KKMB, LLC v. Khader
KKMB, LLC v. Khader
2020 WL 13593895 (N.D. Ga. 2020)
October 9, 2020
Anand, Justin S., United States Magistrate Judge
Summary
The Court did not address any ESI. The parties did not raise the issue of ESI, and the Court denied the Motion to Quash as moot without considering the issue.
KKMB, LLC, Plaintiff,
v.
ABRAHAM MATTAR KHADER, et al., Defendants
v.
ABRAHAM MATTAR KHADER, et al., Defendants
CIVIL ACTION NO. 1:20-CV-3997-JPB-JSA
United States District Court, N.D. Georgia, Atlanta Division
Filed October 09, 2020
Counsel
Mark Hardiman, Pro Hac Vice, Nelson Hardiman, LLP, Los Angeles, CA, Lauren Ann Warner, Chilivis Grubman LLP, Atlanta, GA, for Defendant Jason Boutros, M.D.Mark Hardiman, Pro Hac Vice, Nelson Hardiman, LLP, Los Angeles, CA, for Defendant Jason K. Boutros, M.D., Inc.
Anand, Justin S., United States Magistrate Judge
ORDER
*1 Plaintiff KKMB, LLC is suing several defendants in the United States District Court for the Central District of California for fraudulent and negligent misrepresentation, concealment, and unlawful business practices under California law. In short, Plaintiff alleges that Defendants defrauded it into buying multiple life insurance policies as viatical life settlements by misrepresenting the life expectancy of those insured by the policies. See KKMB, LLC v. Khader, No. 2:18-cv-5170-GW-JPR, Third Am. Compl. [107] at ¶¶ 19–25 (C.D. Cal. Sept. 30, 2019). As relevant here, Defendants Jason Boutros, M.D. and Jason K. Boutros, M.D., Inc. are alleged to have created fraudulent medical documents indicating that Defendant Noura Shoubash, who was insured by multiple life insurance policies, had a short life expectancy. Id. at ¶ 33. Defendants are alleged to have taken part in a complex scheme to use the fraudulent records to inflate the investment value of the policies, which were eventually sold to unsuspecting investors, like Plaintiff, as viatical life settlements. Id. at ¶ 34.
Defendants Jason Boutros, M.D. and Jason K. Boutros, M.D., Inc. (“Respondents”) seek to depose Habersham Funding, LLC (“Movant” or “Habersham”), a life settlement provider located in this District. This matter is before the Court because Habersham has moved to quash Respondents' subpoena on the grounds that the examination topics listed by Respondents are overbroad and unduly burdensome. Upon careful consideration of the material filed by the parties, the Court DENIES Habersham's Motion to Quash [1] as moot.[1]
I. DISCUSSION
A. Discovery Standards
Federal Rule of Civil Procedure 26(b)(1) broadly provides that: “Parties 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, considering 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.”
*2 Rule 30(b)(6) provides for discovery via oral deposition of an organization. The rule requires that deposition notices or subpoenas directed at organizations “describe with reasonable particularity the matters for examination.” Id. at 30(b)(6). Rule 30(b)(6) imposes an affirmative duty on the corporation to designate a witness who is able to provide binding answers on behalf of the corporation. See Ecclesiastes 9:10-11-12, Inc. v. LMC Holding Co., 497 F.3d 1135, 1147 (10th Cir. 2007); Peterson v. Aaron's Inc., No. 1:14-CV-1919-TWT, 2017 WL 385923, at *2 (N.D. Ga. Jan. 25, 2017). The designated witness must testify not only about the facts within the corporation's “collective knowledge,” but also about “the corporation's position, beliefs and opinions.” QBE Ins. Corp. v. Jorda Enters., Inc., 277 F.R.D. 676, 689 (S.D. Fla. 2012) (citing Great Am. Ins. Co. v. Vegas Constr. Co., 251 F.R.D. 534, 539 (D. Nev. 2008); United States v. Taylor, 166 F.R.D. 356, 362 (M.D.N.C. 1996) (designee presents corporation's “position,” its “subjective beliefs and opinions” and its “interpretation of documents and events”)).
Parties can obtain discovery, including discovery via oral deposition of an organization, from third parties pursuant to subpoenas issued under Rule 45 of the Federal Rules of Civil Procedure. The scope of information that may be sought via a Rule 45 subpoena is the same as the scope of discovery generally allowable pursuant to Rule 26(b). Rule 45 specifically imposes on the issuer of the subpoena an affirmative duty to avoid imposing undue burden or expense on the non-party. See Fed. R. Civ. P. 45(d)(1). This duty reflects a balancing between the litigants' need to obtain information from non-parties and the need to protect outsiders to the litigation from having to incurring undue burden and expense. Thus, on a timely motion, a court is required to quash a subpoena which “subjects a person to undue burden.” Id. at 45(d)(3).
The burden falls on the party seeking to quash the subpoena to demonstrate that it is subjected to an undue burden or that the sought information is otherwise protectible under Rule 45. See Hill v. Flagstar Bank, No. 1:13-cv-3305-SCJ-GGB, 2013 WL 12070130, at *3 (N.D. Ga. Oct. 23, 2013); Medi-Weightloss Franchising USA, LLC v. Medi-Weightloss Clinic of Boca Raton, LLC, Case No. 8:11-cv-2437-T-30 MAP, 2012 WL 12904394, at *2 (M.D. Fla. May 10, 2012). “A person or entity claiming that a subpoena will subject it to an undue burden cannot rely on such ‘a perfunctory assertion’; it ‘must show clearly the manner and extent of the burden and the injurious consequences of [the serving party's] insistence on compliance with the subpoena.’ ” Century Commc'ns of Fla., Inc. v. Bright House Networks, LLC, Case No. 09-81108-CIV, 2010 WL 11597661, at *2 (S.D. Fla. Aug. 2, 2010) (quoting Hernandez v. Esso Standard Oil Co. (Puerto Rico), 252 F.R.D. 118, 120 (D.P.R. 2008); see also In re Application of Mesa Power Group, LLC, 878 F. Supp. 2d 1296, 1306 (S.D. Fla. 2012) (the party moving to quash must show with more than “conclusory statements” that the subpoena subjects it to an undue burden) (quoting Int'l Ass'n of Machinists & Aerospace Workers v. P & B Transp., No. 3:05-cv-1083-J-32MCR, 2007 WL 4145974, at *2 (M.D. Fla. Nov. 19, 2007)).
B. Habersham's Motion to Quash
Respondents have at least twice served subpoenas on Habersham seeking to depose it under Rule 30(b)(6) of the Federal Rules of Civil Procedure. Respondents first served Habersham on August 18, 2020 with a subpoena commanding Habersham to virtually appear for a deposition covering seven topics on September 2. See Exh. E [1-5] at 5. Those seven topics, as they appeared in the August 18 subpoena, were as follows:
*3 • Examination Topic No. 1: YOUR purchase of the PRUCO POLICY and LSW POLICY and any other policies purchased from SHOUBASH.
• Examination Topic No. 2: YOUR business dealings with KKMB, including the sale of the PRUCO POLICY and LSW POLICY and any other policies sold to KKMB.
• Examination Topic No. 3: YOUR COMMUNICATIONS with PERSONS who provided the tracking service for SHOUBASH in connection with the PRUCO POLICY and LSW POLICY and any other policies purchased from SHOUBASH.
• Examination Topic No. 4: YOUR COMMUNICATIONS with KKMB regarding the tracking of SHOUBASH in connection with the PRUCO POLICY and LSW POLICY.
• Examination Topic No. 5: YOUR COMMUNICATIONS 4348281 CANADA with respect to YOUR purchase and sale of the PRUCO POLICY and LSW POLICY and any other policies sold to KKMB.
• Examination Topic No. 6: PATIENT MEDICAL INFORMATION for SHOUBASH that was submitted to LIFE EXPECTANCY UNDERWRITERS in connection with the sale of the PRUCO POLICY and LSW POLICY.
• Examination Topic No. 7: Life expectancy estimates that YOU obtained for SHOUBASH from the LIFE EXPECTANCY UNDERWRITERS and that YOU disclosed to KKMB in connection with the sale of the PRUCO POLICY and LSW POLICY.
Id. at 8–9.
In response to Habersham's objections to what it characterized as the vagueness, overbreadth, and ambiguity of the examination topics, Respondents served an amended subpoena on September 1, which noticed the deposition for September 11. Exh. A [1-1] at 5. In addition to clarifying confusing language, such as replacing the original subpoena's use of the second-person “you” and “your” with “Habersham,” the amended subpoena substantively narrowed Topics 2, 4, 5, 6, and 7 as follows:
• Examination Topic No. 2: HABERSHAM's business dealings with KKMB or William “Andy” Meardon, Kathleen “Kat” Meardon, Kenneth J. Bonnet, Daniel J. Kehl, or Robert A. Kehl, including the sale of the PRUCO POLICY and LSW POLICY and any other policies where any of the following existed:
• HABERSHAM provided post-closing services to KKMB;
• HABERSHAM provided tracking services to KKMB;
• HABERSHAM provided life expectancy estimates to KKMB;
• HABERSHAM had a written or unwritten agreement with William “Andy” Meardon to provide Mr. Meardon with the opportunity to purchase the life settlement policy ...
• Examination Topic No. 4: HABERSHAM'S COMMUNICATIONS with KKMB or William “Andy” Meardon, Kathleen “Kat” Meardon, Kenneth J. Bonnet, Daniel J. Kehl, or Robert A. Kehl regarding the tracking on SHOUBASH in connection with the PRUCO POLICY and LSW POLICY.
• Examination Topic No. 5: HABERSHAM'S COMMUNICATIONS with 4348281 CANADA or Lloyd O'Brien, Derek O'Brien, Corey Lloyd O'Brien, or Lori Marriott with respect to HABERSHAM'S purchase and sale of the PRUCO POLICY and LSW POLICY and any other policies that HABERSHAM knew at the time would be sold to an entity affiliated with William “Andy” Meardon.
• Examination Topic No. 6: PATIENT MEDICAL INFORMATION on SHOUBASH that HABERSHAM submitted to LIFE EXPECTANCY UNDERWRITERS in connection with the sale of the PRUCO POLICY and LSW POLICY.
• Examination Topic No. 7: Identification of life expectancy estimates that HABERSHAM obtained on SHOUBASH from the LIFE EXPECTANCY UNDERWRITERS at the time of purchase from SHOUBASH and that HABERSHAM disclosed to KKMB or William “Andy” Meardon, Kathleen “Kat” Meardon, Kenneth J. Bonnet, Daniel J. Kehl, or Robert A. Kehl in connection with HABERSHAM'S sale of the PRUCO POLICY and LSW POLICY to 4348281 CANADA.
*4 Id. at 9–11.
Habersham again objected to the scope of Respondents' examination topics. See Exh. D [1-4] at 3–4. On September 4, Habersham's counsel offered Respondents the following proposed amendments to Topics 2, 5, and 6, stating that Habersham would withdraw its objections to the topics should they be adopted:
• Topic 2: Between the time period from 2007 through 2017, with respect to the PRUCO and LSW POLICY and any other policies insuring the life of SHOUBASH, the details of any agreement or proposal as to the following:
• HABERSHAM's provision of post-closing services to KKMB;
• HABERSHAM's provision of tracking services to KKMB;
• HABERSHAM's provision of life expectancy estimates to KKMB; and
• HABERSHAM's provision of a first right to KKMB OR William “Andy” Meardon to directly purchase the life settlement insurance policy from HABERSHAM ...
• Topic 5: The negotiation, terms and conditions of HABERSHAM's sale of the PRUCO POLICY and LSW POLICY to 4348281 CANADA.
• NEW TOPIC 6: With respect to Topic 5 above, HABERSHAM's knowledge that 4348281 CANADA sold the PRUCO POLICY and LSW policy to KKMB or William “Andy” Meardon.
Id. at 3 (emphasis in original).
Habersham then filed this motion on September 10, claiming that Respondents' counsel “has refused to respond to [its] writing.” Mot. to Quash [1] at 2–3. As such, says Habersham, “it had no choice but to seek intervention from this Court” to address its concerns regarding the breadth of the subpoena, which it says fails to describe the topics of examination with “reasonable particularity” as required by Rule 30(b)(6). Id. at 1, 3. According to Habersham, the examination topics as stated in the September 1 subpoena would require it to conduct a broad investigation involving interviews with former employees and the review of a large quantity of documents dating back over a decade, tasks that are substantially burdensome and expensive, if even possible during the ongoing COVID-19 pandemic. See id. at 4–8.
The use of the term “any other policies” in Topics 1, 2, 3, and 5's inquiries into the Pruco and LSW policies, says Habersham, render the topics overbroad “fishing expedition[s]” and make it impossible to prepare for questioning. Id. at 5– 6. So, too, does Topic 2's use of the phrase “including but not limited to” and its inquiry into “written or unwritten” agreements with William Meardon, according to Habersham. Id. at 6–7. Habersham further argues that Topics 3, 4, and 5 are improper because they use the word “communications,” which it states Respondents have defined unduly broadly. Id. at 7–8. Also vague and overbroad are the phrases “knew at the time” and “entity affiliated with” appearing in Topic 5 and the term “life expectancy underwriters” appearing in Topics 6 and 7, argues Habersham. Id. at 8. As such, Habersham requests that it be excused from compliance with the September 1 subpoena.
Respondents state that, since the filing of the motion, they have agreed in full to Habersham's proposed amendments to Topics 2, 5, and 6, thus rendering the motion moot as it relates to those topics. Resp. [5] at 9. Respondents attach a proposed amended deposition notice which incorporates the language suggested by Habersham in its final round of objections before filing the Motion to Quash. See Exh. 1 [5-2] at 2–8. As for the remaining topics, Respondents point out that Habersham limited its final round of objections to those topics, and that its objections to Topics 1, 3, 4, and 7 in its motion are therefore improper. Resp. [5] at 13. In any case, say Respondents, Habersham offers no more than conclusory assertions that the examination topics would subject it to the hardship it claims, and thus that it has not carried its “heavy burden” to show that those examination topics are so broadly and vaguely stated that preparation for questioning on them would constitute an undue burden. See id. at 14–15. Respondents contend that Habersham's motion is simply one more in a series of a dilatory tactics, and they accordingly request that the Court impose sanctions on Habersham. Id. at 15.
*5 In its reply brief, Habersham concedes that its objections to the overbreadth and vagueness of the subpoena are moot in light of Respondents' agreement to revise Topics 2, 5, and 6. Reply [6] at 9, 12, 14. Habersham does not sustain any argument as to its prior objections to Topics 1, 3, 4, and 7. Instead, Habersham states that, at this juncture, “the only issues remaining to be decided are: 1) whether [Respondents] should be required to provide non-party Habersham with a listing or copies of the documents to be used at the deposition and 2) whether Habersham should be awarded its fees and costs for being forced to file this Motion.” Id. at 2.
The Court notes that Habersham's Motion to Quash sought only for the Court to quash the September 1 subpoena for the alleged undue burden caused by its overbreadth and vagueness and to award reasonable attorney's fees for what it contends to be Respondents' litigious conduct. In the motion, Habersham stated that it was Respondents' “refusal to recast the Subpoena topics to allow [it] to prepare witness(s) [sic] to testify to the topics set forth in the Subpoena in compliance with F.R.C.P. 30(b)(6)” that prevented its appearance at a deposition. Mot. to Quash [1] at 10. In its reply brief, Habersham acknowledges that Respondents' proposed amended deposition notice addresses and moots the overbreadth and vagueness concerns it raised in its motion. Although Habersham appears to have made the request to Respondents by email before filing the Motion to Quash, see Exh. D [1-4] at 2–3, Habersham did not request that the Court require Respondents to provide it with a listing or copies of documents intended to be used at the deposition in its brief in support of its Motion to Quash; rather, Habersham raises and argues for the request for the first time in its reply brief. However, arguments raised for the first time in a reply brief are not properly before the Court. See Kellner v. NCL (Bahamas), LTD., 753 F. App'x 662, 667 (11th Cir. 2018) (per curiam) (collecting authority); Herring v. Sec'y, Dep't of Corr., 397 F.3d 1338, 1342 (11th Cir. 2005); United States v. Whitesell, 314 F.3d 1251, 1256 (11th Cir. 2002), cert. denied, 539 U.S. 951 (2003); United States v. Dicter, 198 F.3d 1284, 1289 (11th Cir. 1999); United States v. Martinez, 83 F.3d 371, 377 n.6 (11th Cir. 1996); United States v. Coy, 19 F.3d 629, 632 n.7 (11th Cir. 1994). Thus, the issue of whether Respondents' subpoena is unduly burdensome without such a document listing or provision—as opposed to whether the language of the examination topics themselves renders it unduly burdensome—is not properly before the Court. Accordingly, the Court denies Habersham's request to quash the September 1 subpoena as moot and declines to consider Habersham's belated request that Respondents be required to provide copies or a listing of documents it intends to use at the deposition.
Finally, Habersham and Respondents each accuse the other of having engaged in dilatory tactics worthy of either an award of fees and/or sanctions. Neither request is warranted. Although Rule 45 requires the Court to “impose an appropriate sanction” on an issuing party or attorney who fails to “take reasonable steps to avoid imposing undue burden or expense on a person subject to [a] subpoena,” Fed. R. Civ. P. 45(d)(1), the Court has made no finding that Respondents failed to abide by Rule 45's strictures. Thus, Habersham is not entitled to sanctions. Likewise, Respondents, who acknowledge that “Rule 45 does not authorize sanctions for successfully opposing a motion to quash,” Resp. [5] at 15, fail to identify the authority on which the Court should impose sanctions on Habersham for filing an unsuccessful motion. To the extent Respondents seek that the Court exercise its inherent power to sanction bad-faith or vexatious conduct, the Court finds that use of its inherent powers, which “must be exercised with restraint and discretion,” Purchasing Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218, 1223 (11th Cir. 2017) (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991)), is an inappropriate response to the filing of a motion that is denied for mootness.
II. CONCLUSION
*6 As explained above, the Court DENIES Habersham's Motion to Quash [1] as moot.
IT IS SO ORDERED this 9th day of October, 2020.
Footnotes
This matter was referred to the undersigned Magistrate Judge pursuant to Standing Order No. 18-01, NDGa, which is available on the Court's public internet page. By that Order, all actions that fall within the Clerk's Office's Miscellaneous Actions assignment category, including motions to quash or enforce subpoenas, are automatically referred to a Magistrate Judge to hear and determine or otherwise handle to the full extent allowed by the Federal Magistrates Act, 28 U.S.C. § 636(b)(1)(A) and (B). The Eleventh Circuit has specifically upheld the authority of Magistrate Judges under the Act to issue orders resolving motions to quash subpoenas relating to litigation pending in another district, even where doing so resolves and finally disposes of the matter pending in this Court. See Jordan v. Comm'r, Miss. Dep't of Corr., 947 F.3d 1322, 1327–28 (11th Cir. 2020).