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finding expert testimony, unsupported by any case law, insufficient evidence from which to accept either parties' understanding of the law
Summary of this case from Ancile Inv. Co. v. Archer Daniels Midland Co.Opinion
90 Civ. 2370 (JFK)(FM)
June 2, 2000
MEMORANDUM OPINION AND ORDER
Presently before the Court is a motion by plaintiff British International Insurance Company Limited, formerly known as American Centennial Insurance Company ("ACIC" or "Plaintiff"), for an order compelling defendant Seguros La Republica, S.A., now known as Aseguradora Interraciones, S.A. ("La Republica"), to furnish certain post-judgment asset discovery. La Republica opposes this motion principally on the theory that Mexican law either renders ACIC's requests irrelevant or prohibits La Republica's compliance. As explained below, ACIC's motion is granted in part and denied in part.
I. BACKGROUND
At all times relevant to this action, ACIC and La Republica were, and both companies continue to be, engaged in the business of insurance and reinsurance. (O'Donnell Cert. dated November 12, 1999 ("O'Donnell Cert.") Ex. A ("Compl.") ¶¶ 1-2; Martinez Cert. ¶ 2).
La Republica is a member of Grupo Financiero Interacciones, S.A. de C.V. ("Grupo Financiero"), a financial holding company organized under Mexican law. (Martinez Cert. ¶ 2; Alvarez Cert. dated November 12, 1999 ("Alvarez Cert. I") ¶¶ 4-5).
Grupo Financiero has three subsidiaries: La Republica; Banco Interacciones, S.A., a banking company; and Interacciones Casa de Bolsa, S.A. de C.V., which is a brokerage house. (Martinez Cert. ¶ 2).
This lawsuit stems from reinsurance agreements that ACIC alleges were memorialized in 26 "facultative" insurance certificates issued by La Republica to ACIC. (Compl. ¶¶ 7-9). ACIC claims that La Republica failed to remit its share of losses that ACIC paid to its insureds pursuant to the underlying insurance policies. (Id.).
There are two types of reinsurance agreements. Under a facultative insurance agreement, an insurer cedes all or part of the risk under specific insurance policies to a reinsurer who may participate in litigation or claims adjustment. Under a "treaty" insurance agreement, the reinsurer must rely on the efforts of the reinsured and has no right to participate in the management of the claim or suit. United States v. Brennan, 938 F. Supp. 1111, 1123 (E.D.N.Y. 1996), rev'd on other grounds, 183 F.3d 139 (2d Cir. 1999).
A. Procedural History
ACIC filed its complaint in April 1990. In June 1992, the Court ordered La Republica to post $5.7 million in pre-answer security pursuant to Section 1213(c)(1)(A) of the New York Insurance Law. (O'Donnell Cert. Ex. B at 3). After La Republica refused to post the required security, (see id. Ex. C), the Court held that a default judgment should be entered against La Republica once the extent of ACIC's damages was determined. See ACIC v. La Republica, No. 90 Civ. 2370, 1995 WL 731630, at *9 (S.D.N.Y. Dec. 11, 1995).
New York Insurance Law § 1213(c)(1) provides that:
Before any unauthorized foreign or alien insurer files any pleading in any proceeding against it, it shall either:
(A) deposit with the clerk of the court in which the proceeding is pending, cash or securities or file with such clerk a bond with good and sufficient sureties, to be approved by the court, in an amount to be fixed by the court sufficient to secure payment of any final judgment which may be rendered in the proceeding, but the court may in its discretion make an order dispensing with such deposit or bond if the superintendent certifies to it that such insurer maintains within this state funds or securities in trust or otherwise sufficient and available to satisfy any final judgment which may be entered in the proceeding, or
(B) procure a license to do an insurance business in this state.
Following an inquest conducted before former Magistrate Judge Leonard Bernikow, and pursuant to his Report and Recommendation, the Court ordered the entry of a default judgment against La Republica in the amount of $11,251,696.35, plus interest to the date of judgment. See id., 1999 WL 301689, at *10 (S.D.N.Y. May 12, 1999). Thereafter, on May 17, 1999, the Clerk of the Court entered a default judgment against La Republica in the amount of $11,801,024.98. (O'Donnell Cert. Ex. E).
Responsibility for certain remaining aspects of this case was reassigned on November 5, 1998, to Magistrate Judge Henry B. Pitman, and on September 29, 1999, to me. I then held a conference on November 4, 1999, to address the progress of post-judgment discovery. By the time of the November conference, ACIC had filed a motion to compel discovery which failed to address the effect of a lawsuit that La Republica had filed in Mexico in late 1995 ("Mexican Action"). In the Mexican Action, which remains pending, La Republica is seeking, inter alia, a judicial declaration that the reinsurance agreements relied upon in this suit are null and void. (See Ramirez Cert. ¶ 2-3; Pl.'s Mem. dated November 12, 1999 ("Pl.'s Mem. I") at 4).
La Republica instituted the Mexican Action against nine defendants. ACIC, however, was named only as a third-party defendant. Although the suit has been pending for nearly five years, it appears that none of the defendants and only five of the sixteen third-party defendants (including ACIC) have been served. (See Alvarez Cert. dated December 7, 1999 ("Alvarez Cert. II") ¶¶ 6-7).
To permit the parties to brief the issues raised by the Mexican Action, I denied the motion to compel and directed ACIC to submit a new set of motion papers. The renewed motion to compel was filed on November 24, 1999. The last submission in connection with that renewed motion was received on April 12, 2000.
More recently, on May 4, 2000, the United States Court of Appeals for the Second Circuit issued two decisions in this case. In a per curiam opinion, the Court rejected La Republica's argument that the security requirement of New York Insurance Law § 1213 violated its due process rights. British Int'l Insur. Co. v. Seguros La Republica, S.A., 2000 WL 531466 (2d Cir. May 4, 2000). In an accompanying summary order, the Court rejected several additional claims by La Republica, but nevertheless remanded the case to this Court to determine whether certain of ACIC's legal expenses were reimbursable and whether ACIC had presented proof of $52,987 of the $910,630 that it claims to have paid its insureds. Id., 2000 WL 553188 (2d Cir. May 4, 2000). The issues raised in the summary order appear to fall within the ambit of my assignment to oversee general pretrial matters and report and recommend regarding dispositive motions.
The schedule for addressing these issues is consideredinfra.
B. Mexican Action
As noted above, ACIC's renewed motion requires this Court to consider the effect, of the Mexican action, if any, on discovery. In that action, on November 22, 1995, the Twentieth Civil Court of the Federal District of Mexico entered an Order ("Mexican Order") which states, in part, that
any execution of judgment originating abroad will be subject to the result of [the] trial [of the Mexican Action], as ordered by articles 1347-A section VI of the Commerce Code and 571 section VI of the Civil Procedure Code, applied suppletorily [sic] to the Commercial Legislation, which cause is the subject matter of the legal action filed, until there is a final judgment to the effect of preserving and having invoked articles complied with.
The translation of the Mexican Order supplied by La Republica is sworn to be a true and correct translation. (Id. at 5).
In arriving at this determination, the Mexican court relied upon two provisions of Mexican law. Neither party has furnished the Court with a translation of one of these provisions, Article 571 of the Mexican Code of Civil Procedure. Moreover, there is a dispute as to the correct translation of the second provision, Article 1347-A of the Mexican Civil and Commercial Codes ("Article 1347-A"). According to Westlaw, Article 1347-A provides:
Final judgments and decrees of foreign countries may be enforceable if the following conditions are followed:
* * *
(VI) The cause of action that resulted in the foreign judgment is not the subject-matter of a pending action between the same parties in a Mexican tribunal predating the foreign action or letters rogatory to serve the other party have not been processed and delivered to the Foreign Secretariat or the state authority to effect service of process.
Mexican Civil and Commercial Codes art. 1347-A (1996 WL 919809).
ACIC has furnished a somewhat less fluid, but similar, translation of Article 1347-A, which reads as follows:
Judgments and resolutions rendered abroad may be enforceable if the following conditions are met:
* * *
VI. That the cause of action which gave origin to them is not the subject matter of pending litigation among the same parties before Mexican Courts and in which the Mexican Court anticipated assumption of jurisdiction or at least that the rotary letters to serve process would have been issued and delivered to the Ministry of Foreign Relations or to the authorities of the State where service of process has to be carried out. The same ruling shall apply when a final judgment has been rendered.
(Alvarez Cert. II ¶ 10).
Finally, La Republica has submitted a verified translation of Article 1347-A which provides as follows:
Judgements and rulings issued abroad may have full force and effect if the following conditions are satisfied:
* * *
VI. When the action that gave rise to them is not the subject matter of a lawsuit that is pending between the same parties in Mexican courts and in which the Mexican court has conducted a preliminary hearing or at least has processed and delivered the letters rogatory or request for a subpoena to the Office of the Secretary of Foreign Relations or to the authorities of the state where the summons must be served. The same rules shall apply to final judgments.
(Feb. 29, 2000, letter from Albert E. Fowerbaugh, Jr., Esq., to the Court Attach, at 3). La Republica further contends that the Westlaw version of Article 1347-A "is not accurate and should not be relied upon by this Court." (Id. at 1)
Following the entry of the Mexican Order, ACIC attempted to appeal it, but the Twentieth Civil Court and Seventh Chamber of the Superior Court of Appeals for the Federal District (Mexico City) stayed that appeal until all the defendants and third-party defendants were served. (Alvarez Cert. II ¶ 8). The appeal later was dismissed. (Id.).
ACIC then filed a constitutional complaint in the Eighth Federal Court for Civil Matters seeking to vacate the order of the Twentieth Civil Court staying ACIC's appeal from the Mexican Order. (Id. ¶ 9). As part of this separate action, ACIC sought an additional stay to ensure that its constitutional challenge to the Mexican order would be heard first. That application, which also was denied, is the subject of a separate appeal to the Third Collegiate Tribunal in Mexico. ( Id. ¶ 13).
C. Status of Discovery
In July 1999, ACIC attempted to initiate post-judgment asset discovery, serving 71 interrogatories, 57 document requests, and notices to depose four individuals: Carlos Hank Rhon (the chairman of the board of La Republica and a board member of Grupo Financiero); Carlos Hank Gonzalez (a board member of both entities); Arturo Martinez de la Mora (the chief executive officer of Grupo Financiero and a board member of La Republica); and Marco Cardenas Barquet (the chief executive officer of La Republica). (Pl.'s Mem. I at 6-7).
In response to the interrogatories and document requests, La Republica disclosed information concerning its remainder interest in a trust fund in Houston, Texas, valued at approximately $25,000, but objected to every request for information concerning its Mexican assets. (See O'Donnell Cert., Exs. J, K). La Republica declined, however, to produce any of the noticed witnesses for a deposition. (Id. Ex. I).
It appears that these holdings are substantial. Indeed, La Republica's financial statement for the year ending December 31, 1997, reflects net equity in excess of 86 million Mexican pesos, which is approximately US $9 million at current exchange rates. (See O'Donnell Cert. Ex. F).
La Republica contends that any more extensive disclosure would violate several provisions of Mexican law which allegedly prohibit it from disclosing any information to ACIC concerning its Mexican assets. (See O'Donnell Cert. Exs. J at 2, K at 2). In addition to the Mexican Order and Article 1347-A, La Republica relies upon Rule 18 (IV) of the General Rules for the Constitution and Operation of Financial Groups, and Article 35 of the Financial Groups Law.
According to La Republica, Rule 18(IV) provides that:
It is prohibited [for] the holding company: IV. To disclose information related to its operations or related to the operations of other members of the group, other than to the legally empowered government agencies; such prohibition to include board members, examiners, officers, employees and generally anyone who may execute binding commitments on behalf of the holding company.
(Ramirez Cert. ¶ 8).
According to La Republica, Article 35 states that:
The violation of the precepts of this law and of the rules that are issued in accordance herewith, shall be punished by a fine to be levied by the National Banking and Securities Comission [sic] or the National Insurance and Bonds Commission, each within its respective area of competence, up to five percent of the paid-in capital of the infringing company, such fine to be notified to the Board of Directors of the infringing company.
ACIC has supplied its own translations of Rule 18(iv) and Article 35. (See Alvarez Cert. I ¶¶ 8-9). The differences between the two translations are insignificant for purposes of this Memorandum Opinion and Order.
La Republica contends that it therefore is prohibited from disclosing any information concerning its "operations" pursuant to these provisions because it is a member of Grupo Financiero, which is a holding company within the meaning of Rule 18(iv). ( See Ramirez Cert. ¶¶ 8-10; Def.'s Mem. at 9-10). La Republica's Mexican law expert opines that all of the discovery sought by ACIC — including information about La Republica's physical assets — is prohibited because it is part of the operations of Grupo Financiero. (Ramirez Cert. ¶ 8). ACIC's expert concludes, to the contrary, that the discovery sought does not relate to La Republica's operations, and that only Grupo Financiero is barred from making disclosures. (Alvarez Cert. I ¶¶ 10-13).
Although the parties have conferred several times in an unsuccessful attempt to resolve their discovery disputes, (see O'Donnell Cert. Exs. M-Q), after which La Republica provided supplemental responses, (id. Ex. P), some twenty interrogatories remain in dispute (id. Ex. Q). Additionally, La Republica has yet to produce any deposition witnesses. (See id. Ex. I). At one point during the parties' discovery discussions, La Republica offered to produce Mr. Martinez de la Mora to provide testimony, pursuant to Fed.R.Civ.P. 30(b)(6), regarding all of La Republica's assets and liabilities, including its assets in Mexico. (See O'Donnell Cert. ¶ 2; Hassan Cert. ¶ 4, Ex. F). That offer, however, was subject to several conditions, including ACIC's agreement that his testimony would never be disclosed to any Mexican authorities. (See id.). ACIC declined La Republica's proposed compromise, citing concerns about La Republica's good faith. (O'Donnell Cert. ¶ 3).
D. Renewed Discovery Motion
ACIC seeks an order: (1) compelling the asset depositions of the four deponents originally noticed in July 1999; (2) granting letters rogatory pursuant to Fed.R.Civ.P. 28(b) in the event that these four witnesses are not produced; (3) requiring responses to the disputed interrogatories and document requests; and (4) authorizing the service of information subpoenas pursuant to New York CPLR § 5224. (See ACIC Notice Mot.). ACIC contends that it is entitled to this post-judgment relief under Rule 69 of the Federal Rules of Civil Procedure.
La Republica, on the other hand, contends that the requested discovery should be denied as irrelevant because ACIC will not be able to enforce its default judgment in Mexico prior to a final resolution of the Mexican Action. La Republica also claims that any order compelling the requested discovery would require La Republica's directors to violate Mexican law. Finally, La Republica argues that ACIC's use of information subpoenas pursuant to New York State law would be improper because Rule 69 prohibits a judgment creditor from utilizing both federal and state asset discovery procedures in the same action. (See Def.'s Mem. at 12-14).
II. DISCUSSION
A. Relevance of Requested Information
Rule 69 of the Federal Rules of Civil Procedure, which governs post-judgment asset discovery, provides, in part, that:
In aid of the judgment or execution, the judgment creditor or a successor in interest when that interest appears of record, may obtain discovery from any person, including the judgment debtor, in the manner provided in these rules or in the manner provided by the practice of the state in which the district court is held.
Under the Rule, a judgment creditor is entitled to a wide range of discovery concerning the assets and liabilities of a judgment debtor. See, e.g., Greyhound Exhibitgroup. Inc. v. E.L.U.L. Realty Corp., No. 88 CV 3039, 1993 WL 50528, at *1 (E.D.N.Y. Feb. 23, 1993) ("The scope of [Rule 69] post-judgment discovery is broad."); S.E.C. v. Tome, No. 81 Civ. 1836, 1987 WL 9415, at *1 (S.D.N.Y. Apr. 3, 1987) (same). A judgment creditor is therefore ordinarily entitled to "a very thorough examination of a judgment debtor with respect to its assets," Greyhound, 1993 WL 50528, at *1 (internal quotation marks omitted), including "discovery [of] the identity and location of any of the judgment debtor's assets, wherever located." Minpeco v. Hunt, No 81 Civ. 7619, 1989 WL 57704, at *1 (S.D.N.Y. May 24, 1989) (quoting National Service Industries, Inc. v. Vafla Corp., 694 F.2d 246, 250 (11th Cir. 1982)).
La Republica concedes that, as a judgment creditor, ACIC is entitled to extensive information about La Republica's assets. (See Def.'s Mem. at 7). It nevertheless maintains that the information that ACIC seeks concerning La Republica's assets in Mexico is not relevant because ACIC is barred from executing its judgment against any such assets until the Mexican Action has been resolved. (Id. at 7-9). In advancing this argument, La Republica appears to equate the concept of relevance with the likelihood of a prompt recovery. However, even if a judgment debtor is destitute, there is arguably no information concerning its financial situation which is of greater potential relevance to a judgment creditor than the identity and location of the debtor's assets. The fact that a judgment creditor may have difficulty reaching those assets is not determinative of relevance. Indeed, if the relevance of post-judgment discovery proceedings were to be judged by the likelihood of a prompt recovery against a judgment debtor's assets, few, if any, seemingly indigent debtors would ever be subject to post-judgment asset depositions. Moreover, whenever post-judgment asset discovery was sought, the Court would inevitably become mired in debates about the likelihood that the party seeking discovery could eventually locate any unencumbered assets. In short, at the enforcement stage, the Court would routinely be required to second-guess its own previously-entered judgments. This, in effect, is what La Republica now asks this Court to do. La Republica has not cited any authority, however, which would require this result.
Additionally, it is clear that the Mexican Order does not limit ACIC's right to secure discovery of La Republica's assets in Mexico. Indeed, the Order does not even refer to discovery. Instead, it simply requires that any enforcement of the default judgment be deferred until the Mexican Action is resolved. Requiring that La Republica submit to asset depositions before a final determination of the Mexican Action is therefore wholly consistent with the language of the Mexican Order.
The Mexican Order also relied upon Article 1347-A as authority for its delay in the enforcement of the default judgment in this case. The parties have presented various contradictory translations of that statute, and each has presented legal arguments based upon the version that it favors. Suffice it to say, there is no need to resolve the alleged conflicts among the various translations of Article 1347-A because, like the Mexican Order, Article 1347-A addresses only the issue of enforcement. Since ACIC is not presently seeking to enforce its default judgment, Article 1347-A is inapplicable.
Finally, even if Article 1347-A were somehow controlling, La Republica would not be entitled to avoid or delay discovery on the theory that the Mexican courts ultimately may render the judgment in this action unenforceable in Mexico. Indeed, if this action did not involve a second lawsuit in a foreign country, La Republica would be able to reverse this Court's judgment only by successfully prosecuting an appeal. Absent the entry of a stay, however, ACIC would be entitled to conduct asset discovery during the pendency of that appeal. See National Serv. Indus., Inc. v. Vafla Corp., 694 F.2d 246, 250 (11th Cir. 1982) ("discovery in aid of [a judgment's] execution is not precluded by the filing of an appeal"); Tome, 1987 WL 9415, at *1 (permitting asset discovery while a judgment is being appealed). In this case, since it failed to post the security required by the Court, La Republica is not in a position to seek a stay pending the outcome of the Mexican appeal. More importantly, it does not appear that any of the Mexican courts have been asked, much less agreed, to stay any discovery. Accordingly, as would be true during the pendency of an appeal, the mere possibility that the judgment in this case might, as a practical matter, eventually be rendered unenforceable by another court should not bar ACIC from seeking timely information regarding La Republica's assets.
B. Potential Conflict With Mexican Law
La Republica raises the separate, but nevertheless related, claim that any response to the ACIC discovery requests that disclosed its Mexican assets would run afoul of Rule 18(iv) of the General Rules for the Constitution and Operation of Financial Groups and Article 35 of the Financial Groups Law because La Republica is a subsidiary of the Grupo Financiero holding company. This requires the Court to resolve a disputed question of foreign law.
Under Fed.R.Civ.P. 44.1, the determination of the effect of a foreign law presents a question of law for the Court which may "consider any relevant material or source" without regard to its admissibility under the Federal Rules of Evidence. See Fed.R.Civ.P. 44.1; In re Euromepa, S.A., 154 F.3d 24, 28 n. 2 (2d Cir. 1998). Among other sources, the Court may consider the opinions of experts, but it is not bound by their testimony, even if uncontradicted. Batruk v. Mitsubishi Motors Corp., Nos. 94 Civ. 7593, 8677, 1998 WL 307383, at *3 (S.D.N.Y. June 19, 1998) (Wood, J.); In re Arbitration Between: Trans Chem. Mach. Ltd. and China Nat'l Import and Export Corp., 978 F. Supp. 266, 275 (S.D. Tex. 1997), aff'd, 161 F.3d 314 (5th Cir. 1998); Curtis v. Beatrice Foods Co., 481 F. Supp. 1275, 1285 (S.D.N.Y.) (Pollack, J.), aff'd, 633 F.2d 203 (2d Cir. 1980); 9 Charles Alan Wright § Arthur R. Miller, Federal Practice and Procedure § 2444, at 646 (2d ed. 1995).
The evidence presented to the Court on this issue consists of certifications by the parties' foreign law experts, who are experienced Mexican attorneys. La Republica's expert, Geraldo Ramirez Ornelas, opines that the disclosure of any information about La Republica's physical assets would likely concern its "operations" and is therefore prohibited by Rule 18(iv). (Ramirez Cert at ¶ 8.) Mr. Ramirez further opines that the disclosure of any information about La Republica's dealings with other members of Grupo Financiero or Grupo Financiero itself is also prohibited. (Id.). Not surprisingly, ACIC's foreign law expert, Victor Alvarez de la Torre, takes the opposite view, stating that the term "operations" in Rule 18(iv) is "linked" to the "main financial, banking or insurance activities" of financial institutions, that Grupo Financiero is therefore only precluded from disclosing information regarding its holding of shares in its subsidiaries, and that La Republica may freely disclose any information not relating to its actual insurance and reinsurance operations. (Alvarez Cert. I ¶¶ 11-13).
In the course of rendering their opinions, neither party's expert has cited any case law or other sources which would lend credence to his representations regarding the manner in which Rule 18(iv) should be applied. Accordingly, their competing opinions add little, if anything, to the plain language of the Rule, and essentially cancel each other out.
In these circumstances, it is appropriate for the Court to reach its own determination as to the scope of the disclosure permitted by Mexican law. My reading of La Republica's English language rendition of Rule 18(iv) suggests that only a "holding company" and its officers, directors, and employees are prohibited from making disclosures regarding the holding company's operations or those of its constituent companies. Therefore, La Republica, and its officers, directors, and employees, are not barred from making disclosures regarding the nature, extent and whereabouts of La Republica's assets, including any such assets that may be held by Grupo Financiero or its constituent companies. The four depositions noticed by ACIC consequently are proper because each of the proposed deponents is an officer, director or employee of La Republica. The fact that several of the deponents also hold a second position or title at Grupo Financiero does not diminish their ability to testify aboutLa Republica's assets based upon their affiliation with La Republica.
Several further observations concerning La Republica's foreign law objections to the asset discovery sought by ACIC are appropriate. First, as ACIC correctly notes, La Republica's offer to produce Mr. Martinez de la Mora, the chief executive officer of Grupo Financiero, to testify as a Rule 30(b)(6) witness in this case substantially undermines La Republica's foreign law objection. Although La Republica indicates that the witness was proffered merely because he was present at a November 3, 1999, pretrial conference in this case, (see Dec. 15, 1999, letter from Michael R. Hassan, Esq., to the Court at 2), La Republica cannot have it both ways. If Article 18(iv) broadly prohibits disclosures by anyone affiliated with a holding company, La Republica should not be in a position to offer Mr. Martinez de la Mora (or any of the other proposed deponents) "as a compromise." (See id.).
Second, Article 35 imposes a financial penalty of "up to five percent" of an infringing company's paid-in capital for any improper disclosures. La Republica has not established that it would, in fact, be required to pay a substantial fine for the sorts of disclosure sought by ACIC in this case. Moreover, any fine that La Republica may face could obviously have been avoided by posting the security previously required by this Court. Since La Republica failed to post that security, the quandary that it allegedly now faces is entirely its own doing.
Third, "[t]he party relying on foreign law has the burden of showing that such law actually bars [the] production" or testimony at issue. United States v. Vetco Inc., 691 F.2d 1281, 1289 (9th Cir. 1981). "In order to meet that burden, the party resisting discovery must provide the Court with information of sufficient particularity and specificity to allow the Court to determine whether the discovery sought is indeed prohibited by foreign law." Alfadda v. Fenn, 149 F.R.D. 28, 34 (S.D.N.Y. 1993). Here, apart from the conclusory assertions of its foreign law expert, La Republica has not offered any corroborative detail to establish that its interpretation of Rule 18(iv) is the correct one. Accordingly, it has not met its burden.
Finally, even if this Court were to conclude that La Republica would violate Mexican law by disclosing its Mexican assets to ACIC in this action, the blanket denial of ACIC's motion to compel would not necessarily be the result. Rather, in such circumstances, courts in this country typically analyze several factors relevant to principles of international comity to determine the respective interests of the United States and the country whose citizens are being asked to respond to the discovery requests. Madanes v. Madanes, 186 F.R.D. 279, 285 (S.D.N.Y. 1999) (Francis, M.J.). The United States Supreme Court has indicated that those factors are:
(1) the importance to the . . . litigation of the documents or other information requested;
(2) the degree of specificity of the request;
(3) whether the information originated in the United States;
(4) the availability of alternative means of securing the information; and
(5) the extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine important interests of the state where the information is located.Societe Nationale Industrielle Aerospatiale v. United States District Court, 482 U.S. 522, 544 n. 28, 107 S.Ct. 2542, 96 L.Ed.2d 461 (1987) (quoting tentative draft of Restatement of Foreign Relations Law of the United States (Revised) § 437(1)(c), subsequently adopted as Restatement (Third) of Foreign Relations Law of the United States, § 442(1)(c)). The last of these factors is of the greatest importance in determining whether to defer to the foreign jurisdiction. Madanes, 186 F.R.D. at 286; see Garpeg, Ltd. v. United States, 583 F. Supp. 789, 795 (S.D.N.Y. 1984) (Sweet, J).
In this case, the information sought by ACIC obviously is critical to its ability to collect on its default judgment against La Republica. Indeed, as La Republica concedes, all of its substantial assets other than its interest in a $25,000 trust fund are located in Mexico. Therefore, unless ACIC secures information concerning La Republica's Mexican assets, it will not be able to enforce its judgment. Of far greater importance for present purposes, absent such disclosure ACIC will not even be able to test La Republica's representation that all of its other assets are located exclusively in Mexico. It follows that the documents sought by ACIC are not only relevant, but "crucial."See Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468, 1475 (9th Cir. 1992).
Turning to the second factor, ACIC has filed an extensive set of interrogatories and document requests, as well as four notices of deposition. Nevertheless, with the possible exception of the deposition notices, La Republica has not objected that any of these discovery requests are impermissibly overbroad. Rather, their only general objections to disclosure were that Mexican law and the Mexican Order precluded compliance, that some of the requests sought privileged information, and, inexplicably, that La Republica did not wish to respond "unless and until [ACIC] withdraws its Motion to Compel Discovery." (See O'Donnell Cert. Exs. J [La Republica's Answers and Objections to Interrogatories] at 2, K [La Republica's Responses and Objections to Documents Requests] at 2). Thus, having failed to complain about any alleged overbreadth or burdensomeness, La Republica has waived such objections. See Fed.R.Civ.P. 33(b)(4), 34(b); Mills v. Energy Transp. Corp., No. 96 Civ. 4828, 1997 WL 795793, at *1 (S.D.N.Y. Dec. 30, 1997).
The third factor — location of the information — augurs against disclosure since all of ACIC's asset inquiries are apparently directed to information and people located in Mexico. This factor, however, is fully counterbalanced by the fourth factor — the unavailability of alternative means of obtaining substantially equivalent information, See Richmark, 959 F.2d at 1475-76; Vetco, 691 F.2d at 1290.
The final factor requires the Court to weigh the competing interests of the United States and the foreign jurisdiction. As noted, this is obviously the most important consideration. Here, the United States obviously has a great interest in the solvency of its insurance companies, one element of which is ensuring that their reinsurers honor their financial commitments. See Dean Constr. Co. v. Agricultural Ins. Co., 42 Misc.2d 834, 249 N.Y.S.2d 247 (Sup.Ct. Nassau County 1964) ("public policy of [New York] State is to afford residents protection against the obstacles encountered in pursuing their legal rights against alien insurers in foreign forums"), aff'd, 22 A.D.2d 82, 254 N.Y.S.2d 196 (2d Dept. 1964). On the other hand, Mexico apparently has an interest in restricting access to information about the "operations" of its holding companies. The level of that interest is difficult to gauge in this case since the Mexican government has not taken any steps to object to the discovery sought by ACIC. Similarly, La Republica has not adduced any evidence suggesting why Rule 18(iv) was promulgated or the precise national interest that it is intended to serve. As noted above, the willingness of La Republica to produce a Rule 30 (b)(6) witness to testify about its Mexican assets suggests that the terms of Rule 18(iv) are not applied inflexibly, and that holding companies and their constituent companies retain the ability to "deal" when faced with a discovery request that arguably violates Mexican law.
In these circumstances, where the balance of the national interests does not militate strongly against disclosure and all but one of the remaining factors tip the other way, principles of international comity plainly are not offended by ordering disclosure of the information sought by ACIC. The concerns expressed by La Republica can also be accommodated to a certain extent by requiring that the first asset deposition be taken pursuant to Rule 30(b)(6). Although ACIC questions La Republica's good faith, if the witness or witnesses proffered pursuant to the Rule are able to provide adequate information concerning La Republica's Mexican assets, it may not be necessary to require all four proposed deponents to testify. This determination, however, obviously cannot be made at this stage.
C. Request for Information Subpoenas
In addition to the foregoing discovery, ACIC seeks an order authorizing the issuance of information subpoenas pursuant to Rule 5524 of the New York Civil Practice Law and Rules. Rule 69 of the Federal Rules of Civil Procedure provides in the disjunctive that a judgment creditor may obtain discovery "in the manner provided in these rules or in the manner provided by the practice of the state in which the district court is held." (Emphasis added). This requires a judgment creditor to opt for one set of procedures or the other. F.D.I.C. v. LeGrand, 43 F.3d 163, 171-72 (5th Cir. 1995); 13 James Wm. Moore et al., Moore's Federal Practice § 69.04[2], at 69-15 (3d ed. 1999) ("Once the judgment creditor makes a clear election to use either the federal or state discovery methods, only that body of law (federal or state) and not the other, will apply."). Having elected to pursue discovery under the Federal Rules of Civil Procedure, and having moved to compel that discovery, ACIC can no longer seek discovery under the CPLR. ACIC's request for the issuance of information subpoenas consequently must be denied.
III. CONCLUSION
For the reasons stated above, it is hereby ORDERED that:
1. By June 30, 2000, the Defendant shall make one or more witnesses available pursuant to Fed.R.Civ.P. 30(b)(6) to testify about the assets of La Republica held in Mexico. If La Republica fails to comply with this directive, or if the Rule 30(b)(6) witness(es) cannot provide sufficient detail concerning those assets, La Republica shall make Carlos Hank Rhon, Carlos Hank Gonzalez, Arturo Martinez de la Mora, and Marco Cardenas Barquet available by July 31, 2000, for asset in Mexico. If any of the witnesses required by this paragraph not made available, ACIC may apply for letters rogatory to secure testimony.
2. By June 29, 2000, La Republica shall provide ACIC with complete answers to all outstanding interrogatories and document requests unless they call for privileged information, in which event it shall provide the privilege log required by Local Rule 26.2.
3. ACIC's request for information subpoenas is denied.
4. The Court will hold a further conference on July 11, 2000, at 10 a.m. to discuss, among other issues, the additional proceedings or papers required by the summary order recently entered by the Court of Appeals.
SO ORDERED.
Dated: New York, New York June 1, 2000
FRANK MAAS United Magistrate Judge