Preview
FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018
NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020
Exhibit 5
FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018
NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF WESTCHESTER
----------------------------------------------------------------X
PAMELA GOLDSTEIN, ELLYN & TONY BERK,
as Administrators of the Estate of Winifred Berk,
and PAUL BENJAMIN, on behalf of themselves
and all other similarly situated, Index No. 60767/2018
Plaintiffs,
Hon. Linda S. Jamieson
-against-
HOULIHAN/LAWREN CE INC.,
Defendants.
----------------------------------------------------------------X
SECOND REPORT AND RECOMMENDATION
OF DISCOVERY REFEREE
DATED JANUARY 21, 2020
William P. Harrington, Esq.
Bleakley Platt & Schmidt, LLP
One North Lexington Avenue
White Plains, NY 10601
(914) 949-2700
FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018
NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF WESTCHESTER
----------------------------------------------------------------X
PAMELA GOLDSTEIN, ELLYN & TONY BERK,
as Administrators of the Estate of Winifred Berk,
and PAUL BENJAMIN, on behalf of themselves
and all other similarly situated, Index No. 60767/2018
Plaintiffs,
Hon. Linda S. Jamieson
-against-
HOULIHAN/LAWREN CE INC.,
Defendants.
----------------------------------------------------------------X
SECOND REPORT AND RECOMMENDATION
OF DISCOVERY REFEREE
INTRODUCTION
In this putative class action, defendant Houlihan Lawrence Inc. ("HLI") seeks a
protective order pursuant to CPLR 3103 to preclude any further class certification discovery.
(Ex. 1.) In the alternative, HLI requests that I issue an order staying any further discovery until
the Court rules on HLI's protective order motion. (Ex. 2, p. 6.) 1
Plaintiffs argue that additional discovery is required because plaintiffs have not" ...
obtained basic documents from key executives and file locations or taken a single deposition."
(Ex. 2, p. 1.)
The following submissions were considered: (1) November 14, 2019 letter of Philip M. Halpern, Esq. (Ex.
1 to Appendix); (2) December 5, 2019 letter of Jeremy Vest, Esq. (Ex. 2); and (3) December 13, 2019 letter of Philip
M. Halpern, Esq. (Ex. 3.)
FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018
NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020
PROCEDURAL HISTORY
By order dated May 8, 2019, I was appointed Special Master. Since then, I conducted
multiple discovery conferences and conference calls with counsel to address ongoing discovery
disputes between the parties.
In those conferences and calls I have issued rulings consistent with the well settled
"proportionality" standard governing pretrial discovery in general and pre-class certification
discovery in particular. In so doing, I have denied certain categories of discovery sought by
plaintiffs, limited others, and sought clarification from HLI regarding others.
DISCUSSION
I. The Court's Prior Decision
In arguing that HLI' s existing discovery production is sufficient under CPLR 901, et al.,
HLI relies heavily on the following language of the Court in discussing plaintiffs' General
Business Law§ 349 claim, essentially arguing any class certification motion is destined to fail:
To analyze the ultimate efficacy of each claim, this Court will be
called upon to determine what was said and what disclosure, if any,
were made to each plaintiff during the relationship with Houlihan
Lawrence. Each of these transactions are separate, different people
were involved, and undoubtedly different things were said and
communicated. While the alleged commonality between these
plaintiffs may be alleged non-disclosure, the ultimate resolution of
the claims can only be determined by individual analysis of each
transaction, and to a certain extent each transaction can be
considered unique.
(Ex. 4, p. 12.)
Notwithstanding the foregoing language, the Court denied HLI's motion to dismiss the
GBL § 349 claim. The Court held that there was no "bright line test" in construing what
constitutes actionable "consumer oriented" conduct under GBL § 349:
2
FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018
NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020
As the Second Department recognized in the decision of Teller v.
Bill Hayes, Ltd., 213 A.D.2d 141, 630 N.y.S.2d 769 (2d Dept. 1995),
a Court can be presented with a case that exhibits characteristics of
a single-shot, unique transaction as well as a consumer-oriented
transaction, and the Court is necessarily required to balance the
interests in making its decision.
Underlying this dichotomy is the concern and protection of the
consuming public for which GBL Section 349 was enacted. On the
other hand, disputes involving private parties who have entered into
separate arrangements should not have to be held answerable to the
remedies afforded in GBL § 349. See Oswego, supra ("In
explicating the legislative objective behind section 349, we are
mindful of the potential for a tidal wave of litigation against
businesses that was not intended by the Legislature").
Ultimately, as the Second Department has dictated, this Court is
to consider whether the alleged acts or practices have a broad impact
on consumers at large.
The allegations made by the plaintiffs, which this Court must
accept as true at this stage of the litigation, state that the practices of
Houlihan Lawrence are pervasive, have and will affect many others,
and Houlihan Lawrence has promoted its practices. See, e.g.,
Gaidon v. Guardian Life Ins. Co. ofAm., 94 N. Y.2d 330, 725 N.E.2d
598, 704 N.Y.S.2d 177 (1999); Karlin v. !VF Am., 93 N.Y.2d 282,
712 N.E.2d 662, 690 N.Y.S.2d 495 (1999). Of course, if discovery
in this matter proves otherwise, this Court will certainly revisit this
issue upon the proper application.
Defendant further argues that GBL § 349 does not apply to real
estate transactions or to transactions involving the sums presented
herein. The Court believes that real estate transactions are not
excluded from the protections of the statute. See Polonestsky v.
Better Homes Depot, Inc., 97 N.Y.2d 46, 760 N.E.d2d [sic] 1274,
735 N.Y.S.2d 479 (2001) ...
(Ex. D, pp. 15-16) (emphasis added.)
In light of the above, the appropriate scope of pre-class certification discovery must be
based upon the "balance[ing] of interests" articulated by the Court.
In essence, HLI argues enough is enough, that plaintiffs have received over 60,000 pages
of documents which is more than sufficient to move for class certification. Further, in effect,
3
FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018
NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020
HLI argues that plaintiffs cannot meet the CPLR 901 class certification criteria given the Court's
aforecited observation. (Supra, p. 2.)
Plaintiffs respond that the information they have received has been either useless or given
them insight into appropriate discovery sources needed to prove that HLI's dual agency program
is a pervasive, promoted institutional practice which has and will impact the public at large.
Based upon this Court's prior holding, plaintiffs have a right to discovery in an effort to establish
class certification of its GBL § 349 claim. The question is how much?
The "proportionality" standard for pre-class certification discovery is well settled and
need not be repeated. Both sides cite cases supporting their respective position, yet none of the
aforesaid cases is dispositive. The propriety of pre-class certification discovery is sui generes.
As noted by the Court, this case does not involve a "bright line" analysis but rather a thoughtful
balancing of the interests under GBL § 349.
While plaintiffs are not entitled to all the discovery they seek, plaintiffs have yet to
receive sufficient discovery to flesh out the potential existence of HLI' s alleged institutional dual
agency practices which may support class certification. The mere fact HLI has produced 60,000
documents to date is not dispositive. Discovery is an iterative process based upon the real time
evaluation of information that is produced. Parties are permitted, indeed attorneys are
compelled, to pivot as required based upon the evaluation of information received in discovery.
During the October 22, 2019 meet and confer with the parties, HLI announced its
intention to seek a global protective order based upon Tozzi v. Jack, 169 A.D.3d 547, 92
N.Y.S.3d 648 (1 st Dept. 2019), describing the case as a "game changer." I do not believe that to
be the case as Tozzi merely reinforces the proposition that sophisticated parties are bound by the
4
FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018
NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020
terms of executed agreements. As noted by plaintiffs, Tozzi was issued long before the Court
issued its April 2019 Motion to Dismiss decision.
At the October 22, 2019 conference, I reviewed and ruled upon each of plaintiffs'
discovery requests, rejecting some, limiting others and seeking clarification regarding the
remaining requests. As stated above, given this Court's prior ruling on the Motion to Dismiss, I
believe plaintiffs are entitled to some tailored additional discovery. The below issues remain.
Therefore, I recommend HLI's protective order motion be denied and further recommend the
Court rule as follows with respect to plaintiffs' remaining discovery demands:
(1) HLI Custodians Jim Gricar and Toni Crystal
HLI should produce search terms hit counts from its search of HLI executives Gricar and
Crystal;
(2) HLI Corporate Policy re: Dual Agency
HLI should produce documents regarding the HLI corporate policy, if any, regarding the
institutional implementation, rationale and training regarding dual agency;
(3) In-House Bonus Email
HLI shall produce internal emails from Scarsdale, Bronxville and White Plains offices
regarding any HLI institutional dual agency "bonus" program. Such production must be subject
to negotiated mutually agreeable search terms. Absent same, the Discovery Referee or the Court
will impose same;
(4) Non-MLS or "Pocket" Transactions2
HLI shall produce a subset of the transaction sample files (the number of which shall be
negotiated or established by the Discovery Referee) of the 1,000 non-MLS or "pocket"
2 "Pocket" transactions are HLI in-house sales that are consummated before the property is listed on the
MLS for review by general public.
5
FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018
NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020
transactions identified for the first time by prior HLI document productions. Such request is not
"too late" as argued by HLI;
(5) Show Time Reports
Show Time Reports are a database which reflects HLI' s first "substantive contact" with a
client regarding a property. Plaintiff alleges these reports will "permit plaintiffs to assess
whether [HLI] made timely [dual agency] disclosure before acting as a dual agent in each sample
transaction." (Ex. 2, p. 9.) This type of granular discovery at this stage of the litigation is
inappropriate and not reasonably likely to lead to the discovery of evidence of a pervasive
institutional policy generally harmful to the public relevant to the class certification standards
under CPLR 901. If and when class certification is granted, such discovery may be appropriate.
Therefore, such discovery should be denied at this time.
CONCLUSION
Accordingly, I respectfully report and recommend that the Court deny the global
protective order sought by HLI and proceed as set forth above.
Dated: White Plains, NY
January 21, 2020
William P. Harri
Discovery Refer
TO: All Counsel via NYSCEF
6
Preview
FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018 NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020 Exhibit 5 FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018 NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF WESTCHESTER ----------------------------------------------------------------X PAMELA GOLDSTEIN, ELLYN & TONY BERK, as Administrators of the Estate of Winifred Berk, and PAUL BENJAMIN, on behalf of themselves and all other similarly situated, Index No. 60767/2018 Plaintiffs, Hon. Linda S. Jamieson -against- HOULIHAN/LAWREN CE INC., Defendants. ----------------------------------------------------------------X SECOND REPORT AND RECOMMENDATION OF DISCOVERY REFEREE DATED JANUARY 21, 2020 William P. Harrington, Esq. Bleakley Platt & Schmidt, LLP One North Lexington Avenue White Plains, NY 10601 (914) 949-2700 FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018 NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF WESTCHESTER ----------------------------------------------------------------X PAMELA GOLDSTEIN, ELLYN & TONY BERK, as Administrators of the Estate of Winifred Berk, and PAUL BENJAMIN, on behalf of themselves and all other similarly situated, Index No. 60767/2018 Plaintiffs, Hon. Linda S. Jamieson -against- HOULIHAN/LAWREN CE INC., Defendants. ----------------------------------------------------------------X SECOND REPORT AND RECOMMENDATION OF DISCOVERY REFEREE INTRODUCTION In this putative class action, defendant Houlihan Lawrence Inc. ("HLI") seeks a protective order pursuant to CPLR 3103 to preclude any further class certification discovery. (Ex. 1.) In the alternative, HLI requests that I issue an order staying any further discovery until the Court rules on HLI's protective order motion. (Ex. 2, p. 6.) 1 Plaintiffs argue that additional discovery is required because plaintiffs have not" ... obtained basic documents from key executives and file locations or taken a single deposition." (Ex. 2, p. 1.) The following submissions were considered: (1) November 14, 2019 letter of Philip M. Halpern, Esq. (Ex. 1 to Appendix); (2) December 5, 2019 letter of Jeremy Vest, Esq. (Ex. 2); and (3) December 13, 2019 letter of Philip M. Halpern, Esq. (Ex. 3.) FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018 NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020 PROCEDURAL HISTORY By order dated May 8, 2019, I was appointed Special Master. Since then, I conducted multiple discovery conferences and conference calls with counsel to address ongoing discovery disputes between the parties. In those conferences and calls I have issued rulings consistent with the well settled "proportionality" standard governing pretrial discovery in general and pre-class certification discovery in particular. In so doing, I have denied certain categories of discovery sought by plaintiffs, limited others, and sought clarification from HLI regarding others. DISCUSSION I. The Court's Prior Decision In arguing that HLI' s existing discovery production is sufficient under CPLR 901, et al., HLI relies heavily on the following language of the Court in discussing plaintiffs' General Business Law§ 349 claim, essentially arguing any class certification motion is destined to fail: To analyze the ultimate efficacy of each claim, this Court will be called upon to determine what was said and what disclosure, if any, were made to each plaintiff during the relationship with Houlihan Lawrence. Each of these transactions are separate, different people were involved, and undoubtedly different things were said and communicated. While the alleged commonality between these plaintiffs may be alleged non-disclosure, the ultimate resolution of the claims can only be determined by individual analysis of each transaction, and to a certain extent each transaction can be considered unique. (Ex. 4, p. 12.) Notwithstanding the foregoing language, the Court denied HLI's motion to dismiss the GBL § 349 claim. The Court held that there was no "bright line test" in construing what constitutes actionable "consumer oriented" conduct under GBL § 349: 2 FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018 NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020 As the Second Department recognized in the decision of Teller v. Bill Hayes, Ltd., 213 A.D.2d 141, 630 N.y.S.2d 769 (2d Dept. 1995), a Court can be presented with a case that exhibits characteristics of a single-shot, unique transaction as well as a consumer-oriented transaction, and the Court is necessarily required to balance the interests in making its decision. Underlying this dichotomy is the concern and protection of the consuming public for which GBL Section 349 was enacted. On the other hand, disputes involving private parties who have entered into separate arrangements should not have to be held answerable to the remedies afforded in GBL § 349. See Oswego, supra ("In explicating the legislative objective behind section 349, we are mindful of the potential for a tidal wave of litigation against businesses that was not intended by the Legislature"). Ultimately, as the Second Department has dictated, this Court is to consider whether the alleged acts or practices have a broad impact on consumers at large. The allegations made by the plaintiffs, which this Court must accept as true at this stage of the litigation, state that the practices of Houlihan Lawrence are pervasive, have and will affect many others, and Houlihan Lawrence has promoted its practices. See, e.g., Gaidon v. Guardian Life Ins. Co. ofAm., 94 N. Y.2d 330, 725 N.E.2d 598, 704 N.Y.S.2d 177 (1999); Karlin v. !VF Am., 93 N.Y.2d 282, 712 N.E.2d 662, 690 N.Y.S.2d 495 (1999). Of course, if discovery in this matter proves otherwise, this Court will certainly revisit this issue upon the proper application. Defendant further argues that GBL § 349 does not apply to real estate transactions or to transactions involving the sums presented herein. The Court believes that real estate transactions are not excluded from the protections of the statute. See Polonestsky v. Better Homes Depot, Inc., 97 N.Y.2d 46, 760 N.E.d2d [sic] 1274, 735 N.Y.S.2d 479 (2001) ... (Ex. D, pp. 15-16) (emphasis added.) In light of the above, the appropriate scope of pre-class certification discovery must be based upon the "balance[ing] of interests" articulated by the Court. In essence, HLI argues enough is enough, that plaintiffs have received over 60,000 pages of documents which is more than sufficient to move for class certification. Further, in effect, 3 FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018 NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020 HLI argues that plaintiffs cannot meet the CPLR 901 class certification criteria given the Court's aforecited observation. (Supra, p. 2.) Plaintiffs respond that the information they have received has been either useless or given them insight into appropriate discovery sources needed to prove that HLI's dual agency program is a pervasive, promoted institutional practice which has and will impact the public at large. Based upon this Court's prior holding, plaintiffs have a right to discovery in an effort to establish class certification of its GBL § 349 claim. The question is how much? The "proportionality" standard for pre-class certification discovery is well settled and need not be repeated. Both sides cite cases supporting their respective position, yet none of the aforesaid cases is dispositive. The propriety of pre-class certification discovery is sui generes. As noted by the Court, this case does not involve a "bright line" analysis but rather a thoughtful balancing of the interests under GBL § 349. While plaintiffs are not entitled to all the discovery they seek, plaintiffs have yet to receive sufficient discovery to flesh out the potential existence of HLI' s alleged institutional dual agency practices which may support class certification. The mere fact HLI has produced 60,000 documents to date is not dispositive. Discovery is an iterative process based upon the real time evaluation of information that is produced. Parties are permitted, indeed attorneys are compelled, to pivot as required based upon the evaluation of information received in discovery. During the October 22, 2019 meet and confer with the parties, HLI announced its intention to seek a global protective order based upon Tozzi v. Jack, 169 A.D.3d 547, 92 N.Y.S.3d 648 (1 st Dept. 2019), describing the case as a "game changer." I do not believe that to be the case as Tozzi merely reinforces the proposition that sophisticated parties are bound by the 4 FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018 NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020 terms of executed agreements. As noted by plaintiffs, Tozzi was issued long before the Court issued its April 2019 Motion to Dismiss decision. At the October 22, 2019 conference, I reviewed and ruled upon each of plaintiffs' discovery requests, rejecting some, limiting others and seeking clarification regarding the remaining requests. As stated above, given this Court's prior ruling on the Motion to Dismiss, I believe plaintiffs are entitled to some tailored additional discovery. The below issues remain. Therefore, I recommend HLI's protective order motion be denied and further recommend the Court rule as follows with respect to plaintiffs' remaining discovery demands: (1) HLI Custodians Jim Gricar and Toni Crystal HLI should produce search terms hit counts from its search of HLI executives Gricar and Crystal; (2) HLI Corporate Policy re: Dual Agency HLI should produce documents regarding the HLI corporate policy, if any, regarding the institutional implementation, rationale and training regarding dual agency; (3) In-House Bonus Email HLI shall produce internal emails from Scarsdale, Bronxville and White Plains offices regarding any HLI institutional dual agency "bonus" program. Such production must be subject to negotiated mutually agreeable search terms. Absent same, the Discovery Referee or the Court will impose same; (4) Non-MLS or "Pocket" Transactions2 HLI shall produce a subset of the transaction sample files (the number of which shall be negotiated or established by the Discovery Referee) of the 1,000 non-MLS or "pocket" 2 "Pocket" transactions are HLI in-house sales that are consummated before the property is listed on the MLS for review by general public. 5 FILED: WESTCHESTER COUNTY CLERK 05/14/2020 08:55 AM INDEX NO. 60767/2018 NYSCEF DOC. NO. 579 RECEIVED NYSCEF: 05/14/2020 transactions identified for the first time by prior HLI document productions. Such request is not "too late" as argued by HLI; (5) Show Time Reports Show Time Reports are a database which reflects HLI' s first "substantive contact" with a client regarding a property. Plaintiff alleges these reports will "permit plaintiffs to assess whether [HLI] made timely [dual agency] disclosure before acting as a dual agent in each sample transaction." (Ex. 2, p. 9.) This type of granular discovery at this stage of the litigation is inappropriate and not reasonably likely to lead to the discovery of evidence of a pervasive institutional policy generally harmful to the public relevant to the class certification standards under CPLR 901. If and when class certification is granted, such discovery may be appropriate. Therefore, such discovery should be denied at this time. CONCLUSION Accordingly, I respectfully report and recommend that the Court deny the global protective order sought by HLI and proceed as set forth above. Dated: White Plains, NY January 21, 2020 William P. Harri Discovery Refer TO: All Counsel via NYSCEF 6