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FILED: WESTCHESTER COUNTY CLERK 07/20/2020 04:40 PM INDEX NO. 60767/2018
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EXHIBIT 6
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF WESTCHESTER
PAMELA GOLDSTEIN,
ELLYN & TONY BERK as Administrators
of the Estate of Winifred Berk, and PAUL Index No. 60767/2018
BENJAMIN, on behalf of themselves and
all others Hon. Linda S. Jamieson
similarly situated,
Plaintiffs, FOURTH REPORT AND
v. RECOMMENDATION OF
DISCOVERY REFEREE
HOULIHAN/LAWRENCE INC.,
Defendant.
In this putative class action, the parties are engaged in pre-class certification
discovery. On January 27, 2020, Plaintiffs sought intervention of the Discovery
Referee on a variety of discovery disputes that had arisen. (Ex. 1.)
Plaintiffs'
Houlihan/Lawrence Inc. ("HLI") responded to letter on February 20, 2020
by filing its second motion for a protective order, in large degree seeking to preclude
Plaintiffs'
the relief requested in January letter. (Ex. 2.) The motion was opposed
by Plaintiffs on March 6, 2020. (Ex. 3.) HLI replied on March 11, 2020. (Ex.4.) I
Plaintiffs'
advised the parties that January letter would be treated as a C.P.L.R §
3124 motion to compel discovery.
BACKGROUND
Familiarity with the background and procedural history of this matter is
assumed. Both parties argue that two prior Reports and Recommendations are
essentially dispositive and limit or increase the scope of the remaining discovery.
Neither argument is correct. Those Reports and Recommendations dealt with
specific discovery disputes based upon the discovery produced (or not produced) as
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of the date of those decisions. While many things have changed in our world since
the issuance of those R&Rs, the well settled standards for pre-class certification
articulated therein have not and will once again be applied in addressing the
instant motion.
On January 21, 2020, I issued the Second Report & Recommendation (Ex. 5,
"Second R&R"). In the Second R&R, I recommended that the Court deny HLI's
request for a global protective order precluding further class certification discovery.
Based upon the discovery that had been produced at that time and respective
parties'
arguments, I also recommended that HLI produce "some tailored additional
discovery,"
namely: (1) search term hit counts from its search of HLI executives
Gricar and Crystal; (2) documents regarding HLI corporate policy on dual agency;
(3) internal emails, subject to mutually agreeable search terms, from the Scarsdale,
Bronxville and White Plains offices regarding a dual agency bonus program; and (4)
a subset of transaction files of non-MLS transactions. (Second R&R at 5-6.) I also
recognized that, although HLI had produced over 60,000 pages of documents,
"[d]iscovery 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."
(Second R&R at 4.) That being said, the proper scope of pre-class
certification discovery requires a thoughtful balancing of competing interests and
ultimately requires an acute sense of proportionality. (Id.)
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Neither party objected to the Second R&R. Explicit in that ruling was the
Plaintiffs'
premise that counsel was entitled to receive, review and evaluate
information ordered by the Second R&R. For example, information regarding the
number of search term hit counts does not end a discussion about the discovery
sought through those search terms. Nothing in the R&R was meant to preclude the
Plaintiffs'
counsel from arguing about the inadequacy of that production or the need
for supplementation based upon such inadequacies; or preclude HLI from objecting
over"
to same. Nor did any R&R permit a "do or the liberal reopening of discovery
requests. Not being clairvoyant, my hope and expectation was that the parties
would cooperate and adhere to the aforesaid directives.
On February 21, 2020, I issued the Third Report & Recommendation (Ex. 6,
"Third R&R"), which authorized the issuance of a Commission to Serve a Subpoena
on James Michael Gricar, the former General Sales Manager of HLI, and ruled on a
variety of HLI's substantive objections to the documents requested in the subpoena.
Neither party objected to the Third R&R. That ruling addressed the adequacy of a
third-party subpoena, nothing more or less. It did not expand or limit the scope of
permitted party discovery, nor could it. In an exercise of caution, in consenting to
the Third R&R, HLI's counsel specifically noted that it did not consent to any
expansion of the scope of discovery.
Against that backdrop, I address the respective motions.
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DISCUSSION
I. Global Discovery Issues
A. Seven Additional Custodians
The selection of HLI discovery custodians, which included Michael Gricar,
preceded my involvement in this matter. However, subsequent to the selection of
Gricar and my appointment as Discovery Referee, HLI disclosed that two of the
three Gricar hard drives maintained by HLI could not be located. HLI has offered
no explanation to date. An HLI witness may ultimately have to explain the absence
of the Gricar computer drives in depositions. That issue is not before me. However,
at this point there is no evidentiary basis to attack HLI, or its counsel, let alone
support the spoliation argument advanced by Plaintiffs. It is equally clear that
Plaintiffs'
counsel would not have selected Gricar had they known of the missing
hard drives. Therefore, Plaintiffs are entitled to designate a new custodian in place
of Gricar. The parties should meet and confer to agree upon the appropriate new
custodian. Absent same, I will designate him/her.
Plaintiffs'
Nevertheless, request for the wholesale addition of seven
custodians for global search and production should be denied. This would
significantly expand the scope of discovery beyond the applicable proportionality
standard. Plaintiffs have been on notice that at least some of these individuals could
Plaintiffs'
have relevant information for almost a year. In addition, request would
be inconsistent with previous discovery rulings I have made, particularly insofar as
it relates to Stephen and Christopher Myers, the Chairman and CEO of HLI,
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respectively. As for the office managers of the Scarsdale, Bronxville, and White
Plains, the adequacy of the production relating to their computer files will be
addressed below. However, at this juncture adding each as a general custodian for
Plaintiffs'
discovery purposes is not warranted. The essence of objection as it relates
to the White Plains, Bronxville and Scarsdale offices is that the discovery produced
from those offices has been inadequate. As discussed below, those alleged
deficiencies can be addressed without the designation of six new custodians and the
cost and delay associated with same.
In sum, and in light of the important limitations on class-certification
Plaintiffs'
discovery, request for seven additional custodians should be denied.
However, Plaintiff's request to designate one new custodian should be granted. For
the reasons set forth in my prior rulings, the new custodian cannot be either
Stephen or Chris Meyers. The parties should agree within 10 days upon the new
custodian and proceed with discovery as itrelates to the new custodian. If the
parties cannot agree, I should be advised of same in writing wherein each party
should suggest the appropriate new custodian for my determination.
Plaintiffs'
B. Request for an Academic Discovery Directive
Plaintiffs'
request for an order directing compliance with the Second and
Third R&Rs should be denied.
Plaintiffs argue that such a directive is necessary because they challenge
HLI's interpretation of what documents are relevant in this case. To support this
position, HLI points to the production of a low percentages of documents that hit on
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certain search terms, and stray statements made by HLI in its papers. The Second
and Third R&Rs speak for themselves. Counsel in this case are very experienced
and able. Having consented to both R&Rs, the parties should comply with same.
Of course, the Third R&R dealt with documents that had to be produced by
Mr. Gricar, not HLI. The mere fact that certain documents are deemed relevant
and discoverable in the context of a non-party subpoena does not mean that a party
to that litigation has the burden to search for those documents. I suggested the
issuance of the third-party subpoena to Mr. Gricar after denying Plaintiffs certain
documents from HLI. To impose a search and production obligation on HLI at this
point would circumvent those previously imposed discovery limitations-limitations
that were not challenged by Plaintiffs. That would be improper and
counterproductive to streamlined class-certification discovery.
The foregoing is not intended to mean that either party is without a remedy if
it is uncovered that discovery abuses have been committed in this case. The
C.P.L.R. and the Court's inherent authority provide ample recourse on an
appropriate record. But there is no such record before me.
II. Issues Related to the Second R&R
A. Search Terms
Plaintiffs chose the following 10 search terms for the Gricar and Chrystal
collections in July 2019.
agen*" House"
"Dual In-House or "In
Share" agen*"
"Market "Designated
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Agen* disclos*
w/5 Grow /5 strategy
Fiduciary Inventory
Team*
Bonus
Eventually, and apparently without informing Plaintiffs, HLI ended up using
the following set of modified search terms (the shaded terms being the difference) to
conduct its search.
agen*" House"
"Dual In-House or "In
Share" agen*"
"Market "Designated
Agen* disclos*
w/5 Grow /5 strategy
"in-house"
Fiduciary Bonus w/3
(polic*
Team w/20 or rul*) Bonus and commission
Plaintiffs'
Specifically, HLI removed from proposed list one term altogether,
"inventory," "team" "bonus."
the word and limited the terms and According to HLI,
these modifications were "to account for substantial overbreadth and the
unworkable."
elimination of two terms that were
"team*" "inventory"
Plaintiffs appear to concede that the terms and were
overbroad, since they no longer request the use of those general terms, and instead
ask for the following set of requested terms:
agen*" House"
"Dual In-House or "In
Share" agen*"
"Market "Designated
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Agen* disclos*
w/5 Grow /5 strategy
points"
Fiduciary Script OR "Talking
Inventory w/10 [eighteen terms] Bonus
"inventory"
Regarding Plaintiffs proposal of running the term within 10
"hits"
characters of 18 different terms, itis unclear how many will be returned by
running these search terms, and it is not particularly burdensome to merely run the
Plaintiffs'
searches and provide those results. Indeed, had HLI provided counsel
"hits" "inventory,"
with the number of on the initial run of before unilaterally
removing it, this issue may have worked itself out. Having failed to do so, the
dispute is before me, and HLI should produce to Plaintiffs the hit results (without
"inventory" 2020.1
duplicate hits) for the 18 requested relationships by May 11, At
that point, ifthe parties cannot come to some agreement about whether and to what
extent those relationships should be searched by HLI, the parties should present
the dispute to me for a ruling.
Plaintiffs'
attempt to expand the breath of the search to include "Script OR
points"'
'Talking should be denied. First, these terms are newly-minted. Second,
that is actually two searches. And third, the breadth of the terms makes it very
likely that the number of hits will be substantial and more than likely overly
1 Plaintiffs' proposed eighteen additional search terms and derivations are: low OR declin*
OR
shrink* shar* Crowd"
OR OR limited OR know OR listing OR pre-listing OR "In or In-crowd OR
where" priorit* encourage*
"Want to go OR Push OR move OR market OR focus OR OR OR incent*.
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burdensome to review-the terms are simply not reasonably limited. Thus, those
searches should be denied.
"Bonus"
In addition, Plaintiffs renewed request that the term should be run
should also be rejected. The term is incredibly broad and will likely serve as an
inefficient dragnet for responsive documents.
Regarding custodians, as discussed above, a search should be run for the new
custodian designated by the parties or directed by me.
Finally, in its moving papers, HLI indicated that there was an inadvertent
technical error in two of the previously run searches. To the extent HLI has not
already corrected this error, HLI should do so and produce responsive documents by
May 18, 2020.
B. Corporate Policy Regarding Dual Agency
In the Second R&R, I directed the production of "documents regarding the
HLI corporate policy, if any, regarding the institutional implementation, rationale
."
and training regarding dual agency . ..
Plaintiffs take issue with the manner that HLI has utilized to search for
these documents. Essentially, Plaintiffs argue that a fulsome search for such
documents must include a production of the file-by-file report of HLI's corporate
shared drives and the records of the seven proposed additional custodians. As
discussed herein, those requests are largely denied. This result is particularly
appropriate given the proportionality touchstone because HLI has produced
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significant documentation on this topic, and the Gricar subpoena also calls for the
production of this information in Requests Nos. 7-8.
C. Corporate Shared Drives
Plaintiffs'
request for a file-by-file report of HLI's corporate headquarter
shared drives should be granted in part.
Exhibit 11 to HLI's Reply lists the file paths for many corporate shared drive
folders.
folders"
Plaintiffs first point out that the "accounting are omitted from
Exhibit 11. HLI should produce the file paths for any such accounting folders by
May 11, 2020.
Regarding a file-by-file report, many of the file path descriptions and folder
names demonstrate, prima facie, a very low likelihood that they would contain
documents relevant to any issues in this case, let alone class certification. Thus,
wholesale production of the information requested would not be appropriate. The
production of all the file names for all of the files in all of the folders on all of HLI's
corporate shared drives is overbroad, particularly at this stage of discovery, and
should be denied.
However, it does appear that the burden associated with producing a file
report is low. Therefore, Plaintiffs should be allowed to select, based on the path
descriptions (which they apparently have already reviewed in detail), a reasonable
subset of the file paths set forth in Exhibit 11 for HLI to produce the corresponding
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file report. Plaintiffs should provide their selected file paths within two weeks after
folder"
receipt of the supplemental "accounting file paths. The parties are directed
to agree on the additional file paths. Absent same, I will resolve the issue.
D. In-House Bonus E-mails
Plaintiffs'
request for an order directing HLI to "produce all e-mails sent or
received by all e-mail accountholders in the Scarsdale, Bronxville, and White Plains
on" Plaintiffs'
offices during the Class Period that hit newly-minted search terms
Plaintiffs'
should be denied. The scope of the request is overbroad.