Huang v. ITV Media, Inc. et al
ORDER granting in part and denying in part 74 Motion to Compel. For the reasons set forth in the attached Memorandum and Order, the portion of the motion seeking to compel production of documents held by non-party iTV Beijing is GRANTED as to all Defendants, but Plaintiff's request for sanctions pursuant to Fed. R. Civ. P. 37 is DENIED. On or before March 17, 2017, Defendants shall produce the relevant documents in the possession of iTV Beijing. A status conference is set for April 4, 2017 at 10:00 a.m. in Courtroom 820 of the Central Islip courthouse. Ordered by Magistrate Judge Steven I. Locke on 2/22/2017. (Cea, Christine)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
ITV MEDIA, INC., ITV MEDIA (HONG
KONG), LTD., ITV.CN, INC. and SONG
LIN, an individual,
LOCKE, Magistrate Judge:
Presently before the Court is Plaintiff Tianbo Huang’s (“Huang” or “Plaintiff”)
Motion to Compel Defendants iTV Media Inc. (“iTV Media”), iTV Media (Hong Kong),
Ltd. (“iTV HK”), iTV.CN, Inc. (“iTV.CN”), and Song Lin (“Lin” and collectively,
“Defendants”) to produce documents responsive to Plaintiff’s Federal Rule of Civil
Procedure (“Fed. R. Civ. P.”) 34(a) requests. See Notice of Motion (“Notice of Motion”),
Docket Entry (“DE”) .
Specifically, Plaintiff seeks to compel Defendants to
produce documents held by non-party iTV Media Technology (Beijing) Ltd. (“iTV
Beijing” or the “Non-Party”), a wholly owned subsidiary of iTV HK (which is wholly
owned by iTV Media) and a sister corporation of iTV.CN. See Memorandum of Law
in Support of Defendants’ Motion to Compel Pursuant to Fed. R. Civ. P. 37 (“Pl.’s
Mem. Law”), DE [74-1], at 14. Huang also seeks sanctions pursuant to Fed. R. Civ.
P. 37 in connection with his motion. See Notice of Motion. Defendants oppose
Plaintiff’s motion in its entirety. See Memorandum of Law in Opposition to Plaintiff’s
Motion to Compel Pursuant to Fed. R. Civ. P. 37 (“Def.’s Mem. Law”), DE .
For the reasons set forth herein, the portion of the motion seeking to compel
production of documents held by non-party iTV Beijing is GRANTED as to all
Defendants, but Plaintiff’s request for sanctions pursuant to Fed. R. Civ. P. 37 is
DENIED. On or before March 17, 2017, Defendants shall produce the relevant
documents in the possession of iTV Beijing. A status conference is set for April 4,
2017 at 10:00 a.m. in Courtroom 820 of the Central Islip courthouse.
The factual and procedural background of this action is discussed in an April
8, 2014 Memorandum and Order in which the Honorable Joseph F. Bianco granted
former Defendant UTStarcom, Inc.’s Motion to Dismiss and granted in part and
denied in part Defendants’ Motion to Dismiss, and is incorporated herein by
reference. See April 8, 2014 Memorandum and Order, DE . Nevertheless, the
following facts provide relevant context for the instant motion.
A. The Parties
Plaintiff Huang is a New York resident who has worked in the internet
television industry for over ten years. See Second Amended Complaint (“SAC”), DE
, ¶ 9. Defendant iTV Media, incorporated under the laws of the British Virgin
Islands with an office in California, is in the media business and operates as a holding
company, wholly owning Defendant iTV HK, a company based in and organized under
the laws of Hong Kong. Id. at ¶¶ 1, 3; see Def.’s Mem. Law at 3. iTV HK, also a
holding company, wholly owns Defendant iTV.CN, a Delaware corporation with a
principal place of business in California, and iTV Beijing, the Non-Party that is the
subject of the current dispute. See Def.’s Mem. Law at 3; SAC ¶ 2. Individual
Defendant Lin is the Chief Executive Officer and a member of the Board of Directors
of all the iTV entities, including iTV Beijing. Def.’s Mem. Law at 3; SAC ¶ 4. Lin is
a citizen of China, but maintains a residence in California. SAC ¶ 4.
B. Plaintiff’s Claims
On December 8, 2010, Huang met with Lin and Jingchun “Jason” Sun (“Sun”),
Chairman of the Board of iTV Media, in Plainview, New York. Id. at ¶¶ 16, 22. The
purpose of the meeting was to discuss Huang possibly managing iTV.CN, which at
the time was a newly established entity. Id. at ¶¶ 22-23. iTV Media sought to launch
an internet based television service platform in the United States under iTV.CN. Id.
According to Plaintiff, he was sought after because iTV.CN “critically needed [his]
experience, contacts within the industry, and expertise,” and he was promised “a
stable and promising career.” Id. at ¶¶ 23, 24.
After the initial meeting, he met with iTV executives in Beijing, China. Id. at
During the trip, Huang was offered the position of directing “the global
operations of iTV Group, with the exception of China, including directing
responsibility for all of the North American operations through a newly-formed U.S.
entity, Defendant iTV.CN.” Id. at ¶ 27. He also was offered an annual salary of
$300,000, annual performance bonuses, and stock interests in iTV Media equal to 1%
of the company. Id. at ¶¶ 27-28. He further was told that an initial public offering
of iTV Media was forthcoming within the year, and that he would be provided
“invested stock rights” in that company. Id. at ¶ 26. Persuaded, he accepted the offer
in April 2011, terminating his then-current employment. Id. at ¶ 33. Although
working to launch iTV.CN, his position was “Vice President of iTV Media Inc. &
President of iTV Media International,” and the terms of his employment were
memorialized in a written Offer Letter, signed by Lin. Id. at Ex. A (“Offer Letter”),
DE [36-1], at 1. Huang reported directly to Lin and was based in Melville, New York.
See Offer Letter; SAC ¶ 37.
Plaintiff’s employment with Defendants was not as he had imagined. Despite
the Offer Letter describing his duties as leading operations of international
businesses outside of China, Huang claims that he was “prevented from doing so by
L[in], his direct supervisor, who continued to personally manage international
operations, most notably those in Spain and Thailand.”
Id. at ¶ 39.
instructed Plaintiff to ignore copyright restrictions and to not enter into licensing
agreements with content copyright owners. Id. at ¶ 49. Moreover, according to
Huang, he was not timely paid his salary, worked 20-30 hours in excess of his weekly
schedule without compensation, and was not awarded any stock interest. Id. at ¶¶
40-41, 43. When he complained to Lin, including that Defendants’ conduct violated
the New York Labor Law, Lin responded with insulting remarks and threatened
termination. Id. at ¶¶ 40, 44, 47. In general, Huang describes the environment as a
“hostile and intimidating work atmosphere.” Id. at ¶ 40.
Despite these work conditions, however, Plaintiff worked “diligently” and “iTV
Group’s business objectives had been significantly advanced by the latter part of
2012.” 1 Id. at ¶ 52. Nevertheless, on November 2, 2012, Huang was terminated. Id.
at ¶ 53. He believes that this was a “result of his continued attempt to secure the
benefits promised to him in his [Offer Letter] and his insistence on obtaining legal,
albeit more expensive, content for the iTV Group platforms.” Id. at ¶ 54. Although
his stock interests vested fully upon termination, he did not, within 30 days of
termination, receive any acknowledgement that they vested, nor did he receive
overtime pay or his full benefits pursuant to his agreed upon severance package. Id.
at ¶¶ 55, 63-64. Further, even though he was not paid his salary, he was sent an IRS
Form W-2 stating that he was paid $342,779.08 in 2012. Id. at ¶ 56. Plaintiff claims
this document was knowingly false and misleading, particularly to “mask and to
conceal the iTV Group and L[in]’s fraud and to intentionally inflict upon Plaintiff
harm through the creation of a large financial tax burden.” Id. at ¶¶ 57, 60.
For this alleged harm, Huang commenced this action on June 14, 2013 against
Defendants, 2 subsequently amending the Complaint twice.
(“Compl.”), DE ; Amended Complaint (“Am. Compl.”), DE ; SAC. He alleges
causes of action for breach of contract, unjust enrichment, fraud and deceit, breach of
duty of good faith and fair dealing, and failure to maintain records and illegal
Plaintiff refers to the iTV Defendants as “iTV Group,” see Pl.’s Mem. Law at 1, a description
Defendants label “fictional.” See Def.’s Mem. Law at 15.
UTStarcom, Inc. (“UTStarcom”) was an original Defendant in this action, but was voluntarily
dismissed by Stipulation of Dismissal dated May 7, 2014. See Stipulation of Dismissal of
UTSTARCOM, INC. (“Stip. of Dismissal”), DE . According to a Form 20-F filed by UTStarcom
Holdings Corp. (“UTStarcom Holdings”), the parent company of UTStarcom, UTStarcom Holdings
owns 49% of iTV Media. See Declaration of Eugene Meyers (“Meyers Decl.”), DE [74-2], at Ex. 8
(“UTStarcom Holdings 2014 20-F”), DE [74-10], at 3.
deductions in violation of the New York Labor Law. See generally SAC. Defendants
answered the SAC on February 13, 2015. See DE .
C. The Current Dispute
Plaintiff served discovery requests on each Defendant in early 2015. 3 See Pl.’s
Mem. Law at 6. Defendants generally objected, in part, that the documents were not
in their “possession, custody or control.” See Letter Motion to Compel (“Letter Motion
to Compel”), DE , at Ex. A (“Defendants’ Objections”), DE [61-1], at pp. 3, 13, 21,
32. Although Defendants produced some documents, Huang claims that “the vast
majority of the documents bore little relation to the discovery requests” as “no
internal correspondence was produced from any of the support staff based in China .
. . .” Pl.’s Mem. Law at 6.
As a result, Plaintiff proposed a list of custodians that were likely to possess
responsive information, including five based in the United States and five in the iTV
Beijing office. See id.; Meyers Decl., at Ex. 12 (“ESI Request”), DE [74-14]. According
to Huang, the employees of the iTV Beijing office “were responsible for the accounting
of the iTV Group operations, the management of the human resources of the iTV
Group, the funding and capitalization of the iTV Group and the development and
management of iTV Media’s stock options offering.” Pl.’s Mem. Law at 6. Defendants,
however, refused to produce documents of these custodians with the exception of Lin,
Plaintiff has not attached its document requests to the current motion. Accordingly, the
Court relies on each Defendants’ objections to Plaintiff’s Requests for the Production of Documents,
which were attached to Huang’s Letter Motion to Compel filed with this Court on June 4, 2015. See
Letter Motion to Compel (“Letter Motion to Compel”), DE .
explaining that “we stand by our objection to any and all discovery requests for
materials maintained by companies or employees of companies not named as
defendants in this matter.” See Meyers Decl. at Ex. 16 (“May 14, 2015 Letter”), DE
[74-18]. Moreover, Defendants explained that computers kept at iTV.CN offices in
New York were “scrubbed” before they were returned to the company, suggesting that
documents held by the United States custodians are out of Defendants’ possession.
On June 4, 2015 Plaintiff filed a letter motion to compel, citing issues with
Defendants’: (1) relevancy objections to Huang’s discovery requests; (2) objection that
they do not have “possession, custody or control over iTV Media subsidiaries;” and (3)
refusal to produce documents in response to Plaintiff’s ESI request with the exception
of documents by Lin, including documents held by iTV Beijing employees. See Letter
Motion to Compel at 2-3. A hearing was held on this letter motion on July 21, 2015,
at which time the Court ruled on Defendants’ relevancy objections. See July 21, 2015
Minute Order (“July 21, 2015 Minute Order”), DE . Concerning Defendant’s
refusal to produce documents in control of its subsidiaries and those related to the
ESI Request, the Court denied the motion with leave to renew as a motion on notice
and after a Fed. R. Civ. P. 30(b)(6) deposition. Id.
Huang thereafter took the deposition of Lin as a 30(b)(6) witness, and this
motion followed. See Meyers Decl. at Ex. 3 (“Lin Dep.”). He now seeks an order
compelling Defendants to produce all documents responsive to his Fed. R. Civ. P.
34(a) requests, particularly focusing on those documents held by iTV Beijing, and
related sanctions. See Notice of Motion.
Pursuant to Fed. R. Civ. P. 26:
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.
Fed. R. Civ. P. 26(b)(1). Information “is relevant if: ‘(a) it has any tendency to make
a fact more or less probable than it would be without the evidence; and (b) the fact is
of consequence in determining the action.” Vaigasi v. Solow Mgmt. Corp., No. 11 Civ.
5088, 2016 WL 616386, at *11 (S.D.N.Y. Feb. 16, 2016) (quoting Fed. R. Evid. 401).
Further, “[t]he party seeking the discovery must make a prima facie showing, that
the discovery sought is more than merely a fishing expedition.” Evans v. Calise, No.
92 Civ. 8430, 1994 WL 185696, at *1 (S.D.N.Y. May 12, 1994); see also Mandell v. The
Maxon Co., Inc., No. 06 Civ. 460, 2007 WL 3022552, at *1 (S.D.N.Y. Oct. 16, 2007)
(“[T]he party seeking discovery bears the burden of initially showing relevance.”). It
is well-established that “[m]otions to compel are left to the court’s sound discretion.”
Mirra v. Jordan, No. 13-CV-5519, 2016 WL 889683, at *2 (S.D.N.Y. Feb. 23, 2016);
see also Liberty Mut. Ins. Co. v. Kohler Co., No. 08-CV-867, 2010 WL 1930270, at *2
(E.D.N.Y. May 11, 2010) (“[A] motion to compel is entrusted to the sound discretion
of the district court.”).
Rule 34 requires a party to produce all documents in the scope of Rule 26 and
within its “possession, custody, or control.” See Fed. R. Civ. P. 34(a) (“A party may
serve on any other party a request within the scope of Rule 26(b) . . . to produce and
permit the requesting party or its representative to inspect, copy, test, or sample the
following items in the responding party’s possession, custody, or control . . . .”). The
“concept of control” is “highly fact-specific,” Guillory v. Skelly, No. 12-CV-00847, 2014
WL 4542468, at *7 (W.D.N.Y. Sept. 11, 2014), and is “broadly construed . . . .” N.Y.
ex rel. Boardman v. Nat’l R.R. Passenger Corp., 233 F.R.D. 259, 268 (N.D.N.Y. 2006)
(“The term control in the context of discovery is to be broadly construed. . . . The
critical inquiry is whether the party-litigant can exercise custody and control over the
A party has “control” over documents held by a non-party if it “has the legal
right or practical ability to obtain documents from [that] non-party . . . .” In re
Teligent, Inc., 358 B.R. 45, 60 (Bankr. S.D.N.Y. 2006); see also Bank of N.Y. v.
Meridien BIAO Bank Tanzania Ltd., 171 F.R.D. 135, 146 (S.D.N.Y. 1997)
(“[D]ocuments are considered to be under a party’s control when that party has the
right, authority, or practical ability to obtain the documents from a non-party to the
This rule applies equally even where the non-party is “beyond the
jurisdiction of the court.” M.L.C., Inc. v. N. Am. Philips Corp., 109 F.R.D. 134, 136
(S.D.N.Y. 1986) (“A party may be ordered to produce documents where that party has
the legal right to obtain the documents, even though that party retains no copy, and
regardless of whether the documents are beyond the jurisdiction of the court.”); see
also Cooper Indus., Inc. v. British Aerospace, Inc., 102 F.R.D. 918, 920 (S.D.N.Y. 1984)
(“The fact that the documents are situated in a foreign country does not bar their
Finally, the party seeking discovery bears the burden “to make a
showing that the other party has control over the materials sought.” Dietrich v.
Bauer, No. 95 CIV. 7051, 2000 WL 1171132, at *4 (S.D.N.Y. Aug. 16, 2000), on
reconsideration in part, 198 F.R.D. 397 (S.D.N.Y. 2001).
MOTION TO COMPEL
With these standards in mind, the Court turns to Huang’s Motion to Compel.
Specifically, Plaintiff seeks an order from this Court that “defendants must produce
responsive documents within the custody of iTV Beijing employees.” Pl.’s Mem. Law
at 14. The Court is mindful that the Non-Party has a different relationship with each
of the Defendants—iTV Media and iTV HK are holding companies and parent
corporations, iTV.CN is a sister corporation, and Lin is an individual who is the Chief
Executive Officer of iTV Beijing. As such, the Court analyzes whether each of these
Defendants, based on their relationship to the Non-Party, exercise the requisite
control over iTV Beijing such that they must be compelled to produce documents in
the Non-Party’s possession.
A. Parent-Subsidiary Relationship: iTV Media and iTV HK
In analyzing “control” in the context of a parent-subsidiary relationship,
Courts focus on four factors: “the degree of ownership and control exercised by the
parent over the subsidiary, a showing that the two entities operate as one,
demonstrated access to documents in the ordinary course of business, and an agency
relationship.” DeSmeth v. Samsung Am., Inc., No. 92 CIV. 3710, 1998 WL 74297, at
*9 (S.D.N.Y. Feb. 20, 1998); see also Camden Iron & Metal, Inc. v. Marubeni Am.
Corp., 138 F.R.D. 438, 442 (D.N.J. 1991) (“Evidence considered by the courts includes
the degree of ownership and control exercised by the parent over the subsidiary, a
showing that the two entities operated as one, demonstrated access to documents in
the ordinary course of business, and an agency relationship.”). Similar to the legal
standard set forth above, “[w]hen determining the sufficiency of ‘custody and control’
of material for purposes of Fed.R.Civ.P. 34, the nature of the relationship between
the party and nonparty corporations is the key.” PCI Parfums et Cosmetiques Int’l v.
Perfumania, Inc., No. 93 CIV. 9009, 1998 WL 646635, at *2 (S.D.N.Y. Sept. 21, 1998);
see also Doe Run Peru S.R.L. v. Trafigura AG, No. 3:11, 2011 WL 13059042, at *1 (D.
Conn. Aug. 24, 2011) (“Whether a subpoenaed domestic corporation can be compelled
to produce documents held by its foreign parent or subsidiary turns on the nature of
the relationship between the entities.”). Below, the Court focuses on the relevant four
factors in determining whether iTV Media and iTV HK exercise control over iTV
Beijing for the purposes of discovery.
1. Ownership and Control
At the outset, the Court recognizes that iTV HK’s full ownership of iTV Beijing
heavily weighs in favor of a finding of ownership and control. See United States v.
Int’l Union of Petroleum & Indus. Workers, AFL-CIO, 870 F.2d 1450, 1452 (9th Cir.
1989) (“A corporation must produce documents possessed by a subsidiary that the
parent corporation owns or wholly controls.”); In re Ski Train Fire of Nov. 11, 2000
Kaprun Austria, No. MDL 1428, 2006 WL 1328259, at *6 (S.D.N.Y. May 16, 2006)
(finding that the factor of ownership and control “tips in Plaintiffs’ favor” due to a
parent-subsidiary relationship); Dietrich, 2000 WL 1171132, at *3 (“Numerous courts
have concluded that a parent corporation has a sufficient degree of ownership and
control over a wholly-owned subsidiary that it must be deemed to have control over
documents located with that subsidiary.”). This finding further extends to iTV Media,
which wholly owns iTV HK, as “[t]his principle applies where the subsidiary is not
owned directly but, rather, is owned by an intermediate corporation that is itself a
wholly-owned corporation of the parent corporation.” Dietrich, 2000 WL 1171132, at
*3; see also Lethbridge v. British Aerospace PLC, No. 89 CIV. 1407, 1990 WL 194915,
at *1 (S.D.N.Y. Nov. 28, 1990) (“Furthermore, even if INC were not itself a party to
this action, it is a wholly-owned subsidiary of British Aerospace Holdings Inc. ,
which in turn is a wholly-owned subsidiary of PLC, and PLC would therefore be
obligated to disclose documents and information held by INC.”).
The Court is cognizant, however, that “[m]ere ownership by a parent . . . is not
a decisive factor, but merely one factor among several.” Sicav v. Wang, No. 12 CIV.
6682, 2014 WL 2624753, at *5 (S.D.N.Y. June 12, 2014). Even so, Plaintiff proffers
several other examples of “control.”
For example, Lin testified that iTV Media
directed iTV Beijing to handle services on its behalf, including assigning the NonParty’s human resources department to handle Huang’s payroll and compensation.
See Lin Dep. at 49-50. Indeed, Lin testified that the human resources work related
to Plaintiff was “[n]ot the first” time that iTV Beijing performed “services” on behalf
of iTV Media. See id. at 51:1-12. Moreover, Huang provides two resolutions of the
Board of Directors of iTV Media, one where it directs iTV Beijing to enter into a joint
venture with another company, and another where the Board adopted that iTV
Beijing would take out a loan from a lender. See Meyers Decl. Ex. 17 (“May 6, 2011
Resolution”); Ex. 19 (“December 23, 2011 Resolution”).
Finally, control is also
suggested through common leadership, as Defendant Lin is the Chief Executive
Officer of iTV Media, iTV HK, and iTV Beijing, and testified that the general
managers of all entities report to him. See Def.’s Mem. Law at 3; Lin Dep. at 17-18,
76:23-25, 77:1-3. Thus, although Defendants argue that each iTV subsidiary has its
own corporate structure and “independent decision-making process,” see Def.’s Mem.
Law at 9, that the parent corporations and subsidiary all share the same CEO and
directed iTV Beijing to perform tasks on its behalf weigh in favor of a finding of
control. See DeSmeth, 1998 WL 74297, at *9 (giving weight to that a parent and
subsidiary share the same senior vice president).
2. Operation as One
Turning to the second factor, Huang has met his burden of showing that the
parents and subsidiary operate as one entity. Although Defendants argue that iTV
Media and iTV HK are holding companies “which do not have employees beyond their
executives,” Lin also testified that iTV Beijing shares the same CEO, financial
controller, and chief operating officer with iTV Media, and that the legal affairs
manager of both iTV Media and iTV HK works for iTV Beijing on “a case-by-case
basis.” See Lin Dep. at 93, 102, 103, 133; Def.’s Mem. Law at 11. In addition to
similar employees, according to the March 28, 2012 Minutes of the Board of Directors
of iTV Media, iTV Beijing had certain “managing functions over other offices in dayto-day global operation especially at finance and HR aspects . . . .” 4 See Meyers Decl.
at Ex. 4 (“March 28, 2012 Minutes”), DE [74-6], at 1350.
Finally, Kelly Tsang
(‘Tsang”), who worked as an accountant for iTV.CN, explained that the budget was
controlled by the Beijing office. See Meyers Decl. at Ex. 13, Deposition of Kelly Tsang
(“Tsang Dep.”), DE [74-15], at 23-25.
Although Tsang worked for iTV.CN, iTV
Beijing’s sister corporation, she explained that “everything is controlled by the
Beijing office” and that “[t]heir main office is there,” suggesting that iTV Beijing
controlled the budget for all the iTV entities. See Tsang Dep. at 25:1-6.
Defendants argue that the entities never operated as one unit because they
serve different purposes, and have separate boards, independent structures, and no
direct management by the corporate parent.
Def.’s Mem. Law at 11. However,
taking a pragmatic approach to the issue of control, the Court finds the facts as set
forth above, particularly those regarding shared employees, establish that the parent
corporations and subsidiary operated as one unit. See Motorola Credit Corp. v. Uzan,
No. 02 CIV. 666, 2013 WL 6098388, at *3 (S.D.N.Y. Nov. 20, 2013) (“This pragmatic
approach to understanding ‘control’ will often result in a finding that a parent
corporation has, practically speaking, sufficient control over its subsidiaries to
As Defendants point out, the minutes also reflect that the Board of Directors did not want
iTV Beijing to have these management functions because it was “structured for local operation” and
that they sought to “position [the] Beijing office as the China headquarter [sic] with emerging projects
in China instead of global headquarter [sic].” See March 28, 2012 Minutes at 1350. This, however,
supports the Court’s finding that the iTV entities had operated as one insomuch as it provided support
where no other was available.
require that it search them in compliance with a subpoena served on the parent.”); In
re Vivendi Universal, S.A. Sec. Litig., No. 02 CIV. 5571, 2009 WL 8588405, at *4
(S.D.N.Y. July 10, 2009) (reasoning that a parent and wholly owned subsidiary “could
be said to be operating as one entity if they shared employees, shared facilities,
shared office space and utilized common practice and forms.”).
3. Access to Documents
Regarding the third factor, Courts have found that “‘[a]ccess’ and ‘ability to
obtain documents’ have been found where ‘documents ordinarily flow freely between’
parent and subsidiary.” See Linde v. Arab Bank, PLC, 262 F.R.D. 136, 141 (E.D.N.Y.
2009) (quoting Hunter Douglas, Inc. v. Comfortex Corp., No. CIV. A. M8–85, 1999 WL
14007, at *3 (S.D.N.Y. Jan. 11, 1999)). The record before the Court satisfies this
standard. For example, Lin described that he, as CEO of iTV Media, “assigned” the
human resources department at iTV Beijing to handle Plaintiff’s employment,
including setting up payroll, the Offer Letter, and processing paperwork, and
explained that the iTV Beijing office would “share with [him] the paperwork.” See
Lin Dep. at 39-41. Also, former Chief Financial Officer of iTV Media, Richard Abbott
(“Abbott”), testified that employee incentive plans were created “at the parent
company,” and that an employee would be provided with a form regarding the
granting of restricted stock, which was signed by “acting general counsel out of
Beijing.” See Meyers Decl. at Ex. 14, Deposition of Richard Abbott (“Abbott Dep.”),
DE [74-16], at 15-17. Other evidence of shared documents presented by Plaintiff
includes “iTV HK’s payment agent’s bank account information from Lin to iTV
Beijing staff” and an e-mail summarizing payments to Huang sent from iTV Beijing
to iTV Media. See Pl.’s Mem. Law at 14 (citing Lin Dep. at 51-54; Abbott Dep. at 109111).
Defendants contest these examples provided by Huang, arguing that they are
“corporate” documents insomuch as they were prepared by an iTV employee through
a “charge back system,” or that iTV Beijing performed them for a fee. See Def.’s Mem.
Law at 19. For a majority of the examples, however, Defendants do not cite to any
evidence demonstrating that the parent companies charged iTV Beijing for the
Defendants do, however, cite to a portion of Lin’s
testimony where he states that iTV Beijing charged iTV Media for the work it
completed in connection with processing Huang’s employment papers and setting up
his payroll. See id.; Lin Dep. at 49. Lin, however, also explained that as CEO of iTV
Media, he “assigned” iTV Beijing to handle the case due to a “limited staffing team,”
that the Non-Party “shared” the relevant paperwork with him, and that, in general
when Huang began, iTV Beijing would “help out” until a proper “charge-back” process
was set up. Lin Dep. at 39:9-12; 40:19-25; 74:12-16. This language suggests that not
all of iTV Beijing’s activities on behalf of the parent corporations were done for a fee,
and, as such, Defendants “may not hold themselves out as united for some purposes,
but unconnected for others.” DeSmeth, 1998 WL 74297, at *10.
The Court is also not persuaded by Defendants that this case is similar to In
re Vivendi, where the Court found that a parent did not have access to its subsidiary’s
documents. There, individual plaintiffs served a subpoena on Société Générale (“SG”)
to produce documents relating to Elektrim Telekomunikacja (the “ET documents”),
which SG claimed were in the possession of its wholly owned subsidiary. 2009 WL
8588405, at *1. In attempting to show access to documents, the individual defendants
only showed a sharing between SG and the subsidiary of financial statements, which
the Court found insufficient as that did “not demonstrate access to the ET
documents.” Id. at *4. Here, however, Plaintiff not only cites to the sharing of
financial reports amongst the iTV entities, but also points to other evidence
suggesting that iTV Beijing and the parent companies shared documents,
particularly those relating to Plaintiff’s employment which bear upon the claims in
this litigation. See Pl.’s Mem. Law at 13. 5 As Huang has shown significantly more
than the plaintiffs in In re Vivendi, that case does not call for denial of Plaintiff’s
Motion to Compel.
4. Agency Relationship
Finally, the Court turns to the fourth factor, whether there is an agency
relationship between the parent and subsidiary. “[T]o establish a parent’s agency
relationship with a subsidiary, traditional agency principles apply and there must be
‘facts sufficient to show (1) the principal’s manifestation of intent to grant authority
to the agent, and (2) agreement by the agent.’” Harte v. Ocwen Fin. Corp., No.
Plaintiff also attaches filings with the Securities Exchange Commission by UTStarcom
Holdings, which reference the corporate structure of the iTV entities, and requests that the Court take
judicial notice of the filings. See Pl.’s Mem. Law at 5, n.3. Defendants dispute the admissibility of
these documents, arguing that they are filed by a third-party minority shareholder, and argue that
taking judicial notice is improper. See Def.’s Mem. Law at 14. The Court does not, however, rely on
these filings in determining the motion, as the other evidence in the record is sufficient, and thus does
not decide the judicial notice issue.
13CV5410, 2016 WL 1275045, at *4 (E.D.N.Y. Mar. 31, 2016) (quoting Commercial
Union Ins. Co. v. Alitalia Airlines, S.p.A., 347 F.3d 448, 462 (2d Cir. 2003)). Here,
Huang suggests an agency relationship based on iTV Media’s control over iTV
Beijing, specifically through actions by the iTV Media Board of Directors and because
iTV Media directed that iTV Beijing share its resources with other iTV entities. See
Pl.’s Mem. Law at 10-11. He does not, however, explain if iTV Beijing agreed to this
granting of authority upon it, and thus the Court finds that he has not satisfied his
burden of establishing an agency relationship.
Nonetheless, as three out of four factors weigh in favor of Plaintiff, and based
upon the totality of the circumstances, including that iTV Beijing is wholly owned by
the corporate defendants, and that all entities involved report to the same Chief
Executive Officer, the Court finds that Defendants iTV Media and iTV HK exercise
the requisite control over the responsive documents held by iTV Beijing. See In re
Ski Train Fire, 2006 WL 1328259, at *8 (“Viewing the totality of these facts, and in
light of the 100% ownership of Siemens Austria by Siemens AG, the Court concludes
that the only reasonable conclusion to draw is that if Siemens AG needed the
assistance or cooperation of Siemens Austria in a matter of concern to the company,
it would receive such assistance, be it in the form of providing documents in Siemens
Austria’s custody, or otherwise.”). Accordingly, Plaintiff’s motion to compel is granted
as to Defendants iTV Media and iTV HK.
B. Sister Corporation: iTV.CN
The relationship between iTV.CN and iTV Beijing, both wholly owned by iTV
HK and thus “sister corporations,” demands a different analysis. Fewer cases analyze
whether a litigating party should be compelled to produce documents held by its
foreign sister corporation. Some have found the necessary control “where the sister
corporation was found to be the alter ego of the litigating entity . . . or where the
litigating corporation had acted with its sister in effecting the transaction giving rise
to suit and is litigating on its behalf . . . .” Gerling Int’l Ins. Co. v. C.I.R., 839 F.2d
131, 141 (3d Cir. 1988); see also PCI Parfums et Cosmetiques Int’l, 1998 WL 646635,
at *2 (citing same standard).
Others, although recognizing that an “[a]lter ego
situation may certainly lead to the conclusion that one corporation has control over
documents held by the other corporation,” have found that “a showing of control has
not been limited to alter ego situations . . . .” S.E.C. v. Credit Bancorp, Ltd., 194
F.R.D. 469, 473 (S.D.N.Y. 2000); see also Cooper Indus., Inc. v. British Aerospace, Inc.,
102 F.R.D. 918, 919 (S.D.N.Y. 1984) (finding documents held by British affiliate of
defendant in defendant’s control where they “relate to the planes that defendant
works with every day”).
The record before the Court reflects that iTV.CN exercises the requisite
“control” within the meaning of Fed. R. Civ. P. 34 over the documents held by iTV
Beijing. Even though the two entities have different Boards of Directors, they are
both wholly owned by the same entity, iTV HK, and share the same Chief Executive
Officer, Lin. See Perini Am., Inc. v. Paper Converting Mach. Co., 559 F. Supp. 552,
552 (E.D. Wis. 1983) (finding control where, even though sister companies had
different directors, 100% of the stock of one and 99.5% of the other was owned by the
same individual). The record also demonstrates a free flow of information between
the two sister corporations, including the budget, payroll reports, organization chart,
and company policies—such as travel and vacation policies and the employee
handbook. See Tsang Dep. at 18:10-19 (iTV.CN sends payroll information each week
to iTV Beijing financial controller and Plaintiff), 23-25 (budget sent by the Beijing
office); Meyers Decl. at Ex. 22, DE [74-24] (sending company policies, including travel
policy and employee handbook, and organization chart, from iTV.CN to a human
resources employee at iTV Beijing), Ex. 24, DE [74-26] (email chain including
Plaintiff and iTV Beijing employees over the budget).
Moreover, based on the testimony of Lin, there appears to be a level of
cooperation amongst the two entities. During his deposition, Lin explained that
Huang initially borrowed space at the iTV Beijing office for a call center, which
irritated the staff in Beijing because he utilized resources before a “proper chargeback” process was in place. Lin Dep. at 73:4-25. In an attempt to smooth over the
situation, Lin explained that:
I said okay, because it’s a new process; it’s a—you know, Huang is a new
manager, and it will take time for him to set up everything. So, you
know, as the sister company, we just help out, you know until a proper
team setup here and also proper financials, including the charge-back
of, you know, resources between the companies established.
So I coordinate between Beijing office and the U.S office to make sure
that a proper process can be set up and also some early stage assistance
can be made available to Billy so that he can, you know, grow the
business, you know, where we can get over the setup stage as soon as
Lin Dep. at 73-75. The history of “help[ing] out” amongst the entities suggests that
iTV Beijing would continue to provide assistance to its sister corporation, either
through producing documents or otherwise. Also, as Lin, CEO of all entities involved,
“coordinate[d]” this level of cooperation between iTV.CN and iTV Beijing in the past,
the Court sees no reason why he could not do so regarding the production of
documents in the future.
As such, the Court grants Plaintiff’s motion as it pertains to Defendant
C. Chief Executive Officer: Lin
Finally, the Court finds that Defendant Lin, as Chief Executive Officer of iTV
Beijing, demonstrates sufficient control over the Non-Party to grant Plaintiff’s
motion. Indeed, “[i]t is well-established that ‘[a]n individual party to a lawsuit can
be compelled to produce relevant information and documents relating to a non-party
corporation of which it is an officer, director or shareholder.’” Riddell Sports Inc. v.
Brooks, 158 F.R.D. 555, 558 (S.D.N.Y. 1994) (citing Gen. Envtl. Sci. Corp. v. Horsfall,
136 F.R.D. 130, 133 (N.D. Ohio 1991)); see also In re Flag Telecom Holdings, Ltd. Sec.
Litig., 236 F.R.D. 177, 181 (S.D.N.Y. 2006) (finding that a former senior executive of
a company must produce documents in possession of that company); In re Teligent,
Inc., 358 B.R. at 60 (high ranking officer and director must produce documents of
corporation). Furthermore, Plaintiff has met his burden of establishing Lin’s control
over iTV Beijing, including that he directed iTV Beijing to assist Plaintiff in setting
up iTV.CN and instructed iTV Beijing’s human resources department to handle
processing Plaintiff’s initial employment matters. See Pl.’s Mem. Law at 11; Lin Dep.
at 39, 73-75. Accordingly, Plaintiff’s motion to compel is also granted as to Lin.
Finally, the Court addresses the portion of Huang’s motion requesting
“appropriate sanctions, including the payment of expenses incurred by plaintiff in
preparing this Motion pursuant to Fed. R. Civ. P. 37(a)(5)(A).” See Pl.’s Mem. Law at
2. According to Fed. R. Civ. P. 37(a)(5)(A), if a motion to compel is granted,
[T]he court must, after giving an opportunity to be heard, require the
party or deponent whose conduct necessitated the motion, the party or
attorney advising that conduct, or both to pay the movant’s reasonable
expenses incurred in making the motion, including attorney’s fees. But
the court must not order this payment if:
the movant filed the motion before attempting in good faith to
obtain the disclosure or discovery without court action;
the opposing party’s nondisclosure, response, or objection was
substantially justified; or
other circumstances make an award of expenses unjust.
Fed. R. Civ. P. 37(a)(5)(A). Here, particularly in light of the fact that the Court could
not decipher Plaintiff’s original Letter Motion to Compel until it was filed as a fully
briefed Motion on Notice and upon a 30(b)(6) deposition, the Court finds that
Defendants’ nondisclosure was subject to reasonable dispute and thus substantially
justified. See Underdog Trucking, L.L.C. v. Verizon Servs. Corp., 273 F.R.D. 372, 377
(S.D.N.Y. 2011) (“Instead, conduct is substantially justified if there was a genuine
dispute or if reasonable people could differ as to the appropriateness of the contested
action.”) (internal quotation marks omitted). Accordingly, and as Plaintiff does not
argue otherwise, the portion of the Motion to Compel requesting sanctions is denied.
For the reasons set forth above, the portion of the motion seeking to compel
production of documents held by non-party iTV Beijing is GRANTED as to all
Defendants, but the portion seeking sanctions is DENIED. On or before March 17,
2017, Defendants shall produce the relevant documents in the possession of iTV
Beijing. A status conference is set for April 4, 2017 at 10:00 a.m. in Courtroom 820
of the Central Islip courthouse.
Dated: Central Islip, New York
February 22, 2017
/s Steven I. Locke
STEVEN I. LOCKE
United States Magistrate Judge
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