Price Waterhouse LLP v. First American Corp.

182 F.R.D. 56, 42 Fed. R. Serv. 3d 423, 1998 U.S. Dist. LEXIS 12435, 1998 WL 481571
CourtDistrict Court, S.D. New York
DecidedAugust 12, 1998
DocketNo. M8-85 (RWS)
StatusPublished
Cited by16 cases

This text of 182 F.R.D. 56 (Price Waterhouse LLP v. First American Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Price Waterhouse LLP v. First American Corp., 182 F.R.D. 56, 42 Fed. R. Serv. 3d 423, 1998 U.S. Dist. LEXIS 12435, 1998 WL 481571 (S.D.N.Y. 1998).

Opinion

OPINION

SWEET, District Judge.

Price Waterhouse-United Kingdom (“PW-UK”) and Price Waterhouse-United States (“PW-US”) (collectively, the “Movants”) have moved pursuant to Rule 45 of the Federal Rules of Civil Procedure for an order quashing a Rule 30(b)(6) subpoena served by First American Corporation and First American Bankshares, Inc. (“FAC”) on PW-US as agent for PW-UK and on Colin McKay, a PW-UK partner residing in New York, on the grounds that this Court lacks in person-am jurisdiction over PW-UK, that Rule 45 forbids compelling a witness to travel more than 100 miles to testify as a nonparty in a deposition, and that enforcement of the subpoena would violate the principles of international comity. For the reasons set forth below, the motion to quash is granted.

Parties

FAC is a Virginia corporation with its principal place of business in Washington D.C. During the events which led to the DC Action (defined below), FAC was a privately held bank holding company wholly owned by Credit and Commerce American Holdings Co. N.V. (“CCAH”).

PW-US is a registered limited liability partnership of independent accountants organized under Delaware law that engages in the practice of accountancy in the United States. Its .principal office is in New York.

PW-UK is an English partnership set up under the Partnership Act (1890) of England. It is located and operates principally in the United Kingdom.

Colin McKay (“McKay”) is a partner of PW-UK who is currently residing in New York.

Facts and Prior Proceedings

The facts and prior proceedings were set forth in detail in two prior opinions, familiarity with which is assumed. See First American Corp. v. Price Waterhouse LLP, 988 F.Supp. 353 (S.D.N.Y.1997) [hereinafter First American I ]; First American Corp. v. Price Waterhouse LLP, No. M8-85,1998 WL 148421 (S.D.NY. Mar.27, 1998) [hereinafter First American II]. Facts relevant to the instant motion are set forth below.

FAC is plaintiff in an action in the District Court for the District of Columbia, captioned First American Corp., et al. v. Sheikh Zayed Bin Sultan Al-Nahyan, 2 F.Supp.2d 58 (D.D.C. 1998) (JUG/PJA) (the “DC Action”). The DC Action is just one proceeding of many spawned by the largest bank fraud in world history perpetrated by the Bank of Credit and Commerce International (“BCCI”).

The Price Waterhouse firms were auditors of BCCI (Overseas) Limited, and the efforts of separate Price Waterhouse firms were coordinated by PW-UK. As part of its coordination of worldwide audits, PW-UK would [58]*58instruct and direct the efforts of accounting firms in those territories where BCCI subsidiaries carried on material business. In the United States, the appointed accounting firm was PW-US.

In 1996, FAC served a document subpoena and three deposition subpoenas on PW-US. Pursuant to those subpoenas, PW-US produced over 33,000 pages of documents and three of its partners or principals for deposition.

In August 1997, FAC served’ a new subpoena on PW-US and on a partner of PW-UK who is currently working at PW-US. The subpoena requested documents from PW-UK related to BCCI and any services performed by Price Waterhouse for BCCI. PW-US objected to this request on the grounds that, inter alia, PW-US had no control over documents in PW-UK’s possession, and that PW-US was not the appropriate vehicle for serving, obtaining jurisdiction over, and/or taking discovery from PW-UK because no jurisdiction was established by serving PW-US.

On September 30, 1997, FAC brought an application by ex parte order to show cause, asserting that service of the subpoena on PW-US provided jurisdiction over PW-UK, based on the working relationship between the two partnerships. The petition was heard in Part I before this Court on October 28, 1997. By opinion dated December 17, 1997, the Court found that jurisdiction existed over PW-UK on the grounds that PW-UK had done business in New York to a degree sufficient to satisfy § 301 of the New York Civil Procedure Law and Rules, when PW-UK conducted audits of BCCI’s New York branch through PW-US. The Court found that the amount of control exerted over PW-US by PW-UK satisfied the standard set by Frummer v. Hilton Hotels International, Inc., 19 N.Y.2d 533, 227 N.E.2d 851, 281 N.Y.S.2d 41 (1967), which stands for the proposition that a foreign corporation may be found to be doing business in New York if a local affiliate of the foreign corporation “does all the business which [the other corporation] could do were it here by its own officials.” First American I, 988 F.Supp. at 362-63 (citing Frummer, 19 N.Y.2d at 537, 227 N.E.2d at 854, 281 N.Y.S.2d at 44).

On December 19, 1997, FAC served on employees of the legal department of PW-US a deposition subpoena addressed to PW-US “as Agent for Price Waterhouse (U.K.firm)” (the “December Subpoena”). The December Subpoena requested designation of officers, directors, or managing agents capable of testifying on various subjects relating to PW-UK’s dealings with BCCI, including the nature of the relationships between BCCI and the CCAH nominees, the identity of those who knew of the illegal relationships, and when, how, and what these persons learned of them.

On January 8, 1998, PW-UK and PW-US filed a motion for reargument of First American I, 988 F.Supp. at 353, claiming (1) that the Court committed clear error in holding that the PW-US audit of BCCI, performed at the direction of PW-UK, established an agency-like relationship sufficient to satisfy the standard for imposing personal jurisdiction as set forth by the New York Court of Appeals in Frummer and (2) that the Court overlooked the requirement in N.Y. C.P.L.R. § 301 that the foreign corporation must be doing business at the time of the summons and complaint rather than at the time of the occurrence giving rise to the action. By opinion dated March 27, 1998, the motion for reconsideration was granted, but the underlying motion to reverse the order to compel discovery of documents was denied. This Court found that the Movants’ first ground for reconsideration failed to set forth any overlooked legal authority. As to the second ground, sufficient facts had been presented at a prior hearing to establish that PW-UK was “doing business” through its relationship with PW-US at the jurisdictionally significant time. See First American II, 1998 WL 148421 at *2-*3.

On January 13,1998, FAC served a second deposition subpoena addressed to PW-US “as Agent for Price Waterhouse (U.K.firm),” dated January 15, 1998, which was substantially identical to the December Subpoena (the “January Subpoena”). Additionally, FAC served another substantially identical subpoena on “Price Waterhouse (U.K.firm) [59]*59c/o Colin McKay,” dated January 21, 1998 (the “McKay Subpoena,” together with the December and January Subpoenas, the “Subpoena”).

On January 14,1998, PW-UK and PW-US filed the motion to quash the December Subpoena.

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182 F.R.D. 56, 42 Fed. R. Serv. 3d 423, 1998 U.S. Dist. LEXIS 12435, 1998 WL 481571, Counsel Stack Legal Research, https://law.counselstack.com/opinion/price-waterhouse-llp-v-first-american-corp-nysd-1998.