58 Cal.App.5th 57
Cal. Ct. App.2020Background
- VeriPic (Kwan) sued competitor Foray alleging defamation/related torts; Foray filed a cross-complaint. Central factual dispute involved the foray.ca domain and whether traffic was routed to VeriPic.com.
- Early verified discovery responses and Kwan’s deposition said the foray.ca domain was "parked" and any routing was routine by VeriPic’s ISP. Later BigBiz emails produced contradicted those statements: they show Kwan asked BigBiz to "point them to VeriPic.com" and contain messages implying lawyers instructed destruction of certain domains.
- Defendants moved for sanctions (including under Code Civ. Proc. § 2023.030(a)); the trial court issued a lengthy order to show cause, found Kwan and VeriPic committed fraud on the court and spoliated evidence, dismissed VeriPic’s remaining claims with prejudice, ordered disgorgement and a modest monetary sanction payable to the court, but denied defendants’ request for monetary discovery sanctions under § 2023.030(a).
- Defendants appealed the denial of monetary discovery sanctions against Kwan/VeriPic and against former plaintiffs’ counsel Grellas Shah LLP and partner Dhaivat Shah.
- The Court of Appeal held the trial court abused its discretion by denying § 2023.030(a) monetary sanctions as to Kwan and VeriPic and remanded for determination of reasonable expenses (including attorney fees) to be paid to defendants; it affirmed the denial of sanctions as to Grellas Shah LLP and Shah.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred in denying monetary sanctions under CCP §2023.030(a) against Kwan and VeriPic for discovery misuse (false responses/spoliation). | Trial court’s other sanctions (dismissal, disgorgement, sanction to court) made additional monetary sanctions punitive or unjust. | §2023.030(a) mandates awarding reasonable expenses (including fees) for discovery misuse unless the conduct was substantially justified or sanction would be unjust; trial court found false testimony and spoliation. | Reversed as to plaintiffs: remanded for the trial court to determine reasonable expenses (attorney fees) and order Kwan/VeriPic to pay defendants. |
| Whether the trial court erred in denying monetary sanctions under §2023.030(a) against former counsel Grellas Shah LLP and Dhaivat Shah. | Counsel: due process and privilege/Fifth Amendment invocation by Kwan prevented a full defense; no evidence counsel advised discovery abuse. | Counsel knew or should have known clients were lying and advised or permitted continued misuse of discovery. | Affirmed as to counsel: appellate court rejected the due process bar but found insufficient substantial evidence that counsel "advised" the misuse required by §2023.030(a). |
Key Cases Cited
- Slesinger v. Walt Disney Co., 155 Cal.App.4th 736 (Cal. Ct. App. 2007) (recognizing court’s inherent authority to remedy fraud on the court)
- Department of Forestry & Fire Protection v. Howell, 18 Cal.App.5th 154 (Cal. Ct. App. 2017) (standards for appellate review of sanctions and discussion of §2023.030(a) mandatory award rule)
- Corns v. Miller, 181 Cal.App.3d 195 (Cal. Ct. App. 1986) (burden on attorney to prove they did not advise discovery abuse once movant shows misuse)
- Ghanooni v. Super Shuttle, 20 Cal.App.4th 256 (Cal. Ct. App. 1993) (attorney-sanction rule under §2023.030 requires showing attorney "advised" the abuse)
- Rutledge v. Hewlett-Packard Co., 238 Cal.App.4th 1164 (Cal. Ct. App. 2015) (sanctions should be remedial, proportionate, and not produce a windfall)