Ohio Department of Insurance v. RPM Mortgage, Inc., et al.
Filing
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OPINION & ORDER: For the foregoing reasons, the Court denies the ODI's motion to quash and orders the ODI to comply with the subpoena. The Court reminds counsel that, in accord with the scheduling order in place in PartnerRe, all discovery, including the deposition contemplated by the subpoena, is to be completed by December 17, 2020. (Signed by Judge Paul A. Engelmayer on 12/2/2020) (jwh)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
OHIO DEPARTMENT OF INSURANCE,
Plaintiff,
20 Misc. 590 (PAE)
-vRPM MORTGAGE, INC. and LENDUS, L.L.C.,
OPINION &
ORDER
Defendants.
PAUL A. ENGELMAYER, District Judge:
On November 30, 2020, this matter was transferred to this Court because it relates to
discovery in Partner Reinsurance Co. v. RPM Mortgage, Inc. (“PartnerRe”), No. 18 Civ. 5831
(PAE) (S.D.N.Y.). See Dkts. 4 (“Transfer Order”), 5. That case arises from a dispute over a
failed merger agreement between defendant buyers RPM Mortgage, Inc. (“RPM”) and LendUS,
LLC (“LendUS,” and together with RPM, “RPM”) and Entitle Direct Group, Inc. (“Entitle”), an
Ohio-based title-insurance company. There, Entitle’s stockholder representative, Partner
Reinsurance Co. Ltd. (“PartnerRe”), alleges that RPM breached their merger agreement by
failing to consummate the deal. RPM denies those allegations and has asserted counterclaims
blaming Entitle and PartnerRe for the transaction’s failure.
One condition for closing that merger was obtaining regulatory approval of the
transaction from plaintiff the Ohio Department of Insurance (“ODI”). Over the course of the
PartnerRe parties’ negotiation and execution of the merger agreement, they worked together to
assemble the financial information required and to submit the application for approval (the
“Form A” application) to the ODI in March 2017. However, RPM and LendUS later came to
believe that Entitle had failed to provide material information about its financial condition to the
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ODI, and sought Entitle’s consent to supplement the Form A with additional information. They
contend that PartnerRe refused, and that PartnerRe or Entitle may have engaged in ex parte
communications with the ODI that they argue the merger agreement forbade. On June 2, 2017,
the ODI approved the application.
Before the Court now is the ODI’s motion to quash a subpoena issued to it by RPM in
connection with discovery in PartnerRe. That subpoena seeks a deposition of a representative of
the ODI under Federal Rule of Civil Procedure 30(b)(6) and the production of documents related
to the ODI’s consideration of the Entitle-RPM merger. Dkt. 1-1 (“Subpoena”). ODI has, to date,
produced more than 2,000 pages of documents in response. Dkt. 1 (“ODI Mem.”) at 4. It argues
that such production exhausts the materials in its possession that are not subject to Ohio statutory
privileges. Id. at 5. It further contends that the deposition RPM seeks would be unduly
burdensome, and potentially explore privileged materials or communications. Id. at 9. RPM
disagrees, arguing that the cited privileges are inapplicable to the materials requested and that the
deposition sought will impose no undue burden on the ODI. Dkt. 2 (“RPM Mem.”).
For the reasons that follow, the Court denies the ODI’s motion to quash and orders the
subpoena enforced.
I.
Applicable Legal Standards
In general, “[p]arties may obtain discovery regarding any nonprivileged matter that is
relevant to any party’s claim or defense.” Fed. R. Civ. P. 26(b)(1). The Federal Rules of Civil
Procedure direct the Court to quash or modify subpoenas only in limited circumstances, such as
where the subpoena “requires disclosure of privileged or other protected matter” or “subjects a
person to undue burden.” Fed. R. Civ. P. 45(c)(iii), (iv). To survive a motion to quash, “the
party issuing the subpoena must demonstrate that the information sought is relevant and material
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to the allegations and claims at issue in the proceedings.” Alex & Ani, Inc. v. MOA Int’l Corp.,
No. 10 Civ. 4590 (KMW), 2011 WL 6413612, at *3 (S.D.N.Y. Dec. 21, 2011) (citation omitted).
“Although not unlimited, relevance, for purposes of discovery, is an extremely broad concept.”
Trilegiant Corp. v. Sitel Corp., 272 F.R.D. 360, 363 (S.D.N.Y. 2010) (quoting Condit v. Dunne,
225 F.R.D. 100, 105 (S.D.N.Y. 2004)).
Once the issuing party demonstrates relevance, “[t]he movant bears the burden of
persuasion in a motion to quash a non-party subpoena.” Hughes v. Twenty-First Century Fox,
Inc., 327 F.R.D. 55, 57 (S.D.N.Y. 2018); see Amphenol Corp. v. Fractus, S.A., No. 19 Misc. 160
(PAE), 2019 WL 2521300, at *6 (S.D.N.Y. June 19, 2019); see also, e.g., Dove v. Atl. Cap.
Corp., 963 F.2d 15, 19 (2d Cir. 1992). “Whether a subpoena imposes an undue burden depends
upon such factors as relevance, the need of the party for the documents, the breadth of the
document, the time period covered by it, the particularity with which the documents are
described and the burden imposed.” Night Hawk Ltd. v. Briarpatch Ltd., No. 03 Civ. 1382
(RWS), 2003 WL 23018833, at *8 (S.D.N.Y. Dec. 23, 2003) (citation omitted). The trial court
has broad discretion to determine whether a subpoena imposes an undue burden. See Jones v.
Hirschfeld, 219 F.R.D. 71, 74 (S.D.N.Y. 2003).
The standard applicable to depositions is similar to the standard for document subpoenas:
The Court may authorize additional depositions unless “the discovery sought is unreasonably
cumulative or duplicative, or can be obtained from some other source that is more convenient,
less burdensome, or less expensive,” “the party seeking discovery has had ample opportunity to
obtain the information,” or “the burden or expense of the proposed discovery outweighs its likely
benefit.” Fed. R. Civ. P. 26(b), (d); see Uni-World Capital L.P. v. Preferred Fragrance, Inc.,
No. 13 Civ. 7204 (PAE), 2014 WL 12939056, at *1 (S.D.N.Y. Dec. 1, 2014).
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II.
Discussion
A.
Relevance
Here, the materials sought by RPM are relevant, and the ODI has not argued otherwise.
See ODI Mem. The ODI’s approval of the Entitle-RPM merger was a condition of the deal’s
closing, and the merger agreement contained a host of provisions regarding the parties’
submissions to and communications with the ODI. See, e.g., PartnerRe, No. 18 Civ. 5831, Dkt.
34-3 (“Merger Agreement”) §§ 3.6(a) (regarding Entitle’s financial statements submitted to the
ODI), 5.4(a) (requiring efforts to prepare ODI Form A and other submissions to ODI), 5.4(b)
(requiring parties to keep each other “promptly informed of material communications relating to
the receipt of” approval by the ODI), 8.1(c) (requiring ODI’s approval as a condition of closing).
RPM argues that Entitle and PartnerRe may have breached some or all of those terms, including
by submitting misleading information to the ODI or withholding pertinent information from it.
See RPM Mem. at 8–9. Regardless of the merits of those claims and defenses, they appear
central to RPM’s theory of liability in PartnerRe. See, e.g., PartnerRe, No. 18 Civ. 5831 (PAE),
Dkt. 128 (“Answer to Amended Complaint”) ¶¶ 8, 18, 25, 37–38. Accordingly, the Court will
not quash the subpoena on the basis that it is irrelevant.
B.
Privilege
The ODI focuses mostly on the application of Ohio statutory privileges to resist RPM’s
subpoena. Specifically, it asserts that all remaining documents or information are protected both
under (1) the “work product” privilege established in Ohio Rev. Code. Ann. § 3901.48(B), (C);
and (2) the deliberative-process privilege. See ODI Mem. at 5–9. The first clearly does not
apply to many of the documents and information at issue here. The second likely does not apply
either, and, in any event, the ODI has not carried its burden of persuasion as to it.
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First, as RPM correctly notes, Ohio protections for the ODI’s “work product” apply only
to specific functions of the ODI. Section 3901.48(B) protects from disclosure “work papers”1 of
the ODI “resulting from the conduct of an examination made pursuant to section 3901.07 of the
Revised Code or from the conduct of a financial analysis of any entity subject to examination by
the superintendent.” Similarly, section 3901.48(C) protects such papers “resulting from the
conduct of a performance regulation examination made pursuant to authority granted under
section 3901.011 of the Revised Code or from the conduct of a market analysis or investigation
of any entity subject to examination by the superintendent.” But the ODI’s analysis of the
Entitle-RPM merger did not result or arise from an examination under sections 3901.07 or
3901.011 of the Ohio Revised Code. Rather, the ODI’s review of mergers and acquisitions of
insurance companies arises from its authority in section 3901.321, which does not contain a
confidentiality provision and is not referred to in section 3901.48(B) or (C). See State ex rel. The
Plain Dealer v. Ohio Dep’t of Ins., 687 N.E.2d 661, 670 (Ohio 1997) (“[T]he [ODI] is bound to
follow the legislative mandate of treating documents submitted pursuant to R.C. 3901.321 as
public, and keeping confidential those documents submitted due to an R.C. 3901.07
examination.”).
1
Ohio Admin. Code § 3901-3-08(C) defines work papers as follows:
the records kept by the superintendent of the procedures followed, the tests
performed, the information obtained, and the conclusions reached pertinent to his
or her examination and surveillance of the financial affairs of an insurer. Work
papers may include audit planning documentation, work programs, analyses,
memoranda, notes, letters of confirmation and representation, copies of work
papers of certified public accountants, abstracts or copies of company documents
and schedules of commentaries prepared or obtained by the superintendent in the
course of his or her examination and surveillance of the financial affairs of an
insurer.
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Accordingly, to the extent that any of the documents requested by RPM were submitted
pursuant to section 3901.321 rather than sections 3901.07 or 3901.011, they are public under
Ohio law. In the event that any such documents may be pertinent to the ODI’s work under more
than one of these provisions, the Ohio Supreme Court has held that “the original purpose for
collecting the document controls.” See The Plain Dealer, 687 N.E.2d at 669. Thus, to the extent
that RPM’s subpoena seeks disclosure of a work paper that was originally collected pursuant to
the ODI’s authority under section 3901.07 or 3901.011, such a document may properly be
withheld. However, that is not a basis to quash the subpoena. It is instead a basis to withhold a
specific document, with this basis identified on a document-by-document privilege log furnished
by the ODI to RPM.
Second, the ODI argues that the deliberative-process privilege applies to some or all of
the testimony that RPM seeks to elicit in its deposition of an ODI representative. See ODI Mem.
at 8–9. As an initial matter, it does not appear that any such privilege applies in this context.
Most of the cases the ODI cites apply a specific exemption identified in the Federal Freedom of
Information Act (“FOIA”), 5 U.S.C. § 552(b)(5) (“Exemption 5”). See, e.g., Kent Corp. v.
NLRB, 530 F.2d 612, 618 (5th Cir. 1976). And at least one Ohio court has expressly rejected the
application of such a privilege under the state’s public-records law. See State ex rel. Dist. 1199,
Health Care & Soc. Serv. Union, SEIU v. Gulyassy, 669 N.E.2d 487, 492 (Ohio Ct. App. 1995)
(“For the foregoing reasons, we decline respondents’ invitation to create an Exemption 5-type
privilege to R.C. 149.43.”).2 The lack of legal support for the existence of this privilege alone
warrants the denial of the ODI’s motion to quash on this ground.
2
The two Ohio decisions on which the ODI relies are inapposite. Each addressed appeals of
administrative decisions, recognizing only that reviewing courts are limited to the record before
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Even assuming that the deliberative-process privilege applied, the ODI has failed to carry
its burden of showing that it requires the Court to quash the subpoena here. Hughes, 327 F.R.D.
at 57. It does not identify the deposition topics that would fall within its protection, asserting
only that “testimony from a Department representative on the above-listed topics as outlined by
RPM would be protected from disclosure pursuant to the deliberative process privilege.” ODI
Mem. at 9. In fact, the deposition topics identified by RPM, and objected to by the ODI, appear
not to intrude upon such deliberations. See ODI Mem. at 6 (RPM seeks testimony on “policies
and procedures implemented” by ODI in connection with Form A filings in general and the
Entitle-RPM transaction in general, as well as information about which communications took
place in connection therewith). Accordingly, the deliberative-process privilege, even if it
applied, would not provide a basis for quashing the subpoena.
C.
Undue Burden
Last, the ODI briefly argues that the deposition called for by the subpoena would impose
an undue burden on it and the representative chosen for such a proceeding. See ODI Mem. at 9.
But its submission on this point is largely conclusory. See Probulk Carriers Ltd. v. Marvel Int’l
Mgmt. & Transp., 180 F. Supp. 3d 290, 293 (S.D.N.Y. 2016) (rejecting undue-burden argument
as “entirely conclusory”); id. (“Certainly the obligation for sitting for a deposition is not, in and
of itself, burdensome.”); see also Taylor Precision Prods., Inc. v. Larimer Grp. Inc., 15 Civ. 4428
(ALC) (KNF), 2017 WL 10221320, at *5 (S.D.N.Y. Feb. 27, 2017) (rejecting challenge to
subpoena where challenger “failed to demonstrate with any specificity that” it was unduly
the agency in such situations. See Talbut v. Perrysburg, 594 N.E.2d 1046, 1049 (Ohio Ct.
App. 1991) (review of “quasi-judicial proceeding” limited by statute to transcript of proceedings
before the agency unless enumerated exception applies); T. Marzetti Co. v. Doyle, 523 N.E.2d
347, 350 (Ohio Ct. App. 1987) (“The trial court was required to judicially review the decision of
the Ohio Civil Rights Commission upon the record before it.”).
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burdensome). And to the extent that the ODI cites the remote work occasioned by the
COVID-19 pandemic as a special burden relevant here, the Court does not view that fact as
supporting quashing the subpoena. As RPM notes, the deposition likely will be conducted
remotely as well, obviating the need for travel that might otherwise be required. See RPM Mem.
at 11. Depositions in civil cases since March have overwhelmingly been conducted remotely—
and successfully and efficiently. The ODI does not identify anything especially burdensome
about the deposition contemplated here or why it is entitled to special solicitude. Accordingly,
the ODI has not met its burden of demonstrating that the deposition of one of its
representatives—which the Court understands from RPM’s representations to last no more than
“a few hours on a single day,” id.—would impose an undue burden on it. The Court therefore
declines to quash the subpoena.
CONCLUSION
For the foregoing reasons, the Court denies the ODI’s motion to quash and orders the
ODI to comply with the subpoena. The Court reminds counsel that, in accord with the
scheduling order in place in PartnerRe, all discovery, including the deposition contemplated by
the subpoena, is to be completed by December 17, 2020.
SO ORDERED.
PaJA.�
__________________________________
PAUL A. ENGELMAYER
United States District Judge
Dated: December 2, 2020
New York, New York
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