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ISA Chicago Wholesale, Inc. v. Khan

June 3, 2010


The opinion of the court was delivered by: Judge Andersen

Magistrate Judge Susan E. Cox



The plaintiff, ISA Chicago Wholesale, Inc. ("ISA"), has charged defendants Fahad Khan ("Khan"), Evelina Shpolyanskaya ("Shpolyanskaya") and Mak & Sons, Inc. ("MSI") with fraud, breach of contract, action on account, account stated, and unjust enrichment. Khan and Shpolyanskaya (collectively, "defendants") reside in Los Angeles, California, but ISA brought suit in Chicago, Illinois. At issue here are certain depositions that ISA has noticed up to take place in Chicago. Defendants seek a protective order pursuant to Federal Rule of Civil Procedure 26(c), requiring that: 1) any depositions of defendants occur in June 2010 at the earliest; 2) the depositions take place in California, preferably when ISA's president Mr. Muhammed Inayat ("Inayat") appears in California on a different matter; and 3) ISA be required to pay for costs associated with the depositions, including, but not limited to, defendants' counsel's travel expenses. Defendants' request with respect to the timing of the depositions is now moot. The Court is left with the questions of location and cost of the depositions. For the reasons discussed herein, the motion for protective order is denied.*fn1


ISA is an Illinois corporation with its principal place of business in this state.*fn2 ISA distributes cigars and other tobacco related products to wholesalers throughout the United States.*fn3 Inayat is the owner and president of ISA.*fn4 Defendant Khan began working for ISA in 2002, at which time he allegedly met and married defendant Shpolyanskaya.*fn5 In 2007, defendants moved to Los Angeles, California to begin their own wholesale business (as sole shareholders and owners) called MSI.*fn6 MSI has since been dissolved by the state of California.*fn7

The allegations in the complaint are as follows. Defendants placed orders for their customers on credit with ISA, but began to renege on their payments to ISA and withhold expired and returned goods.*fn8 ISA also claims that defendants placed orders for customers who had not authorized such orders.*fn9 When defendant Khan allegedly avoided Inayat's phone calls and presented him with false information, Inayat claims to have come to Los Angeles to locate ISA's stolen merchandise and confront the defendants.*fn10 ISA alleges that after this confrontation, defendants sold the stolen merchandise for a profit.*fn11 In its complaint, ISA prays for a judgment against defendants in the amount of $322,000.00, plus punitive damages, interest, and attorneys' fees and other costs expended in the course of this suit.*fn12

Defendants first responded to the complaint by filing a motion to dismiss for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3), which was denied by this court.*fn13 Next, defendants filed a motion to dismiss or for other sanctions, arguing that Inayat (one of ISA's main witnesses) should be deposed in Chicago and that if he could not appear in Chicago, the case should be dismissed.*fn14 The merits of this motion were never reached due to its termination as moot.*fn15


1. Location

On April 29, 2010, defendants' counsel (whose office is located in Chicago, Illinois) received two notices of deposition for each defendant.*fn16 The depositions were noticed for May 10, 2010 and were to be taken in ISA's counsel's office in Chicago.*fn17 This motion for a protective order alleges that noticing the depositions for Chicago would unduly burden the defendants. Defendants argue that they are presently short of funds and that because one of ISA's witnesses, Inayat, will be in California in the near future, the depositions should take place in California.*fn18

The first question before this Court is whether the defendants should be protected from being deposed in Chicago, Illinois. A court may, for good cause, "issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense... by specifying the terms, including time and place, for the disclosure of discovery."*fn19 The party moving for the protective order has the burden of showing "good cause" in order to receive this protection from the court.*fn20 The courts, in turn, have broad discretion to determine the appropriate place of a noticed deposition.*fn21

In determining the appropriate place of a noticed deposition, there is an initial presumption that a defendant (especially a corporate defendant) should be deposed at its principal place of business or residence.*fn22 However, defendants' corporation MSI has been dissolved by the state of California, and, therefore, this presumption is not outcome determinative. There are a number of factors that may override the presumption and may persuade the court to require that the depositions be conducted in the forum district or some other place.*fn23 First, the court will consider the cost of transportation and the lost work to ...

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