Grande Prairie Energy LLC v Alstom Power, Inc.Annotate this Case
Decided on October 4, 2004
Supreme Court, New York County
GRANDE PRAIRIE ENERGY LLC, Plaintiff,
ALSTOM POWER, INC., Defendant.
Charles Edward Ramos, J.
In motion 05, plaintiff Grande Prairie Energy LLC ("GPE") moves pursuant to CPLR 2106 to compel defendant Alstom Power, Inc. ("Alstom") to produce Stefan Hatt for a deposition.[FN1]
On February 12, 2004, plaintiff served defendant with a notice of deposition for Hatt's deposition. Defendant informed plaintiff on February 13, 2004 that Hatt was not in its employ. Defendant offered to stipulate to the process necessary to take Hatt's deposition in Switzerland.
At a February 6, 2004 conference, the parties were directed to either agree by February 13, 2004 to forego depositions in Europe or proceed with discovery immediately. At a March 4, 2004 conference, plaintiff advised the Court of the difficulty taking a deposition in Switzerland so the Court ordered that if Swiss witnesses were called for trial, they must first appear for a deposition one week before trial. The parties were also given May 28, 2004 as the final day for discovery and to file the note of issue.
Plaintiff moved in sequence 05 to compel Hatt's deposition on June 8, 2004. Instead of opposing the motion, on July 22, 2004, defendant filed an order to show cause, designated motion 06, requesting that the motion be filed under seal. Meanwhile on June 25, 2004, motion 05 was granted in the absence of opposition. The decision dated June 25, 2004 is hereby vacated.
This is a breach of contract action arising from an agreement dated February 25, 2000. GPE was formed by ABB Equity Ventures to develop a $290 million power generation plant near Bartlett Illinois (the "Bartlett Project"). In February 2000, GPE entered into a power purchase agreement with Wisconsin Electric and Power Co. ("WEPCO"). If GPE was unable to deliver power to WEPCO by May 1, 2002, it would pay liquidated damages between $25,000 per day rising to $125,000. Simultaneously, GPE was negotiating with Alstom and entered into a Limited Notice to Proceed and Term Sheet. Upon GPE's payment of $5 million, Alstom guaranteed to hold two turbines until April 15, 2000. Negotiations of the final contract commenced, including telephone and e-mail communications and three multi-day negotiating sessions in New York. Greg Dubin, a former officer of GPE, states in his June 7, 2004 affidavit that he was actively involved in negotiating with Alstom and that Stefan Hatt was one of his chief contacts at Alstom.
Alstom, formerly known as ABB Alstom Power Inc., is, according to the complaint, incorporated in Delaware, with a principal place of business in Connecticut. On April 11, 2000, [*2]Alstom informed GPE that it could not deliver the turbines for at least six to twelve months. On April 14, 2000, GPE demanded adequate assurances in writing from Alstom.
There is no dispute that Mr. Hatt is not an employee of defendant. The issue is whether Alstom has control over him for the purposes of producing him for a deposition. Alstom maintains that Hatt works for a Swiss supplier from which Alstom purchased the turbines; an entity related to Alstom, but separate. According to Alstom, during the negotiations, the Swiss supplier was known as ABB PowerGeneration Ltd., but today, the supplier is known as ALSTOM (Switzerland) Ltd.
In July 2003, the parties entered into a confidentiality agreement providing that confidential material submitted to the court would be filed under seal. The Court was never advised of this agreement and has not So-ordered it. Alstom's motion to seal the file or submit certain documents under seal is denied. A confidentiality agreement is insufficient for the court to seal a file. The Court Rules provide in Section 216.1:
(a) Except where otherwise provided by statute or rule, a court shall not enter an order in any action or proceeding sealing the court records, whether in whole or in part, except upon a written finding of good cause, which shall specify the grounds thereof. In determining whether good cause has been shown, the court shall consider the interests of the public as well as of the parties. Where it appears necessary or desirable, the court may prescribe appropriate notice and opportunity to be heard.(b) For purposes of this rule, "court records" shall include all documents and records of any nature filed with the clerk in connection with the action. Documents obtained through disclosure and not filed with the clerk shall remain subject to protective orders as set forth in CPLR 3103(a).
Statutory authority: Judiciary Law, Art. 2. The parties have not provided the Court with any reason to seal the file. Accordingly, it is impossible for the Court to make an independent determination of good cause to seal the file. In re Will of Hofmann, 284 AD2d 92 (1st Dept 2001). See also Liapakis v Sullivan, NYLJ, Oct. 18, 2000, p 29, aff'd 290 AD2d 393 (1st Dept 2002). Should the parties provide the Court with an affidavit from a person with knowledge explaining why the file or certain documents should be sealed, the Court will reconsider its decision.
GPE's motion to compel Mr. Hatt's deposition is granted. Alstom cannot seriously argue that Mr. Hatt is not within its control. It is not disputed that throughout this transaction and this litigation Mr. Hatt has been held out as one of Alstom's key people. Mr. Hatt acted as one of the members of Alstom's three member negotiating team. According to Greg Dubin, a former officer of GPE who was actively involved in negotiating on GPE's behalf, Mr. Hatt was one of the lead negotiators for Alstom. Hatt was present at almost all of the meetings between GPE and Alstom. He is the author or a recipient of almost all of the e-mails regarding the Bartlett project; over 600 e-mails and an additional 130 which are allegedly privileged. Indeed his e-mail address was Stefan Hatt/chkra/ABB@ABB_CHKRA and the ABB Alstom Power logo shows up on his e-mail header. According to a September 1999 e-mail from Steve Gooch, another member of ABB's negotiating team,
First and foremost, ABB Alstom Power is one organization, coordinated, and not working in a vacuum. Baden is informed and aware of everything we are doing, positions we are taking, and are consulted directly before I respond to you. In fact, Stefan Hatt is here in Richmond sitting across from me right now.
Alstom described Mr. Hatt in its First Interrogatory response as an "Alstom individual" having "knowledge of the development of the Bartlett project, the parties' contract negotiations and the communications between the parties relating to the Bartlett project." Jim Page, Alstom's designated corporate witness, testified at his deposition that in answering the interrogatories, he relied on Mr. Hatt for information. He also testified that he had no knowledge regarding turbine [*3]availability issues, but that Mr. Hatt would be the appropriate witness. Steve Gooch, another Alstom witness, said the same thing at his deposition. GPE is entitled to depose Mr. Hatt when the designated corporate representative is inadequate and he and other witnesses point to Mr. Hatt as being the most knowledgeable. JMJ Contract Management, Inc. v Ingersoll-Rand Co., 100 AD2d 291 (3d Dept 1984).
Alstom fails to counter GPE. Alstom challenges GPE's reliance on Page by mischaracterizing Page's deposition testimony. Alstom mysteriously relies on cases that provide that a party cannot be compelled to produce a former employee. That is true. However, GPE does not seek to compel Alstom to produce a former employee, but as a person subject to its control.
"[I]f a party subject to the court's in personam jurisdiction controls a foreign corporate entity the party, by virtue of its control, should be obligated to produce any and all appropriate discovery under its aegis, including that under the control of its subsidiary, wherever the subsidiary may be located." Bank of Tokyo-Mitsubishi, Ltd. v Kvaerner a.s., 175 Misc 2d 408, 411 (Sup Ct, NY County 1998). Therefore, a parent company which is a party to an action can be compelled to produce for deposition an employee of its foreign subsidiary.
The reverse is true as well because control does not require a principal-agent relationship. In Orlich v Helm Bros., Inc., 160 AD2d 135 (1st Dept 1990), plaintiff sought discovery from the German parent of the defendant corporation. The Court held that plaintiff could not go through the American subsidiary to get documents from the German parent corporation. However, this case is distinguished from Orlich because the movant in Orlich could only point to "possible" common ownership, directors and officers between the German Corporation and the American Corporation.
Here, GPE has established significant ties between Alstom and its Swiss supplier which employs Mr. Hatt. In addition to sharing a name, Alstom and its Swiss "supplier" are merely American and European counterparts of the same French company. According to its website, Alstom employs 75,000 people in over 70 countries including the United States, headquartered in Connecticut and Switzerland. Moreover, Gad Cohn an officer of GPE stated in his July 29, 2004 affidavit that he worked for ABB Equity Ventures, Inc. in Princeton NJ, GPE's former parent company from 1999 to 2002 and ABB EV in Switzerland from 1997 to 1999, during which time he worked on the development of power plants. Often he worked with Alstom in the US and Europe. Based on his experience, he states that Alstom was organized into eight global business units within a global framework.
Mr. Cohen was the first to approach to Alstom on GPE's behalf regarding the Bartlett project. Alstom's Chris Broemmelsiek responded with an e-mail stating that Markus Fluck would coordinate Alstom's "Baden/Richmond task force." Gabor Riesz was designated by Alstom as the "Special Project Manager" for the project. According to Alstom's interrogatory response, Riesz was replaced by Gooch and Hatt. Here, GPE has established significant ties between defendant and Alstom Europe for which Hatt allegedly works. Therefore, GPE ought to be able to go through Alstom to get discovery from its counterpart even if it is located in Switzerland.
Another indication that Hatt is connected to Alstom is that Alstom lists Mr. Hatt on its privilege log as either sender or recipient. Either disclosure of Alstom's documents to Hatt destroys privilege because he works for an independent supplier or it does not. Alstom cannot have it both ways.
Alstom argues that Hatt's listing is not conclusive of his relationship to Alstom. Rather, Alstom argues that privilege is not destroyed by disclosure to Hatt because the joint defense doctrine protects privileged communications with him or in his presence.
The common-interest privilege is not as broad as Alstom would have it. It does not protect communications during complex commercial transactions simply because litigation often arises out of such transactions. Douglas H. Flaum and Rachel Sims, Using the Common Interest Doctrine to Prevent a Waiver of Privilege, NYLJ 9/28/03, p 4, col 4. Rather,
[the] "common interest" privilege must be limited to communication between counsel and parties with respect to legal advice in pending or reasonably anticipated litigation in which the joint consulting parties have a common legal interest. The attorney-client privilege, even as expanded by the "common interest" exception, may not be used to protect communications that are business oriented or are of a personal nature.
Aetna Cas. & Sur. Co. v Certain Underwriters at Lloyd's, London, 176 Misc2d 605 (Sup Ct, NY County 1998) reargument denied, 176 Misc 2d 598 (1998). It is an extension of the attorney client privilege and work product privilege. Parisi v Leppard, 172 Misc 2d 951 (Sup Ct Nassau County 1997). The common interest arrangement doctrine is distinguished from the joint defense privilege. Lugosh v Congel, 219 FRD 220, 236 (SDNY 2003). "[I]f the meeting is for some other purpose, the presence of a codefendant or his counsel destroys the expectation of confidentiality and the privilege does not exist." Parisi, at 955. Business and personal communications are not privileged. Aetna Cas. & Sur. Co., supra. This Court therefore rejects Alstom's argument that the common interest privilege shields Hatt's communications with Alstom. Until April 14, 2000, when GPE demanded the return of its $5 million, there was no pending or anticipated litigation. Stenovich v Wachtell, Lipton, Rosen & Katz, 195 Misc. 2d 99 (Sup Ct, NY County 2003). Moreover, Hatt's (or his employer's) business advice is not protected. Id. Rather, this was a transaction (complex perhaps). The fact that attorneys may have been involved to structure the deal does not result in common interest privilege. Therefore, either privilege has been waived with regard to documents shared with Hatt or Hatt and his employer are sufficiently connected to Alstom to maintain privilege.
While the Court grants GPE's motion, a word about timing is required. GPE waited too long to bring this motion. It has known since February that Alstom objected to producing Hatt. Yet, GPE waited until June to bring this motion. GPE has 30 days to take this deposition. GPE is also sanctioned $500 for failing to comply with discovery orders which directed GPE to make this motion sooner. The sanction shall be paid to the Fund for Client Protection within 30 days of service of this order with notice of entry.
Accordingly, it is
ORDERED, that the decision dated June 25, 2004 granting GPE's motion to compel is withdrawn and the motion is restored to the calendar; and it is further
ORDERED, that GPE's motion to compel Hatt's deposition is granted.
Dated: October 4, 2004
Footnote 1:In his June 8, 2004 affirmation, Mark Hanchet, attorney for plaintiff, requests that the court find that each of the e-mails authored by Stefan Hatt are admissible at trial as admissions of Alstom. As this relief was not requested in the notice of motion, it will not be addressed.