Diversified Lenders, LLC v. Amazon Logistics, Inc. et al

Filing 75

ORDER granting in part Diversified's 63 Motion for Protective Order, by Judge Robert S. Lasnik. (swt)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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DIVERSIFIED LENDERS, LLC,

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Plaintiff,

Cause No. C16-1232RSL

v.
AMAZON LOGISTICS, INC., and
VERTICAL HOLDINGS UNLIMITED,
LLC,

ORDER GRANTING IN PART
MOTION FOR PROTECTIVE ORDER

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Defendants.
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AMAZON LOGISTICS, INC.,

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Cross-Claim Plaintiff,
v.
VERTICAL HOLDINGS UNLIMITED,
LLC,
Cross-Claim Defendant.

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This matter comes before the Court on “Plaintiff Diversified Lenders, LLC’s Motion for

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Protective Order.” Dkt. # 63. On March 3, 2017, defendant Amazon Logistics, Inc., issued a

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discovery subpoena to defendant Vertical Holdings Unlimited, LLC (“VHU”). Because VHU

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has not appeared in this action and a default has been entered against it, the subpoena was issued

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under Fed. R. Civ. P. 45. Diversified filed this motion for protective order under Fed. R. Civ. P.

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ORDER GRANTING IN PART MOTION
FOR PROTECTIVE ORDER

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26(c).
“[T]ypically only the recipient of a subpoena has standing to assert objections . . . .”
Cabell v. Zorro Prods., Inc., 294 F.R.D. 604, 607 (W.D. Wash. 2013). Nevertheless, a party may
seek to quash third-party discovery requests where its own interests are implicated. Uhler v. Van
Cleave, 2017 WL 553276, at *6 (W.D. Wash. Feb. 10, 2017). In this case, Diversified has not

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shown that the subpoena seeks information that is confidential or otherwise protectable (Cabell,
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294 F.R.D. at 608), that it has “a personal right or privilege with respect to the documents
requested” (Uhler, 2017 WL 553276, at *6), or that it has an expectation of privacy in its

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business transactions with another corporation (Auto-Owners Ins. Co. v. Se. Floating Docks,

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Inc., 231 F.R.D. 426, 429 (M.D. Fla. 2005)). Although an order quashing the subpoena is not

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appropriate, courts generally permit a party to challenge the relevance of third-party discovery

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requests by seeking a protective order under Fed. R. Civ. P. 26(c). See In re REMEC, Inc.

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Securities Litig., 2008 WL 2282647, at * 1 (S.D. Cal. May 30, 2008).

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This dispute arises out of the following facts: VHU provided delivery services for

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Amazon beginning in March 2015. Shortly thereafter, Diversified notified Amazon that all of

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VHU’s accounts had been sold or assigned to Diversified and that all payments thereon should

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be made exclusively to Diversified. Amazon paid Diversified approximately $3,000,000 under
the notice of assignment, but ultimately terminated its contract with VHU. Amazon asserts that

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VHU failed to pay its employees: the remaining funds that Amazon still owed VHU were
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therefore paid to VHU’s employees and applicable state labor departments. Diversified alleges
that there are more than fifty outstanding invoices for transportation services provided by VHU
and seeks more than $1.7 million from Amazon. Dkt. # 1 at ¶ 13. Amazon denies that the
invoices are legitimate or accurate (Dkt. # 23 at ¶ 13) and seeks discovery from VHU in an

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ORDER GRANTING IN PART MOTION
FOR PROTECTIVE ORDER

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attempt to quantify Diversified’s losses. Diversified argues that the requests for communications

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between VHU and Diversified after this lawsuit was filed, records showing transfers of funds

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between VHU and Diversified related to Amazon invoices, and documents detailing amounts
Diversified has recovered from any source related to the Amazon invoices are overbroad and
irrelevant.

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Having reviewed the memoranda, declarations, and exhibits submitted by the parties, the
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Court finds as follows:
A. Document Request No. 2

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Amazon seeks “all communications between VHU and Diversified, or any agents for

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VHU or Diversified, since April 29, 2016,” the date on which this lawsuit was filed. For the

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reasons stated in the “Order Compelling Production,” of even date, the Court finds that

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communications between Diversified and VHU after April 29, 2016, that are related to any

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payments made by VHU to Diversified are relevant and discoverable. Amazon does not,

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however, have a right to broad ranging discovery regarding the way in which the putative

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adverse parties choose to protect their respective interests in this litigation. Diversified’s motion

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for protective order is GRANTED in part and DENIED in part as to Document Request No. 2.
B. Document Requests Nos. 5 and 8
Diversified argues that documents regarding its receipt of funds related to the services

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VHU provided to Amazon are irrelevant. The Court disagrees. Payment information will help
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establish the amount actually due and owing under the notice of assignment. To the extent that
Amazon needs information from VHU detailing its financing, payment, and charge back

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arrangement with Diversified in order to accurately calculate what has already been paid and

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what is outstanding, the documents are relevant. Diversified argues that the Uniform

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ORDER GRANTING IN PART MOTION
FOR PROTECTIVE ORDER

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Commercial Code gives it a right to double recovery, making evidence of payment from VHU

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irrelevant. That issue has not been argued or resolved in this case, and Amazon will have the

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opportunity to develop facts in support of its legal theory.

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For all of the foregoing reasons, Diversified’s motion for protective order is GRANTED

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in part. Production in response to Document Request 2 is hereby limited to communications
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between Diversified and VHU after April 29, 2016, that are related to any payments made by
VHU to Diversified.

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Dated this 23rd day of March, 2017.

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A

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Robert S. Lasnik
United States District Judge

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ORDER GRANTING IN PART MOTION
FOR PROTECTIVE ORDER

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