Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States Securities and Exchange Commission v. Stifel Nicolaus & Co., Inc.

United States District Court, E.D. Wisconsin

August 24, 2016

UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
STIFEL, NICOLAUS & CO., INC. and DAVID W. NOACK, Defendant.

          ORDER GRANTING IN PART AND DENYING IN PART RENEWED MOTION TO STRIKE AMENDED ANSWERS TO ADMISSIONS (DOC. 128) AND GRANTING MOTIONS TO DEEM REQUESTS ADMITTED (DOCS. 132, 134)

          C.N. CLEVERT, JR. U.S. DISTRICT JUDGE

         The Securities and Exchange Commission has filed a motion against each defendant seeking to have certain requests for admission deemed admitted. Meanwhile, Stifel Nicholas filed a renewed motion to strike portions of the SEC's amended responses to Stifel's requests for admission.

         Requests for admission are governed by Fed.R.Civ.P. 36, which provides that a party may serve requests for admission regarding the truth of any nonprivileged matter relevant to a party's claim or defense. Fed.R.Civ.P. 36(a)(1), 26(b)(1). Requests for admission should be simple and concise and should not state half-truths requiring the answering party to qualify responses. U.S. Fire Ins. Co. v. Bunge N. Am., Inc., No. 05-cv-2192-JWL-DJW, 2008 WL 2222022, *5 (D. Kan. 2008).

         Rule 36 provides that an answering party may admit the matter, deny it, or state in detail why it cannot truthfully admit or deny it. Fed.R.Civ.P. 36(a)(4). However, the rule adds that when good faith requires that a party qualify an answer or deny only a part of a matter, the answer must specify the part admitted and qualify or deny the rest. Id. Further, the rule allows a party to object. Fed.R.Civ.P. 36(a)(5).[1]

         “A denial must fairly respond to the substance of the matter.” Fed.R.Civ.P. 36(a)(4). “It is expected that denials will be forthright, specific, and unconditional.” 8B Charles Alan Wright, et al., Federal Practice & Procedure § 220 (3d ed. 2010). However,

[i]f the responding party cannot simply admit the matter stated in the request without some explanation or qualification, the responding party may admit with qualification. An admission may require qualification when the request is ostensibly true, but the responding party cannot in good faith admit it without some necessary contextual explanation to remedy any improper inferences. When good faith requires that a party qualify an answer or deny only part of a matter, the answer must specify the part admitted and qualify or deny the rest.

7 James Wm. Moore et al., Moore's Federal Practice § 36.11[5][a] (Matthew Bender 3d ed. 2016). “Generally, qualification is permitted if the statement, although containing some truth, ‘standing alone out of context of the whole truth . . . convey[s] unwarranted and unfair inferences.'” Flanders v. Claydon, 115 F.R.D. 70, 72 (D. Mass. 1987); accord Caruso v. Coleman Co., No. Civ. A. No. 98-CV-6733, 1995 WL 347003, *1 (E.D. Pa. June 7, 1995) (stating that if a referenced statement is misquoted or taken out of context a party should deny the admission or if necessary qualify it).

         A responding party may claim lack of knowledge or information as a reason for failing to admit or deny a request “only if the party states that it has made reasonable inquiry and that the information it knows or can readily obtain is insufficient to enable it to admit or deny.” Fed.R.Civ.P. 36(a)(4). However, the respondent's mere statement that it made a reasonable inquiry is not necessarily adequate “if the evidence does not show that the party did, in fact, make a reasonable inquiry.” Moore et al., supra, § 36.11[5][d]; see Asea, Inc. v. So. Pac. Transp. Co., 669 F.2d 1242, 1247 (9th Cir. 1981) (rejecting argument that a statement that reasonable inquiry was made is sufficient to comply with the rule and holding that reasonable inquiry must actually be made); Napolitano v. Synthes USA, LLC, 297 F.R.D. 194, 198-99 (D. Conn. 2014) (finding that a response claiming reasonable inquiry must state specifically what efforts have been made to obtain requisite knowledge or why reasonable efforts would be futile).[2]

[A] party generally will not be required to make inquiry of a complete stranger to obtain information. On the other hand, the reasonable inquiry requirement goes beyond parties to the suit, and parties have been required to make inquiry of a person not a party to the action in order to respond to Rule 36 admissions. In this regard, one court has found that a party must make inquiry of a third party when there is some identity of interest manifested, such as both being parties to the litigation, a present or prior relationship of mutual concerns, or active cooperation in litigation, and when there is no manifest or potential conflict between the party and the person of whom inquiry will be made.

Moore et al, supra, § 36.11[5][d].

         A responding party may validly object to a request that exceeds the scope of discovery. Moore et al., supra, § 36.11[5][c]; Lynn v. Monarch Recovery Mgmt., Inc., 285 F.R.D. 350, 363 (D. Md. 2012). And a responding party may object based on vagueness, i.e., when “the respondent cannot answer because the meaning of the request is uncertain.” Moore et al, supra, § 36.11[5][c]; Caruso, 1995 WL 347003, at *5. But inadmissibility at trial is not a valid objection. Id. at *7-*8.

         The party requesting the admission may move for a determination regarding the sufficiency of the responses. If the response does not comply with Rule 36, the court may order that the matter be admitted or that an amended answer be served. Moore et al., supra, § 36.12[1], [3].

         A. Motion by the SEC regarding Stifel's responses (Doc. 132)

         The SEC moves for an order deeming some of its requests admitted by Stifel. The requests fall into two general categories: (1) the authenticity of certain recordings, and (2) statements of codefendant David Noack, former Stifel employee, allegedly made to school districts. In response to the motion, Stifel stipulated to the authenticity of the records “absent new and unforeseen information coming to light” and to the statements that Noack, at deposition, confirmed he had made (totalling twenty-six or so of the approximately fifty Noack statements in the requests for admission).

         The SEC contends that because Stifel's stipulation regarding authenticity of the records is conditioned, the court should grant the SEC's motion. Regardless, the authenticity issue is moot. Any “new and unforeseen information coming to light” would have to be substantial and out of left field for the court to allow Stifel to escape its stipulation.

         As for the remaining Noack statements, the court finds Stifel's responses inadequate. For instance, request 24 of the SEC's second set of requests asked that Stifel stipulate to a particular quote being made by Noack at a particular meeting. Stifel responded:

Objection. Because this request concerns an alleged isolated statement that was made as part of extended discussions, Stifel objects to the request as vague, ambiguous and argumentative in that it does not incorporate the context of the statement. Subject to its objections, Stifel states that it is not aware of any current employee who was present for the meeting identified in this request and who is able to authenticate the recording. Accordingly, after making reasonable inquiry, the information known to Stifel or that it can readily obtain is insufficient to enable it to admit or deny this request.

(Doc. 133 Ex. E at 13.)

         But the objection fails. Stifel was not asked to admit what the statement meant or whether it was true, so context is not required. The request is clear ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.