Case of the Day: United States v. SLH2021 S.A.

Oil tanker at sea

The case of the day is United States v. SLH2021 S.A. (E.D. La. 2023). The PS Dream was a Panamanian-flagged tanker that was held by the US Coast Guard pending an investigation for violations of the Act to Prevent Pollution from Ships, the statute implementing the International Convention for the Prevention of Pollution from Ships. In order to secure the release of the vessel, the owner, SLH2021 S.A., the operator, Prive Shipping Denizcilik Ticaret A.S., and the disponent owner, Petro Plus General Trading LLC, entered into a security agreement and to post a $2 million bond with sureties. The agreement required the owners and operator to pay the crew’s salaries, room and board, and medical costs. The government alleged that the owners and operators breached this provision of the security agreement and sought an order requiring the defendants to comply, or in the alternative, a judgment for $2 million and forfeiture of the bond.

The government served notices of depositions of Prive and Petro Plus under FRCP 30(b)(6), the rule that requires entities to designate “one or more officers, directors, or managing agents, or designate other persons who consent to testify on its behalf” with respect to topics identified in the notice. Attached to each notice was a document labeled “subpoena duces tecum,” with a list of documents required to be produced at the time of the deposition. Maybe there is some special variant on federal practice in Louisiana, or in admiralty cases, that I have never heard of, but it strikes me as a surprising procedural faux pas by the government. The correct thing to do in this situation is to serve a request for the production of documents under FRCP 34. If you really do want to serve a subpoena on a party instead of serving a request for production of documents, for example, to get documents quicker than you would get them under FRCP 34, fine, but it has to be a real subpoena, in the form of a real subpoena and served as a real subpoena is served. The government, recognizing the problem, withdrew the “subpoenas.” But the defendants nevertheless sought a protective order, arguing that the depositions should take place in their home countries (Turkey and Dubai) rather than in the USA.

The general rule, which the court followed, is that the deposition of a corporate defendant should be taken at the defendant’s place of business rather than in the forum. (The rule is different, of course, for depositions of corporate plaintiffs, who have chosen the forum). But the circumstances in a given case can justify a departure from the ordinary rule. The issue is particularly interesting when the corporate defendant is in a foreign country. Courts split on whether that fact weighs in favor of conducting the deposition abroad, or whether it weighs against conducting the deposition abroad.

The judge rightly treated some of Letters Blogatory’s favorite issues as key issues in her decision. In Turkey, the government’s permission would be required to take the deposition. That permission would likely take months to obtain and might not be forthcoming. The legal situation was less clear in the UAE (although no doubt in practice many lawyers simply take depositions there without worrying themselves about the legality). Questions about the legality of taking depositions without foreign government permission, and concerns about the time it can take to obtain such permission, are, in my view, a very good reason for overcoming the presumption about the location of a deposition when the witness is abroad, at least in the absence of any showing of hardship. In other words, while it might not make sense to require an “ordinary person” sued in the United States to travel here for a deposition, the legal hurdles to taking depositions in many countries provide a good reason for compelling sophisticated defendants to travel to the United States to testify.

The court weighed other factors, which I won’t get into here, and decided that the government had met its burden to show that the depositions should take place in the US.

Photo credit: Sarvesh Lutchmun (CC BY-SA 4.0)

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