Houser v. PowerDot, Inc.
Houser v. PowerDot, Inc.
2024 WL 3327774 (N.D. Ohio 2024)
May 31, 2024
Greenberg, Jonathan D., United States Magistrate Judge
Summary
The court resolved a dispute over discovery issues related to ESI by denying a motion to quash a subpoena and ordering the deposition of a 30(b)(6) deponent to occur by a certain date. The court also found that the subpoena must adhere to the court's scheduling order and that the scope of the subpoena is subject to the relevancy standard of Fed. R. Civ. P. 26(b)(1). The court also noted that the decision to quash a subpoena is within its discretion and that the party challenging the subpoena had standing to do so.
Additional Decisions
ROBERT HOUSER, et al., Plaintiffs,
v.
POWERDOT, INC., et al., Defendants
v.
POWERDOT, INC., et al., Defendants
CASE NO. 1:21-CV-00915-CAB
United States District Court, N.D. Ohio, Eastern Division
Filed: May 31, 2024
Counsel
Jason R. Bristol, Joshua R. Cohen, James B. Rosenthal, Cohen, Rosenthal & Kramer, Cleveland, OH, for Plaintiff Robert Houser.Clint S. Engleson, Procopio, Cory, Hargreaves & Savitch, San Diego, CA, Edmund W. Searby, Porter Wright Morris & Arthur, Cleveland, OH, Shawn J. Anderson, Husch Blackwell, Milwaukee, WI, Thomas J. Cedoz, Husch Blackwell, Novi, MI, Tyler M. Paetkau, Husch Blackwell, Oakland, CA, for Defendants.
Greenberg, Jonathan D., United States Magistrate Judge
ORDER
*1 This matter has been referred to the undersigned for resolution of the discovery disputes raised in Doc. Nos. 90 and 93. (Doc. Nos. 91, 94.) Before the Court is the pending Motion to Quash Subpoena Duces Tecum, or, Alternatively, for Protective Order, and to Stay Deposition. (Doc. No. 141.) For the following reasons, the Motion to Quash Subpoena Duces Tecum, or, Alternatively, for Protective Order, and to Stay Deposition[1] (Doc. No. 141) is DENIED.
I. Procedural History
On April 12, 2024, Plaintiffs filed a Motion to Compel Discovery and Fed.R.Civ.P. 37(a) Certification. (Doc. No. 125.)
That same day, Defendants filed a Motion to Stay Discovery. (Doc. No. 126.) In their motion, Defendants asked the Court “to issue an Order temporarily staying only the discovery relevant to the IP claims until such time that it has ruled on Therabody's Objections/Appeal” to the Order denying the Motion for Protective Order. (Id.)
On April 17, 2024, the Court granted the motion to stay the discovery relevant to the intellectual property claims only until the Court ruled on Defendants’ objections to the Order denying their Motion for Protective Order. (Doc. No. 132.)
On April 24, 2024, the Court held a hearing on the Motion to Compel Discovery and Fed.R.Civ.P. 37(a) Certification. (Doc. No. 134.) For the reasons set forth on the record, the Court ordered in part as follows:
5. The parties shall depose Mr. Houser as the 30(b)(6) deponent of Neurobridge by remote means on a Monday (or whatever day Mr. Houser is off of work). Defendants may inquire as to subsequent pay issues during Mr. Houser's deposition as the 30(b)(6) witness for Neurobridge. The 30(b)(6) deposition of Mr. Houser on behalf of Neurobridge shall occur by May 20, 2024. Defendants shall promptly provide a copy of the subpoena issued to Match 1 to Plaintiffs’ counsel and the parties shall schedule the deposition of Match 1 for a date and time that is mutually convenient to the parties. The deposition of Match 1 shall occur by May 24, 2024.
(Id.) (emphasis added).
On May 17, 2024, Plaintiffs filed the pending Motion to Quash Subpoena Duces Tecum, or, Alternatively, for Protective Order, and to Stay Deposition. (Doc. No. 141.)
That same day, given the timing of the scheduled deposition at issue in the Motion to Quash Subpoena Duces Tecum, or, Alternatively, for Protective Order, and to Stay Deposition, the Court ordered that any response in opposition to the Motion to Quash must be filed by 3:00 p.m. on May 20, 2024, and set a telephone status conference for May 21, 2024, at 1:00 p.m. (Non-document Order dated May 17, 2024.)
On May 21, 2024, the Court held a telephone status conference regarding the current outstanding discovery issues. (Doc. No. 145.) The Court ordered that the deposition of Match One would be continued to June 18 or 19, 2024. (Id.) As no party wanted to hold a hearing on the Motion to Quash Subpoena Duces Tecum, or, Alternatively, for Protective Order, and to Stay Deposition, the Court stated it would rule on the motion based on the briefing. (Id.)
II. Analysis
*2 Plaintiffs represent that Defendants failed to serve a copy of the Match One subpoena on Plaintiffs’ counsel before serving the subpoena on Match One in violation of Rule 45(a)(1)(D)(4). (Doc. No. 141 at 4.) Plaintiffs state that when they learned a subpoena had been served on Match One, “weeks” after it was issued, Plaintiffs asked Defendants for a copy of the subpoena, but Defendants never provided it. (Id.) In its April 24, 2024 Order on the Motion to Compel, the Court ordered Defendants to “ ‘promptly provide a copy of the subpoena issued to Match 1 to Plaintiffs’ counsel.’ ” (Id.) However, Defendants waited another five days before producing a copy of the subpoena to Plaintiffs. (Id.) Plaintiffs argue that “[d]espite the subpoena being issued on March 22, 2024, Houser did not receive a copy until more than a month after issuance and after the close of fact discovery in this matter.” (Id.) If Defendants had complied with Rule 45, “Plaintiff would have had a week left during the discovery period to determine whether any additional discovery was necessary in response to Defendants’ subpoena and to challenge its scope.” (Id.) Plaintiffs assert that the subpoena to Match One “is designed to annoy, embarrass, harass, and retaliate against Houser for the instant litigation” and will not lead to the discovery of admissible evidence. (Id. at 5.)
Defendants respond that discovery closed on March 28, 2024, “with the narrow exception of matters pertaining to the Parties’ ongoing intellectual property dispute, and including three [sic] outstanding depositions of NeuroBridge, Match One, Michael Guiliano, and Therabody.” (Doc. No. 144 at 9.) Defendants argue that Plaintiffs’ “eleventh-hour motion seeks to obstruct Therabody's ability to obtain the relevant evidence placed at issue by the $5 million ‘front pay’ claim and completely disregards the Parties’ discovery conferences before Magistrate Judge Greenberg.” (Id.) Defendants assert that the admissibility of evidence at trial is different from its discoverability under Rule 26. (Id. at 10.) Defendants maintain that the requested deposition and documents “are plainly relevant to why Houser lost this employment there too, and whether PowerDot is responsible for lost compensation once Houser commenced employment with Match One.” (Id. at 11.)
As an initial matter, “ ‘[a] subpoena issued pursuant to Fed. R. Civ. P. 45 is considered to be a discovery device in the Sixth Circuit, and accordingly, must adhere to the deadlines of a court's scheduling order.’ ” Allstate Ins. Co. v. Papanek, 309 F. Supp. 3d 511, 514 (S.D. Ohio 2018) (quoting Miami Valley Fair Hous. Ctr., Inc. v. Connor Grp., No. 3:10CV00083, 2011 WL 13157347, at *3 (S.D. Ohio July 21, 2011)). See also Sterling Grp., L.P. v. Babcock Power, Inc., No. 3:17-MC-1-CRS-CHL, 2017 WL 2958503, at *2 (W.D. Ky. July 11, 2017) (citing Fabery v. Mid-S Ob-GYN, No. 06-2136 D/P, 2000 WL 35641544, at *1 (W.D. Tenn. May 15, 2008); Martin v. Oakland Cty., No. 2:06-CV-12602, 2008 WL 4647863, at *2 (E.D. Mich. Oct. 21, 2008)).
The scope of a subpoena issued under Fed. R. Civ. P. 45 is “subject to the general relevancy standard applicable to discovery under Fed. R. Civ. P. 26(b)(1).” Laethem Equip. Co. v. Deere and Co., 2007 WL 2873981, at *4 (E.D. Mich.2007) (internal quotation omitted). “That general relevancy standard is very broad.” Cleveland Clinic Health System–East Region v. Innovative Placements, Inc., 2012 WL 187979, at *2 (N.D. Ohio Jan.23, 2012) (quoting Lewis v. ACB Bus. Serv. Inc., 135 F.3d 389, 402 (6th Cir. 1998). Rule 45(d) does, however, provide circumstances under which a court must or may quash or modify a subpoena. That Rule provides, in pertinent part, that “the court for which the district where compliance is required must quash or modify a subpoena that: (i) fails to allow a reasonable time to comply; (ii) requires a person to comply beyond the geographical limits specified in Rule 45; (iii) requires disclosure of privileged or other protected matter, if no exception or waiver applies; or (iv) subjects a person to undue burden.” Fed. R. Civ. P. 45(d)(3)(A). Rule 45(d)(3)(B) also further establishes that the court may quash or modify a subpoena if it requires “disclosing a trade secret or other confidential research, development, or commercial information.” Fed. R. Civ. P. 45(d)(3).
*3 The party issuing a subpoena must take reasonable steps to avoid imposing an undue burden on a person subject to a subpoena, but “the movant bears the burden of establishing that the issued subpoenas violate Rule 45 of the Federal Rules of Civil Procedure.” Cleveland Clinic Health System–East Region, 2012 WL 187979, at *2 (quoting Recycled Paper Greetings, Inc. v. Davis, 2008 WL 440458 at * 3 (N.D. Ohio Feb.13, 2008)). In evaluating a motion to quash a subpoena, the district court may consider “whether (i) the subpoena was issued primarily for purposes of harassment, (ii) there are other viable means to obtain the same evidence, and (iii) to what extent the information sought is relevant, nonprivileged, and crucial to the moving party's case.” Id. (quoting Bogosian v. Woloohojian Realty Corp., 323 F.3d 55, 66 (1st Cir. 2003)). The decision of whether to quash a subpoena is within the sound discretion of the district court. Thomas v. City of Cleveland, 57 F. App'x 652, 654 (6th Cir. 2003). See also Pitzer v. Cinmar, LLC, 2016 WL 7325158, at *1 (N.D. Ohio Dec. 16, 2016).
1. Standing
As the Sixth Circuit has recognized, “ ‘[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 party claims some personal right or privilege with regard to the documents sought.’ ” Mann v. Univ. of Cincinnati, 114 F.3d 1188 (Table), at *4 (6th Cir. 1997) (quoting 9A Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure § 2459 (1995)). Plaintiffs argue that Houser has such a “personal right or privilege” in his personnel file and in any “ ‘severance agreement’ ” and communications with legal counsel. (Doc. No. 141 at 7.) This Court has previously found such an interest, and therefore standing, in challenging third-party subpoenas for personnel files and a security agreement. Johnson v. Guards Mark Security, No. 4:04 CV 2447, 2007 WL 1023309, at *1 (N.D. Ohio Mar. 31, 2007). The Court notes Defendants do not challenge Houser's standing to move to quash the subpoena to Match One. (Doc. No. 144.) Therefore, the Court finds Houser has standing to challenge the subpoena issued to Match One.
2. Compliance with Rule 45
Rule 45(a)(4) states that “[i]f the subpoena commands the production of documents, electronically stored information, or tangible things or the inspection of premises before trial, then before it is served on the person to whom it is directed, a notice and a copy of the subpoena must be served on each party.” Fed. R. Civ. P. 45. As another court in this circuit has explained:
The purpose of the prior notice requirement “is to afford other parties an opportunity to object to the production or inspection, or to serve a demand for additional documents or things. Such additional notice is not needed with respect to a deposition because of the requirement of notice imposed by Rule 30 or 31. But when production or inspection is sought independently of a deposition, other parties may need notice in order to monitor the discovery and in order to pursue access to any information that may or should be produced.”
Automotive Inspection Servs., Inc. v. Flint Auto Auction, Inc., No. 06-15100, 2007 WL 3333016, at *3 (E.D. Mich. Nov. 9, 2007) (quoting Fed. R. Civ. P. 45 committee note, 1991 amendments).
In explaining the additional amendments to the rule that occurred in 2013, the committee notes stated:
Rule 45(a)(4) is added to highlight and slightly modify a notice requirement first included in the rule in 1991. Under the 1991 amendments, Rule 45(b)(1) required prior notice of the service of a “documents only” subpoena to the other parties. Rule 45(b)(1) was clarified in 2007 to specify that this notice must be served before the subpoena is served on the witness.
*4 The Committee has been informed that parties serving subpoenas frequently fail to give the required notice to the other parties. The amendment moves the notice requirement to a new provision in Rule 45(a) and requires that the notice include a copy of the subpoena. The amendments are intended to achieve the original purpose of enabling the other parties to object or to serve a subpoena for additional materials.
Parties desiring access to information produced in response to the subpoena will need to follow up with the party serving it or the person served to obtain such access. The rule does not limit the court's authority to order notice of receipt of produced materials or access to them. The party serving the subpoena should in any event make reasonable provision for prompt access.
Fed. R. Civ. P. 45 committee note, 2013 amendments.
Although Defendants argue that Plaintiffs “misrepresent[ ] information regarding the status of service,” as Plaintiffs’ counsel received proof of service on May 16, 2024, “a full day before their improper presentation of the incorrect document to the Court on May 17, 2024” (Doc. No. 144 at 11), Defendants do not refute Plaintiffs’ assertion that Defendants failed to serve a copy of the subpoena to Match One on Plaintiffs’ counsel before serving the subpoena on Match One. (Doc. No. 144.) Indeed, the proof of service reflects service on Match One on March 26, 2024 (Doc. No. 144-7 at 11), over a month before Plaintiffs received a copy of the subpoena. (Doc. No. 141 at 4.) Therefore, it is undisputed that Defendants failed to provide notice prior to service of the subpoena as required by the rule.
Plaintiffs argue the subpoena should be quashed as a discovery sanction because of Defendants’ non-compliance with Rule 45(a)(4). (Doc. No. 141 at 8.) However, “Courts in the Sixth Circuit decline to quash subpoenas based on a technical violation of Rule 45(a)(4) where the moving party suffered no prejudice.[ ] See, e.g., Sys. Prods. & Solutions, Inc. v. Scramlin, No. 13-cv-14947, 2014 WL 3894385, at *6 (E.D. Mich. Aug. 8, 2014) (citing Black v. Kyle-Reno, No. 1:12-cv-503, 2014 WL 667788, at *2 (S.D. Ohio Feb. 20, 2014)); Friedberg v. Madison Realty Invs., Inc., No. 1:16-mc-0003, 2016 WL 1562948, at *2 (S.D. Ohio Apr. 18, 2016) (citing Hendricks v. Total Quality Logistics, LLC, 275 F.R.D. 251, 252 (S.D. Ohio 2011)) (‘The Court can move past a technical violation of Rule 45(a)(4) and examine the merits of the matter when the movant has not been prejudiced by the violation.’).” AFT Michigan v. Project Veritas, Civil Case No. 17-13292, 2022 WL 779784, at *3 (E.D. Mich. Mar. 14, 2022) (footnote omitted). Plaintiffs maintain they have suffered prejudice because if Defendants had complied, Plaintiffs “would have had sufficient time to serve additional subpoenas or discovery requests” of their own before discovery closed. (Doc. No. 141 at 8.) Plaintiffs state that they noticed the deposition of attorney Tom Cedoz in response to the Match One subpoena once they obtained a copy, and that Defendants took the position of “ ‘too bad, discovery is over’ ”; had Defendants complied with the Rule 45(a)(4), Plaintiffs could have noticed the deposition before the fact discovery deadline. (Id.) In addition, Plaintiffs assert that this is the second time Defendants violated the notice provision, as Defendants failed to serve a copy of a subpoena duces tecum sent to Fifth Third Bank in advance and Defendants “only shared the documents they received from Fifth Third after months and multiple requests.” (Id.)
*5 In a footnote, Defendants argue that they received an unserved subpoena for attorney Cedoz on May 8, 2024, “a full month after the close of all fact discovery on March 28, 2024.” (Doc. No. 144 at 8 n.2.) In a lengthy string cite, Defendants include parentheticals such as “absolute litigation privilege,” “protective order proper if any of Shelton criteria lacking,” “refusing to allow deposition of in-house counsel who helped develop litigation strategy,” etc. (Id.) The Court finds any argument regarding the propriety of the subpoena to Mr. Cedoz raised in the brief in opposition, other than timeliness, to be waived for lack of development. Kuhn v. Washtenaw Cnty., 709 F.3d 612, 624 (6th Cir. 2013) (“This court has consistently held that arguments not raised in a party's opening brief, as well as arguments adverted to in only a perfunctory manner, are waived.”).[2] Defendants otherwise offer no explanation for their failure to comply with Rule 45(a)(4) or otherwise respond to Plaintiffs’ arguments regarding prejudice. (Doc. No. 144.)
The Sixth Circuit has explained a district court's inherent powers to sanction a party as follows:
A district court has the inherent power to sanction a party when that party exhibits bad faith. Chambers v. NASCO, Inc., 501 U.S. 32, 43–50, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991). The “imposition of inherent power sanctions requires a finding of bad faith,” First Bank of Marietta v. Hartford Underwriters Ins. Co., 307 F.3d 501, 517 (6th Cir. 2002), or conduct “tantamount to bad faith,” Roadway Express, Inc. v. Piper, 447 U.S. 752, 767, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980). A district court's reliance upon its inherent authority to sanction derives from its power to impose respect in its presence, control the litigants before it, and guarantee the integrity of the courts. See Chambers, 501 U.S. at 43–44, 111 S.Ct. 2123. Due to “their very potency, inherent powers must be exercised with restraint and discretion.” Id. at 44, 111 S.Ct. 2123 (citing Roadway Express, 447 U.S. at 764, 100 S.Ct. 2455). “A primary aspect of that discretion is the ability to fashion an appropriate sanction for conduct which abuses the judicial process.” Id. at 44–45, 111 S.Ct. 2123. As the Supreme Court observed in Roadway Express, “outright dismissal of a lawsuit, which [the Supreme Court] had upheld in Link [v. Wabash R.R. Co., 370 U.S. 626, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962)], is a particularly sever [sic] sanction, yet is within the court's discretion.” Chambers, 501 U.S. at 45, 111 S.Ct. 2123 (citation omitted).
Bradley J. Delp Revocable Trust v. MSJMR 2008 Irrevocable Trust, 665 F. App'x 514, 520 (6th Cir. 2016). “ ‘For a plaintiff's actions to be motivated by bad faith, willfulness, or fault, his conduct must display either an intent to thwart judicial proceedings or a reckless disregard for the effect of [his] conduct on those proceedings.’ ” Id. at 521-22 (quoting Wu v. T.W. Wang, Inc., 420 F.3d 641, 643 (6th Cir. 2005)) (additional citations omitted).
The Court cannot find, based on the record before it, that Defendants have exhibited bad faith, as opposed to negligence, in failing to comply with the notice provision of Rule 45(a)(4) to warrant the imposition of sanctions pursuant to the Court's inherent powers. However, Defendants cannot be heard to complain that Plaintiffs’ subpoena to Mr. Cedoz was after the close of discovery, when the subpoena to Mr. Cedoz could have (and likely would have) been served before discovery closed had Defendants complied with the notice provision of Rule 45(a)(4). Therefore, Plaintiffs may serve their deposition subpoena on Mr. Cedoz and Defendants are foreclosed from raising any argument regarding timeliness in opposition to the subpoena.
3. Scope
Plaintiffs argue that “[t]he only discovery of Match One ever contemplated or discussed with the Court at the various discovery hearings was a limited deposition examination related to mitigation of damages.” (Doc. No. 141 at 9.) At that point, Plaintiffs had not seen the subpoena, and had they reviewed it before those proceedings, “would have strenuously objected to any such discovery.” (Id.) Plaintiffs assert that the subpoena is meant to bully, harass, and cause further damage, burden, and expense for Plaintiffs or “coerce” Plaintiffs to drop their claims. (Id.) Plaintiffs also argue the subpoena places an undue burden on them because “[t]o the extent any legal agreement exists between Houser and Match One that contains confidentiality provisions, non-disparagement clauses, and the like, compliance with the Defendants’ subpoena may cause Match One to violate such terms and conditions and may necessitate Houser taking further action to prevent such disclosures.” (Id. at 9-10.) Finally, Plaintiffs assert that the subpoena seeks irrelevant, inadmissible evidence, as whether Houser is a “ ‘serial fraudster’ ” is irrelevant to the case and inadmissible, even if the Court granted Defendants’ pending motion for leave to file an amended counterclaim alleging fraud in the inducement. (Id. at 10.) Plaintiffs maintain that the topics contained in the subpoena duces tecum “are not reasonably calculated to shed light on the issue of mitigation of damages.” (Id. at 11.)
*6 Defendants argue that the subpoenaed Match One deposition and documents “are plainly relevant to why Houser lost this employment there too, and whether PowerDot is responsible for lost compensation once Houser commenced employment with Match One.” (Doc. No. 144 at 11.) Defendants assert they are “entitled to explore fully ... the entire circumstances of Houser's employment with Match One and its termination, and not just for mitigation purposes but also to obtain other admissible evidence.” (Id. at 11-12.) Defendants maintain any confidentiality agreement cannot bar discovery, as Plaintiffs conceded the agreement has an exception for court-ordered disclosure and “a confidentiality agreement does not control over evidence required for a case.” (Id. at 12.) In addition, the stipulated protective order in this case governs the handling and disclosure of “sensitive information,” and Plaintiffs “fail[ ] to articulate any specific and particularized harm [ ] resulting from disclosure under the Parties’ current SPO.” (Id.)
The Court agrees with Defendants that the requested information falls within the scope of Rule 26(b)(1), which does not turn on the admissibility of such evidence. Fed. R. Civ. P. 26(b)(1) (“Information within this scope of discovery need not be admissible in evidence to be discoverable.”) The Court further agrees with Defendants that the requested information is relevant to the front pay claim and mitigation of damages. Plaintiffs informed this Court that there was language in the agreement between Houser and Match One that allowed for disclosure if ordered by a court. (Doc. No. 116 at 11) (“The Court: And is there any kind of boilerplate language in that agreement ‘unless otherwise ordered by a court’? Attorney Bristol: Yes, yes, there is.”). The Court notes there is a stipulated protective order in place that governs confidential information. (Doc. No. 37.) The Motion to Quash Subpoena Duces Tecum, or, Alternatively, for Protective Order, and to Stay Deposition is therefore DENIED.
IT IS SO ORDERED.
Footnotes
The Court previously ordered the deposition of Match One would not proceed on May 22, 2024 as noticed and would be continued to June 18 or 19, 2024. (Doc. No. 145.)
While the Court will not address such arguments here because of waiver, the Court will not foreclose any proper objection to the scope of a subpoena issued to attorney Cedoz raised in a motion to quash.