Case Name: Jatoft-Foti Insurance Agency, Inc., et al. v. Behnam Halali, et al.
Case No.: 1-12-CV-233118

Currently before the Court is the motion of plaintiffs Jatoft-Foti Insurance Agency, Inc. (“JFIA”), John Jatoft (“Jatoft”) and Don Foti (“Foti”) (collectively, “Plaintiffs”) for a protective order and the appointment of a discovery referee.

This is a trade secret misappropriation case. Plaintiffs allege that they terminated the contracts of a number of their former insurance agents after learning in January 2012 of a plan by the agents to collect commissions on “phantom” policy sales. Plaintiffs further allege that certain terminated agents were hired by competing insurance agencies and used Plaintiffs’ trade secret information to target their customers. Defendants and cross-complainants Kraig Jilge, David Fung, Viet Chung, Karen Gagarin, and Phuong Chung (collectively, “Defendants”) are former JFIA insurance agents who either were terminated or resigned following the investigation into the activities allegedly discovered in January 2012.

Plaintiffs move for a protective order prohibiting Defendants’ attorney, James A. Otto (“Otto”), from engaging in harassing, demeaning, and oppressive conduct at all future depositions. (See Code Civ. Proc., § 2025.420, subd. (b).) In addition, Plaintiffs request that the Court appoint a discovery referee, at defense counsel’s expense, to oversee all future depositions. (See Code Civ. Proc., § 639.)

A. Request for Judicial Notice

In support of their motion, Plaintiffs ask the Court to take judicial notice of the following: (1) the indictment against defendants Behnam Halali, Ernesto Magat, Kraig Jilge, and Karen Gagarin in United States of America v. Behnam Halali, et al. in the United States District Court, Northern District of California; (2) an order denying a motion for terminating sanctions and appointing a discovery referee in MTO Shahmaghsoudi v. Azizi, et al. in Alameda County Superior Court; (3) a declaration in support of the motion for terminating sanctions in MTO Shahmaghsoudi v. Azizi, et al.; and (4) an order issued by the discovery referee in MTO Shahmaghsoudi v. Azizi, et al.

A court may take judicial notice of the existence of court records that are relevant to a pending issue. (See Evid. Code, § 453, subd. (d); People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2.) However, the truth of the matters asserted in court documents or the interpretation of their meaning is not subject to judicial notice. (See Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1565; Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113.)

While the documents at issue are court records, Plaintiffs fail to articulate, and it is not otherwise readily apparent, how the existence of these documents are relevant to the pending motion. Accordingly, Plaintiffs’ request for judicial notice is DENIED.

B. Meet and Confer

As a threshold matter, Defendants argue that Plaintiffs failed to meet and confer in good faith concerning the discovery dispute at issue. A motion for a protective order shall be accompanied by a meet and confer declaration “showing a reasonable and good faith attempt at an informal resolution of each issue presented by the motion.” (Code Civ. Proc., §§ 2016.040, 2025.420, subd. (a).) The rule is designed “to encourage the parties to work out their differences informally so as to avoid the necessity for a formal order” which, in turn, “will lessen the burden on the court and reduce the unnecessary expenditure of resources by litigants through promotion of informal, extrajudicial resolution of discovery disputes.” (Townsend v. Super. Ct. (1998) 61 Cal.App.4th 1431, 1435.) As such, a “‘reasonable and good faith attempt at informal resolution requires more than bickering with [opposing] counsel …. Rather, the law requires that counsel attempt to talk the matter over, compare their views, consult, and deliberate’[Citation.].” (Clement v. Alegre (2009) 177 Cal.App.4th 1277, 1294.) The court has discretion to deny discovery absent efforts to meet and confer, but must consider whether a less drastic remedy is appropriate given the circumstances presented. (See Obregon v. Super. Ct. (1998) 67 Cal.App.4th 424, 434.)

On November 18, 2014, the Court ordered Jatoft and Foti to submit to 10 consecutive days of deposition within 60 days of the filing of the order. One month later, the Court approved a stipulation between the parties scheduling Jatoft’s deposition for January 6, 2015. (See Otto Decl., Ex. 1.) On January 6, 2015, Jatoft’s deposition commenced. After several hours of testimony and a number of heated exchanges between counsel, Jatoft suspended the deposition in order to seek a protective order to prevent abusive questioning. (See Heller Decl., ¶ 5.) Two days later, on January 8, 2015, Defendants’ counsel, Otto, sent a meet and confer letter to Jatoft’s counsel, John Heller (“Heller”), indicating that Jatoft intentionally obstructed the discovery process by refusing to give good faith responses to his questions and inviting Heller to meet and confer concerning the production of Jatoft for the balance of his deposition. (See Heller Decl., Ex. G.)

On January 12, 2015, Heller sent a letter in response stating, in relevant part:

This letter is to meet and confer regarding issues that arose during the John Jatoft deposition, to respond to your correspondence dated December 5 (sent on January 8, 2015), and to propose ways to avoid court intervention.

I have now reviewed the deposition transcript of John Jatoft’s deposition and it confirms my understanding at the time. Mr. Jatoft was attempting to answer your questions, sometimes under difficult and trying circumstances. In those situations where the foundation of your question was inaccurate, he sought to correct that error as part of his answer. On each occasion, Mr. Jatoft was attempting to provide clarity, not –as you maintain- to obfuscate.

My concerns are no secret. I believe that under the governing authorities, you have an obligation to be civil and professional to the deponent and counsel. That means that you may not cut off a witness in the middle of his answer, even if you think his answer is not responsive. It means that you cannot denigrate his intelligence, nor that of the lawyer defending him. It means that you may not accuse him of perverting justice, or refusing to tell the truth. And it means that you may not – no matter how strong your feelings – accuse me of ruining the lives of defendants.

My aim had been to expedite resolution of this issue, and I have served two notices of ex parte appearance, both withdrawn after you and Mr. Lindstrom objected. My hope had been that you would agree to an expedited hearing schedule for a protective order motion, as noted in one of my past emails. Having not heard from you, I renew that proposal now.

My suggestions to move forward are the following:

1. We agree to appointment of a discovery referee, paid for by you or your clients, to oversee and rule on objections during the pendency of your questioning.
2. We agree on an expedited hearing and briefing schedule for a motion on a protective order. If you agree to so stipulate, I will send a proposed expedited briefing schedule to you.

There may well be other remedies that we could agree on to address the issues of concern, and I remain willing to consider any that you propose. Please let me know as soon as practicable whether we can resolve this matter on these or other terms. (Heller Decl., ¶ 9, Ex. G.)

Four days after sending this letter, Plaintiffs filed the instant motion.

Based on the above facts, Plaintiffs failed to make a serious attempt to informally resolve the dispute. First, Otto declares that he did not receive the January 12, 2015 meet and confer letter until the day the motion was filed, January 16, 2015. (See Otto Decl., ¶ 3.) As such, Defendants had no opportunity to review the letter or respond to any of Plaintiffs’ concerns. Second, litigants are required to present their positions in the meet and confer process with “the same candor, specificity, and support as during the briefing of discovery motions.” (Townsend, supra, 61 Cal.App.4th at p. 1435.) Here, the January 12, 2015 letter does not cite any legal authority in support of Plaintiffs’ position or provide specific examples of the conduct they seek to prohibit in the future. Thus, even if Defendants had the opportunity to respond, the letter did not adequately define the scope of the matters in controversy or permit Otto to meaningfully address Plaintiffs’ concerns. Finally, the letter does not reflect a sincere attempt at informal resolution. (See Clement, supra, 177 Cal.App.4th at p. 1294 [stating that attempting informal resolution means more than the mere attempt by the discovery proponent to persuade objector of the error his ways].) Paradoxically, Plaintiffs’ only suggestion to informally resolve the dispute concerning Otto’s conduct was to expedite the hearing of an anticipated motion for a protective order. Accordingly, Plaintiffs failed to adequately meet and confer prior to filing the instant motion.

Given the nature of the dispute (purportedly unprofessional conduct at the deposition) and Otto’s claimed willingness to change his behavior (see Heller Decl., ¶ 5), the Court believes that further meet and confer efforts between the parties should lead to the informal resolution of many, if not all, of Plaintiffs’ concerns. Consequently, Plaintiffs’ motion for a protective order and request for the appointment of a discovery referee is CONTINUED for 30 days to March 19, 2015, and the parties are ordered to meet and confer and make a good faith effort to informally resolve their discovery dispute. In the meet and confer discussions, the Court orders the parties to read and consider the relevant provisions of the Santa Clara County Bar Association Code of Professionalism that has been approved by this Court by Standing Order. The parties are advised that the Court will consider the Code of Professionalism in making a final order in the event that court order is required to address this dispute. If the hearing is still necessary, Plaintiffs’ counsel shall file a declaration no later than March 6, 2015, describing the parties’ further meet and confer efforts and identifying the issues that were resolved and those that were not.

The Court will prepare the order.