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Hunt v. Enzo Biochem


October 22, 2012


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



Dan Brecher, former counsel for plaintiff Paul Lewicki, brings this motion for an Order pursuant to Rule 71 directing non-party Lawrence Glaser to return confidential documents. On October 12, following an evidentiary hearing at which Brecher and Lewicki - but not Glaser - were present and testified, I granted a motion for sanctions brought by defendants Enzo Biochem, Inc., Heiman Gross, Barry Weiner, Elazar Rabbani, Sharim Rabbani, John Deluca, Dean Engelhardt, and John Does 1-50 (the "Enzo Defendants").*fn1 I found both Lewicki and Brecher in civil contempt under Rule 37 for violating this Court's Order for the Protection and Exchange of Confidential Information (the "Protective Order") by improperly giving Glaser confidential materials. Accordingly, I ordered Brecher to pay $33,780.86 to the Enzo Defendants and to "take all necessary steps to retrieve from Glaser any documents designated 'Confidential,' whether original or copies, previously produced by the Enzo Defendants."*fn2 In an effort to comply with this Court's October 12 Order, Brecher now seeks an Order: (1) requiring Glaser to turn over all Confidential Documents and all materials derived therefrom; and (2) requiring Glaser to pay damages to Brecher. For the reasons set forth below, Brecher's motion is granted in part and denied in part.


A. Undisputed Facts*fn3 In 2001, Lewicki signed a retainer agreement with attorney Michael Rovell with a view towards filing a series of lawsuits against the Enzo Defendants.*fn4 Lewicki, Glaser, and most of the other plaintiffs in this case planned to sue the Enzo Defendants for misrepresenting the preliminary success of its HIV and Hepatitis B therapies - including pre-clinical and clinical trials, its patent estate, and other commercial arrangements - in order to inflate the price of Enzo stock and reap a profit.*fn5 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.*fn6 At a deposition, Glaser admitted that he entered into a written agreement with Lewicki, Cavanagh, and Pope in 2001 - an agreement that required these individuals to contribute to Glaser's legal expenses in return for a share of any recovery Glaser obtained in his lawsuit.*fn7 In line with the plan, Glaser filed the Virginia case in 2002.*fn8 After Glaser's claims were dismissed, he appealed unsuccessfully to the Fourth Circuit, and then to the Supreme Court.*fn9

In 2006, Lewicki and other plaintiffs commenced this action, making similar allegations against Enzo. Plaintiffs were initially represented by Rovell; when he died, plaintiffs replaced him with Brecher.*fn10 Concerned that confidential documents provided to plaintiffs might be misused by non-parties such as Glaser, Enzo's counsel negotiated and stipulated the terms of the Protective Order with Brecher, which was entered on March 25, 2008.*fn11 In April, 2009, Lewicki - who knew about the existence but perhaps not the details of the Protective Order -"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."*fn12 Brecher refused both Lewicki's request and additional requests made by Glaser, and went so far as to threaten to withdraw as counsel if Lewicki petitioned the Court on his own.*fn13 In June 2009, I granted Enzo's motion for summary judgment, dismissing Lewicki's case in its entirety.*fn14

On October 2, 2009, Lewicki and Glaser removed boxes of files, some of which were confidential, from Brecher's office in New York City.*fn15 Brecher asserts that while he let Glaser assist Lewicki in removing the files, he only did so because: (1) Glaser had an automobile to carry the files (whereas Lewicki did not); and (2) "Lewicki and Glaser had both previously made written representations in communications with [Brecher] indicating that they understood that there was the Protection Order which provided that the Confidential Documents should not be reviewed by persons such as Glaser."*fn16 Glaser took the files to an attorney who he hoped would help Lewicki with his appeal, but who ultimately declined to take the case.*fn17 Glaser then brought the files to a meeting with Lewicki at a New Jersey Turnpike rest stop at which they reviewed three files that were marked "confidential" and that were covered by the Protective Order.*fn18

In January 2011, Glaser filed a motion pursuant to Rule 60 in the Virginia District Court seeking to reopen his original case. Attached to Glaser's motion were the three confidential files reviewed at the rest stop.*fn19 Glaser's Rule 60 motion was denied by the Virginia District Court on April 1, 2011.*fn20 After this denial was affirmed by the Fourth Circuit in October, 2011, Glaser again petitioned for a writ of certiorari in the United States Supreme Court and was again denied.*fn21

Enzo moved in this Court for an Order directing Brecher and Lewicki to: (1) obtain the return of the Confidential Documents for Glaser; (2) pay Enzo for its litigation costs.*fn22 I found that Brecher and Lewicki had violated the Protective Order and I granted Enzo's motion in full. In attempting to comply with my Order, Brecher has made several written requests to Glaser for the return of the confidential documents; Glaser has thus far refused and expressed his belief that he has no obligation to comply with Brecher's requests.*fn23 Brecher now moves for an Order compelling Glaser to return the documents to Enzo.

B. Glaser's Assertions*fn24

Glaser is not a party to this action, has never resided in New York, and has had no contact with New York other than to help Lewicki remove the case files from Brecher's office.*fn25 Glaser believes that the confidential documents at issue were responsive to subpoenas issued in connection with his bankruptcy case, and that they therefore should never have been covered by a confidentiality agreement or protective order.*fn26 Glaser asserts that Brecher never showed him the Protective Order - and that although he knew of its existence, he never signed or agreed to be bound by it.*fn27 Further, Glaser asserts that when he looked through the documents, there was no red weld folder marked confidential, nor was there any other way for him to identify which documents might be covered by the Protective Order.*fn28 Indeed, Glaser asserts that when Brecher gave him the files, he knew Glaser would use them in an attempt to reopen his Virginia case.*fn29


A. Personal Jurisdiction and Due Process

A court may not assert personal jurisdiction over a party if doing so would deny that party due process under the Fourteenth Amendment.*fn30 This due process inquiry has two steps: first, a court must determine whether the party has had minimum contacts with the state in which it sits sufficient to justify the exercise of personal jurisdiction over that party; and second, the court must determine whether the exercise of personal jurisdiction is reasonable and thus comports with "'traditional notions of fair play and substantial justice.'"*fn31 "'The two prongs of the inquiry are interrelated, such that a weak showing of minimum contacts requires a stronger demonstration of reasonableness.' The converse is also true."*fn32

The minimum contacts requirement ensures that a party is not haled into court "solely as a result of random, fortuitous, or attenuated contacts."*fn33

To establish the minimum contacts necessary to satisfy specific jurisdiction, [T]he plaintiff first must show that his claim arises out of or relates to defendant's contacts with the forum state. The plaintiff must also show that the defendant purposefully availed himself of the privilege of doing business in the forum state and that the defendant could foresee being haled into court there.*fn34

If a party's contacts with the forum state rise to this minimum level, a party may defeat jurisdiction only by presenting "a compelling case that the presence of some other considerations would render jurisdiction unreasonable."*fn35

The reasonableness factors include: (1) the burden imposed on the party by the exercise of personal jurisdiction; (2) the forum state's interest in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the judicial system's interest in efficient resolution; and (5) the state's interest in promoting substantive social policies.*fn36

B. Protective Orders

1. Generally

It is well-established that courts have inherent equitable powers to grant confidentiality orders.*fn37 Courts have the power to seal both court filings and documents produced in discovery.*fn38 Such orders are necessary given the scope of modern discovery:

"[T]he expanded scope of discovery under the Federal Rules and the increased amounts of information they generated created side effects outside the adjudicatory system - it posed a threat to privacy and confidentiality. To meet this new problem, the discovery rules contain provisions, such as the authorization for protective orders in Rule 26(c), to limit the discovering party's use of information beyond the litigation context."*fn39

Thus, "[p]rotective orders serve essential functions in civil adjudications, including the protection of the parties' privacy and property rights."*fn40

2. Court Authority to Enforce Protective Orders

Courts have inherent power to enforce their orders. "[T]he power of a court to make an order carries with it the equal power to punish for a disobedience of that order."*fn41 Moreover, courts have inherent power to issue orders designed to correct wrongs committed through its process.*fn42

A court may not "enjoin the entire universe of potential violators of its orders"; it has no power to enjoin "those who are acting independently of the enjoined party and whose own rights have not been adjudged."*fn43 However, "third parties 'who are in active concert or participation' with the parties, their officers, agents, servants, employees or attorneys, can be enjoined."*fn44 As the Second Circuit explained:

This language gives force to injunctions and prevents parties from violating them by proxy. "[D]efendants may not nullify a decree by carrying out prohibited acts through aiders and abettors, although they were not parties to the original proceeding."*fn45

This is as true for orders created under Rule 26(c) as it is for injunctions issued under Rule 65.*fn46 Moreover, a court has jurisdiction over those who aid and abet the violation of its discovery orders, regardless of their location.*fn47

C. Collateral Estoppel

Collateral estoppel bars re-litigation of an issue where "(1) the identical issue was raised in a previous proceeding; (2) the issue was actually litigated and decided in the previous proceeding; (3) the party had a full and fair opportunity to litigate the issue; and (4) the resolution of the issue was necessary to support a valid and final judgment on the merits."*fn48 A court should also consider whether estoppel would be unfair to the defendant because the current plaintiff could have easily joined the earlier action, the current suit was not foreseeable, the defendant had little incentive to defend the first action vigorously, or the second action affords the defendant procedural opportunities that could cause a different result.*fn49


A. Brecher's Leave to File This Motion

This Court's individual rules require that prior to filing a motion, a party must "write to Chambers, with a copy to opposing counsel, to request a pre-motion conference."*fn50 Glaser asserts that Brecher never served him with a copy of the pre-motion letter he sent to the Court.*fn51 On this basis, Glaser argues that the Court never should have considered Brecher's request, and that because leave to file this motion was improvidently granted, the motion should be denied. While Brecher should have served Glaser a copy of his pre-motion letter, denying Brecher's motion on that basis would only delay the resolution of this dispute. That said, as a corrective measure I granted Glaser's Septemer 11, 2012 request to file a sur-reply consisting of a declaration and a memorandum of law.*fn52 I have considered both of those documents in deciding this motion.

B. Nature of the Relief Sought

Brecher asserts that he is moving pursuant to Rule 71.*fn53 This Rule states that "[w]hen an order grants relief for a nonparty or may be enforced against a nonparty, the procedure for enforcing the order is the same as for a party." This Rule primarily governs the service of process on non-parties and the enforcement of court orders against them. There is no court order here that directly binds Glaser. Glaser correctly points out that because he did not sign the Protective Order, he did not directly violate it. Similarly, my October 2011 Opinion and Order was enforceable only against Brecher and Lewicki - not Glaser. Instead, Brecher's motion is best understood as a motion for an order requiring Glaser to turn over the confidential files to Enzo and pay Brecher damages.

C. Personal Jurisdiction

Glaser argues that it would offend due process for this Court to exercise jurisdiction over him because his contacts with New York fall well short of the minimum contacts required by International Shoe and its progeny. Because Glaser's contacts with New York indisputably fall short of that required for general jurisdiction, the question is whether this Court may exercise specific jurisdiction over Glaser "arising out of or related to [his] contacts with the forum."*fn54 Glaser asserts that his only contact with New York was his retrieval of the files from Brecher's office. Although Brecher asserts that Glaser had additional contacts with New York, this Court has not conducted an evidentiary to determine whether Brecher is correct.*fn55 Accordingly, for the purposes of this motion, I have accepted Glaser's assertion as true.

Glaser admits the following: (1) he knew that the Protective Order existed;*fn56 and (2) he refused to sign it because he wanted to use confidential documents to reopen his case in Virginia.*fn57 In his attempt to reopen his Virginia case - and again in the exhibits he has submitted to this Court - he has included documents stamped "confidential," indicating his awareness that he possesses documents covered by the Protective Order.*fn58 Based solely on these facts, this Court has jurisdiction to order Glaser to return the files to Enzo.*fn59

In Eli Lilly & Co. v. Gottstein, a recent and closely-analogous case, the Second Circuit stated that a non-party's "aiding and abetting the breach of [a Protective Order] gives the issuing court jurisdiction over the nonparty aider and abettor to enjoin him from continuing those actions."*fn60 In Eli Lilly, a protective order governed the sharing of confidential documents among the parties.*fn61 One of plaintiffs' experts decided to share confidential documents with the media, notwithstanding that he had signed the protective order.*fn62 The expert arranged to have an Alaskan attorney intervene in an unrelated case and obtain a subpoena requiring the expert to produce the confidential documents, which he did.*fn63

Although the Alaskan attorney never signed the protective order and had no direct contact with New York, the district court issued an injunction requiring him to return the confidential documents.*fn64 The Second Circuit affirmed, holding that although "courts cannot enjoin the entire universe of potential violators of its orders," they can enjoin "third parties 'who are in active concert or participation' with the parties, their officers, agents, servants, employees or attorneys."*fn65 The Second Circuit's reasoning was as follows:

If courts cannot bind third parties who aid and abet the violation of their protective orders, then any party, agent, attorney or expert who comes into possession of material he wanted to use against the producing party could simply disseminate the information quickly, then deal with the damages issue after the fact. We understand that the threat of a sizable damages award may deter this action in some cases, but [appellant]'s proposed rule would eviscerate courts' ability to manage discovery and, hence, litigation.*fn66

Accordingly, the Second Circuit held that the district court's injunction was "a perfectly appropriate device to foreclose further dissemination of the confidential documents produced under the protective order."*fn67

Glaser is a "[nonparty] who reside[s] outside the territorial jurisdiction" of this Court, yet he is "subject to [this] court's jurisdiction [because he had] actual notice of the court's order, [and] actively aid[ed] and abet[ted] a party in violating that order."*fn68 Glaser may not have known the specifics of the Protective Order, but he did know of its existence, and he was aware it applied to Lewicki and Brecher. At some point, Glaser became aware that the files he had retrieved from Brecher's office were confidential, and that Brecher and Lewicki has violated the Protective Order by sharing them with him. Rather than returning or ceasing to use these improperly-obtained documents, Glaser exacerbated the consequences of the violation by using them in an attempt to reopen his Virginia litigation against Enzo. Even now, Glaser refuses to return the documents. These actions constitute aiding and abetting Brecher's and Lewicki's violation of the Protective Order. Thus, this Court has jurisdiction to issue an injunction preventing Glaser from making further use of documents obtained via an abuse of its process.

D. Damages/Sanctions

While this Court has jurisdiction to order Glaser to return the confidential documents, it is less clear whether this Court has jurisdiction to sanction him for his past actions or otherwise find him "liable." Moreover, because I am not holding that Glaser has violated any order of this Court, neither sanctions nor damages are appropriate. This distinction was key to the Second Circuit's decision in Eli Lilly. In rejecting the appellant's assertions that the district court had tried to enforce its protective order against him, the Second Circuit clarified that:

[T]he district court did not enforce [the protective order] against [appellant] - an order to which [he] was not privy. [Appellant] seems to miss the fact that the injunction against which he appeals merely "enjoined him from further disseminating" the "documents produced by Eli Lilly and Company subject to [the protective order]" and required him "forthwith [to] return any such documents and copies still in his . . . possession . . . ." It did not purport to bind [him] to the provisions of the protective order. Thus, [Appelant]'s assertion that the court "enforce[d] a protective order under Rule 26(c)" against him is wholly mistaken. Nor, as [he] contends, did the court impose aiding-and-abetting "liability." The district court made this abundantly clear, observing that "this is not a contempt proceeding, and the court is not now punishing anyone for any alleged violation of court orders. Rather, this proceeding seeks to prevent irreparable harm to Lilly by enjoining those persons whose actions threaten such harm."*fn69

Similarly, I am not holding that Glaser violated any provisions of the Protective Order, nor am I imposing aiding and abetting "liability" or "punishing" him for violating this Court's orders.*fn70

It is also unclear whether Brecher is entitled to any damages. I ordered Brecher to obtain the return of the confidential documents from Glaser and pay Enzo for its litigation costs because I found him in contempt under Rule 37 for his failure to comply with a Protective Order.*fn71 By seeking damages against Glaser, Brecher is attempting to shift the cost of my order to Glaser. Brecher, however, is fully responsible for his violation of the Protective Order. Thus, there is no justification - equitable or otherwise - for shifting the burden of his sanctions to others.

E. Collateral Estoppel

In March, 2011, Enzo moved in the Eastern District of Virginia for sanctions against Glaser stemming from his use of the confidential documents in an attempt to reopen his case.*fn72 Judge Gerald Lee initially granted these sanctions, but reversed himself sua sponte days later when he realized that Glaser was not a party to the Protective Order.*fn73 Glaser now argues that because Brecher's motion raised "the same fundamental arguments" that Enzo raised in its motion for sanctions, Judge Lee's decision precludes this Court from reaching a different result. Glaser asserts that because Brecher "has become a shill for"*fn74 Enzo, and because "Brecher's motion advances Enzo's interests in seeing that the allegedly confidential documents never see the light of day,"*fn75 Brecher is in privity with Enzo. First, Brecher is neither a "shill" for Enzo, nor is he is in privity with it; rather, he brings this motion on his own behalf in an attempt to comply with this Court's order directing him to retrieve the documents from Glaser.*fn76 Second, the question of privity between Brecher and Enzo is irrelevant because this motion presents a different issue than Enzo's motion against Glaser in Virginia.

Enzo's motion for sanctions against Glaser was: (1) an attempt to vindicate Enzo's interests; and (2) premised on the incorrect assumption that Glaser was bound by the Protective Order. Collateral estoppel does not apply to Brecher's motion because Brecher is not attempting to relitigate Judge Lee's determination that the Protective Order does not apply to Glaser. Further, although I am ordering Glaser to turn over the confidential documents to Enzo, this Opinion and Order stems not from Enzo's rights but from this Court's interest in ensuring that its orders are followed. As the Second Ciruit reasoned in Eli Lilly, if district courts could not order the turnover of documents procured by those who aid and abet the violation of protective orders, "courts' ability to manage discoery and, hence, litigation [would be eviscerated]."*fn77


Brecher's motion is granted in part and denied in part. Glaser is hereby enjoined from further disseminating all confidential documents obtained from Brecher and all materials derived therefrom. Glaser shall forthwith return any such documents and copies still in his possession or control to Enzo. Brecher's motion for damages is denied.


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