In re Yassai
| Decision Date | 12 August 1998 |
| Docket Number | Adversary No. SA 98-1162 JR.,Bankruptcy No. SA 97-28379 JR |
| Parties | In re Ismail YASSAI, Debtor. Heidi K. LEANDERS, trustee of the bankruptcy estate of Ismail Yassai, Plaintiff, v. Ismail YASSAI, Defendant. |
| Court | United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — Central District of California |
Thomas W. Dressler, Jason Pomerantz, Dressler, Rein, Evans & Sestanovich, LLP, Los Angeles, CA, for trustee.
Martin W. Taylor, Anthony R. Montero, Snell & Wilmer, LLP, Irvine, CA, for Non-Parties Jafar Yassai and Lantech Group, Inc.
Bernard J. Frimond, Laguna Hills, CA, for Debtor.
On February 23, 1998, the chapter 7 trustee, Heidi K. Leanders ("Trustee"), filed a complaint objecting to Ismail Yassai's ("Debtor") discharge under Bankruptcy Code (the "Code")1 § 727. In connection with her discovery efforts, Trustee served subpoenas (the "Third-Party Subpoenas") on three banks seeking deposition testimony and financial information pertaining to Debtor, his brother Jafar Yassai, and various business entities in which Debtor allegedly has an interest, including Lantech Group, Inc.
On June 18, 1998, Jafar Yassai and Lantech Group, Inc. (collectively, "Movants") filed a motion seeking to quash the Third-Party Subpoenas, or in the alternative, seeking protective orders (the "Motion"). After a hearing on July 9, 1998, I took the matter under submission.
On July 30, 1998, I ruled from the bench denying the Motion and Trustee's request for attorney's fees incurred in opposing the request for protective orders. On August 5, 1998, the order (the "Order") denying the Motion and the request for attorney's fees was entered. This opinion contains findings of facts and conclusions of law consistent with my rulings from the bench on July 30, 1998.
This court has jurisdiction over this case pursuant to 28 U.S.C. § 157(b)(1) () and 28 U.S.C. § 1334(b) (). This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(J). Venue is proper in this court pursuant to 28 U.S.C. § 1409(a).
On November 17, 1997, Debtor filed a voluntary chapter 7 petition. On February 23, 1998, Trustee filed the complaint (the "Complaint") objecting to Debtor's discharge pursuant to Code §§ 727(a)(2), (a)(3), (a)(4), and (a)(5).
On May 20, 1998, Trustee served the Third-Party Subpoenas on Sanwa Bank California (Rosemead, CA), Sanwa Bank California (Mission Viejo, CA), and Citizens Business Bank (Claremont, CA) (collectively, the "Banks"). The Third-Party Subpoenas required depositions and production of documents relating to the financial affairs of Debtor, Debtor's brother Jafar Yassai (with whom Debtor engaged in various prepetition business transactions), and property or entities in which Debtor had an interest prepetition.2
On June 18, 1998, Movants filed the Motion. On June 29, 1998, Trustee filed an opposition (the "Opposition") to the Motion. On July 7, 1998, Debtor filed a reply (the "Reply") to the Opposition. After a hearing on July 9, 1998, I took the matter under submission.
On July 30, 1998, I ruled from the bench and denied the Motion and request for attorney's fees. On August 5, 1998, the Order was entered. This opinion reflects my findings of facts and conclusions of law consistent with my ruling from the bench on July 30, 1998.
The Motion to Quash is brought under Federal Rule of Civil Procedure ("FRCP") 45(c)(3)(A)(iii) and (iv),3 which provides in pertinent part that "on, timely motion, the court by which a subpoena was issued shall quash or modify the subpoena if it . . . (iii) requires disclosure of privileged or other protected matter and no exception or waiver applies, or (iv) subjects a person to undue burden." FED.R.CIV.P. 45(c)(3)(A). Subparagraph (c)(3)(A), however, does not specify whether persons who are not subject to the subpoena and are not parties to the action, such as Movants, have standing to bring forth such a motion. Furthermore, neither the Ninth Circuit nor any other circuit court has addressed whether a non-party has standing to move to quash or modify a subpoena which is not directed at them under FRCP 45(c).
Movants assert that a person has standing to bring a motion to quash a subpoena served on another person pursuant to FRCP 45 if the subpoena infringes on the movant's legitimate interests. However, the legitimate interests test is inapplicable. The test has only been applied in criminal proceedings where the FRCP do not apply. See United States v. Raineri, 670 F.2d 702, 712 (7th Cir.1982); United States v. Tomison, 969 F.Supp. 587, 592 n. 12, 596 (E.D.Cal.1997).
It is by now a "`familiar canon of statutory construction that the starting point for interpreting a statute is the language of the statute itself.'" O'Hara v. Teamsters Union Local, 151 F.3d 1152, 1160 (9th Cir.1998) (quoting Continental Cablevision, Inc. v. Poll, 124 F.3d 1044, 1048 (9th Cir.1997) (citations omitted)). When a court looks to the language of a statute to interpret its meaning, the court "`derives meaning from the context, and this requires reading the relevant statutory provisions as a whole.'" Pension Benefit Guar. Corp. v. Carter & Tillery Enterprises, 133 F.3d 1183, 1186 (9th Cir. 1998) (quoting Carpenters Health and Welfare Trust Funds for Cal. v. Robertson (In re Rufener Constr., Inc.), 53 F.3d 1064, 1067 (9th Cir.1995)).
Movants bring the Motion only under FRCP 45(c)(3)(A). Subparagraph (c)(3)(A) permits a court to quash or modify the subpoena upon the showing that one of the four requirements listed at FRCP 45(c)(3)(A)(i)-(iv) is met. FRCP 45(c)(3)(B) also grants a court the authority to modify or quash a subpoena if one of three requirements listed at FRCP 45(c)(3)(B)(i)-(iii) is met. However, FRCP 45(c)(3)(B), unlike FRCP 45(c)(3)(A), expressly permits the court to quash or modify a subpoena "to protect a person subject to or affected by the subpoena." FED.R.CIV.P. 45(c)(3)(B) (emphasis added). FRCP 45(c)(3)(A) does not similarly extend the scope of the court's power to grant a motion to quash or modify to parties who are merely "affected by," but not "subject to" the subpoena. The Supreme Court has held that where particular language is included "`in one section of a statute but omitted in another section of the same Act,'" it is generally presumed the inclusion and exclusion was "intentional and purposeful . . . ." Brown v. Gardner, 513 U.S. 115, 120, 115 S.Ct. 552, 130 L.Ed.2d 462 (1994) (quoting Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (citations and internal quotation marks omitted)). If the drafters of the FRCP had intended FRCP 45(c)(3)(A) to apply to parties who are not directly subject to the subpoena, they would have so stated.
Additionally, in construing the statute section in its entirety, the Ninth Circuit has instructed that I can consider "the title of the section in which the relevant language appears." Hanford Downwinders Coalition, Inc. v. Dowdle, 71 F.3d 1469, 1475 (9th Cir. 1995) (citing Greyhound Corp. v. United States, 495 F.2d 863, 868 (9th Cir.1974); Oregon Pub. Util. Comm'n v. I.C.C., 979 F.2d 778, 780 (9th Cir.1992); United States v. Cha, 837 F.2d 392, 394 (9th Cir.1988)). The Ninth Circuit has noted that statutory titles "can be very useful tools" in resolving the ambiguity of statutes. Greyhound Corp., 495 F.2d at 868 (citation omitted). See also Oregon Pub. Util. Comm'n, 979 F.2d at 780 (); Cha, 837 F.2d at 394.
Here, the title of FRCP 45(c) is "Protection of Persons Subject to Subpoenas." This suggests that FRCP 45(c) is designed primarily to protect persons from subpoenas that are served upon them. Indeed, FRCP 45(c)(1) and (c)(2) both only pertain to the party issuing the subpoena and the rights of the person subject to the subpoena. FRCP 45(c)(1) imposes a duty upon the party or attorney issuing the subpoena to take reasonable steps to avoid imposing an undue burden or expense on a person subject to the subpoena. FRCP 45(c)(2) outlines the procedures by which a person who is commanded to produce may object to the subpoena. Where the drafters intended that the scope of FRCP 45(c) should be broader, they have done so explicitly by providing the court the power to quash or modify subpoenas to protect a person subject to or affected by the subpoena, as in FRCP 45(c)(3)(B).
Nevertheless, Movants urge the court to look to Broadcort Capital Corp. v. Flagler Secs., Inc., 149 F.R.D. 626, 628 (D.Col.1993), for guidance on this issue. Factually, the Broadcort case is similar. In Broadcort, the movant was a non-party who was not subject to the subpoena. The movant sought to quash or modify the subpoena directed at another non-party. The party who issued the subpoena argued that the movant lacked standing under FRCP 45(c)(3)(A). Id. The court held that the movant had standing on grounds of privilege and the breadth of the subpoena. Id. at 628-29.
However, I am reluctant to rely upon Broadcort because the court did not support its holding with an analysis of the language of FRCP 45(c). Rather, the judge relied on the Advisory Committee Note to this section, which states: "Subparagraph (c)(3)(A)(iv) requires the court to protect all persons from undue burden imposed by the use of the subpoena power." FED.R.CIV.P. 45(c) advisory committee's note. With that, the court concluded that a "court has the power and duty to examine all appropriate issues dealing with persons affected by a subpoena. . ....
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