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Elsevier Inc. v. Pierre Grossmann, IBIS Corp.

United States District Court, S.D. New York

May 8, 2017

ELSEVIER INC., ELSEVIER B.V., ELSEVIER LTD., and ELSEVIER MASSON SAS, Plaintiffs,
v.
PIERRE GROSSMANN, IBIS CORP., PUBLICAÇÕES TÉCNICAS INTERNACIONAIS, and JOHN DOE Nos. 1-50, Defendants.,

          OPINION AND ORDER

          KATHERINE POLK FAILLA United States District Judge.

         On June 29, 2012, Plaintiffs Elsevier Inc., Elsevier B.V., Elsevier Ltd., and Elsevier Masson SAS (collectively, “Plaintiffs” or “Elsevier”) brought this action against Defendants Publicações Técnicas Internacionais (“PTI”), IBIS Corp. (“IBIS”), and Pierre Grossmann (“Grossmann” and, together with PTI and IBIS, “Defendants”), alleging that Defendants had operated a scheme to (i) obtain subscriptions to the journals sold by Plaintiffs at discounted rates and (ii) to resell those journal subscriptions to institutions otherwise obligated to pay full price for them. On May 8, 2015, the Court entered default judgment against PTI and IBIS. Grossmann proceeded to trial.

         On January 14, 2016, a jury determined that Grossmann had violated the Racketeer Influenced and Corrupt Organizations Act (“RICO” or the “Act”), 18 U.S.C. §§ 1961-68, but that he had not engaged in a conspiracy to violate the Act. The jury further determined that Grossman had breached one or more contracts with Plaintiffs and that he had converted Plaintiffs' property. The jury awarded Plaintiffs $11, 108 in damages for the RICO violation and $6, 201 for the contractual breaches, but found that Plaintiffs had not been damaged by the conversion of their property.

         Post-trial, Grossmann filed a motion for judgment as a matter of law on the RICO claim (the “RICO Motion”). The following day, Plaintiffs filed: (i) a motion for judgment as a matter of law on the question of RICO damages or, in the alternative, for a new trial solely on the question of RICO damages (the “Damages Motion”); (ii) a motion for an award of damages and an entry of final default judgment against PTI and IBIS (the “Motion for Final Default Judgment”); and (iii) a motion for attorneys' fees and costs under 18 U.S.C. § 1964(c) (the “Fee Motion”). In an Opinion and Order issued on August 4, 2016 (the “August 4 Opinion”), the Court granted the RICO Motion, but gave Plaintiffs leave to request a new trial at which they could attempt to establish RICO liability against Grossmann. The Damages Motion was denied; the Motion for Final Default Judgment granted in part and denied in part; and the Fee Motion denied without prejudice.

         On February 15, 2017, Plaintiffs filed a motion (i) for a new trial against Grossmann pursuant to Federal Rule of Civil Procedure 59 on the issue of domestic injury with respect to Plaintiffs' RICO claims and (ii) for leave to amend Plaintiffs' Amended Complaint pursuant to Federal Rule of Civil Procedure 15 to set forth supplemental, domestic-injury allegations. For the reasons outlined below, this motion is granted.

         BACKGROUND[1]

         A. Factual and Procedural Background Prior to August 4, 2016

         The bulk of the background relevant to this case has not changed in the months since the Court outlined it in the August 4 Opinion. Therefore, to avoid redundancy, the Court here incorporates by reference the factual and procedural background statements set forth in that Opinion. See Elsevier, Inc. v. Grossman, 199 F.Supp.3d 768, 774-78 (S.D.N.Y. 2016), order clarified sub nom. Elsevier Inc. v. Grossmann, No. 12 Civ. 5121 (KPF), 2016 WL 7077037 (S.D.N.Y. Dec. 2, 2016).

         B. Subsequent Procedural Background

         In its August 4 Opinion, the Court granted Grossmann's RICO Motion, and denied Plaintiffs' Damages Motion. (Dkt. #222). However, the Court gave Plaintiffs leave (i) to request a new trial at which they could establish RICO liability against Grossmann and (ii) to move for leave to amend the Amended Complaint. (Id.).

         On February 15, 2017, Plaintiffs filed a motion (i) for a new trial against Grossmann pursuant to Federal Rule of Civil Procedure 59 on the issue of domestic injury with respect to Plaintiffs' RICO claims and (ii) for leave to amend Plaintiffs' Amended Complaint pursuant to Federal Rule of Civil Procedure 15 to set forth domestic-injury allegations to supplement their RICO and RICO conspiracy claims against PTI and IBIS. (Dkt. #297-300). Grossmann opposed Plaintiffs' motion in two emails, the first of which he sent to the Court on February 20, 2017 (Dkt. #302), and the second of which he sent to Plaintiffs on March 8, 2017 (Dkt. #318). Plaintiffs filed a letter reply on March 20, 2017. (Dkt. #322).

         DISCUSSION

         A. Plaintiffs' Motion for a New Trial with Regard to Domestic Injury Is Granted

         1. Applicable Law

         For clarity, the Court here will revisit the legal standards it applied in the August 4 Opinion and describe any subsequent changes thereto.

         a. Federal Rule of Civil Procedure 59

         Federal Rule of Civil Procedure 59 gives a court discretion to “grant a new trial on all or some of the issues” in a case after a jury trial has been held “for any reason for which a new trial has heretofore been granted in an action at law in federal court.” Fed.R.Civ.P. 59(a)(1)(A). The Second Circuit has acknowledged that an “intervening change in controlling law” can be an appropriate basis for granting a new trial under Rule 59. LiButti v. United States, 178 F.3d 114, 119 (2d Cir. 1999); see also Sass v. MTA Bus Co., 6 F.Supp.3d 229, 238 (E.D.N.Y.) (granting a new trial based on a change in the governing law), adhered to on reconsideration, 6 F.Supp.3d 238 (E.D.N.Y. 2014). But see LiButti, 178 F.3d at 119 (“Usually, an intervening change in controlling law is a basis for an amendment of the judgment, rather than a new trial.”). The Second Circuit has also recognized that courts have discretion to grant a new trial where doing so is necessary to prevent a miscarriage of justice. See Hygh v. Jacobs, 961 F.2d 359, 365 (2d Cir. 1992) (noting that trial court has discretion to grant Rule 59 motions to avoid verdict constituting “a miscarriage of justice” (internal quotation mark omitted) (quoting Smith v. Lightning Bolt Prods., Inc., 861 F.2d 363, 370 (2d Cir. 1988)); Fioto v. Manhattan Woods Golf Enters., LLC., 304 F.Supp.2d 541, 545 (S.D.N.Y. 2004) (same), aff'd sub nom. Fioto v. Manhattan Woods Enters. LLC, 123 F. App'x 26 (2d Cir. 2005) (summary order).

         b. The Racketeer Influenced and Corrupt Organizations Act

         i. RICO Generally

         Congress enacted RICO to combat “racketeering activity.” RJR Nabisco, Inc. v. European Cmty., __ U.S. __, 136 S.Ct. 2090, 2096-97 (2016). A “pattern of racketeering activity” occurs when an individual commits two or more predicate offenses within a ten-year period, see 18 U.S.C. § 1961(5); those predicate offenses are related to one another, see H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239 (1989); and the predicates “amount to or pose a threat of continued criminal activity, ” id.

         The heart of RICO is 18 U.S.C. § 1962, which creates four substantive prohibitions against “racketeering activity.” This case concerns the third and fourth prohibitions. The third prohibition reads:

It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.

Id. § 1962(c). The fourth prohibition makes it unlawful for anyone to conspire to violate any part of § 1962. ...


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