Park v. Law Offices of Tracey Buck-Walsh ( 2021 )


Menu:
  • Filed 12/27/21
    CERTIFIED FOR PUBLICATION
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    FIRST APPELLATE DISTRICT
    DIVISION THREE
    JOHN PARK,
    Plaintiff and Appellant,
    v.
    LAW OFFICES OF TRACEY                      A161672
    BUCK-WALSH et al.,
    (Sonoma County
    Defendants;
    Super. Ct. Nos. SCV-2599791 &
    DEPARTMENT OF JUSTICE,                     SCV-261163)
    Real Party in Interest and
    Respondent.
    John Park is engaged in litigation against his former attorneys,
    prompting this collateral dispute between Park and the California
    Department of Justice (the DOJ) over his subpoena duces tecum requiring
    the DOJ to produce electronically stored documents. (Civ. Proc. Code,
    § 1985.8; statutory references are to this code unless otherwise specified.)
    The DOJ reportedly reviewed several hundred thousand electronic
    documents but produced fewer than a hundred. Partway through the
    production, the trial court ordered Park to pay $32,836.25 to defray the
    “undue burden or expense” of the DOJ’s compliance with Park’s subpoena.
    (§ 1985.8, subd. (l) (§ 1985.8(l)).) When the production was complete, the trial
    1
    court ordered Park to pay the DOJ an additional $111,618.75. Park appeals
    the later order. We affirm.
    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
    2
    Bureau of Gambling Control, which is part of the DOJ. The DOJ had not
    produced any documents or otherwise responded to Park’s subpoena.
    I.    Discovery Order No. 1
    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
    3
    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 section 1985.8(l), which
    states: “An order of the court requiring compliance with a subpoena issued
    under this section shall protect a person who is neither a party nor a party’s
    officer from undue burden or expense resulting from compliance.”
    The DOJ relied on cases applying rule 45 of the Federal Rules of Civil
    Procedure (rule 45). Rule 45(d)(2)(B)(ii) states that an order requiring
    compliance with a third party subpoena “must protect a person who is
    neither a party nor a party’s officer from significant expense resulting from
    compliance.” Federal courts apply a two-part test for shifting costs pursuant
    to this rule, considering (1) whether a given expense resulted from
    compliance with the subpoena, and (2) whether the expense is significant.
    (Valcor Engineering Corp. v. Parker Hannifin Corp. (C.D. Cal., July 12, 2018,
    No. 8:16-cv-00909-JVS-KESx) 2018 U.S.Dist. Lexis 142120, p. *4 (Valcor).)
    Some federal courts consider additional equitable factors, but others deem
    equitable considerations irrelevant. (Id. at pp. *6–*7.)
    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
    4
    neither Torngren nor the DOJ have any interest in Park’s dispute with his
    former counsel.
    Park also relied on cases applying rule 45, arguing that expenses
    claimed by the DOJ should not be reimbursed because they were
    unreasonable. (Citing U.S. v. McGraw-Hill Companies, Inc. (2014) 
    302 F.R.D. 532
    , 536 (McGraw).) According to Park, the document production was
    expensive because the DOJ’s review procedures were overly complicated, and
    equitable factors weighed in Park’s favor because his theory in the
    underlying litigation is that these nonparties played a role in the defendants’
    wrongdoing, and because the government has ample financial resources to
    bear the expense of producing documents. Park also argued that even if the
    referee found compliance caused an “undue burden or expense” (§ 1985.8(l)),
    most of the DOJ’s expenses were not compensable because they were
    unnecessarily incurred or had not been verified. (Citing Nitsch v.
    Dreamworks Animation SKG Inc. (N.D. Cal. Mar. 9, 2017, No. 5:14-cv-04062-
    LHK (SVK)) 2017 U.S.Dist. Lexis 34106, p *2.)
    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 rule 45, reasoning that there is a dearth of
    California case law construing section 1985.8; the two cost-shifting standards
    are similar; and both provisions use mandatory language. The referee
    reported finding no authority for distinguishing between the terms “undue
    burden or expense” (§ 1985.8(l)) and “significant expense” (rule 45).
    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
    5
    claimed $108,543 in costs were compensable. Second, these “conditionally
    allowed” fees should be reduced by 50 percent because the DOJ failed to carry
    its burden of proving its claimed costs were reasonable, and its supporting
    documentation was vague. (Citing Michael Wilson & Partners, Ltd. v. Sokol
    Holdings, Inc. (10th Cir. 2013) 
    520 Fed. Appx. 736
    .)
    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
    6
    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.
    In Referee’s Report and Recommended Discovery Order No. 4, the
    referee recommended the motion be granted in part, requiring the DOJ to
    pay attorney fees and costs for Park having to bring the motion because Park
    had a legitimate concern over the DOJ’s delays. On May 14, 2020, the trial
    court adopted the referee’s recommendations.
    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.
    7
    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.
    8
    DISCUSSION
    I.    The October 2020 Order Is Appealable
    Park contends the October 2020 order is appealable under section
    904.1, subdivision (a)(12), as an order directing a party to pay a monetary
    sanction in an amount that exceeds $5,000. We reject this argument because
    the October 2020 order does not impose a monetary sanction; it implements a
    fee-shifting mechanism intended to protect nonparties from undue burden or
    expense in responding to a third party subpoena. (§ 1985.8(l).) But we accept
    Park’s alternative theory, that the October 2020 order is appealable as a final
    determination of a collateral matter resolving all issues between Park and
    the DOJ. The order fits within an exception to the one final judgment rule
    because it is collateral to the subject matter of the main litigation; it is final
    as to that collateral matter; and it directs the payment of money by the
    appellant. (See Marsh v. Mountain Zephyr, Inc. (1996) 
    43 Cal.App.4th 289
    ,
    297; People v. Hernandez (2009) 
    172 Cal.App.4th 715
    , 720; see also
    Conservatorship of Rich (1996) 
    46 Cal.App.4th 1233
    , 1237.)
    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 section 1985.8(l), and
    (2) permitting recovery of costs that were inflated and not adequately proven.
    9
    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 Code of Civil
    Procedure to integrate ESI into the discovery law, including section 1985.8,
    which establishes procedures for subpoenaing ESI. (See Vasquez v.
    California School of Culinary Arts, Inc. (2014) 
    230 Cal.App.4th 35
    , 41
    (Vasquez).)
    Several provisions of section 1985.8 address problems that arise when
    the propounding party seeks discovery of ESI “that is not reasonably
    accessible because of undue burden or expense.” (See e.g. § 1985.8, subds. (e),
    (f).) This circumstance is a ground for opposing a subpoena. (Id. at subd. (e).)
    But even where undue burden or expense is established, the court “may
    nonetheless order discovery” upon a showing of good cause and subject to the
    limitations of subdivision (i). (Id. at subd (f).) Where a source “is not
    reasonably accessible,” the court may attach conditions to the discovery,
    including allocating the expense of production. (Id. at subd. (g).) Under
    subdivision (i), even where a source “is reasonably accessible,” the court must
    “limit the frequency or extent of discovery” if it finds “[t]he 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.” (Id. at subd. (i)(4).) “A party serving a
    subpoena . . . shall take reasonable steps to avoid imposing undue burden or
    expense” on the responding party. (Id. at subd. (k).) And most importantly
    10
    for our case, any “order of the court requiring compliance with a subpoena
    issued under this section shall protect a person who is neither a party nor a
    party’s officer from undue burden or expense resulting from compliance.” (Id.
    at subd. (l).) In other words, in the face of an “undue burden or expense” the
    court “may” order a person to comply with a subpoena for ESI, but any such
    order “shall protect” a stranger to the litigation from that undue burden or
    expense. (Id. at subds. (f), (l).)
    Neither Park nor the DOJ cite any authority construing section
    1985.8(l). Thus, we apply settled rules governing statutory construction. We
    “ ‘ “begin with the plain, commonsense meaning of the language used by the
    Legislature. [Citation.] If the language is unambiguous, the plain meaning
    controls.” ’ ” (Riverside County Sheriff’s Dept. v. Stiglitz (2014) 
    60 Cal.4th 624
    , 630.) If the statutory language is ambiguous, permitting “ ‘ “more than
    one reasonable interpretation,” ’ ” we may look “ ‘ “ ‘to a variety of extrinsic
    aids, including the ostensible objects to be achieved, the evils to be remedied,
    the legislative history, public policy, contemporaneous administrative
    construction, and the statutory scheme of which the statute is a part.’ ” ’ ”
    (DiCampli-Mintz v. County of Santa Clara (2012) 
    55 Cal.4th 983
    , 992.)
    Section 1985.8(l) uses the word “shall,” which connotes a mandatory
    duty or directive. (Woodbury v. Brown-Dempsey (2003) 
    108 Cal.App.4th 421
    ,
    432 [noting that the distinction between “ ‘may’ ” and “ ‘shall’ ” is
    “particularly acute when both words are used in the same statute”]; see also
    Toshiba America Electronic Components v. Superior Court (2004) 
    124 Cal.App.4th 762
    , 769.) Thus, by its plain language, section 1985.8(l)
    mandates that courts protect nonparties from “undue burden or expense”
    when ordering them to comply with a subpoena to produce ESI.
    11
    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 Lost 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 section
    1985.8(l) appears to grant courts discretion to determine whether the burden
    or the expense of complying with a third party subpoena is undue in light of
    the facts of the particular case.
    This interpretation of the undue burden or expense standard is
    consistent with other provisions in section 1985.8 that require the trial court
    to make similarly fact-specific assessments in deciding whether to limit
    discovery or shift costs. (See Weatherford v. City of San Rafael (2017)
    
    2 Cal.5th 1241
    , 1246–1247 [statute’s structure and text of surrounding
    provisions can impart more precise meaning to text being interpreted].) For
    example, a trial court may decline to enforce a subpoena for ESI if the source
    “is not reasonably accessible because of undue burden or expense” (§ 1985.8,
    subds. (e) & (f), italics added); a subpoenaing party may be ordered to bear
    “the reasonable expense” of translating data compilations into useable form
    (§ 1985.8, subd. (h), italics added); and discovery of even accessible ESI may
    be curtailed where the “burden or expense of the proposed discovery
    outweighs the likely benefit” (§ 1985.8, subd. (i)(4), italics added).
    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
    12
    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.)
    B. The Trial Court Did Not Misconstrue the Statute
    Park makes three arguments that the trial court incorrectly applied
    section 1985.8.(l)’s cost-shifting standard. His primary argument is that the
    trial court erred in ordering Park to pay the DOJ’s costs of complying with
    the subpoena based solely on the referee’s finding that those costs constitute
    a “significant expense.” According to this argument, the court erred as a
    matter of law because it applied the rule 45 test for cost-shifting, which is
    materially different from the “undue burden or expense” standard in section
    1985.8(l).
    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 rule 45 for guidance as to the proper application of the “undue . . .
    expense” language in section 1985.8(l), noting that section 1985.8 does not
    define the term, there is little California law interpreting section 1985.8, and
    13
    the phrase “significant expense” in rule 45 is similar. (See Vasquez, supra,
    230 Cal.App.4th at pp. 42–43 [“ ‘ “Because of the similarity of California and
    federal discovery law, federal decisions have historically been considered
    persuasive absent contrary California decisions” ’ ”].) In finding that the
    state statute and the federal rule “appear” to be similar, the referee observed
    that both provisions use mandatory language, and both “appear to be an
    effort to balance the interests that litigating parties have in discovering
    relevant information from third parties, and the interests third parties have
    in being protected from unduly burdensome, costly and involuntary
    involvement in the legal affairs of others.” But the referee did not conflate
    the state and federal rules. He expressly found that the costs he
    recommended shifting to Park are significant and “represent an undue
    expense to the DOJ.” The trial court did not abuse its discretion by adopting
    recommendations that were based in part on this reasoning.
    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 rule 45, and the word “ ‘undue’ ” is a qualitative measure, making
    equitable factors the focus of section 1985.8(l). In presenting this argument,
    Park posits that “ ‘significant’ ” costs, which must be shifted under the federal
    standard, may not be shifted under the California rule unless the expense is
    so unfair as to constitute an undue burden.
    Park may or may not be correct about federal law. Some federal courts
    applying rule 45 do consider “equitable factors such as the public importance
    of the litigation, the invasiveness of the request, the reasonableness of the
    costs of production, the relative ability of the parties to bear the costs, and
    14
    the non-party’s interest, if any, in the outcome of the case.” (Valcor, supra,
    2018 U.S.Dist. Lexis 142120, at p. *3; see also McGraw-Hill, supra, 302
    F.R.D. at p. 534.) But whether or not equitable factors are relevant under the
    federal test, the referee here did explicitly consider equitable factors when he
    made recommendations as to both of the DOJ’s cost-shifting motions in this
    case. The referee found those factors were only “marginally instructive” but
    weighed in favor of the DOJ because the DOJ does not have any interest in
    this litigation, the DOJ did not engage in aggressive litigation tactics, and
    both Park and the DOJ appear to have sufficient economic resources to bear
    the costs of responding to the subpoena.
    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 section 1985.8(l), the court should look to qualitative factors such as
    the relationship of the subpoenaed person to the dispute and the resources of
    the subpoenaed person and the requesting party (see § 1985.8, subds. (i) &
    (l)), but this is in addition to, not instead of, examining how significant the
    expense of responding to the subpoena is.
    Park’s secondary argument that the trial court misconstrued section
    1985.8 is that the DOJ’s cost-shifting motion should have been denied
    because, in granting Park’s motion to compel the DOJ to comply with the
    subpoena, the trial court necessarily found that compliance does not
    constitute an undue burden. This time seeking support from federal law,
    Park posits that federal courts refuse to shift attorney fees under rule 45
    when a subpoena does not subject the nonparty to an “undue burden.”
    (Citing e.g. In re Globalstar Secs. Litig. (S.D. Cal. June 7, 2005,
    15
    No. 04cv1394-B (BLM)) 2005 U.S.Dist. Lexis 52125, p. *8 (Globalstar).)
    According to Park, the fact that the trial court ordered the DOJ to comply
    with the subpoena proves that the subpoena is not unduly burdensome and
    thus precludes shifting attorney fee costs even under cases applying rule 45.
    This argument fails because it is squarely contrary to California law,
    which requires courts to protect nonparties from “undue burden or expense.”
    (§ 1985.8(l), italics added.) At the hearing on Park’s motion to compel, the
    DOJ argued that the subpoena was both overbroad and imposing an undue
    expense on a nonparty with no interest in the litigation. The referee rejected
    only the first argument, concluding the number of documents was not
    unmanageable and they should be produced. (See Discovery Order No. 1.)
    Though this may be characterized as an implied finding that the burden of
    compliance was not undue, the referee at the same time mentioned but
    reserved for another day the possibility that the cost-shifting statute could
    protect the DOJ from the full cost of complying with the subpoena. Thus,
    Park has always been on notice that the order compelling the DOJ to comply
    with the subpoena was subject to the court’s obligation to protect the DOJ
    from the undue expense of compliance.
    Moreover, Park’s argument conflates two different concerns addressed
    by distinct provisions in rule 45. Rule 45 “provides two related avenues by
    which a person subject to a subpoena may be protected from the costs of
    compliance: sanctions under Rule 45(d)(1) and cost-shifting under Rule
    45(d)(2)(B)(ii).” (Legal Voice v. Stormans Inc. (9th Cir. 2013) 
    738 F.3d 1178
    ,
    1184 (Legal Voice).)
    Park relies on Globalstar, in which nonparty Qualcomm moved for an
    order requiring plaintiffs to pay sanctions under former rule 45(c)(1) (now
    rule 45(d)(1)). (Globalstar, supra, 2005 U.S.Dist. Lexis 52125 at p. *10.)
    16
    Qualcomm sought to recover all costs it incurred to comply with a third party
    subpoena on the ground that the plaintiffs violated their duty under rule 45
    to “ ‘take all reasonable steps to avoid imposing undue burden or expense on
    a person subject to that subpoena.’ ” (Id. at p. *12.) The district court
    exercised its discretion to transfer some but not all of Qualcomm’s costs of
    complying with the subpoena, declining to assess Qualcomm’s attorney’s fees
    as a sanction because the subpoena was not issued “in bad faith or for an
    improper purpose.” (Id. at pp. *13 & *14–*16.) However, because the
    subpoena was overbroad and both sides engaged in unnecessary
    gamesmanship, the court required plaintiffs to pay half of the costs
    Qualcomm incurred before the subpoena was adequately narrowed. (Id. at
    pp. *13 & *16–*24.) Park errs in relying on cases like Globalstar because the
    appealed order in this case does not involve a discovery sanction. (See also
    Balfour Beatty Infrastructure v. PB&A (2017) 
    319 F.R.D. 277
    , 283 & 284
    [after finding that cost of compliance with third party subpoena was not
    significant, court declined to impose attorney fee sanction].)
    Federal cases that may provide some guidance are those that address
    rule 45’s cost-shifting provision, which protects nonparties from significant
    expense resulting from compliance with a subpoena even if compliance with
    the subpoena is not unduly burdensome. (Legal Voice, supra, 738 F.3d at
    p. 1184.) Legal Voice arose out of a dispute over compliance with a subpoena
    duces tecum seeking documents from a law center that was a nonparty to the
    plaintiffs’ underlying lawsuit. (Legal Voice, supra, 
    738 F.3d 1178
    .) The law
    center challenged the subpoena on numerous grounds, including that
    plaintiffs sought documents that were protected from disclosure by the First
    Amendment and the attorney-client privilege. (Id. at p. 1181.) The trial
    court required the law center to respond to some categories of documents but
    17
    also denied some of plaintiffs’ requests, and then ordered the law center to
    bear all costs it incurred in connection with the protracted discovery dispute.
    The Ninth Circuit affirmed the denial of the law center’s motion for sanctions
    under rule 45(d)(1) but reversed the denial of costs to the law center under
    rule 45(d)(2), acknowledging that different standards apply to the separate
    inquiries and pointing out that rule 45(d)(2)’s cost-shifting provision “is
    mandatory.” (Legal Voice, at p. 1184.)
    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
    section 1985.8.(l), this time relying on a federal case to support an overly
    narrow view of what constitutes undue burden or expense. He argues that
    “the burden of compliance is ‘undue’ only when a [subpoena] requires
    something beyond the mere production of relevant documents” and, relatedly,
    that costs should not be shifted when the “ ‘producing party has the exclusive
    ability to control’ ” them, as when it chooses to undertake an exacting review
    for privilege. (Quoting US Bank Nat. Assn. v. PHL Variable Ins. Co.,
    18
    (S.D.N.Y. Nov. 5, 2012, No. 12 CIV. 6811 CM JCF) 2012 U.S.Dist. Lexis
    158448, p. *4.)
    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.” (§ 1985.8, subd. (j).)
    And the statute mandates cost shifting whenever necessary to protect
    nonparties “from undue burden or expense resulting from compliance” with a
    subpoena. (§ 1985.8 (l).) The statutory language is not limited to—nor does
    it exclude—particular reasons for a burden or expense being undue. In one
    case the hurdle may be the technical challenge of extracting information from
    older computer systems or storage media, in another the complexity of the
    required privilege review or the sheer volume of information potentially
    responsive to a subpoena. Or, as in this case, all three of these factors may
    contribute to the undue expense of a document production. We decline Park’s
    invitation to read into the statute constraints that would cabin and distort
    the trial court’s consideration of all relevant circumstances, and we find no
    abuse of discretion in the way that the referee and the trial court exercised
    that discretion here.
    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.
    19
    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.
    DISPOSITION
    The judgment is affirmed. The DOJ is awarded costs on appeal.
    20
    TUCHER, P.J.
    WE CONCUR:
    FUJISAKI, J.
    RODRÍGUEZ, J.
    Park v. California Department of Justice (A161672)
    21
    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
    22
    

Document Info

Docket Number: A161672

Filed Date: 12/27/2021

Precedential Status: Precedential

Modified Date: 12/27/2021