Opinion
96 Civ. 9721 (PKL) (THK), 98 Civ. 0123 (PKL) (THK)
January 9, 2002
OPINION AND ORDER AND REPORT AND RECOMMENDATION
These consolidated actions were referred to me by the Honorable Peter K. Leisure, United States District Judge, for resolution of discovery disputes and settlement Plaintiff-Cross-Claimant Gianni Versace S.p.A. (hereinafter "Plaintiff" or "Gianni Versace") has brought a motion for sanctions, including a finding of contempt, because of Alfredo Versace's long-term refusal to obey three discovery Orders issued by the Court. For the reasons that follow, Alfredo Versace is required, as a sanction, to pay Plaintiff's costs and attorneys' fees incurred in attempting secure compliance with the Court's discovery Orders. Further, the Court recommends that Alfredo Versace's Answer in the Foldom action, 98 Civ. 0123, be stricken, and that his Answer to the cross-claim in the related action, A.V. by Versace, Inc. v. Gianni Versace, S.p.A., 96 Civ. 9721, be stricken.
The action had previously been referred to the Honorable Naomi Reice Buchwald, but was reassigned to the undersigned after Judge Buchwald was appointed as a United States District Judge.
BACKGROUND
The facts underlying these consolidated actions are set forth in detail in three decisions by Judge Leisure, to whom these cases have been assigned. See A.V. by Versace, Inc. v. Gianni Versace, S.p.A., 126 F. Supp.2d 328 (S.D.N.Y. 2001); A.V. by Versace, Inc. v. Gianni Versace. S.p.A., 87 F. Supp.2d 281 (S.D.N.Y. 2000); A.V. by Versace V. Gianni Versace, S.p.A., No. 96 Civ. 9721 (PKL), 1997 WL 31247, at *1 (S.D.N.Y. Jan. 28, 1997). For purposes of the instant motion, the pertinent substantive claims are those by Gianni Versace against Alfredo Versace ("Alfredo") and Foldom International (U.S.A.), Inc. ("Foldom"), alleging trademark infringement, unfair competition, and trademark dilution, in violation of the Lanham Act and New York law. Gianni Versace contends that Alfredo and Foldom have been marketing jeans and other items of clothing, as well as cigarettes, through the use of various marks that are confusingly similar to trademarks registered by Gianni Versace. In addition, it is alleged that Alfredo has been licensing or franchising such infringing trademarks. On February 10, 1998, the Honorable Sidney H. Stein (the District Judge then assigned to the case), issued a preliminary injunction enjoining Alfredo Versace and Foldom from, inter alia, using, registering, advertising, marketing, licensing, or authorizing the use of any of the Versace Trademarks, Versace Trade Dress, or Medusa Designs, as those marks were defined in the preliminary injunction, to create the impression that such name, logo, or symbol is the trade name or business name of any business, product, or service. Alfredo Versace was also enjoined from using his own name as a trademark, and was further restricted in how he could use his name in connection with products he had designed. See A.V. by Versace, 87 F. Supp.2d at 285. Although Alfredo Versace has argued throughout the litigation that an injunction in this case cannot be applied to commercial activity he takes outside the United States, the Court has made clear that the preliminary injunction applies to activity both in the United States and abroad. See A.V. by Versace, 126 F. Supp.2d at 334-41.
On December 14, 2000, a default judgment was entered against Foldom. See A.V. by Versace, Inc. v. Gianni Versace S.p.A., 160 F. Supp.2d 657, 661 (S.D.N.Y. 2001)
Pretrial discovery in this action has been protracted and contentious. After considering submissions by the parties and hearing oral argument at a conference on December 1, 1998, then-Magistrate Judge Buchwald entered an Order against Alfredo Versace, granting Gianni Versace's motion to compel discovery and requiring the production, within thirty days, of documents responsive to requests issued by Gianni Versace and specified in Judge Buchwald's Order. Among the documents to be produced were (1) those relating to any licenses, manufacturing contracts, and franchise agreements for products and various trademarks utilized by Alfredo; (2) trademark registrations and applications for trademark registrations, on behalf of Alfredo, in any jurisdiction; and (3) evidence of any monies received by or due to Alfredo, or any related entity, as the result of the licensing, franchising, or use of any of the infringing trademarks identified in the preliminary injunction. (Order, Jan. 19, 1999, ¶ 5.) Argument relating to Alfredo's failure to comply with the January 19, 1999 Order took place at a conference before Judge Buchwald on May 7, 1999. Following that conference, Judge Buchwald entered another Order directing Alfredo to "fully comply with all outstanding discovery requests" within forty-five days. (Order, May 18, 1999.)
Although Alfredo produced some additional documents in mid-1999, they were not fully responsive either to the outstanding discovery requests or to the Court's discovery Orders. (Letter-Application of David Jacoby, Esq., May 9, 2000 ("Jacoby May 9 Letter"), at 2.) At a January 20, 2000 conference, the Court directed Alfredo, for the third time, to comply with the outstanding discovery requests. To be clear about which requests still required responses, the Court directed Gianni Versace's counsel to identify by letter all open discovery items, and directed Alfredo to provide documents responsive to those requests within thirty days of receipt of the letter. This direction was embodied in an Order dated January 24, 2000. Gianni Versace's counsel wrote the letter, as directed, on January 28, 2000. ( Id., Exhibit ("Ex.") D.)
By letter dated March 6, 2000, Alfredo's counsel at the time, Theodore R. Kupferman, wrote to Judge Leisure, seeking to have the Court's discovery Orders reconsidered and, if the motion was denied, requesting leave to appeal that decision to the Second Circuit. ( Id., Ex. F.) In his letter, Mr. Kupferman stated that his client believed that discovery relating to his activities abroad was improper and that counsel agreed with him, but acknowledged that his client was bound by the Court's discovery orders. Nevertheless, according to Kupferman, Alfredo "refused to provide the information," and if the Court failed to grant the requested relief, counsel sought to be relieved because he "did not want to be held in violation of a Court Order, [because he could] not compel the client to abide [by] the direction." ( Id.) Judge Leisure denied counsel's requests for reconsideration and for leave to appeal, noting that any objections to the Court's discovery Orders were untimely, since objections were required to be filed within ten days of each of the Orders in issue, which were dated January 19, 1999, May 19, 1999, and January 21, 2000, respectively. (Memorandum Endorsed Order, Mar. 6, 2000.)
In a Memorandum Order, dated June 28, 2000, Judge Leisure granted the motion of Tunick Kupferman Creadore, P.C., to be relieved as counsel for Alfredo Verace. Among the reasons cited for granting the motion were Alfredo's termination of the firm's legal services and his cessation of communications with the firm, as well as counsel's assertion that Alfredo had not been candid regarding his efforts to comply with this Court's previous directives. See A.V. by Versace v. Gianni Versace S.p.A., Nos. 96 Civ. 9721 (PKL) (THK), 98 Civ. 0123 (PLK) (THK), 2000 WL 863452, at *1 (S.D.N.Y. June 28, 2000).
No further discovery responses were provided by Alfredo after the January 20, 2000 conference. (Jacoby May 9 Letter.) Moreover, no opposition was filed to Plaintiff's motion for sanctions. The only document submitted to the Court that could be construed as addressing, in any way, the allegations in the pending motion, was an affidavit submitted by Alfredo, dated May 15, 2000. By its terms, Alfredo's May 15 affidavit makes clear that it was submitted in opposition to Gianni Versace's submission in support of its request for attorneys' fees and costs, which had been awarded by Judge Leisure when he found Alfredo to be in contempt for his failure to comply with a preliminary injunction entered by the Court. See also Gianni Versace, S.p.A. V. Alfredo Versace, No. 98 Civ. 0123 (PKL), 2000 WL 739569, at *2 (S.D.N.Y. June 8, 2000), which refers to Alfredo's May 15 affidavit in the context of the application for attorneys' fees. Although Alfredo stated in his affidavit, in totally conclusory language, that he has "been guided at all times and comported myself by the advice of counsel (and] I have been advised by counsel that I have produced all documents requested" (Affidavit of Alfredo Versace, May 15, 2000, ¶ 9), in the same affidavit he attacked his counsel, arguing that his attorney's statement to the Court that he has refused to obey this Court's Orders is a "bold, outrageous and malicious falsehood," ( id. ¶¶ 3-4). Other than his attacks on his attorney's veracity, Alfredo submitted no competent evidence to contradict both his own counsel's and his adversary's assertions that he had not produced the documents required by this Court's three Orders.
In a separate Order, issued in response to a letter submitted to the Court directly by Alfredo Versace, the Court reiterated that Alfredo, although proceeding pro se, was bound by this Court's Orders. (Memorandum Endorsed Order, Mar. 8, 2000.)
Alfredo was held in contempt, see A.V. by Versace, 87 F. Supp.2d at 294-97, and he was ordered to pay $31,031.39 in attorneys' fees and costs, see Gianni Versace, 2000 WL 739569, at *3.
On November 20, 2000, this Court held a hearing with respect to Gianni Versace's motion for sanctions. Alfredo appeared at the hearing, along with a newly retained attorney, Bryan J. Holzberg, who agreed to represent Alfredo with respect to the motion. At the hearing, Mr. Holzberg acknowledged that Alfredo had never filed any opposition to the sanctions motion (Transcript of Nov. 20, 2000 Hearing ("Nov. 20 Tr."), at 7-8), and he essentially conceded that Alfredo had not previously complied with the outstanding discovery Orders ( id. at 9-11). Although he attempted to justify Alfredo's noncompliance by claiming that Alfredo was confused by his former attorney's views about his discovery obligations, he eventually conceded that Alfredo had been in disagreement with his attorney over the breadth and scope of his discovery obligations. ( Id. at 10-13.) The Court noted at that hearing that it viewed any confusion by Alfredo to be of his own making, because he refused to read the plain language of court Orders and refused to accept his own attorney's advice. ( Id. at 13.) The Court made clear at the hearing that it had determined Alfredo's conduct to be sanctionable, and that the only issue yet to be decided was the severity of sanctions to be imposed. ( Id. at 17-18.) Mr. Holzberg urged the Court to withhold any decision with respect to sanctions, arguing that his client had produced responsive documents that day and was prepared to promptly supplement that production based upon its review by Plaintiff's counsel. ( Id. at 19-20, 31-32.) The Court directed Alfredo to make a full document production within the week and to set forth in an affidavit his basis for believing that he was in full compliance with the Court's Orders. The Court then directed Plaintiff's counsel to provide a submission to the Court on whether it viewed the latest document production by Alfredo as being fully responsive to the outstanding discovery Orders, and how that production affected Plaintiff's entitlement to sanctions, if at all.
On November 21, 2000, Alfredo purported to produce to Plaintiff all licenses, contracts, and agreements concerning trademarks to which Alfredo is a party or a beneficiary; all trademark registration applications in any jurisdiction, by or on behalf of Alfredo; documents regarding all monies earned, received, or due Alfredo as a result of his trademarks, licenses, contracts, or other agreements; as well as other documents. (Letter of Bryan J. Holzberg to David Jacoby, Nov. 21, 2000.) On November 30, 2000, Alfredo submitted an affidavit in which he again attempted to blame his noncompliance on his attorney's improper advice; he also asserted that he finally understood his obligations, had produced whatever responsive documents were in his possession, and would attempt to secure expeditiously other documents that he did not have. (Affidavit of Alfredo Versace, Nov. 30, 2000.) Over the next month or so, the parties exchanged a series of letters in which they debated asserted deficiencies in the production, and in which Alfredo further supplemented his production. In a letter to the Court, Mr. Holzberg contended that "Mr. Versace has produced each responsive document in his possession and is expeditiously seeking to obtain exhibits or attachments to said documents which he had failed to maintain or never received." (Letter of Bryan J. Holzberg, Dec. 21, 2000, at 2.) Mr. Holzberg nevertheless asserted that "his reading of the Court's discovery orders [is] that Mr. Versace is not required to produce discovery regarding non-United States activities conducted by non-United States entities which are devoid of contacts in any form in the United States." (Id. at 3.) With respect to specific deficiencies in document production cited by Plaintiff, however, Mr. Holzberg acknowledged, inter alia, that (1) while his files indicated that Alfredo's prior counsel had made full disclosure of financial information, that "was apparently not so and I will forward copies of these documents"; (2) although he did not concede that the request for documents regarding Alfredo's cigarette licenses had not been complied with, certain documents had not been produced because they had been "discarded upon Schonherr being ordered by foreign courts to cease their activity on behalf of Mr. Versace"; (3) documents relating to Alfredo's business activity in Korea were tied up in litigation between Alfredo and his agent, Michael Ko, and "production of additional Dae Myung materials must await ongoing discovery from Korean counsel"; and (4) there were no documents regarding funds received from either Diesse S.r.l. or Gruppo Manufattore Italiane S.r.l., because no funds were derived from those companies. (Id. at 3-4.)
Even after Alfredo's belated production of documents in November and December 2000, Plaintiff continued to view the document production as incomplete, citing, for example, Mr. Holzberg's statement, in his December 21 letter, that he did not understand the Court's Orders to extend to activity by non-U.S. entities outside the United States. (Letter of David Jacoby, Jan. 5, 2001 ("Jacoby Jan. 5 Letter"), at 1-2.) It is clear that both Judge Buchwald's and this Court's Orders did apply to such activity. ( See. e.g., Jan. 19, 1999 Order ¶ 5 ("Alfredo Versace is ordered to produce discovery responsive to the interrogatories and document requests previously propounded by Gianni Versace, without regard to any territorial limitation.").) Further, Plaintiff pointed to Alfredo's "continued" efforts to secure documents that he claimed not to have in his possession and that should have been produced long ago, such as documents that were in the possession of his Korean attorney — clearly an agent of Alfredo's. (Jacoby Jan. 5 Letter at 2.) In addition, although Mr. Holzberg asserted that Alfredo has repeatedly sworn that he received no funds from Diesse S.r.l., Plaintiff pointed to an earlier discovery response of Alfredo's indicating that he received a $15,000 payment from Diesse, thus evidencing that Alfredo "has been less than candid with the Court and his counsel." (Id. at 2-3.) In short, Plaintiff contends that Alfredo "steadfastly has disregarded and remains woefully in violation of the outstanding discovery Orders. Most of the documents relating to his purported business apparently no longer exist or, to the extent that they exist, have not been produced." (Letter of David Jacoby, Mar. 30, 2001, at 2.)
Although Alfredo had an ongoing disagreement with the Court over its authority to enjoin his activity abroad, his disagreement did not excuse his failure to comply with Court Orders requiring the production of information regarding such activity. In any event, Judge Leisure has made clear that the preliminary injunction originally issued by Judge Stein always had provisions that applied without geographic limitation; was interpreted by Alfredo himself, through his actions, to apply extraterritorially; and, in fact, applied to Alfredo's activities both in the United States and abroad. See A.V. by Versace, 126 F. Supp.2d at 333-36.
Finally, Plaintiff has further supplemented its submissions in support of its request for sanctions, with a motion it filed before Judge Leisure, in April 2001, to hold Alfredo in further contempt of court for additional violations of the preliminary injunction in this action. In support of its motion, Plaintiff has submitted affidavits that purport to demonstrate a broad range of business activity by Alfredo utilizing his name and mark, which is alleged to violate the preliminary injunction, and as to which no documentary evidence has been produced — purportedly in violation of this Court's discovery Orders. (Affidavit of Eric Berger, Apr. 13, 2001 ("Berger Aff."); Affidavit of Theodore C. Max, Apr. 13, 2001 ("Max Aff.").) Alfredo has opposed the motion, as well as the submission of the motion papers to this Court as further evidence of his discovery violations. (Affidavit of Alfredo Versace, May 7, 2001 ("Versace May 7 Aff.").) The contempt motion is sub judice, and this Court is not prepared to draw any conclusions with respect to Plaintiff's allegations about further violations of the preliminary injunction. Moreover, in many respects it is difficult to parse the evidence of additional discovery violations from that of the alleged substantive violations of the preliminary injunction. For example, much of the ongoing activity that Plaintiff contends is infringing, and as to which no documentary evidence has been produced, Alfredo argues is unauthorized by him and is not being conducted on his behalf.
However, there is some apparently uncontested evidence of further discovery derelictions by Alfredo. For example, a letter from an attorney in Korea to Alfredo, dated July 28, 2000, makes reference to the remittance of licensing fees to Alfredo's bank account. (Versace May 7 Aff., Ex. 6.) Plaintiff asserts that Alfredo has produced "absolutely no discovery with regard to these activities or these royalties" (Reply Affidavit of Theodore C. Max, May 21, 2001 ("Reply Aff.") ¶ 27); such discovery was clearly covered by the outstanding Orders. Similarly, Alfredo makes reference to legal action he took in Italy to stop the manufacture of counterfeit jeans and the use of his mark without his authorization. (Versace May 7 Aff. ¶ 15 and Ex. 3.) Nevertheless, the document he provides makes no reference to his being a party to such litigation and indicates that the controversy is still pending; more pertinently, this document, its missing attachments, and any other evidence of this alleged dispute in Italy, were never previously provided to Plaintiff in discovery. (Reply Aff. ¶ 28.) In addition, there is evidence that Alfredo entered into a licensing agreement for the use of the trademark "Designed by Alfredo Versace" on watches, and that watches with his trademark have been sold on the Internet. (Berger Aff. ¶¶ 28-33 and Exs. J-L; Affidavit of Charles A. LeGrand, Esq., Apr. 11, 2001, ¶¶ 6-14 and Exs. C-G.) Although Alfredo belatedly produced a portion of his licensing agreement with Venus de Chine Marketing, Ltd., a Hong Kong corporation that serves as a distributor of Alfredo's goods, he failed to produce any documents relating to the agreement with the manufacturer of the watches, Globe Legend, Ltd. (of Hong Kong) (Reply Aff. ¶ 15). Alfredo contends that he has no relationship with or knowledge of the manufacturer, "other than that Venus de Chine had some possible connection to it." (Versace May 7 Aff. ¶ 21). However, in another proceeding in this case, in which Plaintiff sought to have Alfredo's present attorney, Bryan Holzberg, disqualified, Gianni Versace submitted a letter from Holzberg written on behalf of Alfredo, in which it is confirmed that "Globe Legend, Ltd. (of Hong Kong) has been endorsed by Mr. Alfredo Versace, the Versace Boutique, Inc., to manufacture and distribute timepieces worldwide exclusively, effective March 10, 2000, for three (3) full years." A.V. by Versace v. Gianni Versace, S.p.A. 160 F. Supp.2d 657, 661-62 (S.D.N.Y. 2001). Alfredo never produced that letter in discovery, or any other documents relating to Globe Legend. Moreover, even with respect to Venus de Chine's marketing of Alfredo Versace watches, Alfredo merely represents that early in 2001 Venus de Chine recalled all "Gadget" sample watches. (Versace May 7 Aff. ¶¶ 22, 31.) He does not refute that "Designed by Alfredo Versace" men's and women's watches were offered for sale and sold by catalog and on the Internet, in 2000 and 2001, by Gadget Universe, the entity to which Venus de Chine allegedly provided only "samples." (Berger Aff. ¶¶ 28-33; LeGrand Aff. ¶¶ 6-14; Max April 13 Aff. ¶¶ 34-36; Reply Aff. ¶¶ 21-22.)
In sum, until the Court hearing on November 20, 2000, Gianni Versace's motion for sanctions had been unopposed; moreover, as of that date, it was undisputed that Alfredo had failed to comply with the three outstanding discovery Orders for a period of almost two years. Although, subsequent to the hearing, and with much prodding, Alfredo produced documents that were responsive to the outstanding discovery requests, even when thus given the opportunity to remedy his noncompliance, his response to Plaintiff's document requests remained incomplete. Throughout this period, Alfredo has been evasive and untrustworthy; he has attempted to avoid responsibility for his derelictions by proffering disingenuous claims of misunderstanding and supposed reliance upon his attorneys' advice. Cf. Gianni Versace, 2000 WL 739569, at **2-3 (describing Alfredo's "litany of explanations and excuses" in his attempt to reargue the contempt finding and the award of sanctions to Plaintiff). Yet, even his attorneys have made clear that he has been unwilling to heed their advice that he comply with Court Orders (even if both he and they disagreed with them), with the result that his attorneys have been compelled to withdraw as counsel. See A.V. by Versace, 2000 WL 863452, at *1 ("According to [Alfredo's counsel], this breakdown in communications is further evidenced by Mr. Versace's lack of candor regarding his efforts to comply with this Court's previous directives.").
Two different law firms that were representing Alfredo in this litigation have been granted leave to withdraw from representing him. See id.
DISCUSSION
Gianni Versace asks that severe sanctions be imposed against Alfredo for his failure to comply with this Court's discovery Orders. Specifically, Gianni Versace requests that Alfredo be held in contempt, that he be ordered to pay Gianni Versace's costs and attorneys' fees for the instant motion and the applications leading to the three prior discovery Orders entered by the Court, that a further monetary sanction be imposed against Alfredo, and that Alfredo's Answer in the Foldom action, 98 Civ. 0123, and his Answer to the cross-claims in the related action, A.V. by Versace, Inc. v. Gianni Versace, S.p.A., 96 Civ. 9721, be stricken.Plaintiff's motion for sanctions is brought under Rule 37(b)(2) of the Federal Rules of Civil Procedure, which provides the framework for the imposition of sanctions for failure to comply with a court's discovery orders. The Rule provides that the court may make such orders in regard to a discovery failure "as are just," including (1) an order striking out pleadings or rendering a judgment by default; (2) an order of contempt; and (3) an order requiring the disobedient party to pay the reasonable expenses, including attorneys' fees, caused by the disobedient party's failure. See Fed.R.Civ.P. 37(b)(2). "Rule 37 sanctions must be applied diligently both to penalize those whose conduct may be deemed to warrant such a sanction, [and] to deter those who might be tempted to such conduct in the absence of a deterrent." Roadway Express, Inc. v. Piper, 447 U.S. 752, 763-64, 100 S.Ct. 2455, 2463 (1980) (quoting Nat'l Hockey League v. Metro. Hockey Club, 427 U.S. 639, 643, 96 S.Ct. 2778, 2781 (1976)); see also Update Art, Inc. v. Modiin Publ'g, Ltd., 843 F.2d 67, 73 (2d Cir. 1988); Cine Forty-Second St. Theatre Corp. v. Allied Atists Pictures Corp., 602 F.2d 1062, 1066 (2d Cir. 1979).
The Court has wide discretion in imposing sanctions. As the Second Circuit has observed, "[w]hen a party seeks to frustrate [the purpose of the discovery provisions of the Federal Rules of Civil Procedure] by disobeying discovery orders, thereby preventing disclosure of facts essential to an adjudication on the merits, severe sanctions are appropriate." Daval Steel Prods. v. M/V Fakredine, 951 F.2d 1357, 1365 (2d Cir. 1991). Although strong sanctions should be imposed only for serious violations of court orders, they are justified "when the failure to comply with a court order is due to willfulness or bad faith, or is otherwise culpable." Id. at 1367; see also Bobal v. Rensselaer Polytechnic Inst., 916 F.2d 759, 764 (2d Cir. 1990); cf. Dodson v. Runyon, 86 F.3d 37, 40 (2d Cir. 1996) ("[T]he more the delay was occasioned by plaintiff's personal obstruction, or was designed to benefit the plaintiff's strategic interests, the more suitable the remedy of dismissal."); New Pac. Overseas Group (USA) Inc. v. Excal Int'l Dev. Corp., Nos. 99 Civ. 2436, 99 Civ. 3591 (DLC), 2000 WL 97358, at *4 (S.D.N.Y. Jan. 27, 2000) ("Courts ordinarily impose such extreme sanctions only where there has been willfulness, bad faith, or any fault in the course of discovery. . . . While dismissal and default are extreme remedies, in this day of burgeoning, costly and protracted litigation, courts should not shrink from imposing harsh sanctions where . . . they are clearly warranted.") (citations and internal quotation marks omitted); Baba v. Japan Travel Bureau Int'l, Inc., 165 F.R.D. 398, 402 (S.D.N Y 1996) (dismissing case because of pro se litigant's willful disobedience of discovery orders); Szilvassy v. United States, 82 F.R.D. 752, 755 (S.D.N.Y. 1979) (dismissing case where plaintiff "demonstrated willfully, in bad faith, and with fault a continuing disregard of [the] Court's orders as well as of the provisions and spirit of the discovery rules"). Sanctions must be weighed in light of the full record in the case. See Cine Forty-Second Street, 602 F.2d at 1068.
With respect to Plaintiff's request to strike Alfredo's Answer, which in effect would result in a default judgment, the following considerations are relevant:
(a) willfulness or bad faith on the part of the noncompliant party; (b) the history, if any, of noncompliance; (c) the effectiveness of lesser sanctions; (d) whether the noncompliant party had been warned about the possibility of sanctions; (e) the client's complicity.American Cash Card Corp. v. ATT Corp., 184 F.R.D. 521, 524 (S.D.N.Y. 1999); see also New Pac. Overseas Group, 2000 WL 377513, at *7 (the five factors used to determine whether to impose the sanction of default are the duration of the party's failures, whether the party has received notice of the potential sanctions, the prejudice to the party seeking relief arising from the noncompliant party's actions, due process considerations, and the efficacy of lesser sanctions); Yucyco, Ltd. v. Ljubjanska Banka D.D., No. 96 Civ. 4274 (DC), 2001 WL 699135, at *4 (S.D.N.Y. June 20, 2001) (same); cf. Selletti v. Carey, 173 F.3d 104, 111 (2d Cir. 1999) (appropriateness of dismissal of action under Rule 41(b) depends on the duration of the plaintiff's failure to comply with the court order, whether the plaintiff was on notice that failure to comply would result in dismissal, the prejudice to the defendants from further delay, the court's interest in managing its docket balanced against the plaintiff's interest in receiving a chance to be heard, and whether the efficacy of lesser sanctions has been considered); Banjo v. United States, No. 95 Civ. 633 (DLC), 1996 WL 426364, at **5-7 (S.D.N.Y. July 30, 1996) (citing the same factors, court dismisses case because of plaintiff's willful obstruction of discovery).
There can be little doubt that Alfredo's failure to comply with this Court's discovery Orders has been willful and prolonged. Alfredo was given no fewer than three opportunities to comply with this Court's Orders, over a period of more than two years. Judge Buchwald's first discovery Order addressed to Alfredo was entered on January 19, 1999. Further Orders were entered on May 18, 1999, and January 20, 2000. In response to an application by Alfredo to have the Court reconsider its discovery Orders, Judge Leisure ruled that the request was untimely. (Memorandum Endorsed Order, Mar. 6, 2000.) Yet, the ordered discovery was still not produced. Moreover, Alfredo disregarded his own attorneys' advice as to producing the required discovery. See Jones v. Niagara Frontier Transp. Auth., 836 F.2d 731, 735 (2d Cir. 1987) (upholding sanction of dismissal where plaintiff's disobedience of court orders was willful, plaintiff ignored his counsel's advice and refused to answer deposition questions, and plaintiff obstructed progress on litigation that had been pending for seven years). In addition, even after this Court's November 2000 hearing and warning that sanctions would be imposed, and Alfredo's request to "purge" himself of any contempt, his response to Plaintiff's document requests remained incomplete. Although the Court is unable to ascertain the precise level of Alfredo's present noncompliance, a finding by the District Court crediting Plaintiff's allegations of Alfredo's further contempt of the preliminary injunction, would necessarily indicate extensive further violations of the Court's discovery Orders. In any event, the Court has little confidence in Alfredo's representations that he has produced whatever documents he has that are responsive. As discussed above, Plaintiffs have produced documents secured from other sources, which were not produced in discovery by Alfredo, that should have been either in Alfredo's possession or within his control.
Thus, not only has Alfredo been complicit in the noncompliance; he has, in fact, disregarded his attorneys' advice to comply.
The Court has attempted to assess whether one or more of the less drastic sanctions in the Rule 37 arsenal of discovery sanctions would suffice as a "just" way of accomplishing the purposes of the Rule. I am compelled to conclude that they would not. For example, there is no question that Plaintiff has expended substantial time and effort in attempting to secure responses to its document requests and compliance with this Court's Orders, over a period of over two years. Clearly, it is entitled to the attorneys' fees and costs it has incurred in those efforts. See Fed.R.Civ.P. 37(b)(2); Selletti, 173 F.3d at 110 (imposition of monetary sanction under Rule 37(b)(2) found to be appropriate where plaintiff failed to justify its noncompliance with discovery requirements); Hoar v. Sara Lee Corp., 882 F.2d 682, 687 (2d Cir. 1989) (affirming district court's award of costs of securing compliance with discovery orders, as sanction under Rule 37(b)); Teletel v. Tel-Tel U.S. Corp., No. 99 Civ. 4811 (LLS), 2000 WL 1335872, at **2-3 (S.D.N.Y. Sept. 15, 2000) (sanctioning plaintiff for the costs caused by its discovery defaults); New Pac. Overseas Group, 2000 WL 97358, at *5 (same). Gianni Versace's counsel shall therefore submit, by February 1, 2002, appropriate documentation in support of its request for the fees and costs incurred in attempting to secure compliance with this Court's discovery Orders. If Alfredo disputes the reasonableness of the request, he shall, by February 18, 2002, serve and file his opposition to the request. Such opposition shall not attempt to relitigate the Court's determination that sanctions are appropriate.
The Court recognizes that Alfredo's noncompliance dates back to 1999, when Judge Buchwald entered her first Order requiring compliance with Gianni Versace's discovery requests; however, this Court will award only the costs and fees incurred since its involvement with the action and the entry of its January 24, 2000 Order, which required that Alfredo provide the information which was detailed in the January 28, 2000 letter from Gianni Versace's attorneys. Moreover, in light of the other sanctions that this Court is recommending, see discussion infra, Gianni Versace may choose to waive its right to monetary sanctions, in which case it shall so inform the Court.
There is no reason to believe, however, that this monetary sanction will be effective as a punishment or deterrent, or as a means of coercing Alfredo's compliance with this Court's Orders. Tellingly, the record in this case demonstrates that Alfredo has flouted other Orders, including those imposing monetary sanctions. For example, in the Opinion and Order finding Alfredo to be in contempt of the preliminary injunction entered in this action on February 10, 1998, Judge Leisure awarded Gianni Versace, inter alia, one-third of the costs and attorneys' fees incurred in applying for relief. See A.V. by Versace, 87 F. Supp.2d at 296. In a subsequent decision, the Court ordered Alfredo to remit $31,031.39 (the amount of tees and costs approved by the Court) to Gianni Versace, by July 7, 2000. See Gianni Versace, 2000 WL 739569, at *3. In the eighteen months that have passed since the entry of that Order, Alfredo still has not complied. (Max Apr. 13 Aff. ¶¶ 11-12.)
For the same reasons, the Court sees little to be gained by holding Alfredo in contempt of the Court's discovery Orders — although a finding of contempt would be justified because "the order[s] violated [are] 'clear and unambiguous,' the proof of non-compliance is 'clear and convincing,' and [Alfredo] was not reasonably diligent in attempting to comply." A.V. by Versace, 87 F. Supp.2d at 288 (quotingUnited States v. Local 1804-1, Int'l Longshoremen's Ass'n, 44 F.3d 1091, 1096 (2d Cir. 1995)). It is difficult at this point to fashion a meaningful coercive sanction, since the present state and degree of Alfredo's non-compliance are unclear. Additionally, any remedy that would compensate Plaintiff for Alfredo's noncompliance would be duplicative of the award of costs and fees the Court has determined to be appropriate under Rule 37(b)(2).
I further conclude that other lesser sanctions authorized by Rule 37(b) would be equally ineffective. For example, there is no meaningful way in which to correlate Alfredo's discovery failures with discrete issues in the case; therefore, the sanction of precluding Alfredo from offering evidence on certain matters is not viable. See Fed.R.Civ.P. 37(b)(2) (B). The discovery that Gianni Versace has been seeking is relevant both to the fact and scope of Alfredo Versace's infringing activity, as well as to the issue of damages, that is, the profits he has earned from his infringing activity. For example, because Alfredo has tailed to provide complete information about his foreign and offshore activities, Gianni Versace has been hampered in its ability to document the extent of Alfredo's infringing activity. (Affidavit of Theodore C. Max, May 23, 2000.) Moreover, Gianni Versace has been deprived of competent evidence by which to assess the profits Alfredo has made from his alleged infringing activity. Cf. New Pac. Overseas Group, 2000 WL 97358, at *5 (imposing sanction of attorneys' fees, costs, and additional monetary award, but declining to dismiss action because it appeared that lesser sanctions could be effective in ensuring limited remaining discovery of inspection of equipment).
The full record of this case makes abundantly clear that Alfredo has been willfully obstructive and evasive with respect to the Court's substantive and discovery Orders; his disregard of Court Orders has been inexcusable. He has been warned on more than one occasion that continued disobedience to Court Orders would result in severe sanctions. Indeed, he has already been held in contempt once and, in addition to the instant motion, he is faced with another motion for contempt of the preliminary injunction. Alfredo's disregard of Court Orders has continued for several years, resulting in substantial prejudice to Plaintiff, in terms of both proving its case and terminating Alfredo's infringing activity. Under these extreme circumstances, the harshest of remedies is appropriate. Cf. Bambu Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849, 853 (2d Cir. 1995) (affirming grant of default judgment for willful failure to comply with discovery orders); Jones v. Niagara, 836 F.2d at 735 (affirming dismissal of action because of plaintiff's willful obstruction of discovery); Yucyco, 2001 WL 699135, at *7 (dismissing amended complaint because of plaintiff's persistent failure to meet discovery obligations); Dukes v. New York City Police Comm'r Ward, 129 F.R.D. 478, 481-82 (S.D.N.Y. 1990) (dismissing case where plaintiff repeatedly disregarded court orders).
At a hearing held before Judge Leisure on April 18, 2000, Alfredo was explicitly warned, in detail, of the serious consequences he would face if he continued to disobey Court Orders. (Transcript of April 18, 2000 Hearing, passim.)
Accordingly, I recommend that Alfredo Versace's Answer in the Foldom action be stricken, and that his Answer to the cross-claim in the actionA.V. by Versace, Inc. v. Gianni Versace, S.p.A., 96 Civ. 9721, be stricken. This Court's recommendation is based on the unambiguous evidence in the record relating to Alfredo Versace's conduct since the entry of the three discovery Orders in issue. As noted, Alfredo may be in even further noncompliance with those Orders; whether or not this is so depends upon the District Court's findings, it any are deemed necessary, on the pending contempt motion.
Because the sanction of striking Alfredo Versace's pleadings is tantamount to being a case-dispositive determination, the portion of this Opinion imposing that particular sanction is submitted as a Report and Recommendation to Judge Leisure.
CONCLUSION
For the reasons set forth above, Alfredo Versace is required, as a sanction, to pay the costs and attorneys' fees Plaintiff incurred in attempting to secure compliance with the Court's discovery Orders. In addition, the Court recommends that Alfredo Versace's Answer in theFoldom action, 98 Civ. 0123, be stricken, and that his Answer to the cross-claim in the related action, A.V. by Versace, Inc. v. Gianni Versace, S.p.A., 96 Civ. 9721, be stricken.
Pursuant to 28 U.S.C. § 636 (b)(1)(C) and Rule 72(a) and (b) of the Federal Rules of Civil Procedure, the parties shall have ten days from service of this decision to file written objections. See also Fed.R.Civ.P. 6(a) and (e). Such objections shall be filed with the Clerk of the Court, with extra copies delivered to the chambers of the Honorable Peter K. Leisure, U.S.D.J., and to the chambers of the undersigned, Room 1660. Any requests for an extension of time for filing objections must be directed to Judge Leisure. Failure to file objections will result in a waiver of those objections for purposes of appeal. See Thomas v. Am, 474 U.S. 140, 149-52 (1985), reh'g denied, 474 U.S. 1111 (1986); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993), cert. denied, 513 U.S. 822, 115 S.Ct. 86 (1994); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir.), cert. denied, 506 U.S. 1038, 113 S.Ct. 825 (1992); Small v. Secretary of Health Human Servs., 892 F.2d 15, 16 (2d Cir. 1989).