Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_06-cv-04135/USCOURTS-cand-5_06-cv-04135-7/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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United States District Court

For the Northern District of California

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*E-filed 1/11/08*

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

21X CAPITAL LTD. and DAVID A. BREWER, 

Plaintiffs,

v.

ROBERT WERRA and JOHN WERRA, 

Defendants.

 /

Case No. C06-04135 JW (HRL)

ORDER ON PLAINTIFF 21X CAPITAL'S

MOTIONS TO COMPEL DISCOVERY

Re: Docket Nos. 41, 45

In this diversity action, Plaintiffs sue to collect a state court judgment (entered on their

cross-claim) against RJW Acquisitions, LC ("RJW") from individuals alleged to be alter egos of

RJW. Plaintiff 21X Capital moves to compel further document production and interrogatory

responses. The party resisting relevant, non-privileged discovery has the burden of showing

why discovery should not go forward. Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir.

1975). 

DISCUSSION

Plaintiffs' effort to impose personal liability on Defendants focuses on the direct

individual actions of the Werras, as well as on the activities of a few of the approximately 90

business entities owned or controlled by Defendants, notably - for present purposes - 20/20

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For the Northern District of California

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 Technologies, Inc. ("20/20") and NTK Engineering (NTK). Basically, Plaintiffs say that RJW -

the plaintiff in the underlying state lawsuit - was a shell corporation functioning mainly to

pursue that litigation. Plaintiffs further claim that the monies it used to fund the underlying suit

were funneled to RJW by the Werras (either individually or through their other entities, notably

20/20 and NTK) as needed and without regard to maintaining formalities of separate corporate

existences. Also, say Plaintiffs, once RJW suffered a substantial judgment in the state court

action, Defendants promptly recategorized as "loans" money that had previously gone into RJW

with no such categorization. Plaintiffs' discovery looks to examine financial dealings between

the Defendants, RJW, 20/20 and NTK to develop evidence to support their alter ego theory. It

remains to be seen if they will be successful, but within reasonable limits they surely are

entitled to make the inquiry. 

In these motions to compel, Plaintiff complains about: 1) Defendants' failure to produce

documents known to have existed but now gone "missing"; 2) unacceptable limitations

Defendants placed on the scope of requests (especially with respect to records of 20/20 and

NTK); and 3) the absence of a verification to certain supplemental responses. 

At the hearing, the court questioned defense counsel at length about how the document

search was conducted and how and why some things were missing (i.e., some check request

vouchers, certain bank statements and cancelled checks). The court also asked of counsel the

rationale for the limitations placed by Defendants on the scope of the requests. The court was

surprised at how many questions counsel could not answer. Further, the court was dissatisfied

at how often the answer failed to illuminate and, frequently, resulted in a fog of obfuscation. 

For example, Defendants object to producing 20/20 documents except those that pertain

to RJW, and then narrowly define what is pertinent. And yet, it is not exactly clear that 20/20

(a) is a separate entity at all, or (b) if it is, that Defendants made any distinction between them. 

During the state lawsuit, for instance, RJW's lawyer represented on the record that 20/20 was

merely a "d/b/a" for RJW. See Carlson Decl. (Docket No. 55). This court does not know for

sure the "truth" about 20/20's legal "separateness," but certainly there was enough apparent

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interaction and overlap between it and RJW to justify the discovery sought by Plaintiff. The

same goes for NTK. 

CONCLUSION

Based on the foregoing, Plaintiff's motions to compel are GRANTED. No later than

January 22, 2008, Defendants shall: 

1. Produce all non-privileged documents responsive to the following:

a. Robert Werra Request for Production No.'s 8, 9, 22, 57, 60-62 (Docket No. 47).

b. John Werra Request for Production No.'s 9, 10, 23, 58, 61-63 (Docket No. 48).

This production shall include, but is not limited to, those documents underlying these

records (i.e., check request vouchers, photocopies of checks, and complete bank

statement records), as well as the general ledgers of Robert Werra, John Werra, 20/20

and NTK (from April 2003-present).

2. Fully answer the interrogatories responsive to the following:

a. Robert Werra Interrogatory No.'s 2, 3, 13, 15-18, 20-23 (Docket No. 43).

b. John Werra Interrogatory No.'s 5, 12, 13 (Docket No. 44).

Defendants may again elect under FED. R. CIV. P. 33(d) to respond to the interrogatories

by specifying responsive business records. However, if those records do not completely

answer the interrogatory, Defendants shall so indicate and provide a supplemental,

written response. Otherwise, the records are presumed to be complete responses to the

interrogatories posed.

3. Provide a more complete response to John Werra Interrogatory No. 18 (Docket No. 44). 

This response shall include the factual basis on which Defendants intend to rely (even if

otherwise privileged) in asserting their laches defense. 

4. File and serve declarations from David Bower, Paul Ivanhoff, the Werras, and lead

defense counsel attesting to the following:

a. Describe the search for responsive documents (What was done to locate

documents? How was the search conducted? Who was involved?).

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b. For documents known to have existed, but currently missing, explain why the

documents are missing and whether Defendants are able to retrieve a copy of

such documents from third parties. (Obviously, where possible, Defendants shall

supplement the prior production with the missing documents.)

5. Upon completion of the supplemental production, certify that all responsive, nonprivileged documents have been served on Plaintiff.

6. Serve a written verification of the supplemental responses previously provided to

Plaintiffs' counsel in correspondence. 

IT IS SO ORDERED.

Dated: 1/11/08 

HOWARD R. LLOYD

UNITED STATES MAGISTRATE JUDGE

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United States District Court

For the Northern District of California

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THIS IS TO CERTIFY THAT A COPY OF THIS NOTICE WILL BE SENT TO:

Thomas H. Carlson tcarlson@rjop.com, smarcus@rjop.com 

Kevin Thayer Reed kreed@kvn.com, dmiller@kvn.com 

Aaron Paul Silberman aps@rjop.com, fyh@rjop.com 

Jon Burgess Streeter jstreeter@kvn.com, efiling@kvn.com, mcanales@kvn.com,

sharmison@kvn.com 

Courtney Towle ctowle@kvn.com, sgiminez@kvn.com 

Counsel are responsible for transmitting this order to co-counsel who have not signed

up for e-filing.

Dated: 1/11/08

 /s/ KRO 

Chambers of Magistrate Judge Howard R. Lloyd

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