Opinion
18 MS 302/09-2353.
February 7, 2011
MEMORANDUM OPINION AND ORDER
On January 10, 2011, U.S. District Judge John G. Koeltl, sitting in Part One, ordered defendant and judgment-debtor Air Cargo Associates, Inc. ("ACA") to show cause "why an order should not be granted pursuant to Rule 45 of the Federal Rules of Civil Procedure, punishing [ACA] for contempt of court and violation of, and non-compliance with" a subpoena issued by counsel for plaintiff and judgment-creditor John J. Carey ("Carey"). (Order to Show Cause, at 1.) The parties submitted declarations in support of and in opposition to the order to show cause, and on January 25, 2011, the parties appeared before Part One and presented oral arguments. For the reasons set forth below, although ACA has shown cause why it should not be held in contempt, the Court orders ACA to produce a witness for deposition and additional documents requested by Carey in advance of the deposition.
I. Background
In 1999, Carey, a resident of Wisconsin, hired ACA, a New Jersey corporation, to transport cattle by airplane from Miami, Florida to Puerto Rico. Before it could leave Miami, ACA's airplane was grounded due to mechanical problems. While the plane was grounded, ACA failed to remove the cattle from the airplane and several of the cattle died as a result of exposure to excessive heat. (Declaration of Bernard D'Orazio, ¶ 4.) Subsequently, Carey sued ACA in the U.S. District Court for the Southern District of Florida and obtained a jury verdict finding ACA negligent and liable for the loss of the cattle. On June 27, 2006, the Court entered judgment in favor of Carey in the amount of $88,300.00 plus interest and, on August 21, 2007, the Court entered a judgment in favor of Carey for costs of $5,520.83, plus interest. (D'Orazio Decl., ¶¶ 5-6.) ACA appealed, but the appeal was dismissed on ACA's own motion. Carey v. United States, No. 06-15015-CC, slip op. at 1 (11th Cir. Dec. 7, 2006). ACA has been registered to do business in New York since March 7, 2005. (D'Orazio Decl., Ex. G.)The Florida Judgment was registered in the Southern District of New York on December 14, 2009. (Id. ¶ 3.) Counsel for Carey issued a restraining notice and subpoena on December 17, 2009, which ACA answered "without objection." (Reply Declaration of Bernard D'Orazio, ¶ 3.) ACA identified James Farrell as the President of ACA, with a business address in Jamaica, New York. (Id. Ex. I.) Counsel for Carey then issued a subpoena duces tecum and ad testificandum on January 29, 2010 ("2010 Subpoena"). This subpoena required ACA to designate an officer, director, or managing agent for deposition on February 25, 2010, at 100 Lafayette Street in New York City. The 2010 Subpoena was served on ACA on February 9, 2010, by service on the New York Secretary of State, pursuant to New York Business Corporation Law § 306. (Id. Ex. B.) On February 23, 2010, Carey and ACA agreed through counsel to defer the deposition of Mr. Farrell until an unspecified future time, with ACA reserving the right to object to the taking of the deposition. (Id. Ex. C.) At that time, ACA — though reserving its right to object to the 2010 Subpoena — offered to deliver a compact disc with copies of documents ACA believed to be responsive to the requests made in the 2010 Subpoena, and delivered the disc on March 8, 2010. (Id.)
In August 2010, the parties unsuccessfully attempted to resolve their disputes about the 2010 Subpoena. (D'Orazio Reply Decl., ¶¶ 3-5.) Nearly three months later, in a letter to ACA dated November 8, 2010, Carey argued that the March 2010 submission did not fully comply with the document requests in the 2010 Subpoena, and demanded that ACA address all of the deficiencies by November 30, 2010. (D'Orazio Decl., Ex. D.) Carey's November 8, 2010, letter also demanded that ACA make Mr. Farrell available for deposition on December 8, 2010. ACA responded by e-mail dated November 23, 2010, in which ACA asserted that the 2010 Subpoena was not valid, that it had voluntarily produced the responsive documents it had in its possession in March 2010, and that James Farrell had recently resigned as an officer of ACA. (Id. Ex. F.) By e-mail dated December 8, 2010, counsel for ACA represented that there was no successor to Farrell. (Id.) In its motion papers, ACA has stated that "ACA is not an operating business and at present has no officers or directors." (ACA Response to Order to Show Cause, at 3.) However, counsel for Carey attests that "ACA has not been dissolved . . . and remains listed and in good standing in both NY and NJ." (Id. at 4.)
II. Discussion
A. Contempt of Court
Rule 45 of the Federal Rules of Civil Procedure permits a district court that has issued a subpoena to "hold in contempt a person who, having been served, fails without adequate excuse to obey the subpoena." Fed.R.Civ.P. 45(e). Under Second Circuit precedent, a party seeking to hold another in contempt must: (1) prove the alleged contemnor's non-compliance with a court order by clear and convincing evidence; (2) show that the order violated was clear and unambiguous; and (3) show that the alleged contemnor was not diligent in attempting to comply.United States v. Local 1804-1, Int'l Longshoremen's Ass'n, AFLCIO, 44 F.3d 1091, 1096 (2d Cir. 1995) (citing Equal Employment Opportunity Commission v. Local 580, Int'l Ass'n of Bridge Ironworkers, Joint Apprentice-Journeyman Educ. Fund, 925 F.2d 588, 594 (2d Cir. 1991)).
ACA argues that this Court should not hold it in contempt for failure to produce documents responsive to the 2010 Subpoena because it substantially complied with those document requests in March 2010. A district court may hold a party in contempt only where it has been shown that the alleged contemnor violated a court order by clear and convincing evidence. Int'l Longshoremen's Ass'n, 44 F.3d at 1096. After receiving the 2010 Subpoena, ACA produced 1,856 documents on a compact disc in March 2010. According to ACA, after this production, "months passed without objection or comment regarding the documents." (ACA Response to Order to Show Cause, ¶ 11.) Carey argues that this Court should hold ACA in contempt because the March 2010 document production did not comply with the 2010 Subpoena, and because ACA resisted Carey's numerous efforts to obtain additional documents in August 2010. However, Carey has not demonstrated that the requested documents could have been produced by ACA when the 2010 Subpoena was issued. As such, the Court is not satisfied that the record before it reflects "clear and convincing evidence" that ACA failed to comply with the 2010 Subpoena's document requests. Therefore, the Court holds that ACA is not in contempt for failure to produce documents pursuant to the 2010 Subpoena.
Carey argues that this Court should hold ACA in contempt for failure to produce a witness for deposition, as required by the 2010 Subpoena. ACA does not dispute that it failed to provide a witness for deposition, but argues it was not required to provide a witness because the 2010 Subpoena was not properly served. ACA's primary argument is that Carey failed to tender a witness fee and mileage allowance when serving the subpoena. As explained below, under the collateral bar doctrine, a party may not ordinarily challenge the validity of an order in a contempt hearing where that party failed to challenge the order through a motion for reconsideration or appeal. See United States v. Cutler, 58 F.3d 825, 832 (2d Cir. 1995). However, application of the collateral bar doctrine here must be tempered by the requirement that an alleged contemnor must be shown to have violated a "clear and unambiguous" order of the court. Int'l Longshoremen's Ass'n, 44 F.3d at 1096. The clear language of Rule 45 indicates — and federal courts both inside and outside of the Second Circuit have held — that failure to tender the required witness fee and mileage allowance can serve as an adequate ground for the invalidation of a subpoena. Fed.R.Civ.P. 45(b)(1). See CF I Steel Corp. v. Mitsui Co. (U.S.A.), Inc., 713 F.2d 494, 496 (9th Cir. 1983); In re Dennis, 330 F.3d 696, 704-05 (5th Cir. 2003); Song v. Dreamtouch, Inc., 01 Civ. 0386, 2001 WL 487413, at *7 (S.D.N.Y. May 8, 2001) (Schwartz, J.); Xstrata Canada Corp. v. Advanced Recyclying Tech., 08 Civ. 1366, 2010 WL 4609302, at *4 (N.D.N.Y. Nov. 5, 2010) (Homer, Mag. J.). In light of these decisions, the Court finds that the ACA was not "unambiguously" required to designate an officer, director, or managing agent for deposition. Therefore, it would be unreasonable to hold ACA in contempt.
ACA argues that the 2010 Subpoena is invalid because: (1) the Southern District of New York was not the appropriate venue for the issuance of the subpoena; (2) the subpoena was not personally served on an officer of ACA; and (3) Mr. Farrell resigned as an officer. However, this Court is the proper court to issue a subpoena calling for a deposition within Manhattan. See Fed.R.Civ.P. 45(a)(2)(B). Additionally, ACA is party obligated to respond to requests for discovery, regardless of the status of a particular officer or director. See 8A Charles Alan Wright Arthur R. Miller, Federal Practice and Procedure § 2110 (3d ed. 1998 Supp. Feb. 2010).
B. Compliance with the 2010 Subpoena
Although a finding of contempt is not warranted on the record presented, the Court construes Carey's request for "other . . . relief as may be just and proper" as a motion to compel compliance with the 2010 Subpoena. See Fed.R.Civ.P. 37(a).
ACA argues that it is not required to produce its last-known officer for deposition because the 2010 Subpoena is invalid. In its response to the Order to Show Cause, ACA argues that the subpoena is invalid on various grounds. However, because ACA failed to raise these objections to the subpoena in a timely motion to quash, they are deemed waived. The recipient of a subpoena may not ignore the subpoena and then later question its validity; the proper procedural mechanism to challenge the validity of a subpoena is a timely motion to quash. See Fed.R.Civ.P. 45(c)(3).
The application of an implied waiver is supported by the collateral bar doctrine as well as the plain language of Rule 45. "Under the collateral bar doctrine, a party may not challenge a district court's order by violating it. Instead, he must move to vacate or modify the order, or seek relief in [a court of appeals.]" United States v. Cutler, 58 F.3d 825, 832 (2d Cir. 1995) (citing Walker v. City of Birmingham, 388 U.S. 307, 317-21 (1967)). In this case, ACA could have challenged the subpoena by filing a timely motion to quash in this Court. Indeed, the only case cited by ACA to support its position that the 2010 Subpoena was invalid involved a timely motion to quash by the subpoena recipient. See Xstrata Canada Corp. v. Adv. Recycling Tech., No. 08 Civ. 1366, 2010 WL 4609302, at *1 (N.D.N.Y. Nov. 5, 2010). Rather than filing a motion to quash, ACA chose to ignore the subpoena entirely, and raised its objections to the 2010 Subpoena only after being ordered to show cause why it should not be held in contempt. The application of the collateral bar doctrine to preclude ACA's objections is necessary to implement the timeliness requirement for a motion to quash pursuant to Rule 45 and avoid further undue delay in this case. The Court holds that ACA's objections are deemed waived under the collateral bar doctrine, and ACA is therefore obligated to produce an officer, director, or managing agent for deposition.
III. Conclusion
The Court finds that ACA has shown cause why it should not be held in contempt for non-compliance with the 2010 Subpoena. Nonetheless, ACA is ORDRED to produce its last known officer, James Farrell, for deposition by March 10, 2011, and to respond to Carey's reasonable requests for document discovery by February 24, 2011.
By letter dated January 31, 2011, counsel for ACA reported that the parties have agreed to conduct any deposition ordered by this Court in Waterbury, Connecticut, rather than in Manhattan, as originally requested by Carey. Therefore, the Court ORDERS the parties to conduct the deposition in Waterbury, Connecticut, unless the parties agree to another location.
SO ORDERED.
Dated: New York, New York
February 7, 2011