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Tetravue, Inc. v. St. Paul Fire & Marine Insurance Co.

United States District Court, S.D. California

March 15, 2017

TETRAVUE, INC. and PAUL BANKS, Plaintiffs,
v.
ST. PAUL FIRE & MARINE INSURANCE COMPANY, et al., Defendants. AND RELATED COUNTERCLAIMS

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO COMPEL SUPPLEMENTAL DISCOVERY RESPONSES AND DOCUMENT PRODUCTION [ECF NO. 55]

          Hon. Barbara L. Major United States Magistrate Judge.

         Currently before the Court is Defendant's February 6, 2017 “Motion to Compel Supplemental Discovery Responses and Document Production from Plaintiffs” [ECF No. 55-1 (Mot.”)] and Plaintiffs' February 13, 2017 opposition to the motion [ECF No. 60 (“Oppo.”)]. Having considered the briefing submitted by the parties and having reviewed all of the supporting exhibits, the Court GRANTS IN PART AND DENIES IN PART the motion.

         FACTUAL AND PROCEDURAL BACKGROUND

         Plaintiffs TetraVue and TetraVue's CEO Paul Banks brought this suit seeking damages from their insurance company, Defendant St. Paul Fire and Marine Insurance Co. (“St. Paul”), arising from St. Paul's alleged breach of duty to defend Plaintiffs against a lawsuit brought by a third party. See ECF No. 1 at 9. In 2008, Plaintiff Paul Banks left his former employer, General Atomics (“GA”), and founded TetraVue Inc. Id. at 11. In 2009, Mr. Banks sued GA for breach of contract and fraud, and GA cross-complained against TetraVue and Mr. Banks alleging that they had improperly used GA's trade secrets and non-trade secret confidential information to further TetraVue's business and solicit customers in competition with GA. Id. On January 6, 2011, Plaintiffs tendered to St. Paul the defense of the amended cross-complaint, and on January 25, 2011, St. Paul denied coverage and defense of Plaintiffs. Id. Plaintiffs defended the amended cross-complaint using their own resources, and the jury rendered a verdict for Mr. Banks on his complaint against GA, and for TetraVue and Mr. Banks against GA on the amended cross-complaint. Id. at 12-13.

         On February 24, 2011, Plaintiffs filed an action for declaratory relief in the San Diego Superior Court against Defendant St. Paul, and the trial court granted summary judgment in favor of Defendant. Id. at 13; see also ECF No. 22 at 2. On July 19, 2013, the California Court of Appeal reversed holding that Defendant had a duty to defend Plaintiffs in the underlying action against GA. ECF No. 1 at 13. Defendant reimbursed Plaintiffs for their past defense costs, and counterclaimed alleging that it was entitled to reimbursement of all or most of the defense costs it had paid. Id. On June 13, 2014, Plaintiffs filed the instant action in the San Diego County Superior Court alleging breach of the duty to defend, breach of contract, and breach of the implied covenant good faith and fair dealing. Id. at 9-15. On August 27, 2014, St. Paul answered, and on August 28, 2014, removed the action to this Court. Id. at 1-6, 22-27.

         On November 16, 2016, Defendant filed a motion to compel seeking, inter alia, to compel Plaintiffs to produce all non-privileged documents responsive to its Requests for Production (“RFP”) Nos. 1-15[1] and to provide supplemental responses to Interrogatory Nos. 3-14.[2] ECF No. 43-1 at 4-6, 8. On December 2, 2016, the Court granted in part and denied in part Defendant's motion, and required Plaintiffs to produce all responsive documents, except for documents from the underlying litigation that did not relate to GA's cross-claims against Plaintiffs, and to provide supplemental responses to Defendant's interrogatories. ECF No. 52 at 10-17.

         Plaintiffs subsequently served supplemental written responses and produced additional documents. See ECF No. 55-2, Declaration of Jared K. LeBeau (“LeBeau Decl.”) at 2-3; ECF No. 60-1, Declaration of Ty Tosdal (“Tosdal Decl.”) at 2. Specifically, on December 16, 2016, Plaintiff produced GA's “advertising materials, correspondence between counsel, discovery requests and responses, deposition transcripts of Paul Banks, motions in limine, trial briefs and admitted trial exhibits.” Tosdal Decl. at 2; see also LeBeau Decl. On January 23 and January 26, 2017, Plaintiffs produced additional documents from the underlying case, including nine responsive deposition transcripts, the exhibits from Mr. Bank's deposition, and 127 admitted trial exhibits. Id. Defendant claimed that Plaintiffs' supplemental production and interrogatory responses were deficient and filed the instant motion to compel. See Mot.

         LEGAL STANDARD

         The scope of discovery under the Federal Rules of Civil Procedure is defined as follows:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.

Fed. R. Civ. P. 26(b)(1).

         District courts have broad discretion to determine relevancy for discovery purposes. See Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002). District courts also have broad discretion to limit discovery to prevent its abuse. See Fed.R.Civ.P. 26(b)(2) (instructing that courts must limit discovery where the party seeking the discovery “has had ample opportunity to obtain the information by discovery in the action” or where the proposed discovery is “unreasonably cumulative or duplicative, ” “obtain[able] from some other source that is more convenient, less burdensome, or less expensive, ” or where it “is outside the scope permitted by Rule 26(b)(1)”).

         A party may request the production of any document within the scope of Rule 26(b). Fed.R.Civ.P. 34(a). “For each item or category, the response must either state that inspection and related activities will be permitted as requested or state with specificity the grounds for objecting to the request, including the reasons.” Id. at 34(b)(2)(B). The responding party is responsible for all items in “the responding party's possession, custody, or control.” Id. at 34(a)(1). Actual possession, custody or control is not required. Rather, “[a] party may be ordered to produce a document in the possession of a non-party entity if that party has a legal right to obtain the document or has control over the entity who is in possession of the document.” Soto v. City of Concord, 162 F.R.D. 603, 619 (N.D. Cal. 1995).

         An interrogatory may relate to any matter that may be inquired under Rule 26(b). Fed.R.Civ.P. 33(a)(2). “The grounds for objecting to an interrogatory must be stated with specificity, ” and any interrogatory not objected to must be answered fully in writing under oath. Fed.R.Civ.P. 33(b)(4).

         Pursuant to Federal Rule of Civil Procedure 37, “a party may move for an order compelling disclosure or discovery.” Fed.R.Civ.P. 37(a)(1). The party seeking to compel discovery has the burden of establishing that its request satisfies the relevance requirement of Rule 26. Soto, 162 F.R.D. at 610. Thereafter, the party opposing discovery has the burden of showing that the discovery should be prohibited, and the burden of “clarifying, explaining, and supporting its objections.” DIRECTV, Inc. v. Trone, 209 F.R.D. 455, 458 (C.D. Cal. 2002) (citing Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975)).

         DISCUSSION

         Defendant moves the Court to compel Plaintiffs to produce the requested documents in a usable format and supplement their discovery responses. Mot. at 11-20. Specifically, Defendant asks the Court to compel Plaintiffs to

1. [w]ithdraw their meritless objections based on their claimed inability to obtain the defense file from their prior counsel, as well as withdraw their qualified responses that they will supplement all responses once that file has been obtained;
2. [p]rovide further and complete supplemental responses to [Defendant's] Requests for Production Nos. 1-15;
3. [p]rovide further and complete supplemental responses to [Defendant's] Interrogatories Nos. 3-14, including identifying the specific documents they were asked to identify; and
4. [r]eview their December 2016 supplemental production, remove any nonresponsive documents, and organize any responsive ones based on which requests for production they are responsive to.

Id. at 20-21.

         Defendant asserts that the Court has previously ordered Plaintiffs to respond to the discovery at issue, that the documents in the possession of Mr. Greenstein, one of Plaintiffs' counsel in the underlying litigation, are in Plaintiffs' “control” for discovery purposes, that Plaintiffs' production does not comply with Fed.R.Civ.P. 34, and that Plaintiffs need to supplement their interrogatory responses. Id. at 11-20. In support, Defendant contends that Mr. Greenstein represented Plaintiffs in the underlying action and still represents them, and that any documents Mr. Greenstein obtained in connection with Plaintiffs' representation are in Plaintiffs' “control” and should be produced, if the documents are not privileged and are responsive to Defendant's RFPs. See id. at 11-13. Defendant further contends that Plaintiffs' production does not comply with the requirements of Fed.R.Civ.P. 34. Id. at 13-19. Defendant claims that the production was a “data dump, ” that Plaintiffs did not provide any meaningful index to locate responsive documents and did not establish that they produced documents in the format maintained in the ordinary course of business, that Plaintiffs' production contains a significant number of non-responsive documents, and Plaintiffs are in a ...


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