COR Clearing, LLC v. Calissio Resources Group, Inc. et al

Filing 116

MEMORANDUM AND ORDER that plaintiff's motion to compel production of documents and things in response to the December 4, 2015, subpoena #94 is granted. TDAC shall comply with plaintiff's motion to compel on or before June 10, 2016. Ordered by Senior Judge Lyle E. Strom. (ADB)

IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEBRASKA
COR CLEARING, LLC, a Delaware )
limited liability company,
)
)
Plaintiff,
)
)
v.
)
)
CALISSIO RESOURCES GROUP,
)
INC., a Nevada corporation,
)
ADAM CARTER, an individual,
)
SIGNATURE STOCK TRANSFER,
)
INC, A Texas corporation; and )
DOES 1-50,
)
)
Defendants.
)
______________________________)

8:15CV317

MEMORANDUM AND ORDER

This matter is before the Court on plaintiff, COR
Clearing, LLC’s (“COR Clearing” or “plaintiff”), motion to compel
(Filing No. 94).

COR Clearing’s motion seeks “an order

compelling TD Ameritrade (“TDAC”) to produce documents and things
responsive to COR Clearing’s subpoena served on or about December
4, 2015.”

(Id.)

The matter has been fully briefed by the

See Filing Nos. 95, 98, 103, and 111.1

parties.

After review of

the motion, the parties’ briefs, and the applicable law the Court
finds as follows.
BACKGROUND

1

COR Clearing filed both a redacted and an unredacted brief
in support of its motion to compel (Filing Nos. 95 and 98). TDAC
filed an opposition to plaintiff’s motion. Part of TDAC’s Index
of evidence in support of its opposition was restricted. See
Filing Nos. 105, 106, and 107.

On August 26, 2015, plaintiff filed suit against
Calissio Resources Group, Inc. (“Calissio”), Adam Carter,
Signature Stock Transfer, Inc., and Does 1-50 (collectively
“defendants”) (Filing No. 1).

Plaintiff’s complaint alleges

three causes of action against defendants including:

(1) a

request for declaratory judgment; (2) unjust enrichment; and (3)
fraud.

See id. at 9-13.

Plaintiff claims that defendants

“calculated [a] scheme to defraud the marketplace and the
clearing system in order to obtain millions of dollars from
unsuspecting market participants by exploiting a weakness in the
dividend payment system of the third-party Depositary Trust
Clearing Corporation (“DTCC”).”

(Id. at 1).

On October 5, 2015, plaintiff asked the Court to
appoint a receiver “for the limited purpose of instructing [t]he
[DTCC] to make post-payable adjustments in accordance with its
policies and procedures.”

(Filing No. 20 at 1).

Numerous third

parties, including TDAC, objected to the appointment of the
receiver.

See Filing Nos. 32-36, 40-41, 43, 47-48, 53-56, 59-64,

66-73, 75-77.

The Court ordered a hearing on plaintiff’s motion

(Filing No. 65).

On November 10, 2015, after hearing arguments

from the plaintiff and TDAC, the Court denied plaintiff’s motion
to appoint a receiver.

(Filing No. 80).

On or about December 4, 2015, plaintiff served a
subpoena on TDAC.

See Filing No. 98 at 1.

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COR Clearing alleges

TDAC is in possession of “highly relevant” documents and other
materials pertinent to COR Clearing’s underlying claims.

See id.

Specifically, plaintiff makes five requests including:
“[d]ocuments sufficient to identify all individuals, businesses,
and entities to which [TDAC] sold or transferred any share of
Calissio stock between and including June 30, 2015 and August 19,
2015,” (Filing No. 96-2 at 9); and “[a]ll documents consisting or
relating to any communication between [TDAC] and any person,
individual, introducing firm, broker, dealer, regulatory agency,
or entity, including, without limitation, DTCC and FINRA,”
at 10).

(Id.

(Id. at 9-11).

LAW
Federal Rule of Civil Procedure 26(b)(1) allows
[p]arties [to] obtain discovery
regarding any nonprivileged matter
that is relevant to any party’s
claim or defense and proportional
to the needs of the case,
considering the importance of the
issues at stake in the action, the
amount in controversy, the parties’
relative access to relevant
information, the parties’
resources, the importance of the
discovery in resolving the issues,
and whether the burden or expense
of the proposed discovery outweighs
its likely benefit. Information
within this scope of discovery need
not be admissible in evidence to be
discoverable.
Fed. R. Civ. P. 26(b)(1).

The United States Supreme Court has

held that discovery under Rule 26 should be “construed broadly to
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encompass any matter that bears on, or that reasonably could lead
to other matter that could bear on, any issue that is or may be
in the case.”

Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340,

351, 98 S. Ct. 2380, 57 L. Ed. 2d 253 (1978).

However, this

broad interpretation and liberal application of the rule does not
provide unlimited discovery.

Oppenheimer, 437 U.S. at 351; see

also Hickman v. Taylor, 329 U.S. 495, 507, 67 S. Ct. 385, 91 L.
Ed. 451 (1947) (stating “discovery, like all matters of
procedure, has ultimate and necessary boundaries.”).
Initially “[t]he party seeking discovery must satisfy
some threshold showing of relevancy before discovery is
required.”

Lubrication Technologies, Inc. v. Lee’s Oil Service,

LLC, Civil No. 11-2226 (DSD/LIB), 2012 WL 1633259, at *2 (D.
Minn. April 10, 2012) (internal citation omitted).

However,

“[o]nce that threshold has been met, the resisting party ‘must
show specifically how . . . each . . . [request for production]
is not relevant or how the discovery is overly broad, burdensome,
or oppressive.’”

Lubrication Technologies, 2012 WL 1633259, at

*2 (quoting St. Paul Reinsurance Co., Ltd. v. Commercial
Financial Corp., 198 F.R.D. 508, 512 (N.D. Iowa 2000))
(alterations in original).
“Determinations of relevance in discovery rulings are
left to the sound discretion of the trial court . . . .”

Hayden

v. Bracy, 744 F.2d 1338, 1342 (8th Cir. 1984) (internal citations

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omitted).

District courts may limit “the scope of discovery

after balancing a number of interests.”

Slate v. ABC, 802 F.

Supp. 2d 22, 26 (D.D.C. 2011) (citing In re Sealed Case (Medical
Records), 381 F.3d 1205, 1215 (D.C. Cir. 2004) (additional
citations and quotations omitted)).

One of the interests that

may be included in the district court’s balancing is a right to
privacy.

See Seattle Times Co. v. Rhinehart, 467 U.S. 20, 35

n.21, 104 S. Ct. 2199, 81 L. Ed. 2d 17 (1984); see also Hardie v.
National Collegiate Athletic Ass’n, No. 13cv346-GPC (DHB), 2013
WL 6121885, at *3 (S.D. Cal. Nov. 20, 2013) (providing “federal
courts . . . recognize a right of privacy that can be raised in
response to discovery requests.”).

A number of courts have held

that the “standards for nonparty discovery require a stronger
showing of relevance than . . . party discovery.”

Stamy v.

Packer, 138 F.R.D. 412, 419 (D.N.J. 1990) (citing Laxalt v.
McClatchy, 116 F.R.D. 455, 458 (D. Nev. 1986); Dart Industries
Co. v. Westwood Chemical Co., 649 F.2d 646, 649 (9th Cir. 1980);
Slater Steel, Inc. v. Vac-Air Alloys Corp., 107 F.R.D. 246, 248
(W.D.N.Y. 1985)).
DISCUSSION
After plaintiff served the December 4, 2015, subpoena,
TDAC responded with a letter detailing TDAC’s objections and
stated that “TDAC will not be producing any documents in response
to the [s]ubpoena.”

(Filing No. 96-3 at 3).
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Following TDAC’s

letter, both counsel for plaintiff and TDAC discussed the matter
further in an attempt to find a mutually agreeable solution
(Filing No. 98 at 6).

TDAC expressed a willingness to provide

“some limited production of information.”

(Id.)

However,

plaintiff insisted on the production of “two critical sets of
information:

the identity of the at least 764 TDAC customers who

initiated purchases of Calissio shares during the relevant period
and who TDAC improperly credited with due bill payments relating
to Calissio stock and non-privileged communications regarding the
purchases and due bill payments.”

(Id.)

The Court finds that plaintiff’s motion should be
granted.

The Court is satisfied that plaintiff sufficiently

established its threshold showing of relevancy with respect to
all requests in the December 4, 2015, subpoena.

The Court

further finds that TDAC, as the party resisting production, has
failed to “show specifically how . . . each . . . [request for
production] is not relevant or how the discovery is overly broad,
burdensome, or oppressive.”

Lubrication Technologies, 2012 WL

1633259, at *2 (internal citations and quotations omitted).
Given the broad nature of Rule 26, the proportionality of
plaintiff’s requests, and the interests to be balanced, the Court
finds plaintiff’s requests to be relevant, even under the
stronger standard applicable for third-party subpoenas.

In

addition, the Court finds that plaintiff’s requests are not
overly broad, burdensome, or oppressive.
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To the extent

plaintiff’s request does not seek privileged or information not
available to TDAC, the motion is granted.

Accordingly,

IT IS ORDERED that plaintiff’s motion to compel
production of documents and things in response to the December 4,
2015, subpoena is granted.

TDAC shall comply with plaintiff’s

motion to compel on or before June 10, 2016.
DATED this 23rd day of May, 2016.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court

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