Civil Practice – Jurisdiction – Discovery – Deposition Testimony – Foreign Officer – Minimum Contacts

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Cheatham v. Ribonomics, Inc. (Lawyers Weekly No. 11-15-0368 , 8 pp.) (John R. Jolly Jr., Chief Special Superior Court Judge) N.C. Bus. Ct.

Holding:The defendants shall make the officer of a Massachusetts-based wholly-owned subsidiary available for the taking of a deposition in the continental United States, even though the officer is a citizen and resident of Japan, where both the subsidiary and the officer have had minimum contacts with the state and where the legislature has granted the courts statutory authority to exercise jurisdiction in such an instance.

Facts

The plaintiffs moved to allow for the taking of a video deposition via teleconference.

One of the defendants, an initial investor in the named defendant, is a Japanese company based in Nagoya, Japan. It lent money to Ribonomics, Inc. after the company’s formation.

The investor’s president and CEO is Katsuhiko Nishida, a citizen and resident of Japan. Nishida also personally lent money to Ribonomics.

The court previously ordered the plaintiffs to complete their deposition of Nishida on or before April 15, 2011.

The plaintiffs filed a motion at that time asking the court to order Nishida to give his deposition testimony by video teleconference, because traveling to Japan is too expensive, time-consuming and wrought with uncertainties given the currently unsettled nuclear environment.

The defendants argued that Japanese law prohibits the taking of depositions by video teleconference and that the same would be impracticable given Nishida’s inability to speak fluent English.

Analysis

The issue before the court is how the plaintiffs may proceed in taking the deposition of Nishida, either individually or as a witness.

The ability of this court to compel a Japanese citizen to participate in a video teleconference deposition raises jurisdictional concerns and implicates notions of international comity.

The Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters protects the territorial sovereignty of foreign signatory states and is applicable when depositions of party witnesses are sought to be taken within the geographic boundaries of a foreign signatory state.

The Hague Convention does not deprive a district court of jurisdiction to order a foreign national party before it to produce evidence under the Federal Rules of Civil Procedure.

When depositions of foreign nationals are taken on American or neutral soil, courts have concluded that comity concerns are not implicated.

Based upon notions of international comity and foreign sovereignty, the court concludes that it would be improper for it to compel Nishida to testify in Japan by video teleconference.

Under the circumstances of this civil action, the court has the power to compel Nishida to appear on American soil for his deposition.

Still, when the plaintiffs initiated this civil action, they were charged with the knowledge that one or more relevant witnesses whose testimony might be sought were not residents of the United States, and that pragmatic issues might arise with regard to securing live discovery testimony from such persons.

The court has substantial discretion to specify the time and place of any deposition, and courts frequently compel agents of foreign corporations to appear for depositions on American soil.

While the court is unaware of any North Carolina case law directly on point, the above cited federal cases are instructive.

The question of whether the court can compel Nishida to appear in the United States to give deposition testimony depends on whether his company’s Massachusetts-based wholly-owned subsidiary and Nishida, as the company’s N.C. R. Civ. P. 30(b)(6) witness, is subject to the in personam jurisdiction of this court.

Whether the subsidiary and Nishida are subject to in personam jurisdiction depends on (1) whether the legislature has granted to the courts statutory authority to exercise its jurisdiction over the defendant, and (2) whether the exercise of jurisdiction comports with the due process limitations.

The General Assembly has granted courts statutory authority to exercise jurisdiction over foreign corporations engaged in business in the state under G.S. § 1-75.4(1)(d).

With regard to whether the exercise or jurisdiction comports with the due process limitations, before a state court may exercise personal jurisdiction over a non-resident defendant, certain minimum contacts with the forum state must be established so that maintenance of the suit would not offend traditional notions of fair play and substantial justice. A non-resident defendant must purposefully avail itself of the privilege of conducting activities within the forum state to be subject to personal jurisdiction in that state.

The subsidiary of Nishida’s company and Nishida have provided Ribonomics with initial and ongoing funding, and the subsidiary maintains an important and controlling interest in Ribonomics.

The court concludes that the subsidiary, through its relationship with Ribonomics, is engaged in substantial activity in this state for purposes of § 1-75.4(1)(d). The subsidiary and Nishida are subject to the in personam jurisdiction of the court.

Because the subsidiary is subject to the in personam jurisdiction of the court, it can be compelled under Rule 30(b)(6) to produce its officers, directors or managing agents (including Nishida) in the U.S. to give deposition testimony.

On or before May 20, 2011, the defendants shall make Nishida available in person for deposition in any one of the states of the U.S., other than Hawaii and Alaska. If the plaintiffs wish to depose Nishida, they shall do so in such state.

So ordered.