100 F.R.D. 21 | D.D.C. | 1983
MEMORANDUM OPINION AND ORDER
A substantial number of significant discovery disputes has arisen in this case. On October 5, 1983, this Magistrate conducted a comprehensive hearing on all outstanding discovery disputes between the parties to this litigation. Since then the Magistrate has reviewed the entire court file and specifically the parties’ various discovery motions, hereinafter discussed, and the memoranda in support of, and opposition to, these motions. With reference to all the discovery compliance ordered herein, such discovery shall be furnished and/or completed by Friday, November 18, 1983.
I. Plaintiffs’ Motion for Protective Orders as to Defendants’ Second Set of Interrogatories Propounded to Plaintiff H.M. Sendi and Second Set of Interrogatories Propounded to Plaintiff Eloise Sendi.
The motion for a Protective Order as to the interrogatories propounded to Dr. H.M. Sendi is DENIED, in part, and GRANTED, in part. After a complete review of the court file and specifically the deposition transcript of Dr. Sendi, as to relevant parts thereof, the Magistrate is of the view that he was vague and indefinite in many of his responses, and thus he should be required to give specific, detailed and accurate responses to interrogatories num
The motion for a Protective Order as to the interrogatories directed to Mrs. Eloise Sendi is hereby GRANTED as counsel at oral argument conceded the issue had been mooted by her subsequent oral deposition.
II. Defendants’ Motion to Compel Plaintiffs to Produce Copies of Tax Returns and Documents and Information Concerning Investment Activities of the Plaintiffs Not Connected With the Pension Plans Involved in this Case.
Defendants in their motion of August 24, 1983 seek to compel plaintiffs to produce all documents responsive to their Document Requests Nos. 1, 3 and 4 of the Defendants’ First Request for Production of Documents and to require that Dr. H.M. Sendi furnish information in response to a particular question he refused to answer during his deposition of July 19-20, 1983. After a complete review of the court file, the Magistrate concludes this motion shall be GRANTED. The production is clearly relevant to the issues of Dr. and Mrs. Sendi’s sophistication, experience, access to other information concerning investment matters, and relevant to the counterclaim issues of commingling or use of the pension funds as their personal funds. The capacity in which they sue in no way limits or is even relevant to their actual sophistication and experience in investment matters. Notwithstanding the privacy and confidentiality interest afforded to tax returns, De Masi v. Weiss, 669 F.2d 114, 119-20 (3d Cir.1982), where critical issues of sophistication in the stock market, loans by the funds to the Sendis personally, the possible commingling or misuse of pension funds with personal funds, and credibility of the plaintiffs concerning the substance of their conversations with their stock market adviser and account executive, the defendant Ronald Fitzgerald, Sr., are presented, the production of copies of their tax returns may be required. See, e.g., Smith v. Bader, 83 F.R.D. 437, 439 (S.D.N.Y.1979); Houlihan v. Anderson-Stokes, Inc., 78 F.R.D. 232, 234 (D.D.C. 1978). The contents of the tax returns in this case would also be relevant on the issues of the suitability of the investments in the pension plans. Dr. and Mrs. Sendi’s personal incomes and finances are obviously relevant on disposable income to be placed in the plans and their investment goals and objectives. However, to protect the privacy and confidentiality interest accorded tax returns, copies of the tax returns shall be filed under seal in this case and no disclosure shall be made of the contents thereof except in the litigation of this case, and even then, any contents reflected in pleadings or memoranda shall also be under seal.
The motion also sought to compel Dr. Sendi to state any facts he knows which would have led him or anyone in June 1980 to believe that American Resources Management Corporation stock was highly risky, speculative, and not suitable for the plaintiffs. At deposition, Dr. Sendi refused to answer this question on advice of counsel, asserting attorney work product and attorney-client privileges. After a review of the relevant portions of the deposition transcript, the parties’ memoranda, and the court file, the Magistrate concludes the motion should be GRANTED, provided the answer is limited only to all the facts which existed prior to June 20, 1980 concerning the risk involved in purchasing American Resources Management Corporation stock, known to Dr. Sendi, Mrs. Sendi, or any of their agents and employees, and the disclo
Defendant filed an amended motion to compel discovery on September 7, 1983 to compel plaintiffs to' respond to interrogatory No. 7 of the first set of interrogatories filed April 14, 1983, which read:
Please identify all investments made during the period January 1, 1973 to present, for the benefit of Dr. H.M. Sendi, Eloise Sendi, the Defined Contribution Pension Plan, the Voluntary Contribution Pension Plan or any other pension plan or other trust or brokerage arrangement of which either Plaintiff is a beneficiary.
The Magistrate concludes that a complete, detailed and accurate answer to this interrogatory is required. The plaintiffs’ investment experience and history is material to any evaluation of their sophistication and experience in investment matters, and also relevant to the defendants’ defenses of ratification, estoppel, statute of limitations and laches. For these reasons, and those stated above concerning their total financial and investment experience, the motion to compel is GRANTED.
III. Plaintiffs’ Motion for Protective Orders as to Depositions of E.F. Hutton & Co. and Samuel Rollins, CPA.
The Magistrate on September 29, 1983 granted the motions for protective orders to preserve the status quo pending oral argument on all the outstanding discovery disputes in this case and review of the entire court file. Having now reviewed the entire court file, and having ruled on the scope of discovery with respect to Dr. and Mrs. H.M. Sendi’s financial and investment experience to the effect that such discovery cannot be limited to their capacities as trustees for the two pension plans involved in this litigation, but that what is relevant is their total financial and investment experience, the Magistrate hereby lifts the protective orders and will allow these depositions to proceed, provided at least five (5) days notice is given and the depositions are completed prior to November 18, 1983.
IV. Plaintiffs’ Motion for Sanctions and to Compel, filed September 26,1983.
Plaintiffs, asserting that the defendants had belatedly produced certain documents and records and suggesting bad faith by the defendants,
“Order (a) that the following designated facts shall be taken to be established for purposes of this action in accordance with the claims of the plaintiffs: (1) that margin calls were not sent to plaintiffs; and (2) that defendant Fitzgerald avoided having margin calls sent to plaintiffs; (b) refusing to allow defendants to oppose plaintiffs’ claims that (1) margin calls were not sent to plaintiffs; and (2) that defendant Fitzgerald avoided having margin calls sent to plaintiffs; and (c) prohibiting defendants from introducing evidence that margin calls were sent to plaintiffs.”
The Magistrate has carefully reviewed the parties’ respective memoranda and attached exhibits, including excerpts of deposition testimony, declarations under 28 U.S.C. § 1746, and relevant documents, and concludes that the record is now insufficient to establish purposeful concealment of relevant discovery materials or bad faith.
Further, with reference to all documents and records the defendants claim to be privileged, but which would otherwise be responsive to plaintiffs’ discovery requests, the defendants shall file with the court a memorandum setting forth the nature and date of the document or record, a description of the subject matter and the privilege asserted, and the name, address and title of the person or persons who prepared the document, the name of the person(s) to whom the document was addressed or sent, and the current custodian of the document or record.
In all other respects the plaintiffs’ motion for sanctions and to compel is hereby DENIED. Specifically, each party is denied requests for reasonable expenses and attorneys’ fees with reference to their respective motions for protective orders or motions to compel in view of the fact that each side has not fully complied with their discovery responsibilities in this case. However, the rulings herein are without prejudice to plaintiffs renewing their motion for sanctions should further discovery disclose evidence of bad faith by the defendants, concealment or destruction of records or documents relevant to the discovery issues in this case.
V. Other Discovery Issues.
At oral argument counsel for the plaintiffs raised a discovery question concerning the meaning of the Code G-53-Q on the ledger sheet for Account No. 45-95795, the H.M. Sendi Ltd. Pension Plan Voluntary Contribution for Dr. H.M. Sendi with reference to “trans funds from mon to cash.” Counsel for the plaintiffs requested to be advised whether that code referred to defendant Fitzgerald’s code. Defendants shall endeavor to furnish whatever further information is currently available on the meaning of this code symbol on or before November 18, 1983.
Plaintiffs’ counsel also raised a question of discovery concerning whether Prudential-Bache was paying Mr. Fitzgerald’s legal fees in this case and whether there was any arrangement to reimburse him if judgment were entered against him. Based on the oral argument and representations of counsel and the possibility that a conflict could develop between the positions of Prudential-Bache and defendant Fitzgerald, if Prudential-Bache later at trial endeavor to prove Mr. Fitzgerald was acting outside the scope of his employment for PrudentialBache, the Magistrate concludes that the defendants must give full, complete and candid answers to this discovery request, whether there is a written agreement or merely an understanding between the parties, as the response may bear upon credibility issues relevant to resolving the issues in this case.
Counsel for the plaintiffs also orally requested that the defendant PrudentialBache be required to state what facts it would rely upon to establish that if the defendant Fitzgerald committed violations of law, Prudential-Bache did not participate in such violations by willfully and recklessly failing to supervise his acts and conduct and by failing to establish and enforce adequate internal rules and guidelines. Counsel for the defendants argued that this position was merely legal pleading which they were entitled to assert to meet whatever factual case plaintiffs might present at trial, and that they currently know of no facts which would indicate Mr. Fitzgerald committed violations of law. Accordingly, based on this representation, the plaintiffs’ oral motion to compel a further factual answer was DENIED.
Upon suggestion of counsel for the plaintiffs and acquiescence of counsel for the defendants, a status/settlement conference is hereby set before the Magistrate for De
. Counsel for the plaintiffs in a letter of September 1, 1983 strongly protested the withholding by the defendants of what he characterized as a sell recommendation of May 16, 1980 regarding American Resources Management Corporation stock issued by Prudential-Bache’s research department. In that letter counsel asserted: “We believe the failure to disclose the
. It is significant to note the declaration of James C. Sweeney, Regional Counsel in Prudential-Bache’s headquarters in New York, New York, under 28 U.S.C. § 1746, to the effect that a research library check for a record of the wire transcription, dated May 16, 1980, a copy of which had been obtained from Mr. Barry Saydal, a former employee of the Research Department, disclosed no reference to the May 16, 1980 “Information Piece” on American Resources Management Corporation in the research library indices or in the Weekly Research Notes for the week of May 16, 1980. According to Mr. Sweeney, while the May 16, 1980 “Information Piece” appears to have been something produced and transmitted by the Prudential-Bache system, no record of that piece appears anywhere in the system.
Further, Mr. Fitzgerald in a declaration has stated that until he was asked by Mr. Charles Mills about this document: “I was not aware of any such document and to the best of my knowledge did not remember ever seeing or hearing about such a document.”
. The Magistrate specifically refers to Mr. Anthony Somma’s handling of the original margin calls records and the A.E. copies and computer runs and the misplacing of the envelope with the original records in it.
. It is noted that Prudential-Bache’s predecessor company, Bache Halsey Stuart Shields, Inc.’s former employee, Barry Sahgal, who was the alleged source of this document, has since the discovery of this document been deposed in New York, New York, on September 26, 1983. It appears that the March 11, 1980 Research Note, which was initially found and produced, bore the name of Barry Sahgal, and this may have been the lead that resulted in his subsequent location, the contact and the revelation of the May 16, 1980 “Information Piece.”
. The Magistrate has decided to impose the expense of such further discovery on the defendant Prudential-Bache in view of counsel’s concession in his letter of September 19, 1983: "... the documents included with the above described letters were newly discovered, previously lost, through inadvertence and mistake not earlier tendered to counsel.....”
