Monterey Bay Military Housing, LLC v. Ambac Assurance Corporation

Background

This opinion addresses a discovery dispute, not the underlying claims in the action. Ambac sought to compel the United States Department of the Army, and Jefferies sought to compel the United States Department of the Air Force, to produce organizational witnesses for depositions under Federal Rule of Civil Procedure 30(b)(6). The agencies were not parties to the case. They had declined to provide live deposition witnesses and offered to answer written questions instead.

On August 1, 2023, the court granted in part and denied in part the motions to compel. The court found that the agencies’ decisions to refuse live testimony were arbitrary and capricious under the Administrative Procedure Act. It required limited depositions: 4.5 hours concerning specified topics for the Army and 3.5 hours concerning specified topics for the Air Force. It also required the defendants to provide proposed exhibits in advance and set deadlines for completing the depositions.

The Army and Air Force objected to that order and filed the Stay Motion, asking the court to pause the depositions while Judge Paul G. Gardephe considered their objections. Ambac and Jefferies opposed the Stay Motion.

Legal standard

A stay is a temporary pause in court proceedings. The court considered four factors: whether the party seeking the stay was likely to succeed, whether it would suffer irreparable harm without a stay, whether a stay would substantially harm other interested parties, and the public interest. The party seeking the stay carried a heavy burden.

Because the earlier discovery order was nondispositive, it would remain in effect unless Judge Gardephe found it clearly erroneous or contrary to law. The court also considered the Administrative Procedure Act standards governing challenges to an agency’s denial of a request for testimony, as well as the federal subpoena rule that can provide an alternative basis for compelling discovery.

Court’s analysis

The court held that the Army and Air Force had not shown a strong likelihood of success on their objections. It rejected their argument that written answers could substitute for live Rule 30(b)(6) testimony, noting that the Federal Rules of Civil Procedure do not permit a subpoenaed party to make that election. The court also concluded that the earlier order’s limited deposition topics, time limits, and advance-exhibit requirement were authorized and that the agencies had not shown that the court was required to send the matter back to them instead of compelling the depositions.

The court also found no irreparable harm. The agencies relied on general assertions that witness preparation would divert personnel from other duties, but they provided no declaration or other evidence showing that the limited depositions would substantially interfere with an important government function. The court noted that the agencies had already offered to spend resources preparing written responses and that the earlier order had narrowed the depositions to reduce additional burdens.

The court treated the potential harm to Ambac and the other defendants as a neutral factor because they did not specifically claim financial hardship or increased litigation expenses from a delay. The public-interest factor was neutral, or possibly weighed against a stay, because delaying the depositions could prolong discovery and delay dispositive motions and trial.

Disposition

The court denied the Stay Motion. The order requiring the limited Army and Air Force Rule 30(b)(6) depositions therefore remained in effect. The clerk was directed to close the docket entry for the Stay Motion. This opinion did not decide the underlying claims or defenses in the case.