AIM IMMUNOTECH, INC

v.

TUDOR

Plaintiff AIM Immunotech, Inc. (“AIM”), brought this action against Defendants asserting a violation of § 13(d) of the Securities and Exchange Act of 1934 (the “Exchange Act”).¹ At issue here is Plaintiff’s motion to compel complete discovery responses from Defendants, Franz Tudor, Todd Deutsch, Ted Kellner, and MCEF Capital, LLC. (Doc. 92). Tudor, against whom default has been entered, did not file a response to the motion. The other three Defendants, however, filed a joint response, with supporting declarations (Docs. 93, 94, 95).

I. Background

In this action, Plaintiff alleges that Defendants worked together to attempt to take control of AIM, including nominating director candidates and soliciting proxies for AIM’s annual meeting. Their first alleged attempt to nominate directors occurred on April 18, 2022,

when Defendant Walter Lautz submitted a proposal to nominate Robert Chioini and Daniel Ring and sought to have them included in AIM’s proxy statement as nominees to run for the director positions on AIM’s Board of Directors (“Lautz Proposal”). AIM rejected the Lautz Proposal as flawed. After Lautz’s proposal failed, Jorgl submitted a nomination notice on behalf of the Defendants. On July 8, 2022, Jorgl provided to AIM a notice of stockholder intent to nominate Robert Chioini and Michael Rice for election as directors at the 2022 annual meeting of AIM’s Stockholders (“Jorgl Notice”). The AIM Board of Directors rejected the Jorgl Notice. Plaintiff then filed this action alleging that because Defendants coordinated their efforts to effectuate a change in control and beneficially owned more than 5% of AIM’s outstanding stock, they were required to file disclosures under 13(d), which they did not do. Following AIM’s rejection of Jorgl’s Notice, Jorgl filed a lawsuit in Delaware Chancery Court challenging the rejection. (“Delaware action”).² The Delaware court ultimately denied Jorgl’s motion for a preliminary injunction to force his nominees on the ballot. (Doc. 79-1, Ex. B). In the Delaware action, AIM served non-party subpoenas on Deutsch and Kellner. The subpoenas sought fifteen broad categories of documents all related to the issues in the Delaware and this action.

II. Discovery Requests

On January 20, 2023, Plaintiff propounded its first requests to produce to Defendants that included 29 requests and defined the “relevant period” as December¹, 2020 through the date of production. (Doc. 92-1, 92-2, 92-3, and 92-4). While their specific responses varied,

Defendants each took the position that Plaintiff is only entitled to the same documents previously provided pursuant to its subpoena in the Delaware action.³ Defendants objected to the “relevant period” in this action because it went further back in time than the Delaware subpoena, which sought documents dating back to July¹, 2021.4 They also objected to the discovery as unduly burdensome because it would require Defendants to again engage an outside vendor to retrieve potentially additional ESI and would require Defendants to determine which documents produced in the Delaware action relate to each specific request. Plaintiff filed the instant motion asking the Court to overrule Defendants’ objections and compel them to produce the following categories of information for the period of

December¹, 2020 through the present:  All documents, emails, text messages, direct messages on social media, instant messages, letters, correspondence, or other communications between, involving, or relating to AIM, its Board of Directors, or any member of its Board of Directors.  All documents and communications related to the Jorgl Notice, Jorgl Rejection, Jorgl Nomination Efforts, and all documents and communications related to the Lautz Proposal, Lautz Rejection, and Lautz Nomination Efforts.

III. Legal Standards

Parties may obtain discovery on “any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). “Information within this scope of discovery need not be admissible in evidence to be discoverable.” Id. A party may move for an order compelling disclosure or discovery. Fed. R. Civ. P. 37. The Court has broad discretion in managing pretrial discovery matters and in deciding to compel or deny discovery. Josendis v. Wall to Wall Residence Repairs, Inc., 662 F. 3d 1292, 1306 (11th Cir. 2011); Perez v. Miami-Dade Cnty., 297 F. 3d 1255, 1263 (11th Cir. 2002).

IV. Discussion

Simply stated, Defendants argue that Plaintiff is not entitled to additional document production in this case beyond that which was already provided in the Delaware action. Defendants, however, have failed to cite any legal authority to suggest that the scope of discovery conducted in the Delaware action, or the cost of discovery in that action, can be used to limit the discovery sought in this entirely separate case. There is no dispute that documents previously produced in the Delaware action are responsive to discovery requests here. In fact, it appears that any additional production largely would arise from the expanded “relevant period”—i.e., from July¹, 2021 to December¹, 2020.5 While Defendants attempt to characterize the seven-month expansion as “arbitrary” and lacking “significance,” the “relevant period” is actually tailored to the facts of this case.

Indeed, the Amended Complaint alleges that “well before the current hostile takeover efforts formally began, the Group attempted to disparage AIM and suppress AIM’s stock value” and as part of those efforts they “tried to interfere with AIM’s day-to-day operations and its investor relations firm.” (Doc. 54 at ¶¶ 32-33). In the instant motion, AIM clarifies that “Tudor and Deutsch began their harassment of AIM’s management and its investor relations firm in late 2020 and continued through the spring of 2022.” (Doc. 92 at 8-9). Given these allegations, discovery related to this seven-month period is relevant.

PHILIP R. LAMMENS

United States Magistrate Judge Copies furnished to: Counsel of Record Unrepresented Parties