Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-02239/USCOURTS-cand-3_04-cv-02239-10/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:77 Securities Fraud

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CHARLES O. BRADLEY TRUST, et al.,

Plaintiffs,

v.

ZENITH CAPITAL LLC, et al.,

Defendants.

___________________________________/

No. C-04-2239 JSW (EMC)

ORDER GRANTING PLAINTIFFS’

MOTION TO COMPEL ALBRECHT

DEFENDANTS TO PRODUCE

DOCUMENTS

(Docket No. 102)

Plaintiffs have filed suit against various Defendants based on an alleged securities fraud. 

Basically, there are three groups of Defendants: the Zenith Defendants, the GMM Defendants, and

the Albrecht Defendants. Pending before the Court is Plaintiffs’ motion to compel the Albrecht

Defendants to produce all documents listed on the Albrecht Defendants’ privilege log. The Albrecht

Defendants are Mark J. Albrecht and Mark J. Albrecht Accountancy Corporation, public

accountants. Having considered the parties’ briefs and accompanying submissions, as well as the

oral argument of counsel, the Court hereby GRANTS Plaintiffs’ motion to compel.

The Albrecht Defendants oppose production of the documents to the extent that the private

information of nonparties is implicated. In support of their position, the Albrecht Defendants cite 26

U.S.C. § 7216, California Code of Civil Procedure § 1985.5, and article I, section 1, of the California

Constitution. Section 7216 does not bar production of the documents. The statute provides that

disclosure of tax return information is permissible if made pursuant to a court order. See 26 U.S.C. §

7216(b)(1)(B). Thus, if the Court here concludes that production is warranted, then there is no

problem under § 7216. Nor is § 1985.5 a bar to the production of documents. The Federal Rules of

Case 3:04-cv-02239-JSW Document 122 Filed 08/24/05 Page 1 of 2
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Civil Procedure are controlling, not the California Code of Civil Procedure. Moreover, the discovery

rule embodied in § 1985.5 is more restrictive than the Federal Rules on discovery. See Hutton v.

City of Martinez, 219 F.R.D. 164, 166 (N.D. Cal. 2003) (“Where application of state law would be

clearly inconsistent with federal law, state law privileges do not apply.”); cf. Soto v. City of Concord,

162 F.R.D. 603, 609 n.2 (N.D. Cal. 1995) (“The federal policy on discovery is a liberal standard, and

applying California privilege law, such as California Evidence Code § 1043 and Penal Code § 832.5

would severely limit Plaintiff from gaining access to the police files in dispute.”). As for the right to

privacy provided for in the California Constitution, the Court can consider the right to the extent it is

not inconsistent with federal law. The question thus boils down to whether there should be

disclosure of the documents given the relevance of the information and the burden of the discovery,

which includes the privacy interests of nonparties.

The Court finds that, given the relevance of the information and the burden of the discovery,

it is appropriate for the documents to be produced but only under a strict protective order. Thus, the

Court grants Plaintiffs’ motion to compel production of the documents but such production shall be

subject to a protective order, the terms of which shall be provided to the Court by the parties in the

form of a joint stipulation and proposed order per the Court’s instructions given at the hearing.

As for the costs of the production, the Albrecht Defendants shall bear the cost of

attorney/paralegal review and redaction of the documents. (The parties have agreed that social

security numbers and tax identification numbers may be redacted.) Plaintiffs shall bear the cost of

copying.

This order disposes of Docket No. 102.

IT IS SO ORDERED.

Dated: August 24, 2005

 

 EDWARD M. CHEN

United States Magistrate Judge

Case 3:04-cv-02239-JSW Document 122 Filed 08/24/05 Page 2 of 2