HERBL Inc vs Central Coast Agriculture Inc et al

Case Number

22CV00077

Case Type

Hearing Date / Time

Fri, 10/27/2023 - 10:00

Nature of Proceedings

Motion to Compel

Tentative Ruling

For all reasons stated herein, the motion of plaintiff and cross-defendant HERBL, Inc., to compel further responses and production of documents is denied.

Background: 

The second amended complaint (SAC) filed in this action by plaintiff HERBL, Inc. (HERBL), on May 5, 2022, is the operative pleading. As alleged in the SAC:

HERBL operates a group of distribution centers that sell legal cannabis products across the State of California. (SAC, ¶ 8.) Defendant Central Coast Agriculture, Inc. dba Raw Garden (CCA) is engaged in the cultivation, manufacturing, and sale of cannabis products. (Id. at ¶ 9.) On October 1, 2019, HERBL and CCA entered into a written agreement (the agreement) providing that HERBL would be the exclusive California distributor for CCA products through the end of September 2023. (Ibid.) Under the terms of the parties’ agreement, the parties may terminate the agreement terminated prior to the end of its term under specified circumstances. (Id. at ¶¶ 14, 39.) From July 2021 forward, it was CCA and HERBL’s mutual understanding and agreement that HERBL was no longer responsible for sales under the agreement. (Id. at ¶ 25.)

In early 2021, CCA and defendant Nabione, Inc. dba Nabis (Nabis) began working together to arrange for CCA to terminate the agreement and enter into a contract for Nabis to handle the distribution of CCA’s products. (SAC, ¶ 27.) In early December 2021, HERBL became aware that Nabis was engaging CCA in contract negotiations to handle the distribution of CCA’s products and actively encouraging CCA to breach its contract with HERBL. (Id. at ¶ 33.) On December 15, 2021, HERBL sent Nabis a cease-and-desist notice making Nabis aware of the agreement and its exclusivity provision regarding the distribution of CCA’s products during the contract term. (Id. at ¶ 35.)

On January 3, 2022, CCA sent HERBL a written notice of breach and termination of the agreement that falsely asserted that HERBL had failed to cure defaults. (SAC, ¶ 37.) CCA did not provide HERBL with notice of a default or breach of the agreement by HERBL as required by the agreement. (Ibid.) On January 4, 2022, CCA sent HERBL an email asserting that HERBL had engaged in a “supplemental default” by failing to timely pay an invoice due that day. (Id. at ¶ 38.) On January 7, 2022, CCA terminated the agreement for failure to cure the supplemental default. (Id. at ¶ 40.) Also on January 7, 2022, CCA disseminated an announcement to all of its customers and contacts, informing them that “[e]ffective January 7th, 2022, CCA products will be distributed to your business by Nabis.” (Id. at ¶ 41.) In the announcement, CCA offered a coupon for a discount on all orders made through Nabis which diminished HERBL’s ability to mitigate damages by causing HERBL to sell remaining supplies of CCA product at a steep discount. (Id. at ¶ 43.)

The SAC alleges twelve causes of action: (1) intentional misrepresentation (against CCA); (2) negligent misrepresentation (against CCA); (3) breach of contract (against CCA); (4) breach of implied covenant of good faith and fair dealing (against CCA); (5) express indemnity (against CCA); (6) unfair business practices under Business and Professions Code section 17200 et seq. (against CCA and Nabis); (7) intentional interference with contractual relations (against Nabis); (8) intentional interference with prospective economic relations (against Nabis); (9) negligent interference with prospective economic relations (against Nabis); (10) civil conspiracy to commit fraud (against CCA and Nabis); and (12) aiding and abetting fraud (against Nabis).

On May 12, 2022, CCA filed a verified cross-complaint against HERBL (the cross-complaint) alleging four causes of action: (1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) account stated; and (4) open book account. In the cross-complaint, CCA alleges that HERBL failed to meet sales goals contemplated by the agreement, failed to maintain an adequate sales force as required by the agreement, failed to deliver CCA’s products during the agreed-upon delivery window, missed payment deadlines, failed to pay invoices, failed to provide required reporting metrics, and failed to provide adequate storage for CCA’s products. (Cross-Complaint, ¶¶ 18-44.) As a result of HERBL’s breaches of the agreement, CCA terminated the agreement and, upon HERBL’s termination, onboarded Nabis to take over distribution in order to avoid a month-long lapse in sales. (Id. at ¶¶ 47, 50-52.)

On June 3, 2022, CCA and Nabione each filed an answer to the SAC generally denying its allegations and asserting affirmative defenses.

On August 31, 2022, HERBL filed an amendment to the SAC substituting Nabitwo, LLC (Nabitwo), for fictitious defendant Doe 13. On September 30, 2022, Nabitwo filed an answer to the SAC generally denying its allegations and asserting eighteen affirmative defenses.

Court records reflect that on April 8, 2022, HERBL filed a verified answer to a verified cross-complaint filed by CCA on March 7, 2022. The Court has no record of HERBL having filed an answer to the cross-complaint filed by CCA on May 12, 2022.

On August 18, 2023, HERBL filed a motion to compel Nabis to provide further responses and additional documents in response to its request for production of documents, set one (the RFP). In the motion, HERBL requests an award of monetary sanctions against Nabis and its counsel in the amount of $8,528. The motion is opposed by Nabis.

HERBL asserts that it served Nabis with the RFP on September 2, 2022. (Durdle Decl., ¶ 2 & Exh. A.) Nabis served responses and objections to the RFP on October 18, 2022. (Id. at ¶ 3 & Exh. B; see also Opp. Wayne Decl., ¶ 2 & Exh. A.) On November 30, 2022, HERBL’s counsel sent a letter to Nabis’s counsel in an attempt to meet and confer regarding what HERBL contends are outstanding issues with Nabis’ responses to the RFP and requesting that Nabis provide further responses as well as enlarge its document production. (Durdle Decl., ¶ 4 & Exh. C.)

After new counsel substituted in as counsel for Nabis and, at counsel’s request, HERBL stipulated to extend the deadline for Nabis to produce documents to February 6, 2023. (Durdle Decl., ¶ 5 & Exh. D.) After Nabis failed to produce any documents by February 6, 2023, counsel for HERBL sent a letter on February 9, 2023, noticing HERBL’s intent to file a motion to compel production. (Id. at ¶ 6 & Exh. E.)

From February 15, 2023, through May 2, 2023, the parties corresponded regarding Nabis’s responses to the RFP, Nabis’s production of documents responsive to the RFP, Nabis’s refusal to provide any documents dated after January 7, 2022, Nabis’ refusal to provide information regarding its relationships with the cannabis brands Plus Products and Emerald Sky, and Nabis’s purported failure to produce any responsive communications from its internal “Slack” messaging service, which HERBL asserts is or appears to be Nabis’s primary form of internal communications. (Durdle Decl., ¶¶ 7-9 & Exhs. F, G, & H; see also Wayne Decl., ¶ 6.) Following a meet and confer meeting between the parties’ counsel on May 31, 2023, Nabis agreed to produce documents concerning Emerald Sky and Plus Products, as well as the missing “Slack” data but maintained its objection to producing documents dated after January 7, 2022. (Durdle Decl., ¶ 10 & Exh. I; see also Wayne Decl., ¶ 7 [asserting that Nabis’ counsel stated it needed to confer with Nabis and lead counsel regarding the expanded date range and production of “Slack” data and that counsel for HERBL also discussed an alternative proposed date range including May 1, 2022, but with no agreement to expand the date range].)

Though HERBL has agreed to numerous extensions, it contends that it has not received any “Slack” data from or any further substantive meet and confer efforts by Nabis. (Durdle Decl., ¶ 11 & Exh. J.)

In support of its opposition to the motion, Nabis offers the declaration of its counsel, Adam E. Wayne, who declares that after serving objections and responses to the RFP, Nabis produced documents on three successive occasions, consisting of a total of 6,288 documents, prior to HERBL filing the present motion. (Wayne Decl., ¶ 3.) Specifically, on February 24, 2023, Nabis produced 657 documents which Nabis asserts includes “highly sensitive and personal mobile text message data collected for more than a three-year period of time from numerous Nabis executives’ cell phones for the date range January 1, 2019 to January 7, 2022….” (Id. at ¶ 4.) On March 22, 2023, Nabis produced an additional 3,640 documents collected from Nabis’s servers which are comprised of internal and external emails and which include “highly sensitive trade-secret information and documents, for a period of over three-years from January 1, 2019 to January 7, 2022….” (Id. at ¶ 5.)

Following the May 31, 2023, meet and confer meeting further discussed above, Nabis produced an additional 1,991 documents related to communications with Emerald Sky and Plus Products as agreed to by the parties during the May 31, 2023, meeting. (Wayne Decl., ¶ 8.) After receiving a copy of the present motion, Nabis worked to complete an additional production of the “Slack” data which took two-months to complete. (Id. at ¶ 9.) October 12, 2023, Nabis produced an additional 7,815 documents comprised of “highly sensitive and confidential ‘Slack’ data for a three-year period of January 1, 2019 to January 7, 2022…” (Id. at ¶ 10; see also Nissen Decl., ¶ 8.)

In connection with the production of “Slack” data on October 12, 2023, counsel for Nabis sent two emails to counsel for HERBL requesting that HERBL withdraw the present motion because Nabis had purportedly produced all documents responsive to the RFP. (Wayne Decl., ¶ 11.) HERBL would not agree to take the present motion off-calendar. (Ibid.) Nabis asserts that it has produced a total of 14,103 pages of documents responsive to the RFP at issue. (Id. at ¶ 12.)

Nabis also submits the declaration if its counsel Christopher Nissen in support of its opposition to the present motion, which includes additional information regarding Nissen’s medical leave, documents produced by Nissen’s office on June 16, 2023, and the correspondence regarding HERBL’s deadline to file a motion to compel with respect to the RFP. (See Nissen Decl., ¶¶ 3-6.)

Analysis:

There exist procedural problems with HERBL’s motion. A motion to compel further responses to a demand for production of documents must “set forth specific facts showing good cause justifying the discovery sought by the demand.” (Code Civ. Proc., § 2031.310, subd. (b)(1); Kirkland v. Superior Court (2002) 95 Cal.App.4th 92, 98.) “[U]nless there is a legitimate privilege issue or claim of attorney work product, [the] burden [of showing good cause for the request] is met simply by a fact-specific showing of relevance.” (TBG Ins. Services Corp. v. Superior Court (2002) 96 Cal.App.4th 443, 448; see also Code Civ. Proc., § 2017.010 [subject to limitation, “any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action … if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence”].)

Though Nabis’s contention regarding the sole manner in which HERBL can meet its burden to demonstrate good cause for the RFP at issue (i.e., by setting forth specific facts in a declaration) is without merit (see Code Civ. Proc., § 2031.310, subd. (b)(1) [requiring “the motion” to set forth specific facts showing good cause]), the substance of the present discovery dispute appears to be limited to whether Nabis must produce documents or communications “occurring” after January 7, 2022, and whether Nabis may limit its responses to a date prior to January 7, 2022. (See, e.g., Motion at p. 5, ll. 8-15 & 21-25; p. 7, ll. 1-3 & 10-11; pp. 10-11 & p. 12, ll. 1-15.)

To demonstrate good cause for discovery of documents or communications occurring after January 7, 2022, HERBL asserts that this Court has already ruled that these documents and communications are relevant. (Motion at p. 13.) In its separate statement, HERBL asserts the Court’s prior ruling to demonstrate good cause for each RFP at issue in the motion (See, e.g.; p. 9, ll. 10-27; p. 13, ll. 5024; p. 16, ll. 23-28 & p. 17, ll. 1-14; p. 20, ll. 14-28 [discussing a prior motion to compel filed by CCA and the Court’s ruling thereon in support of HERBL’s contention that good cause exists for RFP Nos. 1 through 6].) The Court’s examples are not intended to be exhaustive.

HERBL has failed to offer specific facts demonstrating good cause. For example, HERBL has failed to reference the date of the Court’s order or tentative ruling or provide a copy of the ruling, forcing the Court to undertake its own efforts in this regard. Moreover, to the extent HERBL is referring to the Minute Order dated November 18, 2022, HERBL has failed to explain how the Court’s ruling on a different motion involving different discovery requests served by a different party seeking different categories of documents has any preclusive effect with regard to each RFP at issue here. Without specific facts justifying an order compelling Nabis to produce documents or communications occurring after January 7, 2022 with regard to each RFP at issue, or compelling Nabis to provide further responses to each RFP presently at issue, HERBL’s generalized references to and conclusive assertions regarding a prior Minute Order addressing a substantively different discovery dispute constitute “mere generalities” which are insufficient to demonstrate good cause for each RFP at issue in the motion. (See Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 224.)

In addition, California Rules of Court, rule 3.1345(c), requires that a separate statement submitted in support of a motion to compel further responses to a demand for inspection of documents “be full and complete so that no person is required to review any other document in order to determine the full request and the full response.” (Cal. Rules of Court, rule, 3.1345(c).) “Material must not be incorporated into the separate statement by reference.” (Ibid.) I

A rule-compliant separate statement must set forth, for each discovery request or demand to which a further response or production is requested, the text of the request or demand and any response or further responses thereto and, if necessary, “the text of all definitions, instructions, and other matters required to understand each discovery request and the responses to it” including, “[i]f the response to a particular discovery request is dependent on the response given to another discovery request, or if the reasons a further response to a particular discovery request is deemed necessary are based on the response to some other discovery request, the other request and the response[.]” (Cal. Rules of Court, rule 3.1345(c)(1), (2), (4) & (5).)

The separate statement submitted by HERBL in support of the motion is deficient and noncompliant. For example, in RFP No. 1, HERBL demands that Nabis produce “DOCUMENTS that provide the basis for YOUR Responses to Form Interrogatories, Set One, propounded by HERBL in this matter.” (Sep. Stmt., p. 1, ll. 3-4.) As RFP No. 1 references Nabis’s responses to HERBL’s form interrogatories, Nabis’s response to RFP No. 1 is dependent on Nabis’s response to those form interrogatories. However, HERBL has failed to provide either the text or a copy of the form interrogatories or Nabis’s responses thereto.

Furthermore, each of the RFP at issue include capitalized terms which available information demonstrates were defined by HERBL elsewhere in the RFP. (See, e.g., Sep. Stmt., p. 7, ll. 5-6 [RFP No. 7 including the capitalized terms “DOCUMENTS”, COMMUNICATIONS, “YOU” and “CCA”]; p. 10, ll. 23-26 [RFP No. 3 also including the capitalized term “RELATING TO”]; p. 26, ll. 27-28 [RFP No. 10 also including the capitalized term “AGREEMENT”].) Wholly absent from the separate statement submitted by HERBL is the text of the definitions of each capitalized term that appears in each of the RFP at issue.

Because the separate statement submitted by HERBL is not full and complete for all reasons discussed above, the Court is unable to determine the full requests or whether good cause exists for each RFP at issue without reviewing other documents. In addition, because HERBL has failed to sufficiently set forth specific facts demonstrating good cause for the discovery sought in the RFP at issue for reasons discussed above, the motion does not comply with California Rules of Court, rule 3.1345(c)(3), which provides that a separate statement must include “[a] statement of the factual and legal reasons for compelling further responses, answers, or production as to each matter in dispute[.]” (Cal. Rules of Court, rule 3.1345(c)(3).)

The motion also fails to concisely identify each RFP at issue by number, forcing the Court to determine which RFP are at issued based on the nearly 100-page separate statement submitted by HERBL . (See Cal. Rules of Court, rule 3.1345(d).)

The procedural deficiencies described above constitute a sufficient basis on which the Court may deny the motion. (Mills v. U.S. Bank (2008) 166 Cal.App.4th 871, 893.) Because HERBL has not complied with the requirements of California Rules of Court, rule 3.1345, the Court is unable to effectively determine whether the motion is meritorious. The Court will therefore exercise its discretion to deny the motion. (Ibid.; see also Neary v. Regents of University of California (1986) 185 Cal.App.3d 1136, 1145, 230 Cal.Rptr. 281 [discussing plaintiff’s failure to adequately support a motion to compel discovery due to a nonconforming separate statement].)