758 F. Supp. 2d 238
S.D.N.Y.2010Background
- Milliken sought turnover of funds from Judgment Debtors and Bank of China in New York federal court under CPLR §5225(b).
- Bank of China asserted a superior lien on the subject account as an affirmative defense, which Milliken disputed.
- Parties engaged in discovery; Bank delayed responding and sought extensions, ultimately failing to timely answer interrogatories or produce documents.
- Judge Francis issued a May 10, 2010 order conditioning discovery and precluding Bank’s superior-lien defense if it failed to comply; Bank did not comply despite extensions.
- Milliken sought sanctions and an order requiring turnover; the Bank sought a protective order to avoid Hague Convention procedures.
- Judge McKenna denied the Bank’s protective-order motion, found sanctions appropriate, and required Bank to produce the requested materials within two weeks; Bank’s lien defense was precluded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bank forfeited Hague Convention rights for delay | Milliken argues Bank waived rights by delay. | Bank contends no waiver, only forfeiture due to conduct; comity considerations apply. | Not foreclosed on forfeiture grounds; merits considered. |
| Whether Hague Convention applies to initial Rule 26 disclosures | Milliken urges Convention procedures not required for initial disclosures. | Bank argues control via Hague for foreign discovery to limit Rule 26 disclosures. | Hague not required for initial disclosures; Rule 26(a) disclosures proceed in Federal Rules framework. |
| Whether discovery should proceed under Hague or Federal Rules under the comity framework | Milliken seeks broad discovery under FRCP given importance to case integrity. | Bank emphasizes foreign sovereignty and Chinese law/private banking secrecy. | Discovery under Federal Rules appropriate; Hague procedures not mandated. |
| Whether Bank is precluded from asserting a lien superior to Milliken’s | Milliken contends Bank failed to comply and should be barred from asserting any superior lien. | Bank asserts its lien remains valid despite discovery lapses. | Bank precluded from asserting any lien superior to Milliken’s; sanctions awarded. |
Key Cases Cited
- Aérospatiale v. United States Dist. Court, 482 U.S. 522 (1987) (establishes Hague Convention framework and comity analysis)
- First American Corp. v. Price Waterhouse LLP, 154 F.3d 16 (2d Cir. 1998) (Convention not exclusive; initial discovery can proceed under FRCP)
- Hilton v. Guyot, 159 U.S. 113 (1895) (comity factors and sovereign interests guiding international judicial cooperation)