INTL FCStone Markets, LLC v. Intercambio Mexicano de Comercio S.A. de C.V.

Background

The court addressed a discovery dispute arising during the deposition of Defendant Intercambio Mexicano de Comercio S.A. de C.V.’s principal and designated representative. Plaintiff INTL FCStone Markets, LLC alleged that Defendant failed to pay approximately $500,000 in margin debt in a commodities trading account. Plaintiff alleged that margin calls were not satisfied and that stop-loss orders led to liquidation of the account in December 2017. Defendant disputed the alleged debt and contended that the account was improperly terminated because Plaintiff did not provide a required date for liquidation.

Plaintiff asked the witness about Defendant’s financial ability to satisfy the margin calls during December 2017 and January 2018, including the amount of money Defendant had in the bank and whether it had an open line of credit. Plaintiff also asked about a January 4, 2018 meeting and later communications concerning the parties’ dispute. Defendant’s counsel instructed the witness not to answer those questions.

The Parties’ Positions

Defendant argued that its assets and ability to pay were irrelevant to whether either party breached the contract or to the amount of damages. Defendant also argued that the January 4 meeting and later communications were settlement discussions and therefore inadmissible under Federal Rule of Evidence 408(a), which generally limits the use of settlement-related conduct and statements to prove liability or the amount of a disputed claim.

Plaintiff argued that Defendant’s ability to pay was relevant to whether Plaintiff’s failure to specify a liquidation date affected the amount Plaintiff could recover. Plaintiff also argued that it was entitled to ask Defendant about statements and events involving Plaintiff itself, even if the communications were efforts to resolve the dispute. Plaintiff maintained that Defendant’s counsel had no valid basis under the deposition rule for instructing the witness not to answer.

Ruling

Judge Hellerstein overruled Defendant’s objections. The court stated that counsel may not instruct a deponent not to answer based on relevance, financial privacy, inadmissibility under Federal Rule of Evidence 408(a), or any combination of those grounds. The court ordered Plaintiff to resume the deposition.

The opinion does not state that the court finally decided whether the financial information or the settlement-related communications will be admissible at trial. Its ruling addressed the propriety of instructing the witness not to answer during the deposition.