New Falls Corporation v. Soni

Filing 43

MEMORANDUM OF DECISION & ORDER: For the above stated reasons, the Plaintiff's 21 motion pursuant to Rule 72 for a modification of the August 2, 2017 order is denied in its entirety. This case is respectfully referred to Magistrate Judge A. Kathleen Tomlinson for the remainder of discovery. SEE ATTACHED DECISION for details. It is SO ORDERED by Judge Arthur D. Spatt on 2/13/2018. (Coleman, Laurie)

FILED 
CLERK 

2:13 pm, Feb 13, 2018

U.S. DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 
LONG ISLAND OFFICE 

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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NEW FALLS CORPORATION,
Plaintiff,

MEMORANDUM OF
DECISION & ORDER
2:16-cv-06805 (ADS)(AKT)

-againstOM P. SONI,
Defendants.
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APPEARANCES:

Vlock & Associates, P.C.
Attorneys for the Plaintiff
630 Third Avenue
18th Floor
New York, NY 10017
By:
Stephen Vlock, Esq.,
Steven Paul Giordano, Esq., Of Counsel
Robert T. Bean, Attorney at Law
Attorney for the Defendant
3033 Brighton 3rd Street
Brooklyn, NY 11235
By:
Robert T. Bean, Esq., Of Counsel
SPATT, District Judge:
The Plaintiff New Falls Corporation (the “Plaintiff”) commenced this action against the
Defendant Om P. Soni (the “Defendant”) seeking to recover monies owed based on an alleged
note for business and commercial loans (the “Note”).
Presently before the Court is a motion by the Plaintiff, pursuant to Federal Rule of Civil
Procedure (“FED. R. CIV. P.” or “Rule”) 72, seeking a modification of a protective order issued by
Magistrate Judge A. Kathleen Tomlinson on August 2, 2017. In that order, Judge Tomlinson held
that the Defendant was not required to produce any corporate records from non-party Soni

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Holdings LLC (“Soni Holdings”) to the Plaintiff. For the following reasons, the Plaintiff’s motion
is denied.
I. BACKGROUND
A. The Relevant Facts
On or about May 14, 2007, Soni Holdings executed the Note and delivered it to the
Plaintiff’s predecessor-in-interest, AmSouth Bank. The Note was for $301,216.50, to be repaid
with interest. On the same date, the Defendant executed an agreement guaranteeing all of Soni
Holdings’ obligations under the Note. The Note was assigned and transferred to the Plaintiff on
September 15, 2015.
At some point, the Plaintiff demanded that the Defendant pay all monies due under the
Note. The Defendant has not paid the Plaintiff.
B. The Relevant Procedural History
The Plaintiff filed its complaint on December 9, 2016. The Plaintiff seeks the amount
owed under the Note, as well as attorneys’ fees and expenses.
The Defendant filed his answer on January 12, 2017.
On February 10, 2017, the Defendant filed his first motion for a protective order in favor
of non-party Soni Holdings pursuant to Rule 26(c). According to the motion, the Plaintiff served
Soni Holdings with a subpoena, demanding all documents relating to the Defendant. The subpoena
was attached as an exhibit to the motion.
On March 17, 2017, during a conference, Judge Tomlinson denied the Defendant’s motion
for a protective order without prejudice. The order implied that the Defendant did not have
standing to seek a protective order for a non-party.

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On April 13, 2017, the Defendant filed a second motion for a protective order, this time
asking the Court to protect him from having to produce the documents from Soni Holdings. The
Defendant argued that the Plaintiff’s request that he produce the Soni Holdings documents was
vague, unduly burdensome, and overbroad. Furthermore, the Defendant stated that he is not an
owner or manager of Soni Holdings. To that end, he supplied Soni Holdings’ 2009 Schedule K-1
identifying Anjali Soni as the owner or member.
On August 2, 2017, Judge Tomlinson granted the Defendant’s motion for a protective
order. The Court relied on the fact that “the information sought relates solely to the corporate
entity” and not to the individual Defendant. (Civil Conference Minute Order, August 1, 2017,
ECF No. 20). To that end, the Court stated that it:
pointed out to Plaintiff’s counsel that the only defendant named in this action is the
individual Om Soni. Plaintiff did not sue the corporation for reasons unknown to
this Court. Consequently, any responses proffered to discovery demands are solely
on behalf of defendant Soni in his individual capacity. Defendant Soni is not
required to produce documents and materials for the corporation. Plaintiff’s
counsel has already served a subpoena on the non-party corporation seeking a
whole array of business records. To the extent that Plaintiff is seeking to obtain K1 and other corporate records from the individual defendant here, such procedure
is not proper. We spent some time today discussing plaintiff’s options with regard
to bringing a motion to enforce compliance with the non-party subpoena to obtain
these records.
(Id.).
On August 11, 2017, the Plaintiff filed the instant motion for Rule 72 review of Judge
Tomlinson’s August 2, 2017 order.
II. DISCUSSION
A. The Legal Standard
As to nondispositive matters, such as motions for protective orders, Rule 72 states:
When a pretrial matter not dispositive of a party’s claim or defense is referred to a
magistrate judge to hear and decide, the magistrate judge must promptly conduct
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the required proceedings and, when appropriate, issue a written order stating the
decision. A party may serve and file objections to the order within 14 days after
being served with a copy. A party may not assign as error a defect in the order not
timely objected to. The district judge in the case must consider timely objections
and modify or set aside any part of the order that is clearly erroneous or is contrary
to law.
FED. R. CIV. P. 72(a). “Under the clearly erroneous standard of review of Rule 72(a), the
magistrate judge’s findings should not be rejected merely because the court would have decided
the matter differently. Rather, the district court must affirm the decision of the magistrate judge
unless the district court on the entire evidence is left with the definite and firm conviction that a
mistake has been committed.” Cendant Mortg. Corp. v. Saxon Nat'l Mortg., 492 F. Supp. 2d 119,
124 (E.D.N.Y. 2007) (citation omitted). Under the “contrary to law” standard of review, “a
magistrate judge's decision is contrary to law only where it runs counter to controlling authority.”
Pall Corp. v. Entegris, Inc., 655 F. Supp. 2d 169, 172 (E.D.N.Y. 2008) (citation omitted).
“Pursuant to this highly deferential standard of review, magistrate judges are thus afforded
broad discretion in resolving discovery disputes . . . [and] a party seeking to overturn a discovery
order bears a heavy burden.” Garcia v. Benjamin Grp. Entm’t Inc., 800 F. Supp. 2d 399, 403
(E.D.N.Y. 2011) (internal citations omitted).
B. The Relevant Law
Rule 26(c)(1) states that:
A party or any person from whom discovery is sought may move for a protective
order in the court where the action is pending—or as an alternative on matters
relating to a deposition, in the court for the district where the deposition will be
taken. The motion must include a certification that the movant has in good faith
conferred or attempted to confer with other affected parties in an effort to resolve
the dispute without court action. The court may, for good cause, issue an order to
protect a party or person from annoyance, embarrassment, oppression, or undue
burden or expense, including one or more of the following:
(A) forbidding the disclosure or discovery;
(B) specifying terms, including time and place or the allocation of expenses,
for the disclosure or discovery;
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(C) prescribing a discovery method other than the one selected by the party
seeking discovery;
(D) forbidding inquiry into certain matters, or limiting the scope of
disclosure or discovery to certain matters;
(E) designating the persons who may be present while the discovery is
conducted;
(F) requiring that a deposition be sealed and opened only on court order;
(G) requiring that a trade secret or other confidential research, development,
or commercial information not be revealed or be revealed only in a specified
way; and
(H) requiring that the parties simultaneously file specified documents or
information in sealed envelopes, to be opened as the court directs.
FED. R. CIV. P. 26(c)(1).
Parties are protected from abuse in the liberal discovery system by Rule 26(c). See AMW
Materials Testing, Inc. v. Town of Babylon, 215 F.R.D. 67, 72 (E.D.N.Y. 2003) (“While the
Federal Rules mandate a liberal standard, district courts are empowered to issue protective orders
to temper the scope of discovery under [Rule 26(c)]”); Seattle Times Co. v. Rhinehart, 467 U.S.
20, 34, 104 S. Ct. 2199, 2208, 81 L. Ed. 2d 17 (1984) (“Because of the liberality of pretrial
discovery permitted by Rule 26(b)(1), it is necessary for the trial court to have the authority to
issue protective orders conferred by Rule 26(c)”).
Under Rule 26(c), the court can order a stay of discovery or provide other protections to
the moving party, including ordering discovery take place in a particular sequence. Id.; Hasbrouck
v. BankAmerica Hous. Servs., 187 F.R.D. 453, 455 (N.D.N.Y.), aff’d sub nom. Hasbrouck v.
BankAmerica Hous. Servs., Inc., 190 F.R.D. 42 (N.D.N.Y. 1999). “To show good cause, particular
and specific facts must be established rather than conclusory assertions.” AMW Material Testing,
Inc. v. Town of Babylon, 215 F.R.D. 67, 72 (E.D.N.Y. 2003) (citing Hasbrouck, 187 F.R.D. at
455). “[I]f the movant establishes good cause for protection, the court may balance the
countervailing interests to determine whether to exercise discretion and grant the order.”
Hasbrouck, 187 F.R.D. at 455 (internal citations omitted); see also Dove v. Atlantic Capital Corp.,
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963 F.2d 15, 19 (2d Cir. 1992) (“The grant and nature of protection is singularly within the
discretion of the district court and may be reversed only on a clear showing of abuse of
discretion . . . . This standard applies where the requested order has been denied as well as when
it has been granted” (internal citations and quotation marks omitted)).
C. Application to the Plaintiff’s Motion
Having reviewed the record, including, among other things, the August 2, 2017 order; the
Plaintiff’s objections to the order; the Defendant’s response to the Plaintiff’s objections; the
Defendant’s motions for a protective order and the Plaintiff’s responses to those motions; as well
as the relevant legal authorities, the Court concludes that issuance of the protective order was
neither clearly erroneous nor contrary to law.
The Plaintiff does not point to any case law that supports his contention. Therefore, the
Plaintiff cannot meet his burden of showing that the August 2, 2017 order “runs counter to
controlling authority.” Pall, 655 F. Supp. 2d at 172 (citation omitted).
In support of his contention that the ruling was clearly erroneous, the Plaintiff merely
makes broad reference to Rule 26(b)(1), which states that “[p]arties may obtain discovery
regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional
to the needs of the case . . . .” FED. R. CIV. P. 26(b)(1). However, the Court notes that the August
2, 2017 order does not preclude the Plaintiff from obtaining the corporate records of Soni Holdings.
Instead, the Court encouraged the Plaintiff to file a motion to compel compliance with a non-party
subpoena. As Rule 26(c)(1)(C) states, a court, in granting a protective order, may “prescribe[e] a
discovery method other than the one selected by the party seeking discovery.” FED. R. CIV. P.
26(c)(1)(C). Courts are granted wide discretion in deciding whether to grant protective orders.
Dove, 963 F.2d at 19.

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The Court cannot say that granting the protective order was clearly erroneous or an abuse
of discretion. In fact, the protective order, coupled with the directive to file a motion to compel
compliance, appears completely reasonable to this Court. The Defendant demonstrated good cause
as to why the protective order should be granted. As the Defendant points out, he is not a member
or a manager of Soni Holdings. Furthermore, the Defendant represents that the “financial and
business records . . . are no longer available to [him].” (Def.’s Mem. of Law in Opp. to Pl.’s Mot.
for Rule 72 Review at 3). Instead, the records sought are currently contained on a flash drive
which contains sixty-four (64) gigabytes of data covering a twenty year period. (Id.). As much of
that data includes privileged medical records, the Defendant represents that it would take six
hundred (600) hours to review all of the documents contained on the flash drive. Clearly, requiring
the Defendant, who is not a member or officer of Soni Holdings, to conduct such a search would
be unduly burdensome.
On November 9, 2017, the Plaintiff followed Judge Tomlinson’s guidance, and filed a
motion to compel Soni Holdings’ compliance with the subpoena. As Soni Holdings is in the best
position to provide the Plaintiff with the documents from Soni Holdings, this is the most reasonable
course of action. As stated above, the Plaintiff has elected to not sue Soni Holdings. It appears
from the parties’ submissions that this was due, at least in part, to a successful arbitration between
the Plaintiff and Soni Holdings. Whatever the reason, the Plaintiff has sued the Defendant in his
individual capacity, and not as a member or officer of Soni Holdings. Therefore, the Court cannot
say that the August 2, 2017 order was clearly erroneous or contrary to law in holding that the
Defendant need only respond to discovery demands in his individual capacity, and that a protective
order be granted in the Defendant’s favor to prevent him from having to turn over corporate
documents from Soni Holdings.

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As the Plaintiff has not met his “heavy burden of showing that the ruling was ‘clearly
erroneous or contrary to law,’” H.L. Hayden Co. of N.Y., Inc. v. Siemens Med. Sys., Inc., 106
F.R.D. 551, 553 (S.D.N.Y. 1985), his motion for an order modifying Judge Tomlinson’s August
2, 2017 order is denied in its entirety.
III. CONCLUSION
For the above stated reasons, the Plaintiff’s motion pursuant to Rule 72 for a modification
of the August 2, 2017 order is denied in its entirety. This case is respectfully referred to Magistrate
Judge A. Kathleen Tomlinson for the remainder of discovery.

It is SO ORDERED:
Dated: Central Islip, New York
February 13, 2018
____/s/ Arthur D. Spatt____
ARTHUR D. SPATT
United States District Judge

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