law and motion tentative rulings date: july 23, 2020 … · 7/23/2020 · 191 north first street,...

SUPERIOR COURT, STATE OF CALIFORNIA

COUNTY OF SANTA CLARA

Department 6, Honorable Maureen A. Folan Farris Bryant, Courtroom Clerk

191 North First Street, San Jose, CA 95113

To contest the ruling, call (408) 808-6856 before 4:00 P.M.

LAW AND MOTION TENTATIVE RULINGS

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LINE # CASE # CASE TITLE RULING

LINE 1 20CV365010 Dinesh Patel et al vs Santa

Clara Unified School District

et al

This matter will be heard by Judge Kirwan (who

handles Writs of Mandates) on October 27, 2020

at 9am in Department 19.



et al






et al




LINE 4 18CV338604 CHARLES KUTA vs

COLORTOKENS. INC

Click Control Line 4 for Tentative Ruling

LINE 5 18CV338604 CHARLES KUTA vs

COLORTOKENS. INC


LINE 6 19CV342353 Matilde Orozco et al vs Oscar

Avina et al

Counsel participated in an informal discovery

conference with the Court on October 6, 202 and

did an excellent job resolving the motion on

calendar today. Counsel will submit a

stipulation and order on the agreement reached.

This Motion is OFF CALENDAR.

LINE 7 19CV359995 Mark Figueiredo vs Craig

Hansen et al

Counsel participated in an informal discovery

conference with the Court on September 30,

2020 and had a very fruitful discussion. Well

done! The Motion for Protective Order is

continued to November 12, 2020 at 9am, if

necessary. Counsel will continue to meet and

confer and participate in another IDC on

October 28th, 2020 at 10am to advise the Court

of the status of their efforts.







LINE 8 20CV362574 IAN MCNISH et al vs

DANIEL BIKLE et al

Defendant’s Motion to Compel Further

Responses is OFF CALENDAR as supplemental

responses were provided before the hearing of

this matter. The Court conducted an Informal

Discovery Conference with both sides on

September 30, 2020 and both sides did a very

good job during the informal discovery

conference. The Court is proud of both sides for

their commitment to changing the previous

dynamic that existed and treating this dispute as

a business problem to be solved.

LINE 9 18CV322457 Mariia Kravchuk vs Taylor

Morrison of California, LLC

OFF CALENDAR. This Motion was rendered

moot after Court’s 7-16-2020 order.

LINE 10 19CV357352 JULIE MABIE-

MARCELLUS et al vs

ELAINE NEZ et al

The Court needs information on whether

attorney Steinberg has filed any applications to

serve as counsel pro hac vice in California in the

preceding two years. CRC 9.40 (d) (5) and proof

that fees have been paid to the State Bar. The

Court cannot grant this application absent same.

LINE 11 20CV364349 Muneca Nogami et al vs

Thong Nguyen et al

Plaintiffs’ Motion to Recover Costs against

Defendants Peter Nguyen and Thong Nguyen is

GRANTED. The Court will not consider the

opposition papers because defaults have been

entered against both defendants as of the time

the Court posted this tentative ruling. Plaintiffs

are entitled to costs pursuant to Code of Civil

Procedure 415.30 (d) and the Court finds the

attorney time and expenses incurred in locating

these hard to find defendants in the amount of

$1,910 reasonable. Accordingly, the Court

orders Peter Nguyen and Thong Nguyen to pay

plaintiffs the amount of $1,910. The Court will

prepare the order.

LINE 12 17CV315411 John Park v Peter Lunardi et al Park’s Discovery Motion is continued to October 8, 2020 at 9am.

John Park v Peter Lunardi et

al


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LINE 15

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LINE 17

LINE 18

LINE 19

LINE 20

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LINE 23

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LINE 25

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LINE 27

LINE 28

LINE 29

LINE 30

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1

Calendar line 4-5 Case Name: Kuta v. Colortokens, Inc.

Case No.: 18CV338604

After full consideration of the evidence, the separate statements submitted by the

parties, and the authorities submitted by each party, the court makes the following rulings:

This is an action for wrongful termination. According to the complaint, plaintiff

Charles Kuta (“Kuta”) signed an employment agreement with defendant ColorTokens (“CT”)

in which he was to earn a salary of $150,000 plus two forgivable loans for $35,000 in 2015 and

2016, respectively, to be its Principle Engineer. (See complaint, ¶¶ 14-15.) The first

forgivable loan was made to Kuta on August 3, 2015. (See complaint, ¶ 16.) At the end of

May 2016, Kuta met with CT’s CEO, Nitin Mehta, who raised Kuta’s salary to $180,000 per

year. (See complaint, ¶ 18.) Kuta asked Mr. Mehta about the second forgivable loan, but did

not receive a response. (Id.) Kuta was in a rush to get a beta version of their product out so he

did not give further thought about the failure to provide the second loan until April 28, 2018

when Plaintiff reviewed the offer letter again. (See complaint, ¶ 18, 22.) Kuta then sent an

email to HR, requesting the second forgivable loan to which he was entitled. (See complaint, ¶

22.) On April 30, 2018, Kuta was out of the office due to a colonoscopy. (See complaint, ¶

23.) Kuta’s manager, Bharat Sastri (“Sastri”), informed Kuta that both of them were laid off,

and as Kuta was not present, Kuta was requested to go in the following day. (Id.) On May 1,

2018, Mr. Mehta terminated Kuta because the company had decided to not continue

development of their product, despite being told on April 27, 2018 that the sales force was very

excited about the product and felt that it would be the first product to generate significant

revenues for CT. (See complaint, ¶¶ 21, 24, 25.) Kuta is 62 years old and believes that he was

wrongfully terminated due to age discrimination and for retaliation for seeking his full

compensation. (See complaint, ¶ 26.)

On November 28, 2018, Kuta filed the complaint against CT, asserting causes of action

for:

1) Wrongful termination in violation of public policy;

2) Retaliation in violation of California Labor Code § 1102.5;

3) Breach of written contract;

4) Breach of implied covenant of good faith and fair dealing;

5) Fraud;

6) Promissory estoppel; and,

7) Declaratory relief.

On January 18, 2019, CT filed a cross-complaint (“XC”) against Kuta, asserting causes

of action for:

1) Breach of contract;

2) Breach of the implied covenant of good faith and fair dealing;

3) Fraud;

4) Promissory estoppel; and,

5) Declaratory relief.

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CT moves for summary judgment, or, in the alternative, moves for summary

adjudication of each of Plaintiff’s causes of action. CT separately moves for summary

judgment of the XC, or, in the alternative, moves for summary adjudication of a number of

“issues” related to each cause of action.

I. DEFENDANT COLORTOKEN’S MOTION FOR SUMMARY JUDGMENT,

OR, IN THE ALTERNATIVE, FOR SUMMARY ADJUDICATION OF

EACH CAUSE OF ACTION OF THE COMPLAINT

Defendant’s burden on summary judgment or adjudication

“A defendant seeking summary judgment must show that at least one element of the

plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause

of action. … The burden then shifts to the plaintiff to show there is a triable issue of material

fact on that issue.” (Alex R. Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98

Cal.App.4th 66, 72; internal citations omitted; emphasis added.)

“The ‘tried and true’ way for defendants to meet their burden of proof on summary

judgment motions is to present affirmative evidence (declarations, etc.) negating, as a matter of

law, an essential element of plaintiff’s claim.” (Weil et al., Cal. Practice Guide: Civil

Procedure Before Trial (The Rutter Group 2007) ¶ 10:241, p.10-91, citing Guz v. Bechtel

National Inc. (2000) 24 Cal.4th 317, 334; emphasis original.) “The moving party’s declarations

and evidence will be strictly construed in determining whether they negate (disprove) an

essential element of plaintiff’s claim ‘in order to avoid unjustly depriving the plaintiff of a

trial.’” (Id. at § 10:241.20, p.10-91, citing Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092,

1107.)

“Another way for a defendant to obtain summary judgment is to ‘show’ that an

essential element of plaintiff’s claim cannot be established. Defendant does so by presenting

evidence that plaintiff ‘does not possess and cannot reasonably obtain, needed evidence’

(because plaintiff must be allowed a reasonable opportunity to oppose the motion.) Such

evidence usually consists of admissions by plaintiff following extensive discovery to the effect

that he or she has discovered nothing to support an essential element of the cause of action.”

(Id. at ¶ 10:242, p.10-92, citing Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-

855.)

Law regarding summary judgment in discrimination and retaliation cases

In reviewing motions for summary judgment or adjudication in discrimination or

retaliation cases, California courts employ the burden-shifting formula first articulated by the

United States Supreme Court in McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792.

(King v. United Parcel Service (2007) 152 Cal.App.4th 426, 433, fn.2; see also Scotch v. Art

Institute of California (2009) 173 Cal.App.4th 986, 1004; see also Loggins v. Kaiser

Permanente Internat. (2007) 151 Cal.App.4th 1102, 1108–1109 (stating that “[w]hen a plaintiff

alleges retaliatory employment termination either as a claim under the FEHA or as a claim for

wrongful employment termination in violation of public policy, and the defendant seeks

3

summary judgment, California follows the burden shifting analysis of McDonnell Douglas

Corp. v. Green (1973) 411 U.S. 792 … to determine whether there are triable issues of fact for

resolution by a jury”).) Under McDonnell Douglas, the plaintiff bears the burden of

establishing a prima facie case of discrimination, and the burden then shifts to the employer to

offer a legitimate, nondiscriminatory or nonretaliatory reason for the adverse employment

action. (See Mixon v. Fair Employment and Housing Commission (1992) 192 Cal.App.3d

1306, 1318; see also Yanowitz v. L'Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1042 (stating that “

[o]nce an employee establishes a prima facie case, the employer is required to offer a

legitimate, nonretaliatory reason for the adverse employment action”); see also Loggins, supra,

151 Cal.App.4th at p.1109 (stating that “[i]n the first stage, the ‘plaintiff must show (1) he or

she engaged in a ‘protected activity,’ (2) the employer subjected the employee to an adverse

employment action, and (3) a causal link existed between the protected activity and the

employer's action… [and i]f the employee successfully establishes these elements and thereby

shows a prima facie case exists, the burden shifts to the employer to provide evidence that

there was a legitimate, nonretaliatory reason for the adverse employment action”); see also

Sada v. Robert F. Kennedy Medical Center (1997) 56 Cal.App.4th 138, 155 (stating same).)

“‘A defendant employer’s motion for summary judgment slightly modifies the order of

these [McDonnell Douglas] showings.’” (Scotch, supra, 173 Cal.App.4th at p.1005, quoting

Kelly v. Stamps.com, Inc. (2005) 135 Cal.App. 4th 1088, 1097.) To prevail on its motion for

summary judgment, the defendant employer is “required to show either that (1) plaintiff could

not establish one of the [prima facie] elements of the FEHA claim, or (2) there was a

legitimate, nondiscriminatory [or nonretaliatory] reason for its decision to terminate plaintiff's

employment.” (Avila v. Continental Airlines, Inc. (2008) 165 Cal.App.4th 1237, 1247, citing

Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 355-356 and Kelly, supra, 135 Cal. App.

4th at pp.1097-1098.) The elements for a discrimination claim are: that (1) [the plaintiff] was a

member of a protected class, (2) he was qualified for the position he sought or was performing

competently in the position he held, (3) he suffered an adverse employment action, such as

termination, demotion, or denial of an available job, and (4) some other circumstance suggests

discriminatory motive.” (Guz, supra, 24 Cal.4th at p.355.) “[T]o establish a prima facie case of

retaliation under the FEHA, a plaintiff must show (1) he or she engaged in a ‘protected

activity,’ (2) the employer subjected the employee to an adverse employment action, and (3) a

causal link existed between the protected activity and the employer's action.” (Yanowitz,

supra, 36 Cal.4th at p.1042.)

“If the employer has met its burden by showing a legitimate reason for its conduct, the

employee must demonstrate a triable issue by producing substantial evidence that the

employer’s stated reasons were untrue or pretextual, or that the employer acted with a

discriminatory [or retaliatory] animus, such that a reasonable trier of fact could conclude that

the employer engaged in intentional discrimination [or retaliation] or other unlawful action.”

(DeJung v. Super. Ct. (2008) 169 Cal.App.4th 533, 553, citing Cucuzza v. City of Santa Clara

(2002) 104 Cal.App.4th 1031, 1038 and Guz, supra, 24 Cal.4th at pp.357-358 (also stating that

“the ultimate issue is simply whether the employer acted with a motive to discriminate

illegally”) (emphasis original); see also Serri v. Santa Clara University (2014) 226 Cal.App.4th

830, 861-868 (stating that Loggins, supra, “held that a prima facie showing of ‘temporal

proximity, although sufficient to shift the burden to the employer to articulate a

nondiscriminatory reason for the adverse employment action, does not, without more, suffice

also to satisfy the [employee's burden] to show a triable issue of fact on whether the employer's

articulated reason was untrue and pretextual”; also stating that “[s]ince we have already

4

concluded that Serri cannot meet her burden of showing that the stated [nondiscriminatory]

reasons for her termination were false or pretextual, we reject her contention that the timing in

this case, in itself, was sufficient to create a triable issue regarding her tortious discharge and

retaliation claims”); see also Hicks v. KNTV Television, Inc. (2008) 160 Cal.App.4th 994, 1003;

see also Horn v. Cushman & Wakefield Western, Inc. (1999) 72 Cal.App.4th 798, 806; see also

Wills v. Superior Court of Orange County (2011) 195 Cal.App.4th 143, 170.) “Speculation

cannot be regarded as substantial responsive evidence.” (Cucuzza, supra, 104 Cal.App.4th at

p.1038; see also Horn, supra, 72 Cal.App.4th at p.807 (stating that “an issue of fact can only be

created by a conflict of evidence… [i]t is not created by speculation or conjecture”); see also

Martin v. Lockheed Missiles & Space Co. (1994) 29 Cal.App.4th 1718, 1735 (stating that “the

discharged employee, to avert summary judgment, must produce ‘substantial responsive

evidence’ that the employer’s showing was untrue or pretextual… speculation cannot be

regarded as substantial responsive evidence”); see also Compton v. City of Santee (1993) 12

Cal.App.4th 591, 595-596 (stating that “[a] party may not avoid summary judgment based on

mere speculation and conjecture [citation], but instead must produce admissible evidence

raising a triable issue of fact”).).) “Further, an inference of intentional discrimination cannot

be drawn solely from evidence, if any, that the company lied about its reasons.” (Guz, supra,

24 Cal.4th at p.360; see also Guz, supra, 24 Cal.4th at p.361 (stating that “[t]he pertinent statutes

do not prohibit lying, they prohibit discrimination… [and] there must be evidence supporting a

rational inference that intentional discrimination, on grounds prohibited by the statute, was the

true cause of the employer’s actions”) (emphasis original).) “[E]ven where the plaintiff has

presented a legally sufficient prima facie case of discrimination, and has also adduced some

evidence that the employer’s proffered innocent reasons are false, the fact finder is not

necessarily entitled to find in the plaintiff’s favor.” (Id. at pp.361-362.) “For instance, an

employer would be entitled to judgment as a matter of law if the record conclusively revealed

some other, nondiscriminatory reason for the employer’s decision, if the plaintiff created only a

weak issue of fact as to whether the employer’s reason was untrue and there was abundant and

uncontroverted independent evidence that no discrimination had occurred.” (Id. at 362.) “In

order to raise an issue as to the employer’s credibility, the employee must set forth specific

facts demonstrating ‘such weaknesses, implausibilities, inconsistencies, incoherences, or

contradictions in the employer’s proffered legitimate reasons for its action that a reasonable

factfinder could rationally find them ‘unworthy of credence.’’” (Cucuzza, supra, 104

Cal.App.4th at p.1038, quoting Hersant v. Department of Social Services (1997) 57 Cal.App.4th

997, 1005; see also Serri, supra, 226 Cal.App.4th at p.863 (stating same); see also Horn, supra,

72 Cal.App.4th at pp.806-807; see also Arteaga v. Brink's, Inc. (2008) 163 Cal.App.4th 327, 342

(stating that “[t]he employee cannot simply show that the employer’s decision was wrong or

mistaken, since the factual dispute at issue is whether discriminatory animus motivated the

employer, not whether the employer is wise, shrewd, prudent, or competent”); see also Reeves

v. MV Transp., Inc. (2010) 186 Cal.App.4th 666, 673-674.)

“[T]he plaintiff may establish pretext ‘either directly by persuading the court that a

discriminatory reason more likely motivated the employer or indirectly by showing that the

employer’s proffered explanation is unworthy of credence.’” (Morgan v. Regents of University

of Cal. (2000) 88 Cal.App.4th 52, 68-69.) “Circumstantial evidence of ‘pretense’ must be

‘specific’ and ‘substantial’ in order to create a triable issue with respect to whether the

employer intended to discriminate on an improper basis.” (Id. at p.69.) “With direct evidence

of pretext, ‘a triable issue as to the actual motivation of the employer is created even if the

evidence is not substantial.’” (Id.) “The plaintiff is required to produce ‘very little’ direct

evidence of the employer’s discriminatory intent to move past summary judgment.” (Id.)

5

“In Guz, the Supreme Court emphasized that ‘the great weight of federal and California

authority holds that an employer is entitled to summary judgment if, considering the

employer’s innocent explanation for its actions, the evidence as a whole is insufficient to

permit a rational inference that the employer’s actual motive was discriminatory.” (Serri,

supra, 226 Cal.App.4th at p.861, citing Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317, 361.) “It

is not sufficient for an employee to make a bare prima facie showing or to simply deny the

credibility of the employer’s witnesses or to speculate as to discriminatory motive.” (Id., citing

Hersant, supra, 57 Cal.App.4th 1004; see also Hicks, supra, 160 Cal.App.4th at p.1003 (stating

that “[t]he plaintiff must do more than raise the inference that the employer’s asserted reason is

false”).) “‘A reason cannot be proved to be ‘a pretext for discrimination’ unless it is shown

both that the reason was false, and that discrimination was the real reason.’” (Hicks, supra,

160 Cal.App.4th at p.1003, quoting St. Mary's Honor Center v. Hicks (1993) 509 U.S. 502, 515

(emphasis original); see also McGrory v. Applied Signal Technology, Inc. (2013) 212

Cal.App.4th 1510, 1531 (stating that there must be evidence supporting a rational inference that

intentional discrimination, on grounds prohibited by the statute, was the true cause of the

employer’s actions”); see also Serri, supra, 226 Cal.App.4th at p.863 (stating that “[l]ogically,

disbelief of an Employer's stated reason for a termination gives rise to a compelling inference

that the Employer had a different, unstated motivation, but it does not, without more,

reasonably give rise to an inference that the motivation was a prohibited one”); see also St.

Mary's Honor Center v. Hicks (1993) 509 U.S. 502, 514-519 (stating that “[w]e have no

authority to impose liability upon an employer for alleged discriminatory employment

practices unless an appropriate factfinder determines, according to proper procedures, that the

employer has unlawfully discriminated… nothing in law would permit us to substitute for the

required finding that the employer's action was the product of unlawful discrimination, the

much different (and much lesser) finding that the employer’s explanation of its action was not

believable”; also stating that “once the defendant has responded to the plaintiff's prima facie

case, ‘the district court… needs to decide’ not … whether defendant’s response is credible, but

‘whether the defendant intentionally discriminated against the plaintiff”).) “If plaintiff

produces no evidence from which a reasonable factfinder could infer that the employer’s true

reason was discriminatory, the employer is entitled to summary judgment.” (Hicks, supra, 160

Cal.App.4th at p.1003.) “[E]ven though we may expect a plaintiff to rely on inferences rather

than direct evidence to create a factual dispute on the question of motive, a material triable

controversy is not established unless the inference is reasonable. And an inference is

reasonable if, and only if, it implies the unlawful motive is more likely than defendant’s

proffered explanation.” (Cucuzza, supra, 104 Cal.App.4th at p.1038; see also McGrory, supra,

212 Cal.App.4th at pp.1529-1530 (stating that “even though we may expect a plaintiff to rely

on inferences rather than direct evidence to create a factual dispute on the question of motive, a

material triable controversy is not established unless the inference is reasonable”).) “If

plaintiff fails to produce substantial responsive evidence to demonstrate a material triable

controversy, summary judgment is properly granted.” (Id.) Additionally, “temporal proximity

alone is not sufficient to raise a triable issue as to pretext once the employer has offered

evidence of a legitimate, nondiscriminatory reason for the termination.” (Arteaga v. Brink's,

Inc. (2008) 163 Cal.App.4th 327, 353, 357 (also stating that “[s]tanding alone against

Defendant’s strongly supported legitimate reason for terminating [Plaintiff], temporal

proximity does not amount to more than a scintilla of evidence of discrimination”; also stating

that "[w]here the employee relies solely on temporal proximity in response to the

employer's evidence of a nonretaliatory reason for termination, he or she does not create a

triable issue as to pretext, and summary judgment for the employer is proper”); see also

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Loggins v. Kaiser Permanente Internat. (2007) 151 Cal.App.4th 1102, 1112 (stating that

“temporal proximity, although sufficient to shift the burden to the employer to articulate a

nondiscriminatory reason for the adverse employment action, does not, without more, suffice

also to satisfy the secondary burden borne by the employee to show a triable issue of fact on

whether the employer's articulated reason was untrue and pretextual”); see also Light v.

Department of Parks & Recreation (2017) 14 Cal.App.5th 75, 94 (stating that "a mere temporal

relationship between an employee’s protected activity and the adverse employment action,

while sufficient for the plaintiff’s prima facie case, cannot create a triable issue of fact if the

employer offers a legitimate, nonretaliatory reason for the adverse action”); see also Serri v.

Santa Clara University (2014) 226 Cal.App.4th 830, 868 (quoting Loggins, supra, 151

Cal.App.4th at p.1112.)

CT’s request for judicial notice

In support of its motion for summary judgment, CT requests judicial notice of the

complaint. CT’s request for judicial notice is GRANTED.

Second cause of action for retaliation pursuant to Labor Code § 1102.5

The second cause of action for retaliation pursuant to Labor Code § 1102.5 alleges that

CT terminated Kuta due to his April 28, 2018 email to HR “requesting the second forgivable

loan that he was entitled and requested that it be offered in a timely manner.” (See complaint.

¶¶ 29-35, 38-42 (also alleging that CT “intentionally, maliciously, in bad faith terminated

Plaintiff because plaintiff, in good faith and in a reasonable, appropriate business manner,

asserted his right to the earned wages due him under the employment agreement… Labor Code

section 1102.5 et seq. were in full force and effect and were binding on Defendants… the

public policy of… Labor Code §§ 1102.5 et seq., is to prohibit employers from retaliating

against employees who complaint [sic] about activities or conduct that would result in a

violation of state or federal statues [sic], or a violation or noncompliance with state or federal

rule or regulation, including allegations of failure to pay wages… Labor Code § 1102.5, in

relevant part, prohibited an employer from retaliating against an employee for complaining

about conduct or activity that would result in a violation of state or federal statute, or a

violation or noncompliance with a state or federal rule or regulation, including the California

Labor Code provisions pertaining to payment of wages due”).) CT asserts that the second

cause of action lacks merit because: Plaintiff cannot establish the prima facie case because his

April 28, 2018 email does not constitute protected activity; Plaintiff was terminated for

legitimate, non-retaliatory reasons related to CT’s financial difficulties; and, Plaint iff cannot

demonstrate, through “specific and substantial evidence” that CT’s articulated basis for Kuta’s

termination was pretextual. (See CT’s memorandum of points and authorities in support of

motion for summary judgment (“Def.’s memo”), pp.14:9-28, 15:1-28, 16:1-28, 17:1-28, 18:1-

28, 19:1.)

Whether the April 28, 2018 email constitutes protected activity

The second cause of action is premised on Labor Code § 1102.5, subdivision (b). (See

complaint, ¶ 39 (stating that “Labor Code § 1102.5, in relevant part, prohibited an employer

from retaliating against an employee for complaining about conduct or activity that would

result in a violation of state or federal statute, or a violation or noncompliance with a state or

federal rule or regulation, including the California Labor Code provisions pertaining to

payment of wages due”); compare with Lab. Code § 1102.5, subd. (b) (stating that “[a]n

7

employer, or any person acting on behalf of the employer, shall not retaliate against an

employee for disclosing information… to a person with authority over the employee or another

employee who has the authority to investigate, discover, or correct the violation or

noncompliance… if the employee has reasonable cause to believe that the information

discloses a violation of state or federal statute, or a violation of or noncompliance with a local,

state, or federal rule or regulation, regardless of whether disclosing the information is part of

the employee's job duties”).) CT argues that Plaintiff cannot demonstrate a prima facie case

for retaliation pursuant to Labor Code § 1102.5, subdivision (b) because the section

specifically requires the employee to have reasonable cause to believe that the information

discloses a violation of a state or federal statute or a noncompliance with a rule or regulation,

and Plaintiff testified that he did not believe that the April 28, 2018 email constituted a report

of illegal activity.

In support of CT’s arguments, it presents Kuta’s deposition testimony in which he

states that he “didn’t report… to anybody at the company that the company had engaged in

something [he] thought was illegal…. [and did not] at any time, make a complaint in any

hotline with the company about the fact that [he] hadn’t received the loan.” (Guzman decl. in

support of Def.’s motion for summary judgment (“Guzman decl.”), exh. 1 (“Kuta depo”),

pp.278: 2-6, 290:8-12.) Kuta also states that his email to HR requested the second forgivable

loan when he “just happened to be looking at … my ColorTokens folder and came across it and

said, ‘Oh, it $200,000, it’s not $180.’” (Id. at pp.278:19-25, 279:1-11.) HR never responded to

his request, and Kuta never called HR back because he “didn’t have a chance because… [t]he

Monday afterwards [he] was getting a colonscopy and was out of action, and then [he] was told

[he] was terminated… [although he] had subsequent communications with [HR… t]alking

about stock options and severance and other issues… [and did not] ever raise with [HR] in any

of those emails about [HR’s failure to respond to the request].” (Id. at p. 288:9-18.) CT meets

its initial burden to demonstrate that Kuta did not make a disclosure of a federal or state statute,

rule or regulation, and did not have reasonable cause to believe that his April 28, 2018 email

disclosed a violation of a statute.

CT also meets its burden to demonstrate that it had a legitimate, nonretaliatory reason for

Kuta’s termination.

CT argues that Kuta was terminated due to financial difficulties, and was forced to

focus on its core ColorTokens software developed by the mainline engineering team, and away

from the projects of the NetX Team. (See Def.’s memo, p.16:3-15.) In support of their

argument, they present the deposition testimony of Kuta’s manager, Sastri, who states that: the

NetX project was created in April 2017 to deploy in September for the Veterans

Administration (“VA”) (see Guzman decl., exh. 4 (“Sastri depo”), pp.100:6-25, 101:1-3,

103:10-25, 104:1-2); CT’s CEO initially gave Sastri the resources to create eight fully

functional NetX boards by him and Kuta, and later were assigned Ryan Farjadi (“Farjadi”) and

Ankush Saxena (“Saxena”) to develop software for the NetX, the ColorMaster side of things

(id. at pp.118:1-18, 126:4-15); the NetX project was tangential to the main software, with a

complete separate source tree as it was developed primarily for the VA (id. at p.124:20-25); the

three teams were the mainline engineering department, the NetX team, and the contractor use

team, and “the NetX team essentially became the contract use team” (id. at p.127:8-16); on the

contractor use team, Bryce and Kuta were added (id. at pp.129:3-25, 130:1-3); CT was

disqualified from the Long Beach bid at the VA and the team then began doing investigative

work “little projects to just verify certain things, for example, how do you control a motor in a

8

power plant using a NetX” because Sastri “wanted to do something productive, not just sit

around… [because he] was being paid a salary” (id. at pp.170:20-25, 171:1-9, 173:8-16); a

week before Sastri and Kuta’s termination, an individual named Natarajan asked to look at the

NetX code, and the team also gave him a couple of NextX boards to bring back with him (id. at

pp.182:21-25, 183:1-10); in March 2018, Sastri had a conversation with Mehta and Pankaj

Parekh about the company’s financial situation, and when asked how he felt about things,

Sastri told them that he was “very disheartened because I believe we have spent $20 million,

and this was my estimate, and we don’t have a product to sell… I just feel very discouraged

and disheartened that we have spent so much money and so much time and energy and we

don’t have anything” (id. at pp.188:25, 189:1-20); and, at the same time of Sastri’s termination,

Kuta, Farjadi and Saxena were also terminated (id.at p.204:15-22).

CT also presents the deposition testimony of Farjadi who also states that: in early to

mid-2017, CT had the opportunity to provide a technical solution to the VA to segregate its

medical devices from its central IT network to address cybersecurity issues by acting as an air

gap or bump in the wire (see Guzman decl., exh. 7 (“Farjadi depo”), p.45:1-24); Farjadi

believes he was made aware of the rejection by the VA to CT’s bidon the NetX project (id. at

p.65:3-13); some of the initial runs of the boards were faulty, and Farjadi is unsure as to

whether the problems were fixed (id. at p.74:5-18); in May 2018, Farjadi was told that the team

was being dissolved—that the entire team was being disbanded (id. at pp.95:1-25, 96:1-25,

97:1-7); and, at this conversation, it seemed like there was a possibility that they might want to

pull some of the team back into the mainline ColorMaster branch team but there were internal

politics regarding disagreements “with the engineering style and the decisions in hiring and

structural decisions of that portion of the company and that there was significant issues

working with that team” and he had a discussion about staying on and working on the

ColorMaster software, but it was decided that it wasn’t going to work (id.at p.98:1-9).

CT also presents the deposition testimony of Saxena, who states that: when he and

Farjadi came over to the NetX team in mid-2017, the team was trying to find a solution for “a

huge VA contract” to segregate medical devices to hospitals from the main IT infrastructure by

creating a hardware product known as NetX that would as a bump in the wire (see Guzman

decl., exh. 8 (“Saxena depo”), pp.40:16-25, 41:1-17); the NetX team itself was focused on

developing the software component of the device as the hardware component was developed

externally by Volanysys (id. at p.41:18-25); Sastri worked on some hardware problems (id. at

p.43:11-21); around late September 2017, he was informed by Sastri that the VA had rejected

the NetX bid and were no longer pursuing the VA contract (id. at pp.46:25, 47:1-3, 16-18);

after the VA had rejected the NetX bid, the team worked on other applications that

ColorMaster didn’t cover, including the contractor use case, which continued until he left CT

(id. at pp.48:7-25, 49:1-19, 50:11-18, 51:4-10); CT dissolved the NetX team and “most of the

engineers” because CT was “running out of money… burned it all trying to build whatever

Rajesh Kazansky had dreamed of and nobody was buying it” (id. at pp.63:5-25, 64:1-16); and,

when he was terminated, the product was months away from bringing the NetX product to

market as it still required testing, production and a customer (id. at pp.110:1-25, 111:1-25,

112:1-25).

CT also presents the deposition testimony of Bryce Jonasson, a Windows consultant

(see Guzman decl., exh. 9 (“Jonasson depo”), p.56:12-25), who states that, prior to his

termination, he “kind of saw it coming… that the end was near” because he “was concerned

about the viability of the company on whole… [and] went out to look for another job and that’s

9

how come… I found a job right away… I was at work three days after they fired me” (id. at

p.63:7-25); he did not think CT was viable because it had no sales (id. at pp.64:2-25, 65:1-5);

prior to his termination, he noticed that people were disappearing and Pankaj Parekh, the VP of

engineering was terminated within a week of him (id. at p.65:6-25); and, the NetX team was

dissolved at the same he was terminated, and there were many more people getting terminated

(id. at p.80:11-21).

CT also presents Kuta’s deposition testimony, in which he states that: he didn’t report

to anybody at the company that the company had engaged in something that he thought was

illegal (see Kuta depo, p.290:8-12); he didn’t make a complaint at any hotline with the

company that he hadn’t received the loan and did not follow up about the status of the second

loan after the April 1, 2018 meeting (id. at p.278:2-10); he sent an email to Mr. Hiten on April

26 requesting the second forgivable loan but hadn’t requested it earlier because he assumed

that his pay was above the limit when, in fact it wasn’t and when he was looking at his CT

folder and came across it, he fired off the email because “[o]h, it 200,000, it’s not 180” (id. at

pp.278:19-25, 279:1-11); he has never raised the issue regarding the second forgivable loan

with Mr. Patel since his email and the issue has not come up during his exit meeting (id. at

pp.288:9-25, 289:1-11, 303:11-13); Mr. Hiten Patel did not do anything that led Kuta to

believe he was angry for sending the email (id. at p.294:18-22); no one has communicated to

Kuta that Mr. Patel was angry for Kuta sending the email (id. at p.295:8-19); he was told that

he was being laid off because the NetX project was cancelled (id. at p.283:3-16); Mr. Mehta

suggested that he talk to other people in the company about looking for another position, and

did in fact speak to two people (id. at pp.301:17-21, 302:19-21); and, Farjadi and Saxena told

him they were offered positions but they chose not to accept, and he does not recall what

Jonasson said (id. at pp.300:2-14. 310:13-25, 311:1-4, 313:4-15).

CT also presents the declaration of Hiten Patel, who states that he received the email

from Kuta, but did not respond, and never mentioned this email to Mehta or the head of the

mainline engineering team, and was not involved in the decision making process regarding the

dissolution of the NetX team, Kuta’s termination, or the decision not to offer Kuta an

alternative position with the mainline engineering team (Patel decl. in support of Def.’s motion

for summary judgment, ¶¶ 3-4); on May 1, 2018, he and Dr. Mehta met with Kuta and told him

that CT was terminating him because it was discontinuing the NetX team (id. at ¶ 6); on June

1, 2018, CT contacted Kuta to discuss the opportunity to provide consulting services, but

eventually Kuta stopped responding (id. at ¶ 7).

Lastly, CT presents the declaration of Nitin Mehta, who states that: in September 2016,

CT received a Request for Information from the VA requesting information about potential

solutions as to how to segregate its medical devices from its general IT network, and Sastri was

assigned to prepare the response, a device called NetX (Mehta decl., in support of Def.’s

motion for summary judgment, ¶ 5); Sastri submitted a proposal to lead, oversee and develop

the NetX project and provided him a team including Kuta, Farjadi and Saxena, and Jonasson

was added as a consultant (id. at ¶ 6); Sastri and the NetX team delivered a very rough beta

version on the potential NetX product, which CT used to prepare and submit the requisite bid

for the VA contract, but on September 19, 2017, he was informed that the bid was rejected (id.

at ¶ 7); after the NetX bid was rejected, he permitted Sastri to keep the NetX team together,

including Kuta, to allow the team to explore potential alternative applications for the NetX

technology and product, such as the contractor use case (id. at ¶ 8); on March 5, 2018, Sastri

had a meeting with him in which Sastri expressed extreme reservations about the direction of

10

the company, the value of the company and the likely difficulties that the company would have

in securing future financing, and CT leadership took steps to reevaluate on what it should focus

(id. at ¶¶ 9-11); on April 23, 2018, he met with Natarajan Venkataraman, in which

Venkataraman stated that he had reviewed the NetX code, but his assessment was that the code

was relatively underdeveloped and constituted little more than a proof of concept that required

substantial work to turn it into a viable product (id. at ¶ 12); and, CT decided to dissolve the

NetX team and terminated Kuta, Farjadi, Saxena, Sastri and Jonasson, and to date, no CT

employees have resumed any work on the NetX or contractor use case projects (id. at ¶ 13).

Here, CT meets its initial burden to demonstrate that it had a legitimate, nonretaliatory

reason to terminate Kuta—namely, that it had financial difficulties and the team neither had a

shippable product, nor customers to sell it. Accordingly, the burden shifts to Plaintiff to

produce substantial evidence that the CT’s stated reasons were untrue or pretextual, or that CT

acted with a retaliatory animus.

Kuta’s objections to the portions of the Mehta and Patel declarations are

OVERRULED.

In opposition, Kuta fails to demonstrate the existence of a triable issue of material fact.

In opposition, Kuta presents the “Additional Terms” of his employment agreement,

which provided for the second $35,000 forgivable loan, which, stated: “If requested, additional

$35,000 forgivable loan during second year of employment, provided however your salary,

bonus and other cash compensations combined remains below $200,000.” (See Kuta decl. in

opposition to motion for summary judgment (“Kuta decl.”), ¶ 6, exh. 1.) It was this letter that

he reviewed on April 28, 2018 that prompted his email to Patel. (See Kuta decl., ¶ 24.) Kuta

“believed they were wages owed based on my employment agreement.” (Id.) As to whether

information constitutes a disclosure of a violation of state or federal statute, or a violation or

noncompliance with a state or federal rule or regulation, “it is not the motive of the asserted

whistleblower, but the nature of the communication that determines whether it is covered.”

(Mize-Kurzman v. Marin Community College Dist. (2012) 202 Cal.App.4th 832, 855.)

“[C]omplaints about personal grievances or vague or conclusory remarks that fail to put an

employer on notice as to what conduct it should investigate will not suffice to establish

protected conduct.” (Yanowitz v. L'Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1047 (discussing

protected conduct for purpose of prima facie case of retaliation pursuant to FEHA).) As

previously stated, Kuta admitted that he “didn’t report…at any time…to anybody at the

company that the company had engaged in something [he] thought was illegal.” (Kuta depo,

p.290:8-12.) Here, Kuta’s evidence does not demonstrate that his April 28, 2018 email would

put CT on notice of a violation of the Labor Code. Accordingly, Kuta fails to demonstrate a

triable issue of material fact as to whether he engaged in protected activity.

Regardless of whether Kuta engaged in protected activity, however, Kuta fails to

produce substantial evidence that the CT’s stated reasons were untrue or pretextual, or that CT

acted with a retaliatory animus. Kuta first asserts that Fajardi, Saxena and Jonasson were not

laid off and were offered to continue work within the company while Sastri and Kuta—two

more senior employees, were terminated. (See Pl.’s opposition to Def.’s motion for summary

judgment, p.9:13-19.) However, the argument is not supported by the deposition testimony;

they were all terminated. Moreover, even if Kuta was right about Sastri and Kuta being laid

off due to being “more senior,” that has nothing to do with retaliation. Kuta also argues that

11

“Defendant has not carried its burden of showing a legitimate, nondiscriminatory reason to

terminate Plaintiff [sic] employment, as it did not offer any explanation for its offering other

employees on the same team the opportunity to continue employment.” (Pl.’s opposition to

Def.’s motion for summary judgment, p.9:19-21.) As previously stated, CT met its burden.

Kuta then asserts that “Defendant claims that they terminated Plaintiff because the NetX

Project that he was working on was suspended, but this alleged legitimate, non-discriminatory

reason is false as shown by the abundant evidence that Defendant selected Plaintiff for

termination was retaliatory.” (Id. at p.10:13-16, citing Pl.’s separate statement of undisputed

material facts nos. 27-37.) However, Kuta relies solely on ‘the temporal proximity between

Plaintiff’s termination and his requests for immediate payment of his second forgivable loan”

to demonstrate “that a fact finder could infer that his termination was retaliatory.” (Id. at

p.10:16-21.) As stated above, “temporal proximity alone is not sufficient to raise a triable

issue as to pretext once the employer has offered evidence of a legitimate, nondiscriminatory

reason for the termination.” (Arteaga v. Brink's, Inc. (2008) 163 Cal.App.4th 327, 353, 357

(also stating that “[s]tanding alone against Defendant’s strongly supported legitimate reason for

terminating [Plaintiff], temporal proximity does not amount to more than a scintilla of evidence

of discrimination”; also stating that "[w]here the employee relies solely on temporal proximity

in response to the employer's evidence of a nonretaliatory reason for termination, he or she

does not create a triable issue as to pretext, and summary judgment for the employer is

proper”); see also Loggins v. Kaiser Permanente Internat. (2007) 151 Cal.App.4th 1102, 1112

(stating that “temporal proximity, although sufficient to shift the burden to the employer to

articulate a nondiscriminatory reason for the adverse employment action, does not, without

more, suffice also to satisfy the secondary burden borne by the employee to show a triable

issue of fact on whether the employer's articulated reason was untrue and pretextual”); see

also Light v. Department of Parks & Recreation (2017) 14 Cal.App.5th 75, 94 (stating that "a

mere temporal relationship between an employee’s protected activity and the adverse

employment action, while sufficient for the plaintiff’s prima facie case, cannot create a triable

issue of fact if the employer offers a legitimate, nonretaliatory reason for the adverse action”);

see also Serri v. Santa Clara University (2014) 226 Cal.App.4th 830, 868

(quoting Loggins, supra, 151 Cal.App.4th at p.1112.) Kuta’s other evidence that his

termination was retaliatory is speculative and “[s]peculation cannot be regarded as substantial

responsive evidence”. (Cucuzza, supra, 104 Cal.App.4th at p.1038 ; see also Horn, supra, 72

Cal.App.4th at p.807 (stating that “an issue of fact can only be created by a conflict of

evidence… [i]t is not created by speculation or conjecture”); see also Martin v. Lockheed

Missiles & Space Co. (1994) 29 Cal.App.4th 1718, 1735 (stating that “the discharged

employee, to avert summary judgment, must produce ‘substantial responsive evidence’ that the

employer’s showing was untrue or pretextual… speculation cannot be regarded as substantial

responsive evidence”); see also Compton v. City of Santee (1993) 12 Cal.App.4th 591, 595-596

(stating that “[a] party may not avoid summary judgment based on mere speculation and

conjecture [citation], but instead must produce admissible evidence raising a triable issue of

fact”).).

CT’s motion for summary adjudication of the second cause of action for violation of

Labor Code § 1102.5, subd. (b) is GRANTED.

As to CT’s motion for summary adjudication of the second cause of action for violation

of Labor Code § 1102.5, subd. (b), CT’s objections to evidence are not the basis for the Court’s

ruling.

12

First cause of action for wrongful termination in violation of public policy

“The claim for wrongful discharge in violation of public policy requires [Kuta] to prove

(1) he was employed by [the defendant], (2) [the defendant] discharged him, (3) the alleged

violation of public policy was a motivating reason for the discharge, and (4) the discharge

caused him harm.” (Haney v. Aramark Uniform Services, Inc. (2004) 121 Cal.App.4th 623,

641.) The first cause of action alleges that Kuta was terminated in violation of the public

policy “as codified in Labor Code §§ 1102.5, et seq.,… to prohibit employers from retaliating

against employees who complaint [sic] about activities or conduct that would result in a

violation of state or federal statues [sic], or a violation or noncompliance with state or federal

rule or regulation, including allegations of failure to pay wages.” (Complaint, ¶¶ 27-37.) Here,

for the reasons stated above, CT meets its initial burden to demonstrate that the cause of action

for violation of section 1102.5 lacks merit.

To the extent that the first cause of action may be construed as also a wrongful

termination in violation of the public policy against age discrimination, CT presents his own

deposition testimony in which he states that he’s not sure if his age was a reason why he was

selected for layoff, and that he has no information indicating that he was selected for layoff

because of his age. (See Pl.’s depo, p.287:2-11.) CT meets its initial burden to demonstrate

that Kuta cannot demonstrate a prima facie case that CT wrongfully terminated him in

violation of any public policy against age discrimination. Further, for the same reason that CT

meets its initial burden to demonstrate that it had a legitimate, nonretaliatory reason to

terminate Kuta—namely, that it had financial difficulties and the team neither had a shippable

product, nor customers to sell it, it likewise meets its initial burden to demonstrate that it had a

legitimate, nondiscriminatory reason to terminate Kuta. Accordingly, the burden shifts to

Plaintiff to produce substantial evidence that the CT’s stated reasons were untrue or pretextual,

or that CT acted with a discriminatory animus.

In opposition, Kuta first asserts that “Defendant violated public policy when it

terminated Plaintiff based on Plaintiff’s complaint of unpaid wages, a violation of state

regulation at workplace.” (Pl.’s opposition to Def.’s motion for summary judgment, pp.10:24-

28, 11:1-21.) For reasons already articulated previously, to the extent that the cause of action

is premised on a violation of the public policy codified by Labor Code section 1102.5

prohibiting retaliation, Kuta fails to demonstrate a triable issue of material fact as to whether he

engaged in protected activity; however, even if Kuta had demonstrated a triable issue as to

whether he engaged in a protected activity, Kuta fails to produce substantial evidence that the

CT’s stated reasons were untrue or pretextual, or that CT acted with a retaliatory animus.

Kuta’s proffered evidence either does not address retaliation in the first instance, is speculative

and/or does not amount to substantial responsive evidence.

To the extent that the first cause of action may be construed as also a wrongful

termination in violation of the public policy against age discrimination, Kuta asserts that “[i]t’s

ColorTokens’ burden to proffer sufficient evidence that allows the trier of fact to conclude that

it is more likely than not that one or more legitimate nondiscriminatory reasons were the sole

basis for the adverse employment action…. ColorTokens has failed to present any such

evidence, thus the burden of proof cannot shift to the plaintiff to present evidence that the

employer’s decision was motivated at least in part by prohibited discrimination.” (Pl.’s

opposition to Def.’s motion for summary judgment, pp.11:22-28, 12:1-8.) As previously

stated, however, CT has plainly met its burden to demonstrate a legitimate, nondiscriminatory

13

basis for terminating Kuta: it had financial difficulties and the team neither had a shippable

product, nor customers to sell any such product.

As previously mentioned, Kuta made an argument with regards to the second cause of

action that Fajardi, Saxena and Jonasson were not laid off and were offered to continue work

within the company while Sastri and Kuta—two more senior employees, were terminated.

(See Pl.’s opposition to Def.’s motion for summary judgment, p.9:13-19.) However, the

argument is not supported by the deposition testimony cited; they were all terminated. Sastri’s

deposition testimony cited by Kuta does not refer to any of the other team members; rather,

Sastri’s deposition testimony concerned his assertion that he had not received all of his stock

options. (See Pl.’s opposing separate statement of undisputed material facts, number (“UMF”)

32, citing Sastri depo, pp.64:24-25, 65:1-6, 74:20-25, 75:1-25, 76:1-4, 207:21-25, 208:1-3.)

Patel’s deposition testimony cited by Kuta indicates that Saxena and Farjadi had conversations

that they were going to be taken off the NetX team, and were offered work moving forward so

that they could remain, but they declined that offer and were not terminated at the time of the

conversation since they were already employees of the company. (See UMF 32, citing Patel

depo, pp.9:25, 10:1-9, 39:19-25, 40:1, 47:24-25, 48:1-15, 49:12-25, 50:1-19.) However, this

testimony does not contradict the evidence that they were in fact terminated after this

conversation. In fact, it is consistent with their testimony. (See Fajardi depo, pp.95:1-25, 96:1-

25, 97:1-25, 98:1-9 (stating that he received a call that the team was being dissolved and

conversations with Mehta, Patel and other managers on the ColorMaster team including a

discussion about the possibility of working for the mainline engineering team “shortly

before…the separation”); Saxena depo, pp.63:5-25, 64:1-3 (stating that he had a conversation

“to make it work with another team” the day of his termination “but it was just, I think, too

little too late”).) Kuta also offers his own deposition testimony in which he states that Fajardi

and Saxena told him that they were offered positions but chose not to accept. (See UMF 32,

citing Kuta depo., pp.300:2-24, 310:13-25, 311:1-4, 312:7-11, 313:4-15.) Again, this evidence

does not demonstrate that they were ultimately terminated. Lastly, Kuta also cites his

deposition testimony in which he states:

Q: Do you believe that you were selected for this layoff because of your age?

A: It could a factor. I can’t say.

(Kuta depo, p.287:2-5; see also UMF 37, citing Kuta depo, p.287:2-5.)

Kuta fails to present substantial evidence that the CT’s stated reasons were untrue or

pretextual, or that CT acted with a discriminatory animus. Accordingly, CT’s motion for

summary adjudication of the first cause of action for wrongful termination in violation of

public policy is GRANTED.

As to CT’s motion for summary adjudication of the first cause of action for wrongful

termination in violation of public policy, CT’s objections to evidence are not the basis for the

Court’s ruling.

Third cause of action for breach of written contract and fourth cause of action for breach

of the implied covenant of good faith and fair dealing

CT argues that the third cause of action for breach of contract and the dependent fourth

cause of action for breach of the covenant of good faith and fair dealing lack merit because the

14

alleged contract is too indefinite to be enforceable as it lacked the requisite material terms, and

thus was little more than a preliminary negotiation. In support of this argument, CT quotes

Kruse v. Bank of America (1988) 202 Cal.App.3d 38, which stated that “[p]reliminary

negotiations or an agreement for future negotiations are not the functional equivalent of a valid,

subsisting agreement.” (Kruse, supra, 202 Cal.App.3d at p.59.) “A manifestation of

willingness to enter into a bargain is not an offer if the person to whom it is addressed knows

or has reason to know that the person making it does not intend to conclude a bargain until he

has made a further manifestation of assent.” (Id.)

CT contends that “[h]ere, the facts are almost identical” to Kruse. In Kruse, supra,

George M. Jewell was a long standing customer of the defendant bank and an apple grower.

(Id. at p.45.) Bill Sullivan was the manager of the Sebastopol branch. (Id.) Sullivan had

arranged a series of loans to Jewell to assist an apple processor in Sebastapol, a company

owned by Mrs. Kruse, the O’Connell Company (“OCC”). (Id.) The OCC was troubled as it

had an outstanding loan to the bank, unpaid judgments and other pressing debts. (Id. at pp.45-

46.) Bank was unwilling to give further loans to OCC, but Jewell discussed the idea of

assisting it with Sullivan, who was enthusiastic and made comments that led Jewell believe that

the bank was interested in providing long-term financing, although Jewell also Jewell knew

that Sullivan did not have authority to approve loans larger than $100,000. (Id. at pp.46-47.)

At Sullivan’s urging, Jewell acquired a controlling interest in OCC, but when project cost over-

runs required Jewell to borrow additional sums from the bank which he in turn loaned to OCC.

(Id. at p.48.) Sullivan told Jewell that something would be worked out at the end of the year,

and the Jewells optimistically anticipated long-term financing which would permit

consolidation of several debts under a favorable repayment schedule amortized over a 20 year

period, but they knew that Sullivan lacked authority to approve a loan of that magnitude. (Id.

at pp.48-49.) Sullivan’s superior told Jewell that “we’re going to be able to help you,” which

Jewell assumed indicated that the loan would be approved, and Sullivan shared that optimism.

(Id. at p.49.) However, the appraisal was too low to justify the loan and despite Sullivan’s

urging of his superiors to reconsider, Sullivan informed Jewell that the bank would not be able

to provide long term financing on the OCC plant. (Id.) With regards to the quote upon which

Kuta relies, the Kruse court stated:

Here, the entire subject matter under consideration - the long-

term loan - was at best left open to future negotiations and

agreement. George M. Jewell, fully aware of Sullivan’s limited

lending authority, was informed that Sullivan was “working on”

obtaining the necessary approval from his superiors. The

Jewells’ hopeful expectation that a loan agreement would

eventually be reached was simply that: an expectation. The

Bank’s manifestation of assent never materialized; and no

agreement was ever formed. Under such circumstances, the

Bank was under no legal obligation or commitment to make a

long-term loan.

(Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 59.)

Although CT characterizes the subject May 14, 2015 agreement as “almost identical” to

that in Kruse, there are some notable differences. First, in Kruse, the loan was the purported

agreement at issue. Here, the additional $35,000 forgivable loan at issue was an “Additional

15

term” of the offer to Kuta. The offer had an expiration date of May 17, 2015. There were

specific conditions to the additional $35,000 forgivable loan; Kuta was required to make a

request for the loan in his second ear of employment, but only if his salary, bonus and other

cash compensation combined was below $200,000. Kuta and CT CEO Parekh signed the

Additional Terms which stated that “employment terms and this letter supersede any other

agreements or promises made to you by anyone whether oral or written.” But more

importantly, Kuta performed pursuant to the agreement. In Kruse, the amount of the loan was

not agreed upon; here, it is $35,000. CT asserts that the Additional Term neither specifies a

rate of interest nor applicable loan fees and charges; however, that argument presumes that

interest, loan fees or charges were involved with the instant loan.

“Under California law, a contract will be enforced if it is sufficiently definite (and this

is a question of law) for the court to ascertain the parties' obligations and to determine whether

those obligations have been performed or breached.” (Ersa Grae Corp. v. Fluor Corp. (1991) 1

Cal.App.4th 613, 623 (also stating that “[s]tated otherwise, the contract will be enforced if it is

possible to reach a fair and just result even if, in the process, the court is required to fill in

some gaps”).) “To be enforceable, a promise must be definite enough that a court can

determine the scope of the duty[,] and the limits of performance must be sufficiently defined to

provide a rational basis for the assessment of damages.” (Ladas v. California State Auto. Assn.

(1993) 19 Cal.App.4th 761, 770.) However, “the modern trend of the law favors carrying out

the parties’ intentions through the enforcement of contracts and disfavors holding them

unenforceable because of uncertainty.” (Okun v. Morton (1988) 203 Cal.App.3d 805, 817; see

also Moncada v. West Coast Quartz Corp. (2013) 221 Cal.App.4th 768, 777 (stating that “the

law leans against the destruction of contracts because of uncertainty and favors an

interpretation which will carry into effect the reasonable intention of the parties if it can be

ascertained”), quoting Rivers v. Beadle (1960) 183 Cal.App.2d 691, 695-697 (also stating that

“ [a]ll agreements have some degree of indefiniteness and some degree of uncertainty… [i]f

the parties have concluded a transaction in which it appears that they intend to make a contract,

the court should not frustrate their intention, if it is possible to reach a fair and just result, even

though this requires a choice among conflicting meanings and the filling of some gaps that the

parties have left”).) The California Supreme Court has stated that “although an agreement may

be indefinite or uncertain in its inception, subsequent performance by the parties under the

agreement will cure this defect and render it enforceable. When one party performs under the

contract and the other party accepts his performance without objection it is assumed that this

was the performance contemplated by the agreement.” (Bohman v. Berg (1960) 54 Cal.2d 787,

794–795; see also Sabatini v. Hensley (1958) 161 Cal.App.2d 172, 175-176 (stating that

“[w]hen an employer promises a prospective employee a fixed salary and an indeterminate

bonus, each promise is made to induce undertaking of the employment… [a]cceptance of the

employment is consideration for the promise of a bonus, and this promise thus is enforceable…

[t]he failure to specify the amount or a formula for determining the amount of the bonus does

not render the agreement too indefinite for enforcement… [i]t is not essential that the contract

specify the amount of the consideration or the means of ascertaining it”).)

CT argues that the Additional Term specifically states that it will be recommended to

the Board of Directors that Kuta be granted certain benefits and thus, by its nature, the

agreement was left open to future negotiation and agreement. (See Def.’s memo, p.21:4-23.)

However, unlike Kruse, the additional $35,000 forgivable loan here was an additional term of

the signed offer for employment that had an expiration of May 17, 2015, and a start date of

May 26, 2015. Again, the offer for employment was signed by both parties, provides a number

16

of terms that provide for a valid employment agreement, and Kuta’s performance under the

contract, and CT’s acceptance of Kuta’s performance without objection renders the agreement

enforceable. While CT presents evidence of a promissory note with new, additional terms

entered into between the parties as to the first forgivable loan, there is no such evidence

regarding the second forgivable loan. With regards to CT’s argument of definiteness, CT fails

to meet its initial burden as to the third and fourth causes of action.

CT also argues that Kuta’s breach of contract cause of action and dependent fourth

cause of action for breach of the covenant of good faith and fair dealing fail because Plaintiff

did not satisfy all conditions precedent to receive the second forgivable loan. As CT states, the

particular Additional Term states “[i]f requested, additional $35,000 forgivable loan during

second year of employment, provided however your salary, bonus and other cash

compensations combined remains below $200,000/year.” CT asserts that because Kuta

requested the second forgivable loan nearly four years from his start date, Kuta is not entitled

to the second forgivable loan altogether. (See Def.’s memo, pp.21:24-28, 22:1-4.) CT also

argues that “there is no evidence to show that Plaintiff actually requested the loan during his

second year of employment, apart from his since conclusory allegation that he did so orally in

May 2016.” (Id. at p.22:5-6.) However, CT’s cited evidence—Kuta’s deposition testimony—

while nondescript, it is nonetheless evidence supporting the allegation that Kuta requested the

forgivable loan during his second year of employment. It is further supported by his

declaration. (See Kuta decl., ¶ 17 (stating that “[i]n or about the end of May 2016, I met with

the Nitin Mehta, CEO… I asked Mr. Mehta about the second forgivable loan (item #3 from the

employment terms), but did not receive his response”).) CT fails to meet its initial burden as to

the third and fourth causes of action on the ground that it lacks merit because Kuta did not

satisfy all conditions precedent to receive the second forgivable loan, and, even if it met its

initial burden, it itself presented a triable issue of material fact. Moreover, Kuta also

demonstrates the existence of a triable issue of material fact.

CT’s motion for summary adjudication of the third and fourth causes of action is

DENIED.

As CT failed to meet its initial burden as to the third and fourth causes of action, it is

unnecessary to address Kuta’s evidence or CT’s objections thereto, or Kuta’s objections.

Fifth cause of action for fraud

The fifth cause of action for fraud alleges that CT “falsely and fraudulently induced

Plaintiff to sign the employment agreement in May 2015 by making written promises in the

agreement that COLORTOKENS had [no] intention of keeping, such as an additional $35,000

forgivable loan during second year of Plaintiff’s employment set forth in the employment

agreement.” (Complaint, ¶¶ 59-64 (also alleging that “they had no intention of giving Plaintiff

the forgivable loan called for in the employment agreement”).) CT presents Kuta’s deposition

testimony in which he states that “there is a portion where the complaint mentions that

ColorTokens never intended to issue the second—the second promissory note… [a]nd I do not

believe that that was the case when that letter was written, that the CEO at the time, Raj

Parekh, fully intended to do that… he did grant me the first promissory note, but also to grant

the second one.” (Kuta depo, p.46:11-23.) In opposition, Kuta argues that CT failed to meet

its initial burden because “providing a second promissory note is different from providing the

promised second forgivable loan.” (Pl.’s opposition to Def.’s motion for summary judgment,

17

p.17:2-13.) Here, Kuta is correct. The alleged fraud involved the failure to provide the

additional $35,000 forgivable loan, not a promissory note. CT fails to meet its initial burden.

CT’s motion for summary adjudication of the fifth cause of action is DENIED.

As CT failed to meet its initial burden as to the fifth cause of action, it is unnecessary to

address Kuta’s evidence or CT’s objections thereto, or Kuta’s objections.

Sixth cause of action for promissory estoppel

CT asserts that the sixth cause of action for promissory estoppel fails as a matter of law

because Kuta cannot show a clear and unambiguous promise and cannot establish reasonable

reliance on a contingent promise. (See Def.’s memo, pp.23:23-28, 24:1-28, 25:1-23.) As to a

clear and unambiguous promise, CT asserts that because the second additional forgivable loan

was conditioned on a recommendation to the board and otherwise indefinite and lacking

significant contractual terms, the promissory estoppel cause of action fails as a matter of law.

CT again cites to Kruse, supra, 202 Cal.App.3d at p.891, and also to Laks v. Coast Fed. Sav. &

Loan Assn. (1976) 60 Cal.App.3d 885, 891. Both cases, however, discuss a loan agreement,

rather than an Additional Term of an employment agreement, and the arguments mirror those

articulated with regards to the third and fourth causes of action. Unlike Laks and Kruse, again,

Kuta performed pursuant to the agreement. For reasons already articulated, the offer for

employment was signed by both parties, provides a number of terms that provide for a valid

employment agreement, and Kuta’s performance under the contract, and CT’s acceptance of

Kuta’s performance without objection renders the agreement enforceable. CT fails to meet its

initial burden to demonstrate that the sixth cause of action for promissory estoppel lacks merit

because Kuta cannot show a clear and unambiguous promise.

CT also argues that because the second additional forgivable loan was to be

recommended to the Board, he cannot have reasonably relied to his detriment on the promises

regarding his employment at CT and his resigning from his prior employment at LG. In

support, CT cites to Granadino v. Wells Fargo Bank, N.A. (2015) 236 Cal.App.4th 411, in

which the plaintiffs were seeking injunctive relief of the foreclosure of their home due to their

negotiation of a loan modification. Granadino is again factually inapposite; Granadino did not

even involve a promise. (Id. at p.417.) The plaintiffs were expressly told that the foreclosure

process would move forward, counter to the purported representation. (Id. at p.418.)

Moreover, while the plaintiffs contended that they delivered tax returns, they never contended

that they were related to the foreclosure sale postponement. (Id.) Here, the second additional

forgivable loan is an Additional Term of the employment agreement. CT also fails to meet its

initial burden to demonstrate that the sixth cause of action for promissory estoppel lacks merit

because Kuta cannot show reasonable reliance. Accordingly, the motion for summary

adjudication of the sixth cause of action is DENIED.

As CT failed to meet its initial burden as to the sixth cause of action, it is unnecessary

to address Kuta’s evidence or CT’s objections thereto, or Kuta’s objections.

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Seventh cause of action for declaratory relief

CT tersely argues that “[b]ased thereon, and in light of the arguments outlined above, it

is clear Plaintiff failed to make the requisite showing that declaratory relief should be granted

in his favor… [a]s such, ColorTokens respectfully requests the Court discmiss Plaintiff’s cause

of action for declaratory relief….” (Def.’s memo, pp.25:27-28, 26:1-2.) First, CT is mistaken

as to the party who has the initial burden on summary adjudication. Second, for reasons

articulated above, CT fails to meet its initial burden to demonstrate that the prior causes of

action related to the employment agreement lack merit. Accordingly, the motion for summary

adjudication of the seventh cause of action is DENIED.

As CT failed to meet its initial burden as to the seventh cause of action, it is

unnecessary to address Kuta’s evidence or CT’s objections thereto, or Kuta’s objections.

Claim for punitive damages

CT argues that “Plaintiff has failed to alleged [sic] facts evidencing the malice,

oppression or fraud required to impose punitive damages under California Civil Code section

3294.” (Def.’s memo, p.26:4-6.) Again, CT is mistaken as to the party who has the initial

burden on summary adjudication. Other than merely arguing that “clear and convincing

evidence” is required, CT fails to suggest as to how the claim for punitive damages lack merit.

CT fails to meet its initial burden to demonstrate that the claim for punitive damages lack

merit. Accordingly, the motion for summary adjudication of the claim for punitive damages is

DENIED.

II. CROSS-COMPLAINANT’S MOTION FOR SUMMARY JUDGMENT

Cross-complainant’s burden on summary judgment

The moving party bears the initial burden of production to make a prima facie showing

that there are no triable issues of material fact—one sufficient to support the position of the

party in question that no more is called for. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th

826, 850-851.) “A plaintiff [or cross-complainant] moving for summary judgment ‘bears the

burden of persuasion that ‘each element of’ the ‘cause of action’ in question has been ‘proved,’

and thus, that ‘there is no defense’ thereto.’” (Thompson v. Ioane (2017) 11 Cal.App.5th 1180,

1195; see also Code Civ. Proc. § 437c, subd.(p)(1).) Cross-complainants, who bear the burden

of proof at trial by preponderance of evidence, therefore “must present evidence that would

require a reasonable trier of fact to find the underlying material fact more likely than not—

otherwise he would not be entitled to judgment as a matter of law, but would have to present

his evidence to a trier of fact.” (Aguilar, supra, 25 Cal.4th at p.851.) “‘Once the plaintiff... has

met that burden, the burden shifts to the defendant... to show that a triable issue of one or more

material facts exists as to the cause of action or a defense thereto.’” (Thompson v. Ioane

(2017) 11 Cal.App.5th 1180, 1195 (Sixth District case), quoting Code Civ. Proc. § 437c, subd.

(p)(1).)

According to the notice of motion, CT moves for summary judgment, or, in the

alternative, for summary adjudication of the following nineteen “issues”:

1) The first cause of action for breach of contract has established that the promissory

note entered into by CT and Kuta constitutes an enforceable written contract;

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2) The first cause of action for breach of contract has established that ColorTokens

performed its obligations under the Promissory Note by providing Kuta with a

check for $35,000;

3) The first cause of action for breach of contract has established that Kuta breached

the terms of the promissory note by failing to repay the amount of the promissory

note pursuant to the terms of the Promissory Note’s acceleration clause;

4) The first cause of action for breach of contract has established that Kuta’s breach of

the terms of the Promissory Note was not excused;

5) The first cause of action for breach of contract has established that Kuta’s breach of

the terms of the Promissory Note has proximately caused damage to ColorTokens

by depriving it of the use of the capital that it loaned to Kuta, as well as the interest

thereon;

6) The first cause of action for breach of contract succeeds as a matter of law because

all requisite elements have been satisfied;

7) The second cause of action for breach of the covenant of good faith and fair dealing

has established that the Promissory Note entered into by ColorTokens and Kuta

constitutes an enforceable written contract;


has established that Kuta attempted to, and has, deprived ColorTokens of the

benefits of the Promissory Note separate and apart from the breach itself, by

refusing to work with, or even respond to, ColorTokens’ requests to negotiate a

more flexible repayment plan than is even required under the Promissory Note;


succeeds as a matter of law because all requisite elements have been satisfied;

10) The third cause of action for fraud has established that Kita made a knowing

misrepresentation of fact by entering into the Promissory Note with no intention of

repayment;

11) The third cause of action for fraud has established that Kuta intended to induce

ColorTokens’ reliance (i.e. the provision of a $35,000 check) by signing the

Promissory Note;

12) The third cause of action for fraud has established that ColorTokens reasonably

relied on Kuta’s signature of the Promissory Note by ultimately providing Kuta

with a $35,000 check;

13) The third cause of action for fraud has established that ColorTokens’ detrimentally

relied on Kuta’s signature of the Promissory Note because Kuta has failed to repay

the $35,000 loan, plus interest, pursuant to the terms thereof;

14) The third cause of action for fraud succeeds as a matter of law because all requisite

elements have been satisfied;

15) The fourth cause of action for promissory estoppel has established that Kuta made a

clear promise, with unambiguous terms, to ColorTokens by entering into the written

Promissory Note;

16) The fourth cause of action for promissory estoppel has established that ColorTokens

reasonably and foreseeably relied on Kuta’s execution of the Promissory Note by

providing him with a $35,000 check;

17) The fourth cause of action for promissory estoppel has established that ColorTokens

detrimentally relied on Kuta’s execution of the promissory note because Kuta has

failed to repay the $35,000 loan, plus interest, pursuant to the terms thereof;

18) The fourth cause of action for promissory estoppel succeeds as a matter of law

because all requisite elements have been satisfied; and,

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19) The fifth cause of action for declaratory relief succeeds as a matter of law based on

the noticed issues outlined above.

The purported issues are not issues of duty.

Code of Civil Procedure section 437c, subdivision (f)(1) states that “[a] party may

move for summary adjudication as to one or more causes of action within an action, one or

more affirmative defenses, one or more claims for damages, or one or more issues of duty….”

(Code Civ. Proc. § 437c, subd.(f)(1).) The above purported issues are not issues of duty.

Accordingly, the 19 issues are not proper subjects of summary adjudication. Cross-

complainant’s motion for summary adjudication of each issue is DENIED.

As to its motion for summary judgment, CT fails to meet its initial burden.

As CT states, on May 16, 2015, it entered into an employment agreement with Kuta in

which an Additional Term to the agreement was that CT was granted a forgivable loan within

90 days from his hire date. (See CT’s separate statement in support of motion for summary

judgment of cross-complaint, undisputed material facts nos. (“UMFs”) 1-3.) Mr. Parekh was

unable to offer a salary close to what Kuta was making at LG, so he would think of another

way to compensate him and the employment letter included the forgivable loans. (See

evidence cited by UMF 3.) On August 3, 2015, Kuta was presented with a promissory note

and was requested to sign it to get the $35,000 forgivable loan. (UMFs 7-8.) Kuta received the

$35,000. (UMF 10.) On May 1, 2018, Kuta was laid off. (UMF 11.) CT did not engage in an

IPO and was not valued at $50M or greater. (UMFs 12-13.) CT’s legal counsel contacted

Kuta to discuss the structuring of a severance agreement. (Patel decl., exh. 1.) Included in this

discussion was a possible consulting agreement. (Id.) When Kuta did not respond to CT’s

counsel, CT’s counsel then sent an email discussing the Promissory Note and terminated the

proposed consulting agreement. (Id.) Kuta has not responded to the email and has not made

any payments on the loan. (UMFs 18-20.)

Here, CT’s UMFs fail to provide an amount of damages, an essential element for the

first four causes of action. (See Acoustics, Inc. v. Trepte Construction Co. (1971) 14

Cal.App.3d 887, 913 (stating that damages is an element for breach of contract cause of

action); see also Vu v. California Commerce Club, Inc. (1997) 58 Cal.App.4th 229, 233 (stating

that damages resulting from breach of contract is an element for breach of the covenant of

good faith and fair dealing); see also Lazar v. Super. Ct. (Rykoff-Sexton, Inc.) (1996) 12 Cal. 4th

631, 638 (stating that resulting damages is an element for fraud cause of action); see also Laks,

supra, 60 Cal.App.3d at p.890 (stating that damages is an element for a promissory estoppel

cause of action); see also Code Civ. Proc. §437c, subd (b)(1) (stating that “[t]he supporting

papers shall include a separate statement setting forth plainly and concisely all material facts

that the moving party contends are undisputed”); see also Massingill v. Department of Food &

Agriculture (2002) 102 Cal.App.4th 498, 511 (stating that “[a]ll material facts must be set forth

in the separate statement”).) Accordingly, CT fails to meet its initial burden to demonstrate

that it is entitled to judgment as a matter of law; CT’s motion for summary judgment is

DENIED.

As CT failed to meet its initial burden, it is unnecessary to address the parties’

objections to evidence.

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The Court shall prepare the Order.

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1

Calendar line 12 Case Name: John Park v. Peter Lunardi, et al.

Case No.: 17CV315411

I. Introduction

This action arises from a dispute over shares in a gaming business operated by Garden City,

Inc. (“Garden City”) under the business name Casino M8trix. Because the Court has

summarized the facts and allegations in this action and Garden City’s separate action against

defendant Swallow (No. 16-CV-295297) on many occasions, these facts and allegations are not

recounted in detail here. There is another discovery dispute. And so, the Court turns directly to

this most recent discovery dispute between plaintiff John Park (“Park”) and deponent

Greenfield, LLP (“Greenfield”), the law firm representing the Lunardi family1 in this and other

similar actions. Before the Court is a motion by Park to compel Greenfield to comply with a

deposition subpoena.

II. Discovery Dispute

In brief, Park and Greenfield dispute whether he may now obtain documents from Greenfield

based on his exhaustion of and inability to obtain documents through other avenues of

discovery.

For context, in December 2019, Park subpoenaed attorney Maureen Harrington of Greenfield,

opposing counsel in this matter. The subpoena sought documents similar to those requested in

the present subpoena described below.2 Ms. Harrington and Lunardi moved to quash the

subpoena. In May 2020, the Honorable Peter H. Kirwan granted this motion and quashed the

subpoena in its entirety on the basis Park had not made an adequate showing to justify

deposing and obtaining documents from Ms. Harrington under Carehouse Convalescent

Hospital v. Superior Court (2006) 143 Cal.App.4th 1558 (Carehouse).

In the intervening months, the parties continued to engage in discovery and had a number of

disputes. Recently, in July 2020, after Park filed this motion in June, the Court granted Park’s

motion to compel Garden City to comply with a deposition subpoena seeking nearly identical

documents to those set forth in the subpoena at issue now (as summarized below).

Nevertheless, Park still seeks discovery from counsel and moves to compel Greenfield to

comply with the subpoena for business records he propounded to it in January 2020, to which

Greenfield objected. (Garner Decl., ¶ 12 & Exs. 15–16.) In particular, Park moves to compel

compliance with Request Nos. 1–4, 10–11, 13, 17–19, 21, 23, and 25–29.

The first group of requests at issue encompasses Greenfield’s communications with attorney

Tracey Buck-Walsh. More specifically, Request No. 1 seeks Greenfield’s communications

with Tracey Buck-Walsh that mention or relate to Garden City. Request No. 2 is nearly

identical but instead seeks communications that relate to or mention Park. Request Nos. 3 and

4 are also nearly identical, except the subjects of the targeted communications are Swallow and

Patrick Tierney. The communications that are the subject of Request No. 19 are those related to

1 Park originally sued both Jeanine Lunardi and her husband Peter. During the pendency of this action, Peter

Lunardi passed away. A substitution was requested and granted by the Court. And so, this action now proceeds against Jeanine Lunardi as a defendant in her own right and as the representative of her husband’s estate. 2 The subpoenas were directed to different deponents and are not exactly identical. Moreover, much has transpired

in the course of discovery since Judge Kirwan granted the motion to quash. Thus, the Court rejects the contention

that Park is making an improper motion for reconsideration under Code of Civil Procedure section 1008. This

characterization and allusion to punishment as contempt is unreasonable.

2

Garden City’s financial statements. Request No. 21 seeks all communications between Ms.

Harrington and Tracey Buck-Walsh related to Garden City’s corporate status. Request No. 23

is nearly identical to the preceding request but focuses on communications related to the

obligation to pay or payment of distributions to Swallow.

The next group of requests seeks communications with Swallow. Request No. 17 seeks

communications between Greenfield and Swallow about Garden City’s audited financial

statements for the period ending December 31, 2015, while Request No. 18 seeks their

communications about monthly financial statements.

Next, Request Nos. 26–29 seek communications with regulatory agencies, namely the

California Bureau of Gambling Control, California Gambling Control Commission, William

Tongren, and the City of San Jose. The communications requested are those between

Greenfield and each of these regulators about the purchase or contemplated purchase of Garden

City shares by Park or Lunardi.

Finally, Request Nos. 10–11, 13, and 25 appear to seek Greenfield’s work product. Request

No. 10 seeks a “recap” related to Lunardi’s loan application for the purchase of shares. Request

No. 11 seeks “[a]ll documents relating to or mentioning a memorandum [Greenfield] wrote

regarding distributions owed to [Swallow].” Request No. 13 seeks all internal or external

communications relating to Garden City’s financial statements, including audited financial

statements for the period ending December 31, 2015. Finally, Request No. 25 seeks all

communications between Greenfield and any accountant related to Garden City’s payment or

obligation to pay distributions to Swallow.

Greenfield served written objections to these document requests. The firm raised objections

ranging from relevance and overbreadth to the attorney-client privilege. And, throughout its

objections, Greenfield indicated that it had already produced non-privileged documents. The

parties met-and-conferred about the subpoena and Park’s contemplated motion in June, but

could not informally resolve their dispute. It is not apparent that they continued their meet-and-

confer efforts after the Court’s July-2020 ruling granting Park’s motion to compel Garden

City’s compliance with a subpoena for business records. Ultimately, because no informal

resolution could be reached, Park filed and proceeds with his motion to compel Greenfield to

comply with the subpoena, particularly Request Nos. 1–4, 10–11, 13, 17–19, 21, 23, and 25–

29. Greenfield requests an award of monetary sanctions in opposition to the motion. For the

reasons set forth below, the motion and Greenfield’s request for sanctions are both DENIED.

III. Discussion

When a deponent fails to respond to a deposition notice or subpoena, the propounding party

may move to compel compliance. (See Code Civ. Proc., §§ 2025.450, 2025.480.) Just as there

are different types of deposition subpoenas, there are different means of complying with and

compelling compliance with a subpoena. (Ibid.) When a deponent simply fails to show up for

or proceed with a deposition or fails to produce documents for inspection, the propounding

party may seek an order compelling the deponent to attend the deposition and provide

testimony or produce the documents described in the deposition subpoena. (Code Civ. Proc.,

§ 2025.450, subd. (a).) Under Section 2025.480—which contemplates (in part) the

circumstance in which a deponent appears and provides testimony but refuses to answer

particular questions—the propounding party may seek an order compelling the deponent to

answer a question he or she objected to or failed to respond to at the deposition. And, like

Section 2025.450, Section 2025.480 authorizes a party to move to compel the deponent to

produce documents described in the deposition subpoena. Although the statutes overlap in that

3

they both authorize a motion to compel a deponent to comply with a subpoena by producing

documents requested therein, they differ in some regards. Section 2025.450 requires a

threshold showing of good cause while Section 2025.480 does not.

Park does not identify any statutory basis for his motion. Nevertheless, because Park proceeds

as though he must make a threshold showing of good cause and given written objections were

served by Greenfield in advance, the Court treats the motion as a motion to compel compliance

made under Code of Civil Procedure section 2025.450.

With this clarification in mind, the issues are as follows. First, does Park make a sufficient

threshold showing of good cause under the ordinary standard applicable to document requests

and the Carehouse standard for deposing opposing counsel? Second, if so, does Greenfield

nevertheless possess a legitimate objection justifying its refusal to produce responsive

documents? The Court finds that for similar reasons, Park’s requests as drafted lack good cause

under either of the applicable standards and are subject to valid objections excusing Greenfield

from complying with the subpoena.

Under Section 2025.450, the moving party has an initial burden of showing good cause for the

discovery sought. (Code Civ. Proc., § 2025.450, subd. (b)(1) [“The motion shall set forth

specific facts showing good cause justifying the production for inspection of any document,

electronically stored information, or tangible thing described in the deposition notice.”].) The

moving party’s “burden is met simply by [making] a fact-specific showing of relevance.”

(Glenfed Development Corp. v. Super. Ct. (1997) 53 Cal.App.4th 1113, 1117.) For the purpose

of discovery, relevant information is “any matter, not privileged, that is relevant to the subject

matter involved in the pending action or to the determination of any motion made in that

action, if the matter either is itself admissible in evidence or appears reasonably calculated to

lead to the discovery of admissible evidence.” (Code Civ. Proc., § 2017.010.) Courts interpret

this provision liberally in favor of allowing discovery. (Gonzalez v. Super. Ct. (1995) 33

Cal.App.4th 1539, 1546–47.) A party may discover evidence “if it ‘might reasonably assist a

party in evaluating the case, preparing for trial, or facilitating settlement....’ [Citation.]” (Ibid.)

If good cause is established, the deponent resisting production must justify his or her refusal to

comply. (See Kirkland v. Super. Ct. (2002) 95 Cal.App.4th 92, 97–98.)

The overarching problem with the requests that both undercuts Park’s claim of good cause and

bolsters Greenfield’s objections is that they are overbroad. Instead of seeking particularized

documents or categories of documents bearing some factual or logical nexus to Park’s

purported need to issue the subpoena to Greenfield in particular, Park’s expansive requests

universally seek documents related to broad subjects or even simply to individuals. Because of

the requests’ overbreadth, the Court cannot say that there is good cause for the entirety or even

the majority of discovery encompassed by each request. Similarly, Greenfield’s relevance and

overbreadth objections are well-taken. Furthermore, the breadth of the requests makes them

problematic under the Carehouse standard.

First, like Judge Kirwan—the Court rejects Park’s argument that Carehouse does not apply.

Greenfield has served as both transaction counsel and litigation counsel. Just as status as

litigation counsel does not categorically immunize an attorney from being deposed (as

discussed below), Park’s attempt to cast Greenfield as solely transaction counsel is

unreasonable, particularly given his document requests are not specifically directed to

transactional documents. Park places undue and unpersuasive emphasis on the means through

4

which discovery is sought from opposing counsel; it is not the case that similar concerns to

those discussed in Carehouse and set forth below are entirely absent when discovery from

opposing counsel is sought through document requests as compared to oral testimony. None of

the cases cited by Park support a contrary conclusion. Optronic Technologies, Inc. v. Ningbo

Sunny Electronic Co. (N.D.Cal. Aug. 13 2018, No. 16-CV06370-EJD-VKD) 2018 WL

3845984 is distinguishable in many regards, including because different attorneys served as

transaction and litigation counsel. Similarly, Pamida, Inc. v. E.S. Originals, Inc. (8th Cir. 2002)

281 F.3d 726 does not purport to broadly exempt document requests as compared to subpoenas

for oral testimony from closer scrutiny; rather, the court there found the work-product doctrine,

a qualified protection, gave way to the needs of the propounding party based on the particular

facts and circumstances present. All of this is to say that Park does not cite any binding

precedent establishing Carehouse categorically does not apply under these circumstances. And,

the federal precedent he does cite are not persuasive; he relies on the authority cited

imprecisely and without regard for the ratio decidendi of each decision. And so, the Court

applies Carehouse below.

“Depositions of opposing counsel are presumptively improper, severely restricted, and require

‘extremely’ good cause—a high standard.” (Carehouse, supra, 143 Cal.App.4th at p. 1562.)

“There are strong policy considerations against deposing an opposing counsel.” (Ibid.) The

Sixth Appellate District discussed those policy concerns as follows:

Taking the deposition of opposing counsel not only disrupts the

adversarial system and lowers the standard of the profession, but

it also adds to the already burdensome time and costs of

litigation. It is not hard to imagine additional pretrial delays to

resolve work-product and attorney-client objections, as well as

delays to resolve collateral issues raised by the attorney’s

testimony. Finally, the practice of deposing opposing counsel

detracts from the quality of client representation. Counsel should

be free to devote his or her time and efforts to preparing the

client’s case without fear of being interrogated by his or her

opponent. Moreover, the “chilling effect” that such practice will

have on the truthful communications from the client to the

attorney is obvious.

(Spectra-Physics, Inc. v. Super. Ct. (1988) 198 Cal.App.3d 1487, 1494 (Spectra-Physics),

citing Shelton v. American Motors Corp. (8th Cir. 1986) 805 F.2d 1323, 1327 (Shelton).)

While difficult, it is not impossible to obtain the deposition of opposing counsel. In doing so,

California courts apply a three-prong test in considering the propriety of attorney depositions,

evaluating (1) whether the party seeking the deposition has other practical means to obtain the

information sought, (2) whether it is crucial to preparation of the case, and (3) whether the

information sought is subject to a privilege claim. (Carehouse, supra, 143 Cal.App.4th at

p. 1563.) The party seeking the deposition has the burden of proving the first two factors. The

burden of proving the third factor regarding claims of privilege lies with the party opposing the

deposition. (Id. at pp. 1563–64.)

Here, Park fails to establish good cause under Carehouse for obtaining documents from

Greenfield. The first impediment to his ability to establish good cause under Carehouse is the

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breadth of his requests. Because the requests are so broad, he necessarily does not show that he

cannot obtain these documents from another source and that they are crucial to the preparation

of the case. There is an inadequate nexus between Park’s purported rationale for the discovery

and the discovery actual sought by the requests as drafted. Certainly Park may view it as more

expedient to attempt to prove his case by reviewing Greenfield’s internal strategy during the

transaction, but there is a public policy against allowing attorneys to take undue advantage of

the other side’s efforts. (Carehouse, supra, 143 Cal.App.4th at p. 1562.) In other words, Park is

not necessarily entitled to prove his case by obtaining the opposing counsel’s blueprint.

Additionally, the Court acknowledges that at the time Park filed his motion, his other discovery

efforts had been impeded. Yet, as of the hearing on this motion, the Court has granted his

motion to compel Garden City to produce responsive documents. And so, the circumstances

have changed and now undercut his claim that he cannot obtain the discovery sought by the

requests as drafted from an alternative source.

Finally, although it is unnecessary to conclusively make any privilege determination at this

juncture, the Court observes the following. While Park explicitly couches many of his requests

as seeking only non-privileged documents, the fact is that many of the requests by their very

nature seek attorney communications that are likely to be privileged.3 This is to say that despite

including a caveat that he seeks non-privileged documents, Park necessarily is asking for

categories of documents that will require a time-consuming and expensive privilege review to

identify perhaps the handful of documents that are not subject to the privilege. While the Court

cannot say for sure that this is intentional, it is concerning and unnecessary given Park purports

to have a need for particular transactional documents that he has simply failed to specify in any

particularized manner. This further bolsters the conclusion that Park’s document requests are

not adequately tailored to relevant, discoverable information that is peculiarly within the

possession and subject to discovery from Greenfield.

For all of the foregoing reasons, Park’s motion to compel compliance is DENIED. This order

solely addresses the requests as drafted and nothing in this order permits or forecloses

discovery other than that which is specifically before the Court in connection with this motion.

Greenfield’s request for monetary sanctions is DENIED. Greenfield does not cite an applicable

statutory basis for awarding it sanctions. Sanctions may only be awarded under Code of Civil

Procedure section 2025.450, subdivision (g) when a motion to compel compliance is granted.

That particular statute’s sanctions provision is not reciprocal. And, even assuming Section

2025.450 provided for an award of monetary sanctions to a party prevailing in opposing a

motion to compel compliance—like the other statutes authorizing various motions to compel—

the Court finds an award of sanctions would be unjust. Park’s motion resulted, at least in part,

from Greenfield’s discovery strategy to date, including Garden City’s refusal to respond to

similar requests in the subpoena directed to it. And so, although circumstances have now

changed due to the Court’s order compelling Garden City’s compliance, the Court finds it

would be unjust to award sanctions to Greenfield.

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3 The Court acknowledges that as for requests involving third parties, like the regulatory agencies, a claim of

privilege is unjustified. Nevertheless, the requests are drafted in such a manner that a search for responsive

documents in the possession of the law firm necessarily will encompass privileged documents and work-product

that will necessitate further review.

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law and motion tentative rulings date: july 23, 2020 … · 7/23/2020 · 191 north first street,...

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