Opinion
Civ. No. 00-1428 LH/DJS
March 23, 2001
ORDER
THIS MATTER comes before the Court upon Defendants Motion for Protective Order filed March 16, 2001 (Docket No. 25). Defendants seek a protective order quashing or modifying various subpoenas duces tecum which have been served upon non-parties by Plaintiffs.
Defendants assert that Plaintiffs have served subpoenas requesting the production of documents pursuant to Fed.R.Civ.P. 45(c) upon their banks, businesses with whom they have had commerce, and nonparty family members financial institutions.
Defendants assert that the subpoenas were improperly served and that they seek confidential and private materials not related to the issues in the suit. Defendants further assert that Plaintiffs are using the subpoena power to harass and embarrass them.
Defendants do not have standing to challenge the subpoenas, absent a claim of privilege or a proprietary interest in the subpoenaed matter. United States v. Nachamie, 91 F. Supp.2d 552, 558 (S.D. N.Y. 2000) (citations omitted); Windsor v. Martindale, 175 F. R. D. 665, 668 (D. Co. 1997).
Because they assert neither a claim of privilege nor a proprietary interest in the subpoenaed materials, their Rule 45 challenge to the subpoenas cannot succeed.
Although Defendants do not have standing to challenge the subpoenas directly, they can still challenge the subject matter of the subpoenas as falling outside the scope of discovery. Rule 45 subpoenas fall within the ambit of discovery and are subject to the constraints that apply to all other methods of formal discovery. Alper v. United States, 190 F. R. D. 281, 284 (D.Mass. 2000).
While Defendants have standing to raise an objection to the scope of discovery pursuant to Fed.R.Civ.P. 26, the Court finds that they are not entitled to relief on that ground.
This lawsuit is premised upon Plaintiffs allegation that Defendants have violated the franchise agreement between the parties by deliberately under-reporting sales, thus depriving Plaintiffs of royalties due them. Plaintiffs assert that surveillance of Defendants revealed frequent sales which were not processed through the cash register and which were conducted on a cash basis. In addition, Plaintiffs contend that the materials ordered by Defendants are disproportionate to the sales reported by them.
Defendants object that subpoenas directed toward financial institutions of individuals and family members are not reasonably related to their business.
Defendants also object that subpoenas directed to companies with whom they have done business are overbroad, as they seek records of any transactions, and not reasonably related to the issues in this suit.
Plaintiffs respond that they have records indicating that individuals identified as parents of some Defendants have used Defendants social security numbers. Plaintiffs also argue that the discovery should be allowed because the basis of the suit is the concealment of financial transactions by Defendants intended to avoid contractual obligations, proof of which is not likely to appear merely from Defendants business records. Plaintiffs draw an analogy to the subpoena power and scope of discover enjoyed by the Internal Revenue Service in investigating the underpayment of taxes.
While the Court does not agree that Plaintiffs are in a position analogous to the Internal Revenue Service, it does find that the subpoenas are within the broad scope of discovery permitted by Fed.R.Civ.P. 26 and are not intended solely to harass or embarrass Defendants. The scope of discovery is not limited to issues raised by the pleadings. Gomez v. Martin Marietta Corp., 50 F.3d 1511, 1519 (10th Cir. 1995). Rather, it extends to the existence, nature, custody and location of tangible things reasonably calculated to lead to the discovery of admissible evidence. Fed.R.Civ.P. 26(b)(1).
The subpoenas served by Plaintiffs are limited in temporal scope and are reasonably calculated to lead to the discovery of admissible evidence given the claims and defenses constituting this lawsuit.
IT IS THEREFORE ORDERED that Defendants Motion for Protective Order is denied.
IT IS FURTHER ORDERED that the stay imposed by this Courts Order of March 20, 2001 (Docket No. 30) is hereby lifted.