A fundamental prerequisite to a viable lawsuit is a plaintiff possessing standing to bring it, and in writ of mandate proceedings that generally means a person or entity actually possessing a beneficial interest in the legal relief being sought. Nonetheless, CEQA’s broad statutory standing provisions, the “public interest exception” to beneficial interest standing, constitutional associational privacy claims, and the general unavailability of civil discovery (due to the general irrelevance of extra-record evidence) in administrative mandamus actions have all conspired to allow CEQA litigation standing abuses to become a large – and largely unchecked – problem. Indeed, I have previously analyzed and written about this particular CEQA litigation abuse in depth. (See, e.g., “Standing Against Environmental Injustice: Some Thoughts On Facing The Need For CEQA Litigation Reform,” by Arthur F. Coon, posted July 18, 2017.) I am thus happy to be able to report that, in an opinion filed November 28, and ordered published on December 19, 2017, the Fourth District Court of Appeal has now done something about it. Specifically, it properly upheld the use of civil discovery directed to the issue of a plaintiff organization’s standing in a CEQA writ proceeding, and also affirmed the trial court’s judgment of dismissal after granting a terminating sanction for plaintiff’s discovery abuse in attempting to thwart such discovery. This important new decision is Creed-21 v. City of Wildomar (Walmart Real Estate Business Trust, Real Party in Interest) (4th Dist., Div. 2, 2017) _____ Cal.App.5th _____.
Relevant Background Facts: A Twisted Procedural Tale
To understand the Court of Appeal’s holdings, a recounting of the litigation’s procedural history is necessary. On April 8, 2015, an alleged non-profit, social advocacy organization named Creed-21, represented by the Briggs Law Corporation (“Briggs”), filed a CEQA/planning and zoning law writ of mandate petition challenging the City of Wildomar’s approval of a Walmart retail complex. Creed-21 alleged at least one of its members resided in or near the City (and, hence, could presumably benefit from an environmentally improved project); the City’s answer alleged Creed-21 lacked standing. The trial court set a merits briefing schedule under which the City’s and Walmart’s joint opposition brief was initially due January 25, 2016, although, as will be seen, this date apparently “slipped” somewhat as a result of certain procedural developments.
In an effort to obtain evidentiary support for the “lack of standing” defense, real party Walmart noticed the deposition of Creed-21’s person most qualified (PMQ) to testify on standing issues for September 15, 2015, in Costa Mesa. Creed-21 objected variously to the date, that discovery was categorically not allowed in a mandate action, and (without disclosing the PMQ’s address) that the deposition location was 75 miles from the PMQ’s residence. Walmart’s meet and confer efforts failed to elicit a further response. Walmart noticed another deposition for October 14, 2015, and Creed-21 responded less than a week before the scheduled date, objecting on the same grounds and refusing to produce the PMQ for deposition. Creed-21 additionally asserted its membership was irrelevant, and that its corporate standing could be verified with the Secretary of State, and it recommended letting the trial court decide the issue.
Taking Creed-21 up on its proposal, Walmart moved to compel Creed-21 to produce its PMQ, submitting to the court a recent hearing transcript from another Los Angeles Superior Court action in which Creed-21 was also represented by Briggs. In that action, Creed-21’s president, Richard Lawrence, testified that there was only one other officer of Creed-21, and that he had no idea how many members existed; that Briggs prepared all Creed-21’s tax returns; that Creed-21’s address was the same as Briggs’ Upland address; that Creed-21 had no money, assets, or employees; and that Briggs “fronted” the money for Creed-21’s lawsuits and paid any fees it owed. Armed with this and other “alter ego” evidence that Briggs was essentially running a CEQA litigation shakedown organization, Walmart believed it had strong grounds to further explore the standing issue through civil discovery.
Walmart’s motion was scheduled to be heard on January 5, 2016. However, Creed-21’s attorney failed to give proper notice of its intent to appear and was thus not allowed to argue; the Court accordingly adopted its tentative ruling ordering Creed-21 to produce its PMQ and all requested documents within 10 days, and to pay Walmart $3,000 in attorneys’ fees and costs. A week later, Creed-21 sought relief based on its attorney’s ignorance of the relevant local rule on giving notice of intent to appear; alleged that if allowed to argue it would have argued discovery was inappropriate; for the first time alleged its PMQ was Lawrence, who lived 90 miles away; and presented the declaration of one Ms. Jiminez declaring she and other Creed-21 members lived and worked in Wildomar. The trial court denied the motion for relief after a February 1, 2016 hearing and directed that the PMQ deposition go forward on February 8. Creed-21 filed an appellate writ petition requesting that the Court of Appeal vacate the trial court’s order and deny or narrow the discovery sought by Walmart, but the Court of Appeal denied all relief on February 5.
Meanwhile, Creed-21 filed an ex parte application in the trial court on February 3 seeking to continue the PMQ deposition date to February 24 on the basis that attorney Cory Briggs’ parent just had major surgery and Briggs, as the only child who could provide care, would need three weeks off work to do so. Walmart’s opposition pointed out that Creed-21 was seeking to extend the deposition past the date the merits opposition brief was due (which would obviously deprive the Wildomar defendants of using any helpful information obtained in the deposition unless briefing were also delayed); that it failed to explain why the associate attorney (not Briggs) who had appeared at every other hearing could not defend the deposition; and that it failed to explain why a caregiver could not relieve Briggs to allow him to attend a one-day deposition.
After the trial court denied the requested continuance, Creed-21 failed to produce its PMQ on February 8, and the City and Walmart filed their opposition without being able to complete the discovery Walmart had noticed. They argued that the petition should be denied for procedural reasons and on the merits; that Creed-21 was a shell corporation with no money, bank account, or assets; and that it was used by its alter ego Briggs (who handled all its tax and corporate filings and shared its address) to recover attorneys’ fees from litigating against large corporations. They pointed out the Jiminez declaration did not cure Creed-21’s lack of standing as it surfaced only well after the filing of the action and also after Lawrence’s testimony that he only knew of 2 members.
On March 9, 2016, Walmart moved for issue and monetary sanctions against Creed-21 for its violations of the trial court’s January 5 and February 1, 2016 discovery orders compelling it to produce the PMQ for deposition on the standing issue. The trial court granted the motion, finding defendants had attempted to work with Creed-21 to no avail, and that Creed-21 did not show good faith in attempting to resolve the issues. Rather, Creed-21 continued to raise the same unmeritorious issues, make inadequate showings in its requests for relief, and disobey the Court’s orders, including failing to pay the $3,000 in monetary sanctions to Walmart. The trial court observed with apparent frustration: “Nothing has worked. Multiple orders have been made. Sanctions have been imposed. Nothing except further delay in the proceedings. And I don’t think at this point in light of the history, the defense should have to choose between getting the deposition and delaying the hearing on the merits.” Accordingly, while it did not issue further monetary sanctions, it “issued an issue sanction against Creed-21 that it lacked standing in the action,” which was the same as a terminating sanction, and again ordered Creed-21 to pay the $3,000 in monetary sanctions earlier imposed.
The Court of Appeal’s Decision
Creed-21 appealed and argued that the “severe issue sanction” meted out to it by the trial court “should only be granted against a litigant who persists in outright refusal to comply with discovery obligations,” and that the action should not have been dismissed absent “a showing of bad faith, which was not supported by the evidence.” Here, Creed-21 argued, its counsel’s alleged “family emergency” excused its noncompliance and it actually did try to cooperate with discovery effort to the extent it was able.
Applying the “abuse of discretion” standard of review to the trial court’s choice of sanction for Creed-21’s discovery abuses, the Court of Appeal had no trouble affirming the judgment of dismissal. Code of Civil Procedure § 2023.030 authorizes a trial court to impose monetary, issue, evidence or terminating sanctions against anyone misusing the discovery process, and issue, evidence or terminating sanctions are authorized for a party’s or party-affiliated deponent’s failure to obey an order compelling attendance, testimony and production. (Code Civ. Proc., § 2025.450(d).) Case law indicates the discovery statutes employ an “incremental approach to discovery sanctions,” starting with monetary sanctions and ending with termination, under which the sanction should be “appropriate to for dereliction” and not exceed that required to protect the party entitled to but denied discovery. While terminating sanctions should not be issued lightly, imposition of this ultimate sanction is justified where the totality of circumstances show a willful violation, preceded by a history of abuse, and where the evidence shows lesser sanctions would not produce compliance.
Under the abuse of discretion standard of review, an appellate court resolves all evidentiary conflicts most favorably to the trial court’s ruling, and reverses only when the “order was arbitrary, capricious or whimsical.” Under these applicable rules, Appellant Creed-21 failed to carry its burden to affirmatively demonstrate error here; the entire record supported the “issue sanction, which was granted by the trial court based on the consistent refusal of Creed-21 to comply with court orders on discovery,” and after lesser monetary sanctions and orders did nothing to produce compliance. The trial court’s imposition of a terminating sanction was not arbitrary or capricious. Moreover, the Court of Appeal held Appellant’s citation to case law preceding the Civil Discovery Act of 1986 as requiring “bad faith” conduct to justify “outright dismissal” was misplaced, as only post-1986 cases are relevant to the analysis.
Conclusion and Implications
The Court of Appeal’s opinion makes a significant contribution to the CEQA jurisprudence and constitutes an example of judicial CEQA reform in the troublesome area of standing abuse. The Creed-21 case helpfully recognizes that ordinary civil discovery procedures can play an appropriate and important role in administrative mandamus actions. This is critical where a key issue – such as the plaintiff’s standing to sue – is unrelated to the merits of the agency’s decision and inherently dependent for resolution on evidence that lies outside the record and was not a part of the agency’s proceedings or decision-making process. In addition to refuting meritless legal arguments that such discovery is categorically barred, the opinion underscores that flaunting discovery rules and orders – as the plaintiff and its “alter ego” law firm did here – is a serious matter that can result in judicial sanctions terminating an action, including a writ of mandate proceeding.
The Supreme Court has recognized that “public interest” standing is an exception to the usual “beneficial interest” requirement for filing a mandamus action, that the exception is not “freely available to business interests lacking a beneficial interest in the litigation,” and that “[t]he policy underlying the exception may be outweighed by competing considerations of a more urgent nature.” (Save the Plastic Bag Coalition v. City of Manhattan Beach (2011) 52 Cal.4th 155, 170, fn. 5, citations omitted). The Fourth District’s opinion in Creed-21 not only appears to be the first CEQA case addressing sanctions for failures to comply with discovery directed to standing, but it provides an excellent illustration of an all-too-common CEQA litigation abuse and of various related factors that should be held to constitute “competing considerations of a more urgent nature” sufficient to negate a phony “environmental” plaintiff organization’s alleged standing.