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Sahu v. Union Carbide Corp.

September 22, 2009


The opinion of the court was delivered by: John F. Keenan, United States District Judge


Before the Court is Plaintiffs' motion under Rule 56(f) of the Federal Rules of Civil Procedure for an order staying the time for their opposition to Defendants' May 18, 2005, motion to dismiss and/or for summary judgment until further discovery can be conducted.


The Court assumes familiarity with the facts and procedural history of the case. For a detailed statement thereof, see Sahu v. Union Carbide Corp., 548 F.3d 59, 60-65 (2d Cir. 2008). Briefly, Plaintiffs seek recovery for injuries allegedly caused by pollution from the Union Carbide India Limited ("UCIL") plant in Bhopal, India (the "Bhopal Plant"). Plaintiffs allege that the Bhopal Plant -- which was the site of a catastrophic gas leak in 1984 unrelated to the instant claims -- produced hazardous wastes during its normal operations that contaminated the soil and drinking water of local communities. UCIL was a subsidiary of the Union Carbide Corporation ("UCC") until 1994, when UCC sold all of its shares. UCIL has since changed its name to Eveready Industries India Limited ("EIIL"). Plaintiffs seek to hold UCC and its former CEO, Warren Anderson, liable for their injuries on the grounds that (1) they were direct participants and joint tortfeasors in the activities that resulted in the pollution; (2) they worked in concert with UCIL to cause, exacerbate, or conceal the pollution; and (3) UCIL acted as UCC's alter ego, justifying piercing the corporate veil.

The instant motion arises in the wake of the following procedural history. On May 18, 2005, Defendants moved to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure and/or for summary judgment pursuant to Rule 56. To the extent Defendants moved for dismissal on the pleadings, the Court converted the motion to one for summary judgment on the grounds that matters outside the pleadings had been presented to the Court and that Plaintiffs were on notice that such a conversion was possible. Sahu v. Union Carbide Corp. (Sahu I), 418 F. Supp. 2d 407, 410-11 (S.D.N.Y. 2005). The Court granted Defendants summary judgment on all claims, save Plaintiffs' veil-piercing claim.*fn1 Id. at 416. Defendants had argued that there was no equitable basis to pierce the corporate veil since EIIL -- UCIL's current incarnation -- is a financially viable corporation capable of meeting its liabilities. In their opposition to Defendants' motion, Plaintiffs requested an opportunity to conduct discovery pursuant to Rule 56(f) in order to rebut this assertion. The Court consented and reserved decision on the veil-piercing claim until Plaintiffs had received discovery regarding "EIIL and its corporate relationship to UCIL and UCC." Id.

Plaintiffs subsequently submitted 199 document requests and sought to take four depositions on wide-ranging topics. The Court denied these as beyond the scope of permitted discovery save for seventeen of the document requests, which explicitly related to EIIL. Sahu v. Union Carbide, No. 04 Civ. 8825, 2006 U.S. Dist. LEXIS 714 (S.D.N.Y. Jan. 9, 2006). The Court also issued a letter rogatory addressed to the appropriate judicial authority in India to obtain documents directly from EIIL on relevant topics. (Heck Aff. Ex. 4.)

After the close of this discovery, by order and opinion dated November 20, 2006, the Court granted Defendants summary judgment on the veil-piercing claim. Sahu v. Union Carbide Corp. (Sahu II), No. 04 Civ. 8826, 2006 U.S. Dist LEXIS 84475 (S.D.N.Y. Nov. 20, 2006). The Court found that there was insufficient evidence to make the wrong- or fraud-prong of the veil-piercing test a genuine issue of material fact. Id at *30. With regard to EIIL, the Court found that Plaintiffs could not dispute that it was a financially viable corporation, meaning no inference of abuse of the corporate form could be drawn. Id. at *20.

The Second Circuit addressed in a single opinion both the initial grant of summary judgment on the non-veil-piercing claims and the subsequent grant of summary judgment on the veil-piercing claim. Sahu v. Union Carbide Corp., 548 F.3d 59 (2d Cir. 2008). Twice noting that it was a "close case" or "close question," id. at 67, 70, the Second Circuit vacated and remanded both decisions. Regarding the non-veil-piercing claims, the appellate court found that Plaintiffs had not received sufficient notice that Defendants' motion would be converted to one for summary judgment. Id. at 66-70; see also id. at 70 ("Underlying the notice requirement is the principle that parties are entitled to a reasonable opportunity to present material pertinent to a summary judgment motion."). Regarding the veil-piercing claim, the Second Circuit found that its dismissal relied in part on the dismissal of the non-veil-piercing claims; consequently the appellate court vacated the Court's judgments in their entirety. In closing, the Second Circuit observed that "relatively limited further proceedings" were likely necessary "in connection with consideration of summary judgment." Id.

Plaintiffs now bring the instant motion, requesting a stay and an opportunity under Rule 56(f) to conduct discovery relevant to the following issues:

1. Whether Union Carbide directly participated in and/or acted as a joint tortfeasor with [UCIL] in the activities and decisions that caused or resulted in the environmental pollution at issue;

2. Whether Union Carbide conspired with and/or aided and abetted UCIL to cause, exacerbate and/or conceal the pollution problem in Bhopal;

3. Whether the corporate veil of UCIL and/or [EIIL] may be pierced to hold UCC liable for the pollution at issue; and

4. Whether UCC may be held liable for some form of injunctive relief and medical monitoring.

(Pls.' Mem. 3.) They propose that this discovery be effected through 63 requests for the production of documents from Defendants (Garbow Aff. Ex. B); 18 requests for the production of documents from third party Arthur D. Little, a consulting firm that assisted in the environmental rehabilitation of the Bhopal site (Garbow Aff. Ex. F); a Rule 30(b)(6) deposition of Defendant UCC (Garbow Aff. Ex. G); depositions of several of Defendant UCC's former officers (Garbow Aff. Exs. H, I, J); and 86 requests for admission (Garbow Aff. Ex. K).


A. Rule 56(f)

Rule 56(f) provides,

If a party opposing the motion [for summary judgment] shows by affidavit that, for specified reasons, it cannot present facts essential to justify its opposition, the court may: (1) deny the motion; (2) order a continuance to enable affidavits to be obtained, depositions to be taken, or other discovery to be undertaken; or (3) issue any other just order.

Fed. R. Civ. P. 56(f). According to the Second Circuit's interpretation of Rule 56(f), "when a party facing an adversary's motion for summary judgment reasonably advises the court that it needs discovery to be able to present facts needed to defend the motion, the court should defer decision of the motion until the party has had the opportunity to take discovery and rebut the motion." Commercial Cleaning Servs. v. Colin Serv. Sys., 271 F.3d 374, 386 (2d Cir. 2001). The affidavit required by Rule 56(f) must state "(1) what facts are sought and how they are to be obtained, (2) how those facts are reasonably expected to create a genuine issue of material fact, (3) what effort the affiant has made to obtain them, and (4) why the affiant was unsuccessful in those efforts." Hudson River Sloop Clearwater, Inc. v. Dep't of Navy, 891 F.2d 414, 422 (2d Cir. 1989).

"Rule 56(f) discovery is specifically designed to enable a plaintiff to fill material evidentiary gaps in its case in an effort to withstand summary judgment." Capital Imaging Assocs., P.C. v. Mohawk Valley Med. Assocs., Inc., 725 F. Supp. 669, 680 (N.D.N.Y 1989). It does not, however, permit a plaintiff to engage in a "fishing expedition." Waldron v. Cities Serv. Co., 361 F.2d 671, 673 (2d Cir. 1966). A plaintiff must also show "that the material sought is germane to the defense, and that it is neither cumulative nor speculative." Paddington Partners v. Bouchard, 34 F.3d 1132, 1138 (2d Cir. 1994). "[I]f the court decides to grant . . . a continuance, it must also determine the appropriate scope and manner of . . . discovery." Capital Imaging Assocs., P.C., 725 F. Supp. at 680 (citing Sam Wong & Son, Inc. v. N.Y. Mercantile Exch., 735 F.2d 653, 678 (2d Cir. 1984)); see also Cruden v. Bank of New York, 957 F.2d 961, 972 (2d Cir. 1992) ("A trial court enjoys wide discretion in its handling of pre-trial discovery.").

The Court first considers whether Plaintiffs have demonstrated a need for the discovery sought under Rule 56(f) and, second, whether any of the discovery that survives ...

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