United States District Court, M.D. Louisiana
FIREFIGHTERS' RETIREMENT SYSTEM, ET AL.
CITCO GROUP LIMITED, ET AL.
ON: (1) MOTION TO COMPEL DEPOSITION RESPONSES FROM THE
30(B)(6) REPRESENTATIVE OF CITCO FUND SERVICES (CAYMAN
ISLANDS) LIMITED, WIEKERT WEBER; AND (2) MOTION TO COMPEL
DEPOSITION RESPONSES FROM THE 30(B)(6) REPRESENTATIVE OF THE
CITCO GROUP LIMITED
WILDER-DOOMES, UNITED STATES MAGISTRATE JUDGE
the court are two motions seeking to compel additional
deposition testimony from certain of defendants'
corporate representatives: (1) Motion to Compel Deposition
Responses from the 30(b)(6) Representative of Citco Fund
Services (Cayman Islands), Limited, Wiekert Weber (the
“Motion to Compel CFS Deposition”); and (2) Motion to
Compel Deposition Responses from the 30(b)(6) Representative
of the Citco Group Limited (the “Motion to Compel Citco
Group Deposition”). Both Motions were filed by plaintiffs,
Firefighters' Retirement System (“FRS”),
Municipal Employees' Retirement System of Louisiana
(“MERS”), and New Orleans Firefighters'
Pension & Relief Fund (“NOFF”) (collectively,
“Plaintiffs”). Defendants, Citco Technology
Management, Inc. (“CTM”), Citco Banking
Corporation N.V. (“Citco Banking”), Citco Fund
Services (Cayman Islands) Limited (“CFS Cayman”),
and The Citco Group Limited (“Citco Group”)
(collectively, the “Citco Defendants”) have filed
an Opposition to each Motion.
reasons set forth herein, both Motions are
March 1, 2013, Plaintiffs filed this suit against 23
defendants, including the Citco Defendants, asserting claims
under the Louisiana Securities Act and Louisiana Unfair Trade
Practices Act, as well as third party beneficiary, unjust
enrichment, breach of contract, negligent misrepresentation,
and general tort claims. Plaintiffs' claims arise from a
$100 million investment loss. In April of 2008, the Louisiana
Funds purchased 100, 000 Series N Shares offered and issued
by FIA Leveraged Fund (“Leveraged”) for $100
million. After a series of investment transactions
initiated by Leveraged, in March of 2011, Plaintiffs sought
to redeem their Series N shares.Ultimately, the shares went
unredeemed and Plaintiffs determined that the investment was
illiquid and, thus, the N shares, for which there was no
market, were valueless.
to the instant Motions, Plaintiffs assert that
“affiliates of CFS Cayman, all ultimately owned by
Citco Group, received $50 million of the Offering Proceeds
from the Series N Offering of Leveraged at the time CFS
Cayman was serving as the administrator of the Leveraged
Fund….” Plaintiffs argue that they are entitled to
obtain deposition testimony from representatives of CFS
Cayman and Citco Group “to determine whether the Citco
Group, Administrator, and the entities owned by the Citco
Group (Citco Trading, Citco Trust, CFS Cayman, Citco Funds)
breached its own internal policies in accepting these
payments without disclosure to the Louisiana
Law and Analysis
to Fed.R.Civ.P. 37(a)(3)(B)(i), a party seeking discovery may
move to compel an answer where “a deponent fails to
answer a question asked under Rule 30….” For
purposes of this rule, “an evasive or incomplete
disclosure, answer, or response must be treated as a failure
to disclose, answer, or respond.”
Plaintiffs' Motion to Compel CFS Deposition is
complain that Wiekert Weber (“Weber”), who was
deposed individually and as the 30(b)(6) corporate
representative of CFS Cayman, “failed to respond to
questions asked about Citco's conflict of interest policy
and whether it was in accordance with the policy for Citco
affiliates to receive compensation from the proceeds of a
fund's offering where CFS Cayman also serves as the
independent administrator and not disclose the amount of
funds Citco received to the purchaser of the
securities.” Plaintiffs contend that Weber was
“evasive and non-responsive” when asked questions
regarding conflicts of interest and that they are
“entitled to receive a direct response from the
30(b)(6) corporate representative of CFS Cayman as to whether
a conflict of interest existed….” Plaintiffs
ask that the court require Weber to sit for an additional
hour-long deposition at defendants' cost.
specifically complain that despite Mr. Weber's position
as Compliance and Operations Manager of the Administrator, he
refused “to respond to questions asked about the
Administrator's conflict of interest policy and whether
it violated the Administrator's policy for Citco
affiliates to receive compensation from the
proceeds….” In opposition to the Motion, the
Citco Defendants contend that while Plaintiffs'
deposition notice set forth topics related to CFS
Cayman's conflict of interest policies,
Plaintiffs' counsel never asked any questions regarding
the policies themselves and instead asked confusing questions
without laying the necessary foundation regarding
hypothetical situations. The Citco Defendants further contend
that despite the confusing questions, Weber “actually
answered the very questions concerning conflict of interest
Plaintiffs now falsely claim he ‘refused' to answer
or to which he supposedly provided nonresponsive
undersigned has reviewed the portions of Mr. Weber's
deposition cited by the parties.Based on that review, the
court separates the questions posed to Mr. Weber into two
categories. First, Plaintiffs' counsel asked Mr. Weber
factual questions regarding CFS Cayman's duties as the
administrator. Second, Plaintiffs' counsel asked Mr.
Weber hypothetical questions seeking Mr. Weber's opinion
as to whether a proposed set of assumptions would constitute
a conflict of interest. With respect to the first category of
questions, it does not appear that Plaintiffs' counsel
attempted to clarify Mr. Weber's responses or otherwise
explain to Mr. Weber that his responses were inadequate. With
respect to the second category of questions, the court finds
that such hypothetical questions were inappropriately
directed to Mr. Weber in the first instance.
noted above, certain questions posed to Mr. Weber during the
deposition sought factual information regarding CFS
Cayman's duties. The questions and responses which fall
into this category and which Plaintiffs challenge are as
Q: And would you agree with me that an independent
administrator would mean that you're independent of any
conflicts? Isn't that correct?
A: As fund administrator in our duty to perform the fund
Q: Would you agree with me that an independent administrator
would have to disclose to investors any conflict of interest
that he may have?
A: I think that you pointed out yourself that [sic] offering
memorandum mentions that the voting shares are held with
Millennium (Cayman Islands) Foundation, which is an affiliate
of the administrator. I think that is the disclosure you were
Q: Well, no. I mean, my question is a little more broader
than that. Would you agree with me that an independent
administrator would have to disclose to investors any
conflicts of interest that it may have? Do you agree with
A: No, to the extent that I already mentioned to you on the
Q: And why do you believe that an independent administrator
would not have to disclose any conflicts of interest that it
A: Because it's not a conflict of interest.
Q: Do you know what a conflict of interest is?
A: I - I have an idea what it is.
Q: What would you say?
A: So that we would, for example, provide investment advisory
services and be the administrator to the Fund.
Q: Or that you may be the administrator of the Funds and
receive a substantial benefit from the offering proceeds;
isn't that correct?
A: I have no idea what you're -
undersigned considers the thrust of the above line of
questions to be to explore Mr. Weber's understanding of
what a conflict of is and what CFS Cayman's role as
administrator of the Funds was. With regard to these
questions, the undersigned does not consider certain of Mr.
Weber's answers to be non-responsive. For example, Mr.
Weber did provide a direct answer to the first question in
the above exchange, and provided an example of what he
understood a conflict of interest to be. However, with
regard to other questions in this exchange, the undersigned
finds Mr. Weber's answers to be confusing and, at least
based on the portion of the deposition transcript provided to
the court, seemingly non-responsive. Specifically, Mr.
Weber's references to voting shares and his insistence
that the issues regarding the voting shares were not a
conflict of interest does not seem to directly answer
Plaintiffs' counsel's questions. However, to the
extent Plaintiffs' counsel believed Mr. Weber's
responses to be inadequate, Plaintiffs' counsel had a
responsibility to ask follow-up or clarifying questions.
Especially in light of the parties' obligation to meet
and confer regarding discovery disputes and the fact that the
Citco Defendants' counsel attempted to explain that
Plaintiffs' counsel and Mr. Weber did not seem to be
talking about the same thing, the undersigned finds that
Plaintiffs' counsel had an obligation, to the extent
counsel believed Mr. Weber's responses to be confusing,
non-responsive, or otherwise inadequate, to ask clarifying
questions. Rather than doing so, it appears that
Plaintiffs' counsel moved on to what the court considers
the second category of questions, those asking Mr. Weber to
provide a conclusion as to whether a particular proposed
scenario would constitute a conflict of interest.
Hypothetical Questions/Questions Regarding Whether There Is A
Conflict of Interest
remainder of the questions to which Plaintiffs assert Mr.
Weber provided non-responsive answers fall within the second
category of questions, i.e., those seeking Mr.
Weber's opinion as to whether a proposed set of
assumptions would constitute a conflict of interest. The
following exchanges fall within this second category:
Q: Would the fact that you're receiving substantial
compensation out of the offering and also serving as the
administrator be a conflict of interest?
A: I beg to differ because our fees, as in our administration
agreement, are industry norm. There was nothing out of the
Q: Would the fact that you're receiving substantial
compensation other than fees out of the offering and also
serving as administrator be a conflict of interest?
A: No. sir.
[Counsel for Mr. Weber]: ...