Orix USA Corporation v. Armentrout
Filing
7
MEMORANDUM OPINION AND ORDER: The Court declines to transfer Movant ORIX USA Corporation's Rule 45 Motion to Compel Compliance with Subpoena [Dkt. No. 1 ] pursuant to Federal Rule of Civil Procedure 45(f). (Ordered by Magistrate Judge David L Horan on 7/21/2016) (mcrd)
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
ORIX USA CORPORATION,
Petitioner,
V.
MARC ARMENTROUT,
Respondent.
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No. 3:16-mc-63-N-BN
MEMORANDUM OPINION AND ORDER
Movant ORIX USA Corporation (“ORIX”) has filed a Rule 45 Motion to Compel
Compliance with Subpoena [Dkt. No. 1], seeking an order compelling non-party Marc
Armentrout to comply with a January 29, 2016 document subpoena issued pursuant
to Federal Rule of Civil Procedure 45 in connection with the underlying action pending
in the Texarkana Division of the United States District Court for the Eastern District
of Texas, ORIX USA Corp. v. Preston Hollow Capital, LLC, 15-CV-00170-RWS (E.D.
Tex.) (the “Underlying Action”).
United States District Judge David C. Godbey has referred this motion to the
undersigned United States magistrate judge for determination under 28 U.S.C. §
636(b). See Dkt. No. 2.
The Court then issued an Electronic Order explaining that “Federal Rule of Civil
Procedure 45(f) provides that, when the court where compliance is required did not
issue the subpoena, it may transfer a motion under Rule 45 to the issuing court if the
person subject to the subpoena consents or if the court finds exceptional circumstances”
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and requiring that “ORIX USA Corporation and Respondent Marc Armentrout must
each file a response to this order by July 18, 2016 explaining their respective views on
the propriety of transferring the Rule 45 Motion to Compel Compliance with Subpoena
1 under Rule 45(f) to the Texarkana Division of the United States District Court for the
Eastern District of Texas for resolution in connection with the” Underlying Action. Dkt.
No. 3.
ORIX and Armentrout each timely filed the required response. See Dkt. No. 5;
Dkt. No. 6.
Legal Standards and Analysis
“Federal Rule of Civil Procedure 45 ‘explicitly contemplates the use of subpoenas
in relation to non-parties’ and governs subpoenas served on a third party, such as
[Armentrout], as well as motions to quash or modify or to compel compliance with such
a subpoena.” Am. Fed’n of Musicians of the United States & Canada v. Skodam Films,
LLC, 313 F.R.D. 39, 42 (N.D. Tex. 2015) (quoting Isenberg v. Chase Bank USA, N.A.,
661 F. Supp. 2d 627, 629 (N.D. Tex. 2009)).
Under Rule 45, “[a] subpoena may command: (A) production of documents,
electronically stored information, or tangible things at a place within 100 miles of
where the person resides, is employed, or regularly transacts business in person.” FED.
R. CIV. P. 45(c)(2)(A); see also FED. R. CIV. P. 45(a)(1)(C) (“A command to produce
documents, electronically stored information, or tangible things or to permit the
inspection of premises ... may be set out in a separate subpoena.”). Rule 45(a)(1)(C)
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further provides that “[a] subpoena may specify the form or forms in which
electronically stored information is to be produced.” FED. R. CIV. P. 45(a)(1)(C).
Rule 45(d)(2)(B) requires that “[a] person commanded to produce documents or
tangible things or to permit inspection may serve on the party or attorney designated
in the subpoena a written objection to inspecting, copying, testing or sampling any or
all of the materials or to inspecting the premises – or to producing electronically stored
information in the form or forms requested” – and that “[t]he objection must be served
before the earlier of the time specified for compliance or 14 days after the subpoena is
served.” FED. R. CIV. P. 45(d)(2)(B). “‘The serving party may agree to extend the
deadline to respond to a subpoena, including the deadline to serve written objections.’”
Am. Fed’n, 313 F.R.D. at 43 (quoting Shaw Group, Inc. v. Zurich Am. Ins. Co., Civ. A.
No. 12-257-JJB-RLB, 2014 WL 1783955, at *4 (M.D. La. May 5, 2014)).
“If an objection is made, the following rules apply: (i) At any time, on notice to
the commanded person, the serving party may move the court for the district where
compliance is required for an order compelling production or inspection. (ii) These acts
may be required only as directed in the order, and the order must protect a person who
is neither a party nor a party’s officer from significant expense resulting from
compliance.” FED. R. CIV. P. 45(d)(2)(B). Timely serving written objections therefore
suspends the non-party’s obligation to comply with a subpoena commanding production
of documents, pending a court order. See FED. R. CIV. P. 45(d)(2)(B)(ii); Am. Fed’n, 313
F.R.D. at 44.
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On the other hand, “[t]he failure to serve written objections to a subpoena within
the time specified by Rule [45(d)(2)(B)] typically constitutes a waiver of such objections,
as does failing to file a timely motion to quash.” Am. Fed’n, 313 F.R.D. at 43 (internal
quotation marks omitted).
And “a non-party’s Rule 45(d)(2)(B) objections to discovery requests in a
subpoena are subject to the same prohibition on general or boiler-plate [or
unsupported] objections and requirements that the objections must be made with
specificity and that the responding party must explain and support its objections.” Id.
at 46 (citing Heller v. City of Dallas, 303 F.R.D. 466, 483 (N.D. Tex. 2004), and
adopting “the explanations in Heller of what is required to make proper objections and
how to properly respond to discovery requests”). Just as, “[a]lthough [Federal Rule of
Civil Procedure] 34 governs document discovery from a party and not a non-party, see
FED. R. CIV. P. 34(c),” “Rule 34(b)(1)’s reasonable particularity requirement should
apply with no less force to a subpoena's document requests to a non-party,” so too “a
non-party’s Rule 45(d)(2)(B) objections to those requests should be subject to the same
requirements facing a party objecting to discovery under Rule 34.” Id. at 44, 46. This
means that a non-party is subject to the requirements that an objection to a document
request must, for each item or category, state with specificity the grounds for objecting
to the request, including the reasons, and must state whether any responsive materials
are being withheld on the basis of that objection; that an objection to part of a request
must specify the part and permit inspection of the rest; that “general or so-called
boilerplate or unsupported objections are improper under Rule 45(d)(2)(B)”; and that
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the explanations in Heller v. City of Dallas, 303 F.R.D. 466 (N.D. Tex. 2014), of what
is required to make proper objections and how to properly respond to discovery
requests apply equally to non-parties subject to a Rule 45 subpoena. See id. at 46; FED.
R. CIV. P. 34(b)(2)(B)-(C).
ORIX properly filed its motion to compel in this Court, which, as required by
Rule 45(d)(2), is the court in the district where compliance with the subpoena is
required. See Dkt. No. 1-1.
Federal Rule of Civil Procedure 45(f) provides that, “[w]hen the court where
compliance is required did not issue the subpoena, it may transfer a motion under this
rule to the issuing court if the person subject to the subpoena consents or if the court
finds exceptional circumstances.” FED. R. CIV. P. 45(f). Rule 45(f) does not require that
a motion to transfer be filed, and the Court may sua sponte order transfer where
appropriate. See Parker Compound Bows, Inc. v. Hunter’s Mfg. Co. Inc., No.
5:15-MC-00064, 2015 WL 7308655 (N.D. Ohio Nov. 19, 2015).
Armentrout does not consent to transfer, and the Court therefore may only
transfer the motion to compel to the issuing court (the Eastern District of Texas) if
exceptional circumstances exist. See Dkt. No. 5; CMB Expert, LLC v. Atteberry,
3:14-mc-51-B-BN, 2014 WL 2197840, at *1 (N.D. Tex. May 27, 2014).
ORIX does not formally move to transfer but contends that, while it “is confident
that this Court is more than capable of deciding this matter given the blatant waivers
committed by Armentrout in failing to timely respond to the subpoena, the Court may
determine that the circumstances exist to support the transfer of this matter to the
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Eastern District of Texas.” Dkt. No. 6 at 2. ORIX consents to transfer to the United
States District Court for the Eastern District of Texas “and believes there is sufficient
evidence for this Court to conclude that the necessary circumstances exist to transfer
this matter if Armentrout does not also consent to a transfer.” Id.
Specifically, ORIX explains that Judge Schroeder, the presiding judge in the
Underlying Action, “is very familiar with the facts in the underlying lawsuit” and has
“held a discovery hearing which lasted several hours on June 30, 2016” and was
scheduled to conduct a hearing on additional discovery disputes on July 19, 2016. Id.
at 1. “During the June 30 hearing, Judge Schroeder ordered Preston Hollow Capital,
LLC to produce any messages and correspondence between [Armentrout] and any
employee or agent of” Preston Hollow Capital, LLC. Id. ORIX asserts that
“[t]ransferring the case to Judge Schroeder will likely maintain consistency in the
scope of discovery” and “that any additional burden on Armentrout will be minimal,
particularly since he is now employed at Preston Hollow Capital, LLC, the defendant
in the Underlying Action.” Id. at 1-2 (footnote omitted).
ORIX also notes, “[i]n the spirit of full disclosure, ... that Judge Kinkeade ruled
on a motion to quash or modify a subpoena issued from the Underlying Action served
on Deason Capital Services, LLC last week,” but ORIX “believes that the circumstances
associated with the Deason Capital motion are different than the instant matter
because Judge Schroeder has not addressed any issues directly related to Deason
Capital.” Id. at 2.
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Armentrout opposes a Rule 45(f) transfer. He notes that he and ORIX “reside in
the Dallas Division of the Northern District of Texas, the place of compliance is in the
Dallas Division, and the documents at issue in this proceeding are located or
retrievable in the Dallas Division” and asserts that, “[o]ther than the fact that [ORIX]
chose the Texarkana Division as its forum for what appear to be solely strategic
litigation reasons, neither [ORIX], [Armentrout], or the subject matter of the Rule 45
Subpoena have any connection with Texarkana or the Eastern District of Texas.” Dkt.
No. 5 at 1-2. “Furthermore, to [Armentrout’s] knowledge, there is no pending motion
or order in the Texarkana court that overlaps with the subject-matter of Petitioner’s
Motion to Compel,” and “the Rule 45 subpoena at issue in [ORIX’s] Motion is not the
subject of any pending action or order of the Texarkana court.” Id. at 2, 3. Armentrout
argues that he “entitled under the Rules to oppose [ORIX’s] Motion in his local district
and division” and that “resolving the Motion to Compel in [Armentrout’s] home district
[does not implicate] any of the concerns raised by the Advisory Committee” as to Rule
45(f) transfers where, Armentrout “is unaware of any ruling by the Texarkana court
on the issues presented in the Motion to Compel or that these issues are likely to rise
in multiple districts.” Id. at 4. According to Armentrout, “[a]t bottom, the subpoena and
Motion to Compel are the kind of unremarkable third-parties discovery motion practice
that is contemplated by the venue provision of Rule 45,” and he “is unaware of any
‘exceptional circumstance’ that would support transferring [ORIX’s] Motion pursuant
to Rule 45(f).” Id.
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As a general matter, “the proponent of transfer bears the burden of showing that
such circumstances are present.” FED. R. CIV. P. 45(f), advisory committee notes (2013
amendments). The Advisory Committee Notes provide the following guidance as to
when transfer of a subpoena-related motion is appropriate:
The prime concern should be avoiding burdens on local nonparties subject
to subpoenas, and it should not be assumed that the issuing court is in a
superior position to resolve subpoena-related motions. In some
circumstances, however, transfer may be warranted in order to avoid
disrupting the issuing court’s management of the underlying litigation,
as when the court has already ruled on issues presented by the motion or
the same issues are likely to rise in discovery in many districts. Transfer
is appropriate only if such interests outweigh the interests of the
nonparty served with the subpoena in obtaining local resolution of the
motion.
Id. “In determining whether ‘exceptional circumstances’ exist, courts consider several
factors, including the complexity, procedural posture, duration of pendency, and the
nature of the issues pending before, or already resolved by, the issuing court in the
underlying litigation.” Duck v. United States Sec. & Exch. Comm’n, No.
CV116MC00697CKK, 2016 WL 1573444, at *2 (D.D.C. Apr. 19, 2016) (internal
quotation marks omitted; citing cases).
The Court is persuaded that transfer is not appropriate here based on any
exceptional circumstances. The Court notes that Armentrout’s lack of connection to the
Eastern District of Texas is not necessarily a basis to avoid transfer of a motion
regarding a subpoena issued by that court in service of discovery in the Underlying
Action pending there. And, where Armentrout is now represented by the same counsel
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representing the defendant in the Underlying Action, he might face only a minimal
burden in litigating the motion to compel in the Eastern District of Texas.
But the Court has not been presented with particular circumstances that
suggest that transfer is needed or warranted to avoid disrupting the issuing court’s
management of the underlying litigation, such as where the same issues are likely to
rise in discovery in many districts. See CMB, 2014 WL 2197840, at *3. Under the
particular circumstances presented here, it appears that, to the extent that Judge
Schroeder has already ruled on an issue related to those presented by the motion to
compel, the Court will have the benefit of that ruling, which does not appear to be
particularly complicated or to be based on a complex factual background. And the
Court notes that another judge of this Court has already decided another subpoenarelated motion connected to the Underlying Action.
Conclusion
For the reasons explained above, the Court declines to transfer Movant ORIX
USA Corporation’s Rule 45 Motion to Compel Compliance with Subpoena [Dkt. No. 1]
pursuant to Federal Rule of Civil Procedure 45(f).
SO ORDERED.
DATED: July 21, 2016
_________________________________________
DAVID L. HORAN
UNITED STATES MAGISTRATE JUDGE
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