Case Name: Lore Emily Karamcheti v. Midland Funding, LLC, et al.

Case No.: 2015-1-CV-283437

This is a class-action lawsuit brought by plaintiff Lore Emily Karamcheti (“Plaintiff”) against defendant Midland Funding, LLC (“Midland”) for violating the California Fair Debt Buying Practices Act (“FDBPA”). Plaintiff allegedly incurred a financial obligation in the form of a consumer credit account issued by Citibank, N.A. (“Citibank”). (Complaint, ¶11.) On or about March 8, 2014, Citibank received the last payment. (Id. at ¶12.) Several months later, Citibank removed the debt from its books as an asset and treated it as a loss or expense. (Id. at ¶13.) Shortly thereafter, the debt was sold by Citibank to Midland for collection purposes. (Id. at ¶14.) Two weeks later, Midland sent or caused to be sent a written communication to Plaintiff, the first written communication from Midland to Plaintiff regarding the debt. (Id. at ¶16.) This communication did not contain the notice required by Civil Code section 1788.52, subdivision (d)(1) (“Section 1788.52”) of the FDBPA. (Id. at ¶¶15-18.)

Currently before the Court is (1) Plaintiff’s motion to compel deposition attendance and document production and (2) Midland’s related motion to seal certain documents.

For context, on July 18, 2017, Plaintiff served a deposition notice on Midland to depose its person most knowledgeable (“PMK”) and for the production of documents. (Salmonsen Decl., ¶ 3; Exh. A.) Two weeks before the scheduled deposition date, Midland served formal objections to the subjects for examination and document demands. (Id. at ¶ 5; Exh. C.) Midland’s counsel also advised Plaintiff for the first time that two of its attorneys would be unavailable on the noticed deposition date. (Id. at ¶ 6, Exh. D.) In response, Plaintiff’s counsel sent Midland’s counsel a letter requesting three alternative deposition dates. (Id. at ¶ 7, Exh. E.) Thereafter, Midland’s counsel provided three potential deposition dates but refused to provide a PMK unless Plaintiff narrowed the scope of her deposition notice to cover only the subjects and documents Midland deemed relevant to the action. (Id. at ¶ 8, Exh. F.) In an effort to meet and confer, Plaintiff’s counsel responded to Midland’s letter, addressing the objections it raised and attempting to narrow the scope of some of the matters for examination. (Id. at ¶ 9, Exh. G.) Midland’s counsel responded by reiterating his refusal to provide a PMK and responses to document requests outside the scope of the subjects Midland deemed relevant to the action. (Id. at ¶ 10, Exh. I.) Midland did not appear at the noticed deposition.

Plaintiff therefore filed the instant motion to compel the attendance of Midland’s PMK for deposition and production of requested documents. Midland filed an opposition to the motion as well as a motion to seal certain documents Plaintiff conditionally lodged under seal in support her motion. Plaintiff seeks an award of sanctions against Midland in connection with her motion, and Midland seeks sanctions from Plaintiff in connection with its motion to seal.

I. Motion to Compel

A. Deposition Attendance
Plaintiff seeks an order under Code of Civil Procedure Section 2025.450 (“Section 2025.450”) compelling Midland’s PMK to attend deposition. Section 2025.450 authorizes a motion to compel a deponent’s attendance where he or she failed to appear.

As a preliminary matter, Midland argues Plaintiff failed to meet and confer in good faith prior to filing the instant motion. Under Section 2025.450, subdivision (b)(2), a motion to compel must be accompanied by a meet and confer declaration or, when the deponent fails to attend the deposition, a declaration stating the moving party contacted the deponent to inquire about the nonappearance. As Midland failed to attend the deposition, Plaintiff was only required to submit a declaration stating she contacted Midland to inquire about the nonattendance. Here, discussions between the parties’ counsel occurred before the deposition because Midland objected to the deposition notice and indicated it would not attend the deposition. Plaintiff’s counsel complied with the spirit of the statute because he inquired about Midland’s planned nonattendance in advance of the deposition. Even assuming Plaintiff’s counsel was required to do more than inquire about the nonattendance, the record reflects he did so and Midland’s contention those efforts were inadequate is unsupported.

To adequately meet and confer, the propounding party must make a reasonable and good faith attempt to informally resolve the discovery matters at issue. (Code Civ. Proc., § 2016.040.) This requirement 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. Sup. Ct. (1998) 61 Cal.App.4th 1431, 1435.) “A reasonable and good-faith attempt at informal resolution entails something more than bickering…the law requires that counsel attempt to talk the matter over, compare their views, consult, and deliberate.” (Id. at p. 1439.)

Midland argues Plaintiff did not meet and confer in good faith because she “failed to meaningfully seek an informal resolution regarding the scope of the PMK notice” and was dilatory in stipulating to a protective order regarding certain confidential documents which Midland would only produce when such order was in place. (Opp. at p. 10:25-26; 11:1-7.) The Court is not persuaded the evidence demonstrates Plaintiff insufficiently met and conferred with Midland prior to filing this motion.

The same day Midland served its objections to Plaintiff’s deposition notice and advised her of counsel’s unavailability to attend on the scheduled date, Plaintiff’s counsel contacted Midland’s counsel to try and arrange for an alternative deposition date. (Salmonsen Decl., Exhs. D, E.) Moreover, when Midland’s counsel persisted in refusing to produce a deponent unless the subjects for examination and document requests were narrowed, Plaintiff’s counsel substantively responded and offered to narrow the scope of some of the matters for examination. (Salmonsen Decl., Exh. H.) He further represented that once Midland agreed to provide a deponent, he would re-notice the deposition for one of the dates Midland’s counsel stated he would be available. (Ibid.) Midland’s counsel did not accept Plaintiff’s counsel’s offers of compromise and continued to stand on his same objections. (Salmonsen Decl., Exh. I.) The record therefore establishes Plaintiff sufficiently met and conferred with Midland prior to filing this motion. The fact that Plaintiff did not agree to all of Midland’s demands does not mean Plaintiff failed to adequately meet and confer.

Turning to the merits of the motion, Section 2025.450, subdivision (a) provides that “[i]f after service of a deposition notice, a party to the action…without having served a valid objection under Section 2025.410, fails to appear for examination or to proceed with it…the party giving the notice may move for an order compelling the deponent’s attendance and testimony.” Under Section 2025.410, a valid objection is one based on an error or irregularity in the deposition notice. (Code Civ. Proc., § 2025.410, subd. (a).) If a party objects on other grounds, the party must nevertheless appear for the deposition as noticed, unless the party files a motion to stay the taking of the deposition and quashing the notice or for a protective order. (See Code Civ. Proc., §§ 2025.280, subd. (a), 2025.410, subd. (c), 2025.420.)

Here, Plaintiff served a notice for the deposition to occur on September 22, 2017. (Salmonsen Decl., ¶ 3; Exh. A.) Next, no objection regarding an error or irregularity in the notice was served. Code of Civil Procedure section 2025.410, subdivision (a) authorizes a party served with a deposition notice that “does not comply with Article 2 (commencing with Section 2025.210)” to serve a written objection specifying that error or irregularity. Article 2 covers the requirements of noticing and conducting a deposition, such as when and where a deposition may be taken (Code Civ. Proc., §§ 2025.210, 2025.250), the contents of a deposition notice (Id. at § 2025.220), and the time limit for depositions (Id. at § 2025.290). None of the provisions of Article 2 relate to interposing the types of objections Midland raised. Midland objected to the deposition notice on the ground it was procedurally defective because Plaintiff unilaterally set the deposition date. (Salmonsen Decl., Exh. C.) This is not an objection contemplated by Section 2025.410 as Article 2 contains no requirement that a noticing party consult with the deponent before scheduling a deposition date. Midland also objected to the notice on substantive grounds, arguing that the matters for examination and the document demands were overbroad. (Id.) These are also not the type of objections contemplated by section 2025.410. Thus, the objections Midland served did not excuse it from attending the September 22, 2017 deposition. Because Midland did not serve a valid objection to the deposition notice and failed to appear for examination, Plaintiff’s motion to compel deposition attendance is warranted.

Midland’s arguments in opposition are not persuasive. It contends the subjects for examination in the deposition notice are either overbroad and not narrowly tailored to the issues it deems relevant to the litigation, moot because of the parties’ prior stipulations, or violative of third-party privacy rights. Midland cites no legal authority supporting the proposition that a party can broadly object in advance to matters for examination listed in a deposition notice and then be excused from attendance. To the extent Midland has objections to actual questions asked at the deposition, nothing in this order prevents it from interposing legitimate objections at that time. Then, if necessary, Plaintiff may bring a motion to compel deposition answers under Code of Civil Procedure section 2025.480 (“Section 2025.480”).

Accordingly, the motion to compel the deposition attendance of Midland’s PMK is GRANTED. Midland’s PMK shall appear for deposition within 20 days of this Order, unless otherwise agreed, at a mutually decided time.
B. Document Production

Plaintiff seeks to compel the production of documents requested in her deposition notice. Sections 2025.450 and 2025.480 govern this portion of the motion. Section 2025.450 states that if, after serving a deposition notice, the deponent fails to serve a valid objection and produce requested documents for inspection, the deposing party may move for an order compelling production. Similarly, Section 2025.480 provides that if a deponent fails to produce any document at deposition, the deposing party may move to compel production.

As an initial matter, the Court notes that although Midland served written objections to the document requests in the notice, the Civil Discovery Act does not contemplate service of formal written objections to document production requests made in connection with a deposition notice. Instead, a deponent may substantively object to production at the deposition itself. (See Carter v. Sup. Ct. (1990) 218 Cal.App.3d 994, 997 [noting that procedure relating to stand-alone document demands “is quite different from a deposition at which a party is required to bring documents”]; see also Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2017), ¶ 8:531.) This contrasts with stand-alone inspection demands; a party must serve written responses to such requests by the production time prescribed by law and waives any objections not timely asserted. (See Code Civ. Proc., §§ 2031.030, subd. (c)(2), 2031.210, subd. (a), 2031.270, 2031.300.) Thus, where a deponent fails to attend deposition and the parties did not meaningfully discuss attendant document requests prior to a motion to compel production, the court would typically decline to evaluate the motion as it would not yet be known whether the deponent will produce the documents requested. Here, however, since formal objections to the document requests were served, the parties met and conferred, and the parties addressed the substance of Midland’s objections in their papers, the Court will address the merits of the motion in the interests of judicial efficiency.

Plaintiff moves to compel production in response to requests for production of documents (“RPD”) Nos. 1, 3, 5-7, 9, and 11-12. A motion for an order compelling document production “shall set forth specific facts showing good cause justifying the production for inspection of any document, electronically stored information, or tangible thing described in the deposition notice.” (Code Civ. Proc., §2025.450, subd. (b)(1); see also Kirkland v. Sup. Ct. (2002) 95 Cal.App.4th 92, 98 (Kirkland).) Once good cause is shown, the burden shifts to the responding party to justify its objections. (See Kirkland, supra, 95 Cal.App.4th at p. 98.)

Preliminarily, the Court will address RPD Nos. 6 and 7 because no meaningful dispute exists at this juncture regarding the propriety of these requests. Midland represents in its opposition that it will produce documents responsive to both RPD Nos. 6 and 7 following entry of the parties’ stipulated protective order. (See Opp. at p. 15-16.) The protective order was entered on December 22, 2017. Accordingly, the motion to compel production in response to RPD Nos. 6 and 7 is GRANTED and the Court will address the balance of Plaintiff’s requests below.

1. Good Cause Requirement and Relevance Objections

Midland objected to all requests at issue on the ground they seek irrelevant information. Plaintiff argues good cause exists for the discovery sought because it will help her prove elements of her claims. In opposition, Midland attempts to justify its relevance objections.

To establish good cause for the discovery sought, the moving party must make “a fact-specific showing of relevance.” (Glenfeld Development Corp. v. Sup. Ct. (1997) 53 Cal.App.4th 1113, 1117.) Information is relevant to the subject matter if it might reasonably assist a party in evaluating its case, preparing for trial, or facilitating settlement. (Gonzalez v. Sup. Ct. (1995) 33 Cal.App.4th 1539, 1546.) “Admissibility is not the test and information, unless privileged, is discoverable if it might reasonably lead to admissible evidence.” (Ibid., original italics.) Courts liberally construe the relevance standard, and any doubts as to whether a request seeks information within the scope of discovery are generally resolved in favor of allowing discovery. (Colonial Life & Accident Ins. Co. v. Sup. Ct. (1982) 31 Cal.3d 785, 790.)

RPD No. 1 seeks the January 30, 2014 purchase and sale agreement between Midland and Citibank, including all attachments, schedules and exhibits. Plaintiff asserts the discovery sought is relevant because it is necessary to determine the threshold issue of whether or not Midland is a “debt collector” and “debt buyer” who had knowledge it was purchasing consumer debts. Though she acknowledges this Court (Hon. Stoelker) previously held she failed to establish good cause justifying the production of this purchase agreement, Plaintiff contends this order was rendered in the context of a motion to compel the production of documents necessary for her to oppose an impending motion to compel arbitration. In opposition, Midland argues the purchase agreement is irrelevant to the claims at issue because it is the bill of sale and not the purchase agreement that transferred Citibank’s rights to Plaintiff’s account to Midland and this bill of sale was previously produced. Both parties’ arguments are misplaced. For purposes of Section 1788.52, a “debt buyer” is a person or entity that is regularly engaged in the business of purchasing charged-off consumer debt for collection purposes and not one that acquires a charged-off consumer debt incidental to the purchase of a portfolio predominantly consisting of consumer debt that has not been charged off. (Civ. Code § 1788.50, subd. (a)(1).) Here, Plaintiff fails to demonstrate how production of the single purchase agreement between Midland and Citibank would tend to demonstrate that Midland is an entity that regularly engages in the business of purchasing charged-off consumer debt. As such, she does not establish good cause for this request.

RPD No. 3 seeks all contracts, agreements, correspondence or other documents between Midland and Midland Credit Management, Inc. (“MCM”) regarding Plaintiff’s debt. Plaintiff asserts the discovery sought is relevant because Midland asserted in its motion for summary judgment that it placed her debt with MCM for servicing and MCM developed procedures to ensure its letters complied with the FDBPA’s requirements. Plaintiff concludes that any contract by which MCM was working as a servicer for Midland would therefore be relevant to the claims in the case. In opposition, Midland broadly asserts without analysis that this request has nothing to do with the single issue in the case (i.e. whether Midland violated the FDBPA by failing to include a Section 1788.52 notice in its first written communication to Plaintiff). Midland further argues only some of the documents sought through this request would be relevant, thereby seemingly conceding this request does in fact seek documents that are relevant. Midland does not substantiate the first part of this argument and the second part merely pertains to the breadth of this RPD, which does not actually address the existence of good cause. Plaintiff otherwise establishes good cause for the discovery sought. Documents relating to the nature of the relationship between Midland and MCM might reasonably assist Plaintiff in evaluating her case and preparing for trial as Midland claims MCM was directly responsible for ensuring its letters complied with the FDBPA.

RPD No. 5 requests documents showing the design, creation, review, approval, printing, or mailing of collection letters like the one Plaintiff received. Plaintiff asserts the discovery sought is relevant because these documents are directly relevant to the claims and defenses in the case. Though this argument is somewhat conclusory in its analysis, the Court agrees that documents relating to the creation, production and mailing of Midland’s collection letters might reasonably assist Plaintiff in evaluating whether Midland included the Section 1788.52 notice in its first written communication to Plaintiff and the other class members. Midland’s argument in opposition is identical to its argument relative to RPD No. 5. For the reasons discussed, its argument is unpersuasive and Plaintiff establishes good cause for this request.

RPD No. 9 requests Midland’s collection logs or other records of collection activities related to Plaintiff’s account. Plaintiff asserts the discovery sought is relevant because collection logs and other records of collection activities are relevant to demonstrate Midland’s process for sending collection letters along with its determination of which individual would receive the letters. She also argues documents responsive to this request would be directly relevant to Midland’s assertion of bona fide error as an affirmative defense in this case, as they would tend to show whether its FDBPA violation was intentional or occurred notwithstanding processes it had in place to prevent such violations. The Court agrees. Midland’s argument in opposition is identical to its argument relative to RPD No. 5. For the reasons discussed, this argument is unpersuasive and Plaintiff establishes good cause for this request.

RPD No. 11 requests all mailing lists reflecting the names, addresses and contact information of all persons to whom MCM mailed collection notices like the one received by Plaintiff, from July 22, 2014 to the present. Plaintiff asserts the discovery sought is relevant because documents relating to the identity of potential class members is usually discoverable and relevant to the determination of whether the issues should be adjudicated in a class action rather than a multiplicity of suits. In opposition, Midland does not address the issue of relevance. The Supreme Court has held that “[c]ontact information regarding the identity of potential class members is generally discoverable, so that the lead plaintiff may learn the names of other persons who might assist in prosecuting the case.” (Pioneer Elecs. (USA), Inc. v. Superior Court (2007) 40 Cal. 4th 360, 373.) As such, Plaintiff sufficiently establishes good cause for this request.

RPD No. 12 requests Midland’s most recent balance sheet, including all supporting notes, schedules, exhibits and similar documents. Plaintiff asserts the discovery sought is relevant because documents relating to Midland’s net worth are relevant to the determination of whether or not a class action should be permitted and to the issue of potential damages that may be assessed against Midland. In opposition, Midland does not address the issue of relevance. Civil Code section 1788.62, subdivision (b) provides that “[i]f the court finds that the debt buyer engaged in a pattern and practice of violating any provision of this title, the court may award additional damages to the class in an amount not to exceed the lesser of five hundred thousand dollars ($500,000) or 1 percent of the net worth of the debt buyer.” The issue of Midland’s net worth is therefore directly relevant to the amount of damages that may be recoverable against it. As such, Plaintiff sufficiently establishes good cause for this request.

In sum, Plaintiff establishes good cause exists for the discovery sought in RPD Nos. 3, 5, 9, and 11-12 and the relevance objections are overruled. As for RPD No. 1, Plaintiff failed to establish good cause and the motion as to that request will therefore be denied.

2. Additional Objections

Midland also objected to each request on the grounds of attorney-client privilege; attorney work product doctrine; privacy; confidential, proprietary, commercially sensitive, and/or trade secret information; compound; overbreadth; undue burden and oppression; and vagueness and ambiguity. With respect to RPD No. 12, Midland also objected to the request on the grounds it is premature because class certification has not occurred yet. In addition, with respect to RPD Nos. 3, 5 and 9, Midland objects for the first time in its opposition that the requests are duplicative or cumulative.

Midland does not attempt to justify all of these objections. Therefore, the undefended objections are overruled, with the exception of the objections based on the attorney-client privilege and work product doctrine which are preserved. (See Best Products, Inc. v. Superior Court (2004) 119 Cal.App.4th 1181, 1188-1189; Kirkland, supra, 95 Cal.App.4th at 98.) The objections Midland does attempt to justify are discussed below.

a. RPD Nos. 3, 5 and 9

RPD No. 3 seeks all contracts, agreements, correspondence or other documents between Midland and MCM or its affiliates regarding Plaintiff’s specific debt; RPD No. 5 seeks all documents that would show the design, creation, review, approval, printing or mailing of collection letters like the one received by Plaintiff; and RPD No. 9 seeks Midland’s collection logs or other record of collection activities regarding Plaintiff’s specific account.

Midland argues these requests are overbroad because they are not tailored to elicit production of documents relevant to the limited issue of whether it included the Section 1788.52 notice insert in its first written communication to Plaintiff. Midland contends that, at best, the only relevant information within the scope of these requests is any documentation between Midland and MCM regarding the procedures in place to send Plaintiff the Section 1788.52 notice. The Court agrees. As worded, RPD No. 3 requires Midland to produce all contracts, correspondence or documents between Midland and MCM regarding Plaintiff’s debt, irrespective of whether or not these documents relate to the issue of Midland’s sending (or failure to send) Plaintiff the Section 1788.52 notice insert. Similarly, RPD Nos. 5 and 9 seek all documents related to Midland’s process of creating and mailing collection letters without reference to its specific processes for sending a Section 1788.52 notice insert. As such, the overbreadth objection is sustained as to RPD Nos. 3, 5 and 9. It is therefore unnecessary for the Court to address any additional objections to these requests. The Court’s ruling does not preclude Plaintiff from serving amended document requests that are more narrowly tailored in view of the Court’s decision.

b. RPD Nos. 11 and 12

RPD No. 11 requests the name and contact information of all persons to whom MCM mailed collection notices like the one received by Plaintiff, from July 22, 2014 to the present, and RPD No. 12 requests documents relating to Midland’s net worth.

Midland argues these requests are moot in light of the parties’ agreement to stipulate that, for purposes of this action, the size of the putative class satisfies the numerosity prong of the class certification analysis and Midland’s net worth exceeds the statutory maximum for damages in an FDBPA class action. It does not further substantiate its argument or cite any legal authority in support of its position. As such, Midland’s mootness objection is overruled.

3. Conclusion

For the reasons set forth above, Plaintiff’s motion to compel production of documents requested in her deposition notice is GRANTED IN PART and DENIED IN PART. The motion is DENIED as to RPD Nos. 1, 3, 5 and 9. The motion is GRANTED as to RPD Nos. 6, 7, 11 and 12. To the extent the motion is granted, Midland shall produce responsive documents at the deposition, except that it is not required to produce documents it maintains are protected from disclosure by the attorney client privilege and attorney work product doctrine.

C. Request for Sanctions

Plaintiff requests an award of monetary sanctions against Midland and its counsel pursuant to Code of Civil Procedure sections 2023.030 (“Section 2023.030), subdivision (a), 2025.450, subdivision (g)(1), and 2025.480, subdivision (j).

Plaintiff argues Midland failed to comply with Sections 2025.450 and 2025.480 and has also misused the discovery process. With respect to allegations of misuse of the discovery process, Plaintiff generally charges Midland with withholding information, documents and identifying information for percipient witnesses.

To the extent Plaintiff bases her sanctions request on misuses of the discovery process unrelated to the deposition notice, she cites Section 2023.030, subdivision (a), which provides that a court may impose a monetary sanction against “one engaging in the misuse of the discovery process.” The prefatory paragraph of Section 2023.030 only authorizes sanctions “[t]o the extent authorized by the chapter governing any particular discovery method.” Sections 2025.450 and 2025.480, the statutes governing failures to appear or produce documents at a deposition, do not authorize an award of sanctions for anything other than discovery misuses related to deposition matters. Plaintiff cites no independent statutory authority justifying a sanctions award based on general claims a party has withheld information, documents or witness information.

With respect to the motion to compel deposition attendance, however, Sections 2025.450 and 2025.480 do authorize monetary sanctions where a party successfully makes a motion to compel deposition attendance and production of documents pursuant to a deposition notice, unless the party subject to sanctions acted with substantial justification or other circumstances that would make imposing sanctions unjust. Here, with respect to the issues of deposition attendance and document production, Plaintiff substantially prevailed in bringing this motion. In addition, the Court finds Midland did not act with substantial justification in opposing the majority of this motion and there are no circumstances that would make the imposition of sanctions unjust. While Midland argues the Court should deny Plaintiff’s request for sanctions because she failed to adequately meet and confer and purportedly ignored its offer of alternative deposition dates, this contention is not well-taken for the reasons previously discussed.

Plaintiff requests monetary sanctions in the amount of $9,160.00, representing 26 hours of attorney time at $350.00 per hour and a $60 filing fee. (Supplemental Salmonsen Decl., ¶ 6.) The Court declines to award sanctions for the full 26 hours of time actually spent working on the motion and reply because that amount is excessive. The motion did not raise complex issues warranting the expenditure of nearly three full days of work. Furthermore, Plaintiff did not prevail in full, thereby justifying a decrease in recoverable attorney’s fees. The Court finds that a reasonable amount of time to spend preparing a motion and reply under these circumstances is 14 hours. Plaintiff’s request for monetary sanctions is therefore GRANTED IN PART in the amount of $4,960 (14 hours x $350.00 + $60.00). Midland shall pay this sanction to Plaintiff’s counsel within 20 calendar days of this Order.

II. Motion to Seal

Midland and non-party MCM (“Moving Parties”) jointly move to seal (1) an intercompany services agreement between Midland and MCM; (2) production notes related to another individual’s account with MCM; (3) an approval letter from a supervisory examiner with the Nevada Department of Business and Industry; and (4) documents relating to marketing decisions and the effectiveness of MCM’s marketing tools. These documents were lodged conditionally under seal by Plaintiff in support of her motion to compel Midland’s deposition attendance and production of documents. The sealing request is made pursuant to California Rules of Court, rules 2.550 and 2.551. The Moving Parties also request an award of sanctions.

A. Merits of the Motion

California Rules of Court, rules 2.550 and 2.551 set forth specific criteria for permanently sealing court records. (See Cal. Rules of Court, rule 2.550(d) [stating that the court must make the following express factual findings before granting leave to file records under seal: (1) an overriding interest overcomes the public’s presumptive right of access to court records, (2) that interest supports sealing the records, (3) a substantial probability exists that the overriding interest will be prejudiced if the records are not sealed, (4) the proposed sealing is narrowly tailored, and (5) no less restrictive means exist to achieve the overriding interest].)

However, these criteria do not directly apply to “discovery motions and records filed or lodged in connection with discovery motions or proceedings.” (Cal. Rules of Courts, rule 2.550(a)(3); see also Mercury Interactive Corp. v. Klein (2007) 158 Cal.App.4th 60, 93–94 [holding there is no right of public access to discovery materials that are not used at trial for adjudicatory purposes]; NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1210 [same].) Instead, in discovery proceedings, a party moving to seal records is held to a lesser burden and need only identify the specific information claimed to be entitled to confidentiality and the nature of the harm threatened by disclosure. (See H.B. Fuller Co. v. Doe (2007) 151 Cal.App.4th 879, 894.) Before ruling on a motion to seal in this context, a court must also weigh any countervailing considerations. (Ibid.)

As a preliminary matter, the parties expend significant effort discussing whether the lodging of the subject documents violated a stipulated protective order Plaintiff’s counsel entered into with the Moving Parties in a prior federal lawsuit involving a different plaintiff, as counsel purportedly acquired the documents pursuant to the terms of that order. This previous action is separate and distinct from the present matter and, as such, the protective order has no binding effect on this litigation.

With that said, the Court nevertheless finds that with respect to the intercompany services agreement between Midland and MCM, the production notes related to the plaintiff’s MCM account in the prior federal lawsuit, and the MCM marketing materials, the motion to seal has merit. Though both parties apply the incorrect sealing standard, the Moving Parties have nonetheless demonstrated specific facts showing the disclosure of the above-listed documents would harm their business interests.

With respect to the intercompany services agreement between Midland and MCM, the Moving Parties argue the agreement contains competitive and commercially sensitive information, including the financial and legal terms of their agreement and the structure of their valuable ongoing business relationship. (Gerkin Decl., ¶ 3.) Such confidential and proprietary business information is the very type of matter they seek to shield from their competitors as its disclosure would harm their financial and business interests. (Id.) With respect to the production notes regarding the MCM account at issue in the prior federal action, the Moving Parties assert disclosure of these documents would violate that plaintiff’s constitutional right to privacy as it contained detailed notes regarding her financial obligation to MCM. Finally, with respect to the marketing materials, the Moving Parties argue these documents contain commercially sensitive, confidential, proprietary and trade secret information, including information relating to MCM’s marketing techniques, marketing decisions and the effectiveness of its marketing tools. (McClure Decl., ¶ 4.) They further contend any disclosure of such information would lead to a loss in their competitive advantage in the debt buying and debt collection industry. (Id.) The Court finds these assertions of specific facts demonstrating the nature of harm that would occur in the event of disclosure are sufficient to meet the standard for sealing documents lodged in connection with a discovery motion.

Moreover, Plaintiff fails to identify any countervailing considerations that outweigh this showing of potential harm. In opposition, Plaintiff claims the Moving Parties did not substantiate their claim of harm with specific facts and further argues she was justified in providing the Court with examples of documents she seeks from the Moving Parties through discovery. Plaintiff also argues there is a necessity for other consumers’ counsel to access information from the documents she lodged with the Court. These arguments are unpersuasive. As discussed, contrary to Plaintiff’s assertion, the Moving Parties advances arguments and presented evidence clearly demonstrating the type of harm that would be suffered if these documents were not sealed. Plaintiff’s claim of justification and the need of public access to such information is unavailing because there is no right of public access to discovery materials that are not used at trial for adjudicatory purposes. (See Mercury, supra, 158 Cal.App.4th at 93–94; KNBC, supra, 20 Cal.4th at 1210.)

However, with respect to the Nevada Department of Business and Industry approval letter, the motion to seal is denied as the Moving Parties neither identify any confidential information in the letter nor any harm that would occur if such letter was disclosed. Instead, they merely argue this letter is not relevant to the claims of Plaintiff’s case. Relevance is not the standard for determining if a document should be sealed.

For the above reasons, the motion to seal is GRANTED as to (1) the intercompany services agreement between Midland and MCM; (2) production notes related to another individual’s account with MCM; and (3) documents relating to marketing decisions and the effectiveness of MCM’s marketing tools. The motion is DENIED as to the approval letter from the supervisory examiner with the Nevada Department of Business and Industry.

B. Request for Sanctions

The Moving Parties seek monetary sanctions against Plaintiff and her counsel, arguing that Plaintiff misused the discovery process by producing documents in violation of the previous federal protection order. In support of this request, they cite Section 2023.030, subdivision (a), which provides that a court may impose a monetary sanction against “one engaging in the misuse of the discovery process.” They also cite Section 2023.010, which lists examples of misuse of the discovery process, including the use of discovery to annoy, embarrass or oppress another. As previously discussed, Section 2023.030 only authorizes sanctions “[t]o the extent authorized by the chapter governing any particular discovery method.” As for Section 2023.010, it also does not independently provide for an award of actions. Furthermore, the Moving Parties do not bring the motion to seal under any chapter governing a particular discovery method. There is therefore no statutory basis for a sanctions award.

Accordingly, their request for sanctions is DENIED.