Standard Chartered Bank v Gosaibi
2014 NY Slip Op 30054(U)
January 9, 2014
Supreme Court, New York County
Docket Number: 653506/2011
Judge: Ellen M. Coin
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Slip Op 30001(U), are republished from various state
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York State Unified Court System's E-Courts Service,
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publication.
INDEX NO. 653506/2011
[*FILED:
1]
NEW YORK COUNTY CLERK 01/10/2014
NYSCEF DOC. NO. 176
RECEIVED NYSCEF: 01/10/2014
SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY
PART 63
PRESENT: HON. ELLEN M. COIN
INDEX NO.
653506/2011
MOTION DATE Sept. 18, 2013
MOTION SEQ. NO. 004
E-FILED
STANDARD CHARTERED BANK,
Plaintiff,
-against-
AHMAD HAMAD AL GOSAIBI
AND BROTHERS COMPANY, et al.,
Defendants.
The following papers, numbered 1, were read on this motion to quash ?r narrow
subpoenas:
Papers
Notice of Motion-Affidavits-Exhibits
Memorandum of Law in Support
Affirmations in Opposition
Papers Numbered
1
2
3
ELLEN M. COIN, J:
Defendants-judgment debtors move to quash a subpoena duces
tecum and information subpoena with restraining notice served by
plaintiff-judgment creditor Standard Chartered Bank (Standard)
upon PepsiCo,
Inc.
(Pepsi).
In the alternative, defendants seek
an order narrowing the subpoenas and/or for a protective order.
Pepsi was not served with this motion and has not moved this
Court for relief with respect to the subpoenas.
STANDING
A person other than one to whom a subpoena is directed does
not have standing to move to quash the subpoena unless he has a
proprietary interest in the subject documents or where they
1
[* 2]
Involve privileged communications.
(Hyatt v State Franchise Tax
Board, 105 AD3d 186, 194-195 [2d Dept 2013]).
Defendants assert
that they have standing to move to quash the instant subpoenas on
the ground that the subpoenas seek all contracts between Pepsi
and the defendants, documents which, they claim, include
confidential proprietary information about defendants' bottling
operations.
In support of their claim defendants submit the
affidavit of Eric L. Lewis, Global Legal Coordinator for
defendant-judgment debtor Ahmad Hamad Al Gosaibi & Brothers
Company ("AHAB").
Mr. Lewis alleges that he has personal
knowledge of defendants' "business interests throughout the
world," including the bottling and related contracts AHAB has
signed with Pepsi and related companies.
He claims that such
agreements "typically include sensitive, commercial information
such as the respective marketing obligations of the parties to
the contract, production obligations and quotas, quality control
obligations, health and safety obligations, trade mark usage,
prices for product concentrate, retail price issues, standards
for beverage manufacture, and indemnity obligations."
Aff. at 3,
~7).
(Lewis
He contends that all such terms and conditions
are confidential, and that many constitute trade secrets.
Where a proprietary interest is asserted, standing has been
granted where the subpoena sought documents in the possession of
2
[* 3]
~nother
actually belonging to the movant (see e.g. Matter of
State of N.Y. Comm. on Governmental Operations of City of N.Y.,
10 AD2d 306, 308 [1st Dept 1960]; Oncor Communications v State of
New York, 165 Misc 2d 262, 265 [Sup Ct, Albany County 1995],
aff'd 218 AD2d 60 [3d Dept 1996]).
That is not the case here.
Instead, the issue is whether defendants can claim standing with
respect to their contracts with Pepsi and related companies.
A movant's status as a party to the contracts required to be
produced by a subpoena, without more, is an insufficient interest
in the subpoenaed material for purposes of standing to challenge
the subpoena.
(38-14 Realty Corp. v New York City Dept. of
Consumer Affairs, 103 AD2d 804
Parker Mgt., Inc.,
1997]).
[2d Dept 1984]; Ripa v Cathy
1997 WL 34846650 [Sup Ct, New York County
To the extent, however, that defendants claim that their
business practices constitute sensitive commercial information,
they may have demonstrated a sufficient proprietary interest to
establish standing.
(See e.g. Hyatt v State Franchise Tax Bd.,
105 AD3d 186, 195 [2d Dept 2013]).
However, even were the Court
to find that defendants did demonstrate standing, they would not
prevail on this motion for the reasons that follow.
PEPSI'S SUBSIDIARIES AND AFFILIATES
Plaintiff has agreed to limit the Information Subpoena to
information in the possession of Pepsi and to eliminate those
3
[* 4]
portions of the subpoena that sought information in the
possession of Pepsi subsidiaries and affiliates.
Thus, this
aspect of the motion is moot.
SCOPE OF THE SUBPOENAS
Although the subpoena duces tecum originally called for
production of documents created on or after January 28, 2007,
plaintiff has agreed to limit the documents to be produced to
those created on or after April 30, 2011.
This does not render
defendants' point moot, since the time parameters now called for
still precede the date of entry of judgment in this Court.
However, in an affidavit submitted in 2009 in the Grand Court of
the Cayman Islands, AHAB's accountant alleged that AHAB was
insolvent.
As plaintiff contends, transfers made by AHAB while
insolvent are subject to potential recovery as fraudulent
conveyances (Debtor & Creditor Law §§273, 273-a, 276, 278),
within the six-year statute of limitations for constructive fraud
and, in the case of actual fraud, the longer of six years from
the date of the conveyance or two years from discovery.
§§203(g}, 213(1)).
(CPLR
Thus, the time period for which plaintiff
requests documents in its subpoena duces tecum is not overbroad.
Defendants contend that compliance with the subpoenas would
expose Pepsi to civil and criminal penalties under the laws of
Saudi Arabia.
In support they offer the unsworn affidavit of
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[* 5]
AHAB's Saudi Arabian lawyer,
Dr. Eyad Reda, who claims that
absent consent of the account holder or royal or agency order,
Article 19 of the Saudi Banking Control Law and Shari'ah
principles of privacy prohibit disclosure of banking information
to any third parties.
In opposition, plaintiff's expert, Muddassir H. Siddiqui,
alleges that Article 19 prohibits such disclosure only by parties
who come into possession of banking information during the
performance of their duties under the Saudi Banking Control Law.
He notes that since Pepsi does not operate as a bank under Saudi
Law and is not an agent of the Saudi Arabian Money Authority,
Article 19 imposes no restrictions on Pepsi.
Moreover, he
contends, Saudi law and Shari'ah law obligate a Saudi debtor to
fully disclose its assets to its creditors.
Thus,
Pepsi's
disclosure pursuant to the subpoenas is consonant with Saudi law.
The Court accepts the opinion of plaintiff's expert.
He
supports it with specific citations and a copy of the Banking
Control Law.
Defendants' expert fails to specify what "partiesn
are subject to the requirements of the Saudi Banking Control Law
and fails to specify the Shari'ah principles of privacy on which
he relies.'
1
Whether Shari'ah law is "lawn or religious traditions that
differ among Muslims is a factual issue (see, e.g., Awad v
Ziriax, 754 F Supp2d 1298, 1306 [WO Okla 2010], aff'd 670 F3d
1111 [10th Cir 2012]).
Moreover, as Standard notes, New York
5
[* 6]
Defendants' citation of Richbell Info. Servs., Inc. v
Jupiter Partners L.P.
(32 AD3d 150, 156 [1st Dept 2006]) does not
support their contentions.
That case concerned pre-trial
discovery from a party, not, as here, post-judgment discovery of
judgment debtors' assets.
Moreover, as noted, the requested
disclosure would not be prohibited under Saudi law or Shari' ah
principles.
Defendants further contend that the Pepsi subpoenas •require
production of all contracts between Pepsin and themselves,
0
includ[ing] confidential proprietary information about the
[Judgment Debtors'] bottling operations."
at 13).
(See Defendants' Memo.
However, plaintiff has agreed to limit the scope of the
contracts to be produced by Pepsi to three categories:
(1)
contracts sufficient to the basic relationships between AHAB and
Pepsi;
(2) contracts sufficient to identify funds flowing between
AHAB and Pepsi; and (3) contracts reflecting defendants' bank
accounts or assets.
In addition, plaintiff has agreed in
principle with Pepsi to enter into a confidentiality agreement.
As defendants have not articulated any confidential information
that will not be covered by this agreement, this aspect of their
argument is unavailing.
courts generally do not permit a party to avoid disclosure in
response to a subpoena on the basis of religious laws or rules.
(Matter of Congregation B'Nai Jonah v Kuriansky, 172 AD2d 35, 3839 [3d Dept 1991]).
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[* 7]
Defendants further object to the subpoena's request for
information concerning transactions between Pepsi and persons or
entities under the Judgment Debtors' control, arguing that such
information is irrelevant to the satisfaction of judgment.
"CPLR
5223 compels disclosure of all matter relevant to the
satisfaction of judgment, and sets forth a generous standard
which permits the creditor a broad range of inquiry through
either the judgment debtor or any third person with knowledge of
the debtor's property."
(Gryphon Dom. VI, LLC v GER Info. Serv.,
Inc., 29 AD3d 392, 393 [l"t Dept 2006]) (citation and internal
quotations omitted).
Pepsi's records of transactions with
entities controlled by AHAB may provide Standard with
information, such as transfers AHAB made to or through related
entities, that could aid Standard's efforts to enforce this
Court's judgment.
Defendants offer no authority to support their
argument and have failed to meet their requisite burden of
demonstrating that these requests are "utterly irrelevant" to
satisfying this Court's judgment.
(See Technology Multi Sources,
S.A. v Stack Global Holdings, Inc., 44 AD3d 931,
2007]; Liberty Co. v Rogene Indus., Inc.,
Dept 2000] ) .
7
932 [2d Dept
272 AD2d 382, 383 [2nd
[* 8]
REQUEST FOR COPIES OF OTHER SUBPOENAS SERVED
Defendants seek the additional relief of an order directing
Standard to provide them with copies of any other post-judgment
subpoenas or restraining notices that it has served on third
parties.
While CPLR §2303(a) provides for notice to all parties
of subpoenas served, this provision applies to pending civil
judicial proceedings, not to post-judgment proceedings such as
the instant, governed by CPLR §5224.
Thus, this aspect of their
motion is denied.
In accordance with the foregoing,
it is hereby
ORDERED that the motion is denied.
This constitutes the decision and order of the court.
Dated: January 9,
201~
Ellen M. Coin, A.J.S.C.
Case Disposed
8