Elena Del Campo v. American Corrective Counseling, No. 5:2001cv21151 - Document 773 (N.D. Cal. 2009)
Court Description: ORDER DENYING DEFENDANTS' MOTION FOR PROTECTIVE ORDER; AND ORDER GRANTING PLAINTIFFS' MOTION TO COMPEL by Judge Patricia V. Trumbull denying 756 Motion for Protective Order; granting 758 Motion to Compel; finding as moot 761 Motion to Continue. (pvtlc2, COURT STAFF) (Filed on 10/23/2009)
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Elena Del Campo v. American Corrective Counseling Doc. 773 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION 11 12 ELENA DEL CAMPO, ET AL., 13 14 15 16 17 ) ) Plaintiffs, ) ) v. ) ) AMERICAN CORRECTIVE ) COUNSELING SERVICES, INC., ET AL., ) ) Defendants. ) ___________________________________ ) Case No.: C 01-21151 JW (PVT) ORDER DENYING DEFENDANTS’ MOTION FOR PROTECTIVE ORDER; AND ORDER GRANTING PLAINTIFFS’ MOTION TO COMPEL [Docket Nos. 756, 758 ] 18 INTRODUCTION 19 Individual defendants Don R. Mealing and Lynn Hasney move for protective order to delay 20 the production of discovery related to their private financial information, unless and until, liability is 21 first determined. (collectively “defendants”). On the other hand, plaintiffs Elena del Campo, and 22 others similarly situated, move to compel further interrogatory responses related to that same 23 information. (collectively “plaintiffs”). The parties oppose each others’ respective motions. 24 Pursuant to Civ. L.R. 7-1, the motions were taken under submission. Having reviewed the papers 25 and considered the arguments of counsel, defendants’ motion for protective order is denied and 26 plaintiffs’ motion to compel is granted.1 27 28 1 The holdings of this court are limited to the facts and particular circumstances underlying the present motions. ORDER, page 1 Dockets.Justia.com 1 BACKGROUND American Corrective Counseling Services, Inc. has filed for bankruptcy and all proceedings 2 3 related to that corporate entity have been stayed by the court. (“ACCS”). However, the above- 4 captioned case is proceeding against the individual defendants and one of the corporations formed 5 by defendant Mealing named Inc. Fundamentals. See Docket No. 740. 6 In the amended and consolidated complaint, plaintiffs have alleged, inter alia, that 7 defendants violated the Fair Debt Collection Practices Act, 15 U.S.C §1692, by operating a bad 8 check diversion program which threatened criminal prosecution if bad check writers failed to remit 9 certain fees. See Docket No. 283. On January 3, 2007, the court approved the parties’ stipulated 10 protective order to govern the discovery and disclosure of confidential, proprietary and private 11 information. (“January 3, 2007 Stipulated Protective Order”). See Docket No. 290. On December 12 3, 2008, the case was certified as a class action. See Docket No. 705. 13 Plaintiffs served the individual defendants with certain discovery related to their private 14 financial information. Specifically, plaintiffs propounded interrogatories seeking information 15 regarding defendants’ personal assets and net worth. The defendants objected, and in turn, moved 16 for protective order. And plaintiffs moved to compel. 17 18 19 DISCUSSION I. Defendants’ Motion for Protective Order “A party or any person from whom discovery is sought may move for a protective order . . . . 20 [and] [t]he court may, for good cause, issue an order to protect a party or person from annoyance, 21 embarrassment, oppression, or undue burden or expense, . . . .” Fed. R. Civ. P. 26(c)(1). “To obtain 22 a protective order, the party resisting discovery or seeking limitations thereon, must show ‘good 23 cause’ for its issuance.” Schwarzer, William W., Tashima, A. Wallace, Wagstaffe, James M., 24 California Practice Guide, Federal Civil Procedure Before Trial, 11:1070 (citing Fed. R. Civ. P. 25 26(c)(1); Jepson, Inc. v. Makita Elec. Works, Ltd, 30 F.3d 854, 858 (7th Cir. 1994)). “The moving 26 party must make a clear showing of a particular and specific need for the order.” Id. (citing 27 Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975)). 28 ORDER, page 2 1 A. Right to Privacy 2 Generally, federal courts recognize a right to privacy that can be raised in response to 3 discovery requests. See, e.g., Johnson by Johnson v. Thompson, 971 F.2d 1487, 1497 (10th Cir. 4 1992) and DeMasi v. Weiss, 669 F.2d 114, 119-120 (3rd Cir. 1982). However, the right of privacy is 5 not an absolute bar to discovery. Rather, courts balance the need for the information against the 6 claimed privacy right. See, e.g., Ragge v. MCA/Universal Studios, 165 FRD 601, 604 (C.D. Ca. 7 1995). 8 Defendants Mealing and Hasney move for protective order on the grounds that a protective 9 order would prevent the premature disclosure of their private financial information in violation of 10 their respective privacy rights. Instead, defendants request that any such discovery occur, only if 11 and after, liability has been determined because of the especially “burdensome and intrusive nature 12 of the net worth discovery requests.” In addition, defendants note that plaintiffs’ own hybrid 13 approach to class certification warrants granting their request. 14 Originally, plaintiffs had sought to certify two classes, one class pursuant to Rule 23(b)(2) on 15 the issues of injunctive and declaratory relief and statutory damages and then another class pursuant 16 to Rule 23(b)(3) on the issue of actual damages. (the “Rule 23(b)(2) class” and the “Rule 23(b)(3) 17 class”). Plaintiffs explained that they sought to certify the two classes consecutively, instead of 18 concurrently, because they were uncertain whether defendants would be able to pay damages. 19 The district court rejected any efforts to bifurcate class certification stating that “judicial economy 20 militated against plaintiffs’ piecemeal approach, especially in light of the speculative nature of 21 plaintiffs’ contentions regarding damages.” Order Denying Plaintiffs’ Implied Motion to Bifurcate 22 Class Certification dated September 19, 2008. (“September 19, 2008 Order”). See Docket no. 682. 23 Pursuant to the September 19, 2008 Order, plaintiffs later moved for concurrent certification of the 24 two classes, which was granted by the district court. Order Granting Plaintiffs’ Supplemental 25 Motion for Class Certification dated December 3, 2008. See Docket no. 705. 26 Defendants further note that plaintiffs have contended that the primary goal of litigation is 27 declaratory and injunctive relief. Indeed, defendants point out that the district court itself noted that 28 monetary damages are incidental to the Rule 23(b)(2) class. Id. ORDER, page 3 1 Plaintiffs argue that bifurcating liability and discovery will cause even further delays in 2 already protracted litigation. Indeed, the above-captioned action was filed on December 11, 2001. 3 Plaintiffs further argue that the district court’s rejection of their efforts to impliedly bifurcate class 4 certification in the interests of judicial economy militates against bifurcating liability and discovery 5 here. Plaintiffs also argue that defendants had not sought to bifurcate discovery when the parties 6 submitted their respective proposals for a discovery management plan in or around November 2007. 7 Defendants have not shown good cause for a protective order. The court agrees that efforts 8 to bifurcate liability and discovery would only cause further and unnecessary delays in the above- 9 captioned action. As noted by plaintiffs (and as discussed below), defendants’ private financial 10 information is relevant and may be disclosed subject to the January 3, 2007 Stipulated Protective 11 Order. Therefore, on balance, the need here for the information outweighs the claimed privacy 12 rights. Accordingly, defendants’ motion for protective order is denied. 13 II. 14 Plaintiffs’ Motion to Compel Pursuant to Rule 37(a), plaintiffs move to compel further interrogatory responses on the 15 grounds that the discovery sought is relevant, that the discovery is reasonably calculated to lead to 16 the discovery of admissible evidence and that the discovery is not protected from disclosure by any 17 privilege. 18 Rule 26(b) states that “[p]arties may obtain discovery regarding any nonprivileged matter 19 that is relevant to any party’s claim or defense.” Fed. R. Civ. P. 26(b). “Relevant information need 20 not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery 21 of admissible evidence.” Id. 22 Notwithstanding the above, discovery is subject to certain limitations and is not without 23 “ultimate and necessary boundaries.” Gonzales v. Google, Inc., 234 F.R.D. 674, 680 (N.D. Cal. 24 2006) (citing Pacific Gas and Elec., Co. v. Lynch, 2002 WL 32812098, at *1 (N.D. Cal. August 19, 25 2002). Unless a party objects to producing any documents requested, it must produce the requested 26 documents as they are kept in the usual course of business or organize and label them to correspond 27 to the categories in the request. Fed. R. Civ. P. 34(b)(2)(E). 28 Under Rule 26, a court must limit the frequency or extent of discovery if it determines any of ORDER, page 4 1 2 the following: (i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues. 3 4 5 6 7 Fed. R. Civ. P. 26(b)(2)(i), (ii) and (iii). 8 Based on the various claims alleged in the above-captioned action, a court may award 9 statutory and punitive damages. Specifically, the Fair Debt Collection Practices Act allows for 10 statutory damages, which may include no more than 1 percent of the defendants’ net worth. 11 Plaintiffs’ remaining claims provide for an award of punitive damages. 12 Plaintiffs argue that discovery related to the individual defendants’ personal assets and net 13 worth is relevant and reasonably calculated to lead to the discovery of admissible evidence. From 14 approximately 1996 until November 2004, defendants Mealing and Hasney actively managed and 15 controlled ACCS. Their majority interest in ACCS was later sold for $30 million. 16 Defendants too, concede that the discovery sought is relevant. See, e.g., Notice of Motion 17 and Motion for Protective Order to Bifurcate Discovery to Protect Privacy Rights at 11. 18 (“Defendants do not dispute that Plaintiffs are entitled to discovery to help establish their damages 19 claims, . . . . “). 20 In light of the claims alleged and the potential remedies thereto, the discovery sought by 21 plaintiffs is relevant. See, e.g., Oakes v. Halvorsen Marine Ltd., et al., 179 F.R.D. 281, 286 (C.D. 22 Cal. 1998)(“The discovery of financial information relevant to a punitive damages claim is 23 permissible under the Federal Rules of Civil Procedure, whether or not such evidence would be 24 admissible at trial.”). Defendants may produce their interrogatory responses subject to the January 25 3, 2007 Stipulated Protective Order. Accordingly, plaintiffs’ motion to compel is granted. 26 27 28 ORDER, page 5 1 CONCLUSION 2 Based on the foregoing reasons, defendants’ motion for protective order is denied and 3 plaintiffs’ motion to compel is granted. Defendants shall serve their interrogatory responses no later 4 than November 13, 2009. Defendant Hasney shall serve further interrogatory 5 responses to interrogatory nos. 17 (set one), 20 and 21 (set two), 22, 23 and 25 (set three) and 6 defendant Mealing shall serve further interrogatory responses to interrogatory nos. 16, 17 and 18 (set 7 one), 20, 21 and 22 (set two), 22 [sic.] and 24 (set three). Defendants Hasney and Mealing may elect 8 to respond to certain interrogatories (interrogatory nos. 23 and 25 for defendant Hasney and 9 interrogatory nos. 22 and 24 for defendant Mealing) pursuant to Rule 33(d)(1). 10 11 IT IS SO ORDERED. Dated: October 23, 2009 12 13 PATRICIA V. TRUMBULL United States Magistrate Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER, page 6
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