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In re Flag Telecom Holdings

September 13, 2006

IN RE FLAG TELECOM HOLDINGS, LTD. SECURITIES LITIGATION
THIS DOCUMENT RELATES TO:
ALL ACTIONS



The opinion of the court was delivered by: Conner, Senior D.J.

OPINION AND ORDER

Plaintiffs Peter Loftin, Norman H. Hunter and Joseph Coughlin (collectively, "plaintiffs") move pursuant to Rule 45 of the Federal Rules of Civil Procedure to quash a subpoena served by defendant Citigroup Global Markets, Inc. ("Citigroup") on non-party KPMG LLP ("KPMG"). For the reasons stated herein, plaintiffs' motion is granted.

BACKGROUND

The facts of this case are set forth extensively in our previous opinions, familiarity with which is presumed. See In re Flag Telecom Holdings, Ltd. Sec. Litig., 236 F.R.D.177 (S.D.N.Y. 2006); In re Flag Telecom Holdings, Ltd. Sec. Litig., 411 F. Supp. 2d 377 (S.D.N.Y. 2006); In re Flag Telecom Holdings, Ltd. Sec. Litig., 352 F. Supp. 2d 429 (S.D.N.Y. 2005); In re Flag Telecom Holdings, Ltd. Sec. Litig., 308 F. Supp. 2d 249 (S.D.N.Y. 2004). Accordingly, we set forth only the procedural and factual history necessary for decision on the present motion.

As outlined in our previous Opinion and Order dated June 21, 2006, (the "June 21, 2006 Order"), Andres Bande, Edward McCormack, Larry Bautista, Daniel Petri, Edward McQuaid, Philip Seskin and Dr. Lim Lek Suan (the "individual defendants") and Citigroup (collectively, the "defendants") served plaintiffs with a request for the production of documents. Included was a request for "[a]ll documents concerning any litigation, including prior to the Relevant Time Period,*fn1 in which you have been (i) a named or lead plaintiff or (ii) a defendant and in which fraud, deceit, or misrepresentation was alleged."

On April 22, 2005, plaintiffs served their objections to the individual defendants' document requests and, in response to the requests, plaintiffs produced over 4,000 pages of publicly available documents filed in an unrelated action against KPMG,*fn2 as well as Loftin's Morgan Stanley brokerage account statements from December 1998 through April 2002 related to FTHL securities transactions and account reconciliations. After several unsuccessful meet and confer sessions, the individual defendants filed a motion to compel plaintiffs to produce documents responsive to their requests.

In addition, Citigroup served KPMG with a subpoena on April 13, 2006. (Friedman Decl., Ex. C.) That subopoena requested:

1. All Documents and Communications Concerning any Tax Services provided by KPMG to Mr. Peter Loftin during the period January 1, 1998 through April 12, 2002, including without limitation any Documents Concerning securities investments made in connection with Mr. Loftin's use of BLIPS, FLIP or OPIS tax shelters.

2. All Documents and Communications Concerning any purchases or sales of Flag Telecom securities in connection with any client's use of BLIPS, FLIP or OPIS tax shelters. (Id.)*fn3

In response to Citigroup's service of the subpoena on KPMG, Loftin filed the instant motion to either quash the subpoena or, in the alternative, to stay the subpoena pending the Court's resolution on the motion to compel. While the present motion was pending, this Court, by the June 21, 2006 Order, denied the individual defendants' motion.

DISCUSSION

I. Standing

Generally, absent a claim of privilege, a party does not have standing to object to a subpoena served on a non-party. See Langford v. Chrysler Motors Corp., 513 F.2d 1121, 1126 (2d Cir. 1975). However, a party may have "a sufficient privacy interest in the confidentiality of records pertaining to their personal financial affairs so as to give them standing to challenge the subpoenas." Sierra Rutile Ltd. v. Katz, No. 90 Civ. 4913, 1994 WL 185751, at *2 (S.D.N.Y. May 11, 1994); see Chazin v. Lieberman, 129 F.R.D. 97, 98 (S.D.N.Y. 1990) (finding a party had standing to challenge a subpoena served on non-party ...


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