Federal Trade Commission v. Consumer Defense LLC et al

Filing 296

ORDER. IT IS ORDERED that 200 Mr. Hanley's motion for leave to amend his motion to quash with supplemental exhibits is DENIED. IT IS FURTHER ORDERED that 196 Mr. Hanley's Motion to Quash Subpoena is DENIED. Signed by Magistrate Judge Brenda Weksler on 10/9/2019. (Copies have been distributed pursuant to the NEF - MR)

1
2
3

UNITED STATES DISTRICT COURT

4

DISTRICT OF NEVADA

5

***

6

FEDERAL TRADE COMMISSION,

7
8
9

Case No. 2:18-cv-00030-JCM-BNW

Plaintiff,
ORDER
v.
CONSUMER DEFENSE, LLC, et al.,

10

Defendants.

11
12

Presently before the court is Defendant Jonathan Hanley’s Motion to Quash Subpoena

13

(ECF No. 196), filed on March 12, 2019. The receiver who issued the subpoena responded (ECF

14

No. 197) on March 15, 2019. Mr. Hanley did not file a reply. Instead, Mr. Hanley filed a motion

15

for leave to amend his motion to quash with supplemental exhibits (ECF No. 200) on March 22,

16

2019, which is also presently before the court. The receiver responded (ECF No. 203) on April 5,

17

2019, and Mr. Hanley replied (ECF No. 204) on April 12, 2019.
Background

18
19
20
21

The parties are familiar with the facts of the case and the court will repeat them here only
as necessary.
American Home Loan Counselors (AHLC) and Modification Review Board (MRB) are

22

co-defendants of Mr. Hanley’s in this case. They are also in receivership. (See ECF No. 55 at 18

23

(“Thomas W. McNamara shall continue to serve as receiver of the Receivership Entities with full

24

powers of an equity receiver.”).) At issue is a subpoena that the receiver issued to Parsons Behle

25

& Latimer PLC (Parsons), the firm that allegedly previously represented MRB and AHLC, and

26

critically, also Mr. Hanley. The subpoena seeks the client files of MRB and AHLC.

27
28

Mr. Hanley moves to quash this subpoena on the grounds that the client files of MRB and
AHLC contain attorney-client privileged information. (ECF No. 196 at 2.)

1

The receiver responds that Mr. Hanley’s motion should be denied on multiple grounds,

2

including that (1) Parsons jointly represented MRB, AHLC, and Mr. Hanley. And because of this

3

joint representation, the attorney-client privilege does not protect MRB and AHLC’s files from

4

disclosure to the receiver; (2) even if Mr. Hanley’s attorney-client privilege previously protected

5

the documents at issue, they have been disclosed to MRB and AHLC, so they are no longer

6

protected by the attorney-client privilege; and (3) Mr. Hanley did not properly meet and confer

7

with the receiver under the Local Rules before filing this motion. (See ECF No. 197.) The

8

receiver also requests that the court impose sanctions on Mr. Hanley for “frivolous” and “abusive

9

litigation conduct.” (Id. at 5.)

10

As noted above, Mr. Hanley did not file a reply in support of his motion to quash but

11

instead filed a motion to amend his motion to quash with supplemental exhibits under LR 15-1.

12

(See ECF No. 200.) Mr. Hanley attached several engagement letters and emails to this motion that

13

he asserts “define the scope of the attorney client relationship.” (ECF No. 200 at 1). Mr. Hanley

14

appears to suggest that Parsons never jointly represented MRB, AHLC, and himself. (See id.) He

15

writes that a “new engagement letter, which included receivership entities[,] was never entered

16

into by Hanley despite repeated requests from Parsons to execute. Parsons withdrew their

17

representation from Hanley when it became clear that Hanley did not intend for them to represent

18

MRB & AHLC (the entities identified in the subpoena).” (ECF No. 200 at 2.)

19

The receiver responded to Mr. Hanley’s motion, arguing that it should be denied on

20

multiple grounds. (ECF No. 203.) The receiver argues that as a procedural matter, it was improper

21

for Mr. Hanley to file his motion for leave to amend. (Id. at 2.) Substantively, the receiver argues

22

that Mr. Hanley’s new motion fails to establish that the receiver’s subpoena should be quashed.

23

(Id.) This is so, accordingly to the receiver, because (1) a signed contract is not necessary under

24

Nevada law to create an attorney-client relationship; (2) Mr. Hanley’s motion does not refute

25

what Parson’s attorney Jeffrey Corey stated under oath – that Parsons understood itself to be

26

jointly representing Mr. Hanley and the two receivership entities; (3) Mr. Hanley’s statement that

27

an unsigned engagement letter confirms that Parsons did not represent Mr. Hanley and the two

28

receivership entities is merely a legal interpretation from a non-lawyer; and (4) even if Parsons
Page 2 of 5

1

never jointly represented Mr. Hanley and the receivership entities, the documents at issue have

2

already been disclosed to the receivership entities, so the attorney-client privilege has been

3

waived. (Id. at 3-5.)
Mr. Hanley’s reply largely reiterates the points he made in his opening briefs. (See ECF

4
5

No. 204.)
DISCUSSION

6
A. Motion to Amend

7

Mr. Hanley moves to amend his motion to quash under LR 15-1. Local Rule 15-1,

8
9
10

however, discusses how to properly move to amend pleadings, not motions. Accordingly, Mr.
Hanley did not properly move under LR 15-1 to amend his motion to quash.
The court notes that parties may file supplemental briefs and/or evidence with leave of

11
12

court for good cause shown under Local Rule 7-2(g). Because Mr. Hanley is a pro se litigant, the

13

court considered whether he demonstrated good cause for the court to consider the additional

14

evidence submitted. The only explanation offered by Mr. Hanley for needing to supplement was

15

that it took “some time for the[] new exhibits to be discovered[,] . . . which were believed to have

16

been destroyed . . . .” (ECF No. 200 at 2.) This explanation is too vague for the court to find good

17

cause to allow Mr. Hanley to amend his motion; the court does not know why Mr. Hanley

18

believed the exhibits were destroyed or why it took additional time for the exhibits to be

19

discovered and whether a further explanation on either subject would demonstrate good cause.1

20

Accordingly, the court denies Mr. Hanley’s motion to amend his motion to quash (ECF No. 200).
B. Motion to Quash

21

Before parties file discovery motions, they must meet and confer in an attempt to resolve

22
23

their dispute. Under Rule 37(a)(1) of the Federal Rules of Civil Procedure, a discovery motion

24

must include a certification that the movant has in good faith conferred or attempted to confer

25
26
27
28

The court notes that in reviewing Mr. Hanley’s motion to amend (ECF No. 200), it reviewed the attached
exhibits. Had the court found good cause to allow Mr. Hanley to amend his motion to quash, consideration
of these exhibits would not have changed the court’s ruling on Mr. Hanley’s motion to quash.
1

Page 3 of 5

1

with the other party to resolve the dispute without court action. Fed. R. Civ. P. 37(a)(1).

2

Additionally, Local Rule 26-7(c) provides that:

3
4
5

Discovery motions will not be considered unless the movant (1) has made a good
faith effort to meet and confer as defined in LR IA 1-3(f) before filing the motion,
and (2) includes a declaration setting forth the details and results of the meet-andconfer conference about each disputed discovery request.

6

Under LR IA 1-3(f), “to ‘meet and confer’ means to communicate directly and discuss in good

7

faith the issues required under the particular rule or court order.” “Unless these rules or a court

8

order provide otherwise, this requirement may only be satisfied through direct dialogue and

9

discussion in a face-to-face meeting, telephone conference, or video conference.” Id.

10

If parties properly meet and confer and cannot resolve their discovery disputes, they may

11

file discovery motions with the court. Such motions must contain legal authority supporting the

12

movant’s position. LR 7-2(a). “The failure of a moving party to file points and authorities in

13

support of the motion constitutes a consent to the denial of the motion.” LR 7-2(d).

14

Here, the court is concerned that Mr. Hanley did not comply with the meet and confer

15

rules cited above. Mr. Hanley states that he attempted to meet and confer with counsel for the

16

receiver (ECF No. 196 at 1), but counsel for the receiver declared under oath that Mr. Hanley

17

never attempted to meet and confer with him in accordance with the Local Rules, and he would

18

have been notified if Mr. Hanley reached out to someone else in his firm. (ECF No. 197-2 at ¶¶ 3-

19

4 (Bhandari Decl.).) None of the documents that Mr. Hanley attached to his motion to quash (or

20

motion to amend his motion to quash) call into question this sworn statement.

21

Additionally, Mr. Hanley did not comply with LR 7-2(a), as he did not cite authority in

22

support of his assertion that the subpoenaed documents are protected by the attorney-client

23

privilege. While the court reviewed the various engagement letters and emails that Mr. Hanley

24

attached to his motion to quash and his motion to amend, these are not a substitute for a detailed

25

legal analysis with citation to relevant authority. Mr. Hanley does not explain what law governs

26

the attorney-client privilege in this case (e.g., Nevada law or other), when an attorney-client

27

relationship is formed under that law, or when a joint defense group is formed under that law.

28

Accordingly, the court denies Mr. Hanley’s motion to quash.
Page 4 of 5

1

C. Receiver’s Request for Sanctions

2

The court, in its discretion, denies the receiver’s request for sanctions at this time.

3

However, Mr. Hanley is advised that although the court will liberally construe his filings because

4

he is not represented by an attorney, he nevertheless is required to follow the same rules of

5

procedure that govern other litigants. See Ghazali v. Moran, 46 F.3d 52, 54 (9th Cir. 1995). Mr.

6

Hanley is cautioned that any additional failures to comply with the court’s rules or orders may

7

subject him to sanctions.

8
9
10
11

IT IS THEREFORE ORDERED that Mr. Hanley’s motion for leave to amend his motion
to quash with supplemental exhibits (ECF No. 200) is DENIED.
IT IS FURTHER ORDERED that Mr. Hanley’s Motion to Quash Subpoena (ECF No.
196) is DENIED.

12
13

DATED: October 9, 2019

14
15
16

BRENDA WEKSLER
UNITED STATES MAGISTRATE JUDGE

17
18
19
20
21
22
23
24
25
26
27
28
Page 5 of 5