Federal Housing Finance Agency v. Merrill Lynch & Co., Inc. et al
Filing
683
OPINION & ORDER....This Opinion offers guidance to the parties, without prejudice in support of, or in opposition to, admissibility at trial....In light of the guidance, the parties are directed to meet and confer concerning the admissibility of prior testimony of Merrill Lynch witnesses. Should the parties fail to reach agreement, the issue will be decided closer to the time of trial (Signed by Judge Denise L. Cote on 2/28/2014) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------X
:
FEDERAL HOUSING FINANCE AGENCY, etc.,
:
:
Plaintiff,
:
-v:
:
:
MERRILL LYNCH & CO., INC., et al.,
:
Defendants.
:
:
------------------------------------------X
11 Civ. 6202 (DLC)
OPINION & ORDER
APPEARANCES:
For plaintiff Federal Housing Finance Agency:
Manisha M. Sheth
Quinn Emanuel Urquhart & Sullivan, LLP
51 Madison Avenue, 22nd Floor
New York, New York 10010
For defendants Merrill Lynch & Co., Inc. and affiliated
entities:
Edward J. Bennett
Williams & Connolly, LLP
725 Twelfth Street, N.W.
Washington, D.C. 20005
For defendants Matthew Whalen, Brian T. Sullivan, Michael M.
McGovern, Donald J. Puglisi, Paul Park, and Donald C. Han:
H. Rowan Gaither
Richards Kibbe & Orbe LLP
200 Liberty Street
New York, New York 10281
DENISE COTE, District Judge:
Plaintiff Federal Housing Finance Agency (“FHFA”) requests,
by letter of February 19, 2014, that the Court enter an order
holding admissible prior testimony from witnesses affiliated
with defendant Merrill Lynch & Co., Inc. (together with related
entities, “Merrill Lynch”) under Federal Rule of Civil Procedure
32(a)(1)(A) and Federal Rule of Evidence 804(b)(1).
By letters
of February 21, Merrill Lynch opposes FHFA’s request, as do
individual defendants Matthew Whalen, Brian T. Sullivan, Michael
M. McGovern, Donald J. Puglisi, Paul Park, and Donald C. Han
(together, the “Individual Defendants”).
This Opinion offers
guidance to the parties, without prejudice to the parties’
ability to make further showings in support of, or in opposition
to, admissibility at trial.
Federal Rule of Civil Procedure 32(a) permits a deposition
taken in a prior action to “be used in a later action involving
the same subject matter between the same parties, or their
representatives or successors in interest, to the same extent as
if taken in the later action,” where the party against whom the
deposition is used “was present or represented at the taking of
the deposition or had reasonable notice of it.”
32(a)(1)(A), 32(a)(8).
Fed. R. Civ. P.
The “same subject matter” and “same
parties” requirements have been “construed liberally in light of
the twin goals of fairness and efficiency.”
Co., 682 F.2d 776, 778 (9th Cir. 1982).
Hub v. Sun Valley
“The accepted inquiry
focuses on whether the prior cross-examination would satisfy a
reasonable party who opposes admission in the present lawsuit.
2
Consequently, courts have required only a substantial identity
of issues, and the presence of an adversary with the same motive
to cross-examine the deponent.”
Id. (citation omitted)
(collecting cases); accord Ikerd v. Lapworth, 435 F.2d 197, 205
(7th Cir. 1970); 8A Charles Alan Wright et al., Federal Practice
and Procedure § 2150 (3d ed. 2010).
Similarly, when a declarant is “unavailable as a witness,”
Federal Rule of Evidence 804(b)(1) excepts from the rule against
hearsay prior testimony in any proceeding “offered against a
party who had -- or, in a civil case, whose predecessor in
interest had -- an opportunity and similar motive to develop it
by direct, cross-, or redirect examination.”
804(b)(1).
Fed. R. Evid.
With respect to the interpretation of “predecessor
in interest,” courts have adopted a “realistically generous
[approach] over one that is formalistically grudging,” admitting
testimony where “it appears in the former suit a party having a
like motive to cross-examine about the same matters as the
present party would have, was accorded an adequate opportunity
for such examination.”
Lloyd v. Am. Export Lines, Inc., 580
F.2d 1179, 1187 (3d Cir. 1978) (citation omitted); accord New
Eng. Mut. Life Ins. Co. v. Anderson, 888 F.2d 646, 651 (10th
Cir. 1989); Dykes v. Raymark Indus., Inc., 801 F.2d 810, 815-17
(6th Cir. 1986).
“[W]hen objecting to the admissibility of such
[testimony],” the opposing party should “explain as clearly as
3
possible to the judge precisely why the motive and opportunity
of the [party] in the first case was not adequate to develop the
cross-examination which the instant [party] would have presented
to the witness.”
Dykes, 801 F.2d at 817.
To be “similar,” the
motives to develop the testimony should be “of substantially
similar intensity to prove (or disprove) the same side of a
substantially similar issue.”
United States v. DiNapoli, 8 F.3d
909, 914-15 (2d Cir. 1993).
FHFA’s letter of February 19 attaches excerpts from prior
deposition testimony of certain Merrill Lynch witnesses.
Counsel for Merrill Lynch was present at all but one of these
depositions, a deposition of former Merrill Lynch employee
Michael Blum (the “Blum Deposition”).
All depositions but the
Blum Deposition were taken in actions on an agreed-upon list of
Residential Mortgage-Backed Securities (“RMBS”) cases responsive
to this Court’s order of November 6, 2012 that “defendants and
FHFA have to provide [each other] the testimony from RMBS
witnesses and investigations and litigation.”
Merrill Lynch
does not contest, in its February 21 letter, that the cases in
which this testimony was taken concern the “same subject
matter,” and it does not claim that its “motive to develop” this
testimony was any different in those cases than it would have
been in this case.
If this is so, the depositions at which
counsel for Merrill Lynch was present should fall within the
4
ambits of Federal Rule of Civil Procedure 32(a)(1) and Federal
Rule of Evidence 804(b)(1).
With respect to the Blum Deposition, FHFA contends that
“Mr. Blum’s interests in the context of [that] investigation
were aligned with Merrill Lynch’s,” noting that “Mr. Blum was
represented by the same counsel that represented him in the
present action, with bills paid by Merrill Lynch.”
The fact
that Merrill Lynch paid for Mr. Blum’s representation does not
itself establish that his counsel had the “same motive” to
develop his testimony as Merrill Lynch would have.
With the exception of the testimony of defendants Whalen
and Park, the Individual Defendants note that they were not
present or represented at these prior depositions.
They argue
that FHFA has failed to establish that these cases concern the
same issues as the instant case or that Merrill Lynch had the
same motive to develop testimony as the Individual Defendants
would have had.
Before trial, FHFA will have an opportunity to
explain why the Individual Defendants’ interests are aligned
with those of Merrill Lynch, and the Individual Defendants, for
their part, may identify any particular lines of re-direct
examination they would have explored that Merrill Lynch did not.
CONCLUSION
In light of this guidance, the parties are directed to meet
and confer concerning the admissibility of prior testimony of
5
Merrill Lynch witnesses.
Should the parties fail to reach
agreement, the issue will be decided closer to the time of
trial.
SO ORDERED:
Dated:
New York, New York
February 28, 2014
__________________________________
DENISE COTE
United States District Judge
6
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?