Joyce Dudley vs National Family Solutions, LLC
Case No: 19CV03481
Hearing Date: Wed Sep 04, 2019 9:30

Nature of Proceedings: OSC Re Compliance with Investigative Supboena

TENTATIVE RULING: Respondent is ordered to comply with the investigative subpoena, to the extent and in the manner outlined below.

Background: Based upon information provided by the State Bar of California, the District Attorney’s Office (Petitioner) in October 2017 began investigating respondent National Family Solutions LLC (NFS) for possible illegal conduct, including the unauthorized practice of law, operation of an unregistered lawyer referral service, violation of the Legal Document Assistant statute, and false advertising. On May 3, 2018, the State Bar sent a Cease and Desist letter to Eric Campbell, a co-owner and manager of NFS, expressing its opinion that NFS has engaged in the unauthorized practice of law and should immediately cease and desist from doing so.

In furtherance of its investigation, the District Attorney’s Office issued an investigative subpoena to NFS on April 11, 2019, seeking responses to interrogatories and the production of documents. It was personally served upon Mr. Campbell on April 12, 2019. In a May 1 meeting to discuss the subpoena, Mr. Campbell stated that he was not willing to identify any attorneys who prepare legal documents for or on behalf of NFS, since doing so would be burdensome and harmful to NFS. At the meeting, the response deadline was extended to June 3, 2019.

On June 2, NSF delivered a document which the District Attorney’s Office contends constituted only a partial response to the subpoena’s demands. In its response, NFS objected to identifying various professionals whom it advertises as being part of its team, including lawyers, Legal Document Assistants, psychologists, doctors, and private investigators. It further objected to identifying past customers whose testimonials are posted on its website, and to identifying its own managers and employees. In making the refusal, NFS contended that the identification and provision of contact information is not relevant, would be burdensome, and “would hurt the company at a detrimental level.” With respect to NFS employees, it further objected that identifying them would violate their right to privacy.

The petition was filed on July 3, 2019, seeking and order to show cause directing respondent to appear before the court and show cause why it has refused to comply with the subpoena, and an order directing respondent to appear and testify at the District Attorney’s Office as called for by the subpoena, answer the interrogatories, and produce the documents.

On July 8, 2019, Petitioner applied ex parte for the issuance of the OSC sought by the petition. The application established the broad authority of the District Attorney, as the county’s chief law enforcement officer, to investigate, including through issuance of investigative subpoenas, in carrying out the Petitioner’s obligation to enforce the law, citing Government Code section 11180 et seq., and Business & Professions Code section 16759. Section 11181 authorizes the issuance of such subpoenas, and 11182 authorizes the department head to delegate powers to conduct investigations or hearings, which in this case have been delegated by District Attorney Joyce Dudley to Deputy District Attorney Christopher B. Dalbey. No judicial proceeding need be pending in order to issue investigative subpoenas, and an investigative inquiry can exist merely because the agency has suspicion of the law being violated, or even because it just wants assurance that it is not. (Brovelli v. Superior Court (1961) 56 Cal.2d 524, 529.)

The application further noted that civil discovery standards are not applicable to investigative subpoenas, including that a district attorney is not required to make a good cause showing of relevance and materiality. Rather, all that is required is that the investigation be one which the agency is authorized to make, the demand not be too indefinite, and the information sought be reasonably relevant. (Id.) “Reasonably relevant” means reasonably relevant to the intended investigation, not to any judicial hearing. (Fielder v. Berkeley Props. Co.(1972) 23 Cal.App.3d 30, 39.) Here, Petitioner has a reasonable belief that various provisions of the Business and Professions Code (sections 6125, 6148, 6155, 6401.6, 6408, 6408.5, 6410, 6410.5, 17200, 17500, and 17602) have been violated; the substance of the sections puts NFS on notice of the basis for the subpoena. Further it seeks specific information which Petitioner believes will confirm or refute the suspicions of unlawful conduct. It concludes that the subpoena was regularly issued and duly served, and NFS must comply.

The application was granted by the Court, and the OSC was issued and a hearing on the OSC set for September 4, 2019.

NFS, appearing in pro per solely through its principal, Eric Campbell, opposed the OSC on August 21, 2019, by filing three documents. One appears to be a pleading responsive to the petition itself, one is an opposition memorandum of points and authorities, and one is a declaration. The documents filed by NFS largely consist of arguments about why the State Bar and DA investigations are based on a misunderstanding of how it operates, that just because its business model is innovative does not mean it is illegal, and arguments that substantively attempt to refute any liability under the various statutory schemes alleged. The documents repeatedly complain that the DA has not provided any evidence about how it has violated the statutory schemes, and how its investigation arose from a State Bar letter that was based upon a misunderstanding of how NFS operates, apparently in an attempt to show that the investigation is baseless. It emphasizes that it did identify one attorney it used to prepare documents for California residents, and contends that proves its willingness, within reason, to resolve any issues there might be with its business model.

It contends it is not engaged in the unauthorized practice of law, because its system allows pro-se litigants to find a resolution that does not require legal advice, and its attorneys do not provide legal advice. The clients enter information into the system, which is then forwarded to a licensed attorney, and the information provided “tells” the attorney what documents the client would like prepared and what information will be included. NFS contends its attorneys are only “scribers” who fill out the documents. It contends that it is not an attorney referral service, because when a client is interested in hiring an attorney, NFS only conducts a geo-specific Google search query and transmits the resulting list of attorneys to the client, the attorneys are not aware of the referral, and it does not get paid for the referral. It argues that it is not violating the Legal Document Assistant statutes, because it uses attorneys to prepare the documents, not non-attorneys. It further does not believe it is engaged in false advertising.

NFS believes that complying with the subpoena would be detrimental and would cause it irreparable harm, because the DA’s office is requesting, among other things, the contact information of all attorneys who work with it, for the purpose of investigating alleged illegal activity. It previously turned over the contact information of one of its attorneys, who resigned from her position with NSF upon being contacted by an agency, and it fears that the same will happen with its remaining attorneys if it divulges their identities, resulting in it having no staff to prepare documents.

In its reply papers, the District Attorney first notes that the oppositions were filed by Eric Campbell, a non-lawyer, who cannot legally appear for NFS, an LLC, in this action, and urges that the opposition papers be disregarded. The reply further notes that the key questions concern relevance—which is broadly defined in this context. The DA is authorized to investigate pursuant to Government Code section 11180 et seq., if she “reasonably believes” there “may have been” a violation of the unfair competition law. (Bus. & Prof. Code, § 16749.) The State Bar’s determination that NFS engaged in the unauthorized practice of law is sufficient basis for that reasonable belief. NFS contends the extensive online questionnaire (which Campbell attached) tells the attorney what document the client would like prepared, but it does not directly do so, and in fact that scriber must necessarily ascertain from the information given what documents are needed. If NFS does not employ attorneys, someone else is making those determinations, and is engaged in the unauthorized practice of law. If independent contractor attorneys are making the decisions, they are practicing law and not acting as scriveners. As a result, petitioner has a reasonable belief that NFS is committing the unauthorized practice of law, either by having employees provide legal services or by hiring attorneys to do so.

With respect to the Legal Document Assistants law, the NFS client contract (also attached to the opposition) states NFS will provide documentation services to clients, putting in doubt Campbell’s statement that only a licensed attorney would prepare requested documents. To the extent it provides document services, the contract does not comply with Business and Professions Code section 6410, or 6410.5(a). Petitioner therefore has a reasonable belief that NFS is violating the LDA statute.

With respect to the contention that NFS is acting as an unlawful lawyer referral service, NFS contends that it only provides to clients lists of attorneys it locates on Google, without charge. The definition of a lawyer referral service is not dependent upon whether the referring party gets paid, however, and NFS advertises that it will can refer attorneys “from our trusted network.” This gives rise to a reasonable belief that NFS may be acting as an unlawful referral service, and it is authorized to investigate even if just to make sure the law is not being violated.

Petitioner also has a reasonable belief that respondent is in violation of the false advertising law, since it advertises that attorneys and legal document assistants prepare the filings, and that its “provider network of attorneys and other legal professionals… provide on-demand services,” which could deceive clients into believing that attorneys are performing legal services.

No privilege is asserted against identifying NFS’s independent contractor attorneys. Further, NFS must identify its managers and employees. If the business is in fact lawful, NFS should not have any trouble finding attorneys willing to perform the services.

Finally, petitioner contends that NFS’s substantial arguments regarding its compliance with the law are misplaced. The sole question here is whether Petitioner is entitled to an order compelling NFS to fully comply with the subpoena.

ANALYSIS: The Court will order NFS to comply with the District Attorney’s investigative subpoena, in the manner and to the extent outlined herein.

As a preliminary matter, the Court will not disregard the papers filed by NFS based upon its failure to appear and file papers in this court through a licensed attorney. It will caution NFS, however, that should any further proceedings be held before the Court, it must do so through use of a licensed attorney.

The Court can understand the position of NFS, in urging that it should not be compelled to comply with the subpoena, based upon its belief that it is operating in compliance with the law. In fact, if the District Attorney is permitted to complete its investigation, it may well conclude that NFS is operating in compliance with the law, and that no enforcement action is needed. However, the District Attorney is charged with enforcing these laws, and has been provided the authority to conduct investigations to determine if further enforcement action is necessary, based solely upon a reasonable belief that NFS “may be” operating in violation of the law. The information the District Attorney received from the State Bar of California provides support for the District Attorney’s reasonable belief that NFS may be operating in violation of the law. This is true in spite of NFS’s protestations that the State Bar’s conclusions were based upon a misunderstanding of the NFS business model.

The OSC seeks, in very general terms, an order compelling NFS to appear and testify, and answer interrogatories and produce documents, in response to the subpoena. Petitioner’s documents filed in support of the OSC do not clearly state which responses were not sufficiently answered. The Court is not inclined to simply issue a blanket order simply requiring full compliance, without articulation of what specific matters which the District Attorney contends were not properly answered. While a petition to compel compliance with an investigative subpoena may not be subject to civil discovery rules, including the requirement that motions to compel be accompanied by a separate statement setting forth the factual and legal reasons for compelling further responses as to each individual matter in dispute (see Cal. Rules of Court, rule 3.1345, subd. (c)), it is certainly subject to principles of due process. The Court will not compel compliance with any interrogatory other than those NFS could reasonably ascertain had been insufficiently answered, by reference to the petition and its supporting papers. As to any other matters, NFS has been deprived of its due process right to respond to the matter on its merits, and they will not be the subject of the Court’s order compelling further response.

The focus of the Petition appears to be those interrogatories which sought to have NFS identify persons who might be able to provide Petitioner with information from which it could evaluate whether or not NFS’s business model is operating in compliance with the law, as it contends. Specifically, NSF refused to identify persons it employs or with whom it has independent contractor relationships (lawyers, attorney or legal document assistant “team” members, family psychologists, “other legal professionals” [No. 16.b.], LDAs, customer support, doctors, private investigators, case managers, California clients, managers, and employees, as well as clients whose testimonials are on the NFS website), in Interrogatory Nos. 1, 2, 13-17, 20, 32, 37, and 38. The public interest in ensuring compliance with the law would appear to this Court to outweigh any privacy interest that any such persons may have in simply being identified in response to the subpoena. Further, while NSF expressed concern about the impact that a District Attorney investigation of possible criminal conduct could have on its business and business associates, and while that concern is understandable, it does not outweigh the public interest in ensuring that businesses which conduct activities that are regulated by the law, are acting in compliance with the law.

The Court will therefore order NFS to respond to and provide further answers to Interrogatory Nos. 1, 2, 13-17, 20, 32, 37, and 38. The Court notes that NFS has responded to No. 32 both with an objection against identifying its clients who requested or obtained services for a matter concerning California law or a California court based upon the clients’ privacy rights, but also stated that it could not provide response because its database did “not have a query functionality to distinguish specific states client’s data.” Petitioner will be entitled to further information with respect to the database’s capabilities, should she so desire.

Petitioner does not specify any requested documents that were not produced by NFS in response to the subpoena. Other than those documents that were sought related to the interrogatories for which NFS refused to identify the responsive persons, due process would, once again, prohibit any blanket order compelling production, since NFS has not had an opportunity to address those issues on their merits. As a result, to the extent this Court is ordering further production of documents, the production order is limited to those documents sought within the numbered requests addressed above.

The OSC seeks an order to have NFS “appear and testify and answer interrogatories and produce documents.” To the extent that Petitioner believes that such physical appearance is required, it shall coordinate with NFS to find a mutually agreeable date, time, and place for that appearance. NFS shall determine and produce its person most qualified to testify and provide the information which is requested, whether or not that person is Mr. Campbell. The person designated by NFS shall be permitted to appear with counsel. If physical appearance is not required, NFS will be ordered to provide the supplemental interrogatory responses and document production to Petitioner on or before September 25, 2019, or such other date to which the parties may agree.