Case Number: SC113447 Hearing Date: June 06, 2014 Dept: M

Tentative Ruling
FX Networks v. Dish Network
SC113447

This is an action by Plaintiff FX Networks LLC (“FX” or “Plaintiff”) against Dish Network LLC (“Dish”) arising from a promotion by Dish (which Dish calls its ““30th Anniversary Promotion”) in which it gave its subscribers, for a limited time, free access to Starz and Encore television channels. FX alleges that “basic cable television channels” such as FX, unlike “premium cable channels” such as HBO, Showtime, and Starz depend on advertising revenue. FX alleges that movie studios typically license the rights in “windows” in the following order: (1) video on demand and pay per view; (2) DVD; (3) premium cable channels; and (4) basic cable channels. FX alleges that there is value in having the exclusive right to air a movie for the first time in each “window.” FX alleges that as the “basic cable licensee, FX enjoys exclusive rights against all other pay and basic television channels during the ‘free TV’ window.” FX alleges that the value of these rights, and the advertising revenue that FX stands to gain for any particular movie, depends critically on “the amount of exposure that such licensed movies will have had prior to their debut and exhibition on FX . . . .”
This action against defendants Dish and Starz Entertainment LLC (“Starz”) concerns that free TV window. FX alleges that in early 2011, Dish announced a rate increase to its subscribers, but to “soften the blow of this rate hike, Dish offered what had been Starz and Encore premium pay television channels . . . for free to all existing Dish subscribers whose rates were increasing.” FX alleges this “effectively turned the [Starz] premium pay channels into free basic cable channels for over 12 million Dish households.” FX alleges that this effective conversion of Starz and Encore into “free television” interferes with FX’s exclusive licenses to premiere and exhibit movies on FX during the free TV window, specifically those produced by Sony Pictures (Sony) and Buena Vista (Disney), devalues FX’s exclusive licenses with these studios, and concomitantly threatens to reduce FX’s revenue streams from advertisers – see FAC pages 1-2, #4.
FX’s First Amended Complaint, as modified by Judge Tarle’s April 8, 2012 ruling dismissing FX’s unfair competition claim, alleges three causes of action against Dish for: (1) intentional interference with contract; (2) intentional interference with prospective economic advantage; and (3) declaratory relief (FX previously alleged the same causes of action against Starz, which is no longer a party to this action).

Defendant Dish Network’s Motion to Compel Production of Financial Statements and Corporate Testimony re Same

Dish served a PMK deposition notice on Plaintiff. It now seeks to compel production of, and PMK testimony regarding, Plaintiff’s “annual financial statements from 2009 to present,” asserting that same are necessary to test Plaintiff’s damages claims. Plaintiff previously objected to those requests, and has opposed the motion. Dish timely served and filed a reply.

GRANTED:

Having read and considered the moving papers, the court tentatively grants the Defendants’ motion pursuant to CCP 2025.450, and rules as follows:

1. CCP 2025.450(a): If, after service of a deposition notice, a party to the action or an officer, director, managing agent, or employee of a party, or a person designated by an organization that is a party under Section 2025.230, without having served a valid objection under Section 2025.410, fails to appear for examination, or to proceed with it, or to produce for inspection any document, electronically stored information, or tangible thing described in the deposition notice, the party giving the notice may move for an order compelling the deponent’s attendance and testimony, and the production for inspection of any document, electronically stored information, or tangible thing described in the deposition notice;
2. CCP 2025.450(b): A motion under subdivision (a) shall comply with both of the following:
(1) The motion shall set forth specific facts showing good cause justifying the production for inspection of any document, electronically stored information, or tangible thing described in the deposition notice.

(2) The motion shall be accompanied by a meet and confer declaration under Section 2016.040, or, when the deponent fails to attend the deposition and produce the documents, electronically stored information, or things described in the deposition notice, by a declaration stating that the petitioner has contacted the deponent to inquire about the nonappearance.

3. As an initial matter, the Court will exercise its broad discretion to conclude that Defendant engaged in a sufficient meet and confer efforts as to the motion. See, Obregon v. Superior Court (1998) 67 CA 4th 424, 431-35;
4. FX has not asserted that the documents and requested testimony are protected by the Cal. Const. Article 1, Section 1 privacy protection. Rather, it asserts other grounds of objection, the primary one being relevance. Per Plaintiff, the financial statements are not relevant because it is not pursuing lost profits as damages, and it has produced the documents, discovery responses and deposition testimony pertinent thereto from which its damages claims (which, it asserts, are based on the devaluation of its licenses) can be calculated and tested;
5. The principal purpose of the discovery statutes is “to educate the parties concerning their claims and defenses so as to encourage settlements and to expedite and facilitate trial.” Emerson Electric Co. v. Superior Court (1997) 16 C 4th 1101, 1107. As such, parties are entitled to obtain nonprivileged information relevant to the subject matter involved in the pending action. Code Civ. Proc., § 2017.010. Relevant evidence is evidence “having any tendency in reason to prove or disprove any disputed fact that is of consequence to the determination of the action.” Evid.Code, § 210;
6. Thus, “[f]or discovery purposes, information is relevant if it might reasonably assist a party in evaluating the case, preparing for trial, or facilitating settlement …. Admissibility is not the test and information unless privileged, is discoverable if it might reasonably lead to admissible evidence. These rules are applied liberally in favor of discovery….” Stewart v. Colonial Western Agency, Inc. (2001) 87 CA 4th 1006, 1013 (internal quotations and citations omitted);
7. The Court concludes that regardless of how Plaintiff characterizes its damages – and the Court agrees with defendant’s assertion that Plaintiff’s characterization of its damages has been a moving target – Defendant has the far better arguments. The requested financial statements (and the requests pertaining to same are reasonable as to the time period involved) are relevant to its damages claims under the broad relevance standard of section 2017.010;
8. There is no indication whatsoever that the information is sought to harass, as Plaintiff contends. Further, the Court trusts that, if for some strange reason FX does not accept Dish’s offer to designate the documents and testimony as “Outside Counsel’s Eyes Only,” (Reply, 8:23-25), able counsel on both sides will find a reasonable solution to the alleged problem;
9. Although the Court found this motion interesting, it, most assuredly, should not have been necessary;
10. Motion is granted in full. Further PMK deposition as to deposition topic no. 33 is to take place on a mutually agreeable date, within 20 days, at defense counsel’s Figueroa Street office. At that deposition, Plaintiff is to produce all documents responsive to PMK Deposition Notice RFP no. 9; and
11. No request for sanctions was made, and none will be awarded.

Plaintiff’s Motion to Compel defendant Dish Network’s Further Responses to Inspection Demands (Set 5)

FX seeks to compel Dish’s further responses to inspection demands nos. 105, 106, and 108-111, all of which pertain to documents produced in, and transcripts and videotapes of depositions taken in, a state court action in Colorado (“Colorado Action”) in which Starz (formerly Dish’s co-defendant in this action) sued Dish concerning the same promotion, with some additional particularity, which gives rise to this action. Dish has opposed the motion; Plaintiff timely replied.

DENIED:

Having read and considered the moving papers, the court tentatively denies the Plaintiff’s motion pursuant to CCP 2031.310, and rules as follows:

1. CCP 2031.310(a): On receipt of a response to a demand for inspection, copying, testing, or sampling, the demanding party may move for an order compelling further response to the demand if the demanding party deems that any of the following apply:
(1) A statement of compliance with the demand is incomplete.
(2) A representation of inability to comply is inadequate, incomplete, or evasive.
(3) An objection in the response is without merit or too general.
(b) A motion under subdivision (a) shall comply with both of the following:
(1) The motion shall set forth specific facts showing good cause justifying the discovery sought by the demand.
(2) The motion shall be accompanied by a meet and confer declaration under Section 2016.040.

2. In the Colorado Action, Starz alleged that the promotion violated three separate provisions of a 2006 agreement between Starz and Dish. Discovery in the Colorado Action concerning two of those provisions/issues – the use of Starz’s trademarks and Dish’s portrayal of Starz channels as “free” – is the subject of the instant discovery dispute. FX asserts that the discovery sought here pertains to Dish’s affirmative defenses of authorization, license, and justification, and that Dish acknowledged same by seeking a stay in this action based on the Colorado Action. Dish asserts that the subject discovery is overbroad;
3. As discussed in connection with Dish’s motion to compel re FX’s financial statements, the scope of discovery is broad, and disclosure is favored. However, notwithstanding that “fishing expeditions” are sometimes allowed by the discovery rules, there are limits on the catch. Calcor Space Facility, Inc. v. Superior Court (1997) 53 CA 4th 216, 224 (“‘fishing expeditions’ are permissible in discovery, there is a limit”); see also, Tylo v. Superior Court (1997) 55 CA 4th 1379, 1387;
4. Indeed, “[a] trial court shall limit the scope of discovery 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….” Code Civ. Proc., § 2017.020(a);
5. Notwithstanding the well-written moving and reply briefs, the Court agrees with the arguments well-stated in the opposition brief: as currently phrased, the subject inspection demands collectively act as a “sledge hammer,” rather than the preferred “lancet.” Calcor, supra, at 221 (“[discovery] should be well calibrated; the lancet is to be preferred over the sledge hammer”);
6. FX has, as Dish succinctly puts it, “brought a motion to compel every document produced and every word of testimony” from the Colorado Action (Opp., 1:2-3) (emphasis added). Further, a good part of (if not most) of that evidence has nothing to do with the issues in this action. Plaintiff has not shown the “good cause” required by CCP 2031.310(b)(1) for an order compelling production;
7. Thus, an order denying the motion is appropriate. However, because some of the requests may be proper if they were more narrowly drafted, the Court will permit Plaintiff an opportunity to go “back to the drawing board.” Given the high caliber of counsel on both sides of this case, the Court expects that it should not have to determine any dispute over renewed inspection demands concerning the Colorado Action from Plaintiff, and that if any such dispute is brought before the Court, the issues will be significantly narrowed from those presented in the papers on the motion at bar; and
8. Motion is denied without prejudice to service of new, more narrowly-drafted request for production concerning the Colorado Action.

Plaintiff’s Motion to Compel Testimony and Documents re PMK Deposition of defendant Dish Network

Plaintiff served a PMK deposition notice on Dish. It then, in the face of numerous boilerplate objections by Dish, moved to compel production of (and, in some instances, PMK testimony as to) seven categories of documents pertaining to Dish’s knowledge of physical windows, licensing, and FX’s movie premiers, Dish’s communications with advertisers concerning its pre-giveaway knowledge of FX’s movie premiers, and Dish’s affirmative defenses. After the filing of the motion, the parties informally resolved all issues in the motion with the exception of document categories 3 (concerning Dish’s knowledge of windowing of the 22 movies at issue, specifically, the dates or periods of windows for the movies) and 5-7 (concerning Dish’s communications with advertisers concerning its pre-giveaway knowledge of FX’s movie premiers); Dish filed an opposition as to those four categories. FX timely served and filed a reply.

DENIED:

Having read and considered the moving papers, the court tentatively denies the Plaintiff’s motion pursuant to CCP 2025.450, and rules as follows:

1. As was the case with Plaintiff’s motion to compel further responses to inspection demands, the Court agrees with the arguments interposed in Dish’s opposition brief, and concludes that the remaining four categories of documents in dispute constitute a “sledge hammer.” Thus, an order denying the motion is appropriate. However, these requests and the reasonable alternative suggestions regarding search terms and their results is a much closer call for the Court;
2. Much like the aforementioned motion and because the subject matter sought in the requests appear to be proper, the Court will permit Plaintiff an opportunity to go “back to the drawing board” but will require that the requests be more narrowly drafted;
3. Again, given the high caliber of counsel on both sides of this case, the Court expects that it should not have to determine any dispute over renewed inspection demands, and that if any such dispute is brought before the Court, the issues will be tailored having confirmed the results from conducting searches based on modified search terms as requested; and
4. Motion is denied without prejudice to service of new, more narrowly-drafted requests for production concerning Dish’s knowledge of windowing of the 22 movies at issue and Dish’s communications with advertisers concerning its pre-giveaway knowledge of FX’s movie premiers.

Other matters:

1. This morning, counsel are to retrieve from the clerk of the court the three courtesy-copy binders they submitted as to the three motions determined today, as well as the courtesy-copy binder on the motion to continue trial (which motion Dish withdrew);
2. It is unfortunate that Plaintiff refused to disclose discoverable documents, yet simultaneously moved to compel further responses to its own overbroad (some, patently so) inspection demands. The discovery disputes determined by the Court today utilized an inordinate amount of the time and resources of the Court and its staff;
3. The Court expects all counsel and their clients to comply with the discovery provisions of the Code without the need for Court intervention; intervention should be reserved for matters which good faith efforts cannot resolve. Counsel are now ordered to comply with Local Rule 3.26 and Appendix 3A [formerly Rule 7.12], which by this order is now made mandatory in this action; and
4. Plaintiff shall give notice of today’s rulings and timely file proof of service thereof.