Williams et al v. Big Picture Loans LLC et al

Filing 33

MEMORANDUM OPINION. See Opinion for details. Signed by Senior United States District Judge Robert E. Payne on 2/8/2019. (sbea, )

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

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

v.

Civil Action No. 3:18-mc-12

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

This matter is before the Court on Simon Xu Liang's AMENDED
MOTION

TO

QUASH

SUBPOENA

TO

SIMON

XU

LIANG

TO

TESTIFY

DEPOSITION IN A CIVIL ACTION AND MEMORANDUM IN SUPPORT
3) . 1

For

the

following

reasons,

the

AMENDED

MOTION

AT

A

(ECF No.
TO

QUASH

SUBPOENA TO SIMON XU LIANG TO TESTIFY AT A DEPOSITION IN A CIVIL
ACTION AND MEMORANDUM IN SUPPORT

(ECF No.

3) will be granted in

part and denied in part.
BACKGROUND

In Williams v. Big Picture Loans,
(E.D. Va. 2018),

2

LLC,

329 F. Supp. 3d 248

the Court set out the basis for this litigation

11

This matter was transferred from the United States District
Court for the District of South Carolina.
2 The published version of the Memorandum Opinion is Williams
v. Big Picture Loans, LLC, No. 3:17-cv-461, ECF No. 146, and it is

1

and

the

efforts

of

Technologies, Inc.
Picture
escape

Loans")
the

the

two

corporate

defendants,

Ascension

("Ascension") and Big Picture Loans, LLC ("Big
(collectively

reach

of

this

the

case

by

"Corporate

Defendants")

trying

come

to

within

to
the

sovereign immunity of the Lac Vieux Desert Band of Lake Superior
Chippewa Indians (the "Tribe").
Memorandum Opinion,

For the reasons set forth in the

the Corporate Defendants'

this case for lack of
immunity was rejected.

jurisdiction under a

motion to dismiss
claim of sovereign

That decision is pending before the United

States Court of Appeals for the Fourth Circuit.
The plaintiffs'

Complaint against the Corporate Defendants

and Martorello alleges two violations of the federal Racketeering
Influenced Corrupt Organizations Act,

18 U.S. C.

§§

1962 ( c)

1962(d), as well as violation of Virginia's usury laws,

and

a claim

for unjust enrichment, and a plea for declaratory judgment.
The facts that give rise to these claims are outlined in the
Memorandum Opinion,

Williams,

32 9

F.

Supp.

3d at

253-66.

As

explained in the Memorandum Opinion, the corporate structures here
are convoluted and somewhat difficult to follow.
Memorandum

Opinion

recites

a

structure

that

was

In sum,

the

manipulated

principally for the purpose of affording Martorello and his related
entities the protection of tribal immunity while violating usury

a redacted version of the sealed and complete Memorandum Opinion
found at Williams, No. 3:17-cv-461, ECF No. 130.
2

laws

when,

in

fact,

the

applicable

test

shows

that

neither

Ascension nor Big Picture Loans is an arm of the tribe, and that,
therefore,

neither are

entitled to

The

immunity.

fundamental

purpose of the corporate arrangements was to permit the defendants
to evade the usury laws of the states, including those of Virginia,
and to allow the making of consumer loans at rates approximating
699% per annum, with the overwhelming share of the yield of the
repayment

of

those

loans

going

to

Martorello

or

corporations

controlled by him and a very small portion going to the Tribe.
After the Corporate Defendants appealed from the decision
denying them protections of sovereign immunity, the case was set
for

trial on the claims against Martorello.

The case against

Martorello was set for trial to begin on March 18, 2019, but as
explained in the Memorandum Order entered on January 23,

2019,

Williams, No. 3:17-cv-461, ECF No. 323, the Corporate Defendants
thwarted the discovery efforts of the plaintiffs and Martorello to
adequately prepare for trial.

It therefore became necessary to

continue the trial against Martorello generally, because, in part,
of the need to take the deposition of Simon Xu Liang and others
who

are

Bellicose

employed
Capital,

Memorandum Opinion,

by Ascension
LLC

but

were

("Bellicose").

formerly
As

employed

explained

by

in

the

Bellicose was controlled by Martorello,

but

Bellicose was acquired by the Tribe in 2015. Williams, 329 F. Supp.
3d at 259. Bellicose's assets were assigned to Ascension and its
3

liabilities were
ceased

to

assigned to Big

exist.

Id.

Ascension and Big

at

261.

Picture Loans,
This

and Bellicose

restructuring

Picture Loans take on

(which

saw

lending operations of

Bellicoise and another Martorello company) was part of a plan by
Martorello,

Ascension,

and

Big

Picture

to

clothe

a

lending

operation-which the United States District Court for the Southern
District of New York said could be regulated under New York's nondiscriminatory anti-usury laws-in the Tribe's sovereign immunity.
Id. at 257-259; see also Otoe-Missouria Tribe of Indians v. N.Y.
State Dep't of Fin. Servs., 974 F. Supp. 2d 353, 360-61 (S.D.N.Y.
2013); aff'd, 769 F.3d 105 (2d Cir. 2014).
With that in mind,
against

the Corporate

plaintiffs
employees

sought
about

to

and precluded from conducting discovery
Defendants because of

obtain information

Bellicose

and

its

their appeal,

from

operations

farmer
as

the

Bellicose

well

as

the

transformation of Bellicose and affiliated entities into Ascension
and Big Picture Loans.

That evidence was intended to help them

prove their merits case against Martorello.
did not

initiate

the depositions

against

Although Martorello
the

former

Bellicose

employees, he has said he needs information from the to aid in his
defense.
Liang is the controller of Ascension and he was formerly an
employee

of

Bellicose.

He

is

a

part

owner of

Eventide Credit

Acquisitions, LLC ("Eventide") which provided the initial loan of
4

$300M that was to fund the lending operations to be conducted by
Ascension and Big Picture Loans after Bellicose became what is now
Ascension and Big Picture Loans.
The plaintiffs in Williams,

No.

with two subpoenas ad testificandum,

3: 17-cv-461,

served Liang

one under Federal Rule of

Civil Procedure 30(b) (1) and the other under Federal Rule of Civil
Procedure 45.

After the Corporate Defendants filed their appeal,

Liang's counsel and plaintiffs' counsel discussed the subpoenas,
and plaintiffs' counsel made clear that they planned to proceed
with a deposition of Liang under the Rule 45 subpoena.
Liang,

who

is

represented by the

same

law

firm

as

the

Corporate Defendants, filed the AMENDED MOTION TO QUASH SUBPOENA
TO SIMON XU LIANG TO TESTIFY AT A DEPOSITION IN A CIVIL ACTION AND
MEMORANDUM IN SUPPORT (ECF No. 3).

The plaintiffs responded to

that motion (ECF No. 7), and Liang replied (ECF No. 9). The parties
presented oral argument.
After the AMENDED MOTION TO QUASH SUBPOENA TO SIMON XU LIANG
TO TESTIFY AT A DEPOSITION IN A CIVIL ACTION AND MEMORANDUM IN
SUPPORT (ECF No. 3) was ripe, but before the Court had a hearing
on the motion, the Court decided the Corporate Defendants' motion
to stay in Williams. See No. 3:17-cv-461, ECF No. 323.

Relevant

here, the Court confirmed that neither Matt Martorello (the third
defendant in the case) nor the plaintiffs could serve discovery
directly

on

the

Corporate

Defendants,
5

because

the

Corporate

Defendants' appeal to the Fourth Circuit must be respected.
at 7,

9.

But,

Id.

the Court also held that the case against Matt

Martorello would not be stayed even though the trial had to be
moved

because

of

the

delayed

discovery

caused

by

expansive

assertions of sovereign immunity of which the assertion by Liang
is but a part.

Id.

Matt Martorello,

because the Court is divested only "over [the]

at 6.

Thus,

discovery may proceed against

aspects of the case involved in the appeal."

Id. at 8-9 (quoting

Griggs v. Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982)).
DISCUSSION

A court must quash or modify a

subpoena that "subjects a

person to undue burden" or that "requires disclosure of privileged
or

other

protected

Fed.

matter."

R.

Civ.

P.

45(d) (3) (A).

Additionally, the "party or attorney responsible for issuing and
serving

a

subpoena

must

take

imposing undue burden or

expense

subpoena."

P.

Fed.

R.

Civ.

reasonable
on

45(c) (1).

a

person

steps

to

subject

avoid
to

the

The burden to establish

that a subpoena ad testificandum imposes an undue burden is on the
person opposing its command.
Co.,

289 F.R.D. 237, 241

F.R.D.

618,

620

(E.D.

Va.

See Singletary v. Sterling Transp.

(E.D. Va. 2012); Castle v. Jallah, 142
1992);

9A Fed.

Prac.

&

Proc.

Civ.

§

2463.1 (3d ed.).
First, Liang argues that he should not have to testify while
the Corporate Defendants' appeal is pending because he shares the
6

same immunity as the Tribe and thus cannot be deposed by thirdparty

subpoenas. 3

The

Court

finds

this

argument

unpersuasive

insofar as it pertains to Liang's employment at Bellicose and in
his role as part owner of Eventide.

Liang has failed to provide

a single case in which a court has held that an officer of a tribal
entity is protected by his employer's sovereign immunity from being
questioned about
entity.

his

employment before working

for

the

Nor has the Court found any case that so holds.

tribal

Further,

although the Supreme Court has acknowledged that tribal immunity
may cover tribal employees and officials acting within the scope
of their employment so that they cannot be sued, see Michigan v.
Bay Mills Indian Cmty., 572 U.S. 782, 791 n.4

(2014), the Supreme

Court has also held that tribal employees may be sued in their
individual
employee.

capacity

for

torts

committed

by

the

individual

See Lewis v. Clarke, 137 S. Ct. 1285, 1288 (2017).

If

they can be sued in their individual capacity, surely they can be

3

Liang raises two other arguments for why he should not have
to testify, but, since the time of the filing of the motion to
quash, the Court has held that both are unpersuasive.
First, as
stated earlier, this Court has already held that it is only ~over
[the] aspects of the case involved in the appeal." Williams, No.
3:17-cv-461, ECF No. 323 at 8-9 (quoting Griggs, 459 U.S. at 58);
see also Alice L. v. Dusek, 492 F.3d 563, 564 (5th Cir. 2007) (per
curiam).
Second, Liang argues that the subpoena subjects him to an
undue burden because whether the case against Matt Martorello
should be stayed was pending at the time the motion was filed.
That too was decided in a prior order, and the motion to stay was
denied. Williams, No. 3:17-cv-461, ECF No. 323 at 6-7.
7

subpoenaed for depositions as individuals.

Thus, the Court holds

that Liang can be deposed about all activities in his role as an
officer or employee or shareholder of Bellicose and Eventide, the
operation of Bellicose, the reasons for Bellicose's sale to the
Tribe, and the structure of the Bellicose sale.
But, whether Liang can be questioned about his employment at
Ascension must be left for another day.

Although the Court doubts

that Liang can altogether avoid testifying about his work at
Ascension even if the Fourth Circuit decides that the Corporate
Defendants

are

protected by

the

Tribe's

immunity,

the

Court

believes that prudence dictates that Liang should not be asked
about his role at Ascension during the pendency of the appeal.

If

the Fourth Circuit affirms the decision rejecting the claim to
sovereign

immunity,

then

discovery

can

be

reopened

to

allow

inquiry.
However, because of problems with discovery and delay caused
by dealing with broad claims of immunity from discovery interposed
by the Corporate Defendants, this case is now out of kilter.

The

requested deposition is related to the merits of the claims against
Martorello.

And, it is correct that preserving testimony now would

be helpful to the plaintiffs.

However, there is pending a class

certification motion against Martorello that ought to be decided
first.

Therefore,

the

deposition

allowed

here

will

scheduled until after class certification is decided.
8

not

be

CONCLUSION

For the foregoing reasons and as set forth above, the AMENDED
MOTION TO QUASH

SUBPOENA TO

SIMON XU LIANG TO TESTIFY AT A

DEPOSITION IN A CIVIL ACTION AND MEMORANDUM IN SUPPORT (ECF No. 3)
will be granted in part and denied in part.
It is so ORDERED.
/s/
Robert E. Payne
Senior United States District Judge
Richmond, Virginia
Date: February 8, 2019

9