Antietam Industries, Inc. et al v. Morgan Keegan & Company, Inc.
Filing
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ORDER denying as moot 13 Motion to quash; denying as moot 13 Motion for protective order; denying 16 Motion to quash; denying 16 Motion for protective order. Signed by Magistrate Judge Thomas B. Smith on 10/2/2012. (Smith, Thomas)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
ANTIETAM INDUSTRIES, INC., WILLIAM
WARFEL and JANICE WARFEL,
Plaintiffs,
v.
Case No. 6:12-cv-1250-Orl-36TBS
MORGAN KEEGAN & COMPANY, INC.,
Defendant.
______________________________________
ORDER
Pending before the Court is Plaintiffs’ Amended Motion to Quash Subpoena to
FINRA and Motion for Protective Order. (Doc. 16).1 The only difference between
Plaintiffs’ original Motion to Quash Subpoena to FINRA and Motion for Protective
Order (Doc. 13) and the instant motion is the inclusion of the certificate of counsel
required by M.D. FLA. R. 3.01(g).
Plaintiffs bring this action pursuant to the Federal Arbitration Act, 9 U.S.C. § 9
(2008) (the “FAA”), to confirm an award they received in a Financial Industry
Regulatory Authority (“FINRA”) arbitration. (Doc. 1). Defendants have answered and
moved the Court to vacate the award on the ground that one of the arbitrators
misrepresented and failed to disclose information suggesting he may have been
biased. (Doc. 7). Defendant argues that the arbitrator’s conduct constitutes “evident
partiality” under FAA Section 10(a)(2) and “misbehavior by which the rights of any
party have been prejudiced” under FAA Section 10(a)(3). (Id. at 2) On September 10,
1
The parties refer to themselves as “Petitioners” and “Respondent,” while the Court refers
to them as “Plaintiffs” and “Defendant.”
2012, the Defendant caused a subpoena for the following documents and information
to be served on FINRA:
ALL DOCUMENTS and/or COMMUNICATIONS
CONCERNING or EVIDENCING the contents of the arbitrator
files for MASS, including but not limited to all arbitrator
disclosures, arbitrator applications, resumes, background
information, conflict information, bias disclosures, arbitrator
oaths, acknowledgements [sic], and documents signed,
relating to the WARFEL MATTER, the COFFEY MATTER, or
any FINRA arbitration to which MASS was or is assigned to as
an arbitrator.
(Doc. 19-1 at 8).
Although FINRA has not asked the Court for relief from the subpoena, Plaintiffs
are seeking a Court order quashing the subpoena or, in the alternative, a protective
order that the discovery not be had. (Doc. 16).
Plaintiffs cite to Park v. First Union Brokerage Services, Inc., 926 F.Supp.
1085, 1090 (M.D. Fla. 1996) for the proposition that discovery is not appropriate in this
case, although they do not go as far as to contend that discovery is never permitted in
proceedings to confirm arbitration awards. The Court in Park rejected First Union’s
argument that because the FAA does not expressly prohibit discovery, it must be
allowed. However, it appears that the primary reason the Court struck a notice of
filing deposition in Park was because it was being utilized by both parties “to continue
with legal argument beyond that authorized by Local Rule 3.01(b).” Id. at 1090. In the
same vein, the Court said “the efforts by [First Union] in this ‘discovery’ suggest that it
is merely a ‘tactical response to having lost the arbitration,’ or an inappropriate
attempt to seek a ‘second bite at the apple’ because of dissatisfaction with the
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outcome.” Id. (quoting Hobet Mining v. Int’l Union, United Mine Workers of America,
877 F.Supp. 1011 (S.D.W.Va. 1994)); see also Merit Ins. Co. v. Leatherby Ins. Co.,
714 F.2d 673, 680-81 (7th Cir. 1983), cert. denied, 464 U.S. 1009 (1983); Remmey v.
Paine Webber, Inc., 32 F.3d 143, 146 (4th Cir. 1994).
I am persuaded by the holdings in Admin. Dist. Council 1 of Illinois of the Int’l
Union of Bricklayers and Allied Craft-Workers, AFL-CIO v. Masonry Co., Inc., No. 12
C 233, 2012 WL 1831454 (N.D.Ill. May 18, 2012) (recognizing the right of a party to
depose an arbitrator in limited circumstances, so long as the examination does not
question the correctness of the decision); Int’l Union of Elec., Radio and Mach.
Workers, AFL-CIO v. Westinghouse Elec. Corp., 48 F.R.D. 298 (S.D.N.Y. 1969)
(permitting discovery regarding issue of arbitrability under FED. R. CIV. P. 81(a)(3));
and Univ. Commons-Urbana, Ltd v. Universal Constrs., Inc., 304 F.3d 1331 (11th Cir.
2002) (additional fact finding required into evident partiality of arbitrator), and find that
the requested discovery should be permitted in this case.
Defendant challenges Plaintiffs’ standing to bring a motion to quash the
subpoena. (Doc. 18 at 2). The general rule in the Eleventh Circuit is that a party does
not have standing to contest a subpoena served on someone else, unless that party
alleges a “personal right or privilege with respect to the materials subpoenaed.” Armor
Screen Corp. v. Storm Catcher, Inc., No. 07-81091-CIV, 2008 WL 5049277, at *2
(S.D. Fla. Nov. 25, 2008) (quoting Brown v. Braddiek, 595 F.2d 961, 967 (5th Cir.
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1979)).2 Defendant’s subpoena is not directed to Plaintiffs, it was not served on
Plaintiffs, and Plaintiffs have not asserted any personal right or privilege in the
information described in the subpoena. Accordingly, Plaintiffs do not have standing to
move to quash the subpoena.
Plaintiffs seek a protective order on the ground that the subpoena is a fishing
expedition in which Defendant is requesting information that is not reasonably
calculated to lead to the discovery of admissible evidence. Federal Rule of Civil
Procedure 26(c)(1) states that the Court may, “for good cause, issue an order to
protect a party or person from annoyance, embarrassment, oppression, or undue
burden or expense[.]” Because Plaintiffs are parties, they have standing to request a
protective order. Armor, 2008 WL 5049277 at *3.
Federal Rule of Civil Procedure 26 also governs the scope of discovery. The
Rule permits “discovery regarding any non-privileged matter that is relevant to any
party’s claim or defense . . . [or, upon court order,] any matter relevant to the subject
matter involved in the action.” FED. R. CIV. P. 26(b)(1). The word “relevant” as used in
the Rule, is “construed broadly to encompass any matter that bears on, or that
reasonably could lead to other matter that bears on, any issue that is or may be in the
case.” Oppenheimer Fund v. Sanders, 437 U.S. 340, 351 (1978) (citing Hickman v.
Taylor, 329 U.S. 495, 501(1947)).
Because they are the parties seeking the protective order, Plaintiffs have the
2
In Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc), the Eleventh
Circuit adopted as binding precedent all decisions of the former Fifth Circuit rendered prior to the
close of business on September 30, 1981.
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burden of showing good cause. Malibu Media, LLC v. Doe, Case No. 2:12-cv-266FtM-29DNF, 2012 U.S. Dist. LEXIS 129163, at *16 (M.D. Fla. Aug. 21, 2012; U&I
Corp. v. Advanced Med. Design, Inc., 251 F.R.D. 667, 673 (M.D. Fla. 2008) . To carry
their burden, Plaintiffs must make “a particular and specific demonstration of fact as
distinguished from stereo-typed and conclusory statements” supporting the need for a
protective order. U&I Corp., 251 F.R.D. at 673 (citing United States v. Garrett, 571
F.2d 1323, 1326 n.3 (5th Cir. 1978)). Plaintiffs make a generalized complaint that
Defendant is on a fishing expedition but their presentation falls well short of a
“particular and specific demonstration.” While the scope of the subpoena is broad, the
focus is on information which may tend to show that one of the arbitrators failed to
disclose or misrepresented information which beared upon his neutrality going into
this arbitration. This information is relevant to Defendant’s motion to vacate the
arbitration award.
Finally, Plaintiffs contend that Defendant’s position in asking for this discovery
is inconsistent with its position on the same issue in other cases. They argue that in
Sturdivant v. Morgan Keegan & Co., Inc., FINRA Case No. 08-03548 and Middle
District of Florida case, Fornell v. Morgan Keegan, Case No. 6:12-cv-0038-27TBS,
Defendant successfully argued that arbitrators who had rendered prior decisions
favorable to Defendant should not be removed from subsequent arbitration panels
because those were “different cases on different facts.” (Doc. 16 at 11). Plaintiffs
believe Defendant should not be permitted to take a contradictory position in this
case. Id. at 12.
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The doctrine of judicial estoppel “prevents a party from prevailing in one phase
of a case on an argument and then relying on a contrary argument to prevail in
another phase.” New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (quoting Pegram
v. Herdrich, 530 U.S. 211, 227, n. 8 (2000)). Generally, for judicial estoppel to be
applicable, the parties in both actions must be identical. Osorio v. Dole Food Co.,
Case No. 07-22693-CIV-HUCK/O’SULLIVAN, 2009 U.S. Dist. LEXIS 713, at *51 (S.D.
Fla. Jan. 5, 2009). Florida law provides an exception to the mutuality requirement
when there are “special fairness and policy considerations” and the party is attempting
to use “intentional self-contradiction to obtain an unfair advantage in [this] litigation.”
Id. at *53-54. A non-exclusive list of the factors the Court may ultimately consider in
deciding whether to apply the doctrine of judicial estoppel includes: (1) whether the
party’s later position is “clearly inconsistent” with its earlier position; (2) whether the
party was successful in persuading a court to accept its earlier position; and (3)
whether the party asserting an inconsistent position will realize an unfair advantage or
the opposing party will suffer an unfair detriment. New Hampshire, 532 U.S. at 75051. This discovery dispute is not the appropriate point in the litigation to decide the
merits of Plaintiffs’ argument that Defendant should be judicially estopped from
bringing its motion to vacate the arbitration award. Accordingly, this ground for the
issuance of a protective order is rejected.
Now, Plaintiffs’ original Motion to Quash Subpoena to FINRA and Motion for
Protective Order (Doc. 13) are DENIED AS MOOT and Plaintiffs’ Amended Motion to
Quash Subpoena to FINRA and Motion for Protective Order (Doc. 16) are DENIED.
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IT IS SO ORDERED.
DONE AND ORDERED in Orlando, Florida, on October 2, 2012.
Copies to all Counsel
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