Robin Singh Educ. Servs., Inc. v. Blueprint Test Preparation, LLC

• Decision Date: 23 January 2013
• Docket Number: B204775,B211422,B218775
• Parties: ROBIN SINGH EDUCATIONAL SERVICES, INC., Plaintiff and Respondent, v. BLUEPRINT TEST PREPARATION, LLC, et al., Defendants and Appellants. ROBIN SINGH EDUCATIONAL SERVICES, INC., Plaintiff and Appellant, v. BLUEPRINT TEST PREPARATION, LLC et al., Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

ROBIN SINGH EDUCATIONAL SERVICES, INC., Plaintiff and Respondent, v. BLUEPRINT TEST PREPARATION, LLC, et al., Defendants and Appellants.

ROBIN SINGH EDUCATIONAL SERVICES, INC., Plaintiff and Appellant, v. BLUEPRINT TEST PREPARATION, LLC et al., Defendants and Appellants.

B204775

B211422

B218775

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN

Filed: January 23, 2013

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct.

Nos. BC330098, BC346066,

BC347174)

APPEALS from a judgment of the Superior Court for the County of Los Angeles, William F. Highberger, Judge. Affirmed in part, reversed in part.

Horvitz & Levy, H. Thomas Watson, Jeremy B. Rosen, Kris Bahr; Cotkin Law Group, Joan M. Cotkin; Ropers, Majeski, Kohn & Bentley, James C. Potepan, Susan H. Handelman, Courtney E. Curtis for Defendants and Appellants.

Horvitz & Levy, H. Thomas Watson, Jeremy B. Rosen, Kris Bahr; Knee, Ross & Silverman and Howard P. Knee for Defendant and Appellant.

Norminton, Wiita & Fuster, Thomas M. Norminton, Kathleen Dority Fuster; Tycko & Zavareei, Hassan A. Zavareei, Andrea R. Gold, Greines, Martin, Stein & Richland, Robin Meadow, Cynthia E. Tobisman, Lara M. Krieger; Zohar Law Firm and Daniel Yehuda Zohar, for Plaintiff and Respondent.

As the importance of standardized tests has increased for admission to undergraduate and graduate schools, the business of preparing students to take those tests has flourished. This case arises out of the creation of a new Law School Admissions Test (LSAT) preparation business by five employees of one test preparation company who left to start a competing company. This professional move generated seven and a half years of litigation, including three and a half years of vigorously contested pretrial discovery and motions, a three-month trial, four appeals, and multiple writ proceedings.

Defendants Trent Teti, Matthew Riley, Justin Capuano, and Jodi Triplett (defendants), along with their colleague Courtney Martin, were LSAT preparation instructors employed by plaintiff Robin Singh Educational Services, Inc., doing business as TestMasters (TestMasters). They thought they could do better on their own. So in the fall of 2004 they began working on what would become in early 2005 a competing LSAT preparation course, defendant Blueprint Test Preparation, LLC (Blueprint). Much of the work they did in creating their new LSAT preparation course was on their personal computers. Because defendants did not want anyone to know that they were working on creating Blueprint in 2004 while they were still working for TestMasters, however, they were not very forthcoming in producing documents during discovery evidencing that they were working on Blueprint in 2004. This tactic generated lengthy and expensivecontroversies in discovery, especially when TestMasters' forensic electronic discovery experts discovered documents in defendants' computers from 2004 that defendants had not produced, and the trial court found that defendants had misused the discovery process.

Defendants' discovery abuse resulted in considerable monetary and nonmonetary sanctions, which gave TestMasters a significant advantage at trial. On TestMasters' main claims for breach of the duty of loyalty by an employee and breach of oral employment contract, the jury found in favor of TestMasters and against Blueprint and Teti, but in favor of the other defendants. The jury, however, awarded TestMasters only $183,000 of the $18 million in damages TestMasters had requested, plus $10,000 in punitive damages against Teti only. On TestMasters' defamation claims, the jury awarded TestMasters a total of $45,000 against Triplett, Riley, and Blueprint.

In these three appeals, defendants appeal the pretrial orders imposing monetary and nonmonetary sanctions against them for misuse of the discovery process. TestMasters appeals from the judgment that awarded TestMasters much less than it had sought to recover. Defendants also appeal from the portion of the judgment awarding TestMasters damages for defamation against Triplett, Riley, and Blueprint, while Riley appeals from the punitive damages award against him. We affirm the trial court's pretrial discovery sanctions orders, and, with the exception of the defamation claims, affirm the judgment.

FACTUAL BACKGROUND¹

A. The Parties

Robin Singh is a self-described "LSAT enthusiast" and "LSAT junkie." He took the LSAT as a college senior at Duke University, and earned a perfect score of 48.² Between 1988 and 2003 Singh took the LSAT 26 times,³ scored in the 99th percentile every time, and achieved a perfect score 13 times, which he claims is a world record. Singh never gets tired of taking the LSAT, which keeps him "in touch with the pressure students feel."

In the spring of 1989 Singh began tutoring a group of his college friends for the LSAT. After graduating with a degree1 in history and Latin, Singh enrolled in USC Law School. He took a leave of absence, however, during his first year of law school. Singh never returned because he went into the LSAT preparation business, first as an instructor at Kaplan Test Prep from August 1990 to August 1991, and then as the owner of his own LSAT preparation company, TestMasters, in mid-October 1991.

TestMasters held its first class in the fall of 1991 at USC. By the end of the 1990's, TestMasters was teaching classes throughout California. By 2001 TestMasters had expanded to 18 states, by 2002 to 30 states, and by 2004 to England, Japan, and Canada. Overall, TestMasters' annual enrollment went from 15 students in 1991 to 9,000 in 2004, and during that period 80,000 students took TestMasters' LSAT preparation course. In order to work at TestMasters, an instructor must score in the 99th percentile on the LSAT. TestMasters instructors do not have written contracts.

Trent Teti worked as an LSAT instructor first at Kaplan, and then at TestMasters from approximately 2000 to January 7, 2005. He earned a B.A. in philosophy from UC Berkeley, and studied logic and philosophy as a graduate student at the University of Virginia and UCLA, where he enrolled in but did not complete a Ph.D. program in philosophy. Teti felt that he was the best instructor at TestMasters and that Singh was not giving him "proper due or credit." In his January 7, 2005 resignation email, he told TestMasters that he was leaving to "attend to matters I have long neglected."

Matthew Riley took the TestMasters course as a student and then worked as a TestMasters LSAT instructor from late March or early April 2003 until February 3, 2005. He has taken the LSAT three times, earning 99th percentile scores of 179, 175, and 176, and has never answered a question wrong in the logic games section. When he resigned from TestMasters on February 3, 2005, he stated that he felt "like it is time to move on."

Justin Capuano graduated from UCLA in 2003 with a degree in mechanical engineering. He earned a score of 172 on the LSAT, also in the 99th percentile. In college he taught SAT preparation classes for three years. He was a TestMasters student, and worked at TestMasters from the spring of 2003 to the end of 2004 as an LSAT instructor and in the research and development department. His last TestMasters class was November 10, 2004, and he sent a resignation email on December 31, 2004, telling TestMasters that he had "to start getting serious with myself and find a more permanent career."

Jodi Triplett was Teti's fiancée in 2004. She studied English literature as an undergraduate at Stanford University and as a graduate student at the University of Virginia and UC Irvine. Her LSAT area of expertise is reading comprehension. She worked for TestMasters from 2001 through 2004, resigning with Teti on January 7, 2005. Triplett was not an LSAT instructor at TestMasters; she taught GRE classes and performed law school admissions consulting work for students applying to law school. She also worked in marketing and trained TestMasters instructors, and would go to classes to observe and evaluate TestMasters instructors. She told TestMasters in her resignation email that it was time for her "to stop working a part time job and move on with my life."

Courtney Martin was one of Teti's close friends. Like Singh, Martin came to TestMasters from Kaplan as an LSAT instructor. She worked at TestMasters from 2002 until she resigned on February 17, 2005 and joined Blueprint, where she stayed until April or May 2006.

Blueprint is an LSAT preparation company founded by Teti, Riley, Capuano, Triplett, and Martin that competes with TestMasters. The process of defendants'departure from TestMasters to form Blueprint began in September 2004 while they were all still working for TestMasters, and continued into February 2005 when Blueprint launched its website, March 2005 when defendants taught their first Blueprint class, and May 2005 when defendants finished writing the last of Blueprint's course lessons. Martin and Capuano are no longer associated with Blueprint.

B. From TestMasters . . .

In September 2004 Teti contacted his close friend of over 20 years, Tom McCarthy, about Teti's idea of starting an LSAT preparation company that would compete with TestMasters, where Teti was employed as an instructor. McCarthy worked for TestMasters until early 2003 performing web and graphic design services, and had access to TestMasters' course materials in digital format. Despite a written confidentiality agreement with TestMasters, McCarthy in July 2002 downloaded TestMasters' course files without authorization, and then in September 2004 provided Teti with electronic files containing the 2002 version of TestMasters'...