Zucchella v. Olympusat, Inc.
Zucchella v. Olympusat, Inc.
2020 WL 6594992 (C.D. Cal. 2020)
October 14, 2020
Abrams, Paul L., United States Magistrate Judge
Summary
The court ordered the plaintiff's banks to produce requested bank records from a narrowed time frame, as they were found to be relevant and proportional to the needs of the case. The court also expressed concern about the defendants' motives and suggested alternative methods for obtaining the information.
Additional Decisions
Maria Luz Zucchella
v.
Olympusat, Inc., et al
v.
Olympusat, Inc., et al
Case No.: CV 19-7335-DSF (PLAx)
United States District Court, C.D. California
Filed October 14, 2020
Counsel
Lindsey Wagner, Scott Wagner and Associates PA, Burbank, CA, Barbara Faye Enloe Hadsell, Dan Stormer, Tanya Sukhija-Cohen, Theresa Zhen, Hadsell Stormer Renick and Dai LLP, Pasadena, CA, for Maria Luz Zucchella.Laura Reathaford, Caroline A. H. Sayers, Ronald A. Valenzuela, Lathrop GPM LLP, Los Angeles, CA, William D. Cross, Jr., Pro Hac Vice, Lathrop GPM LLP, Kansas City, MO, for Olympusat, Inc., et al.
Abrams, Paul L., United States Magistrate Judge
PROCEEDINGS: (IN CHAMBERS) Defendants' Motion for Order re Defendants' Subpoenas for Bank Records (ECF No. 106)
*1 On September 30, 2020, the parties in this action filed a Joint Stipulation (alternatively “JS” (ECF No. 107)) in support of their positions regarding defendants' Motion (“Motion” or “Mot.” (ECF No. 106)), seeking an order from this Court finding that the records that defendants intend to subpoena from plaintiff's banks –– Wells Fargo Bank, N.A. (“Wells Fargo”) and HSBC Bank, USA, NA (“HSBC”) (collectively “Responding Parties” or “Banks”) –– are relevant and discoverable, proportional to the needs of the case, and “properly tailored to strike the right balance between any privacy interest implicated by the production of bank records and Defendants' need for this discovery.”[1] (Mot. at 2). Defendants also submitted the Declarations of their counsel, Ronald A. Valenzuela (“Valenzuela Decl.”) with exhibits, and Laura Reathaford (“Reathaford Decl.”), as well as the Declaration of Charles Mohler, the President of Olympusat (“Mohler Decl.”). (ECF Nos. 108-10). Plaintiff submitted the Declaration of her counsel, Theresa Zhen (“Zhen Decl.”). (ECF No. 111). On October 7, 2020, the parties filed their Supplemental Memoranda. (ECF Nos. 113, 114). Defendants also submitted the Supplemental Declaration of Valenzuela (“Valenzuela Supp'l Decl.”) with exhibits, and Objections to the Zhen Declaration.[2] (ECF Nos. 115, 116). Plaintiff also submitted the Supplemental Declaration of Zhen (“Zhen Supp'l Decl.”). Having considered the pleadings submitted in connection with the Motion, the Court has concluded that oral argument will not be of material assistance in determining the Motion. Accordingly, the hearing scheduled for October 21, 2020, is ordered off calendar. See Local Rule 7-15.
Legal Standard
*2 The Court will examine the issues in the Motion using the general standard set forth in Federal Rule of Civil Procedure 26 (“Rule 26”). Rule 26 provides that a party 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[.]” Fed. R. Civ. P. 26(b)(1). Factors to consider include “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.” Id. Information need not be admissible in evidence to be discoverable. Id. However, a court “must limit the frequency or extent of discovery otherwise allowed by [the Federal] rules” if “(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or (iii) the proposed discovery is outside the scope permitted by Rule 26(b)(1).” Fed. R. Civ. P. 26(b)(2)(C). Finally, the Court is mindful of the imperative that the Federal Rules of Civil Procedure be “construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.” Fed. R. Civ. P. 1 (emphasis added); see also Landis v. N. Am. Co., 299 U.S. 248, 254-55, 57 S. Ct. 163, 81 L. Ed. 153 (1936) (a court has the inherent power “to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants” and “[h]ow this can best be done calls for the exercise of judgment, which must weigh competing interests and maintain an even balance”).
Relevance “has been construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351, 98 S. Ct. 2380, 57 L. Ed. 2d 253 (1978) (citing Hickman v. Taylor, 329 U.S. 495, 501, 67 S. Ct. 385, 91 L. Ed. 451 (1947)). Even so, the scope of discovery is not without limits as Rule 26(b) provides that discovery is limited to information that is relevant to a claim or defense in the lawsuit and proportional to the needs of the case. The party seeking to compel discovery “has the initial burden of demonstrating relevance” under Rule 26. See Integon Preferred Ins. Co. v. Saavedra, 2019 WL 4228372, at *2 (C.D. Cal. July 12, 2019) (citations omitted). Thereafter, “[t]he party who resists discovery has the burden to show discovery should not be allowed, and has the burden of clarifying, explaining, and supporting its objections.” Duran v. Cisco Sys., Inc., 258 F.R.D. 375, 378 (C.D. Cal. 2009) (citing Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975); Sullivan v. Prudential Ins. Co. of Am., 233 F.R.D. 573, 575 (C.D. Cal. 2005)).
Rule 45 of the Federal Rules of Civil Procedure allows the “person commanded to produce documents” to “serve ... a written objection to inspecting, copying, testing, or sampling any or all of the materials ... before the earlier of the time specified for compliance or 14 days after the subpoena is served.” Fed. R. Civ. P. 45(d)(2)(B) (emphasis added). It does not generally allow for objection by a party who may be impacted by the production of documents from a third party. Indeed, “[o]rdinarily a party has no standing to seek to quash a subpoena issued to someone who is not a party to the action, unless the objecting party claims some personal right or privilege with regard to the documents sought.” Crispin v. Christian Audigier, Inc., 717 F. Supp. 2d 965, 973-74 (C.D. Cal. 2010) (citations omitted). Rule 45 itself provides that a subpoena must be modified or quashed if it “requires disclosure of privileged or other protected matter, if no exception or waiver applies ....” Fed. R. Civ. P. 45(d)(3)(A)(iii). Thus, a privacy interest in the documents –– such as plaintiff asserts herein –– may warrant party intervention. Windsor v. Martindale, 175 F.R.D. 665, 667 (D. Colo. 1997); Littlefield v. NutriBullet, L.L.C., 2018 WL 5264148, at *4 (C.D. Cal. Jan. 22, 2018) (personal rights claimed with respect to bank account records give a party sufficient standing to challenge a third-party subpoena served upon a financial institution) (citation omitted).
Plaintiff's Standing to Challenge the Subpoenas
In their Supplemental Memorandum, defendants state that on October 2, 2020 (after defendants served the subpoenas on the Banks (see Zhen Supp'l Decl. Exs. A, B)), plaintiff sent letters to the Banks instructing them to delay preparing responses to the subpoenas. (Def'ts' Supp'l Mem. at 2; see also Zhen Supp'l Decl. ¶ 2 Exs. A, B). Defendants assert that plaintiff “has no authority to interfere with the subpoenas or instruct the banks to ignore them in this manner.” (Def'ts Supp'l Mem. at 2). Plaintiff responds that because she is claiming a personal right and “privilege” as to the bank records, she has standing to challenge the subpoenas. (JS at 29 (citation omitted)).
*3 The Court agrees that plaintiff has standing to object to the subpoenas based on her asserted privacy rights in the bank records as discussed above (Windsor, 175 F.R.D. at 667; Littlefield, 2018 WL 5264148, at *4). Although her letters to the Banks instructing them to delay preparing their responses to the subpoenas may have been unauthorized (an issue that the Court does not decide herein), defendants state that also on October 2, 2020, they immediately notified the Banks that plaintiff's letter “in no way relieves [the Banks] of [their] obligation to identify documents responsive to the subpoena, prepare those documents for production, and produce the documents on October 28.” (Valenzuela Supp'l Decl. Exs. 4, 5). Defendants also informed the Banks that they had no objection to the Banks waiting until October 28, 2020, to produce the “responsive –– properly redacted –– documents,” and that if the Court “has not resolved the parties' dispute by October 26, someone from [defendants' counsel's] office will contact [the Banks] that day to advise [them] of this fact and make any necessary arrangements to briefly postpone the bank's production until the Court has issued its ruling.” (Id.).
Based on the foregoing, defendants' concern regarding plaintiff's communication with the Banks appears to be a non-issue at this time.
The Subject Subpoenas
The subpoenas to Wells Fargo and HSBC seek the following:
All DOCUMENTS dated or generated between April 1, 2014 to the present for each ZUCCHELLA ACCOUNT that state, refer to, or mention any of the following names ....
(JS at 15; Valenzuela Decl. Exs. 5, 6). “ZUCCHELLA ACCOUNT” is defined as follows:
[A]n account of any type, including but not limited to business or equity lines of credit, checking, savings, investment, financial, and brokerage account, whether currently open or closed, bearing the signatory authority of Maria Luz Zucchella ... or for which Maria Luz Zucchella ..., either individually or with others, is or was an account holder.
(JS at 15; Valenzuela Decl. Exs. 5, 6). The Instructions for the requests provide, among other things, the following:
The Responding Party shall produce any responsive account statements in redacted form so that only the relevant entries are shown (i.e. entries showing transactions referencing persons who are specifically identified in [Section III.A of the Attachment to the subpoena].[3] The Responding Party shall redact in their entirety all transactions that do not reference persons specifically identified in [Section III.A of the Attachment to the subpoena], including the description of the transaction, the amount of deposit or withdrawal, and balance information. All other non-transaction information shall be redacted in its entirety, including, but not limited to, the account holder's assets, liabilities, and beginning and end balances, interest, dividends, other income, and investments. All content that is not a transaction shall be redacted. If the Responding Party cannot identify responsive entries on account statements regarding transactions involving persons identified in [Section III.A of the Attachment to the subpoena], it must not produce any documents. Rather, the Responding Party should issue a notice that it has searched for and has not located any responsive bank entries.
(JS at 15-16; Valenzuela Decl. Exs. 5, 6).
The Parties' Positions
Defendants note that in the Court's April 1, 2020, Order, the Court previously narrowed subpoenas that had been served on the Banks by defendants, seeking to obtain plaintiff's bank records evidencing alleged kickbacks. (JS at 1; ECF No. 80). Defendants observe that the Court “indicated that if Defendants obtained additional information about kickbacks or other financial wrongdoing by Ms. Zucchella, Defendants were free to serve additional, properly tailored subpoenas.” (JS at 1). Defendants contend that they now “have obtained such information,” and that they have provided declarations from “two other content producers establishing that Ms. Zucchella was soliciting kickbacks as far back as 2009 and continued to do so in 2016, 2017, and 2018.” (Id.). They also argue that the instant subpoenas have been “properly tailored” to target “bank records establishing [plaintiff's] financial wrongdoing,” and “reflecting [prohibited] financial transactions between [plaintiff], or her company, Perro Blanco Films, LLC (“Perro Blanco Films”), and film and television producers doing business with Olympusat.” (Id. at 1-2; see also Def'ts' Supp'l Mem. at 4). Defendants note that plaintiff's employment agreement with Olympusat strictly prohibited all such transactions and contend that the only records they are requesting “are those evidencing financial transactions that are prohibited under Plaintiff's employment agreement.” (JS at 2 (emphasis omitted); Def'ts' Supp'l Mem. at 4).
*4 Defendants further contend that the records they are seeking are relevant to at least three of their affirmative defenses, and eight of their counterclaims.[4] (Id. at 9, 18-19). They claim that Olympusat had one or more legitimate and non-discriminatory reasons for terminating plaintiff's employment, and that “information exists that would have justified a lawful termination.” (Id. at 18). For instance, they allege that plaintiff's “financial wrongdoing ... in receiving kickbacks as well as compensation, personally and through her company, Perro Blanco Films, from or through third parties for company related business, essentially competing with her employer, Olympusat,” was in violation of her employment agreement. (Id. at 18-19). Defendants suggest that they have information showing that plaintiff “repeatedly solicited kickbacks, in 2016, 2017, and 2018, from content producers doing business with Olympusat, receiving a $10,000 kickback in one instance.” (Id. at 19 (citing Valenzuela Decl. Exs. 1 (Nunez Decl.), 3 (Caballero Decl.))). They contend that the subpoenas only seek records documenting “financial transactions between content producers doing business with Olympusat and [plaintiff], or her company Perro Blanco Films, during the time [she] was working for Olympusat.” (Id.). According to defendants, plaintiff “was the primary point of contact at Olympusat” for the content producers listed in the subpoenas, and was “charged with developing these leads and securing agreements with them on behalf of Olympusat.” (Id. at 19-20) (emphasis omitted) (citing Mohler Decl. ¶¶ 2-3). As such, defendants argue that any documents produced by the Banks “would necessarily constitute evidence of misconduct alleged by Defendants” as they would show that plaintiff “was paid from or through third parties for company related business or in areas that could be competitive or conflicting.” (Id. at 20). If such records are found in the Perro Blanco Films account, that would “also show that [plaintiff] continued to operate that business in breach of her employment agreement,” thus directly going to defendants' affirmative defenses and counterclaims. (Id. (citations omitted)).
Defendants also contend that the information sought is proportional to the needs of the case because “Defendants' reputations and goodwill that they fought hard for and committed significant effort and capital to earn” is at stake in this action. (Id. at 21 (citations omitted)). They suggest that any records produced by the Banks “will help dispose of Plaintiff's claim that Defendants retaliated against her for bringing her sexual harassment and discrimination lawsuit, and ... will help establish that this action is merely an effort by [plaintiff] to avoid responsibility for her own misconduct.” (Id. (citations omitted)). Defendants note that plaintiff cannot complain about the burden or expense of the subpoenas because they are directed to the Banks, “and if the banks raise any concerns regarding the burden or expense involved in responding to the subpoenas, Defendants are willing to work with them to address those concerns.” (Id. at 22). Defendants discount plaintiff's privacy concerns in light of the narrow manner in which the subpoenas have been tailored and the corresponding instructions regarding redactions to non-responsive information. (Id. at 23-24). They further assert that the Protective Order entered in this action will protect any over-produced information. (Id. at 24). To the extent plaintiff contends that the subpoenas violate the Court's April 1, 2020, Order because defendants have not presented any corroborating evidence of any kickback to her, defendants also discount those arguments based on the narrowly-tailored information sought by the subpoenas and corresponding safeguards, the declarations submitted with the JS, and on the fact that corroboration, while not a prerequisite to discovery, has been offered in the form of the sworn declarations of content producers Nunez, Agrasanchez, and Caballero documenting plaintiff's repeated efforts to obtain kickbacks. (Id. at 25-28 (citations omitted)).
Plaintiff responds that defendants' search of her bank records for kickbacks she allegedly received is based on “pure speculation on their part.” (Id. at 4). She notes that the only evidence defendants have produced to support the instant subpoenas has been the “single-page declarations of Adam Caballero and Alex Agrasanchez who make vague allegations and, like [the previous declaration of] Mr. Joel Nunez, provide no documentary evidence corroborating the claims made in those declarations.” (Id. at 4 (citing Valenzuela Decl. Exs. 4, 5)). She notes that although Mr. Nunez claimed he had paid plaintiff a kickback of $10,000, the previously subpoenaed bank records “found no evidence of wrongdoing on Plaintiff's part” and, therefore, his claims of a kickback “were evidently false.” (Id. at 30; Zhen Decl. ¶ 2). Plaintiff contends, therefore, that the subpoenas are overbroad and amount to an impermissible fishing expedition. (JS at 30). She also contends that the subpoenas are overbroad as they seek documents “from April 1, 2014 to the present (more than one year after Plaintiff was terminated by Defendants and after the employment agreement lapsed).” (Pl.'s Supp'l Mem. at 2).
*5 In his declaration, Mr. Agrasanchez alleged that “in or around June 9, 2009, ... Zucchella communicated to [him] by email that if [he] (on behalf of Movie Mex, International, Inc.) wanted [his] classical feature films offered as part of US/Free TV through Channel 22 L.A., [he] would have to pay Ms. Zucchella 30% commission for her distribution services.” (JS at 32 (quoting Valenzuela Decl. Ex. 5) (internal quotation marks omitted) (brackets in JS)). Agrasanchez went on to state that the commission “was too high” and that he “ceased working with her.” (Id. (quoting Valenzuela Decl. Ex. 5)). Plaintiff notes that Mr. Agrasanchez' declaration relates to a time period well prior to her employment with Olympusat on April 1, 2014, and that “from December 15, 2008 to May 21, 2009, [she] was not working at all for Olympusat.”[5] (JS at 4-5, 33-34). Plaintiff also argues that defendants fail to explain any relationship between US/Free TV, Channel 22, and Olympusat, or how plaintiff “could have ‘enriched herself at her employer's expense’ when these entities appear to be unrelated.” (Id. at 5, 33-34).
Plaintiff also notes that Mr. Caballero stated in his declaration that in 2016, 2017, and 2018, plaintiff “contacted [him] by phone to speak about ... the possibility of selling [his movies] in perpetuity to a company for the price of $6,000 per movie if [he] would send [his] movies to another producer who would work as a facade for whom Olympusat would enter into an actual contract. That company would receive $8,000 from Olympusat and, in exchange, Ms. Zucchella would receive from [him] $2,000 per movie in the contract.” (Id. at 5 (quoting Valenzuela Decl. Ex. 4) (internal quotation marks omitted) (brackets in JS)). Mr. Caballero went on to state that he “refused to work with Ms. Zucchella in this way.” (Id. (citation omitted)). Plaintiff argues that this declaration is “vague and incomprehensible,” in that Mr. Caballero “fails to specify key companies and producers who are alluded to in his declaration.” (Id.).
Plaintiff states that she has served document requests and interrogatories on defendants relating to these declarations, but that defendants “insist there are no responsive records” and have failed to provide any additional corroborating evidence, such as emails or phone records, to support the claims made by Mr. Agrasanchez and Mr. Caballero. (Id. at 5, 30-32). Indeed, because neither Mr. Agrasanchez nor Mr. Caballero stated that they actually paid plaintiff a kickback, plaintiff argues that defendants fail to support their request for her private financial records. (Id. at 32-33). Additionally, she notes that Mr. Agrasanchez's declaration “rests upon a single communication made in or around June 2009, which is nearly five years prior to the time period requested in the contested subpoenas,” and that plaintiff was not an employee of Olympusat at that time. (Id. at 33). She submits that it is “abundantly clear that after months of investigation, Defendants have found no meaningful or credible evidence to support their accusations of financial impropriety.” (Id. at 34). She argues, therefore, that defendants have not met their heavy burden to justify their “intrusion on Plaintiff's bank records, which by state law are private and confidential.” (Id. at 6 (citation omitted)).
Next, plaintiff asserts that the subpoenas are not narrowly tailored. (Id. at 34-35). She notes that the subpoenas seek information about 308 entities[6] (the “List”) (none of which include Mr. Agrasanchez, Mr. Caballero, or their companies). (Id. at 35). She argues that the vague and unsubstantiated Agrasanchez and Caballero Declarations “do not justify the production of nearly six years of bank statements containing references to 30[8] different entities ... none of whom have alleged any specific financial wrongdoing by Plaintiff or appear to be related to Agrasanchez or Caballero.” (Id.). She points out that many of the 308 names on the List “appear duplicative or have unclear names.” (Id. (citing e.g., entry numbers 24, 221, 222, 223, 225, 226, 264, 265)). Plaintiff argues that this “is hardly what the Court permitted when it said that subsequent subpoenas must be ‘properly tailored’ to seek relevant documents.” (Id.). Plaintiff notes that the subpoenas at issue herein are defendants' “fourth attempt to obtain bank records for Plaintiff they have no justification for seeking.” (Id. at 37). She suggests that the fact that defendants “are issuing these overbroad subpoenas with such unabashed fervor is just confirmation that they are using this invasion of Plaintiff's financial privacy as a scare tactic to coerce her into submission.” (Id.). She also suggests that defendants could “easily” obtain the same information they seek by speaking to the individuals on defendants' List of “30[8] content producers and their contact persons,” or by speaking to their own employees who have taken over “business communications with the 30[8] content producers and their contact persons to investigate if there were any previous inappropriate communications between Plaintiff and the 30[8] content producers.” (Id. at 37-38 (citing Mohler Decl.)). She asserts her financial privacy right and that of her husband and argues that defendants' overbroad subpoenas are “truly unbridled in their scope,” and seek such documents even from plaintiff's retirement accounts and investment accounts. (Id. at 39-40).
*6 Finally, plaintiff suggests that if this Court is inclined to grant Defendants' Motion, the following process should be followed:
[1] The Responding Parties will be ordered to deliver all responsive records to Plaintiff. Plaintiff will take a “first look” at the records only to ascertain if the records are correctly redacted and conform with the Court's ruling on this Motion.
[2] If the records are correctly redacted and they conform with the Court's ruling on this Motion, Plaintiff will immediately (within 24 hours) forward the records to Defendants. Plaintiff's counsel will certify that she has not modified or amended the records in any way.
[3] If the records are incorrectly redacted or do not conform with the Court's ruling on this Motion, Plaintiff will immediately (within 24 hours) notify Defendants and present the records to the Court for an in-camera review. If the Court disagrees with Plaintiff and finds that the records have been correctly redacted and do conform with the Court's ruling on this Motion, the Court will order the records to be made available to Defendants. If the Court agrees with Plaintiff that the records have been incorrectly redacted or do not conform with the Court's ruling on this Motion, the Court will order the responding parties to reproduce a corrected set of records to Plaintiff, who will review to ascertain that the records are correctly redacted per (2) above.
Any responsive records produced pursuant to this Court Order will be designated “Attorneys Eyes Only” and will not be disseminated to parties including but not limited to Mr. Mohler or any corporate representatives of Olympusat or to third parties.
(Id. at 42-43).
In the alternative, plaintiff requests that the Court issue a protective order “instructing Responding Parties to produce responsive bank statements simultaneously to both parties but with redactions of all other private information on the bank statement”; and require defendants to follow certain steps if they detect that the Banks have overproduced the records. (Id. at 43).
Analysis
To the extent the subpoenas seek documents from April 1, 2014, to the present, the Court agrees that they are overbroad. In light of the fact that Mr. Caballero contends that plaintiff contacted him in 2016, 2017, and 2018, and Mr. Nunez also stated that he was contacted by plaintiff in 2017, the Court finds it reasonable and proportional to the needs of the case to narrow the time frame at issue from January 1, 2016, to December 31, 2018.
As argued by defendants, the after-acquired evidence defense permits an employer “to demonstrate that it would have terminated an employee for wrongdoing discovered after an alleged wrongful termination, if the employer had known about the wrongdoing prior to termination. If the employer can successfully meet this burden, some liability may be avoided.” Bird v. PSC Holdings I, LLC, 2013 WL 12108107, at *2 (S.D. Cal. Nov. 20, 2013) (citations omitted) (holding that defendant was entitled to third-party discovery to develop its defense).
*7 With respect to the after-acquired evidence defense, the Supreme Court has held the following:
Where an employer seeks to rely upon after-acquired evidence of wrongdoing, it must first establish that the wrongdoing was of such severity that the employee in fact would have been terminated on those grounds alone if the employer had known of it at the time of the discharge. The concern that employers might as a routine matter undertake extensive discovery into an employee's background or performance on the job to resist claims under the [Age Discrimination in Employment] Act is not an insubstantial one, but we think the authority of the courts to award attorney's fees, mandated under the statute, 29 U.S.C. §§ 216(b), 626(b), and to invoke the appropriate provisions of the Federal Rules of Civil Procedure will deter most abuses.
McKennon v. Nashville Banner Pub. Co., 513 U.S. 352, 362-63, 115 S. Ct. 879, 886-87, 130 L. Ed. 2d 852 (1995).
As the Bird court also noted, the Court here is “currently not in the position to determine the merits or possible success” of defendants' after-acquired evidence defense, or even the ultimate admissibility of such evidence, and “need only determine whether the sought information is relevant and discoverable.” Bird, 2013 WL 12108107, at *3. Plaintiff does not specifically argue that the requested documents are not relevant to defendants' after-acquired evidence defense, to their other affirmative defenses, or to their counterclaims alleging that plaintiff breached her employment agreement by taking kickbacks in violation of her employment agreement.
Defendants' subpoenas –– with their 308 search terms –– do give this Court some pause to consider whether defendants are “undertak[ing] extensive discovery into an employee's ... performance on the job” to resist her claims of sexual harassment, sex-based discrimination, and retaliation, among others. In their Counterclaims, however, they assert that prior to her employment with Olympusat, plaintiff was performing consulting work for them through Perro Blanco Films. (Counterclaims ¶ 6). They state that in 2008 they discovered that plaintiff “was receiving kickbacks on licensing deals to the detriment of Olympusat,” and plaintiff's relationship was terminated with Olympusat. (Id. ¶ 7).[7] They allege that when they re-hired her as a consultant in 2009, they agreed to work with her “as long as [she] agree[d] not to receive any further kickbacks.” (Id. ¶ 7). When Olympusat hired her as an employee in 2014, it again “required that [plaintiff] agree in writing to not take any kickbacks on any Olympusat deals and asked that [she] transfer all ownership rights” in Perro Blanco Films to her husband. (Id. ¶ 8). These terms were allegedly agreed to by plaintiff in her 2014 employment agreement. (Id. ¶ 9). Defendants have also provided the declarations of Nunez, Agrasanchez, and Caballero, all reflecting that they were approached by plaintiff with respect to providing kickbacks to her. Both Mr. Agrasanchez and Mr. Caballero state that they refused her request, which, apparently, is why their names do not appear on the List. On the other hand, defendants found no bank records to corroborate Mr. Nunez' allegation that he actually made a $10,000 to plaintiff. On balance, however, the Court finds that such evidence, if it exists, would be relevant to some of defendants' defenses and counterclaims.
Additionally, the Court determines that the List of names in Attachment A of the subpoena was only somewhat narrowly determined. Mr. Mohler, the President of Olympusat since 2017, attested that on June 1, 2020, he performed a search of Olympusat's business records “to identify the names of certain content producers, including film and television production companies, that Olympusat, Inc. has contracted with, or considered contracting with, to purchase or license content for distribution by Olympusat, Inc. on various media platforms.” (Mohler Decl. ¶ 2). Mr. Mohler also attested that he limited his search “to identify the producers that Plaintiff ... was primarily responsible for, or otherwise substantively participated in, acquiring or attempting to acquire the producer's content on behalf of Olympusat, Inc.” (Id.). He states that the search generated over 140 results. (Id.). He then also identified “the person or persons who were Olympusat, Inc.'s primary point of contact for each of the over 140 producers.” (Id. ¶ 3). That search resulted in the total List of 308 content producers and their contact persons with whom plaintiff specifically worked. (Id.). As noted below, the Court finds this List to be somewhat overbroad and requires Mr. Mohler to revise his List.
*8 The question remains whether the requested information is also proportional to the needs of the case. In accordance with Rule 26, the Court has considered the importance of the issues at stake in the action, the amount in controversy, the importance of the discovery in resolving the issues, the parties' relative access to the relevant information, the parties' resources, and whether the burden or expense of the proposed discovery outweighs its likely benefits. The Court determines that if bank records exist reflecting actual payments to plaintiff or her company, Perro Blanco Films, from content producers for whom plaintiff was “primarily responsible” while employed by Olympusat, during the 2016-2018 time period, that evidence would be central to defendants' affirmative defenses and counterclaims and proportional to the needs of the case.
Based on the above, defendants' Motion (ECF No. 106) is granted in part, as follows:
(1) Defendants shall immediately notify the Banks that the existing subpoenas are being modified as set forth herein and provide them with a copy of this Order.
(2) The subpoenas to the Banks shall be narrowed to the time period from January 1, 2016, to December 31, 2018. Production shall be set for no later than November 18, 2020.
(3) The List of names to be searched for must be revised as follows: defendant Mohler shall review the current List and revise it to include only the names of those “content producers [and their contact persons], including film and television production companies, that Olympusat, Inc. has contracted with ... to purchase or license content for distribution by Olympusat, Inc.” and for whom plaintiff was the point of contact at Olympusat “charged with developing these leads and securing agreements with ... on behalf of Olympusat.” The revised List shall not include the names of any content producers or their contact persons Olympusat only “considered contracting with” or for whom plaintiff was not the point of contact at Olympusat. No later than October 28, 2020, defendant Mohler shall provide a declaration to plaintiff attesting that he has complied with this portion of the Court's Order and that the revised List of names to be included in section III.A of the Attachment to the subpoenas includes only those content producers and their contact persons with whom Olympusat had a contract to purchase or license content for distribution by Olympusat, Inc. and for whom plaintiff was the point of contact at Olympusat, while employed by Olympusat from April 1, 2014, to October 11, 2019.[8]
(4) So that there is no confusion on the part of the Responding Parties, the Instructions in Attachment A, Section I, shall be modified to change “Section C” to read “Section III.A of the Attachment to the subpoena.” Except as ordered herein, no other changes shall be made to the subpoenas or to the Attachments to the subpoenas unless mutually agreed upon.
(5) Defendants shall instruct the Responding Parties to provide plaintiff's counsel with an identical copy of the documents produced to defendants, at the same time and by the same method the Responding Parties serve their production on defendants' counsel. That is, if the documents are being served by U.S. Mail (or other delivery service), the Responding Parties shall also concurrently send plaintiff's counsel a copy by U.S. Mail (or other delivery service); if the production is made by personal delivery, the Responding Parties shall also concurrently produce a copy to plaintiff's counsel by personal delivery. The costs, if any, associated with the Banks' duplication of the production, and the reasonable costs associated with its service on plaintiff's counsel, shall be borne by defendants.
(6) Plaintiff's request that the documents produced by the Banks be designated “Attorneys' Eyes Only” is granted, as such a designation is deemed appropriate. No later than October 28, 2020, the parties shall submit to the Court for its review either an amendment to the existing protective order in this action, or a draft amended stipulated protective order, containing a mutually-agreed upon Attorneys' Eyes Only designation and the procedures to be followed with respect to that designation.
*9 IT IS SO ORDERED.
Footnotes
Plaintiff objected to the Motion because defendants “seek neither to quash or modify the subpoenas per Rule 45(d)(3),” and that “for all intents and purposes, this discovery motion concerns the parties' dispute regarding a Motion to Quash the subpoena under Rule 45(d)(3), or at a minimum seeks the same relief as a Motion to Quash.” (JS at 29, 41). Apparently anticipating this Court's concerns regarding the posture of the Motion, on October 7, 2020, the parties filed a Stipulation (alternatively “Stip.” (ECF No. 112)) acknowledging that in her portion of the JS, plaintiff had requested affirmative relief along the lines of a motion to quash or modify the subpoenas, and stipulating that “even though Plaintiff has not filed a motion for affirmative relief, in order to save the Court's time and judicial resources, the Court may properly consider the affirmative relief” requested by plaintiff. (Stip. at 3). Accordingly, the Court does just that herein.
In her Declaration, Ms. Zhen stated the following: “I am informed and believe that Plaintiff has joint bank accounts and financial accounts with her husband. These accounts contain financial transactions for both Plaintiff and her husband.” Defendants objected to this statement as speculative, lacking foundation, consisting of hearsay, and lacking relevance. Defendants' objections are overruled.
The subpoenas presented to the Court with the Valenzuela Declaration indicate that the names are listed in “Section C” –– there is no “Section C” in the subpoenas; the names are listed in the Attachment to the subpoenas at section III.A.
Specifically, defendants assert the Banks' records are relevant to their affirmative defenses of “Legitimate Business Purpose/Necessity/Business Judgment Rule”; “After Acquired Evidence”; and “Employment Would Have Ceased”; and to the counterclaims for “Breach of Contract”; “Breach of the Implied Covenant of Good Faith and Fair Dealing”; “Unfair Competition”; “Fraud, Constructive Fraud and Intentional Misrepresentation”; “Unfair Trade Practices” in violation of three of Florida's statutes (2 separate counterclaims); “Breach of Fiduciary Duty”; and “Breach of Duty of Care and Loyalty.” (JS at 9).
Plaintiff explains that on May 27, 2009, she signed a consulting services agreement with Ocean New Media, LLC, an Olympusat affiliate, and that the contract provided she was a “non-exclusive consultant for Olympusat (not an employee) and therefore could not have violated any employment agreement.” (JS at 33). Defendant acknowledges this distinction. (JS at 19 n.6).
The subpoenas that were served on October 1, 2020, listed only 308 names. (Zhen Supp'l Decl. Exs. A, B). Defendants apparently removed an entry for “CPA” from the original list of 309 names. (Def'ts' Supp'l Mem. at 4 n.2).
In her Answer to defendants' Counterclaims, plaintiff denies the allegations in paragraphs 7-9 of the Counterclaims. (ECF No. 29).
The Court recognizes that plaintiff's period of employment with Olympusat is longer than the narrowed time period that the Banks will utilize for searching for documents reflecting a transaction involving an entity or individual on the revised List. As a result, even if Olympusat includes on the revised List a customer for whom some or all of its interactions with plaintiff as the point person occurred outside of the narrowed time frame, the Banks are only responsible for searching for and producing documents falling within that narrowed time frame.