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Neo Ivy Capital Management LLC v. Savvysherpa LLC

United States District Court, D. Minnesota

March 8, 2019

Neo Ivy Capital Management LLC, et al., Plaintiffs,
v.
Savvysherpa LLC, et al., Defendants.

          Michelle S. Grant, Dorsey & Whitney LLP, for Defendant

          Christopher C. Grecian, HKM, P.A., for Plaintiff

          REPORT AND RECOMMENDATION

          David T. Schultz, United States Magistrate Judge.

         INTRODUCTION

         This matter is before the Court on Plaintiffs' Petition and corresponding motion to compel compliance with third-party subpoenas issued in a AAA arbitration. Because this Court's resolution of the motion will also effectively determine the outcome of the underlying action (i.e., the Petition), this ruling is issued in the form of a Report and Recommendation.

         Plaintiff Neo Ivy Capital Management LLC (Neo Ivy) is a quantitative hedge fund that invests in a variety of industries, including the healthcare sector, through statistical trading strategies. Compl. ¶ 8, Docket No. 1. Non-party Yinglong Guo (Guo) is a former employee of Neo Ivy who worked as a research analyst there from March 7, 2016 to July 23, 2017. Id. ¶¶ 9, 12. After Guo left Neo Ivy and took a job with Savvysherpa, he sued Neo Ivy for payment of a bonus and other compensation. Grecian Aff. Ex. A, Docket No. 18. Neo Ivy counterclaimed alleging breach of Guo's non-compete agreement. Id. Ex. B.

         Savvysherpa was acquired by United Healthcare Services, a subsidiary of United Health Group (UHG) in December 2017. West Decl. ¶ 8, Docket No. 22. In August 2018, Neo Ivy issued two identical third-party document subpoenas-one directed to Savvysherpa and one directed to UHG. Compl. Exs. A & B, Docket No. 1-1. UHG and Savvysherpa timely objected to the subpoenas, prompting Neo Ivy to commence this action to enforce them. Id. ¶ 20, Docket No. 1. For the reasons described more fully below, the Court grants in part and denies in part the motion to compel compliance with the subpoenas.

         FINDINGS OF FACT

         I. The Underlying Arbitration

         In the underlying arbitration Guo alleges that Neo Ivy and Yao have breached Guo's employment agreement by failing to pay a bonus and other compensation when he left their employ. Grecian Aff. Ex. A, Docket No. 18-1. Neo Ivy and Yao have counterclaimed, alleging that Guo misappropriated Neo Ivy's trade secret source code and violated his non-compete agreement by accepting employment with Savvysherpa. Id. Ex. B. At the request of Neo Ivy and Yao, the arbitrator issued identical subpoenas to Savvysherpa and UHG on August 22, 2018, with a return date of September 20, 2018. Compl. Exs. A & B, Docket No. 1-1.[1] Savvysherpa and UHG timely objected to the subpoenas. Id. Ex. C. The parties did not meet and confer after the objection to the subpoenas. Rather, on November 21, 2018, Neo Ivy and Yao initiated this action to compel compliance with the subpoenas under Fed.R.Civ.P. 45. Docket No. 1.

         II. The Subpoenaed Parties

         Savvysherpa is a healthcare data science company whose business is to identify significant problems in the healthcare industry and attempt to solve them. West Decl. ¶ 4, Docket No. 22. It performs this business by conducting its own primary research, reviewing publicly available research, and accessing a database of claims information (presumably belonging to UHG or one of its many subsidiaries). Id. These efforts are ultimately designed to lead to improved delivery of healthcare. Id. Savvysherpa does not trade in outside publicly traded securities. Id.

         UHG is a diversified healthcare company. Grant Decl. Ex. A, 2018 10-K, Docket No. 25-1. It is a large organization comprised of over 1000 subsidiaries that, in 2018, generated over $226 Billion in annual operating revenues. West Decl. ¶ 9, Docket No. 22; Grant Decl. Ex. A, Docket No. 25-1. UHG is comprised of two distinct but strategically aligned business platforms: provision of healthcare benefits under the United HealthCare umbrella and health services under the Optum umbrella. Grant Decl. Ex. A, docket No. 25-1. A UHG companywide search for documents is, to say the least, a time-consuming and expensive undertaking.

         III. The Subpoenaed Documents

         The document subpoenas at issue broadly define each subpoenaed entity to include “any and all . . . present or past members, investors, managers, partners, joint venturers, attorneys, corporate parents, subsidiaries, divisions, accountants, agents, employees, advisors, representatives, professionals, consultants, assignees, affiliates, or other persons who may have acted, or purported to act, or are purporting to act, on behalf of [United Health Group or Savvysherpa].”

         The parties here made no attempt of which the Court has been made aware to narrow the scope of the subpoenas. Accordingly, the subpoenaed documents are:

         Request No. 1: All Documents and Communications relating to Savvysherpa's hiring of Guo, including but not limited to job descriptions, applications, interviews, and offers of employment.

         Request No. 2: All Documents and Communications relating to the transfer of Guo's H1-B visa from New Ivy to Savvysherpa, including but not limited to any forms I-797.

         Request No. 3: All Documents and Communications relating to UnitedHealth's hiring of Guo, including but not limited to job descriptions, applications, interviews, and offers of employment.

         Request No. 4: All Documents and Communications relating to work or services performed by Guo for Savvysherpa or UnitedHealth, including but not limited to any work product Guo created for Savvysherpa or UnitedHealth.

         Request No. 5: All Documents and Communications relating to any actual or planned investment activity by Savvysherpa (sic) or UnitedHealth between 2015 and the present, including but not limited to any ...


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