Keawsri v. Ramen-ya Inc.

Background

The plaintiffs had obtained a judgment requiring Ramen-Ya Inc., Yasuko Negita, Masahiko Negita, Miho Maki, Y&S International Corporation, and Kenji Kora to be jointly and severally liable for damages, penalties, attorneys’ fees, costs, and post-judgment interest. The judgment included $687,825.81 in damages and penalties and $1,110,807.82 in attorneys’ fees and costs.

To collect the judgment, the plaintiffs served subpoenas seeking information about the judgment debtors’ assets, including identification documents, bank and investment account records, fund transfers, property, income, tax documents, business records, and certain contact information. The judgment debtors did not produce all requested materials and asserted that some documents were protected by the Fifth Amendment privilege against compelled self-incrimination.

The plaintiffs moved to compel production and sought contempt sanctions against defense counsel Vikrant Pawar and Martin Siegel. Ramen-Ya Inc. separately moved to vacate a $5,000 sanction imposed at an earlier conference, arguing that it lacked the ability to pay.

Fifth Amendment privilege and discovery

The court held that the individual judgment debtors had not waived the Fifth Amendment privilege merely by failing to assert it in their first objections to the subpoenas. However, claims covering categories of documents that were not specifically identified were waived.

The court rejected the claim that Yasuko Negita and Masahiko Negita could withhold their Japanese passports. The court reasoned that the existence and authenticity of the passports and related travel information were effectively already known or could be established through other sources. The court also rejected Miho Maki’s claims concerning her Japanese family registry, Japanese identification documents, and foreign investment accounts because her counsel did not explain how producing those documents would itself be incriminating.

The court ruled that foreign bank records from the previous five years had to be produced because federal law required those records to be maintained. Foreign bank records outside that required period, or records not covered by that requirement, could be withheld under the Fifth Amendment. The court also required production of records concerning international transfers and currency transactions because the relevant transactions were already reported or reportable to the government, making the information a “foregone conclusion.”

The court allowed the individual judgment debtors to withhold documents showing business income earned outside the United States when producing those documents could provide evidence of unreported income and create a risk of prosecution for tax fraud. It likewise allowed withholding of documents concerning income-producing foreign real estate. Documents concerning foreign real estate or other tangible property that did not involve income could not be withheld because the judgment debtors had not shown a real danger of self-incrimination.

Ramen-Ya Inc., as a corporation, could not invoke the Fifth Amendment privilege. The court also ordered production of the requested contact information for Naomi and Saori Negita and Haruna Maki, because the defendants did not assert a Fifth Amendment objection to that information.

Sanctions against counsel

The plaintiffs sought sanctions against Pawar and Siegel under the court’s inherent authority and 28 U.S.C. § 1927, which can require a lawyer to pay costs caused by unreasonably and vexatiously multiplying litigation. The court denied that request. Although the privilege arguments were largely unsuccessful and counsel had repeatedly raised weak discovery objections, the court found that counsel’s arguments were not so baseless that the court could infer they were made solely to delay the case or in bad faith.

Ramen-Ya Inc.’s motion to vacate the sanction

Ramen-Ya Inc. submitted tax and bank records showing no income during a stated period and zero balances in two accounts. The plaintiffs pointed to evidence that Ramen-Ya Inc. had received substantial COVID-19 relief funds and remained an active corporation.

The court denied Ramen-Ya Inc.’s motion to vacate the $5,000 sanction. The company’s evidence showed that two bank accounts had no money but did not clearly, plainly, and unmistakably establish that the company had no other way to pay the sanction.

Disposition

The court granted in part and denied in part the plaintiffs’ motion to compel post-judgment discovery and for sanctions against RYI Counsel. The court denied Ramen-Ya Inc.’s motion to vacate the sanctions. Sanctions would not run against Yasuko Negita, Masahiko Negita, or Miho Maki for records lawfully withheld under the opinion. For records improperly withheld, sanctions would begin if the records were not produced within seven days after the opinion and order issued.