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SEC ALJ Rejects Mere Witness Inconvenience
May 7, 2015
There may come a time when you get called to testify. You may be a party in some lawsuit or you may be a witness. You're more than happy to answer questions under oath but it's the date of the proposed testimony and/or the proposed location for your testimony that's a problem. You can't get away from work. It's too expensive for you to travel. You have a pressing family situation or a personal medical condition that makes the trip impossible. These and other considerations routinely come up. A recent Securities and Exchange Commission ruling sheds some interesting light on how such problems are addressed.
In The Matters Of Reliance Financial Advisors, LLC, Timothy S. Dembski , and Walter F. Grenda, Jr. -AND- Scott M. Stephan (Order Regarding Testimony, Admin. Proc. Rulings Rel. No. 2601; Admin. Proc. File Nos. 3-16311 and 3-16312 / April 28, 2015), we are presented with an interesting issue of what to do and what is considered when a witness is required to travel to give testimony at a Securities and Exchange Commission ("SEC") hearing.
Following the institution of proceedings on December 20, 2014 in Reliance Financials Advisors, Dembski, and Grenda, and in Stephan, the SEC scheduled hearings to begin in New York, New York on may 11, 2015. On April 24, 2015, the Administrative Law Judge ("ALJ") received a letter from:
- Attorney R. Scott Atwater, who represents subpoenaed witnesses John Skop,75, Thomas R. Krajewski,68, and William James,71. Atwater asserted that the necessary travel from Buffalo, New York, to New York, New York would be "inconvenient" for his clients and that costs attendant to Atwater's presence in New York City would not be reimbursed by the government. Accordingly, Atwater requested that the examination and cross-examination of his clients take place in Buffalo, New York, or alternatively, that his clients be permitted to testify via video conferencing; and
- Attorney Joanne Schultz, who represents subpoenaed witnesses Anna Barrett,70, William Haubrick, 72, Richard Blazkewicz, 62and Victoria Blazkewicz (no age provided). Schultz requested that her clients be permitted to testify in Buffalo, New York, and she cited their ages and noted that Richard Blazkewicz "recently underwent hip replacement surgery."Schultz also noted that the costs attendant to her presence in New York City would not be reimbursed by the government.
Although the Division of Enforcement indicated that it was "amenable to taking witnesses' testimony by video for any particular witness who has ailments that make travel particularly onerous, Respondents Dembski, Grenda, and Reliance oppose Atwater's and Schultz's requests.
Ailment versus Inconvenience
In considering the requests by the various subpoenaed witnesses, the ALJ notes that only Richard Blazkewicz has alleged the existence of any ailment that would impede in participation at the New York City hearing and the other witnesses merely cited "inconvenience." Accordingly, the ALJ ordered that Richard Blazkewicz file a declaration representing that "it is against medical advice for Mr. Blazkewicz to attend the hearing in person" and upon receipt of that document, the parties shall make alternate arrangements to accommodate his testimony - in the absence of the declaration, he will testify in person in New York City. As to the other witnesses, their request for alternate arrangements was denied.
Bill Singer's Comment
A well-reasoned decision by the ALJ and a ruling that offers meaningful guidance to practitioners facing similar testimonial issues. Mere inconvenience will likely not carry the day. Consequently, in seeking to compel testimony at a location other than that proposed, you may need to offer proof that a witness has a medical condition making such travel inadvisable.
Notwithstanding the ALJ's ruling in this case, there are circumstances where the demand for testimony requires unfair, arduous travel arrangements. In some situations, one party's demand for such travel is simply a ploy to gain leverage over the witness or aggravate an adversary. Welcome to the world of hard-ball litigation. As a lawyer, let me be clear: There are many circumstances where I want a living and breathing, in the flesh, witness physically in front of me. I will not pretend otherwise.
In this day and age of improved technology, however, the trier of fact should give fair consideration to a request for remote testimony via a live feed, particularly when an adverse party is not prejudiced by questioning a witness who appears on a video screen rather than in a chair in the hearing room.