Stanley Works Israel Ltd. v. 500 Group, Inc.

          RULING ON MOTION TO COMPEL DEPOSITIONS OF PLAINTIFF EMPLOYEES

          CHARLES S. HAIGHT, JR. SENIOR UNITED STATES DISTRICT JUDGE

         The Stanley Works Israel Ltd., f/k/a ZAG Industries, Ltd. ("Plaintiff" or "Stanley"), an Israeli limited liability company, brings this diversity action against Defendants 500 Group, Inc., a New York corporation, and Paolo Tiramani, a citizen of Nevada (collectively, "Defendants"). Plaintiff and Defendant 500 Group were parties to certain product license agreements that related generally to patent rights owned by 500 Group. Plaintiff's claims against Defendants arise from a dispute over monies paid pursuant to a settlement agreement between the parties.

         Presently before the Court is a discovery dispute relating to Defendants' efforts to obtain deposition testimony from three of Plaintiff's employees: Efrat Fixler ("Fixler"), Klara Tunkel ("Tunkel"), and Tail Waysbort ("Waysbort"). All three proposed deponents reside in Israel. Defendants seek an order compelling the deposition of these employees in Connecticut, the forum where Plaintiff initiated this action. Plaintiff argues that Defendants' request should be denied because the proposed deponents are not "officers, directors or managing agents" of the Plaintiff and therefore not subject to deposition by notice, and not subject to deposition outside the 100-mile radius of their residence pursuant to Fed.R.Civ.P. 45(c)(1). See Doc. 47. Plaintiff has offered to produce these witnesses without requiring Defendants to issue a subpoena provided that the depositions occur by videoconference or in Israel, where each of the witnesses is located. Id. Defendants have rejected this offer, maintaining that the depositions must occur in Connecticut or, alternatively, that Plaintiff must bear all of defense counsel's costs associated with conducting the depositions in Israel. Id. at 2.

         I. RELEVANT BACKGROUND

         Plaintiff initiated this action against the Defendants seeking to recover money damages related to a payment by Plaintiff to Defendant 500 Group pursuant to a written settlement agreement (the "Settlement Agreement"). Specifically, Plaintiff alleges that the parties agreed that Plaintiff would withhold $600, 000 from the total settlement payment of $10 million for payment to the Israeli tax authority. See Doc. 24 ¶¶ 15, 21. However, Plaintiff mistakenly failed to deduct $600, 000 from the total settlement payment as the agreed-upon tax withholdings. Id. ¶¶ 24, 25. Defendants have allegedly refused requests to return the $600, 000 alleged overpayment. Id. ¶¶ 26, 32.

         On October 12, 2018, Defendants served notices of deposition on Plaintiff seeking the depositions of, inter alia, Fixler, Tunkel, and Waysbort to take place in Hartford, Connecticut in December 2018. See Doc. 46 ("Mot. to Compel"), Exs. C, D, and E. Since that date, the parties have corresponded extensively regarding the terms of the proposed Stanley deponents' depositions, see Id. at 2-5, but have been unable to reach an agreement as to the location of the depositions and who should bear the costs.

         II. DISCUSSION

         The parties' dispute turns, in large measure, on whether the Stanley employees are "officers, directors, or managing agents" of Stanley. Under Rule 30(b)(1) of the Federal Rules of Civil Procedure, an officer, director, or managing agent of a corporate party may be compelled to give testimony pursuant to a notice of deposition. A notice of deposition “must state the time and place of the deposition.” Fed.R.Civ.P. 30(b)(1) (emphasis added). Thus, in the first instance, the party noticing the deposition is entitled to designate the place of the deposition. A corporate employee or agent who does not qualify as an officer, director, or managing agent, on the other hand, is not subject to deposition by notice. See, e.g., Sugarhill Records Ltd. v. Motown Record Corp., 105 F.R.D. 166, 169 (S.D.N.Y.1985); Schindler Elevator Corp. v. Otis Elevator Co., No. 06 CIV.5377CMTHK, 2007 WL 1771509, at *2 (S.D.N.Y. June 18, 2007). Such an employee, like any other non-party witness, must be subpoenaed pursuant to Rule 45 of the Federal Rules of Civil Procedure - including the limitation that the witness may only be deposed "within 100 miles of where the person resides, is employed, or regularly transacts business in person." Fed.R.Civ.P. 45(c)(1)(A). Thus, because the proposed deponents reside and work in Israel, the Defendants may depose them in Connecticut only if they qualify as managing agents of Plaintiff.^[1]

         To determine whether an employee qualifies as a "managing agent" subject to deposition by notice, courts in this district generally consider five factors:

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 demands 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 the information is sought by the examination;

4) the general responsibilities of the individual respecting the matters involved in ...