Broker Genius Inc. v. Seat Scouts LLC et al

Filing 259

OPINION & ORDER re: 256 LETTER MOTION for Discovery Deposition de bene esse addressed to Magistrate Judge Sarah Netburn from Christoph Heisenberg dated November 8, 2018, filed by Seat Scouts LLC. Defendants request leave to obtain de bene esse testimony from Stage Front, or alternatively, to extend the discovery period so that Defendants can depose Stage Front. Because Defendants have not demonstrated good cause to reopen discovery, their request is DENIED. The Clerk of Court is respectfully directed to terminate the motion at ECF No. 256. (Signed by Magistrate Judge Sarah Netburn on 11/29/2018) (ras) (Main Document 259 replaced on 11/29/2018) (ras).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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11/29/2018

BROKER GENIUS, INC.,
Plaintiff,

17-CV-08627 (SHS)(SN)
OPINION & ORDER

-againstSEAT SCOUTS LLC, et al.,
Defendants.
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SARAH NETBURN, United States Magistrate Judge:

Counsel for the parties in this case have consistently engaged in litigation tactics that
“unreasonably and vexatiously” multiply the proceedings in this case. 28 U.S.C. § 1927. The
current dispute is more of the same.
On September 4, 2018, Plaintiff served a subpoena on Stage Front, a non-party to this
litigation. ECF No. 253, at 2. The parties’ dispute arises from this subpoena. Defendants contend
that they secured from Plaintiff an “express agreement that [Defendants] would proceed under
[Plaintiff’s] subpoena.” ECF No. 252, at 2. 1 Defendants argue that Plaintiff “slow-walked” its
negotiations with Stage Front past the close of fact discovery, thereby preventing Defendants
from conducting a deposition. Defendants state that Stage Front will provide relevant testimony
favorable to their defenses at trial. Id. at 3. To prevent undue prejudice, Defendants request leave
to obtain de bene esse testimony from Stage Front, or alternatively, to extend the discovery

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Although Defendants do not provide a citation for this claim, Plaintiff does not explicitly oppose
Defendants’ contention, and there is circumstantial evidence (discussed below) that some type of
agreement existed.

period so that Defendants can depose Stage Front. Id. at 1, 3. Because Defendants have not
demonstrated good cause to reopen discovery, their request is DENIED.
BACKGROUND
Stage Front is a Maryland corporation engaged in the ticket brokerage business. Stage
Front’s “autopricer technology” may be relevant to the claims and defenses in this litigation. On
September 4, 2018, Plaintiff served a subpoena on Stage Front, and Stage Front filed its
objections on September 12. ECF No. 253, at 2. Plaintiff responded promptly and appears to
have engaged in good faith negotiations. Indeed, on the same day that Plaintiff received Stage
Front’s objections, Plaintiff spoke with Stage Front in an effort to resolve their disputes. ECF
No. 252, Exhibit 5, at 8–9. The parties engaged in further discussions on September 18, and
Plaintiff emailed Stage Front with a proposal to resolve their remaining disputes on September
21. Id. at 6–7.
On September 26, Defendants asked Plaintiff for an update regarding the Stage Front
discovery. In an email exchange, Defendants indicated that they wanted to participate in
discussions regarding the scope of document production and the timing of a deposition. Plaintiff
updated Defendants on the status of the subpoena. Plaintiff further stated that, under the Federal
Rules of Civil Procedure, Defendants could independently serve a subpoena on Stage Front. ECF
No. 253, Exhibit B.
On September 27, Stage Front emailed both Plaintiff and Defendants. Stage Front’s
counsel explained that he had been “recently contacted” by Defendants and that Defendants
stated they would be serving a deposition subpoena. To avoid litigation in the District of
Maryland (where Stage Front is located), Stage Front suggested that, after Stage Front and
Plaintiff resolved their remaining dispute, Stage Front would share the final agreement with

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Defendants for their approval. Defendants agreed that “one track” would be best; it does not
appear that Plaintiff responded. ECF No. 252, Exhibit 1, at 1.
Plaintiff and Stage Front continued to negotiate the scope of Plaintiff’s document
requests. Plaintiff made a proposal on September 27 and submitted a follow-up email on
September 30. ECF No. 252, Exhibit 5, at 3–4. On October 3, Stage Front emailed Plaintiff and
carbon copied Defendant. The email stated that Plaintiff would memorialize an agreement for
Stage Front’s review and that Stage Front would pass that agreement onto Defendants for
approval. Id. at 2–3. Plaintiff responded that the parties had reached an agreement and noted the
upcoming discovery deadline on October 10. Stage Front replied that it was unaware of the
deadline, but that it would advise the parties as the deadline approached. Id. at 2.
On October 11, one day after the close of fact discovery, Plaintiff approached Defendants
regarding the Stage Front subpoena. Plaintiff memorialized this conversation in an email on
October 12. Specifically, Plaintiff stated that it would forego seeking discovery from Stage Front
if Defendants confirmed that they would not call Stage Front to testify at trial; Defendants
indicated that they could obtain discovery regardless of Plaintiff’s intentions, but committed to
clarifying how Defendants planned to proceed. When Defendants failed to respond by October
16, Plaintiff sought the Court’s guidance as to how the parties should move forward. 2 ECF No.
244, at 1 & Exhibit 1.
In the interim, Defendants communicated with Stage Front regarding Plaintiff’s
subpoena. On October 18, after this discussion had taken place, Defendants told Plaintiff in an
email that there was a “tentative plan” with Stage Front to narrow the scope of the document

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In an Endorsed Order, the Court noted that it does not offer guidance in the abstract and instructed the
parties to make an appropriate application if they sought relief from the October 10 discovery deadline.
ECF No. 246.
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request; to have Stage Front produce documents on the 25th; and to hold a deposition on the
29th. Plaintiff objected to Defendants’ “unilateral plan and schedule.” ECF No. 252, Exhibit 6, at
1–2. Stage Front summarized Defendants’ communications in a separate email chain. While
Defendants may not have been acting in bad faith, Defendants seem to have misrepresented
Plaintiff’s position to Stage Front, as well as Stage Front’s position to Plaintiff. 3 ECF No. 253,
Exhibit D, at 1–2.
The agreement between Plaintiff and Stage Front quickly fell apart. On October 18,
Plaintiff emailed Stage Front — carbon copying Defendants — stating that Plaintiff could no
longer agree to the parties’ previous limitations on Plaintiff’s subpoena. 4 Plaintiffs further stated
that it intended to enforce its subpoena in the District of Maryland if Stage Front maintained its
original objections. ECF No. 253, Exhibit E, at 1.

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Stage Front described the contents of Defendants’ communications in an email on October 18. The
email states in part:
Chris [Defense Counsel] stated that he had been in discussions with you
[Plaintiff Counsel] and that in those discussions, you indicated that your
efforts with regard to Stage Front were defensive in nature so the scope
of the deposition was largely dependent on him. Chris said that he does
not think the parties’ needs are materially impacted by Stage Front’s
production of documents. In part, because his clients had already
produced documents which would be responsive to Stage Front’s
subpoena. . . . At no time did I ever agree to produce documents on the
25th or that the deposition would be taken on the 29th.What I did say
was that I needed to hear from both of you, together, as to what the scope
of the deposition and production would be. And that if [the production]
was limited . . . as Chris stated, I could produce documents by the 25th
and be available for a deposition on the 29th.
ECF 253, Exhibit D, at 1.
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For example, Plaintiff had limited the scope of Document Request Number 5 and had agreed to stipulate
that it would not use any information produced by Stage Front as the basis for any claims against Stage
Front. ECF No. 252, Exhibit 5, at 1. In its October 18 email, Plaintiff stated that it could no longer agree
to these conditions, in part because “recently disclosed evidence” raised concerns that Stage Front had
worked in concert with Defendants to violate the Court’s preliminary injunction. ECF No. 253, Exhibit E,
at 1.
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A week later, on October 25, Defendants asked Plaintiff for an update on “where you
stand in obtaining the Stage Front deposition.” Plaintiff stated that Stage Front was objecting to
the subpoena and that the parties were now outside the fact discovery period. In response,
Defendants informed Plaintiff that they planned to seek leave from the Court to obtain de bene
esse testimony from Stage Front. Defendants filed their letter motion on October 29, 2018.
LEGAL STANDARD
A de bene esse deposition — sometimes referred to as a “preservation” deposition — is a
deposition taken “in anticipation of a future need.” Black’s Law Dictionary 408 (7th ed. 1999).
In the eighteenth century, for example, parties in maritime litigation could take a de bene esse
deposition immediately upon filing the complaint to avoid the possibility that a witness would set
sail during the lawsuit. Wright & Miller, Federal Practice and Procedure, § 2105 (3d ed.). More
recently, courts have allowed parties to conduct a preservation deposition when the party
demonstrates that the witness may become unavailable for trial. See, e.g., Shim-Larkin v. City of
New York, No. 16-CV-6099, 2018 WL 3407710, at *1 (S.D.N.Y. May 11, 2018) (allowing
plaintiff to conduct a de bene esse deposition when the witness suffered from a serious medical
condition).
There is some disagreement among the district courts in New York whether a de bene
esse deposition may proceed after the close of discovery. McDermott v. Liberty Mar. Corp., No.
08-CV-1503, 2011 WL 2650200, at *2 (E.D.N.Y. July 6, 2011) (citing Kingsway Fin. Servs.,
Inc. v. Pricewaterhouse–Coopers LLP, No. 03-CV-5560, 2008 WL 5423316, at *2 (S.D.N.Y.
Dec. 31, 2008)). In Manley v. AmBase Corp., however, the Court of Appeals for the Second
Circuit provided insight into the proper standard. 337 F.3d 237 (2d Cir. 2003). Discussing the
use of de bene esse depositions at trial, the court held that Rule 32 “draws no distinction between

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depositions taken for purposes of discovery and those taken for trial.” Id. at 247 (citing United
States v. IMB Corp., 90 F.R.D. 377, 381 n.7 (S.D.N.Y. 1981)). This suggests that discovery
depositions and preservation depositions should be treated alike under the Federal Rules of Civil
Procedure. Accordingly, the court concludes that de bene esse depositions, like depositions taken
for discovery purposes, cannot be conducted after the close of discovery absent extenuating
circumstances.
Other lower courts have arrived at the same conclusion. In Sanofi-Synthelabo v. Apotex
Inc., for example, the court reasoned that de bene esse depositions were governed by the court’s
scheduling order because the “Federal Rules of Civil Procedure make no distinction between
depositions taken for the purpose of discovery and those taken de bene esse.” No. 02-CV-2255,
2005 WL 469594, at *1 (S.D.N.Y. Feb. 18, 2005). Accordingly, because discovery had already
closed — and because defendants failed to provide good cause for modifying the scheduling
order — that court denied defendants’ request to conduct a de bene esse deposition. Id. Other
district courts in this circuit have adopted a similar position. Compare George v. Ford Motor Co.,
No. 03-CV7643, 2007 WL 2398806, at *12 (S.D.N.Y. Aug. 17, 2017) (finding no good cause to
modify the scheduling order because there were no “unforeseen events arising after the close of
discovery” and because both sides “had every opportunity to seek [these] deposition[s] . . .
during the discovery period”) with Skim-Larkin, 2018 WL 3407710, at *1 (finding good cause
existed when the witness had a “serious medical condition that may make her unavailable to
testify at trial”).
DISCUSSION
Fact discovery closed on October 10, 2018. ECF No. 180. Accordingly, Defendants may
obtain de bene esse testimony from Stage Front only if they can demonstrate good cause to

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modify the Court’s Scheduling Order. Because Defendants have failed to make this showing,
their request is denied.
Defendants had every opportunity to depose Stage Front during the discovery period. On
May 21, 2018, Defendants “presented the relevant Stage Front evidence” as part of its motion
practice before Judge Stein. ECF No. 252, at 1. Accordingly, Defendants were aware of Stage
Front’s importance at least five months before the close of fact discovery. Defendant’s failure to
obtain the relevant discovery during this extensive window cautions against a finding of good
cause.
Defendants maintain that they secured an agreement with Plaintiff to proceed under
Plaintiff’s subpoena. Therefore, Defendants argue, the “failure to obtain a discovery deposition
rests solely and exclusively with Plaintiff.” ECF No. 252, at 1–2. Even assuming an agreement
existed — an assumption not entirely supported by the record — Defendants’ argument is
unpersuasive. By relying on an opposing party’s subpoena, litigants assume the risk that they
may lose the opportunity to obtain discovery, either because the subpoena was quashed, or
because it was withdrawn. That is exactly what happened here. After serving the subpoena,
Plaintiff engaged in responsive, good-faith negotiations with Stage Front. That Plaintiff and
Stage Front were ultimately unable to reach an agreement was a risk that Defendants accepted.
Indeed, Defendants themselves seemed to be aware of this possibility. They sent a courtesy copy
of a subpoena to Stage Front, but never followed through with actually serving it. No. 252,
Exhibit 1, at 1. As the fact discovery deadline drew closer and still no documents had been
produced, Defendants should have taken steps to ensure they could obtain any necessary
discovery. The history of counsel’s litigation strategies only undermines Defendants’ position
that they reasonably relied on Plaintiff’s counsel’s cooperation.

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Moreover, Defendants are at least partially at fault for the breakdown in Plaintiff’s
negotiations with Stage Front. Plaintiff and Stage Front reached an agreement on October 5, and
Stage Front’s counsel stated that he would provide an update once the parties were closer to the
discovery deadline (i.e. within the next five days). ECF No. 252, Exhibit 5, at 2. After discovery
closed, but before any documents had been produced, Defendants contacted Stage Front
regarding Plaintiff’s subpoena. Defendants created a “tentative plan” to narrow the document
production and to schedule Stage Front’s deposition. While it seems Defendants acted in good
faith, their efforts created a roadblock: Plaintiff, quite reasonably, felt that Defendants had “taken
over” its subpoena, and Stage Front felt confused as to the actual scope of Plaintiff’s request.
ECF No. 253, at 3 & Exhibit D. Similarly, Defendants did not timely inform Plaintiffs that
Defendants planned to call Stage Front as a trial witness. Again, although Defendants may have
acted in good faith, their actions caused Plaintiff to believe that discovery from Stage Front was
not a critical need. ECF No. 253, at 3. On these facts, the Court cannot find good cause to reopen
discovery.
Defendants emphasize that some courts have allowed de bene esse depositions to occur
even after the close of discovery. ECF No. 252, at 1. These cases are distinguishable. In RLS
Associates, LLC v. United Bank of Kuwait PLC, for example, the witness left his employment
with defendant and moved from New York to Dubai during the litigation. No. 01-CV1290, 2005
WL 578917, at *5 (S.D.N.Y. Mar. 11, 2005). Although the discovery period had closed, the
court allowed the defendants to conduct a de bene esse deposition because they had no reason to
schedule a deposition of their own witness. Id. at *7. Here, Defendants have long known that
Stage Front is located in the District of Maryland, outside the subpoena authority of this Court.

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Accordingly, unlike that of the defendant in RLS Associates, Defendants’ failure to schedule a
deposition during the discovery period cannot be excused.
CONCLUSION
Defendants request leave to obtain de bene esse testimony from Stage Front, or
alternatively, to extend the discovery period so that Defendants can depose Stage Front. Because
Defendants have not demonstrated good cause to reopen discovery, their request is DENIED.
The Clerk of Court is respectfully directed to terminate the motion at ECF No. 256.
SO ORDERED.

DATED:

November 29, 2018
New York, New York

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