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Edu-Science, Inc. v. Intubrite, LLC

United States District Court, Ninth Circuit

September 3, 2013

EDU-SCIENCE (USA), INC., Plaintiff,
v.
INTUBRITE, LLC, Defendant. INTUBRITE, LLC, Counterclaimant,
v.
EDU-SCIENCE (USA), INC.; and EDU-SCIENCE (HK) LTD., Counterdefendants.

ORDER DENYING INTUBRITE'S MOTION FOR TERMINATING SANCTIONS

BARRY TED MOSKOWITZ, Chief District Judge.

In a motion filed nunc pro tunc to April 26, 2013, Defendant and counterclaimant Intubrite, LLC ("Defendant" or "Intubrite") filed a motion for terminating sanctions, or in the alternative, an order from the Court compelling depositions ("Mot."). Plaintiff and counterdefendant EDU-Science (USA), Inc. ("Plaintiff" or "EDU-USA") filed its opposition nunc pro tunc to May 4, 2013 ("Opp."). For the reasons below, Intubrite's motion for terminating sanctions or an order compelling depositions (ECF No. 60) is DENIED.

I. BACKGROUND

Intubrite alleges that on March 26, 2013, it served six notices of deposition on EDU-USA for Patrick Ng ("Ng"), Max Choi ("Choi"), Teresa Wong ("Wong"), "Ellen" (whose surname appears to be unknown), Bardeen Lai ("Lai") and KO Tsang ("Tsang"). All of the depositions were to take place during the week of April 8, 2013, but only Ng appeared for his deposition. Additionally, Plaintiff's counsel represented to Intubrite that "Ellen" is not an employee of either EDU-USA or EDU-Science (HK), Ltd. ("EDU-HK").

EDU-USA objected to the four remaining deposition notices (Choi, Wong, Lai, and Tsang), but did not seek a protective order. Intubrite argues that EDU-USA's failure to seek a protective order means that EDU-USA waived any right to object to the deposition notices, and that Intubrite is now entitled to dismissal of EDU-USA's complaint as a result of their failure to show, or in the alternative, to an order compelling the depositions of Choi and Wong as "managing agents" of EDU-USA.

II. DISCUSSION

Under Federal Rule of Civil Procedure 37(d), a party may be subject to dismissal or lesser sanctions if the party or party's officer, director, or managing agent fails, after being served with proper notice, to appear for that person's deposition. Fed.R.Civ.P. 37(d)(1)(A)(I) & (d)(3). Dismissal is appropriate only where "the party's violations of the court's orders [are] due to wilfulness or bad faith." Dreith v. Nu Image, Inc. , 648 F.3d 779, 788 (9th Cir. 2011). "It is appropriate to reject lesser sanctions where the court anticipates continued deceptive misconduct." Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills , 482 F.3d 1091 (9th Cir. 2007).

The court must consider five factors in determining whether dismissal is warranted, namely: "(1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the other party; (4) the public policy favoring the disposition of cases on their merits; and (5) the availability of less drastic sanctions." Dreith at 788 (internal quotations omitted).

Here, the Court finds that no sanctions of any kind are warranted, including dismissal. Even if the Court were to find sanctions appropriate, the factors strongly weigh against dismissal. First, there are certainly less drastic sanctions available. Moreover, there is no risk of prejudice to Intubrite because it was on notice that EDU-USA was objecting to the depositions, and Intubrite may still pursue those depositions by other means if the proposed deponents are not managing agents. In addition, dismissing EDU-USA's claims would still leave Intubrite's claims to be resolved, and therefore would not result in a more expeditious resolution of the litigation. Finally, the Court finds that the public policy favoring disposition of cases on their merits weighs heavily in this case.

There appears to be a good faith-dispute between the parties as to whether Rule 37(d) applies to the proposed deponents. Intubrite argues that Rule 37(d) does apply because Choi, Wong, Lai, and Tsang are managing agents of EDU-USA. EDU-USA argues that none of the four are managing agents, and that EDU-USA only became aware that Intubrite believed them to be managing agents on the afternoon of April 8, 2013, the day before Mr. Choi was scheduled to be deposed. See Opp. (ECF No. 63) at 4.

Technically, the fact that Intubrite served notice of the depositions rather than obtaining subpoenas indicated that it considered the four to be party deponents rather than outside witnesses, since under the Federal Rules of Civil Procedure, "only a party to a lawsuit may be deposed pursuant to notice as opposed to subpoena, " Calderon v. Experian Info. Solutions, Inc., 287 F.R.D. 629, 631 (D. Idaho 2012); see also Fed.R.Civ.P. 30 & 45. However, EDU-USA's failure to recognize that is not necessarily a sign of bad faith, especially where Intubrite had timely notice of EDU-USA's objections to the depositions. See EDU-USA's Opp. (ECF No. 63), Attachment A.

As an alternative to dismissal, Intubrite seeks a court order compelling the depositions of Mr. Choi and Ms. Wong. While the Court finds that compelling their depositions is inappropriate at this time, the question remains whether they are managing agents such that EDU-USA must seek a protective order rather than simply objecting to the depositions. See Fed.R.Civ.P. 37(d)(2) (a party is only excused for failing to produce a managing agent for deposition if it has a pending motion for a protective order).

"[T]he question of whether a particular person is a managing agent' is to be answered pragmatically, on an ad hoc basis, considering the facts of the particular case." Calderon v. Experian Info. Solutions, Inc., 287 F.R.D. 629, 632 (D. Idaho 2012). Noting that the Ninth Circuit has not yet addressed the appropriate standard, the court in Calderon noted the following four factors are consistently observed in the case law:

(1) whether the individual is invested with general powers allowing him to exercise judgment and discretion in corporate matters; (2) whether the individual can be relied upon to give testimony, at his employer's request, in response to the demand of the examining party; (3) whether any person or persons are employed by the corporate employer in positions of higher authority than the individual designated in the area regarding which information is sought by ...

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