Nitsch v. Dreamworks Animation SKG Inc. et al

Filing 337

ORDER by Magistrate Judge Howard R. Lloyd re 321 Discovery Dispute Joint Report No. 1. (hrllc2, COURT STAFF) (Filed on 10/14/2016)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION United States District Court Northern District of California 11 12 ROBERT A. NITSCH, et al., Case No. 5:14-cv-04062 LHK (HRL) Plaintiffs, 13 ORDER RE DISCOVERY DISPUTE JOINT REPORT NO. 1 v. 14 15 16 17 DREAMWORKS ANIMATION SKG, INC., et al., Re: Dkt. 321 Defendants. In this consolidated antitrust class action, plaintiffs sue their former employers, claiming 18 that defendants engaged in a conspiracy to fix and suppress employee compensation and to restrict 19 employee mobility. Plaintiffs further allege that defendants fraudulently concealed the conspiracy, 20 thereby preventing plaintiffs from timely filing their claims. 21 At issue in Discovery Dispute Joint Report (DDJR) No. 1: Whether defendants should be 22 permitted to conduct discovery of 500 absent class members (approximately 5% of the certified 23 class). Defendants also state that they reserve the right to seek discovery from additional class 24 members later. The matter is deemed suitable for determination without oral argument. Civ. L.R. 25 7-1(b). Upon consideration of the parties’ respective arguments, this court denies defendants’ 26 request for discovery. 27 Ordinarily, discovery of absent class members is not allowed. McPhail v. First Command 28 Fin. Planning, Inc., 251 F.R.D. 514, 517 (S.D. Cal. 2008). That is because absent class members 1 are not required to do anything, and “‘subject[ing] absent class members to discovery may defeat 2 the purpose of certifying the class in the first place.’” Id. (quoting On the House Syndication, Inc. 3 v. Federal Express Corp., 203 F.R.D. 452, 456 (S.D. Cal. 2001)). Such discovery is only allowed 4 where the party seeking it establishes that “(1) the discovery is not designed to take undue 5 advantage of class members or to reduce the size of the class, (2) the discovery is necessary, 6 (3) responding to the discovery requests would not require the assistance of counsel, and (4) the 7 discovery seeks information that is not already known by the proponent.” Id. (citing Clark v. 8 Universal Builders, Inc., 501 F.2d 324, 340-42 (7th Cir.1974); see also Holman v. Experian 9 Information Solutions, Inc., No. C11-00180 CW (DMR), 2012 WL 2568202, at *3 (N.D. Cal., 10 July 2, 2012) (same). Here, defendants propose to serve 4 document requests and 11 interrogatories1 to elicit United States District Court Northern District of California 11 12 information about whether and when absent class members had actual or constructive knowledge 13 of the alleged conspiracy and whether they acted diligently in trying to uncover the facts giving 14 rise to their claims---i.e. elements of plaintiffs’ fraudulent concealment claim. Defendants argue 15 that this discovery is necessary to “fully litigate” their statute of limitations defense. Additionally, 16 they contend that the proposed requests are short and simple and seek information largely 17 available only in the files and minds of class members. Defendants’ stated purpose in seeking this discovery is to find evidence to establish their 18 19 defense. The practical effect, however, would be to reduce the size of the class by ferreting out 20 and eliminating individual claims. As noted above, defendants propose to start with discovery on 21 500 members, and reserve the right to seek discovery of even more members later. While 22 defendants say that they do not (and could not) possess the requested information, some of the 23 proposed requests focus on defendants’ alleged misleading actions, i.e., matters that do not strike 24 this court as dependent upon proof from absent class members. Moreover, it appears that the 25 requested information may also be available from other sources. Defendants acknowledge that 26 27 28 1 Defendants apparently intended to, but did not, append a copy of their proposed discovery requests to DDJR No. 1. Nevertheless, a copy of the requests apparently was previously posted to another motion, at Dkt. 306-1. 2 1 they have some email communications and say that they have obtained other evidence through 2 discovery from class representatives. Additionally, this court is told that defendants have 3 subpoenaed class members’ unions for the same information. Finally, this court is unpersuaded 4 that the responding to the proposed discovery, including the preparation of privilege logs, would 5 not require the assistance of counsel. See, e.g., McPhail, 251 F.R.D. at 518 (noting that, in order 6 to properly respond to the proposed discovery, each absent class member “would need to confer 7 with Class Counsel to understand the purpose of the request, the penalty for not filing a response, 8 the need to discuss all relevant information, the need to refresh their recollection with 9 documentation, the need to understand the context of the request in light of the allegations of the 10 United States District Court Northern District of California 11 complaint and the reason the Defendants are making the request.”). Defendants’ citation to Town of New Castle v. Yonkers Contracting Co., Inc., No. 88 Civ. 12 2952 (CES), 1991 WL 159848 (S.D.N.Y., Aug. 13 1991) and Transamerica Refining Corp. v. 13 Dravo Corp., 139 F.R.D. 619 (S.D. Tex. 1991) do not persuade this court to the contrary. In Town 14 of New Castle, discovery was allowed, in part, because of the finite size of the class (around 20 15 members) and because the court found that defendants would be unable to disprove the fraudulent 16 concealment claim without the requested discovery. 1991 WL 159848 at *2. For the reasons 17 discussed above, defendants have not demonstrated that is the case here. In Transamerica 18 Refining Corp., discovery was permitted because the court concluded that the requested 19 information was known only to absent class members and was necessary to the determination of 20 common questions. 139 F.R.D. at 621-22. Here, defendants have not convincingly explained how 21 evidence that might bar individual claims may be imputed to the class as a whole. 22 Defendants argue that precluding this discovery from absent class members will violate the 23 Rules Enabling Act, which provides that rules of procedure and evidence “shall not abridge, 24 enlarge or modify any substantive right.” 28 U.S.C. § 2072(b). However, in her certification 25 order, Judge Koh concluded that individual issues concerning defendants’ statute of limitations 26 defense may be reserved for individual treatment, similar to procedures used for individualized 27 damages inquiries. See, e.g., Vaquero v. Ashley Furniture Indus., Inc., 824 F.3d 1150, 1156 (9th 28 Cir. 2016) (“The district court has discretion to shape the proceedings. With a class of only about 3 1 600 members, the court could choose an option such as the use of individual claim forms or the 2 appointment of a special master, which plainly would allow Defendants to raise any defenses they 3 may have to individual claims.”); Arthur Young & Co. v. U.S. Dist. Ct., 549 F.2d 686, 696 (9th 4 Cir. 1977) (finding no error in the decision to separate issues relevant to certain defenses for 5 individual adjudication at the close of the class trial); McPhail, 251 F.R.D. at 519 (concluding that 6 “inquiry into individual issues can take place during a second phase of trial or during the claims 7 administration process”); On the House Syndication, Inc., 203 F.R.D. at 458 (stating that “the 8 most appropriate time to gather any necessary information from individual class members is 9 generally after a determination of liability and before payment of individual claims.”). Based on the foregoing, defendants’ request for discovery from absent class members is 10 United States District Court Northern District of California 11 12 13 14 15 denied. SO ORDERED. Dated: October 14, 2016 ______________________________________ HOWARD R. LLOYD UNITED STATES MAGISTRATE JUDGE 16 17 18 19 20 21 22 23 24 25 26 27 28 4

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