Tentative Rulings

Case Number: ****1708    Hearing Date: June 23, 2020    Dept: 32

Superior Court of California

County of Los Angeles

Department 32

BACKGROUND

Plaintiff Daphne White (“Plaintiff”) alleges she slipped and fell at a store owned and operated by Defendant Alpha Beta Company (“Defendant”). Defendant moves to compel third party Key Health Medical Solutions (“Deponent” or “Key Health”) to comply with a deposition subpoena requiring the production of records about Plaintiff. Specifically, Defendant seeks information concerning the satisfaction or sale of any lien for Plaintiff’s medical bills, i.e., factoring agreements. Deponent opposes the motion. The motion is denied.

LEGAL STANDARD

Code of Civil Procedure section 1987.1 provides, “If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by [a party or a witness] . . . may make an order . . . directing compliance with it upon those terms or conditions as the court shall declare, including protective orders.” (Code Civ. Proc., ; 1987.1.)

DISCUSSION

A. Deposition Questions

As an initial matter, to the extent Defendant seeks to compel Deponent to answer deposition questions about its factoring agreements, the motion is denied as procedurally defective. Defendant has not lodged the deposition transcript with the Court, as required. (Code Civ Proc., ; 2025.480, subd. (h).) Defendant has also not filed a separate statement. (Cal. Rules of Court, rule 3.1345, subds. (a), (c).) The Court therefore cannot determine the questions and answers in dispute. Even if the Court were to reach the merits of the issue, however, the Court would deny the motion for the same reason it denies the motion to compel production of documents.

B. Documents

The scope of permissible discovery is broad. “[A]ny party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (Code Civ. Proc., ; 2017.010.) “In the context of discovery, evidence is ‘relevant’ if it might reasonably assist a party in evaluating its case, preparing for trial, or facilitating a settlement. Admissibility is not the test, and it is sufficient if the information sought might reasonably lead to other, admissible evidence.” (Glenfed Development Corp. v. Superior Court (1997) 53 Cal.App.4th 1113, 1117.) “Any doubts regarding relevance are generally resolved in favor of allowing the discovery.” (Mercury Interactive Corp. v. Klein (2007) 158 Cal.App.4th 60, 98.) The scope of permissible discovery “is equally applicable to discovery of information from a nonparty . . . .” (Johnson v. Superior Court (2000) 80 Cal.App.4th 1050, 1062.)

The court in Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, stated that “a plaintiff may recover as economic damages no more than the reasonable value of the medical services received and is not entitled to recover the reasonable value if his or her actual loss was less.” (Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 555.) The court concluded “that when a medical care provider has . . . accepted as full payment for the plaintiff’s care an amount less than the provider’s full bill, evidence of that amount is relevant to prove the plaintiff’s damages for past medical expenses and, assuming it satisfies other rules of evidence, is admissible at trial.” (Id. at 567.) Therefore, this information is discoverable.

Nevertheless, the Court denies the motion. Deponent has demonstrated that its factoring agreements are trade secrets. Per Civil Code section 3426.1, “Trade secret means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”  (Civ. Code, ; 3426.1.)

Here, Deponent has advanced evidence that “[t]he ‘spread’ between how much Key Health pays for an account, and how much the company is ultimately able to recover from that account, reflects Key Health’s analysis of the various risks associated with its purchase. These risks could range from collectability of the debt, the patient’s ability to pay, and other factors.” (Declaration of Chris Hammond, ¶ 4.) Further, Deponent has advanced evidence that it “derives actual independent economic value from keeping the methods by which it buys an account receivable and the price paid a secret from the public. If a competitor were to learn about Key Health's price that it has, or would be willing, to pay to a certain medical provider, other competitors could undercut Key Health's prices.” (Declaration of Chris Hammond, ¶ 6.)

Defendant’s evidence is sufficient to establish that the terms of Deponent’s agreements with medical finance companies are trade secrets. As Deponent has demonstrated that its agreements with medical finance companies are trade secrets, Defendant has the burden to “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 (1992) 7 Cal.App.4th 1384, 1393.) While Defendant has shown that the factoring agreement might have some minimal relevance to its defense against Plaintiff’s claims, it has not shown that the information is essential for several reasons. First, the information has little probative value. “The probative value of such evidence in determining the reasonable value of the medical services provided an injured plaintiff is minimal.” (Moore v. Mercer (2016) 4 Cal.App.5th 424, 443.) Second, Deponent has demonstrated that it has not agreed to accept less than the total amount of Plaintiff’s medical bills. (Declaration of Chris Hammond, ¶ 3.) Therefore, the motion is denied.

CONCLUSION AND ORDER

Defendant’s motion to compel compliance with the subpoena it served on Deponent is denied. Defendant shall provide notice and file proof of such with the Court.

DATED: June 23, 2020 ___________________________

Stephen I. Goorvitch

Judge of the Superior Court

Case Number: ****1708    Hearing Date: March 17, 2020    Dept: 32

Superior Court of California

County of Los Angeles

Department 32

BACKGROUND

Plaintiff Daphne White (“Plaintiff”) alleges she slipped and fell at a store owned and operated by Defendant Alpha Beta Company (“Defendant”). Defendant moves to compel third party Key Health Medical Solutions (“Deponent” or “Key Health”) to comply with a deposition subpoena requiring the production of records about Plaintiff. Specifically, Defendant seeks information concerning the satisfaction or sale of any lien for Plaintiff’s medical bills, i.e., factoring agreements. Deponent opposes the motion. The motion is denied.

LEGAL STANDARD

Code of Civil Procedure section 1987.1 provides, “If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by [a party or a witness] . . . may make an order . . . directing compliance with it upon those terms or conditions as the court shall declare, including protective orders.” (Code Civ. Proc., ; 1987.1.)

DISCUSSION

A. Deposition Questions

As an initial matter, to the extent Defendant seeks to compel Deponent to answer deposition questions about its factoring agreements, the motion is denied as procedurally defective. Defendant has not lodged the deposition transcript with the Court, as required. (Code Civ Proc., ; 2025.480, subd. (h).) Defendant has also not filed a separate statement. (Cal. Rules of Court, rule 3.1345, subds. (a), (c).) The Court therefore cannot determine the questions and answers in dispute. Even if the Court were to reach the merits of the issue, however, the Court would deny the motion for the same reason it denies the motion to compel production of documents.

B. Documents

The scope of permissible discovery is broad. “[A]ny party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action or to the determination of any motion made in that action, if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (Code Civ. Proc., ; 2017.010.) “In the context of discovery, evidence is ‘relevant’ if it might reasonably assist a party in evaluating its case, preparing for trial, or facilitating a settlement. Admissibility is not the test, and it is sufficient if the information sought might reasonably lead to other, admissible evidence.” (Glenfed Development Corp. v. Superior Court (1997) 53 Cal.App.4th 1113, 1117.) “Any doubts regarding relevance are generally resolved in favor of allowing the discovery.” (Mercury Interactive Corp. v. Klein (2007) 158 Cal.App.4th 60, 98.) The scope of permissible discovery “is equally applicable to discovery of information from a nonparty . . . .” (Johnson v. Superior Court (2000) 80 Cal.App.4th 1050, 1062.)

The court in Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, stated that “a plaintiff may recover as economic damages no more than the reasonable value of the medical services received and is not entitled to recover the reasonable value if his or her actual loss was less.” (Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 555.) The court concluded “that when a medical care provider has . . . accepted as full payment for the plaintiff’s care an amount less than the provider’s full bill, evidence of that amount is relevant to prove the plaintiff’s damages for past medical expenses and, assuming it satisfies other rules of evidence, is admissible at trial.” (Id. at 567.) Therefore, this information is discoverable.

Nevertheless, the Court denies the motion. Deponent has demonstrated that its factoring agreements are trade secrets. Per Civil Code section 3426.1, “Trade secret means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”  (Civ. Code, ; 3426.1.)

Here, Deponent has advanced evidence that “[t]he ‘spread’ between how much Key Health pays for an account, and how much the company is ultimately able to recover from that account, reflects Key Health’s analysis of the various risks associated with its purchase. These risks could range from collectability of the debt, the patient’s ability to pay, and other factors.” (Declaration of Chris Hammond, ¶ 4.) Further, Deponent has advanced evidence that it “derives actual independent economic value from keeping the methods by which it buys an account receivable and the price paid a secret from the public. If a competitor were to learn about Key Health's price that it has, or would be willing, to pay to a certain medical provider, other competitors could undercut Key Health's prices.” (Declaration of Chris Hammond, ¶ 6.)

Defendant’s evidence is sufficient to establish that the terms of Deponent’s agreements with medical finance companies are trade secrets. As Deponent has demonstrated that its agreements with medical finance companies are trade secrets, Defendant has the burden to “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 (1992) 7 Cal.App.4th 1384, 1393.) While Defendant has shown that the factoring agreement might have some minimal relevance to its defense against Plaintiff’s claims, it has not shown that the information is essential for several reasons. First, the information has little probative value. “The probative value of such evidence in determining the reasonable value of the medical services provided an injured plaintiff is minimal.” (Moore v. Mercer (2016) 4 Cal.App.5th 424, 443.) Second, Deponent has demonstrated that it has not agreed to accept less than the total amount of Plaintiff’s medical bills. (Declaration of Chris Hammond, ¶ 3.) Therefore, the motion is denied.

CONCLUSION AND ORDER

Defendant’s motion to compel compliance with the subpoena it served on Deponent is denied. Defendant shall provide notice and file proof of such with the Court.

DATED: March 17, 2020 ___________________________

Stephen I. Goorvitch

Judge of the Superior Court