United States District Court, D. Colorado
Kristen L. Mix United States Magistrate Judge.
matter is before the Court on Respondents' Motion
and Memorandum to Transfer Subpoena-Related Motion to Issuing
Court [#11] (the “Motion”). Movant filed a
Response [#18], and Respondents filed a Reply [#22].
Additionally, Respondents filed a Notice of Supplemental
Authority [#14], Second Notice of Supplemental Authority
[#15], and Third Notice of Supplemental Authority [#23]. The
Court reviewed the Motion, Response, Reply, Respondents'
supplemental authorities, case record, and applicable law.
Accordingly, the Court is fully advised in the premises. For
the reasons set forth below, the Motion [#11] is
2017, Respondents filed suit in the United States District
Court for the Eastern District of Virginia, alleging that
Defendant Matt Martorello (“Defendant
Martorello”) and others (collectively
“Defendants”) engaged in a “criminal
enterprise established with the intent of evading state usury
laws.” Compl. [E.D. Va. #1] at
Specifically, Respondents allege that Defendants employed a
“rent-a-tribe” business model, whereby a payday
lending scheme associates with a Native American tribe
“in an attempt to cloak itself in the privileges and
immunities enjoyed by the tribe-or to at least create the
illusion that it enjoys tribal immunity.” Id.
to Respondents, Defendant Martorello associated with the Lax
Vieux Desert Band of Lake Superior Chippewa Indians (the
“Tribe”), using the name Red Rock Tribal Lending,
LLC (“Red Rock”) to make illegal, high-interest
loans. Id. at 2, 5; Motion [#11] at 4.
Although Red Rock “claim[ed] to be owned and operated
by the Tribe, ” Respondents allege that, in reality,
Defendant Martorello's company, Bellicose Capital, LLC
(“Bellicose”), “funded the loans,
controlled the underwriting, and handled the day-to-day
operations.” Compl. [E.D. Va. #1] at 2.
suits accumulated against Defendant Martorello's
“rent-a-tribe” payday loan competitors and
regulation by the Consumer Financial Protection Bureau
appeared imminent, Defendant Martorello sold Bellicose to the
Tribe, rebranding as Ascension Technologies, LLC
(“Ascension”) and “continu[ing] to operate
with minimal tribal involvement.” Id. at 5-6.
Simultaneously, Red Rock rebranded as Big Picture Loans, LLC
(“Big Picture”). Motion [#11] at 5.
Although Defendant Martorello formally sold Bellicose to the
Tribe, Senior Judge Robert Payne found that Big Picture and
Ascension did not qualify as “arm[s] of the
Tribe” entitled to assert sovereign immunity.
Memorandum Opinion [E.D. Va. #146] at 80. Indeed,
Judge Payne found that “the impetus behind the
formation of Big Picture and Ascension was [Defendant]
Martorello and Bellicose's desire to avoid liability,
more so than the Tribe's interest in starting its own
business.” Id. at 53.
of Defendant Martorello's Amended Initial Disclosures,
Defendant Martorello identified Movant Jennifer Weddle-an
attorney in Greenberg Traurig LLP's Denver office-as
someone who “may have . . . discoverable information
that [Defendant] Martorello may use to support his
defenses.” Resp't Ex. 1, Am. Initial
Disclosures [#11-2] at 3-4; Motion [#11] at 6.
Specifically, Defendant Martorello indicated that Movant may
have discoverable information regarding the
“[r]elationship between [Defendant] Martorello,
Bellicose, and Sourcepoint with [the Tribe] and Red Rocks . .
. and related facts.” Resp't Ex. 1, Am. Initial
Disclosures [#11-2] at 3-4. Thereafter, Respondents
served Movant with a Subpoena to Produce Documents,
Information, or Objects or To Permit Inspection of Premises
in a Civil Action [#11-3] (the “Subpoena”),
seeking discoverable information Defendant Martorello may use
to support his defenses.
December 2018, Movant filed a Motion to Quash Subpoena [#1]
(the “Motion to Quash”) in this Court, which
District Judge Jackson referred to the undersigned. Order
of Reference [#4]. In January 2019, Respondents filed
the present Motion [#11], asking the Court to transfer this
case to the Eastern District of Virginia for consideration of
Movant's Motion to Quash [#1] in connection with the
arguments raised in Movant's Motion to Quash [#1] relate
to issues in the underlying litigation on which Defendant
Martorello and Respondents disagree. See, e.g.,
Reply [#22] at 1. Movant's Motion to Quash, for
example, argues that the Subpoena “seeks information
that is protected by the attorney-client” privilege and
confidentiality obligations. Motion to Quash [#1] at
6. Answering Respondent George Hengle's Second Set of
Interrogatories in the underlying litigation, however,
Defendant Martorello signaled intent to “assert good
faith as a defense in this matter based, in part, on
non-privileged information provided by attorney Jennifer
Weddle . . . as well as others at their respective law firms
. . . about the legality of the tribal business model and
[the Tribe's] lending operations.” Resp't
Ex. 3 [#11-4] at 7-8. With regard to Defendant
Martorello's intended good faith defense, Respondents
“disagree that [Defendant] Martorello can assert a
defense based on advice of counsel without waiving the
attorney-client privilege with respect to documents showing
the nature of that advice.” Motion [#11] at 7.
Judge Payne has yet to rule on Respondents' Motion to
Compel Information Withheld on the Basis of Attorney-Client
Privilege [E.D. Va. #340], which addresses the waiver issue.
to Respondents, Defendant “Martorello and
[Movant's] attorney client [sic] relationship, or lack
thereof, is [also] pending before Judge Payne.”
Reply [#22] at 2. In the present case, Movant argues
that Defendant Martorello cannot even waive the applicable
attorney-client privilege, since Movant “did not
represent [Defendant Martorello] individually.”
Response [#18] at 12. As Respondents note, however,
Defendant “Martorello seeks to intervene in this action
to assert privilege, including privilege over documents
generated during the course of [Movant's] representation
of entities ‘with respect to which Martorello is or was
a principal, including Bellicose, SourcePoint, and
Eventide.'” Reply [#22] at 5 (quoting
Motion to Intervene and Quash, in Part, Non-Party
Subpoena to Jennifer Weddle [#19] at 4). As with the
waiver issue, Judge Payne has yet to rule on the
attorney-client relationship issue. See, e.g.,
Order [E.D. Va. #462].
Respondents cite “potential spoliation of documents by
Defendants, ” including “Greenberg Traurig
delet[ing] its client files . . . consistent with the
Tribe's direction and [Defendant] Martorello's
confirmation.” Motion [#11] at 3, 8. As
Respondents explain, the Subpoena seeks documents from Movant
rather than Defendants since Defendant
“Martorello's [personal] emails were apparently
destroyed in connection with the sale of Bellicose to the
Tribe.” Reply [#22] at 6. Acknowledging
Respondents' reasoning, Movant counters that Greenberg
Traurig “complied” with the Tribe's direction
and also “deleted the Bellicose files and disposed of
them by secure methods, ” reinforcing that the
Tribe-not Defendant Martorello-holds the applicable
attorney-client privilege. Response [#18] at 3.
According to Respondents, “Judge Payne is very familiar
with this issue and thus is in a better position to rule on
whether Greenberg Traurig's backup systems should be
searched to the recover the missing emails.”
Reply [#22] at 2. As with the waiver and
attorney-client privilege issues, Judge Payne has yet to rule
on the spoliation issue. Minute Order [E.D. Va.
#316] (ordering parties to “file agreed order to
include spoliation and ESI discovery plan”);
Order [E.D. Va. #460] (extending-until May 13,
2019-the deadline to complete the ESI discovery plan).
Rule of Civil Procedure 45(f) provides that, “[w]hen
the court where compliance is required did not issue the
subpoena, it may transfer a [subpoena-related] motion . . .
to the issuing court if the person subject to the subpoena
consents or if the court finds exceptional
circumstances.” In the present case, the Eastern
District of Virginia issued the Subpoena, requiring
Movant's compliance in the District of Colorado, given
Movant's employment as an attorney in Greenberg Traurig
LLP's Denver office. Movant filed a subpoena-related
motion, the Motion to Quash [#1], and Respondents filed the
Motion [#11], asking the Court to transfer the Motion to
Quash to the Eastern District of Virginia for consideration
in connection with the underlying litigation. Movant
“does not consent to a transfer” and argues Rule
45(f)'s “exceptional circumstances” do not
exist in the present case. Response [#18] at 6;
“proponent of transfer bears the burden of showing that
[exceptional] circumstances are present.” Fed.R.Civ.P.
45(f) advisory committee's note to 2013 ...