Ringelberg v. Vanguard Integrity Professionals -Nevada, Inc. et al

MOTION to Quash /Objection to Notice of Taking Deposition

D. Nev.March 24, 2018

Page 1 of 12 34200961v1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 VINCENT J. AIELLO, ESQ. (Nevada Bar No. 7970) GREENSPOON MARDER LLP 3993 Howard Hughes Pkwy., Suite 400 Las Vegas, NV 89169 vincent.aiello@gmlaw.com Telephone: (702) 978-4255 Fax: (954) 333-4285 Attorneys for Defendants Vanguard Integrity Professionals-Nevada, Inc., and Vanguard Integrity Professionals, Inc. UNITED STATES DISTRICT COURT DISTRICT OF NEVADA STEVEN RINGELBERG, an individual, Plaintiff, v. VANGUARD INTEGRITY PROFESSIONALS – NEVADA, INC., a Nevada corporation, VANGUARD INTEGRITY PROFESSIONALS, INC., a Nevada corporation; DOES 1-10; and ROE ENTITIES 11-20. Defendants ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 2:17-cv-01788-APG-PAL OBJECTION TO NOTICE OF TAKING DEPOSITION/MOTION TO QUASH Defendants, Vanguard Integrity Professionals – Nevada, Inc., a Nevada Corporation (“VIP- N-INC”), and Vanguard Integrity Professionals, Inc., a Nevada Corporation (“VIP-INC”) (collectively referred to as “Defendants” or “Vanguard”), by and through their counsel of record, Vincent J. Aiello, Esq. of Greenspoon Marder LLP, hereby file the following Objection to the Notices of Taking Deposition of FRCP 30(b) witness Brian Marshall, Carlos Lescano, and Mark Van Wormer, and Motion to Quash the same, pursuant to FRCP 45 (d)(2)(B) and FRCP 45 (d)(3)(A). / / / / / / Case 2:17-cv-01788-JAD-PAL Document 122 Filed 03/24/18 Page 1 of 12 34200961v1 Page 2 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 DATED this 24th day of March, 2018. GREENSPOON MARDER LLP By: /s/Vincent J. Aiello VINCENT J. AIELLO, ESQ. Nevada Bar No. 007970 3993 Howard Hughes Pkwy, #400 Las Vegas, NV 89169 Attorneys for Defendants I. INTRODUCTION In connection with noticing the depositions of Brian Marshall, President of Vanguard (“Marshall”), Mark Van Wormer (“Van Wormer”), Vice President of Professional Services; and Carlos Lescano (“Lescano”) (Marshall, Van Wormer and Lescano collectively referred to as “Deponents”), Accounts Payable Clerk for Vanguard, Plaintiff Steven Ringelberg requested non- party Deponents to provide a slew of documents for the depositions. Defendants hereby object to the Notices and request the Court quash each Notice with respect to the documents Plaintiff demands non-party Deponents to produce at the time of their deposition for the following reasons: First, each Deponent is an employee of Defendants and not a party to this action. As employees they cannot be compelled to produce documents at the time of their deposition. The proper vehicle for production of documents from a party is a request in accordance with FRCP 34 directed to Defendants. Plaintiff has submitted two FRCP 34 requests to Defendants and Defendants have produced responsive documents to Plaintiff’s requests. Plaintiff Ringelberg should not be allowed to circumnavigate Rule 34 by simply delivering a notice of deposition pursuant to FRCP 30(b) with an additional list of documents Plaintiff has since decided to seek from Defendants and rely upon a passing reference to FRCP 34. This reason, alone, serves as a basis to quash the Notice. Case 2:17-cv-01788-JAD-PAL Document 122 Filed 03/24/18 Page 2 of 12 34200961v1 Page 3 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Second, the Notices only provide Vanguard a total of approximately 15 days to comply with its terms. This is not a reasonable period of time for compliance under FRCP 34 and, therefore, the Court should quash the Notice. Finally, the Notices place an undue burden on Vanguard, especially in light of the claims made in this case, the amount in controversy, the importance of the specifically requested discovery in actually resolving the issues in this case, and the burden that will be imposed on Vanguard in obtaining the requested discovery. While Defendants have provided dates the witnesses are available for the noticed depositions, Defendants do not believe its employees should be required to produce any documents in compliance with the Notices. If Plaintiff seeks documents from Defendants, the proper vehicle for that discovery is Rule 34 Request for Production of Documents upon Defendants and not Defendants’ employees. II. FACTUAL STATEMENT/PROCEDURAL HISTORY On March 20, 2018, Plaintiff Ringelberg served Notices of Taking Deposition of FRCP 30(b) upon: (1) Brain Marshall, President for Vanguard Integrity Professionals, Carlos Lescano, Accounts Payable Clerk of Defendants Vanguard Integrity Professionals, Inc. and Vanguard Integrity Professionals – Nevada, Inc., and (2) Mark Van Wormer, Vice President Professional Services of Defendants Vanguard Integrity Professionals, Inc. and Vanguard Integrity Professionals – Nevada, Inc. After discussion between counsel concerning adjusting the date for the depositions and the nature of the requests referenced in the 30(b) depositions notices, the depositions were re-noticed for April 5, 20181. See Ex. “A” These Notices also appear to act, or at least purport to act, as an FRCP 45 subpoenas and demand that each employee deponent produce specified documents pertaining to Defendants’ business operations at the time of his deposition (i.e., 15 days after the Notice was served). 1 Marshall’s deposition notice was served however the date has not been set as of filing the present motion. Case 2:17-cv-01788-JAD-PAL Document 122 Filed 03/24/18 Page 3 of 12 34200961v1 Page 4 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Specifically, the documents demanded by the Notice include but are not limited to detailed highly sensitive information regarding Defendants’ business plans, sales forecasts and financial projections for years 2018-2020. These time periods are well beyond the scope of the claims and time frame at issue in the litigation as Plaintiff ceased working for the Defendants in May of 2015. The requests include revenue projections for new (FY2018 and beyond) software licenses, software maintenance, professional services fees, conference and training fees, expense projections by department, and profit projections, past profit and loss statements, cash flow statements, and balance sheets, as well as documents memorializing Marshall and Van Wormer’s promotions to their current positions with Defendants, and charts of accounts for Defendants as well as company policies. See Ex. “A”. The foregoing is not a complete list of all of the information demanded in the Notices; however, it provides the Court with an understanding of the unreasonable burden in producing documents for matters that have nothing to do with Plaintiff’s claims asserted in the Third Amended Complaint (“TAC”). These claims involve purported violations of Title VII, breach of contract, illegal surveillance, slander or intentional misrepresentation. In fact, many of the items that Plaintiff has requested have already been produced for the relevant time period at issue in this case. In light of the foregoing Defendants move to quash the deposition notices as it relates to the requests for the production of documents. III. ARGUMENT A. THE NOTICE SHOULD BE QUASHED BECAUSE DEFENDANTS ARE A PARTY TO THIS ACTION AND THE EMPLOYEES ARE NOT A PARTY. A corporate “employee who does not qualify as an officer, director, or managing agent is not subject to deposition by notice. Rather, the employee is treated as any other non-party; before being compelled to testify, he or she must be served with a subpoena pursuant to Federal Rule of Civil Procedure 45.” Karakis v. Foreva Jens Inc., No. 08–61470, 2009 WL 113456, at *1 (S.D. Fla. Jan.19, 2009) (citing authorities). A party need not comply with Rule 45 and issue a subpoena if a non-party will consent to having his deposition taken by notice alone.” Morawski v. Farmers Case 2:17-cv-01788-JAD-PAL Document 122 Filed 03/24/18 Page 4 of 12 34200961v1 Page 5 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Tex. Cty. Mut. Ins. Co., No. 3:14–mc–21–D–BN, 2014 WL 717170, at *1 (N.D. Tex. Feb.25, 2014). While dates were provided to opposing counsel to conduct the depositions, no such consent or waiver of the obligation to serve a corresponding subpoena in accordance with FRCP 45 as to employee non-party deponents was ever provided for in this case. In order to “obtain an order compelling a non-party to appear for a deposition, the party seeking the deposition must not only notice the deposition, but must also properly serve the non-party with a deposition subpoena pursuant to Rule 45.” Id. (internal quotation marks omitted); see also McMahon v. Presidential Airways, Inc., No. 6:05–cv–1002–Orl–28JGG, 2006 WL 5359797, at *1 (M.D. Fla. Jan.18, 2006). FRCP 45(d)(2)(B) sets forth the deadline by when an objection to a subpoena must be made. According to that rule, "The objection must be served before the earlier of the time specified for compliance or 14 days after the subpoena is served." Defendants' objection and motion to quash is timely. Notwithstanding the foregoing, even if Rule 45 was complied with it was not intended to serve as a means to circumnavigate the requirements and provisions of Fed. R. Civ. P. 34. The proper vehicle through which a party may obtain documents from another party is a FRCP 34 request for production of documents. Rule 34 provides, in relevant part, that "[a] party may serve on any other party a request ... to produce and permit the requesting party or its representative to inspect, copy, test, or sample ... any designated documents or electronically stored information . . ". A party cannot secure “documents from an opposing party by serving a deposition subpoena duces tecum on an employee of the opposing party commanding production of the party's documents at the deposition unless the provisions of Rule 34 are followed. However, if the deponent is a nonparty, production of documents can be compelled only by a subpoena duces tecum2.” § 26:411. Compelling production of documents and things at deposition, 10A Fed. Proc., L. Ed. § 26:411. 2 If the person is a non-party, production of documents can be compelled only by a subpoena duces tecum issued under Rule 45(d)(1). 8 Wright & Miller, Federal Practice and Procedure, s 2108 (1970); cf. Hickman v. Taylor, 329 U.S. 495, 67 S.Ct. 385, 91 L.Ed. 451 (1947).Fisher v. Marubeni Cotton Corp., 526 F.2d 1338, 1341 (8th Cir. 1975) Case 2:17-cv-01788-JAD-PAL Document 122 Filed 03/24/18 Page 5 of 12 34200961v1 Page 6 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 It is Defendants’ position that in this instance the “court may deny discovery where the documents have no great significance to the case and the proposed discovery would undermine important interests of the responding party. Imposition on the ‘important interests’ of a responding party is properly weighed as a ‘burden’ under Rule 26(b), without regard to whether any party is a sovereign.” § 1:29. Generally, Handbk. Fed. Civ. Disc. & Disclosure § 1:29 (4th ed.) In this case, the corporations are parties to the suit, not the employees. Plaintiff has propounded document requests directly on the individual employees. This approach is seriously flawed for a number of reasons. As an initial matter, the employee is not a party to the litigation. Thus, under this scenario, document requests to the employee should be propounded as a subpoena although as set forth below, this approach is a dead-end as well. In Contardo v. Merrill Lynch, Pierce, Fenner & Smith, 119 F.R.D. 622, 623 (D. Mass. 1988), the court in that matter explained that the discovery served upon the employee of the defendant should be served under Rule 45 as a subpoena because the employee was neither a party nor an officer, director or managing agent of the defendant. Neither deponent at issue in this motion is an officer, director or managing agent. Putting aside those issues, the documents sought pertain to the employee's work for the corporation, and, as noted above, such documents are not the employee's documents. Rather, they are their employer's documents. Therefore, the employee has no duty to produce corporate documents under Federal Rule 34. Similar to the case at hand in Invesco International, Inc. v. Paas, 244 F.R.D. 374, 377 n.5 (W.D. Kentucky 2007), the court noted that a witness served with discovery in his personal capacity had none of the requested documents in his possession as the documents were instead in the possession, custody, and control of his current and former law firm employers. Likewise, the court in Wirtz v. Local Union 169, 37 F.R.D. 349, 351 (D.Nev. 1965), recognized the foregoing principle. In that case, the court reasoned, "A subpoena duces tecum, under Rule 45, is not intended as a substitute for a motion to produce under Rule 34." Because, in that case, the subpoena required production of documents under the control of the plaintiff, as Case 2:17-cv-01788-JAD-PAL Document 122 Filed 03/24/18 Page 6 of 12 34200961v1 Page 7 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 distinguished from documents in the possession of control of an independent witness, the court felt compelled to quash the subpoena. More recently, in Hasbro, Inc. v. Serafino, 168 F.R.D. 99, 100 (D.Mass. 1996) the district court there reasoned that FRCP 45's subpoena provisions do not apply where a party seeks to obtain documents from another party: "It is evident," the Hasbro Court explained, "that Rule 45, to the extent it concerns discovery, is still directed at non-parties and that rule 34 governs the discovery of documents in the possession or control of the parties themselves." The basis for the court's reasoning was that "Rule 45, as well as the advisory committee notes, are replete with references to non-parties" while Rule 34, "unquestionably applies only to parties." Based on the foregoing, it is evident that the proper method for Plaintiff to obtain documents from Defendants is through requests for production of documents in accordance with FRCP 34. Plaintiff Ringelberg has already served such requests upon Defendants and Defendants have responded and reserve all rights to further supplement any responses. Defendants have provided Plaintiff with numerous documents relevant to claims raised in the TAC. B. THE NOTICE SHOULD BE QUASHED BECAUSE IT DOES NOT PROVIDE DEFENDANTS WITH A REASONABLE TIME TO COMPLY WITH ITS TERMS. The next ground for Defendants' objection to the Notice, and the next reason for their request that the Court quash the Notice, is that it fails to provide Defendants with a reasonable period of time to comply with its terms. FRCP 45(d)(3)(A)(i) provides that, "On timely motion, the court for the district where compliance is required must quash or modify a subpoena that . . . fails to allow a reasonable time to comply." While the rule does not specify the time period a party must give the subpoenaed entity or person to comply with the subpoena, the period must be reasonable. Here, Plaintiff’s request does not comply with the FRCP 34 as the demand for documents does not provide the requisite 30 day response period. This is not a sufficient period of time for Vanguard to review, gather and comply with the Notice, especially in light of the significant Case 2:17-cv-01788-JAD-PAL Document 122 Filed 03/24/18 Page 7 of 12 34200961v1 Page 8 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 amount of paper work that is demanded by each Notice. On this basis alone, the Court should quash the Notice. C. THE NOTICE SUBJECTS VANGUARD TO AN UNDUE BURDEN. The Court should quash the Notice because it subjects individual employees of Vanguard to an undue burden. The Notice literally requests Defendants’ employees to produce thousands of documents from numerous departments of Vanguard many of which are irrelevant documents that deal with protected trade secrets and business strategies. Such demand is unreasonable given the time frame, number of departments within Vanguard that are involved, and amounts of documentation the Notices requests. As an initial matter, “confidential projections about product development, including sales, costs and royalties, appear to be well within the scope of information deemed by the Ninth Circuit to be a trade secret or confidential commercial information.” Cf. Apple Inc. v. Samsung Elecs. Co., 727 F.3d 1214, 1222 (Fed. Cir. 2013) (discussing In re Elec. Arts, Inc., 298 Fed. Appx. 568, 569 (9th Cir. 2008)). Moreover, courts “have presumed that a disclosure to a competitor is more harmful than disclosure to a non-competitor.” See, e.g., American Standard, Inc. v. Pfizer, Inc., 828 F.2d 734, 741 (Fed. Cir. 1987) (collecting cases). Plaintiff Ringelberg is in fact a competitor to Defendants as he markets his services as a consultant through Atlas Cyber Security and Ringelberg & Associates representing and lecturing for other cyber security service companies in the computer security field. See Ex. “B”. Within presentation materials for multiple data security conferences Plaintiff promotes himself as the “founder and director of Atlas Cyber Security offering cyber security consulting with Correlog and Sycnsort among others.” See Ex. “B” page 2. In the context of this case, providing copies of Defendants’ highly sensitive commercial and financial documents, business plans and current as well as future projections for the Defendants’ business strategies as well as its client lists and chart of accounts is not relevant or proportional to the claims alleged in Plaintiff’s TAC. Per Fed. R. Civ. P. 26 “Parties may obtain discovery regarding any non-privileged matter that is relevant to any party’s claim or Case 2:17-cv-01788-JAD-PAL Document 122 Filed 03/24/18 Page 8 of 12 34200961v1 Page 9 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 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.” Given the issues at stake in this action, the amount in controversy, the importance of the specifically requested discovery in actually resolving the issues alleged in the TAC, and the burden that will be imposed on Defendants in obtaining and disclosing the requested discovery there is no obligation for Defendants to provide such sensitive information. See, e.g., Id. (based on affidavit similar to the declarations submitted here, rejecting arguments that showing was insufficiently developed). Sci. Games Corp. v. AGS LLC, No. 217CV00343 JADNJK, 2017 WL 3671286, at *2 (D. Nev. Aug. 24, 2017). Van Wormer’s deposition notice specifically calls for the production of materials that Defendants deem highly confidential and protected trade secret information. The requested information is unrelated to the claims raised in the TAC. Specifically, Plaintiff demands Defendants’ employees produce the following documents: 1. Business Plans and Financial Projections for calendar years 2018, 2019 and 2020, including revenue projections for new software licenses, software maintenance, professional services, conference and training, as well as expense projections by department, and profit projections. The production of this sensitive business information imposes an undue burden upon the Defendants as it is not “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.” FRCP 26. Defendants can satisfy their initial burden to support quashing the request for production of documents in the deposition notice and as such “the burden shifts to the requesting party to show a ‘substantial need for the testimony or material that cannot be otherwise met without undue hardship.’” Gonzales v. Google, Inc., 234 F.R.D. 674, 684 (N.D. Cal. 2006). Courts have discussed “substantial need” as requiring a showing that “the requested Case 2:17-cv-01788-JAD-PAL Document 122 Filed 03/24/18 Page 9 of 12 34200961v1 Page 10 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 discovery is relevant and essential to a judicial determination of [the party's] case.” Id. at 685 (citing Upjohn Co. v. Hygieia Biological Labs., 151 F.R.D. 355, 358 (E.D. Cal. 1993)). The information must be “reasonably necessary for a fair opportunity to develop and prepare the case for trial.” Aevoe Corp. v. AE Tech Co., 2013 WL 5954570, *3 (D. Nev. Nov. 6, 2013). “The determination of substantial need is particularly important in the context of enforcing a subpoena when discovery of a trade secret or confidential commercial information is sought from non-parties.” Gonzales, 234 F.R.D. at 685 (citing Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792, 814 (9th Cir. 2003)). In this instance the request for production in the deposition notice is over broad, seeks highly sensitive information and is improperly served on Defendants’ employees. IV. DEFENDANTS’ EMPLOYEES WILL APPEAR FOR THEIR DEPOSITION Despite this Objection/Motion to Quash, Defendants’ employees will appear for their noticed depositions on agreed upon dates. The purpose of filing this Objection/Motion to Quash is not to vacate the depositions but to inform this Court and Plaintiff’s counsel that Defendant is challenging the Notice with respect to the documents it requests Defendant to produce during the depositions of its employees. V. CONCLUSION WHEREFORE, for the foregoing reasons, Defendants Vanguard Integrity Professionals, Inc. and Vanguard Integrity Professionals – Nevada, Inc. objects to the Notices and requests the Court quash the Notices that Plaintiff served on it. / / / / / / / / / Case 2:17-cv-01788-JAD-PAL Document 122 Filed 03/24/18 Page 10 of 12 34200961v1 Page 11 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 DATED: March 24, 2018 Respectfully submitted, GREENSPOON MARDER LLP /s/ Vincent J. Aiello VINCENT J. AIELLO, ESQ. NV Bar No. 7970 3993 Howard Hughes Parkway, Suite 400 Las Vegas, NV 89169 Attorneys for Defendants Vanguard Integrity Professionals-Nevada, Inc., and Vanguard Integrity Professionals, Inc. Case 2:17-cv-01788-JAD-PAL Document 122 Filed 03/24/18 Page 11 of 12 34200961v1 Page 12 of 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I electronically filed the foregoing with the Clerk of the Court by using the CM/ECF system on this 24th day of March, 2018. I also certify that the foregoing document is being served this day on all counsel of record or pro se parties identified on the Service List below in the manner specified, either via transmission of Notices of Electronic Filing generated by CM/ECF or in some other authorized manner for those counsel or parties who are not authorized to receive Notices of Electronic Filing electronically. /s/ Jacquelin Ierien JACQUELIN IERIEN SERVICE LIST Daniel Norr, Esq. Law Office of Daniel Norr, LLC 170 S. Green Valley Parkway, Suite 300 Henderson, NV 89012 Richard A. Mescon Leichtman Law PLLC 315 Madison Avenue, Suite 3011 New York, NY 10017 Attorneys for Plaintiff Jason Wiley, Esq. Wiley Peterson 1050 Indigo Drive, Suite 130 Las Vegas, NV 89145 Attorneys for Ronn Bailey Case 2:17-cv-01788-JAD-PAL Document 122 Filed 03/24/18 Page 12 of 12