Opinion
INDEX NO. 653506/2011 MOTION SEQ. NO. 004
01-09-2014
STANDARD CHARTERED BANK, Plaintiff, v. AHMAD HAMAD AL GOSAIBI AND BROTHERS COMPANY, et al., Defendants.
PRESENT: HON. E
E-FILED
The following papers, numbered 1, were read on this motion to quash or narrow subpoenas:
| Papers | Papers Numbered |
| Notice of Motion-Affidavits-Exhibits | 1 |
| Memorandum of Law in Support | 2 |
| Affirmations in Opposition | 3 |
E, J:
Defendants-judgment debtors move to quash a subpoena duces tecum and information subpoena with restraining notice served by plaintiff-judgment creditor Standard Chartered Bank (Standard) upon PepsiCo, Inc. (Pepsi). In the alternative, defendants seek an order narrowing the subpoenas and/or for a protective order. Pepsi was not served with this motion and has not moved this Court for relief with respect to the subpoenas.
STANDING
A person other than one to whom a subpoena is directed does not have standing to move to quash the subpoena unless he has a proprietary interest in the subject documents or where they involve privileged communications. (Hyatt v State Franchise Tax Board, 105 AD3d 186, 194-195 [2d Dept 2013]). Defendants assert that they have standing to move to quash the instant subpoenas on the ground that the subpoenas seek all contracts between Pepsi and the defendants, documents which, they claim, include confidential proprietary information about defendants' bottling operations. In support of their claim defendants submit the affidavit of Eric L. Lewis, Globaf Legal Coordinator for defendant-judgment debtor Ahmad Hamad Al Gosaibi & Brothers Company ("AHAB"). Mr. Lewis alleges that he has personal knowledge of defendants' "business interests throughout the world," including the bottling and related contracts AHAB has signed with Pepsi and related companies. He claims that such agreements "typically include sensitive, commercial information such as the respective marketing obligations of the parties to the contract, production obligations and quotas, quality control obligations, health and safety obligations, trade mark usage, prices for product concentrate, retail price issues, standards for beverage manufacture, and indemnity obligations." (Lewis Aff. at 3, ¶7). He contends that all such terms and conditions are confidential, and that many constitute trade secrets.
Where a proprietary interest is asserted, standing has been granted where the subpoena sought documents in the possession of another actually belonging to the movant (see e.g. Matter of State of N.Y. Comm. on Governmental Operations of City of N.Y., 10 AD2d 306, 308 [1st Dept 1960]; Oncor Communications v State of New York, 165 Misc 2d 262, 265 [Sup Ct, Albany County 1995], aff'd 218 AD2d 60 [3d Dept 1996]). That is not the case here. Instead, the issue is whether defendants can claim standing with respect to their contracts with Pepsi and related companies.
A movant's status as a party to the contracts required to be produced by a subpoena, without more, is an insufficient interest in the subpoenaed material for purposes of standing to challenge the subpoena. (38-14 Realty Corp. v New York City Dept. of Consumer Affairs, 103 AD2d 804 [2d Dept 1984]; Ripa v Cathy Parker Mgt., Inc., 1997 WL 34846650 [Sup Ct, New York County 1997]). To the extent, however, that defendants claim that their business practices constitute sensitive commercial information, they may have demonstrated a sufficient proprietary interest to establish standing. (See e.g. Hyatt v State Franchise Tax Bd., 105 AD3d 186, 195 [2d Dept 2013]). However, even were the Court to find that defendants did demonstrate standing, they would not prevail on this motion for the reasons that follow.
PEPSI'S SUBSIDIARIES AND AFFILIATES
Plaintiff has agreed to limit the Information Subpoena to information in the possession of Pepsi and to eliminate those portions of the subpoena that sought information in the possession of Pepsi subsidiaries and affiliates. Thus, this aspect of the motion is moot.
SCOPE OF THE SUBPOENAS
Although the subpoena duces tecum originally called for production of documents created on or after January 28, 2007, plaintiff has agreed to limit the documents to be produced to those created on or after April 30, 2011. This does not render defendants' point moot, since the time parameters now called for still precede the date of entry of judgment in this Court. However, in an affidavit submitted in 2009 in the Grand Court of the Cayman Islands, AHAB's accountant alleged that AHAB was insolvent. As plaintiff contends, transfers made by AHAB while insolvent are subject to potential recovery as fraudulent conveyances (Debtor & Creditor Law §§273, 273-a, 276, 278), within the six-year statute of limitations for constructive fraud and, in the case of actual fraud, the longer of six years from the date of the conveyance or two years from discovery. (CPLR §§203(g), 213(1)). Thus, the time period for which plaintiff requests documents in its subpoena duces tecum is not overbroad.
Defendants contend that compliance with the subpoenas would expose Pepsi to civil and criminal penalties under the laws of Saudi Arabia. In support they offer the unsworn affidavit of AHAB's Saudi Arabian lawyer, Dr. Eyad Reda, who claims that absent consent of the account holder or royal or agency order, Article 19 of the Saudi Banking Control Law and Shari'ah principles of privacy prohibit disclosure of banking information to any third parties.
In opposition, plaintiff's expert, Muddassir H. Siddiqui, alleges that Article 19 prohibits such disclosure only by parties who come into possession of banking information during the performance of their duties under the Saudi Banking Control Law. He notes that since Pepsi does not operate as a bank under Saudi Law and is not an agent of the Saudi Arabian Money Authority, Article 19 imposes no restrictions on. Pepsi. Moreover, he contends, Saudi law and Shari'ah law obligate a Saudi debtor to fully disclose its assets to its creditors. Thus, Pepsi's disclosure pursuant to the subpoenas is consonant with Saudi law.
The Court accepts the opinion of plaintiff's expert. He supports it with specific citations and a copy of the Banking Control Law. Defendants' expert fails to specify what "parties" are subject to the requirements of the Saudi Banking Control Law and fails to specify the Shari'ah principles of privacy on which he relies.
Whether Shari'ah law is "law" or religious traditions that differ among Muslims is a factual issue (see, e.g., Awad v Ziriax, 754 F Supp2d 1298, 1306 [WD Okla 2010], aff'd 670 F3d 1111 [10th Cir 2012]). Moreover, as Standard notes, New York courts generally do not permit a party to avoid disclosure in response to a subpoena on the basis of religious laws or rules. (Matter of Congregation B'Nai Jonah v Kuriansky, 172 AD2d 35, 38-39 [3d Dept 1991]).
Defendants' citation of Richbell Info. Servs., Inc. v Jupiter Partners L.P. (32 AD3d 150, 156 [1st Dept 2006]) does not support their contentions. That case concerned pre-trial discovery from a party, not, as here, post-judgment discovery of judgment debtors' assets. Moreover, as noted, the requested disclosure would not be prohibited under Saudi law or Shari'ah principles.
Defendants further contend that the Pepsi subpoenas "require production of all contracts between Pepsi" and themselves, "includ[ing] confidential proprietary information about the [Judgment Debtors'] bottling operations." (See Defendants' Memo, at 13). However, plaintiff has agreed to limit the scope of the contracts to be produced by Pepsi to three categories: (1) contracts sufficient to the basic relationships between AHAB and Pepsi; (2) contracts sufficient to identify funds flowing between AHAB and Pepsi; and (3) contracts reflecting defendants' bank accounts or assets. In addition, plaintiff has agreed in principle with Pepsi to enter into a confidentiality agreement. As defendants have not articulated any confidential information that will not be covered by this agreement, this aspect of their argument is unavailing.
Defendants further object to the subpoena's request for information concerning transactions between Pepsi and persons or entities under the Judgment Debtors' control, arguing that such information is irrelevant to the satisfaction of judgment. "CPLR 5223 compels disclosure of all matter relevant to the satisfaction of judgment, and sets forth a generous standard which permits the creditor a broad range of inquiry through either the judgment debtor or any third person with knowledge of the debtor's property." (Gryphon Dom. VI, LLC v GBR Info. Serv., Inc., 29 AD3d 392, 393 [1st Dept 2006]) (citation and internal quotations omitted). Pepsi's records of transactions with entities controlled by AHAB may provide Standard with information, such as transfers AHAB made to or through related entities, that could aid Standard's efforts to enforce this Court's judgment. Defendants offer no authority to support their argument and have failed to meet their requisite burden of demonstrating that these requests are "utterly irrelevant" to satisfying this Court's judgment. (See Technology Multi Sources, S.A. v Stack Global Holdings, Inc., 44 AD3d 931, 932 [2d Dept 2007]; Liberty Co. v Rogene Indus., Inc., 272 AD2d 382, 383 [2nd Dept 2000]).
REQUEST FOR COPIES OF OTHER SUBPOENAS SERVED
Defendants seek the additional relief of an order directing Standard to provide them with copies of any other post-judgment subpoenas or restraining notices that it has served on third parties. While CPLR §2303(a) provides for notice to all parties of subpoenas served, this provision applies to pending civil judicial proceedings, not to post-judgment proceedings such as the instant, governed by CPLR §5224. Thus, this aspect of their motion is denied.
In accordance with the foregoing, it is hereby
ORDERED that the motion is denied.
This constitutes the decision and order of the court.
__________
Ellen M. Coin, A.J.S.C.