A recent appellate decision has affirmed a lower court’s order blocking an attempt to compel a nonparty to provide documents in an ongoing dispute involving alleged unauthorized stock transfers. The case centers on claims of improper share sales and raises questions about the limits of discovery from individuals not directly involved in the main litigation.
Toca Madera Scottsdale, LLC filed an appeal in the Superior Court of New Jersey, Appellate Division, challenging a January 31, 2025 order that quashed its subpoena directed at Devin O’Brien, a New Jersey resident who is not a party to the underlying Arizona lawsuit against Madera Group Investments, LLC.
According to court filings, Toca Madera initiated legal action against Madera Group Investments (MGI) and its Chief Financial Officer Scott Jackson in Arizona after learning of alleged unauthorized transfers of company shares. Under the written operating agreement between Toca Madera and MGI, any transfer of shares required approval from Toca Madera. In 2023, Phil Vella claimed to have acquired shares in Toca Madera through purchases from MGI. Toca Madera asserted it did not authorize these sales and accused MGI of transferring shares without permission and concealing these actions.
As part of its Arizona lawsuit, Toca Madera sought judicial declarations voiding any third-party share sales and brought claims under Arizona law for disassociation, breach of contract, and breach of the implied covenant of good faith and fair dealing. During discovery, Toca Madera served an October 21, 2024 subpoena on O’Brien seeking documents and communications related to investment activity among O’Brien, Jackson, and Vella. O’Brien had previously worked with Jackson across various businesses but was not directly involved with the business at issue in the Arizona litigation.
O’Brien objected to certain requests as overly broad or irrelevant but produced some documents he deemed responsive. He withheld 125 documents as irrelevant and argued that compliance would be unduly burdensome given his limited connection to the matter. Nevertheless, O’Brien agreed to be deposed pursuant to the subpoena.
Unable to resolve disagreements over document production, Toca Madera filed a motion in New Jersey Superior Court under Rule 4:11-4(b) seeking to compel O’Brien’s compliance. The company argued that messages between O’Brien and Jackson demonstrated contemporaneous knowledge of disputed investment activities. O’Brien opposed this motion and cross-moved to quash the subpoena entirely.
The motion judge heard arguments on January 16 and 28, 2025. While suggesting an in camera review of withheld documents could resolve relevance concerns, counsel for Toca Madera instead proposed appointing a special discovery adjudicator at their own expense—a suggestion that was neither formally moved nor consented to by all parties.
After considering written submissions and oral arguments—and finding no resolution between parties—the judge granted O’Brien’s motion to quash on January 31, 2025. Citing precedent including Lipsky v. New Jersey Association of Health Plans Inc., the judge concluded that Toca Madera had “not demonstrated that compliance with the subpoena [was] not unduly burdensome nor that the documents were needed or unavailable through other means.” The judge noted that primary sources for discovery should be parties themselves rather than nonparties unless there is clear necessity.
On appeal, Toca Madera argued that the trial judge misapplied standards governing nonparty discovery set forth in Berrie v. Berrie and other cases. However, the appellate panel rejected these arguments. The opinion explained that courts must weigh necessity against burden when deciding whether nonparties must comply with subpoenas: “Need implies essentiality” rather than mere convenience or desirability.
The appellate division found no evidence suggesting O’Brien possessed unique records relevant to claims about unauthorized share transfers; instead it characterized much of Toca Madera’s position as speculative. It also emphasized privacy concerns raised by demands for information from personal cellphones and email accounts—calling such requests “extreme”—and found those interests outweighed any asserted need for further disclosure.
Additionally, because information sought could likely be obtained from defendants already party to the Arizona litigation (even if cooperation had been lacking), there was insufficient justification for imposing additional burdens on a nonparty like O’Brien.
The panel affirmed denial of Toca Madera’s motion to compel compliance with its subpoena as well as granting O’Brien’s cross-motion to quash it entirely.
Attorneys listed on briefs include Kevin G. Walsh and Samantha L. Varsalona for appellant (Greenberg Traurig LLP), Levi Downing and Robert Ward for respondent Devin O’Brien (Kelley Drye & Warren LLP). The case is identified as Docket No. A-1961-24.
