI No. 12 Propounded by EpicCom to OSI

DFI No. 12 propounded by EpicCom to OSI asks OSI to produce all writings involving it and Pai Accountancy LLP from 15 February 2002 to 31 March 2013, in which a topic of writing was: Mr. Pao’s salary from OSI, EpicCom, or Epic Communications; deferments of employee salaries or other types of compensation; loan agreements; financial viability of OSI, Epic Communications, or EpicCom; the RDA Agreement or the RDA Agreement Addendum; the Development Agreement; or the Rental Deferment Agreement.

In response to the request, OSI objected on the grounds of privacy, vagueness, and ambiguity.  Without waiving its objections, OSI agreed to produce documents “which on their face appear to be responsive” and are in its possession, custody, or control.

The parties do not address the issue of good cause with respect to this request in their papers.  However, it is self-evident that there is good cause for writings that address Mr. Pao’s salary with Plaintiffs, the financial viability of Plaintiffs, and the various agreements entered into by Plaintiffs, such as the RDA Agreement, the RDA Agreement Addendum, the Development Agreement, and the Rental Deferment Agreement, because Mr. Pao’s salary with Plaintiffs, the financial effect that Mr. Pao’s conduct had on Plaintiffs, and the various agreements entered into by Plaintiffs are raised as issues in the SAC.

As previously articulated, Mr. Pao’s salary and the compensation received by other non-parties from OSI is not relevant to the litigation and, thus, good cause is lacking for discovery regarding the same.  Additionally, Plaintiffs do not explain how the financial viability of OSI is relevant to the instant litigation.

As there is good cause for some of the documents sought by the request, rather than denying the discovery altogether due to the lack of good cause for some documents, the Court limits the request to writings involving OSI and Pai Accountacy LLP from 15 February 2002 to 31 March 2013, in which a topic of writing was: Mr. Pao’s salary from EpicCom or Epic Communications; financial viability of Epic Communications or EpicCom; the RDA Agreement or the RDA Agreement Addendum; the Development Agreement; or the Rental Deferment Agreement.

OSI does not attempt to defend its objections to the request other than to restate them without providing any analysis.  Thus, OSI’s objections to the request are overruled.  (See Coy v. Super. Ct., supra, 58 Cal.2d at p. 220-221.)

Nonetheless, Plaintiffs do not indicate how OSI’s substantive response to the request is deficient and the Court finds that it is code-compliant because OSI states that it will produce all documents that are responsive to the request that are in its possession, custody, or control.  (See Code Civ. Proc., 2031.220.)

Accordingly, a further response is not warranted to DFI No. 12.

1. DFI No. 10 Propounded by Epic Communications to Mr. Pao

DFI No. 10 to Mr. Pao propounded by Epic Communications asks Mr. Pao to produce all writings that support OSI’s contention in paragraph 25 of the cross-complaint that “[t]he decision of the BAR program transfer was made by its designated program manager (mutually agreed upon between the customer (RDA Microelectronics), Epiccom, and [OSI] to be Dr. Majid Riaziat of [OSI]) because Epic wanted to seize the program account/money with the intention for non-program use in early March of 2013.”  (Plaintiffs’ Sep. Stmt. Re DFI, p. 22:4-9.)

In response to the request, Mr. Pao agreed to produce all non-privileged documents in his possession, custody, or control, “which appear on their face to be responsive to this demand.”  (Plaintiffs’ Sep. Stmt. Red DFI, p. 22:10-14.)

In their papers, Plaintiffs do not articulate why they believe Mr. Pao’s response to the request to be deficient as they only discuss why the documents sought by the request are relevant.

Mr. Pao’s response to the request is code-compliant because he provided a statement of compliance, indicating that he would produce all responsive documents in his possession, custody, or control.  (See Code Civ. Proc., 2031.220.)

Accordingly, no further response is warranted to DFI No. 10.

1. Conclusion

Plaintiffs’ motion to compel further responses to the DFI is DENIED.

1. Requests for Monetary Sanctions

Both Plaintiffs and Defendants request awards of monetary sanctions.

1. Plaintiffs’ Request

Plaintiffs request a single, consolidated award of monetary sanctions against Defendants and Defendants’ counsel in the amount of $2,500 pursuant to Code of Civil Procedure section 2031.310, subdivision (h) in connection with their motions.

Code of Civil Procedure section 2031.310, subdivision (h) provides that “the court shall impose a monetary sanction … against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel further response to a demand [for inspection], 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.”

Plaintiffs were unsuccessful on their motion to compel further response to the DFI and, thus, are not entitled to an award of monetary sanctions.

Accordingly, Plaintiffs’ request for monetary sanctions is DENIED.

2. Defendants’ Request

Defendants request an award of monetary sanctions against Plaintiffs’ and their counsel in the amount of $2,450 pursuant to Code of Civil Procedure section 2023.010.

Code of Civil Procedure section 2023.010 defines acts that constitute misuses of the discovery process, and does not itself set forth any provisions regarding the issuance of a monetary sanction.  Since Defendants do not cite any statutory provision authorizing an award of monetary sanctions, they are not entitled to an award of monetary sanctions.

Accordingly, Defendants’ request for monetary sanctions is DENIED.

Conclusion and Order

Plaintiffs’ motion to compel further responses to the RFA is DENIED.

Plaintiffs’ motion to compel further responses to the FI and SI is DENIED IN PART and GRANTED IN PART.  The motion is DENIED as to SI Nos. 7-8 propounded by Epic Communications to Mr. Pao, SI Nos. 16, 18-19, and 25 propounded by Epic Communications to OSI, and FI No. 17.1 as to RFA Nos. 17-20 propounded by EpicCom to Mr. Pao.  The motion is GRANTED as to SI No. 6 propounded by Epic Communications to Mr. Pao, SI No. 23 propounded by Epic Communications to OSI, FI Nos. 8.3, 8.4, and 8.7 and SI No. 25 propounded by EpicCom to Mr. Pao, and FI No. 15.1 and SI Nos. 13, 19, and 32 propounded by EpicCom to OSI.  Accordingly, within 20 days of the date of the filing of this Order, Mr. Pao shall provide further, verified code-complaint responses to SI No. 6 propounded by Epic Communications and FI Nos. 8.3, 8.4, and 8.7 and SI No. 25 propounded by EpicCom, without objection.  Additionally, OSI shall provide further, verified code-complaint responses to SI No. 23 propounded by Epic Communications and FI No. 15.1 and SI Nos. 13, 19, and 32 propounded by EpicCom, without objection.

Plaintiffs’ motion to compel further responses to the DFI is DENIED.

Plaintiffs’ request for monetary sanctions is DENIED.

Defendants’ request for monetary sanctions is DENIED.

________________­­­____________ DATED:

_________________________­­­________________________ HON. SOCRATES PETER MANOUKIAN Judge of the Superior Court County of Santa Clara

[1] Notably, Plaintiffs’ notices of motion state that Plaintiffs are moving for further responses to only some of the requests listed above and do not include SI No. 23 and DFI No. 10 to Mr. Pao propounded by Epic Communications, FI No. 8.7 and SI No. 25 to Mr. Pao propounded by EpicCom, or FI No. 15.1 and SI Nos. 13, 19, and 32 to OSI propounded by EpicCom.  However, these requests are addressed fully in Plaintiffs’ separate statements and it appears that they are at issue in the instant motions.  While it appears that Defendants neglected to address these requests in their opposition due to the omission of the requests in the notices of motion, the Court will still consider the motions as to these requests because they were addressed in Plaintiffs’ separate statements such that Defendants had adequate notice that they were at issue.