Beverly Ohntrup v. Makina Ve Kimya Endustrisi Kur

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 12-4065
No. 12-4500
___________
BEVERLY OHNTRUP, ADMINISTRATOR OF THE
ESTATE OF ROBERT OHNTRUP; ROBERT OHNTRUP
v.
MAKINA VE KIMYA ENDUSTRISI KURUMU;
THE REPUBLIC OF TURKEY;
FIREARMS CENTER INCORPORATED
*Alliant Techsystems, Inc,
Intervenor in No. 12-4065
*(Pursuant to the Court's Order dated 12/28/12)
Beverly Ohntrup, Administrator of the Estate of Robert
Ohntrup, Deceased, and Beverly Ohntrup, in her own right,
Appellants
__________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D. C. No. 2-76-cv-00742)
District Judge: Honorable Mitchell S. Goldberg
___________
Argued September 25, 2013
Before: AMBRO, FISHER and
HARDIMAN, Circuit Judges.
(Filed: July 25, 2014)
William F. Ford, Esq. [Argued]
Rachel E. Stephens, Esq.
Lathrop & Gage
2345 Grand Boulevard
Suite 2200
Kansas City, MO 64108
Will W. Sachse, Esq.
Dechert
2929 Arch Street
18th Floor, Cira Centre
Philadelphia, PA 19104
Attorneys for Intervenor Alliant Techsystems, Inc.
Casey B. Green, Esq. [Argued]
Wade D. Albert, Esq.
Sidkoff, Pincus & Green
1101 Market Street
Suite 2700
Philadelphia, PA 19107
Attorneys for Appellant Beverly Ohnthrup
Thomas J. Sullivan, Jr., Esq. [Argued]
Viola Vetter, Esq.
Brady L. Green, Esq.
2
Morgan, Lewis & Bockius
1701 Market Street
Philadelphia, PA 19103
Attorneys for Appellee Morgan, Lewis & Bockius
____________
OPINION
____________
HARDIMAN, Circuit Judge.
These two appeals arise from the failure of a Turkish
arms manufacturer to pay a thirty-year-old judgment. The
first appeal (No. 12-4500) requires us to review the District
Court’s order granting counsel’s motion to withdraw.
Perceiving no abuse of discretion, we will affirm that order.
The second appeal (No. 12-4065) challenges the District
Court’s conclusion that certain post-judgment discovery
requests impose an “undue burden.” Because the District
Court erred when it relied upon the uncertainty surrounding
the judgment creditor’s ability to attach the targeted property,
we will vacate that order and remand.
I
The historical facts underlying this dispute are
incidental to the issues now before us, so we recount them
only briefly. In 1975, a pistol manufactured by the judgment
debtor malfunctioned, firing a bullet through Robert
Ohntrup’s hand while he loaded the gun. Robert and his wife
Beverly filed a products liability action in the District Court
against the seller of the pistol, Firearms Center, Inc., and its
owners. Defendants then impleaded the manufacturer of the
3
pistol, Makina ve Kimya Endustrisi Kurumu (MKEK), which
is wholly owned by the Republic of Turkey. After a bench
trial, the District Court entered a final judgment holding
Firearms Center and MKEK jointly liable for $847,173.97
and obliging MKEK to indemnify Firearms Center. MKEK
appealed and we affirmed. See Appeal of Makina ve Kimya
Endustrisi Kurumu (Ohntrup I), 760 F.2d 259 (3d Cir. 1985).
The law firm of Morgan Lewis & Bockius (the Firm or
Morgan Lewis) represented MKEK throughout the products
liability litigation. MKEK terminated the Firm after learning
that we dismissed its appeal in March 1985, and the Firm
filed a motion to withdraw. Under the local rules of the
United States District Court for the Eastern District of
Pennsylvania, an attorney must receive permission from that
court to withdraw unless his client appoints replacement
counsel. See E.D. Pa. Local R. 5.1(c). It permitted the
individual Morgan Lewis lawyers to withdraw but required
the Firm to remain as counsel of record until MKEK hired
substitute counsel.
The Firm appealed the partial denial of its motion to
withdraw, but we affirmed. Ohntrup v. Firearms Ctr., Inc.
(Ohntrup II), 802 F.2d 676 (3d Cir. 1986). In doing so, we
noted that the Firm filed its motion only a few months after
the Ohntrups initiated collection efforts, when it remained to
be seen whether MKEK would ultimately comply with the
District Court’s discovery orders. At that time, we viewed the
Firm as an important conduit for communication between the
Ohntrups and MKEK, which had already earned its reputation
as an “intract[a]ble litigant.” Id. at 679. Without the Firm, we
noted that the substantial communication gap between the
Ohntrups and MKEK would hamper post-judgment
proceedings. Id.
4
The Ohntrups tried in vain to collect their judgment, as
MKEK disregarded the Ohntrups’ discovery requests. The
Ohntrups sought assistance from the United States
Department of State and they pursued MKEK in the Turkish
courts, both to no avail. They also tried to add the Republic of
Turkey as a defendant under an alter ego theory, but Turkey
and MKEK ignored the District Court’s discovery orders in
that regard.
In 2007, eight years after Robert died of cancer,
Beverly, in her personal capacity and as administrator of
Robert’s estate (collectively, Ohntrup), obtained a $16 million
civil contempt judgment against MKEK that grows by
$10,000 annually until MKEK complies with discovery.
Meanwhile, the original judgment continues to increase by
ten percent each year to account for delay damages.
Ohntrup’s judgments against MKEK are now worth about
$25 million.
Over twenty-five years have passed, and MKEK has
yet to respond to a discovery request or participate in any way
in post-judgment proceedings. Despite having been thwarted
at seemingly every turn, Ohntrup’s lawyers continue their
dogged pursuit of MKEK. In 2011, they learned of a $16.2
million transaction in which a Minneapolis-based company
called Alliant Techsystems, Inc. (Alliant), agreed to sell
munitions manufacturing components to MKEK. Ohntrup
obtained some initial discovery from Alliant, but the District
Court entered an order denying Ohntrup’s subsequent
discovery requests. When Ohntrup recently renewed her post-
judgment discovery efforts, Morgan Lewis again sought leave
to withdraw as counsel for MKEK. This time, the District
Court granted the motion to withdraw. Ohntrup appeals both
orders.
5
II
The District Court had jurisdiction pursuant to 28
U.S.C. § 1332. We have jurisdiction over both appeals
pursuant to 28 U.S.C. § 1291. In Morgan Lewis’s previous
appeal of this dispute, we applied the doctrine of “practical
finality” to exercise jurisdiction over its appeal of the District
Court’s order denying its motion to withdraw from
representing MKEK. Ohntrup II, 802 F.2d at 678. For the
reasons stated in that opinion, we have jurisdiction over
Ohntrup’s present appeal of the District Court’s order
granting the Firm’s withdrawal from representing MKEK
(No. 12-4500).
As for Ohntrup’s appeal of the District Court’s order
denying post-judgment discovery in aid of execution (No. 12-
4065), the same rationale again leads us to conclude that we
have jurisdiction. The District Court’s order in that appeal
prevents Ohntrup from learning more about the munitions
manufacturing components she claims belong to MKEK.
Without that information, Ohntrup is unable to attach the
property. The District Court’s order ends Ohntrup’s pursuit of
that property, and to deny jurisdiction would render the
District Court’s order effectively unreviewable. This would
be inappropriate for the same reasons found by some of our
sister courts, which have applied the doctrine of practical
finality to exercise jurisdiction over orders denying post-
judgment discovery. See Wilkinson v. F.B.I., 922 F.2d 555,
558 (9th Cir. 1991), overruled on other grounds by Kokkonen
v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994); United
States v. McWhirter, 376 F.2d 102, 104–06 (5th Cir. 1967);
see also Saldana-Sanchez v. Lopez-Gerena, 256 F.3d 1, 7
n.12 (1st Cir. 2001) (endorsing this proposition). We join
those courts in holding that a judgment creditor may appeal
6
from the denial of discovery in aid of execution. Accordingly,
we have jurisdiction to hear both appeals.
III
Having established our jurisdiction, we turn to
Ohntrup’s appeal of the District Court’s order granting
Morgan Lewis’s motion to withdraw. After Ohntrup recently
restarted efforts to collect on the judgment, the Firm renewed
the request the District Court denied over twenty-five years
ago and asked for permission to withdraw as counsel for
MKEK. Finding that continued representation would serve no
meaningful purpose, the District Court entered an order
granting the motion. We review that decision for abuse of
discretion. Ohntrup II, 802 F.2d at 679.
Our decision in Ohntrup II and this appeal both
implicate the relevant local rule for attorney withdrawal,
which provides: “An attorney’s appearance may not be
withdrawn except by leave of court, unless another attorney
of this court shall at the same time enter an appearance for the
same party.” E.D. Pa. Local R. Civ. P. 5.1(c).1 Although we
affirmed the District Court’s order in Ohntrup II, we took
issue with the notion that Morgan Lewis could not withdraw
until MKEK hired substitute counsel. We said in that regard:
We do not believe that such a result
automatically follows in all cases from the
language of [Local Rule 5.1(c)]. Otherwise, a
lawyer in the present situation might be unable
to withdraw at any time. Such a result is neither
1
Formerly E.D. Pa. Local R. Civ. P. 18(c).
7
mandated nor required for the effective
administration of the judicial system. Rather,
we conclude that a law firm is entitled to
withdraw once the firm demonstrates to the
satisfaction of the district court that its
appearance serves no meaningful purpose,
particularly insofar as an opposing interest is
concerned.
Id. at 679–80.
A panel of our Court and district courts within the
Third Circuit have interpreted the quoted passage in Ohntrup
II as enunciating a “meaningful purpose” test that guides the
district court’s discretion on a motion for leave to withdraw.
These courts have formulated three- and four-factor tests to
decipher the import of “meaningful purpose.”2 We perceive
two problems with that approach. First, there is no multi-
factor test that a district court must apply to decide a motion
for attorney withdrawal. Rules regarding attorney withdrawal
are necessarily general because of the context-laden nature of
such determinations. The interests to be considered will vary
widely from case to case. Second, contrary to the District
2
See, e.g., Buschmeier v. G&G Investments, Inc., 222
F. App’x 160 (3d Cir. 2007); Best Med. Int’l, Inc. v. Accuray,
Inc., No. 2:10-CV-1043, 2014 WL 281676 (W.D. Pa. Jan. 24,
2014); Sharp v. Verizon Del., Inc., No. 11-1209, 2012 WL
6212615 (D. Del. Dec. 12, 2012); S.E.C. v. Asthma Disease
Mgmt., Inc., No. 02-7436, 2012 WL 1658410 (E.D. Pa. May
11, 2012); Select Brokerage Servs., Inc. v. Asset Building
Consultants, Ltd., No. 10-953, 2011 WL 283186 (W.D. Pa.
Jan. 26, 2011); Worldspan, L.P. v. Ultimate Living Grp., LLC,
No. 03-1081, 2006 WL 1046942 (D. Del. Apr. 20, 2006).
8
Court’s interpretation, its discretion to grant a motion to
withdraw does not begin with whether the attorney serves a
meaningful purpose. Rather, we stated that when the law firm
serves no meaningful purpose, it “is entitled to withdraw.”
Ohntrup II, 802 F.2d at 680 (emphasis added). That is, it
would be an abuse of discretion to deny its motion to
withdraw. “The very concept of discretion presupposes a zone
of choice within which the trial courts may go either way.”
Kern v. TXO Prod. Corp., 738 F.2d 968, 971 (8th Cir. 1984).
The point at which the law firm no longer serves a
meaningful purpose in the case marks the outer boundary of
the District Court’s discretion because withdrawal would be
required at that point. By requiring “leave of court” before an
attorney may withdraw, the local rules commit the decision
on attorney withdrawal to the discretion of the district court.
And that discretion is not governed by any “meaningful
purpose” test.
Here, the District Court granted the Firm’s renewed
motion for withdrawal and did not abuse its discretion in
doing so. Ohntrup claims the District Court erred because,
without the Firm as counsel to MKEK, she will suffer
onerous service requirements under the Hague Convention,
which governs service on foreign defendants in countries, like
Turkey, that have ratified the treaty.3 Ohntrup argues that
3
This question turns on the interpretation of Article 10
of the Hague Convention, which governs service by mail. It is
a question of first impression in our Court and one that
divides the other courts of appeals. As an alternative to
reversing the District Court’s dismissal of Morgan Lewis,
Ohntrup asks us to hold that she may serve papers by mail
without running afoul of the Hague Convention. This
9
such a burden weighs far more heavily than the Firm’s light
burden of forwarding papers to Turkey. We disagree.
At the time the District Court denied the Firm’s first
motion to withdraw, it remained uncertain how the Ohntrups’
post-judgment proceedings would unfold and whether MKEK
would comply with discovery requests served on the Firm.
We affirmed the District Court’s initial denial of the motion
to withdraw because there was a chance that the Firm’s
presence would facilitate communication between the parties,
not to guarantee Ohntrup the most convenient method to
comply with the service requirements in the Federal Rules of
Civil Procedure. By now, it is clear that the Firm is merely a
captive, uncompensated process server and that Ohntrup’s
efforts to communicate with MKEK through the Firm are
futile. Accordingly, the District Court did not err when it
granted the Firm’s motion to withdraw.4
IV
hypothetical question is not ripe for review. See Peachlum v.
City of York, Pa., 333 F.3d 429, 433 (3d Cir. 2003).
4
Ohntrup asserts that our decision in Ohntrup II,
which affirmed the District Court’s statement denying the
Firm’s motion to withdraw until MKEK obtains substitute
counsel, is law of the case. The penultimate sentence in our
opinion in Ohntrup II explicitly negates this argument: “Our
affirmance is without prejudice to renewal of the motion at a
later appropriate time even if no substitute counsel replaces
Morgan.” 802 F.2d at 680.
10
We next consider Ohntrup’s appeal of the District
Court’s order denying additional discovery in aid of
execution. We review the denial of discovery for an abuse of
discretion. Holmes v. Pension Plan of Bethlehem Steel Corp.,
213 F.3d 124, 138 (3d Cir. 2000).
Our review of this order begins with a summary of the
relevant factual and procedural history. Two months after
Alliant announced its contract with MKEK, Ohntrup filed a
motion for supplementary relief in aid of execution pursuant
to Fed. R. Civ. P. 69(a) and Pa. R. Civ. P. 3118. Ohntrup
asked the District Court to enjoin Alliant from transferring
any property in its possession owned by MKEK and to
compel Alliant to disclose information regarding its
transactions with MKEK. At the recommendation of the
Magistrate Judge, the District Court denied Ohntrup’s request
for an injunction, but granted discovery, subject to a
confidentiality order to protect Alliant’s confidential business
information.
Following the District Court’s order, Alliant produced
its current agreements with MKEK, along with information
on MKEK’s finances and Alliant’s shipments to Turkey.
Ohntrup’s lawyers alleged deficiencies in Alliant’s responses,
but the Magistrate Judge disagreed, holding that Alliant was
not required to supplement its responses with specifics on
future shipments. Soon thereafter, Ohntrup served Alliant
with three additional sets of discovery requests, mostly
concerning the timing of the shipments. Alliant moved to
quash those requests, and the Magistrate Judge issued an
order reaffirming her decision that Alliant need not
supplement its responses. Upon review of the Magistrate
Judge’s order, the District Court held that additional
discovery would be an “undue burden” on Alliant under Pa.
11
Rawle Civ. P. 4011(b) because: (1) discovery may jeopardize
Alliant’s relationship with MKEK, (2) Alliant is an innocent
third party, (3) it would incur expenses responding to
discovery, and (4) discovery may be futile if the Foreign
Sovereign Immunities Act (FSIA), 28 U.S.C. § 1330 et seq.,
protects the components from attachment.
The District Court’s analysis improperly considered
the possibility that discovery might be futile without
determining whether that was in fact the case. Although the
District Court is correct that “there is doubt as to whether
Plaintiffs will likely be able to execute on their judgments,”
Ohntrup’s potential inability to show that the subject property
is not immune from attachment is immaterial to the question
of unreasonable burden.5 See App. at 14. Ohntrup should not
be penalized in the pursuit of discovery in aid of execution
merely because a novel or difficult question of law is
implicated. Accordingly, we will remand so the District Court
may analyze the question anew.
This does not mean that Alliant must wait until
Ohntrup files a writ of execution if it wishes to argue that the
FSIA bars attachment. Consistent with the Supreme Court’s
recent pronouncement regarding the FSIA, if MKEK’s
munitions manufacturing components are immune from
attachment, then the District Court should deny Ohntrup’s
discovery request “because information that could not
5
The District Court relied on the “unreasonable . . .
burden” rule in Pa. R. Civ. P. 4011(b) for its ruling, but used
the “undue burden” term of Fed. R. Civ. P. 45. As the District
Court applied the Pennsylvania Rules of Civil Procedure, we
will use the language of those rules.
12
possibly lead to executable assets is simply not ‘relevant’ to
execution in the first place.” Republic of Argentina v. NML
Capital, Ltd., 134 S. Ct. 2250, 2257 (2014) (quoting Fed. R.
Civ. P. 26(b)(1)). Thus, if Alliant can persuade the District
Court that Ohntrup cannot attach the targeted property, then
Ohntrup’s discovery would be irrelevant under Rule 4011(c).6
Conversely, if the District Court concludes that the targeted
property is not immune, that fact would obviously weigh in
Ohntrup’s favor. Finally, if the District Court chooses not to
decide whether the targeted property is subject to attachment
or lacks sufficient information to reach a definitive
conclusion on the issue before discovery, any speculation in
that regard should not be a factor in the Court’s unreasonable
burden analysis. See NML Capital, 134 S. Ct. at 2257-58.
***
For the reasons stated, we will affirm the District
Court’s order granting Morgan Lewis’s motion to withdraw
as counsel for MKEK. We will vacate the order of the District
Court precluding discovery and remand the case for
additional proceedings consistent with this opinion.
6
As the party objecting to the discovery, Alliant would
bear the burden of persuasion on the FSIA issue. See Winck v.
Daley Mack Sales Inc., 21 Pa. D. & C.3d 399, 404 (Pa. Com.
Pl. 1980). We do not decide who bears the burden of
persuasion when a party actually attempts to attach property
that is arguably immune and the FSIA is directly at issue.
13