Summary
In Contemporary Services Corporation, et al., v. Staff Pro, Inc., et al., supra, (Aug. 30, 2007, B189132), we rejected all of the arguments CSC is now making and explicitly held the award was not an abuse of discretion.
Summary of this case from Contemporary Services Corporation v. Staff Pro, Inc.Opinion
NOT TO BE PUBLISHED
APPEAL from three orders of the Superior Court of Los Angeles County, Victor H. Person, Judge, and Eli Chernow, Retired Judge., Los Angeles County, Super. Ct. No. BC247681.
Philipson & Simon, Jeffrey S. Simon and David A. Simon; Martin & McCormick and Kathy J. McCormick for Plaintiffs and Appellants.
Gibbs, Giden, Locher & Turner and James M. Gansinger for Defendants and Respondents.
WILLHITE, J.
INTRODUCTION
Contemporary Services Corporation (CSC) and Staff Pro Security Inc. (Staff Pro) both provide security and event staffing services to arenas, stadiums, and similar venues in which concerts, athletic events and trade shows are held. In 2001, CSC filed suit against Staff Pro. CSC’s first amended complaint alleged causes of action for below-cost pricing (Bus. & Prof. Code, § 17043) and unfair competition (Bus. & Prof. Code, § 17200).
In December 2005, the trial court granted Staff Pro’s motion for summary adjudication of the cause of action for below-cost pricing. CSC filed a writ petition to challenge that order. We issued an alternative writ of mandate. After Staff Pro filed its return and we had an opportunity to more thoroughly review the record, we concluded that CSC’s petition had been materially misleading in several respects. We therefore discharged the alternative writ as having been improvidently granted and, without reaching the merits, summarily denied CSC’s petition. (Contemporary Services Corp. v. Superior Court (Staff Pro, Inc. et. al.) (April 25, 2006, B188217).)
This appeal challenges three separate orders made by the trial court directing CSC and its counsel (Philipson & Simon) to pay attorney fees and costs to Staff Pro. For purposes of clarity, we separately discuss each order. We reverse one order because it was unauthorized by statute. We affirm the two other orders.
An order “directing payment of monetary sanctions by a party or an attorney” is appealable if it exceeds $5,000. (Code Civ. Proc., § 904.1, subd. (12).)
I. THE DECEMBER 9, 2005 SANCTIONS AWARD
On December 9, 2005, the trial court ordered CSC and its counsel to pay $21,650 in attorney fees and costs to Staff Pro. The purpose of the order was to compensate Staff Pro for the costs it had incurred in bringing to the court’s attention the fact that CSC and its counsel had possession of internal documents stolen from Staff Pro. We reverse the order because it was unauthorized by statute.
The trial court also imposed evidentiary sanctions upon CSC (see fn. 6, infra) but the propriety of that portion of its ruling is not before us.
A. FACTUAL BACKGROUND RE CSC’S POSSESSION OF STOLEN STAFF PRO DOCUMENTS
Our statement of facts is gleaned from the evidentiary matter (deposition testimony, declarations and documents from prior discovery litigation) submitted to the trial court on Staff Pro’s motion for terminating sanctions which was based upon CSC’s possession of stolen Staff Pro documents. We view the evidence in the light most favorable to the trial court’s order. (See Laguna Auto Body v. Farmers Ins. Exchange (1991) 231 Cal.App.3d 481, 487, 491.)
These events primarily involve the actions of three individuals: Larry Lopez (a former Staff Pro employee), James Granger (CSC’s Vice President of Administration) and David A. Simon of Philipson & Simon, A.P.C. (CSC’s counsel of record since Nov. 2002).
Lopez worked for Staff Pro from October 1997 to March 2003. In early Fall 2003, Granger telephoned Lopez and asked Lopez to meet with him and Simon to discuss Staff Pro’s activities. Shortly thereafter, Lopez met with the two men and gave them some internal Staff Pro documents (job costing reports). Lopez discussed the documents with Simon.
At Lopez’s April 2004 deposition, Staff Pro learned for the first time that Lopez had provided CSC with the job costing reports. When asked from where he obtained the documents, Lopez asserted the Fifth Amendment.
Thereafter, Staff Pro demanded return of the documents and the production of any other improperly obtained Staff Pro documents.
In May 2004, the discovery referee ordered Simon to produce all documents given to him by Lopez.
In June 2003, the parties had stipulated to submit all discovery disputes to retired Judge Eli Chernow as a referee. Because the reference was specific (not general), his reports were advisory, but not binding, upon the trial court.
In June 2004, Simon sent Staff Pro’s counsel a letter stating that he was enclosing a copy of the computer disc that Lopez had given to CSC. Simon claimed that the disc “was just recently discovered to be in CSC’s possession.” Simon, however, failed to enclose any disc with the letter.
In October 2004, CSC finally turned over to Staff Pro a copy of the computer disc that Lopez had given it. The disc contained thousands of pages of privileged and confidential documents, including material related to Staff Pro’s litigation strategy. All of the documents came from the office computer of Suzanne Thoreson, Staff Pro’s Vice President of Administration. Thoreson never authorized Lopez to access her computer.
During discovery litigation conducted before the referee in November 2004, CSC proffered several documents which Staff Pro claimed were from the disc that Lopez had improperly provided to Granger and Simon. Staff Pro requested that the referee impose terminating sanctions. The referee held that the trial court should determine in the first instance whether CSC could use the documents or, in the alternative, whether CSC should be sanctioned for its possession of the documents.
In February 2005, Staff Pro again deposed Lopez. To explain his possession of the disc, Lopez testified that in 2002 while he was still employed by Staff Pro, Thoreson had twice asked him up to “back up” her documents onto a computer disc. Lopez’s testimony was false. Not only had Thoreson unequivocally testified that she never authorized Lopez to perform that task, the disc itself contained documents created in August 2003, five months after Lopez left Staff Pro, thereby undermining any claim that the disc had been created in 2002.
Lopez further testified that in September 2003, he met with Simon and Granger at Simon’s office and gave them the computer disc. According to Lopez, Simon never asked him how he got the disc or what was on the disc. However, when questioned further about the transaction, Lopez invoked the Fifth Amendment. In particular, Lopez asserted the privilege against self-incrimination when asked if he told Simon either how he obtained the disc or what the disc contained; if Simon, Granger or CSC had paid him for the disc; if he had sought financial compensation for providing them with the disc; if Simon or CSC had asked him to copy Staff Pro documents; if he (Lopez) had stolen any documents from Staff Pro; and if he (Lopez) was familiar with the contents of the disc.
B. STAFF PRO MOVES FOR SANCTIONS
In April 2005, Staff Pro moved for sanctions. The notice of motion stated it was brought “pursuant to California Code of Civil Procedure Sections 128, 128.5, 2023, 2030(l), 203.1(m) [sic], California Evidence Code Section 413, [] as well as the Court’s inherent authority to prevent abuses of the litigation process.” Staff Pro sought “an order of sanctions . . . terminating the action with prejudice” and “[i]n addition to, or as an alternative to terminating sanctions[, ] the additional relief specified on page 15 . . . against CSC and its counsel, and all such other and further relief as this Court deems to be just and proper.” The relief specified on page 15 was an order that CSC and its counsel “pay all of Staff Pro’s attorneys fees and costs incurred in defending this vindictive action.”
Evidence Code section 413 provides: “In determining what inferences to draw from the evidence or facts in the case against a party, the trier of fact may consider, among other things, the party’s failure to explain or to deny by his testimony such evidence or facts in the case against him, or his willful suppression of evidence relating thereto, if such be the case.” Staff Pro has never explained the relevance of this statute to its sanctions request.
Although Staff Pro’s notice of motion referenced several statutory provisions governing discovery abuse, its memorandum of points and authorities did not discuss any of them. Instead, Staff Pro first catalogued CSC’s earlier discovery abuses and the referee’s rulings and sanction order (the merits of which are not before us) and then focused on what Staff Pro characterized as CSC’s “most egregious misconduct yet”: the theft and use of stolen internal Staff Pro documents. After setting forth the facts to support its claim that CSC and its counsel had authorized the theft, Staff Pro wrote: “Under California law, and the Rules of Professional Conduct, this court should dismiss CSC’s case and order CSC, its counsel and [its] principal . . . to pay all of Staff Pro’s attorneys’ fees and costs.” (Capitalization, boldface, and underlining deleted.) The only statutory provision cited by Staff Pro was Penal Code section 484 (petty theft). Staff Pro argued that “[a]nything less than termination” of the lawsuit would be insufficient. Staff Pro quickly dispatched the potential remedies of imposition of monetary sanctions, submission of a jury instruction, or an order to CSC to return the stolen documents. Citing a decision from a federal trial court, CSC urged the only appropriate sanction was dismissal and the award of fees and costs.
CSC’s opposition to Staff Pro’s motion never addressed whether the trial court had the authority to impose any of the sanctions requested by Staff Pro. Instead, CSC argued, based upon its evidentiary showing, that the disc did not contain stolen documents, but if it did, CSC was not implicated in the theft. CSC concluded that a terminating sanction was not appropriate and that “[t]he only remedy available, if any is appropriate at all, is a monetary sanction or evidentiary exclusion. [See Code Civ. Proc., § 2023.] However, neither of which would be appropriate under the undisputed record presented in this Motion.” (Italics omitted.)
Staff Pro’s Reply to CSC’s opposition made a passing reference to the trial court’s inherent authority “to protect the integrity of their proceedings” and reiterated its request for a terminating sanction.
C. THE TRIAL COURT’S RULING
After conducting a hearing, the trial court issued the following ruling on June 30, 2005.
“Staff Pro’s Motion for terminating sanctions is denied. Staff Pro has not proven that CSC or its attorneys have actually stole, or authorized the theft of Staff Pro’s documents. [Further, ] the Court has not been directed to any evidence that CSC or its attorneys have actually used any of the stolen documents. . . . However, CSC’s receipt of a disc containing documents stolen from Staff Pro warrants the imposition of certain evidentiary sanctions, [which are set forth below in fn. 6].
The trial court ruled: “Although the Court denies the request to impose terminating sanctions, evidentiary sanctions are clearly appropriate. CSC is ordered to return all copies of all documents contained on the disc, CSC must return all copies of the disc, and may not keep any copy in any format whatsoever. Any copy kept on a hard drive must be destroyed within two (2) days of this order, and CSC must provide a sworn declaration to Staff Pro when this has occurred. If CSC or its attorneys have any copy of the disc or the documents contained therein on a zip drive, these must also be turned over. In short, CSC and its attorneys must give back everything they have that was not produced by Staff Pro in the course of discovery. All documents, discs and data must be returned to Staff Pro (or destroyed in the case of data or documents that are on any hard drive or other media that is not easily transported) within two (2) days of this ruling. At trial, CSC is prohibited from using any Staff Pro document that does not contain a Staff Pro bates stamp number, indicating clearly that it was produced by Staff Pro.”
“Larry Lopez testified at deposition that he turned the disc over to Plaintiff’s counsel in September 2003; Mr. Simon (Plaintiff’s counsel) states that he received it ‘shortly before June 2, 2004.’ He says he got it from ‘his client, ’ but he doesn’t say who actually gave it to him, or how, or when, or the circumstances. Lopez admits that Simon never asked how he got the disc or what was on it, but took the 5th when asked about what he told Simon.
“The disc and its contents were obviously stolen, but it is not clear at whose direction, or even when the theft occurred. While there is some suggestion [by CSC] that the disc might have been generated from a zip drive of files that might have been copied from Suzanne Thoreson’s computer sometime in 2002, given that the disc contains documents that were generated in August 2003 (several months after Lopez stopped working for Staff Pro), it is obvious that the disc was created no earlier than August 2003.
“Lopez invoked the 5th amendment when asked whether Mr. Simon has ever offered him any money. He also invoked the 5th when queried about whether he had ever asked Mr. Simon for money. He invoked the 5th when asked whether Simon ever requested that he copy Staff Pro material. Mr. Simon’s failure to address these specific issues in his declaration in opposition to the motion is very troubling, to say the least. . . .[]
CSC’s opposition to Staff Pro’s sanctions motion had included a nine-page declaration from Simon. The declaration was long on rhetoric and short on facts. Simon simply averred: “I had nothing to do with Mr. Lopez making a disc of documents or obtaining any documents from Staff Pro.” As to when he received the disc, Simon claimed: “I first learned about the disc just before June 2, 2004, when it was provided to me by my client.” Simon did not identify the individual(s) who gave his client the disc.
“The Court considers the conduct of CSC and its counsel to be severe but not to necessarily warrant terminating sanctions. Staff Pro was not unreasonable in bringing the motion and did so in good faith and, as was argued during the hearing, merely preventing CSC from using the information derived from the stolen disc at trial and ordering CSC to return all such material seems insufficient to the Court for such behavior.[] Therefore, the Court, in addition to imposing the evidentiary sanctions, orders CSC and its counsel, jointly and severally, to pay the reasonable attorneys’ fees and costs of Staff Pro in bringing the conduct of CSC and its counsel before the Court.” (Italics added.)
Based upon comments made at the hearing held on the motion, it appears that the court’s tentative ruling indicated an intent only to require CSC to return the documents and to bar CSC from using the documents at trial. (See fn. 6, ante.) Although Staff Pro’s attorney urged several times during his argument that these two remedies were insufficient, he never raised the issue of monetary sanctions.
As can be seen from the above ruling, the trial court did not cite any statute in awarding attorney fees and costs to Staff Pro. Staff Pro thereafter submitted evidence re costs and attorney fees. A declaration from Staff Pro’s attorney explained that the amount requested represented the expenses incurred “to bring to the Court’s attention those acts justifying Staff Pro’s Motion for Terminating Sanctions.”
On December 9, 2005, the trial court ordered CSC and counsel to pay $21,650 to Staff Pro.
D. DISCUSSION
In its briefs, CSC attacked the sanctions award on the basis that that the trial court “did not make the necessary finding of subjective bad faith to warrant the monetary sanctions” under Code of Civil Procedure section 128.5. Staff Pro responded by urging that the trial court had implicitly made that finding and that the finding was supported by substantial evidence. In supplemental briefing submitted pursuant to our request (Gov. Code, § 68081), both parties conceded that section 128.5 does not and cannot apply to this case because the lawsuit was filed after December 31, 1994. (Olmstead v. Arthur J. Gallagher & Co. (2004) 32 Cal.4th 804, 819 [section “128.5(a) does not authorize trial courts to impose sanctions for any form of litigation misconduct arising ‘from a complaint filed, or a proceeding initiated’ after December 31, 1994”].) Consequently, the issue becomes whether there is another basis upon which the trial court’s order can be upheld. As we now explain, there is not.
All subsequent undesignated statutory references are to the Code of Civil Procedure.
The seminal decision is Bauguess v. Paine (1978) 22 Cal.3d 626. It held the trial court has no inherent authority “to punish misconduct by awarding attorney’s fees.” (Id. at p. 638.) An award of attorney fees must be authorized by statute. As we explained in Andrews v. Superior Court (2000) 82 Cal.App.4th 779, section 128—another statute cited by Staff Pro in its sanctions motion—does not confer that authority upon the trial court.
After the Bauguess decision was rendered, the Legislature enacted section 128.5 to give the trial court the authority to award sanctions for attorney misconduct, but, as set forth above, the statute applies only to lawsuits filed on or before December 31, 1994. Subsequently enacted section 128.7 does not apply to this case because Staff Pro never utilized its “safe harbor” provisions, and because those provisions do not address the conduct in this case: the receipt and retention of stolen documents.
Contrary to what Staff Pro now argues, former section 2023 (since repealed and replaced with sections 2023.010 to 2023.040) cannot be used to uphold this particular sanctions order. The statutory scheme authorizes a monetary sanction award (including attorney fees) for “[m]isuses of the discovery process” (§ 2023.010) unless the court finds that the offending party “acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” (§ 2023.030, subd. (a).) The statutory examples of discovery misuse involve improperly using or responding to “a discovery method” or disobedience of a court order to provide discovery. Here, the crux of Staff Pro’s sanctions motion was that CSC engaged in conduct outside of the discovery process: theft and use of stolen property. The trial court credited that claim to the extent it found that CSC possessed stolen property (a finding CSC does not contest). That finding simply does not equate with misuse of the discovery process. Nor can Staff Pro now rely upon the fact that CSC took six months to comply with the referee’s order to return the stolen disc. Staff Pro’s motion was not based upon that or any other failure to comply with discovery. Instead, Staff Pro focused on CSC’s criminal conduct to urge that terminating sanctions were warranted to protect the integrity of the proceeding. The trial court’s ruling made no reference to discovery abuse(s) in awarding sanctions but, instead, explicitly stated its award was to compensate Staff Pro for the cost of bringing the issue of CSC’s possession of stolen property to the court’s attention.
Section 2023.040 provides: “A request for a sanction shall, in the notice of motion, identify every person, party, and attorney against whom the sanction is sought, and specify the type of sanction sought. The notice of motion shall be supported by a memorandum of points and authorities, and accompanied by a declaration setting forth facts supporting the amount of any monetary sanction sought.” Staff Pro’s motion did not comply with these specific requirements of notice. (See Staples v. Hoefke (1987) 189 Cal.App.3d 1397, 1419 [due process requires notice in moving for sanctions under section 128.5].)
Lastly, we reject Staff Pro’s arguments that the doctrines of waiver and invited error apply so as to preclude CSC from urging that no statute authorized the trial court’s award of attorney fees.
First, Staff Pro finds a waiver in CSC’s failure to raise in the trial court the inapplicability of section 128.5. Staff Pro relies upon Children’s Hospital & Medical Center v. Bonta´ (2002) 97 Cal.App.4th 740 to support this argument. There, the trial court, in granting judgment, found the plaintiffs were entitled to attorney fees under the private attorney general doctrine. Subsequently, the plaintiffs filed evidence of their fees, a hearing was conducted, the court set the amount of attorney fees, and entered an award. On appeal, the defendants for the first time urged that the trial court lacked jurisdiction to make the award because the trial court had initially found the plaintiffs were entitled to attorney fees under the private attorney general doctrine before theplaintiffs filed their formal motion for fees whereas such an award can only be made in the first instance “upon motion.” The appellate court found that the defendants had waived this argument because they had had multiple opportunities to present the argument to the trial court but had failed to do so. (Id. at pp. 775-776.) That case is clearly distinguishable. There, it was not contested that the trial court had the authority under the facts of that lawsuit to award attorney fees under the private attorney general doctrine. The appellate attack on the attorney fee award was based only upon a minor procedural defect that occurred prior to the entry of the award, a defect the defendants could have but did not bring to the trial court’s attention. Here, on the other hand, the issue is not a technical defect in procedure but, instead, is whether the trial court even had the power to award attorney fees. As already explained, absent statutory authority, a trial court has no authority to award attorney fees. (Bauguess v. Paine, supra, 22 Cal.3d 626.) We decline to find that CSC’s dereliction in failing to question the court’s authority to award attorney fees conferred such authority.
Next, Staff Pro attempts to find invited error because CSC’s opposition to Staff Pro’s motion included the passing suggestion that its conduct, at most, warranted evidentiary or monetary sanctions. We are not persuaded. “The ‘doctrine of invited error’ is an ‘application of the estoppel principle’: ‘Where a party by his conduct induces the commission of error, he is estopped from asserting it as a ground for reversal’ on appeal. [Citation.] . . . At bottom, the doctrine rests on the purpose of the principle, which is to prevent a party from misleading the trial court and then profiting therefrom in the appellate court. [Citations.]” (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 403, italics added.) In contrast, the doctrine does not apply if a party simply tried “‘to make the best of a bad situation for which [it] was not responsible.’” (Ibid.) In light of this authority, we find that the brief suggestion in CSC’s opposition does not constitute invited error. The bulk of CSC’s pleading opposed Staff Pro’s sanctions request on the merits: CSC claimed that it had done nothing improper. Consequently, CSC’s passing reference to monetary sanctions cannot reasonably be construed as either an invitation to the trial court to award attorney fees to Staff Pro or the inducement which led to the trial court’s subsequent order.
In sum, the sanctions award of December 9, 2005 must be reversed as lacking in statutory authorization.
We do not condone CSC’s conduct in receiving and retaining documents obviously stolen from Staff Pro; we hold only that the monetary award is not authorized by statute. As we have already noted, section 128.5 does not apply to this lawsuit because the action was filed after December 31, 1994 and section 128.7 does not cover the egregious situation presented in this case. The lack of statutory authorization to impose financial sanctions for the type of serious misconduct committed by CSC can only be corrected by legislation. We suggest that the Legislature consider the merits of an appropriate provision in the section 128 series.
II. FEBRUARY 24, 2006 SANCTIONS ORDER
A defendant is entitled to discover the information in the plaintiff’s possession that allegedly supports the plaintiff’s claims. (See Burke v. Superior Court (1969) 71 Cal.2d 276.) Here, Staff Pro sought to learn what documentary evidence supported CSC’s specific allegations about Staff Pro’s unfair business practices. After CSC failed to comply with the discovery referee’s orders to do so, Staff Pro moved for sanctions. The trial court ultimately adopted the referee’s recommendation to impose evidentiary and monetary sanctions upon CSC and its counsel because of its willful and unjustified failure to comply with discovery. On this appeal, CSC challenges the award of monetary sanctions (attorney fees and costs).
A. Factual and Procedural Background
CSC’s first amended complaint alleged that Staff Pro had committed various unfair business practices that injured CSC. In specific, CSC alleged that the rates Staff Pro charged its clients were substantially below Staff Pro’s actual costs, thereby precluding CSC from submitting competitive bids. CSC alleged that Staff Pro made up for these financial shortfalls by billing those clients for services which were never rendered (“ghost billing”) and by improperly obtaining and selling ticket events (“ticket scalping”). In addition, CSC alleged that Staff Pro, in order to obtain contracts, bribed various management employees of its clients.
After making several unsuccessful attempts to learn from CSC the evidence which supported those claims, Staff Pro propounded a Document Demand to obtain identification and production of the documents in CSC’s possession that supported the pleading allegations. In particular, Requests Nos. 11 through 18 of the Document Demand identified specific factual allegations in CSC’s first amended complaint and directed CSC to produce the documents which supported those allegations. CSC resisted the discovery on various grounds, none of which CSC renews on appeal. Staff Pro moved to compel responses. The referee granted Staff Pro’s motion. CSC’s response was simply to identify the more than 400, 000 documents that Staff Pro had already turned over to CSC in discovery.
Staff Pro moved for sanctions, urging that CSC’s en masse designation of all the documents it (Staff Pro) had produced “was no response at all.” In addition, Staff Pro noticed the deposition of the person most knowledgeable (PMK) at CSC re identifying the specific documents which supported CSC’s pleading allegations. CSC objected that this was an impermissible attempt by Staff Pro to prematurely depose one of CSC’s expert witnesses because the PMK was also its forensic accounting expert. The referee overruled that objection (a ruling CSC does not contest on appeal) and deferred ruling upon Staff Pro’s sanctions motion pending completion of the deposition.
The referee explained: “The development of the PMK deposition process was intended to require a litigant to produce a knowledgeable spokesman for its position(s) on disputed issues in litigation. It is very common that the information and contentions advanced by a litigant include information developed during the course of litigation by counsel or experts. The mere fact that a litigant relies upon such information does not shield the information from discovery or defer discovery until the very end of the discovery process. Otherwise, the PMK process, and other potentially meaningful discovery devices, would be rendered useless.”
Thereafter, CSC filed supplementary responses reducing to approximately 200, 000 the number of documents that supported its allegations and identified Pamela Wax-Semus (a forensic accounting expert) as its PMK. Two months before the deposition occurred, the referee warned CSC that if it “fail[ed] to provide meaningful information about which specific documents it contends support its allegations and the logical manner in which the documents are contended to provide such support, it would be appropriate to consider evidentiary and possibly other sanctions.”
At her June 2005 deposition, Wax-Semus identified six exhibits that supported CSC’s allegations. Other than that, she claimed that CSC would have to review all of Staff Pro’s financial records because each of those records could potentially support CSC’s allegations of below-cost bidding.
In October 2005, Staff Pro renewed its requests for sanctions, urging CSC had failed to comply with its obligation to identify the documents which supported its allegations. In so far as is relevant to this appeal, Staff Pro sought to recover the attorney fees and costs (deposition expenses) expended in its unsuccessful effort to compel CSC to identify the documents which supported its pleading allegations. As will be explained later, Staff Pro supported this request with declarations from its attorneys as well as law firm invoices.
After the parties filed extensive briefs on the issues, the referee rendered a detailed ruling. He explained, in relevant part:
“CSC has abjectly failed to make meaningful discovery. [¶] Staff Pro was entitled to discover what documents, if any, CSC had to support its detailed allegations. Instead of answering the questions, CSC cataloged initially more than 400, 000 documents consisting of every document produced by Staff Pro. Although the number was ultimately reduced to something over 200, 000, the response remained meaningless. . . . CSC’s responses . . . constituted the polar opposite of meaningful discovery. CSC has not provided Staff Pro with any information as to the basis of the detailed allegations [found in its first amended complaint]. Instead, CSC has caused Staff Pro to incur the expenditure of tens of thousands of dollars in legal fees and waste months and months of pre-litigation time.
“CSC has consistently objected to the discovery as being inappropriate other than as expert discovery. CSC’s objections are not well taken. It is elementary that a defendant is entitled to discover the facts and documents that underlie the allegations made by a plaintiff. [Citation.] The development of discovery by means of a person most knowledgeable is intended to reduce the game playing and expense generation of discovery. One person of the corporation’s choice becomes the spokesperson for the corporation on the issues for which the designation was made. When CSC designated one of its experts as its corporate spokesperson, it can not complain that the person it designated is also one of its experts.
“CSC complains that its expert analysis is not complete. While that may be true, that proposition has nothing to do with CSC’s providing the basis for the allegations it made four years earlier, prior to the time CSC had conducted any discovery. . . .
“CSC began this lawsuit by voluntarily making specific detailed allegations as to Staff Pro’s costs at certain locations and other elements of Staff Pro’s business. Staff Pro is entitled as a matter of law to learn the basis of support for CSC’s allegations regardless of whether the allegations are conclusions or underlying facts. If CSC had no facts or documents to support its allegations at the time they were made, Staff Pro was entitled to learn that information. . . .
“The only fair characterization of CSC’s response to Staff Pro’s appropriate discovery requests and the numerous rulings of the Referee is that CSC has been repeatedly evasive and unresponsive. It has engaged in the worst from of discovery abuse in that it has forced its adversary to expend tens of thousands of dollars and months of effort in a futile search of elementary discovery.
“The appropriate remedy for CSC’s failure to provide basic information to the party it sued and will not disclose the basis of its lawsuit is a difficult question. In this case, however, CSC’s frustration of Staff Pro’s rights have continued over four years since the discovery was propounded, through an original response and three supplemental responses, and two [deposition] sessions with its designated person most knowledgeable.”
After imposing evidentiary sanctions, the referee wrote:
The referee ruled that CSC would be precluded at trial from introducing any documentary evidence except for the items which Wax-Semus had, at her deposition, specifically identified as supporting CSC’s allegations. The propriety of that ruling is not an issue on appeal.
“CSC’s refusal to comply with its discovery obligations is willful and without justification.” “[S]uch refusal has continued after CSC was advised orally and in writing by the Referee that it was required to make meaningful discovery.”
The referee therefore concluded that Staff Pro was entitled to recover from CSC and CSC’s counsel the attorney fees ($41,275.50) and the costs ($4,773.78) it had incurred in attempting to obtain the ordered discovery.
CSC filed timely objections to the referee’s recommendations. None of its objections addressed the award of attorney fees and costs. Staff Pro filed a timely reply to CSC’s objections
Thereafter, CSC filed an ex parte application for an “Order to File Highly Confidential Documents under Seal.” The confidential documents consisted of approximately one thousand pages of internal Staff Pro documents which Staff Pro had turned over to CSC during discovery and which, pursuant to the parties’ stipulation, were governed by a protective order. Although CSC’s application argued that the documents would establish that the referee’s recommendation “is contrary to law, ” CSC advanced no argument that the documents were relevant to the award of attorney fees and costs. At a hearing held on CSC’s application, Staff Pro noted that CSC had filed its application long after the time to file objections to the referee’s recommendation had expired. Staff Pro also argued that a grant of CSC’s application would prejudice it since it had just received the application and it had already filed its reply to CSC’s objections. The trial court ruled: “I am denying the ex parte application to submit these [confidential] documents because I don’t believe there is any authority for it, and it appears to be prejudicial to the defense [Staff Pro] under the circumstances” “to accept additional documents after they’ve completed their responses.”
Several weeks later, the trial court adopted the referee’s report. Its minute order reads: “The Court has reviewed [CSC’s] objections to the Discovery Referee’s report dated January 6, 2006 and [Staff Pro’s] Reply thereto. The Court finds that the objections lack merit. Therefore, the Court adopts the Referee’s Report and Recommendations contained therein as its own.”
B. Discussion
1. CSC Has Not Established that the Discovery Referee Erred in Ordering the Deposition of Its PMK
CSC, conceding that Staff Pro was entitled to learn which documents in CSC’s possession supported the allegations in its first amended complaint, attacks the monetary sanctions order in the following way. Noting that the order was primarily based upon the finding that CSC had failed to properly identify the documents at the deposition of its PMK, CSC argues that “a deposition is an inappropriate vehicle to inquire into law-to-fact application [and that] the inquiry should have been made in the form of a special interrogatory.” In support, CSC cites this Division’s opinion in Rifkind v. Superior Court (1994) 22 Cal.App.4th 1255 (Rifkind).
CSC does not challenge any other aspect of the ruling, including the findings that its en masse designation of hundreds of thousands of documents was deficient and improper and that its failure to comply with discovery was willful and without justification. In fact, CSC concedes that “[t]he general authority of the discovery referee to impose monetary sanctions against litigants and attorneys that engage in discovery abuses is not at issue.”
In Rifkind, the defendant’s answer raised various defenses. At deposition, the defendant was asked to state the facts which supported a particular affirmative defense such as the statute of limitations. Defense counsel objected to the questions as improperly calling for legal conclusions and suggested that plaintiff propound the same questions through interrogatories. The plaintiff declined to do so and, instead, successfully obtained a judicial order directing the defendant to answer the deposition questions. (Id. at pp. 1256-1258.)
In a writ proceeding, we concluded that the trial court erred in granting the motion to compel the defendant to answer. We held that it is improper to ask a party at a deposition “to state all facts, list all witnesses and identify all documents” that support a particular legal contention. (Id. at p. 1259.) That information, instead, should be gathered through interrogatories. We explained that the “basic vice [of such questions] when used at a deposition is that they are unfair. They call upon the deponent to sort out the factual material in the case according to specific legal contentions, and to do this by memory and on the spot.” (Id. at p. 1262, italics added.) “As one commentator put it, legal contention questions require the party interrogated to make a ‘law-to-fact application that is beyond the competence of most lay persons.’” (Ibid.) However, in language applicable to this case, we noted that the same cannot be said about “asking the person deposed about the basis for, or information about, a factual conclusion or assertion, as distinguished from the basis for a legal conclusion.” (Id. at p. 1259, italics added.) Those questions are proper.
CSC’s reliance upon Rifkind is misplaced for two separate reasons.
The first reason is that, in contrast to the complaining party in Rifkind, CSC did not properly raise this issue below. Although CSC now claims it “repeatedly made” this objection, it did not do so in a timely manner. Prior to the deposition of the PMK, CSC raised only objections based upon the PMK’s status as an expert witness, objections which were overruled and have not been pursued on appeal. During the deposition, CSC did not object that Staff Pro’s inquiries to the PMK constituted improper legal contention questions. CSC did not raise Rifkind until November 2005—five months after the PMK’s deposition—when it opposed Staff Pro’s request for sanctions. This was too little and too late. CSC gambled that its participation in the deposition would resolve the issues raised by Staff Pro’s earlier discovery request. When it did not and Staff Pro sought sanctions, CSC sought to justify its failures by relying upon authority it could have but did not invoke during the deposition. “Errors and irregularities of any kind occurring at the oral examination that might be cured if promptly presented are waived unless a specific objection to them is timely made during the deposition. These errors and irregularities include, but are not limited to, . . . the conduct of [an] attorney . . . or to the form of any question.” (Code Civ. Proc., § 2025.460, subd. (b).) In sum, CSC forfeited any claim of error based upon Rifkind.
The second reason to reject CSC’s argument is that Staff Pro did not pose legal contention questions to the PMK. Legal contention questions ask a witness to marshal and supply all facts in support of a particular legal contention. Here, Staff Pro did not do that but, instead, sought to explore the factual matters raised by CSC’s complaint. For instance, Staff Pro’s notice of deposition stated that it sought the identification of specific documents which supported CSC’s allegations that Staff Pro “actually made sales of [its] event staffing services at less than its legitimate costs”; that Staff Pro had “generated . . . false or ‘ghost’ billings to venue operators and event hosts for event staffing services that, in fact, were never rendered”; and that Staff Pro had “obtained premium concert tickets through various deceptive and fraudulent devices and have sold those tickets at over face value through ticket brokers and ticket scalpers.” This was the same way that the questions were posed to the PMK at the deposition. She was asked about how the specific documents identified earlier by CSC in response to Staff Pro’s Document Demand supported CSC’s factual allegations. As we explained in Rifkind, supra, it is proper to pose “questions at a deposition asking the person deposed about the basis for, or information about, a factual conclusion or assertion.” (Id. at p. 1259.) Hence, no Rifkind error occurred.
2. CSC Has Not Established that the Trial Court Did Not Conduct An Independent Review of the Referee’s Report and Recommendations
CSC next urges that the trial court “failed to conduct an independent review” of the referee’s recommendation to award monetary sanctions before adopting it. None of CSC’s arguments on that point is persuasive.
The governing principle is that “a discovery referee’s report is advisory, not determinative, [so that] the trial court must independently consider the referee’s findings before acting upon the referee’s recommendations. . . . [However, ] a hearing is not required as a matter of law. In an exercise of its discretion, the trial court may consider the matter as the circumstances dictate.” (Marathon Nat. Bank v. Superior Court (1993) 19 Cal.App.4th 1256, 1261.) In adopting a referee’s report, it is presumed that the trial court properly exercised its judicial responsibilities. (Ibid.) Its order doing so will be reversed only if the record affirmatively establishes that it misconstrued its powers. (Ibid.) CSC has failed to meet its burden of showing error. (Compare Rockwell Internat. Corp. v. Superior Court (1994) 26 Cal.App.4th 1255, 1269-1270 [record affirmatively established that the trial court had abdicated its judicial responsibility to review the referee’s report].)
CSC first argues that the trial court “did not hold a hearing on the Discovery Referee’s ruling.” However, as set forth above, the trial court is not required to conduct a hearing before deciding whether to adopt the recommendation of a special referee. Nothing more need be said on this point as CSC has advanced no argument as to why the decision not to conduct a hearing was error. (Dills v. Redwoods Associates, Ltd. (1994) 28 Cal.App.4th 888, 890, fn. 1.)
CSC next claims the trial court improperly adopted the referee’s recommendation because “the billing records detailing the $41,275.50 in attorneys’ fees awarded to Staff Pro were not filed with the Trial Court.” The claim is not persuasive. In that regard, the relevant facts are the following. Staff Pro supported its request to the referee for an award of attorney fees with declarations from the three attorneys involved in this particular discovery litigation. The declarations set forth the number of hours each worked, their hourly rates, and the nature of their work. In addition, Staff Pro attached the law firm’s invoices as exhibits to the declarations.
After the referee submitted his report and recommendations to the trial court, CSC filed its objections. However, CSC’s objections made no mention of the award of monetary sanctions; instead CSC focused entirely on the issue whether CSC had failed to comply with its discovery obligations. Staff Pro’s reply to CSC’s objections included the three declarations from counsel previously submitted to the referee but omitted the invoices generated by the law firm.
Staff Pro’s appellate brief explains: “Staff Pro submitted the fee declarations of its counsel, but did not attach the actual bills with the description of the work done. Staff Pro did not want to violate the attorney/client privilege or have such invoices become a matter of public record, which CSC or its counsel may have then tried to show to Staff Pro’s clients, or other third parties, as purported proof of Staff Pro’s alleged wrongdoing.”
CSC now argues that that the trial court “did not have before it all of the documents necessary to conduct an independent review” of the recommendation re award of attorney fees. We disagree. The three detailed declarations submitted by Staff Pro’s counsel constituted sufficient evidence to permit trial court review of the referee’s recommendation. There is no requirement that the trial court also be furnished with the law firm’s invoices submitted to the referee. If CSC believed the amount recommended by the referee was incorrect and that the invoices were relevant evidence on that issue, CSC should have raised that point in the trial court. It did not do so. It cannot now complain the trial court did not consider those documents. In fact, CSC’s failure to include in its written objections to the referee’s recommendations any argument about the referee’s determination of the amount of attorney fees could be construed as an implicit concession that the amount had been properly calculated (assuming its conduct warranted imposition of monetary sanctions).
Equally without merit is CSC’s argument that the trial court’s denial of its ex parte request to file confidential Staff Pro documents under seal requires reversal of the trial court’s order adopting the referee’s recommendation to award Staff Pro attorney fees and costs. CSC’s ex parte request never urged that the confidential documents were relevant to the trial court’s review of that recommendation and its appellate briefs fail to articulate any specific arguments in that regard. Further, CSC’s briefs neither acknowledge the reasons the trial court gave for denying the motion nor argue why those reasons were incorrect. This deficient presentation constitutes a forfeiture or abandonment of any claim that the trial court committed prejudicial error in denying the ex parte application. (Dills v. Redwood Associates, Ltd., supra, 28 Cal.App.4th at p. 890, fn. 1.)
III. JULY 17, 2006 SANCTIONS ORDER
Lastly, CSC attacks a sanctions order made in July 2006. CSC and its counsel were ordered to pay Staff Pro’s attorney fees after Staff Pro defeated CSC’s motion for financial and evidentiary sanctions. We find no error and therefore affirm the order.
A. Factual and Procedural Background
In November 2005, CSC moved for monetary and evidentiary sanctions contending that Staff Pro had failed to produce or had destroyed records it had been directed to turn over to CSC.
The parties’ briefs and the court’s ruling sometimes refers to this as “Motion No. 16.”
Staff Pro provided a detailed response. Through citation to supporting declarations, Staff Pro established that it had produced the bulk of the requested documents and, to the extent any documents had not been produced, it was because it either no longer possessed them or could not locate them.
The referee issued his ruling in a letter to counsel. He credited Staff Pro’s response that Staff Pro had complied with its obligation to produce the documents but noted there were some ambiguities in a few of Staff Pro’s explanations for non-production. He therefore directed Staff Pro “to produce a further statement identifying the categories of documents not produced and providing an unambiguous and comprehensive explanation of the reason(s) for non-production.” On the merits of CSC’s motion, he concluded that CSC was “not entitled to any sanctions.” Turning to the issue of attorney fees, he wrote:
“As to attorney’s fees, each side has something to say. On CSC’s side, some production of documents was made as late as [a month ago], and an order for further clarification is being made in favor of CSC. On Staff Pro’s side, Staff Pro appropriately contends that the bulk of the fees it was required to incur were to defeat CSC’s rehashing of previously resolved issues and CSC’s unmeritorious claims.
“On balance the referee concludes that Staff Pro should be viewed as the party prevailing on the great bulk of this motion. CSC has demonstrated a history of generating intensive discovery fights of little or no merit.” (Italics added.)
The referee directed Staff Pro to file within 10 days a declaration of fees incurred with the motion. Twelve days later, Staff Pro submitted declarations from two of its attorneys, supplemented by invoices from their law firm, requesting $18,256 in attorney fees.
Although CSC’s response noted that Staff Pro’s submission was two days late, CSC did not argue that it (CSC) had been prejudiced by this minor delay. CSC attacked the specific number of hours billed by Staff Pro’s counsel for opposing CSC’s motion. In addition, CSC reargued the merits of the referee’s ruling and urged that Staff Pro, not CSC, should have been sanctioned. Thereafter, on two separate dates, CSC filed letters which the referee construed collectively as a motion for reconsideration. The referee denied the reconsideration request, reaffirmed his earlier ruling, and directed Staff Pro to prepare the appropriate order.
Staff Pro prepared an order, explaining in detail the referee’s denial on the merits of CSC’s motion for sanctions. The order tracked the language in the referee’s earlier letter denying CSC’s motion. The order concluded:
“With respect to attorneys’ fees, although CSC contends that the production of some documents were made as late as January 30, 2006, Staff Pro appropriately contends that the bulk of the fees that it was required to incur were to defeat CSC’s rehashing of previously resolved issues and CSC’s unmeritorious claims. On balance, the Referee concludes that Staff Pro should be viewed as the party prevailing on the great bulk of this Motion. CSC has demonstrated a history of generating intensive discovery fights with little or no merit. Consequently, the Referee orders CSC and its counsel to pay reasonable attorney’s fees to Staff Pro in the amount of $18,250.00.”
CSC filed objections to the proposed order. Primarily, CSC (again) reargued the merits of the referee’s ruling, claiming that its motion had been substantially justified by the facts and had been brought in good faith. On the issue of attorney fees, although CSC again noted that Staff Pro’s declarations had been filed two days later, CSC still failed to claim that it had been prejudiced by that minor delay. CSC further objected to the order’s language, taken from the referee’s earlier ruling, that Staff Pro was the prevailing party on the motion.
The referee implicitly overruled all of CSC’s objections and signed the order recommending the imposition of $18,250 in sanctions.
CSC filed objections in the superior court to the referee’s report and recommendations. The objections simply reiterated the arguments CSC had (unsuccessfully) made to the referee. CSC attached to its objections copies of all the pertinent motions, responses, and correspondence which had been filed with the referee. Staff Pro filed a reply to CSC’s objections, and, in specific, answered CSC’s argument that Staff Pro had “overbilled” for its work in opposing CSC’s motion. Staff Pro’s reply was supported by multiple exhibits. CSC objected to the trial court’s consideration of Staff Pro’s reply because the reply was 13 days late.
Six weeks later, the trial court, on July 17, 2006, adopted the referee’s report and recommendations as its own.
B. Discussion
CSC urges that the record does not establish that the trial court independently considered the referee’s findings before adopting his report. As set forth earlier in our discussion of the February 24, 2006 sanctions award, it is presumed that the trial court properly exercised its judicial responsibility to independently review the referee’s report, the opposing party’s objections, and the moving party’s reply. It is appellant’s burden to affirmatively establish that the trial court failed to act as required by law. (Marathon Nat. Bank v. Superior Court, supra, 19 Cal.App.4th 1256.)
In an effort to meet that burden, CSC argues that since the signed order “did not even recite the fact that Staff Pro had been required to supplement its earlier responses and omitted the Discovery Referee’s comments favorable to CSC” made in the referee’s letter denying CSC’s motion, “it cannot be determined whether the Trial Court went beyond the proposed Order and reviewed the paperwork, but it appears that if such a review had been undertaken at the very least the Trial Court would have modified the proposed Order to reflect accurately what the Discovery Referee had decided below.” We disagree.
For one thing, CSC never raised either before the referee or the trial court the fact that the order did not include those comments. After Staff Pro filed the proposed order with the referee, CSC raised multiple objections to it but did not include this claim. After the referee signed the order, CSC filed objections in the trial court but, once again, failed to claim error because the order did not include those comments. CSC’s failure to raise this point below constitutes a forfeiture of its right to complain now.
In any event, considered on the merits, CSC’s argument is not persuasive. In the context of the referee’s overall ruling (denial of CSC’s motion for sanctions against Staff Pro), the referee’s comments that Staff Pro had only recently produced some documents and that Staff Pro needed to clarify some of its reasons for non-production were not significant. The keys points are that the referee found that CSC’s claims that Staff Pro had failed to produce and destroyed evidence lacked merit and that, in fact, Staff Pro had complied with its discovery obligation. Hence, the fact that the trial court did not amend the order to include the two comments does not establish that the trial court did not independently review the referee’s report. In sum, CSC has not met its burden to establish that the trial court did not independently review the record before adopting the referee’s recommendation.
Separate from its claim that the trial court did not independently review the record, CSC advances four arguments as to why the referee’s ruling “was factually and statutorily in error.” This approach misses the mark. At this stage of the proceedings, we do not review the referee’s recommendations; instead, we review for abuse of discretion the trial court’s order adopting those recommendations. (Sauer v. Superior Court (1987) 195 Cal.App.3d 213, 228.) Nonetheless, even if recast in the proper context of review of the trial court’s order, none of CSC’s arguments is persuasive.
First, the trial court’s finding that Staff Pro was the prevailing party on the motion and therefore entitled to attorney fees was not an abuse of discretion. Staff Pro had defeated CSC’s request for monetary and evidentiary sanctions based upon the (incorrect) claims that Staff Pro had either not produced relevant evidence or had destroyed such evidence. As explained above, the fact that the referee had directed Staff Pro to clarify some of its explanations for non-production does not change that conclusion.
In a similar vein, we reject CSC’s argument that the award was improperly made to punish CSC for having brought other motions (as opposed to compensate Staff Pro for having to respond to this motion) because the order noted that “CSC has demonstrated a history of generating intensive discovery fights with little or no merit.” Placed in proper context—the comment followed the finding that Staff Pro was the prevailing party on the motion—it is clear that the comment merely amplified the trial court’s reasoning why Staff Pro was the prevailing party, e.g., Staff Pro incurred attorney fees “to defeat CSC’s rehashing of previously resolved issues and CSC’s unmeritorious claims.”
CSC’s argument that the award of attorney fees was not proper because Staff Pro submitted the evidence supporting its fee request to the referee two days late is not persuasive. Given that CSC offers no authority to support this argument and has never claimed that such a de minimis delay prejudiced its ability to argue against the award either before the referee or in the trial court, we reject the argument.
Staff Pro’s brief, citing evidence not included in the record on appeal, urges that the referee granted Staff Pro an extension to file the evidence because Staff Pro’s attorney was ill. We need not address that point.
Lastly, CSC makes the passing argument that Staff Pro was awarded compensation for work unrelated to opposing CSC’s motion but fails to articulate a fact-specific argument, with citations to the record, to support the argument. This deficient presentation constitutes a forfeiture of any such claim. (Reyes v. Kosha (1998) 65 Cal.App.4th 451, 466, fn. 6.)
DISPOSITION
The trial court’s order of December 9, 2005 (as well as its antecedent ruling of June 30, 2005 finding that Staff Pro was entitled to attorney fees and costs) imposing $21,650 monetary sanctions on CSC and counsel is reversed; its order of February 24, 2006 directing CSC and CSC counsel to pay Staff Pro $41,275.50 in attorney fees and $4,773.78 in costs is affirmed; and its order July 17, 2006 directing CSC and CSC’s counsel to pay $18,250 in attorney fees to Staff Pro is affirmed. Staff Pro is to recover its costs on appeal. The Clerk of this Court is directed to forward a copy of this opinion to the State Bar of California. (Bus. & Prof. Code, § 6086.7, subd. (a)(3).)
We concur: EPSTEIN, P. J., SUZUKAWA, J.
In October 2006, the trial court granted Staff Pro’s motion to dismiss CSC’s cause of action for unfair competition because CSC lacked standing to pursue that claim. The court therefore entered judgment on the complaint in favor of Staff Pro. CSC has filed a notice of appeal from that judgment.
In Contemporary Services Corporation, et al. v. Staff Pro, Inc. et al. (Mar. 21, 2006, B185119), CSC challenged a different award of $9,900 in attorney fees and costs made to Staff Pro. We found no abuse of discretion and therefore affirmed.
The trial court denied CSC’s subsequent motion to set aside the referee’s ruling that Staff Pro be permitted to depose CSC’s PMK.