Judge Michael Ciaffa
Nexray Medical sought a protective order insurer Allstate served on non-party bank to discover financial documents relevant to its Mallela defense. The subpoena served on the bank sought financial records and documents Allstate claimed were relevant and material, but which Nexray argued was overly broad. The court rejected Nexray's argument the subpoena was facially defective. Yet, it ruled such decision did not eliminate the need for careful judicial oversight of the discovery process. It also noted courts have emphasized that the scope of discovery into Mallela issues was not unlimited. Further, the court noted the Appellate Division's decisions consistently adhered to the principle that more than mere relevance and materiality was necessary to warrant disclosure from a non-party. The court concluded Allstate was improperly using the subpoena to obtain leverage in its defense of this matter, noting if Allstate believed Nexray was fraudulently incorporated, it could commence a declaratory judgment against it. However, it ruled what Allstate could not do was "seek a financial proctology exam" of Nexray's bank account based on mere suspicion it may uncover a possible Mallela violation. Thus, the court granted a protective order in Nexray's favor limiting the subpoena.
