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Inc. v. Hattenhauer Distributing Co.

United States District Court, S.D. Indiana, Indianapolis Division

March 24, 2016

NOBLE ROMAN'S, INC., Plaintiff,
v.
HATTENHAUER DISTRIBUTING COMPANY, Defendant

          For NOBLE ROMAN'S, INC., Plaintiff: Andrew M. McNeil, BOSE MCKINNEY & EVANS, LLP, Indianapolis, IN.

         For HATTENHAUER DISTRIBUTING COMPANY., Defendant: Dawn M. Johnson, John E. Petite, Ryan J. Yager, PRO HAC VICE, GREENSFELDER, HEMKER & GALE, P.C., Saint Louis, MO.

         For HATTENHAUER DISTRIBUTING COMPANY, Counter Claimant, Counter Defendant: Dawn M. Johnson, John E. Petite, Ryan J. Yager, GREENSFELDER, HEMKER & GALE, P.C., Saint Louis, MO.

          OPINION

         Debra McVicker Lynch, United States Magistrate Judge.

         Order on Plaintiff's Motion for Protective Order

         Defendant Hattenhauer Distributing Company has served documents and deposition subpoenas on Privet Fund Management, LLC (" Privet Fund" ), a major shareholder of plaintiff Noble Roman's, Inc. ( See Dkt. 130-3). Noble Roman's filed a motion to quash the subpoenas which the court denied without prejudice. For the reasons given in its February 25, 2016 order (Dkt. 129), the court allowed Noble Roman's to seek relief through a motion for protective order. Noble Roman's filed such a motion. For the reasons described in this order, the court GRANTS Noble Roman's motion for protective order (Dkt. 130) and ORDERS that Hattenhauer is prohibited from obtaining the discovery from Privet Fund sought by the subpoenas.

         The court's February 25, 2016 order stated that although the court allowed Noble Roman's to seek relief through a motion for protective order, that procedure would not preclude the " standing" arguments advanced by Hattenhauer in response to Noble Roman's motion to quash the Privet Fund subpoenas. Hattenhauer has renewed its argument that Noble Roman's lacks standing to advance any objections to the subpoenas and to seek relief prohibiting or limiting the discovery they seek. The court will address the standing argument first. It will then address the parties' arguments regarding the merits of allowing the discovery sought by the Privet Fund subpoenas.

         Analysis

         I. Noble Roman's has standing to challenge the subpoenas.

         Relying on district court decisions, Hattenhauer contends that Noble Roman's, as a party, " lacks standing to object to a subpoena issued on a non-party." (Hattenhauer opposition, Dkt. 131, at p. 8). The court rejects Hattenhauer's standing argument.

         Standing is a doctrine of subject matter jurisdiction, and flows from the Constitution's limit of judicial power to adjudicate " Cases" and " Controversies." Lexmark Internat'l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377, 1386, 188 L.Ed.2d 392 (2014). As explained by the Supreme Court, there is an " irreducible constitutional minimum of standing." Id. A court has subject matter jurisdiction to adjudicate a plaintiff's claims only if the plaintiff has " suffered or [is] imminently threatened with a concrete and particularized 'injury in fact' that is fairly traceable to the challenged action of the defendant and likely to be redressed by a favorable judicial decision." Id. The question of standing is different from an issue whether a statute--or, in this court's view, a Federal Rule of Civil Procedure--may otherwise deny a person relief for the injury he asserts is threatened by another's conduct. See id. at 1387-88. In other words, a person may have standing--and the court has subject matter jurisdiction to decide his claim--but by statute Congress may have circumscribed the type of plaintiff or type of interests for which a statutory requirement or prohibition allows the court to provide redress. Id. In that situation, the court can adjudicate the plaintiff's claim but may determine on the merits that the plaintiff has no cause of action. Id. In the latter vein, the court notes that Hattenhauer has made no suggestion that a statute or rule of civil procedure prohibits a court from hearing a party's objections to a subpoena directed to a non-party, or that a statute or rule of civil procedure circumscribes the types of objections a court may consider from a party that objects to a non-party subpoena.

         This court acknowledges that many district court cases have invoked " standing" in ruling that a party is " generally" or " ordinarily" prohibited from objecting to a non-party subpoena, including the principal case Hattenhauer relies on, Parker v. Four Seasons Hotels, Ltd., 291 F.R.D. 181, 186 (N.D.Ill. 2013). But " standing" does not supply a proper doctrinal foundation for such a rule, at least not without an examination of the particular circumstances of a party's challenge to a non-party subpoena and evaluation of whether the party will suffer a concrete injury in fact that can be redressed by a favorable decision forbidding or limiting the discovery sought by the subpoena. The only Seventh Circuit case to discuss a party's " standing" to challenge a non-party subpoena addressed the issue in those terms--the nature of the interest of the party that could be redressed through quashing a subpoena to a non-party. The court stated: " A party has standing to move to quash a subpoena addressed to another if the subpoena infringes upon the movant's legitimate interests." United States v. Raineri, 670 F.2d 702, 712 (7th Cir. 1982) (citing In re Grand Jury, 619 F.2d 1022, 1027 (3rd Cir. 1980)).

          Raineri was a criminal case. A witness had testified during the government's presentation of its case in chief and been cross-examined by the defense. About a week later in the trial, the defense issued a subpoena to the witness to testify again--this time during the defense's presentation of its case in chief. The prosecutor objected and moved to quash the subpoena, and the trial court did so. On appeal, the defendant complained that the government " had no standing or authority to move to quash the subpoena" because it was addressed to a third party. The court disagreed and found that the government's " legitimate interest" in seeking redress from enforcement of the subpoena " rested upon its interest in preventing undue lengthening of the trial, undue harassment of its witness, and prejudicial over-emphasis on [the witness's] credibility." 670 F.2d at 712.[1]

         The court finds that Noble Roman's has sufficient legitimate interests of its own with respect to the Privet Fund subpoenas to be heard on whether the subpoenas should be quashed or a protective order issued prohibiting that discovery by Hattenhauer. For one thing, if these subpoenas were enforced, Noble Roman's would be required to devote employee time and effort, as well as attorney time, effort, and expense, to review the documents requested by Hattenhauer from Privet Fund, and to devote substantial attorney time and expense for traveling to, preparing for, and cross-examining Privet Fund Rule 30(b)(6) deponent witness(es) in Atlanta, Georgia. These aren't trivial issues or interests. Indeed, it is the strength of litigants' legitimate interests in the control of expansive discovery and corralling the spiraling costs of litigation that led to a series of changes to the federal discovery rules over the last thirty plus years that emphasize the power--and duty --of the district courts actively to manage discovery and to limit discovery that exceeds its proportional and proper bounds.[2] The court will trace this evolution in section II below, in connection with the merits of the Privet Fund subpoenas.

         Of course, a party's objections may have far less force or persuasive value (and may sometimes have no persuasive value) when discovery is directed to a non-party and not to the party itself. For example, a party's objection based on the time and effort required of the non-party to comply with a subpoena might, in the usual case, have no weight at all. But, for example, a party's objection that the time required of the non-party to comply with the subpoena would extend the period of production of documents or the completion of depositions beyond the court's discovery deadline might be accorded substantial weight in a particular case. Or. a party's objection that the non-party discovery exceeds the proper bounds under Rule 26(b)(1) and thus unfairly burdens the party (by requiring it to devote substantial resources to reviewing the discovery, participating in depositions, or filing motions in limine) also may have substantial weight in a particular case.

         Suffice it to say, this court has no doubt it has the constitutional power to adjudicate Noble Roman's objections to the subpoenas issued to non-party Privet Fund in this litigation. Moreover, as addressed below, the discovery rules expressly empower--and direct the court--to manage discovery and to act ...


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