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deferring consideration of a summary judgment motion where the version of facts set forth by defendants had not yet been subject to cross-examination through a deposition and collecting cases
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01 Civ. 0216 (RWS) —
October 8, 2002
PETER N. WANG, ESQ., FRIEDMAN, WANG BLEIBERG, New York, NY, THOMAS J. KAVALER, ESQ., SUSAN BUCKLEY, ESQ., CAHILL GORDON REINDEL, New York, NY, Attorneys for Plaintiff.
MARK C. ZAUDERER, ESQ., JONATHAN D. LUPKIN, ESQ., SOLOMON, ZAUDERER, ELLENHORN, FRISCHER SHARP, New York, NY, Attorneys for Defendants.
ABBE DAVID LOWELL, ESQ., PAMELA J. MARPLE, ESQ., MANATT, PHELPS PHILLIPS Washington, DC, Attorneys for Baron Budd, Frederick Baron and Russell Budd.
OPINION
Defendants Baron Budd, P.C. ("Baron Budd"), Frederick Baron ("Baron") and Russell Budd ("Budd") (collectively the "Baron Budd defendants") have moved pursuant to Rule 56 of the Federal Rules of Civil Procedure and Local Rule 56.1 to dismiss Counts V, VI and XII of the Third Amended Complaint of plaintiff G-I Holdings ("Holdings"). Holdings has moved in opposition pursuant to Fed.R.Civ.P. 56(f) for a continuance to allow for further discovery.
For the following reasons, Holdings' motion for a continuance is granted, and the Baron Budd defendants' motion for summary judgment is denied, with leave to renew upon close of the discovery ordered below.
Facts
The parties and facts discussed herein are discussed in greater detail in G-I Holdings v. Baron Budd, 2002 WL 1585328 (S.D.N.Y. July 17, 2002) and G-I Holdings v. Baron Budd, 179 F. Supp.2d 233 (S.D.N.Y. 2001), familiarity with which is presumed.
Prior Proceedings
Holdings instituted this action on January 10, 2001, alleging a wide variety of claims. The First Amended Complaint (the "FAC") was filed on April 30, 2001 and alleged inter alia that the Defendants engaged in a scheme to inundate the judicial system, and Holdings, with hundreds of thousands of asbestos cases without regard to their merit, and to commit various illegal acts in connection with such litigation including suborning false testimony. The FAC contained ten counts and alleged that Defendants (1) maliciously interfered with GAF's right to petition Congress (prima facie tort) (Claim I); (2) tortiously interfered with GAF's contracts and economic advantage (Claim II); (3) violated federal antitrust law (Claim III); (4) violated the RICO statute (Claims IV-VII); (5) breached contracts with GAF (Counts VIII, IX); and (6) fraudulently induced GAF to enter into contracts they never intended to honor (Count X). That complaint was dismissed in part on December 11, 2001, but leave was granted to replead.
In a Second Amended Complaint, filed on January 25, 2002, Holdings repled certain of its state law claims, asserted a cause of action against Baron Budd for common law fraud, and amended the allegations with regard to its witness tampering theory. Defendants moved to dismiss the Second Amended Complaint, and Weitz Luxenberg moved to strike certain allegations in the complaint.
On March 18, 2002, however, Holdings filed a Third Amended Complaint (the "TAC") in which it added a common law fraud claim against Weitz Luxenberg and amended two paragraphs of its mail and wire fraud allegations against the Baron Budd defendants to identify five cases and asserted on information and belief that "the Baron Budd Memorandum was used to create false product identification and testimony in the deposition of each of the plaintiffs who were deposed in these actions." Holdings also sought the Court's permission to file the Third Amended Complaint after it had already filed it.
At a hearing on April 17, 2002, leave to file the Third Amended Complaint was granted, and the Defendants' motions to dismiss the Second Amended Complaint and strike certain allegations were denied inasmuch as they no longer targeted the current complaint. The Defendants were then given leave to renew their motions with regard to the TAC.
Also at the April 17, 2002 hearing, the Baron Budd defendants requested that Holdings be directed to withdraw subpoenas noticing the depositions of several present and former Baron Budd employees. Because of the pending motion to dismiss, it was determined that the depositions should be delayed until after the motion to dismiss was decided. Holdings claims that thereafter it did not press discovery issues until after the Court ruled on the motion to dismiss, on July 17, 2002.
On July 17, 2002, an opinion issued, dismissing all but the three counts at issue (Counts V, VI and XII); Count II (tortious interference with economic advantage against all defendants); Count III (tortious interference with contract against all defendants); Count IX (breach of contract against Weitz Luxenberg); and Count X (breach of contract against Ness Motley). Holdings was granted a limited right to replead its Count XIII (common law fraud against the Weitz Luxenberg defendants). Accordingly, a Fourth Amended Complaint (the "FAC") was filed on August 21, 2002, and the Weitz Luxenberg defendants filed a motion to dismiss what is the amended Count XIII in the FAC on October 4, 2002. That motion is set for oral argument on October 30, 2002.
Holdings' Attempts to Take Discovery On July 26, 2002, Holdings served a notice of deposition upon Baron Budd pursuant to Fed.R.Civ.P. 30(b)(6). In that notice, Holdings sought information concerning the following topics:
• the Baron Budd organizational structure in or about December 1995, including but not limited to the role of Melanie Oliver and other paralegal "supervisors" in asbestos litigation;
• Baron Budd's practices and procedures with respect to the preparation of affidavits for use in asbestos litigation, both for trial and for settlement, including but not limited to its preparation of the affidavits described in paragraphs 81 through 91 of the TAC; and
• Baron Budd's practices and procedures with respect to obtaining product identifications and work histories from its clients, including but not limited to such practices with respect to those clients for whom the affidavits described in paragraphs 81 through 91 of the TAC were prepared.
Four days later, Holdings' counsel had a conversation with counsel for Baron Budd, during which Baron Budd requested an extension of time in which to answer the allegations of the Third Amended Complaint. Holdings' counsel agreed to the extension of time. Counsel for Baron Budd also expressed his doubts that discovery could go forward, because the scheduled cut-off date for discovery was July 1, 2002, and stated that an additional Rule 26(f) discovery conference should be held. In a letter dated August 1, 2002, Holdings's counsel requested that counsel for defendants call to schedule such a meeting.
On August 5, 2002, counsel for Baron Budd contacted Holdings' counsel to seek to adjourn the Rule 30(b)(6) deposition date of August 13, 2002, by approximately two weeks. Holdings agreed to this adjournment. A new date was never set by defendants, however.
On August 6, 2002, Holdings served on the Baron Budd defendants a third request for production of documents and a second set of interrogatories. The second set of interrogatories sought, inter alia, the following information:
• Identify each and every paralegal and/or individual to be identified in response to Interrogatory No. 14 herein that reported to Melanie Oliver in the years 1995 and 1996, including but not limited to the paralegals described in paragraphs 81 through 91 of the TAC;
• Identify each and every asbestos action to which Melanie Oliver was assigned and/or on which Melanie Oliver worked in any capacity whatsoever, whether supervisory, advisory, as a consultant or otherwise, in the years 1995 and 1996; and
• Identify each and every claimant, client or plaintiff you represented during the Period for whom Melanie Oliver or any paralegal and/or any individual to be identified in response to Interrogatory No. 14 herein working under the supervision of Melanie Oliver in preparing an affidavit to be used, either for trial or settlement purposes, in connection with an asbestos action.
The third request for production of documents sought, inter alia, the following documents:
• All documents including but not limited to correspondence, transmittal letters, fax cover sheets, executed affidavits, all drafts of affidavits, electronic mail, handwritten notes and telephone and voice mail messages, concerning the drafting and execution of any client or claimant's affidavit prepared for or used during the Period in any action, or for the settlement of any action, in which Plaintiff is or was a party, including but not limited to the affidavits and materials described in paragraphs 81 through 91 of the TAC; and
• All documents concerning the Baron Budd organizational structure during the Period, including but not limited to documents concerning the role of Melanie Oliver.
On August 13, 2002, the Baron Budd defendants filed the instant motion for summary judgment.
On August 16, 2002, Holdings' counsel contacted counsel for Baron Budd to attempt to set a date for the Rule 30(b)(6) deposition and also communicated Holdings' request to depose two affiants on which the instant motion relies: Melanie Oliver and Lance Pool. Holdings also sought an extension of time to respond to the instant motion to allow time to depose the witnesses.
On August 20, 2002, counsel for Baron Budd refused to allow the extension of time. The next day, Holdings requested that the Court extend the time in which to respond to the instant motion and adjourn the September 18, 2002 hearing day to October 23, 2002.
The Baron Budd defendants have yet to provide any of the requested discovery or schedule any of the requested depositions.
The motions of the Baron Budd defendants for summary judgment and of Holdings for a continuance were heard on October 2, 2002, and were considered fully submitted at that time.
Discussion I. Standards for a Rule 56(f) Motion
Holdings has filed a declaration under Fed.R.Civ.P. 56(f) seeking an order denying defendants' motion for summary judgment and compelling defendants to provide certain discovery. That rule states that:
Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.
Courts have interpreted Rule 56(f) to provide that when a party facing an adversary's motion for summary judgment reasonably advises the court that it needs discovery to be able to present facts needed to defend the motion, the court should defer decision of the motion until the party has had the opportunity to take discovery and rebut the motion. Commercial Cleaning Servs, L.L.C. v. Colin Serv. Systems, Inc., 271 F.2d 374, 386 (2d Cir. 2001) (citing Meloff v. New York Life Ins. Co., 51 F.3d 372, 375 (2d Cir. 1995) (holding that grant of judgment was premature where plaintiff submitted properly supported Rule 56(f) request for further discovery in opposition to defendant's motion for summary judgment); Hellstrom v. U.S. Dep't of Veteran's Affairs, 201 F.3d 94, 97 (2d Cir. 2000) ("Only in the rarest cases may summary judgment be granted against a plaintiff who has not been afforded the opportunity to conduct discovery.")). The district court is afforded discretion in making this decision. Id.
The Second Circuit has established a four-part test to determine the sufficiency of an affidavit or declaration submitted pursuant to Rule 56(f). The affidavit or declaration must detail: (1) the nature of the uncompleted discovery; (2) how the facts sought are reasonably expected to create a genuine issue of material fact; (3) what efforts the affiant has made to obtain those facts; and (4) why those efforts were unsuccessful. Paddington Partners v. Bouchard, 34 F.3d 1132, 1138 (2d Cir. 1994); Hudson River Sloop Clearwater, Inc. v. Dep't of the Navy, 891 F.2d 414, 422 (2d Cir. 1989). See also Demry v. Extebank Deferred Comp., 216 F.3d 283, 286 (2d Cir. 2000) (discovery should be denied where the requested discovery will not create a genuine dispute of material fact); Contemporary Mission Inc. v. United States Postal Serv., 648 F.2d 97, 102 (2d Cir. 1981) ("An opposing party's mere hope that further evidence may develop prior to trial is an insufficient basis on which to justify the denial of the motion.").
II. Summary Judgment May Not Be Granted Until Certain Discovery Has Taken Place
Holdings argues that discovery necessary to respond to the instant motion remains incomplete in that it has not had the opportunity to depose either Oliver or Pool, and the Baron Budd defendants have not yet produced any documents or answered any interrogatories relating to the alleged "fixing" of the affidavits.
A. Depositions of Oliver and Pool
Holdings has noticed depositions of both Oliver and Pool, the affiants on whose affidavits the Baron Budd defendants have entirely based this summary judgment motion. See Defs.' Rule 56.1 Statement ¶¶ 1-4 (relying solely on Oliver affidavit), ¶¶ 5-9 (relying solely on Pool affidavit). Neither of those depositions have been conducted, and thus Oliver's and Pool's version of the facts set forth in their affidavits were not subject to cross-examination.
The Baron Budd defendants argue that undisputed facts establish that (1) Oliver did not alter the specific cohort of affidavits presently at issue and (2) GAF could not in any case have relied in settlements on any such affidavits.
Since the facts put forward by the Baron Budd defendants to support these claims are only presented in the form of affidavits and the central factual allegations concerning the alleged "fixing" of affidavits and GAF's reliance thereon are disputed, albeit by an unnamed source, the summary judgment motion must be denied. E.g., Rosen v. Trans World Airlines, Inc., 1997 WL 107640, at *2 (S.D.N.Y. March 11, 1997) ("The motion of Port Authority is denied because plaintiff has not yet been given the opportunity to depose the Port Authority employee on the basis of whose affidavit summary judgment is sought."); Messina v. Mazzeo, 854 F. Supp. 116, 141 (E.D.N.Y. 1994) (denying defendants' motion for summary judgment where plaintiff had not had the opportunity to depose, among others, affiant doctor and a deposition might raise material issues of fact). Cf. Connecticut Indemnity Co. v. 21st Century Transport Co., 186 F. Supp.2d 264 (E.D.N.Y. 2002) (denying plaintiff's argument that as a matter of law defendant cannot succeed on motion for summary judgment where plaintiff has not had the opportunity to depose affiants on whose affidavits summary judgment motion was based because plaintiff had opportunity to depose affiants and did not).
Therefore, Holdings shall have the opportunity to depose Oliver and Pool before the Baron Budd motion for summary judgment may be considered.
B. Other Discovery
Holdings also asserts that additional fact discovery and document production is necessary to respond to the instant motion with regard to the specific cases identified by it in the TAC and FAC as well as a number of other cases in which it claims that the "fix" might have been on.
Counts V, VI and XII of Holdings' Third Amended Complaint survived a motion to dismiss because Holdings identified, as it had been ordered to do, a cohort of cases in which it claimed that the fixing had occurred. To the extent that Holdings seeks discovery on cases other than those in the cohort, the request is not relevant and constitutes an impermissible "fishing expedition." Paddington Partners v. Bouchard, 34 F.3d 1132, 1138 (2d Cir. 1994) (while "Rule 56(f) discovery is specifically designed to enable a plaintiff to fill material evidentiary gaps in its case . . . it does not permit a plaintiff to engage in a 'fishing expedition.'") (citing Capital Imaging Assoc. v. Mohawk Valley Medical Assoc., 725 F. Supp. 669, 680 (N.D.N.Y. 1989) (citing Waldron v. Cities Serv. Co., 361 F.2d 671, 673 (2d Cir. 1966))). Holdings shall have a brief period of discovery related solely to the cohort of cases that it identified in the TAC and FAC in order to attempt to confirm its allegations as it has not yet had the opportunity to do.
The Baron Budd defendants argue that during a visit to the Center for Claims Resolution ("CCR"), GAF's former agent in settling asbestos-related claims, both parties reviewed the files of the cases identified by Holdings as belonging to the cohort in which "fixing" took place. Further, the Baron Budd defendants argue that those files did not contain any such affidavits and that therefore any other discovery related to those cases would be futile. Holdings is persuasive in arguing that CCR's files might not be complete. It may request discovery to determine whether those files were complete or whether additional documents that are in the possession of the Baron Budd defendants were not in the CCR's files, such as the disputed affidavits, and that constituted documents on which GAF relied in connection with the resolution of asbestos claims.
The Baron Budd defendants also argue that, as a result of the contentions in the Oliver and Pool affidavits, any further discovery would not and could not result in any genuine issue of material fact. However, Holdings may test this contention.
The motion for summary judgment is denied, with leave to renew. As soon as practicable, the Baron Budd defendants shall produce Oliver and Pool for depositions and shall answer any interrogatories or produce any requested documents related to the group of cases identified in the TAC and FAC and to the alleged "fixing" of affidavits in those cases. The Baron Budd defendants need not in response to discovery requests identify or produce any additional cases other than the ones in the cohort. Discovery on this issue shall close on December 13, 2002, unless it is otherwise ordered, and the Baron Budd defendants may thereafter renew their motion for summary judgment. Leave is also granted to raise any other discovery issues arising out of the request for interrogatories and document demands. At the end of the discovery period, Holdings has leave to move for broader discovery based on any new information it has gleaned during this discovery period.
The parties are directed to meet and confer with respect to the discovery schedule and in the probable event of disagreement to submit memoranda and proposed orders within ten (10) days of any disagreement.
III. Hillis Affidavit
A related dispute arose as to the admissibility of the Hillis affidavit, in which a private investigator reports on her interview with an unidentified paralegal, the so-called "Source 1," about the alleged affidavit fixing. Holdings relied exclusively on this affidavit to raise a material issue of fact in response to the summary judgment motion.
If the Baron Budd defendants renew their summary judgment motion, the Hillis affidavit will be insufficient to create a material issue of fact because it is inadmissible hearsay. Sarno v. Douglas Elliman-Gibbons Ives, Inc., 183 F.3d 155, 160 (2d Cir. 1999) (hearsay assertion that would not be admissible if testified to at trial is not competent material for a Rule 56 affidavit) (citing H. Sand Co. v. Airtemp Corp., 934 F.2d 450, 454-55 (2d Cir. 1991)).
Holdings argues that Source 1's statements to Hillis are not hearsay because (1) they are statements against interest, or (2) they show state of mind. The first hearsay exception is unavailing as there is no suggestion the Source 1 is "unavailable" within the definition of Federal Rule of Evidence 804(a). Holdings, in fact, has stated that it will subpoena Source 1 to testify at trial. Second, the state of mind exception does not permit Hillis to state what Source 1 told her because his statements made in 2002 were irrelevant to his intent or motive in allegedly assisting in "fixing" affidavits in December 1995. Fed.R.Evid. 803(3).
Source 1 must be identified, and the Baron Budd defendants must have the opportunity to depose Source 1, by December 13, 2002, if Holdings seeks to rely on his testimony.
Conclusion
In light of the foregoing, the Baron Budd defendants' summary judgment motion is denied, with leave to renew upon the close of the limited discovery detailed above.
It is so ordered.