Parties in California state court employment lawsuits and other actions may now deploy a potent new discovery tool. New demands for disclosure may be used in employment litigation and other lawsuits, with exceptions, filed in California Superior Courts on and after January 1, 2024. The new state court disclosures differ in important respects from Federal Rule 26 disclosures made in federal court litigation. In many instances, the availability of the new demand procedure to plaintiffs’ counsel will require employers and their litigators to invest more effort and time in investigating cases at the outset than has been the case to ensure they are prepared to comply with plaintiffs’ disclosure demands. Where the parties’ disclosures succeed in informing litigants of the evidence earlier in cases than we have been accustomed, plaintiffs and employers may serve fewer interrogatories and requests for documents, with the potential to resolve cases earlier.

The new demands require parties to disclose to one another all witnesses, documents and electronically stored information (ESI) that “is relevant to the subject matter of the action,” a requirement that apparently encompasses all witnesses and material that are discoverable in California state court litigation. All “reasonably available” witnesses, documents and ESI must be disclosed. The new law provides that a party is “not excused from making its initial disclosures because it has not fully investigated the case . . .” or because another party made an insufficient disclosure or no disclosure at all.

Employers and their counsel can be required to make their disclosures to plaintiffs and their counsel quite early in the litigation, namely, as early as 60 days from when the employer files a response to plaintiff’s complaintor otherwise appears in the case. Given the broad scope of what employers must disclose under the new demands and how early plaintiffs’ counsel may, and almost certainly will, serve their demands, the availability of the new disclosure procedure subjects employers and defense counsel to a substantial new burden to thoroughly investigate cases much earlier in litigation than was often the case before the enactment of the new disclosure procedure.

As compared to Rule 26 disclosures in federal court litigation, disclosures under the new California state court procedure are significantly broader and more demanding. Under Rule 26, federal court litigants must disclose only witnesses and documents “that may support [the disclosing party’s] claims or defenses,” which is a far narrower slice than all witnesses, documents, and ESI that are “relevant to the subject matter of the action” as required in the state court disclosures. Disclosures under the new state procedure also may be required earlier in the litigation than those under Rule 26.

The law authorizing the new method of discovery is amended California Code of Civil Procedure section 2016.090.

The following is what you need to know now about the new procedure:

1. The Information and Documents That Must be Disclosed

Parties must disclose the following in response to section 2016.090 demands:

• Witnesses and what they know: the names, addresses, telephone numbers and email addresses of all persons likely to have knowledge “that is relevant to the subject matter of the action” or that the disclosing party “may use to support its claims or defenses.”

Along with the name of each person, a party’s disclosures must state “the subjects” of that person’s knowledge. Section 2016.090 does not describe the level of detail needed for a compliant statement of “the subjects” of a person’s knowledge. For example, the statute does not make clear whether describing the subject of a person’s knowledge as “liability” or “alleged lost earnings” is sufficient or more robust descriptions are required and, if so, in what respects.

Notably, section 2016.090 calls for disclosure of each witness’s email address and phone number. Employer-side counsel have generally resisted disclosing to plaintiffs’ attorneys such work or personal contact information of employers’ current employees, objecting on privacy grounds. It remains to be seen whether and under what circumstances California courts will honor privacy objections raised in response to the disclosure demands.

• Documents and ESI: a copy of all documents and ESI in the disclosing party’s possession, custody or control that “is relevant to the subject matter of the action” or that the disclosing party “may use to support its claims or defenses.” ESI within the scope of this requirement may include, for example, emails, Microsoft Teams and other text messages, recordings and transcripts of meetings conducted via Zoom, Teams, and similar platforms, and other documents in electronic form, such as spreadsheets and reports. As an alternative to producing copies in its disclosures, a party may serve a description “by category and location” of the documents and ESI it would otherwise be required to produce.
• Insurance coverage: applicable insurance policies and reservation of rights letters, along with any other agreements that would require a person to indemnify a defendant. Only provisions identified as “material” by the new law must be disclosed.

2. The Scope of What Parties Must Disclose

New Code of Civil Procedure section 2016.090 requires disclosure of witnesses, documents, and ESI that are (i) “relevant to the subject matter” of the case; “or" (ii) that the disclosing party “may use to support its claims or defenses . . .” The difference between disclosing what is “relevant to the subject matter” of a case and only what the disclosing party “may use to support its claims or defenses” is considerable. All information and documentation that is “relevant to the subject matter” of the case potentially reaches from the witnesses, documents, and ESI most at the center of the case to those at the outer boundary of what is discoverable under California law. (California law defines the scope of discovery as what is “relevant to the subject matter” of the action. California Code of Civil Procedure section 2017.010.)

On the other hand, what a disclosing party decides it “may use in support of its claims or defenses” is far narrower. For example, if a party is required to disclose only what it “may use in support of its claims or defenses”, the party will not disclose evidence that is adverse to its position in the case. However, if the party is required to disclose all witnesses and material that are “relevant to the subject matter” of the case, the party likely will be required to disclose both favorable and unfavorable material.

For these reasons, the question of whether the new disclosure demands require parties to disclose both what parties “may use in support” of their claims or defenses and all that is “relevant to the subject matter” of the case or require disclosure of only category of witnesses and material or the other is of great importance. In providing that, in response to a demand, each party must disclose all witnesses, documents, and ESI that are (i) “relevant to the subject matter” of the case; “or” (ii) that the disclosing party “may use to support its claims or defenses . . .”, the “or” is arguably disjunctive. If the word is construed as disjunctive, the two categories of witnesses and material may be treated as alternative obligations, not two parts of a party’s cumulative disclosure obligation. How California courts will construe the statute in this respect remains to be seen.

3. A Party May Make Multiple Disclosure Demands

In addition to the initial demand for disclosures, a party may serve up to two supplemental demands at any time before the trial date is first set and at least one after the initial setting of trial.

4. Enforcement and Other Provisions

The new disclosure obligations may be enforced through a party’s motion to the court or by the court on its own initiative. Section 2016.090 does not mention specific consequences courts may impose when a party fails to serve disclosures or serves deficient ones. Monetary sanctions, issue sanctions, and excluding evidence parties improperly failed to disclose are likely to be among the consequences courts will consider.

Disclosures must be verified under penalty of perjury by a party representative or signed by the party’s counsel.

Section 2016.090 permits parties to modify the requirements of section 2016.090, apparently in any respect, by agreement.

The disclosure demands are not authorized in unlawful detainer, Family Code, Probate Code, or small claims actions, and cases in which a party has been granted preference and an early trial setting on grounds of advanced age, etc.

New section 2016.090 includes a sunset provision mandating the automatic repeal of the statute on January 1, 2027, unless the California Legislature extends the law.

5. Consequences for Employers and Their Counsel

As time passes and employment lawsuits are filed in California this year, the use of the new demands will become the new normal. Impacts will include the following:

• Greater Pressure to Conduct Thorough Investigations Earlier

Employee-side counsel will serve demands for disclosure and they will do so early in their cases. To be prepared to comply, employers and their counsel will need to commence thorough investigations promptly upon learning lawsuit, particularly if there was no pre-litigation dialogue with plaintiffs’ counsel or the employer did not otherwise anticipate claims being made. Consequently, a greater part of the defense work and, consequently, attorneys’ fees may be pressed to the early phase of cases.

In instances when the employer and its counsel are confident a lawsuit will be filed, inhouse counsel may find it prudent to authorize more thorough investigations in even the pre-litigation phase to ensure the employer is prepared to comply with an early disclosure demand once suit is filed.

• Fewer Sets of Interrogatories and Requests for Documents

One purpose behind the amendment of section 2016.090 was to reduce the volume of other written discovery litigants feel the need to conduct. Disclosures may, in fact, have that consequence, particularly where they help the parties narrow the issues.

• Cases May Resolve Earlier

At least in some cases, disclosures may help parties reach resolution more quickly. This may be especially true in single plaintiff cases with only a few issues that will determine exposure. In such cases, if the disclosures put on the table most of what the parties need to know to evaluate the case and potential dispositive motions, parties may be able to reach negotiated resolutions earlier.

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