Restivo Enterprises v. Corinthian Internat’l Parking		CASE NO. 114CV264741
DATE: 3 October 2014	TIME: 9:00	LINE NUMBER: 18

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 2 October 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 3 October 2014, the following motions were argued and submitted: (1) the motion of plaintiff Restivo Enterprises, Inc. (“Plaintiff”) to compel production of documents and for an award of monetary sanctions; and (2) the motion of defendant Corinthian International Parking Services, Inc. (“Defendant”) for a protective order.  Defendant filed a formal opposition to Plaintiff’s motion to compel production of documents, in which it requests an award of monetary sanctions.  Plaintiff filed a formal opposition to Defendant’s motion for a protective order.

I.       Statement of Facts

Plaintiff is engaged in the business of providing limousine services to individuals and corporate clients throughout the greater Bay Area.  (See Complaint, ¶ 1.)  Plaintiff started doing business as Le Grande Affaire Limousine Services (“Le Grande”) in May of 1999, and spent approximately $500,000 to build goodwill and name recognition.  (See Complaint, ¶ 7.)  Over the years, Plaintiff compiled information that it alleges are its trade secrets, including customer lists, computer databases of customer information, pricing and financial information, and trip tickets.  (See Complaint, ¶ 8.)

Plaintiff requires its employees to sign agreements maintaining the secrecy of its customers’ information.  (See Complaint, ¶ 10.)  When a Le Grande limousine chauffeur is assigned a customer, he or she is given a trip ticket that is used to contact and communicate with the customer.  (See Complaint, ¶ 11.)  Pursuant to the terms of the agreements signed by the chauffeurs, the information in the trip tickets and customer lists is to be kept confidential.  (See id.)

In June of 2013, eleven (11) Le Grande chauffeurs resigned from their employment with Plaintiff and, soon thereafter, several of them (the “Chauffeurs”) began working with Defendant.  (See Complaint, ¶¶ 12-13.)  During their employment with Plaintiff, the Chauffeurs allegedly made copies of the trip tickets and customer lists for purposes of soliciting business from Plaintiff’s customers after the Chauffeurs left their employment with Plaintiff.  (See Complaint, ¶ 14.)

While working for Defendant, the Chauffeurs utilized Plaintiff’s trade secrets, i.e. the trip tickets and customer lists, to solicit business from Plaintiff’s customers for the benefit and profit of Defendant.  (See Complaint, ¶ 15.)  Plaintiff alleges that Defendant was aware of the Chauffeurs’ actions and paid the Chauffeurs a commission consisting of a percentage of the business that the Chauffeurs brought from Plaintiff to Defendant.  (See Complaint, ¶ 16.)

On 2 May 2014, Plaintiff filed the operative complaint, alleging causes of action for: (1) trade secret misappropriation; (2) trade secret misappropriation; (3) intentional interference with economic advantage; (4) conversion; and (5) unfair competition under Business and Professions Code section 17200, et seq.

II.      Discovery Dispute

Shortly after the filing of this lawsuit,on 12 May 2014, Plaintiff filed an ex parte application for a temporary restraining order, an order to show cause regarding the issuance of a preliminary injunction, an order for expedited discovery, an order for evidence preservation, and an ex parte application for a protective order.

The court (Hon. Carol Overton) granted both applications on 12 May 2014, and issued two related orders.  (See Plaintiff’s RJN, Ex. 1, 2.)  The first order dated 12 May 2014, provided that Plaintiff could immediately conduct limited expedited discovery in the form of an expert forensic examination of Defendant’s computer system for the express purpose of downloading Defendant’s complete customer database.  (See Plaintiff’s RJN, Ex. 1.)  The order further provided that the forensic expert was to maintain the list as “Confidential – Attorneys Eyes Only” and use it for the purpose of comparing Defendant’s customer list to Plaintiff’s customer list to determine if there was any overlap with respect to the parties’ customers.  (See id.)  The second order dated 12 May 2014, granted the request for a protective order regarding the protection of confidential information produced in connection with Plaintiff’s expedited discovery.   (See Plaintiff’s RJN, Ex. 2.)

Thereafter, on 16 May 2014, Plaintiff filed another ex parte application for an order to show cause regarding the issuance of a preliminary injunction and an order for expedited discovery.  On the same day, the court (Hon. Carol Overton) granted the application.  (See Defendant’s RJN, Ex. I.)  The 16 May 2014 order provided that Plaintiff could immediately conduct limited expedited discovery in the form of an expert forensic examination of Defendant’s computer system on 20 May 2014, for the express purpose of downloading Defendant’s complete customer database containing the names and addresses of its customers, the date they first did business with Defendant, and “the key contact” to determine if there was any overlap or duplication with Plaintiff’s customers.  (See id.)

Plaintiff retained a computer forensic examiner, Steven Burgess (“Mr. Burgess”), to go on site to Defendant’s company and perform a digital image and forensic copy of Defendant’s server and local computers.

On 20 May 2014, Defendant filed an ex parte application to vacate the court’s prior 12 May 2014 and 16 May 2014 orders.

Plaintiff served Defendant with demands for inspection, set three (“DFI”) on 2 June 2014.  (See Ackerman Dec., Ex. E.)  In relevant part, DFI Nos. 1 and 2 asked Defendant to make available for inspection and forensic copying “by the designated computer forensic expert under protective order”: (1) all of its “customer relations management databases, systems, software or any other database” relating to its customers’ names and contact information; and (2) all of its” invoice and billing databases, systems software or any other database” relating to the amounts billed to customers.  (Id.)  The DFI demanded that Defendant permit the inspection of the requested electronically-stored information (“ESI”) on 3 July 2014.  (See id.)

On 12 June 2014, the court issued its order regarding Defendant’s 20 May 2014 ex parte application.  (See Plaintiff’s RJN, Ex. 3, p. 3.5-7.)  In its 12 June 2014 order, the Court vacated its prior 12 May 2014 and 16 May 2014 orders with respect to discovery and indicated that its prior orders were amended and superseded by the 12 June 2014 order.  (See id.)  The court’s 12 June 2014 order also stated that: “All discovery shall proceed per applicable section of the California Code of Civil Procedure.  The Court orders that the parties meet-and-confer regarding discovery plans and scheduling.”  (See id.)

Defendant served Plaintiff with its objection-only responses to the DFI on 2 July 2014.  (See Ackerman Dec., Ex. F.)

Plaintiff’s counsel sent Defendant’s counsel a meet and confer letter on 14 July 2014, regarding Defendant’s responses to the DFI.  (See Ackerman Dec., Ex. G.)  Plaintiff’s counsel asserted that Defendant’s objections to the DFI lacked merit and requested that Defendant agree by 18 July 2014, to provide further responses to the requests.  (See id.)

Defendant’s counsel replied to the meet and confer letter on 18 July 2014, advising that Defendant would provide further responses no later than 4 August 2014, and agreeing to extend the time period for Plaintiff to file any motion to compel further responses.  (See Ackerman Dec., Ex. H.)

Defendant served Plaintiff with further responses to the DFI on 4 August 2014.  (See Ackerman Dec., Ex. I.)  Defendant’s objection-only further responses to DFI Nos. 1 and 2 were virtually identical to its initial responses to the requests.

From 4 August 2014 to 28 August 2014, Plaintiff’s counsel and Defendant’s counsel exchanged meet and confer emails regarding DFI Nos. 1 and 2 and discussed a potential protective order, but no resolution was reached.  (See Gravink Dec., Exs. C, D, E.)

On 29 August 2014, Plaintiff filed the instant motion to compel further responses to DFI Nos. 1 and 2 and for an award of monetary sanctions.[1]  The matter was set for hearing on 25 September 2014.

On 11 September 2014, Defendant filed the instant motion for a protective order, providing that it need not respond to the DFI unless certain conditions are met.  Defendant’s motion was set for hearing on 3 October 2014.  Plaintiff’s motion was then continued to 3 October 2014, to be heard with Defendant’s motion for protective order.

Defendant filed papers in opposition to Plaintiff’s motion on 12 September 2014.  Plaintiff filed a reply in support of its motion on 18 September 2014.  Plaintiff filed papers in opposition to Defendant’s motion for protective order on 22 September 2014.  Defendant filed a reply in support of its motion on 26 September 2014.

III.     Discussion

         A.  Motion to Compel Further Responses to DFI Nos. 1 and 2

               1.            Evidentiary Objections

Defendant objects to portions of the declarations of Ronnie Aguilar, Alex Alvarado, and Marco Rego submitted by Plaintiff in support of its motion on the ground of hearsay.  There is no authority holding that the Court must rule on an evidentiary objection made in connection with a discovery motion.  Furthermore, the declarations are not necessary to the Court’s resolution of the instant motion.

Accordingly, the Court declines to rule on Defendant’s evidentiary objections.

               2.            Requests for Judicial Notice

Both Plaintiff and Defendant request that the Court take judicial notice of several documents.

a.            Plaintiff’s Request

Plaintiff requests that the Court take judicial notice of: (1) the court’s 12 May 2014 order granting Plaintiff’s ex parte application for a temporary restraining order, an order to show cause regarding the issuance of a preliminary injunction, an order for expedited discovery, and an order for evidence preservation; (2) the court’s 12 May 2014 granting Plaintiff’s ex parte application for entry of a protective order; and (3) the court’s 12 June 2014 order granting Defendant’s ex parte application to vacate the court’s prior 12 May 2014 and 16 May 2014 orders.

A court may take judicial notice of court records that are relevant to a pending issue.  (See Evid. Code § 452, subd. (d); see also People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 [only relevant matters subject to judicial notice].)

Plaintiff’s request for judicial notice is GRANTED because the documents are court records and relevant to the pending motion.

     

b.            Defendant’s Request

Defendant requests that the Court take judicial notice of the following items: (A) Plaintiff’s complaint filed on 2 May 2014; (B) Plaintiff’s ex parte application filed on 12 May 2014; (C) the declaration of Forest Wade submitted in support of Plaintiff’s 12 May 2014 ex parte application; (D) the court’s 12 May 2014 order granting Plaintiff’s ex parte application for a temporary restraining order, an order to show cause regarding the issuance of a temporary injunction, an order for expedited discovery, and an order for evidence preservation; (E) Plaintiff’s memorandum of points and authorities filed in support of its 12 May 2014 ex parte application; (F) the declaration of Forest Wade submitted in support of Plaintiff’s 12 May 2014 ex parte application for a protective order; (G) the court’s 12 May 2014 order granting Plaintiff’s ex parte application for entry of a protective order; (H) Plaintiff’s ex parte application filed on 16 May 2014; (I) the court’s 16 May 2014 granting Plaintiff’s ex parte application; (J) Defendant’s memorandum of points and authorities filed in support of its ex parte application to vacate the court’s prior orders; (K) the declaration of Jonathon Covey submitted in support of Defendant’s ex parte application; (L) the court’s 12 June 2014 order granting Defendant’s ex parte application to vacate the court’s prior 12 May 2014 and 16 May 2014 orders; (M) the declaration of Douglas Knapp submitted in opposition to Plaintiff’s order to show cause; (N) Defendant’s memorandum of points and authorities in opposition to Plaintiff’s order to show cause; (O) Defendant’s answer to the complaint filed on 19 June 2014; (P) the court’s 11 June 2014 order on Plaintiff’s order to show cause regarding a preliminary injunction; (Q) the declaration of Kelli Kellerman submitted in opposition to Plaintiff’s order to show cause; (R) Plaintiff’s memorandum of points and authorities filed  in connection with the instant motion; (S) Defendant’s objections to evidence submitted in support of its opposition to Plaintiff’s order to show cause filed on 17 June 2014; (T) the fact that the Code of Civil Procedure does not contain any statutes numbered “2023” or “2031.300(2)(c)”; (U) Defendant’s memorandum of points and authorities submitted in support of its motion for protective order filed on 11 September 2014; (V) the declaration of Douglas Knapp submitted in support of Defendant’s motion for protective order; and (W) Defendant’s proposed protective order filed on 11 September 2014.

A court may take judicial notice of court records that are relevant to a pending issue.  (See Evid. Code § 452, subd. (d); see also People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2.)

Defendant’s request for judicial notice of items A, C, D, G, I, L, O, P, and R is GRANTED because the documents are court records and relevant to the pending motion.  Defendant’s request for judicial notice of items B, E, F, H, J, K, M, N, Q, S, T, U, V, and W is DENIED because they are not relevant to the pending motion.

3.            Legal Standard

A party propounding a request for production of documents may move for an order compelling a further response if it deems that: (1) a statement of compliance with the demand is incomplete; (2) a representation of inability to comply is inadequate, incomplete, or evasive; or (3) an objection in the response is without merit or too general.  (See Code Civ. Proc., § 2031.310, subd. (a).)  The motion must set forth “specific facts showing good cause justifying the discovery sought by the demand.”  (See Code Civ. Proc., § 2031.310, subd. (b)(1); see also Kirkland v. Super. Ct. (2002) 95 Cal.App.4th 92, 98.)  Good cause is established simply by a fact-specific showing of relevance.  (See Kirkland v. Super. Ct., supra, 95 Cal.App.4th at p. 98.)  If good cause is shown, the burden shifts to the responding party to justify any objections.  (See id.)

4.            Good Cause

Discovery is allowed for any matters that are not privileged, relevant to the action, and reasonably calculated to lead to the discovery of admissible evidence.  (See 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. Super. Ct. (1995) 33 Cal.App.4th 1539, 1546.)

Plaintiff argues that there is good cause “for compelling Defendant to allow Plaintiff to perform a forensic inspection of Defendant’s customer relations management database as well as its billing database to determine the overlap of customers between the two companies and when Defendant first began doing business with those customers for which there is an overlap.”  (Mem. Ps & As., p. 10:1-5.)  Plaintiff states that DFI Nos. 1 and 2 are “designed to obtain the information from which one could determine whether Defendants have improperly solicited Plaintiff’s customers as well as the dollar volume of ‘unjust enrichment’ that Defendant may have gained by reason of its improper conduct.”  (Mem. Ps & As., p. 4:5-8.)

Defendant argues that Plaintiff has not established good cause for the discovery sought because it does not have any actual evidence that its purported trade secrets were misappropriated.  (See Opp’n., p. 14:1-22.)

There is good cause for the discovery sought as Plaintiff has filed a complaint alleging that Defendant misappropriated its trade secrets, including its customer lists and customer information, and DFI Nos. 1 and 2 seek to discover ESI regarding whether Defendant and Plaintiff had overlapping customers and how much money Defendant may have gained from those customers.  Thus, the discovery sought is reasonably calculated to lead to the discovery of admissible evidence that is relevant to the issues of liability and damages.

Defendant’s argument that Plaintiff fails to establish good cause for the discovery sought because Plaintiff purportedly lacks evidence at this point in time to support its claims is without merit as the very purpose of discovery is to discover evidence to support one’s claims.  (See Code Civ. Proc., § 2017.010.)

Accordingly, Plaintiff has demonstrated that there is good cause for the discovery sought.

5.            Objections

Defendant objected to DFI Nos. 1 and 2 on numerous grounds, including that: the requests violate the court’s 12 June 2014 order; Plaintiff’s trade secret designation does not comply with Code of Civil Procedure section 2019.210; the requests violate its right to privacy under that California Constitution and/or Evidence Code section 1060; Plaintiff failed to serve a consumer notice pursuant to Code of Civil Procedure section 1985.3; the requests are overbroad and seek irrelevant information; Plaintiff failed to meet and confer pursuant to California Rules of Court, rule 3.724(8); and the parties have not entered into a protective order.

               6.            Undefended Objections

Except as expressly indicated below, Defendant does not attempt to defend its objections and, therefore, the Court finds that the undefended objections are without merit.  (See Coy v. Super. Ct., supra, 58 Cal.2d at pp. 220-221.)

a.            Unduly Burdensome

Throughout its opposition papers, Defendant states in a conclusory manner that the DFI are unduly burdensome.

First, Defendant did not object to the DFI in its responses as unduly burdensome and, therefore, any objection to the requests on this basis is waived.  (See Stadish v. Super. Ct. (1999) 71 Cal.App.4th 1130, 1141 [party whose response fails to set forth a particular ground for objection waives its right to raise that objection later].)

Second, even if Defendant had timely asserted such an objection in its responses to the DFI, it does not make a particularized showing of facts demonstrating hardship.  (See West Pico Furniture Co. v. Super. Ct. (1961) 56 Cal.2d 407, 417-418 [stating that to justify an undue burden objection, the objecting party must make a particularized showing of facts demonstrating hardship].)

b.            Meet and Confer Pursuant to the Court’s 12 June 2014 Order

Defendant asserts that Plaintiff did not comply with the court’s 12 June 2014 order because Plaintiff served it with the DFI without first meeting and conferring about the requests.

The Court finds that Defendant’s argument is without merit.  As an initial matter, the court’s 12 June 2014 order, providing that the parties should meet and confer with respect to their discovery plans and scheduling, did not issue until 10 days after Plaintiff served Defendant with the DFI on 2 June 2014.  Moreover, the court’s order did not prohibit the parties from propounding discovery before they met and conferred regarding their discovery plans and scheduling.  The 12 June 2014 order specifically stated that discovery was to proceed pursuant to the Code of Civil Procedure, and the Code of Civil Procedure does not require any meet and confer efforts prior to the service of demands for inspection.  (See Code Civ. Proc., 2031.020, subd. (b) [a plaintiff may make a demand for inspection without leave of court at any time that is 10 days after the service of the summons on, or appearance by, the party to whom the demand is directed, whichever occurs first].)

Finally, it appears that the parties did engage in some meet and confer efforts regarding Plaintiff’s demands for inspection of Defendant’s computer databases at the 20 May 2014 hearing on Defendant’s ex parte application.  Defendant’s counsel declares that at the 20 May 2014 hearing, he proposed the use of a neutral discovery referee or an independent third-party computer expert to review Plaintiff’s and Defendant’s computer databases to generate a list of overlapping customers.  (See Gravink Dec., ¶ 4)  Plaintiff’s counsel rejected these proposals and indicated that Plaintiff would proceed with its DFI.  (See id.)

Accordingly, this objection is without merit and, consequently, overruled.

c.            Overbroad

Defendant objects to DFI Nos. 1 and 2 as overbroad, arguing that the only information that is relevant to the lawsuit is the identity of its clients who first used its limousine services between June 2013 and June 2014, who were also Plaintiff’s limousine customers before June 2013.

Defendant states that it is a parking and transportation company and less than 5 percent of its business is limousine services.  Defendant contends that since the requests seek information about all of its customers, not just its limousine customers, the requests are overbroad.  Defendant further asserts that since the complaint alleges that the Chauffeurs began their employment with Defendant in June 2013, information about its customers prior to June 2013 is irrelevant to the lawsuit.  Finally, Defendant states that Plaintiff sold the business in June 2014, such that information about its customers and the amounts that they paid after June 2014 is irrelevant to Plaintiff’s claims.  (See Defendant’s RJN, Ex. P; see also Gravink Dec., Ex. A, Special Interrogatory No. 108.)

Conversely, Plaintiff argues that it must be allowed to discover information about Defendant’s customers prior to June 2013 in order to determine which customers first became Defendant’s customers after June 2013.

Plaintiff persuasively argues that information about the customers that Defendant had prior to June 2013 is relevant because that information is necessary to determine whether the customers that Defendant had after June 2013 worked with Defendant prior to June 2013.  Furthermore, it does not appear that the information should be limited solely to Defendant’s limousine customers.  The complaint alleges that the Chauffeurs used Plaintiff’s trade secrets in order to solicit business from Plaintiff’s customers and the Chauffeurs began employment with Defendant in a similar capacity as they had with Plaintiff.  (See Complaint, ¶¶ 13-16.)  The complaint does not state that Defendant solicited Plaintiff’s clients for the purpose of promoting its limousine services alone or that Defendant was unjustly enriched because those customers then used only Defendant’s limousine services.  It is possible that Defendant utilized Plaintiff’s trade secrets to solicit Plaintiff’s customers and those customers then stopped using Plaintiff’s limousine services and began using other non-limousine services provided by Defendant.

Defendant does establish that the information sought should be limited to information prior to June 2014, as Plaintiff sold its business at that time such that information about Defendant’s customers after June 2014 is irrelevant.  Thus, Defendant’s over breadth objection is sustained.

Since the majority of the information sought by DFI Nos. 1 and 2 is relevant to the lawsuit, the Court limits the requests to information and/or records prior to June 2014, instead of denying discovery completely based upon Defendant’s over breadth objection.

d.            Trade Secret Designation

Defendant argues that Plaintiff’s trade secret designation is not reasonably particularized in accordance with Code of Civil Procedure section 2019.210 and, therefore, the Court should issue a protective order providing that Defendant need not respond to any of Plaintiff’s discovery requests until Plaintiff amends its trade secret designation.  Defendant asserts that Plaintiff’s trade secret “description is not specific enough to fulfill the first purpose” of the statute—to promote well-investigated claims—because Plaintiff “has pursued discovery in this case without having conducted any investigation to ensure that there is good cause to believe [Defendant] may have misappropriated its trade secrets.”  (Opp’n., p. 11:3-6.)  Defendant contends that Plaintiff needs to disclose which of its customers’ information it believes Defendant took.  Defendant asserts that until Plaintiff does the same, it cannot form a defense to Plaintiff’s claims.

Plaintiff argues that Defendant must file a motion to compel a further designation or a demurrer in order to assert this objection, citing to Advanced Modular Sputtering, Inc. Super. Ct. (“Advanced Modular”) (2005) 132 Cal.App.4th 826 and Brescia v. Angelin (“Brescia”)(2009) 172 Cal.App. 4th 133.

As in initial matter, while the defendants in Advanced Modular and Brescia objected to the plaintiffs’ trade designations by, respectively, bringing a motion for protective order and filing a demurrer to the complaint, the cases do not hold or otherwise stand for the proposition that a defendant must use one of those procedural devices to raise such an objection.  The Court is unaware of any authority holding that a defendant may not properly raise an objection to a trade secret designation in response to a discovery request.

Code of Civil Procedure section 2019.210 expressly provides that, “[i]n any action alleging the misappropriation of a trade secret . . . , before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under Section 3426.5 of the Civil Code.”  (Code Civ. Proc., § 2019.210.)  The statute requires a plaintiff to identify or designate the trade secrets at issue with sufficient particularity to limit the permissible scope of discovery by distinguishing the trade secrets from matters of general knowledge in the trade or of special knowledge of those persons skilled in the trade.  (See Advanced Modular, supra, at pp. 833-836)  Reasonable particularity “means that the plaintiff must make some showing that is reasonable, i.e., fair, proper, just and rational … under all of the circumstances to identify its alleged trade secrets in a manner that will allow the trial court to control the scope of subsequent discovery, protect all parties’ proprietary information, and allow them a fair opportunity to prepare and present their best case or defense at a trial on their merits.”  (Id. at p. 836.)  The trade secret designation mandated by the statute is not itself a pleading, but functions like one in a trade secret case because it limits the scope of discovery in much the same way as the allegations of a complaint limit discovery in other types of civil actions.  (See id. at p. 835.)

Plaintiff filed a trade secret designation on 12 May 2014, asserting that the following information constitutes its trade secrets: (1) the names and addresses of Le Grande clients and/or customers; (2) the contact information for Le Grande clients and/or customers, including the names of the key persons to contact and their telephone numbers and/or email addresses; and (3) the dollar volume of business each Le Grande client and/or customer has done with Le Grande.  (See Defendant RJN, Ex. C.)

Here, the Court finds that Plaintiff’s trade secret designation is reasonably particularized, given the nature of the alleged secret, to permit Defendant to ascertain whether and in what way the information is distinguished from matters already known, and to permit the Court to fashion appropriate discovery.  The trade secret designation makes clear that Plaintiff is claiming that its customers’ identities and contact information, as well as the monetary value of their business are its trade secrets.  Plaintiff’s customers are a limited and identifiable group such that the Court can limit discovery as appropriate and Defendant has an opportunity to prepare its defense.  Contrary to Defendant’s assertion, reasonable particularity does not require the party alleging misappropriation to define every minute detail of its claimed trade secret.  (See Advanced Modular, supra, at p. 835.)  Defendant cites no authority for its contention that Plaintiff must identify every customer whose information it believes was misappropriated by Defendant and the case law does not support such a finding.

Accordingly, the Court finds that Plaintiff’s trade secret designation is adequate and Defendant’s objection on this basis is therefore overruled.

e.            Privacy

Defendant argues that DFI Nos. 1 and 2 invade its right to privacy in its financial documents.

Conversely, Plaintiff argues that the right to privacy does not apply to corporations and, even if it did, the information sought is directly relevant and necessary to its claims.

The extent to which a business entity may have a privacy right is unsettled.  (See Volkswagen of America, Inc. v. Super. Ct. (2006) 139 Cal.App.4th 1481, 1492, fn. 9.)  Generally, the right of privacy afforded by the California Constitution has been interpreted to protect only individuals, not business entities.  (See Roberts v. Gulf Oil Corp. (1983) 147 Cal.App.3d 770, 793.)  However, some cases suggest that even though business entities may not have a constitutionally protected privacy right, they may still be afforded some privacy protections.  (See H & M Associates v. City of El Centro (1980) 109 Cal.App.3d 399, 409 [corporation’s right to privacy was invaded by the city’s improper disclosure]; see also Schnabel v. Super. Ct. (1993) 5 Cal.4th 704, 718 [closely-held corporation’s right to privacy must be considered in discovery dispute arising out of shareholder’s marital dissolution dispute].)   “[A]lthough corporations have a lesser right to privacy than human beings and are not entitled to claim a right to privacy in terms of a fundamental right, some right to privacy exists.”  (Ameri-Medical Corp. v. Workers’ Comp. Appeals Bd. (1996) 42 Cal.App.4th 1260, 1288-1289.)

In ruling upon an objection to discovery based upon privacy, courts apply a three-factor test.  (See Alch v. Super. Ct. (2008) 165 Cal.App.4th 1414, 1423-1424.)  The first inquiry is whether the discovery sought actually implicates privacy interests.  (See id.)  If so, then the court must decide whether the party whose privacy interests are implicated has a reasonable expectation of privacy, and whether the discovery sought would result in a serious invasion of any such reasonable expectation.  (See id.)  If permitting the discovery sought would result in a serious invasion of a reasonable expectation of privacy, then the court must determine whether the discovery sought is directly relevant to the pleadings and is essential to a fair resolution of the lawsuit.  (See id.)  If the court makes such a finding, then it must overrule the privacy objection.  (See id.)

Assuming arguendo that Defendant has a right to privacy in its financial information, the information sought by the DFI is directly relevant to Plaintiff’s claims because the amount of money that Defendant billed its customers, particularly those customers that it shares with Plaintiff, goes to Plaintiff’s allegation that Defendant has been unjustly enriched as a result of misappropriating Plaintiff’s trade secrets.  Plaintiff’s interest in obtaining this information outweighs any privacy rights that Defendant has in the information.

Accordingly, Defendant’s privacy objection is overruled.

Defendant encourages the Court to issue a protective order pertaining to the information sought.  Plaintiff indicates in its reply papers that it is amenable to a protective order allowing for the designation of documents as confidential and attorney’s eyes only.

In order to assuage Defendant’s privacy concerns, the Court orders that any financial records and/or information that is produced or copied in response to DFI Nos. 1 and 2 shall be labeled confidential and for Plaintiff’s attorney’s eyes only, and Plaintiff shall be limited to using any of Defendant’s financial records only for the purpose of the ensuing litigation.

f.             Trade Secret Privilege

Defendant argues that the information sought by DFI Nos. 1 and 2 is protected under the trade secret privilege provided by Evidence Code section 1060.  Defendant asserts that its customers’ names and the amounts billed to each customer constitute trade secrets.

Plaintiff does not address Defendant’s objection based on the trade secret privilege in its papers.

Evidence Code section 1060 establishes a privilege for trade secret information.  (See Evid. Code., § 1060.)  “The Legislature has defined trade secrets as ‘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 to 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.’”  (In re Providian Credit Card Cases (2002) 96 Cal.App.4th, 292, 300, quoting Civ. Code, § 3426.1, subd. (d).)  The party claiming the trade secret privilege has the burden of establishing its existence.  (See Bridgestone/Foirestone, Inc. v. Super. Ct. (1992) 7 Cal.App.4th 1384, 1393.)  If the party asserting a trade secret objection meets this initial burden of showing that the information sought to be protected is a trade secret, then the burden shifts to the party seeking discovery to show that the information sought is directly relevant, and necessary to the proof of a claim or defense.  (See id.) Unlike other privileges where protection is absolute, the court has power to order disclosure of trade secret.  (See id.)

The Court finds that Defendant’s customer lists and information about its customers’ payments qualify as trade secrets, as their contents are not generally known to the public or other persons who can obtain economic value from their disclosure or use.  (See In re Providian Credit Card Cases (2002) 96 Cal.App.4th, 292, 300; see also Morelife, Inc. v. Lloyd Perry (1997) 56 Cal.App. 1514, 1521-1522 [holding that the customer list of a company qualified as a trade secret].)

Plaintiff has demonstrated that the information pertaining to Defendant’s customer lists and the amounts paid by Defendant’s customers is directly relevant to its claims of trade secret misappropriation and damages because the complaint alleges that Defendant misappropriated Plaintiff’s customer lists and other trade secrets and was thereby unjustly enriched.  Production of this information is essential to the resolution of Plaintiff’s claims.

Accordingly, notwithstanding Defendant’s trade secret privilege objection, the Court finds that the information sought by DFI Nos. 1 and 2 should be produced.

Plaintiff indicates that it is willing enter into a protective order allowing such information to be designated as confidential and/or for attorney’s eyes.

It appears to the Court that a protective order would be a sufficient safeguard to protect sensitive trade secret information disclosed by Defendant in response to DFI Nos. 1 and 2.  Accordingly, the Court orders that any information and/or records that are produced or copied in response to DFI Nos. 1 and 2 that Defendant contends is covered by the trade secret privilege shall be labeled confidential and for Plaintiff’s attorney’s eyes only.  Additionally, Plaintiff shall be limited to using any information and/or records so designated for the purpose of the ensuing litigation.

g.            Conclusion

The Court finds that further responses to the requests are warranted subject to the terms of the protective order outlined below because the Court limited DFI Nos. 1 and 2 to information and/or documents prior to June 2014 based on Defendant’s over breadth objection and all of Defendant’s remaining objections are overruled.

               6.            Requests for Monetary Sanctions

Both Plaintiff and Defendant request monetary sanctions in connection with the instant motion pursuant to Code of Civil Procedure section 2031.310, subdivision (h).[2]

Code of Civil Procedure section 2031.310, subdivision (h) provides that the court shall impose a monetary sanction against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel a further response to demands for inspection 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.

                              a.            Plaintiff’s Request

Plaintiff requests monetary sanctions against Defendant in the amount of $1,215.

Here, while Plaintiff was successful on its motion to compel further responses to DFI Nos. 1 and 2, some of Defendant’s objections had merit.  Thus, the Court finds that Defendant acted with substantial justification in opposing the motion.

Accordingly, Plaintiff is not entitled to an award of monetary sanctions and its request is DENIED.

                              b.            Defendant’s Request

Defendant requests monetary sanctions in the amount of $6,237.

As a preliminary matter, Defendant’s request for monetary sanctions is procedurally improper as Defendant does not identify the person, party, and/or attorney against whom it is requesting sanctions.  (See Opp’n., p. 15:22-28; see also Code Civ. Proc., § 2023.040 [“[a] request for a sanction shall, in the notice of motion, identify every person, party, and attorney against whom the sanction is sought, and specify the type of sanction sought”].)  Furthermore, Defendant was only minimally successful in its opposition to the instant motion and, thus, is not entitled to an award of monetary sanctions.

Accordingly, Defendant’s request for monetary sanctions is DENIED.

         B.  Motion for Protective Order

Defendant moves for a protective order under Code of Civil Procedure sections 2017.020, subdivision (a), 2019.020, subdivision (b), and 2031.060, subdivision (a), providing that: DFI Nos. 1 and 2 are limited to information pertaining to customers who first used Defendant’s limousine services between June 2013 and June 2014, who were also Plaintiff’s customers prior to June 2013; Defendant need not respond to DFI Nos. 1 and 2 until Plaintiff amends its trade secret designation; inspection of Defendant’s computer systems shall be conducted by an independent third-party computer expert who will also inspect Plaintiff’s computer systems to generate a list of overlapping customers; the parties may designate various materials as confidential and/or for attorneys’ eyes only.

               1.            Defendant’s Request for Judicial Notice

Defendant requests that the Court take judicial notice of the following items: (A) Plaintiff’s complaint filed on 2 May 2014; (B) Plaintiff’s ex parte application filed on 12 May 2014; (C) the declaration of Forest Wade submitted in support of Plaintiff’s 12 May 2014 ex parte application; (D) the court’s 12 May 2014 order granting Plaintiff’s ex parte application for a temporary restraining order, an order to show cause regarding the issuance of a preliminary injunction, an order for expedited discovery, and an order for evidence preservation; (E) Plaintiff’s memorandum of points and authorities filed in support of its 12 May 2014 ex parte application; (F) the declaration of Forest Wade submitted in support of Plaintiff’s 12 May 2014 ex parte application for a protective order; (G) the court’s 12 May 2014 order granting Plaintiff’s ex parte application for entry of a protective order; (H) Plaintiff’s ex parte application filed on 16 May 2014; (I) the court’s 16 May 2014 granting Plaintiff’s ex parte application; (J) Defendant’s memorandum of points and authorities filed in support of its ex parte application to vacate the court’s prior orders; (K) the declaration of Jonathon Covey submitted in support of Defendant’s ex parte application; (L) the court’s 12 June 2014 order granting Defendant’s ex parte application to vacate the court’s prior 12 May 2014 and 16 May 2014 orders; (M) the declaration of Douglas Knapp submitted in opposition to Plaintiff’s order to show cause; (N) Defendant’s memorandum of points and authorities in opposition to Plaintiff’s order to show cause; (O) Defendant’s answer to the complaint filed on 19 June 2014; (P) the court’s 11 June 2014 order on Plaintiff’s order to show cause regarding a preliminary injunction; (Q) Plaintiff’s memorandum of points and authorities filed in connection with its motion to compel further responses; and (R) Defendant’s objections to evidence submitted in support of its opposition to Plaintiff’s order to show cause filed on 17 June 2014.

A court may take judicial notice of court records that are relevant to a pending issue.  (See Evid. Code § 452, subd. (d); see also People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2.)

Defendant’s request for judicial notice of items A, C, D, G, I, L, O, P, and Q is GRANTED because the documents are court records and relevant to the pending motion.  Defendant’s request for judicial notice of items B, E, F, H, J, K, M, N, and R is DENIED because they are not relevant to the pending motion.

2.            Legal Standard

Code of Civil Procedure section 2017.020, subdivision (a) generally provides that the court shall limit the scope of discovery pursuant to a motion for protective order if it determines that the burden, expense, or intrusiveness of that discovery clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence.   Moreover, when a party has been served with a demand for inspection, it may promptly move for a protective order, protecting it from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense.  (See Code Civ. Proc., § 2031.060, subds. (a), (b).)  Furthermore, for good cause shown, the court may establish the sequence and timing of discovery for the convenience of parties and witnesses and in the interests of justice.  (See Code Civ. Proc., § 2019.020, subd. (b).)

 

3.            Request for an Order Limiting the Information Sought by DFI Nos. 1 and 2

Defendant argues that there is good cause for a protective order limiting DFI Nos. 1 and 2 to information pertaining to customers who first used Defendant’s limousine services between June 2013 and June 2014, who were also Plaintiff’s customers prior to June 2013, because the requests are overbroad.  In support of its position, Defendant offers the same arguments that it made with respect to its over breadth objection in its opposition to Plaintiff’s motion to compel further responses.  As articulated above, Defendant’s contention that the requests are over broad largely lacks merit.  Moreover, to the extent that the requests are over broad, the Court remedied the defect by limiting the requests to information prior to June 2014.

Defendant also argues that there is good cause to limit the information sought by the requests because Plaintiff does not have any evidence that Defendant misappropriated its trade secrets.  As indicated above, Defendant’s argument is without merit as the very purpose of discovery is to discover evidence to support one’s claims.  (See Code Civ. Proc., § 2017.010.)

Accordingly, Defendant has not established good cause for a protective order limiting the information sought by DFI Nos. 1 and 2 to information pertaining to customers who first used Defendant’s limousine services between June 2013 and June 2014, who were also Plaintiff’s customers prior to June 2013.

4.            Request for an Order Stating that Defendant Need Not Respond to DFI Nos. 1 and 2 Until Plaintiff Amends its Trade Secret Designation

Defendant argues that there is good cause for a protective order providing that it need not respond to DFI Nos. 1 and 2 until Plaintiff amends its trade secret designation because Plaintiff’s trade secret designation is not reasonably particularized.  Defendant offers the same arguments that it made with respect to the particularity of the trade secret designation in its opposition to Plaintiff’s motion to compel further responses.  As articulated above, Plaintiff’s trade secret designation is reasonably particularized, given the nature of the alleged secret, to permit Defendant to ascertain whether and in what way the information is distinguished from matters already known, and to permit the Court to fashion appropriate discovery.  Accordingly, Defendant has not established good cause for a protective order providing that it need not respond to DFI Nos. 1 and 2 until Plaintiff amends its trade secret designation.

5.            Request for an Order Providing that an Independent Computer Expert Shall Inspect Defendant and Plaintiff’s Computer Systems

Defendant argues that there is good cause for an order providing that any inspection of its computer systems shall be conducted by an independent third-party computer expert.  Defendant contends that such a protective order is necessary to protect its confidential and trade secret information because Plaintiff would not agree to narrow the scope of DFI Nos. 1 and 2.  Defendant also argues that the proposed protective order is necessary because Plaintiff has refused to disclose the names of the persons or companies whose information it believes Defendant has misappropriated.

Defendant contends that, pursuant to the proposed protective order filed with the Court on 11 September 2014, the joint computer expert would inspect Plaintiff’s computer systems and generate a list of its customers that used Plaintiff’s limousine services during the relevant time period.  Defendant indicates that this list could be kept confidential and would be disclosed only to Plaintiff and the joint computer expert.  The joint computer expert would then inspect Defendant’s computer systems and generate a list of its limousine customers who first used its services during the relevant time period.  The contents of this list would be kept confidential and only disclosed to Defendant and the joint computer expert.  Then, the joint computer expert would compare the two lists and generate a third list of overlapping customers, containing the customers’ contact information and the dates that the customers used the parties’ services.  This list would also be kept confidential and disclosed only to the parties and the expert.  Defendant indicates that it is willing to split the cost of the joint computer expert with Plaintiff.

Plaintiff opposes Defendant’s proposed protective order and argues that Defendant has failed to demonstrate that such an order is warranted.  Plaintiff points out that Defendant has not made and showing that the discovery sought is unduly burdensome, unduly expensive, or that the information is available through a less intrusive means.  Plaintiff indicates that it is willing to enter into a protective order that allows sensitive material to be designated as confidential and/or for attorneys’ eyes only.  Plaintiff contends that such a protective order would adequately protect Defendant’s information.  Furthermore, Plaintiff points out that the proposed protective order compels the inspection of its ESI, even though Defendant has not propounded any discovery seeking the same.  Plaintiff further argues that it has a right to have its own computer expert inspect Defendant’s computer systems and prepare a report for its benefit alone.

The Court finds that Defendant has not established good cause for the proposed protective order.  There is no indication that a protective order allowing for the designation of information and/or documents produced in response to DFI Nos. 1 and 2 as confidential and/or for attorneys’ eyes only is insufficient to protect Defendant’s concerns regarding potentially private and/or trade secret information.

Furthermore, it does not appear that the information sought is available through any less intrusive means.  As indicated above, the requests have been limited in scope as appropriate.  Moreover, the inspection of Defendant’s computer systems to be performed by the joint computer expert would not be any less intrusive than the one conducted by Plaintiff’s expert as the joint computer expert would still inspect all of Defendant’s computer systems with respect to the relevant time frame.  Moreover, the proposed protective order is even more intrusive as it compels an inspection of Plaintiff’s ESI by the joint computer expert.

Accordingly, Defendant has not established good cause for a protective order providing that a joint computer expert shall inspect its and Plaintiff’s computer systems and prepare a list of their overlapping customers.

6.            Request for an Order Generally Allowing Materials to be Designated as Confidential and/or for Attorneys’ Eyes Only

Defendant requests that the Court issue a general protective order allowing the parties to designate various information as confidential and/or for attorneys’ eyes only.  Defendant filed a proposed protective order with the instant motion on 11 September 2014.  The proposed protective order contains a general section with detailed guidelines, outlining how the parties are to designate information as confidential and/or for attorneys’ eyes only and the type of notice that should be provided prior to disclosure of such information.  Defendant indicates in its papers that, “[w]ith regard to the general section of the protective order, the main difference between the terms the parties have previously agreed upon and the Proposed Protective Order is that all electronically stored information produced in this action would be automatically designated ‘For Outside Attorneys Eyes Only.’”  (Mem. Ps & As., p. 15, fn. 10.)

Plaintiff indicates that it is not opposed to a protective order being issued in this case that allows for the designation of materials as attorneys’ eyes only and limits the disclosure of confidential information to designated individuals.

Thus, it appears that the parties agree that there is a need for a general protective order which allows for the designation of materials as attorneys’ eyes only and limits the disclosure of confidential information to designated individuals.

Accordingly, the Court finds that there is good cause for the issuance of a general protective order, allowing the parties to designate information as confidential and/or for attorney’s eyes only.  Defendant shall prepare and submit to the Court for signature a separate protective order, containing the general provisions outlined in the 11 September 2014 proposed protective order.  Defendant is not to include the provision providing for automatic designation of all electronically-stored information as attorneys’ eyes only or the portions of the 11 September 2014 proposed protective order that the Court has found to be without good cause.

7.            Conclusion

Defendant’s motion for a protective order is GRANTED IN PART and DENIED IN PART.  The motion is GRANTED as to the request for a general protective order, allowing the parties to designate information as confidential and/or for attorney’s eyes only.  The motion is DENIED as to all other requests.

IV.     Conclusion and Order

Plaintiff’s motion to compel further responses to DFI Nos. 1 and 2 is GRANTED, subject to the terms of the protective order described below.  Accordingly, within 20 days of the date of the filing of this Order, Defendant shall provide further verified, code-compliant responses to DFI Nos. 1 and 2, without objection, and allow inspection of all responsive information and/or records.  Any information and/or records that are produced and/or copied in response to DFI Nos. 1 and 2 that Defendant contends is covered by the trade secret privilege or constitutes Defendant’s financial records and/or information shall be labeled confidential and for Plaintiff’s attorney’s eyes only. Plaintiff shall be limited to using any such information and/or records thus designated only for the purpose of the ensuing litigation.

Plaintiff’s request for monetary sanctions in connection with its motion is DENIED.

Defendant’s request for monetary sanctions in connection with Plaintiff’s motion is DENIED.

Defendant’s motion for a protective order is GRANTED IN PART and DENIED IN PART.  The motion is GRANTED as to the request for a general protective order, allowing the parties to designate information as confidential and/or for attorney’s eyes only.  Defendant shall prepare and submit to the Court for signature a separate protective order, containing the general provisions outlined in the 11 September 2014 proposed protective order.  Defendant is not to include the provision providing for automatic designation of all electronically-stored information as attorneys’ eyes only or the portions of the 11 September 2014 proposed protective order that the Court has found to be without good cause. The motion is DENIED as to all other requests.

________________­­­____________ DATED:

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

 

[1]While Plaintiff’s motion is framed generally as a motion to compel production of documents, it is apparent from Plaintiff’s moving papers that the instant motion is one to compel further responses to DFI Nos. 1 and 2 under Code of Civil Procedure section 2031.310 because Plaintiff filed a separate statement as required by California Rules of Court, rule 3.1345(a) and argues that Defendant’s objections to the DFI lack merit and it satisfied the good cause requirement under Code of Civil Procedure section 2031.310, subdivision (b)(1).

 

[2] The Court notes that Plaintiff cites Code of Civil Procedure section 2031.310, subdivision (d) in its notice of motion as the basis for its sanctions request and it appears that its citation to subdivision (d), instead of subdivision (h), was a typographical error.