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PIERSON FERDINAND LLP
Alejandro Pérez (SBN 030968)
3050 North Central Avenue, Suite 1060
Phoenix, Arizona 85016
[email protected]
(602)887-3368
W. Scott Lawler PLC (pro hac application pending)
3133 W. Frye Road, Ste 101
Chandler, AZ 85226
Tel: 480-339-0181
[email protected]
Attorneys for Movants
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
|
REPUBLIC OF KAZAKHSTAN Plaintiff, v. BIG SKY ENERGY CORPORATION Defendants. |
Case No.: OBJECTION TO SUBPOENAS AND |
1. Introduction.
Defendants Big Sky Energy Corporation, a Nevada corporation (“Big Sky Nevada”), and W. Scott Lawler (“Mr. Lawler” and collectively with Big Sky Nevada, “Movants”), by and through counsel, Mr. Lawler, respectfully request that the Court quash or modify the subpoenas served on Big Sky Nevada and its officer and counsel, Mr. Lawler. The subpoenas at issue are attached hereto as Exhibits 1 and 2 (“Subpoenas”) and were issued by plaintiff Republic of Kazakhstan (“ROK”).
Movants object to the Subpoenas and move to quash or modify them as, among other things, they are overbroad and require undue expense on Movants, and constitute an abuse of process as they are purportedly in connection with an attempt to collect on a
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judgment but in reality seek information well outside the permissible scope. Notably, ROK has requested this information in two prior proceedings, Big Sky Nevada produced all relevant and available information, and further attempts by ROK to obtain additional information have been denied in the context of the underlying arbitration from which the current judgment arose. Now, despite purportedly only seeking to collect on a judgment, ROK seeks information wholly unrelated to collection on a purported judgment and instead seeks a third bite at the apple to attempt to obtain information they were not, and are not, entitled to, including without limitation, privileged information and information related to other entities that are not parties to this litigation. Movants have no problem producing relevant information and as the declaration of Mr. Lawler makes clear, Big Sky Nevada has no assets on which ROK can collect and is not currently operating, nor has it done so for nearly a decade. See Declaration of Scott Lawler (“Lawler Declaration”), attached as Exhibit 3 hereto. Accordingly, there is little information for ROK to legitimately seek. However, Big Sky Nevada has already produced all relevant information and, in fact, conducted a meet and confer call with counsel for ROK to see if the parties could reach a mutual agreement to produce this documentation in satisfaction of the Subpoenas. But, ROK would not agree to this reasonable request, necessitating the instant motion.1
ROK has no legitimate reason to seek the volume and scope of documents from the individuals and entities listed below, and as such Movants respectfully request that
1 Initially Movants filed their timely motion in the District of Nevada as Big Sky is a Nevada corporation and the Subpoenas require production of documents in Nevada. However, the District of Nevada ruled that the place of compliance of the Subpoenas is Arizona and denied Movants’ initial motion to quash without prejudice to the filing of the instant motion in this Court. Moreover, pursuant to FRCP 45(f), Movants consent to transfer of this matter back to the Nevada federal court at this Court’s discretion. See FRCP 45(f): “Transferring a Subpoena-Related Motion. When the court where compliance is required did not issue the subpoena, it may transfer a motion under this rule to the issuing court if the person subject to the subpoena consents or if the court finds exceptional circumstances.” ↩
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the Court quash or modify these Subpoenas as set forth herein.
2. Factual Background.
A default judgment was entered in this case on July 28, 2022 (Doc. 21). The default judgment arose out of an ICSID Case No. ARB/17/22 which was an arbitration between Big Sky Nevada and ROK (“Arbitration”). In the underlying Arbitration, ROK sought virtually the same documents it now seeks against Big Sky Nevada. Big Sky Nevada produced all relevant and available information, and further attempts by ROK to obtain additional information were denied in Arbitration. See Lawler Declaration at ¶¶ 2-19. Moreover, the documents at issue were also sought by ROK in case no. MC-19-00035-PHX-DWL in the federal District Court of the District of Arizona, which was an application pursuant to 17 U.S.C. § 1782 for document discovery. ROK’s request for the documents at issue was denied in that proceeding as well. See Order quashing ROK’s subpoena, Exhibit 4.
ROK’s newest Subpoenas are a third bite at the apple under the guise of collecting on a judgment. However, it is clear that the Subpoenas are simply a pretext for ROK to yet again seek information that is irrelevant and in fact is not even related to this litigation at all. In fact, the Subpoenas seek, without limitation, the following classes of information which is completely irrelevant to the instant case or otherwise improper:
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Moreover, Big Sky Nevada has not been in operation since 2015 and has only one employee, its attorney and officer, Mr. Lawler. See Lawler Declaration, Exhibit 3, at ¶¶ 3-16. Moreover, Big Sky Nevada has no assets that ROK could execute on, as it owns no real property, has no bank accounts, has no accounts receivable, has had no corporate proceedings since 2015, has no cash or cash equivalents, has no investments, has no inventory, has no fixtures, furniture, machinery, automobiles, watercraft, aircraft, collectibles, intellectual property, notes receivable, tax refunds, or interest in insurance policies. Id. Big Sky Nevada also has no beneficial interests in any insurance policies or annuities, has no beneficial interests in any trusts, and has no interest in any other entity. Id.
Finally, ROK’s Subpoenas include deposition subpoenas for both Mr. Lawler as the person most knowledgeable for Big Sky Nevada and to Mr. Lawler individually. It is improper for ROK to depose non-party Mr. Lawler especially when he is the only employee of Big Sky Nevada and will be serving as its person most knowledgeable for the Big Sky Nevada deposition should it go forward.
Counsel for Big Sky Nevada explained to counsel for ROK that Big Sky Nevada has no assets upon which it can collect and attempted to reach an agreement as to the documents sought improperly through the overbroad Subpoenas, but were unable to do so. Nevertheless, even though ROK was not agreeable to Big Sky Nevada’s reasonable proposal to produce only the documents relating to its lack of assets – and not any privileged or irrelevant information – Big Sky Nevada has already produced to ROK all relevant information demonstrating its lack of assets. It is a difficult and cumbersome process as Big Sky Nevada has only one employee – Mr. Lawler – but in a good faith
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effort to comply with reasonable and good faith document requests Big Sky Nevada has produced all relevant, non-privileged information regarding its lack of assets.
3. Legal Standard.
Pursuant to Rule 45 of the Federal Rules of Civil Procedure, a court must quash or modify a subpoena if it “requires disclosure of privileged of other protected matter,” or subjects a person to undue burden. Arizona recognizes both the attorney/client privilege) and the accountant/client privilege ). A.R.S. § 12-2234; A.R.S. § 32-749(A).
Additionally, the attorney work doctrine “also protects an attorney’s mental impressions, conclusions, or legal theories concerning the litigation, as reflected in memoranda, correspondence, interviews, briefs, or in other tangible and intangible ways.” Wardleigh v. Second Judicial Dist. Court In & For Cty. of Washoe, 111 Nev. 345, 357, 891 P.2d 1180, 1188 (1995) (citing Hickman v. Taylor, 329 U.S. 495, 510–11, 67 S.Ct. 385, 393–94, 91 L.Ed. 451 (1947); NRCP 26(b)(3)).
Generally, courts utilize a six-factor test for determining if an undue burden exists: “ ‘(1) relevance of the information requested; (2) the need of the party for the documents; (3) the breadth of the discovery request; (4) the time period covered by the request; (5) the particularity with which the party describes the requested documents; and (6) the burden imposed.’ ” Precourt v. Fairbank Reconstruction Corp., 280 F.R.D. 462, 467 (D.S.D. 2011). If the sought after documents are not relevant, “then any burden whatsoever imposed... [is] by definition undue.” Compaq Computer Corp. v. Packard Bell Elecs., 163 F.R.D. 329, 335-36 (N.D.Cal 1995).
Further, a subpoena is facially overbroad if it (1) fails to specify the documents or things sought with appropriate particularity, (2) covers an unreasonable time period, or (3) extends to documents or materials of limited or no relevance in the action. See Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792, 813 (9th Cir. 2003) (subpoena was properly quashed where it sought testimony and documents regarding topics that had “no bearing” on the claims at issue); Williams v. City of Dallas, 178 F.R.D. 103, 109 (N.D.
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Tex. 1998) (holding subpoena was overbroad where it “is not limited in time or topic to any issue of consequence to this litigation or to any other litigation”); Broadcort Capital Corp. v. Flagler Sec., Inc., 149 F.R.D. 626, 629 (D. Colo. 1993) (holding subpoena was facially overbroad where “[n]othing has been provided that would indicate any relevance or potential relevance of telephone or financial records from January 1, 1992 on” and subpoena was therefore not limited to relevant time period).
FRCP 45(d)(3) lays out the requirements for quashing or modifying a subpoena. A federal court is required to quash or modify a subpoena that “subjects a person to undue burden.” Fed. R. Civ. P. 45(d)(3)(A)(iv). The court may also quash a subpoena “to protect a person subject to or affected by a subpoena...if it requires disclosing a trade secret or other confidential research, development, or commercial information.” Fed. R. Civ. P. 45(d)(3)(b). Federal courts addressing this question have held the following with regard to a party’s moving to quash a subpoena served on a third party:
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undue burden.” Fed. R. Civ. P. 45(d)(3)(A)(iv). FRCP 45 does not limit the burdened person to the individual or entity that is subject to the subpoena. Of course, “[t]he party that moves to quash a subpoena has the burden of persuasion,” Airbus DS Optronics GmbH v. Nivisys LLC (D.Ariz. May 28, 2015, No. CV-14-02399-PHX-JAT) 2015 U.S.Dist.LEXIS 69074.).
4. Legal Argument.
A. The Subpoenas should be quashed or modified to prohibit requests related to any privileged or confidential material.
As set forth above, any communications between Lawler (in his capacity as counsel) and Big Sky Nevada are privileged and confidential. The Subpoenas seek such information in violation of Big Sky Nevada’s attorney/client privilege. To this extent they are improper, bordering on an abuse of process, and must be quashed or limited.
Moreover, the Subpoenas are unduly burdensome and facially overbroad. Regarding the Precourt factors, any information sought not directly related to the assets of Big Sky Nevada, is completely irrelevant. If the sought after documents are not relevant, “then any burden whatsoever imposed... [is] by definition undue.” Compaq Computer Corp. v. Packard Bell Elecs.163 F.R.D. 329, 335-36 (N.D.Cal 1995).
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Regarding the remaining factors, the information sought is overly broad and appears to contain no limitations as to time (apart from a vague reference to “from January 1, 2015 through the present”), requesting merely “all communications” and “all documents.” The documents and information sought are clearly part of an improper fishing expedition by ROK to seek information that is not in any way related to its judgment and merely to harass Big Sky Nevada and to get information on other, non-party entities. In fact, as noted above, the Subpoenas seek information from entities that are not parties to this litigation, including Big Sky Kazakhstan, Ingalls & Snyder Value Partners, L.P., Mr. Lawler individually, International Legal Services, Inc., and Vaninn Capital PCC.
In evaluating whether the scope of a subpoena is overbroad, courts must ensure that the requested information is relevant to the truth or falsity of the particular statements at issue. Gilmore v. Jones; see also Sheindlin v. Brady, 339 F.R.D. 111, 123 (W.D. Va. 2021) (quashing multiple nonparty subpoenas, through which defendant sought evidence to prove that his allegedly defamatory statements were true because defendant had failed to show that the information he sought was relevant and necessary to the claims or defenses in the action); Weinstein, 2020 WL 1485960, at *4, *6 (quashing in part nonparty subpoenas that sought “fifty-six categories of documents” and broadly requested “all documents pertaining to [the nonparties’] financial transactions, financial statements, audit files, formation and management agreements,” none of which was relevant to the veracity of the alleged defamatory statements or to any other claims or defenses in the action); Eshelman, 2017 WL 5919625, at *5, *8 (granting in part motion to quash nonparty subpoena that requested all documents produced in “all” prior civil lawsuits involving the nonparties
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because the subpoena was “facially overbroad” and constituted a “fishing expedition” that likely would require production of “wholly irrelevant documents”); In re Biovail Corp. Sec. Litig., 247 F.R.D. 72, 74 (S.D.N.Y. 2007). (quashing multiple nonparty subpoenas where “the virtually limitless financial and other information” plaintiffs sought was “unnecessary and irrelevant” to the case and “the burden the[ ] demands place[d] on the subpoenaed non-parties and diversion of their staff to provide it far outweigh[ed] any probative value of the information”).
Here the documents requested in the Subpoenas are completely improper as they fall outside of those directly related to Big Sky Nevada’s (not Big Sky Kazakhstan which is a entity unrelated to Big Sky Nevada) ability, or inability, to pay a judgment. The Subpoenas should be quashed or modified to the extent they seek any information outside that limited basis. Accordingly, even if the Subpoenas did not seek privileged information, which they do, those Subpoenas should be quashed due to the fact that they are facially overbroad and unduly burdensome.
B. The Subpoenas improperly seek information against non-debtor entities.
The only entity against which ROK has any judgment of any kind is Big Sky Nevada. There is no alter ego determination against Big Sky Kazakhstan or Lawler. Moreover, ROK has no judgment against Lawler, Big Sky Kazakhstan, Jacqueline Danforth (“Danforth”), Ingalls and Snyder Value Partners L.P. (“Ingalls & Snyder”), International Legal Services, Inc. (“ILS”), or Vannin Capital PCC (“Vannin”) (and collectively, “Non-Debtor Entities”). Yet, ROK is attempting to abuse the legal process by pretending to use the post-judgment discovery process to obtain discovery against all Non-Debtor Entities in an egregious abuse of the discovery process.
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As the federal courts have recognized when examining this issue, obtaining post-judgment discovery from nonparties is generally limited to a judgment debtor’s assets. See Caisson Corporation v. County West Building Corp., 62 F.R.D. 331, 334 (E.D.Pa.1974) (holding that inquiries of nonparties under FRCP 69(a) “must be kept pertinent to the goal of discovering concealed assets of the judgment debtor and not be allowed to become a means of harassment” of the nonparties); Burak v. Scott, 29 F.Supp. 775, 776 (D.D.C.1939) (holding that “a judgment creditor [does not have] any right to ... require the disclosure of assets of persons other than the judgment debtor” under FRCP 69); see also Strick Corp. v. Thai Teak Prod. Co., 493 F. Supp. 1210, 1218 (E.D. Pa. 1980) (recognizing that “discovery of assets of a nonparty is not generally contemplated by Rule 69(a)”); Rock Bay, LLC v. Dist. Ct., 129 Nev. 205, 210–11, 298 P.3d 441, 445 (2013). But again, the only entity against which ROK has a judgment is Big Sky Nevada, not Lawler, and not Big Sky Kazakhstan. Yet, the vast majority of the requests in the Subpoenas relate to Lawler, Big Sky Kazakhstan, or other Non-Debtor Entities. For example, below are document requests contained in the Subpoenas improperly seeking documents from Non-Debtor Entities, including without limitation Big Sky Kazakhstan:
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The above sample of requests related to Non-Debtor Big Sky Kazakhstan and other Non-Debtor Entities – by no means exhaustive – is improper and egregious. Moreover, the Subpoenas themselves seek nearly 10 (ten) years’ worth of documents, seeking documents from January 1, 2015. Under no scenario could such a broad range of documents have anything to do with legitimate attempts to collect a debt from Big Sky Nevada, nor with anything to do with the current financial condition of Big Sky Nevada. Rather, these are merely attempts by ROK to attack and harass the Non-Debtor Entities, including Lawler and Big Sky Kazakhstan, in violation of federal and [Nevada] [Arizona?] law. Accordingly, the Subpoenas must be quashed and/or limited to the extent they seek information from other individuals or entities, including the Non-Debtor Entities.
Moreover, as noted above, it is undisputed that Lawler serves as the attorney for Big Sky Nevada, and thus any communications between Lawler (in his capacity as an attorney) and Big Sky Nevada are privileged and confidential. ROK does not dispute that such communications are protected by the attorney/client privilege. Thus, the Subpoenas must be modified and/or quashed to the extent they seek this information as well. See Compaq Computer Corp. v. Packard Bell Elec., 163 F.R.D. 329, 335-36 (N.D.Cal 1995).
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Here the documents requested in the Subpoenas are completely improper outside of those directly related to Big Sky Nevada’s (not Big Sky Kazakhstan which is an unrelated entity) inability to pay a judgment. The Subpoenas should be quashed or modified to the extent they seek any information outside that limited basis. Accordingly, even if the Subpoenas did not seek privileged information, which they do, those Subpoenas should be quashed due to the fact that they are facially overbroad and unduly burdensome.
5. Certification
Nevada counsel for Big Sky Nevada certifies that on June 27, 2024, at 11:00 am, he had a telephone call with counsel for ROK which lasted approximately 30 minutes in an effort to resolve the above dispute. See Declaration of Brenoch Wirthlin, Exhibit 5 hereto. Counsel discussed the fact that Big Sky Nevada lacks any assets to pay a judgment and the possibility of a potential resolution whereby Big Sky Nevada would produce the documents demonstrating that fact but not any privileged or irrelevant documents. Id. Counsel for ROK stated that he would discuss the proposal with his client, but subsequently informed undersigned counsel that no agreement could be reached. Id. Thus, undersigned counsel certifies that despite a sincere effort to resolve or narrow the dispute during the meet-and-confer conference, the parties were unable to resolve or narrow the dispute without court intervention. Id. Accordingly, Movants have complied with the requirements to attempt to meet and confer to try to resolve the instant matter before filing the instant motion. Id. In addition, pursuant to applicable local rules, a copy of a proposed order granting this motion is attached hereto as Exhibit 6.
6. Conclusion
For all these reasons, Movants respectfully request an order to quash or, at the very least, modify the Subpoenas at issue, and grant such other and further relief as the Court deems necessary.
DATED this 6th day of September, 2024.
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PIERSON FERDINAND LLP
/s/ Alejandro Pérez
Alejandro Pérez
Attorneys for Movants
CERTIFICATE OF SERVICE
I hereby certify that on the date below, I electronically transmitted the foregoing OBJECTION TO SUBPOENAS AND MOTION TO QUASH OR MODIFY SUBPOENAS to the Clerk’s Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to all counsel in this matter; all counsel being registered to receive Electronic Filing.
Dated this 9/4/2024
/s/ Alejandro Pérez
Alejandro Pérez