National Credit Union Administration Board v. Basconi et al
Order: Defendants are to produce to plaintiff all of the items/documents outlined in this order; defendants shall complete the production required by this order by 3/17/17, to afford plaintiff an opportunity to review the production prior to the close of the discovery period on 3/31/17 (Related documents 83 and 84 ). Signed by Magistrate Judge George J. Limbert on 2/27/17. (S,AA)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
NATIONAL CREDIT UNION
ADMINISTRATION BOARD, acting in its
capacity as Liquidating Agent for G.I.C.
Federal Credit Union,
LYNN A. BASCONI, et al.,
CASE NO.: 5:16CV455
JUDGE SARA LIOI
Magistrate Judge George J. Limbert
This matter was referred to the undersigned for resolution of discovery-related issues that
have developed in this case. ECF Dkt. #84. Pursuant to the Order issued by the undersigned on
January 20, 2017, Defendants Ciuni & Panichi, Inc. (“C&P”), Lynn A. Basconi, Robert J. Smolko,
and Charles Ciuni (collectively, the “Defendants”), and Plaintiff National Credit Union
Administration Board (“Plaintiff”), acting in its capacity as liquidating agent for G.I.C. Federal
Credit Union (“GIC”), filed simultaneous briefs on February 3, 2017. ECF Dkt. #85, #90, #91. On
February 10, 2017, the Defendants and Plaintiff both submitted responses to the opposition’s brief.
ECF Dkt. #92, #94. A hearing was held before the undersigned on February 17, 2017, with Plaintiff
represented by Samuel J. Lauricia III and Walter A. Scott Lucas, and the Defendants represented
by Amanda M. Gatti and Jason D. Winter.
Plaintiff and Defendants have raised numerous discovery-related issues in the briefs and the
responses thereto. The undersigned is inclined to first address the discovery issues raised by
Plaintiff, followed by a discussion of the discovery issues raised by the Defendants. A summary will
be provided at the end of this Order.
DISCOVERY-RELATED ISSUES PRESENTED BY PLAINTIFF
Plaintiff alleges that the Defendants’ discovery responses are deficient for the failure to:
Respond to Plaintiff’s request for identification of other federally-insured credit
unions the Defendants audited;1
Identify the Defendants’ work papers for the years 2006, 2007, and 2008;
Provide internal audit manuals, and personnel files (including communications
relating to Defendant Basconi’s termination of employment) for personnel that
worked on the [GIC] audits; and
Provide search terms for electronically stored information (“ESI”).
ECF Dkt. #91 at 3. In the brief, Plaintiff also responds to the Defendants’ discovery-related issues;
however, this discussion is more properly addressed below in Section II of this Order. See ECF Dkt.
#91 at 11-14.
Additionally, in the response to the Defendants’ brief, Plaintiff raises an additional discovery
dispute. ECF Dkt. #94 at 8. As for the substance of the additional discovery dispute, a letter, dated
February 9, 2017, that was exchanged with opposing counsel is cited by Plaintiff as containing the
basis for the dispute. Id. In the letter to opposing counsel, Plaintiff states:
We regretfully must address an issue that became apparent after we had an
opportunity to review [GIC’s] [ESI]. Specifically, it became apparent that your
clients’ responses to discovery requests were deficient and incomplete, at best, after
comparing same to GIC’s ESI. Your clients’ apparent selective production of emails
and work papers has unduly prejudiced [Plaintiff’s] ability to effectively prosecute its
Plaintiff’s brief regarding the instant discovery dispute indicates that Plaintiff is seeking information
regarding audit services performed on behalf of other credit unions. ECF Dkt. #91 at 5-6. At the hearing,
Plaintiff made clear that it was only seeking information regarding other federally-insured credit unions.
ECF Dkt. #94-1 at 1. The letter further states the grounds for Plaintiff’s concerns. See id.
Continuing, Plaintiff indicates that the Defendants provided in excess of 8,000 pages of
documents with no visible demarcation within the documents to determine to what years the
documents pertain or to allow proper classification of the documents. ECF Dkt. #91 at 4. Plaintiff
states that since Defendant C&P was GIC’s auditor for over twenty consecutive years, it is important
to identify which of the thousands of documents relate to the specific years at issue and to determine
the work papers for each year at issue. Id. For these same reasons, Plaintiff asserts that it is
important to obtain marketing materials, and “determine relevant experience and deviations of work
conducted to address justiciable issues in this case.” Id. The undersigned will address each
discovery-related issue in turn.
Identification and Documentation of Other Federally-Insured Credit Unions
Audited by Defendant C&P
Plaintiff first asserts that it is seeking information regarding audit services performed by
Defendant C&P on behalf of other federally-insured credit unions.2 ECF Dkt. #91 at 5. Similarly,
Plaintiff seeks the identity of credit unions for which Defendant Baconi and Defendant Smolko
provided professional services. Id. At the hearing, Plaintiff indicated that it was requesting a list
of all federally-insured credit unions audited by Defendant C&P as well as any audit reports and
work papers prepared for these credit unions.3 Further, Plaintiff stated at the hearing that it was
See n. 1, supra.
At the hearing, Plaintiff did not address why it separately sought the identity of the credit unions for
which Defendant Bosconi and Defendant Smolko provided professional services. Presumably, this issue was
not addressed because these credit unions would be encompassed in the request for a list of all credit unions
to which C&P provided professional services. In any event, it was made clear at the hearing that Plaintiff was
only seeking information regarding other federally-insured credit unions.
seeking these documents for the time period of 2005 to 2010, although Plaintiff later stated that it
was “willing to modify and concede to limit the years from not going back to 2000.”
Continuing, Plaintiff claims that the Defendants’ objection on the basis of relevancy and
privilege was improper because the objection was not stated with specificity. ECF Dkt. #91 at 5.
Plaintiff asserts that the requested information is relevant, especially since a document in the
Defendants’ work papers with the year 2010 noted thereon was titled “Illustrative Financial
Statements for a Credit Union.” Id. According to Plaintiff, since the allegations in the Complaint
relate to years prior to 2010, the extent of the Defendants’ experience is relevant and that by the year
2010 the Defendants “would not require illustrative financial statements for a credit union.” Id. at
5-6. At the hearing, Plaintiff added that Defendant C&P claimed to be experts in advising federallyinsured credit unions when addressing the relevancy of information related to how Defendant C&P
treated the accounts of other federally-insured credit unions, and that Plaintiff had narrowly drawn
The Defendants contend that the information pertaining to other credit unions is irrelevant
and confidential. ECF Dkt. #92 at 3. Continuing, the Defendants assert that Plaintiff’s request seeks
documents that may not bear any similarity to the subject matter in this case. Id. at 5. The
Defendants discuss two cases in support of their position. First, the Defendants cite In re One
Bancorp Securities Litigation, 134 F.R.D. 4, 11 (D. Me. Feb. 14, 1991), a case in which the court
denied as overly broad the plaintiff’s request for documents from a defendant with respect to “clients
that are in the same or similar businesses as One Bancorp.” While the discovery request made in
In re One Bancorp Securities Litigation was broader than Plaintiff’s discovery request insofar as it
sought information relating to “similar businesses” and Plaintiff seeks information relating only to
other federally-insured credit unions, the requests are similar in nature.
In the second case discussed by the Defendants, Amcast Industrial Corp. v. Detrex Corp.,
138 F.R.D. 115 (N.D. Ind. July 15, 1991), the plaintiff sought all writings relating to or describing
any clean-ups, removal actions, remedial actions, remedial investigations, or feasability studies in
which the defendant had participated or been involved. Despite recognizing that this discovery
request may produce some relevant information, the Amcast court denied the plaintiff’s motion to
compel discovery relating to this request, stating that the request was unlimited as to its time frame
and was not merely a “fishing expedition,” and was instead an “effort to ‘drain the pond and collect
the fish from the bottom.’” Id. at 120-21.
While it is understood that Plaintiff’s discovery request is not as broad as the discovery
request made in Amcast, the undersigned agrees with the Defendants that Plaintiff’s discovery
request seeking the production of a list of all federally-insured credit unions audited by Defendant
C&P, as well as any audit reports and work papers prepared for those credit unions, is overly broad.
Plaintiff is seeking production of these documents for a five-year period without asserting how these
documents relate to this case beyond claiming that the documents will allow Plaintiff to determine
whether the Defendants deviated from their typical standard of care when dealing with GIC.
As detailed below, the undersigned is ordering the production of additional documents that
Plaintiff claims will allow it to determine whether the Defendants were negligent when handling
GIC’s account. While production of the requested information regarding the Defendants’ other
clients that are or were federally-insured credit unions may produce some relevant information, the
request is overly broad as Plaintiff has not indicated what information is likely to be produced that
may be useful beyond stating that it wants to use the production as a comparison. Plaintiff has
requested similar documents similar to those sought from the Defendants from all federally-insured
credit unions serviced by the Defendants. This is likely to place a significant burden on the
Defendants. Further, the undersigned is not persuaded by Plaintiff’s sole citation to the document
produced by the Defendants that was marked “2010" and titled “Illustrative Financial Statements
for a Credit Union.” See ECF Dkt. #91 at 5-6. Plaintiff appears to suggest that this document shows
that the Defendants were not as experienced as they claimed in preparing financial statements for
credit unions since they were in possession of illustrative financial statements. See id. However,
it is just as possible that the Defendants maintained illustrative financial statements to ensure that
the highest standards were maintained, rather than requiring illustrative financial statements to draw
from due to incompetence. In any event, the existence of an illustrative financial statement from
2010 does not provide justification for Plaintiff’s production request.
Work Papers from 2006, 2007, and 2008, and Audit Manuals
Plaintiff next seeks Defendant C&P’s work papers, categorized by the relevant audit years.
ECF Dkt. #91 at 6. Continuing, Plaintiff states that the applicable auditing standards generally
require an auditor to maintain sufficient documentation such that an experienced auditor that is
otherwise unconnected to the audit could review and replicate the audit procedures. Id. Plaintiff
states that compliance with this auditing standard is simply impossible if Defendant C&P maintains
its audit records in the same manner the records were produced to Plaintiff. Id. Further, Plaintiff
indicates that it has retained an expert to opine as to the Defendants’ deviation from the applicable
standards of care, and that the Defendants’ response is simply that roughly 8,000 plus pages of
documents have already been produced. Id. Plaintiff also notes that many of the pages produced
by the Defendants do not contain dates, making it impossible for Plaintiff to identify the work papers
for any particular audit year. Id.
At the hearing, Plaintiff acknowledged that the Defendants had offered to allow Plaintiff to
image the hard drive and software upon which the produced documents were stored, but expressed
concern that this would only result in the production of the same documents already produced and
leave open the question as to the audit year corresponding to each document. Plaintiff also stated
the belief that the Defendants’ audit manuals constituted work papers, and that the Defendants did
not need to worry about producing proprietary documents because a protective order exists in this
The Defendants contend that all of the work papers in custody and control of Defendant C&P
have been produced. Continuing, the Defendants state the work papers were produced “in the
normal course of business under Federal Rule 34,” and thus there is no additional discovery
obligation on behalf of the Defendants regarding the working papers.
As to the audit manuals, the Defendants rely partially on the following quote from In re
Worlds of Wonder Securities Litigation, 147 F.R.D. 214, 216 (N.D. Cal. Nov. 5, 1992):
The audit manuals do not establish the standards against which the defendant’s
conduct or the plaintiff’s audit is to be measured. That standard is established by
[Generally Accepted Auditing Standards] and [Generally Accepted Accounting
Plaintiff also states that the Defendants “accepted the engagement each year with knowledge
that all work papers were subject to production,” and that “[c]ertainly [the] Defendants were aware
of the NCUA’s Supervisory Committee Manual for Federal Credit Unions, which at Section 3.06
requires independent compensated auditors to make available and produce, among other things,
proprietary audit programs and retained reviewer notes.” No agreement was provided by Plaintiff
for review, and the cited portion of the “ NCUA’s Supervisory Committee Manual for Federal Credit
Unions” was likewise not provided, making these assertions by Plaintiff difficult to evaluate. In any
event, the undersigned is ordering that the audit manuals be produced to Plaintiff, thereby rending
this portion of Plaintiff’s argument moot.
Principles], publically disseminated standards recognized throughout the accounting
ECF Dkt. #92 at 6. Continuing, the Defendants indicate that many district courts follow the
reasoning displayed in In re Worlds of Wonder Securities Litigation and consider internal audit
manuals to be confidential, proprietary, irrelevant, and not subject to discovery. Id. (internal
Plaintiff cites two cases in which courts held that audit manuals were
discoverable despite containing proprietary information. ECF Dkt. #92 at 7 (citing Gohler v. Wood,
162 F.R.D. 691 (D. Utah Apr. 19, 1995); Fields v. Oliver’s Stores, Inc., No. 87 Civ. 0894, 1991 WL
44845 (S.D.N.Y. Mar. 2, 1990)). The Defendants claim that Plaintiff’s reliance on these two cases
is misplaced because, unlike the instant case, the plaintiffs in those two cases alleged fraud or
reckless misconduct against the defendants in connection with the audit performed. ECF Dkt. #92
at 7. Additionally, the Defendants assert that disclosure of the audit manuals is against public policy
as it would constitute the use of professional standards, created by auditors, against those same
auditors, and that this practice would result in auditors ceasing to create higher standards for
themselves. ECF Dkt. #92 at 7. According to the Defendants, this unwillingness to set higher
standards will result in less protection for the public. Id.
Having considered the arguments presented by the parties, the undersigned orders that the
Defendants produce to Plaintiff the work papers from 2006, 2007, and 2008, categorized by relevant
audit years. Currently, many of the roughly 8,000 pages of work papers do not indicate the audit
year corresponding to the document, making these portions of the Defendants’ production largely
useless for the purposes of this case. Continuing, the Defendants cite Fed. R. Civ. P. 34 when
claiming that their production was made “in the normal course of business,” and that no further
discovery obligation exists as to these documents. The Defendants’ claim that the work papers were
produced “in the normal course of business” leads to a number of questions as to why no dates are
discernable on a number of the documents. As it stands, the Defendants prepared the work papers
in connection with their auditing responsibilities to GIC, the credit union now being liquidated by
Plaintiff, at a time during which GIC was the victim of an embezzlement scheme involving over
eight million dollars. The year in which the working papers were produced is highly relevant to this
case, and, since the Defendants now claim that their normal course of business was to create and rely
on undated work papers, the Defendants are in the best position to identify the audit year in which
these work papers were created. Additionally, placing the responsibility of identifying the audit year
of the documents produced by the Defendants on Plaintiff would be a large burden, likely requiring
an arduous series of depositions.
The undersigned further orders the Defendants to produce the requested audit manuals. An
additional passage from In re Worlds of Wonder Securities Litigation provides additional guidance
beyond the portion of that case relied upon by Plaintiff:
Both sides quote a number of unpublished cases to show that this or that magistrate
judge ordered audit manuals produced or ordered that they not be produced. What is
clear is that it is up to the court’s discretion to determine the merits of each individual
147 F.R.D. at 217. The Defendants’ assertion that the audit manuals are irrelevant is not well taken.
The audit manuals likely contain the methodology, tools, and checklists associated with the audit.
This information is relevant when evaluating the manner in which the Defendants conducted GIC’s
audits. As for the Defendants’ concern that the audit manuals contain confidential and proprietary
information, a protective order has been issued in this case. ECF Dkt. #88. Any confidential and/or
proprietary information contained in the audit manuals will be subject to this protective order. The
Defendants also raised the concern that the protective order will not protect this information from
being disclosed to any experts utilized in this case. However, this risk is typical in these types of
cases, and, if an expert does utilize any proprietary information or trade secret, the Defendants have
the option to take legal action. Likewise, the Defendants’ argument that ordering the production of
the audit manuals is against public policy is not well taken as the value of the production of the audit
manuals in this case is likely high, especially considering the fashion in which the Defendants
produced their initial discovery, which provided less than complete information regarding Defendant
C&P’s audit practices as they pertained to GIC.
For these reasons, the undersigned orders the Defendants to produce to Plaintiff the 2006,
2007, and 2008 work papers, categorized by relevant audit years. Further, the Defendants are
ordered to produce the requested audit manuals to Plaintiff.
Personnel Files and Billing Records
Plaintiff seeks personnel files and related documents for all employees of Defendant C&P
that worked on the GIC audits. ECF Dkt. #91 at 8. According to Plaintiff, the Defendants
improperly reduced the scope of the discovery request to apply only to Defendant Basconi, as if she
was the only employee that worked on the GIC audits, when, in fact, at least four additional
individuals also worked on the GIC audits. Id. at 8-9. Plaintiff also indicates that it seeks additional
information regarding Defendant Basconi’s termination or resignation from C&P. Id. at 9. At the
hearing, Plaintiff indicated that the Defendants have agreed to produce supplemental information
to satisfy the request regarding Defendant Basconi’s termination or resignation.5
At the hearing, Plaintiff also indicated that the Defendants have agreed to produce the requested
marketing materials. See ECF Dkt. #91 at 3, n.2.
The Defendants contend that the personnel files are irrelevant and that ordering the
production of said files is against public policy. ECF Dkt. #92 at 7-8. Specifically, the Defendants
assert that production of the personnel files is against public policy because production would
discourage employers from making candid critiques of employees due to the fear of having those
critiques exposed and used against the employer in litigation. Id. The Defendants’ arguments are
not well taken. The personnel files requested by Plaintiff are not irrelevant, as they likely contain
relevant information on the employees of Defendant C&P who were responsible for providing
auditing services to GIC during the period in which GIC was subjected to an embezzlement scheme
ultimately resulting in a loss of over eight million dollars. Further, production of the requested
personnel files is not against public policy as there is a protective order in place in this case, and
personnel files are already routinely disclosed in litigation.6 Accordingly, the Defendants are
ordered to produce the personnel files for all employees of C&P that worked on GIC’s audits.
Plaintiff also requests time sheets and invoices, at times referred to collectively as “billing
records” during the hearing, from 2009 to 2012. ECF Dkt. #91 at 7. At the hearing, Plaintiff
indicated that the Defendants had produced time sheets with a number of the pages redacted, and
that no invoices had been produced. The Defendants contend that time sheets have already been
produced. ECF Dkt. #92 at 2-3. The parties appear to be in agreement that the relevant time sheets
were produced, however, Plaintiff takes issue with the redactions. The Defendants have not
explained why portions of the time sheets were redacted, or how the redacted portions of the time
The parties cite case law supporting their respective positions as to whether personnel files are
discoverable. ECF Dkt. #91 at 8; ECF Dkt. #92 at 8. None of the case law cited is binding on this Court.
sheets constitute privileged information. See id. at 2-3. Additionally, the Defendants make no
mention of invoices in their brief, and did not speak to the issue at the hearing.
The Defendants do not dispute that the time sheets and invoices are discoverable, and do not
provide an explanation for redacting portions of the time sheets. The undersigned finds that the time
sheets and invoices from 2009 to 2012 are relevant as claims made by Plaintiff against the
Defendants extend into these years. Accordingly, the Defendants are ordered to produce the time
sheets without redactions for the years 2009 to 2012. For these same reasons, the undersigned
orders that the Defendants produce invoices for the years 2009 to 2012.
Plaintiff also requests that the Defendants identify the search terms used when the
Defendants reviewed their ESI.7 ECF Dkt. #91 at 10. The Defendants contend that search terms
were not utilized when compiling their ESI. ECF Dkt. #92 at 3. Neither party provided further
explanation of this issue at the hearing. The undersigned will not order the Defendants to produce
search terms when they claim that no such search terms exist. However, the Defendants are ordered
to produce any search terms used when compiling and reviewing ESI as the result of this Order.
Additional Discovery Dispute
In its response brief, Plaintiff first raises the issue that there might be additional discovery
disputes, relying on a letter sent to the Defendants’ counsel as support. ECF Dkt. #94-1. Neither
the letter nor Plaintiff’s brief indicate what action Plaintiff asks the Court to take regarding the
alleged deficiencies in the Defendants’ production, and this additional discovery dispute was not
At the hearing, Plaintiff indicated that the Defendants have agreed to share the search terms related
to the review of ESI regarding Defendant Basconi’s termination or resignation.
addressed at the hearing, other than a brief mention by Plaintiff of one of the documents discussed
in the letter near the end of the hearing. The documents mentioned in the letter do not involve
Plaintiff’s request for production regarding Defendant C&P’s business dealing with other federallyinsured credit unions, and undersigned is finding in Plaintiff’s favor on all other discovery-related
issues. At this time, Plaintiff simply has not provided enough information regarding these additional
potential discovery disputes to enable the undersigned to determine whether the potential disputes
have been rendered moot or to resolve the potential disputes. That being said, the Defendants are
of course obligated to comply with the rules of discovery and produce all information in accordance
with the rules.
DISCOVERY-RELATED ISSUES PRESENTED BY THE DEFENDANTS
The discovery-related issues raised by the Defendants stem from Plaintiff’s responses to
Interrogatories and Requests for Admission (“Requests”) issued by the Defendants. Although
Plaintiff objected to numerous Interrogatories and Requests, the reason for the objections was
consistent throughout and can be illustrated by the following answer to one of the Defendants’
For each individual in Your Answer to Interrogatory No. 7, supra, list any and
all experience that [member of GIC’s supervisory committee] has in the areas
of bookkeeping, accounting, and/or auditing including the type of experience,
years of experience, and any degrees, certifications or licenses.
ANSWER: In addition to the General Objections set forth above, [Plaintiff] objects
to this Interrogatory on the grounds that it is vague, ambiguous, overly broad, and
unduly burdensome. Further, [Plaintiff] objects to this Interrogatory on the basis that
the information requested is more readily accessible and can be obtained from
individuals or third parties - including the supervisory committee members
themselves - other than [Plaintiff].
ECF Dkt. #90-2 at 5.8
The Defendants assert that “[f]or all intents and purposes, [Plaintiff] is [GIC].” ECF Dkt.
#90 at 2. Continuing, the Defendants argue that although GIC may no longer physically exist, its
rights and abilities to pursue claims against the alleged tortfeasors survive through Plaintiff. Id. The
Defendants take issue with Plaintiff’s refusal to provide substantive responses to Interrogatories and
Requests, and Plaintiff’s claim that information sought in the Interrogatories and Requests is “in the
possession of other parties or individuals,” or is “more readily accessible and can be obtained from
individuals or third parties.” Id. (internal citations omitted).
According to the Defendants, Plaintiff cannot claim that it is simply the liquidating agent and
thus it has no duty to provide information that GIC would otherwise have the obligation and/or
ability to disclose. Id. The Defendants argue that Plaintiff “may not utilize the separate identity of
the defunct corporation as a litigation sword” and evade discovery by claiming it lacks custody
and/or control of the information sought by the Defendants. Id. at 2-3. Further, the Defendants
claim that Plaintiff is “standing in the shoes” of GIC, and is thus obligated to “secure such
information from its assignor as it can” in order to respond to the Defendants’ discovery requests.
Id. at 3. The Defendants conclude their brief by claiming that Plaintiff cannot persuasively assert
that GIC still maintains some separate and independent identity in order to evade discovery, and
stating that Plaintiff must respond with any information and/or documents that would otherwise be
in possession and/or control of GIC. Id. at 6. According to the Defendants, allowing otherwise
The complete set of Interrogatories and Request to which Plaintiff has objected can be found in ECF
Dkt. #90-2 and ECF Dkt. #90-3.
“would empower agencies alike to seek out nearly every valuable case against third-party
professionals of their insureds by assignment as an end-run around discovery.” Id.
Plaintiff contends that it does not have control of the requested information or the individuals
with knowledge. ECF Dkt. #94 at 4. Specifically, Plaintiff asserts that it does not have control over
the additional requested information as it has turned over all requested documents to the Defendants,
which amounted to tens of thousands of pages. Id. at 4. Continuing, Plaintiff claims that it does not
have a special relationship to the persons with knowledge that creates a duty to conduct the
requested discovery. Id. Plaintiff states that the liquidation of GIC was not a negotiated transfer or
rights, as is the case with a business contract or voluntary assignment for payment, and that there
is no special relationship, or any relationship for that matter, between Plaintiff and GIC’s former
employees, officers, and directors, many of which are represented by separate counsel and have
potentially diverging legal interests. Id. at 4-5.
Plaintiff’s argument is meritorious. The Defendants cite a number of cases in support of their
position, however, these cases are factually distinct from the circumstances presented in the instant
case. Specifically, most of the cases cited by the Defendants present facts in which a negotiated
transfer of rights took place in the form or an assignment, a subrogation of rights, or on the basis of
a corporate parent relationship. See ECF Dkt. #90 at 3-6 (citing Brunswick Corp. v. Suzuki Motor
Co., 96 F.R.D. 684 (E.D. Wis. Nov. 30, 1983); In re Skelaxin Metaxalone Antitrust Litig., 299
F.R.D. 555 (E.D. Tenn. Jan. 30, 2014); Fireman’s Mut. Ins. Co. v. Erie-Lackawanna Railroad Co.,
35 F.R.D. 297 (N.D. Ohio June 4, 1964); Travelers Indem. Co. Of America v. Kendrick Bros.
Roofing, Inc., No. 1:10-cv-00604, 2013 WL 6681240 (D. Idaho Dec. 18, 2013); JPMorgan Chase
Bank, N.A. v. KB Home, No. 2:08-cv-1711, 2010 WL 1994787 (D. Nev. May 18, 2010); Bank of
New York v. Meridien BIAO Bank Tanzania Ltd., 171 F.R.D. 135 (S.D.N.Y. Mar. 21, 1997).9 In the
instant case, Plaintiff is acting as the liquidating agent of GIC rather than as an assignee, there has
been no subrogation of rights, and there is no corporate parent relationship.
The Defendants also cite Wallis v. Centennial Ins. Co., No. 2:08-cv-2558, 2013 WL 528472
(E.D. Cal. Feb. 11, 2013). In Wallis, the court denied the defendants’ objection to discovery
requests on the basis that the defendants had not made a reasonable inquiry to secure information
that was readily obtainable from persons and documents within their relative control and to fully
state those efforts. Id. at *4. In the instant case, Plaintiff has turned over tens of thousands of
documents in GIC’s possession, and it cannot be said that the members of GIC’s supervisory
committee are in Plaintiff’s relative control as nearly all of the supervisory committee members are
represented by independent counsel and likely have divergent legal interests.10 For this same reason,
Plaintiff does not have a special relationship with the supervisory committee members.
Accordingly, the reasoning in Wallis is not applicable to the present case.
Likewise, FDIC v. Hutchins, No. 1:11-CV-1622, 2013 WL 12109446 (N.D. Ga. Oct. 25,
2013), is not directly applicable to the instant case. In Hutchins, the court held that the fact that “the
FDIC had no pre-failure involvement with BankFirst does not, standing alone, relieve it of its
obligation to designate a responsive Rule 30(b)(6) deponent.” 2013 WL 12109446, at *3. Unlike
the FDIC in Hutchins, Plaintiff is not refusing to “create a witness,” but instead asserting that it has
no control over or a special relationship with the individuals with knowledge of the information
These cases are cited herein in the sequence in which the Defendants present each case in their brief.
See ECF Dkt. #90 at 4-5.
The Defendants have brought the members of GIC’s supervisory committee into this lawsuit as third
party defendants, and their legal representatives may be viewed on the docket. See ECF Dkt. #11.
sought by the Defendants. See ECF Dkt. #94 at 4-8. For the above stated reasons, namely, that it
cannot be said that the members of GIC’s supervisory committee are in Plaintiff’s relative control
as nearly all of the supervisory committee members are represented by independent counsel and
likely have divergent legal interests, and since Plaintiff does not have a special relationship to the
supervisory committee members for these same reasons, the instant case is factually distinct from
Plaintiff is in no better position than the Defendants to learn the facts responsive to the
Interrogatories and Requests to which Plaintiff objected, and the Defendants can obtain the
information sought from the members of GIC’s supervisory committee. See Goldstein v. FDIC, No.
ELH-11-1604, 2013 WL 8446551, *2 (D. Md. May 23, 2013) (holding that the FDIC could have
no knowledge of K Bank’s policies, procedures, relationships, or actions since the underlying events
took place prior to the date the FDIC was appointed receiver, and finding that the FDIC was in no
better position than the plaintiff to “learn such facts from the documents produced and [the plaintiff]
can obtain the information he seeks from the officers of K Bank and K Capital, who created the
documents and have knowledge of their own procedures and relationships”). To answer the
Interrogatories and Requests to which Plaintiff has objected, Plaintiff would almost certainly be
required to depose the members of the supervisory committee, and then answer the Interrogatories
and Requests with the information learned during the depositions. As Plaintiff is in no better
position than the Defendants to provide the information sought in the Interrogatories and Requests
to which Plaintiff objected, the undersigned denies the Defendants’ request to order Plaintiff to
respond to the discovery requests discussed herein.
Based on the instant Order, the Defendants are to produce to Plaintiff all of the following:
Work papers from 2006, 2007, and 2008, categorized by relevant audit years;
The audit manuals, as requested by Plaintiff;
Personnel files for all employees of Defendant C&P that worked on GIC’s audits;
Time sheets from 2009-2012 without redactions;
Invoices from 2009-2012; and
Any search terms used when compiling and reviewing ESI as the result of this Order.
The Defendants shall complete the production required by this Order by March 17, 2017, to afford
Plaintiff an opportunity to review the production prior to the close of the discovery period on March
IT IS SO ORDERED.
DATE: February 27, 2017
/s/ George J. Limbert
GEORGE J. LIMBERT
UNITED STATES MAGISTRATE JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?