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Nxivm Corporation v. Barbara Bouchey

October 24, 2011


The opinion of the court was delivered by: David E. Peebles U.S. Magistrate Judge

DECISION AND ORDER This matter arises out of a bankruptcy court adversary proceeding brought in another district by petitioner NXIVM Corporation ("NXIVM") against two debtors who are not parties to the proceedings in this court. The court's assistance was elicited by NXIVM in order to enforce a subpoena issued to respondent Barbara Bouchey, a resident of this district, to compel her appearance at a deposition to be conducted in connection with that bankruptcy proceeding. As a result of that request I issued an order compelling the respondent to appear for deposition and to provide requested documents for use in connection with her deposition.

Ms. Bouchey did not appear at the date and time specified in the court's order for the deposition. Based upon her failure to appear as directed, NXIVM filed a motion with the court seeking an order holding Ms. Bouchey in civil contempt. While that motion was pending respondent ultimately did submit to a deposition by counsel for NXIVM, although in petitioner's estimation she did not fully comply with the court's order, having left before the deposition was concluded.

Because the respondent has now complied with the court's order, I decline the petitioner's invitation to certify facts to support a finding of civil contempt to the assigned district judge but will, in the exercise of the court's inherent power, require the respondent to pay the costs, including a reasonable attorney's fee, associated with the preparation, filing, and argument of petitioner's contempt motion.


Adversary proceedings have been commenced and remain pending in the United States Bankruptcy Court for the Western District of Washington involving NXIVM as a plaintiff and two debtors, Susan Faye Dones and Kimberly Woolhouse, as defendants. The respondent is not a party to those proceedings, and the substance of the claims and defenses in those matters is not directly relevant to the issues now before this court.

On June 8, 2011, United States Bankruptcy Judge Brian D. Lynch, before whom the adversary proceedings are pending, issued an order addressing NXIVM's stated intention to subpoena certain non-parties, including Barbara Bouchey, for deposition.*fn1 Swanson Aff. (Dkt. No. 1-2) ¶ 12 and Exh. E. In that order, inter alia, Judge Lynch granted NXIVM's request for the issuance of such subpoenas, specifying the permissible topics to be addressed during each deposition and requiring each subpoenaed witness to produce any requested documents at least three days prior to their respective scheduled depositions. Id.

Following Judge Lynch's determination, petitioner served Barbara Bouchey with a subpoena issued out of this district on July 21, 2011, commanding her appearance at a deposition scheduled to be held on July 27, 2011 in Albany, New York, and directing the production of documents for use in conjunction with that deposition.*fn2 Nichols Aff. (Dkt. No. 1-13) ¶ 16 and Exh. C. Upon being served, Ms. Bouchey moved in the Bankruptcy Court for the Western District of Washington for an order quashing the subpoena. Nichols Aff. (Dkt. No. 1-13) ¶ 19; see also Swanson Aff. (Dkt. No. 1-2) Exh. I. Finding that he lacked jurisdiction to quash the subpoena since it was issued from this court, Judge Lynch declined to address the motion but nonetheless ruled that the deposition of Ms. Bouchey should be limited to four hours in duration. See Nichols Aff. (Dkt. No. 14-1) Exh. D; see also Motion Hearing (8/17/11) Transcript (Dkt. No. 13) p. 3.

On August 1, 2011, following the issuance of Judge Lynch's second order addressed to the matter, NXIVM filed an order to show cause with this court seeking to compel Ms. Bouchey's compliance with the deposition subpoena. Dkt. No. 1. Respondent opposed that application and cross-moved for an order quashing the subpoena. Dkt. No. 4.

A hearing was conducted by the court on August 17, 2011 in order to address the parties' cross-motions regarding the subpoena. At the close of the hearing, I issued an oral decision directing the respondent to appear for deposition on August 30, 2011 in Albany, New York, and to produce all documents within her possession, custody or control referenced in Exhibit A to the subpoena issued to her by NXIVM; that verbal ruling was memorialized in a written order issued on the date of the hearing.*fn3 Dkt. No. 10.

Despite my verbal directive and the issuance of the confirming written order, plaintiff failed to appear for deposition on August 30, 2011.*fn4

Nichols Aff. (Dkt. No. 14-2) ¶¶ 22-24. Instead, at 6:21 p.m. on the evening before the scheduled deposition, respondent sent an e-mail communication to NXIVM's counsel tersely advising that she would not be appearing for her court-ordered deposition. Id. at ¶ 23 and Exh. I.

As a result of respondent's failure to appear, on September 1, 2011, NXIVM moved for sanctions and a civil contempt order against respondent Bouchey. Dkt. No. 14. That motion, which was originally scheduled to be heard on October 7, 2011, was subsequently adjourned to October 14, 2011. See Dkt. Entry Dated 9/13/11.

Following a telephone conference with the court on September 12, 2011, during which I urged her to comply with the August 17, 2011 order, Ms. Bouchey finally appeared for deposition on September 14, 2011. Nichols Aff. (Dkt. No. 20) ¶ 6. Approximately four hours and forty-five minutes into that deposition, after counsel for NXIVM had completed her questioning and while debtor Susan Dones was cross-examining her, Ms. Bouchey left the deposition, over the objection of counsel for NXIVM, claiming a need to get to the airport for a departing flight. Id. at Exh. A. As a result of Ms. Bouchey's termination of the deposition, on October 3, 2011, NXIVM supplemented its pending motion to add this as an additional ground for holding Ms. Bouchey in contempt.*fn5 Dkt. No. 20.

A hearing was held on October 14, 2011 by telephone conference, in which a court reporter participated, to address NXIVM's contempt motion. At the close of that ...

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