United States District Court, S.D. New York
November 10, 2005.
Commodity Futures Trading Commission, Plaintiff,
Commodity Investment Group, Inc., et al. Defendants.
The opinion of the court was delivered by: HAROLD BAER JR., District Judge
MEMORANDUM & ORDER
In this action, plaintiff Commodity Futures Trading Commission
("CFTC") alleges that defendants violated the anti-fraud
provisions of the Commodity Exchange Act, 7 U.S.C. § 6c(b), by
misrepresenting to customers the likelihood of profit and the
risk of loss involved in trading commodity options. (Compl. ¶¶
4-5). Plaintiff now moves for permission to depose thirty
individuals with knowledge of the alleged fraud, including
current and former employees and customers. Defendants argue that
plaintiff should be limited to ten depositions, in accordance
with Rule 30(a)(2)(A) of the Federal Rules of Civil Procedure.
Plaintiff's motion for leave to take thirty depositions is
GRANTED in part and DENIED in part.
Rule 30(a)(2)(A) limits parties to ten depositions each unless
both parties stipulate to additional depositions or if the court
grants leave to exceed this limit. Leave should be granted in
accordance with the principles set forth in Rule 26(b)(2), which
provides, inter alia, that discovery should be limited if it is
"unreasonably cumulative or duplicative," or "the burden or
expense of the proposed discovery outweighs its likely benefit"
taking into consideration the needs of the case, the amount in
controversy, other methods of obtaining the information, the
importance of the issues to the litigation, and the importance of
this particular discovery tool in resolving the issues. Although
a witness might have discoverable information, a party is not
always entitled to depose that individual. See Sigala v.
Spikouris, No. 00-CV-0983, 2002 U.S. Dist. LEXIS 10743 (E.D.N.Y.
Mar. 7, 2002). Rule 30(a)(2)(A) was enacted to control discovery costs and prevent harassment or undue delay. See In re Air
Crash at Taipei, Taiwan on October 31, 2000, No. MDL 1394,
2003 U.S. Dist. LEXIS 23220 (C.D. Cal. Mar. 26, 2003). A court has
discretion to allow more than ten depositions if the party who is
seeking discovery has shown why it is necessary. Id.; see
also Sigala, 2002 U.S. Dist. LEXIS at *1 (allowing thirteen
depositions because the witnesses' testimony would not be
This Court finds that, given the facts of this case, plaintiff
should be allowed to take the following sixteen depositions.
Should, after these depositions are completed, CFTC desire
further depositions, it can seek leave to take additional
depositions at that time.
Plaintiff seeks to depose twenty current or former employees of
defendant Commodity Investment Group ("CIG") to show that
defendants repeatedly made fraudulent misrepresentations
throughout the relevant time period.*fn1 Defendants object
because some of those employees only worked for CIG for a short
period of time and their testimony will be less valuable than
long time employees and likely cumulative.
I find that CFTC may depose the following employees: Linda
Kuhney, Michael Kuhney,*fn2 Janelle M. Breig, Robert Kevin
Monk, Christina Ostergaard, Paul J. Paradis, Karen Wilson, John
R. Wright, James J. Connellan, Adam J. Tout, Joaneen Davis, Steve
Zander, and Violet Botting. These witnesses are sufficient to
show that defendants' fraudulent techniques were "not isolated,
infrequent, or uncommon." (Pl. Mem. at 3). The testimony of the
other employees CFTC seeks to depose would be duplicative.
Plaintiff also seeks to depose ten of defendants' former
customers who were alleged victims of defendants' fraud and who
may be unavailable for trial. Defendants object to these
depositions, arguing that these individuals' testimony would be
duplicative of that which could be provided by individuals
subject to this Court's subpoena power. Five former customers who
reside in the New York metropolitan area have already provided
declarations to CFTC.
I find that CFTC may depose the following former customers:
Hoover F. Bell, Norman Fisher, and Daniel X. Willis, Jr. These
witnesses will provide a sufficient sample of those customers
located outside this Court's subpoena power who were allegedly
defrauded. Additional depositions would be too costly and would
not provide CFTC with sufficient new information to justify the
burden on defendants. Under Local Civil Rule 30.1, an applicant seeking to depose a
witness more than one hundred miles from the courthouse my be
ordered to "pay the expense (including a reasonable counsel fee)
of the attendance of one attorney for each advers[e] party at the
place where the deposition is to be taken." I find that
defendants have demonstrated good cause to shift these costs to
CFTC. Therefore, CFTC is responsible for paying the costs
associated with any depositions that occur more than one hundred
miles from this courthouse.
For the foregoing reasons, CFTC's motion is GRANTED in part.
CFTC may depose the sixteen individuals listed above.
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