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overruling magistrate's denial of § 1782 petition because party had injected accuracy of allegation into proceeding
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Case No. 15-mc-80651-MARRA/MATTHEWMAN
04-26-2016
In the Matter of the Application of Kate O'Keeffe to Issue a Subpoena for the Taking of a Deposition and the Production of Documents for Use in a Foreign Proceeding
Allison Sinclair Lovelady, Dana Jane McElroy, Deanna Kendall Shullman, Thomas & Locicero PL, Fort Lauderdale, FL, Camille Calman, Eric Feder, Davis Wright Tremaine, LLP, New York, NY, Constance M. Pendleton, Davis Wright Tremaine, LLP, Washington, DC, for Kate O'Keeffe.
Allison Sinclair Lovelady, Dana Jane McElroy, Deanna Kendall Shullman, Thomas & Locicero PL, Fort Lauderdale, FL, Camille Calman, Eric Feder, Davis Wright Tremaine, LLP, New York, NY, Constance M. Pendleton, Davis Wright Tremaine, LLP, Washington, DC, for Kate O'Keeffe.
ORDER SUSTAINING OBJECTIONS, SETTING ASIDE THE ORDER OF THE MAGISTRATE JUDGE, DENYING THE MOTION TO QUASH, AND CLOSING THE CASE
KENNETH A. MARRA, United States District Judge
This appeal of the Magistrate Judge's Order (DE 18) presents the question of whether the application filed by Kate O'Keeffe ("O'Keefe"), which seeks the issuance of a subpoena to nonparty Nikita Zukov to obtain discovery for use in a libel proceeding in Hong Kong, is intended to obtain relevant discovery, or rather is part of an improper fishing expedition that seeks cumulative evidence and is aimed to harass.
O'Keeffe is the defendant in a Hong Kong libel action. By virtue of the application in question, O'Keefe is attempting to gather evidence to prove the truth of her allegedly defamatory statement, made and published in 2012, that Sheldon G. Adelson is "foul-mouthed." The Magistrate Judge concluded that discovery from Nikita Zukov pertaining to Zukov's alleged observations of Adelson using bad language during their business dealings over a nine-month period in 1989 was irrelevant and quashed the subpoena. The Magistrate Judge further concluded that the discovery request was improper because the discovery was speculative, the search terms were inflammatory, and O'Keeffe had already discovered many other examples of Adelson's use of bad language.O'Keeffe filed Objections (DE 22) to the Order, Sheldon G. Adelson filed his Response (DE 25) and O'Keeffe filed her Reply (DE 26). The parties have also filed Notices of Supplemental Authority and Responses thereto. (DE 29, 30, 32, 33.)
After carefully reviewing the Order of the Magistrate Judge, the parties' submissions and the record herein, the Court concludes that the discovery sought pertaining to Adelson's alleged use of foul language during his business interactions with Zukov in the late 1980s is relevant to the truth of O'Keeffe's charge that Adelson is foul-mouthed. There is no evidence in the record that the discovery request is a fishing expedition or a vehicle for harassment, and the discovery is not needlessly cumulative. Because this Court concludes that the Magistrate Judge's determinations were clearly erroneous and contrary to law, the Court sustains the Objections (DE 22) to the Magistrate Judge's Order and sets aside the Order (DE 18) quashing O'Keeffe's subpoena to Nikita Zukov.
I. BACKGROUND
A. Adelson's Libel Lawsuit
O'Keeffe, the applicant in this case, is the defendant in a libel lawsuit filed by Sheldon G. Adelson in Hong Kong. (DE 1.) The libel lawsuit stems from O'Keeffe's statement that Adelson was "foul-mouthed" in an article she co-wrote. (Id. ) The article described the tension that arose between Adelson, the Chief Executive Officer of Las Vegas Sands Corporation ("LVSC"), and Steven Jacobs, a former employee of LVSC, during Jacobs's employment with LVSC. (Id. ¶ 2.) The article contained the following sentence: "In some ways, Mr. Jacobs, a 6-foot-5-inch tall Ivy League graduate who colleagues say rarely curses, couldn't be more different from Mr. Adelson—a scrappy, foul-mouthed billionaire from working-class Dorchester, Mass." (Id. ¶ 4.) The article, which appeared in the December 7, 2012 edition of the Wall Street Journal , reported on the wrongful termination lawsuit filed by Jacobs against LVSC. (Id. ¶ 2.)
In the Hong Kong lawsuit, Adelson asserts that the description of him as "foul-mouthed" is untrue and defamatory. In that lawsuit, he states that "foul-mouthed" implies that he used bad language "in his office as Chairman" and "in business meetings when addressing colleagues and subordinates." (Id. ¶ 5.) As a defense in the Hong Kong lawsuit, O'Keeffe contends that her description of Adelson as "foul-mouthed" is true in substance and fact. (Id. ¶ 9.) O'Keeffe bears the burden of proving the truth of her statement in that lawsuit.
B. O'Keeffe's Application for Discovery Under 28 U.S.C. § 1782
To establish the truth of her statement in the Hong Kong lawsuit, O'Keeffe seeks discovery from Nikita Zukov, an architect in Palm Beach, Florida. It is undisputed that Zukov provided architectural services to Las Vegas Sands Inc., a company for which Mr. Adelson served as a chief executive, for several months in approximately 1989. (DE 14, Stipulated Facts ¶ 8.)
According to O'Keeffe, Zukov personally witnessed Adelson use foul and offensive language. (DE 1 ¶ 11.) As stated at oral argument before the Magistrate Judge (DE 22-1), Constance M. Pendleton, Esq., counsel for O'Keeffe in this matter, has spoken with Zukov regarding his interactions with Adelson during the time in question. According to Pendleton, Zukov "interacted with Mr. Adelson very frequently ... several times a week," has a "very clear and excellent memory," and has "direct eyewitness testimony" regarding Adelson's use of foul language. (DE 22-1 ¶ 14.)
On May 22, 2015, O'Keeffe filed an ex parte application for an order under 28 U.S.C. § 1782 to issue a subpoena to Zukov for the taking of a deposition and the production of documents for use in the Hong Kong lawsuit. (DE 1.) The undersigned referred the matter to United States Magistrate Judge William Matthewman for appropriate disposition. (DE 5.) On June 12, 2015, the Magistrate Judge granted O'Keeffe's motion, permitted O'Keeffe to issue a subpoena to Zukov, and gave Zukov twenty days to file any objections. (DE 9.) On June 19, 2015, counsel for O'Keeffe served the subpoena on Nikita Zukov's counsel, who accepted service for Zukov. (DE 22-1, Declaration ¶ 12.) A review of the docket indicates that Zukov never filed any objections
C. Adelson's Motion to Quash
Adelson filed a Motion to Quash Subpoena on June 19, 2015. (DE 10.) In the motion, Adelson argued that the subpoena to Zukov should be quashed because the discovery sought is irrelevant and that the subpoena is harassing and cumulative and amounts to a fishing expedition.
After the motion was fully briefed (DE 12, DE 13) and after holding oral argument on the motion, the Magistrate Judge entered an order granting the motion to quash. (DE 18.) In the Order, the Magistrate Judge concluded that the discovery sought pertaining to the interactions between Adelson and Zukov is irrelevant to the truth of O'Keeffe's statement that Adelson is "foul-mouthed." In reaching that conclusion, the Magistrate Judge ruled that there are "temporal relevancy limitations on Section 1782 discovery" and found that the interactions between Adelson and Zukov occurred too long ago to be relevant. (DE 18, Order at 15-16.) Further, the Magistrate Judge found that O'Keeffe's application was an improper fishing expedition "with no real proof" that she will uncover any information. (Id. at 18.) In addition, the Magistrate Judge found that the Section 1782 application was a vehicle for harassment because the search terms in the subpoena are inflammatory and are designed to embarrass and harass Adelson. (Id. at 19.) Finally, the Magistrate Judge found that the discovery application was cumulative of other requests made by O'Keeffe in Nevada and New Jersey federal courts and other examples of Adelson's alleged foul-mouthed nature that O'Keeffe has already described in her filings in the Hong Kong court. (Id. at 19-20.)
II. LEGAL STANDARD
Rule 72(a) requires a district court to modify or vacate a magistrate judge's order to the extent that the order "is clearly erroneous or is contrary to law." Fed. R. Civ. P. 72(a). A finding is "clearly erroneous" when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. Krys v. Lufthansa German Airlines , 119 F.3d 1515, 1523 (11th Cir.1997). An order is contrary to law when it fails to apply or misapplies relevant statutes, case law or rules of procedure. Tolz v. Geico Gen. Ins. Co. , No. 08–80663–CIV, 2010 WL 384745, at *2 (S.D.Fla. Jan. 27, 2010).
III. DISCUSSION
Section 1782 authorizes a court to provide assistance to an applicant seeking to gather evidence for use in a foreign proceeding. 28 U.S.C. § 1782. A court deciding a section 1782 application must first determine whether the statutory requirements are met, and if those requirements are met, the court may then consider other factors in deciding whether to exercise the discretion granted under the statute. In re Clerici , 481 F.3d 1324, 1331–34 (11th Cir.2007) (citing Intel Corp. v. Advanced Micro Devices, Inc ., 542 U.S. 241, 255–65, 124 S.Ct. 2466, 159 L.Ed.2d 355 (2004) ).
Here, the Magistrate Judge concluded that all of the statutory requirements are met and that all four Intel factors weigh in favor of issuance of the subpoena, but concluded that the subpoena should be quashed due to other considerations, i.e. the discovery is irrelevant, the request amounts to an improper fishing expedition, it is a vehicle for harassment and is needlessly cumulative. O'Keeffe contends that the Magistrate Judge's Order cannot be sustained on two grounds. First, O'Keeffe contends that the Magistrate Judge gave improper weight to these considerations in granting the motion to quash. Second, O'Keeffe argues that the Magistrate Judge's rulings on relevancy, fishing expedition, harassment, and cumulative evidence are clearly erroneous and contrary to law. Because the Court agrees with O'Keeffe that the Magistrate Judge's rulings on relevancy, fishing expedition, harassment, and cumulative evidence are clearly erroneous and contrary to law, the Court need not consider whether the Magistrate Judge gave improper weight to these considerations.
A. Relevancy
O'Keeffe objects to the Magistrate Judge's determination that the discovery sought is irrelevant to the Hong Kong litigation. As discussed more fully below, the Court concludes that the Magistrate Judge's determination that the discovery is irrelevant is clearly erroneous and contrary to law and must be vacated.
Rule 26 of the Federal Rules of Civil Procedure guides the Court's determination as to whether any information possessed by Nikita Zukov is discoverable. Rule 26 provides, in relevant part, that "[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense.... Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Fed. R. Civ. P. 26(b)(1). The scope of discovery under Rule 26(b)(1) is to be broadly and liberally construed. See Hickman v. Taylor , 329 U.S. 495, 506, 67 S.Ct. 385, 91 L.Ed. 451 (1947) (stating deposition discovery rules are to be accorded broad and liberal treatment); Farnsworth v. Procter & Gamble Co. , 758 F.2d 1545, 1547 (11th Cir.1985) ( "The Federal Rules of Civil Procedure strongly favor full discovery whenever possible.").
Rule 26(b) was amended effective December 1, 2015. Although this proceeding was pending on December 1, 2015, because the Motion to Quash Subpoena was briefed and the Magistrate Judge issued its Order before that date, this Court will apply the earlier version of the Rule.
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Here, O'Keeffe's allegedly defamatory accusation concerns Adelson's general character trait of being foul-mouthed. O'Keeffe's article described as Adelson as "a scrappy, foul-mouthed billionaire from working-class Dorchester, Mass." (DE 1, Application ¶ 4.) O'Keeffe's main defense in the Hong Kong libel lawsuit is that her description of Adelson is true. Adelson's alleged character trait of being foul-mouthed is therefore an essential element of O'Keeffe's defense. Because, under Rule 26(b)(1), O'Keeffe may obtain discovery regarding "any nonprivileged matter that is relevant to [her] ... defense," O'Keeffe may obtain discovery of any matter relevant to Adelson's character trait of being foul-mouthed within the context of his business dealings.
O'Keeffe seeks to inquire into Adelson's alleged use of foul language in his interactions with Nikita Zukov. Adelson's relationship with Zukov occurred in or around 1989. As noted by the Magistrate Judge, a substantial number of years has elapsed since that time. In the Magistrate Judge's view, the fact that Adelson's interactions with Zukov occurred many years ago rendered the information irrelevant. The Magistrate Judge ruled that it has a "duty to impose reasonable temporal relevancy limitations on Section 1782 discovery." (DE 18, Order at 16.) While the Court must consider the relevancy of information in deciding whether the information is discoverable, an inelastic and arbitrary rule that cuts off all discovery of facts occurring at some point in the past cannot reasonably be applied to the facts of this case. Here, such a restriction would be at odds with the broad scope of O'Keeffe's defamatory statement, the truth of which she must prove in the foreign proceeding to prevail on her defense.
O'Keeffe's article contains a broadside attack that is not limited in scope to Adelson's use of foul language in recent years. O'Keeffe's article accuses Adelson of having a general character trait of being foul-mouthed. To prove the truth of her broadside attack on Adelson's character in the Hong Kong litigation, and because a reputation for having a particular character trait rarely evolves overnight, O'Keeffe must proffer evidence tending to show Adelson has a history of using foul language. Documents and testimony showing that Adelson used foul language in his business interactions with another person in 1989 is relevant to the truth of O'Keeffe's charge that Adelson has a general character trait of being foul-mouthed, particularly when taken together with O'Keeffe's long list of other instances in which Adelson has used bad language over the ensuing years. Any other conclusion would ignore the broad and liberal construction given to the scope of the discovery rules. See Hickman , 329 U.S. at 506, 67 S.Ct. 385.
As also noted by the Magistrate Judge, Adelson's relationship with Zukov was relatively short-lived. For approximately nine months, Zukov interacted with Adelson on an architectural project. Again, O'Keeffe's article contains a broadside attack that is not confined to Adelson's alleged use of foul language in long-term relationships. That Adelson's use of bad language transcends his most intimate business relationships and affected his daily interactions with a person with whom he had a short-lived relationship is relevant to the truth of O'Keeffe's charge that Adelson has a general character trait of being foul-mouthed.
The Court's discovery-related inquiry does not end with its determination that the information possessed by Zukov is relevant to O'Keeffe's defense. Although admissibility is not the test for determining discoverability, because Rule 26 defines the scope of discovery by looking to whether the information is admissible or would lead to the discovery of admissible evidence, the Court must be mindful of the Federal Rules of Evidence. Under Rule 405(b) of the Federal Rules of Evidence, "[w]hen a person's character or character trait is an essential element of a charge, claim, or defense, the character or trait may also be proved by relevant specific instances of the person's conduct." Fed. R. Evid. 405(b). Here, Adelson's alleged character trait of being foul-mouthed is substantively at issue in the Hong Kong libel case. Schafer v. Time, Inc. , 142 F.3d 1361, 1372 (11th Cir.1998) ("Since the plaintiff's character is substantively at issue in a libel case ..., Rule 405(b) permits the admission of evidence regarding specific instances of the plaintiff's conduct on that issue.").
Further, Rules 401 and 403 of the Federal Rules of Evidence set forth the basic rules controlling the admissibility of evidence. Rule 401 defines "relevant evidence" as evidence having "any tendency to make a [consequential] fact more or less probable than it would be without the evidence." Fed. R. Evid. 401. Pursuant to Rule 403, although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of "unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence." Fed. R. Evid. 403
Here, evidence showing that Zukov witnessed Adelson use foul language in a business context over the course of several months in the late 1980s has a tendency to make the truth of O'Keeffe's statement more probable than it would be without the evidence. See Faigin v. Kelly , 184 F.3d 67, 83 (1st Cir.1999) (finding that testimony by other athletes regarding their difficulties with Faigin and his associates went directly to the truth of the disputed statements contained in Kelly's autobiography and therefore was relevant and admissible); Bularz v. Prudential Ins. Co. of Am. , 93 F.3d 372, 378–79 (7th Cir.1996) (affirming the admission of Prudential's compilation of fifty customer complaints it received about Bularz's sales practices and reasoning that the evidence was "relevant to determining whether Prudential's alleged defamatory statement was true, and thus to deciding whether Prudential had an affirmative defense to Bularz's claim").
Further, this Court cannot discern any unfair prejudice, confusion of the issues, misleading of the jury, delay, waste of time, or cumulative evidence that would substantially outweigh the probative value of the evidence. The Magistrate Judge suggested that any probative value was substantially outweighed by one or more these risks, and it appears that the Magistrate Judge's primary concern was the prospect of the presentation of cumulative evidence. The Court cannot agree that O'Keeffe's discovery request presents a risk of cumulative evidence. In the Hong Kong litigation, it will be incumbent on O'Keeffe to convince a jury that there are enough specific instances of bad language to support her broad accusation against Adelson of being foul-mouthed. To that end, in O'Keeffe's Amended Defense filed in the Hong Kong court, O'Keeffe has cited several examples of Adelson's interactions with people other than Zukov as evidence of Adelson's use of foul language. (DE 1-5.) Further, O'Keeffe has made requests for discovery in federal court in Nevada and New Jersey from people other than Zukov who may possess information concerning Adelson's use of bad language. Yet, it is undisputed that O'Keeffe has not made any other discovery requests concerning Adelson's use of foul language particular to his interactions with Zukov. Because O'Keeffe has not sought any other discovery relating to Adelson's interactions with Zukov (i.e. other than the instant request before this Court) and since the success of O'Keeffe's defense in the foreign proceeding largely depends upon the numberof specifics she can proffer, the Court finds that O'Keeffe's discovery request does not present a risk of cumulative evidence or any of the other concerns identified in Rule 403 sufficient to outweigh the probative value of the evidence.
In summary, the Court concludes that the information sought by O'Keeffe is discoverable under Rule 26(b)(1) of the Federal Rules of Civil Procedure because it is relevant to her defense in the Hong Kong litigation and would be admissible at trial under the Federal Rules of Evidence. As provided under Rule 26(b)(2), otherwise discoverable requests may be limited if the discovery sought is "unreasonably cumulative or duplicative" or "the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues." Fed. R. Civ. P. 26(b)(2)(C)(I), (iii). As discussed above, the Court concludes that the discovery sought is not unreasonably cumulative or duplicative, and there has been an insufficient showing that the burden or expense, if any, of the proposed discovery outweighs the likely benefits of the discovery, considering the factors set forth in Rule 26(b)(2). Accordingly, the Court concludes that the Magistrate Judge's Order (DE 18) is clearly erroneous and contrary to law.
B. Fishing Expedition, Vehicle for Harassment, Cumulative Request
O'Keeffe objects to the Magistrate Judge's conclusions that the discovery request was an improper fishing expedition and a vehicle for harassment and sought needless cumulative evidence. The Magistrate Judge concluded that the discovery request was improper because the discovery was speculative, the search terms were inflammatory, and O'Keeffe had already discovered many other examples of Adelson's use of bad language. This Court does not agree with the Magistrate Judge's conclusion that the discovery request was improper on these grounds.
As to his ruling that O'Keeffe's discovery request is an improper fishing expedition, the Magistrate Judge based his conclusion on the fact that O'Keeffe's allegation that relevant information exists was based upon "information and belief." (DE 1, Application ¶ 11 ("Upon information and belief, during that time, Zukov personally witnessed Adelson use foul or otherwise offensive language."). However, at oral argument, O'Keeffe's counsel indicated to the Magistrate Judge a basis for her belief that the discovery request might produce relevant information. That is, O'Keeffe's counsel stated to the Magistrate Judge that she had personally spoken to Zukov and that, according to their discussions, Zukov personally witnessed Adelson use foul language in a business context when both men were professionals in their 50s. Counsel further stated at oral argument that Zukov has a clear memory of the time in question and has indicated that he interacted with Adelson very frequently—several times a week—during the time in question. O'Keeffe's counsel has cited to the relevant excerpts of the transcript of the hearing in a Declaration filed with the Court in support of O'Keeffe's objections to the Magistrate Judge's Order. (DE 22-1, Declaration of Constance M. Pendleton ¶ 14.)
While counsel's representations to the Magistrate Judge at oral argument do not constitute evidence, counsel's representations do suggest that there is a concrete basis for O'Keeffe's belief that relevant information exists, and therefore that O'Keeffe's belief is based upon more than mere speculation. Further, O'Keeffe's discovery request is narrowly limited to Adelson's use of bad language in his interactions with Zukov during a specific time frame, which, as discussed above, is relevant to O'Keeffe's central defense in the Hong Kong litigation. Based on the representations of counsel, the Court concludes that the Magistrate Judge's ruling was erroneous.
As to his conclusion that the subpoena is a vehicle for harassment, the Magistrate Judge based his ruling on the inflammatory nature of the search terms set forth in the subpoena. While the search terms do encompass offensive words, they are necessary and appropriate in a subpoena to obtain information showing the truth of O'Keeffe's statement that Adelson uses foul language. In re O'Keeffe , 646 Fed.Appx. 263, 269, No. 15–3129, 2016 WL 1426001, at *5 (3d Cir. Apr. 12, 2016) (concluding that O'Keeffe's application for a subpoena in a related case was not a vehicle for harassment and explaining that "[t]he nature of the search terms is precisely why they are relevant for her defense: they directly touch on whether someone might be considered ‘foul-mouthed’ for purposes of the Hong Kong litigation"). Adelson should not be permitted to place the statement that he is "foul-mouthed" in issue and then thwart discovery on the ground that it is unduly offensive. Egiazaryan v. Zalmayev , No. 11 CIV. 2670 PKC GWG, 2012 WL 137574, at *2 (S.D.N.Y. Jan. 12, 2012) ("A defamation plaintiff may not place a matter in issue and then successfully thwart discovery because it is unduly intrusive, sensitive or privileged from disclosure."). In addition, the Court notes that Zukov, on whom the subpoena was served and to whom the search terms were posed, has not objected to the subpoena on the ground that the subpoena is a vehicle for harassment (or any other ground). As a result, the Court concludes that the Magistrate Judge's ruling is also erroneous.
In summary, this Court concludes that the Magistrate Judge's determinations that the subpoena is a fishing expedition and a vehicle for harassment are not factually or legally supportable. Further, as discussed above, the subpoena is not needlessly cumulative of other discovery requests. Accordingly, the Court concludes that the Magistrate Judge's Order is clearly erroneous and contrary to law.
IV. CONCLUSION
For the foregoing reasons, the Court sustains the objections to the Magistrate Judge's Order, vacates the Magistrate Judge's Order granting Adelson's motion to quash the subpoena, and denies Adelson's motion to quash the subpoena.
Accordingly, it is hereby ORDERED AND ADJUDGED as follows:
1. O'Keeffe's Objections [DE 22 ] are SUSTAINED , and the Magistrate Judge's Order [DE 18 ] is SET ASIDE .
2. Adelson's Motion to Quash Subpoena to Nikita Zukov [DE 10 ] is DENIED .
3. Nikita Zukov shall have produce the documents sought by the subpoena and sit for a deposition within 40 days from the date of this Order or at such other time that is agreeable to the parties.
4. This case is CLOSED .
DONE AND ORDERED in Chambers at West Palm Beach, Florida, this 26thday of April, 2016.