Meyer Corporation U.S. v. Alfay Designs, Inc. et al

Filing 89

ORDER granting in part and denying in part 76 Motion to Compel; granting 77 Motion to Compel. For the foregoing reasons, defendants' 76 motion to compel and for sanctions regarding various challenges to plaintiff's discovery respon ses and to the conduct of plaintiff's counsel at depositions taken by defendants is granted in part and denied in part and defendants' 77 motion to compel and for sanctions for plaintiff's failure to produce an adequate 30(b)(6) witness is granted. See attached. Ordered by Magistrate Judge Marilyn D. Go on 8/13/2012. (Attachments: # 1 Exhibit Applebaum v. Nat'l Westminster Bank) (Albertsen, Joanne)

Case 1:07-cv-00916-DLI-MDG Document 136 Filed 10/05/11 Page 1 of 12 PageID #: 2267

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - X
NATAN APPLEBAUM, et al.,
Plaintiffs,
ORDER
- against CV 2007-0916 (DLI)(MDG)
NATIONAL WESTMINSTER BANK,
Defendant.
- - - - - - - - - - - - - - - - - - X
Go, United States Magistrate Judge:
Plaintiffs bring this action against National Westminster Bank
("NatWest") for civil damages for knowingly providing material
support or resources to to the Islamic Resistance Movement,
commonly known as HAMAS, a foreign terrorist organization, in
violation of 18 U.S.C. § 2339B and financing acts of terrorism in
violation of 18 U.S.C. § 2339C.

Plaintiffs seek an order imposing

sanctions against NatWest's counsel, Jonathan Blackman, for his
conduct at the deposition of NatWest witness Michael Hoseason held
in connection with this and a related action, Weiss v. National
Westminster Bank, 06-cv-4622 (DLI)(MDG).
BACKGROUND
Plaintiffs allege, inter alia, that NatWest maintained bank
accounts in England for Interpal, the principal clearinghouse for
funds raised throughout Europe and the Middle East on behalf of
HAMAS.

Plaintiffs further allege that NatWest transmitted and

deposited millions of dollars on behalf of Interpal to agents of

Case 1:07-cv-00916-DLI-MDG Document 136 Filed 10/05/11 Page 2 of 12 PageID #: 2268
HAMAS and alleged terrorist organizations.

Mr. Hoseason was the

leader of NatWest's Money Laundering Suspicion Team from 1999 to
2003.
Plaintiffs contend that Mr. Blackman impeded their ability
to conduct an orderly deposition of Mr. Hoseason by making
speaking objections and engaging in disruptive conduct.
Plaintiffs point to the fact that Mr. Blackman appears on 114 of
the 141 pages of the deposition transcript, or 81% of the pages.
Plaintiffs further argue that Mr. Blackmun made speaking
objections which were deliberately designed to coach his witness
and that he made insulting and unprofessional comments to
opposing counsel.

Such conduct by Mr. Blackman followed his

accusations of racism leveled at other counsel at the depositions
of two other NatWest witnesses earlier that week.

Mr. Blackman

counters that his conduct was proportional to the degree of
improper questions posed by plaintiffs' counsel.
DISCUSSION
Plaintiffs seek sanctions under 28 U.S.C. § 1927 and Rule
30(d) of the Federal Rules of Civil Procedure.

Section 1927

provides that "[a]ny attorney who so multiplies the proceedings
in any case unreasonably and vexatiously may be required by the
court to satisfy personally the excess costs, expenses, and
attorneys' fees reasonably incurred because of such conduct."
U.S.C. § 1927.

Courts in the Second Circuit have construed

Section 1927 as requiring "a clear showing of bad faith on the
part of the attorney."

See Shafi v. British Airways, PLC, 83

F.3d 566, 571 (2d Cir. 1996); Phillips v. Mfrs. Hanover Trust
-2-

28

Case 1:07-cv-00916-DLI-MDG Document 136 Filed 10/05/11 Page 3 of 12 PageID #: 2269
Co., No. 92 Civ. 8527, 1994 U.S. Dist. LEXIS 3748, at *3-*4
(S.D.N.Y. March 29, 1994).

A clear showing of bad faith can be

established where an attorney's actions are "so completely
without merit as to require the conclusion that they must have
been undertaken for some improper purpose such as delay."
Oliveri v. Thompson, 803 F.2d 1265, 1273 (2d Cir. 1986); see
Revson v. Cinque & Cinque, 221 F.3d 71, 78 (2d Cir. 2000).
In the Second Circuit, courts "typically consider three
factors: (1) the extent and pervasiveness of the interruptions,
as evidenced by the number of times that the attorney appears on
the transcript; (2) the character of the interruptions (e.g.,
whether they included personal attacks on opposing counsel, or
were merely groundless objections); and (3) the effect of the
attorney's conduct (e.g., whether the deposition was entirely
destroyed or merely prolonged)."

Sicurelli v. Jeneric/Pentron,

Inc., No. 02 CV 4934, 2005 WL 3591701, at *3 (E.D.N.Y. Dec. 30,
2005).
As to the first factor, although Mr. Blackman appears on 81%
of the pages of the deposition transcript, many of his statements
were limited simply to objecting to the form of the question and
advising the witness that he may answer.

The extent of counsel's

objections is less pervasive than of counsel in other cases where
the court imposed sanctions under section 1927.

Compare Morales

v. Zondo, 204 F.R.D. 50, 54 (S.D.N.Y. 2001) (granting sanctions
under section 1927 where counsel appeared on more than 85% of the
pages of the deposition transcript with statements other than an
objection as to form or a request to the court reporter to read
-3-

Case 1:07-cv-00916-DLI-MDG Document 136 Filed 10/05/11 Page 4 of 12 PageID #: 2270
back a question) and Unique Concepts, Inc., v. Brown, 115 F.R.D.
292, 293 (S.D.N.Y. 2003) (granting sanctions under section 1927
where counsel appeared on 91% of the transcript pages with
statements other than an objection as to form) with Sicurelli,
2005 WL 3591701, at *4 (denying sanctions under section 1927
where counsel appeared on 76% and 67% of transcript pages with
statements other than objections to form or requests to the court
reporter to have a question read back); Phillips v. Manufacturers
Hanover Trust Co., No. 92 CIV. 8527, 1994 WL 116078, at *3-*4
(S.D.N.Y. Mar. 29, 1994) (denying sanctions where counsel
appeared on 60% of transcript pages with statements including
objections to form).
Second, as to the character of the interruptions, plaintiffs
point to a number of instances in which Mr. Blackman engaged in
lengthy speeches rather than limiting himself to brief
explanations of objections.

They also complain about his

statements criticizing the way the opposing counsel conducted the
examination and his attempts to control the manner in which
questions were asked, sometimes by making personal attacks on
opposing counsel.

Mr. Blackman counters that his conduct was

justified because the questioning by plaintiffs' counsel was
improper and abusive.
This Court agrees that Mr. Blackman sometimes made unduly
lengthy objections.

A number of these objections arose as a

result of Mr. Blackman's intolerance of opposing counsel's
practice of questioning Mr. Hoseason about the contents of a
document without first showing him the document.

-4-

In many

Case 1:07-cv-00916-DLI-MDG Document 136 Filed 10/05/11 Page 5 of 12 PageID #: 2271
instances, the witness was unable to answer without review of the
document and Mr. Werbner persisted in this manner of questioning.
However, there is no rule that a questioner must show a witness a
document before asking a question pertaining to the contents of a
document.

At one point, Mr. Blackman took it upon himself to

show the witness a document that related to a pending question.
See Tr. at 16. In other instances, Mr. Blackman accused
plaintiffs' counsel of posing deliberately misleading questions.
The following are just a few notable examples of Mr.
Blackman's attempts to control the conduct of the deposition,
beginning with Mr. Blackman's expressions of dissatisfaction
because the witness was not shown a document.
Q. I will represent to you that -- strike that.
Mr. Blackman: Why don't you just show him the document
so he doesn't have to accept your representations. You
are looking at the document. Is this a game? Show him
the document.
Q. Isn't it true that the amber color code used by
NatWest was done where there was suspicion about the
customer but wrongful money laundering conduct had not
been proved.
Mr. Blackman: Objection to the form of the question.
am going to direct him not to answer when you start
reading or purporting to read things to him that he
does not have. Don't answer the question. He will
show you the document if he wants to.

I

Q. Are you refusing to answer the question, Mr.
Hoseason?
Mr. Blackman: Why don't you show him the document? Mr.
Werbner, answer my question. I am going to show him
the document. Do we have the document? Can we get it?
I think it is really outrageous, not to mention a waste
of time, to ask someone questions when you are reading
from a document and you won't show it to him. I think
that is really unfair.
Q. Will you answer the question?
-5-

Case 1:07-cv-00916-DLI-MDG Document 136 Filed 10/05/11 Page 6 of 12 PageID #: 2272
Mr. Blackman: You can answer the question. What is the
question? Don't assume anything he is telling you is
true when he says to you "isn't it true that" because
it is probably not.
Tr. at 15-16.
Mr. Blackman also made gratuitous speeches in expressing his
dissatisfaction as to how certain questions were posed.
Q. Would you read the sentence that appears under that?
A. The sentence under neither [sic] the heading
criminal activity says:
Contrary to pop beleave [sic] this is not just
drug trafficking criminal activity including
terrorism, theft, fraud, blackmail, counterfeiting
and illegal deposit taking check quote.
Q. Do you agree with that?
Mr. Blackman: Mr. Werbner, this is not an appropriate
question. It really isn't. I mean this is not a Texas
jury trial. Maybe you do this stuff where you come
from but we don't do it in cases in the Federal court
in New York. This witness doesn't have to agree or
disagree with what is in the document. I am going to
let him answer the question but it is completely
irrelevant to any issue in this case.
Tr. at 48-49.
* * *
Q. But at some point, without being precise as to the
date, you did discover that the United States
Government had declared Interpal to either be engaged
in terror financing or to be suspected of that,
correct?
A. Correct.
Q. Now, even after the US Government made that
declaration about NatWest customer, NatWest continued
to render financial services, isn't that right?
A. Correct.
Q. For more than a year, are isn't that true?
Mr. Blackman: I am not going to even bore to object to
the argumentative nature of these questions. You know
the answer to these questions and this is supposed to
-6-

Case 1:07-cv-00916-DLI-MDG Document 136 Filed 10/05/11 Page 7 of 12 PageID #: 2273
be a discovery deposition and we will stipulate to that
fact, but if you think that somehow important or
impressive to ask these "even if" questions you are
certainly free to spend your time doing that.
...
A. I don't know exactly how long.
Q.

Do you know generally how long?

A.

No.

Tr. at 33.
In addition, on several occasions, counsel objected on the
ground that he perceived an unambiguous question to be unclear.
Generally, the witness is the person to determine whether he
understands the question, to ask for clarification if necessary
and then to answer it to the best of his ability.

See Phillips,

1994 WL 116078, at *3; Hall v. Clifton Precision, A Division of
Litton Sys., Inc., 150 F.R.D. 525, 530 n. 10 (E.D. Pa. 1993).
Indeed, Mr. Hoseason did sometimes ask plaintiffs' counsel to
clarify or reformulate a question when he was confused.

The

following are examples of Mr. Blackman objections to the clarity
or wording of a question:
Q.
Mr. Hoseason, from your preparation for this
deposition, isn't it true that Natwest put red flags on
Interpal on numerous internal bank records?
Mr. Blackman: Objection to the form of the question.
I don't know what "numerous" means, but you can answer.
Tr. at 15.
* * *
Q. . . . Can you explain why NatWest put red flags on
Interpal on numerous Goalkeeper records, yet continued
to provide Interpal with financial services?
Mr. Blackman: Again, I object, as I did to a similar
question a while ago. It is argumentative,
but you can answer, and also so far
hypothetical, since you have not shown him
the document, but you can answer the
-7-

Case 1:07-cv-00916-DLI-MDG Document 136 Filed 10/05/11 Page 8 of 12 PageID #: 2274
question.
A. There was no reason not to continue to provide
financial services to a customer that had a red flag
against them.
Q. Explain that?
Mr. Blackman: In general terms now or about Interpal?
Can you clarify the question, Mr. Werbner? No, he won't
clarify the question. Mr. Werbner is shaking his head.
He does not wish to clarify the question. I am going
to just object and say the question is unclear whether
we are talking about Interpal or customers in general.
To the extent you can answer, given that deliberate
uncertainty, you certaintly may, Mr. Hoseason.
Tr. at 17-18.
* * *
Q. . . .
Isn't it true
appearing multiple times
Suspicion Reports should
bank than a customer who
times?

that a NatWest customer who is
on the bank's Money Laundering
be of greater concern to the
has not appeared multiple

Mr. Blackman: Objection, argumentative, you may answer.
A. No.
Q. Please explain.
Mr. Blackman: Is that a question, "Please explain?"
What don't you understand about the answer, Mr.
Werbner? You can answer, I suppose, if you are capable
of reading Mr. Werbner's mind about his problem, since
he won't articulate it. You may answer.
A. An internal Suspicion Report could be generated by
or could be created by any member of bank staff. Those
individuals may or may not have or have varying degrees
of knowledge of the customer. They might therefore
submit multiple Suspicion Reports for no good reason.
Id. at 23-24.
Most troubling were Mr. Blackman's speaking objections in
which he appeared to suggest to the witness how to answer a
question.

For example:

Q. How do you explain that conduct of NatWest?

-8-

Case 1:07-cv-00916-DLI-MDG Document 136 Filed 10/05/11 Page 9 of 12 PageID #: 2275
Mr. Blackman: Why does he have to explain it Mr.
Werbner? I would ask you to explain the question. The
question lacks foundation because it assumes that an
English bank should stop providing financial services
to a customer to whom it is lawfully entitled to
provide those services in the UK because the United
States Government in a regulation which on its face
does not apply in that situation has put the customer
on a list. That is why the question lacks foundation,
as you know. So to ask him to explain it implies that
there is something to explain. Having made in a [sic]
objection, you may answer the question.
Tr. at 33.

This objection was particularly inappropriate, both

in requiring the questioner to give a reason for his question and
then in thwarting a spontaneous (and frank) response.
Q. What other type of disclosure is there, as it was
done during your work on the NatWest Money Laundering
Team?
...
Mr. Blackman: Object to the form of the question.
not sure that there is another type, but you can
answer.

I am

A. We either make a disclosure to the authorities or we
don't.
Tr. at 10.
* * *
Q. Are you aware that around August 2003 the United
States Government declared Interpal, the bank in the
West customer, to be (NatWest) to be an organization
engaged in terror financing?
Mr. Blackman: Object to the form of the question.
Actually there was a specific designation what Interpal
was, which you have I guess chosen for some reason not
to use, but you can answer the question.
. . .
A. I am aware that around that time that they appeared
on a list of some description. I don't believe that
that list specifically related to persons and entities
engaged in terrorist financing. I think it was a list
of people and entities that were suspected of being so.
Tr. at 31.
* * *
Q. What is your understanding of the reference to "the
current volatile situation in Palestine?"
-9-

Case 1:07-cv-00916-DLI-MDG Document 136 Filed 10/05/11 Page 10 of 12 PageID #: 2276
Mr. Blackman: I am going to object for lack of
foundation because if he didn't write this then you are
asking him to speculate about what somebody else wrote.
That is my objection. You may answer.
A. I don't know specifically because I don't know who
wrote it.
Tr. at 131-32.
As to the third factor, despite the manner of Mr. Blackman's
frequent interruptions, there was a valid basis for many of his
objections to the form of questions, as illustrated in the last
example.

Virtually every time he objected to form, he also

instructed the witness to answer.

More importantly, his conduct

did not impede most lines of questioning.

In the few instances

where Mr. Blackman instructed Mr. Hoseason not to answer a
question, nearly every instruction was based on privilege or work
product grounds.

Plaintiffs' counsel was able to finish Mr.

Hoseason's deposition and there were no material questions that
Mr. Hoseason was prevented from answering.
Thus, in considering the three applicable factors, this
Court finds that Mr. Blackman's conduct was not so outrageous to
rise to the level of the bad faith warranting sanctions under
section 1927.

Accordingly, plaintiffs' motion for sanctions

pursuant to section 1927 is denied.
Unlike section 1927, Rule 30(d)(2) does not require a clear
showing of bad faith.

Rather, under Rule 30(d)(2), sanctions may

be imposed on an attorney who "impedes, delays, or frustrates the
fair examination of the deponent."

Fed. R. Civ. P. 30(d)(2).

The Advisory Committee Notes to Rule 30 explain that sanctions
are authorized for making improper objections or giving

-10-

Case 1:07-cv-00916-DLI-MDG Document 136 Filed 10/05/11 Page 11 of 12 PageID #: 2277
directions not to answer prohibited in the rule.
Committee's Notes to 1993 Amendments.

See Advisory

"The making of an

excessive number of unnecessary objections may itself constitute
sanctionable conduct."

Id.

Also, Rule 30(c)(2) requires that an objection "be stated
concisely in a nonargumentative and nonsuggestive manner."
R. Civ. P. 30(c)(2).

Fed.

As the Advisory Committee observed,

depositions "frequently have been unduly prolonged, if not
unfairly frustrated, by lengthy objections and colloquy, often
suggesting how the deponent should respond."

Id.

At the deposition, Mr. Blackman argued that his speaking
objections were required in order to permit plaintiffs' counsel
to respond to objections.

However, it was inappropriate for Mr.

Blackman to elaborate extensively on his reasons for objecting,
particularly in the argumentative and suggestive manner in which
he did.

As illustrated above, some of his objections turned into

long colloquies peppered with personal attacks on opposing
counsel.
Notwithstanding Mr. Blackman's failure to follow the
directive in Rule 30(c)(2) in many instances, his objections to
the form of questions were not necessarily baseless.

This Court

recognizes that he was raising his numerous objections to form at
the deposition in order not to waived them.
Committee's Notes to 1993 Amendments.

See Advisory

Critically, despite

frequent objections, the questioning of Mr. Hoseason proceeded -often for extended periods of time with no interruption other
than simple objections to form before Mr. Blackman delivered his

-11-

Case 1:07-cv-00916-DLI-MDG Document 136 Filed 10/05/11 Page 12 of 12 PageID #: 2278
next lengthy objection.

In fact, plaintiffs' counsel does not

identify any subject matter the witness was prevented from
answering.

Although I find from review of the entire transcript

that some of Mr. Blackman's conduct was intermittently, at best,
intemperate, I do not find that his conduct either destroyed the
deposition or frustrated the fair examination of the deponent.
Thus I deny plaintiffs' motion for sanctions under Rule 30.

See,

e.g., Synventive Molding Solutions, Inc. v. Husky Injection
Molding Systems, Inc., 262 F.R.D. 365, 375-76 (D.Vt. 2009)
(declining to award sanctions where "voluminous, unwarranted and
often argumentative objections 'verge[d] on frustrating the fair
examination' of the deponent, but opposing counsel was not
prevented from completing the deposition") (quoting Philips);
Cameron Industries, Inc. v. Mothers Work, Inc., 2007 WL 1649856
at *5 (S.D.N.Y. 2007).

However, Mr. Blackman is cautioned that

other courts may not look as charitably upon such behavior that
is at the edge of acceptable conduct.
CONCLUSION
For the foregoing reasons, plaintiffs' motion for sanctions
is denied.
SO ORDERED.
Dated:

Brooklyn, New York
October 5, 2011
/s/
MARILYN D. GO
UNITED STATES MAGISTRATE JUDGE

-12-