The opinion of the court was delivered by: POLITAN
LETTER OPINION ORIGINAL ON FILE WITH CLERK OF THE COURT
This matter comes before the Court on defendant Juan Handal's ("Handal") motion to quash service of process and/or to dismiss all claims against him for lack of personal jurisdiction, and on defendant Lucky Insurance Company, Ltd.'s ("Lucky") motion for sanctions.
The Court has reviewed the parties' submissions and has heard oral argument in the matter. For the reasons set forth herein, the Court shall grant Handal's motion, and shall deny Lucky's motion.
In December of 1994, plaintiff American Centennial Insurance Company ("ACIC") requested permission to take the deposition of Mr. Juan Handal in the underlying litigation. That action involves the question whether certain corporations (hereafter "the companies") were parties to a reinsurance agreement between Pool Latino De Reaseguros (PLAR) and ACIC, and thus subject to mandatory arbitration clauses in those agreements. Magistrate Judge Hedges ordered the production of Handal for deposition in Panama. (Peim Certif., Exh. A., Schiavone Aff., Exh. A.)
Subsequent to Magistrate Judge Hedges' Order, negotiations took place between counsel for ACIC and the companies in an attempt to agree upon a more convenient time and location for the taking of the deposition. New Jersey was agreed upon as the most favorable situs for Handal's deposition.
On the week of December 18, 1994, Handal travelled to New Jersey to be deposed as a witness in this action. Handal's deposition was taken between December 20-22, 1994. (Peim Certif., P 12). Prior to the conclusion of Handal's deposition, counsel for ACIC personally served Handal with process in the instant action. (Peim Certif., P 25, Schiavone Aff. P 3).
ACIC contends that service upon Handal was in compliance with Fed.R.Civ.P. 4(c). Handal argues that he was immune from service while in New Jersey for a deposition in furtherance of the underlying litigation.
A. Service of Process on Handal
Generally, non-resident witnesses or parties are exempt from service of process while they are in the jurisdiction solely on the business of the court. Page Co. v. Macdonald, 261 U.S. 446, 448, 67 L. Ed. 737, 43 S. Ct. 416 (1923); Stewart v. Ramsay, 242 U.S. 128, 129, 61 L. Ed. 192, 37 S. Ct. 44 (1916); Chambliss v. Haeberle, 33 F. Supp. 835, 836 (D.N.J. 1940). However, the rule of immunity with regard to non-residents is not boundless. For instance, the Supreme Court has held that a party's non-resident attorney was not immune from service while representing his client in court. Lamb v. Schmitt, 285 U.S. 222, 76 L. Ed. 720, 52 S. Ct. 317 (1932). In Lamb, the non-resident attorney was denied immunity because service was necessary to recover funds alleged to have been fraudulently paid to him as attorneys' fees by the defendant as part of an attempt to defeat the rights secured to the plaintiff in the first action. Id. at 226. The Lamb Court noted that immunity was founded upon the convenience of the court, not the convenience of the individual parties, and that immunity "shall be extended or withheld only as judicial necessities require." Id. at 225. The Court stated the test to be "whether the immunity itself, if allowed, would so obstruct judicial administration in the very cause for the protection of which it is invoked as to justify withholding it." Id. at 228. "Immunity was created to expedite the work of the court, not as a windfall for litigants." United States Nat'l Bank of Oregon v. Great Republic Life Ins. Co., 54 F.R.D. 498, 499 (D.Or. 1971).
Two different interpretations of the Lamb immunity test have developed. One school of thought suggests that immunity should not be granted if service in the second action is closely related to the first. For instance, the Tenth Circuit denied immunity to a non-resident defendant who was served by the plaintiffs while attending his deposition. ARW Exploration Corp. v. Aguirre, 45 F.3d 1455, 1460 (10th Cir. 1995). The ARW court concluded that immunity is lost "'where the later action, in which the immunity from service is claimed, arises out of or involves the same subject matter as the one in which the nonresident has voluntarily attended.'" Id. at 1460 (quoting Walker v. Calada Materials Co., 309 F.2d 74, 76 (10th Cir. 1962)).
The second theory evolving from Lamb is that immunity should be granted to non-residents, even when the second action is factually similar to the first, unless the grant of immunity would obstruct justice in the first suit. Shapiro & Son Curtain Corp. v. Glass, 348 F.2d 460 (2d Cir.), cert. denied, 382 U.S. 942, 15 L. Ed. 2d 351, 86 S. Ct. 397 (1965); United Nations v. Adler, 90 F. Supp. 440, 441 (S.D.N.Y. 1950); NASL Marketing, Inc. v. de Vries, 94 F.R.D. 309 (S.D.N.Y. 1982).
NASL was factually similar to the instant case. In NASL, a witness travelled from Holland to New York for the sole purpose of testifying in the plaintiff's arbitration proceeding. Upon the completion of his testimony, the witness was served with process. In squashing service the NASL court determined: "Plaintiff has failed to show that any of the acts charged in the complaint have so interfered with its rights as determined in the arbitration [first suit] to justify the withholding of immunity [from service in the second suit]." 94 F.R.D. at 311.
The principle of immunity in this context is designed to encourage nonresident witnesses to voluntarily enter a jurisdiction to participate in civil proceedings. Stewart, 242 U.S. at 129. Denying immunity to non-resident witnesses, like Handal, would not encourage but would decrease participation in civil proceedings. Such a practice would cause future potential witnesses to shun a jurisdiction in order to escape a lawsuit.
This Court is satisfied that the Third Circuit Court of Appeals
favors encouraging the proper and comprehensive resolution of litigation, and would favor the adoption of a rule which grants immunity to non-resident witnesses appearing before the district court.
Adoption of this rule will encourage participation by non-resident witnesses in civil proceedings without exposing themselves to separate lawsuits.
In the matter sub judice, ACIC has not established that a grant of immunity from service to Handal "would so obstruct judicial administration in the very cause for the protection of which it is invoked as to justify withholding it." Lamb v. Schmitt, 285 U.S. at 228. See Shapiro & Son, 348 F.2d at 461; Matter of Equitable Plan, Co., 277 F.2d 319 (2d Cir. 1960); NASL, supra; ...