Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-02728/USCOURTS-casd-3_09-cv-02728-0/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:77 Securities Fraud

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28 1Neithersubpoena issued from the Southern District of California, but forsake of judicial economy this Court

                  addresses the Defendants’ objections.

1 09cv2728 

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

RQ CONSTRUCTION, INC.,

Plaintiff,

v.

ECOLITE CONCRETE U.S.A., INC., ET AL.,

Defendants.

                                                                                

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Civil No. 09‐CV‐2728‐BEN(WVG)

ORDER DENYING DEFENDANTS’ REQUEST

FOR PROTECTIVE ORDER QUASHING OR

LIMITING SCOPE OF THIRD PARTY

SUBPOENAS

(Doc. No. 25)

I. INTRODUCTION

Defendants’ Request for Protective Order Quashing or Limiting Scope of the Third

Party Subpoenas (Doc. No. 25) is DENIED. Defendants request a protective order quashing or

limiting the scope of Plaintiff’s Subpoena Deuces Tecum to Defendants’ insurance broker, Lemas

& Associates, and to Defendants’ insurance provider, Illinois Union Insurance Company. The

Court finds the documents requested non‐privileged and relevant to the case at bar.

II. BACKGROUND

On June 23, 2010, Plaintiff notified Defendants regarding two subpoenas deuces

tecum: one directed to their insurance broker, Lemas & Associates, and the other to their

insurance carrier, Illinois Union Insurance Company.1 The subpoenas demand compliance no

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28 2The parties’ Joint Statement notes a new production date other than the July 30, 2010, deadline noticed on

                  the subpoenas.

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later than August 6, 2010.2  Neither insurance broker, nor carrier, object to the subpoenas.

Defendants have filed the instant dispute over the subpoenas alleging financial privacy

protections under the Gramm‐Leach‐Bliley Act and irrelevance.

III. DISCUSSION

A subpoena may command a nonparty to produce designated documents, electroni‐

cally stored information, or tangible things in its possession, custody or control. See Fed.R.Civ.P.

45(a)(1)(A)(iii). These items are properly discoverable if they relate to “any nonprivileged matter

that is relevant to any party's claim or defense.” Fed.R.Civ.P. 26(b). The information sought need

not be admissible at the trial if the information sought “appears reasonably calculated to lead to

the discovery of admissible evidence.”  Id.  A relevant matter is “any matter that bears on, or that

reasonably could lead to other matters that could bear on, any issue that is or may be in the

case.”  Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). Because discovery is

designed to define and clarify the issues, it is not limited to only those specific issues raised in the

pleadings.  Id.

In addition to the discovery standards under Rule 26 incorporated by Rule 45, Rule 45

itself provides that “on timely motion, the court by which a subpoena was issued shall quash or

modify the subpoena if it ... subjects a person to undue burden.” Rule 45(c)(3)(A)(iv). Of course,

“if the sought‐after documents are not relevant, nor calculated to lead to the discovery of

admissible evidence, then any burden whatsoever imposed would be by definition ‘undue.’ “

Compaq Computer Corp. v. Packard Bell Elec., Inc., 163 F.R.D. 329, 335‐36 (N.D.Cal.1995).

Underlying the protections of Rule 45 is the recognition that “the word ‘non‐party’ serves as a

constant reminder of the reasons for the limitations that characterize ‘third‐party’ discovery.”

Dart Indus. Co. v. Westwood Chem. Co., 649 F.2d 646, 649 (9th Cir.1980) (citations omitted).

Thus, a court determining the propriety of a subpoena balances the relevance of the discovery

sought, the requesting party's need, and the potential hardship to the party subject to the

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subpoena.  Heat & Control, Inc. v. Hester Industries, Inc., 785 F.2d 1017, 1024 (Fed. Cir. 1986);

Gonzales v. Google, 234 F.R.D. 674, 680 (N.D.Cal.2006); see also Fed. R. Civ. Pro. 45(c)(3)(B)(iii).

Defendants assert that the information sought is protected under the Gram‐Leach‐

Bliley Act. This argument is unavailing. The Gramm‐Leach‐Bliley Act requires financial institutions,

including insurance companies, to protect the security and confidentiality of their customers'

nonpublic personal information.  See 15 USC § 6801(a), 15 USC § 6809(3)(A). Regardless, a

financial institution does not violate the act if it provides the information in response to judicial

process, including civil discovery. 15 USC § 6802(e)(8); see Marks v. Global Mortg. Group, Inc.,

218 F.R.D. 492, 496 (S.D. W. Va. 2003); see also William Schwarzer et al., Cal. Prac. Guide Fed. Civ.

Pro Before Trial Ch. 11(III)‐B §1021. Neither the insurance provider, nor broker, subpoenaed in

the instant dispute would violate the Gramm‐Leach‐Bliley Act by providing the responsive

documents to Plaintiff.

Defendants contend that the subpoenas request irrelevant information. Plaintiff

explains that the requests aim to elicit potential evidence that Defendants knew of litigation risks

or the decreased value of their company.  This Court finds Plaintiff with the better argument.

Defendants complain that the subpoenas request irrelevant information including insurance

applications, expired policies, and reservation of rights letters. However, any representation that

Defendants provided to their insurance company may provide evidence to support Plaintiff’s

fraud claim. The Court declines to modify the scope in light of the relevance of the information

sought. Also persuasive is the third parties’, Lemas & Associates and Illinois Union’s, failure to

object to the subpoenas. Thus, in balancing the relevance of the discovery sought, the requesting

party's need, and the potential hardship to the party subject to the subpoena, the Court

concludes that the subpoenas are appropriate and declines to issue a protective order to quash

or modify them.

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IV. CONCLUSION

Defendants’ Request for Protective Order Quashing or Limiting Scope of the Third

Party Subpoenas (Doc. No. 25) is DENIED. The Court finds the documents requested to be non‐

privileged and relevant to the case at bar.             

DATED:  August 4, 2010

    Hon. William V. Gallo

    U.S. Magistrate Judge

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