Peoples National Bank, N.A. v. Mehlman et al
MEMORANDUM AND ORDER : IT IS HEREBY ORDERED that Defendants motion for entry of a protective order (Doc. No. 58) is GRANTED in part and DENIED in part. IT IS FURTHER ORDERED that Plaintiffs proposed version of the protective order shall be entered in this case by separate document. Signed by District Judge Audrey G. Fleissig on 01/28/2016. (KCB)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
PEOPLES NATIONAL BANK, N.A.,
DEBRA J. MEHLMAN, et al.,
Case No. 4:15CV00996 AGF
MEMORANDUM AND ORDER
This fraud action is before the Court on Defendants’ motion for entry of a
protective order. (Doc. No. 58.) Both parties agree on the need for a protective order but
disagree about its scope, specifically whether it should preclude Plaintiff from using
confidential discovery materials in related litigation. For the reasons set forth below,
Defendants’ motion shall be granted in part and denied in part, and Plaintiff’s proposed
protective order (Doc. No. 59-1) shall be entered.
This lawsuit arises out of two loans made by Plaintiff Peoples National Bank,
N.A., in 2007 and in 2008, to Defendant Mark S. Mehlman Realty Inc. (“MSM Realty”).
Both loans were guaranteed by Defendant Mark Mehlman. Plaintiff sued MSM Realty
and Mark Mehlman in Missouri state court for breach of the loan agreements and
obtained a judgment against them on January 15, 2013. On May 14, 2014, during postjudgment discovery in aid of execution (the “state collection action”), the parties to the
state action signed a stipulated protective order (Doc. No. 19-1). The stipulated
protective order provided that discovery materials from the state collection action could
be used only for purposes of that litigation and could not be disclosed to any person not
included in the protective order.
On August 20, 2014, Plaintiff filed a motion in the collection action to remove
confidential designations on some discovery materials so that Plaintiff could use the
materials in other related litigation. On June 22, 2015, the state court denied the motion.
On the same day, the state court also denied Plaintiff’s motion to compel discovery
against garnishees Mehlman Homes Realty, LLC (“MHR”) and Mark S. Mehlman
Homes, LLC (“MSM Homes”), both of which are Defendants in the present case.
According to the order of denial, Plaintiff had sought information regarding the
garnishees’ payments to “any employee, agent, or contractor” and “virtually every
financial and corporate document” of the garnishees since January 1, 2009. The state
court reasoned that Plaintiff’s request was too broad in scope and in time, given that the
state judgment was entered on January 15, 2013.
On June 24, 2015, two days after the state court’s denial of Plaintiff’s two
motions, Plaintiff filed the present action against Mark Mehlman; MSM Realty; Debra
Mehlman, individually and as trustee of her trust; MHR; MSM Homes; and Mark
Mehlman’s sons, Scott and Blair Mehlman. Plaintiff alleges that Mark Mehlman
fraudulently induced Plaintiff to extend the loans and that all Defendants engaged in
fraudulent transfers to prevent Plaintiff from collecting the state court judgment.
Defendants filed a motion to dismiss the suit on the basis, inter alia, that the suit relied on
confidential discovery materials from the state collection action which was not allowed
by the stipulated protective order in that action.. This Court denied the motion to dismiss
on October 21, 2015.
On January 4, 2016, Defendants filed the present motion for entry of a protective
order in the present lawsuit. Both parties agree on a substantial portion of the terms of
the protective order, which provide that confidential discovery materials, such as trade
secrets and sensitive business information, will not be disclosed to anyone not included in
the protective order and that the protective order will continue to be in force beyond the
termination of this lawsuit unless this Court orders otherwise. The parties, however,
disagree whether the protective order should preclude Plaintiff from using the
confidential discovery materials “in other related litigation.”
Defendants argue that the protective order should preclude Plaintiff from using
confidential discovery materials in related litigation, namely in the state collection action.
Plaintiff argues that the protective order should not be so restrictive, insisting that the
restriction proposed by Defendants will lead to costly duplicative discovery in this case
and in the state collection action. Defendants counter that Plaintiff’s proposal
circumvents the state court’s earlier denial of Plaintiff’s discovery request.
Under Federal Rule of Civil Procedure 26(c)(1)(G), a federal district court “may,
for good cause, issue an order to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense, . . . requiring that a trade secret
or other confidential research, development, or commercial information not be revealed
or be revealed only in a specified way.” Fed. R. Civ. P. 26(c)(1)(G). The movant has the
burden to demonstrate good cause. Miscellaneous Docket Matter No. 1 v. Miscellaneous
Docket No. 2, 197 F.3d 922, 926 (8th Cir. 1999). The court has discretion to determine
the scope of any protective order. Roberts v. Shawnee Mission Ford, Inc., 352 F.3d 358,
362 (8th Cir. 2003) (citing Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984)). In
exercising that discretion, courts are to balance “the competing needs and interests of the
parties affected by discovery.” Certain Underwriters at Lloyd’s London v. Garmin Int’l,
Inc., No. 11-CV2426-EFM, 2012 WL 3879885, at *3 (D. Kan. Sept. 6, 2012) (citation
This Court believes that Defendants have failed to show good cause for restricting
the scope of the protective order as they propose. Defendants’ arguments are largely
conclusory and do not point to specific undue harm that this Court’s adoption of
Plaintiff’s proposed protective order would inflict on Defendants. Moreover, the Court
believes that Defendants’ concern about Plaintiff’s circumvention of the state court’s
discovery denial noted above is misplaced. This Court’s adoption of Plaintiff’s version
of the proposed protective order will not infringe on the state court’s authority to
determine what discovery materials from this lawsuit may be used in the state collection
In sum, the Court sees no justification for this Court to issue an order precluding
Plaintiff from using discovery material in related litigation. See Dove v. Atl. Capital
Corp., 963 F.2d 15, 19-20 (2d Cir. 1992) (holding that the district court did not abuse its
discretion in denying a protective order to prevent discovery material obtained by a
debtor in a collection action from being used in related litigation in another country in
which the debtor claimed that an individual negotiated high risk loans on behalf of
debtor). Of course, Plaintiff can only discover in this case material that is discoverable
under the Federal Rules of Civil Procedure.
IT IS HEREBY ORDERED that Defendants’ motion for entry of a protective
order (Doc. No. 58) is GRANTED in part and DENIED in part.
IT IS FURTHER ORDERED that Plaintiff’s proposed version of the protective
order shall be entered in this case by separate document.
AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 28th day of January, 2016.
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