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Jurisdiction and Due Process; Deposition ‘Coaching’ Update

July 3, 2019 in  News

New York Law Journal 

In May the Court of Appeals issued an important decision on permissible exercise of long-arm jurisdiction by New York courts over an Ohio merchant of guns. For those of us, who may believe we know most everything about New York’s venerable long-arm statute needed to make correct jurisdictional evaluations, the new decision can be somewhat humbling. Why? Because the court divided 4-3 on the result, complete with majority, concurring and dissenting opinions.

By reading the starkly opposing viewpoints—based on the same facts—one can see that there may be little room for smugness re one’s own evaluation of a long-arm jurisdiction scenario. The case is Williams v. Beemiller (N.Y. Ct. App., May 9, 2019). Chief Judge Janet DiFiore wrote the opinion for the court, joined in by three Judges (with Judge Paul Feinman also writing a separate concurring opinion). Judge Eugene Fahey dissented with two Judges joining his opinion.

Plaintiff was injured when shot in Buffalo by a gang member who purchased his gun illegally from one Bostic. The latter had purchased firearms from defendant Brown, an Ohio gun dealer who sold only in Ohio to Ohio residents. Brown made the sales only after Bostic showed proof of Ohio residency, filed the necessary ATF paperwork and passed the FBI background check. Plaintiffs sued the Ohio gun manufacturer and Ohio distributor as well as Brown, the duly authorized Ohio retail seller. Plaintiffs claimed negligent sale and distribution of the gun. Only Brown contested personal jurisdiction via a motion to dismiss.

New York’s long-arm statute, CPLR 302, allows exercise of jurisdiction over a non-domiciliary who commits a tortious act outside New York causing injury to persons or property in New York provided certain key conditions are met. Those details are set forth in CPLR 302(a)(3)(i), (ii). They concern doing or soliciting business in New York, deriving substantial revenue from goods used or consumed in the state or reasonably expecting the out-of-state tortious act to have consequences here.

Due Process

But a claim of factual congruence with the statutory language doesn’t necessarily make valid jurisdiction a shoe-in. There’s one more—truly critical—non-statutory requirement. It is a constitutional one. New York law also requires that assertion of jurisdiction “comports with due process.” And, it is the latter prerequisite that was at the core of the court’s decision. Due process means the outsider has “certain minimum contacts” with the forum and the “maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Williams, Slip Opinion, p. 4.

The foregoing aspects are two distinct requirements, not one. As Chief Judge DiFiore reminds us regarding due process, “[a] non-domiciliary tortfeasor has minimum contacts with the forum State … if it purposefully avails itself of the privilege of conducting activities within the forum State” thereby “invoking the benefits and protections of [the forum state’s] laws.” This test envisions something more than the “fortuitous circumstance” that a product sold in another state later makes its way into the forum state “through no marketing or other effort of the defendant.” In other words, the “mere likelihood that a product will find its way into the forum” does not justify haling into court the non-domiciliary. It is a constitutional inquiry.

Here, the requisite showing of “minimum contacts” with New York by Brown, merely an Ohio gun seller to an Ohio resident, was lacking. Although Bostic, the purchaser, said he “wouldn’t mind having a shop in Buffalo,” that falls short of [the] “purposeful availment” requirement. This new Williams decision alerts counsel that, wholly apart from meeting CPLR 302’s statutory conditions, there’s a second, all-important due process prerequisite to evaluate.

Judge Feinman agreed but also wrote separately to express his view that Brown’s so-called “connection” to New York was statutorily insufficient to establish jurisdiction under CPLR 302 in the first instance. Judge Fahey’s dissent elaborated on his view that the undisputed facts support jurisdiction over Brown and, further, that the court majority erred in interpreting the “minimum contacts” requirement so “stringently.” There’s good, brisk, educational reading in these opinions. There’s also a kind of “caution” for litigators assessing the chasm between the Judges. Structuring the jurisdictional facts to fit, not only the statutory criteria but also the due process standards, is critical. Lawyers have to be on their toes. As the divided opinions reflect, in some settings, there’s lots of room for excellent and creative advocacy by both sides.

Deposition Misconduct

In my November 2018 column, “Attorney Misconduct During Depositions,” N.Y.L.J. (Nov. 9, 2018), p. 3, the various kinds of games lawyers play at depositions were surveyed. The tactics (or antics) are often in violation of Federal Civil Procedure Rule 30(c)(1) and (2). The deposition is supposed to let “[t]he examination and cross-examination of a deponent proceed as they would at trial under the Federal Rules of Evidence, except Rules 103 and 615.” Unlike trial testimony, however, if counsel objects to a question, “the examination still proceeds” and the testimony is taken subject to any objection. The deponent witness may only be instructed not to answer questions when necessary to preserve a privilege, to enforce a limitation ordered by the court, or to present a motion under Rule 30(d)(3).

The November column provided illustrative case law, citations to a slew of commentaries and articles on the bounds of attorney behavior, as well as New York state prohibitions against mischief in addition to those in federal courts. We discussed deposition misconduct categories such as multiple objections “as to form” coupled with speeches that interrupted the flow of the deposition or that hinted to the witness how to respond. The sheer number of possible “form” objections identified in the column offer offending counsel an array of potential openings for errant behavior. If allowed, excessive objections could hamstring deposition practice at large.

Another category discussed was “witness coaching” or so-called “speaking objections” in which the witness-defending lawyer makes statements beyond the objection itself and intends to coach the witness on how to respond. Or, perhaps, the tactic may be intended to impede the flow of the testimony and throw the interrogator off his or her game. Still another misconduct category is making excessive interruptions. Indeed, where the latter is an issue, courts themselves have reviewed the transcript, counted the interruptions and ordered sanctions. The proof of mischief was right there, memorialized in the transcript.

A short update of the foregoing topic seems justified because of a new ruling in a California federal court awarding sanctions against plaintiff’s counsel in a multidistrict class action litigation. The case is called In Re: Ford Motor Co. DPS6 Powershift Transmission Products Liability Litigation (Hobart v. Ford), No. 2:18—ML—0284 AB (FFMx). The Order granting sanctions, dated May 13, 2019, was issued by U.S. Magistrate Judge Frederick F. Mumm. Then, in late June, the court awarded nearly $19,000 in costs to defendant.

The plaintiff Hobart purchased a new Ford Fiesta from a dealer believing that the car had an automatic transmission. Instead, Hobart claims, it was a set of computerized manual transmissions without a torque converter. He alleged a defective transmission because it “bucks, wears prematurely, causes delayed or sudden acceleration, and causes difficulty in stopping the vehicle.” Dealership repairs were insufficient. Hobart claims Ford knowingly concealed the transmission defects from plaintiff and the dealerships.

Hobart was deposed in February 2019. “Within the first few questions, plaintiff’s counsel embarked on a course of strenuous objections and instructions not to answer.” Order, at p. 2. In late March, counsel for the parties conferred on issues presented by defendant Ford’s motion for sanctions and other relief. Plaintiff’s counsel stood by “many of the objections,” but offered Ford the opportunity to re-depose Hobart on the questions plaintiff’s counsel believed remained unanswered. Ford declined the offer.

Judge Mumm’s analysis began by noting that FRCP Rule 30(d)(2) allows a court to impose an appropriate sanction—including the reasonable expenses and attorney’s fees incurred by any party—upon a person “who impedes, delays or frustrates the fair examination of the deponent.” Attorneys as well as parties may be sanctioned. Ninth Circuit case law has held that Rule 30(d)(2) sanctions do not require a finding of bad faith.

Additionally, 28 U.S.C. §1927 authorizes sanctions when an attorney “unreasonably and vexatiously” multiplies proceedings in a federal action. The sanctions can be ordered “to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” A key term in this statute is “vexatiously”; carelessly, negligently, or unreasonably multiplying the proceedings is not enough. Order, Slip Op. at 3. Further, the court has “inherent power” to sanction an attorney or party “if the court specifically finds bad faith or conduct tantamount to bad faith.”

Sanctions Awarded

So, what did Hobart’s attorney do at the deposition that warranted the sanctions inquiry? The court categorized the mischief that constituted sanctionable conduct, as follows: (1) Improper Objections and Coaching (Order, Slip Op. at 3—6); (2) Improper Instructions Not To Answer (Order, Slip Op. at 6—9); (3) Meritless Objections; Improper Purpose (Order, Slip Op. at 9—10).

There can be no question, said the court, “that plaintiff’s counsel deliberately frustrated, delayed and impeded Mr. Hobart’s deposition.” An objection must be made “concisely in a nonargumentative and nonsuggestive manner.” FRCP Rule 30(c)(2). Yet, plaintiff’s counsel violated these strictures throughout. Often, the objections were “verbose and argumentative.” Occasionally, she interrupted the witness, contradicted him, or answered for him.

In approximately 60 instances, counsel interposed objections that implicitly instructed Hobart how to answer. Objections such as “Calls for speculation”; “He is not qualified [to answer the question]”; “To the best of your knowledge”; “Don’t guess”; and “You can answer if you understand” evidently signaled the deponent that “he should claim ignorance or confusion, no matter how simple the question.”

For example, Hobart was asked where the noise was coming from in the vehicle. Counsel interjected: “I’m going to object. It calls for expert testimony. He is not a mechanic. Foundation. However, you can describe it if you have an idea of where you thought it was, the general direction.” The witness then answers: “I’m not a mechanic. So I would be just guessing. I’m not a mechanic to make that call.” When asked follow-up questions, Hobart said, “Like I said, I’m not qualified to answer that question.” In the “most egregious instances,” plaintiff’s counsel coached the deponent to claim ignorance of factual matters he admitted to knowing. Order, Slip Op. at 4—5.

On approximately 20 occasions, counsel cited “impermissible grounds” to justify instructions and/or made meritless privilege claims. When asked if plaintiff would have accepted Ford’s return of his purchase price, his counsel said: “Objection; calls for speculation. He is not going to answer that question as to what he would have done. He is not here to answer hypothetical questions.” Said the court: “A speculative question is not a proper ground for instructing a deponent not to answer.” Order, Slip Op. at 6—7. The court quotes several other meritless instructions that the witness should not respond.

A number of other objections, “while utterly without merit, appeared calculated to thwart inquiry into the heart of plaintiff’s claims.” Thus, when asked if he understood what the term “automatic transmission” means, the witness said, “Yes.” But counsel interrupted. “Let me object. Vague and ambiguous. If you understand the question, you can answer.” On a follow-up, counsel again objected: “I’m going to object. Calls for expert opinion. You can answer if you understand the question.” On cue, the deponent responds, “I don’t think I’m qualified to answer that question. I’m not a mechanic.” Later he added: “I don’t know what an automatic transmission is today.”

Citing yet other examples, the court concluded that “plaintiff’s counsel’s interference with such basic lines of questioning, by dint of coaching and meritless objections, bespeaks an improper purpose.” Order, Slip Op. at 10. The court found that, although Hobart “was not without fault,” he was “following his counsel’s lead, as a lay client might be expected to do.” So a punishment such as precluding evidence of fraud or damages would essentially amount to “terminating sanctions,” which would be too onerous.

Lesser sanctions could deter similar misconduct in the future. Plaintiff was ordered to be re-deposed and his counsel ordered to assert only narrow, specified objections. Objections that a question is vague, lacks foundation, calls for hearsay, etc. may not be asserted. The court also ordered that defendant submit its showing of costs attributable to the deposition misconduct. Ford did so. Then, on June 24, Judge Mumm granted monetary sanctions for costs in the amount of $18, K. Penton, “Ford Gets Sanctions Against Knight Law For Coaching Clients,” Law360, June 24, 2019.