II. Motion of Cal-Am to Compel Compliance With Prior Discovery Ruling and to Award Sanctions

On June 14, 1999, Cal-Am filed a Motion to Compel Compliance With Discovery Order and to Award Sanctions. In its motion, Cal-Am seeks to compel the EL&L Group to answer Cal-Am's data requests, as the Assigned Commissioner had ordered in the May 3 Scoping Memo.

On March 3, 1999, Cal-Am sent data requests to EL&L, which under the set schedule should have been answered promptly. Cal-Am requested the details of any alleged violations of drinking water quality regulation, if any. EL&L timely responded that the Commission had no jurisdiction or authority over the plaintiffs which EL&L and the companion law firms represent. After failing to resolve the discovery dispute, Cal-Am filed its first motion to compel answers to its data requests, noting that EL&L raised no other objections to answering the questions. Cal-Am requested both evidentiary and monetary sanctions.

On April 13, 1999 in response to Cal-Am's first motion to compel, EL&L contended that: the Commission had no authority or jurisdiction over its clients, the civil litigants; and, the data request was beyond the scope of the OII and beyond the limits of discovery permitted under Public Utilities Code Section 17942 and Code of Civil Procedure Section 20203. EL&L argued that its lawsuits and the contentions therein were not an issue in the OII, but that the OII posed specific issues and questions to the respondents and DHS. EL&L alleged that its contentions were irrelevant to this proceeding and that contention interrogatories were not properly asked of non-parties. EL&L alleged that it was not a party in this proceeding. EL&L accused Cal-Am of attempting to inappropriately lift the stay of discovery by the civil courts.

In a May 3, 1999 Scoping Memo, the Assigned Commissioner (AC) rejected EL&L's allegations of non-party status, reciting EL&L's extensive participation in this proceeding as a full party. The form of the interrogatories was, therefore, appropriate. He ruled that the Commission had personal jurisdiction over EL&L and they must answer Cal-Am's data request within 10 days, as well as similar additional questions posed by the AC in the scoping memo in an attempt to narrow the issues in the proceeding.

On May 18, 1999 in response to the May 3 Scoping Memo rulings, EL&L filed an objection to its questions coupled with a notice of withdrawal. EL&L continued to argue that the Commission does not have the jurisdiction or authority to address the issues in the OII. EL&L contended it did not have adequate information to respond to the Commission or Cal-Am's questions because discovery in the Superior Court cases was stayed. EL&L then indicated it was withdrawing from the proceeding.

In its response to EL&L's objection/request to withdraw, Cal-Am opposed EL&L's position and gave notice that it would file a second Motion to Compel.

Cal-Am contends that prior to filing its second motion to compel June 14, it made reasonable efforts to meet and confer with the firms comprising the EL&L Group (pursuant to the requirements of Commission Resolution ALJ-164) for the purpose of resolving any differences regarding the mandated discovery, but that these efforts have failed. Cal-Am asserts that as of June 14, 1999, the EL&L Group had not answered any of Cal-Am's data requests which were served on March 3, 1999. Instead of responding to the data requests, the EL&L Group simply notified the other parties on May 18, 1999, without seeking leave from the Commission, that the EL&L Group was withdrawing from these proceedings. Cal-Am asserts that this attempt to withdraw is compelling evidence of the EL&L Group's continued refusal and failure to comply with the discovery rulings in the May 3 Scoping Memo.

For the EL&L Group's failure to comply, Cal-Am requests both evidentiary and monetary sanctions. As evidentiary sanctions, Cal-Am seeks the following binding findings:

Drinking water served by Cal-Am at no time contained chemicals or contaminants that created a health risk to Cal-Am's customers.

The water quality standards applicable to Cal-Am were at all times adequate.

Cal-Am was at all times in full compliance with such standards.

As monetary sanctions, Cal-Am seeks reimbursement in the amount of $15,000, or alternatively, an amount equal to the reasonable attorneys fees and costs expended by Cal-Am to file its two discovery motions.²

Cal-Am bases its request for evidentiary sanctions on the suggestion in the May 3 Scoping Memo that a request for such sanctions be renewed in the event the EL&L Group did not comply with the Scoping Memo's discovery rulings. (May 3 Scoping Memo, mimeo., at 8.) Cal-Am also bases its request for monetary sanctions on Decision (D.)98-03-073, Pacific Enterprises, et al., 1998 Cal.PUC Lexis 1, 184 PUR4th 417, where we concluded that (1) imposing sanctions for recalcitrance in discovery is part and parcel of the power to control a Commission proceeding, and (2) discovery sanctions in Commission proceedings include the power to order payment of reasonable attorneys fees and costs.

Finally, Cal-Am urges that if any further violations of the Commission's orders occur, the Commission should issue an order to show cause why the EL&L Group should not be held in contempt.

A. Response of the EL&L Group

On June 23, 1999, the EL&L Group filed an opposition to Cal-Am's June 14 motion to compel. For several reasons, EL&L argues that the Commission should deny this motion, and should instead issue an order directing Cal-Am to withdraw its data requests.

First, the EL&L Group argues that the Commission has neither subject matter jurisdiction to address the issues in this proceeding, nor personal jurisdiction over any of the plaintiffs in the pending civil lawsuits.³ EL&L begins by arguing that Cal-Am's data requests seek information regarding plaintiffs' allegations in the pending lawsuits, which are not the subject of this proceeding. EL&L also contends that Cal-Am misstates the purpose of the OII, which was not to investigate the accuracy or correctness of the EL&L Group's contentions, but to investigate whether the regulated utilities have complied with safe drinking water standards. Accordingly, EL&L contends that plaintiffs' allegations in the civil lawsuits are irrelevant to this investigation and should be addressed by the Superior Court rather than this Commission. The EL&L Group concludes by noting that the Commission cannot compel them or their clients to respond to Cal-Am's data requests, nor can the Commission make findings that preclude the assertion of any of their clients' contentions.

In the same vein, EL&L contends that Cal-Am is inappropriately attempting to litigate the civil cases before the Commission.⁴ Cal-Am's data requests should be propounded in the Superior Court after the stay is lifted, according to EL&L. If this Commission were to grant the motion to compel, argues EL&L, the Commission would effectively be lifting the stay and allowing litigation in this forum of the lawsuits. Such an act would not only be beyond the jurisdiction of the Commission, but would be a result that the regulated utilities have said they wish to avoid, according to EL&L.

The EL&L Group also argues that Cal-Am's data requests conflict with several well-established Commission policies regarding discovery. First, EL&L maintains that under the Commission's rules, the right to obtain discovery from nonparties such as EL&L clients is limited. To support this argument, EL&L relies upon D.94-08-028, In Re Alternative Regulatory Frameworks for Local Exchange Carriers, 55 CPUC2d 672 (1994), which holds that members of a trade association are not automatically subject to discovery merely because their association has intervened as an interested party in a Commission proceeding. Second, EL&L argues that Cal-Am's data requests are contention interrogatories, which cannot be propounded to nonparties under Public Utilities Code § 1794 and § 2020 of the Code of Civil Procedure (CCP). Third, the EL&L Group contends that evidence regarding the violations of drinking water quality standards and personal injury lies solely within the possession of Cal-Am. Accordingly, the burden of discovery should be placed upon EL&L clients only if Cal-Am can demonstrate that it does not have the requested materials, a showing Cal-Am has not made.

The EL&L Group reiterates that because discovery in the civil suits has been stayed, it does not have adequate information to answer the questions in the Scoping Memo, and should not be compelled to do so.⁵ EL&L repeats that the focus of this investigation has been improperly shifted from the respondents to the injured plaintiffs represented by EL&L and RK&M. The EL&L Group asserts that apart from public information, the only information it has in this proceeding to answer the data requests at issue is the allegedly inadequate information that the regulated utilities have provided themselves.

B. Responses Supporting Cal-Am's Motion

Responses supporting Cal-Am's motion to compel were filed by Southern California Water Company (SoCal), San Gabriel, Citizens and California Water Association (CWA).

SoCal's vice president of water quality, Denise Kruger, filed a response indicating that on February 18, 1999, SoCal produced for EL&L all of the workpapers underlying SoCal's compliance report. Ms. Kruger seriously questions how, after seeking and receiving information from several respondents, reviewing the respondents' compliance filings and filing numerous lawsuits, the EL&L Group would still be unable to answer questions about the basis for these lawsuits. Ms. Kruger argues that EL&L should not be allowed to benefit from the Commission's rules and regulations when they favor EL&L, and not abide by them when they do not.

San Gabriel contends that in compliance with the Assigned Commissioner's November 23, 1998 ruling, it contacted the EL&L Group to make available documents supporting the San Gabriel compliance report. Between February 2-5, 1999, San Gabriel allowed EL&L to inspect and copy these documents. San Gabriel states that EL&L made no objections to the documents produced, nor did EL&L propound additional data requests. Thus, San Gabriel argues, the EL&L Group has no basis for alleging that it has been denied access to data critical for answering the data requests. San Gabriel also challenges the EL&L Group's assertion that Question 16 in the May 3 Scoping Memo requires responses from experts in the civil lawsuits. San Gabriel argues that parties in this proceeding have prepared to offer expert testimony via a technical advisory panel, in which the EL&L Group is free to participate.

Citizens believes that the EL&L Group's contention that it does not have the information necessary to answer the questions in the Scoping Memo is false, since Citizens and other respondents have provided all the information that EL&L requested in discovery. Citizens claims it has not denied access to anything relating to its compliance with water quality standards, and points out that EL&L has not specified with particularity any information to which access has allegedly been denied. Citizen continues that since a civil lawsuit cannot properly be filed unless the plaintiff has knowledge of facts supporting its claims of injury and alleged wrongdoing, the fact that EL&L is claiming to have no such information in this proceeding demonstrates that its lawsuits were filed without an adequate factual basis, and should be dismissed immediately. Citizens concludes that the Commission clearly has authority to order answers to its questions, and that the stays in the civil court actions apply only to discovery in those actions. Indeed, Citizens continues, the stays were granted specifically because this Commission does have jurisdiction over drinking water quality and had opened this investigation.

CWA contends that under Holocard v. PT&T Co., 86 CPUC 406 (1977), the Commission clearly has the authority to compel discovery from utilities or nonutilities, and from parties or nonparties. CWA argues that EL&L has information relevant to this proceeding, and that the Commission must require EL&L to respond to the outstanding discovery requests and to the questions in the Scoping Memo before permitting EL&L to withdraw.

Most dramatically, CWA contends that the EL&L Group has committed contempt under Pub. Util. Code § 2113 through its nonresponsiveness to Commission orders, and that the sanctions for this behavior should include the payment of all parties' costs to file and pursue discovery motions and to respond to EL&L pleadings, including the motion to withdraw. CWA contends that under CCP § 2023(b)(1), this is a routine punishment in civil courts for noncompliance with discovery rulings, and that the Commission has authority to impose similar punishments in its own proceedings. Other civil sanctions that the Commission can impose, according to CWA, include a prohibition on participation in an action (or on the assertion of particular claims) until the contempt is cured, and making findings of fact in favor of parties who have been adversely affected by misuse of the discovery process. (See, Hull v. Superior Court, 54 Cal.2d 139, 146 (1960); CCP § 2023(b)(2).)

CWA requests the following sanctions in this proceeding: (1) that the EL&L Group be prohibited from commenting on the final order in this proceeding or from challenging its findings of fact or conclusions of law, (2) that the Commission adopt a finding of fact that there is no factual basis for EL&L's assertion that the regulated utilities have delivered contaminated water, (3) that the Commission report the EL&L Group's contempt to the trial and appellate courts hearing the civil lawsuits filed by EL&L, and (4) that the Commission impose other appropriate sanctions for failure to comply with its orders.

C. Discussion

To the extent that the EL&L Group is continuing to challenge the discovery rulings in the May 3 Scoping Memo by arguing that the Commission lacks subject matter or personal jurisdiction, we once again reject those arguments as having no merit and affirm the Assigned Commissioner's ruling. D.99-06-054 resolved the EL&L Group's challenge to this Commission's subject matter jurisdiction to pursue this investigation; we concluded therein that we have such jurisdiction.

In the portion of the May 3 Scoping Memo devoted to Cal-Am's motion to compel answers to its data requests, we affirm the ruling rejecting EL&L's argument that we lack personal jurisdiction. We affirm the conclusion that the EL&L Group received full-party status and has behaved as a full-party throughout this proceeding, including propounding data requests to (and receiving responses from) numerous respondent utilities. The May 3 Scoping Memo determined that by these and other acts of participation, the EL&L Group had waived any of the protections from discovery that arise from a special appearance, or that a nonparty enjoys. We affirm the observation in the May 3 Scoping Memo that the Commission has the power to subpoena information from nonparties. Therefore, we are obviously convinced that we have authority to compel the information that Cal-Am requests.

The May 3 Scoping Memo rejected as unconvincing EL&L's argument that Cal-Am's data requests are beyond the scope of the OII because they are directed to matters within the knowledge of EL&L clients. We affirm the statements in the Scoping Memo that this Commission is concerned about these claims and the policy issues they raise and that, without adjudicating the merits of the lawsuits, we have the authority to investigate these issues and to receive information from anyone who has facts regarding these issues. Thus, the May 3 Scoping Memo concluded that Cal-Am's data requests were appropriate.

The Scoping Memo also rejected: (1) EL&L's arguments that Cal-Am's data requests are beyond the limits of discovery permitted by Pub. Util. Code § 1794 and CCP § 2020; (2) the EL&L claim that their clients are members of an association, and so subject to the limitations on discovery from association members described in D.94-08-028; (3) the claim that Cal-Am's data requests are unlawful contention interrogatories under Pub. Util. § 1794; and (4) the allegation that the information requested is under Cal-Am's control. We affirm these rulings. In its response, EL&L has provided no reasons why we should revisit the conclusions in the May 3 Scoping Memo on these issues.

As to the EL&L Group's argument that granting Cal-Am's motion will effectively lift the Superior Court stay of discovery, the EL&L Group fails to mention that the stay in some of the civil cases was instituted to allow this Commission to complete its investigation in this proceeding. Thus, compelling answers to data requests propounded in this investigation would not interfere with the stay of discovery ordered by the Los Angeles County Superior Court in the damage actions before it.

EL&L argues that the data it has received from respondents is inadequate, yet EL&L has not pursued its right to compel any other on additional information. Therefore, this argument has no merit. Neither does EL&L's argument that Cal-Am's contention interrogatories are improper since the record is clear that EL&L is a party in this proceeding representing the interests of civil litigants.

Regarding Cal-Am's request for binding evidentiary sanctions, our findings are clearly binding upon the parties to this proceeding and in any future Commission proceedings. However, the specific findings that Cal-Am is requesting go to the heart of the issues being investigated here, but they also go beyond what the evidence before us justifies. We are unwilling to distort the evidentiary record before us merely for the purpose of attempting to control the behavior of the EL&L Group in discovery. We also find unreasonable CWA's request that all parties should be reimbursed for the costs of responding to any of the EL&L Group's pleadings because the EL&L Group was authorized to participate as a full party in this proceeding and filed pleadings in accordance with that status. While no supporting affidavit was provided, there is no question that the EL&L's refusal to answer Cal-Am's data requests has subjected Cal-Am to litigation expense. As described above, Cal-Am undoubtedly incurred expense in filing its March 29, 1999 motion to compel answers to its data requests, and then was forced to incur further costs in filing the June 14 motion seeking compliance with the discovery rulings in the May 3 Scoping Memo.

In Pacific Enterprises, et. al. (1998) Cal.PUC LEXIS 1, 184 PUR4th 417, (D.98-03-073), we summarized our authority in discovery disputes and concluded that we have the power to impose discovery sanctions -- including the payment of attorneys fees and the Commission's costs -- where litigants violate the discovery procedures in CCP § 2023, which we have generally applied in Commission proceedings. Our rationale was as follows:

"The presiding officer controls the day-to-day activity of a proceeding. . . The presiding officer, of necessity, must have the authority to pass on discovery motions and impose sanctions for discovery abuse. To hold otherwise would impose a burden on the Commission that Rules 62 and 63 were designed to avoid. Further, if sanctions could not be imposed by the presiding officer[,] material evidence would remain undisclosed or unconscionable delay incurred as parties seek relief from the Commission. . ."

* * *

"It seems to us incongruous to grant to a presiding officer the authority to control the course of a hearing, rule on all motions, and recommend a decision to the full Commission, and yet deny that officer authority to assure the soundness of the fact-finding process. Without an adequate evidentiary sanction, a party served with a discovery order in the course of a Commission hearing has no incentive to comply and often has every incentive to refuse to comply. Evidentiary sanctions for recalcitrance in discovery are part and parcel of the power to control a hearing and recommend a decision based on all relevant evidence." (184 PUR4th at 488-89.)

We conclude that the EL&L Group has refused to comply with our May 3 discovery order, and to answer crucial questions posed by the Commission for the purpose of narrowing the disputes in this proceeding.

Nonetheless, there is no record here to support the sanctions requested by Cal-Am. A discovery sanctions request should be accompanied by a declaration or affidavit supporting the amount (e.g., time spent in preparing, making or opposing the motion, the hourly rate, etc.). Code of Civil Procedure § 2023(c), for example, requires that a monetary sanctions request be supported by a declaration "setting forth facts supporting the amount." Weil & Brown, Civil Procedure Before Trial § 8:868.1, explains that, "...this is the type of information which the judge needs to rule on the motion and, absent such information, judges may well exercise their discretion to deny the motion."

We have considered the respondent utilities' argument that there will be inequity if the EL&L Group is not again compelled to answer Cal-Am's data requests, since the utilities have answered all of the RK&M and EL&L data requests. On balance, however, we do not believe that this inequity justifies yet another ruling directing the law firms to answer Cal-Am's data requests. We note that even if RK&M and the EL&L Group had not intervened in this proceeding, our OII demanded answers to questions very similar to those posed by the law firms, and the regulated utilities would have been required to answer these questions even if EL&L and RK&M had not intervened in this proceeding.

Rather than prolong this proceeding in order to afford the EL&L Group a second opportunity to answer Cal-Am's data requests where it is likely that EL&L will continue to be evasive in providing responses, we think it is a better use of the parties' and the Commission's resources to use the existing record in this 18-month proceeding to resolve the issues herein.

Finally, we deny CWA's request to foreclose the rights of the EL&L Group to appeal from the final order in this proceeding. CWA's request for such relief raises many issues, and CWA has provided no analysis of how this request can be reconciled with Pub. Util. Code § 1794, which allows applications for rehearing under specified circumstances by both parties and nonparties in Commission proceedings.⁶