Opinion
01 Civ. 3137 (HB)(FM).
July 30, 2004
Christopher Lovell, Esq., Lovell Stewart Halebian LLP, New York, New York, Counsel for Plaintiffs.
Marc Rachman, Esq., Davis Gilbert LLP, J. Walter Thompson Company, New York, New York, Counsel for Amicus Curiae.
Bruce A. Colbath, Esq., Weil, Gotshal Manges LLP, New York, New York, Counsel for Amicus Curiae Jewelers of America.
Michael B. Miller, Esq., Sullivan Cromwell LLP, New York, New York, Counsel for Amicus Curiae, International Diamond Manufacturers Association.
Robert L. Begleiter, Esq., Constantine Partners, New York, New York, Counsel for Amicus Curiae, Jewelers Vigilance Committee.
REPORT AND RECOMMENDATION TO THE HONORABLE HAROLD BAER, JR.
I. Introduction
The plaintiffs ("Plaintiffs") in this putative class action are purchasers of diamonds and diamond jewelry who have brought suit to recover damages and injunctive relief under federal and New York law. The defendants are two divisions of the De Beers Group (De Beers Centenary AG and De Beers Consolidated Mines Limited) and the chairman (Nicolas Oppenheimer) and managing director (Gary Ralfe) of those divisions (collectively, "De Beers"). The gravamen of the Plaintiffs' complaint is that, as a result of De Beers' false or misleading advertising and monopolistic control, consumers in the United States have paid too much for diamond jewelry and other diamonds.
After De Beers failed to answer the complaint, Your Honor awarded the Plaintiffs two default judgments and referred the question of class certification to me. I also was directed to hold an inquest to determine the damages and other relief to which the Plaintiffs are entitled.
On March 3, 2003, I issued a Report and Recommendation ("Report") which concluded that the Plaintiffs' motions for class certification should be denied. By Opinion and Order dated October 10, 2003 ("Order"), Your Honor adopted the Report in part, and remanded this matter to me for further consideration.Leider v. Ralfe, No. 01 Civ. 3137 (HB), 2003 WL 22339305, at *1 (S.D.N.Y. Oct. 10, 2003). Both the Report and the Order are incorporated herein by reference.
Pursuant to the Order, Your Honor granted class certification for the Plaintiffs' claims for injunctive relief under the Wilson Tariff Act and Sections 1 and 2 of the Sherman Act, but denied certification for their claims for injunctive relief under New York's Donnelly Act, N.Y. Gen. Bus. Law. § 340. Id. at *8-*9. The Order also adopted the Report's conclusion that Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), barred the Plaintiffs from bringing a claim under Section 4 of the Clayton Act to recover treble damages under the Sherman Act or the Wilson Tariff Act. Leider, 2003 WL 22339305, at *8.
Additionally, the Order referred several questions related to class certification to me for further consideration. First, the Order directed me to consider whether a class for injunctive relief should be certified under Rule 23(b)(2) of the Federal Rules of Civil Procedure in connection with the Plaintiffs' false advertising and deceptive trade practices claims under Sections 349 and 350 of the New York General Business Law and the Lanham Act, 15 U.S.C. § 1125(a).Id. at *8-*9. Second, I was asked to determine whether the Plaintiffs' claims for monetary damages under the Donnelly Act, the Lanham Act and Sections 349 and 350 of the New York General Business Law should be certified under Rule 23(b)(3) of the Federal Rules even if class treatment was inappropriate under Rule 23(b)(2). Id. at *11. Third, the Order instructed me to consider certain other issues relevant to the certification inquiry under Rule 23(b)(3), including the enforceability of any money judgment that might be entered against De Beers. Id. at *10. Fourth, the Order directed me to determine whether the Plaintiffs' methodology for calculating damages contained sufficient "specificity about what monetary loss the members of the class have suffered and what loss is attributable to De Beers." Id. at *11. Finally, I was asked to consider "what, if any, management tools are available to address any problems of individualized proof that do arise." Id.
Following the issuance of the Order, there have been several significant developments. First, with the consent of the Plaintiffs' counsel, several organizations were granted leave to submit amicus curiae briefs addressing the Plaintiffs' motion for class certification, with some of the submissions focusing in particular on the Plaintiffs' request for injunctive relief with respect to De Beers' advertising practices. The amici also have participated in conferences with the Court. Second, in response to certain amicus submissions, the Plaintiffs have withdrawn their Lanham Act claim. (See e.g., Pls.' Mem. of L. in Supp. of Continued Mot. for Class Certification, dated Dec. 15, 2003 ("Pls.' Mem. of L."), at 2 n. 1 (Plaintiffs "no longer seek to certify any class under the Lanham Act"); Pls.' Reply Mem. of L. at 63-64 (Plaintiffs are "no longer pursuing any Lanham Act claims against De Beers on either a class-wide or individual basis . . . because they lack standing to do so.")). Third, on July 13, 2004, in the United States District Court for the Southern District of Ohio, De Beers SA pleaded guilty to a charge that it had fixed the prices of industrial diamonds and agreed to pay a maximum fine of $10 million. See Margaret Webb Pressler, De Beers Pleads to Price-Fixing, Wash. Post, July 14, 2004, at E1; Stephen Labaton, De Beers Agrees to Guilty Plea to Re-enter the U.S. Market, N.Y. Times, July 10, 2004, at C1; John R. Wilke,De Beers is in Talks to Settle Price Fixing Charge, Wall St. J., Feb. 24, 2004, at A1. Finally, De Beers has announced plans to open a store in New York City. Steve James, De Beers to Plead Guilty; Return to U.S., Reuters, July 12, 2004, available at http://www.reuters.com/ financeNewsArticle.jhtml?type+businessNews+storyID=5648460 (last visited July 30, 2004). It therefore appears that, despite its decision not to defend this action, De Beers is making plans to conduct business in the United States and in this District in the near future.
Amicus briefs were submitted by De Beers' advertising agency, J. Walter Thompson ("JWT"), and three trade organizations: the Jewelers Vigilance Committee ("JVC"); the International Diamond Manufacturers' Association ("IDMA"); and the Jewelers of America ("JA"). The Plaintiffs consider at least some of these organizations to be stalking horses for De Beers, noting, for example, that Sean Cohen, the President of the IDMA and a member of the Board of Directors of the JVC, "has been a De Beers sightholder since 1947." (Pls.' Mem. of L. in Response to Submissions of Amici Curiae, dated Feb. 24, 2004 ("Pls.' Reply Mem. of L."), at 1 n. 2; Aff. of Gary Jacobson, sworn to on Feb. 20, 2004 ("Jacobson Aff."), ¶ 2, Ex. A). In fact, it appears that Mr. Cohen is a principal of Codiam, Inc., which has been a De Beers sightholder since its founding in 1947. (See Jacobson Aff. Ex. A).
According to an organization chart in De Beers 2003 Annual Review, De Beers SA is a Luxenbourg corporation, which is the parent company of defendant De Beers Centenary A.G., a Swiss corporation, and defendant De Beers Consolidated Mines, Ltd., a South African corporation. See De Beers Annual Review 2003 at 23, available at www.debeersgroup.com/ dbinvestor/dbiAnnualReview2003.asp (last visited July 26, 2004).
Having considered the arguments advanced by the Plaintiffs and by the amici, I recommend that the Plaintiffs' motion for class certification of its Donnelly Act and Section 350 claims be denied. I further recommend that the Plaintiffs' claims under Section 349 be certified for class action purposes under Rule 23(b)(3). Finally, I conclude that there is a reasonable likelihood that the Plaintiffs' money judgment against De Beers will be recoverable — if not now, then in the future — and that the class can be managed adequately.
III. Discussion
A. Donnelly Act
Seeking to recover damages under the Donnelly Act, the Plaintiffs allege that De Beers' anti-competitive "agreements and other U.S. conduct . . . were undertaken and disseminated from New York." (Compl. ¶ 85). The Plaintiffs further allege that "[a]s a direct and proximate result of this violation . . ., [De Beers] intentionally caused [P]laintiffs and all other members of the [c]lass damages, including that [P]laintiffs . . . paid prices for diamond jewelry that were unlawfully inflated by at least 2% of the price paid therefor and prices for stand-alone diamonds that were unlawfully inflated by at least 10% of the price paid therefor." (Id. ¶ 86).
A lawsuit to recover damages under the Donnelly Act "must be commenced within four years after the cause of action has accrued." N.Y. Gen. Bus. Law § 340(5). Accordingly, although the Complaint defines the proposed Donnelly Act class more broadly, (see Compl. ¶¶ 84-88), the Plaintiffs have agreed to limit the scope of the class to those "persons who purchased diamonds or diamond jewelry in the United States between April 14, 1997 and the present." (See Proposed Order Certifying Class ("Proposed Order") at 3; July 21, 2004 Tr. at 12).
Section 901(b) of the New York Civil Practice Law and Rules ("CPLR") states that a lawsuit to recover a statutory "penalty" may not be maintained as a class action unless the statute specifically authorizes that avenue of recovery. CPLR § 901(b). Although the Donnelly Act, in turn, is silent about class actions, it does provide in Subsection 5 that the "state . . . or any person who shall sustain damages by reason of any violation of this section, shall recover three-fold the actual damages sustained thereby, as well as costs not exceeding ten thousand dollars, and reasonable attorneys' fees." N.Y. Gen. Bus. Law § 340(5) (emphasis added). The IDMA argues in its amicus submission that the Plaintiffs' Donnelly Act claim therefore cannot be certified as a class action because the mandatory treble damages remedy set forth in Subsection 5 constitutes a "penalty" within the meaning of Section 901(b). (See IDMA Br. at 3-9). The Plaintiffs respond that Rule 23 of the Federal Rules, rather than CPLR Section 901(b), is the controlling provision, and that the Rule authorizes class certification of their Donnelly Act claim. (See Pls.' Reply Mem. of L. at 11-14). The Plaintiffs further contend that even if Section 901(b) is applicable here, their Donnelly Act claim still could be certified because the treble damages remedy is not a penalty. (Id. at 17-18).
The New York and federal courts do not agree on the proper characterization of an antitrust treble damages remedy. As Justice Ramos of the Commercial Division of the New York State Supreme Court has noted, a "long line of federal cases clearly supports [the] contention that treble damages under the Sherman Act and the Clayton Act are remedial, not punitive, in nature."Lennon v. Philip Morris Cos., Inc., 734 N.Y.S.2d 374, 379 (Sup.Ct. N.Y. County 2001). On the other hand, the "New York state courts have historically concluded that treble damages are punitive in nature," thereby precluding a class action suit unless it is specifically authorized by statute. See id. at 380 (collecting cases).
In this case, the roadblock imposed by Section 901(b) appears to be insurmountable because the treble damages provision of the Donnelly Act sets forth the minimum damages that a court can award. For this reason, efforts to bring a class action for money damages under the Donnelly Act have typically been rejected by New York courts. See, e.g., Asher v. Abbott Labs., 737 N.Y.S.2d 4 (1st Dep't 2002); Cox v. Microsoft Corp., 737 N.Y.S.2d 1, 2-3 (1st Dep't 2002); see also In re Microsoft Corp. Antitrust Litig., 127 F. Supp.2d 702, 727 (D. Md. 2001) ("[P]laintiffs' class action claims must be dismissed because under New York law a class action cannot be maintained if the remedy is penal.").
The key question in this case is whether the Court should apply state or federal law in determining whether a class action may be maintained against De Beers pursuant to the Donnelly Act. CitingHanna v. Plumer, 380 U.S. 460 (1965), the Plaintiffs assert that Rule 23 of the Federal Rules, not Section 901(b), should govern. (See Pls.' Reply Mem. of L. at 11-14). In Hanna, the Supreme Court held that if a state law is in direct conflict with an established Federal Rule of Civil Procedure, the federal rule applies. Hanna, 380 U.S. at 470-74; Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 427 n. 7 (1996) ("It is settled that if the Rule in point is consonant with the Rules Enabling Act, 28 U.S.C. § 2072, and the Constitution, the Federal Rule applies regardless of any contrary state law."); see United States v. Dentsply Int'l, Inc., Nos. CIV. A. 99-005-SLR, CIV. A. 99-255-SLR, CIV. A. 99-854-SLR, 2001 WL 624807, at *16 (D. Del. Mar. 30, 2001) ("Under Hanna, a federal court sitting in diversity first must determine whether a Federal Rule directly 'collides' with the state law it is being urged to apply."). If there is no direct conflict between state law and the federal rule, the court must determine whether the state law is substantive or procedural. Hanna, 380 U.S. at 470. If the provision is substantive, the federal courts must apply the state law; if it is procedural, the federal courts apply their own procedural rules.Hanna, 380 U.S. at 465; Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).
Section 901(b) was enacted to bar class actions "where it would be difficult to identify the members of the class and where recovery of the statutory minimum by each class member" would lead to the imposition of "annihilatory punishment" on corporate defendants. See Joseph M. McLaughlin, Practice Commentaries, C901:7, N.Y. CPLR 901(b) (McKinney 1976) (citing Vickers v. Home Fed. Sav. Loan Ass'n of East Rochester, 386 N.Y.S.2d 291, 294 (Sup.Ct. Monroe County 1976)). Rule 23, by comparison, expresses no preference for (or against) any particular class action remedy. Accordingly, there does not appear to be any direct conflict between the state statute and the federal rule. See In re Relafen Antitrust Litig., 221 F.R.D. 260, 285 (D. Mass. 2004) (quoting Wade v. Danek Med., Inc., 182 F.3d 281, 290 (4th Cir. 1999)) (Rule 23 "makes no reference to the remedies that representative parties may seek," and "'merely establishes the procedures for pursuing a class action in the federal courts'").
Moreover, the federal and state courts that have considered the second question presented by Hanna have concluded that Rule 901(b) is substantive, not procedural. See id. at 285-86;see also Noble v. 93 University Place Corp., No. 02 Civ. 1803 (SAS), 2004 WL 944543, at *6 n. 83 (S.D.N.Y. May 3, 2004) (noting that, although a certification motion was governed by Rule 23, "[S]ection 901(b) is arguably substantive and has been found to apply . . . by federal courts in this district"); Dentsply, 2001 WL 624807, at *16 ("Rule 23 of the Federal Rules . . . governs the manner of determining whether class certification is appropriate in federal courts; [CPLR] § 901(b) establishes a bar to certain claims being considered for class treatment on a threshold level."); cf. Dornberger v. Metropolitan Life Ins. Co., 182 F.R.D. 72, 84 (S.D.N.Y. 1998) (Sand, J.) (denying class certification for claims under a provision of the New York Insurance Law that provided for the recovery of a specific penalty and did not expressly permit class actions, observing that "[i]t would be patently unfair to allow plaintiff an attempt at recovery in federal court for a state law claim that would be barred in state court").
The Plaintiffs' reliance on In re Bridgestone/Firestone, Inc. Tires Products Liability Litig., 205 F.R.D. 503, 514-16 (S.D. Ind. 2001), rev'd on other grounds, 288 F.3d 1012 (7th Cir. 2002), as a basis for applying Rule 23, rather than Section 901(b), is misplaced for at least two reasons. First, in that case, the court concluded that there was a "direct collision" between Rule 23 and the Michigan Consumer Protection Act ("MCPA"), which permitted class actions to be brought only "on behalf of persons residing or injured" in Michigan. Id. at 514-15. Accordingly, pursuant to Hanna, the court was required to apply the federal rule, rather than state law. Second, the court expressly noted that, unlike Section 901(b), the MCPA did not bar a class action claim; instead, it simply "add[ed] another criterion — injury or residence in Michigan — not contemplated by Rule 23's requirements of numerosity or commonality of issues."Id. at 516. On this basis, the court concluded that the limitation set forth in the MCPA was not substantive.
By comparison, Section 901(b) does not permit any class actions to be brought under the Donnelly Act. See In re Relafen, 221 F.R.D. at 285 ("New York courts consistently apply [Section] 901(b) to bar class actions brought under the Donnelly Act.") (citing Cox, 737 N.Y.S.2d at 2; Asher, 737 N.Y.S.2d at 4;Lennon, 734 N.Y.S.2d at 380). Accordingly, as numerous courts have found, the statute sets forth a substantive rule which is not in conflict with Rule 23. The substantive law of New York State therefore precludes the prosecution of the Plaintiffs' Donnelly Act claim as a class action.
B. Sections 349 and 350
1. Plaintiffs' Allegations
In their Seventh Claim for Relief, the Plaintiffs allege that De Beers violated Sections 349 and 350 of the New York General Business Law — New York's Consumer Protection Act — through their "intentional manipulation and boosting of the prices of diamonds and diamond jewelry, their false and misleading advertisements, omitted material facts, and other misleading conduct." (Compl. ¶ 82). More specifically, they allege that De Beers artificially stimulated the demand for diamonds by intentionally misleading consumers into believing that diamonds are "rare" and worth the inflated prices that De Beers charges. (Id. ¶¶ 31-45). The Plaintiffs contend that, in furtherance of this scheme, De Beers has "continuously . . . disseminated from this District" scores of false and misleading advertisements. (Id. ¶¶ 34(b)-(c)). The Plaintiffs charge that diamonds are not in fact rare, and that the supply of them is actually increasing. (Id. ¶ 35, 36(a)-(b)). The Plaintiffs further allege that even though diamonds have "little real value," De Beers' actions — including its "efforts to restrain and reduce the diamond supplies available for import into the U.S., [its] systematic false advertising campaign to stimulate purchases of diamonds in the U.S., and [its] elimination of transparency in the diamond market" — have made diamonds "seem naturally rare and worth the exorbitant prices that diamonds and diamond jewelry now sell for." (Id. ¶ 36(c)). Finally, the Plaintiffs allege that De Beers has falsely associated diamonds with love, beauty, and our deepest and most tender emotions in its advertising, when, in reality, De Beers is dealing in "blood diamonds" mined with slave labor. (Id. ¶¶ 37-43).
2. Prima Facie Case
Section 349 of the General Business Law provides, in pertinent part, that:
(a) Deceptive acts or practices in the conduct of any business, trade or commerce, or in the furnishing of any service in this state are hereby declared unlawful.
. . .
(h) In addition to the right of action granted to the attorney general pursuant to this section, any person who has been injured by reason of any violation of this section may bring an action in his own name to enjoin such unlawful act or practice, an action to recover his actual damages or fifty dollars, whichever is greater, or both such actions. The court may, in its discretion, increase the award of damages to an amount not to exceed three times the actual damages up tp one thousand dollars, if the court finds the defendant willfully or knowingly violated this section. The court may award reasonable attorney's fees to a prevailing plaintiff.
Section 350 of the General Business Law provides that "[f]alse advertising in the conduct of any business, trade or commerce or in the furnishing of any service in this state is hereby declared unlawful." Id. § 350.
The showing that must be made to recover under either section is similar. See Ortho Pharmaceutical Corp. v. Cosprophar, Inc., 32 F.3d 690, 697 (2d Cir. 1994). Thus, a "plaintiff must show '(i) that the act or practice was misleading in a material respect, and (ii) that the plaintiff was injured.'" Id. (quoting Coors Brewing Co. v. Anheuser-Busch Cos., 802 F. Supp. 965, 975 (S.D.N.Y. 1992)).
There are two key differences between the provisions. First, while Section 349 extends to all deceptive practices and acts, Section 350 is expressly limited to "false advertising." Second, under Section 349, a plaintiff is not required to show justifiable reliance. Boule v. Hutton, 328 F.3d 84, 94 (2d Cir. 2003); Stutman v. Chemical Bank, 95 N.Y.2d 24, 29 (2000). "To state a claim under Section 350 for false advertising, however, it is necessary to allege reliance on the allegedly false advertisement." Pelman v. McDonald's Corp., No. 02 Civ. 7821 (RWS), 2003 WL 22052778, at *7 (S.D.N.Y. Sept. 3, 2003). But see Blue Cross and Blue Shield of New Jersey, Inc. v. Philip Morris, Inc., 113 F. Supp.2d 345, 349-50 (E.D.N.Y. 2000) (Weinstein, J.) ("[T]hough the New York Court of Appeals has not expressly ruled on whether reliance is a requirement under [S]ection 350, the same conclusion would seem to follow from the court's decision [relating to Section 349] in Stutman.").
To prevail under either statute, a plaintiff must establish that the false advertising or deceptive practices alleged took place in New York. Goshen v. Mut. Life Ins. Co. of N.Y., 98 N.Y.2d 314, 324 (2002); Weaver v. Chrysler Corp., 172 F.R.D. 96, 100 (S.D.N.Y. 1997). As the New York Court of Appeals explained in Goshen in the context of Section 349:
To apply the statute to out-of-state transactions . . . would lead to an unwarranted expansive reading of the statute, contrary to legislative intent, and potentially leading to the nationwide, if not global application of General Business Law § 349.
. . .
As both the text of the statute and the history suggest, the intent is to protect consumers in their transactions that take place in New York State. It was not intended to police the out-of-state transactions of New York companies, nor was it intended to function as a per se bar to out-of-state plaintiffs' claims of deceptive acts leading to transactions within the state.Goshen, 98 N.Y.2d at 325.
3. Analysis
In light of De Beers' default, the Plaintiffs' properly-pleaded allegations, except insofar as they relate to damages, must be accepted as true. See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Time Warner Cable of New York City v. Barnes, 13 F. Supp.2d 543, 547 (S.D.N.Y. 1998). Accordingly, De Beers can no longer dispute that it has advertised that its diamonds:
(a) are "extraordinary and rare;"
(b) are "exceptional;"
(c) are "so rare that fewer than 1% of women will ever own one" weighing one carat or more;
(d) are "as exceptional as . . . love;"
(e) "will last as long as love itself;" and
(f) "will capture your love and keep it alive for millenniums [sic] to come."
(See Compl. ¶¶ 34(c), 37-38). Although the Complaint suggests that De Beers also "systematically represented . . . that diamonds are naturally rare," (id. ¶ 2(b) (emphasis added)), the Plaintiffs have since conceded that this is their characterization of De Beers' advertisements, which said simply that diamonds are "rare." (July 21, 2004 Tr. at 3-5).
Regardless of how plentiful diamonds may be in nature, the Plaintiffs allege in their Complaint — and De Beers consequently is deemed to have admitted — that De Beers engaged in efforts "to systematically buy up and store diamonds in order to keep them off the market and make them seem rare." (Compl. ¶ 2(d)). In furtherance of this effort, De Beers is also alleged to have entered into "collusive agreements" with its "partners," including the sightholders. (Id. ¶ 4(a)).
The fact that De Beers can no longer controvert the Plaintiffs' allegations concerning De Beers' statements or conduct is not dispositive of the Plaintiffs' right to relief on behalf of a class. Instead, "[e]ven after [a] default, . . . it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit conclusions of law." In re Industrial Diamonds Antitrust Litig., 119 F. Supp.2d 418, 420 (S.D.N.Y. 2000) (citing 10A Charles Alan Wright, Arthur R. Miller Mary Kay Kane, Federal Practice and Procedure § 2688, at 63 (3d ed. 1988)).
a. Section 349
Judge Scheindlin has addressed the applicability of Section 349 to conduct similar to that attributed by the Plaintiffs to De Beers in New York v. Feldman, 210 F. Supp.2d 294 (S.D.N.Y. 2002). There, several states brought suit to recover the damages allegedly arising out of the defendants' conspiracy to rig bids at public stamp auctions. Id. at 298. Included among the claims against the defendants were claims under Section 349 and the Donnelly Act. Id. Although the defendants argued that Section 349 was not meant to address antitrust violations, Judge Scheindlin rejected this contention, concluding that the "expansive" language of the statute was intended to encompass circumstances "far beyond the reach of common law fraud" and to apply "regardless of whether the allegedly deceptive activity is covered by other laws." Id. at 301 (citing Blue Cross and Blue Shield of New Jersey. Inc. v. Philip Morris, Inc., 178 F. Supp.2d 198
(E.D.N.Y. 2001) (Weinstein, J.)). Specifically addressing the suggestion that an antitrust claim could not be the subject of a suit under Section 349, Judge Scheindlin stated:
In large measure, New York courts have interpreted [S]ection [349] by looking to the definition of deceptive acts and practices under section 5 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 45. See U-Neek, Inc. v. Wal-Mart Stores, Inc., 147 F. Supp.2d 158, 176 (S.D.N.Y. 2001); Genesco Enter., a Div. of Lymutt Indus. Inc. v. Koch, 593 F. Supp. 743 (S.D.N.Y. 1984); Gaidon [v. Guardian Life Ins. Co.],[ 94 N.Y.2d 330, 352 (1999)]; Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, [26] (1995) (Kaye, C.J.). It is well-established that the government may use the FTC Act to enforce antitrust laws. See Times-Picayune Publ'g Co. v. United States, 345 U.S. 594, 609 (1953) (finding that section 5 of the FTC Act "registers violations of the Clayton and Sherman Acts"); FTC v. Motion Picture Adver. Servs. Co., Inc., 344 U.S. 392, 395 (1953) (holding that conduct prohibited by Sherman Act automatically violates section 5 of the FTC Act); United States v. St. Regis Paper, 285 F.2d 607, 610 n. 4 (2d Cir. 1960) ("[A]ny violation of the Sherman and Clayton Acts [is] also a violation of § 5 of the Federal Trade Commission Act"); In re Antibiotic Antitrust Actions, 333 F. Supp. 317, 320 (S.D.N.Y. 1971). The antitrust violations alleged in the Complaint constitute the kind of deceptive acts and practices contemplated by [S]ection 349.Feldman, 210 F. Supp.2d at 302 (emphasis added); see also Karlin v. IVF America, Inc., 93 N.Y.2d 282, 290 (1999) (New York Consumer Protection Act applies to "virtually all economic activity").
Here, too, even if the statements made by De Beers in its advertising were literally true, the Plaintiffs have adequately alleged collusive activity on the part of De Beers which was intended to induce consumers to buy diamonds at inflated prices, and which actually had that effect. Moreover, it is clear that the anticompetitive and misleading practices that the Defendants are alleged to have engaged in adversely affected the consuming public. The Plaintiffs also have alleged that they were injured by these practices since they paid too much for diamonds. Consequently, the Plaintiffs have stated a Section 349 violation arising out of De Beers' deceptive activities, including its anticompetitive conduct.
In its amicus brief, JWT suggests that the Plaintiffs have failed to show any injury separate and apart from the deception and that "the deception itself cannot be the injury." (JWT Br. at 24). JWT relies on Small v. Lorillard, 94 N.Y.2d 43 (1999). In that case, the New York Court of Appeals found that the plaintiffs' alleged injury — an increase in the price of cigarettes — was insufficient to state a claim under the Consumer Protection Act because it was not the result of the misrepresentation that the plaintiffs relied upon, which was the failure of the defendant tobacco companies to advertise that nicotine was addictive. Id. at 56. By the time the Court of Appeals considered Small, the plaintiffs had "abandoned the addiction component of the legal theory of their case." Id. Given these circumstances, Judge Wesley observed:
[The] plaintiffs do not allege that the cost of cigarettes was affected by the alleged misrepresentation, nor do they seek recovery for injury to their health as a result of their ensuing addiction. . . . Indeed, they chose expressly to confine the relief sought solely to monetary recoupment of the purchase price of cigarettes. Plaintiffs' cause of action under [Section 349] thus sets forth deception as both act and injury. . . . [The plaintiffs] therefore fail to demonstrate that they were "actually harmed" or suffered pecuniary injury by reason of the alleged deception within the meaning of the statute. They cannot have it both ways.Id. (internal citations omitted).
By comparison, in this case the plaintiffs do allege that their injury — the increased price of diamonds and diamond jewelry — was a direct result of De Beers' misrepresentations that diamonds are naturally rare and valuable:
Indeed, for 55-plus years, defendants have continuously prepared in and disseminated from this District by interstate wires and mails throughout the United States, advertisements intended "to condition and induce the consuming public in the United States to believe that diamonds are naturally rare and valuable [such that] they are inherently worth the prices charged therefor."
(Compl. ¶ 34(b) (quoting United States v. De Beers, Civ. 29-446, Compl. filed Jan. 27, 1945, at ¶ 57(a))). Moreover, the plaintiffs allege that "even as [De Beers] spends extraordinary advertising and other sums . . . to artificially increase American demand for diamonds and diamond jewelry, [it] has simultaneously spent large sums to systematically buy up diamonds and otherwise restrict, restrain and reduce the supplies that come into (and are available to come into) the United States. (Id. ¶ 3). This deceptive conduct plainly is different than the result it allegedly has caused, namely, an increase in diamond prices.
JWT's claim that "[t]here is simply no nexus between the alleged false representations and the injury plaintiffs claim to have suffered," (see JWT Br. at 25), is therefore unfounded.
There is one final wrinkle regarding the Plaintiffs' Section 349 claim. Like the Donnelly Act, Section 349 provides a treble damages remedy. See N.Y. Gen. Bus. Law § 349(h). The statute also permits a plaintiff to recover "his actual damages or fifty dollars, whichever is greater." Id. Unlike the Donnelly Act, the award of treble damages under Section 349 is not mandatory. To avoid the prohibition set forth in CPLR Section 901(b), the Plaintiffs have offered to waive their right to recover treble damages. (See Pls.' Reply Mem. of L. at 30). However, they should also be required to forego the award of any sum other than their actual damages, i.e., the $50 minimum award, in order to proceed with their Section 349 claim. See, e.g., Cox v. Microsoft Corp., 778 N.Y.S.2d 147, 148-49 (1st Dep't 2004) ("Inasmuch as plaintiffs in their amended complaint expressly seek only actual damages, . . . [Section] 901(b), which prohibits class actions for recovery of minimum or punitive damages, [is] inapplicable."); Ridge Meadows Homeowners' Ass'n, Inc. v. Tara Dev. Co., Inc., 665 N.Y.S.2d 361 (4th Dep't 1997) (where plaintiffs consent to strike a portion of their cause of action seeking treble damages and limit their relief to actual damages, Section 901(b) "is no longer applicable and that cause of action may be maintained as a class action"); Super Glue Corp. v. Avis Rent A Car System, Inc., 517 N.Y.S.2d 764, 767 (2d Dep't 1987) ("the weight of authority holds that a class action may be maintained to recover actual damages and injunctive relief pursuant to General Business Law [Section] 349(h)").
Accordingly, the Plaintiffs are entitled to proceed with their Section 349 claim on behalf of the proposed class.
In their reply papers, the Plaintiffs have limited their Section 349 class to "[a]ll persons who purchased diamonds or diamond jewelry in the State of New York between April 14, 1998 and the present." (See Proposed Order at 3; July 21, 2004 Tr. at 10-11). By narrowing the class in this fashion, the Plaintiffs have mooted any objection that they are seeking to recover on behalf of a class of persons whose claims are time barred or who are not entitled to rely on New York law as a basis for relief.See Gaidon v. Guardian Life Ins. Co., 96 N.Y.2d 201, 211-12 (2001) (statute of limitations for claims brought under Sections 349 and 350 is three years).
b. Section 350
As noted earlier, Section 350 requires a more specific showing than Section 349 in two respects. First, it is not enough simply to establish that De Beers engaged in a deceptive act or practice. Instead, the Plaintiffs must show that De Beers distributed false advertising. Second, the Plaintiffs must have actually relied on that false advertising.
In this case, neither of these required showings has been made. Thus, the De Beers' advertising — which describes diamonds as "extraordinary," "rare," and symbolic of "love" — cannot be shown to be false. Indeed, even if diamonds are scarce because of De Beers' monopolistic practices, this does not make them any less "rare" in the marketplace. Similarly, even if De Beers' diamonds are so-called "blood diamonds," this does not mean that they cannot also be emblematic of love, as the large number of diamond engagement and wedding rings purchased each year plainly shows.
Additionally, even if the Court were to assume that the challenged statements in De Beers' advertisements constituted "false advertising" within the meaning of Section 350, the Plaintiffs have not adequately alleged reliance on those false statements by the class members. In their Complaint, the Plaintiffs contend that De Beers' conduct was "intended" to "induce reasonable reliance by [the P]laintiffs and members of the . . . Class." (Compl. ¶ 74) (emphasis added). The Plaintiffs further allege that they and the class members are "presumed to have mistakenly relied upon" De Beers' misleading advertising. (Id. ¶ 75) (emphasis added). Nowhere in the Complaint, however, have the Plaintiffs alleged that the class members actually did rely on De Beers' false advertising. Accordingly, they have failed to establish the reliance element of a Section 350 claim.
Named plaintiff Leider has, however, submitted an affirmation in an effort to establish this element of his individual claim. (See Affirm. of Andrew Leider, dated Mar. 26, 2004 ("Leider Affirm."), ¶¶ 7 ("I relied on these advertisements in the sense that they contributed to my decision to pay what I paid for the diamond ring and, indeed, to determine to purchase any diamond ring.") (emphasis omitted), 8 ("De Beers' ads influenced the society in which I live and caused others to feel like I did; this also influenced me.").
For these reasons, the Plaintiffs should be denied class certification with respect to their Section 350 claim. Ultimately, however, whether the Complaint states a Section 350 claim is of little consequence since the Plaintiffs have adequately pleaded their Section 349 claim and are therefore entitled to recover damages under the New York Consumer Protection Act.
C. Certification Under Rule 23(b)(2)
Although at least one of the amicus briefs seeks to revisit the issue, my prior Report concluded that the Plaintiffs have met the preliminary requirements for class certification set forth in Rule 23(a), and Your Honor agreed with that determination. See Report at 17-19; Leider, 2003 WL 22339305, at *6 n. 15. There is therefore no reason to review these findings.
The Plaintiffs obviously would prefer that their Section 349 claim be certified as an injunction class action under subsection (b)(2), rather than a damages class action under subsection (b)(3), of Rule 23. As Judge Scheindlin has noted:
There is a significant distinction between certification of an injunctive class pursuant to Rule 23(b)(2), and certification of a damage class pursuant to Rule 23(b)(3). When an action is certified under Rule 23(b)(3), class members are entitled to notice of the pendency of the action and may elect to "opt out" of the class and thereby not be bound by the judgment rendered in the class action. When a class action is certified under Rule 23(b)(2), however, all persons comprising the class become mandatory members. In other words, all those who come within the description in the certification become, and must remain, members of the class because no opt-out provision exists. Daniels v. City of New York, 198 F.R.D. 409, 415 (S.D.N.Y. 2001) (quoting Wilson v. Tinicum Township, No. 92 Civ. 6617, 1993 WL 280205, at *8 (E.D. Pa. July 20, 1993)) (internal quotation marks and citations omitted); see also 1 American Bar Association Section of Litigation, Business Commercial Litigation in Federal Courts § 15.4, at 974 (Robert L. Haig, ed. 1998) ("Unlike class actions certified under [Rule] 23(b)(3), when a class is certified under . . . [Rule] 23(b)(2), absent class members generally have no right to notice or the opportunity to opt-out of the class action.").
To secure class certification under Rule 23(b)(2), a plaintiff must show that the wrongdoer "has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole." Fed.R.Civ.P. 23(b)(2). When "monetary relief is requested in tandem with injunctive and declaratory relief, the court must determine whether the requested monetary relief predominates over the claims for equitable relief." Parker v. Time Warner Entm't Co., 331 F.3d 13, 18 (2d Cir. 2003) (noting that the 1966 Advisory Committee note to Rule 23(b)(2) provides that the "subdivision does not extend to cases in which the appropriate final relief relates exclusively or predominately to money damages").
My prior Report concluded that the Plaintiffs' proposed class should not be certified under Rule 23(b)(2) because the money damages sought were not "merely incidental" to their request for damages. See Report at 20-21. As Your Honor noted in the Order, the proper standard for evaluating the predominance of money damages in this Circuit is set forth in Robinson v. Metro-North Commuter Railroad Co., 267 F.3d 147 (2d Cir. 2001). See Leider, 2003 WL 22339305, at *7. In Robinson, the Second Circuit rejected the bright-line test promulgated by the Fifth Circuit in Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998), pursuant to which class certification under Rule 23(b)(2) was appropriate only when the monetary damages sought were "merely incidental" to the plaintiffs' request for injunctive or declaratory relief. Robinson, 267 F.3d at 164. One consequence of the Allison test was that Rule 23(b)(2) certification typically was foreclosed "in all actions seeking actual damages 'even if the class-wide injunctive relief is the form of relief in which the plaintiffs are primarily interested.'" Parker, 331 F.3d at 20 (quoting Robinson, 267 F.3d at 163) (internal quotation marks and citations omitted).
Pursuant to Robinson, "a district court must 'consider the evidence presented at a class certification hearing and the arguments of counsel,' and then assess whether [Rule 23](b)(2) certification is appropriate in light of 'the relative importance of the remedies sought, given all the facts and circumstances of the case.'" Robinson, 267 F.3d at 164 (quoting Hoffman v. Honda of Am. Mfg., Inc., 191 F.R.D. 530, 536 (S.D. Ohio 1999)). Additionally, as the Robinson court explained:
The district court may allow [Rule 23](b)(2) certification if it finds in its "informed, sound judicial discretion" that (1) "the positive weight or value [to the plaintiffs] of the injunctive or declaratory relief sought is predominant even though compensatory or punitive damages are also claimed," Allison, 151 F.3d at 430 (Dennis, J., dissenting) and (2) class treatment would be efficient and manageable, thereby achieving an appreciable measure of judicial economy.
Although the assessment of whether injunctive or declaratory relief predominates will require an ad hoc balancing that will vary from case to case, before allowing (b)(2) certification a district court should, at a minimum, satisfy itself of the following: (1) even in the absence of a possible monetary recovery, reasonable plaintiffs would bring the suit to obtain the injunctive or declaratory relief sought; and (2) the injunctive or declaratory relief sought would be both reasonably necessary and appropriate were the plaintiffs to succeed on the merits. Insignificant or sham requests for injunctive relief should not provide cover for (b)(2) certification of claims that are brought essentially for monetary recovery.Id. The court thus adopted a case-by-case approach inRobinson, indicating that this determination should also be made separately for each claim. See Leider, 2003 WL 22339305, at *8 (citing Robinson, 267 F.3d at 167).
Your Honor has certified the Plaintiffs' claims under the Wilson Tariff Act and the Sherman Act as class actions pursuant to Rule 23(b)(2). Therefore, because of De Beers' default, the Plaintiffs will be able to secure an appropriately-worded injunction against any continued anticompetitive conduct on the part of De Beers. Having secured that relief under federal law, it seems dubious that members of the somewhat narrower Section 349 class would have any separate interest in the protections that an injunction might afford. Indeed, it seems far more likely that most members of the class will have acquired only one item of diamond jewelry during the class period and will have little interest in making similar acquisitions in the future. Accordingly, while an injunction against future misconduct may be useful for some members of the Section 349 class, it is apparent that this is not the thrust of their claim.
The affirmation of proposed class representative Leider is instructive in that regard. As he makes clear, he is participating in this lawsuit because he believes that he overpaid for his wife's ring, not because he might pay too much in the future for similar jewelry. (See Leider Affirm. ¶¶ 5-12). Indeed, in their papers, the Plaintiffs impliedly concede this point, making no effort to argue that the gravamen of their Section 349 claim is their prayer for injunctive relief. Their lead counsel also did not proffer any argument that injunctive relief was predominant when he was given an opportunity to address this point during the July 21 telephone conference. Finally, the Plaintiffs' lead counsel has advised the Court that the Plaintiffs do not seek certification of a Rule 23(b)(2) class for any claim as to which a Rule 23(b)(3) class is certified. (See Letter from Christopher Lovell, Esq. to the Court, dated July 26, 2004 ("Lovell Letter"), at 2).
For these reasons, the Court should not certify the Section 349 claim as a class action under Rule 23(b)(2).
D. Certification Under Rule 23(b)(3)
Rule 23(b)(3) requires a plaintiff to demonstrate that "questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." Fed.R.Civ.P. 23(b)(3). This predominance inquiry tests "whether proposed classes are sufficiently cohesive to warrant adjudication by representation." Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997). To meet the predominance requirement of Rule 23(b)(3), a plaintiff must demonstrate that "'the issues in the class action that are subject to generalized proof, and thus applicable to the class as a whole, . . . predominate over those issues that are subject only to individualized proof.'" In re Visa Check/Master Money Antitrust Litig., 280 F.3d 124, 136 (2d Cir. 2001) (quoting Rutstein v. Avis Rent-A-Car Sys., Inc., 211 F.3d 1228, 1233 (11th Cir. 2000)).
Rule 23(b)(3) also sets forth four factors pertinent to a finding of predominance and superiority. Courts may consider:
[(1)] the interest of members of the class in individually controlling the prosecution or defense of separate actions; [(2)] the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; [(3)] the desirability or undesirability of concentrating the litigation of the claims in the particular forum; [(4)] the difficulties likely to be encounter in the management of a class action.
Fed.R.Civ.P. 23(b)(3). This list of pertinent factors is "nonexhaustive." Amchem, 521 U.S. at 615-16.
In their Complaint, the Plaintiffs contend that De Beers' deceptive and anticompetitive conduct in violation of Section 349 caused them to overpay for diamond jewelry by at least two percent and for other diamonds by at least ten percent. (See Compl. ¶ 83). If so, it is apparent that few of the class members would have the inclination — much less the financial resources — to pursue their claims individually against a defendant which does not even concede that it is doing business here. Indeed, a WESTLAW search did not reveal any reported decisions in which a retail jewelry customer in New York State — presumably the largest segment of the class — commenced an action in state or federal court against De Beers to recover an alleged overcharge.
The Court's docket, however, indicates that two other putative class actions were filed after the "60 Minutes" story referenced in the Complaint aired in February 2001. Both actions were assigned to Your Honor as related cases. (See Tietjen v. Ralfe, Docket No. 01 Civ. 3223 (HB); Towne Silversmith v. Ralfe, Docket No. 01 Civ. 4211 (HB)). Thereafter, the plaintiffs' counsel in both cases were voluntarily dismissed their complaints on June 29, 2001, in favor of this action. As a consequence, unless the Leider lawsuit is permitted to proceed as a class action, De Beers may never be held liable for damages to the large class of persons who (through its default) De Beers has admitted were duped into buying diamonds and diamond jewelry at inflated prices in New York State. It follows that a class action is superior to other available methods for the fair and efficient adjudication of the claims raised in the Complaint.
In their Proposed Order, the Plaintiffs seek the appointment as "additional Class Counsel" of the firms of Sirota Sirota LLP (counsel in Towne Silversmith), Louis F. Burke, P.C. (counsel in Tietjen), and Milberg Weiss Bershad Shulman, LLP (which was listed as "Of Counsel" on the Plaintiffs' Memorandum in Response to Submissions of Amici Curiae and in Further Support of Class Certification). (See Proposed Order at 4). By letter dated July 26, 2004, Plaintiffs' proposed Lead Counsel has furnished the Court with the résumés of those firms. (See Lovell Letter). Since the Plaintiffs never made any application for the appointment of additional counsel prior to the July 21 telephone conference, this Report and Recommendation does not address the merits of appointing these firms to assist Lovell Stewart Halebian, LLP as class counsel.
Turning to the predominance requirement, the elements of a Section 349 claim are that (1) the defendants engaged in deceptive acts (2) directed at consumers (3) that were materially misleading, and (4) caused injury. See, e.g., U-Neek, Inc. v. Wal-Mart Stores, Inc., 147 F. Supp.2d 158, 175-76 (S.D.N.Y. 2001) (quoting Maurizio v. Goldsmith, 230 F.3d 518, 521 (2d Cir. 2000)); FTC v. Crescent Pub. Group, Inc., 129 F. Supp.2d 311, 321 n. 67 (S.D.N.Y. 2001); Goshen, 98 N.Y.2d at 324. The first three of these elements of a prima facie case have been established by reason of De Beers' default. Indeed, the only issue that remains to be resolved in this action is whether particular class members have been injured and are therefore entitled to money damages.
As Judge Sotomayor indicated in In re Visa Check, 280 F.3d at 139, "[c]ommon issues may predominate when liability can be determined on a class-wide basis, even when there are some individualized damages issues." Here, the Plaintiffs have submitted a lengthy affirmation by Professor Christopher L. Gilbert of the University of Trento, Italy, who is an expert on metals and minerals markets. (See Affirm. of Christopher L. Gilbert, dated Dec. 22, 2003 ("Third Affirmation" or "Third Affirm.")). In that Third Affirmation, Professor Gilbert sets forth a proposed class-wide methodology for calculating damages. In brief, for diamonds of .3 carats or more, he proposes to "unpackage" the value of the diamonds from the other components of diamond jewelry. (See Third Affirm. ¶¶ 43-47). He then proposes to use data from the Rappaport Diamond Index, an industry price-reporting service, to determine the extent to which each class member was overcharged. (See id.). Professor Gilbert proposes a different way of determining damages for jewelry containing diamonds weighing less than .3 carats. (See id.). While both branches of his proposed methodology may ultimately prove inadequate for the task of determining each class member's damages, at this preliminary stage the Plaintiffs are not required to set forth their final suggested protocol for how damages should be calculated. See In re Potash Antitrust Litig., 159 F.R.D. 682, 697 (D. Minn. 1995). Instead, they need only show that the methodologies that they propose are not "so insubstantial as to amount to no method at all." Id. In this case, through Professor Gilbert's Third Affirmation, the Plaintiffs have plainly met this limited requirement for class certification.
My original Report also raised questions regarding the manageability of the Plaintiffs' proposed damages class action.See Report at 25-27. Because the Section 349 class has now been limited to persons who purchased diamonds or diamond jewelry in New York State during the proposed class period, the number of people who will be eligible to participate as class members obviously has decreased considerably. Additionally, despite my original misgivings, the Plaintiffs now have shown that reasonable notice can be given to the Section 349 class through a media notification program. (See Aff. of Katherine Kinsella, sworn to on Dec. 15, 2003, ¶¶ 10, 23-25). Indeed, their proposed notification expert, Katherine Kinsella, has participated in programs involving substantially larger classes, such as that certified in In re Compact Disc Minimum Advertised Price Antitrust Litig., an MDL case in Maine, in which the settlement class "was estimated to include 75 million unidentifiable members," 3.5 million of whom registered online. (Id. ¶¶ 27-28). Richard H. Redfern, a second expert retained by the Plaintiffs, has also submitted an affidavit suggesting various techniques that could be used to verify the authenticity of class members' damages claims. (See Aff. of Richard H. Redfern, sworn to on Dec. 13, 2003, ¶ 6). Having reviewed the submissions of the Plaintiffs' experts, I am satisfied that the Section 349 claim, if certified for class action treatment pursuant to Rule 23(b)(3), will be manageable.
In sum, the Plaintiffs have shown that their Section 349 claim meets the requirements of Rule 23(b)(3) and should therefore be certified as a class action.
One of the other concerns that I raised in my earlier Report related to the difficulty of establishing that a particular consumer purchased a particular diamond which is traceable to De Beers. See Report at 22-23. A closer reading of the Complaint shows that the Plaintiffs are alleging in their Section 349 claim that De Beers so totally dominated the relevant market that its anticompetitive activities inflated the prices of all diamonds — an allegation which De Beers, in turn, has admitted through its default. (See Compl. ¶¶ 81-83). Whether the Plaintiffs will be able to establish that damages were sustained by every diamond purchaser, rather than just those who purchased De Beers diamonds, is an issue which need not be resolved at this preliminary stage.
E. Judgment Enforcement
Finally, the Order directed that inquiry be made into "whether it is an appropriate use of judicial resources to permit a class action against . . . defendant[s] that may be unreachable."Leider, 20003 WL 22339305, at *10. In response to that concern, the Plaintiffs have submitted under seal certain materials outlining the means by which they hope to collect any money judgment that may be entered against De Beers on behalf of the class. (See Pls.' Mem. of L. at 49-58). Suffice it to say, the avenues outlined therein establish that this suit cannot be dismissed as merely quixotic. Indeed, even in the absence of the sealed submission, recent events, such as the guilty plea of De Beers SA, suggest that the Plaintiffs' likelihood of collecting a money damages judgment are improving over time.
IV. Conclusion
For the foregoing reasons, I recommend that the Plaintiffs' motion for class certification of its claims under the Donnelly Act and Section 350 of the New York General Business Law be denied. I further recommend that the Plaintiffs' claims under Section 349 of the General Business Law be certified for class action purposes under Rule 23(b)(3). Finally, I conclude that there is a reasonable likelihood that the Plaintiffs' money judgment against De Beers will be recoverable — if not now, then in the future — and that the class can be managed adequately.
V. Notice of Procedure for Filing of Objections to this Report and Recommendation
The parties are hereby directed that if they have objections to this Report and Recommendation, they must, within ten days from today, make them in writing, file them with the Clerk of the Court, and send copies to the chambers of the Honorable Harold Baer, Jr., and the undersigned, at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b). Any requests for an extension of time for filing objections must be directed to Judge Baer. The failure to file timely objections will result in a waiver of those objections for purposes of appeal. See Thomas v. Arn, 474 U.S. 140 (1985); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b).
Counsel for the amici are cautioned that they are not parties and should therefore seek leave from Judge Baer before filing any objections to this Report and Recommendation.