Asim Khan v. Zort, Inc., et al Case No. CV-21-08681-MWF (AGRx) United States District Court, C.D. California Filed January 31, 2023 Counsel Attorneys Present for Plaintiffs: Eric Bensamochan Attorneys Present for Defendants: Dixon Cheung, Dylan Anderson Rosenberg, Alicia G., United States Magistrate Judge Proceedings: MINUTES OF VIDEO DISCOVERY CONFERENCE RE: DEFENDANTS' OBJECTIONS, MOTION TO QUASH, AND MOTION FOR PROTECTIVE ORDER REGARDING PLAINTIFF'S SUBPOENAS FOR THE PRODUCTION OF DOCUMENTS (Dkt. 57). *1 Case is called. Counsel state their appearances. Defendants Zort, Inc., and Adam Iza filed Objections, Motion to Quash, and Motion for Protective Order Regarding Plaintiff's Subpoenas For Production of Documents Under Fed. R. Civ. P. 45. (Dkt. No. 57.) Plaintiff Asim Khan filed an opposition. (Dkt. No. 62.) The court reviewed the declarations filed by Plaintiff Khan (Dkt. Nos. 55, 58) and the declaration filed by Mr. Iza (Dkt. No. 56). The matter came on for hearing. At the hearing, Plaintiff advised that he withdraws a subpoena to third party Common Cents Consulting, LLC (Exh. H) and duplicate subpoenas to third party Coinbase, Inc. (Exh. A) and third party American Express, Inc. (Exh. C). The eight subpoenas at issue to third parties under Rule 45 are: Exh. B Coinbase, Inc. Exh. D Bank of America Exh. E U.S. Bancorp Exh. F Newport Lamborghini Exh. G Hermes of Paris, Inc. Exh. I Del Amo Motorsports Exh. J The Early Airway, LLC Exh. K American Express, Inc. At oral argument, Plaintiff advised that three of these third parties have already produced responsive documents (Newport Lamborghini, Hermes of Paris, and U.S. Bancorp).[1] In addition, Defendants previously produced some responsive Bank of America records in response to Defendants' subpoena to the same entity. The scope of discovery under Rule 45 “is the same as that applicable to Rule 34 and the other discovery rules.” Advisory Comm. Notes to 1970 Amendment. “Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). “District courts have broad discretion in determining relevancy for discovery purposes.” Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 635 (9th Cir. 2005). In this diversity action, state law supplies the rule of decision and privacy claims are determined under applicable state law. See Oakes v. Halvorsen Marine Ltd., 179 F.R.D. 281, 284 (C.D. Cal. 1998). At the hearing, counsel confirmed that they rely on California law or federal cases interpreting California law. A party moving to quash a third party subpoena has standing when, as here, the party has a privilege or personal right in the information sought to be disclosed. See Cones v. Parexel Int'l Corp., 2018 U.S. Dist. LEXIS 103458, *4-*5 (S.D. Cal. June 20, 2018) (collecting cases); see also In re REMEC, Inc. Sec. Litig., 2008 U.S. Dist. LEXIS 47412, *4 (S.D. Cal. May 30, 2008); Transamerica Life Ins. Co. v. Axsys Grp., 2015 U.S. Dist. LEXIS 187337, *3 (C.D. Cal. May 14, 2015) (following REMEC). *2 California's constitutional right to privacy “extends to one's confidential financial affairs.” Valley Bank of Nevada v. Superior Court, 15 Cal. 3d 652, 656 (1975) (bank records) see also Pioneer Electronics (USA), Inc. v. Superior Court, 40 Cal. 4th 360, 371 (2007) (consumer records). It is not clear whether this right is extended to corporate entities. See Connecticut Indemnity Co. v. Superior Court, 23 Cal. 4th 807, 817, 98 Cal. Rptr. 2d 221 (2000) (assuming without deciding that insureds who are corporate entities have a constitutional right to privacy and citing to Roberts v. Gulf Oil Corp., 147 Cal. App. 3d 770, 791-93, 195 Cal. Rptr. 393 (1983), for proposition that corporate entities do not have constitutional privacy rights); see also State Water Resources Control Bd. v. Baldwin & Sons, Inc., 45 Cal. App. 5th 40, 63 & n.29 (2020) (assuming without deciding that right extends to corporate entities). Courts engage in a careful balancing of the right to privacy with “the right of civil litigants to discover relevant facts.” Valley Bank, 15 Cal. 3d at 657. Accordingly, the right to privacy “must be measured against other competing or countervailing interests in a ‘balancing test.’ ” Pioneer, 40 Cal. 4th at 371; Vinson v. Superior Court, 43 Cal. 3d 833, 842 (1987) (“courts must balance the right of civil litigants to discover relevant facts against the privacy interests of persons subject to discovery”); see also Lewis v. Superior Court, 3 Cal. 5th 561, 572-73 (2017) (noting standard applicable to countervailing interests varies depending on privacy interest asserted).[2] “Protective measures, safeguards, and other alternatives may minimize the privacy intrusion. ‘For example, if intrusion is limited and confidential information is carefully shielded from disclosure except to those who have a legitimate need to know, privacy concerns are assuaged.’ ” Pioneer, 40 Cal. 4th at 371. At oral argument, the parties did not dispute the need for a protective order. The court referred counsel to the form protective order on the court's website as a starting point, and ordered counsel to confer as to the form of protective order and the potential need for an “attorneys eyes only” provision. Plaintiff relies on the important interest in ascertaining the truth in legal proceedings and argues that the requested discovery is directly relevant to the claims and defenses. See Alch v. Superior Court, 165 Cal. App. 4th 1412, 1426-27 (2008). Plaintiff's discovery is directed at tracing or locating funds that were allegedly procured by means of fraud to accounts at Coinbase and transferred to other accounts. Plaintiff has identified the banks or financial institutions at which Defendants held accounts, and has explained the relationship between Iris Au and her company, Dream Agency, to Defendants in terms of financial transfers. Plaintiff may reasonably seek the documents showing the accounts into which his money has gone, as well as statements indicating the money transferred into and out of the accounts. Such documents could reasonably shed light on the nature of the entities at issue, their alleged connection to the fraud, and the fate of Plaintiff's money. Plaintiff's specific need for the discovery outweighs the generalized interests in financial privacy, even assuming that such privacy protections extend to Defendant Zort, Inc., particularly in light of Plaintiff's agreement to an appropriate protective order. *3 IT IS ORDERED that: 1. Defendants' motion for protective order is GRANTED IN PART. Counsel shall confer and file a stipulation and proposed protective order by Friday, February 3, 2023. 2. Defendants' motion to quash subpoenas is DENIED and the objections OVERRULED except as to the need for a protective order. 3. On or before February 14, 2023, third parties Coinbase, Inc., Bank of America, U.S. Bancorp, Del Amo Motorsports, The Early Airway, LLC, and American Express shall complete production of documents responsive to the respective subpoenas, and U.S. Bancorp shall provide the password necessary to access the documents. Defendants may designate such documents pursuant to the protective order as appropriate. cc: District Judge Michael W. Fitzgerald Footnotes [1] U.S. Bancorp has apparently produced password-protected electronic records but has not yet provided the password to access those records. [2] The California Supreme Court explained that compelling countervailing interests must be shown when the constitutional privacy interest asserted is, for example, freedom from involuntary sterilization or freedom to pursue consensual familial relationships. Lewis, 3 Cal. 5th at 572.