United States Equal Employment Opportunity Commission v. Giumarra Vineyards Corporation

Filing 78

ORDER DENYING PLAINTIFF INTERVENORS' DEMAND FOR DISCOVERY FINANCIAL INFORMATION signed by Magistrate Judge Michael J. Seng on 2/6/2012. (Yu, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA
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U.S. EQUAL EMPLOYMENT
OPPORTUNITY COMMISSION,

CASE NO. 1:09-cv-02255-AWI-MJS

ORDER DENYING PLAINTIFFINTERVENORS’ DEMAND FOR
DISCOVERY OF FINANCIAL
DELFINA OCHOA, MARIBEL OCHOA, INFORMATION
JOSE OCHOA, AND GUADALUPE
MARTINEZ,
Plaintiff,

Plaintiffs-In-Intervention,

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v.

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GIUMARRA VINEYARDS CORPORATION,
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Defendant.
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I.

INTRODUCTION

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This action was initiated December 29, 2009, by Plaintiff, the U.S. Equal
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Employment Opportunity Commission (“EEOC”), alleging Defendant engaged in unlawful
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employment practices directed against individuals now named as Plaintiff Intervenors. The
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unlawful acts were claimed to consist of toleration of a hostile work environment arising out
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of alleged sexual harassment of one Intervenor by a co-worker and the retaliation, by
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summary termination of employment, against all Intervenors for complaining about the
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unlawful actions. The complaint sought recovery of lost wages, general compensatory
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damages, punitive damages and other equitable and injunctive relief. Intervenors added
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supplemental state law discrimination and retaliation claims.
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Defendant denies the claims and specifically denies that any of the Intervenors were

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harassed, complained of harassment or were terminated for complaining of harassment.

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Defendant claims Intervenors voluntarily terminated their own employment after

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approximately thirteen days on the job.
EEOC and Defendant have reached an agreement to settle the former’s claims.

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The terms are being finalized. Intervenors pursue their claim for damages.

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The case originally faced a June 30, 2011, discovery deadline and an August 19,

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2011, deadline for filing non-dispositive motions. Trial was set to begin on November 15,

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2011. Later, the discovery deadline was extended to September 30, 2011, and trial was

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set for January 31, 2012. Then, following retirement of the District Judge to whom the

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case had been assigned, discovery was continued until December 30, 2011 and trial is

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now set for June 12, 2012.

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The matter is before the Court at this time in response to Intervenor’s request for

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an order directing Defendant to produce records and deposition testimony relating to

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Defendant’s financial status. This issue was first presented to the Court in a request for

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a telephone conference; such a conference is a prerequisite to filing a discovery motion

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before the undersigned. During the November 15, 2011 conference and by follow-up

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minute order (ECF No. 56), the parties were directed to provide further briefing on the

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issue. A continued informal conference was convened December 14, 2011, at which time,

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after hearing further argument from the parties, the Court announced its intended decision

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consistent with the following.

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The Court now issues its order without formal hearing, the matter being deemed

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submitted based on the briefing and informal conferences discussed above and in

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accordance with Local Rule 230(g) and Fed. R. Civ. P. 78.

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II.

ISSUE PRESENTED

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The issue before the undersigned is whether Defendant should be compelled at this

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time to produce, in connection with Intervenor’s punitive damage claim, evidence relating

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to Defendant’s final status.
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III.

Fed. R. Civ. P. 26(b)(1) gives each party in federal litigation the right to discover “any

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APPLICABLE LAW

non-privileged matter that is relevant to any party’s claim or defense”.

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A valid claim for punitive damages generally puts defendant’s financial worth at issue

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and makes it admissible at trial for consideration in determining an amount of the punitive

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damages to be awarded. City of Newport v. Fact Concerts, Inc., 453 U.S. 247 267 (1981).

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Since net worth is relevant to the issue of punitive damages, it is discoverable in a proper

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case. As Intervenors note, the question here, and generally, is when such information is

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to be disclosed. Id.

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Applicable law on this issue in this circuit is clearly unclear: The Ninth Circuit has not

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yet issued a decision signifying whether it will follow that line of cases holdings that a

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defendant’s financial condition is discoverable in advance of trial whenever punitive

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damages are properly pled, or that line which holds that plaintiff must make a prima facie

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showing of entitlement to such damages. See EEOC v. California Psychiatric Transitions,

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258 F.R.D. 391, 394-395 (E.D. Cal. 2009) (citing U.S. v. Matusoff Rental Co., 204 F.R.D.

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396, 399 (W.D. Ohio 2001); EEOC v Klockner H & K Machines, 168 F.R.D 233, 235-236

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(E.D. Wis. 1996); and EEOC v. Staffing Network, 2002 WL 311473840 at *3-4 (N.D. Ill. Nov.

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4, 2002) as representative of the former and to Roberts v. Shawnee Mission Ford., Inc.,

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2002 WL 1162438 at *2-3 (D. Kan. Feb 7, 2002) and Vivino v. Everlast Sporting Goods Mfg.

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Co., Inc., 1987 WL 17571 (E.D. Pa. Sept. 28, 1987) as to the latter view.

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This Court is not prepared to declare one or the other of the above rules supreme.

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However, in this case, and this case alone, the Court feels it would be abdicating its

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responsibility were it to order disclosure of financial information at this time given the

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considerations discussed with the parties and, briefly, below.

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IV.

ANALYSIS

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Intervenors’ pleading alleges facts which, if allowed to go to the jury and believed by

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the jury, could support an award of punitive damages. Intervenors have prayed for recovery

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of such damages. (ECF No. 19) However, Defendant counters with denials and sufficient
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questions about the credibility of the claims as to render it conceivable that the trial judge

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could foreclose consideration of punitive damages.

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Intervenors’ claim, in essence, that an employee of Defendant and a co-worker of

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Intervenors subjected one Intervenor, a seventeen year old female, to crude, graphic and

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outrageous sexual harassment and that, when Intervenors complained about such behavior,

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they were terminated and forced to forfeit their housing without notice because of the

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complaints and because of their status as indigenous Mexicans. Intervenors contend that

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Defendant showed reckless indifference to the harassment and discrimination.

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Defendant responds by denying that Intervenors were harassed or terminated.

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Rather, Defendant claims the Intervenors terminated their employment voluntarily following

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a dispute with a non-supervisory co-worker about the quality of their work. Defendant

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maintains that at no time prior to their quitting did any of the Intervenors ever complain to

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anyone about any harassment or discrimination of any kind. Defendant alleges several

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striking inconsistencies in the claims and memories of the Intervenors and asserts that their

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claims reflect facts diametrically opposed to those of percipient witnesses. Defendants also

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note that Intervenors were employed by Defendant for only thirteen days some four years

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ago. Significantly, Intervenors do not seek damages for lost wages or emotional distress

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beyond the “garden variety” distress that may accompany any wrong.

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Obviously, the Court can not resolve these discrepant claims at this point. Indeed,

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Intervenors note, correctly, that hey have no obligation even under the more stringent view

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to prove their entitlement to punitive damages at this stage of the proceedings; they need

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only present sufficient facts to show the prayer is not merely a pretext for unwarranted

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discovery of financial materials. Chenoweth v. Schaaf, 98 F.R.D. 587, 589 (W.D. Pa. 1983).

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In this latter respect, the Court inquired of Intervenors as to why they sought such

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financial information at this particular stage of the proceedings, two years into the case, two

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previously-set discovery deadlines dates having passed, and still more than six months pre-

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trial; the Court asked if the Intervenors would be prejudiced if the discovery request were

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not acted on until closer to trial. Intervenors’ responded that they sought the information to
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assist in the settlement process.

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The parties, the Court, and the public have an interest in promoting early, agreed-

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upon resolution of cases through negotiation and settlement. See Ressler v. Jacobson, 822

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F.Supp. 1551, 1554-55 (M.D. Fla. 1992). Discovery of discoverable information for use in

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promoting compromise and settlement is legitimate and often productive. However, the

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Court is unable to conclude that that goal, the only one identified by Intevenors, has any role

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here, for the following reasons.

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First, the facts presented - the short duration of Intervenors’ employment, the

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resulting short duration of the alleged harassment and discrimination, the absence of

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economic or emotional distress damages, and the potential challenges to Intervenors’

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credibility - all militate against the likelihood of a substantial general damages award.

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Punitive damages, if awarded, must meet a ratio of something less than ten to one relative

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to actual damages. BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589,

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134 L. Ed. 2d 809 (1996).

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Second, apparently all parties recognize and agree that Defendant is a very large

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and successful farming enterprise, not capable of credibly resisting settlement by claiming

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an award could not be collected. Indeed, defense counsel made it clear that Defendant had

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not used and had no intention of using any sort of non-collectability strategy in negotiation,

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acknowledging affirmatively his belief that Defendant was fully capable of satisfying even

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a seven figure judgment.

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Third, the scope of the requested information is quite broad. Intervenors requested

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information as to all ofDefendant’s assets, liabilities, expenses, loans, loan payments,

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debts, taxes, income and bank accounts during the period from 2007 to the present.

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Finally, it appears that one of the counsel for Intervenors in this case is counsel for

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other Plaintiffs in similar actions. According to defense counsel, these other clients are

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seeking information about Defendant’s finances and business operations.

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Considering all of the foregoing, the Court is not prepared to conclude that

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Intervenors necessarily have shown the existence of a valid claim justifying the discovery
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of Defendant’s financial information at this time or that the information sought is not sought

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for pretextual purposes. (As to this latter point, the Court does not suggest an unethical

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motive. As noted, information as to a Defendant’s ability to satisfy a judgment can facilitate

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settlement negotiations. However, here there does not seem to be any real question as to

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Defendant’s ability in that regard. Although avoidance of having to disclose confidential

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financial information might in and of itself be an inducement to settle, use of that

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inducement would have scent of impropriety about it.)

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V.

CONCLUSION

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Accordingly, the Court DENIES the request for an order compelling Defendant’s

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production of financial information at this time, but it does so without prejudice to

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Intervenors’ right to renew the request at the time of and in connection with the trial

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confirmation hearing. The parties and the trial judge will be in a better position to determine

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at that time the propriety and timing of such discovery and still give Intervenors ample

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opportunity prior to trial to review and digest the information, if any is ordered disclosed.

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To facilitate the process, The Court ORDERS further that Defendant assemble, and

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be prepared to present at the time of the pre-trial conference, such categories of financial

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information for such time periods as the parties shall hereafter agree are relevant and

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necessary to a determination of an amount of punitive damages to be awarded if the trial

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judge allows, and the jury awards, such damages. (The Court believes the scope of the

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current request is overly broad and goes beyond what would be necessary to educate

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Intervenors and the jury appropriately in determining an award. The Court is confident that

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the parties can come to agreement on a more reasonable scope. If they fail, they may

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seek direction from the Court.)

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IT IS SO ORDERED.

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Dated:
ci4d6

February 6, 2012

Michael J. Seng

/s/
UNITED STATES MAGISTRATE JUDGE

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