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G-I HOLDINGS, INC. v. BARON & BUDD

February 25, 2004.

G-I HOLDINGS, INC., Plaintiff, -against- BARON & BUDD; FREDERICK BARON; RUSSELL BUDD; NESS, MOTLEY, LOADHOLT, RICHARDSON & POOLE; RONALD MOTLEY; JOSEPH RICE; WEITZ & LUXENBERG; PERRY WEITZ and ROBERT GORDON, Defendants


The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge Page 3

OPINION

Plaintiff G-I Holdings ("Holdings") has moved pursuant to Rule 15(a) to amend its Fourth Amended Complaint to assert new allegations and an additional claim against defendants Baron & Budd, Frederick Baron and Russell Budd (collectively, the "Baron & Budd defendants"). For the reasons set forth below, the motion is denied.

Parties

  Holdings is a New Jersey corporation and is a holding company which includes certain former asbestos manufacturers, and is the successor by merger to GAF Corporation ("GAF"). Plaintiffs throughout the country have initiated many thousands of tort actions against GAF and Holdings arising out of the manufacture of a product known as Calsilite, an insulation product containing asbestos.

  Baron & Budd is a law firm which represents plaintiffs in personal injury asbestos litigation. Frederick Baron and Russell Budd are the principals of Baron & Budd.

 Prior Proceedings Page 3

  The facts discussed herein are discussed in greater detail in G-I Holdings v. Baron & Budd, 218 F.R.D. 409 (S.D.N.Y. 2003) ("Holdings V"); G-I Holdings v. Baron & Budd, 213 F.R.D. 146 (S.D.N.Y. 2003) ("Holdings IV"); G-I Holdings v. Baron & Budd, 02 Civ. 0216, 2002 WL 31251702 (S.D.N.Y. Oct. 8, 2002) ("Holdings III"); G-I Holdings v. Baron & Budd, 238 F. Supp.2d 521 (S.D.N.Y. 2002) ("Holdings II"); and G-I Holdings v. Baron & Budd, 179 F. Supp.2d 233 (S.D.N.Y. 2001) ("Holdings I"), familiarity with which is presumed.

  This action was initiated by the filing of an action by Holdings against the defendants on January 10, 2001, alleging violations of the federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. ("RICO"). The initial complaint made allegations regarding a deposition preparation memorandum entitled "Preparing for Your Deposition," (the "Baron & Budd Memorandum"). See Holdings I, 179 F. Supp.2d at 241-42. The First Amended Complaint was filed on April 30, 2001. Because that complaint failed to plead the predicate acts of mail and wire fraud, it was dismissed with leave to replead. Id. at 261-63. A Second Amended Complaint was filed on January 25, 2002.

  On March 18, 2002, after all defendants had moved to dismiss the Second Amended Complaint, Holdings filed a Third Amended Complaint in which it added, inter alia, allegations against the Baron & Budd defendants identifying five cases in which Page 4 it asserted on information and belief that "the Baron & Budd Memorandum was used to create false product identification and testimony in the deposition of each of the plaintiffs who were deposed in these actions." Holdings also sought the Court's permission to file the Third Amended Complaint after it had already filed it. Permission was granted on April 17, 2002. In Holdings II, the allegations concerning the Baron & Budd Memorandum in the Third Amended Complaint were dismissed because "the additional allegations do not overcome shortcomings outlined in [Holdings I]. " 238 F. Supp.2d at 539. Leave was granted to replead other claims, but not those related to the Baron & Budd Memorandum. A Fourth Amended Complaint was filed on August 21, 2002 which modified the claims for which leave to replead was granted.

  On September 22, 2003, Holdings moved for leave to file a Fifth Amended Complaint which would add factual allegations as well as a claim for relief against Baron & Budd for common law fraud based on allegations related to the Baron & Budd Memorandum. After submission of briefs, oral argument was heard on the motion on October 29, 2003, at which time the motion was deemed fully submitted.

  Discussion

  Holdings' proposed amendments include a section in which parts of the Baron & Budd Memorandum which include directions to Page 5 clients preparing for depositions are compared to two deposition transcripts from March 1996 in relation to the Baron & Budd clients Jimmy Wayne Embry ("Embry") and Carey Garrett ("Garrett"). See Proposed Fifth Amended Complaint ("PFAC"), ¶¶ 69-71. For example, the Baron & Budd Memorandum instructs deponents to "say that a girl from Baron & Budd showed you the pictures of MANY products, and you picked out the ones you remembered." PFAC ¶ 70. At Embry's deposition, in response to the question whether someone had told him that all the products pictured had asbestos in them, Embry answered "[n]o, I just picked out what I had worked with." Id.

  Based on these comparisons between the Baron & Budd Memorandum and the deposition transcripts, as well as on unspecified information which Holdings alleges was both "recently obtained" and is "sufficient to support these new allegations," Kavaler Opening Aff. ¶ 3, Holdings alleges that the testimony of the two witnesses "that they recalled the products was false and was suborned by [Baron & Budd paralegal Lynell] Terrell's use of the [Baron & Budd] Memorandum." Id., ¶ 71. Holdings adds these factual allegations to Count VI of the PFAC, which alleges that individual defendants Baron and Budd violated the RICO statute, 18 U.S.C. § 1962 ...


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