[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
____________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
FEBRUARY 1, 2002
No. 00-16087 THOMAS K. KAHN
___________________________ CLERK
D. C. Docket No. 98-02275 CV-PCH
CHRYSLER INTERNATIONAL CORPORATION,
a Delaware corporation,
Plaintiff-Appellant,
versus
JOHN CHEMALY, individually,
MICHAEL DEL MARMOL, individually, et al.
Defendants-Appellees.
_________________________
Appeal from the United States District Court
for the Southern District of Florida
__________________________
(February 1, 2002)
Before EDMONDSON and CARNES, Circuit Judges, and MUSGRAVE*, Judge.
________________
C Honorable R. Kenton Musgrave, Judge, U.S. Court of International Trade, sitting by
designation.
EDMONDSON, Circuit Judge:
In the past, Appellant Chrysler International Corporation brought suit, in federal
district court in Michigan, against Appellees John Chemaly, Michael del Marmol, and
Cherokee Export Company (“CEC”) over a dispute arising out of an automobile
distribution contract. Chrysler, in the earlier case, obtained a judgment against CEC.
The case now before us is a separate, follow-on suit. In this case, Chrysler sought to
pierce the corporate veil and to hold Chemaly and del Marmol personally liable for
the earlier judgment. The jury found in favor of Chemaly and del Marmol. Chrysler
appeals, challenging the district court’s rulings on admissibility of several pieces of
evidence and challenging the court’s rulings on the issue of laches. We affirm.
DISCUSSION
C Chrysler’s Deposition in South Africa
Chrysler argues that the district court erred in issuing a protective order
preventing it from deposing Archie Sinclair. Sinclair owned the company to which
some of the automobiles involved in the Michigan litigation were sold. Del
Marmol testified that Sinclair had not paid for the automobiles and that Sinclair
2
claimed the automobiles were defective. Chrysler, on the other hand, claimed that
Sinclair had always maintained that he had paid for the automobiles but that the
funds had been diverted into Defendants’ personal accounts.
Because Sinclair lived in South Africa, Chrysler asked the district court for a
letter of request1 to obtain Sinclair’s testimony for use at trial:2 what Chrysler calls
a de bene esse deposition.3 The district court granted the request, but set a deadline
for its taking: specifically warning the parties that “the pendency of [South
Africa’s] decision whether to execute the letter of request and the execution
thereof” would not serve to extend the discovery deadline.
Chrysler moved for the letter of request on 4 January 2000, about fifteen
months after filing this lawsuit. The motion was granted on 20 January. When the
letter of request was issued by the district court, the discovery period was
1
The letter of request in this case was a request, sent by the district court to the South African
Department of Justice, seeking to have the proper South African authorities summon Sinclair “to
give testimony under oath by question and answers upon oral deposition.” According to the request,
the questioning was to have been done by Chrysler’s lawyers and their designated South African
representatives. The district court also requested that defendants’ lawyers be allowed to ask
questions if they were present.
2
Federal Rule of Civil Procedure 32(a)(3)(B) states that a deposition can be used for “any
purpose” where the witness is more than 100 miles from the place of the hearing or outside of the
United States.
3
The phrase “de bene esse” does not appear in the Federal Rules of Civil Procedure. For
depositions, we understand the phrase to mean depositions that may be used at trial if the witness
is unable to attend the trial.
3
scheduled to end on 4 February. The trial was itself already set for 3 July. The
district court later extended the discovery period several times: the final discovery
deadline was 25 April. The South African authorities, however, did not execute
the letter of request until 28 April and scheduled the deposition for 6 June: less
than a month before the trial was then scheduled to begin (on 22 June, the district
court -- acting sua sponte -- rescheduled the start of trial for October 2000).
Upon learning that the deposition had been scheduled outside of the 25 April
discovery deadline, Defendants moved for a protective order to prevent Chrysler
from taking the deposition. The district court granted the protective order. When
Chrysler’s motion for reconsideration was denied, Chrysler took the deposition
anyway. But, when Chrysler sought to introduce the deposition testimony at trial,
the district court would not allow it.
At the heart of this case is the authority of the district court to control the
pace of litigation before it. At the outset, we stress the broad discretion district
courts have in managing their cases. See Johnson v. Bd. of Regents of Univ. of
Georgia, 263 F.3d 1234, 1269 (11th Cir. 2001) (“[W]e accord district courts broad
discretion over the management of pre-trial activities, including discovery and
scheduling.”). Given the caseload of most district courts and the fact that cases can
sometimes stretch out over years, district courts must have discretion and authority
4
to ensure that their cases move to a reasonably timely and orderly conclusion. Cf.
Johnson Enterprises of Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d 1290, 1333
(11th Cir. 1998) (“We recognize the time pressures that the federal district courts
face because of crowded dockets. . ..”). This discretion is not wholly unfettered,
see Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1367 (11th Cir. 1997); but
it is and must be broad.
Evidentiary rulings and the entry of a protective order are likewise subject to
review for abuse of discretion. See Preserve Endangered Areas of Cobb’s History,
Inc. v. U.S. Army Corps of Engineers, 87 F.3d 1242, 1245 (11th Cir. 1996);
Ad-Vantage Tel. Directory Consultants, Inc. v. GTE Directories Corp., 37 F.3d
1460, 1463 (11th Cir. 1994). Chrysler argues that the district court abused its
discretion in granting the protective order because -- Chrysler says -- a difference
exists between a discovery deposition and a de bene esse deposition. Chrysler
argues that discovery deadlines cannot apply to the latter.
Chrysler’s reliance on Charles v. Wade, 665 F.2d 661 (5th Cir. Unit B
1982),4 is misplaced. Chrysler is correct that the Charles court saw an abuse of
discretion in the trial court’s denial of a request to take, after the discovery
4
In Stein v. Reynolds Securities, Inc., 667 F.2d 33, 34 (11th Cir. 1982), we adopted as binding
precedent all decisions of Unit B of the former Fifth Circuit handed down after 30 September, 1981.
5
deadline, a deposition of testimony for use at trial. But the facts of Charles are
materially different from this case.5 So, we are not being asked to follow Charles;
we are being asked to extend Charles to different circumstances. In Charles, the
reason given by the district court for denying permission to take the deposition was
simply that the discovery period had closed. Id. at 664. Nothing in Charles
suggests that the plaintiff delayed in setting the deposition of a known witness.
Also, at no time before the discovery period had closed had the district court in
Charles given any indication to the parties that it intended to treat all depositions --
whether for discovery or for use at trial -- in the same fashion for timing purposes.
In addition, the potential deponent in Charles was an incarcerated prisoner in an
immediately adjoining state, not -- as here -- a free businessman located on a
different continent.
In this case, Chrysler did delay in acting -- by moving for the letter of
request more than a year after filing this lawsuit -- to obtain the testimony of
Sinclair in a form usable at trial. The trial date was set. And as the district court
noted in its order granting the letter of request, Chrysler had known that Sinclair
5
“[G]eneral expressions, in every opinion, are to be taken in connection with the case in which
those expressions are used.” Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 399 (1821) (Marshall,
C.J.) Furthermore, “[t]here is, of course, an important difference between the holding in a case and
the reasoning that supports that holding.” Crawford-El v. Britton, 523 U.S. 574, 585 (1998).
6
resided on a different continent and had known of the importance of Sinclair’s
testimony for some time: “as early as August 1999.”6
Because the district court, before the discovery deadline expired, warned the
parties that all depositions -- including the potential South Africa deposition --
would be subject to the discovery deadline, the issuance of the later protective
order should have come as no real surprise to Chrysler. When the district court
granted permission to Chrysler to take the deposition in South Africa, the district
court had stated its intention to place a limit on the date by which the deposition
could be taken. The initial order granting the letter of request stated that the
pendency of the execution of the letter would not serve to extend the discovery
deadline: a clear indication that the South African deposition would be barred if
not taken before the time set for the end of discovery.7 Moreover, in the order
(dated 17 March 2000) in which it granted its last extension of the discovery
6
Chrysler’s claim that it moved for the letter of request as soon as it learned Sinclair would not
appear at the trial voluntarily is not compelling. The district court found that Chrysler was aware
of Sinclair’s involvement in this case as “likely prior to the commencement of this action.” That
Chrysler knew of the importance of Sinclair’s testimony for a considerable time before it moved for
the letter of request is clear, and Chrysler should have known of the inherent difficulties and
uncertainties of getting a witness who lives halfway around the world to testify at trial at a specific
time in the future. The district court did not err in finding that Chrysler should have acted sooner.
7
We do not suggest that the district court’s discretion is limited to imposing the discovery
deadline as the deadline for the taking of all depositions. The district court would have been within
its power to impose a different deadline for the deposition Chrysler sought to take. But the point
is that it was no automatic abuse of discretion for the district court to set the deadline that it did: to
adopt the discovery deadline as the deadline for the South Africa deposition.
7
period, the district court explicitly warned the parties of the importance of the
deadlines imposed by the court and noted that an appropriate sanction for violation
of the discovery deadline would include “striking witnesses deposed or testimony
obtained outside the discovery period.” (emphasis added). This language is also a
clear indication that the district court was treating the so-called de bene esse
deposition as subject to the same deadline as all other depositions.
Chrysler on appeal does not argue that the district court abused its discretion
in not again extending the discovery deadline. Instead, Chrysler asserts on appeal -
- as it did before the trial court in its motion opposing the protective order -- that it
was intrinsically a legal error to treat de bene esse depositions as subject to the
discovery deadline. We cannot agree.
In allowing or disallowing a deposition to be taken for use at trial, it is
appropriate that the district court consider all the circumstances, including fairness
to the adverse party and the amount of time remaining before the date set for trial.
The district court can set a definite time limit for the taking of the very deposition
it is permitting to be taken. And the district court can make that time limit the
same as the time limit for discovery depositions. Nothing about this approach to
8
the setting of time limits is inherently unlawful.8 The only question is whether the
specific time limits that are selected are themselves an abuse of discretion.
Given the circumstances in this case, we are unconvinced that the district
court’s discretion has been abused. At least when, as here, the district court --
more than three months before the discovery deadline finally expired -- has warned
that all depositions will be subject to the same timing restrictions and when the
district court has also determined that the party seeking to take a deposition for use
at trial has unduly delayed in undertaking to obtain it, we cannot consider the grant
of the protective order or the exclusion of the deposition at trial to have been an
abuse of discretion.9
8
The district court’s identical treatment (for timing purposes) of discovery and de bene esse
depositions is consistent with the language of the Federal Rules of Civil Procedure, which draw no
distinction between the two. The federal rules simply limit the instances in which a deposition can
be used at trial. See Fed. R. Civ. P. 32. Depositions are generally devices for discovery. But in the
right circumstances, all or almost all depositions potentially could be used at trial. For a court to
treat discovery deadlines as applying to all depositions is not an uncommon or inherently
unreasonable kind of shorthand to say “be done with deposition taking by ‘X’ date.” So, parties who
delay in taking a needed deposition and who assume that a district court will draw (when the Rules
do not and if the pretrial order does not) a distinction, for pretrial scheduling purposes, between
different kinds of depositions assume a risk: they cannot count on the trial court’s allowing a
deposition to be taken closer to the trial date.
9
By the way, nothing in the district court record establishes that a deposition in South Africa
would be impossible to arrange in fewer than “X” (that is, some certain number of) days. As it
happened, from the time the letter was issued until the deposition was taken in South Africa was a
little over five months. If Chrysler had moved for the letters even a couple of months earlier, good
reason exists to believe that the deposition could have been easily taken before 25 April, the ultimate
deadline.
9
C Evidence of the Altered Bills of Lading
Chrysler also challenges the district court’s granting of the defendants’
motion in limine to exclude some evidence of CEC’s transactions with a company
known as First Imperial. The evidence sought to be excluded was CEC’s alteration
of some bills of lading to conceal the fact that CEC had sold vehicles in territories
in which it was forbidden -- by its contract with Chrysler -- from doing so. In
challenging the district court’s grant of the motion in limine, Chrysler stresses that
evidence also existed that some funds involved in the First Imperial transactions
were diverted to pay Chemaly’s personal debts.
As always, the pertinent standard of review is important. A ruling admitting
or excluding evidence is only reviewed for abuse of discretion. See Ad-Vantage
Tel., 37 F.3d at 1463. “[T]he abuse of discretion standard of review recognizes
that for the matter in question there is a range of choice for the district court and so
long as its decision does not amount to a clear error of judgment we will not
reverse even if we would have gone the other way had the choice been ours to
make.” McMahan v. Toto, 256 F.3d 1120, 1128 (11th Cir. 2001); see also United
States v. Cunningham, 194 F.3d 1186, 1195 (11th Cir. 1999) (“[O]ur job as an
appellate court is to determine whether the district court abused its discretion, not
10
whether we would have admitted or excluded evidence ourselves.”); In re Rasbury,
24 F.3d 159, 168 (11th Cir. 1994) (upholding district court ruling under abuse of
discretion standard, although also noting that “we would have affirmed the district
court had it reached a different result, and if we were reviewing this matter de
novo, we may well have decided it differently”). The district court’s ruling on the
admissibility of this evidence was within its discretion.
Chrysler argues that the evidence of the altered bills of lading is relevant to
the question of whether CEC was organized for the purposes of working a fraud
upon creditors, one of the elements of piercing the corporate veil under Florida
law. See Dania Jai-Alai Palace, Inc. v. Sykes, 450 So.2d 1114, 1120 (Fla. 1984).
The crux of Chrysler’s veil piercing claim is that Del Marmol and Chemaly
funneled corporate money out of CEC and into their personal accounts and to pay
off their personal debts. As a result of this diversion, CEC was unable to satisfy its
debts to Chrysler.
Chrysler’s challenge to the district court’s ruling on Defendants’ motion to
exclude evidence fails to appreciate that the district court allowed Chrysler to put
on evidence that the First Imperial transactions were used to divert funds out of
CEC. The district court’s ruling was a narrow one. The ruling only excluded
11
evidence that bills of lading had been altered to conceal that sales had been made
outside of CEC’s rightful territory.10
The district court first concluded that the evidence was not relevant.
Chrysler argues that the fraudulent alteration of the bills of lading shows a pattern
on the part of defendants to engage in fraudulent conduct. Even if we suppose that
one kind of fraud may have logical relevance to other kinds, the rules of evidence
exclude some “relevant” evidence. See generally Fed. R. Evid. 402. For example,
Federal Rule of Evidence 404(b) states that evidence of one wrong act by a person
is not admissible to show he acted in conformity with it on another occasion.
Evidence of the other wrong may be admissible to show “motive, opportunity,
intent, preparation, plan, knowledge, identity, or absence of mistake.” Fed.R.Evid.
404(b). But as the district court saw it, nothing connected the alteration of the bills
of lading to the main point of this case: CEC’s inability to pay its debts on account
of defendants channeling money out of CEC for the Defendants’ personal use. The
fraud involved in altering the bills of lading deals with the source of funds coming
into CEC and is significantly different from the fraud underlying the suit: the
10
In granting the motion in limine, the district court stated that “I am going to grant the motion
. . ., which does not mean that you are precluded from other evidence about diverting funds and
things like that.” It further instructed Chrysler that “[i]f [defendants] completely ignored the
corporate form and just treated this as their personal funds, if you have evidence to that effect, you
can show that.” Chrysler was simply instructed to “[h]ide the other fraud; that is, that they were
misrepresenting to Chrysler just exactly what they were doing with the jeeps . . ..”
12
fraud involved in diverting funds out of CEC and, thus, causing CEC to become
insolvent and, therefore, allowing CEC and defendants to evade liability to
Chrysler.
Moreover, even if the evidence about the bills of lading was admissible
otherwise, the district court concluded that the relevance of the alterations of bills
of lading would be substantially outweighed by the unfair prejudicial effect of the
evidence under Federal Rule of Evidence 403. The district court noted that
Chrysler had “a lot of evidence” (other than the bill-of-lading evidence) to support
its case.
In striking the balance between the costs and benefits of the bill-of-lading
evidence, other judges might have come down the other way. But the district court
was within its discretion to conclude that evidence of the fraudulent alteration of
the bills of lading posed too great a danger of improperly swaying the jury on the
veil-piercing claim, which centered around the fraudulent diversion of funds out of
CEC.
C Laches
13
Chrysler also challenges the district court’s jury instructions on the
affirmative defense of laches and the district court’s denial of Chrysler’s motion
for a directed verdict on that question. We, however, need not address the ultimate
merits of this claim. The jury’s special verdict form indicates that they based their
decision on Chrysler’s failure to establish that del Marmol and Chemaly dominated
and controlled CEC to such an extent that the company was merely their alter
ego.11 For the jury to reach the question of whether Chrysler’s claim was barred by
the doctrine of laches was, therefore, unnecessary; and no reversible error can be
based on the district court’s handling of the issue.
The judgment of the district court is hereby affirmed.
AFFIRMED.
11
This element is also an element of a cause of action to pierce the corporate veil under Florida
law. See Sykes, 450 So.2d at 1120.
14