Appel v. Wolf

• Decision Date: 09 November 2021
• Docket Number: 21-cv-1557-L-BGS,21-cv-1536-L-BGS,21-cv-1466-L-BGS
• Court: U.S. District Court — Southern District of California
• Parties: HOWARD APPEL, Petitioner, v. ROBERT S. WOLF, Respondent.

HOWARD APPEL, Petitioner, v. ROBERT S. WOLF, Respondent.

Nos. 21-cv-1466-L-BGS; 21-cv-1536-L-BGS; 21-cv-1557-L-BGS

United States District Court, S.D. California

November 9, 2021

ORDER GRANTING IN PART MOTIONS TO QUASH NON-PARTY SUBPOENAS, OR IN THE ALTERNATIVE FOR A PROTECTIVE ORDER, AND FOR FEES ASSOCIATED WITH THESE MOTIONS

Hon Bernard G. Skomal United States Magistrate Judge

I. INTRODUCTION

Petitioner Howard Appel, the Plaintiff in Appel v. Wolf, Case No. 18-cv-814-L-BGS, has filed motions to quash, or in the alternative for protective orders, as to Rule 45 subpoenas issued by Respondent Robert Wolf, the Defendant in Appel v. Wolf.^[1] Three motions were filed in the three cases, but cover a total of eight subpoenas that were issued by Wolf to Citibank N.A., BMO Capital Markets Corp., KPMG, LLP, J.P. Morgan Chase N.A., J.P. Morgan Securities, LLC, SunTrust Robinson Humphrey, Inc., SunTrust Bank, and Millennium Health LLC. (Case No. 21-cv-1466-L-BGS at ECF Nos. 2-3, 5; Case No. 21-cv-1536-L-BGS at ECF 1; Case No. 21-cv-1557-L-BGS at ECF 1.)

Appel argues the discovery sought in the subpoenas is not relevant to a claim or defense, not proportional to the needs of the case, protected by rights of privacy and confidentiality, and that the subpoenas are simply an attempt to harass Appel. (ECF 3 at 2-14.^[2]) Wolf has filed oppositions to each motion. (Case No. 21-cv-1466-L-BGS at ECF No. 10; Case No. 21-cv-1536-L-BGS at ECF 7, 9; Case No. 21-cv-1557-L-BGS at ECF 5.) Wolf argues the discovery is relevant to the truth of Wolf s defamatory statement. (Id.) Appel filed reply briefs in two of the cases and the parties filed a joint statement pursuant to then-applicable local requirements in Case No. 21-cv-1557-L-BGS before it was transferred here. (Case No. 21-cv-1466-L-BGS at ECF Nos. 10, 15; Case No. 21-cv-1536-L-BGS at ECF 12; Case No. 21-cv-1557-L-BGS at ECF 8.)

Having considered all the briefing, the Court GRANTS the motions for the reasons set forth below, but denies an award of fees to Appel. (Case No. 21-cv-1466-L-BGS at ECF Nos. 2-3, 5; Case No. 21-cv-1536-L-BGS at ECF 1; Case No. 21-cv-1557-L-BGS at ECF 1.)

II. BACKGROUND

A. Claim for Libel Per Se

Appel's Complaint in the underlying action asserts a single claim for libel per se against Wolf for a statement Wolf made about Appel in an email. (Compl. [ECF 1] ¶¶ 9-13, ¶¶ 14-19 (First Claim for Relief, Libel Per Se^[3]).) The email related to a different case, between Appel and Concierge Auctions, LLC ("Concierge"), a company that auctions high-end luxury real estate. (Compl. ¶¶ 3-6, 10.)

Appel's Complaint alleges that despite the property owner indicating an intention not to sell a particular property and having refused to sign a purchase agreement with Concierge, Concierge took and refused to return Appel's $285, 000 deposit. (Id. ¶ 5.) A dispute arose between Appel and Concierge regarding the sale. (Id. ¶¶ 5-6.) It was in the context of that case that Wolf made the allegedly libelous statement about Appel in an email dated November 27, 2017. (Id. ¶¶ 5-6, 9-10.) Specifically, Wolf stated:

By the way, I know Howard Appel from when I used to head the litigation side at Gersten Savage, more than 10 years ago. Howard had legal issues (securities fraud) along with Montrose Capital and Jonathon Winston who were also clients at the time. Please send him my regards.

(Id. ¶10; Decl. of Steven Brower [ECF 4] ("BrowerDecl"), Ex. F.)

Wolf has conceded this statement was mistaken and made about a different Howard Appel. A declaration submitted by Wolf, in support of briefing on a different issue in the 18-cv-814 case, asserts that this description in the email referred to a different Howard Appel. (Decl. of Robert Wolf [ECF 5-2] ("Wolf Decl") ¶ 8 in Case No. 18-cv-814 ("[P]laintiff turned out to be a different Howard Appel. . .").) Wolf also indicates in the current briefing that he was referring to a different Howard Appel. (ECF 10 at 2 ("The email to Appel's attorneys mistakenly referred to a different Howard Appel than the current Petitioner . . .").

B. Subpoenas

As discussed in more detail below, despite arguing the discovery sought in the eight subpoenas is relevant to the truth of Wolf s statement, Wolfs Opposition does not describe what the eight subpoenas he issued actually seek or how the specific requests in those subpoenas relate to the truth of his statement. (See IILC.1.d).) Wolf vaguely describes the discovery sought only as "[t]his evidence," "evidence at issue," as seeking "this type of evidence," and "discovery evidence" he claims he is entitled to. (ECF 10 at 3, 14-15.) What he actually requests under these voluminous subpoenas is never even summarized, let alone detailed for the Court.

Appel's briefing also does not discuss the subpoenas in detail but does summarize them as "requesting communications between Appel and various financial institutions concerning a credit agreement between Millennium Lab Holdings II, LLC/Millennium Laboratories, LLC (a business entity where Appel previously served as president) and several lenders." (ECF 3 at 5.) Appel additionally describes one as "over 380 pages long with exhibits, requesting "Any and all communications' for a period of four years between Appel, his former employer, and various financial institutions and other parties concerning certain credit agreements." (ECF 3 at 10 (emphasis in original).)

Based on the Court's own review, Appel's summary is generally accurate, although lacking specifics. Each subpoena, to the eight different entities, does exceed 380 pages with attached exhibits. Using the 21-cv-1466 case as an example, there are five exhibits attached to each subpoena: Exhibit A - a Credit Agreement dated April 16, 2014 ("the Credit Agreement"); Exhibit B - a Confidential Information Memorandum ("CIM"); Exhibit C - a March 16, 2014 Commitment Letter ("Commitment Letter"); Exhibit D - a November 7, 2017 Bankruptcy Complaint ("Bankruptcy Complaint"); and Exhibit E - a December 9, 2015 Complaint filed in the District of Delaware against Appel and others ("District Court Complaint"). (ECF 5-1 through 5-6.)

The subpoenas primarily seek "Any and all communications between" Appel and a specific person or the subpoenaed entity regarding either an entire exhibit or a portion of one of these exhibits for a four-year period, January 1, 2012-January 1, 2016. (ECF 5-1 at 5-9.) As examples, item No. 14 requests "Any and all communications between YOU and Howard J. Appel regarding the letter dated March 16, 2014, attached hereto as Exhibit C, between January 1, 2012, and January 1, 2016." (ECF 5-1 at 7.) Similarly, No. 8 requests "Any and all communications between YOU and Howard J. Appel regarding the statement in Exhibit B attached hereto regarding the "Management Discussion and Analysis" section at pages 88-90, between January 1, 2012, and January 1, 2016." (Id.) There are thirty-six similar requests referencing one of the five exhibits in whole or in part. (ECF 5-1 at 6-9.) Despite the lack of explanation from Wolf, the Court generally understands the subpoenas to seek more information about the 2014 Credit Agreement from financial institutions that were involved in it.

The requests in the other seven subpoenas are largely the same. Given the parties have not even discussed them, the Court will not detail them further here. The above description is sufficient for purposes of the Court's analysis of all the motions, at least based on the parties' arguments.

C. Millennium

Wolfs Opposition details the information he has collected concerning Millennium Laboratories ("Millennium"), a company where Appel was president. (ECF 10 at 6-13.) Wolfs briefing summarizes allegations against Millennium, including: Millennium's urine testing business (id. at 6-7 (citing Aff. of Andrew A. Servais ("Servais Aff"), Ex. 1, U.S. Compl. in Intervention ("Govt. Compl.")).); its changes to its sales strategy, allegedly supervised by Appel, that resulted in illegal kickbacks and false Medicare claims (id. at 7-8 (citing Govt. Compl.)); a 2014 restructuring of a credit agreement to allow four shareholders, including Appel, to "cash-out" in April 2014 (id. at 9-10); the Department of Justice's ("DOJ") subpoenaing information from Millennium in 2012, the DOJ's action against Millennium for alleged violations of the False Claims Act based on Medicare claims in 2015, and settlement of that action the same year (id. at 8 (citing Govt. Compl), 11-12 (citing Servais Aff, Exs. 19-20)); and Millennium's bankruptcy and confirmation of its bankruptcy plan despite claims against Millennium executives (id. at 12-13 (citing In re Millennium Lab Holdings II, LLC, 242 F.Supp.3d 322, 330 (D Del. 2017) and Servais Aff, Ex. 5)). Although Wolfs Opposition largely does not discuss what he actually requests in the subpoenas, the Court has deduced that the five different documents cited throughout the subpoena requests are documents related to the April 2014 Credit Agreement (the Credit Agreement, CIM, and 2014 Commitment Letter) and litigation that followed (Bankruptcy Complaint and District Court Complaint).

III. DISCUSSION

A. Legal Standards

The subpoenas at issue were issued under Federal Rule of Civil Procedure 45. (See infra III.A. 1 .a) However, as discussed below, a Rule 45 subpoena must comply with the limitations on discovery set out in Federal Rule of Civil Procedure 26, (see infra III.A. Lb), including being relevant to a claim, here libel per se (see infra III.A.2)), or defense, here Wolfs truth defense (see infra III.A.3)). 1. Discovery

a) Rule 45

Rule 45 allows a party to subpoena a non-party to produce documents. Fed.R.Civ.P. 45(a)(1)(C); Fed.R.Civ.P. 34(c) ("As permitted in Rule 45, a nonparty may be compelled to produce...