Williams et al v. Big Picture Loans LLC et al

Filing 16

MEMORANDUM OPINION. Signed by District Judge Robert E. Payne on 3/16/2018. (jsmi, )

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division

LULA WILLIAMS, et al.,
on behalf of themselves and all
individuals similarly situated,
Plaintiffs,

v.

Civil Action No. 3:18-mc-1

BIG PICTURE LOANS, LLC, et al.,
Defendants.

MEMORANDUM OPINION

This matter is before the Court on MATT MARTORELLO'S NOTICE
OF MOTION AND MOTION TO QUASH PLAINTIFF'S SUBPOENAS TO ARANCA
US,

INC.

(ECF No.

1) .

For

the

reasons

set

forth

below,

the

motion will be denied.
BACKGROUND
A. Factual Background

This action-and the primary case to which it is related,
Lula Williams, et al. v. Big Picture Loans,
cv-461-revolves
("Martorello")

around
in

the

the

creation

role
of

of
a

LLC,

et al.,

Matt

lending

3:17-

Martorello

business,

Big

Picture Loans, LLC ("Big Picture"), by the Lac Vieux Desert Band

("the Tribe") . 1 Big Picture

of Lake Superior Chippewa Indians
offers

short-term,

high-interest

Before Big Picture was formed,

loans

through

Bellicose Capital

its

website.

("Bellicose"),

a company in which Martorello had a significant ownership stake,
provided

marketing,

underwriting,

another

lending

January

2016,

entity,

Tribal Acquisition Company,

after

entity
Bellicose

transferring

entity,

that
was

control

Tribe

purchased

of

LLC

related

managed

by

a

services

had

created.

by

a

Then,

separate

Bellicose

to

another
Inc.

entity

in

tribal

of

which

tribal

("TED") . As

the Tribe and another company,

separate

to

("TAC") . TAC dissolved

Tribal Economic Development Holdings,

part of this transaction,
is

the

and

which

Martorello

is

president, entered into a note requiring variable payments over
the

course

of

a

seven-year

Certification {ECF No. 1-1)
Given the

~1

term

("the

Note").

Martorello

3-4.

complicated nature of

the

transaction and

the

possibility of audits and litigation based on the terms of the
Note,

Martorello' s

tax attorneys recommended that he engage a

1

The parties have developed an extensive factual record in the
related case about the events surrounding the creation of Big
Picture, primarily in connection with DEFENDANTS BIG PICTURE
LOANS AND ASCENSION TECHNOLOGIES' MOTION TO DISMISS FOR LACK OF
SUBJECT MATTER JURISDICTION (ECF No. 22). However, the facts
described here are limited to those needed to give context to
Martorello's motion to quash.
2

third party to provide a valuation of the Note.

Id.

1

5.

The

parties dispute whether Martorello or Bellicose engaged Aranca,
Inc.

("Aranca") to complete that valuation. Plaintiffs highlight

the report prepared by Aranca
states
conduct

that

Aranca

valuation

"has

( "the Valuation Report"),

been

analysis

engaged

by

prepare

a

and

Valuation Report

(ECF No.

Martorello asserts

(Under Seal)

8-2)

that he engaged Aranca,

Bellicose.
written

express an opinion on the 'Fair Market Value'

which
to

report

to

[of]

[Bellicose] . "

at 5.

In contrast,

and the engagement

letter between Aranca and Kairos PR, LLC {"Kairos")-an entity of
which Martorello was the president-says that Kairos "desires to
retain

A[ranca]

to

certain

perform

services . . . and to provide

[Kairos]

report."

(ECF

Engagement

Certification
Martorello

1

Letter
In

6.

provided

any

it

documents at issue here,
the

Note.

In

event,

with

designated

with a certain valuation

No.

12)

after

certain

valuation

at

Aranca

documents,

l;

was

Martorello
engaged,

including

the

to enable Aranca to accurately valuate

addition,

Martorello's

attorneys

at

times

interacted directly with Aranca's employees about the valuation.
Martorello

Certification~~

7-8. Aranca

then

completed

Valuation Report on May 5, 2017. Valuation Report at 1.

3

the

B. Procedural Background

On

June

22,

Hengle,

Dowin

brought

suit

2017,

Coffy,
in

Lula Williams,
and

the

Felix

related

Martorello,

and other

tribal

that

violated

the

they

Gloria

Gillison,
case

Turnage,

Jr.

("Plaintiffs")

against

entities

Big

Picture,

and officials,

Racketeer

George

Influenced

alleging

and

Corrupt

Organizations Act and Virginia usury laws by conspiring to offer
loans
high

to

annual

licenses
seek

Plaintiffs and other Virginia residents
percentage

to do so.

dismissal

rates

without

After Defendants

of

the

Complaint

obtaining

at extremely
the

requisite

indicated that

for

lack

of

they would

subject

matter

jurisdiction and personal jurisdiction, among other grounds,
Court ordered the parties
Sept.

1 Order

(ECF No.

to conduct

17,

jurisdictional discovery.

Docket No.

3: 17-cv-461) .

later rejected Defendants' objections to Plaintiffs'
subpoenas
business

on the

basis

operations."

3:17-cv-461)

at

3;

that

Oct.

see

they were

18

also

Order
Oct.

16

the

The Court
third-party

"intended to

(ECF

No.

49,

Transcript

frustrate

Docket

No.

(ECF No.

48,

Docket No. 3:17-cv-461) at 23:4-25.
Martorello produced a

copy of the Valuation Report in the

course of jurisdictional discovery.
Plaintiffs
sought,

in

served

a

relevant

subpoena
part:

Then,

on Aranca

(1)
4

"[a] 11

on October 27,
( "the

Subpoena")

documents

2017,
that

submitted

by . . . Martorello . . . as part of
Bellicose" ;
that

were

[its]

( 2)

[Aranca's]

" [a] 11 documents submitted by any third parties

reviewed

and/or

considered

by

business valuation of Bellicose";

correspondence between any employee,
representative

of

Aranca

7 - 2) ,

A

11 1- 2 ,

No .

engagement with

Ex.

[Aranca]
and

(3)

officer,

The

Subpoena

1.

However,

counsel,

required

Horton

III

conferring

Guzzo

("Guzzo" ) ,

and

agreed

extend Aranca' s

("Horton") ,

to

November

and/ or

10,

Aranca' s

(ECF

Aranca

2017.

after

Andrew

on

of

"[a] 11 e-mail

Subpoena

produce the requested documents by November 15,
at

part

director,

and . . . Martorello."
6.

as

to

Subpoena

Plaintiffs'

counsel,

Fenn

deadline

to

respond to November 30. Horton then sent Aranca's objections to
the Subpoena to Guzzo on November 22.

The objections stated in

part that certain requests called for information protected by
the

attorney-client

privilege

and

work-product

doctrine.

See,

e.g., Subpoena Objections (ECF No. 1-1) at 9. 2
On
counsel

November
to

privileged
Boughrum

notify
and

Deel.

Martorello' s

27,

Martorello's

them

should
(ECF

counsel,

that
be

No.

counsel

some

of

withheld
12-1)

1

at
8.

Richard Scheff

2

Aranca' s

Then,

on

("Scheff") ,

1-1

Aranca's

documents

Martorello's

All page numbers associated with ECF No.
numbers automatically assigned by ECF.
5

contacted

were

direction.

November

29,

notified Guzzo

refer

to

the

that

he

had

identified

responsive

documents

in

Aranca' s

possession that were subject to the attorney-client privilege,
and that Martorello intended to file a motion for a protective
order,

or to quash,

Then,

on

December

privilege

log

"by early next week."
Martorello

1,

containing

provided

documents,

102

7-6 at 2. 3

ECF No.

Plaintiffs

asserting

with

that

a

every

document therein was protected by the attorney-client privilege,
and two also by the work-product doctrine. Boughrum Deel. 110;
Privilege Log (ECF No. 1-1) at 20-22.
When Aranca did not produce any documents by November 3 O,
Guzzo

contacted Horton,

who

expressed

his

understanding

that

there was an agreement to give Bellicose "a few more days"
move

for a

protective order regarding the Subpoena,

to

and that

Aranca did not need to respond until that motion was resolved.
ECF

No.

expectations,
December

at

7-6

s,

6.

Aranca still
Horton

privileged documents
documents

After

(which

clarified

Guzzo

did not produce

indicated

that

he

the documents.

was

(which would be produced)

would

be

withheld

Plaintiffs'

pending

separating

On

non-

from privileged
resolution

of

"Bellicose's" expected motion). However, he further stated that,
if

he

was

"not

served

soon

with

3

[that

motion],"

he

would

All page numbers in this and other exhibits related to
counsel's e-mail exchanges are the page numbers automatically
assigned by ECF.
6

consider that failure "a waiver of the privilege by Bellicose"
and would produce both privileged and non-privileged documents.
Id.

at

2.

Aranca

subsequently

documents on December 8,

produced

the

1

Boughrum Deel.

15,

non-privileged

but it is still

withholding the purportedly privileged documents.
On December 7,
confer

to

claims.

The

Plaintiffs'

Plaintiffs

parties

19

to

about
table

Martorello's
that

privilege

discussion

on an upcoming filing deadline

so

that

in the

The meet-and-confer did not occur until December

Martorello' s

December

counsel suggested a meet-and-

counsel

agreed

could focus

related case.
11.

Martorello' s

counsel

that

then notified Plaintiffs'

Martorello

did

not

agree

with

counsel on
Plaintiffs'

arguments. Id.~~ 14, 16-17.
Martorello finally moved to quash the Subpoena on December
21,

2017.

District

ECF
of

compliance.

No.

1.

California,
See

He

filed

where

Subpoena at

After the motion became ripe,
February

6,

2018

finding

the

the

l;

motion

Subpoena

Fed.

R.

in

the

Northern

requires

Aranca's

Civ.

P.

45 (d) (3) (A).

that court transferred it here on
that

"exceptional

circumstances"

existed because this Court issued the orders governing the scope
of jurisdictional discovery,

under which Plaintiffs served the

Subpoena. See ECF Nos. 14-15; Fed. R. Civ. P. 45(f).

7

DISCUSSION

The Subpoena was

issued pursuant

to Fed.

R.

Civ.

P.

45.

Under that rule, a subpoena can demand "production of documents,
electronically stored information, or tangible things at a place
within 100 miles of where the

[recipient]

or regularly transacts business."
However,
subpoena

Fed.

resides,

R.

Civ.

P.

is employed,
45 (c) (2) (A) .

"[o] n timely motion," a court "must quash or modify a
that,"

as

relevant

here,

privileged or other protected matter,
applies." Id.

"requires

disclosure

of

if no exception or waiver

45 (d) (3) (A) (iii) . Courts have broad discretion in

determining whether a movant has established that predicate. See
Cook v. Howard, 484 F. App'x 805, 812 (4th Cir. 2012)

("District

courts are afforded broad discretion with respect to discovery
generally, and motions to quash subpoenas specifically.").
The Court must first decide whether Martorello has standing
to quash the Subpoena.

The Subpoena is,

of course,

directed at

Aranca, and not Martorello, who is a party in the related case.
"Ordinarily,

a

party
to

a

does

subpoena

issued

personal

right or privilege

App'x

(E.D.
740,

Va.
744

2012)
(4th

have

nonparty

subpoena." Singletary v.
239

not

standing

unless

in the

the

party

Co.,

(quoting United States
2005));
8

challenge
claims

a

some

information sought by the

Sterling Transp.

Cir.

to

see

also

289 F.R.D.

v.

Idema,

Green

v.

237,

118

F.

Sauder

Mouldings,

Inc.,

223

F.R.D.

304,

306

(E.D.

Va.

2004). 4

Here,

Martorello has credibly asserted that some documents requested
in the Subpoena are protected by the attorney-client privilege
and

the

work-product

should prevail is a

doctrine.

Whether

litigation,
F.R.D.

at

privilege

claims

separate question that concerns the merits

of Martorello's motion to quash,
Furthermore,

those

Martorello

is

"a

not his standing to bring it.
party- [d] efendant]

to

th [e]

with interests adverse to Plaintiff [s] . " Green,
307.

Thus,

as

in Green,

Martorello has

223

standing to

challenge the Subpoena on privilege grounds.

I.

Alleged Deficiencies of Subpoena

Before

discussing

the

substance

of

his

privilege

claims,

Martorello notes two mistakes by Plaintiffs that, he claims, are
fatal flaws to the Subpoena. First, he argues that the Subpoena
4

In their briefs, the parties rely primarily on case law from
the Ninth Circuit discussing Martorello' s ability to bring the
motion to quash and the substance of his privilege assertions.
Rule 45 (f) is silent about which law binds transferee courts
that are deciding a transferred motion-the law of the circuit in
which the transferee court sits, or the law of the circuit where
the subpoena will be enforced. Nonetheless, transferee courts
have uniformly relied on their own circuits' law. See, e.g. ,
Williamson v. Recovery Ltd. P'ship, No. 2:06-CV-292, 2016 WL
4920773, at *1-*3 (S.D. Ohio Sept. 15, 2016); United States ex
rel. Ortiz v. Mount Sinai Hosp., 169 F. Supp. 3d 538, 543-45
(S.D.N.Y. 2016); Ameritox, Ltd. v. Millennium Health, LLC, No.
15-CV-31-WMC, 2015 WL 420308, at *1 & n.l, *2 (W.D. Wis. Feb. 2,
2015); Wells v. Lamplight Farms Inc., 298 F.R.D. 428, 432-34
(N.D. Iowa 2014). Similarly, the Court relies on Fourth Circuit
precedent to guide its analysis, but considers the Ninth Circuit
case law as persuasive authority.
9

is "procedurally deficient" because it seeks documents relating
to

a

party,

defenses,

Martorello,

and

which

that

have

has

no

not

asserted

bearing

on

other

jurisdictional arguments. Thus, Martorello says,
merits

discovery masquerading as

Plaintiffs

have

not

engaged

Defendants'

the Subpoena is

jurisdictional discovery,

in

the

Rule

required to engage in that merits discovery.
asserts that the Subpoena is

jurisdictional

26(f)

and

conference

Second, Martorello

"substantively deficient"

because

it states that Aranca must produce documents pursuant to Rule
34, rather than Rule 45, and this error is not harmless.
Both arguments are misguided. Martorello's first contention
misunderstands

the

scope

of

the

jurisdictional

discovery

authorized by the Court. Martorello concedes that Plaintiffs are
permitted

to

discovery,

as

serve
the

subpoenas

Court

Transcript at 23: 2 0-22
procedural
Procedure

vehicle

to

the

He

Valuation

part

of

jurisdictional

recognized.

See

Oct.

16

(" [] I] t' s perfectly all right to use any

of

the

contends,
Report

by

the

Federal

discovery about
however,
could

jurisdictional

issues

asserted

jurisdictional

any

a

already

authorized

in pursuit

issue . . . . ") .

has

as

because

be

Martorello
defenses,

10

a

of

and

Civil

jurisdictional

that documents

not

information only concerns Martorello' s

Rules

relevant
himself
the

tax planning.

relating
to

the

has

not

privileged
But these

relevance
himself

assertions
produced

are

the

belied

by

Valuation

the

fact

Report

that
the

in

Martorello
course

of

jurisdictional discovery because it contained information about
Bellicose's

operations.

Consequently,

it

is

reasonable

for

Plaintiffs to believe that communications and documents sent by
Martorello to Aranca reasonably can be expected to shed light on
Bellicose' s

operations,

and

thus

it

was

reasonable

Plaintiffs to seek those documents from Aranca.

Therefore,

for
the

Subpoena did not exceed on its face the scope of jurisdictional
discovery.
Martorello's second argument overlooks the language of the
full Subpoena that Aranca received.
states

that

Aranca

is

required

Exhibit A to the Subpoena
to

produce

the

requested

documents pursuant to Rule 34. But that exhibit is attached to a
form subpoena, which notes throughout that Aranca's obligations
are

set by Rule

45,

and even includes a

full

page with the

relevant text of that rule. See Subpoena at 1, 3. As a result,
Aranca

would

have

been

fully

aware

that

the

rule

number

mentioned in Exhibit A was a typographical error, which does not
make

the

Subpoena

substantively

deficient.

Thus,

both

of

Martorello's facial attacks on the Subpoena fail, and the Court
must turn to the merits of his motion.

11

II.

Timeliness of Martorello's Objections and Motion to Quash

As

an

cannot
(1)

initial

consider

neither

matter,

Martorello' s

Aranca

Subpoena,

thus

Martorello

did

Plaintiffs

nor

not

assertions

Martorello

waiving

any

timely

assert
of

file

his

the

privilege

timely

privilege

that

motion

because:

objected

objection;
to

Court

to

the

and

(2)

quash.

Those

arguments are addressed in turn below.
A. Timeliness of Objections

A subpoena recipient can assert objections, but they "must
be

served

before

compliance or 14
Civ.

P.

No.

days

45 (d) (2) (B).

any objection,
LLC,

the

earlier

of

after the

Normally,

time

subpoena is

specified

served."

for

Fed.

R.

failure to object timely waives

including privilege.

6:14-CV-00012,

the

Bell

2014 WL 1630754,

Inc.

v.

at *9

GE Lighting,
(W.D.

Va.

Apr.

23,

2014);

see also In re Motorsports Merch. Antitrust Litig.,

186

F.R.D.

344,

349

(W.D.

Va.

1999)

(citing cases).

Untimely

objections may, however, be considered in "unusual circumstances
and

for

nonparty
respect

good
and
to

cause
for

the

shown,"

the

including

"where

subpoenaing party

nonparty's

compliance

prior

nonparty challenged the subpoena." Bell,
(internal quotations omitted).

12

were

counsel
in
to

for

contact
the

time

the
with
the

2014 WL 1630754 at *9

Aranca's objections were clearly untimely. The Subpoena was
served on October 27, 2017, and the original production date was
November 15. The parties later agreed to extend that deadline to
November 30. But the parties' agreement cannot change the plain
language

of

Rule

45,

which

"before the earlier of"
service

of

the

requires

objections

to

be

served

the production date or 14 days after

subpoena.

Fed.

R.

Civ.

45 (d) (2) (B) .

P.

Accordingly, Aranca needed to object before November 10, 14 days
after October 27 or secure an extension of time from the Court.
The parties'

communications do not indicate that the extension

of the production date was also intended to apply to Aranca' s
objections.

Indeed,

Horton

did

not

appear

Aranca was

in non-compliance with Rule

objections

on November

22.

See

circumstances presented by the
good cause

ECF

No.

record,

to consider Aranca' s

45

to

be

aware

when he

7-5
the

at
Court

objections,

that

served the

9.

Under

the

can find no

and they must

be

considered waived.
However, Aranca's waiver of its objections does not affect
Martorello's

privilege

claims.

"A

party

cannot

object

to

a

subpoena duces tecum served on a nonparty, but rather, must seek
a protective order or make a motion to quash." Moon v. SCP Pool
Corp . ,

232

F . R. D .

633 ,

63 6

(C . D.

Cal.

2 OOs) •

In other words ,

even though Aranca waived any privilege objections that it might
13

have,

Martorello

challenges

by

could

timely

privilege arguments

still

moving

have
to

preserved

quash.

can be entertained,

his

Whether

privilege

Martorello's

therefore,

depends

on

whether his motion was timely.
B. Timeliness of Motion to Quash

A movant must satisfy the threshold requirement of filing
a "timely motion" before a court can quash a subpoena under the
mandatory

provisions

45 (d) (3) (A) .
timely,
decide

so

for

rule

district

the

approach,

That

of

Rule
does

courts

timeliness

45 (d) (3).

of

a

not
have

See

Fed.

explain what
developed

makes

two

motion to quash.

R.

Civ.
a

P.

motion

approaches

Under

the

to

older

the motion must be filed within the 14-day deadline

serving

Tutor-Saliba

objections
Corp.

v.

set

by

United

Rule

45{d) (2) (B).

States,

30

Fed.

See,

Cl.

e.g.,

155,

156

(1993); see also WM High Yield v. O'Hanlon, 460 F. Supp. 2d 891,
894

(S.D.

including

Ind. 2006)
courts

(summarizing cases). Most courts, however-

within

the

Fourth

Circuit-consider

a

motion

timely if it is filed before the return date of the subpoena.
See, e.g., Flynn v. Square One Distribution, Inc., No.
25-0RL-37TBS,

2016 WL 2997673,

at *l

(M.D.

6:16-MC-

Fla. May 25,

2016);

Carter v. Archdale Police Dep't, No. l:13CV613, 2014 WL 1774471,
at *3 (M.D.N.C. May 2, 2014); WM High Yield, 460 F. Supp. 2d at
894-95; Nova Biomedical Corp. v.
14

i-STAT Corp.,

182 F.R.D.

419,

422

(S.D.N.Y.

1998).

Applying

that

test,

courts

have

found

motions to quash untimely not only "when filed months after the
date of a
Bell,

subpoena' s

service or its deadline for compliance, "

2014 WL 1630754,

at *10,

but also when they were filed

mere days after the return date,

see City of St. Petersburg v.

Total Containment, Inc., No. 06-20953CIV, 2008 WL 1995298, at *2
(E.D.

Pa. May 5,

2008)

(movant did not move to quash subpoena

until day after return date despite learning about it thirteen
days earlier) ;
05026-DGK,

cf.

2016

WL

Joplin Sch.
3512262,

v.

at

Pl Grp.,

*l

(W.D.

Inc.,
Mo.

No.

June

3: 15-CV22,

2016)

(movant knew about noticed deposition for two weeks, but did not
file motion to quash until three days before deposition).
Here,

Martorello' s

motion

is

untimely

under

either

approach. It was not filed until December 21, well after the 14day objection deadline of November 10. Likewise, the motion was
filed

more

than

a

month

after

the

original

return

date

of

November 15, and several weeks after the amended return date of
November

3 O.

Consequently,

Martorello' s

motion

is

not

timely

within the meaning of Rule 45(d) (3) (A).
Neither of the arguments that Martorello makes in response
is

compelling.

He

first

asserts

that

because it was

filed by December 8,

non-privileged

documents

in

response
15

his

motion

was

timely

when Aranca produced the
to

the

Subpoena.

Yet

Martorello

misreads

proposition:
WL 4393031

Moore v.
(E.D.

Nxtbigthing,
Cal.

Mar.

both

28,

LLC,

Cal.
No.

2016).

cases

Chase,

cited

Inc.,

July 17,

No.

2015)

14-CV-05438-JST,
The phrase

in

support

of

1: 14-CV-01178-SKO,
and Internmatch,
2016

WL

2015

Inc.

1212626

"date of production"

that

v.

(N.D.

in both

those cases does not refer to the date on which documents were
actually produced in response to the subpoena, but instead,

the

production date identified on the face of the subpoena-that is,
the return date. See Internmatch, 2016 WL 1212626, at *2; Moore,
2015 WL 4393031, at *6. Accordingly, those cases only adopt the
dominant interpretation of timeliness noted above,

under which

Martorello's motion is untimely. 5
Martorello's contention that any delay from his late filing
can be disregarded is unconvincing because Martorello must show
"' unusual circumstances' " or other good cause for the untimely
filing.

Chao v. Aurora Loan Servs., LLC, No.

2012 WL 5988617, at *2

C 10-3118 SBA LB,

(N.D. Cal. Nov. 26, 2012)

5

(quoting Moon,

Martorello' s contrary interpretation of those cases makes no
sense, as it would mean that a person in receipt of a subpoena
could conceivably wait any amount of time before producing
documents-even a year-and a motion to quash would be timely if
filed at any time before the eventual date of production. This
approach would thus produce results that are inconsistent with
the commonly-accepted understanding of timeliness and that
undermine the goal of efficient discovery underlying Rule 45.
16

232 F.R.D. at 636) . 6 But he has provided no plausible explanation
for his

counsel's

Plaintiffs'

repeated delays,

counsel.

related case,

Because

even after conferring with

Martorello

is

a

party

in

the

he would have first become aware of the Subpoena

on or around October 27, when it was served on Aranca. See Fed.
R. Civ. P. 45{a) (4). Martorello did not discover the purportedly
privileged documents
Aranca' s

until

slow response

to

November
the

27,

apparently because

Subpoena.

Martorello' s

of

counsel,

Scheff, conferred with Plaintiffs' counsel on November 29. Then,
despite Scheff' s

statement that Martorello would move to quash

the Subpoena "by early next week," Martorello's counsel for some
reason did not initiate another meet-and-confer until December
7-a

week

passed.

after
And,

Martorello's

the
even

counsel

agreed-upon
after
did

the
not

production

date

had

occurred,

meet-and-confer
formally

reject

already

Plaintiffs'

privilege arguments until December 19, a further delay of eight
days. Therefore, this situation is nothing like the one in Hartz
Mountain

6

Corp.

v.

Chanelle

Pharmaceutical

Veterinary

Products

It is unclear if this exception is even applicable to untimely
motions to quash, as Moon was discussing exceptions to untimely
objections to subpoenas. See 232 F.R.D. at 636. The timeliness
analysis for objections, under Rule 45 {d) (2) {B), is different
than the timeliness inquiry for motions to quash, under Rule
45{d) (3) {A). Bell, 2014 WL 1630754, at *9. Nonetheless, the
Court will assume that the exception applies in order to address
Martorello's argument.
17

Manufacturing

Ltd.,

235

F.R.D.

535

(D.

Me.

2006),

where

an

untimely motion to quash was excused because the delay resulted
from the movant' s
the

terms

sought

of

by

the

a

"attempts . . . come to an agreement . . . on
confidentiality

subpoena."

Id.

order

at

covering

536.

the

Plaintiffs

documents
made

their

disagreement with Martorello' s position clear at the outset of
the discussions with his counsel, and Martorello simply dragged
his

feet

in

arguments.

investigating

Engaging

in

or

fruitless

responding

to

meet-and-confers

Plaintiffs'
is

not

the

same as negotiating an agreement for document production.
This result does not change because Martorello' s untimely
filing might not have prejudiced Plaintiffs in the related case.
Rule

45(d) (3) (A)

does

not

provide

that

prejudice

(or

lack

thereof) to the party serving the subpoena is a consideration in
deciding if a motion to quash is timely. The only court to have
considered it as a factor relevant to timeliness did so in the
context of the good cause analysis detailed in Moon.
2012

WL

5988617,

Martorello

has

at

not

motion. Accordingly,

*2.
shown

And,

for

the

good

cause

to

reasons
excuse

See Chao,
-- ---

noted
his

above,

untimely

Martorello' s motion can be denied for its

untimeliness alone.

18

III. Martorello's Claims of Privilege

Even if Martorello' s motion were timely,

it fails on the

merits, because Martorello has not demonstrated that either the
attorney-client privilege or the work-product doctrine apply to
the documents listed in the privilege log.
A. Attorney-Client Privilege

The attorney-client privilege is
'full

and

frank

communication

"[i] ntended to encourage

between

attorneys

and

clients. '" Solis v. Food Emp' rs Labor Relations Ass' n,
221,

226

(4th Cir.

2011)

their

644 F. 3d

(quoting Upjohn Co. v. United States,

449 U.S. 383, 389 (1981)). A party asserting the privilege bears
the burden of demonstrating the following elements:
(1) the asserted holder of the privilege is
or sought to become a client; (2) the person
to whom the communication was made (a) is a
member of the bar of a court, or is his
subordinate and (b) in connection with this
communication is acting as a lawyer; (3) the
communication relates to a fact of which the
attorney was informed {a) by his client (b)
without the presence of strangers (c) for
the purpose of securing primarily either (i)
an opinion on law or (ii) legal services or
(iii) assistance in some legal proceeding,
and not {d) for the purpose of committing a
crime or tort; and ( 4) the privilege has
been (a) claimed and {b) not waived by the
client.
NLRB

2011)

v.

Interbake Foods,
(internal

LLC,

quotations

637

F.3d 492,

omitted).
19

The

501-02

Fourth

(4th Cir.

Circuit

has

emphasized that

"the privilege

is

not

absolute,"

but

instead

must be "strictly confined within the narrowest possible limits
consistent with the logic of its principle." Solis, 644 F.3d at
226 (internal quotations omitted).
Martorello' s
assess

his

Interbake
though,

privilege log provides enough information to

numerous

Foods,

concerns

637

attorney-client
F.3d at

502.

two different

privilege

claims.

The parties'

aspects

of

the

See

disagreement,
privilege:

(1)

whether Martorello engaged Aranca, and is thereby the client who
has

standing

Martorello

to

does

assert
have

the

privilege;

standing,

he

and

waived

(2)
the

whether,

if

privilege

by

providing the communications at issue to Aranca.
1.

Standing

The party claiming the privilege must be a client who has
sought

legal

advice.

See

id.

at

501-02.

The

word

"client"

carries two meanings within the context of this dispute: someone
must have been a client of the attorneys named in the privilege
log,

and someone

(not necessarily the

been a

client of Aranca.

client

in

attorneys,

both

senses;

same person)

Martorello contends
he

had

previously

that he
engaged

and then engaged Aranca at his attorneys'

to properly valuate the Note for tax purposes.
the

other

hand,

assert

that,

although
20

must have
is

the

his

tax

direction

Plaintiffs,

Martorello

may

on

have

engaged

the

attorneys

communications,

with

whom

he

made

the

underlying

Bellicose was Aranca's client because Bellicose

engaged Aranca to complete the valuation.
is

the

true

holder

of

any

Therefore,

privilege

that

Bellicose

attached

to

communications between Martorello and Aranca in which Martorello
forwarded

confidential

Because

communications.

control

of

Bellicose was transferred to TAC and then TED, "the authority to
assert

and waive

likewise

passed

[Bellicose] 's
to

TED's

attorney-client

current

privilege"

management.

See

has

Commodity

Futures Trading Comm'n v. Weintraub, 471 U.S. 343, 349 (1985).
Assuming

that

Martorello

himself

had

an

attorney-client

relationship with his tax attorneys, 7 he has not shown that he
was

also

Aranca's

different

parties

Valuation

Report

Bellicose . . . to

client.
might
states
conduct

The

record

that

that

engaged

have

reflects
Aranca.

First,

Aranca

valuation

"has

been

analysis

and

three

engaged
prepare

the
by
a

written report to express an opinion on the 'Fair Market Value'
[of]

[Bellicose]

along with allocation of

'Fair Market Value'

between [Bellicose's] tangible and intangible assets." Valuation

7

That client could, in theory, have been Bellicose, or any one
of the many shell entities of which Martorello is president.
Nonetheless, given that Martorello refers in his certification
to "!!!Y taxation attorneys," it seems that Martorello was their
client-a point that Plaintiffs provide no evidence to contest.
Martorello Certification 1 5 (emphasis added).
21

Report at 5. In addition, Aranca's counsel, Horton, consistently
referred

to

"Bellicose' s"

implying

that

Aranca

motion

believed

for

a

Bellicose

protective
held

all

order,

applicable

privileges. Second, Martorello says in his certification that he
engaged Aranca himself. Martorello Certification
Engagement Letter indicates that Kairos,
Martorello,

was

a

A [ranca]

"retain [ing]

1

third party led by
to

perform

designated valuation services . . . and to provide
[the]

6. Third, the

certain

[Kairos] with

[V]aluation [R]eport." Engagement Letter at 1.
Martorello may be right

that Bellicose is unlikely to be

the privilege holder, given that it had already been sold to TAC
by the time that Martorello contacted Aranca,

and there was no

apparent

after Aranca was

engaged.

interaction between Aranca
Nevertheless,

the

and TAC

evidence

Martorello

that

has

submitted does not establish with any certainty that Martorello
himself engaged Aranca. Indeed, Martorello relies exclusively on
the Engagement Letter to support his argument,
does not identify him as Aranca's client.

but that letter

To the contrary,

it

plainly states that the agreement for Aranca to complete certain
"business valuation services" was
your company,
aside
Kairos'

from

"by and between A [ranca]

identified above," which is Kairos.

being

president,

addressed
the

to

and

Engagement
22

signed
Letter

by

does

Id.

In fact,

Martorello
not

and

as

reference

Martorello

by

name

at

all.

managed by Martorello,

Kairos

may

still

be

solvent

and

giving him the authority to assert the

attorney-client privilege on its behalf. See Weintraub, 471 U.S.
at

349-350

("[T]he

corporate

attorney-client

privilege

rests

with the corporation's management and is normally exercised by
its officers and directors").
Kairos,
any

But it is equally plausible that

like Bellicose, has been sold or has new management.

case,

currently

Martorello
manages

has

Kairos,

made

no

attempt

instead

to

prove

completely

that

ignoring

In
he
the

distinction between the privilege being possessed by Kairos or
by Martorello. Therefore, he has not established that he is the
party entitled to assert the privilege.

2.
Furthermore,
privilege,
privileged

Waiver
even if Martorello had standing to assert the

his privilege claim fails
information

securing legal advice.

to

Aranca

because he disclosed the
for

purposes

As the privilege holder,

other

than

the client can

waive otherwise privileged materials by "ma[king] any disclosure
of

a

confidential

communication to any

individual

who

embraced by the privilege." In re Grand Jury Subpoena,
331,

336

(4th Cir.

waiver is an issue,
burden

of

showing

2003)

(internal quotations

the proponent of
both

"that

an
23

is

341 F. 3d

omitted).

Where

the privilege bears

attorney-client

not

the

relationship

existed,

[and]

also that the particular communications at issue

are privileged and that the privilege was not waived."

Id.

at

335.
At the

same time,

communication
instance,

to

a

courts

third

have

States v. Kovel,
convey

not every disclosure of a
party

consistently

296 F.2d 918

confidential

destroys

the

held,

confidential

privilege.

relying

on

For

United

(2d Cir. 1961), that a client may

information

to

an

agent-such

an

as

accountant or tax consultant-without waiving the privilege,
long as

that

disclosure

is made

to

facilitate

the

as

attorney's

provision of legal services to the client. See United States v.
Adlman,

68

F.3d 1495,

Bornstein,

977

Proceedings

Under Seal v.

(4th

Cir.

F.2d

1500

1991) ;

112,

Black

F.R.D.

87,

90

(D.

Corp.,

241

F.

Supp.

&

Md.

(2d

1995);

(4th

116

Cir.

Decker

Corp.

United

1065,

United States
1992);

United States,

2003);
2d

Cir.

Jury
1191

United States,

States

1071-72

Grand

F.2d 1188,

947

v.

v.

v.

(N.D.

219

ChevronTexaco

Cal.

2002).

In

deciding the application of this "derivative privilege, " courts
consider

several

factors,

including

"to

whom

was

the

advice

provided-counsel or the client," and "which parties initiated or
received the communications." Black & Decker,
The

central

performed

by

concern,
the

however,

accountant."

is
Id.
24

"the
The

219 F. R. D. at 90.

nature

of

the

communications

to

work
the

agent must be
[the

client]

"made
in

for

the

the purpose of

rendition

of

the

legal

[agent]

services

assisting

rather

than

merely for the purpose of receiving accounting [or tax]

advice."

Grand Jury Proceedings Under Seal,

see also

Kovel,

296 F. 2d at 922

( "If what is sought is not legal advice

but only accounting service,
the

accountant's

exists.");
1994)

rather

Samuels v.

94 7 F. 2d at 1191;

. . . or if

than

the

Mitchell,

the

advice

lawyer's,

155 F.R.D.

195,

sought

no
199

is

privilege
(N.D.

Cal.

( "If privileged documents or communications are disclosed

to accountants for a purpose other than securing legal advice,
the privilege is waived.").
Martorello
inapposite

here

contends
because

that
those

Kovel
cases

and

its

progeny

only apply where

a

are
third

party acts as an attorney's agent to provide interpretation, not
where,
agent

as here,
at

a client engages the third party to act as his

an attorney's

direction.

But Martorello misconstrues

the way in which Kovel limited its holding. Kovel noted that "it
was not presented with the situation of an accountant acting as
the client's agent,
purpose
lawyer."

of

rather than the attorney's agent,

subsequent

communication by

Grand Jury Proceedings

(citing Kovel,

Under Seal,

296 F.2d at 922 n.4).

Fourth Circuit has explained,

the

accountant
94 7

for the
to

F. 2d at

the
1191

"In such a situation," the

"communications between the client
25

and his agent made for the purpose of facilitating the rendition
of

legal

services

( emphasis added) .

would

be

covered

by

the

privilege."

As this description makes clear,

Id.

even where

the client rather than the attorney has engaged the agent,

the

privilege only attaches if the agent's work is intended to help
the

attorney

reached

by

Consequently,

provide

Kovel
those

and

legal
the

cases

services-the
cases

are

that

precise

have

instructive

conclusion

interpreted
here

despite

it.
the

differences in the identity of the party hiring the agent. 8
Martorello further asserts that,
applies,

even if Kovel's rationale

he disclosed the confidential communications to Aranca

so that it could "assist[]

in furthering the legal advice his

attorneys were providing," not so that it could give accounting
advice.

Martorello

Martorello,

Reply

(ECF

No.

12)

the privilege log reveals

at

7.

According

to

that his attorneys were

actively involved in helping Aranca, as all parties were working
towards the same goal of accurately valuating Bellicose for tax
purposes.

But this

the privilege log;

statement does

not

accurately characterize

almost all of the entries are described as

8

Other cases support the conclusion that this distinction is
negligible, as they involved situations where the client-not the
attorney-initiated the relationship with the agent. See Adlman,
68 F.3d at 1500 (privilege waived if client, not attorney,
provided agent with confidential information to obtain tax
advice); Grand Jury Proceedings Under Seal, 947 F.2d at 1189-91
(client conferred with accountant and then hired attorney).
26

either

"[e]-mail

Aranca

communication

between . . . Martorello

including . . . Martorello

relaying"

information, or "[e]-mail communication from
Aranca forwarding"
at 20-22.

confidential

and

confidential
. Martorello to

information.

See Privilege Log

That language does not imply extensive,

or,

indeed,

any, involvement by Martorello's attorneys. In fact, it suggests
the opposite: that Martorello sent, and presumably received, the
majority

of

the

communications

with

Aranca

for

his

personal

benefit. This evidence of limited attorney involvement weighs in
favor of finding waiver. See Black

&

Decker, 219 F.R.D. at 90.

Moreover, Martorello's argument focuses on the wrong issue.
The determinative factor is that Aranca was engaged for the sole
purpose
and

of

"perform [ing]

"conducting

purposes.

valuation

Engagement

Martorello

certain business

1

Certification

for

analysis"

Letter
5.

at

1.
I

Put

valuation

services"

Martorello' s

Valuation

Report

differently,

tax

at

Aran ca

5;

was

engaged to better help Martorello understand the effect of the
Bellicose sale and the Note on his taxes.
the

extension

circumstances.

of

the

attorney-client

See Adlman,

Courts have rejected

privilege

68 F.3d at 1500

in

similar

("If the facts were

that [the client] furnished information to [its accounting firm]
to seek

[the firm] 's expert advice on the tax implications of

the proposed transaction,

no privilege would apply.");
27

Black

&

Decker,

219

F.R.D.

at

91

transactions

at

plaintiff . .

retain [ed]

("Given

issue,

it

the

is

complexity

of

the

understandable

the services of

[its agent]

why

to help

evaluate the tax and business implications of the transaction.
The record does not support the conclusion that

[the agent] 's

advice-or

primarily

assist

the

the

documents

plaintiff's

at

issue-were

attorneys

(emphasis

added)) .

Furthermore,

valuation

activities

in

illustrates

provided

rendering

the
why

legal

advice."

of

Aranca's

purpose
Grand

Under Seal is not analogous to this case.

to

Jury

Proceedings

The client in that

case consulted with his accountant because he was the subject of
a

grand

jury

investigation

communications were

into

his

tax

intended to help

returns,

and

those

the attorney defend the

client in the investigation. Grand Jury Proceedings Under Seal,
947 F. 2d at 1189,
subject

of

any

engaged Aranca,

1191. Here,

however,

investigation
and he

has

or

not

Martorello was not the

proceeding

at

the

time

identified how Aranca' s

he

work

helped his attorneys provide legal instead of tax services.
Martorello's

reading

beyond

the

narrow

prescribed.

The

mere

transaction,

as Martorello' s

far

cloak

of

secrecy

takes
scope

fact

around

the

attorney-client

that

that

an

the

Fourth

attorney

attorneys did,
all
28

the

privilege

Circuit
recommended

has
a

"does not place a

incidents

of

[that]

transaction."

Matter of

Fischel,

557

F.2d 209,

212

(9th Cir.

1977). And whether Martorello's attorneys helped Aranca evaluate
the

tax

implications

fulfill

dual

lawyer.

See

roles

is

as

an accountant

Bornstein,

inquiry

is

immaterial,

977

whether

F.2d

the

at

since
or

tax

117

an

attorney

can

specialist and a

("[T]he

accountant's

appropriate

workpapers

were

produced more for the benefit of Bornstein the lawyer or more
for the benefit of Bornstein the accountant/tax preparer,

that

is, whether the accounting services were performed primarily to
allow

Bornstein

to

give

legal

advice.") .

Martorello

has

not

proven that he did not waive the attorney-client privilege by
disclosing his communications to Aranca,

see In re Grand Jury

Subpoena, 341 F.3d at 336, and his motion to quash falls short.
B. Work-Product Doctrine

Martorello

also

contends

that

four

documents

in

the

privilege log are also protected by the work-product doctrine.
That

doctrine

prevents

discovery

of

documents

"prepared

in

anticipation of litigation," whether by an attorney or a party
or

its

representative.

"' [M] aterials

prepared

in

Fed.
the

R.

Civ.

26(b) (3) (A).

P.

ordinary course

of

business

or

pursuant to regulatory requirements or for other non-litigation
purposes,'"

however,

are

not

shielded

privilege. Solis, 644 F.3d at 232
29

by

the

work-product

(quoting Nat'l Union Fire Ins.

Co.

v.

Murray Sheet Metal

Co.,

967

F. 2d

980,

984

(4th Cir.

1992)). Thus, the documents at issue
must have been created because of the
prospect
of
litigation,
when
(1)
"the
[party] faces an actual claim or a potential
claim following an actual event or series of
events
that
reasonably could result
in
litigation," National Union, 967 F.2d at
984, and (2) the work product "would not
have been prepared in substantially similar
form
but
for
the
prospect
of
that
litigation." [United States v.] Adlman, 134
F.3d [1194,] 1195 [(2d Cir. 1998)].
RLI Ins.
Va.

2007)

Co. v.

Conseco,

(emphasis

and

Inc.,

477 F.

alteration

Supp.
in

2d 741,

original).

748

(E.D.

The

party

claiming the work-product privilege bears the burden of showing
that the documents were created in anticipation of litigation,
and "must come forward with a specific demonstration of facts"
in that regard,

either through affidavits or a privilege log.

Id.;

see also Interbake Foods,

with

the

attorney-client

product doctrine

637

privilege,

F.3d at 502.
the

is narrowly construed.

scope
ePlus

Moreover,
of

Inc.

as

the

work-

v.

Lawson

Software, Inc., 280 F.R.D. 247, 251 (E.D. Va. 2012).
Martorello has

not

shown that

the

documents

were prepared in anticipation of litigation.

noted above

The privilege log

describes each of the first three documents as a

"[m] emorandum

of legal counsel R. Hackett setting forth historical enforcement
information relating to small dollar lending," and the fourth as
30

an attachment to that memorandum. ECF No. 1-1 at 20-22. The log
provides no further information, such as the date the memorandum
was

created,

memorandum,

and

neither

Rick Hackett

with more details.
sufficient

to

Martorello

("Hackett"),

nor

the

drafter

of

the

has provided an affidavit

Martorello claims

implicate

the

that

this

information is

work-product privilege because

it

shows that the documents were meant to provide legal support for
the

changes

further

in

the

asserts

valuation

that

the

advise . . . Martorello

as

of

the

Note

memorandum

"is

to

potential

and

Bellicose.

clearly

He

meant

litigation

to

risks."

Martorello Reply at 2 n.2.
The evidence provided is insufficient to demonstrate that
the

memorandum

is

work product.

created in anticipation of
"' fac [ing]

an actual

For a

litigation,

claim or a

document
a

to

have

been

party must have been

potential

claim following

an

actual event or series of events that reasonably could result in
litigation.'" RLI Ins.,
Union,

477 F.

Supp.

2d at 748

(quoting Nat'l

967 F.2d at 984). Martorello has provided no information

about what pending or imminent
create the memorandum,

litigation prompted Hackett

and the vague,

litigation based on the

inchoate threat of future

complicated sale of

31

to

Bellicose

is

not

enough. 9

The

memorandum

appears

general

litigation risks

called

for

memorandum

with
is

a

any

to

contain

related to

complex

document

the

sale,

transaction.

prepared

in

an

the

assessment

of

which would be

Accordingly,
ordinary

course

the
of

business, since it would have been created in the same form with
or without the prospect of litigation.
232;

RLI

Ins.,

477

F.

Supp.

2d

at

See Solis,
748.

As

a

644 F. 3d at
result,

the

documents in question cannot be withheld as work product.
CONCLUSION

For

the

foregoing

reasons,

MATT

MARTORELLO'S

NOTICE

OF

MOTION AND MOTION TO QUASH PLAINTIFF'S SUBPOENAS TO ARANCA US,
INC.

(ECF No. 1) will be denied.
It is so ORDERED.

/s/
Robert E. Payne
Senior United States District Judge

Richmond, Virginia
Date: March
2018

Jfz.-,

9

This would also be true if the impetus for the memorandum was
the possibility that Martorello or one of his companies would be
audited. The work-product doctrine can apply where documents are
created in connection with an IRS audit or enforcement action.
See Black & Decker, 219 F .R .D. at 91; Fed. Election Comm' n v.
Christian Coalition, 178 F.R.D. 61, 77 (E.D. Va. 1998). Here,
however, there is no indication that the threat of an audit was
any greater than the indefinite threat of litigation.
32