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Roberts v. C.R. England, Inc.

United States District Court, D. Utah, Central Division

March 12, 2018

Charles Roberts et al., Plaintiffs,
v.
C.R. England, Inc., et al., Defendants.

          District Judge Robert Shelby

          MEMORANDUM DECISION AND ORDER GRANTING IN PART MOTION TO QUASH SUBPOENA ISSUED TO HOULIHAN VALUATION ADVISORS

          Brooke C. Wells United States Magistrate Judge

         Defendants C.R. England, Inc., Opportunity Leasing Inc., and Horizon Truck Sales and Leasing, LLC, (collectively Defendants) move to quash the subpoena issued to Houlihan Valuation Advisors (Houlihan) by Plaintiffs.[1] This matter is referred to the undersigned in accordance with 28 U.S.C. 636(b)(1)(A) from United States District Judge Robert J. Shelby.[2]After careful review of the record, the parties' briefs, and the arguments presented at oral argument, [3] the undersigned finds the subpoena overbroad as to time and overbroad or irrelevant as to some requests. Thus, the court will grant the motion to quash in part.

         BACKGROUND

         This matter is a class action involving Plaintiffs who allege that Defendants fraudulently solicited and sold them a business opportunity to drive large trucks. Defendants own and operate a trucking company, a company that leases trucks, and a school that provides instruction for students so they can obtain a commercial driver license. Plaintiffs allege violations of various state and federal laws. In short, Plaintiffs assert that Defendants misrepresented the income that was available to students who ended up leasing trucks from Defendants.

         The instant motion brought by Defendants concerns the quashing of a subpoena issued to Houlihan. Defendants state the subpoena “seeks from a non-party valuation company ten years of confidential financial statements and valuation reports concerning Defendants, including underlying work papers, communications and research.”[4] Defendants argue the subpoena is overbroad as to time, the requested items, and the subpoena seeks irrelevant information.

         DISCUSSION

         Under Federal Rule of Civil Procedure 45, Plaintiffs request discovery from a non-party valuation company, Houlihan. Plaintiffs seek approximately ten years of information pertaining to Defendants' net worth and financial condition in support of their claims for punitive damages.[5] Discovery of a defendant's net worth and financial condition is relevant to the issue of punitive damages.[6] A majority of federal courts permit such discovery without requiring a plaintiff to establish a prima facia case on the issue of punitive damages.[7] The establishment of a prima facia case as it relates to the discovery requests is not at issue. Instead, Defendants argue the subpoena is overbroad as to time. Defendants also argue the subpoena is overbroad as to requested materials and that some of the requested discovery is irrelevant. For example, Defendants point to the request for underlying work papers, research communications, and documents/data provided by Defendants to Houlihan as overbroad. In contrast, Plaintiffs assert Defendants placed their own finances at issue in their certification request to the Utah Supreme Court and in their motion to the Tenth Circuit.

         Although the relevancy of the discovery is conceded, when a party obtains discovery regarding another party's net worth and financial condition the discovery is not without limits. Multiple cases in this circuit have limited the scope of discoverable financial information to the defendant's current financial condition.[8] Defendants cite to other cases for the same proposition.[9]

         Here, Defendants have already provided tax returns and financial statements for the last 10 years and that is presumably why Plaintiffs request mirrors the same time frame. But, despite this prior production, the court finds the current discovery requests are overbroad as to time and go beyond what is reasonable for Plaintiffs to show Defendants current net worth or financial condition. Therefore, in considering relevant case law found in this circuit, [10] the court will limit any allowed requests to the last two years plus the current year of three months (2016, 2017 and 2018).

         Next, the court is convinced some of the requested discovery is overbroad and goes beyond what is necessary to show Defendants' current financial condition. Certain items are also irrelevant to this showing. Accordingly, the court will limit them as follows:

Request No. 1, 2 and 3: no limitation on the requested items but limited as to time.
Request No. 4, 5 and 6: the court finds the subpoenaed information overbroad so these requests will be stricken. The court is not persuaded that Plaintiffs need the work papers, research and communications related to the Houlihan evaluation to show Defendants' current financial condition. Further their relevance to show the current financial condition is at best questionable.
Request No. 7: the court finds the documents or electronic data relevant to understanding the draft valuation reports so this ...

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