IN RE: TELEXFREE SECURITIES LITIGATION CIVIL ACTION NO. 4:14-02566-TSH United States District Court, D. Massachusetts Signed June 16, 2023 Hillman, Timothy S., United States District Judge ORDER AND MEMORANDUM ON PLAINTIFFS’ MOTION TO COMPEL (Docket No. 1584) *1 This multi-district litigation involves dozens of defendants who allegedly aided and abetted a fraudulent pyramid scheme run by TelexFree. Plaintiffs move to compel discovery from PNC Bank, N.A. (“PNC”), a non-party,[1] consistent with Fed. R. Civ. Proc. Rule 45. (Docket No. 1584). For the reasons below, this motion is denied. Background The relevant background can be found in this Court's order on the motion to dismiss. (Docket No. 1418, at 15-16). The only claims against PNC were dismissed by this Court because the plaintiffs failed to allege that PNC had any actual knowledge of TelexFree's fraudulent nature. The plaintiffs moved for reconsideration, primarily arguing that “red flags” were enough to constitute actual knowledge and that they were unfairly denied a chance for discovery. (Docket No. 1438). This Court summarily dismissed that motion. (Docket No. 1519).[2] The plaintiffs served PNC with a “Rule 45” subpoena requesting non-party discovery. After a meet-and-confer, the plaintiffs narrowed their request to two categories of information: (1) financial records concerning TelexFree accounts at PNC and (2) communications of eight custodians associated with those accounts that related to thirty search terms, mostly relating to TelexFree insiders. PNC complied with the first request but refused the second and plaintiffs filed this motion to compel. Standard of Review “A Rule 45 subpoena must fall within the scope of proper discovery under Fed. R. Civ. P. 26(b)(1). Thus, the information sought must be: (1) not privileged; (2) relevant to the claim or defense of any party; and (3) proportional to the needs of the case.” Smith v. Turbocombustor Tech., Inc., 338 F.R.D. 174, 176 (D. Mass. 2021) (citation omitted). The burden of establishing relevancy falls on the subpoenaing party, and the burden of establishing undue burden falls on the subpoenaed party. Viscito v. Nat'l Plan. Corp., No. 3:18-cv-30132-MGM, 2020 WL 4274721, at *2 (D. Mass. July 24, 2020). Analysis Plaintiffs argue that, in part, discovery against PNC is relevant because their case against PNC was cut short and the discovery might lead to evidence supporting claims against PNC. Plaintiffs could not defeat the motion to dismiss by arguing discovery would strengthen their claim, and they are no more entitled to it now that the claims against PNC have been dismissed. Parker v. Landry, 935 F.3d 9, 18 (1st Cir. 2019). More convincingly, plaintiffs argue that they are entitled to discovery that illuminates how the money from the TelexFree fraud was transferred from the accounts that were directly connected to TelexFree to associates. This Court finds that such information is relevant to the surviving claims. PNC seems to argue that the plaintiffs’ improper motivation negates their proper motivation for discovery. This Court finds that while the plaintiffs’ motivation may be relevant, as discussed below, stating an improper ground for discovery does not preclude discovery on valid grounds. *2 However, PNC has already agreed to provide the relevant documents: financial records regarding TelexFree accounts. The only discovery in dispute concerns emails of PNC employees that mention TelexFree and TelexFree-associated entities. That would be relevant if PNC was a defendant, but it is not. Plaintiffs argue the communications “will help provide context and offer explanation for the transactions that appear in the account statements that PNC has agreed to produce.” But any context concerning those transactions would come from the defendants who conducted them, not PNC employees. Plaintiffs have thus failed to demonstrate the relevance of these communications to any surviving claims and defenses. Although this Court finds that plaintiffs’ improper motivation does not undermine alternate, relevant grounds for discovery, it is also “not required to blind itself to the purpose for which a party seeks information.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 352 n. 17 (1978). The plaintiffs seek what is essentially party discovery on a non-party in a bid to revive claims that were not sufficiently pleaded. Because the plaintiffs have failed to show the information is relevant, discussion of the burden on PNC is unnecessary. Conclusion For the reasons above, the motion to compel is denied. SO ORDERED. Footnotes [1] Plaintiffs argue that PNC has not been subject to a final dismissal. While technically true, it is legally irrelevant; all the claims against PNC have been dismissed. The plaintiffs themselves have conceded the difference by serving PNC with a subpoena rather than attempting party discovery. [2] To the extent the plaintiffs require elucidation, red flags, on their own, are insufficient to create an inference of actual knowledge and parties are not entitled to discovery to oppose a motion to dismiss.