Opinion
05 Civ. 5277 (DAB) (DFE) 05 Civ. 5330 (DAB) (DFE) 05 Civ. 5635 (DAB) (DFE) 05 Civ. 5816 (DAB) (DFE) 05 Civ. 7262 (DAB) (DFE) 05 Civ. 7810 (DAB) (DFE).
May 9, 2006
MEMORANDUM AND ORDER
On the question of whether the defendants should be permitted to depose Hans-Werner Hector, the parties sent me a joint letter dated May 2, 2006 (14 pages, plus Pl. Exhs. A through G, plus Def. Exhs. A through G), plus a May 3 letter from plaintiff, plus a May 4 letter from defendants. Next, the parties sent me a joint letter dated May 5, 2006 (39 pages, plus voluminous exhibits); this addresses five issues, but the second issue (at pages 12-26) is a rehash of whether the defendants should be permitted to depose Hans-Werner Hector. I will follow the sequence in which the five issues appear in the May 5 joint letter.
Issue A. Plaintiff's privilege log.
I direct Plaintiff to send me, by May 11, 2006, the following 13 documents for my in camera inspection: Documents listed on Plaintiff's privilege log as numbers 12, 18, 43, 44, 94, 218, 219, 243, 274, 307, 348, 360, and 362. If it wishes, plaintiff may include an ex parte affidavit explaining why each document (or a portion of it) is privileged. I deny the other requests made by defendants in connection with this issue.
Issue B. Defendants' request to depose Hans-Werner Hector.
Mr. Hector is a German national who apparently owns a vacation residence on Jones Island, South Carolina. In April 2006, the defendants discovered that he was there; on April 11 and 12, they served his wife with a subpoena calling for his deposition, and on April 13 Plaintiff agreed to accept service on behalf of Mr. Hector, and agreed to bring him back to the United States if I were to rule that his deposition was appropriate.
In the May 2 joint letter, and again in the May 5 joint letter, the defendants argue that Mr. Hector is a "managing agent" of Plaintiff within the meaning of Rules 32(a) (2) and 37(b) (2), F.R.Civ.P. In the May 5 letter, at pages 17-22, they add some case law and Plaintiff cites some countervailing case law. I find that the defendants have failed to show that Mr. Hector is a "managing agent" of Plaintiff. In United States Fidelity Guar. Co. v. Braspetro Oil Services Co., 2001 WL 43607 at *2-3 (S.D.N.Y. Jan. 17, 2001), Magistrate Judge Katz wrote:
Courts in this district have generally considered five factors in determining whether an individual is a managing agent. . . .
The examining party bears the burden of establishing the status of the witness. . . .
. . . Indeed, the five-factor test essentially assumes the existence of some form of an agency relationship, and proceeds from that point.
In the case at bar, the defendants have failed to show that Mr. Hector was an agent of Plaintiff. They emphasize that he was and is an indirect owner of Plaintiff, but this merely suggests that Plaintiff might, in a sense, be an agent of Mr. Hector. A case strongly on point is Campinas Foundation v. Simoni, 2005 WL 1006511, *1-2 (S.D.N.Y. Apr. 27, 2005), where Magistrate Judge Kevin Fox ruled that Heidrun Eckes-Chantre was not a "managing agent" of Campinas Foundation:
. . . Hoop testified, among other things, that Eckes-Chantre "calls the shots" with respect to Campinas and can give the plaintiff directives.
* * *
. . . Eckes-Chantre played an important role in establishing Campinas and . . . she is the primary beneficiary of the plaintiff foundation. Eckes-Chantre is not employed by and, apparently, has never been employed by Campinas. Hoop noted that Eckes-Chantre can make suggestions to Campinas and may issue directives to it; however, the final decision-maker on all matters pertinent to the operation and management of Campinas is its council, not Eckes-Chantre.
Accordingly, the defendants are not entitled to depose Mr. Hector as a party witness. In April they served him with a subpoena. However, I quash the subpoena because I determine, pursuant to Rule 26(b) (2), F.R.Civ.P., that the discovery sought is unreasonably cumulative and duplicative of the depositions that the defendants have taken and will take of Plaintiff's agents, including Ekkehart Hassels-Weiler.
In my Memorandum and Order dated February 24, 2006, at page 2, I wrote:
. . . As of today, however, they [the defendants] have shown me no reason to believe that Mr. Hector had any relevant knowledge beyond what was reported to him by Mr. Hassels-Weiler. On February 22 and 23, Defendants took the deposition of Mr. Hassels-Weiler. To the extent they need additional information about Mr. Hector, I agree with Plaintiff that they should next proceed by serving interrogatories to Plaintiff. I hereby direct Plaintiff to respond to such interrogatories within 7 calendar days from receipt.
The defendants declined to serve such interrogatories. I have now been presented with a fuller record. Nevertheless, I still find that there is no reason to believe that Mr. Hector had any knowledge, beyond what was reported to him by Mr. Hassels-Weiler, that is relevant to these lawsuits.
The defendants claim that discovery has already revealed that, from the inception of the Credit Agreement, Plaintiff was "aware" that AMC Computer Corp. was handling its accounts receivable in the manner that Plaintiff now alleges to have been false and fraudulent. (See 5/2/06 joint letter, p. 2.) The defendants have not given me details about the evidence of such "awareness." For the purposes of defendants' motion, I am willing to assume that there was such "awareness" on the part of all of the employees of Plaintiff's agent Eagle Advisors, Inc. The evidence apparently establishes that none of those employees spoke with Mr. Hector about Plaintiff except Mr. Hassels-Weiler, who oversees and reviews all of Mr. Hector's numerous large investments in the United States. The defendants have no need to show that the "awareness" passed from Plaintiff's agents to Mr. Hector. And there is no reason to believe that Mr. Hector had any source of knowledge other than Mr. Hassels-Weiler; it is undisputed that Mr. Hector had no contact with any of the defendants.
True, it appears that Mr. Hector was and is an indirect owner of Plaintiff, and that he was consulted by Mr. Hassels-Weiler about the investment recommendations made by Mr. Hassels-Weiler to Plaintiff (apparently to Bessemer Trust Company, the trustee of the Eugenia Trust, which owns 100% of Plaintiff). None of this is relevant to the claims and defenses in these lawsuits. There is no reason to believe that a deposition of Mr. Hector could improve the defendants' case. Moreover, by opposing such deposition, Plaintiff has precluded any possibility that Plaintiff might call Mr. Hector as a witness at the trial.
Accordingly, I deny the defendants' request to take the deposition of Mr. Hector.
Issue C. Defendants' request for a third session of deposition of Ekkehart Hassels-Weiler.
I hereby direct Plaintiff to produce Mr. Hassels-Weiler for a third session of deposition, for a maximum of four hours. The questions must be limited to the subject matters of documents provided to the defendants after the February 22 and 23 sessions.
Issue D. Defendants' request for a second session of deposition of David Alexander.
I hereby direct Plaintiff to produce Mr. Alexander for a second session of deposition, for a maximum of three hours. I impose no limit on the subject matter of the questions put to this witness.
Issue E. Defendants' request to depose Debra Ross.
I hereby direct Plaintiff to produce Ms. Ross for deposition. I impose no limit on the subject matter of the questions put to this witness. However, I limit the questioning to five hours.
In all other respects, fact discovery is closed. I am not extending the deadlines for expert discovery.
I am faxing this Memorandum and Order only to Mr. Falek and Mr. McGovern. I request Mr. McGovern's law firm to notify all other defense counsel, because this will not be placed in the electronic filing system until May 10.