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denying a motion to disqualify where the allegations were "too vague and conclusory to meet the heightened burden of proof required for a motion to disqualify"
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99 Civ. 12070 (RMB) (JCF)
May 11, 2001
MEMORANDUM AND ORDER
The plaintiff, Bulkmatic Transport Company, Inc. ("Bulkmatic") brings this action to recover damages from the defendants Nicolas L. Pappas, Susan Pappas, Bronx Mobile Truck Repair, Inc. ("Bronx Mobile"), and FME Logistical Services, Inc. ("FME") for breach of fidicuary duty, fraud, violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., and violation of Sections 273 and 276 of New York Debtor and Creditor Law.
Bulkmatic has moved to compel production of certain documents subpoenaed from Carla's Pasta, a third-party that has had business relations with the defendants, and to require Carla's Pasta to pay the attorneys' fees and other expenses the plaintiff incurred in making this motion. The defendants contend that this motion should be denied because (1) Bulkmatic has not sought a pre-motion conference; (2) the plaintiff has failed to show that the discovery sought from Carla's Pasta will lead to relevant and admissible evidence; and (3) the motion denigrates defendants' reputation by mischaracterizing the allegations laid out in the Amended Complaint. For the reasons set forth below, the plaintiff's motion to compel is granted.
A more complete recitation of the facts is included in my report and recommendation concerning the defendants' motion to dismiss the complaint, which is being filed concurrently.
The plaintiff alleges that Nicolas Pappas, with help from his wife Susan Pappas, devised a scheme in which two corporations controlled by Mr. Pappas, Bronx Mobile and FME, submitted bills to Bulkmatic for services that were never rendered. Bulkmatic also claims that the defendants illegally diverted shipments of flour the plaintiff was delivering to end users and purchasers in New York and neighboring states, and later sold the stolen flour to various bakeries located in the same region.
After discovering copies of checks Carla's Pasta submitted to the defendants in connection with its purchases of flour, Bulkmatic issued a document subpoena to Carla's Pasta on March 17, 2000. (Memorandum of Law in Support of Plaintiff's Motion to Compel Production of Documents From Carla's Pasta ("Pl. Memo."), at 2; Subpoena dated March 17, 2000 ("Carla's Pasta Subpoena"), attached as Exh. A to Plaintiff's Notice of Motion to Compel Production of Documents From Carla's Pasta ("Pl. Notice")). Pursuant to this subpoena, Carla's Pasta was required to produce responsive documents by March 31, 2000. Three checks were turned over a month after the deadline, together with a letter from Wayne Earle, Carla's Pasta's comptroller, in which Mr. Earle acknowledged that the company was attempting to locate additional relevant documents. In August 2000, apparently through sources other than Carla's Pasta, Bulkmatic received additional checks written by Carla's Pasta to the defendants but omitted from its earlier production. (Pl. Memo. at 3). The plaintiff again requested that all relevant documents be turned over, but Carla's Pasta failed to comply in full. (Pl. Memo. at 3-4).
On September 28, 2000, Bulkmatic took the deposition of David Whiting, a former bookkeeper at Carla's Pasta. (Deposition of David Whiting ("Whiting Dep."), attached as Exh. F to Pl. Notice). During the deposition, Mr. Whiting revealed that Carla's Pasta maintained detailed records of its transactions with the defendants consisting of bills of lading, weight tickets, receipts, invoices, and purchase orders. (Whiting Dep. at 18, 24-25, 30-32, 62-63) According to the plaintiff, none of these records were ever produced. (Pl. Memo. at 4)
Discussion A. Standing
Although the defendants oppose this motion, the threshold question is whether they have standing to challenge the subpoena at issue here. Generally, in the absence of a claim of privilege or proprietary interest, parties to an action may not object to a subpoena served on a non-party. See Langford v. Chrysler Motors Corp., 513 F.2d 1121, 1126 (2d Cir. 1975); United States v. Nachamie, 91 F. Supp.2d 552, 558 (S.D.N.Y. 2000); Palumbo v. Shulman, No. 97 Civ. 4314, 1998 WL 720668, at *1 (S.D.N.Y. Oct. 13, 1998). Here, the defendants have not asserted any privilege or any proprietary interest in relation to the Carla's Pasta documents sought by Bulkmatic and therefore do not have standing to challenge the subpoena. Even if the defendants did have standing, none of the arguments they advance in opposition to this motion has merit.
B. Merits
1. Failure to Request Pre-Motion Conference
The defendants claim that Bulkmatic moved to compel the production of Carla's Pasta documents without first requesting a pre-motion conference pursuant to Local Rule 37.2. (Defendant's Certification Opposing Plaintiff's Motion to Compel Production of Documents From Carla's Pasta, Inc. ("Def. Certification") ¶¶ 4-5) In fact, Bulkmatic's counsel did seek the Court's permission to bring a motion to compel in a two-page letter detailing Carla's Pasta's continued non-compliance with the subpoena. (Letter of Rene A. Torrado, Jr. dated October 25, 2000) ("Torrado Letter"), attached as Exh. A to Reply Memorandum of Law in Further Support of Plaintiff's Motion to Compel Production of Documents from Carla's Pasta. In response to this request, I allowed the plaintiff to "make a formal motion to enforce the subpoena" without scheduling a conference. (Memorandum Endorsement dated October 30, 2000)2. Relevance
The defendants next assert that the motion to compel should be denied because the documents sought will not lead to relevant or admissible evidence. (Def. Certification ¶¶ 12-16). Rule 26 of the Federal Rules of Civil Procedure provides in part that "[p]arties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party," and "[r]elevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Fed.R.Civ.P. 26(b)(1) The documents sought here fall squarely within the scope of Rule 26. These documents cover the period during which the alleged thefts occurred. They also relate to the allegedly illicit transactions between Carla's Pasta and the individual defendants, Bronx Mobile, and FME, as well as other trucking companies used by Nicolas and Susan Pappas that are specifically mentioned in the Amended Complaint. (Document Rider; Amended Compl. ¶ 21).
The subpoena requests the production of:
All documents concerning business transactions and/or relationships with: (1) Bulkmatic Transport Company; (2) Bronx Mobile Diesel Repair, Inc. a/k/a Bronx Mobile Truck Repair, Inc.; (3) J.W.C. Trucking, Inc.; (4) Mayor Trucking; (5) C R Trucking, Inc.; (6) Asterisk Trucking, Inc.; (7) K.D. Bulk Transport Inc.; (8) FME Logistical Services, Inc.; (9) NLP Trucking Inc.; or (10) Nicholas or Susan Pappas, individually, during the period January 1995 through the present, including but not limited to sale or purchase of flour, removal of flour, transport of flour, bulk transport of any goods, repair services, other transport or trucking services.
(Document Rider attached to Carla's Pasta Subpoena ("Document Rider").
3. Mischaracterization of the Amended Complaint
Finally, the defendants contend that Bulkmatic has improperly characterized the allegations raised in its Amended Complaint by making a new claim of theft in the motion to compel. (Def. Certification ¶ 7). Yet, the plaintiff has consistently accused the defendants of stealing flour (Compl. ¶¶ 1, 19-21, 25; Amended Compl. ¶¶ 1, 20-22, 26), and the fact that Bulkmatic is doing so again in connection with a subpoena does not constitute a mischaracterization of the defendants' alleged conduct.
The defendants further argue that the purported misstatements contained in the subpoena and the instant motion were designed to unfairly prejudice this Court and the non-parties in an attempt to "leverage [the plaintiff's] position against [the defendants] in this action and in the marketplace." (Def. Certification ¶¶ 8-9) Nevertheless, as has already been discussed above, the plaintiff's request for documents is proper. In addition, there is no indication that the subpoena was intended to harass the defendants, Carla's Pasta, or any other non-party. It has been observed that:
[A] purpose to harass a witness or a party by abuse of the court's process will not be countenanced, yet such delict must be carefully distinguished from the unavoidable burden that a valid subpoena, which may be necessarily broad, imposes.United States v. International Business Machines, Corp., 83 F.R.D. 92, 94 (S.D.N.Y. 1979); see also Petz v. Ethan Allen, Inc., 113 F.R.D. 494, 496 (D. Conn. 1985). Regardless of whether the defendants may be "prejudiced" by this subpoena in the eyes of their customers or competitors, Bulkmatic has not abused the discovery process in moving to compel production of documents plainly relevant to its case. Cf. Stuart v. General Motors Corp., 217 F.3d 621, 637 (8th Cir. 2000) (denial of motion to compel was proper where plaintiff's discovery requests were "burdensome and irrelevant"); Wilson v. International Business Machines, Corp., 62 F.3d 237, 240 (8th Cir. 1995) (no abuse of discretion in denying motion to compel because plaintiff's request was overbroad and came very late in discovery process); United States v. Yonkers Board of Education, 946 F.2d 180, 185 (2d Cir. 1991) (denial of motion to compel justified where defendant's request was duplicative)
Accordingly, the plaintiff's motion to compel discovery is granted.
C. Reasonable Expenses
The plaintiff also seeks reimbursement for its expenses in making this motion, including attorneys' fees, from Carla's Pasta. (Pl. Notice at 2). Pursuant to Rule 45 of the Federal Rules of Civil Procedure, such a request may be granted if a nonparty is declared in contempt on the basis of its failure to comply with subpoena. See Diamond v. Simon, No. 89 Civ. 7061, 1994 WL 10622, at *1 (S.D.N.Y. Jan. 10, 1994); Kohler Co. v. Weiss, No. 90 Civ. 3188, 1993 WL 307775, at *2 (S.D.N.Y. Aug. 9, 1993); see also Patterson, Belknap, Webb Tyler LLP v. Regia Management Corp., No. 97 Civ. 2624, 1998 WL 788798, at *1 (S.D.N.Y. Nov. 10, 1998) (implying sanctions appropriate under contempt provision of Rule 45). Carla's Pasta has not come forth with any excuse, let alone an adequate one, for its delay in producing the documents. On the other hand, the plaintiff has not provided this Court with an estimate of its costs in bringing the instant motion. Therefore, Bulkmatic's application for attorney's fees and expenses is denied without prejudice to reinstatement following the conclusion of discovery, at which time the plaintiff may submit a detailed accounting of its expenses and Carla's Pasta may articulate any reasons for its initial failure to comply.
Rule 45 states in part that "[f]ailure by any person without adequate excuse to obey a subpoena served upon that person may be deemed a contempt of the court from which the subpoena issued." Fed.R.Civ.P. 45(e).
Conclusion
For the reasons set forth above, the plaintiff's motion to compel production of documents from Carla's Pasta is granted, and its application for an award of attorney's fees and costs is denied without prejudice.
SO ORDERED.