In United States v. Petters, No. 08-5348, 2021 WL 71681 (D. Minn. Jan. 8, 2021), the District Court denied a request by nonparties to discover documents and other materials that had been obtained by the receiver and bankruptcy trustees in separate litigation.
The Government filed a motion to dissolve the preliminary injunction and to terminate the receivership of Thomas J. Petters, the mastermind behind one of the largest and most complex Ponzi schemes in U.S. history. Despite not objecting to the motion, nonparties to the lawsuit requested that the order terminating the Petters receivership include, among other things, a formal procedure for accessing documents in the receiver’s possession. The nonparties also sought discovery-related materials from litigation brought by the receiver and trustees of Petters-related bankruptcy estates against a nonparty bank. The nonparties sought this discovery to aid them in their unrelated lawsuit pending against the bank. In their reply, the Government argued that procedures for retaining and accessing documents in the receiver’s possession could be addressed during the 45-day period following the receivership termination and that access to those documents was governed by procedures set forth in the Freedom of Information Act, 5 U.S.C. § 552. The receiver argued during the hearing that the non-parties sought documents subject to confidentiality agreements and that they should discover them directly from the bank.
The District Court ultimately agreed with the Government and the receiver, and granted the motion given the lack of objections filed. The District Court denied the nonparties’ requests, reasoning that the receivership could not be used as a vehicle for discovery in the nonparties’ unrelated lawsuit. The District Court further held that any documents governed by a confidentiality agreement would remain confidential.
Co-Editors in Chief
Alexander J. Beeby, Larkin Hoffman Daly & Lindgren Ltd.
Kesha Tanabe, Tanabe Law