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Hunt v. Enzo Biochem

October 12, 2011

FRANCIS SCOTT HUNT AND SHUNDRA CHERI HUNT, INDIVIDUALLY AND AS TRUSTEE FOR IAN CHRISTOPHER HUNT, LAWRENCE A. MCMAHON AND JUDITH J. MCMAHON, PAUL D. CAVANAGH INDIVIDUALLY AND AS TRUSTEE FOR THE PAUL D. CAVANAGH TRUST, AND VIRGINIA POPE, PLAINTIFFS,
v.
ENZO BIOCHEM, INC., HEIMAN GROSS, BARRY WEINER, ELAZAR RABBANI, SHARIM RABBANI, JOHN DELUCCA, DEAN ENGELHARDT, AND JOHN DOES 1-50, DEFENDANTS.
KEN ROBERTS, PLAINTIFF,
v.
ENZO BIOCHEM, INC., ET AL., DEFENDANTS.
PAUL LEWICKI, PLAINTIFF,
v.
ENZO BIOCHEM, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.

OPINION AND ORDER

I. INTRODUCTION

Enzo Biochem, Inc., Heiman Gross, Barry Weiner, Elazar Rabbani, Sharim Rabbani, John Deluca, Dean Engelhardt, and John Does 1-50 (the "Enzo Defendants") bring this motion for sanctions against plaintiff Paul Lewicki and his former counsel, Dan Brecher. The Enzo Defendants allege that Lewicki and Brecher violated this Court's Order for the Protection and Exchange of Confidential Information (the "Protective Order") by improperly giving Lawrence Glaser confidential materials. The Enzo Defendants further allege that Glaser used those materials in support of a motion to re-open his lawsuit against them in Virginia (the "Virginia case") under Federal Rule of Civil Procedure 60(b).*fn1 The Enzo Defendants seek to recoup the expenses associated with responding to that motion, and to recover their confidential materials.*fn2

The Court held an evidentiary hearing to resolve the disputed issues of fact raised by the motion. The hearing was held on July 7, 2011 and on July 26, 2011. Both Lewicki and Brecher testified at the hearing.*fn3 Brecher and the Enzo Defendants also submitted a number of exhibits as well as post-hearing memoranda. Brecher argues that he complied with the Protective Order by turning over documents solely to Lewicki, and that it would therefore be inappropriate to sanction him.*fn4 Lewicki argues that he should not be sanctioned because he did not know that the documents Glaser had access to were confidential, and because Brecher failed to make him aware of his duties under the Protective Order.*fn5 For the reasons set forth below, the motion by the Enzo Defendants is granted in its entirety.

II. BACKGROUND*fn6

1. The Virginia Case

In 2001, Lewicki signed a retainer agreement with attorney Michael Rovell with a view towards filing a lawsuit against the Enzo Defendants. As part of the retainer agreement, Lewicki, Glaser, and most of the other plaintiffs in this case planned to sue the Enzo Defendants for misrepresenting the effectiveness of Enzo's products in order to inflate the price of Enzo stock and reap a profit.*fn7 The plan called for Glaser to win his case in Virginia first, and for the rest of the group to use that hoped-for success in a subsequent case in New York.*fn8

In line with the plan, Glaser filed the Virginia case in 2002.*fn9 After losing in the district court, Glaser appealed, and the case was remanded for further proceedings. The Enzo Defendants then successfully moved for dismissal, whereupon Glaser brought a second appeal in 2006. The United States Court of Appeals for the Fourth Circuit denied him any relief, thereby ending his case.*fn10

2. The New York Case

A. From Filing to Summary Judgment

The plaintiffs in the New York case were initially represented by Michael Rovell, the same attorney who represented Glaser in the Virginia case. They filed suit in 2006 and by 2008 were on their third amended complaint, which raised common law fraud claims.*fn11 Rovell died while the case was pending, and Glaser helped the plaintiffs find Brecher to replace him; Glaser also gave Lewicki a $20,000 loan to pay his share of the retainer.*fn12 Because the claims in the New York case were closely related to those in the Virginia case, Lewicki encouraged Brecher to consult with Glaser.*fn13 The two met several times, and Glaser eventually gave Brecher documents from the Virginia case (the "Virginia files").*fn14 Along the way, Brecher learned that Glaser had a substantial financial interest in the New York case.*fn15

Brecher and Donald Chase, counsel for the Enzo Defendants, stipulated to the terms of a Protective Order which was entered on March 25, 2008.*fn16 Lewicki's understanding of the Protective Order is unclear. At the hearing, Lewicki testified that he heard of the Protective Order, but also that he never saw it.*fn17 He claimsOrder was that "confidential documents needed to be kept confidential."*fn18 that all he understood about the Protective Brecher claims, however, that he told Lewicki about the Protective Order before it was filed, and that he discussed it in great detail with Lewicki before Lewicki's deposition.*fn19

On April 11, 2009, Lewicki requested that Brecher "ask [Judge Scheindlin] to make [the Protective Order] formally. . . binding on" Glaser, so that Glaser could have access to Enzo's confidential documents. After stating that he declined Glaser's personal requests on the matter, Brecher told Lewicki that he would not seek modification of the Protective Order and threatened to withdraw as counsel if Lewicki petitioned the court on his own.*fn20 Glaser repeated his requests in March 2009,*fn21 and Brecher denied those as well.*fn22

The Enzo Defendants moved for summary judgment, which this Court granted in June 2009.*fn23 The remaining plaintiffs appealed, and several were granted permission to proceed in forma pauperis.*fn24 Brecher does not represent them on appeal.*fn25

B. Post-Summary Judgment

After the Enzo Defendants won summary judgment, Lewicki asked if he could pick up the plaintiffs' files (the "New York files") from Brecher's office.*fn26 In an e-mail dated July 6, 2009, Brecher told Lewicki that he could not pick up the New York files for two reasons. First, in order to release Lewicki's personal files, he needed authorization from the Trustee in Lewicki's bankruptcy proceeding. Second, in order to release the rest of the New York files, he needed authorization from the other plaintiffs.*fn27

Glaser also asked Brecher to return the Virginia files.*fn28 On July 22, 2009, he e-mailed Brecher stating that he and Lewicki would come by the following day and "grab everything."*fn29 Brecher gave Glaser two boxes of files from the Virginia case the ...

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