The Sterling Group LP v. Babcock Power, Inc. et al

Filing 18

MEMORANDUM OPINION AND ORDER signed by Magistrate Judge Colin H. Lindsay on 7/11/2017, GRANTING Movant's 1 Motion to Quash, and DENYING Movant's 15 Motion for Leave to File Additional Briefing. cc: Counsel(RLK)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
MISCELLANEOUS ACTION NO. 3:17-MC-1-CRS-CHL

THE STERLING GROUP, L.P.,

Movant,

v.
BABCOCK POWER, INC., et al.,

Respondents.

MEMORANDUM OPINION AND ORDER
Before the Court is a “Rule 45 Motion to Quash March 7, 2016 Subpoena Served on
Sterling by Respondents, and for Sanctions” (“Motion to Quash”) (DN 1) filed by movant The
Sterling Group, L.P. (“Sterling”) in the United States District Court for the Southern District of
Texas. Respondents Babcock Power, Inc. and Vogt Power International, Inc. (“Babcock”) filed
a response (DN 3).1 On January 20, 2017, the Motion to Quash was transferred to the United
States District Court for the Western District of Kentucky. (DN 5.) On February 8, 2017, the
Motion to Quash was referred to the undersigned by Senior District Judge Charles R. Simpson,
III for disposition regarding the subpoena; Judge Simpson specifically deferred the issue of
sanctions. (DN 14.)
On February 10, 2017, Sterling filed a “Motion for Leave to File Additional Briefing in
Support of Sterling’s Rule 45 Motion to Quash” (“Motion for Leave to File Additional
Briefing”) (DN 15). Babcock did not file a response.
The Motion to Quash and Motion for Leave to File Additional Briefing are therefore ripe
for review and will be addressed separately below.
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For the substance of its argument in response to the Motion to Quash, Babcock refers to a memorandum (DN 237)
filed in conjunction with another civil action pending in the Western District of Kentucky, Babcock Power, Inc. v.
Kapsalis, Civil Action No. 3:13-cv-717-CRS-CHL.

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I.

BACKGROUND
The subpoena subject of the Motion to Quash was issued in conjunction with another

action pending before this Court, Babcock v. Kapsalis, Civil Action No. 3:13-cv-717-CRS-CHL
(“the Babcock matter”). (See DN 1-8 [March 7, 2016 subpoena].) The Babcock matter has a
long history of contentious discovery disputes. The background will only cover the various
opinions and orders in the Babcock matter that the Court finds directly relevant to the issues at
hand. Any citations to filings in the Babcock matter will be indicated as such.
On September 21, 2015, a subpoena was issued to Sterling in conjunction with the
Babcock matter. (Babcock matter, DN 118-2 [9/21/2015 subpoena].) In response, on October
28, 2015, Sterling filed a “Motion for Protective Order, to Quash Subpoena, and for Sanctions,
Including Cost-Shifting” (“Motion for Protective Order and to Quash”) (Babcock matter, DN
118); that motion addressed the September 21, 2015 subpoena served on Sterling. On December
3, 2015, the Court held a hearing on the Motion for Protective Order and to Quash, along with
other motions.
At the beginning of the hearing, the Court encouraged the parties to come to an
agreement regarding their discovery disputes. (DN 151 at 58.) Specifically, the Court stated,
“Maybe both of you will dislike my ruling on some of [the discovery motions] but . . . unless and
until I issue those rulings, you've got control over how it gets worked out. So take advantage of
that . . . .” (Id. at 59.) At another point in the December 3, 2015 hearing, the Court raised
concerns about a specific request in the September 21, 2015 subpoena for all monthly financial
reports for Express Group Holdings, LLC that were in Sterling’s possession. (Babcock matter,
DN 151 at 55-57 [12/3/2015 transcript].) As a result, at the December 3, 2015 hearing counsel
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for Babcock agreed to talk to counsel for Sterling about a “reasonable restriction” and
“reasonable limitation” with respect to the requests contained in the subpoena. (Id.)
On February 26, 2016, the Court issued a memorandum opinion and order (Babcock
matter, DN 204) granting the Motion for Protective Order and to Quash filed by Sterling insofar
as it sought to quash the September 21, 2015 subpoena. In that memorandum opinion and order,
the Court addressed the substance of the requests in the subpoena, finding those requests to be
overbroad, not limited in subject matter or scope, or seeking irrelevant information; as a result,
the Court quashed, in full, the September 21, 2015 subpoena. The Court also stated:
As a final matter, while the Court has, in effect, granted the Motion
in full as it relates to the subpoena at issue, it does not find that
plaintiffs’ requests have no merit whatsoever. Rather, many of
them are simply too broad and the Court is not in the best position
to craft more narrow requests. At the hearing conducted by the
Court on December 3, 2015, plaintiffs’ counsel agreed to talk to
opposing counsel about a “reasonable restriction” with respect to
their discovery requests. (DN 151, p. 55.) It is in the best interests
of Sterling and plaintiffs to avoid another costly discovery dispute
by working together as required by Local Rule 37.1.
(Id. at 12.)
Also on February 26, 2016, the undersigned conducted a telephonic status conference in
this matter. On March 2, 2016, the undersigned issued an order (Babcock matter, DN 208)
memorializing several rulings that it made during the February 26, 2016 telephonic status
conference. The March 2, 2016 order stated, among other things:
The Amended Scheduling Order (DN 186) is further amended as
follows:
Fact discovery deadline: April 1, 2016*
*All discovery that is outstanding must be completed by this date.
No additional discovery is permitted.
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Plaintiffs’ expert disclosure deadline: March 15, 2016
Defendants’ expert disclosure deadline: April 22, 2016
Expert discovery deadline: May 20, 2016
Dispositive motion deadline: June 22, 2016
(Babcock matter, DN 208 at 4.) The March 2, 2016 order did not mention the issuance of
another subpoena to Sterling or any other exception to the ruling that no additional discovery
was permitted.
On March 7, 2016, Babcock served a subpoena on Sterling.

(DN 1-8 [3/7/2016

subpoena; Babcock matter, DN 226-2.) In response, on March 21, 2016, Sterling filed a “Motion
to Quash March 7, 2016 Subpoena and for Sanctions” (“Motion to Quash March 7 Subpoena”).
(Babcock matter, DN 226.) On October 4, 2016, the Court issued an order denying, without
prejudice, the Motion to Quash March 7 Subpoena because it should have been filed in the
district where compliance was required. (Babcock matter, DN 357.) As a result, on October 30,
2016, Sterling filed the instant Motion to Quash in the United States District Court for the
Southern District of Texas.

(DN 1.)

As noted, the Motion to Quash was subsequently

transferred to this Court for consideration.
II.

ANALYSIS
A.

Motion to Quash (DN 1)

In the March 2, 2016 order, the Court stated, among other things, that the fact discovery
deadline for outstanding discovery, that is discovery that had already been served by the parties,
was April 1, 2016. The March 2, 2016 order also specifically stated that no additional discovery

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was permitted. Therefore, no additional fact discovery was permitted to be served by any party,
at the latest, after March 2, 2016.
“A subpoena that seeks documents under Federal Rule of Civil Procedure 45 is a
discovery device subject to the same deadlines as other forms of discovery set forth in the court's
scheduling order.” Fabery v. Mid-S. Ob-GYN, No. 06-2136 D/P, 2000 WL 35641544, at *1
(W.D. Tenn. May 15, 2008); see also Martin v. Oakland Cty., No. 2:06-CV-12602, 2008 WL
4647863, at *2 (E.D. Mich. Oct. 21, 2008) (“[A] a subpoena cannot be issued once discovery has
closed.”). The March 7, 2016 subpoena was a stand-alone discovery device; it was not an
amendment or supplement to earlier-served discovery. The September 21, 2015 subpoena that
had been issued to Sterling and discussed at the December 3, 2015 hearing had been quashed and
was no longer legally in play. Nowhere in the March 2, 2016 order is an exception for a
subpoena to Sterling mentioned. Consequently, the issuance of the March 7, 2016 subpoena to
Sterling in conjunction with this action was “additional discovery” that clearly violated the
March 2, 2016 scheduling order.
Moreover, contrary to plaintiffs’ assertion, the March 7, 2016 subpoena was not
“outstanding” discovery either. (Babcock matter, DN 237 at 14.) Specifically, plaintiffs argue
that the March 7, 2016 subpoena was “drafted in accordance with the instructions of the Court
so that it could not possibly be objectionable . . . .” (Babcock matter, DN 237 at 14 [emphasis in
original].) Plaintiffs further argue that the fact that plaintiffs “would continue to seek documents
from Sterling was specifically contemplated by th[e] Court in its February 26, 2016
[memorandum opinion and order].” Plaintiffs’ characterization of the situation is self-serving
and inaccurate.
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For one, plaintiffs’ counsel agreed at the December 3, 2015 hearing to work with
Sterling’s counsel to craft reasonable restrictions to the requests contained in the September 21,
2015 subpoena. Following that hearing, plaintiffs did not withdraw the September 21, 2015
subpoena or timely cause another subpoena with reasonable restrictions to be issued; rather,
plaintiffs waited until March 7, 2016 (i.e., after the fact discovery deadline and after the issuance
of the February 26, 2016 memorandum opinion and order) to cause another subpoena to be
issued to Sterling.
The Court recognizes that it stated – in the February 26, 2016 memorandum opinion and
order – that it was not finding that plaintiffs’ requests in the September 21, 2015 subpoena had
no merit whatsoever and noted that plaintiffs’ counsel had agreed, at the December 3, 2015
hearing, to work with Sterling’s counsel to impose reasonable restrictions on the requests
contained in that subpoena. That the Court recounted the agreement of plaintiffs’ counsel at the
December 3, 2015 hearing to craft reasonable restrictions with respect to the subpoena did not
equate to an instruction to issue a subpoena to Sterling after the discovery deadline.

Nor did the

February 26, 2016 memorandum opinion and order give permission to plaintiffs to draft and
cause another subpoena to be issued after the discovery deadline.
Plaintiffs could have withdrawn the September 21, 2015 subpoena after the December 3,
2015 hearing; they did not. Plaintiffs could have caused another subpoena to be issued to
Sterling before the discovery deadline; they did not. Plaintiffs could have sought an exception to
the March 2, 2016 order barring additional discovery; they did not. At the December 3, 2015
hearing, the Court expressly encouraged the parties to come to an agreement regarding their
discovery disputes. The Court cautioned that, until it ruled on the various motions pending, the
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parties had control over how the discovery disputes would be resolved, and that they should take
advantage of that. Despite this, plaintiffs chose to wait until an unfavorable ruling had been
issued.
In sum, the Court imposed a fact discovery deadline in this matter, without objection
from any party, and plaintiffs caused the March 7, 2016 subpoena to be issued to Sterling after
that deadline. Accordingly, the Motion to Quash will be granted.
B.

Motion for Leave (DN 15)

No further briefing is necessary. Therefore, the Motion for Leave to File Additional
Briefing will be denied.
III.

CONCLUSION
Accordingly,
IT IS ORDERED that the Motion to Quash (DN 1) is GRANTED.
IT IS FURTHER ORDERED that the Motion for Leave to File Additional Briefing (DN

15) is DENIED.

Colin Lindsay, MagistrateJudge
United States District Court
cc: Counsel of record
July 10, 2017

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