Wei et al v. Rocky Point International LLC

Filing 81

ORDER signed by Judge J.P. Stadtmueller on 9/6/2017: GRANTING in part and DENYING in part 58 Plaintiff's Motion to Compel Discovery Responses; GRANTING 60 Plaintiff's Motion to Restrict Document; and ORDERING Defendant to supplement its discovery responses in accordance with this Order within 7 days. See Order. (cc: all counsel) (jm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
SEAH CHEE WEI,

v.

Plaintiff,

Case No. 16-CV-1282-JPS

ROCKY POINT INTERNATIONAL LLC,

ORDER

Defendant.
This is an action to recover funds which Plaintiff alleges were
fraudulently transferred to Defendant Rocky Point International, LLC
(“Rocky Point”). Before the Court is Plaintiff’s motion to compel
production of certain financial records, including bank statements, balance
sheets, income statements, and tax returns. (Docket #58). Plaintiff wants to
use these records for several purposes, including attempting to undermine
Rocky Point’s justifications for the transfers at issue in this case (such as
the upfront commission scheme and the cash pooling agreement
discussed at length in the parties’ summary-judgment submissions) and to
show that the transfers rendered the relevant entities insolvent. Id. at 3–5.
Thus, Plaintiff seeks an order for Rocky Point to produce: (1) all of Rocky
Point’s bank statements from BMO Harris Bank, N.A. from October 1,
2013 through January 31, 2017; and (2) all fiscal year end reports, balance
sheets, profit and loss statements, tax returns, budget reports, audited
financial statements, and audit reports for Rocky Point for the period
January 1, 2013 through December 31, 2016. Id. at 7.
District courts have broad discretion in deciding matters relating to
discovery. Packman v. Chicago Tribune Co., 267 F.3d 628, 646–47 (7th Cir.
2001); Rennie v. Dalton, 3 F.3d 1100, 1110 (7th Cir. 1993). Under Federal

Rule of Civil Procedure 26(b)(1), parties may obtain discovery “regarding
any nonprivileged matter that is relevant to any party’s claim or defense
and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). The
information sought need not itself be admissible to be discoverable. Id. In
considering matters of proportionality, the Rule directs courts to consider
“the importance of the issues at stake in the action, the amount in
controversy, the parties’ relative access to relevant information, the
parties’ resources, the importance of the discovery in resolving the issues,
and whether the burden or expense of the proposed discovery outweighs
its likely benefit.” Id.; Elliot v. Superior Pool Prods., LLC, No. 15-cv-1126,
2016 WL 29243, at *2 (C.D. Ill. Jan. 4, 2016).
Rocky Point initially resisted Plaintiff’s discovery requests as overly
broad and unduly burdensome. As to the BMO Harris bank statements,
Rocky Point asserts that Plaintiff can retrieve them from the bank directly
by way of a subpoena. (Docket #70 at 7). This objection makes no sense,
however, as the ability of a third party to produce records does not
obviate Rocky Point’s duty to produce relevant documents when they are
within its control. See Fed. R. Civ. P 34(a). Moreover, Rocky Point does not
dispute the notion that it has easy access to its own bank statements. Thus,
this objection is without merit. See In re NASDAQ Market-Makers Antitrust
Litig., 169 F.R.D. 493, 530 (S.D.N.Y. 1996) (holding that a party can be
ordered to produce documents that it has the legal right and practical
ability to obtain from another).
Additionally, regarding both the BMO Harris statements and the
other requested financial records, Rocky Point believes that the narrow

Page 2 of 7

issue of fraudulent transfer presented in this suit belies Plaintiff’s asserted
need for so many records over such an expansive time period. However, it
should be noted at the outset that after Plaintiff filed his motion, Rocky
Point produced a large number of responsive documents—what it calls
“almost all” of the requested discovery. (Docket #70 at 3). As of the filing
of Plaintiff’s reply, it appears that Rocky Point has produced the soughtafter tax returns, bank statements from Wells Fargo and Bank of America,
“paperwork” concerning the underlying loan and brokerage agreements,
mortgage-related

documents,

invoices

and

checks

regarding

improvements made to the Pewaukee lake house, and “most of its
financial statements, books and records, and other financial documents.”
See id. at 4–5; (Docket #76 at 2). According to Rocky Point’s opposition
brief, this leaves only “some third-party records” that have not been
produced, (Docket #70 at 9), although its later supplement represents that
there is nothing more to provide, (Docket #76 at 2).
Both Plaintiff and this Court noticed the slippage in these
representations: the outside observer cannot be expected to know what it
means to produce “almost all” of the relevant records or why some
portion of those records has been withheld while “most” have not. Put
simply, Rocky Point does not equip the Court or Plaintiff to assess what
has been produced and what has not, making it impossible to determine
whether other responsive records exist. In this vacuum of certainty, the
Court is obliged to enforce compliance with Plaintiff’s requests.
The Federal Rules of Civil Procedure contemplate a scheme of
ongoing, fulsome disclosure of information and documents when a party

Page 3 of 7

is presented with appropriate requests for the same. They do not invite a
game of hide-the-ball as to whether relevant material is being withheld, or
how much, or why. Trial by ambush is no longer the name of the game.
Macaulay v. Anas, 321 F.3d 45, 50 (1st Cir. 2003).
As noted above, “[p]arties may obtain discovery regarding any
nonprivileged matter that is relevant to any party’s claim or defense and
proportional to the needs of the case[.]” Fed. R. Civ. P. 26(b)(1). Rocky
Point claims that Plaintiff must also show that the records sought are
“indispensable,” but this has never been the relevant standard, (Docket
#70 at 6),1 and the Court finds that Plaintiff’s requests seek information
relevant to its claims and proportional to the needs of the case as a whole,
given the ease of locating and producing the records and their potential
probative value on the core questions at issue in this lawsuit. At best,
Rocky Point thinks that the records sought will not turn out to be
persuasive evidence in Plaintiff’s favor, but it is free to make that
argument at trial. It is not a reason to deny discovery.
Thus, the Court will enter an order compelling Rocky Point to
supplement its responses to provide: (1) all of Rocky Point’s bank
statements from BMO Harris Bank, N.A. from October 1, 2013 through
January 31, 2017; and (2) all fiscal year end reports, balance sheets, profit
Rocky Point’s cited case involved a motion to compel discovery
responses after the period for discovery had already closed. Balschmiter v. TD
Auto Finance LLC, No. 13–CV–1186–JPS, 2015 WL 2451853, at *10 (E.D. Wis. May
21, 2015). Such a request necessarily demands a higher showing of need for the
discovery sought, which the movant in that case did not make. That is not the
situation in this case. Moreover, in Balschmiter, the lack of prejudice in denying
the requested discovery was one reason among several that militated in favor of
the ultimate result. See id.
1

Page 4 of 7

and loss statements, tax returns, budget reports, audited financial
statements and audit reports for Rocky Point for the period January 1,
2013 through December 31, 2016.2 To the extent such records have already
been produced, they need not be produced again.
Finally, the Court must address Plaintiff’s request for an award of
attorney’s fees expended in connection with the instant motion. Federal
Rule of Civil Procedure 37(a)(3)(B)(iv) provides that if a party fails to
produce documents as requested, a party seeking discovery may move for
an order compelling production of documents. Fed. R. Civ. P.
37(a)(3)(B)(iv). If the motion is granted—or if the requested discovery is
provided after the motion was filed—the court must, after giving an
opportunity to be heard, require the party whose conduct necessitated the
motion to pay the movant’s reasonable expenses incurred in making the
motion, including attorney’s fees. Id. 37(a)(5)(A). However, the court must
not order such a payment if (i) the movant filed the motion before
attempting in good faith to obtain the disclosure or discovery without
court action; (ii) the opposing party’s nondisclosure, response, or objection

In his reply, Plaintiff claims that there are other financial institutions
with relevant accounts in addition to BMO Harris. (Docket #77 at 2). In his prayer
for relief in the reply, Plaintiff updated his demand to request bank statements
from BMO Harris and “any other institution holding [Rocky Point’s] funds.” Id.
at 14. Parties are not permitted to make new arguments in a reply brief, as it
deprives the non-movant of the opportunity to offer its opposition. Gold v.
Wolpert, 876 F.2d 1327, 1331 n.6 (7th Cir. 1989); Autotech Techs. Ltd. P’ship v.
Automationdirect.com, Inc., 249 F.R.D. 530, 536 (N.D. Ill. 2008). The Court will only
order production of documents as Plaintiff originally prayed for in his motion. If
Rocky Point fails to provide other relevant documents in response to an
appropriate discovery request, and if good faith meet-and-confer efforts fail to
resolve the parties’ dispute, the matter may be revisited with the Court.
2

Page 5 of 7

was substantially justified; or (iii) other circumstances make an award of
expenses unjust. Id.
Here, Plaintiff requests an award of fees and expenses in the
amount of $11,500, arguing that although Rocky Point produced most of
what was asked for, it should have done so sooner. See (Docket #77 at 11).
The Court must deny the request for a simple reason: other than baldly
stating the amount of their fees and expenses, Plaintiff has produced not a
single sworn statement or other shred of documentary proof, such as time
sheets or evidence regarding counsel’s billing rates, to substantiate the
amount claimed. Awarding Plaintiff an amount of fees seemingly plucked
from thin air would be unjust, as neither Rocky Point nor the Court have
the ability to interrogate the reasonableness of the requested fees. See
Commodity Future Trading Comm’n v. Tade Exchange Network Ltd., 159 F.
Supp. 3d 5, 8 (D.D.C. 2015) (proponent of fee award under Rule 37 must
show that rate requested and hours expended are reasonable); Kamps v.
Fried, Frank, Harris, Shriver & Jacobson L.L.P., 274 F.R.D. 115, 120 (S.D.N.Y.
2011) (fees denied where no contemporaneous time records describing
work performed were timely submitted). Thus, no award of fees will be
made.
Accordingly,
IT IS ORDERED that Plaintiff’s motion to compel discovery
responses (Docket #58) be and the same is hereby GRANTED in part and
DENIED in part as stated herein;

Page 6 of 7

IT IS FURTHER ORDERED that Plaintiff’s motion to restrict an
exhibit submitted in connection with his motion to compel (Docket #60) be
and the same is hereby GRANTED; and
IT IS FURTHER ORDERED that Defendant supplement its
discovery responses as required by this Order no later than seven (7) days
from the date of this Order.
Dated at Milwaukee, Wisconsin, this 6th day of September, 2017.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

Page 7 of 7