Elavon, Inc. v. Northeast Advance Technologies Inc. et al

Filing 544

ORDER denying 474 Motion to Stay re: 474 LETTER MOTION to Stay re: 473 Order,, addressed to Judge Kenneth M. Karas from Steven Y. Yurowitz dated 10/21/2021. Accordingly, the Friedman Defendants' motion is DENIED. The Clerk is respectfully directed to te1minate the motion (Dkt. 494). SO ORDERED.. (Signed by Magistrate Judge Paul E. Davison on 4/20/2022) (ks)

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UNITED STATES DISTRJCT COURT

SOUTHERN DISTRICT OF NEW YORK
ELAVON, INC,

Plaintiff,

15 Civ. 7985 (KMK)(PED)

- against -

ORDER

NORTHEAST ADVANCE TECHNOLOGIES, INC.,
SAMUEL BRACH, JOSHUA BRACH, ESTEBAN
-CASTILLO, JOEL FRIEDMAN, AND RIVKY
FRIEDMAN, --- ----- ----- --

Defendants.
PAUL E. DAVISON, U.S.M.J.:

By letter dated December 10, 2022, Defendants Joel and Rivky Friedman (the "Friedman
Defendants") move to continue the deposition ofElavon, Inc.'s Rule 30(b)(6) designated witness,
Ms. Holly Franklin. [Dkt. 494.]} Elavon, Inc. ("Elavon" or "Plaintiff) opposed the Friedman

Defendants' motion by letter dated December 16, 2021. [Dkt 498.] Familiarity with the record
is assumed. For the reasons stated below, the motion is DENIED.

I. RELEVANT BACKGROUND
In and around April 13, 2021, the Friedman Defendants provided an Amended Rule
30(b)(6) Notice to Elavon (the "Deposition Notice"). [Dkt. 494-1.] The Deposition Notice
requested that Elavon prepare its witness to testify to eleven overarching topics, which

To the extent that the Friedman Defendants' letter requests spoliation sanctions, the
Court will address that in a separate Order and Memorandum. Further, the Court finds that the
Friedman Defendants' argument that Ms. Franklin's deposition (which lasted more than 8 hours
and required a stenographer substitidon before concluding at 7:04 pm) was improperly
terminated is without merit.

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encompassed fifteen sub-topics. These included the following:
1. Rules governing permitted credit card use by a cardholder and merchant.
2. In connection with chargebacks:

A. Each and every department within plaintiff that plays any role in the
chargeback process and the relationship among them;
B. Chargeback rules and procedures, including those specifically

addressing (i) credit not processed, (ii) fraud, and (iii) goods not received;
C. Plaintiffs obligations to merchants, issuing banks, and card brands;
D. Information and documentation associated with each chargeback at
issue in this action;
E. The specific action or steps take in connection with the chargebacks at

issue in this case, including (i) how the initial disputes were processed, (ii)
the action taken in connection with the subject chargebacks and how such
action was communicated, (in) the specific individuals directing such
action, and (iv) the reason for the action taken; and
F. The computer systems, plaintiffs and otherwise, that are used in the
chargeback process.
3. Plaintiffs role in the chargeback process and the relationship between and
among the merchant, acquirer, issuing bank, and issuer.
4. In connection with Northeast Advance Technologies, Inc. ("Northeast"):

A. Plaintiffs relationship with Northeast;
B. Agreements between plaintiff and Northeast;
C. Agreements between plaintiff and any cardholder;
D. Northeast's business;
E. Northeast use of and practices in connection with credit card
processing;
F. Northeast's charging activity before and during the charges that were
charged-back and which are at issue in this case;
G. Steps, if any, plaintiff took to monitor such activity;
H. Steps, if any, plaintiff took in response to such monitoring; and

F. [sic] Plaintiffs investigation of Northeast in connection with its
business and chargebacks.
5. Fees or income earned by plaintiff as a result of Northeast's charging activity.

6. The allegations in plaintiffs pleadings and discovery responses, including the
documents produced by plaintiff.
7. Plaintiffs policies in accepting merchants.
8. Plaintiffs risk management in connection with its merchants and card
processing.

9. Plaintiffs policies, procedures, and practices for considering and listing
terminated merchants on the MATCH list.
10. Plaintiffs communication platforms and systems, electronic or otherwise,

including (i) their names, (ii) how they are maintained, serviced, and stored, (iii)

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how they are accessed (and where records of access are maintained), (iv) how they
are backed up, (v) the details, if any, of their routine or systematic purge or
deletion, and (vi) where deleted messages are stored and how deleted messages
can be found and restored.
11. Plaintiffs retention policies, including for electronic records and electronic
communications.

[Dkt. 494-1 at 3-4.] Elavon presented Ms. Holly Franklin as its Rule 30(b)(6) witness and on
October 20, 2021, the Friedman Defendants deposed her. Her deposition lasted approximately 8
hours. During the deposition, Ms. Franklin stated that she had spent about an hour preparing for

the deposition. [Dkt. 494-2 at 17.]

II. APPLICABLE LAW
Under Rule 30(b)(6), a corporate entity may be noticed for a deposition. The corporate
entity then designates a corporate representative "to testify on its behalf." Fed. R. Civ. P.

30(b)(6). Although a deposition under Rule 30(b)(6) "Is not designated to be a memory contest,"
Equal Emp. Opportunity Comm'n v. American Int'l Grp., Inc., 1994 WL 376052,at *3
(S.D.N.Y. July 18, 1994), the corporate deponent has an affirmative duty to make available [a
representative] able to give complete, knowledgeable and binding answers on its behalf." Reilly
v. Natwest Markets Group Inc., 181 F.3d 253,268 (2d Cir. 1999). "Moreover, a corporation's

obligation to prepare a witness to address topics included m a Rule 3 0(b)(6) notice of deposition
is triggered where the witness lacks personal knowledge of the matters set forth in the deposition
notice." Heras v. Metropolitan Learning Institute, 2022 WL 20899, at *2 (E.D.N.Y, Jan. 3,
2022). "Producing an unprepared witness is tantamount to a failure to appear." United States v.
Taylor, 166 F.R.D. 356, 363 (M.D.N.C. 1996). "When a party falls to comply with Rule

30(b)(6), Rule 37 allows courts to impose various sanctions, including the preclusion of

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evidence." Reilly, 181 F.3d at 268.
Sanctions are appropriate "where the inadequacies in a deponent's testimony [are]
egregious and not merely lacking in desired specificity in discrete areas." Kyoei Fire & Marine
Ins. Co. Ltd. v. M/V Maritime Antatya, 248 F.R.D. 126, 152 (S.D.N.Y. 2007). Nonetheless,
"courts are reluctant to award sanctions on the basis of deficient Rule 30(b)(6) testimony when
counsel fail to make a good faith effort to resolve the deficiencies or when the application for
sanctions appears tactically motivated." Agmel v. Central Park Boathonse LLC, 2015 WL
463971, at *2 (S.D.N.Y. Jan. 26,2015).

III. ANALYSIS
The Friedman Defendants argue that Ms. Franklin was unprepared for her deposition. To
support this argument, the Friedman Defendants rely upon Ms. Franklin's statement that she
spent approximately an hour preparing for the deposition. They also claim that because Ms.
Franklin was unprepared, she could not inform them on the topics provided for in the Deposition
Notice. A review of the Friedman Defendants' arguments and the Deposition Notice indicates
that the Friedman Defendants found Ms. Franklin's testimony to be insufficient for point one,
subsection E of point two, subsection F of point four, point six, and point eleven.
The Friedman Defendants make much of the fact that Ms. Franklin spent approximately
one hour preparing for this deposition. However, Ms. Franklin has personal knowledge of the
case, as she was a "primary contact[] or player[] from day one. Dkt. 494-2 at 78; see Heras,
2022 WL 20899, at *2. Further, she has been at Elavon for 23 years and had been in her position

The Friedman Defendants fail to identify which points of their Deposition Notice Ms.
Franklin provided insufficient testimony for, and instead state topics that they believe their
Deposition Notice covers.

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for approximately two years when she detected the chargeback issues. She also testified that it
would be a fair characterization to say that her "entire career with Elavon is focused on loss
prevention and risk assessment^]" [Dkt 494-2 at 9.] Although an hour is not a substantial
amount of time, given Ms. Franldin's personal knowledge of the case, it was sufficient to prepare

her as Elavon's Rule 30(b)(6) witness.
Further, having reviewed Ms. Franklin's testimony, this Court finds that Ms. Franklin's
testimony was not insufficient as to any of the points identified by the Friedman Defendants. The

testimony that the Friedman Defendants claims is insufficient generally falls within the
information requested by the Deposition Notice, but the Friedman Defendants are demanding a
degree of detailed recollection "that would be unrealistic without more specific notice." Agniel,

2015 WL 463971, at *2. This Court further finds that this motion is meritless and "tactically
motivated" and is therefore denied. See id

IV. CONCLUSION
Accordingly, the Friedman Defendants' motion is DENIED. The Clerk is respectfully
directed to terminate the motion (Dkt. 494).

Dated: April 20, 2022
White Plains, New York

SQORDERED

PauIE. f)avison

United States Magistrate Judge