Wang v. Bear Stearns Companies LLC
308 F.R.D. 113
S.D.N.Y.2015Background
- Defendants Bear Stearns and Deloitte moved for sanctions under Rule 37(d) for Mr. Wang’s failure to appear at a deposition in this securities action; sanctions included dismissal with prejudice and costs/fees.
- Mr. and Mrs. Wang have a long marriage, share financials, and Mr. Wang directed Bear Stearns stock purchases in 2008; Mrs. Wang opened and managed accounts for the family.
- Ghods, Mrs. Wang’s attorney in related matters, impeded service and deposition scheduling, denying representation and delaying proceedings for months.
- Bear Stearns obtained alternate service on Mr. Wang after defense counsel acknowledged representation and delayed deposition; Mr. Wang ultimately did not appear for the January 13, 2015 deposition.
- Court determined the Wangs acted as alter egos and that lesser sanctions were ineffective, given prior FINRA sanctions and ongoing obstruction.
- Court ordered dismissal with prejudice and required shifting costs and attorneys’ fees to the Wangs and counsel for bad-faith conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dismissal is warranted under Rule 37(d) for failure to appear | Wang failure to appear warrants sanctions | Wangs obstruct deposition; dismissal appropriate | Yes, dismissal with prejudice warranted |
| Whether the Wangs can be treated as alter egos for sanctions | Wangs are separate plaintiffs | Wangs are effectively alter egos controlling actions | Yes, treated as alter egos for purposes of Rule 37(d) |
| Whether costs and attorneys’ fees should be awarded against the Wangs and their counsel | Costs should be limited | Costs/fees appropriate due to bad-faith conduct | Yes, costs and attorneys’ fees awarded against Wangs and Ghods |
| Whether lesser sanctions would have been effective | Lesser sanctions could suffice | Lesser sanctions ineffective given repeated conduct | No, lesser sanctions unlikely to cure conduct |
Key Cases Cited
- Flaks v. Koegel, 504 F.2d 702 (2d Cir.1974) (alter-ego/related entity sanctioning appropriate when control evident)
- Magee v. Paul Revere Life Insurance Co., 178 F.R.D. 33 (E.D.N.Y.1998) (sanctioning nonparty witness through party when party responsible for appearance)
- PrecisionFlow Techs., Inc. v. CVD Equipment Corp., 198 F.R.D. 33 (N.D.N.Y.2001) (sanctions may be imposed for non-appearance of a witness not designated as party rep)