Securities & Exchange Commission v. Merkin

283 F.R.D. 689, 2012 WL 2899387, 2012 U.S. Dist. LEXIS 80922
CourtDistrict Court, S.D. Florida
DecidedJune 12, 2012
DocketNo. 11-23585-CIV-GRAHAM/GOODMAN
StatusPublished
Cited by9 cases

This text of 283 F.R.D. 689 (Securities & Exchange Commission v. Merkin) is published on Counsel Stack Legal Research, covering District Court, S.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Securities & Exchange Commission v. Merkin, 283 F.R.D. 689, 2012 WL 2899387, 2012 U.S. Dist. LEXIS 80922 (S.D. Fla. 2012).

Opinion

POST-DISCOVERY HEARING ORDER REGARDING RULE 30(b)(6) DEPOSITION NOTICE

JONATHAN GOODMAN, United States Magistrate Judge.

The issue before the Court appears straightforward on its face: whether Defendant can take a Rule 30(b)(6) deposition of the SEC in this case. Phrased differently, the issue is whether the SEC can foreclose a 30(b)(6) deposition in a case it initiated by arguing that the deposition would necessarily and always require the disclosure of privileged or otherwise protected information. And, to use a third variation on the phrasing of the issue, the question is whether a civil defendant may obtain factual information in a deposition taken of a government agency pursuant to Rule 30(b)(6) in a manner which does not cause the agency to disclose the work product of its counsel, and, if so, what safeguards can be implemented to prevent an abusive deposition?

For the reasons (and with the limitations and safeguards) discussed below, the Court concludes that the answer is yes, Defendant may take the 30(b)(6) deposition of the SEC in this case.

I. Background

The SEC filed this civil lawsuit against Defendant Merkin, an attorney, for allegedly making false public statements in connection with the purchase and sale of penny stock. Specifically, the SEC accuses Merkin of stating falsely in four letters, which he knew would be posted on the internet, that his client was not being investigated about possible violations of the securities laws. The SEC alleges that these statements were false because Merkin knew full well about an SEC investigation because Merkin was actually [691]*691representing his client in the investigation. The SEC seeks injunctive relief, an order requiring Merkin to disgorge all ill-gotten gains, civil money penalties and an order barring Merkin from participating in any penny stock offering.

Over the course of several months, Merkin’s counsel attempted to convince the SEC to permit him to take a 30(b)(6) deposition. He ultimately issued a 15-topic 30(b)(6) deposition Notice. The SEC objected to the Notice and asked Merkin to withdraw it. The SEC took the position that no 30(b)(6) deposition should go forward because such a deposition would lead to questions implicating work product protected information, the attorney-client privilege, the deliberative process privilege and the investigative privilege. The SEC argued that a 30(b)(6) deposition would require the SEC to produce its own enforcement division attorneys as deposition designees or would require those government lawyers to prepare a non-lawyer by divulging the attorney’s opinions, strategies and thoughts. It also contended that the noticed topics were irrelevant and/or overbroad and that, to the extent the topics were not, the SEC already produced documents that Merkin could use to determine the facts and information upon which the SEC based its claims.

II. The Discovery Hearing

Instead of filing discovery motions, the parties complied with Judge Graham’s discovery procedures order by conferring over the dispute, calling Chambers to schedule a discovery hearing and then submitting relevant materials. [See ECF No. 15, p. 2]. The submitted materials included letters discussing the discovery dispute that were created during the conferral process and effectively serve as mini-briefs. The parties also submitted post-hearing Notices of Supplemental Authority. [ECF Nos. 26; 30].

At the hearing, the SEC argued that it was not taking the broad position the SEC was exempt from Rule 30(b)(6) and need not ever produce a 30(b)(6) witness. Instead, it contended that whether the SEC must produce a 30(b)(6) witness should be decided on a ease-by-case, topie-by-topic basis and that, applying this approach, the Court should conclude that none of the noticed topics warrant a 30(b)(6) deposition.

Notwithstanding this seemingly flexible and nuanced position, SEC counsel advised that he—the Assistant Chief Litigation Counsel of the Enforcement Division [see ECF No. 30]—had never personally produced a 30(b)(6) designee in his eight years with the agency, was unaware of any instance where another SEC attorney had done so and could not imagine even one issue in this ease which could justify a 30(b)(6) deposition. SEC counsel also cited cases, from this District and other districts, where courts have ruled that a 30(b)(6) deposition of the SEC was inappropriate and would not permit it.

Merkin’s counsel argued that, despite its rhetoric, the SEC was actually seeking special treatment under a rule that by its own terms applies equally to all parties. To that end, Merkin’s counsel argued that he is entitled to obtain admissions from the SEC during a 30(b)(6) deposition and, for illustrative purposes, explained that he wants an SEC designee to agree or concede that the SEC instructs parties under investigation to keep the existence of the investigation confidential. In response to a question from the Court, Merkin’s counsel also opined that a 30(b)(6) deposition would be less expensive than, for example, propounding equivalent requests for admission.

Merkin’s counsel, who has been in private practice since 1985 and who advised that he routinely litigates against the SEC in civil enforcement actions, also stated that he has previously issued 30(b)(6) notices in SEC cases. While counsel could not recall a specific case in which he succeeded in taking such a deposition, he cited a number of cases from other districts where the SEC or another government agency provided a 30(b)(6) witness.

Based on these arguments, the parties sought opposing relief during the hearing: (1) The SEC requested an order quashing the Notice or, in the alternative, a protective order preventing Merkin from taking a 30(b)(6) deposition; and (2) Merkin asked for [692]*692an order compelling the SEC to comply with his request for a 30(b)(6) deposition.

III. The Speciñc Topics Listed in the 30(b)(6) Notice

Merkin listed the 30(b)(6) topics in an exhibit attached to his Notice:1

Exhibit “A”
1. The specific facts, information, documents, investigative testimony, and/or other direct and/or circumstantial evidence, including but not limited to the factual portions of the Staffs “Action Memo” to the full Commission, and/or specifically relied upon by the Plaintiff, which support the specific allegations, singular cause of action, and various forms of requested relief asserted by, or requested by the Plaintiff from/against Mr. Merkin, in the Complaint of the Securities and Exchange Commission (D.E.l), in the matter styled, “SEC v. Stewart A. Merkin,” Case No. 11-cv-23585-DLG, filed in the U.S. District Court for the Southern District of Florida, which asserts that Mr. Merkin violated the anti-fraud provisions of Section 10(b) of the Exchange Act, and SEC Rule 10b-5, promulgated thereunder, and seeks various forms of relief from/respecting Mr. Merkin.
2. Any exculpatory facts, information, documents, investigative testimony, and/or other direct and/or circumstantial evidence, including but not limited to the factual portions of the Staffs “Action Memo” to the full Commission, which support Mr. Merkin’s innocence, defenses, and/or affirmative defenses, which Plaintiff uncovered during its investigation of StratoComm and/or Mr.

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Bluebook (online)
283 F.R.D. 689, 2012 WL 2899387, 2012 U.S. Dist. LEXIS 80922, Counsel Stack Legal Research, https://law.counselstack.com/opinion/securities-exchange-commission-v-merkin-flsd-2012.