Case 1:19-cv-06555-MKB-VMS Document 39 Filed 08/04/21 Page 1 of 4 PageID #: 359
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`Vorys, Sater, Seymour and Pease LLP
`Legal Counsel
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`Alycia N. Broz
`Direct Dial (614) 464-5481
`Direct Fax (614) 719-4810
`Email anbroz@vorys.com
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`52 East Gay Street
`P.O. Box 1008
`Columbus, Ohio 43216-1008
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`614.464.6400 | www.vorys.com
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`Founded 1909
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`August 4, 2021
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`The Honorable Magistrate Judge Vera M. Scanlon
`U.S. District Court, Eastern District of New York
`225 Cadman Plaza East 1214 South
`Brooklyn, NY 11201
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`Re:
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`In re Payment Card Interchange Fee and Merchant Discount Litigation, 05-md-
`1720 (E.D.N.Y.) (MKB) (VMS): Motion to Compel Non-Party Production
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`Dear Magistrate Judge Scanlon:
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`The Grubhub Plaintiffs move to compel non-party Klarna, Inc. (“Klarna”) to
`produce documents in response to a subpoena. The Grubhub Plaintiffs have, in good faith,
`sought to resolve the parties’ disagreements, but without success. Accordingly, the Grubhub
`Plaintiffs seek the intervention of this Court.
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`Klarna offers installment payment products that allow users to make purchases
`and pay what is owed over time. (Broz Decl. ¶ 2.) Defendants have previously argued that the
`existence of such alternative payment products is evidence of Defendants’ lack of market power.
`(Id. ¶ 3.) Klarna also leverages Visa’s Honor All Cards rule, which is a focus of the Grubhub
`Plaintiffs’ case, by offering a “one-time” Visa card to allow users to shop at merchants that have
`chosen not to accept Klarna as a payment form. (Id. ¶ 4.) In addition, the fact that a purported
`“alternative” payment product provides users with a Visa card under certain circumstances
`suggests that Visa may have taken steps to suppress or restrain potential competition. (Id.)
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`The subpoena, which includes twelve document requests, was served on May 13,
`2021. (Broz Decl. ¶ 5, Ex. A.) On May 27, Klarna’s counsel made nine general objections,
`including relevance and burdensomeness, and said “Klarna will not produce any documents.”
`(Id. ¶ 6 & Ex. B.) On May 30, counsel for the Grubhub Plaintiffs asked for a meet and confer,
`which occurred on June 10, by telephone, without resolving the dispute. (Id. ¶¶ 7-8 & Ex. C.)
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`Over the next two months, the Grubhub Plaintiffs sought to address the relevance
`and burdensomeness objections. (Id. ¶¶ 9, 11, 13 & Exs. D, F, H.) On July 2, Klarna’s counsel
`stated “[w]e certainly agree that whether the market sees new entrants is relevant, and there is
`no dispute that Klarna is such a new entrant,” and added that “the honor all cards rule is certainly
`relevant” and “Klarna understands that its place in the payments market might mean that it has
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`some relevant documents.” (Id. ¶ 10 & Ex. E.) The letter then asserted that the subpoena was
`“broad” and asked for “much greater particularity.” (Id.) With relevance acknowledged, the
`Grubhub Plaintiffs asked Klarna to identify “what documents and information it is willing to
`produce” and to describe “the burden any broader production would impose in sufficient detail
`for us to evaluate that burden and discuss how it might be limited.” (Id. ¶ 11 & Ex. F.) Klarna
`then denied it conceded that “some of the documents sought in the subpoena are relevant” and
`said that asking it to support its claim of burdensomeness—two months after the subpoena was
`served—was “simply premature.” (Id. ¶ 12 & Ex. G.) On July 19, the Grubhub Plaintiffs
`explained which documents would be responsive to each request, but Klarna responded that,
`despite the explanations, it “does not understand the importance of any of the documents sought
`by the Requests.” (Id. ¶¶ 13-14 & Exs. H & I.) Klarna still has not produced any documents.
`(Id. ¶ 15.)
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`1.
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`Klarna has waived any objections not specifically raised in its May 27 letter
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`A party commanded to produce documents may serve written objections to the
`requests no later than 14 days after the subpoena is served. See Fed. R. Civ. P. 45(d)(2)(B). The
`subpoenaed entity must make specific objections to particular subpoena specifications. See
`Rinaldi v. Nice, No. 19-CV-424, 2020 U.S. Dist. LEXIS 133034, at *14 (S.D.N.Y. July 27,
`2020). This specificity requirement is important, because it prevents the meet-and-confer
`process from becoming an endless game of whack-a-mole.
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`Klarna’s May 27 letter—its only communication within the 14-day period—made
`only general objections that, for the most part, did not identify specific requests. (Broz Decl. Ex.
`B.) Items 4-9 of Klarna’s rote objections do not mention any specific request, and in fact could
`not apply to each request. For instance, the attorney-client privilege and work product objection
`could not apply to Requests 1, 2, and 3, for agreements with Visa, Mastercard, and issuing banks.
`The May 27 letter also does not mention—much less object to—Request 12, which seeks
`documents Klarna produced to the Department of Justice during its investigation of the proposed
`merger of Visa and Plaid. Klarna thus has waived any objection to Request 12 and is limited to
`only its relevance and burdensomeness objections set forth in its first, second, and third general
`objections. See Rinaldi, 2020 U.S. Dist. LEXIS 133034, at *14 (rejecting “blanket general
`objections” to subpoena on bases of relevancy and overbreadth; subpoenaed party “waived them
`because it did not make a specific objection(s) to any particular request(s)”).
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`2.
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`Klarna’s relevance objections are without merit
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`Klarna makes two cursory relevance objections that apply only to Requests 1, 2,
`3, 4, 7, 10, and 11. (Broz Decl. Ex. B at 1-2.) First, it states that “Requests 2, 4, 7, 10 and 11
`seek documents that have nothing to do with any of the parties to the case.” (Id.) Second, it
`states that Requests 1 and 3 “fare no better” because Klarna “fails to see how any agreement
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`Klarna might have with a network has anything to do with the networks’ allegedly
`anticompetitive behavior vis-à-vis the Grubhub Plaintiffs.” (Id.)
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`Discovery is not limited to documents involving named parties. See Fed. R. Civ.
`P. 26(b). Klarna’s objections also make no sense in the context of this case. Requests 2 and 4
`seek agreements between Klarna and issuing banks, who are members of Defendants’ networks
`and participants in the anticompetitive restraints challenged by the Grubhub Plaintiffs. Klarna’s
`agreements with such banks are relevant to discovery of admissible evidence about the impact of
`the challenged rules. Requests 1, 3, 7, 10, and 11 seek information about Klarna’s agreements
`with Defendants, its interaction with merchants, and its operations; such information is relevant
`to assessing whether Defendants have acted to avoid competition from Klarna, whether Klarna
`should be included in the relevant market, whether Klarna has encountered barriers to entry, and
`other issues that are relevant to the claims and defenses in this case. See Fed. R. Civ. P. 26(b)(1).
`These are precisely the kinds of issues and topics that caused Klarna’s counsel, in her July 2
`letter, to concede that the Klarna possesses “some relevant documents.” (Broz Decl. Ex. E.)
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`3.
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`Klarna’s burdensomeness and overbreadth objections are without merit
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`Klarna’s first and second general objections—which apply only to Requests 1, 3,
`5, 6, 7, 8, and 9—allege overbreadth and burdensomeness. (Broz Dec. Ex. B.) Klarna objects to
`producing agreements with Visa and Mastercard (Requests 1, 3, 8, and 9) solely on the ground
`that such documents are in the possession of the networks. (Id.) Parties issuing subpoenas are
`not limited to obtaining documents from only one source. See Palm Bay Int’l, Inc. v. Marchesi
`Di Barolo S.P.A., No. CV 09-601, 2009 U.S. Dist. LEXIS 104020, at *28 (E.D.N.Y. Nov. 9,
`2009) (duplicativeness objection “does not obviate the obligation to produce” documents
`because parties have “the right to obtain the documents from more than one source”). Klarna
`offers no evidence whatsoever that producing the documents these requests seek would impose
`an unreasonable burden—or indeed, any burden at all—and ignores that the requests also seek
`internal Klarna documents. The same response applies to the objection that Requests 5 and 6
`seek communications between Klarna and the Grubhub Plaintiffs.
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`Klarna also contends that Request 7 is burdensome because it could implicate
`communications with “millions of Merchants that do not have an agreement with Klarna.” (Broz
`Decl. Ex. B.) Klarna offers no evidence that it has communicated with “millions” of merchants,
`so its objection is wholly hypothetical. In any event, the Grubhub Plaintiffs responded to this
`claim by asking that Klarna simply “produce its typical or template response to a merchant who
`has written Klarna and declined to enter into an acceptance agreement” and “any employee
`training on how to respond to merchants that decline to enter into an agreement with Klarna.”
`(Id. Ex. H.) There is no reason to suspect that such limited requests are burdensome.
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`In short, the objected-to requests are relevant, and there is no basis for claims of
`unfair burden or overbreadth. This Court should order Klarna to produce responsive documents.
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`Counsel of Record (via ECF)
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`cc:
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`Respectfully submitted,
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`Alycia N. Broz
`/s/
`Alycia N. Broz
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`8/04/2021 39687469
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