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In re Motion to Quash Subpoena Issued to Non-Party JPMorgan Chase Bank, N.A.

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

December 28, 2017

In re Motion to Quash Subpoena Issued to Non-Party JPMorgan Chase Bank, N.A.

          ORDER

          Hon. Jane Magnus-Stinson, Chief Judge

         This matter involves a subpoena (the “Chase Subpoena”) issued by the United States (the “Government”) to a non-party, JPMorgan Chase Bank, N.A. (“Chase”) related to the bank records of Badlands NGLs LLC (“Badlands”). Badlands moved to quash the Chase Subpoena in this Court, and the Government has now moved to transfer this matter to the United States District Court for the District of South Carolina. The Motion to Transfer, [Filing No. 10], is now ripe for the Court's decision.

         I.

         Background

         The Government initiated litigation against William Gilliam in the United States District Court for the District of South Carolina to collect unpaid federal income tax liabilities for tax years 1993 and 1995 (the “Underlying Lawsuit”). [Filing No. 10 at 2.] The District of South Carolina entered judgment in favor of the Government and against Mr. Gilliam in the Underlying Lawsuit for $7, 683, 217.19, and that amount will continue to accrue interest and statutory penalties until it has been paid in full. [Filing No. 10 at 2.] The United States has started efforts to collect the judgment entered against Mr. Gilliam in the Underlying Lawsuit, after he has refused to remit payment and has not made “an acceptable offer to resolve the judgment against him.” [Filing No. 10 at 3.] The Government's collection efforts have led to Badlands, which the Government describes as “a venture founded by Mr. Gilliam, which currently employs him as its Chief Executive Officer.” [Filing No. 10 at 3.]

         On July 7, 2017, the Government issued the Chase Subpoena to Chase, requesting the records of any Badlands' accounts. [Filing No. 10 at 3.] Badlands objected to the scope of the Chase Subpoena, stating that it needed to protect confidential trade secrets and commercial information. [Filing No. 10 at 3.] After attempts to resolve Badlands' objections failed, Badlands filed a Motion to Quash Non-Party Subpoena in this Court on October 4, 2017. [Filing No. 2.]

         On October 25, 2017, the Government filed a Motion to Transfer Badlands' Motion to Quash to the District of South Carolina. [Filing No. 10.] While Chase does not object to the Government's motion, Badlands objects to transfer of the Motion to Quash. [Filing No. 10 at 1.] The Motion to Transfer is now ripe for the Court's decision.[1]

         In the meantime, Badlands also moved to quash a subpoena issued by the Government directly to Badlands, for documents in the possession of Badlands (the “Colorado Subpoena”), in the United States District Court for the District of Colorado (the “Colorado Action”). [See Filing No. 10-1.] As was the Chase Subpoena, the Colorado Subpoena was issued by the District of South Carolina. [Filing No. 10-1 at 26.] In the Colorado Action, the Government moved to transfer Badlands' Motion to Quash pending there to the District of South Carolina, and the United States District Court for the District of Colorado recently granted the Government's Motion to Transfer. [Filing No. 20-1.]

         II.

         Standard of Review

         Federal Rule of Civil Procedure 45(f) provides that “[w]hen the court where compliance is required did not issue the subpoena, it may transfer a motion under this rule to the issuing court if the person subject to the subpoena consents or if the court finds exceptional circumstances… To enforce its order, the issuing court may transfer the order to the court where the motion was made.” The Seventh Circuit Court of Appeals has explained that “[b]y allowing for transfers, Rule 45(f) allows for consolidation of motions in a single appropriate court, thereby avoiding piecemeal litigation in multiple fora as well as piecemeal appeals.” P.H. Glatfelter Co. v. Windward Prospects Ltd., 847 F.3d 452, 458 (7th Cir. 2017). The Advisory Committee note to Rule 45(f) provides some insight as to what constitutes “exceptional circumstances”:

The prime concern should be avoiding burdens on local nonparties subject to subpoenas, and it should not be assumed that the issuing court is in a superior position to resolve subpoena-related motions. In some circumstances, however, transfer may be warranted in order to avoid disrupting the issuing court's management of the underlying litigation, as when that court has already ruled on issues presented by the motion or the same issues are likely to arise in discovery in many districts. Transfer is appropriate only if such interests outweigh the interests of the nonparty served with the subpoena in obtaining local resolution of the motion.

         III.

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