Liu et al v. Win Woo Trading, LLC et al

Filing 134

ORDER denying 92 First MOTION to Quash Plaintiff's Subpoena Duce Tecum filed by Jia Tun Zheng, Safety Trucking, LLC; ORDER TO SHOW CAUSE why Leon Jew should not be sanctioned sua sponte under Rule 11 of the Federal Rules of Civil Procedure for filing the motion to quash. Show Cause Response due by 3/4/2016. Signed by Judge Kandis A. Westmore on 2/18/2016. (kawlc1, COURT STAFF) (Filed on 2/18/2016)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 KUANG XUAN LIU, et al., Case No. 14-cv-02639-KAW Plaintiffs, 8 v. 9 10 WIN WOO TRADING, LLC, et al., ORDER DENYING DEFENDANTS' MOTION TO QUASH PLAINTIFFS' SUBPOENA DUCES TECUM; ORDER TO SHOW CAUSE Re: Dkt. No. 92 Defendants. United States District Court Northern District of California 11 12 13 On January 11, 2016, Defendants Safety Trucking, LLC and Jiatun Zheng filed a motion to 14 quash Plaintiffs’ third party subpoenas served on East West Bank and Mark J. Bluer. (Defs.’ Mot., 15 Dkt. No. 92.) 16 On February 18, 2016, the Court held a hearing, and after careful consideration of the 17 parties’ arguments, for the reasons set forth below, the Court DENIES Defendants’ motion to 18 quash, and issues an ORDER TO SHOW CAUSE to attorney Leon Jew why the Court should not 19 impose sanctions sua sponte under Federal Rule of Civil Procedure 11(c)(3). 20 I. 21 BACKGROUND On January 4, 2016, Plaintiffs emailed defense counsel copies of the third party subpoenas 22 to be served on East West Bank and Mark J. Bluer. (Defs.’ Mot. at 1; Decl. of Leon E. Jew, “Jew 23 Decl.”, Dkt. No. 92-1 ¶ 2, Exs. B & C.) On January 5, 2016 and January 7, 2016, respectively, 24 Plaintiff served the third parties with the subpoenas. (Suppl. Decl. of X. Young Lai, “Suppl. Lai 25 Decl.,” Dkt. No. 114 ¶¶ 2-3, Exs. A & B.) The subpoenas commanded the third parties to produce 26 documents on January 20, 2016. See ids. Fact discovery closed on January 8, 2016. (Am. Case 27 Management Or., Dkt. No. 90 at 1.) 28 On January 11, 2016, Defendants filed a motion to quash. (Defs.’ Mot., Dkt. No. 92.) On 1 January 25, 2016, Plaintiffs filed an opposition. (Pl.’s Opp’n, Dkt. No. 109.) On February 1, 2 2016, Defendants filed a reply. (Defs.’ Reply, Dkt. No. 110.) 3 On February 9, 2016, the Court ordered Plaintiffs to file a supplemental declaration with the 4 proofs of service attached as exhibits. (Dkt. No. 113.) On February 10, 2016, Plaintiffs filed the 5 supplemental declaration. (Suppl. Lai Decl., Dkt. No. 114.) II. 6 LEGAL STANDARD Federal Rule of Civil Procedure 45 allows any party to serve a subpoena that commands a 7 8 non-party "to produce documents, electronically stored information, or tangible things . . ." Fed. 9 R. Civ. P. 45(a)(1)(C). Subpoenas are also subject to the relevance requirements of Rule 26(b), and therefore may command the production of documents which are "nonprivileged [and] . . . 11 United States District Court Northern District of California 10 relevant to a party's claim or defense." Soto v. Castlerock Farming & Transp., Inc., 1:09-CV- 12 00701 AWI, 2011 WL 2680839, at *7 (E.D. Cal. July 8, 2011), quoting Fed. R. Civ. P. 26(b)(1). In California, federal courts interpret Rule 45 as setting forth two types of subpoenas: 13 14 pretrial discovery subpoenas and trial subpoenas. See F.T.C. v. Netscape Comm. Corp., 196 15 F.R.D. 559, 560 (N.D. Cal. 2000); see also Integra Lifesciences I, Ltd. v. Merck KGaA, 190 16 F.R.D. 556, 562 (S.D. Cal. 1999). Pre-trial discovery subpoenas include requests for the 17 production and inspection and books, documents, and tangible items. See Fed. R. Civ. P. 26(a)(5) 18 (Parties may obtain discovery by requesting production of documents or things under Rule 19 45(a)(1)(C), for inspection and other purposes). Trial subpoenas, on the other hand, include 20 requests for attendance at a hearing or trial, and may be used in narrow circumstances to secure 21 documents. See Fed. R. Civ. P. 45(a)(1)-(2)(A); see also Puritan Inv. Corp. v. ASLL Corp., 1997 22 WL 793569, 1 (E.D. Pa. 1997) (trial subpoenas may be used to secure documents at trial for the 23 purpose of memory refreshment or trial preparation); Rice v. United States, 164 F.R.D. 556, 558 n. 24 1 (N.D. Okla. 1995) (trial subpoenas may be used to ensure availability at trial of original 25 documents previously disclosed by discovery). Generally, requests for production of documents 26 and things under Rule 45 constitute pre-trial discovery and must be served within the designated 27 discovery period. See Integra Lifesciences, 190 F.R.D. at 561-62. 28 /// 2 III. 1 MOTION TO QUASH 2 A. 3 It is undisputed that the subpoenas were served on nonparties before the discovery cut off. 4 (See Defs.’ Mot. at 2.) Defendants contend, however, that they are untimely, because the date for 5 performance was on January 20, 2016, which was after the January 8, 2016 cut-off. Id. “Many 6 courts have found that Rule 45 subpoenas sought after the discovery cut-off are improper attempts 7 to obtain discovery beyond the discovery period.” nSight, Inc. v. PeopleSoft, Inc., 2006 WL 8 988807, at *3 (N.D. Cal. Apr. 13, 2006) (citing Rice, 164 F.R.D. at 557-59 (subpoenas duces 9 tecum for particular records, issued to third parties after close of discovery, were quashed as The subpoenas were timely. improper attempt to engage in discovery after discovery cut-off)). These subpoenas, however, 11 United States District Court Northern District of California 10 were served prior to the close of discovery. That performance would occur after the cut off does 12 not render the subpoenas untimely. 13 B. 14 Defendants claim that Plaintiffs’ subpoenas seek highly sensitive documents, including Defendants have not demonstrated privacy. 15 bank records, checks, and Forms 1099, from East West Bank, which implicates privacy concerns. 16 Under California law, the privacy rights of businesses are accorded less weight than that of 17 individuals. Saca v. J.P. Molyneux Studio Ltd., CIV S06-2818 MCE EFB, 2008 WL 62181, at *4 18 (E.D. Cal. Jan. 4, 2008). The Court notes that the parties have a stipulated protective order in 19 effect, which ameliorates some of those concerns. See Vieste, LLC v. Hill Redwood Dev., 2011 20 WL 855831, at *1 (N.D. Cal. Mar. 9, 2011) (quoting Oakes v. Halvorsen Marine Ltd., 179 F.R.D. 21 281, 284 (C.D. Cal. 1998)) (party’s interest in the confidentiality of its financial information can 22 be adequately addressed via a protective order); Hill v. Nat'l Collegiate Athletic Assn., 7 Cal. 4th 23 1, 38 (1994) ("[P]rivacy concerns" "are assuaged if intrusion is limited and confidential 24 information is carefully shielded from disclosure except to those who have a legitimate need to 25 know."). The Court notes that Safety Trucking’s document production, which sought the same 26 documents now being subpoenaed, was not complete. In fact, Defendants previously represented 27 that they had already produced all documents that were “available,” because boxes of records had 28 disappeared when they relocated to their current office in June 2013. (Dkt. No. 106 at 3.) 3 1 Additionally, Defendants argue that the subpoena to Mark J. Bluer, a former attorney, 2 requesting “highly sensitive documents concerning written communications between the parties, 3 among others, also raises concerns of attorney-client privilege and confidentiality issues.” (Defs.’ 4 Mot. at 4.) In opposition, Plaintiff states that Mr. Bluer represented the plaintiffs in a prior case 5 against Win Woo and Safety Trucking, so Defendants cannot invoke attorney-client privilege. 6 (Pl.’s Opp’n at 3; Decl. of X. Young Lai, “Lai Decl.,” Dkt. No. 109-1 ¶ 10.) At the hearing, 7 defense counsel acknowledged that Mr. Bluer represented Plaintiffs in the prior action, and 8 withdrew the objection. 9 The Court notes that Plaintiffs first attempted to obtain the entire case file from Defendants, but the file was incomplete. (Dkt. No. 106 at 1.) Furthermore, while some documents 11 United States District Court Northern District of California 10 may be protected, Defendants failed to identify which documents it believes would be privileged. 12 C. 13 Without elaboration, Defendants move to quash the subpoenas on the grounds that they No undue burden or oppression 14 request “highly sensitive documents” that are unduly burdensome and “unfair” to Safety Trucking. 15 (Defs.’ Mot. at 3-4.) Furthermore, Defendants claim that they will be unduly burdened and 16 oppressed, because the subpoenas command performance after the fact discovery cutoff in 17 violation of the case management order, which will also result in the case not progressing. (Defs.’ 18 Mot. at 4.) These arguments are unavailing. As discussed above, the fact that the performance 19 date is after the discovery cutoff does not render the subpoenas untimely. See discussion supra 20 Part III.A. Nor is it violative of the case management order. Moreover, the bulk of the burden in 21 responding to the subpoenas is borne by the third parties rather than by Safety Trucking. Indeed, 22 the Court notes that the third party entities have not moved to quash, modify or otherwise objected 23 to the subpoenas. Furthermore, Defendants have purposefully hindered Plaintiffs’ attempts to 24 obtain the information now sought by way of subpoena, so any claims of undue burden or 25 oppression are unpersuasive. 26 27 28 IV. ORDER TO SHOW CAUSE Perhaps more troubling, at the hearing, defense counsel appeared unaware that the motion to quash argued that the Bluer subpoena should be quashed on the grounds that it violated 4 1 Defendants’ attorney-client privilege. Upon further questioning, counsel admitted that a law 2 student drafted the motion, but represented that he quickly reviewed and approved the final 3 document from his mobile phone prior to filing. Defense counsel also acknowledged that Mr. 4 Bluer never represented his client, and, in fact, had represented the plaintiffs in a prior case. The 5 Court does not believe that counsel read the motion prior to filing, or even in preparation for the 6 motion hearing, because he was surprised when the privilege argument was brought to his 7 attention, and immediately withdrew the argument. When asked by the Court why such a clearly 8 erroneous argument was included in the motion, defense counsel had no answer, and instead 9 apologized for wasting the Court’s time. 10 Federal Rule of Civil Procedure 11 requires that the attorney signer certify that, “to the best United States District Court Northern District of California 11 of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the 12 circumstances,” that a filing “is not being presented for any improper purpose, such as to harass, 13 cause unnecessary delay, or needlessly increase the cost of litigation.” Fed. R. Civ. P. 11(b)(1). 14 Here, defense counsel’s representations to the Court regarding the preparation of the motion to 15 quash, coupled with his lack of knowledge of the arguments contained therein, indicate that the 16 motion was filed for an improper purpose. It should also be noted that neither the motion nor 17 Defendants’ reply provide any legal authority to support the argument that the subpoenas were 18 untimely because they required production after the fact discovery cutoff, and oddly relies on Rule 19 12(b)(5) in support of the motion. (Defs.’ Mot. at 2, 4; Defs.’ Reply at 2.) Defendants’ positions 20 taken during discovery suggest that this motion is the latest effort to harass in an attempt to 21 deprive Plaintiffs of their day in court. 22 Rule 11 also requires that the attorney certify that “the claims, defenses, and other legal 23 contentions are warranted by existing law or by a nonfrivolous argument for extending, 24 modifying, or reversing existing law or for establishing new law.” Fed. R. Civ. P. 11(b)(2). Here, 25 Defendants never had an attorney-client relationship with Mr. Bluer, so there was no existing or 26 nonfrivolous argument that they would enjoy attorney-client privilege. 27 28 For the reasons set forth above, attorney Leon Jew is ordered to show cause by March 4, 2016 why the Court should not impose sanctions, on him individually, sua sponte under Rule 5 1 11(c) for filing a frivolous motion to quash. V. 2 CONCLUSION 3 In light of the foregoing, Defendants’ motion to quash is DENIED. Additionally, defense 4 counsel is ORDERED TO SHOW CAUSE on or before March 4, 2016 why the Court should not 5 impose Rule 11 sanctions sua sponte for filing the motion to quash. 6 7 IT IS SO ORDERED. Dated: February 18, 2016 __________________________________ KANDIS A. WESTMORE United States Magistrate Judge 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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