United States District Court, S.D. California
LF CENTENNIAL LIMITED, a British Virgin Islands corporation, Plaintiff,
Z-LINE DESIGNS, INC., a Nevada corporation; and DOES 1-100, inclusive, Defendant.
(1) GRANTING PLAINTIFF'S EX PARTE MOTION FOR PROTECTIVE
ORDER [DKT. NO. 46]; (2) DETERMINING JOINT MOTION FOR
DETERMINATION OF DISCOVERY DISPUTE NO. 1 AND GRANTING IN PART
AND DENYING IN PART DEFENDANT'S MOTION TO COMPEL [DKT.
NO. 57]; AND (3) DETERMINING JOINT MOTION FOR DETERMINATION
OF DISCOVERY DISPUTE NO. 2 AND GRANTING PLAINTIFF'S
MOTION TO COMPEL [DKT. NO. 56].
Nita L. Stormes, United States Magistrate Judge
parties recently filed multiple discovery motions. First,
plaintiff LF Centennial, LTD (LFCL) filed a motion for
protective order to preclude the deposition of one of its
in-house counsel, Bonita Leung. Defendant Z-Line Designs then
filed a competing ex parte motion to extend the discovery
cutoff, and in it included substantive arguments regarding a
distinct discovery issue regarding requests for production
(RFPs) that Z-Line served on LFCL. The court ruled on the
discovery extension, ordered further briefing for the
protective order, and ordered that Z-Line's RFP issue be
briefed separately as “Joint Motion for Determination
of Discovery Dispute No. 1.”
before Joint Motion No. 1 was actually briefed, LFCL filed
another joint discovery motion regarding its own RFPs, which
the court construes as “Joint Motion for Determination
of Discovery Dispute No. 2.”
Procedural History Relevant to All Motions.
an action for breach of a licensing agreement that resulted
from patent litigation between the predecessor of LFCL and
Z-Line. After a year of litigation the parties entered into a
licensing agreement (Agreement) dated July 26, 2013, where
LFCL's predecessor Whalen Furniture Manufacturing, Inc.
(WFM), along with LFCL, granted a worldwide license to Z-Line
to manufacture and sell TV stands covered by the patents.
Z-Line agreed to pay a 5% royalty on U.S. sales in return.
Both LFCL and WFM are named as parties to the Agreement
because at the time it was entered into, LFCL was in the
process of purchasing WFM's assets, including the subject
patents. Once that purchase was completed, LFCL asserted that
the outstanding royalties were owed exclusively to LFCL. LFCL
now believes that Z-Line is not paying all royalties and
filed this action for breach of contract, breach of covenant
of good faith and fair dealing, and for an accounting.
filed a motion to dismiss this action for lack of
jurisdiction. It argued that WFM is an indispensable third
party under Rule 19 because WFM and LFCL are both parties to
the Agreement. Dkt. No. 35-1, p.7. Z-Line noted that
WFM's joinder would destroy diversity, which would
require a remand of this action to state court based on lack
of diversity jurisdiction. LFCL countered that although WFM
was initially a party to the Agreement, WFM's rights
terminated when LFCL purchased its assets, including the
patents at issue.
district judge found that LFCL made an evidentiary showing of
a valid transfer of all assets from WFM to LFCL:
In response to Z-Line's challenge to the validity of the
WFM assignments, LFCL comes forward with the declaration of
Bonita Leung, Sr. Legal Counsel for LFCL, who submits a copy
of the U.S. Patent and Trademark Office's January 30,
2014 Notice of Recordation of Assignment, showing that
assignor WFM assigned Patent Nos. ‘311 and ‘485
to assignee LFCL. The declaration also establishes that, in
May 2013, LFCL purchased all other assets of WFM.
Nov. 30, 2016 Order, Dkt. No. 41, p.3. The court found that
Z-Line failed to overcome LFCL's evidentiary showing and
noted that a valid assignment would negate Z-Line's Rule
19 arguments. Id. at pp.3-4. It denied the motion to
dismiss without prejudice to Z-Line refiling it, if Z-Line
ever discovered a valid basis to challenge the assignment of
the patents. Id. at p.4.
can obtain discovery of non-privileged information so long as
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
Fed. R. Civ. P. 26(b)(1). Discoverable information need not
be admissible. Id. Once the propounding party
establishes that the request seeks relevant information,
“[t]he party who resists discovery has the burden to
show discovery should not be allowed, and has the burden of
clarifying, explaining, and supporting its objections.”
Superior Commc'ns v. Earhugger, Inc.,
257 F.R.D. 215, 217 (C.D.Cal.2009); see Blankenship v.
Hearst Corp., 519 F.2d 418, 429 (9th Cir.1975)
(requiring defendants “to carry heavy burden of showing
why discovery was denied”).
Plaintiff's Motion for Protective
Discovery at Issue.
discovery Z-Line noticed a Rule 30(b)(6) deposition to depose
LFCL's person most knowledgeable (PMK). Z-Line thought
that Bonita Leung, the in-house counsel who supported
LFCL's opposition to the motion to dismiss with a
declaration, would be the Rule 30(b)(6) witness. When Z-Line
learned that the PMK witness would not be Ms. Leung, Z-Line
noticed Leung's personal deposition. Both the PMK and
Leung deposition notices contain 22 identical categories of
documents that each witness must produce at deposition. In
the notice for the PMK deposition, Z-Line explains that it