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In re ClassicStar Mare Lease Litigation

United States District Court, E.D. Kentucky, Central Division, Lexington

January 3, 2017

In re ClassicStar Mare Lease Litigation
v.
CLASSICSTAR, LLC, et al., Defendants. WEST HILLS FARM, LLC, Plaintiff, Master Nos. 5:07-CV-353-JMH, 5:06-CV-243-JMH

          MEMORANDUM OPINION AND ORDER

          Robert E. Wier United States Magistrate Judge.

         Brookstone Development, Ltd., Inc.; Brookstone Development Pty., Ltd.;[1] Great Lakes Geophysical, LLLP; and Riverside Equities, LLC (collectively, Movants) request quashal of three issued subpoenas. DE #2623 (Motion to Quash).[2] Plaintiffs West Hills Farms, LLC; MacDonald Stables, LLC; Arbor Farms, LLC; Jaswinder Grover; and Monica Grover (collectively, Plaintiffs) responded in opposition. DE #2624 (Response). Movants replied. DE #2625 (Reply). The matter is fully briefed and ripe for consideration.[3] The subpoenas demand compliance in Louisville, Kentucky, and Mount Pleasant, Michigan. See DE ##2620-1, 2621-1, 2622-1. A motion to quash is properly directed, at least initially, to the “court for the district where compliance is required[.]” Fed.R.Civ.P. 45(d)(3); see also, e.g., Green v. Cosby, 314 F.R.D. 164, 167 n.2 (E.D. Pa. 2016) (holding motion to quash was “properly filed” in E.D. Pa. although a Massachusetts court issued the subpoena).[4] The Eastern District of Kentucky is not the district where compliance is required concerning these three subpoenas.[5] Accordingly, the Court DENIES Movants' quashal effort for want of jurisdiction but nevertheless provides the following guidance on the substantive issues.

         I. RELEVANT BACKGROUND

         The involved parties here present a post-judgment discovery dispute to the Court. See DE ##2228, 2229, 2230, 2231, 2232, 2351 (Judgments); see also In re ClassicStar Mare Lease Litig., 823 F.Supp.2d 599 (E.D. Ky. 2011), aff'd, 727 F.3d 473 (6th Cir. 2013). Broadly speaking, this multi-district litigation matter, which has required Court attention for more than a decade, resolved Plaintiffs' RICO-centered claims against ClassicStar and other defendants concerning various mare lease agreements, resulting in a weighty (approximately $65 million) damage total. The Court references the cited opinions for a more thorough discussion of the underlying facts. The involved parties are now engaged in asset discovery and collection; the judgment debtors face a multimillion-dollar liability.

         As relevant here, certain non-party Movants ask the Court to quash three subpoenas the listed Plaintiffs issued to various banks. The Plaintiffs seek from the named banks a broad swath of documents that “identify or describe financial accounts or transactions owned, controlled, or conducted by” a variety of “individuals, entities or names since January 1, 2009[.]” See DE ##2620-1, 2621-1, 2622-1. These Plaintiffs oppose the motion to quash. The quashal effort pertains to only a few of the 19 subpoena categories.

         The Court notes, as a commentary to its processing of the motion, that the parties' briefing ignores large areas of potential consequence and interest to the Court (including the decisional jurisdictional issue). Nevertheless, in an attempt to efficiently give guidance on the merits and enable post-judgment discovery to proceed as appropriate in this long-pending (and long-closed) case, the Court addresses the issues the parties have presented.

         II. LEGAL STANDARD

         “In aid of the judgment or execution, the judgment creditor . . . may obtain discovery from any person . . . as provided in [the Federal Rules of Civil Procedure] or by the procedure of the state where the court is located.” Fed.R.Civ.P. 69(a)(2). Here, certain judgment creditors seek to obtain discovery via subpoena. See Id. 45.

         “On timely motion, ” the court, as possibly relevant here, “must quash or modify a subpoena that: . . . (iii) requires disclosure of privileged or other protected matter, if no exception or waiver applies; or (iv) subjects a person to undue burden.” Fed.R.Civ.P. 45(d)(3)(A). Further, “[a]s provided in Rule 45, a nonparty may be compelled to produce documents[.]” Id. 34(c). Courts “have held that the scope of discovery under a subpoena is the same as the scope of discovery under Rule 26.” Hendricks v. Total Quality Logistics, LLC, 275 F.R.D. 251, 253 (S.D. Ohio 2011); see also Transcor, Inc. v. Furney Charters, Inc., 212 F.R.D. 588, 591 (D. Kan. 2003) (“It is well settled . . . that the scope of discovery under a subpoena is the same as the scope of discovery under Rule 26(b) and Rule 34.” (footnotes omitted)). Under Rule 26:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.

         Fed. R. Civ. P. 26(b)(1).[6] The amended Rule “codified a proportionality requirement, . . . exhort[ing] judges to exercise their preexisting control over discovery more exactingly.” Robertson v. People Magazine, No. 14 Civ 6759 (PAC), 2015 WL 9077111, at *2 (S.D.N.Y. Dec. 16, 2015). “Restoring proportionality is the touchstone of revised Rule 26(b)(1)'s scope of discovery provisions.” Siriano v. Goodman Mfg. Co., L.P., No. 2:14-cv-1131, 2015 WL 8259548, at *5 (S.D. Ohio Dec. 9, 2015); Albritton v. CVS Caremark Corp., No. 13-CV-218-GNS-LLK, 2016 WL 3580790, at *3-*4 (W.D. Ky. June 28, 2016) (same); Gallagher v. Anthony, No. 16-CV-284, 2016 WL 2997599, at *1 (N.D. Ohio May 24, 2016) (same); see also Fed. R. Civ. P. 26 advisory committee's note to 2015 amendment. Overall, even post-amendments, the general “scope of discovery is within the sound discretion of the trial court.” Coleman v. Am. Red Cross, 23 F.3d 1091, 1096 (6th Cir. 1994); see also Surles ex rel. Johnson v. Greyhound Lines, Inc., 474 F.3d 288, 305 (6th Cir. 2007).

         More particularly, discovery under Rule 69(a) must be calculated to assist in judgment collection. Motorola Credit Corp. v. Uzan, 293 F.R.D. 595, 598 (S.D.N.Y. 2013). Despite this constraint, the “scope of post-judgment discovery is broad.” Libraire v. Kaplan, 760 F.Supp.2d 288, 293 (E.D.N.Y. 2011) (citation and internal quotation marks omitted). This District has succinctly explained the contours of discovery in this setting:

[T]he scope of post-judgment discovery is broad, United States v. Conces, 507 F.3d 1028, 1040 (6th Cir. 2007), and includes the right to obtain discovery from non-parties. Fed. R. Civ. Proc. 69(a)(2). A judgment creditor ‘is entitled to utilize the full panoply of federal discovery measures provided for under federal and state law to obtain information from parties and non-parties alike, including information about assets on which execution can issue or about assets that have been fraudulently transferred.' Andrews v. Raphaelson, No. 5:09-cv-77, 2009 WL 1211136, *3 (E.D. Ky. Apr. 30, 2009) (quoting Magnaleasing, Inc. v. Staten Island Mall, 76 F.R.D. 559, 561 (S.D.N.Y. 1977).

GATX Corp. v. Appalachian Fuels, LLC, No. 09-41-DLB, 2011 WL 4015573, at *2 (E.D. Ky. Sept. 9, 2011). The undersigned, in this very case, has previously approved a fairly expansive scope of permissible post-judgment discovery, see, e.g., DE #2591 (Order), [7] including tailored “access to legitimate asset discovery, even [from] a non-party.” See DE #2590 (Order), at 6-7 (explaining: “Rule [69(a)] generally does not encompass discovery of the assets of a true non-party. Magnaleasing, 76 F.R.D. at 562 (citations omitted). Courts should not apply the limit ‘mechanically, ' however, and ‘[d]iscovery has been permitted against a non-party where the relationship between the judgment debtor and the non-party is sufficient to raise a reasonable doubt about the bona fides of the transfer of assets between them.' Id. (citations omitted).” (citation shortened)).

         A party asserting that subpoena compliance will subject it to undue burden “must show that disclosure will cause it a clearly defined and serious injury.” State Farm Mutual Auto. Ins. Co. v. Warren Chiropractic & Rehab. Clinic, P.C., 315 F.R.D. 220, 224 (E.D. Mich. 2016) (internal quotation marks removed); see also Buchanan v. Am. Motors Corp., 697 F.2d 151, 152 (6th Cir. 1983) (affirming quashal on the ground that the subpoena was “unreasonably burdensome”). Finally, “[t]he party seeking to quash a subpoena bears the ultimate burden of proof. If the discovery sought appears relevant on its face, the party resisting the discovery has the burden to establish the lack of relevance[, ] but when relevancy is not apparent on the face of the request, the party seeking the discovery has the burden to show the relevancy of the request.” Hendricks, 275 F.R.D., at 253 (internal citations and quotation marks omitted).

         III. ...


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