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Beautyko LLC v. Amazon Fulfillment Services, Inc.

United States District Court, W.D. Washington, Seattle

April 16, 2018

BEAUTYKO LLC; LINOI LLC; SHOP FLASH USA INC.; BEAUTYKO USA INC.; AND BENNOTI USA INC., Plaintiffs,
v.
AMAZON FULFILLMENT SERVICES, INC., Defendant.

          ORDER GRANTING IN PART MOTION FOR SUPPLEMENTAL PROCEEDINGS, GRANTING IN PART MOTION FOR PROTECTIVE ORDER, AND DENYING MOTION TO SEAL

          RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on Amazon Fulfillment Services, Inc. (“Amazon”)'s Motion for Supplemental Proceedings (Dkt. #139), Plaintiffs Beautyko LLC, Linoi LLC, Shop Flash USA Inc., Beautyko USA Inc., and Bennoti USA Inc. (collectively referred to as “Beautyko”)'s Motion for Protective Order (Dkt. #142), and Amazon's related Motion to Seal (Dkt #147). Amazon seeks an order requiring Beautyko to appear for supplemental proceedings and to testify under oath concerning assets and property that may be used to satisfy the outstanding judgment in this case. Beautyko opposes this request on various grounds. For the following reasons, the Court GRANTS IN PART Amazon's Motion for Supplemental Proceedings, GRANTS IN PART Beautyko's Motion for Protective Order, and DENIES Amazon's Motion to Seal.

         I. BACKGROUND

         On November 22, 2017, judgment in the amount of $3, 611, 999.80 was rendered in favor of Defendant Amazon and against Plaintiffs. Dkt. #136. On December 22, 2017, costs in the amount of $4, 950.14 were taxed against Beautyko (Dkt. #138). The judgment against Beautyko thus totals $3, 616, 949.94, not including interest. Beautyko has not appealed this judgment and the judgment remains unsatisfied. See Dkt. #140 (Declaration of Vanessa Power) at ¶¶ 3-4. Amazon believes, based on discovery in this case and discussions with Beautyko's counsel, that Beautyko owns property or has assets that may be used to satisfy the judgment. Id. at ¶ 5.

         II. DISCUSSION

         A. Motion for Supplemental Proceedings

         Federal Rule of Civil Procedure 69(a)(2) provides: “[i]n the aid of the judgment . . . the judgment creditor . . . may obtain discovery from any person-including the judgment debtor…” The procedure “in proceedings supplementary to and in aid of judgment . . . must accord with the procedure of the state where the court is located.” Fed.R.Civ.P. 69(a)(1). Under Washington State's supplemental proceedings statute, a judgment creditor may apply for an order requiring the judgment debtor “to appear at a specified time and place” to answer concerning a judgment “[a]t any time within ten years after entry of a judgment.” RCW 6.32.010. Where the judgment is a corporation, the “corporation must attend by and answer under the oath of an officer thereof.” RCW 6.32.050.

         Under RCW 6.32.010, a court may order a judgment debtor not only “to appear in court for examination” but also “to produce certain described documents.” Arnold v. Nat'l Union of Marine Cooks & Stewards Ass'n, 42 Wn.2d 648, 649, 257 P.2d 629 (1953); Britannia Holdings Ltd. v. Greer, 127 Wn.App. 926, 929, 113 P.3d 1041 (2005) (referring to court orders in supplemental proceedings requiring judgment creditor to provide “information and documents” as well as a “full accounting”). The purpose of this procedure is to “make the judgment debtor answer concerning the extent and whereabouts of his or her property and, if possible, to enable the judgment creditor to locate nonexempt property belonging to the judgment debtor which may be applied on the debt.” Rainier Nat'l Bank v. McCracken, 26 Wn.App. 498, 511, 615 P.2d 469 (1980).

         Pursuant to the above laws, Amazon now requests that an examination be ordered of Avi Sivan as corporate representative of all of the Beautyko entities. Amazon lists 14 topics of investigation in its Motion. See Dkt. #139 at 3-4.

         In Response, Beautyko first argues that “the requested discovery is far overreaching and should be limited.” Dkt. #145 at 1. Specifically, Beautyko objects to two of topics of investigation:

4. Corporate income tax returns for the past five years for each Judgment Debtor and all income tax returns for any business in which Avi Sivan has had an interest in at any point in the past five years. If the filing of the most recent return is pending but the return has been prepared or the information is available, this information is requested as well.
5. Personal income tax returns for the past five years for Avi Sivan and Prem Ramchandani. If the filing of the most recent return is pending but the return has been prepared or the information is available, this information is requested as well.

Id. at 2 (citing Dkt. #139-1) (emphasis added by Beautyko). Beautyko objects to the Motion “to the extent that additional requests can be interpreted as requiring the Judgment Debtors to produce personal financial information of nondebtor people or entities.” Id. Beautyko points out that judgment was entered against the Beautyko entities, not against Avi Sivan or Prem Ramchandani. Beautyko requests that any examination take place in the Eastern District of New York. Beautyko equates Amazon's Motion to requesting the Court enter an order for a subpoena that an examination be conducted under Rule 30(b)(6). Id. at 5.

         On Reply, Amazon argues that certain facts make discovery into the personal financial information of Mr. Sivan and Mr. Ramchandani appropriate. These facts are:

(1) Mr. Sivan and Mr. Ramchandani are the only owners of the Beautyko Plaintiffs; (2) the Beautyko Plaintiffs shared the same addresses, warehouses, emails, tax identification numbers, and even bank accounts, thus commingling funds and other assets, not only between and among the Beautyko Plaintiffs, but between and among at least seven known non-judgment debtor businesses; (3) Mr. Sivan conducted business on behalf of Beautyko Plaintiffs as well as non-judgment debtor businesses - with Amazon if not others - using his personal email account; and (4) at least two of the Beautyko ...

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