Gibraltar SSI, LLC v. Comes, et al. CASE NO. 112CV230686
DATE: 27 June 2014 TIME: 9:00 LINE NUMBER: 7
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 26 June 2014. Please specify the issue to be contested when calling the Court and counsel.

On 27 June 2014, the motions of defendant Eric McAfee (“Mr. McAfee”) to (1) quash business records subpoenas served on nonparties Organic Pastures Dairy, LLC (“Organic Pastures”) and McAfee Capital LLC (“McAfee Capital”), and (2) quash a business records subpoena served on Mr. McAfee’s accountant James Sullivan were argued and submitted. Plaintiff Gibraltar SSI, LLC (“Gibraltar”) filed formal oppositions to both motions.

Factual and Procedural History

This action arises from an attempt to collect on a sister-state judgment. In July 2007, Mountain Property Development (a California corporation) entered into a loan agreement with California Bank and Trust whereby the bank would loan $17,640,000 in connection with a parcel of real property located Routt County, Colorado. The loan was evidenced by a promissory note and secured by a deed of trust. In connection with the loan, Mr. McAfee and Robert Comes (collectively “Defendants”) executed personal guarantees through which they promised to repay sums due under the promissory note and related documents.

In July 2011, the bank sold and assigned the note and guaranty to Gibraltar for $5.4 million. At the time of the assignment, the note was in default and Mountain Property Development owed the bank approximately $12 million. In December 2011, Gibraltar instituted a civil action in Colorado against Defendants for breach of the personal guarantees. At the same time, Gibraltar instituted a public trustee foreclosure with respect to the Routt County property.

In July 2012, the Routt County District Court entered Summary Judgment against Defendants in the sum of $12,018,396.23 plus interest. On November 28, 2012, the foreclosure was concluded with Gibraltar successfully purchasing the property for $6,800,000. In December 2012, Gibraltar filed a partial satisfaction of judgment, reducing the money judgment against Defendants to roughly $6.1 million.

In August 2012, Gibraltar filed the Colorado judgment with this Court, seeking to domesticate and enforce the sister-state judgment against Defendants in California.

On 30 July 2013, the Court (Judge Kirwan) issued a charging order (the “Charging Order”). The Charging Order applies to a number of entities in which Mr. McAfee holds an ownership interest, including McAfee Capital and Organic Pastures. The Charging Order provides that “the interest in, and right to, any payment of Eric McAfee from the following limited liability companies [including McAfee Capital and Organic Pastures] is hereby charged with the unpaid balance of the judgment, plus accrued interest and recoverable costs, entered in favor of judgment creditor Gibraltar SSI, LLC and against Eric McAfee and Robert Comes in this action on August 20, 2012.” (Charging Order, dated 30 July 2013, attached to the Amended Decl. of Colleen Kelley in Support of Mot. to Quash (“Decl. of Kelley”), Ex. 4 [following copy of subpoena served on McAfee Capital].) The Charging Order further provides that the listed companies, including McAfee Capital and Organic Pastures, “shall pay any money or property due or to become due to Eric McAfee directly to Gibraltar.” (Id.) Finally, the Charging Order provides that Mr. McAfee “is retrained from assigning or otherwise disposing or transferring his right to payment from Organic Pastures Dairy, LLC for monies loaned by McAfee to Organic Pastures.” (Id.)

On 30 May 2014, based upon allegations by Gibraltar that McAfee Capital was violating the Charging Order, the Court appointed a receiver to enforce the Charging Order. In connection with the allegations that Mr. McAfee is receiving money from the business entities in violation of the Charging Order, Gibraltar also filed a motion for sanctions and contempt. In the motion, Gibraltar alleged that Mr. McAfee violated the Charging Order by directing McAfee Capital to continue paying McAfee’s mortgage in an amount exceeding $10,000 per month. On 13 June 2014, the Court issued an Order to Show Cause to McAfee Capital to show why it should not be held in contempt of court for violating the Charging Order.

Discovery Dispute

I. Dispute Concerning Subpoenas Served on Organic Pastures and McAfee Capital

On 15 April 2014, Gibraltar served Organic Pastures and McAfee Capital with business records subpoenas. The subpoenas are identical and seek documents evidencing transfers from the companies to Mr. McAfee, his immediate family members, or business entities owned by Mr. McAfee in violation of the Charging Order. More specifically, the subpoenas demand the production of, among other things, bank statements, financial statements showing Mr. McAfee’s interests in the companies, contracts between Organic Pastures and Mr. McAfee or McAfee Capital, and documents reflecting monies owed and monies transferred to Mr. McAfee.

The subpoenas directed Organic Pastures and McAfee Capital to produce the records on 7 May 2014.

On 30 April 2014, counsel for Mr. McAfee emailed counsel for Gibraltar, indicating that “[u]nless you will withdraw the above-referenced subpoenas, we intend to file Motions to Quash both subpoenas as they are invasive of the LLC’s right to privacy in confidential financial information.” (Decl. of Penhallegon, Ex. E.) Counsel for Mr. McAfee also indicated that the subpoenas “are unreasonably cumulative, duplicative, burdensome, and expensive.” (Id.)

Counsel for Gibraltar responded the same day, stating the following:

With respect to the subpoena to McAfee Capital, if you identify the requests, or categories of requests, that you believe are objectionable, I will consider whether to withdraw the specific requests in light of the electronic discovery recently acquired . . . . If a document has already been requested and produced . . . it would not need to be produced again. [¶] With respect to the subpoena to Organic Pastures, given the charging order and assignment order that is now in place in the case, I do not believe a blanket objection or motion to quash is appropriate, but if there are specific requests that Organic Pastures nonetheless deems objectionable under the circumstances, I will consider each specific objection and respond to it. (Decl. of Penhallegon, Ex. E.)

Counsel for Mr. McAfee did not respond to Gibraltar’s counsel’s request to identify the specific document demands that she deemed objectionable.

On 6 May 2014, Mr. McAfee filed the motion presently before the Court, seeking an order quashing the business records subpoenas served on Organic Pastures and McAfee Capital.

On 23 May 2014, Gibraltar filed an opposition to the motion and, on 30 May 2014, Mr. McAfee filed his reply.

II. Dispute Concerning Subpoena Served on James Sullivan

On 2 May 2014, Gibraltar served James Sullivan (“Mr. Sullivan”) with a business records subpoena. Mr. Sullivan is Mr. McAfee’s personal accountant and has prepared tax returns for at least some of the business entities owned by Mr. McAfee, including McAfee Capital. Mr. Sullivan is also an attorney and has represented Mr. McAfee in the past on other matters.

The subpoena asks Mr. Sullivan to produce documents relating to his work performed as an accountant on behalf of Mr. McAfee, McAfee Capital, Marguerite McAfee (Mr. McAfee’s wife), and P2 Capital, LLC.

The subpoena required production of the documents on 30 May 2014.

On 27 May 2014, three days prior to the date for production, Mr. McAfee filed the second motion currently pending before the Court, asking the Court to quash the business records subpoena served on Mr. Sullivan.

Gibraltar filed an opposition to the motion on 16 June 2014, and Mr. McAfee filed a reply brief on 20 June 2014.

Discussion

In the two motions presently before the Court, Mr. McAfee seeks an order quashing business records subpoenas served on nonparties. In the first motion, Mr. McAfee requests that the Court quash business records subpoenas served on two companies—McAfee Capital and Organic Pastures. In the second motion, Mr. McAfee requests that the Court quash the business records subpoena served on his personal accountant.

The gravamen of both motions is that the information sought through the subpoenas is private financial information protected by the right to privacy under the California Constitution.

A. Legal Standard

Mr. McAfee seeks relief under Code of Civil Procedure section 1987.1. That section authorizes parties and non-party witnesses to move the court for an order quashing or modifying a subpoena duces tecum on the ground that the records sought are not within the permissible scope of discovery or that the requests are unduly burdensome. (Code Civ. Proc. [“CCP”], § 1987.1, subds. (a) & (b).)

Upon motion reasonably made, the court may make an order quashing a subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as it shall declare. (CCP, § 1987.1, subd. (a).) In addition, the court may make any other order as may be appropriate to protect against unreasonable or oppressive demands, including unreasonable violations of the right to privacy. (Id.)

The party objecting to a discovery request bears the burden of explaining and justifying its objections. (See Fairmont Ins. Co. v. Super. Ct. (2000) 22 Cal.4th 245, 255.)

B. Subpoenas Served on McAfee Capital and Organic Pastures

Mr. McAfee seeks an order quashing the business records subpoenas served on McAfee Capital and Organic Pastures. He asserts that the subpoenas seek private financial information from both companies and that such information is protected by the right to privacy under article I, section 1 of the California Constitution.

1. Separate Statement

As an initial matter, Gibraltar asserts that Mr. McAfee’s motion is procedurally defective because is it not accompanied by a separate statement. Gibraltar asserts that, “[b]ecause McAfee has failed to file a separate statement, neither Gibraltar nor this Court have any way of knowing which specific requests McAfee is objecting to [in] this motion.” (Opp., p. 6.) Based upon this procedural defect, Gibralter argues that the motion should be denied.

California Rules of Court, rule 3.1345 provides that “motions that require a separate statement include a motion . . . [t]o compel or to quash the production of documents or tangible things at a deposition.” (Cal. Rules of Court, rule 3.1345(a)(5).) According to rule 3.1345, “[a] separate statement is a separate document filed and served with the discovery motion that provides all the information necessary to understand each discovery request and all the responses to it that are at issue.” (Cal. Rules of Court, rule 3.1345(c).)

Where the moving party has failed to supply the court with a separate statement, or has provided the court with a deficient separate statement, the court has discretion, but is not required, to deny the discovery motion. (See Mills v. U.S. Bank (2008) 166 Cal.App.4th 871, 893 [holding that “trial court was well within its discretion to deny the motion to compel discovery” on the ground that the moving party provided a non-code-compliant separate statement].) Generally, the Court will not deny a discovery motion on the ground that the moving party failed to submit a separate statement if the parties’ arguments are fully developed in their moving papers and the lack of a separate statement will not prevent the Court from addressing the merits of the motion. (See Mills, supra, 166 Cal.App.4th at p. 894.)

Here, Mr. McAfee did not file a separate statement in support of its motion. He did, however, file a separate statement with his reply brief. In the declaration accompanying his reply, Mr. McAfee’s counsel states that “[t]he failure to timely file a Separate Statement was my fault as I erroneously read the statute and rule of court to say that if seeking to quash a subpoena in its entirety before any documents had been produced, no statement was required.” (Decl. of Kelly in Support of Mot. to Quash filed 30 May 2014, ¶ 7.)

Even if the Court was to consider the late-filed separate statement, for the reasons set forth below, the motion must still be denied.

2. Analysis

Mr. McAfee argues that the Court should quash the subpoenas because they violate Organic Pasture’s and McAfee Capital’s “inalienable right to privacy” established by the California Constitution. (Reply, pp. 4-5.) Mr. McAfee also asserts, without referring to any particular request contained in the subpoenas, that the document requests also implicate the privacy interests of other third-party individuals, such as his wife and children.

In support of his argument, Mr. McAfee notes that the zone of privacy protected by the California Constitution has been held to extend to a person’s confidential financial affairs. (See e.g., Fortunato v. Sup. Ct. (2003) 114 Cal.App.4th 475, 480 [recognizing privacy interest in a person’s financial affairs]; see also Valley Bank of Nevada v. Sup. Ct. (1975) 15 Cal.3d 652, 656-657.) Mr. McAfee further asserts that, where the right to privacy is implicated, the party seeking discovery must show that the discovery sought is directly relevant to a particular cause of action or defense. (Britt v. Sup. Ct. (1978) 20 Cal.3d 844, 859-862.) According to Mr. McAfee, Gibraltar has not met its burden of demonstrating that the private financial information sought by the subpoenas is directly relevant.

The problem with Mr. McAfee’s motion is that he simply asserts, without any substantive discussion, that Organic Pastures and McAfee Capital may invoke the right to privacy in the first instance. The extent to which a business entity may object to discovery requests on the basis of privacy, however, remains unsettled. (Nativi v. Deutsche Bank National Trust Co. (2014) 223 Cal.App.4th 261, 314 n. 16.)

Some background information is helpful in understanding the nature of this issue. In 1974, the California Constitution was amended and the right to privacy was added to the list of inalienable rights contained in article I. Under the amendment, article I reads as follows:

All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy.

(Cal. Const., art. I, § 1.) “The drive behind the constitutional amendment was an acknowledgment that ‘[f]undamental to our privacy is the ability to control circulation of information.’” (White v. Davis (1975) 13 Cal.3d 757, 774, citation to quoted material omitted.)

In 1980, the Court of Appeal for the Fourth District suggested that the right to privacy extended to corporations. (See H & M Associates v. City of El Centro (1980) 109 Cal.Ap.3d 399, 409 [corporate right to privacy invaded by city’s improper disclosure of information].) Three years later, however, the Court of Appeal for the Fifth District explicitly held that article I applies to “people” and that “[t]he constitutional provision simply does not apply to corporations.” (Roberts v. Gulf Oil Corp. (1983) 147 Cal.App.3d 770, 791.) While the court made clear that a corporation “does not have standing to assert a right to privacy under article I, section 1 of the California Constitution and does not have a right to privacy in a fundamental sense, [that] does not mean that [the corporation] does not retain a general right to privacy under the United States Constitution via some combination of the [Fourth, Fourteenth, and Fifth Amendments].” (Id., at p. 795.)

Since the issuance of these two decisions, the courts have struggled with the degree to which business entities may object to discovery on the basis of privacy. (Nativi, supra, 223 Cal.App.4th at p. 314 n. 16.) In dealing with this issue, the Court of Appeal has stated that “[i]t is clear to us that the law is developing in the direction that the strength of the privacy right being asserted by a nonhuman entity depends on the circumstances[,] [including] . . . the strength of the nexus between the artificial entity and human beings and the context in which the controversy arises.” (Ameri-Medical Corp. v. Workers’ Comp. Appeals Bd. (1996) 42 Cal.App.4th 1260, 1288.)

Mr. McAfee has made no attempt to address this issue. He simply asserts that Organic Pastures and McAfee Capital have a fundamental right to privacy under the California Constitution. Moreover, he does not specifically address any one of the 25 particular document requests at issue in the subpoenas or how each of the requests, which call for different categories of documents, violate any cognizable right to privacy. Rather, he generally asserts that the right to privacy is implicated and that Gibraltar must therefore demonstrate direct relevance. Mr. McAfee’s untimely separate statement does not remedy these deficiencies.

As indicated above, before the burden shifted to Gibraltar to demonstrate direct relevance, the initial burden was on Mr. McAfee to demonstrate that the subpoenas raised privacy concerns in the first instance. (See Fairmont Ins. Co., supra, 22 Cal.4th 245, 255.) Mr. McAfee has failed to carry that burden. Mr. McAfee repeatedly states that Organic Pastures and McAfee Capital have a fundamental “inalienable right” to privacy in their financial information. The case law does not support such a contention. Moreover, while the document requests in the subpoenas may implicate privacy concerns of natural third persons, Mr. McAfee has not attempted explain the nexus between Organic Pastures, McAfee Capital, and the third-parties or how the individual requests in the subpoenas would infringe upon the individuals’ privacy rights. Consequently, his motion to quash the business records subpoenas served on Organic Pastures and McAfee Capital is DENIED.

C. Subpoena Served on James Sullivan

In the second motion before the Court, Mr. McAfee asks the Court to quash the business records subpoena served by Gibraltar on James Sullivan. As indicated above, Mr. Sullivan is Mr. McAfee’s personal accountant and attorney, and the subpoena seeks the production of 31 categories of documents related to the financial work that Mr. Sullivan has performed in his capacity as an accountant for Mr. McAfee, Mr. McAfee’s wife, McAfee Capital, and P2 Capital, LLC (“P2 Capital”).

The requests fall into eight categories.

The requests in the first category (requests 1-10) seek “All documents, excluding email or other written Communication (but not excluding any attachments or enclosures thereto)” that Mr. Sullivan received from or provided to Mr. McAfee, McAfee Capital, Mrs. McAfee, and P2 Capital on or after 1 January 2011.

The requests in the second category (requests 11-14) seek “All Documents that refer, relate to, or identify any asset or assets owned or controlled by” Mr. McAfee, McAfee Capital, Mrs. McAfee, and P2 Capital on or after 1 January 2011.

The requests in the third category (requests 15 and 16) seek “All Documents that refer, relate to, or constitute the books and records of” McAfee Capital and P2 Capital.

The requests in the fourth category (requests 17-22) seek all documents reflecting transfers of money or property from or to Mr. McAfee, McAfee Capital, Mrs. McAfee, or P2 Capital.

The requests in the fifth category (requests 23 and 24) seek “all Documents,” “[e]xcepting any agreement between attorney and client,” “that refer, relate to, or constitute any contract or agreement, including any loan agreement(s), to which” Mr. McAfee, McAfee Capital, Mrs. McAfee, or P2 Capital are parties.

Requests 25 and 26 (the sixth category) seek “All Documents that refer, relate to, or reflect any money due or owed to” Mr. McAfee and McAfee Capital.

Request 27 (the seventh category) seeks all tax returns prepared for Mr. McAfee, McAfee Capital, Mrs. McAfee, or P2 Capital.

The last category of requests (requests 28-31) seek all documents reflecting communications from or to Mr. Sullivan from or to Mr. McAfee, McAfee Capital, Mrs. McAfee, or P2 Capital, excluding any communications that are legal in nature.

Mr. McAfee argues that the subpoena should be quashed on the following grounds: the attorney-client privilege and work product doctrine; overbreadth; undue burden; and privacy.

1. Attorney-Client Privilege and Work Product

Mr. McAfee asserts that, in addition to acting as an accountant, Mr. Sullivan is also Mr. McAfee’s attorney and that the subpoena should be quashed based upon the attorney-client privilege and work product doctrine.

Mr. McAfee does not attempt to justify his assertions of privilege. Indeed, in his reply brief, Mr. McAfee states that he is only required to assert the privilege and that “[h]e is not required to explain what documents violate the privilege as that may in itself reveal privileged information.” (Reply in Support of Mot. to Quash Subpoena Served on James Sullivan, p. 3.)

Mr. McAfee’s argument misconstrues the procedure for claiming a privilege. In circumstances in which a party objects to discovery on the basis of a privilege and the court is subsequently asked to rule on the objection (either through a motion to compel filed by the propounding party or through a motion for protective order or motion to quash), the burden is on the party claiming the privilege to establish whatever preliminary facts are essential to the claim. (See Evid. Code, §§ 402, 405; Alpha Beta Co. v. Sup. Ct. (1984) 157 Cal.App.3d 818, 824-825 [noting that, in response to a motion to compel, the burden is on the party claiming the privilege to establish whatever preliminary facts are essential to the claim]; see also Weil & Brown, California Practice Guide: Civil Procedure Before Trial (Rutter Group 2012) at 8:191.) In the context of the attorney-client privilege, the party claiming the privilege is required to prove (usually by declarations) the existence of the attorney-client relationship when the communication was made. (Alpha Beta Co., supra, 157 Cal.App.3d at pp. 824-825.)

Because Mr. McAfee has failed to set forth the preliminary facts justifying his assertion of the attorney-client privilege and work product protection, the Court will not quash the subpoena on either of those grounds.

2. Undue Burden

Mr. McAfee asks the Court to quash the subpoena served on Mr. Sullivan on the basis of undue burden. A party claiming that requested discovery is unduly burdensome must make a particularized showing of facts demonstrating hardship. (West Pico Furniture Co. v. Sup. Ct. (1961) 56 Cal.2d 407, 417-418.) Mr. McAfee has not made a particularized showing or otherwise explained why the production of documents from Mr. Sullivan would create a hardship. The claim of undue burden is therefore not a basis upon which the Court will quash the subpoena.

3. Overbreadth

Mr. McAfee claims that the document requests in the subpoena are overly broad as to time. Specifically, Mr. McAfee points out that the requests seek documents from either January of 2011 or January of 2012. Because these dates pre-date Gibraltar’s judgment, Mr. McAfee argues that the documents from prior to the judgment are irrelevant, rendering the requests overly broad.

Gibraltar argues that the requests are not overly broad because it has raised claims against Mr. McAfee for fraudulent conveyance and the statute of limitations for such claims is seven years.

Gibraltar’s argument is not well-taken. Its claims for fraudulent conveyance are raised in the recently filed separate lawsuit against Mr. McAfee. Gibraltar does not raise claims for fraudulent conveyance in its collection action that pre-dates the July 2012 judgment.

Under the Civil Discovery Act, the scope of permissible discovery is limited to matters “relevant to the subject matter involved in the pending action . . .” (CCP, § 2017.010, emphasis added.) Here, the pending action is Gibraltar’s collection action—not the separate lawsuit that Gibraltar filed earlier this year against Mr. McAfee alleging fraudulent conveyance. Because documents reflecting information from before the judgment was entered against Mr. McAfee do not relate to the subject matter of this litigation, the documents are not within the permissible scope of discovery under Code of Civil Procedure section 2017.010.

Consequently, the subpoena will be modified so that Mr. Sullivan is only required to produce documents from after the date that the underlying judgment was entered against Mr. McAfee that gave rise to Gibraltar’s collection action.

4. Privacy

Mr. McAfee asserts that the documents sought by the subpoena contain private financial information protected from disclosure under the California Constitution. Mr. McAfee asserts the right to privacy not only on behalf of himself, but also his wife, McAfee Capital, and P2 Capital.

As an initial matter, Mr. McAfee’s motion to quash the subpoena served on Mr. Sullivan suffers from the same defect as his motion to quash the subpoenas served on Organic Pastures and McAfee Capital. More specifically, and as addressed more fully above, Mr. McAfee has failed to explain how or why the business entities McAfee Capital and P2 Capital are entitled to assert the right to privacy, which only applies to natural persons. (See Roberts v. Gulf Oil Corp. (1983) 147 Cal.App.3d 770, 791 [“The constitutional provision simply does not apply to corporations.”].)

Thus, to the extent that the subpoena requests documents concerning McAfee Capital and P2 Capital, Mr. McAfee has not demonstrated that the right to privacy is a basis for which the subpoena should be quashed.

The subpoena, however, also seeks financial information concerning Mr. McAfee and his wife. As natural persons, they may assert the right to privacy.

As Mr. McAfee points out, the zone of privacy protected by article 1 of the California Constitution has been held to extend to a person’s confidential financial affairs. (See e.g., Fortunato v. Sup. Ct. (2003) 114 Cal.App.4th 475, 480 [recognizing privacy interest in a person’s financial affairs]; see also Valley Bank of Nevada v. Sup. Ct. (1975) 15 Cal.3d 652, 656-657.)

Where the right to privacy is implicated, the party seeking discovery must show that the discovery sought is directly relevant to a particular cause of action or defense. (Britt v. Sup. Ct. (1978) 20 Cal.3d 844, 859-862.) “Direct relevance” is a higher standard than the “relevancy to the subject matter” standard generally applicable to discovery requests. (Id., at p. 859.) According to the California Supreme Court, direct relevance means that the discovery sought is essential to the fair resolution of a matter in dispute. (Id.) Once direct relevance has been demonstrated, the proponent of the discovery must show that the information sought is not available through less intrusive means. (Allen v. Super. Ct. (1984) 151 Cal.App.3d 447, 449.) The Court must then carefully balance the right to privacy on the one hand, and the right of civil litigants to discover facts, on the other. (Pioneer Electronics, Inc. v. Super. Ct. (2007) 40 Cal.4th 360, 371.)

Concerning the documents sought containing information pertaining to Mr. McAfee himself, Gibraltar points out the following facts: Gibraltar has obtained a $7 million judgment against Mr. McAfee; this Court has entered a Charging Order requiring 15 business entities in which Mr. McAfee holds an ownership interest to pay any money owed to Mr. McAfee directly to Gibraltar and prohibiting Mr. McAfee from transferring his financial interests to the companies; and this Court has ordered McAfee Capital to appear and show cause why a contempt order should not be entered for what appear to be intentional violations of the Charging Order whereby Mr. McAfee has continued receiving tens of thousands of dollars per month from McAfee Capital. Based upon these facts, Gibraltar argues that the information sought in the subpoena concerning Mr. McAfee’s financial affairs and the companies in which he holds an economic interest are directly relevant to Gibraltar’s collection action. The Court agrees and finds that the discovery sought (as it pertains to Mr. McAfee himself) is essential to the fair resolution of a matter in dispute.

The documents sought concerning Mrs. McAfee, however, are another matter. As to the documents pertaining to Mrs. McAfee’s financial affairs, Gibraltar asserts that the information is directly relevant for the same reasons that apply to Mr. McAfee. This argument is not well taken. Mrs. McAfee is not a party to this action and is not a judgment debtor in this case. Gibraltar makes a passing reference to the fact that Mrs. McAfee’s interests in the subject companies may be community property subject to collection for Mr. McAfee’s debts. Gibraltar has not, however, provided the Court with any facts substantiating its claim that the property at issue is community property. In the absence of such a showing, and in recognition that Mrs. McAfee has a cognizable privacy interest in her financial affairs protected by article 1 of the California Constitution, the Court finds that Gibraltar has not made a showing that Mrs. McAfee’s financial information is directly relevant to this action.

Returning to Mr. McAfee’s assertion of the right of privacy, because Gibraltar has demonstrated the direct relevance of Mr. McAfee’s financial information, the Court must balance the right to privacy against Gibraltar’s right to discovery in this collection action. (Pioneer Electronics, Inc. v. Super. Ct. (2007) 40 Cal.4th 360, 371.)

Weighing against Mr. McAfee’s right to privacy is the fact that there is a well-settled public interest in facilitating the enforcement of judgments and “ensuring that those injured by the actionable conduct of others receive full redress of those injuries.” (Johnson v. Super. Ct. (2000) 80 Cal.App.4th 1050, 1071.) In light of this public interest, and because Mr. McAfee has not set forth any reasons why the Court should not compel disclosure of the documents in furtherance of the interest, the Court finds that Mr. McAfee’s right to privacy must give way to Gibraltar’s right to obtain the information necessary to collect on its judgment. (See Harris v. Super. Ct. (1992) 3 Cal.App.4th 661, 664 [noting that, if a public interest in the disclosure of private information is found to be compelling, the individual’s right of privacy must give way and disclosure will be required].)

In sum, because Mr. McAfee has failed to explain how or why business entities are entitled to assert the right to privacy, Mr. McAfee’s motion to quash the subpoenas as to the information concerning McAfee Capital and P2 Capital on the basis of privacy is rejected and the Court only considers the argument as to Mr. McAfee and his wife (the two natural persons implicated by the requests). As to the private financial information sought from Mr. Sullivan concerning Mr. McAfee and his wife, Gibraltar has demonstrated the direct relevance of the information pertaining to Mr. McAfee, but has failed to demonstrate the direct relevance of the financial information of Mrs. McAfee. Consequently, Mr. McAfee is not entitled to an order quashing the subpoena in its entirety, but the subpoena shall be modified so that Mr. Sullivan need not disclose documents solely containing Mrs. McAfee’s private financial information.

The Court is aware that this modification may create some ambiguity as to what Mr. Sullivan is required to produce when faced with documents that contain the financial information of both Mr. McAfee and his wife, such as joint tax returns. The entry of a protective order should sufficiently cure this problem. Thus, while Mr. Sullivan shall not be required to produce documents solely containing Mrs. McAfee’s financial information, to the extent that the requests call for the production of documents that may reference Mrs. McAfee or her financial affairs (such as joint tax returns and communications made by Mr. McAfee to Mr. Sullivan that reference Mrs. McAfee or her assets), the documents containing such information shall be produced under a protective order.

Pursuant to the protective order now entered by the Court, any documents produced by Mr. Sullivan containing Mrs. McAfee’s financial information shall not be disseminated to the public and shall be used by Gibraltar only for the purpose of the ensuing litigation.

5. Conclusion

Based upon the above discussion, Mr. McAfee’s motion to quash the business records subpoena served on Mr. Sullivan is DENIED, subject to the following three modifications and conditions: (1) Mr. Sullivan shall not produce any documents solely containing the private financial information of Marguerite McAfee; (2) to the extent that the requests concerning Mr. McAfee, McAfee Capital, and P2 Capital require the production of documents that incidentally contain Mrs. McAfee’s financial information (such as joint tax returns prepared for Mr. McAfee and his wife), the documents shall be produced subject to a protective order under which Mrs. McAfee’s financial information shall not be disseminated to the public and shall be used by Gibraltar only for the purpose of the ensuing litigation; and (3) each of the requests shall be limited in time from 30 July 2012 (the date the Colorado judgment was entered against Mr. McAfee) to the present.

Conclusion and Order

Mr. McAfee’s motion to quash the business records subpoenas served on Organic Pastures and McAfee Capital is DENIED. Accordingly, Organic Pastures and McAfee Capital shall respond to Gibraltar’s deposition subpoenas for the production of business records within 20 calendar days of the filing of this Order.

Mr. McAfee’s motion to quash the business records subpoena served on James Sullivan is DENIED subject to the Court’s modifications. The subpoena shall be modified and subject to the following conditions as follows:

(1) Mr. Sullivan shall not respond to the requests that only call for the production of Mrs. McAfee’s financial information;

(2) to the extent that the remaining requests require the production of documents that incidentally contain Mrs. McAfee’s financial information, the documents shall be produced subject to a protective order under which Mrs. McAfee’s financial information shall not be disseminated to the public and shall be used by Gibraltar only for the purpose of the ensuing litigation; and

(3) each of the requests shall be limited in time from 30 July 2012 to the present.

Accordingly, Mr. Sullivan shall respond to Gibraltar’s deposition subpoena for the production of business records, as modified herein, within 20 calendar days of the filing of this Order.