State Farm Mutual Automobile Insurance Company v. Pointe Physicial Therapy, LLC et al

Filing 313

OPINION AND ORDER Affirming 295 Order on Motion to Compel and Ordering other Actions. Signed by District Judge Paul D. Borman. (DTof)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Plaintiff,

Case No. 14-cv-11700
Paul D. Borman
United States District Judge

v.

Stephanie Dawkins Davis
United States Magistrate Judge
POINTE PHYSICAL THERAPY, LLC,
et al.,
Defendants.
_______________________________________/
OPINION AND ORDER:
(1) OVERRULING NON-PARTY MCM SOLUTIONS, INC.’S OBJECTION
(ECF NO. 299) TO MAGISTRATE JUDGE DAVIS’S NOVEMBER 3, 2017
OPINION AND ORDER GRANTING PLAINTIFF’S MOTION TO COMPEL;
(2) AFFIRMING MAGISTRATE JUDGE DAVIS’S ORDER (ECF NO. 295); and
(3) ORDERING MCM TO FULLY COMPLY WITH THE TERMS OF THE
SUBPOENA WITHIN FOURTEEN DAYS OF THE DATE OF THIS ORDER
OR FACE SANCTIONS FOR NON-COMPLIANCE
On November 3, 2017, Magistrate Judge Davis issued an Opinion and Order
(ECF No. 295) granting Plaintiff State Farm Mutual Automobile Insurance
Company’s (“State Farm”) motion to compel non-party MCM Solutions, Inc.
(“MCM”) to comply with a third party subpoena for documents served on MCM by

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State Farm on July 20, 2017. On November 13, 2017, MCM filed an Objection to the
Magistrate Judge’s November 3, 2017 Opinion and Order, which is presently before
the Court. (ECF No. 299, Objection.) For the reasons that follow, the Court
OVERRULES MCM’s Objection, AFFIRMS the Magistrate Judge’s November 3,
2017 Opinion and Order, and ORDERS MCM to comply fully with the terms of the
subpoena within fourteen (14) days of the date of this Order or face sanctions for
noncompliance.
II.

STANDARD OF REVIEW
28 U.S.C. § 636(b)(1)(A) and Federal Rule of Civil Procedure 72(a) both

provide that a district judge must modify or set aside any portion of a magistrate
judge’s non-dispositive pretrial order found to be “clearly erroneous or contrary to
law.” 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a). The United States Supreme
Court and the Sixth Circuit Court of Appeals have stated that “a finding is ‘clearly
erroneous’ when although there is evidence to support it, the reviewing court on the
entire evidence is left with the definite and firm conviction that a mistake has been
committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948) (explaining
the clearly erroneous standard under Rule 52(a)); Hagaman v. Comm'r of Internal
Revenue, 958 F.2d 684, 690 (6th Cir. 1992) (quoting U.S. Gypsum Co.). See also
United States v. Mandycz, 200 F.R.D. 353, 356 (E.D. Mich. 2001) (explaining the
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standard under Rule 72(a)).
This standard does not empower a reviewing court to reverse the Magistrate
Judge’s finding because it would have decided the matter differently. Anderson v.
City of Bessemer City, N.C., 470 U.S. 564, 573 (1985) (interpreting the clearly
erroneous standard in Rule 52(a)). The Sixth Circuit has noted that: “[t]he question
is not whether the finding is the best or only conclusion that can be drawn from the
evidence, or whether it is the one which the reviewing court would draw. Rather, the
test is whether there is evidence in the record to support the lower court’s finding, and
whether its construction of that evidence is a reasonable one.” Heights Cmty. Cong.
v. Hilltop Realty, Inc., 774 F.2d 135, 140 (6th Cir. 1985).
“The ‘clearly erroneous’ standard applies only to the magistrate judge’s factual
findings; his legal conclusions are reviewed under the plenary ‘contrary to law’
standard. . . . Therefore, [the reviewing court] must exercise independent judgment
with respect to the magistrate judge’s conclusions of law.” Haworth, Inc. v. Herman
Miller, Inc., 162 F.R.D. 289, 291 (W.D. Mich.1995) (citing Gandee v. Glaser, 785 F.
Supp. 684, 686 (S.D. Ohio 1992)). “‘An order is contrary to law when it fails to apply
or misapplies relevant statutes, case law, or rules of procedure.’” Mattox v. Edelman,
No. 12-13762, 2014 WL 4829583, at *2 (E.D. Mich. Sept. 29, 2014) (quoting Ford
Motor Co. v. United States, No. 08–12960, 2009 WL 2922875, at *1 (E.D. Mich.
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Sept. 9, 2009)).
III.

ANALYSIS
State Farm alleges that the “undisputed evidence” produced in this case

suggests that Defendant Amale Bazzi secretly owns and/or controls MCM (allegedly
owned “on paper” by Bazzi’s son-in-law Youssef Bakri) and has utilized MCM, and
other third-party entities, to conceal her role in the fraudulent scheme at the heart of
State Farm’s Complaint. State Farm now seeks documents from non-party MCM,
including communications and other business records of MCM, to enable State Farm
to establish MCM’s role in the alleged fraudulent scheme.
The Magistrate Judge, after hearing oral argument on State Farm’s motion,
correctly concluded that MCM’s corporate records sought in State Farm’s subpoena
are not protected by Fifth Amendment privilege. MCM, a corporate entity, “may not
. . . disregard [its] choice to incorporate, claim Fifth Amendment protection, and shield
[its] business records from production.” In re Grand Jury Subpoena (John Doe, Inc.),
991 F. Supp. 2d 968, 976 (E.D. Mich. 2014). MCM’s speculation that there may at
some time be a criminal investigation involving Mr. Bakri, MCM’s “incorporator,”
(Objection at 4, PgID 12694), does nothing to alter the correctness of this conclusion.
MCM has no valid claim of Fifth Amendment privilege and must produce the
requested documents.
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As the Magistrate Judge noted, State Farm has explained in great detail the
relevance of the subpoenaed documents to the fraudulent scheme alleged in the
Complaint and MCM’s role in the alleged scheme. The Magistrate Judge correctly
observed that “[d]ocuments regarding the ownership of MCM and its employees will
establish who actually owns MCM and purportedly works there, which is critical to
unraveling the relationships between Defendants and third parties involved in the
scheme.” (ECF No. 295, Order at 6, PgID 12145.) The Magistrate Judge adequately
supported her finding of proportionality and MCM fails to proffer any argument to
establish undue burden related to complying with the subpoena.
III.

CONCLUSION
The Court concludes that Magistrate Judge Davis’s November 3, 2017 Order

is neither factually erroneous nor contrary to law.

Accordingly, the Court

OVERRULES MCM’s Objection, AFFIRMS the Magistrate Judge’s November 3,
2017 Order, and ORDERS MCM to fully comply with State Farm’s subpoena within
fourteen (14) days of the date of this Order or face sanctions for noncompliance.
IT IS SO ORDERED.
s/Paul D. Borman
Paul D. Borman
United States District Judge
Dated: November 27, 2017
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CERTIFICATE OF SERVICE
The undersigned certifies that a copy of the foregoing order was served upon each
attorney or party of record herein by electronic means or first class U.S. mail on November 27,
2017.
s/Deborah Tofil
Case Manager

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