ITOCHU INTERNATIONAL INC. v. DEVON ROBOTICS, LLC et al

Filing 274

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE J. CURTIS JOYNER ON 10/8/2014. 10/9/2014 ENTERED AND COPIES MAILED, E-MAILED.(kp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
ITOCHU INTERNATIONAL, INC.,

:
:
Plaintiff, :
:
v.
:
:
DEVON ROBOTICS, LLC, ET. AL.,
:
:
Defendants. :

CIVIL ACTION
No. 09-cv-4123
CONSOLIDATED WITH
No. 09-cv-1819

MEMORANDUM
JOYNER, J.

OCTOBER 8, 2014

Before the Court are Defendants Devon Robotics, LLC, Devon
Health Services, and John A. Bennett, M.D.’s (“Devon”) Motion to
Quash the Subpoenas Issued by ITOCHU International, Inc. (Doc. No.
268), and ITOCHU’s Opposition thereto (Doc. No. 271).

For the

reasons below, the Motion to Quash is DENIED. An Order follows.
I. BACKGROUND
The facts of this dispute are well known to the parties and it
is unnecessary to outline them extensively here. It suffices to say
that despite its apparent efforts, ITOCHU has been largely unable
to satisfy the judgment it obtained against Devon last year.

In

aid of these efforts, ITOCHU has issued subpoenas to nine banks
seeking information about accounts allegedly owned by Devon and
related parties. At present, the banks have raised no objections to
the subpoenas. In the instant Motion however, Devon asks this Court
to quash or modify the subpoenas because it claims they (1)
improperly seek records relating to Nance DiRocco, (2) improperly
1

seek

records

relating

to

retirement

assets

not

subject

to

execution, and (3) are unnecessarily excessive and duplicative.
II. STANDARD OF REVIEW
As a general matter, district courts are given “significant
discretion when resolving discovery disputes.” First Sealord Sur.
v. Durkin & Devries Ins. Agency

918 F. Supp. 2d 362, 382 (E.D. Pa.

2013); Wisniewski v. Johns-Manville Corp., 812 F.2d 81, 90 (3d Cir.
1987) (“The conduct of discovery is a matter for the discretion of
the district court and its decisions will be disturbed only upon a
showing of an abuse of this discretion.”).
The scope of discovery in civil suits is controlled by Federal
Rule of Civil Procedure 26, which states that “[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). Generally,
the scope of discovery is very broad, though it “is not unlimited
and may be circumscribed.” Bayer AG v. Betachem, Inc., 173 F.3d
188, 191 (3d Cir. 1999). Among other things, discovery can be
limited “for good cause to protect a person from embarrassment,
oppression, or harassment.” Caisson Corp. v. Cnty. W. Bldg. Corp.,
62

F.R.D.

331,

333

(E.D.

Pa.

1974);

see

Fed.

R.

Civ.

P.

26(b)(2)(C).
Discovery in aid of execution is similarly broad, and is
controlled by Rule 69. In relevant part, that rule states that
“[i]n aid of the judgment or execution, the judgment creditor ...

2

may

obtain

discovery

from

any

person—including

the

judgment

debtor—as provided in these rules or by the procedure of the state
where the court is located.” Fed. R. Civ. P. 69(a)(2). This rule
allows the “judgment creditor ... freedom to make a broad inquiry
to discover hidden or concealed assets of the judgment debtor.”
Caisson, 62 F.R.D. at 334. As with general civil discovery, this is
not

unlimited,

and

“must

be

kept

pertinent

to

the

goal

of

discovering concealed assets of the judgment debtor and not be
allowed to become a means of harassment of the debtor or third
persons.” Id.
Rule 45 provides the specific rules for discovery directed at
nonparties. Relevant here is subsection (d)(3), which requires the
court to quash or modify a subpoena “if it requires disclosure of
privileged or other protected matter, if it risks unfair prejudice
to persons who are the subject of a subpoena's commands, or
subjects a party to an undue burden.” First Sealord, 918 F. Supp.
2d at 382 (internal quotation marks and citations omitted); Fed. R.
Civ. P. 45(d)(3)(A). Additionally, the rule allows a court to quash
or modify a subpoena that requires disclosure of confidential
business information or an unretained expert’s opinion. Fed. R.
Civ. P. 45(d)(3)(B).
As with all discovery, the subpoenaing party “bears the
initial

burden

of

demonstrating

the

requested

discovery

is

relevant,” as defined by Rule 26. First Sealord, 918 F. Supp. 2d at

3

382. If relevance is shown or apparent, the burden then shifts to
the challenging party to either contest relevancy or show that the
information sought falls within subsection (d)(3) of Rule 45. See
Id. at 383; In re Domestic Drywall Antitrust Litig., 300 F.R.D.
234, 239 (E.D. Pa. 2014); Fed. R. Civ. P. 45(d)(3). This latter
burden is “‘particularly heavy to support a motion to quash as
contrasted to some more limited protection’ such as a protective
order.”

First Sealord, 918 F. Supp. 2d at 383 (quoting Pepsi-Cola

Metro. Bottling Co. v. Ins. Co. of N. Am., CIV 10-MC-222, 2011 WL
239655, at *3 (E.D. Pa. Jan. 25, 2011)). When assessing the
parties’ respective positions, the court is required to “balance
several

competing

factors:

‘(1)

relevance,

(2)

need,

(3)

confidentiality, and (4) harm.’” Id. (quoting Mannington Mills,
Inc. v. Armstrong World Indus., Inc., 206 F.R.D. 525, 529 (D. Del.
2002)).
III. ANALYSIS
A. Standing
As a threshold matter, Devon cannot challenge the subpoenas
unless it has standing to do so. “Generally, ‘a party does not have
standing to quash a subpoena served on a third party.’” Id. at 382
(quoting Thomas v. Marina Assocs., 202 F.R.D. 433, 434 (E.D. Pa.
2001)). “An exception to this rule permits a party to move to quash
when it ‘claims some personal right or privilege in respect to the
subject matter of a subpoena duces tecum directed to a nonparty.’”

4

Id. (quoting Davis v. Gen. Accident Ins. Co. of Am., No. 98-4736,
1999 WL 228944, at *2 (E.D. Pa. April 15, 1999)).
In similar factual contexts, courts have generally found that
“[p]ersonal rights claimed with respect to bank account records
give a party sufficient standing to challenge third-party subpoenas
served upon financial institutions holding such information.” Ace
Hardware Corp. v. Celebration Ace Hardware, LLC, No. 09-cv-66, 2009
WL 2753197, at *1 (D. Del. Aug. 28, 2009); see also Catskill Dev.,
LLC v. Park Place Entm't Corp., 206 F.R.D. 78, 92-93 (S.D.N.Y.
2002)(finding that defendant had standing to challenge subpoena of
its financial records directed at nonparty bank). Because the
subpoenas request personal financial information of the judgment
debtors, Devon has standing to challenge them.
B. Nance DiRocco
ITOCHU’s

subpoenas

ask

for,

among

other

things,

records

relating to accounts held by Dr. Bennett’s wife, Nance DiRocco. We
understand Devon’s objections to these requests to be twofold.
Primarily, Devon argues that the subpoena requests violate this
Court’s March

18,

2014

Order

which

ordered

Devon

to

produce

documents “related to all assets, monies, and property held by Dr.
Bennett, or by Dr. Bennett and Nance DiRocco as tenants by the
entirety.” Doc. No. 247 at 2. This objection is unavailing. Though
Devon appears to believe that the Order limited discovery and
production to only those entirety estates, that interpretation

5

belies the plain text. The Order simply commanded Devon to produce
documents

relating

to

those

estates,

it

said

nothing

about

discovery into Ms. DiRocco’s other assets.
Additionally — though the Motion does not make this entirely
clear — Devon appears to object to the relevancy of these requests
based on the fact that Ms. DiRocco is not a judgment debtor in this
action. Doc. No. 268 at 2, 5. However, the law is clear that
discovery into the assets of a nonparty is “permitted where the
relationship between the judgment debtor and the nonparty is
sufficient to raise a reasonable doubt about the bona fides of the
transfer of assets.” Strick Corp. v. Thai Teak Prods. Co., 493 F.
Supp. 1210, 1218 (E.D. Pa. 1980). The relationship between Dr.
Bennett and Ms. DiRocco is clearly sufficient to raise such doubts.
See, e.g., Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Van
Waeyenberghe, 148 F.R.D. 256, 257 (N.D. Ind. 1993) (“[I]t should be
beyond question that a judgment creditor is allowed to ask a
judgment debtor for asset and financial information relating to the
debtor's spouse or other family members.”); Andrews v. Raphaelson,
5:09-CV-077-JBC, 2009 WL 1211136, at *3 (E.D. Ky. Apr. 30, 2009)
(“Such information is relevant as it may lead to the discovery of
marital assets out of which the judgment may be recovered, or to
money or property that may have been transferred to the spouse to
evade creditors.”).
Additionally, there is no evidence here that ITOCHU’s requests

6

are being used as “a means of harassment” of Devon, Ms. DiRocco, or
the subpoenaed parties. See Caisson, 62 F.R.D. at 334. Rather,
ITOCHU has raised legitimate concerns about the propriety of asset
transfers from Devon to Ms. DiRocco. See Doc. No. 271 at 9-10.
Discovery into her assets is thus plainly relevant to its execution
efforts and does not run afoul of this Court’s rulings or the
federal rules.
C. Retirement Accounts
In

a

modification

similar
of

the

relevance

argument,

subpoenas

on

the

Devon
ground

also
that

requests
they

seek

information about retirement accounts, which it claims are exempt
from Execution. Doc. No. 268 at 5-6. This argument also falls
short. While it may ultimately be the case that these assets are
not subject to execution, that does not mean that information about
them is protected from discovery. See 12 Charles Alan Wright &
Arthur R. Miller, Federal Practice and Procedure § 3014 (2d ed.
2014) (“The judgment creditor is allowed discovery to find out
about assets on which execution can issue or about assets that have
been fraudulently transferred or are otherwise beyond the reach of
execution.”) (emphasis added); Caisson, 62 F.R.D. at 334 (“All
agree that the judgment creditor must be given the freedom to make
a broad inquiry to discover hidden or concealed assets of the
judgment debtor.”). As is the case with Ms. DiRocco’s accounts,
ITOCHU has questioned whether asset transfers into these allegedly7

protected retirement accounts were proper. We will allow ITOCHU to
examine whether this is in fact true. The question of whether
ITOCHU can execute on the accounts is reserved for another day.
D. Duplicative or Excessive Requests
Devon also requests that the subpoenas be quashed or modified
because it claims they seek “excessive information unlikely to
yield discovery in aid of execution.” Doc. No. 268 at 6. Devon
argues

that

since

it

has

already

provided

ITOCHU

with

bank

statements and other financial records, the requests to the nine
banks are only useful to “conduct an audit” of those records. Id.
at 6. But of course this is exactly what ITOCHU is attempting to
do. While Devon claims that it does not have the funds to satisfy
the judgment, ITOCHU argues that Devon has not provided a complete
picture of its finances and is trying to hide its assets through an
intricate system of asset transfers. See Doc. No. 271 at 2-3. In an
attempt

to

untangle

this

web,

ITOCHU

has

hired

a

forensic

accountant and subpoenaed records from a variety of parties. Id.
Discovery of Devon’s bank accounts and financial records is plainly
relevant to these efforts, and is a proper form of post-judgment
discovery. See generally 12 Wright & Miller § 3014 (“The scope of
[post-judgment] examination is very broad, as it must be if the
procedure is to be of any value.”).
Devon also claims that the subpoenas seek information and
documents that have already been provided to ITOCHU. Doc. No. 268

8

at 6-7. Devon supports this argument merely by pointing to the
volume of documents it has already produced. Id. at 3, 7. But while
the subpoenas are of course likely to yield some duplicative
documents, they also seem likely to produce new information as
well. ITOCHU

has

adequately alleged

—

with

support

from its

forensic accountant and discovery counsel — that Devon’s prior
productions were not comprehensive. Doc. No. 271 at 6-7 & Exs. A,
B. If Devon is unwilling to produce sufficient documentation,
ITOCHU has the right to discover and examine Devon’s assets through
subpoenas to third parties.
E. Costs
Finally, Devon requests that if the subpoenas are not modified
or

quashed,

ITOCHU

should

be

required

to

bear

the

costs

of

discovery. Doc. No. 268 at 6. Devon claims that “the cost of
analyzing the subpoenaed documents in attorneys fees and expert
fees is likely to be very high, and it would not be fair to shift
the cost of the proposed discovery to Devon, when the cost is out
of proportion to any conceivable benefit.” Id.

As Devon itself

will incur no costs in the production or review of these documents,
we presume that Devon is referring here to the costs ITOCHU will
incur analyzing the documents, which it will likely seek to recover
from Devon at a later date.
Devon’s request is premature. The question of whether ITOCHU
will be permitted to recoup these costs from Devon has not yet been

9

presented to this Court, and we see no reason why it needs to be
decided at this time.
IV. CONCLUSION
For the foregoing reasons, Devon’s Motion to Quash is DENIED.

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