Matthew Stein et al v. Skatteforvaltningen

Filing 88

MEMORANDUM AND ORDER denying 73 Letter Motion for Local Rule 37.2 Conference; denying 74 Letter Motion for Local Rule 37.2 Conference; denying 75 Letter Motion for Local Rule 37.2 Conference. For the foregoing reasons, and except as noted, movants' discovery motions are denied. The Clerk of Court is respectfully directed to terminate the motions pending at ECF Nos. 73, 74, and 75. SO ORDERED. (Signed by Judge Naomi Reice Buchwald on 2/1/2024) (vfr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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MATTHEW STEIN AND JEROME LHOTE,
Plaintiffs/CounterclaimDefendants,
- against –
SKATTEFORVALTNINGEN,

MEMORANDUM AND ORDER
23 Civ. 2508 (NRB)

Defendant/CounterclaimPlaintiff,
- against –
LUKE MCGEE
Counterclaim-Defendant.
------------------------------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE

On January 11, 2024, Matthew Stein, Jerome Lhote, and Luke
McGee (collectively, “movants”) filed three separate pre-motion
letters raising numerous discovery disputes. 1

To place these

motions in context, some background is necessary.

In May 2019,

the movants entered into a settlement agreement (the “Agreement”
or

“Settlement

Agreement”)

with

SKAT.

Section

8(f)

of

the

Settlement Agreement requires SKAT to: promptly upon the execution

1 Defendant Skatteforvaltningen (“SKAT”) responded in opposition to those
letters on January 17, 2024, and movants filed replies on January 22, 2024.
Because the pre-motion letters concerning non-dispositive issues “were
sufficiently lengthy to address all relevant arguments” and there was a
“clear lack of merit” supporting the movants’ arguments, the Court will
construe the pre-motion letters as the motions themselves. Int’l Code
Council, Inc. v. UpCodes Inc., 43 F.4th 46, 54 (2d Cir. 2022).

of the Agreement, (1) bring, in writing, the Agreement and its
terms to the attention of the Danish prosecutor (“SØIK”); and (2)
represent, in writing, (a) that the Agreement reflects the Covered
Parties’ good-faith negotiation, (b) their cooperation may result
in SKAT’s recovery of additional funds, and (c) the Agreement is
in SKAT’s best interests.

In April 2021, SØIK instituted criminal

proceedings against the movants that presently remain pending.
In March 2023, Stein and Lhote (but not McGee) filed the
instant action against SKAT, 2 which alleges only one claim of
breach of the Settlement Agreement: that SKAT failed to comply
with the specific requirements of Section 8(f) of the Settlement
Agreement. 3

See ECF No. 11 (“Compl.”) at ¶¶ 61-65.

Despite the

limited nature of this claim, movants have made more than thirty
document requests. 4

Broadly speaking, these discovery requests

far exceed, in scope and substance, temporally and otherwise,
plaintiffs’ pled claim.

Indeed, the breadth of their requests

calls to mind case law that states that “[d]iscovery is not a
fishing expedition for Plaintiffs to obtain information to try and

Thus, any reference to “plaintiffs” only includes Stein and Lhote because
McGee is only a third-party defendant to the counterclaims asserted by SKAT.
3 Plaintiffs also seek a declaratory judgment stating that the affidavit of
confessions of judgment are invalid and unenforceable, but that claim is not
the subject of any discovery requests or disputes and is thus irrelevant
here.
4 Document production had not begun at the time that movants filed the instant
motions because the parties had not yet agreed on a protective order.
2

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create claims that do not already exist.”

Toussaint v. Interfaith

Med. Ctr., 21 Civ. 1100 (ARR)(JRC), 2022 WL 118722, at *8 n.10
(E.D.N.Y. Jan. 12, 2022).
Moreover, movants’ expansive discovery requests are premised
on a fundamental misunderstanding of what Section 8(f) of the
Settlement Agreement requires of SKAT.

Specifically, movants

claim that the “main purpose of Section 8(f) was to positively
influence SØIK in its investigation of [movants] and to possibly
forestall any criminal investigation.”
squarely rejects this contention.

ECF No. 74 at 2.

The Court

In no way does Section 8(f)

require SKAT to advocate for the non-prosecution of movants.
fact,

movants

chose

to

continue

negotiating

the

In

Settlement

Agreement even after SKAT expressly refused to include any nonprosecution guarantee in the Agreement.
Moreover,

the

Agreement

makes

clear

See Compl. at ¶ 34.

that

SKAT

may

respond

truthfully to any inquiries made as part of an investigation by
SØIK or any other governmental body.
§ 9(c).

Indeed,

taking

movants’

See Settlement Agreement
position

to

its

logical

conclusion, movants are suggesting that SKAT, in exchange for a
hoped-for

payment

of

a

sum

of

money,

agreed

to

forfeit

its

fundamental loyalty to the citizens of Denmark and become the
advocate

for

specifically)

movants
out

of

who

had

billions

defrauded
of

-3-

Danish

Denmark
Kroner.

(and

SKAT

Therefore,

whatever subjective expectations movants may have about SKAT’s
obligations under Section 8(f) of the Settlement Agreement, the
plain language of Section 8(f) is clear: SKAT has two precise
obligations

and

neither

movants’ behalf.

entails

any

sort

of

advocacy

on

the

With this context in mind, the Court addresses

each of movants’ requests in turn in the chart below.

Issue
Time Period of SKAT’s
Document Production
(Letter 1, Issue A)

Ruling
SKAT’s offer to produce all relevant documents
from between March 2019 to June 2021 is
reasonable given that this time period
meaningfully encompasses the sole claim of
breach alleged in plaintiffs’ complaint.

Communications
Concerning the
Settlement Agreement
(Letter 1, Issue B)

Movants’ request for communications with
certain governmental entities in addition to
SØIK concerning the Settlement Agreement is
denied because such communications, should
they exist, have no bearing on the sole claim
raised in plaintiffs’ complaint. Furthermore,
movants’ reliance on the confidentiality and
non-disparagement provisions of the Settlement
Agreement is plainly misplaced.

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Documents from Other
Litigations (Letter
1, Issue C)

Plaintiffs’ requests for documents from other
cases brought by SKAT or from other cases in
which SKAT is a party are denied because such
documents have no relevance to the sole claim
raised in plaintiffs’ complaint. Moreover,
these requests appear to be an improper
backdoor effort to obtain discovery that
movants could not independently obtain in
those other proceedings.

SKAT’s Communications
with SØIK Concerning
the Settlement
Agreement (Letter 2,
Issue A)

SKAT’s offer to produce documents related to
Section 8(f) is entirely reasonable in light
of the sole claim in plaintiffs’ complaint.
To the extent there remains confusion around
the meaning of the phrase “related to,” the
Court directs the parties to Rule 26.3(c)(7)
of the District’s Local Rules, which supplies
a definition of the nearly identical term of
“concerning.” To be clear, the Court does not
intend to foreclose disclosure of any
communications initiated by SKAT which would
reasonably be understood to undermine its
obligations under Section 8(f).

Communications with
SØIK Concerning
Proceedings Against
Movants (Letter 2,
Issue B)

This request far exceeds the scope of the
claimed breach and is denied on that basis
alone. Moreover, the Settlement Agreement
expressly permits SKAT to respond truthfully
to inquiries from SØIK relating to its
criminal investigation of movants. Settlement
Agreement § 9(c). In addition, since movants
are criminal defendants in proceedings
commenced by SØIK, movants may not use this
case to obtain discovery for use in the
criminal case which may not be available to
them in that proceeding.

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Communications
Concerning Section
2(c) of the
Settlement Agreement
(Letter 2, Issue C)

Plaintiffs’ request for communications between
SKAT and the Covered Parties concerning
Section 2(c) of the Settlement Agreement is
denied. Setting aside that any such
communications should already be in
plaintiffs’ custody and control, these
communications are plainly outside the
pleadings and thus irrelevant to the sole
claim raised in their complaint. In addition
to their irrelevance, there has been no
showing that the provision is ambiguous such
as to justify an exploration of the intent of
the parties.

Communications and
Information Regarding
Individuals with
Knowledge of the
Settlement Agreement
(Letter 3, Issue A)

SKAT has already identified the names of two
individuals with knowledge of the Settlement
Agreement and has represented that it will
produce documents with additional names. This
would appear to be sufficient. However, if
this information plus the additional
information that will be revealed by the
document production is ultimately
insufficient, this issue can be raised again
if the parties are unable to resolve their
disagreement.

SKAT’s Communications
with the Press
(Letter 3, Issue B)

Plaintiffs’ requests for documents and
information concerning SKAT’s communications
with the press are denied because any such
communications are irrelevant to the sole
claim before us.

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For the foregoing reasons, and except as noted, movants’
discovery motions are denied.

The Clerk of Court is respectfully

directed to terminate the motions pending at ECF Nos. 73, 74, and
75.

SO ORDERED.
Dated:

New York, New York
February 1, 2024

____________________________
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE

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