Pieciak v. Crowe LLP
Filing
207
OPINION AND ORDER granting in part and denying in part 166 MOTION for Reconsideration of the Court's January 30, 2024 Order and staying the Third-Party Action as to Mr. Padda; granting in part and denying in part 188 MOTION to Compel Third-Party Defendants' Compliance with the Discovery Schedule Order; denying 188 request for attorney fees and costs. Signed by Judge Christina Reiss on 4/25/2024. (law)
U.S. DISTRICT COURT
DIS TR1ci .QF VERMONT
I
UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT
KEVIN J. GAFFNEY, in his official
Capacity as Commissioner of the Vermont
Department of Financial Regulation, solely as
Liquidator of Global Hawk Insurance
Company Risk Retention Group,
Plaintiff,
V.
CROWELLP,
Defendant/Third-Party Plaintiff,
V.
JASBIR S. THANDI, GLOBAL
CENTURY INSURANCE BROKERS, INC.,
JASPREET SINGH PADDA, and
QUANTBRIDGE CAPITAL LLC,
Third-Party Defendants.
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711zq APR 25 PH /2: 56
Case No. 2:21-cv-00273
OPINION AND ORDER GRANTING MR. PADDA'S MOTION FOR
RECONSIDERATION, DENYING QUANTBRIDGE'S MOTION FOR
RECONSIDERATION, STAYING THE THIRD-PARTY ACTION
AS TO MR. PADDA, GRANTING CROWE'S MOTION TO COMPEL
AS TO QUANTBRIDGE, DENYING CROWE'S MOTION TO COMPEL
AS TO MR. PADDA, AND DENYING CROWE'S
REQUEST FOR ATTORNEY'S FEES AND COSTS
(Docs. 166 & 188)
Third-Party Defendants Jaspreet Singh Padda ("Mr. Padda") and Quantbridge
Capital LLC ("Quantbridge") request reconsideration of the court's order denying their
motion to stay the civil action against Mr. Padda pending resolution of the related
criminal case. In the alternative, they request the court rule that no adverse inference will
result from Mr. Padda' s invocation of his Fifth Amendment privilege. Defendant/Third-
Party Plaintiff Crowe LLP ("Crowe") opposes the motion and requests the court compel
compliance with the discovery order, require immediate service of initial disclosures and
responses, and award fees and costs under Fed. R. Civ. P. 37(a)(5)(A). 1
Plaintiff is represented by Derek T. Rocha, Esq., Eric A. Smith, Esq., Jennifer
Rood, Esq., and Margaret C. Fitzgerald, Esq. Crowe is represented by Caesar A. Tabet,
Esq., Elizabeth B. Coburn, Esq., Jacob B. Berger, Esq., John M. Fitzgerald, Esq.,
Matthew B. Byrne, Esq., and Michael J. Grant, Esq. Jasbir S. Thandi ("Mr. Thandi") and
Global Century Insurance Brokers, Inc., ("GCIB"), are self-represented. Mr. Padda and
Quantbridge are represented by Hannah C. Waite, Esq.
I.
Factual and Procedural Background.
Plaintiff Kevin J. Gaffney (the "Commissioner") brings this action in his official
capacity as Commissioner of the Vermont Department of Financial Regulation
("VDFR"), solely as Liquidator of Global Hawk Insurance Company Risk Retention
Group ("Global Hawk"), a Vermont nonstock mutual insurance company, against Crowe,
an accounting firm that audited Global Hawk's financial statements in 2016, 2017, and
2018. Plaintiff asserts nine causes of action: negligence by Crowe in issuing its audit
reports in 2016 (Count I), 2017 (Count II), and 2018 (Count III); negligent
misrepresentation by Crowe to VDFR in its audit reports in 2016 (Count IV), 2017
(Count V), and 2018 (Count VI); and breach of contract by Crowe for, without due
professional care, issuing its audit reports in 2016 (Count VII), 2017 (Count VIII), and
2018 (Count IX) (the "Underlying Action").
On March 28, 2023, Crowe filed an Amended Third-Party Complaint (the
"ATPC") asserting one count of fraud against Mr. Thandi, GCIB, Mr. Padda, and
Quantbridge (the "Third-Party Action"). (Doc. 76.) The Third-Party Action "is a
contingent third-party claim by Defendant and Third-Party Plaintiff [Crowe] in the event
[it] is held liable to the [Commissioner] for any of the claims asserted in [his]
Complaint." Id. at 2, ,r 1. At times relevant to the ATPC, Quantbridge was a limited
1
Mr. Padda and Quantbridge state Plaintiff Kevin J. Gaffney "represented to [them] that [he]
takes no position on this motion." (Doc. 166 at 4.)
2
liability corporation organized and existing under the laws of New York. Since 2016, it
was controlled by Mr. Padda as its managing member, chief compliance officer, portfolio
manager, and only employee apart from "potential clerical staff[]" Id. at 4, 1 14(a).
Mr. Padda and Quantbridge filed a motion to stay discovery in the Third-Party
Action pending resolution of the Underlying Action on November 3, 2023. (Doc. 137.)
Crowe opposed the motion on November 17, 2023, (Doc. 141), and on December 1,
2023, Mr. Padda and Quantbridge filed a reply. (Doc. 142.)
On November 16, 2023, Mr. Padda, Mr. Thandi, and non-party Sandeep Sahota
("Mr. Sahota") were indicted (the "Indictment") in the Northern District of California.
United States v. Thandi, et al., No. 4:23-cr-00428 (N.D. Cal. Nov. 16, 2023), ECF Doc. 1
(the "California Criminal Case"). 2 They were each charged under 18 U.S.C. § 371 for
conspiracy to commit insurance fraud (Count 1), 18 U.S.C. 1033(a) for insurance fraud
false statements (Counts 2-3), and 18 U.S.C. § 2 for aiding and abetting. Mr. Thandi was
also charged under 18 U.S.C. § 1033(b) for insurance fraud misappropriation (Counts 45) and 18 U.S.C. 1344 for bank fraud (Counts 6-7).
On December 18, 2023, the Indictment was unsealed. Mr. Padda and Quantbridge
subsequently filed a motion to stay the Third-Party Action pending resolution of the
California Criminal Case on January 8, 2024, (Doc. 157), which Crowe opposed on
January 22, 2024. (Doc. 162.)
In seeking a stay, Mr. Padda and Quantbridge did not attach a copy of the
Indictment, although they described the charges against them in three conclusory
sentences. On January 29, 2024, the court held a hearing and issued an order denying
both motions to stay, granting a motion for extension of time to complete the depositions
of Mr. Padda and Mr. Sahota and ordering the parties to hold a Rule 26 conference by
2
The court takes judicial notice of the Northern District of California docket in United States v.
Thandi, et al., No. 4:23-cr-00428 (N.D. Cal. Nov. 16, 2023). See Fed. R. Evid. 201(b) ("The
court may judicially notice a fact that is not subject to reasonable dispute because it: (1) is
generally known within the trial court's territorial jurisdiction; or (2) can be accurately and
readily determined from sources whose accuracy cannot reasonably be questioned."); see also
Mangiafico v. Blumenthal, 471 F.3d 391, 398 (2d Cir. 2006) (explaining "docket sheets are
public records of which [a] court [can] take judicial notice").
3
February 12, 2024, as well as file a stipulated discovery schedule (the "Discovery
Schedule"). (Doc. 164.)
The parties filed the Discovery Schedule on February 9, 2024, (Doc. 165), which
the court approved on February 12, 2024. (Doc. 168.)
Mr. Padda and Quantbridge filed a motion for reconsideration of the court's denial
of their motion to stay the Third-Party Action due to Mr. Padda's criminal indictment on
February 9, 2024. (Doc. 166.) Crowe opposed the motion on February 19, 2024, (Doc.
178), and on March 4, 2024, Mr. Padda and Quantbridge replied. (Doc. 185.)
In the interim, Mr. Padda filed a Motion for Protective Order on February 12,
2024, (Doc. 169), and an Emergency Motion for Protective Order on February 19, 2024,
(Doc. 176), to reschedule his February 21, 2024 deposition. The court denied both
motions on February 21, 2024, stating: "This is not an emergency. The parties shall meet
and confer to set a mutually convenient deposition date if the court denies the pending
Motion for Reconsideration." (Doc. 182) (citation omitted).
Thereafter, on March 11, 2024, Crowe filed a motion to compel Mr. Padda and
Quantbridge to comply with the Discovery Schedule and requested the court award
Crowe fees and costs pursuant to Fed. R. Civ. P. 37(a)(5)(A). (Doc. 188.) Mr. Padda
responded in opposition on March 25, 2024. 3 (Doc. 192.) After Crowe replied on March
26, 2024, the court took the pending motions under advisement. 4 (Doc. 194.)
The Indictment contains the following factual allegations against Mr. Padda:
At a date unknown, but beginning no later than May 2018, defendants
3
Although Crowe's motion to compel is directed at Mr. Padda and Quantbridge, only Mr. Padda
responded in opposition to the motion. The court therefore considers the motion unopposed with
regard to Quantbridge.
4
The court will address Crowe's motion to compel non-party Sandeep Sahota's deposition and
transferred request to quash in a separate Order. (Docs. 183, 195.) The court does not consider
Mr. Sahota's "Notice of Joinder in Third-Party Defendants' Motion for Reconsideration[,]"
(Doc. 171), because it is not a motion, let alone a motion to intervene. See Fed. R. Civ. P. 7(b)(l)
("A request for a court order must be made by motion."); cf MasterCard Int'l Inc. v. Visa Int'l
Serv. Ass'n, Inc., 471 F.3d 377,382 (2d Cir. 2006) (explaining that Fed. R. Civ. P. 24 "explicitly
contemplates motions by non-parties[]" and "provides the mechanism by which non-parties who
believe they have a valid and sufficient interest in a litigation can assert their rights").
4
THANDI, SAHOTA, and PADDA, agreed to and did cause to be submitted
false Global Hawk financial statements to the [VDFR] through its captive
manager, Management Company 1. The purpose of these false submissions
was to cover up Global Hawk's financial situation and to allow Global
Hawk to continue to operate as a Vermont-domiciled insurance company.
These financial statements significantly and materially overstated Global
Hawk's assets and concealed the fact that Global Hawk was insolvent.
In May 2020, after Vermont regulators discovered the misappropriation and
Global Hawk's insolvency, Global Hawk was declared insolvent and was
liquidated pursuant to a Court order of a Vermont state court. Overstating
the value of the assets of Global Hawk, and the later discovery by the
Vermont regulators and others, jeopardized the safety and soundness of
Global Hawk as an insurer, and these false statements were a significant
cause of Global Hawk being liquidated.
United States v. Thandi, et al., No. 4:23-cr-00428 (N.D. Cal. Nov. 16, 2023), ECF
Doc. 1 at 11, ,r,r 16-17.
II.
Conclusions of Law and Analysis.
A.
Whether the Court Should Reconsider its Denial of a Stay of the ThirdParty Action.
"It is well-settled that a party may move for reconsideration and obtain relief only
when the [movant] identifies 'an intervening change of controlling law, the availability of
new evidence, or the need to correct a clear error or prevent manifest injustice."' Kole!
Beth Yechiel Mechil ofTartikov, Inc. v. YLL Irrevocable Tr., 729 F.3d 99, 108 (2d Cir.
2013) (quoting Virgin Atl. Airways, Ltd. v. Nat'! Mediation Bd., 956 F.2d 1245, 1255 (2d
Cir. 1992)). "[T]he standard for granting a ... motion for reconsideration is strict[.]"
Analytical Survs., Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) (alteration
adopted) (internal quotation marks omitted) (quoting Shrader v. CSX Transp., Inc., 70
F.3d 255, 257 (2d Cir. 1995)). Reconsideration "is not a vehicle for relitigating old
issues, presenting the case under new theories, securing a rehearing on the merits, or
otherwise taking a second bite at the apple[.]" Id. (internal quotation marks omitted)
(citingSequaCorp. v. GBJCorp., 156F.3d 136, 144(2dCir.1998)).
Quantbridge is a limited liability corporation, and "[c]orporations do not have a
Fifth Amendment right against self-incrimination." Louis Vuitton Malletier S.A. v. LY
5
USA, Inc., 676 F.3d 83, 92 n.5 (2d Cir. 2012). In the Second Circuit, "this rule includes
small or solely owned corporations." Id. (citation omitted); see also In re Grand Jury
Subpoena Issued June 18, 2009, 593 F.3d 155, 158 (2d Cir. 2010) (explaining that "a
one-person corporation cannot avail itself of the Fifth Amendment privilege" and "[t]here
simply is no situation in which a corporation can" do so) (alteration in original) (internal
quotation marks omitted). "If no existing employee [can] produce records without
incriminating himself [or herself] by such an act, then the corporation may be required to
produce the records by supplying an entirely new agent who has no previous connection
with the corporation that might place him [or her] in a position where his [or her]
testimonial act of production would be self-incriminating." In re Two Grand Jury
Subpoenae Duces Tecum, 769 F.2d 52, 57 (2d Cir. 1985).
Because Quantbridge lacks a Fifth Amendment right against self-incrimination,
even with Mr. Padda allegedly as one of its few employees, it lacks a factual and legal
ground for requesting reconsideration. See S.E.C. v. Ryan, 747 F. Supp. 2d 355, 364
(N.D.N.Y. 2010) ("Whether it is a one-person corporation or a limited liability company,
neither can avail itself of this Fifth Amendment protection.") (citing In re Grand Jury
Subpoena Issued June 18, 2009, 593 F.3d at 158) (second citation omitted). In any event,
it is not named in the Indictment in the California Criminal Case and has no criminal
charges pending against it. The court thus DENIES Quantbridge' s motion for
reconsideration.
In contrast, Mr. Padda has a Fifth Amendment privilege against self-incrimination.
See U.S. Const. amend. V ("No person ... shall be compelled in any criminal case to be a
witness against himsel:fl.]"). In seeking reconsideration, Mr. Padda provides the
following new information: his counsel's affidavit in support of the motion explaining
that she will advise him to invoke his Fifth Amendment rights if a stay is denied, (Doc.
166-1), and three examples from Crowe's 757 proposed written questions for his
deposition:
•
Did you alter or modify any information from Stifel' s October 31, 2018
statement for Global Hawk's Stifel account when preparing Exhibit 27?
6
•
How did you alter or modify any information from Stifel's October 31,
2018 statement for Global Hawk's Stifel account when preparing
Exhibit 27?
•
Why did you alter or modify any information[?]
(Doc. 166 at 7.)
He also provides an interrogatory Crowe served on him, which states:
Describe in detail the reasons why Quantbridge's statements for Global
Hawk's accounts at Stifel contain material misstatements as to Global
Hawk's assets maintained in the Stifel accounts, including without
limitation a description of who, if anyone, directed Quantbridge and/or
Padda to materially misstate the cash, cash equivalents, holdings, securities,
or other assets and/or liabilities maintained in or in connection with Global
Hawk's Stifel accounts, and a detailed Identification of any
Communications relating to any alleged material misstatements contained
in Quantbridge's Global Hawk investment statements.
Id.
This new evidence renders it apparent that Mr. Padda's Fifth Amendment rights
will be impaired if he is required to defend against the Third-Party Action at the same
time as the Indictment. The court therefore GRANTS Mr. Padda's motion to reconsider
and reconsiders its decision not to grant a stay.
B.
Whether the Court Should Stay the Third-Party Action as to Mr.
Padda.
"A district court may stay civil proceedings when related criminal proceedings are
imminent or pending, and it will sometimes be prudential to do so." Louis Vuitton, 676
F .3d at 98. "[C]ourts have generally been concerned about the extent to which continuing
the civil proceeding would unduly burden a defendant's exercise of his rights under the
Fifth Amendment, which provides that ' [n]o person ... shall be compelled in any
criminal case to be a witness against himselfI,]"' Id. at 97 (second and third alterations in
original) (footnote omitted) (citing U.S. Const. amend. V). In response to this concern,
granting "[a] stay can protect a civil defendant from facing the difficult choice between
being prejudiced in the civil litigation, if the defendant asserts his or her Fifth
Amendment privilege, or from being prejudiced in the criminal litigation if he or she
waives that privilege in the civil litigation." Id.
7
"The person seeking a stay bears the burden of establishing its need ... [and
a]bsent a showing of undue prejudice upon [the] defendant or interference with his [or
her] constitutional rights, there is no reason why [the] plaintiff should be delayed in its
efforts to diligently proceed to sustain its claim." Id. (citations and internal quotation
marks omitted). Indeed, "a stay of a civil case to permit conclusion of a related criminal
prosecution has been characterized as an extraordinary remedy[,]" id. at 98 (alterations
adopted) (citation and internal quotation marks omitted), as "the Constitution rarely, if
ever, requires [one]." Id. (emphasis omitted). A "court's decision ultimately requires and
must rest upon a particularized inquiry into the circumstances of, and the competing
interests in, the case." Louis Vuitton, 676 F.3d at 99 (citation and internal quotation marks
omitted).
Second Circuit courts have used a six-factor balancing test when deciding whether
to grant a stay:
1) the extent to which the issues in the criminal case overlap with those
presented in the civil case; 2) the status of the case, including whether the
defendants have been indicted; 3) the private interests of the plaintiffs in
proceeding expeditiously weighed against the prejudice to plaintiffs caused
by the delay; 4) the private interests of and burden on the defendants; 5) the
interests of the courts; and 6) the public interest.
Id. Although this test may serve as "a rough guide[,]" it is not a "mechanical device[]"
and should not "replac[e] the district court's studied judgment as to whether the civil
action should be stayed based on the particular facts before it and the extent to which
such a stay would work a hardship, inequity, or injustice to a party, the public or the
court." Id.
Mr. Padda argues that the court should stay the Third-Party Action because of its
"relative infancy[]" and undisputed overlap with the California Criminal Case. (Doc. 166
at 3.) Asserting that the court need not also stay the Underlying Action, he states that
"[e]ven if Crowe loses, the basis for the loss is likely to be that Crowe was not able to
rely on anything that Mr. Padda ... did[, which] ... might short-circuit or narrow the
issues in the Third-Party [Action]." Id. at 4. With regard to prejudice, he contends that he
8
has "little resources" and cannot testify in the Underlying Action without "revealing his
defense strategy" or invoking his Fifth Amendment privilege. Id. at 5, 7. Mr. Padda
contends he does not "pose any present risk of further violating the laws," and he asserts
the public's interest lies in preserving a criminal defendant's constitutional rights and "in
enforcement of the laws." Id. at 5-6.
Crowe counters that Mr. Padda fails to satisfy the reconsideration standard,
contending that the Third-Party Action is not in an initial stage and a loss for Crowe in
the Underlying Action would not necessarily narrow the issues in the Third-Party Action,
in light of the court's previous "holding that negligence by a plaintiff does not defeat a
fraud claim." (Doc. 178 at 5, 16.) It characterizes Mr. Padda's potential invocation of his
Fifth Amendment rights and his claimed lack of resources as inadequate and unsupported
reasons for a stay. In terms of prejudice, Crowe notes that a stay will cause duplicate
issues at trial and potentially inconsistent findings regarding whether Mr. Padda provided
truthful information to Crowe.
Both the Third-Party Action and the California Criminal Case concern Mr.
Padda's alleged fraud in the State of Vermont based on the same events at issue in the
Underlying Action. Accordingly, there is substantial, if not complete, overlap between
the two actions. The first factor therefore weighs heavily in favor of a stay.
The second factor, the status of the Third-Party Action, does as well because the
case is in an early stage, as "[n]either party has responded to discovery requests[.]" Doc.
185 at 1; cf Louis Vuitton, 676 F.3d at 104 ("In light of the length of time that the lawsuit
had progressed by the time the indictments issued, and defendants' dilatory tactics during
discovery, granting a stay posed a particular risk to [the plaintiffs] interest in the prompt
resolution of its claims."). In addition, Mr. Padda requested a stay soon after his
indictment, 5 and "[t]here is considerable authority for the principle that a stay is most
5
Cf Motorola, Inc. v. Abeckaser, 2009 WL 816343, at *3 (E.D.N.Y. Mar. 26, 2009) (finding the
status of the criminal case factor weighed against defendants when they had "waited for a year
and a half following the issuance of the indictment to move for a stay of the parallel civil
proceedings, choosing instead to make their stay motion after the close of discovery and on the
eve of summary judgment").
9
justified where a movant, like the defendant[] here, is already under indictment for a
serious criminal offense and is required at the same time to defend a civil action
involving the same subject matter." Id. at 101 (footnote omitted).
With regard to the third and fourth factors concerning prejudice to the parties,
although "[t]he [c]ourt appreciates that this stay will result in inconvenience and delay to
[Crowe, however,] under settled authority the Fifth Amendment is the more important
consideration." Volmar Distribs., Inc. v. New York Post Co., 152 F.R.D. 36, 40 (S.D.N.Y.
1993). 6 "To now allow discovery under the relatively liberal rules of civil procedure, as
opposed to the more restrictive rules and procedures governing criminal matters, poses a
danger of fundamental unfairness to Mr. [Padda] ... in the criminal case." Jenkins v.
Miller, 2015 WL 13505321, at *2 (D. Vt. Apr. 6, 2015); see Creative Consumer
Concepts, Inc. v. Kreisler, 563 F.3d 1070, 1080 (10th Cir. 2009) ("A district court may
also stay a civil proceeding in deference to a parallel criminal proceeding for other
reasons, such as to prevent either party from taking advantage of broader civil discovery
rights or to prevent the exposure of the criminal defense strategy to the prosecution.").
The Third-Party Action depends in part on the outcome of the Underlying Action.
, If Crowe is not found liable, the Third-Party Action will be moot. If Crowe is found
liable, it may pursue its claim against the Third-Party Defendants. Resolution of the
Underlying Action may therefore negate the need for unnecessary discovery relating to
the Third-Party Action. Crowe's allegations in its ATPC made this contingent
relationship clear. 7 Based on these considerations, the third and fourth factors weigh in
6
See Jenkins v. Miller, 2015 WL 13505321, at *1 (D. Vt. Apr. 6, 2015) ("[A]lthough a stay will
delay the instant case, Fifth Amendment concerns merit significant weight."); Trs. of Plumbers
& Pipefitters Nat'! Pension Fund v. Transworld Mech., Inc., 886 F. Supp. 1134, 1140 (S.D.N.Y.
1995) (explaining that the plaintiffs' "legitimate interest in the expeditious resolution of their
case" is "trumped by defendants' interests in avoiding the quandary of choosing between
waiving their Fifth Amendment rights or effectively forfeiting the civil case").
7
In the ATPC, Crowe alleges its claim is contingent upon "[whether] and to the extent Crowe is
held liable to the [Commissioner] in connection with any of the claims asserted in the
[Underlying Action] Complaint[.]" (Doc. 76 at 3, 13-14, ,r,r 14, 16.)
10
favor of Mr. Padda because the Underlying Action may proceed to a resolution without
impairing Crowe's right to pursue the Third-Party Action.
Finally, the interests of the court and the public, the fifth and sixth factors, favor a
stay or are in equipoise. "[C]ourts have an interest in seeing civil actions proceed even
where a criminal investigation is ongoing[.]" US. Commodity Futures Trading Comm 'n
v. A.S. Templeton Grp., Inc., 297 F. Supp. 2d 531, 535 (E.D.N.Y. 2003). On the other
hand, deferring resolution of this case "makes efficient use of judicial time and resources
by [e]nsuring that ... subsequent civil discovery will proceed unobstructed by concerns
regarding self-incrimination." Javier H v. Garcia-Botello, 218 F.R.D. 72, 75 (W.D.N.Y.
2003). Although the public has an interest in preventing fraud, "there is no indication that
[Mr. Padda] pose[s] any present risk of violating the [relevant] laws, and 'the public's
interest in the integrity of the criminal case is entitled to precedence over the civil
litigant."' Sec. & Exch. Comm'n v. McGinnis, 161 F. Supp. 3d 318,324 (D. Vt. 2016)
(citation omitted). On balance, "[b]ecause of the overlapping issues in the criminal and
civil cases, the criminal prosecution will serve to advance the public interests at stake
here." Trs. ofPlumbers & Pipefitters Nat 'l Pension Fund v. Transworld Mech., Inc., 886
F. Supp. 1134, 1140 (S.D.N.Y. 1995).
Collectively, the competing factors considered weigh in favor of a stay. See Sec. &
Exch. Comm'n, 161 F. Supp. 3d at 324 ("[A] stay is warranted because it would impose
only a minimal 'hardship, inequity, or injustice' on [plaintiff] and would preserve
[d]efendants' rights in any criminal action.") (citing Louis Vuitton, 676 F.3d at 99). The
court therefore STAYS the Third-Party Action as to Mr. Padda and DENIES AS MOOT
his request for adverse inference immunity.
C.
Whether the Court Should Grant Crowe's Motion to Compel
Compliance with the Discovery Schedule and Request for Attorney's
Fees and Costs.
Pursuant to Fed. R. Civ. P. 37(a)(l), "a party may move for an order compelling
disclosure or discovery. " 8 "A district court has broad latitude to determine the scope of
8
The Federal Rules require that a motion for an order compelling discovery or disclosure
11
discovery and to manage the discovery process." EM Ltd. v. Republic ofArgentina, 695
FJd 201, 207 (2d Cir. 2012), aff'd sub nom. Republic ofArgentina v. NML Cap., Ltd.,
573 U.S. 134 (2014).
In its motion, Crowe states that Mr. Padda's and Quantbridge's lack of initial
disclosures and response to discovery requests justifies compelling them to comply with
the Discovery Schedule. 9 The response, submitted only by Mr. Padda, claims that
granting the motion to compel would be contrary to the court's Order denying the request
to reschedule his deposition. See Doc. 182 ("The parties shall meet and confer to set a
mutually convenient deposition date if the court denies the pending Motion for
Reconsideration.") (citation omitted).
Crowe's motion to compel compliance with the Discovery Schedule is DENIED
AS MOOT as to Mr. Padda because the court has stayed the Third-Party Action against
him. The Third-Party Action is not stayed as to Quantbridge, Quantbridge did not oppose
the motion to compel, and the court's Order regarding Mr. Padda's deposition did not
apply to Quantbridge. Quantbridge must therefore comply with the Discovery Schedule.
See Christine Asia Co. v. Alibaba Grp. Holding Ltd., 327 F.R.D. 52, 54 (S.D.N.Y. 2018)
("Motions to compel, pursuant to Rule 37, are left to the sound discretion of the court.").
Insofar as Crowe's motion to compel pertains to Quantbridge, the motion is GRANTED.
If the court grants in part and denies in part a Rule 37 motion, it "may issue any
protective order authorized under Rule 26( c) and may, after giving an opportunity to be
heard, apportion the reasonable expenses for the motion." Fed. R. Civ. P. 37(a)(5)(C).
"include a certification that the movant has in good faith conferred or attempted to confer with
the person or party failing to make disclosure or discovery in an effort to obtain it without court
action." Fed. R. Civ. P. 37(a)(l). Crowe's motion includes March 6, 2024 emails between the
parties regarding its objection to the lack of compliance, as well as a declaration stating that the
parties performed a meet-and-confer call on March 11, 2024. See Docs. 188-1, 188-2. The court
considers this information a sufficient certification that the parties conferred in good faith.
9
Crowe claims that Mr. Padda and Quantbridge asserted that they would respond to discovery
requests within two weeks of the court's motion to reconsider decision. Pursuant to their
counsel's email, this assertion pertained only to Mr. Padda. See Doc. 188-2 at 2 ("Consistent
with the [c]ourt's February 21, 2024 Entry Order, Mr. Padda will serve his discovery responses
within [fourteen] days of a decision on the motion to reconsider (assuming it is denied).").
12
"This rule is in contrast with [Fed. R. Civ. P.] 37(a)(5)(A) and (B), which require the
award of appropriate attorneys' fees to the prevailing party." Alicea v. County of Cook,
88 F.4th 1209, 1219 (7th Cir. 2023) (emphasis in original).
"Where the parties have taken legitimate positions, and the court grants in part and
denies in part the motion, courts generally conclude that justice requires that each party
be responsible for its own fees and costs." New Mexico ex rel. Balderas v. Real Est. L.
Ctr., P.C., 405 F. Supp. 3d 1233, 1254 (D.N.M. 2019). In this case, neither party briefed
the issue of whether a corporation may assert a Fifth Amendment privilege. Although
Quantbridge did not oppose the motion to compel, it filed a contemporaneous motion to
reconsider the stay, which, if granted as to Quantbridge, would have mooted Crowe's
motion to compel.
Based on these circumstances, the court DENIES Crowe's request for an award of
attorney's fees and costs. In doing so, it warns Quantbridge that further non-compliance
will likely result in the imposition of sanctions under Fed. R. Civ. P. 3 7 and that it is
hereby compelled to file its initial disclosures and respond to Crowe's pending discovery
requests within thirty (30) days or risk a default judgment. See Guggenheim Cap., LLC v.
Birnbaum, 722 F.3d 444,450,452 (2d Cir. 2013) (explaining that "[i]f a party ... fails to
obey an order to provide or permit discovery, the district court may impose sanctions,
including rendering a default judgment against the disobedient party[,]" but "even entries
of default judgments against counseled clients require sufficient notice") (internal
quotation marks omitted) (second alteration in original) (citing Fed. R. Civ. P.
37(b)(2)(A)(vi)).
13
CONCLUSION
For the foregoing reasons, the court GRANTS Mr. Padda's motion for
reconsideration, DENIES Quantbridge's motion for reconsideration, and STAYS the
Third-Party Action as to Mr. Padda. (Doc. 166.) The court GRANTS the motion to
compel compliance with the Discovery Schedule as to Quantbridge, DENIES AS MOOT
the motion with regard to Mr. Padda, and DENIES Crowe's request for attorney's fees
and costs. (Doc. 188.)
SO ORDERED.
~
Dated at Burlington, in the District of Vermont, this 2f" day of April, 2024.
Christina Reiss, District Judge
United States District Court
14
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