United States District Court, E.D. California
G.P.P., INC. dba GUARDIAN INNOVATIVE SOLUTIONS, Plaintiff,
GUARDIAN PROTECTION PRODUCTS, INC., Defendant.
K. OBERTO UNITED STATES MAGISTRATE JUDGE
7, 2016, the parties appeared telephonically for a follow-up
informal discovery dispute conference. Dylan Liddiard, Esq.,
appeared on behalf of Plaintiff G.P.P., Inc. d/b/a Guardian
Innovative Solutions ("GIS"), and Margaret Drugan,
Esq., appeared on behalf of Defendant Guardian Protection
Products, Inc. ("Guardian").
reviewing the parties' submissions and hearing the
parties' arguments, the Court makes the following
findings and orders:
Unaudited Consolidated Financial Statement
relevance of each document in a document "family"
should be assessed separately. See In Re: Takata Airbag
Prod. Liab. Litig., MDL No. 2599, 1:15-md-02599-FAM,
Doc. 954 (S.D. Fla. Mar. 1, 2016); In Re: Zoloft Prod.
Liab. Litig., MDL No. 2342, 2013 WL 8445354, *4-5 (E.D.
Pa. Oct. 31, 2013), adopted without objection, 2013 WL
8445280 (Nov. 19, 2013); Abu Dhabi Commercial Bank v.
Morgan Stanley & Co. Inc., No. 08 Civ. 7508, 2011 WL
3738979 (S.D.N.Y. Aug. 18, 2011), adopted without objection,
2011 WL 3734236 (S.D.N.Y. Aug. 24, 2011). GIS has not shown
the relevance of Guardian's unaudited consolidated
financial statement for the twelve-month period ending May
2011 (the "financial statement") to any party's
claim or defense in the case. See Gerawan Farming, Inc.
v. Prima Bella Produce, Inc., No. 1:10-CV-00148 LJO,
2011 WL 2518948, at *2 (E.D. Cal. June 23, 2011) ("the
party seeking to compel discovery bears the initial burden of
showing that its discovery request satisfies the relevancy
requirements of Rule 26(b)(1)."). Accordingly, GIS's
request for an order requiring Guardian to produce the
financial statement is hereby DENIED.
Assertion of Attorney-Client Privilege
federal action such as this based on diversity of citizenship
jurisdiction, state law governs privilege claims. Star
Editorial, Inc. v. United States District Court for the
Central District of California (Dangerfield), 7 F.3d
856, 859 (9th Cir. 1993); Wilson v. Kauai Restaurants,
Inc., No. 2:11-CV-2033 MCE GGH, 2013 WL 618151, at *1
(E.D. Cal. Feb. 19, 2013).
has not met its burden under California law of establishing
the preliminary facts necessary to support the exercise of
the attorney-client privilege over the redaction of the
document labeled GUARD 00008467. Costco Wholesale Corp.
v. Superior Ct., 47 Cal.4th 725, 733 (2009).
Guardian's privilege log describes the communication as
"Communication with Attorney Ken Nota regarding
negotiations with GIS regarding new contract."
"Negotiations" is one of the enumerated activities
that California courts have held fall outside an in-house
lawyer's legal duties. See Costco, 47 Cal.4th at
743; Chicago Title Ins. Co. v. Superior Ct., 174
Cal.App.3d 1142 at 1151 (1985) ("It is settled that the
attorney-client privilege is inapplicable where the attorney
merely acts as a negotiator for the client, gives business
advice or otherwise acts as a business agent.") (citing
Aetna Cas. & Sur. Co. v. Superior Ct., 153
Cal.App.3d 467, 475 (1984)). Given that the Court has made a
tentative decision that the redacted information in GUARD
00008467 is not covered by the attorney-client privilege, the
Court hereby GRANTS Guardian's request to submit the
document for in camera review, pursuant to
Costco. See 47 Cal.4th at 738-39
("[N]othing in Evidence Code section prevents a party
claiming a privilege from making an in camera disclosure of
the content of a communication to respond to an argument or
tentative decision that the communication is not
privileged."). Guardian shall submit to the Court for
in camera review an unredacted version of the
document labeled GUARD 00008467, on or before July 11, 2016.
respect to Guardian's assertion of the attorney-client
privilege over the redacted portion of the document labeled
GUARD 00008554-56, Guardian's privilege log description
indicates that the redacted portion "recit[es]
Guardian's attorney's statements concerning the
distribution agreements' quotas." This description
is consistent when viewing the redacted portion in context
with the unredacted portions of the email. The sentence
preceding the redaction reads: "This is my best analysis
but the agreements were not always clear on quotas when
certain territories were expanded (in the early days) or when
a distributor was added." It is reasonable to presume
that the next (redacted) sentence related to legal advice
received from Guardian's attorney relating to the
interpretation of the agreements at issue, as the privilege
log indicates. See Zurich Am. Ins. Co. v. Superior
Ct., 155 Cal.App.4th 1485, 1494 (2007) (holding that the
corporate attorney-client privilege extends to confidential
communications between agents of the client regarding legal
advice and strategy, in which the corporation's attorneys
are not directly involved or which do not include excerpts of
direct communications from the attorneys.). At this time,
in camera review of this document is not
appropriate. See, e.g., Costco, 47 Cal.4th
725, 739 (2009) ("because the privilege protects a
transmission irrespective of its content, there should be no
need to examine the content in order to rule on a claim of
privilege"); State Farm Fire & Cas. Co. v. Superior
Ct., 54 Cal.App.4th 625, 640 (1997) ("We will not
take into consideration the actual privileged information in
aid of our determination"); Cornish v. Superior
Ct., 209 Cal.App.3d 467, 480 (1989) ("it is neither
customary nor necessary to review the contents of the
communication in order to determine whether the
[attorney-client] privilege applies."). However, to
permit the Court to further evaluate the claim of privilege,
Guardian is hereby ORDERED to submit a declaration from
current employee Johnny Green setting forth facts sufficient
to support the exercise of the attorney-client privilege over
the redacted portion of the document labeled GUARD
00008554-56, on or before July 15, 2016. See Citizens for
Ceres v. Superior Ct., 217 Cal.App.4th 889, 911 (2013)
("The party claiming the privilege usually makes the
preliminary showing via declarations.") (citing Weil &
Brown, Cal. Practice Guide: Civil Procedure Before Trial, The
Rutter Group, ¶ 8:192, p. 8C-52 (rev. # 1, 2012)).
Darin Lease's Electronically Stored Information
employee Darin Lease testified at his deposition that, at
Johnny Green's request, he "develop[ed] a
methodology to estimate distributor sales on a monthly basis
by territory" in the spring of 2013. Deposition of
Darin Lease ("Lease dep."), at 21:9-16. Mr.
Lease's electronically stored information (ESI) is
therefore relevant under Fed.R.Civ.P. 26(b)(1); as such,
Guardian had a duty to preserve it. See In re: Napster,
Inc. v. Hummer, 462 F.Supp.2d 1060, 1067 (N.D. Cal.
2006) ("As soon as a potential claim is identified, a
litigant is under a duty to preserve evidence which it knows
or reasonably should know is relevant to the action.").
Mr. Lease's ...