Matter of Aerco Intl. Inc. (Precision Machining & Stamping Inc.)
Annotate this CaseDecided on May 16, 2013
Supreme Court, Westchester County
In the Matter of the Application of Aerco International, Inc., to vacate and/or quash
against
the subpoena issued by Precision Machining and Stamping Inc. d/b/a SECTOR TOOL AND MFG. to non-party G.A. Fleet Associates, Inc. in the action pending in the Superior Court of New Jersey entitled Precision Machining and Stamping Inc. d/b/a Sector Tool and Mfg., Aerco International, Inc. Docket No. MRS-L-2660-11, New Jersey Superior Court, Law Division, Morris County
50930/2013
Connell Foley LLP
Attorneys for Petitioner
85 Livingston Avenue
Roseland, New Jersey 07068
By NYSCEF
Riker Danzig Scherer Hyland Perretti LLP
Attorneys for Respondent
Headquarters Plaza
One Speedwell Avenue
Morristown, New Jersey, 07962
By NYSCEF
G.A. Fleet & Associates, Inc.
55 Calvert Street
Harrison, New York 10528
By Mail
Francesca E. Connolly, J.
The following documents were read in connection with the application by petitioner Aerco International, Inc., for an order staying consideration of this petition until the New Jersey Superior Court issues an order on Aerco's pending motion in that court to quash an identical subpoena, or in the alternative, an order vacating the non-party subpoena served on G.A. Fleet Associates, Inc., pursuant to CPLR § 3101 (a) (4); an order quashing the non-party subpoena served on G.A. Fleet Associates, Inc., pursuant to CPLR § 2304; and the entry of a protective order pursuant to CPLR § 3101:
Notice of Petition, Petition, Affirmations, Proposed Order, Exhibits1-16
Petitioner's Memorandum of Law17
Respondent's Affidavit in Opposition, Exhibits18-32
Respondent's Memorandum of Law33
Reply Affirmation, Exhibits, Affidavit with Exhibit34-51
Petitioner's Reply Memorandum of Law52
Order of the New Jersey Superior Court (Hon. Robert J. Brennan, J.S.C.), dated
March 13, 201353
FACTUAL BACKGROUND/PROCEDURAL HISTORY
The parties are engaged in a protracted breach of contract/fraud action pending before the Hon. Robert J. Brennan, J.S.C., of the New Jersey Superior Court. Respondent, Precision Machining and Stamping Inc. d/b/a Sector Tool and Mfg. ("Precision"), manufactured component parts for Aerco International, Inc. ("Aerco"), to use in its manufacture of various products including commercial boilers, hot water heaters, and water source heating products. Precision commenced suit against Aerco in New Jersey Superior Court claiming breach of contract, fraudulent inducement, and various other causes of action.
In furtherance of discovery in that action, Precision served nearly identical non-party subpoenas duces tecum and ad testificandum on two of Aerco's sales representatives, G.A. Fleet Associates, Inc. ("G.A. Fleet"), located in Harrison, New York, and Thermco, located in New Jersey. Both G.A. Fleet and Thermco are non-parties to the New Jersey litigation. Precision used the procedures set forth in newly enacted CPLR § 3119, the Uniform Interstate Depositions and Discovery Act, to serve G.A. Fleet in New York. Aerco filed a motion to quash the Thermco subpoena in the Superior Court of New Jersey before Judge Brennan and filed this substantially similar motion regarding the G.A. Fleet subpoena served in New York.
Aerco now petitions this Court to defer consideration of the petition until Judge Brennan of the New Jersey Superior Court rules on the pending motion to quash the identical subpoena issued to Thermco. Aerco argues that the New Jersey court will be considering and determining the propriety of the identical subpoena, including the relevance of the information sought and issues related to the alleged confidential, proprietary nature of the information sought. Aerco submits that in the interests of judicial economy and to avoid the possibility of inconsistent rulings on identical subpoenas, this Court should allow the New Jersey Court, who is most familiar with the claims and [*2]defenses in the underlying litigation pending before it, to issue its decision before this Court decides this petition.
Aerco further submits that if this Court considers the petition relating to the subpoena issued to G.A. Fleet before a decision is rendered in the New Jersey action, the subpoena should be quashed or vacated, and a protective order should be issued, as the subpoena is facially invalid, seeks irrelevant information, and is overly burdensome and oppressive. Aerco also submits that the information sought in the subpoena is obtainable from Aerco, and involves confidential trade secrets and proprietary business information.
Precision opposes the petition, alleging the material sought from G.A. Fleet is relevant to the parties' claims against each other and is not obtainable from Aerco, nor is it confidential, and any alleged facial defect in the non-party subpoena is remedied by Precision's opposition to the motion to quash.
G.A. Fleet has not submitted any papers in support of, or in opposition to, the motion to quash.
While this application was sub judice, Judge Brennan issued an order dated March 13, 2013 denying the motion to quash the nearly identical subpoena issued to Thermco, and finding that the subpoena was not overly broad or unreasonably burdensome. He also found that Precision demonstrated the relevancy of the information sought with respect to the issues before the court in the litigation.
LEGAL ANALYSIS/DISCUSSION
Effective January 1, 2011, New York adopted the Uniform Interstate Depositions and Discovery Act, which is codified under CPLR §3119. "The purpose of the act is to allow for disclosure in New York State for use in an action pending in another United States jurisdiction without the need for a court order" (Patrick M. Connors, McKinney's Supplementary Practice Commentaries, McKinney's Cons Laws of New York, CPLR § 3119). While CPLR § 3102 (e) was already in place to provide assistance in these circumstances, this provision required an application for a court order to obtain disclosure in New York. CPLR § 3119 was enacted to allow "for an expedited procedure whereby an out-of-state subpoena issued by a court within the United States and its territories can be presented to a county clerk who can then issue a New York subpoena (id.; CPLR § 3119 [b] [2]). For further convenience, under CPLR §3119 (b) (4), if a party to the out-of-state proceeding retains an attorney licensed in New York, and that attorney receives the original or a true copy of the out-of-state subpoena, the attorney may issue the subpoena in New York, consistent with CPLR § 2302 (a).
Under the Uniform Act, "[d]iscovery authorized by the subpoena must comply with the rules of the state in which it occurs" (Hyatt v State Franchise Tax Board, 2013 NY Slip Op 01550, 962 N.Y.S.2d 282, 293 [2d Dept 2013]). "[M]otions to quash, enforce, or modify a subpoena issued [*3]pursuant to the Act shall be brought in and governed by the rules in the discovery state" (id.; CPLR § 3119 [d] and [e]).
Although the Uniform Act "requires minimal judicial oversight since there is no need to present the matter to a judge in the discovery state before a subpoena is issued," CPLR § 3119 expressly contemplates judicial review by providing a mechanism to move for relief against the subpoena under the rules or statutes of New York (Hyatt v State Franchise Tax Board, 962 N.Y.S.2d at 292; CPLR § 3119 [e]). However, in applying and constructing the Uniform Act, the court is directed to consider the need to promote uniformity of the law among states that have enacted the statute (CPLR § 3119 [f]). "[W]hen a court of another state has already reviewed the subpoena," New York courts should afford that determination the "widest possible latitude" (id. at 293-294).
Here, Precision's New York counsel served the non-party subpoena upon G.A. Fleet in New York in compliance with the Uniform Act. Precision served a nearly identical non-party subpoena on Thermco in New Jersey. Petitioner, Aerco, moved to quash both subpoenas. While the motion was sub judice, Judge Brennan of the New Jersey Superior Court reviewed the nearly identical non-party subpoena and issued an order dated March 13, 2013, denying the motion to quash upon finding that the subpoena was not overly broad or unreasonably burdensome. Judge Brennan, who is the judge assigned to preside over the underlying matter, is fully familiar with the parties' claims and defenses, having issued rulings on multiple discovery matters to date. His order of March 13, 2013 considered the propriety of a subpoena nearly identical to the subpoena at issue in this application. Since Judge Brennan is in a better position to determine the appropriate scope of disclosure and has already reviewed the subpoena, this Court will afford his determination the widest possible latitude (id.).
This Court also finds that the form and content of the subpoena sufficiently complies with existing New York statutes and rules. The Uniform Act "expressly states that the standards that are generally applicable to depositions set forth in CPLR article 31 are also applicable to out-of-state subpoenas issued under CPLR 3119(b)" (Kapon v Koch, 105 AD3d 650 [1st Dept 2013]). "[S]o long as the information sought is material and necessary' to the prosecution or defense of an action, it shall be disclosed" (id.).
The threshold requirement for discovery in New York civil actions, that the disclosure sought is "material and necessary in the prosecution or defense of an action," applies to non-parties as well as parties, provided that the non—party is given "notice stating the circumstances or reasons such disclosure is sought or required" (CPLR §3101[a] [4]; see generally Kooper v Kooper, 74 AD3d 6, [2d Dept 2010]). "The phrase material and necessary' is to be interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity. The test is one of usefulness and reason'" (id. at 10).
The New Jersey Superior Court has already reviewed the subpoena and, in a well-reasoned decision, determined that the disclosure sought is sufficiently material and necessary. Affording that [*4]decision the widest possible latitude, this Court adopts the reasoning of the New Jersey Superior Court and denies the motion to quash. Importantly, ruling in this way consistently with the New Jersey Court furthers the legislative intent of the statute by promoting uniformity of the law among the states (see CPLR § 3119 [f]).
In addition, the subpoena served on G.A. Fleet will not be vacated for failure to comply with the notice requirements of CPLR § 3101 (a) (4). The statute directs the non-party be given notice stating the circumstances or reasons the disclosure is sought "to afford a nonparty who has no idea of the parties' dispute or a party affected by such request an opportunity to decide how to respond" (Velez v Hunts Point Multi-Service Center, Inc., 29 AD3d 104, 110 [1st Dept 2006]). The notice provision contained in the statute is for the benefit of the non-party, to assist it in determining how to respond to the subpoena.
Here, Precision served the subpoena upon G.A. Fleet along with a cover letter with contact information for Precision's counsel, a copy of the stipulated protective order entered into between the parties, and basic information about the litigation. While Aerco argues that the subpoena should be quashed as being facially defective with regard to the notice requirement, the non-party, G.A. Fleet, has neither objected to the subpoena, nor joined in Aerco's motion to quash. Precision could have, indeed, been more expansive in setting forth the circumstances or reasons the disclosure was sought from the non-party. However, considering the specific notice provided here by Precision to the non-party, and the fact that the non-party has submitted no objection to the subpoena, the Court finds Precision has sufficiently satisfied the notice requirements as required by CPLR § 3101 (a) (4).
Nevertheless, Precision has cured any facial defect with regard to the notice requirement in its opposition to Aerco's motion to quash. In Velez v Hunts Point Multi-Service Center, Inc., the First Department allowed a party issuing a subpoena to remedy the facial defect with regard to the notice requirement by submitting a showing of circumstances and reasons such disclosure was sought in opposition to a motion to quash (29 AD3d at 111). While the Second Department has not yet had the occasion to address the issue squarely, in Kooper, it has indicated that such a facial defect might be remedied in this way (Kooper v Kooper, 74 AD3d at 13-14; see generally Kaufman v Red Ground Corp., 170 AD2d 484, 485 [2d Dept 1991]).
Since the New Jersey Superior Court has determined the propriety of a nearly identical subpoena in the same action pending before it, and the subpoena sufficiently complies with existing New York statutes and rules, Aerco's petition to quash or vacate the subpoena, and for a protective order is denied.
Based upon the foregoing, it is hereby
ORDERED, that the petition to stay consideration of the petition until the New Jersey Superior Court issues an order on a pending motion to quash a nearly identical subpoena Precision served on non-party Thermco is denied as moot; and it is further, [*5]
ORDERED, that petitioner's application to vacate the non-party subpoena served on G.A. Fleet Associates, Inc., pursuant to CPLR § 3101 (a) (4) is denied; and it is further
ORDERED, that petitioner's application to quash the non-party subpoena served on G.A. Fleet Associates, Inc., pursuant to CPLR § 2304 is denied; and it is further
ORDERED, that petitioner's application for a protective order pursuant to CPLR § 3103 is denied.
All other relief requested and not decided herein is denied.
This constitutes the decision and order of the Court.
Dated: White Plains, New York
May 16, 2013
HON. FRANCESCA E. CONNOLLY, J.S.C.
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