UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
November 29, 2007
WOLTERS KLUWER FINANCIAL SERVICES INC., PLAINTIFF,
SCIVANTAGE, ADNANE CHARCHOUR, SANJEEV DOSS, CAMERON ROUTH AND GREGORY ALVES, DEFENDANTS.
The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge
OPINION & ORDER
To fulfill its promise of providing the fair and ordered administration of justice, our legal system depends upon lawyers and law firms following ethical guidelines. To be sure, zealous advocacy by attorneys is not only expected, it is commendable. Nonetheless, there is a line beyond which such aggressive representation gives way to misconduct.
While frequently under fire, attorney behavior remains largely self-regulating. Lawyers are entrusted with ensuring that both their own conduct and that of their colleagues fall within the bounds of the rules of professional responsibility. Occasionally, as here, this responsibility leads lawyers to bring questionable conduct to the attention of the court. Often, though, to avoid public criticism, lawyers settle amongst themselves without court involvement. And to a large extent, courts-even when aware of the misconduct-are satisfied to allow such self-governance among lawyers.
However, the expectation that lawyers can and will resolve questions of attorney behavior without the intervention of the courts-and thus without the threat of official oversight-is hardly a license for lawyers to sweep transgressions under the proverbial rug by settling out of court. From time to time, a lawyer's misconduct is so grave and so blatant as to demand more. When such lapses occur in the federal courts, it is not only our prerogative but our responsibility to address them and, where appropriate, impose sanctions.*fn1 Indeed, as Canon 3B(3) of the Code of Conduct for U.S. Judges makes clear: "A judge should initiate appropriate action when the judge becomes aware of reliable evidence indicating the likelihood of unprofessional conduct by a.lawyer."*fn2
The instant case, unfortunately, has been marked by a myriad of just such "reliable evidence" of attorney misconduct serious enough that this Court felt compelled to act. Sadly, the nub of the problem may not be just the behavior of one or two attorneys or law firms, but a much broader problem that has affected the practice of law generally over the last twenty or thirty years and has in the eyes of many turned what was once a profession into more of a business.
This distinction between the legal profession and a business was eloquently explained over thirty years ago by the Honorable Charles D. Breitel, while Chief Judge of the New York Court of Appeals:
A profession is not a business. It is distinguished by the requirements of extensive formal training and learning, admission to practice by qualifying licensure, a code of ethics imposing standards qualitatively and extensively beyond those that prevail or are tolerated in the marketplace, a system for discipline of its members for violation of the code of ethics, a duty to subordinate financial reward to social responsibility, and, notably, an obligation on its own members, even in nonprofessional matters, to conduct themselves as members of a learned, disciplined, and honorable occupation. Matter of Freeman, 34 N.Y.2d 1, 7 (1974).
Chief Judge Breitel's assessment echoes that of former Harvard Law School Dean Roscoe Pound, who had earlier defined a profession as "a group.pursuing a learned art as a common calling in the spirit of public service-no less a public service because it may incidentally be a means of livelihood."*fn3
More recently, the New York Committee on the Profession and the Courts more frequently referred to as the "Craco Report" after its Chair Louis Craco observed, the rising number of lawyers and the de-localization of practice have "heightened the commercialization" of the practice of law.*fn4 Gone are the days where the ambit of a numerous and complex, with the stakes continually rising-not only in terms of the issues and amounts in controversy, but in the fees that attorneys earn. The legal profession has seen a transformation wherein the naked competition and singular economic focus of the marketplace have begun to infiltrate the practice of the law, subordinating high standards of service, collegiality, and professionalism as a result. As the Committee further observed: "[t]he rise in the mobility of lawyers weakened the ties to firms, institutions, and communities in which professional standards traditionally had been articulated and enforced.kept in check by the cultural mores of the relatively small legal community."*fn5
Thus, a dismaying erosion of civility in practice has often accompanied the expansion of our legal profession. Such incivility "commonly manifests itself as rudeness, refusal to accommodate a colleague's schedule, judge baiting, or harassment during depositions..[A]lso included under the umbrella are sharp practice tactics such as misrepresenting facts to the court or an adversary and including false information in unsworn documents."*fn6 However, while the idealized notion of the small-town lawyer is an anachronism, the idea that civility among lawyers is incompatible with full and effective representation should not be. Indeed, while Rule 7-101 of the Lawyer's Code of Professional Responsibility obligates a lawyer to provide zealous representation, it provides at the same time that "[a] lawyer does not violate [this responsibility] by acceding to reasonable requests of opposing counsel which do not prejudice the rights of the client, by being punctual in fulfilling all professional commitments, by avoiding offensive tactics, or by treating with courtesy and consideration all persons involved in the legal process."*fn7
So, while our system is by its very nature adversarial, it goes without saying that such a system expects-indeed, requires-a measure of civility. Nor will our system long survive as it is if we tolerate the use of misleading or downright false statements by lawyers-to opposing parties or to the Court itself-in an attempt to secure a favorable outcome for their clients and themselves.
These and other examples of ethical misconduct are quite simply unacceptable. Such conduct is a drain on valuable judicial resources: when, for example, a litigant misleads the Court, it necessarily takes more time for the Court to try and sift through the facts and separate truth from falsehood. As important, incivility and contentiousness tend to undermine public confidence in the efficacy of the legal system. Finally, when a lawyer deviates from ethical norms he or she acts to the serious detriment of the very individuals that have sought his or her counsel with the expectation of competent, acceptable methods of representation.
Let me begin the story of the present case with the underlying sanctions motion. On April 24, 2007, Defendants Scivantage, Adnane Charchour ("Charchour"), Cameron Routh ("Routh"), Gregory Alves ("Alves"), and Sanjeev Doss ("Doss") (collectively, "Defendants") moved for sanctions pursuant to Fed. R. Civ. P. 37, Fed. R. Civ. P. 16(f), 28 USC § 1927 and the inherent powers of the court, and for civil contempt, against Plaintiff Wolters Kluwer Financial Services Inc. ("Plaintiff" or "Wolters Kluwer"), as well as Plaintiff's then-counsel, Dorsey & Whitney ("Dorsey"), and Dorsey's then-lead counsel on this litigation, Kristan Peters ("Ms. Peters" or "Peters") for a variety of wrongs.
While that motion was withdrawn after a settlement had been reached, my concern was that without more the public and the profession would be deprived of their right to know. The parties sought to seal all the papers surrounding all the motions and, with respect to the hearing, that I seal the courtroom and the transcript. While I acceded to these requests it was with the reservation that depending on the testimony some or all of the sealed material would, on notice to the parties, be unsealed. The issues raised by the motion were troubling.*fn8 The sealing and the caveat were to insure that, if proven, the wrongs would see the light of day and, conversely, if unproven, the reputation of those accused would remain unscathed. I scheduled an evidentiary hearing which began on July 23, 2007. That hearing turned out to embrace five days over nearly two months, concluding on September 12, 2007. The following finding of fact come primarily from that proceeding.*fn9
II.FINDINGS OF FACT
A. Plaintiff's Activities Prior to Initiation of Action
In or about mid-February 2007, Brian Longe ("Longe"), the president of Wolters Kluwer Financial Services (Plaintiff's parent organization), became aware that three former employees of Plaintiff's "Gainskeeper" business unit who had resigned in June 2006 -- i.e., Defendants Cameron Routh, Gregory Alves, and Sanjeev Doss -- were now working for a competing software company, Scivantage, that was bidding against Wolters Kluwer for a contract to provide software for tax lot accounting services. 9/4/07 Tr. 40:7-15; Declaration of Deidra D. Gold, July 10, 2007 ("Gold Decl.") ¶ 1, 6. Longe contacted Deidra Gold ("Gold"), General Counsel for Wolters Kluwer North American Financial Services, as well as Steven Isaacson ("Isaacson") and Hubert "Chip" Zyvoloski ("Zyvoloski"), other Wolters Kluwer in-house counsel, and passed along that information. Gold Decl. ¶ 1, 6; 9/4/07 Tr. 40:7-15, 40:21-41:1. Ms. Gold approved the retention of outside counsel to investigate the matter and determine whether litigation was appropriate. Gold Decl. ¶ 7. Gold recommended Kristan Peters, a partner at Dorsey & Whitney in New York.*fn10 Id.
Ms. Peters, although she had only recently joined Dorsey as a partner in January 2007, had a longstanding relationship with the Wolters Kluwer companies spanning approximately nine years.*fn11 9/11/07 Tr. 152:1-5.
In February and March 2007, Wolters Kluwer, assisted by Ms. Peters, commenced their investigation. Initially, Chip Zyvoloski was assigned to directly supervise the investigation, although he transferred his supervisory role to Steven Isaacson around mid-March. 7/23/07 Tr. 61:15-18; 8/15/07 Tr. 14:9-19.
From Wolters Kluwer's perspective, their allegations against the individual Defendants were largely based on the theory that the three individual Defendants took their knowledge of complicated tax lot accounting transactions and their conceptual knowledge of how Gainskeeper's software tracked those transactions (including their knowledge of certain algorithms), and their knowledge of the tax software business generally, and gave that knowledge to Scivantage (and that Defendants' knowledge constituted protectible "trade secrets").*fn12 Wolters Kluwer did not have evidence that the three Defendants took actual programming code and gave it to Scivantage, or that they even had access to the code.*fn13 See 7/23/07 Tr. 111:17-20 (Zyvoloski testimony); 8/15/07 Tr. 199:13-19, 202:10-14 (Honor testimony). Indeed, the three individual Defendants were management-level employees, not programmers.*fn14 Wolters Kluwer Vice President David Stephens ("Stephens") did, at one point, inform in-house counsel that Defendants had access to the programming code, although that information turned out to be inaccurate.*fn15 See 7/23/07 Tr. 90:1-5, 91:20-92:5; see also 8/15/07 Tr. 51:22-52:6.
During this time, Wolters Kluwer conducted a forensic investigation of Defendants' computers still in its possession to ascertain whether Defendants did, indeed, steal trade secrets, or have access to password-protected information. See Tr. 88:13-89:11 (Zyvoloski testimony). Zyvoloski stated that there was no evidence that Defendants misappropriated trade secrets. See Tr. 89:2-7 (Zyvoloski testimony),*fn16 and none was presented to the Court with Plaintiff's complaint.
During this time, Ms. Peters and Chip Zyvoloski assisted Wolters Kluwer employees to draft Declarations to be attached to the Complaint. Ms. Peters' March 15, 2007 draft of the Declaration of Charles Ross ("Ross"), the General Manager of Gainskeeper, included a reference to the named Defendants being part of the team that had access to the programming code, but Mr. Ross, in his March 16 revision, excised this language.*fn17 Ross testified that it was "not [his] intention" to convey through his declaration that the individual defendants had misappropriated the software code. See 8/15/07 Tr. 156:25-157:3.*fn18
During the drafting of the Complaint, Zyvoloski, and Joseph Honor, the technology manager for Gainskeeper, expressed to Dorsey or Peters their discomfort with Paragraph ¶ 39 of the Complaint, because that paragraph suggested that Wolters Kluwer knew that Defendants had taken software code. See 7/23/07 Tr. 122:3-7, 123:1-5, 124:1-8 (Zyvoloski testimony); 8/15/07 Tr. 204:5-20, 205:4-9 (Honor testified, "I did not feel that it was likely that they would have stolen our software code"). Ms. Peters generally advised Zyvoloski that the "complaint.contained.facts as well as advocacy," and that that paragraph was "advocacy. and within the legal bounds of pleading." See 7/23/07 Tr. 122:2-5. Wolters Kluwer ultimately approved the language Peters proposed in Paragraph ¶ 39. See 8/15/07 Tr. 18:17-19:7 (Isaacson testimony).
B. Plaintiff's Initiation of Action
On Wednesday, March 21, Plaintiff, through their counsel Ms. Peters, applied to this Court ex parte for a Temporary Restraining Order and emergency discovery.*fn19 Ms. Peters attached six Declarations by Wolters Kluwer employees to Plaintiff's Complaint and initial application.*fn20 Ms. Peters advised Wolters Kluwer to seek a TRO.*fn21 Wolters Kluwer reviewed the papers beforehand and authorized the filing of the complaint as well as the seeking of the TRO and expedited discovery.*fn22
Plaintiff, in its complaint, alleged nine state law claims, e.g. misappropriation of trade secrets (and aiding and abetting the same), unfair competition (and aiding and abetting the same), breach of fiduciary duty (and aiding and abetting the same), conversion, unjust enrichment, and breach of contract (and aiding and abetting the same), and one federal claim, i.e. violations of the federal Computer Fraud and Abuse Act, 18 U.S.C. § 1030(a)(4), (a)(2)(C). Plaintiff premised federal supplemental jurisdiction on the Computer Fraud and Abuse Act claim.*fn23 Plaintiff's allegations centered around the allegation that the three individual Defendants had helped Scivantage produce their software by stealing trade secrets from Plaintiff and passing them along to Defendants, despite the fact that they were bound by nondisclosure agreements, which Plaintiff alleged prohibited disclosure of trade secrets.*fn24 Plaintiff, citing "irreparable harm" to its interests, requested a TRO against Defendants.
Plaintiff's initial application stated that its "work product is in the form of software code," and focused on the confidential nature of that software code.*fn25 See Plaintiff's Memorandum of Law in Support of Order to Show Cause, Mar. 20, 2007 ¶ 6; Pl. Compl. at ¶ 15. Plaintiff described over the course of four paragraphs how its code was password-protected and located in a secure data center to which only certain employees had access. See Pl. Compl. ¶¶ 15-18, Pl. Mem. Law. Mar. 20, 2007 ¶¶ 6-9 (similar), Declaration of Charles Ross, Mar. 20, 2007, ¶¶ 7-10 (similar).*fn26 Paragraph 39 of the Complaint, which Plaintiff's in-house counsel Zyvoloski had expressed discomfort with, stated that "Defendants have been able to jump start their further penetration of the market by using plaintiffs protected and proprietary methods, [and] software code." Pl. Compl. ¶ 39.*fn27 Stephens testified that when he later read the initial application, he agreed it was "misleading to focus on all the code stuff." 8/15/07 Tr. 141:24-142:3.
Ms. Peters, along with Charles Ross, personally visited Chambers to make the application.*fn28 See Declaration of Charles Ross, Mar. 20, 2007, ¶ 2; Tr. 157:17-158:5.
Based on Ms. Peters' ex parte representations, I issued a TRO on March 21, drafted by Plaintiff and modified slightly by the Court, which restrained Defendants from, inter alia, marketing their Maxit product, contacting Plaintiff's current customers, or contacting Plaintiff's employees, pending a hearing which I originally set for Friday, March 23, 2007.*fn29 I struck the portions of Plaintiff's proposed order that provided for restraints upon Defendants' contact with Plaintiff's potential customers.*fn30 The order also provided at Plaintiff's behest for voluminous discovery, depositions, "imaging" of Defendants' computers, and Plaintiff's access to Defendants' computers.
C. Defendants' Appearance in Action
Defendants, represented by Akin Gump Strauss Hauer & Feld LLP, wrote the Court the next day, Thursday, March 22, and stated that "plaintiff's claims clearly lack merit -- and indeed seem calculated to mislead the Court." See Letter of Richard J. Rabin, Mar. 22, 2007.*fn31
After a conference call between the parties that day, I adjourned the TRO hearing to March 28, 2007 and gave several verbal orders.*fn32 After Ms. Peters disagreed with Defendants' written memorialization of the Court's verbal orders, and requested revision of at least one order, I memorialized my Orders on March 23, 2007.*fn33 I ordered Defendants "beginning Monday, March 26, 2007" to arrange for the imaging of the computers of the individual Defendants Doss, Alves, and Routh under the supervision of a "neutral third party," but otherwise excused Defendants from complying with "any" of the remaining discovery or disclosure obligations in my March 21, 2007 Order.*fn34
Defendants remained generally restrained from marketing to Plaintiff's current customers pending the TRO hearing. Additionally, I restrained, at Plaintiff's request, the three individual Defendants Doss, Routh, and Alves from marketing to Plaintiff's potential customers, to the extent those three Defendants knew those entities to be potential customers of the plaintiff.*fn35
Defendants submitted, on March 27, 2007, a Memorandum of Law in opposition and several Declarations by the Defendants.
Prior to the TRO hearing on March 28, 2007, David Stephens expressed his opinion to Ms. Peters and Mr. Isaacson that the "previous focus on code itself was misdirected," and advised Ms. Peters to modify her arguments accordingly. See 8/15/07 Tr. 114:18-115:25, 132:32-133:16.
D. TRO Hearing
At the TRO hearing on March 28, 2007, Defendants generally averred that Plaintiff's lawsuit was bereft of evidence and could only be intended to deliberately mislead the Court, that it was an "abuse of judicial process," and that Plaintiff's real intention was to disrupt its competitor's business.*fn36 See generally 3/27/07 Defendants' Memorandum of Law in Opposition to Plaintiff's Motion for a Preliminary Injunction ("Def. Mem."), at 1-2. Defendants noted, inter alia, that although Plaintiff's complaint mentioned that Plaintiff's software code was protected by password and other, more stringent, means, none of the Defendants had the password for the code while in Plaintiff's employ. Defendants further noted, and Plaintiff did not dispute, that Plaintiff had previously conducted two forensic investigations of its own computers, and did not present evidence of those investigations to the Court. Def. Mem. at 2. Defendants argued, "It is clear why plaintiff proceeded ex parte. [H]ad the plaintiff contacted the Scivantage Parties, and had the court been provided the full truth. this TRO never would have been issued." Def. Mem. at 4.
I began the hearing by asking about Defendants' access to the code.*fn37 Ms. Peters conceded, eventually, that Defendants had no access to source code.*fn38 (That said, at one point, she stated, "Mr. Doss does write code." See Tr. at 6:7-9.)*fn39 She now argued that even though Defendants had no access to source code, the information and knowledge Defendants brought with them to Scivantage constituted "a peculiar combination of these methodologies, know-how, and formulae," and thus constituted a trade secret. See Tr. at 8:20-24. Defendants averred that Defendants' information and knowledge was of IRS public tax regulations and general business practices, and was not a "trade secret." See, e.g., Transcript of Oral Argument, March 28, 2007 ("Tr."), at 35.
Following the hearing, on March 29, 2007, I dissolved the TRO by written Order, but provided for discovery, in accordance with orders given at the TRO hearing.*fn40 I ordered that the "imaging" of up to fifteen of Defendants' computers would "occur" on March 29;*fn41 that Defendants would provide emails and other documents to Plaintiffs by Friday, March 30; and that Defendants could fax objections to the Court by March 29, at 3:00 P.M. After an extensive plea by Plaintiff as to their urgency,*fn42 I also ordered depositions to be expedited and that the four individual Defendants in this action -- Sanjeev Doss, Cameron Routh, Gregory Alves, and Adnane Charchour -- be deposed on April 2 and April 3, 2007. I set April 6 as a date for hearing, in part to accommodate both Plaintiff's lead counsel's personal vacation schedule, and her request for expedited relief.*fn43
E. Defendants' Discovery Objections and Requests
Defendants timely provided objections to Plaintiff's discovery requests by letter on March 29 at 2:56 P.M.*fn44 Defendants, inter alia, represented that production of all documents requested by Plaintiff could not humanly be completed by the next day, March 30.*fn45 Defendants noted that as "imaging" immobilizes a computer while it is "imaged," Defendants could not produce material from computers until the imaging had been completed.*fn46 Defendants also represented that they wished to review the produced material for privilege, confidentiality, and relevance before producing it to Plaintiff. Defendants also provided more specific objections to Plaintiff's discovery requests. Defendants requested reciprocal expedited discovery in a letter of 11:21 AM, and proposed an Order, at 5:53 P.M., that requested depositions of four of Plaintiff's witnesses prior to the upcoming hearing, and reciprocal document discovery, including emails regarding "plaintiff's purposes in bringing this action."
At the close of business, March 29, 2007, I faxed a letter to the parties wherein I ordered that because of the "volume of documents and emails along with the fact that the imaging and the production of emails cannot be done simultaneously," as well as in an effort to accommodate Plaintiff's stated requests to receive discovery before conducting depositions,*fn47 the hearing was adjourned to April 26. Although I ordered "material turned over on a rolling basis," I ordered "completion" by April 5, 2007, with privileged material produced with a privilege log to the Court on that date.*fn48 I stated that "[o]bviously this will require that the depositions be scheduled for later dates. [but] that's plaintiff's choice to make." I granted that reciprocal "depositions and other discovery may be scheduled," and requested a schedule agreed to by the parties with dates of all depositions by April 5. I also addressed several of Defendants' specific objections, overruling some and sustaining others.
Ms. Peters, within an hour and a half of receiving my letter,*fn49 wrote and emailed the Court requesting an immediate conference.*fn50 See Letter of Kristan Peters, Mar. 29, 2007, 7:28 P.M. Ms. Peters stated that the "Court's Order has no dates as to when this discovery [presumably Plaintiffs'] must be produced." (Indeed, that was true, as my letter envisioned that the parties would meet and confer and present a schedule to the Court by April 5). Ms. Peters requested "firm deadlines [to] be set by which Defendants have to abide and produce discovery," despite my letter which set April 5 as Defendants' deadline to produce discovery. Ms. Peters stated that "no imaging has been done yet, in defiance of the Court's order," despite my letter which stated that Defendants would now produce "images of hard drives" by April 5. Ms. Peters also requested an immediate conference to address "my other discovery requests." "which [Defendants] chose to ignore and did not address," despite the fact that indeed, Defendants had not objected to those requests (and that Defendants' deadline to produce discovery pursuant to those requests had now been extended).
On Friday, March 30, after Ms. Peters emailed her intention to seek emergency relief from the Part I emergency motions judge regarding imaging,*fn51 I subsequently reiterated and clarified, via an email, that "all discovery requested by Plaintiff, including imaging, was addressed" in my March 29 letter and, "as stated," was now due on April 5.*fn52 See Email of Mark Noferi, Law Clerk to Judge Baer, 12:16 P.M., Mar. 30, 2007.
F. Plaintiff's Motion to the Part I Emergency Motions Judge to Compel Depositions
Defendants' counsel, at 2:08 A.M. on March 29, 2007, had proposed by email a confidentiality order to Plaintiff to govern discovery in this action, which provided for designations of material as "confidential" or "attorneys' eyes only."*fn53 Defendants' counsel avers that its proposed confidentiality agreement was "standard." See Declaration of James Chou, Apr. 24, 2007 ("Chou Decl.") ¶ 3. Defendants lead counsel Richard Rabin avers that he did not receive a response with any proposed modifications until Ms. Peters called him, late in the day of March 30, with the Court's law clerk on the line. See Reply Declaration of Richard J. Rabin, May 31, 2007 ("Rabin Reply Decl.") at ¶ 9.*fn54
Subsequently, after the close of business on Friday, March 30, 2007, Plaintiff moved the Part I emergency motions judge, the Honorable Kevin Castel, to compel the depositions to go forward on April 2 and 3.*fn55 Rabin Decl. ¶ 15; Peters Decl. ¶ 67.
Ms. Peters subsequently represented to this Court by email that "Judge Castel ordered that the deposition of the four witnesses Monday and Tuesday will be on an attorneys' eyes only basis until such time as the parties can work out a confidentiality agreement to present to Judge Baer for his approval."*fn56 E-mail of Kristan Peters, 5:51 P.M., Mar. 30, 2007. Defendants then represented to this Court that Judge Castel also ordered that the confidentiality order Defendants had previously provided to Plaintiffs on March 29 would apply to this action under further agreement between the parties or further order of this Court. E-mail of Richard Rabin, 2:08 P.M., Apr. 1, 2007. (Defendants' proposed confidentiality order, as discussed infra, prohibited in-house counsel from viewing "attorneys' eyes only" information.)*fn57 Ms. Peters responded, "Judge Castel never saw the agreement and did not comment on its contents one way or another." Email of Kristan Peters, 5:51 P.M. at Rabin Reply Decl. Ex. 6. Ms. Peters confirmed that ""[Judge Castel] said that everything at the Monday and Tuesday depositions would for attorneys' eyes only and there would be no one but the deponent and the attorneys in the depositions until we could come to terms about a confidentiality agreement." Id. Ms. Peters remarked, "I would hope you and I could first get through these depositions." Id.
G. Depositions of Defendants
Defendants produced the four individual Defendants (e.g., Doss, Routh, Alves, and Charchour) for depositions as ordered on Monday, April 2 and Tuesday, April 3. (Defendants also, as noted infra, on Monday, April 2, noticed depositions of Plaintiff's witnesses, and provided document requests to Plaintiff. See Rabin Decl. Ex. 18.)
a. Alves' Deposition
The deposition of Gregory Alves took place on Monday, April 2, 2007, at Dorsey & Whitney's New York offices, starting at 9:25 A.M. It is undisputed that the deposition was "attorneys' eyes only." Notwithstanding this understanding, before the deposition, Ms. Peters introduced Defendants' counsel, James Chou, to two representatives of her client who were present in Dorsey's offices that day -- Joseph Honor, the Gainskeeper "technology manager," and Stevie Conlon, a tax attorney who replaced defendant Doss at Gainskeeper.*fn58 See Chou Decl. ¶ 13; 8/15/07 Tr. 205:15-22.
Joseph Honor testified that generally during the course of these two days of depositions, Ms. Peters, during breaks, disclosed to him and Stevie Conlon the deponents' "general response to some of the answers to her questions in the deposition."*fn59 8/15/07 Tr. 207:1-8, 208:6-12; 9/4/07 Tr. 15:5-10 (Court: ".[D]id she go over questions that had been asked or answers that had been given?" Honor: "To some questions, yes.").*fn60 Honor testified that Ms. Peters, in the course of disclosing information, "asked us to assist her in developing questions." See 9/4/07 Tr. 14:21-15:10.*fn61
At one point, Alves testified regarding the tracking of "wash sales" at the "sublot" level. Ms. Peters asked for a brief recess.*fn62 Ms. Peters left the room, returned with a list of examples relating to the tracking of "wash sales" at the "sublot" level, and began questioning Alves again. See Chou Decl. ¶ 14.*fn63 Defendants' counsel Mr. Chou asked Ms. Peters on the record whether she was sharing "attorneys' eyes only" deposition information with her clients. See Alves Depo. at 171-72. Mr. Chou avers that Ms. Peters was "evasive, appeared uneasy, and would not give a straight answer." See Chou Decl. ¶
15. The deposition transcript bears out Mr. Chou's assertion, although Ms. Peters eventually responded "No" to Mr. Chou's question.*fn64
Ms. Peters alleged towards the end of the deposition that the witness Alves, during his deposition, took unduly long cigarette breaks. Mr. Chou avers, and the record supports, that Ms. Peters attempted to create a false record, as Alves took two short cigarette breaks of ten and six minutes, and that on each occasion Mr. Chou and Alves were waiting for Ms. Peters for several minutes to begin the deposition anew.*fn65 See Chou Decl. at ¶ 18. Ms. Peters does not directly dispute Mr. Chou's factual assertions.
Ms. Peters also attempted to create a record that would show that Alves took an unduly long time to answer questions. See, e.g., Alves Depo. at 240-41.*fn66
Ms. Peters stopped the deposition of her own accord at 2:45 P.M to begin Doss' deposition. See Alves Depo. at 254. Citing her prior allegations of dilatory conduct by Alves, Ms. Peters asserted the ability to redepose Alves again, and (incorrectly) challenged Defendant's counsel's assertion that the Federal Rules of Evidence provide for a deposition of seven hours on one day.*fn67 Ms. Peters also asserted, despite my Order adjourning the deadline for discovery to April 5, and her subsequent decision to compel depositions regardless, that she should re-depose Alves again because Defendants had "failed" to produce written discovery.*fn68
Defendants offered to produce Alves at the end of the day, after Doss' deposition, for the rest of his seven hours. Ms. Peters suggested that was acceptable. At 5:55 P.M., at the end of Doss' deposition, Ms. Peters requested to continue with Alves. Defendants' counsel represented that they would go get him at Akin Gump's offices and bring him back. See Doss Tr. at 131-32. Defendants' counsel represented that they returned with Alves to Dorsey's conference room in 25 minutes, but that nobody was there. Doss' counsel represented that the court reporter was instead in Ms. Peters' office. Chou Decl.
¶¶ 22-24. Exactly 25 minutes after Defendants left, Ms. Peters put on the record that "opposing counsel" hasn't returned and "we'll have to reconvene on another date." See Doss Tr. at 132.*fn69 Ms. Peters also stated on the record that the court reporter "said that she's got a train to catch." Doss. Tr. at 131. However, Defendants' counsel saw the court reporter leaving Dorsey's building two hours later. The court reporter stated that she had been visiting a friend inside the building. Chou Decl. ¶ 26.
b. Doss' Deposition
Prior to Doss' deposition on Monday, April 2, Doss retracted parts of his Declaration submitted with Defendants' opposition to the TRO. Opp'n. to Pl.'s Mot. to Reinstate TRO Ex. 3. At his deposition, Doss admitted that after the initiation of this lawsuit, he had retained possession of certain files, and subsequently deleted them, and that his prior Declaration was inaccurate in this respect. Doss Depo. at 112:40-114:00. For example, Doss admitted that he had retained a copy of a published scholarly article on tax loss accounting that he had authored while at Gainskeeper. Doss Depo. at 115:20-116:10.
While deletion of documents after the onset of litigation is not to be condoned, it was, and is, unclear how consequential those deleted files were to Plaintiff's underlying contentions in this litigation (namely, that Defendants had stolen protectible trade secrets from Plaintiff or breached their nondisclosure agreements). In any event, those deletions, and Doss' lack of truthfulness about them, formed the basis for Ms. Peters' subsequent averments of "spoliation," and essentially all of her future motions against Defendants for sanctions, contempt, and compulsion of evidence. Isaacson, for his part, recalled regarding Doss' March 30 statement that retracted a portion of his Declaration that he "didn't really come to any conclusion" that Doss admitted to perjury. 8/15/07 Tr. 73:4-12.
After the depositions on April 2, clearly denominated "attorneys eyes only," Ms. Peters emailed transcripts of the depositions in ASCII form to Isaacson. Isaacson Decl. ¶ 13; see also WKFS Exhibit 9 (Email of Kristan Peters, Apr. 2, 2007 10:39 P.M.).*fn70
Isaacson read portions of the transcripts and forwarded them to Gold. Isaacson Decl. ¶ 13; 8/15/07 Tr. 16:16-21; Gold Decl. ¶ 14. Gold did not review them at this time (or ever, as it turned out). Gold Decl. ¶ 14. Gold did not forward the transcripts to anyone else at Wolters Kluwer besides her secretary. Id.
c. Routh's Deposition
Routh was deposed at Dorsey's offices beginning at 10:07 A.M. on Tuesday, April 3.*fn71 Four Wolters Kluwer employees were present in Dorsey's offices that day -- David Stephens, Brian Longe, Joseph Honor, and Stevie Conlon. See 8/15/07 Tr. 117:25-119:25 (Stephens testimony).*fn72
At the beginning of the deposition, Defendants' counsel Mr. Chou stated that the deposition was "attorneys' eyes only," which did not include in-house counsel. See Routh Depo. at 7. Ms. Peters disagreed, and volunteered that she had shared the contents of the depositions with "in-house counsel in Minnesota."*fn73 Id. at 8. As Mr. Chou was about to call Mr. Rabin for clarification of the call with Judge Castel, Ms. Peters offered to proceed under "attorneys' eyes only," not including in-house counsel, for the deposition. See id. at 10.
Despite this accord, Chou and Defendants' co-counsel, Peter Guirguis, saw Ms. Peters confer with the Wolters Kluwer employees during a break. Chou Decl. ¶ 30. Honor testified that during this second day of depositions, Ms. Peters again disclosed "generally what was happening in the deposition." 8/15/07 Tr. 208:13-20. Honor described the content that was disclosed as "a lot."*fn74 8/15/07 Tr. 208:21-25. For example, Honor testified that "we had asked [Routh] a question about . if he could recall anyone on the list of the client list that we had, and she had told us that he couldn't recall anybody on that list." 8/15/07 208:25-209:5.*fn75 There is no evidence that Honor would have received information about questions asked in this "attorneys' eyes only" deposition from any source except Ms. Peters.*fn76
During a particular break at 2:32 P.M., David Stephens emailed Cameron Routh's salary information to Ms. Peters and her secretary, Eileen Brennan. See Chou Decl. ¶ 31, Ex. 3. The "To" and From" line of the email are blacked out, so that Stephens' name and the recipient are not visible. See Chou Decl., Ex. 3. Stephens testified that he did not know who blacked out that information, nor why. 8/15/07 Tr. 121:6-21. Ms. Peters used a hard copy of this email to ask Routh questions.*fn77 See Routh Depo. at 285-88.
Upon the completion of Routh's deposition for the full seven hours, Ms. Peters asserted her purported right to continue the deposition after Defendants provided her with written discovery.*fn78 Defendants' counsel noted (again) that Ms. Peters chose to move forward with depositions without documents.*fn79 Regarding Defendants' noticed depositions, Ms. Peters stated, "I have priority in terms of finishing depositions. And I don't have to present anyone for depositions until I finish my depositions."*fn80 See Routh Depo. at 435. Routh's deposition concluded at 6:40 P.M. Id.
d. Charchour's Deposition
Charchour's deposition was originally scheduled for 2 P.M. on Tuesday, April 3, in accordance with Plaintiff's notice. Chou Decl. ¶ 32. As noted, because Defendants' counsel was an hour late for Routh's deposition that day, he offered to continue for an extra hour with Charchour. See Chou Decl. ¶ 28, Ex. 2. During Routh's deposition on Tuesday, April 3, Ms. Peters approached Defendants' counsel Mr. Chou off-record during a break, indicated that she needed the full seven hours to depose Routh, and requested to move Charchour's deposition to another day. See Chou Decl. ¶ 28, Ex. 2. Later, on the record, Defendants' counsel Mr. Chou represented that Charchour was available on Thursday, April 5. See Routh Depo. at 435. Ms. Peters indicated that she preferred to take Charchour's deposition the following week, after receiving document production from Defendants. Defendants' counsel did not object.*fn81
On Wednesday, April 4, at 3:14 P.M., Ms. Peters instead requested of Defendants' counsel to take Charchour's deposition on Friday, April 6, and threatened sanctions if Defendants did not comply.*fn82 See Rabin Decl., Ex. 7. Mr. Rabin responded by email on Thursday, April 5 at 7:19 P.M. that "we are not available" for the following day, April 6, and requested Ms. Peters to provide him with alternate dates.*fn83 See Plaintiff's Motion to Compel Depositions., Apr. 6, 2007, at Ex. F.
On Friday, April 6, 2007, at 9:42 A.M., Ms. Peters put on the record with a court reporter that Defendants' counsel "hasn't shown for a duly noticed deposition," and that the deposition was "put over. because opposing counsel showed an hour and ten minutes late for the deposition on Tuesday." See Transcript of Charchour Depo., Apr. 6, 2007, at 3. The original copy of this transcript later provided to the Court has handwriting on it that reads, "Move for sanctions failed to show." At 12:05 P.M. that day, Mr. Rabin responded and again requested that Ms. Peters provide alternative dates. See Rabin Decl. Ex. 31. At the close of business that day, as discussed infra, Ms. Peters instead filed a motion to, inter alia, compel Charchour's deposition.*fn84 See Plaintiff's Motion to Compel Depositions., Apr. 6, 2007. Subsequently, Ms. Peters proposed April 11 as an alternative date. See Rabin Decl. Ex. 31.
Defendants' counsel rescheduled Charchour's deposition for April 11, 2007. The deposition began at 10:23 A.M.*fn85 See Chou Decl. ¶ 36. Notwithstanding my April 6 email (see infra) to the parties that explicitly stated that depositions would proceed on an "attorneys eyes only" basis, which did not include in-house counsel, Ms. Peters stated that she agreed to this condition "under protest." See Charchour Depo. at 9.*fn86
At the end of Charchour's deposition, notwithstanding my April 6 email (see infra) to the parties that explicitly stated that depositions would be limited to one day and seven hours absent further order of the Court, Ms. Peters again stated her intention to re-depose Charchour after receiving documents from Defendants. See Charchour Depo. at 325.*fn87 Ms. Peters repeatedly threatened further sanctions motions if Defendants did not agree, stating, inter alia, "My client is happy to litigate the matter. If you don't want to produce Mr. Charchour willingly. we'll waste more of his money and his fees."*fn88 See id. at 329, 334.
e. Ms. Peters' Conduct at Depositions, Generally
At various times during these depositions, Ms. Peters either refused to show witnesses documents from which she quoted, showed documents to witnesses from across the table, or refused to provide copies of documents to counsel.*fn89 Ms. Peters also generally refused to allow witnesses, or counsel, to take breaks.*fn90 During Doss' deposition, when Doss' counsel objected to Ms. Peters mischaracterizing Doss' testimony and expressed his intention to approach a Magistrate, Ms. Peters threatened to call security and remove Doss and his counsel from the building.*fn91
These and other examples of Ms. Peters' consistently confrontational behavior throughout depositions are troubling. "The discovery process is, to a substantial degree, dependent upon cooperation between opposing attorneys..The deposition itself is a part of a judicial proceeding, and attorneys have an obligation to conduct themselves with dignity in every phase of such proceedings." HAROLD BAER, JR. AND ROBERT C. MEADE,
JR., DEPOSITIONS: PRACTICE AND PROCEDURE IN FEDERAL AND NEW YORK STATE COURTS 122 (2005).
H. Further Discovery Disputes
On April 4, at 3:17 P.M., Ms. Peters represented to Defendants' counsel that Judge Castel's "attorneys' eyes only" order "expired."*fn92 See Rabin Decl. Ex. 7. Following that representation, after the close of business that night, Ms. Peters' associate Deidre Sheridan called Defendants' counsel Peter Guirguis regarding Defendants' proposed confidentiality agreement of March 29. Both made clear to each other initially, and over the next few days, that Defendants did not want access for in-house counsel to confidential materials, and Plaintiffs did. See Guirguis Decl. ¶¶ 5-8; Sheridan Decl. ¶¶ 2-9; Guirguis Reply Decl. ¶¶ 5-7.
On April 5, Jeffrey Loop, a first-year associate at Dorsey, inexplicably and apparently without supervision, instructed Dorsey's managing clerk to serve by fax a subpoena duces tecum on Bahwan Cybertek, a third-party contractor whom Scivantage hired to program its source code, without notifying Defendants.*fn93 Rabin Decl. ¶ 46; 9/4/07 Tr. 159:22-162:4. Loop testified that this was merely a "mistake," and that no Dorsey associates or partners had instructed him to serve the third-party subpoena without notice to Defendants. 9/4/07 Tr. 162:5-23.
On April 5, Defendants' deadline to produce documents, Defendants produced approximately 10,000 pages of documents to the Court by CD-Rom, as well as a privilege log.*fn94 Defendants did not, however, produce documents to plaintiff, and instead requested, by written letter at 4:47 P.M., that I order Defendants' proposed Confidentiality Stipulation and Protective Order before they did so. See Letter of Richard Rabin, Apr. 5, 2007. Defendants, in that request, cited Ms. Peters' admitted sharing of information from the depositions with in-house counsel, her representation that Judge Castel's order "expired," and refusal to meaningfully respond to Defendant's proposed confidentiality stipulation. Id.
Defendants additionally requested that as Ms. Peters had recently requested extensive additional document discovery on April 3 (and represented that such discovery was due April 5), the deadline for Defendants' additional production should be extended to April 13, 2007 (albeit that documents should be produced on a "rolling basis"). See Letter of Richard Rabin, Apr. 5, 2007. Defendants requested that the deadline for Plaintiffs' production of discovery be similarly set for April 13 (also albeit that Plaintiffs, in good faith, should produce on a "rolling basis"). Id. Defendants also requested, since Defendants had noticed depositions and Plaintiff had not meaningfully responded, that I order nine depositions starting April 11, 2007. Id.
Ms. Peters, on her part, subsequently wrote the Court on April 6 and proposed a protective order of her own, so as to "remove this apparent obstacle to discovery."*fn95
On April 6, I issued directives to the parties via email. I imposed a confidentiality "standstill," and ordered that all discovery would be on an "Attorneys' Eyes Only" basis (i.e., outside counsel, not in-house counsel). I directed the parties to submit either a joint confidentiality order or separate proposed confidentiality orders by Monday, April 9. I limited depositions to 10 for each side, total, including depositions already taken by Plaintiff.*fn96 I directed the parties to immediately meet and confer and present me with a list of each party's proposed deponents and the place, date, and time of these depositions by April 9, with the proviso that "if agreement is not possible. [the Court] will simply order the depositions and their place and timing [itself]." I adjourned, at Defendants' request, the deadline to respond to Plaintiff's additional document requests to April 13. Similarly, I adjourned the deadline for Plaintiff to provide documents to Defendant. I also provided that Defendants' images in the possession of the third-party vendor should be produced to Plaintiff's counsel after a final ruling on confidentiality.
I. Plaintiff's Motion to Reinstate the TRO
On April 5, Ms. Peters (on behalf of Plaintiff) filed a 2-page motion to reinstate the temporary restraining order against Defendants.*fn97 See "Plaintiff's Motion to Reinstate TRO.", Apr. 5, 2007 ("Pl. TRO Mot."). On April 9, Defendant filed an opposition to Plaintiff's motion, termed the motion "frivolous," and requested fees and costs associated with defending the motion.*fn98 At 7:11 P.M. that day, Ms. Peters requested that the Court "await ruling until such time as plaintiff submits its reply brief to the Court." Email of Kristan Peters, 7:11 P.M., Apr. 9, 2007.
On April 11, Ms. Peters filed a reply. See "Plaintiff's Reply to Defendants' Opposition.", Apr. 11, 2007 ("Pl. TRO Reply"). Procedurally, Ms. Peters "sandbagged" her adversary by not having provided any evidence on three of four points in her original 2-page motion, but then attaching 133 pages of evidence (primarily, but not entirely, in the form of transcripts) in support of her 12-page reply brief. See Wolters Kluwer Fin. Servs. v. Scivantage, 2007 U.S. Dist. LEXIS 27048, at *2-3 (S.D.N.Y. Apr. 12, 2007).
Later, in her Declaration filed with her opposition to the sanctions motion, Ms. Peters averred that she called the Court's law clerk ex parte on April 5 for guidance as to filing the motion to reinstate the TRO. See Peters Decl. ¶ 230. Ms. Peters avers that she mentioned that only "rough draft" transcripts were available. Ms. Peters avers that she asked the clerk whether the Court preferred "rough draft" transcripts or final transcripts at a later date, and that the clerk informed her that the Court preferred final transcripts at a later date. Ms. Peters then avers that she faxed several pages of final transcripts the following day to the Court.*fn99 See generally Peters Decl. ¶¶ 231-32.
Aside from the issue of transcripts, Ms. Peters provided no explanation for why the information in the (new) April 10 Declaration of David Stephens, as well as the (previously-filed) March 20 Declaration of Charles Ross, the March 29 Declaration of Brian Dalia, and the March 30 Declaration of Von Duran, all attached to her reply brief, was not provided in some form with the initial motion. Defendants emailed the Court subsequent to her reply and requested permission to file a sur-reply. See Email of Richard Rabin, Apr. 11, 2007 10:58 A.M. (referring to Plaintiff's "146-page 'reply'," and terming it "new arguments" and "wholly improper"); compare Email of Kristan Peters, Apr. 11, 2007 12:57 P.M.
In any event, on April 12, I denied Plaintiff's motion as procedurally improper gamesmanship, and substantively "bereft" of evidence. I declined to grant Defendant's request for fees, but warned Plaintiff that future improper conduct might warrant sanctions. See Wolters Kluwer Fin. Servs. v. Scivantage, 2007 U.S. Dist. LEXIS 27048, at *4. Substantively, Ms. Peters (on behalf of Plaintiff) provided no new evidence that showed a "likelihood of success on the merits," or "sufficiently serious questions going to the merits," that would have warranted reconsideration of my decision to dissolve the TRO on March 29.*fn100 See id. at *3-4. I made clear that "[a]s a hearing is scheduled for April 26 regarding Plaintiff's application for a TRO, reinstatement can, if it turns out to be appropriate, occur at that juncture." Id. at *4.
J. Plaintiff's Motion for Contempt
Following my April 6 directive imposing a "standstill" and extending Defendants' deadline to produce documents, Ms. Peters moved the same day to, inter alia, hold Defendants in contempt for their failure to produce documents by the previous April 5 deadline.*fn101 Citing "obstruction of discovery," and Defendants' "fail[ure] to move for a protective order pursuant to Fed. R. Civ. P. 26(c)," despite Defendants' request that I "so order" their proposed protective order, Ms. Peters moved for an order of contempt and sanctions in the form of costs of the motion. Pl. Contempt. Mot. at 1-2.*fn102 Ms. Peters also requested that all discovery (presumably including Plaintiff's more recent requests, now due April 13) be provided that same day, April 6, so that Ms. Peters could adequately prepare for upcoming depositions.*fn103
Ms. Peters also moved to compel the re-deposition of Alves (based on his allegedly "dilatory" behavior), compel the re-deposition of Doss, and to compel the deposition of Charchour. See Pl. Contempt. Mot. at 5.*fn104
This motion for contempt was not fully briefed before Plaintiff voluntarily dismissed its case.
K. Defendants' Motion to Dismiss
On Monday, April 9, Defendants filed a motion to dismiss Plaintiff's Complaint. Defendants argued first that the Court lacked subject matter jurisdiction over the action. Defendants noted that Plaintiff's sole federal claim, out of its ten claims, alleged that Defendants violated two provisions of the Computer Fraud and Abuse Act (CFAA),
18 U.S.C. § 1030(a)(4) and 18 U.S.C. § 1030(a)(2)(c).
The Computer Fraud and Abuse Act is a criminal statute that prohibits "unauthorized access" to computers. (As noted, it is now undisputed that Defendants in this action never had access to Plaintiff's code.) Although a civil right of action exists under the Act, no civil right of action generally exists under the two provisions Plaintiffs base their claims upon. See B.U.S.A. Corp. v. Ecogloves, Inc., 2006 U.S. Dist. LEXIS 85988, at *4 n.5 (S.D.N.Y. 2006). As diversity is plainly lacking (given that both Plaintiff Wolters Kluwer and Defendant Scivantage are Delaware corporations), Defendants averred that no subject matter jurisdiction existed. See Defendants' Mem. Law. in Support of Mot. to Dismiss at 4.
Secondly, Defendants argued that Plaintiffs lacked personal jurisdiction over Defendants, as Doss, Routh, and Alves all worked in Massachusetts, where Scivantage is located. Def. Mem. Law at 9-10. Third, Defendants argued that Plaintiffs failed to state a claim on the merits that any "trade secret" was stolen. See Def. Mem. Law. at 13.*fn105
L. Confidentiality Order
As noted, Defendants provided their proposed confidentiality order to Plaintiffs at 2:08 A.M., Thursday, March 29. On Friday, March 30, according to both Plaintiff's and Defendants' counsel, Judge Castel ordered that the depositions would be "attorneys' eyes only" until such time as the parties could work out a confidentiality agreement and present it to Judge Baer. On April 4, Ms. Peters represented that Judge Castel's order had "expired," but directed her associate Deidre Sheridan to negotiate with Defendants. It became clear fairly quickly that Defendants did not want the order to include in-house counsel, and Plaintiffs did.*fn106
Gold received "for the first time" on Thursday, April 5 for her "review and comment" Dorsey's draft of their proposed confidentiality order from Deidre Sheridan. Gold Decl. ¶ 11; 7/23/07 Tr. 33:2-7, 43:18-25. Gold discussed the draft with Mr. Isaacson, Ms. Peters, and one of Ms. Peters' associates on Friday, April 6, 2007. Gold Decl. ¶ 11.
Gold stated that her intention was to allow in-house counsel to have information in part to "comply with [Plaintiff's] internal and external financial reporting responsibilities."*fn107 Gold Decl. ¶ 10; Peters Decl. ¶ 109. Ms. Peters later reiterated that concern on several occasions but with no support for the proposition.*fn108 Gold stated that Wolters Kluwer had recently been involved in a situation where a confidentiality order prohibited the sharing of litigation information with a client, and that Wolters Kluwer counsel had to approach their adversary for permission to share information in order to effect a settlement. 7/23/07 Tr. 33:20-24.*fn109
On Friday, April 6, at 6:23 P.M. (before Easter weekend), Ms. Peters emailed Defendants' counsel and requested that a lawyer for Defendants commit time to work on the confidentiality order over the weekend, to "get it worked out by no later than tomorrow." Rabin Decl. Ex. 12. Defendants' counsel Mr. Guirguis responded at 7:15 P.M. that night, "Please send us the document as soon as it is ready for our review." Rabin Decl. Ex. 13.*fn110
At 7:50 P.M. that evening, Gold sent a fairly lengthy email to Ms. Peters, Isaacson, and Sheridan outlining her thoughts regarding the access that Wolters Kluwer needed. Peters Ex. A.
On Monday, April 9, at 2:01 P.M., Ms. Peters emailed, for the first time, a proposed confidentiality order to Mr. Rabin, eleven days after Defendants had proposed theirs.*fn111 See Rabin Decl. Ex. 14. Shortly thereafter, at 2:50 P.M., Ms. Peters emailed Plaintiff's proposed confidentiality order to the Court, with a four-page letter brief attached.*fn112 See Rabin Decl. Ex. 15. Subsequently, on April 10, Ms. Peters wrote the Court to relate that she "leapt at the opportunity to work cooperatively," "work[ed] through the Easter weekend," and Defendants' counsel "never bothered to respond." "[Mr. Rabin] just submitted his own version with no effort at negotiation; not even a return call." See Letter of Kristan Peters, Apr. 10, 2007, 1:55 P.M.*fn113 Defendants' counsel, on their part, emailed the Court on April 9 at 6:02 P.M. the original Confidentiality Order they proposed to Defendants on March 29. See Email of James Chou, Apr. 9, 2007 at 6:02 P.M.
Defendants' confidentiality order, which Plaintiffs variously had characterized as "wholly inappropriate,"*fn114 "objectionable" and "broadly worded,"*fn115 provided that "confidential" information could generally be disclosed to outside counsel, in-house counsel, and designated directors, officers, and employees, while "Attorneys' Eyes Only" information could generally be disclosed to outside counsel, and experts (under certain restrictions).*fn116
Plaintiffs' proposed Confidentiality Order, in fact, provided for broader disclosure in a more vaguely worded fashion. Plaintiff's proposed order provided that "confidential" information could generally be disclosed to outside counsel, in-house counsel, experts, or former employees. Plaintiff also proposed that "highly confidential" information, if "technical," could generally be disclosed to outside counsel; designated in-house counsel, including Deidre Gold and Steve Isaacson; designated employees, including Plaintiff's employees Joseph Honor and Charles Ross, who currently work on Plaintiff's Gainskeeper program that competes with Defendants' program;*fn117 designated directors and officers, including Plaintiff's President, Brian Longe, and Plaintiff's parent company's CEO, Chris Cartwright;*fn118 and experts (without specific restrictions).*fn119
Under Plaintiff's proposed order, disclosure of "non-technical highly confidential information" was similar to that of "technical highly confidential information," except that disclosure of "non-technical highly confidential information" to in-house counsel was not explicitly conditioned upon prior notice.*fn120
Defendants' proposed order generally provided for a process by which a party could challenge a disclosure of confidential information before such disclosure was made. Plaintiff's proposed order, although it provided that notice be provided "prior" to disclosure for "technical highly confidential information" (but not, as noted, "nontechnical "highly confidential information") did not provide for such a process.*fn121
Defendants described Plaintiff's proposed order as "non-standard."*fn122 Indeed, it appeared strange that in Plaintiff's lawsuit, where the purported theft of Plaintiff's trade secrets was purportedly at issue, Plaintiff's proposed order sought broader access for a far greater number of people with less formal protections against disclosure -- presuming, of course, that discovery would proceed on a reciprocal basis, as purportedly was occurring at this time. Defendants called it a "Trojan Horse designed to permit what plaintiff's case purportedly was designed to stop: the release of one company's trade secrets to individuals at another company." See Rabin Decl., Ex. 16, at 2. Defendants also noted at this time that Plaintiff has "filed multiple pointless motions designed to drown a smaller adversary in legal fees." Defendants contended as well that Plaintiff intended to "leisurely review defendants' highly confidential documents. while defendants patiently await the discovery that they deserve." Id. at 4. Wolters Kluwer employees, however, generally aver that their intention was not to seek discovery of Defendants' trade secrets, such as source code.*fn123
Defendants also informed the Court at this time that Plaintiff had attempted to serve a subpoena to Defendants' third-party software programming consultants for information, including Defendants' source code, without notifying Defendants. See Rabin Decl., Ex. 16 at 4 n.4.
In any event, by written Order on April 12, noting that "[p]rotective orders that limit access to certain documents to counsel and experts only are commonly entered in litigation involving trade secrets," I substantively adopted Defendants' proposed confidentiality Order with minor changes.*fn124 I provided for neutral procedures such that if either party sought access to "attorneys' eyes only" information for either in-house counsel or employees, either party could apply to the Court for such access and provide an affidavit in support.*fn125 Plaintiff never subsequently sought access for its in-house counsel or employees through these procedures.
The Confidentiality Order provides, inter alia, as noted at length in my Opinion of May 23, 2007, that protected material shall not be used in "any other litigation proceeding."*fn126 See generally Wolters Kluwer Fin. Servs. v. Scivantage, 2007 U.S. Dist. LEXIS 37306 (S.D.N.Y. Mar. 23, 2007). The Confidentiality Order provides for neutral procedures to challenge "attorneys' eyes only" designations. See Wolters Kluwer Fin. Servs. v. Scivantage, 2007 U.S. Dist. LEXIS 37306, at *5-6, *6 n.6. That said, the Confidentiality Order provides that "attorneys' eyes only" material shall remain "attorneys' eyes only," and thus unusable in other litigation, until further Order of this Court, or Defendants' provision of consent. See id. at *5-6, *34 n.32; see also Confidentiality Order ¶ 4(c).*fn127 The Confidentiality Order specifically provides that any obligations thereunder survive the termination of this lawsuit, and that this Court retains jurisdiction after the termination of this lawsuit to enforce the terms of the Order. See id. at *26; see also Confidentiality Order ¶ 13.
M. Defendants' Document Production of April 11, and Related Activity
On April 5, as previously noted, Defendants presented approximately 10,000 pages of documents to the Court, along with a privilege log. Defendants, as noted, requested that I sign Defendants' proposed Confidentiality Order before they produced documents to Plaintiff. See Letter of Richard Rabin, Apr. 5, 2007.
On Plaintiff's part, on April 4, Ms. Peters asked Jeffrey Loop, a Dorsey associate, to oversee Plaintiff's document production. See 9/4/07 Tr. 150:12-23. On April 5, pursuant to Defendants' document requests of April 2, Wolters Kluwer provided a substantial number of documents in electronic form to Dorsey for Dorsey's review. See 7/23/07 Tr. 94:6-96:8, 98:2-4. Dorsey then commenced review that day of that substantial number of electronic documents for responsiveness and privilege and the like.*fn128 See Loop Decl. ¶ 5; 9/4/07 Tr. 153:17-154:5, 164:24-165:18.
On April 6, as noted, I imposed a "standstill" and ordered that all discovery be "attorneys' eyes only" until further order. See Rabin Decl. Ex. 8. I also provided that Plaintiff's additional document requests of April 3 would be due Friday, April 13, and that documents requested by Defendants would also be due Friday, April 13.*fn129 Id.
On Saturday, April 7, Mr. Rabin offered to produce documents to Plaintiff under the "attorneys' eyes only" restriction I had ordered. See Rabin Decl., Ex. 31. Ms. Peters, after first requesting that Defendants split documents into several categories (including a category for in-house counsel), then agreed to accept the documents as "attorneys' eyes only." See Peters Decl., Ex. 8. At 7:24 P.M. that day, Mr. Rabin offered to produce the documents on Sunday or Monday, and reiterated the offer at 8:31 A.M. Sunday morning, April 8. Id. Ms. Peters declined the offer, as it was Easter Sunday, and told Mr. Rabin to stop "harassing" her. Id.*fn130 The lack of civility aside, the Court takes some responsibility for not realizing by this time that Plaintiff's counsel was troubled; similarly, with more oversight, her firm might have reached the same conclusion.
On April 8, Mr. Rabin also inquired as to the status of Plaintiff's documents. Ms. Peters, as noted, referred to her document production as "extraordinary." See Peters Decl. Ex. 8. Ms. Peters represented that "we were ready to produce some documents on April 5, but you refused to produce or exchange." and characterized Plaintiff's efforts as an "extraordinary document effort."*fn131 See Peters Decl. Ex. 8.
On April 10, Ms. Peters emailed Mr. Rabin and the Court's law clerk and asked Mr. Rabin, inter alia, "When will you produce the documents that the court has ordered several times that you produce." Email of Kristan Peters, Apr. 10, 2007, 5:53 P.M. On April 11, at 12:23 P.M., Ms. Peters emailed Mr. Rabin and the Court's law clerk again and stated, inter alia, "[W]e are ready willing and able to provide you with documents, even though you only very recently issued your requests, long after I issued mine to you," again cited Mr. Rabin's purported "continuing failure to produce in violation of the Court's orders," cited her emails of Saturday [April 7] "stating the above," and threatened that she would forward those emails to the Court if Mr. Rabin "pretend[ed] not to know where [she] stand[s] on those issues." Email of Kristan Peters, Apr. 11, 2007, 12:23 P.M.
Later that day, April 11, at Charchour's deposition, Ms. Peters, in support of her argument to re-depose Charchour, stated that "We asked you several times Saturday to produce the documents under [attorneys' eyes only]. Mr. Rabin has still refused to do so." Charchour Tr. at 326. Defendants' counsel Mr. Chou stated that ".[W]e have stood ready, as you know, to produce documents since I believe. Friday [April 6]." Charchour Tr. at 330. Ms. Peters retorted twice, "That's a patent lie." Id.
Regarding Plaintiff's documents, Ms. Peters stated then that she was not under a present order to produce (despite my prior admonitions to produce on a "rolling basis").*fn132 Charchour Tr. at 333. Defendants' counsel offered to produce his 10,000 pages that day if Ms. Peters was willing to make an exchange. Charchour Tr. at 335.*fn133
Ms. Peters responded, "Yes. Sure.. We turned around our production of documents much more readily than you have." Id. at 335-36. Ms. Peters represented that she would provide "everything that we've got," and that although she had not asked her associate Jeff Loop how many documents were ready, "as a seasoned counsel doing this for 20 years. the number of documents is [not] what's relevant. What is relevant is the quality of documents.. We've got a significant amount of documents that are quality documents here to produce. today" Id. at 339, 340.
Subsequent to Ms. Peters' conversation with Mr. Chou at the Charchour deposition, Ms. Peters asked Mr. Loop, for the first time, whether the documents were ready, and how many boxes. Loop Decl. ¶ 7; see 9/4/07 Tr. 167:18-168:10.*fn134 Loop informed her that 500 pages of paper documents were available, i.e. the 500 pages of non-confidential, generally publicly available information that Wolters Kluwer had provided Dorsey on or about April 4. Loop Decl. ¶ 8; see also 9/4/07 Tr. 155:9-14. Loop provided those documents to Ms. Peters. 9/4/07 Tr. 154:17-22. Loop informed Ms. Peters that Plaintiff's substantive, and more substantial, documents would be ready for production to Defendants on Friday, April 13, which Loop understood to be the "scheduled date of the exchange." Loop Decl. ¶ 8. It is hard to believe that Mr. Loop understood the timetable and lead counsel did not.
Defendants produced over 50,000 pages of documents, comprised of 22 boxes, to Plaintiff the night of April 11. Rabin Decl. ¶ 44. Plaintiff, in response, produced the aforementioned 500 pages of non-confidential material to Defendants. Rabin Decl. ¶ 43; 9/4/07 Tr. 154:17-155:14; see also Wolters Kluwer Fin. Servs. v. Scivantage, 2007 U.S. Dist. LEXIS 37306, at *7 n.7 (S.D.N.Y. 2007).*fn135 At some point shortly thereafter, Ms. Peters complained to Defendants about their production in paper form and requested production in electronic form.*fn136
On Thursday, April 12, at 6:34 A.M., Ms. Peters emailed Defendants' counsel Mr. Chou and stated that "Mr. Loop has more documents for you today and more again Friday."*fn137 See Def. Ex. 16. Mr. Chou subsequently contacted Mr. Loop at 9:55 A.M., but did not receive a response regarding documents (nor the documents themselves) that day. See Def. Ex. 17.
On Friday, April 13, in the morning, Loop provided Ms. Peters with three DVDRoms containing 27,000 pages of Plaintiffs' documents, which were ready for production. Loop Decl. ¶¶ 8-9; Tr. 9/4/07 Tr. 155:18-22. Ms. Peters, for reasons which will be related infra, did not produce the documents to Defendants that day.
N. Court-Ordered Depositions
On March 29, as noted previously and as clearly as I could, I requested by letter a schedule for depositions, "obviously not to interfere one with the other," agreed to by the parties by Thursday, April 5. Rabin Decl. Ex. 5.
On April 2, Defendants noticed depositions of nine of Plaintiff's witnesses to take place on Tuesday, April 10 through Saturday, April 14.*fn138 Aside from the one deposition scheduled for Saturday, April 14, Defendants' noticed depositions did not conflict with Ms. Peters' vacation that she previously stated would begin on April 13.*fn139 There is scant evidence, however, that Ms. Peters ever took any substantial steps to arrange for the depositions of her witnesses on the dates for which Defendants had initially noticed depositions.*fn140 It is not clear whether Ms. Gold was informed of Defendants' April 2 notices.*fn141
On April 3, as previously noted, Ms. Peters stated she had "priority" and that she "did not have to present anyone for depositions until [she] finish[ed] [her] depositions. See Routh Depo. at 435. On April 4, at 7:43 P.M., Ms. Peters emailed Mr. Rabin, stated that the schedule "will have to be rearranged," and stated that "if you submit it to the Court as is, I will inform the Court that you refused to confer with me." See Rabin Decl. Ex. 20. On April 5, at 1:40 P.M., Ms. Peters communicated to Mr. Rabin her specific objections to Mr. Rabin's proposed depositions. See Rabin Decl. ¶ 29. Mr. Rabin represented that he would confer with his client. See Rabin Decl. ¶ 30.
Within the hour, at 2:21 P.M. that day, Ms. Peters faxed her proposed depositions schedule to the Court. Ms. Peters proposed a list of 14 (and potentially more) additional depositions, not including the four individual Defendants.*fn142 Ms. Peters' first eight proposed depositions directly conflicted with eight of Defendants' nine proposed depositions, despite my prior admonition that depositions were "obviously not to interfere one with the other."*fn143 Ms. Peters listed the deponents' work addresses under their names. Defendants, in their letter of April 5, requested that I order the depositions of Plaintiff's nine witnesses to proceed beginning on April 11. See Rabin Decl., Ex. 20.
On April 6, as previously noted, I directed the parties to immediately meet and confer and present me, if possible, with a list of each party's proposed deponents and their place, date, and time by April 9, with the proviso that "if agreement is not possible. [the Court] will simply order the depositions and their place and timing [itself]." See Rabin Decl. Ex. 8. I limited depositions to 10 for each side, total, including depositions already taken by Plaintiff, and explicitly limited depositions to one day and seven hours, in accordance with Fed. R. Civ. P. 30(d)(2), unless further Order of the Court was provided.*fn144 Id.
On April 9, Defendants provided, pursuant to my April 6 directive, a proposed schedule for depositions of 10 of Plaintiff's witnesses, to begin on April 12 and continue through April 23. Rabin Decl. Ex. 20. Ms. Peters failed to provide an updated proposed schedule pursuant to my directive.*fn145
Accordingly, on April 11, 2007, at 6:06 P.M.,*fn146 by written Order, I ordered sixteen depositions to go forward -- ten by Defendants, who had yet to take a deposition, and six by Plaintiff (given that Plaintiff had already taken four depositions).*fn147 See Rabin Decl. Ex. 22. As at that time, ten business days remained before the April 26 hearing, I scheduled two depositions per day for the next eight business days. Id.
At 8:59 P.M. on April 11, by email, Ms. Peters requested a conference call, stating, without specifying, that "some of the people scheduled for next week are out of state or away on vacation out of the country."*fn148 See Rabin Decl. Ex. 23. Noting that "the plaintiff never bothered to update her proposed schedule," and that "most, if not all [of Defendant's] notices were out as of April 2," I declined, by written endorsement on April 12, to revise my April 11 order. I additionally stated that "if you can agree other dates before the hearing, that's fine; if not, it is doubtful, depending on your adversary's largess, that they will testify" at the April 26 TRO hearing. Id.
For Thursday, April 12, and Friday, April 13, I scheduled depositions of two of Plaintiff's witnesses (David Stephens, on April 12, at 10 AM, and Charles Ross, on April 13, at 10 AM), and depositions of two of Defendants' witnesses (Michael Wiatrak, on April 12, at 9 AM, and Bill Wagner, on April 13, at 4 PM). Ms. Peters was responsible for scheduling depositions for Plaintiff. As described below, none of the four ordered depositions occurred despite the fact that, had Ms. Peters sought their presence, each and every one (as their testimony revealed) would have been available.
a.Ordered Deposition of Plaintiff's Witness David Stephens
David Stephens, as noted, was ordered to be deposed on April 12 at 10 AM. (Defendants, in their proposed deposition schedule of April 9, had proposed that time. See Rabin Decl. Ex. 21.)*fn149 Stephens was in Chicago for a business meeting. See Isaacson Decl. ¶ 16; 8/15/07 Tr. 122:9-10. He had asked Ms. Peters on April 9 whether he should have gone to the conference in Chicago rather than be in New York or Massachusetts, but it is unclear if he received a response. See WKFS Ex. 12.
At 9:23 P.M, Stephens emailed Ms. Peters and stated that he could land in New York at 3:10 P.M. WKFS Ex. 13. Stephens suggested, inter alia, that the deposition could take place at LaGuardia airport, or that it could be done by video conference. Id. There is no evidence Ms. Peters passed on those suggestions to Defendants' counsel.*fn150
The next day, April 12, at 8:02 P.M., Ms. Peters stated that Stephens was not available the next week (the same week as her vacation). 5/24/07 Peters Decl. Ex. 43. Stephens, for his part, testified that although he had a vacation in Tortola from the 13th through the 18th, that he was "available" during that time to come back to New York and had discussed that with Ms. Peters. See 8/15/07 Tr. 124: 1-13; 136:1-137:13.
b. Ordered Deposition of Defendants' Witness Michael Wiatrak
Michael Wiatrak, as noted, was ordered to be deposed on Thursday, April 12 at 9 AM at Scivantage's offices in New Jersey. As noted, the previous night at 9:07 P.M., Ms. Peters stated in her final email that "I guess we will have to. proceed in NJ at 9." Rabin Decl. Ex. 28. Defendants aver that their counsel worked through the night to prepare for the deposition. Rabin Decl. ¶ 38.
Neither Ms. Peters nor any representative of Plaintiff appeared in order to take Wiatrak's deposition at that time. See Chou Decl. ¶ 47. Defendants' counsel James Chou emailed Ms. Peters and another Dorsey associate, Jeffrey Loop, at 9:55 A.M. without any response. See Chou Decl., Ex. 6. Ms. Peters now avers that her failure to appear was due to "[Defendants' counsel] Mr. Rabin's lack of courtesy and refusal to cooperate regarding the scheduling of Mr. Wiatrak's deposition." Peters Decl. ¶ 129.
c. Ordered Deposition of Defendants' Witness Charles Ross
Ross, as noted, was ordered to be deposed on Friday, April 13, at 10 A.M. Ross was with David Stephens in Chicago on April 11 when Ms. Peters informed Ross of his ordered deposition. See 8/15/07 Tr. 161:10-16, 167:23-168:1, 168:8-23. Ross then traveled to New York on April 12. See 8/15/07 Tr. 161:17-24.
On April 12, at 1:44 P.M., Ms. Peters emailed Defendants' counsel and stated that she had informed Ross to be available at 8 A.M. tomorrow (April 13), and that that would provide 6 1/2 hours for his deposition, as Ross had to "depart for his vacation at 2:30 P.M." See Chou Decl. Ex. 13 at 4. Ross testified that he did not, in fact, have a vacation scheduled on April 13, nor had he told Ms. Peters that he needed to depart at 2:30 P.M. that day, nor had he advised Ms. Peters of any particular time that he would have had to leave his deposition that day. See 8/15/07 Tr. 163:18-164:7, 164:19-21. Ross testified that although he had a vacation scheduled for the next day, April 14, had his deposition been scheduled for April 13, he could have taken the last shuttle to Boston that night at 8 or 8:30 P.M. See 8/15/07 Tr. 163:24-164:4.*fn151
Defendants' counsel Mr. Chou replied at 3:18 P.M. that the deposition would proceed at 10 A.M. as ordered, and that Defendants were entitled to seven hours, but Defendants would proceed if Plaintiff stipulated to resume his deposition no later than Monday, April 23. Id. Ms. Peters replied at 3:23 P.M. that as Ross was away on vacation the next week, and that two depositions were scheduled for April 23, that "if you want more time, you will have to start earlier in the day."*fn152 Id. Ms. Peters alternatively offered Ross for April 24. Id. Mr. Chou responded at 3:50 P.M. that he thought it was feasible to continue Ross' deposition on April 23. Id.
It appears that at some later point that afternoon, Ms. Peters and Mr. Rabin spoke by telephone. At 6:19 P.M., Ms. Peters emailed Mr. Rabin to "confirm [their] conversation" that she "offered to have Mr. Ross available to you starting at 8 am to give you a full 7 hours of deposition time because of his flight schedule, but you declined." 5/24/07 Peters Decl. Ex. 66. Ms. Peters averred that Mr. Rabin stated that "starting his deposition at 10 A.M. would be sufficient." Id. Ms. Peters stated that "[t]herefore, pursuant to your request, we will produce him at 10 A.M." Id.
Mr. Rabin responded to Ms. Peters (and Marc Reiner) at 6:59 P.M. and stated that "For the first time in my career, I find it impossible to communicate orally with opposing counsel." Chou Decl. Ex. 12. Mr. Rabin suggested that "we conduct all future communications in writing." Mr. Rabin then reiterated his prior position regarding Ross's deposition -- that it would begin at 10 AM and last for seven hours, and that any time short of seven hours would be made up at a later date. Chou Decl. Ex. 12.
Ms. Peters, at 8:02 P.M., offered either to begin with Ross on April 13 and finish on April 24, or that Ross could be deposed for a full day on April 24th. Peters Decl. Ex. 43. At 8:41 P.M that night, Mr. Rabin agreed to accept the offer to depose Ross for a full day on April 24. See Peters Decl. Ex. 43; Rabin Decl. ¶ 34 n.1. Ms. Peters forwarded Mr. Rabin's email to Ross at 9:33 P.M. See Peters Ex. G. Ross got off his plane in New York, saw Ms. Peters' email, and returned to Massachusetts the next morning, April 13. See 8/15/07 Tr. 162:2-4, 173:9-13. At 10:11 P.M., Rabin emailed Ms. Peters and stated, "We will take both Ross and Stephens on the 24th, beginning at 10 AM. We are doing this based solely on your representation that [Ross] has a vacation beginning 2:30 tomorrow so that he could otherwise not stay past 2:30. We will confirm the truth of this representation at his deposition." Def. Ex. 49.*fn153
The scheduling of Ross' deposition then became a subject of discussion during the conference call with the Court on the afternoon of Friday, April 13.
d. Ordered Deposition of Plaintiff's Witness Bill Wagner
Wagner, as noted, was ordered to be deposed on Friday, April 13, at 4 P.M., at Scivantage's offices in New Jersey. The prior day, Thursday, April 12, at 2:16 P.M., Plaintiff's counsel Marc Reiner asked Defendants' counsel to confirm his deposition. Defendants did so at 3:21 P.M. Chou Decl. Ex. 9. Ms. Peters subsequently informed Reiner that she wanted to take Wiatrak's deposition instead of Wagner's the next day, in part because she personally wanted to take Wagner's deposition at another time. 9/4/07 Tr. 193:3-15, 239:6-9, 240:6-23. At 4:40 P.M., Ms. Peters emailed Defendants' counsel, informed them that she had informed the court's law clerk (apparently ex parte) that Wiatrak's deposition was not taken, and asked, "Do you mind substituting Wiatrak for Wagner's deposition slot tomorrow?" See Chou Decl. Ex. 13 at 2. At 6:59 P.M., Mr. Rabin emailed Ms. Peters and Mr. Reiner that night and stated that Defendants were producing Wagner as ordered. See Chou Decl., Ex. 12. (Indeed, Mr. Rabin confirmed that Defendants would be producing all its Court-ordered witnesses at the Court-ordered times. See id.)*fn154
The next morning, Friday, April 13, the day scheduled for his deposition, at 9:23 A.M., Reiner emailed Ms. Peters and stated, "I would like to tell [Defendants' counsel] Rabin as early as possible that the Wagner deposition is not going forward today. Can I do that?"*fn155 See Dorsey Ex. N. Ms. Peters emailed back at 10:37 A.M. and directed, "Don't say anything yet to [Defendants' counsel] Rabin as I don't want to tip him off." Id.
At about 3:15 P.M. (apparently shortly after a conference call with the Court, discussed infra), Ms. Peters authorized Mr. Reiner to cancel Wagner's deposition. 9/4/07 Tr. 195:9-17. At 3:23 P.M., Reiner emailed Defendants' counsel and stated, despite Mr. Rabin's previous email confirming, "Since I have not heard from you. we are unable to go forward with the Wagner deposition." See Rabin Decl., Ex. 32. Defendants' counsel Mr. Chou emailed back at 3:55 and rebutted accurately that Mr. Reiner had, indeed, heard back from Defendants.*fn156 Id.
Wagner's deposition did not take place. See Chou Decl. ¶ 61. O. Plaintiffs' Decision to Voluntarily Dismiss Pursuant to Rule 41
On Thursday, April 12, Dorsey counsel began to discuss the idea of a voluntary dismissal of the case pursuant to Fed. R. Civ. P. 41. Ms. Peters, Marc Reiner, Deidre Sheridan, and Jeffrey Loop discussed the idea in a meeting that day at some time before 2:18 P.M. 9/4/07 Tr. 173:11-14. Reiner initially proposed the idea.*fn157 Reiner Decl. ¶ 3; see also 9/4/07 Tr. 180:10-19. Mr. Reiner avers that Ms. Peters initially thought that Plaintiff should address the venue issue with a motion requesting certification of the case to Massachusetts. Reiner Decl. ¶ 4. Reiner asked Loop to send a broadcast email to the trial group asking if anyone had experience with a motion to transfer venue. 9/4/07 Tr. 166:7-14. Loop received a response from another Dorsey associate indicating that it might take months to transfer the case, and if Dorsey was seeking "emergent relief," Dorsey would be better served by dismissing and re-filing. See Ex. KP-34 (Email of Jeffrey Loop, Apr. 12, 2007 2:18 P.M.); 9/4/07 Tr. 166:7-14.
Eventually, Reiner recommended voluntarily dismissing the case, for, according to him, three reasons. The first was that Defendants had filed a motion to dismiss which in part raised the issue of personal jurisdiction over Defendants.*fn158 See 9/4/07 Tr. 181:22-182:10. The second was that given that depositions had been ordered during Ms. Peters' vacation, Dorsey wanted to cancel and reschedule the depositions so that Ms. Peters could be present to defend them.*fn159 Id. The third was that Dorsey had been receiving "adverse rulings from the Court," and rather than "try and persuade the Court otherwise," Reiner thought it was better "to start with a different judge." See 9/4/07 Tr. 182:7-10, 268:7-10. For example, at 2:20 P.M. that day, April 12, Reiner emailed Ms. Peters, Sheridan, and Loop, and stated that ". I like doing something -- i.e., [Rule] 41(a)(1) -- where the judge expressly does not have any discretion to screw us either through action or inaction." Ex. KP-34.
As Reiner points out, on that day, April 12, as noted above, I issued three orders that could be construed as adverse to Dorsey's client (and in two orders, perhaps more germane to Dorsey's concern, I noted deficiencies in counsel's advocacy as a partial basis for my ruling). First, I ordered Defendants' confidentiality order into effect, which denied Plaintiffs' in-house counsel and employees access to "attorneys' eyes only" information (although I provided for a neutral process by which either party could apply to the Court for access by its in-house counsel or employees). Second, at 5:15 P.M., I denied Plaintiffs' request to modify my Order that ordered depositions of Plaintiffs' witnesses to take place, and noted that Plaintiff "never bothered to update her proposed deposition schedule." See Rabin Decl. Ex. 23. Third, at 5:28 P.M., I denied Plaintiffs' motion to immediately reinstate the TRO, and noted that Plaintiff "sandbagged" Defendant with its reply and that further gamesmanship may warrant sanctions (but additionally that a hearing was scheduled two weeks hence for April 26, at which Plaintiff could present argument in favor of reinstatement). See Wolters Kluwer Fin. Servs. v. Scivantage, 2007 U.S. Dist. LEXIS 27048; see also Rabin Decl. Ex. 3.
Reiner and Ms. Peters met with Zachary Carter, head of Dorsey's New York trial group, at some point after the prior meeting among Dorsey counsel and proposed the idea of a voluntary dismissal and concomitant filing of a new complaint in Massachusetts. Carter concurred. See 9/4/07 Tr. 182:18-183:1 (Reiner testimony); 9/11/07 Tr. 13:11-14:5, 17:8-11 (Carter testimony). Carter was aware of the adverse orders and the argument to "start with a different judge," but kept from him was the fact that such a move entailed canceling already-scheduled depositions.*fn160 Reiner subsequently drafted a Rule 41 voluntary dismissal notice.*fn161 See 9/4/07 Tr. 183:5-7.
That day, April 12th, Ms. Peters emailed (apparently at 4:35 P.M., although it is not entirely clear) Ms. Gold a copy of the confidentiality order that I entered that day. See Ex. KP-61; 7/23/07 Tr. 54:6-9 (Gold testimony). At 5:02 P.M., Mr. Reiner forwarded several recent letters and litigation filings in this action to Gold and Isaacson. See Exhibit KP-60. Mr. Reiner included a copy of this Court's deposition order of April
11. Not surprisingly, it does not appear that the two other orders of April 12 that contained language noting deficiencies in counsel's advocacy were forwarded to its client.*fn162
While the idea of a voluntary dismissal gained traction, at 4:02 P.M. that day on April 12, Ms. Peters submitted a formal motion to adjourn the April 26 hearing to May 3 or later, despite her prior multiple representations of immediate "irreparable harm" to her client. Later that day, Ms. Peters submitted a formal motion for a protective order, requesting to adjourn depositions until the "week of April 23rd."*fn163 See Rabin Decl. Ex.
24. Ms. Peters noted that Defendants had provided 22 boxes of discovery to Plaintiff (pursuant, of course, to Plaintiff's extensive discovery demands), and now argued, inter alia, that she needed extra time to review documents before depositions and the hearing, despite the fact that Plaintiff had produced no meaningful discovery of its own. Keep in mind, too, as I had, that this law firm has over 600 lawyers around the country, some of whom I presume are litigators.
That night, Dorsey associate Deidre Sheridan began drafting a complaint, and forwarded comments to Peters, Reiner, and others at 4:04 AM, Friday, April 13. See Dorsey Ex. N. At 9:23 A.M., Friday, April 13, Reiner emailed the Dorsey team, commented that it would be "useful to have local counsel lined up to file this [Massachusetts] complaint," and asked to "confirm that the client is on board."*fn164 See Dorsey Ex. N. Ms. Peters emailed back at 10:37 A.M. and stated, "Still no decision on re-filing from Deidra [Gold]. Don't say anything yet to Rabin as I don't want to tip him off."*fn165 Id. Reiner testified that he understood Ms. Peters' comment about "tipping off" to refer to the voluntary dismissal.*fn166
Ms. Peters averred in various documents and emails at this time, some to the Court, and some to Defendants, that Plaintiff's four main witnesses -- David Stephens, Joseph Honor, Charles Ross, and Plaintiff's CEO Brian Longe -- were all unavailable the following week to be deposed, which was the same week as Ms. Peters' vacation.*fn167
At 12:03 P.M., I emailed the parties, proposed a conference call that afternoon, and asked Plaintiff, inter alia, to "clarify which deponents, specifically, were or are not available (as opposed to the unavailability of particular counsel), and for what reasons." See Rabin Decl. ¶ 7. I also requested that Plaintiff propose a specific alternate date, place, and time for their deposition but that it be before the hearing, and asked both parties to apprise the Court by email of their positions regarding Honor and Longe. Id.
At 12:07 P.M., Defendants emailed the Court and generally opposed Plaintiff's motion for a protective order, stating that "[t]he schedule in this case has not been a mystery," and representing that Ms. Peters had generally and repeatedly refused to provide witnesses for depositions during the preceding days. Because Ms. Peters did not serve the motion for adjournment upon Defendants, Defendants could not respond to it.*fn168
At 12:26 P.M., Ms. Peters represented to the Court merely that Honor and Longe could be deposed April 24 or 25 (after her vacation), without stating the reasons for their unavailability. See Email of Kristan Peters, April 13, 2007, 12:26 P.M.
At approximately 12:30 P.M. Eastern time, Deidra Gold, during a conference call with Isaacson, Brian Longe, David Stephens, and Ms. Peters, authorized Dorsey & Whitney to file a Fed. R. Civ. P. 41(a)(1)(i) notice of voluntary dismissal, as well as to file a new complaint in Massachusetts.*fn169 See Gold Decl. ¶ 17; 7/23/07 Tr. 31:22-32:1; 8/15/07 Tr. 32:10-21; 8/15/07 Tr. 125:17-21. Isaacson states that this authorization to file the Rule 41 dismissal was a "final decision." See Isaacson Decl. ¶ 17; 8/15/07 Tr. 30:22-25, 106:15-107:5; Gold Decl. ¶ 5. Gold's understanding was that the action "would be withdrawn after our discussion and my authorization of that action." 7/23/07 Tr. 39:9-11. Longe's understanding of the decision made on this call substantively echoed Gold's and Isaacson's.*fn170
Both Gold and Isaacson state that they were aware at this time that Defendants had filed a motion to dismiss based in part on lack of personal jurisdiction, although both aver that they had not seen Defendants' motion to dismiss at this time. See Gold Decl. ¶ 17; Isaacson Decl. ¶ 17; 8/15/07 Tr. 33:14-19.
Ms. Peters, on cross, averred that the client authorized Dorsey to first pursue an attempt to have the matter transferred to the District of Massachusetts, and alternatively, if that approach was not successful, to file a notice of voluntary dismissal.*fn171 7/23/07 Tr. 70:4-20. Wolters Kluwer employees, as noted above, do not remember the conversation that way. Gold stated that she did not recall any discussion during this call regarding further discussions with the Court before making a decision to withdraw the case. 7/23/07 Tr. 39:21-25. Indeed, Gold, who authorized the voluntary dismissal as lead in-house counsel, stated that she was not even aware that a conference call was scheduled for later that day.*fn172 7/23/07 Tr. 39:17-21. Gold specifically stated that she was not "presented with contingencies or conditions or anything of that nature."*fn173 7/23/07 Tr. 40:1-2. It is also not clear, but appears extremely unlikely, that the parties discussed the relative likelihood that a district judge might agree to transfer a case to a new venue based on an unbriefed oral application by one party, and that that transfer might be effectuated by the close of business that day. What does appear, and appears beyond peradventure, is that the participants on this call agreed that by the end of the day, one way or another, the case would be in Boston.*fn174
Clearly, all parties understood that depositions would be cancelled by this voluntary dismissal. See 8/15/07 Tr. 33:20-23 (Isaacson stated that it was his "intention" to cancel depositions by this Rule 41 dismissal); see also Gold Decl. ¶ 19 (Gold "understood" that subsequent depositions would be "dismissed promptly after [she] authorized [Dorsey] to file a notice of dismissal."); see also 7/23/07 Tr. 53:19 (Gold stated "It was my expectation.").*fn175
Regarding adverse orders issued by the Court, both Gold and Isaacson testified that they were aware at this time that the Court had entered Defendant's proposed Confidentiality Order, but opined that they had never been told that the Court had declined to modify the deposition schedule nor that the Court had denied Plaintiff's application to reinstate the TRO. See 7/23/07 Tr. 54:3-25 (Gold testimony); 8/15/07 Tr. 34:17-22, 35:16-19, 36:1-4 (Isaacson testimony). It appears that some discussion took place regarding the idea of, as Reiner put it, "starting with a different judge." See 9/4/07 Tr. 58:5-19 (Longe testified, "There was discussion on the phone as to whether we would have a better outcome in Boston.. Deidre [Gold] recommended with Steve [Isaacson] that we move it to Boston on the advice of outside counsel.")
Gold stated that around this time, she was discussing with Dorsey her desire to have a "more orderly managed case," to do a "full case review," and to "proceed more normally." See 7/23/07 Tr. 47:17-48:11.*fn176
P. Friday, April 13 Conference Call with the Court, and Subsequent Voluntary Dismissal
At 2:30 P.M. on Friday, April 13, my law clerk at my direction emailed the parties and asked if it was possible to set up a conference call in 15 minutes. Email of Mark Noferi, Apr. 13, 2007, 2:30 P.M. The parties generally responded affirmatively. Ms. Peters simply responded, "yes." Email of Kristan Peters, Apr. 13, 2007, 2:31 P.M.
Beginning shortly after 2:45 P.M., I held a conference call with counsel for the parties.*fn177 Ms. Peters, and at times Marc Reiner, represented Plaintiff; Mr. Guirguis represented Defendants.*fn178 See 9/4/07 Tr. 183:15-16; Reiner Decl. ¶¶ 5-6; Guirguis Decl. ¶ 15.
At the beginning of the call, which had been scheduled to address depositions, Ms. Peters attempted to raise arguments regarding a transfer of venue in light of Defendants' pending motion to dismiss.*fn179 See 9/4/07 Tr. 183:19-20 (Reiner testimony).
The change of venue motion had not yet been answered and I declined to address the issue at that time. See Reiner Decl. ¶ 6 ("The Court stated that it did not want to address the issue at that time because the issue was not yet ripe."); Peters Decl. ¶ 132. Believe it or not, the parties then discussed the deposition schedule for the following days. See Reiner Decl. ¶ 5; Peters Decl. ¶¶ 154-158 (relating discussions during this conference call regarding scheduling of depositions of various witnesses). This discussion ensued even though Plaintiff's counsel was fully aware that the New York case would be, or for that matter may already have been, dismissed and thus no depositions were even contemplated. At one point, I noted (as I had in my April 12 denial of Ms. Peters' email request to adjourn the depositions) that witnesses would be precluded if their deposition could not be arranged before the April 26 hearing. See Peters Decl. ¶ 156; Guirguis Decl.
¶ 15 ("[Ms. Peters] stated that she would proceed with plans to present certain witnesses irrespective of the Judge's rulings").
Later we learned that during this telephone conference, Jordan Brackett, a first-year Dorsey associate, periodically entered Ms. Peters' office to obtain her handwritten revisions to a draft of the Massachusetts complaint. Brackett Decl. ¶ 6.
Following (or, it is not clear, perhaps during) this conference call after Ms. Peters raised the issue of a transfer, Ms. Peters directed Reiner to file the Rule 41(a)(1)(i) notice of voluntary dismissal.*fn180 9/4/07 Tr. 183:19-21; Reiner Decl. ¶ 6; Peters Decl. ¶ 132.
Reiner signed the voluntary dismissal, and instructed a member of the managing clerk's office to file the notice. 9/4/07 Tr. 183:23-25. Before it was filed, Reiner attached to the voluntary dismissal a standard certificate of service, except that on this certificate of service, where it states "a copy of the foregoing has been sent via U.S. Mail and electronically," Reiner manually crossed out the words "and electronically."*fn181 See Rabin Decl. Ex. 34; 9/4/07 Tr. 184:5-19.*fn182 Reiner then arranged for service on Defendants' counsel by regular mail only. 9/4/07 Tr. 184:1-4. Dorsey did not notify the Court of the voluntary dismissal.*fn183 See 9/4/07 Tr. 184:20-185:9, 185:14-20.
At 5:02 P.M., in an effort to "arrange the depositions more conveniently for all concerned," I emailed the parties, including Ms. Peters, Mr. Reiner, and Ms. Peters' secretary, and offered to adjourn the hearing scheduled for Thursday, April 26 to Monday, April 30, I wrote that "[n]ot hearing from you by 6:00 P.M. tonight, I will assume this is doable for all concerned." See Rabin Decl. Ex. 27. Defendants' counsel responded that adjournment was acceptable. See Def. Exs. 26, 27. Dorsey did not respond.*fn184 The Court continued to be in the dark about the dismissal when I offered to delay the hearing a few days to accommodate counsel.
Q. Filing of Massachusetts Complaint
Reiner finalized the Massachusetts Complaint in the late afternoon and early evening of Friday, April 13.*fn185 Reiner Decl. ¶ 6.
Plaintiffs requested in the Massachusetts action, inter alia, a permanent injunction that would have granted much of the same relief as the previously-dissolved TRO in this Court, as well as injunctive relief against the new Defendant, Bahwan Cybertek. Rabin Decl. Ex. 33, at 30.*fn186 Indeed, Reiner called it "virtually the same Complaint." Reiner Decl. ¶ 6. Plaintiffs also requested attorneys' fees. Id.
Plaintiffs did not immediately serve the Massachusetts Complaint on Defendants.*fn187 Rabin Decl. ¶¶ 47-53.
Defendants aver that Plaintiff used information elicited from the "Attorneys' Eyes Only" depositions in the Massachusetts complaint, in violation of the "attorneys' eyes only" restriction, and the language in the Confidentiality Order that prohibits use of such information in "any other litigation." See Rabin Decl. ¶ 49 n.3; Chou Decl. ¶ 72; Guirguis Decl. ¶ 19. Specifically, Defendants aver that a) the fact that Charchour was aware that Doss, Alves, and Routh had non-disclosure agreements with CCH; b) Scivantage's use of Bahwan Cybertek as its key technological consultant; and c) Scivantage's use of the SharePoint document management system were elicited during depositions. See id. Mr. Reiner avers that he (and other associates) reviewed the Massachusetts Complaint before filing, and "it was [his] intent, and I believe this intent was carried out in full," that the information in the Massachusetts Complaint was either in the previous New York Complaint or independently available from other sources. Reiner Decl. ¶ 6; 9/4/07 Tr. 233:12-234:3.
R. Plaintiff's Failure to Provide Documents on April 13
Plaintiffs did not produce any discovery by the Friday, April 13 deadline, other than the earlier referred-to 500 pages of press releases, etc. As Ms. Peters notes, "[P]ursuant to the Rule 41(a) notice, the discovery order was dissolved." Peters Decl. ¶ 165. Indeed, Ms. Peters avers that ".because counsel was working to get the [Massachusetts] complaint prepared, it did not take the time away from that important task. to do a document exchange." Peters Decl. ¶ 165.
Both Gold and Isaacson opine that they were unaware of Plaintiff's deadline to produce documents that day, April 13. See 7/23/07 Tr. 55:15-56:1; 8/15/07 Tr. 36:25-37:4.
S. Defendants' Delivery of Documents on April 13
At 7:14 P.M., Defendants' counsel James Chou emailed Marc Reiner and Ms. Peters to inform them that Defendants were ready to produce 3 CD-Roms of documents "within the hour." Chou Decl. Ex. 16. Chou also asked Reiner and Ms. Peters to confirm whether they would similarly produce documents, and mentioned that Ms. Peters had represented to him that Plaintiffs would produce two CD-Roms. Id. Interestingly, there was as yet no notice to Defendants of the filing in Massachusetts or that this New York case was to be dismissed. The Plaintiff failed to produce documents, although the Defendants produced documents without any notice as yet that the case was no longer a viable litigation in this District.
Incredible as it may sound, Both Ms. Peters and Mr. Reiner aver that they had no "forewarning" that Defendants would be producing documents to them that night, despite the clear deadline for Defendants to produce on April 13 pursuant to my April 6 directives, and despite Ms. Peters' repeated entreaties to produce documents by that date, or else she would move for sanctions. See Reiner Decl. ¶ 8; Peters Decl. ¶ 166.*fn188
Indeed, Ms. Peters specifically referenced that April 13 deadline on April 11, when, at the Charchour deposition, she pushed Defendants to produce documents earlier. See Charchour Tr. at 328 (".I'm leaving for Turkey on the 13th and producing documents to me for the first time on the 13th is going to impede my ability to prepare on the 26th.")*fn189
Neither Mr. Reiner nor Ms. Peters responded to Mr. Chou's 7:14 P.M. email. Ms. Peters avers that she was on a plane to Turkey at this point.*fn190 Peters Decl. ¶ 46. Mr. Reiner avers that he was in his "colleague's office working," and that he did not check his email at this time, as he did not regularly carry his Blackberry around with him in the office.*fn191 9/4/07 Tr. 190:7-19. While this may be true, it stretches credulity in a case like this, where email flowed back and forth constantly at all hours of the day and night.
At about 7:20 P.M., Akin Gump's employee Evandro Gigante, who was coordinating delivery of the documents with the Dorsey mailroom staff, called Dorsey's mailroom and told them that he was delivering a package to Marc Reiner. Gigante Decl. ¶¶ 7-8. The mailroom told him that Reiner was still in the offices. Id. at ¶ 8. Gigante communicated to Mr. Chou that Mr. Reiner was still in the offices. Chou Decl. ¶ 66. Chou called Mr. Reiner. Mr. Reiner did not answer his phone.*fn192 Chou Decl. ¶ 67. At about 7:50 P.M., Gigante called the same Dorsey mailroom employee, who said he had just seen Reiner in his (own) office. Gigante Decl. ¶ 9. Around 8 P.M., Akin Gump delivered 3 CD-Roms containing 153,000 pages of documents in electronic format to Dorsey & Whitney, along with a privilege log. Rabin Decl. ¶ 45; Rabin Reply Decl. ¶ 15, Ex. 9. Specifically, Defendants provided a) electronic copies of the approximately 54,774 pages it provided on April 11 in paper form, in response to Ms. Peters' further demands, and b) 98,474 pages of additional documents, in accordance with Ms. Peters' requests and the Court's discovery orders.*fn193 See Rabin Reply Decl. ¶ 15, Ex. 8, 9.
At 8:08 P.M., Mr. Chou emailed Mr. Reiner and Ms. Peters to inform them that the documents had been delivered. Chou Decl. Ex. 17. Mr. Chou asked for "the courtesy of a reply" regarding Plaintiff's documents and their intention of proceeding with depositions next week. Id. Neither Mr. Reiner nor Ms. Peters responded.
Mr. Reiner avers that he did not learn of the aforementioned events of Defendants' delivery until he returned home and read his emails around 9 P.M. Tr. 188:17-189:18. I found Mr. Reiner's testimony on this score less than credible.*fn194
The next day, Saturday, April 14, at 11:52 A.M., Defendants' counsel Mr. Rabin emailed Mr. Reiner and Ms. Peters and demanded immediate production of Plaintiff's documents. See Rabin Decl. ¶ 53, Ex. 36. Mr. Rabin also represented that he would move for contempt on Monday, "for this and various other conduct." Id. At 12:53 P.M. that day, Mr. Chou emailed Mr. Reiner and Ms. Peters and asked to "work out the deposition schedule" with regard to witnesses that Ms. Peters had indicated were unavailable. See Chou Decl. Ex. 18. Neither Mr. Reiner nor Ms. Peters responded that day. Defendants' counsel continued to work through the weekend to prepare for the depositions to take place during the upcoming week, Rabin Decl. ¶ 53, still without notice of the filing in Massachusetts.
On Sunday, April 15, 2007, at 1:21 P.M., Ms. Peters emailed Defendant's counsel Chou and Rabin from Turkey. See Peters Decl. ¶ 164; Rabin Decl. Ex. 37. She began, "I assume from below you did not get notice of our 41(a)(1) notice Friday." Rabin Decl. Ex. 37. She stated, "We filed our new claim Friday as well [sic] with a changed complaint," but there was no information as to where the claim was filed, nor in what court. Id. She informed Defendants' counsel that Plaintiff would not serve them until she received notice that they would be representing the Defendants, as "we are filing under seal."*fn195 Id. In fact, the Massachusetts complaint was not filed under seal. See Chou Decl. ¶ 71; Rabin Decl. Ex. 33.*fn196 Ms. Peters concluded, "There are no depositions next week as the previous matter has concluded and a new matter has replaced it." Rabin Decl. Ex. 37.
T. Plaintiff's Subsequent Refusal to Return Discovery
Defendants' counsel Mr. Rabin emailed Ms. Peters and Mr. Reiner at 5:25 P.M., Sunday, April 15, and asked Plaintiff to confirm whether it would return all of the documents, including the electronic documents Plaintiff requested, as they were delivered to Plaintiff's office Friday evening after its voluntary dismissal of the case. See Peters Decl. Ex. 67; Rabin Decl. Ex. 38. Ms. Peters responded, at 5:45 P.M., "No." See Rabin Decl. Ex. 38.
At 6:01 P.M., Ms. Peters responded in more detail, stating that "[Y]ou are misrepresenting the facts about the timing of delivery. The security at the front door and your emails to me on the point and your own delivery service will make clear that you are once again being dishonest." Rabin Decl. Ex. 38. Ms. Peters stated, "We will comply with the timetable set forth in the court's order." Id. Mr. Rabin emailed at 6:02, and 6:05 P.M., stating that the production was made Friday night, per Plaintiff's request, and asked Ms. Peters to confirm its return. See Rabin Decl. Ex. 38; Peters Decl. Ex. 67. At 6:16 P.M., Ms. Peters again refused, stating, "We have no obligation to jump through hoops for you at the first instance you make a demand when we and the court have been asking you to comply with timetables for weeks that you have thumbed your nose at."*fn197
See Rabin Decl. Ex. 38.
Ms. Peters stated, "Assumedly everything is relevant to the new action." Id. Although, as noted, Ms. Peters cited the section of the Confidentiality Order that provided for the return of documents within 90 days, she did not cite to its sections that prohibited use of discovery in "any other litigation proceeding." Ms. Peters continued, "I am on vacation and will review the matter. when I return." Id.
U. Court's Order of April 16 to Return Discovery, and Plaintiff's Subsequent Copying of Discovery
On Monday morning, April 16, 2007, at 9:39 A.M., Defendants' counsel Mr. Rabin informed the Court by email that Plaintiff voluntarily dismissed the case, accepted documents, and now refused to return them. Rabin Decl. Ex. 39. At 10:18 A.M., Mr. Reiner responded and stated that the document production was "contained in a single manila envelope" that "apparently contains discs" and "was delivered to my office on Friday while I was not there." Rabin Decl. Ex. 39. Mr. Reiner represented that the envelope "remains sealed and unopened," and "[t]he envelope will remain unopened until after Mr. Rabin and Ms. Peters have had the opportunity to resolve this matter." Id. Mr. Reiner did not see "any need for an emergency conference call." Id. At 11:21 A.M., Mr. Rabin also informed the Court, for its first inkling, that Plaintiff had filed the Massachusetts action.*fn198 See Rabin Decl. Ex. 41.
At 12:25 P.M., Ms. Peters emailed Reiner and expressed her belief that the information in the transcripts of the depositions (that had been ordered "attorneys' eyes only" by Judge Castel) was not confidential.*fn199 See Peters Ex. 40. Reiner emailed back at 12:29 P.M. and informed Ms. Peters that the Confidentiality Order precluded use of the deposition transcripts in different litigation. See id. ("we will move to file under seal ASAP, but that doesn't address the issue that confidential information cannot be used in a different litigation per the order.") Ms. Peters emailed back at 12:35 P.M. and told Reiner, despite her email to Defendant's counsel the prior day canceling depositions because "the previous matter has concluded and a new matter has replaced it," that "this is not a different litigation. This is the same litigation in another venue." See id.
Shortly before 2:45 P.M., on April 16th, my law clerk set up a conference call between the parties and myself. See Dorsey Ex. P. Reiner informed Ms. Peters by email. Id. After a short exchange, at 3:17 P.M., Ms. Peters emailed Mr. Reiner and stated, "I am going to want a copy made of the discs no matter what the judge says. We have a right to retain this because it is derivative of our info. I will take the heat for that decision, but I am going to want a copy made no matter what."*fn200 Id.
The conference call with Mr. Rabin and Mr. Reiner began at about 3:20.*fn201
9/4/07 Tr. 198:20-22. The substance of the conversation was Defendants' request to have the documents returned. 9/4/07 Tr. 200:9-11; Rabin Decl. ¶ 57. Reiner raised the argument that the Massachusetts litigation was substantively the same as the new litigation. 9/4/07 Tr. 200:14-23. Reiner also raised Plaintiff's concerns that Defendants would "spoliate" evidence. 9/4/07 Tr. 200:14-23. In part to cap the escalating controversy over Plaintiff's accusations of spoliation, and according to both Mr. Reiner and Mr. Rabin, I ordered Dorsey to return the documents that Defendants had produced into the Court's custody and to do so within 24 hours. 9/4/07 Tr. 200:24-201:3; Rabin Decl. ¶ 57.
At 3:48 P.M., Mr. Reiner emailed Ms. Peters in Turkey to inform her of the results of the call. Reiner informed Ms. Peters that "the Court ordered all of the documents be sent to the Court within 24 hours."*fn202 Dorsey Ex. Q. In one more shocking example of what at best may be described as unprofessional conduct, Ms. Peters emailed back at 3:54 P.M., "This is exactly what I thought would happen which is why I told you I want copies of the disc[s]."*fn203 Id.
Ms. Peters and Mr. Reiner subsequently spoke on the telephone around (most likely slightly before) 4:30 P.M. Eastern time.*fn204 9/4/07 Tr. 203:6-13. Ms. Peters told Reiner that she wanted to have the documents copied, and that Dorsey would retain the copies.*fn205 9/4/07 Tr. 203:14-22. Ms. Peters reiterated that it was "her decision." 9/4/07 Tr. 203:23-204:3. Reiner told Ms. Peters that he didn't think that this was a very good idea, and that he thought it would be better simply to return the documents.*fn206 9/4/07 Tr. 204:4-7; 9/11/07 Tr. 266:1-12. Ms. Peters, according to her, explained to Reiner that if he filed a motion for a protective order that act alone-i.e. the act of filing-created a "legal safe haven."*fn207 9/11/07 Tr. 264:10-17, 268:20-269:7.
Reiner approached a colleague seeking guidance, who suggested he contact Richard Silberberg, a Dorsey partner who also served on Dorsey's management committee and as the head of Dorsey's advocacy practice. 9/4/07 Tr. 72:23-74-12, 77:3-7; 205:6-17. Reiner went to Silberberg's office. 9/4/07 Tr. 77:3-7, 205:18-23. Reiner told Silberberg about the conference call with the Court and that the Court had directed that documents be produced to the Court. 9/4/07 Tr. 77:19-78:3, 205:18-23. Reiner told Silberberg that he had called Ms. Peters in Turkey and told her the results of the conference call, that Ms. Peters had indicated that she wanted to have a copy of the documents made before returning the documents to the Court, and that Reiner had told her not to make copies, but that Ms. Peters had resisted that suggestion. 9/4/07 Tr. 78:3-21, 205:18-23. Reiner told Silberberg that he was concerned that Ms. Peters' course of action would violate the Court's order. 9/4/07 Tr. 78:3-21.*fn208
Silberberg told Reiner that Dorsey would not make copies of these documents and would comply with the Court's order. 9/4/07 Tr. 78:25-79:2, 205:24-206:3. (Silberberg testified that he was not aware at this time that copies were already being made, if they were. 9/4/07 Tr. 80:7-21.) Reiner asked that someone else communicate that information to Ms. Peters, as Reiner had already tried to convince her that copies not be made, and further complicating matters, that Mr. Reiner's wife worked for Ms. Peters' husband at a different organization, making their relationship awkward. 9/4/07 Tr. 79:4-11, 206:5-207:2. Silberberg contacted Zachary Carter, head of the New York trial group, and asked Carter to broach the matter with Ms. Peters. 9/4/07 Tr. 79:12-80:1, 206:5-13; 9/11/07 Tr. 15:2-17.*fn209
Reiner emailed Ms. Peters and Carter at 4:39 P.M. and informed her that Carter would be calling her.*fn210 Dorsey Ex. QQ. Mr. Carter called Ms. Peters in Turkey. 9/11/07 Tr. 17:20-18:16. Carter remembered this conversation as heated.*fn211 9/11/07 Tr. 20:14-17. Ms. Peters expressed her view to Carter that if Dorsey returned the documents to this Court, that I might eventually rule against her and require that the documents be returned to Defendants, and thus the documents would be unavailable to her to use in Massachusetts.*fn212 9/11/07 Tr. 18:21-19:22. Ms. Peters expressed that she wanted to seek a protective order to retain a copy of the documents to use in Massachusetts.*fn213 9/11/07 Tr. 19:23-20:1. Carter told her that seeking a protective order was appropriate, but the mere filing of a protective order would not remove her obligation to return the documents pursuant to the Court's order. 9/11/07 Tr. 20:2-7, 8-14 (".[W]hether she agreed with your order or not she had to comply with it, [and] until and unless she had successfully applied to you for a protective order, we were under an obligation to return the documents to the Court as directed by the deadline that had been set by the Court.").
Carter was unclear on whether he was aware that copies were already made, or in the process of being made, if they were being made. 9/11/07 Tr. 21:9-13. Ultimately, Carter avers that he communicated to Ms. Peters that she could direct the copying of documents, so long as all the copies were delivered to the Court by the deadline to return documents if Dorsey had not successfully obtained a protective order in the meantime.*fn214
9/11/07 Tr. 21:14-22:1, 23:18-24:5. Carter understood, however, that the turnaround time to draft a protective order, let alone receive action upon it by the Court, by the next afternoon was quite short.*fn215 9/11/07 Tr. 23:3-24:5.*fn216
At (it appears) about 5:30 P.M. or so, Ms. Peters attempted to call her secretary at Dorsey.*fn217 9/12/07 Tr. 420:19-22. Dorsey's secretary supervisor, Eve Morris, overheard the page for Ms. Peters' regular secretary, and as Ms. Peters' secretary had left for the day, Ms. Morris answered.*fn218 Id. Ms. Peters asked Ms. Morris to make copies of documents, and to work with Marc Reiner on the project. 9/12/07 Tr. 420:23-421:7. Ms. Morris called Reiner, informed him that Ms. Peters had directed her to make copies of the documents, and asked where the documents were located. 9/4/07 Tr. 204:16-21; 9/12/07 Tr. 421:12-14. Reiner told her where the documents were, although Ms. Morris testified that Reiner was "reluctant to speak" to her and said, "I really don't want anything to do with this."*fn219 9/12/07 Tr. 421:15-20; 9/4/07 Tr. 205:1-5. At 5:53 P.M., Ms. Morris emailed both Ms. Peters and Mr. Reiner and informed them that another Dorsey employee "was in the process of having the 22 boxes of documents picked up. and copied overnight." Ex. KP-41.
At 6:31 P.M., Ms. Peters left a voicemail for Mr. Reiner telling him that she had spoken with Mr. Carter, that she had spoken with the secretary, Eve Morris, that the documents would be copied, and that a motion would be made to Judge Baer seeking the immediate transmission of the documents to Massachusetts.*fn220 See Dorsey Ex. R. (transcription of voicemail). Ms. Peters added that Dorsey would "not retain a copy." See id. Ms. Peters also directed that a motion be made to the Massachusetts Court, wherein "we should attach the copies of the transcript. and maybe the reply brief that we filed so that. Judge Stearns' court can see what we are talking about." Dorsey Ex.
At 6:49 P.M., Ms. Peters followed up with an email to Reiner confirming the plan and, stating, inter alia, that Judge Stearns in Massachusetts now had "joint jurisdiction." Peters Ex. 39.*fn221 Reiner emailed back and again expressed concern regarding the provisions of the Confidentiality Order, stating that the motion to Judge Stearns "may be a bit tricky since the evidence of spoliation, etc. is still Highly Confidential."*fn222 Id. Ms.
Peters responded at 7:00 P.M. and, inter alia, stated flatly, "Evidence of spoliation is not still highly confidential." Id. Ms. Peters represented that she would draft the motion to this Court. Id.
Reiner, according to him, felt that even though Dorsey was copying documents that the Court had ordered to be returned, because Dorsey would not be retaining those documents past the Court's deadline to return them, Dorsey was (technically) complying with the Court's order.*fn223 9/4/07 Tr. 211:24-212:9. See also, Tr. 224:3-16.
The next morning, Tuesday, April 17, Reiner instructed an associate to draft a protective order to this Court, as he had seen no draft from Ms. Peters, and the deadline to return documents was approaching.*fn224 9/4/07 Tr. 212:19-213:1. At 11:15 A.M., Reiner forwarded that draft to Ms. Peters. Dorsey Ex. S. Around this time, Dorsey gave instructions to a mailroom employee to bring the original 22 boxes of documents down to the Court, but to wait outside the courthouse and not deliver them until the motion for a protective order had been filed and Dorsey gave the go-ahead. 9/4/07 Tr. 219:16-220:4.
At 12:15 P.M., Ms. Peters emailed back with comments, and reiterated that she envisioned that Dorsey would "do the copying necessary whilst filing a protective order."*fn225 Dorsey Ex. T. At 12:19 P.M., in response to an email from Reiner asking about the timing of delivery of boxes to the Court, Ms. Peters responded that "we should send the motion before we send the documents." Peters Ex. W. Ms. Peters, in contradiction to her earlier voicemail providing that Dorsey would "not retain a copy," now added that "[o]nce all the copies are made," Reiner should send Defendants' original documents to this Court, but "retain the copies of the 22 boxes until such time as Judge Baer rules on our motion."*fn226 Peters Ex. W. Ms. Peters and Reiner traded emails about the draft of the motion for a protective order during the next two to three hours. See Dorsey Ex. T.
At 2:55 P.M., Reiner emailed Ms. Peters, informed her that the boxes were due shortly, and asked her if she had any further comments on the motion. Dorsey Ex. T.
At some point this day, Reiner spoke with Isaacson.*fn227 Reiner mentioned that Defendants had produced additional documents on Friday, April 13, that the Court had requested that they be returned, and that Dorsey was in the process of drafting a motion to transfer the documents to the Massachusetts court. See 8/15/07 Tr. 37:15-39:13. Isaacson instructed him not to file the motion and to return the documents to this Court.*fn228 See 8/15/07 Tr. 39:3-13.
V. Court's Order of April 17 to Return Discovery
On Tuesday, April 17, 2007, at approximately 2:45 P.M., Dorsey's mailroom employee delivered 22 boxes of Defendants' discovery from Plaintiff, as well as the aforementioned envelope that contained three CD-Roms, and Defendants' privilege log. Contrary to Mr. Reiner's prior representation, however, that envelope was not sealed and was opened. My law clerk emailed the parties at 3:02 P.M. to communicate this information.*fn229 See Rabin Decl. Ex. 40.
Around this time, Reiner spoke with Carter and informed him that copies of the documents had already been made (without a motion having been filed, let alone acted upon) and that the Court's law clerk had communicated that the envelope containing CDs had been opened. 9/4/07 Tr. 217:14-20; 9/11/07 Tr. 24:6-25:11. Carter expressed surprise that copies of the CDs had been made before the motion had been filed.*fn230
9/4/07 Tr. 217:14-20, 9/11/07 Tr. 24:6-25:11. Carter and Reiner agreed to notify the Court that copies had been made. 9/4/07 Tr. 217:21-218:2.
At 3:36 P.M., Mr. Reiner informed the Court that Dorsey had made "copies of those documents. in connection with a motion we plan to file shortly," because the "issue of spoliation will be before Judge Stearns."*fn231 Rabin Decl. Ex. 41. Mr. Rabin responded at 4:03 P.M. that he was "incredulous," and would have remained ignorant of the unsealing and copying were it not for my law clerk's email. Rabin Decl. Ex. 42. Mr. Rabin also noted that the "spoliation" issue is a "phantom of plaintiff's imagination," since the documents were now in the custody of this Court. Id. Mr. Rabin requested the return of all copies of all documents in its possession to the Court immediately. Id.*fn232
Mr. Rabin noted that the Confidentiality Order barred the use of documents in other litigation (including the Massachusetts action), and at 4:15 P.M., specifically noted the language of Paragraph 7(a) of the Confidentiality Order that stated, inter alia, that protected material could not be used in "any other litigation proceeding." See id.; see also Email of Richard Rabin, Apr. 17, 2007 4:15 P.M. Mr. Reiner reiterated, at 4:15 P.M. (despite his prior warnings to Ms. Peters), that "[c]opies of the documents were made so that Judge Stearns may have a copy." See Email of Marc Reiner, Apr. 17, 2007, 4:15 P.M.*fn233
At 6:17 P.M, Isaacson emailed Ms. Peters, copying Gold, and summarized "from his notes" the points that Ms. Gold made at the end of their Friday conversation, which included, inter alia, that "we are okay with filing the [Massachusetts] complaint, with no request for an expedited discovery process," that "we need to have a more detailed review of the case with you. before proceeding with the Massachusetts action beyond filing the complaint," and that "if we proceed, early on we need to address the protective order with the Court in Massachusetts."*fn234 Ex. WKFS 18.
Sometime this Tuesday evening, Reiner called Ms. Peters and requested to be removed from the case, owing particularly to the awkward situation of their spouses working together. 9/4/07 Tr. 229:17-230:11.
On Wednesday, April 18, at 9:16 A.M., after Ms. Peters responded to Isaacson's email, Gold emailed Peters (copying Isaacson) and reiterated her desire for a "sit down. after we had the chance to review what we could legally have access to from the prior proceeding." Ex. WKFS 18. Gold asked as well that the client be more fully informed "along the way" than perhaps had been requested in Ms. Peters' prior work for the company. Ex. WKFS 18. Gold also stated, "We expect to review pleadings in advance of their filing." Id.
Also on Wednesday, April 18, in the morning, Dorsey returned their copies of Defendants' documents to Defendants' counsel at Akin Gump. 9/4/07 Tr. 228:22-229:1. Mr. Reiner also arranged for the return of documents produced separately by Defendant Sanjeev Doss to Doss' separate counsel.*fn235 9/4/07 Tr. 229:7-16.
On Wednesday, April 18, in the afternoon, Ms. Peters removed Reiner from the case. 9/4/07 Tr. 231:15-20. Reiner avers that the reason was the stress of their personal situation with their spouses. 9/4/07 Tr. 230:8-11. Ms. Peters advanced the contention that she fired Reiner from the case because when he returned Doss' documents directly to Doss' counsel the prior day in an effort to comply with my April 17 order, without telling
Ms. Peters, he had (according to Ms. Peters) violated my April 16 order that directed Dorsey to return Defendants' documents to the Court (which, although it goes without saying, was superseded by my April 17 order).*fn236 9/4/07 Tr. 254:23-255:10; 9/11/07 Tr. 280:3-15. At some point this day, Ms. Peters also called the first-year associate Jordan Brackett, directed him that documents and briefs could leave Dorsey's offices only at her direction, and criticized Mr. Reiner's return of the documents.*fn237 Brackett Decl. ¶ 10.
Dorsey witnesses generally agree that at this point and onward, Ms. Peters possessed overall responsibility for the handling of the case, despite being on vacation. See 9/4/07 Tr. 91:23-92:2 (Silberberg testimony); 9/11/07 Tr. 29:7-12 (Carter testimony).*fn238
At 5:03 P.M., Mr. Rabin represented to the Court that he had received only two of the three CD-Roms that I had previously ordered Plaintiffs to return to Defendants. See Email of Richard Rabin, Apr. 18, 2007 5:03 P.M. Mr. Reiner avers that only two copies were able to be made in the short time period that Dorsey possessed the CDs, and thus, only two were returned.*fn239 See Reiner Decl. ¶ 10.
On Wednesday, April 18, 2007, Mr. Rabin also forwarded to the Court Reiner's letter to Defendants of April 17, in which Plaintiff objected to the designation of the deposition transcripts as "attorneys' eyes only," and provided its own designations of "attorneys' eyes only" material in the six transcripts.*fn240 Mr. Rabin also forwarded to the Court Reiner's subsequent letter to Defendants of April 18, in which Plaintiff "clarified" its letter of April 17 to state that it "object[ed] to the designation of any of the defendants' deposition transcripts as "Confidential" or "Attorneys' Eyes Only." Defendants argued at that time that "plaintiff has voluntarily dismissed this suit, leaving no valid reason to. use [the transcripts] in any new action." Defendants specifically requested that Plaintiff turn over to Defendants all copies and originals of the deposition transcripts in this action.
On Thursday, April 19, the Court's law clerk, at my direction, held a conference call with Defendants' counsel Mr. Chou and Plaintiff's counsel Mr. Reiner to ascertain the situation.*fn241 Mr. Reiner represented that he could not answer questions about the missing CD-Roms, as he had been transferred off the case due to "internal staffing issues." Chou Decl. ¶ 78; 9/4/07 Tr. 234:9-235:10. My law clerk asked who could speak about the case. 9/4/07 Tr. 235:3-5. Mr. Reiner represented that as Ms. Peters was in Turkey, and Deidre Sheridan was unavailable at that time, that no one was currently available to speak with the Court. See Chou Decl. ¶ 78; 9/4/07 Tr. 235:3-10.
W. Court's Conversation with Zachary Carter on Thursday, April 19
That afternoon, Thursday, April 19, I contacted Bob Dwyer, the managing partner at Dorsey & Whitney's New York office, who advised that I should contact another partner, Zachary Carter. 9/4/07 Tr. 236:2-5, 9/11/07 30:19-24. My law clerk spoke with Mr. Carter briefly and scheduled a conversation between Carter and I that evening. 9/4/07 Tr. 30:25-31:5.
Mr. Carter subsequently called Ms. Peters in Turkey to discuss the matter with her. Peters Decl. ¶ 197; 9/11/07 Tr. 31:13-32:1. Ms. Peters requested to be on the conference call with the Court. 9/11/07 Tr. 32:2-4. Carter communicated to Ms. Peters that he thought it was in Dorsey's best interest that, given that the Court appeared to be concerned about the conduct of counsel, Ms. Peters not be on the call.*fn242 9/11/07 Tr. 32:5-13, 102:15-103:3. Ms. Peters communicated her concerns of "spoliation" to Mr. Carter. Peters Decl. ¶ 197. While hard to believe, it appears that the concerns about spoliation were concerns about what the Court might do with or to the records.
At 4:34 P.M. that evening, Defendants had faxed to Dorsey (and shortly thereafter, to the Court) a proposed Order that would have required Plaintiff to return and/or destroy all copies of transcripts taken in this action, and communicated at my direction that any counter-proposal would be due by 10 AM the next day. See Dorsey Ex. K.
Mr. Carter then called me at about 7:30 P.M. that night. 9/11/07 Tr. 32:14-17. I expressed concern about Dorsey's compliance with orders, and the fact that no one assigned to the case was available to speak to me about the case. 9/11/07 Tr. 32:20-33:11. I told Carter that I wanted the transcripts of depositions to be returned by noon the following day, Friday, April 20.*fn243 9/11/07 Tr. 33:11-13, 34:9-11, 35:18-25. Carter testified that he considered that to be an order. 9/11/07 Tr. 80:20-22. Carter told me that Dorsey would comply with that deadline. 9/11/07 Tr. 34:6-8.
Mr. Carter then called Ms. Peters in Turkey, where it was approximately 3 A.M., and communicated the contents of our phone call, including my order to return the transcripts by noon the next day. 9/11/07 Tr. 38:7-22. This conversation was heated as well.*fn244 9/11/07 Tr. 40:11-13, 141:10-13. Ms. Peters initially expressed that this Court's order was not a valid order. 9/11/07 Tr. 38:25-39:1, 40:15-17 (Carter testified, "It was difficult to get Ms. Peters to accept that even if she disagreed with the Court's order, that we had to obey it."). Ultimately, however, Carter and Peters agreed to return the transcripts the next day, and to draft a letter to the Court to accompany them. 9/11/07 Tr. 39:1-13. Deidre Sheridan began drafting that letter that night.*fn245 9/11/07 Tr. 39:6-13. Deidre Sheridan also oversaw the collection of transcripts. 9/11/07 Tr. 86:20-87:7.
X. Dorsey's Representation of the "Return" of Transcripts
At some point on the evening of Thursday, April 19 or the early morning of Friday, April 20, Ms. Peters informed Carter that she had copies of "minuscript" drafts of the transcripts at her home in Connecticut. 9/11/07 Tr. 50:18-23, 51:14-20, 114:13-16, 115:13-25, 166:21-167:17.
At approximately 11:20 AM on Friday, Sheridan informed Brackett that all deposition transcripts needed to be returned to this Court by noon. Brackett Decl. ¶ 11. Brackett collected the transcripts from Ms. Peters' office. Id. Ms. Peters' secretary attempted to stop Brackett, telling him that Ms. Peters had directed that no transcripts were to leave the firm without her approval, and that if any did, she (Ms. Peters' secretary) would be fired. Brackett Decl. ¶ 12, 9/12/07 Tr. 405:11-407:20. Brackett collected the transcripts regardless and deposited them at Sheridan's office. Brackett Decl. ¶ 13.
Brackett then collected a redweld from his own office containing transcripts, some of which contained highlighting and flags, and also deposited that at Sheridan's office. Brackett Decl. ¶ 16.
At 11:37 A.M., Sheridan emailed a draft of the letter to the Court to Ms. Peters and Carter.*fn246 See Dorsey Ex. LL. Sheridan's draft contained language that, inter alia, stated that Ms. Peters possessed copies of transcripts at her home, and requested this Court to be able to use in Massachusetts transcripts attached as exhibits to motions and pleadings filed in this Court. See id.
At about 15 or 20 minutes to noon, before the deadline, Deidre Sheridan, with Jordan Brackett, informed Carter that they had additional copies of transcripts that were marked up with attorney notes.*fn247 9/11/07 Tr. 48:18-25, 50:6-23, 59:7-12, 82:22-83:20. Carter indicated to Sheridan to hold those transcripts for review until Ms. Peters returned, rather than returning them to the Court. 9/11/07 Tr. 49:1-8; Brackett Decl. ¶ 16. Presumably, this was because, as later turned out to be the argument, they may have been work product. Of course, even if they were so it would not allow the order that they be delivered to the Court to be disregarded. Brackett, for his part, brought his redweld with the highlighted transcripts back to his office. Brackett Decl. ¶ 16. Brackett then caught a cab and brought the transcripts that did not appear to be highlighted or otherwise marked up to this Court. Brackett Decl. ¶¶ 17-18. Carter, for his part, left shortly thereafter to attend to another unrelated matter in court. 9/11/07 Tr. 55:21-56:3.
Carter testified that, as this was Ms. Peters' case, he assumed Ms. Peters would handle the issue of the transcripts with Deidre Sheridan upon her return. See 9/11/07 Tr. 85:7-12, 106:1-8. Carter did not inform Ms. Peters (or the Court) that these additional transcripts existed, nor direct her to revise the draft of the letter to the Court to reflect that these additional transcripts existed. See 9/11/07 Tr. 96:13-22, 96:23-97:1, 99:23-100:5, 105:18-20, 106:24-107:6, 203:16-18. Nor did Carter instruct Sheridan or Brackett to inform Ms. Peters (or the Court) that these additional transcripts existed, nor direct them to revise or supplement the draft of the letter to the Court to reflect the existence of the additional transcripts. 9/11/07 Tr. 97:24-98:7, 204:20-205:1.
At 12:02 P.M., Ms. Peters emailed Carter and Sheridan regarding Sheridan's draft of the letter to the Court, in which she stated that "this is riddled with factual errors and misstatements," and added that "no submissions should go to the court without my review or the firm will have a malpractice issue." Ex. KP-25; see also 9/11/07 Tr. 186:10-20. Subsequently, in an email to the managing partner of Dorsey's New York office, Ms. Peters clarified which parts of this draft posed, in her opinion, a "malpractice" issue. See Ex. KP-T. Ms. Peters specifically pointed to the part of Sheridan's draft that requested use, in Massachusetts, of transcripts attached as exhibits to motions and pleadings filed in this Court. Id.
Ms. Peters emailed the Court at 12:07 P.M. and stated that "We need another hour to finalize the letter because of the lateness of the Court's order last night." Email of Kristan Peters, Apr. 20, 2007 12:07 P.M. She continued, "In the meantime, an associate working with Zach Carter gathered the transcripts they could find in the office and are bringing them down by taxi now." Id. (emphasis added). Notably, Ms. Peters did not mention any transcripts that she had brought to her home.)
At 12:09 P.M., Ms. Peters forwarded a copy of the draft letter to the Court (it is unclear which draft) to Isaacson stating, "Please review." Peters Ex. D.
At 12:31 P.M., Brackett emailed Sheridan and stated, "Everything is delivered." Ex. KP-56. Brackett provided to the Court a bound original copy, marked "original," and a bound copy, marked "copy," of the five substantive depositions of Defendants taken in this action.*fn248 All copies were stamped "attorneys' eyes only." Generally, the words "attorneys' eyes only" appeared at the top of each page that contained substantive deposition testimony.
Sheridan forwarded Brackett's email to Carter and Ms. Peters at 12:36 P.M. Id. Ms. Peters testified that she thought all the transcripts in Dorsey's possession at that time (aside from the copies at her house) had been returned at this point. 9/11/07 Tr. 202:2-13.
At 1:13 P.M, Ms. Peters emailed a revised draft of the letter to the Court. In that letter, Ms. Peters stated that Mr. Carter "has asked an associate to retrieve all transcripts that could be located relating to the Scivantage matter and has had them provided to the Court."*fn249 Ms. Peters requested in her letter to use the transcripts in the Massachusetts litigation. Ms. Peters' letter did not raise any concerns regarding attorney work product. Ms. Peters letter also made no mention of any transcripts that were kept, at her house or otherwise. Ms. Peters' letter also omitted the language in Sheridan's draft that requested permission from this Court to be able to use, in Massachusetts, transcripts attached as exhibits to motions and pleadings filed in this Court. Letter of Kristan Peters, April 20, 2007.
At 3:46 P.M., Isaacson emailed Ms. Peters and stated that he reviewed her letter. Peters Ex. D. Isaacson reminded Ms. Peters that Gold had approved the seeking of an order to assure "preservation of evidence" in the new case, and asked what the "next step" was. Id.
At 3:55 P.M., Ms. Peters proposed an order to this Court that again requested that Defendants' designations of the depositions as "attorneys' eyes only" be deemed "null and void."
Y. Ms. Peters' Ordering of Additional Copies of Transcripts
On Saturday, April 21, 2007, at 1:03 A.M. Eastern time, while Ms. Peters was still in Turkey, she emailed a Veritext court reporter and stated, "We seem to have misplaced the four discs of the four deposition transcripts you did. Can you please send them to my attention by FEDEX ASAP?"*fn250 Dorsey Ex. H.
Ms. Peters returned to the United States by plane that day. 9/11/07 Tr. 271:17-22. While she was in flight, the Veritext court reporter emailed her back and said that the transcripts would be hand delivered on Monday, April 23.*fn251 Dorsey Ex. I. Ms. Peters received and read that email Sunday morning. 9/11/07 Tr. 273:1-5. The Dorsey log shows that the transcripts were received on Monday, April 23, at 11:54 A.M.
Ms. Peters avers that she subsequently returned the envelope with the transcripts unopened. 9/11/07 Tr. 172:10-13. Ms. Peters avers that she returned them "probably Tuesday," April 24. 9/11/07 Tr. 13-17; see also 9/11/07 Tr. 172:25-175:5.*fn252 (It is unclear if she returned them before or after the Court's directives issued on that day, discussed infra.)
Also on Saturday, April 21, Ms. Peters emailed Sheridan and Brackett and asked them to research several issues, stating, inter alia, ".[T]he client has asked whether an ex parte communication between a judge and an attorney who has not entered an appearance in the case constitutes an order." See Brackett Decl. ¶ 19, Exs. 3, 4.*fn253 The
client did not ask Ms. Peters that question. See 9/11/07 Tr. 202:14-203:6.
Z. Plaintiff's Filing of Transcripts With Her Application For "Emergency" Relief in Massachusetts
On Monday, April 23, at 11:30 A.M., Tom Tinkham, Dorsey's chief administrative partner, emailed Ms. Peters, copying Silberberg and Jonathan Herman, and instructed her that before any further action be taken on the Wolters Kluwer case, "it must be reviewed with Jonathan Herman," another partner in Dorsey's New York office. Dorsey Ex. A; 9/12/07 Tr. 341:12-20, 342:6-19. Tinkham added that "when Rich Silberberg returns to New York, he will decide how we best move forward."*fn254 Dorsey Ex. A. (Silberberg was returning to the office on Thursday, April 26. 9/4/07 Tr. 86:1-5.)
Around this time, Ms. Peters sought to initiate a motion to be filed in Massachusetts for preservation of evidence in Massachusetts. Gold Decl. ¶ 12.*fn255 Gold avers, however, that it was "not [her] understanding that outside counsel would file a TRO or other motion for emergency relief." Id.
On Monday, April 23, Defendants' counsel and Mr. Doss' counsel, separately wrote the Court and alleged that Plaintiff, in fact, continued to retain transcripts of depositions taken in this action. See e.g., Letter of George Richardson, Apr. 23, 2007. At some point that Monday, Ms. Peters had a conference call with the Massachusetts Court. See Peters Ex. D. Later Monday, April 23, at 4:49 P.M., Ms. Peters emailed the Court and requested until Wednesday, April 25, to respond to Mr. Doss' submission and "bring to the court's attention certain law" before this Court rendered any decision. Email of Kristan Peters, Apr. 23, 2007, 4:49 P.M.
At 9:36 P.M., Ms. Peters emailed Isaacson and informed him that "we had a conference call with the [Massachusetts] court today." Peters Ex. D. (It is not clear if the conference call occurred before 4:49 P.M.) Ms. Peters informed Isaacson that "the hearing is scheduled to occur in Boston this Wednesday at 11 AM." Id. Ms. Peters asked Isaacson if he could review pleadings on an expedited basis. Id.
On Tuesday, April 24, at 6:03 A.M., Ms. Peters emailed this Court again, expressed her opinion, inter alia, that the Massachusetts action is "not. a new or different matter, but a continuing matter and therefore all confidential materials can be used in this Massachusetts matter," and requested to bring "certain factual misstatements to the Court's attention before it renders a decision." See Email of Kristan Peters, Apr. 24, 2007, 6:03 A.M. At 9:28 A.M., Ms. Peters emailed this Court again and suggested that "it warrants the time to allow this matter to be properly briefed by both parties.. I would suggest that we take the time to get it well briefed now." See Email of Kristan Peters, Apr. 24, 2007, 9:28 A.M.
At 11:18 A.M., Tuesday, April 24, Dorsey's Massachusetts local counsel emailed Ms. Peters and expressed their concerns about service of the motion papers on Defendants. See Ex. KP-80. Local counsel stated, "The judge is unlikely to look kindly on service very late in the day, given that we are asking for a hearing tomorrow.. [T]he judge is almost sure to ask whether we have sent copies of our motion papers to the defendants' New York counsel, and he will likely be unhappy with us if we have not served them." Ex. KP-80.
At 12:45 P.M., Dorsey partner Jonathan Herman emailed Zachary Carter and asked if filing, in Massachusetts, reply papers from the New York action with deposition transcripts attached would "be a violation of any existing court order of Baer."*fn256 Dorsey Ex. M. Carter emailed back at 1:52 P.M. and stated that using, in Massachusetts, transcripts attached to exhibits would be "fair game."*fn257 Dorsey Ex. M.
At 2:41 P.M., Mr. Rabin informed this Court by email that a hearing regarding discovery matters at Plaintiff's request was scheduled in the Massachusetts action, No. 07-cv-10729, for 11 A.M., Wednesday, April 25. Mr. Rabin alleged that Ms. Peters "has been pressing the Court in Massachusetts for a discovery hearing designed. to try to 'beat' Judge Baer to the punch on these issues," and again requested the return of all discovery, including deposition transcripts. See Rabin Supp. Decl. Ex. 3. Ms. Peters responded to Defendants' counsel and the Court, at 2:52 P.M., and stated, "Your statements. attempting to characterize my motives are completely inappropriate. Nothing new is going to be filed tomorrow in this Massachusetts matter." (emphasis added).*fn258 Rabin Supp. Decl. Ex. 4.
At 2:44 P.M., Mr. Rabin requested from Ms. Peters a courtesy copy of any papers that were filed in connection with the hearing. See Rabin Supp. Decl. Ex. 5. At 2:53 P.M., Ms. Peters refused, as she "could not provide it to anyone other than the parties and their approved counsel." See Rabin Supp. Decl. Ex. 6. Ms. Peters stated that "This is not process. Process has been served." Id. (It appears that process in fact had not been served at that point.) At 2:55 P.M., Ms. Peters informed the individual Defendants that there was a hearing scheduled, but did not attach any papers. See Rabin Supp. Decl. Ex. 9. At 2:59 P.M., Mr. Rabin requested that Ms. Peters provide papers forthwith to the parties, and represented that Charchour had not received anything indicating a hearing. See Rabin Supp. Decl. Ex. 7. At 3:08 P.M., Ms. Peters responded, "Now that you have established that you are no longer their counsel and that we can serve them directly, we will do so. Have a nice day." See Rabin Supp. Decl. Ex. 7. Mr. Rabin reiterated his request at 3:17 P.M.*fn259 Id. At 4:38 P.M., Ms. Peters emailed local counsel and suggested they serve the motion and order "right away to these defendants electronically." Ex. KP-62.
On Tuesday, April 24, at 4:45 P.M., my law clerk, at my direction, sent an email to Ms. Peters, copying other counsel, that began "The Judge would like to remind the parties." that my April 16 verbal order "ordered discovery returned to the Court," "with the intention that the parties would not utilize such discovery.." See Email of Mark Noferi, April 24, 2007, 4:45 P.M. Further, my law clerk, at my direction, stated to Plaintiff's lead counsel, as clearly as I knew how, that "The Judge would like you to represent to the Court whether your law firm currently possesses, or has possessed since Friday, April 20, any copies (in any format) of any transcripts of any depositions taken in this action." Id. The email asked Plaintiff's lead counsel to "please identify which copies of which transcripts your law firm possesses, or has possessed, since Friday, April
20." Id. The email continued, "If [Plaintiff's] law firm does currently possess such copies, the Judge directs your firm to return any such copies to this Court by 11 A.M. tomorrow, pending the disposition of the motions currently before the Court."*fn260 Id.
At 5:06 P.M., local counsel filed the motion in Massachusetts. WKFS Ex. 26. These motion papers show that Plaintiff filed several motions in the District of Massachusetts that day, including a motion for "short order of notice," a motion for an "order to show cause," a motion for extensive "emergency discovery," and a motion to exceed page limits.*fn261 Ms. Peters' name appeared on the various motions. Ms. Peters submitted a declaration, signed by her, and attached prior declarations and exhibits filed in this action, which included 115 pages of the aforementioned "attorneys' eyes only" deposition transcripts from this action. Plaintiff also requested that the Massachusetts Court issue an order returning the deposition transcripts to Plaintiffs "to use in [the Massachusetts] action"; an order that the Massachusetts Court "take custody of the transcripts in this action;" an order that the documents in the custody of this Court "be returned to Plaintiffs;"*fn262 and an order "requiring Defendants to produce documents previously produced but returned."*fn263 Plaintiff apparently requested the Massachusetts Court at some point to hold a hearing on the motions ex parte.*fn264
Despite the Confidentiality Order in place that prohibited use of documents in any other litigation, and my repeated orders of the prior week to return all discovery, including transcripts, Plaintiff's Memorandum of Law stated, "Defendants' counsel. have sought an order from the New York Court that all discovery material -- documents, deposition testimony, written responses to discovery -- be returned to Defendants or destroyed and not used in the ongoing litigation in Massachusetts. No such order has issued from the New York Court and it is difficult to believe that a New York Court would issue such an order."*fn265 See Pl. Mem. Law at 7-8, at Rabin Supp Decl., Ex. 13.
The emergency discovery requested by Plaintiffs resembled the extensive emergency discovery originally requested by Plaintiff in this action, large portions of which were provided by Defendants to Plaintiff before, and after, Plaintiff's voluntary dismissal of this action. See "Emergency Discovery Order," April 25, 2007, No. 07-cv-10729 (D. Ma.). Additionally, some of the emergency discovery requested in Massachusetts was discovery that Plaintiff had requested in this action and I had denied to Plaintiff as overbroad or unnecessary.
At 5:31 P.M., we re-sent my 4:45 P.M. directives to counsel, and Mr. Reiner, Mr. Brackett, and Ms. Peters' secretary, in an effort to ensure that Dorsey received these directives "in case lead counsel is traveling." See Rabin Supp. Decl. Ex. 12. Brackett immediately reviewed the transcripts in his office and realized that several of the transcripts he previously thought were "work product" were in fact unmarked. Brackett Decl. ¶¶ 16, 22.*fn266 Brackett called Ms. Peters and told her that he still had transcripts, some of which were unmarked. Brackett Decl. ¶¶ 22-23; see also 9/11/07 Tr. 162:17-23.*fn267 Ms. Peters told him that she would stop by his office to look at the transcripts. Brackett Decl. ¶ 23. Also at this time, Ms. Peters avers that Sheridan informed her that she also possessed transcripts. 9/11/07 Tr. 278:8-12.
Meanwhile, at 5:31 P.M., Plaintiff's Massachusetts local counsel emailed the moving papers to the individual Defendants. See Rabin Supp. Decl. Ex. 13.
At 5:40 P.M., subsequent to its filing, Ms. Peters emailed the Memorandum of Law to Herman. Ex. KP-66.
At 6:56 P.M., after it was filed, Ms. Peters forwarded the motion for emergency discovery to Isaacson. See Ex. KP-55; 9/11/07 Tr. 332:18-334:10, 334:16-24.
At 7:34 P.M., Ms. Peters emailed the Court to "confirm" her ex parte conversation with my law clerk.*fn268 See Peters Ex. U. Ms. Peters represented that "we attempted to get clarification as to whether the court believes that Dorsey needs to go through its pleading files and remove all exhibits from its pleadings in its files in order to be in compliance with the email we received from you." Id. "Moreover. we would have to scrub our firm computers as well to be in compliance with such a directive by 11 a.m. tomorrow." Id. "You told us in our conversation with you tonight that you did not think it was the Court's intention to require the above, but that you would call the judge. We have not heard back from you. Your email was sent so late that it does not give us time to respond other than this brief email, as we will be in court tomorrow."*fn269
That evening, April 24, with the help of her babysitter who had placed them into a mail cabinet, Ms. Peters found the minuscript transcripts at her house. 9/11/07 Tr. 167:2-19; see also Declaration of Lisa Buendia, Sept. 9, 2007.
Also that evening, April 24, at some point before 8:29 P.M., Defendants filed their Motion for Sanctions and Contempt.*fn270 Defendants' motion began, "This action could be the poster child for bad faith litigation, abuse of process, and utter contempt of the judicial process." See Defendants' Consolidated Memorandum of Law., Apr. 24, 2007 ("Def. Sanctions Mem."), at 1. Defendants moved for sanctions pursuant to Fed. R. Civ. P. 37, Fed. R. Civ. P. 16(f), 28 USC § 1927 and the inherent powers of the court, and for civil contempt. See generally id. Defendants requested sanctions in the form of fees and costs in this litigation, to bar Plaintiff and its counsel from using discovery in this case in the Massachusetts action, to disqualify Plaintiff's counsel from prosecuting the Massachusetts action, and for civil contempt against Plaintiff.*fn271 See generally id.
At 12:33 A.M., Mr. Rabin informed this Court that Ms. Peters "continues to flout the Court's orders" and did file in Massachusetts a "voluminous set of motion papers attaching deposition transcripts in this action," and "sought to cover her tracks by suggesting some 'clarification' was needed on the clear and direct Orders of this Court." See Email of Richard Rabin, Apr. 25, 2007 12:33 A.M. Defendants requested that this Court order Plaintiff to withdraw its Massachusetts filing immediately. Id.
AA. District of Massachusetts Hearing on Plaintiff's Emergency Motions The hearing in the District of Massachusetts proceeded on Wednesday, April 25 at 11 A.M. At the beginning of the hearing, Judge Stearns stated three concerns. First, he stated "this action looks more like an appeal of Judge Baer's order." Secondly, he stated he was "baffled by the request to hold this hearing ex parte. given the history between the parties." Third, he stated that he did not understand "why the papers were not served on the defendants until last night." See Rabin Supp. Decl., Ex. 14, at 4-5. At the end of the hearing, Judge Stearns stated, "Nothing has changed my initial impression of the case. I regard this motion as simply a collateral attack on Judge Baer's prior order.. I do not believe that the plaintiff is before the Court with clean hands." Id. at 30.
BB. Subsequent Actions Relating to Dorsey's Return of Transcripts
At some point on April 25, 2007, Plaintiff filed a "motion to remove confidentiality designations" in this Court and again submitted a proposed order that would declare "Defendants' designations of the depositions in their entirety as CONFIDENTIAL and ATTORNEYS' EYES ONLY" as "null and void."
Meanwhile, in the morning of April 25, Brackett had a messenger deliver his transcripts to Ms. Peters' office. Brackett Decl. ¶ 26.
On Thursday, April 26, David Stephens emailed Gold and Isaacson (without cc'g Dorsey counsel), informed them that Charchour and Routh were chairing a "key industry conference" the next week, and stated that "[h]aving a TRO to prevent their presence would be very helpful to our business," but that he had spoken with Ms. Peters and she informed him that Gold and Isaacson wanted to hold off on "any further TRO action."*fn272
Peters Ex. C.
At some point on the morning of Thursday, April 26, Herman and Ms. Peters discussed the issue of returning transcripts to the Court, and that some of these transcripts may have been work product privileged.*fn273 9/12/07 Tr. 343:14-344:6, 347:23-348:9; Brackett Decl. ¶ 27.*fn274 Ms. Peters communicated to Herman that it was necessary to hold on to the transcripts in order to prosecute the case. 9/12/07 Tr. 345:22-346:3. According to Herman, notwithstanding the possibility of a privilege, Herman directed her to return the transcripts.*fn275 9/12/07 Tr. 345:18-19.
After Ms. Peters' conversation with Herman, Ms. Peters asked Brackett to return to her office so they could review Brackett's deposition transcripts. Brackett Decl. ¶ 28; see also 9/11/07 Tr. 162:12-19. Brackett showed Ms. Peters that some of the transcripts did not contain markings. Id. Regarding the unmarked transcripts, Ms. Peters instructed Brackett to "scribble all over them" so that they would be considered attorney work product, and thus that Dorsey would not have to return them.*fn276 Brackett Decl. ¶ 29. Ms. Peters then told Brackett that she would leave the office for a few minutes so that Brackett could write on the transcripts without her being present.*fn277 Brackett Decl. ¶ 30.
Ms. Peters, when confronted with this testimony, opined that it was all a joke. Brackett, when asked by the Court how he understood Ms. Peters' direction, made it clear that in his view, Ms. Peters was "not joking." Brackett Decl. ¶ 31; 9/12/07 Tr. 419:2-5.*fn278 Brackett circled or underlined the name of the deponent on the front page of each of the previously unmarked transcripts.*fn279 Brackett Decl. ¶¶ 31-32.
Over lunch, Brackett decided to tell Mr. Herman about the incident with Ms.
Peters, and did so. Brackett Decl. ¶¶ 33-34.
At some point in the afternoon, Ms. Peters showed Mr. Herman a draft of an email that she was planning to send to the Court. 9/12/07 Tr. 353:20-354:24; 9/11/07 Tr. 247:15-248:5. Herman expressed his disapproval with some of the language in the email. 9/11/07 Tr. 247:23-248:3, 248:6-10; 9/12/07 Tr. 353:20-354:24.
At 3:05 P.M., Ms. Peters emailed the Court and stated that she had "been pulled five different ways today on a variety of matters," and requested another day to respond to my requests for transcripts and factual representations.*fn280 See Rabin Supp. Decl. Ex.
Shortly before 3:30 P.M., Mr. Herman and David Singer, another Dorsey partner, informed Silberberg that Mr. Brackett had told them about the incident with Ms. Peters, and related Brackett's story to Silberberg. 9/4/07 Tr. 88:17-89:15. Mr. Herman also showed Mr. Silberberg what Herman understood to be a draft of the email that Ms. Peters had proposed to send to the Court. 9/4/07 Tr. 92:3-13; 9/12/07 Tr. 353:20-354:24. Mr. Silberberg expressed his concern about the proposed language. 9/4/07 Tr. 92:10-13.
At approximately 3:30 P.M., Mr. Silberberg met with Mr. Dwyer and Mr. Carter. 9/4/07 Tr. 86:6-87:6, 9/11/07 58:4-15. Silberberg related what he had been told about the Brackett-Peters incident, and the three called Mr. Brackett into the office. 9/4/07 Tr. 92:14-25, 9/11/07 Tr. 60:4-7; Brackett Decl. ¶ 35. Brackett related to the three senior partners his version of events, which was substantively the same as the version of events Herman and Singer had told to Silberberg. 9/4/07 Tr. 92:25-93:10; Brackett Decl. ¶ 35. Brackett also informed Dwyer and Carter that in response to Ms. Peters' direction, he had placed a circle around the names of the parties in the caption of the deposition transcripts. 9/4/07 Tr. 93:9-15; Brackett Decl. ¶ 35. The three senior partners told Brackett that if anything like that happened again, he should immediately inform a partner rather than attempting to deal with the matter himself. 9/4/07 Tr. 93:17-22.
At 4:05 P.M., apparently while this meeting was taking place, I emailed Ms. Peters, reiterated the procedural history of various orders since Plaintiff's dismissal of the case, and once again requested transcripts of any depositions in Plaintiff's possession, this time by 6:15 P.M. that night.*fn281
At 4:41 P.M, also apparently while the partner's meeting with Brackett was taking place, Ms. Peters responded by email to me and requested a conference call.*fn282 See Rabin Supp. Decl. Ex. 19. She stated that "in response to the Court's request of April 20," (wherein she appeared to actually be referring to the Court's April 19 order to Carter), that she was not "made aware of any conference call with the parties present in which such an order was issued." (emphasis added). Id. She added that since she had returned, "like all busy lawyers who are deluged with work once they return from an absence. I have addressed the Court's concerns in many ways in which the Court may not be aware." Id. She continued, "The only transcripts I have been able to turn up since my return," aside from transcripts attached as exhibits to pleadings, are "some copies of transcripts that have attorney notes written all over them."*fn283 Id.; see also 9/11/07 Tr. 257:14-261:10. She added that she had "just learned" that fact "today upon a discussion with that associate."*fn284 Id.
Ms. Peters continued, "I have asked the Firm about the transcripts with attorney notes on them, and they take the position that it is Attorney Work Product and would be inappropriate to provide to the Court because of various legal and ethical issues." See Rabin Supp. Decl. Ex. 19. She added, "because it appears to be an order that implicates risk management issues, we have been busy assessing the ethical, legal, and appellate issues." Id. Ms. Peters requested the Court's "indulgence" and to be permitted to submit the requested letter the next day. Id.
After their meeting with Brackett, Silberberg, Dwyer, and Carter brought Ms. Peters in and told her of the information Brackett had related to them. 9/4/07 Tr. 93:24-25. Ms. Peters told the three senior partners (despite her prior email to the Court representing that the transcripts had "attorney notes written all over them") that whatever she had said to Brackett was a "joke." 9/4/07 Tr. 94:2-5; 9/11/07 Tr. 130:25-131:5. Silberberg told her that even assuming it were a "joke," a concept Brackett flatly denies, it was highly improper and unacceptable. 9/4/07 Tr. 95:5-7. Silberberg (and Carter) learned that there were still more transcripts that had not been turned over. 9/4/07 Tr. 95:18-96:6, 9/11/07 Tr. 59:1-17. Silberberg learned that Ms. Peters still possessed copies of transcripts at her home, and directed that she bring them in the next morning for delivery to the Court. 9/4/07 Tr. 97:6-16, 9/11/07 59:1-17.
Towards the end of her meeting with Dwyer, Carter, and Silberberg, Ms. Peters provided the three senior partners with what she represented to be a copy of her 4:41 P.M. email to the Court. 9/4/07 Tr. 97:25-98:4, 98:15-99:7, 9/11/07 Tr. 59:20-25. Silberberg expressed his anger, both because Ms. Peters had sent the email without Mr. Herman's approval, and because he felt that it contained two inaccurate statements. 9/4/07 Tr. 99:24-100:9. Silberberg felt that the Firm had not expressed the position that it would be inappropriate to provide attorney work product to the Court. See 9/4/07 Tr. 100:16-21, 101:3-8. Silberberg also felt that there was no study of "risk management" issues by the Firm, as Ms. Peters had said. See 9/4/07 Tr. 101:23-102:1.*fn285
At some point during this meeting, either Brackett or Peters brought a number of deposition transcripts into Silberberg's office. See 9/4/07 Tr. 102:7-14. Dwyer, Carter, and Silberberg decided that the firm should return all of the transcripts to the Court the next morning, to be accompanied by a cover letter drafted by Ms. Peters and reviewed by Mr. Herman. See 9/4/07 Tr. 109:12-110:8, 9/11/07 Tr. 60:8-15. This directive was memoralized in an email by Mr. Dwyer, sent the next morning, at 9:02 A.M. See Dorsey Ex. D.
Silberberg decided that while supervision of Ms. Peters on the case should continue, he would not remove her from the matter. See 9/4/07 Tr. 102:23-103:5, 104:17-105:7. The three senior partners directed that Ms. Peters provide Mr. Herman with copies of all recent orders or emails and correspondance with the Court and opposing counsel, and that Ms. Peters would clear all future correspondance with Mr. Herman before sending it. See 9/4/07 Tr. 109:12-110:8. These directives were also memorialized in Mr. Dwyer's email the next morning. See Dorsey Ex. D.
At some point after Ms. Peters' meeting with the senior partners, Ms. Peters related her version of events of the Brackett incident to a junior associate, Eric Epstein.*fn286
Later that day, at 5:52 P.M., in response to Ms. Peters' 4:40 P.M. email, I emailed and pointed Ms. Peters' attention to two cases that unsurprisingly supported the proposition that an attorney may be ordered to turn over "work product" to the Court.*fn287
At approximately 9:15 or so the next morning, Friday, April 27, Ms. Peters apparently lost her temper and accused Brackett of lying about the incident regarding the transcripts.*fn288 Brackett Decl. ¶ 36.
At 9:34 AM that morning, April 27, Ms. Peters forwarded to Mr. Herman as per his instructions a copy of my email directives of 4:05 P.M. the day before. See Dorsey Ex. E. Incredibly, the version of my email that Ms. Peters forwarded to Mr. Herman omitted two substantive portions. The first missing portion consists of the sentences summarizing my Tuesday, April 24 directives and requiring her to represent whether her law firm possessed transcripts and if so to return those transcripts to the Court by 11 AM, Wednesday, April 25.*fn289 The second missing portion consists of the last sentence of those Tuesday, April 24 directives, wherein I noted that Ms. Peters' conduct "[gave] me pause." Compare Dorsey Ex. E with Dorsey Ex. G; see also, e.g., 9/11/07 Tr. 230:7-237:11.*fn290
At 9:29 A.M., Ms. Peters provided Herman with a draft of a letter to the Court to accompany the return of transcripts.*fn291 Dorsey Ex. AA, 9/12/07 Tr. 351:21-352:4. Herman sent back a revised draft at 11:17 A.M. and asked Ms. Peters to "please use" it.*fn292 Dorsey Ex. BB.
On Friday, April 27, at approximately midday, and having failed to make any substantive response to my April 24 order, Ms. Peters delivered in person twenty additional copies of deposition transcripts to the Court. Her final version of the accompanying letter told the Court that her "colleague made an attempt. to locate the transcripts in the office, and missed some." Ms. Peters represented that "most of the transcripts remaining are attorney work product."*fn293 Ms. Peters now represented that "some of the attached transcripts that were brought to my attention yesterday for the first time do not appear to be work product privileged."*fn294 Among those transcripts characterized as "not work product privileged" were clean paper copies of the five substantive depositions of Defendants taken in this case. Those copies were all marked "attorneys' eyes only." Some of those copies included circles around the caption on the front page, as Brackett subsequently testified to.
CC. Conference Call of May 1
On Friday, April 27, at 5:20 P.M, I requested a conference call with counsel for the parties to discuss Plaintiff's request to have the just-delivered copies of transcripts returned so that counsel might use one or more to defend against Defendants' previously-filed motion for contempt and sanctions.*fn295 I also requested the parties' views regarding "a) the effect of the confidentiality order in this action on Plaintiff's request, b) the effect of the Massachusetts litigation, or c) the interplay between those two issues."
On Tuesday, May 1, because of my increased concern about Ms. Peters', I ordered a court reporter to be present for this telephone conference. Ms. Peters stated, "Your Honor specifically stated to me that in clarifying its order that all exhibits to previous pleadings were something that I could use." See Transcript of May 1, 2007, at
16. I corrected Ms. Peters and stated, "I never said that you could use them, never.. [U]nder this kind of language [the language of the confidentiality order] that you all agreed to. you can't use them. I said you could keep them because I didn't want them, but I never said you could use them." Id.*fn296 It continues to confound the Court that the clear language of the agreed-upon confidentiality order was simply overlooked or, worse yet, disregarded.
Ms. Peters also requested that Defendants return to her the 500 pages of "important and valuable" documents that she had produced to Plaintiffs.*fn297 Id. at 8.
I requested letter-briefs of a "couple of pages" from the parties regarding the use of deposition transcripts in other litigation, one from Plaintiff by Thursday, May 3, and an opposition by Defendants by Monday, May 7. See Transcript of May 1, 2007, at 11.
On Wednesday, May 2, I returned one (original) copy of the deposition transcripts at issue to Plaintiff's counsel for use in defending against Defendants' motion for sanctions and contempt, with the explicit proviso that such deposition transcripts were not to be used in "any other litigation, including but not limited to the new action in Massachusetts," and that such deposition transcripts would be returned to this Court after Plaintiff's opposition to Defendants' motion for contempt and sanctions.
DD. Dorsey's Withdrawal as Counsel
On Tuesday, May 1, subsequent to the conference call that day, Jenner & Block attorneys noticed their appearance in this action on behalf of Plaintiff.
On Wednesday, May 2, 2007, at approximately 12:43 P.M., Ms. Peters told Doss' counsel Mr. Richardson, that even if Defendants disqualified her as counsel in the action, she would still "help them in the background" because of her "wealth of knowledge" in the case. Richardson Aff., May 2, 2007 at ¶ 2.
On May 17, 2007, Dorsey & Whitney moved to withdraw as counsel at their client's request. On May 18, 2007, I granted Dorsey & Whitney's motion to withdraw as counsel.
EE. Subsequent Motion Practice
Ms.Peters, on behalf of Plaintiff, submitted a thirteen-page "Motion to Release Transcripts for Use in Continuing Cases" on May 3, in which she moved this Court to allow the use of the deposition transcripts at issue in the Massachusetts Action, No. 07-cv-10729 (D. Ma.), and the New York action filed by Defendants, No. 07-cv-3329 (S.D.N.Y.). Defendants submitted their opposition on May 7. Having requested a letter-brief of a "couple of pages," I denied Plaintiff's request to reply.
On May 23, 2007, I denied Plaintiff's motion to use the deposition transcripts in the Massachusetts action, holding that the Confidentiality Order barred such use. See Wolters Kluwer Fin. Servs. v. Scivantage, 2007 U.S. Dist. LEXIS 37306 (S.D.N.Y. May 23, 2007). I left in place the sanction that Plaintiff's counsel shall return to the Court the deposition transcripts after its defense of the sanctions motion. I advised Ms. Peters to attend a program at the New York County Lawyers Association entitled "Ethical Bounds of Aggressive Litigation," on June 19. Otherwise, I provided that further sanctions, if any, would await a ruling on Defendants' motion of April 24.
FF. Defendants' Instant Motion and Subsequent Procedural History
On April 24, 2007, as noted, Defendants submitted their motion for sanctions pursuant to Fed. R. Civ. P. 37, Fed. R. Civ. P. 16(f), 28 USC § 1927 and the inherent powers of the court, and for civil contempt. On May 9, 2007, Defendants submitted supplemental declarations in support of their motion that detailed Plaintiff's actions in connection with the use of transcripts in Massachusetts. On May 10, Ms. Peters, on behalf of Plaintiff, requested more time to respond. That day, I responded to Ms. Peters' request and extended the date for fully briefed motions to May 30. (I subsequently extended that date to May 31.) On May 16, I also allowed Plaintiff Wolters Kluwer to submit a separate brief.
On May 21, 2007, Ms. Peters, on behalf of Dorsey, submitted a motion for extension of page limits to file a fifty-page opposition brief. "In an abundance of caution," on May 23, I extended the page limit from 35 pages to 39. Again on May 23, I granted Ms. Peters' request for an extra day to file her opposition, until May 24. Also on May 23, Plaintiff, now represented by Jenner & Block, submitted an opposition.
On May 23, as noted, in my opinion that denied Plaintiff's motion to use the deposition transcripts in the Massachusetts action, I noted that I would reserve decision on the sanctions requested by Defendants, and that such sanctions would "abide the fully briefed motion and any hearings that are warranted." See Wolters Kluwer Fin. Servs. v. Scivantage, 2007 U.S. Dist. LEXIS 37306, at *37.
At 12:19 A.M. on May 25, Ms. Peters, on behalf of Dorsey, served her opposition on Defendants with an unfinished version of her Declaration. Rabin Reply Decl. ¶ 4. At 4:45 P.M., May 25, (the Friday before Memorial Day weekend), Ms. Peters served the final version of her Declaration upon Defendants.
Ms. Peters' opposition brief is 39 pages long. Additionally, she submits a 72-page, 283-paragraph Declaration. Several arguments in her brief incorporated by reference wholesale sections of her Declaration. Including those sections, her brief would be 53 pages long.*fn298
Defendants replied on May 31, 2007.
On June 5, counsel Charles Stillman noticed his appearance on behalf of Ms. Peters individually. On May 31, 2007, Ms. Peters, through her counsel, requested oral argument.*fn299 On June 11, I wrote the parties and stated that I believed "the fairest course to all involved" would be to hold an evidentiary hearing, and scheduled that hearing for Monday, June 25. I stated that "the scope of the hearing will encompass the relief requested by Defendants in their motion for contempt, sanctions, and fees." I asked the parties to exchange witness lists by June 15.
On June 12, 2007, Frank Wohl of Lankler, Siffert and Wohl noticed his appearance on behalf of Dorsey & Whitney.
On June 14, 2007, Ms. Peters returned to the Court the original transcript of her statement to the court reporter on April 6, 2007 regarding Charchour's deposition.*fn300
On June 15, the parties exchanged witness lists per my direction. Ms. Peters, through her counsel, stated that she was prepared to "stand on the averments in her declaration," albeit with several reservations.*fn301 See Letter of Charles Stillman, June 15, 2007. The other parties named many (but not all) of the heretofore-named primary actors on their lists.*fn302 Defendants, in their letter, requested guidance on "topics on which [the Court] would like further elucidation." See Letter of Richard J. Rabin, June 15, 2007.
On June 19, 2007, I faxed a reply to Defendants, cc'g other counsel, wherein I stated that "[t]opics of interest to the Court include, but are not limited to, 1) Plaintiff Wolters Kluwer's knowledge, involvement, or direction of the litigation decisions made in this case, including but not limited to the filing of the Complaint, the negotiation of the Confidentiality Order, and the decision to pursue emergency relief in Massachusetts; 2) "Attorneys' eyes only" information disclosed to Plaintiff Wolters Kluwer, if any; 3) [t]he circumstances surrounding the canceling of depositions on April 12 and April 13; 4) [t]he circumstances surrounding Plaintiff's voluntary dismissal of Friday, April 13, and the canceling of scheduled depositions; 5) [t]he circumstances of Defendant's delivery of documents to Plaintiff's counsel on Friday, April 13, and the subsequent copying of said documents by Plaintiff's counsel, the return of documents and transcripts, as well as the role played by lawyers, if any, in this event; and 6) [t]he circumstances surrounding Plaintiff's application for emergency relief in Massachusetts." See Letter of Hon. Harold Baer, Jr., June 19, 2007.*fn303
On Friday, June 22, 2007, the parties requested an adjournment of the hearing scheduled for Monday, June 25 in light of settlement discussions among the parties that the parties "hope[d] [would] obviate the need for a hearing." See Letter of Richard J. Rabin, June 22, 2007.*fn304
On June 25, 2007, I met with the parties in Chambers and explained that notwithstanding their settlement discussions, Defendants' motion for sanctions and contempt raised continuing concerns about the ethical conduct of the parties. I further stated that I felt that in the interests of justice an evidentiary hearing was required to explore the issues raised by Defendants' motion.*fn305 Ms. Peters' counsel inquired as to the issues that concerned the Court, and I reiterated that those issues included, but were not limited to, the six areas of concern I laid out in my June 19 letter. See generally Transcript of June 25, 2007 ("6/25/07 Tr.") at 78-81. I made clear that it was up to the parties as to whether to proceed with their settlement in light of the planned hearing.*fn306 I
requested that Defendants' counsel be present at the hearing to call witnesses in connection with their motion. See Transcript of June 25, 2007, at 88-89. At the parties' request, however, and with that caveat, I granted their request for adjournment until July 23, 2007, after some accommodation amongst the various counsel as to their availability on that date.
On June 26, 2007, I requested by letter from Wolters Kluwer a declaration from Deidre Gold, in-house counsel for Wolters Kluwer. Ms. Gold and Steven Isaacson both provided a declaration on July 10.
Also on June 26, 2007, according to Ms. Peters, Mr. Stillman informed her of his intention to withdraw from her representation, because of disputes over payment, stemming from disputes over indemnification between Ms. Peters and Dorsey. "Motion for a Continuance and for Disqualification of Judge Baer Pursuant to 28 USC 455 Because of Peters' Right to the Testimony of Judge Baer Concerning His Oral Orders," July 20, 2007 ("Peters Mot. For Cont."), see also Affirmation of Charles Stillman, July 9, 2007, at ¶ 3-4. On July 9, Mr. Stillman submitted a formal motion to withdraw. On July 10, I held a conference call with Ms. Peters and Mr. Stillman at which Ms. Peters requested to adjourn the hearing, or alternatively, to allow her to testify at a later date, as she might be placed in the situation of objecting to her own testimony. On July 11, I emailed the parties and granted Ms. Peters' request insofar as allowing her to testify on August 15, but expressed my intention to continue with the hearing on July 23 regarding other witnesses. Mr. Stillman emailed on July 11 that his understanding was that Ms. Peters' sought-for new counsel, Mr. Engel, would submit his notice of appearance the next day, July 12. Mr. Engel did not do so.
On July 13, I held another conference call with Mr. Stillman and Ms. Peters and reiterated my intention to hold the hearing on July 23.
On July 16, I wrote the parties and, inter alia, reiterated that an evidentiary hearing would proceed on July 23, 2007, as previously scheduled, and that I "continue[d] to believe that providing the parties an opportunity to present testimony at a hearing is the fairest way to proceed for all." Letter of Hon. Harold Baer, Jr., July 16, 2007.
Also on July 16, Dorsey, by letter from its counsel, noticed the Court and the parties of its intention to call Richard Silberberg.
On Friday, July 20, Defendant Scivantage informed the Court by letter that it had reached a settlement with all parties (Plaintiff Wolters Kluwer, Dorsey, and Ms. Peters) and requested to adjourn the hearing. Wolters Kluwer seconded that request that day.
Also on Friday, July 20, Ms. Peters submitted a motion to again request to adjourn the hearing, based on the argument that she was not put on notice of the allegations raised against her by Defendants' April 24 motion, as well as the argument that she was forced to proceed at the hearing without counsel. See Peters Mot. For Cont. at 1-3. Ms. Peters averred that she had retained new counsel, Michael Ross. See Declaration of Kristan Peters, July 20, 2007, at ¶ 12. However, Mr. Ross averred in a Declaration that per the terms of his retainer, he was retained to begin his engagement after the hearing on July 23. See Declaration of Michael Ross, July 19, 2007, at ¶ 2. Ms. Peters also requested a trial by jury.
Ms. Peters in this motion also moved for my recusal, based on her averred "right" to call as a witness myself, and the Court's law clerk, as witnesses to my oral orders and untranscribed telephone calls. See Peters Mot. For Cont. at 3-4, citing 28 U.S.C. § 455(b)(1), (b)(5)(iv).*fn307
Also on Friday, July 20, Dorsey submitted a pre-hearing memorandum. See Dorsey & Whitney LLP's Pre-Hearing Memorandum, July 20, 2007. Dorsey's memorandum contained further detail regarding allegations against Ms. Peters (specifically, inter alia, that Ms. Peters directed Reiner not to inform opposing counsel or the Court of the voluntary dismissal, and directed copying of documents after my April 16 order to return documents), and also volunteered admissions of involvement on the part of Dorsey partners (specifically, inter alia, that Carter approved submission of transcripts to the Massachusetts Court). Dorsey requested, inter alia, to seal the hearings because of the danger to lawyers' reputations, analogizing to the long-standing practice of maintaining as confidential lawyer disciplinary hearings. See id. at 12, citing, e.g., Johnson Newspaper Corp. v. Melino, 77 N.Y.2d 1, 7-8 (N.Y. 1990).*fn308
GG. Hearing of July 23, 2007 and Subsequent Procedural History
The hearing began on July 23, 2007, nearly three months after Defendants' motion for contempt and sanctions of April 24, 2007.*fn309 At the beginning of the hearing, I briefly recounted the procedural history of the case since Defendants' motion. See Transcript of July 23, 2007 ("7/23/07 Tr.") at 3-7.
I reiterated that "the issues that will be explored at this hearing will be as I explained on June 11 and again on June 25 the issues raised by defendants motion for sanctions and contempt and the inherent powers of the Court and for civil contempt." 7/23/07 Tr. at 7:15-18.*fn310 I further noted that I had reiterated those issues in my May 23 opinion, and articulated specific issues in my June 19 letter.*fn311 Id. at 8:8-11. I stated that "[a]ny sanctions or contempt imposed. will be based solely on the conduct of this matter." Id. at 7:25-8:1.*fn312 I stated that "[n]o criminal contempt is contemplated at this time, nor has it been.. [I]f evidence received in this hearing leads me to believe that criminal contempt may be warranted, I will provide full notice and opportunity to respond to the parties." 7/23/07 Tr. at 7:21-24.
I denied Ms. Peters' request to adjourn the hearing once again owing to her averred inability to secure representation.*fn313 I declined to grant Ms. Peters' request to have myself or my law clerk testify. I noted that "legal and policy considerations prevent a judge who is presiding over a trial from being called as a witness or subjected to discovery, and this applies to evidentiary hearings as well."*fn314 See 7/23/07 Tr. at 9:18-10:11, citing In re Evergreen Security, 2006 Bankr. Lexis 3727 (Bankr. M.D. Fla. 2006); Cheeves v. Southern Clays, Inc., 797 F. Supp. 1570 (M.D. Ga. 1992); United States v. Elmardoudi, 2007 U.S. Dist Lexis 47123 (N.D. Iowa 2007), citing United States v. Iannello, 740 F.Supp. 171, 189 (S.D.N.Y. 1990). I noted, moreover, that "Ms. Peters' motion for recusal further undercut her efforts to obtain the testimony of my law clerk. which is equally protected." 7/23/07 Tr. at 10:21-24, citing United States v. Iannello, 740 F.Supp. at 187.*fn315 "Where a litigant has sought to depose a law clerk in a case where a recusal motion is pending, courts have typically denied the testimony, as allowing the law clerk to testify would in most cases dictate recusal." 7/23/07 Tr. at 11:2-6, citing Terrazas v. Slagle, 142 F.R.D. 136, 139 (W.D. Tex. 1992).*fn316 I declined to grant Ms. Peters' request for recusal.*fn317 7/23/07 Tr. at 11:8-18.
I granted Dorsey's request to seal the proceedings, owing to the concerns of the danger to lawyers' reputations (albeit with the proviso that I might unseal them at a later time). See 7/23/07 Tr. at 12:5-18.*fn318 Ms. Peters orally requested, inter alia, a stay to appeal to the Second Circuit, which I denied. See 7/23/07 Tr. at 16:4-10, 18.
At the hearing that day, July 23, Deidra Gold and Chip Zyvoloski, in-house counsel for Wolters Kluwer, testified.
On July 27, Michael Ross and Robert Katzberg entered appearances on behalf of Ms. Peters. On July 30, I granted Mr. Stillman's motion to withdraw as counsel.
On August 9, Ms. Peters appealed my decision not to grant her motion for recusal to the Second Circuit, moved the Circuit to stay the sanctions proceedings, moved for an expedited briefing schedule, and moved for permission to file a petition for writ of mandamus. On August 14, the Circuit held that my decision was not appealable as a final order, and denied Ms. Peters' motions. See Order of Aug. 14, 2007, No. 07-3410 (2d Cir. 2007).
On August 10, Akin Gump had moved to withdraw as counsel for Scivantage, Charchour, Routh, and Alves, because Ms. Peters had threatened legal action against those parties if their counsel continued to examine witnesses.*fn319 See Affirmation of Richard J. Rabin, Aug. 10, 2007. I granted Akin Gump's motion on August 15.
On August 13, Ms. Peters' new counsel informed me by letter that Ms. Peters would continue to examine or cross-examine witnesses herself (despite her representations of prejudice owing to her lack of counsel at the July 23 hearing). See Letter of Michael Ross and Robert Katzberg, Aug. 13, 2007.
HH. August 15 Hearing and Subsequent Procedural History
The hearing continued on August 15, 2007.*fn320 Steve Isaacson, in-house counsel for Wolters Kluwer, and David Stephens, Charles Ross, and Joseph Honor, employees of Wolters Kluwer, testified. Most notably, Mr. Honor testified that Ms. Peters disclosed information from the "attorneys' eyes only" depositions to him. See, e.g., 8/15/07 Tr. 207:1-7, 208:6-12.
On August 22, 2007, Ms. Peters wrote an apology of sorts to the Court, without admitting violations of Court orders.*fn321 On August 28, 2007, Ms. Peters' counsel informed the court that Ms. Peters had enrolled in a continuing legal education class called "Hot Topics in Legal Ethics." Letter of Robert F. Katzberg, Aug. 28, 2007.
II. September 4 Hearing and Subsequent Procedural History
The hearing continued on September 4, 2007. Joseph Honor completed his testimony, and Brian Longe (of Wolters Kluwer), and Richard Silberberg, Jeffrey Loop, and Marc Reiner of Dorsey & Whitney testified. Most notably, Mr. Silberberg testified regarding the allegations that Ms. Peters directed Jordan Brackett to alter transcripts before their return to the Court. See, e.g., 9/4/07 Tr. 88:22-89:15. Dorsey also proffered exhibits showing that Ms. Peters sought an additional set of transcripts on April 21, subsequent to my April 19 order to Mr. Carter to return all transcripts. See Dorsey Ex. H, I, J.
On September 5, I directed Mr. Brackett by letter to provide a Declaration to the court by September 10. Mr. Brackett did so. See Declaration of Jordan Brackett, September 9, 2007.
On September 10, Ms. Peters wrote the Court and requested to cross-examine Mr. Brackett and Mr. Herman, and to call Eric Epstein.*fn322 Although it was late in the game and out of turn, I permitted the examinations by Ms. Peters of Brackett, Herman, and Epstein.
JJ. Hearings of September 11 and 12
The hearing continued on September 11, 2007. Zachary Carter testified, and Ms. Peters cross-examined him at length.*fn323 Ms. Peters chose to testify, and testified and was cross-examined at length.*fn324
The next day, September 12, the hearing continued. Jonathan Herman, Eric Epstein, Jordan Brackett, and Eve Morris, all of Dorsey & Whitney, testified. After the testimony, counsel for Wolters Kluwer reached a stipulation with counsel for the three primary individual Defendants that the Defendants had, indeed, taken some confidential and proprietary documents with them from Wolters Kluwer (without specifying which ones).*fn325 The hearing concluded.*fn326
KK. Post-Hearing Procedural History
Following the hearing, I provided the parties the opportunity to submit post-hearing Memoranda of Law. As a result, I received briefs from Dorsey & Whitney, Plaintiff Walters Kluwer, and Kristan Peters.*fn327
As noted above, the Code of Conduct for U.S. Judges provides that when presented with "reliable evidence indicating the likelihood of unprofessional conduct by a.lawyer" a judge should initiate "appropriate action." The lengthy and detailed facts outlined above, all of which occurred over a brief span of less than three months, provide a vacuum-packed picture not only of unprofessional conduct by lawyers but also of a desire to shield one another, their peers, and the public from such disclosures. The next question then is what constitutes appropriate action. As the 2nd Circuit has noted, "[t]o deal effectively, fairly, and efficiently with sanction claims, district courts have a difficult task, but wide discretion." Oliveri v. Thompson, 803 F.2d 1265, 1280 (2d Cir. 1986). Of course, the predicate to the question of what should be done is what can be done.*fn328
Therefore, I will begin by briefly discussing various bases for sanctioning power before setting out the sanctionable conduct in this case.
A. Bases for Sanctions
Because I limited the scope of the hearing to those issues raised in Defendant's original sanctions motion, I will here discuss only those relevant sources of the Court's power to impose sanctions-28 U.S.C. § 1927, the inherent powers of the Court, and Fed. R. Civ. P. 37 and 16(f) for violations committed during the discovery process.*fn329
a. 28 U.S.C. § 1927
28 U.S.C. § 1927 provides that "any attorney or other person admitted to conduct cases in any court" who "so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927.
The purpose of the statute is "to deter unnecessary delays in litigation." Oliveri v. Thompson, 803 F.2d 1265, 1273 (2d Cir. 1986), citing H.R. Conf. Rep. No. 1234, 96th Cong., 2d Sess. 8. "An award under § 1927 is proper when the attorney's actions are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose," such as delay. Oliveri v. Thompson, 803 F.2d at 1273, citing Acevedo v. Immigration and Naturalization Service, 538 F.2d 918, 920 (2d Cir. 1976). See also, Malhiot v. Southern California Retail Clerks Union, 735 F.2d 1133 (9th Cir. 1984) (awarding sanctions under § 1927 for misleading statements); Penthouse International, Ltd. v. Playboy Enterprises, Inc., 663 F.2d 371 (2nd Cir. 1981) (affirming district court dismissal of action for prolonged obstruction of discovery and misleading statements by counsel); Unique Concepts, Inc. v. Brown, 115 F.R.D. 292 (S.D.N.Y. 1987).
Because of the importance of legitimate zealous advocacy, and because § 1927 sanctions are punitive in nature, courts should strictly construe the statute. See, e.g., Braley v. Campbell, 832 F.2d 1504, 1512 (10th Cir. 1987) (en banc). Moreover, a finding of bad faith is a prerequisite to sanctions under 28 U.S.C. § 1927. Oliveri v. Thompson, 803 F.2d 1265, 1273. It should also be noted that sanctions imposed under 28 U.S.C. § 1927 may only be imposed on counsel, not the client. See Oliveri v. Thompson, 803 F.2d at 1273. In addition, "[b]ecause the statute is penal in nature.and is to be strictly construed, no vicarious liability should be imposed on third parties, such as uninvolved partners of violators or law firms. To extend liability beyond violators would not conform with the punitive nature of the statute." Joseph, SANCTIONS TREATISE at 380.
Importantly, sanctions pursuant to § 1927 may be imposed after the underlying action has been dismissed or judgment entered. Id. at 414. Finally, the statute leaves the decision of whether to impose sanctions within the discretion of the court, and the court will typically consider equitable factors in deciding whether sanctions are warranted. Id. at 411.
b. Inherent Powers of the Court
Federal courts necessarily have the power to "protect the administration of justice by levying sanctions in response to abusive litigation practices." Brockton Sav. Bank v. Peat, Marwick, Mitchell & Co., 771 F.2d 5, 11 (1st Cir. 1985) (internal citation omitted). See also Link v. Wabash R.R., 370 U.S. 626, 632 (1962) (noting that inherent powers of a court to impose sanctions is "well-acknowledged"); Chambers v. NASCO, Inc., 501 U.S. 32(1991) (statutes and Federal Rules of Civil Procedure in no way limit inherent powers, but rather expand upon them). Under the inherent power of the court to supervise and control its own proceedings, a court may award a reasonable attorneys' fee to the prevailing party when the losing party has "acted in bad faith, vexatiously, wantonly, or for oppressive reasons." Oliveri v. Thompson, 803 F.2d at 1272, citing F.D. Rich Co., Inc. v. United States ex rel. Industrial Lumber Co., Inc., 417 U.S. 116, 129 (1974).*fn330
In order to impose sanctions pursuant to its inherent power, a finding of bad faith is necessary. See id. ("'Bad faith' may be found, not only in the actions that led to the lawsuit, but also in the conduct of the litigation."), citing Hall v. Cole, 412 U.S. 1, 15 (1973).*fn331 Awards should be imposed based on clear evidence that the challenged actions are entirely without color, and are taken for reasons of harassment or delay or for other improper purposes, and such sanctions require "a high degree of specificity in factual findings." See id. (citations omitted).
As the Supreme Court has recognized, "[b]ecause inherent powers are shielded from direct democratic controls, they must be exercised with restraint and discretion." Roadway Express, Inc. v. Piper, 447 U.S. 752, 764 (1980). Nonetheless, courts have wide discretion in fashioning inherent power sanctions, and "their compensatory aspect is only incidental." Joseph, SANCTIONS TREATISE at 450.*fn332
Sanctions imposed under the inherent powers of the Court may be imposed against either counsel or the client. "Indeed, the only meaningful difference between an award made under § 1927 and one made pursuant to the court's inherent power is. that awards under § 1927 are made only against attorneys or other persons authorized to practice before the courts while an award made under the court's inherent power may be made against an attorney, a party, or both." Oliveri v. Thompson, 803 F.2d at 1273.
c. Discovery Sanctions Pursuant to Fed. R. Civ. P. 37 and 16(f)
Rule 37 promotes "strict adherence to the responsibilities counsel owe to the Court and to their opponents." Blauinsel Stiftung v. Sumitomo Corp., 2001 U.S. Dist. LEXIS 20746, at *17-18 (S.D.N.Y. 2001), citing, e.g., Cine Forty-Second Street Theatre Corp. v. Allied Artists Pictures Corp., 602 F.2d 1062, 1067 (2d Cir. 1979). Rule 37 sanctions "must be applied diligently both to penalize those whose conduct may be deemed to warrant such a sanction, [and] to deter those who might be tempted to such conduct in the absence of such deterrent." Id., citing Roadway Express, Inc. v. Piper, 447 U.S. 752, 763-64 (1980); Update Art, Inc. v. Modiin Publishing, Ltd., 843 F.2d 67, 71 (2d Cir. 1988).
Specifically, Rule 37(d) mandates the imposition of sanctions on a party, or "the attorney advising that party," who "fails to appear" for a deposition "after being served with proper notice." See Fed. R. Civ. P. 37(d). Additionally, Rule 37(b)(2) provides that if a party fails to obey an order to provide or permit discovery, that party, or the attorney advising it, may be liable for expenses including attorneys' fees. See Fed. R. Civ. P. 37(b)(2).
Additionally, Fed. R. Civ. P. 16(f) provides, inter alia, that a party or party's attorney who fails to obey a pretrial or scheduling order or fails to participate in a scheduling or pretrial conference in good faith may be liable for sanctions as set out in Rule 37(b)(2), including attorneys' fees.*fn333 See Fed. R. Civ. P. 16(f). Sanctions may be imposed under 16(f) to punish for improper conduct, United States v. Samaniego, 345 F.3d 1280, 1284 (11th Cir. 2003), and without a finding of bad faith. Rice v. Barnes, 201 F.R.D. 549, 551 (M.D.Ala. 2001) (violation need not be willful to be sanctionable).
B. Sanctionable Conduct
Commonly, as reflected in the discussion of the various sources of sanctioning power above, sanctions are financial in nature-be they attorneys' fees, costs of excess litigation, or even fines. All that having been said-and with ample cause and authority to impose sanctions-after much consideration I have decided not to impose financial sanctions. As explained above, the sanctions motion was withdrawn after the parties negotiated a settlement amongst themselves. While the terms of the settlement are confidential and I see no reason to delve into them further, suffice it to say that I am satisfied that the costs incurred by the parties-both financial and emotional-in this case have been significant and sufficient under the circumstances. This does not, however, include the time and effort expended by Akin Gump in connection with the five days of hearings and I will entertain an application for those fees. If they choose to make such an application, it should be provided on notice to Dorsey & Whitney within ten days from the date of this Opinion, with any response due ten days thereafter.
However, monetary sanctions are not the only, or even the primary, concern here. If among the basic goals of our profession are "protection of the public" and "preservation of confidence by the public," then misconduct such as that on display here deserves to see the light of day.*fn334 As the lengthy recitation of facts above makes clear, there has been no shortage of deplorable behavior here that, without question, rises to the level of sanctionable conduct. Therefore, I impose public reprimand for each instance of such conduct, as I have spelled them out in the following sections. In addition, I will forward a copy of this decision to the Grievance Committee for the Southern District of New York and to the Attorney Disciplinary Committee in the First Department.
a. Plaintiff's Initiation of Action
Plaintiff's Complaint, supported by its moving papers, contained the following sentence: "Defendants have been able to jump start their further penetration of the market by using plaintiff's. software code." Pl. Compl. ¶ 39. I find that this statement in Paragraph 39, in conjunction with Plaintiff's supporting moving papers, was not well grounded in fact, and made in bad faith in an attempt to mislead this Court into granting expedited relief based on the misperceived fact that Defendants had stolen and were at that time currently using Plaintiff's software code. Furthermore, although Wolters Kluwer expressed their concerns to Ms. Peters about this paragraph, in the end, Wolters Kluwer approved its submission.*fn335
Accordingly, under the inherent powers of the Court I reprimand both Ms. Peters and Wolters Kluwer for the misleading statement in Paragraph 39 of the Complaint.*fn336
b. TRO Hearing
Following the submission of Plaintiff's moving papers to this Court that stated that Defendants were "using plaintiff's software code," Ms. Peters gave shifting and evasive answers at the hearing as to whether Defendants had stolen code. She then averred, "Mr. Doss does write code." Given Plaintiff's prior submission to the Court with the intention to secure expedient relief based upon an impression that Defendants had stolen and were using code, I find that Ms. Peters' statement that "Mr. Doss does write code," at a hearing to determine whether that expedient relief should continue, was made in bad faith in an attempt to mislead the Court.
Additionally, at the TRO hearing, Ms. Peters repeatedly mischaracterized my March 22 verbal order, memorialized in writing in my March 23 order, that "beginning Monday, March 26, 2007, Defendants [would] arrange for. imaging" as an Order that Defendants would provide imaging to Plaintiff on Monday, March 26, 2007.*fn337
I find that Ms. Peters' statements were made in bad faith for an improper purpose. Accordingly, under 28 U.S.C. § 1927 and the inherent power of the Court, I hereby reprimand Ms. Peters for those statements.
c. Defendants' Discovery Objections and Requests
On March 29, Ms. Peters requested that I immediately provide dates for production of discovery, despite my admonition to the parties to meet and confer and provide me with a schedule; she requested that I provide a deadline for Defendants' discovery, despite the fact that I had just provided one; she stated that Defendants had violated a Court order by not providing imaging, even though I had just extended Defendants' deadline to do so; and she requested an immediate conference to address her other discovery requests, despite the fact that no outstanding objections existed.
I find that Ms. Peters' March 29 letter was made in bad faith, and for the purposes of harassment (in forcing Defendants to expend time, money, and effort to respond to frivolous arguments and to provide immediate discovery, not to mention forcing the Court to respond to frivolous arguments). Accordingly, under 28 U.S.C. § 1927 and the inherent power of the Court I hereby reprimand Ms. Peters for this March 29 letter.
d. Plaintiff's Motion to the Part I Emergency Motions Judge to Compel Depositions
I decline to sanction Ms. Peters for her motion to the Part I emergency motions judge, Judge Castel, in part because Ms. Peters has put in issue ex parte and/or untranscribed conversations with Judge Castel by requesting his testimony, and I have not relied on any recollection by Judge Castel as to that conversation here.
I do find sanctionable, however, the portion of Ms. Peters' Declaration in which she contradicted her contemporaneous March 30 email by adding a semicolon that subtly or not so subtly changed Judge Castel's order to imply that it only applied to the depositions scheduled for Monday. See Peters Decl. ¶ 79 ("Judge Castel ordered that the deposition of the four witnesses Monday; and Tuesday will be on an attorneys' eyes only basis."). As noted supra, there is a strong inference that Ms. Peters planned to circulate the depositions and knew, too, that her disclosure of questions asked to and answered by Mr. Honor at the Tuesday depositions was witnessed by others, and might come to light, and that her use of the semi-colon to provide a misleading interpretation of Judge Castel's order was made in bad faith. Consequently, under the inherent power of the Court I hereby reprimand Ms. Peters for this statement.
e. Alves' Deposition
Ms. Peters' attempted to create a false record that Alves took unduly long breaks, and then mischaracterizing those breaks on the record as "15 minutes" and "10 minutes," when the record belies her contentions. I find that Ms. Peters' actions were made in bad faith, and under the inherent power of the Court I hereby reprimand Ms. Peters for those actions.
Ms. Peters' contention on the record that the Federal Rules of Evidence provide (without leave) for a deposition of seven hours on more than one day is wholly meritless. I find that this contention was made in bad faith, for the purposes of harassment. Under
28 U.S.C. § 1927 and the inherent power of the Court I hereby reprimand Ms. Peters for this contention.
f. Routh's Deposition
Mr. Honor testified that at Routh's deposition, Ms. Peters disclosed to him questions asked, and answers given, in the deposition. Specifically, Honor recalled that Ms. Peters told him that she had asked a question to Routh about a customer list, and that Routh had answered that he couldn't remember. There is no other source from which Honor could have received this information from what was, and still is, an "attorneys' eyes only" deposition unless he received it from Ms. Peters.
Accordingly, I hereby find that Ms. Peters, in bad faith, disclosed information from an "attorneys' eyes only" deposition to an employee of her client, and thus violated a Court order-the very confidentiality order to which she herself had subscribed-with the knowledge and intention to violate such Court order.*fn338 Under Fed. R. Civ. P. 16(f) and the inherent power of the CourtI hereby reprimand Ms. Peters for this action.
g. Charchour's Deposition
At the end of Charchour's deposition, Ms. Peters again contended on the record that Charchour should be deposed again, despite my now-explicit admonition of April 6 that depositions were limited to one day and seven hours, in accordance with Fed. R. Civ.
P. 30(d)(2). Ms. Peters then threatened defense counsel with further sanctions and contempt motions if Defendants did not comply. The fact that her threats were made in bad faith, for the improper purpose of harassing Defendants by forcing them to respond to unnecessary motions, provide additional discovery, and by driving up their legal fees, is evident from the face of her statements.*fn339
Accordingly, under 28 U.S.C. § 1927 and the inherent power of the Court, I hereby reprimand Ms. Peters for these statements on the record.
h. Ms. Peters' Conduct at Depositions, Generally
At various times in these depositions, Ms. Peters refused to show witnesses documents from which she quoted, showed documents to witnesses from across the table, refused to provide copies of documents to counsel, refused to allow witnesses to take breaks, and threatened to call security when opposing counsel stated his intention to approach a Magistrate with a discovery dispute.
Under the inherent power of the Court I hereby reprimand Ms. Peters for these actions.
i. Plaintiff's April 6 Motion for Contempt and Sanctions
Ms. Peters premised her motion on the argument that Defendants failed to move for a protective order by the previous April 5 deadline. This argument was meritless on its face. Further, as all discovery at this point was "attorneys' eyes only" per my Order, I had addressed Defendants' concerns, and Ms. Peters had no basis to move for contempt and sanctions owing to lack of its production. All Ms. Peters needed to do was accept the discovery under that basis once Defendants offered it to her, which Defendants subsequently and promptly did following my April 6 directives.
Accordingly, I find that Ms. Peters' motion was meritless, made in bad faith, and designed to harass Defendants by forcing them to respond to a meritless contempt motion. Under 28 U.S.C. § 1927 and the inherent power of the Court I hereby reprimand Ms. Peters for these actions.
j. Confidentiality Order
On April 9, Ms. Peters emailed a proposed Confidentiality Order to her adversary for the first time, on the day it was due. Less than an hour later, Ms. Peters emailed her proposed Confidentiality Order to the Court. The next day, April 10, Ms. Peters stated that Defendants submitted their "own version with no effort at negotiation." I find that these actions were made in bad faith, and intended to mislead the Court by implying that Defendants instead acted in bad faith, and thus that this Court should adopt Plaintiff's Confidentiality Order rather than Defendants.
Under the inherent power of the Court I hereby reprimand Ms. Peters for her presentation of the Confidentiality Order to this Court.
k. Defendants' April 11 Production of Documents
Despite several representations by Ms. Peters that Defendants had failed to produce documents, the evidence shows that Defendants' counsel had proffered the documents and that Ms. Peters had refused to accept it, instead choosing later to make statements to the Court that Defendants had failed to comply with their obligations.
Accordingly, I find that Ms. Peters' above statements were misleading and inaccurate, and made in bad faith, with the improper purpose of harassing Defendants by forcing them to respond to Ms. Peters' inaccurate arguments, and for the improper purpose of inaccurately implying to the Court that Defendants failed to comply with Court orders. Under the inherent power of the Court I hereby reprimand Ms. Peters for the above statements.
l. Ms. Peters' Statements Regarding Plaintiffs' Production of Discovery Ms. Peters repeatedly made inaccurate statements about the production of Plaintiff's documents, without any basis for doing so, in an attempt to force Defendants into producing their discovery more quickly. In fact, Ms. Peters only had the 500 pages of generally publicly available documents, and had not discussed with Mr. Loop whether substantive documents were accessible, let alone ready, for production.
Accordingly, I find that Ms. Peters' statements to opposing counsel and the Court were misleading and inaccurate, and made in bad faith, for the improper purpose of gaining an advantage by procuring Defendants' discovery before Plaintiff provided meaningful discovery of its own. Under the inherent power of the Court I hereby reprimand Ms. Peters for these statements.
m. Ms. Peters' and Dorsey's Statements and Actions Regarding Court-Ordered Depositions
The evidence shows that on April 2, when presented with Defendants' notices of depositions, Ms. Peters made scant (if any) effort to produce witnesses for those dates. Ms. Peters also emailed to the Court her proposed schedule without providing Defendants an opportunity to respond. Ms. Peters' proposed schedule directly conflicted with Defendants' noticed depositions. Despite my instructions to do so, Ms. Peters made no effort to confer with Defendants to work out a mutually agreeable solution. Subsequently, I ordered several depositions of Plaintiff's witnesses on April 11.
Regarding David Stephens' deposition, I decline to impose sanctions for the fact that Mr. Stephens was not produced as ordered on April 12.*fn340
Regarding Michael Wiatrak's deposition, despite Ms. Peters' averment the night before that she would take the deposition, no one from Dorsey appeared to take it. Under Fed. R. Civ. P. 37 and the inherent power of the Court I hereby reprimand Ms. Peters for their failure to appear.
Furthermore, I find Ms. Peters' false statements to Defendants' counsel that Ross had a vacation on April 13 and thus could not appear for the full time to be made in bad faith, in an apparent attempt not to produce Ross until she had examined Defendants' witnesses. Under the inherent power of the Court, I hereby reprimand Ms. Peters for these false statements.
Regarding Bill Wagner's deposition, under Fed. R. Civ. P. 37 and the inherent power of the Court I hereby reprimand Ms. Peters for her failure to appear.
Additionally, under the inherent power of the Court I hereby reprimand Mr. Reiner for his emailed statement to Defendants' counsel that the deposition would be cancelled because Dorsey "had not heard" from Defendants. In fact, Dorsey had heard, and Mr. Reiner's email was simply a bad faith subterfuge to allow the deposition to be cancelled without making Defendants' counsel aware of the real reason of which he was well-aware at the time, i.e. that the case was being dismissed.
n. Plaintiff's Voluntary Dismissal of Action
It appears clear now that Dorsey's decision to dismiss was driven in large measure by their desire to "judge-shop," stemming primarily from the fact that I had noted deficiencies in counsel's advocacy, which primarily related to Ms. Peters.*fn341
However, the ultimate decision to voluntarily dismiss was one recommended by Dorsey writ large (including Ms. Peters), and made by the client, Wolters Kluwer. Three Dorsey partners -- Ms. Peters, Mr. Reiner, and Mr. Carter -- were involved with the decision to recommend dismissal.
Fed. R. Civ. P. 41 does not exist to allow a plaintiff to commence in one court, secure extensive emergency discovery, fail to provide discovery itself, and then "judge-shop" to seek expedient relief in a new Court after the original when this Court notes deficiencies in plaintiff's counsel's advocacy. Nor does Rule 41 exist to allow plaintiff's counsel to rearrange the case schedule to its liking. See Blauinsel Stiftung v. Sumitomo Corp., 2001 U.S. Dist. LEXIS 20746 (S.D.N.Y. 2001).
Indeed, Rule 41(d) exists to deter "forum shopping and vexatious litigation" by preventing a plaintiff from dismissing in one court and re-filing the same claim against the same defendant in a new court, as happened here.*fn342 See Blauinsel Stiftung v. Sumitomo Corp., 2001 U.S. Dist. LEXIS 20746, at *26-27, citing Simeone v. First Bank N.A., 971 F.2d 103, 108 (8th Cir. 1992). Accordingly, I reprimand Dorsey for their voluntary dismissal.
o. April 13 Conference Call with Court and Method of Voluntary Dismissal
After the client had made its decision to voluntarily dismiss the case and re-file in Massachusetts, Ms. Peters engaged in a conference call with the Court to address her motions to adjourn the TRO hearing and adjourn depositions. During this call, the subject of scheduling future depositions was discussed. This conference call was a fraud on the Court and on the Defendant, as Ms. Peters knew at that point that those depositions would never happen.
Accordingly, under 28 U.S.C. § 1927 and the inherent powers of the Court I hereby reprimand Ms. Peters for taking part in this call insofar as the scheduling of depositions was concerned rather than telling the true state of affairs to the Court and the Defendants, as Ms. Peters' discussion of depositions was made in bad faith and for the improper purpose of misleading this Court and Defendants.*fn343
Additionally, under the inherent power of the Court I hereby reprimand Mr. Reiner for his decision to file the voluntary dismissal without immediately notifying the other side, as evidenced by his crossing out of the portion of the certificate of service that provided for service by e-mail. That action was also made in bad faith and for the improper purpose of misleading this Court and Defendants. Although Reiner's actions were at Ms. Peters' direction, there is no evidence that Ms. Peters specifically directed Mr. Reiner to cross out those words on that certificate of service. Mr. Reiner apparently took that action on his own initiative.
p. Defendants' Delivery of Documents, and Subsequent Copying of Documents
Dorsey accepted discovery materials after the action here had been dismissed. It strains credulity to suggest that Dorsey did not know the discovery was coming. Even taking Ms. Peters' and Mr. Reiner's averments in their best light, when the discovery was delivered Friday night, Dorsey had no valid basis to accept it, and Dorsey should have left word for it to be returned immediately. Subsequently, I ordered the return of the discovery to this Court to serve as a neutral custodian while the parties worked out their disagreements. Ms. Peters went ahead and had the documents copied, apparently fearful that she might lose her arguments to this Court to keep the documents.
Accordingly, under Fed. R. Civ. P. 16(f) and the inherent power of the Court I hereby sanction Ms. Peters for the copying of documents, in violation of this Court's April 16 order, in bad faith, with the improper purpose of the intention to use them in Massachusetts.*fn344
q. Plaintiff's Return of Transcripts
On Thursday, April 19, I ordered the return of transcripts by noon the following day. At some point, it became clear that Ms. Peters possessed additional transcripts at her home. Sheridan, overseen by Carter, prepared a draft of a letter to the Court that mentioned these additional transcripts. Ms. Peters literally removed that reference in her final letter to the Court, and instead inserted a more vague reference to Mr. Carter asking "an associate to retrieve all transcripts that could be located." Ms. Peters' letter was at best misleading as to her knowledge of the state of the transcripts at the time.
I reprimand Ms. Peters for her failure to mention these transcripts in her letter to the Court, and find bad faith from the totality of the circumstances in this litigation, and Ms. Peters' repeated refusals to return any and all documents and transcripts to the Court when ordered to do so.
Just before the transcripts were due, Carter was informed that additional transcripts existed that he believed were work product. Carter made the decision not to immediately return these additional transcripts, nor to inform the Court about them. That decision not to inform the Court, although not made in bad faith, was an error in judgment. Carter then compounded that error by not informing Ms. Peters of the existence of these transcripts, or directing the junior associates to inform Ms. Peters, or ensuring in some way that these transcripts were returned, or that the letter subsequently sent to this Court reflected the true whereabouts of the transcripts at this time.
At this point, and considering the prior conversations he had had with Ms. Peters where she averred her intentions not to comply with Court orders, Mr. Carter as head of litigation should have provided more supervision, or the firm should have, at his behest. In any event, he should not have relied on Ms. Peters to responsibly handle the issue upon her return. All that said, I decline to sanction Mr. Carter because of the lack of evidence of bad faith on his part.
r. Ms. Peters' Ordering of Additional Transcripts
After I ordered Carter to return all transcripts to this Court, Ms. Peters had the audacity to order additional copies from the court reporter. This action was in blatant and intentional disregard of this Court's order. There is no legitimate justification under which Ms. Peters could have ordered these additional copies. Ms. Peters' bad faith is evidenced by her direction to a junior associate to research whether my order to Carter, in essence, "really constituted an order." Ms. Peters' bad faith is evidenced further by the fact that she informed no one at her law firm of her actions.
Ms. Peters is reprimanded for ordering additional copies of transcripts, in bad faith, in violation of this Court's order to return all the transcripts, for safe keeping, to the Court and in light of the language that the confidentiality agreement to the effect that the transcripts were not usable in other litigation. To the extent that state disciplinary authorities may review Ms. Peters' actions in this litigation, they may among other areas want to further review Ms. Peters' actions in connection with the ordering of these transcripts.
s. Use of Transcripts in Massachusetts
As set out in detail in my opinion of May 23, 2007, see Wolters Kluwer Fin. Servs. v. Scivantage, 2007 U.S. Dist. LEXIS 37306, Plaintiff used transcripts in Massachusetts in contravention of the Confidentiality Order that prohibited use of transcripts in "any other litigation."*fn345
Ms. Peters used the transcripts in a bad-faith effort for the improper purpose of gaining advantage (and expedient relief) in a new court after she had "judge-shopped," and after she had gained extensive discovery without providing any discovery of her own, and in an effort to have that Court eviscerate the Confidentiality Order that this Court had entered to govern discovery produced in this litigation (which remained in force after this litigation).
The blame does not fall only upon Ms. Peters' shoulders, however. Dorsey senior partners (i.e. Carter and Herman) signed off on her use of the transcripts in Massachusetts. Unfortunately, these partners were unfamiliar with the Confidentiality Order-another failure to provide sufficient supervision-and Ms. Peters was less than forthcoming about presenting its terms to them. Still, at the end of the day, the decision to forward Southern District transcripts to Massachusetts was Dorsey's decision, not just Ms. Peters' decision.
Accordingly, under the inherent power of the Court I hereby sanction Dorsey and Ms. Peters, jointly and severally, for the use of the transcripts in Massachusetts in contravention of this Court's Confidentiality Order.
t. Associated Actions to Use of Transcripts in Massachusetts
Over the course of April 23 and 24, Ms. Peters emailed this Court three separate times and requested that this Court wait until Wednesday, April 25 before rendering any decision regarding transcripts that Dorsey might still possess. In retrospect, it is clear that these emails were a transparent attempt to convince this Court to wait on any ruling until, Ms. Peters hoped, the Massachusetts Court might eviscerate the Confidentiality Order (without, of course, Ms. Peters' informing this Court that such relief was sought in Massachusetts, and while Ms. Peters approached the Massachusetts Court ex parte and misled the Massachusetts Court as to the nature of the orders that had been issued in this Court).
Accordingly, I find that these emails were misleading, and sent in bad faith, for the improper purpose of making an ex parte "end run" around this Court's orders, on a matter over which this Court retained jurisdiction. Under Fed. R. Civ. P. 16(f) and the inherent powers of the Court I hereby reprimand Ms. Peters for these statements designed to mislead this Court and evade this Court's orders.
u.Filings and Statements Made In Massachusetts Court
Ms. Peters refused to serve Defendants' New York counsel with the moving papers in Massachusetts on April 24, despite her own local counsel's admonition to do so. Most notably, when Defendants' counsel informed Ms. Peters that he had been authorized to accept service, Ms. Peters still refused to provide them, noting a grammatical error in Defendants' counsel's email. Ms. Peters' explanation for her refusal to provide service, given the history of this litigation, defies credulity. In any event, though, I do not believe that I possess the power to impose sanctions in connection with Plaintiff's filings in the Massachusetts Court.*fn346 I will, however, transmit a copy of this Opinion to Judge Stearns in Massachusetts in the case that he sees fit to take action there.
Also, to the extent that Plaintiff's motions in Massachusetts constituted a bad-faith attempt at vexatious and harassatory litigation via an attempt to gain improper advantage in Massachusetts through a voluntary dismissal, and to re-litigate this Court's orders already rendered, I will transmit a copy of this Opinion to Judge Stearns for whatever action, if any, he sees fit.
v. Ms. Peters' Order to an Associate to Alter Transcripts
From the evidence, it is clear that Ms. Peters ordered a junior associate to alter transcripts that had been ordered returned to this Court by "scribbling all over them," so that the transcripts might be considered "work product" and thus arguably not returnable. Nonetheless, Ms. Peters, after her direction to the associate concocted a post hoc explanation that she was "joking" when she gave that order. The evidence supports the clear finding that she was not.
That representation was false. More to the point, Ms. Peters' order to an associate to alter evidence that a Court ordered returned is disturbing to say the least. It evinces a blatant disregard for Court orders, and a willingness to take any action necessary towards the desired end, including ordering subordinates to commit misdeeds that, apparently, she felt uncomfortable committing herself.*fn347
In certain situations where violations of Court orders also comprise ethical violations, it is appropriate to refer the matter to the state disciplinary authorities in case they may want to take action. Indeed, matters have been referred to disciplinary committees for lesser infractions, such as Rule 11 violations. See Steinle v. Warren, 765 F.2d 95 (7th Cir. 1985) (referring matter to state disciplinary committee for pursing frivolous claims). Although this Court possesses the power to suspend attorneys from practicing law,*fn348 it is more appropriate to refer the matter to our Southern District of New York disciplinary committee and to the Appellate Division First Department because of the procedural protections inherent to that process. See Thornton v. GMC, 136 F.3d 450, 455 (5th Cir. 1998) (reversing district court's suspension of attorney and instead referring to state disciplinary committee).
Although not all of the sanctions imposed here fall squarely on Ms. Peters' shoulders, it is fair to say that most likely, none would have been imposed on any parties had a different lawyer been the lead litigator for Plaintiff.*fn349 Ms. Peters was the driving force behind most of the decisions made by Wolters Kluwer and Dorsey in this litigation. Sadly, Ms. Peters' actions in this litigation show a studied disregard for the sanctity of Court orders. In addition, Ms. Peters' proclivity for misrepresentation is disturbing.