Julie Picache v. Smythe European, Inc., et al. CASE NO. 112CV219238
DATE: 19 June 2014 TIME: 9:00 LINE NUMBER: 4
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 Wednesday 18 June 2014. Please specify the issue to be contested when calling the Court and counsel.

On 19 June 2014, the motion of defendant Smythe European, Inc. for a protective order and an award of monetary sanctions was argued and submitted. Plaintiff Julie Picache filed a formal opposition to the motion.

All parties are reminded that all papers must comply with California Rules of Court, rule 3.1110(f).

Statement of Facts

This action arises out of the purchase of a 2007 Mercedes-Benz R350 by plaintiff Julie Picache (“Plaintiff”) from defendant Smythe European, Inc. dba Smythe European Mercedes Benz (“Smythe”). Plaintiff purchased the vehicle on 11 December 2011. Pursuant to the terms of the operative sales contract, Smythe had a right to cancel within 10 days if it was unable to assign the contract to a lender. Plaintiff alleges that Smythe did not contact her within the 10-day cancellation period, but on or about 27 December 2011, advised her that she needed to provide an additional down payment or return the vehicle. Plaintiff informed Smythe that it had no right to cancel the contract beyond the 10-day period, tendered a check for the first installment payment, and refused to return the vehicle. Thereafter, on 10 February 2012, Smythe had the vehicle repossessed by AD Hills Repo Company. Plaintiff alleges that Smythe had no legal right to take the vehicle, and thus, the “repossession” was tantamount to theft.

On 23 February 2012, Plaintiff filed a complaint against Smythe and AD Hills Repo Company related to these events, and filed the operative first amended complaint on 23 May 2013. Plaintiff asserts causes of action against Smythe for: (1) breach of contract; (2) violation of the Rosenthal Fair Debt Collection Practices Act; (3) violation of the Fair Credit Reporting Act; (4) violation of the Equal Credit Opportunity Act; (5) violation of Civil Code § 1785.20; (6) violation of Civil Code § 1787.2; (7) violation of the Consumers Legal Remedies Act; (8) violation of Business and Professions Code § 17200; (9) conversion; and (10) breach of the peace. Plaintiff also asserts a cause of action against AD Hills Repo Company for violation of the Fair Debt Collection Practices Act.

Discovery Dispute

On 23 May 2012, Plaintiff served Smythe with a first set of special interrogatories (“SI”), including SI Nos. 20-22. (Babbitt Dec., p. 2:1-9, Ex. 1.) SI No. 20 asked Smythe to identify, for the past 5 years, each person whose contract it cancelled due to inability to obtain financing. (Id.) SI No. 21 asked Smythe to identify each person whose contract it cancelled due to inability to obtain financing, whose vehicle was returned to Smythe. (Id.) SI No. 22 asked Smythe to identify each person whose contract it cancelled due to inability to obtain financing, whose vehicle was repossessed by Smythe. (Id.)

Smythe provided initial objection-only responses to SI Nos. 20-22 that were the subject of a discovery motion brought by Plaintiff. (Babbitt Dec., p. 2:10-28, 3:1-21.) In its opposition to Plaintiff’s motion, Smythe objected to the SI on the ground of relevancy. In its 11 December 2012 order granting Plaintiff’s discovery motion to the extent that it sought further responses to SI Nos. 20-22, the court reasoned that the information sought by SI Nos. 20-22 was relevant to the instant case because Smythe would offer evidence at trial of its custom and habit of giving timely oral notice of cancellation and Plaintiff should be able to refute that argument with evidence of Smythe’s actual practice if it differed from its representation.

Thereafter, Smythe provide further responses to SI Nos. 20-22 that were also the subject of several discovery motions. (Id.) Pursuant to the court’s 19 December 2013 order, Smythe provided a further response to SI No. 20 on 14 February 2014, in which it identified six individuals whose contracts it had cancelled due to inability to obtain financing. (Babbitt Dec., p. 3:22-24, Ex. 9.) On 23 April 2014, Smythe served a further response to SI No. 22 in which it identified one individual whose contract it cancelled due to inability to obtain financing and whose vehicle was returned. (Babbitt Dec., p. 4:6-11, Ex. 10.)

Plaintiff then served Smythe with requests for production of documents, set 5 (“RPD”), on 21 April 2014, which included RPD Nos. 41-46. (Burr Dec., p. 11:22-23, Ex. D.) Plaintiff also served Smythe with requests for production of documents, set 6 (“RPD”), on 29 April 2014, which included RPD No. 47. (Burr Dec., p. 11:24-25, Ex. E.)

RPD Nos. 41-47 ask Smythe to produce copies of all retail installment sales contracts (“RISC”) it entered into with the seven individuals identified by it in its responses to SI Nos. 20 and 22 (the “Customers”). (See Burr Dec., Exs. D, E.)

On 14 May 2014, Smythe’s counsel sent Plaintiff’s counsel a meet and confer letter regarding RPD Nos. 41-47. (Burr Dec., p. 11:8-14, Ex. A.) Smythe’s counsel indicated that it was her understanding that the RPD were propounded to determine when Smythe provided the Customers with notice of cancellation of their RISC. (Id.) Smythe’s counsel asserted that there was no document in any sales files that would provide that information, as it was Smythe’s custom and practice to provide notice of cancellation only via telephone. (Id.) Smythe’s counsel contended that the RISC sought by the RPD are irrelevant because the date on which Smythe provided the Customers with notice of cancellation of their RISC could not be determined upon a review of the same. (Id.) She advised that Smythe further objects to the RPD on the ground that the RISC set forth “substantial information that is not relevant here, including commercially sensitive financial information and trade secrets.” (Id.)

Smythe’s counsel proposed that Plaintiff withdraw the RPD and Smythe would produce “the Acknowledgement of Rewritten Contract form for each customer identified,” as those documents reflect the original contract date and the date of the re-written contract, and do not disclose any commercially sensitive or trade secret information. (Id.) Smythe’s counsel indicated that Smythe was otherwise prepared to file a motion for protective order with respect to the RPD. (Id.)

Later the same day, Plaintiff’s counsel replied to Smythe’s counsel’s meet and confer letter via email. (Burr Dec., p. 11:15-17, Ex. B, p. 2.) Plaintiff’s counsel stated that he does not believe that the information contained within the RISC is commercially sensitive financial or trade secret information. (Id.) He further asserted that production of the acknowledgments of rewritten contracts alone would not be “not sufficient.” (Id.)

Plaintiff’s counsel indicated that he would agree to modify the RPD such that Smythe could redact all information within the RISC pertaining to the price of the vehicle and financial terms, including “the annual percentage rate, finance charge, amount financed, total payments, total sales price, number of payments, amount of payments, monthly payments beginning, final payment, and all of the information in the Itemization of the Amount Financed.” (Id.) In return, Smythe would produce the acknowledgments of rewritten contracts for each of the Customers and agree to not redact information in the RISC about the buyer, seller, vehicle (e.g. new, used, make, model, and vehicle identification number), signatures, and dates indicating the dates on which the RISC was signed. (Id.)

Smythe’s counsel replied to Plaintiff’s counsel via email on 19 May 2014. (Burr Dec., p. 11:15-17, Ex. B, p. 1.) Smythe’s counsel declined Plaintiff’s counsel’s proposal and advised that Smythe was willing to produce only the acknowledgments of rewritten contracts in exchange for Plaintiff’s agreement to withdraw the RPD. (Id.) Smythe’s counsel contended that the acknowledgments of rewritten contracts set forth the only relevant information, particularly the dates on which the original contract and rewritten contract were entered into, while the RISC contain irrelevant information such as the vehicle’s make, model, and vehicle identification number. (Id.) She requested that Plaintiff’s counsel clarify why production of the acknowledgments of rewritten contracts would be insufficient. (Id.)

Later the same day, Plaintiff’s counsel responded to Smythe’s counsel via email, stating that the dates on the RISC were circumstantial evidence of whether the dealership notified the customer of the cancellation within 10 days of the date of sale of the vehicle. (Id.) Plaintiff’s counsel asserted that the compromise that he previously proposed was reasonable and Plaintiff was unwilling to accept only the acknowledgments of rewritten contracts. (Id.)

On 20 May 2014, Smythe filed the instant motion for a protective order and an award of monetary sanctions. On 9 June 2014, Plaintiff filed papers in opposition to the motion. Smythe filed a reply on 12 June 2014.

Discussion

I. Motion for Protective Order

Smythe moves for a protective order providing that it need not respond to RPD Nos. 41-47. In the alternative, Smythe moves for a protective order providing that it need only produce the acknowledgments of rewritten contracts or “the contract dates [. . .] via responses to interrogatories.” (Mem. Ps & As., p. 8:8-12.) Smythe also requests that the Court “first review the responsive documents in camera to determine their relevancy to this action,” “[s]hould [it] consider ordering the production of documents responsive to [the RPD].” (Notice of Motion, p. 2:15-17.)

A. Legal Standard

For good cause shown, a court may make any order that justice requires to protect any party or other natural person from unwanted annoyance, embarrassment, or oppression, or undue burden and expense. (Code Civ. Proc., § 2031.060, subd. (b).) For example, the court may order that all or some of the items or categories of items in the demand need not be produced, or the inspection, copying, testing, or sampling be made only on specified terms and conditions. (Code Civ. Proc., § 2031.060, subd. (b)(1)(4).)

In deciding whether there is good cause for a protective order, a court should evaluate whether the moving party has made “a factual exposition of a reasonable ground for the order sought.” (Goodman v. Citizens Live & Cas. Ins. Co. (1967) 253 Cal.App.2d 807, 819.) The moving party carries the burden of proving the existence of such a reasonable ground by a preponderance of the evidence. (Standish v. Super. Ct. (1999) 71 Cal.App.4th 1130, 1145.)

If the motion for a protective order is denied in whole or in part, the court may order that the party provide or permit the discovery against which protection is sought on terms and conditions that are just. (Code Civ. Proc., § 2031.060, subd. (g).)

B. Relevance

Smythe argues that there is good cause for a protective order because the documents sought by the RPD–all RISC Smythe entered into with the Customers–are irrelevant to the instant case.

Discovery is allowed for any matters that are not privileged, relevant to the subject matter involved in the action, and reasonably calculated to lead to the discovery of admissible evidence. (Code Civ. Proc., § 2017.010.) The “relevance to the subject matter” and “reasonably calculated to lead to discovery of admissible evidence” standards are applied liberally with any doubt generally resolved in favor of discovery. (Colonial Life & Acc. Ins. Co. v. Super. Ct. (1982) 31 Cal.3d 785, 790.) Moreover, for discovery purposes, information is “relevant to the subject matter” if it might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement thereof. (Gonzalez v. Super. Ct. (1995) 33 Cal.App.4th 1539, 1546.)

Smythe contends that the discovery sought is irrelevant because “[t]here is no place on the contracts where it is noted that a notice of cancellation was provided (i.e., that a phone call to the customer was made or a cancellation letter was sent).” (Mem. Ps & As., p. 3:18-20.) Smythe further contends that the RISC set forth “substantial information that is not relevant at all, such as fees charged by the dealership, the sale price of the vehicle, the finance rate and the cost of add-ons, such as GAP insurance and LoJack,” as well as the vehicle’s make, model, and identification number. (Mem. Ps & As., p. 3:20-22, 4:16-17.)

Smythe argues that “the only potentially relevant document [. . .] is the Acknowledgment of Rewritten Contract form, which states the date of the original contract and the date of the re-written contract, but does not disclose financing terms and other terms that are entirely irrelevant.” (Mem. Ps & As., p. 3:26-28, 4:1.)

Conversely, Plaintiff asserts that the RISC are relevant to the instant case because they may lead to admissible evidence that refutes Smythe’s contention that it has the custom and habit of giving timely oral notice of cancellation. Plaintiff argues that “if the time period between the first and second RISCs was longer than 10 days, such as 30 days apart, then this could be circumstantial evidence showing that Smythe did not notify [the Customers] [of] its intent to cancel within 10 days.” (Opp’n., p. 1:14-16.) Plaintiff additionally argues that “[i]f one or more of [the Customers] testified at trial that their contract was not canceled within 10 days, and Smythe disputed this, the time period between the signing of the two contracts could be used to dispute Smythe’s version of events.” (Opp’n., p. 7:6-8.)

Furthermore, Plaintiff asserts that information in the RISC pertaining to the buyer, the seller, signatures on the RISC, dates on the RISC, and the vehicle’s year, make, model, and identification number is relevant because she needs it “to make sure that [the Customers] can authenticate the contract if and when they are shown it.” (Opp’n., p. 8:7-11.)

Plaintiff also argues that production of the acknowledgments of rewritten contracts alone is insufficient because they are not legally binding contracts. (Opp’n., p. 9:5-7.)

The Court finds that information contained within the RISC pertaining to the vehicles purchased by the Customers and the financial terms of the RISC is irrelevant to the instant case. Information such as the vehicle’s year, make, model, and identification number is not information that is necessary for Plaintiff to confirm whether the Customers will be able to authenticate the RISC.

In addition, the finance rate, the fees charged by the dealership, the amount financed, the total amount and number of payments to be made, the sale price of the vehicle, the date of the first payment, the date of the final payment, and the cost of add-ons are irrelevant because that information will not assist Plaintiff in establishing that Smythe failed to provide the Customers with a timely notice of cancellation of their RISC.

The Court finds that information contained within the RISC pertaining to the buyer, the seller, signatures on the RISC, and the dates on which the RISC was signed, is relevant to the instant case. This information will reveal the identities of the parties to the RISC, the dates on which Smythe entered into RISC with the Customers, and the time that lapsed between the date of the original contract and the date of the rewritten contract. This information is relevant because Plaintiff may be able to use it at trial as circumstantial evidence to establish the fact that Smythe failed to provide some or all of the Customers with timely notice of cancellation.

Moreover, even though Smythe contends that there is no indication on the RISC that a notice of cancellation was provided to the Customers, Plaintiff should be afforded the opportunity to review the RISC and determine for herself whether they contain any such notation. For this reason, production of the contract dates via responses to special interrogatories or the acknowledgments of rewritten contracts alone is insufficient. Furthermore, while the acknowledgments of rewritten contracts purportedly contain the date of the original RISC and the date of the re-written RISC, there is no way for Plaintiff to ensure that they accurately reflect the actual dates on the RISC without reviewing the RISC and comparing the dates therein with the dates contained in the acknowledgments of rewritten contracts.

Accordingly, as some of the information in the RISC is relevant, Smythe is not entitled to a protective order providing that it need not respond to RPD Nos. 41-47 or, in the alternative, that it need only produce the acknowledgments of rewritten contracts or the contract dates via responses to interrogatories.

C. Privacy

Smythe argues that there is good cause for a protective order because the disclosure of the RISC sought by the RPD would violate the privacy rights of the Customers.

The right of privacy established by the California Constitution protects an individual’s “reasonable expectation of privacy against a serious invasion.” (See Pioneer Electronics (USA), Inc. v. Super. Ct. (2007) 40 Cal.4th 360, 370, citing Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 40.)

In evaluating Smythe’s privacy claim, the court applies the framework set forth in Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 40. Smythe must first demonstrate that the Customers possess a “legally protected privacy interest” in the information sought. (See id. at p. 35.) Second, the Customers must have a reasonable expectation of privacy under the particular circumstances. (See id. at p. 36–37.) Third, the invasion of privacy must be serious in nature, scope, and actual or potential impact. (See id.) Trivial invasions do not require the court to balance the interest of the parties. (See id. at p. 37.) However, if the invasion of privacy is serious and there is a reasonable expectation of privacy, then the court must balance the privacy interest at stake against other competing or countervailing interests, which include the interest of the requesting party, fairness to the litigants in conducting the litigation, and the consequences of granting or restricting access to the information. (See Pioneer Electronics (USA), Inc. v. Super. Ct., supra, 40 Cal.4th at p. 370–371.)

Smythe does not clearly articulate in its papers what information in the RISC it believes is protected by the Customers’ right to privacy. In its discussion of the Customers’ privacy rights in its memorandum of points and authorities, Smythe cites the case of Hofmann Corp. v. Super. Ct. (1985) 172 Cal. App. 3d 357, and asserts that in that case the Court of Appeal addressed a similar situation, finding that the trial court abused its discretion in allowing the production of the defendant company’s confidential customer list. (Mem. Ps & As., p. 4:24-28.) Smythe then highlights the Court of Appeal’s statement that when “sensitive information” is sought through discovery the court must carefully weigh competing factors. (Mem. Ps & As., p. 5:1-8.)

After Smythe’s brief reference to Hofmann Corp. v. Super. Ct., it states that “the Legislature has recognized the need for keeping personal information private” and cites Civil Code sections 1798.1 and 1798.3, the latter of which defines the term “personal information.” (Mem. Ps & As., p. 5:9-27.) Smythe then generally discusses the legal framework to be applied and the balancing of interests that occurs when evaluating the privacy interests of third parties and disclosure of their “personal information.” (Mem. Ps & As., p. 6:1-28, 7:1-9.)

Thus, it appears to the Court that Smythe intended to assert that the RPD violate the Customers’ privacy interests in their personal information, which includes their identities, contact information, and financial information.

With respect to the Customers’ identities and contact information, although disclosure of the same may invade their privacy, there is generally no protection for the identity, addresses, or phone numbers of percipient witnesses. (See Puerto v. Super. Ct. (2008) 158 Cal. App. 4th 1242, 1251-1252 [“[a] percipient witness’s willingness to participate in civil discovery has never been considered relevant [to the privacy analysis]—witnesses may be compelled to appear and testify whether they want to or not”].) Moreover, while the Customers’ identities and contact information are personal, they are not particularly sensitive. Furthermore, Smythe has already disclosed the Customers’ identities and contact information to Plaintiff in its responses to SI Nos. 20 and 22. Thus, the Court finds that the Customers’ identities and contact information are not protected by their right to privacy.

With respect to the Customers’ financial information, it is well-established that the right to privacy extends to a person’s financial affairs. (See Cobb v. Super. Ct. (1979) 99 Cal.App.3d 543, 550.) Here, the RPD seek the RISC, which may contain information about the Customers’ finances, including any financing they received, the amount they paid for their vehicles, and the number and amount of payments they were to make to Smythe.

Disclosure of this private financial information is a serious invasion of the Customers’ right to privacy, such that Plaintiff must establish that the information sought is directly relevant. Plaintiff is unable to establish that the information is directly relevant because, as indicated above, any information in the RISC about the type of financing the Customers received, the amount they paid for their vehicles, and the number and amount of payments they were to make to Smythe, will not have any bearing on whether Smythe provided timely notice of cancellation to the Customers. Thus, the Customers’ financial information is irrelevant to the instant case. As such, the Customers’ privacy interests clearly outweigh Plaintiff’s interest in obtaining the information sought.

Nevertheless, Plaintiff does not seek such private information and indicates that she is agreeable to redaction of all of the financial terms and information in the RISC. Accordingly, Smythe is not entitled to a protective order as requested based on the Customers’ privacy interest in their financial information. The Court will address the privacy concerns by imposing a condition of redaction as set forth below.

D. Conclusion

Smythe’s motion for a protective order is DENIED, and Smythe shall produce the documents sought by RPD Nos. 41-47, subject to the following condition. Smythe shall redact from the RISC all financial information, including the finance rate, the fees charged by the dealership, the amount financed, the total amount and number of payments to be made, the sale price of the vehicle, the date of the first payment, the date of the final payment, and the cost of add-ons, prior to production. Smythe shall also redact information about the vehicle’s year, make, model, and identification number, prior to production.

E. Request for In Camera Review

Smythe urges the Court to review the documents that are responsive to the RPD in camera prior to their production. Given the Court’s imposition of the condition outlined above, the Court finds an in camera review to be unnecessary in this case. Accordingly, Smythe’s request for an in camera review is DENIED.

II. Smythe’s Request for Sanctions

Smythe requests monetary sanctions against Plaintiff and her counsel in the amount of $2,640.00 under Code of Civil Procedure section 2031.060, subdivision (h).

Code of Civil Procedure section 2031.060, subdivision (h) states that the court shall impose a monetary sanction against any party, person, or attorney who unsuccessfully makes or opposes a motion for a protective order, 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.

Here, Smythe was ultimately unsuccessful on its motion for a protective order and, therefore, is not entitled to an award of monetary sanctions. Accordingly, Smythe’s request for sanctions is DENIED.

Conclusion and Order

Smythe’s motion for a protective order is DENIED. Accordingly, Smythe shall produce the documents sought by RPD Nos. 41-47, within 20 calendar days of the date of the filing of this order, subject to the following condition. Smythe shall redact from the RISC all financial information, including the finance rate, the fees charged by the dealership, the amount financed, the total amount and number of payments to be made, the sale price of the vehicle, the date of the first payment, the date of the final payment, and the cost of add-ons, as well as information about the vehicle’s year, make, model, and identification number, prior to production.

Smythe’s request for sanctions is DENIED.