JOHN PARK,
A161672
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION THREE
Filed 12/27/21
CERTIFIED FOR PUBLICATION; (Sonoma County Super. Ct. Nos. SCV-2599791 & SCV-261163)
BACKGROUND
In 2016, Park sued his former counsel for breach of fiduciary duty and intentional interference with Park‘s plan to purchase a cardroom casino in San Jose. That action was consolidated with a similar case Park filed against the same defendants for interfering with his plan to purchase a cardroom casino in Gardena. Park alleges that from 2003 until 2012, defendants provided legal services for Park‘s gaming businesses, representing Park before the California Gambling Control Commission and the Bureau of Gambling Control. This attorney-client relationship ended due to a dispute about defendants’ monthly billing rates. Thereafter, defendants allegedly thwarted Park‘s efforts to secure ownership interests in the two cardroom casinos by using Park‘s confidential information, assisting his competitors, and making disparaging remarks about Park to regulators and others.
In September 2018, Park issued third party subpoenas duces tecum to the DOJ and to Deputy Attorney General William Torngren, who represents the Bureau of Gambling Control. Both subpoenas sought production of 19 categories of documents generated between January 2014 and the present. Park requested communications and documents pertaining to Park and the casinos at issue in the litigation, including emails from the accounts of 17 DOJ employees, several of whom are attorneys representing the Bureau in gambling control matters. The subpoenas had a return date of September 28, 2018.
As of February 2019, Torngren had produced text messages responsive to Park‘s subpoena but no emails, taking the position those belong to the Bureau of Gambling Control, which is part of the DOJ. The DOJ had not produced any documents or otherwise responded to Park‘s subpoena.
On February 25, 2019, Park filed a motion to compel the DOJ to comply with his subpoena. The trial court appointed the Honorable William Elfving (Retired) as discovery referee for all discovery disputes in this action. Park‘s motion to compel became the subject of Referee‘s Report and Recommended Discovery Order No. 1, submitted to the court and counsel on July 23, 2019.
In his motion to compel, Park sought an order requiring the DOJ to produce documents responsive to his subpoena within 60 days, arguing that more than nine months had passed without the DOJ producing a single document. Opposing this motion, the DOJ reported its computer search had identified over 600,000 potentially responsive documents that had to be reviewed individually for relevancy and privilege, and it anticipated this process could take up to another year. Park balked at this claim, arguing that the DOJ did not use proper search terms, a manual search of documents for responsiveness and privilege was less efficient than computer-assisted methods, and the DOJ had not assigned enough people to respond to his subpoena.
The referee recommended a partial grant of Park‘s motion. Park had narrowed the scope of his requests, but the DOJ continued to claim the subpoena was overbroad. The referee concluded that the number of documents at issue was not unmanageable as compared to the average complex civil case and that “[t]he DOJ must devote sufficient resources to this production.” He recommended ordering the DOJ to produce all responsive, nonprivileged emails, and a privilege log if applicable, within 120 days. On August 20, 2019, the trial court adopted the referee‘s report after independently reviewing the matter and the parties’ objections to the report.
II. Discovery Order No. 2
On July 25, 2019, the DOJ filed a motion for an “Order Protecting it from Undue Burden or Expenses Incurred in Responding to Plaintiff John Park‘s Subpoena Duces Tecum.” The DOJ sought to require Park to pay: (1) $108,543 for costs incurred by the DOJ through July 25, 2019; and (2) all additional costs the DOJ would incur to comply with the order to produce documents. This motion was made pursuant to
The DOJ relied on cases applying
The DOJ argued that it had already incurred $108,543 in costs in order to comply with the subpoena, which should be shifted to Park because they were significant. (Citing Valcor, supra, 2018 U.S.Dist. Lexis 142120.) In addition, the DOJ argued that equitable factors weighed in its favor as neither Torngren nor the DOJ have any interest in Park‘s dispute with his former counsel.
Park also relied on cases applying
On September 3, 2019, the referee issued Referee‘s Report and Recommended Discovery Order No. 2, which recommended granting in part the DOJ‘s motion for a protective order. Like the parties, the referee found guidance in federal law applying
Ultimately, the referee recommended ordering Park to pay $32,836.25 to the DOJ for its costs of complying with Discovery Order No. 1. This figure reflects two related findings the referee made: First, only $65,672.50 of the claimed $108,543 in costs were compensable. Second, these “conditionally
The referee went on to conclude that because the DOJ‘s reduced costs “are significant and represent an undue burden and expense to the DOJ,” they should be shifted to Park. The referee also found that, although equitable factors were “only marginally instructive,” they weighed in favor of the DOJ. Finally, the referee recommended denying as premature the request for an order requiring Park to reimburse all further reasonable costs incurred to comply with the subpoena. On September 16, 2019, the trial court adopted Referee‘s Report and Recommended Discovery Order No. 2.
III. Discovery Order No. 3
On December 3, 2019, Park filed a motion for sanctions against the DOJ for failing to comply with the November 2019 deadline for producing documents. The DOJ opposed the motion on the ground that it had made a good faith effort to comply and requested that the deadline be extended. The DOJ reported it had assigned both an attorney and a paralegal to the matter, and that they had already spent more than 600 hours and reviewed more than 14,000 documents in order to produce 23 unique documents. The DOJ reported more than 36,900 documents still needed to be reviewed.
The referee addressed Park‘s sanctions motion in Referee‘s Report and Recommended Discovery Order No. 3, recommending sanctions. The referee found that the DOJ failed to allocate sufficient resources to comply with the deadline; he declined to support the DOJ‘s request to extend the deadline; and he recommended the DOJ be ordered to pay reasonable attorney fees and expenses to Park in the amount of $9,747.16. On February 19, 2020, the trial court adopted the referee‘s recommendations.
IV. Discovery Order No. 4
On March 2, 2020, Park filed a motion for an order of contempt and further sanctions against the DOJ, as there was “no completion date in sight” and he faced the prospect of going to trial “without critical evidence.”
The DOJ opposed Park‘s motion on multiple grounds, including that it anticipated fully complying with the subpoena before this most recent motion could be adjudicated. Then on March 20, 2020, the DOJ reported that it had produced its final set of documents, a privilege log, and an affidavit of no records for certain DOJ employees, thus completing its response to the subpoena.
V. Discovery Order No. 5
On April 7, 2020, the DOJ filed the motion at issue in the present appeal, seeking a second order protecting it from undue burden or expense incurred in responding to the Park subpoena, this time for the period from July 23, 2019 to March 18, 2020. The DOJ reported that during this period, it spent 998.75 hours on the subpoena and the value of this work totaled $223,237.50. The DOJ supported its motion with a declaration from Deputy Attorney General Bart Hightower, which incorporated time reports for himself and a staff of lawyers and other professionals.
Opposing this motion, Park argued that compliance with his subpoena did not subject the DOJ to undue burden or expense. First, he relied on the trial court‘s prior finding that compliance with the subpoena would not impose an undue burden on the DOJ to argue that the cost-shifting motion failed as a matter of law. Alternatively, Park argued that the claimed expenses should be rejected or substantially reduced because the number of hours the DOJ claimed to have spent on the subpoena was patently unreasonable, the DOJ‘s supporting documentation was inadequate, and the methods employed to conduct the document review were overly complicated and time-consuming.
The referee addressed the DOJ‘s motion in Referee‘s Report and Recommended Discovery Order No. 5, applying the same principles used to resolve the DOJ‘s prior motion for a protection order. The referee found that the DOJ failed to demonstrate its claimed costs were all reasonable, in that it employed review methods that were overly complicated and time consuming, failed adequately to document actual costs incurred, and appeared to seek compensation for some non-compensable time. For these deficiencies, the referee recommended reducing the amount of potentially recoverable costs by half, to $111,618.75. The referee found these costs were significant, represented an undue expense, and should be shifted to Park.
On October 27, 2020, the trial court adopted Referee‘s Report and Recommended Discovery Order No. 5 after independently reviewing the matter (hereafter, the October 2020 order). An amended notice of entry of the October 2020 order was served and filed on December 11, 2020. This timely appeal followed.
I. The October 2020 Order Is Appealable
Park contends the October 2020 order is appealable under
II. Park Fails to Demonstrate Reversible Error
We review the October 2020 order under the abuse of discretion standard governing appeals from trial court rulings on discovery matters. (Curtis v. Superior Court (2021) 62 Cal.App.5th 453, 467.) Under this standard, the ” ’ “trial court‘s findings of fact are reviewed for substantial evidence, its conclusions of law are reviewed de novo, and its application of the law to the facts is reversible only if arbitrary and capricious.” ’ ” (Ellis v. Toshiba America Information Systems, Inc. (2013) 218 Cal.App.4th 853, 882.) Here, Park contends that the trial court abused its discretion by (1) applying the wrong legal standard for shifting costs pursuant to
A. Statutory Overview
In 2009, the California Legislature passed the Electronic Discovery Act “[i]n order to eliminate uncertainty and confusion regarding the discovery of electronically stored information [(ESI)], and thereby minimize unnecessary and costly litigation that adversely impacts access to the courts.” (Stats 2009, ch. 5, § 23.) The Act added several provisions to the
Neither Park nor the DOJ cite any authority construing
The term “undue burden or expense” is not defined in the statute. In common parlance, the word “undue” connotes a judgment call about whether some action or result exceeds what is reasonable or fair. Such an inquiry by a factfinder would necessarily require a case-specific consideration of the factual circumstances. (Cf. Atkins v. City of Los Angeles (2017) 8 Cal.App.5th 696, 733 [under Fair Employment and Housing Act, whether an accommodation will impose an undue hardship is a case-specific, ” ‘multi-faceted, fact-intensive inquiry’ “].) Thus, the plain language of
This interpretation of the undue burden or expense standard is consistent with other provisions in
Legislative history pertaining to the Electronic Discovery Act adds little but is consistent with this interpretation of the statute. For example, the legislative history reflects an intention that any court order requiring compliance with a subpoena to produce ESI “shall protect a non-party from undue burden or expense resulting from compliance.” (Senate Judiciary Committee Report, AB 5, 2009–2010 Reg. Sess., Comment 12, p. 10.) We have not found, and the parties have not pointed us to, any material in the legislative history that defines undue burden or expense, but there is evidence of the Legislature‘s intention to preserve the court‘s discretion, both to order discovery upon a showing of good cause and to “consider all relevant factors in determining whether and in which circumstances a protective order should be issued.” (Senate Judiciary Committee Report, AB 5, 2009–2010 Reg. Sess., Comment 7, pp. 7–8.)
Park makes three arguments that the trial court incorrectly applied
Park mischaracterizes the October 2020 order granting in part the DOJ‘s second request for an order protecting it from the undue burden or expense of responding to Park‘s subpoena. The order is not based solely on a finding that compliance with the subpoena amounted to a significant expense. The referee—like the DOJ and Park—did look to federal law construing
Park insists that the referee‘s reliance on federal case law undermines the integrity of the October 2020 order because of a “critical difference” between the federal and California cost-shifting standards: the word ” ‘significant’ ” is a quantitative measure, making equitable factors irrelevant under
Park may or may not be correct about federal law. Some federal courts applying
We also disagree with Park to the extent he suggests that the question whether the expense of responding to a subpoena is “significant” is irrelevant to the determination whether the expense is “undue.” As a matter of common sense, the more significant an expense is, the more likely it is to be undue. In applying
Park‘s secondary argument that the trial court misconstrued
This argument fails because it is squarely contrary to California law, which requires courts to protect nonparties from “undue burden or expense.” (
Moreover, Park‘s argument conflates two different concerns addressed by distinct provisions in
Park relies on Globalstar, in which nonparty Qualcomm moved for an order requiring plaintiffs to pay sanctions under
Federal cases that may provide some guidance are those that address
Thus, Park‘s theory that the October 2020 order cannot be affirmed absent a finding that the subpoena was unduly burdensome is not supported by federal law or by California law. As the referee in this case explained, “[g]iven the issues framed by the pleadings in this lawsuit, Park was entitled to the documents requested by the subpoena,” notwithstanding the fact that the limitations of the DOJ‘s technology systems and the complex privilege issues made compliance with Park‘s subpoena “a very labor-intensive process.” The DOJ‘s inability to prove that this burden excused it from having to respond at all to the subpoena did not preclude the DOJ from “seeking reimbursement for ‘undue expense’ incurred in responding to the subpoena.”
Park offers a third theory about how the trial court misconstrued
California law does not support Park‘s extreme view. The Electronic Discovery Act clearly contemplates that subpoenaed parties will review ESI before producing it in order to protect information that “is subject to a claim of privilege or of protection as attorney work product.” (
C. Shifting Fifty Percent of Costs Was No Abuse of Discretion
We turn now to Park‘s second claim of error. He contends that, even if cost shifting could be proper on an appropriate record, the trial court abused its discretion by ordering Park to pay 50 percent of the DOJ‘s claimed costs here after finding that some of those costs were not reasonable and others were not properly verified. According to Park, a 50 percent reduction is insufficient because the DOJ inflated its costs, and its billing records are so vague that it is not possible to determine what time is compensable.
The referee‘s recommendation regarding the amount the DOJ should recover from Park was based on a comprehensive, even-handed analysis. He took account of the DOJ‘s failure to demonstrate that all of its claimed costs were reasonable and to provide documentation of some costs. He also considered that the DOJ claimed some costs that were not compensable. The referee also explained why denying the DOJ‘s second compensation request in its entirety would “not be in the interests of justice.” The DOJ is a third party with no stake in this litigation, who did not engage in aggressive litigation tactics and whose ability to bear the expense of compliance is no greater than Park‘s. Equally important, the DOJ is a law enforcement agency that serves as counsel for state agencies that regulate the activities of Park and others involved in the gaming industry. The DOJ has an obligation to protect privileged communications and data from disclosure in Park‘s litigation, notwithstanding its antiquated computer system. The DOJ was too slow to respond to the subpoena, but it did ultimately allocate “sufficient staff to the project in order [to complete] production.”
Despite deficiencies in its motion, the DOJ established that its costs of compliance with the subpoena were “significant and represent[ed] an undue expense to the DOJ.” Taking account of all relevant facts (including the DOJ‘s deficiencies), the referee recommended reducing the amount of the DOJ‘s potentially recoverable costs by 50 percent to $111,618.75. The trial court adopted that recommendation after independently considering the matter, and Park fails to carry his burden to demonstrate that this decision was an abuse of discretion.
The judgment is affirmed. The DOJ is awarded costs on appeal.
TUCHER, P.J.
WE CONCUR:
FUJISAKI, J.
RODRÍGUEZ, J.
Park v. California Department of Justice (A161672)
Trial Court: Sonoma County Superior Court
Trial Judge: Hon. Patrick M. Broderick
Counsel: Umberg Zipser, Scott B. Garner, Todd W. Smith, and Hon. Halim Dhanidina (Ret.) for Plaintiff and Appellant
Rob Bonta, Attorney General of California, Chris A. Knudsen, Senior Assistant Attorney General, Andrea R. Austin, Supervising Deputy Attorney General, Bart E. Hightower, Deputy Attorney General for Real Party in Interest and Respondent
Willoughby, Stuart & Benning, Bradley A. Benning, and Charles Richard Hellstrom for Defendants