On March 31, 2003, plaintiffs Comcast of Los Angeles, Inc., and other subsidiaries of Comcast Corporation, filed a complaint against defendants Top End International Inc., All Trend International Inc., CoolBX Inc., aka Cool Box Inc., aka Original Coolbox, Hsi Hsiao, aka David Hsiao, Shirley Kuo, aka Hsiao Kuo, East Point Enterprises, Inc ., and Does 1-50, claiming violations of Title 42 U.S.C. § 553 and California Penal Code § 593d. The gravamen of plaintiffs' complaint is that plaintiffs provide cable television services to customers in the greater Los Angeles area and, at all times, defendants have engaged in a scheme to illegally manufacture, modify, sell or otherwise distribute for profit “pirate” cable television descramblers, which have the capability to unlawfully descramble all scrambled premium and pay per view cable television programming submitted on plaintiffs' system. Plaintiffs seek monetary damages under the Communications Act, unjust profits under the California Penal Code and injunctive relief. Defendants Top End International Inc., All Trend International Inc., East Point Enterprises Inc., CoolBX Inc., Hsi Hsiao and Shirley Kuo answered the complaint and raised several affirmative defenses.
On April 18, 2003, pursuant to a temporary restraining order issued by District Judge John F. Walter, the United States Marshal's Service seized materials at defendants' premises and filed inventory lists of the materials seized, including some documents. On May 12, 2003, Judge Walter issued a preliminary injunction enjoining defendants from continuing to manufacture or sell and distribute the “pirating” devices.
*2 Rule 26(b)(1), as recently amended, permits discovery in civil actions of “any matter, not privileged, that is relevant to the claim or defense of any party....” Generally, the purpose of discovery is to remove surprise from trial preparation so the parties can obtain evidence necessary to evaluate and resolve their dispute. Oakes v. Halvorsen Marine Ltd., 179 F.R.D. 281, 283 (C.D.Cal.1998). Toward this end, Rule 26(b) is liberally interpreted to permit wide-ranging discovery of information even though the information may not be admissible at the trial. Jones v. Commander, Kansas Army Ammunitions Plant, 147 F.R.D. 248, 250 (D.Kan.1993). The party who resists discovery has the burden to show discovery should not be allowed, and has the burden of clarifying, explaining, and supporting its objections. Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir.1975); Nestle Foods Corp. v. Aetna Cas. & Sur. Co., 135 F.R.D. 101, 104 (D.N.J.1990).
Central to the pending dispute is the nature and scope of the Fifth Amendment privilege against self-incrimination. The Fifth Amendment privilege against self-incrimination applies in civil proceedings. United States v. Balsys, 524 U.S. 666, 671-72, 118 S.Ct. 2218, 2222, 141 L.Ed.2d 575 (1998); Lefkowitz v. Turley, 414 U.S. 70, 77, 94 S.Ct. 316, 322, 38 L.Ed.2d 274 (1973). Indeed,
[t]he privilege is not ordinarily dependent upon the nature of the proceeding in which the testimony is sought or is to be used. It applies alike to civil and criminal proceedings, wherever the answer might tend to subject to criminal responsibility him who gives it. The privilege protects a mere witness as fully as it does one who is also a party defendant.
McCarth v. Arndstein, 266 U.S. 34, 40, 45 S.Ct. 16, 17, 69 L.Ed. 158 (1924). “However, in the civil context, the invocation of the privilege is limited to those circumstances in which the person invoking the privilege reasonably believes that his disclosures could be used in a criminal prosecution, or could lead to other evidence that could be used in that manner.” Doe v. Glanzer, 232 F.3d 1258, 1263 (9th Cir.2000); United States v. Bodwell, 66 F.3d 1000, 1001 (9th Cir.1995) (per curiam). Nonetheless, “ ‘[t]he privilege afforded not only extends to answers that would in themselves support a conviction ... but likewise embraces those which would furnish a link in the chain of evidence needed to prosecute the claimant for a ... crime.” ’ United States v. Hubbell, 530 U.S. 27, 38, 120 S.Ct. 2037, 2044, 147 L.Ed.2d 24 (2000) (quoting Hoffman v. United States, 341 U.S. 479, 486, 71 S.Ct. 814, 818, 95 L.Ed. 118 (1951)); Balsys, 524 U.S. at 671-72, 118 S.Ct. at 2222.
“In the case of a [request to produce documents,] the only thing compelled is the act of producing the document....” Fisher v. United States, 425 U.S. 391, 410 n. 11, 96 S.Ct. 1569, 1580-81 n. 11, 48 L.Ed.2d 39 (1976); Baltimore City Dep't of Soc. Servs. v. Bouknight, 493 U.S. 549, 554-55, 110 S.Ct. 900, 905, 107 L.Ed.2d 992 (1990). The compelled production of documents may nonetheless implicate the privilege against self-incrimination “because the act of complying with the ... demand testifies to the existence, possession, or authenticity of the things produced.” Bouknight, 493 U.S. at 555, 110 S.Ct. at 905; Fisher, 425 U.S. at 410, 96 S .Ct. at 1581. Yet, the Fifth Amendment only protects the contents of documents created by the privilege holder under some method of compulsion, and not the content of documents voluntarily prepared. United States v. Doe, 465 U.S. 605, 610, 104 S.Ct. 1237, 1241, 79 L.Ed.2d 552 (1984); In re Grand Jury Proceedings, 759 F.2d 1418, 1419 (9th Cir.1985); In re Grand Jury Proceedings, 745 F.2d 1250, 1251 (9th Cir.1984).
*3 Documents not prepared by the privilege holder are not protected by the Fifth Amendment. Fisher, 425 U.S. at 409-10, 96 S.Ct. at 1580-81; United States v. Osborn, 561 F.2d 1334, 1339 (9th Cir.1977). Therefore, for instance, “the contents of ... bank records ... are not privileged under the Fifth Amendment.” Doe v. United States, 487 U.S. 201, 206, 108 S.Ct. 2341, 2345, 101 L.Ed.2d 184 (1988); In re Grand Jury Proceedings, 40 F.3d 959, 961-62 (9th Cir.1994), cert. denied,
515 U.S. 1132, 115 S.Ct. 2558, 132 L.Ed.2d 811 (1995).
Furthermore, the privilege against self-incrimination only protects natural persons, not artificial entities such as corporations. Doe, 487 U.S. at 206, 108 S.Ct. at 2345; Braswell v. United States, 487 U.S. 99, 102, 108 S.Ct. 2284, 2287, 101 L.Ed.2d (1988). In other words, “corporate records are not private and therefore are not protected by the Fifth Amendment.” Braswell, 487 U.S. at 109, 108 S.Ct. at 2290. Thus, for example, even if defendants prepared the documents in question, if the defendants were acting in their corporate capacities when they prepared such documents, the documents would be corporate documents in defendants' temporary possession, custody or control, but not documents privileged under defendants' individual Fifth Amendment right against self-incrimination. Id. at 106-07, 108 S .Ct. at 2289; United States v. MacKey, 647 F.2d 898, 900-01 (9th Cir.1981) (per curiam).
The Court, applying the foregoing legal standards to the requests for production of documents at issue, finds defendants Hsiao's and Kuo's self-incrimination objections to be completely without merit. First, plaintiffs' amended discovery requests are propounded to defendants Hsiao and Kuo, in their capacities as the custodians of records for the four corporations named therein, and neither Hsiao nor Kuo deny he or she is a custodian. As discussed above, a corporation has no Fifth Amendment privilege against self-incrimination, and “corporate custodian[s] such as [defendants] may not resist [requests] for corporate records on Fifth Amendment grounds[,]” even if the requests are addressed to defendants as custodians of the corporate records. Braswell, 487 U.S. at 108-09, 108 S.Ct. at 2290.
Therefore, there is no merit to defendants' claim of the privilege against self-incrimination, and plaintiffs' motion should be granted.
At oral argument, defendants contended that last week they had produced all responsive documents to plaintiffs; thus, defendants argued the pending discovery motion is moot. However, plaintiffs disputed the completeness of plaintiffs' production, noting that only 90 or so documents had been produced by defendants and these documents do not include vital sales invoices or show the sales prices and the number of sales by defendants of the “pirate” descrambling devices. Further, plaintiffs argued that such sales invoices are kept on defendants' businesss computers, as discovered during the Marshal's execution of the search and seizure warrants, and no computer documents were produced to plaintiffs by defendants.
*4 Based on the foregoing discussion, the Court would like to take this opportunity to remind defendants and their counsel that they have an obligation to conduct a reasonable inquiry into the factual basis of defendants' discovery responses. National Ass'n of Radiation Survivors v. Turnage, 115 F.R.D. 543, 554-56 (N.D.Cal.1987). Under Rule 34, a party must produce or permit inspection of documents responsive to a request for production of documents when such documents are in the party's “possession, custody or control.” “[F]ederal courts have consistently held that documents are deemed to be within [a party's] ‘possession, custody or control’ for purposes of Rule 34 if the party has actual
possession, custody, or control, or has the legal right to obtain the documents on demand.” In re Bankers Trust Co., 61 F.3d 465, 469 (6th Cir.1995) (emphasis added), cert, dismissed,
517 U.S. 1205, 116 S.Ct. 1711, 134 L.Ed.2d 808 (1996); see also
United States v. Int'l Union of Petroleum and Indus. Workers, AFL-CIO, 870 F.2d 1450, 1452 (9th Cir.1989) (“Control is defined as the legal right to obtain documents upon demand.”). Thus, “[a] party responding to a Rule 34 production request ... ‘is under an affirmative duty to seek that information reasonably available to [it] from [its] employees, agents, or others subject to [its] control.” ’ Gray v. Faulkner, 148 F.R.D. 220, 223 (N.D.Ind.1992) (citation omitted). Accordingly, defendants must produce all the business records on their computers, even if they have, since the Marshal's searches, turned those computers over to others or otherwise transferred the information on their computers to others for safe-keeping. As discussed at the hearing, computer records may be produced to plaintiffs in either electronic format or hard copy, at defendants' option.