motion to quash trial subpoena to khosla

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Jeffrey E. Essner ( State Bar No. 121438) Joan R. Gallo ( State Bar No. 65875) Dori L. Yob (State Bar No. 227364) HOPKINS & CARLEYA Law Corporation

The Letitia Building70 S First Street

San Jose, CA 95113- 2406

mailing address: P. O. Box 1469San Jose, CA 95109- 1469Telephone: ( 408) 286- 9800Facsimile: ( 408) 998-4790

Attorneys for Defendants and Cross -ComplainantsMartins Beach 1, LLC and Martins Beach 2, LLC

FILh I'DSAN MATEO COUNTY

AFIR\ 2 9 201

Clerk of

By

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN MATEO

SURFRIDER FOUNDATION, a Non- CASE NO. CIV520336Profit Organization,

MARTINS BEACH 1, LLC AND MARTINSPlaintiff, BEACH 2, LLC' S MEMORANDUM OF

V.

MARTINS BEACH 1, LLC, a CaliforniaCorporation; MARTINS BEACH 2, LLC, a California Corporation; and DOES lthrough 20, inclusive,

Defendants.

MARTINS BEA

20 BEACH 2, LLC,

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1; LLC;

Cross -Complainants,

SURFRIDER FOUNDATION, a Non - Profit Organization; and ROES 1 through20, inclusive,

Cross -Defendants.

733\ 1111798.2

POINTS AND AUTHORITIES INSUPPORT OF MOTION TO QUASHCIVIL SUBPOENA DIRECTED TOVINOD KHOSLA

BY FAXDate: May 2- 1, 2014Time: 9:00 a. r. a.m. Dept.: Law & Motion

Trial Date: May 5, 2014

MARTINS BEACH 1, LLC AND MARTINS BEACH 2, LLC' S MEMORANDUM OF POINTS ANDAUTHORITIES IN SUPPORT OF MOTION TO QUASH CIVIL SUBPOENA DIRECTED TO VINOD KHOSLA

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TABLE OF CONTENTS

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I. INTRODUCTION.............................................................................................................. 1

II. STATEMENT OF FACTS................................................................................................. 3

A. The Relevant Pleadings........................................................................................... 3

B. Discovery Propounded By Surfrider....................................................................... 3

C. The Notice of Deposition and Subpoenas to Vinod Khosla................................... 4

III. LEGAL ARGUMENT........................................................................................................ 5

A. Code of Civil Procedure Section 1987. 1 Provides the Court With BroadPowers to Issue An Order Quashing the Subpoena to Protect Mr. KhoslaFrom the " Unreasonable or Oppressive Demands, Including UnreasonableViolations of the Right of Privacy" Associated with Surfrider' s Attempt toCompel Mr. Khosla to Testify at Trial and Produce Documents ............................ 5

B. There is Good Cause for the Issuance of an Order Quashing the SubpoenaBecause the Subpoena Does Not Sufficiently Explain the Materiality of theMatters and Things Sought or Sufficiently Describe the Documents ..................... 5

C. Mr. Khosla' s Lack of Unique Personal Knowledge of RelevantInformation, Combined With The Fact that Surfrider Has Already ObtainedAll Information It Seeks Through Less Intrusive Means, Constitute GoodCause for an Order Quashing the Subpoena........................................................... 7

1. The LLCs are Manager Managed With All Management andOversight Responsibility for Their Operations Vested In Mr. SteveBaugher....................................................................................................... 7

2. Surfrider Has Already Obtained All Information It Seeks ThroughLess Intrusive Means and Has an Improper Motive for Seeking theDepositionof Mr. Khosla.......................................................................... 10

3. There is Good Cause for An Oder Quashing the Subpoena BecauseSurfrider Seeks Mr. Khosla' s Testimony For An Improper Motive......... 11

D. The Subpoena Violates Mr. Khosla' s Constitutional Privacy Rights bySeeking Private Financial Records Without Good Cause ..................................... 11

E. Sanctions Should Be Awarded Against Surfrider and Its Attorneys .................... 12

IV. CONCLUSION.................................................................................................................13

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BNYY NY

TABLE OF AUTHORITIES

Page

Cases

Britt v. Superior Court1978) 20 Cal.3d 844................................................................................................................ 11

Cobb v. Superior Court1979) 99 Cal.App.3d 543.......................................................................................................... 12

Davis v. Superior Court

1992) 7 Cal.App.4th 1008......................................................................................................... 12

Department ofHealth Services v. Sup. Ct. - 1980) 104 Cal.App.3d 80........................................................................................................... 5

Fortunato v. Superior Court2003) 114 Cal.AppAth 475...................................................................................................... 12

Hofnan Corp. v. Superior Court1985) 172 Cal. App.3d 357........................................................................................................ 11

Liberty Mutual Ins. Co. v. Superior Court1992) 10 Cal.AppAth 1282..................................................................................................... 10

Statutes

Code of Civil Procedure section 1985.......................................................:..................................... 5

Code of Civil Procedure section 1985( b)......................................................................................... 6

Code of Civil Procedure section 1987. 1.................................................................................... 5, 10

Code of Civil Procedure section 1987. 1 ( a).................................................................................... 11

Code ofCivil Procedure section 1987. 1( b)...................................................................................... 5

Code of Civil Procedure section 1987.2.....................................................:.................................. 12

Constitutional Provisions

California Constitution, Article 1, Section 1.................................................................................. 11

Other Authorities

Cal. Prac. Guide Civ. Pro. Before Trial Ch. 8C- 5, ¶ 8: 303 ( The Rutter Group 2010) .................... 12

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I. INTRODUCTION

Defendants Martins Beach 1, LLC and Martins Beach 2, LLC (" Martins") bring this

motion to quash the trial subpoena (" Subpoena") to a non-party to this action, Vinod Khosla.

This is the second time, Martins has filed this motion. Plaintiff Surfrider Foundation

Surfrider") previously sought to take the deposition of Mr. Khosla and the Court granted

Martins motion to quash on the grounds that the deposition subpoena and notice were not

properly served. The instant motion to quash should also be granted on the grounds that there is

no basis in law or fact to call Mr. Khosla to testify at trial.

As more fully explained below, the affidavit in support of the Subpoena does not describe

the materiality of the matters on which Surfrider seeks the testimony ofMr. Khosla and does not

describe the materials sought with sufficient particularity. The affidavit includes only a

conclusory statement that good cause exists because Mr. Khosla and his wife are members of the

trust that is a member of the LLCs and that therefore, Mr. Khosla supposedly has knowledge

germane to the issues in dispute. There is no explanation of what knowledge Mr. Khosla may

have, which issues this knowledge relates to, or any explanation of the need for Mr. Khosla' s

testimony whatsoever. This is because Mr. Khosla simply does not have any unique knowledge

relevant to the issues in this litigation. Moreover, the records sought are not described with

sufficient specificity or are duplicative of records that have already been produced by the LLCs

during discovery in this matter.

The LLCs are " manager managed" limited liability companies with one asset, certain real

property located at 22325 Cabrillo Highway, and commonly known as Martins Beach ( the

Property"). Plaintiff brought this lawsuit against the LLCs under the " private attorney general"

provisions of the Coastal Act in an effort to force the LLCs to apply for a Coastal DevelopmentPermit (" CDP") to control access to its private property, Martins Beach, even though there is no

public right of access to the Property. Plaintiffasserted three separate causes of action in its

complaint: ( 1) Declaratory Relief Under the Coastal Act; (2) Injunctive Relief Under the Coastal

Act; and ( 3) Civil Fines and Penalties Under the Coastal Act. The central question in the case is

whether the alleged activities undertaken by the LLCs on its private property constitute733\ 1111798.2 - 1 -


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development" under the definition of that term in the Coastal Act, and therefore required a CDP.

The Operating Agreements for the LLCs, which were produced during discovery,

demonstrate that the LLCs are " manager managed" meaning that all management and operational

decision making authority is fully vested in a professional non-member manager, Mr. Steve

Baugher. Mr. Khosla is not an officer, director, managing agent, or even an employee of the

LLCs. Mr. Baugher testified at his deposition that he made all decisions regarding public accessto the beach, including the activities Surfrider alleges constitute " development", and had full

responsibility and oversight over the LLCs' property. Mr. Baugher further testified that Mr.

Khosla and his wife have no involvement in the management of the Property. Mr. Baugher

further testified that he has never discussed or received written instructions from Mr. Khosla

regarding allowing or disallowing public access to cross the Property, outside the presence of

counsel. Mr. Khosla simply has no information that is relevant to the claims in this litigation.

This case presents a legal issue. That is, whether the activities alleged in the complaint

constitute " development" under the Coastal Act. Nonetheless, Surfrider has deposed the Person

Most Knowledgeable of the LLCs, Mr. Baugher in both his individual capacity and his capacity

as the PMK of the LLCs. Surfrider has also deposed on- site property manager, Mr. Jim Deeney.

These are the individuals with any potentially unique personal knowledge of any facts related to

the issues pled in the Complaint. Surfrider has also propounded two sets of special

interrogatories, two sets of form interrogatories, two sets of requests for admission, and two sets

of requests for production of documents on the LLCs.

In light of the exhaustive discovery efforts to date, and the absence of any relevant

information in Mr. Khosla' s possession, and, most importantly, the absence of a persuasive reason

to compel Mr. Khosla to testify, the Surfrider' s efforts to force Mr. Khosla to testify at trial can

only be explained by an improper motive to harass, annoy, or invade the privacy of Mr. Khosla,

to create some perceived leverage, or to generate publicity.

The LLC' s respectfully requested that the Court grant its motion to quash and award

sanctions against Surfrider and its attorneys in the amount of $2,280.

733\ 1111798.2 - 2- MARTINS

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II. STATEMENT OF FACTS

A. The Relevant Pleadings

Plaintiff, the Surfrider Foundation, brought this lawsuit under the " private attorney

general" provisions of the Coastal Act in an effort to force a private property owner to apply for aCoastal Development Permit (" CDP") to control access to its private property, Martins Beach,

even though there is no public right of access to the Property.' More specifically, Plaintiff asserts

that the LLCs have engaged in " development" by: ( 1) maintaining a fence, gate, and no

trespassing signs that have existed on the Property since long before the Property was purchased

by the LLCs; (2) repainting a billboard that advertised the business of a predecessor -in -interest;

and ( 3) having security on the Property to monitor for trespassers to avoid injury and liability tothe owner. ( RJN, Exh. A.) Plaintiff claims these activities resulted in a " change in intensity" of

use of the Property and therefore constitute " development" as that term is defined under the

Coastal Act. ( Id.) Based on the undisputed facts, these activities do not constitute " development"

under the Coastal Act, or under any sense of the word.

On October 29, 2012, an " unincorporated association" referred to as " Friends of Martins

Beach" brought the issue ofpublic access to the Property squarely before this Court in a separate

lawsuit against Martins Beach 1, LLC and Martins Beach 2, LLC asserting various theories as to

why the LLCs are required to allow public access to the beach via the private road, and' seeking toestablish the " general public' s" right to use certain portions of the Property for recreation.

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October 24, 2013, the Court granted Summary Judgment in favor of the LLCs, finding there is

not, nor has there ever been, a legal " right" for any member of the public to be on the Property ingeneral, or use Martins Beach Road to access the beach.

B. Discovery Propounded By Surfrider

Surfrider has propounded extensive discovery in this case, including two sets of special

interrogatories, two sets of form interrogatories, two sets of requests for admission, and two sets

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Request for Judicial Notice in Support of Defendants' Motion to Quash Subpoena to VinodKhosla (hereinafter " RJN") at Exh. A. 2

Declaration of Dori Yob in Support of Defendant Martins Beach 1, LLC and Martins Beach 2, LLC' s Motion to Quash Subpoena (" Yob Dec."), 12. 733\ 1111798.2 - 3- MARTINS

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of requests for production of documents. ( Yob Dec. 13.) After meet and confer efforts, Surfrider

filed a motion to compel production of, inter alfa, purchase and title documents and financial

records. That motion was denied to the extent it sought documents unrelated to " public access

and any alleged restrictions on public access to the beach." ( See RJN, Exh. B.) Surfrider has also

taken the depositions of. (1) the PMK for Martins Beach 1 and Martins Beach 2, LLC; (2) Steven

Baugher, personally; ( 3) on-site property manager, Jim Deeney; and (4) an expert disclosed in the

Friends of Martins Beach case, Bill Lott. ( Yob Dec. 14.) The discovery conducted by Surfrider

has not lead to any information demonstrating that Mr. Khosla possesses knowledge of any factrelevant to the claims in this litigation.

C. The Notice of Deposition and Subpoenas to Vinod Khosla

On February 19, 2014, Surfrider served the LLCs with a notice to take the deposition of

Mr. Vinod Khosla. ( Yob Dec., ¶ 5.) During meet and confer efforts, Surfrider refused to

withdraw the notice and on February 28th purported to serve a subpoena on the LLCs' attorneys.

Mr. Khosla was never personally served with the notice or subpoena and there was no agreement

among counsel to accept service on behalf of Mr. Khosla. ( Id. at ¶6.) As a result of Surfrider' s

refusal to withdraw the notice and subpoena seeking Mr. Khosla' s deposition, the LLC' s filed a

motion to quash on March 7, 2014. ( 1d.) The Court granted the motion to quash at the April 2,

2014 hearing on the motion, with a written order following on April 17, 2014. ( Id.) The Court

granted the motion on the grounds that the subpoena was improperly served. ( Id.)

On April 7, 2014, a few days after Martins Motion to Quash the Deposition Subpoena was

granted, Surfrider served the Subpoena on Mr. Vinod Khosla seeking personal appearance andproduction of documents at trial. ( Yob Dec., Exh. A.) The affidavit to the Subpoena indicates

that Surfrider seeks the following three categories of documents from Mr. Khosla: ( 1) " The

purchase and title documents" for the LLCs' property; ( 2) " The Operating Agreement for [the

LLCs']'; and (3) " Financial records reflecting payments from KFT Trust UTA dated l 1/ 1/ 1986 tothe LLCs]". ( Id.) The sole explanation provided in the affidavit regarding the materiality of Mr.

Khosla' s testimony and/ or the documents sought is the following:

Good cause exists for the production of the documents because the witness and733\ 1111798. 2 - 4 -

MAK17N5 BEACH 1, LLC AND MARTINS BEACH 2, LLC' S MEMORANDUM OF POINTS ANDAUTHORITIES IN SUPPORT OF MOTION TO QUASH CIVIL SUBPOENA DIRECTED TO VINOD KHOSLA

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his wife are the sole members of the KFT Trust UTA dated 11/ 17/ 1986 which islisted as the sole member of each Defendant. Furthermore, Defendants' manager, Mr. Baugher, and the property manager, Mr. Deeney have both identified thewitness as having been involved in the purchase of the property and havingunique knowledge about circumstances germane to the issues in dispute.

Id.) There is no explanation regarding what relevant " knowledge" Mr. Khosla may have. There

is also no mention of any specific " circumstances" or " issues".

III. LEGAL ARGUMENT

A. Code of Civil Procedure Section 1987. 1 Provides the Court With BroadPowers to Issue An Order Quashing the Subpoena to Protect Mr. KhoslaFrom the " Unreasonable or Oppressive Demands, Including UnreasonableViolations of the Right of Privacy" Associated with Surfrider' s Attempt toCompel Mr. Khosla to Testify at Trial and Produce Documents

Pursuant to Code of Civil Procedure. section 1985, a trial subpoena must include " an

affidavit... showing good cause for the production of the matters and things described in the

subpoena, specifying the exact matters or things desired to be produced, [ and] setting forth in full

detail the materiality thereof to the issues involved in the case." ( Code of Civ. Proc. 1985.) Any

party, witness, consumer, employee, or person whose personally identifying information is sought

may make a motion to quash a trial subpoena. ( Code of Civ. Proc. 1987. 1( b).) The court " may

make an order quashing the subpoena entirely, modifying it, or directing compliance with it upon

those terms or conditions as the court shall declare, including protective orders." ( Code of Civ.

Proc. 1987. 1.) " In addition, the court may make any other order as may be appropriate to protect

the person from unreasonable or oppressive demands, including unreasonable violations of the

right of privacy of the person." ( 1d.)

To obtain a protective order or an order to quash the Subpoena to Mr. Khosla, the LLCs

need only show that there is " good cause" for issuance of the order. ( Code Civ. Proc. § 1987. 1;

see also Department ofHealth Services v. Sup. Ct. ( 1980) 104 Cal.App.3d 80, 84). The LLCs

readily meet this burden.

B. There is Good Cause for the Issuance of an Order Quashing the SubpoenaBecause the Subpoena Does Not Sufficiently Explain the Materiality of theMatters and Things Sought or Sufficiently Describe the Documents

A copy of an affidavit shall be served with a subpoena duces tecum issued before trial,

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showing good cause for the production of the matters and things described in the subpoena,

specifying the exact matters or things desired to be produced, setting forth infull detail the

materiality thereof to the issues involved in the case, and stating that the witness has the desired

matters or things in his or her possession or under his or her control." ( Code Civ. Proc. § 1985( b)

emphasis added].)

The affidavit in support of the Subpoena fails to show good cause for Mr. Khosla' s

testimony or production of any documents, fails to specify the exact matters or things desired to

be produced, and fails to set forth the materiality of the materials sought or Mr. Khosla' s

testimony in any detail. The sole grounds provided for in the affidavit for seeking Mr. Khosla' s

testimony is his status as a member of the trust that is a member of the LLCs. There is no dispute

in this litigation regarding ownership of the Property and, as set forth more full below, Mr.

Khosla has no unique knowledge of the facts underlying this litigation. The affidavit also states

that Mr. Baugher and Mr. Deeney have identified the witness as having unique knowledge about

circumstances germane to the issues in dispute. There is no explanation whatsoever regarding

what circumstances or issues Mr. Khosla may have knowledge of and, as explained below,

precisely the opposite is true — documents produced and deposition testimony in the case have

established Mr. Khosla has no unique knowledge of any facts relevant to the instant litigation.

Simply put, Surfrider has not, and cannot set forth the materiality of Mr. Khosla' s testimony orthe documents sought because neither is material to the issues in this litigation.

In addition, the documents sought by the Subpoena have not been identified with

sufficient specificity.. The terms " purchase and title" documents and "[ f]inancial records" are

hopelessly vague and it is not possible to determine what specific documents are sought by the

Subpoena.. The documents sought are also either duplicative of documents already produced

during discovery ( the Operating Agreement for the LLCs) or were previously sought by Surfriderduring discovery and were the subject of a motion to compel that was denied (purchase and titledocuments and financial records). ( See RJN, Exh. B.) Specifically, Surfrider' s motion to compel

was denied to the extent it sought documents unrelated to the issue of public access and anyalleged restrictions on public access to the beach because any such documents are irrelevant to733\ 1111798.2 - 6- MARTINS 6MARTINSBEACH 1, LLC AND MARTINS BEACH 2, LLC' S MEMORANDUM OF POINTS ANDAUTHORITIES IN SUPPORT OF MOTION TO QUASH CIVIL SUBPOENA DIRECTED TO VINOD KHOSLA

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this litigation. ( See id.) Therefore, the Subpoena should be quashed in its entirety.

C. Mr. Khosla' s Lack of Unique Personal Knowledge of Relevant Information, Combined With The Fact that Surfrider Has Already Obtained AllInformation It Seeks Through Less Intrusive Means, Constitute Good Causefor an Order Quashing the Subpoena

1. The LLCs are Manager Managed With All Management andOversight Responsibility for Their Operations Vested In Mr. SteveBaugher

The Operating Agreement for the LLCs, which was produced during written discovery,

plainly states that Martins Beach 1, LLC and Martins Beach 2, LLC are both manager managed

limited liability companies.3 (

See Yob Decl., Exh. B. at p. 2- 3.) Steve Baugher is the LLCs'

manager. ( See id.) The business, .property and affairs of the LLCs are managed exclusively byMr. Baugher. ( Id. at Exh. B.) Paragraph 4. 1( a) of the Operating Agreement states:

Exclusive Management by Manager. The business, property and affairs of theCompany will be managed exclusively by the Manager. Except for situations inwhich the approval of the Member is expressly required by the Act, the Articles orthis Agreement, the Manager will have full, complete and exclusive authority, power, and discretion to manager, and control the business, property, and affairs ofthe Company, to make all decisions regarding those matters and to perform anyand all other acts or activities customary or incident to the management of theCompany' s business, property and affairs.

Yob Dec., Exh. B, p. 3.) As the manager of the LLCs, Mr. Baugher therefore has full, complete

and exclusive authority, power, and discretion to manage, and control the business property andaffairs of the LLCs. ( Id. at Exh. B.)

On January 30, 2014, Surfrider took the deposition of the Person Most Knowledgeable of

the LLCs (Steve Baugher), and also took the deposition of Mr. Baugher in his personal capacity. Yob Dec., ¶4.) During the deposition, Mr. Baugher confirmed that he had complete decision

making authority over the activities Surfrider claims constitute " development" in its Complaint,

i. e. ( 1) maintaining a fence, gate, and no trespassing signs; ( 2) repainting a billboard that

advertised the business of a predecessor -in -interest; and ( 3) having security on the Property.

With respect to the fence and gate, Mr. Baugher testified that he made the decision to

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Inexplicably, the Subpoena seeks these same Operating Agreement( s) from Mr. Khosla thatwere already produced in discovery in this matter. 733\ I 111798.2 - 7- MARTINS

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cease allowing access to the Property on the same terms and conditions that the Deeney' s had

allowed access to the Property:

Q: Can you estimate for me the first time the LLCs decided to cease allowing thesame access that the Deeneys had?

A. Sir, you' re asking when we shut the gate and did not open it? Because the

property was operated in the same context for the first two years, say, as theDeeneys did. So it would have been approximately two years after the purchase.

Q. ... Who made that decision? A. I did.

Q. Did you have input from anybody in making that decision? Yes or No. A. No.

Q. Did you discuss that decision with anybody?

A. No.

Id. at Exh. C, p. 43: 13- 44: 25.) Mr. Baugher further explained that he has never discussed or

received written instructions from Mr. Khosla regarding allowing or disallowing public access to

cross the Property without the presence of counsel:

N

MR. ESSNER:

THE WITNESS: MR. ESSNER: THE WITNESS:

Q•

MR. ESSNER:

THE WITNESS:

Id. at Exh. C, p. 20:24-22: 6.)

Have you ever discussed with the Khoslas allowing or disallowingpublic access to cross the property? Objection. I want to assert the attorney/client privilege. And makesure you don' t disclose any communications you may have had inthe presence of counsel. But I just want to admonish you on that. You can answer the question to the extent that there' s been nolawyers involved.

To the extent there' s been no lawyers involved? Correct. No.

Have you received any written instruction to or from the Khoslasregarding access to the property? Again I'm going to admonish you not to disclose any writtendiscussions where there were lawyers involved. So if you're able toanswer that question without disclosing attorney/client privilegedcommunication, feel free to do so. No.

With respect to repainting the billboard on the Property, Mr. Baugher testified that he

made all decisions regarding changing the sign:

Q. Was it your decision to change the sign? A. Yes.

Q. Did you have any conversation with anybodyabout changing the sign?

MR. ESSNER: Again I'm going to admonish yous.2 - 8-

IVIAK I IIVJ VtAL;H 1, LLL; AND MARTINS BEACH 2, LLC' S MEMORANDUM OF POINTS ANDAUTHORITIES IN SUPPORT OF MOTION TO QUASH CIVIL SUBPOENA DIRECTED TO VINOD KHOSLA

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not to disclose any communications with counsel. THE WITNESS: No.

Id. at Exh. C, p. 81: 12- 18.)

With respect to hiring the security guards, Mr. Baugher testified that he was the person

who made the decision to hire security guards at the Property:

Q. Who made the decision to hire security guards? A. I did.

1d. at Exh. C, p. 64: 22- 24.)

Mr. Khosla does not have any management responsibilities or day-to-day knowledge of

the LLCs' operations. ( Id. at Exh. C.) Mr. Khosla is not an officer, director, managing agent, or

employee of the LLCs. ( Id.) At his deposition, Mr. Baugher testified that Mr. Khosla and his

wife have no involvement in management of the Property at issue in this litigation:

Q. Do the Khoslas listed as the members have any involvement in management of theproperty?

THE WITNESS: No.

Id. at Exh. C, p. 20: 17- 22.)

Finally, Mr. Baugher testified that he is the LLCs' only employee:

Q. Are there any -- well, currently are there any employees, full-time employees ofthe LLCs besides yourself?

A. No.

Q. Are there any part-time employees? A. No.

Q. In July through September of 2009 were there any other full- time employees? A. No.

Q. Any part- time employees? A. No.

Q. Since the property was purchased have there been any other employees other thanyou?

A. No.

Id. at Exh. C, p. 196:2- 15.)

Mr. Baugher made it clear in his deposition that he had complete decision making

authority over the activities Surfrider claims constitute " development" in its Complaint. Mr.

Baugher further testified that he has not had any communication with Mr. Khosla on these

subjects. Accordingly, even if the Subpoena sufficiently identified the matters or materials733\ 11 11798.2 - 9- MARTINS

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sought, there is no relevance to Mr. Khosla' s testimony.

2. Surfrider Has Already Obtained All Information It Seeks ThroughLess Intrusive Means and Has an Improper Motive for Seeking theDeposition of Mr. Khosla

The Court may quash a subpoena where the information sought is unreasonable or

oppressive, including unreasonable violations of the right of privacy of the person whose

testimony is sought. ( Code Civ. Proc. § 1987. 1.) Seeking information from an individual who

has no personal knowledge of the facts underlying the litigation is improper, unreasonable, and

oppressive. ( See Liberty Mutual Ins. Co. v. Superior Court ( 1992) 10 Cal. AppAth 1282, 1287

improper to seek deposition " absent a reasonable indication of the [ deponent' s] personal

knowledge of the case and absent exhaustion of less intrusive discovery methods."]:)

In Liberty Mutual Ins. Co., the court analyzed whether it was appropriate to allow a party

to notice the deposition of a corporate president or officer at the apex of the corporate hierarchy

of the other party. In that case, the corporate officer had no personal knowledge of the case and

less intrusive means of discovery had not been exhausted. The court held that " it amounts to an

abuse of discretion to withhold a protective order when a plaintiff' seeks to depose a corporate

president, or corporate officer at the apex of the corporate hierarchy, absent a reasonable

indication ofthe officer's personal knowledge ofthe case and absent exhaustion of less intrusive

discovery methods." ( Id. [emphasis added].)

Here, although Mr. Khosla is not the president at the apex of the corporate hierarchy, the

same reasoning from Liberty Mutual should apply. Just as the president in Liberty Mutual had no

personal knowledge of the subject matter of the case, Mr. Khosla is similarly removed from the

subject matter of the current litigation. Mr. Khosla does not have day to day or any other

management over the LLCs. ( Yob Dec. at Exh. B.) All management and decision making

authority is vested in the LLCs' manager, Steve Baugher. ( Id.) Just as the president at the apex

of the corporate hierarchy in Liberty Mutual did not have personal knowledge of low level

business dealings within the corporate entity, Mr. Khosla does not have first-hand personal

knowledge of the facts underlying this litigation. Liberty Mutual found that it is unreasonably

burdensome to seek the deposition of an individual removed from the litigation with no unique73311111798.2 _ 10 - MARTINS

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personal knowledge of the litigation; it would be similarly unreasonable to require Mr. Khosla to

attend trial as a witness. This is particularly true where, as here, Surfrider has already deposed

the LLCs' manager (Steve Baugher) and the on-site property manager (Jim Deeney) — the

individuals with unique personal knowledge of any facts relating to this litigation.

3. There is Good Cause for An Oder Quashing the Subpoena BecauseSurfrider Seeks Mr. Khosla' s Testimony For An Improper Motive

Simply put, Surfrider cannot show any likelihood that Mr. Khosla possesses any firsthand

knowledge of facts that may be relevant to the instant litigation. In light of the utter lack ofany

unique personal knowledge relating to this litigation, Surfrider' s insistence on calling Mr. Khosla

at trial can only be explained by an improper motive to harass, annoy, invade privacy, and/or gain

leverage in this litigation. In fact, the only justification provided in the affidavit in support of the

Subpoena seeking Mr. Khosla' s testimony is his position as a member of the trust that is a

member of the LLCs. The ownership of the Property is neither relevant to this litigation nor in

dispute. Therefore, Surfrider' s Subpoena is improper as it unreasonable, seeks. to cause

oppression, and violates the privacy of a non- party with no unique first-hand knowledge of the

facts underlying this litigation.

D. The Subpoena Violates Mr. Khosla' s Constitutional' Privacy Rights bySeeking Private Financial Records Without Good Cause

The Court may make any order that is appropriate to protect against unreasonable

violations of the right ofprivacy. ( Code Civ. Proc. § 1987. 1( a).) Information may be shielded

from production if its disclosure would impair a person' s " inalienable right of privacy" providedby the California Constitution, Article 1, Section 1. ( Britt v. Superior Court ( 1978) 20 Cal.3d

844, 855- 56.) In fact, the threat to First Amendment Rights may be more severe during litigation,

as the party directing the inquiry may be a litigation adversary who may well attempt to harass its

opponent and gain strategic advantage by probing deeply into areas which an individual mayprefer to keep confidential. ( Id. at 857.) Protection is given to sensitive information which

people may wish to keep confidential, such as their financial dealings and assets. ( Hofman Corp.

v. Superior Court ( 1985) 172 Cal.App.3d 357, 362.) 733\ 1 111798.2 - 11 -

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To compel disclosure of private financial information, a litigant must establish a waiver of

the protections by the objecting party. Such a showing requires establishing a " compelling need" for the information, as well as its " direct relevance" to the case. ( Davis v. Superior Court ( 1992)

7 Cal.AppAth 1008, 1013- 15 [ To find waiver of right of privacy, litigant must show " compelling" need for information that has " direct relevance" to case]; see also Rylaarsdam, Edmon et. al, Cal.

Prac. Guide Civ. Pro. Before Trial Ch. 8C- 5, ¶ 8: 303 ( The Rutter Group 2010) [" right of privacy

exists as to a party' s confidential financial affairs, even when the information sought is admittedlyrelevant to the litigation (citing Cobb v. Superior Court ( 1979) 99 Cal.App.3d 543,' 550.) Such a

waiver is not easily established. ( See Fortunato v. Superior Court (2003) 114 Cal. AppAth 475,

482 [ The waiver ...of the constitutional right to privacy " must be narrowly rather than expansivelyconstrued"].)

Here, the Subpoena seeks " purchase and title documents of the real property" and

f]inancial records reflecting payments from KFT Trust UTA dated 11/ 17/ 1986 to Defendants

Martins Beach 1, LLC and Martins Beach 2, LLC." ( Yob Dec., Exh. A.) The Khoslas have a

constitutional right to privacy over these documents relating to their financial dealings and assets.

This information is completely irrelevant to the issues in this litigation; namely, whether or not

the LLCs' alleged conduct constitutes development under the Coastal Act or the issue of public

access to the beach. Surfrider has not, and cannot show any need for these documents or Mr.

Khosla' s testimony, let alone the requisite " compelling need" for disclosure of financial

information covered by the constitutional right to privacy. Therefore, the Subpoena should be

quashed in its entirety.

E. Sanctions Should Be Awarded Against Surfrider and Its Attorneys

Under Code of Civil Procedure section 1987. 2 the court may award the amount ofreasonable expenses incurred in making or opposing a motion to quash, " including reasonable

attorney' s fees" if the court finds that the motion was made or opposed in bad faith or without

substantial justification or that one or more of the requirements of the subpoena was oppressive. Code Civ. Proc. § 1987.2.)

Surfrider has misused the Subpoena to improperly seek to compel a third party' s733\ 1111798. 2 - 12- MARTINS

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testimony for an improper purpose. Surfrider' s conduct has resulted in the LLCs having to bring

the instant motion to quash and incur unnecessary legal fees. Surfrider' s conduct is oppressive in

that it served a defective Subpoena directed at a non-party for the purpose of harassing Mr.

Khosla, attempting to create leverage in this litigation, and/or to increase publicity in this matter.

Accordingly, sanctions should be awarded in the amount of $2,280 against Surfrider and its

attorneys. ( See Yob Decl. at ¶ 8.)

IV. CONCLUSION

For the reasons stated above, the Subpoena served on Mr. Khosla is defective and

improperly seeks to compel Mr. Khosla to testify at trial despite the fact that he has no unique

personal knowledge of the facts. Surfrider has obtained all available non -privileged information

it seeks and has an improper motive in seeking Mr. Khosla' s testimony. The only purpose for the

Subpoena is to harass and annoy a non-party. Therefore, the LLCs respectfully request that the

Court quash the Subpoena and award sanctions in the amount of $2,280.

Dated: April, 2014 HOPKINS & CARLEY

A Law Corporation

By: ni' a"u- JefflFff. EssnerDori L. Yob

Attorneys for Defendants and Cross - Complainants Martins Beach 1, LLC andMartins Beach 2, LLC

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MAKTINS BEACH 1, LLC AND MARTINS BEACH 2, LLC' S MEMORANDUM OF POINTS ANDAUTHORITIES IN SUPPORT OF MOTION TO QUASH CIVIL SUBPOENA DIRECTED TO VINOD KHOSLA