Randall et al v. Offplan Millionaire AG et al
Filing
81
ORDER granting in part and denying in part 76 Motion to Compel jurisdictional discovery; denying 80 Motion for Leave to File Reply. Signed by Magistrate Judge Thomas B. Smith on 3/1/2019. (Smith, Thomas)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
NICHOLAS J. RANDALL and FAN FENG,
Plaintiffs,
v.
Case No: 6:17-cv-2103-Orl-31TBS
OFFPLAN MILLIONAIRE AG,
CAPINVEST LLC, JOACHIM OLIVER
NEDELA, STEPHEN JORDAN-QUAYLE,
CARL DHIR, CRESCENT REAL ESTATE
MANAGEMENT, INC., DANIEL J.
DORAN, JR. and LUCRETIA L. DORAN,
Defendants.
ORDER
Before the Court is Plaintiffs’ Motion to Compel Jurisdictional Discovery From
Defendant Joachim Oliver Nedela (Doc. 76) and Defendant Nedela’s Response (Doc.
79). This follows a Joint Notice of Impasse Regarding Jurisdictional Discovery (Doc. 75).
At issue is whether Nedela, a German citizen, resident in Switzerland, can be compelled
to produce documents and sit for a deposition on the issue of whether this Court has
personal jurisdiction over him. For the reasons set forth below, the Court finds that he can
be compelled and therefore, the motion is GRANTED in part.
Background
Plaintiffs allege that Defendants violated the Federal Racketeer Influenced Corrupt
Organizations Act, 18 U.S.C. §§ 1961-1968, and the Florida Racketeer Influenced and
Corrupt Organizations Act, FLA. STAT. §§ 895.01-895.06, by “collectively conspiring to
participate in an enterprise for the common purpose of engaging in racketeering activity,
specifically wire and mail fraud, concerning the conveyance and maintenance of real
property located in the United States, where the majority of the properties are located in,
and enterprise conduct occurred in, Orange County, Florida (Doc. 17, ¶¶ 243-311). Six
Defendants have been served, failed to respond, and have been defaulted. Plaintiffs have
been unable to serve a seventh (See Docs. 26, 27, 31, 32, 48, 49 and 57). The remaining
Defendant, Nedela, has made a limited appearance and filed a motion to dismiss for lack
of personal jurisdiction and failure to state a claim upon which relief can be granted (Doc.
56). On September 12, 2018, Plaintiffs filed a consolidated preliminary response to the
motion to dismiss which included a motion for leave to conduct discovery limited to the
issue of personal jurisdiction, and to stay their response to the motion to dismiss until
after the completion of that discovery (Doc. 64). The same day, Plaintiffs served on
Nedela their First Set of Interrogatories Concerning Personal Jurisdiction and First
Request for Production of Documents Concerning Personal Jurisdiction (Doc. 64-4).
Plaintiffs also served a notice of taking Nedela’s deposition without specifying the date or
place while simultaneously requesting deposition dates and offering to take the
deposition at any location and any time convenient to Nedela. He filed a response
opposing the request to take jurisdictional discovery (Doc. 65).
On October 23, 2018, the Court granted Plaintiffs' motion to conduct discovery and
stayed their response to Nedela's motion to dismiss for forty-five days "during which time
[Plaintiffs] may engage in discovery that is limited to the jurisdictional issues raised by
Nedela." (Doc. 66 at 11). The Court found that "Plaintiffs are entitled to obtain the limited
jurisdictional discovery sought for the purpose of responding to Nedela's motion to
dismiss." (Id.).
On November 13, 2018, Plaintiffs and Nedela jointly moved for an extension of the
time to complete jurisdictional discovery and the deadline for Plaintiffs to respond to
-2-
Nedela's motion to dismiss (Doc. 67). The parties said Nedela had gathered more than
6,000 documents to review for responsiveness to Plaintiffs' discovery requests and that
they were experiencing difficulty in clearing a mutually convenient day to hold Nedela's
deposition (Doc. 75, citing Doc. 67 at 2). The Court granted the motion and extended
Plaintiffs' deadline to respond to the motion to dismiss through January 10, 2018 (Doc. 69
at 1).
On November 27 and 30, 2018, Nedela informed the Court that he believes there
are obstacles to conducting the jurisdictional discovery under Swiss law and he sought
relief from the jurisdictional discovery deadlines (See Docs. 70, 70-1, 71, 71-1). On
December 3, 2018, the Court denied without prejudice, Nedela’s request for an additional
extension of time noting: "[t]he Court does not know Swiss law or how it impacts
jurisdictional discovery in this case." (Doc. 72 at 1). The Court added that it "does not now
intend to strictly enforce the discovery deadline established in its Order," and instructed
that "[w]hen the parties better understand the situation in Switzerland, including the
sequence, timing, and results of actions there, they should update the Court which will,
when it has more concrete information, entertain a motion to enlarge the time for
jurisdictional discovery." (Id. at 1-2). Plaintiffs sought an additional brief extension of time
(Doc. 73), which the Court granted (Doc. 74). On the date to complete jurisdictional
discovery and file Plaintiffs' response to Nedela's motion to dismiss, the parties filed a
Joint Notice of Impasse Regarding Jurisdictional Discovery (Doc. 75). The pending
motion to compel and response followed.
Standards of Law
The scope of discovery is well known:
-3-
Unless otherwise limited by court order, the scope of
discovery is as follows: Parties may obtain discovery
regarding 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. Information within this scope of discovery need
not be admissible in evidence to be discoverable.
FED. R. CIV. P. 26(b)(1). The rules of civil procedure “strongly favor full discovery
whenever possible.” Farnsworth v. Procter & Gamble Co., 758 F.2d 1545, 1547 (11th Cir.
1985). That said, relevancy is key. “The discovery process is designed to fully inform the
parties of the relevant facts involved in their case.” U.S. v. Pepper’s Steel & Alloys, Inc.,
132 F.R.D. 695, 698 (S.D. Fla. 1990) (citing Hickman v. Taylor, 329 U.S. 495, 501
(1947)). “The overall purpose of discovery under the Federal Rules is to require the
disclosure of all relevant information so that the ultimate resolution of disputed issues in
any civil action may be based on a full and accurate understanding of the true facts, and
therefore embody a fair and just result.” Oliver v. City of Orlando, No. 6:06-cv-1671-Orl31DAB, 2007 WL 3232227, at * 1 (M.D. Fla. Oct. 31, 2007) (citing United States v.
Proctor & Gamble Co., 356 U.S. 677, 682 (1958)). If a party fails to respond to an
interrogatory or request for production, or fails to attend his deposition, the party seeking
the discovery may file a motion to compel such response or attendance. FED. R. CIV. P.
37(a)(3)(B)(i)-(iv), (d)(1)(A).
Analysis
In an August 10, 2018 sworn declaration accompanying his motion to dismiss,
Nedela stated that he is a German citizen residing in Switzerland (Doc. 56-1, ¶3). He
declares that he had nothing to do with the scheme alleged; he was not involved in day-
-4-
to-day operations; he never hired or had any relationship with the other individual
Defendants; he was never aware of communications with Plaintiffs; and his was a
nominal role in Defendant Offplan Millionaire AG (Id., ¶¶ 25-49). Plaintiffs seek to test
these assertions through discovery.
Although Plaintiffs claim no jurisdictional discovery has been completed (Doc. 76
at 5), Nedela has served his answers to Plaintiffs’ first set of interrogatories (Doc. 79-2)
and he has responded to Plaintiffs’ first request for the production of documents, largely
by stating that he will “produce all relevant and non-privileged documents responsive to
[the] request[s], if any, that are within his possession, custody or control in accordance
with applicable law.” (Doc. 79-1, pp. 3-7). The Court understands Nedela has provided his
lawyers with over 6,000 documents for review, but they have not been produced to
Plaintiffs, and Nedela has not been deposed because he claims “his Swiss counsel
subsequently made him aware that his deposition and production of documents would put
him at serious risk of criminal prosecution in Switzerland if the proper procedures were
not followed.” (Doc. 79 at 1). Plaintiffs dispute this conclusion and contend that discovery
can and should be had.
The Swiss lawyers Plaintiffs and Nedela have consulted agree that, according to
Art. 271 para. 1 of the Swiss Criminal Code, it is an offense for anyone to carry out
“activities on behalf of a foreign state on Swiss territory without lawful authority, where
such activities are the responsibility of a public authority or public official” as well as for
anyone to carry out "such activities for a foreign party or organization” or to encourage
such activities. Hence, a foreign request for obtaining evidence in Switzerland – such as
an order for pre-trial discovery – is subject to prior authorization by the Swiss Federal
Department of Justice and Police (Docs. 75-1 through 75-4, emphasis added). Nedela
-5-
argues that his deposition and production of documents implicate Art. 271 and perhaps
Art. 273 of the Swiss Criminal Code and are subject to the Hague Convention. 1 For these
reasons he contends that he should not be compelled to comply without following the
procedures set forth in the Hague Convention. Plaintiffs argue that there is no showing of
a legitimate threat of prosecution or that these Swiss laws apply to their discovery
requests. The Southern District of New York has explained:
[A] party seeking an order to apply Hague Convention
procedures in lieu of the procedures set forth in the Federal
Rules of Civil Procedure must demonstrate that a specific
foreign law “actually bars the production or testimony at
issue.” Alfadda v. Fenn, 149 F.R.D. 28, 34 (S.D.N.Y. 1993).
“In order to meet that burden, the party resisting discovery
must provide the Court with information of sufficient
particularity and specificity to allow the Court to determine
whether the discovery sought is indeed prohibited by foreign
law.” Id. Notably, however, the Court’s ultimate task “is not to
definitively determine what Swiss law is, but rather to decide
whether the risk of prosecution under Article 271 is so great”
as to warrant a protective order. Microsoft Corp. v. Weidmann
Elec. Tech. Inc., No. 5:15-CV-153 (GWC), 2016 WL 7165949,
at *12 (D. Vt. Dec. 7, 2016).
EFG Bank AG v. AXA Equitable Life Ins. Co., 17-CV-4767 (JMF), 2018 WL 1918627, at
*1 (S.D.N.Y. Apr. 20, 2018). After considering the parties’ arguments and legal authorities
the Court is not persuaded that Swiss Art. 271 and 273 bar the requested production and
deposition, or that they actually subject Nedela or his lawyers to potential criminal liability
or threat of criminal prosecution.
Plaintiffs have asked Nedela to produce information “at the offices of Baker,
Donelson, Bearman Caldwell & Berkowitz, PC, c/o Hal K. Litchford at SunTrust Center,
200 South Orange Ave., Suite 2900, Orlando Florida 32801” (Doc. 64-4). And, the Court
1 The Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial
Documents in Civil or Commercial Matters and The Hague Convention of 18 March 1970 on the Taking of
Evidence Abroad in Civil or Commercial Matters.
-6-
understands the documents are already in the possession of Nedela’s lawyers in Miami,
Florida (See Doc. 70, ¶ 5). So, there is no need to obtain the documents in Switzerland.
And, while Nedela is a resident of Switzerland, he is a citizen of Germany. 2 Nedela cites
no cases applying these Swiss law provisions to preclude someone who is not a Swiss
citizen from producing his own documents3 outside of Switzerland. Although Nedela
objects that Plaintiffs are asking him “to perform an end-run around his legal obligations,
which is not contemplated by Swiss law,” (Doc. 79 at 7), it is not the Court’s task to
“definitively determine what Swiss law is;” rather, it is Nedela’s burden to show that the
specific foreign law “actually bars the production or testimony at issue.” EFG Bank AG,
supra. The Court finds that Nedela has not met his burden with respect to the documents.
See, e.g., EFG Bank AG, 2018 WL 1918627, at *2 (“Significantly, however, decisions of
the Swiss Federal Department of Justice and Police (“FDJP”)—an administrative, nonjudicial body—indicate that Swiss law does not preclude the voluntary production of
documents by a private party and that “voluntary” is defined broadly to include the
production of discovery so long as the party faces only procedural consequences rather
than criminal sanctions for its failure to produce.”).
As for the requested deposition, the Court agrees that if it takes place in
Switzerland, that country’s procedures should apply. But the Court sees no reason why
the deposition must occur in Switzerland. There has been no showing that Nedela can
only be deposed in Switzerland. And, Plaintiffs are on record that they will meet Nedela
Despite counsel’s representation in the response brief that Nedela is a resident “and citizen” of
Switzerland (Doc. 79 at 15), he previously declared, under penalty of perjury, that he was a German citizen.
(Doc. 56-1, ¶3).
2
The fact that documents were tendered to Nedela’s Florida counsel by Nedela confirms that they
were “currently in [Nedela’s] possession, custody, or control” (Doc. 64-4 at 11).
3
-7-
“anywhere at any time” to take his deposition (Doc. 76 at 20). There is ample precedent
for permitting or ordering a deposition to occur outside of Switzerland. See Schindler
Elevator Corp. v. Otis Elevator Co, 657 F. Supp. 2d 525, 529 (D.N.J. 2009) (“There is no
affront to Swiss sovereignty by virtue of a deposition in New Jersey or at some convenient
location outside of Switzerland.”); Calixto v. Watson Bowman Acme Corp., No. 07–60077,
2008 WL 4487679, at *3 (S.D. Fla. Sept. 29, 2008) (Swiss resident ordered to appear for
deposition in London, or a location otherwise convenient, pursuant to the Federal Rules);
Triple Crown Am., Inc. v. Biosynth AG, No. 96–7476, 1998 WL 227886, at *4 (E.D. Pa.
Apr. 30, 1998) (ordering depositions of Swiss corporation's agents occur in Pennsylvania,
with reimbursement for reasonable costs); Ward–THG, Inc. v. Swiss Reinsurance Co., No.
96–8100, 1997 WL 83294, at *1 (S.D.N.Y. Feb. 27, 1997) (depositions of Swiss nationals
to occur in the United States, with reimbursement for associated travel costs); Roberts v.
Heim, 130 F.R.D. 430 (N.D.Cal.1990) (ordering that deposition of Swiss national and
resident proceed in San Francisco); see also In re Honda Am. Motor Co. Dealership
Relations Litig., 168 F.R.D. 535, 538-40 (D.Md.1996) (ordering deposition of Japanese
defendant in Maryland, noting: “if a federal court compels discovery on foreign soil,
foreign judicial sovereignty may be infringed, but when depositions of foreign nationals
are taken on American or neutral soil, courts have concluded that comity concerns are
not implicated.”).
Nedela has already participated in the case by submitting his declaration with
attached documents, answering interrogatories, and responding to requests for
production (while not producing the documents). He objected to Plaintiffs’ motion to
conduct jurisdictional discovery (Doc. 65) but, after the Court allowed the discovery (Doc.
66) he moved (with Plaintiffs), to extend the deadline to complete it (Doc. 67). It is only
-8-
now, after receiving that extension, presenting some of his evidence, and delivering other
evidence to his Florida lawyers, that Nedela seeks to avoid discovery due to Swiss law.
As Judge Kovachevich observed in a similar situation:
While this Court has all due respect for the laws of foreign
sovereignties and a citizen's allegiance to said laws,
defendants have subjected themselves to the privileges and
protections of this country's laws by moving the Court to
dismiss for lack of personal jurisdiction and they cannot now
deny the obligations and duties that foreseeably arise from
those same laws.
As the Supreme Court stated in Insurance Corp. Of Ireland,
Ltd. v. Compagnie Des Bauxites De Guinee, 456 U.S. 694,
706, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982), “[b]y submitting
to the jurisdiction of the court for the limited purpose of
challenging jurisdiction, the defendant agrees to abide by that
court's determination on the issue of jurisdiction: That decision
will be res judicata on that issue in any further proceedings.”
The Supreme Court also noted that “as a sanction for failure to
comply with a discovery order directed at establishing
jurisdictional facts, [a court may] proceed on the basis that
personal jurisdiction over the recalcitrant party has been
established [.]” Id. at 695. FED. R. CIV. P. Rule 37(b)(2)(A)
permits such a result so long as the sanction is just and
directly related to the claim which was the subject of the
discovery order. Id. at 707.
Coca-Cola Foods v. Empresa Comercial Internacional De Frutas S.A., 96-358-CIV-T17C, 1997 WL 370121, at *7 (M.D. Fla. June 12, 1997). Taking Nedela at his word when
he says he is “not attempting to evade discovery” and “genuinely wants to comply with
the Court’s order and provide the jurisdictional discovery requested” (Doc. 79), the Court
finds that Nedela can furnish the discovery in this district or some other location outside
Switzerland and accomplish that goal. The failure to do so may result in a finding that
personal jurisdiction over Nedela has been established.
While Nedela argues the need to comply with the Hague Convention and the
procedures prescribed therein, Plaintiffs correctly observe that such compliance is not
-9-
mandatory. In Societe Nationale Industrielle Aerospatiale, et al. v. United States District
Court for the Southern District of Iowa, 482 U.S. 522, 107 S.Ct. 2542, 96 L.Ed.2d 461
(1987), the Supreme Court held that the discovery procedures provided by the Hague
Convention do not necessarily control discovery with respect to foreign litigants before an
American court. The Court rejected the notion that the Hague Convention requires the
use of its procedures to the exclusion of the Federal Rules. Id. at 533, 107 S.Ct. at 2550.
The Court also declined to “announce a new rule of law that would require first resort to
Convention procedures whenever discovery is sought from a foreign litigant.” Id. at 542,
107 S.Ct. at 2554. When determining whether to require use of the optional Hague
Convention procedures, or to permit discovery pursuant to the Federal Rules, the
Supreme Court instructed courts to consider the particular facts of each case, the
sovereign interests at issue, and the likelihood that resort to Hague Convention
procedures will prove effective. Id. at 544, 107 S.Ct. at 2555.
Nedela acknowledges that the Court has the discretion to supersede the Hague
Convention and the procedures prescribed therein, but contends that it may not disregard
the specific comity analysis set out in Aerospatiale, which, in his view, “militates in favor
of allowing discovery to proceed under the laws of Switzerland, pursuant to the procedure
set forth in the Hague Convention.” (Doc. 79 at 14, citing 482 U.S. at 543–44 & n. 28).
There is authority stating that the Court need not reach this analysis because the parties
can obtain the remaining discovery without running the risk of violating Swiss law. See
EFG Bank AG, 2018 WL 1918627, at *3 (“Because EFG does not meet its burden to
show that the discovery request actually conflicts with Swiss law, the Court need not
address the parties' arguments concerning Societe Nationale Industrielle Aerospatiale v.
United States District Court for the Southern District of Iowa, 482 U.S. 522 (1987).”).
- 10 -
Nonetheless, applying the analysis, the Court finds that the facts of this case do not
warrant recourse to the Hague Convention procedures.
The Restatement (Third) of Foreign Relations Law § 442(1)(c) instructs:
In deciding whether to issue an order directing production of
information located abroad, and in framing such an order, a
court or agency in the United States should take into account
the importance to the investigation or litigation of the
documents or other information requested; the degree of
specificity of the request; whether the information originated in
the United States; the availability of alternative means of
securing the information; and the extent to which
noncompliance with the request would undermine important
interests of the United States, or compliance with the request
would undermine important interests of the state where the
information is located.
Restatement (Third) of Foreign Relations Law § 442 (1987). Applied here, the discovery
sought is clearly important, if not essential. Indeed, prosecution of this action has been at
a standstill pending resolution of the jurisdictional issue. This factor weighs against the
use of Hague Convention procedures. The specificity of the request considers how
burdensome it will be to respond to the discovery. “Broad, generalized requests for
information weigh in favor of utilizing Hague procedures, while specific, limited requests
disfavor the use of Hague procedures.” Salt River Project Agric. Improvement & Power
Dist. v. Trench France SAS, 303 F. Supp. 3d 1004, 1008 (D. Ariz. 2018). Plaintiffs’
requests are targeted to the jurisdictional issue and the documents are apparently,
already on United States soil. This weighs against the need for Hague Convention
procedures. The Court presumes that the documents and testimony did not originate in
the United States. This factor favors use of the Hague Convention procedures. There are
alternative means of securing the information which are superior to the delay inherent in
use of the Hague Convention. This factor weighs against utilizing the Hague Convention
- 11 -
procedures. In considering the final comity factors, the Court notes that Plaintiffs and
Nedela are not Swiss citizens, the documents are currently not on foreign soil, and the
deposition can be held outside Switzerland. Therefore, compliance with this discovery
does not appear to undermine Swiss interests.
While Nedela argues that the documents contain trade secrets and the protection
of those secrets is an important Swiss interest he has already responded to the requests
for production by objecting to the production of privileged information (Doc. 79-1). The
Court recognizes privileges appropriately asserted. Absent a showing that all the
documents are trade secrets (a position which is untenable, considering that Nedela has
already attached some of them to his declaration), there is no reason why non-privileged
documents cannot be produced, consistent with Nedela’s response to the request for
production. In sum, the facts of this case do not warrant use of the Hague Convention
procedures.
The Court is persuaded by the great weight of authority that the present
circumstances justify production of the documents in the United States and the taking of
Nedela’s deposition at a suitable location outside Switzerland, with Plaintiffs to reimburse
Nedela’s reasonable travel expenses. Plaintiffs’ motion to compel is therefore GRANTED
in part. Nedela shall make himself available for deposition at a location agreed upon by
the parties, outside of Switzerland, within 30 days. Plaintiffs shall pay all reasonable costs
of Nedela’s travel and subsistence incurred relating to the deposition. Nedela shall also
produce the documents sought in the request to produce, consistent with his response to
the request, within 15 days of the date of this Order. To the extent Nedela has asserted
that certain documents are trade secrets, he shall provide a privilege log. As Nedela has
already responded to the interrogatories, the motion to compel them is DENIED. Plaintiffs
- 12 -
shall file their response to Nedela’s motion to dismiss within 14 days after the parties
receive the transcript of Nedela’s deposition. Plaintiffs Unopposed Motion to File a Reply
(Doc. 80) is DENIED.
DONE and ORDERED in Orlando, Florida on March 1, 2019.
Copies furnished to:
Counsel of Record
Unrepresented Parties
- 13 -
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?