Securities and Exchange Commission v. Gallagher

Background

The Securities and Exchange Commission asked the court to admit excerpts from Nicholas Irwin’s videotaped deposition at trial instead of requiring Irwin to testify live. The SEC identified Irwin as a victim witness in its disclosures. It argued that Irwin was unavailable under Federal Rule of Evidence 804(a)(4) because of a condition described in a sealed submission. The SEC also asked to identify its trial exhibits by number instead of by letter. Gallagher opposed the request concerning Irwin but consented to numbered exhibits.

Unavailability and Former Testimony

Rule 804(a)(4) treats a witness as unavailable when the witness cannot testify because of an existing infirmity, physical illness, or mental illness. If the witness is unavailable, Rule 804(b)(1) permits former testimony from a lawful deposition when it is offered against the same party and that party had a similar motive and opportunity to examine the witness.

The court held that the SEC met its burden by submitting Irwin’s sealed declaration and a letter from a licensed therapist who had treated him for two years. The materials described Irwin’s diagnosis, symptoms, and concern that testifying at trial would trigger or aggravate his condition. The court therefore concluded that Irwin was unavailable to testify at trial.

The court also held that the deposition excerpts were admissible under Rule 804(b)(1). Gallagher was the same party against whom the testimony was offered, and the court found that he had the same motive and opportunity to examine Irwin during the deposition. The court rejected Gallagher’s argument that his questioning was not cross-examination because he had subpoenaed Irwin. It explained that the SEC had disclosed Irwin as a person with information supporting its claims and that, absent unusual circumstances, an adverse party’s deposition of such a disclosed person functions as cross-examination.

The court also rejected Gallagher’s argument that SEC objections prevented him from cross-examining Irwin. The court stated that objections, other than objections to the form of a question, are preserved for trial and do not instruct a witness not to answer. Gallagher had not asked the court to compel an answer to any question.

Remote Testimony

The court noted that Gallagher did not oppose remote testimony by Irwin if the SEC allowed one of Gallagher’s witnesses to testify remotely as well. Under Federal Rule of Civil Procedure 43(a), remote testimony may be allowed for good cause in compelling circumstances with appropriate safeguards. The court concluded, however, that the sealed submissions showed remote testimony would create the same possible triggering and aggravating circumstances as live testimony. The court therefore admitted the deposition excerpts instead.

Rulings

Judge P. Castel granted the SEC’s motion to use excerpts from Irwin’s videotaped deposition at trial. The court also granted the SEC’s request to identify its trial exhibits by number. Separately, the court granted the SEC’s letter motion to redact portions of its filings concerning these requests and directed the clerk to terminate that pending letter motion.