Penn, LLC et al v. Prosper Business Development Corporation, et al
Filing
240
OPINION AND ORDER granting 210 Sealed Motion to Compel the Re-Deposition of Bradford S Eldridge. Signed by Magistrate Judge Terence P Kemp on 7/5/2013. (kk2)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Penn, LLC, et al.,
:
Plaintiffs,
:
v.
:
Prosper Business Development
Corporation, et al.,
Defendants.
Case No. 2:10-cv-993
:
JUDGE GREGORY L. FROST
Magistrate Judge Kemp
:
OPINION AND ORDER
This case is before the Court to resolve a discovery
dispute.
Plaintiffs Penn, LLC (“Penn”) and Big Research, LLC
(“Big Research”) filed a motion for an order compelling the “redeposition” of non-party witness Bradford S.
Eldridge.
(Doc.
#210). Defendants Prosper Business Development Corporation
(“Prosper”), Phil Rist, and Gary Drenik filed a memorandum in
opposition to Plaintiffs’ motion.
(Doc. #221).
Mr. Eldridge,
the non-party witness, likewise filed a memorandum in opposition.
(Doc. #224).
On June 24, 2013, Plaintiffs filed a reply brief in
support of their motion.
(Doc. #238).
Consequently, the motion
has been briefed fully and is now ripe for decision.
For the
following reasons, the motion will be granted.
I. Background
The nature and history of this litigation are fully set
forth in previous orders of this Court and will not be repeated
at length here.
Briefly, however, for purposes of the current
motion, the Court notes that Penn filed the present action on
behalf of itself and derivatively on behalf of Big Research for
restitution and damages, alleging that Defendants improperly
transferred and diverted business opportunities, assets, and
revenues of Big Research to Prosper, and that these improper
transactions happened both when Big Research was still operating
and in connection with the purchase of Big Research’s assets and
the transfer of its remaining business to Prosper.
Big Research retained Mr. Eldridge to perform various tasks
which included an interpretation of Big Research’s Operating
Agreement, an analysis of capital account balances, a valuation
of Penn’s membership interest in Big Research, instruction on how
to wind-up Big Research and how to comply with the May 2010
Arbitration Award, a determination as to the reasonableness of
the royalty rate Prosper charged Big Research, and a calculation
of Big Research’s liquidation value.
(Doc. #221 at 2-3).
Plaintiffs deposed Mr. Eldridge, seeking information concerning
his reports and practices.
They claim that Mr. Eldridge’s
counsel refused any inquiry into the following areas important
for cross-examination:
1.
Eldridge’s typical valuation methodologies and the
extent to which his specific work here varied from
his usual protocol or techniques;
2.
The criteria Eldridge considered important in the
work he performed here, and the extent to which
other data points may have been significant had he
been aware of them;
3.
The assumptions provided to him by Defendants, and
the extent to which his conclusions here change if
the assumptions are wrong; and
4.
The instructions and communications Eldridge
received from James Leickly in Leickly’s capacity
as BIGresearch’s counsel, at a time when Eldridge
was performing his valuation work per Leickly’s
direction and before Leickly came to represent
Eldridge.
(Doc. #210 at 4).
In their motion, Plaintiffs claim that Mr.
Eldridge “should be required to sit for re-deposition, and be
compelled to answer under oath regarding the four topics listed
above.”
Id.
Alternatively, Plaintiffs request that the Court
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preclude Defendants from making any mention of Mr. Eldridge and
his work at trial.
Id. at 4-5.
In opposition, Defendants claim that Plaintiffs are using
Mr. Eldridge’s deposition to do an “end-around” the Court’s order
prohibiting Plaintiffs from using expert testimony due to their
failure to comply with the relevant deadlines.
(Doc. #221 at 1).
Defendants also argue that they should not be barred from
referencing Mr. Eldridge’s work despite his refusal to answer
questions about it because he explained it in “great detail”
during the deposition.
Id. at 1. Defendants also argue that they
should not suffer any adverse consequences relating to Mr.
Eldridge’s failure to answer questions because his counsel, and
not defense counsel, advised him not to answer.
Id.
Mr. Eldridge likewise opposes the motion to compel, arguing
that Plaintiffs are attempting to elicit expert testimony from
him in violation of this Court’s order.
(Doc. #224 at 1).
Accordingly, Mr. Eldridge insists that his refusal to answer was
consistent with Fed. R. Civ. P. 30(c)(2), which allows a witness
to refuse to answer a deposition question “to enforce a
limitation ordered by the court.”
Id.
II. Discussion
Fed. R. Civ. P. 30(c)(2) provides that “[a] person may
instruct a deponent not to answer only when necessary to preserve
a privilege, to enforce a limitation ordered by the court, or to
present a motion under Rule 30(d)(3).”
Here, Mr. Eldridge’s
counsel instructed him not to answer on the grounds that he was
enforcing “a limitation by the court.”
The purported limitation
arises from the Court’s ruling that Plaintiffs are not entitled
to present expert testimony due to their failure to comply with
the relevant deadlines.
(Doc. #98).
More specifically, the
Court issued an Opinion and Order providing that Plaintiffs are
prohibited from presenting the testimony of forensic accounting
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expert witness Rebekah A. Smith of GBQ Consulting in light of
their failure to meet the expert disclosure deadline.
Id.
The Court’s ruling concerning expert witness testimony,
however, is not a limitation on discovery as suggested by counsel
for Mr. Eldridge.
See Fed. R. Civ. P. 26(b)(2)(c).
Fed. R. Civ.
P. 26(b)(2)(c) discusses when a court may issue an order limiting
discovery and indicates that a court may do so if it determines
that:
(i) the discovery sought is unreasonably cumulative or
duplicative, or can be obtained from some other source
that is more convenient, less burdensome, or less
expensive;
(ii) the party seeking discovery has had ample
opportunity to obtain the information by discovery in the
action; or
(iii) the burden or expense of the proposed discovery
outweighs its likely benefit, considering the needs of
the case, the amount in controversy, the parties’
resources, the importance of the issues at stake in the
action, and the importance of the discovery in resolving
the issues.
This Court has not issued an order limiting discovery under Fed.
R. Civ. P. 26(b)(2)(c).
An order precluding a party from
presenting expert testimony at trial is not the equivalent of an
order limiting a party’s ability to question a witness about
matters of opinion, especially if the opposing party intends to
offer testimony from that very witness.
Accordingly, Mr.
Eldridge was improperly instructed not to answer on the grounds
that he was enforcing “a limitation by the court.”
To the extent that Mr. Eldridge’s counsel may have had
objections to questions based on his belief that those questions
called for expert, as opposed to fact, testimony, Fed. R. Civ. P.
30(c)(2) provides that an objection during a deposition “must be
noted on the record, but the examination still proceeds; the
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testimony is taken subject to any objection.”
Accordingly, Mr.
Eldridge should have answered Plaintiffs’ questions subject to
any such objection.
Simply put, Mr. Eldridge did not have a
basis upon which to refuse to answer under the relevant rules and
the instruction not to answer was improper.
Given that Mr. Eldridge was improperly instructed not to
answer questions, the Court finds it both necessary and proper to
require him to be deposed a second time.
See Fed. R. Civ. P.
30(c)(2) (allowing a party to take a second deposition if the
request is consistent with Fed. R. Civ. P. 26(b)(2)).
Defendants
urge that, if ordered, Mr. Eldridge’s second deposition should be
limited to two hours.
(Doc. #221 at 2, 6).
The Court agrees
that a presumptive time limit is advisable even though the
additional time is necessary in order to allow Plaintiffs to
explore fully the basis for Mr. Eldridge’s deposition testimony
without being prevented from doing so by way of improperlygrounded instructions not to answer.
A two-hour time limit
appears to be reasonable in light of the fact that Mr. Eldridge
was deposed previously for nearly seven hours, and in light of
the fairly limited scope of the questions he refused to answer.
However, should the process of re-deposing Mr. Eldridge turn out
to be more protracted than would first appear, the parties shall
discuss if a reasonable extension of the two-hour time limit is
warranted, and Plaintiffs may apply for more time if they believe
it is necessary and if Defendants or the witness disagree.
III. Conclusion
Based upon the foregoing, Plaintiffs’ motion for an order
compelling the “re-deposition” of non-party witness Bradford S.
Eldridge (Doc. #210) is granted.
The duration of the deposition
shall be limited to two hours, subject to the qualification on
that time limit set forth above.
IV. Procedure on Objections
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Any party may, within fourteen days after this Order is
filed, file and serve on the opposing party a motion for
reconsideration by a District Judge.
28 U.S.C. §636(b)(1)(A),
Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 91-3, pt.
I., F., 5.
The motion must specifically designate the order or
part in question and the basis for any objection.
Responses to
objections are due fourteen days after objections are filed and
replies by the objecting party are due seven days thereafter.
The District Judge, upon consideration of the motion, shall set
aside any part of this Order found to be clearly erroneous or
contrary to law.
This order is in full force and effect, notwithstanding the
filing of any objections, unless stayed by the Magistrate Judge
or District Judge.
S.D. Ohio L.R. 72.3.
/s/ Terence P. Kemp
United States Magistrate Judge
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