## Facts

- Jennifer Costa, a New York resident, booked and prepaid from New York for a stay at the Atlantis Resort in the Bahamas.
- Her booking included a “mandatory housekeeping gratuity” and a “utility service fee.”
- Costa alleged the fees were marketed as amounts for housekeeping staff and utilities, but that the housekeeping “gratuity” was not fully paid to housekeeping staff.
- The Atlantis resort operations, including employing housekeeping staff, were conducted by a wholly owned Bahamian subsidiary of Kerzner that was not named as a defendant.
- Florida-based Kerzner entities handled sales, marketing, reservations, accounting, solicitation, or travel arrangements for Atlantis guests and collected and deposited the disputed fees for the subsidiary’s use.
- In discovery, Costa sought documents and interrogatory information about the disputed fees; defendants objected that the materials were held by Bahamian affiliates and not within their possession, custody, or control.

## Issues

1. Whether, under Federal Rules of Civil Procedure 26, 33, and 34, the U.S. defendants had “control” requiring production of documents and information held by their Bahamian corporate affiliates.
2. Whether the Hague Evidence Convention was the required or exclusive method to obtain evidence located in the Bahamas rather than ordinary discovery under the Federal Rules.

## Decision

- The court granted the plaintiff’s motion to compel.
- The court held the defendants had Rule 34 “control” over responsive materials held by their Bahamian affiliates because “control” includes the legal right or practical ability to obtain documents on demand.
- The court ordered defendants to produce responsive documents and supplement interrogatory answers with information held by the Bahamian affiliates.
- The court rejected defendants’ argument that the Hague Evidence Convention displaced or limited party discovery under the Federal Rules in these circumstances.

## Legal Principles

- “Control” under Rule 34 is broadly construed and includes not only physical possession but also the legal right or practical ability to obtain documents from another entity.
- A close corporate relationship (including wholly owned subsidiaries) and integrated financial or operational arrangements can support a finding that a party has the practical ability to obtain an affiliate’s records.
- A party generally cannot avoid discovery obligations by relying on formal corporate separateness or the foreign location of responsive documents when it can obtain them from affiliates.
- The Hague Evidence Convention is not an exclusive mechanism for obtaining documents located abroad when discovery is sought from a party subject to the court’s jurisdiction and the party has control over the materials.

## Conclusion

The court compelled the U.S. Kerzner defendants to produce documents and provide interrogatory information held by their Bahamian affiliates, finding Rule 34 “control” based on practical ability within an integrated corporate structure, and held that the Hague Evidence Convention did not supplant ordinary federal party discovery.


Costa v. Kerzner Int'l Resorts, Inc., 277 F.R.D. 468 (S.D. Fla. 2011)