PSC: fraud, spoliation of evidence, and civil conspiracy.
These claims are dismissed. In essence, plaintiffs are asking
this Court to sit as an appellate court in review of the PSC
proceedings. If defendants engaged in misconduct before the PSC,
plaintiffs' remedy is to seek relief from the PSC and, if
appropriate, to then seek review in the state courts. In fact,
plaintiffs indicate in their proposed complaints that PSC
proceedings investigating defendants' alleged misconduct before
the PSC are still pending. (BRN Am. Compl. ¶ 111). Plaintiffs
have not articulated any basis for this Court to interfere in the
on-going state administrative proceedings.
In addition, New York follows "the majority view and [does] not
recognize spoliation of evidence as a cognizable tort action."
Weigl v. Quincy Specialties Co., 158 Misc.2d 753, 601 N.Y.S.2d 774,
776 (Sup.Ct. 1993). Finally, plaintiffs fail to allege
adequate facts to sustain a conspiracy claim based on defendants'
alleged misconduct before the PSC and, again, New York does not
recognize an independent tort of civil conspiracy. Wall Street
Transcript Corp., 638 N.Y.S.2d at 641. Accordingly, these claims
are dismissed on these bases as well.
For the reasons set forth above, defendants' cross-motion to
dismiss is granted in part and denied in part, and plaintiffs'
motion for leave to file amended and supplemental complaints is
granted. The parties shall appear for a pretrial conference on
May 14, 1999 at 2:30 p.m. in Courtroom 11A at 500 Pearl Street.
Plaintiff Phone Programs, Inc. moves for reconsideration and
clarification of the Court's April 13, 1999 opinion. Plaintiffs
Statistical Phone Philly and Black Radio Network, Inc. join in
the motion. First, plaintiffs contest the dismissal of their RICO
claims. Second, plaintiffs seek leave to replead claims based on
defendants' alleged misconduct before the New York Public Service
Commission (the "PSC"). Third, plaintiffs seek clarification of
the disposition of claims against the individual defendants. For
the reasons set forth in my Opinion, the motion is denied. I add
only the following:
1. Plaintiffs contend that the Court erred in dismissing their
RICO claims because the Court "misunderstood their definition of
the nature of the very specific RICO enterprise that [d]efendants
sought to control through their racketeering activities." (Pls.
Recons. Mem. at 1). The contention is rejected.
The Court understood clearly that plaintiffs were alleging an
enterprise consisting of an association in fact formed by "the
Downstate Dedicated MAS or 976-component of [NYTel]," employees
and agents of NYNEX and NYTel, employees and agents of Ericsson,
and certain unidentified long distance providers. (BRN Am. Compl.
¶ 115). The Court held, however, that plaintiffs failed to
sufficiently allege that defendants engaged in the alleged
racketeering activity to maintain control of the alleged
enterprise, because it was apparent that defendants could
maintain control of the alleged enterprise without engaging in
the alleged racketeering activity. Plaintiffs take issue with
that conclusion, but to no avail.
The alleged enterprise is a component or unit or other
subdivision of NYNEX/NYTel. It may purchase goods and services
from Ericsson and other providers, but it was established and is
controlled by NYNEX/NYTel. It will remain a component or unit or
other subdivision of NYNEX/NYTel, whether or not it engages in
In contrast, the members of a street gang alleged to be an
enterprise, for example, may need to engage in racketeering
activities to maintain their power and control
over the gang. As a matter of logic, however, a corporation need
not engage in racketeering activities to maintain power and
control over one of its own components or subdivisions.
Plaintiffs' own memorandum in support of their motion for
reconsideration is telling as it purports to describe plaintiffs'
[T]his network that [NYTel] and Ericsson knowingly
constructed and reconstructed with inferior,
unsuitable and non-standard equipment and software
for [NYTel] usage, did not work adequately; did not
produce accurate and reliable data on activity; and
never properly provided the promised services to
system users, including the [p]laintiffs. Through the
racketeering activity alleged, [d]efendants strove
for years to maintain control of this network by
fraudulently concealing this reality, misleading
[p]laintiffs (and the PSC) about the quality and
performance of the equipment and software.
(Pls. Recons. Mem. at 2). In short, plaintiffs allege that
defendants sold them a defective system and then tried to
fraudulently cover up the defects. The sale of a defective
"network" and the efforts to cover up the defects simply are not
a proper basis for a RICO claim.
2. Plaintiffs' request for leave to replead their claims based
on defendants' alleged misconduct before the PSC is denied.
Plaintiffs now concede that New York courts do not recognize
"spoliation" of evidence as an independent tort action, but they
contend that they should be permitted to amend their complaints
to plead negligence and prima facie tort claims. (See Pls.
Recons. Mem. at 20). In making this argument, they rely on a
decision of the Northern District of New York denying a motion to
dismiss negligence and prima facie tort claims based on the
negligent destruction of evidence at a fire scene. Tietjen v.
Hamilton-Beach/Proctor-Silex, Inc., No. 97-CV-188, 1998 WL
865586 (N.D.N.Y. Nov. 25, 1998).
Plaintiffs' arguments are rejected. Plaintiffs have not
identified any legal theory that permits them to bring an
independent cause of action based on an adversary's alleged
misconduct in administrative proceedings, nor does such a cause
of action make sense. It makes no sense that a party's misconduct
or discovery abuse or perjury in an administrative proceeding can
form the basis for an independent lawsuit for damages. It does
not make sense, for example, for the parties to engage in
discovery in this case to ascertain whether defendants engaged in
discovery abuse in the proceedings before the PSC. It also does
not make sense, for example, for this Court to conduct a trial to
determine whether defendants destroyed or concealed evidence in
the proceedings before the PSC. Plaintiffs may seek relief with
respect to any such misconduct before the PSC, where the alleged
misconduct occurred, and where, indeed, proceedings have been
commenced on this very subject. If plaintiffs are dissatisfied
with the results of those proceedings, they may seek further
relief under Article 78 of the CPLR.
Another option is that if and when the instant cases go to
trial, plaintiffs may request a preclusion order or an adverse
inference instruction based on defendants' alleged destruction or
concealment of evidence. Any such request, however, is premature,
and in any event the alleged misconduct is not the basis for an
independent cause of action for damages.
Finally, plaintiffs' reliance on Tietjen is misplaced, for
there the destruction of evidence occurred prior to any suit
being filed and the case did not involve alleged misconduct in
administrative proceedings. Further, neither a negligence nor a
prima facie tort theory is applicable to the claim of misconduct
in this case. Plaintiffs have not alleged negligent conduct but
have instead asserted intentional and fraudulent concealment.
Moreover, to succeed on a claim for prima facie tort under New
York law, a plaintiff must allege "disinterested malevolence,"
that is, that the defendant's sole motive was to harm the
plaintiff. Curiano v. Suozzi, 63 N.Y.2d 113, 480 N.Y.S.2d 466,
469, 469 N.E.2d 1324 (Ct.App. 1984). Here, plaintiffs have not
alleged that defendants acted with "disinterested malevolence";
rather, they have alleged that defendants engaged in the alleged
misconduct before the PSC for their own self-interest: to avoid
liability and to support their positions in those proceedings.
3. Plaintiffs request clarification of the Court's Opinion with
respect to the claims against the individual defendants. The
individual defendants did not make separate motions to dismiss
and thus the Court did not consider the claims against the
individual defendants separately from the claims against the
corporate defendants. The claims against the individual
defendants survive to the same extent that the claims against the
corporate defendants survive.
While plaintiffs may proceed with their claims against the
individual defendants (with respect to the claims that have
survived), I note the following: Plaintiffs may have some
meritorious claims, but those claims are obscured to a great
extent by plaintiffs' kitchen-sink approach to litigation.
Indeed, plaintiffs asserted sixteen causes of action, many of
which had a tenuous basis, at best. Plaintiffs would be
well-advised to consider whether it is to their advantage to
continue to cast as wide a net as possible, or whether they would
be better served by focusing their efforts on the claims that
have merit, against the defendants that are the true parties in