Environmental Dimensions, Inc. v. EnergySolutions Government Group, Inc.
Filing
138
MEMORANDUM OPINION AND ORDER by Chief District Judge William P. Johnson OVERRULING 126 Objections. (mag)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
ENVIRONMENTAL DIMENSIONS, INC.,
A New Mexico Corporation,
Plaintiff,
v.
No. CV 16-1056 WJ/JHR
ENERGYSOLUTIONS GOVERNMENT
GROUP, INC. (n/k/a Atkins Energy
Government Group, Inc.), a foreign for
profit corporation,
Defendant.
MEMORANDUM OPINION AND ORDER
This matter comes before the Court on EnergySolutions Government Group’s (“ESGG’s”)
Objections to Memorandum Opinion and Order Denying ESGG’s Motion to Quash Environmental
Dimension’s (“EDi’s”) Subpoenas to the Department of Energy (“DOE”) and National Nuclear
Security Administration (“NNSA”) and for a Protective Order (Doc. 126), filed April 11, 2019.
The Court, having reviewed Magistrate Judge Jerry H. Ritter’s Memorandum Opinion and Order
of March 28, 2019 (Doc. 123), as well as EDi’s Response in Opposition to ESGG’s Objections
(Doc. 129), filed April 25, 2019, and ESGG’s Reply in Support of its Objections (Doc. 136), filed
May 17, 2019, hereby overrules the objections and adopts Magistrate Judge Ritter’s
Memorandum Opinion and Order. ESGG’s Motion to Stay Compliance with Magistrate Judge
Ritter’s Order (Doc. 127), filed April 11, 2019, and fully briefed on May 17, 2019 (Doc. 137), is,
accordingly, denied as moot.
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I.
LEGAL STANDARDS
Pursuant to statute, this Court must review a magistrate judge’s ruling when a party timely
files written objections. Objections to non-dispositive rulings are reviewed under 28 U.S.C. §
636(b)(1)(A) and Fed. R. Civ. P. 72(a). Discovery is a nondispositive matter, and magistrate judges
have the authority to issue discovery-related orders. Hutchinson v. Pfeil, 105 F.3d 562, 566 (10th
Cir. 1997) (citing 28 U.S.C. § 636(b)(1)(A); Ocelot Oil Corp. v. Sparrow Industries, 847 F.2d
1458, 1462 (10th Cir. 1988)).
Under Section 363(b)(1)(A) and Rule 72(a), this Court must defer to the magistrate judge’s
ruling unless it was clearly erroneous or contrary to law. Allen v. Sybase, 468 F.3d 642, 658 (10th
Cir. 2006) (citing Hutchinson v. Pfeil, 105 F.3d 562, 566 (10th Cir. 1997); 28 U.S.C. §
636(b)(1)(A); Fed. R. Civ. P. 72(a)). “The clearly erroneous standard … requires the reviewing
court affirm unless it ‘on the entire evidence is left with the definite and firm conviction that a
mistake has been committed.’” Ocelot Oil Corp., 847 F.2d at 1464 (quoting United States v. United
Staes Gypsum Co., 333 U.S. 364, 395 (1948)).1 Thus, “[t]he clearly erroneous standard is intended
to give the magistrate [judge] a free hand in managing discovery issues.” New Mexico v.
Volkswagen Group of America, Inc., CV 16-0147 MCA/LF, 2016 WL 4072342, at * 1 (D.N.M.
2016) (citation omitted). “Under the ‘contrary to law’ standard, the district judge conducts a
plenary review of the magistrate judge’s legal determinations, setting aside the magistrate judge’s
order only if it applied an incorrect legal standard.” Coll v. Stryker Corp., CV 14-1089 KG/SMV,
2017 WL 3190658, at *7 (D.N.M. 2017) (cited authority omitted). “In sum, it is extremely difficult
to justify alteration of the magistrate judge’s non-dispositive actions by the district judge.” Id.
“As the Seventh Circuit has articulated the standard, to be clearly erroneous ‘a decision must strike [the court] as
more than just maybe or probably wrong; it must … strike [the court] as wrong with the force of a five-week-old,
unrefrigerated dead fish.’” STC.UNM v. Quest Diagnostics Inc., CV 17-1123 MV/KBM, 2018 WL 3539820 at *1
(D.N.M. 2018) (quoting Parts &Elec. Motors, Inc. v. Sterling Elec., Inc., 866 F.2d 228, 233 (7th Cir. 1988)).
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“Finally, ‘theories raised for the fist time in objections to the magistrate judge’s order are deemed
waived.’” Id. (quoting United States v. Garfinkle, 261 F.3d 1030, 1031 (10th Cir. 2001)).
II.
BACKGROUND2
As stated by ESGG, “[o]n May 29, 2018, EDi served subpoenas on DOE and NNSA,
requesting documents relating to a radiological release event at the Waste Isolation Pilot Plant
(‘WIPP Incident’), including an alleged settlement agreement between ESGG and the government
contractor (Los Alamos National Security (‘LANS’)) charged with operating remediation
activities at Los Alamos National Laboratory (‘LANL’).” Doc. 126, p. 2. ESGG objected to the
subpoenas and filed its Motion to Quash on September 27, 2019. Doc. 87. In its Motion, ESGG
took the position that EDi’s subpoenas should be quashed because they sought irrelevant
information to EDi’s claims in this litigation. See generally id. Additionally, ESGG argued that
EDi was seeking discovery that it was previously denied by Magistrate Judge Ritter. See id., p. 16.
In conclusion, ESGG argued that “EDi is not entitled to discovery into liability for the WIPP
Incident as a whole, including any alleged settlement agreement between ESGG and LANS.” Id.,
p. 16.
Meanwhile, the Department of Justice (on behalf of DOE and NNSA) conferred with
counsel for EDi, and the parties ultimately reached an agreement as to what would be produced in
the event that the Court denied ESGG’s motion to quash. See Doc. 126-1. Of note, the Department
has not sought to intervene in this action or otherwise challenged the validity of EDi’s subpoenas.
Id. On the contrary, the Department has “located a requested settlement agreement” and indicated
that, if the motion to quash is denied, then it will be producing the same to EDi subject to “the
terms of the existing protective order.” Id.
ESGG does not object to any of Magistrate Judge Ritter’s background section, and the Court finds none of it to be
clearly erroneous. As such, the Court only restates the facts pertinent to the instant dispute.
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Nonetheless, ESGG litigated its Motion to Quash to fruition, arguing in its Reply Brief
that: (1) EDi’s Response had been served one day late, and that the Motion to Quash should
therefore be granted under this Court’s Local Rules; (2) the discovery sought by EDi is irrelevant
to its claims; (3) EDi’s subpoenas are overly burdensome; and, (4) the alleged settlement
agreement is confidential. See Doc. 95. Magistrate Judge Ritter rejected these arguments. See Doc.
123. First, Magistrate Judge Ritter concluded that EDi’s Response was timely. Id., p. 1. Second,
he determined that ESGG lacked standing to challenge the subpoenas because it refused to admit
to the existence of the “alleged” settlement agreement. Id., p. 6 (reasoning that ESGG would have
demonstrated standing had it admitted to the existence of the agreement, but that its assertions of
confidentiality were “conclusory, at best, and insufficient to establish standing to challenge the
subpoenas.”). Alternatively, Magistrate Judge Ritter determined that ESGG’s Motion should be
denied on its merits. Id., p. 6. Magistrate Judge Ritter reasoned that there was no absolute rule
precluding EDi from subpoenaing third parties where its previous efforts to compel production of
the alleged agreement failed. Id., pp. 6-7. Moreover, Magistrate Judge Ritter reasoned that the
alleged agreement would be relevant to EDi’s claims for unfair trade practices and tortious damage
to reputation and contract. Id., p. 7. Finally, Magistrate Judge Ritter found that ESGG lacked
standing to object to the subpoenas as unduly burdensome, and rejected its position that the
confidential nature of the alleged agreement should preclude its disclosure to EDi, given that the
parties could easily enter into a stipulated protective order in this case. Id., pp. 8-9.
ESGG now objects to Magistrate Judge Ritter’s Order. First, ESGG argues that Magistrate
Judge Ritter incorrectly calculated EDi’s response deadline and that, because it was filed one day
late, ESGG’s Motion to Quash should have been granted regardless of its merit as a matter of this
Court’s Local Rules. Doc. 126, p. 5. Next, ESGG argues that it has standing to move to quash
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because it has a privacy interest in the alleged settlement agreement. Id., p. 7. ESGG then explains
that its failure to admit to the existence of the agreement was a matter of technical truth; it knew
which agreement EDi was referring to but “could not” admit to its existence because EDi did not
name the correct agreement. Id., p. 8. Alternatively, ESGG argues that EDi cannot burden nonparties for discovery that should have been sought from ESGG, and that EDi should not be able to
receive from a non-party the settlement agreement that Judge Ritter previously denied it. Id., pp.
9-11. Finally, ESGG objects that the subpoenas seek irrelevant discovery. Id. at 12.
III.
ANALYSIS
A) Timeliness of EDi’s Response to the Motion to Quash
The Court agrees with ESGG that it is technically right, insofar as it appears that Magistrate
Judge Ritter may have miscalculated EDi’s Response deadline, and that it was, in fact, filed one
day late under this Court’s Local Rules. See D.N.M.LR-Civ.7.4(a) (“A response must be served
and filed within fourteen (14) calendar days after service of the motion…. These time periods are
computed in accordance with FED. R. CIV. P. 6(a) and (d).”). It is also true that under this Court’s
Local Rules “[t]he failure of a party to file and serve a response in opposition to a motion within
the time prescribed for doing so constitutes consent to grant the motion.” D.N.M.LR-Civ.7.1(b).
As such, ESGG is technically correct, Magistrate Judge Ritter could have granted its Motion as a
matter of procedure under this Court’s Local Rules.
However, the Court is not here dealing with a substantial delay, it is dealing with a response
brief that was filed one day late. In such circumstances, the Court prefers to rule on the merits of
the Motion, and it does not fault Magistrate Judge Ritter for turning to the Motion’s substance
rather than dwelling on this procedural technicality. Moreover, the Local Rules “may be waived
by a Judge to avoid injustice[,]” D.N.M.LR-Civ.1.7, and the Court notes that they should “be
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construed consistently with the Federal Rules of Civil Procedure[,]” D.N.M.LR-Civ.1.4, which are
to be “construed, administered, and employed by the Court and the parties to secure the just,
speedy, and inexpensive determination of every action and proceeding.” Fed. R. Civ. P. 1. When
read together, the Court is confident that these provisions support analysis of the merits of ESGG’s
Motion rather than granting it a technical win especially where, as here, the Court agrees its Motion
should be denied.
B) Standing
ESGG does not challenge Judge Ritter’s restatement of the legal standards that apply when
a Court considers whether a party has standing to challenge a third-party subpoena. As Magistrate
Judge Ritter noted, “[g]enerally, a party has no standing to quash a subpoena served upon a third
party, except as to claims of privilege relating to the documents being sought or upon a showing
that there is an applicable privacy interest.” Doc. 123, p. 5 (citing Morris v. Ulibarri, CV 06-1052
MV/DJS, 2010 WL 11474423 at *2 (D.N.M. 2010); Booth v. Davis, CV 10-4010 RDR, 2011 WL
2008284 at *2 (D. Kan. 2011); Martin v. National Union Fire Insurance Co. of Pittsburg, PA, CV
13-0285 MAP, 2013 WL 12156516 at *1 (M.D. Fla. 2013); Charles Schwab & Co., Inc. v.
Highwater Wealth Management, LLC, CV 17-0803 CMA/NYW, 2017 WL 4278494 at *4 (D.
Colo. 2017); Paramo v. Aspira Bilingual Cyber Charter School, CV 17-3863, 2018 WL 4538422
at *3 (E.D. Penn. 2018)). Contrary to Magistrate Judge Ritter’s finding, ESGG argues that it does
have standing to challenge the subpoenas here because it has a privacy interest in the alleged
agreement. Doc. 126, p. 7. ESGG so argues despite its failure to admit the existence of the
agreement in its briefing before Magistrate Judge Ritter. Id. The Court is not convinced.
ESGG had a burden in demonstrating its standing to move to quash EDi’s subpoenas. As
Magistrate Judge Ritter noted, “[a]bsent a specific showing of privilege or privacy, a court cannot
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quash a subpoena duces tecum.” Doc. 123, p. 5 (quoting Windsor v. Martindale, 175 F.R.D. 665
(D. Colo. 1997)). Here, ESGG did not (and does not) make a specific showing of privacy. In its
objections ESGG argues that some of the other information sought by EDi “may well have
included discussion of ESGG’s proprietary business methods, pricing, personnel, and other
confidential information[,]” but it does not describe the information it seeks to be protected beyond
these general terms. Doc. 126, pp. 8-9. As such, the Court is not convinced that Magistrate Judge
Ritter made a legal error when determining that ESGG failed to prove its standing to challenge
EDi’s subpoenas, and bald allegations that the magistrate judge’s order will cause harm or damage
to the objecting party are insufficient. See Toth v. Gates Rubber Co., 216 F.3d 1088 (10th Cir.
2000) (unpublished).
C) Alternatively, the Court agrees with Magistrate Judge Ritter’s analysis of the
merits of ESGG’s Motion.
i. EDi was not precluded from seeking the documents from third parties.
ESGG objects to Magistrate Judge Ritter’s quotation of a non-binding district court case
out of the District of Wyoming for the proposition that “there is no absolute rule prohibiting a party
from seeking to obtain the same documents from a non-party as can be obtained from a party, nor
is there an absolute rule providing that the party must first seek those documents from an opposing
party before seeking the from a non-party.” See Doc. 123, p. 6. ESGG does not argue that this is a
misstatement of the law or a misapplication of the law, only that the court in that non-binding case
ultimately quashed the subpoena at issue. Doc. 126, p. 10. ESGG then argues that “other district
courts reach a similar conclusion that the requesting party should seek the discovery first from
parties to the litigation[.]” Doc. 126, p. 10 (citations omitted). None of the cases cited by ESGG
demonstrate that Magistrate Judge Ritter applied the wrong legal standard in this case, and none
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of them are binding on this Court. As such, the Court overrules ESGG’s objection that EDi was
required to obtain the subpoenaed documents from it, rather than seeking them from third parties.
ii. ESGG has failed to demonstrate the impropriety of permitting EDi to receive the
settlement agreement Magistrate Judge Ritter previously denied it.
ESGG’s next objection amounts to a contention that Magistrate Judge Ritter was bound by
his own prior rulings to deny EDi access to the alleged settlement agreement. See Doc. 126, pp.
11-12. However, as Judge Ritter explained, both of EDi’s prior motions to compel the settlement
agreement from ESGG and LANS were denied on procedural grounds; that is, he never reached
their substance. Doc. 123, p. 7. While ESGG “questions the policy benefits in allowing” EDi to
subpoena a non-party after losing motions to compel on procedural grounds, it has failed to
demonstrate anything about Magistrate Judge Ritter’s ruling in this regard that is clearly erroneous
or contrary to law.
iii. The Court is not convinced that the information sought by EDi’s subpoenas is
irrelevant to EDi’s claim.
Turning to the heart of the matter, the Court is not convinced that ESGG has demonstrated
that the alleged settlement agreement is irrelevant to EDi’s claims. At the outset, the Court notes
that EDi has agreed to dismiss its tortious damage to reputation claim, so ESGG is correct that
Magistrate Judge Ritter’s reliance on that claim was erroneous. See Doc. 126, p. 13. Nonetheless,
that claim was not the focus of Magistrate Judge Ritter’s Order, which set forth EDi’s assertions
of ESGG’s alleged unfair trade practices, See Doc. 123, p. 2. To this end, ESGG argues that
Magistrate Judge Ritter made a legal error, because EDi has offered no evidence that ESGG
knowingly made a false or misleading representation “at the time” of contracting for its services.
Doc. 126, p. 13 (citing Eisert v. Archdiocese of Santa Fe, 207 P.3d 1156, 1164 (N.M. Court App.
2009)). The Court has reviewed the Eisert case, and does not find that it precludes the discovery
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sought here. There, the plaintiff’s claim under New Mexico’s Unfair Trade Practices Act was
dismissed (and the dismissal was affirmed on appeal) because she failed to demonstrate that the
defendant cemetery “knowingly made a misrepresentation of fact when it sold the burial plots to
Juan and Sofie, nor does Eisert even allege that the cemetery knowingly made such a
misrepresentation.” Eisert v. Archdiocese of Santa Fe, 2009-NMCA-042, ¶ 27, 146 N.M. 179, 187,
207 P.3d 1156, 1164. The Court does not read this holding to require the false or misleading
representation to be made at the time of contracting where, as here, the parties have an ongoing
relationship. Moreover, the holding of Eisert was that the plaintiff failed to demonstrate any
misrepresentation. That is not the case here, at least if EDi’s allegations are believed. Regardless,
ESGG has failed to demonstrate that Magistrate Judge Ritter committed a legal error in holding
that the settlement agreement was discoverable.
D) Having concluded that Magistrate Judge Ritter’s Order is neither clearly
erroneous nor contrary to law, the Court will deny ESGG’s Motion to Stay.
“The power to stay proceedings is incidental to the Court’s inherent power to control the
disposition of the causes on its docket with economy of time and effort.” Amaya v. Bregman, CV
14-0599 WJ/SMV, 2016 WL 10516104, at *2 (D.N.M. 2016) (citing Landis v. N. Am. Co., 299
U.S. 248, 254 (1936)). “The party requesting a stay ‘must make out a clear case of hardship or
inequity, if there is even a fair possibility that the stay will work damage to someone else.’” Id.
ESGG, having failed to demonstrate that Judge Ritter’s Order was contrary to law, has failed to
meet its burden in requesting that the Court stay execution of the Order.
IV.
CONCLUSION
As noted in the Legal Standards section above, it is extremely difficult to justify alteration
of the magistrate judge’s non-dispositive actions by the district judge. In order to do so, the
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objecting party must clearly convince this Court that the magistrate judge erred as a matter of fact
and as a matter of law. ESGG has failed to meet this heavy burden here.
IT IS THEREFORE ORDERED that ESGG’s Objections to Judge Ritter’s Order (Doc.
126) are overruled¸ Magistrate Judge Ritter’s Memorandum Opinion and Order (Doc. 123) is
adopted, and ESGG’s Motion to Stay Compliance with Magistrate Judge Ritter’s Order (Doc.
127), is denied as moot.
__________________________________
CHIEF U.S. DISTRICT JUDGE
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