Friday, August 14, 2015

Tick, Tick, Tick . . .

Rutledge v. Hewlett-Packard Co., No H036790 (D6 July 22, 2015)

This case presents a grab bag of arguments on an appeal of a trial court’s granting of summary adjudication in a ten-year-old class action involving allegedly defective computer parts. Of procedural interest are a pair of issues about class certification and two issues related to discovery sanctions. In particular, one of the sanctions orders highlights a potential trap involving motions to compel productions of documents under third-party subpoenas.

Let’s focus on the interesting* issue first.

Plaintiffs got hit with a monetary sanction of $4,000 after the trial court denied a motion to compel production under a third party document subpoena. Plaintiffs served a third party subpoena and got responses in 2004. (2004!) Over the course of seven years, they continued—at a glacial pace—to follow up with the third party and, from time to time, got some more documents. In 2011 (2011!) Plaintiffs, still unsatisfied, moved to compel documents that fell within the scope of the original document request. The trial court denied the motion, based on Code of Civil Procedure § 2025.480(b)—a statute that says a motion to compel further answers from a deponent must be brought within sixty days of the completion of the deposition record and awarded $4,000 as a sanction under § 2025.480(j).

Section 2025.480 is codified in a chapter of the Discovery Act called “Oral Deposition Inside California.” When addressing a subpoena for documents only, one would think there must be a more on point statute somewhere, perhaps in the chapters addressing subpoenas or document demands. Cf. Fed. R. Civ. P. 34(c) (subpoena seeking documents treated as a request for the production of documents). Nope. California has this not-very-intuitive practice of calling the production of any third party evidence—whether documents or testimony—a “deposition.”  See § 2020(a)(1)–(3). So a 2007 case says that in order to enforce a subpoena for a “deposition seeking production of business records”—a subpoena duces tecum everywhere else—you rely on § 2025.480. See Unzipped Apparel, LLC v. Bader, 156 Cal. App. 4th 123, 131 (2007). That statute has a sixty-day clock that runs from “the completion of the record of the deposition.” And as Unzipped explains, when a subpoena seeks only documents, as opposed to actual deposition testimony, that record is complete upon the service of objections.

Unzipped was ultimately a little ambiguous on a couple points. At one point the court notes that, if the response to a subpoena is an offer to let the other side conduct an inspection, the party “can rest assured that the 60-day period does not begin to run until the production is over.” That obviously suggests a rule different than one that runs automatically from the service of objections and responses.

Unzipped also relies on the provisions that set motion to compel deadlines for party discovery methods from the date of service of responses or objections. It says that the rules shouldn’t be more lenient for non-parties. That makes sense. The responses and objections are sufficient or they are not. You know what to move on and there’s a cutoff.

But Unzipped fails to recognize that for document productions, there is a separate statute that deals with compliance with what is stated in the reposes. See § 2031.320(a). A motion under that statute is timely, so long as it’s brought before the close of discovery. That also makes a lot of sense. Any litigator worth her salt will tell you that moving on “I don’t think you’ve really given me everything you said you would” is a pretty high hurdle. To make the record needed to successfully move on that issue takes perseverance, a lot of time, and often a fair helping of luck. And it’s that issue—not the sufficiency of the third party’s responses or objections—that is at play in this case.

Anyway, awful facts sometimes lead to ill-considered law. Plaintiffs are moving to compel compliance with a seven-year-old subpoena, and over that time, they made some languid efforts to get what they needed. That seems ridiculous. So the court here waves away Unzipped’s ambiguity about when the sixty-days runs and firmly holds that the sixty days runs from service of objections. It also states that the requirement is mandatory. So plaintiffs ran out of time way back in 2004. And given that § 2025.480(j) provides for mandatory sanctions absent substantial justification, the trial court didn’t abuse its discretion in dinging plaintiffs for four grand.

Not crazy, but definitely a trap for the unwary. And it all begs a few questions.

First, can the parties agree to extend the time? There are, no doubt, third party subpoenas for which it will take more than sixty days to complete production. The other statutes that set a deadlines to move to compel permit extensions on written agreement of the parties. See, e.g., § 2031.310(c) (motion to compel additional responses to RFPs must be bought within forty-five days unless the parties agree otherwise in writing). But § 2025.480(b) does not facially permit the parties to agree to a later cutoff in writing. Does this mean the sixty-day window can’t be extended? Or is it nonetheless extendable under § 2016.030, which permits the parties to alter any discovery procedure by written stipulation? 

And in the absence of a written agreement, could there be some sort of estoppel? Anyone who has complex litigation in California state court is familiar with the sometimes months long negotiations that go into the appropriate scope of third party discovery, particularly when electronically stored information is at issue. Could this kind of active negotiation with or without a request to delay filing a motion to compel somehow toll the limit or estop the responding party from raising it? Cf. U. S. Cas. Co. v. Indus. Acc. Comm’n, 122 Cal. App. 2d 427, 433 (1954) (“[A] mere request for delay, in the absence of a promise or agreement not to plead the statute of limitations, does not estop one from asserting it.”). That would appear to be rejected under the facts of this case, albeit implicitly.

Moving on, for the second sanctions issue, plaintiffs sought evidentiary sanctions based on what appears to be the spoliation or non-production of certain reporting data—the opinion is not very clear on the point. But as one might expect in a case that has run on this long, there were a number of contentious discovery disputes. Plaintiffs won many of them and later obtained orders from the court enforcing its prior orders. The sanction they sought was to deem key parts of their liability theory to be established.

The trial court found that to be too far and the court of appeal agreed. Relying on the principle that evidentiary sanctions must not be used merely to punish or award a windfall by avoiding a trial on the merits, it denied the motion. The court of appeal affirms. The principle was a correct one and the trial court did not manifestly abuse its discretion in applying it.

The other two issues involve class cert. The first involves the trial court’s refusal to certify a nationwide class. Plaintiffs’ claims arose in breach of warranty, as well as under the Unfair Competition Law and the Consumer Legal Remedies Act. The trial court reasoned that nationwide certification would result in the application of these California substantive laws to the claims of plaintiffs from other states. Finding that result unmerited, it certified a California-only class. The court of appeal, however, disagrees with the trial court’s analysis.

Whether nationwide certification is permissible is essentially a choice of law question. The test has two steps. First, a plaintiff needs to show that the state whose law will be applied as significant contact or aggregation of contacts to each member of the class, so as to create a state interest that makes it fair to certify nationwide. If that is met, the burden shifts to defendant to show some other state’s law has a materially greater interest. Here Defendant’s headquarters and principal place of business are in California and many of the facts at issue in the case occurred here. Relying on decision in another court of appeal case and a federal trial court opinion, the court holds that those facts were sufficient to meet the first part of the test. Because Defendant didn’t make much of an effort as to the second element, nationwide certification should have been granted.

The second class issue involves the trial court’s refusal to certify a class under the CLRA. The motion was brought years into the litigation and after the trial court had already granted Plaintiffs summary adjudication on some of Defendant’s affirmative defenses. The trial court denied certification under the so-called “one way intervention” rule. The theory is that plaintiffs who delay certification until after the merits are decided get a free pass. If the merits fail, they sidestep the preclusive effect of a class judgment. But if they win, they get a free shot to join in a sure thing. Here, since the trial court had ruled on a summary judgment, it didn’t abuse its discretion in denying cert on this basis.
In other parts of the case with little procedural interest, the court reverses summary adjudication on some claims, affirms it on some others, and remands the case for another go-round.

Reversed in part and remanded.

*Ok, I suppose a case could be made that the appropriate cutoff date to move to compel the production of documents responsive to a subpoena is not exactly the most interesting legal issue ever.

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