Opinion
Civil Action No. 02 — CV — 404.
June 25, 2003.
MEMORANDUM ORDER
There are two matters now ripe for decision. First, Defendant Rick Willard moves to take the deposition of James Guerin, a federal inmate, pursuant to FED. R. Civ. P. 30(a)(2). [Docket # 31] This motion is opposed by Plaintiff Ferranti International, Inc. and its affiliates (collectively "Ferranti") because the deposition request is untimely. [# 32] Willard's motion will be denied.
Second, Willard has submitted a Statement of Objections to the Magistrate Judge's May 27, 2003 Order and moves this court to set it aside. [#30 filed under seal] Plaintiff Ferranti and non-party KPMG LLP have submitted separate memoranda in opposition to overturning the Order. [# 33 34] Willard's request will be denied.
I. Background
In November 1987, Ferranti, a company listed on the London Stock Exchange, acquired International Signal and Control Group PLC ("ISC"), another company listed on the London Stock Exchange. Peat Marwick Mitchell Co. ("PMM") acted as Ferranti's accountant on the deal. Peat Marwick Mitchell Co. is the predecessor of KMPG-UK. ISC was a Lancaster, Pa. based company that designed, manufactured and sold electronic military equipment.
After Ferranti acquired ISC it came to light that James Guerin, the former ISC chairman, had participated in a complex fraud and arms-sale scheme. Guerin had inflated ISC's reported sales and profits by creating fictitious contracts. In 1990, Ferranti filed suit against PMM in the High Court of Justice, Chancery Division, of England and Wales. Ferranti claimed that PMM negligently audited ISC's financial statements because it did not discover Guerin's financial scheme. The parties ultimately settled their dispute for $pound; 40 million.
In 1991, Guerin plead guilty to illegally exporting high technology electronic weapon systems to South Africa and defrauding ISC out of hundreds of millions of dollars. The scheme included dozens of Panamanian front companies and upwards of 145 Swiss bank accounts. According to the Government's Sentencing Memorandum, Guerin's scheme included "the creation of in excess of $1 billion in fictitious sales and contracts, the laundering of $958,000,000 in funds and the illegal export of in excess of $50 million of munitions and other prohibited components." Original Compl. at 3. A civil suit in High Court of Justice, Chancery Division, of England and Wales resulted in a $189 million judgment against Guerin and four other co-conspirators for their financial shenanigans. Guerin is currently serving his fifteen-year prison sentence in Coleman, Florida. Ferranti's case against Willard is but one of the numerous follow-on lawsuits ensuing from Guerin's downfall.
In January 2002, Ferranti filed its state court complaint against Willard and Bottom Line Telecommunications alleging that they participated with Guerin in a check-kiting scheme. The Defendants removed the action to this court on January 25, 2002. Willard was the owner of Bottom Line Telecommunications now in Las Vegas, Nevada. Bottom Line Telecommunications is no longer a party to this litigation. At the time of the alleged scheme, Willard lived in California. Ferranti alleges that Guerin assigned a $7,675,425 receivable due to ISC over to Bottom Line Telecommunications. Ferranti further alleges that no consideration was given in return and that Willard was paid in life insurance policies for his participation. See Original Compl. 4-5.
By Order of this court, discovery was set to close on February 3, 2003. See Order filed on Sept. 12, 2002 [#12]. On December 23, 2002, Defendant Willard moved for an enlargement of Discovery. We granted Defendant's motion and enlarged discovery until June 3, 2003. We stated in the Order that "NO FURTHER EXTENSIONS WILL BE PERMITTED." See Order filed on January 9, 2003 [#23].
Discovery continued and the parties were unable to reach an amicable arrangement regarding three items Willard sought from Ferranti. Willard seeks: (1) a draft copy of the Ferranti-PMM settlement agreement; (2) a copy of a Coopers Lybrand Report reviewing the fraud; and (3) a complete copy of Guerin's 1995, 1997 and 2001 depositions testimony taken in the course of ISC Technologies. Ltd. v. Guerin, Case No. 90-229-CIV-FTM-25D;Shinehouse v. Guerin, Case No. 96-200-CA-01; ISC Technologies Ltd. v. Guerin, Case No. 95-MC-274 (M.D. Fl.); and Jasin v. Ferranti Int'l Inc., Civ. No. 0002478 (Pa. Ct. Common Pleas). The Magistrate Judge denied Defendant's request for all three document categories on May 27, 2003. See Order of May 27, 2003 [#29]. The Magistrate Judge stated that if Guerin is listed as a witness, the court would revisit the production of Guerin's previous testimony. Id. Willard has now entered objections to the Magistrate Judge's Order.
II. Discussion
A. Willard May Not Now Take the Deposition of Guerin
Willard seeks to depose Guerin. Guerin is a federal prisoner in Coleman, Florida. Rule 30(a)(2) requires parties to seek leave of the court prior to taking a discovery deposition of a federal prisoner. See FED. R. Civ. P. 30(a)(2). A court may only deny a Rule 30(a)(2) deposition request if it violates Rule 26(b)(2). See FED. R. Civ. P. 30(a)(2) (limiting depositions "to the extent consistent with the principles stated in Rule 26(b)(2). . . ."). We must look to Rule 26(b)(2).
Rule 30(a)(2) states in pertinent part:
A party must obtain leave of the court, which shall be granted to the extent consistent with the principles stated in Rule 26(b)(2), if the person to be examined is confined in prison or if, without the written stipulation of the parties.
FED. R. Civ. P. 30(a)(2).
Rule 26(b)(2) allows the court to place limits on discovery when "the party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought." See FED. R. Civ. P. 26(b)(2)(ii). Discovery was originally scheduled to close on February 3, 2003. We granted a 120 day enlargement until June 3, 2003. The Order enlarging discovery stated in all capital letters that "NO FURTHER EXTENSIONS WILL BE PERMITTED." Willard filed his motion to depose Guerin on June 3, 2003, the last day of the discovery period.
Rule 26(b)(2) states in pertinent part:
The frequency or extent of use of the discovery methods otherwise permitted under these rules and by any local rule shall be limited by the court if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.
FED. R. Civ. P. 26(b)(2).
Willard's motion is untimely because it was submitted on the last day of the discovery period. Defense counsel is fully aware that moving for a deposition on the last day of the discovery period is not the same as completing the deposition on the last day of discovery. Willard seeks to correct this defect by arguing that Ferranti "obfuscated about the existence of any deposition transcripts of James Guerin. . . ." See Def.'s Memo. filed on June 3, 2003 at 3 [#31]. Willard claims he was not put on notice to depose Guerin until early May 2003 because Ferranti neglected to mention the prior depositions. We disagree. Willard's reference to the deposition transcripts is a red herring.
Willard has been on notice that Guerin's deposition would be useful to this case since Ferranti filed its complaint. The original complaint mentions Guerin by name in paragraphs 9, 10, 11, 12, 13, 14, 15, 16, 18, 21 and 24 in the twenty-three paragraph long Background Facts section. The complaint also mentions Guerin's company ISC in paragraphs 6, 7, 8, 9, 10, 16, 17, 21, 23 and 27. Willard was clearly on notice that Guerin is a central figure in the events surrounding Ferranti's allegations. Not only was Guerin mentioned throughout the complaint, Guerin is the only alleged co-conspirator mentioned by name in the complaint. Willard was on notice to depose Guerin since January 17, 2002. Willard was on notice for a full fifteen months before he moved to depose Guerin. See Berry v. Rite Aid Corp., No. Civ. A. 00-0049, 2001 WL 527815, at *1 (E.D. Pa. May 16, 2001) (denying plaintiff's leave to file additional interrogatories when request came over one year after the complaint was filed and after the close of discovery because plaintiff has ample opportunity during discovery and did not offer a reason for the delay); Medtronics Sofamor Danek, Inc. v. Osteotech, Inc., No. 99-2656-GV, 2001 WL 1910058, at * 4-5 (W.D. Tenn. Sept. 21, 2001) (denying motion to compel discovery when the defendant moved one day after the close of discovery and was aware of the requested materials over fifteen months prior to the motion).
Willard's own discovery requests demonstrate that Willard was on notice that Guerin is central to the case. Willard repeatedly requested information regarding Guerin. Specifically, Willard requested documents relating to Guerin's prior testimony in his First Request for Production of Documents and Things. See Request dated on June 10, 2002, at ¶ 5. Willard continued to request information regarding Guerin and his testimony in Willard's letters to the Magistrate Judge on September 23, 2002, November 6, 2002, April, 16, 2003, and May 21, 2003, and in his Second Request for Production of Documents and Things dated December 26, 2003. Willard was throughly and consciously aware of Guerin's central role in Ferranti's allegations since Ferranti filed its complaint. Willard's failure to move pursuant to Rule 30(a)(2) in a timely fashion is no excuse for delaying the close of discovery. Willard's motion will be denied because it is untimely under FED. R. Civ. P. 30(a)(2) and 26(b)(2)(ii). B. The Magistrate Judge's May 27, 2003 Order was not Clearly Erroneous
Today's Memorandum and Order may be revisited if Guerin is listed as a trial witness. See Charles v. Wade, 665 F.2d 661, 664 (5th Cir. 1982) (allowing party to take a prisoner's deposition pursuant to Rule 30(a) after the close of discovery when the deposition was is intended to replace live testimony at trial under Rule 32(a)(3)).
The Magistrate Judge denied Willard's request to compel Ferranti to produce: (1) a draft copy of the Ferranti-PMM settlement agreement; (2) a copy of a Coopers Lybrand Report reviewing the fraud; and (3) a complete copy of Guerin's 1995, 1997 and 2001 depositions testimony taken in the course of prior litigation. The burden is on Willard to show that the Magistrate Judge's order was clearly erroneous or contrary to law. See 28 U.S.C. § 636(b)(1)(A) ("A judge of the court may reconsider any pretrial matter under this subparagraph (A) where it has been shown that the magistrate judge's order is clearly erroneous or contrary to law.").
1. Guerin's Prior Depositions
On May 6, 2003, the Magistrate Judge ordered Ferranti to make Guerin's prior deposition transcripts available for Defense counsel to review subject to the parties' Confidentiality Agreement. Defense counsel reviewed the documents on May 19th and 20th at Plaintiff's counsel's office. Thereafter, Defense counsel requested the Magistrate Judge to make an in camera review of 158 pages from the depositions and to determine whether Ferranti should produce the pages subject to the Confidentiality Agreement. During a May 22, 2003 conference call, the Magistrate Judge denied their production. Willard claims that the Magistrate Judge's failure make and in camera review was contrary to law.
In this case, the Magistrate Judge listened to arguments from both Defense and Plaintiff counsel. The Magistrate Judge weighted the need for the Defendant to have access to the documents against the Plaintiff's need for confidentiality in its on-going investigation against Guerin's other potential co-conspirators. According to Ferranti, the Magistrate Judge also considered the relevancy of the information to Willard's case and the fact that the portions mentioning Willard were already produced to Defense counsel. Willard has not cited any case where a Magistrate Judge was overturned after conducting such a balancing test, nor any statute or rule that bars the Magistrate Judge's actions. Moreover, Willard does not expresses a reason as to why he needs the prior depositions. Therefore, Willard has not meet his burden to demonstrate that the decision was contrary to law.
2. The Ferranti-PMM Settlement Agreement
The Magistrate Judge denied Willard's request to compel KPMG-USA to produce the 1991 Ferranti-PMM settlement agreement because KPMG-USA is not in possession of the agreement. KPMG-USA maintains that the Settlement Agreement may be in KPMG-UK's possession. See Third-Party's Memo. at 2-3 filed on June 20, 2003 [#34]. KPMG-USA and KPMG-UK are separate legal entities. We do not have jurisdiction over KPMG-UK. See Howard v. Klynveld Peat Marwick Goerdeler, 977 F. Supp. 654, 660-63 (S.D.N.Y. 1997) (finding that service on KPMG-USA is not the correct service of process where defendant was the KPMG affiliate company in the Netherlands). The Magistrate Judge directed Willard to seek discovery from KMPG-UK in the United Kingdom under the Hague Convention and applicable law.
Willard seeks to circumvent this jurisdictional problem by seeking drafts of the Ferranti-PMM settlement from KPMG-USA. The Magistrate Judge correctly noted that these are protected from disclosure under the work product doctrine and the attorney-client privilege. The draft agreements were made in the course of litigation and are covered by the work product doctrine. The draft agreements also represent confidential communications between a party and their attorney used for the purpose of giving legal advice and assistance.
Again, Willard does not cite one case, statute or rule that the Magistrate Judge supposedly contravened or misapplied. Willard has not demonstrated that the Magistrate Judge's Order regarding the Ferranti-PMM settlement agreement was contrary to law. The Magistrate Judge reached the uncontroversial decision that drafts written by counsel to settle a legal dispute are protected by discovery from the work product doctrine and the attorney-client privilege. The Magistrate Judge also stated the obvious when he directed the Defendant to seek discovery from a foreign partnership in the partnership's home country when they are not subject to the court's jurisdiction. Willard's request to overturn the Magistrate Judge's Order regarding the Ferranti-PMM Settlement Agreement is denied because he has failed to demonstrate that the Magistrate Judge's Order was clearly erroneous or contrary to law.
3. The Cooper Lybrand Report
The Magistrate Judge denied production of the Coopers Lybrand Report regarding Guerin's scheme because the report was solicited at the request of the Herbert Smith law firm in preparation for litigation in the United Kingdom. The Magistrate Judge held that the document was protected by attorney-client privilege and the work product doctrine. The report is clearly protected by the attorney-client privilege because it was a communication made for the purpose of securing legal advice.See In re Ford Motor Co., 110 F.3d 954, 965-66 (3d Cir. 1997). The report is clearly covered by the work product doctrine. The Third Circuit has stated that:
A party seeking the protection of the work product privilege must show that the materials were prepared in `the course of preparation for possible litigation.' Hickman v. Taylor, 329 U.S. 495, 505 (1947). This court has accorded an attorney's work product almost absolute protection from discovery, because `any slight factual content that such items may have is generally outweighed by the adversary system's interest in maintaining the privacy of an attorney's thought processes and in ensuring that each side relies on its own wit in preparing their respective cases.' Sporck v. Peil, 759 F.2d 312, 316 (3d Cir. 1985).Haines v. Liggett Group Inc., 975 F.2d 81, 93 (3d Cir. 1992). The report is covered by the work product doctrine because it was solicited by counsel in the preparation for trial.
Willard fails to show how the Magistrate Judge's Order was clearly erroneous or contrary to law. Willard claims that the report is no longer privileged because it has been publically disseminated, yet Willard fails to cite one instance of alleged dissemination or publication. Willard seeks to claim that the document should be produced because it is relevant to his case. Relevance is not the test for attorney-client privilege. Willard's request to over turn the Magistrate Judge's Order regarding the Coopers Lybrand Report will be denied because he has failed to demonstrate that the decision was contrary to law or clearly erroneous.
III. Conclusion
Willard's motion for leave to depose Guerin pursuant to FED. R. CIV. P. 30(a)(2) is denied because the motion is untimely. Willard's submitted objections to the Magistrate Judge's May 27, 2003 Order fail to sway this court to overturn the Order because Willard has failed to demonstrate that the Order was clearly erroneous or contrary to law.
An appropriate Order follows.
ORDER
AND NOW, this 25th day of June, 2003, upon consideration of Defendant Rick Willard's Motion for Leave to Take the Deposition of James Guerin filed on June 3, 2003 [#31]; Plaintiff Ferranti International, Inc.'s Response in Opposition filed on June 17, 2003 [#32]; Defendant Rick Willard's Statement of Objections to Magistrate Judge's May 27, 2003 Order filed on June 3, 2003 [#30]; Plaintiff Ferranti International, Inc.'s Response to Defendant's Statement of Objections filed on June 17, 2003 [#33]; and Third-Party KPMG LLP's Memorandum in Opposition to Defendant's Statement of Objections filed on June 20, 2003 [#34]; it is hereby ORDERED that:
1. Defendant Rick Willard's Motion for Leave to Take the Deposition of James Guerin [#31] is DENIED WITHOUT PREJUDICE to Defendant Rick Willard's right to file leave to take a deposition of James Guerin if James Guerin is listed as a trial witness; and
2. Defendant Rick Willard's Statement of Objections to Magistrate Judge's May 27, 2003 Order is DENIED.