563 F.2d 992 (10th Cir. 1977), 77-1382, In re Westinghouse Elec. Corp. Uranium Contracts Litigation
|Citation:||563 F.2d 992|
|Party Name:||In re WESTINGHOUSE ELECTRIC CORPORATION URANIUM CONTRACTS LITIGATION (In the United States District Court for the Eastern District of Virginia) Ancillary Proceedings. In the Matter of SUBPOENAS DUCES TECUM addressed to Rio Algom Corporation by George R. Albino and Mervyn Lawton.|
|Case Date:||October 11, 1977|
|Court:||United States Courts of Appeals, Court of Appeals for the Tenth Circuit|
Argued and Submitted Aug. 3, 1977.
Samuel A. Haubold of Kirkland & Ellis, Chicago, Ill. (Joel R. Dangerfield of Mock, Shearer & Carling, Salt Lake City, Utah, on
the brief), for Westinghouse Electric Corp., appellee.
Keith F. Bode of Jenner & Block, Chicago, Ill. (David S. Dolowitz and James B. Lee of Parsons, Behle & Latimer, Salt Lake City, Utah, and Albert E. Jenner, Jr., Anton J. Valukas, Barry Sullivan and Don R. Sampen of Jenner & Block, Chicago, Ill., on the brief), for Rio Algom Corp., appellant.
Before McWILLIAMS, BARRETT and DOYLE, Circuit Judges.
McWILLIAMS, Circuit Judge.
Rio Algom Corporation appeals from an order adjudging it, and its president, George R. Albino, to be in willful and inexcusable civil contempt of court for failing to comply with a discovery order of the United States District Court for the District of Utah, Central Division. Rio Algom was ordered to pay into the registry of the court the sum of $10,000, per day, until such time as Rio Algom complied with the order. It was further provided that should Rio Algom fail to pay the ordered fine, the United States Marshal was authorized and directed to enter upon the property of Rio Algom at La Sal, Utah and seize "any and all property of Rio Algom of sufficient value to satisfy the above sums." Our study of the matter leads us to conclude that the trial court erred in holding Rio Algom in contempt and in imposing the severe sanction in connection therewith. We therefore reverse.
Westinghouse Electric Corporation is the defendant in a civil action brought by several utility companies in the United States District Court for the Eastern District of Virginia. The action is essentially one for breach of contract, with the utility companies alleging that Westinghouse breached its contract to deliver uranium at a certain price. One of Westinghouse's defenses in the Virginia proceeding is that performance has been rendered "commercially impracticable" within the meaning of the Uniform Commercial Code because of a dramatic, unprecedented, and unforeseeable rise in the price of uranium. In connection with the defense of impracticability of performance, a major issue is whether the 800% increase in the price of uranium, from $5 per pound to $40 per pound, was caused by secret price fixing engaged in by various producers of uranium, both within and without the United States.
Rio Algom Corporation is a Delaware corporation and it operates a uranium mine in Utah. However, Rio Algom Corporation maintains its corporate office in Canada, and it is this fact which triggers the present controversy. Westinghouse, in preparation for trial of the breach of contract case in the Eastern District of Virginia, has been taking the depositions of the officers of various uranium producing companies, as well as generally engaging in discovery designed to show that the rise in the price of uranium resulted from a world-wide cartel. As a part of its discovery, Westinghouse caused a subpoena to issue in Utah on the resident manager of Rio Algom. The subpoena directed Rio Algom to produce its president, George R. Albino, in Utah for the purpose of taking his deposition and to produce certain business records. George R. Albino now resides, and for several years has been residing, in Canada. There is, however, a dispute between the parties as to whether Albino is presently a citizen of Canada or the United States.
Although Rio Algom has since complied with the subpoena in numerous particulars, it did object to producing certain business documents then located in its offices in Canada, and further objected to producing Albino for depositional purposes, insofar as his testimony might relate to such business records and their contents. The basis for such objection was the belief by Rio Algom that if it produced its business records then located in Canada, and if it produced its president, Albino, and permitted him to be examined concerning such records, then it would be in violation of Canadian law and subject to criminal sanctions. Specifically, Rio Algom claims that if it fully complied with the Westinghouse subpoena it would be in violation of the Canadian Uranium Information Security Regulations, SOR, 76-644 (P.C. 1976-2368, Sept. 21, 1976), promulgated
under the authority of Canada's Atomic Energy Control Act, R.S.C.1970, c. A-19.
Upon hearing the district court overruled a motion to quash and on May 2, 1977, ordered Rio Algom to produce its business records then on file in Canada and to produce its president, Albino, to be examined concerning the contents of such records. [*]
Rio Algom did not comply with the May 2 order. Rio Algom was next ordered to show cause why it should not be held in contempt for failing to comply with the May 2 order. Hearing on the show cause order was held on June 21 and July 29, and on the latter date, Rio Algom was adjudged in contempt. It is from the written order of contempt entered on July 29, 1977, that Rio Algom now appeals.
The record reveals that Westinghouse has previously caused letters rogatory to issue to the Supreme Court of Ontario, which letters sought the aid of the Canadian courts in obtaining Rio Algom's business records located in Canada and in taking the deposition of Albino. However, the Ontario Supreme Court declined to enforce the letters rogatory, and dismissed the same on the ground, among others, that to enforce the letters rogatory would cause a violation of the Uranium Information Security Regulations, which constitute a Canadian public policy statement. The regulations were held to fall within the purposes of the Atomic Energy Control Act and to further the national interest, as expressed in the Act, "to control and supervise the development, application and use of atomic energy." The Ontario court further reasoned that the letters rogatory sought to measure conduct of the Canadian Government against laws of the United States so that to enforce the letters would tend to impinge on Canada's sovereignty. The lengthy opinion of the Ontario Supreme Court is In re Evidence Act, R.S.O.1970, c. 151 (and In re: Westinghouse Electric Corp. Uranium Contract Litigation ), --- Ont.2d --- (1977).
On June 23, 1977, Rio Algom formally requested the consent of the Canadian Minister of Energy, Mines & Resources to release the company's records located in Canada to the end that it could fully comply with the discovery order. Such request was formally denied on July 19, 1977, on the ground that "the production of such documents would be contrary to the policy of the Government of Canada in this matter." Rio Algom's letter requesting exemption from the Canadian nondisclosure regulation appears in an Appendix.
Much of the material summarized above is gleaned from the memoranda of counsel, and attachments thereto, filed with the district court in connection with Rio Algom's motion to quash and Westinghouse's request for enforcement of the subpoena. The hearing held in connection with the show cause order on July 29, 1977, consisted mainly of extended colloquy between court and counsel. No witnesses were examined. Rio Algom did offer three exhibits, which were received without objection. Westinghouse offered some thirty-eight exhibits, four of which were received without objection. The district court reserved ruling on the remaining thirty-four exhibits offered by Westinghouse, commenting that the remaining thirty-four exhibits were not necessary and that to admit such might well be "inviting error." It is evident, then, that the district court did not consider thirty-four of the thirty-eight exhibits offered by Westinghouse at the July 29 hearing. Accordingly, in our disposition of the matter we, like the district court, will not, and do not, consider the thirty-four exhibits offered by Westinghouse but not admitted by the district court. Westinghouse, incidentally,
has not in this appeal in any wise challenged the trial court's failure to admit in evidence these thirty-four exhibits.
Rio Algom concedes that it has not fully complied with the discovery order of May 2. The excuse offered for failing to fully comply with the May 2 order is that should it fully comply, then it would be in violation of Canadian law and subject to severe sanctions in that country. The applicable Canadian statute provides for a "normal" penalty for a violation of the regulation of a $5,000 fine, or two years imprisonment, or both. However, should an indictment be returned, and a conviction suffered, then the penalty could be a $10,000 fine, or five years imprisonment, or both. The district court concluded, in effect, that such was not an adequate excuse for the admitted noncompliance, within Fed.R.Civ.P. 45(f). The district court further found that neither Rio Algom nor Albino had diligently sought to comply with its order, nor had either made a good faith showing of inability to comply. Nor had they sought a "timely" exemption from the Canadian nondisclosure law.
In our view the record does not support the finding that Rio Algom has failed to act in good faith, nor does it support the trial court's conclusion that Rio Algom had no adequate excuse for its failure to comply with the discovery order. All things considered, on the basis of the record before it, the district court in our view abused its discretion in adjudging Rio Algom to...
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