Wells Fargo Bank NA v. Wyo Tech Investment Group LLC

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Wells Fargo Bank NA, No. CV-17-04140-PHX-DWL

10 Plaintiff, ORDER

11 v.

12 Wyo Tech Investment Group LLC, et al.,

13 Defendants. 14 15 Pending before the Court is a motion to quash/modify filed by non-parties 16 Wilenchik & Bartness, P.C. (“the Wilenchik Firm”) and Lisa Loftis. (Doc. 179.) The 17 motion is directed at a pair of Rule 45 deposition subpoenas that were issued by CWT 18 Canada II Limited Partnership, Resource Recovery Corporation, and Jean Noelting 19 (collectively, the “Judgment Creditors”), who have filed an opposition to the motion. (Doc. 20 184.)1 As explained below, the motion will be granted in part and denied in part. 21 BACKGROUND 22 I. Case Background 23 This is a civil interpleader action in which two sets of adversaries—(1) Wyo Tech 24 Investment Group LLC (“Wyo Tech”) and (2) the Judgment Creditors—are fighting over 25 $546,282.55. 26 In 2016, the Judgment Creditors obtained a $7 million judgment against Dennis 27 1 The Judgment Creditors requested oral argument, but that request will be denied 28 because the issues have been fully briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 78(b); LRCiv. 7.2(f). 1 Danzik in New York state court. 2 In October 2017, the Judgment Creditors attempted to collect on a portion of the 3 outstanding judgment by freezing a bank account at Wells Fargo, which had a balance of 4 $546,282.55. Notably, this account wasn’t held in Danzik’s name. Instead, it was held in 5 the name of Wyo Tech. To freeze the account, the Judgment Creditors’ attorneys utilized 6 an unusual procedural tool known as a “restraining notice,” which is governed by section 7 5222 of the New York Civil Practice Law and Rules. 8 Wyo Tech protested when it learned its account had been frozen, arguing that it had 9 no connection with Danzik and that Wells Fargo should immediately release the frozen 10 funds. In response, Wells Fargo filed an interpleader action in this court. Functionally, 11 this meant that Wells Fargo deposited the disputed funds into the Court’s bank account so 12 the Court could referee the fight between Wyo Tech and the Judgment Creditors over who 13 has the superior entitlement to the funds. 14 II. The Ruling That The Judgment Creditors Are Entitled To Conduct Discovery Concerning The Legal Fees Remitted To The Wilenchik Firm By Wyo Tech 15 16 One of the key disputed issues in this case has been whether the Judgment Creditors 17 should be entitled to conduct discovery concerning their theory that Danzik secretly 18 controls Wyo Tech or otherwise has an interest in Wyo Tech’s funds. In a lengthy order 19 issued in April 2019, the Court concluded that the Judgment Creditors should be entitled 20 to pursue such discovery. (Doc. 119.) 21 In that order, the Court also addressed a related discovery dispute, which concerned 22 a Rule 45 document subpoena the Judgment Creditors had issued to the Wilenchik Firm in 23 February 2019. (Id. at 11-13.) That subpoena sought all “documents sufficient to show all 24 payments made to Wilenchik by Wyo Tech and by third party Inductance Energy 25 Corporation (‘Inductance’) and the client(s) on whose behalf and the matter for which the 26 payments were made.” (Id. at 11.) The Judgment Creditors argued the subpoena was 27 appropriate because they had a good-faith basis to believe Wyo Tech and Inductance had 28 been paying the Wilenchik Firm to represent Danzik in various legal matters and “the more 1 money Wyo Tech paid for Danzik’s and his cronies’ legal fees—especially in matters in 2 which Wyo Tech has no interest—the more probable it is that Danzik has an interest in the 3 disputed funds.” (Id., citation omitted.) The Wilenchik Firm disagreed, arguing the 4 subpoena should be quashed because, inter alia, the payment records are irrelevant. (Id.) 5 The Court rejected the Wilenchik Firm’s relevance argument and ordered it to comply, 6 reasoning as follows: 7 To be sure, the Court agrees with Wilenchik that whether Wyo Tech paid Danzik’s attorneys’ fees does not conclusively establish Danzik has an 8 interest in the interpleaded funds. But the standard for relevance does not 9 require that the evidence sought conclusively prove any issue in the case. If Wyo Tech paid Danzik’s attorneys’ fees, that at least makes it more likely 10 Danzik had an interest in Wyo Tech’s funds. [Citing New York cases.] 11 Additionally, because some of Wyo Tech’s funds were transferred to Inductance for the ‘opening’ of an Inductance account immediately before 12 the restraining notice was issued on the Wyo Tech account, whether 13 Inductance paid Danzik’s legal bills also bears on whether Danzik has an interest in the interpleaded funds. 14 (Id. at 13, citations omitted.) 15 III. The Wilenchik Firm’s Belated Production Of The Subpoenaed Payment Records 16 A. The Motion Papers 17 This was not, unfortunately, the end of the dispute over the payment records. On 18 May 13, 2019, the Judgment Creditors filed a motion for an order to show cause (“OSC”) 19 why the Wilenchik Firm should not be held in civil contempt for failing to comply with the 20 subpoena. (Doc. 131.) This motion stated that the Wilenchik Firm had simply ignored the 21 April 26, 2019 production deadline that was set forth in the Court’s earlier order and not 22 produced any responsive records. (Id.) 23 On May 15, 2019, the Wilenchik Firm filed a response to the OSC motion. (Doc. 24 134.) The Wilenchik Firm asserted that it mistakenly thought it had sent responses to the 25 subpoena to the Judgment Creditors on April 26, 2019 and only came to realize, after 26 receiving the OSC Motion, that the responses had never been delivered due to a 27 miscommunication. (Id. at 2, 4.) The Wilenchik Firm also asserted that it supplemented 28 its responses by producing responsive documents after corresponding with the Judgment 1 Creditors’ counsel after the OSC motion was filed. (Id. at 4-5.) 2 Later that day, the Judgment Creditors filed an amended motion for an OSC. (Doc. 3 135.) In this motion, the Judgment Creditors asserted that the belatedly-produced 4 documents were still insufficient because, among other things, (1) “Wilenchik’s production 5 of 14 pages . . . doesn’t show which payments were for which clients or which matter, nor 6 do they show the ‘account source’ of the payments, all of which were required by the 7 subpoena”; and (2) “Wilenchik continues to withhold documents related to other payments 8 we know it got from Wyo Tech and Inductance. Indeed, we submit with this motion several 9 checks from Wyo Tech and Inductance to Wilenchik showing payments that Wilenchik 10 did not disclose in its production.” (Id. at 3-4.) 11 On May 16, 2019, the Court issued an order setting a hearing on the Judgment 12 Creditors’ OSC request. (Doc. 136.) In this order, the Court expressed “significant 13 concerns about discovery conduct of Wilenchik . . . . These concerns have nothing to do 14 with the timing of the discovery responses—like the Judgment Creditors, the Court accepts 15 the [Wilenchik Firm’s] representation that [it] mistakenly believed [its] discovery 16 responses had been sent on April 26, 2019. Instead, these concerns flow from the substance 17 of the discovery responses and the seeming inaccuracy of certain statements contained in 18 the [Wilenchik Firm’s] brief to the Court.” (Id. at 4.) The hearing was set for May 29, 19 2019. (Doc. 138.) 20 On May 22, 2019, the Wilenchik Firm submitted a response brief. (Doc. 140.) In 21 this brief, the Wilenchik Firm stated that it “wish[ed] to apologize sincerely to both the 22 Court and opposing counsel for this incident, and fully acknowledge that mistakes were 23 made here regarding the Subpoenas responses. We cannot apologize enough. Indeed, we 24 concede we were wrong and will not make any excuses. However, we wish to make clear 25 to the Court that nothing here was done intentionally or to be in any way contemptuous of 26 this Court.” (Id. at 2.) The Wilenchik Firm further represented that, following its receipt 27 of the Judgment Creditors’ amended motion, it had “produced 325 pages of responsive 28 documents,” which was far more than the 14 pages it had previously produced. (Id.) The 1 Wilenchik Firm concluded by asking the Court to decline to hold it in civil contempt 2 because its “acknowledged negligent mishandling” of the situation “was caused by an 3 unfortunate combination of events at [the Wilenchik Firm] over the past few months—in 4 other words a ‘perfect storm’ or ‘comedy of errors’ (meant in the sense that is without even 5 the slightest hint of humor).” (Id. at 4.) 6 On May 28, 2019, the Judgment Creditors filed a reply in support of their OSC 7 motion. (Doc. 150.) In it, they disputed the Wilenchik Firm’s representation that all 8 responsive documents had been produced, arguing that (1) “for at least four of the payments 9 [the Wilenchik Firm] identified as coming from Inductance or Wyo Tech, [the Wilenchik 10 Firm] has failed to produce documents showing the source account from which these 11 payments were made,” (2) “for at least three of the payments [the Wilenchik Firm] 12 identified as coming from Inductance or Wyo Tech, [the Wilenchik Firm] has failed to 13 produce documents showing the clients on whose behalf or the matters for which these 14 payments were made,” and (3) the Wilenchik Firm’s “handwritten ledgers,” which “show[] 15 hundreds of thousands of dollars in ‘Danzik Retainer’ payments,” were not accompanied 16 by “source-account, client, or matter information—and we cannot even tell who made these 17 payments to [the Wilenchik Firm].” (Id. at 2-3.) The Judgment Creditors also argued that 18 the Wilenchik Firm hadn’t produced “a December 13, 2018 check from Inductance to [the 19 Wilenchik Firm] for $100,000,” which the Judgment Creditors only happened to know 20 about through other sources. (Id. at 4-5.) 21 B. The Contempt Hearing 22 On May 29, 2019, the Court held the OSC hearing. (Doc. 157.) During this hearing, 23 the Wilenchik Firm argued it shouldn’t be held in civil contempt because its earlier 24 production failures and misstatements were caused by its lawyer’s misunderstanding of the 25 firm’s “particular system of bookkeeping, which [counsel] didn’t understand until [he] 26 spoke to Miss Loftis, who handles all those matters and all the banking.” (Id. at 10-11.) 27 The Wilenchik Firm further represented “we have a situation where we have third parties, 28 Wyo Tech and Inductance, depositing funds into our trust account for use on a variety of 1 cases. So those funds are not tracked at that stage by matter, they’re tracked by payor. 2 Which is, you know, the money came from Inductance and/or Wyo Tech, or it came from 3 Danzik Applied Sciences.” (Id. at 11.) The Wilenchik Firm also represented that “[w]e’ve 4 pulled every shred of every paper that could possibly be responsive and produced it. To 5 date we’ve produced 325 pages of documents, . . . [a]nd let me be clear, that’s all we have, 6 that’s all we got.” (Id. at 20.) 7 In response to this assertion, the Court posed some questions to the Wilenchik Firm 8 concerning the Judgment Creditors’ claim that some responsive records still had not been 9 produced. (Id. at 22.) The Wilenchik Firm replied by stating it was still “working on 10 getting” copies of certain materials and “to get that, we’re going to have to pull the checks, 11 which we’ve instructed our bookkeeper to do, to just flat out get it.” (Id. at 23.) 12 Next, the Judgment Creditors addressed the Court. During this portion of the 13 hearing, the Court asked the Judgment Creditors to identify, with specificity, which 14 documents they believed were still outstanding. In response, the Judgment Creditors 15 stated: “Obviously when they got a check, . . . it didn’t just go into the pot of all escrow 16 funds . . . without any further tracking. . . . [T]here has to be some type of tracking that 17 shows this $100,000 check from Wyo Tech or from Inductance just came in, and this will 18 be applied to any one of these, quote, Wyo Tech or, quote, Danzik matters. That’s all I’m 19 looking for. A document that shows which matters and which clients it would be 20 permissible to use that retainer check for. They haven’t produced something like that.” (Id. 21 at 30.) Later, the Judgment Creditors elaborated: “I just can’t understand how a law firm 22 could accept payments into its escrow account without having a single piece of paper or 23 document that says, this $100,000 escrow payment is to be used for this client or for these 24 ten clients or these ten matters.” (Id. at 32-33.) 25 Following this exchange, the Court again posed some questions to the Wilenchik 26 Firm. Among other things, the Court stated that it “tend[s] to share [the Judgment 27 Creditors’] skepticism of the idea that a $100,000 retainer check could come into your firm 28 and there could be zero paperwork anywhere showing who gets credit for that or what 1 client matters it subsequently got applied to when you were working on it.” (Id. at 39.) In 2 response, the Wilenchik Firm’s lawyer stated: 3 I had my own skepticism about that until I had it explained to me by Miss Loftis. And she does keep track of all this. . . . I even asked her, I said, okay, 4 so what happens if a client calls up and says, how much money do I have left 5 in my retainer account in your trust account? And the way she does that is to go and take the documents that we supplied, and to subtract amounts paid 6 to other slips of paper or ledgers that she has that shows money coming in, 7 and says, okay, based on these two figures this is what you've got left. She literally goes through that process. It’s not written down anywhere. 8 (Id. at 39, emphases added.) The Wilenchik Firm further asserted that “as much as [the 9 Judgment Creditors don’t] accept that, the offer was made by Mr. Wilenchik to . . . have 10 Ms. Loftis speak to [the Judgment Creditors] directly, and she can explain it to [them] and 11 answer [their] questions.” (Id.) Later, the Wilenchik Firm reiterated: “[T]here’s nothing 12 more we can say, other than we’ve given [the Judgment Creditors] all the documentation 13 that’s out there. And if [they want] to depose Miss Loftis and ask her those questions, 14 fine.” (Id. at 39-40.) 15 Based on these representations, the Court ended the hearing by (1) declining to hold 16 the Wilenchik Firm in civil contempt (id. at 41), (2) ordering the Wilenchik Firm to produce 17 any outstanding bank records within 30 days (id. at 42), and (3) declining—based on the 18 Wilenchik Firm’s representation that no such records existed—to require the Wilenchik 19 Firm to produce any internal accounting records showing how retainer payments had been 20 allocated to individual client matters (id. at 44). However, with respect to this final 21 category of information, the Court clarified that “I see a world where in later stages of this 22 case there might be depositions from folks within the firm about how the accounting system 23 works.” (Id. at 44.) 24 IV. The Rule 45 Deposition Subpoenas 25 On July 8, 2019, the Judgment Creditors issued a Rule 45 deposition subpoena to 26 the Wilenchik Firm (Doc. 179-1 at 6-9) and a separate Rule 45 deposition subpoena to Lisa 27 Loftis, the Wilenchik Firm’s accountant and bookkeeper (Doc. 179-1 at 2-4.) The 28 1 subpoena to the Wilenchik Firm identifies the following six subjects as the “matters for 2 examination”: 3 1. “The payments—including date, amount, and source account—made to You 4 by Wyo Tech.” 5 2. “The payments—including date, amount, and source account—made to You 6 by Inductance.” 7 3. “The client(s) on whose behalf the payments in Request Nos. 1 and 2 above 8 were made.” 9 4. “The matter(s) for which the payments in Request Nos. 1 and 2 above were 10 made.” 11 5. “Your system and protocols related to the record-keeping, management, and 12 preservation of documents reflecting client payments, charges, and 13 invoices.” 14 6. “Your search for, and collection and review of, documents in response to the 15 (i) Subpoena to Produce Documents, Information, or Objects or to Permit 16 Inspection of Premises in a Civil Action, dated February 9, 2019, served on 17 You in this action; and (ii) order of the court in this action, dated April 9, 18 2019 (Dkt. No. 119 at 19).” 19 (Doc. 179-1 at 9.) 20 ANALYSIS 21 I. The Parties’ Arguments 22 The motion to quash/modify (Doc. 179) can be divided into two parts. As for the 23 subpoena to Ms. Loftis in her individual capacity, she argues it should be quashed because 24 it is “completely redundant of the subpoena served on the Firm and is therefore totally 25 unnecessary, disproportionate to the needs of the case, and constitutes pure harassment and 26 an unwarranted intrusion on [her] personally.” (Id. at 1-2, 5-7.) As for the other subpoena, 27 the Wilenchik Firm “moves only for a modification of the subpoena to strictly limit the 28 scope of the questioning.” (Id. at 2, 7-11.) 1 In general, the Wilenchik Firm argues its subpoena is objectionable because any 2 deposition would “run the extreme risk of imposing on [its] obligation to maintain client 3 confidences and privileges” and also “would impinge on the confidential, proprietary 4 nature of [its] business operations, bookkeeping and accounting methods.” (Id. at 4.) As 5 for the six categories of information identified in the deposition notice, the Wilenchik Firm 6 doesn’t challenge the first or second categories. (Id. at 9.) With respect to the third and 7 fourth categories (the identity of the “clients” and “matters” that were to receive credit for 8 the payments made by Wyo Tech and Inductance), the Wilenchik Firm argues such 9 information constitutes “attorney-client privileged” information and that answering “such 10 questions would require [its] representative to speculate about the payor’s intentions and 11 thoughts about the use of the funds when they were being deposited.” (Id.) Thus, the 12 Wilenchik Firm argues these requests should “be modified and limited exclusively to 13 questions about the factual matters of which invoices the payments in Request Nos. 1 and 14 2 have actually been used to pay.” (Id., emphasis added.) With respect to the fifth category 15 (the Wilenchik Firm’s system and protocols for tracking client payments), the Wilenchik 16 Firm argues it “is designed exclusively to harass, vex and annoy [the Wilenchik Firm] and 17 to implicitly (and unethically) accuse its attorneys of lack of candor to the tribunal without 18 any valid basis whatsoever.” (Id. at 9-10.) Finally, with respect to the sixth category (how 19 the Wilenchik Firm searched for responsive documents in response to the earlier document 20 subpoena and the April 2019 order), the Wilenchik Firm argues it “is aimed solely at re- 21 opening the entire OSC hearing in which any noncompliance with the prior subpoena was 22 rectified and resolved.” (Id. at 10.) 23 In their response (Doc. 184), the Judgment Creditors argue the motion to quash the 24 subpoena to Ms. Loftis is “moot” because they’ve told the Wilenchik Firm they’ll forego 25 such a deposition so long as Ms. Loftis is designated as the Rule 30(b)(6) representative 26 for purposes of the firm’s deposition. (Id. at 1, 5.) As for the other subpoena, the Judgment 27 Creditors generally argue that although the documents previously produced by the 28 Wilenchik Firm “show[] how payments from Wyo Tech and Inductance were ultimately 1 applied, as it stands today, we don’t know the clients on whose behalf or the matters for 2 which hundreds of thousands of dollars from Wyo Tech and Inductance were initially made 3 and earmarked.” (Id. at 4.) The Judgment Creditors argue such information “is significant, 4 because if some of these payments were initially earmarked for Dennis Danzik, his wife, 5 his company, or his cronies, that makes it more probable that Mr. Danzik has an interest in 6 the interpleaded funds.” (Id.) With respect to the third and fourth categories, the Judgment 7 Creditors argue the privilege objection is meritless because fee information isn’t considered 8 privileged under Ninth Circuit law (id. at 8-9) and the “proprietary business practices” 9 objection is meritless because the Wilenchik Firm “already publicly disclosed all of this 10 information” during the contempt hearing (id. at 7). With respect to the fifth category, the 11 Judgment Creditors argue that the parties and Court specifically contemplated, during the 12 contempt hearing, that the Wilenchik Firm might later be required to explain in a deposition 13 how its accounting system works. (Id. at 9-10.) And with respect to the sixth category, 14 the Judgment Creditors argue they “should be able to get sworn testimony from [the 15 Wilenchik Firm]” to verify the oral representations that were made during the contempt 16 hearing. (Id. at 11.) 17 In the reply (Doc. 192), Loftis argues her request to quash isn’t moot because the 18 Judgment Creditors still haven’t withdrawn her subpoena. (Id. at 3.)2 As for the other 19 subpoena, the Wilenchik Firm generally argues that the information being sought is 20 irrelevant and disproportionate. (Id. at 3-4.) More specifically, the Wilenchik Firm argues 21 categories three and four are improper because the information being sought “is attorney- 22 client privileged communication.” (Id. at 4-5.) The Wilenchik Firm does not, however, 23 provide any legal citations in support of this claim. (Id.) As for the fifth and sixth 24 categories, the Wilenchik Firm reiterates its earlier argument that this information “has 25 absolutely zero relevance to any issue in this case and is being sought solely to harass and 26 2 Loftis also argues the Court should “award . . . her attorneys’ fees incurred in 27 opposing” the subpoena. (Doc. 192 at 3.) This request will be rejected. First, it is hornbook law that arguments raised for the first time in a reply are waived. Second, fees 28 would not be appropriate here because the Court is granting the motion to quash/modify only in part. 1 vex [the Wilenchik Firm] apparently in the hopes of embarrassing it by showing that its 2 system of tracking funds [in] its trust account is somehow substandard or deficient.” (Id. 3 at 4.) 4 II. Discussion 5 As for the subpoena directed to Ms. Loftis, the Court agrees it should be quashed. 6 Indeed, the Judgment Creditors seem to acknowledge that subpoena is unnecessary in light 7 of the Wilenchik Firm’s agreement to have Ms. Loftis serve as its representative during its 8 deposition. This acknowledgement, however, doesn’t render the motion to quash “moot” 9 because the subpoena to Ms. Loftis remains outstanding and the Judgment Creditors 10 haven’t formally withdrawn it. Thus, the motion to quash that subpoena will be granted. 11 As for the other subpoena, the Wilenchik Firm hasn’t moved to quash it and doesn’t 12 object to the first and second categories of information specified in the deposition notice. 13 Thus, the narrow issue for the Court to resolve is whether the third, fourth, fifth, and sixth 14 categories should be eliminated or narrowed. 15 With respect to the third and fourth categories, the Wilenchik Firm’s primary 16 argument is the information sought by the Judgment Creditors is protected by the attorney- 17 client privilege. This argument is unavailing. The law in the Ninth Circuit is clear: 18 “Information regarding the fee arrangement is ordinarily not part of the subject matter of 19 the professional consulting and therefore is not privileged communication even though it 20 may evidence wrongdoing by the client.” In re Grand Jury Proceedings, 33 F.3d 1060, 21 1063 (9th Cir. 1994) (quotation omitted). Notably, the Wilenchik Firm has already 22 produced—without raising any concern over privilege issues—all of the documents in its 23 possession showing the retainer payments it received from Wyo Tech and Inductance and 24 all of the documents in its possession (including “handwritten ledgers,” see Doc. 150 at 3) 25 showing which clients and matters ultimately received credit under its accounting system 26 based on those payments. There is no logical reason why those categories of information 27 should be considered non-privileged but information about the clients and matters for 28 1 which the retainer payments were initially earmarked should be considered privileged.3 2 The Wilenchik Firm also argues that categories three and four are impermissible 3 because its representative would be forced “to speculate about the payor’s intentions and 4 thoughts about the use of the funds when they were being deposited.” (Doc. 179 at 9.) But 5 during the contempt hearing, the Wilenchik Firm stated that, although its system for 6 crediting retainer payments toward particular clients and matters is “not written down 7 anywhere,” Ms. Loftis “does keep track of all of this” and has her own “process” for 8 keeping track of things. (Doc. 157 at 39.) Having made that representation, the Wilenchik 9 Firm cannot now assert that any testimony on this topic by Ms. Loftis would be speculative. 10 The Court also rejects the Wilenchik Firm’s argument that categories three and four 11 are impermissible because they “would impinge on the confidential, proprietary nature of 12 [its] business operations, bookkeeping and accounting methods.” (Doc. 179 at 4.) During 13 the contempt hearing, the Wilenchik Firm described its internal accounting system in great 14 detail and then offered to have Ms. Loftis submit to a deposition to answer any questions 15 about it. (See, e.g., Doc. 157 at 39 [“[T]he offer was made by Mr. Wilenchik to . . . have 16 Ms. Loftis speak to [the Judgment Creditors] directly, and she can explain it to [them] and 17 answer [their] questions.”]; id. at 39-40 [“[T]here’s nothing more we can say, other than 18 we’ve given [the Judgment Creditors] all the documentation that’s out there. And if [they 19 want] to depose Miss Loftis and ask her those questions, fine.”].) Moreover, this is not a 20 trade secrets case in which the Wilenchik Firm would somehow face financial harm if a 21 competitor learned about and copied its accounting system. 22 The Wilenchik Firm’s final basis for objecting to categories three and four is that 23 the information being sought is irrelevant, disproportionate to the needs of the case, and 24 unduly burdensome. The Court disagrees.4 Under New York law, a judgment creditor 25 3 If the Judgment Creditors were to attempt to delve into truly privileged topics during 26 the deposition, counsel for the Wilenchik Firm would, of course, be entitled to raise appropriate objections at that time. 27 4 As noted in an earlier order (Doc. 119 at 12 & n.3), the test for “relevance,” in the context of a Rule 45 subpoena to a non-party, is no different than the test under Rules 26 28 and 34. See, e.g., Transcor, Inc. v. Furney Charters, Inc., 212 F.R.D. 588, 591 (D. Kan. 2003) (“It is well settled . . . that the scope of discovery under a subpoena is the same as 1 may be entitled to funds held in a third party’s bank account if that account is used to pay 2 the judgment debtor’s expenses. (See generally Doc. 119 at 13.) It is therefore relevant to 3 know whether Wyo Tech and/or Inductance were depositing large retainer payments in the 4 Wilenchik Firm’s escrow account with the expectation that such funds would be used to 5 pay Danzik’s personal legal expenses. On that note, the Court is particularly unpersuaded 6 by the Wilenchik Firm’s assertion that “if Wyo Tech chose to pay legal fees of someone 7 else simply as a charitable act, would that give the beneficiary of that largesse some kind 8 of interest in Wyo Tech’s bank account too? Of course not.” (Doc. 192 at 2 n.1.) The 9 Court is unaware of any examples of companies spending tens or hundreds of thousands 10 of dollars of their investors’ money on “charitable” gifts of legal fees to unrelated 11 businessmen who themselves are not engaged in charitable affairs. 12 With respect to the fifth category of information (“Your system and protocols 13 related to the record-keeping, management, and preservation of documents reflecting client 14 payments, charges, and invoices”), the Wilenchik Firm’s objections will be overruled. This 15 is exactly the type of information the Wilenchik Firm offered, during the contempt hearing, 16 to have Ms. Loftis provide during a future deposition. It also makes sense to allow the 17 Judgment Creditors to obtain information on this topic, given the Wilenchik Firm’s 18 representation that its system for crediting escrow payments to particular clients and 19 matters is “not written down anywhere” and that Ms. Loftis is responsible for “keep[ing] 20 the scope of discovery under Rule 26(b) and Rule 34. Thus, the court must examine 21 whether a request contained in a subpoena duces tecum is overly broad or seeking irrelevant information under the same standards set forth in Rule 26(b) and as applied to 22 Rule 34 requests for production.”); Fed. R. Civ. P. 45, advisory committee notes to 1970 amendment (“[T]he scope of discovery is the same as that applicable to Rule 34 and the 23 other discovery rules.”); S. Gensler, 1 Federal Rules of Civil Procedure, Rules and Commentary, Rule 45, at 1189 (2018) (“The scope of information that may be sought via 24 subpoena is the same as the scope of discovery generally under Rule 26(b).”). Under Rule 26(b)(1), “[p]arties may obtain discovery regarding any nonprivileged matter that is 25 relevant to any party’s claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). Relevance “has been construed broadly to encompass any matter that 26 bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). 27 However, non-parties are entitled to special consideration in the Rule 45 context when “weigh[ing] the burden to the subpoenaed party against the value of the information to the 28 serving party.” Soto v. Castlerock Farming & Transport, Inc., 282 F.R.D. 492, 504 (E.D. Cal. 2012). track of all this.” (Doc. 157 at 39.) The Court does not view the Judgment Creditors’ interest in obtaining information on this topic to be some sort of nefarious plot to question || the veracity of the Wilenchik Firm’s attorneys—one of the relevant issues in this case is 4|| whether Wyo Tech and Inductance made retainer deposits that were intended to benefit 5 || Danzik and it is necessary to understand the Wilenchik Firm’s “system and protocols || related to the record-keeping, management, and preservation of documents reflecting client 7 || payments, charges, and invoices” in order to properly evaluate that issue. 8 Finally, with respect to the sixth category of information, the Wilenchik Firm’s objections will be sustained. Unlike category five, the Judgment Creditors don’t need this 10 || information to evaluate and understand the significance of the other evidence in the case. 11 Accordingly, IT IS ORDERED that: 12 (1) The motion to quash/modify (Doc. 179) is granted in part and denied in 13 || part; 14 (2) | The subpoena to Ms. Loftis is quashed; and 15 (3) | The subpoena to the Wilenchik Firm is modified in the following respect: the 16 || sixth category of information specified in the deposition notice shall be removed. 17 Dated this 29th day of August, 2019. 18 19 ham

71 United States District Judge 22 23 24 25 26 27 28

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