IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

LAST ATLANTIS CAPITAL, LLC, )

et al., ) Nos. 04 C 0397

) 05 C 5600

Plaintiffs, ) 05 C 5671

)

vs. ) JUDGE ELAINE BUCKLO

) MAGISTRATE JUDGE ARLANDER KEYS

AGS SPECIALIST PARTNERS, ) 

et al., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

This case is currently before the Court on a motion, filed

by non-party Ivan Kline, to modify a subpoena served on him by

the plaintiffs. The motion, filed in the District Court for the

Southern District of New York, was referred to this Court,

because of its familiarity with the case. For the reasons

explained below, the Court grants Mr. Kline’s motion to modify

the subpoena. 

Discussion

Ivan Kline served as primary outside counsel for the

American Stock Exchange LLC (“AMEX”), formerly a defendant in

this lawsuit. AMEX has been officially out of the case for six

years. When the plaintiffs moved recently for additional time to

obtain discovery from AMEX, AGS opposed the motion, arguing that

the plaintiffs had squandered the time the Court gave them and

should not be permitted an extension. In fact, AGS moved to
dismiss the case because of the plaintiffs’ failure to prosecute

their case and their repeated failure to comply with Court orders

and schedules. Along with its opposition, AGS submitted a

declaration from Mr. Kline indicating that the plaintiffs had

made no efforts to obtain discovery during the time allotted by

the Court. In response, the plaintiffs subpoenaed Mr. Kline. 

Mr. Kline moved in the issuing court (the Southern District of

New York) to quash or modify the subpoena and the presiding judge

there has represented that she will defer to this Court on the

matter, given this Court’s experience and involvement with the

case. 

Generally speaking, discovery in federal court is broad; the

Federal Rules allow parties to obtain discovery “regarding any

nonprivileged matter that is relevant to any party’s claim or

defense . . . .” Fed. R. Civ. P. 26(b)(1). Nevertheless, courts

must limit discovery where, inter alia, “the burden or expense of

the proposed discovery outweighs its likely benefit, considering

the needs of the case [and] the importance of the discovery in

resolving the issues.” Fed. R. Civ. P. 26(b)(2)(C)(iii). 

Additionally, Federal Rule of Civil Procedure 45, which governs

subpoenas, provides that, “[o]n timely motion, the issuing court

must quash or modify a subpoena that . . . subjects a person to

undue burden.” Fed. R. Civ. P. 45(c)(3)(A)(iv). In determining

whether the subject of a subpoena is being subjected to “undue

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burden,” courts consider a number of factors, including the

person’s status as a non-party, the relevance of the discovery

sought, the subpoenaeing party’s need for the documents, the

breadth of the request and the burden imposed on the subpoenaed

party. E.g., Robinson Steel Co., Inc. v. Caterpillar, Inc., No.

2:10-CV-438-JTM-PRC, 2012 WL 5903769, at *3 (N.D. Ind. Nov. 21,

2012)(citing WM High Yield v. O'Hanlon, 460 F.Supp.2d 891,

895–896 (S.D. Ind.2006)).

The subpoena served on Mr. Kline requires him to appear for

deposition and to bring with him all documents concerning his

declaration, as well as all documents, including emails and ESI,

concerning any nonprivileged communication Mr. Kline had with any

party, any attorney for any party, or any other person, from

March 22, 2007 to the present concerning any claims or defenses

asserted in this lawsuit; any communications between Mr. Kline

and the AMEX or between Mr. Kline and the other exchanges during

that same six year period; all documents regarding requests to

produce documents and ESI, including audit trail data; and

various other categories of documents that all go far beyond the

scope of anything remotely relevant to Mr. Kline’s declaration. 

After the subpoena issued and after Mr. Kline filed his motion,

however, the two sides were able to negotiate much of their

dispute. In particular, Mr. Kline and the plaintiffs agreed that

Mr. Kline would: 

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produce documents and appear for a deposition limited

to 21⁄2 hours of direct examination concerning the

following topics: (1) the circumstances of how Mr.

Kline gave his August 1, 2012 declaration concerning 

discovery in the Action; (2) non-privileged

communications Mr. Kline had with plaintiffs’ counsel

and/or with the defendants and/or their counsel

concerning Amex data and/or plaintiffs’ or defendants’

efforts to obtain or preserve such data, including

discovery requests served on the Amex; and (3) Mr.

Kline’s knowledge – if any – about the circumstances

and timing of Amex’s overriding or preservation of

audit trail data and Merged Orders Log data if such

knowledge was previously communicated to plaintiffs or

defendants or their respective counsel. 

November 28, 2012 Letter from Mary H. Dontzin to the assigned

judge in the Southern District of New York, p. 2 (attached as

Exhibit B to the Declaration of Mary H. Dontzin in Support of

Motion of Non-Party Ivan Kline to Modify a Subpoena for

Deposition Testimony and Production of Documents). 

One sticking point remains. Counsel for Mr. Kline framed

the issue as follows (and she represented that plaintiffs’

counsel agreed to the characterization): in addition to providing

discovery regarding non-privileged communications he had with

plaintiffs’ counsel and/or defendants and/or their counsel

concerning Amex data and the parties’ efforts to obtain or

preserve such data, the plaintiffs want Mr. Kline to produce

documents and give deposition testimony “regarding any nonprivileged communications Mr. Kline had with defendants and their

counsel that concern this litigation in general (as opposed to

limiting it to communications concerning Amex data and/or

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plaintiffs/ or defendants’ efforts to obtain or preserve such

data) . . . .” Id. Counsel for Mr. Kline wants to limit the

issue as described above. 

At a hearing on October 26, 2012, the Court observed that

the plaintiffs had:

demonstrated an adequate reason for having to take the

deposition of Mr. Kline, because counsel did indicate

on the record at the last hearing that he was relying

principally on – in support of his motion was the

affidavit of Mr. Kline, which you haven’t taken his

deposition, and I think it would prejudicial to you not

to allow you to take that deposition before you have to

respond to that motion to dismiss because the motion to

dismiss, is obviously, as we all know, a very drastic

remedy.

 

Transcript of Proceedings, pp. 9-10. But nothing in the Court’s

ruling suggests that it was willing to give the plaintiffs carte

blanche in obtaining discovery from Mr. Kline; on the contrary,

the Court clearly tied its decision to allow additional discovery

to the motion to dismiss and the declaration submitted by Mr.

Kline in support of that motion. 

The Court agrees that what the plaintiffs seek is unreasonable

under the circumstances. Given that Mr. Kline is not a party, given

the reasons the plaintiffs served him with a subpoena in the first

place, and given the Court’s earlier observations as to why the

plaintiffs are entitled to depose Mr. Kline at this juncture, the

scope of discovery proposed by Ms. Dontzin is reasonable, fair and

even generous. The scope of discovery sought by the plaintiffs is too

broad; the Court is not persuaded that the discovery sought would do

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anything to advance the ball in this very old case; on the contrary,

the discovery would lend nothing to the resolution of the issues

involved. 

Quite simply, communications and documents relating to anything

other than Mr. Kline’s declaration and the parties’ dealings with

respect to the subject data is irrelevant to these proceedings. The

plaintiffs have attempted to paint Mr. Kline as biased, working

surreptitiously in concert with the defendants. Even if true, the

Court fails to see the import of this; on the motion to dismiss, the

relevant question is the extent of the efforts made by the plaintiffs

to obtain the subject discovery from the AMEX. There is no suggestion

that Mr. Kline somehow thwarted the plaintiffs’ efforts because of his

alleged relationship with the defendants. Indeed, along with their

response, the plaintiffs submitted a copy of an order issued by the

SEC in 2007, which sanctioned the AMEX “for failing to properly

surveil for, and enforce, Exchange Rules against options specialists.” 

 Friedman Declaration, ¶4 (see also, Exhibit D attached thereto). The

Court declines the invitation to go down this rabbit hole; the theory

of relevance here is, at best, extremely convoluted and tenuous.

Conclusion

For the reasons set forth above, the Court grants Mr.

Kline’s motion to modify the subpoena served on him. The scope

of discovery is limited to the three issues spelled out in Ms.

Dontzin’s November 28, 2012 letter; the Court rejects the

plaintiffs’ argument that they should be permitted to obtain

discovery from Mr. Kline concerning this Action generally. 

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Having so decided, the Court has determined that it need not hear

further from Mr. Kline, and his request to file a reply brief is

denied as moot. 

Date: January 17, 2013

E N T E R E D:

______________________________

MAGISTRATE JUDGE ARLANDER KEYS

UNITED STATES DISTRICT COURT

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