Coventry Capital US LLC v. EEA Life Settlements, Inc. et al
Filing
111
OPINION AND ORDER: Accordingly, for all the foregoing reasons, plaintiff's application for an order compelling the individual defendants to produce documents and for sanctions is denied in all respects. In addition, unless the Guernsey Manager and EEA UK make a complete production of documents in this matter, defendants are precluded from using any documents from either. SO ORDERED. (Signed by Magistrate Judge Henry B. Pitman on 1/24/2019) Copies Transmitted By Chambers. (ne)
I
USDCSDNY
DOCUMENT
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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· ELECfRCN:CALLY FILED 1
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l
DC:C #: ·-·.;:
DATE FILED:
I
I .
COVENTRY CAPITAL US LLC,
Plaintiff,
-against-
17 Civ. 7417 (VM) (HBP)
OPINION
AND ORDER
EEA LIFE SETTLEMENTS, INC.,
et al.,
Defendants.
-----------------------------------x
PITMAN, United States Magistrate Judge:
I.
Introduction
By letter dated June 12, 2018 (Docket Item ("D.I.") 66)
("Coventry's June 12 Ltr."), plaintiff Coventry Capital US LLC
("Coventry") moves (1) to compel defendant EEA Life Settlements
Inc.
("EEA Life") to produce certain documents and (2) to impose
sanctions against the individual defendants based on their
failure to produce certain documents.
For the reasons set forth
below, the motion is denied.
II.
Facts
This is a diversity action arising out of the parties'
unsuccessful efforts to negotiate plaintiff's purchase of a
portfolio of life insurance policies from EEA Life.
ii
1[2.. y/ /~
According to the complaint, EEA Life owned a portfolio
comprised of 133 life insurance policies with an aggregate net
benefit of approximately $459 million.
Plaintiff alleges that
EEA Life held this portfolio on behalf of EEA Life Settlements
Fund PCC Limited ("EEA Settlements Fund") and its affiliates.
At
an unspecified point in time after 2014, EEA Life ostensibly
sought a buyer for the portfolio and entered into negotiations
with Coventry.
Coventry alleges that these negotiations were, in
reality, a sham, and that defendants actually had no intention of
completing the sale.
According to Coventry, defendants entered
into the sham negotiations in order to appease investors who were
seeking to redeem their investments in an affiliate of EEA Life,
EEA Settlements Funds.
Coventry also alleges that it entered
into an agreement with EEA Life during the negotiations that
provided, upon the execution of a definitive contract of sale,
Coventry would receive the death benefits of any person insured
under a policy contained in the portfolio who died after May 15,
2017.
Coventry claims that defendants actually sought to main-
tain ownership of the portfolio to enable EEA Life and its
affiliates to charge investors millions of dollars in fees and
other expenses, and to reap the death benefits resulting from the
large numbers of insureds who unexpectedly died in May, June and
August 2017.
As a result of the foregoing, Coventry asserts a
claim against EEA Life for breach contract, a claim against all
2
defendants for fraud and intentional misrepresentations and a
claim against individual defendants Vincent Piscaer and Hiren
Patel for aiding and abetting the alleged fraud and intentional
misrepresentations.
An understanding of the current dispute requires an
understanding of the rather complicated relationship among the
defendants and several other entities.
EEA Life is wholly owned
by EEA Life Settlements Master Fund II Limited ("Master Subsidiary II").
Master Subsidiary II and a second entity -- EEA Life
Settlements Master Fund Limited ("Master Subsidiary") are both
wholly owned by EEA Life Settlements Holdings Limited ("EEA
Holdings").
Fund.
EEA Holdings is wholly owned by EEA Settlements
EEA Settlements Fund has an investment management agree-
ment with EEA Fund Management (Guernsey) Limited (the "Guernsey
Manager") under which the Guernsey Manager manages EEA Settlements Fund, EEA Holdings, Master Subsidiary, Master Subsidiary II
and EEA Life.
Defendant Piscaer is one of four directors of the
Guernsey Manager.
The Guernsey Manager is also a party to a
marketing agreement with EEA Fund Management Limited ("EEA UK")
which acts as marketing agent for EEA Settlements Fund.
Accord-
ing to Coventry, Patel is an officer and managing director of EEA
UK and Piscaer is Head of Alternative Investments of EEA UK.
Piscaer and Patel, however, deny that either is an officer of EEA
UK.
The Guernsey Manager and EEA UK are wholly owned by Anath
3
Capital Group Limited ("Anath"); Patel is one of two directors of
Anath.
The present dispute arises out of document requests
Coventry served on EEA Life, Piscaer and Patel.
The document
requests seek documents that are in the actual possession of the
Guernsey Manager, EEA UK and other affiliated or related entities.
Coventry first raised an issue with respect to the
individual defendants' failure to produce documents from the
Guernsey Manager, EEA UK and the affiliated or related entities
in February 2018.
Coventry cited the defendants' Rule 26(a) (1)
disclosures as one of the reasons for believing that the individual defendants and EEA Life had access to the documents. These
disclosures provided, in pertinent part:
To the best of defendants' knowledge, non-privileged documents relating to EEA's business dealings
with Coventry, the negotiation of the LOI, information
related to the Portfolio and Retention Portfolio, and
communications regarding the proposed transaction after
the execution of the LOI are located at .
(3) EEA
Fund Management (Guernsey) Limited, PO Box 141, La
Tonelle House, Les Banques, St. Sampson, Guernsey GYl
3HS; (4) EEA Life Settlements Fund PCC Limited, PO Box
141, La Tonelle House, Les Banques, St. Sampson, Guernsey GYl 3HS; and (5) EEA Fund Management Limited, 6th
Floor, Becket House, 36 Old Jewry, London EC2R 8DD.
Copies of responsive, non-privileged documents will be
provided pursuant to Fed.R.Civ.P. 34.
Defendants at that time took the same position that they are
taking now, namely, that they do not have the ability to produce
documents in the actual possession of the Guernsey Manager, EEA
4
UK and the other related or affiliated entities.
After hearing
oral argument on March 8, 2018, I issued an Order on March 29,
2018 which provided, in pertinent part:
Given the scant nature of defendants' document
production to date, the nature of the relationships
among EEA Inc. and its affiliates and the representations in defendants' 26(a) (1) disclosures, I understand
plaintiff's skepticism with respect to defendants'
claim. Nevertheless, I cannot assume that defendants'
counsel was dissembling when he represented on the
record in open court that the defendants do not possess
and do not have the practical ability to obtain documents in the possession of Guernsey Manager, the Fund,
EEA UK and EEA Holdings.
I conclude that plaintiff's
motion to compel should be denied, without prejudice to
renewal, provided that within 14 days of the date of
this Order, defendants provide an (1) affidavits or
declarations pursuant to 28 U.S.C. § 1746 from all
defendants confirming the representations made by
counsel at the March 8 oral argument and (2) affidavits
or declarations pursuant to 29 U.S.C. § 1746 from
Guernsey Manager, the Fund, EEA UK and EEA Holdings
confirming that these entities do not permit EEA Inc.
to have access to their documents in the regular course
of their business and that they have not and will not
provide any documents to EEA Inc. in connection with
this litigation unless compelled to do so as a result
of formal discovery proceedings.
(Order dated Mar. 29, 2018 (D.I. 47) at 5-6).
The individual
defendants and EEA Life timely filed declarations confirming
their inability to access the documents of the Guernsey Manager
and EEA UK for the purpose of producing them in this proceeding
(Declaration of Hiren Patel, dated April 11, 2018
(D.I. 52);
Declaration of Vincent Piscaer, dated April 11, 2018 (D.I. 53);
Declaration of Carl T. Daly, dated April 12, 2018 (D.I. 54)).
5
Coventry raised the issue again, with respect to
Piscaer and Patel, at a conference held on May 11, 2018.
At that
time, Coventry claimed that Piscaer and Patel had admitted that
they had access to the documents of the Guernsey Manager and EEA
UK in the ordinary course of business and, therefore, had the
practical ability to produce the documents (Transcript of Proceedings, dated May 11, 2018 (D.I. 62)
("5-11-18 Tr.") at 5-6)
Piscaer and Patel continued to contend that although they had
access to documents in the ordinary course of business, the
Guernsey Manager and EEA UK were refusing to grant them access to
documents for the purpose of producing them in this litigation.
After hearing from both sides, I directed Piscaer and Patel
to produce all non-privileged documents that are in
their possession custody or control for any purpose.
If they don't currently have actual possession, they
are directed to attempt to get possession.
If the[ir]
employers says no, that's something, a bridge I guess
we can cross down the road.
(5-11-18 Tr. at 22-23).
By emails dated May 14, 2018, both Piscaer and Patel
made requests for the documents in issue to the Guernsey Manager
and to EEA UK.
Both entities refused to grant Piscaer and Patel
access to the documents.
Specifically, the Guernsey Manager
responded to each of the individual defendants as follows:
We start from the position that the documents you refer
to are the property of the Company. We do not consider
that you have any legal right to take possession of the
Company's documents for the purposes of use in litigation brought against you personally. Any such produc6
tion would amount, in our view, to misappropriation.
As explained in a signed declaration of Martyn Roussel
on 18 April 2018, the Company has determined not to
permit you to access documents held by the Company for
the purpose of giving disclosure in the proceedings.
That remains the case.
Further we note that the Company is under a contractual
obligation to EEA Life Settlements Fund PCC Limited
(the "Fund", and various of the Fund's subsidiaries),
pursuant to the Management Agreement of 30 April 2010,
as amended from time to time. The Management Agreement
provides that the Company shall use its best endeavours
to prevent disclosure by its officers, employees or
agents of documents relating to the affairs of the
Fund. There is no exemption to that requirement which
applies in this case.
The Company has decided to restrict your access to
documents preceding October 2017.
This decision has
been taken in view of the Company's contractual obligations, and your request, notwithstanding the above, to
access the Company's documents.
The restriction will
take effect from the date of this email.
(Coventry's June 12 Ltr., Ex. 20).
EEA UK's response to each of
the individual defendants was substantially the same.
Coventry has now raised the issue again, seeking
sanctions against the individual defendants and an Order compelling EEA Life to produce documents in the possession of the
Guernsey Manager.
Coventry claims that Piscaer and Patel have access to
documents in the actual possession of the Guernsey Manager and
EEA UK as a result of their positions as officers and/or directors of each entity.
Coventry claims that EEA Life has the practical ability
to produce documents in the actual possession of the Guernsey
7
"
Manager pursuant to its management agreement with the Guernsey
Manager.
Specifically, Coventry relies on the following language
in the management agreement to support its conclusion that EEA
Life has the right to the Guernsey Manager's documents.
6
Administrative and Secretarial Responsibilities
During the continuance of this Agreement the Manager
shall:
*
*
*
(d)
permit the Directors, Auditors, the
Custodian and the employees and agents for the
time being of a Group Entity to inspect such accounts, books, records, statements, the register
of members of the relevant Group Entity and provide such persons with such information, explanations and assistance as they may reasonably require in connection therewith.
*
7
*
*
Investment Management Responsibilities
During the continuance of this Agreement the [Guernsey]
Manager shall:
*
*
*
(c)
at all times give promptly to the Directors
and/or the Custodian all such information and
explanations as the Directors and/or the
Custodian may require with respect to a Group
Entity's Investment Assets and render written
reports of the composition of the portfolio
and borrowings of each Group Entity as often
as the Directors and/or Custodian shall reasonably require;
(d)
in carrying out its duties as investment
manager hereunder, observe and have regard
to:
*
8
*
*
(v)
any directions provided by the Directors
of the relevant Group Entity.
(Coventry's June 12 Ltr., Ex. 1 at 8-9, 12-14).
III.
Analysis
Rule 34 of the Federal Rules of Civil Procedure re-
quires a party to produce documents and other tangible objects
that are within the party's "possession, custody or control."
Tiffany (NJ) LLC v. Oi Andrew, 276 F.R.D. 143, 147 (S.D.N.Y.
2011)
(collecting cases), aff'd sub nom., Tiffany (NJ) LLC v.
Andrew, 10 Civ. 9471 (WHP), 2011 WL 11562419 (S.D.N.Y. Nov. 14,
2011)
(Pauley, D.J.).
A document or tangible object is within a
party's control if the party has the practical ability to obtain
the document or object.
In re NTL, Inc. Sec. Litig., 244 F.R.D.
179, 195 (S.D.N.Y. 2007)
(Peck, M.J.)
("Under Rule 34, control
does not require that the party have legal ownership or actual
physical possession of the documents at issue; rather, documents
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 action."
(internal quotation marks
and citations omitted)), aff'd sub nom., Gordon Partners v.
Blumenthal, 02 Civ. 7377 (LAK), 2007 WL 1518632 (S.D.N.Y. May 17,
2007)
(Kaplan, D.J.).
A party also has control over material
that it has a legal right to obtain.
S.E.C. v. Strauss, 09 Civ.
4150 (RMB) (HBP), 2009 WL 3459204 at *7 (S.D.N.Y. Oct. 28, 2009);
9
United States v. Stein, 488 F. Supp. 2d 350, 361, 363
2007)
(S.D.N.Y.
(Kaplan, D.J.); In re NASDAQ Market-Makers Antitrust
Litig., 169 F.R.D. 493, 498, 530 (S.D.N.Y. 1996)
(Sweet, D.J.).
"The burden of demonstrating that the party from whom discovery
is sought has the practical ability to obtain the documents at
issue lies with the party seeking discovery."
Tiffany (NJ) LLC
v. Qi Andrew, supra, 276 F.R.D. at 148; accord In re Namenda
Direct Purchaser Antitrust Litig., 15 Civ. 7488
WL 3822883 at *6 (S.D.N.Y. Aug. 30, 2017)
(CM) (JCF), 2017
(Francis, M.J.); Golden
Trade S.r.L. v. Lee Apparel Co., 143 F.R.D. 514, 525 n.7
(S.D.N.Y. 1992)
(Dolinger, M.J.)
("In the face of a denial by a
party that it has possession, custody or control of documents,
the discovering party must make an adequate showing to overcome
this assertion.") .
"Accordingly, where discovery is sought from
an entity for documents in the physical possession of another,
affiliated entity,
'[i]t is the discovering party's burden to
demonstrate that the requested entity has either the legal right
or the practical ability to obtain the documents in question from
their custodian.'"
In re: Application of Passport Special
Opportunities Master Fund, LP for an Order Compelling Compliance
with a Subpoena Issued to Deloitte Touche Tohmatsu Ltd. Pursuant
to 28 U.S.C.
§
1782, 16 Misc. 33
(S.D.N.Y. Mar. 1, 2016)
(PAE), 2016 WL 844833 at *4
(Engelmayer, D.J.), quoting In re Nortel
Networks Corp., Sec. Litig., 01 Civ. 1855 (RMB) (MHD), 2004 WL
10
2149111 at *2 (S.D.N.Y. Sept. 23, 2004)
(Dolinger, M.J.).
11
[A]
party is not obliged to produce, at the risk of sanctions,
documents that it does not possess or cannot obtain."
Shcherbakovskiy v. Da Capo Al Fine, Ltd., 490 F.3d 130, 138 (2d
Cir. 2007)
Although the "practical ability" to obtain a document
is one of the tests for control, the concept has limits.
A party
does not have the practical ability to obtain a document if the
party could obtain the document only by committing a tort or a
crime.
While cleaning person may have the practical ability to
obtain documents in the offices he/she cleans by pilfering them,
no attorney would seriously argue that such documents are in the
cleaning person's "possession, custody or control."
The Federal
Rules of Civil Procedure exist to facilitate the administration
of justice.
An interpretation of the Rules that would require a
party to commit a tort or crime in order to comply with discovery
obligations is antithetical to that purpose.
See Societe
Internationale Pour Participations Industrielles et Commerciales,
S.A. v. Rogers, 357 U.S. 197, 211 (1958)
("It is hardly debatable
that fear of criminal prosecution constitutes a weighty excuse
for nonproduction .
• 11 ) • 1
1
For reasons that are explained elsewhere, the French
Blocking statute is unique and constitutes an exception to the
principle set out above.
See generally In re Vivendi Universal,
S.A. Sec. Litig., 02 Civ. 5571 (RJH) (HBP), 2006 WL 3378115 at *3(continued ... )
11
A contractual right to obtain a document is also
frequently found to be a basis for concluding that a document is
within a party's possession custody or control.
Salazar, 275 F.R.D. 437, 447 (S.D.N.Y. 2011)
Chevron Corp. v.
("'Control' is
construed broadly to encompass documents that the respondent has
'the legal right, authority or practical ability to obtain
upon demand.'")
(Kaplan, D.J.), quoting Dietrich v. Bauer, 244
F.R.D. 179, 195 (S.D.N.Y. 2001)
(Sweet, D.J.); In re Flagg
Telecom Holdings, Ltd. Sec. Litig., 236 F.R.D. 177, 180 (S.D.N.Y.
2006)
(Conner, D.J.); 2 Michael Silberberg, Edward M. Spiro &
Judith L. Mogul, Civil Practice in the Southern District of New
York§ 21:4 at 248 (2017-2018 ed.); SB Charles A. Wright, Arthur
R. Miller, Richard L. Marcus, Federal Practice
at 149 (2010).
&
Procedure§ 2210
However, that concept also has limits.
As
explained by the Honorable Loretta A. Preska, United States
District Judge:
In the context of discovery pursuant to Rule 34 of the
Federal Rules of Civil Procedure, "control" can be
found where a party (1) is legally entitled, or (2) has
the practical ability, to acquire the documents.
While the test frequently is stated such a way that it
might be interpreted as disjunctive ("legal entitlement
or practical ability"), it cannot be the case that
legal entitlement alone is sufficient to find control
where the subpoenaed party makes a showing that it
1
( • • • continued)
(S.D.N.Y. Nov. 16, 2006); Compagnie Francaise d'Assurance Pour
le Commerce Exterieur v. Phillips Petroleum Co., 105 F.R.D. 16,
30 (S.D.N.Y. 1984) (Keenan, D.J.); Bodner v. Banque Paribas, 202
F.R.D. 370, 375 (E.D.N.Y. 2000).
*4
12
lacks the practical ability to obtain access to documents.
It appears that this disjunctive construction
conceals an underlying assumption that legal entitlement to documents necessarily brings with [it] the
practical ability to acquire those documents and overlooks the possibility that a party could have a legal
entitlement but nonetheless lack the practical ability
to exercise that right. As a matter both of logic and
of law, the ability to obtain or access documents must
be the sine qua non of "control"; a clearer statement
of the rule therefore might read:
"control can be
found where a party has the practical ability to acquire or access documents by (1) legal entitlement or
(2) any other means."
In re Application of Potanina, 14 Misc. 31 (LAP), 2015 WL 4476612
at *l (S.D.N.Y. June 30, 2015)
(inner quotations and citations
omitted).
In M'Baye v. New Jersey Sports Prod., Inc., 05 Civ.
9581 (DC), 06 Civ. 3439 (DC), 2008 WL 1849777 (S.D.N.Y. Apr. 21,
2008), defendants sought dismissal of the action based on plaintiff's failure to comply with an order to produce documents.
With respect to documents in the possession of third parties, the
production order in M'Baye, like the production order in this
case, ordered M'Baye to "take all actions within his legal rights
and practical ability to compel the production of such documents"
by the third party.
2008 WL 1849777 at *l.
In response to calls
and correspondence from plaintiff and his attorney, the third
party produced some, but not all, of the documents in issue.
The
Honorable Denny Chin, the United States District Judge, now
United States Circuit Judge, denied the motion to the extent it
sought dismissal of the action, stating:
13
First, I am not persuaded that M'Baye has acted
wilfully or in bad faith.
To the contrary, I conclude
that M'Baye does not have possession, custody, or
control of the documents in question, and that he has
acted diligently to try to obtain them.
[M'Baye's
attorney] made diligent efforts to obtain the documents
from [the third party], but [the third party's] emails
show that he was being very difficult, apparently
because he believed he was slighted somehow by M'Baye's
promoter. M'Baye went so far as to engage a Swiss
lawyer to write a demand letter to [the third party].
M'Baye's inability to obtain more documents from [the
third party] after these efforts shows that he does not
have control over them.
See Chaveriat v. Williams Pine
Line Co., 11 F.3d 1420, 1427 (7th Cir. 1993) (" [T]he
fact that a party could obtain a document if it tried
hard enough and maybe if it didn't try hard at all does
not mean that the document is in its possession, custody, or control; in fact it means the opposite.").
*
*
*
Defendants seem to suggest that M'Baye has violated the Court's order because he has done nothing
further in Switzerland since his Swiss counsel wrote
the demand letter to [the third party].
. It was
not my intent, however, to order M'Baye to sue [the
third party] in Switzerland to obtain the documents.
In my view, M'Baye has made reasonable, good faith
efforts to obtain the documents from [the third party].
I note that if defendants really believe these documents are so important, they may themselves seek to
compel [the third party] to produce them.
See
Shcherbakovskiy, 490 F.3d at 138.
2008 WL 1849777 at *4. 2
See also Shcherbakovskiy v. Da Capo Al
Fine, Ltd., supra, 490 F.3d at 138 ("We also think it fairly
obvious that a party also need not seek such documents from third
parties if compulsory process against the third parties is
available to the party seeking the documents.
However, if a
Judge Chin reserved decision on the whether the lesser
sanction of an adverse inference instruction would be imposed.
2
14
party has access and the practical ability to possess documents
not available to the party seeking them, production may be
required."
(emphasis added)); Searock v. Stribling, 736 F.2d 650,
653-55 (11th Cir. 1984)
(reversing dismissal of counterclaim as a
sanction for defendant's failure to produce documents in possession of third party where defendant made diligent, but unsuccessful, efforts to obtain the documents).
In light of the foregoing authorities, I conclude that
plaintiff's motion should be denied as to both the individual
defendants and EEA Life.
Assuming, without deciding, that the
individual defendants and EEA Life have the legal right to obtain
the documents in issue from the Guernsey Manager and EEA UK, the
record demonstrates that each has attempted to obtain the documents from the Guernsey Manager and EEA UK and each has been
rebuffed.
The Guernsey Manager and EEA UK have now terminated
the individual defendants' access to the documents in issue, and
the individual defendants cannot now access the documents for any
purpose.
Prior to that, the Guernsey Manager and EEA UK advised
that they would consider any attempt by the individual defendants
to produce the documents in this litigation to be an act of
misappropriation.
As noted above, the Federal Rules of Civil
Procedure cannot rationally be construed to require the commission of tortious acts.
15
Although plaintiff claims, without any evidence, that
the individual defendants, by virtue of their alleged positions
with the Guernsey Manager and EEA UK, engineered their lack of
access to the documents in the possession of these entities, the
record is to the contrary.
Counsel for the individual defendants
has represented that they took no part in the decisions of the
Guernsey Manager and EEA UK to deny them access to the documents
(Letter from Mark J. Hyland, Esq. to the undersigned, dated June
19, 2018 (D.I. 70) at 8).
Although I understand why plaintiff is
suspicious of this representation, plaintiff's suspicions cannot
satisfy its burden of proof.
With respect to EEA Life, it may be that Coventry's
interpretation of the management agreement is correct and perhaps
EEA Life does have the contractual right to obtain the documents
in issue from the Guernsey Manager.
The record, however, demon-
strates that the Guernsey Manager rejects such an interpretation
and has refused to make the documents available to EEA Life.
The
only mechanism by which the competing interpretations could be
tested would be an action by EEA Life against the Guernsey
Manager to compel production pursuant to the management agreement.
Neither Coventry's research nor my own has found any case
in which a party or a witness was required to institute litigation against a third party to obtain documents.
16
Denial of plaintiff's motion does not leave plaintiff
without a remedy.
As defendants have pointed out, plaintiff is
free to seek the documents in issue through a request pursuant to
the Hague Convention.
I appreciate that a Hague Convention
request can be time consuming, but that fact will not confer
control of the documents in issue on the individual defendants or
EEA Life.
In addition, requiring the defendants to commence
litigation in the United Kingdom to obtain the documents -- a
result that is unsupported by any case -- would also be time
consuming.
The principal cases cited by plaintiff in support of
its application are all distinguishable.
In Chevron Corp. v.
Donziger, 296 F.R.D. 168 (S.D.N.Y. 2013)
(Kaplan, D.J.), there
was a factual finding that the party who claimed an inability to
produce the documents actually controlled the third parties who
were refusing to make the documents available.
210-12.
296 F.R.D. at
In this case there is an unrebutted representation that
the individual defendants played no role in the decisions by the
Guernsey Manager and EEA UK to deny the individual defendants
access to the documents.
Similarly, in In re Flagg Telecom
Holdings, Ltd. Sec. Litig., supra, 236 F.R.D. 177, there was no
evidence that the non-party whose documents were sought had
refused to produce them to the party who was the subject of the
discovery request.
Here, there is documentary evidence corrobo-
17
rating the refusal of the Guernsey Manager and EEA UK to make the
documents available to the individual defendants and EEA Life.
Finally, plaintiff's reliance on Royal Park Inv. SA/NV v. Deutsche Bank Nat'l Tr. Co.,
15, 2018)
(slip op.)
14 Civ. 4393
(AJN) (BCM)
(S.D.N.Y. May
(Moses, M.J.), is also misplaced.
The issue
in that case was an assignee's obligation to produce relevant
documents of the assignor.
In ordering production and condition-
ally imposing sanctions, the Honorable Barbara Moses, United
States Magistrate Judge, relied on a long line of cases holding
that it would be unfair to permit the owner of claim escape its
discovery obligations by the simple expedient of assigning the
claim.
As explained in JP Morgan Chase Bank v. Winnick, 228
F.R.D. 505, 506 (S.D.N.Y. 2005)
(Lynch, then D.J., now Cir. J.):
It is both logically inconsistent and unfair to allow
the right to sue to be transferred to assignees of a
debt free of the obligations that go with litigating a
claim.
If the plaintiff's theory carried the day, the
assignor would be able to assign a claim more valuable
than it could ever have, because its claim, if pursued
by the assignor, would entail certain obligations that,
when assigned, would magically disappear.
There was no assignment of a claim in this case, and, therefore,
the fairness considerations that existed in Royal Park are not
present here.
The individual defendants and EEA Life cannot use their
inability to obtain the documents as both as a shield and a
sword.
Unless plaintiff is able to obtain documents from the
Guernsey Manager and EEA UK, defendants are precluded from using
18
any documents from these entities with respect to a motion or at
trial.
Even if some documents from the Guernsey Manager or EEA
UK have been produced, permitting defendants to use those documents while the Guernsey Manager and EEA UK are resisting complete production, creates a risk that the documents that have
been produced are "cherry picked" and do not tell the entire
story.
If defendants believe that the Guernsey Manager or EEA UK
have documents relevant to their defenses, they also have the
option of seeking discovery pursuant to the Hague Convention.
Finally, I have considered plaintiff's request for an
adverse inference instruction as a sanction and conclude that it
is not appropriate.
The individual defendants and EEA Life have
complied with my prior Orders directing them to attempt to obtain
the documents and there really is no evidence that their failure
to obtain the documents was in intentional or even the product of
recklessness or negligence.
IV.
Conclusion
Accordingly, for all the foregoing reasons, plaintiff's
application for an order compelling the individual defendants to
produce documents and for sanctions is denied in all respects. In
addition, unless the Guernsey Manager and EEA UK make a complete
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production of documents in this matter, defendants are precluded
from using any documents from either.
Dated:
New York, New York
January 24, 2019
SO ORDERED
HENRYPI
United States Magistrate Judge
Copies transmitted to:
All Counsel
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