ASI, Inc. v. Aquawood, LLC et al

Filing 580

MEMORANDUM OPINION AND ORDER denying 512 APPEAL/OBJECTION OF MAGISTRATE JUDGE DECISION to District Judge; denying 513 APPEAL/OBJECTION OF MAGISTRATE JUDGE DECISION to District Judge. (Written Opinion) Signed by Judge John R. Tunheim on 7/29/2022. (HMA)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

ASI, INC.,

Civil No. 19-763 (JRT/HB)
Plaintiff,

v.
AQUAWOOD, LLC, et al.,

MEMORANDUM OPINION AND ORDER
DENYING DEFENDANTS’ OBJECTIONS TO
THE MAGISTRATE JUDGE’S DISCOVERY
ORDER

Defendants.

Keith M. Sorge, ARTHUR, CHAPMAN, KETTERING, SMETAK & PIKALA, PA,
81 South Nineth Street, Suite 500, Minneapolis, MN 55402; Shelli L. Calland,
Stephen A. Weisbrod, and Tamra Ferguson, I, WEISBROD MATTEIS &
COPLEY PLLC, 1200 North West New Hampshire Avenue, Suite 600,
Washington, DC 20036, for plaintiff;
Joseph H. Lubben, Matthew D. Callanan, and Michael Reck, BELIN
MCCORMICK, PC, 666 Walnut Street, Suite 2000, Des Moines, IA 50309, for
defendants Aquawood, Dollar Empire LLC, Brian Dubinsky, and Peter
Magalhaes;
Brandon Underwood and Devan Rittler-Patton, FREDRIKSON AND BYRON,
111 East Grand Avenue, Suite 301, Des Moines, IA 50309; Joseph H. Lubben,
BELIN MCCORMICK, PC, 666 Walnut Street, Suite 2000, Des Moines, IA
50309, for defendants Benzai International Ltd, Park Lane Solutions Ltd.,
Toy Quest Ltd., Chan Ming Yiu, Liu Yi Man, and Chan Siu Lun;
David W. Asp, Kate M. Baxter-Kauf, and Robert David Hahn, LOCKRIDGE
GRINDAL NAUEN PLLP, 100 Washington Ave South, Suite 2200,
Minneapolis, MN 55401; Joseph H. Lubben, BELIN MCCORMICK, PC, 666
Walnut Street, Suite 2000, Des Moines, IA 50309, for defendants MGS
International, LLC and Richard Toth;

Joseph H. Lubben and Matthew D. Callanan, BELIN MCCORMICK, PC, 666
Walnut Street, Suite 2000, Des Moines, IA 50309, for defendants Wellmax
Trading Ltd. and Michael Wu.

ASI, Inc., formally known as Aviva Sports, Inc., (“Aviva”) brought this action to
collect on an $8.5 million underlying judgment against Manley Toys, Ltd (“Manley”). Aviva
alleges that Defendants Aquawood and Dubinsky (among several other defendants),
working together as a RICO enterprise, engaged in a series of fraudulent transfers in order
to evade paying the judgment Manley owed to Aviva. Over the course of discovery,
disputes arose as to certain documents and information Aviva requested from Aquawood
and Dubinsky. Aviva filed a Motion to Compel and, after conducting a hearing, Magistrate
Judge Bowbeer ordered Aquawood and Dubinsky to turn over the discovery. Aquawood
and Dubinsky object to the Magistrate Judge’s order. Because the Magistrate Judge
committed no clear error in ordering Aquawood and Dubinsky to turn over the discovery,
the Court will deny their objections.
BACKGROUND
In the course of discovery for this action, Aviva requested that the Defendants turn
over, (1) bank statements, (2) tax returns, and (3) documents sufficient to show all
physical and mailing addresses, used by Brian Dubinsky. (Decl. Matthew Callanan Supp.
Aquawood LLC’s Objs., Ex. A, at 3, 6, Apr. 11, 2022, Docket No. 512; Callanan Decl., Ex. C
at 8.) Aquawood objected to the requests to overturn its bank statements and tax
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returns, and Dubinsky objected to the request to divulge his personal addresses.
(Callanan Decl., Ex. B at 12, 23; Callanan Decl., Ex. D at 2.) Aviva moved to compel the
Defendants to overturn that information. (Mot. Compel, Mar. 1, 2022, Docket No. 471.)
The Magistrate Judge ordered Aquawood to turn over its bank statements and tax
returns. (Mot. Compel Hr’g Tr. at 96:4–97:16, Apr. 3, 2022, Docket No. 511.) The
Magistrate Judge also ruled that Dubinsky had blurred the line between his personal and
professional involvement in the underlying behavior at issue in the suit, and thus it was
appropriate for Defendants to disclose “Mr. Dubinsky’s personal mailing and physical
addresses.” (Id. at 88:1–9.)
Aquawood and Dubinsky filed objections to the Magistrate Judge’s rulings.
(Dubinsky’s Appeal/Obj. Mag. J. Decision, Apr. 11, 2022, Docket No. 512; Aquawood’s
Appeal/Obj. Mag. J. Decision, Apr. 11, 2022, Docket No. 513.)
DISCUSSION
I.

STANDARD OF REVIEW
The standard of review on an objection to a magistrate judge’s order depends on

whether that order is dispositive.

The district court reviews a magistrate judge’s

dispositive decisions de novo, while it reviews non-dispositive rulings for clear error. See
Fed. R. Civ. P. 72. In determining whether a ruling is dispositive, Rule 72 “permits the
courts to reach commonsense decisions rather than becoming mired in a game of labels.”
E.E.O.C. v. Schwan's Home Serv., 707 F. Supp. 2d 980, 988 (D. Minn. 2010) (quoting Charles
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A. Wright, Arthur R. Miller, & Richard L. Marcus, Federal Practice and Procedure: Civil 2d
§ 3068, at 338 (1997)). “Courts typically consider ‘the impact on the merits of the case in
deciding whether [the motion] should be characterized as dispositive.’” Id. (quoting
Wright & Miller § 3068, at 345). An order that resolves a claim, defense, or action is
dispositive and subject to de novo review. Id. (quoting Wright & Miller § 3068, at 321–
22).
Here, the Magistrate Judge has issued discovery orders. Whether Aquawood turns
over bank statements and tax returns, and whether Dubinsky divulges his personal
addresses does not resolve any of the questions underlying this litigation. As such, the
Court reviews the Magistrate Judge’s order for clear error.
II.

ANALYSIS
A. Aquawood’s Objection
Aquawood claims that the Magistrate Judge’s order was in error because she failed

to determine if (1) Aquawood’s bank statements and tax returns were relevant and (2)
whether plaintiffs have a compelling need for them. See EEOC v. Ceridian Corp., 610 F.
Supp. 2d 995, 996–97 (D. Minn. 2008) (stating that a preponderance of authorities set out
this two-part test for deciding whether to turn over tax returns). Aquawood does not
contest the relevance of its bank statements and tax returns but argues instead that Aviva
has no compelling need for them because the information contained therein is readily

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available from other sources of discovery: namely from Aquawood’s general ledger and
profit and loss statements. 1
In support of its argument, Aquawood cites PSK, LLC. v. Hicklin. 2010 WL 2710507
(N.D. Iowa, July 8, 2010). In PSK the Court ruled that the defendant had failed to show a
compelling need for the plaintiff’s tax return because the plaintiff requested them only to
assist in establishing damages. Id. at *3. However, the plaintiff had already supplied the
defendants with “detailed spreadsheets showing monthly revenues broken down by
business segment, balance sheets showing assets and liabilities, and income statements
showing revenue, expenses, and production of costs.” Id. at *2. PSK is inapplicable for
two reasons: first, Aquawood has failed to indisputably show that it provided Aviva with
any documents that Aviva could use to ascertain the nature and circumstances
surrounding Aquawood’s financial dealings; and second, Aviva’s claims against
Aquawood, not just their damages, directly pertain to Aquawood’s financial dealings.
Aviva alleges that Aquawood was involved in a RICO enterprise that intentionally
passed money among various entities to prevent Aviva from collecting on a valid
judgment. (See generally, Am. Compl., May 17, 2021, Docket No. 284.) Thus, Aviva
argued to the Magistrate Judge that it requested the bank records and tax returns
“specifically because they are, at least partially, in the control of third parties . . . like banks

Aviva asserts that Aquawood had failed to produce its general ledger as of the date of
this motion, and it is unclear to the Court whether Aquawood has produced it yet. (Decl. Shelli
L. Calland, ¶ 7, Apr. 25, 2022, Docket No. 525.)
1

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and the IRS, and thus are a check on what is in the profit and loss statements and the
general ledgers, which . . . can be manipulated[.]” (Hr’g Tr. at 71:4–11.) Aviva has shown
it has a compelling reason to access the tax returns and bank statements even though
similar information may exist in Aquawood’s general ledger and profit and loss
statements. Therefore, the Court finds that the Magistrate Judge did not disregard the
law in the order to Aquawood to turn over its tax records and bank statements to Aviva
and thus, the Court will overrule Aquawood’s objection.
B. Dubinsky’s Objection
Dubinsky claims the Magistrate Judge’s order is in error because of a failure to
identify the relevancy of Dubinsky’s personal address to this case, and what information
Aviva might obtain from its disclosure. However, the Magistrate Judge clearly articulated
why Dubinsky’s personal address was relevant and why it would aid Aviva in obtaining
information that it could not access through his work address: Dubinsky’s own
descriptions of his behavior created doubt as to whether he was acting personally or as
an employee of Aquawood. (Hr’g Tr. at 88:1–9.) 2 Thus, the Magistrate Judge did not
clearly err by ordering Dubinsky to turn over irrelevant information.

“As far as physical addresses or mailing addresses, given that there does seem to have
been—to have been, even in Mr. Dubinsky’s own descriptions of things, you know, some blurring
of when he’s saying I do it versus its’s really him as an employee of Aquawood, I think it’s
appropriate to provide—and you can protect it if you think it necessary—but appropriate to
provide Mr. Dubinsky’s personal mailing and physical addresses.” (Hr’g Tr. at 88:1–9.)
2

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Dubinsky cites Benford v. City of Minneapolis to support the contention that courts
routinely deny production of home addresses absent some compelling reason to provide
them. 2012 WL 13028133 (July 30, 2012). However, Benford is not instructive. In
Benford, the Court refused to compel the disclosure of the defendant’s personal home
address where the plaintiffs asserted that it was needed in order “to serve the individual
Defendants” though the defendants had already been served. Id. at *10. Here, Aviva
seeks Dubinsky’s addresses in order to obtain information pertaining to Aviva claims
against Dubinsky, not to effectuate service.
Finally, Dubinsky cites to several cases where courts have held that divulging
personal addresses was irrelevant to the underlying actions. As noted by Aviva, however,
those cases all pertain to the disclosure of the home addresses of police officers sued for
wrongful behavior while on duty, or situations where there was a particular risk to
individuals’ safety. 3 The Magistrate Judge’s “failure” to rely on any of these non-binding
cases in arriving at her decision was not clear error.

Collens v. City of New York, 222 F.R.D. 249, 253 (S.D.N.Y. 2004) (declining to compel
discovery of police officer’s home address under the official information privilege applicable in
federal civil rights cases); Scaife v. Boenne, 191 F.R.D. 590, 592–93 (N.D. Ind. 2000) (considering
the safety of the police officers’ families in denying discovery of police officers’ home addresses
for the last ten years, social security numbers, and the names of their children); Smith v. Sharp,
2013 WL 2298142, at *3 (N.D. Ill. May 24, 2013) (declining to provide home addresses of polices
officers in an excessive force case because the addresses were irrelevant); Mackey v. Cnty. of San
Bernardino, 2013 WL 12474636, at *2 (C.D. Cal. Dec. 19, 2013) (“Providing this information to
plaintiff poses potential danger to defendants given the given the historic violence between the
parties.”).
3

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CONCLUSION
Because the Magistrate Judge did not clearly err in ordering Aquawood to turn
over its tax returns and bank statements or in ordering Dubinsky to divulge his personal
addresses, the Court will deny both of the Defendants’ objections.
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that Dubinsky’s Objection to the Magistrate Judge’s Order [Docket No.
512] and Aquawood’s Objection to the Magistrate Judges Order [Docket No. 513] are
DENIED.

DATED: July 29, 2022
at Minneapolis, Minnesota.

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JOHN R. TUNHEIM
United States District Judge

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