The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge Page 3
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.
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.
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
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
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.
Holdings' proposed amendments include a section in which parts of the
Baron & Budd Memorandum which include directions to
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 ...