United States Securities and Exchange Commission v. Collector's Coffee Inc.

Background

The United States Securities and Exchange Commission (SEC) moved to compel the deposition of defendant Mykalai Kontilai in New York. Kontilai asserted two grounds for refusing to appear there: he argued that he should not be deposed because of his pending asylum application, and he argued that the deposition should take place in Russia.

Asylum application

The court treated Kontilai’s refusal to cooperate in scheduling the deposition as subject to the same burden that applies when a party seeks a protective order. A protective order is a court order limiting or preventing discovery when the requesting party shows good cause. The court held that Kontilai had the burden to show good cause for declining to be deposed in New York.

Kontilai did not explain what burden he would suffer from complying with his legal obligations. His Russian-law expert asserted that appearing for a deposition in the United States could prejudice Kontilai’s ability to obtain asylum in Russia, but the court found that the declaration did not explain why. The court also relied on its earlier conclusion that any effect on Russia’s view of Kontilai’s compliance with United States discovery obligations would not constitute an “undue” burden. The court rejected Kontilai’s request to delay the proceedings to obtain briefs from asylum experts because he had not shown good cause for failing to obtain those materials earlier and had not explained why they would affect the decision.

Location of the deposition

The court explained that the party noticing a deposition usually chooses its location, but that courts have discretion to resolve location disputes. Although depositions of defendants are often presumed to occur where the defendant resides, the court declined to apply that presumption here because the SEC’s federal securities claims could not have been brought in Russia.

The court found it unnecessary to weigh the ordinary location factors because it concluded that a deposition in Russia was not legally possible under the circumstances presented. The SEC cited United States State Department information stating that the United States had not accepted Russia’s accession to the Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters, and that Russia generally does not permit voluntary depositions of willing witnesses in civil and commercial matters. Kontilai also proposed a videoconference deposition, but the court found that he had not explained how videoconferencing would overcome those legal barriers.

Ruling

The court ordered Kontilai to appear for his deposition in the district on a date agreed upon by the parties. If the parties could not agree, they could file proposed dates by letter on or before July 24, 2020, and the court would select a date. The court noted that Kontilai said he intended to invoke the Fifth Amendment at the deposition, but it did not consider that issue because he did not argue that it affected the deposition’s location or manner.

This was a discovery ruling about the timing and location of a deposition; it did not decide the merits of the SEC’s securities claims.