Randy Salinas v. The Cornwell Quality Tools Company, et al Case No. 5:19-cv-2275-FLA (SPx) United States District Court, C.D. California Filed July 08, 2021 Counsel Craig M. Nicholas, Shaun Andrew Markley, Ethan Thomas Litney, Nicholas and Tomasevic, LLP, San Diego, CA, for Randy Salinas. Adam Yuda Siegel, Jackson Lewis PC, Los Angeles, CA, Jared L. Bryan, Richard B. Azada, Allyson Suzanne Ascher, Jackson Lewis PC, Irvine, CA, Robert M. Gippin, Pro Hac Vice, Roderick Linton Belfance LLP, Akron, OH, for The Cornwell Quality Tools Company, et al. Pym, Sheri, United States Magistrate Judge Proceedings: (In Chambers) Order Denying Defendant's Motion for Protective Order and Sanctions [58] I.INTRODUCTION *1 On May 26, 2021, defendant The Cornwell Quality Tools Company filed a motion for protective order and sanctions, which is supported by the declaration of defense counsel Richard B. Azada (“Azada Decl.”) and exhibits thereto, and by the declaration of defendant's Information Technology (“IT”) Director Mickey Charlton (“Charlton Decl.”). Docket no. 58. Plaintiff filed an opposition to defendant's motion for protective order and sanctions on June 8, 2021, which is supported by the declaration of plaintiff's counsel Ethan Litney (“Litney Decl.”) and exhibits thereto. On June 15, 2021, defendant filed a reply to plaintiff's opposition. The court found a hearing on the motion would not be of assistance, and so vacated the hearing scheduled for June 29, 2021. The court now denies defendant's motion for protective order and sanctions for the reasons discussed below. II.BACKGROUND Defendant manufactures, distributes, and sells tools and related products such as tool boxes and service equipment. Defendant carries out sales primarily through dealers who drive around in mobile dealerships stocked with Cornwell tools. Plaintiff has worked as a dealer for defendant in California since 2007. Plaintiff brings this putative wage and hour class action against defendant under the California Labor Code and California Unfair Competition Law, California Business and Professions Code § 17200, alleging he and other dealers are entitled to unpaid wages and reimbursement for business expenses and illegal deductions. Plaintiff's proposed class is defined as all individuals who worked for defendant in California during the class period as a dealer or any similar title, and who were not classified as employees. During the deposition of defendant's former district manager Joe Asaro on October 30, 2020, defendant raised the issue of the origins of the documents obtained by plaintiff from the DMReporting directory of defendant's website, and plaintiff explained that he accessed them through defendant's publicly available website. Litney Decl. ¶ 2, Ex. 1 at 50:1-25. Defendant also raised the same concern during the December 4, 2020 deposition of defendant's current district manager Brian Brotherton. Id., Ex. 2 at 50:17-51:4. Plaintiff's counsel disclosed that they have accessed 25,524 files from defendant's web servers relating to defendant's franchised dealers. Mtn. at 8, Azada Decl., Ex. F at 19. Defendant does not contend any privileged information was accessed, but states plaintiff accessed documents that include internal reports with private, person, or financial information. Mtn. at 8; Azada Decl. ¶ 4; Charlton Decl. ¶ 2. On December 9, 2020, defendant sent a letter to plaintiff contending there is “ample reason to believe [plaintiff's counsel's] firm and plaintiff engaged in improper self-help activities.” Litney Decl. ¶ 3. In the letter, defendant claimed defendant's IT professionals looked into these matters and found that none of the documents in plaintiff's possession are publicly available through conventional means, and that these documents are only accessible through a login and password-protected portal. Id., Ex. 3. During a call addressing other discovery matters, plaintiff's counsel sought to ensure that defendant had done its due diligence prior to sending its letter. Id. Defense counsel replied that it had done everything it needed to do to ensure the factual premise of the December 9, 2020 letter. Id. *2 During an informal discovery conference with the court on December 14, 2020, defendant represented that plaintiff accessed password-protected documents. Id. ¶ 4. On December 31, 2020 defendant sent a further meet and confer letter, in which defendant acknowledged that three of the disputed documents were stored on the publicly available website referenced in plaintiff's letter, but contended that nine other documents were “obtained from some other source that your firm has not yet disclosed.” Id. ¶ 5, Ex. 5. On January 7, 2021, plaintiff informed defendant of the factual inaccuracies contained in defendant's December 30, 2020 letter. Id. ¶ 6, Ex. 6. Defendant did not respond to plaintiff's letter, and instead sent plaintiff its half of a request for an informal discovery conference relating to whether plaintiff's actions constituted improper self-help activities. Id. ¶ 7, Ex. 7. On March 3, 2021, plaintiff agreed to submit to the informal discovery conference in an effort to resolve this dispute. Id. In addition, plaintiff and his counsel confirmed that they did not use a web crawler or web scraper to find the DMReporting directory on defendant's website, and confirmed the URL to the DMReporting directory was printed on a number of documents produced by defendant, which were in the public record. Id. The following day, plaintiff also confirmed he had not downloaded any additional files from the DMReporting directory since defendant's first letter, and even included a video demonstrating how to publicly access the DMReporting directory. Id. ¶ 8, Ex. 8. On March 29, 2021, the parties had their first informal discovery conference with the court regarding the propriety of plaintiff's actions. Id. ¶ 9, Ex. 9. The next day, plaintiff complied with the court's request at the informal discovery conference that plaintiff specifically identify every document obtained from defendant's website. Id. ¶ 10, Ex. 10. Plaintiff also provided a meet and confer letter confirming that six of the disputed deposition exhibits that defendant contended did not originate in the DMReporting directory did actually originate in the directory, and that one of the disputed exhibits was actually BATES-stamped and produced in discovery by defendant. Id. Despite plaintiff's further clarification and confirmation regarding the origins of the disputed documents, defendant insisted on another informal discovery conference. Id. On April 30, 2021, the parties had their second informal discovery conference with the court relating to the same issue. Id. ¶ 11, Ex. 11; Azada Decl. ¶¶ 10-11. Although the parties did not resolve their dispute at those discovery conferences, the court informed the parties defendant had satisfied its meet and confer obligation on this issue. Azada Decl. ¶ 11. Plaintiff has treated the documents downloaded from defendant's website as through they were subject to the protective order entered in this action, and have not provided them to plaintiff. Litney Decl. ¶ 12. Neither plaintiff's counsel nor any party working on plaintiff's counsel's behalf accessed the DMReporting directory prior to plaintiff filing his September 3, 2020 motion to compel. Id. ¶ 13. Further, plaintiff claims defendant's website did not have password protection, authentication requirements, or any discernable terms of service or other limits regarding its use and/or defendant's consent for visitors to access and download documents. Id. Despite this clarification, defendant filed the instant motion on May 26, 2021. III.DISCUSSION As an initial matter, defendant's motion for a protective order and sanctions was not filed in the form of a joint stipulation as required for all discovery motions under Local Rule 37-2. Local Rule 37-2.4 provides that the court will not consider any discovery motion in the absence of a joint stipulation unless there is a declaration from counsel for the moving party establishing that opposing counsel failed to confer in a timely manner, failed to provide the opposing party's portion of the joint stipulation, or refused to sign and return the joint stipulation. Here, although the parties sufficiently met and conferred, there is no indication that defendant attempted to file a joint stipulation, and thus the motion could be denied without prejudice solely for failure to comply with the Local Rules. The court will nonetheless consider the merits of the instant motion given that defendant sufficiently satisfied its meet and confer obligation and plaintiff does not take issue with defendant's failure to file a joint stipulation. *3 In this motion, defendant asks the court to enter a protective order and issue sanctions against plaintiff pursuant to its inherent authority. See Mtn. at 7. Specifically, defendant seeks a protective order requiring plaintiff and his attorneys to: (1) cease and desist from all web crawling, web scraping, and unauthorized activities and access on defendant's web and electronic database systems; (2) cease use and disclosure of defendant's confidential information for any purpose; (3) return all originals and copies of all confidential information; (4) provide defendant with a detailed identification of all uses and disclosures made by plaintiff and his counsel concerning defendant's confidential information; (5) provide defendant with a list of the name, address, and telephone number of each person or entity who accessed the information; (6) provide a specific description of all computers and databases on which plaintiff stored the information; and (7) execute declarations that plaintiff and his counsel have returned all confidential information. See id. at 3. Defendant further requests that the court award: (1) evidentiary sanctions precluding plaintiff or his counsel from utilizing the documents obtained from defendant's website in this action; and (2) monetary sanctions in the amount of $5,375 against plaintiff for the cost associated with preparing and filing the instant motion. Id. at 3, 7; Azada Decl. ¶ 14. Plaintiff also seeks monetary sanctions against defendant for the time spent addressing this matter. See Opp. at 25. A.Legal Standard The Federal Rules do not provide the authority to issue protective orders relating to documents obtained outside the scope of discovery. U.S. v. Comco Mgmt. Corp., 2009 WL 4609595, at *3 (C.D. Cal. Dec. 1, 2009) (citing In re Shell Oil Refinery, 143 F.R.D. 105 (E.D. La. 1992)); see also Kirshner v. Uniden Corp. of America, 842 F.2d 1074 (9th Cir. 1988). Instead, a federal court can issue sanctions relating to such documents under its inherent authority. Comco Mgmt. Group, 2009 WL 4609595, at *3-4. Under their inherent authority, courts have broad discretion to “fashion an appropriate sanction for conduct which abuses the judicial process.” Chambers v. NASCO, Inc., 501 U.S. 32, 42, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991). Inherent power sanctions are available “in response to abusive litigation practices ... and to insure the orderly administration of justice and the integrity of the court's orders.” Halaco Eng'g Co. v. Costle, 843 F.2d 376, 380 (9th Cir. 1998). A district court may, among other things, dismiss a case in its entirety, bar witnesses, exclude other evidence, award attorneys' fees, or assess fines. Am. Unites for Kids v. Rousseau, 985 F.3d 1075, 1090 (9th Cir. 2021). Under its inherent powers, a court may impose sanctions where a party has willfully disobeyed a court order, or where the party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons. Id. (citation omitted). These powers, however, “must be exercised with restraint and discretion.” Chambers, 501 U.S. at 44. The bad faith requirement sets a “high threshold,” which may be met by willful misconduct, or recklessness that is coupled with an improper purpose. Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 649 (9th Cir. 1997); Fink v. Gomez, 239 F.3d 989, 993-94 (9th Cir. 2001). “It is the moving party's burden to demonstrate that the party against whom it seeks sanctions acted with the requisite bad faith or improper purpose.” Lofton v. Verizon Wireless, LLC, 308 F.R.D. 276, 285 (N.D. Cal. 2015). B.Sanctions Are Not Warranted Defendant argues plaintiff improperly downloaded at least 25,524 files from defendant's web servers relating to defendant's franchised dealers by manipulating web links in order to access these documents through a “backdoor” web directory not intended for public access or use. Mtn. at 6, 9-10. Defendant argues plaintiff likely used a web scraper or automated process to batch download all of these files, and that this constituted bad faith as a matter of law. Id. at 7, 11. Defendant also argues plaintiff improperly filed discovery motions seeking documents they already had access to through self-help means. Id. at 18-19. Defendant further contends these documents contain highly sensitive private third-party information, and that plaintiff's alleged unauthorized access into defendant's electronic systems warrants an immediate protective order and sanctions, because plaintiff's actions infringe upon non-parties' highly personal data and information. Id. at 9, 14. *4 Although defendant repeatedly asserts that plaintiff manipulated defendant's web links and used a web scraper to obtain the documents contained on defendant's website, defendant has offered no proof apart from speculation (see Charlton Decl. ¶ 3), and plaintiff has stated he did not use a web crawler or web scraper to access these documents. See Opp. at 5, Litney Decl. ¶ 7, Ex. 7. Rather, plaintiff's counsel has explained he accessed these documents through the web address titled “http://corporate.cornwelltools.com/dmreporting/,” which appeared on documents produced by defendant that were then in the public record. See id.; Azada Decl., Ex. E at 7; docket no. 34-2, Ex. O; docket no. 38-2, Ex. Q. Plaintiff's counsel asserts that they have nonetheless treated the documents downloaded as being subject to the protective order in place, and have not provided the documents to plaintiff, essentially treating them as being “Attorneys' Eyes Only.” Opp. at 12, Litney Decl. ¶ 12. Plaintiff clarifies that the documents have only been utilized in a small number of depositions of defendant's former and current employees who have already accessed the documents at issue by nature of their positions with defendant, and one such deposition exhibit was filed in support of plaintiff's motion for class certification under seal. Id.; docket nos. 61-63. Further, plaintiff's counsel contends he did not access the documents at issue before filing the September 3, 2020 motion to compel, and that defendant failed to demonstrate that the documents located on its website were exhaustive of documents responsive to plaintiff's discovery requests. Opp. at 13-14, Litney Decl. ¶ 14. Defendant fails to identify any conduct by plaintiff or his counsel that could rise to the level of bad faith required to warrant sanctions. Indeed, defendant fails to identify any misconduct by plaintiff at all. Although defendant cites to various cases to suggest that plaintiff's actions were improper (see Mtn. at 14-17), the cases do not support defendant's implicit contention that all self-help discovery – that is, any document collection not conducted through formal discovery requests – is prohibited. The cases defendants cite instead stand for the unremarkable proposition that a party may not purloin, misappropriate, or otherwise improperly access documents. See, e.g., O'Day v. McDonnell Douglas Helicopter Co., 79 F.3d 756, 762-64 (9th Cir. 1996) (finding employee who stole sensitive personnel documents to which he was not allowed access from his employer was not engaging in protected activity under the Age Discrimination in Employment Act); Speckman v. Minn. Mining & Mfg. Co. 7 F. Supp. 2d 1030, 1031-32 (D. Neb. 1997) (imposing sanctions where plaintiff's counsel removed without authorization a document posted at defendant's worksite during depositions at worksite); Pillsbury, Madison & Sutro v. Schechtman, 55 Cal. App. 4th 1279, 1282-83, 1289 (1997) (upholding injunction requiring return of documents acquired through “ ‘self-help’ discovery” that was “violative of ownership or privacy interests,” namely, by attorney improperly removing confidential personnel documents from law firm without consent). But that is not what plaintiff did here. Here, plaintiff accessed the documents at issue through a publicly available website using a web link he obtained from documents produced by defendant, which have since entered the public record. See Litney Decl. ¶ 7, Ex. 7; docket no. 34-2, Ex. O; docket no. 38-2, Ex. Q. The court's own review of the web address provided by defendant and used by plaintiff to access the documents at issue confirms that the website is still publicly available and that such documents can be downloaded through the “uploads” link on the DMReporting directory without any password or authentication requirement. To clarify this point, plaintiff even provided defendant with a video demonstrating that no such authentication gate exists. See Opp. at 17, Litney Decl. ¶¶ 8, 10. Defendant attempts to blame plaintiff's access to the documents at issue on plaintiff's alleged bad faith when it is defendant's own apparent negligence that led to the documents being accessible. Defendant thus fails to demonstrate how simply downloading documents from an unprotected publicly available website using a web link that is in the public record meets the “high threshold” required to establish bad faith. See Primus Auto. Fin. Servs., Inc., 115 F.3d at 649. In addition, defendant fails to explain how plaintiff has utilized the documents in bad faith or for an improper purpose at any time during this action. To the contrary, plaintiff's counsel has treated the documents downloaded from defendant's website as though they are subject to the protective order in place, and has not provided them to plaintiff, essentially treating them as having an “Attorneys' Eyes Only” designation. Litney Decl. ¶ 12. While plaintiff utilized some of the documents during the depositions of defendant's former and current managerial employees, those individuals already had access to the documents in light of their positions with defendant (see id.), and defendant has not demonstrated any prejudice as a result of them reviewing those documents. Plaintiff's actions throughout the discovery process further demonstrate that plaintiff and his counsel have not acted in bad faith since they have voluntarily participated in two informal discovery conferences with the court relating to this dispute, they complied with the court's request to identify every document obtained from defendant's website, and they have not downloaded any additional files from the DMReporting directory since defendant's first meet and confer letter on this issue. Id. ¶¶ 8, 10-11. *5 Contrary to defendant's speculation, plaintiff's counsel declares that counsel did not access the documents on defendant's website prior to filing plaintiff's September 3, 2020 motion to compel. Id. ¶ 13. But even assuming plaintiff previously obtained and fully reviewed those documents prior to filing his discovery motions, defendant fails to demonstrate that those documents were fully responsive to plaintiff's discovery requests such that his discovery motions were unnecessary. Id. As plaintiff rightly argues, to the extent that defendant suggests the documents on its website were exhaustive, defendant's repeated objections to plaintiff's discovery requests relating to burden would be called into serious question. Accordingly, because defendant fails to demonstrate that plaintiff's downloading of documents from its publicly available website was performed in bad faith or that plaintiff used the documents in bad faith or for an improper purpose, defendant's motion for evidentiary and monetary sanctions is denied. Plaintiff's request for monetary sanctions presents a closer question. Defendant has pressed its accusations against plaintiff for months, and continued to do so even after plaintiff expended considerable time and effort to demonstrate to defendant that its concerns were baseless. While the inquiry was initially reasonable, at some point it went too far. Nonetheless, because defendant understandably wished raise its concern by way of a formal motion, the court will not impose sanctions against defendant at this time. The court cautions defendant, however, that if it continues to make baseless accusations against plaintiff for having downloaded the documents at issue through defendant's publicly available website, sanctions may be warranted against defendant in the future. IV ORDER For the foregoing reasons, defendant's motion for protective order and sanctions (docket no. 58) is denied.