Commercial Litigation and Arbitration

Negligent Accounting ≠ RICO Violation — Last Minute Cancellation of, and Failure to Attend Deposition One Has Noticed Is Sanctionable under Rule 30(g) — Sanction of Mandatory Continuing Legal Education

From Edmonds v. Seavey, 2010 U.S. App. LEXIS 10898 (2d Cir. May 27, 2010):

After more than a year of both formal and informal discovery, appellant has adduced no evidence that would permit a reasonable fact finder to conclude that the defendants have engaged in a pattern of "racketeering activity" within the meaning of the civil RICO statute. See 18 U.S.C. § 1961 et seq.; see also Spool v. World Child Int'l Adoption Agency, 520 F.3d 178, 183 (2d Cir. 2008). Instead, this case presents little more than a business dispute in which appellant — the aggrieved business partner — can demonstrate, at most, negligent accounting on the part of the defendants. Because that is plainly insufficient to prevail on a civil RICO claim, the court below properly dismissed it. See Qatar Nat'l Navigation & Transp. Co., Ltd. v. Citibank, N.A., No 89-civ-0464(CSH), 1992 U.S. Dist. LEXIS 14784, 1992 WL 276565, at *5 (S.D.N.Y. Sept. 29, 1992), aff'd 182 F.3d 901 (2d Cir. 1999) (summary order).

[Footnote 1] As there existed no independent basis for subject matter jurisdiction over appellant's remaining state law claims, the district court was well within its discretion to decline to exercise supplemental jurisdiction over those claims. See, e.g., Matican v. City of New York, 524 F.3d 151, 154-55 (2d Cir. 2008).

***The magistrate did not abuse his discretion in his May 5, 2009 order imposing sanctions based on the refusal of appellant's counsel to attend a deposition that he noticed, and the district court correctly affirmed that award. See Fed. R. Civ. P. 30(g) ***.

[Footnote 2] This Rule provides that "[a] party who, expecting a deposition to be taken, attends in person or by an attorney may recover reasonable expenses for attending, including attorney's fees, if the noticing party failed to[] . . . attend and proceed with the deposition." Fed. R. Civ. P. 30(g)(1).

Appellant's counsel purported to cancel the deposition of Mrs. Seavey the evening before it was to take place — a Sunday, no less — retaliation for the defendants' purported "obstructions in the discovery process." We agree that this proffered explanation is nothing more than pretext. Appellant's counsel did not even know the contents of the documents that were being "obstructed," much less whether they were relevant to the deposition when he cancelled it. And, in any case, the proper course would have been to proceed with the deposition while reserving the right to recall Mrs. Seavey and question her about subsequent disclosures if it proved necessary. See, e.g., Barrett v. Brian Bemis Auto World, 230 F.R.D. 535, 537 (N.D. Ill. 2005).

Finally, the district court's December 2, 2009 order imposing sanctions under Rule 11 was a legitimate exercise of discretion.*** Both the record in this case and the submissions of counsel confirm for our Court, a conclusion drawn below, that counsel does not appear to comprehend the function of the civil RICO statute. Thus, the district court's chosen sanction is particularly apropos: requiring that counsel attend CLE courses in the relevant subject area.

[Footnote 3] Notably, such a sanction is not without precedent. See, e.g., Balthazar v. Atl. City Med. Ctr., 137 Fed. Appx. 482, 490-91 (3d Cir. 2005) (unpublished); LaVigna v. WABC Television, Inc., 159 F.R.D. 432, 437 (S.D.N.Y. 1995).

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