First American Corporation v. Price Waterhouse Llp

154 F.3d 16, 1998 U.S. App. LEXIS 16093
CourtCourt of Appeals for the First Circuit
DecidedJuly 14, 1998
Docket98-7500
StatusPublished
Cited by2 cases

This text of 154 F.3d 16 (First American Corporation v. Price Waterhouse Llp) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First American Corporation v. Price Waterhouse Llp, 154 F.3d 16, 1998 U.S. App. LEXIS 16093 (1st Cir. 1998).

Opinion

154 F.3d 16

FIRST AMERICAN CORPORATION and First American Bankshares,
Inc., Petitioners-Appellees-Cross-Appellants,
v.
PRICE WATERHOUSE LLP, a limited liability partnership
registered under the laws of the State of
Delaware, Respondent-Cross-Appellee,
Price Waterhouse United Kingdom Firm, a partnership
organized under the laws of England, United
Kingdom, Respondent-Appellant-Cross-Appellee.

Docket Nos. 98-7500(L), 98-7529(XAP).

United States Court of Appeals,
Second Circuit.

Argued June 10, 1998.
Decided July 14, 1998.

Christopher F. Dugan, Washington, D.C. (Stephen J. Brogan, Washington, D.C., Stephen C. Bennett, New York, NY, Jones, Day, Reavis & Pogue, on the brief) for Petitioners-Appellees-Cross-Appellants.

James E. Tolan, New York, NY (William K. Dodds, Peter L. Critchell, Amianna Stovall, Dechert Price & Rhoads, on the brief) for Respondent-Appellant-Cross-Appellee.

Edwin G. Schallert, New York, NY (Barton Legum, Faune P. Devlin, Debevoise & Plimpton, on the brief) for Respondent-Cross-Appellee.

Before: NEWMAN, JACOBS, and PARKER, Circuit Judges.

JACOBS, Circuit Judge:

This appeal, heard on an expedited basis, reviews orders of the United States District Court for the Southern District of New York (Sweet, J.) enforcing a non-party witness subpoena against a United Kingdom accounting partnership, and finding the firm in contempt for failure to comply.

In the several years leading up to the collapse of the Bank of Commerce and Credit International ("BCCI"), Price Waterhouse United Kingdom Firm ("PW-UK") was its worldwide auditor. In accordance with its normal practice, PW-UK was assisted in these audits by Price Waterhouse partnerships in other countries. Those firms, which include the American firm, Price Waterhouse LLP ("PW-US"), as well as Price Waterhouse (Cayman) and Price Waterhouse (Luxembourg), examined the BCCI entities in their respective locales and supplied the information requested by PW-UK for inclusion in the consolidated financial statements that PW-UK prepared.

Two companies alleged to have been acquired surreptitiously by BCCI--First American Corporation and First American Bankshares ("First American")--commenced an action relating to the BCCI debacle in the United States District Court for the District of Columbia; the relevant discovery period in that action is currently scheduled to end on August 11, 1998. In aid of discovery in its District of Columbia action, First American sought a subpoena pursuant to Fed.R.Civ.P. 45 from the United States District Court for the Southern District of New York, directing, inter alia, that PW-UK produce what PW-UK represents to be a great quantity of documents. Judge Sweet concluded that jurisdiction over PW-UK is well-founded because that partnership "does business" in New York, within the meaning of N.Y. C.P.L.R. § 301, through the affiliated partnership of PW-US.

On appeal, PW-UK argues that (1) PW-UK is not "doing business" in New York, because PW-US is not its agent, is a distinct entity, and lacks power to bind PW-UK; (2) the exercise of personal jurisdiction over PW-UK violates due process; and (3) First American should be compelled to resort first to the Hague Convention, so that a British court can decide in the first instance the propriety of this disclosure. On its cross-appeal, First American argues that the district court erred insofar as it failed to credit its theory that Price Waterhouse is a worldwide partnership, or that such a partnership was created by reason of estoppel.

On June 23, 1998, we affirmed the orders of the district court, issued our mandate forthwith, and stated that our opinion would follow. We conclude that the district court properly exercised personal jurisdiction over PW-UK, although we rely on a different rationale.

BACKGROUND

The orders reviewed on this appeal were issued in aid of discovery in an action pending in the United States District Court for the District of Columbia, First American Corp. et al. v. Sheikh Zayed Bin Sultan Al-Nahyan, 1998 WL 405057, in which First American (by its trustee in liquidation) alleges that the defendants conspired illegally to acquire First American using funds provided by BCCI and related entities. The four remaining defendants in that action include two former officers of First American (Clark M. Clifford and Robert A. Altman) and two former shareholders. First American alleges claims for fraud, civil RICO violations, breach of fiduciary duty, reckless and negligent misconduct, and civil conspiracy. The net proceeds of any damage award or settlement are to be distributed by its trustee to the United States (pursuant to an order of forfeiture entered against BCCI in a criminal RICO action) and to the Federal Reserve Board (pursuant to settlement agreements).

Discovery between and among the parties in the District of Columbia action began in September 1995; third-party discovery began early in 1996. In September 1996, First American served a subpoena for documents on "Price Waterhouse," which was defined to include Price Waterhouse (U.K.), Price Waterhouse (Cayman) and Price Waterhouse (Luxembourg). Only PW-US responded to the subpoena. Based on its responses, First American took the depositions of three PW-US partners.

In August 1997, First American served three copies of a new document subpoena seeking production of documents from "Price Waterhouse, the worldwide accounting firm." Again, that term was expressly defined to include PW-UK. One copy was served in New York on the Manhattan office of PW-US. The other two were addressed to "Price Waterhouse c/o Clive D.J. Newton," and served on Mr. Newton, a PW-UK partner who had been seconded to PW-US, worked out of the Manhattan office of PW-US, and was living in Connecticut. Mr. Newton was served with one copy at his home in Connecticut and the other at the PW-US office in New York.

Once again, the only response was by PW-US, which refused to produce any documents of the so-called "worldwide accounting firm," or the constituent parts identified in the subpoena definitions.

The district court record does not contain any proof of service with respect to the subpoenas served on Mr. Newton, of which the one served in New York is of particular importance. In response to a request by the panel, (i) First American supplied an affidavit dated June 11, 1998 from process-server James Walker, who attests to delivering a copy of the subpoena to Mr. Newton by hand in the Manhattan office building of PW-US on August 28, 1997, and (ii) PW-UK acknowledged that Mr. Newton received the subpoena in the manner, at the place, and at the time specified in Mr. Walker's affidavit.

First American filed a Petition to Compel in the district court on September 29, 1997. On December 17, 1997, Judge Sweet found that PW-UK's coordinated activities with and through PW-US in New York were sufficient to sustain jurisdiction.

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Bluebook (online)
154 F.3d 16, 1998 U.S. App. LEXIS 16093, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-american-corporation-v-price-waterhouse-llp-ca1-1998.