Motion for Judgment on the Pleadings in Galaxy International Purchasing,LLC vs. Ayaz Farooqui| Trellis.Law

On February 21, 2020 a Motion-Secondary was filed involving a dispute between Galaxy International Purchasing,Llc, and Farooqui, Ayaz, for 09 Limited - Rule 3.740 Collections Over $10,000 in the District Court of Fresno County.

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1 Stephen G. Recordon (SBN 91401)
E-FILED
Recordon & Recordon
2 11/30/2020 4:26 PM
225 Broadway, Suite 1900 Superior Court of California
3 San Diego, CA 92101 County of Fresno
Phone: (619) 232-1717 By: L. Vang, Deputy
4 Facsimile: (619) 232-5325
5
1sgrecordon@gmail.com

6 Attorneys for Defendant Ayaz Farooqui
7

8
SUPERIOR COURT OF THE STATE OF CALIFORNIA
9
COUNTY OF FRESNO – B.F. SISK COURTHOUSE
10

11 Galaxy International Purchasing, LLC, Case No. 20CECL01745

12 Plaintiff, Defendant’s Memorandum of Points and
v. Authorities in Support of Motion to Compel
13
a Further Response to Requests for
14 Ayaz Farooqui, et al Production

15 Defendants Date: February 11, 2021
Time: 8:30 A.M.
16
Dept: 404
17 Judge: Hon. Mark Cullers

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Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745
1 TABLE OF CONTENTS
2
I. Introduction ……………………………………………………………………………….. 1
3
II. Factual and Procedural Background ……………………………………………………… 2
4
III. Argument …………………………………………………………………………………. 8
5
A. This Court has the Authority to Compel Galaxy International
6
Purchasing, LLC to Produce the Documents Requested …………………………. 8
7
B. This Court Should Compel Production as to Request for
8
Production No. 8, as Plaintiff’s Objections Lack Merit ………………………….. 9
9
IV. Conclusion ……………………………………………………………………….……… 14
10

Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745
1 I. Introduction
2 Galaxy International Purchasing, LLC is, as their name would suggest, a debt buyer. As a
3 debt buyer, on every lawsuit Galaxy files, one of the core elements of Galaxy’s claims is whether
4 or not Galaxy actually owns all of the rights to the accounts they claim to own. If Galaxy cannot
5 establish each step of the “chain of title” for the account at issue, they cannot establish standing.
6 See Rowena F. Cockerell v. Title Insurance and Trust Company, 42 Cal 2d 284, 292 (1954) “[t]he
7 burden of proving an assignment falls upon the party asserting rights thereunder.”
8 Defendant Farooqui sent interrogatories to Galaxy asking Galaxy to identify every party in
9 the chain of title, and also sent request for production asking for the documents showing any
10 assignment of the account at issue. While Galaxy answered Mr. Farooqui’s interrogatories, it
11 appears that in their answers Galaxy omitted one or more parties who actually owned rights in the
12 account at issue. Defendant believes that Galaxy is withholding information and hiding the
13 identity of the party that actually owned the account at issue before Galaxy purchased it.
14 This brings us to the dispute before this Court: Mr. Farooqui sent requests for production
15 to Galaxy, asking them to produce the written documents associated with each assignment or
16 transfer of the account, in two different documents requests. Galaxy openly refused to produce the
17 contract which they claim governs their purchase of the account at issue and failed to produce
18 documents which are clearly referred to in the one of the few documents produced so far, and that
19 document, entitled “Bill of Sale.”
20 Even the Bill of Sale produced by Galaxy clearly contradicts Galaxy’s answers to Mr.
21 Farooqui’s interrogatories, indicating that the documents that Galaxy refuses to produce are likely
22 to show a hidden additional owner in the chain of title.
23 If Galaxy intends to continue to claim they have standing as an assignee of the rights to the
24 account at issue, Mr. Farooqui is entitled to copies of all of the documentation of that claimed
25 assignment. Galaxy cannot “cherry-pick” the documents they would like Mr. Farooqui to have
26 and withhold the rest.
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Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

-1-
1 Mr. Farooqui therefore asks this Court to order Galaxy to fully respond to Mr. Farooqui’s
2 document request, and to produce all of the responsive documents in Galaxy’s possession, custody
3 or control, including an electronic document in Excel format, entitled “Lot196finaldata.xls” and
4 the “Account Purchase Agreement,” both of which Galaxy admits they possess.
5 II. Factual and Procedural Background
6 On July 31, 2020, counsel for Mr. Farooqui served on counsel for Galaxy Mr. Farooqui’s
7 Requests for Production, Set One, and Special Interrogatories, Set One. 1 In Special Interrogatory
8 5, Mr. Farooqui asked Galaxy to identify “all other entities that have ever been assigned an interest
9 of any nature in the account,” and in Special Interrogatory 6, Mr. Farooqui asked for the dates on
10 which the account had been assigned. 2 In Requests for Production 8 and 9, Mr. Farooqui asked
11 for all documents related to the assignment of the account at issue. 3
12 On September 11, 2020, Galaxy responded to the above requests. 4
13 Inaccurate Interrogatory Responses
14 As to Special Interrogatory 5, Galaxy identified the following parties as part of the chain of
15 title: “WebBank, LendingClub Corporation, LC Trust I and Plaintiff.” 5 As to Special
16 Interrogatory 6, Galaxy claimed that on January 31, 2019, Galaxy purchased the account at issue
17 from LC Trust I. 6
18 Counsel for Mr. Farooqui has dealt with many debt buyer claims involving LendingClub
19 Corporation, and is well aware that LendingClub as a business practice does not retain title to the
20 accounts they service, but rather sells the rights to the profits from these accounts to third party
21 investors, in the form of “Member Payment Dependent Notes.” 7 LendingClub Corporation’s
22 website shows that LendingClub continues to engage in this business model: see
23 https://www.lendingclub.com/legal/prospectus. 8 Counsel for Mr. Farooqui is also aware that LC
24

25
1
Declaration of Stephen G. Recordon, ¶¶4-7 and Ex. A and B.
26 2
Declaration of Stephen G. Recordon, Ex. A, page 4, lines 24-28.
3
Declaration of Stephen G. Recordon, Ex. B, page 6, lines 7-13.
27 4
Declaration of Stephen G. Recordon, ¶¶8-13 and Ex. C and D.
5
Declaration of Stephen G. Recordon, Ex. C, page 5, lines 8-9.
28 6
Declaration of Stephen G. Recordon, Ex. C, page 5, lines 16-19.
7
Declaration of Stephen G. Recordon, ¶¶14-17 and Ex F.
8
Declaration of Stephen G. Recordon, ¶¶14-17 and Ex F.

Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

-2-
1 Trust I is a subsidiary of LendingClub Corporation, as LendingClub’s SEC filings state this. 9 As
2 LendingClub sells their “Member Payment Dependent Notes” to third party investors, a subsidiary
3 of LendingClub is unlikely to purchase these notes: this would make no economic sense.
4 In other words, Galaxy’s answers to Special Interrogatories 5 and 6 did not match
5 LendingClub’s past business practices, or their own website. There is clearly reason here to
6 believe that Galaxy’s responses were not accurate, and that there was actually a third party
7 “investor” who owned rights to Mr. Farooqui’s account prior to Galaxy.
8 This leads us to Galaxy’s document production.
9 Incomplete Document Production
10 On September 11, 2020, Galaxy also provided responses to Mr. Farooqui’s Requests for
11 Production, Set One. In Requests for Production 8 and 9, Mr. Farooqui requests documents
12 related to the assignment of the account at issue. As to both of these Requests, Galaxy responded
13 by raising meritless objections, and by producing a short series of documents as “Exhibit 4” in
14 their document production. 10
15 Exhibit 4, here attached to the Declaration of Stephen G. Recordon as Exhibit E and
16 submitted concurrently with this brief, contains no documents at all regarding any assignment of
17 the account at issue from WebBank, the alleged original creditor, to anyone. Instead, all of the
18 documents pertain to a single assignment, from someone to Galaxy International Purchasing, LLC.
19 On these documents, LendingClub Corporation is listed as “seller,” but as these documents, make
20 clear, LendingClub is not the actual owner of the accounts sold.
21 There are five documents in Exhibit 4: a document entitled “Account Purchase Package,”
22 which simply lists the name of LendingClub Corporartion, and Galaxy’s name and address, a
23 document entitled “Lending Club-Galaxy International Purchasing, LLC Closing Statement,”
24 which appears to document a wire transfer and has significant redactions, a “Bill of Sale” several
25 pages of text which appear to be a printout of text from an Excel spreadsheet, or similar document,
26 and finally, a document entitled “Account Schedule.”
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28
9
Declaration of Stephen G. Recordon, ¶¶18-19 and Ex G.
10
Declaration of Stephen G. Recordon ¶¶10-13 and Ex. D and E

Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

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1 The only document which lays out any of the terms of any assignment is the “Bill of Sale.”
2 This document defines a term, “Investors,” as “”an Account-holding individual or entity investor
3 selling it(s) Accounts through LendingClub and this Bill of Sale.” The Bill of Sale then states that
4 “…the Investors referenced in the data filed named Lot196finaldata.xls hereby transfer(s), sell(s),
5 convey(s), grant(s) and deliver(s) to Buyer…the Accounts as set forth in the Account Schedule…”
6 The Bill of Sale also states that “…each of the undersigned Investors has executed a
7 limited power of attorney between such Investor and LendingClub wherein a designated power is
8 for LendingClub to act as attorney-in-fact for such Investor and to execute this Bill of Sale on
9 behalf of such Investor…”
10 Below this text there are six signatures, and four are signed by LendingClub as “attorney-
11 in-fact.” The four entities who signed through powers of attorneys are: ACL Consumer Loan
12 Trust III, Consumer Lending Receivables Trust 2016-A, LendingClub Issuance Grantor Trust
13 Series 2016-NP1 and Webster Bank, NA.
14 From this text, the Bill of Sale makes clear that:
15 a. The parties who own accounts and are selling them to Galaxy are the “Investors” and are
not LendingClub, who is simply an agent;
16
b. The Investors all granted “powers of attorney” to LendingClub and stated that
17 LendingClub would sign on their behalf as attorney-in-fact
c. The four parties for whom LendingClub signed as attorney-in fact are ACL Consumer
18 Loan Trust III, Consumer Lending Receivables Trust 2016-A, LendingClub Issuance
19
Grantor Trust Series 2016-NP1 and Webster Bank, NA, and no one else;
d. There is a document entitled Lot196finaldata.xls, which specifies which of the above four
20 Investors owned each individual account; and
e. There is a document entitled “Account Schedule” which also describes the accounts sold.
21

22 If we look to the fifth document in Exhibit 4, it is entitled “Account Schedule” and simply
23 states that “An electronic account data file titled Lot196finaldata.xls containing detailed account
24 information will be provided to buyer on the closing date.” In other words, we need
25 “Lot196finaldata.xls” to find out which of the four Investors listed above owned Mr. Farooqui’s
26 account. The fourth document in Exhibit 4, which is several pages of a line of text, does appear to
27 be from an Excel sheet, but does not list any “Investors,” and does not list the name of any of the
28 four partiers who signed the Bill of Sale through a power of attorney.

Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

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1 First meet and confer attempt and response
2 On September 21, 2020, counsel for Mr. Farooqui sent a meet and confer letter to Galaxy
3 asking for the electronic document, Lot196finaldata.xls, and for the limited powers of attorney
4 described in the Bill of Sale. 11 Counsel specifically addressed the issue of possible redactions of
5 private information of other consumers: “We understand that you may need to redact the account
6 numbers and identifying information of other consumers whose data may appear in
7 Lot196finaldate.xls, and we are happy to discuss the mechanics of this procedure with you.” 12
8 On October 13, 2020, Galaxy responded to this first meet and confer letter, and claimed
9 not to have possession of the limited power of attorney documents referred to in the Bill of Sale.
10 Galaxy also claimed that the several page line of text contained in Exhibit 4 (Exhibit E to the
11 Declaration of Stephen G Recordon, the pages following the Bill of Sale) was extracted from the
12 electronic document Lot196finaldata.xls, and that the Investors were identified in that line of text
13 under the heading “Legal Name.” 13
14 There is a significant issue with this claim. The name found under that heading, “LC Trust
15 I,” does not match the names of the four Investors who signed the Bill of Sale through a power of
16 attorney.
17 Supplemental Response to Requests for Production 8 and 9
18 Along with their October 13, 2020 letter, Galaxy also send a Supplemental Response to
19 Requests for Production 8 and 9. 14 In this document, for the first time, Galaxy raised the claim
20 that the requests sought documents that were protected by attorney-client privilege, the work
21 product doctrine, and the trade secret privilege.
22 Galaxy also sent a “Privilege Log” which only described one document, a “Purchase and
23 Sale Agreement” that Galaxy had never mentioned before. 15 This document only addressed
24 claims of trade secret privilege, and said nothing about attorney-client privilege. There was also
25 no text explaining why this claim of privilege was not timely raised.
26

27 11
Declaration of Stephen G. Recordon ¶¶20-21 and Ex H
12
Id at page 4
28 13
Declaration of Stephen G. Recordon ¶¶22-23 and Ex I
14
Declaration of Stephen G. Recordon ¶24 and Ex J
15
Declaration of Stephen G. Recordon ¶25 and Ex K

Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

-5-
1 Second meet and confer attempt
2 On October 15, 2020, counsel for Mr. Farooqui sent a meet and confer letter to Galaxy
3 addressing their claims of privilege, and pointing out that the privilege log they sent made no
4 mention of any privilege other than trade secret, which was also waived as not timely raised under
5 Code of Civil Procedure §2031.300(a). 16
6 Counsel for Mr. Farooqui also pointed out that the documents in Exhibit 4 were not an
7 actual copy of Lot196finaldata.xls, and in any case did not identify any of the four “Investors”
8 listed in the Bill of Sale, meaning that there was obviously still information missing.
9 Counsel demanded not only Lot196finaldata.xls in its original format, but also the
10 “Purchase and Sale Agreement” that Galaxy withheld. Counsel offered to discuss redactions of
11 price or similar terms in order to allay any confidentiality concerns: “If your concern is a redaction
12 of the price or something similar, I invite you to contact us to discuss this. The contract as a whole
13 is transparently not a “trade secret,” but we are happy to discuss redaction of price, and in fact
14 would prefer redaction of the personal identifying information of consumers other than our client
15 (not to include the Investors).” 17
16 On October 23, 2020, Galaxy sent a letter in response. 18 In this letter, Galaxy took the
17 salutary step of dropping its claims of attorney-client privilege and work product as to the
18 “Purchase and Sale Agreement.” Galaxy also refused to turn over a copy of Lot196finaldata.xls as
19 Galaxy claimed they needed to protect the privacy rights of other consumers, despite the fact that
20 Mr. Farooqui already made clear in both meet and confer letter that she has no issue with
21 redactions of the information of other consumers: she just needs to see the list of Investors and the
22 associated account numbers.
23 Finally, Galaxy now made a new claim: that LC Trust I somehow had signed through a
24 power of attorney. In the Bill of Sale, only four parties signed through a “power of attorney,” and
25 LC Trust I was not one of them. Again, clearly something was amiss.
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27

28 16
Declaration of Stephen G. Recordon ¶¶26-27 and Ex L
17
Id at page 4
18
Declaration of Stephen G. Recordon ¶¶28-29 and Ex M

Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

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1 Second Supplemental Response to Request for Production 9
2 Together with Galaxy’s October 23, 2020 letter, Galaxy also sent a Second Supplemental
3 Response to Request for Production 9, in which Galaxy dropped their claim of attorney-client
4 privilege but maintained their untimely claim of trade secret privilege. 19
5 Third meet and confer attempt
6 On October 27, 2020, counsel for Mr. Farooqui sent their third meet and confer letter to
7 Galaxy, again offering to allow redactions of consumer information in Lot196finaldata.xls,
8 pointing out that there is no reason that Galaxy cannot email an Excel sheet as discovery, and
9 pointing out the discrepancies between the Bill of Sale and Galaxy’s new, completely unsupported
10 claim that LC Trust I alone was the Investor. 20
11 On November 12, 2020, Galaxy sent a final response to Mr. Farooqui’s meet and confer
12 letters, refusing to provide the “Purchase and Sale Agreement” and refusing to provide
13 Lot196finaldata.xls in its original form (with redactions) or any other new documents. 21 Galaxy
14 also claimed that “the Bill of Sale is signed on behalf of each investor represented in the sale
15 agreement.”
16 The problem, of course, is that not all of the signatures (six) are for Investors: only the
17 signatures signed as attorney-in-fact are for Investors. There are four of those signatures, and we
18 still do not know which of those parties was the one who owned Mr. Farooqui’s account. Galaxy
19 has now claimed that one (LC Trust I) or both (LC Trust I and LendingClub) of the other
20 signatures was for the investor who owned the account, but the Bill of Sale provides otherwise:
21 only parties who signed powers of attorneys, and for whom LendingClub signed as attorney-in-
22 fact are Investors.
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27

28 19
Declaration of Stephen G. Recordon ¶30 and Ex N
20
Declaration of Stephen G. Recordon ¶¶31-32 and Ex O
21
Declaration of Stephen G. Recordon ¶¶33-34 and Ex P

Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

-7-
1 See Bill of Sale: (“…each of the undersigned Investors has executed a limited power
2 of attorney between such Investor and LendingClub wherein a designated power is for
3 LendingClub to act as attorney-in-fact for such Investor and to execute this Bill of Sale on
4 behalf of such Investor…”). 22 LendingClub only executed the Bill of Sale in their capacity as
5 attorney-in-fact for four parties and LC Trust I was not one of them. We still do not know which
6 of these four parties was the true Investor who owned Mr. Farooqui’s account, and we are entitled
7 to the Purchase and Sale Agreement and the full copy of Lot196finaldata.xls so Mr. Farooqui can
8 see for himself who actually owned his account.
9 III. Argument
10 A. This Court has the Authority to Compel Galaxy International Purchasing, LLC to
11 Produce the Documents Requested
12
This Court has statutory authority to compel Velocity Investments, LLC to produce the
13
documents requested under CA Code of Civil Procedure § 2031.310(a), which provides that:
14
On receipt of a response to a demand for inspection, copying, testing, or sampling,
15 the demanding party may move for an order compelling further response to the
demand if the demanding party deems that any of the following apply:
16 (1) A statement of compliance with the demand is incomplete.
17
(2) A representation of inability to comply is inadequate, incomplete, or evasive.
(3) An objection in the response is without merit or too general.
18
Here, Mr. Farooqui has moved the Court for an order to compel on the basis of late filed
19
and meritless objections, on the basis of an incomplete statement of compliance, and a failure to
20
ultimately provide documents, as to Requests for Production 8 and 9.
21
This Court has the authority to enforce Code of Civil Procedure § 2031.310, and should
22
use its authority to do so by compelling Plaintiff to produce the documents that Defendant
23
requested.
24
//
25
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26
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27

28
22 Declaration of Stephen G. Recordon ¶¶12-13 and Ex E.

Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

-8-
1 B. This Court Should Compel Production as to Request for Production No. 8, as
2 Plaintiff’s Objections Lack Merit
3 The parties’ request and Galaxy’s final response were as follows:
4 Request for Production No. 8:
5 Any and all documents in your possession, custody or control which relate in any way to
6 the assignment, sale or transfer of the account on which your claim is based. Said documents
7 would include, but would not be limited to, bills of sale, assignments, future flow agreements and
8 participation agreements.
9 Plaintiff’s Supplemental Response to Request for Production No. 8 (October 13, 2020):
10 Plaintiff objects to this request on the basis and to the extent that it is unduly burdensom
11 (sic) as to the term “all documents.” Plaintiff further objects to this request on the basis that it
12 seeks documents that are proprietary and trade secret in nature and that are protected by the
13 attorney-client privilege and the attorney work-product doctrine. Plaintiff provided a privileg (sic)
14 log explaining its position. Discovery and investigation are ongoing. Plaintiff reserves the right to
15 supplement this responses (sic) to the extent that it locates non-privileged documents subject to
16 this request. Without waiving any objection, and subject thereto, Plaintiff responds as follows:
17 Plaintiff has conducted a reasonable and diligent search of its records; attached hereto as Exhibit 4,
18 Bill of Sale with Loan Schedule, are non-privileged documents responsive to this request that are
19 within Plaintiff’s possession and control.
20 Note: in a letter dated October 23, 2020, 23 Galaxy withdrew their claim of attorney-client
21 privilege and work product as to Request for Production 9. It is unclear whether Galaxy intended
22 to withdraw this claim for the nearly identical Request 8 as well.
23 Argument:
24 Plaintiff Velocity Investments makes three objections, “unduly burdensome,” and two
25 untimely claims of privilege, one of which may have been abandoned already.
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Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

-9-
1 Unduly Burdensome
2 Velocity claims that the term “all documents” is somehow unduly burdensome. This is a
3 request for all documents that fit in a given category, Code of Civil Procedure §2031.210(a)
4 anticipates that parties may request a category of documents, rather than a single document (“shall
5 respond…to each item or category of items…”). Furthermore, our request is narrow: we requested
6 here documents related to a single transactional category (assignment), of a single account. This is
7 a narrow, closed universe of documents, and is hardly “unduly burdensome.”
8 Attorney-client privilege
9 Given that Galaxy has abandoned this claim for the exact same group of documents in
10 Request for Production 9, it is unclear whether Galaxy intended to do the same for Request 8. Out
11 of an abundance of caution, Mr. Farooqui simply notes that this objection was not raised in
12 Galaxy’s initial response, making it untimely, and was not addressed in Galaxy’s Privilege Log.
13 Galaxy has not identified any communication from any attorney to any client, and it is not even
14 clear whether any attorney hired by Galaxy was involved in any capacity in drafting any of the
15 documents requested. Galaxy has not stated any basis for their claim and appears to have already
16 attempted to abandon this claim. There is simply nothing here.
17 Trade Secret
18 There are multiple issues with Velocity’s claim of a “trade secret” privilege.
19 Untimely
20 The first is that this claim was not timely raised. There is no mention of a trade secret in
21 Galaxy’s initial response; 24 it was not until October 13, well after Galaxy’s time to respond
22 expired, that this claim was raised. 25
23 Under Code of Civil Procedure §2031.300(a), any objection, including claims of privilege,

24 are waived if not timely raised. Galaxy cannot wait until their time to respond expires and then at

25 their leisure claim a document is a “trade secret.” Galaxy must raise this qualified privilege within

26 their time to do so, or it is waived. See Stadish v. Sup Ct, 71 Cal App 4th 1130 (1999).

27 ///

28
23
Declaration of Stephen G. Recordon, ¶¶28-29 and Ex M.
24
Declaration of Stephen G. Recordon, ¶¶10-11 and Ex D.

Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

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1 Not an owner
2 Second, it is not at all clear that Galaxy is an “owner” of any trade secret. Under Evidence
3 Code §1060, only the “owner” of a trade secret may refuse its disclosure. The only document that
4 Galaxy claims is a “trade secret” is the Purchase and Sale Agreement.” We have no idea who
5 actually wrote this contract: Galaxy may be claiming as a “trade secret” a contract actually written
6 by LendingClub. It is not enough to simply claim that Galaxy possesses knowledge they would
7 like to keep secret: even a thief who stole a trade secret has that. Even employees who actually
8 create trade secrets are not necessarily owners of the trade secret: see Labor Code §2870, see also
9 Solomons v. United States, 137 U.S. 342, 346 (1890). Galaxy may not claim that LendingClub’s
10 procedures and documents are somehow Galaxy’s trade secret: trade secrets are intellectual
11 property and have a real owner, which is likely to be the party that actually created the process. or
12 compiled the information in question.
13 There are less restrictive means to protect Galaxy’s discount and purchase price
14 Galaxy claims that their “purchasing process” is a secret, as well as their discount rate and
15 price. The “purchasing process” is likely a bidding process actually created by the seller; in any
16 case Galaxy has done absolutely nothing to establish that they have a “purchasing process” that is
17 not simply to participate in whatever bidding process that LendingClub decides to use.
18 As to discounts or price, Mr. Farooqui has repeatedly offered to allow redactions of price.

19 Mr. Farooqui has no interest in the price Galaxy paid for his account, he wants to know who

20 owned the account and sold it to Galaxy. The documents that Galaxy is withholding are likely to

21 shed light on this question, which is central to Mr. Farooqui’s defense.

22 Galaxy has simply ignored Mr. Farooqui’s repeated offers to redact, instead attempting to

23 use a claimed “trade secret” as a shield to avoid providing needed discovery to Mr. Farooqui.

24 Where there are less restrictive alternatives to withholding a document, those should be used.

25 The Court in Bridgestone/Firestone v. Sup Ct laid out the balancing test involved where

26 there is a claim of a trade secret:

27 Under such circumstances, we believe that a court is required to order disclosure of
a trade secret unless, after balancing the interests of both sides, it concludes that
28

25
Declaration of Stephen G. Recordon, ¶24 and Ex J.

Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

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1 under the particular circumstances of the case, no fraud or injustice would result
from denying disclosure. What is more, in the balancing process the court must
2
necessarily consider the protection afforded the holder of the privilege by a
3 protective order as well as any less intrusive alternatives to disclosure proposed by
the parties.
4 (5) We therefore hold that the party claiming the privilege has the burden of
5
establishing its existence. (Evid. Code, § 405; ALRB, supra, 175 Cal. App.3d at p.
715.) Thereafter, the party seeking discovery must make a prima facie,
6 particularized showing that the information sought is relevant and necessary to the
proof of, or defense against, a material element of one or more causes of action
7 presented in the case, and that it is reasonable to conclude that the information
8
sought is essential to a fair resolution of the lawsuit. It is then up to the holder of
the privilege to demonstrate any claimed disadvantages of a protective order. Either
9 party may propose or oppose less intrusive alternatives to disclosure of the trade
secret, but the burden is upon the trade secret claimant to demonstrate that an
10
alternative to disclosure will not be unduly burdensome to the opposing side and
11 that it will maintain the same fair balance in the litigation that would have been
achieved by disclosure.
12

13 Bridgestone/Firestone v Sup Ct 7 Cal App 4th 1384, 1393 (1992)
14 Galaxy bears the burden not only to establish that a contract likely written by LendingClub
15 is somehow Galaxy’s trade secret, but also bears the burden to show what “trade secret” is left to
16 hide if Galaxy simply follows Mr. Farooqui’s suggestion and redacts pricing and discount
17 information. At this point, Galaxy has done nothing, simply waiting to see if Mr. Farooqui will
18 force them to actually comply.
19 The existence of a contract is surely not a secret: that contract is Galaxy’s basis for filing
20 suit as a debt buyer. If there is pricing information in the contract that can be redacted, there is no
21 basis for claiming the rest of a purchase contract somehow rises to the level of a “trade secret” like

22 a chemical formula, or a process for manufacturing computer chips. Galaxy is overstating their

23 claim, and ignoring the perfectly adequate solution offered by Mr. Farooqui, in order to hide

24 documents that are not privileged.

25 Request for Production No. 9:

26 Any and all documents containing, reflecting or otherwise tending to prove the assignment,

27 transfer, or chain of title to the account at issue to Plaintiff.

28 ///

Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

-12-
1 Plaintiff’s Supplemental Response to Request for Production No. 9 (October 23, 2020):
2 Plaintiff objects to this request on the basis and to the extent that it is unduly burdensome,
3 as to the term “all documents.” Plaintiff further objects to this request on the basis that it seeks
4 documents that are proprietary and trade-secret in nature. Plaintiff provided a privilege log
5 explaining its position. Discovery and investigation are ongoing, Plaintiff reserves the right to
6 supplement this responses (sic) to the extent that it locates non-privileged docunents (sic)
7 responsive to this request. Without waiving any objection, and subject thereto, Plaintiff responds
8 as follows: Plaintiff has conducted a reasonable and diligent search of its records; attached hereto
9 as Exhibit 4, Bill of Sale with Loan Schedule, are non-privileged documents responsive to this
10 request that are within Plaintiff’s possession and control. In addition, see attached “VERIFIED
11 STATEMENT OF HEATHER H. KOCHAMBA REGARDING INABILITY TO COMPLY.”
12 Argument:
13 Plaintiff Velocity Investments makes two objections, “unduly burdensome,” and one
14 untimely claim of privilege.
15 Unduly Burdensome
16 Velocity claims that the term “all documents” is somehow unduly burdensome. As noted
17 above, this is a request for all documents that fit in a given category, Code of Civil Procedure
18 §2031.210(a) anticipates that parties may request a category of documents, rather than a single
19 document (“shall respond…to each item or category of items…”). Furthermore, our request is
20 narrow: we requested here documents related to a single transactional category (assignment), of a
21 single account. This is a narrow, closed universe of documents, and is hardly “unduly
22 burdensome.”
23 Trade Secret
24 The only document that Galaxy claims as a trade secret is the “Purchase and Sale
25 Agreement” already addressed above for Request 8. Mr. Farooqui will not burden the court with a
26 repetition of the same argument, and instead incorporates that argument by reference here.
27 ///
28 ///

Defendant’s Memo of Points and Auth re Motion to Compel 20CECL01745

-13-
IV. Conclusion
2 After significant effort by the parties to meet and confer, Mr. Farooqui is forced to turn to
3 the Court for relief. Mr. Farooqui is only asking for production of two documents central to his
4 defense, and the parties have, as a practical matter, disposed of most of the dispute other than
5 Galaxy's claim that a contract likely written by another party is somehow Galaxy's trade secret,
6 merely because it mentions the price that Galaxy paid for a set of accounts. Mr. Farooqui needs
7 this document, and the full Excel sheet identifying the "Investors" for the sale in question, in order
8 to identify the actual "Investor" who purportedly owned her account, and to establish her defense
9 that Galaxy lacks standing. Mr. Farooqui appreciates the Court's time in reviewing this issue.
10

11 Respectfully Submitted
12

13 DATED: November 30, 2020
STEPHEN G. RECORDON
14

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Mark E. Cullers Track Judge’s New Case

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November 30, 2020

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February 21, 2020

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Motion-Secondary: Galaxy International Purchasing,LLC vs. Ayaz Farooqui

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