Xyngular v. Schneckl

Filing 334

MEMORANDUM DECISION AND ORDER granting 239 Plaintiffs Motion to Compel. Signed by Magistrate Judge Paul M. Warner on 3/30/2016. (jds)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

XYNGULAR CORPORATION, a
Delaware corporation,

Plaintiff,

MEMORANDUM DECISION AND
ORDER
Case No. 2:12-CV-00876-RJS-PMW

v.
District Judge Robert J. Shelby
MARC SCHENKEL, an individual,
Magistrate Judge Paul M. Warner
Defendant.

This matter was referred to Magistrate Judge Paul M. Warner by District Judge Robert J.
Shelby pursuant to 28 U.S.C. § 636(b)(1)(A).1

Before the court is Plaintiff Xyngular

Corporation’s (“Plaintiff”) motion to compel production of documents by Defendant and
Counter-Plaintiff Marc Schenkel (“Defendant”).2

The court has carefully reviewed the

memoranda submitted by the parties. Pursuant to civil rule 7-1(f) of the United States District
Court for the District of Utah Rules of Practice, the court elects to determine the motion on the
basis of the written memoranda and finds that oral argument would not be helpful or necessary.
See DUCivR 7-1(f).
FACTUAL BACKGROUND
Judge Shelby authorized discovery in this case regarding allegations of improper conduct,

1

Docket no. 46.

2

Docket no. 239.

including allegations that Defendant improperly obtained Plaintiff’s documents from Ian Swan,
an IT consultant and minority shareholder of Xyngular.3
Through its discovery requests, Plaintiff requested copies of all documents provided by
Plaintiff to government agencies.4 Defendant previously filed a complaint with the Federal
Bureau of Investigation (“FBI”) alleging improper and/or illegal conduct by Plaintiff. Defendant
represents that the universe of responsive documents is two emails he exchanged with the FBI.5
Defendant contends that the documents provided to the FBI are protected from disclosure by the
government informant privilege.
After Defendant failed to produce documents, Plaintiff filed a Freedom of Information
Act request with the FBI seeking Defendant’s submissions.6 The FBI responded with a form
letter stating that the FBI could not confirm or deny the existence of any such documents due to
privacy concerns.7 The FBI stated that it required authorization and consent from Defendant to
process the request.8
Plaintiff’s current motion seeks an order compelling Defendant to turn over responsive
documents in its possession and to sign the necessary authorization and consent.9 In addition,
Plaintiff requests that the court order Defendant to turn over “[a]ny communications [Defendant]

3

See docket no. 239-6.

4

Docket no. 239.

5

Docket no. 253 at iii.

6

Docket no. 239-7.

7

Docket no. 239-8.

8

Id.

9

Docket no. 239.
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has had with the FBI as they relate to his claimed activity as a whistleblower.”10 Defendant
contends that the documents sought are protected from disclosure under the government
informant privilege.11
ANALYSIS
Under rule 26(b) of the Federal Rules of Civil Procedure, “[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 district court has broad discretion over the control of discovery, and [the
Tenth Circuit] will not set aside discovery rulings absent an abuse of that discretion.” Sec. &
Exch. Comm’n v. Merrill Scott & Assocs., Ltd., 600 F.3d 1262, 1271 (10th Cir. 2010) (quotations
and citations omitted).
“What is usually referred to as the informer’s privilege is in reality the Government’s
privilege to withhold from disclosure the identity of persons who furnish information of
violations of law to officers charged with enforcement of that law.” Roviaro v. United States,
353 U.S. 53, 59, (1957) (emphasis added); see also Bernard v. Ray, 246 F. App’x 553, 555 (10th
Cir. 2007) (“The government has long had the authority to withhold the identity of informants.”
(emphasis added)); United States v. Mendoza-Salgado, 964 F.2d 993, 1000 (10th Cir. 1992)
(“[T]he government enjoys a privilege to withhold from disclosure the identity of persons who
furnish law enforcement officers with information on criminal acts.” (emphasis added)); Usery v.
Local Union 720, Laborers’ Int’l Union of N. Am., AFL-CIO, 547 F.2d 525, 527 (10th Cir. 1977)
(“The government is privileged to withhold from disclosure the identities of persons furnishing
information of law violations to law enforcement officers.” (emphasis added)); Perez v. El

10

Id.

11

Docket no. 253.
3

Tequila LLC, No. 12-CV-588-JED-PJC, 2014 WL 5341766, at *3 (N.D. Okla. Oct. 20, 2014)
(“The informer’s privilege is an evidentiary privilege permitting the Government to withhold the
names of persons who provide it with information about crimes or possible violations of the law.
(emphasis added)).
The government informant privilege is not an absolute privilege. “[W]here the disclosure
of the contents of a communication will not tend to reveal the identity of an informer, the
contents are not privileged. Likewise, once the identity of the informer has been disclosed to
those who would have cause to resent the communication, the privilege is no longer applicable.”
Rovario at 60. “[A]n informant’s identity must be revealed whenever it would be relevant and
helpful to an accused’s defense or essential to a fair determination of a cause.” United States v.
Moralez, 908 F.2d 565, 567 (10th Cir. 1990) (citing Roviaro at 60-61).
The Tenth Circuit routinely applies the Supreme Court’s Roviaro analysis in assessing
invocations of government informant privilege and has noted that “we are guided by Roviaro.”
United States v. Mathis, 357 F.3d 1200, 1208 (10th Cir. 2004). Under the plain language of
Roviaro and numerous Tenth Circuit opinions, the privilege must be invoked by a government
actor. See Roviaro, 353 U.S. at 59. Defendant cites no binding precedent that would permit a
non-governmental party to invoke the government informant privilege.
Defendant’s contention that the FBI invoked the government informant privilege here is
unfounded and unavailing.12 The FBI’s letter appears to be a routine form letter sent to anyone
inquiring about information relating to a private individual. Nothing in the letter shows any
consideration of the specific case. Moreover, the letter itself does not reference “informant” or

12

Docket no. 253 at 2.
4

“privilege.” Rather, the response states that it is part of a general policy of preventing an
“unwarranted invasion of personal privacy.” 5 U.S.C. § 552 (b)(6) and 5 U.S.C. § 552 (b)(7)(c).
Finally, the purpose of the government informant privilege is to protect the identity of the
informant. Once the identity of the informant is known, the information is no longer privileged.
In this case, Defendant and Mr. Swan are known to be the purported informants, and Defendant
provides no substantive evidence of other, unknown informants that might face retaliation should
Defendant’s exchanges with the FBI be disclosed.
CONCLUSION
Based on the foregoing, Plaintiff’s motion to compel is GRANTED. Within fourteen
days of the date of this order, Defendant is ordered to produce documents and information
responsive to requests for production nos. 1, 4, and 15 and interrogatory no. 1.
Plaintiff shall prepare for Defendant’s signature any paperwork required by the FBI for
release of the records. Defendant shall sign and return the authorization paperwork within five
days of receipt of the authorization paperwork from Plaintiff. If necessary, Defendant shall
cooperate with Plaintiff and perform any other actions reasonably necessary for Plaintiff to
obtain the records from the FBI. Nothing herein shall be deemed to require the FBI to respond
or produce documents: the FBI may, as appropriate, invoke the government informant privilege
or any other available privilege or protection.
IT IS SO ORDERED.
DATED this 30th day of March, 2016.
BY THE COURT:

PAUL M. WARNER
United States Magistrate Judge
5