Motion to Compel in GOLDEN PACIFIC BANK, N.A. VS. BILLFLOAT, INC. ET AL| Trellis.Law

On January 11, 2016 a Motion-Secondary was filed involving a dispute between Billfloat, Inc., Gilbert, Ryan, O'Malley, Sean, Golden Pacific Bank, N.A., and Billfloat, Inc., Does 1 To 50, Inclusive, Gilbert, Ryan, O'Malley, Sean, for civil in the District Court of San Francisco County.

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treet, Suite 1200

WEBB LEGAL GROUP

WILLIAM T. WEBB #193832
JENNIFER D. SU #291603
155 Montgomery Street, Suite 1200

San Francisco, CA 94104 FILED ~
(415) 277-7200 Superior Court of California,
(415) 277-7210 (fax) ‘County of San Francisco
Attorneys for BILLFLOAT, INC., 11/08/2016
RYAN GILBERT AND SEAN O’MALLEY Clerk of the Court
BY:VANESSA WU
Deputy Clerk

SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SAN FRANCISCO
(Unlimited Jurisdiction)

GOLDEN PACIFIC BANK.N.A., ) Case No.: CGC-16-549804
)
Plaintiff, ) DISCOVERY
)
v. ) BILLFLOAT, INC.’S SEPARATE

) STATEMENT IN SUPPORT OF
BILLFLOAT, INC., RYAN GILBERT, SEAN ) OPPOSITION TO PLAINTIFF’S
O'MALLEY, DOES 1-50, ) MOTION TO COMPEL FURTHER
) RESPONSES TO SPECIAL
Defendants. ) INTERROGATORIES, SET ONE, AND
) REQUESTS FOR PRODUCTION OF
) DOCUMENTS, SETS ONE & TWO; AND
) REQUEST FOR SANCTIONS
BILLFLOAT, INC. )
Cross-Complainant, ) Date: November 22, 2016
) Time: 9:00 a.m.
Vv. ) Dept: 302

GOLDEN PACIFIC BANK, N.A., and ROES
1-50,

Cross-Defendants.

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SPECIAL INTERROGATORIES, SET ONE

Discovery request

Discovery Response at Issue

Moving Party’s Argument

SPECIAL
INTERROGATORY NO.
25:

IDENTIFY all loan
applications referred by YOU
to a DEPOSITORY
INSTITUTION, including, but
not limited to, the names of the
loan applicants, dates of
referrals, and amounts of the
loan applications.

RESPONSE:

Objection. This
interrogatory is vague,
ambiguous, overbroad, and
harassing. Moreover,
discovery and investigation are
incomplete, and further
information may become
known to Responding Party as
discovery and investigation
progress. Additionally, there
may be responsive information
that is subject to the
attorney/client or work product
privileges. Moreover, the loan
applicants are entitled to a
constitutional right to privacy.
See Schnabel v. Superior
Court (1993) 5 Cal 4th 704,
712. The requested
information is sensitive and
confidential. The loan
applicants should be notified
of the request and afforded the
opportunity to object to any
such disclosure. Valley Bank
of Nevada v. Superior Court
(1975) 15 Cal.3d 652, 658.
Responding Party agrees to
meet and confer with
Propounding Party to more
narrowly tailor this request in
order to ensure that
Propounding Party has the
information it needs to prepare
for trial and to protect
Responding Party from
harassment and overreaching.
Discussions will involve
Propounding Party advancing
the costs of such notification
and whether Propounding
Party is willing to indemnify
Responding Party for the costs

Here, BillFloat should be
compelled to provide a further
response to this interrogatory
because: (1) it is evasive and
incomplete by failing to
provide all of the information
requested by the interrogatory
(including by artificially
limiting the response to
referrals pursuant to the
SmartBiz program); (2)
BillFloat objection based upon
the Valley Bank case fails; and
(3) BillFloat has waived its
right to incorporate documents
by reference in its response.
The Topic Requested is
Relevant to GPB's Claims
and Reasonably Calculated
to Lead to the Discovery of
Admissible Evidence.

A further response to an
interrogatory may be ordered
if the response is evasive or
incomplete or if an objection
asserted is without merit. Code
of Civ. Proc. § 2030.300
(a)(1), (3). Under the
discovery statutes, information
is discoverable if it is
unprivileged and is either
relevant to the subject matter
of the action or reasonably
calculated to reveal admissible
evidence. (See, Code
Civ.Proc., $§2016(b), 2031;
Pacific Tel. & Tel. Co. v.
Superior Court, (1970) 2
Cal.3d 161, 172—173.) The
relevance of the subject matter
standard must be reasonably
applied; in accordance with the
liberal policies underlying the
discovery procedures, doubts

1 of responding to any as to relevance should
objections. Subject to, and generally be resolved in favor
2 notwithstanding, these of permitting discovery
3 objections, Responding Party _| (citation).’ (Pacific Tel., 2
states as follows. Cal.3d at 173.) The
4 Pursuant to Code of information sought in this
Civil Procedure section Interrogatory goes to support
5 2032.230, Responding Party GPB's claim for damages.
6 refers Propounding Party to Pursuant to the marketing
produced record BF-0006207, | agreements between the
7 which contains a list all loan parties, GPB has a right to
applications referred by share in fees recovered on
8 Responding Party to SmartBiz referrals to other
Propounding Party. lenders by BillFloat.
9 SUPPLEMENTAL Moreover, GPB has the right
10 RESPONSE: to receive 70 percent of SBA
Objection. This 7(a) loan referrals itself from
1 interrogatory is vague, BillFloat for businesses
< ambiguous, overbroad, and seeking a loan of $25,000 or
= 12 harassing. Moreover, less. GPB Complaint at §38(c).
= discovery and investigation are | GPB further has most favored
i 13 incomplete, and further nation rights for future small
7 14 information may become business lending products or
a known to Responding Party as | services that BillFloat may
g 15 discovery and investigation offer through a depository
é progress. Additionally, there | institution (these future
= 16 may be responsive information | products included SBA loans
2 that is subject to the in amounts greater than
4 7 attorney/client or work product | $25,000). GPB Complaint at J
18 privileges. Moreover, the loan | 16. BillFloat also failed to
applicants are entitled to a honor these contractual
19 constitutional right to privacy. | requirements of the Joint
See Schnabel v. Superior Marketing Agreement and
20 Court (1993) 5 Cal.4th 704, Amended Joint Marketing
1 712. The requested Agreements. See GPB
information is sensitive and Complaint, §§13-16,
22 confidential. The loan 38(a)-(c). For the Court's
applicants should be notified | convenience, a copy of the
23 of the request and afforded the | redacted (public) complaint of
opportunity to object to any Golden Pacific Bank is
24 such disclosure. Valley Bank | attached to this Separate
25 of Nevada v. Superior Court Statement as Attachment A.
(1975) 15 Cal.3d 652, 658. BillFloat's Response is
26 Responding Party agrees to Evasive and Incomplete.
meet and confer with BillFloat's second
27 Propounding Party to more supplemental response to see
8 narrowly tailor this request in _| three "data spreadsheets" it
2
BILLFLOAT, INC.’S SEPARATE STATEMENT IN SUPPORT OF OPPOSITION TO PLAINTIFF’S MOTION TO
COMPEL FURTHER RESPONSES TO SPECIAL INTERROGATORIES, SET ONE, AND REQUESTS FOR
PRODUCTION OF DOCUMENTS, SETS ONE & TWO; AND REQUEST FOR SANCTIONSWEBB LEGAL GROUP

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order to ensure that
Propounding Party has the
information it needs to prepare
for trial and to protect
Responding Party from
harassment and overreaching.
Discussions will involve
Propounding Party advancing
the costs of such notification
and whether Propounding
Party is willing to indemnify
Responding Party for the costs
of responding to any
objections. Subject to, and
notwithstanding, these
objections, Responding Party
states as follows.

Pursuant to Code of
Civil Procedure section
2030.230, Responding Party
refers Propounding Party to
produced record BF-0004514,
which contains a list all loan
applications referred by
Responding Party to
Propounding Party.
Responding Party also refers
Propounding Party to the data
spreadsheets that Responding
Party is producing that contain
a listing of all SBA 7(a) loan
applications referred by
Responding Party to other
lending institutions through
the SmartBiz program.
SECOND
SUPPLEMENTAL
RESPONSE:

By way of further
response, pursuant to Code of
Civil Procedure section
2030.230, Responding Party
refers Propounding Party to
the data spreadsheets that
contain a listing of all SBA
7(a) loan applications referred
by Responding Party to other

prepared is evasive and not
compliant with the terms of
the Interrogatory. First, the
response itself is evasive as it
only references loan referrals
made pursuant to the SmartBiz
program. GPB not only had a
right to “most favored nation
status” and referral fees for
loan products and future loan
products offered under the
SmartBiz Program, but it also
had a right to “most favored
nation status” for future small
business lending products
offered by BillFloat outside of
the program. Accordingly,
BillFloat’s response is evasive
and incomplete as it fails to
address all loan applications
referred by BillFloat to
Depository Institutions. See
GPB Complaint at Exh. 2, §
3.1, p.4; Exh. 3, § 3.1,

p.5. In addition, pursuant to
the License Agreement,
BillFloat agreed that Golden
Pacific Bank "shall have the
right of first refusal to provide
the financing required for any
future small business

lending products or services
[BillFloat] plans to offer that
are projected to yield at least
$500,000 in net profit per
year." GPB Complaint at J 14.
BillFloat’s attempt to rely on
Code of Civil Procedure
section 2030.230 to
incorporate documents by
reference into its response fails
because BillFloat failed to cite
to that Code section in its
initial response, citing instead
to the inapplicable Code
section 2032.230. Moreover,
the spreadsheets referenced

1 lending institutions through were specifically prepared for
the SmartBiz program, Bates BillFloat's response to this
2 numbers BF 0043850, BF interrogatory, are not business
3 0043851 and BF 0043852. records, and are not verified or
submitted under oath. In
4 addition, BillFloat's response
fails to comply with the
5 definition of "IDENTIFY" as
6 stated in the Special
Interrogatories, Set One. This
7 term is defined to require the
responding party to provide
8 the title of the document and
the date on the document.
9 Further, this
10 Interrogatory
additional information to be
1 included under the term
< "IDENTIFY," including the
= 12 names of the applicants, the
= date of the application, and the
i 13 amount of the loan.
7 14 BillFloat's response fails to
a comply with the definition of
5 15 "IDENTIFY."
5 BillFloat's Objections Fail.
= 16 Moreover, BillFloat has failed
2 to raise specific facts by
6 7 objection why the request is so
18 vague, ambiguous, or
overbroad that BillFloat
19 cannot provide a satisfactory
responses or how the
20 information sought by
1 interrogatory would pose an
undue burden on BillFloat to
22 produce. See Kirkland v.
Superior Court, 95
23 Cal.App.4th 92, 96-98 (2002)
(rejecting objection that
24 discovery requested was
25 vague, ambiguous, and
overbroad as there was good
26 cause for the request); Darbee
v. Superior Court, 208
27 Cal.App.2d 680, 687 (1962);
28 Mead Reins. Co. v. Superior
4
BILLFLOAT, INC.’S SEPARATE STATEMENT IN SUPPORT OF OPPOSITION TO PLAINTIFF’S MOTION TO
COMPEL FURTHER RESPONSES TO SPECIAL INTERROGATORIES, SET ONE, AND REQUESTS FOR
PRODUCTION OF DOCUMENTS, SETS ONE & TWO; AND REQUEST FOR SANCTIONSWEBB LEGAL GROUP

1 Court, 1888
Cal.App.3d 313, 322-323
2 (1986) ("Oppression must not
3 be equated with burden [] all
discovery imposes some
4 burden on the opposition [] to
support an objection of
5 oppression there must be some
6 showing that the ultimate
effect of the burden is
7 incommensurate with the
result sought.").
8 Accordingly, Defendant’s
objections on this basis fail.
9 BillFloat's third-party
10 objection based upon Valley
Bank of Nevada v. Superior
11 Court, 15 Cal.3d 652, 658
< necessarily fails. Here,
= 12 BillFloat itself alleges that the
= SmartBiz program was a
a 13 joint venture between Golden
7 14 Pacific and BillFloat. See
a FACC at § 33 (stating that a
g 15 joint venture was created and
é that as part of that joint
= 16 venture "The parties agreed to
=? share in certain costs and
a 7 revenues associated with the
18 ongoing improvement and
marketing of the GOLD
19 Standard and the SmartBiz
Brand IP and business
20 development that could lead to
1 more loan applications."). Id.
at JJ 165-169. Accordingly, it
22 defies reason how BillFloat
can now claim that Golden
23 Pacific is not entitled to the
very information directly
24 relevant to that alleged joint
25 venture.
BillFloat's objection to
26 producing the documents is
also unsupported by the Valley
27 Bank case. The Valley Bank
28 case is distinguishable from

the case at issue here. In that
case, the information requested
was from third-parties to
which the requesting party had
no right to review the
information sought outside of
the discovery process. Here,
by contrast, Golden Pacific is
owed referral fees based upon
the very transactions it is
seeking. Golden Pacific asserts
rights to the SmartBiz platform
itself. Indeed, it is BillFloat
that has alleged that the
SmartBiz program is a joint
venture between Golden
Pacific and BillFloat.

The Valley Bank case does not
stand for the proposition that
third-party notice is required
any time bank records
information is sought. Indeed,
Valley Bank stated that it was
not appropriate to remove
personally identifying
information from the bank
records. The court left

open the possibility that in
other circumstances, notice
would not be necessary if such
personally identifying
information can be removed or
perhaps a confidentiality order
issued. Jd. at 658 (“With
respect to bank customer
information, the trial court has
available certain procedural
devices which may be useful
in fashioning an appropriate
order that will, so far as
possible, accommodate
considerations of both
disclosure and confidentiality
(evidently inappropriate in the
instant case), ordering that the
information be sealed, to be
opened only on further order

of the court ...and the holding
of in camera hearings. There
may well be others which
ingenious courts and counsel
may develop.”).

BillFloat's objections on third
party privacy are evasive and
in bad faith. As set forth in the
Separate Statement, the
categories requested are
directly relevant to matters in
dispute in the litigation.
Moreover, as this Court has
stated, the protective order in
place in this case is in place to
address these third party
issues. This court stated, "That
is what confidentiality orders
are all about. Third-party
privacy is not going to trump
the ability of either party to get
documents in the

possession of the other party
about themselves." Onstott
Decl. at § 29, Exh. Y, pp.
20:2-8.

There is a stipulated protective
order in place in this action
requiring such confidentiality.
Onstott Decl. Exh. Z.
Accordingly, BillFloat's
objections based upon third
party privacy and Valley Bank
fail.

Here, BillFloat makes an
attorney-client privilege and
work product objection. This
objection has no merit.
BillFloat has not explained
how information concerning
the interrogatory is privileged.
Indeed, BillFloat's objection
that the interrogatory "may"
request privileged and

work product information fails
to even assert that there is
actually privileged information

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to protect. Here, BillFloat's
privilege and work product
objections fail because it has
not established that either of
those privileges apply to the
requested category. The
"burden of showing
preliminary facts necessary to
support the privilege lies with
the party claiming it."
Wellpoint Health Networks,
Inc. v. Superior Court
(McCombs), 59 Cal.App.4th
110, 123 (1997). BillFloat has
failed to show any privilege
applicable to any of the
information being sought.
BillFloat should be ordered to
provide a full and complete
response to this interrogatory
from January |, 2013 to the
present for all loan
applications referred by
BillFloat toa DEPOSITORY
INSTITUTION, including, but
not limited to, the names of the
loan applicants, dates of
referrals, and amounts of the
loan applications, and the
bates number(s), or other
means of identifying the
document, for each loan
document.

Reasons why motion should be denied

opportunity to assert his interests by objecting to disclosure, by seeking an appropriate protective
8

order, or by instituting other legal proceedings to limit the scope or nature of the matters sought to
be discovered.”) GPB misunderstands the holding of Valley Bank of Nevada to mean that the
protective order between the parties in this case is sufficient to protect the interests of the
customers when in fact Valley Bank of Nevada requires the customer to be notified and for the
customer to have “a fair opportunity to assert his interests by objecting to disclosure and seeking
an appropriate protective order.” No such protective order protecting these third party interests
exists.

sion that have to do about BillFloat. The

documents requested by BillFloat in GPB’s poss
documents requested here are not about GPB but pertain solely to third parties. GPB should not
be allowed to circumvent its requirement to provide the requisite notice to consumers.

Secondly, BillFloat stated in its verified responses that the requested information was
provided in the identified spreadsheets prepared by BillFloat. BillFloat’s response complies with
California Code of Civil Procedure section 2030.220, which provides that “a response to
interrogatories shall be as complete and straightforward as the information reasonable available to
the responding party permits.” Further, California Code of Civil Procedure section 2030.230
provides that:

If the answer to an interrogatory would necessitate the preparation or the making
of a compilation, abstract, audit, or summary of or from the documents of the
party to whom the interrogatory is directed, and if the burden or expense of
preparing or making it would be substantially the same for the party propounding
the interrogatory as for the responding party, it is a sufficient answer to that
interrogatory to refer to this section and to specify the writings from which the
answer may be derived or ascertained. This specification shall be in sufficient
detail to permit the propounding party to locate and to identify, as readily as the
responding party can, the documents from which the answer may be ascertained.
The responding party shall then afford to the propounding party a reasonable
opportunity to examine, audit, or inspect these documents and to make copies,
compilations, abstracts, or summaries of them.

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Onstott. (Declaration of Christopher Onstott, Ex. H.) GPB’s counsel now states that the
spreadsheets are “insufficient.”

As such, in order to address GPB’s requests, BillFloat spent a great deal of time and
electronically generated spreadsheets that provide all relevant information as to each loan at issue
(the “Spreadsheets”). The Spreadsheets include information regarding all risk factors for each
loan, so GPB can easily look at each loan and determine whether it is a loan it would have
underwritten if it had been referred to GPB, and from this information it can easily calculate its
alleged damages. BillFloat produced the Spreadsheets in native Microsoft Excel format, so that

the spreadsheets can be easily manipulated by GPB’s experts, and also so that the formulas used

to make the calculations can be double-checked. BillFloat has verified that the Spreadsheets

contain information as to all SmartBiz loans.

In producing the Spreadsheets, BillFloat invited GPB to review them and to let BillFloat

know whether they lacked in detail or specificity in some manner such that BillFloat could re-

produce them with information in a different format calculated to address GPB’s concerns. GPB

has never indicated how the Spreadsheets are deficient.

The motion to compel should be denied for these reasons.

Discovery request

Discovery Response at Issue

Moving Party’s Argument

SPECIAL
INTERROGATORY NO.
26:

IDENTIFY all loan
applications referred by YOU
that were funded by a
DEPOSITORY
INSTITUTION, including, but
not limited to, the names of the
loan applicants, dates of
referrals, and amounts of the
loan applications.

RESPONSE:

Here, BillFloat should be
compelled to provide a further
response to this interrogatory
because: (1) it is evasive and
incomplete by failing to
provide all of the information
requested by the interrogatory
(including by artificially
limiting the response to
referrals pursuant to the
SmartBiz program); (2)
BillFloat objection based upon
the Valley Bank case fails; and
(3) BillFloat has waived its
right to incorporate documents
by reference in its response.
For the same reasons as set
forth above with respect to
Special Interrogatory No. 25,
BillFloat should be compelled
to provide a full and complete
further response to this

1 applicants should be notified interrogatory.
of the request and afforded the | The Topic Requested is
2 opportunity to object to any Relevant to GPB's Claims
3 such disclosure. Valley Bank | and Reasonably Calculated
of Nevada v. Superior Court to Lead to the Discovery of
4 (1975) 15 Cal.3d 652, 658. Admissible Evidence.
Responding Party agrees to A further response to an
5 meet and confer with interrogatory may be ordered
6 Propounding Party to more if the response is evasive or
narrowly tailor this request in | incomplete or if an objection
7 order to ensure that asserted is without merit. Code
Propounding Party has the of Civ. Proc. § 2030.300
8 information it needs to prepare | (a)(1), (3). Under the
for trial and to protect discovery statutes, information
9 Responding Party from is discoverable if it is
10 harassment and overreaching. | unprivileged and is either
Discussions will involve relevant to the subject matter
1 Propounding Party advancing | of the action or reasonably
< the costs of such notification calculated to reveal admissible
= 12 and whether Propounding evidence. (See, Code
= Party is willing to indemnify Civ Proc., §§2016(b), 2031;
a 13 Responding Party for the costs | Pacific Tel. & Tel. Co. v.
7 14 of responding to any Superior Court, (1970) 2
a objections. Subject to, and Cal.3d 161, 172—173.) The
g 15 notwithstanding, these relevance of the subject matter
é objections, Responding Party | standard must be reasonably
= 16 states as follows. applied; in accordance with the
2 Pursuant to Code of liberal policies underlying the
4 7 Civil Procedure section discovery procedures, doubts
18 2032.230, Responding Party as to relevance should
refers Propounding Party to generally be resolved in favor
19 produced record BF-0006207, | of permitting discovery
which contains a list all loan (citation).’ (Pacific Tel., 2
20 applications referred by Cal.3d at 173.) The
1 Responding Party to information sought in this
Propounding Party. Interrogatory goes to support
22 SUPPLEMENTAL GPB's claim for damages.
RESPONSE: Pursuant to the marketing
23 Objection. This agreements between the
interrogatory is vague, parties, GPB has a right to
24 ambiguous, overbroad, and share in fees recovered on
25 harassing. Moreover, SmartBiz referrals to other
discovery and investigation are | lenders by BillFloat.
26 incomplete, and further Moreover, GPB has the right
information may become to receive loan referrals itself
27 known to Responding Party as | and further has most favored
28 discovery and investigation nation rights that BillFloat also
11
BILLFLOAT, INC.’S SEPARATE STATEMENT IN SUPPORT OF OPPOSITION TO PLAINTIFF’S MOTION TO
COMPEL FURTHER RESPONSES TO SPECIAL INTERROGATORIES, SET ONE, AND REQUESTS FOR
PRODUCTION OF DOCUMENTS, SETS ONE & TWO; AND REQUEST FOR SANCTIONSWEBB LEGAL GROUP

1 progress. Additionally, there | failed to honor. Complaint at
may be responsive information | (See GPB Complaint, §§13,
2 that is subject to the 38(a)-(b).)
3 attorney/client or work product | BillFloat's Response is
privileges. Moreover, the loan | Evasive and Incomplete.
4 applicants are entitled to a BillFloat's response to see
constitutional right to privacy. | three spreadsheets it prepared
5 See Schnabel v. Superior is insufficient and not
6 Court (1993) 5 Cal 4th 704, compliant with the terms of
712. The requested the Interrogatory. First, the
7 information is sensitive and response itself is evasive as it
confidential. The loan only references loan referrals
8 applicants should be notified made pursuant to the SmartBiz
of the request and afforded the | program and further only
9 opportunity to object to any references referrals made
10 such disclosure. Valley Bank | without regard to whether the
of Nevada v. Superior Court loan was funded. As set forth
Wl (1975) 15 Cal.3d 652, 658. above, GPB not only had a
< Responding Party agrees to right to “most favored nation
= 12 meet and confer with status” and referral fees for
= Propounding Party to more loan products and future loan
a 13 narrowly tailor this request in | products offered under the
7 14 order to ensure that SmartBiz Program, but it also
a Propounding Party has the had a right to “most favored
g 15 information it needs to prepare | nation status” for future loan
é for trial and to protect small business loan products
= 16 Responding Party from offered by BillFloat outside of
2 harassment and overreaching. | the program. In addition,
6 7 Discussions will involve pursuant to the License
18 Propounding Party advancing | Agreement, BillFloat agreed
the costs of such notification that Golden Pacific Bank
19 and whether Propounding "shall have the right of first
Party is willing to indemnify refusal to provide the
20 Responding Party for the costs | financing required for any
1 of responding to any future small business lending
objections. Subject to, and products or services
22 notwithstanding, these [BillFloat] plans to offer that
objections, Responding Party | are projected to yield at least
23 states as follows. $500,000 in net profit per
Pursuant to Code of year." GPB Complaint at § 14.
24 Civil Procedure section Accordingly, BillFloat’s
25 2030.230, Responding Party response is incomplete as it
refers Propounding Party to fails to address all loan
26 produced record BF-0004514 | applications referred by
which contains a list all loan BillFloat to Depository
27 applications referred by Institutions. See GPB
28 Responding Party to Complaint at Exh, 2, § 3.1,
12
BILLFLOAT, INC.’S SEPARATE STATEMENT IN SUPPORT OF OPPOSITION TO PLAINTIFF’S MOTION TO
COMPEL FURTHER RESPONSES TO SPECIAL INTERROGATORIES, SET ONE, AND REQUESTS FOR
PRODUCTION OF DOCUMENTS, SETS ONE & TWO; AND REQUEST FOR SANCTIONSWEBB LEGAL GROUP

1 Propounding Party. p-: Exh. 3, § 3.1, p.5.
Responding Party also refers BillFloat’s attempt to rely on
2 Propounding Party to the data | Code of Civil Procedure
3 spreadsheets that Responding | section 2030.230 to
Party is producing that contain | incorporate documents by
4 a listing of all SBA 7(a) loan reference into its response fails
applications referred by BillFloat waived its right to
5 Responding Party to other incorporate documents by
6 lending institutions through reference as it failed to cite to
the SmartBiz program. that Code section in its initial
7 SECOND response, citing instead to the
SUPPLEMENTAL inapplicable Code section
8 RESPONSE: 2032.230. Moreover, three
By way of further spreadsheets referenced were
9 response, pursuant to Code of | prepared for the purposes of
10 Civil Procedure section this interrogatory, are not
2030.230, Responding Party business records, and are not
1 refers Propounding Party to verified or submitted under
< the data spreadsheets that oath. In addition, BillFloat's
= 12 contain a listing of all SBA response fails to comply with
= 7(a) loan applications referred | the definition of "IDENTIFY"
a 13 by Responding Party to other _| as stated in the Special
7 14 lending institutions through Interrogatories, Set One. This
a the SmartBiz program, Bates term is defined to require the
3 15 numbers BF 0043850, BF responding party to provide
g 0043851 and BF 0043852. the title of the document and
= 16 the date on the document.
= Further, this specific
6 7 Interrogatory asked for
18 additional information to be
included under the term
19 "IDENTIFY," including the
names of the applicants, the
20 date of the application, and the
1 amount of the loan.
BillFloat's response fails to
22 comply with the definition of
"IDENTIFY."
23 BillFloat's Objections Fail.
Moreover, BillFloat has failed
24 to raise specific facts by
25 objection why the request is so
vague, ambiguous, or
26 overbroad that BillFloat
cannot provide a satisfactory
27 responses or how the
information sought by
28 B
BILLFLOAT, INC.’S SEPARATE STATEMENT IN SUPPORT OF OPPOSITION TO PLAINTIFF’S MOTION TO
COMPEL FURTHER RESPONSES TO SPECIAL INTERROGATORIES, SET ONE, AND REQUESTS FOR
PRODUCTION OF DOCUMENTS, SETS ONE & TWO; AND REQUEST FOR SANCTIONSWEBB LEGAL GROUP

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interrogatory would pose an
undue burden on BillFloat to
produce. See Kirkland v.
Superior Court, 95
Cal.App.4th 92, 96-98 (2002)
(rejecting objection that
discovery requested was
vague, ambiguous, and
overbroad as there was good
cause for the request); Darbee
y. Superior Court, 208
Cal.App.2d 680, 687 (1962);
Mead Reins. Co. v. Superior
Court, 1888 Cal.App.3d 313,
322-323 (1986) ("Oppression
must not be equated with
burden [] all discovery
imposes some burden on the
opposition [] to support an
objection of oppression there
must be some showing that the
ultimate effect of the burden is
incommensurate with the
result sought.").

Accordingly, Defendant’s
objections on this basis fail.
BillFloat's third-party
objection based upon Valley
Bank of Nevada v. Superior
Court, 15 Cal.3d 652, 658
necessarily fails. Here,
BillFloat itself alleges that the
SmartBiz program was a
joint venture between Golden
Pacific and BillFloat. See
FACC at § 33 (stating that a
joint venture was created and
that as part of that joint
venture "The parties agreed to
share in certain costs and
revenues associated with the
ongoing improvement and
marketing of the GOLD
Standard and the SmartBiz
Brand IP and business
development that could lead to
more loan applications."). /d.

at JJ 165-169. Accordingly, it
defies reason how BillFloat
can now claim that Golden
Pacific is not entitled to the
very information directly
relevant to that alleged joint
venture.

BillFloat's objection to
producing the documents is
also unsupported by the Valley
Bank case. The Valley Bank
case is distinguishable from
the case at issue here. In that
case, the information requested
was from third-parties to
which the requesting party had
no right to review the
information sought outside of
the discovery process. Here,
by contrast, Golden Pacific is
owed referral fees based upon
the very transactions it is
seeking. Golden Pacific asserts
rights to the SmartBiz platform
itself. Indeed, it is BillFloat
that has alleged that the
SmartBiz program is a joint
venture between Golden
Pacific and BillFloat.

information, the trial court has
available certain procedural
devices which may be useful
in fashioning an appropriate
order that will, so far as
possible, accommodate
considerations of both
disclosure and confidentiality
(evidently inappropriate in the
instant case), ordering that the
information be sealed, to be
opened only on further order
of the court ...and the holding
of in camera hearings. There
may well be others which
ingenious courts and counsel
may develop.”).

to address these third party
issues. This court stated, "That
is what confidentiality orders
are all about. Third-party
privacy is not going to trump
the ability of either party to get
documents in the possession of
the other party about
themselves." Onstott Decl. at J
29, Exh. Y, pp. 20:2-8.

Here, BillFloat makes an
attorney-client privilege and

mery Street, Suite 1200

a
&
=

work product objection. This
objection has no merit.
BillFloat has not explained
how information concerning
the interrogatory is privileged.
Indeed, BillFloat's objection
that the interrogatory "may"
request privileged and work
product information fails to
even assert that there is
actually privileged information
to protect. Here, BillFloat's
privilege and work product
objections fail because it has
not established that either of
those privileges apply to the
requested category. The
"burden of showing
preliminary facts necessary to
support the privilege lies with
the party claiming it."
Wellpoint Health Networks,
Inc. v. Superior Court
(McCombs), 59 Cal.App.4th
110, 123 (1997). BillFloat
has failed to show any
privilege applicable to any of
the information being sought.
BillFloat should be ordered to
provide a full and complete
response to this interrogatory
from January 1, 2013 to the
present for all loan
applications referred by
BillFloat toa DEPOSITORY
INSTITUTION that were
funded, including, but not
limited to, the names of the
loan applicants, dates of
referrals, and amounts of the
loan applications, and the
bates number(s), or other
means of identifying the
document, for each loan
document. This time period
corresponds to the
approximate time period

3) 277-7200

& &
=

applicable to the parties!
dealings with each other
pursuant to the contract
alleged in Golden Pacific's
Complaint. GPB Complaint at
§§ 12-32.

Reasons why motion should be denied

BillFloat’s objections are appropriate given the circumstances. The request is overbroad
and unduly burdensome. Firstly, GPB has made no efforts to provide notices to consumers as
required by California law for the information that it seeks. See Valley Bank of Nevada v.
Superior Court (1975) 15 Cal.3d 652, 658 (“Striking a balance between the competing
considerations, we conclude that before confidential customer information may be disclosed in
the course of civil discovery proceedings, the bank must take reasonable steps to notify its
customer of the pendency and nature of the proceedings and to afford the customer a fair
opportunity to assert his interests by objecting to disclosure, by seeking an appropriate protective
order, or by instituting other legal proceedings to limit the scope or nature of the matters sought to
be discovered.”) GPB misunderstands the holding of Valley Bank of Nevada to mean that the
protective order between the parties in this case is sufficient to protect the interests of the
customers when in fact Valley Bank of Nevada requires the customer to be notified and for the
customer to have “a fair opportunity to assert his interests by objecting to disclosure and seeking
an appropriate protective order.” No such protective order protecting these third party interests
exists.

Further, GPB takes the Court’s statement out of context, GPB states that “This court
stated, ‘That is what confidentiality orders are all about. Third-party privacy is not going to trump
the ability of either party to get documents in the possession of the other party about themselves.”
Onstott Decl. at § 29, Exh. Y, pp. 20:2-8.” However, the Court’s statement was with respect to
documents requested by BillFloat in GPB’s possession that have to do about BillFloat. The
documents requested here are not about GPB but pertain solely to third parties. GPB should not
be allowed to circumvent its requirement to provide the requisite notice to consumers.

interrogatories shall be as complete and straightforward as the information reasonable available to
18

mery Street, Suite 1200

a
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the responding party permits.” Further, California Code of Civil Procedure section 2030.230
provides that:

In fact, during meet and confer correspondence on the telephone between counsel, GPB’s counsel
suggested that that BillFloat address this issue by creating spreadsheets with the identifying loan
information redacted. Mr. Webb confirmed this in his April 4, 2016 meet and confer letter to Mr.
Onstott. (Declaration of Christopher Onstott, Ex. H.) GPB’s counsel now states that the
spreadsheets are “insufficient.”

In producing the Spreadsheets, BillFloat invited GPB to review them and to let BillFloat

know whether they lacked in detail or specificity in some manner such that BillFloat could re-

produce them with information in a different format calculated to address GPB’s concerns. GPB
has never indicated how the Spreadsheets are deficient.

The motion to compel should be denied for these reasons.

Discovery request Discovery Response at Issue | Moving Party’s Argument
SPECIAL RESPONSE: Here, BillFloat should be
INTERROGATORY NO. Objection. This compelled to provide a further

mery Street, Suite 1200

a
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=

27:

IDENTIFY all loan
applications referred by YOU
toa THIRD PARTY SBA
LENDER, including, but not
limited to, the names of the
loan applicants, dates of
referrals, and amounts of the
loan applications.

interrogatory is vague,
ambiguous, overbroad, and
harassing. Moreover,
discovery and investigation are
incomplete, and further
information may become
known to Responding Party as
discovery and investigation
progress. Additionally, there
may be responsive information
that is subject to the
attorney/client or work product
privileges. Moreover, the loan
applicants are entitled to a
constitutional right to privacy.
See Schnabel v. Superior
Court (1993) 5 Cal 4th 704,
712. The requested
information is sensitive and
confidential. The loan.
applicants should be notified
of the request and afforded the
opportunity to object to any
such disclosure. Valley Bank
of Nevada v. Superior Court
(1975) 15 Cal.3d 652, 658.
Responding Party agrees to
meet and confer with
Propounding Party to more
narrowly tailor this request in
order to ensure that
Propounding Party has the
information it needs to prepare
for trial and to protect
Responding Party from
harassment and overreaching.
Discussions will involve
Propounding Party advancing
the costs of such notification
and whether Propounding
Party is willing to indemnify
Responding Party for the costs
of responding to any
objections.
SUPPLEMENTAL
RESPONSE:

Objection. This

response to this interrogatory
because: (1) evasive and
incomplete by failing to
provide all of the information
requested by the interrogatory
(including by artificially
limiting the response to
referrals pursuant to the
SmartBiz program); (2)
BillFloat objection based upon
the Valley Bank case fails; and
(3) BillFloat has waived its
right to incorporate documents
by reference in its response.
For the same reasons as set
forth above with respect to
Special nterrogatory No. 25,
BillFloat should be compelled
to provide a full and complete
further response to this
interrogatory.

BillFloat's Response is
Evasive and Incomplete.

A further response to an
interrogatory may be ordered
if the response is evasive or
incomplete or if an objection
asserted is without merit. Code
of Civ. Proc. § 2030.300
(a)(1), (3). BillFloat's response
to see three spreadsheets it
prepared is insufficient and not
compliant with the terms of
the Interrogatory. First, the
response itself is evasive as it
only references loan referrals
made pursuant to the SmartBiz
program and further only
references referrals made
without regard to whether the
loan was funded. As set forth
above, GPB not only had a
right to “most favored nation
status” and referral fees for
loan products and future loan
products offered under the
SmartBiz Program, but it also

BILLFLOAT, INC.’S SEPARATE STATEMENT IN SUPPORT OF OPPOSITION TO PLAINTIFF’S MOTION TO.
COMPEL FURTHER RESPONSES TO SPECIAL INTERROGATORIES, SET ONE, AND REQUESTS FOR
PRODUCTION OF DOCUMENTS, SETS ONE & TWO; AND REQUEST FOR SANCTIONS1 interrogatory is vague, had a right to “most favored
ambiguous, overbroad, and nation status” for future loan
2 harassing. Moreover, small business loan products
3 discovery and investigation are | offered by BillFloat outside of
incomplete, and further the program. Accordingly,
4 information may become BillFloat’s response is
known to Responding Party as_| incomplete as it fails to
5 discovery and investigation address all loan applications
6 progress. Additionally, there | referred by BillFloat to
may be responsive information | Depository Institutions. See
7 that is subject to the GPB Complaint at Exh. 2, §
attorney/client or work product | 3.1, p.4; Exh. 3, § 3.1, p.5.
8 privileges. Moreover, the loan | Moreover, BillFloat’s
applicants are entitled to a reference to three “data
9 constitutional right to privacy. | spreadsheets” that are not
10 See Schnabel v. Superior business records
Court (1993) 5 Cal 4th 704, and are neither verified nor
Wl 712. The requested submitted under oath does not
< information is sensitive and comply with the requirements
= 12 confidential. The loan. of the interrogatory. BillFloat
applicants should be notified is being sued for fraud,
S 13 of the request and afforded the | nothing in their dealings to
se 14 opportunity to object to any date supports the notion that
5 such disclosure. Valley Bank | GPB should simply "trust"
a 15 of Nevada v. Superior Court BillFloat or its self-prepared
(1975) 15 Cal.3d 652, 658. spreadsheet. Indeed,
Es 16 Responding Party agrees to BillFloat’s attempt to rely on
2 meet and confer with Code of Civil Procedure
6 7 Propounding Party to more section 2030.230 to
18 narrowly tailor this request in| incorporate documents
order to ensure that by reference into its response
19 Propounding Party has the fails. BillFloat failed to cite to
information it needs to prepare | that Code section in its initial
20 for trial and to protect response, citing instead to the
a Responding Party from inapplicable Code section
harassment and overreaching. | 2032.230, thus waiving

Case Info

Judge

Andrew Y.S. Cheng Track Judge’s New Case

Case No.

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Document Filed Date

November 08, 2016

Case Filing Date

January 11, 2016

County

Parties

BILLFLOAT, INC. Cross Complainant
BILLFLOAT, INC. Defendant
DOES 1 TO 50, INCLUSIVE Defendant
GILBERT, RYAN Cross Complainant
GILBERT, RYAN Defendant
GOLDEN PACIFIC BANK, N.A. Cross Defendant
GOLDEN PACIFIC BANK, N.A. Plaintiff
GOLDEN PACIFIC, N.A., A NATIONAL BANK Cross Defendant
ISOLA, PETER LINDSEY Attorneys for Defendants
ISOLA, PETER LINDSEY Attorney for the Defendant
O'MALLEY, SEAN Cross Complainant
O'MALLEY, SEAN Defendant
ROES 1-50 Cross Defendant
SCHEIDT, BRUCE A Attorneys for Plaintiffs
SCHEIDT, BRUCE A Attorney for the Plaintiff
WEBB, WILLIAM T Attorneys for Defendants
WEBB, WILLIAM T Attorney for the Defendant
Jennifer Yu Attorneys for Defendants
Christopher Onstott Attorneys for Plaintiffs
Errol Dauis Attorneys for Plaintiffs
Jennifer Su Attorney
Ilene Block Attorneys for Plaintiffs
Gabriel Herrera Attorneys for Plaintiffs
Tyler Carle Attorneys for Defendants
Robert Lockwood Attorneys for Defendants
Nicolas Morgan Attorneys for Plaintiffs
Peter Brejcha Attorneys for Plaintiffs
Robert Hale Attorney
Neil Peretz Attorney
James Meister Attorney
BRUCE ARMSTRONG Attorney
Peter Lee Attorney

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Motion-Secondary: GOLDEN PACIFIC BANK, N.A. VS. BILLFLOAT, INC. ET AL

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