Pham et al

Filing 214

CONDITIONAL ORDER Granting in Part and Denying in Part 172 Trustee's Motion for Protective Order; ALTERNATE REPORT AND RECOMMENDATIONS re Evidentiary Sanctions. Objections due by 5/20/2011. Signed by Magistrate Judge Howard R. Lloyd on 5/6/2011. (hrllc2, COURT STAFF) (Filed on 5/6/2011)

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*E-FILED 05-06-2011*

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NOT FOR CITATION

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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For the Northern District of California

United States District Court

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No. C08-00201 JW (HRL)

IN RE COMUNITY LENDING,
INCORPORATED,

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Debtor
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CHRISTINA PHAM, et al.

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CONDITIONAL ORDER GRANTING IN
PART AND DENYING IN PART
TRUSTEE’S MOTION FOR
PROTECTIVE ORDER
ALTERNATIVE REPORT AND
RECOMMENDATION RE
EVIDENTIARY SANCTIONS

Plaintiffs,
v.

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COMUNITY LENDING INCORPORATED
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[Re: Docket No. 172]

Defendant.
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AND RELATED CROSS-ACTIONS
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Trustee John Richardson moves for a protective order as to Topics 1-9 of plaintiffs’ Fed.

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R. Civ. P. 30(b)(6) notice for the deposition of ComUnity Lending, Inc.1 Plaintiffs filed a cross-

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motion to compel the deposition, which was deemed by this court to be their opposition to the

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Trustee’s motion. The Trustee filed a reply, and plaintiffs were permitted to file a sur-reply.

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The matter is deemed suitable for determination without oral argument, and the May 10, 2011

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hearing is vacated. CIV. L.R. 7-1(b). Upon consideration of the moving and responding papers,

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As an apparent afterthought, the Trustee argues that the instant motion is to be
deemed his cross-motion for protective order as to plaintiffs’ written discovery requests. The
parties’ dispute over those discovery requests will be addressed in a separate order on
plaintiffs’ motion to compel (Docket No. 137), which was fully briefed by the time the
instant motion was filed.
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this court conditionally grants in part and denies in part the Trustee’s motion for protective

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order and issues an alternative report and recommendation as to evidentiary sanctions plaintiffs

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might seek.

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With respect to Topics 2-8, the parties dispute whether, in view of the Ninth Circuit’s

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ruling, these requests fairly are within the scope of legitimate discovery. Plaintiffs point out

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that the Ninth Circuit did not address the question whether the Plan actually met the

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requirements of a so-called “top hat” plan. Nevertheless, the import of the appellate decision,

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as this court reads it, is that (1) the interpretation of the Plan urged by plaintiffs on appeal was

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contrary to the parties’ stated intention that the Plan was intended to be an unfunded “top hat”
plan; and (2) the parties’ dispute turns on the question whether ComUnity was, in fact, insolvent

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For the Northern District of California

United States District Court

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during the time period in question. (See Docket No. 121). Accordingly, the testimony sought

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by these topics is neither relevant nor reasonably calculated to lead to the discovery of

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admissible evidence, and any possible relevance is outweighed by the burden imposed. FED. R.

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CIV. P. 26(b). The Trustee’s motion for protective order as to these topics therefore is granted,

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notwithstanding that the motion was filed only after the noticed deposition date had passed.

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As for Topic 1, the testimony sought is relevant, and the Trustee has not convincingly

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demonstrated that this topic calls solely for expert testimony. Indeed, plaintiffs point out that

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the Trustee relied, both on summary judgment and on appeal, on lay testimony from Allen

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Christensen as to ComUnity’s finances. Similarly, with respect to Topic 9, this court finds that

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the testimony sought is relevant to the key question of ComUnity’s alleged insolvency. The

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Trustee has not managed to persuade that he should be excused from the burden of designating

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and preparing deponent(s) to testify on the company’s behalf. See generally In re Kenny

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Industrial Services, LLC, No. 03 B 04959, 2009 WL 1604989 (Bkrtcy. N.D. Ill., June 5, 2009)

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(indicating that the trustee testified as the defunct corporation’s Fed. R. Civ. P. 30(b)(6)

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designee). The Trustee’s cited authority, Marky v. Norstar Bank, N.A., 143 B.R. 989 (Bkrtcy.

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W.D.N.Y. 1992) does not concern discovery, but rather, a trustee’s duty to conduct a proper

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Fed. R. Civ. P. 11 inquiry. Moreover, it is of no moment that the Trustee says he has produced

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knowledgeable witnesses for deposition in their individual capacities. The point of taking a

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Fed. R. Civ. P. 30(b)(6) deposition is to obtain testimony that is binding on the company.

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Although plaintiffs move for an order compelling the Trustee to produce deponents re

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Topics 10 and 11, there is no dispute here. The Trustee expressly says that he agreed to

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produce Fed. R. Civ. P. 30(b)(6) witnesses to testify on these topics. (Mot. at 12).

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Accordingly, this court finds that, in addition to testimony on Topics 10 and 11 (which

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are not in dispute), plaintiffs are entitled to Fed. R. Civ. P. 30(b)(6) deposition testimony as to

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Topics 1 and 9. The Trustee therefore is ordered to produce appropriate person(s) to testify in

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their capacities as Fed. R. Civ. P. 30(b)(6) designees on these topics. This order, however, is
conditioned on the presiding judge’s determination that the period for fact discovery and expert

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For the Northern District of California

United States District Court

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disclosures should be re-opened to permit plaintiffs an opportunity to take the Fed. R. Civ. P.

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30(b)(6) deposition and to prepare expert disclosures that take that testimony into account.

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Additionally, this court recommends that a special master be appointed to address any further

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discovery disputes that may arise.

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Alternatively, if the presiding judge decides that modification of the scheduling order is

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not warranted, then this court recommends that he consider imposing the evidentiary sanctions

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which may be requested by plaintiffs for the failure to produce Fed. R. Civ. P. 30(b)(6)

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designee(s) to testify about Topics 1 and 9. This court does not find the Trustee’s failure to be

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substantially justified. He does not deny that the instant motion was filed only after the noticed

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deposition date passed, and he has not explained why he could not bring a motion sooner.

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Moreover, inasmuch as the period for discovery and expert disclosures has passed, there has

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been palpable prejudice to plaintiffs. FED. R. CIV. P. 37(d).

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Dated:

May 6, 2011

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HOWARD R. LLOYD
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UNITED STATES MAGISTRATE JUDGE

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5:08-cv-00201-JW Notice has been electronically mailed to:

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Hong-Nhung Thi Le

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Jeffrey L. Fillerup
[e-mail]

[e-mail], [e-mail]
[e-mail], [e-mail], [e-mail],

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Jesse Landis Hill

[e-mail], [e-mail]

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John Walshe Murray

[e-mail]

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Jonas Noah Hagey

[e-mail]

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Matthew Brooks Borden [e-mail], [e-mail],
[e-mail]

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Robert Anthony Franklin

Ronald Scott Kravitz [e-mail], [e-mail], [e-mail],
[e-mail]

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Suzanne L. Decker
For the Northern District of California

United States District Court

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[e-mail], [e-mail]

[e-mail]

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Counsel are responsible for distributing copies of this document to co-counsel who have not
registered for e-filing under the court’s CM/ECF program.

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