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Novick v. Axa Network, LLC

United States District Court, S.D. New York

October 22, 2014

STEVEN S. NOVICK, Plaintiff,
v.
AXA NETWORK, LLC, and AXA ADVISORS, LLC, Defendants. AXA NETWORK, LLC, and AXA ADVISORS, LLC, Counter Claimants,
v.
STEVEN S. NOVICK, Counter Defendant.

MEMORANDUM AND ORDER

KEVIN NATHANIEL FOX, Magistrate Judge.

Before the Court is the plaintiff's motion for sanctions, pursuant to Rule 37(b)(2) of the Federal Rules of Civil Procedure, "consisting of the striking of Defendants' Answer and Counterclaims, allowing negative spoliation inferences being made against Defendants, and the imposition of a monetary fine and/or costs incurred by Plaintiff in relation to his repeated attempts to obtain the at-issue discovery and failure to preserve same." The defendants oppose the motion.

Plaintiff's Contentions

The plaintiff contends that the defendants committed five "strikes" which justify his request for sanctions, namely: (1) after five years of "vacillating about whether or not audio recordings to which Plaintiff is entitled either exist or are relevant, " the defendants notified him, in March 2013, that they "located the audio recordings, however, said audio recordings could not be listened to"; (2) in December 2012, the defendants produced "a total of only 156 e-mails, virtually all of which" were irrelevant, but promised to correct the mistake; (3) in January 2013, the defendants produced "4, 202 e-mails, purporting to rectify the mistake, however, " they only produced "e-mails they deem favorable to Defendants"; (4) pursuant to the September 25, 2013 order, the defendants produced "a hard drive containing approximately 102, 000 e-mails, which e-mail exchange was wholly deficient and omitted e-mails that the Plaintiff maintains exist and/or previously existed"; and (5) on March 28, 2014, the defendants sent a letter "admitting that their e-discovery was deficient, " without specifying the extent of the deficiency, "and even this 43, 200 e-mail production did not satisfy Defendants' outstanding production requirements."

The plaintiff contends that the defendants have spoliated audio recordings because "audio recordings from the time period August 28, 2006 through November 5, 2006 (approximately one-third of the entire time period ordered) are missing, " and "Defendants admit that they were likely erased and taped over." The defendants represented the following to the plaintiff, in their October 25, 2013 letter:

Our forensic analysis to date reveals that any recordings subject to Magistrate's [sic] Judge Fox's Order for those dates between September 8, 2006 and November 5, 2006, and between August 28 and August 31, 2006, were copied to DVDs created on or before November 1, 2006. Assuming the recordings for these dates were copied to double-sided and separate DVDs, our forensic analysis indicates that seven (7) double sided DVDs were created on August 28, 2006, and on various dates between September 7 and November 1, 2006, which have not been located or otherwise accounted for. The next DVD in sequence, created on November 6, 2006, contained recordings for November 6-9, 2006 that were produced to you. Except for the seven (7) DVDs created on August 28, 2006, and on various dates between September 7 and November 1, 2006, our forensic analysis has confirmed that all other DVDs created that contain recordings subject to Magistrate Judge Fox's Order have been located. All of the recordings subject to Magistrate Judge Fox's Order contained on these DVDs were produced to you on October 17, 2013.

According to the plaintiff, "these recordings are from the most important time period of all - directly before and directly after Mr. Novick's termination."

Similarly, the plaintiff asserts, "Defendants have spoliated e-mails, " because [t]here are practically no e-mails scribed by Mr. Miller and/or Mr. Haspel to any of Mr. Novick's clients during the period of October 2006-May 2007; and practically no e-mails between the Millers and Mr. Haspel. There was nothing regarding Georgette Geller and/or AXA's hiring process at the Stamford branch. There was nothing regarding any discussion between Plaintiff and Mr. Joel Miller about continuing business operations. Only a single e-mail was provided between Joel Miller and Plaintiff (and that was sent to Mr. Novick's personal e-mail address).

The plaintiff maintains that this is "inconceivable based upon the fact that the Millers and Mr. Haspel were involved with the triaging' of Mr. Novick's accounts, Mr. Pirrone was his assistant and Ms. Geller was his supervisor and also involved in pre-determination meetings." The plaintiff contends that the defendants must "have spoliated e-mails of seven custodians after due notice to preserve same, " since they insisted that "they have provided all e-mails." The plaintiff maintains that the Court sanctioned the defendants previously but those sanctions "have fallen on deaf ears" and "[f]urther sanctions of the same import would be meaningless." The plaintiff asserts that striking the defendants' answer and counterclaims is warranted. Furthermore, "[o]wing to the exorbitant expenses Plaintiff has incurred relating to discovery in this matter, due in no small measure to the dilatory discovery tactics" of the defendants, the plaintiff asserts that monetary sanctions are warranted, consisting of reasonable attorney's fees expended in making each of the plaintiff's discovery-related motions to date, including the instant motion, but excluding the attorney's fees for the prior motion for sanctions which were already reimbursed by the defendants. The plaintiff contends "it is warranted that he be permitted to re-take depositions at the Defendants' expense, using e-mails that should have been available prior to the original taking of depositions." Additionally, the plaintiff "demands the production of all email sent to or received from Joel Miller, Joseph Miller, Georgette Geller, Ned Dane, and Robert Jones from June 2006 through June 2007." The plaintiff asserts that he

should be permitted to depose Christopher Barber, the supervisor of Larry Passaretti, who would be familiar with the supervisory duties, policies, and procedures of AXA, in addition to the lack of consequences against Mr. Passaretti from AXA for his involvement with selling away interests in a Ponzi scheme, his eventual resignation and the lack of interference from AXA in transferring his clients to a new firm, and the FINRA investigation against him from his activities with AXA.

Defendants' Contentions

The defendants contend that "no responsive emails have been withheld and there is no evidence that any emails are missing." According to the defendants, the plaintiff's allegations are without any evidentiary support and incorrect. For example, the defendants assert, "the 2013 and 2014 email productions contained more than 11, 900 emails from Joel Miller and more than 6, 050 emails from Max Haspel, and at least hundreds more from most of each of the other custodians." Moreover, the plaintiff provides no evidence that only a single e-mail message between Joel Miller and the plaintiff was produced. The defendants maintain that, "[w]hile there were some well-documented technical difficulties with [e-mail message] searches due to their complexity, defendants worked to overcome those difficulties, as soon as they discovered or learned of them, and believe they have all been resolved." The defendants contend that their "assessment of the vast majority of the emails most recently produced is that they are utterly irrelevant to the issues in this action, " because "the email search (designed by plaintiff) was not targeted to any of the issues in the case, not because anything of relevance was withheld - it was not." The defendants assert that the plaintiff failed to establish by any evidence that their "production is incomplete, let alone spoliated."

According to Jay Mason ("Mason"), a director in the Information Technology group at AXA Equitable Life Insurance Company, whose team was asked to collect e-mail messages of ten custodians employed or affiliated with the defendants, "[i]n March 2014, a question was raised regarding the number of emails in the email boxes of one of the custodians, Joseph Pirrone. It appeared that, even though Pirrone left the company in or about October 2006, there should have been more emails in his email box than there were, so my staff and I investigated." According to Mason, "due to human error, " an archive database known as "Frontbridge" was not searched, and "[i]t is clear that there was a large group of emails from each [Joseph Pirrone, Joel Miller, Joseph Miller and Max Haspel] that was not included in their original email boxes sent... for searching and production." Mason asserts that "emails from the four custodians" were gathered "as quickly as possible, and sent to Case Central to have the search terms run."

The defendants "acknowledge that there are approximately eight weeks of audio recordings, within the period of time for which production of audio recordings was eventually ordered, that cannot be located or produced, " but "[t]his is not a new issue, " and the defendants advised plaintiff of it, on October 17, 2013, when the majority of the recordings were produced to him, and "[t]he fact that these weeks of recordings are missing constitutes the only real issue in plaintiff's sanctions motion." The defendants maintain that they "cannot now explain the absence of these recordings, " or identify any person who had knowledge of their existence, despite their efforts to do so. The defendants assert that "Plaintiff has already received sanctions appropriate to remedy the missing recordings, " when he was permitted to take depositions of five individuals, at the defendants' expense; however, he took only four depositions. The defendants contend that, "[w]hile it is true that the previous sanctions motion did not specifically address the missing eight weeks of recordings, the parties believed, at the time plaintiff made his first motion for sanctions, that all of the recordings were missing." The defendants maintain that harsh sanctions are not warranted because "there is no evidence concerning when, why or how the eight weeks of audio recordings went missing, and there is similarly no evidence as to ...


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