Opposition To Plaintiffs Motion For Further Sanctions Against Defendants

Motion

Cal. Super. - 2nd Dist.December 11, 2018

Electronically FILED by Supetibr Court of California, County of Los Angeles on 06/16/2020 08:38 PM Sherri R. Carter, Executive Officer/Clerk of Court, by) . Lara,Deputy Clerk ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 MICHAEL J. NIBORSKI (State Bar No. 192111) BENJAMIN S. AKLEY (State Bar No. 278506) PRYOR CASHMAN LLP 1801 Century Park East, 24th Floor Los Angeles, California 90067 Telephone: (310) 683-6900 Facsimile: (310) 943-3397 mniborski@pryorcashman.com bakley @pryorcashman.com LISA M. BUCKLEY (Admitted Pro Hac Vice) PRYOR CASHMAN LLP 7 Times Square New York, New York 10036 Telephone: (212) 326-0483 Facsimile: (212) 326-0806 Ibuckley @pryorcashman.com Attorneys for Defendants PHILIP LAWRENCE and PHILMAR STUDIOS, INC. SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES - CENTRAL DISTRICT PATRIZIO MOI, an individual; and MOI PRODUCTIONS, INC., a Delaware corporation; and JABARI’S INC., a New York corporation, directly and derivatively on behalf of PHILMAR HOLDING N.V., a Curagao company, and PHILMAR HOLDING B.V., a Dutch company, Plaintiffs, Vs. PHILIP LAWRENCE, an individual; PHILMAR STUDIOS, INC. a Delaware corporation; REMKO PETERS, an individual; and DOES 1 through 100, inclusive, Defendants, - and - PHILMAR HOLDING N.V., a Curacao company; and PHILMAR HOLDING B.V., a Dutch company, Nominal Defendants. Case No. 18STCV08191 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 Hearing: Date: June 29, 2020 Dept: 39 Time: 10:00 AM Judge: The Honorable Elizabeth R. Feffer Action Filed: December 11, 2018 Trial Date: None Set DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TABLE OF CONTENTS TABLE OF AUTHORITIES ........ooiiiiiiiiiie eee eee estes eee esi sitesi eae I. INTRODUCTION AND SUMMARY OF ARGUMENT .......ccccctiiiiiiiiiieniieenieeesieeee II. STATEMENT OF FACTS coisas estes esate sie eee A, The Comt's January 7, 2000 OFT ovens me B. Defendants’ Compliance with the Court’s Discovery Order..........cccoocvveiiiniiieeinninneenn. C. Plaintiffs’ Bad Faith Actions And Failure To Meet And Confer............cccoeeuvvieinninneenn. III. ARGUMENT .....ooiitiiiiite eee ees esate esate esate ebb e esate eeebae eens A. Defendants Have Not Disobeyed This Court’s Discovery Order ..........ccccoevvvieeennunneenn. B. Defendants’ Production of Financial Records Complies with California’s Procedural RULES « oere eee eee C. Defendants Were Not Required To Produce Valuations Because Attorney Work Product Was Specifically Excluded From Plaintiffs’ Requests .........cccccceeeennnee. D. Defendants Made a Good Faith Search of All Relevant Documents. That They Had AVAITADIE: cuss muss sms om sss a un sx m0 050 65050 055 508508 55.5565 555 E. Plaintiffs’ Motion Should be Dismissed on the Grounds that the Matter was Settled and There Was No Good Faith Meet and Confer....................... F. The Court Should Grant Defendants Sanctions .......c.ueveveeeiivnveieieiiieeeieeeieeereeerieeennns IN CIN TC SCT INT costes sesso TEE HEE HRs i DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 TABLE OF AUTHORITIES CASES - PAGE(s) Biles v. Exxon Mobil Corp., 124. Cal. App. Ah 13S GROUT): nsw umn m5m0mmmm500w00505 0505050 50505550 55500555555 S558 E50 SHR AATRIR 9 Deyo v. Kilbourne, 84 Cal. APP. 3A 771 (1978) cee eee eee eee eee eee ee eee eset e essen 8 Dodge, Warren & Peters Ins. Servs., Inc. v Riley, 105 Cal App 4th 1414 (2003) nit eee eee eee essere eee e eee ebaee eens 12, 13 Ellis v. Toshiba Am. Info. Sys., Inc., 218 Cal APP 4th 853 (2013) ceeeeiiiieeeeieie eee eee eee eerie eee eee e eee 14, 15 Hoist Fitness System v. TuffStuff Fitness International, Inc., No. EDCV 17-1388-AB(KKXx), 2019 U.S. Dist. LEXIS 2790 (C.D. Cal, Jan. 7, 2019) cueeiieeeeieee eee eerste eee ee este e eset e essere ease nbaeeeeenes 9 Kim v. Westmoore Partners, Inc., 201 Cal. App A020 (ZH TY cms swnsornston man umes 55.000. 050555 555 050550 55558 A550 SAS HR AATARIR 8 In re Marriage of Michaely, 150 Calitornia App: JI BU2; (2007) xcs sms sso smmsmmmsmmmsmssmmmms em ss snes 14 New Albertsons, Inc. v. Superior Court, 168 Cal. App. 4th 1403 (2008) ....eveeeeeeiiiieeeeiieee e eee ee e ee essere sses 8,13 Optronic Techs., Inc. v. Ningbo Sunny Elec. Co., , No. 16-cv-06370-EJD (VKD), 2019 U.S. Dist. LEXIS 17747 (N.D. Cal., Feb. 4, 2019) .....cccovioiiiiiniiiiieeeiieeeeeiieeeene 9 Sexton v. Superior Court, 58 Cal, App. A, TAS T1TDTY, commonstun mn umes mmmmsm comms ove samo 5505505 558 SR 5 8, 15 Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants, 148 Cal. App. 4th 390 (2007) ceeeeiiiiieeeiiiee eee eee eee eee e eae e seer e esses 8, 15 STATUTES & RULES Cal. Civ. Prog. Code $ 203 2B 1 YZ x52 50.0 v0 50mm 5005000 5055.0580500 505505550 55550550 555 S545 0005.3 11 Cal. Civ. Proc. Code § 2031.310(D) uuuuuiiiiiiiiiiiiiiieeeeeeeeeeetceie eee eects ee ease ev eee ee ee sannaaans 7 Cal. Civ, Prog. Code S 2030 31 OU JL cxmmm vm 0 nm mms 550.5000 5055.580505055 06558 555.575 50 555.45 S305 A555. 14 Cal. Civ. Proc. Code § 2031.310(Z)(1)(2)(3)(A)eeurrreeeaiiiiee eet e e e e ee eevee es 12 Cl. Civ, Prog. Code: S -ZOF 3 T OU) coum 0500 0550505078505 055550500 50 A005 550 55 SASH 7,15 Cal. Civ. Proc. Code § 203 1.310) (1) +vveeeerrurrreeerirreeeeniiieeeesiiieeeesnireeeessasseeeessnsseeeeesnseeeeennns 7,13 California Rules of Court, RUIE 3.1345 o.oo 7 ii DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 I. INTRODUCTION AND SUMMARY OF ARGUMENT The instant motion of Plaintiff Patrizio Moi and Moi Productions (collectively “Moi” or “Plaintiffs”) seeking further sanctions against defendants Philmar Studios Inc. (“Philmar”) and Philip Lawrence (“Lawrence”) (collectively “Defendants”) is, simply put, an example of bad faith conduct and gamesmanship that should not be countenanced by the Court. Following a full settlement of this action, Plaintiffs-in the span of one week-reneged on a final settlement agreement, requested an immediate meet and confer on a discovery issue that had never been specifically addressed, reneged on that required meet and confer, filed the instant motion, and then substituted new counsel in the action (their third in the span of less than a year). These facts, which are undisputable, indicate a clear bad faith purpose and an improper use of the discovery process. Another notable indication of Moi’s true purpose in filing this motion is the fact that Moi has not sought a single item of discovery from codefendant Remko Peters (“Peters”), an alleged coconspirator of Lawrence, and according to the allegations in the complaint, the most active member in that alleged conspiracy. This yields the obvious conclusion that Mof1’s intent is to simply improperly harass Defendants. Perhaps tacitly acknowledging the fact that Plaintiffs’ instant motion seeks documents and information that were not part of Plaintiffs’ First Set of Requests for Production of Documents (the “Document Requests”), Plaintiffs’ counsel initially insisted on a meet and confer on the issues raised in the instant motion. Defendants obliged this request and-despite just having had a settlement agreement improperly breached-agreed to conduct this meet and confer. However, as discussed in detail herein, Plaintiffs ultimately abandoned this required step in the process for no good reason. Contrary to Plaintiffs’ assertions, Defendants have not failed to comply with the Court’s January 7, 2020 order (the “Discovery Order”) which granted Plaintiffs’ motion to compel further production of documents in connection with Plaintiffs’ Document Requests. The instant motion seeks documents that fall outside of the Document Requests. Specifically, Plaintiffs” First Motion to Compel sought: (1) an order compelling Defendants to submit further responses and (2) an order compelling Defendants to produce documents which they agreed to produce. The Discovery Order did not expand Defendants’ obligations to include documents from custodians Plaintiffs never 1 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 previously mentioned, tax returns, or loan documents with Marcel Boekhoorn. Nor did the Court expressly hold that Defendants were to provide native QuickBooks files in addition to PDF and excel documents containing the financial records requested. Furthermore, the Discovery Order did not require production of work product which was specifically and expressly excluded from Plaintiff’s requests, rendering any valuations created at the direction of counsel in the context of this litigation outside of the purview of Plaintiffs’ Document Requests. Additionally, Plaintiffs assertions that Defendants must not have conducted a good faith search based on the fact that Lawrence was not custodian to the majority of the emails produced by Defendants is similarly misplaced. As argued below, and as attested by Tyler Johnson, current Chief Executive Officer of Record Plant, Defendants conducted a diligent, good faith, and broad search for responsive documents. Indeed, all of the allegedly damning emails that Plaintiffs argue Defendants withheld are not only, according to Plaintiffs’ own admission, within the possession, custody, and control of Plaintiff Jabari’s Inc. and codefendant Peters, they are also dated over a year before Plaintiffs notified Defendants of their intention to commence an action, and Defendants therefore had no duty to preserve those documents. It is respectfully submitted that Plaintiffs’ instant motion seeking further sanctions should be denied in its entirety, and this Court should grant Defendants sanctions against Plaintiffs for what is a patently offensive misuse of the discovery process and an unfortunate waste of the time and resources of this Court and Defendants. II. STATEMENT OF FACTS A. The Court’s January 7, 2020 Order On January 7, 2020, this Court granted Plaintiffs’ Motion to Compel Further Responses and Produce Documents Responsive to Moi’s First Sets of Requests for Production of Documents (the “First Motion to Compel”). (See Declaration of Michael J. Niborski in Support of Defendants’ Opposition to Plaintiffs’ Motion for Further Sanctions “Niborski Decl.” {[14.) Moi’s First Motion to Compel specifically sought: “(1) an order compelling Defendants to submit further responses to Mot’s first sets of the Requests; and (2) an order compelling Defendants to produce documents, which they agreed to produce, within 14 days of the order. (See Niborski Decl. Exhibit “Ex.” 2, 2 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 Plaintiffs’ Memorandum of Points and Authorities in Support of Moi's Motion to Compel “PL FMTC”; emphasis added). These documents were identified in the First Motion to Compel as “several categories of documents concerning: (1) the Equity Agreement; (2) Defendants’ intent to comply with the Equity Agreement; (3) stock transfers for PhilMar Studios; (4) the formal and informal management of Philmar Studios; (5) renovations made to the Record Plant building; (6) discussions related to Plaintiffs obtaining equity in PhilMar Studios; and (7) documents concerning Plaintiffs which were created after October 2016.” (Niborski Decl. 16.) Plaintiffs also identified certain financial documents Defendants had agreed to produce, namely, “‘financial statements,” which Defendants believed to include PhilMar Studio’s balance sheet, income statement, profit and loss statement, and cash flow statement.” (Id. at J 17; Ex. 3.) In its order dated January 7, 2020 (the “Discovery Order”), the Court overruled Defendants’ objections to Plaintiffs’ Document Requests deeming all objections to the requests waived. (Id. at 918.) The Court’s Minute Order provides in pertinent part that “[t]he Court grants the motion and orders Defendant Philip Lawrence and PhilMar Studios, Inc. to produce complete, verified, objection-free, and code-compliant responses and all responsive documents at issue by 02/07/2020.” (Id. at q19; Dahlberg Decl. Ex. A; emphasis added.) Neither the Court’s Discovery Order, nor Plaintiffs’ Notice of Ruling provided any further guidance concerning prior agreements reached by the parties’ counsel with respect to the search parameters for production of documents. (Niborski Decl. 20.) Furthermore, the Discovery Order did not expand Plaintiffs’ rights to documents not previously sought in the Document Requests or in their First Motion to Compel. (/d.) B. Defendants’ Compliance with the Court’s Discovery Order In accordance with the Court’s Discovery Order, on February 7, 2020 Defendants made a supplemental production of documents and provided supplemental responses to the Document Requests. (Id. at 21.) Contrary to Plaintiffs’ assertions, Defendants responses met with the Court’s requirement that the responses be “complete, verified, objection-free, and code complaint.” (Id.) Defendants also produced all responsive documents that had been previously produced in Defendants prior three productions as well as additional documents that could no longer be withheld 3 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 due to the Court’s order overruling Defendants’ objections. (/d.) To date, Defendants have produced nearly 1,000 documents with a total of over 3,000 pages. (Id.) In response to Plaintiff’s broad Request No. 20 which sought “All documents concerning or relating to the financial records of PHILMAR STUDIOS since December 5, 2016” which contained the undefined term “financial records” and failed to specify which records were in fact sought, Defendants provided the balance sheets, income statements, profit and loss statements, and cash flow statements for the years 2017 through 2019. (Id. at q 22; Dahlberg Decl. 8.) Defendants also provided underlying financial documents which consisted of 13 excel documents containing Philmar Studios’ general ledgers and financial reports for the time period at issue. (Niborski Decl. 423; Dahlberg Decl. {8, Ex. C.) In addition to these documents, Defendants also provided bank statements from Philmar Studios’ Business Money Market Account from Comerica Bank as well as hundreds of documents and emails including those where Philmar employees and outside consultants specifically discussed Philmar Studios’ financial condition. (Niborski Decl. q 23; Dahlberg Decl. Ex. C; Declaration of Tyler Johnson “Johnson Decl.” 49.) In his second motion to compel, Moi alleges that, Defendants selectively withheld damaging emails that referred to Moi and the Equity Agreement. (Plaintiffs” Motion Seeking Further Sanctions “Pl. SMTC” p. 8.) Moi bases this assertion on several sample emails attached to Plaintiffs’ motion which were obtained through Plaintiff Jabari McDavid (“McDavid”) (See Dahlberg Decl. 9; Exhibits D through G.). Notably, all of the emails which allegedly prove that Defendants were withholding documents are dated 2017, over a full year before Defendants were first notified by Plaintiffs’ counsel of their intention to file a suit. (Niborski Decl. 24.) Not only does Plaintiffs’ motion fail to establish that Defendants were wrongfully withholding any information, the emails at issue are necessarily accessible and easily obtained from McDavid and Peters. Specifically, Plaintiffs allege that the missing emails consist of communications between Peters and Lawrence which demonstrate they allegedly engaged in a conspiracy together. (Pl. SMTC pp. 2, 8.) As recipient of the emails, Peters would undoubtedly have easy access to such communications. Furthermore, Plaintiffs admit that McDavid was also a recipient of the emails at issue, thus it is unclear how Lawrence would be able to withhold emails already known to be in Plaintiffs’ 4 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 possession. Moreover, McDavid has emails Defendants can no longer access because McDavid’s cousin, Antwan, who was administrator of the email accounts, was incarcerated and Defendants lost the ability to access those emails. (Johnson Decl. {12.) Despite attempting to retrieve these emails, Defendants were unable to access them. (Id.) In response to Plaintiffs’ Request No. 19, requesting “All documents concerning or relating to formal or informal valuations of Philmar Studios since December 5, 2016”, Defendants response stated that “Defendants are unable to comply with this request despite conducting a diligent search, and a reasonable inquiry has been made in an effort to comply with the request. Documents concerning a formal or informal valuation of Philmar Studios outside of the context of this litigation are not and have never been in the possession, custody, or control of Defendants.” (Niborski Decl. q 25; Dahlberg Decl. Ex. C.) Plaintiffs argue that the qualification in Defendants’ response implies that Defendants are withholding valuations “in the context of litigation.” (SMTC p. 9.) Although, the Court instructed Defendants to provide documents that are “objection-free,” the Court did not instruct Defendants to provide documents specifically excluded from Plaintiffs’ requests. (Niborski Decl. 26.) In the “Definitions” section of Plaintiff’s Document Requests, it states in pertinent part, “Patrizio Moi does not seek responsive DOCUMENTS which are protected by the attorney-client privilege or work product doctrine.” (Id. at J 26, Ex. 4; emphasis added.) Defendants’ response is not an objection to the request on the grounds that it requires production of documents that are attorney work product, nor are Defendants withholding the documents on those grounds. (Id. at 27.) Rather, the response specifies that the valuations specifically requested by Moi in the Document Requests, that is, any “formal or informal valuation” that is not otherwise protected by the work product doctrine simply does not exist. (/d.; Johnson Decl. 11.) Contrary to Plaintiffs’ allegations, Defendants have performed a diligent, good faith search for all responsive documents. (Johnson Decl. at {{[3-7.) Plaintiffs’ assert that the fact that Lawrence is the custodian of only 19 responsive documents proves that Defendants failed to conduct a good faith search. (SMTC p. 10.) This self-serving assumption ignores the fact that Lawrence was simply not custodian to as many responsive documents as the other custodians searched. In fact, Lawrence was not at Record Plant for most of the time period at issue because he was on tour. (Johnson Decl. 5 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 97.) This necessarily means that Lawrence would not be custodian to emails involving daily logistics and communications with and concerning Moi. (I/d.) Logically, Lawrence would also not have communications with Moi, since even Moi admits his communications with Lawrence occurred only twice and even those were in person. (Second Amended Complaint qq 45, 137.) Additionally, Defendants have not failed to comply with the Court’s Discovery Order simply because they did not search custodians that were not part of the parties’ agreed upon search parameters. (Niborski Decl. 28; Ex. 5.) The Discovery Order did not invalidate prior search parameters, nor did Plaintiffs seek discovery from custodians they mention for the first time in this motion. (Id. at 29.) According to Plaintiffs’ prior counsel, the parties agreed to a joint set of search terms on August 14, 2019. (Id.) The search terms, did not include the names of Sheree Barnes or Larry S. Tyler. (Id. at 30; Ex. 5.) Thus, Defendants failure to search custodians that were never even mentioned much less requested by Plaintiffs or the Court is not grounds for a finding that they violated the Court’s order. (Id.) C. Plaintiffs’ Bad Faith Actions And Failure To Meet And Confer! On April 20, 2020, Plaintiffs’ former attorney, Brianna Dahlberg (“Ms. Dahlberg”) sent an email to Defendants’ counsel stating that “[w]e have been informed by Mr. Moi that he will not be signing the settlement agreement and that he wishes to resume litigating the case.” (Niborski Decl. 94; Ex. 1.) In that same email informing Defendants for the first time that Plaintiff was refusing to sign the Settlement Agreement, Ms. Dahlberg, also for the first time, listed a host of purported deficiencies in defendants’ document production and sought to meet and confer prior to April 22, 2020, the stipulated deadline for the filing of motions to compel. (/d.) Neither party had pursued or even discussed discovery in the two months since the mediation on February 27, 2020 because the case had been settled. (Id. at 5.) Moi’s radical and wholly unexpected change in course-his refusal to sign the Settlement Agreement that he gave Defendants an ultimatum to sign and his list of purported deficiencies in Defendants’ document ! For a more complete recitation of the facts concerning the parties’ settlement of this action Defendants respectfully refer the Court to their Motion for a Protective Order and to Enforce Settlement Agreement filed on May 20, 2020. 6 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 production-was a flat-out ambush. Although Ms. Dahlberg told Defendants’ counsel that if they were unable to meet and confer prior to April 22, the parties could agree to extend the deadline, that invitation was illusory at best. (Id. at 6.) Defendants’ counsel proposed a 45-day extension since the court had vacated the trial date and had continued current motion dates for June 29, 2020 in light of the coronavirus pandemic. (Id. at 7.) Nevertheless, Ms. Dahlberg rejected the proposed extension as “far too long,” but she made no counterproposal, ignored follow-up emails sent by Defendants’ counsel proposing a 30-day extension, and on April 22, she went ahead and filed a disingenuous motion for sanctions fraught with untruths. (Id. at {{8-12.) In the interest of judicial efficiency, Defendants sought a stay of all discovery pending a decision on their Motion For a Protective Order and to Enforce the Settlement Agreement. Defendants now seek sanctions against Plaintiffs for their misuse of the discovery process. III. ARGUMENT A. Defendants Have Not Disobeyed This Court’s Discovery Order A motion seeking to compel further discovery responses must “set forth specific facts showing good cause justifying the discovery sought by the demand.” Cal. Civ. Proc. Code § 2031.310 (b). A party moving to compel further responses must also provide a meet and confer declaration. Id. Further, “absent exceptional circumstances, the court shall not impose sanctions on a party or any attorney of a party for failure to provide electronically stored information that has been lost, damaged, altered, or overwritten as the result of the routine, good faith operation of an electronic information system. Cal. Civ. Proc. Code § 2031.310 (j). A court will not impose sanctions where it “finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” Cal. Civ. Proc. Code § 2031.310 (h). As a preliminary matter, the California Rules of Court, Rule 3.1345 (3) and (7), concerning the format of discovery motions, requires that motions to compel further responses to a demand for inspection of documents and motions for issue or evidentiary sanctions require a separate statement. Plaintiffs’ motion, which also seeks issue and evidentiary sanctions, included no such statement and therefore should be denied on that ground alone. 7 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 Furthermore, it is axiomatic that “a party cannot be sanctioned for violating a discovery order that it did not, in fact, violate.” Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants, 148 Cal. App.4th 390, 410 (2007) (citing Deyo v. Kilbourne, 84 Cal. App.3d 771 (1978)). As one court has noted, “[s]anctions are serious business. ... A request for sanctions should be reserved for serious violations of the standard of practice, not used as a bullying tactic.” Kim v. Westmoore Partners, Inc., 201 Cal. App.4th 267, 293 (2011). Moreover, “there must be a failure to obey an order compelling discovery before the court may impose a nonmonetary sanction for misuse of the discovery process...” New Albertsons, Inc. v. Superior Court, 168 Cal. App.4th 1403, 1423 (2008). Indeed, “such a potentially severe sanction will be reserved for those circumstances where the party’s discovery obligation is clear and the failure to comply with that obligation is clearly apparent.” Id. (emphasis added.) Here, Plaintiffs are using this motion seeking further sanctions as a bullying tactic against Defendants Philmar Studios and Philip Lawrence. The timing of Plaintiffs’ motion and attempt to move forward with discovery despite the parties having already settled the matter is just one indication of Plaintiffs’ bad faith, and is grounds for denial of this motion as the discovery at issue is now moot. That Plaintiffs move on the grounds that Defendants allegedly violated the Discovery Order, while seeking discovery that was not sought under that previous order is further indication of Plaintiffs’ bad faith. Thus, this Court should deny Plaintiffs’ motion in its entirety. Plaintiffs are in fact seeking discovery never previously sought which therefore cannot be subject to the Court’s Order. Courts have held that a party’s failure to timely move to compel discovery is a waiver of their right to do so. See Sexton v. Superior Court, 58 Cal. App. 4th 1403, 1410 (1997). Although courts have broad discretion to impose discovery sanctions, “two facts are generally prerequisite to the imposition of nonmonetary sanctions ... (1) absent unusual circumstances, there must be a failure to comply with a court order, and (2) the failure must be willful.” Biles v. Exxon Mobil Corp., 124 Cal.App.4th 1315, 1327 (2004) (internal citations omitted). Furthermore, the reality of eDiscovery in today’s world requires attorneys to enter into agreements to narrow the search for relevant documents. California courts enforce such agreements 8 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 which include agreements concerning search terms and custodians identified for discovery. See e.g. Optronic Techs., Inc. v. Ningbo Sunny Elec. Co., , No. 16-cv-06370-EJD (VKD), 2019 U.S. Dist. LEXIS 17747, at *6-7 (N.D. Cal., Feb. 4, 2019)) (“[T]he parties agreed on a search methodology for electronically stored information, as they were required to do...and such agreements will be enforced.”) (citing Hoist Fitness Sys. v. TuffStuff Fitness Int’l, Inc., No. EDCV 17-1388-AB (KKXx), 2019 U.S. Dist. LEXIS 2790 (C.D. Cal., Jan. 7, 2019). Defendants have found no authority which renders such prior agreements between the parties’ counsel void due to a court granting a motion to compel discovery. Nor can Plaintiffs avoid the agreements between the parties’ counsel by continually substituting their counsel. Here, Defendants’ failure to produce documents that were never requested by Plaintiffs and were not mentioned in this Court’s order cannot be deemed a willful violation of the Court’s order. Plaintiffs argue that Defendants failed to produce documents from Lawrence’s manager, Larry S. Tyler and documents relating to Philmar Studios’ “outside bookkeeper” Sheree Barnes, or any other “outside accountants who would possess responsive financial information and communications.” (PL. SMTC p. 10.) According to Plaintiffs, such documents are within Defendants’ possession, custody, and control and the Discovery Order necessarily included a search of these outside custodians. (Id. at 11.) However, Plaintiffs conveniently fail to mention that counsel had already negotiated and agreed upon search parameters concerning the Document Requests prior to this Court’s Order. As Plaintiffs prior counsel noted in his declaration in support of the motion to compel discovery granted by this Court, “on August 14, 2019, the parties finally agreed to a joint set of keyword search terms to implement in searching for documents.” (Pollack Decl. 32; emphasis added.) The search terms, did not include the names of Sheree Barnes or Larry S. Tyler. (See Niborski Decl. 30, Ex. 5.) Nor did Plaintiffs make any request that the custodians Plaintiffs now seek discovery from be searched by Defendants. (Id.) Thus, Plaintiffs’ assertion that Defendants failed to comply with the Court’s Order is unfounded. Additionally, Plaintiffs now seek “[Philmar’s] tax returns, and all documents related to the $2.3 million loan from Marcel Boekhoorn and disputes over its repayment” (PL. SMTC p. 14). These documents are similarly not mentioned in the Document Requests. (Niborski Decl., Ex. 4.) Plaintiffs 9 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 argue that those documents are encompassed within Plaintiffs’ broad request No. 20 which sought documents “concerning or relating to the financial records of Philmar Studios since December 5, 2016” and broad definition of “DOCUMENTS” (P1. SMTC p. 7.) However, Plaintiffs prior counsel, Steven Pollack (“Pollack”) specifically explained what documents the parties agreed would be produced by Defendants. (Niborski Decl. {{[15, 17; Ex. 3.) Pollack acknowledges that Defendants agreed to provide “Philmar Studio’s balance sheet, income statement, profit and loss statement, and cash flow statement.” (Id.) Notably, Plaintiffs admit that Defendants provided precisely these documents, as well as 13 excel documents containing Philmar Studios’ general ledgers and financial reports for the time period at issue. (See Dahlberg Decl. 8; Johnson Decl. 49.) Plaintiffs allege that Defendants failed to provide bank statements, however, this is untrue. (Johnson Decl. 9; Niborski Decl. 23.) Defendants’ production also included bank statements from Philmar Studios’ Business Money Market Account from Comerica Bank (Niborski Decl. 423; Dahlberg Decl. Ex. C) in addition to hundreds of documents and emails including those where Philmar employees and outside consultants specifically discussed Philmar Studios’ financial condition. (Niborski Decl. {23; Johnson Decl. 19.) Nowhere in Plaintiff’s motion do they mention a request for tax returns or loan documents concerning Marcel Boekhoorn. (Niborski Decl., Exs. 2-4.) Indeed, they only learned about the loan through Defendants’ production of documents. (Niborski Decl. {31.) Thus, failure to comply with a request for documents never articulated by Plaintiffs or the Court cannot be deemed a failure to comply with the Court’s Discovery Order. B. Defendants’ Production of Financial Records Complies with California’s Procedural Rules Furthermore, Defendants provided Plaintiffs with its financial records in a reasonably usable format, and thus, Defendants have complied with this Court’s Discovery Order. Under California’s Code of Civil Procedure, “[u]nless the parties otherwise agree or the court otherwise orders, ...(1) If a demand for production does not specify a form or forms for producing a type of electronically stored information, the responding party shall produce the information in the form or forms in which it is ordinarily maintained or in a form that is reasonably usable. (2) A party need not produce the 10 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 same electronically stored information in more than one form.” Cal. Civ. Proc. Code § 2031.280 (d(MD)2). Here, Defendants provided Philmar Studio’s balance sheets, income statements, profit and loss statements, and cash flow statements for the years 2017 through 2019, 13 excel documents containing Philmar Studios’ general ledgers and financial reports for the time period at issue, and bank statements. (Niborski Decl. 422-23.) Defendants clearly complied with the Court’s Order by providing the documents in one format. California’s procedural rules do not require that the same information be provided in additional forms. Cal Civ. Proc. Code § 2031.280. Thus, Defendants have not violated the Discovery Order and the motion seeking further sanctions should be denied. C. Defendants Were Not Required To Produce Valuations Because Attorney Work Product Was Specifically Excluded From Plaintiffs’ Requests Plaintiffs argue that Defendants failed to produce any documents relating to “formal or informal valuations of Philmar Studios responsive to Moi’s RFP 19.” (Pl. SMTC p. 9; citing Dahlberg Decl. 10.) Defendants’ response to this request which states that “[dJocuments concerning formal or informal valuation of Philmar Studios outside of the context of this litigation are not and have never been in the possession, custody, or control of Defendants” is a failure to comply with the Court’s instruction that “all objections, including privilege, have been waived.” (See Pl. SMTC p. 9; Dahlberg Decl. Ex. C at 8:26-9:2.) According to Plaintiffs, the qualification in Defendants’ response implies that Defendants are withholding valuations “in the context of litigation” in violation of the Discovery Order. Although, the Court instructed Defendants to provide documents that are “objection-free,” the Court did not instruct Defendants to provide documents specifically excluded from Plaintiffs’ requests. (Niborski Decl. 26.) In the “Definitions” section of the Document Requests, Plaintiffs stated in pertinent part, “Patrizio Moi does not seek responsive DOCUMENTS which are protected by the attorney-client privilege or work product doctrine.” (Id., Ex. 4.) Contrary to Plaintiffs’ assertion, here, Defendants are not objecting to the request on the grounds that it requires production of documents that are attorney work product, nor are Defendants withholding the documents on those grounds. Indeed, Defendants are merely availing themselves of Plaintiff’s express exclusion of attorney work product from their Document Requests. 11 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 D. Defendants Made a Good Faith Search of All Relevant Documents That They Had Available Plaintiffs make several strained arguments alleging that Defendants failed to conduct a good faith search for relevant documents. (Pl. SMTC pp.10-11.) Plaintiffs’ thinly veiled attempt to harass and annoy Defendants is made all the more obvious by the fact that to date, Plaintiffs have failed to request any documents from Peters, Lawrence’s alleged coconspirator. Section 2031.310 of the California Code of Civil Procedure limits the frequency or extent of discovery of electronically stored information, even from a source that is reasonably accessible, under the following conditions: (1) It is possible to obtain the information from some other source that is more convenient, less burdensome, or less expensive. (2) The discovery sought is unreasonably cumulative or duplicative. (3) The party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought. (4) The likely burden or expense of the proposed discovery outweighs the likely benefit, taking into account the amount in controversy, the resources of the parties, the importance of the issues in the litigation, and the importance of the requested discovery in resolving the issues. Cal. Civ. Proc. Code § 2031.310 (g)(1)(2)(3)(4). Furthermore, “absent exceptional circumstances, the court shall not impose sanctions on a party or any attorney of a party for failure to provide electronically stored information that has been lost, damaged, altered, or overwritten as the result of the routine, good faith operation of an electronic information system.” Cal. Civ. Proc. Code § 2031.310(j)(i). Defendants were under no obligation to preserve documents predating the filing of the complaint, on December 11, 2018, or at the very least predating when Plaintiffs made clear their intention to file a suit against Defendants which occurred by legal demand letter from Plaintiffs in October 2018. See Dodge, Warren & Peters Ins. Servs., Inc. v Riley, 105 Cal App 4th 1414, 1419 (2003) (holding that the Civil Discovery Act does not “provide[] a mechanism for the preservation of evidence” prior to the commencement of an action or the issuance of a discovery request.); See also New Albertsons, Inc., 168 Cal. App.4th at 1430 (“Destroying evidence in response to a discovery request after litigation has commenced would surely be a misuse of discovery within the meaning of section 2023, as would such destruction in anticipation of a discovery request.”) 12 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 First, Plaintiffs argue that “Defendants appear to have deliberately failed to search Lawrence’s smeezemp3 @gmail.com email account which he used to communicate with his shareholder partners and Peters about their deal with Moi.” (Pl. SMTC p. 10.) Indeed, the knowledge that Lawrence used that Gmail account to communicate with anyone concerning Moi is evident in the documents produced by Defendants. A search of the documents produced by Defendants reveal over 100 emails from the smeezemp3 @gmail.com to various custodians. To the extent Plaintiffs assert the emails were sent to Peters, Plaintiffs can obtain those emails by requesting them directly from Peters. Access to the relevant emails is also available through Jabari McDavid who Plaintiffs admit is a recipient of them as well. (See Dahlberg Decl. 12; Exs. D, E, F, and G.) Moreover, McDavid has access to emails that Defendants can no longer access. In fact, the email address McDavid used when at Record Plant can no longer be accessed by Defendants because McDavid’s cousin Antwan, who is currently incarcerated, was the administrator for those accounts. (Johnson Decl. 12.) Defendants have attempted, but have failed to access those emails. (Id.) Furthermore, the emails allegedly withheld predate Defendants duty to preserve emails. Dodge, Warren & Peters Ins. Servs., Inc., 105 Cal App 4th at 1419. Thus, Defendants’ failure to provide the emails attached to Plaintiffs’ motion was not a violation of the Discovery Order. Finally, Plaintiffs argument that Lawrence being custodian to a small number of emails produced somehow means that Defendants failed to conduct a diligent search is nonsensical. (Pl SMTC p.10.) To the extent possible, and in accordance with general eDiscovery practice, Defendants attempted to limit the number of duplicate emails produced to Plaintiffs. That Lawrence’s emails were part of an email chain attributed to a different custodian does not negate the fact that Plaintiffs are receiving the requested information. It is not surprising that Lawrence was not involved in many of the day to day operations of Record Plant while he was away on tour. (Johnson Decl. {7.) Plaintiffs’ assumption that this somehow signals a failure to search for records is self-serving and unsubstantiated. 13 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 E. Plaintiffs’ Motion Should be Dismissed on the Grounds that the Matter was Settled and There Was No Good Faith Meet and Confer Plaintiffs have brought this motion immediately following their announcement that they renege on the settlement agreement reached by the parties. (Niborski Decl. {{3-12.) Since Defendants have complied with the Discovery Order, any motion to compel discovery logically falls outside of that order, and so Plaintiff’s motion is in reality seeking further discovery, not just compliance with a court order. A propounding party must bring its “motion to compel further responses within 45 days of the service of the response ..., and must demonstrate that it complied with its obligation to “meet and confer.” Sinaiko Healthcare, 148 Cal. App.4th at 403 (emphasis added)(citing §§ 2016.040, 2030.300, subd. (b), 2031.310, subd (b)(2).) A “[m]isuse of the discovery process includes ... failing to meet and confer in good faith to resolve a discovery dispute when required by statute to do so.” Ellis v. Toshiba Am. Info. Sys., Inc., 218 Cal App 4th 853, 877, 878 (2013) (citing In re Marriage of Michaely, 150 Cal. App.4th 802, 809 (2007); § 2023.010, subds. (g), (1).) Plaintiffs’ motion requires that the parties meet and confer in good faith. Cal. Civ. Proc. Code § 2031.310.(b)( 2). Here, Plaintiffs have acted in bad faith by bringing a motion to compel continued discovery in an action that has been settled for months. Even if Plaintiffs challenge the enforceability of the settlement agreement, their gamesmanship in waiting until the eleventh hour to inform Defendants of the challenge and thereafter announce for the first time that they would be moving to further compel discovery, is inexcusable bad faith conduct. Plaintiffs ambushed Defendants and failed to comply with the statutory meet and confer requirement to seek further discovery which as explained above is the applicable standard, where, as here, the requests at issue fall outside of the court’s Discovery Order. Plaintiffs outright refused to grant Defendants a reasonable extension, providing Defendants with two days’ notice before filing their motion, and refusing to discuss the issues entirely. (Niborski Decl. {{[3-12.) If Plaintiffs had sought to meet and confer in earnest, Defendants would have pointed out that the alleged deficiencies were not subject to Plaintiffs’ First Motion to Compel discovery, and were therefore waived. See Sexton, 58 Cal. App. 4th at 1410. Even if Plaintiffs’ objections are not waived, they still should be required to meet and confer since the issues 14 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 have not been previously brought to Defendants’ attention. Plaintiffs’ failure to even discuss the issues brought in this motion, many of which are mentioned for the first time, would render imposition of any sanctions unjust. See Cal Civ. Proc. Code § 2031.310 (h). F. The Court Should Grant Defendants Sanctions Where, as here, a party engages in the misuse of the discovery process, the court may impose monetary sanctions for the “reasonable expenses, including attorney’s fees, incurred by anyone as a result of that conduct.” Ellis, 218 Cal App 4th at 877. The party’s misuse need not be willful for the monetary sanctions to be imposed. Id. at 877-878. Here, Plaintiffs first informed Defendants of their motion only two days before filing it. Despite inviting Defendants to meet and confer, Plaintiffs rejected Defendants’ response agreeing to the extension. (Niborski Decl. 6-12.) Rather than attempt to resolve and find an acceptable date to meet and confer, Plaintiffs without explanation entirely ignored Defendants’ efforts and filed their motion without conferring on the subject of the motion at all. (/d.) Plaintiffs’ actions are a deliberate misuse of the discovery process, and as such, this Court should impose monetary sanctions for the reasonable expenses, including attorney’s fees, in the amount of $28,651.95, incurred by Defendants as a result of their misconduct. (/d.; Niborski Decl., Iq 32-35.) IV. CONCLUSION Defendants Philip Lawrence and Philmar Studios, Inc. respectfully request that this Court deny the instant motion grant Defendants sanctions against Plaintiffs. DATED: June 1, 2020 PRYOR CASHMAN LLP By:_/s/ Michael J. Niborski Michael J. Niborski Benjamin S. Akley Lisa M. Buckley Attorneys for Defendants Philip Lawrence and Philmar Studios, Inc. 15 DEFENDANTS’ OPPOSITION TO PLAINTIFFS PATRIZIO MOI AND MOI PRODUCTIONS’ MOTION FOR FURTHER SANCTIONS AGAINST DEFENDANTS PHILIP LAWRENCE AND PHILMAR STUDIOS, INC. FOR FAILURE TO COMPLY WITH THE COURT’S DISCOVERY ORDER OF JANUARY 7, 2020