United States District Court, S.D. New York
March 24, 2004.
JSC FOREIGN ECONOMIC ASSOCIATION TECHNOSTROYEXPORT, Plaintiff, against INTERNATIONAL DEVELOPMENT AND TRADE SERVICES, INC., et al., Defendants
The opinion of the court was delivered by: JOHN KOELTL, District Judge
OPINION and ORDER
Defendants M & B Oxford 41, Inc. PM & B Oxford"), P & F Equities,
Inc. ("P & F Equities"), and Atrium Square, Inc. ("Atrium Square")
(collectively, "entity defendants"), object to Magistrate Judge Peck's
February 9, 2004 orders requiring M & B Oxford and P & F Equities to
produce Michael Shine and requiring Atrium Square to produce Dennis John
Edwards for depositions.
The Objections should be sustained only if the Magistrate Judge's
rulings were clearly erroneous or contrary to law. See
28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a).
The following facts are not substantially in dispute between the
parties. Mr. Shine has stated that he never acted in any respect as an
attorney for either M & B Oxford or for P & F Equities. (Declaration of
David Perlmutter dated Feb. 9, 2004 ("Perlmutter Decl.") attached as Ex.
1 to Defs.' Objections ¶¶ 3(a)-3(b).) However, in 2002 M & B Oxford paid
$650,000 for "legal fees." (Ex. 12 to Declaration of Tracey A. Tiska
("Tiska Decl.") dated Mar. 10, 2004.) The entity defendants contend that
these fees were not in fact legal fees but were paid for mortgage
interest that was due. (Ex. A to Declaration of Joel M. Cohen dated Mar.
17, 2004.) Mr. Shine was previously an officer and director of Atrium
Square, but he resigned those positions in September 2003. (Perlmutter
Decl. ¶ 3(c).)*fn1
Mr. Shine currently has an attorney-client relationship with
Grandchester Holdings, Ltd. ("Grandchester"), a British Virgin Islands
entity that holds all the shares of P & F Equities, which in turn holds
all the shares of M & B Oxford. (Perlmutter Decl. ¶ 3(a).) Mr. Shine
also acts as attorney-in-fact for O.C.S. Management, Ltd. ("OCS"), an
Isle of Man company that is the corporate director of Grandchester.
(Perlmutter Decl. ¶ 3(a).) In addition, Mr. Shine has an attorney-client
relationship with Arexco. Management Holdings, Ltd. ("Arexco"), an entity
that holds all the shares of Atrium Square. (Perlmutter Decl. ¶ 3(d).)
Mr. Shine has stated that he has never had any direct or indirect
ownership interest in the entity defendants, Grandchester, OCS, or
Arexco. (Perlmutter Decl. ¶ 3(e).)
Mr. Shine stated that Mr. Edwards is a director of OCS, and that Mr.
Edwards resigned as an officer and director of Atrium Square in November
2003. (Perlmutter Decl. ¶ 3(f) & 4.)*fn2 OCS apparently has the
authority to act on behalf of Arexco. (Ex. 7 to Tiska Decl.)
Counsel for the entity defendants represents that both Mr. Shine and
Mr. Edwards have made it clear that they will not appear, voluntarily or
by order, for depositions in this case.
The issue raised by the defendants' Objections is whether the
Magistrate Judge's orders that the defendants produce Mr. Shine and Mr.
Edwards for depositions were clearly erroneous or contrary to law.
Pursuant to Rule 30(b)(1) of the Federal Rules of Civil Procedure, a
specific officer, director, or managing agent of a corporate party may be
compelled to testify pursuant to a notice of deposition. A corporate
employee or agent who does not qualify as an officer, director, or
managing agent is not subject to deposition by notice. Dubai Islamic Bank
v. Citibank, N.A., No. 99 Civ. 1930, 2002 WL 1159699, *2 (S.D.N.Y. May
31, 2002); United States v. Afram Lines (USA), Ltd., 159 F.R.D. 408, 413
(S.D.N.Y. 1994); Sugarhill Records Ltd. v. Motown Record Corp.,
105 F.R.D. 166, 169 (S.D.N.Y. 1985). The burden is on the examining party
to establish the status of the
witness, but this burden is "modest" and any doubts are resolved in
favor of the examining party. Dubai, 2002 WL 1159699, at *4.
In this case, there is no dispute that neither Mr. Shine nor Mr.
Edwards was an officer or director of any of the entity defendants at the
time the depositions were noticed. Determining whether a person is a
"managing agent" is answered "pragmatically and on a fact-specific
basis." Dubai, 2002 WL 1159699, at *2. Courts in this district generally
consider five factors in determining whether a person is a managing
1) whether the individual is invested with general
powers allowing him to exercise judgment and
discretion in corporate matters; 2) whether the
individual can be relied upon to give testimony, at
his employer's request, in response to the demands of
the examining party; 3) whether any person or persons
are employed by the corporate employer in positions of
higher authority than the individual designated in the
area regarding which the information is sought by the
examination; 4) the general responsibilities of the
individual respecting the matters involved in the
litigation; and 5) whether the individual can be
expected to identify with the interests of the
Dubai, 2002 WL 1159699, at *3 (internal citation omitted) (collecting
The record thus far does not support a conclusion that either Mr. Shine
or Mr. Edwards acts as a managing agent for any of the entity defendants.
There is no evidence that either Mr. Shine or Mr. Edwards exercises
judgment or discretion in the affairs of any of the entity defendants.
Mr. Shine and Mr. Edwards each resigned their respective officer and
positions with the entity defendants before their depositions were
noticed. Mr. Shine serves as counsel to Grandchester, the parent company
of M & B Oxford and P & F Equities, but there is no evidence that this
position confers any power on him that would make him the functional
equivalent of a "managing agent" for either M & B Oxford or P & F
Equities. The plaintiffs have not shown that Mr. Edwards' position at OCS
is one that allows him to exercise his judgment and discretion in the
affairs of Atrium Square or that identifies his interests with those of
Atrium Square. Moreover, Mr. Shine and Mr. Edwards have made it clear
that they refuse to appear for any depositions in this case, even at the
expense of possible sanctions against the entity defendants. There is
therefore no basis to conclude that either Mr. Shine or Mr. Edwards
identify with the interests of the corporate parties directed to produce
them. See Afram Lines, 159 F.R.D. at 414 (refusing to require deposition
by notice where "the proposed deponent is not an employee of the opponent
and may, in fact, be beyond its control," and where allowing deposition
by notice would result in "not merely the waiver of formal subpoena
procedures," but also sanctions on the opponent "for failing to produce
witnesses who are in fact beyond its control").
The plaintiff notes that courts have sometimes held that corporate
parties must produce individuals, including former
officers or directors, pursuant to Rule 30, even though those individuals
had no formal affiliation or position with the corporations at the time
their depositions were noticed. The cases cited by the plaintiff,
however, do not support a similar conclusion in this case. See, Smith v.
Show Show of Rocky Mount, Inc., No. 00-30141, 2001 WL 1757184, at *2 (D.
Mass. Aug. 26, 2001) (requiring production of witness who, although he
had changed jobs, "remains a managing agent to the present time" and
whose "present management responsibilities" invested him with power to
exercise judgment and discretion over corporation's affairs); Independent
Prods. Corp. v. Loew's, Inc., 24 F.R.D. 19, 23-24, 26 (S.D.N.Y. 1959)
(requiring production of witnesses who had resigned specifically to avoid
depositions in case but who still retained financial stake in outcome of
litigation, and who "are in a very real sense now in the `employ' of the
plaintiffs although formal ties are broken"); Founding Church of
Scientology v. Webster, 802 F.2d 1448, 1453 (D.C. Cir. 1986) (district
court properly required Church of Scientology to produce its founder, L.
Ron Hubbard, as a managing agent because Hubbard still exercised
"ultimate control" over church despite his ostensible resignation from
In this case, for the reasons explained above, there is no basis to
conclude that the entity defendants have control over Mr. Shine or Mr.
Edwards, or that Mr. Shine and Mr. Edwards
exercise such judgment and discretion over the affairs of these
corporations that they could be required, despite their resignations from
official positions, to testify pursuant to Rule 30(b)(1). A managing
agent is a "person who has the interests of the corporation so close to
his heart that he could be depended upon to carry out his employer's
direction to give testimony at the demand of a party engaged in
litigation with the employer." Loew's, 24 F.R.D. at 25 (internal citation
omitted). Mr. Shine and Mr. Edwards do continue to have some attenuated
connections with the entity defendants; however, they have refused to
appear for noticed depositions and have made it clear that they will not
appear in the future, even at the expense of sanctions for the entity
defendants, so it cannot be said that their interests are identified with
those of the entity defendants. Therefore, it cannot be concluded that
the entity defendants control either Mr. Shine or Mr. Edwards to such an
extent that they could be compelled to testify pursuant to a notice of
deposition, and that the entity defendants could be subject to sanctions
for failing to make them appear.
For these reasons, the entity defendants' Objections to Magistrate
Judge Peck's February 9, 2004 orders are sustained. The notices of
deposition of Mr. Shine and Mr. Edwards are vacated. The plaintiff must
treat both Mr. Shine and Mr. Edwards as they would any other non-party
witness. Because both
men are overseas, the plaintiff must follow the procedures of the
Hague Convention or other applicable treaties to secure their testimony.
See Dubai, 2002 WL 1159699, at *2.