Parties in California state employment lawsuits and other actions may now deploy a potent new discovery tool.

Following the California Legislature's enactment of S.B. 235 in September 2023, new demands for disclosure may be used in employment litigation and other lawsuits, with exceptions, filed in California Superior Courts on and after Jan. 1, 2024.

The new state court disclosures differ in important respects from disclosures made in federal litigation, which are governed by Rule 26 of the Federal Rules of Civil Procedure. In many instances, plaintiffs counsel's access to the new demand procedure will now require employers and their litigators to invest more effort and time in investigating cases at the outset 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, which creates the potential to resolve cases earlier.

The new demands require parties to disclose to each other all the witnesses, documents and electronically stored information "that is relevant to the subject matter of the action," a requirement that apparently encompasses all witnesses and material discoverable in California state 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 the plaintiff's complaint or 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 new disclosure procedure subjects employers and defense counsel to a substantial new burden to thoroughly investigate cases much earlier in litigation than was often previously the case.

As compared to federal Rule 26 disclosures, disclosures under the new California 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 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 the amended Section 2016.090 of the California Code of Civil Procedure. The following is what practitioners need to know now about the new procedure.

1. Information and Documents That Must be Disclosed

Parties must disclose the following in response to Section 2016.090 demands.

Witnesses and What They Know

Parties must disclose the names, addresses, telephone numbers and email addresses of all persons likely to have knowledge relevant to the action's subject matter, 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 these subjects. For example, the statute does not make clear whether describing the subject of a person's knowledge as "liability" or "alleged lost earnings" would be sufficient or if 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 the 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

Parties must also disclose a copy of all documents and ESI in the disclosing party's possession, custody or control relevant to the subject 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

Parties must disclose 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. Scope of What Parties Must Disclose

The new law requires disclosure of witnesses, documents and ESI that are relevant to the subject matter of the case or that the disclosing party may use to support its claims or defenses.

The difference between disclosing what is relevant to the subject matter of the case and only disclosing what the disclosing party may use to support its claims is considerable.

All information and documentation relevant to the subject matter of the case is a broad category that can potentially reach from the witnesses, documents and ESI at the center of the case to the information and documents at the outer boundary of what is discoverable under California law. The California Code of Civil Procedure, Section 2017.010, defines the scope of discovery as any matter relevant to the subject matter of the action.

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 will likely be required to disclose both favorable and unfavorable material.

For these reasons, it is important to know whether the new disclosure demands require parties to disclose both information that parties may use in support of their claims or defenses, as well as all information relevant to the subject matter of the case, or if the demands only require disclosure of one category of witnesses and material.

In providing that, in response to a demand, each party must disclose all witnesses, documents and ESI that are relevant to the subject matter of the case, or that the disclosing party may use to support its claims or defenses, the "or" is arguably disjunctive.

If the word "or" 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. 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 exclusion of evidence that parties improperly failed to disclose are likely to be among the consequences courts will consider.

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

Section 2016.090 permits parties to modify its requirements, apparently in any respect, by agreement.

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

Section 2016.090 includes a sunset provision mandating its automatic repeal on Jan. 1, 2027, unless the California Legislature extends the law.

An earlier version of Section 2016.090 was repealed as of Jan. 1, 2024. The earlier version provided for a similar disclosure process but only when the court ordered disclosures following the parties' stipulation. The earlier version was scarcely ever used in California employment litigation.

If the Legislature does not first extend the life of the new Section 2016.090, the earlier version is set to spring back, becoming effective again as of Jan. 1, 2027.

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 of a lawsuit, particularly if there was no prelitigation dialogue with the plaintiffs' counsel or if the employer did not otherwise anticipate claims being made.

Consequently, a greater part of the defense work and, consequently, attorney 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, in-house counsel may find it prudent to authorize more thorough investigations even in the prelitigation phase to ensure the employer is prepared to comply with an early disclosure demand once the 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 that litigants feel the need to conduct.

Disclosures may, in fact, have that consequence, particularly where they help the parties narrow the issues.

Potential Earlier Resolution

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 reveal 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.