October 3, 2013
Allen B. Roberts, Plaintiff,
Leslie D. Corwin and GREENBERG TRAURIG, LLP, Defendants.
Counsel for the Plaintiff is John H. Pope, Esq., Epstein Becker & Green, P.C.
Counsel for the Defendants is Roy L. Reardon, Esq., Simpson Thacher & Bartlett LLP.
MARCY S. FRIEDMAN, J.
In this legal malpractice action, defendants Leslie D. Corwin and Greenberg Traurig, LLP (collectively Greenberg Traurig) move to dismiss the complaint or, in the alternative, to disqualify Epstein Becker & Green, P.C. (Epstein Becker) from representing plaintiff Allen B. Roberts, based on alleged unethical conduct on Epstein Becker's part. Defendants also seek discovery sanctions against Mr. Roberts.
In the instant motion, Greenberg Traurig contends that Epstein Becker engaged in "unethical conduct and deceit" in acting as co-counsel to Greenberg Traurig while also preparing for a potential malpractice action against Greenberg Traurig. (Ds.' Memo. in Support at 1-3.) Greenberg Traurig further contends that Mr. Roberts and Epstein Becker engaged in discovery abuses by failing "to issue a litigation hold or to undertake required steps to preserve" relevant material and to log as privileged or produce certain documents. (Id. at 3-5.)
The facts of this matter are set forth in this Court's decision and order on the record on May 14, 2012, the transcript of which was so-ordered on May 21, 2012 (May 2012 Decision), and the decision and order, dated September 10, 2012 (Sept. 2012 Decision), familiarity with which is assumed. Mr. Roberts retained Greenberg Traurig to represent him in an arbitration against the firm he founded, Roberts & Finger, LLP. The arbitration panel issued an adverse interim award on May 11, 2006, finding that Mr. Roberts "failed to establish a prima facie case that he has suffered any damage as a result of the manner in which the dissolution of Rogers & Finger LLP was carried out." (Interim Award, ¶ 10.) The panel's determination was based in pertinent part on Mr. Roberts' failure to present expert testimony as to the value of the law firm and its assets. (Id., ¶¶ 8, 9, 10.) Mr. Roberts retained Epstein Becker to serve as co-counsel to Greenberg Traurig in the arbitration in May 2006, after the panel's issuance of the interim award. (May 2012 Decision at 19.) The panel issued an adverse final award on July 13, 2006, incorporating the interim award. (Final Award.) Mr. Roberts' petition to vacate the unfavorable final award was denied by order of this Court (Moskowitz, J.), dated April 3, 2007. (Sept. 2012 Decision at 4.) Mr. Roberts ultimately reached a global settlement with Roberts & Finger in August 2007. (Sept. 2012 Decision at 24; Complaint, ¶ 55.)
Shortly after the issuance of the adverse interim award, and while Epstein Becker, through Mr. Cozier, was co-counseling with Greenberg Traurig to obtain relief from the award, Mr. Roberts consulted with John Sachs, also an attorney at Epstein Becker, regarding a possible malpractice action against Greenberg Traurig.  Although the parties dispute the date as of which Epstein Becker was retained for the malpractice action, it is undisputed that Mr. Roberts consulted with Mr. Sachs as early as May 2006, and that a formal demand was not served until October 2007.  This demand, made by letter dated October 18, 2007 (Sachs Aff., Ex. 1), asserted that the arbitrators precluded expert testimony on the valuation of Mr. Roberts' partnership interest based on Greenberg Traurig's failure to disclose that it would call an expert, and that such failure constituted malpractice. This malpractice action was filed on October 30, 2009, and was also based on Greenberg Traurig's failure to disclose the expert witness.
Greenberg Traurig contends that Epstein Becker misused its position as co-counsel "to build a record against [Greenberg Traurig] to support a purported malpractice claim." (Ds.' Memo. of Law in Support at 15.) In support, Greenberg Traurig cites Mr. Corwin's testimony that he "disclosed to [Epstein Becker] and Cozier, without reservation of any kind, as I would to any of my own colleagues at [Greenberg Traurig], or to any other qualified lawyer selected by Roberts to be my co-counsel, all information that would be helpful to them in understanding the background of the case and, in particular, all aspects of the underlying arbitration." (Corwin Aff., ¶ 17.)
Significantly, Greenberg Traurig does not allege that Epstein Becker, through its position as co-counsel, gained any information, confidential or privileged, which it could not have obtained from Mr. Roberts himself. In both Matter of Beiny [Weinberg] (129 A.D.2d 126 [1st Dept 1987]) and Lipin v. Bender (84 N.Y.2d 562 ), the cases relied on by Greenberg Traurig, the Courts imposed sanctions because counsel used or countenanced the use of surreptitious means to gain access to privileged information. In Weinberg, counsel obtained non-party discovery without providing the statutorily required notice to his adversary. The Court disqualified counsel and issued a protective order, stating: "It is important to stress that the rationale for the disqualification here imposed is not fundamentally different from that employed in situations where an attorney undertakes to represent interests adverse to those of a former or present client. What is to be prevented is the misuse of information disclosed in confidence between attorney and client." (129 A.D.2d at 143.) In Lipin, the plaintiff deliberately picked up documents left on a table by defendants' counsel during a court conference. The Court struck the complaint, reasoning that plaintiff "knowingly and deliberately intruded herself into plainly private communications between defendants and their attorney" and failed to return those communications in violation of court orders. (84 N.Y.2d at 568.) Further, plaintiff's counsel "exploited information derived from the disputed documents." (Id.)
In Greene v. Greene (47 N.Y.2d 447 ), a malpractice action on which Greenberg Traurig also relies, two members of the law firm that represented the plaintiff had formerly been partners in the defendant law firm. They were not only potentially personally liable for any wrongdoing by the defendant firm but also had gained confidential information while they were members of the firm and had allegedly been "privy to partnership discussions concerning the firm's potential liability." (47 N.Y.2d at 453.) In light of their access to client confidences, coupled with "a direct and substantial stake in the outcome of the litigation" which was adverse to the client's (id. at 452), the Court concluded that the plaintiff's firm must be disqualified. (Id. at 453.)
Here, in contrast, Mr. Corwin offers only the vague testimony, cited above, that he did not withhold any information from Epstein Becker. Moreover, although Mr. Roberts was Greenberg Traurig's client, he was free to disclose to Epstein Becker whatever communications he had with Mr. Corwin or whatever documents he received from Mr. Corwin, including strategy discussions and drafts. Greenberg Traurig also fails to identify any information that Mr. Corwin disclosed to Epstein Becker regarding his representation of Mr. Roberts, including his litigation strategy in the underlying arbitration, which Epstein Becker has relied on in claiming that Greenberg Traurig committed malpractice. Finally, Greenberg Traurig does not contend that Epstein Becker impeded its ability to represent Mr. Roberts in the arbitration in any way. In fact, Mr. Corwin testified that Mr. Cozier "made positive and helpful contributions to carrying out" the litigation strategy developed by Greenberg Traurig. (Corwin Aff., ¶ 17.)
As previously noted, Epstein Becker's simultaneous representation of Mr. Roberts for purposes of both mitigating damages in the arbitration proceeding and preparing for a possible malpractice action raises ethical concerns. (See May 14, 2012 Tr. at 25-26.) However, this case does not involve the egregious conduct in obtaining confidential information through deceptive means, or an inherent conflict of interest, which has been held to require the severe remedy of disqualification.
Greenberg Traurig also relies on alleged violations of the ethical rules governing attorney conduct (22 NYCRR 1200.0) to buttress its claim that Mr. Roberts' complaint should be dismissed or Epstein Becker disqualified as his attorney. (Ds.' Memo. in Support at 18-21.) Rule 4.3, which Greenberg Traurig cites, provides that a lawyer shall not "state or imply that the lawyer is disinterested" when communicating with a person who is not represented, or give legal advice to that person. Rule 8.4 (c) and its predecessor, Disciplinary Rule 1-102, also prohibit dishonest and deceitful conduct. The court credits Greenberg Traurig's claim that Rule 4.3, which did not exist at the time of Epstein Becker's alleged misconduct, is consistent with a lawyer's " general obligation not to engage in conduct involving dishonesty, deceit, fraud, or misrepresentation.'" (Reply Memo. Of Law at 12 [quoting Roy D. Simon, Simon's New York Rules of Professional Conduct Annotated at 850 ].) The court finds, however, that Rule 4.3 is not applicable to the co-counseling relationship. Rule 8.4 (c) also is not implicated because this case does not involve the type of egregious conduct that has been held to warrant disqualification or sanctions. The court further rejects Greenberg Traurig's claim that Epstein Becker violated Rule 3.1 (a) which provides that a lawyer shall not bring or defend a frivolous claim. Epstein Becker has not engaged in frivolous conduct by arguing in the arbitration proceeding that the panel should not have rejected Mr. Roberts' damages evidence, while now arguing in this malpractice action that Greenberg Traurig committed malpractice by not noticing an expert on damages.
Finally, the court holds that Mr. Robert's failure to produce or log as privileged certain documents, and Mr. Roberts' or Epstein Becker's alleged failure to issue a litigation hold, do not warrant the imposition of a spoliation sanction. "Dismissal is the most drastic sanction contemplated by the CPLR for failure to comply with discovery and should be imposed only when the conduct of the offending party was willful, contumacious, or in bad faith." (Mateo v. T & H Enters., 60 A.D.3d 411, 412 [1st Dept 2009].) When possible, "actions should be resolved on the merits. Litigants who have not replied expeditiously to notices for discovery and inspection should be afforded reasonable latitude before imposition of the ultimate sanction." (Shure v. New York Cruise Lines, Inc., 59 A.D.3d 292, 293 [1st Dept 2009].) The First Department recently re-stated the standard for spoliation sanctions in VOOM HD Holdings LLC v. EchoStar Satellite L.L.C. (93 A.D.3d 33, 45 [1st Dept 2012]):
"A party seeking sanctions based on the spoliation of evidence must demonstrate: (1) that the party with control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind'; and finally, (3) that the destroyed evidence was relevant to the party's claim or defense such that the trier of fact could find that the evidence would support that claim or defense."
The requisite culpable state of mind can be demonstrated through intentional or willful conduct, gross negligence, or ordinary negligence. (Id.) If the destruction of evidence was brought about through intentional or willful conduct or gross negligence, relevance is presumed. (Id.) If any spoliation is brought about through ordinary negligence, relevance must be proven. (Id.) Significantly, the presumption of relevance may be rebutted by "demonstrating that the innocent party had access to the evidence alleged to have been destroyed or that the evidence would not support the innocent party's claims or defenses, " and that there was therefore no prejudice. (Id.)
Greenberg Traurig contends that Mr. Roberts failed to produce or log as privileged approximately 80 responsive emails, in response to a discovery demand directed to him. (Reardon Aff., ¶¶ 33-34.) It is undisputed that such emails were subsequently produced by Epstein Becker in June 2012, pursuant to a subpoena directed to Epstein Becker and following this court's May 2012 Decision determining privilege issues relating to the documents.  It is also undisputed that Mr. Roberts produced over 2, 800 documents during discovery. (Roberts Aff., ¶ 14.)
This is not a case in which Mr. Roberts has a history of willful non-compliance with this court's discovery orders. (Compare VOOM, 93 A.D.3d at 40. See also General Motors Acceptance Corp. v. New York Cent. Mut. Fire Ins. Co., 104 A.D.3d 523, 525-26 [1st Dept 2013] [finding party's "history of noncompliance with the court's prior discovery orders" supported finding that the failure to produce was "wilful and contumacious"].) Moreover, the asserted discovery default is not a basis for sanctions inasmuch as the emails were produced, albeit by Epstein Becker, well in advance of depositions, dispositive motion practice, and trial preparation.
To the extent that Greenberg Traurig claims that Mr. Roberts' failure to produce the emails indicates that there must have been other documents that were not preserved and that it was therefore prejudiced by the destruction of documents with unknowable content (Ds.' Memo. In Support at 22), this contention is unavailing. Although Greenberg Traurig has completed discovery, it makes no showing, through either deposition testimony or other documents, that any documents were destroyed. This case is therefore distinguishable from VOOM, where the innocent party was able to establish both that identified documents were not preserved and that the adverse party "did not cease the automatic destruction of e-mails until four months after [the] action was commenced." (Id. at 44. See also General Motors Acceptance Corp., 104 A.D.3d at 525-26.) A finding of spoliation may not be premised on Greenberg Traurig's mere supposition that additional documents must have existed and must have been destroyed.
In seeking discovery sanctions, Greenberg Traurig also alleges that it first learned at Mr. Sachs' deposition on October 12, 2012 that he maintained a hard copy file and that the file should have been produced but was not.  (Reardon Aff., ¶¶ 5-6.) Epstein Becker contends that the materials provided by Mr. Sachs "pertained solely to events and preparations undertaken after the October 18, 2007 demand letter" and "would not be subject to production" under the court's order. (Pope Aff., ¶ 2.) At oral argument, Mr. Pope represented that he reviewed Mr. Sachs' papers, and that they were not subject to production because they post-dated the notice of intent to commence malpractice proceedings. (Tr. at 29-30.)
On this record, Greenberg Traurig fails to demonstrate that any materials contained in the file Mr. Sachs referenced in his deposition are responsive. Although it had the opportunity to do so at his deposition, Greenberg Traurig failed to elicit testimony from Mr. Sachs as to the contents of the file, including testimony as to when he created the notes. The court notes that Greenberg Traurig did not request an in camera review of the file. Nor would such review be warranted, given the complete lack of showing by Greenberg Traurig that the documents would be subject to production.
Greenberg Traurig further contends that Mr. Roberts or Epstein Becker, on his behalf, failed to institute a "litigation hold" to preserve documents. (Ds.' Memo. in Support at 21-22.) Mr. Roberts and Epstein Becker acknowledge that a formal written litigation hold was not issued. (See Roberts' Interrogatory Response No. 5; Sachs' Dep. at 97-98.) However, Mr. Roberts attests that "[s]ince the beginning of [Greenberg Traurig's] representation of me, I saved emails and electronic documents in a personal folder on my computer, and retained all hard copies of documents in a file. This practice continued through the arbitration and post-arbitration proceedings." (Roberts Aff., ¶ 14.) Epstein Becker further claims that a formal written litigation hold was not necessary as Mr. Roberts acted to preserve his documents and the attorneys at Epstein Becker were under an independent ethical obligation to maintain and preserve client files. (P.'s Memo. In Opp. at 24-25.)
"Once a party reasonably anticipates litigation, it must, at a minimum, institute an appropriate litigation hold to prevent the routine destruction of electronic data." (VOOM, 93 A.D.3d at 41.) Greenberg Traurig submits no authority that the litigation hold must always be written and that the form of the litigation hold may not vary with the circumstances. Moreover, Greenberg Traurig makes no showing that an automatic email deletion protocol was in place at Epstein Becker or, as held above, that Mr. Roberts or Epstein Becker deleted any emails or otherwise destroyed any documents. Under these circumstances, a spoliation sanction is not appropriate.
The court has considered the Greenberg Traurig's remaining contentions and finds them to be without merit.
It is accordingly hereby ORDERED that Greenberg Traurig's motion to dismiss plaintiff's complaint is denied in its entirety.
This constitutes the decision and order of the court.