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Firefighters' Retirement System v. Citco Group Ltd.

United States District Court, M.D. Louisiana

June 30, 2017

FIREFIGHTERS' RETIREMENT SYSTEM,
v.
CITCO GROUP LIMITED, ET AL.

          RULING AND ORDER ON MOTION TO COMPEL

          ERIN WILDER-DOOMES UNITED STATES MAGISTRATE JUDGE.

         Before the court is a Motion to Compel Supplemental Interrogatory Responses (the “Motion to Compel”)[1] filed by defendants, Citco Banking Corporation N.V., The Citco Group Limited, Citco Fund Services (Cayman Islands) Limited, and Citco Technology Management, Inc. (collectively, “Citco”). Plaintiffs, Firefighters' Retirement System (“FRS”), Municipal Employees' Retirement System of Louisiana (“MERS”), and New Orleans Firefighters' Pension & Relief Fund (“NOFF”) (FRS, MERS, and NOFF are collectively referred to herein as “Plaintiffs”) have filed an opposition to the Motion to Compel, [2] and Citco has filed a Reply.[3] The parties discussed the Motion to Compel during the June 27, 2017 in court status conference. This Ruling and Order is intended to memorialize the oral rulings made during the status conference. For the reasons set forth during the June 27, 2017 conference, as well as those set forth herein, Citco's Motion to Compel is GRANTED IN PART AND DENIED IN PART.

         I. Background

         Citco has moved to compel Plaintiffs to provide supplemental discovery responses to various interrogatories.[4] Citco asserts that Plaintiffs' responses were untimely, are in some instances non-responsive, and improperly refer to external documents.[5] Citco further argues that despite its requests, Plaintiffs have failed to identify specific members of their Boards of Directors, employees, and/or investment committees that made the decision to invest in Leveraged and/or monitored that investment. Finally, Citco argues that Plaintiffs have failed to submit a sworn verification in conjunction with their interrogatory responses in contravention of the federal rules.

         In opposition to the Motion to Compel, Plaintiffs generally assert that the information necessary to respond more comprehensively to Citco's discovery requests is contained in Citco's own document production, which was produced after Plaintiffs issued their responses to the interrogatories. Plaintiffs further argue that Citco has propounded contention interrogatories that are more properly responded to at or near the end of the discovery period. Plaintiffs explain that their references to the Trustee's Report and Disclosure Statement, In re Fletcher Intl., Ltd., No. 12-12796, United States Bankruptcy Court, Southern District of New York and the Amended and Revised Status Report of the Trustee, In re Soundview Elite, Ltd., , No. 13-13098, United States Bankruptcy Court, Southern District of New York (collectively, the “Trustees' Reports”) are meant to: (1) establish the amount of funds Citco received between April 1, 2008 and June 20, 2008; and (2) explain the various relationships between the Citco entities.

         II. Law and Analysis

         A. Interrogatories at Issue

         Citco asserts that Plaintiffs have failed to provide substantive answers to various interrogatories, which have been propounded by the various Citco defendants to the three Plaintiffs (FRS, MERS, and NOFF). Citco's Motion to Compel includes the text of interrogatories issued by a particular Citco defendant to a particular Plaintiff. Identical interrogatories were issued by other Citco defendants to FRS, MERS, and NOFF and Plaintiffs have provided substantively similar responses thereto. This Ruling and Order applies equally to each identical interrogatory propounded to each Plaintiff. The following interrogatories, and the responses thereto, are included in Citco's Motion to Compel:

Interrogatory No. 1 of CFS Cayman to FRS: State whether You contend that CFS Cayman prepared and delivered to FRS in Louisiana the offering memorandum for the Series N shares of Leveraged, as alleged in paragraph 9 of the Petition, and, if so, state the basis for such contention.[6]
Interrogatory No. 2 of CFS Cayman to FRS: State whether You contend that CFS Cayman negotiated the investment structure for FRS's investment in Leveraged, as alleged in paragraphs 19 and 21 of the Petition, and, if so, state the basis for such contention.[7]
Interrogatory No. 10 of CFS Cayman to FRS: State whether You contend that CFS Cayman failed to take “industry-standard steps” in performing any services to Leveraged, as alleged in paragraph 74 of the Petition and, if so, (i) identify the “industry-standard steps” that You contend CFS Cayman did not take and (ii) state the basis for Your contention that such steps are “industry-standard.”[8]
Interrogatory No. 13 of CFS Cayman to FRS: State whether You contend that CFS Cayman provided “substantial assistance” and/or was a “substantial factor” in the sale of the Series N shares to FRS, as alleged in paragraph 114 of the Petition and, if so, state the basis for such contention.[9]
Interrogatory No. 14 of CFS Cayman to FRS: State whether You contend that CFS Cayman directly or indirectly controlled a person liable under La. R.S. 51:714(A) or occupied a similar status or performed a similar function as such a person, as alleged in paragraphs 120 to 124 of the Petition and, if so, identify (i) each person that CFS Cayman directly or indirectly controlled who You contend is liable under La. R.S. 51:714(A) or who occupied a similar status or performed a similar function as CFS Cayman; and (b) state the basis for Your contention that CFS Cayman directly or indirectly controlled such person(s) or that such person(s) occupied a similar status or performed a similar function as CFS Cayman.[10]
Interrogatory No. 15 of CFS Cayman to MERS: Identify every person or entity who participated in Your decision to invest in the Series N shares of Leveraged, including but not limited to investment advisors, investment brokers, consultants, promoters, placement agents, sales agents, investment firms, committee members, members of boards of directors, employees, agents, partners, or representatives, and as to each provide a brief description of their position and role in the decision.[11]
Interrogatory No. 16 of Citco Group to FRS: Identify all persons or entities that were involved in any way in the monitoring or retention of Your investments in the Series N shares of Leveraged, including but not limited to investment advisors, investment brokers, consultants, promoters, placement agents, sales agents, investment firms, committee members, members of boards of directors, employees, agents, partners, or representatives, and as to each provide a brief description of their position and role during the time You held Your investments in the Series N shares of Leveraged.[12]
Interrogatory No. 17 of CFS Cayman to FRS: In regard to Your allegations in Count II of the Petition (Third Party Beneficiary Claims), identify each provision of the Administration Agreement that was breached and state the basis for Your allegation that each such provision was breached.[13]
Interrogatory No. 17 of CTM to FRS: Identify each item of damages that You claim, and for each such item provide an explanation of how You computed each item of damages, including any mathematical formula or model used.[14]

         B. Timeliness of Responses

         As an initial matter, Citco asserts that Plaintiffs' responses to the interrogatories were late and therefore Plaintiffs' objections thereto should be waived. For all but one of the interrogatories at issue in the Motion to Compel, Plaintiffs have objected, asserting that the interrogatories ask FRS, MERS, and/or NOFF to provide facts that are “currently known solely by [Citco] or other defendants” and which are the subject of pending discovery requests[15] or require Plaintiffs to provide knowledge for persons who are not their employees or representatives.[16] Despite these objections, Plaintiffs have also provided responses to the interrogatories (the sufficiency of which is also questioned by Citco as discussed below).

         Citco explains that it propounded its first set of interrogatories on Plaintiffs on January 9, 2017 and thereafter provided an extension through February 22, 2017. Citco asserts that Plaintiffs did not provide responses by the February 22, 2017 date and instead served responses and objections on March 3, 10, and 13, 2017.

         “[A]s a general rule, when a party fails to object timely to interrogatories, production requests, or other discovery efforts, objections thereto are waived.” In re United States, 864 F.2d 1153, 1156 (5th Cir. 1989); See, Shaw Group Inc. v. Zurich American Ins. Co., 2014 WL 1891543, at *1, n.1 (M.D. La. May 12, 2014) (same); Godsey v. United States, 133 F.R.D. 111, 113 (S.D.Miss. Dec. 13, 1990) (“[T]here is authority within this circuit that does recognize the general rule that discovery objections are waived if a party fails to object timely to interrogatories, production requests, or other discovery efforts.”) (citations omitted). “Where parties have failed to respond timely to written discovery requests, this court has required those parties to answer interrogatories and produce documents without objections.” Shaw Group, Inc., 2014 WL 1891543, at *1, n.1 (noting that the court had previously ordered the defendant to submit complete responses, without objections, to plaintiff's discovery requests to which defendant had not responded, within seven days); See, Matherne v. Schramm, 2013 WL 5961096 (M.D. La. Nov. 7, 2013) (ordering plaintiffs to submit complete responses, without objections, to defendants' discovery requests to which plaintiffs had not responded); Johnson v. City of Baton Rouge, 2011 WL 709186, at *1 (M.D. La. Nov. 7, 2013) (ordering defendants to respond to plaintiff's discovery requests and provide all responsive documents, without objection, within ten days).

         Here, Plaintiffs do not contest Citco's assertion that an extension through February 22, 2017 was agreed upon, nor do they contest that their responses were provided after the February 22, 2017 date. Instead, Plaintiffs' position regarding the timeliness of its responses is based on the large number of documents Plaintiffs had to review prior to responding and the brief time period between their deadline to respond and their actual response date.[17] Plaintiffs assert that “[o]ut of the blue, Citco informed that the interrogatories had not been timely responded to despite the ongoing communications between”[18] the parties' counsel and that it was necessary to obtain Citco's document production before responding to the interrogatories.

         Citco contends that Plaintiffs provided responses to the interrogatories 9, 16, and 19 days after February 22, 2017. Plaintiffs have provided no explanation for their failure to seek an additional extension of time to respond past February 22, 2017. Under such circumstances, the general rule that Plaintiffs' objections to the interrogatories are waived should apply. However, Plaintiffs' objections do not relate to the relevancy of the requests, nor do they assert that responding to same would be unduly burdensome. Instead, Plaintiffs' objections are, for the most part, related to their position that supplemental responses to these interrogatories cannot be made until after additional discovery has taken place.[19] Such supplementation is required under the Federal Rules of Civil Procedure. Fed.R.Civ.P. 26(e)(1)(A) (“A party who has…responded to an interrogatory…must supplement or correct its…response: (A) in a timely manner if the party learns that in some material respect the…response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made know to the other parties during the discovery process or in writing….”). Plaintiffs' “objection” is more akin to an assertion that Plaintiffs have attempted to respond to the various interrogatories based on the information available to them, and that Plaintiffs' responses may be supplemented following additional discovery. While the general rule is that objections not timely raised are waived, the issue here is whether Plaintiffs should be required to provide supplemental responses without the opportunity to conduct additional discovery. The court cannot compel Plaintiffs to respond with information they do not have and, as discussed below, deferring such supplemental responses is within the discretion of the court. Under such circumstances, Plaintiffs' objection is simply not the sort that is waived by failure to timely respond to the discovery requests.

         With respect to Plaintiffs' objections based on their position that the interrogatories seek information regarding the knowledge of persons who are not Plaintiffs' employees or representatives, such objection, to the extent it is even applicable based on the wording of the interrogatories, is waived under the general rule.[20] The interrogatories at issue ask Plaintiffs to: (1) identify persons or entities who participated in the decision to invest in the Series N shares and provide a brief description of their position and role in the decision; and (2) identify persons or entities involved in monitoring or retention of the Series N investments and provide a brief description of their position and role. These interrogatories only ask Plaintiffs to identify the individuals and entities who participated in the decision to invest or the monitoring of that investment, they do not ask Plaintiffs to set forth the “knowledge” of such individuals or entities. Accordingly, Plaintiffs' objection based on its assertion that the requests seek information regarding the knowledge of individuals or entities who are not their employees or representatives does not appear to be responsive to the interrogatories in the first instance. Further, unlike Plaintiffs' “objections” based on the universe of knowledge currently available to it, there is no reason why Plaintiffs should not be able specifically identify at this juncture the persons and entities (and their positions and roles) involved in the investment decision or which monitored the investment. To the extent Plaintiffs' objection to these interrogatories would otherwise be relevant, such objection is waived based on the timeliness of Plaintiffs' responses.

         C. Responsiveness of Plaintiffs' Interrogatory Responses

         i. Identification of Individuals Involved in Investment Decision and/or Monitoring (Interrogatory 15 from CFS Cayman to MERS and Interrogatory 16 from Citco Group to FRS)

         Two of the interrogatories at issue in the Motion to Compel seek the identities of persons and entities involved in the decision to invest in the Series N shares or which monitored that investment:

Interrogatory No. 15 of CFS Cayman to MERS: Identify every person or entity who participated in Your decision to invest in the Series N shares of Leveraged, including but not limited to investment advisors, investment brokers, consultants, promoters, placement agents, sales agents, investment firms, committee members, members of boards of directors, employees, agents, partners, or representatives, and as to each provide a brief description of their position and role in the decision.
Interrogatory No. 16 of Citco Group to FRS: Identify all persons or entities that were involved in any way in the monitoring or retention of Your investments in the Series N shares of Leveraged, including but not limited to investment advisors, investment brokers, consultants, promoters, placement agents, sales agents, investment firms, committee members, members of boards of directors, employees, agents, partners, or representatives, and as to each provide a brief description of their position and role during the time You held Your investments in the Series N shares of Leveraged.

         In response to Interrogatory 15, MERS states that “the persons attending the February 14, 2008 and March 12, 2008 board meetings participated in the decision to invest in the Series N Shares of Leveraged. The names of the persons attending said meeting are contained in the transcription of said meeting being produced as FRS006924-FRS007050. In addition, MERS further identifies CSG, Joe Meals, and the members of the MERS Board as of April 1, 2008 in response to Interrogatory No. 15.” In opposition to the Motion to Compel, Plaintiffs further explain that Robert Rust was the executive director of MERS and that Mr. Rust stated prior to his termination that “Denis Keily never made a presentation to the MERS board like he did to the FRS Board and that Mr. Rust recommended approval after consulting with [CSC], a registered investment advisor with the SEC and the MERS investment advisor, and CSG employee Joe Meals….” Plaintiffs further assert that Mr. Rust “discussed the investment with Steven Stockhill of FRS and Richard Hampton of NOFF” and that “MERS is not aware of another person other than CSG, Joe Meals, and Robert Rust that evaluated the investments and made a recommendation to make the investment.”[21]

         In response to Interrogatory 16, FRS asserts that “that the persons attending the February 14, 2008 and March 12, 2008 board meetings participated in the decision to invest in the Series N Shares of Leveraged. The names of the persons attending said meeting are contained in the transcription of said meeting being produced as FRS006924-FRS007050. In addition, Plaintiff further identifies CSG, Joe Meals, and the members of the Board as of April 1, 2008 in response to Interrogatory No. 16.”

         As discussed above, to the extent Plaintiffs' objections to these interrogatories are even responsive to the requests, such objections have been waived. Moreover, Plaintiffs have not provided full responses to either interrogatory. Although Plaintiffs argued during the June 27, 2017 hearing that their current responses were sufficient, neither response sets forth a list of individuals or entities who participated in the decision to invest, or who monitored that investment. Although it appears that Plaintiffs have provided some information as to FRS, they have not provided similar information with respect to MERS or NOFF.[22] During the conference, Citco's Motion to Compel supplemental responses to Interrogatories 15 and 16 was GRANTED. Plaintiffs are ORDERED to provide supplemental responses to Interrogatory 15 setting forth the identities every person or entity who participated in the particular Plaintiff's decision to invest in the Series N shares of Leveraged, including a brief description of their position and role in the decision. Plaintiffs are FURTHER ORDERED to provide supplemental responses to Interrogatory 16 setting forth the persons or entities that were involved in any way in the monitoring or retention of the particular Plaintiff's investments in the Series N shares of Leveraged, including a brief description of their position and role during the time the particular Plaintiff held its investments in the Series N shares of Leveraged.

         ii. Reference to the Trustees' Reports (Interrogatories 1, 2, 10, ...


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