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Sky Medical Supply Inc. v. SCS Support Claims Services, Inc.

United States District Court, E.D. New York

March 24, 2017

SKY MEDICAL SUPPLY INC., Plaintiff,
v.
SCS SUPPORT CLAIM SERVICES, INC., PATIENT FOCUS MEDICAL EXAMINATIONS, PC d/b/a ALL BOROUGH MEDICAL, PC, NATIONWIDE MANAGEMENT INC., BAB MANAGEMENT INC., MANAGEMENT COMPANY A, MANA GEMENT COMPANY B, MANAGEMENT COMPANY C, MANAGEMENT COMPANY D, MANAGEMENT COMPANY E, BENJAMIN OSIASHVILI a.k.a VENIAMIN OSIASHVILI, MIKAEL OSIASHVILI a.k.a MICHAEL OSIASHVILI, SVETLANA OSIASHVILI, ALEKSEY VAYNER a.k.a ALEX VAYNER, EITAN DAGAN, MANAGER DEFENDANT A, MANAGER DEFENDANT B, MANAGER DEFENDANT C, MANAGER DEFENDANT D, MANAGER DEFENDANT E, TATIANA SHARAHY, MD, MITCHELL EHRLICH, MD, JOSEPH C. COLE, MD, JULIO WESTERBAND, MD, WILLIAM A. ROSS, MD, RENAT R. SUKHOV, MD, WILLIAM S. KRITZBERG, MD, ROBERT A. SOHN, DC, STANLEY ROSS, MD, MITCHELL L. WEISMAN, MD, MARK WEBER, MD, GARY J. FLORIO, MD, ANTONIO MARTINS, MD, DAMION A. MARTINS, MD, M.S., DANTE BRITTIS, MD, CHRISTOPHER FERRANTE, DC, BRIAN FREINDLICH, DC, WAYNE KERNESS, MD, DENIS MANN, DC, ANDREW MILLER, MD, ANDREW BAZOS, MD, DREW STEIN, MD, LINDA ACKERMAN and EVGENIYA VAKIDOVA, Defendants.

          MEMORANDUM AND ORDER

          A. KATHLEEN TOMLINSON U.S. MAGISTRATE JUDGE

         I. Preliminary Statement

         Plaintiff Sky Medical Supply Inc. (“Plaintiff” or “Sky Medical”) brings the instant action against SCS Support Claim Services, Inc., Patient Focus Medical Examinations, PC d/b/a All Borough Medical, PC, Nationwide Management Inc., BAB Management Inc., Management Company A, Management Company B, Management Company C, Management Company D, Management Company E, Benjamin Osiashvili a.k.a Veniamin Osiashvili, Mikael Osiashvili a.k.a Michael Osiashvili, Svetlana Osiashvili, Aleksey Vayner a.k.a Alex Vayner, Eitan Dagan, Manager Defendant A, Manager Defendant B, Manager Defendant C, Manager Defendant D, Manager Defendant E, Tatiana Sharahy, MD, Mitchell Ehrlich, MD, Joseph C. Cole, MD, Julio Westerband, MD, William A. Ross, MD, Renat R. Sukhov, MD, William S. Kritzberg, MD, Robert A. Sohn, DC, Stanley Ross, MD, Mitchell L. Weisman, MD, Mark Weber, MD, Gary J. Florio, MD, Antonio Martins, MD, Damion A. Martins, MD, M.S., Dante Brittis, MD, Christopher Ferrante, DC, Brian Freindlich, DC, Wayne Kerness, MD, Denis Mann, DC, Andrew Miller, MD, Andrew Bazos, MD, Drew Stein, MD, Linda Ackerman and Evgeniya Vakidova. Plaintiff seeks monetary damages based upon the following causes of action: (1) declaratory judgment, pursuant to 28 U.S.C. §§ 2201 and 2202, declaring that all peer reviews and all IME reports issued by the Defendants are null and void; (2) mail fraud under the Federal Racketeering Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. §1962(c); (3) mail fraud under the RICO Act, 18 U.S.C. §1962 (d) against the Nationwide Defendants; (4) mail fraud under the RICO Act, 18 U.S.C. §1962 (c) against the GW Defendants; (5) mail fraud under the RICO Act, 18 U.S.C. §1962 (c) against the GW Defendants; (6) mail fraud under the RICO Act, 18 U.S.C. §1962 (d) against the Nationwide Defendants; (7) mail fraud under the RICO Act, 18 U.S.C. §1962 (d) against the Nationwide Defendants; (8) mail fraud under the RICO Act, 18 U.S.C. §1962 (d) against the GW Defendants; (9) mail fraud under the RICO Act, 18 U.S.C. §1962 (d) against the GW Defendants; (10) common law fraud; (11) aiding and abetting fraud against the GW Defendants; (12) unjust enrichment; and (13) tortious interference. See generally Second Amended Complaint (“SAC”) [DE 294].

         Presently before the Court are two motions seeking to quash subpoenas served upon non-parties to this lawsuit. The first is Plaintiff's motion to quash the subpoena duces tecum served upon non-party Government Employees Insurance Company (“GEICO”) by the GW Defendants[1]to the extent the subpoena seeks disclosure of a Settlement Agreement entered into between Plaintiff and non-party GEICO in an unrelated action. See DE 459. The GW Defendants and the Nationwide Defendants[2] (collectively, the “Defendants”) oppose the motion. See DE 461, 462. The second motion involves Defendants and non-parties BDB Management NY Inc. (“BDB”) and TCMR Management, Inc.'s (“TCMR”) (collectively, the “Non-Party Objectors”) and seeks to quash four subpoenas duces tecum served upon non-party JP Morgan Chase Bank (“Chase”) since, according to both Defendants and the Non-Party Objectors, the subpoenas “seek private financial records of the Defendants that are irrelevant to Plaintiff's damage claims.” DE 478.

         For the reasons that follow, Plaintiff's motion is DENIED and Defendants' motion is GRANTED, in part, and DENIED, in part.

         II. Relevant Background

         On February 8, 2016, the GW Defendants served upon non-party GEICO an Amended Subpoena to Produce Documents, Information, or Objects or to Permit Inspection of Premises in a Civil Action (the “GEICO Subpoena”). See DE 459-1 (GEICO Subpoena). As is relevant to the disposition of the instant motion, the GEICO Subpoena sought a “copy of the settlement agreement between GEICO and Sky Medical that resolve[d] the lawsuit commenced by the GEICO Complaint.”[3] Id., Amended Appendix A. Thereafter, on March 28, 2016, Plaintiff filed a letter motion seeking to quash the GEICO Subpoena to the extent that it sought production of the “confidential settlement agreement between plaintiff, its owner Edi Kalontarov, and GEICO” in an unrelated action. DE 459. Both the GW Defendants and the Nationwide Defendants filed opposition on April 15, 2016. DE 461, 462. After conducting an initial review of the motion papers, the Court issued an Order on May 5, 2016, expressing “concerns regarding what relevance, if any, the Settlement Agreement has with respect to Defendant's ability to defend itself against Plaintiff's claims contained in the Second Amended Complaint.” DE 467. Therefore, “prior to making a final ruling on Plaintiff's motion to quash” the Court directed that “Plaintiff provide a hard copy of the Settlement Agreement . . . within 14 days of the date of this Order to enable the Court to conduct an in camera review as to the overall relevance of the document.” Id. In addition, the Court indicated that it had not yet rendered a threshold determination as to whether Plaintiff possessed the requisite standing to contest the subpoena in the first instance. Id. On May 19, 2017, Plaintiff provided a copy of the Settlement Agreement to the Court to facilitate its adjudication of the motion.

         With respect to Defendants' motion to quash [DE 478], Plaintiff executed the four subpoenas[4] at issue (the “Chase Subpoenas”) on April 13, 2016 and April 21, 2016.[5]DE 478, Exs. D, E, F. All four subpoenas seek the same six categories of financial information for accounts held by Defendants and the Non-Party Objectors which are presumably within the custody and control of Chase. Id. On May 20, 2016, Defendants filed a letter motion, in which the Non-Party Objectors joined, seeking to quash the Chase Subpoenas based upon the fact that the information sought encompassed “private financial records of the Defendants that are irrelevant to Plaintiff's damages claims.” DE 478. On May 23, 2016, Plaintiff filed a response in which it opposed the motion. DE 483.

         III. Applicable Legal Standard

         Rule 45 of the Federal Rules of Civil Procedure governs the procedure when an individual or entity seeks to quash or modify a subpoena. Specifically, Rule 45(d) provides, in pertinent part, that

(A) When Required. On timely motion, the court for the district where compliance is required must quash or modify a subpoena that:
(i) fails to allow a reasonable time to comply;
(ii) requires a person to comply beyond the geographical limits specified in Rule 45(c);
(iii) requires disclosure of privileged or other protected matter, if no exception or waiver applies; or
(iv) subjects a person to undue burden.
(B) When Permitted. To protect a person subject to or affected by a subpoena, the court for the district where compliance is required may, on motion, quash or modify the subpoena if it requires:
(i) disclosing a trade secret or other confidential research, development, or commercial information; or
(ii) disclosing an unretained expert's opinion or information that does not describe specific occurrences in dispute and results from the expert's study that was not requested by a party.

Fed. R. Civ. P. 45(d)(3)(A), (B).

         “A determination to grant or deny . . . a motion to quash a subpoena is discretionary.” John Wiley & Sons, Inc. v. Doe Nos. 1-30, 284 F.R.D. 185, 189 (S.D.N.Y. 2012); see In re Subpoena Issued to Dennis Friedman, 350 F.3d 65, 68 (2d Cir. 2003); Solomon v. Nassau Cnty., 274 F.R.D. 455, 460 (E.D.N.Y. 2011) (“Motions to quash subpoenas under the Rules are ‘entrusted to the sound discretion of the district court.'”) (quoting In re Fitch, Inc., 330 F.3d 104, 108 (2d Cir. 2003)); Libaire v. Kaplan, 760 F.Supp.2d 288, 291 (E.D.N.Y. 2011) (“The decision whether to quash or modify a subpoena is committed to the sound direction of the trial court.”) (citations omitted).

         “The party issuing the subpoena must demonstrate that the information sought is relevant and material to the allegations and claims at issue in the proceedings.” Night Hawk Ltd. v. Briarpatch Ltd., 03 Civ. 1382, 2003 WL 23018833, at *8 (S.D.N.Y. Dec. 23, 2003); see also Salvatorie Studios, Int'l v. Mako's Inc., 01 Civ. 4430, 2001 WL 913945, at *1 (S.D.N.Y. Aug. 14, 2001). Relevance in this context is subject to the over-arching relevance requirement outlined in Rule 26(b)(1). See In re Refco Sec. Litig., 759 F.Supp.2d 342, 345 (S.D.N.Y. 2011) (“Subpoenas issued under Rule 45 are subject to the relevance requirement of Rule 26(b)(1)”); see Ford Motor Credit Co. v. Meehan, No. CV 05-4807, 2008 WL 2746373, at *4 (E.D.N.Y. July 11, 2008); During v. City Univ. of New York, No. 05 Civ. 6992, 2006 WL 2192843, at *82 (S.D.N.Y. Aug. 1, 2006).

         Rule 26(b)(1), as amended on December 1, 2015, recognizes that “[i]nformation is discoverable . . . if it is relevant to any party's claim or defense and is proportional to the needs of the case.” Rule 26 Advisory Committee Notes to 2015 Amendments; see Sibley v. Choice Hotels Int'l, No. CV 14-634, 2015 WL 9413101, at *2 (E.D.N.Y. Dec. 22, 2015) (recognizing that “the current version of Rule 26 defines permissible discovery to consist of information that is, in addition to being relevant ‘to any party's claim or defense, ' also ‘proportional to the needs of the case.'”) (internal citation omitted). Notably, although Rule 26 still permits a wide range of discovery based upon relevance and proportionality, the “provision authorizing the court . . . to order discovery of any matter relevant to the subject matter involved in the action” has been eliminated. Rule 26 Advisory Committee Notes to 2015 Amendments; see Sibley, 2015 WL 9413101, at *2 (internal citation omitted). The rationale behind the elimination of this phrase is the reality that it “has been used by some, incorrectly, to define the scope of discovery.” Rule 26 Advisory Committee Notes to 2015 Amendments. Thus, Rule 26(b)(1), as amended, although not fundamentally different in scope from the previous version “constitute[s] a reemphasis on the importance of proportionality in discovery but not a substantive change in the law.” Vaigasi v. Solow Mgmt. Corp., No. 11 CIV 5088, 2016 WL 616386, at *13 (S.D.N.Y. Feb. 16, 2016); see Robertson v. People Magazine, No. 14 Civ. 6759, 2015 WL 9077111 at *2 (S.D.N.Y. Dec. 16, 2015) (“[T]he 2015 amendment [to Rule 26] does not create a new standard; rather it serves to exhort judges to exercise their preexisting control over discovery more exact-ingly.”). “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 over- broad, duplicative, or unduly burdensome.” Kingsway Fin. Servs., Inc. v. Pricewaterhouse-Coopers LLP, No. 03 Civ. 5560, 2008 WL 4452134, at *4 (S.D.N.Y. Oct. 2, 2008); see John Wiley & Sons, Inc., 284 F.R.D. at 189 (burden on motion to quash is borne by the moving party); Ford Motor Credit Co., 2008 WL 2746373, at *5 (“The burden of persuasion in a motion to quash a subpoena . . . is borne by the movant.”) (citing Sea Tow Int'l, Inc. v. Pontin, 246 F.R.D. 421, 424 (E.D.N.Y. 2007)). In addition, where the party moving to quash is a non-party to the pending litigation, that fact “entitles the witness to consideration regarding expense and inconvenience.” Night Hawk Ltd., 2003 WL 23018833, at *8 (internal quotations and citation omitted); see Cohen v. City of New York, No. 05 Civ. 6780, 2010 WL 1837782, at *3 (S.D.N.Y. May 6, 2010) (recognizing that “special weight [should be given] to the burden on non-parties of producing documents to parties involved in litigation”); Corbett v. eHome Credit Corp., No. 10-CV-26, 2010 WL 3023870, at *3 (E.D.N.Y. Aug. 2, 2010); Concord Boat Corp. v. Brunswick Corp., 169 F.R.D. 44, 49 (S.D.N.Y. 1996).

         IV. Plaintiff's Motion to Quash ...


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