United States District Court, S.D. California
IN RE Bof I HOLDING, INC. SECURITIES LITIGATION.,
ORDER: DENYING LEAD PLAINTIFF'S OBJECTIONS TO THE
MAGISTRATE JUDGE'S ORDER ON JOINT MOTION FOR
DETERMINATION OF DISCOVERY DISPUTE NO. 2
[DKT. NO. 100-1]
Gonzalo P. Curiel United States District Judge
the Court are Objections, Dkt. No. 100, to Magistrate Judge
Karen Crawford's March 23, 2017 order, Dkt. No. 97,
ruling on the parties' Joint Motion for Determination of
Discovery Dispute No. 2, Dkt. No. 90. In the March 23 order,
the magistrate judge denied Lead Plaintiff's
“request for an order permitting it to review and use
documents provided by a former employee of defendant subject
to a Protective Order and defendant's privilege
review” and granted “defendant's request for
a Court Order requiring plaintiff to return the documents
provided by a former employee of Bof I and to destroy any
copies in its possession.” Dkt. No. 97 (the
“March 23 order” or “the order”).
Lead Plaintiff filed objections to the magistrate judge's
order on April 6, 2017. Dkt. No. 100. The objections have
been fully briefed. Defendants filed an opposition on April
17, 2017. Dkt. No. 105. Lead Plaintiff filed its reply on
April 28, 2017. Dkt. No. 108.
Upon consideration of the moving papers and the applicable
law, and for the reasons set forth below, the Court DENIES
Lead Plaintiff's Objections to Magistrate Judge
Crawford's March 23, 2017 Order Regarding Joint Motion
for Determination of Discovery Dispute No. 2. Dkt. No. 100-1.
discovery dispute arises from Lead Plaintiff's informal
investigations into the facts bearing on its securities fraud
suit against Defendants.
of its pre-discovery informal investigations into its claims,
Lead Plaintiff has interviewed a number of Bof I's former
employees. One of these employees, upon being approached by
Lead Plaintiff's investigator, provided Lead Plaintiff
with 1, 189 pages of documents associated with her employment
at Bof I. Dkt. No. 97 at 2. Once received, a contract
attorney working for Lead Plaintiff reviewed the documents to
determine whether the documents contained privileged or
protected information. Id. at 3. The contract
attorney concluded that the documents did contain such
information. Id. As a result, Lead Plaintiff shipped
the documents to outside legal ethics counsel and screened
the contract attorney from any future participation in the
litigation against Bof I. Id. A copy of the
documents have remained with outside legal ethics counsel
pending the resolution of this dispute. Id.
October 20, 2016, Lead Plaintiff's outside legal ethics
counsel contacted Defendants about the documents. Outside
counsel requested that Defendants perform a privilege review
of the documents and complete a privilege log of any
documents that should be withheld or redacted. Id.
After reviewing the documents, Defendants objected, on
October 28, 2016, to the release of any of the documents and
sought their immediate return. Id. According to
Defendants, the documents contain “highly confidential,
non-public banking documents” that include customer
loan files; sensitive financial information about Bof I's
customers, such as federal tax forms, social security
numbers, account numbers, financial information and balances;
Bof I's code of conduct; various internal lending
guidelines marked “Confidential - Internal Use
Only”; and internal emails sent and received at Bof
Dkt. No. 90 at 13. On November 4, 2016, Lead Plaintiff
informed Defendants that it would not destroy or return the
documents until the dispute was settled. Id.
December 5 and 8, 2016, the parties conferred regarding the
documents. Id. During the meetings, the parties
discussed having the documents remain in the sole custody of
outside legal counsel until the Fed. R. Civ. P 16
(“Rule 16”) conference took place. Id.
Ultimately, however, the parties were unable to reach an
accord and the Joint Motion for Determination of Discovery
Dispute No. 2 soon followed. Dkt. No. 90 (filed January 18,
March 23, 2017, Magistrate Judge Karen Crawford denied Lead
Plaintiff permission to review the documents subject to a
protective order. Dkt. No. 97. The magistrate judge concluded
(1) that the court did not have authority under Rule 26(c) to
issue the requested protective order because formal discovery
had yet to begin and (2) that Lead Plaintiff's position
was not persuasive under the legal authority cited, most
notably the district court opinion in Brado v. Vocera
Comms., Inc., 14 F.Supp.3d 1316 (N.D. Cal.
2014). Accordingly and in light of the fact that
formal discovery had not yet begun, the magistrate judge
ordered that Lead Plaintiff return the documents to
Defendants and “destroy any copies in its
possession.” Dkt. No. 97 at 10.
Federal Rule of Civil Procedure 72(a), aggrieved parties may
file objections to the rulings of a magistrate judge in
non-dispositive matters within fourteen days. Fed.R.Civ.P.
72(a). In reviewing a magistrate judge's order, the
district judge “must consider timely objections and
modify or set aside any part of the order that is clearly
erroneous or is contrary to law.” Fed.R.Civ.P. 72(a);
28 U.S.C. § 636(b)(1)(A); see also U.S. v.
Raddatz, 447 U.S. 667, 673 (1980); Osband v.
Woodford, 290 F.3d 1036, 1041 (9th Cir. 2002).
the “clearly erroneous standard, ” a court should
overturn a magistrate judge's ruling when it is
“left with the definite and firm conviction that a
mistake has been committed.” See Concrete Pipe
& Prods. of Cal., Inc. v. Constrs. Laborers Pension
Trust, 508 U.S. 602, 622 (1993). A magistrate
judge's legal conclusions as to non-dispositive matters
are reviewable for clear error. Grimes v. City &
Cnty. of San Francisco, 951 F.2d 236, 240-41 (9th Cir.
1991) (citing Maisonville v. F2 America, Inc., 902
F.2d 746, 747-48 (9th Cir. 1990)). “An order is
contrary to law when it fails to apply or misapplies relevant
statutes, case law, or rules of procedure.” DeFazio
v. Wallis, 459 F.Supp.2d 159, 163 (E.D.N.Y. 2006)
(internal citations omitted).
decisions issued by magistrate judges under 28 U.S.C. §
636(b)(1)(A) are entitled to “great deference by the
district court.” U.S. v. Abonce-Barrera, 257
F.3d 959, 969 (9th Cir. 2002). As such and in making its
determination, the “reviewing court may not simply
substitute its judgment for that of the deciding
court.” Grimes, 951 F.2d at 240-41.
Plaintiff argues that the Magistrate Judge's March 23,
2017 order should be reversed because it is “contrary
to law” and suffers from a number of legal errors. Dkt.
Plaintiff argues that the first legal error arises from the
order's conclusion that the court lacked authority to
enter a pre-discovery protective order. Citing to this
Court's opinion in In re Bof I Holding, Inc. Sec.
Litig., 318 F.R.D. 129, 135-36 (S.D. Cal. 2016), Lead
Plaintiff argues that the magistrate judge erred by failing