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1 KEKER, VAN NEST & PETERS LLP
JEFFREY R. CHANIN - # 103649
2 jchanin@keker.com
MICHELLE S. YBARRA - # 260697 ELECTRONICALLY
3 mybarra@keker.com
EDWARD A. BAYLEY - # 267532 F I L E D
Superior Court of California,
4 ebayley@keker.com County of San Francisco
633 Battery Street
5 San Francisco, CA 94111-1809 04/07/2020
Telephone: 415 391 5400 Clerk of the Court
BY: ERNALYN BURA
6 Facsimile: 415 397 7188 Deputy Clerk
7 Attorneys for Plaintiff CROWN BUILDING MAINTENANCE,
INC., a California Corporation, dba ABLE BUILDING
8 MAINTENANCE
9
10 BEFORE ADR SERVICES, INC.
11 CROWN BUILDING MAINTENANCE, Case No. CGC-18-566118
INC., a California Corporation, dba ABLE ADRS Case No. 19-3525-KJM
12 BUILDING MAINTENANCE,
REPLY IN SUPPORT OF ABLE’S
13 Plaintiff, MOTION FOR SANCTIONS
14 v. DISCOVERY (all Discovery Matters referred
to Hon. Kevin J. Murphy under Code Civ. Proc.
15 METRO SERVICES GROUP, JEFF § 638 per June 24, 2019 Order)
DACHENHAUS, MARK NOLAN and
16 DEREK SCHULZE, Motion: 108
Date: April 8, 2020
17 Defendants. Time: 8:00 a.m.
Referee: Hon. Kevin J. Murphy
18
19 Date Filed: April 26, 2018
Trial Date: May 4, 2020
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21
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23 REDACTED-PUBLIC VERSION OF
DOCUMENT SOUGHT TO BE SEALED
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1 TABLE OF CONTENTS
PAGES
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I. INTRODUCTION ...............................................................................................................6
3
II. DEFENDANTS MISSTATE THE LEGAL STANDARD ...............................................10
4
III. TERMINATING SANCTIONS ARE WARRANTED .....................................................12
5
A. Defendants fail to rebut that they spoliated relevant evidence. .............................12
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1. Defendants failed to take any steps to preserve relevant evidence. ...........12
7
2. Defendants have not rebutted Able’s showing that they lost and
8 destroyed relevant evidence. ......................................................................15
9 B. Defendants have not “affirmatively disproved” prejudice to Able. .......................19
10 C. Defendants’ discovery abuse additionally and independently warrants
terminating sanctions. ............................................................................................20
11
D. Terminating sanctions are necessary to cure the prejudice to Able and to
12 these proceedings. ..................................................................................................23
13 IV. ALTERNATIVELY, ISSUE SANCTIONS ARE NECESSARY.....................................25
14 V. CONCLUSION ..................................................................................................................25
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1 TABLE OF AUTHORITIES
2
3 Federal Cases Page(s)
4
Apple Inc. v. Samsung Elecs. Co.,
5 881 F. Supp. 2d 1132 (N.D. Cal. 2012) .................................................................................... 13
6 Apple Inc. v. Samsung Elecs. Co.,
888 F. Supp. 2d 976 (N.D. Cal. 2012) ...................................................................................... 15
7
Clear-View Techs., Inc. v. Rasnick,
8 No. 5:13-CV-02744-BLF, 2015 WL 2251005 (N.D. Cal. May 13, 2015) ............................... 13
9 Edwards v. Toys “R” Us,
10 527 F. Supp. 2d 1197 (C.D. Cal. 2007) .................................................................................... 18
11 Hynix Semiconductor Inc. v. Rambus Inc.,
897 F. Supp. 2d 939 (N.D. Cal. 2012) ...................................................................................... 13
12
Keithley v. Home Store.com, Inc.,
13 No. C-03-04447 SI (EDL), 2008 WL 3833384 (N.D. Cal. Aug. 12, 2008) ............................. 14
14 Micron Tech., Inc v. Rambus Inc.,
15 645 F.3d 1311 (2011) ................................................................................................................ 14
16 In re Napster, Inc. Copyright Litig.,
462 F. Supp. 2d 1060 (N.D. Cal. 2006) .............................................................................. 13, 14
17
Nat’l Ass’n of Radiation Survivors v. Turnage,
18 115 F.R.D. 543 (N.D. Cal. 1987) ........................................................................................ 13, 14
19 Philips Elecs. N. Am. Corp. v. BC Tech.,
773 F. Supp. 2d 1149 (D. Utah 2011) ....................................................................................... 15
20
21 SBM Site Services v. Garrett,
2011 WL 7563785 (D. Colo. June 13, 2011).............................................................................. 9
22
Surowiec v. Cap. Title Agency, Inc.,
23 790 F. Supp. 2d 997 (D. Ariz. 2011) ........................................................................................ 13
24 TPK Touch Sols., Inc. v. Wintek Electro-Optics Corp.,
No. 13-CV-02218-JST, 2013 WL 5289015 (N.D. Cal. Sept. 18, 2013)................................... 21
25
Zubulake v. UBS Warburg LLC,
26
220 F.R.D. 212 (S.D.N.Y. 2003) .............................................................................................. 13
27
28
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1 State Cases
2 Am. Indian Model Sch. v. Oakland Unified Sch. Dist.,
227 Cal. App. 4th 258 (2014) ................................................................................................... 18
3
4 Cedars-Sinai Med. Ctr. v. Superior Court,
18 Cal. 4th 1 (1998) .................................................................................................................. 13
5
Collisson & Kaplan v. Hartunian,
6 21 Cal. App. 4th 1611 (1994) ................................................................................................... 11
7 Creed-21 v. City of Wildomar,
18 Cal. App. 5th 690, 702 (2017) ....................................................................................... 10, 11
8
Do It Urself Moving & Storage, Inc. v. Brown, Leifer, Slatkin & Berns,
9
7 Cal. App. 4th 27 (1992) ......................................................................................................... 10
10
DuPont Merck Pharm. Co. v. Superior Court,
11 78 Cal. App. 4th 562 (2000), as modified (Jan. 25, 2000) ........................................................ 22
12 Electronic Funds Solutions, LLC v. Murphy,
134 Cal. App. 4th 1161 (2005) ................................................................................................. 24
13
Ellis v. Toshiba Am. Info. Sys., Inc.,
14
218 Cal. App. 4th 853 (2013) ................................................................................................... 13
15
People ex rel. Herrera v. Stender,
16 212 Cal. App. 4th 614 (2012), as modified (Jan. 16, 2013) ...................................................... 23
17 J.W. v Watchtower Bible & Tract Soc’y of New York, Inc.,
29 Cal. App. 5th 1142, 1169-1171 (2018) ................................................................................ 23
18
Jerry’s Shell v. Equilon Enters., LLC,
19 134 Cal. App. 4th 1058 (2005) ................................................................................................. 25
20
Juarez v. Boy Scouts of Am., Inc.,
21 81 Cal. App. 4th 377 (2000) ............................................................................................... 22, 25
22 Lang v. Hochman,
77 Cal. App. 4th 1225 (2000) ................................................................................................. 112
23
Liberty Mut. Fire Ins. Co. v. LcL Admin’rs, Inc.,
24 163 Cal. App. 4th 1093 (2008) ........................................................................................... 18, 24
25 Liberty Mut. Ins. Co. v. Superior Court,
26 10 Cal. App. 4th 1282 (1992) ................................................................................................... 13
27 Miranda v. 21st Century Ins. Co.,
117 Cal. App. 4th 913 (2004) ................................................................................................... 24
28
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1 Puritan Ins. Co. v. Superior Court,
171 Cal. App. 3d 877 (1985) .................................................................................................... 20
2
Quantum Cooking Concepts, Inc. v. LV Assocs., Inc.,
3
197 Cal. App. 4th 927 (2011) ................................................................................................... 17
4
R.S. Creative Inv. v. Creative Cotton, Ltd.,
5 75 Cal. App. 4th 486 (1999) ..................................................................................................... 10
6 Reeves v. MV Trans., Inc.,
186 Cal. App. 4th 666 (2010) ............................................................................................. 12, 13
7
Sauer v. Superior Court,
8 195 Cal. App. 3d 213 (1987) .................................................................................................... 24
9
Siry Inv., L.P. v. Farkhondehpour,
10 -- Cal. Rptr. 3d --, 2020 WL 1026822 (Cal. Ct. App. Mar. 3, 2020), as
modified on denial of reh’g (Mar. 23, 2020) .............................................................. 11, 20, 245
11
Stephen Slesinger, Inc. v. Walt Disney Co.,
12 155 Cal. App. 4th 736 (2007) ......................................................................................... 9, 11, 24
13 Visueta v. Gen. Motors Corp.,
14 234 Cal. App. 3d 1609 (1991) .................................................................................................. 18
15 Williams v. Russ,
167 Cal. App. 4th 1215 (2008) ....................................................................................... 6, 10, 20
16
Statutes
17
Code Civ. Proc. § 128.7 .................................................................................................................. 21
18
Code Civ. Proc. § 2023.010(b)-(i) .................................................................................................. 21
19
Code Civ. Proc. § 2031.280(a)........................................................................................................ 24
20
21 Rules
22 Cal. Rule Ct. 3.1306(a) ................................................................................................................... 17
23 Other Authorities
24 CACI 4401 ...................................................................................................................................... 25
25
26
27
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1 I. INTRODUCTION
2 Were there any doubt that severe nonmonetary sanctions are warranted in this case,
3 Defendants’ opposition briefing and recent en masse production of millions of new documents
4 remove it. Defendants 1 fail to rebut the overwhelming record showing that they spoliated
5 potentially relevant evidence, repeatedly and willfully abused the discovery process, and continue
6 to do so. Nor do Defendants even attempt to affirmatively disprove the resulting prejudice to
7 Able, as is their burden upon Able’s showing of spoliation. See Williams v. Russ, 167 Cal. App.
8 4th 1215, 1227 (2008). Instead, Defendants’ oppositions rest on transparent mischaracterizations
9 of the record and misstatements of law, in particular regarding the following:
10 Able has met and conferred on the issues raised in its motion. Defendants’ contention
11 that Able never met and conferred over the issues raised in its motion is false. See Metro Opp. at
12 25. Able made multiple efforts to meet and confer, including in October 2019, November 2019,
13 January 2020, and February 2020. Declaration of Jeffrey R. Chanin In Support of Able’s Reply
14 (“Chanin Decl.”) Exs. 3-8. 2 Able not only addressed Defendants’ repeated failure to comply with
15 numerous discovery obligations and court orders, including the February 26, 2019 order, but
16 insisted that Defendants remedy those deficiencies “or Able will be forced to move for
17 terminating and/or issue sanctions.” Id. Ex. 6. 3 Though Able did so, a party is not required to
18 meet and confer over non-compliance with discovery orders before moving for non-monetary
19 sanctions. See Cal. Practice Guide: Civ. Proc. Before Trial ¶ 8:2318. To use the Referee’s
20 phrasing, this is another example of “flat out incorrect and disingenuous” accusations of failure to
21 meet and confer. See Ind. Defs.’ Opp., Castricone Decl. Ex. J, at 5.
22
1
23 As used herein, “Metro” refers to Defendant Metro Services Group; “Individual Defendants”
refers to Defendants Schulze, Dachenhaus, and Nolan; and “Defendants” refers to Metro and the
24 Individual Defendants collectively. Able refers interchangeably to the opposition argument
submitted by Metro and that submitted by the Individual Defendants, as each has incorporated the
25 other’s argument.
2
Able was unable to meet and confer with Defendants on discovery matters in December 2019
26 due to Metro’s monthlong de facto stay. See Chanin Decl. ¶ 3 & Ex. 2.
3
27 As the Referee well knows, his appointment was preceded by a year of extensive meet-and-
confers regarding Defendants’ discovery misconduct. See Able’s July 19, 2019 Mot. to Compel re
28 Database at 2-7; Able’s July 15, 2019 Mot. to Compel re Devices at 1-7; Able’s May 7, 2019
Mot. to Continue Trial at 6-13.
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1 Defendants have repeatedly violated court orders. Defendants’ contention that there is no
2 evidence they violated any discovery order is also demonstrably false. See Ind. Defs.’ Opp. at 24-
3 28. Able’s exhaustive efforts to obtain compliance with longstanding discovery orders have been
4 repeatedly stymied. After misrepresenting the status of its document collection efforts, 4 Metro
5 was ordered on February 26, 2019 to produce all information responsive to certain outstanding
6 discovery requests by March 29, 2019. See Chanin Decl. Ex. 1-A. It failed to do so, forcing Able
7 to file another motion to compel. On July 26, Defendants falsely represented to the Referee that
8 their “data collection was complete.” See Chanin Decl. Ex. 17 at 3 (Metro’s July 26, 2019
9 Opposition letter brief). With the understanding that it would provide Able the documents that
10 were the subject of the Court’s February 26 order, on August 20, 2019 the Referee ordered
11 Defendants to produce their supposedly “complete” document collection database. See Chanin
12 Decl. Ex. 1-D. But Able’s subsequent review revealed that Defendants had failed to collect any
13 documents from key custodians, had applied absurdly restrictive search parameters ensuring
14 critical evidence would not be captured, and had included in the database tens of thousands of
15 junk emails. In short, Defendants had come nowhere near to providing Able access to an adequate
16 and complete document collection database, in violation of the August 12, 2019 order. See MPA 5
17 at 16-18, App. C. Defendants further violated the Referee’s Decision No. 1 compelling them to
18 definitively and finally identify their devices, see Chanin Decl. Ex. 1-C; Referee’s Decision No.
19 2, requiring (for the second time) a complete response to Special Interrogatory No. 13 regarding
20 Defendants’ document collection, id. Ex. 1-D; and Referee’s Decision No. 3, ordering Defendants
21 to produce the devices, id. Ex. 1-E. All of these violations are detailed in Able’s motion and the
22 supporting record. See MPA Parts II.D, IV.B.2.
23 Defendants still have not produced devices and documents. Defendants’ contention that
24 they have produced “every electronic device that Plaintiff requested” is also inaccurate. Ind.
25 Defs.’ Opp. at 24. The devices still missing include seven from Metro, three from Dachenhaus,
26
27 4
See Chanin Decl. Ex. 18 (Able’s July 19, 2019 Mot. to Compel) at 5; id., Bayley Decl. ¶ 10 &
Ex. 3.
28 5
“MPA” refers to the Memorandum of Points and Authorities in support of Able’s motion.
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1 four from Nolan, and six from Schulze—all dating from the period most critical to this litigation.
2 See MPA App. B. Defendants admit they have not collected responsive documents, information
3 from multiple other devices, accounts, and key custodians. See MPA App. C; Ex. 6 M (Oddo
4 PMQ Tr.) at 25:11-17, 26:10-25, 42:25-43:3, 64:13-19, 82:14-83:15, 86:3-10, 115:6-10.
5 Able cannot reconstruct the missing information. Defendants argue for the first time that
6 Able has Defendants’ missing evidence, or an adequate substitute, on its own computers. See Ind.
7 Defs.’ Opp. at 6. But a forensic analysis of Able’s computers will not reveal the substance of
8 material transferred to the Individual Defendants’ personal devices, and it certainly will not reveal
9 what information they later transmitted to Metro. See Ex. P (Crain Decl.) at 5-18.
10 Able’s good-faith discovery efforts have been met with stonewalling. Defendants attempt
11 to recast their two-year history of discovery abuse as “good-faith disagreement.” Metro Opp. at
12 24. The assertion beggars belief. To take just the most recent example, the Referee observed in
13 connection with Defendants’ motion to compel depositions that “Plaintiff’s attorneys bent over
14 backwards to accommodate” and “made good-faith efforts to coordinate,” only to be met with a
15 “pattern of not responding to [Able]’s communications.” Ind. Defs.’ Opp., Castricone Decl. Ex. L
16 at 8. Nor does Defendants’ stipulation to use of the Discovery Referee evidence their good faith,
17 as they contend. Ind. Defs.’ Opp. at 25. Making groundless claims of bias, Defendants sought to
18 withdraw their stipulation once it became clear that the Referee’s rulings would be no more
19 favorable than the Court’s. Chanin Decl. ¶ 12 & Ex. 9.
20 Defendants’ recent document dumps do not cure its discovery abuse. Since Able filed
21 this motion, Defendants have made multiple productions collectively containing millions of
22 documents, including six new volumes of documents after close of business on Friday, April 3
23 alone. Chanin Decl. ¶¶ 15-17 & Exs. 11-13. Burying Able in eleventh-hour “document dumps”
24 that require it to find responsive needles in the haystacks—the majority of which Defendants
25 maintain Able is not permitted to review in any event—does not constitute compliance with
26 court-ordered productions.
27
6
28 Except as otherwise specified, citations to “Ex.” are to exhibits attached to the Declaration of
Jay Rapaport in support of Able’s motion for sanctions.
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1 The merits, although immaterial here, are not in Defendants’ favor. Defendants spill
2 considerable ink arguing the merits of Able’s claims, while also arguing they are outside the
3 ambit of the Discovery Referee’s charge. Because Able’s claims are relevant only to whether
4 Defendants have spoliated information that would tend to lead to the discovery of admissible
5 evidence, and not the merits of those claims, Able will not address the merits here. Able has
6 already addressed them by way of the proper mechanism—in its opposition to Metro’s motion for
7 summary judgment. 7 Chanin Decl. ¶ 20 and Exs. 16-A, 16-B, 16-C. Suffice it to say, Defendants’
8 sweeping assertions that there are no trade secrets in the building maintenance industry have been
9 squarely rejected by multiple courts, including in other trade-secret litigation against Metro. See,
10 e.g., Chanin Decl. Ex. 19 (order preliminarily enjoining Metro from misappropriating industry
11 trade secrets); SBM Site Services v. Garrett, 2011 WL 7563785, at *9-10 (D. Colo. June 13,
12 2011) (finding janitorial services company’s customer and pricing information “include and/or
13 constitute SBM’s trade secrets”). Defendants’ duty to comply with their discovery obligations
14 does not turn on the strength of the parties’ claims or defenses, much less Defendants’ perception
15 of them. Rather, discovery sanctions enable a Court to protect the integrity of the process and
16 ensure that the factfinder can determine the merits. See Stephen Slesinger, Inc. v. Walt Disney
17 Co., 155 Cal. App. 4th 736, 762-63 (2007). Defendants’ misconduct has made that impossible
18 here.
19 Terminating sanctions are commensurate with Defendants’ dereliction. Defendants
20 argue that terminating sanctions are unjustified here because Defendants did not engage in the
21 even more egregious misconduct described in other cases, such as relying on forged documents or
22 destroying evidence of a defective part in a products-liability action. Ind. Defs.’ Opp. at 23-24;
23 Metro Opp. at 26-27. But California courts have declined to catalogue the types of misconduct
24 necessary to justify the imposition of terminating sanctions “because corrupt intent knows no
25 stylistic boundaries.” Slesinger, 155 Cal. App. 4th at 764 (internal citations omitted). Rather,
26 “[t]he essential requirement is to calibrate the sanction to the wrong.” Id. Here, the record
27 confirms that Defendants’ steadfast intransigence has tainted the entire litigation process and
28 7
The Individual Defendants did not move for summary judgment.
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1 terminating sanctions alone can fully remedy the harm.
2 II. DEFENDANTS MISSTATE THE LEGAL STANDARD
3 Able seeks terminating sanctions on two grounds, each subject to a different test. A
4 terminating sanction for the spoliation of evidence is warranted where the defendant’s actions
5 prejudice the plaintiff’s ability to prove an essential element of its claims or to controvert an
6 essential element of the asserted defenses. See MPA at 18. Where the plaintiff makes a prima
7 facie showing that the defendant destroyed evidence and that there is a “substantial probability”
8 the plaintiff’s ability to establish an essential element of its claim has been damaged, the burden
9 shifts to the defendant to affirmatively “disprove[e] prejudice.” Williams, 167 Cal. App. 4th at
10 1227. Where defendant’s evidence of lack of prejudice conflicts with the plaintiff’s, the Court
11 accepts the plaintiff’s evidence as true. Id.
12 Terminating sanctions for discovery abuse are independently warranted where the
13 defendant’s misconduct was willful and no lesser sanction will suffice. See Do It Urself Moving
14 & Storage, Inc. v. Brown, Leifer, Slatkin & Berns, 7 Cal. App. 4th 27, 36 (1992). In determining
15 the propriety of terminating sanctions for discovery abuse, the trial court considers the totality of
16 the circumstances, including the defendant’s conduct, the detriment to the plaintiff, and the
17 number of formal and informal attempts to obtain the discovery. Creed-21 v. City of Wildomar,
18 18 Cal. App. 5th 690, 702 (2017).
19 Where the spoliation was intentional or the defendant’s discovery abuse egregious,
20 violation of a prior court order is not a prerequisite to awarding terminating sanctions on either
21 ground. R.S. Creative Inv. v. Creative Cotton, Ltd., 75 Cal. App. 4th 486, 497 (1999). Defendants
22 concede as much. Metro Opp. at 19-20; Ind. Defs.’ Opp. at 23. However, Defendants misstate the
23 legal standards in other key respects.
24 First, Defendants incorrectly argue that terminating sanctions are unwarranted here
25 because “the evidence [Able] speculat[s] must have been taken and/or deleted does not constitute
26 a trade secret.” Ind. Defs.’ Opp. at 20. But the Court need not determine the merits of Able’s
27 claims to decide whether sanctions are proper; rather, “the trial court is required to consider the
28 evidence presented to determine whether a misuse of the discovery process has occurred.” See
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1 Dep't of Forestry & Fire Prot. v. Howell, 18 Cal. App. 5th 154, 185 n.15 (2017). Nor would
2 awarding terminating sanctions amount to an improper decision on the merits, as Defendants
3 contend. Ind. Defs.’ Opp. at 19. The California Court of Appeal has squarely rejected that
4 argument. See, e.g., Howell, 18 Cal. App. 5th at 185 n.15 (“[W]e do not believe the trial court’s
5 rulings on discovery sanctions are an improper decision on the merits of the case.”).
6 Second, the Individual Defendants suggest that terminating sanctions are unavailable
7 because they were previously sanctioned just once, and because Able itself was similarly
8 sanctioned. Ind. Defs.’ Opp. at 21. Not so. No prior lesser sanction is required where, as here, the
9 evidence points to irremediable harm or a considerable risk of recurrence. See, e.g., Siry Inv., L.P.
10 v. Farkhondehpour, -- Cal. Rptr. 3d --, 2020 WL 1026822, at *7 (Cal. Ct. App. Mar. 3, 2020), as
11 modified on denial of reh’g (Mar. 23, 2020). 8 The modest sanction against Able has no bearing
12 on whether terminating sanctions against Defendants are justified. See Slesinger, 155 Cal. App.
13 4th at 776 (“The earlier sanctions against Disney . . . provide no cover for SSI’s misconduct”).
14 Finally, Defendants argue that terminating sanctions are only appropriate for more serious
15 conduct than that at issue here. Metro Opp. at 26-27; Ind. Defs.’ Opp. at 23-24. But Defendants’
16 own authorities undermine their position. See, e.g., Collisson & Kaplan v. Hartunian, 21 Cal.
17 App. 4th 1611, 1618 (1994) (terminating sanctions appropriate after defendants violated just one
18 court order and “chose to ignore the many attempts, both formal and informal, made by plaintiff
19 to secure fair responses from them”); Lang v. Hochman, 77 Cal. App. 4th 1225, 1246-47 (2000)
20 (terminating sanctions justified where party spends “months avoiding or evading discovery,”
21 violates orders compelling production, and makes “disingenuous” representations of compliance).
22 All of the circumstances in those cases are present here.
23
24 8
See also Howell, 18 Cal. App. 5th at 191-92 (“[T]he trial court may impose terminating
sanctions as a first measure in extreme cases, or where the record shows lesser sanctions would be
25 ineffective.”); Collisson, 21 Cal. App. 4th at 1617-1622 (approving of terminating sanctions for
evasive discovery responses, although they were the defendants “‘first effort’ at drafting
26 responses,” because the defendants previously “ignore[d] the many attempts . . . made by plaintiff
to secure fair responses”).
27
Metro’s success in evading sanctions to date is immaterial. Where defendants engage in
28 the same underlying discovery misconduct, “the ineffectiveness of the monetary sanction against
[one defendant] applie[s] with equal force to all defendants.” Siry, 2020 WL 1026822, at *7.
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1 III. TERMINATING SANCTIONS ARE WARRANTED
2 Able has moved for terminating sanctions on the grounds that (1) Defendants spoliated
3 relevant evidence and prejudiced Able’s ability to pursue its claims; and (2) Defendants abused
4 the discovery process by disregarding their discovery obligations, violating court orders, and
5 serving false and evasive discovery responses. MPA at 25-26. Defendants have failed to rebut
6 that sanctions are warranted on either ground.
7 A. Defendants fail to rebut that they spoliated relevant evidence.
8 Contrary to Metro’s contention that Able’s spoliation claim is based only on “(1) no
9 litigation hold; [and] (2) [Metro’s] automatic e-mail deletion process,” Metro Opp. at 27, Able’s
10 motion is premised on additional grounds that Defendants have failed to rebut, including their
11 failure to take any steps to preserve potentially relevant information, intentional deletion of
12 relevant documents, and destruction of devices that contained the same.
13 1. Defendants failed to take any steps to preserve relevant evidence.
14 Defendants do not contest that spoliation includes the failure to preserve potentially
15 relevant evidence, or that their duty to preserve was triggered the moment litigation became
16 “reasonably foreseeable.” Reeves v. MV Trans., Inc., 186 Cal. App. 4th 666, 681 (2010). That
17 duty arose no later than May 26, 2017, when Able’s counsel wrote to assert the rights at issue in
18 this lawsuit. MPA at 11-12; 21-22. Yet despite their obligation, Defendants made no effort to
19 preserve potentially relevant evidence in May 2017 or at any other time, even after this suit was
20 filed. See MPA at 22-23, 25. Defendants’ failure to do so constitutes textbook spoliation. Their
21 arguments to the contrary are meritless.
22 First, Defendants expressly concede that litigation was reasonably foreseeable upon their
23 receipt of Able’s May 26, 2017 letter; they assert that upon receipt, “Metro instructed the
24 Individual Defendants that they were not to delete any files . . . or dispose of any hard copy
25 documents that might be relevant to the claims or defenses in this matter.” Ind. Defs.’ Opp. at 9.
26 If Metro thought it necessary to so instruct the Individual Defendants in May 2016, it follows that
27 Defendants all foresaw the present litigation with clarity by that time.
28 Metro’s insistence that the May 26 letter was not a “preservation letter” and therefore did
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1 not trigger preservation duties is baseless. Metro Opp. at 14. The duty to preserve is “an
2 affirmative one,” Nat’l Ass’n of Radiation Survivors v. Turnage, 115 F.R.D. 543, 557-58 (N.D.
3 Cal. 1987), triggered by objective foreseeability, see Reeves, 186 Cal. App. 4th at 681. 9
4 Numerous courts have rejected the notion that the duty to preserve depends on a plaintiff’s
5 statement of intent to sue. See, e.g., Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216
6 (S.D.N.Y. 2003) 10; Cedars-Sinai Med. Ctr. v. Superior Court, 18 Cal. 4th 1, 8 (1998). Similarly,
7 that a party does not expressly demand the preservation of evidence is immaterial. See id.; see
8 also Clear-View Techs., Inc. v. Rasnick, No. 5:13-CV-02744-BLF, 2015 WL 2251005, at *1
9 (N.D. Cal. May 13, 2015) (holding that the absence of a preservation demand “does not vitiate the
10 independent obligation of an adverse party to preserve such information”). 11 In other words, it is
11 Defendants’ affirmative duty to preserve evidence, not Able’s obligation to ensure they do so.
12 Second, Defendants contend that Metro’s owner’s verbal instruction to the Individual
13 Defendants not to delete documents satisfied the duty to preserve. Metro Opp. at 14; Ind. Defs.’
14 Opp. at 9. Far from it. Metro President and PMQ witness Michael Oddo described the sum total
15 of his instruction as follows:
16 I believe we had a conversation where the three [Individual Defendants]
named here, I asked them if they had taken anything that they weren’t
17
supposed to take, and they all said, No. And I said, Well, then don’t take
18 anything off your computers, and let’s just keep doing our business.
19 Ex. M (Oddo PMQ Tr.) at 15:12-18; see also id. at 22:7-12 (confirming this instruction was “the
20
9
21 That “contingencies” might be necessary before a plaintiff would file suit is unimportant,
provided litigation is “reasonably foreseeable” in the abstract. See Hynix Semiconductor Inc. v.
22 Rambus Inc., 897 F. Supp. 2d 939, 955 (N.D. Cal. 2012); see also Micron Tech., Inc v. Rambus
Inc., 645 F.3d 1311, 1320 (2011) (“Th[e] standard . . . is not so inflexible as to require that
23 litigation be imminent, or probable without significant contingencies . . . .” (internal quotation
marks omitted)).
24 10
Absent contrary California authority on discovery matters, federal decisions are persuasive
authority. See Liberty Mut. Ins. Co. v. Superior Court, 10 Cal. App. 4th 1282, 1288 (1992). That
25 rule applies with particular force in the e-discovery context, as “[t]here is little California case
law regarding discovery of electronically stored information.” See Ellis v. Toshiba Am. Info. Sys.,
26 Inc., 218 Cal. App. 4th 853, 861 n.6 (2013).
11
27 The authorities on this point are overwhelming and uncontroverted. See, e.g., Apple Inc. v.
Samsung Elecs. Co., 881 F. Supp. 2d 1132, 1137 (N.D. Cal. 2012); Surowiec v. Cap. Title
28 Agency, Inc., 790 F. Supp. 2d 997, 1005-06 (D. Ariz. 2011); In re Napster, Inc. Copyright Litig.,
462 F. Supp. 2d 1060, 1067-68 (N.D. Cal. 2006).
13
REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS
Case No. CGC-18-566118
1379673
1 only thing that Metro did to preserve and secure information for this litigation”). 12 That
2 Defendants find this verbal direction was a sufficient litigation hold is troubling. Oddo’s verbal
3 direction did nothing to insure the affirmative preservation of all potentially discoverable
4 evi
Preview
1 KEKER, VAN NEST & PETERS LLP JEFFREY R. CHANIN - # 103649 2 jchanin@keker.com MICHELLE S. YBARRA - # 260697 ELECTRONICALLY 3 mybarra@keker.com EDWARD A. BAYLEY - # 267532 F I L E D Superior Court of California, 4 ebayley@keker.com County of San Francisco 633 Battery Street 5 San Francisco, CA 94111-1809 04/07/2020 Telephone: 415 391 5400 Clerk of the Court BY: ERNALYN BURA 6 Facsimile: 415 397 7188 Deputy Clerk 7 Attorneys for Plaintiff CROWN BUILDING MAINTENANCE, INC., a California Corporation, dba ABLE BUILDING 8 MAINTENANCE 9 10 BEFORE ADR SERVICES, INC. 11 CROWN BUILDING MAINTENANCE, Case No. CGC-18-566118 INC., a California Corporation, dba ABLE ADRS Case No. 19-3525-KJM 12 BUILDING MAINTENANCE, REPLY IN SUPPORT OF ABLE’S 13 Plaintiff, MOTION FOR SANCTIONS 14 v. DISCOVERY (all Discovery Matters referred to Hon. Kevin J. Murphy under Code Civ. Proc. 15 METRO SERVICES GROUP, JEFF § 638 per June 24, 2019 Order) DACHENHAUS, MARK NOLAN and 16 DEREK SCHULZE, Motion: 108 Date: April 8, 2020 17 Defendants. Time: 8:00 a.m. Referee: Hon. Kevin J. Murphy 18 19 Date Filed: April 26, 2018 Trial Date: May 4, 2020 20 21 22 23 REDACTED-PUBLIC VERSION OF DOCUMENT SOUGHT TO BE SEALED 24 25 26 27 28 1 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 TABLE OF CONTENTS PAGES 2 I. INTRODUCTION ...............................................................................................................6 3 II. DEFENDANTS MISSTATE THE LEGAL STANDARD ...............................................10 4 III. TERMINATING SANCTIONS ARE WARRANTED .....................................................12 5 A. Defendants fail to rebut that they spoliated relevant evidence. .............................12 6 1. Defendants failed to take any steps to preserve relevant evidence. ...........12 7 2. Defendants have not rebutted Able’s showing that they lost and 8 destroyed relevant evidence. ......................................................................15 9 B. Defendants have not “affirmatively disproved” prejudice to Able. .......................19 10 C. Defendants’ discovery abuse additionally and independently warrants terminating sanctions. ............................................................................................20 11 D. Terminating sanctions are necessary to cure the prejudice to Able and to 12 these proceedings. ..................................................................................................23 13 IV. ALTERNATIVELY, ISSUE SANCTIONS ARE NECESSARY.....................................25 14 V. CONCLUSION ..................................................................................................................25 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 TABLE OF AUTHORITIES 2 3 Federal Cases Page(s) 4 Apple Inc. v. Samsung Elecs. Co., 5 881 F. Supp. 2d 1132 (N.D. Cal. 2012) .................................................................................... 13 6 Apple Inc. v. Samsung Elecs. Co., 888 F. Supp. 2d 976 (N.D. Cal. 2012) ...................................................................................... 15 7 Clear-View Techs., Inc. v. Rasnick, 8 No. 5:13-CV-02744-BLF, 2015 WL 2251005 (N.D. Cal. May 13, 2015) ............................... 13 9 Edwards v. Toys “R” Us, 10 527 F. Supp. 2d 1197 (C.D. Cal. 2007) .................................................................................... 18 11 Hynix Semiconductor Inc. v. Rambus Inc., 897 F. Supp. 2d 939 (N.D. Cal. 2012) ...................................................................................... 13 12 Keithley v. Home Store.com, Inc., 13 No. C-03-04447 SI (EDL), 2008 WL 3833384 (N.D. Cal. Aug. 12, 2008) ............................. 14 14 Micron Tech., Inc v. Rambus Inc., 15 645 F.3d 1311 (2011) ................................................................................................................ 14 16 In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d 1060 (N.D. Cal. 2006) .............................................................................. 13, 14 17 Nat’l Ass’n of Radiation Survivors v. Turnage, 18 115 F.R.D. 543 (N.D. Cal. 1987) ........................................................................................ 13, 14 19 Philips Elecs. N. Am. Corp. v. BC Tech., 773 F. Supp. 2d 1149 (D. Utah 2011) ....................................................................................... 15 20 21 SBM Site Services v. Garrett, 2011 WL 7563785 (D. Colo. June 13, 2011).............................................................................. 9 22 Surowiec v. Cap. Title Agency, Inc., 23 790 F. Supp. 2d 997 (D. Ariz. 2011) ........................................................................................ 13 24 TPK Touch Sols., Inc. v. Wintek Electro-Optics Corp., No. 13-CV-02218-JST, 2013 WL 5289015 (N.D. Cal. Sept. 18, 2013)................................... 21 25 Zubulake v. UBS Warburg LLC, 26 220 F.R.D. 212 (S.D.N.Y. 2003) .............................................................................................. 13 27 28 3 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 State Cases 2 Am. Indian Model Sch. v. Oakland Unified Sch. Dist., 227 Cal. App. 4th 258 (2014) ................................................................................................... 18 3 4 Cedars-Sinai Med. Ctr. v. Superior Court, 18 Cal. 4th 1 (1998) .................................................................................................................. 13 5 Collisson & Kaplan v. Hartunian, 6 21 Cal. App. 4th 1611 (1994) ................................................................................................... 11 7 Creed-21 v. City of Wildomar, 18 Cal. App. 5th 690, 702 (2017) ....................................................................................... 10, 11 8 Do It Urself Moving & Storage, Inc. v. Brown, Leifer, Slatkin & Berns, 9 7 Cal. App. 4th 27 (1992) ......................................................................................................... 10 10 DuPont Merck Pharm. Co. v. Superior Court, 11 78 Cal. App. 4th 562 (2000), as modified (Jan. 25, 2000) ........................................................ 22 12 Electronic Funds Solutions, LLC v. Murphy, 134 Cal. App. 4th 1161 (2005) ................................................................................................. 24 13 Ellis v. Toshiba Am. Info. Sys., Inc., 14 218 Cal. App. 4th 853 (2013) ................................................................................................... 13 15 People ex rel. Herrera v. Stender, 16 212 Cal. App. 4th 614 (2012), as modified (Jan. 16, 2013) ...................................................... 23 17 J.W. v Watchtower Bible & Tract Soc’y of New York, Inc., 29 Cal. App. 5th 1142, 1169-1171 (2018) ................................................................................ 23 18 Jerry’s Shell v. Equilon Enters., LLC, 19 134 Cal. App. 4th 1058 (2005) ................................................................................................. 25 20 Juarez v. Boy Scouts of Am., Inc., 21 81 Cal. App. 4th 377 (2000) ............................................................................................... 22, 25 22 Lang v. Hochman, 77 Cal. App. 4th 1225 (2000) ................................................................................................. 112 23 Liberty Mut. Fire Ins. Co. v. LcL Admin’rs, Inc., 24 163 Cal. App. 4th 1093 (2008) ........................................................................................... 18, 24 25 Liberty Mut. Ins. Co. v. Superior Court, 26 10 Cal. App. 4th 1282 (1992) ................................................................................................... 13 27 Miranda v. 21st Century Ins. Co., 117 Cal. App. 4th 913 (2004) ................................................................................................... 24 28 4 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 Puritan Ins. Co. v. Superior Court, 171 Cal. App. 3d 877 (1985) .................................................................................................... 20 2 Quantum Cooking Concepts, Inc. v. LV Assocs., Inc., 3 197 Cal. App. 4th 927 (2011) ................................................................................................... 17 4 R.S. Creative Inv. v. Creative Cotton, Ltd., 5 75 Cal. App. 4th 486 (1999) ..................................................................................................... 10 6 Reeves v. MV Trans., Inc., 186 Cal. App. 4th 666 (2010) ............................................................................................. 12, 13 7 Sauer v. Superior Court, 8 195 Cal. App. 3d 213 (1987) .................................................................................................... 24 9 Siry Inv., L.P. v. Farkhondehpour, 10 -- Cal. Rptr. 3d --, 2020 WL 1026822 (Cal. Ct. App. Mar. 3, 2020), as modified on denial of reh’g (Mar. 23, 2020) .............................................................. 11, 20, 245 11 Stephen Slesinger, Inc. v. Walt Disney Co., 12 155 Cal. App. 4th 736 (2007) ......................................................................................... 9, 11, 24 13 Visueta v. Gen. Motors Corp., 14 234 Cal. App. 3d 1609 (1991) .................................................................................................. 18 15 Williams v. Russ, 167 Cal. App. 4th 1215 (2008) ....................................................................................... 6, 10, 20 16 Statutes 17 Code Civ. Proc. § 128.7 .................................................................................................................. 21 18 Code Civ. Proc. § 2023.010(b)-(i) .................................................................................................. 21 19 Code Civ. Proc. § 2031.280(a)........................................................................................................ 24 20 21 Rules 22 Cal. Rule Ct. 3.1306(a) ................................................................................................................... 17 23 Other Authorities 24 CACI 4401 ...................................................................................................................................... 25 25 26 27 28 5 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 I. INTRODUCTION 2 Were there any doubt that severe nonmonetary sanctions are warranted in this case, 3 Defendants’ opposition briefing and recent en masse production of millions of new documents 4 remove it. Defendants 1 fail to rebut the overwhelming record showing that they spoliated 5 potentially relevant evidence, repeatedly and willfully abused the discovery process, and continue 6 to do so. Nor do Defendants even attempt to affirmatively disprove the resulting prejudice to 7 Able, as is their burden upon Able’s showing of spoliation. See Williams v. Russ, 167 Cal. App. 8 4th 1215, 1227 (2008). Instead, Defendants’ oppositions rest on transparent mischaracterizations 9 of the record and misstatements of law, in particular regarding the following: 10 Able has met and conferred on the issues raised in its motion. Defendants’ contention 11 that Able never met and conferred over the issues raised in its motion is false. See Metro Opp. at 12 25. Able made multiple efforts to meet and confer, including in October 2019, November 2019, 13 January 2020, and February 2020. Declaration of Jeffrey R. Chanin In Support of Able’s Reply 14 (“Chanin Decl.”) Exs. 3-8. 2 Able not only addressed Defendants’ repeated failure to comply with 15 numerous discovery obligations and court orders, including the February 26, 2019 order, but 16 insisted that Defendants remedy those deficiencies “or Able will be forced to move for 17 terminating and/or issue sanctions.” Id. Ex. 6. 3 Though Able did so, a party is not required to 18 meet and confer over non-compliance with discovery orders before moving for non-monetary 19 sanctions. See Cal. Practice Guide: Civ. Proc. Before Trial ¶ 8:2318. To use the Referee’s 20 phrasing, this is another example of “flat out incorrect and disingenuous” accusations of failure to 21 meet and confer. See Ind. Defs.’ Opp., Castricone Decl. Ex. J, at 5. 22 1 23 As used herein, “Metro” refers to Defendant Metro Services Group; “Individual Defendants” refers to Defendants Schulze, Dachenhaus, and Nolan; and “Defendants” refers to Metro and the 24 Individual Defendants collectively. Able refers interchangeably to the opposition argument submitted by Metro and that submitted by the Individual Defendants, as each has incorporated the 25 other’s argument. 2 Able was unable to meet and confer with Defendants on discovery matters in December 2019 26 due to Metro’s monthlong de facto stay. See Chanin Decl. ¶ 3 & Ex. 2. 3 27 As the Referee well knows, his appointment was preceded by a year of extensive meet-and- confers regarding Defendants’ discovery misconduct. See Able’s July 19, 2019 Mot. to Compel re 28 Database at 2-7; Able’s July 15, 2019 Mot. to Compel re Devices at 1-7; Able’s May 7, 2019 Mot. to Continue Trial at 6-13. 6 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 Defendants have repeatedly violated court orders. Defendants’ contention that there is no 2 evidence they violated any discovery order is also demonstrably false. See Ind. Defs.’ Opp. at 24- 3 28. Able’s exhaustive efforts to obtain compliance with longstanding discovery orders have been 4 repeatedly stymied. After misrepresenting the status of its document collection efforts, 4 Metro 5 was ordered on February 26, 2019 to produce all information responsive to certain outstanding 6 discovery requests by March 29, 2019. See Chanin Decl. Ex. 1-A. It failed to do so, forcing Able 7 to file another motion to compel. On July 26, Defendants falsely represented to the Referee that 8 their “data collection was complete.” See Chanin Decl. Ex. 17 at 3 (Metro’s July 26, 2019 9 Opposition letter brief). With the understanding that it would provide Able the documents that 10 were the subject of the Court’s February 26 order, on August 20, 2019 the Referee ordered 11 Defendants to produce their supposedly “complete” document collection database. See Chanin 12 Decl. Ex. 1-D. But Able’s subsequent review revealed that Defendants had failed to collect any 13 documents from key custodians, had applied absurdly restrictive search parameters ensuring 14 critical evidence would not be captured, and had included in the database tens of thousands of 15 junk emails. In short, Defendants had come nowhere near to providing Able access to an adequate 16 and complete document collection database, in violation of the August 12, 2019 order. See MPA 5 17 at 16-18, App. C. Defendants further violated the Referee’s Decision No. 1 compelling them to 18 definitively and finally identify their devices, see Chanin Decl. Ex. 1-C; Referee’s Decision No. 19 2, requiring (for the second time) a complete response to Special Interrogatory No. 13 regarding 20 Defendants’ document collection, id. Ex. 1-D; and Referee’s Decision No. 3, ordering Defendants 21 to produce the devices, id. Ex. 1-E. All of these violations are detailed in Able’s motion and the 22 supporting record. See MPA Parts II.D, IV.B.2. 23 Defendants still have not produced devices and documents. Defendants’ contention that 24 they have produced “every electronic device that Plaintiff requested” is also inaccurate. Ind. 25 Defs.’ Opp. at 24. The devices still missing include seven from Metro, three from Dachenhaus, 26 27 4 See Chanin Decl. Ex. 18 (Able’s July 19, 2019 Mot. to Compel) at 5; id., Bayley Decl. ¶ 10 & Ex. 3. 28 5 “MPA” refers to the Memorandum of Points and Authorities in support of Able’s motion. 7 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 four from Nolan, and six from Schulze—all dating from the period most critical to this litigation. 2 See MPA App. B. Defendants admit they have not collected responsive documents, information 3 from multiple other devices, accounts, and key custodians. See MPA App. C; Ex. 6 M (Oddo 4 PMQ Tr.) at 25:11-17, 26:10-25, 42:25-43:3, 64:13-19, 82:14-83:15, 86:3-10, 115:6-10. 5 Able cannot reconstruct the missing information. Defendants argue for the first time that 6 Able has Defendants’ missing evidence, or an adequate substitute, on its own computers. See Ind. 7 Defs.’ Opp. at 6. But a forensic analysis of Able’s computers will not reveal the substance of 8 material transferred to the Individual Defendants’ personal devices, and it certainly will not reveal 9 what information they later transmitted to Metro. See Ex. P (Crain Decl.) at 5-18. 10 Able’s good-faith discovery efforts have been met with stonewalling. Defendants attempt 11 to recast their two-year history of discovery abuse as “good-faith disagreement.” Metro Opp. at 12 24. The assertion beggars belief. To take just the most recent example, the Referee observed in 13 connection with Defendants’ motion to compel depositions that “Plaintiff’s attorneys bent over 14 backwards to accommodate” and “made good-faith efforts to coordinate,” only to be met with a 15 “pattern of not responding to [Able]’s communications.” Ind. Defs.’ Opp., Castricone Decl. Ex. L 16 at 8. Nor does Defendants’ stipulation to use of the Discovery Referee evidence their good faith, 17 as they contend. Ind. Defs.’ Opp. at 25. Making groundless claims of bias, Defendants sought to 18 withdraw their stipulation once it became clear that the Referee’s rulings would be no more 19 favorable than the Court’s. Chanin Decl. ¶ 12 & Ex. 9. 20 Defendants’ recent document dumps do not cure its discovery abuse. Since Able filed 21 this motion, Defendants have made multiple productions collectively containing millions of 22 documents, including six new volumes of documents after close of business on Friday, April 3 23 alone. Chanin Decl. ¶¶ 15-17 & Exs. 11-13. Burying Able in eleventh-hour “document dumps” 24 that require it to find responsive needles in the haystacks—the majority of which Defendants 25 maintain Able is not permitted to review in any event—does not constitute compliance with 26 court-ordered productions. 27 6 28 Except as otherwise specified, citations to “Ex.” are to exhibits attached to the Declaration of Jay Rapaport in support of Able’s motion for sanctions. 8 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 The merits, although immaterial here, are not in Defendants’ favor. Defendants spill 2 considerable ink arguing the merits of Able’s claims, while also arguing they are outside the 3 ambit of the Discovery Referee’s charge. Because Able’s claims are relevant only to whether 4 Defendants have spoliated information that would tend to lead to the discovery of admissible 5 evidence, and not the merits of those claims, Able will not address the merits here. Able has 6 already addressed them by way of the proper mechanism—in its opposition to Metro’s motion for 7 summary judgment. 7 Chanin Decl. ¶ 20 and Exs. 16-A, 16-B, 16-C. Suffice it to say, Defendants’ 8 sweeping assertions that there are no trade secrets in the building maintenance industry have been 9 squarely rejected by multiple courts, including in other trade-secret litigation against Metro. See, 10 e.g., Chanin Decl. Ex. 19 (order preliminarily enjoining Metro from misappropriating industry 11 trade secrets); SBM Site Services v. Garrett, 2011 WL 7563785, at *9-10 (D. Colo. June 13, 12 2011) (finding janitorial services company’s customer and pricing information “include and/or 13 constitute SBM’s trade secrets”). Defendants’ duty to comply with their discovery obligations 14 does not turn on the strength of the parties’ claims or defenses, much less Defendants’ perception 15 of them. Rather, discovery sanctions enable a Court to protect the integrity of the process and 16 ensure that the factfinder can determine the merits. See Stephen Slesinger, Inc. v. Walt Disney 17 Co., 155 Cal. App. 4th 736, 762-63 (2007). Defendants’ misconduct has made that impossible 18 here. 19 Terminating sanctions are commensurate with Defendants’ dereliction. Defendants 20 argue that terminating sanctions are unjustified here because Defendants did not engage in the 21 even more egregious misconduct described in other cases, such as relying on forged documents or 22 destroying evidence of a defective part in a products-liability action. Ind. Defs.’ Opp. at 23-24; 23 Metro Opp. at 26-27. But California courts have declined to catalogue the types of misconduct 24 necessary to justify the imposition of terminating sanctions “because corrupt intent knows no 25 stylistic boundaries.” Slesinger, 155 Cal. App. 4th at 764 (internal citations omitted). Rather, 26 “[t]he essential requirement is to calibrate the sanction to the wrong.” Id. Here, the record 27 confirms that Defendants’ steadfast intransigence has tainted the entire litigation process and 28 7 The Individual Defendants did not move for summary judgment. 9 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 terminating sanctions alone can fully remedy the harm. 2 II. DEFENDANTS MISSTATE THE LEGAL STANDARD 3 Able seeks terminating sanctions on two grounds, each subject to a different test. A 4 terminating sanction for the spoliation of evidence is warranted where the defendant’s actions 5 prejudice the plaintiff’s ability to prove an essential element of its claims or to controvert an 6 essential element of the asserted defenses. See MPA at 18. Where the plaintiff makes a prima 7 facie showing that the defendant destroyed evidence and that there is a “substantial probability” 8 the plaintiff’s ability to establish an essential element of its claim has been damaged, the burden 9 shifts to the defendant to affirmatively “disprove[e] prejudice.” Williams, 167 Cal. App. 4th at 10 1227. Where defendant’s evidence of lack of prejudice conflicts with the plaintiff’s, the Court 11 accepts the plaintiff’s evidence as true. Id. 12 Terminating sanctions for discovery abuse are independently warranted where the 13 defendant’s misconduct was willful and no lesser sanction will suffice. See Do It Urself Moving 14 & Storage, Inc. v. Brown, Leifer, Slatkin & Berns, 7 Cal. App. 4th 27, 36 (1992). In determining 15 the propriety of terminating sanctions for discovery abuse, the trial court considers the totality of 16 the circumstances, including the defendant’s conduct, the detriment to the plaintiff, and the 17 number of formal and informal attempts to obtain the discovery. Creed-21 v. City of Wildomar, 18 18 Cal. App. 5th 690, 702 (2017). 19 Where the spoliation was intentional or the defendant’s discovery abuse egregious, 20 violation of a prior court order is not a prerequisite to awarding terminating sanctions on either 21 ground. R.S. Creative Inv. v. Creative Cotton, Ltd., 75 Cal. App. 4th 486, 497 (1999). Defendants 22 concede as much. Metro Opp. at 19-20; Ind. Defs.’ Opp. at 23. However, Defendants misstate the 23 legal standards in other key respects. 24 First, Defendants incorrectly argue that terminating sanctions are unwarranted here 25 because “the evidence [Able] speculat[s] must have been taken and/or deleted does not constitute 26 a trade secret.” Ind. Defs.’ Opp. at 20. But the Court need not determine the merits of Able’s 27 claims to decide whether sanctions are proper; rather, “the trial court is required to consider the 28 evidence presented to determine whether a misuse of the discovery process has occurred.” See 10 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 Dep't of Forestry & Fire Prot. v. Howell, 18 Cal. App. 5th 154, 185 n.15 (2017). Nor would 2 awarding terminating sanctions amount to an improper decision on the merits, as Defendants 3 contend. Ind. Defs.’ Opp. at 19. The California Court of Appeal has squarely rejected that 4 argument. See, e.g., Howell, 18 Cal. App. 5th at 185 n.15 (“[W]e do not believe the trial court’s 5 rulings on discovery sanctions are an improper decision on the merits of the case.”). 6 Second, the Individual Defendants suggest that terminating sanctions are unavailable 7 because they were previously sanctioned just once, and because Able itself was similarly 8 sanctioned. Ind. Defs.’ Opp. at 21. Not so. No prior lesser sanction is required where, as here, the 9 evidence points to irremediable harm or a considerable risk of recurrence. See, e.g., Siry Inv., L.P. 10 v. Farkhondehpour, -- Cal. Rptr. 3d --, 2020 WL 1026822, at *7 (Cal. Ct. App. Mar. 3, 2020), as 11 modified on denial of reh’g (Mar. 23, 2020). 8 The modest sanction against Able has no bearing 12 on whether terminating sanctions against Defendants are justified. See Slesinger, 155 Cal. App. 13 4th at 776 (“The earlier sanctions against Disney . . . provide no cover for SSI’s misconduct”). 14 Finally, Defendants argue that terminating sanctions are only appropriate for more serious 15 conduct than that at issue here. Metro Opp. at 26-27; Ind. Defs.’ Opp. at 23-24. But Defendants’ 16 own authorities undermine their position. See, e.g., Collisson & Kaplan v. Hartunian, 21 Cal. 17 App. 4th 1611, 1618 (1994) (terminating sanctions appropriate after defendants violated just one 18 court order and “chose to ignore the many attempts, both formal and informal, made by plaintiff 19 to secure fair responses from them”); Lang v. Hochman, 77 Cal. App. 4th 1225, 1246-47 (2000) 20 (terminating sanctions justified where party spends “months avoiding or evading discovery,” 21 violates orders compelling production, and makes “disingenuous” representations of compliance). 22 All of the circumstances in those cases are present here. 23 24 8 See also Howell, 18 Cal. App. 5th at 191-92 (“[T]he trial court may impose terminating sanctions as a first measure in extreme cases, or where the record shows lesser sanctions would be 25 ineffective.”); Collisson, 21 Cal. App. 4th at 1617-1622 (approving of terminating sanctions for evasive discovery responses, although they were the defendants “‘first effort’ at drafting 26 responses,” because the defendants previously “ignore[d] the many attempts . . . made by plaintiff to secure fair responses”). 27 Metro’s success in evading sanctions to date is immaterial. Where defendants engage in 28 the same underlying discovery misconduct, “the ineffectiveness of the monetary sanction against [one defendant] applie[s] with equal force to all defendants.” Siry, 2020 WL 1026822, at *7. 11 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 III. TERMINATING SANCTIONS ARE WARRANTED 2 Able has moved for terminating sanctions on the grounds that (1) Defendants spoliated 3 relevant evidence and prejudiced Able’s ability to pursue its claims; and (2) Defendants abused 4 the discovery process by disregarding their discovery obligations, violating court orders, and 5 serving false and evasive discovery responses. MPA at 25-26. Defendants have failed to rebut 6 that sanctions are warranted on either ground. 7 A. Defendants fail to rebut that they spoliated relevant evidence. 8 Contrary to Metro’s contention that Able’s spoliation claim is based only on “(1) no 9 litigation hold; [and] (2) [Metro’s] automatic e-mail deletion process,” Metro Opp. at 27, Able’s 10 motion is premised on additional grounds that Defendants have failed to rebut, including their 11 failure to take any steps to preserve potentially relevant information, intentional deletion of 12 relevant documents, and destruction of devices that contained the same. 13 1. Defendants failed to take any steps to preserve relevant evidence. 14 Defendants do not contest that spoliation includes the failure to preserve potentially 15 relevant evidence, or that their duty to preserve was triggered the moment litigation became 16 “reasonably foreseeable.” Reeves v. MV Trans., Inc., 186 Cal. App. 4th 666, 681 (2010). That 17 duty arose no later than May 26, 2017, when Able’s counsel wrote to assert the rights at issue in 18 this lawsuit. MPA at 11-12; 21-22. Yet despite their obligation, Defendants made no effort to 19 preserve potentially relevant evidence in May 2017 or at any other time, even after this suit was 20 filed. See MPA at 22-23, 25. Defendants’ failure to do so constitutes textbook spoliation. Their 21 arguments to the contrary are meritless. 22 First, Defendants expressly concede that litigation was reasonably foreseeable upon their 23 receipt of Able’s May 26, 2017 letter; they assert that upon receipt, “Metro instructed the 24 Individual Defendants that they were not to delete any files . . . or dispose of any hard copy 25 documents that might be relevant to the claims or defenses in this matter.” Ind. Defs.’ Opp. at 9. 26 If Metro thought it necessary to so instruct the Individual Defendants in May 2016, it follows that 27 Defendants all foresaw the present litigation with clarity by that time. 28 Metro’s insistence that the May 26 letter was not a “preservation letter” and therefore did 12 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 not trigger preservation duties is baseless. Metro Opp. at 14. The duty to preserve is “an 2 affirmative one,” Nat’l Ass’n of Radiation Survivors v. Turnage, 115 F.R.D. 543, 557-58 (N.D. 3 Cal. 1987), triggered by objective foreseeability, see Reeves, 186 Cal. App. 4th at 681. 9 4 Numerous courts have rejected the notion that the duty to preserve depends on a plaintiff’s 5 statement of intent to sue. See, e.g., Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216 6 (S.D.N.Y. 2003) 10; Cedars-Sinai Med. Ctr. v. Superior Court, 18 Cal. 4th 1, 8 (1998). Similarly, 7 that a party does not expressly demand the preservation of evidence is immaterial. See id.; see 8 also Clear-View Techs., Inc. v. Rasnick, No. 5:13-CV-02744-BLF, 2015 WL 2251005, at *1 9 (N.D. Cal. May 13, 2015) (holding that the absence of a preservation demand “does not vitiate the 10 independent obligation of an adverse party to preserve such information”). 11 In other words, it is 11 Defendants’ affirmative duty to preserve evidence, not Able’s obligation to ensure they do so. 12 Second, Defendants contend that Metro’s owner’s verbal instruction to the Individual 13 Defendants not to delete documents satisfied the duty to preserve. Metro Opp. at 14; Ind. Defs.’ 14 Opp. at 9. Far from it. Metro President and PMQ witness Michael Oddo described the sum total 15 of his instruction as follows: 16 I believe we had a conversation where the three [Individual Defendants] named here, I asked them if they had taken anything that they weren’t 17 supposed to take, and they all said, No. And I said, Well, then don’t take 18 anything off your computers, and let’s just keep doing our business. 19 Ex. M (Oddo PMQ Tr.) at 15:12-18; see also id. at 22:7-12 (confirming this instruction was “the 20 9 21 That “contingencies” might be necessary before a plaintiff would file suit is unimportant, provided litigation is “reasonably foreseeable” in the abstract. See Hynix Semiconductor Inc. v. 22 Rambus Inc., 897 F. Supp. 2d 939, 955 (N.D. Cal. 2012); see also Micron Tech., Inc v. Rambus Inc., 645 F.3d 1311, 1320 (2011) (“Th[e] standard . . . is not so inflexible as to require that 23 litigation be imminent, or probable without significant contingencies . . . .” (internal quotation marks omitted)). 24 10 Absent contrary California authority on discovery matters, federal decisions are persuasive authority. See Liberty Mut. Ins. Co. v. Superior Court, 10 Cal. App. 4th 1282, 1288 (1992). That 25 rule applies with particular force in the e-discovery context, as “[t]here is little California case law regarding discovery of electronically stored information.” See Ellis v. Toshiba Am. Info. Sys., 26 Inc., 218 Cal. App. 4th 853, 861 n.6 (2013). 11 27 The authorities on this point are overwhelming and uncontroverted. See, e.g., Apple Inc. v. Samsung Elecs. Co., 881 F. Supp. 2d 1132, 1137 (N.D. Cal. 2012); Surowiec v. Cap. Title 28 Agency, Inc., 790 F. Supp. 2d 997, 1005-06 (D. Ariz. 2011); In re Napster, Inc. Copyright Litig., 462 F. Supp. 2d 1060, 1067-68 (N.D. Cal. 2006). 13 REPLY IN SUPPORT OF ABLE’S MOTION FOR SANCTIONS Case No. CGC-18-566118 1379673 1 only thing that Metro did to preserve and secure information for this litigation”). 12 That 2 Defendants find this verbal direction was a sufficient litigation hold is troubling. Oddo’s verbal 3 direction did nothing to insure the affirmative preservation of all potentially discoverable 4 evi