Tag Archives: Bahamas

Case of the Day: Application of Coalition to Protect Clifton Bay

The case of the day is In re Application of the Coalition to Protect Clifton Bay (S.D.N.Y. 2014). Peter Nygård was the longtime owner of Nygård Cay in the Bahamas. Louis Bacon owned a neighboring parcel, Point House. The Coalition to Protect Clifton Bay had brought two actions in the Bahamas challenging the supposed failure of the Bahamian government to oversee Nygård’s expansion of Nygård Cay. Nygård sought to intervene in those actions. Bacon, who opposed Nygård’s work on his property, had separately sued several of Nygård’s associates for defamation, claiming they were part of a “smear campaign” against him. Nygård, taking a page perhaps from Steven Donziger, had a videographer, Stephen Feralio, who filmed “Nygård’s daily life, both personal and professional, including meetings between Nygård and Bahamian officials,” and who also allegedly “aided in the production of anti-Bacon videos.” The Coalition and Bacon, taking a page from Gibson Dunn, sought an order under § 1782 allowing a subpoena to Feralio to obtain the videos. Did I say taking a page from Gibson Dunn? I misspoke—Gibson Dunn is actually representing the Coalition and Bacon!
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Case of the Day: Costa v. Kerzner International Resorts

Update: Due to a problem with my HTML, I published a garbled version of this article this morning. Here’s the corrected version!

Atlantis Resort in the BahamasThe case of the day is Costa v. Kerzner International Resorts, Inc. (S.D. Fla. 2011). Jennifer Costa, who had been a guest at the Atlantis Resort in the Bahamas, sued the resort’s on behalf of a purported class of similarly disgruntled guests, sued Kerzner International Resorts, Inc., Kerzner International North America, Inc., Kerzner International Marketing, Inc., and PIV Inc., for unfair and deceptive practices. The claim was that the defendants charged a “mandatory housekeeping gratuity and utility service fee”, but that the whole fee did not go to the housekeepers as a gratuity or to pay for utility service.

The defendants objected to Costa’s requests for production of documents and interrogatories on the grounds that the information they sought was in the possession, custody, or control of the Bahamian affiliates. Costa moved to compel responses.

The magistrate judge held that the defendants, all US firms, satisfied the three-part test for possession, custody, and control set out in Steele Software Systems v. Dataquick, 237 F.R.D. 561 (D. Md. 2006). First, he noted that the defendants were part of a “unified corporate structure” with the Bahamian entities, and that they had control of the relevant information because “a subsidiary has access to and control over documents held by a foreign parent corporation, particularly when there is a close working relationship on a common transaction and the subsidiary could easily obtain the documents when it is in its interest to do so.” Second, the Bahamian affiliates were directly connected to the transactions at issue to the case, because the defendants transferred the fees collected to the Island Hotel Company, one of the Bahamian firms. Finally, the Bahamian affiliates would benefit from a victory for the defendants in the litigation, as the parent company would ultimately be responsible for damages to the plaintiff class.

The defendants asserted that Costa should make first resort to the Hague Evidence Convention, an argument the magistrate judge rejected out of hand in light of Aerospatiale. But the court seemed to regard Aerospatiale as support for a blanket rule that discovery aimed at foreign parties is always proper under the Federal Rules of Civil Procedure. In fact, Aerospatiale merely rejected the proposed rule that discovery aimed at foreign parties is never proper under the FRCP and must always proceed under the Convention. Probably the court should have engaged in a more detailed analysis of the requirements of comity in the particular circumstances of the case.

Photo credit: derekskey (license)

Case of the Day: Day v. Cornèr Bank (Overseas) Ltd.

Judge Lamberth, describing the allegations in the Case of the Day, Day v. Cornèr Bank (Overseas) Ltd. (D.D.C. 2011), wrote that they detailed “a sordid affair straight out of a Hollywood script—or at least a second-rate mystery novel.” The plaintiff was Tonya Kay Day. According to Day’s complaint, several years ago her mother, Lavera Jean Foelgner, told her of $14 million that she had accumulated “from participation for many years in the oil business.” During the conversation, Day alleges, Foelgner “cryptically” told Day of a bank in the Bahamas, Corner Bank, where she had deposited the funds. She showed Day a painting hanging on the wall of her home, which had a “mechanically printed” number on the back—supposedly the account number and password for the bank account. But Foelgner was “tragically and unexpectedly killed” a short time later by a drunk driver, before she was able to give the account statements to Day. Day spent several years investigating, and she ultimately concluded that the account her mother had told her about was held at Cornèr Bank (Overseas) Ltd., a wholly-owned subsidiary of the Swiss bank Cornèr  Banca S.A., based in the Bahamas. She hired a lawyer, who in turn contacted Graham, Thompson & Co., a Bahamian law firm, to seek its help. But according to the complaint, Graham, Thompson & Co., unbeknownst to Day, actually represented the bank and concealed that fact in order to “gain access to plaintiff’s ‘confidential information.'” The firm then withdrew from its representation of Day. Day took matters into her own hands and travelled to the Bahamas to visit the bank herself. According to Day’s allegations, the bank manager refused to let her in to the bank. Day then sued the bank, the Swiss parent, the bank manager, and the Bahamian law firm.

The defendants moved for sanctions under Rule 11 (the court denied the motions), but of more interest to Letters Blogatory readers is their motion to dismiss for insufficient service of process. Day had filed affidavits from a process server in the Bahamas averring that he had served the papers upon each Bahamian defendant by personal delivery. But the defendants submitted affidavits stating that they had been served only with the complaint, not with a summons. Day then sought to effect service under the Hague Service Convention. But in the interim, she had attempted to correct inconsistencies in her complaint by filing a “Notice of Correction” (what’s that?) but not an amended complaint. The defendants were ultimately served via the Bahamian central authority, but Graham, Thomspon & Co. continued to object to service on the grounds that the complaint it received from the central authority was, in light of the “Notice of Correction”, no longer the operative pleading.

In light of the service under the Convention, the judge determined that he did not need to decide whether the previous service was effective, and in particular, whether, as a matter of fact, the Bahamian process server had or had not served the summons with the complaint. The court also avoided the need to decide whether the “Notice of Correction” rendered the service improper, as on the defendants’ motion, it struck the Notice of Correction, which did not comply with Rule 15, the rule governing amendment to the pleadings. Thus the court denied the motion to dismiss for insufficient service of process.