Buck G. Woodall v. The Walt Disney Company

Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 1 of 14 Page ID #:5407 [7] 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA [10] 11 BUCK G. WOODALL, ) NO. CV 20-3772-CBM(Ex) ) 12 Plaintiff, ) ) 13 v. ) ORDER GRANTING DEFENDANTS’ ) 14 THE WALT DISNEY COMPANY, ) MOTION FOR PROTECTIVE ORDER et al., ) 15 ) Defendants. ) 16 ______________________________) [17] 18 The Court has read and considered all papers filed in support of 19 and in opposition to “Defendants’ Motion for Protective Order, filed 20 March 25, 2022 (“the Motion”). The Court has taken the Motion under 21 submission without oral argument. See Minute Order, filed April 8, 22 2022. [23] 24 The parties have agreed on the terms of a protective order, with 25 the exception of two disputed provisions sought by Defendants and 26 opposed by Plaintiff: (1) a provision precluding Mitchell Stein 27 (“Stein”) from having access to any documents Defendants designate as 28 “Highly Confidential - Attorneys’ Eyes Only”; and (2) a provision that Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 2 of 14 Page ID #:5408 1 the designating party may designate as confidential an entire document 2 when the document contains both confidential information and 3 information otherwise available to the public or to the receiving 4 party. [5] 6 Where there exists “good cause,” Rule 26(c) of the Federal Rules 7 of Civil Procedure authorizes the Court to protect parties from “undue 8 burden or expense” in discovery by ordering “that a trade secret or 9 other confidential research, development, or commercial information 10 not be disclosed or be disclosed only in a designated way.” See Brown 11 Bag Software v. Symantec Corp., 960 F.2d 1465 , 1469–70 (9th Cir.), 12 cert. denied, 506 U.S. 869 (1992); see also Fed. R. Civ. P. 26(c). [13] 14 1. Preclusion of Stein from Having Access to Documents 15 Defendants Designate as “Highly Confidential - Attorneys’ 16 Eyes Only” [17] 18 A privilege log Plaintiff served in February of 2022 indicates 19 that Plaintiff has withheld, under claim of attorney-client privilege, 20 an email from Stein dated December 13, 2021 (see “Declaration of Peter 21 Shimamoto in Support of Defendants’ Motion for a Protective Order” 22 (“Shimamoto Dec.”), Ex. R). The privilege log also indicates that 23 Plaintiff’s brother and two of Plaintiff’s attorneys saw or received 24 this email (id.). [25] 26 Stein’s role in this litigation is somewhat unclear. Plaintiff 27 has offered differing characterizations of Stein: (1) “a member of 28 Plaintiff’s outside counsel litigation team” (see Shimamoto Dec., Ex. [2] Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 3 of 14 Page ID #:5409 1 O); (2) an individual “akin” to a paralegal or clerical staff of 2 counsel of record acting under attorney supervision (id.); (3) a 3 “paralegal and research assistant who is employed and being supervised 4 by Plaintiff’s counsel of record” on a “pro bono” basis (“Plaintiff’s 5 Supplemental Memorandum, etc.”, p. 3); and (4) a “Consultant to 6 Plaintiff’s Counsel” (see Shimamoto Dec., Ex. R). Plaintiff does not 7 identify the particular firm which may employ Stein, and Plaintiff 8 does not identify the particular person(s) for whom Stein provides 9 services. [10] 11 It is undisputed that Stein was a California attorney and that 12 Stein is currently suspended from practicing law in this State. It is 13 also undisputed that, in 2013, Stein was convicted of multiple 14 felonies involving fraud, for which Stein served a lengthy term in 15 federal prison. [16] 17 The Court grants Defendants’ unopposed Request for Judicial 18 Notice of the following documents:1 [19] 20 1. An “Order of Involuntary Inactive Enrollment,” filed 21 December 29, 2011, in the California State Bar Court Hearing 22 Department in In re Mitchell J. Stein, case number 11-TR-18758-RAH 23 /// 24 /// 25 /// [26] 27 1 See Mir v. Little Company of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988) (court may take judicial notice of court [28] records). [3] Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 4 of 14 Page ID #:5410 1 (Shimamoto Dec., Ex. S);2 [2] 3 2. A “Notice of Disciplinary Charges” filed in the State Bar 4 Court by the State Bar of California Office of the Chief Trial Counsel 5 on December 14, 2012, charging Stein with eleven counts of misconduct 6 in connection with Stein’s representation of members of “mass joinder” 7 lawsuits filed against mortgagors relating to alleged mortgage 8 defaults, foreclosures and/or loan modifications (Shimamoto Dec., Ex. 9 T). Stein’s alleged misconduct included failure to render promised 10 services, failure to communicate with clients, failure to refund 11 unearned fees, failure to render accounts of client funds and 12 conversion of client funds (id.). The “Notice of Disciplinary 13 Charges” further alleged that, after the State Bar had suspended Stein 14 from the practice of law, Stein had employed two licensed attorneys as 15 “straw men” for the purpose of enabling Stein to continue to practice 16 law sub rosa (id.). The “Notice of Disciplinary Charges” further 17 alleged that, on or about August 15, 2011, the Superior Court assumed 18 jurisdiction over Stein’s law practice, and that, on December 29, 19 2011, the State Bar ordered Stein involuntarily enrolled as an 20 inactive member of the State Bar (id.). [21] 22 3. A “Transmittal of Records of Conviction of Attorney, etc.,” 23 filed August 14, 2013, in the Office of the California State Bar 24 Court, indicating that, on May 20, 2013, Stein was convicted of crimes [25] 26 2 Although the copy of this document submitted by Defendants and the copy of the same document on the State Bar’s 27 website do not bear a signature or a signature date, the State Bar’s website confirms that Stein was deemed not eligible to [28] practice law as of January 1, 2012. [4] Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 5 of 14 Page ID #:5411 1 of moral turpitude in United States v. Stein, United States District 2 Court for the Southern District of Florida case number 11-CR-80205 3 (Shimamoto Dec., Ex. U); and [4] 5 4. An Order of the State Bar of California Review Department, 6 dated September 8, 2013, ordering Stein suspended from the practice of 7 law effective October 1, 2013, pursuant to California Business and 8 Professions Code section 6102, in light of Stein’s conviction and 9 “pending final disposition of this proceeding” (Shimamoto Dec., Ex. 10 V).3 [11] 12 The Court also has reviewed federal and state court dockets, 13 which show the following:4 14 /// 15 /// [16] 17 3 Under California Business and Professions Code section 6102(c), after a judgment of conviction has become final, “the 18 Supreme Court shall summarily disbar the attorney if the offense is a felony under the laws of California, the United States, or [19] any state or territory thereof, and either: (1) an element of the 20 offense is the specific intent to deceive, defraud, steal, or make or suborn a false statement, or involved moral turpitude, or 21 (2) the facts and circumstances of the offense involved moral turpitude.” Even so, the California Supreme Court apparently has 22 yet to issue a disbarment order against Stein. 23 4 The Court takes judicial notice of the dockets and documents described below. See Mir v. Little Company of Mary [24] Hosp., 844 F.2d at 649 ; see also Fed. R. Evid. 201(c)(1) (court 25 “may take judicial notice on its own”). The dockets and imaged documents in the federal actions are available on the PACER 26 database at www.pacer.gov. The dockets in the California state court actions are available on the California courts’ website at 27 www.courts.ca.gov. Documents concerning Stein on the website of the State Bar of California may be found at [28] https://apps.calbar.ca.gov. [5] Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 6 of 14 Page ID #:5412 1 1. United States v. Stein, United States District Court for the 2 Southern District of Florida case number 9:11-cr-80205-KAM. An 3 Indictment filed on December 13, 2011, charged Stein with multiple 4 offenses arising out of Stein’s involvement with Heart Tronics, Inc., 5 formerly doing business as Sigalife, Inc. and Recom Managed Systems, 6 LLC, a company allegedly involved in the sale of heart monitoring 7 devices. The Indictment charged Stein with conspiracy to commit wire 8 and mail fraud, three counts of mail fraud, three counts of wire 9 fraud, three counts of securities fraud, three counts of money 10 laundering and one count of conspiracy to obstruct justice, the last 11 count being based on allegations that Stein testified falsely before 12 the SEC on multiple occasions. The Indictment alleged that Stein and 13 others perpetrated a scheme to defraud Sigalife investors by, among 14 other things: (1) artificially inflating the price and demand for 15 Sigalife stock; (2) concealing defendants’ ownership and trading of 16 Sigalife stock; (3) misappropriating Sigalife’s assets; and 17 (4) testifying falsely to the SEC to conceal their conduct. The 18 Indictment alleged, among other things, that Stein and his 19 coconspirators: (a) created false purchase orders, false and 20 misleading press releases and a false and misleading SEC filing; 21 (b) concealed their ownership and trading of Sigalife stock by false 22 and misleading practices; and (c) misappropriated Sigalife’s assets by 23 orchestrating sham agreements through which Sigalife paid cash and 24 stock to third parties. [25] 26 Although Stein was represented by several attorneys before and 27 after trial, Stein represented himself during trial (with the 28 assistance of standby counsel). On May 20, 2013, a jury found Stein [6] Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 7 of 14 Page ID #:5413 1 guilty on all counts. Thereafter, Stein filed numerous pro se 2 posttrial motions, including several motions for a new trial. In one 3 order, the court denied Stein’s motion for a new trial, two amended 4 motions for a new trial and a “second” motion for a new trial, finding 5 the motions “not only to be baseless, but also offensive.” See “Order 6 Denying Posttrial Motions” filed June 9, 2014 (Dkt. No. 340). On 7 December 8, 2014, the court sentenced Stein to a prison term of 204 8 months plus two years’ supervised release. In an “Amended Judgment” 9 filed April 8, 2015, the court imposed restitution in the sum of 10 $13,186,025.85. [11] 12 The United States Court of Appeals for the Eleventh Circuit 13 affirmed the conviction, but vacated Stein’s sentence and remanded for 14 resentencing. See United States v. Stein, 846 F.3d 1135 (11th Cir. 15 2017), cert. denied, 138 S. Ct. 556 (2017). On remand, the district 16 court resentenced Stein to 150 months’ imprisonment plus three years’ 17 supervised release, and imposed restitution in the sum of $1,029,570. 18 See United States v. Stein, 964 F.3d 1313 (11th Cir.), cert. denied, [19] 141 S. Ct. 954 (2020). The Eleventh Circuit affirmed the judgment. 20 See id. [21] 22 2. Securities and Exchange Commission v. Heart Tronics, Inc., 23 United States District Court for the Central District of California, 24 case number SA CV 11-1962-SVW(KESx), filed on December 20, 2011 (a 25 week after the filing of the Florida criminal case). In this civil 26 enforcement action against various defendants, including Stein and his 27 wife, the SEC alleged that: (1) Stein was Heart Tronics’ purported 28 outside counsel, de facto controlling officer and husband of its [7] Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 8 of 14 Page ID #:5414 1 majority shareholder; and (2) Stein engaged in a fraudulent scheme to 2 inflate the price of Heart Tronics stock in order to profit from 3 selling its securities to investors, by creating false purchase orders 4 with fictitious companies as the basis for SEC filings and for press 5 releases touting sales of Heart Tronics’ heart monitoring system. See 6 Securities and Exchange Comm’n v. Stein, 906 F.3d 823, 826 (9th Cir. 7 2018), cert. denied, 140 S. Ct. 245 (2019). Following Stein’s 8 conviction in the Southern District of Florida, the district court 9 granted the SEC’s motion for summary judgment on a number of the 10 securities fraud claims on the ground that the doctrine of collateral 11 estoppel precluded Stein from contesting the SEC’s allegations in the 12 civil case. See id. at 828. The Ninth Circuit affirmed. Id. at 934. [13] 14 3. In the Matter of Mitchell J. Stein, State Bar Court of 15 California Hearing Department case number 1-TR-18758-RAH. As 16 indicated above, the State Bar’s website contains an “Order of 17 Involuntary Inactive Enrollment” regarding Stein, filed December 29, 18 2011. The Order references an October 26, 2011 order of the Los 19 Angeles County Superior Court assuming jurisdiction over Stein’s law 20 practice. The State Bar Court ordered Stein involuntarily enrolled as 21 an inactive member of the State Bar. The copy of the Order contained 22 on the State Bar’s website is not dated or signed. However, the 23 website confirms that Stein was deemed “not eligible to practice law” 24 as of January 1, 2012. [25] 26 4. In the Matter of Attorneys Suspended or Disbarred by the 27 State Bar of California, etc., United States District Court for the 28 Southern District of California case number 3:12-mc-00230. On [8] Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 9 of 14 Page ID #:5415 1 April 4, 2012, the court issued an order disbarring Stein from that 2 court. [3] 4 5. In re Mitchell J. Stein., United States District Court for 5 the Central District of California case number CV 12-mc-00132-ABC. 6 On May 7, 2012, the Court issued an order disbarring Stein from this 7 Court. [8] 9 6. MGM Grand Hotel LLC v. Stein, United States District Court 10 for the District of Nevada case number 2:07-cv-01349-JCM-LRL. In a 11 complaint filed in state court on March 29, 2007, the plaintiff 12 alleged that Stein had delivered to it six negotiable credit 13 instruments in the total sum of $600,000 which were returned 14 dishonored and unpaid. Stein removed the action to federal court 15 where his attorney subsequently obtained a court order permitting the 16 attorney to withdraw. Stein filed no opposition to the plaintiff’s 17 motion for summary judgment, which the court granted. An Amended 18 Judgment was entered on December 19, 2008, awarding the plaintiff 19 damages in the sum of $570,000.00, plus attorneys’ fees and costs.5 [20] 21 7. State of California v. Stein, Los Angeles County Superior 22 Court case number LS021817. On August 15, 2011, the State Bar filed a 23 verified petition and application for assumption of jurisdiction over 24 defendant’s law practice under Business and Professions Code section 25 6190 et seq. See People v. Stein, 2018 WL 2214715 , at *4 (Cal. App. [26] 5 The plaintiff subsequently filed a certification of the 27 judgment in this Court, in MGM Grand Hotel LLC v. Stein, United States District Court for the Central District of California case [28] number SACV 09-mc-00001-UA. [9] Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 10 of 14 Page ID #:5416 1 May 15, 2018), cert. denied, 139 S. Ct. 828 (2019). On October 13, 2 2011, the trial court issued permanent orders authorizing the State 3 Bar to assume jurisdiction over defendant’s law practice. Id. [4] 5 8. People v. Stein, Los Angeles County Superior Court case 6 number LC094571. The State of California filed charges against Stein 7 and others on August 15, 2011, the same day the State Bar filed suit 8 seeking to assume jurisdiction over Stein’s practice. The State 9 alleged that the defendants had engaged in unfair business and 10 advertising practices in connection with the solicitation of 11 distressed homeowners to participate in “mass joinder” lawsuits 12 against mortgage lenders. See People v. Stein, 2018 WL 2214715 . All 13 of the defendants settled except Stein. Id. Following the criminal 14 prosecution and civil enforcement actions against Stein, and after 15 obtaining provisional relief, the State indicated a willingness to 16 dismiss the action against Stein, observing that Stein allegedly was 17 “judgment-proof.” Id. at *3. However, the State did obtain summary 18 judgment against Stein on a claim for attorneys’ fees, which the Court 19 of Appeal affirmed. Id. [20] 21 9. Working for Help v. Cain, United States District Court for 22 the Central District of California case number CV 11-6677-SVW(SSx). 23 Stein and another attorney, Erickson Davis, represented the 24 plaintiffs, purported charitable enterprises, in this putative class 25 action filed on August 15, 2011. The complaint alleged civil rights 26 violations against: the SEC Chairman; SEC employees; an officer of 27 “Recom Managed Systems” Lee Ehrlichman; Recom’s counsel; and unknown 28 postal inspectors and FBI agents. The complaint, among other things, [10] Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 11 of 14 Page ID #:5417 1 alleged that the defendants had committed the murder or manslaughter 2 of one million Americans, and further alleged that the plaintiffs had 3 suffered damages in excess of a trillion dollars. On December 7, 2012 4 (after the State Bar had assumed jurisdiction over Stein’s practice 5 and after the State Bar had deemed Stein ineligible to practice law), 6 Stein and his co-counsel filed a first amended complaint bearing 7 Stein’s signature and identifying Stein as counsel. Thereafter, the 8 SEC Defendants moved to dismiss and also to disqualify counsel, 9 arguing that Stein was not authorized to practice law in California 10 and was the defendant in an SEC enforcement action and a criminal 11 prosecution in Florida, both of which concerned Recom. On 12 February 28, 2012, the plaintiffs filed a notice of voluntary 13 dismissal. [14] 15 The website of the Federal Bureau of Prisons (“BOP”) shows that 16 Stein was released on January 13, 2022.6 Thus, at the time Stein 17 purportedly authored the December 13, 2021 email identified on 18 Plaintiff’s privilege log, Stein evidently was still in BOP custody. [19] 20 Presently, Stein is unconstrained by the rules of professional 21 responsibility governing the conduct of attorneys in this Court. See 22 Cal. State Bar Rules of Professional Conduct, Rule 1.0 (stating that 23 the “rules together with any standards adopted by the Board of 24 Trustees pursuant to these rules shall be binding upon all lawyers”); [25] 26 6 The Court takes judicial notice of the contents of the “Find an Inmate” section of the BOP’s website, available at 27 www.bop.gov. See United States v. Basher, 629 F.3d 1161 , 1165 & n.2 (9th Cir. 2011) (taking judicial notice of information from [28] BOP inmate locator). [11] Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 12 of 14 Page ID #:5418 1 Local Rule 83-3.1.2 (adopting, for “each attorney,” “the standards of 2 professional conduct required of members of the State Bar of 3 California and contained in the State Bar Act, the Rules of 4 Professional Conduct of the State Bar of California, and the decisions 5 of any court applicable thereto”); Allergan, Inc. v. Teva Pharms. USA, [6] 2017 WL 772486 , at *4 (E.D. Tex. Feb. 28, 2017) (denying motion to 7 amend protective order to permit non-attorney employees of party to 8 access documents designated as confidential, observing that the non9 parties were not officers of the court, were not bound by the same 10 Code of Professional Responsibility, and were not subject to the same 11 sanctions as licensed attorneys). [12] 13 The Court finds that Stein’s history reflects such a level of 14 untrustworthiness and moral turpitude as to warrant the preclusion of 15 Stein from having access to documents designated by Defendants as 16 “Highly Confidential - Attorneys’ Eyes Only” in this case.7 Stein’s 17 access to such documents, which may well include valuable intellectual 18 property, would pose an unreasonable risk of disclosure of the 19 documents to others, including Defendants’ competitors. Cf. Smith v. 20 Shartle, 2020 WL 6781608 , at *1 (D. Ariz. Nov. 18, 2020) (in an action 21 brought by the spouse and the estate of a BOP inmate, granting motion 22 for “Attorneys’ Eyes Only” provision in protective order prohibiting 23 the spouse from having access to discovery information where the 24 spouse previously had violated a court order). There is no indication 25 on this record that a preclusion of Stein’s access to documents [26] 7 The evidence of Stein’s untrustworthiness dates back 27 many years. However, there is no evidence before the Court that Stein became more trustworthy while in prison or after his recent [28] release therefrom. [12] Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 13 of 14 Page ID #:5419 1 designated by Defendants as “Highly Confidential - Attorneys’ Eyes 2 Only” would impair Plaintiff’s prosecution of this case in any 3 appreciable respect. Plaintiff is represented by multiple law firms 4 which presumably can call upon the services of multiple competent 5 paralegals, clerks, research assistants and consultants other than 6 Stein. In sum, good cause exists for a protective order precluding 7 Stein from having access to documents designated by Defendants as 8 “Highly Confidential - Attorneys’ Eyes Only.”8 [9] 10 2. Provision That the Designating Party May Designate an Entire 11 Document as Confidential When the Document Contains Both 12 Confidential Information and Information Otherwise Available 13 to the Public or to the Receiving Party [14] 15 Plaintiff already has served thousands of document requests in 16 this case (see Shimamoto Dec., Ex. C; see also “Plaintiff’s Motion to 17 Compel Production of Documents” filed March 12, 2022, Joint 18 Stipulation, p. 2). The Court declines to require Defendants 19 initially to separate out from their presumably thousands or hundreds 20 of thousands of confidential, responsive documents those pages or 21 portions of pages which may contain non-confidential information. See 22 Fed. R. Civ. P. 26(b)(1) (discovery must be proportional to the needs 23 of the case); F.R.C.P. 26(b)(2(C) (authorizing protective order 24 limiting discovery which is “outside the scope permitted by Rule [25] 26 8 This Court encourages the employment and the rehabilitation of ex-felons, and Plaintiff remains at liberty to 27 trust Stein with Plaintiff’s most confidential information. However, for the reasons discussed herein, Plaintiff should not [28] be at liberty to force Defendants to trust Stein with theirs. [13] Case 2:20-cv-03772-CBM-E Document 145 Filed 04/13/22 Page 14 of 14 Page ID #:5420 1 26(b)(1))”; Procaps S.A. v. Patheon Inc., 2013 WL 4773433 , at *6 (S.D. 2 Fla. Sept. 4, 2013) (“Discovery is a means to an end: learning 3 relevant facts, documents, and witnesses so that a party is not 4 ambushed by surprise information. It is not meant to be what it often 5 has become: an expensive, time-consuming litigation within the 6 litigation. Courts have recognized this in the confidentiality 7 context by noting that the practical burdens (i.e., inordinate time 8 and expense) associated with a page-by-page or section-by-section 9 designation protocol militate against such a default rule, unless the 10 parties otherwise agree.”) (citations omitted); S2 Automation LLC v. 11 Micron Tech., Inc., 283 F.R.D. 671, 686 (D.N.M. 2012) (requiring a 12 document-by-document review “could increase the cost of production 13 dramatically and make production more time consuming. Sometimes it is 14 better and more simple just to designate a document as confidential to 15 facilitate speedy production of discovery.”). Initial designations of 16 confidential documents may proceed on a document-by-document basis. [17] 18 ORDER [19] 20 For the foregoing reasons, the Motion is granted. 21 Contemporaneously herewith, the Court will issue the Protective Order 22 proposed by the Motion. [23] 24 DATED: April 13, 2022. [25] 26 /S/ CHARLES F. EICK 27 UNITED STATES MAGISTRATE JUDGE