2016-00189229-CU-IP

Champ Systems, Inc. vs. Stewart Fines

Nature of Proceeding: Motion to Compel Production of Documents

Filed By: Hodgson, Timothy E.

Plaintiff Champ Systems, Inc.’s motion to compel Defendant Stewart Fines “compliance with [Plaintiff’s] request for production of documents” is ruled upon as follows.

The Court must note that Plaintiff’s motion is somewhat unclear. The notice of motion fails to indicate the statutory basis for the motion. It purports to be a motion to compel compliance with Plaintiff’s request for production yet the separate statement and accompanying papers indicate that Defendant interposed objections to the requests at issue (34-40, 41 and 42) and did not agree to produce any documents. A motion to compel compliance is only proper where a party has agreed to produce documents but has failed to do so in compliance with its statement. (CCP § 2031.320(a).) As such, the motion at most can be construed as one to compel further responses

In this trade secret misappropriation action Plaintiff alleges, among other things, that Defendant established a competing IT support business while still employed by Plaintiff and diverted Plaintiff’s customers to Defendant’s new business (MyITBud). Defendant contends that he simply informed customers that he had left Plaintiff’s employ and started his own company. The Court notes that the parties spend time in their papers arguing over the merits of this case. The Court makes no determination or comment on the merits of the case in this discovery motion.

The subject requests for production seek statements including invoices showing customer names and addresses pertaining to goods and/or services Defendant or MyITBud billed or charged any customer for the years 2012 through present (RFP 34-

40). RFP 41 seeks all proposals Defendant/MyITBud offered to provide services and/or goods to any potential customer. RFP 42 seeks all proposals Defendant/MyITBud offered to provide services and/or goods to any potential customer who is a current or former customer of Plaintiff. Defendant interposed the same objection to each request premised on his right to financial privacy in addition to the right to privacy of his customers. He also objected on the basis that the requests seek confidential and proprietary trade secret information, that the requests seek information not reasonably calculated to lead to the discovery of admissible evidence and that the requests were vague, ambiguous and overbroad.

Plaintiff argues that a defendant in a trade secret case such as this one was ordered by an Alameda County trial court to produce the very same documents. The trial court decision was in the case of Morlife, Inc. v. Perry. While that case resulted in a published opinion in Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, the published opinion dealt with an appeal from a judgment after trial, and did not address the trial court’s discovery order Plaintiff attempts to rely on. Citation to a trial court decision is not appropriate under the rules of court. (CRC Rule 3.1113(c).) Moreover this Court is not bound by the opinion of another trial court which has no precedential value. ( Harrot v. County of Kings (2001) 25 Cal.4th 1138, 1148.) As a result, Plaintiff’s request for judicial notice of the trial court decision is denied as it has no relevance to this motion.

The Court first addresses the contention that the subject requests seek information that is not reasonably likely to lead to the discovery of admissible evidence. Indeed, in the discovery context, information is relevant “if it might reasonably assist a party in evaluating its case, preparing for trial, or facilitating a settlement. [citations omitted] Admissibility is not the test and information, unless privileged, is discoverable if it might reasonably lead to admissible evidence.” (Glenfed Development Corp. v. Superior Court (1997) 53 Cal.App.4th 1113, 1117; Lipton v. Superior Court (1996) 48 Cal.App.4th 1599, 1611-1612 [court’s emphasis].) “Relevant to the subject matter” is broader than relevancy to the issues which determine admissibility of evidence at trial. Weil and Brown, Cal Prac. Guide: Civil Procedure Before Trial (TRG 2010) 18:66 citing Bridgestone-Firestone Inc. v. Sup. Ct. (1992) 7 Cal. App. 4th 1384, 1392. Admissibility at trial is not the test. See Davies v. Superior Court (1984) 36 Cal. 3d 291, 301. Here the requests seek information related to services Defendant provided to customers and proposals sent to potential customers and Plaintiff has alleged that Defendant diverted customers to his new business. In the most general sense, information regarding Defendant’s customers could lead to the discovery of admissible evidence on the issue of whether Defendant improperly diverted Plaintiff’s customers, but only to the extent that Defendant’s customers were customers that Plaintiff claims were improperly diverted from Plaintiff.

Defendant contends, however, that information regarding his own customers which Plaintiff does not contend he diverted are not relevant. Plaintiff fails to articulate the rationale for obtaining information regarding Defendant’s customers in the opening points and authorities, instead referring the Court to the separate statement.

Nevertheless, it argues that information regarding income derived from Defendant’s own customers is somehow relevant to Plaintiff’s measure of damages. In that regard Plaintiff simply argues that the trial court in Morlife used a ratio of the defendant’s income from the plaintiff’s former customers divided by all income received from all of defendants’ customers to determine unjust enrichment damages. In affirming the judgment, including the trial court’s calculation of unjust enrichment damages, Morlife,

Inc. v. Perry (1997) 56 Cal.App.4th 1514, stated that evidence of unjust enrichment was presented in the form of salaries the defendants earned in its first six months of the new business’ operation and then applied a 33% figure to their combined earnings, recognizing that 33% of business during the first six months was derived from work for plaintiff’s former customers. (Id. at 1528.)

While evidence of Defendant’s overall earnings may in fact be relevant with respect to Plaintiff’s measure of damages on an unjust enrichment theory, that does not mean that the identity of customers who are not claimed to have been Plaintiff’s former customers is likely to lead to the discovery of admissible evidence and the published opinion in Morlife is not to the contrary. Indeed, Morlife makes clear that a confidential customer list is a trade secret. (Id at pp. 1521-1522.) Again the trial court opinion is not citable. Thus, the Court agrees that the subject requests are overbroad to the extent that they seek information regarding the identity of customers not claimed to have been Plaintiff’s former customers.

To the extent that Plaintiff contends that there are additional former customers of Plaintiff that Defendant provided services to, other than those previously identified in this action, it can easily propound an interrogatory asking the same and then seeking documents in the event that Defendant answers in the affirmative. But requesting all documents regarding all of Defendant’s customers at this juncture is overbroad and the Court will not order Defendant to provide such information at this time. Nothing prevents Plaintiff from seeking information about the amount of money received from other customers who are not claimed to have been Plaintiff’s former customers without seeking identity. The Court, however, will not rewrite the requests for Plaintiff.

The Court also notes that it already ordered Defendant to provide the same documentation regarding Plaintiff’s former/current customers when it granted Plaintiff’s motion to compel further responses on July 23, 2018. Therefore, since the Court is not requiring Defendant to produce information regarding Defendant’s customers, no further response is required at this time with respect to RFPs 34-40 and 41 and the motion is denied as to those requests.

However, the motion is granted as to RFP 42 which as described above, seeks all proposals Defendant/MyITBud offered to provide services and/or goods to any potential customer who is a current or former customer of Plaintiff. This request is properly limited and indeed, Defendant indicates in opposition that he will respond to that request and produce the requested documents. As a result, a further response must be provided. To the extent that Defendant raised a right to privacy on his own behalf, the Court has already concluded on July 23, 2018 that any right to privacy does not prevent production of the information as the information sought (at least related to customers claimed to be diverted) is directly relevant to the claims alleged in the Complaint. (ROA 52.) In addition, the other objections set forth in response to RFP 42 are overruled as no effort was made to justify them.

The Court rejects Defendant’s argument that Plaintiff failed to adequately meet and confer.

As a result, the motion is denied as to RFPs 34-41 and granted as to RFP 42.

Defendant shall provide a verified further response to RFP 42 consistent with the above no later than January 29, 2019.

Plaintiff’s request for sanctions is denied as the opposition was substantially justified.

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or other notice is required.