United States District Court, Eastern District of New York
September 28, 1999
PHILIP MORRIS, INCORPORATED, PLAINTIFF,
GRINNELL LITHOGRAPHIC CO., INC., OLIVER MUNSON AND LES SUTORIUS, DEFENDANTS.
The opinion of the court was delivered by: Hurley, District Judge.
MEMORANDUM AND ORDER
By notice of motion dated January 15, 1999, defendants Grinnell
Lithographic Co., Inc. ("Grinnell") and Oliver Munson ("Munson"),
seek the following relief:
1. an order pursuant to Rule 56 of the Federal Rules of Civil
(a) dismissing all claims of Philip Morris, Incorporated
("plaintiff") for failure to prove that it suffered an injury as
a result of defendants' conduct, or, alternatively;
(b) dismissing plaintiff's treble damages claim under Section
2(c) of the Robinson-Patman Act, 15 U.S.C. § 13(c) ("§ 2(c)"),
given the absence of proof of "antitrust injury" as required by
Section 4 of the Clayton Act, 15 U.S.C. § 15 ("§ 4");
(c) dismissing plaintiff's claim under Section 180.03 of the
New York State Penal Law ("§ 180.03") on the ground that the
statute does not create a private cause of action; and
(d) dismissing plaintiff's claims against Munson on the ground
there is no evidence to indicate his authorization or awareness
of payments made by Les Sutorius ("Sutorius") to Louis Cappelli
2. an order, pursuant to Federal Rules of Evidence 104, 401,
403 and/or 702, declaring the report of plaintiff's expert (the
"Rapp Report") to be inadmissible as "irrelevant and unreliable";
3. in the event plaintiff's federal claim — i.e., the
purported violation of the Robinson-Patman Act — is dismissed,
declining to exercise supplemental jurisdiction over the state
As explained below, the relief sought in paragraphs 1(a)(b) and
(d) above are denied; the relief sought in paragraph 1(c) —
pertaining to the cause of action predicated on § 180.03 — is
granted; the relief sought in paragraph 2 — pertaining to the
Rapp Report — is granted to the extent a hearing will be held
before me immediately prior to jury selection to determine
whether the Rapp Report and corresponding testimony of its author
passes muster under relevant provisions of the Federal Rules of
Evidence, consistent with the holding in Kumho Tire Co. v.
Carmichael, 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238
(1999); and the relief sought in paragraph 3 is denied as moot in
view of the above determinations.
The complaint in this action arises from a bribery scheme
participated in by Cappelli, the former Graphics Purchasing
Manager of plaintiff's Marketing Services Purchasing Department,
and Grinnell, a vendor which provided lithographic printing
services to plaintiff.
Munson was and is the President, Chair of the Board, and a
shareholder of Grinnell. Sutorius was a salesperson for Grinnell.
For more than ten years, Sutorius, acting for Grinnell, made
weekly bribe payments to Cappelli. The weekly sums began at $100
per week in or about 1979, increasing over time to $400 a week
for the mid-1988 to 1990 period. In addition, Cappelli was
provided with golf vacations, and other gratuities, by Grinnell
during the 1980s.
It is alleged in the complaint that "in excess of $150,000 in
illegal bribes, kickbacks and gratuities" were paid to Cappelli
in return for his manipulating the purchasing process for
lithographic printing services to favor Grinnell. (Amended Compl.
¶ 1.) During the time frame involved, plaintiff awarded Grinnell
contracts in excess of $54 million. The resulting injury to
plaintiff was that "it paid substantially inflated prices" for
the services received. Id.
On February 21, 1995, plaintiff filed the present action,
alleging a federal claim based on the Robinson-Patman Act, as
well as state law claims for fraud, commercial bribery and breach
of fiduciary duty.
Extensive pre-trial proceedings occurred thereafter, with the
case being placed on the ready trial calendar on October 15,
1998. A week later, defendants successfully sought permission to
file a belated summary judgment motion.
The items of relief requested by defendants*fn1 shall be
discussed seriatim consistent with the sequence set forth in
the notice of motion, beginning with the multiple requests for
summary judgment. Before doing so, however, the standards for
determining a motion for summary judgment will be reviewed.
B. Standards for Summary Judgment
A motion for summary judgment may be granted only when it is
shown "that there
is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law." Fed.
R.Civ.P. 56(c); see also Celotex Corp. v. Catrett,
477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Donahue v.
Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir.
The party seeking summary judgment "bears the initial
responsibility of informing the district court of the basis for
its motion" and identifying which materials "it believes
demonstrate the absence of a genuine issue of material fact."
Celotex, 477 U.S. at 323, 106 S.Ct. 2548; see also Trebor
Sportswear Co. v. The Ltd. Stores, Inc., 865 F.2d 506, 511 (2d
Cir. 1989). The substantive law governing the case will identify
those facts that are material, and "[o]nly disputes over facts
that might affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment." Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91
L.Ed.2d 202 (1986).
Once the moving party has come forward with support
demonstrating that no genuine issue of material fact remains to
be tried, including pleadings, depositions, interrogatory
answers, and affidavits, the burden shifts to the non-moving
party to provide similar support setting forth specific facts
about which a genuine triable issue remains. See Fed.R.Civ.P.
56(e); Anderson, 477 U.S. at 250, 106 S.Ct. 2505; Borthwick v.
First Georgetown Sec., Inc., 892 F.2d 178, 181 (2d Cir. 1989);
Donahue, 834 F.2d at 57. The Court must resolve all ambiguities
and draw all reasonable inferences in favor of the non-moving
party. See Donahue, 834 F.2d at 57. Moreover, the Court's role
on a motion for summary judgment "in short, is confined . . . to
issue-finding; it does not extend to issue-resolution." Gallo v.
Prudential Residential Servs., Ltd. Partnership, 22 F.3d 1219,
1224 (2d Cir. 1994); see also Consarc Corp. v. Marine Midland
Bank, N.A., 996 F.2d 568, 572 (2d Cir. 1993).
"[T]he mere existence of some alleged factual dispute between
the parties will not defeat an otherwise properly supported
motion for summary judgment; the requirement is that there be no
genuine issue of material fact." Anderson, 477 U.S. at 247-48,
106 S.Ct. 2505 (emphases omitted). Moreover, "[c]onclusory
allegations will not suffice to create a genuine issue. There
must be more than a `scintilla of evidence,' and more than `some
metaphysical doubt as to the material facts.'" Delaware & Hudson
Ry. Co. v. Consolidated Rail Corp., 902 F.2d 174, 178 (2d Cir.
1990) (quoting Anderson, 477 U.S. at 252, 106 S.Ct. 2505, and
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)); see also Carey
v. Crescenzi, 923 F.2d 18, 21 (2d Cir. 1991). "The non-movant
cannot escape summary judgment merely by vaguely asserting the
existence of some unspecified disputed material facts, . . . or
defeat the motion through mere speculation or conjecture."
Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121
(2d Cir. 1990) (citations and internal quotations omitted).
C. Purported Absence of Proof of Injury
Defendants' initial argument is that all of plaintiff's
claims should be dismissed because it has not suffered any injury
as a result of defendants' conduct.
Plaintiff intends to call Richard T. Rapp, Ph.D. ("Rapp"), an
economist and president of an economics consulting firm, to
testify as an expert that "Philip Morris paid an average of
approximately 22 percent more for products when purchased from
Grinnell than in comparable transactions from other vendors,
resulting in approximately $11.5 million in damages to Philip
Morris." (See Rapp Affidavit, sworn to Feb. 5, 1999 ("Rapp
Aff."), at ¶ 3.) But, as noted, defendants have moved to preclude
such testimony being offered at trial, and therefore, have asked
the Court to focus solely on the "undisputed
factual (i.e., non-expert) evidence" in deciding this issue.
(See Defs.' Mem. at 20.)
Based on the submissions of counsel, it appears — as defendants
assert — that neither Cappelli nor any other individual who
provided information during the discovery phase of the case, was
able to identify a specific transaction in which a product
supplied by Grinnell could have been furnished to plaintiff by
another vendor at a lower price. That circumstance, however, is
not fatal to plaintiff's case. To the contrary — and not
considering the proffered testimony of Rapp as requested by
defendants — there is a legal presumption that, at a minimum, the
prices paid by plaintiff to Grinnell were inflated by the amount
of the bribes and, accordingly, the bribe amounts are recoverable
as damages. Grace v. E.J. Kozin Co., 538 F.2d 170, 173-74 (7th
Cir. 1976); Continental Mgmt. Inc. v. United States, 208 Ct.Cl.
501, 527 F.2d 613, 618 (1975) ("[I]t is enough to show the fact
and amount of the bribes — nothing further need be alleged or
proved by way of specific or direct injury."); Novartis Corp. v.
Luppino (In re Luppino), 221 B.R. 693, 703 n. 4 (Bankr.
S.D.N.Y. 1998); see also Donemar, Inc. v. Molloy, 252 N.Y. 360,
365, 169 N.E. 610 (1930); City of New York v. Liberman,
232 A.D.2d 42, 660 N.Y.S.2d 872, 875 (1st Dep't 1997).
In sum, there is a material issue of fact whether plaintiff
sustained an injury as a result of the bribes paid to Cappelli
even if the damages delineated by Rapp are culled from the
discussion. That being the case, defendants' omnibus request for
summary judgment is rejected, thereby necessitating a discussion
of their alternative, more limited summary judgment applications.
The first of these, seeking a dismissal of plaintiff's treble
damages claim based on a violation of § 2(c) of the
Robinson-Patman Act, is the subject of the next section of this
Memorandum Opinion, section "D."
D. Motion to Dismiss Robinson-Patman Act Claim for Purported
Failure to Satisfy Antitrust Injury Requirement
(1) Commercial Bribery Falls Within the Ambit of § 2(c) of the
Plaintiff's first cause of action is based on a charged
violation of § 2(c) of the Robinson-Patman Act*fn2 which
Payment or acceptance of commission, brokerage, or
It shall be unlawful for any person engaged in
commerce, in the course of such commerce, to pay or
grant, or to receive or accept, anything of value as
a commission, brokerage, or other compensation, or
any allowance or discount in lieu thereof, except for
services rendered in connection with the sale or
purchase of goods, wares, or merchandise, either to
the other party to such transaction or to an agent,
representative, or other intermediary therein where
such intermediary is acting in fact for or in behalf,
or is subject to the direct or indirect control, of
any party to such transaction other than the person
by whom such compensation is so granted or paid.
15 U.S.C. § 13(c).
Section 2(c) was enacted primarily to prevent large buyers from
obtaining indirect price discrimination by demanding that the
suppliers pay fees to bogus brokers, which fees would then be
returned to the buyers. Federal Trade Comm'n v. Henry Broch &
Co., 363 U.S. 166, 174, 80 S.Ct. 1158, 4 L.Ed.2d 1124 (1960);
Hansel `N Gretel Brand, Inc. v. Savitsky, 94 CV 4027, 1997 WL
543088, at *7 (S.D.N.Y. Sept.3, 1997); Roosevelt Savings Bank v.
Eveready Maint. Supply Co., 85 CV 245, 1987 WL 30194, at *1
(E.D.N.Y. Dec.2, 1987). But it has also been construed "to
cover cases of commercial bribery involving a breach of a
fiduciary duty by the buyer's agent," a situation akin to the one
at bar. Roosevelt Savings Bank, 1987 WL 30194, at *1, and cases
cited therein; see also Hansel `N Gretel, 1997 WL 543088, at
*7, and cases cited therein including Broch, 363 U.S. at 169 n.
6, 80 S.Ct. 1158.
(2) Defendants Have Violated § 2(c)
For plaintiff's cause of action predicated on § 2(c) to survive
defendants' motion for summary judgment, it must first appear
that there is a factual basis to maintain that the conduct
alleged constitutes "commercial bribery" within the purview of
the statute. That requirement clearly has been satisfied here,
nor do defendants contend otherwise for present purposes. Indeed,
if plaintiff's proof regarding Grinnell's conduct parallels the
allegations in the complaint, it would have been entitled to
injunctive or declaratory relief if the conduct was ongoing, even
in the absence of evidence of concomitant antitrust or
competitive injury. See, e.g., Federal Trade Comm'n v.
Simplicity Pattern Co., 360 U.S. 55, 64-66, 79 S.Ct. 1005, 3
L.Ed.2d 1079 (1959); The Grand Union Co. v. Federal Trade
Comm'n, 300 F.2d 92, 99 (2d Cir. 1962); Biddle Purch. Co. v.
Federal Trade Comm'n, 96 F.2d 687, 691 (2d Cir. 1938); Federal
Paper Board Co. v. Amata, 693 F. Supp. 1376, 1385-86 (D.Conn.
(3) Parties' Positions as to Whether Defendants' Violation of
§ 2(c), Standing Alone, is Sufficient to Support
Plaintiff's Claim for Treble Damages Under its First Cause
Plaintiff, however, is not asking for declaratory or injunctive
relief. Instead, it seeks treble damages under § 4.*fn3 As to
that claim, is the violation of § 2(c) by Grinnell sufficient to
defeat defendants' motion for summary judgment? What, if
anything, beyond the violation of that Section is required to
vest plaintiff with a private right of action to sue for damages
under the Clayton Act?
In defendants' view, considerably more is required. Citing such
cases as Amata, 693 F. Supp. 1376; Hansel `N Gretel, 1997 WL
543088; Miyano Machinery USA, Inc. v. Zonar, 1993 WL 23758, *7
(N.D.Ill. Jan.29, 1993); NL Industries, Inc. v. Gulf & Western
Industries, 650 F. Supp. 1115 (D.Kan. 1986); and Haff v.
Jewelmont Corp., 594 F. Supp. 1468, 1471-79 (N.D.Cal. 1984),
defendants make reference to § 4, and urge that a violation of §
2(c) must be supplemented by proof of "antitrust injury" to
permit an award for damages. (Defs.' Mem. at 22.) And it is urged
that plaintiff "cannot prove any set of facts sufficient to
show that it suffered as a competitor: there is no evidence of
collusion, no evidence that Grinnell interfered with other bids,
and no evidence that Philip Morris was injured as against other
cigarette manufacturers or other purchases of lithographic
displays." (Id. at 27 (emphases added).) It should be noted
from the above underscoring that defendants equate "antitrust
injury" with "competitive injury."
Plaintiff begins its counter-argument by correctly noting that
commercial bribery is included within the scope of § 2(c), (Pl.'s
Mem. at 14), and then arguing that in order to curb that abuse,
"courts have expanded the scope of standing under Section 2(c) to
include plaintiffs who demonstrate injury in the form of
overcharges attributable to commercial bribe payments. . . ."
(Id. at 16.) Competitive injury, in plaintiff's view, is simply
not an element of its cause of action for damages. In support of
this position, the Court's attention is directed to Grace v.
E.J. Kozin Co., 538 F.2d 170, 173 (7th Cir. 1976); Edison Elec.
Institute v. Henwood, 832 F. Supp. 413, 418-19 (D.D.C. 1993);
Roosevelt Savings Bank v. Eveready Maintenance Supply Co., No.
85 CV 245, 1987 WL 30194 (E.D.N.Y. 1987); Gregoris Motors v.
Nissan Motor Corp., 630
132 F. Supp. 902, 910 (E.D.N.Y. 1986); and Municipality of Anchorage
v. Hitachi Cable, Ltd., 547 F. Supp. 633, 639-40 (D.Alaska 1982).
Plaintiff, like defendants, treats "antitrust injury" and
"competitive injury" as synomonous. (See, e.g., Pl.'s Mem. at
14 ("Defendants contend that Philip Morris must prove it suffered
`antitrust injury' as a result of the commercial bribery —
i.e., competitive injury attributable to something the
antitrust laws were designed to prevent, see J. Truett Payne Co.
v. Chrysler Motors Corp., 451 U.S. 557, 562, 101 S.Ct. 1923, 68
L.Ed.2d 442 (1981) — in order to prevail on its claim under
Section 2(c) of the Robinson-Patman Act." (emphases added)).)
But, as shall be discussed, infra, the terms "antitrust injury"
and "competitive injury" are not interchangeable, or
synonymous, for purposes of a private antitrust claim for treble
damages based on a substantive violation of § 2(c).
(4) Unsettled State of Law re Elements of a Private Cause of
Action for Treble Damages Based on a Violation of § 2(c)
Neither the Supreme Court nor the Second Circuit has delineated
the elements which a private litigant must establish to recover
treble damages for a violation of § 2(c),*fn4
and decisions from
district courts and other circuits reflect varied approaches to
the issue, producing divergent, often unreconcilable results.
Indeed, some courts have held that § 2(c) is essentially a
self-contained antitrust statute, the violation of which may
properly serve as a predicate for a monetary award. See
Calnetics Corp. v. Volkswagen of Am. Inc., 532 F.2d 674, 696
(9th Cir. 1976) ("We hold that, if distributor is able on remand
to prove that [defendants] indeed committed acts of commercial
bribery in violation of § 2(c), then the [distributor] ought to
be allowed any damages proximately caused by that violation.");
Roosevelt Savings, 1987 WL 30194, at *1; Gregoris Motors, 630
F. Supp. at 910.
In Roosevelt Savings, the terms "antitrust injury" and
"competitive injury" are used interchangeably. See 1987 WL
30194, at *2 ("[W]hether antitrust injury must be shown is a
closer question. . . . A plain reading of § 2(c) . . . convinces
me that a § 2(c) claim need not include a showing of
anticompetitive injury."). The court in Gregoris Motors speaks
solely of "anticompetitive effect" and concludes, based on "plain
language" of § 2(c), that such injury need not be proven by
plaintiff. 630 F. Supp. at 910.
Cases such as Calnetics Corp., Roosevelt Savings and
Gregoris Motors reflect a literal reading of § 2(c), absent any
reference to the requirements of § 4.
Other courts have concluded that a violation of 2(c) is
insufficient to warrant an award of damages, unless coupled with
proof of competitive injury. See Hansel `N Gretel, 1997 WL
543088, at *8-10; Miyano, 1993 WL 23758, at *7-8; Amata, 693
F. Supp. at 1386-87; NL Industries, 650 F. Supp. at 1123 ("The
absence of competitive injury is fatal to an antitrust claim.").
And finally, there is a third school of judicial thought. Its
proponents are of the view that a party seeking treble damages as
a result of commercial bribery must only establish a violation of
§ 2(c) and an "antitrust injury," which injury need not include
proof of competitive injury. Edison
Elec. Inst. v. Henwood, 832 F. Supp. 413, 418-19 (D.D.C. 1993);
Municipality of Anchorage v. Hitachi Cable, Ltd., 547 F. Supp. 633
(D.Alaska 1982). Cf. Fitch v. Kentucky-Tennessee Light and
Power, 136 F.2d 12, 16 (6th Cir. 1943).
The differing positions urged by the present parties as to the
elements of plaintiff's cause of action for treble damages — as
well as the divergent results reached by courts grappling with
the same issue in other cases — seem to be traceable to how the
following threshold questions are answered:
(i) is "antitrust injury" an element of a cause of
action aimed at recovering treble damages for a
violation of § 2(c) ("Question 1"); and
(ii) if so, does plaintiff's obligation to establish
"antitrust injury" necessarily require proof
that defendants' conduct caused it competitive
harm in the marketplace ("Question 2")?
These questions will be addressed seriatim.
(5) "Antitrust Injury" Is an Element of Plaintiff's Cause of
Action for Treble Damages (Question 1)
Preliminarily, it should be noted that § 2(c) simply defines
that certain conduct is illegal. To pursue a private claim for
treble damages requires reference to § 4 which expressly creates
See, e.g., Genesco Inc. v. T. Kakiuchi and Co.,
815 F.2d 840
, 853 (2d Cir. 1987) (§ 2(c) makes certain business
practices "`unlawful'. . . . while § 4 of the Clayton Act . . .
provides for an express private right of action for treble
damages to any person injured in his business or property as a
result of any antitrust violation."); Amata, 693 F. Supp. at
1386-88. Cf. J. Truett Payne, 451 U.S. at 561-62, 101 S.Ct.
1923 (discussing relationship between § 2(a) and § 4 of the
Clayton Act); Brunswick Corp. v. Pueblo-O-Mat, Inc.,
429 U.S. 477
, 484-87, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977) (discussing
relationship between § 7 and § 4 of the Act).
Section 4 of the Clayton Act provides:
Any person who shall be injured in his business or
property by reason of anything forbidden in the
antitrust laws may sue therefor in any district court
of the United States in the district in which the
defendant resides or is found or has an agent,
without respect to the amount in controversy, and
shall recover threefold the damages by him sustained,
and the cost of suit, including a reasonable
15 U.S.C. § 15(a).
Section 4, by its terms, authorizes damage awards to those
private antitrust litigants which demonstrate injury to their
"business or property," caused "by reason of" a violation of the
Although the expansive language of § 4 — particularly the
phrase "by reason of" — would appear to authorize treble damages
to any aggrieved party that was able to establish a nexus between
an injury sustained and a defendant's violation of an antitrust
law provision, the statute has not been so broadly construed.
Brunswick, 429 U.S. at 489, 97 S.Ct. 690 ("[T]o recover treble
damages . . . [plaintiff] must prove more than injury causally
linked to an illegal presence in the market." (emphasis added));
Atlantic Richfield Co. v. USA Petro. Co., 495 U.S. 328, 334,
110 S.Ct. 1884, 109 L.Ed.2d 333 (1990); Local Beauty v. Lamaur,
787 F.2d 1197, 1200-01 (7th Cir. 1986).
Indeed, § 4 has been judicially circumscribed to include only
claims of "antitrust injury." That term has been defined by the
Supreme Court to mean "actual injury
attributable to something the antitrust laws were designed to
prevent." J. Truett Payne, 451 U.S. at 557, 101 S.Ct. 1923. But
— prescinding for the moment from the question of whether
antitrust injury may exist absent proof of competitive injury —
that limiting definition does not appear to be an impediment to
plaintiff. The injury to its business — in an amount at least
equal to the bribes paid — was the direct result of commercial
bribery, an activity outlawed by § 2(c) thereby satisfying the
J. Truett Payne definition. Moreover, the damage incurred
clearly dovetails with the statutory language of § 4, that is, an
injury caused "by reason of [something] forbidden in the
In sum, antitrust injury is an element of a cause of action
seeking treble damages, which plaintiff seemingly has met.
Defendants note, however, that the complaint speaks solely of
plaintiff having paid inflated sums for goods and services
purchased from Grinnell, devoid of any suggestion that the
increased prices affected its ability to function in the
marketplace. Is that a fatal flaw in plaintiff's first cause of
action? In other words, may antitrust injury be established by
plaintiff without a showing of competitive injury?
(6) Absence of Demonstrable Competitive Injury Does not
Preclude Plaintiff From Recovering Treble Damages Based on
Defendants' Violation of § 2(c) (Question 2)
This subdivision of the opinion will be divided into two major
parts for analytical purposes.
The first part consists of a review of a settled area of
antitrust law, viz., that Congress, in enacting the
Robinson-Patman Act, determined, as recognized by the courts,
that certain business practices — such as those covered by § 2(c)
— are unlawful per se, while others — such as discriminatory
pricing under § 2(a) — are not necessarily unlawful, i.e., are
non per se in character. The recognized difference between the
two is that a per se unlawful practice under the Robinson-Patman
Act is inherently anticompetitive, thus obviating the need to
prove anticompetitive injury when the relief sought is
injunctive or declaratory in nature; for a non per se practice,
such injury is not implicit and, thus, more than the mere
commission of the act must be shown in order to establish a
substantive violation of the statute.
After reviewing that settled area of the law, and with the
corresponding principles in mind, attention will be turned to the
pivotal, and unsettled issue regarding plaintiff's first cause of
action, that being whether its burden of proof in seeking treble
damages under § 4 requires a showing that defendants' conduct
caused competitive injury. Or, given the per se character of
commercial bribery, may the required antitrust element of the § 4
claim be satisfied without such proof?
a) Whether Competitive Injury Must be Shown to Establish a
Substantive Violation of the Robinson-Patman Act Depends on
the Antitrust Provision Involved.
The Clayton Act, including the Robinson-Patman Act, the Sherman
Act, and certain parts of a federal tariff act, constitute the
federal antitrust laws. (1050 PLI/Corp. 811, 819 (1998), citing
15 U.S.C. § 12.) Their shared goal is to protect competition and,
in the case of the Robinson-Patman Act, to protect competitors as
well. Chroma Lighting v. GTE Prods. Corp., 111 F.3d 653, 657-58
(9th Cir. 1997); Monahan's Marine, Inc. v. Boston Whaler,
866 F.2d 525
, 528 (1st Cir. 1989) ("Unlike the Sherman Act which
protects `competition, not competitors,' Brown Shoe Co. v.
United States, 370 U.S. 294
, 320, 82 S.Ct. 1502, 8 L.Ed.2d 510 .
. . (1962), the Robinson-Patman Act extends its protection to
competitors.") From that, however, it may not be inferred that
proof of an effect on competition, or competitive injury, is a
sine qua non to a charged Robinson-Patman Act violation.
Such may, or may not be the case depending on the statutory
As to a substantive violation of the Robinson-Patman Act — as
distinct from a concomitant private claim for damages under § 4,
which will be discussed shortly — the Supreme Court underscored
the above point in F.T.C. v. Simplicity Pattern Co., thusly:
Section 2(a) makes unlawful price discriminations
`where the effect of such discrimination may be
substantially to lessen competition or tend to create
a monopoly in any line of commerce, or to injure,
destroy, or prevent competition. . . .'
This price discrimination provision is hedged with
qualifications. An exception is made for price
differentials `which make only due allowance for
differences in the cost of manufacture, sale, or
delivery.' Care was taken that price changes are not
outlawed where made in response to changing market
conditions. Finally, § 2(a) codifies the rule of
United States v. Colgate & Co., 250 U.S. 300, 39
S.Ct. 465, 63 L.Ed. 992 (1919), protecting the right
of a person in commerce to select his `own customers
in bona fide transactions and not in restraint of
Subsections (c), (d), and (e), on the other hand,
unqualifiedly make unlawful certain business
practices other than price discriminations.
In terms, the proscriptions of these three
subsections are absolute. Unlike § 2(a), none of them
requires, as proof of a prima facie violation, a
showing that the illicit practice has had an
injurious or destructive effect on competition.
360 U.S. 55
, 64-65, 79 S.Ct. 1005, 3 L.Ed.2d 1079 (emphasis
In Simplicity, the Supreme Court reversed a circuit decision
which had set aside a cease and desist order issued by the
Federal Trade Commission. That cease and desist order, based on a
violation of § 2(e),*fn6 prohibited Simplicity Pattern from
continuing its practice of providing services and facilities to
its larger customers which were not afforded to competing smaller
customers on a proportionally equal basis.
Given that Congress has concluded that § 2(e), along with §
2(c) and § 2(d) involve per se violations, (i.e., "the
proscriptions of these three subsections are absolute"; id.),
the Court held that neither the absence of proven competitive
injury nor the presence of cost justification was relevant to the
charged violation. In other words, if the act was committed, the
substantive violation occurred.
With respect to per se violations of the Robinson-Patman Act,
it is not that the targeted practices do not effect competition.
Were that the case, the antitrust laws would not be implicated.
Instead, Congress decided that such practices are necessarily
anticompetitive and, thus, no proof to that effect is required to
establish a violation. See, e.g., Grand Union, 300 F.2d at 99
("[I]n making same, but not all, of the practices outlawed by the
Robinson-Patman Act illegal per se, Congress indicated that those
selected for per se treatment always led to the undesired
effects in competition." (emphasis added)); Fitch v.
Kentucky-Tennessee Light & Power, 136 F.2d 12, 16 (6th Cir.
1943) ("Plainly, the payment of the secret commissions to Fitch
was an unfair labor practice, and obviously resulted in lessening
competition in the sale of coal to the Power Company."). Cf.
Simplicity, 360 U.S. at 63 n. 5, 79 S.Ct. 1005 ("Simplicity
argues that the
Examiner `affirmatively found an absence of competitive injury.'
This view was apparently adopted by the Court of Appeals. . . .
We do not so read the record, however. What the Examiner said was
that `there is no showing of competitive injury' (emphasis
In sum, it is well established that certain practices are per
se unlawful under the Robinson-Patman Act as inherently
anticompetitive, while others are not. Commercial bribery falls
within the former category.
b) Plaintiff's Proof of Antitrust Injury Under § 4 Need Not
Include Proof of Competitive Injury.
Does the distinction between per se and non per se violations
of the Robinson-Patman Act carry over to corresponding damage
claims under § 4 to the extent an aggrieved party who has
established (1) a substantive violation of § 2(c) and (2)
"antitrust injury" need not also prove anticompetitive effect?
Plaintiff, as discussed previously, has framed the issue under
discussion somewhat differently than above. But in urging that
competitive injury is not an element of its cause of action for
treble damages, considerable stock has been placed in Roosevelt
Savings Bank v. Eveready Maintenance Supply Co., and Gregoris
Motors v. Nissan Motor Corp., the two decisions from this
district addressing that question. Both concluded that such proof
is not required for the victim of commercial bribery to recover
damages. Although I agree with the results reached in both
Roosevelt Savings Bank and Gregoris Motors, defendants are
correct in noting that the analytical process in each of those
cases is perhaps overly cryptic in that no reference is made to §
4, nor to the requirement — as explained in J. Truett Payne —
that one seeking treble damages must establish antitrust injury.
See also Edison Elec. Inst. v. Henwood, 832 F. Supp. 413, 418
(D.D.C. 1993) (court relied on per se illegality of commercial
bribery in concluding that competitive injury need not be
established; however, like Roosevelt Savings and Gregoris
Motors, no mention is made of § 4).
However, among the many other decisions cited by plaintiff in
support of its position, I found Municipality of Anchorage, 547
F. Supp. at 640, to be particularly helpful for present purposes.
Fitch, 136 F.2d 12, also warrants brief mention.
In Municipality of Anchorage, the municipality brought an
action under, inter alia, § 2(c) for damages caused by
defendants' bribery of two municipal employees in a bid-rigging
Defendant Hitachi sought the dismissal of the § 2(c) claim,
arguing along the following lines as synopsized by the district
[T]he Municipality lacks standing to sue. Hitachi
suggests that when a seller bribes a buyer's agent,
only competitors of the seller suffer competitive
injury and have standing to sue. Furthermore, since
the Utility is a regulated monopoly and has no
competitors, it cannot suffer a competitive injury.
547 F. Supp. at 637.
After recognizing the unsettled state of the law as to whether
proof of an adverse effect on competition is necessary to
establish liability under § 2(c) and § 4, the district court
found that it was not, reasoning:
Any examination of a plaintiff's right to sue under a
statute must begin with the language of the statute
itself. I find nothing in the language of section
2(c) to justify imposing a competitive injury
requirement on potential plaintiffs. Unlike section
2(a) which outlaws price discrimination whose effect
`may be substantially to lessen competition or tend
to create a monopoly', sections 2(c), (d), and (e)
prohibit business practices other than price
discrimination. F.T.C. v. Simplicity Pattern Co.,
360 U.S. 55, 65, 79 S.Ct. 1005, 1011, 3 L.Ed.2d 1079
(1959). None of these latter sections
"requires, as proof of a prima facie violation, a
showing that the illicit practice has had an
injurious or destructive effect on competition."
Suits for damages by private plaintiffs "injured in .
. . business or property" are authorized by section 4
of the Clayton Act, 15 U.S.C. § 15. . . . Section 4
has long been read to include a requirement that any
potential plaintiff under the antitrust laws be
within the so-called `target area' of the antitrust
violations. . . . Although the exact boundaries of
the target area may be the subject of much dispute,
the purpose of this requirement is to limit recovery
under antitrust law to those entities whom the laws
were meant to protect. [Blue Shield of Virginia v.]
McCready, 457 U.S. 465, 102 S.Ct. , 2548
, [73 L.Ed.2d 149]; Brunswick Corporation v.
Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct.
690, 697, 50 L.Ed.2d 701 (1977).
I conclude that, when commercial bribes are paid to a
company's employees to obtain contracts for the sale
of goods, the company has standing to bring an action
for damages under section 2(c) of the Robinson-Patman
Act. 15 U.S.C. § 13(c). . . . I reject the analysis
[in those decisions which have reached a contrary
result], believing that those cases adopt too narrow
a view of the intent and purpose of section 2(c).
Id. at 639-40.
Anchorage is instructive for, inter alia, its focus on the
statutory language of § 2(c) and that section's per se character,
as well as its explanation of the standing requirements for a § 4
claim which dovetails nicely with the definition of "antitrust
injury" given in J. Truett Payne.
In Fitch, the utility's former president, Fitch, accepted
bribes in return for awarding purchase contracts to the Nashville
Coal Company. As a result, he, the coal company and its president
were sued by the utility, which obtained a judgment for treble
damages against defendants based on violations of § 2(c).
On appeal, appellant argued that § 2(c) "is concerned only with
price discriminations extended by sellers to different buyers;
and that there is no proof that the seller in this case so
discriminated." 136 F.2d at 15.
Fitch predates the decisions which articulated the dichotomy
between the primary purpose for enacting § 2(c) (i.e., to
curtail price discrimination accomplished through sham brokers)
and the additional goal of curbing commercial bribery in the
purchase or sale of goods. Thus, in rejecting appellant's
argument that the subject conduct was beyond the ambit of § 2(c),
the Court did not employ the later developed term of "commercial
bribery." Yet, Fitch — in affirming the treble damages award to
the victimized utility — is significant for present purposes in
that it speaks of "secret commissions" being an "unfair trade
practice [which] obviously result[s] in lessening competition."
Id. at 16.
Plaintiff, at least as to the result urged, I believe has the
better side of the argument. Commercial bribery by its very
nature is anticompetitive. Indeed, the sole purpose of the
practice is to circumvent competitive forces in obtaining a
contract. Congress, as explained by the Supreme Court in
Simplicity, recognized that fact in drafting § 2(c). While
price discrimination may, or may not be violative of § 2(a),
commercial bribery is always violative of § 2(c) and is never in
the public interest.
There is no reason that the per se character of such conduct
should not be recognized in private suits for damages under § 4.
To the contrary, such private suits will serve to curtail such
purely pernicious business practices in the marketplace,
consistent with the purpose of § 4 as tellingly explained by the
Supreme Court in Blue Shield of Virginia v. McCready:
[T]he lack of restrictive language [in the treble
damages provision of § 4] reflects Congress'
`expansive remedial purpose' in enacting § 4:
Congress sought to create a private enforcement
mechanism that would deter violators and deprive them
of the fruits of their illegal actions, and would
provide ample compensation to the victims of
457 U.S. 465, 472, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982)
(citations omitted); see also Calderone Enters., 454 F.2d at
In sum, plaintiff was a victim of a violation of § 2(c) on the
undisputed facts, and sustained an injury consistent with both
the statutory requirements of § 4 as written by Congress and the
definition of "antitrust injury" set forth in J. Truett Payne.
Antitrust injury need not entail proof of competitive injury,
given that commercial bribery under § 2(c) is the type of per se
violation which presupposes an anticompetitive effect.*fn7
In reaching this conclusion, I declined to follow such cases as
Hansel `N Gretel, 1997 WL 543088, Amata, 693 F. Supp. 1376,
and NL Industries, 650 F. Supp. 1115, which hold that the
absence of proof of competitive injury is fatal to a cause of
action for treble damages. Common to those three decisions — all
of which are relied upon by defendants — is what I perceive to be
a failure to draw the critical distinction between non per se
antitrust violations, and per se Robinson-Patman Act violations,
for purposes of private damages claims under § 4.
By way of example, consider Hansel `N Gretel. There,
Savitsky, while an officer of Hansel `N Gretel, conducted a
kickback scheme whereby various suppliers overcharged the company
and divided the excess with him. 1997 WL 543088, at *1. The
company sued for, inter alia, treble damages under §§ 2(c) and
4 of the Clayton Act, naming Savitsky, and two participating
suppliers as defendants.
Defendants moved to dismiss the company's Robinson-Patman Act
cause of action on the ground that it failed to allege
"competitive injury." The district court accepted that
argument,*fn8 based on the following rationale:
When a § 2(a) claim is brought by a buyer who has
allegedly been discriminated against directly by the
seller, it "must first prove that, as the disfavored
purchaser, it was engaged in actual competition with
the favored purchaser(s) at the time of the price
differential." . . . Although the present case
concerns § 2(c), the same principle must apply.
Absent such discrimination against parties engaged in
actual competition, I discern no anticompetitive
effect arising out of the kickbacks at issue which
Id. at *10.
The relevant excerpt from Amata reads:
To recover damages under section 4, the Court [in
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,
429 U.S. 477, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977)] held
that the petitioner had to do more than prove that
the defendant violated section 7. . . . In addition
to proving a violation of the substantive antitrust
law, "[p]laintiffs must prove antitrust injury, which
is to say injury of the type the antitrust laws were
intended to prevent and that flows from that which
acts unlawful. The injury should reflect the
anticompetitive effect either of the violation or of
anticompetitive acts made possible by the violation."
The Brunswick analysis has been applied to
violations of the Robinson-Patman Act, and it governs
Federal's claim for treble damages. In J. Truett
Payne Co. v. Chrysler Motors Corp., 451 U.S. 557,
101 S.Ct. 1923, 68 L.Ed.2d 442 (1981), the petitioner
alleged a violation of section 2(a) of the
Robinson-Patman Act. In its analysis of the
petitioner's claim, the Court noted that "[o]ur
decision here is virtually governed by our reasoning
in [Brunswick]." Id. at 562, 101 S.Ct. at 1927.
The petitioner had to prove more than just a
violation of section 2(a), "since such proof
establishes only that injury may result." Id.
(quoting Brunswick, 429 U.S. at 486, 97 S.Ct. at
696). "To recover treble damages . . . a plaintiff
must make some showing of actual injury attributable
to something the antitrust laws were designed to
prevent." Id. . . . . Although J. Truett Payne
involved section 2(a) of the Robinson-Patman Act,
there is no reason why its analysis should not also
apply to claims arising out of section 2(c) since in
both instances the right to treble damages is granted
by section 4 of the Clayton Act.
693 F. Supp. at 1387-88.
And finally, the district court in NL Industries held that a
private antitrust claim for damages based on a violation of §
2(c) is not viable in the absence of competitive injury, citing
Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477, 97 S.Ct.
690, 50 L.Ed.2d 701 (1977). 650 F. Supp. at 1123. But Brunswick
involved a violation of § 7 of the Clayton Act. That section
proscribes mergers whose effect "may be substantially to lessen
competition. . . ." 15 U.S.C. § 18 (emphasis added). Obviously,
given the statutory language involved, a private litigant may not
rely simply on a violation of § 7 in seeking damages under § 4.
Instead, such a party must prove actual as distinct from
potential harm, which harm must pertain to competition, again,
given the language of § 7. And to have standing under § 4, or
"antitrust injury" as explained in J. Truett Payne, the
competitive harm must have been to that party.
In sum, Hansel `N Gretel relied in large measure on § 2(a)
decisions to decide a § 2(c) case; Amata used both § 2(a) and §
7 decisions, while NL Industries relied on Brunswick, a § 7
case, for the same purpose, i.e., to decide a § 2(c) case.
For the reasons given, the holdings in antitrust cases
involving non per se violations are not interchangeable with
those involving per se unlawful business practices under the
Robinson-Patman Act, such as commercial bribery under § 2(c).
That statement is beyond cavil for substantive violations. Based
on the statutory language of § 2(c) and § (4), the purpose sought
to be advanced by each of the statutes, and what I believe to be
the better reasoned cases, (particularly Municipality of
Anchorage), I conclude that the per se character of § 2(c)
violations is equally applicable to claims under § 4 in the sense
that an aggrieved party — while required to establish both a
substantive violation and an antitrust injury — is not obligated
to also prove that such injury caused competitive harm.
I have also reviewed the other cases cited by defendants and
find them unpersuasive as well.
For the reasons indicated above, defendants' motion for summary
judgment on plaintiff's first cause of action is denied.
E. Private Right of Action Under Penal Law § 180.03
Plaintiff's second claim against defendants is for commercial
bribery in violation of Penal Law § 180.03. (See Compl. ¶¶
37-40.) Plaintiff asserts that by defendants' violation of the
Penal Law, it "has been injured in its business" and its damages
include "the payment of inflated
prices for goods and services." (See id. ¶ 39.) Plaintiff
further contends that by virtue of the willful conduct of
defendants, punitive damages should be awarded. (Id. ¶ 40.)
Defendants, however, contend that plaintiff's second claim should
be dismissed because "there is no private right of action for a
violation of section 180.03 of the penal code." (Defs.' Mem. at
Section 180.03 of the New York State Penal Law provides:
A person is guilty of commercial bribing in the first
degree when he confers, or offers or agrees to
confer, any benefit upon any employee, agent or
fiduciary without the consent of the latter's
employer or principal, with intent to influence his
conduct in relation to his employer's or principal's
affairs . . .
N Y Penal Law § 180.03. As a threshold matter, the Court notes
that the statute does not itself create a private right of
action. As Judge McKenna explained in Philip Morris, Inc. v.
Heinrich, No. 95 CIV. 0328, 1996 WL 363156, at *18 (S.D.N Y
June 25, 1996), that does not end the inquiry; "[a]bsent such a
directive, the courts are to determine themselves, considering
such factors as legislative history, consistency with the overall
legislative scheme for creating the private right and whether the
plaintiff is one of the class for whose special benefit the
statute was enacted." Id. The court in Philip Morris
concluded that it was unnecessary to create a private right of
action under the Penal Law as recovery could be had under common
law theories of fraud and breach of fiduciary duty for such
conduct. Id. at *17.
It appears that every federal court considering the issue has
concluded that the commercial bribery sections of the Penal Law
do not create a private right of action. See, e.g., id. at *18
(declining to find private right of action under Penal Law §
180.03 (citing Kinley Corp. v. Integrated Resources Equity Corp.
(In re Integrated Resources, Inc.), 851 F. Supp. 556, 563
(S.D.N.Y. 1994) (holding that there is no private right of action
under Texas commercial bribery statute))); Sierra Rutile Ltd. v.
Katz, No. 90 Civ. 4913, 1996 WL 556963, at *4 (S.D.N.Y., Oct. 1,
1996) (no private right of action under Penal Law § 180.08);
Texwood Ltd. v. Gerber, 621 F. Supp. 585, 589 (S.D.N.Y. 1985)
(noting that plaintiffs cited no authority for the proposition
that a private right of action exists under Penal Law § 180.03,
but explaining that under New York law an employer may recover
from his employee bribes taken in violation of § 180.08 and
limiting plaintiffs' recovery to the amount of the bribes).*fn9
Aside from the case law distinguished by Judge McKenna in
Philip Morris and a more recent case, City of New York v.
Liberman, 232 A.D.2d 42, 660 N.Y.S.2d 872 (1st Dep't 1997),
plaintiff cites no authority to support its view that a private
cause of action under the Penal Law exists. Liberman, moreover,
does not compel the conclusion urged by plaintiff. Indeed,
Liberman is not applicable because the claim pursued by
plaintiff in that case was not based upon the commercial bribery
section of the New York Penal Law. Rather, the Court in
Liberman simply held that the purchaser was entitled to recover
any bribe monies paid by a vendor to its agent.*fn10 That
holding dovetails with
the well-settled principle of New York law that an employer whose
agent has received commercial bribes is entitled to recovery of
such bribes. See, e.g., Donemar v. Molloy, 252 N.Y. 360, 365,
169 N.E. 610 (1930) ("If . . . a vendor bribes purchaser's agent,
it must be assumed that the purchase money is loaded by the
amount of the bribe. The vendor has had and received money which
belongs to the purchaser to the extent of the bribe, which
neither the vendor nor the unfaithful agent may in good
conscience and good morals retain."); British American & E. Co.
v. Wirth Ltd., 592 F.2d 75, 79 (2d Cir. 1979) ("[W]here there is
an agency relationship, the principal is entitled to recover any
monies paid as commercial bribes to his agent."); Sierra, 1996
WL 556963, at *4 (same).*fn11
Based on the foregoing, the Court agrees with the other federal
courts that have refused to recognize a private right of action
based on a violation of New York Penal Law § 180.03. Accordingly,
plaintiff's second claim is dismissed.
F. Defendants' Motion to Dismiss all of Plaintiff's Claims
Against Defendant Oliver Munson Is Denied
It should be noted that Munson was during the time frame
alleged in the complaint, and apparently still is, the President,
Chair of the Board, and a shareholder of Grinnell. Now that
discovery has been completed, defendants' counsel moves to
dismiss all claims against Munson on the ground that there is no
proof that he either authorized or was aware of the bribes
Sutorius paid to plaintiff's purchasing agent Cappelli.
Although the bulk of the bribes to Cappelli consisted of weekly
cash payments (see "Stipulated Facts," Ex. A to Not. of Mot.,
at 9), the bribes also were furnished in other forms. By way of
example, plaintiff alleges in its complaint that, as part of the
"Bribery Scheme," "Grinnell, Munson and Sutorius also arranged
for or paid for Cappelli's golf vacations on at least four
occasions. . . ." (Am.Compl. "The Bribery Scheme" ¶ 23 at 7.)
That such "all expenses paid" golf vacations were provided to
Cappelli, with the "knowledge and consent of Munson," is conceded
in the stipulation of facts entered into between plaintiff and
defendants. (Stipulation of Facts, Ex. A to Not. of Mot., ¶ 22 at
10.) Conceivably, defendants will posit that the free golf
vacations at distant locales were not bribes, contrary to the
position taken by plaintiff in its complaint and now. However, at
the very least, the present scenario raises a material issue of
fact which precludes defendants' request for summary judgment as
to the claims asserted against Munson. Whether Munson may also be
held accountable for other bribes paid to Cappelli based on,
e.g., his review of the expense reports of Sutorius which were
inflated by the bribe payments, need not be addressed in view of
In sum, for the reasons indicated, defendants' motion to
dismiss all claims against defendant Munson is denied.
G. Defendants' Application to Preclude the Admission Into
Evidence of the Rapp Report as Being Irrelevant and Unreliable
Is Granted to the Extent That a Hearing Will be Held Prior to
Rapp was retained by plaintiff to testify as an expert
regarding the damages it sustained as a result of defendants'
commercial bribery. In performing his analysis, Rapp examined
"4,067 product contracts set forth on purchase orders prepared
and issued by Philip Morris for
lithographic products of the type Grinnell supplied from 1979 to
1991." (Rapp Aff. ¶ 13.) Utilizing that data, he created "268
product categories, each containing products of a similar
nature." Id. The purpose of this process was to "standardize"
the various non-Grinnell and Grinnell products involved by
endeavoring to account for numerous factors which could produce
price differentials other than preferential treatment afforded to
Grinnell. At the conclusion of this highly detailed undertaking,
Rapp opined that plaintiff paid approximately 22% more for
products it purchased from Grinnell than for similar products
purchased from other vendors, resulting in a damage estimate of
$11.5 million. (Id. at ¶ 6.)
Following Grinnell's receipt of the Rapp Report, it hired G.
Hossein Borhani, Ph.D. ("Borhani"). Borhani focused on the
obvious linch pin of the Rapp Report, to wit, the determination
as to which non-Grinnell products were sufficiently similar to
the products purchased from Grinnell to permit meaningful
comparisons. (See Mar. 17, 1998 Borhani Report at 3.) Upon
analyzing the Rapp Report, Borhani identified two purported
1. Product category or codes so narrowly defined that many
Grinnell products have been assigned a product code for which
there are no corresponding products supplied by other vendors;
2. That even when products are supplied by both Grinnell and
other vendors, Rapp's methodology fails to appropriately account
for a number of factors — such as, e.g., number of colors in
the lithographic materials supplied — which may affect the
contract price. (See id. at 5-6.)
The Rapp Report, viewed in isolation, suggests that its
introduction would be of assistance to the jury in determining
plaintiff's damages, and that the methodology employed is
sufficiently reliable to warrant its introduction consistent with
my "gatekeeper" role under Rule 104(a) and Kumho Tire Co. v.
Carmichael, 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238
(1999). But, of course, the Rapp Report may not be reviewed in
isolation. Rather the comments of Borhani must be taken into
account. Those comments go directly to the reliability of the
Under the circumstances, a hearing will be scheduled
immediately prior to trial to provide me with an opportunity to
hear Rapp's and Borhani's testimony concerning their respective
positions and the factual predicates for those positions, subject
to questioning by the Court and to cross-examination by opposing
The relief sought by defendants in the motion are denied except
(1) plaintiff's claim under § 180.03 of the New York State Penal
Law is dismissed and (2) defendants' application to preclude
Rapp's testimony and the Rapp Report is granted to the extent
that a hearing will be held immediately prior to jury selection
to determine their admissibility.