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SAS Institute, Inc. v. World Programming Ltd.

United States District Court, E.D. North Carolina

March 2, 2018




         This matter is before the court on renewed motion of plaintiff, judgment creditor herein, to compel responses to post-judgment interrogatories and request for production of documents (DE 722).[1] The judgment debtor defendant responded in opposition, and, upon leave of court, plaintiff replied. The parties thereafter filed additional documentation pertaining to the motion. In this posture, the issues raised are ripe for ruling. For the following reasons, the court grants in part and denies in part plaintiff's motion.


         On July 15, 2016, the court entered judgment in this matter awarding plaintiff, in pertinent, part, total damages of $79, 129, 905.00, comprising compensatory damages based upon breach of contract, fraudulent inducement to contract, and the North Carolina Unfair and Deceptive Trade Practices Act (“UDTPA”), as well as trebled damages based upon the UDTPA.

         Plaintiff initially filed on October 31, 2016, a motion to compel responses to post-judgment interrogatories and requests for production of documents, which motion the court denied without prejudice pending the outcome of appeal in this matter. On October 24, 2017, the court of appeals affirmed this court's July 15, 2016 judgment in pertinent part. See SAS Inst., Inc. v. World Programming Ltd., 874 F.3d 370, 375 (4th Cir. 2017). On December 8, 2017, the court entered an amended judgment, affirming the court's prior judgment in pertinent part, in accordance with the mandate of the court of appeals.

         Plaintiff filed the instant renewed motion on December 11, 2017, seeking an order compelling defendant to respond fully to plaintiff's “First Post-Judgment Interrogatories, ” and “First Post-Judgment Request for Production of Documents, ” served July 11, 2016, which are attached to plaintiff's memorandum . (See DE 722-2; 722-3). By way of summary, these discovery requests in aid to judgment collection seek information regarding defendant's financial interests, accounts, properties, assets, customers, transactions, and liabilities, without geographical limitation, as described in further detail in the analysis herein. Defendant's responses to these discovery requests, also attached to plaintiff's memorandum, include an objection to all requests to the extent they seek information regarding assets located outside of the United States. (See DE 722-4 at 2; DE 722-5 at 2). Defendant responded to some of plaintiff's requests relating to assets inside the United States, but also asserted additional objections based upon issues of confidentiality, burden, overbreadth, and irrelevance.

         In opposition to plaintiff's motion to compel, defendant argues that the court should deny plaintiff's motion to the extent it relates to assets located outside the United States, and that its other objections are valid. Defendant suggests that the court should grant relief consistent with a prior proposal to place in a “lockbox” defendant's ongoing United States revenue. Defendant relies upon a declaration of counsel Wayne F. Dennison; declaration of defendant's company director, Oliver Robinson; and defendant's responses to prior discovery requests during pendency of the lawsuit.

         In reply, plaintiff relies upon correspondence regarding the “lockbox” proposal, as well as additional documentation regarding corporate transactions involving defendant in the United Kingdom, further supplemented in filing made February 6, 2018. (See DE 729; 736). Plaintiff requested expedited consideration of the motion on February 20, 2018.[2] Defendant filed on February 28, 2018, a notice and declaration of United Kingdom counsel attaching court documents from plaintiff's execution proceedings in the United Kingdom. (See DE 746; 747).


         Federal Rule of Civil Procedure 69 provides that “[i]n aid of the judgment or execution, the judgment creditor . . . may obtain discovery from any person - including the judgment debtor - as provided in these rules or by the procedure of the state where the court is located.” Fed.R.Civ.P. 69(a)(2). “The rules governing discovery in postjudgment execution proceedings are quite permissive.” Republic of Argentina v. NML Capital, Ltd., 134 S.Ct. 2250, 2254 (2014). Under the federal rules, [3] “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case.” Fed.R.Civ.P. 26(b)(1). Relevance in the context of discovery is “construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978).

         Although the Fourth Circuit has not opined on the scope of postjudgment discovery, district courts, including those within this circuit, have recognized a “presumption . . . in favor of full discovery of any matters arguably related to the creditor's efforts to trace the debtor's assets and otherwise to enforce its judgment.” E.I. DuPont de Nemours & Co. v. Kolon Indus., Inc., 286 F.R.D. 288, 291 (E.D. Va. 2012). “It is generally true that the judgment creditor must be given the freedom to make a broad inquiry to discover hidden or concealed assets of the judgment debtor.” Id. at 291; Silicon Knights, Inc. v. Epic Games, Inc., 917 F.Supp.2d 503, 534 (E.D. N.C. 2012) (compelling discovery of “[i]nformation and documents pertaining to [defendant's] prejudgment assets and finances, ” as being “relevant to determining whether [defendant] has, in preparation for a possible judgment, secreted, hidden, wasted, or otherwise improperly disposed of assets”); cf. Republic of Argentina, 134 S.Ct. at 2254 (noting postjudgment discovery may be expected to encompass “investigation of any person shown to have any light to shed on the subject of the judgment debtor's assets or their whereabouts”) (quotations omitted).

         Here, plaintiff contends that defendant improperly has limited its responses or raised inadequate objections in several respects, which the court will address in turn below.

         A. Extraterritorial Discovery

         Defendant limits several responses to information about assets or transactions in the United States, and it objects to discovery of information about assets or transactions outside of the United States. In particular, defendant limits its responses to interrogatories 3-10, 15, 19-21, and document requests 2-3, 11-17, 19, 21, 26-27, to the United States where those discovery requests otherwise are not so limited geographically. Defendant also asserts a blanket objection to each interrogatory and document request “to the extent that it seeks information regarding assets located outside of the United States and is therefore not relevant to executing the judgment in the United States.” (DE 722-4 at 1-2; 722-5 at 1-2).

         Plaintiff contends in its motion that defendant should be compelled to supplement its responses without such territorial limitation, to the full extent of the scope of the questions posed. The court agrees with plaintiff. The federal rules and applicable caselaw do not provide grounds for limiting postjudgment discovery to a defendant's assets or transactions in the United States, to the exclusion of any and all other locations in the world. Indeed such a limitation is contrary to the purpose of postjudgment discovery to identify the whereabouts of a defendants assets, to trace their movement, and to discover hidden or concealed assets. See Republic of Argentina, 134 S.Ct. at 2254; EM Ltd. v. Republic of Argentina, 695 F.3d 201, 208 (2d Cir. 2012); E.I. DuPont de Nemours & Co., 286 F.R.D. at 291. Defendant has not identified, and this court has not found, any case where a court has required postjudgment discovery to be limited the United States, where, as here, a defendant has most of its assets abroad. Indeed courts that have addressed the issue consistently have determined to the contrary. See, e.g., id.; First City, Texas Houston, N.A. v. Rafidain Bank, 281 F.3d 48, 54 (2d Cir. 2002); Motorola Credit Corp. v. Uzan, 293 F.R.D. 595, 598 (S.D.N.Y. 2013).

         Defendant suggests that the propriety of limiting postjudgment discovery to the United States is a question open for debate, given that the Supreme Court expressly declined to address the issue in Republic of Argentina. Contrary to defendant's suggestion, however, Republic of Argentina does not leave much room for debate. There, the Supreme Court stated: “We . . . assume without deciding that, as the Government conceded at argument, and as the Second Circuit concluded below, in a run-of-the-mill execution proceeding the district court would have been within its discretion to order the discovery from third-party banks about the judgment debtor's assets located outside the United States.” 134 S.Ct. at 2255 (quotations omitted; emphasis added). The court then proceeded to decide the “single, narrow question before [the court] whether the Foreign Sovereign Immunities Act specifies a different rule when the judgment debtor is a foreign state, ” holding that it did not. Id. at 2255, 2258. In light of the Supreme Court's assumption, the government's concession, and the Second Circuit's holding in Republic of Argentina, coupled with the breadth of discovery authorized by the rules, the court declines to limit postjustment discovery to the United States, as a matter of law.

         Defendant argues Morrison v. Nat'l Australia Bank Ltd., 561 U.S. 247, 255 (2010), suggests a different result because it expressed the principle that “legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.” Morrison, however, is inapposite for several reasons. First, if Morrison controlled the instant issue of scope of postjudgment discovery under Rule 69, then there would have been no need for the Second Circuit and Supreme Court to consider the issue in Republic of Argentina. Second, the rule in Morrison is directed to “legislation of Congress, ” not federal rules of procedure. 561 U.S. at 255. Third, the question presented concerned whether a federal statute, particularly §10(b) of the Securities Exchange Act of 1934, applied to “misconduct in connection with securities traded on foreign exchanges”; it did not address the geographical scope of discovery applicable to litigants already subject to a judgment in federal court. 561 U.S. at 251. Accordingly, Morrison is not determinative of the issues raised by the instant motion.

         Defendant suggests in its objection that this is not a “run-of-the-mill execution proceeding, ” in part because execution of the judgment in the United Kingdom will be challenging. The fact that plaintiff ultimately may not be able to execute all or part of the judgment in the United Kingdom, however, does not provide a basis for foreclosing discovery on information about the location of defendant's assets in the United Kingdom, or elsewhere in the world. The Supreme Court rejected a similar argument in Republic of Argentina:

[Defendant] maintains that, if a judgment creditor could not ultimately execute a judgment against certain property, then it has no business pursuing discovery of information pertaining to that property. But the reason for these subpoenas is that [plaintiff] does not yet know what property [Defendant] has and where it ...

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