SYLVAIN A. MAGGARD, ETC., Plaintiff,
ESSAR GLOBAL LIMITED, et al., Defendants.
PAMELA MEADE SARGENT UNITED STATES MAGISTRATE JUDGE
This case is before the under Dated: the Defendants’ Motion For A Protective Order, (Docket Item No. 68), Non-Party Movant Rewant Ruia’s Motion To Quash, (Docket Item No. 90), and Plaintiff Sylvain A. Maggard’s Motion For Sanctions, (Docket Item No. 96), (“Motions”). A hearing on the Motions was held before the undersigned by telephone conference call on November 14, 2013. Based on the arguments and representations of counsel, and based on the reasoning stated herein, the Motion for Protective Order is denied, the Motion to Quash is granted in part and denied in part, and the Motion for Sanctions is granted.
The plaintiff, Sylvain A. Maggard d/b/a Orleans Management Group, LLC, (“Maggard”), has filed suit in this court alleging that the defendants owe him an $8.6 million commission for services rendered as a “Coal Consultant” in connection with the acquisition of Trinity Coal Company in April 2010. Maggard alleges that he entered into an oral agreement with Madhu Vuppuluri in June 2009 which obligated one of the defendants to pay him millions of dollars upon the closing of the deal. According to the Amended Complaint, Maggard states that, in the course of providing consulting services, he interacted with Ravi Ruia and Rewant Ruia.
Ravi Ruia is a resident of Mauritius and a citizen of India, and Rewant Ruia is a resident of the United Arab Emirates and a citizen of India. At a September 3, 2013, hearing, the court directed the parties to agree on dates for depositions and, if necessary, for defendants to raise any objections to producing witnesses during those dates on the grounds that they are not within the defendants’ control to produce. On September 9, 2013, the court issued an order addressing certain aspects of a motion to compel filed by Maggard, including dates by which the defendants were required to respond to certain discovery. This order does not address depositions or deadlines for raising or resolving disputes about depositions. Regarding the filing of this Motion for Protective Order, Maggard has not issued any deposition notices for Ravi or Rewant Ruia. On September 11, 2013, Maggard’s counsel contacted defense counsel requesting that the defendants produce Ravi and Rewant Ruia for depositions during the week of October 28, 2013. However, on September 16, 2013, the defendants informed Maggard that they were not obligated to produce Ravi and Rewant Ruia pursuant to a Rule 30(b) notice.
A. Motion for Protective Order
When a party to litigation is a corporation, notice of deposition must be given to it pursuant to Federal Rules of Civil Procedure Rule 30(b)(6). See In re Honda Am. Motor Co., Inc. Dealership Relations Litig., 168 F.R.D. 535, 540 (D. Md. 1996). Rule 30(b)(6) permits two separate means for obtaining deposition testimony from an organization that is a party to a litigation. First, it may notice the corporation alone, and the corporation must designate who will speak on its behalf. See Honda, 168 F.R.D. at 540 (citing Fed.R.Civ.P. 30(b)(6)). Second, the examining party itself may designate deponents to speak for the corporation, but only if the named individuals are “directors, officers, or managing agents.” Honda, 168 F.R.D. at 540 (citing Fed.R.Civ.P. 30(b)(6)). During the November 14, 2013, telephone conference call, the parties agreed that the issue on this motion is whether Ravi and/or Rewant Ruia are “managing agents” of any of the defendants.
The determination of whether an individual is a “managing agent” of a corporation must be made at the time of the deposition. See Honda, 168 F.R.D. at 540 (citing Curry v. States Marine Corp. of Del., 16 F.R.D. 376, 377 (S.D.N.Y. 1954)). The burden of proving that an individual qualifies as a managing agent rests with the party seeking discovery, and doubts about an individual’s status as such at the pre-trial discovery stage are resolved in favor of the examining party. See Honda, 168 F.R.D. at 540 (citing Founding Church of Scientology of Wash., D.C. v. Webster, 802 F.2d 1448, 1452 n.4 (D.C. Cir. 1986)). If an examining party fails to meet its burden of showing that an individual is, in fact, a managing agent, then it must resort to Federal Rules of Civil Procedure Rule 45 for subpoenas on nonparty witnesses. See Honda, 168 F.R.D. at 540 (citing United States v. Afram Lines (U.S.A.), Ltd., 159 F.R.D. 408, 413 (S.D.N.Y. 1994)).
Courts have held that the test for determining who may be properly designated a managing agent must be a functional one, and the determination must be made on a case-by-case basis. See Honda, 168 F.R.D. at 540 (citing Webster, 802 F.2d at 1452). Nonetheless, some of the controlling factors that courts generally agree are used in deciding whether an individual is a managing agent of a corporation include: (1) whether the corporation has invested the person with discretion to exercise his judgment; (2) whether the employee can be depended upon to carry out the employer’s directions; and (3) whether the individual can be expected to identify himself or herself with the interests of the corporation as opposed to the interests of the adverse party. See Honda, 168 F.R.D. at 540 (citing Reed Paper Co. v. Proctor & Gamble Distrib. Co., 144 F.R.D. 2, 4 (D. Me. 1992); Colonial Capital Co. v. Gen. Motors Corp., 29 F.R.D. 514, 516-17 (D. Conn. 1961); see also Sugarhill Records Ltd. v. Motown Record Corp., 105 F.R.D. 166, 170 (S.D.N.Y. 1985); Afram Lines, 159 F.R.D. at 413; Indep. Prods. Corp. v. Loew’s, Inc., 24 F.R.D. 19, 25 (S.D.N.Y. 1959)). The district court in Honda also noted “other factors to consider, ” including (1) the degree of supervisory authority which a person is subject to in a given area; and (2) the general responsibilities of the individual regarding the matters at issue in the litigation. 168 F.R.D. at 540-41 (citing Sugarhill, 105 F.R.D. at 170.). However, “[t]he ‘paramount test’ is whether the individual can be expected to identify with the corporation’s interests as opposed to an adversary’s.” Honda, 168 F.R.D. at 541.
The defendants base their argument that Ravi and Rewant Ruia are not subject to Rule 30(b) notice and must be subpoenaed under Rule 45, on the affidavit testimony of Madhu Vuppuluri. Vuppuluri testified that neither Ravi nor Rewant Ruia is currently an officer, director or employee of Essar, Inc., which was renamed Essar Americas, Inc., on September 24, 2009; Essar Americas, Inc; Essar Minerals, Inc.; Essar Steel Algoma, Inc.; or Essar Steel Minnesota, LLC. (Docket Item No. 71, (“Vuppuluri Declaration”), at 2, 3). He stated that Ravi Ruia served as a director of Essar Global Limited from September 20, 2005, to July 3, 2009, and again from April 5, 2010, to March 26, 2012. (Vuppuluri Declaration at 2). He stated that Ravi Ruia also served as a director of Essar Steel Algoma, Inc., from June 23, 2007, to March 23, 2011. (Vuppuluri Declaration at 2). Vuppuluri testified that he had confirmed with the corporate secretary of Essar Global Fund Limited that the ultimate shareholders of the defendants are discretionary trusts, whose beneficiaries include, among others, companies, whose 100 percent shareholders are Ravi and Rewant Ruia. (Vuppuluri Declaration at 2). He testified that he also had confirmed with the corporate secretary of Essar Global Fund Limited that Rewant Ruia is not currently an officer, director or employee of that company. (Vuppuluri Declaration at 3). However, Vuppuluri testified that Rewant Ruia was a director of Essar Steel Minnesota, LLC, from November 2, 2010, to February 21, 2012, and he was a director of Essar Steel Algoma, Inc., from January 1, 2012, through March 26, 2012. (Vuppuluri Declaration at 3). He testified that Rewant Ruia’s task of overseeing Essar’s North American’s operations, including Essar Steel Algoma was during the time Rewant Ruia served as director of Essar Steel Minnesota, LLC, and Essar Steel Algoma, Inc., (Vuppuluri Declaration at 3-4). Vuppuluri testified that neither Ravi nor Rewant has corporate authority to take any actions on behalf of any of the defendants to bind them contractually or legally. (Vuppuluri Declaration at 3, 4). He stated that the Essar group of companies is not a legal entity. (Vuppuluri Declaration at 3).
On the other hand, Maggard has offered evidence of multiple instances in which Ravi and Rewant Ruia have held themselves out as controlling the defendants. In particular, Maggard asserts that Ravi Ruia held himself out as Vice Chairman of the Essar Group, and Rewant Ruia held himself out as a director of the Essar Group. In support of these assertions, Maggard has offered a screenshot of Essar’s website,  dated May 12, 2013, showing its Board of Directors. (Exhibit K to Docket Item No. 81). This screenshot lists Ravi Ruia as the Vice Chairman of the Essar Group, and it lists Rewant Ruia as a Promoter Director of the Essar Group. (Exhibit K to Docket Item No. 81). In an Essar Group profile of Ravi Ruia, dated August 25, 2012, it is stated that he is Vice Chairman of the Essar Group and that he has “overseen the Group’s globalization plans, ” including leading “the recent acquisitions of … Trinity Coal in the USA.” (Exhibit L to Docket Item No. 81). Rewant Ruia’s Essar Group profile, also dated August 25, 2012, lists him as Director of the Essar Group, and it specifically states that he is a “Director on the Board of Major Companies of the Essar Group.” (Exhibit M to Docket Item No. 81). It states that he “presently oversees Essar’s Steel, Minerals and Retail businesses. Responsible for Essar Group’s North America operations which span the U.S. and Canada, he manages Essar Steel Algoma, Trinity Coal Company, Iron Ore Mines & Pellet Project in Minnesota.” (Exhibit M to Docket Item No. 81). More recently, an October 1, 2013, livemint report states that Ravi Ruia and his brother Shashikant Ruia lead the Essar Group. (Exhibit R to Docket Item No. 81). Another livemint report, this one dated March 10, 2013, describes Rewant Ruia as overseeing Essar Group’s North American metals and mining operations in the U.S. and Canada, and further describes him as head of North American operations, which includes managing Essar Steel Algoma, Inc., Trinity Coal Co. and the Iron Ore Mines and Pellet Project in Minnesota for Essar Steel Minnesota, LLC. (Exhibit S to Docket Item No. 81). Lastly, and most recently, Rewant Ruia’s Linked In profile, dated October 11, 2013, states that Rewant Ruia has been a director at Essar from “2005-Present.” (Exhibit T to Docket Item No. 81).
Although the defendants have offered affidavit testimony stating that Ravi and Rewant Ruia are not currently officers, directors or employees of any of the defendants, I find that Maggard has produced sufficient evidence to support a finding at this pretrial discovery stage that Ravi and Rewant Ruia are “managing agents.” Multiple online sources, some belonging to Essar and some not, have held Ravi and Rewant Ruia out to be Vice Chairman and Promoter Director, respectively, at or near the relevant time. These sources also evidence that these men had a great amount of control over at least some of the defendants in this case. As stated previously, the paramount test is whether the individual can be expected to identify with the corporation’s interests as opposed to an adversary’s. See Honda, 168 F.R.D. at 541. I find that there can be no doubt in this case that Ravi Ruia’s and Rewant Ruia’s interests are closely aligned with the defendants’ interests as opposed to an adversary’s. The exhibits provided by Maggard demonstrate that the group of defendant companies is a closely run family business. Even assuming that Ravi and Rewant Ruia no longer hold the positions of Vice Chairman and Promoter Director, each man has unquestionably held high-ranking positions within the corporation. According to the exhibits, Ravi Ruia and his brother founded the corporation, and Rewant Ruia has played a large role in the business, as set forth above. Also, just as in the Honda case, I find that there is no reason to suspect that what either Ravi or Rewant Ruia might say at deposition will not be closely identified with, and in furtherance of, the interests of the defendants. Additionally, the defendants have offered no evidence that either Ravi or Rewant Ruia is no longer loyal to the corporation or does not still identify with its interests. See Honda, 168 F.R.D. at 541.
In addition to all of the above, it is worth reiterating that to the extent that there are doubts about Ravi Ruia’s and Rewant Ruia’s statuses as managing agents, these must be resolved in favor of the examining party at the pretrial discovery stage. All of this being the case, I find that Maggard has sufficiently shown, for purposes of this Motion for Protective Order, that Ravi and Rewant Ruia are managing agents of some combination of the ...