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The United States District Court for the District of New Jersey recently granted a Plaintiff’s Motion for expedited discovery and for leave to serve third-party subpoenas prior to a Federal Rule 26(f) conference where the information sought in those subpoenas was critical to properly amending and serving Plaintiff’s Complaint.

In Tyson v. Coinbase Global, Inc., 2024 U.S. Dist. LEXIS 2576 (D. N.J. Jan. 4, 2024), Plaintiff, Sydney Tyson, owned bitcoin in an account managed by Defendant, Coinbase Global, Inc. In the Summer of 2023, Plaintiff alleged that his Coinbase account was hacked leading to suspicious emails confirming transactions that he never completed. The strange activity continued until one day, Plaintiff received an email addressed to someone named “Paul” noting that his account had been locked. Plaintiff was never able to unlock or deactivate his account and alleges that he had $298,500 worth of bitcoin taken from his account. After learning about the alleged theft, Defendant refused to reverse the transaction or compensate Plaintiff for his alleged losses.

Less than four months after the alleged theft took place, Plaintiff filed a Complaint in the United States District Court for the District of New Jersey containing counts stating causes of action under the Computer Fraud and Abuse Act, New Jersey’s Computer-Related Offenses Act and common law claims of fraud, conversion, replevin and unjust enrichment. Shortly after filing his Complaint, Plaintiff hired an outside consultant to trace the allegedly stolen bitcoin and the consultant was able to identify a collection of digital wallets into which the stolen cryptocurrency was placed. However, by nature of the exchange taking place on a cryptocurrency platform, the identities of the human individuals who owned those digital wallets could not be determined. Therefore, the Complaint was unable to name the alleged hackers and bitcoin thieves because cryptocurrency transactions do not allow users to identify persons holding or transferring assets on any cryptocurrency exchange.

Given this time-sensitive issue of pleading fictitious parties, Plaintiff filed a motion seeking expedited discovery and for leave to file four third-party subpoenas on the cryptocurrency exchanges on which Plaintiff’s outside consultant was able to trace the allegedly stolen bitcoin. Plaintiff’s subpoenas would seek, among other documents and information, “All documents related to [the wallet address], including account opening and closing documents, the identity of the account holder, all proofs of identification (such as government-issued photo ID), date of birth, Social Security Number, telephone number, electronic mail address, residential/mailing address, and Know York Consumer (“KYC”) and Anti-Money Laundering (“AML”) information compiled by [the exchange]…”

In ruling on Plaintiff’s Motion, the Court cited Federal Rule of Civil Procedure 26 and explained that while the scope of federal discovery is broad, parties are generally barred from seeking discovery before the completion of a Rule 26(f) conference. The Court did note that it had the ability to grant a party leave to conduct discovery prior to this conference when the request was reasonable in light of the circumstances presented by the moving party. Citing the “good cause” standard, the Court noted that such “good cause” exists where the need for expedited discovery outweighs the prejudice to the responding party. In so deciding, the Court was bound to consider (1) the timing of the request in light of the formal start to discovery; (2) whether the request is narrowly tailored; (3) the purpose of the requested discovery; and (4) whether the discovery burdens Defendants and whether Defendants can respond to the request in an expedited manner.

Applying these factors, the Court agreed that “good cause” was present to permit expedited discovery. Specifically, the motion for leave to file the third-party subpoenas was filed just eight days after Plaintiff’s Complaint was filed and the information sought, namely the identities of digital wallet holders, was necessary in order to serve Plaintiff’s Complaint. Further, the Court found that the information was being sought by non-party cryptocurrency exchanges, which did not prejudice the named defendants in any way. The Court noted that these digital wallet holders may have held information vital to resolution of the case.

In granting Plaintiff’s Motion for expedited discovery and for leave to file third-party subpoenas, the Court did curtail the breadth of information sought by these subpoenas. Specifically, the Court determined that the legal name, street address, telephone number and email address of these wallet holders would be sufficient information to allow Plaintiff to identify the wallet holders and serve his Complaint upon them. This limitation was imposed in order to provide Plaintiff the relief he sought and to allow this case to proceed while also respecting the boundaries established by Rule 26(f) making all other information sought by Plaintiff discoverable after this mandated conference.

The United States District Court for the District of New Jersey’s ruling is indicative of how the Federal Rules of Civil Procedure are adapting to technological advances that impact the needs of attorneys in conducting modern discovery. As technology continues to evolve and the information underlying civil claims becomes more complex, Federal Courts have shown the willingness and ability to relax certain Federal Rules in the name finding equitable solutions to novel and challenging legal issues at the inceptions of civil cases.

On October 31, 2023, the United States District Court for the District of New Jersey granted Motions for Summary Judgment filed by Atlantic City and Bally’s Park Place, LLC (hereafter “Bally’s) in the case of Snead v. Bally’s Casino, 2023 U.S. Dist. LEXIS 194905 (D.N.J. Oct. 31, 2023). The Motions and underlying case stemmed from an incident where Plaintiff was walking on the Atlantic City boardwalk when her foot caught a raised board causing her to trip and fall. Plaintiff initially filed a Complaint against these defendants in State Court, but the case was removed to District Court on the basis of diversity jurisdiction.

The board at issue was approximately two inches higher than the other boards in the area. It was undisputed that Atlantic City owned the board at issue and that Bally’s fixed the board for public safety reasons instead of waiting for an Atlantic City representative to be dispatched for repairs. Atlantic City retains boardwalk inspectors and carpenters, who walk the entire length of the boardwalk at least five days each week looking for potential hazards. In the deposition testimony of a City representative, he acknowledged that the subject board would be considered a tripping hazard in need of repair if that condition were discovered during a regular inspection of the area.

On its Motion for Summary Judgment, Atlantic City relied on immunities granted to the municipality through the New Jersey Tort Claims Act. Specifically, Atlantic City claimed that the board at issue did not constitute a “dangerous condition” and that it had neither actual nor constructive notice of the board at issue. Even if it did have notice of this condition, Atlantic City argued that retaining inspection staff and carpenters to identify and repair these issues was not palpably unreasonable.

Plaintiff countered in her own cross-Motion for Summary Judgment that Atlantic City admitted the subject board was a dangerous condition because it admitted that the board constituted a tripping hazard. She also argued that the City had at least constructive notice of the subject board because her liability expert opined that the board existed as a hazardous condition for approximately one to two years prior to the fall. Allowing this condition to exist, Plaintiff argued that Atlantic City’s inaction was palpably unreasonable such that Tort Claims Act immunities could not be relied upon.

In ruling on Atlantic City’s cited Tort Claims Act Immunities, the Court began with whether Plaintiff was able to prove that the subject board constituted a dangerous condition. The Court rejected Plaintiff’s argument as to this immunity because it believed that Plaintiff’s reliance on Atlantic City’s representative testimony, her expert report and her own assumptions as to the board height were insufficient to meet the Act’s threshold. The Court felt that Plaintiff’s expert report was nothing more than net opinion that could not properly support her claims. Specifically, the Court found that the report cited no evidence for the conclusion that the elevated board existed for one to two years prior to the fall or that a faulty anchoring system was to blame for this condition. The Court noted a lack of relevant code citations in Plaintiff’s report, which was necessary to form the basis for the expert’s opinion.

The Court similarly rejected the argument that Atlantic City’s representative admitting that the raised board could be considered a tripping hazard was somehow an admission that a dangerous condition existed. Relying on a number of prior decisions, the Court dismissed Plaintiff’s reasoning and found that no such admission took place through the City’s testimony.

Similarly, the Court found that Plaintiff had not shown Atlantic City had actual or constructive knowledge of the subject board. This point was rejected because Plaintiff’s argument relied upon the net opinion of her expert, who opined without factual support that the subject board existed in a dangerous condition for approximately two years prior to the fall. The Court also rejected Plaintiff’s conclusion that the existence of a dangerous condition, if proven, automatically constitutes actual or constructive notice of same.

Finally, the Court found that even if Plaintiff had proven the existence of a dangerous condition of which Atlantic City was aware, its retention of boardwalk inspectors and boardwalk carpenters who are on the lookout for hazardous conditions is far from palpably unreasonable conduct.

Overall, the District Court granted Atlantic City’s Motion for Summary Judgment finding the City immune from liability under the New Jersey Tort Claims Act. The Court’s decision further solidified the degree and type of evidence that a plaintiff must submit in order to overcome the Act’s strict provisions emphasizing that immunity for public entities is the norm when potential liability may also exist.