Case Name: beIN IP Ltd v. BeoutQ, et al.
Case No.: 17CV316099

Plaintiff beIN LP Ltd. (“Plaintiff”) moves to compel third-party Kratos Defense Security Solutions, Inc. (“Kratos”) to comply with a subpoena for the production of business records.

I. Factual Background and Discovery Dispute

This is an action for unfair business practices and intentional interference with contractual relations. Plaintiff is a company within the beIN Media Group, a TV Production, distribution and media rights acquisition entity, which centralizes global rights acquisitions and sales. (First Amended Complaint (“FAC”), ¶ 1.) Plaintiff owns the rights to exclusively distribute and broadcast certain sports programs and alleges that defendant Saudi Selevision Company LLC (“Selevision”), who distributed beIN channels in Saudi Arabia from February 2014 to April 2016, when the relationship was terminated, pirated beIN’s programming and made it available for streaming on defendant BeOUTQ’s website www.beoutQ.se. (Id., ¶¶ 11-16.) Defendant Raed Reda Hassan Khusheim (“Khusheim”) and other presently unidentified third parties are also alleged to have engaged in this unlawful rebroadcast and distribution of beIN’s media content. Plaintiff alleges that the defendants accomplished this using services provided by California companies, particularly content hosting, security and social media services. (Id., ¶ 16.)

Based on the foregoing allegations, on May 21, 2018, Plaintiff filed the FAC asserting the following causes of action against all of the defendants: (1) violation of Business & Professions Code section 17200; (2) intentional interference with prospective economic advantage; (3) negligent interference with economic relations; and (4) intentional interference with contractual relations.

According to Plaintiff, throughout the course of this litigation it has been diligent in investigating defendant beOUTQ’s (“beOUT”) identity, residence, and co-conspirators from materials obtained through the issuance of subpoenas to third-parties. Through this discovery, beIN has identified and added to its complaint two additional defendants- Selevision and its CEO, Raed Reda Hassan Khusheim (“Khusheim”), who’s company, Khusheim Holdings Company, is the parent of Selevision. (Schwartz Decl., ¶ 4, Exhibit G.) beIN also discovered that beOUT’s set-top boxes receive unauthorized broadcasts from Arabsat, an inter-governmental organization funded by the Arab League which operates a fleet of geostationary communication satellites that carry television channels, radio stations and pay-tv networks to more than 80 countries and over 170 million viewers. beIN maintains that Arabsat is engaged in pirating its content and has refused to stop broadcasting the beOUT signal, suggesting complicity in the alleged pirating.

On July 27, 2018, beIN served third-party Kratos with a deposition subpoena for the production of business records which sought five categories of documents relating, in general, to the following: (1) Kratos’s documents relating to Arabsat; (2) documents sufficient to identify the products/services Kratos provided to Arabsat; (3) documents identifying third parties that may have a relationship with Arabsat; (4) documents sufficient to identify Arabsat’s internet and satellite users; and (5) documents relating to beOUT piracy of beIN content, Selevision, Khushiem, Khusheim Holdings, any of the offending websites or user applications, or any of the offending set-top box companies. (Declaration of Eric Schwartz in Support of Motion to Compel Compliance with Subpoena (“Schwartz Decl.”), ¶ 17, Exhibit J.)

Deponent Kratos is a Delaware company registered to do business in California that provides national security and technology solutions, including for satellite communications. (Schwartz Decl., ¶ 2, Exhibit A.) Among other products, Kratos sells the COMPASS system, which is a network management product for the management and control of satellites. (Id., Exhibits B and C.) In July 2017, Arabsat selected COMPASS to support its satellite fleet ground operations- i.e., the same satellite system used to broadcast beOUT’s purportedly pirated content. (Id.) COMPASS was delivered to Arabsat by Kratos’s wholly-owned subsidiary in France, Kratos Communications S.A.S. (Id., ¶ 10, Exhibits B and H.) Kratos also agreed to provide Arabsat with related data storage services. (Id., Exhibit B.)

On August 24, 2018, after receiving an extension, Kratos responded to Plaintiff’s deposition subpoena, explaining in a letter that it had not directly contracted or communicated with Arabsat, its French subsidiary had, and thus it was not in possession of any “relevant documents.” (Schwartz Decl., ¶ 13, Exhibit K.) Kratos also asserted a variety of objections. (Id.) beIN responded in writing on August 28, 2018, disputing Kratos’s claims that (1) it did not have control over its subsidiary or have an obligation to produce documents maintained by it and (2) that its French subsidiary was a distinct entity and the only point of contact with Arabsat. (¶ 14, Exhibit L.) beIN further indicated its willingness to engage in further meet and confer efforts to address Kratos’s concerns. After additional meet and confer efforts were made, and Kratos objected that it did not have to produce documents from its French subsidiary because it could not attest, under California Evidence Code section 1561, how its French subsidiary prepared its documents, this motion followed on November 5, 2018, when the parties were unable to resolve their dispute. Kratos opposes the motion.

II. Discussion

A. Kratos’s Request for Judicial Notice

In connection with its opposing papers, Kratos requests that the Court take judicial notice of various items, including records from the High Court of Paris, French Law no 68-678, Federal Rule of Civil Procedure 45 Subpoena Form AO88B and Regulation 2016/679 of the European Parliament and of the Council of 27 April 2016. (See Declaration of Will B. Fitton in Support of Opposition to Motion to Compel Compliance with Subpoena (“Fitton Decl.”), Exhibits A, C, D, E and H.) These items are all permissible subjects of judicial notice as the laws of the United States and foreign nations or organizations of nations. (Evid. Code, § 452, subds. (a), (b) and (f).) Accordingly, Kratos’s request for judicial notice is GRANTED.

B. Plaintiff’s Motion to Compel Compliance

With the instant motion, Plaintiff moves to compel compliance with the deposition subpoena served on Kratos pursuant to Code of Civil Procedure sections 1987.1 and 2025.480, both of which authorize such a motion when a non-party deponent fails to produce documents or electronically stored information in response to a deposition subpoena. (See Unzipped Apparal, LLC v. Bader (2007) 156 Cal.App.4th 123, 127.) Kratos, as the deponent resisting discovery, bears the burden of justifying its objections to the requests contained in Plaintiff’s subpoena. (See Williams v. Superior Court (2017) 3 Cal.5th 531, 541.)

1. Timeliness

As an initial threshold matter, Kratos maintains that the instant motion to compel compliance is untimely and therefore must be denied in its entirety by the Court. A motion to compel compliance with a deposition subpoena must be “made no later than 60 days after the completion of the record of the deposition.” (Code Civ. Proc., § 2025.480, subd. (b).) Where the subject of the motion to compel is a deposition subpoena for the production of business records, as it is here, the 60-day time limit runs from the date the objections or other responses are served because the deposition record is then deemed complete. (Rutledge v. Hewlett-Packard Co. (2015) 238 Cal.App.4th 1164, 1192.)

Kratos argues that Plaintiff’s motion is late because it served its objections on August 24, 2018, and beIN’s motion to compel filed 60 days later, on October 23, 2018, was rejected and ultimately filed as “amended” on October 31, 2018, seven days after the statutory deadline. This argument is unavailing because per California Rules of Court, rule 3.1300(e), “[a] paper submitted before the close of the clerk’s office to the public on the day the paper is due is deemed timely filed.” There is no dispute that Plaintiff submitted its motion papers to the clerk’s office for filing within 60 days of the service of Kratos’s objections to the deposition subpoena. Upon such submission, the motion papers qualified as filed for the purposes of determining timeliness. The authority relied on by Kratos to support a contrary conclusion, Residential Rent Stabilization & Arbitration Bd. (2004) 124 Cal.App.4th 775, 777-778, is distinguishable because the filing at issue in that case (a petition, not a discovery motion) was not “submitted” to the clerk and rejected several days later, as happened here, but rather immediately rejected at the filing window and not resubmitted for filing until several days later after the deadline had passed. Thus, the Court finds that Plaintiff’s motion to compel compliance is timely and will therefore address its substantive merits.

2. Whether Kratos is Obligated to Produce Responsive Materials Maintained by its French Subsidiary

Beyond addressing the objections asserted in its response to Plaintiff’s deposition subpoena, the thrust of Kratos’s opposition to the instant motion to compel is that the California subpoena cannot be permitted to reach its French subsidiary due to French and European Union (“EU”) laws and international comity concerns. Additionally, Kratos maintains that the reach of subpoena is more limited than beIN believes it is. In contrast, it is Plaintiff’s position that Kratos is obligated to produce documents maintained by its foreign subsidiary, over which it (Kratos) has control, and French “blocking statutes” do not apply and operate to bar production.

The five categories of requests contained in the deposition subpoena at issue do not specifically request documents from Kratos’s French subsidiary in particular, although the terms “Kratos,” “You” and “Your” within the requests are defined to include, among other things, any subsidiary of Kratos. (See Schwartz Decl., ¶ 12, Exhibit J.) The determinative question, therefore, is the extent of the obligation of a non-party who receives a deposition subpoena for business records to respond to it, and how that obligation may or may not be affected by the fact that responsive documents could possibly be maintained by the non-party deponent’s foreign subsidiary.

At the outset, the Court notes that it is not persuaded that the portions of discovery jurisprudence relating to the limitations placed on discovery from foreign nationals (whether a party or not), e.g., international comity (see Societe Nationale Industrielle Aerospatiale v. United States Dist. Ct. (1987) 482 U.S. 522, 546) and the Hague Evidence Convention procedures (28 U.S.C. § 1781), are implicated by the circumstances at bench. This is because the actual recipient of the deposition subpoena at issue, Kratos, is not a foreign entity but rather a company that is headquartered and registered to do business in California. Assuming for the sake of argument that Plaintiff’s motion is granted, the Court would not be ordering a foreign entity to produce responsive documents, but rather a California-based entity. Thus, the special concerns that must be taken into consideration when discovery is from a foreign national are not implicated here.

While the Discovery Act does not specifically define the phrase “business records,” it includes every kind of record maintained by every kind of business, governmental activity, profession or occupation, whether carried on for profit or not. (Evid. Code, §§ 1270 and 1560, subd. (a).) As used in Code of Civil Procedure section 2020.410 et seq. (concerning business records subpoenas), “business records” means things like journals, account books, reports and the like-, i.e., an item, collection or grouping of information about a business entity. (See Urban Pac. Equities Corp. v. Superior Court (1997) 59 Cal.App.4th 688, 692-693.) Plaintiff argues that Kratos is obligated to produce all relevant documents maintained by its wholly-owned subsidiary because, while such documents might not be in Kratos’s possession or custody, they are in its control, and that issue would be the only basis for a legitimate objection.

Indeed, an entity that has been served with a deposition subpoena for the production of records is obligated to produce all responsive documents within its “control.” (Code Civ. Proc., § 1985, subd. (a); see also Code Civ. Proc., § 2020.030 [applying Code of Civil Procedure § 1985 to all deposition subpoenas].) Kratos does not necessarily dispute that it could obtain such responsive records from its French subsidiary, i.e., that they are in its control, but it notes that a deposition subpoena must be delivered to someone, e.g. the “custodian of records,” who is able to attest to the authenticity and trustworthiness of those records, and maintains that it is it not able to do so here. In making this argument, Kratos relies primarily on the case of Cooley v. Superior Court (2006) 140 Cal.App.4th 1039, in which a wrongful death plaintiff moved to enforce a deposition subpoena served on nonparty District Attorney seeking the production of business records concerning a fatal automobile accident that were generated by entities other than the DA (specifically, the local police department and the California Highway Patrol). The Court reversed the trial court’s order compelling the DA to comply with the subpoena, concluding that the DA did not function as the custodian of the records or other qualified witness because it could not “attest to the various attributes of the records relevant to their authenticity and trustworthiness” as required by Evidence Code section 1561, and thus could not comply. Kratos argues that it is in the same position as the DA in Cooley, and thus cannot produce materials maintained by its French subsidiary.

Kratos’s effort to analogize itself to the DA in Cooley is unavailing because the DA in that case clearly was not able to authenticate the records of documents produced by completely separate, independent agencies. Here, in contrast, the French subsidiary is wholly-owned by and within the control of Kratos, and while Kratos’s US custodian of records may not be able to authenticate the business records of the foreign subsidiary, it surely has other individuals who meet the definition of “qualified witness” to authenticate said records under the pertinent statutes. (E.g., Evid. Code, § 1561 [stating that authenticity and trustworthiness of documents produced in response to deposition subpoena can be certified by the custodian of those records or “other qualified witness”].) Kratos certainly has not demonstrated that it currently does not have individuals who are so qualified available to it.

While California cases are silent as to whether service of a business records subpoena on a nonparty corporation in California compels production of its records located outside of the state, numerous federal courts, including those within the Ninth Circuit, have concluded that a U.S. corporation can be ordered to produce records housed in foreign subsidiary or affiliate offices as the company has legal control over such documents. (See, e.g., In re ATM Fee Antitrust Litig. (N.D. Cal. 2005) 233 F.R.D. 542, 545; Cooper Indus., Inc. v. British Aerospace, Inc. (S.D.N.Y. 1984) 102 F.R.D. 918, 919-920; In re Investigation of World Arrangement, Etc. (D.D.C. 1952) 13 F.R.D. 280, 285.) This is primarily because such corporations maintain control over their subsidiaries and thus are in a position to obtain responsive documents. Here, with Kratos no different, the Court finds that the company is obligated to produce documents maintained by its French subsidiary that are responsive to the deposition subpoena.

3. Kratos’s Objections

In its response to the deposition subpoena, Kratos objected to each of the five requests contained therein as vague, ambiguous, overbroad, unduly burdensome and as seeking documents that are not relevant nor reasonably calculated to lead to the discovery of admissible evidence. Then, subject to each of the foregoing objections, Kratos responded that its French subsidiary was “the entity that has provided satellite goods and services to Arabsat” and that because Kratos had not directly communicated with Arabsat, it was “not in possession of relevant documents.”

As set forth above, as the deponent resisting discovery, Kratos bears the burden of justifying its objections. (See Williams v. Superior Court, supra, 3 Cal.5th at 541.) Kratos makes no effort to justify its objections asserting that the requests are vague or ambiguous or seek irrelevant information and therefore they are without merit. In any event, the requests unquestionably seek relevant documents because they seek materials which are likely to contain information regarding, for example, the identity of third-parties that have a relationship with alleged co-conspirator Arabsat or customers of Arabsat who may be involved in the unauthorized broadcasts of beIN’s content. beIN’s request are also directed towards determining whether there is a basis to name Arabsat as a defendant in this action.

Turning to Kratos’s objection that the requests are overbroad and not narrowly tailored to this litigation, as a general matter a discovery request that otherwise seeks relevant information will be deemed overbroad if it also seeks information that is beyond the scope of discovery. (See Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 224.) Critically, the scope of discovery is broad; any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter is either itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence. (Code Civ. Proc., § 2017.010.) “In the context of discovery, evidence is ‘relevant’ if it might reasonably assist a party in evaluating its case, preparing for trial, or facilitating settlement.” (Gonzalez v. Superior Court (1995) 33 Cal.App.4th 1539, 1546.) Considering the foregoing standard, the Court is not persuaded that Plaintiff’s requests are overbroad as they are specifically aimed at fleshing out the particularities of the relationship between Kratos and Arabsat, the latter of whom is suspected by Plaintiff of engaging in unauthorized attempts to distribute and stream Plaintiff’s content using, at least in part, technology provided by Kratos (or its French subsidiary). Thus, Kratos’s objection is without merit.

Kratos’s remaining objection is that responding to the requests would impose an undue burden on it. An objection on this ground may be made when “the burden, expense, or intrusiveness of [the] discovery clearly outweighs the likelihood that the information sought will lead to the discovery of admissible evidence.” (Williams, supra, 3 Cal.5th at 549 [internal citation and quotation omitted].) Conclusory statements by the objecting party are insufficient to justify such an objection, instead, in order to sustain the objection that party must submit detailed evidence showing precisely how much work is required to respond to the subject requests. (West Pico Furniture Co. of Los Angeles v. Superior Court (1961) 56 Cal.2d 407, 419.) Kratos falls well short of this standard, merely stating that a limited search for U.S. documents that contain the term “Arabsat” and the names and terms covered by Request No. 5 returned more than 7,500 records. But Kratos has provided no details regarding the amount of time required to respond to the deposition subpoena or the accompanying expense and therefore the Court cannot determine whether the burden imposed by the subpoena outweighs the value of whatever information it may produce. As such, this objection is unsubstantiated and must be overruled.

III. Conclusion

For the reasons set forth above, the Court concludes that Kratos’s objections to the deposition subpoena issued by Plaintiff are without merit. Accordingly, Plaintiff’s motion to compel compliance is GRANTED. Kratos is obligated to provide all responsive materials to Plaintiff, including those maintained by its French subsidiary. Out of an abundance of caution, and concerns raised by Kratos in its opposition, the Court orders Plaintiff, its attorneys, and agents, to refrain from disseminating the information ultimately obtained to any nonparty except for use in the present litigation.