Tradewinds Airlines Inc. v. Soros et al

Filing 247

MEMORANDUM OPINION & ORDER: Plaintiffs' motion to modify the Protective Order is granted. The Court has contemporaneously filed a separate order setting forth modifications consistent with this opinion. (Signed by Judge John F. Keenan on 7/20/2016) (tn)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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TRADEWINDS AIRLINES, INC.,
:
:
Plaintiff,
:
:
-against:
:
GEORGE SOROS and PURNENDU
:
CHATTERJEE,
:
:
No. 08 Civ. 5901 (JFK)
Defendants.
:
No. 10 Civ. 8175 (JFK)
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COREOLIS HOLDINGS, INC. and
:
Memorandum Opinion
TRADEWINDS HOLDINGS, INC.,
:
& Order
:
Plaintiffs,
:
:
-against:
:
GEORGE SOROS and PURNENDU
:
CHATTERJEE,
:
:
Defendants.
:
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JOHN F. KEENAN, United States District Judge:
Coreolis Holdings, Inc.; TradeWinds Holdings, Inc.; and
TradeWinds Airlines, Inc. (collectively, “Plaintiffs”) move to
modify a protective order issued in the above-referenced actions
on October 1, 2013.

For the reasons set forth below, the motion

is granted.
Background
The Court assumes familiarity with the factual background
of these now-completed actions as set forth in the Opinion and
Order dated March 31, 2015. See TradeWinds Airlines, Inc. v.
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Soros, 101 F. Supp. 3d 270, 271-277 (S.D.N.Y. 2015), aff’d, 637
F. App’x 53 (2d Cir. 2016).

Plaintiffs hold unsatisfied North

Carolina judgments against C-S Aviation Services, Inc. (“C-S
Aviation”) and brought these actions to pierce the corporate
veil of C-S Aviation and recover from its alleged alter egos,
George Soros and Purnendu Chatterjee (“Defendants”).

In

connection with that litigation, this Court “so ordered” a
stipulated protective order on October 1, 2013 (the “Protective
Order” or “Order”), which governs the disclosure and use of all
discovery material produced in the instant actions.
On March 31, 2015, this Court granted summary judgment for
Defendants. Soros, 101 F. Supp. 3d at 283.

That decision was

affirmed by the Second Circuit Court of Appeals on March 10,
2016. Soros, 637 F. App’x 53 (2d Cir. 2016).

On May 26, 2016,

Plaintiffs filed a veil-piercing action in the General Court of
Justice, Superior Court Division, Guilford County, North
Carolina, to enforce the North Carolina judgments against Soros
Fund Management LLC (“SFM”) as C-S Aviation’s alleged alter ego.
See Notice of Removal at 1-2, Trustee for TradeWinds Airlines,
Inc. v. Soros Fund Mgmt. LLC, No. 16-cv-0710 (M.D.N.C. June 23,
2016.)

SFM subsequently removed the action to the United States

District Court for the Middle District of North Carolina. Id.
Plaintiffs now seek modification of the Protective Order so that
discovery material produced in the instant actions may be used
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in connection with the newly filed North Carolina action,
subject to the same confidentiality provisions, and with the
exception of the discovery material produced by Dr. Chatterjee.
Analysis
A district court retains jurisdiction to modify or
terminate a protective order it has issued, even after judgment.
Gambale v. Deutsche Bank AG, 377 F.3d 133, 139-142 (2d Cir.
2004).

The Second Circuit has held that where a party has

reasonably relied on a protective order in giving testimony or
producing materials, a district court should not modify the
order “absent a showing of improvidence in the grant of [the]
order or some extraordinary circumstance or compelling need.”
S.E.C. v. TheStreet.Com, 273 F.3d 222, 229 (2d Cir. 2001)
(quoting Martindell v. Int’l Tel. & Tel. Corp., 594 F.2d 291,
296 (2d Cir. 1979)).

On the other hand, where a party or

deponent could not have reasonably relied on the continuation of
the protective order, the decision whether to modify the order
is left to the “sound discretion of the trial court.” Id. at 231
(quoting In re Agent Orange Prod. Liab. Litig., 821 F.2d 139,
147 (2d Cir. 1987)).
In determining whether there has been reasonable reliance
on a protective order, district courts in this circuit have
considered:

“(1) the scope of the protective order; (2) the

language of the order itself; (3) the level of inquiry the court
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undertook before granting the order; and (4) the nature of
reliance on the order.” In re Sept. 11 Litig., 262 F.R.D. 274,
277 (S.D.N.Y. 2009) (quoting In re EPDM Antitrust Litig., 255
F.R.D at 318 (D. Conn. 2009)).

Here, each of these factors

weighs against reasonable reliance and in favor of permitting
modification.

First, the scope of the Protective Order favors

modification because the Order is a “blanket” order covering all
documents produced during the litigation, not a targeted order
covering only certain documents. See EPDM, 255 F.R.D at 319.
Next, the language of the Order supports permitting modification
because it specifically provides that either party may seek
changes to the Order. (See Protective Order ¶ 9 (“Nothing herein
shall prevent any party from seeking further, greater or lesser
protection with respect to the use of any Discovery Material in
connection with this litigation.”).)

The level of inquiry

undertaken before the Order was entered also weighs in favor of
modification because the Court “so ordered” the parties’
stipulation without having cause to determine whether all the
documents covered actually warranted protection. See EPDM, 255
F.R.D at 322 (“In the absence of the requisite good cause
showing, it cannot be presumed that every piece of discovery
filed under the Order is actually worthy of such a high level of
protection.” (citing Lugosch v. Pyramid Co. of Onondaga, 435
F.3d 110, 126 (2d Cir. 2006)).

Finally, the nature of the
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reliance on the Order weighs in favor of modification because
there is no indication that the Defendants relied on the Order
to produce documents they would not have otherwise disclosed.
Even if Plaintiffs were required to show a “compelling
need” or “extraordinary circumstance,” however, they have done
so.

First, courts within this circuit have found there to be a

“compelling need” or “extraordinary circumstance” warranting
modification where a blanket protective order is entered without
a showing of good cause. See Charter Oak Fire Ins. Co. v.
Electrolux Home Prods., Inc., 287 F.R.D. 130, 132 (E.D.N.Y.
2012); Fournier v. Erickson, 242 F. Supp. 2d 318, 341-42
(S.D.N.Y. 2003).
Further, there is a compelling need for modification here
to avoid considerable unnecessary effort and expense.
Plaintiffs’ claims in the North Carolina action are closely
related to the claims brought before this Court.

Without

modification of the Protective Order, the same discovery
materials will likely have to be reviewed and re-produced,
needlessly causing duplication of effort and extra expense.

And

importantly, because the proposed modifications maintain the
same protections regarding public disclosure, there is no
significant prejudice to any party.
While Mr. Soros’s counsel urges the Court to wait until the
North Carolina action reaches a more advanced stage before
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modifying the Protective Order, he acknowledges that SFM intends
to file a motion to dismiss the North Carolina action for lack
of personal jurisdiction. See Letter from Martin Klotz, Esq. to
Hon. John F. Keenan 1 (July 7, 2016).

Specifically, SFM intends

to argue that plaintiffs have failed to make a prima facie
showing that SFM is the alter ego of C-S Aviation. See id.

The

current deadline for the motion is July 21, 2016. See Docket
Entry, Trustee for TradeWinds Airlines, Inc. v. Soros Fund Mgmt.
LLC, No. 16-cv-0710 (M.D.N.C. June 28, 2016.)

Because discovery

material from the actions litigated before this Court will very
likely be useful in resolving that jurisdictional issue, the
Court sees no reason to delay modifying the Protective Order.
For these reasons,

Plaintiffs' motion to modify the

Protective Order is granted.

The Court has contemporaneously

filed a separate order setting forth modifications consistent
with this opinion.

SO ORDERED.

Dated:

New York, New York
July 20, 2016
F. Keenan
United States District Judge

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