Nguyen v. Raymond James Financial, Inc. et al

Filing 92

ORDER denying 88 Motion to Compel. Signed by Magistrate Judge Amanda Arnold Sansone on 11/19/2020. (BEE)

Case 8:20-cv-00195-CEH-AAS Document 92 Filed 11/19/20 Page 1 of 6 PageID 717

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
KIMBERLY NGUYEN, On Behalf
Of Herself and All Others Similarly
Situated,
Plaintiff,
v.

Case No. 8:20-cv-195-T-36AAS

RAYMOND JAMES & ASSOCIATES,
INC.,
Defendant.
______________________________________/
ORDER
Kimberly Nguyen, individually and on behalf of all others similarly situated,
moves to compel documents from Raymond James & Associates, Inc. (Raymond
James) in response to her request for production no. 1. (Doc. 88). Raymond James
opposes the motion. (Doc. 91).
I.

BACKGROUND
Ms. Nyugen brings a securities fraud action against Raymond James. (Doc.

26). According to the amended complaint, in June 2015, Ms. Nyugen held a Raymond
James “commission-based account” containing mutual funds. (Id., ¶ 20). Ms. Nyugen
alleges that, in January 2016, her “Raymond James financial advisor . . . advised her
to transfer her assets [from her 2015 commission-based account] into a Fee-Based
Raymond James Freedom Account.” (Id., ¶ 21). Ms. Nyugen alleges that Raymond
James engaged in a “reverse churning” scheme to deceive its customers into
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transferring their securities into fee-based accounts. (Id., ¶¶ 14-15). Ms. Nyugen
alleges that Raymond James “profited significantly at the expense of its clients” by
acting against their best interests and “cost[ing] investors millions in excess fees.”
(Id., ¶¶ 9, 11, 54, 62).
In support of her allegations, Ms. Nyugen relies on a Securities and Exchange
Commission (SEC) consent order entered in a separate administrative proceeding
against Raymond James and its affiliates. (Doc. 88, Ex. A). Ms. Nyugen argues the
claims asserted in the SEC proceeding are substantially similar to the claims she
asserts here.1 (Id., ¶ 8).
Ms. Nyugen requests that Raymond James produce “all Documents that
[Raymond James] produced to the [SEC] related to In re Raymond James &
Associates, Inc., et al., Administrative Proceeding File No. 3-19464.” (Doc. 88). In
response, Raymond James contends this request seeks documents not relevant or
proportional to the needs of this action because the accounts and timeframe at issue
in the SEC administrative proceeding differ from Ms. Nyugen’s account. (Doc. 91).
II.

LEGAL STANDARD
A party is entitled to “discovery regarding any nonprivileged matter that is

relevant to any party's claim or defense and proportional to the needs of the case.”
Fed. R. Civ. P. 26(b)(1). “Proportionality requires counsel and the court to consider

The SEC consent order settled claims involving a “practice or course of business
which operates or would operate as a fraud or deceit upon the purchaser,” in violation
of federal securities laws. See (Doc. 88-1, p. 7).
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whether relevant information is discoverable in view of the needs of the case.” Tiger
v. Dynamic Sports Nutrition, LLC, No: 6:15-cv-1701-Orl-41TBS, 2016 WL 1408098,
at *2 (M.D. Fla. Apr. 11, 2016). “Information within this scope of discovery need not
be admissible in evidence to be discoverable.” Id. A party may move for an order
compelling disclosure or discovery. Fed. R. Civ. P. 37. The court has broad discretion
in managing pretrial discovery matters and in compelling document productions.
Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d 1292, 1306 (11th Cir. 2011).
III.

ANALYSIS
Ms. Nyugen’s request for production no. 1 and Raymond James’ response are

at issue:
Request for Production No. 1- Produce all Documents that RJA
produced to the U.S. Securities and Exchange Commission related to In
re Raymond James & Associates, Inc., et al., Administrative Proceeding
File No. 3-19464.
Response to Request for Production No. 1- In response to this
Request, and subject to the foregoing objections and the Parties’
Stipulated Confidentiality Agreement and ESI Agreement, RJA objects
to this Request as irrelevant, overbroad, and not proportional to the
needs of this case for several reasons. First, the scope of Administrative
Proceeding File No. 3-19464 brought by the U.S. Securities and
Exchange Commission (“SEC”) (“SEC Administrative Proceeding”)
concerned unit investment trusts (“UIT”) and “inactive” separatelymanaged advisory accounts (accounts that are individually managed by
a customer’s financial advisor). In contrast, the Freedom Program
investment platform which Plaintiff utilized at RJA by virtue of opening
a Freedom account involved pooling the invested principal of all
Freedom investors who selected the same portfolio objective and
managing the pooled investments on a discretionary basis by an
Investment Committee in conjunction with a research and due diligence
team. Second, Plaintiff lacks standing to represent any individuals
whose accounts were at issue in the SEC Administrative Proceeding
referenced in this Request, and thus to seek discovery related to that
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proceeding, because she does not possess the same interest and did not
suffer the same alleged injury as RJA customers whose accounts were
at issue in that proceeding. See Prado-Steiman ex rel. Prado v. Bush,
221 F.3d 1266, 1279 (11th Cir. 2000). Third, all of the account holders
for the account-types at issue in the SEC order dated September 17,
2019 (cited at Amended Complaint ¶ 8) (“SEC Order”) that resolved the
SEC Administrative Proceeding have been compensated through
disbursement of a settlement fund, as set out in the SEC Order, and
consequently have no damages, and thus cannot be members of any
purported class in this case. Furthermore, RJA objects to this Request
as irrelevant to the extent it seeks documents concerning UITs, because
UITs have no relation to this case.
RJA additionally objects to the extent this Request seeks documents
produced to the U.S. Securities and Exchange Commission by entities
other than RJA. RJA also objects to the extent that this Request seeks
confidential documents and information for which RJA sought
confidential treatment from the SEC, which documents and information
are further protected by RJA’s and third parties’ rights to privacy, as
well as by trade secret laws.
RJA further objects to this Request on the grounds that Plaintiff is not
entitled to “clone” or seek a duplicate copy of regulatory discovery. See
Midwest Gas Servs., Inc. v. Indiana Gas Co., 2000 WL 760700, at *1
(S.D. Ind. 1999) (“‘Cloned discovery,’ requesting all documents produced
or received during other litigation or investigations, is irrelevant and
immaterial unless the fact that particular documents were produced or
received by a party is relevant to the subject matter of the instant case.
. . . The plaintiffs’ counsel must do their own work and request the
information they seek directly.”); see also In re Worldcom, Inc. Secs.
Litig., No. 02-civ-3288, 2003 WL 22953645, at *7 (S.D.N.Y. Dec. 16,
2003) (requiring defendants to “fashion their own document requests”
and denying defendants’ request for all document and information
provided in response to regulatory subpoenas). RJA also objects to this
Request inasmuch as it seeks documents provided to the SEC that are
protected from disclosure by the attorney-client privilege and the
attorney work product doctrine.
No documents will be produced.
(Doc. 88, pp. 5-6).
Raymond James argues that the accounts addressed in the SEC proceedings
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differ from the account here. (Doc. 91, pp. 2-3). The consent SEC order settled claims
involving alleged violations of federal securities laws by Raymond James and two
affiliates. (Doc. 88, Ex. A). The SEC administrative proceeding involved financial
advisor managed fee-based accounts alleged to not have been properly managed.
Specifically, the accounts were inactive for one or more years, but the account holder
was charged an annual fee. (Id.).
Ms. Nyugen alleges that the Raymond James’ financial advisor failed to
conduct a suitability analysis before and after recommending that Ms. Nyuogen
transfer her assets into a fee-based account. However, unlike the accounts in the SEC
proceedings managed by an individual financial advisor and left inactive for over a
year, Ms. Nyugen’s account was managed and monitored by an investment committee
and annually rebalanced. (Doc. 91, Ex. B, ¶¶ 7, 8). Because the SEC proceedings
concerned fee-based accounts left inactive, Ms. Nyugen’s Raymond James freedom
account is different and subject to different claims.2
Although the accounts in the SEC proceeding and this action are different,
there may be a subset of relevant documents within the documents produced to the
SEC. However, even if some of the documents sought ultimately may be relevant to
this action, the request as drafted is an overbroad request for a document dump
Ms. Nyugen incorrectly states that “[r]elevance, for purposes of discovery, does not
hinge on admissibility at trial and is construed broadly to include any matter that
reasonably could lead to the discovery of admissible evidence.” (Doc. 88, p. 7). The
Rule changed in 2000 to “relevant to the claim or defense of any party.” See In re
Zantac Prods. Liab. Litig., No. 20-MD-2924, 2020 WL 5585137, at *2 n.1 (S.D. Fla.
Sept. 16, 2020). (citation omitted). “The new language is purposefully narrower than
the old language,” and intended to “narrow the scope of discovery.” Id.
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without any concern for whether the scope of the request is proportional to the needs
of this case. Ms. Nyugen’s broadly and aimlessly seeks the production of all
documents that Raymond James and other affiliated entities produced to the SEC
over a twenty-month period in thirty separate productions. (See Doc. 91, Ex. A, ¶¶ 45). According to Raymond James, the SEC production consisted of 9,218 documents,
amounting to 50,965 pages. (Id., ¶ 5). In addition, approximately half of the requested
documents are dated before the relevant time period—beginning January 1, 2015.
(See Doc. 91, Ex. D, p. 8). Further, many of the documents requested are email
communications containing names and account identifying information of Raymond
James’ and its affiliates’ customers, which are protected. (Doc. 91, p. 7). The document
request is overbroad not proportional to the needs of this action.
IV.

CONCLUSION
Ms. Nyugen’s request for production no. 1 requests documents beyond the

scope of what Rule 26(b)(1) permits. Thus, the motion to compel (Doc. 45) is DENIED.
ORDERED in Tampa, Florida on November 19, 2020.

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