Mircea Voskerician v. Mark Zuckerberg, et al.		CASE NO.114CV264667
DATE: 16 January 2015	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 408.882.2310 and the opposing party no later than 4:00 PM Thursday 15 January 2015.  Please specify the issue to be contested when calling the Court and counsel.

On 16 January 2015, the motion of Defendants Mark Zuckerberg and SFRP, LLC (“Defendants”) to compel non-party James Sagorac (“Sagorac”) to answer deposition questions and produce documents was argued and submitted.  Mr. Sagorac filed formal opposition to the motion.

1. Statement of Facts

This case arises out of a property dispute.  In November 2012, Plaintiff made an offer to purchase the real property located at 1457 Hamilton Avenue in Palo Alto, California (the “Property”), which was accepted.  (See First Amended Complaint (“FAC”), ¶¶ 7-8.)  Plaintiff learned that Mr. Zuckerberg lived directly behind the Property and him, offering to sell him approximately 2,600 square feet of the Property that abutted his backyard.  (See FAC, ¶¶ 9-10.)  Plaintiff and his realtor met with Mr. Zuckerberg’s realtor, who advised that Mr. Zuckerberg wanted to purchase the Property in its entirety and would pay Plaintiff $250,000, plus any down payment that was made.  (See FAC, ¶ 11.)  Plaintiff declined the offer and, subsequently, received another offer from a real estate developer, non-party Sagorac, seeking to purchase his interest in the Property for $4,300,000.  (See FAC, ¶¶ 11-12.)

On 4 December 2012, Plaintiff and his realtor attended a meeting with Mr. Zuckerberg and his financial advisors.  (See FAC, ¶ 13.)  During the meeting, Mr. Zuckerberg stated that he wanted a discount on the Property and, in exchange for the same, he would introduce Plaintiff to his friends, clients, and associates and promote Plaintiff’s real estate business by providing him with referrals and written references.  (See FAC, ¶¶ 13-15.)   On 5 December 2012, Plaintiff informed Mr. Zuckerberg that he would sell his interest in the Property to him “for $1,700,000 plus [Mr. Zuckerberg’s] promises of personal referrals and business promotion activities.”  (FAC, ¶ 16.)

Pursuant to Mr. Zuckerberg’s direction, Plaintiff sold his interest in the Property to defendant SFRP, LLC (“SFRP”).  Plaintiff then attempted to set up meetings with Mr. Zuckerberg to discuss the development of his business.  (See FAC, ¶¶ 17-20, 22-23.)  Plaintiff alleges that Mr. Zuckerberg breached their agreement by failing to provide him with written referrals and introductions or otherwise assist him with the development of his business.  (See FAC, ¶¶ 27, 30, 43.)

On 3 September 2014, Plaintiff filed the operative first amended complaint (“FAC”), alleging causes of action for: (1) promissory fraud; (2) intentional misrepresentation; (3) rescission; (4) breach of contract; and (5) conspiracy.[1]

1. Discovery Dispute

Non-party Sagorac’s deposition was originally noticed for 20 October 2014.  After delays due to his change in representation, he appeared for deposition on 2 December 2014.  Prior to his deposition Defendants served Sagorac with a document subpoena.[2]  In response to some of the document requests, those asking for documents relating to or drafts (electronic or otherwise) of the offer letter he conveyed to Plaintiff on behalf of a client before Plaintiff sold the property to Defendant Zuckerberg instead at an alleged discount, Sagorac stated that he had no responsive documents.

At his deposition Sagorac was asked to disclose the identity of the client on whose behalf he conveyed the $4.3 million competing offer for the property to Plaintiff.  He refused to do so on the instruction of his counsel (who also represents Plaintiff), who also objected that such information was a trade secret and confidential business information.  Sagorac stated that it was his belief that if he did not maintain the confidentiality of client information, clients would no longer do business with him.

In response to questions regarding his answer to some of the deposition subpoena document requests that he had no documents, Sagorac testified that he did not perform any searches of his current computer for responsive documents regarding the November/December 2012 offer.  He stated that this was because his former hard drive had failed and had to be replaced in September 2013.  Defendants contend that this somehow shows a failure to make reasonably diligent efforts to look for responsive documents.

After the deposition Counsel for Defendants and for Sagorac (who also represented Plaintiff) met and conferred on these issues but were unable to reach an agreement.  No one argues that the efforts to meet and confer before this motion was filed were inadequate.

III.     Discussion

Defendants move to compel Mr. Sagorac to provide responses to the deposition questions which he was instructed not to answer or refused to answer and to provide further responses to documents requests made in the deposition subpoena despite his responses that he has no documents to the targeted requests.[3]

1. Motion to Compel further deposition testimony and documents described in deposition notice
2. Legal Standard

If a deponent fails to answer a question at his or her deposition, the party seeking discovery may move for an order compelling an answer.  (See Code Civ. Proc., § 2025.480, subd. (a).)  There is no requirement that the moving party show good cause to compel answers at a deposition.  (Compare Code Civ. Proc., §§ 2025.450, subd. (b)(1) [showing of good cause required where motion pertains to production of documents described in deposition notice] with 2025.480 [no good cause requirement where motion pertains to oral testimony].)  A deponent who has objected to a question and refused to answer bears the burden of justifying such refusal.  (See Coy v. Super. Ct. (1962) 58 Cal.2d 210, 220-221.)  If the court determines that the answer sought is subject to discovery, it shall order that the answer be given on the resumption of the deposition.  (See Code Civ. Proc. § 2025.480, subd. (i).)

A request to provide further responses to document requests in a third party deposition subpoena does require a showing of good cause by the moving party.  (See Code Civ. Proc., §§ 2025.450, subd. (b)(1).)

2. Parties’ Arguments

Defendants contend that, because of Mr. Sagorac’s prior business dealings with Plaintiff and his willingness to sign a declaration on April 9, 2014 prepared by Plaintiff’s Counsel (now also his counsel) attesting to the $4.3 million offer before this litigation even began, they must be allowed “to test the authenticity of the Offer, including by discovering the ‘client’ behind it.  Their ability to defend against plaintiff’s claims will be unduly prejudiced without this information.”  Defendants’ Memorandum of Points and Authorities (“Defs. Memo.”) at 7:22-23.  They state that they have “repeatedly offered to stipulate to keep the identity of Mr. Sagorac’s client confidential and use the information only for purposes of litigation or discuss other confidentiality restrictions that plaintiff’s counsel may propose.  Plaintiff’s counsel has refused this offer but has not moved for a protective order on the issue.”  Id. at 8:13-16.  They also contend that Sagorac has failed to meet his burden to establish that the identity of his client constitutes a trade secret.

Defendants further contend, without any citation to supporting authority and despite the explanation provided at deposition, that Mr. Sagorac failure to search his current computer for documents related to the 2012 offer somehow raises an inference that he has committed fraud.

In Opposition, Mr. Sagorac states that he testified “as to the terms of the offer and the terms of his potential agreement with his client to build a new custom home on the property. Only the person’s identity remains an issue.”  Opposition (“Opp.”) at 3:20-22.  He also asserts (correctly) that no evidence has been presented showing or raising an inference that he has committed fraud simply because he did not want to identify his client.   Sagorac has filed a declaration stating his belief that his client’s identifying information is a “trade secret” and that disclosure would hurt his business because it might make such clients less likely to do business with him.  He also restates that the former hard drive on his computer crashed and was replaced in September 2013, that he has complied with Defendants’ request at his deposition to review his email accounts, and that he

“found several emails from 2014 from projects in Los Altos and I gave those emails to my attorney Mr. Draper.  I could not and did not find any other emails relating to the Palo Alto property or Mr. Voskerician. As I testified at my deposition I do not keep emails and I delete them after receiving them.  I do not have emails from 2012.”  Declaration of James Sagorac (“Sagorac Decl.”) at 4.

Despite maintaining that a trade secret exists the opposition states that in light of Defendants’ “melodramatic claims .  . . Sagorac has offered to provide the person’s name, contact information and particulars about the offer on the condition that the information not be publicized or disclosed outside of this litigation.  . . .  The Court may be provided with the actual identity in a chambers copy of any motion.  . . . If Defendants are not agreeable to this disclosure they can bear the burden of explaining why it is not reasonable and efficient.  . . .  Once Defendants are provided the identity and contact information of Sagorac’s client there are no other questions to answer and further deposition testimony is unnecessary.”  Opp. at 4:11-23, internal citations omitted.

This “offer” is apparently a reference to counsel’s letter to Defense Counsel dated 31 December 2014.  See Ex. A to the Declaration of David Draper (“Draper Decl.”). The Court notes that counsel waited to make this concession to common sense until after Defendants went to the time and effort to file a motion to compel on 22 Dec. 2014 and after similar offers from Defense Counsel to keep the information confidential (see emails dated 12 Dec. 2014 in Ex. C to the Cooper Decl.) went without any response.

In addition to offering to disclose the identity of Sagorac’s client this letter states in pertinent part that Sagorac will be providing “clarifications and corrections” to his testimony, that Sagorac does not have the hard drive that failed in September 2013, and that his IT professional (“Dan at ENcompass IT”) has stated that “he does not have Mr. Sagorac’s crashed hard drive nor does he recall Mr. Sagorac taking it with him when he picked up his repaired computer last year.”

3. Analysis

The only objection that was raised in response to Defendants’ questions at deposition regarding the identity of the client who authorized Mr. Sagorac to communicate the competing offer to Plaintiff was that the information was a protected trade secret.  As noted above Defendants are not obligated to show good cause to compel a further response to the question and Sagorac has 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.) He has not met this burden as his declaration does not establish all of the elements of a trade secret. (See Civ. Code, § 3426.1, subd. (d); Cadence Design Systems, Inc. v. Avant! Corp. (2002) 29 Cal.4th 215, 221-222.)  Accordingly, the objection the trade secret objection is overruled.

However as the only information still being sought as deposition testimony is the client’s identifying information (name, address, phone number) there is no good reason to require Mr. Sagorac to return for a continued deposition.  Counsel for both sides now (belatedly) appear to be in agreement that the client’s identifying information is discoverable and may be disclosed so long as it is kept confidential and used only for litigation purposes.

Accordingly the motion to compel further answers to deposition questions is GRANTED IN PART as follows:  Within 20 days of this Order, Mr. Sagorac shall provide the name, address and telephone number of his client to Defendants in writing.  This information shall be used only for purposes of this litigation and maintained as confidential by Defendants’ counsel and not disclosed to anyone not working on the case.  No further deposition appearance by Mr. Sagorac is required.

As for the motion to compel further responses to the deposition subpoena’s document requests, while Defendants have not established that there was anything improper in Sagorac’s assertion that he had no documents responsive to the requests the motion is also GRANTED IN PART as follows.  To the extent Sagorac now states that he has found documents responsive to the targeted requests he shall provide a further sworn response to the deposition subpoena within 20 days of this order stating that all documents in his possession responsive to the targeted requests have been provided to Defendants and enclosing copies of any such documents not already provided to Defendants.

 

 

________________­­­____________ DATED:

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

[1] The Court notes that Plaintiff has filed a motion for leave to file a second amended complaint which is to be heard on 15 January 2015 in Department 2.

[2] The Court has not been provided with copies of the subpoena or of Mr. Sagorac’s responses.

[3] Defendants’ attempt in their Reply to add a request to compel Mr. Sagorac to allow a “neutral forensic information technology expert” to search his @hotmail.com email account and his computer for responsive documents has not been considered by the Court as it is not a part of this motion.