Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-01078/USCOURTS-casd-3_12-cv-01078-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332df Diversity-Contract Default

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

EDU-SCIENCE (USA), INC.,

Plaintiff,

Case No. 12cv01078 BTM (WMC)

ORDER DENYING

INTUBRITE’S MOTION FOR

TERMINATING SANCTIONS

v.

INTUBRITE, LLC,

Defendant.

INTUBRITE, LLC,

Counterclaimant,

v.

EDU-SCIENCE (USA), INC.; and

EDU-SCIENCE (HK) LTD.,

Counterdefendants.

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.

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I. BACKGROUND

Intubrite alleges that on March 26, 2013, it served six notices of deposition on

EDU-USAfor Patrick Ng (“Ng”), MaxChoi(“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

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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 EDUUSA 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

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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 issought

by the examination; (4) the general responsibilities of the

individual respecting the matters involved in the litigation.

Id. “[W]hile the burden is on the party seeking the discovery to prove that the potential

witnessis a managing agent of the corporation, this burden is a modest one, and at least

at the discovery stage, all doubts are to be resolved in favor of the party seeking the

depositions.” Id. at 632-33.

With regard to Mr. Choi, Intubrite isseeking his deposition as a managing agent

of EDU-USA, despite the fact that Mr. Choi is a director of EDU-HK. Intubrite argues

that “EDU-USA and EDU-HK are sufficiently linked to treat them as the same for

discovery purposes.” Mot. at 6. There isinsufficient evidence on the record before the

Court to make that determination. Moreover, while the Court has discretion in

determining the status of each individual on a case-by-case basis, the factors noted by

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the court in Calderon start from the assumption that the individual in question is

actually an employee of the company. The evidence and arguments presented by

Intubrite are insufficient to convince the Court that Mr. Choi is employed by, or

otherwise an agent of, EDU-USA. Intubrite points to a Quality Control agreement

signed by Mr. Choi on behalf of “EDU-Science,” see Mot., Attachment 4, and

investigation reports and emails on which Mr. Choi is copied. See Mot., Attachments

5 & 6. However, the contract is ambiguous at best as to whether “EDU-Science”

denotes EDU-USA, EDU-HK, or some amalgamation of the two. Moreover, as EDUUSA points out, it makes sense that Mr. Choi would be copied on these emails and

investigation reports since his company was the manufacturer of the products at issue. 

Opp. at 9. Therefore, the Court holds that Intubrite has not met its burden of showing

that Mr. Choi is a managing agent of EDU-USA.

As to Ms. Wong, who is an employee of EDU-USA, or at least was at the time

the deposition was noticed, the parties seem to agree that she has knowledge of the

contracts at issue. However, EDU-USA argues that she is not a managing agent

because she had no discretionary authority, but rather only acted under Mr. Ng’s

direction. The Court disagrees. She, not Mr. Ng, signed the price quotations at issue

in this case. Moreover, EDU-USA itself identified her in its initial disclosures as a

person with knowledge or information about the subject matter of the litigation. 

Specifically, EDU-USA statesthatshe may have knowledge or information regarding:

(1) Sales and Purchase Orders from Intubrite, (2) fixing quality issues of products

involved in this litigation purchased by Intubrite, (3) creating and sending invoices to

Intubrite, (4) customer relations between Edu-Science and Intubrite, and (5) other

subjects as they may arise during the course of the litigation. See Mot., Attachment 7

at 2. The case law is clear that employees, regardless of their title at the company, may

be considered “managing agents” for deposition purposes “where their duties and

activities are closely linked with the events giving rise to the lawsuit.” Calderon, 287

F.R.D. at 633.

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With regard to the fact that Ms. Wong is no longer employed by EDU-USA, an

employee’s status as a managing agent is generally determined as of the time of

deposition. Rundquist v. Vapiano SE, 277 F.R.D. 205, 208 (D.D.C. 2011). “However,

courts have made exceptions to this general rule, for example when a corporation

terminates an officer in light of pending litigation. . . .” Id. See also United States v.

Afram Lines (USA), Ltd., 159 F.R.D. 408, 414 (S.D.N.Y. 1994) (noting the

disagreement among courts as to when the proposed deponent must have been the

party’s managing agent in order to be subject to deposition by notice). Here, the parties

allude to Ms. Wong’s employment being terminated after service of the notice of

deposition due to alleged health problems. See Mot. at 8-9; Opp. at 2. However, EDUUSA has not submitted any evidence to support this.

Therefore, the Court holds that Ms. Wong is a managing agent of EDU-USA. 

EDU-USA requested leave to bring a motion for a protective order to address Ms.

Wong’s medical condition if the Court determined thatshe is a managing agent. EDUUSA’s request is granted. EDU-USA may file a motion for a protective order by the

magistrate judge within 21 days of the date of this order, at which point it may also

raise the issue of where the deposition should be held. If EDU-USA fails to seek a

protective order within that time, Intubrite may file another motion to compel before

the magistrate judge.

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III. CONCLUSION

For the reasons above, Intubrite’s motion for terminating sanctions or an order

compelling depositions (ECF No. 60) is hereby DENIED. EDU-USA has 21 days

from the date of this order to seek a protective order from the magistrate judge as to

Ms. Wong. If it failsto do so, Intubrite may bring another motion to compel before the

magistrate judge.

IT IS SO ORDERED.

DATED: September 3, 2013

BARRY TED MOSKOWITZ, Chief Judge

United States District Court

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