United States District Court, S.D. California
ORDER GRANTING PLAINTIFF TUNGSTEN HEAVY POWDER AND
PARTS, INC.'S EX PARTE APPLICATION FOR EXPEDITED
DISCOVERY [ECF NO. 5.]
WILLIAM V. GALLO, UNITED STATES MAGISTRATE JUDGE
to Rule 26(d), plaintiff Tungsten Heavy Powder and Parts,
Inc. (“Tungsten”) applies ex parte for
an Order permitting limited expedited discovery. (ECF No. 5.)
An untimely opposition was filed on November 10, 2017. (ECF
No. 8.)Having reviewed the papers and arguments
therein, Tungsten's Application is GRANTED.
2015, defendant Khem Precisions Machining, LLC
(“Khem”), a machining company in Richmond,
Virginia, ordered a large number of tungsten buffer weights
from Tungsten. (Sery Decl. ¶ 4, ECF No. 5-3.) Khem
accepted the buffer weights and ultimately used them to
manufacture finished assemblies for its end customer.
(Id. at ¶ 6.) To date, Khem has allegedly
refused to pay all amounts invoiced for the buffer weights
and threatened that it will sell or dispose of its assets to
prevent Tungsten from obtaining recovery through litigation.
(Id. at ¶ 7-9.)
September 14, 2017, Tungsten filed a Complaint and Summons
against Khem for breach of contract. (See ECF No.
1.) Tungsten believes Khem is actively taking steps to
dispose of assets to frustrate recovery in this action and
requests permission for expedited discovery to gather
information necessary to decide whether to seek preliminary
injunctive relief. (Yun Decl. ¶ 5-6, ECF No. 5-4.)
October 25, 2017, Tungsten filed a motion for expedited
discovery requesting: (1) Khem's financial accounting
records, including financial reports, profit and loss
statements, and balance sheets, since August 14, 2015; (2)
all documents related to any effort by Khem to obtain
bankruptcy protection; (3) all documents related to
Khem's efforts to sell, alienate, or otherwise dispose of
any of Khem's assets; (4) copies of Khem's document
retention policy; and (5) the deposition of a Khem designee
sufficiently knowledgeable about topics related to (1)-(4).
(Ex. A to Appl. 7:3-13, 12:8-18, ECF No. 5-2.) Tungsten also
seeks to depose a person motion knowledgeable about these
documents and topics.
Federal Rule of Civil Procedure 26(d), discovery generally
does not commence until parties to an action meet and confer
as prescribed by Federal Rule of Civil Procedure 26(f),
unless allowed by court order or agreement of the parties. A
court may permit early discovery if the requesting party
demonstrates good cause. Semitool, Inc. v. Tokyo Electron
America, Inc., 208 F.R.D. 273, 276 (N.D. Cal. 2002).
“Good cause may be found where the need for expedited
discovery, in consideration of the administration of justice,
outweighs the prejudice to the responding party.”
Id. In determining whether good cause justifies
expedited discovery, courts commonly consider the following
factors: “(1) whether a preliminary injunction is
pending; (2) the breadth of the discovery requests; (3) the
purpose for requesting the expedited discovery; (4) the
burden on the defendants to comply with the requests; and (5)
how far in advance of the typical discovery process the
request was made.” Am. LegalNet., Inc. v.
Davis, 673 F.Supp.2d 1063, 1067 (C.D. Cal. 2009);
Apple Inc. v. Samsung Elecs. Co., Ltd., 768
F.Supp.2d 1040, 1044 (N.D. Cal. 2011).
Court finds that the balance of factors favors Tungsten.
First, there is no motion for preliminary injunction pending,
which weighs against Tungsten. However, Tungsten has a need
to determine whether injunctive relief is necessary to ensure
Khem does not improperly dispose of its assets. See
Interserve, Inc. v. Fusion Garage PTE, Ltd., No.
C09-5812-JQ(PVT), 2010 U.S. Dist. LEXIS 6395, at *7, 2010 WL
143665, at *2 (N.D. Cal. Jan. 7, 2010) (“Expedited
discovery will allow plaintiff to determine whether to seek
an early injunction.”). Preliminary injunctions have
been granted in this District in such circumstances. See,
e.g., Odyssey Reinsurance Co. v. Nagby, No.
16-CV-3038-BTM(WVG), 2017 U.S. Dist. LEXIS 165582, 2017 WL
4432453 (S.D. Cal. Oct. 4, 2017). Second, the discovery
requested is limited to only one deposition and information
related to any efforts by Khem to dispose of assets. Third,
the deposition and documents sought are narrowly tailored to
determining whether Khem has or plans to dispose of assets to
prevent any recovery in this litigation. Fourth, the burden
on Khem is relatively minimal. Tungsten requests a single
deposition and documents that are readily obtainable and, as
Khem acknowledges, would have to be produced in the normal
course of the litigation. Any burden on Khem is outweighed by
the interests of justice. Fifth, discovery in the normal
course will commence in the next few months given that Khem
has filed an Answer and a combined Early Neutral Evaluation
and Case Management Conference has been scheduled. Thus,
while the instant request for discovery is early, it is not
extraordinarily so. This factor favors neither party.
Court disagrees Khem would be prejudiced by early discovery.
As Khem notes, the requested discovery is fair game and will
come forth during the course of discovery later in the case.
Given this acknowledgement, it is unclear how Khem will
suffer prejudice if inevitable discovery is taken
early. Khem certainly has not specifically set forth how it
would be prejudiced. The Court also disagrees that the nature
of Tungsten's requests will open every case to expedited
discovery motions. What sets this case apart is the purported
threat that Khem will take steps to thwart Plaintiff's
efforts to collect money it is owed. Not every case involves
such circumstances. And although Khem characterizes this
representation as a “bald assertion, ” it was
made in a sworn declaration filed under the penalty of
perjury and Rule 11 sanctions. Such declarations have
evidentiary value. Aside from calling this representation a
bald assertion, Khem has not countered it with a declaration
or other evidence.
the Court finds Tungsten has shown good cause for early
discovery. The information sought through the proposed
deposition and document production is relevant as to any
future request for preliminary injunctive relief and is
likely to assist the Court in proceeding with the litigation.
However, the Court finds the deposition should be limited in
duration. The Court determines that four hours should be
sufficient for Tungsten to inquire about any efforts by Khem
to dispose of assets.