Federated States of Micronesia v GMP Hawaii, Inc. [2009] FMSC 45; 16 FSM Intrm. 648 (Pon. 2009) (22 December 2009)

FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2008-004

FEDERATED STATES OF MICRONESIA,
Plaintiff-Counterdefendant,

vs.

GMP HAWAII, INC., a Hawaii corporation, d/b/a GMP ASSOCIATES,
Defendant-Counterclaimant.

_________________

ORDER DENYING THE FSM'S REQUEST FOR SANCTIONS AND GRANTING GMP'S

Dennis K. Yamase
Associate Justice

Decided: December 22, 2009

APPEARANCES:

For the Plaintiff: Dana Smith, Esq.
Program Management Unit
Office of the FSM President
P.O. Box PS-4
Palikir, Pohnpei FM 96941

For the Defendant: Daniel M. Benjamin, Esq. (pro hac vice)
La Bella & McNamara, LLP
401 West A Street, Suite 1150
San Diego, California 92101

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HEADNOTES

Civil Procedure  Depositions; Civil Procedure  Discovery
Unless manifest injustice would result, the court will require that the party seeking discovery pay the opposing party's expert a reasonable fee for time spent in responding to discovery. Since the time spent cannot be known with certainty until after it has been spent, Rule 26(b)(4)(C) contemplates that, as a matter of general practice, payment will not be tendered to the opposing party's expert witness until after the discovery deposition has been completed. FSM v. GMP, Hawaii, Inc., 16 FSM Intrm. ---, --- (Pon. 2009).

Civil Procedure  Depositions
A party deposing the opposing party's expert witness is not required to pay expert fees for the deponent's time in advance of the deposition, absent an agreement to do so, and no rule permits a party to terminate a deposition for the failure to pay expert witness fees in advance. FSM v. GMP, Hawaii, Inc., 16 FSM Intrm. ---, --- (Pon. 2009).

Civil Procedure
If an FSM civil procedure rule that is identical or similar to a U.S. counterpart has not previously been construed, an FSM court may look to U.S. sources for guidance in interpreting the rule. FSM v. GMP, Hawaii, Inc., 16 FSM Intrm. ---, --- n.2 (Pon. 2009).

Civil Procedure  Depositions; Civil Procedure  Discovery; Civil Procedure  Sanctions
A party is not entitled to an order requiring that its expert witness receive payments in advance of, or during, a discovery deposition and since it is not entitled to such an order, its motion to impose sanctions because the opposing party has not made advance payments and to compel advance payments will be denied. FSM v. GMP, Hawaii, Inc., 16 FSM Intrm. ---, --- (Pon. 2009).

Civil Procedure  Depositions
Since an expert witness deponent's refusal to continue his deposition without advance payment was unjustified and contrary to the rules, the court will order that the deponent resume his deposition, and the party deposing him may notice his deposition. FSM v. GMP, Hawaii, Inc., 16 FSM Intrm. ---, --- (Pon. 2009).

Civil Procedure  Sanctions
Although Rule 37 sanctions cannot be imposed on the FSM except to the extent permitted by statute, when the FSM's opposition to the sanctions motion was not substantially justified and an award of expenses is not otherwise unjust, the court may order the deponent whose conduct necessitated the sanctions motion or the attorney advising such conduct or both of them to pay the reasonable expenses incurred in obtaining the sanctions order. FSM v. GMP, Hawaii, Inc., 16 FSM Intrm. ---, --- (Pon. 2009).

Civil Procedure  Sanctions
Rule 37(a)(4) requires an opportunity for hearing before a fees and expenses sanction is imposed and courts may comply with this requirement either by holding an oral hearing on adequate notice or by considering written submissions from the affected persons. FSM v. GMP, Hawaii, Inc., 16 FSM Intrm. ---, --- (Pon. 2009).

Civil Procedure  Depositions; Civil Procedure  Sanctions
A sanction award imposed on a deponent may be setoff against the expert fees owed him after his deposition has been completed. FSM v. GMP, Hawaii, Inc., 16 FSM Intrm. ---, --- (Pon. 2009).

Civil Procedure  Depositions; Evidence  Expert Opinion
A motion to exclude an expert witness's deposition testimony is premature when it is made before his deposition has been completed, and any motion to exclude his trial testimony on the ground of relevance before the deposition is complete is also premature. FSM v. GMP, Hawaii, Inc., 16 FSM Intrm. ---, --- (Pon. 2009).

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COURT'S OPINION

DENNIS K. YAMASE, Associate Justice:

On October 7, 2009, the plaintiff, Federated States of Micronesia, filed its motion for discovery sanctions. The defendant, GMP Hawaii, Inc. ("GMP"), filed its opposition on October 13, 2009. The motion is denied.

Also on October 13, 2009, GMP filed, with supporting memorandums and exhibits, its Motion for Sanctions and if Necessary to Compel and its Motion to Exclude Testimony of Andrew Yanoviak. The FSM filed, with supporting affidavits and exhibits, its opposition to GMP's sanctions motion on October 30, 2009, and to GMP's exclusion motion on November 4, 2009. On November 6, 2009, GMP filed, with supporting affidavit, its replies to both oppositions. GMP's motion for sanctions is granted in part and the motion to exclude Yanoviak's testimony is denied without prejudice.

The court's reasons follow.

I.

FSM attorneys traveled to Honolulu to, among other things, attend GMP's deposition of Andrew Yanoviak, the FSM's designated expert witness. Yanoviak stated that his expert fees were $500 per hour, with a minimum of two hours, to be paid in advance with a cashier's check. GMP acquiesced to one $1,000 advance payment because it knew its discovery deposition of Yanoviak would last at least two hours. The scheduled September 14, 2009 deposition was delayed from morning until afternoon at which time GMP tendered a $1,000 cashier's check and the deposition started. GMP's lead counsel appeared by video-conferencing[1] and when that became unworkable the deposition was continued to September 17, 2009, so that GMP's lead counsel could appear in person. Yanoviak insisted that GMP pay him $1,000 by certified check at the start of every two hours and that GMP sign a contract to that effect. GMP declined to proceed with its discovery deposition under those terms. Yanoviak declined to be deposed further. The FSM adopted Yanoviak's position.

II.

The FSM then filed this motion for sanctions. The FSM asks that the court order GMP 1) to make advance payment to its expert witness Andrew Yanoviak before GMP may depose Yanoviak; 2) to pay the FSM's cost to attend Yanoviak's noticed deposition in Honolulu, Hawaii; and 3) to pay the FSM's attorney fees and costs for bringing this motion.

The applicable rule, in pertinent part, provides that "[u]nless manifest injustice would result, (i) the court shall require that the party seeking discovery pay the expert a reasonable fee for time spent in responding to discovery . .㺼." FSM Civ. R. 26(. 26(b)(4)(C). Because GMP is seeking discovery of the FSM's expert, it is thus required to pay that expert a reasonable fee. Since the time spent cannot be known with certainty until after it has been spent, Rule 26(b)(4)(C) contemplates that, as a matter of general practice, payment will not be tendered to the opposing party's expert witness until after the discovery deposition has been completed.

A party deposing the opposing party's expert witness is not required to pay expert fees for the deponent's time in advance of the deposition, absent an agreement to do so. Harris v. Costco Wholesale Corp., 226 F.R.D. 675, 676 (S.D. Cal. 2005); cf. Congrove v. St. Louis-S.F. Ry., 77 F.R.D. 503, 504-05 (W.D. Mo. 1978).[2] No rule permits a party to terminate a deposition for the failure to pay expert witness fees in advance. Harris, 226 F.R.D. at 676-77.

Here, the only agreement to do so was an acquiescence to pay for the first two hours in advance. GMP was not, and is not, required to pay any other expert witness fees to Yanoviak before the completion of his deposition, and Yanoviak had no right to insist upon prior payment as a condition to continuing the deposition.

The FSM is therefore not entitled to an order requiring that its expert witness Andrew Yanoviak receive any other payments in advance of, or during, a discovery deposition. Since the FSM is not entitled to such an order, its other two claims for relief must also fail.

Accordingly, the FSM's motion is denied.

III.

GMP, in its sanctions motion, asserts that there were technical problems with the video-conferencing and that since Yanoviak was unresponsive during a series of questions, this required that the deposition be continued so that GMP's lead counsel could fly from San Diego to Honolulu, and that when the deposition resumed, Yanoviak refused to continue unless he was paid in advance every two hours but GMP refused to continue under those terms, which it considered unreasonable. GMP asks 1) that it be awarded its reasonable fees and costs for its attorney to travel to Honolulu to take Yanoviak's deposition; 2) that it be awarded its reasonable costs and fees for bringing its sanctions motion; and 3) that Yanoviak's further deposition be compelled on reasonable terms consistent with FSM Civil Rule 26(b)(4)(C)'s mandate. In its motion to exclude Yanoviak's testimony, GMP asks that Yanoviak be barred from testifying because, in GMP's view, he is biased and his qualifications are not appropriate for the conditions in the FSM, and his testimony is, or would be, irrelevant, unreliable, speculative, and biased. The FSM contends that any motion to exclude Yanoviak's deposition testimony is premature because the deposition has not yet concluded and that any motion to exclude his trial testimony is also premature and contrary to the Evidence Rule permitting expert testimony.

Since, as explained above, Yanoviak's refusal to continue his deposition without advance payment was unjustified and contrary to the rules, the court will order that Yanoviak resume his deposition. GMP's motion to compel his further deposition on reasonable terms is therefore granted. GMP may notice Andrew Yanoviak's deposition.

GMP may be entitled to sanctions. The FSM asserts that sanctions cannot be imposed on it because Civil Procedure Rule 37(f) provides that "[e]xcept to the extent permitted by statute, expenses and fees may not be awarded against the Federated States of Micronesia under this rule." However,

[i]f the motion [to compel] is granted, the court shall, after opportunity for hearing, require the party or deponent whose conduct necessitated the motion or the party, attorney, or trial counselor advising such conduct or both of them to pay to the moving party the reasonable expenses incurred in obtaining the order, including attorney or trial counselor fees, unless the court finds that the opposition to the motion was substantially justified or that other circumstances make an award of expenses unjust.

FSM Civ. R. 37(a)(4). The FSM's opposition to the motion was not substantially justified and an award of expenses is not otherwise unjust. Although the court cannot impose on the FSM a sanctions award for the expenses of the motion to compel, it may order Yanoviak, the "deponent whose conduct necessitated the motion" or the "attorney . .&# advising such conduct ouct or both of them to pay to" GMP "the reasonable expenses incurred in obtaining the order." Id.court may therefore order Yanoviak or the FSM's attorney, or both to pay GMP its reasonablenable expenses in obtaining this court order.

The court will not award GMP its expenses incurred by its lead attorney in attending the Honolulu deposition since it is uncertain how much of those expenses were due to the deponent's conduct and how much were due to technical difficulties and since GMP had other counsel present who may have been able to take over the questioning.

Since Rule 37(a)(4) requires an opportunity for hearing before a fees and expenses sanction is imposed and since courts may comply with this requirement either by holding an oral hearing on adequate notice or by considering written submissions from the affected persons, Adams v. Island Homes Constr., Inc.[2002] FMSC 9; , 10 FSM Intrm. 430, 432 (Pon. 2001), GMP shall file and serve, no later than January 18, 2010, its attorneys' fees and costs request for expenses incurring in obtaining this discovery order and shall include its position on how the sanction should be apportioned between FSM counsel and deponent Yanoviak. FSM counsel and Yanoviak shall have until February 1, 2010, to respond. The court expects that it will then rule on the request. Since any sanction award imposed on deponent Yanoviak will be setoff against the expert fees owed Yanoviak after his deposition has been completed, GMP shall place in a trust account any fees due Yanoviak until after the court has made its expense award. Once that award has been made, GMP shall promptly pay Yanoviak any balance due him.

Until Yanoviak's deposition has been completed, any motion to exclude any of his deposition testimony is premature. Any motion to exclude his trial testimony on the ground of relevance is also premature. The court notes that it is unlikely, given Yanoviak's stated qualifications, that Yanoviak would not have some technical knowledge that could assist the court to understand some part of the evidence or to determine some fact at issue in this case and on which Yanoviak may express an expert opinion. GMP's motion to exclude testimony by Yanoviak is accordingly denied without prejudice. The court suggests that GMP, if it should file some future motion to exclude Yanoviak testimony, should restrict the motion to some narrow area.

IV.

The FSM's motion for sanctions is denied. GMP's motion for sanctions is granted, as outlined above. GMP has until January 18, 2010, to file its request for expenses incurred in obtaining this order granting its sanctions motion. GMP's motion to exclude Yanoviak's testimony is denied without prejudice.

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^[1]GMP’s in-house counsel was present in person but did not participate in the questioning of the deponent.
^[2]If an FSM civil procedure rule that is identical or similar to a U.S. counterpart has not previously been construed, an FSM court may look to U.S. sources for guidance in interpreting the rule. See, e.g., Berman v. College of Micronesia-FSM, [2008] FMSC 32; 15 FSM Intrm. 582, 589 n.1 (App. 2008); Arthur v. FSM Dev. Bank, [2006] FMSC 59; 14 FSM Intrm. 390, 394 n.1 (App. 2006). FSM Rule 26(b)(4)(C)’s pertinent part is virtually identical to the U.S. rule and whether the FSM rule permits an expert witness deponent to require advance payment has not previously been considered.