Court Opinion

ID: 894415
Source: CourtListenerOpinion
Date Created: 2013-06-06 17:37:22.903608+00
Date Added: 2024-06-11T13:05:23.307084
License: Public Domain

Filed 6/6/13 Knight v. Super. Ct. CA4/1
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

                    COURT OF APPEAL, FOURTH APPELLATE DISTRICT
                                   DIVISION ONE

                                           STATE OF CALIFORNIA

MARK KNIGHT,                                                          D063819

         Petitioner,                                                  (Imperial County
                                                                      Super. Ct. No. ECU06566)
         v.

THE SUPERIOR COURT OF IMPERIAL
COUNTY,

         Respondent;

CHAD KEY et al.,

         Real Parties in Interest.

         PROCEEDINGS in mandate after superior court denied motion to quash

deposition subpoena. Juan Ulloa, Judge. Petition granted in part.

                         FACTUAL AND PROCEDURAL BACKGROUND
       Chad Key and 24 real parties in interest (the homeowners) filed a civil suit against

D.R. Horton, Inc. (D.R. Horton) and others. In their second amended complaint, the

homeowners assert a single cause of action for violation of the building standards for

original construction pursuant to Civil Code section 896 et seq. Generally, the

homeowners allege that the houses in their development—built by D.R. Horton and the

other defendants—are materially defective and deficient in a number of ways. They seek

damages to cover the cost of repairing their homes and to compensate them for

consequential and incidental damages.

       Petitioner Mark Knight is not a party to this action. Knight is the president of

FrontLine Response, LLC (FrontLine), an "independent company that contracts with

home builders to serve as an extension of their warranty department. In that capacity,

FrontLine, with permission from homeowners, investigates issues homeowners may have

with their home and forwards the requested repairs to the builder." D.R. Horton retained

FrontLine to contact the homeowners after they initiated this litigation. FrontLine

employees talked to the homeowners and offered to have their houses fixed in return for

the homeowners signing a form letter asking their attorney to dismiss them from this

action. The homeowners contend this conduct violates Civil Code section 913, which

prohibits a builder or its representatives from contacting plaintiffs outside the presence of

their attorney.

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       The homeowners served a deposition subpoena on Knight, seeking to take his

deposition and asking him to produce certain documents. Knight's petition concerns only

two of those document requests: those seeking (1) "training materials provided by

FrontLine Response, LLC to employees"; and (2) information about "payments received

by YOU from D.R. Horton for work performed regarding any homes involved in the

lawsuit."

       Knight moved to quash the deposition subpoena. In a declaration, Knight asserts

that the requested training materials include trade secret information which is not subject

to disclosure. Knight also contends the request for documents concerning payments by

D.R. Horton to FrontLine violates his right to privacy regarding financial information.

       The trial court denied the motion to quash. At the hearing on the motion, the court

acknowledged the training manual constitutes a trade secret, but found the information

could be adequately shielded by a protective order. According to the court, disclosure is

warranted because "all of those matters seem, to me, to be relevant at least in terms of

possibly leading to discoverable or admissible evidence."

       In this petition, Knight contends the denial was improper and asks us to direct the

trial court to limit the ordered production. We requested an informal response to the

petition and issued Palma notice. (Palma v. U.S. Industrial Fasteners, Inc. (1984) 36
Cal. 3d 171, 178.)

                                             3
                                       DISCUSSION

       According to Knight, FrontLine derives economic value from its training manual,

which includes information and techniques not generally known by other similar

businesses in its "niche industry." FrontLine takes several measures to protect the

manual from disclosure. The homeowners do not challenge Knight's declaration or

otherwise dispute that the FrontLine training materials are a protected trade secret as

defined by Civil Code section 3426.1, subdivision (d).

       Evidence Code section 1060 creates a privilege for trade secrets and authorizes the

owner of a trade secret to refuse to disclose the secret "if the allowance of the privilege

will not tend to conceal fraud or otherwise work injustice." In Bridgestone/Firestone,

Inc. v. Superior Court (1992) 7 Cal. App. 4th 1384, the court applied Evidence Code

section 1060 in the context of civil discovery. The court held that it would be error to

order disclosure of a trade secret simply because such information would be discoverable

under the general standard for discovery of matter that " 'appears reasonably calculated to

lead to the discovery of admissible evidence.' " (Bridgestone/Firestone, Inc. v. Superior

Court, supra, at p. 1390; see also Code Civ. Proc., § 2017.010.) As the court explained,

that standard applies only to matters that are not privileged. (Bridgestone/Firestone, Inc.

v. Superior Court, supra, at pp. 1390-1391.) Because Evidence Code section 1060

creates a privilege for trade secrets, use of a heightened standard is necessary before

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disclosure of documents containing trade secrets will be compelled.

(Bridgestone/Firestone, Inc. v. Superior Court, supra, at p. 1393.)

       Under this heightened standard, the party seeking discovery "must make a prima

facie, particularized showing that the information sought is relevant and necessary to the

proof of, or defense against, a material element of one or more causes of action presented

in the case, and that it is reasonable to conclude that the information sought is essential to

a fair resolution of the lawsuit." (Bridgestone/Firestone, Inc. v. Superior Court, supra, 7

Cal.App.4th at p. 1393.)

       Here, rather than applying the heightened standard for discovery of a privileged

trade secret, the respondent court applied the general standard for discovery under Code

of Civil Procedure section 2017.010. The court found the training manual was subject to

discovery because "all of those matters seem, to me, to be relevant at least in terms of

possibly leading to discoverable or admissible evidence." This discovery standard does

not apply to privileged trade secret documents. (Bridgestone/Firestone, Inc. v. Superior

Court, supra, 7 Cal.App.4th at p. 1390.)

       Although the court also ordered the parties to prepare a protective order in an

attempt to protect the trade secret information, such an order is appropriate only after the

party seeking discovery meets its burden of establishing that the information sought is

directly relevant and its disclosure is necessary. (Bridgestone/Firestone, Inc. v. Superior

Court, supra, at p. 1393.) The court could not have required disclosure subject to a

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protective order unless it first found that the homeowners met their burden. By failing to

do so, the court erred.

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       Because Knight's entitlement to relief is clear and the law is well-settled, we

conclude a peremptory writ in the first instance is proper. (Code of Civ. Proc., § 1088;

Alexander v. Superior Court (1993) 5 Cal. 4th 1218, 1222-1223, disapproved on another

ground in Hassan v. Mercy American River Hospital (2003) 31 Cal. 4th 709, 724, fn. 4;

Ng v. Superior Court (1992) 4 Cal. 4th 29, 35.)

                                       DISPOSITION

       Let a writ of mandate issue directing the superior court to vacate its March 5, 2013

order insofar as it directs Knight to provide trade secret information to real parties in

interest and to reconsider the issue under the proper standard. In all other respects, the

petition is denied. The stay issued by this court on May 7, 2013 is vacated. Knight is

entitled to costs in the writ proceeding. (Cal. Rules of Court, rule 8.493(a)(1)(A).) This

opinion is made final immediately as to this court. (Cal. Rules of Court, rule

8.490(b)(3).)

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                              IRION, J.

WE CONCUR:

         O'ROURKE, J.

 McINTYRE, Acting P. J.

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