Effecten-Spiegel AG et al v. Merrill Lynch, Pierce, Fenner & Smith, Inc. et al

Filing 54

MEMORANDUM OPINION AND ORDER.....John Thains July 20 motion to quash the subpoena served on him is granted. The subpoena shall be quashed in its entirety. (Signed by Judge Denise L. Cote on 8/10/2018) (gr)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
IN RE APPLICATION OF EFFECTEN-SPIEGEL :
AG AND ARFB ANLEGERSCHUTZ UG FOR AN
:
ORDER TO TAKE DISCOVERY PURSUANT TO 28 :
U.S.C. § 1782
:
:
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18mc93 (DLC)
MEMORANDUM OPINION
AND ORDER

DENISE COTE, District Judge:
On June 7, 2018, petitioners’ motion to take discovery of
Merrill Lynch, Pierce, Fenner & Smith, Inc. and Merrill Lynch &
Co. (collectively, “Merrill Lynch NY”) pursuant to 17 U.S.C. §
1782 was denied.

Also on June 7, petitioners were granted

permission to serve John Thain, former Chairman and Chief
Executive Officer of Merrill Lynch & Co., with a subpoena to
take discovery pursuant to 17 U.S.C. § 1782.

Thain has now been

served, and he filed a motion to quash on July 20.
became fully submitted on August 6.

The motion

For the foregoing reasons,

Thain’s motion to quash is granted.
Today, petitioners’ motion for reconsideration of the
denial of their application to take discovery of Merrill Lynch
NY was denied.

The Opinion describing the reasons for the

denial is incorporated into this Order by reference.
A court “must quash or modify a subpoena that . . .
subjects a person to undue burden.”
45(d)(3)(A)(iv).

Fed. R. Civ. P.

The subpoena served on Thain contains the

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identical requests as the subpoenas petitioners sought to serve
on Merrill Lynch NY.

In brief, the subpoena commands Thain to

appear for a deposition and to produce any documents in his
possession related to the financial relationship between any
Merrill Lynch entity and Porsche and documents related to the
financing and structuring of Porsche’s investments in Volkswagen
securities.

Thain has submitted a sworn statement in which he

declares that he does not have documents responsive to the
subpoena and that he does not recall any information requested
in the subpoena.

Petitioners have withdrawn their request for

documents and seek only his deposition.
Thain met with Porsche representatives in New York on
October 15, 2008, in the midst of a global financial crisis.
Just one month earlier, Bank of America Corporation announced
that it would acquire Merrill Lynch & Co.

As noted at oral

argument held on June 7, the meeting was “about a refinancing of
a loan that had been previously extended” to Porsche.

It is

undisputed that Thain told Porsche in that meeting that Merrill
Lynch would not be refinancing the loan.

Thain declares that he

“recall[s] a meeting with representatives of Porsche,” he does
not recall “the date of that meeting, the individuals who
attended[,] or the substance of the discussion.”
As noted in today’s Opinion, no Merrill Lynch NY entity
provided Porsche with investment banking services in connection
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with its investment in Volkswagen.

Thain has declared that he

had no “oversight of, or any involvement with” investment
banking services given by Merrill Lynch International Bank Ltd.
(“MLIB”) to Porsche in connection with Porsche’s investment in
Volkswagen.

Further, Porsche’s trading strategy for its

investment in Volkswagen was handled by a German entity with no
relationship to Merrill Lynch.
The subpoena served on Thain subjects him to an undue
burden.

He has no documents.

He has no current recollection of

the meeting held over ten years ago, at a time of a global
financial crisis.

Courts must be vigilant so that CEOs (and

former CEOs) and those in control of large institutions are not
subjected to the burdens of discovery without a showing that
they are likely to have information useful to the litigation
that cannot fairly and with less burden be found elsewhere.
See, e.g., Scott v. Chipotle Mexican Grill, Inc., 306 F.R.D.
120, 122 (S.D.N.Y. 2015) (noting that while “[h]ighly-placed
executives are not immune from discovery,” there is an
“additional layer of protection for senior corporate executives”
and it “may be appropriate to preclude a redundant deposition”)
(citation omitted); Six West Retail Acquisition, Inc. v. Sony
Theatre Management Corp., 203 F.R.D. 98, 102 (S.D.N.Y. 2001)
(deposition of CEO permitted when sufficient evidence presented
that CEO had personal knowledge of relevant facts and unique
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knowledge relevant to the action).

Petitioners have not made a

showing that any deposition of Thain would not be redundant with
the sworn statement he has already provided, or that he has any
unique personal knowledge relevant to the German Litigation.
Petitioners argue that they may be able to refresh Thain’s
recollection at a deposition.

But they admit they have no

documents to assist in that effort and have made no showing that
they have any other information that could serve that purpose.
As significantly, the petitioners have not shown that even
a thoroughly refreshed recollection about a single meeting with
Porsche representatives a decade ago is relevant to the German
Litigation.

The Thain meeting in September 2008 with Porsche

had to do with a refusal to extend financing to Porsche.
petitioners are investors in Volkswagen.

The

It is Porsche’s

strategy for investing in Volkswagen that is at the heart of the
German Litigation.
Acknowledging the weakness of the connection between the
Thain meeting and the issues at stake in the German Litigation,
petitioners suggest in opposition to this motion to quash that
Thain may have information about Porsche’s general financial
condition as of October 15, 2008.

To the extent Porsche’s

general financial condition in October of 2008 is relevant to
the German Litigation (and the petitioners have not explained
how it is), Thain is not an appropriate deponent for that
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inquiry.

For the same reasons petitioners were not allowed to

pursue a fishing expedition through the files of the Merrill
Lynch NY entities, the Thain motion to quash is granted.

CONCLUSION
John Thain’s July 20 motion to quash the subpoena served on
him is granted.

Dated:

The subpoena shall be quashed in its entirety.

New York, New York
August 10, 2018

__________________________________
DENISE COTE
United States District Judge

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