Hull v. Miller et al (TV2)

REPLY to Response to Motion re

E.D. Tenn.June 25, 2018

- 1 - UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TENNESSEE AT KNOXVILLE KENNETH GAYNOR, et al., Individually and on Behalf of All Others Similarly Situated, Plaintiffs, vs. DELOY MILLER, et al., Defendants. § § § § § § § § § § § Civil Action No. 3:15-CV-545-TAV-DCP (Consolidated) CLASS ACTION LEAD PLAINTIFFS’ REPLY IN SUPPORT OF MOTION TO COMPEL THIRD- PARTY KPMG LLP TO PRODUCE DOCUMENTS Lead Plaintiffs have been operating under an aggressive schedule with trial set for December 10, 2018. ECF No. 119. In order to meet this Court’s deadlines, Lead Plaintiffs were forced to move to compel KPMG to produce the agreed-upon documents. The parties have engaged in numerous telephonic meet and confers resulting in an agreement on the scope of production with a reservation of rights, however, due to pending motions KPMG is now unilaterally refusing to comply with the parties’ agreement until the renewed motion to remand is adjudicated. ECF Nos. 155, 156. Contrary to KPMG’s assertions otherwise, Counsel for the parties did meet and confer by email on June 1, 2018. See ECF No. 157 at Ex. D. Due to KPMG’s firm position that it was withholding its production until remand is decided additional discussions were futile especially considering there is no substantive dispute at issue, only the timing of production. Case 3:16-cv-00232-TAV-DCP Document 164 Filed 06/25/18 Page 1 of 5 PageID #: 3464 - 2 - On June 13, 2018, six days after the motion to compel was filed, 1 the Court granted the joint motion to modify the scheduling order by 90 days. ECF No. 158. While the extension has allowed some additional time to conduct discovery, the parties to this litigation still have limited time to complete document discovery, take depositions, and serve experts reports. In the June 13, 2018 Order, the Court made it clear that “absent extraordinary circumstances, it will grant no further continuances in this case.” Id. Therefore, since the case is continuing to proceed while the motion to remand is pending, Lead Plaintiffs will be prejudiced without the production of KPMG’s documents, which are critical to their claims. The documents at issue are not privileged. ECF No. 137. KPMG has already agreed to produce the documents thus waiving any claim of privilege, which equally applies – if it were to be valid – in federal court. See Federal Rule of Evidence 501. The Tennessee accountant-client privilege simply does not apply and will not apply if the case is remanded back to state court. Tenn. Code. Ann. §62-1-116 (2016); see also First Horizon Nat’l Corp. v. Houston Cas. Co., No. 2:15-cv- 2235-SHL-dkv, 2016 U.S. Dist. LEXIS 142332, at *29 (W.D. Tenn. Oct. 5, 2016) (finding plaintiff’s communications with its outside auditor KPMG was not protected by Tennessee’s accountant-client privilege). As the First Horizon court stated, “[t]here is a difference between disclosure to accountants who have been retained by a lawyer to understand technical aspects of a case and whose interests are therefore allied with the client, and outside auditors who, in order to be effective, must have interests that are independent of and not always aligned with those of the company.” 2016 U.S. Dist. LEXIS, at *30. Further, outside auditors such as KPMG have a “public responsibility transcending any employment relationship with the client . . . [and] owe[] ultimate 1 Lead Plaintiffs’ motion to compel KPMG was originally filed as a separate action on June 7, 2018. At the request of the clerk’s office, it was re-filed in this action on June 11, 2018. ECF No. 157. Due to the opening of a separate action stemming from the fact that KPMG is not a party to this litigation, Lead Plaintiffs did not first reach out to the Magistrate Judge for conference. Case 3:16-cv-00232-TAV-DCP Document 164 Filed 06/25/18 Page 2 of 5 PageID #: 3465 - 3 - allegiance to the corporation’s creditors and stockholders, as well as to investing public.” Id. (citing United States v. Arthur Young & Co., 465 U.S. 805 (1984). Finally, to the extent the agreed-upon documents are confidential, there is a Stipulated Protective Order in place to provide protection. Moreover, throughout the meet and confer process, KPMG has focused negotiations on the burden of production, not privilege. To reduce the burden on KPMG, Lead Plaintiffs have agreed to accept already produced documents in satisfaction of the subpoena. Since the agreed-upon documents have already been produced the burden on KPMG is minimal. Furthermore, while Lead Plaintiffs have challenged the Court’s subject matter jurisdiction (See ECF Nos. 155, 164 incorporated herein), until such time as the Court decides the renewed motion to remand, this case proceeds and the Court maintains jurisdiction. The Court has not granted the motion to stay, but instead has continued to advance this litigation by holding argument on the motion for class certification on June 22, 2018. ECF No. 165. Accordingly, since the Court has taken the position that this case is continuing to move forward, KPMG should be required to produce the agreed-upon documents as soon as possible so Lead Plaintiffs can continue to diligently litigate this action and meet the recently revised deadlines. DATED: June 25, 2018 ROBBINS GELLER RUDMAN & DOWD LLP JACK REISE (pro hac vice) STEPHEN R. ASTLEY (pro hac vice) BAILIE L. HEIKKINEN (pro hac vice) CONSTANTINE P. ECONOMIDES (pro hac vice) s/ Stephen R. Astley STEPHEN R. ASTLEY 120 East Palmetto Park Road, Suite 500 Boca Raton, FL 33432 Telephone: 561/750-3000 561/750-3364 (fax) Case 3:16-cv-00232-TAV-DCP Document 164 Filed 06/25/18 Page 3 of 5 PageID #: 3466 - 4 - ROBBINS GELLER RUDMAN & DOWD LLP CHRISTOPHER M. WOOD, #032977 414 Union Street, Suite 900 Nashville, TN 37219 Telephone: 615/244-2203 615/252-3798 (fax) Lead Counsel for Lead Plaintiffs BARRETT JOHNSTON MARTIN & GARRISON, LLC DOUGLAS S. JOHNSTON, JR., #5782 JERRY E. MARTIN, #20193 TIMOTHY L. MILES, #21605 Bank of America Plaza 414 Union Street, Suite 900 Nashville, TN 37219 Telephone: 615/244-2202 615/252-3798 (fax) Local Counsel for Lead Plaintiffs LAW OFFICES OF CURTIS V. TRINKO, LLP CURTIS V. TRINKO (pro hac vice) 16 West 46th Street, 7th Floor New York, NY 10036 Telephone: 212/490-9550 212/986-0158 (fax) KRANENBURG WERNER R. KRANENBURG (pro hac vice) 80-83 Long Lane London EC1A 9ET United Kingdom Telephone: +44 20 3174 0365 Additional Counsel for Lead Plaintiffs Case 3:16-cv-00232-TAV-DCP Document 164 Filed 06/25/18 Page 4 of 5 PageID #: 3467 - 5 - CERTIFICATE OF SERVICE The undersigned hereby certifies that the foregoing has been filed electronically. Notice of this filing will be sent by operation of the Court’s electronic filing system to all parties indicated on the electronic filing receipt. Parties may access this filing through the Court’s electronic filing system. All others below will also be served by depositing a copy thereof in the United States mail, first-class, postage prepaid: David J. Voyticky 2652 Midvale Avenue Los Angeles, CA 90064 Gerald Hannahs 17710 Leatha Lane Little Rock, AR 72223 Paul W. Boyd 8125 Ainsworth Drive Knoxville, TN 37909 Scott Boruff 3847 River Vista Way Louisville, TN 37777 Defendants DATED: June 25, 2018 s/ Stephen R. Astley Stephen R. Astley Case 3:16-cv-00232-TAV-DCP Document 164 Filed 06/25/18 Page 5 of 5 PageID #: 3468