Serrano v. Stefan Merli Plastering decides interesting fee dispute over court reporting charges

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Greatsealcal100Serrano v. Stefan Merli Plastering (May 7, 2008), arising from a fee dispute between the plaintiffs and a court reporting agency, is an interesting decision that may ultimately affect complex cases with far greater frequency than simple cases like Serrano.  In Serrano, the Court of Appeal (Second Appellate District, Division Three) reviewed a ruling by the trial court that required plaintiffs to pay the full amount charged by a court reporting agency to receive their certified copies of various transcripts:

The defendant noticed the depositions of several of the Serranos’ expert witnesses, including Robert Audell. The Audell deposition took place on June 26, 2006, and was reported by a certified shorthand reporter employed by Coast. Counsel for the Serranos requested a certified copy of the transcript. The trial was scheduled to begin on July 25, 2006.

(Slip op., at p. 4.)  Despite the fact that the defendant requested the expedited transcripts, the court reporting agency also charged the plaintiffs an "expedite" fee on top of the cost of the certified copies.  (Ibid.) "The Serranos filed an ex parte application on July 5, 2006, for an order requiring Coast to provide a copy of the Audell deposition transcript without charging any expedited service fee." (Slip. op., at p. 5.)

At this point, things get exciting.  The court reporting agency provided the transcripts on the condition that the plaintiffs agree to be bound by the trial court's ruling on the charges.  At the ex parte hearing, the trial court expressed sympathy with the plaintiffs, but denied them relief:

“I would love to give you relief. I don’t think I can. So take it up. Maybe, you know, one of the divisions up there will feel sympathetic.”

(Slip op., at p. 6.) The Serranos then petitioned the Court of Appeal for an extraordinary writ on August 25, 2006. The Court of Appeal summarily denied the petition on September 20, 2006 (parenthetical note: the denial of a petition for a writ is many times not an opinion on the merits of the issue raised).  The parties settled, but the trial court carved out the issue of the transcript fees on appeal.  Then, the Court of Appeal considered the merits, the court reporting agency appearing as objector and respondent.  After dispensing with various standing and jurisdictional arguments, the Court didn't mince words when examining the core contention:

Coast argues that a court ordering a deposition reporter to provide a copy of a transcript to a party pursuant to section 2025.510, subdivision (c) must order that party to pay the fee charged by the deposition reporter regardless of the amount of the fee. We firmly reject that argument. As we now explain, if a deposition reporter either refuses to provide a copy of a deposition transcript to a non-noticing party in a pending action, for whatever reason, or imposes unacceptable conditions upon such delivery, and the court must intervene, we conclude that the “expense” that the court may require the non noticing party to pay for the transcript must be reasonable.

(Slip op., at pp. 27-28.)  Continuing to pound in the point, the Court said:

Depositions play an important role in litigation and trial preparation, and deposition testimony may be offered as evidence in pretrial proceedings and, in some circumstances, at trial. In light of the importance of deposition testimony in a pending action and the non-noticing party’s lack of bargaining power, a trial court must be cautious not to lend assistance to overreaching by the deposition reporter. For a deposition reporter to refuse to provide a copy of a transcript to a non-noticing party in a pending action unless the party agrees to pay an unreasonable fee would be grossly unfair. Moreover, for a deposition reporter, as an officer of the court, to engage in such conduct would be an abuse of the reporter’s authority. For a trial court to condone such conduct by conditioning the party’s right to receive a copy of a transcript on payment of an unreasonable fee would undermine rather than promote the administration of justice and could very well result in a denial of due process to the non-noticing party victimized by the reporter’s conduct. It therefore follows that the only monetary condition that the court may properly place upon the non noticing party’s right to receive a copy of the deposition transcript would be payment of a reasonable fee.

(Slip op., at pp. 28-29.)  The Court of Appeal concluded by expressly holding that "[t]he cost of transcription must be borne by the party noticing the deposition, unless the court on motion and for good cause orders otherwise (§ 2025.510, subd. (b)), so a reasonable fee for a copy of the transcript would not include any amount that compensates the deposition reporter for the cost to expedite the transcription."  (Slip op. at p. 31.)

So out of a simple personal injury case that settled, we now know that court reporters cannot charge non-noticing parties an expedited transcript fee if it was the noticing party that requested the expedited transcript.  Court reporters around the state must be calling the respondent to thank them for clearing up this point of law.  Complex, multi-party cases may see a significant bottom-line cost savings, although I do not profess to know whether there is an industry practice by court reporters to charge non-noticing parties an expedited transcript fee when it was the noticing party that initially requested the expedited processing.

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When correctly used, Person Most Qualified (PMQ) Depositions are powerful discovery tools

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In Costco Wholesale Corporation v. Superior Court (Greg Randall et al.) (March 27, 2008) ___ Cal.Rptr.3d ___ [2008 WL 803143, 08 Cal. Daily Op. Serv. 3627], the Court of Appeal (Second Appellate District, Division Three) denied a Petition for a Writ of Mandate after the Trial Court (Hon. Emilie H. Elias) granted a Motion to Compel the production of documents that included a partially redacted letter from outside counsel to Costco, commenting upon the appropriateness of classifying certain managerial employees as exempt from California’s overtime pay laws and regulations.  (Hereinafter, point page citations are to the Slip Opinion, available from the Opinions page of the California Courts website.)

The procedural history of the Writ Petition is interesting and merits a quick read if appellate procedure floats your boat.  In short, the following occurred: a Petition was filed, an OSC issued, the OSC was dismissed without an opinion, the Supreme Court directed the Court of Appeal to issue an OSC, the matter was heard, and, finally, the Petition was denied.  (Slip op., at p. 10.) But while I am interested in such things, it doesn’t concern the point I want to make (and will get to) in this post. The result of the case is also of substantial interest to wage & hour practitioners (an area in which I happen to practice). But again, that discussion is for another time, or possibly another blog. (See, e.g., The California Wage And Hour Law Weblog, discussing all thing wage & hour.)

What I find most interesting from this opinion is the dramatic effect created by what was likely a short line of questioning at a Person Most Qualified deposition. Plaintiff deposed the person most knowledgeable (Mr. Matthews) about Costco’s exemption defense. (Slip op., at p. 5.) For those of you who don’t practice wage & hour law in California, the claim that an employee is “exempt” from overtime pay laws and regulations is an affirmative defense in California. The employee establishes a prima facie case by simply alleging that work was performed in excess of 8 hours per day or 40 hours per week, but overtime (premium rate) wages were not paid for that time. The employer then asserts an affirmative defense of “exemption” under the any of the recognized exemption categories.

In any event, plaintiffs’ counsel questioned Mr. Matthews about Costco’s expectations of its managers:

Matthews testified about Costco’s reasonable expectations regarding the duties of managers historically classified as exempt. He testified that in making the classification decision, Costco gathered information during interviews with managers. Matthews also testified that Costco relied, in part, on input from counsel in classifying its employees as exempt or nonexempt. During the deposition, Costco’s counsel explicitly stated that Costco was not relying upon the advice of counsel defense. Costco’s counsel instructed Matthews not to relay any information as to what was discussed during interviews with Costco’s attorneys.

(Slip op., at p. 6.) That question and answer exchange set in motion a series of events that ultimately led to the production of a letter from outside counsel to Costco’s corporate counsel. By way of background, “In June 2000, Costco’s then corporate counsel (attorney Donna M. Brandon) engaged ‘the law firm[ ] of Sheppard Mullin . . . to undertake [a] comprehensive factual investigation and legal analysis regarding the classification of managers within Costco Warehouses.’” (Slip op., at p. 3.) After a thorough review of decisional authority supporting the Trial Court’s ability to review a document in camera to ascertain whether the communications in the letter were privileged under attorney-client or work product doctrines (slip op., at pp. 11-17), the Court concluded that Costco had not met is burden to establish that extraordinary relief was warranted (slip op., at p. 20).

The ultimate significance of the Costco ruling to the parties in that matter seems relatively insignificant:

We have examined the redacted letter, which is presented to us under seal. As redacted, it demonstrates that Costco was successful in precluding discovery of a majority of the August 4, 2000, letter. Thirteen of the 22 pages (pages 2-9 and 17-21) were redacted in their entirety. Large portions of the remaining pages were eliminated by the referee. The only parts remaining visible are inconsequential and do not infringe on the attorney-client relationship. They came from non-privileged written job descriptions and interviews with the two managers.

(Slip op., at p. 18.) Rather, the significance, in my opinion, is that the plaintiffs obtained any portion of that letter. It bears repeating: the plaintiffs obtained part of a letter written by Sheppard Mullin to Costco's general counsel. They did so by asking a PMQ to explain everything that Costco relied upon when classifying its managers. His answer opened, at least in part, Pandora’s box.

The lesson I take away from this is that PMQ depositions provide a rich discovery opportunity that is often squandered when careful thought and preparation are absent.  I once overlooked PMQ depositions as a discovery tool.  I no longer do, and you shouldn't either.

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