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Central States, Southeast and Southwest Areas Pension Fund v. GWT 2005 Inc.

October 6, 2009

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, ET. AL., PLAINTIFFS,
v.
GWT 2005 INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Magistrate Judge Maria Valdez

MEMORANDUM OPINION AND ORDER

The matter before the Court is Subpoena Respondent George Cibula's Motion to Modify or to Quash Subpoena and for Protective Order [Doc. No. 78]. For the reasons set forth below, the motion is denied.

BACKGROUND

On January 25, 2007, the district judge entered a Consent Judgment against Defendants, GWT 2005, Inc. f/k/a General Warehouse & Transportation Co., Geobeo, Inc., C & L, Inc., and CLP Transportation, Inc. (collectively the "Judgment Debtors"), jointly and severally, in the amount of $1,715,046.26 [Doc. No. 77]. More than two years later, having received none of the judgment award, counsel for Central States, Southeast and Southwest Areas Pension Fund and Howard McDougall (collectively "Plaintiffs") issued a subpoena pursuant to Federal Rule of Civil Procedure Rule 69(a)(2) to Cibula, a former officer of the Judgment Debtors, on February 18, 2009. The subpoena, served on February 19, 2009, commanded Cibula to produce his income tax returns to Plaintiffs on or before April 1, 2009, and to appear for a deposition on April 15, 2009. The subpoena also commanded Cibula to produce documents relating to certain other business entities, including Geobeo, Inc, JM Venture, LLC, Plain Jar, LLC, Roaco, LLC, Darwin Realty & Development Corporation, Lathrop Star, Ltd., and New Concord, Inc. (with the exception of Geobeo, Inc., collectively, the "Other Entities"). Cibula filed his motion on April 1, 2009.

DISCUSSION

Initially, the Court addresses Plaintiffs' argument that the motion is untimely under Rule 45. Cibula filed the motion pursuant to Rule 45(c)(3), which allows a court to quash or modify certain subpoenas "on timely motion" by the recipient of the subpoena. Nevertheless, Plaintiffs assert that the motion is untimely because he failed to serve Plaintiffs' counsel with his objections to the subpoena in accordance with Rule 45(c)(2)(B). Plaintiffs do not address whether the motion is untimely under Rule 45(c)(3).

Although it is true that Rule 45(c)(2)(B) concerns subpoenas that command persons to produce documents, Plaintiffs misinterpret the rule's plain language. Rule 45(c)(2)(B) states that "a person commanded to produce documents . . . may serve . . . on the party of attorney designated in the subpoena a written objection [to the subpoena] before the earlier of the time specified for compliance or 14 days after the subpoena is served." Fed. R. Civ. P. 45(c)(2)(B) (emphasis added). Thus, Rule 45(c)(2)(B) is permissive in nature, and merely describes one avenue down which a person served with a subpoena may challenge the subpoena. See WM High Yield v. O'Hanlon, 460 F. Supp. 2d 891, 894 (S.D. Ind. 2006).

Meanwhile, Rule 45(c)(3) describes another procedural avenue available to a subpoena recipient to challenge a subpoena: the motion to quash or modify a subpoena. Although neither Rule 45(c)(3) nor the Advisory Committee's Notes define what constitutes a "timely" motion, this court has held that a motion to quash must be made at or before the time of compliance. Flagstar Bank, FSB v. Freestar Bank, N.A., No. 09 C 1941, 2009 WL 2706965, at *3 (N. D. Ill. Aug. 25, 2009). Because Cibula filed his motion on April 1, 2009, the date of compliance listed on the subpoena, the motion is timely.

Next, the Court addresses Cibula's remaining arguments. Cibula argues that, because the subpoena seeks documents relating to persons (himself) and the Other Entities against which the Plaintiffs have no judgment, the subpoena exceeds the scope of permissible post-judgment discovery under Rule 69(a)(2). Rule 69(a)(2) states that, "in aid of the judgment or execution, the judgment creditor . . . may obtain discovery from any person--including the judgment debtor--as provided in these rules." Fed. R. Civ. P. 69(a)(2). The "rules" mentioned in Rule 69(a)(2) are the federal rules governing pre-trial discovery. Rubin v. Islamic Republic of Iran, No. 03 C 9370, 2008 WL 192321, at *4 (N.D. Ill. Jan. 18, 2008).

Pre-trial discovery is governed by Rule 26(b). Rule 26(b)(1) allows discovery regarding any matter that is relevant to the claim or defense of a party and not privileged. The scope of discoverable information in any case depends on the applicable substantive law on which a party's claims are based. Rubin, 2008 WL 192321, at *5.

The present matter arises out of a previously entered Consent Judgment against the Judgment Debtors for their improper withdrawal from a multiemployer pension plan governed by the Multiemployer Pension Plan Amendments to the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et. seq. As Plaintiffs correctly state, that statute provides that trades or businesses under common control, as defined by federal regulation, as of the date of the improper withdrawal are jointly and severally liable for the withdrawal liability assessment. See 29 U.S.C. § 1301(b)(1); 26 C.F.R. § 1.414(c)-2; C. States, S.E & S.W. Areas Pension Fund v. Neiman, 285 F.3d 587, 589 (7th Cir. 2002). This potential for joint and several liability underlies the Plaintiffs' subpoena requests. Plaintiffs seek discovery to determine if Cibula and/or any of the Other Entities can be held jointly and severally liable for the previously entered withdrawal assessment.

In support of their proposed discovery, Plaintiffs state that Cibula is a former officer of the Judgment Debtors, and that he was the sole owner of Geobeo, Inc., the parent company of the other Judgment Debtors. Plaintiffs also assert that the Other Entities were related to Geobeo, Inc. at the time of the improper withdrawal. To support this assertion, Plaintiffs note that each of the other business entities listed in the subpoena share the same principal office as Geobeo, Inc. and that a 2009 Dun & Bradstreet Report lists Cibula as the sole owner of one of the Other Entities. Moreover, with one exception, each of the Other Entities list Cibula as their Manager or President.*fn1

Against these assertions, Cibula argues that the Plaintiffs are not entitled under Rule 69(a)(2) to this type of third-party discovery. However, since the withdrawal liability of the Judgment Debtors may extend to both Cibula and the other business entities listed in the subpoena, Plaintiffs are entitled to investigate the relationship between Cibula, Other Entities and the Judgment Debtors to identify which, if any, of the Other Entities and/or Cibula belong in the control group (i.e. the group of trades or businesses under common control). C. States, S.E & S.W. Areas Pension Fund v. J.W. Cartage Co., No. 92 C 1695, 1994 WL 416978, at *3 (N.D. Ill. Aug. 8, 1994). To do so, however, Plaintiffs must adhere to the rules governing pre-trial discovery. Because Cibula is a non-party and a former officer of the Judgment Debtors, Plaintiffs' subpoena to him was the proper method to compel his responses to discovery. J.W. Cartage, 1994 WL 416978, at *2.

Cibula's opposition to the subpoena is not supported by the law. In this case, both the individual liability of Cibula as well as the liability of the Other Entities remains an open issue. Plaintiffs are entitled to examine his personal tax returns and question him regarding his relationship with the Judgment Debtors and the Other Entities for the purpose of identifying a control group. J.W. Cartage, 1994 WL 416978, at *3 ...


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