United States District Court, S.D. New York
INDUSTRIAL QUICK SEARCH, INC., MICHAEL MEIRESONNE, and MEIRESONNE & ASSOCIATES, Plaintiffs,
MILLER, ROSADO & ALGOIS, LLP, CHRIS ROSADO, and NEIL A. MILLER, ESQ., Defendants.
OPINION AND ORDER
EDGARDO RAMOS, U.S.D.J.
diversity case, Industrial Quick Search, Inc., Michael
Meiresonne, and Meiresonne & Associates (collectively,
“Plaintiffs” or “IQS”) accuse Chris
Rosado, Neil Miller, and their law firm Miller, Rosado &
Algois, LLP (collectively, “Defendants”) of legal
malpractice and breach of contract, arising under the law of
the State of New York. Complaint (“Compl.”), Doc.
1 ¶ 1. Specifically, Plaintiffs contend that Defendants
committed numerous negligent acts in their representation of
Plaintiffs in an underlying copyright infringement action
brought by Thomas Publishing Company (“Thomas
Publishing”) and the Product Information Network, Inc.
(“PINI”) (collectively, “Thomas”),
and that in doing so Defendants breached their contractual
obligations to render competent and professional legal
services as required by their retainer agreement.
Id. ¶¶ 110-18.
underlying action (the “Thomas Action”), Judge
Robert Owen of the Southern District of New York entered
default judgment against IQS, finding that they had
misappropriated and plagiarized materials copyrighted by
Thomas, and deliberately destroyed documents central to
determining the scope of their violation. Owen Findings of
Fact and Conclusions of Law (“Owen Findings”),
dated August 2, 2006, Doc. 65, Ex. E at 12, ¶¶
20-21. As a result, IQS settled with Thomas for $2.5 million.
Compl. ¶ 66. IQS then brought the instant action, suing
their attorneys,  asserting that but for Defendants'
negligence, Judge Owen would not have entered default
judgment against them and they would not have had to pay
Thomas $2.5 million to settle the underlying case. Before the
Court are the parties' cross-motions for summary judgment
pursuant to Rule 56 of the Federal Rules of Civil Procedure:
Plaintiffs seek partial summary judgment as to their
malpractice claim, see Plaintiffs' Memorandum in Support
of Partial Summary Judgment (“Pls.' Mem. in
Supp.”), Doc. 57, Attach. 3, and Defendants seek
summary judgment on both the malpractice and breach of
contract claims, as well as claims against Chris Rosado in
his individual capacity, Defendants' Memorandum in
Support of Summary Judgment (“Defs.' Mem. in
Supp.”), Doc. 65, Attach. 8. For the reasons set forth
below, Plaintiffs' motion for partial summary judgment is
DENIED, and Defendants' motion for summary judgment is
GRANTED in part and DENIED in part.
FACTUAL AND PROCEDURAL BACKGROUND
The Thomas Action
Publishing is a New York Corporation that publishes the
copyright-protected publication known as the Thomas Register
of American Manufacturers (the “Thomas
Register”). The Thomas Register provides a directory
containing listings and descriptions of products, services,
companies and executives in the manufacturing industry. Owen
Findings at 1, ¶ 2. It is available online, in print,
and on CD and DVD. Id. Thomas Publishing generates
revenue by selling advertising in its publications to
manufacturers and other industrial companies. Id.
PINI is a Delaware corporation which, under license from
Thomas Publishing, contracts with independent sales managers
to market and sell advertising for the Thomas Register.
Id. at 2, ¶¶ 3-4.
Meiresonne & Associates (“M&A”), an
Illinois corporation that is owned and operated by Plaintiff
Meiresonne, is one such independent sales manager that PINI
contracted with to solicit advertising for the Thomas
Register. Plaintiffs' Rule 56.1 Statement of Undisputed
Material Facts (“Pls.' 56.1”), Doc. 27,
¶¶ 6-7; Owen Findings at 2, ¶ 4. In this
capacity, M&A and Meiresonne were privy to Thomas
Publishing's confidential and proprietary information,
which had been entrusted to Meiresonne by PINI for use in
recruiting advertisers to Thomas Publishing. See Thomas
Publishing Memorandum of Law in Support of Motion to Strike,
Doc. 59, Ex. Q, at 5. M&A worked under contract with PINI
as an independent sales manager on a commission basis for
over six years, from 1996 to 2002. See Owen Findings at 2,
¶ 4; Spoliation Tr. 19:7-9; Compl. ¶ 57(e).
Industrial Quick Search, Inc. (“IQS”) is a
Michigan corporation that was formed in 2000 and went online
in 2001. Meiresonne Affidavit (“Meiresonne
Aff.”), Doc. 57, Attach. 2 ¶¶ 36-37.
Meiresonne is a principal and investor in IQS. Compl. ¶
7; Transcript of Spoliation Hearing (“Spoliation
Tr.”), Doc. 65, Ex. A at 145:24-25. Like the Thomas
Register, IQS operates a web-based
customers with a listing of industrial products and services,
and charges manufacturers seeking to advertise such products
and services a fee for inclusion on the web-based directory.
Compl. ¶ 5. In this sense, IQS is a direct competitor of
Thomas Publishing. Unlike the Thomas Register, the website is
organized into “vertical websites.” This means
that IQS's website acts as a central homepage that
provides customers with links to other websites concerning
particular products or services, for example:
www.lubricatingsystems.com, or www.deburringmachinery.com.
Owen Findings at 2, ¶ 5. By organizing the website in
this way, IQS hoped to provide advertisers with high rankings
for their products and services on internet search engines in
a way that Thomas Publishing at that time could not.
Meiresonne Aff. ¶¶ 29-30. Indeed, Meiresonne
conceived of IQS precisely to capitalize on this issue, which
Thomas Publishing's advertisers had brought to his
attention. Id. ¶¶ 31-32. As he plainly
admits, and as discussed more fully below, Meiresonne
endeavored to keep Thomas Publishing from knowing about his
relationship with IQS. Spoliation Tr. at 146:1-3.
Spring of 2001, as IQS rolled out its website, it hired
Christopher Terryn, a student at Grand Valley State
University in Michigan, as an intern. Pls.' 56.1 ¶
20; Owen Findings at 3, ¶ 7. Terryn worked for IQS only
briefly, from April to May of 2001. While employed there,
Terryn was instructed by Meiresonne and IQS office manager
Nicole Korthals to copy material from the Thomas Register for
use on the IQS website. Id. at 3, ¶¶
7-10. Terryn was also instructed to use Thomas
Publishing's proprietary program ThomAds, which provides
a listing of companies that advertise with Thomas Publishing
and the amount of money they spend on advertising, “to
determine the order in which advertisers would appear on
IQS's vertical websites.” Id. ¶¶
9-10; see Thomas Publishing Memorandum of Law in
Support of Motion to Strike, Doc. 59, Ex. Q, at 10.
months following his employment with IQS, in October 2001,
Terryn informed Thomas Publishing that IQS had extensively
copied the Thomas Register in developing its website. Owen
Findings at 3, ¶ 13. In response, on November 6, 2001,
attorneys for Thomas sent IQS a cease-and-desist letter,
informing IQS that it had “inspected IQS's website
and discovered that a great number of product headings on the
website were taken directly from The Thomas Register.”
Cease-and-Desist Letter, Doc. 25, Ex. C at 1; Defendants'
Rule 56.1 Statement of Undisputed Material Facts
(“Defs.' 56.1) ¶ 10. The letter further stated
that “[m]any of these product headings are unique and
distinctive, making any claim of independent creation by your
company implausible. Furthermore, descriptive text listed
under IQS's product headings were also copied verbatim
from The Thomas Register.” Id. Thomas
therefore instructed IQS that “continued use of
Thomas's original and copyrighted product headings and
descriptive text [would] constitute knowing and willful
copyright infringement and unfair competition.”
November 20, 2001, IQS's then-counsel, Price, Heneveld,
Cooper, DeWitt & Litton, responded by letter stating that
“[w]hile we disagree with your infringement
allegations, in order to avoid further dispute, . . . the
descriptive text on each [IQS] Web-page was being rewritten
for other reasons even prior to receiving [Thomas
Publishing's] letter” and that the “rewriting
is scheduled to be completed by mid January 2002.”
Response to Cease-and-Desist Letter, Doc. 25, Ex. D at 1;
Defs.' 56.1 ¶ 11. IQS rewrote portions of the
descriptive text on its websites that were alleged to have
been copied from the Thomas Register. Id. ¶ 11;
Owen Findings ¶ 15. As part of that process, IQS
employees were instructed to ensure that the descriptive text
on IQS's website was different from the text contained in
the Thomas Register. Owen Findings at 4, ¶ 15. According
to Meiresonne, any documentation related to the
re-writes-“including the sources that had been used by
Terryn to originally create the web sites”-was
“discarded in the normal course of business.”
Meiresonne Aff. ¶¶ 77, 80.
time the cease-and-desist letter was sent to IQS, Thomas
Publishing was not aware that Meiresonne and its independent
sales manager, M&A, had any affiliation with IQS.
Defs.' 56.1 ¶ 14; Owen Findings ¶ 16.
Meiresonne kept his relationship with IQS hidden from Thomas
by using false names when calling potential advertisers on
behalf of IQS and using a different address for IQS-related
matters. Id.; Spoliation Tr. at 146:1-3. A few
months later, however, Thomas Publishing discovered
Meiresonne's relationship with IQS. Defs.' 56.1
¶ 14; Owen Findings ¶ 18.
April 2002, Thomas Publishing conducted a study comparing the
text descriptions of companies included in the print volumes
of the 1999-2002 editions of the Thomas Register against the
descriptions of the same companies listed on IQS's
website. Defs.' 56.1 ¶ 21; Owen Findings at 5,
¶ 20. They discovered that, at least as of
March 22, 2001, before Terryn was even hired, IQS's
website contained 350 listings for manufacturers and service
providers that also appeared in the Thomas Register, and that
approximately 82% of those contained product descriptions
virtually identical to those appearing in the Thomas
on April 30, 2002, Thomas sued Plaintiffs in the Southern
District of New York alleging that they knowingly and
willfully copied content from the Thomas Register to create
IQS's website in violation of copyright laws. Pls.'
56.1 ¶ 14; Defs.' Resp. to 56.1 ¶ 14. Thomas
also alleged unfair competition based on the inclusion in
IQS's website of certain of Thomas's confidential and
proprietary marketing information. Id. ¶ 19;
Defs.' Resp. to 56.1 ¶ 19.
Representation of Plaintiffs
January 28, 2003, by execution of a retainer agreement (the
“Retainer Agreement”) and payment of $25, 000,
Plaintiffs retained Defendant Miller, Rosado & Algois
(“MRA”), a law firm with offices in the Eastern
District of New York, to represent them in connection with
the Thomas Action. Pls.' 56.1 ¶¶ 11, 29;
Defs.' Resp. to 56.1 ¶¶ 11, 29; Defs.' 56.1
¶ 17. The parties dispute the extent of Defendant
Rosado's involvement in the case. Defendants contend that
Rosado was only the primary client “contact” with
“billing responsibility” for the matter, and that
Defendant Miller had primary responsibility for the matter.
See Rosado Deposition (“Rosado Dep.”),
Doc. 61, at 33:5-7; Miller Deposition (“Miller
Dep.”), Doc. 61, Ex. 2 at 30:20-31:3; Rosado Affidavit
(“Rosado Aff.”), Doc. 62 Attach. 2, ¶ 9.
Plaintiffs, in contrast, assert that Rosado had greater
involvement in the case, and note that it was Rosado who
signed the Retainer Agreement which stated that “[he]
w[ould] have primary responsibility for [Plaintiffs']
representation.” Pls.' 56.1 ¶ 30; Meiresonne
Aff. ¶ 27; Rosado Dep. at 33:16-25; Miller Dep. at
28:17-19; Retainer Agreement, Doc. 58, Ex. C at 3, 5. Rosado
also asserts that he issued an “oral litigation
hold” at the parties' initial meeting in early
2003, but Plaintiffs deny that this occurred. Rosado Dep. at
38:6-25; Meiresonne Aff. ¶¶ 106-07.
in the Thomas Action commenced in April 2003, with requests
for document production being served on IQS thereafter.
See Thomas Publishing, v. Industrial Quick, et al,
02 Civ. 03307 (RO), Docs. 26, 28-29. Thomas requested
documents relating to the creation of the IQS websites in
2001 and early 2002 and the use of proprietary Thomas selling
aids, among other things. Owen Findings at 6, ¶ 25. As
part of discovery, between August 4-6, 2003, counsel for
Thomas reviewed documents at IQS's offices in Grand
Rapids, Michigan. Owen Findings at 8, ¶ 36; Miller
Affidavit (“Miller Aff.”), Doc. 62 ¶ 7. What
occurred during the pendency of discovery is hotly disputed
by the parties to the instant action.
to Meiresonne, he “repeatedly asked Defendant attorneys
for legal advice as to how to prepare and respond to the
Thomas [P]laintiffs' broad discovery request[s], ”
including “advice on the retention, storage, production
of, or permissible discarding of non-responsive information,
” among other things. Meiresonne Aff. ¶¶
92-95. But, Meiresonne asserts, “no advice was ever
given to [him]” with respect to these topics.
Id. ¶ 96. Meiresonne further avers that
Defendant Miller was on trial in another matter at the time
of the production and that Defendants “refused”
to provide legal advice, answer questions, or “appear
in person for the document production.” Id.
¶¶ 98-100. As a result, Plaintiffs claim that no
document production procedures or controls, privilege log,
Bates stamping, “or other means of tracking
documents” were established, and Thomas was permitted
to remove approximately 30, 000 un-inventoried documents from
IQS's offices. Id. ¶¶ 101-103, 116.
further avers that in the days prior to the August document
production, IQS “t[ook] actions to remove files that
they believed were not responsive to [the] Thomas
[P]laintiffs' discovery requests” because they
believed it would be “helpful to avoid junk papers in
the production.” Id. ¶ 109. By way of
example, Meiresonne explained that M&A had a cost-saving
practice of reusing paper for which only one side had been
used for printing. Id. ¶ 88. Consequently, some
re-used papers had personal, financial and other confidential
information on one side, and information responsive to
Thomas's requests on the other. Id. ¶ 90.
Specifically, Plaintiffs “removed and discarded: (a)
documents printed on recycled scrap paper, with sensitive and
non-responsive financial and other data printed on the scrap
side, ” but only after making copies of any relevant
non-personal information for production; “(b) documents
relating to [IQS's] ‘re-rank' efforts;”
“(c) documents relating to [IQS's] company listing
and product descriptive matter ‘re-writes' that
occurred after the alleged infringement had ceased.”
Id. ¶¶ 110-112. According to Meiresonne,
after IQS “had removed and discarded [the] documents .
. ., but before the documents were taken away for permanent
disposal by [their] trash service, ” he “sent one
final inquiry” to his attorneys informing them what IQS
had done and “request[ing] direction as to whether or
not such actions were proper, ” but received no
response from Defendants. Id. ¶¶ 113-114.
on the other hand, contend that Meiresonne was fully aware
that Miller would not be present at the document production.
Miller avers that he “advised [Meiresonne] that [he]
would be engaged in a trial on another matter during the week
of the production” and sought to “open a dialogue
as to whether the production should be adjourned.”
Miller Aff. ¶ 8. Miller further maintains that
“Meiresonne specifically directed that neither
[Miller], nor anyone from [Miller, Rosado & Algois],
attend the production because [Meiresonne] did not want to
incur the cost of an attorney travelling . . . to
Michigan.” Id. According to Miller, his
presence was not critical to the meeting because he had
previously discussed with Meiresonne which documents were
responsive to Thomas's demands. Id. ¶¶
7-8. Among these documents were “advertiser files,
” which contained information regarding companies that
advertised with IQS. Although Miller did not conduct a review
of each document, he asserts that he and Meiresonne had
agreed to make the entire file available to Thomas.
Id. ¶¶ 9-10. Finally, Miller asserts that
he was “never informed by Mr. Meiresonne, or anyone
else, that Plaintiffs were planning on discarding any
documents, or that they had in fact discarded documents prior
to the document production.” Id. ¶ 11.
in the Thomas Action commenced in the fall of 2003. At
Meiresonne's October 10, 2003 deposition he admitted that
he knew back in October 2001-prior to receipt of the
cease-and-desist letter from Thomas-that there was a
“possibility” that IQS had copied information
from the Thomas Register for inclusion on the IQS website.
Owen Findings at 5, ¶ 22 (citing Meiresonne October 2003
Deposition Tr. at 24-31); Spoliation Tr. 157-165:24.
November 21, 2003, Lisa Dokter, a former IQS editorial staff
member, contacted counsel for Thomas to inform them that she
and her IQS colleagues, at Meiresonne's direction,
removed relevant documents from IQS's files in the days
prior to the August 2003 document production so that
Meiresonne could destroy them. Owen Findings at 6-7,
¶¶ 28-33. Subsequently, on November 24, 2003,
Dokter submitted a declaration more specifically setting
forth that the documents removed from the IQS's files
(1) documents relating to the creation of IQS's vertical
websites in 2001 and early 2002, including, but not limited
to, the copying of the [Thomas Register's] online
information for inclusion on IQS's websites; (2)
documents relating to IQS's unauthorized use of [the
Thomas Register's] selling aids, including, but not
limited to, Thom[A]ds:, Thomas's Prospecting CD, and
Who's Who in the TR Sales Force; (3) documents that
contained instructions concerning the purification/cleansing
of IQS's vertical websites; (4) documents reflecting the
re-ranking of IQS's advertisers based upon information
obtained from [the Thomas Register's] sources; and (5)
IQS internal memoranda and correspondence concerning any of
of Lisa J. Dokter, Doc. 59, Ex. K ¶ 10.
on the foregoing, on November 24, 2003, Thomas moved the
Court for an order to show cause pursuant to Rule 37, to
strike IQS's answer, third-party claims, counterclaims,
and reply to counterclaims on the basis that IQS had
intentionally destroyed relevant discovery. Meiresonne Aff.
¶ 120. According to Meiresonne, it was only in December
2003, the month after the Rule 37 motion was filed and five
months after the August document production, that Defendants
instructed them not to destroy any potentially relevant
information. Meiresonne Aff. ¶ 106.
point between the Fall of 2003 and the Spring of 2004, Nicole
Parker, a then-employee of IQS, prepared a report (the
“Parker Report”) concluding that in 2001 almost
50% of IQS's product listings contained the “exact
wording” or “very similar” wording to
language contained in the Thomas Register. Id. at
207:2-13; Owen Findings ¶ 23; Meiresonne Aff. ¶
spoliation hearing was held before Judge Owen between
February 14-16, 2006. Defs.' 56.1 ¶ 25; see
generally Spoliation Tr. As relevant here, neither party
called Terryn during the spoliation hearing. Rather, the
parties relied on Terryn's January 2004 deposition
testimony, with counsel for Thomas reading significant
excerpts into the record over Defendants' objections.
Spoliation Tr. 26:6-67:25. IQS's counsel, Defendant
Miller, also read excerpts of Terryn's deposition
testimony into the record. Id. at 68:1-80:4. In
particular, Miller focused on the fact that Terryn had
reached an agreement with counsel for Thomas under which they
would represent him should any legal action result from
filing his affidavit or deposition testimony. Id. at
69:9-24. Miller also read those portions of the deposition
transcript in which he pressed Terryn on his precise
recollection of conversations with IQS staff regarding
IQS's alleged practices and instructions related to the
creation and maintenance of its website. See e.g.,
id. at 74:16-79:80.
spoliation hearing, Meiresonne was examined about the
conversations he had with counsel regarding their preparation
for the 2003 document production. Miller Aff. ¶ 13.
Although Miller objected to the question, asserting
attorney-client privilege, Judge Owen warned that a negative
inference could be drawn from Meiresonne's refusal to
testify on that issue. See Spoliation Tr., at
180:22-181:13. Following consultation with counsel,
Meiresonne ultimately testified that he unilaterally
determined the scope of the Thomas Plaintiff's document
requests. Id. at 181:20-183.
was also examined about a statement in his June 2002
affidavit in which he said that he was “confident that
IQS could prove that it did not copy any of [P]laintiffs'
works.” Spoliation Tr. at 206:22-207:4. Counsel for
Thomas noted that one year after Meiresonne swore to that
affidavit, at his October 2003 deposition, Meiresonne had
stated that he knew, in 2001, that there was a
“possibility” that IQS copied the Thomas Register
in creating IQS's website. Owens Findings ¶ 22;
Spoliation Tr. 157-165:24. This revelation prompted
considerable questioning from Judge Owen, leaving him to
comment that Meiresonne's apparent contradiction left him
“distressed.” Spoliation Tr. 162:10. Finally,
Meiresonne conceded that he used a different address to
“disguise” his connection with IQS from Thomas
Publishing. Spoliation Tr. at 146:1-3.
the spoliation hearing, on August 2, 2006, Judge Owen issued
his Findings of Fact and Conclusions of Law. In short, Judge
Owen found that in 2001 Plaintiffs created IQS's vertical
websites by copying information from the Thomas Register,
used ThomAds to rank advertisers based on their advertising
expenditures with Thomas Publishing, and then destroyed
information relevant to the site's creation, all the
while attempting to hide Meiresonne's relationship with
IQS from Thomas. Owen Findings at 3, ¶¶ 10, 12, at
6, ¶ 24; Defs.' 56.1 ¶ 27. He also found that
in the Summer of 2003, after the commencement of the Thomas
Action, Meiresonne destroyed documents responsive to
Thomas's discovery requests that would have assisted in
determining the scope of IQS's copyright infringement and
misappropriation of confidential material. Owen Findings at
6-7, ¶¶ 30-36. Judge Owen further concluded that
Meiresonne's October 2003 deposition testimony
acknowledging that he understood in October 2001 that there
was a “possibility” that IQS had copied
information from the Thomas Register, “directly
contradicted Meiresonne's June 2002 sworn
affidavit” in which Meiresonne averred that “IQS
did not copy [Thomas Publishing's] material or
text” in creating the IQS website and that “IQS
[was] confident that it can prove that it did not copy any
[such] works.” Id. at 5, ¶¶ 21-22.
Based on these factual findings, Judge Owen concluded that
IQS had “intentionally destroyed the documents at
issue, ” and that the “destroyed documents were
likely critical to determining the scope of . . . . [their]
copyright infringement and . . . misappropriation of
[Thomas'] confidential information.” Id.
at 10, ¶ 11, at 12, ¶20. Judge Owen therefore
struck IQS's answer, third-party claims and
counterclaims, and reply and entered default judgement on
liability against them on all of Thomas's allegations.
Id. at 12, ¶ 21. Judge Owen also ordered a
hearing on damages be held on September 11, 2006, but the
parties settled just prior to the hearing, with IQS paying
Thomas $2.5 million. Defs.' 56.1 ¶ 40; Compl. ¶
to Meiresonne, it was not until January 18, 2007, over three
years after the document production, that counsel first
mentioned that IQS should have a formal document retention
policy in place. Meiresonne Aff ¶ 107. In September
2007, counsel's representation of IQS terminated.
Pls.' 56.1 ¶ 28; Compl. ¶¶ 66-67.
The Instant Litigation
March 31, 2009, Plaintiffs initiated the instant litigation
against Defendants, asserting claims of malpractice and
breach of contract. Compl. ¶ 1. Plaintiffs principally
allege that Defendants negligently failed to render competent
legal services by failing to properly advise them on the law
governing document preservation, to adequately supervise
document production, or offer an adequate defense at the
spoliation hearing. Id. ¶¶ 80-109.
Plaintiffs claim that these failures also provide a basis for
their breach of contract claim because of the Retainer
Agreement between the parties. Id.