Case 1:11-mc-22432-MGC Document 1 Entered on FLSD Docket 07/07/2011 Page 1 of 10 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA PROFESSIONAL SHREDDING OF WISCONSIN, INC., a Wisconsin corporation, JAMES KLEMES, an individual, TERESA KLEMES, an individual, SUNSHINE STATE SHREDDING, LLC, a Florida limited liability company, and GARZARELLI- BRICE LTD., a New York limited liability company, Case No.: Pending in United States District Court Southern District of New York Civil No. 10-CIV-4757 (SHS) Plaintiffs, vs. PROSHRED FRANCHISING CORP., a Delaware corporation, Defendant. PLAINTIFF SUNSHINE STATE SHREDDING, LLC AND NON-PARTIES WILLIE EARL WILLIAMS JR AND SANDRA WILLIAMS MOTION FOR PROTECTIVE ORDER AND TO QUASH SUBPOENA AND INCORPORATED MEMORANDUM OF LAW Plaintiff, SUNSHINE STATE SHREDDING, LLC ( PS Florida ), and Non-Parties, WILLIE EARL WILLIAMS, JR and SANDRA WILLIAMS, 1 by and through their undersigned counsel and pursuant to Federal Rule of Civil Procedure 26(c) and 45(c), hereby submit their Motion for Protective Order and to Quash Subpoena (the Motion ) seeking to prevent Defendant PROSHRED FRANCHISING CORP. ( Proshred ) from obtaining certain documents from third-party TD Bank, who has been directed to produce documents to Proshred by July 8, 1 It is well-established that individuals, whose banking records are subpoenaed, have a privacy interest in their personal financial affairs that gives them standing to move to quash a subpoena served on a nonparty financial institution. Great Lakes Transportation Holding, LLC v. Yellow Cab Service Corp. of Florida, Inc., 2011 WL 465507, *5, n. 6 (S.D. Fla. Feb. 4, 2011). Accordingly, the Williams have standing to seek a protective order and to quash the Subpoena.
Case 1:11-mc-22432-MGC Document 1 Entered on FLSD Docket 07/07/2011 Page 2 of 10 2011. In support thereof, PS Florida, Willie Earl Williams, Jr. and Sandra Williams state as follows: PRELIMINARY STATEMENT PS Florida, Mr. Williams and Mrs. Williams seek a protective order to bar Proshred from enforcing, in part, a subpoena to produce documents (the Subpoena ) served on TD Bank. PS Florida is a franchisee of the Proshred franchise system, which engages in the business of paper shredding. Non-Party Willie Earl Williams, Jr. is the principal of PS Florida, and his wife, Sandra Williams, is not involved in any way with PS Florida s Proshred franchised business. Proshred seeks documents from TD Bank that are personally intrusive and have no relevance to any of the claims or defenses at issue in this action. 2 PS Florida s claims arise from Proshred s misrepresentations of material fact made to it prior to PS Florida becoming a Proshred franchisee and from several material breaches of the August 15, 2007 franchise agreement (the Franchise Agreement ) between PS Florida and Proshred. The Subpoena seeks documents relating to bank account statements, requests for loans and all correspondence and documents relating to Earl Williams, individually, and not just in his capacity as the principal of PS Florida. Such broad requests not only seek to invade Mr. Williams personal privacy interests, but the privacy interests of his wife, who, with Mr. Williams, held joint personal checking and savings accounts with TD Bank (and Commerce Bank, before all Commerce Bank branches became TD Bank branches). Accordingly, PS Florida and the Williams respectfully request that this Honorable Court enter an Order quashing the Subpoena, or, in the alternative, limiting the scope of the Subpoena to prohibit Proshred from obtaining any documents from TD Bank that relate to the 2 A true and correct copy of the Amended Complaint filed in the United States District Court, Southern District of New York on July 14, 2010, is attached hereto as Exhibit A. A true and correct copy of Proshred s Answer and Counterclaim against PS Florida is attached hereto as Exhibit B. 2
Case 1:11-mc-22432-MGC Document 1 Entered on FLSD Docket 07/07/2011 Page 3 of 10 personal financial affairs of Mr. and Mrs. Williams, individually, and that have no relation to PS Florida or its Proshred business. MEMORANDUM OF LAW A. A Protective Order And Quashing Of The Subpoena Served On TD Bank Is Warranted To Prohibit The Discovery Of Irrelevant And Private Financial Information Of The Williams. Under Federal Rule of Civil Procedure 26(c), the Court may enter a protective order whenever justice requires in order to protect a party or person form annoyance, embarrassment, oppression, or undue burden or expense. Fed. R. Civ. P. 26(c). Further, under Federal Rule of Civil Procedure 45(c) the Court must quash or modify a subpoena that requires disclosure of privileged or other protected matter, if no exception or waiver applies, and a court may quash or modify a subpoena if it discloses certain confidential information. Fed. R. Civ. P. 45(c)(3)(A)(iii) and Fed. R. Civ. P. 45(c)(3)(B)(i). For a court to consider permitting discovery of financial documents, however, the party seeking the documents must demonstrate that the information sought is relevant, as Rule 26 defines the term, and nothing else precludes disclosure. NetJets Aviation, Inc. v. Peter Sleiman Development Group, LLC, 2011 WL 768066, *1 (M.D. Fla. Feb. 28, 2011) (citing Capone v. Ison, 2008 WL 2277507, *4 (S.D. Fla. May 30, 2008)). Here, the documents sought by Proshred relating to the Williams personal financial affairs have no relevance to the claims and defenses in this action, are confidential and overly broad. documents: 3 Specifically, the Subpoena seeks from TD Bank the production of the following 1. All electronic and written correspondence with Earl Williams related to his Proshred Franchise Sunshine State Shredding, LLC. 3 A true and correct copy of the Subpoena is attached hereto as Exhibit C. 3
Case 1:11-mc-22432-MGC Document 1 Entered on FLSD Docket 07/07/2011 Page 4 of 10 2. Any and all documents relating to Earl Williams and/or his Proshred Franchise Sunshine State Shredding, LLC. 3. Any and all documents, including, but not limited to: account statements, loan applications, and written or electronic correspondence, kept by TD Bank s branch location at: 3325 W. Hillsboro Boulevard, Deerfield Beach, FL, 33442, relating to Earl Williams and/or his Proshred franchise Sunshine State Shredding, LLC. 4. Any and all account statements for Sunshine State Shredding, LLC s corporate bank accounts. 5. Any and all account statements for bank accounts maintained by Earl Williams. 6. Any and all Documents related to loans that you provided to Earl Williams and/or Sunshine State Shredding, LLC. 7. Any and all Documents related to loan requests made to you by Earl Williams and/or Sunshine State Shredding, LLC, which you rejected since 2007. PS Florida and the Williams object to Document Request Nos. 2, 3, 5, 6 and 7 above as they seek information that does not relate to PS Florida s franchised business or the allegations contained in the Amended Complaint, but rather, seek information pertaining to the personal finances of the Williams, individually. 4 More specifically, Proshred seeks to obtain the bank account statements for the Williams joint personal checking and savings accounts and any other personal information of Mr. Williams that TD Bank may possess. Furthermore, Proshred s requests are not limited to any relevant period of time, and thus, encompass information pertaining to the Williams personal bank accounts and other personal financial information from well before PS Florida was formed and began its franchise relationship with Proshred. Simply put, the personal financial information sought is completely irrelevant to this action, and, therefore, the Subpoena should be quashed. 4 While the Subpoena requests documents relating to Earl Williams, Mr. Williams held joint bank accounts at TD Bank with his wife. Therefore, the Subpoena also necessarily seeks the personal financial information of Mrs. Williams as well, who has had absolutely nothing to do with PS Florida s Proshred franchise business. 4
Case 1:11-mc-22432-MGC Document 1 Entered on FLSD Docket 07/07/2011 Page 5 of 10 1. The Personal Financial Information Of Non-Parties That Proshred Seeks Is Irrelevant To The Claims And Defenses At Issue In This Lawsuit And The Subpoena Is Overbroad. Proshred cannot establish that the categories of documents it seeks from TD Bank that relate to the personal financial affairs of the Williams are relevant to the claims and defenses at issue in this lawsuit. Here, PS Florida s claims are based on, in part: (i) Proshred s misrepresentations made to PS Florida prior to the execution of the parties Franchise Agreement that PS Florida was joining a franchise concept that was experiencing rapid growth and was financially sound, that PS Florida could expect a return on its investment in a Proshred franchise within eighteen (18) months, that PS Florida s territory was one of the best territories that Proshred was offering at that time, that PS Florida would definitely make a lot of money operating a Proshred franchise, that Proshred would soon be implementing a National Accounts Program for its franchisees, and that there existed 40,370 businesses in PS Florida s territory; (ii) Proshred s failure to tender the monies it promised to contribute towards the acquisition of two local competitors of PS Florida; (iii) Proshred s failure to purchase a 49% interest in PS Florida, as it had promised; (iv) Proshred s breach of the Franchise Agreement by failing to provide operational and marketing support; and (v) PS Florida s inability to meet the Minimum Performance Levels imposed by Proshred and to continue to operate a financially viable business as a result of Proshred s actions, failed policies and mismanagement. See Amended Complaint, 105-155. Further, the personal savings and checking accounts information of the Williams does not have any bearing on Proshred s general and non-specific affirmative defenses to the Amended Complaint or its Counterclaim against PS Florida. 5 Therefore, the discovery Proshred 5 Proshred asserted seven affirmative defenses to the Amended Complaint, as follows: 1. The Amended Complaint fails to state a claim upon which relief may be granted. 2. Plaintiffs claims are barred by a statue of limitations. 3. Plaintiffs claims are barred by release. 5
Case 1:11-mc-22432-MGC Document 1 Entered on FLSD Docket 07/07/2011 Page 6 of 10 seeks with respect to the Williams personal savings account and checking account statements is wholly irrelevant to the claims and defenses in this action. Accordingly, the Court should enter a protective order and quash, or in the alternative, modify the Subpoena to prohibit Proshred s discovery of the Williams personal banking account statements, which are unrelated to PS Florida s Proshred franchised business. Goulet v. Mederi Caretenders VS of SW FL, LLC, 2011 WL 652851, *1 (M.D. Fla. Feb. 14, 2011) ( A subpoena may be quashed if it calls for the production of clearly irrelevant matters. ); Palumbo v. Shulman, 97 Civ. 4314, 1998 WL 720668, *3 (Oct. 13, 1998) ( a subpoena which calls for the production of irrelevant material, should not be enforced. ). Additionally, Document Request Nos. 2, 3, 5, 6 and 7 are entirely overbroad, and should, at the very least, be limited to information that pertains solely to PS Florida s Proshred franchised business. Indeed, except for Document Request No. 7, none of the requests are limited to any relevant time period. Instead, the Subpoena impermissibly seeks from TD Bank any and all documents or information related to Mr. Williams, even if they have absolutely nothing to do with his investment in, or the operation of, PS Florida s Proshred franchised business. 4. Plaintiffs claims are barred by the statute of frauds. 5. Plaintiffs claims are barred by waiver, laches and estoppels. 6. Plaintiffs damages, if any, were caused solely by the fault or negligence of others outside of Defendant s control. 7. Plaintiffs damages, if any, are barred by contributory negligence. See Proshred s Answer and Counterclaim, p. 39. In addition, Proshred s Counterclaim against PS Florida is for its alleged failure to pay certain notes payable to Proshred and to pay royalties and advertising fund fees under the Franchise Agreement. See Proshred s Answer and Counterclaim, pp. 40-43. 6
Case 1:11-mc-22432-MGC Document 1 Entered on FLSD Docket 07/07/2011 Page 7 of 10 2. Proshred s Right To Subpoena The Personal Financial Information Of The Williams Is Outweighed By The Williams Privacy Interests. Courts have recognized that individuals have certain constitutionally protected privacy rights, including the individual interest in avoiding disclosure of personal matters. McVane v. Federal Deposit Ins. Corp., 44 F.3d 1127, 1136 (2d Cir.1995) (citations omitted). Here, the Williams are not parties to this litigation, and should not be subjected to Proshred s intrusion into their personal financial affairs, which have no bearing on the claims and defenses asserted in this action. Therefore, any alleged right Proshred has to subpoena such information is greatly outweighed by the Williams privacy interests to keep their personal financial information private, and the Court should quash or modify the Subpoena accordingly. See e.g. Netjets Aviation, Inc., 2011 WL 768066, *2-3 (quashing subpoena which sought personal financial information of defendant because, to the extent the documents sought have any marginal relevancy to the allegations of the complaint, such relevancy is outweighed by the sensitive and private nature of these financial records ) (citing Fla. R. Civ. P. 26(c)(1)(D)); Solow v. Conseco, Inc., 06 Civ. 5988, 2008 WL 190340, *4-5 (S.D.N.Y. Jan. 18, 2008) (quashing subpoena seeking information relating to the terms of financing, refinancing, loan and debt obligations of non-party where non-party had a privacy interest in maintaining the confidentiality of the information and the documents sought had little or no relevance to the claims and defenses in the action). Nor would the parties Stipulation and Protective Order governing confidential documents in the litigation adequately protect the disclosure of the Williams private financial information, as Proshred has no right to it in the first place. Accordingly, a protective order is warranted and the Court should quash, or, in the alternative, modify the Subpoena to protect the disclosure of the Williams private banking information. 7
Case 1:11-mc-22432-MGC Document 1 Entered on FLSD Docket 07/07/2011 Page 8 of 10 CERTIFICATE OF COUNSEL Pursuant to Rule 26(c) of the Federal Rules of Civil Procedure, counsel for Plaintiff SUNSHINE STATE SHREDDING, LLC and Non-Parties, WILLIE EARL WILLIAMS, JR and SANDRA WILLIAMS, hereby certifies that she has conferred with Proshred Franchising Corp. s counsel in a good faith attempt to resolve the issues raised herein without court action, but that such efforts were unavailing. CONCLUSION WHEREFORE, based on the forgoing, Plaintiff, SUNSHINE STATE SHREDDING, LLC, and Non-Parties, WILLIE EARL WILLIAMS, JR and SANDRA WILLIAMS, respectfully request that this Honorable Court: (i) grant their instant Motion; (ii) enter an order pursuant to Federal Rule of Civil Procedure 26(c) and 45(c) protecting WILLIE EARL WILLIAMS, JR and SANDRA WILLIAMS personal and private information from being disclosed; (iii) quash the Subpoena to Produce Documents issued by Defendant PROSHRED FRANCHISING CORP. upon TD Bank, or, in the alternative, modify and limit the Subpoena to documents relating solely to SUNSHINE STATE SHREDDING, LLC and its Proshred franchised business; (iv) award SUNSHINE STATE SHREDDING, LLC, WILLIE EARL WILLIAMS, JR and SANDRA WILLIAMS their reasonable expenses and attorneys fees incurred in bringing this Motion in accordance with Federal Rule of Civil Procedure 26(c); and (v) grant such other and further relief as this Court deems necessary and proper. [Signature block on following page] 8
Case 1:11-mc-22432-MGC Document 1 Entered on FLSD Docket 07/07/2011 Page 9 of 10 Dated: Miami, Florida July 7, 2011 Respectfully submitted, /s/ Kaari Gagnon ROBERT ZARCO (Fla. Bar No. 502138) ALEJANDRO BRITO (Fla. Bar No. 0098442) KAARI GAGNON (Fla. Bar No. 0046106), P.A. Miami Tower 100 S.E. 2 nd Street, 27 th Floor Miami, Florida 33131-2193 Telephone: (305) 374-5418 Facsimile: (305) 374-5428 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on July 7, 2011, I electronically filed the foregoing document with the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being served this day on all counsel of record identified on the attached Service List via transmission of Notices of Electronic Filing generated by CM/ECF or via U.S. Mail. s/ Kaari Gagnon 9
Case 1:11-mc-22432-MGC Document 1 Entered on FLSD Docket 07/07/2011 Page 10 of 10 SERVICE LIST Professional Shredding of Wisconsin, Inc., et al. v. Proshred Franchising Corp. Case No. 10-CIV-4757 United States District Court, Southern District of New York William L. Killion, Esq. FAEGRE & BENSON, LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402-3901 (Via U.S. Mail) Kerry Bundy, Esq. FAEGRE & BENSON, LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402-3901 (Via U.S. Mail) Jason R. Lawrence, Esq. FAEGRE & BENSON, LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402-3901 (Via U.S. Mail) Kevin M. Shelley, Esq. KAUFMANN GILDIN ROBBINS & OPPENHEIM, LLP 777 Third Avenue New York, NY 10017 (Via U.S. Mail) Steven A. Rosen, Esq. 271 Madison Avenue Suite 1404 New York, NY 10016 (Via U.S. Mail) 10