United States District Court, E.D. North Carolina, Western Division
B. JONES JR. UNITED STATES MAGISTRATE JUDGE.
matter is before the court on the motion of non-party MMX
Transportation, Inc. ("MMX") to quash or modify a
subpoena served on it by Plaintiff Pacific Alliance
Corporation ("PAC") or for a protective order.
[DE-57]. PAC responded in opposition to the motion [DE-61 ].
For the reasons that follow, the motion is allowed as to the
request for a protective order and is denied as to the
request to quash or modify.
case involves claims of professional negligence and breach of
fiduciary duty by PAC against the law firm McCoy Wiggins and
its members Richard Wiggins and Kenneth Dantinne
(collectively, "counsel"). The claims arise out of
counsel's representation of PAC in a North Carolina state
court action to domesticate a foreign judgment obtained in
Utah by PAC against Star Leasing, Inc., a North
Carolina-based logistics company. PAC alleged that counsel
failed to respond i to requests for admission propounded by
Star Leasing, and, as a result, the North Carolina state
court deemed the subject matter admitted and refused to give
full faith and credit to PAC's foreign judgment. Am.
to PAC, Star Leasing's president, Randal Menscer,
organized MMX and transferred the assets of Star Leasing to
MMX. Resp. [DE-61 ] at 4. On December 31, 2018, PAC served on
MMX a subpoena seeking certain financial and business records
to be produced by January 16, 2019. Mot. [DE-57] at 1, 5-10.
Counsel for MMX and PAC exchanged emails regarding the
subpoena on January 10, 2019, Resp. Ex. E [DE-61-5], and MMX
filed the instant motion the following day.
issued to nonparties are governed by Fed.R.Civ.P. 45.
See Fed. R. Civ. P. 34(c) ("As provided in Rule
45, a nonparty may be compelled to produce a document and
tangible things or to permit an inspection."). "In
response to such a subpoena, a non-party may either file a
motion to quash or modify the subpoena pursuant to
Fed.R.Civ.P. 45(d)(3)(A), move for a protective order
pursuant to Fed.R.Civ.P. 26(c), or oppose a motion to compel
production of the subpoenaed documents pursuant to
Fed.R.Civ.P. 45(d)(2)(B)." Schaaf v. Smithkline
Beecham Corp., 233 F.R.D. 451, 453 (E.D. N.C. 2005)
(citing United States v. Star Scientific, Inc., 205
F.Supp.2d 482, 484 (D. Md. 2002)). When considering the
propriety of enforcing a subpoena, a trial court should
consider "the relevance of the discovery sought, the
requesting party's need, and the potential hardship to
the party subject to the subpoena." Id.
(quoting Heat & Control, Inc. v. Hester Indus.,
785 F.2d 1017, 1024 (Fed. Cir. 1986)). "A party or
attorney responsible for issuing and serving a subpoena must
take reasonable steps to avoid imposing undue burden or
expense on a person subject to the subpoena," and the
court "must quash or modify a subpoena that subjects a
person to undue burden." Fed.R.Civ.P. 45(d)(1),
the context of evaluating subpoenas issued to third parties,
a court 'will give extra consideration to the objections
of a non-party, non-fact witness in weighing burdensomeness
versus relevance.'" Schaaf, 233 F.R.D. at
453 (quoting Indent. Ins. Co. of N. Am. v. Am. Eurocopter
LLC, 227 F.R.D. 421, 426 (M.D. N.C. 2005)). The
determination of the reasonableness of a subpoena requires
the court to balance the interests served by demanding
compliance with the subpoena against the interests furthered
by quashing it, weighing the benefits and burdens,
considering whether the information is necessary and whether
it is available from another source. See 9 A Wright
& Miller, Fed. Practice & Procedure §
2463.1 (3d ed.) (collecting cases); Spring v. Bd. of Trs.
of Cape Fear Cmty. Coll., No. 7:15-CV-84-BO, 2016 WL
4204153, at *1 (E.D. N.C. Aug. 8, 2016). The party seeking
the court's protection from responding to discovery
"must make a particularized showing of why discovery
should be denied, and conclusory or generalized statements
fail to satisfy this burden as a matter of law."
Mainstreet Collection, Inc. v. Kirkland's, Inc.,
270 F.R.D. 238, 240 (E.D. N.C. 2010) (citation omitted).
Accordingly, it is MMX's burden to show why discovery
should be denied. See U.S. Equal Emp't Opportunity
Comm'n v. Bojangles' Rests., Inc., No.
5:16-CV-654-BO, 2017 WL 2889493, at *3 (E.D. N.C. July 6,
2017) (citing Papanicolas v. Project Execution &
Control Consulting, ZZC, No. CIV.A. CBD-12-1579, 2015 WL
1242755, at * 1 (D. Md. Mar. 17, 2015) (noting that
'"[t]he burden of proving that a subpoena is
oppressive is on the party moving to quash"');
Sherrill v. DIO Transp., Inc., 317F.R.D. 609, 612
(D.S.C. 2016) ("[T]he burden of proof is with the party
objecting to the discovery to establish that the challenged
production should not be permitted.") (citation
contends the subpoena should be quashed because it is
unreasonable, overly broad, and unduly burdensome; seeks
irrelevant and confidential documents; and fails to provide
adequate time for compliance. Mem. [DE-58] at 4-12. Prior to
filing the instant motion, MMX asserted these objections in
an email from its counsel to PAC's counsel. Resp. Ex. E
[DE-61-5]. In response to these objections, PAC explained its
theory of the case-McCoy Wiggins' malpractice prevented
PAC from executing its judgment and taking control of Star
Leasing; Star Leasing's assets were subsequently
transferred to MMX; and PAC's damages in this case are
based on the value of Star Leasing, now operating as MMX.
Id. PAC's counsel also offered to discuss how
much additional time MMX would need to comply with the
subpoena and the content of a protective order. Id.
being informed of PAC's argument as to relevance prior to
filing the motion to quash, MMX fails to address it and
inexplicably asserts that "it is hard to conceive of a
reason why PAC seeks the volumes of financial and corporate
records from MMX." Mem. [DE-58] at 4. MMX goes on to
generally assert that PAC's damages are unconnected to
MMX's records but ignores PAC's assertion that Star
Leasing is now operating as MMX, the requested documents are
relevant to PAC's damages, and the requested documents
are necessary to achieve a valuation of Star Leasing.
Id. at 4-5; Resp. Ex. E [DE-61-5]. Accordingly, MMX
has failed to carry its burden of demonstrating the documents
are not relevant.
contends the categories of documents requested are facially
overly broad and would produce a burdensome number, roughly
1, 500, of responsive documents. Mem. [DE-58] at 5-6.
PAC's requests cover a broad range of documents,
including, among other things, three years of financial
statements, tax returns, budgets and proj ections, asset
lists, accounts payable and receivable lists, key employee
compensation schedules, and appraisals; company documents,
such as buy-sell agreements, real estate and property tax
assessments, and loan applications; and two years of banking
documents, such as account statements and copies showing
disbursements and deposits. Mot. [DE-57] at 9-10. However, a
broad request is not necessarily overly broad. In
Schaaf, the court quashed a subpoena seeking
all documents over a ten year period, characterizing
it as "a paradigmatic example of a facially overbroad
subpoena" and observing that "[a] large quantity of
the documents sought have no connection to anything involved
in the case." 233 F.R.D. at 455. In contrast, the
subpoena at issue here requests specific categories of
documents from a two to three year period; the information
sought appears relevant to Star Leasing's valuation and,
in turn, PAC's damages; and 1, 500 documents is not an
inordinate number. Accordingly, MMX has failed to demonstrate
the subpoena is overly broad.
P AC has demonstrated a need for the documents that outweighs
the potential burden on MMX. P AC asserts that the documents
are necessary to value Star Leasing; that Menscer was the
president of Star Leasing, later formed MMX, and transferred
Star Leasing's assets to MMX; and that MMX operates in
the same building with the same employees and the same
equipment as Star Leasing. Resp. [DE-61] at 1, 4, 8. PAC has
subpoenaed documents from Star Leasing, also a non-party,
that predate the formation of MMX, and it is not apparent
what other source could more readily produce the requested
contends the subpoena requires disclosure of confidential
information. Mem. [DE-58] at 6-10. In an affidavit, MMX's
comptroller asserts that access to the requested documents is
limited in the regular course of business due to the
commercially sensitive and confidential nature of the
documents, and she provides specific examples of how
disclosure of certain information could; harm MMX's
business. Locklear Aff. [DE-59] ¶¶ 12-21. Allowing
MMX to produce documents subject to a protective order is
sufficient to address MMX's valid concerns regarding the
potential dissemination and misuse of its commercially
contends the subpoena does not provide adequate time for
compliance and asserts it would take a minimum of eight weeks
to comply. Mem. [DE-58] at 10-11. MMX is a small business
with a limited number of employees capable of searching for
relevant documents, some of which are stored offsite.
Locklear Aff. [DE-59] ¶¶ 4-11. The deadline for
compliance set forth in the ...