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In re 650 Fifth Avenue and Related Properties

United States District Court, S.D. New York

May 17, 2017

IN RE 650 FIFTH AVENUE AND RELATED PROPERTIES
v.
650 FIFTH AVENUE and RELATED PROPERTIES, Defendants. KIRSCHENBAUM, et al., Plaintiffs,

          OPINION & ORDER

          KATHERINE B. FORREST, UNITED STATES DISTRICT JUDGE

         A coordinated jury and bench trial in the above-captioned actions is scheduled to commence on May 30, 2017. Before the Court are a number of motions in limine, some of which are ghosts of the past-motions dealt with in connection with the trial scheduled in 2013 that have again reared their head. So that the final pre-trial conference can be used to discuss other matters relating to the trial, the Court's rulings on the pending motions in limine are set forth below.

         I. APPLICABLE LEGAL PRINCIPLES

         A. Standard on a Motion In Limine

         “The purpose of an in limine motion is to aid the trial process by enabling the Court to rule in advance of trial on the relevance of certain forecasted evidence, as to issues that are definitely set for trial, without lengthy argument at, or interruption of, the trial.” Palmieri v. Defaria, 88 F.3d 136, 141 (2d Cir. 1996) (quotation marks omitted); see also Highland Capital Mgmt., L.P., v. Schneider, 551 F.Supp.2d 173, 176 (S.D.N.Y. 2008). “The trial court should exclude evidence on a motion in limine only when the evidence is clearly inadmissible on all potential grounds.” United States v. Ozsusamlar, 428 F.Supp.2d 161, 164-65 (S.D.N.Y. 2006) (citations omitted).

         A court's ruling on a motion in limine “is subject to change when the case unfolds, particularly if the actual testimony differs from what was contained in the [party's] proffer.” Luce v. United States, 469 U.S. 38, 41 (1984). In limine rulings occur pre-trial, and that fact has significance. The evidence at trial may come in differently than anticipated, altering the solidity of the proffered basis for a pretrial ruling. The Court therefore invites any party who believes that the factual record as developed at trial supports a revised ruling to bring such an application in a timely manner.

         B. Relevant Evidence

         Federal Rule of Evidence 401 defines relevant evidence as that which “has any tendency to make a fact more or less probable than it would be without the evidence, ” so long as “the fact is of consequence in determining the action.” Fed.R.Evid. 401; see also Old Chief v. United States, 519 U.S. 172, 178 (1997). “The fact to which the evidence is directed need not be in dispute.” Id. at 650. To be relevant, evidence need not constitute conclusive proof of a fact in issue, but only have “‘any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.'” McKoy v. North Carolina, 494 U.S. 433, 440 (1990) (quoting New Jersey v. T.L.O., 469 U.S. 325, 345 (1985)); see also United States v. Abu-Jihaad, 630 F.3d 102, 132 (2d Cir. 2010).

         Federal Rule of Evidence 402 provides that all relevant evidence is admissible except as otherwise provided by the Constitution, by Act of Congress, or by applicable rule. Fed.R.Evid. 402; see also United States v. Abel, 469 U.S. 45, 51 (1984).

         C. Federal Rule of Evidence 403

         Federal Rule of Evidence 403 authorizes the exclusion of relevant and otherwise admissible evidence when its “probative value is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.” Fed.R.Evid. 403; see also Old Chief, 519 U.S. at 180. “[W]hat counts as the Rule 403 ‘probative value' of an item of evidence, as distinct from its Rule 401 ‘relevance, ' may be calculated by comparing evidentiary alternatives.” Old Chief, 519 U.S. at 184. “If an alternative were found to have substantially the same or greater probative value but a lower danger of unfair prejudice, sound judicial discretion would discount the value of the item first offered and exclude it if its discounted probative value were substantially outweighed by unfair prejudicial risk.” Id. at 182-83 (explaining that this analytical method is preferred over one that weighs only probative value against prejudice). In making this assessment, a court should take into consideration the “offering party's need for evidentiary richness and narrative integrity in presenting a case.” Id. at 183. Rule 403 is concerned with “some adverse effect . . . beyond tending to prove the fact or issue that justified its admission into evidence.” United States v. Gelzer, 50 F.3d 1133, 1139 (2d Cir. 1995) (quoting United States v. Figueroa, 618 F.2d 934, 943 (2d Cir. 1980)).

         II. THE PENDING MOTIONS IN LIMINE

         A. Claimants' Motions In Limine

         Claimants have brought or renewed the following ten motions in limine (“MILs”):[1]

1. Motion for sanctions, including an adverse inference, based on alleged spoliation of evidence (2013 motion in limine 6, [2] ECF No. 715, renewed at ECF No. 1617);
2. Motion to exclude evidence of control over the Foundation by the Bonyad Mostazafan prior to 1990 (2013 motion in limine 7, [3] ECF No. 715, renewed at ECF No. 1617);
3. Motion to exclude evidence regarding transactions by third party Hanif Partnership involving funds received in connection with a settlement of a then-pending litigation with Claimants (2013 motion in limine 9, [4] ECF No. 715, renewed at ECF No. 1617);
4. Motion to preclude witnesses' invocations of their Fifth Amendment right against self-incrimination[5] (2013 motion in limine 2, [6] ECF No. 715, repeated with additional argument as motion in limine 1, ECF No. 1616);
5. Motion to admit evidence of alleged racial and religious bias by case agents (motion in limine 2, ECF No. 1616);
6. Motion to preclude evidence suggesting that the 1989 partnership transaction was an improper or unlawful tax scheme (2013 motion in limine 3, [7] ECF No. 716, repeated with additional argument as motion in limine 3, ECF No. 1616);
7. Motion to preclude statements made by Assa's former President in proffer sessions (2013 motion in limine 5, [8] ECF No. 715, repeated with additional argument as motion in limine 4, ECF No. 1616);
8. Motion to preclude evidence of control over Alavi by the Government of Iran (motion in limine 5, ECF No. 1616);
9. Motion to preclude evidence relating to why the 1995 Iranian Transaction Regulations were enacted (motion in limine 6, ECF No. 1616);
10. Motion to preclude exhibits as to which the source and custody are unknown (motion in limine 7, ECF No. 1616).

         B. The Government's Motions In Limine[9]

         The Government has brought or renewed the following eleven MILs:

1. Motion to preclude evidence concerning the Alavi Foundation's charitable gifts, including witnesses who have received grants from Alavi (2013 motion in limine 1, ECF No. 718, renewed as motion in limine 1, ECF No. 1619);
2. Motion to preclude evidence regarding certain purported investigations of Claimants by federal and state agencies (2013 motion in limine 2, ECF No. 718, renewed as motion in limine 2, ECF No. 1619);
3. Motion to preclude Claimants from calling individuals who joined the Alavi Board after 2009 (2013 motion in limine 3, ECF No. 718, renewed as motion in limine 3, ECF No. 1619);
4. Motion to admit witness statements of Mohammad Geramian, Mohammad Deghani Tafti, and Mohammad Seyed Badr Taleh as statements against interest pursuant to Federal Rule of Evidence 804(b)(3) (2013 motion in limine 4, ECF No. 718, renewed as motion in limine 4, ECF No. 1619);
5. Motion to permit the Government to call witnesses who intend to assert their Fifth Amendment privilege against self-incrimination and allowing an adverse jury instruction (2013 motion in limine 5, ECF No. 718, renewed as motion in limine 5, ECF No. 1619);
6. Motion to admit evidence regarding Farshid Jahedi's destruction of subpoenaed documents (2013 motion in limine 6, ECF No. 718, renewed as motion in limine 6, ECF No. 1619);
7. Motion to preclude Claimants from eliciting substantive testimony from witnesses who asserted their Fifth Amendment rights against self-incrimination during discovery (motion in limine 7, ECF No. 1619)[10];
8. Motion to preclude J. Duross O'Bryan from testifying as an expert witness (motion in limine number 8, ECF No. 1619);
9. Motion to Preclude Miriam R. Albert from testifying as an expert witness (motion in limine number 9, ECF No. 1619)[11];
10. Motion to preclude reference to a lack of criminal IEEPA or money laundering charges brought against Claimants (motion in limine 10, ECF No. 1619); and
11. Motion to preclude mention of prior employment of counsel for Claimants as a federal judge (motion in limine 11, ECF No. 1619).

         III. DISCUSSION

         A. MILs Concerning the Fifth Amendment

         For ease of reference, the Court addresses as a group all of the MILs that seek rulings with regard to a witnesses' invocation of the Fifth Amendment right against self-incrimination. This includes Claimants' MIL 4 and the Government's MILs 5 and 7.

         1. Hassani and Dabiran

         During the years of civil discovery that occurred in this case, a number of witnesses were deposed and asserted their Fifth Amendment right not to incriminate themselves. Two of these witnesses, Hassan Hassani and Ali Dabiran-former members of the Alavi board of directors-are now available to testify at trial and could be made available in advance of trial for deposition.

         The Government has taken the position that allowing these witnesses to retract their earlier invocation of the Fifth would be unfair. (Memorandum of Law in Support of the Government's Renewed Motions In Limine (“Gov. Mem. in Supp.”), ECF No. 1620, at 4.) According to the Government, this is precisely the sword/shield issue that Second Circuit and other precedent has sought to prevent. See Brink's Inc. v. City of New York, 717 F.2d 700, 710 (2d Cir. 1983); see also Guttierrez-Rodriguez v. Cartagena, 882 F.2d 553, 557 (1st Cir. 1989); S.E.C. v. Towers Fin. Corp., 966 F.Supp. 203, 206 (S.D.N.Y. 1997); United States v. Inc. Vill. of Island Park, 888 F.Supp. 419, 431 (E.D.N.Y. 1995) (“The privilege against self- incrimination may be invoked . . . during the discovery process . . . . Because of the potential for abuse of the privilege by the defendants who use it to obstruct discovery only to waive it and subject the plaintiff to surprise testimony at trial, the courts recognize [that] a decision to assert the privilege during pre-trial depositions may be valid grounds for precluding a defendant from testifying at trial.”); S.E.C. v. Benson, 657 F.Supp. 1122, 1129 (S.D.N.Y. 1987) (a party has a right to take the Fifth, “[b]ut in a civil case, he cannot have it both ways. By hiding behind the protection of the Fifth Amendment as to his contentions, he gives up the right to prove them”); United States v. Sixty Thousand Dollars ($60, 000) in U.S. Currency, 763 F.Supp. 909, 914 (E.D. Mich. 1991) (“Because claimant has asserted a fifth amendment claim in discovery, this court holds that he may not now waive the privilege and testify.”).

         In Brink's, the Second Circuit held that an employee's (or prior employee's) invocation of the Fifth Amendment right against self-incrimination was, under the facts of that case, admissible and competence evidence. 717 F.2d at 710. The Court explained that admission of such evidence requires an analysis under both Federal Rule of Evidence 401 and Federal Rule of Evidence 403 to ensure that any probative value is not substantially outweighed by the danger of unfair prejudice. Id. In Brink's, the Second Circuit agreed with the district court judge who had stated that evidence that supports a party's position is not the type of prejudicial evidence the rule seeks to preclude; rather, the question is whether the evidence is inflammatory. Id. There, the Second Circuit found that it was not. Id.

         On the instant motions, Claimants assert that any prejudice suffered by the Government is of its own making since Claimants notified the Government more than two months ago that they intended to call Hassani and Dabiran to testify substantively at trial. (Alavi Foundation and 650 Fifth Avenue Company's Memorandum of Law in Opposition to the Government's Motions In Limine (“Claimants' Mem. in Opp.”), ECF No. 1671, at 2-6.) According to Claimants, the Government could have, but has chosen not to, depose the witnesses. (Id.)

         Claimants seek to distinguish the cases cited by the Government on the basis that they relate to situations in which the witnesses at issue were parties to the litigation. In contrast, Claimants argue, the two witnesses here are merely former board members of the in rem party, Alavi. (Id. at 3.)

         All parties agree that the testimony of Hassani and Dabiran-two former board members of Alavi-is relevant. The question is whether, at this late date, substantive testimony from these witnesses should be allowed. The answer is no.

         Discovery closed in this case long ago. Following the return of this case from the Second Circuit, the Court allowed a very limited reopening of discovery. The parties did not raise depositions of these two witnesses with the Court at that time. Claimants cannot now seek what is really a unilateral reopening of fact discovery by arguing that the Government could have taken the witnesses' depositions over the past two months. As Claimants know, neither party was allowed to reopen discovery without court order. Claimants cannot now succeed in their position, which would unilaterally require a reopening of discovery for the purpose of having the Government take additional depositions.[12]

         Now, on the eve of trial, reopening discovery does prejudice the Government and Judgment Creditors. These parties had every reason to believe that the Court was serious when it stated that it would not allow discovery to be reopened in any general way. Moreover, these parties had the right to rely on the record that they had developed during the discovery period. They did so rely: the final pre-trial order for the 650 case has been submitted; exhibits have been selected and offered to the Court; positions as to objections have been staked out; and deposition testimony has been taken and designated. Substantive testimony from these two witnesses runs precisely into issues of unfair advantage and sword/shield issues discussed in certain of the cases cited above.

         Claimants are also incorrect that this situation differs significantly from those in the cases cited by the Government. Former board members of a party- here, Alavi-are sufficiently close to be analogous to the party as a litigant. As a corporate entity, Alavi does not exist outside of its personnel. Both Hassani and Dabiran were high ranking personnel at the relevant period of time. While not personally liable in this action, they are nonetheless directly associated with Claimants. See F.D.I.C. v. Fid. & Deposit Co. of Maryland, 45 F.3d 969, 978 (5th Cir. 1995).

         2. Other witnesses who asserted their Fifth Amendment rights against self-incrimination

         In both its recent MIL submission, as well as in its 2013 filing, Claimants have argued that the Government should not be able to introduce the fact that certain former officers and board members of Alavi refused to answer questions based on their Fifth Amendment right against self-incrimination. (Alavi Foundation's and 650 Fifth Avenue Company's Memorandum of Law in Support of Their Motions In Limine (“Claimants' 2013 Mem. in Supp.”), ECF No. 716, at 8; Alavi Foundation and 650 Fifth Avenue Company's Memorandum of Law in Support of Their Motions In Limine (“Claimants' Mem. in Supp.”), ECF No. 1617 at 2.) Claimants assert that the Government made a purposeful and tactical decision to leave a criminal investigation open in order to coerce witnesses into asserting their Fifth Amendment rights. (Claimants' 2013 Mem. in Supp. at 10-12; Claimants' Mem. in Supp. at 2-9.) How to handle evidence relating to witnesses who had or would take the Fifth was discussed at the first final pre-trial conference held on September 4, 2013. (Sep. 4, 2013, Tr. at 45:23-55:04, ECF No. 1046.) At that time, and in a subsequent order (ECF No. 830), the Court indicated that it would provide further instructions regarding procedures during trial.

         Claimants assert that “more evidence of the Government's coercive tactics with the Fifth Amendment Witnesses is now available” and that it “demonstrates the Government's efforts to interfere with Claimants' ability to present testimony at trial.” (Claimants' Mem. in Supp. at 3.) In this regard, Claimants assert that many witnesses were “cowed” into asserting their Fifth Amendment rights, and others who were prepared to testify had their depositions cancelled. (Id.) As to the latter group, there is plainly no issue before the Court because there is no testimony to suppress.

         As alleged “additional” evidence, Claimants have cited documents that were in their possession in 2013-in which, inter alia, FBI agents discussed the investigation. (See id. at 2-9.) Claimants assert that the Government made it appear to all that employees of the entities under investigation were guilty of some crime and any word would land them in jail. According to Claimants, in light of this position, it was unsurprising that so few people testified. (Id.) The facts cited by Claimants are unsupportive of their argument, however.

         First, Claimants cherry pick comments taken out of context from emails (for instance, an email in which the phrase “we'll lock you up” was used only between agents and not to a third party). (Id. at 8.) Second, it is neither unusual nor nefarious for FBI agents and others working on an investigation to develop views about the investigation and to state such views candidly in emails between themselves. That does not mean that the investigation was irredeemably tainted. There is not a shred of evidence that suggests that the agents engaged in any unusual or coercive tactics here.

         Third, and more importantly, these witnesses faced real criminal exposure at the time. None of the individuals were charged with a crime-but it is wrong to assume that that ex-post outcome demonstrates a lack of real exposure at the time. Charging decisions are made for a variety of reasons. That the Government chose not to charge individuals or an organization with criminal conduct was its right; it could exercise that right (or not) for any number of reasons. In addition, and as the Government has discussed in its submission, these witnesses were represented by counsel, and often by well-known experts in the area. This adds further weight to the view that the witnesses made a considered decision versus being improperly intimidated by the Government.[13]

         The real issue appears to be that there are several instances in which witnesses asserted their Fifth Amendment rights and, as trial approaches, Claimants would now prefer not to have the jury hear that. Unfortunately, the witnesses who asserted the Fifth would have had relevant testimony-the fact that they asserted the Fifth is for the jury to weigh. The Court finds no basis to preclude the evidence on relevance grounds. The record before the Court also does not support concerns regarding the reliability of witnesses' invocation of his/her Fifth Amendment rights.

         Having found that the testimony is relevant, the Court examines whether Rule 403 nevertheless provides a basis for exclusion of such testimony. Here, again, the answer is no. There is no doubt that a jury hearing that a witness asserted his or her Fifth Amendment right is entitled to (although need not) draw the inference that the testimony would have been inculpatory. This undoubtedly helps the Government's case and not Claimants'. But, as in Brink's, there is a difference between “prejudice” as evidence supporting the Government's position and prejudice as evidence that is otherwise inflammatory. Here, it is the former and not the latter. The Court declines to preclude the fact that these witnesses have asserted their Fifth Amendment rights. The next question is the appropriate form of presentation to the jury.

         Claimants have asked that, at the very least, the Court preclude the Government from calling the witnesses live or playing portions of their videotaped depositions to the jury. In considering the question of presentation, the Court considers not only relevance, but also Rule 403 issues. Having carefully considered these issues, the Court will allow the Government either to call the witnesses live or to play their videotaped depositions. The jury is entitled to see a witness who is or has taken the Fifth and to assess his or her demeanor just as they would any other witness. This is particularly important in light of the Court's typical instruction in such situations that the jury may, but need not, draw a negative inference from the invocation of the Fifth Amendment right in a civil case. See 3 Fed. Jury Prac. & Instr. § 104:28 (6th ed. 2016); cf N.Y. Pattern Jury Instr. Civil 1:76.

         As is always the case, the Government will need to ensure that the evidence is ...


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