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Kosher Sports, Inc v. Queens Ballpark Company

August 5, 2011

KOSHER SPORTS, INC., PLAINTIFF,
v.
QUEENS BALLPARK COMPANY, LLC, DEFENDANT.



The opinion of the court was delivered by: Roanne L. Mann, United States Magistrate Judge:

MEMORANDUM AND ORDER

Currently pending before this Court are several motions for sanctions. Defendant Queens Ballpark Company, LLC ("QBC" or "defendant") has moved to sanction plaintiff Kosher Sports, Inc. ("KSI" or "plaintiff") and plaintiff's counsel, Ira Tokayer, for concealing and delaying production of two surreptitiously created recordings (the "2011 recordings") of conversations in 2011 between representatives of non-party Aramark Sports and Entertainment Services, LLC ("Aramark") and plaintiff's president, Jonathan Katz. See Letter to the Court from Avery Mehlman (June 2, 2011) ("Def. 6/2/11 Letter"), Electronic Case Filing Docket Entry ("D.E.") #64; Letter to the Court from Ira Tokayer (June 6, 2011) ("Pl. 6/6/11 Letter"), D.E. #65. Defendant likewise seeks sanctions for spoliation of evidence due to Mr. Katz's destruction of one or more recordings of conversations (the "pre-2011 recordings") of previous meetings with Aramark personnel. See Letter to the Court from Avery Mehlman (June 22, 2011) ("Def. 6/22/11 Letter"), D.E. #72. Finally, contending that defendant's motion for spoliation sanctions is frivolous, plaintiff cross-moves to sanction defendant's counsel. Letter to the Court from Ira Tokayer (June 24, 2011) ("Pl. 6/24/11 Letter"), D.E. #74; Letter to the Court from Avery Mehlman (June 27, 2011) ("Def. 6/27/11 Letter"), D.E. #75.

Having heard oral argument and in-court testimony addressing these issues,*fn1 the Court grants defendant's motions to the following extent: Plaintiff and plaintiff's counsel are ordered to pay a monetary sanction, in an amount to be determined, consisting of attorney's fees and other expenses, for their failure to timely produce the 2011 recordings. With regard to the destruction of the pre-2011 recordings, the Court proposes that the District Court instruct the jurors at trial that they may infer that the lost evidence was unfavorable to plaintiff.*fn2 Finally, as the defense motion for sanctions is meritorious, and not frivolous, the Court denies plaintiff's cross-motion for sanctions.

FACTUAL BACKGROUND

The Court assumes familiarity with the prior proceedings in this case. Briefly stated, plaintiff alleges that defendant, which operates Citi Field (the baseball stadium of the New York Mets since 2009), breached its contract with plaintiff, a vendor of kosher food products, and tortiously interfered with the contractual arrangement between plaintiff and Aramark, defendant's concessionaire. See generally Supplemental Second Amended Complaint ("Complaint"), D.E. #56. More specifically, plaintiff complains, among other things, that defendant has improperly prevented plaintiff from distributing its kosher products at games occurring at Citi Field during the Jewish Sabbath, i.e., on Friday evenings and Saturdays. See id. ¶ 11.

Defendant disputes these allegations, and contends that it is plaintiff's contract with Aramark, and not plaintiff's "Advertising Agreement" with defendant, that "controls the time and manner" in which plaintiff may operate at Citi Field. Letter to Judge Weinstein from Avery Mehlman (Apr. 19, 2011) at 1, D.E. #52. According to defendant, it was Aramark's decision "to deny [plaintiff's] request to operate on the Jewish Sabbath," id. at 2, and it is plaintiff who has breached its contract with defendant, by failing to make the required payments thereunder. See Answer and Counterclaims (May 12, 2011) at 10, D.E. #58.

In August 25, 2010, following a hearing on plaintiff's motion for a preliminary injunction, the Honorable Jack B. Weinstein, the District Court judge assigned to this case, issued an order enjoining defendant and all those acting on its behalf "from taking any action, directly or indirectly, with respect to, or affecting, the time or method of sale of [plaintiff's] products at Citi Field." Order (Aug. 25, 2010) at 1, D.E. # 21. In doing so, Judge Weinstein expressly found, by a preponderance of the evidence, that the contract between plaintiff and defendant "does not control or address the days and hours when . . . [plaintiff] may sell its products at Citi Field." Id.

I. THE 2011 RECORDINGS

A. The January 2011 Recording and Defendant's First Discovery Demands

On January 6, 2011, Mr. Katz attended an operational meeting with Richard Grey, Aramark's Division Manager of Concessions, to discuss the details of plaintiff's operations at Citi Field during the 2011 baseball season. Hearing Tr. at 257-58. Mr. Katz secretly recorded the meeting using a concealed digital recording device. Deposition of Jonathan Katz at 344-45 (May 9, 2011) ("Katz Dep. Tr.").*fn3 While much of the meeting focused on logistical details unrelated to the instant litigation, Mr. Katz raised the question of whether plaintiff would be permitted to operate on Fridays and Saturdays during the upcoming season. Transcript of Recording of January 6, 2011 Meeting ("Jan. 2011 Recording Tr.") at 2, DX C. He claimed that the preliminary injunction issued by the District Court entitled plaintiff to operate on Fridays and Saturdays, id., and he repeatedly suggested that defendant QBC, not Aramark, was the actual decisionmaker on this issue. Id. at 4-5. Mr. Grey was not particularly responsive to these suggestions. Id. at 5-6.

Partway through the meeting, Messrs. Grey and Katz were joined by Scott Kleckner, Grey's superior and Aramark's Resident District Manager at Citi Field, who stated that he and his boss, Scott Wiegert, Aramark's Regional General Manager, both opposed permitting plaintiff to operate on Fridays and Saturdays. Jan. 2011 Recording Tr. at 9. Mr. Kleckner expressed his view that Friday-Saturday operations would damage plaintiff's credibility with Sabbath-observant patrons of Citi Field; he also stated that Scott Wiegert felt that the terms of the governing KSI-Aramark agreement did not include Friday-Saturday operations and would need to be renegotiated were that to change. Id. at 9. Mr. Katz asked Mr. Kleckner whether defendant was seeking to push plaintiff out. See id. at 12 ("But you're telling me that at some point, despite [Judge Weinstein's] ruling, that they are not to interfere with me, . . . even afterwards . . . [they] told you they, uh, you know, let's try to find someone else[?]"). Mr. Kleckner responded: "They would defend this [by saying] that they want to know their other options in case something went south with you or whatever but, you know, [to] cut through the bullshit, yeah -- . . . -- they wanted to know [what] their other options were if they told you [to] pound sand or pay off . . . [,] they had something on the shelf." Id. at 12.

Mr. Katz apparently informed his attorney of the existence of this recording prior to the completion of plaintiff's responses to defendant's first set of interrogatories and document requests. Argument Tr. at 3-4. Those responses, verified by plaintiff's counsel and signed by Mr. Katz on January 14, 2011, include a series of "General Objections" to the interrogatories and document demands; among the boilerplate objections asserted therein, plaintiff generally objected to discovery demands "to the extent that [they] seek the disclosure of documents or information consisting of audio or videotapes prior to the time relevant depositions are complete." Plaintiff's Responses to Defendant's First Set of Interrogatories and Requests for Production of Documents (Jan. 14, 2010) ("Pl. First Resp.") at 2, 10, D.E. #64-3. Plaintiff's responses did not disclose the existence of the January 2011 recording, nor did plaintiff's specific responses to particular discovery demands incorporate by reference the aforementioned general objection or otherwise object to producing or disclosing any recordings. For example, defendant demanded "all documents concerning or evidencing KSI's allegation that QBC determines the locations and hours of operation of KSI," or "that QBC inhibited and barred KSI's hours and locations of operation." Defendant's Interrogatories and Requests for Production of Documents (Dec. 15, 2010) ("Def. First") at 9, D.E. #64-1. Plaintiff responded without objecting and agreed to produce any non-privileged responsive documents. Pl. First Resp. at 11.

The parties subsequently litigated a number of discovery disputes. One of defendant's interrogatories sought a description of, inter alia, each "communication, meeting, [or] discussion . . . concerning KSI's request of Aramark Corporation, as [to] whether KSI can operate on Friday nights and Saturdays . . . ." Def. First at 5. Plaintiff responded, "None, except see Exhibit B," an August 27, 2010 letter from Mr. Tokayer to Mr. Kleckner. Pl. First Resp. at 4. Defendant complained to the Court that this response was not credible, Letter to the Court from Avery Mehlman (Mar. 17, 2011) ("Def. 3/17/11 Letter") at 6, D.E. #38, and sought further explanation at the Court's March 29, 2011 hearing on discovery issues. Mr. Tokayer clarified that he knew of no other communications concerning a request of Aramark. Transcript of March 29, 2011 Hearing (docketed Apr. 1, 2011) ("3/29/11 Hearing Tr.") at 57, D.E. #41. The Court then asked: "[A]re we slicing this very thin? Is it because it says [']request of Aramark as to whether it could operate[']? Were there discussions about whether KSI could operate?" Id. at 57. Notwithstanding his knowledge of the existence of the January 2011 recording, Mr. Tokayer told the Court: "I don't know that there have been discussions since August 27th" of 2010. Id. at 57-58.*fn4

B. The April 2011 Recording and Defendant's Supplemental Discovery Demands

The following week, on April 6, 2011, Mr. Katz called Mr. Kleckner on the phone and recorded their conversation without Mr. Kleckner's knowledge. Hearing Tr. at 222-23; Katz Dep. Tr. at 339, 344-45. Mr. Katz requested permission for plaintiff to operate during the season's opening home games, to be held at Citi Field on the following Friday and Saturday. Transcript of Recording of April 6, 2011 Phone Call ("Apr. 2011 Recording Tr.") (DX D) at 2-3. Mr. Katz indicated that he remembered the concerns Mr. Kleckner had previously raised regarding Friday-Saturday operations; Mr. Kleckner reiterated those same concerns. Id. at 3-4. After referencing plaintiff's lawsuit against QBC, and opining that "you guys don't get to make decisions on your own[,] . . . you have to kind of go to the Mets for approval," Mr. Katz asked Mr. Kleckner "to tell me where we stand here." Id. at 5-6. Mr. Kleckner responded that he was open to hearing more about plaintiff's efforts to rationalize how plaintiff could operate on Fridays and Saturdays "without hurting credibility," and he repeated that there might have to be "a change in financial terms for those days." Id. at 6. In any event, Mr. Kleckner said, logistical problems made it difficult to accommodate plaintiff's request as to the coming Friday and Saturday. Id. at 6-7. He then added, "off the record," that defendant "wanted me to shop" for a substitute kosher vendor and "to terminate and bring in somebody else . . . ." Id. at 8.

On April 15, 2011, plaintiff moved to hold defendant and Aramark in contempt of court for defying the District Court's preliminary injunction; plaintiff's application cited Mr. Katz's conversations on January 6, 2011 and April 6, 2011, though it did not disclose the existence of the recordings of those discussions. Declaration of Jonathan Katz (Apr. 15, 2011) ¶ 2, D.E. #44. An evidentiary hearing on the contempt motion, which remains sub judice, was originally scheduled for June 7, 2011, but, because of the belated surfacing of the 2011 recordings, was adjourned to and held on June 28, 2011. Order (June 6, 2011), D.E. #68; Minute Entry (June 28, 2011), D.E. #76.

Meanwhile, on April 14, 2011, defendant served supplemental interrogatories and document demands seeking, inter alia, particulars concerning "any communications [KSI] ha[s] had with Aramark concerning KSI's operations on Friday evenings and Saturdays at Citi Field since this lawsuit was commenced," and "all documents that constitute any [such] communications . . . ." Defendant's Supplemental Interrogatories and Requests for Production of Documents (Apr. 14, 2011) ("Def. Supp.") at 3-5, D.E. #64-2. Plaintiff's delayed response to the supplemental document demands, dated May 31, 2011, was not received by defense counsel until Monday, June 6, the day before the contempt hearing had been scheduled to commence and after the instant motion for sanctions was filed and first argued. See Plaintiff's Response and Objections to Defendant's Supplemental Request for Production of Documents (May 31, 2011) ("Pl. Supp. Doc. Resp."), D.E. #66-2; 6/3/11 Minute Entry; Def. 6/2/11 Letter at 1; Argument Tr. at 15-17. Plaintiff's objections to the supplemental document demands, while somewhat different from those in his earlier responses, were hardly a model of clarity; again, plaintiff did not state that he was withholding any recordings.*fn5 Plaintiff's response to defendant's supplemental interrogatories was dated June 3, 2011, and was faxed to defense counsel's office at about 7:30 p.m. that evening, the day after the instant motion for sanctions was filed, and after the Court conducted a telephone conference addressing that motion. See Plaintiff's Response and Objections to Defendant's Supplemental Interrogatories (June 3, 2011) ("Pl. Supp. Interrog. Resp."), D.E. #85-1; Transmittal Cover Sheet and Transmission Verification Report (June 3, 2011), D.E. #84-2; 6/3/11 Minute Entry.

C. The Disclosure of the 2011 Recordings

In the interim, the parties had begun conducting, and had substantially completed, depositions, including those of Messrs. Katz and Kleckner and several representatives of defendant. Plaintiff did not disclose the existence of the recordings or otherwise seek to supplement plaintiff's response to defendant's first set of document demands with regard to the discussions captured on the April 2011 recording. At his initial deposition on May 9, 2011, Mr. Katz, when questioned about the meeting on January 6, 2011, failed to mention the recording and claimed that he did not remember the details of that discussion. Katz Dep. Tr. at 243 (testifying that Mr. Kleckner "came in the room and stopped by and said hello . . . at some point during the meeting. . . . I don't recall what we discussed at that time."). However, Mr. Katz later admitted that he had reviewed portions of both the January and April recordings several weeks prior to his deposition. Hearing Tr. at 85-86.

According to defense counsel, it was not until the deposition of Mr. Kleckner on May 31, 2011 that Mr. Tokayer's questioning led him to suspect that counsel was relying on undisclosed recordings. Argument Tr. at 15-16. In a telephone call on June 2, defendant's counsel confronted Mr. Tokayer, asking if he had such recordings; Mr. Tokayer initially responded, "I'll call you back," then admitted that he had such recordings but refused to turn them over prior to the contempt hearing, which was then scheduled to commence on June 7, 2011. Argument Tr. at 5, 16. Defendant filed its initial motion for sanctions on June 2. Def. 6/2/11 Letter at 1. At the Court's direction, plaintiff produced the recordings as well as previously prepared partial transcripts the following day, Friday, June 3. 6/3/11 Minute Entry.

In its written response to the first sanction motion, plaintiff argued that defendant was on notice that the 2011 recordings existed by virtue of plaintiff's general objection to discovery demands to the extent they sought "the disclosure of documents or information consisting of audio or videotapes prior to the time relevant depositions are complete." Pl. 6/6/11 Letter at 2 (quoting Pl. First Resp. at 2). At a hearing on these issues on June 7, plaintiff's counsel repeatedly stated that he had not reviewed the recordings or his notes and was thus substantially unprepared to testify as to what he knew about the recordings or when he learned of them. Argument Tr. at 4, 7, 9-10, 24, 27. Accordingly, he refused to be sworn. Id. at 24.*fn6

The Court adjourned the then imminent contempt hearing in order to allow defendant's counsel the opportunity to review the recordings and reopen the relevant depositions. 6/3/11

Minute Entry. Mr. Katz was questioned about the 2011 recordings at his reopened deposition and at the adjourned contempt hearing. He acknowledged that he had reviewed the relevant discovery responses for their accuracy before they were served on defense counsel. Hearing Tr. at 75-79.

II. THE PRE-2011 RECORDINGS

At Mr. Katz's reopened deposition, it also emerged that he had covertly recorded other meetings with Aramark prior to 2011. Katz Dep. Tr. at 346-47, 386-87. He testified that he likely recorded the pre-season operational meetings with Aramark in 2010 and perhaps 2009, along with "operational meetings at other venues." Id. at 387-89. According to Mr. Katz's deposition testimony, the pre-2011 recordings had been "taped over" and "deleted," id. at 347, 389-90, but he did not remember when or whether they had been erased before or after the instant lawsuit commenced in 2010. Id. at 389-91. After Mr. Katz was asked whether he had informed counsel about the existence of the 2010 recording, id. at 391, plaintiff's attorneys took Mr. Katz out of the room for a private conversation over defense counsel's strenuous objections. Id. at 392. Upon their return, Mr. Tokayer announced that "Mr. Katz would like to clarify his answer" to a prior "confusing question." Id. at 394; see id. at 395. Mr. Katz then recalled that the 2010 recording had been deleted prior to the commencement of the lawsuit in June 2010. Id. at 396-98. Mr. Katz explained his stated ...


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