Eletson Holdings Inc. v. Levona Holdings Ltd.

Background

Levona Holdings Ltd. moved to compel intervenors Apargo Limited, Desimusco Trading Limited, and Fentalon Limited to produce documents responsive to subpoenas served on October 8, 2024. The intervenors opposed the motion. The subpoenas sought documents relevant to four withheld documents, alleged fraud in an arbitration, and Levona’s argument that extraordinary circumstances justified extending the time to challenge the arbitral award.

The intervenors argued that the requests were procedurally defective, overly broad, irrelevant, and unduly burdensome. They also argued that the requests should be limited to documents narrowly related to the four withheld documents and equitable tolling, and that they did not possess, control, or have custody of documents belonging to other entities, including Eletson Gas.

Court’s Analysis

The court held that any procedural objection related to service was mooted by the intervenors’ subsequent intervention in the case. By moving to intervene and agreeing at oral argument to participate fully in party discovery, the intervenors consented to the court’s jurisdiction and waived procedural objections to the earlier service. The court therefore treated the requests, initially served as nonparty subpoenas under Federal Rule of Civil Procedure 45, as party discovery requests under Rule 26.

The court rejected the objections based on overbreadth and irrelevance. Relying on its earlier decisions, the court stated that Levona had presented substantial evidence that fraud had occurred, including alleged withholding of critical documents and allegedly false testimony. The court concluded that the requests were appropriately limited to subjects such as when relevant people learned about the withheld documents, why the documents were not produced, whether the documents conflicted with testimony or arguments in the arbitration, the alleged false testimony, and efforts to prevent Levona from discovering the alleged fraud. The court said that the fact that some information related to issues decided by the arbitrator did not make the requests improper because whether the arbitral decision was obtained through fraud was one of the issues before the court.

The court also rejected the intervenors’ undue-burden objections because they offered no evidence establishing the factual basis for their claimed burden. Regarding documents held by third parties, the court explained that Rule 34 requires a party to produce documents within its possession, custody, or control. Control can include the legal right or practical ability to obtain documents, even when the documents are physically held by a nonparty. The court did not decide whether the intervenors’ eventual production would be deficient if it omitted documents allegedly belonging to third parties. It noted that Levona would have the burden of showing that any documents at issue were actually within the intervenors’ control.

Disposition

Judge Liman granted Levona’s motion to compel. The intervenors were directed to produce the documents requested in the subpoenas by May 20, 2025, and by that date to provide an itemized privilege log identifying withheld documents and the information required by Local Civil Rule 26.2(a)(2), including the reason for withholding each document. The court stated that Levona could move for sanctions under Rule 37 if the intervenors’ compliance was deficient. The Clerk of Court was directed to close the motion docket entry.