Matter of Klein v Persaud

[*1] Matter of Klein v Persaud 2009 NY Slip Op 52582(U) [25 Misc 3d 1244(A)] Decided on December 21, 2009 Supreme Court, Kings County Schack, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on December 21, 2009
Supreme Court, Kings County

In the Matter of the Arbitration of Abraham Klein, Petitioner,

against

Christine Persaud and Caring Home Care Agency, Respondents.



8007/09



Respondent

Mendel Silberberg and Associates

Brooklyn NY

Non Party JP Chase Morgan

Michelle E Tarson, Esq.

Stagg Terenzi Confusione & Wabnik LLP

Garden City NY

NY NY

Arthur M. Schack, J.

In this proceeding, in which this Court confirmed an arbitration award on behalf of petitioner ABRAHAM KLEIN (KLEIN), petitioner KLEIN in his June 12, 2009 order to show cause, seeks to have non-party JP MORGAN CHASE & COMPANY (CHASE) held in contempt for failure to comply with the May 27, 2009 order to show cause, to provide to petitioner KLEIN numerous documents with respect to various bank accounts of respondent CARING HOME CARE AGENCY (CARING) at branches of CHASE and WASHINGTON MUTUAL (WAMU). I also signed for petitioner KLEIN, on June 12, 2009, several judicial subpoenas duces tecum and to testify, requiring CHASE officials to appear and testify about CARING's accounts and provide KLEIN's counsel with "all documents or any things which are in the possession, custody or control" of CHASE, including all "books, records and papers in [*2]your possession, custody or control relating to" five CARING accounts with either CHASE or WAMU (CHASE is the successor in interest to the failed WAMU). Subsequently, CHASE provided the documents, records and papers required by the May 27, 2009 order to show cause and the June 12, 2009 judicial subpoenas.

I dismissed with prejudice, in a July 28, 2009 short form order, the June 12, 2009 order to show to hold CHASE in contempt. Also, I ordered a CHASE official, Ms. Almurie G. De Filippo, to appear for a deposition pursuant to an outstanding June 12, 2009-subpoena. Remaining to be resolved was the amount to be awarded to non-party CHASE for its production expenses in providing the ordered and subpoenaed documents. I granted both KLEIN and CHASE an opportunity to submit further affirmations on the issue of production expenses. Then, I reserved decision. This decision and order is based upon the papers submitted prior to July 28, 2009 and papers I asked to be submitted several weeks later by counsel for both KLEIN and CHASE.

CHASE claims that it provided petitioner KLEIN's counsel with 18,248 pages of documents, for which it should receive $9,112.00 from petitioner KLEIN for production expenses ($4,550.00 for time spent locating and retrieving documents and $4,562.00 for printing). This Court, after hearing oral argument and reviewing all papers submitted, determines that non-party CHASE's reasonable production expenses costs were $1,250.27 and petitioner KLEIN is ordered to pay $1,250.27 to CHASE for production expenses in providing the ordered and subpoenaed documents. The Court will explain the rationale for the award of $1,250.27 to CHASE ($1,192.10 for time spent locating and retrieving documents and $58.17 for printing 1,939 pages of documents).

Discussion

Two CPLR Rules deal with production costs for a non-party. CPLR Rule 3111 states that a deposition subpoena may "require the production of books, papers, and other things in the possession, custody or control of the person to be examined to be marked as exhibits, and used on the examination. The reasonable production expenses of a non-party witness shall be defrayed by the party seeking discovery." CPLR Rule 3122 (d) allows a non-party witness to provide, unless specifically directed to provide original documents, "complete and accurate copies of the items to be produced." Further, "[t]he reasonable production expenses of a non-party witness shall be defrayed by the party seeking discovery." Production costs can include providing electronic discovery, such as e-mail. (Finkelman v Klaus, 17 Misc 3d 1138 (A) [Sup Ct, Nassau County 2007].

This Court must determine what are the "reasonable production expenses of a non-party witness," CHASE, which will be "defrayed by the party seeking discovery," petitioner KLEIN. Ms. Melissa A. Carter, a CHASE Subpoena Analyst employed at CHASE's National Subpoena Processing facility, 7610 West Washington Street, Indianapolis, Indiana 46231, claims, in ¶'s 9 - 13 of her July 16, 2009-affidavit [attached to CHASE's affirmation in further opposition], that:

9. To respond to petitioner's far reaching subpoena, Chase

commenced a search for any and all responsive documents maintained

by Chase, including documents from bank branches.

10. The process of researching accounts to retrieve documents

like deposit slips, deposited checks, and checks drawn on the account [*3]

is time consuming and complex.

11. Items must be individually located by Chase personnel

who look through batches of documents to separate the responsive

item from documents that belong to other customer accounts. Chase

has the ability to produce 100 documents per hour.

12. As of July 8, 2009, Chase produced 18,248 pages in

response to petitioner's subpoena duces tecum. Over 12,000 pages

of those documents were for the account ending in 2810.

13. It took Chase more than 182 research hours, at a cost

of $25 per hour, to complete petitioner's request. As a result, Chase

incurred a total cost of $9,112.00 for produce the 19,248 documents.

(Ex. B).

Exhibit B is an invoice from Ms. Carter in Indianapolis, dated July 15, 2009 and on CHASE letterhead, to counsel for petitioner KLEIN, billing KLEIN for CHASE's production expenses of $9,112.00. Also, the invoice asked petitioner KLEIN's counsel to remit the $9,112.00 payment, with a copy of the invoice, to Ms. Carter, at 7610 West Washington Street, Indianapolis, Indiana 46231. The relevant portions of the invoice state:

1. Time spent locating and retrieving documents or

information requested in the subpoena$4,550.00

No. of hours: 182.00 . . .

4. Cost or duplicates of subpoenaed documents$4,562.00

No. of pages: 18248 . . .

TOTAL:$9,112.00

Less Amount Paid:$0.00

Previous Balance:$0.00

__________

TOTAL AMOUNT DUE:$9,112.00

Not present in the invoice or in Ms. Carter's affidavit or the affirmations submitted by CHASE's counsel is there any explanation of who performed the alleged 182 hours of research, nor their job description nor their rate of pay. Ms. Carter, in ¶ 15 of her affidavit, cites CHASE's notices of account rates and regulations, dated September 25, 2008 [exhibits E and F of affirmation in further opposition] for why the rate for account research is $25.00 per hour. These notices of account rates and regulations state that "[t]he following disclosures are part of your Deposit Agreement and contain additional information about the fees and features of your account."

The "Deposit Agreement" with the $25.00 per hour fee for account research is nothing more than an "adhesion contract," which is "[a] standard-form contract prepared by one party, to be signed by the party in a weaker position, usu. a consumer, who has little choice about the terms." (Black's Law Dictionary, 318 - 319 [7th ed 1999]). Not only is petitioner KLEIN not the holder of the subject CHASE accounts, which is CARING, but CHASE's counsel never [*4]negotiated in advance the research production costs with KLEIN's counsel. KLEIN or CARING, as well as most of CHASE account holders, are obviously in a weaker financial position than banking behemoth CHASE. The $25.00 per hour fee for production research is binding upon KLEIN only if this Court thinks it is reasonable. The Court finds that the $25.00 per hour account research fee is unreasonable. CHASE failed to explain who did the research, their experience and their rate of pay. Moreover, the $25.00 per hour account research fee is set by CHASE to take advantage of customers and consumers and increase CHASE' s bottom line.

CHASE, in its October 14, 2009 Form 8-K filed with the United States Securities and Exchange Commission, states, on p. 2, that on "October 14, 2009" CHASE "reported 2009 third quarter net income of $3.6 billion, or $0.82 per share, compared with net income of $527 million, or $0.09 per share, for the third quarter of 2008." An entity that will have profits of billions of dollars by the close of 2009, while ten percent of American workers are unemployed during the worst financial crisis since the Great Depression of 1929 to 1941, cannot be free to charge whatever it decides to write into an adhesion contract.

Eight days ago, on December 13, 2009, President Barack Obama was interviewed on the CBS news program 60 Minutes and said:

I did not run for office to be helping out a bunch of fat cat bankers

on Wall Street . . . They're still puzzled why is it that people are mad

at the banks. Well, let's see . . . You guys are drawing down $10,

$20 million bonuses after American went through the worst economic

year that it's gone through in — in decades, and you guys caused the

problem. And we've got 10% unemployment."

Clearly, CHASE'S arbitrary $25.00 per hour account research fee for the unsubstantiated 182 hours of research by person or persons unknown only helps to unjustly enrich "a bunch of fat cat bankers on Wall Street." This Court is not a collection vehicle to further enrich already rich bankers. The "fattest cat" at CHASE is James "Jamie" S. Dimon, who is CHASE's Chairman of the Board, President and Chief Executive Officer. CHASE stated in its March 31, 2009 Annual Report to shareholders, at p. 20, that Mr. Dimon earned total compensation of $19,651,556.00 in 2008. This amount included $53,956.00 for personal use of aircraft, $89,020.00 for personal use of cars and $125,227.00 for moving expenses from Chicago to New York [p. 21]. The other "fat cats" listed in the March 31, 2009 Annual Report and their 2008 total compensation are: Michael J. Cavanagh, Chief Financial Officer, $8,945,887.00; Frank J. Bisignano, Chief Administrative Officer, $10,192,946.00; Charles W. Scharf, CEO Retail Financial Services, $13,031,844.00; and, Gordon A. Smith, CEO Card Services, $12,232,483.00. Further, the March 31, 2009 Annual Report states that CHASE's outside Directors, for limited part-time work, received cash fees and stock awards in 2008 ranging from $245,000.00 to $271,909.00 [p. 7].

In determining reasonable production expenses, despite the lack of documentation for who performed the research, the Court accepts CHASE's claim for 182 hours of research, but is guided by the principal that "[o]rdinarily, the retrieval and evaluation of documents should be done by the lowest-level person consistent with accurate and reliable identification of the material called for." (Kahn v General Motors Corp., 1992 WL 208286, *2, 1992 [SD NY 1992]). The Court, in the instant action, has no way of knowing where the computerized research was conducted. Therefore, the Court will assume that it occurred in Indiana, because [*5]Ms. Carter, the Subpoena Analyst, is employed by CHASE in Indianapolis. In June 2009 and until July 23, 2009 both the federal minimum wage and the Indiana minimum wage were $6.55. The minimum wage rate increased on July 24, 2009 to the new federal and Indiana rates of $7.25 per hour. Thus, since CHASE failed to present evidence to the contrary, document retrieval required in the instant action should have been performed "by the lowest-level person consistent with accurate and reliable identification of the material called for." The Court determines that when CHASE conducted the subject account research for petitioner KLEIN the rate for account research should have been $6.55 per hour, not $25.00 per hour. 182 hours multiplied by $6.55 results in account research production costs of $1,192.10.

With respect to the 18,248 pages of documents produced, CHASE never stated that it actually printed 18,248 pages. However, CHASE billed petitioner KLEIN $4,562.00 for "copies or duplicates of subpoenaed documents." Ms. Carter, in ¶ 12 of her affidavit, states that "Chase produced 18,248 pages," and CHASE's counsel, in ¶'s 16 - 18 of her July 20, 2009 affirmation in further opposition, refers to CHASE having "produced" pages of documents. KLEIN's counsel, in ¶ 25 of his August 4, 2009 reply affirmation, objects to CHASE's demand for these production costs because CHASE only delivered 1,939 pages of documents. The balance of the documents was printed by petitioner KLEIN's counsel [¶ 26]. Further, in ¶ 26 of his July 8, 2009-reply, KLEIN's counsel states that for the bulk of the documents he "received two emails containing a web address where thousands of documents had been stored electronically, and from where Affiant had to pick-up, download and print said documents." CHASE's counsel, in ¶ 34 of her August 21, 2009 affirmation in support of payment of production costs, admits that documents "were electronically transmitted to petitioner." Further, CHASE's counsel states, at ¶ 35, that "[r]egardless of how the documents were transmitted by Chase's counsel to petitioner's counsel, Chase representatives spent hours gathering account documents responsive to petitioner's Order to Show Cause and subpoenas."

$4,562.00 divided by 18,248 pages equals a fee of $.25 per page. However, the Court does not know how CHASE determined that petitioner KLEIN should pay CHASE $4,562.00 for 18,248 pages of subpoenaed documents, especially since CHASE only delivered 1,939 printed pages. CHASE does not refute that petitioner KLEIN's counsel printed the balance of 16,317 pages of documents from the internet. Thus, CHASE's billing of petitioner KLEIN for 16,317 pages of documents that it never printed is disingenuous. The Court finds that CHASE's fee of $.25 per page for the subject 18,248 "copies or duplicates of subpoenaed documents" is arbitrary, capricious and unreasonable.To help the Court determine the reasonable costs for printing documents, the Court examined yesterday the websites of three major stationary suppliers and found that a case of Hammermill Copy Plus Paper, containing 10 reams (5,000 sheets), has a list price of $44.99 at Staples, Officemax and Office Depot. All of these prices are less than one cent per page. Therefore, the Court awards CHASE $.01 per page for paper. Also, the Court awards CHASE $.02 per page for toner, copier maintenance and electricity. Thus, the production costs awarded CHASE for printing each copy of a document will be $.03, not $.25. Whereas CHASE printed 1,939 pages, it will be awarded $58.17 for actual printing of documents (1,929 x $0.03 = $58.17). Petitioner KLEIN, whose counsel printed 16,317 pages of documents from the internet, will not have to pay CHASE for his counsel's printing these documents from the internet.

Therefore, non-party CHASE is awarded reasonable production expenses of $1,250.27 [*6]for retrieving and locating 18,248 pages of documents and printing 1,939 pages of these documents (182 hours for retrieval of ordered or subpoenaed documents @ $6.55 per hour = $1,192.10; and, $58.17 for printing 1,939 pages @ $.03 per page).

Conclusion

Accordingly, it is

ORDERED, that non-party JP MORGAN CHASE & COMPANY is awarded $1,250.27, pursuant to CPLR Rules 3111 and 3122 (d), for reasonable costs in producing and providing ordered and subpoenaed documents to petitioner ABRAHAM KLEIN, as ordered by the June 12, 2009 order to show cause and various June 12, 2009 subpoenas duces tecum and to testify, and it is further

ORDERED, that counsel for petitioner ABRAHAM KLEIN, within thirty (30) days of service of notice of entry of this order, shall remit to non-party JP MORGAN CHASE & COMPANY the above-ordered $1,250.27, at JP MORGAN CHASE & COMPANY, National Subpoena Processing, 7610 West Washington Street, Indianapolis, Indiana 46231.

This constitutes the Decision and Order of the Court.

ENTER

HON. ARTHUR M. SCHACK

J. S. C.