Friedman v. Superior Court

Filed 8/29/06 Friedman v. Superior Court CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

ORIGINAL PROCEEDING in mandate. Richard E. Denner, Judge. Petition granted.

Sidley Austin, Howard J. Rubinroit, James M. Harris and Frank J. Broccolo for Petitioners.

No appearance for Respondent.

Phillips, Lerner, Lauzon & Jamra, Stacy D. Phillips; Paul, Hasting, Janofsky & Walker, Jamie Broder and Stephanie E. Hart for Real Party in Interest.

* * * * * * * * * *

This proceeding arises from subpoenas requiring the depositions of three corporate officers and a comprehensive demand for the production of documents served with the subpoenas. The subpoenas are directed at nonparties by one of the parties to a marital dissolution proceeding. The trial court granted, in large part, a motion to compel the depositions and the production of documents. Petitioners filed a petition for writ of mandate seeking to set aside the trial court’s orders. We issued an order to show cause why the petition should not be granted. We now vacate the orders and remand for further proceedings that are consistent with this opinion.

FACTS

1. The Parties

The petitioners are Joshua Friedman, Mitchell Julis, and K. Robert Turner, each of whom is a managing executive officer of the Canyon Companies.

It is alleged, and admitted, that the Canyon Companies are a group of “affiliated entities,” which include limited liability companies and corporations, such as Canyon Partners, LLC; Canpartners Incorporated; and Canyon Partners Incorporated. The Canyon Companies invest funds for hundreds of investors in approximately 15 multi-billion and multi-million dollar investment and real estate funds and managed accounts that were created, and are managed, by the Canyon Companies. The Canyon Companies employ approximately 70 people for the purpose of locating, evaluating and monitoring investments.

It is alleged that the Canyon Companies are regulated by the Securities and Exchange Commission (SEC) and that many investors who do not wish their identities or affairs revealed have confidentiality agreements with the Canyon Companies.

The real party in interest is Loretta G. Evensen. She and R. Christian B. Evensen are parties to a marital dissolution proceeding. We will refer to the real party in interest as Loretta in order to avoid confusing her with Christian Evensen, whom we will also refer to by his first name.

2. Loretta’s Relationship to the Corporate Structure of the Canyon Companies

One of the principal issues in this case is whether Loretta is a client of attorneys working for the Canyon Companies and whether Loretta is therefore a “holder” of the attorney-client privilege.[1] Thus, Loretta’s relationship to the somewhat complex corporate structure of the Canyon Companies is of decisive importance.

We begin at the bottom of the corporate structure with three limited partnerships. They are The Joshua S. Friedman Family Limited Partnership, the Julis Family Limited Partnership, and The Evensen Family Limited Partnership (EFLP). These three limited partnerships are referred to as Family Limited Partnerships.

As far as EFLP is concerned, Christian is the general partner and Loretta is a limited partner. Under the agreement establishing EFLP, the general partner has the “exclusive right to manage the business of the Partnership.” The agreement then lists 11 specific grants of power to the general partner, all of which are very broad grants of power.^[2] One of the specific grants of power to the general partner is to engage counsel in connection with the business and activities of the partnership.

The Family Limited Partnerships, including EFLP, are all “members” of Canyon Capital Advisors LLC (CCA), which is a Delaware limited liability company. A member of a limited liability company is a person who has “been admitted to a limited liability company as a member in accordance with the articles of organization or operating agreement, or an assignee of an interest in a limited liability company who has become a member pursuant to Section 17303”^[3] and who has “not resigned, withdrawn, or been expelled as a member or, if other than an individual, been dissolved.” (Corp. Code, § 17001, subd. (x)(1) & (2).)

In turn, the Turner Revocable Trust and CCA are members of Canyon Realty Advisors LLC, another limited liability company (CCRA). One of the agreements among several investors and officers of the Canyon Companies, the Holders Agreement executed on January 1, 2000, states that “[s]ubstantially all of the active business of the Canyon Group is conducted through CCA and CCRA, although investment activities are conducted through numerous entities in the Canyon Group.”

3. The Discovery Sought by Loretta from Petitioners

On or about September 2, 2004, Loretta issued identical third-party subpoenas to the three petitioners for their depositions and addressed to each of the petitioners a comprehensive (and identical) demand for the production of 49 categories of documents.

These categories were: “all documents“ which “refer, relate or pertain“ to the formation of Canyon Capital Management, L.P., CCA, CCRA; “all documents” which “refer, relate or pertain” to the transfer of the business or assets of Canyon Capital Management to CCA; “all communications” between Christian and petitioners regarding the formation of CCA and CCRA; “all communications” between Christian and petitioners regarding the transfer of assets from Canyon Capital Management to CCA; “all communications” between Christian and attorneys at the firm of Sidley & Austin regarding the formation of CCA and CCRA; “all communications” between petitioners and Gary Cohen, an attorney at Sidley & Austin, regarding the formation of CCA and CCRA; “all communications” between Cohen and petitioners regarding the transfer of assets from Canyon Capital Management to CCA; “all documents” which “refer, relate or pertain” to the negotiations and creation of the “Holders Agreement“ of January 1, 2000; “all communications” between Christian and petitioners regarding the Holders Agreement; “all communications” between Christian, Cohen and other Sidley & Austin lawyers regarding the Holders Agreement; “all communications” between CCA, CCRA, and Sidley & Austin lawyers regarding the Holders Agreement; “all documents” that “refer, relate or pertain” to the consent of spouse form to the Holders Agreement signed by Loretta; “all documents” that “refer, relate or pertain” to Christian’s job performance at CCA; all documents” that “refer, relate or pertain” to clients brought to CCA or CCRA by Christian and by petitioners; “all documents” that “refer, relate or pertain” to fees earned by CCA and CCRA from Christian’s and petitioners’ clients; “all documents” that “refer, relate or pertain” to compensation and bonuses paid to Christian by CCA and CCRA; “all documents” that “refer, relate or pertain” to expenses incurred by Christian which will be reimbursed by CCA; “all documents” that “refer, relate or pertain” to the decision to terminate Christian from CCA; “all documents” that “refer, relate or pertain” to the Memorandum of Understanding dated July 8, 2003, all drafts of this memorandum, and “all communications” between CCA, Sidley & Austin attorneys and Christian relating to this memorandum; “all documents” that “refer, relate or pertain” to the amendment of the Holders and Joinder Agreement of September 18, 2003, all drafts of this agreement, and “all communications” regarding this agreement between CCA, the lawyers at Sidley & Austin, and Christian; “all documents” that “refer, relate or pertain” to the decision to hire petitioner Turner and to give him an equity interest in CCRA, and “all documents” that were given to petitioner Turner when he received an equity interest in CCRA; “all documents” that “refer, relate or pertain” to the transfer for petitioners Friedman’s and Julis’s interest from the CCA and Canyon Capital Management to the Friedman Family Limited Partnership and the Julis Family Limited Partnership; and “all documents” that “refer, relate to pertain” to the transfer of Christian’s interest from the CCA and Canyon Capital Management to EFLP and the R. Christian B. Evensen Family Spray Trust.

Petitioners filed objections. Efforts to resolve the matter failed, and on December 6, 2004, Loretta filed a motion to compel. After resolving some limited issues, the court referred the matter to retired Judge John W. Ouderkirk as discovery referee. The referee heard the matter on two days in June 2004, and issued a memorandum on August 5, 2004. (See section 5, post.)

4. The Discovery Sought by Loretta from Christian in the Marital Dissolution Proceeding

Approximately three weeks prior to serving petitioners with the aforesaid subpoenas and requests for the production of documents, Loretta served Christian with a second set of document requests in the pending marital dissolution proceeding. Petitioners contends, and Loretta denies, that this request for documents seeks “many (if not all) of the same documents she is presently seeking from [petitioners].” Christian responded to these requests but, in time and after some delay, Loretta moved to compel further responses from Christian. Petitioners were allowed to monitor the ensuing hearings, but they were not allowed to participate. Based on what they learned during these hearings, petitioners contend that Loretta is in fact seeking from Christian the same documents she is requesting from petitioners. Loretta denies that this is the case.

5. The Recommendations of the Referee

The referee addressed first petitioners’ claims that the request sought documents protected by the attorney-client privilege. The referee concluded that, as a partner, Loretta is the “joint holder” of the attorney-client privilege of the “Canyon entities.”^[4] As a “joint holder” of the attorney-client privilege, Loretta, according to the referee, is entitled to access “otherwise privileged responsive documents relating to the Canyon entities.” In part, the referee relied on McCain v. Phoenix Resources, Inc. (1986) 185 Cal.App.3d 575 (McCain),^[5] and on a provision of the Corporations Code that gives a partner the right of access to the partnership’s books and records.

Petitioners claimed that the documents requested contained sensitive consumer and employment records in the sense of Code of Civil Procedure sections 1985.3 and 1985.6.^[6] The referee concluded that the “document request includes some records that may be classified as consumer records however there are many requests that do not fall in that category.”

The referee made some findings regarding the question whether the discovery sought was burdensome. According to the chief technology officer of the Canyon entities, Loretta’s request requires the review of at least a million pages. An attorney at Sidley & Austin familiar with the process of reviewing e-mails opined that it would take 5,260 hours to review one million e-mails. The cost of this at $265 per hour is $1,393,900. However, according to Scott Cooper, an expert retained by Loretta, it would take only 10 hours of Canyon supervisory time to review the materials subject to the document request. The referee found Cooper more credible than petitioners’ experts. The referee suggested that petitioners and Loretta share equally the cost of producing electronic discovery.

Referring to Loretta’s efforts to obtain discovery from Christian in the marital dissolution proceeding, petitioners claimed that Loretta should first attempt to obtain these requested documents from Christian. The referee rejected this contention, concluding that there is no requirement of an “exhaustion of remedies” against Christian before Loretta could request the documents from petitioners.

As far as the first three requests were concerned,^[7] the referee suggested alternatives such as organization charts and partnership agreements. The referee recommended that the court order petitioners to produce the remaining documents. In the instance of a few of the document requests, the referee recommended that documents relating to limited periods of time be produced.

6. The Trial Court’s Orders

On October 3, 2005, the trial court entered an order adopting the recommendations of the referee, with the exception of the recommendation regarding the cost of discovery.

Petitioners moved to set aside the recommendations of the referee. On November 30, 2005, the trial court entered a new order which replaced its order of October 3, 2005. What follows is the substance of the court’s November 30, 2005 order.

As far as the costs of discovery were concerned, the court ordered Loretta to bear the cost of the production of documents that are defined in Code of Civil Procedure section 2031.280, subdivision (b);^[8] the final allocation of these costs between Christian and Loretta is to be determined at the time of the trial of the “property issues.” Loretta and petitioners are to share the cost in the instance of electronic discovery that does not fall within the definition set forth in section 2031.280.

The court adopted the referee’s finding that Cooper “credibly” asserted that the cost of compliance with the discovery request was not as burdensome and expensive as petitioners’ experts predicted.

The court addressed the issue of the attorney-client privilege in some detail. The court found that Loretta holds a 50 percent limited partner interest in EFLP, and that Christian is the general partner with 49 percent limited, and one percent general, partnership interest. The court also found that Loretta had signed the “Holders Agreement” as a “Holder” under that agreement, and that this agreement included a provision that Sidley & Austin prepared the Holders Agreement on behalf of the Canyon Companies and not on behalf of any individual Holder.

The court, citing McCain, supra, 185 Cal.App.3d 575, 580-581, noted that partners are entitled to access to partnership records and documents, even if those records are in the possession of the law firm that represents the partnership. The court found: “Under the unique facts of this case, [Loretta] is more akin to a limited partner in the Canyon Companies and as such is entitled to review their documents.” The court rejected the argument that Loretta was seeking the information for personal, and not partnership, reasons, and overruled petitioners’ work product objections. The court closed this topic by stating: “This ruling is not intended to give [Loretta] access to any communications respecting the [petitioners] as the client in their individual capacity. If such information is arguably included in the document requests[,] the individual responding shall submit a privilege log.”

The court adopted the referee’s recommendation that there is no “exhaustion of remedies” requirement (Loretta’s request of Christian) before Loretta can request the documents from petitioners.

The court ordered that all three petitioners appear for their depositions.

The court adopted the referee’s recommendations on the specific document requests, with some minor, nonessential variations.

DISCUSSION

1. Loretta Is a Limited Partner in EFLP; She Is Not a Member or a Limited Partner in any Other Canyon Entity

The question is whether Loretta’s status as a limited partner in EFLP confers upon her some form of legal status or association in entities other than EFLP, notably in the limited liability companies CCA and CCRA. We conclude that the answer to this question is in the negative.

There are two reasons for this. First, one becomes a “member” of a limited liability company with the consent, or the agreement, of the existing members; a “membership” in a limited liability company cannot be imposed without the consent of the members. Second, where, as here, a limited partnership is a member of a limited liability company, the law does not vest a limited partner with a legal interest in the limited liability company.

First. A limited liability company is an entity “having one or more members” organized under Title 2.5 of the Corporations Code. (Corp. Code, § 17001, subd. (t).) As noted, a member of a limited liability company is a person who has been admitted to a limited liability company as a member in accordance with the articles of organization or operating agreement, or an assignee of an interest in a limited liability company who has become a member pursuant to section 17303.^[9] (Corp. Code, § 17001, subd. (x).) A limited liability company is formed by the consent or agreement of its members; the admission of a member requires the consent of the members.^[10] A member cannot be imposed on a limited liability company by some outside authority or source without the agreement of the members of the limited liability company.

It follows that, absent any indication that Loretta is a member of either CCA or CCRA or any other Canyon entity, that status cannot be conferred upon her by a court or any parties other than members of these limited liability companies.

This squares with the realities of the situation. The other members of CCA and CCRA chose to associate themselves with the current members of these limited liability companies, and not with Loretta. Loretta cannot be imposed on what is essentially a consensual business entity without the consent of the members of these entities.

Second. Partnerships, limited partnerships, limited liability partnerships, and limited liability companies are all extensively defined and regulated under the Corporations Code.^[11] This has internal and external consequences. Internally, as far as these forms of business associations are concerned, the applicable statute defines who is a part of the association. We have seen that, in the instance of a limited liability company, the conditions and definition of “membership” are clearly defined. A limited partner in a limited partnership that is a member of a limited liability company is not given the status of a member in the limited liability company. Externally, the law recognizes partnerships, limited partnerships, limited liability partnerships, and limited liability companies as forms of business associations. The Corporations Code does not recognize as an additional form of association the relationship between the limited partner of a limited partnership and the limited liability company, when it is the limited partnership that is a member of a limited liability company.

The trial court’s ruling that “[u]nder the unique facts of this case, [Loretta] is more akin to a limited partner in the Canyon Companies and as such is entitled to review their documents” is in error. There are two reasons why this is so.

First, while the Canyon entities comprise a conglomeration of various forms of business associations, we do not see what is unique about Loretta’s status as a limited partner in EFLP. That status is defined by the limited partnership agreement and the limited partnership act (Corp. Code, § 15611 et seq.). Loretta’s status, and her rights and remedies, are to be found in the foregoing instruments. While the general setting is without a doubt that of a sophisticated business venture of substantial value, there is nothing “unique” about Loretta’s status. She is a limited partner in a limited partnership.

Second, neither the law nor the practical realities make Loretta “akin to a limited partner in the Canyon Companies.” To begin with, nowhere does the law state, define, or recognize a status that is “akin to a limited partnership.” There either is, or is not, a limited partnership as that concept is defined by the Corporations Code. A limited partnership “means a partnership formed by two or more persons under the laws of this state and having one or more general partners and one or more limited partners.” (Corp. Code, § 15611, subd. (r).) The fundamental error in giving Loretta a status that is “akin to a limited partnership” is that this imposes Loretta as a “partner” on persons and/or entities who do not consent to Loretta as a “partner.” The practicalities of the situation confirm the legal realities. Loretta has no control or participation in any of the Canyon entities other than EFLP, where she is a limited partner with no management or control powers. Since Loretta has no control of, or participation in, any entity other than EFLP, it is wrong to invent for her a status in the Canyon entities, i.e., a status “akin to a limited partnership.”

Concluding that Loretta is the client of the lawyers of these limited liability companies redoubles the violation of the consensual principle that underlies limited liability companies. Not only does the trial court’s ruling impose Loretta on the limited liability companies as a de facto member without the consent of the members of those companies, the trial court’s ruling permits her to delve into confidential communications between the limited liability companies and their lawyers. The reality, however, is that Loretta is a limited partner in EFLP and that she has no other recognized status or relationship to any other Canyon entity. This means that she is not a client, but a third party as far as the other Canyon entities are concerned. Accordingly, the ruling that Loretta is a “joint holder” of the attorney-client privilege is erroneous and set aside. The Canyon entities other than EFLP,^[12] including CCA and CCRA, may assert the attorney-client privilege and the work product doctrine vis-Ã -vis Loretta’s request for documents.

2. Whether Loretta Is a Client of Attorneys Retained by EFLP Depends on the Resolution of Several Factors

We address separately in this section the standards and rules that apply to the duty of EFLP to produce documents requested by Loretta. This matter is complicated by the circumstance that attorneys representing EFLP may or may not have an attorney-client relationship with Loretta as a limited partner in EFLP.

The general rule is that when the entity is the client, the natural persons who are members of the entity are not the clients. Illustrative of this rule is Smith v. Laguna Sur Villas Community Assn. (2000) 79 Cal.App.4th 639, 642-644. The court held that the client was the board of the homeowners’ association, not the individual members of the association. The same court also noted that the shareholders of a corporation are not clients even in a closely held corporation, when the corporation has retained counsel. Cases to the same effect are Skarbrevik v. Cohen, England & Whitfield (1991) 231 Cal.App.3d 692, 704, and Meehan v. Hopps (1956) 144 Cal.App.2d 284, 293.

In the instance of partnerships, it has been held that “mere representation of a partnership does not per se constitute representation of the individual partners” and that a number of factors determine whether a lawyer retained by the partnership also represents individual partners. (Johnson v. Superior Court (1995) 38 Cal.App.4th 463, 477.) The factors to be considered are: (a) the size of the partnership; (b) the nature and scope of the attorney’s engagement; (c) the kind and extent of contacts between the attorneys and the individual partners; (d) the attorney’s access to financial information relating to the individual partner’s interests; and (e) whether the totality of the circumstances, including the parties’ conduct, implies an agreement by the partnership attorney not to accept other representations adverse to the individual partner’s personal interests. (Ibid.)

In the event documents are demanded from EFLP that Loretta is not entitled to as a limited partner (see text immediately following) and that are claimed to be protected by the attorney-client and/or work product privileges between EFLP and its counsel, the trial court should apply the foregoing factors to determine whether attorneys representing EFLP also represent Loretta.

The limited partnership act contains provisions that set forth the right of limited partners to inspect and copy records of the limited partnership. (Corp. Code, § 15634.) Section 15634 is part of the revised Uniform Limited Partnership Act, enacted on July 1, 1984. The court in McCain, supra, 185 Cal.App.3d 575, 580, footnote 3 and accompanying text, construed the limited partnership law that was in effect prior to July 1, 1984. Thus, while the general observations of the court in McCain about the relationship between partners continue to be valid, the trial court should look to Corporations Code section 15643 to determine what EFLP documents Loretta is entitled to as a limited partner, irrespective of any assertions of privilege.^[13]

3. The Holders Agreement Does Not Make Loretta a Client of Attorneys Representing Various Canyon Entities

Loretta contends that it is undisputed that she is a “Holder” of the “Canyon LLCs” and that “by extension [Loretta], is therefore entitled to review the otherwise confidential or privileged business documents of the Canyon LLCs.”

The purpose of the Holders Agreement is, according to its terms, to restrict the transfer of Canyon securities in order to provide for “continuity in the control and operation of the Canyon Group.” The Holders Agreement also recites that each of the Holders, including Loretta, is a holder of equity interests in one or more members of the Canyon Group. Loretta’s equity interest is her interest as a limited partner in EFLP. Thus, the Holders Agreement does not invest Loretta with any property or status other than the one she has as a limited partner of EFLP. Moreover, as noted by the trial court, the Holders Agreement states that it was prepared by Sidley & Austin “as counsel for the Canyon Group, and not as counsel for any Holder. Each party has been advised to seek independent counsel to represent such party in connection with this Agreement and any documents related thereto.” Thus, the Holders Agreement did not create an attorney-client relationship between attorneys for the various Canyon entities and Loretta.

We note that in her brief Loretta refers to her “membership interest” in the Canyon entities. As noted, Loretta, as opposed to EFLP, is not a member of any of the Canyon limited liability companies. Thus, she cannot, and does not, have a “membership interest” as that term is defined in Corporations Code section 17001, subdivision (z).)^[14]

Loretta additionally contends that petitioners’ invocation of the attorney-client privilege creates a new privilege, i.e. a “managing partner’s privilege.” We disagree. In each instance, it is the client, i.e., the particular Canyon entity, that has the right to invoke the attorney-client privilege. This creates no new privilege and is no more than existing law recognizes.

4. The Request for Business Records Must Specifically Describe Each Individual Item or Set Forth with Reasonable Particularity Each Category of the Item; the Trial Court Must Also Consider Alternatives That Are Available

“A deposition subpoena that commands only the production of business records for copying shall designate the business records to be produced either by specifically describing each individual item or by reasonably particularizing each category of item.” (Code Civ. Proc., § 2020.410, subd. (a).)

“In Greyhound Corp. v. Superior Court (1961) 56 Cal.2d 355 [], the seminal case in California civil discovery, the court gave examples of improper ‘fishing’ which clearly apply here: ‘The method of “fishing” may be, in a particular case, entirely improper (i.e., insufficient identification of the requested information to acquaint the other party with the nature of information desired, attempt to place the burden and cost of supplying information equally available to both solely upon the adversary, placing more burden upon the adversary than the value of the information warrants, etc.). Such improper methods of “fishing” may be (and should be) controlled by the trial court under the powers granted to it by the statute.’ (Id. at pp. 384-385.) The concerns for avoiding undue burdens on the ‘adversary’ in the litigation expressed in Greyhound apply with even more weight to a nonparty.

Had the Greyhound court been able to anticipate the tremendous burdens promiscuous discovery has placed on litigants and nonparties alike, it might well have taken a stronger stand against such ‘fishing.’” (Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 224-225.)

Loretta states that the primary source of income during the marriage was Christian’s income and earnings derived from his work with the Canyon entities. There are dates and events that appear to be significant in determining Christian’s income and the assets of the community. Examples of such events appear to be the fact that while the dissolution proceeding was pending, Christian was removed from his executive, equity position and then reinstated with a reduction of his equity position, and he allegedly received a sum of $40 million after his separation from Loretta. In other words, determining Christian’s income and the assets of the community will require a consideration of a number of events and factors that are unique to this case.

This having been said, the fact remains that Loretta is seeking information about income and assets she is entitled to. Unfortunately, in seeking this information, the categories set forth in her request for documents are too broad and the categories of items requested are not reasonably particularized, as the law requires.

A substantial number of the categories in Loretta’s request for production are patently too broad. Examples of such requests are “all communications” between Christian and petitioners regarding the formation of CCA and CCRA and “all documents” which “refer, relate or pertain” to the negotiations and creation of the “Holders Agreement” of January 1, 2000. On their face, these categories do not appear to relate to Christian’s income and assets. Other categories may relate to income and assets, but are not particularized as to Christian’s income and assets. An example of such a request is “all communications” between Christian and petitioners regarding the transfer of assets from Canyon Capital Management to CCA. This request can be particularized by the addition of the phrase “that relate to Christian’s income and assets.” We note that there are a few categories that are appropriately particularized, such as the request for “all documents” that “refer, relate or pertain” to bonuses paid to Christian by CCA and CCRA, and the request for “all documents” that “refer, relate or pertain” to expenses incurred by Christian which will be reimbursed by CCA.

As the great bulk of the requests are framed now, they are flawed because, in the words of the Greyhound decision, the categories provide “insufficient identification of the requested information to acquaint the other party with the nature of information desired.” (Greyhound Corp. v. Superior Court, supra, 56 Cal.2d 355, 385.) Thus, the request for “all communications” between Christian and petitioners regarding the formation of CCA and CCRA leaves one in the dark about what information Loretta is seeking in this request, keeping in mind that the request is being made in a marital dissolution proceeding. In this connection, we note that if Loretta is seeking information about subject(s) other than income and assets, she should say what that subject is, and then tailor the request to that subject. As it is, the expectation in a marital dissolution proceeding is that the information sought is about income and assets.

The trial court also erred in not considering alternatives that are available to requiring petitioners to produce documents that relate to, and describe, income and assets. That alternative source is Christian. While it is true that there is no rule that requires Loretta to “exhaust remedies,” it has been held that it is an abuse of discretion not to consider, if not require, less intrusive alternatives to the production of documents. (Allen v. Superior Court (1984) 151 Cal.App.3d 447, 453.) While information from Christian about income and assets does not do away with the advisability of obtaining such information from third parties, information received from Christian would enable Loretta to particularize her production demands on petitioners, and would therefore lessen the burden imposed on the petitioners.

It must be kept in mind that petitioners are nonparties. While the public interest in the system of justice requires that petitioners must shoulder some burdens,^[15] the same public interest mandates that that burden should be moderated and lessened whenever possible without impairing the interests of justice. This means that trial courts should employ a flexible approach in looking for ways to ensure that the party seeking discovery obtains the requested information with a minimum of hardship, cost, and disruption to the party producing the documents.

Finally, we do not think that the trial court adequately resolved the question of how burdensome compliance would have proven to petitioners. Faced with an estimate of 5,260 hours by petitioners and 10 hours by Loretta, it is not enough to say that Loretta’s witness was more credible, especially when, on their face, the document requests are as sweeping as they are in this case. Credible or not, one would think that an estimate of 10 hours for Loretta’s production request is, mildly put, unrealistic.

5. One Deposition by a Custodian of Records Should Suffice; Additional Depositions of Custodians of Record Should Take Place Only if There Is a Need for Further Depositions

The trial court ordered all three custodial depositions to go forward. We do not think this is necessarily required. Petitioners should designate the persons most knowledgeable as a custodian of records. If, after this deposition has been taken, there is a need for further custodial depositions, absent an agreement between the parties the court should order such further depositions as appear to be necessary.

DISPOSITION

The orders of October 3, 2005, and November 30, 2005, are vacated and set aside. The case is remanded for further proceedings consistent with this opinion. Petitioners are to recover their costs in this writ proceeding.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

FLIER, J.

We concur:

COOPER, P. J.

RUBIN, J.

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[1] Evidence Code section 953 provides in relevant part that the “holder” of the attorney-client privilege is “[t]he client when he has no guardian or conservator.”

^[2] As an example, the agreement gives the general partner the power to “execute any and all agreements, contracts, documents, certifications, and instruments necessary or convenient in connection with the management, maintenance and operation of the Property, or in connection with managing the affairs of the Partnership.”

^[3] Corporations Code section 17303 provides in relevant part: “Except as otherwise provided in the articles of organization or the operating agreement, an assignee of an interest in a limited liability company may become a member only if a majority in interest of the other members vote in favor of the assignee’s admission to the limited liability company as a member.” (Corp. Code, § 17303, subd. (a).)

^[4] What we have heretofore referred to as the “Canyon Companies” is the same as the “Canyon entities” referred to by the referee. We will use these terms interchangeably.

^[5] McCain, supra, 185 Cal.App.3d 575, 580-581, held that a law firm representing a partnership must make available to a partner records and documents in the firm’s possession that reflect work done by the firm for the partnership.

^[6] Respectively, these provisions of the Code of Civil Procedure govern subpoenas issued for consumer personal records and employment records and give certain rights to the subjects of these records upon the issuance of subpoenas.

^[7] There were “all documents” which “refer, relate or pertain” to the formation of Canyon Capital Management, L.P., CCA, and CCRA.

^[8] Code of Civil Procedure section 2031.280 provides: “(a) Any documents produced in response to an inspection demand shall either be produced as they are kept in the usual course of business, or be organized and labeled to correspond with the categories in the demand.

(b) If necessary, the responding party at the reasonable expense of the demanding party shall, through detection devices, translate any data compilations included in the demand into reasonably usable form.”

^[9] See footnote 3, ante, for the text of Corporations Code section 17303.

^[10] “Acquisition of Interest. A person may become a member of a limited liability company in two ways:

(a) By acquiring a membership interest directly from the company in the manner specified in the articles of organization or the operating agreement. If neither the articles nor the operating agreement provides for acquisition of membership, a person may become a member on the vote of a majority in interest of the members, excluding the vote of the person acquiring the membership interest, and only on becoming a party to the operating agreement. (Corp.C. 17100(a)(1).)

(b) As an assignee of a membership interest, on compliance with Corp.C. 17303(a) (infra, § 162), and at the time and in the manner provided in the articles of organization or the operating agreement, or if no provisions are made, then when the assignee becomes a party to the operating agreement. (Corp.C. 17100(a)(2).)” (9 Witkin, Summary of California Law (10th ed. 2005), Partnership, § 152, p. 714.)

^[11] (See Corp. Code, §§ 16100 et seq. [partnerships], 15611 et seq. [limited partnerships], 16951 et seq. [limited liability partnerships], and 17000 et seq. [limited liability companies].)

^[12] For the treatment of production requests addressed to EFLP, see section 2 immediately following.

^[13] The court in McCain noted that the documents that it ruled had to be produced to a partner in that case would be covered by the provisions of the revised Uniform Limited Partnership Act, enacted on July 1, 1984, i.e., Corporations Code section 15634. (McCain, supra, 185 Cal.App.3d 575, 580.)

^[14] “‘Membership interest’” means a member’s rights in the limited liability company, collectively, including the member’s economic interest, any right to vote or participate in management, and any right to information concerning the business and affairs of the limited liability company provided by this title.” (Corp. Code, § 17001, subd. (z).)

^[15] We note that petitioners concede that Loretta may properly demand “specific, well-tailored, justifiable requests for the production of non-privileged financial information she cannot obtain from [Christian].” While material obtained from Christian should be taken into account in determining what documents petitioners should produce, Loretta is not required to show that she was not able to obtain documents from Christian before she requests petitioners to produce them.