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Armenian Assembly of America, Inc. v. Cafesjian

October 22, 2010

THE ARMENIAN ASSEMBLY OF AMERICA, INC., ET AL., PLAINTIFFS/COUNTER-DEFENDANTS,
v.
GERARD L. CAFESJIAN, ET AL., DEFENDANTS/COUNTER-PLAINTIFFS.



The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge

PRETRIAL CONFERENCE MEMORANDUM OPINION AND ORDER

On October 18, 2010, the Court held a Pretrial Conference in the above-captioned consolidated actions. The Armenian Assembly of America ("the Assembly") and the Armenian Genocide Museum & Memorial, Inc. ("AGMM") (collectively, "Plaintiffs"), have filed a Consolidated Complaint against Defendants Cafesjian Family Foundation, Inc. ("CFF"), Gerard L. Cafesjian ("Cafesjian"), and John J. Waters Jr. ("Waters"). Plaintiffs allege that Cafesjian and Waters breached their fiduciary duties to AGMM and the Assembly, that Cafesjian breached his duty of good faith and fair dealing to the Assembly, and that Cafesjian and Waters misappropriated trade secrets of the Assembly. Defendants have filed a Streamlined Answer and Counterclaims alleging breaches of contract and the implied covenant of good faith and fair dealing by the Assembly and AGMM, as well as unjust enrichment and a claim for indemnification. The parties have waived their right to a jury trial, and the Court shall try these actions as the finder of fact.

On September 27, 2010, the parties filed their Joint Pretrial Statement setting forth their claims and defenses, witnesses, exhibits, deposition designations, itemization of damages and other relief, and other information relevant to the preparation of trial. Prior to the Pretrial Conference, the parties filed their respective objections to the Pretrial Statement, to which the parties each filed responses and replies. Plaintiffs have also filed motions in limine to exclude the expert testimony and report of both James C. Howard and Robert M. Krasne. Defendants have filed a Motion In Limine to Strike Plaintiffs' Damage Claims. These motions were fully briefed prior to the Pretrial Conference. The Court discussed these motions and objections and made various rulings on the record during the Pretrial Conference. This Memorandum Opinion and Order is intended to review and summarize those discussions and the rulings made on the record, and they are hereby incorporated and made a part of this order. The Court's rulings are based on the grounds set forth by the parties in their papers and during the Pretrial Conference.

DISCUSSION

A. Testimony of Gerard Cafesjian in Plaintiffs' Case-in-Chief

Plaintiffs seek to call Defendant Cafesjian to testify as a witness during their case-in-chief.*fn1 However, Cafesjian is not willing to appear voluntarily during Plaintiffs' case, and Plaintiffs are unable to subpoena him because he remains outside the subpoena power of this Court, which is limited to the District of Columbia and the area within 100 miles of the federal courthouse where this Court sits. See Fed. R. Civ. P. 45(b)(2) (stating that a subpoena may be served within the district of the issuing court or outside that district but within 100 miles of the place specified for trial). Cafesjian is planning to appear voluntarily to testify during Defendants' case-in-chief. However, his appearance will not occur until after Plaintiffs have rested their case. Therefore, Plaintiffs will be unable to subpoena Cafesjian in time for him to give testimony during their case-in-chief. During the Pretrial Conference, the Court asked whether the parties could come to an agreement that would enable Cafesjian, who is elderly and not planning to attend the entirety of the trial, to testify during Plaintiffs' case. The parties were unable to come to any agreement.

Plaintiffs contend, however, that Cafesjian may be compelled to testify by subpoena because he is a party witness, and they argue that Rule 45 does not protect party witnesses from having to travel to this forum to give testimony. Plaintiffs cite to decisions from a number of courts interpreting Rule 45 so as to permit the service of a subpoena on a party witness beyond the 100-mile radius of the court. See, e.g., In re Methyl Tertiary Butyl Ether ("MTBE") Prods. Liab. Litig., No. M21-88, 2009 WL 1840882, at *1 (S.D.N.Y. June 24, 2009) (allowing service of trial subpoenas on corporate defendant's officers outside the territorial limits of Rule 45(b)(2)); In re Ames Dep't Stores, Inc., No. 01-42217, 2004 WL 1661983, at *1-*2 (Bankr. S.D.N.Y. June 25, 2004); Am. Fed'n of Gov't Employees Local 922 v. Ashcroft, 354 F. Supp. 2d 909, 915 (E.D. Ark. 2003). These courts rely on the 1991 amendments to Rule 45, which added present paragraph 45(c) regarding the protections for witnesses served with a subpoena. Rule 45(c)(3)(A)(ii) provides that a court must quash or modify a subpoena that "requires a person who is neither a party nor a party's officer to travel more than 100 miles from where that person resides, is employed, or regularly transacts business in person-except that, subject to Rule 45(c)(3)(B)(iii), the person may be commanded to attend a trial by traveling from any such place within the state where the trial is held." Rule 45(c)(3)(B)(iii) provides that the issuing court may, on motion, quash or modify a subpoena if it requires "a person who is neither a party nor a party's officer to incur substantial expense to travel more than 100 miles to attend trial." These courts hold that because the restriction in subparagraph (c)(3)(A)(ii) applies only to nonparty witnesses, courts should draw an inverse inference and conclude that party witnesses may be subpoenaed beyond the territorial limits of subparagraph (b)(2). See In re Vioxx Prods. Liab. Litig., 438 F. Supp. 2d 664, 666-67 (E.D. La. 2006). This appears to be the conclusion of the majority of courts that have addressed this issue. See id. at 666 (citing cases).

However, an increasing number of courts have questioned the wisdom of this interpretation. See Iorio v. Allianz Life Ins. Co., No. 05cv633, 2009 WL 3415689 (S.D. Cal. Oct. 21, 2009); Dolezal v. Fritch, No. CV-08-1362-PHX-DGC, 2009 WL 764542 (D. Ariz. Mar. 24, 2009); Chao v. Tyson Foods, Inc., 255 F.R.D. 556 (N.D. Ala. 2009); Lyman v. St. Jude Med. S.C., Inc., 580 F. Supp. 2d 719, 733 (E.D. Wis. 2008); Johnson v. Big Lots Stores, Inc., 251 F.R.D. 213 (E.D. La. 2008); Jamsport Entm't, LLC v. Paradama Prods., Inc., No. 02 C 2298, 2005 WL 14917, at *1-*2 (N.D. Ill. Jan. 3, 2005); Johnson v. Land O'Lakes, Inc., 181 F.R.D. 388 (N.D. Iowa 1998). There is no controlling precedent in this jurisdiction, and only one court in this district appears to have considered this question. In Mazloum v. District of Columbia Metropolitan Police Department, 248 F.R.D. 725 (D.D.C. 2008), Judge John D. Bates criticized the majority view of Rule 45 as contrary to the text of the rule:

To begin with, based simply on the text of Rule 45(b)(2) it would seem that Rule 45(c)(3)(A)(ii) functions as a limitation on the scope of Rule 45(b)(2)(B) rather than an expansion of authority. In relevant part, Rule 45(b)(2) states: "Subject to Rule 45(c)(3)(A)(ii), a subpoena may be served at any place..." The phrase "subject to," of course, commonly refers to a constraint, and there is no reason to believe that it does not do so here. The majority position, however, appears to interpret that phrase as if it read: "In addition to the provisions of Rule 45(c)(3)(A)(ii), a subpoena may be served at any place..." That is an odd construction.

248 F.R.D. at 728. However, Judge Bates did not make a ruling with respect to the scope of Rule 45 as applied to party witnesses because it was not an issue properly presented to him. The issue is properly presented here, however, since Plaintiffs have indicated that they intend to subpoena Cafesjian to testify. Therefore, the Court must determine whether Rule 45 allows for the service of a trial subpoena on a party witness who is not within the territorial limitations of the Court's subpoena power as defined by Rule 45(b)(2).

Based on a careful consideration of the decisions of the various courts to address this issue, this Court agrees with the "minority" view that Rule 45 does not permit service of a trial subpoena on a party witness who is beyond the limits of Rule 45(b)(2). The plain language of Rule 45(b)(2) is simple and unambiguous:

Service in the United States.Subject to Rule 45(c)(3)(A)(ii), a subpoena may be served at any place:

(A) within the district of the issuing court;

(B) outside that district but within 100 miles of the place specified for the deposition, hearing, trial, production, or inspection;

(C) within the state of the issuing court if a state statute or court rule allows service at that place of a subpoena issued by a state court of general jurisdiction sitting in the place specified for the deposition, hearing, trial, production, or inspection; or

(D) that the court authorizes on motion and for good cause, if a federal statute so provides.

Fed. R. Civ. P. 45(b)(2). The language "Subject to Rule 45(c)(3)(A)(ii)" indicates that although the court's subpoena power extends to those areas described in subparagraphs (A) through (D), a subpoena must be quashed if it "requires a person who is neither a party nor a party's officer to travel more than 100 miles from where that person resides, is employed, or regularly transacts business in person-except that, subject to Rule 45(c)(3)(B)(iii), the person may be commanded to attend a trial by traveling from any such place within the state where the trial is held." Fed. R. Civ. P. 45(c)(3)(A)(ii). In other words, Rule 45(c)(3)(A)(ii) protects nonparty witnesses from having to travel more than 100 miles from where they reside or normally conduct business. The fact that it does not confer the same protections on party witnesses does not mean, however, that Rule 45(c)(3)(A)(ii) was intended sub silentio to expand the territorial reach of the courts' subpoena power over party witnesses. See Chao v. Tyson Foods, 255 F.R.D. at 559 ("It is... too tenuous an inference to conclude that because a court is not required to quash a subpoena issued to a party or a party's officer under Rule 45(c)(3)(A)(ii), it therefore has the power to compel the attendance of a party witness who was served beyond the explicit geographical limitations of Rule 45(b)(2) and that service of a subpoena is valid on a nationwide basis whenever the person served is a party or the officer of a party."); Johnson v. Big Lots Stores, 251 F.R.D. at 216 ("The phrase 'subject to' ordinarily operates to limit a power or right, not expand it."). Such a construction would effectively create nationwide subpoena service over party witnesses, which would be a dramatic change from the history of federal courts' subpoena power. See Vioxx, 438 F. Supp. 2d at 667-68 (discussing the history of territorial restrictions on courts' subpoena power). This Court agrees with the court in Johnson v. Big Lots Stores, Inc., that Rule 45(c)(3)(A)(ii) was not intended to effect such a change. See 251 F.R.D. at 219-22.

It is true that Rule 45(c)(3)(A)(ii) does not protect a party witness from having to travel more than 100 miles-or even all the way across the country-for trial. A party witness who is properly served with a trial subpoena is not entitled to have that subpoena quashed on the ground that it requires long-distance travel, unless such travel would amount to an undue burden or one of the other bases for quashing a subpoena under Rule 45(c)(3)(A). However, the party witness cannot be properly served unless he or she is served within the territorial limits of Rule 45(b)(2). Therefore, unlike a nonparty witness, a party witness may be served with a subpoena while temporarily in the district and commanded to appear notwithstanding the fact that he or she resides, is employed, or regularly transacts business in person more than 100 miles away in a different state. That is the most logical way to harmonize the language of subparagraphs (b)(2) and (c)(3)(A)(ii) of Rule 45. The "majority" interpretation erroneously elides the distinction between the limitations on service in 45(b)(2) and the limitations on enforcement for nonparty witnesses in 45(c)(3)(A)(ii). See, e.g., Creative Sci. Sys., Inc. v. Forex Capital Markets, LLC, No. C 04-3746, 2006 WL 3826730 (N.D. Cal. Dec. 27, 2006) (arguing that the minority view renders subparagraph (c)(3)(A)(ii) "pure surplusage"). In addition, the "majority" interpretation is in tension with the "unavailable witness" rule for the use of depositions at trial, which provides that "[a] party may use for any purpose the deposition of a witness, whether or not a party, if the court finds... that the witness is more than 100 miles from the place of hearing or trial." Fed. R. Civ. P. 32(a)(4)(B) (emphasis added). If party witnesses could so easily be subpoenaed to testify, the Federal Rules would not consider them to be "unavailable" in such circumstances.

Therefore, the Court finds that Plaintiffs cannot compel Cafesjian to give live testimony during their case-in-chief unless they properly serve him with a trial subpoena while he is within the geographic limits of this Court's subpoena power. However, Plaintiffs will be permitted to use Cafesjian's deposition pursuant to Rule 32(a)(4), and Plaintiffs have appropriately designated excerpts of his deposition testimony in their Pretrial Statement. The Court also notes that Cafesjian will be testifying during Defendants' case, and Plaintiffs will have the opportunity to cross-examine him at that time. During the Pretrial Conference, the Court asked Plaintiffs what additional questions they would ask Cafesjian that could not be admitted through his deposition testimony, but they did not specifically identify what additional evidence they seek to have admitted in their case-in-chief. Therefore, Plaintiffs have not provided the Court with any reason to consider altering the order of proof so as to enable Plaintiffs to directly examine Cafesjian after he gives testimony during Defendants' case. Plaintiffs should be prepared to present their case without live testimony from Cafesjian.

B. Plaintiffs' Objections to Defendants' Exhibits

Plaintiffs have asserted objections to several of Defendants' exhibits, which the Court shall address below.

1. Defendants' Exhibit 4 (Hovnanian Grant Agreement)

Plaintiffs object to the admission of Defendants' Exhibit 4, which appears to be an agreement between the Assembly and Hirair Hovnanian, one of the witnesses who will testify at trial. Plaintiffs purportedly object to the authenticity of the exhibit, but they concede that Mr. Hovnanian will testify that he recognizes his signature on the document. Defendants indicate that they will seek to admit this document to show that the Assembly made agreements with donors that included reversionary clauses. Plaintiffs dispute this interpretation of the exhibit, arguing that Mr. Hovnanian did not sign the agreement as a donor, and therefore there was no binding agreement with him. However, it is clear to the Court that Plaintiffs' objection goes to the weight of the exhibit rather than its authenticity. Therefore, the Court shall overrule Plaintiffs' objection as to the authenticity of Defendants' Exhibit 4.

2. Defendants' Exhibits 144, 146

Plaintiffs object to Defendants' Exhibits 144 and 146, which are letters sent between Plaintiffs' counsel and Defendants' counsel involving settlement negotiations in March and April 2007, prior to Defendants' filing of a lawsuit in the District of Minnesota. Plaintiffs move to exclude these exhibits under Federal Rule of Evidence 408 on the ground that they constitute "conduct or statements made in compromise negotiations regarding the claim." Defendants argue that these exhibits are not being offered to prove liability for a claim but rather to explain Defendants' motivation for and good faith in filing the Minnesota lawsuit and to prove that Plaintiffs were aware of Cafesjian's litigating position prior to the filing of the lawsuit, which are contested issues in this litigation. See Pls.' Consol. Compl. ¶¶ 209-22, 298(b). Rule 408 does not prohibit evidence of statements made in compromise negotiations if not offered to prove liability. See Fed. R. Evid. 408(b). Plaintiffs concede that the last three paragraphs of Exhibit 146 are relevant to the issue of notice and will stipulate to their admission. However, Defendants seek to admit the exhibits in their entirety. The Court agrees with Defendants that at least parts of these exhibits are admissible to show the litigation position that was taken by Plaintiffs that may have prompted Defendants to file a lawsuit. Because that is a contested issue in this case, Rule 408 does not bar their admission for this purpose. See Fed. R. Evid. 408, advisory comm. note (2006 Amendment) (explaining that Rule 408 does not bar evidence admitted to prove bad faith or notice). The Court will, however, limit its consideration of these exhibits to the particular paragraphs or sentences which are relevant for this purpose.

3. Defendants' Exhibits 259 and 166 (Informal Counsel Correspondence)

Plaintiffs object to Defendants' Exhibit 259, which is an email from Plaintiffs' counsel to Defendants' counsel sent on September 2, 2010, explaining which specific acts of self-dealing are alleged by Plaintiffs to have been committed by Defendants. During the Pretrial Conference, Defendants explained that they sought to use this email to help prepare their expert witness to rebut Plaintiffs' claims. The Court ruled that Defendants may use the email for that purpose, but it should not be admitted at trial as an exhibit, and Defendants' expert's testimony should be based on the evidence actually presented at trial rather than on this particular email. Therefore, the Court shall sustain Plaintiffs' objection to Defendants' Exhibit 259.

Plaintiffs also objected to Defendants' Exhibit 166, which is also correspondence between counsel. Because Defendants failed to address this in their opposition papers, the Court shall sustain this objection as conceded.

4. Defendants' Exhibit 258 (Legal Bills)

Plaintiffs object to Defendants' Exhibit 258, which is a summary chart of legal fees for which Defendants seek indemnification. Plaintiffs indicated that they are working with Defendants to obtain the supporting ...


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