Michael Partsch v. Kow Loon Auto Sales, Inc.		CASE NO. 113CV247883
DATE: 22 August 2014	TIME: 9:00	LINE NUMBER: 13

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 21 August 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 22 August 2014, the motion of defendant Kow Loon Auto Sales, Inc. (“Kow Loon”) to quash the deposition subpoena served on Manheim Investments, Inc. (“Manheim”), or alternatively, for a protective order precluding production, use and/or dissemination of documents from Manheim, and for monetary sanctions was argued and submitted. Plaintiff Michael Partsch (“Partsch”) filed a formal opposition to the motion.

Statement of Facts

This action arises out of Kow Loon’s sale of a used vehicle to Partsch. In his first amended complaint (“FAC”), Partsch alleges the following: After viewing an advertisement online for a used 2007 Toyota 4 Runner, Partsch visited Kow Loon’s dealership on or about 30 October 2011. (FAC, pp. 3:23-28, 4:1.) At the dealership, Partsch specifically asked Kow Loon’s salesperson about the vehicle’s history and condition. (FAC, p. 4:14-15.) The salesperson represented that the vehicle was in good condition and free from any mechanical and/or structural defects or damage. (FAC, p. 4:16-17.) The salesperson did not disclose that the vehicle was purchased at auction, where it was announced that the vehicle had sustained frame damage. (FAC, p. 4:10, 18-19.) Based on the salesperson’s representations, Partsch purchased the vehicle for $17,400. (FAC, p. 4:25-26.) Several years later, Partsch discovered that the vehicle had been involved in an accident and sustained substantial frame damage. (FAC, p. 5:24-28.)

In his operative FAC, Partsch asserts four causes of action against Kow Loon for: (1) violation of the Consumers Legal Remedies Act (“CLRA”), (2) violation of Business and Professions Code § 17200, et seq., (3) fraudulent misrepresentation, and (4) negligent misrepresentation.

Discovery Dispute

On 9 May 2014, Partsch served a subpoena on Manheim, the used vehicle auction house where Kow Loon purchased the Toyota 4 Runner for resale to Partsch. The subpoena requested all documentation concerning: (1) the sale at auction of the 2007 Toyota 4 Runner and four other vehicles; (2) the identity of the person who purchased these vehicles, and (3) all vehicles with frame/unibody damage purchased by the same person who purchased the above vehicles, between 30 July 2011 and 30 January 2012. (See Horn Decl., Ex. 1.)

On 12 May 2014, counsel for Kow Loon wrote a meet and confer letter to Partsch’s counsel, requesting that the subpoena be withdrawn for a variety of reasons, including that it seeks information concerning Kow Loon’s trade secrets. It does not appear that Partsch’s counsel responded to this letter.

Accordingly, Kow Loon filed this motion to quash the deposition subpoena, or in the alternative, for a protective order on 23 May 2014. On 29 July 2014, Partsch filed his opposition. Kow Loon filed its reply on 15 August 2014.

Discussion

I. Motion to Quash Subpoena

Kow Loon moves to quash the deposition subpoena served on Manheim on the grounds that it seeks information protected by the trade secret privilege, intrudes upon the right to privacy of its employees, and is overbroad, irrelevant and harassing.

The subpoena seeks three categories of documents. The first category includes all documents concerning the sale at auction of five used vehicles. In particular, Partsch seeks advertisements, auction reports, bills of sale, receipt of payment forms, transfer documents, condition and inspection reports, and any statements or disclosures concerning structural defects in the vehicles sold (“Category 1”). The second category of documents consists of all documents concerning the identity of the person who purchased the vehicles referenced in the first category (“Category 2”). The third category seeks all documentation concerning all vehicles with frame damage purchased by the person identified in the second category between July 30, 2011 and January 30, 2012 (“Category 3”).

A. Legal Standard

The court may, “upon motion reasonably made by a [party] … make an order quashing [a] subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as the court shall declare, including protective orders.” (Code Civ. Proc., § 1987.1, subds. (a) and (b)(1).) In addition, the court may make “any other order as may be appropriate to protect the [moving party] from unreasonable demands.” (Code Civ. Proc., § 1987.1, subd. (a).)

               B. Evidentiary Objections

Kow Loon raises a number of evidentiary objections to the declaration of opposing counsel, Kasra Sadr. There is no authority holding that the Court must rule on an evidentiary objection made in connection with a discovery motion. Furthermore, this declaration is not necessary to the Court’s resolution of the motion. Accordingly, the Court declines to rule on Kow Loon’s evidentiary objections.

               C. Service of Employment Records Notice

Kow Loon argues that the subpoena is defective because Partsch failed to notify its employees that their records are being sought in violation of Code of Civil Procedure section 1985.6.

Pursuant to Code of Civil Procedure section 1985.6, subdivision (b), prior to the date called for in the subpoena duces tecum of the production of employment records, the subpoenaing party shall serve or cause to be served on the employee whose records are being sought a copy of the subpoena and a notice of privacy rights. “‘Employment records’ means the original or any copy of books, documents, other writings, or electronically stored information pertaining to the employment of any employee maintained by the current or former employer of the employee…” (Code Civ. Proc., § 1985.6, subd. (a)(3) [emphasis added].)

Here, the documents sought are not employment records for the purposes of Code of Civil Procedure section 1985.6. First, the records sought consist of bills of sale, receipt of payment forms, transfer documents and the like, not records pertaining to the employment of Kow Loon’s employees. Second, the documents requested are maintained by Manheim, not Kow Loon. As such, they are not records “maintained by the current or former employer of the employee” as required by the statute. Accordingly, the subpoena is not defective on the ground that Partsch failed to notify Kow Loon’s employees of the subpoena.

               D. Overbreadth and Relevance Objections

Kow Loon argues that the subpoena is overbroad as to time and seeks irrelevant information because it requests documents from July 2011 until January 2012, even though the transaction at issue took place in October 2011. It also contends that the subpoena is overbroad as to scope because it involves vehicles other than the one purchased by Partsch. In opposition, Partsch asserts that the subpoena is not overbroad as to time or scope because the information requested may lead to the discovery of admissible evidence in support of his request for injunctive relief under the CLRA. Partsch’s argument is persuasive.

Discovery is allowed for any matters that are relevant to the action, reasonably calculated to lead to the discovery of admissible evidence and not privileged. (Code Civ. Proc., §2017.010.)  Information is relevant if it might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement thereof.  (See Gonzalez v. Superior Court (1995) 33 Cal.App.4th 1539, 1546.)

A plaintiff may seek injunctive relief on behalf of the general public under the CLRA. (See Friedman v. 24 Hour Fitness USA, Inc. (C.D.Cal. 2008) 580 F.Supp.2d 985, 994-995 [purpose of the injunctive relief provision of the CLRA is to remedy public wrong].) In his FAC, Partsch seeks to enjoin Kow Loon from misrepresenting to consumers the quality and condition of its used vehicles and concealing known accident and frame damage. (See FAC, p. 7:16-19, 23-25.) To that end, documents concerning Kow Loon’s purchase of used vehicles during this six-month period may assist Partsch in proving that Kow Loon engaged in a business practice of purchasing used vehicles with frame damage and reselling them at an unjustified markup without disclosing the extent of the damage to customers. Thus, the subpoena seeks information relevant to Partsch’s request for injunctive relief and is not overbroad. Accordingly, Kow Loon’s objections on these grounds are overruled.

E. Trade Secrets Objection

Kow Loon contends that disclosure of the documents sought by the subpoena violate its trade secrets because the documents may reveal its purchasing strategy, profit margins, prices and buying patterns from auction houses. (See Mem. Ps & As., p. 13:24-28.) In opposition, Partsch argues that the information sought has been disclosed to Manheim and others through the auction process and cannot, therefore, be considered a trade secret.

“‘Trade secret’ means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: [¶] (1) Derives independent economic value, actual or potential, from not being generally known to the public or other persons who can obtain economic value from its disclosure or use; and [¶] (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Civ. Code, § 3426.1, subd. (d).)

“Trade secrets are protected … in a manner akin to private property, but only when they are disclosed or used through improper means. Trade secrets do not enjoy the absolute monopoly protection afforded by patented process, for example, and trade secrets will lose their character as private property when the owner divulges them or when they are discovered through proper means.” (Chicago Lock Co. v. Fanberg (9th Cir. 1982) 676 F.2d 400, 404.) The objecting party bears the burden of establishing the existence of a protected trade secret that might be divulged. (See Bridgestone/Firestone, Inc. v. Superior Court (1992) 7 Cal.App.4th 1384, 1393.)

Here, in purchasing the used vehicles at issue from Manheim, Kow Loon voluntarily divulged information from which its purchasing strategy, profit margins, prices and buying patterns can be discovered. (See In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 305 [information not considered trade secrets once disclosed to customers].) Thus, absent a nondisclosure agreement to the contrary between Manheim and Kow Loon, the information submitted to Manheim receives no trade secret protection. (See Chicago Lock Co., supra, 676 F.2d at p. 405 [disclosure of information from which trade secret can be discovered not considered improper absent duty of nondisclosure].) Accordingly, Kow Loon’s objection on the ground of the trade secret privilege is overruled.

               F. Harassing Objection

Kow Loon objects to the subpoena on the ground that it is intended only to harass. It asserts that the subpoena is designed to discover the identity of other consumers who purchased Kow Loon vehicles with potentially undisclosed frame damage. This argument is without merit for two reasons.

First, “[S]ome burden is inherent in all demands for discovery.”  (West Pico Furniture Co. v. Superior Court (1961) 56 Cal.2d 407, 418.)  A party claiming that requested discovery is unduly burdensome must make a particularized showing of facts demonstrating hardship. (Id. at pp. 417-18.)

However, the scope of civil discovery is not without limits.  (Calcor Facility, Inc. v. Superior Court of Orange County (1997) 53 Cal. App. 4th 216, 223.  Courts have recognized that it would be a misuse of discovery to propound overbroad discovery in “an attempt to generate settlement leverage by creating burden, expense, embarrassment, distraction, etc.”  (Obregon v. Superior Court (1998) 67 Cal. App. 4th 424, 431: “It is a judge’s responsibility to control such abuse.”)

“Our observations of the day-to-day practice of law lead us to conclude this cancer is spreading and judges must become more aggressive in curbing these abuses. Courts must insist discovery devices be used as tools to facilitate litigation rather than as weapons to wage litigation. These tools should be well calibrated; the lancet is to be preferred over the sledge hammer.”  (Calcor Space Facility v. Superior Court (1997) 53 Cal. App. 4th 216, 221.

There is nothing in this record to show that discovery is being used for an improper purpose or that it is unduly burdensome.

Second, Kow Loon provides no authority for the proposition that a court may prevent a party from discovering relevant information because he or she might use the information to discover the identity of other potentially injured consumers. (See Code Civ. Proc., §2017.010 [discovery allowed for matters relevant to the action, reasonably calculated to lead to the discovery of admissible evidence and not privileged].) Accordingly, Kow Loon’s objection on this ground is overruled.

G. Privacy Objection

Kow Loon asserts that documents responsive to Category 2 concerning the identity of the person who purchased the vehicles at issue will intrude upon its employees’ right to privacy. It reasons that bills of sale, receipt payment forms, reports of sale and transfer documents will disclose private information such as the identity, home addresses, home telephone numbers and Social Security numbers of its employees. In opposition, Partsch contends that these documents will not substantially intrude on the privacy of the employees who purchased vehicles at the auction on Kow Loon’s behalf.

The right to privacy protects an individual’s “reasonable expectation of privacy against a serious invasion.” (Pioneer Electronics, Inc. v. Superior Court (2007) 40 Cal.4th 360, 370.)  Where a serious invasion of the right to privacy is shown, the proponent of the discovery must demonstrate that the information sought is “directly relevant” to a claim or defense, and “essential to the fair resolution of the lawsuit.” (Britt v. Superior Court (1978) 20 Cal.3d 844, 859; see also Binder v. Superior Court (1987) 196 Cal.App.3d 893, 901 [holding “direct relevance” requires something more than an assertion that the requested discovery might lead to admissible evidence].)

Once direct relevance has been demonstrated, the proponent of discovery must show that the information sought is not available through less intrusive means. (Allen v. Superior Court (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. Superior Court, supra, 40 Cal.4th at p. 371.)

Here, Kow Loon fails to establish that the subpoena seriously invades the right to privacy of its employees. As an initial matter, it does not explain why its employees would provide their home addresses, home telephone numbers and Social Security numbers when making purchases of used vehicles on Kow Loon’s behalf. In any case, with regard to employee addresses and telephone numbers, “it is only under unusual circumstances that courts restrict the discovery of nonparty witnesses’ residential contact information.” (Puerto v. Superior Court (2008) 158 Cal.App.4th 1242, 1254.)

Kow Loon has not established any unusual circumstances that would cause the disclosure of its employees’ contact information particularly intrusive. (Id. at p. 1253 [contact information, “while personal, is not particularly sensitive.”].) As such, the privacy objection as to the contact information of its employees is not justified.

With regard to its employees’ Social Security numbers, the parties dispute whether the subpoenaed documents are likely to include this information. Nevertheless, to assuage any privacy concerns, the Court will direct Manheim to redact any Social Security numbers appearing in responsive documents. (See Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal. 4th 360, 371 [court may implement protective measures in order to assuage privacy concerns].) Accordingly, the objection on the ground of privacy is overruled.

 

               H. Conclusion

Based on the foregoing, the motion to quash the subpoena is DENIED, but the Court directs Manheim to redact any Social Security numbers appearing in responsive documents.

II. Motion for Protective Order

In the alternative, Kow Loon seeks a protective order precluding Partsch and his attorneys from obtaining “information from the DMV or any other source concerning the Vehicle Identification Numbers obtained and the registered vehicle ownership names, addresses and contact information, and that the information obtained from Manheim be solely limited to legitimate use in the instant action and that Mr. Sadr and his law firms and anyone acting on his behalf, be ordered to cease and desist from communicating in any fashion whatsoever with the owners of the VINS obtained under the defective subpoena to MANHEIM.” (Notice of Motion, p. 2:1-6.)

A. Legal Standards

Kow Loon premises its request for a protective order on Code of Civil Procedure section 2019.030, subdivision (a), which provides that the court shall restrict the frequency or extent of use of a discovery method if it determines either of the following: (1) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome or expensive; or (2) the selected method of discovery is unduly burdensome or expensive, taking into account the needs of the case, the amount in controversy, and the importance of the issues at stake in the litigation. A party seeking a protective order bears the burden of showing good cause for the order sought. (See Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 255.)

B. Analysis

Here, Kow Loon fails to submit any evidence indicating that the information sought is unreasonably cumulative or duplicative or is obtainable from some other more convenient source, or that the subpoena is unduly burdensome or expensive. Instead, it relies wholly on the declaration of its counsel, Valerie F. Horn, who states that the discovery sought consists entirely of an illegitimate scheme by Partsch’s attorneys to discover other consumers who purchased vehicles with undisclosed frame damage. (Horn Decl., p. 3:20-26.) Assuming that these contentions prove to be true, Kow Loon does not to provide any authority for the proposition that the Court may enter a protective order under Code of Civil Procedure section 2019.030 because the opposing party may use the information to discover other potentially injured consumers.[1] Accordingly, the motion for protective order is DENIED.

III. Kow Loon’s Request for Monetary Sanctions

Kow Loon makes a request for monetary sanctions against Partsch and his attorneys pursuant to Code of Civil Procedure section 1987.2, subdivision (a), which provides that the court may in its discretion award the amount of the reasonable expenses incurred in making or opposing the motion, including reasonable attorney’s fees, if it finds that the motion was made or opposed in bad faith or without substantial justification or that one or more of the requirements of the subpoena was oppressive.

Here, Partsch successfully opposed the motion and, thus, acted with substantial justification. Accordingly, Kow Loon’s request for monetary sanctions against Partsch and his attorneys is DENIED.

Conclusion and Order

Kow Loon’s motion to quash the deposition subpoena served on Manheim, or alternatively, for a protective order is DENIED. Within 30 calendar days of the filing of this order, Manheim shall produce documents responsive to the subpoena with all Social Security numbers contained therein redacted.

Kow Loon’s request for monetary sanctions is DENIED.

 

 

________________­­­____________ DATED:

_________________________­­­________________________ HON. SOCRATES PETER MANOUKIAN Judge of the Superior Court County of Santa Clara

 

[1] In Kow Loon’s introduction to its memorandum of points and authorities, it cites to Marachic v. Spear (2013) _ U.S. [133 S.Ct. 2191, 186 L.Ed.2d 275] for the proposition that sending information requests to the Department of Motor Vehicles to discover potential clients is an impermissible purpose. (See Mem. Ps & As., p. 4:13-18.) In Marachic, the Supreme Court found that vehicle owners could bring an action for damages against attorneys for obtaining their contact information from the South Carolina Department of Motor Vehicles in violation of the Driver’s Privacy and Protection Act of 1994. (Id. at p. 2210.)

Kow Loon, however, does not explain how Marachic provides it with good cause for a protective order pursuant to Code of Civil Procedure section 2019.030. As such, Kow Loon’s citation to Marachic is inapplicable.