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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

FIRST FINANCIAL SECURITY, INC.,

Plaintiff,

v.

MICHAEL W JONES, et al.,

Defendants.

Case No. 17-cv-00773-BLF 

ORDER DENYING MOTION FOR 

RELIEF FROM NONDISPOSITIVE 

PRETRIAL ORDER

Before the Court is Defendants’ motion for relief from a nondispositive order (“Order”)1

issued by Magistrate Judge Nathanael M. Cousins, which granted Plaintiff’s discovery request for 

documents from third party Fidelity & Guaranty Life Insurance Company (“Fidelity”). See Order, 

ECF 44; Mot., ECF 47. Plaintiff First Financial Security, Inc. (“Plaintiff”) is a life insurance 

brokerage agency that brings claims against Defendants for allegedly orchestrating a mass 

resignation of 1,400 licensed insurance sales contractors who left to work for Plaintiff’s 

competitor, non-party FEG. As part of its damages theory, Plaintiff seeks disgorgement of 

Defendants’ profits through sales by the team of contractors previously employed by Plaintiff. On 

June 20, 2017, Plaintiff served a subpoena duces tecum (“subpoena”) on Fidelity with a 

compliance date of July 7, 2017. Defendants filed a motion to quash the subpoena, which was 

denied without prejudice, and the parties filed a joint discovery letter brief on the issue. ECF 40. 

 

1 Defendants mischaracterize their request as an objection to the Magistrate Judge’s “Report and

Recommendation.” ECF 47. Judge Cousins’ order is a nondispositive pretrial order that is 

properly governed by Federal Rule of Civil Procedure 72(a).
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Judge Cousins issued the order granting Plaintiffs’ discovery request on July 21, 2017. ECF 44. 

The Court has considered Judge Cousins’ order and Defendants’ motion. For the reasons 

discussed below, the motion is DENIED.

I. LEGAL STANDARD

A district court may refer nondispositive pretrial matters to a magistrate judge under 

28 U.S.C. § 636(b)(1)(A). The district court “may reconsider any pretrial matter under this 

subparagraph (A) where it has been shown that the magistrate judge’s order is clearly erroneous or 

contrary to law.” 28 U.S.C. § 636(b)(1)(A); see also Fed. R. Civ. P. 72(a). On review of a 

nondispositive order, “the magistrate’s factual determinations are reviewed for clear error, and the 

magistrate’s legal conclusions are reviewed to determine whether they are contrary to law.” Perry 

v. Schwarzenegger, 268 F.R.D. 344, 348 (N.D. Cal. 2010). This standard is highly deferential –

the district judge may not simply substitute his or her judgment for that of the magistrate judge. 

Grimes v. City and Cnty. of San Francisco, 951 F.2d 236, 241 (9th Cir. 1991). 

When a discovery order centers on a magistrate’s determination of relevance, “the standard 

of review in most instances is not the explicit statutory language, but the clearly implicit standard 

of abuse of discretion.” Geophysical Sys. Corp. v. Raytheon Co., Inc., 117 F.R.D. 646, 647 

(C.D.Cal.1987). The court should not disturb the magistrate’s relevance determination except 

where it is based on “an erroneous conclusion of law or where the record contains no evidence on 

which [the magistrate] rationally could have based that decision.” Wolpin v. Philip Morris Inc., 

189 F.R.D. 418, 422 (C.D. Cal. 1999) (citation omitted). The implicit abuse of discretion standard 

does not apply to portions of a magistrate judge’s discovery order not concerned with relevance. 

Perry, 268 F.R.D. at 348; accord Wolpin, 189 F.R.D. at 422–23.

II. DISCUSSION

Judge Cousins’ Order stems from Plaintiff’s efforts to obtain discovery from third party 

Fidelity regarding the amounts Defendants received from selling their products through Plaintiff’s 

former team of contractors. Defendants argue that the subpoena is premature and seeks irrelevant 

documents. Joint Discovery Letter 1, ECF 40. On July 21, 2017, Magistrate Judge Cousins

granted Plaintiff’s discovery request, subject to the entry of a protective order in this action. See
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Order, ECF 44. The parties entered a stipulated protective order on July 31, 2017. ECF 46. Judge 

Cousins determined that Defendants’ concerns could be addressed by a protective order, and 

determined that the “far off” discovery deadline did not render Plaintiff’s request premature. 

Order, ECF 44. 

In filing this motion for relief, Defendants request this Court to modify Judge Cousins’

order and quash the subpoena for lack of relevance, which they claim Judge Cousins failed to 

address in his order. Mot., ECF 47. The scope of discovery under the Federal Rules of Civil 

Procedure is extremely broad. “Parties may obtain discovery regarding any nonprivileged matter 

that is relevant to any party’s claim or defense...Information within this scope of discovery need 

not be admissible in evidence to be discoverable.” Fed. R. Civ. P. 26(b)(1). 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, 98 

S.Ct. 2380, 2389, 57 L.Ed.2d 253 (1978). Relevancy “should be construed ‘liberally and with 

common sense’ and discovery should be allowed unless the information sought has no conceivable

bearing on the case.” Soto v. City of Concord, 162 F.R.D. 603, 610 (N.D.Cal.1995) (citation and 

quotation omitted). 

In considering Defendants’ objections, this Court is to review the magistrate’s 

determination of relevance for abuse of discretion, and will only disturb the order if it is based on 

“an erroneous conclusion of law or where the record contains no evidence on which [the 

magistrate] rationally could have based that decision.” See EEOC v. Peters’ Bakery, 301 F.R.D. 

482, 484 (N.D. Cal. 2014) (quoting Wolpin, 189 F.R.D. 418, 422 (C.D. Cal. 1999). Plaintiff 

argued in the record before Judge Cousins that the documents sought from Fidelity are relevant to 

its damages theory. Joint Discovery Letter 1, ECF 40. While the Court recognizes that Judge 

Cousins did not explicitly address relevance, his determination that the documents sought are 

relevant to Plaintiff’s damages theory is clearly subsumed within the order granting Plaintiff’s 

request. Further, this Court’s independent review of the discovery request and the arguments 

made by both parties leads the Court to conclude that under the liberal standard for relevance, the

documents Plaintiff requests are relevant and reasonably calculated to lead to the discovery of 
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admissible evidence of damages. Judge Cousins did not abuse his discretion in his determination 

that the documents sought by Plaintiff are relevant. As for timing, Defendants have not shown 

prejudice that is not cured by the protective order. 

For the foregoing reasons, the Court finds that Judge Cousins’ decision to allow the

discovery subject to a protective order fell well within his discretion and was not clearly erroneous 

or contrary to law. The parties’ protective order should be able to adequately protect Defendants’ 

concerns regarding the confidential and sensitive financial nature of the documents. Moreover, 

Fidelity itself has the right to object or file a third party motion to quash the subpoena. To the 

extent Plaintiff attempts to disclose the discovery publicly, Defendants have the right to file a 

motion to seal the documents. Accordingly, the motion for relief from Judge Cousins’ order is 

DENIED.

IT IS SO ORDERED.

Dated: August 11, 2017

______________________________________

BETH LABSON FREEMAN

United States District Judge