United States District Court, S.D. Ohio, Western Division
OPINION AND ORDER
DOUGLAS R. COLE UNITED STATES DISTRICT JUDGE.
cause comes before the Court on (i) Defendant Build Realty,
Inc.'s (“Build”) Objection (ECF No. 109) to
the Magistrate Judge's December 6, 2019 Order (ECF No.
104) regarding discovery issues relating to various PNC Bank
records, and (ii) the parties' joint report of a
discovery dispute relating to Zoom.com audio recordings of
Build management meetings (ECF No. 114). For the reasons
discussed more fully below, the Court ORDERS
1) Build shall produce the requested Zoom Audio conference
2) As more fully set forth in Magistrate Judge
Litkovitz's December 6, 2019 Order (ECF No. 104),
Plaintiffs shall be entitled to banks records from PNC Bank
relating to the escrow accounts of the Build
Defendants as follows:
a.) Plaintiffs shall specify two months from each calendar
year starting with 2013 through 2019 (i.e., two
months in 2013, two months in 2014, etc.); and
b.) the discovery requests to PNC Bank shall be limited to
the requested records relating to the escrow account for the
specified months. (See id.).
Zoom Audio Tapes.
on their respective filings, as well as the discussion that
occurred at the Discovery Conference on January 9, 2020, the
parties appear to agree that officers and employees of the
Build Defendants, potentially along with others, would
conduct business meetings from time to time using Zoom Video
Communications' teleconferencing services, and that
recorded audio (and perhaps video) of those business meetings
is still available in electronic form. In discovery,
Plaintiffs seek production of those recordings. The Build
Defendants, however, assert that the electronic records have
marginal relevance, if any, to the claim on which discovery
is currently moving forward, i.e., Plaintiffs'
breach of fiduciary duty claim. Moreover, the Build
Defendants contend that Plaintiffs' burden to produce
such private information is significant. As to the latter,
the Build Defendants argue that Jonathan Peak, who maintains
the recordings (and also participated in the meetings), is an
attorney, and has served as an attorney for the Build
Defendants from time to time (although he has also provided
services to those entities as a non-attorney). Thus, Peak
indicates that he must review the recordings for
attorney-client information before providing them in
discovery. Peak estimates that the necessary review process
will cost approximately $18, 750. Arguing that producing the
audio records is inappropriate, Build directs the Court's
attention to this cost and asserts that its attorneys in this
litigation would need to review and analyze the recordings,
as well, resulting in additional fees. According to the Build
Defendants, these expenses render the burden of production
disproportionate to the needs of the case. See Fed.
R. Civ. P. 26(b)(1). In the alternative, the Build Defendants
ask the Court to require Plaintiffs to pay the roughly $18,
750 in review expenses cited above.
the parties presented this issue to Magistrate Judge
Litkovitz, she concluded that the Zoom records could be
relevant to at least the breach of fiduciary duty claims, but
then inquired regarding the magnitude of the burden
associated with assembling those materials. In response to
that inquiry, Build developed the cost estimate set forth
regard to that cost estimate, Plaintiffs argued at the
Discovery Conference that there is no need for Build to incur
those costs for two reasons: (1) Peak was not acting as an
attorney when he participated in the meetings, so there is no
need to review for attorney-client privilege; and (2) in any
event, the parties' Stipulated Protective Order
(see ECF No. 80) provides a procedure by which
privileged material can be “clawed-back” to the
extent that such material is discovered after production.
(See id. at ¶¶ 10, 16). Accordingly,
Plaintiffs ask the Court to require the Build Defendants to
produce the Zoom recordings at their own cost.
Court agrees with Magistrate Judge Litkovitz that the Zoom
recordings could be relevant to one or more of
Plaintiffs' claims in this matter, including the breach
of fiduciary duty claim, under the allegations set forth in
the Complaint. Plaintiffs assert that all of the Build
entities are operated as alter egos of one another, and that
the Build entities that are named as trustees in the trusts
in which Plaintiffs were beneficiaries routinely violated
their fiduciary duties to Plaintiffs as beneficiaries.
Discussion among the Build officers and executives regarding
how they have been managing the company could presumably shed
substantial light on the relationships between those entities
(thus providing relevant information regarding whether they
are, in fact, alter egos of one another), as well as offer
information regarding how the entities operate (which could
be directly relevant to the breach of fiduciary issues). The
Court further finds that, given the number of potential
plaintiffs, the nature of the allegations, and the complex
nature of this suit, the potential expenses for producing
these records do not render the discovery disproportionate to
the needs of the case, as that term is used in Fed.R.Civ.P.
26. This is particularly true in that, as noted above,
production of the recordings would not act as a waiver of the
attorney-client privilege given the claw-back procedure in
the Protective Order that the Court has entered in this case.
(See Stip. Prot. Ord. at ¶¶ 10, 16 [ECF
No. 80]). Accordingly, the Court ORDERS the
Build Defendants to produce, at their own expense, the Zoom
recordings that Plaintiffs have requested.
PNC Bank Records.
Bank provided banking services to the various Build entities,
which included maintaining the escrow accounts that Build
used to escrow rehab funds that were supposed to be paid to
Plaintiffs as they completed various rehab activities on the
properties as to which they were trust beneficiaries. In
their Complaint, Plaintiffs contend that one of the ways in
which the Build Defendants violated their fiduciary duties
was by reporting to Plaintiffs that the escrow accounts had
been funded (thereby causing Plaintiffs to start accruing
interest), when in fact that was not the case. Plaintiffs
similarly contend that the Build Defendants would freely move
funds into and out of the escrow accounts to pay their own
bills, treating the money as their own, when in fact they
held it as trustees for Plaintiffs. Based on these
allegations, Plaintiffs contend that the escrow account
records, and in particular details regarding the transfers of
funds in and out of the escrow accounts (such as the dates,
amounts, and recipients or senders of those transfers), are
relevant to their claims.
response, the Build Defendants again suggest that producing
the requested bank records would impose an undue burden on
them, thereby rendering this ...