Case of the Month Archive

As a matter of first impression, the First District held that expenses incurred during the meet and confer process are compensable as discovery sanctions under the Civil Discovery Act. . .

In partial affirmance, the First District held that although expenses incurred during the meet and confer process are compensable as discovery sanctions under the Civil Discovery Act, expenses incurred during a voluntary mediation that occurred after a motion to compel has been filed are not compensable as discovery sanctions.

In March 2020, Monique Covington Moore filed for divorce after 22 years of marriage to Charles Moore. On January 22, 2021, Monique served a deposition subpoena for production of business records on Rocket Lawyer, Inc. (Rocket Lawyer), a legal technology company for which Charles is the chairman of the board and CEO. On March 23, 2021, Rocket Lawyer served written responses and objections to Monique's subpoena, including an objection for lack of personal service per CCP §2020.220(b)(2) [deposition subpoena directed to an organization must be served by personal delivery to officer, director, custodian of records, or authorized agent]. On March 26, 2021, Monique had an identical subpoena personally served on Rocket Lawyer's custodian of records. On April 15, 2021, Rocket Lawyer again served its written responses in which it raised the same objections.

Meanwhile, on March 16, 2021, Monique served a deposition subpoena for the production of business records on Acendi Interactive Company, LLC (Acendi), a company for which Charles is the managing member and officer. Service on Acendi was made by personal delivery to its custodian of records. In response, Acendi served its written responses and objections to the deposition subpoena. For the most part, both Rocket Lawyer and Acendi asserted objections and declined to produce responsive documents.

On June 14, 2021, Monique filed a motion to compel Rocket Lawyer to comply with her deposition subpoena served on March 26, 2021. In her moving papers, Monique requested $10,000 in sanctions. Rocket Lawyer opposed the motion and made its own request for sanctions.

On June 18, 2021, Monique filed a motion to compel Acendi to comply with her deposition subpoena. Monique sought $7,000 in sanctions. Acendi opposed Monique's motion, also making its own request for sanctions.

After Monique filed her motion to compel but before a hearing on her motion, the parties attended two full-day mediation sessions in November 2021 and January 2022 to attempt to resolve the discovery dispute. Following the unsuccessful mediation, each party filed supplemental declarations seeking additional sanction amounts based on mediation-related expenses, which included preparation work, attendance, and post-mediation communication. In her supplemental declaration, Monique sought $64,380 in sanctions against Rocket Lawyer and $30,267 in sanctions against Acendi.

After a hearing, the trial court (San Francisco County's Weinberg) granted Monique's motion in substantial part and ordered Rocket Lawyer and Acendi each to pay Monique $25,000 in monetary sanctions. Both Rocket Lawyer and Acendi appealed. After consolidating the appeals, the First District affirmed in part and reversed in part.

The panel began its analysis by describing the relevant law. Per CCP §2025.480(j), the court must impose a monetary sanction against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel an answer or production, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust. The term "substantial justification" means a justification that is "'clearly reasonable because it is well grounded in both law and fact.'"

Rocket Lawyer's appeal. . .
With the applicable rules in mind, the justices first turned to Rocket Lawyer's appeal. Rocket Lawyer argued that the trial court erred by granting the motion to compel because Monique did not file her motion within 60 days of Rocket Lawyer's service of its written objections to the January 2022 subpoena, as required under CCP §2025.480 [motion to compel must be filed no later than 60 days after completion of the record of the deposition]. The justices disagreed. Since Monique's service of her deposition subpoena in January 2022 was not personally served on Rocket Lawyer as required by CCP §2020.220(b)(2), Rocket Lawyer was under no obligation to respond to the January 2022 subpoena. As such, at the time of Rocket Lawyer's first discovery response, "the discovery dispute was not ripe for a motion to compel because there was no personally served subpoena that could compel Rocket Lawyer's compliance." Instead, it was Rocket Lawyer's service of its written objections on April 15, 2022, that triggered the 60-day clock under CCP §2020.220(b). Since Monique filed her motion to compel on June 14, 2022, her motion was timely filed.

Next, the justices concluded that Rocket Lawyer forfeited its argument that the trial court erred by failing to order a two-tier protective order for financial and trade secret information, noting that Rocket Lawyer failed to raise the issue at trial. Instead of raising the issue at trial, Rocket Lawyer's counsel informed the trial court, "'With respect to the protective order, I don't think it's properly before you…. What we did request [an] additional tier [for], I don't believe this is quite ripe yet because it's not before the Court on a request for order or a motion, is for additional protection on an [attorney's eyes only] basis for narrow categories of documents.'"

Rocket Lawyer next argued the trial court abused its discretion by awarding sanctions without finding that Rocket Lawyer's opposition to Monique's motion was unjustified. The justices found this argument meritless, noting that regardless of the trial court's phrasing of the factual basis for the sanctions award, it was clear that Rocket Lawyer unsuccessfully opposed Monique's motion to compel. As such, CCP §2025.480(j) mandated the imposition of sanctions against Rocket Lawyer.

Lastly, as to Rocket Lawyer's appeal, the justices noted that although Rocket Lawyer challenged the award of sanctions on the basis that the amount was "inflated by hours spent 'meeting and conferring,'" Rocket Lawyer "fail[ed] to provide cogent argument and citation to supporting legal authority" on this point. The justices further noted that typically such failure would result in a forfeiture of the argument. But the justices decided to use their discretion to consider the argument since, in this consolidated appeal, the other appealing party developed the argument on this point. For reasons discussed in more detail later in the opinion, the justices concluded that "although expenses incurred during the meet and confer process are generally compensable as a discovery sanction, the trial court improperly awarded sanctions for mediation-related fees and costs that [Monique] incurred after she filed her discovery motions[.]"

Acendi's appeal. . .
Acendi first argued that Monique's efforts during the meet and confer process were insufficient, since she waited 56 days after being served with Acendi's objections to initiate meet and confer talks. The justices disagreed. After noting that the sufficiency of the meet and confer process depends upon the circumstances, the justices noted the fact that Monique waited so close to the 60-day deadline to begin meet and confer talks is only one factor in a broader analysis. Other relevant factors include the legitimacy and breadth of the discovery sought, the complexity of the dispute, the history of the litigation, the nature of the interactions between counsel, the nature of the issues, and the prospects for success. Here, the justices noted that the trial court presumably found that Monique had legitimate discovery objectives, since it granted her motion to compel in substantial part. Moreover, the justices observed that the trial court could reasonably have found the prospects for resolution between the parties low given Monique's discovery requests were met with "numerous boilerplate objections and a near complete refusal to comply." In light of the unlikely resolution, a longer period for the meet and confer discussions would be unnecessary.

The justices rejected Acendi's related argument that even if the trial court accepted Monique's meet and confer efforts as sufficient, it nevertheless abused its discretion by concluding Acendi had no reasonable legal or factual basis to point out the deficiencies. First, the trial court sanctioned Acendi for its wholesale refusal to produce documents by unreasonably objecting to production requests. Second, Acendi intended its meet and confer argument to form the basis of a total denial of Monique's motion, which the justices noted would have been appropriate only in the most egregious cases of insufficient meet and confer efforts, such as when a party is using the process to burden or harass the other party. Here, Acendi failed to show that Monique used the process to burden or harass.

Acendi next argued that it was substantially justified in opposing the motion because Monique failed to submit a separate statement as required by Cal Rules of Court, rule 3.1345(c) [a motion to compel production of documents at a deposition must be accompanied by a separate statement served with the discovery motion that provides all the information necessary to understand each discovery request and all the responses to it that are at issue]. However, per Cal Rules of Court, rule 3.1345(b)(2), the trial court may allow a moving party to submit, in lieu of a separate statement, a concise outline of the discovery request and each response in dispute. Here, Monique submitted such a concise outline, and the trial court exercised its inherent discretion to accept the outline in lieu of a separate statement. Moreover, Cal Rules of Court, rule 3.1345(b) does not require the moving party to obtain prior court permission before the submission of a concise outline.

The justices next made short shrift of Acendi's argument that the trial court erred by finding no substantial justification since the trial court agreed with some of its arguments. Although the trial court denied Monique's motion on a "handful of requests," it nevertheless rejected Acendi's main arguments and granted the motion in substantial part. As such, the justices concluded the trial court did not abuse its discretion by awarding sanctions against Acendi even though it denied some of Monique's requests, allowed for redaction of nonparty information, and limited the temporal scope of certain requests.

Lastly, the justices held, as a matter of first impression, that costs and fees incurred during the meet and confer process are compensable expenses under the Civil Discovery Act insofar as they are necessary costs of bringing the motion to compel. For support for their position, the justices turned to the plain language of CCP §2023.030(a), which authorizes a court to "'impose a monetary sanction ordering that one engaging in the misuse of the discovery process…pay reasonable expenses, including attorney's fees, incurred by anyone as a result of that conduct.'" Focusing on the phrase "as a result of that conduct," the justices noted meet and confer efforts are required. In fact, a failure to make reasonable and good faith efforts at informal resolution "may jeopardize the movant's ability to obtain relief for the other side's alleged misuse of the discovery process."

Despite this general rule, the justices held the trial court erred by awarding mediation-related expenses in this case, since the mediation occurred after Monique had filed her motion to compel and, therefore, was not a necessary cost of bringing the motion. The justices noted that post-motion efforts to resolve the discovery dispute are "laudable," but nothing in the Civil Discovery Act requires meet and confers talks once the motion has been filed.

Accordingly, the First District reversed the portions of the trial court's orders imposing monetary sanctions on Rocket Lawyer and Acendi and remanded the matter for the trial court's redetermination of the sanctions award without inclusion of Monique's mediation-related expenses. The First District affirmed the orders in all other respects.