In re Auction Houses Antitrust Litigation

196 F.R.D. 444, 2000 WL 1471613
District Court, S.D. New York·Decided October 3, 2000·No. No. 00 Civ. 0648 LAK·Published·Cited by 19 cases

Opinion

MEMORANDUM OPINION

KAPLAN, District Judge.

Although the press has reported that an agreement has been reached to settle these cases, subject to court approval, the proposed settlement (which has not yet been filed with the Court) in fact would not resolve two of the cases, Kruman v. Christie’s International, 00 Civ. 6322(LAK), and Burkle v. Christie’s Inc., 00 Civ. 7018(LAK), which are brought on behalf of a class of persons who dealt with defendants abroad. Discovery still is underway in those actions, thus requiring this ruling.

I

The general nature of this case is set forth in two prior opinions,1 familiarity with which is assumed.

Christie’s has produced handwritten notes from the files of its former chief executive officer, Christopher Davidge (the “Davidge Documents”), which apparently are important evidence of the alleged conspiracy. Defendant A. Alfred Taubman, former chairman of Sotheby’s, served interrogatories on Christie’s by which it sought a great many details concerning the Davidge Documents, including such details as their authors, the meaning of abbreviations used in them, the antecedents of pronouns (e.g., “our,” “her,” etc.) and the like. Christie’s objected to substantially all of these interrogatories, principally on the ground that they “seek[] information that is not in [its] possession, [445]*445custody, or control.”2 In conversations among counsel, Christie’s has taken the position that it cannot answer these interrogatories because the person with knowledge is Davidge, whom it allegedly no longer controls. Taubman disputes this assertion and seeks an order compelling Christie’s to respond fully, including in its response information it contends is available to it from Davidge.

In late December 1999, Christie’s International PLC entered into an agreement with Davidge concerning the termination of his employment (the “Agreement”). The Agreement provides for the payment by Christie’s to Davidge of £5 million of which at least £2 million has not yet been paid. Christie’s obligation to pay it is conditioned upon Davidge’s performance of his contractual obligations. Further, paragraph 14 of the Agreement states:

“You [i.e., Davidge] undertake promptly to provide all such information to the Company [Christie’s] or its advisers or agents as is within your knowledge that may from time to time be required by the Company, in the discretion of the board of directors of the Company, in relation to the business of any Group Company during the period of your employment and to provide to the Company details of all matters, including all actual or potential transactions in respect of which the Company’s knowledge rests solely or principally with you. You undertake further to co-operate promptly and fully in any ongoing investigations or enquiries relating to the business of any Group Company, subject to any reasonable objection raised by your legal advisers ____”

Following the commencement of most of these actions, Christie’s and Davidge entered into a so-called Indemnification and Joint Defence Agreement (the “Defence Agreement”) whereby, broadly speaking, Christie’s agreed to indemnify Davidge with respect to defense costs, fines, and liability in these cases as well as the pending grand jury investigation and actions arising therefrom in exchange for Davidge’s cooperation. Paragraph 2 of the Defence Agreement provides in relevant part as follows:

“Davidge agrees that, as part of his obligations of cooperation under the Termination Agreement, he will comply with such reasonable requests as shall be made of him by Christie’s with respect to any matters concerning the Civil Litigation [i.e., those of these cases already pending] or Future Proceeding [which includes the Kruman action] including the conduct, defense or settlement of the Civil Litigation or Future Proceeding as well as, meeting with and providing information to such parties to the litigation as Christie’s shall request ...”

II

A party served with interrogatories is obliged to respond by “fumish[ing] such information as is available to the party.”3 Christie’s therefore is obliged to respond to the interrogatories not only by providing the information it has, but also the information within its control or otherwise obtainable by it.4 Taubman maintains that information known to Davidge is available to Christie’s by virtue of these agreements and that it therefore should be compelled to provide the information in Davidge’s hands.

Christie’s resists such relief. It says that it has requested Davidge to furnish the information and that Davidge has declined to do so, ostensibly on the ground that he, fears that he might waive his privilege against self-incrimination by doing so. But Christie’s does not say that it has done anything more than request Davidge to provide the information necessary to enable it to give complete and responsive answers to the interrogatories, this despite the fact that Davidge’s reported refusal arguably breaches the agreements. So far as Christie’s has indicated, it [446]*446has not threatened to cease payments to him and his counsel or to consider its indemnification obligation as unenforceable in light of Davidge’s position. Thus, it certainly has not exhausted the means at its disposal to procure a response from Davidge. Indeed, there is reason to suppose that Davidge’s reticence is in Christie’s interests. Yet Christie’s argues the Court should not order it to respond with information known only to Davidge because it somehow would be unfair, or less than sporting, to place it in a position in which it might feel compelled to exert pressure on Davidge to provide the necessary information. But this is decidedly unpersuasive.

Davidge agreed to provide Christie’s with information in his possession. He was not coerced to do so, except in the sense that the enormously valuable economic consideration that he stands to receive under the agreements of course might be expected to have had a certain persuasive force. By entering into those agreements, he knowingly and voluntarily subjected himself to the risk that a failure to provide information requested by Christie’s might be a material breach of the agreements and excuse Christie’s from any further obligation to perform, i.e., any obligation to pay or indemnify him. As he is reaping the benefits of his agreements with Christie’s, it is far from clear that there is any reason why he should not be pressed to bear the burdens. And surely there is no reason for saying that Christie’s should not be given a substantial incentive to seek his cooperation. In fact, the situation is somewhat analogous to that frequently encountered in respect of blocking statutes.

Many foreign countries have enacted statutes that prohibit their citizens and, often, persons subject to their jurisdiction from complying with discovery requests in U.S. litigation. Companies subject both to U.S. discovery demands and to foreign blocking statutes barring compliance often have invoked such statutes in resisting motions for orders compelling them or those subject to their control to produce information covered by the statutes. And while courts have taken different approaches to this question, the modem trend holds that the mere existence of foreign blocking statutes does not prevent a U.S.

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In re Auction Houses Antitrust Litigation, 196 F.R.D. 444, 2000 WL 1471613 (S.D.N.Y. 2000).

196 F.R.D. 444 (In re Auction Houses Antitrust Litigation) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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