Park v. Law Offices of Tracey Buck-Walsh ( 2021 )

Filed 12/27/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
JOHN PARK,
Plaintiff and Appellant,
v.
LAW OFFICES OF TRACEY A161672
BUCK-WALSH et al.,
(Sonoma County
Defendants;
Super. Ct. Nos. SCV-2599791 &
DEPARTMENT OF JUSTICE, SCV-261163)
Real Party in Interest and
Respondent.
John Park is engaged in litigation against his former attorneys,
prompting this collateral dispute between Park and the California
Department of Justice (the DOJ) over his subpoena duces tecum requiring
the DOJ to produce electronically stored documents. (Civ. Proc. Code,
§ 1985.8; statutory references are to this code unless otherwise specified.)
The DOJ reportedly reviewed several hundred thousand electronic
documents but produced fewer than a hundred. Partway through the
production, the trial court ordered Park to pay $32,836.25 to defray the
“undue burden or expense” of the DOJ’s compliance with Park’s subpoena.
(§ 1985.8, subd. (l) (§ 1985.8(l)).) When the production was complete, the trial
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court ordered Park to pay the DOJ an additional $111,618.75. Park appeals
the later order. We affirm.
BACKGROUND
In 2016, Park sued his former counsel for breach of fiduciary duty and
intentional interference with Park’s plan to purchase a cardroom casino in
San Jose. That action was consolidated with a similar case Park filed against
the same defendants for interfering with his plan to purchase a cardroom
casino in Gardena. Park alleges that from 2003 until 2012, defendants
provided legal services for Park’s gaming businesses, representing Park
before the California Gambling Control Commission and the Bureau of
Gambling Control. This attorney-client relationship ended due to a dispute
about defendants’ monthly billing rates. Thereafter, defendants allegedly
thwarted Park’s efforts to secure ownership interests in the two cardroom
casinos by using Park’s confidential information, assisting his competitors,
and making disparaging remarks about Park to regulators and others.
In September 2018, Park issued third party subpoenas duces tecum to
the DOJ and to Deputy Attorney General William Torngren, who represents
the Bureau of Gambling Control. Both subpoenas sought production of 19
categories of documents generated between January 2014 and the present.
Park requested communications and documents pertaining to Park and the
casinos at issue in the litigation, including emails from the accounts of 17
DOJ employees, several of whom are attorneys representing the Bureau in
gambling control matters. The subpoenas had a return date of September 28,
2018.
As of February 2019, Torngren had produced text messages responsive
to Park’s subpoena but no emails, taking the position those belong to the
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Bureau of Gambling Control, which is part of the DOJ. The DOJ had not
produced any documents or otherwise responded to Park’s subpoena.
I. Discovery Order No. 1
On February 25, 2019, Park filed a motion to compel the DOJ to comply
with his subpoena. The trial court appointed the Honorable William Elfving
(Retired) as discovery referee for all discovery disputes in this action. Park’s
motion to compel became the subject of Referee’s Report and Recommended
Discovery Order No. 1, submitted to the court and counsel on July 23, 2019.
In his motion to compel, Park sought an order requiring the DOJ to
produce documents responsive to his subpoena within 60 days, arguing that
more than nine months had passed without the DOJ producing a single
document. Opposing this motion, the DOJ reported its computer search had
identified over 600,000 potentially responsive documents that had to be
reviewed individually for relevancy and privilege, and it anticipated this
process could take up to another year. Park balked at this claim, arguing
that the DOJ did not use proper search terms, a manual search of documents
for responsiveness and privilege was less efficient than computer-assisted
methods, and the DOJ had not assigned enough people to respond to his
subpoena.
The referee recommended a partial grant of Park’s motion. Park had
narrowed the scope of his requests, but the DOJ continued to claim the
subpoena was overbroad. The referee concluded that the number of
documents at issue was not unmanageable as compared to the average
complex civil case and that “[t]he DOJ must devote sufficient resources to
this production.” He recommended ordering the DOJ to produce all
responsive, nonprivileged emails, and a privilege log if applicable, within 120
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days. On August 20, 2019, the trial court adopted the referee’s report after
independently reviewing the matter and the parties’ objections to the report.
II. Discovery Order No. 2
On July 25, 2019, the DOJ filed a motion for an “Order Protecting it
from Undue Burden or Expenses Incurred in Responding to Plaintiff John
Park’s Subpoena Duces Tecum.” The DOJ sought to require Park to pay:
(1) $108,543 for costs incurred by the DOJ through July 25, 2019; and (2) all
additional costs the DOJ would incur to comply with the order to produce
documents. This motion was made pursuant to section 1985.8(l), which
states: “An order of the court requiring compliance with a subpoena issued
under this section shall protect a person who is neither a party nor a party’s
officer from undue burden or expense resulting from compliance.”
The DOJ relied on cases applying rule 45 of the Federal Rules of Civil
Procedure (rule 45). Rule 45(d)(2)(B)(ii) states that an order requiring
compliance with a third party subpoena “must protect a person who is
neither a party nor a party’s officer from significant expense resulting from
compliance.” Federal courts apply a two-part test for shifting costs pursuant
to this rule, considering (1) whether a given expense resulted from
compliance with the subpoena, and (2) whether the expense is significant.
(Valcor Engineering Corp. v. Parker Hannifin Corp. (C.D. Cal., July 12, 2018,
No. 8:16-cv-00909-JVS-KESx) 2018 U.S.Dist. Lexis 142120, p. *4 (Valcor).)
Some federal courts consider additional equitable factors, but others deem
equitable considerations irrelevant. (Id. at pp. *6–*7.)
The DOJ argued that it had already incurred $108,543 in costs in order
to comply with the subpoena, which should be shifted to Park because they
were significant. (Citing Valcor, supra, 2018 U.S.Dist. Lexis 142120.) In
addition, the DOJ argued that equitable factors weighed in its favor as
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neither Torngren nor the DOJ have any interest in Park’s dispute with his
former counsel.
Park also relied on cases applying rule 45, arguing that expenses
claimed by the DOJ should not be reimbursed because they were
unreasonable. (Citing U.S. v. McGraw-Hill Companies, Inc. (2014) 302
F.R.D. 532, 536 (McGraw).) According to Park, the document production was
expensive because the DOJ’s review procedures were overly complicated, and
equitable factors weighed in Park’s favor because his theory in the
underlying litigation is that these nonparties played a role in the defendants’
wrongdoing, and because the government has ample financial resources to
bear the expense of producing documents. Park also argued that even if the
referee found compliance caused an “undue burden or expense” (§ 1985.8(l)),
most of the DOJ’s expenses were not compensable because they were
unnecessarily incurred or had not been verified. (Citing Nitsch v.
Dreamworks Animation SKG Inc. (N.D. Cal. Mar. 9, 2017, No. 5:14-cv-04062-
LHK (SVK)) 2017 U.S.Dist. Lexis 34106, p *2.)
On September 3, 2019, the referee issued Referee’s Report and
Recommended Discovery Order No. 2, which recommended granting in part
the DOJ’s motion for a protective order. Like the parties, the referee found
guidance in federal law applying rule 45, reasoning that there is a dearth of
California case law construing section 1985.8; the two cost-shifting standards
are similar; and both provisions use mandatory language. The referee
reported finding no authority for distinguishing between the terms “undue
burden or expense” (§ 1985.8(l)) and “significant expense” (rule 45).
Ultimately, the referee recommended ordering Park to pay $32,836.25
to the DOJ for its costs of complying with Discovery Order No. 1. This figure
reflects two related findings the referee made: First, only $65,672.50 of the
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claimed $108,543 in costs were compensable. Second, these “conditionally
allowed” fees should be reduced by 50 percent because the DOJ failed to carry
its burden of proving its claimed costs were reasonable, and its supporting
documentation was vague. (Citing Michael Wilson & Partners, Ltd. v. Sokol
Holdings, Inc. (10th Cir. 2013) 520 Fed. Appx. 736.)
The referee went on to conclude that because the DOJ’s reduced costs
“are significant and represent an undue burden and expense to the DOJ,”
they should be shifted to Park. The referee also found that, although
equitable factors were “only marginally instructive,” they weighed in favor of
the DOJ. Finally, the referee recommended denying as premature the
request for an order requiring Park to reimburse all further reasonable costs
incurred to comply with the subpoena. On September 16, 2019, the trial
court adopted Referee’s Report and Recommended Discovery Order No. 2.
III. Discovery Order No. 3
On December 3, 2019, Park filed a motion for sanctions against the
DOJ for failing to comply with the November 2019 deadline for producing
documents. The DOJ opposed the motion on the ground that it had made a
good faith effort to comply and requested that the deadline be extended. The
DOJ reported it had assigned both an attorney and a paralegal to the matter,
and that they had already spent more than 600 hours and reviewed more
than 14,000 documents in order to produce 23 unique documents. The DOJ
reported more than 36,900 documents still needed to be reviewed.
The referee addressed Park’s sanctions motion in Referee’s Report and
Recommended Discovery Order No. 3, recommending sanctions. The referee
found that the DOJ failed to allocate sufficient resources to comply with the
deadline; he declined to support the DOJ’s request to extend the deadline;
and he recommended the DOJ be ordered to pay reasonable attorney fees and
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expenses to Park in the amount of $9,747.16. On February 19, 2020, the trial
court adopted the referee’s recommendations.
IV. Discovery Order No. 4
On March 2, 2020, Park filed a motion for an order of contempt and
further sanctions against the DOJ, as there was “no completion date in sight”
and he faced the prospect of going to trial “without critical evidence.”
The DOJ opposed Park’s motion on multiple grounds, including that it
anticipated fully complying with the subpoena before this most recent motion
could be adjudicated. Then on March 20, 2020, the DOJ reported that it had
produced its final set of documents, a privilege log, and an affidavit of no
records for certain DOJ employees, thus completing its response to the
subpoena.
In Referee’s Report and Recommended Discovery Order No. 4, the
referee recommended the motion be granted in part, requiring the DOJ to
pay attorney fees and costs for Park having to bring the motion because Park
had a legitimate concern over the DOJ’s delays. On May 14, 2020, the trial
court adopted the referee’s recommendations.
V. Discovery Order No. 5
On April 7, 2020, the DOJ filed the motion at issue in the present
appeal, seeking a second order protecting it from undue burden or expense
incurred in responding to the Park subpoena, this time for the period from
July 23, 2019 to March 18, 2020. The DOJ reported that during this period,
it spent 998.75 hours on the subpoena and the value of this work totaled
$223,237.50. The DOJ supported its motion with a declaration from Deputy
Attorney General Bart Hightower, which incorporated time reports for
himself and a staff of lawyers and other professionals.
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Opposing this motion, Park argued that compliance with his subpoena
did not subject the DOJ to undue burden or expense. First, he relied on the
trial court’s prior finding that compliance with the subpoena would not
impose an undue burden on the DOJ to argue that the cost-shifting motion
failed as a matter of law. Alternatively, Park argued that the claimed
expenses should be rejected or substantially reduced because the number of
hours the DOJ claimed to have spent on the subpoena was patently
unreasonable, the DOJ’s supporting documentation was inadequate, and the
methods employed to conduct the document review were overly complicated
and time-consuming.
The referee addressed the DOJ’s motion in Referee’s Report and
Recommended Discovery Order No. 5, applying the same principles used to
resolve the DOJ’s prior motion for a protection order. The referee found that
the DOJ failed to demonstrate its claimed costs were all reasonable, in that it
employed review methods that were overly complicated and time consuming,
failed adequately to document actual costs incurred, and appeared to seek
compensation for some non-compensable time. For these deficiencies, the
referee recommended reducing the amount of potentially recoverable costs by
half, to $111,618.75. The referee found these costs were significant,
represented an undue expense, and should be shifted to Park.
On October 27, 2020, the trial court adopted Referee’s Report and
Recommended Discovery Order No. 5 after independently reviewing the
matter (hereafter, the October 2020 order). An amended notice of entry of
the October 2020 order was served and filed on December 11, 2020. This
timely appeal followed.
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DISCUSSION
I. The October 2020 Order Is Appealable
Park contends the October 2020 order is appealable under section
904.1, subdivision (a)(12), as an order directing a party to pay a monetary
sanction in an amount that exceeds $5,000. We reject this argument because
the October 2020 order does not impose a monetary sanction; it implements a
fee-shifting mechanism intended to protect nonparties from undue burden or
expense in responding to a third party subpoena. (§ 1985.8(l).) But we accept
Park’s alternative theory, that the October 2020 order is appealable as a final
determination of a collateral matter resolving all issues between Park and
the DOJ. The order fits within an exception to the one final judgment rule
because it is collateral to the subject matter of the main litigation; it is final
as to that collateral matter; and it directs the payment of money by the
appellant. (See Marsh v. Mountain Zephyr, Inc. (1996) 43 Cal.App.4th 289,
297; People v. Hernandez (2009) 172 Cal.App.4th 715, 720; see also
Conservatorship of Rich (1996) 46 Cal.App.4th 1233, 1237.)
II. Park Fails to Demonstrate Reversible Error
We review the October 2020 order under the abuse of discretion
standard governing appeals from trial court rulings on discovery matters.
(Curtis v. Superior Court (2021) 62 Cal.App.5th 453, 467.) Under this
standard, the “ ‘ “trial court’s findings of fact are reviewed for substantial
evidence, its conclusions of law are reviewed de novo, and its application of
the law to the facts is reversible only if arbitrary and capricious.” ’ ” (Ellis v.
Toshiba America Information Systems, Inc. (2013) 218 Cal.App.4th 853, 882.)
Here, Park contends that the trial court abused its discretion by (1) applying
the wrong legal standard for shifting costs pursuant to section 1985.8(l), and
(2) permitting recovery of costs that were inflated and not adequately proven.
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A. Statutory Overview
In 2009, the California Legislature passed the Electronic Discovery Act
“[i]n order to eliminate uncertainty and confusion regarding the discovery of
electronically stored information [(ESI)], and thereby minimize unnecessary
and costly litigation that adversely impacts access to the courts.” (Stats
2009, ch. 5, § 23.) The Act added several provisions to the Code of Civil
Procedure to integrate ESI into the discovery law, including section 1985.8,
which establishes procedures for subpoenaing ESI. (See Vasquez v.
California School of Culinary Arts, Inc. (2014) 230 Cal.App.4th 35, 41
(Vasquez).)
Several provisions of section 1985.8 address problems that arise when
the propounding party seeks discovery of ESI “that is not reasonably
accessible because of undue burden or expense.” (See e.g. § 1985.8, subds. (e),
(f).) This circumstance is a ground for opposing a subpoena. (Id. at subd. (e).)
But even where undue burden or expense is established, the court “may
nonetheless order discovery” upon a showing of good cause and subject to the
limitations of subdivision (i). (Id. at subd (f).) Where a source “is not
reasonably accessible,” the court may attach conditions to the discovery,
including allocating the expense of production. (Id. at subd. (g).) Under
subdivision (i), even where a source “is reasonably accessible,” the court must
“limit the frequency or extent of discovery” if it finds “[t]he likely burden or
expense of the proposed discovery outweighs the likely benefit, taking into
account the amount in controversy, the resources of the parties, the
importance of the issues in the litigation, and the importance of the requested
discovery in resolving the issues.” (Id. at subd. (i)(4).) “A party serving a
subpoena . . . shall take reasonable steps to avoid imposing undue burden or
expense” on the responding party. (Id. at subd. (k).) And most importantly
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for our case, any “order of the court requiring compliance with a subpoena
issued under this section shall protect a person who is neither a party nor a
party’s officer from undue burden or expense resulting from compliance.” (Id.
at subd. (l).) In other words, in the face of an “undue burden or expense” the
court “may” order a person to comply with a subpoena for ESI, but any such
order “shall protect” a stranger to the litigation from that undue burden or
expense. (Id. at subds. (f), (l).)
Neither Park nor the DOJ cite any authority construing section
1985.8(l). Thus, we apply settled rules governing statutory construction. We
“ ‘ “begin with the plain, commonsense meaning of the language used by the
Legislature. [Citation.] If the language is unambiguous, the plain meaning
controls.” ’ ” (Riverside County Sheriff’s Dept. v. Stiglitz (2014) 60 Cal.4th
624, 630.) If the statutory language is ambiguous, permitting “ ‘ “more than
one reasonable interpretation,” ’ ” we may look “ ‘ “ ‘to a variety of extrinsic
aids, including the ostensible objects to be achieved, the evils to be remedied,
the legislative history, public policy, contemporaneous administrative
construction, and the statutory scheme of which the statute is a part.’ ” ’ ”
(DiCampli-Mintz v. County of Santa Clara (2012) 55 Cal.4th 983, 992.)
Section 1985.8(l) uses the word “shall,” which connotes a mandatory
duty or directive. (Woodbury v. Brown-Dempsey (2003) 108 Cal.App.4th 421,
432 [noting that the distinction between “ ‘may’ ” and “ ‘shall’ ” is
“particularly acute when both words are used in the same statute”]; see also
Toshiba America Electronic Components v. Superior Court (2004) 124
Cal.App.4th 762, 769.) Thus, by its plain language, section 1985.8(l)
mandates that courts protect nonparties from “undue burden or expense”
when ordering them to comply with a subpoena to produce ESI.
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The term “undue burden or expense” is not defined in the statute. In
common parlance, the word “undue” connotes a judgment call about whether
some action or result exceeds what is reasonable or fair. Such an inquiry by
a factfinder would necessarily require a case-specific consideration of the
factual circumstances. (Cf. Atkins v. City of Lost Angeles (2017)
8 Cal.App.5th 696, 733 [under Fair Employment and Housing Act, whether
an accommodation will impose an undue hardship is a case-specific, “ ‘multi-
faceted, fact-intensive inquiry’ ”].) Thus, the plain language of section
1985.8(l) appears to grant courts discretion to determine whether the burden
or the expense of complying with a third party subpoena is undue in light of
the facts of the particular case.
This interpretation of the undue burden or expense standard is
consistent with other provisions in section 1985.8 that require the trial court
to make similarly fact-specific assessments in deciding whether to limit
discovery or shift costs. (See Weatherford v. City of San Rafael (2017)
2 Cal.5th 1241, 1246–1247 [statute’s structure and text of surrounding
provisions can impart more precise meaning to text being interpreted].) For
example, a trial court may decline to enforce a subpoena for ESI if the source
“is not reasonably accessible because of undue burden or expense” (§ 1985.8,
subds. (e) & (f), italics added); a subpoenaing party may be ordered to bear
“the reasonable expense” of translating data compilations into useable form
(§ 1985.8, subd. (h), italics added); and discovery of even accessible ESI may
be curtailed where the “burden or expense of the proposed discovery
outweighs the likely benefit” (§ 1985.8, subd. (i)(4), italics added).
Legislative history pertaining to the Electronic Discovery Act adds
little but is consistent with this interpretation of the statute. For example,
the legislative history reflects an intention that any court order requiring
12
compliance with a subpoena to produce ESI “shall protect a non-party from
undue burden or expense resulting from compliance.” (Senate Judiciary
Committee Report, AB 5, 2009–2010 Reg. Sess., Comment 12, p. 10.) We
have not found, and the parties have not pointed us to, any material in the
legislative history that defines undue burden or expense, but there is
evidence of the Legislature’s intention to preserve the court’s discretion, both
to order discovery upon a showing of good cause and to “consider all relevant
factors in determining whether and in which circumstances a protective order
should be issued.” (Senate Judiciary Committee Report, AB 5, 2009–2010
Reg. Sess., Comment 7, pp. 7–8.)
B. The Trial Court Did Not Misconstrue the Statute
Park makes three arguments that the trial court incorrectly applied
section 1985.8.(l)’s cost-shifting standard. His primary argument is that the
trial court erred in ordering Park to pay the DOJ’s costs of complying with
the subpoena based solely on the referee’s finding that those costs constitute
a “significant expense.” According to this argument, the court erred as a
matter of law because it applied the rule 45 test for cost-shifting, which is
materially different from the “undue burden or expense” standard in section
1985.8(l).
Park mischaracterizes the October 2020 order granting in part the
DOJ’s second request for an order protecting it from the undue burden or
expense of responding to Park’s subpoena. The order is not based solely on a
finding that compliance with the subpoena amounted to a significant
expense. The referee—like the DOJ and Park—did look to federal law
construing rule 45 for guidance as to the proper application of the “undue . . .
expense” language in section 1985.8(l), noting that section 1985.8 does not
define the term, there is little California law interpreting section 1985.8, and
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the phrase “significant expense” in rule 45 is similar. (See Vasquez, supra,
230 Cal.App.4th at pp. 42–43 [“ ‘ “Because of the similarity of California and
federal discovery law, federal decisions have historically been considered
persuasive absent contrary California decisions” ’ ”].) In finding that the
state statute and the federal rule “appear” to be similar, the referee observed
that both provisions use mandatory language, and both “appear to be an
effort to balance the interests that litigating parties have in discovering
relevant information from third parties, and the interests third parties have
in being protected from unduly burdensome, costly and involuntary
involvement in the legal affairs of others.” But the referee did not conflate
the state and federal rules. He expressly found that the costs he
recommended shifting to Park are significant and “represent an undue
expense to the DOJ.” The trial court did not abuse its discretion by adopting
recommendations that were based in part on this reasoning.
Park insists that the referee’s reliance on federal case law undermines
the integrity of the October 2020 order because of a “critical difference”
between the federal and California cost-shifting standards: the word
“ ‘significant’ ” is a quantitative measure, making equitable factors irrelevant
under rule 45, and the word “ ‘undue’ ” is a qualitative measure, making
equitable factors the focus of section 1985.8(l). In presenting this argument,
Park posits that “ ‘significant’ ” costs, which must be shifted under the federal
standard, may not be shifted under the California rule unless the expense is
so unfair as to constitute an undue burden.
Park may or may not be correct about federal law. Some federal courts
applying rule 45 do consider “equitable factors such as the public importance
of the litigation, the invasiveness of the request, the reasonableness of the
costs of production, the relative ability of the parties to bear the costs, and
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the non-party’s interest, if any, in the outcome of the case.” (Valcor, supra,
2018 U.S.Dist. Lexis 142120, at p. *3; see also McGraw-Hill, supra, 302
F.R.D. at p. 534.) But whether or not equitable factors are relevant under the
federal test, the referee here did explicitly consider equitable factors when he
made recommendations as to both of the DOJ’s cost-shifting motions in this
case. The referee found those factors were only “marginally instructive” but
weighed in favor of the DOJ because the DOJ does not have any interest in
this litigation, the DOJ did not engage in aggressive litigation tactics, and
both Park and the DOJ appear to have sufficient economic resources to bear
the costs of responding to the subpoena.
We also disagree with Park to the extent he suggests that the question
whether the expense of responding to a subpoena is “significant” is irrelevant
to the determination whether the expense is “undue.” As a matter of common
sense, the more significant an expense is, the more likely it is to be undue. In
applying section 1985.8(l), the court should look to qualitative factors such as
the relationship of the subpoenaed person to the dispute and the resources of
the subpoenaed person and the requesting party (see § 1985.8, subds. (i) &
(l)), but this is in addition to, not instead of, examining how significant the
expense of responding to the subpoena is.
Park’s secondary argument that the trial court misconstrued section
1985.8 is that the DOJ’s cost-shifting motion should have been denied
because, in granting Park’s motion to compel the DOJ to comply with the
subpoena, the trial court necessarily found that compliance does not
constitute an undue burden. This time seeking support from federal law,
Park posits that federal courts refuse to shift attorney fees under rule 45
when a subpoena does not subject the nonparty to an “undue burden.”
(Citing e.g. In re Globalstar Secs. Litig. (S.D. Cal. June 7, 2005,
15
No. 04cv1394-B (BLM)) 2005 U.S.Dist. Lexis 52125, p. *8 (Globalstar).)
According to Park, the fact that the trial court ordered the DOJ to comply
with the subpoena proves that the subpoena is not unduly burdensome and
thus precludes shifting attorney fee costs even under cases applying rule 45.
This argument fails because it is squarely contrary to California law,
which requires courts to protect nonparties from “undue burden or expense.”
(§ 1985.8(l), italics added.) At the hearing on Park’s motion to compel, the
DOJ argued that the subpoena was both overbroad and imposing an undue
expense on a nonparty with no interest in the litigation. The referee rejected
only the first argument, concluding the number of documents was not
unmanageable and they should be produced. (See Discovery Order No. 1.)
Though this may be characterized as an implied finding that the burden of
compliance was not undue, the referee at the same time mentioned but
reserved for another day the possibility that the cost-shifting statute could
protect the DOJ from the full cost of complying with the subpoena. Thus,
Park has always been on notice that the order compelling the DOJ to comply
with the subpoena was subject to the court’s obligation to protect the DOJ
from the undue expense of compliance.
Moreover, Park’s argument conflates two different concerns addressed
by distinct provisions in rule 45. Rule 45 “provides two related avenues by
which a person subject to a subpoena may be protected from the costs of
compliance: sanctions under Rule 45(d)(1) and cost-shifting under Rule
45(d)(2)(B)(ii).” (Legal Voice v. Stormans Inc. (9th Cir. 2013) 738 F.3d 1178,
1184 (Legal Voice).)
Park relies on Globalstar, in which nonparty Qualcomm moved for an
order requiring plaintiffs to pay sanctions under former rule 45(c)(1) (now
rule 45(d)(1)). (Globalstar, supra, 2005 U.S.Dist. Lexis 52125 at p. *10.)
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Qualcomm sought to recover all costs it incurred to comply with a third party
subpoena on the ground that the plaintiffs violated their duty under rule 45
to “ ‘take all reasonable steps to avoid imposing undue burden or expense on
a person subject to that subpoena.’ ” (Id. at p. *12.) The district court
exercised its discretion to transfer some but not all of Qualcomm’s costs of
complying with the subpoena, declining to assess Qualcomm’s attorney’s fees
as a sanction because the subpoena was not issued “in bad faith or for an
improper purpose.” (Id. at pp. *13 & *14–*16.) However, because the
subpoena was overbroad and both sides engaged in unnecessary
gamesmanship, the court required plaintiffs to pay half of the costs
Qualcomm incurred before the subpoena was adequately narrowed. (Id. at
pp. *13 & *16–*24.) Park errs in relying on cases like Globalstar because the
appealed order in this case does not involve a discovery sanction. (See also
Balfour Beatty Infrastructure v. PB&A (2017) 319 F.R.D. 277, 283 & 284
[after finding that cost of compliance with third party subpoena was not
significant, court declined to impose attorney fee sanction].)
Federal cases that may provide some guidance are those that address
rule 45’s cost-shifting provision, which protects nonparties from significant
expense resulting from compliance with a subpoena even if compliance with
the subpoena is not unduly burdensome. (Legal Voice, supra, 738 F.3d at
p. 1184.) Legal Voice arose out of a dispute over compliance with a subpoena
duces tecum seeking documents from a law center that was a nonparty to the
plaintiffs’ underlying lawsuit. (Legal Voice, supra, 738 F.3d 1178.) The law
center challenged the subpoena on numerous grounds, including that
plaintiffs sought documents that were protected from disclosure by the First
Amendment and the attorney-client privilege. (Id. at p. 1181.) The trial
court required the law center to respond to some categories of documents but
17
also denied some of plaintiffs’ requests, and then ordered the law center to
bear all costs it incurred in connection with the protracted discovery dispute.
The Ninth Circuit affirmed the denial of the law center’s motion for sanctions
under rule 45(d)(1) but reversed the denial of costs to the law center under
rule 45(d)(2), acknowledging that different standards apply to the separate
inquiries and pointing out that rule 45(d)(2)’s cost-shifting provision “is
mandatory.” (Legal Voice, at p. 1184.)
Thus, Park’s theory that the October 2020 order cannot be affirmed
absent a finding that the subpoena was unduly burdensome is not supported
by federal law or by California law. As the referee in this case explained,
“[g]iven the issues framed by the pleadings in this lawsuit, Park was entitled
to the documents requested by the subpoena,” notwithstanding the fact that
the limitations of the DOJ’s technology systems and the complex privilege
issues made compliance with Park’s subpoena “a very labor-intensive
process.” The DOJ’s inability to prove that this burden excused it from
having to respond at all to the subpoena did not preclude the DOJ from
“seeking reimbursement for ‘undue expense’ incurred in responding to the
subpoena.”
Park offers a third theory about how the trial court misconstrued
section 1985.8.(l), this time relying on a federal case to support an overly
narrow view of what constitutes undue burden or expense. He argues that
“the burden of compliance is ‘undue’ only when a [subpoena] requires
something beyond the mere production of relevant documents” and, relatedly,
that costs should not be shifted when the “ ‘producing party has the exclusive
ability to control’ ” them, as when it chooses to undertake an exacting review
for privilege. (Quoting US Bank Nat. Assn. v. PHL Variable Ins. Co.,
18
(S.D.N.Y. Nov. 5, 2012, No. 12 CIV. 6811 CM JCF) 2012 U.S.Dist. Lexis
158448, p. *4.)
California law does not support Park’s extreme view. The Electronic
Discovery Act clearly contemplates that subpoenaed parties will review ESI
before producing it in order to protect information that “is subject to a claim
of privilege or of protection as attorney work product.” (§ 1985.8, subd. (j).)
And the statute mandates cost shifting whenever necessary to protect
nonparties “from undue burden or expense resulting from compliance” with a
subpoena. (§ 1985.8 (l).) The statutory language is not limited to—nor does
it exclude—particular reasons for a burden or expense being undue. In one
case the hurdle may be the technical challenge of extracting information from
older computer systems or storage media, in another the complexity of the
required privilege review or the sheer volume of information potentially
responsive to a subpoena. Or, as in this case, all three of these factors may
contribute to the undue expense of a document production. We decline Park’s
invitation to read into the statute constraints that would cabin and distort
the trial court’s consideration of all relevant circumstances, and we find no
abuse of discretion in the way that the referee and the trial court exercised
that discretion here.
C. Shifting Fifty Percent of Costs Was No Abuse of Discretion
We turn now to Park’s second claim of error. He contends that, even if
cost shifting could be proper on an appropriate record, the trial court abused
its discretion by ordering Park to pay 50 percent of the DOJ’s claimed costs
here after finding that some of those costs were not reasonable and others
were not properly verified. According to Park, a 50 percent reduction is
insufficient because the DOJ inflated its costs, and its billing records are so
vague that it is not possible to determine what time is compensable.
19
The referee’s recommendation regarding the amount the DOJ should
recover from Park was based on a comprehensive, even-handed analysis. He
took account of the DOJ’s failure to demonstrate that all of its claimed costs
were reasonable and to provide documentation of some costs. He also
considered that the DOJ claimed some costs that were not compensable. The
referee also explained why denying the DOJ’s second compensation request
in its entirety would “not be in the interests of justice.” The DOJ is a third
party with no stake in this litigation, who did not engage in aggressive
litigation tactics and whose ability to bear the expense of compliance is no
greater than Park’s. Equally important, the DOJ is a law enforcement
agency that serves as counsel for state agencies that regulate the activities of
Park and others involved in the gaming industry. The DOJ has an obligation
to protect privileged communications and data from disclosure in Park’s
litigation, notwithstanding its antiquated computer system. The DOJ was
too slow to respond to the subpoena, but it did ultimately allocate “sufficient
staff to the project in order [to complete] production.”
Despite deficiencies in its motion, the DOJ established that its costs of
compliance with the subpoena were “significant and represent[ed] an undue
expense to the DOJ.” Taking account of all relevant facts (including the
DOJ’s deficiencies), the referee recommended reducing the amount of the
DOJ’s potentially recoverable costs by 50 percent to $111,618.75. The trial
court adopted that recommendation after independently considering the
matter, and Park fails to carry his burden to demonstrate that this decision
was an abuse of discretion.
DISPOSITION
The judgment is affirmed. The DOJ is awarded costs on appeal.
20
TUCHER, P.J.
WE CONCUR:
FUJISAKI, J.
RODRÍGUEZ, J.
Park v. California Department of Justice (A161672)
21
Trial Court: Sonoma County Superior Court
Trial Judge: Hon. Patrick M. Broderick
Counsel: Umberg Zipser, Scott B. Garner, Todd W. Smith, and Hon.
Halim Dhanidina (Ret.) for Plaintiff and Appellant
Rob Bonta, Attorney General of California, Chris A.
Knudsen, Senior Assistant Attorney General, Andrea R.
Austin, Supervising Deputy Attorney General, Bart E.
Hightower, Deputy Attorney General for Real Party in
Interest and Respondent
Willoughby, Stuart & Benning, Bradley A. Benning, and
Charles Richard Hellstrom for Defendants
22