United States District Court, S.D. Indiana, Indianapolis Division
ORDER ON DEFENDANTS' MOTIONS FOR PROTECTIVE ORDERS
MARK J. DINSMORE, District Judge.
This matter comes before the Court on Defendants' Motion for Protective Order to Preclude Non-Parties' Deposition and Production of Documents [Dkt. 26] and Defendants' Expedited Motion for Protective Order Staying Deposition and Document Production of Jeffrey B. Abhe. [Dkt. 28.] For the reasons stated below, the Court GRANTS IN PART and DENIES IN PART the motions.
John Drics ("Plaintiff") sued Terence P. Duffy ("Duffy") and several companies controlled by Duffy, including Lionhart Advisors Group Ltd. ("Lionhart"), Photon Global Ltd. ("Photon"), Starbrite Capital Ltd. ("Starbrite"), Arrow Investment Management Inc. ("Arrow"), Borealis Management Ltd. ("Borealis"), and Caledonian Global Financial Services Inc. ("Caledonian") (collectively "Defendants"). He alleges fraud, conversion, breach of contract, and amount due on account. [Dkt. 1-1.]
Plaintiff claims Defendants employed him as legal counsel from 1997 to 2012, [ id. ¶¶ 11-18], and owed him $345, 950 dollars in legal fees at the time his relationship with Defendants ended. [ Id. ¶ 20.] He identifies this amount as the "Accrued Amount." [ Id. ] Plaintiff also claims that in 2003, Duffy agreed to pay him a contingency fee of $619, 000 for executing a merger of Barplats Investments Limited ("Barplats") and Eastern Platinum Limited ("Eastplats"). [ Id. ¶ 21, 23.] Duffy, however, allegedly held this fee in abeyance and invested it in the defendant entities so that Plaintiff would have an incentive to provide quality legal services to those entities. [ Id. ¶ 22, 23.] Plaintiff alleges that this amount was "recorded in the name of Drics on the books and records" of the defendant companies, [ id. ¶ 24], and that he entrusted Duffy to manage the amount for purposes such as investing in a real estate development project called Montana Eagle, LLC. [ Id. ¶ 43.] Plaintiff identifies this amount as the "Retained Amount." [ Id. ¶ 23.]
The Court approved a Case Management Plan ("CMP") on August 29, 2014. [Dkt. 24.] In September, Plaintiff notified Defendants of his service of subpoenas on six non-parties, [Dkt. 27 at 3], including Jeffrey Ahbe, Nicholas Rego, Paul Abrahamsen, EDD Fund Services, Smarsh, Inc., and Blackrock, Inc. [ Id. at 2.] Defendants considered the subpoenas improper, and Plaintiff and Defendants conferred but could not resolve the dispute. [ Id. at 4-5.] On September 29, 2014, Defendants filed the current Motion for Protective Order to Preclude Non-Parties' Deposition and Production of Documents. [Dkt. 26.]
Defendants also filed an Expedited Motion for Protective Order Staying Deposition and Document Production of Jeffrey B. Ahbe. [Dkt. 28.] Plaintiff had scheduled Ahbe's deposition for October 3, 2014, and Defendant sought an expedited order to stay the deposition. [ Id. at 2.] Before the Court ruled on this motion, Plaintiff agreed with Ahbe's counsel to reschedule Ahbe's deposition for October 20, 2014. [Dkt. 31 at 1.] The Court conducted a hearing on the remaining motion for a protective order on October 14, 2014.
The subpoenas at issue request a broad array of financial information. The subpoena directed to Jeffrey Ahbe requests all documents and electronically stored information ("ESI") "pertaining to the distribution of any cash or other consideration" to the Defendants based on their business transactions with Eastplats, Eagle WorldWide Investments, or Muhlava Mining for the years 2005 through 2008; all documents and ESI submitted to "any applicable regulatory agency" with regard to Eastplats or Barplats for the years 2005 through 2008; all documents and ESI "with regards to amounts owed" to Ahbe by Defendants for the years 2005 through 2008; and all documents and ESI "with regards to amounts held by [Defendants] and owed to [Ahbe]." [Dkt. 27-2 ¶¶ 4-7.]
The Rego subpoena requests all communications, documents, and ESI related to "loans or mortgage documents, reflecting loans made to, between or among the named [parties];" "wire transfers sent or received by any of the named parties;" "preparation and finalization of audited financial statements for the business operations of any of the named parties;" "any submission to regulatory agencies or taxing authorities, for or on behalf of [Defendants or] Pyxis Securities, LLC;" and "any and all securities transactions in the name of [Defendants]." [Dkt. 27-3 at 7-11.] The Rego subpoena covers the years 2003 through 2009. [ Id. ] The Abrahamsen and EDD subpoenas request substantially the same information, but cover the years 2007 through 2011 and omit the reference to Pyxis Securities. [ See Dkt. 27-4 & 27-5.]
The Smarsh subpoena requests for the years 2003 through 2009 all communications, documents, and ESI related to the business operations, securities transactions, banking transactions, and submissions to regulatory or taxing authorities of Pyxis Securities. [Dkt. 27-6 at 7.] The Blackrock subpoena requests for the years 2003 through 2012 all communications, documents, and ESI relating to "any allocation or delegation of [Blackrock's] portfolio assets" pursuant to any investment agreement with Lionhart or Duffy. [Dkt. 27-7 at 7.]
II. Legal Standard
Parties may "obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense." Fed.R.Civ.P. 26(b)(1). Discoverable information includes that which is "reasonably calculated to lead to the discovery of admissible evidence." Fed.R.Civ.P. 26(b)(1). However, the "legal tenet that relevancy in the discovery context is broader than in the context of admissibility should not be misapplied so as to allow fishing expeditions in discovery." Piacenti v. Gen. Motors Corp., 173 F.R.D. 221, 224 (N.D. Ill. 1997).
"Although there is a strong public policy in favor of disclosure of relevant materials, " Patterson v. Avery Dennison Corp., 281 F.3d 676, 681 (7th Cir. 2002), a "court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense." Fed.R.Civ.P. 26(c)(1). Similarly, under Rule 26(b), the court "must limit the frequency or extent of discovery" if "the burden or expense of the proposed discovery outweighs its likely benefit." Fed.R.Civ.P. 26(b)(2)(C). Before limiting discovery, "the court should consider the totality of the circumstances, weighing the value of the material sought against the burden of providing it, and taking into account society's interest in furthering the truthseeking function in the particular case before the court." Patterson, 281 F.3d at 681 (internal quotation marks omitted).
When deciding whether to protect a person from a subpoena, "courts consider a number of factors, including the person's status as a non-party, the relevance of the discovery sought, the subpoenaing party's need for the documents, the breadth of the request and the burden imposed on the subpoenaed party." Parker v. Four Seasons Hotels, Ltd., 291 F.R.D. 181, 188 (N.D. Ill. 2013) (internal quotation marks omitted). Courts should "give special weight to the unwanted burdens thrust upon non-parties when balancing [the] competing needs" of discovery. Id. Further, any "party or attorney responsible for issuing and serving a subpoena must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena." Fed.R.Civ.P. 45(d)(1) (emphasis added).
Defendants advance two main arguments for their protective order. They claim the testimony and documents that Plaintiff seeks are irrelevant to any claims or defenses and are therefore beyond the permissible scope of discovery, [Dkt. 27 at 6], and they claim that the undue burden and ...