*1 Before the Court is a Joint Motion to Quash Subpoenas filed by FishDish, LLC (“FishDish”), Kenneth Lockard (“Lockard”), and Beecher, Field, Walker, Morris, Hoffman & Johnson PC (“Beecher”) (FishDish, Lockard, and Beecher collectively “Nonparties”), on October 1, 2019. (Doc. 53.) On October 15, 2019, Plaintiff VeroBlue Farms USA, Inc. (“Plaintiff” or “VBF”) filed a timely Resistance to Nonparties' Motion to Quash. (Doc. 55.) Before the Court had an opportunity to rule on the motion, Nonparties filed a Motion to Stay Due to Pending Motion to Consolidate, filed on October 23, 2019. (Doc. 56.) I denied Nonparties Motion to Stay without prejudice on October 25, 2019 for failure to comply with the Local Rules. (Doc. 57.) Nonparties refiled the Motion to Stay on October 31, 2019. (Doc. 58.) That same day, Nonparties also filed a Motion to Reopen Case, so a Judicial Panel on Multidistrict Litigation could rule on a pending Motion to Consolidate the Hearings on the Joint Motion to Quash Subpoenas. (Doc. 59.) Chief Judge Leonard T. Strand granted that motion on November 1, 2019. (Doc. 60.) I granted the Motion to Stay proceedings for 90 days on November 4, 2019. (Doc. 61.)

On February 5, 2020, the United States Judicial Panel on Multidistrict Litigation entered an Order denying transfer. (Doc. 66.) On February 10, 2020, Nonparties filed a Motion for Leave to File Reply to Plaintiff's Resistance to Nonparties' Motion to Quash. (Doc. 67.) I denied that motion without prejudice due to Nonparties' failure to comply with Local Rules. (Doc. 68.) After the parties met and conferred as required by Local Rule 7(k), Nonparties refiled their motion on February 20, 2020. (Doc. 71.) Attached to the renewed motion was a stipulation to certain facts, narrowing the dispute. (Doc. 71-1 at 1.) I granted Nonparties' Second Motion for Leave to File Reply on March 4, 2020. (Doc. 73.) Nonparties filed their Reply on March 9, 2020. (Doc. 74.) I find that a hearing on the motion is unnecessary. See LR 7(c).

Defendants were the founders, minority shareholders, directors, and officers of VBF (collectively “Founders” or “Defendants”). Plaintiff's Complaint alleged breach of fiduciary duty, fraudulent concealment, fraudulent misrepresentation, constructive fraud, civil conspiracy, aiding and abetting, and more. (See generally Doc. 9.) Plaintiff later filed a Second Amended Complaint, expanding the scope of factual allegations, adding counts against Defendants, and joining more parties. (See Doc. 54-4.) On March 3, 2019, Chief Judge Strand entered an order transferring this case to the United States District Court for the Northern District of Texas (the “Texas Litigation.”) (Doc. 50.) Between September 18 and September 23, 2019, Plaintiff served subpoenas on several parties, including Nonparties, requiring their compliance in this district, specifically at the offices of Elderkin & Pirnie in Cedar Rapids, Iowa. (Doc. 54-2.) Defendants refer to these as the “Second Subpoenas.” (Doc. 54 at 2.) Thus, although the underlying dispute between Plaintiff and Defendants is not before the Court, issues raised regarding subpoenas requiring compliance in the Northern District of Iowa are properly before me. Fed. R. Civ. P. 45. Nonparties subsequently filed a Motion to Quash, which Plaintiff resisted. (See Doc. 54; Doc. 55.) Proceedings were stayed to allow the United States Judicial Panel on Multidistrict Litigation to consider several pending motions. (Docs. 58–64.) The production deadline pursuant to the subpoenas was originally October 2, 2019, but parties agreed to extend the deadline until October 31, 2019. (Doc. 55-9.)

*2 In the Second Subpoenas, Plaintiff requests:

(See, e.g., Doc. 54-2.) As part of their Reply, Nonparties state that they have produced “any and all responsive documents from July 1, 2014 through January 8, 2018.” (Doc. 74; see also Doc. 71-1 at 1.) The parties' stipulation narrows the dispute to two issues: (1) whether the Nonparties waived any privilege by failing to provide a timely privilege log; and (2) whether the Nonparties must produce documents dated, generated, or modified from January 9, 2018 to the present. (Doc. 71-1 at 1.)

Regarding the privilege dispute, Nonparties first argue that the subpoenas should be quashed “because they seek privileged communications [and] Rule 45(d)(3)(A)(iii) provides that a court must quash a subpoena that requires disclosure of privileged information.” (Doc. 54 at 12.) Nonparties assert that the attorney-client, common interest and work product privileges are implicated by the subpoenas. (Doc. 54 at 3.) In its Resistance, Plaintiff responds that Nonparties waived any privilege by failing to provide a timely privilege log in accordance with Rule 26(b)(5). (Doc. 55 at 14.) Further, Plaintiff argues that under the circumstances, Nonparties' conduct merits the extreme sanction of waiver of the privilege. (Id. at 15.) In support of this argument, Plaintiff cites St. Paul Reinsurance Co. v. Commercial Fin. Corp. for the proposition that attorney-client privilege can be waived when it is not adequately asserted. (Id. at 14–15 (citing 197 F.R.D. 620, 627 (N.D. Iowa 2000)).) In its Reply, Nonparties address these arguments and attempt to distinguish the facts of St. Paul Reinsurance Co. from those in the instant case. (Doc. 74 at 5–6.) Nonparties also argue that “[a]n alleged delay in delivering a privilege log, while a stay is already in effect, is a woefully disproportionate offense to the extreme sanction of waiving attorney client privilege.” (Id. at 6.) Nonparties assert that the Court should quash the subpoenas under Federal Rule of Civil Procedure 45(d)(3)(A)(iii) due to disclosure of privileged materials, and Federal Rule of Civil Procedure 26(b) because the subpoenas seek documents outside the permissible scope of discovery. (Doc. 53 at 2.)

*3 Regarding the relevant scope of discovery, Nonparties object to Plaintiff's request for documents dated after January 8, 2018. (Doc. 54 at 7.) Nonparties argue that the last Defendant was terminated by VBF on January 8, 2018 and all of Plaintiff's claims are “variations of breach of fiduciary duty, fraud, and conspiracy related to [Defendants'] actions as VBF's officers and directors” meaning documents after January 8, 2018 are not relevant and outside of the scope of discovery permitted by Federal Rule of Civil Procedure 26(b). (Doc. 54 at 10.) Plaintiff responds by arguing that the Second Amended Complaint expanded the scope of the Texas Litigation “well beyond January 8, 2018, through at least May 2019.” (Doc. 55 at 3.) Further, Plaintiff argues that Nonparties and Defendants coordinated for the dismissal of cases against the Founders, which Plaintiff argues is a continuation of the Founders' misconduct into 2019. (Id. at 5.)

Federal Rule of Civil Procedure 45(d)(3)(A)(iii) provides in relevant part: “On timely motion, the court for the district where compliance is required must quash or modify a subpoena that ... requires disclosure of privileged or other protected matter, if no exception or waiver applies ....” Fed. R. Civ. P. 45(d)(3)(A)(iii). The Rules discuss the proper method to assert a privilege in a requested document. Fed. R. Civ. P. 26(b)(5)(A).

(Id.) Nonparties expressly asserted that compliance with the subpoenas would require disclosure of privileged materials. (Doc. 54 at 11–12.) The outstanding issue is whether the failure to include a privilege log in accordance with the Rule 26(b)(5)(A) constitutes a waiver.

I find that Nonparties did not waive the claimed privileges. “[W]aiver of a privilege is a serious sanction most suitable for cases of unjustified delay, inexcusable conduct, and bad faith.” Progressive Cas. Ins. Co. v. F.D.I.C., 298 F.R.D. 417, 421 (N.D. Iowa 2014) (quoting Rakes v. Life Investors Ins. Co. of Am., 2008 WL 429060, at *4 (N.D. Iowa Feb 14, 2008)). Plaintiff argues that Nonparties' failure to meet and confer in compliance with Local Rules and the lack of timely privilege log together merit the extreme sanction of waiver.[1] (Doc. 55 at 15.) Nonparties failed to meet and confer at other times during this litigation. (See, e.g., Doc. 57; Doc. 68.) The remedy, in those situations, was dismissal of the motion without prejudice and the option to refile after complying with Local Rules. (Doc. 57; Doc. 68.) Nonparties complied and refiled these motions within the requisite period. (Doc. 58; Doc. 71.) Regarding the pending Motion to Quash, Nonparties and Plaintiff have since met and conferred in compliance with Local Rule 7(k). (Doc. 74 at 4.) As such, I find that the original failures to comply with Local Rules have been remedied, and thus, cannot constitute bad faith or inexcusable conduct in this case.

To the extent that Plaintiff alleges that Nonparties' request for an extension until October 31, 2019 to produce documents and communication responsive to the subpoenas was made in bad faith, I find it was not. Plaintiff served subpoenas on the Nonparties between September 18 to September 23, 2019. (Doc. 54 at 7; see also Doc. 54-1, 54-2.) Those subpoenas required responses by October 2, 2019. (Doc. 54-1; Doc. 54-2.). Nonparties asked Plaintiffs for an extension, and received that extension, on September 28, 2019. (Doc. 55-9 at 2–3). Nonparties filed their Motion to Quash on October 1, 2019—prior to the expiration of their original production period of October 2. (See Doc. 53 (filed on 10/01/2019); Doc. 54 (filed on 10/01/2019).) Accordingly, I find that Nonparties did not act in bad faith by requesting an extension and filing a subsequent Motion to Quash prior to the expiration of the original response date.

*4 Regarding the timeliness of the privilege log, I find that the brief delay in production of the privilege log until November 4 was not unjustified. During the course of the litigation in September through November 4, 2019, Nonparties were served subpoenas, agreed to a production extension, filed a motion to quash, a motion to consolidate proceedings, a motion to stay proceedings, and a motion to reopen case. These actions took place in at least three different courts. The production deadline was October 31, 2019 and Nonparties produced the privilege log on November 4, 2019, at the same time I granted a Motion to Stay proceedings. (See Doc. 74 at 6; Doc. 61.) I find that under the totality of the circumstances, including the timeline of production, a four-day delay was not unjustified. Plaintiff makes no allegations of particular conduct that is inexcusable or any prejudice it suffered by the four-day delay. Further, I find that the Nonparties did not act in bad faith.

Even if the delay was unjustified, as noted above: “waiver of a privilege is a serious sanction.” Progressive, 298 F.R.D. at 421. This Court has noted the importance of upholding the privilege in prior cases, stating that “[t]he Rules of Procedure are so deferential to the laudatory purpose of protecting recognized privileges that a party may actually recall inadvertently-produced privileged materials and, in effect, pretend that they had not been produced.” Id. (citing Fed. R. Civ P. 26(b)(5)(B)).[2] After weighing the relative interests in preserving the attorney-client and other referenced privileges against sanctions for a short delay in producing a privilege log, I find that waiving the asserted privileges is a disproportionate sanction.

Nonparties also argue that the Second Subpoenas request information and documents that have no bearing on the claims and defenses in the dispute. (Doc. 54 at 10.) Nonparties state that “discovery in this matter should be limited to VBF's claims regarding Defendants' wrongful conduct while they controlled or were employed by VBF – i.e. prior to January 8, 2018.” (Id.) In support of this argument, Nonparties state that all claims against Defendants are variations of breach of fiduciary duty, fraud, and conspiracy, all in relation to actions as VBF officers and directors. (Id.) They also note that the last Defendant was terminated by VBF on January 8, 2018, and that documents and communications created after that date cannot be relevant because “[o]ne does not have a fiduciary duty after severance or termination.” (Id. at 10–11.)

Nonparties further argue that Plaintiff enlarged its complaint to include facts from the bankruptcy case, in an attempt to bypass the Texas quash order and bring information relevant to the bankruptcy case in for discovery here. (Id. at 11.) Nonparties argue: “None of the new factual assertions are actually germane to the claims or defenses presented in this litigation and were only added as an excuse to obtain discovery from shareholders (and their counsel) who opposed VBF's plan of reorganization.” (Id.)

In its Resistance to the Motion to Quash, Plaintiff argues that the Texas court quashed its original subpoenas (“First Subpoenas”) based on the First Amended Complaint, rather than the Second Amended Complaint which was filed later and expanded the number of assertions and the scope of the litigation. (Doc. 55 at 6.) Next, Plaintiff lists the steps it took to remedy the identified problems with the First Subpoenas in the Texas Litigation, namely, limiting both the scope of the subpoenas as to the time frame and subject matter. (Id. at 6–8.) Further, Plaintiff expands upon Nonparties' relationship to the litigation. Plaintiff states: “FishDish has been the second largest VBF shareholder since mid-2016 and Lockard was FishDish's appointed VBF board member from around that time through late February 2018 when Lockard resigned.” (Id. at 8.) Plaintiff also asserts that, as demonstrated by several examples, Lockard and FishDish “should have a plethora of documents responsive to the Subpoenas and relevant to the Second Amended Complaint.” (Id. at 9.)

*5 Lastly, Plaintiff argues that Nonparties worked with Defendant Maniaci in the Texas Litigation and Defendants generally “to try to procure a free dismissal of the Texas Litigation against the Founders, and in the scope of doing so obviously came to possess or control information related to the Texas Litigation.” (Id.) In support of this argument, Plaintiff points to Exhibit C, a challenge notice to the parts of the Bankruptcy Proceeding created by G&M on behalf of the Official Committee of Unsecured Creditors, and Exhibit D, a letter adopting the challenge notice written by Nonparty Horwood Marcus & Berk Chartered on behalf of the Ad Hoc Committee of Equity Security Holders of VeroBlue Farms, USA, Inc. (See Doc. 55 at 9–10; see also Doc. 55-7; 55-8.) Plaintiff argues that Nonparties and the Founders worked together on these notices to procure a free dismissal of the Texas Litigation without consideration to VBF. (Doc. 55 at 9.) In doing so, Plaintiff argues that the Nonparties came to possess information regarding the Texas Litigation. (Id.) In support of these allegations, Plaintiff cites to “a section of the Challenge Notice entitled ‘Corporate Waste Caused by Prosecution of Founders Action’ ” and notes that Nonparties specifically attack Plaintiff's pursuit of the Texas Litigation and the allegations that Plaintiff is making in the Texas Litigation. (Id. at 9–10 (citing Doc. 55-7 at 14–17).) Finally, Plaintiff notes “[t]he Challenge Notice was prepared over eleven months after the January 8, 2018 cutoff date sought by the Nonparties,” and thus, brings the requested information about the alleged misconduct into 2019. (Id. at 10.)

Federal Rule of Civil Procedure 26(b)(1) provides the following regarding scope of discovery:

Rule 26(b) is “liberal in scope and interpretation, extending to those matters which are relevant and reasonably calculated to lead to the discovery of admissible evidence.”[3] Hofer v. Mack Trucks, Inc., 981 F.2d 377, 380 (8th Cir. 1992). This liberal scope “should not be misapplied so as to allow fishing expeditions in discovery.” (Id.) The party requesting production must make “some threshold showing or relevance ... before parties are required to open wide the doors of discovery and to produce a variety of information which does not reasonably bear upon the issues in the case.” (Id.) “Discovery requests are typically deemed relevant if there is any possibility that the information sought is relevant to any issue in the case.” Cornell v. Jim Hawk Truck Trailer, Inc., 298 F.R.D. 403, 406 (N.D. Iowa 2014) (citations omitted). Further, “the party resisting production ... bears the burden of establishing the lack of relevancy, unless that lack of relevancy is obvious.” (Id.)

I find that Plaintiff has made a threshold showing of relevance as to documents and information dated after the January 8, 2018 cut-off date proposed by Nonparties. In its Resistance, Plaintiff notes that the Second Amended Complaint contains “450 paragraphs” and adds new Defendants in addition to the Founders, including Canaccord Genuity LLC, Christine Gagne, and Sean Maniaci. (Doc. 55 at 4.) The Second Amended Complaint also alleges a total of twenty-six counts, whereas the First Amended Complaint only included nine. (Id.; see generally Doc. 54-4.) Plaintiff is correct that the Second Amended Complaint was the operative complaint at the time of the subpoenas, and thus, dictates the scope of discovery.

The Second Amended Complaint details alleged attempts by the Founders and others to interfere with the Texas Litigation, through the bankruptcy proceedings and the challenge notices. (Doc. 54-4 at 48–54.) Plaintiff's Resistance goes into further detail about the alleged attempts by multiple parties to procure “a free dismissal” of the Texas Litigation with no consideration to Plaintiff. (Doc. 55 at 9–10.) All of these alleged attempts occurred after the January 8, 2018 proposed cut-off date. Further, the Second Amended Complaint alleges that because of the continued misconduct in 2019, punitive damages are warranted. (See Doc. 54-4 at ¶¶ 235, 243, 250, 294, 298, 392, 399.) This alleged misconduct is directly relevant to the Second Amended Complaint. Documents and information about conduct occurring after January 8, 2018 could be relevant in resolving the punitive damage claims in Counts I, II, III, IX, X, XXV, and XXVI. (See Doc. 54-4 at ¶¶ 235, 243, 250, 294, 298, 392, 399.)

*6 Nonparty FishDish has been VBF's second largest shareholder from mid-2016 to present. (Doc. 55 at 8.) Lockard served as FishDish's Board representative on VBF from 2016 until February 27, 2018. (Id. at 8–9.) Plaintiff alleges that his testimony is relevant because both the Founders and VBF have listed Lockard as a person with knowledge, because he and FishDish “may have solicited investors for VBF,” and because he and FishDish “participated in the drafting of VBF corporate documents relating to Alder.” (Id. at 9.) Further, as discussed above, the Second Amended Complaint and the Resistance discuss misconduct continuing into 2019 involving the Founders and Nonparties. Plaintiff made a threshold showing of the relevance of documents and information from FishDish and Lockard. Thus, the information requested from FishDish and Lockard is relevant to this litigation even after the proposed January 8, 2018 cut-off date. The fact that any Founder may have been removed and no longer a fiduciary by the proposed cut-off date does not mean that Founder ceased to create or receive documents that may be relevant to the claims and thus discoverable.

Similarly, Plaintiff alleges that Nonparty Beecher helped to draft the challenge notice on behalf of the Ad Hoc Committee of Equity Security Holders of VeroBlue Farms, USA, Inc. in conjunction with the Founders in an attempt to procure a dismissal of the Texas Litigation against the Founders. (Id. at 9.) Plaintiff argues that this allowed Nonparties to “possess or control information related to the Texas Litigation.” (Id.) I agree. Considering the fact that the Challenge Notice was drafted in December 2018, relevant documents and information could exist dated after the proposed January 8, 2018 cut-off date. Those documents and information should be produced, to the extent that they are not privileged.

Nonparties bear the burden of showing that the requested documents and information dated after January 8, 2018 are not relevant to this case. Cornell, 298 F.R.D. at 406. Nonparties do not meaningfully object to individual subpoenas to specific parties, but rather, state that the new factual assertions in the Second Amended Complaint are not “actually germane to the claims or defenses presented in this litigation and were only added as an excuse to obtain discovery from shareholders (and their counsel) who opposed VBF's plan of reorganization.” (Doc. 54 at 11.) Nonparties also note that “[o]ne does not have a fiduciary duty after severance or termination” and that all Founders were terminated as VBF Directors prior to January 8, 2018. (Id. at 10–11.) Nonparties therefore conclude that the requests here are only fishing expeditions into bankruptcy related matters. The fact that some of the requested documents and information may be relevant to both the bankruptcy proceeding and the instant case does not negate their relevance to the instant case. This case has developed beyond the date the last Founder was terminated, and Plaintiff's subpoenas request documents and information within the scope of the Second Amended Complaint.

Nonparties' Motion to Quash is GRANTED in part and DENIED in part. The motion is granted to the extent that Plaintiff's subpoenas request privileged documents and information. The motion is denied to the extent it attempts to shield documents and information dated after January 8, 2018 from production.

Nonparties indicated in their Reply that Lockard is willing to be deposed and that the deposition has been postponed several times. (Doc. 74 at 2 fn.2.) The deposition should be scheduled by April 16, 2020, or whenever is practicable considering the COVID-19 pandemic. The Court encourages use of video teleconference or other electronic means to overcome challenges presented by the pandemic. Nonparties Lockard, FishDish, and Beecher must produce documents and information responsive to the subpoenas by April 16, 2020.

IT IS SO ORDERED this 2nd day of April, 2020.