## Facts

- Mary Martha Stewart worked as a senior vice-president for Colonial Western Agency, Inc. from October 1997 to January 1998 and later sued for wrongful termination and related tort/contract theories based on alleged promises of long-term employment and fair treatment.
- Colonial Western claimed it terminated Stewart for cause, citing insubordination and refusal to work with superiors, including alleged comments about the CEO’s memory and about an executive vice-president.
- In discovery, Stewart deposed Douglas Wiskow, a Colonial Western employee and managing agent.
- Stewart’s counsel asked questions about the CEO’s memory problems, discussions with other managers, allegations involving the CEO’s treatment of other employees (including a former secretary’s harassment claim), and related workplace events.
- Colonial Western’s counsel repeatedly instructed Wiskow not to answer on the ground the questions were “not calculated to lead to the discovery of admissible evidence.”
- Stewart moved to compel further deposition answers and sought monetary sanctions.

## Issues

1. Whether a monetary discovery sanctions order against counsel is appealable after the action is voluntarily dismissed pursuant to settlement with an express understanding that the sanctions issue will be appealed.
2. Whether the trial court abused its discretion by compelling answers and imposing sanctions where counsel instructed a deponent not to answer based solely on asserted irrelevance.

## Decision

- The Court of Appeal treated the post-ruling voluntary dismissal with prejudice, entered to expedite review of the sanctions order, as permitting appellate review of the sanctions order.
- The court affirmed the order compelling deposition answers.
- The court affirmed $2,400 in monetary discovery sanctions imposed on Colonial Western’s counsel.

## Legal Principles

- A voluntary dismissal with prejudice entered after an adverse ruling, for the purpose of obtaining appellate review of that ruling, may be treated as appealable.
- California discovery is broad; information need not be admissible at trial so long as it is reasonably calculated to lead to admissible evidence.
- In an employment termination dispute, evidence about an employer’s treatment of other employees and related workplace conduct may be discoverable when it could bear on pretext or the credibility of the employer’s stated reasons for termination, even if it includes post-termination events.
- Counsel generally may not instruct a witness not to answer a deposition question based solely on irrelevance; improper directions not to answer may support monetary sanctions.

## Conclusion

The court affirmed discovery sanctions against defense counsel, holding that the challenged deposition questions fell within the broad scope of discovery and that counsel improperly blocked answers on irrelevance grounds, and it allowed appellate review despite a post-settlement voluntary dismissal designed to preserve the sanctions appeal.


Stewart v. Colonial W. Agency, Inc., 87 Cal. App. 4th 1006, 105 Cal. Rptr. 2d 115 (Ct. App. 2001)