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Adelphia Recovery Trust v. Bank of America

December 29, 2009

ADELPHIA RECOVERY TRUST, PLAINTIFF,
v.
BANK OF AMERICA, N.A., ET AL., DEFENDANTS.



The opinion of the court was delivered by: James F. McClure, Jr. United States District Judge

(Judge McClure)

MEMORANDUM

BACKGROUND

The present matter before this Court arises out of the bankruptcy proceedings of Adelphia Communications Corporation ("ACC"). After ACC filed for bankruptcy in 2002, a recovery trust called the Adelphia Recovery Trust ("ART") was created. ART, the plaintiff in the present matter, has since filed an action in the United States District Court for the Southern District of New York against more than forty financial institutions and their respective investment banking firms ("Bank Defendants"). In this action, ART claims that the Bank Defendants "knowingly aided and abetted a fraud by the ACC's majority shareholders and directors . . . " by providing loans to particular subsidiaries of ACC. (Rec. Doc. No. 13 at 2). ART alleges billions of dollars in damages. Id.

As part of the underlying litigation in the Southern District of New York, this Court issued two subpoenas to appear for depositions and produce documents to two non-party witnesses living in Coudersport, Pennsylvania. The two non-party witnesses are Colin Higgin, the former Deputy General Counsel of ACC, and Karen Chrosniak Larsen, the former Director of Investor Relations. (Rec. Doc. Nos. 11 and 13). Both Higgin and Larsen appeared for their depositions, at which they invoked their Fifth Amendment right against self-incrimination to nearly all of the questions asked by the Bank Defendants' counsel.

On October 30, 2009, the Bank Defendants filed motions to compel the deposition testimony of Higgin and Larsen. (Rec. Doc. Nos. 11 and 13). Also on October 30, 2009, the Bank Defendants filed a motion to expedite consideration of their motions to compel the testimony of both Higgin and Larsen. (Rec. Doc. Nos. 12 and 14). On November 2, 2009, we granted the Bank Defendants' motion for expedited consideration of their motions to compel deposition testimony from Higgin and Larsen. (Rec. Doc. Nos. 15 and 16).

Pursuant to this expedited briefing schedule, Higgin filed a response to the Bank Defendants' motion to compel on November 9, 2009. (Rec. Doc. No. 18). Plaintiff ART filed a brief opposing the Bank Defendants' motions to compel the testimony of Higgin and Larsen also on November 9, 2009. (Rec. Doc. No. 20).

On November 16, 2009, the Bank Defendants filed reply briefs in support of their motions to compel the deposition testimony of Larsen and Higgen. (Rec. Doc. No. 23 and 24).

On November 24, 2009, we denied the Bank Defendants' motion to compel the deposition testimony of Higgin and Larsen and ordered an in camera hearing to determine the scope of Higgin and Larsen's Fifth Amendment privilege against self-incrimination. In our November 24, 2009 Memorandum and Order, we noted that relevant statutes of limitations had yet to run for federal crimes as to both Higgin and Larsen and that a real danger of self-incrimination existed for each witness. As such, we ordered an in camera hearing for both Higgin and Larsen to determine the scope of each witness's Fifth Amendment privilege against self-incrimination.

This Court conducted an in camera hearing with Higgin and Larsen on December 15, 2009, and December 28, 2009, respectively. Now, for the following reasons, we will grant in part the Bank Defendants' motion to compel with respect to Higgin and deny the Bank Defendants' motion to compel with respect to Larsen.

DISCUSSION

The issue before this Court is whether Larsen and Higgin properly have invoked their Fifth Amendment privilege against self-incrimination in the context of a subpoena to testify at a deposition.

Rule 26(b)(1) of the Federal Rules of Civil Procedure sets the contours for discovery and provides that "[p]arties may obtain discovery of any matter, not privileged, that is relevant to any party's claim or defense." The rule further states that "[r]elevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." It is well-settled that Rule 26 establishes a liberal discovery policy. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978); Hickman v. Taylor, 329 U.S. 495, 507-08 (1947); Great West Life Assurance Co. v. Levithan, 152 F.R.D. 494, 497 (E.D. Pa. 1994). As a general rule, therefore, discovery is permitted of any items that are relevant or may lead to the ...


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