IN RE: MOTION TO QUASH SUBPOENA

Filing 21

ORDER - This matter involves a subpoena (the "Chase Subpoena") issued by the United States (the "Government") to a non-party, JPMorgan Chase Bank, N.A. ("Chase") related to the bank records of Badlands NGLs LLC (" Badlands"). Badlands moved to quash the Chase Subpoena in this Court, and the Government has now moved to transfer this matter to the United States District Court for the District of South Carolina. The Motion to Transfer, [Filing No. 10 ], is now ripe for the Court's decision. For the reasons stated in this Order, the Court DECLINES TO CONSIDER Badlands' Motion to Quash, 2 , and GRANTS the United States' Motion to Transfer Badlands NGLs LLC Motion to Quash Non-Party Subpoena, 10 . The Clerk is DIRECTED to transfer this matter to the United States District Court for the District of South Carolina, Charleston Division. (SEE ORDER). Signed by Judge Jane Magnus-Stinson on 12/28/2017.(APD)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

IN RE: MOTION TO Q UASH SUBPOENA ISSUED
TO NON-PARTY JPMORGAN CHASE B ANK,
N.A.

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1:17-mc-00069-JMS-TAB

ORDER
This matter involves a subpoena (the “Chase Subpoena”) issued by the United States (the
“Government”) to a non-party, JPMorgan Chase Bank, N.A. (“Chase”) related to the bank records
of Badlands NGLs LLC (“Badlands”). Badlands moved to quash the Chase Subpoena in this
Court, and the Government has now moved to transfer this matter to the United States District
Court for the District of South Carolina. The Motion to Transfer, [Filing No. 10], is now ripe for
the Court’s decision.
I.
BACKGROUND
The Government initiated litigation against William Gilliam in the United States District
Court for the District of South Carolina to collect unpaid federal income tax liabilities for tax years
1993 and 1995 (the “Underlying Lawsuit”). [Filing No. 10 at 2.] The District of South Carolina
entered judgment in favor of the Government and against Mr. Gilliam in the Underlying Lawsuit
for $7,683,217.19, and that amount will continue to accrue interest and statutory penalties until it
has been paid in full. [Filing No. 10 at 2.] The United States has started efforts to collect the
judgment entered against Mr. Gilliam in the Underlying Lawsuit, after he has refused to remit
payment and has not made “an acceptable offer to resolve the judgment against him.” [Filing No.

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10 at 3.] The Government’s collection efforts have led to Badlands, which the Government describes as “a venture founded by Mr. Gilliam, which currently employs him as its Chief Executive
Officer.” [Filing No. 10 at 3.]
On July 7, 2017, the Government issued the Chase Subpoena to Chase, requesting the records of any Badlands’ accounts. [Filing No. 10 at 3.] Badlands objected to the scope of the Chase
Subpoena, stating that it needed to protect confidential trade secrets and commercial information.
[Filing No. 10 at 3.] After attempts to resolve Badlands’ objections failed, Badlands filed a Motion
to Quash Non-Party Subpoena in this Court on October 4, 2017. [Filing No. 2.]
On October 25, 2017, the Government filed a Motion to Transfer Badlands’ Motion to
Quash to the District of South Carolina. [Filing No. 10.] While Chase does not object to the
Government’s motion, Badlands objects to transfer of the Motion to Quash. [Filing No. 10 at 1.]
The Motion to Transfer is now ripe for the Court’s decision. 1
In the meantime, Badlands also moved to quash a subpoena issued by the Government
directly to Badlands, for documents in the possession of Badlands (the “Colorado Subpoena”), in
the United States District Court for the District of Colorado (the “Colorado Action”). [See Filing
No. 10-1.] As was the Chase Subpoena, the Colorado Subpoena was issued by the District of
South Carolina. [Filing No. 10-1 at 26.] In the Colorado Action, the Government moved to transfer Badlands’ Motion to Quash pending there to the District of South Carolina, and the United

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The Court originally granted the Government’s Motion to Transfer before Badlands’ time to respond had expired under Local Rule 7-1. [Filing No. 12.] Subsequently, Badlands filed a Motion
for Reconsideration, requesting that it be given a chance to respond to the Motion to Transfer.
[Filing No. 14.] The Court granted Badlands’ Motion for Reconsideration, Badlands has now filed
a response to the Motion to Transfer, [Filing No. 18], and the Government has now filed a reply,
[Filing No. 19].
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States District Court for the District of Colorado recently granted the Government’s Motion to
Transfer. [Filing No. 20-1.]
II.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 45(f) provides that “[w]hen the court where compliance is
required did not issue the subpoena, it may transfer a motion under this rule to the issuing court if
the person subject to the subpoena consents or if the court finds exceptional circumstances… To
enforce its order, the issuing court may transfer the order to the court where the motion was made.”
The Seventh Circuit Court of Appeals has explained that “[b]y allowing for transfers, Rule 45(f)
allows for consolidation of motions in a single appropriate court, thereby avoiding piecemeal litigation in multiple fora as well as piecemeal appeals.” P.H. Glatfelter Co. v. Windward Prospects
Ltd., 847 F.3d 452, 458 (7th Cir. 2017). The Advisory Committee note to Rule 45(f) provides
some insight as to what constitutes “exceptional circumstances”:
The prime concern should be avoiding burdens on local nonparties subject to subpoenas, and it should not be assumed that the issuing court is in a superior position
to resolve subpoena-related motions. In some circumstances, however, transfer
may be warranted in order to avoid disrupting the issuing court’s management of
the underlying litigation, as when that court has already ruled on issues presented
by the motion or the same issues are likely to arise in discovery in many districts.
Transfer is appropriate only if such interests outweigh the interests of the nonparty
served with the subpoena in obtaining local resolution of the motion.
III.
DISCUSSION
In support of its Motion to Transfer, the Government argues that the non-party to whom
the subpoena was issued, Chase, consents to transfer of this case to the District of South Carolina.
[Filing No. 10 at 4.] The Government also argues that, in any event, exceptional circumstances
exist here which warrant transfer, including that transfer may mitigate the risk of inconsistent rulings on the Motion to Quash pending in this Court and the Motion to Quash that was pending in
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the Colorado Action (but has now been transferred to the District of South Carolina). [Filing No.
10 at 5-10.] The Government also contends that “the issuing court’s familiarity with the litigants
puts it in a better position to rule on the issues presented by the motions to quash.” [Filing No. 10
at 5; Filing No. 10 at 7-8.]
In response, Badlands argues that the Government has not adequately shown that Chase
consents to transfer, and that Badlands’ opposition to transfer should be considered even though it
is not the party to whom the subpoena was issued. [Filing No. 18 at 5-7.] It also asserts that the
risk of inconsistent rulings on the Motion to Quash pending here and the Motion to Quash now
pending in the District of South Carolina “is not necessarily an end in itself, and the Government
has not offered any reason why it would be harmed by such hypothetical inconsistent rulings.”
[Filing No. 18 at 8.] It argues that it, and not the Government, would be harmed by inconsistent
rulings since it “must win both motions to protect its confidential commercial information.” [Filing No. 18 at 8.] Badlands also argues that there is no risk that this Court’s decision on the Motion
to Quash would interfere with the Underlying Litigation. [Filing No. 18 at 9-10.] Badlands contends that it attempted to reach agreements with the Government regarding the subpoenas, but that
the Government would not agree to its proposals, so the Government’s argument regarding judicial
efficiency should be rejected. [Filing No. 18 at 11.] Badlands also asserts that the District of
South Carolina is not necessarily in a better position to decide the Motion to Quash, particularly
since Badlands was never a party to the Underlying Litigation. [Filing No. 18 at 12.] Finally,
Badlands asserts that its interest in litigating the Motion to Quash in this Court – which includes
not having to hire South Carolina counsel – outweighs any factors that favor transfer. [Filing No.
18 at 13-14.]
In reply, the Government reiterates its arguments.

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A. Effect of Chase’s Consent
Rule 45(f) provides that a court may transfer a subpoena-related motion “if the person subject to the subpoena consents….” Here, Chase is the “person subject to the subpoena” and not
Badlands. Badlands admits in its response brief that it has not been able to provide legal authority
supporting the notion that an entity that is not subject to the subpoena, but has filed a motion to
quash, must consent to transfer. [Filing No. 18 at 5.] The Court has not found any cases within
the Seventh Circuit considering that issue either. The plain language of Rule 45(f), however, appears to authorize the Court to transfer the Motion to Quash based on Chase’s consent to transfer
alone. [See Filing No. 19-1 at 1.] In any event, as discussed below, the Court also finds that
exceptional circumstances are present here that warrant transfer.
B. Exceptional Circumstances
District courts within the Seventh Circuit have found that exceptional circumstances exist
warranting transfer where “a ruling on the motion to quash could be inconsistent with the rulings
of the issuing court or involves determination of a question central to the pending litigation….”
Animal Legal Defense Fund v. United States Food & Drug Administration, 2017 WL 3580136, *2
(N.D. Ind. 2017). Transfer may also be appropriate where it would allow for “consolidation of
motions in a single appropriate court, thereby avoiding piecemeal litigation in multiple fora as well
as piecemeal appeals.” P.H. Glatfelter Co., 847 F.3d at 458 (citing United States v. Nixon, 418
U.S. 683, 690 (1974)).
The Court finds that exceptional circumstances exist here which justify transfer of the Motion to Quash to the District of South Carolina. First, the circumstances surrounding the Motion
to Transfer have changed since the parties filed their briefs. Specifically, the District of Colorado
granted the Government’s Motion to Transfer the Motion to Quash the Colorado Subpoena to the

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District of South Carolina. This is significant because transferring the Motion to Quash in this
case would allow one Court – the District of South Carolina – to decide both motions, thus promoting judicial efficiency, ensuring against inconsistent results, and avoiding piecemeal litigation.
P.H. Glatfelter Co., 847 F.3d at 458.
Second, the Court notes that the Underlying Litigation has a long history which the Government claims has included “Mr. Gilliam spen[ding] two decades using every conceivable procedural device to dodge, delay, and deny his income tax liabilities.” [Filing No. 10 at 2.] The Chase
Subpoena relates to the Government’s efforts to collect a judgment in the Underlying Litigation
representing those income tax liabilities. While Badlands argues that it is an entity separate from
Mr. Gilliam, the Court finds significant the fact that Mr. Gilliam founded Badlands and is its Chief
Executive Officer. [See Filing No. 10 at 3.] To the extent that Mr. Gilliam’s history in connection
with the Underlying Litigation, including any history of hiding assets or engaging in certain litigation tactics, is relevant to the Chase Subpoena, the District of South Carolina is a more appropriate forum for resolving the Motion to Quash.
Finally, the Court does not find persuasive Badlands’ only argument supporting its interest
in litigating the Motion to Quash here: that it has engaged local counsel. [Filing No. 18 at 13.]
Badlands presumably has hired counsel to handle proceedings related to the Colorado Subpoena
in the District of South Carolina. Transferring the Motion to Quash the Chase Subpoena will
actually lessen Badlands’ burden by consolidating litigation related to the two subpoenas in one
Court and allowing it to be represented by one counsel.
The Court finds that exceptional circumstances, including avoiding the risk of inconsistent
results and transferring the Motion to Quash to a Court that is familiar with issues that may be

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relevant to the outcome of the Motion to Quash, warrants transferring this matter to the United
States District Court for the District of South Carolina.
IV.
CONCLUSION
For the foregoing reasons, the Court DECLINES TO CONSIDER Badlands’ Motion to
Quash, [2], and GRANTS the United States’ Motion to Transfer Badlands NGLs LLC Motion to
Quash Non-Party Subpoena, [10]. The Clerk is DIRECTED to transfer this matter to the United
States District Court for the District of South Carolina, Charleston Division.

Date: 12/28/2017

Distribution via ECF only to all counsel of record

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