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Motion filed by Pete and Tony Youngs to force Russ Whitney to reveal his net worth 1

Pete and Tony Youngs were associates of Russ Whitney. They were even members of his “Power Team” featured in the back of his “best-selling” book Millionaire Real Estate Mentor. I put “best-selling” in quotation marks because Whitnsey sold the books to himself in effect. See my article on the bogus way he created his “best-seller.” They sued Whitney, Whitney Information Network, Inc. and David Keller for violating their copyrights. In the course of the litigation, the Youngs apparently demanded documents showing Russ Whitney’s net worth. He apparently refused to provide them. This motion below is to get the court to force Whitney to turn over the info. I have said that Whitney’s claims of financial sucess are profoundly exaggerated. He is resisting giving me discovery information as well.

United States District Court, N.D. Georgia.
Pete YOUNGS, and Tony Youngs, Plaintiffs,
v.
WHITNEY EDUCATION GROUP, INC., Whitney Leadership Group, Inc., Whitney
Information Network, Inc., Russ Whitney, and David Keller, Defendants.
Civil Action File No. 1:03-CV-1697-TWT.
May 6, 2004.

Reply in Support of Defendants' Cross Motion to Stay Discovery Concerning
Defendants' Net Worth

NOW COME defendants WHITNEY EDUCATION GROUP, INC. ("WEG"), WHITNEY LEADERSHIP GROUP, INC. ("WLG"), WHITNEY INFORMATION NETWORK, INC. ("WIN"), RUSS WHITNEY (collectively, the "Whitney Defendants"), and DAVID KELLER (collectively, "Defendants"), and hereby file this Reply In Support Of Defendants' Cross Motion To Stay Discovery Concerning Defendants' Net Worth ("Cross Motion"). Defendants' Cross Motion, which was filed with Defendants' Response to Plaintiffs Motion To Compel (the "Motion"), requests a stay of any discovery of Defendants' net worth should this Court grant Plaintiffs' Motion. [FN1]

FN1. Defendants filed an opposition to Plaintiffs' motion to compel on the grounds that Plaintiffs have failed to establish a basis for the discovery they seek. In the event the Court is inclined to grant some net worth discovery, however, Defendants filed the Cross Motion to stay such discovery until the Court has an opportunity to rule on dispositive motions. While Defendants maintain that Plaintiffs' Motion should be denied, Defendants are entitled to a reply brief addressing only their Cross Motion to stay net worth discovery, and therefore do not directly address the Motion herein.
INTRODUCTION

Plaintiffs' mere demand for punitive damages does not justify the intrusive discovery into the personal assets and debts of Mr. Whitney and Mr. Keller. Under Georgia law, Plaintiffs must demonstrate an evidentiary basis for their punitive damages claim before discovery into Defendants' net worth may be authorized, and they have failed to do so. Apparently acknowledging that the two affidavits upon which they relied in their Motion do not provide a basis for punitive damages, Plaintiffs now improperly rely on several additional affidavits cited for the first time in their reply brief. Even with these new affidavits, Plaintiffs still fail to point to any facts providing the evidentiary basis required to justify highlyintrusive discovery into Defendants' personal financial information.

The only allegations upon which Plaintiffs rely in their reply brief-- i.e., "the request by Russ Whitney for information to be included in the book Millionaire Real Estate Mentor" and "the subsequent use of information Plaintiffs never authorized Russ Whitney to include in his publication" (Reply Brf. at 4-5) -- have nothing to do with Mr. Keller and do not state a fraud claim against Mr. Whitney. Further, a review of the specific portions of the self-serving affidavits on which Plaintiffs purport to rely makes clear that nothing Plaintiffs have cited supports the elements of a cause of action for which punitive damages could be available.

In sum, Plaintiffs are not entitled to Defendants' financial information at this time. Defendants' pending Motion For Judgment On The Pleadings, which seeks dismissal of all of Plaintiffs' claims, should be ruled on before Defendants are forced to unnecessarily divulge such personal financial information. Accordingly, should the Court grant Plaintiffs' Motion, Defendants respectfully request that the Court stay such discovery until the Court has made a determination as to the validity of Plaintiffs' punitive damages claim by ruling on the pending Motion For Judgment On The Pleadings or a subsequent summary judgment motion (should such a motion become necessary).
ARGUMENT AND CITATION OF AUTHORITIES

As the court in Holman v. Burgess warned:
[E]vidence of the defendant's financial condition "may" be discoverable by the plaintiff in cases where punitive damages are sought. However, the potential for abuse created by such a discovery right is obvious. Indeed, it is conceivable that an unscrupulous plaintiff might use the threat of such discovery to extort an unwarranted settlement from a defendant. Recognizing the potential for such abuse, this court has previously indicated that a trial court may refuse to enforce such a discovery request where it appears "more calculated to burden the [defendants] than ... to lead to admissible evidence."
199 Ga. App. 61, 63 (1991). The Court of Appeals' warning is particularly appropriate in this case, where Plaintiffs have asserted a host of groundless, conclusory allegations against Defendants and have served countless harassing discovery requests on Defendants, including the requests at issue in Plaintiffs' Motion. Plaintiffs should not be allowed to unreasonably and unnecessarily invade Defendants' privacy when they cannot demonstrate a need or an evidentiary basis for the discovery sought. Discovery into Defendants' personal finances should at least be stayed until a determination is made as to the validity of Plaintiffs' punitive damages claims.

I. PLAINTIFFS' RELIANCE ON ADDITIONAL "EVIDENCE" IN THEIR REPLY BRIEF IS IMPROPER.

Plaintiffs have failed to demonstrate the evidentiary basis required to warrant discovery of Defendants' personal financial information. As a threshold matter, Plaintiffs' attempt to rely on additional affidavits in their reply brief that they did not cite in their Motion is improper. See, e.g., Schwartz v. Upper Deck Co., 183 F.R.D. 672, 682 (S.D. Ca. 1999) ("It is well accepted that raising of new issues and submission of new facts in reply brief is improper."); Gold v. Wolpert, 876 F.2d 1327, 1331 n. 6 (7th Cir. 1989) ("We note that Gold raised a new argument, apparently unwittingly, as well as new factual matters for the first time in his reply brief. This he cannot do. It is well-settled that new arguments cannot be made for the first time in reply. This goes for new facts too.").
Moreover, the only "evidence" upon which Plaintiffs rely to support their punitive damages claim consists of Plaintiffs' own self-serving affidavits and allegations. See Ledee v. Devoe, 225 Ga. App. 620, 624 (1997) ("Mere allegations in the complaint or otherwise and representations by counsel do not suffice; there must be an evidentiary showing."). This is especially telling in light of the voluminous discovery Defendants have produced to Plaintiffs over the last seven months -- none of which is even claimed to establish a basis for punitive damages.
Nonetheless, even considering the new "evidence," Plaintiffs fail to point to facts in any of the affidavits that provide the evidentiary basis required to warrant discovery of Defendants' personal financial information. See Holman, 199 Ga. App. at 62-63 (holding that a plaintiff is not entitled to discover information concerning a defendant's personal financial resources absent an evidentiary showing that a factual basis exists for the plaintiffs punitive damages claim). Thus, at this time, Plaintiffs are not entitled to the discovery sought.

II. ANY DISCOVERY INTO DEFENDANTS' PERSONAL FINANCES IS PREMATURE AND SHOULD BE STAYED.

If discovery into Mr. Whitney's and Mr. Keller's personal finances is permitted, it should at a minimum be stayed until a determination is made regarding Plaintiffs' punitive damages claims. [FN2] Notably, Plaintiffs cite no law in their response to Defendants' Cross Motion for a stay of discovery of net worth, but instead summarily state that "staying the discovery process on this issue is not in keeping with Georgia's punitive damages law." (Reply Brf. at 8.) To the contrary, what is not in keeping with Georgia's punitive damages law is to place the burden on Defendants to identify and describe every personal asset and debt over $2,500 when the only "evidence" Plaintiffs can point to as support for their punitive damages claim -- after seven months of discovery -- is their own selfserving affidavits and allegations.

FN2. In addition, as discussed more fully in Defendants' Response to Plaintiffs' Motion, any discovery into Defendants' finances should be limited solely to Mr. Whitney's and Mr. Keller's net worth and not an identification of every asset and debt exceeding $2,500. Plaintiffs summarily argue in their reply brief that a statement of net worth would be "conclusory" and "not sufficient to allow Plaintiffs to assess the true financial condition of the Defendants," (Reply Brf. at 6); yet, Plaintiffs have not demonstrated why they need to know the details of every asset and debt of Mr. Keller and Mr. Whitney. Further, Plaintiffs do not -- and cannot -- cite to one case, in Georgia or elsewhere, where a court has authorized the type of overreaching, intrusive discovery Plaintiffs seek.

Plaintiffs' request for an identification and description of Mr. Whitney's and Mr. Keller's assets and debts exceeding $2,500 is just as burdensome and oppressive -- if not more so -- than the requests at issue in Holman, where the court held that "a more intrusive and burdensome discovery request than the one filed by the appellee is scarcely imaginable." 199 Ga. App. at 63. In Holman, the plaintiff requested a variety of the defendants' financial records, including income tax returns, paycheck stubs, bank account records, deeds, and other records. Id. at 62. There, the court noted that "it has been held almost uniformly that where pre-trial discovery of the defendant's financial resources is authorized, the scope of such should be restricted to the extent necessary to prevent an unreasonable intrusion into the defendant's privacy." Id. at 64. Similarly, in Ledee v. Devoe, the court found that the plaintiffs interrogatory requests that included a request for a list of all "personal property having a value of $1000 or more," were "manifestly burdensome and oppressive..." 225 Ga. App. at 625.
Here, Plaintiffs offer no justification for needing an identification of every asset and debt exceeding $2,500, nor have they demonstrated an evidentiary basis for their fraud and malicious interference claims, the only claims for which they seek punitive damages. Plaintiffs' discovery requests could require Mr. Whitney and Mr. Keller to disclose assets and liabilities such as cars, loans, televisions, furniture, jewelry, credit card debts, etc. Such information is not realistically needed for the prosecution of Plaintiffs' claims and, even on their face, are calculated merely to embarrass Defendants and pressure a settlement.
The need to stay discovery of Defendants' personal finances is particularly appropriate in light of Defendants' pending Motion For Judgment On The Pleadings, in which Defendants have moved to dismiss all of Plaintiffs' claims. In that motion, Defendants demonstrate that all of Plaintiffs' claims are due to be dismissed. If any of these claims survive, they almost certainly would be dismissed at the summary judgment stage. In the highly unlikely event that one or more of Plaintiffs' claims survive summary judgment, the Court can afford Plaintiffs the opportunity to conduct appropriate discovery into net worth. Plaintiffs would not be prejudiced materially if the Court stays net worth discovery because all of the necessary information would be discovered well in advance of trial, should one be necessary. But to require such intrusive discovery at this early stage would work an unfair hardship on Defendants and allow Plaintiffs to use the discovery process as a weapon to coerce settlement when their claims would never be up to the task.
CONCLUSION

Defendants therefore respectfully request that, if Plaintiffs' Motion is granted, the Court limit discovery to a statement of Mr. Whitney's and Mr. Keller's net worth and stay such discovery until the Court has had an opportunity to rule on Defendants' Motion For Judgment On The Pleadings and summary judgment motion, should one become necessary.
END OF DOCUMENT

United States District Court, N.D. Georgia.
Pete YOUNGS, and Tony Youngs, Plaintiffs,
v.
WHITNEY EDUCATION GROUP, INC., Whitney Leadership Group, Inc., Whitney
Information Network, Inc., Russ Whitney, and David Keller, Defendants.
Civil Action File No. 1:03-CV-1697-TWT.
April 19, 2004.

Plaintiffs' Reply to Defendants' Response
to Plaintiffs' Motion to Compel Discovery
and Award Costs of Litigation, and Plaintiffs' Response to Defendants' Cross Motion to Stay Discovery

COME NOW Plaintiffs Pete Youngs and Tony Youngs and fi le this their Reply to Defendants' Response to Plaintiffs' Motion in Order to Compel Discovery and Their Response to Defendants' Cross Motion to Stay Discovery and shows the Court as follows:
INTRODUCTION

Despite the fact that Defendants devote nearly twelve (1 2) pages to arguing the merits of the case and attempting to mischaracterize the discovery disputes thus far in this action, Defendants' basis for requesting that this Court deny Plaintiffs' Motion to Compel Discovery of Defendant Russ Whitney and Defendant David Keller's financial status is faulty. Essentially, Defendants argue that Plaintiffs are not entitled to this information because Plaintiffs have not established an evidentiary basis for punitive damages. While Defendants cite many cases on this issue, they rely primarily on jurisdictions in which punitive damages must actually be proven prior to discovery of information on financial wealth. These jurisdictions differ from Georgia on this point, and the cases cited by Defendants are not binding and are of little value.

Defendants next argue in their Cross Motion to Stay Discovery concerning Defendants' net worth that this Court should not compel Defendants to turn over this discoverable information until the Court has ruled on whether Plaintiffs' punitive damages claims are valid. Because Plaintiffs have met their evidentiary burden on this matter under Georgia law, and because Plaintiffs must take the depositions of Defendants Keller and Whitney in the very near future. Plaintiffs must have access to the financial information requested in Plaintiffs' discovery requests before this Court could rule on the merits of Plaintiffs' punitive damages claims.

I. PLAINTIFFS HAVE SATISFIED THEIR BURDEN UNDER GEORGIA LAW FOR ESTABLISHING A FACTUAL BASIS FOR PUNITIVE DAMAGES AND ARE ENTITLED TO DISCOVERY OF FINANCIAL INFORMATION FROM DEFENDANTS RUSS WHITNEY AND DAVID KELLER.

In support of their proposition that Federal Courts require certain evidentiary support for punitive damages claims before allowing discovery regarding a Defendants' financial condition, Defendants first cite Wilson v. Gillis Advertising Co., 145 F.R.D. 578 (N.D. Alabama, 1993). What Defendants fail to point out is that the Wilson Court was applying Alabama law on punitive damages in making its decision. Section 6-11-23 of the Alabama Code prohibits the discovery of information relating to a defendant's net worth until after a verdict for punitive damages has been rendered because juries are prohibited from considering a defendant's net worth in deciding whether to aware punitive damages.
The law in Georgia is quite different. As discussed in Plaintiffs' Memorandum of Law in Support of Their Motion to Compel Discovery, evidence of financial worth may be considered by a jury in determining punitive damages. O.C.G.A. § 51-12-5. 1. While a Plaintiff must allege a factual basis for punitive damages in their complaint in order to discover evidence of financial worth, a Plaintiff does not have to satisfy a full evidentiary burden in order to discover this information. See, e.g Miller v. Crumbley, 249 Ga. App. 403, 548 S.E. 2d 657 (2001). A Defendant's financial information is discoverable upon an evidentiary showing either by affidavit, discovery responses or otherwise that a factual basis exists for the punitive damage claim. Holman v. Burgess, 199 Ga. App. 61, 64, 404 S.E. 2d 144 (1991). While it is true that mere allegations regarding punitive damages are not sufficient to meet the requirement for an evidentiary showing. Ledee v. DeVoe, 225 Ga. App. 620. 484 S.E. 2d 344 (1997). Where the initial evidentiary burden is met through items that can be taken as evidence, then discovery of this information must necessarily be in keeping with the broad and liberal discovery standards found in the Federal Rules of Civil Procedure. See, Fed. R.Civ.P. 26 (b)(1).
Contrary to Defendants' contentions, Plaintiffs have met their evidentiary burden in this case. As pointed out in Plaintiffs' Memorandum in support of their Motion to Compel, Plaintiffs have set forth in a Affidavits their contentions of intentional misconduct by Defendant Russ Whitney. In the Affidavit of Tony Youngs, the Affidavit of Pete Youngs, the Second Affidavit of Tony Youngs, the Second Affidavit of Pete Youngs, the Third Affidavit of Tony Youngs, and the Third Affidavit of Pete Youngs, Plaintiffs detailed both the request by Russ Whitney for information to be included in the book Millionaire Real Estate Mentor, and the subsequent use of information Plaintiffs never authorized Russ Whitney to include in his publication. (See Affidavit of Tony Youngs ¶¶ 10,11,12, and 13, Affidavit of Pete Youngs ¶¶ 8, 9, 10, and 11, Second Affidavit of Tony Youngs ¶¶4, Second Affidavit of Pete Youngs ¶ 17, Third Affidavit of Tony Youngs ¶¶ 2, 3, 4, 5, and Third Affidavit of Pete Youngs ¶¶ 2, 3, 4, and 5.)
Furthermore, in initiating this action, Plaintiffs filed an Amended Verified Complaint. in this Amended Verified Complaint, Plaintiffs set forth factual allegations tending to support their claim for punitive damages. (See, ¶¶ 14, 16, 34, 35, 46, 47, 48. 51, 52, 53, 56, 57, 58 and 64 of Plaintiffs' Amended Verified Complaint. A verified complaint may be considered as evidence in a case if it is based on personal knowledge and sets forth specific facts admissible in evidence. See, e.g. Lopez v. Smith, 203 F. 3d. 1122, 1132 (9th Cir. 2000). In this case, both Plaintiffs attested that the Amended Verified Complaint reflected information within their personal knowledge when they signed the Complaint and had same certified.
Through their Affidavits and their Amended Verified Complaint, Plaintiffs have set forth the threshold evidentiary showing that punitive damages are appropriate in this case. Therefore, Plaintiffs are entitled to discovery of the financial information of Defendants Russ Whitney and David Keller in order for them to evaluate their punitive damages claim. Defendants contend that if this Court agrees that Plaintiffs are entitled to this information then this Court should limit the information produced to a statement of the net worth of Mr. Whitney and Mr. Keller. It is Plaintiffs' position that such a statement would be conclusory and not sufficient to allow Plaintiffs to assess the true financial condition of the Defendants. For that reason, Plaintiffs assert that this Court should compel discovery on this issue and have Defendants produce information regarding the assets and debts of Defendants Russ Whitney and David Keller which are individually in excess of $2,500.00.