Laatz v. Zazzle, Inc.

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION [7] 8 NICKY LAATZ, Case No. 22-cv-04844-BLF (VKD) 9 Plaintiff, ORDER RE DISCOVERY DISPUTE RE 10 v. STEPHEN STEINBERG AND LIANA LARSON DEPOSITIONS 11 ZAZZLE, INC., et al., Re: Dkt. No. 241 Defendants. [13] 14 Plaintiff Nicky Laatz and defendant Zazzle, Inc. (“Zazzle”) ask the Court to resolve their 15 dispute regarding whether Zazzle should be permitted to take the deposition of Ms. Laatz’s 16 litigation counsel, Stephen Steinberg, and whether Ms. Laatz should be permitted to take the 17 deposition of Zazzle’s in-house counsel, Liana Larson. Dkt. No. 241. At the Court’s direction, 18 the parties filed supplemental material concerning this dispute on August 5, 2024. See Dkt. No. 19 242; Dkt. No. 244. The Court finds this matter suitable for decision without oral argument. See 20 Civil L.R. 7-1(b). 21 I. BACKGROUND 22 Mr. Steinberg, who is counsel of record for Ms. Laatz in this action, engaged in several 23 email communications with the Copyright Office between February 18 and July 15, 2021 24 regarding registration of the Blooming Elegant font on behalf of Ms. Laatz. Dkt. No. 241 at 1, 4; 25 Dkt. No. 244, Ex. 7. The original complaint in this action was filed on August 24, 2022. Dkt. No. 26 1. Zazzle wishes to take Mr. Steinberg’s deposition in connection with its counterclaim that Ms. 27 Laatz’s copyright registration is invalid. 1 Legal.” Dkt. No. 241 at 3 n.1, 6. Ms. Laatz says that Ms. Larson is one of several Zazzle 2 employees who received an email containing a link to the offering page for the disputed font on 3 Creative Market’s website, which in turn had links to the license terms for the disputed font.1 Id. 4 at 3. In addition, Ms. Laatz says that “Ms. Larson handled pre-lawsuit negotiations in which she 5 stated that the Blooming Elegant license was purchased ‘for use on [Zazzle’s] website.’” Id. Ms. 6 Laatz wishes to take Ms. Larson’s deposition in connection with her claim that Zazzle engaged in 7 fraudulent misrepresentations when it purchased a license to the disputed font. Id. 8 II. LEGAL STANDARD 9 Rule 30 of the Federal Rules of Civil Procedure permits “[a] party . . . [to] depose any 10 person, including a party, without leave of court . . . .” Fed. R. Civ. P. 30(a)(1). However, under 11 Rule 26(c)(1), “[t]he court may, for good cause, issue an order to protect a party or person from 12 annoyance, embarrassment, oppression, or undue burden or expense,” including forbidding a 13 deposition, or limiting its scope. Fed. R. Civ. P. 26(c)(1). The party seeking a protective order 14 bears the burden of showing good cause for the order by “demonstrating harm or prejudice that 15 will result from the discovery.” Rivera v. NIBCO, Inc., 364 F.3d 1057, 1063 (9th Cir. 2004). 16 III. DISCUSSION 17 A. Mr. Steinberg 18 In this action, Zazzle asserts a counterclaim seeking a declaration that Ms. Laatz’s 19 copyright in the disputed font is invalid. See Dkt. No. 144 at 23 (Counterclaim ¶¶ 1-42). 20 Specifically, Zazzle claims: “In connection with applying for the Blooming Elegant Copyrights, 21 Laatz knowingly and intentionally provided materially inaccurate information to the Copyright Office 22 regarding the manner in which she created the Blooming Elegant Computer Files, including by falsely 23 representing that Laatz had hand-coded those files. In fact, the FontLab software actually generated [24] 1 On July 30, 2024, Ms. Laatz moved to seal portions of this discovery letter on the ground that [25] defendants designated the subject information “Confidential.” Dkt. No. 239. The letter itself was provisionally filed under seal. Dkt. No. 239-4. Defendants have offered no justification for [26] maintaining the contents of this discovery letter under seal, and the time for doing so has passed. See Civil L.R. 79-5(f)(3). In any event, the Court finds no basis to conclude that the designated [27] portions of the letter are confidential. Accordingly, Ms. Laatz’s motion to seal portions of this 1 the Blooming Elegant Computer Files by automated means.” Id. ¶¶ 37-38. Zazzle alleges that Mr. 2 Steinberg, serving as Ms. Laatz’s representative, provided the materially inaccurate information to 3 the Copyright Office in a series of email communications with the Copyright Office, attached to 4 Zazzle’s counterclaim as Exhibits A-C. Id. ¶¶ 18-25; Dkt. No. 241 at 4. 5 Citing the Eighth Circuit’s Shelton rule, Ms. Laatz argues that Zazzle may not take Mr. 6 Steinberg’s deposition unless it can demonstrate that (1) no other means exist to obtain the 7 information than to depose opposing counsel; (2) the information sought is relevant and not 8 privileged or protected; and (3) the information is necessary to the preparation of Zazzle’s case. 9 Dkt. No. 241 at 1; see Shelton v. Am. Motors Corp., 805 F.2d 1323, 1327 (8th Cir. 1986). Zazzle 10 does not directly challenge application of the Shelton rule here, although it does argue (contrary to 11 that rule) that “courts routinely compel depositions of counsel when those attorneys serve as 12 critical fact witnesses.” Dkt. No. 241 at 5 (citing cases). 13 The Ninth Circuit has neither endorsed Shelton nor directly addressed the propriety of a 14 party’s deposition of opposing counsel.2 However, district courts in the Ninth Circuit and 15 elsewhere have generally adopted the approach described in Shelton for assessing whether to 16 permit the deposition of opposing counsel. See, e.g., ATS Prods., Inc v. Champion Fiberglass, 17 Inc., No. 13-CV-02403-SI (DMR), 2015 WL 3561611 , at *3 n.5 (N.D. Cal. June 8, 2015) 18 (collecting cases). But the Shelton analysis applies only where the discovery sought concerns 19 matters relating to counsel’s representation of a party in pending litigation. It does not apply to 20 discovery of facts known to counsel as a percipient witness relating to matters that preceded the 21 litigation. See Pamida, Inc. v. E.S. Originals, Inc., 281 F.3d 726, 729-31 (8th Cir. 2002) 22 (distinguishing discovery directed to information about pending litigation that could reveal 23 counsel’s litigation strategy from discovery directed to a concluded litigation in which counsel 24 also happened to represent a party); In re Andre, No. 19-mc-80266-VKD, 2019 WL 6699958 , at [26] 2 In an unpublished decision, the Ninth Circuit applied the three-factor Shelton test in addressing whether a party could depose opposing counsel. See Willer v. Las Vegas Valley Water Dist., 176 27 F.3d 486 (9th Cir. 1999) (citing Massachusetts Mutual Life Ins. Co., 177 F.R.D. 472 , 479 1 *2-3 (N.D. Cal. Dec. 9, 2019) (“The mere fact that Mr. Andre and Kramer Levin happen to 2 represent MASA in the pending action does not insulate them from discovery about a transactional 3 matter, now-concluded, that preceded the litigation.”); ATS Prods., 2015 WL 3561611 , at *6 (“To 4 permit a fact witness to evade a deposition simply because he acted as an attorney in a prior case 5 would invite parties to retain the same counsel in subsequent cases to avoid revealing information 6 that would otherwise be discoverable.”). 7 Ms. Laatz objects to Zazzle’s deposition of Mr. Steinberg on two grounds.3 First, she 8 points out that Zazzle may inquire about the truthfulness of the statements made by Mr. Steinberg 9 on Ms. Laatz’s behalf to the Copyright Office when it takes the depositions of Ms. Laatz and her 10 husband John Laatz, and for this reason Mr. Steinberg’s deposition is unnecessary. See Dkt. No. 11 241 at 2. Indeed, Zazzle has already taken these depositions. See Dkt. No. 244, Ex. 5 (N. Laatz 12 rough dep. 187:13-198:16), Ex. 6 (J. Laatz, rough dep. 308:6-319:17). Second, Ms. Laatz argues 13 that any information Zazzle seeks from Mr. Steinberg will be protected from disclosure by the 14 attorney-client privilege or the attorney work product doctrine. Dkt. No. 241 at 2. Ms. Laatz 15 relies heavily on LA Printex Industries, Inc. v. VF Corp., No. 13-cv-0949 PSG (SSx), 2014 WL 16 12587037 (C.D. Cal. Jan. 14, 2014), for the proposition that Mr. Steinberg’s testimony is not 17 necessary because Zazzle could obtain the information it requires from some other source, as well 18 as for the proposition that Mr. Steinberg’s communications with Ms. Laatz in the prosecution of 19 the copyright registration are protected from disclosure by the attorney-client privilege. Id. (citing 20 LA Printex, 2014 WL 12587037 at *3). 21 Zazzle responds that it requires Mr. Steinberg’s deposition so that it can inquire about his 22 “first-hand knowledge of his awareness (at the time) of [Ms. Laatz’s] creation of Blooming 23 Elegant, his basis for the statement he made to the Copyright Office, and his knowledge of the 24 truthfulness and accuracy of [those statements].” Dkt. No. 241 at 4-5. Zazzle points out that Mr. 25 Steinberg is the only person who made representations to the Copyright Office, and those 26 representations are the basis for its counterclaim. Id. at 5. With respect to Ms. Laatz’s concerns [27] 1 about the attorney-client privilege and work product protections, Zazzle argues that Mr. 2 Steinberg’s communications with the Copyright Office are not privileged or protected, and neither 3 are the facts that form the basis for his statements. Id. In addition, Zazzle challenges Ms. Laatz 4 reliance on LA Printex, arguing that the plaintiff’s motion to quash in that case was granted on the 5 ground that the deposition subpoena was untimely, and distinguishing the facts that formed the 6 basis for the court’s alternative holding. Id. 7 The Court concludes that the more rigorous Shelton rule does not apply here, where Zazzle 8 seeks to depose Mr. Steinberg, not about matters relating to his representation of Ms. Laatz in this 9 litigation, but about communications with the Copyright Office in connection with her copyright 10 registration that occurred more than one year before Ms. Laatz filed this action. While a 11 deposition of opposing counsel is by no means “routine,” and necessarily raises concerns about 12 adequately protecting attorney-client communications and attorney work product,4 those concerns 13 are “less pronounced when, as here, the subject matter of the deposition of opposing counsel is not 14 his conduct in the pending case but his percipient knowledge” of events preceding the litigation. 15 ATS Prods., 2015 WL 3561611 , at *6; see also In re Andre, 2019 WL 6699958 , at *3 (“[T]he only 16 reason Ricoh is in the position of seeking discovery of opposing counsel is that MASA chose to 17 employ as its counsel in the Pennsylvania action against Ricoh the same counsel who had 18 participated in the events that led to Kodak’s sale of patents, including the patents at issue, to 19 MASA—Mr. Andre and Kramer Levin.”). 20 In any event, Zazzle has explained why Mr. Steinberg’s deposition is necessary, and not 21 just relevant. He is the only person who made the allegedly inaccurate statements to the Copyright 22 Office, and nothing in the parties’ discovery dispute letter or supplemental submission suggests 23 that he was merely passing on verbatim statements from Ms. Laatz. Moreover, as Zazzle correctly 24 observes, Mr. Steinberg’s communications with the Copyright Office are not privileged, and 25 Zazzle’s questioning about those non-privileged communications need not implicate any privilege [27] 4 Such a deposition may implicate other concerns as well. See, e.g., California Rule of 1 or protection. 2 Thus, the Court will permit this deposition, but on the following conditions: First, Zazzle 3 may question Mr. Steinberg only about his communications with the Copyright Office as reflected 4 in Exhibits A-C to Zazzle’s counterclaim, including (1) his understanding of the communications 5 from the Copyright office, (2) the factual bases for the statements that he made in responding to 6 the Copyright Office’s communications, and (3) whether he believed the statements he made to 7 the Copyright Office were truthful and accurate at the time they were made. Zazzle may not 8 question Mr. Steinberg about his understanding or application of the law, or about the substance of 9 any communications he had with Ms. Laatz or with any other person with whom he had an 10 attorney-client relationship at the time. Second, the deposition will be limited to no more than 2 11 hours on the record. Third, the deposition shall be conducted at a mutually agreeable date and 12 time within 14 days of the date of this order, unless the parties agree to a later date; however, as 13 such deposition will occur after the August 8, 2024 fact discovery deadline, the parties must obtain 14 an extension of the fact discovery deadline for this purpose by application to Judge Freeman. See 15 Dkt. No. 222 at 2. 16 B. Ms. Larson 17 In this action, Ms. Laatz asserts state law claims for fraudulent misrepresentation, fraudulent 18 concealment, and promissory fraud. See Dkt. No. 82 (claims 1-3). She alleges that Zazzle 19 “misrepresented . . . that the Blooming Elegant License was to be used in accordance with the terms of 20 the Blooming Elegant License, including that it was for a single user named Mohamed Alkhatib”; that 21 Zazzle “knew that the Blooming Elegant License purchased by Alkhatib did not cover Zazzle’s 22 intended use of the Blooming Elegant Trio and Blooming Elegant Software”; and that Zazzle therefore 23 “knew that the representation that the Blooming Elegant License was for a single user was false.” Id. 24 ¶¶ 176-178 (fraudulent misrepresentation); see also id. ¶¶ 184-185 (fraudulent concealment), 191-192 25 (promissory fraud). Ms. Laatz contends that Ms. Larson was responsible for handling license 26 agreements for Zazzle at the relevant time. Dkt. No. 241 at 3 n.1. She argues that whether Ms. Larson 27 viewed the license terms for the disputed font is relevant to Ms. Laatz’s fraud claims because Ms. 1 negotiations suggest she knew the statements Zazzle made when purchasing the license were false. Id. 2 at 3-4. 3 Zazzle responds that Ms. Laatz has no need for Ms. Larson’s deposition, but seeks it only in 4 retaliation for Zazzle’s demand for a deposition of Mr. Steinberg. Id. at 5-6. Further, Zazzle points 5 out that Ms. Laatz was merely “copied on certain communications with Zazzle employees requesting 6 or providing legal advice.” Id. at 6. And, Zazzle argues, there is no justification for deposing Ms. 7 Larson simply because she was one of several employees who received an email containing a link to 8 the offering page for the disputed font on Creative Market’s website, which in turn had links to the 9 license terms for the disputed font, particularly when Ms. Laatz has already obtained deposition 10 testimony indicating that three non-lawyer Zazzle employees made the decision to purchase the 11 disputed font. Id. Finally, Zazzle argues that everything Ms. Laatz wishes to inquire about will 12 require Ms. Laatz to assert the attorney-client privilege. Id. at 6-7. 13 Ms. Larson is alleged to have made certain statements in “pre-lawsuit negotiations” about 14 Zazzle’s purchase of the disputed font. The Court assumes that these statements were made to Ms. 15 Laatz or her representatives before the complaint was filed and that these communications are 16 therefore not privileged. Moreover, the email on which she was copied, which has been provided 17 to the Court in the parties’ supplemental submission, dates to May 2017, several years before this 18 action was filed, and it is not “a communication with Zazzle employees requesting or providing 19 legal advice”; it was produced by Zazzle to Ms. Laatz during discovery. See Dkt. No. 244, Ex. 4. 20 Thus, as to these matters, Ms. Laatz need not satisfy the Shelton rule in order to take Ms. Larson’s 21 deposition.5 22 It is not entirely clear what matters Ms. Laatz wishes to inquire about during her proposed 23 deposition of Ms. Larson. However, to the extent Ms. Laatz suggests that Zazzle has “waived the 24 privilege” as to “Zazzle’s purpose, knowledge, and intent in purchasing” a license to the disputed 25 font, she has not made an adequate showing of any such waiver. See, e.g., Lamartina v. VMware, [27] 5 Zazzle does not contend that Ms. Larson is an “apex” deponent, and so Ms. Laatz need not 1 Inc., No. 20-cv-02182-EJD (VKD), 2024 WL 3049450 (N.D. Cal. June 17, 2024) (discussing 2 requirements for express and implied waiver). If as Ms. Laatz asserts, Ms. Larson had 3 responsibility for handling license agreements, including the license for the disputed font, and 4 negotiated with Ms. Laatz regarding disputes arising from the license at issue, there may well be 5 matters as to Ms. Larson may provide factual, non-privileged testimony. However, as Ms. Laatz 6 is in-house counsel to Zazzle, her deposition also raises concerns about adequately protecting 7 attorney-client communications. 8 Thus, the Court will permit this deposition, but on the following conditions: First, Ms. 9 Laatz may question Ms. Larson only about her personal knowledge of facts, if any, concerning the 10 terms of the license for the disputed font at the time the license was purchased, and may not 11 inquire about information Ms. Larson may have obtained by virtue of her communications with 12 Zazzle employees. Second, if Ms. Larson engaged in pre-lawsuit negotiations with Ms. Laatz or 13 her representatives regarding the disputed font, Ms. Laatz may question Ms. Larson about 14 statements she made in the negotiations and the factual bases for those statements, but may not 15 inquire about information Ms. Larson may have obtained by virtue of her communications with 16 Zazzle employees. Third, Ms. Laatz may not question Ms. Larson about her understanding or 17 application of the law or of the license terms, or about the substance of any communications she 18 had with any Zazzle employees about those matters. Fourth, the deposition will be limited to no 19 more than 2 hours on the record. Fifth, the deposition shall be conducted at a mutually agreeable 20 date and time within 14 days of the date of this order, unless the parties agree to a later date; 21 however, as such deposition will occur after the August 8, 2024 fact discovery deadline, the 22 parties must obtain an extension of the fact discovery deadline for this purpose by application to 23 Judge Freeman. See Dkt. No. 222 at 2. 24 IV. CONCLUSION 25 For the reasons explained above, the Court grants Zazzle’s request for an order requiring 26 Mr. Steinberg to testify in deposition, with limitations, and also grants Ms. Laatz’s request for an 27 /// 1 order requiring Ms. Larson to testify in deposition, with limitations. 2 IT IS SO ORDERED. 3 Dated: August 7, 2024 [4] Virginia K. DeMarchi 6 United States Magistrate Judge [12] © [16] = 17 Z 18