Fort Worth Employees' Retirement Fund v. JP Morgan Chase & Co. et al

Filing 234

MEMORANDUM AND ORDER: The disputes concerning the Rule 30(b)(6) depositions of the defendants are resolved as set forth above. (Signed by Magistrate Judge James C. Francis on 12/9/2013) Copies Mailed By Chambers. (tn)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - -:
FORT WORTH EMPLOYEES’ RETIREMENT
: 09 Civ. 3701 (JPO) (JCF)
FUND, et al.,
:
:
MEMORANDUM
:
AND ORDER
Plaintiffs,
:
:
- against :
:
J.P. MORGAN CHASE & CO., et al.,
:
:
Defendants.
:
- - - - - - - - - - - - - - - - - -:
JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE
This is a securities action brought on behalf of a class of
purchasers of mortgage-backed securities issued by J.P. Morgan
Acceptance Corporation I.

The plaintiffs have submitted a letter

application seeking relief from what they argue is the defendants’
failure to comply with obligations under Rule 30(b)(6) of the
Federal Rules of Civil Procedure in connection with the deposition
of corporate witnesses.

(Letter of Daniel S. Drosman dated Oct.

25, 2013 (“Drosman 10/25/13 Letter”)).

The defendants responded,

opposing the relief requested by the plaintiffs (Letter of Dorothy
J. Spenner dated Nov. 4, 2013 (“Spenner 11/4/13 Letter”)), and the
plaintiffs replied (Letter of Daniel S. Drosman dated Nov. 8, 2013
(“Drosman 11/8/13 Letter”)).
Background
The factual and procedural background of this action is set
1

forth in prior opinions. See Fort Worth Employees’ Retirement Fund
v. J.P. Morgan Chase & Co., 862 F. Supp. 2d 322 (S.D.N.Y. 2012);
Employees’ Retirement System of the Government of the Virgin
Islands v. J.P. Morgan Chase & Co., 804 F. Supp. 2d 141 (S.D.N.Y.
2011), amended by Order dated Jan. 4, 2013.
On July 18, 2013, the plaintiffs served a Rule 30(b)(6)
deposition

notice,

advising

defendants

J.P.

Morgan

Acceptance

Corporation I and J.P. Morgan Securities, Inc. that they intended
to take the deposition of the defendants’ designees on nine topics,
most of which contained multiple subparts.
Notice

of

Deposition

of

Defendants

J.P.

(Lead Plaintiffs’
Morgan

Acceptance

Corporation I and J.P. Morgan Securities, Inc. Pursuant to Fed. R.
Civ. P. 30(b)(6) (“30(b)(6) Notice”), attached as Exh. A to Drosman
10/25/13 Letter, at 8-11).
identified

topics

but

The defendants objected to each of the

indicated

that,

notwithstanding

their

objections, they would produce witnesses to testify about five of
the nine subjects.

(J.P. Morgan Acceptance Corporation I’s and

J.P. Morgan Securities, Inc.’s Objections and Responses to Lead
Plaintiffs’ Notice of Deposition Pursuant to Fed. R. Civ. P.
30(b)(6), attached as Exh. B to Drosman 10/25/13 Letter).

There

does not appear to have been any further negotiation among counsel
over the scope of the depositions.
Meanwhile, at the same time that the plaintiffs propounded
2

their 30(b)(6) deposition notice, they also served document demands
on the defendants and subsequently indicated that at least some of
the requested documents were pertinent to the 30(b)(6) depositions.
(Drosman 11/8/13 Letter at 5-6).1

There was some communication

among counsel concerning the timing of the defendants’ responses
and the possibility of delaying the 30(b)(6) depositions. (Various
e-mails, attached as Exhs. 3, 4, and 5 to Spenner 11/4/13 Letter).
Ultimately, the defendants produced Seth M. Fenton and Paul
White as their 30(b)(6) witnesses on September 12 and 13, 2013.
(Deposition Transcript of Seth M. Fenton dated Sept. 12, 2013
(“Fenton Dep.”) and Deposition Transcript of Paul White dated Sept.
13, 2013 (“White Dep.”), attached respectively as Exhs. 1 and 2 to
Spenner 11/4/13 Letter).

According to the plaintiffs, these

depositions were unsatisfactory in a number of respects.

First,

the witnesses were unprepared to testify at all regarding the four
topics that the defendants had objected to in their entirety.
(Drosman 10/25/13 Letter at 3-4).

1

Even as to other topics, the

The plaintiffs have not provided copies of the relevant email correspondence, reasoning that my individual rules forbid them
from doing so. This is a curious interpretation of my admonition
that “[c]opies of correspondence between counsel shall not be sent
to the court.” (Individual Practices of Judge Francis § 1.A.).
That rule is intended to deter counsel from making my chambers the
repository for communications that may never be relevant to any
dispute requiring court intervention; it does not prevent counsel
from supporting or opposing a discovery motion with pertinent
documentation, including correspondence among attorneys.
3

witnesses

were

generalities.

sometimes

unable

to

testify

(Drosman 10/25/13 Letter at 4-7).

beyond

broad

Furthermore, the

plaintiffs contend that they were hampered by the defendants’
failure to produce documents in advance of the depositions.
(Drosman 10/25/13 Letter at 7-8).

Finally, the plaintiffs

maintain that defendants’ counsel engaged in improper conduct at
the

depositions,

objections.

coaching

the

witnesses

by

making

speaking

(Drosman 10/25/13 Letter at 8-11).

I will address each of these issues in turn and will provide
additional

background

facts

as

they

become

relevant

to

the

analysis.
Discussion
The disputes here appear to have festered in part because of
the reluctance of counsel to engage with each other and with the
Court.

Rather than resolving the issue of the scope of the

30(b)(6) deposition in advance, both sides proceeded as if they did
not

need

to

assistance.

negotiate

with

each

other

or

seek

the

Court’s

In this, the defendants were more in the wrong.

The

weight of the authority holds that a party believing it has
received a flawed 30(b)(6) notice may not merely rest upon its
objections, but must move for a protective order.
[T]here is no provision in the rules which provides for
a party whose deposition is noticed to serve objections
so as to be able to avoid providing the requested
4

discovery until an order compelling discovery is issued.
While it is indeed good practice to discuss any issues
respecting a 30(b)(6) deposition notice with the party
which noticed the deposition in an attempt to work out an
agreement, in the absence of an agreement, a party cannot
decide on its own to ignore the notice.
New England Carpenters Health Benefits Fund v. First Databank,
Inc., 242 F.R.D. 164, 166 (D. Mass. 2007) (footnote omitted);
accord Robinson v. Quicken Loans, Inc., No. 3:12-cv-981, 2013 WL
1776100, at *3 (S.D. W. Va. April 25, 2013); United States ex rel.
Fry v. Health Alliance of Greater Cincinnati, No. 1:03-cv-167, 2009
WL 5227661, at *2-3 (S.D. Ohio Nov. 20, 2009).

This principle

applies not only to objections that go to the notice in its
entirety, but also to those that define the scope of the 30(b)(6)
deposition.

See International Brotherhood of Teamsters, Airline

Division v. Frontier Airlines, Inc., No. 11-cv-2007, 2013 WL
627149, at *7 (D. Colo. Feb. 19, 2013).

But the issue is not free

from doubt; at least one court takes the position that some
objections to a 30(b)(6) notice may be adjudicated on a motion to
compel, thus shifting the burden of going forward to the requesting
party.

See Lykins v. CertainTeed Corp., Civ. A. No. 11-2133, 2012

WL 3542016, at *4 & nn. 9 & 10 (D. Kan. Aug. 16, 2012).

Therefore,

I will not grant the plaintiffs’ application on the ground that the
defendants have procedurally defaulted, but will instead address
the merits.

5

A. Deposition Topics
The first of the four topics for which the defendants declined
to designate a witness is identified as Deposition Subject Matter
No. 4 and comprises “Repurchase requests.” (30(b)(6) Notice at 10,
¶ 4).

A repurchase request, in turn, is defined as “a request or

demand made of or by [the defendants] to repurchase, replace or buy
back a residential mortgage loan that [the defendants] purchased
from an Originator because the loan breached any representation or
warranty made in connection with [the defendants’] purchase or sale
of the loan.”

(30(b)(6) Notice at 6, ¶ 22).

On its face, this

topic would appear to be overbroad, as it could be interpreted to
include any repurchase request ever made or received by the
defendants.

But

the

topic

includes

substantially narrow its scope.
that originated the Loans.”

defined

terms

that

“Originators” are “the lenders

(30(b)(6) Notice at 5, ¶ 19).

The

“Loans,” in turn, are the “mortgage loans that were included in the
Offerings” (30(b)(6) Notice at 5, ¶ 17), and the “Offerings” are
the specific securities offerings at issue in this case (30(b)(6)
Notice at 2-3, ¶ 7).
who

can

testify

Thus, the plaintiffs have asked for a witness

about

repurchase

requests

related

to

contained in the securitizations that they purchased.

loans

This is

relevant subject matter, and the defendants shall comply.
Deposition Subject Matter No. 5 calls for a witness to testify
6

concerning “[a]ny disputes of any kind, including, but not limited
to, actual, threatened, or potential litigation, arbitration, or
mediation, no matter what forum or jurisdiction, between or among
[the defendants] and any other person related to the Offerings,
Certificates, Loans, Originators or any of the allegations in the
Complaint.”

(30(b)(6) Notice at 10-11, ¶ 5).

In this instance,

the defined terms do not sufficiently cabin the scope of the topic.
“Disputes of any kind” relating to every aspect of the subject
matter of this litigation defines a topic that is both allencompassing and fatally vague.

The defendants need not identify

a witness to testify as to this subject matter.
Similarly, Deposition Subject Matter No. 7 is overly broad in
scope.

It requests testimony relating to “[a]ny communications

with, and/or any testimony provided to, any Governmental Body
regarding

[the

“Securitization

defendants’]
Business”

is

Securitization
defined

as

Business,”
“the

where

structuring,

underwriting, offering, issuance and sale of Residential MortgageRelated Securities, including acquiring underlying mortgage loans.”
(30(b)(6) Notice at 11, ¶ 7 and at 6, ¶ 24).
would

require

testimony

about

any

Effectively, this

communication

defendants and any governmental agency.

between

the

What are relevant are

those communications between governmental bodies and the defendants
in connection with any of the offerings at issue or any loans
7

included in those offerings.

With that limitation, the defendants

shall designate one or more appropriate witnesses.
Finally, Deposition Subject Matter No. 8 calls for a witness
to testify about “[a]ny credit default swaps, credit insurance, or
other credit or loss protection that [the defendants] issued or
purchased

concerning

the

Offerings,

(30(b)(6)

Notice

11,

¶

at

8).

Certificates

This

topic

is

or

Loans.”

defined

with

sufficient precision and clarity, and the defendants shall identify
witnesses to address it.
B. Adequacy of Witness Preparation
The plaintiffs complain that even as to the topics for which
the

defendants

did

designate

corporate

representatives,

the

witnesses were unprepared to testify in any detail. The defendants
respond that their witnesses were qualified to testify generally
about the topics identified by the plaintiffs, and that a 30(b)(6)
deposition is not intended to be a “memory test.”

Furthermore,

according to the defendants, the witnesses provided substantial,
detailed information about a wide range of pertinent topics.
But what is determinative is not how much the witnesses did
testify about, it is whether they were unable to testify about
pertinent subject matter within the scope of the notice.
Once the deposing party has served a satisfactory notice,
the responding party is required to “make a conscientious
good-faith endeavor to designate the persons having
8

knowledge of the matters sought by [the party noticing
the deposition] and to prepare those persons in order
that they can answer fully, completely, unevasively, the
questions posed . . . as to the relevant subject
matters.”
Tailored Lighting Inc. v. Osram Sylvania
Products, Inc., 255 F.R.D. 340, 349 (W.D.N.Y. 2009)
(alterations in original) (quoting Securities Exchange
Commission v. Morelli, 143 F.R.D. 42, 45 (S.D.N.Y. 1992))
(internal quotation marks omitted).
Soroof Trading Development Co. v. GE Fuel Cell Systems, LLC, No. 10
Civ. 1391, 2013 WL 1286078, at *2 (S.D.N.Y. March 28, 2013).
Here, the witnesses did not meet that standard.

To take but

a single example, while they could testify about J.P. Morgan’s due
diligence procedures generally, they were not prepared to address
the

due

diligence

performed

transactions at issue.
87).

in

connection

with

the

specific

(Fenton Dep. at 240-41; White Dep. at 186-

To be sure, no two witnesses could testify comprehensively

about the full range of issues identified in the 30(b)(6) notice,
even with heroic preparation.

But the remedy is to designate

additional witnesses who have more transaction-specific knowledge.
The appropriate course now is to fashion a process that will
provide the plaintiffs with the information to which they are
entitled.

Therefore, the plaintiffs shall, on the basis of the

transcripts of the depositions that have been taken, identify to
defendants’ counsel those subjects that they believe were not
adequately addressed by the defendants’ designees.
shall

then

respond

by,

for

example,
9

The defendants

designating

additional

witnesses, suggesting that some issues be narrowed, or offering
alternative forms of evidence.

If the parties are unable to

resolve their differences in this manner, they may resubmit any
residual disputes to me.
C. Documents for Depositions
The plaintiffs next contend that the defendants failed to
produce requested documents sufficiently in advance of the 30(b)(6)
depositions.

Reconstructing the events to assess fault is not a

particularly fruitful exercise at this point.

In the future, the

party taking a deposition shall, two weeks before the deposition,
identify

any

documents

pertinent

to

the

deposition

that

it

previously requested but has not yet received. The producing party
shall provide those documents one week prior to the deposition or
explain why it is unable to do so.

The party taking the deposition

may then decide whether to go forward with the deposition, postpone
it to await additional documents, or seek relief from the Court.
D. Deposition Conduct
Finally,
improper

the

conduct

plaintiffs
by

object

defendants’

to

counsel

what

they

during

allege

the

was

30(b)(6)

depositions. Rule 30(c)(2) of the Federal Rules of Civil Procedure
provides in part that, at a deposition, “[a]n objection must be
stated concisely in a nonargumentative and nonsuggestive manner.”
Thus, “speaking objections” that cue a witness how to answer (or
10

Meyer Corp. U.S.

avoid answering) a question are prohibited.
v.

Alfay Designs,

Inc.,

(E.D.N.Y. Aug. 13, 2012)
(S.D.N.Y. 2001)

i

No.
i

10 CV 3647,

2012 WL 3536987,

at *3

Morales v. Zondo, Inc., 204 F.R.D. 50, 54

Phillips v. Manufacturers Hanover Trust Co., No.

92 Civ. 8527, 1994 WL 116078, at *2-3 (S.D.N.Y. March 29, 1994).
Here,

defendants'

counsel overstepped these bounds by,

for

example, providing commentary that suggested to the witness that he
lacked the knowledge to answer the question.
White

Dep.

at

116).

Of

course,

there

are

(Fenton Dep. at 131;
times

when

it

is

necessary for counsel to explain the basis for an objection in
order

to

focus

and

expedite

the

deposition,

but

any

such

explanation should be offered outside the presence of the witness.
Any attorney who is unable to observe the rules for conducting or
defending a deposition will be precluded from further participation
in depositions.
Conclusion
The disputes concerning the Rule 30(b) (6) depositions of the
defendants are resolved as set forth above.
SO ORDERED.

~

~.~cw-~ ~

JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE

Dated: New York, New York
December 9, 2013
11

Copies mailed

s date to:

Arthur C. Leahy, Esq.
Jonah H. Goldstein, Esq.
Matthew I. Alpert, Esq.
Nathan R. Lindell, Esq.
Scott H. Saham, Esq.
Susan G. Taylor, Esq.
Thomas E. Egler, Esq.
Angel P. Lau, Esq.
L. Dana Martindale, Esq.

Ashley M. Robinson, Esq.

Caroline M. Robert, Esq.

Daniel S. Drosman, Esq.

Darryl J. Alvarado, Esq.

Hillary B. Stakem, Esq.

Robbins Geller Rudman & Dowd LLP

655 West Broadway

Suite 1900

San Diego, CA 92101

Luke O. Brooks,
Robbins Geller
One Montgomery
San Francisco,

Esq.

Rudman & Dowd LLP

Street, Suite 1800

CA 94104

Carolina C. Torres, Esq.

David A. Rosenfeld, Esq.

Samuel H. Rudman, Esq.

Robbins Geller Rudman & Dowd LLP

58 South Service Rd.

Suite 200

Melville, NY 11747

Joseph P. Guglielmo, Esq.

Thomas L. Laughlin, IV, Esq.

Scott + Scott, L.L.P.

405 Lexington Ave.

40th Floor

New York, NY 10174

Geoffrey M. Johnson, Esq.

Scott + Scott, L.L.P.

12434 Cedar Rd., Suite 12

Cleveland Heights, OH 44106

12

Alfred R. Pietrzak, Esq.

Dorothy J. Spenner, Esq.

Owen H. Smith, Esq.

David L. Breau, Esq.

Daniel A. MCLaughlin, Esq.

Danny C. Moxley, Esq.

Sidley Austin LLP

787 Seventh Ave.

New York, NY 10019

Alison L. MacGregor, Esq.

Kelley Drye & Warren, LLP

101 Park Ave.

New York, NY 10178

Darrell S. Cafasso, Esq.

Sullivan & Cromwell, LLP

125 Broad St.

New York, NY 10004

Robert A. Sacks. Esq.

Sullivan & Cromwell, LLP

1888 Century Park East, Suite 2100

Los Angeles, CA 90067

Richard F. Lubarsky, Esq.

Levi Lubarsky & Feigenbaum LLP

1185 Avenue of the Americas

17th Floor

New York, NY 10036

13