Court Opinion

ID: 2967973
Source: CourtListenerOpinion
Date Created: 2015-09-22 03:52:20.506867+00
Date Added: 2024-06-11T15:28:22.094715
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS
                 FOR THE FOURTH CIRCUIT

FLORA NICHOLAS; PAUL GAYTER, in          
their own right and as next friend
of S.G.,
                 Plaintiffs-Appellees,
                 and
BRAINWAVE, INCORPORATED,
                 Party in Interest-
                         Appellee,
                  v.
                                                 No. 03-2054
WYNDHAM INTERNATIONAL,
INCORPORATED; WYNDHAM
MANAGEMENT CORPORATION; SUGAR
BAY CLUB AND RESORT CORPORATION;
RICK BLYTHE,
             Defendants-Appellants,
                 and
BRYAN HORNBY,
                          Defendant.
                                         
            Appeal from the United States District Court
         for the Eastern District of Virginia, at Alexandria.
                   T. S. Ellis, III, District Judge.
                           (MISC-03-20)

                        Argued: May 6, 2004

                       Decided: July 2, 2004

         Before MOTZ and SHEDD, Circuit Judges, and
        Pasco M. BOWMAN, Senior Circuit Judge of the
       United States Court of Appeals for the Eighth Circuit,
                      sitting by designation.
2             NICHOLAS v. WYNDHAM INTERNATIONAL, INC.
Affirmed by published opinion. Judge Shedd wrote the opinion, in
which Judge Motz and Senior Judge Bowman joined.

                              COUNSEL

ARGUED: Douglas Conrad Beach, DUDLEY, CLARK & CHAN,
St. Thomas, Virgin Islands, for Appellants. Enu Mainigi, WILLIAMS
& CONNOLLY, Washington, D.C., for Appellees. ON BRIEF: Rob-
ert M. Doherty, Andrew J. Durkovic, BAKER & HOSTETLER,
L.L.P., Washington, D.C., for Appellants. Joseph G. Petrosinelli, Erin
E. Brophy, WILLIAMS & CONNOLLY, Washington, D.C., for
Appellees.

                              OPINION

SHEDD, Circuit Judge:

   This is an appeal from an order denying discovery from a nonparty
in an ancillary discovery proceeding. The underlying lawsuit is cur-
rently pending in the United States District Court for the District of
the Virgin Islands. The defendants in that action, Wyndham Interna-
tional, Inc. and related parties (collectively, "Wyndham"), sought dis-
covery from Brainwave, Inc., a corporation closely held by Flora
Nicholas and Paul Gayter, two of the plaintiffs in the underlying law-
suit (collectively, "Plaintiffs"). Because Brainwave is located in Vir-
ginia, Wyndham proceeded under Fed. R. Civ. P. 45 to have a
subpoena issue from the United States District Court for the Eastern
District of Virginia. This subpoena sought to compel Brainwave to sit
for a Rule 30(b)(6) deposition and produce certain documents. Two
magistrate judges and the district judge below granted Brainwave a
protective order, concluding that Wyndham’s discovery requests were
cumulative and duplicative since Plaintiffs had already been deposed
and continued to produce documents.

  Wyndham contends on appeal that it is entitled to the discovery it
sought and that no grounds exist to support a protective order. Brain-
wave challenges our jurisdiction to entertain this appeal at all, arguing
              NICHOLAS v. WYNDHAM INTERNATIONAL, INC.                  3
that the district court’s order is nothing more than a routine interlocu-
tory discovery order. We hold that we have jurisdiction over this
appeal and that the district court did not abuse its discretion in grant-
ing a protective order to Brainwave.

                                   I.

   Plaintiffs sued Wyndham in the United States District Court for the
District of the Virgin Islands, seeking damages for the alleged moles-
tation of their minor daughter by a Wyndham employee during their
stay at the Wyndham Sugar Bay Resort in St. Thomas. Plaintiffs
asserted claims for (1) failure to protect the safety of guests, (2)
improper hiring and retention, (3) improper supervision, (4) misrepre-
sentation, (5) constructive fraud, (6) deceptive trade practices, (7)
infliction of emotional distress, and (8) respondeat superior. The
complaint demands damages for Plaintiffs and their daughter.

  Plaintiffs are the owners of Brainwave, a small marketing and
advertising company located in Falls Church, Virginia. Nicholas is
Brainwave’s chief executive officer; Gayter is president of the com-
pany and owns 100% of its stock. Wyndham deposed both Plaintiffs
but was not satisfied with their testimony, especially as it related to
Brainwave.

   In April 2003, Wyndham caused a subpoena to be issued to Brain-
wave. The subpoena issued from the Eastern District of Virginia, and
it called for Brainwave to appear for a Rule 30(b)(6) deposition and
to produce certain documents. Specifically, the subpoena called for
Brainwave to produce all computers, documents and/or tangible evi-
dence relating to the topics described in the deposition notice, includ-
ing (1) e-mail communications concerning the incident at issue in the
lawsuit and Plaintiffs’ alleged damages and (2) Plaintiffs’ employ-
ment and immigration records. The vast majority of the documents
requested in the subpoena relate to Plaintiffs’ employment and immi-
gration status. Brainwave made no response to the subpoena and did
not appear for the deposition. Wyndham then filed this action in the
Eastern District of Virginia, seeking to compel Brainwave’s deposi-
tion and production of documents. Brainwave moved for a protective
order.
4             NICHOLAS v. WYNDHAM INTERNATIONAL, INC.
   At the hearing on Brainwave’s motion, Magistrate Judge Barry R.
Poretz stated that he had discussed the status of the underlying lawsuit
with Magistrate Judge Jeffrey L. Resnick, who was overseeing dis-
covery in the Virgin Islands. Magistrate Judge Resnick assured Mag-
istrate Judge Poretz that he had not ruled on the scope of allowable
discovery as it pertained to the discovery sought by Wyndham here,
but he noted that he believed the employment and immigration mat-
ters had very little probative value with respect to the issues in the
underlying lawsuit. Magistrate Judge Poretz then granted Brainwave’s
motion for protective order, concluding that the discovery sought by
Wyndham was "not relevant to a claim [or] defense and the probative
value is far outweighed by any prejudice . . . by it being onerous, by
being cumulative, and also it being possibly embarrassing." Magis-
trate Judge Poretz further noted that his decision incorporated the rea-
sons set forth in Brainwave’s brief in support of the protective order,
namely, that the discovery sought by Wyndham was cumulative and
duplicative, overly broad, unnecessarily burdensome, and harassing.

   Four days after Magistrate Judge Poretz entered his order, the Vir-
gin Islands district court entered an order compelling Plaintiffs to pro-
duce to another defendant records of e-mails deleted from a personal
computer. This order specifically noted that the Virgin Islands district
court could not compel production of a computer owned by Brain-
wave since the court lacked authority to serve process outside the Dis-
trict of the Virgin Islands. Interpreting this order to require discovery
of records contained on this Brainwave computer, Wyndham moved
to reconsider Magistrate Judge Poretz’s initial order. Magistrate Judge
Thomas R. Jones, Jr. denied reconsideration, concluding that Magis-
trate Judge Poretz’s order — which addressed Wyndham’s "grossly
overbroad" deposition discovery — was not inconsistent with the Vir-
gin Islands district court’s order — which addressed only another
defendant’s request for physical inspection of Plaintiffs’ personal
computers.

   Wyndham timely filed objections to the orders entered by Magis-
trate Judges Poretz and Jones. After hearing argument from the par-
ties, the district court overruled Wyndham’s objections and affirmed
both magistrate judges’ orders. This appeal followed.
              NICHOLAS v. WYNDHAM INTERNATIONAL, INC.                  5
                                   II.

   Brainwave contends that we lack jurisdiction to entertain Wynd-
ham’s appeal because the district court’s order is an interlocutory
order not appealable under 28 U.S.C. § 1291 (providing for appeals
from "final decisions of the district courts"). Ordinarily, our jurisdic-
tion is limited to appeals from final orders that "end[ ] the litigation
on the merits and leave nothing for the court to do but execute the
judgment." Catlin v. United States, 324 U.S. 229, 233 (1945). Under
the collateral order doctrine, however, we may entertain an appeal
from an otherwise interlocutory order if that order (1) conclusively
determines the issue before the lower court, (2) resolves an important
question independent of the subject matter of the litigation, and (3) is
effectively unreviewable on appeal from a final judgment in the case.
Cohen v. Beneficial Ind. Loan Corp., 337 U.S. 541, 546 (1949);
Under Seal v. Under Seal, 326 F.3d 479, 481-84 (4th Cir. 2003).

   Discovery orders are "inherently interlocutory" and typically not
appealable. McCook Metals LLC v. Alcoa, Inc., 249 F.3d 330, 335
(4th Cir. 2001). In the ordinary course, the same court that enters a
discovery order will enter a final judgment in the case; on appeal from
that final judgment, the party aggrieved by a discovery order may
challenge that order along with any other orders entered in the case.
In that situation, there is no need for immediate appellate review.
Ancillary discovery proceedings are different. In an ancillary pro-
ceeding, a party to the underlying lawsuit goes to another court (the
ancillary court) to compel discovery from a nonparty. If the nonparty
resists, then the ancillary court adjudicates the discovery dispute and
the parties go on about their litigation in the original court.

   We have held that the collateral order doctrine does not authorize
appeal from an order granting discovery from a nonparty in an ancil-
lary proceeding. MDK, Inc. v. Mike’s Train House, Inc., 27 F.3d 116,
120-22 (4th Cir. 1994). See also 15B C. Wright, A. Miller & E. Coo-
per, Federal Practice & Procedure: Jurisdiction 2d § 3914.24, at 174
(1992) (stating that "[t]he general rule persists that appeal cannot be
taken from an order granting discovery in an ancillary proceeding").
We have not yet addressed the question whether appeal should be per-
mitted from an ancillary order denying discovery from a nonparty
6             NICHOLAS v. WYNDHAM INTERNATIONAL, INC.
where the underlying lawsuit is pending in another circuit. See
McCook, 249 F.3d at 335; MDK, 27 F.3d at 121.

   We adopt the uniform position of the courts of appeals and hold
that an order denying discovery from a nonparty in an ancillary pro-
ceeding where the underlying lawsuit is pending in another circuit is
immediately appealable as a collateral order. See Miscellaneous
Docket Matter # 1 v. Miscellaneous Docket Matter # 2, 197 F.3d 922,
925 (8th Cir. 1999); Cusumano v. Microsoft Corp., 162 F.3d 708, 712
(1st Cir. 1998); Micro Motion, Inc. v. Kane Steel Co., Inc., 894 F.2d
1318, 1320 (Fed. Cir. 1990); Corporation of Lloyd’s v. Lloyd’s U.S.,
831 F.2d 33, 34 (2d Cir. 1987); Northrop Corp. v. McDonnell Doug-
las Corp., 751 F.2d 395, 399 n.5 (D.C. Cir. 1984); CF&I Steel Corp.
v. Mitsui & Co., 713 F.2d 494, 496 (9th Cir. 1983); In re Rubin, 679
F.2d 29, 30 (5th Cir. 1982) (per curiam); National Life Ins. Co. v.
Hartford Accident & Indem. Co., 615 F.2d 595, 597 (3d Cir. 1980);
In re Westinghouse Elec. Corp., 570 F.2d 899, 901 (10th Cir. 1978).
Such an order conclusively resolves the only issues before the district
court — discovery issues affecting a nonparty — independent of the
merits of the underlying lawsuit. See Cusumano, 162 F.3d at 712;
National Life Ins., 615 F.2d at 597. Moreover, the party aggrieved by
an order denying discovery from a nonparty outside the circuit in
which the underlying lawsuit is pending would have no means of
obtaining appellate review of that order absent immediate appeal. See
Miscellaneous Docket #1, 197 F.3d at 925; Micro Motion, 894 F.2d
at 1320; Rubin, 679 F.2d at 30.

   Discovery orders ordinarily may be challenged through contempt
proceedings in the district court. "Courts have long recognized that a
party sufficiently exercised over a discovery order may resist that
order, be cited for contempt, and then challenge the propriety of the
discovery order in the course of appealing the contempt citation."
MDK, 27 F.3d at 121. This option is not available to a party aggrieved
by an order denying discovery. By its nature, an order denying dis-
covery cannot be disobeyed by the party seeking discovery. The only
alternative, then, is to await final judgment in the underlying action
and seek review of the discovery order on appeal from that judgment.
This alternative is not available in cases such as this one, where the
ancillary proceeding occurs outside the circuit in which the underly-
              NICHOLAS v. WYNDHAM INTERNATIONAL, INC.                    7
                         1
ing lawsuit is pending. Any appeal from the final judgment in this
case will be decided by the Third Circuit, which has no authority to
upset a discovery order entered by a district court in this circuit. We
conclude that we have jurisdiction under the collateral order doctrine
to review the district court’s order denying Wyndham the discovery
it seeks from Brainwave.

                                   III.

  We review the entry of a protective order under Rule 26(c) for
abuse of discretion. M & M Med. Supplies & Serv., Inc. v. Pleasant
Valley Hosp., Inc., 981 F.2d 160, 163 (4th Cir. 1993) (en banc). An
abuse of discretion may be found where "denial of discovery has
caused substantial prejudice." Id. Because Wyndham has not been
substantially prejudiced by the denial of the additional discovery it
seeks, we find no abuse of discretion here.

  Wyndham argues that it should have been permitted to take a Rule
30(b)(6) deposition of Brainwave so that it could discover informa-
  1
   We need not decide whether we would have jurisdiction to entertain
an appeal from an order denying discovery in an ancillary proceeding
conducted by another district court within this circuit. Compare Heat &
Control, Inc. v. Hester Indus., Inc., 785 F.2d 1017, 1020-22 (Fed. Cir.
1986) (permitting appeal from an order denying discovery entered by a
West Virginia federal court in a patent action pending in a California fed-
eral court even though appeals from both courts lay to the Federal Cir-
cuit); Ariel v. Jones, 693 F.2d 1058, 1059 (11th Cir. 1982) (permitting
appeal from an order denying discovery entered in the Middle District of
Florida where the main action was pending in the Southern District of
Florida), with Hooker v. Continental Life Ins. Co., 965 F.2d 903, 905
(10th Cir. 1992) (dismissing appeal from an ancillary discovery order
entered by the Northern District of Oklahoma where the main action was
pending in the Eastern District of Oklahoma); Barrick Group, Inc., 849
F.2d 70, 73-74 (2d Cir. 1988) (dismissing appeal from an order denying
discovery entered by the District of Connecticut where the main action
was pending in the Southern District of New York); In re Subpoena
Served on Cal. Pub. Utils. Comm’n, 813 F.2d 1473, 1476-80 (9th Cir.
1987) (dismissing appeal from an ancillary discovery order entered by
the Northern District of California where the main action was pending
in the Central District of California).
8             NICHOLAS v. WYNDHAM INTERNATIONAL, INC.
tion relating to (1) e-mails sent or received by Nicholas and Gayter
concerning the incident giving rise to this lawsuit and their alleged
damages and (2) information concerning Nicholas’s and Gayter’s
employment records and their communications with the Immigration
and Naturalization Service.

   Even assuming that this information is relevant (in the broadest
sense), the simple fact that requested information is discoverable
under Rule 26(a) does not mean that discovery must be had. On its
own initiative or in response to a motion for protective order under
Rule 26(c), a district court may limit "the frequency or extent of use
of the discovery methods otherwise permitted" under the Federal
Rules of Civil Procedure if it concludes that "(i) the discovery sought
is unreasonably cumulative or duplicative, or is obtainable from some
other source that is more convenient, less burdensome, or less expen-
sive; (ii) the party seeking discovery has had ample opportunity by
discovery in the action to obtain the information sought; or (iii) the
burden or expense of the proposed discovery outweighs its likely ben-
efit." Fed. R. Civ. P. 26(b)(2). Further, upon motion of a party and
"for good cause shown," the court in the district in which a deposition
is to be taken may "make any order which justice requires to protect
a party or person from annoyance, embarrassment, oppression, or
undue burden or expense," including an order that the discovery not
be had. Fed. R. Civ. P. 26(c).

   We cannot say that the district court abused its discretion in deny-
ing Wyndham the discovery it sought from Brainwave. Wyndham had
already deposed both Plaintiffs,2 and Wyndham’s counsel conceded
to the district court that Brainwave could have no more information
about the facts of liability and damages than Plaintiffs themselves
had. (Indeed, Wyndham was aware that either of the Plaintiffs would
have been designated as Brainwave’s corporate representative at any
deposition.) Moreover, Plaintiffs had already produced some 400
pages of e-mails (including e-mails from their Brainwave accounts),
    2
   The district court noted in its July 2003 ruling that the amount of dis-
covery that had already been completed in this lawsuit was "excessive."
This conclusion echoed the Virgin Islands district court’s assessment that
"an excessive amount of discovery ha[d] already been conducted" before
March 2003.
              NICHOLAS v. WYNDHAM INTERNATIONAL, INC.                   9
and they remain under a continuing obligation to supplement their
earlier productions. With respect to the credibility-related discovery
— seeking information with the most tenuous connection to the
underlying lawsuit3 — Wyndham had explored employment and
immigration matters in prior depositions with several different wit-
nesses and obtained documents concerning such matters from those
witnesses. Given the extraordinary circumstances presented here, the
district court was well within its discretion to conclude that the addi-
tional discovery sought by Wyndham was cumulative and duplicative,
unduly burdensome, and harassing.

                                   IV.

   For the foregoing reasons, we conclude that (1) we have jurisdic-
tion to entertain an appeal from the denial of discovery in an ancillary
proceeding where the underlying litigation is pending outside this cir-
cuit and (2) the district court did not abuse its discretion in denying
Wyndham’s request for discovery from Brainwave. The ruling of the
district court is therefore

                                                            AFFIRMED.
  3
   The Virgin Islands district court noted that discovery requests aimed
at Plaintiffs’ immigration status were at "the outer limits of conceivable
relevance."