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John H. Libaire v. Myron Kaplan

January 19, 2011

JOHN H. LIBAIRE, PLAINTIFF(S),
v.
MYRON KAPLAN, JANET KRUDOP, NORTH FORK PRESERVE, INC., AND NORTH FORK PRESERVE, CO., DEFENDANT(S).



The opinion of the court was delivered by: E. Thomas Boyle United States Magistrate Judge

MEMORANDUM OPINION AND ORDER

Before the court is a motion by the judgment debtors, plaintiff, John H. Libaire ("Libaire"), and his counsel, Mitchell A. Stein ("Stein") (collectively the "judgment debtors"), to quash a post-judgment subpoena served upon them by defendants on June 21, 2010 in an effort to enforce a judgment dated January 25, 2010, entered by Judge Hurley, the district court judge assigned to this action, which judgment imposed sanctions against both judgment debtors in the amount of $94,845.45. For the following reasons, the motion to quash is denied.

FACTS

Familiarity with the facts of the underlying action is presumed. By Report and Recommendation dated January 17, 2008, the undersigned recommended that defendants' motion for summary judgment be granted and that Libaire and his counsel, Stein, be sanctioned pursuant to the Private Securities Litigation Reform Act ("PSLRA") for bringing a frivolous securities action. That recommendation was adopted by Judge Hurley on March 24, 2008 and the matter was again referred to the undersigned to report and recommend as to the amount of sanctions that should be awarded to defendants.

By Report and Recommendation dated September 26, 2008, the undersigned recommended that sanctions be imposed in the amount of $79,837.87. Judge Hurley adopted that recommendation on May 22, 2009 and, due to the additional legal services rendered, increased the amount of sanctions to $94,845.45. A judgment in that amount was issued on May 22, 2009. The judgment was amended twice thereafter - first, on May 29, 2009 and again on January 25, 2010 - but the amount of the judgment remained the same throughout.

Libaire timely appealed the Second Amended Judgment on February 25, 2010. By Summary Order dated October 6, 2010, the Second Circuit affirmed the district court's award of summary judgment in favor of the defendants as well as the sanctions award imposed pursuant to the PSLRA.

By subpoena dated June 21, 2010, defendants sought to obtain both documents and deposition testimony from Stein. (Def. Ex. B.) The subpoena commanded Stein to appear for a deposition and to produce twenty categories of documents on July 28, 2010. (Def. Ex. B.) Stein objected to the subpoena and on July 27, 2010 - the day before the subpoena commanded his appearance and production - the judgment debtors sought leave from this court to file a motion to quash the subpoena. The request was referred to the undersigned by Judge Hurley and a pre-motion conference was held on August 5, 2010. The judgment debtors were granted permission at that time to move to quash the June 21, 2010 subpoena.

The fully briefed motion to quash was filed with the Court on October 27, 2010. In their motion, the judgment debtors assert that the subpoena should be quashed because: (1) the court lacks subject matter jurisdiction to enforce the subpoena; and (2) the subpoena is overly broad, unduly burdensome and requests the production of privileged and confidential information.

DISCUSSION

I. Legal Standard

Pursuant to Federal Rule of Civil Procedure 45(c)(3), a court "must quash or modify a subpoena that . . . requires disclosure of privileged or other protected matter, if no exception or waiver applies; or . . . subjects a person to undue burden." Fed. R. Civ. P. 43(c)(3)(A)(iii), (iv). In response to a motion to quash a subpoena, "[t]he party issuing the subpoena must demonstrate that the information sought is relevant and material to the allegations and claims at issue in the proceedings." Kingsway Fin. Servs., Inc. v. Pricewaterhouse-Coopers LLP, No. 03 Civ. 5560, 2008 WL 4452134, at *4 (S.D.N.Y. Oct. 2, 2008) (quotation omitted). "Once the party issuing the subpoena has demonstrated the relevance of the requested documents, the party seeking to quash the subpoena bears the burden of demonstrating that the subpoena is overbroad, duplicative, or unduly burdensome." Corbett v. Ehome Credit Corp., No. 10-CV-26, 2010 WL 3023870, at *3 (E.D.N.Y. Aug. 2, 2010) (quotation omitted). The decision whether to quash or modify a subpoena is committed to the sound discretion of the trial court. See Corbett, 2010 WL 3023870, at *3; Ebbert v. Nassau County, No. CV 05-5445, 2007 WL 674725, at *4 (E.D.N.Y. Mar. 5, 2007).

II. The Court Has Jurisdiction to Enforce the Subpoena "As a general rule, once a federal court has entered judgment, it has ancillary jurisdiction over subsequent proceedings necessary to 'vindicate its authority, and effectuate its decrees.'" Dulce v. Dulce, 233 F.3d 143, 146 (2d Cir. 2000) (quoting Peacock v. Thomas, 516 U.S. 349, 354 (1996)). Such authority includes proceedings to enforce the judgment rendered. See Dulce, 233 F.3d at 146 (citation omitted).

The judgment debtors argue that because the Court determined in rendering summary judgment for defendants that plaintiff did not purchase a security within the applicable limitations period to raise a cognizable securities claim, the Court lacks subject matter jurisdiction over this action. (Pl. Mem. of Law 5.) According to the judgment debtors, this lack of subject matter jurisdiction renders the subpoena void and any decision by the Court a nullity. (Id.) However, plaintiff made virtually the same argument to the Second Circuit when appealing the award of sanctions under the PSLRA and the Circuit Court squarely rejected it. See Libaire v. Kaplan, No. 99-2659-cv, 2010 U.S. App. LEXIS 20594, at *5-7 (2d Cir. Oct. 6, 2010).

In pursuing his appeal, plaintiff argued that the district court was without authority to award sanctions under the PSLRA because there was no "final adjudication of the action" in that the court "impliedly determined that [he] lacked statutory standing" since his securities claims were time-barred. See id. at *5 (alteration ...


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