Santos v. Schroeder

• Court: District Court, N.D. New York
• Decided: July 21, 2022
• Docket: 9:19-cv-01610
• Status: Unknown

Opinion

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK _____________________________________________ FRANCISCO SANTOS, Plaintiff, 9:19-cv-01610(BKS/TWD) v. B. SCHROEDER, C.O., et al.,

Defendants. _____________________________________________ APPEARANCES: FRANCISCO SANTOS Plaintiff pro se NICHOLAS DORANDO, ESQ. NYS Assistant Attorney General, Counsel for Defendants THÉRÈSE WILEY DANCKS, United States Magistrate Judge ORDER Presently before the Court in this civil rights action filed by pro se plaintiff, Francisco Santos, who is proceeding in forma pauperis (“IFP”) is plaintiff’s motion to compel discovery, to appoint counsel, and for sanctions. (Dkt. No. 75.) Defendants oppose the motion. (Dkt. No. 77.) For the reasons that follow, Plaintiff’s motion is granted, in part, and denied, in part in accordance with this Order. I. MOTION TO COMPEL DISCOVERY AND FOR SANCTIONS A. Legal Standard Rule 26(b) of the Federal Rules of Civil Procedure (“FRCP”) sets forth the scope and limitations of permissible discovery: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable. Fed.R.Civ.P. 26(b)(1). Information is relevant if: “(a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action.” Fed. R. Evid. 401. Relevance is a matter of degree, and the standard is applied more liberally in discovery than it is at trial. “‘[I]t is well established that relevance for the purpose of discovery is broader in scope than relevance for the purpose of the trial itself.’” Refco Grp. Ltd., LLC v. Cantor Fitzgerald, L.P., 13 Civ. 1654 (RA)(HBP), 2014 WL 5420225 at *7 (S.D.N.Y. Oct. 24, 2014) (Pitman, M.J.) (brackets in original), quoting Arch Assocs., Inc. v. HuAmerica Int'l, Inc., 93 Civ. 2168 (PKL), 1994 WL 30487 at *1 (S.D.N.Y. Jan. 28, 1994) (Leisure, D.J.); see Degulis v. LXR Biotechnology, Inc., 176 F.R.D. 123, 125 (S.D.N.Y.1997) (Sweet, D.J.); Quaker Chair Corp. v. Litton Bus. Sys., Inc., 71 F.R.D. 527, 530–31 (S.D.N.Y.1976) (Motley, D.J.). As the advisory committee notes, the proportionality factors have been restored to their former position in the subsection “defining the scope of discovery,” where they had been located prior to the 1993 amendments to the rules. Fed. R. Civ. P. 26(b)(1) advisory committee’s notes to 2015 amendment. Relevance is still to be “construed broadly to encompass any matter that bears

2 on, or that reasonably could lead to other matter that could bear on” any party’s claim or defense. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). However, the amended rule is intended to “encourage judges to be more aggressive in identifying and discouraging discovery overuse” by emphasizing the need to analyze proportionality before ordering production of relevant information. Fed. R. Civ. P. 26(b)(1) advisory committee’s notes to 2015 amendment. The burden

of demonstrating relevance remains on the party seeking discovery, and the newly-revised rule “does not place on the party seeking discovery the burden of addressing all proportionality considerations.” Id. In general, when disputes are brought before the court, “the parties’ responsibilities [ ] remain the same” as they were under the previous iteration of the rules, so that the party resisting discovery has the burden of showing undue burden or expense. Id.; see also Fireman’s Fund Insurance Co. v. Great American Insurance Co. of New York, 284 F.R.D. 132, 135 (S.D.N.Y. 2012) (“Once relevance has been shown, it is up to the responding party to justify

curtailing discovery.”). Moreover, information still “need not be admissible in evidence to be discoverable.” Fed. R. Civ. P. 26(b)(1). The advisory committee’s notes to the recent amendment of Rule 26 further explain that “[a] party claiming that a request is important to resolve the issues should be able to explain the ways in which the underlying information bears on the issues as that party understands them. The court’s responsibility, using all the information provided by the parties, is to consider these and all the other factors in reaching a case-specific determination of the appropriate scope of discovery.”

3 Fed. R. Civ. P. 26 advisory committee’s note to 2015 amendment. With these principles in mind, the Court makes the following directives.

B. Plaintiff’s Request for Production of Documents Defendants responded to plaintiff’s demands, however, plaintiff seeks further responses to his Request for Production of Documents (“RFP”), dated May 20, 2021, and November 3, 2021, copies of which defendants have attached to their opposition papers. (Dkt. No. 75 at 7-11; Dkt. No. 77-1 at 7-33, 40-46.1) Defendants argue they have complied with the demands and provided

plaintiff with all relevant information that exists, and thus sanctions are not warranted and the motion should be denied. (See generally Dkt. No. 77.) Defendants also argue plaintiff did not comply with the FRCP and the Northern District of New York’s Local Rules (“LR”) requiring the parties to confer in good faith to try to resolve their discovery disputes before bringing the issues to the Court. Id. The Court finds no merit in this argument given plaintiff’s pro se status, and notes LR 7.1(a)(2) provides that where an incarcerated individual is involved in an action, such “[p]ro se party [is] not subject to the requirement that a court conference be held prior to filing a non- dispositive motion.” NDNY LR 7.1(a)(2).

Further, a review of the submissions by defendants in opposition to the motion shows that defendants have largely responded appropriately to plaintiff’s RFPs. However, with regard to the RFP dated May 20, 2021, (Dkt. No. 77-1 at 17-33), the Court finds defendants have not adequately

1 Citations to docket entries refer to the pagination inserted by CM/ECF, the Court’s electronic filing system. 4 responded to RFP Nos. 1, 2, 4, since the information sought is relevant to plaintiff’s retaliation claims. As such, defendants are directed to provide plaintiff with access to listen to the audio and review the video footage as requested in RFP Nos. 1, 2, and 4 but not provide him with copies of them. Defendants’ counsel must make arrangements for such listening and/or viewing to occur no later than August 22, 2022. Additionally, concerning RFP No. 4, defendants are directed to produce a transcript of the Disciplinary Hearing related to the August 18, 2019, Misbehavior Report. If the audio tapes and/or video footage and/or transcript of the subject Disciplinary Hearing are no longer available, then defendants’ counsel must provide plaintiff with an affidavit from an official of the

Auburn Correctional Facility (“ACF”) by August 22, 2022, detailing the efforts made to locate such audio and/or video footage, and explain why it is no longer available. With regard to RFP Nos. 32, 33, 34, and 35, of the May 21, 2021 RFP, (Dkt. No. 77-1 at 17- 33), defendant is directed to produce, by August 22, 2022, the name(s) of individual(s), if any, at ACF who were assigned to review and preserve the audio and video for the visiting room are on

August 18, 2019, during the time plaintiff was present in that area. The Court finds this information relevant to plaintiff’s claims of retaliation. If no such individual exists, defendants must provide plaintiff with a clear statement to that effect by August 22, 2022. As to RFP Nos. 33, 34, and 35, defendants need not produce Directive 4942 for the reasons stated in their response. (Dkt. No. 77-1 at 10.) However, defendants are directed to provide plaintiff with an affidavit, by August 22, 2022, from the appropriate official at ACF indicating for how long such audio or video footage is preserved.

5 Considering RFP Nos. 3, 5 through 31, 36 through 54, in the May 21, 2021 RFP, (Dkt. No. 77-1 at 17-33), the Court finds the defendants have adequately responded to the demands and/or the information requested is not relevant. Further, plaintiff has failed to adequately explain the ways in which the information sought bears on his claims. Finally, all such demands pertaining to any of the Doe defendants are improper. With regard to the RFP dated November 3, 2021, (Dkt. No. 77-1 at 40-46), RFP Nos. 1

through 5 repeat the plaintiff’s requests for video, audio, and transcript information as requested in RFP Nos. 1, 2, and 4 of the May 21, 2021, RFP, and therefore defendant shall respond to those requests in the same manner as directed above for the May 21, 2021, RFP. In reviewing the remaining requests in the November 3, 2021, RFP, the Court finds defendants have adequately responded to these demands and/or the information requested is not relevant. Thus, no further response is needed.

Because defendants provided responses to plaintiff’s RFPs, and did not wilfully disregard their discovery obligations, sanctions are not warranted. Additionally, the Court is only authorizing the specific discovery as directed herein. No other discovery is permitted since the discovery deadline has expired.

6 II. MOTION FOR COUNSEL A. Legal Standard The statute that governs IFP proceedings provides, in relevant part, that “[t]he court may

request an attorney to represent any person unable to afford counsel.” 28 U.S.C. § 1915(e)(1); see also Hodge v. Police Officers, 802 F.2d 58, 61-62 (2d Cir. 1986). That provision, however, does not require that counsel be appointed for every indigent civil litigant. Although the United States Constitution assures that indigent litigants have “meaningful access” to the courts, it does not guarantee that all such parties will receive the benefit of pro bono representation. Hodge, 802 F.2d at 60 (quoting Bounds v. Smith, 430 U.S. 817, 823 (1977)). Instead, Section 1915(e) confers broad discretion on the courts to appoint counsel to deserving indigent litigants in appropriate circumstances. Hodge, 802 F.2d at 60-62.

While the appointment of counsel to represent indigent parties in civil suits is authorized by statute, when that authority is exercised, a court is required to call upon attorneys to donate their time pro bono, to the benefit of indigent litigants and the court. In deference to the limited resources available to a court to serve the interests of the many indigent litigants who pursue claims before them, and recognizing the “thankless burden” associated with such assignments, Miller v. Pleasure,

296 F.2d 283, 285 (2d Cir. 1961), courts should not grant such applications indiscriminately, but instead must exercise sound judgment and restraint in doing so. Cooper v. A. Sargenti Co., Inc., 877 F.2d 170, 171-72 (2d Cir. 1989).

7 There is no bright line test to be applied when a pro se, indigent civil litigant seeks appointment of counsel. Hendricks v. Coughlin, 114 F.3d 390, 392-93 (2d Cir. 1997). The factors informing the decision of whether to exercise discretion in favor of appointing counsel were summarized by the Second Circuit in its decision in Hodge: In deciding whether to appoint counsel . . . , the district judge should first determine whether the indigent’s position seems likely to be of substance. If the claim meets this threshold requirement, the court should then consider the indigent’s ability to investigate the crucial facts, whether conflicting evidence implicating the need for cross-examination will be the major proof presented to the fact finder, the indigent’s ability to present the case, the complexity of the legal issues and any special reason in that case why appointment of counsel would be more likely to lead to a just determination. Hodge, 802 F.2d at 61-62. In weighing these factors, each case must be decided on its own merits. Velasquez v. O'Keefe, 899 F. Supp. 972, 974 (N.D.N.Y. 1995) (citing Hodge, 802 F.2d at 61). Of these criteria, the Second Circuit has “stressed the importance of the apparent merits of the indigent's claim.” Cooper, 877 F.2d at 172. While a plaintiff need not demonstrate that he can win his case without the aid of counsel, he does have to show “likely merit.” McDowell v. State of New York, No. 91-CV-2440, 1991 WL 177271, at *1 (S.D.N.Y. 1991). B. Plaintiff’s Request for Counsel In this case, plaintiff indicates he does not have the funds for depositions and to prepare for any dispositive motion. (Dkt. No. 75 at 15.) With due regard to plaintiff’s pro se status, these are not proper reasons for appointing pro bono counsel. This action is not overly complex and involves 8 retaliation claims asserted against the defendants. Plaintiff has successfully defended a summary judgment motion made on exhaustion grounds, and successfully amended his complaint. (See Dkt. Nos. 28, 30, 50, 51.) There is nothing in the record that demonstrates that plaintiff is not able to effectively pursue this action. In addition, at this time, the Court is not aware of any special reason why appointment of counsel would be more likely to lead to a just determination of this litigation. Plaintiff is advised that, in the event this action should proceed to trial, the Court will revisit this determination and likely appoint counsel for trial. Accordingly, plaintiff’s request for the appointment of counsel is denied.

Wherefore, it is hereby, ORDERED, that the part of plaintiff’s motion to compel (Dkt. No. 75) is GRANTED, in

part, and DENIED, in part, as set forth herein, and defendant shall produce the discovery as directed by 8/22/2022; and it is further ORDERED, that the part of plaintiff’s motion seeking sanctions (Dkt. No. 75) is DENIED; and it is further

ORDERED that the part of plaintiff’s motion to appoint counsel (Dkt. No. 75) is DENIED without prejudice; and it is further ORDERED that the dispositive motion deadline is reset to 9/26/2022; and it is further

ORDERED that the Clerk of the Court shall serve a copy of this Decision and Order on the parties; and it is further 9 ORDERED that the Clerk of the Court shall provide plaintiff with a copy of the unpublished decision cited herein in accordance with the Second Circuit decision in Lebron vy. Sanders, 557 F.3d 76 (2d Cir. 2009).

Dated: July 21, 2022 Syracuse, New York 3 | Thérese Wiley Dancks United States Magistrate Judge

1991 WL 177271

1991 WL 177271 FACTS Only the Westlaw citation is currently available. Plaintiff is an inmate of the Fishkill United States District Correctional Facility, who was granted leave to Court, S.D. New York. proceed in forma pauperis on April 8, 1991. His complaint, filed on the same day, alleges that Patrick McDOWELL, Plaintiff, on June 14, 1990, plaintiff Vv. The STATE OF NEW YORK, was keep-locked and taken to Special Housing Thomas Coughlin, ITT, Unit (S.H.U.) “O”, where C.O.M. Lupo and Commissioner, et al., Defendants. Sgt. Fredericks maliciously, confiscated, with- . held and deprived plaintiff of his doctor No. 91 Civ. 2440 (SWK). prescribed medical devices necessary for the | rehabilitation and amelioration of pain due Sept. 3, 1991. to severe back injury sustained while in Attorneys and Law Firms the care, custody and control of the N.Y. State D.O.C.S..... Plaintiff did not receive his Patrick McDowell, pro se. medically indicated and prescribed necessary back braces (protheses) returned to him until Martha O. Shoemaker, Assistant Attorney July 17, 1990, over amonth, and then only after General of the State of New York, New York he was put through the grievance procedure City, for defendants. wringer [Cplt. J IV]. As a result, plaintiff claims that he MEMORANDUM OPINION AND ORDER sustained personal injuries of a serious and BARBARA A. LEE, United States Magistrate permanent nature. To wit, chronic pain in lower Judge. back, muscle spasms, pain and stiffness in neck and leg, damage and injury to bones, This is a prisoner civil rights action ligaments, cartilages, tendons, nerves, blood pursuant to 28 U.S.C. § 1983, arising outofthe vessels, organs and soft tissues, as well as to alleged confiscation of plaintiff's “prescribed the nervous system and skeletal system, plus prothesis.” It was referred to me for allpurposes ental anxiety and humiliation, conscious pain by the Hon. Shirley Wohl Kram, U.S.D.J., by and suffering, emotional and psychological Order of Reference entered May 21, 1991. trayma and stress, possible loss of future Presently before me is plaintiff's application for earning capacity. The aforementioned injuries appointment of counsel. For the reasons stated are claimed to be permanent and progressive in below, the motion is denied. nature [Cplt. | IV—A].

WOTWLA77274 Plaintiffs application for appointment of proceed in forma pauperis. Plaintiff also has counsel is made on the following grounds: attested to several unsuccessful attempts to obtain counsel on his own and with his wife's I have very limited-knowledge of the Law. assistance. Almost none. Someone elese did all my writing . for me. I will never be able to get to, let alone However, a consideration of the merits of go through a trail by myself. | have save all my _ plaintiff's case and his ability to gather the documentary evidence from the start, plus my _facts if unassisted by counsel militate against medical records [Application 4 2]. ! the granting of plaintiffs application for the appointment of counsel. The question whether Plaintiff stated that his previous lawyer in _ Plaintiff's claim rises to the level ofthe violation an “unassociated” case “abandoned” him and of a Constitutional right actionable under § that his wife “has contacted many different 1983 would appear to be a question of law that attorneys to no avail,” in his efforts to obtain Could be determined upon summary judgment, representation by counsel. without any of the difficult issues of credibility or fact-gathering for which counsel would be necessary, see ' ‘Hodge v. Police Officers, 802 DISCUSSION F.2d 58.

The criteria which govern a court's The availability of counsel is also a pertinent determination whether to appoint counsel for consideration. Since this is a civil case, there an indigent plaintiff include: the merits of is no Constitutional right to counsel as in plaintiff's case; plaintiff's ability to pay for criminal cases. Nor is the court authorized to private counsel; plaintiff's efforts to obtain a fdr an attorney to represent an indigent party lawyer; availability of counsel; and plaintiffs © @ civil case. “The court may request an ability to gather the facts and deal with the attorney to represent any such person unable issues if unassisted by counsel. Cooper v. A. to employ counsel,” U.S.C. § 1915(d), Sargenti & Co., Inc., 877 F.2d 170, 172 (2d _ but no funds have been authorized by Congress Cir.1989); be Hodge v. Police Officers, 802 F.2d to pay attorneys’ fees in these kinds of cases. 58, 60 (2d Cir.1986). Of these criteria, the most 1" this district, the court's “request” attorneys important, the “threshold requirement,” is the to appear for persons who have been granted merits, or “whether the indigent's position was _ !€aV€ to proceed as poor persons takes the form likely to be of substance.” Cooper, 877 F.2d OF @ list of cases which the Pro Se Office at 172. Indigents do not have to demonstrate circulates to the Pro Bono panel each month. I that they can win their cases without the aid of take judicial notice of the fact that the average counsel; they do have to show likely merit. Jd. length of time for a case to be chosen from the list is six months, and that prisoner civil *2 In this case, plaintiffs inability to pay rights actions are rarely chosen because of for private counsel is sufficiently shown by the high number of these cases on the list. the papers on which he was granted leave to The complaint in this case does not appear

1991 WL 177271 to present any novel question of law which , would increase the likelihood of an attorney's The foregoing is a determination pursuant to volunteering to represent this plaintiff. To place [°28 U.S.C. § 636(b)(1)(A) and Rule 72(a), this case on the list would therefore have the Fed.R.Civ.P. effect of substantially delaying the resolution of the claim, without the likelihood that the court's Itis SO ORDERED. determination would in fact be assisted by a brief filed by a volunteer attorney. All Citations For these reasons, plaintiff's application for Not Reported in F.Supp., 1991 WL 177271 appointment of counsel is denied.

Footnotes

1. Spelling, grammar and punctuation in all quotations from Plaintiffs papers are as in the original.

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(4) If the motion is granted, the court shall, after 1994 WL 30487 opportunity for hearing, require the party or deponent Only the Westlaw citation is currently available. whose conduct necessitated the motion ... to pay the United States District Court, S.D. New York. moving party the reasonable expenses incurred in obtaining ARCH ASSOCIATES, INC., Plaintiff, the order, including attorney's fees ... Vv. Fed.R.Civ.P. 37. HuAMERICA INTERNATIONAL, INC., Defendant. Fed.R.Civ.P. 26 delinates the general provisions concerning No. 93 CIV. 2168 (PKL). discovery. The language in Rule 26(b)(1) as to any matter | “relevant to the subject matter involved in the pending action” Jan. 28, 1994. has been construed “broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.” MEMORANDUM ORDER ( Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 LEISURE, District Judge, (1978). While no general rules have been developed for determining relevance in the context of Rule 26(b){1), courts *1 This is an action for copyright infringement, false in the Second Circuit have denied discovery requests when description and advertising, and unfair competition. Plaintiff the information requested has no conceivable bearing on has moved this Court for an order pursuant to Fed.R.Civ.P. the case. See, e. g., Lemanik, S.A. v. McKinley Allsopp, inc., 37(a)(2) and (a)(4) compelling answers to plaintiffs first 125 F.R.D 602, 608 (S.D.N.Y.1989) (citing Broadway & set of interrogatories and compelling the production Ninery—Sixth St. Realty Co. v. Loew's Inc., 21 ER.D. 347, 352 of documents in accordance with plaintiffs request for (S§.D.N.Y.1958)). On the other hand, it is well established that production of documents dated June 15, 1993. relevance for the purpose of discovery is broader in scope than relevance for the purpose of the trial itself. Accordingly, Plaintiff commenced this action on April 5, 1993 alleging, this Court has applied the “reasonably calculated to lead inter alia, copyright infringement by defendant. The to the discovery of admissible evidence” standard of Rule complaint was served on May 25, 1993, and an amended 26(b)(1) in deciding whether discovery of the documents in complaint was filed on July 9, 1993, On June 15, 1993 question may lead to evidence admissible at trial. See SEC v. plaintiff served defendant with a first set of interrogatories Downe, 92 Civ. 4092 (PKL) (S.D.N.Y. Jan. 27, 1994) at 12- and requests for production of documents pursuant to 14, Indeed, this Court has interpreted “reasonably calculated” Fed.R.Civ.P. 33 and 34. Defendant failed to respond to the —_ to mean “ ‘any possibility that the information sought may be discovery requests. By way of a letter dated July 9, 1993, —_ relevant to the subject matter of the action.’ ” Mallinckrodt plaintiff reminded defendant of the as yet unmet discovery Chemical Works v. Goldman, Sachs & Co., 58 F.R.D. 348, 353 requests. Defendant still did not respond to plaintiffs (§,D.N.Y.1973) (emphasis in original) (quoting C. Wright, requests. On October 4, 1993 plaintiff served and filed the Law of Federal Courts § 81, at 359 n. 47 (2d ed. 1970). | instant motion pursuant to Fed.R.Civ.P. 37, with a return date of October 29, 1993. Defendant did not submit any papers *2 Upon a review of the record in this case, this Court in response to plaintiff's motion. Nearly ninety days have ludes that an order compelling discove isa ropriate passed, and defendant has yet to respond to plaintiffs motion cone POINNE COSEONETY TS □□□□□□□□□□□ papers of to plaintiff's discovery requests, Fed.R.CivP. 37(a) The requested documents may help plaintiff determine the soe extent to which plaintiff's business and goodwill have been provides in relevant part: damaged by defendant's alleged infringement. Thus, the (2) If a deponent fails to answer a question proponded or _—_‘“iscovery information requested is relevant, and within the submitted under rule 30 ... or a party fails to answer an SCOPE of the Federal Rules of Civil Procedure. interrogatory submitted under rule 33 ..., the discovering party may move for an order compelling an answer, Defendant has been given ample time to respond to plaintiff's or a designation, or an order compelling inspection in discovery requests, and has failed to do so. Defendant has accordance with the request. had ample time to submit response papers in opposition to

plaintiff's motion, and has failed to respond. Furthermore, plaintiff has attempted to confer with defendant in an effort Conclusion to resolve the issues raised in this motion pursuant to Local Civil Rule 3(f)Local Civil Rule 3(f). See James River __ For the above stated reasons, plaintiff's motion for an order to Corp. v. Interamerica Trust Co., et al, 1990 WL 6551, compel discovery is hereby granted. Defendant is ordered to *3 (S.D.N.Y.). Accordingly, plaintiffs motion for an order answer the set of interrogatories propounded to defendant and compelling discovery is hereby granted. to produce documents in accordance with plaintiff's first set of interrogatories and requests for production of documents, Additionally, pursuant to Fed.R.Civ.P. 37(a)(4) a hearing will dated June 15, 1993. A hearing is scheduled before this Court be held in this matter to determine if defendant shall be 01 Tuesday February 8, 1994 at 4:30 p.m., to determine the required to pay plaintiff the reasonable expenses incurred in warding of the expenses of the motion, and any additional obtaining the order, including attorney's fees. 2 The hearing sanctions pursuant to Fed.R.Civ.P, 37(a)(4). shall be held before this Court on Tuesday February 8, 1993 at 4:30 pm, in Room 312 of the United States Courthouse, 40 SO ORDERED. Centre Street, New York, New York. All Citations Not Reported in F.Supp., 1994 WL 30487

1 Recently, the Second Circuit has followed the Fifth Circuit's reasoning in f * United States v. Holley, 942 F.2d 916, 924 (5th Cir.1991), cert. denied, 114 S.Ct. 77 (1993), stating that “materiality in a civil discovery deposition is not limited to evidence admissible at trial, but includes matters properly the subject of and material to a deposition under Rule 26(b)(1) [of the Federal Rules Civil Procedure].” United States v. Kross, No. 93-1182, slip op. at 1172-73 (2d Cir. Jan. 18, 1994) (defendant convicted of making false declarations in civil deposition in context of civil forfeiture action). 2 The issue before the Court at the February 8, 1994 hearing will be the level of sanctions which are warranted based on defendant's failure to comply with discovery obligations. The mildest sanctions provided by Fed.R.Civ.P. 37 is an order to reimburse the opposing party for expenses caused by the failure to cooperate. More stringent measures to which this Court may turn, include striking out portions of the pleadings, prohibiting introduction of evidence on particular points, and deeming disputed issues determined adversely to the disobedient party. Harshest of all would be an order of dismissal and the entering of a default Ban, . . □□ judgment. ' © Cine Forty-Second Street Theatre v. Allied Artists, 602 F.2d 1062, 1066 (2d Cir.1979 (finding that a grossly negligent failure to obey an order compelling discovery may justify the severest disciplinary measures); |" United States v. Penn Central Trans., 716 F2d 954, 954-55 (2d Cir.1983) (affirming the District Court's decision striking defendant's answer and entering a default judgment pursuant to Fed.R.Civ.P. 37, for failure to comply with an order for discovery).

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2014 5420225 allegedly designed to appropriate the CIH Entities'? assets 2014 WL 5420225 for the benefit of defendants and to the detriment of the CIH Only the Westlaw citation is currently available. Entities, thereby diminishing the value of the CIH Entities and United States District Court, plaintiffs interest in them (Am.Compl.{ 3). Judge Abrams S.D. New York. concluded that REFCO GROUP LTD., LLC, Plaintiff, y. [b]ecause demand was futile with respect to certain of CANTOR FITZGERALD, LP., et al., Defendants. the Challenged Transactions (namely, the 2006 License Agreement, the Asset Purchase Agreement, and the 2011 No. 13 Civ. 1654(RA)(HBP). License Agreement) but not others (namely, the closure | of Spreadfair, the transfer of CIL's trading activity to Signed Oct. 24, 2014. CFE, and the increase in related-party fees paid by CIL), only the former transactions [ (the “Surviving Challenged Transactions”) ] may form the basis of RGL's claims. OPINION AND ORDER Refco Grp. Ltd. v. Cantor Fitzgerald, L.P., supra, 2014 WL 2610608 at *13. PITMAN, United States Magistrate Judge. □ A. The Surviving Challenged Transactions *1 Refco Group Ltd., LLC (“RGL”) commenced this action on behalf of nominal defendants, Cantor Index Holdings, L.P. The 2006 License Agr cement. On February 7, 2006, CIH's (“CIH”), Cantor Index LLC (“CILLC”), Cantor Fitzgerald wholly-owned subsidiary and nominal defendant CILLC, Game Holdings, LLC (“CFGH”), Cantor Index Limited and non-party CFPH LLC,° granted defendant Cantor G (“CIL”), and Cantor Gaming Limited (“CGL”), as well & W (Nevada) L.P. (“Cantor Nevada”) a “non-exclusive, as on its own behalf, alleging that defendants engaged in non-transferable, perpetual, worldwide, royalty-free right self-interested transactions to siphon assets away from the | and license” to specific patents and patent applications subsidiaries of nominal defendant CIH in which RGL holds held by CILLC with consideration for the license to “be a 10% interest. By notice of motion dated September 9, determined within a reasonable time [after the grant of 2014 (Docket Item 58), defendants and non-party Cantor the license] pursuant to arms-length negotiations in good Entertainment Technology, Inc. CET’)! move to quash a faith” (Am.Comp1.Tf 83, 85). Defendant Howard W. Lutnick subpoena issued by plaintiff to Ernst & Young LLP (“E & (“Lutnick”), as Chairman and CEO of both CILLC and Cantor Y”), the auditor for a planned initial public offering by CET Nevada and as Chairman, President and CEO of CFPH LLC, 2 □ executed the agreement on behalf of all parties (Am. Compl. (the “IPO”).“ For the reasons set forth below, the motion to 86 & Ex. B). quash is denied. *2 The Asset Purchase Agreement. ® On April 30, 2010, I. Background nominal defendant CIL (CIH's wholly-owned subsidiary) The facts underlying this action are set forth in detail in the sold its Financial Fixed Odds (“FFO”) business to defendant Memorandum Opinion and Order of the Honorable Ronnie Cantor Gaming & Wagering Limited (‘CGWL (UK)”) Abrams, United States District Judge, dated June 10,2014, | (Cantor Nevada's wholly-owned subsidiary) (Am.Compl.f familiarity with which is assumed. Refco Grp. Ltd. Cantor 117). The agreement provided for transfer of all of CIL's Fitzgerald, LP, 13 Civ. 1654(RA), €''2014 WL 2610608 *S8¢% _Beodwill and records associated with the FFO business, as well as the transfer of key CIL employees, (S.D.N.Y. June 10, 2014). to CGWL (UK) for £1.00 as consideration, effective as of Judge Abrams granted defendants' motion to dismiss in midnight on February 1, 2010 (Am.Compl.¥ff 117-22). part and denied it in part. re Refco Grp. Lid. v. Cantor — rhe 201] License Agreement.’ In June 2011 CILLC, Fitzgerald, supra, 2014 WL 2610608 at *44, Plaintiff Cantor Nevada and non-party Shuffle Master, Inc., licensed based its claims on a series of transactions by defendants = ,ariain CILLC gambling-related patents to Shuffle Master

2014 5420225 but directed that royalties and fees derived from those following plaintiff's investment (Am.Compl.{ 2). Plaintiff licenses be paid to Cantor Nevada, not CILLC, the claims that “[dJespite the success of the CIH Entities ..., licensor (Am.Compl.44 129-35). Defendant Lee Amaitis the Defendants, with Lutnick at the helm, determined to (“Amaitis”), 8 as Executive Managing Director of CILLC transfer the CIH Entities’ businesses and assets for no or only and CEO of Cantor Nevada, executed the agreement nominal compensation to the control of the Cantor Nevada (Am.Compl.] 130). Entities, ! 14] in which neither the CIH Entities nor RGL held any ownership interest” (Am.Compl.{ 82). The transfer of those assets was allegedly the result, at least in part, of B. The Pari ties’ Claims and Defenses: the Surviving Challenged Trans-actions (Am.Compl.{ 83- Judge Abrams also interpreted plaintiff's allegations that 1,4) 15 py intiffs further contend that each of the Surviving defendants used “ ‘the CIH Entities’ intellectual property, . . □ Challenged Transactions was “unfair, as a matter of price including technology and patents, for the benefit of the Cantor . □□□ □□ Nevada Entities’ as ... describ[ing] the benefits that accrued to and Process, to CIH and its wholly-owned subsidiarlies] Cantor Nevada as a result of the Challenged Transactions but and constituted a breach of fiduciary duty, conversion and not [as constituting] an independent Challenged Transaction.” waste” (Am.CompL{¥ 93, 124, 138). Moreover, plaintiff argues that Cantor Nevada's success is the result of its Refco Grp. Ltd. v. Cantor Fitzgerald, L.P, supra, 2014 use of the CIH Entities’ technology (Am.Compl. 159). WL 2610608 at *6n. 7.° Judge Abrams did not preclude the | According to plaintiff, the Surviving Challenged Transactions plaintiff from basing its claims, at least in part, on defendants! _ resulted in the defendant companies’ growth, the enrichment use of the CIH entities’ intellectual property to benefit Cantor | Of individual defendants and a decrease in value of the Nevada, as long as that benefit resulted from one of the | CIH Entities, as well as RGL's partnership interest in CIH Surviving Challenged Transactions. Thus, presumably, to (Am.Compl.{f 3, 218-19, 228, 231, 236, 241, 254-56). the extent plaintiff attributes those alleged benefits to the Finally, plaintiff argues that the defendants used the Surviving Surviving Challenged Transactions, it has stated a claim. Challenged Transactions to siphon assets away from the CIH Entities and toward Cantor Nevada in anticipation of the IPO, Finally, Judge Abrams (1) dismissed defendants CIL, CGWL __ through which Cantor Nevada would be contributed to CET (UK), CFE and CGL from the action, !° (2) dismissed four in return for an estimated “cash infusion to Defendants of dl approximately $100 million” (Am.Compl.{f 4, 162-71, 210). of P laintiff's claims as to all defendants, @) dismissed Defendants deny plaintiff's claims and contend, among other plaintiff's claim of aiding and abetting the breach of fiduciary things, that CIH has not suffered or sustained any damages duty as to defendant Stephen M. Merkel (“Merkel”) !* and (Defendants' Answer and Affirmative Defenses to Plaintiff's (4) dismissed plaintiffs claim of unjust enrichment as to First Amended Complaint, dated July 18, 2014 (Docket Item all defendants except Cantor Nevada, Lutnick, Merkel and —_44)), Amiaitis. Refco Grp. Lid. v. Cantor Fitzgerald, L.P., supra, 2014 WL 2610608 at *44. Plaintiff's remaining claims with C. Th . The Subpoena respect to the Surviving Challenged Transactions are @) RGL served E & Y with a subpoena duces tecum, breach of fiduciary duty brough t against CIHLLC, Lutnick, dated August 8, 2014, seeking (1) “All Documents and Merkel and Amaitis, (2) aiding and abetting the breach of Cc ‘cations Concemine the auditine of any financial fiduciary duty against all defendants other than CIHLLC onwnumce 6 y : Statement of Cantor G & W (Nevada) conducted by and Merkel, (3) unjust enrichment against Cantor Nevada, Emst & Young during the Relevant Time Period” and Lutnick, Merkel and Amaitis, (4) waste of assets against (2) “All Documents and Communications Concerning the CIHLLC, Lutnick, Merkel and Amaitis and (5) conversion !3 IPO” (Subpoena annexed as Exhibit A to Declaration of against Lutnick, Merkel, Amaitis, Cantor Nevada, CFS, Francis X. Riley III in Support of Defendants' and CET's CFLP, CIHLLC, CIH, CILLC and CFGH. Po Refco Grp. Ltd. Motion to Quash the Subpoena Served on Emst & Young v. Cantor Fitzgerald, L.P., supra, 2014 WL 2610608 at *44. by Plaintiff, dated Sept. 9, 2014, (Docket Item 60) (“Riley Decl.”)). The “Relevant Time Period” is defined as “January *3 Plaintiff alleges that in 2002, it invested $8 million _!, 2002, through the present” (Riley Decl., Ex. A). “Cantor G for a ten percent interest in CIH, which was successful in & W (Nevada)” is defined as the gaming technology industry in the years immediately

2014 6420225 Inc, 11 Civ. 1590(LTS)(HBP), 2013 WL 57892 at *5 (S.D.N.Y. Jan. 4, 2013) (Pitman, M.J.) (‘[A] nonsubpoenaed Cantor G & W (Nevada) Holdings, party has standing only if it has a privilege, privacy or LP, and each of its direct and proprietary interest in the documents sought.” (citation indirect subsidiaries, any of their omitted); Solow v. Conseco, Inc., 06 Civ. 5988(BSJ)(THK), Affiliates doing business in the State of 2008 WL 190340 at *3 (S.D.N.Y. Jan. 18, 2008) (Katz, Nevada in connection with the gaming, pe sports, wagering, gambling, casino or M.J.); 0 Estate of Ungar v. Palestinian Auth., 400 F.Supp.2d similar business, and each of their 541, 554 (S.D.N.Y.2005) (McMahon, D.J.), afd, Fed. agents and representatives, and any of App'x 643 (2d Cir.2009). their successors, assignees, managers, directors, officers and employees In order for a party to have standing to challenge a subpoena served on a non-party, there must be more than “a conclusory assertion that the subpoenas seek documents that are private, *4 (Riley Decl., Ex. A). The “IPO” is “the initial public confidential, and commercially sensitive.” Universitas Educ., offering contemplated by Cantor Entertainment Technology, LLC v. NovaGrp., Inc., supra, 2013 WL 57892 at *5 (internal Inc., discussed in the S—1” (Riley Decl., Ex. A). Pursuant to quotations omitted). Courts should consider “whether the Fed.R.Civ.P. 45, E & Y served objections to the subpoena. 16 information itself is private, confidential, privileged, or highly Defendants and CET move to quash the subpoena. sensitive, and not the form the records take.” □□□□□ v. Conseco, Inc., supra, 2008 WL 190340 at *4. Discussion “Information regarding a party's financial records may give A. Legal Standard rise to a privacy interest.” KGK Jewelry LLC v. ESDNetwork, Pursuant to Fed.R.Civ.P. 45, a party may serve a subpoena on II Civ. 9236(LTS)(RLE), 2014 WL | 199326 at *3 (S.D NY. anon-party. However, upon timely motion, a court may quash Mar. 21, 2014) Ellis, MJ.) (collecting cases). Courts in this or modify a subpoena that requires “disclosing a trade secret Circuit “have found that individuals, whose banking records or other confidential research, development, or commercial are subpoenaed, have a privacy interest in their personal information.” Fed.R.Civ.P. 45(d)(3\(B)(i) (emphasis added). financial affairs that gives them standing to move to quash a “[T]he burden of persuasion in a motion to quash a subpoena subpoena served on a non-party financial institution.” Arias— issued in the course of civil litigation is borne by the movant.” Zeballos v. Tan, 06 Civ. 1268(GEL)(KNF), } “2007 WL : 4 Concord Boat Corp. v. Brunswick Corp., 169 FR.D. 44, 210112 at *1 (S.D.N_Y. Jan. 25, 2007) (Fox, M.J.) (collecting 48 (S.D.N.Y.1996) (Edelstein, D.J.) (internal quotation marks cases); see also Inre Flag Telecom Holdings, Ltd. Secs. Litig., and citations omitted). 02 Civ. 3400(WCC), 2006 WL 2642192 at *2 (S.D.N.Y. Sept. 13, 2006) (Conner, D.J.) (concluding that party had standing to object to a subpoena served on party's accounting firm B. Standing based on party's privacy interest in his financial records); The defendants' and non-party CET's opposition and motion | Reserve Solutions, Inc. v. Vernaglia, 05 Civ. 8622(VM) to quash presents a threshold question of standing, because (RLE), i “9006 WL 1788299 at *1 (S.D.N.Y. June 26, 2006) Plaintiff issued the subpoena to non-party E & Y, not the (Ellis, M.J.} (party had standing to challenge subpoena of movants. “[A] party ordinarily lacks standing to quash @ american Express for his credit card records). Courts have subpoena directed at a nonparty unless the party is seeking a1. afforded the same protection to corporations and LLC's. to protect a personal privilege or right.” Nova Prods., Inc. See Benistar Admin. Servs., Inc. v. United States, No. 6:11— v, Kisma Video, Inc., 220 F.R.D. 238, 241 (S.D.N.Y.2004) MC-62 (LEK\GHL), 2011 WL 7267867 at *1 (N.D.N.Y. (Ellis, M.J.); see also Manolis v. Brecher, \1 Civ. 2750(RMB) — ee. 13, 2011), aff'd sub nom. Benistar Admin Servs ., Inc. v. (HBP), 2013 WL 4044808 at *2 n. I (SDN .¥. Aug. 9, United States, No. 1:11-MC-00062 (LEK)(GHL), 2012 WL 2013) (Pitman, M.J.) (‘[A] party lacks standing to challenge 96569 (N.D.NLY. Jan. 12, 2012); see also SEC v. Verdiramo, subpoenas issued to non-parties on the grounds of relevancy ig Giy, 1888(RMB), 2013 WL 5882918 at *2 (S.D.N.Y. Oct. or undue burden,”); Universitas Educ., LLC v. Nova Grp., 29, 2013) (Berman, D.J.); Trump v. Hyatt Corp., 93 Civ.

2014 WL 5420225 5242(CSH), 4 WL 168021 (S.D.N.Y. Apr. 29, 1994) standing to object to the subpoena. Zintner Handling, Inc. v. (Haight, D.J.). Gen. Elec. Co., supra, 2006 WL 3359317 at *3.

. Here, plaintiff seeks all documents concerning E & Y's Relying upon 'solow v. Conseco, Inc, supra, 2008 — audit of any of Cantor Nevada's financial statements from WL 190340, movants argue that they have standing because = January 1, 2002 to date and all documents concerning the they have a “real interest” in the documents sought from [PO contemplated by CET. In fact, plaintiff itself stated that E & Y, many of which were allegedly provided toE & Y _ it expects that the scope of its subpoena will include not only by movants, and that the scope of the request “inevitably includes all tax returns and supporting documentation as well as financial statements, work papers, banking and financial documents on which the auditors records in any way referencing Cantor [Nevada] and any relied in conducting their examination of its many subsidiaries” (Defendants' and NonParty Cantor (eg., agreements, _resolutions, Entertainment Technology's Brief in Support of Motion to consents, minutes, and representation Quash the Subpoena Served on Ermst & Young LLP by letters of management), but also work Plaintiff, dated Sept. 9, 2014, (Docket Item 59) (“Defs.' Br.”) papers memorializing the auditor's at 6-7). See f* Solow v. Conseco, Inc., supra, 2008 WL understanding of those related-party 190340 at *3 (“[I]t is well-established that a party with a transactions, E & Y's work papers real interest in the documents has standing to raise objections with respect to its purchase and tax to their production.”). Moreover, movants argue that the accounting work would likely also documents sought include more than a decade of financial include valuation materials, as would information, are “private and confidential” and relate to E & Y's assessment of intangible assets Cantor Nevada, which is not publicly held and does not publicly share its financial information (Defs.' Br., at 7-8). Further, they argue that Cantor Nevada has a heightened = *6 (PI.'s Mem., at 12-13). As in Zintner, the subpoena will privacy interest in keeping the financial information out ofthe —_ most likely require E & Y to produce various Cantor Nevada hands of competitors (Defs.' Br., at 7-8). 17 and CET financial records including tax returns and related documents, financial statements, work papers and/or banking Plaintiff contends that movants lack standing because they ‘records, and, therefore, movants have a privacy interest in the fail even to attempt to explain how any interests they may documents sought. have in the documents will be injured by production (P1.'s Mem., at 2, 8). Further, plaintiff argues that movants lack Plaintiff's remaining arguments conflate the issues of standing standing because RGL is not a competitor of the movants, the With the merits. Standing is a threshold inquiry that is distinct information sought is, for the most part, stale and movants' from the merits; “[t]he fundamental aspect of standing is that confidentiality concerns can be addressed by a protective _ it focuses on the party seeking to get his complaint before order Mem., at 8-9). a federal court and not on the issues he wishes to have adjudicated.” BE Flast v. Cohen, 392 U.S. 83, 199, 88 S.Ct. In Zintner Handling, Inc. v. Gen. Elec. Co., supra, 2006 bn WL 3359317, defendant served a subpoena on a non- 1942, 20 L.Ed.2d 947 (1968); accord Be Bordell v, Gen. Elec. party accounting firm. The accounting firm had prepared Co., 922 F.2d 1057, 1060 (2d Cir.1991). Plaintiff's contentions the plaintiff's financial statements that were produced that any injury to the movants is attenuated by the staleness of during discovery. Defendant sought “production of tax the information, the fact that plaintiff is not a competitor and returns and supporting documentation as well as financial the potential availability of a protective order all relate to the statements, work papers, and supporting documentation.” merits of the motion; they do not defeat the movants' claim Zintner Handling, Inc. v. Gen. Elec. Co., supra, 2006 WL that they have at least a fairly arguable privacy interest that the 3359317 at *3. The Court concluded that because the — subpoena will invade. See t "Lerman v. Bd. of Elections, 232 subpoena “could reasonably require [the accounting firm] F.3d 135, 143 n. 9 (2d Cir.2000) (standing focuses on whether to produce banking and financial records,” the corporate _a litigant “has alleged an ‘injury-in-fact’ that is fairly traceable movants' privacy interests in these documents gave them _to the challenged conduct and redressable by a favorable

2014 WL 5420225 oe not with the existence of] a valid claim on 1994) (Leisure, D.J.); see pe Degulis v. LXR Biotechnology, Inc, 176 F.R.D. 123, 125 (S.D.N.Y.1997) (Sweet, □□□□□□ Thus, I conclude that movants have standing to challenge the (" Quaker Chair Corp. v. Litton Bus. Sys., Inc, 71 F.R.D. subpoena. 527, 530-31 (S.D.N.Y.1976) (Motley, D.J.). Pursuant to Rule 26(b)(1), the general scope of discovery includes C. The Merits of the Motion to Quash If the movants have standing, “the next inquiry requires any nonprivileged matter that is weighing the relevance or probative value of the documents relevant to any party's claim or being sought against the privacy interests ... asserted.” defense .... For good cause, the court Solow yv. Conseco, Inc., supra, 2008 WL 190340 at *4. may order discovery of any matter “The burden of demonstrating relevance is on the party relevant to the subject matter involved seeking discovery,” but “general and conclusory objections in the action. Relevant information as to relevance, overbreadth, or burden are insufficient to need not be admissible at the trial exclude discovery of requested information.” US Bank Nat'l if the discovery appears reasonably PHL Variable Ins. Co., 12 Civ. 6811(CM)(JCF), 2012 calculated to lead to the discovery of WL 5395249 at *3 (S.D.N.Y. Nov. 5, 2012) (Francis, M.J.) admissible evidence. (internal quotation marks, brackets and citations omitted). Once the party seeking production of the materials meets its “burden of showing relevance sufficient to justify discovery, | Fed.R.Civ.P. 26(b)(1) (emphasis added). “Although not the burden shifts to [the movant] to show why discovery unlimited, relevance, for purposes of discovery, is an should not be had.” 4.1.4. Holdings S.A. v. Lehman Bros., 97 extremely broad concept.” te Condit v. Dunne, 225 ERD. Civ. 4978(LMM)(HBP), 2000 WL 763848 at *3 (SD.N-Y. 199 195 (g§. D.N.Y.2004) (Leisure, D.J.) (citation omitted). June 12, 2000) (Pitman, M.J.), citing » Inve Agent Orange However, “[w]hile relevance is broadly construed in the Prod. Liab, Litig., 821 F.2d 139, 145 (2d Cir.1987); and —_ context of discovery, it is proper to deny discovery of matter Penthouse Int'l Ltd. v. Playboy Enters., 663 F.2d 371, that is relevant only to claims or defenses that have been 391 (2d Cir.1981) (“Where ... the documents are relevant, stricken.” [ Treppel v. Biovail Corp., 233 F.R.D. 363, 375— the burden is upon the party seeking non-disclosure or a = 76 (S.D.N. Y.2006) (Francis, M.J.) (emphasis added) (internal protective order to show good cause.”). Thus, “[t]he burden quotations and citation omitted) (compelling discovery of of persuasion in a motion to quash a subpoena ... is borne documents relevant to a dismissed claim because they were by the movant.” Jones v. Hirschfeld, 219 F.R.D. 71, 74— _ also relevant to the surviving claims). 75 (S.D.N.Y.2003) (Gorenstein, M.J.), citing ! ” Dove v. Alt. Capital Corp., 963 F.2d 15, 19 (2d Cir.1992); Monarch The movants contend that “the only discovery relevant to Knitting Mach. Corp. v. Sulzer Morat GMBH, 85 Civ. RGL's legal causes of action or the defenses thereto is that 3412(LBS)(NRB), 1998 WL 338106 at *1 (S.D.N.Y. June which is specifically related to the” Surviving Challenged ns Transactions and that the documents sought by plaintiff from 25, 1998) (Buchwald, M.J.); and ! “ Concord Boat Corp. v. E&Y are irrelevant because the subpoena (1) is overly broad, Brunswick Corp., supra, 169 F.R.D. at 48-49. Ultimately, seeking over a decade of documents, (2) seeks information “[m]otions to compel and motions to quash a subpoena are regarding a party dismissed from the action (CET) and both ‘entrusted to the sound discretion of the district court.’ “ concerning an IPO that never happened and (3) is not re Fitch, Inc., 330 F.3d 104, 108 (2d Cir.2003), quoting __ tailored to seek information concerning only the Surviving hes □ Challenged Transactions (Defs.' Br., at 8-9 (emphasis United States v. Sanders, 211 F.3d 711, 720 (2d Cir.2000). added)). Thus, movants contend, plaintiff's assertion that #7 . the documents are relevant is “sheer speculation” and the [I]t is well established that relevance for the purpose of “requests in the subpoena have nothing whatsoever to do discovery is broader in scope than relevance for the purposé = With the Surviving Challenged Transactions (Defs.' Br., at 9). of the trial itself.” Arch Assocs., Inc. v. HuAmerica Int'l, Inc., 93 Civ. 2168(PKL), 1994 WL 30487 at *1 (S.D.N.Y. Jan. 28,

2014 WL 5420225 Plaintiff argues that the material sought relates both to the that the documents sought are relevant to the remaining “nature of Cantor Nevada's use of technology attributable claims and defenses goes beyond “sheer speculation.” to CIH's subsidiaries” and “damages resulting from that . . use,” because the documents will show the value of Cantor E & Y audited the financial statements of Cantor Nevada, and Nevada's assets resulting from the Surviving Challenged plaintiff seeks documents and communications concerning Transactions, as well as the value of the benefit to the audit from January 1, 2002 top resent. The request 1s "Cantor Nevada from the Surviving Challenged Transactions reasonably likely to contain information related, directly or (Pl.'s Mem., at 13-14). Further, because the Form S-1/ indirectly, to the nature of the three Surviving Challenged A provided that, upon completion of the contemplated Transactions and the financial impact of those transactions IPO, Cantor Nevada would be contributed to CET as Cantor Nevada and Lutnick. Even though plaintiff seeks its operating subsidiary, plaintiff contends that as auditor more than a decade of information from the audit, it is still for the contemplated IPO of CET, E & Y would have reasonably calculated to shed light on the impact of the conducted a detailed review of Cantor Nevada's finances, Surviving Challenged Transactions on Cantor Nevada, i.e., “includ[ing] not only the material documents on which the it will give pictures of Cantor Nevada's financial state both auditors relied ..., but also work papers memorializing the before and after the Surviving Challenged Transactions. In auditors' understanding of those related-party transactions.” order for the plaintiff to assess the impact of the Surviving Plaintiff also claims that “E & Y [allegedly] should have Challenged Transactions and to calculate potential damages, traced the S-1/A's disclosures concerning contributions of it will need to differentiate between the financial results of technology, licenses, intellectual property and other assets,” the Surviving Challenged Transactions and those previously which, plaintiff argues, is also relevant to the Surviving dismissed. To limit discovery as movants' suggest would Challenged Transactions (Am. Compl. J 162, Pl.'s Mem., at provide plaintiff with an incomplete understanding of Cantor 12-13). Therefore, plaintiff contends, the E & Y documents Nevada's finances and the impact on the CIH Entities. are “reasonably likely” to lead to evidence regarding the . □ Surviving Challenged Transactions and the benefits of those The relevance of the documents to the claims and defenses in transactions conferred on Cantor Nevada and Lutnick. this action far outweighs any general privacy interest asserted by movants. Movants have failed to identify any specific *8 Here, the materials sought are sufficiently relevant to harm that they will suffer as a result of production, other be discoverable. Movants' view of the scope of discovery in than h aving top roduce information in which they have a this case is unduly restrictive. The plaintiff is not limited, by P*!Vacy interest to plaintiff. Many of the documents are old Rule 26 or Judge Abrams's Order, to discovery “specifically and unlikely to contain commercially sensitive information, related” to the Surviving Challenged Transactions. Instead, particularly in light of the fact that RGL is not a competitor pursuant to Rule 26(b) (1), plaintiff is entitled to that which is of movants; to the extent there 18 any risk of harm from “reasonably calculated to lead to the discovery of admissible the disclosure of sensitive information, that harm can be evidence.” Fed.R.CivP. 26(b)(1) eliminated by a protective order. Thus, defendants and CET's motion to quash is denied. The gravamen of the remaining claims concerns the benefits, if any, to Cantor Nevada, Lutnick and others, and the resultant Il. Conclusion □□ and its subsidiaries nom oe Sere *9 Accordingly, for all the foregoing reasons, defendants a enged Tansactions. The value 0 € inteliectua and CET's motion to quash (Docket Item 58) is denied. E & Prop erty rights transferred to Cantor Nevada through the y shall produce the requested documents within twenty days Surviving Challenged Transactions is central to these claims. of the date of this Order. As the value, if any, of the rights transferred increases, the adequacy of the consideration arguably becomes more of an SO ORDERED issue. Because Cantor Nevada was intended to be contributed to CET as its operating subsidiary, it is reasonable to infer that E & Y would have considered, as part of its audit work, the — All Citations importance and value of the intellectual property rights that were transferred to Cantor Nevada. Thus, plaintiff's assertion Not Reported in F.Supp.3d, 2014 WL 5420225

2014 WL 54202255

1 Plaintiff voluntarily dismissed CET from this action without prejudice after CET withdrew a registration Statement filed with the SEC and ceased to be an operating entity (Plaintiffs Memorandum of Law in Opposition to Defendants' and Non—Party Cantor Entertainment Technology, Inc.'s Motion to Quash the Subpoena Served on Ernst & Young LLP, dated Sept. 16, 2014, (Docket Item 62) (“Pl.'s Mem.”) at 7). 2 The IPO never actually occurred (PI.'s Mem., at 7). 3 The CIH Entities include CIH, CIH's wholly-owned subsidiaries (Hollywood Stock Exchange, LLC, CIL, CFGH and CILLC) and CFGH's wholly-owned subsidiary CGL (Amended Complaint, dated Apr. 15, 2013, (Docket Item 25) (“Am.Compl.”) J 28). 4 Attached to Am. Compl. as Exhibit B. 5 CFPH LLC does not appear to have given or gained anything pursuant to the 2006 License Agreement. It is, therefore, unclear why it is a party to the agreement. 6 Attached to Am. Compl. as Exhibit D. 7 Attached to Am. Compl. as Exhibit E. 8 Amaitis has also served or is serving as a director and/or employee of CIH, CIL, CGL and CGWL (Uk) (Am.Compl{ 13). 9 Movants argue that this aspect of Judge Abrams's decision restricts plaintiffs discovery and that plaintiff is “constrained to the events and facts relevant only to the Three Transactions” (Defendants' and □□□□□□□□□ Cantor Entertainment Technology's Reply Brief in Further Support of Their Motion to Quash the Subpoena Served on Emst & Young LLP by Plaintiff, dated Sept. 18, 2014, (Docket Item 63) (“Defs.' Reply Br.”) at 3). Plaintiff, on the other hand, argues that this aspect of the decision merely limits the basis of plaintiff's claims to those benefits accruing to Cantor Nevada from the use of the CIH Entities’ intellectual property as a result of the Surviving Challenged Transactions (see Pl.'s Mem., at 16-17). 10 remaining defendants are Lutnick, Merkel, Amaitis, Cantor Nevada, Cantor Fitzgerald Securities (“CFS”), Cantor Fitzgerald, L .P. (“CFLP”), Cantor Index Holdings Limited Partnership LLC (“CIJHLLC”), CIH, CILLC and CFGH. 11 Judge Abrams dismissed plaintiff's claim for breach of the Limited Partnership Agreement by CIHLLC, claims of fraudulent conveyance under both New York and Delaware law and a claim for an accounting of the finances and activities of CIH and its subsidiaries by CIHLLC. |” Refco Grp. Ltd. v. Cantor Fitzgerald, L.P ., supra, 2014 WL 2610608 at *44. 12 “Merkel served as a director and/or officer of one or more of the CIH Entities, including [CIH],” as well as “Executive Vice President, Chief Legal Officer, General Counsel and Secretary of Cantor Nevada ... [and] as the Executive Managing Director, General Counsel, and Secretary of [CFLP]’ (Am.Compl.J¥J 14, 33, 46). 13 This claim “survives only to the extent that Defendants converted CIL's tangible assets through the Asset Purchase Agreement or converted CILLC's patents through the 2006 License Agreement or 2011 License Agreement.” t Refco Grp. Ltd. v. Cantor Fitzgerald, L.P., supra, 2014 WL 2610608 at *39. 14 The Cantor Nevada Entities include “Cantor Nevada and its direct and indirect parent and subsidiary entities” (Am.Compl.f[ 35). - 15 Each of the Surviving Challenged Transactions allegedly involves Cantor Nevada or a Cantor Nevada subsidiary and the transfer of some asset or intellectual property from CIH or a CIH subsidiary. 16 See Objections of Non-Party Ernst & Young LLP to Subpoena to Produce Documents, Information, or Objects or to Permit Inspection of Premises in a Civil Action, dated Aug. 22, 2014, annexed as Exhibit A to Supplemental Declaration of Francis X. Riley lil in Further Support of Defendants' and CET's Motion to Quash the Subpoena Served on Ernst & Young by Plaintiff, dated Sept. 18, 2014 (Docket Item 64). 17 ‘CET interests are also implicated because Cantor Nevada was going to be contributed through the rnantamnilatoan IDS hu OCT

2074 WL 5420225

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