Davis v. Invictus Executive Management Services, LLC		CASE NO. 114CV267466
DATE: 25 September 2014	TIME: 9:00	LINE NUMBER: 16

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 Wednesday 24 September 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 25 September 2014, the motion of defendants Amadouba Tall a.k.a. Amadou Tall (“Tall”) and Invictus Executive Management Services, LLC (“Invictus”) (collectively, “Defendants”) to quash plaintiff Vernon Davis’ (“Plaintiff”) amended deposition subpoena for production of business records and request for monetary sanctions was argued and submitted.  Plaintiff filed formal opposition to the motion.

1. Statement of Facts

This is an action for breach of fiduciary duty and fraud, among other things.  Plaintiff is a professional athlete who formerly retained Defendants in April of 2012 to provide professional athlete management and marketing services.  Plaintiff alleges that Defendants ultimately wrongfully obtained over two million dollars from him, including sums advanced to Tall for various personal obligations of his, including payment of taxes and the purchase of a home.

On July 3, 2014, Plaintiff filed a complaint asserting the following causes of action against Defendants: (1) declaratory relief; (2) unfair business practices; (3) breach of fiduciary duty; (4) fraud; (5) negligent misrepresentation; (6) unjust enrichment/restitution; and (7) accounting.

On September 4, 2014, Defendants filed a cross-complaint against Plaintiff for fraud and breach of contract.

1. Discovery Dispute

On July 3, 2014, the same day that Plaintiff filed his complaint, the Court issued an ex parte writ of attachment in the amount of $2.2 million.  (Declaration of Constance Yu in Support of Opposition to Defendants’ Motion to Quash (“Yu Decl.”), ¶ 2.)  The attachment orders prohibited Defendants from “transferring directly or indirectly any interest in any property described in the order.”  The writs of attachment sought to attach funds in Defendants’ accounts into which Plaintiff had remitted the payments alleged in his complaint.

On or about July 21, 2014, the garnishees, JP Morgan Chase Bank N.A. entities, returned required memoranda to the levying officers.  Based on the returned memoranda, Plaintiff believed less than half of the $2.2 million of assets sought to be garnished were captured.  (Yu Decl., ¶ 3.)

As a result, on August 15, 2014 Plaintiff served an Amended Deposition Subpoena for Business Records on non-party JP Morgan Chase Bank N.A. in Santa Clara for three accounts into to which he had remitted payments.  (Declaration of Ronald Foreman in Support of Motion to Quash Amended Deposition Subpoena (“Foreman Decl.”), ¶ 2 and Exhibit A.)  The records requested read as follows:

Any and all documents including but not limited to statements of account, cancelled checks, check registers, statements of account, deposit slips, transfer slips, wire transfers, vouchers, ledgers, and signature cards, from April 16, 2012 to the date of production, for all accounts listed below:

1. JP Morgan Chase, N.A., Account No. ending in – 6061
2. JP Morgan Chase, N.A., Account No. ending in – 5139
3. JP Morgan Chase, N.A., Account No. ending in – 6334.

On August 29, 2014, Defendants filed the instant motion to quash and stay the deposition subpoena pursuant to Code of Civil Procedure section 1987.1 on the grounds that it is procedurally defective and invades Tall’s financial privacy rights.

On September 12, 2014, Plaintiff filed his opposition.

On September 18, 2014, Defendants filed their reply.

1. Discussion
2. Defendants’ Motion to Quash

Defendants move to quash and stay the deposition subpoena in its entirety on the grounds that it is procedurally defective and the demands contained therein are broad and oppressive and infringe upon Tall’s right to privacy in his financial affairs.

Code of Civil Procedure section 1987.1 authorizes a party to bring a motion to quash a subpoena in its entirety, modify it, or direct compliance with it “upon such terms and conditions as the court shall declare [.]”  A court may make any appropriate order to protect the parties, the witness, or the consumer from unreasonable or oppressive demands, including unreasonable violations of the right to privacy of a person.  (Code Civ. Proc., § 1987.1.)

1. Procedural Considerations- Notice

Defendants first assert that the deposition subpoena should be quashed because Plaintiff failed to provide Invictus with the requisite consumer notice mandated by Code of Civil Procedure sections 1985.3 and 2025.240.

Code of Civil Procedure section 1985.3 requires that before a subpoena is served on the custodian of records, notice must be provided to the “consumer” whose records are being sought.  Defendants assert that such notice was not provided to Invictus, specifically, and thus the subpoena is procedurally defective.  This assertion is unavailing.

As Plaintiff notes in his opposition, Code of Civil Procedure section 1985.3 expressly defines “consumer” to mean “any individual, partnership of five or fewer persons, association, or trust which has transacted business with, or has used the services of, the witness or for whom the witness has acted as agent or fiduciary.”  Here, Defendants have not demonstrated that Invictus, a limited liability company, is a consumer within the meaning of Code of Civil Procedure section 1985.3.  Tall was properly served with consumer notice.  Accordingly, Defendants’ contention that the deposition subpoena is procedurally deficient is without merit.

2. Substantive Objections

Defendants next assert that the document demands within the subpoena are overly broad, oppressive, and violate Tall’s privacy rights.

As an initial matter, Defendants’ contention that the demands are oppressive is easily dispensed with.

“In short, as Justice Murphy said for the court in Hickman v. Taylor, 329 U.S. 495, 507 [91 L.Ed. 451, 460, 67 S.Ct. 385], ‘discovery, like all matters of procedure, has ultimate and necessary boundaries.’”  Columbia Broadcasting System, Inc. v. Superior Court of Los Angeles County (1968) 263 Cal. App. 2d 12, 19.)

When asserting undue burden in response to a motion to compel, respondent has the burden of providing detailed evidence of how much work is required to answer the question.  West Pico Furn. Co. v. Superior Court (1961) 56 Cal. 2d 407, 418.

 

When asserting undue burden in response to a motion to compel, respondent has the burden of providing detailed evidence of how much work is required to answer the question.  West Pico Furn. Co. v. Superior Court (1961) 56 Cal. 2d 407, 418.  Such an objection will be sustained only where the burden of answering the discovery request at issue is so unjust that it amounts to oppression.  (Id.)

Here, Defendants are not the party to whom the subpoena was propounded and bear no burden in complying; accordingly, they are not in a position to opine as to the amount of work required to respond to it or whether that amount of work amounts to oppression.

Defendants’ next contention that the demands are overly broad is also without merit.  Generally, a party may seek discovery of any non-privileged thing that is relevant to the subject matter of the litigation or “appears reasonably calculated to lead to the discovery of admissible evidence.”  (Code Civ. Proc., § 2017.010.)  Information is relevant to the subject matter of the litigation “if it might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement.”  (Stewart v. Colonial Western Agency (2001) 87 Cal.App.4^th 1006, 1013.)

Here, Plaintiff’s subpoena is within the scope of permissible discovery because it seeks information that it directly relevant to the subject matter of the litigation.  Plaintiff asserts that he has reason to believe that Defendants used and are still using the subject accounts to pay for various things and are therefore transferring money in violation of the Court’s Right to Attach Orders.

Further, Defendants are alleged to have perpetrated fraud on Plaintiff in order to compel him to provide them with money they were not entitled to and the accounts to which Plaintiff remitted these funds are relevant to the extent that they were used to perpetuate the fraud.  It is reasonable to believe that that documents relating to these accounts will aid in identifying where Defendants transferred assets that are subject to the Court’s orders.  The demands are also sufficiently limited in scope to the relevant time period, i.e., that spanning the beginning of the parties’ business relationship to the present.

Defendants’ remaining argument that their privacy rights are affected to the extent that the subpoena should be quashed is not persuasive.  In ruling on objections to discovery based on privacy, courts apply a three-factor test.  (See Alch v. Superior Court (2008) 165 Cal.App.4^th 1414, 1423-1424.)  The first inquiry is whether the discovery sought actually implicates privacy interests.  (Id.)  If so, the court must then 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 of privacy.  (Id.)  If permitting the discovery would result in such an invasion, the court must determine whether the materials sought are directly relevant and essential to a fair resolution of the lawsuit.  (Id.)  If the answer is in the affirmative, the Court must allow the discovery, but in doing so, may order the propounding party to take appropriate measures to assuage any existing privacy concerns. (Id.)

Here, the subpoena seeks Defendants’ bank records, which would include personal financial information.  There is a legally recognized privacy interest in a person’s financial affairs, and there exists a reasonable expectation of privacy by a bank customer when dealing with a bank.  (See Valley Bank of Nevada v. Superior Court (1975) 15 Cal.3d 652, 656-657.)  In this case, while Tall clearly has a legally recognized privacy interest in the subject records, the extent of the interest maintained by Invictus is questionable.  The right to privacy contained in the California Constitution is limited to “people,” meaning natural persons, and does not apply to corporations. (See Roberts v. Gulf Oil Corp. (1983) 147 Cal.App.3d 770, 791.)

However, some privacy protection may exist for artificial business entities depending on “the nature and purposes of the corporate entity and the nature of the interest sought to be protected.”  (Id.)  Assuming here that Invictus has such a privacy right, the Court must determine whether it is outweighed by the relevance of the information sought to the subject matter in the pending action.  (Id.)  Any doubts as to relevance should generally be resolved in favor of permitting discovery.  (See Hecht, Solberg, Robinson, Goldberg & Bagley v. Superior Court (2006) 137 Cal.App.4^th 579, 595.)

The Court finds that any privacy interest maintained by either defendant in the financial records for the accounts at issue is outweighed by the relevance of these items to the subject matter in the pending action.  As articulated above, financial records for the accounts at issue may provide information that will enable Plaintiff to identify transferred assets that are subject to the Court’s orders.  Accordingly, Defendants’ motion to quash the amended deposition subpoena for production of business records is DENIED.

While the Court declines Defendants’ request that it review any responsive items in camera to assess their value to Plaintiff and the harm their disclosure may cause, in order to protect Defendants’ privacy concerns over Tall’s personal financial information, documents which are responsive to the amended deposition subpoena shall be produced under a protective order requiring that the documents be designated as “confidential” and “for attorney’s eyes only,” and limiting the use of the documents to the instant litigation.

1. Defendants’ Request for Monetary Sanctions

Defendants request that the Court impose $2,830 in sanctions against Plaintiff and his attorneys pursuant to Code of Civil Procedure section 1987.2, which provides that a court “may in its discretion” award sanctions against a party that unsuccessfully makes or opposes a motion to quash under Code of Civil Procedure section 1987.1 where the it finds that the motion “was made in bad faith or without substantial justification or that one or more of the requirements of the subpoena was oppressive.”  (Code Civ. Proc., § 1987.2, subd. (a).)

As Plaintiff’s opposition to the instant motion is successful, Defendants’ request for sanctions is DENIED.

1. Conclusion and Order

Defendants’ motion to quash is DENIED.

Defendants’ request for monetary sanctions is DENIED.

 

 

________________­­­____________ DATED:

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