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COR Clearing, LLC v. Calissio Resources Group, Inc.

United States District Court, D. Nebraska

June 9, 2017

COR CLEARING, LLC, a Delaware limited liability company, Plaintiff,
CALISSIO RESOURCES GROUP, INC., a Nevada corporation, ADAM CARTER, an individual, SIGNATURE STOCK TRANSFER, INC, A Texas corporation; and DOES 1-50, Defendants.


          LYLE E. STROM, Senior Judge.

         This matter is before the Court on the motion of the plaintiff, COR Clearing, LLC, to compel discovery responses (Filing No. 199). The matter has been fully briefed. See Filing Nos. 200, 201, 215, 216, and 223. After review of the motion, the parties' briefs and accompanying indexes of evidence, and the relevant law, the Court finds as follows.


         On August 26, 2015, COR Clearing LLC (“COR” or “plaintiff”) filed its first complaint against Calissio Resources Group, Inc. (“Calissio”), Adam Carter (“Carter”), Signature Stock Transfer, Inc. (“Signature”), and Does 1-50 (Filing No. 1). Plaintiff's complaint alleged three causes of action including: (1) a request for declaratory judgment; (2) unjust enrichment; and (3) fraud. See Id. at 9-13. The complaint alleged that defendants “calculated [a] scheme to defraud the marketplace and the clearing system in order to obtain millions of dollars from unsuspecting market participants by exploiting a weakness in the dividend payment system of the third-party Depositary [sic] Trust Clearing Corporation (“DTCC”).” (Id. at 1).

         On November 10, 2015, following a hearing, the Court denied COR's expedited motion (Filing No. 20) for the appointment of a limited purpose receiver (Filing No. 80). On December 8, 2015, the Court denied Signature's motion (Filing No. 29) to dismiss (Filing No. 85). On April 21, 2016, the Court granted plaintiff's application (Filing No. 108) for default judgment against Calissio Resources Group, Inc. (Filing No. 109). On May 23, 2016, the Court granted plaintiff's motion (Filing No. 94) to compel TD Ameritrade Clearing, Inc. (“TDAC”) “to produce documents and things responsive to [plaintiff's] subpoena served on or about December 4, 2015.” (Filing No. 116).

         On August 2, 2016, the Court granted plaintiff leave to file an amended complaint (Filing No. 122). The amended complaint (Filing No. 123) added four brokerage defendants, namely, National Financial Services, LLC (“NFS”), TDAC, E-Trade Clearing, LLC (“E-Trade”), and Scottrade, Inc. (“Scottrade”) (collectively the “Clearing Firm Defendants”). On December 9, 2016, the Court denied the Clearing Firm Defendants' joint motion (Filing No. 137) to dismiss the amended complaint (Filing No. 160). On January 25, 2017, COR sought and was granted leave to again amend its complaint (Filing Nos. 171 and 174).[1] On January 30, 2017, COR filed its Second Amended Complaint (Filing No. 175). On February 10, 2017, NFS filed its answer (Filing No. 181). On February 13, 2017, defendants TDAC and Scottrade filed their respective answers (Filing Nos. 183 and 184). On February 15, 2017, E-Trade filed its answer (Filing No. 186).

         On March 6, 2017, the Court issued its Third Amended Final Progression Order (Filing No. 193). On April 3, 2017, Signature brought a motion to compel COR's production of 43 different requests for production (Filing No. 194). On June 2, 2017, the Court denied Signature's motion to compel (Filing No. 228). On April 14, 2017, COR brought the instant motion seeking to compel certain discovery responses (Filing No. 199).


         Federal Rule of Civil Procedure 26(b)(1) allows

[p]arties [to] obtain discovery regarding any nonprivileged matter that is 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, 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. Information within this scope of discovery need not be admissible in evidence to be discoverable.

Fed. R. Civ. P. 26(b)(1). The United States Supreme Court has held that discovery under Rule 26 should be “construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351, 98 S.Ct. 2380, 57 L.Ed.2d 253 (1978). However, this broad interpretation and liberal application of the rule does not provide unlimited discovery. Oppenheimer, 437 U.S. at 351; see also Hickman v. Taylor, 329 U.S. 495, 507, 67 S.Ct. 385, 91 L.Ed. 451 (1947) (stating “discovery, like all matters of procedure, has ultimate and necessary boundaries.”).

         Initially “[t]he party seeking discovery must satisfy some threshold showing of relevancy before discovery is required.” Lubrication Technologies, Inc. v. Lee's Oil Service, LLC, Civil No. 11-2226 (DSD/LIB), 2012 WL 1633259, at *2 (D. Minn. April 10, 2012) (internal citation omitted). However, “[o]nce that threshold has been met, the resisting party ‘must show specifically how . . . each . . . [request for production] is not relevant or how [the discovery] is overly broad, burdensome, or oppressive.'” Lubrication Technologies, 2012 WL 1633259, at *2 (quoting St. Paul Reinsurance Co., Ltd. v. Commercial Financial Corp., 198 F.R.D. 508, 512 (N.D. Iowa 2000)) (alterations in original).

         “Determinations of relevance in discovery rulings are left to the sound discretion of the trial court . . . .” Hayden v. Bracy, 744 F.2d 1338, 1342 (8th Cir. 1984) (internal citations omitted). District courts may limit “the scope of discovery after balancing a number of interests.” Slate v. American Broadcasting Companies, Inc., 802 F.Supp.2d 22, 26 (D.D.C. 2011) (citing In re Sealed Case (Medical Records), 381 F.3d 1205, 1215 (D.C. Cir. 2004) (additional citations and quotations omitted)).


         COR seeks an order compelling the Clearing Firm Defendants “to designate a 30(b)(6) witness to testify as to certain topics and to produce documents . . . .” (Filing No. 199 at 1). Specifically, COR seeks to compel Rule 30(b)(6) deposition testimony on deposition topics 2, 18, 41, and 42 (Filing No. 200). In addition, COR seeks to compel the production of documents to Requests for Production (“RFP”) 10-11 (First Set), 2, 9 (as to NFS and E-Trade only), 25, and 26 (Second Set), and 15 and 18 (First Set) (Id.). The Court will discuss each in turn.

         A. Deposition TopicNo. 2 and RFP Nos. 10-11 (First Set) and ...

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