CENTENNIAL BANK, Plaintiff, v. SERVISFIRST BANK INC., GREGORY W. BRYANT, GWYNN DAVEY, PATRICK MURRIN and JONATHAN ZUNZ, Defendants Case No. 8:16-cv-88-T-36JSS United States District Court, M.D. Florida Filed December 21, 2018 Counsel Andrew James Ghekas, John A. Anthony, Lydia Marie Gazda, Stephenie Biernacki Anthony, Anthony & Partners, LLC, Dominic Anthony Isgro, Dale R. Sisco, P.A. D/B/A Sisco-Law, Rachel May Zysk, Eduardo A. Suarez, The Suarez Law Firm, P.A., Tampa, FL, for Plaintiff. John Morgan Brunson, Law Office of John Morgan Brunson, St. Petersburg, FL, Michael Sansbury, Pro Hac Vice, Morgan B. Franz, William Thomas Paulk, Spotswood Sansom & Sansbury, LLC, Birmingham, AL, Sean Estes, Hoyer Law Group, LLC, Ailen Cruz, Wiand Guerra King, PL, Tampa, FL, for Defendant ServisFirst Bank Inc. George L. Guerra, Jared J. Perez, Peter B. King, Chemere Ellis, Guerra King P.A., Robert A. Stines, Freeborn & Peters LLP, Lawrence Joseph Dougherty, Wiand Guerra King, Tampa, FL, Burton Webb Wiand, Law Office of Burton W. Wiand PA, Clearwater, FL, for Defendant Gregory W. Bryant. Gregg Moran, Dade City, FL, for Defendant Jonathan Zunz. Sneed, Julie S., United States Magistrate Judge ORDER *1 THIS MATTER is before the Court on Centennial Bank's Amended Motion for Protective Order Prohibiting Inquiry into the Existence and/or Substance of Any Federal Grand Jury Materials and Suspicious Activity Reports, and Limiting Bryant's Third Production Request (“Motion”) (Dkt. 277) and Gregory Bryant's response in opposition (Dkt. 340). On December 18, 2018, the Court held a hearing on the Motion. For the reasons discussed at the hearing and set forth below, Motion is granted in part and denied in part. BACKGROUND Defendants Gregory Bryant, Patrick Murrin, Gwynn Davey and Jonathan Zunz were all officers at Bay Cities Bank. (Dkt. 199 ¶ 10.) In 2015, Plaintiff, Centennial Bank acquired Bay Cities Bank. (Dkt. 199 ¶ 10.) However, shortly after the acquisition, the individual defendants were hired by the corporate defendant, ServisFirst Bank. (Dkt. 199 ¶ 10.) In the forty-eight-count Second Amended Complaint, Centennial Bank alleged numerous “statutory, contractual, and common law causes of action tied to a pattern of wrongful conduct by the [d]efendants to deprive Centennial of the benefit of the bargain in acquiring Bay Cities and hiring” the individual defendants. (Dkt. 199 ¶ 10.) In ruling on Defendants’ motions to dismiss, the Court dismissed six counts but otherwise denied the motions. (Dkt. 251.) Subsequently, Defendants all answered and raised numerous affirmative defenses. (Dkts. 261, 263, 264, 265, 266.) Additionally, Gregory Bryant raised a counterclaim for defamation against Centennial Bank and John W. Allison, the Chairman and CEO of Centennial. (Dkt. 263 at 61–65.) On October 6, 2017, Mr. Bryant sent Centennial Bank his Third Set of Requests for Production (“3rd RFP”), which requests, among other things, communications with law enforcement agencies relating to an ongoing criminal investigation. (Dkt. 277-1.) Subsequently, the United States of America moved to intervene (Dkts. 282, 292), which was granted (Dkt. 298), and moved to stay the case pending the criminal investigation (Dkt. 303.) In doing so, the United States specifically referenced Mr. Bryant's 3rd RFP. (Dkt. 303 at 4–5.) After a hearing on November 7, 2017, the Court granted the United States of America's motion and stayed the proceedings. (Dkt. 316.) Eventually, the United States agreed to the reopening of the case with conditions to protect the ongoing investigation (Dkt. 335 at 3–4), and the case was reopened on October 23, 2018. (Dkt. 354.) APPLICABLE STANDARDS A party is entitled to “discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). “Information within this scope of discovery need not be admissible in evidence to be discoverable.” Id. A party may move for an order compelling disclosure or discovery. Fed. R. Civ. P. 37. The Court has broad discretion in managing pretrial discovery matters and in deciding to compel. Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d 1292, 1306 (11th Cir. 2011); Perez v. Miami-Dade Cnty., 297 F.3d 1255, 1263 (11th Cir. 2002). Pursuant to Rule 26(c), however, the Court may issue a protective order for good cause. Fed. R. Civ. P. 26(c)(1). The party seeking a protective order has the burden to demonstrate good cause. Auto-Owners Ins. Co. v. Se. Floating Docks, Inc., 231 F.R.D. 426, 429–30 (M.D. Fla. 2005). Although good cause is “difficult to define in absolute terms, it generally signifies a sound basis or legitimate need to take judicial action.” In re Alexander Grant & Co. Litig., 820 F.2d 352, 356 (11th Cir. 1987). ANALYSIS *2 At issue in the Motion is requests sixteen through twenty in the 3rd RFP. (Dkt. 277-1 at 9–10.) These requests generally seek information regarding Mr. Bryant, Kirk D. Eicholtz, and the Catapult Entities.[1] (Dkt. 277-1 at 9.) Specifically, the requests seek documents given to and communications with law enforcement and regulatory agencies, including the Federal Housing Finance Agency and the Department of Justice. (Dkt. 277-1 at 9–10.) Centennial Bank argues that these requests threaten to unlawfully reveal the existence of a Suspicious Activity Report (“SAR”) or reveal confidential grand jury materials. (Dkt. 277 at 4–5.) A. SAR Privilege “Pursuant to the Annunzio-Wylie Anti-Money Laundering Act, 31 U.S.C. § 5318, financial institutions are required to file SARs to notify the government of possible criminal activities.” Wiand v. Wells Fargo Bank, N.A., 981 F. Supp. 2d 1214, 1216 (M.D. Fla. 2013) (footnote omitted). As a result, “SARs are confidential and subject to an ‘unqualified discovery and evidentiary privilege that courts have held cannot be waived.’ ” Id. (quoting Whitney Nat'l Bank v. Karam, 306 F. Supp. 2d 678, 682 (S.D. Tex. 2004)). Specifically, the regulations provide: “No national bank, and no director, officer, employee, or agent of a national bank, shall disclose a SAR or any information that would reveal the existence of a SAR.” 12 C.F.R. § 21.11(k)(1)(i) (emphasis added). However, the SAR privilege does not prohibit disclosure of the “underlying facts, transactions, and documents upon which a SAR is based.” 12 C.F.R. § 21.11(k)(1)(ii)(A)(2). Further, “those underlying documents do not become confidential by reason of being attached or described in a SAR.” Cotton v. PrivateBank & Tr. Co., 235 F. Supp. 2d 809, 814 (N.D. Ill. 2002). At the hearing, Centennial Bank indicated it was prepared to disclose all underlying documents relating to Mr. Bryant, Mr. Eicholtz, and the Catapult Entities. Yet, the scope of what are “underlying documents” remains disputed. To that end: There are two types of supporting documents. The first category represents the factual documents which give rise to suspicious conduct. These are to be produced in the ordinary course of discovery because they are business records made in the ordinary course of business. The second category is documents representing drafts of SARs or other work product or privileged communications that relate to the SAR itself. These are not to be produced because they would disclose whether a SAR has been prepared or filed. Cotton, 235 F. Supp. 2d at 815. Documents from the second category, which include “a draft SAR or internal memorandum prepared as part of a financial institution's process for complying with federal reporting requirements” are included within the SAR privilege “because they may reveal the contents of a SAR and disclose whether a SAR has been prepared or filed.” Lesti v. Wells Fargo Bank NA, 297 F.R.D. 665, 668 (M.D. Fla. 2014) (quoting Regions Bank v. Allen, 33 So. 2d 72, 76–77 (Fla. 5th DCA 2010) (internal quotation marks omitted)). Here, there is a third category at issue: documents related to communications with law enforcement or federal regulatory agencies. As to this category, the Court finds that such communications fall within the SAR privilege as they may reveal the contents or existence of a SAR. Additionally, the Court finds that such communications are not discoverable as they are not “relevant to any party's claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). As such, the Motion is granted as to request nineteen, which requests communications with the Federal Housing Finance Agency. *3 Similarly, the Motion is granted in part as to request sixteen to the extent that it seeks “documents representing drafts of SARs or other work product or privileged communications that relate to the SAR itself or internal memorandum prepared as part of [Centennial Bank's] process for complying with federal reporting requirements.” See Lesti, 297 F.R.D. at 668. The Motion is denied in part as to request sixteen to the extent that it seeks factual documents made in the ordinary course of business that relate to Mr. Bryant or the Catapult Entities. B. Grand Jury Secrecy Centennial Bank also argues that Mr. Bryant's requests threaten the secrecy of grand jury proceedings. (Dkt. 277 at 10–12.) Even in civil proceedings, the Supreme Court has recognized a “long-established policy that maintains the secrecy of the grand jury proceedings in the federal courts.” United States v. Protcer & Gamble Co., 356 U.S. 677, 681 (1958). Parties may not use the liberal civil discovery rules to receive otherwise undiscoverable criminal information. See In re Eisenberg, 654 F.2d 1107, 1113 (5th Cir. 1981) (affirming district court's finding that civil discovery request “was a disguised attempt at criminal discovery”). To overcome grand jury secrecy “whether relying on the court's inherent authority or Rule 6(e)(3)(C)(i)(I),” Mr. Bryant has “the burden to show: (1) that the material [he] seeks is needed to avoid a possible injustice in another proceeding; (2) that the need for disclosure is greater than the need for continued secrecy; and (3) that [the] request is structured to cover only material so needed.” United States v. Aisenberg, 358 F.3d 1327, 1350 (11th Cir. 2004). The Court finds that Mr. Bryant has not made a sufficient showing to order disclosure of grand jury materials. Further, Mr. Bryant has not established how most of his requests are “relevant to any party's claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). For example, it is unclear how request seventeen, which requests government subpoenas, or request twenty, which requests communications with law enforcement, are relevant to any of the causes of action in this case. Mr. Bryant suggests that his requests may be relevant to his counterclaim for defamation (Dkt. 340 at 15) but there are no allegations in the counterclaim regarding false reports to law enforcement. (Dkt. 263 at 61–64.) As such, the Motion is granted as to requests seventeen and twenty. Additionally, the Motion is granted in part as to request eighteen to the extent it seeks information disclosed to law enforcement. However, in accordance with the ruling on request sixteen, the Motion is denied in part to the extent request eighteen seeks factual documents in Centennial Bank's possession related to Mr. Bryant, Mr. Eicholtz, or the Catapult Entities. As discussed at the hearing, Centennial Bank shall produce the relevant discovery by January 4, 2019. C. Other Pending Motions At the December 18, 2018 hearing, the Court also heard argument on Gregory W. Bryant's Motion to Quash Centennial Bank's Subpoenas (Dkt. 288) and Centennial Bank's Motion for Partial Relief from ESI Protocol Order (Dkt 255). However, the parties requested more time to confer on these motions. As discussed at the hearing, the parties shall meet and confer and file a notice indicating whether they have resolved the motions by January 11, 2019. Additionally, the Court encourages the parties to confer regarding Defendant ServisFirst Bank's Motion to Quash Subpoenas (Dkt. 283) and Centennial Bank's Motion in Limine for an Adverse Inference due to Relevant Defendants’ Failure to Preserve Evidence (Dkt. 255). *4 Accordingly, it is ORDERED: 1. Centennial Bank's Amended Motion for Protective Order Prohibiting Inquiry into the Existence and/or Substance of Any Federal Grand Jury Materials and Suspicious Activity Reports, and Limiting Bryant's Third Production Request (Dkt. 277) is GRANTED IN PART and DENIED IN PART to the extent specified herein; 2. Centennial Bank shall produce the relevant discovery by January 4, 2019; DONE and ORDERED in Tampa, Florida, on December 21, 2018. Footnotes [1] The “Catapult Entities” are Catapult Solutions, LLC; Catapult ALF1, LLC; and Catapult ALF2, LLC. (Dkt. 277-1 at 5.)