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FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018
NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023
Motion Sequence No. 23
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 BENJAMIN, on behalf of Index No. 60767/2018
themselves and all others similarly
situated, Hon. Linda S. Jamieson
Plaintiffs,
v.
HOULIHAN/LAWRENCE INC.,
Defendant.
[CORRECTED] MEMORANDUM OF LAW IN SUPPORT OF
CLASS PLAINTIFFS’ MOTION TO CONFIRM
THE TWENTY-FIFTH REPORT AND RECOMMENDATION
MINTZ, LEVIN, COHN, FERRIS,
GLOVSKY AND POPEO, P.C.
919 Third Avenue
New York, NY 10022
BOIES SCHILLER FLEXNER LLP
333 Main Street
Armonk, NY 10504
Class Counsel for Class Plaintiffs
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TABLE OF CONTENTS
Page(s)
PRELIMINARY STATEMENT ..................................................................................... 1
PROCEDURAL BACKGROUND .................................................................................. 1
1. Houlihan Lawrence withholds “fundamentally relevant” evidence ................. 1
2. The Court compels identification of Bonus payments ....................................... 2
3. Houlihan Lawrence defies the Court’s first Order ............................................ 3
4. The Court again compels identification of Bonus payments ............................ 6
5. Houlihan Lawrence defies the Court’s second Order ........................................ 7
6. Houlihan Lawrence continues to deny its production obligation ..................... 8
7. The 25th R&R confirms Houlihan Lawrence defied the 22nd R&R ............... 10
ARGUMENT ................................................................................................................ 11
CONCLUSION............................................................................................................. 12
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TABLE OF AUTHORITIES
Page(s)
State Cases
Namer v. 152-54 W 15th St. Realty Corp.,
108 A.D.2d 705 (1st Dep’t 1985) ............................................................................ 11
Shen v. Shen,
21 A.D.3d 1078 (2d Dep’t 2005) ............................................................................. 11
Stone v. Stone,
229 A.D.2d 388 (2d Dep’t 2005) ............................................................................. 11
Those Certain Underwriters at Lloyds, London v. Occidental Gems, Inc.,
11 N.Y.3d 843 (2008) .............................................................................................. 11
Rules
CPLR § 3126 .................................................................................................................. 8
CPLR § 4403 ...................................................................................................... 1, 11, 12
22 NYCRR § 202.44 ....................................................................................................... 1
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Class Plaintiffs, by and through their undersigned Class Counsel,
respectfully move the Court under CPLR § 4403 and Section 202.44 of the Uniform
Rules for Trial Courts for an order confirming the Twenty-Fifth Report and
Recommendation (“25th R&R”) entered by the Discovery Referee, William P.
Harrington, on March 9, 2023 (Dkt. 1569).
PRELIMINARY STATEMENT
As Class Plaintiffs have advised,1 they consent to confirmation of the 25th
R&R in a continuing effort to advance this four-plus-year-old case to trial. Class
Plaintiffs make this motion to give the Court the benefit of review of the sanctions
motion submissions and for completeness of the record on the public docket.
PROCEDURAL BACKGROUND2
1. Houlihan Lawrence withholds “fundamentally relevant” evidence
On March 21, 2022, in their first merits request for production of documents,
Class Plaintiffs sought documents sufficient to show every In-House Bonus
(“Bonus”) payment, so that they could identify the thousands of Class Members
entitled to summary judgment even if the Court found that only those whose agents
received a Bonus were entitled to disclosure. Presaging its intent to litigate
“virtually every conceivable discovery issue,”3 on April 11, 2022, Houlihan Lawrence
1 Letter from J. Vest to Hon. L. Jamieson, Mar, 15, 2023 (Dkt. 1574)
2Sections 1-5 are reprinted (with minor non-substantive modifications) from Class
Plaintiffs’ motion for sanctions.
3 20th R&R, dated Nov. 9, 2022 (Dkt. 1468) at 10
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refused to produce any document responsive to Class Plaintiffs’ requests, including
those evidencing its Bonus payments, except for its transaction files.4
2. The Court compels identification of Bonus payments
On April 20, 2022, Class Plaintiffs promptly moved to compel.5 Throughout
the ensuing two months of hard-fought litigation, which included Houlihan
Lawrence’s cross-motion for a protective order, both Class Plaintiffs and Houlihan
Lawrence recognized that Class Plaintiffs sought documents sufficient to permit
them to identify Houlihan Lawrence’s Bonus payments:
May 2: Houlihan Lawrence acknowledged that Class
Plaintiffs sought “discovery into each and every Houlihan
Lawrence agent’s in house bonus eligibility and into the in
house bonus status of each and every Houlihan Lawrence
transaction.”6
May 5: Class Plaintiffs again sought “documents sufficient
to show (a) the HL sales agents eligible for an In-House
Bonus; and (b) the dual-agent transactions further tainted by
its actual payment of one.”7
May 12: Houlihan Lawrence again opposed Class Plaintiffs’
request for “In-House Bonus payment and eligibility
records.”8
May 19: After briefing on Class Plaintiffs’ motion to compel
was complete, Houlihan Lawrence cross-moved for a
4 Ex. 1, HL’s Resp. and Obj. to Pls.’ Third Request for Production of Documents
5 Letter from J. Vest to W. Harrington, Apr. 20, 2022 (Dkt. 1431) at §§ 5.6, 5.7
6 Letter from R. MacGill to W. Harrington, May 2, 2022 (Dkt. 1553) at § II.d
(emphasis added)
7Letter from J. Vest to W. Harrington, May 6, 2022 (Dkt. 1552) at 14 (emphasis
added)
8Ex. 2, Letter from R. MacGill to W. Harrington, May 12, 2022 at ¶ 7 (emphasis
added)
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protective order regarding “Plaintiffs’ request for production
of In-House Bonus eligibility and payment records.”9
May 25: Class Plaintiffs argued in opposition to that motion
that the “In-House Bonus payment and eligibility records
are essential to permit Class Plaintiffs to identify those Class
members whose rights HL violated in the event the Court
determines that only those whose transactions HL further
tainted by actual payment of an In-House Bonus are entitled
to relief.”10
June 1: In reply, Houlihan Lawrence again opposed
production of evidence of its “actual payment of the in-house
bonus in any individual transaction.”11
On June 10, 2022, the Discovery Referee denied Houlihan Lawrence’s cross-
motion for a protective order, granting Class Plaintiffs’ request for production of “In-
House Bonus Payment and Eligibility discovery.”12 On July 19, 2022, the Court
confirmed the 16th R&R, without objection from Houlihan Lawrence, thereby
converting the Discovery Referee’s ruling into an Order of the Court.13
3. Houlihan Lawrence defies the Court’s first Order
Nevertheless, one month later, on August 18, 2022, Houlihan Lawrence
produced only “documents sufficient to show agents on Houlihan Lawrence’s 50/50
and in house bonus plans during the class period.”14 Because Houlihan Lawrence
maintained that Bonus-eligibility “can change over time,” Class Plaintiffs could not
9 HL Disc. Mot. No. 11 (Dkt. 1405) at 1 (emphasis added)
10 Pls.’ Opp. to HL Disc. Mot. Nos. 1-19 (Dkt. 1406) at § 11 (emphasis added)
11 HL Reply in Supp. of Disc. Mot. No. 11 (Dkt. 1407) (emphasis added)
12 16th R&R, June 10, 2022 (Dkt. 1356) at 12
13 Decision and Order, Hon. L. Jamieson, July 19, 2022 (Dkt. 1426) at 3
14 Letter from R. MacGill to J. Vest, Aug. 18, 2022 (Dkt. 1504)
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use Houlihan Lawrence’s list of agents who had “at some point had a 50/50 plus
bonus or IHB compensation plan” to determine whether an agent had received a
Bonus in connection with any particular dual-agent transaction.15 Indeed,
Houlihan Lawrence bragged about as much, instructing, “You cannot take this list
and make the general assumption that every transaction by every agent on this list
involved an in house bonus.”16 That brazen disclaimer showed that Houlihan
Lawrence made its August 18 production aware of and intending its inadequacy.
Having waged a two-month discovery battle to secure the 16th R&R and
waited two more for Houlihan Lawrence to comply with it, Class Plaintiffs were,
frankly, apoplectic. Therefore, on September 23, 2022, Class Plaintiffs moved to
enforce the 16th R&R, recounting the same procedural history as above to
demonstrate Houlihan Lawrence’s “clear and flagrant violation of the 16th
R&R.”17 Despite Houlihan Lawrence’s contumacious conduct, Class Plaintiffs
sought “[n]either monetary sanctions, an award of attorneys’ fees and costs, nor
public censure” of Houlihan Lawrence or its counsel.18 Instead, Class Plaintiffs,
interested not in retribution but only in moving forward, sought production of “an
Excel spreadsheet identifying both the recipient and the amount of the In-House
Bonus payment, if any, that Houlihan Lawrence made on every side of every
15 Id. (emphasis added)
16 Id.
17Letter from J. Vest to W. Harrington, Sept. 23, 2022 (Dkt. 1506) at § 1 (emphasis
in original)
18 Id. at 1
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transaction identified on the lists of MLS and Non-MLS dual-agent transactions
produced by Houlihan Lawrence during pre-class certification discovery.”19 In
support, Class Plaintiffs argued:
Only Houlihan Lawrence can identify the In-House Bonus
payments that it made in the ordinary course of its business.
The Discovery Referee must not allow Houlihan Lawrence to
procure further delay by producing disaggregated records that
Plaintiffs will have to try to figure out how to combine and
interpret to identify Houlihan Lawrence’s In-House Bonus
payments. Ordering Houlihan Lawrence to produce a list of In-
House Bonus payments will mitigate the prejudice caused by
Houlihan Lawrence’s misconduct and ensure that the Court can
adjudicate most Class members’ claims on summary judgment
(even in the unlikely event the Court decides that only those
Class members whose agents received an In-House Bonus were
entitled to an In-House Bonus disclosure).20
In its October 14, 2022 response,21 Houlihan Lawrence did not even try to
dispute the facts demonstrating its disobedience—that Class Plaintiffs had sought
production of documents sufficient to permit identification of its Bonus payments;
that the 16th R&R directed Houlihan Lawrence to produce them; and that Houlihan
Lawrence had failed to do so in its August 18 production.22 Thus, in their October
19, 2022 reply, Class Plaintiffs, while still stopping short of requesting sanctions,
nevertheless quoted the Court of Appeals’ admonition that, “[i]f the credibility of
courts orders and the integrity of our judicial system are to be maintained, a
litigant cannot ignore courts orders with impunity.”23
19 Id. at 4
20 Id.
21 Letter from R. MacGill to W. Harrington, Oct. 14, 2022 (Dkt. 1507) at 5-7
22 Letter from J. Vest to W. Harrington, Oct. 19, 2022 (Dkt. 1508) at § 1
23 Id. at 2 (quoting Kihl v. Pfeffer, 94 N.Y.2d 118, 123 (1999)
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4. The Court again compels identification of Bonus payments
On December 19, 2022, the Discovery Referee, while generously sidestepping
Houlihan Lawrence’s disobedience, granted Class Plaintiffs’ motion. Recognizing
that evidence of Houlihan Lawrence’s Bonus payments is “fundamentally relevant
to the claims and defenses raised in this litigation,” and “also at the heart of
Plaintiffs’ damages claims,”24 the Discovery Referee directed Houlihan Lawrence to
produce an Excel spreadsheet showing “both the recipient and the amount” of every
Bonus payment made by Houlihan Lawrence during the Class Period.25 In other
words, after Houlihan Lawrence disobeyed the Order to produce the ordinary-
course-of-business records necessary for Class Plaintiffs to identify its Bonus
payments, the Discovery Referee compelled Houlihan Lawrence to use those records
itself to identify its Bonus payments for Class Plaintiffs.
Importantly for purposes of the sanctions motion, before making that
directive, the Discovery Referee expressly rejected Houlihan Lawrence’s arguments,
saying, “HLI’s arguments are not credited,”26 including its assertion that
identification of its Bonus payments should await expert discovery because it
purportedly lacks sufficient ordinary-course-of-business information to identify
them except through a difficult forensic data expert analysis.
24 22nd R&R, Dec. 19, 2022 (Dkt. 1496) at § 1, p. 3 (emphasis added)
25Id. at 3 (“HLI is directed to produce the In-House Bonus information on an Excel
spreadsheet in the detail requested by Plaintiffs.”)
26 Id. at 2
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The day after the December 20, 2022 status conference, during which the
Court directed the Discovery Referee and the parties to “move faster,”27 Class
Plaintiffs asked Houlihan Lawrence to consent to confirmation of the Discovery
Referee’s ruling. After Houlihan Lawrence ignored that request, on January 3,
2023, Class Plaintiffs moved to confirm the 22nd R&R, including, as relevant here,
that portion directing Houlihan Lawrence “to produce a spreadsheet showing the
recipient and amount of every In-House Bonus payment.”28
After not agreeing to consent to confirm the 22nd R&R, putting Class
Plaintiffs to the burden and expense of moving the Court, Houlihan Lawrence did
not oppose Class Plaintiffs’ motion prior to its January 13, 2023 statutory deadline.
Accordingly, on January 20, 2023, the Court confirmed the 22nd R&R in its
entirety, thereby giving it the full force and effect of another Order of the Court.29
5. Houlihan Lawrence defies the Court’s second Order
Despite its clear and unambiguous obligation to produce an Excel
spreadsheet detailing its Bonus payments, on February 2, 2023, Houlihan
Lawrence’s deadline to comply with the 22nd R&R, Houlihan Lawrence directed
Class Plaintiffs to its transaction files and other parts of its document production
(which, incidentally, neither individually nor collectively permit identification of its
27 Hon. L. Jamieson Hr’g Tr., Dec. 20, 2022 (Dkt. 1516) at 21:19-24
28Pls.’ Mot. to Confirm the 22nd R&R, Jan. 3, 2023 (Dkt. 1501) at 4 (emphasis
added)
29 Order, Hon. L. Jamieson, Jan. 20, 2023 (Dkt. 1514)
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Bonus payments).30 Falsely asserting the sufficiency of its production, Houlihan
Lawrence repeated the same arguments rejected by the Discovery Referee in the
22nd R&R, including that it purportedly has no obligation “to create documentation
that does not exist in the ordinary course of business” and that its Bonus payment
identification must therefore await “expert discovery.”31
6. Houlihan Lawrence continues to deny its production obligation
Just over two business days later, on February 7, 2023, Class Plaintiffs
sought “leave of Court to move under CPLR § 3126 for sanctions against Houlihan
Lawrence for its violation of the Order confirming the 22nd R&R.”32 The Court
granted the leave request the next day, directing Class Plaintiffs to file their motion
for sanctions before the Discovery Referee.33
In its first response to Class Plaintiffs’ leave request, Houlihan Lawrence
continued to ignore the plain language of the 22nd R&R, again implicitly denying
its obligation to produce the Court-ordered Excel spreadsheet:
Plaintiffs’ proposed motion for sanctions is not supported or
supportable. On December 22, 20222, Houlihan Lawrence
produced more than what was contemplated or required by the
Twenty-Second Report and Recommendation: Houlihan
Lawrence produced the actual structured data for the class
counties and dates as it is maintained in the ordinary course of
business, reflecting all available ordinary-course data for these
transactions.34
30 Ex. 3, Letter from R. MacGill to J. Vest, Feb. 2, 2023
31 Id.
32 Letter from J. Vest to Hon. L. Jamieson, Feb. 7, 2023 (Dkt. 1518)
33 Ex. 4, Pls.’ Memo of Law in Supp. of Pls’ Mot. for Sanctions, Feb. 7, 2023
34Letter from A. Donnellan to Hon. L. Jamieson, Feb. 7, 2023 (Dkt. 1520) (emphasis
in original)
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In reply, Class Plaintiffs argued that Houlihan Lawrence’s continued attempt to re-
litigate whether it was “obligated to create documentation that does not exist in the
ordinary course of business [(i.e., the Excel spreadsheet)] further shows why
sanctions are clearly warranted.”35
On February 8, 2023, in its second response to Class Plaintiffs’ leave request,
Houlihan Lawrence announced its intention to produce the Court-ordered Excel
spreadsheet, but again insisted that it was “not in default of any court order”
because “[t]here is no order directing Houlihan Lawrence to create this analysis.”36
Because Houlihan Lawrence accused Class Plaintiffs of making “false statements”
about its obligations under the 22nd R&R and pursuing production of the Court-
ordered Excel spreadsheet in furtherance of a bad faith litigation strategy, Class
Plaintiffs told the Discovery Referee that a decision on their sanctions motion was
now “unavoidable.”37
In its February 15, 2023 opposition to Class Plaintiffs’ sanctions motion,
Houlihan Lawrence, while finally turning over the Court-ordered Excel spreadsheet
identifying its Bonus payments, again asserted that it complied with the 22nd R&R
by producing “structured data.”38
Given Houlihan Lawrence’s continuing refusal to acknowledge the plain
language of the 22nd R&R, in reply, Class Plaintiffs argued that the Discovery
35 Letter from J. Vest to Hon. L. Jamieson, Feb. 8, 2023 (Dkt. 1522)
36 Letter from A. Donnellan to Hon. L. Jamieson, Feb. 8, 2023 (Dkt. 1526)
37 Ex. 5, Letter from J. Vest to W. Harrington, Feb. 8, 2023
38 Ex. 6, Letter from A. Donnellan to W. Harrington, Feb. 15, 2023
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Referee needed to recognize Houlihan Lawrence’s violation of the 22nd R&R before
considering in possible mitigation its belated production of the Court-ordered Excel
spreadsheet to avoid sanctions:
Because Houlihan Lawrence audaciously still contends that it
had no obligation to produce a Bonus-payment spreadsheet, the
Discovery Referee must find it guilty of sanctionable conduct
before considering in possible mitigation its post-deadline
production of the Kleinrichert report under the imminent threat
of sanctions. Failure to make this critical finding will unjustly
expose Class Plaintiffs to further unfounded accusations of
making ‘false statements’ and bringing the Motion only in
furtherance of a bad faith litigation strategy. The Court must
know that Class Plaintiffs had good and proper grounds for
seeking sanctions even if the Discovery Referee too generously
spares Houlihan Lawrence punishment.39
The parties completed briefing on Class Plaintiffs’ sanctions motion on
February 24, 2023.40
7. The 25th R&R confirms Houlihan Lawrence defied the 22nd R&R
As requested by Class Plaintiffs, the first sentence of the “Discussion” in the
25th R&R implicitly confirmed that Houlihan Lawrence was indeed in default of the
22nd R&R when Class Plaintiffs sought leave to move for sanctions on February 7,
2023:
The 22nd Report & Recommendation directed HLI to produce the
In-House Bonus information on an Excel spreadsheet within 14
days of the confirmation.41
39 Ex. 7, Pls.’ Rep. in Further Supp. of Pls.’ Mot. for Sanctions, Feb. 20, 2023
40 See Ex. 8, Letter from A. Donnellan to W. Harrington, Feb. 22, 2023; Ex. 9, Letter
from J., Vest to W. Harrington, Feb. 24, 2023
4125th R&R (Dkt. 1569) at 4 (recognizing Houlihan Lawrence’s “delay in producing
the required Excel spreadsheet”) (emphasis added)
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With that straightforward affirmation of what the 22nd R&R plainly said, but what
Houlihan Lawrence self-righteously refused to concede right up to entry of the 25th
R&R, Class Plaintiffs established Houlihan Lawrence’s defiance of the 22nd R&R
until under the imminent threat of sanctions.
ARGUMENT
CPLR § 4403 provides “[u]pon the motion of any party or on his own
initiative, the judge required to decide the issue may confirm or reject, in whole or
in part, the verdict of an advisory jury or the report of a referee to report; may make
new findings with or without taking additional testimony; and may order a new
trial or hearing.” In general, “[w]here a referee’s findings are supported by the
record, the court should confirm the referee’s report and adopt the recommendation
made therein.” Shen v. Shen, 21 A.D.3d 1078, 1079 (2d Dep’t 2005); see also Stone
v. Stone, 229 A.D.2d 388, 388 (2d Dep’t 2005) (The findings and recommendations of
a Special Referee “should be confirmed whenever the findings are substantially
supported by the record, and the Referee has clearly defined the issues and resolved
matters of credibility”); Namer v. 152-54 W 15th St. Realty Corp., 108 A.D.2d 705,
706 (1st Dep’t 1985) (a court reviewing the findings and recommendations of a
Special Referee will generally “look with favor upon a Referee’s report in as much as
the Referee, as a trier of fact, is considered to be in the best position to determine
the issues presented.”). The deference afforded New York courts to supervise
disclosure “extends to its decision to confirm a referee’s report, so long as the report
is supported by the record.” Those Certain Underwriters at Lloyds, London v.
Occidental Gems, Inc., 11 N.Y.3d 843, 845 (2008).
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For the reasons set forth in their March 15, 2023 letter to the Court,42 Class
Plaintiffs consent to the Court exercising its discretion pursuant to CPLR § 4403 to
adopt the Discovery Referee’s recommendation that Houlihan Lawrence’s “12-day
delay in producing the required Excel spreadsheet” does not “warrant[] the
preclusion order which Plaintiffs [sought] as a sanction.”43
CONCLUSION
For the foregoing reasons, Class Plaintiffs respectfully request that the Court
confirm the 25th R&R in its entirety.
Dated: March 16, 2023
New York, New York
By: /s/ Jeremy Vest
Jeremy Vest, Esq.
MINTZ, LEVIN, COHN, FERRIS,
GLOVSKY AND POPEO, P.C.
919 Third Avenue
New York, NY 10022
William S. Ohlemeyer, Esq.
BOIES SCHILLER FLEXNER LLP
333 Main Street
Armonk, NY 10504
Class Counsel for Class Plaintiffs
42 Letter from J. Vest to Hon. L. Jamieson, Mar. 15, 2023 (Dkt. 1574)
43 25th R&R (Dkt. 1569) at 4-5
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Certificate of Counsel
Pursuant to Commercial Division Rule 17
I, Jeremy Vest, counsel for Plaintiffs, hereby certify, pursuant to Commercial
Division Rule 17, that the word count for the foregoing document, excluding the
caption, table of contents, table of authorities, and signature block, is 2,935 words.
This document therefore complies with the rule, which limits briefs, memoranda,
affirmations, and affidavits to 7,000 words. I certify that the word count Microsoft
Word generated for this document is 2,935.
Dated: March 16, 2023
New York, New York
/s/Jeremy Vest
Jeremy Vest
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Preview
FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 Motion Sequence No. 23 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 BENJAMIN, on behalf of Index No. 60767/2018 themselves and all others similarly situated, Hon. Linda S. Jamieson Plaintiffs, v. HOULIHAN/LAWRENCE INC., Defendant. [CORRECTED] MEMORANDUM OF LAW IN SUPPORT OF CLASS PLAINTIFFS’ MOTION TO CONFIRM THE TWENTY-FIFTH REPORT AND RECOMMENDATION MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C. 919 Third Avenue New York, NY 10022 BOIES SCHILLER FLEXNER LLP 333 Main Street Armonk, NY 10504 Class Counsel for Class Plaintiffs 1 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 TABLE OF CONTENTS Page(s) PRELIMINARY STATEMENT ..................................................................................... 1 PROCEDURAL BACKGROUND .................................................................................. 1 1. Houlihan Lawrence withholds “fundamentally relevant” evidence ................. 1 2. The Court compels identification of Bonus payments ....................................... 2 3. Houlihan Lawrence defies the Court’s first Order ............................................ 3 4. The Court again compels identification of Bonus payments ............................ 6 5. Houlihan Lawrence defies the Court’s second Order ........................................ 7 6. Houlihan Lawrence continues to deny its production obligation ..................... 8 7. The 25th R&R confirms Houlihan Lawrence defied the 22nd R&R ............... 10 ARGUMENT ................................................................................................................ 11 CONCLUSION............................................................................................................. 12 i 2 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 TABLE OF AUTHORITIES Page(s) State Cases Namer v. 152-54 W 15th St. Realty Corp., 108 A.D.2d 705 (1st Dep’t 1985) ............................................................................ 11 Shen v. Shen, 21 A.D.3d 1078 (2d Dep’t 2005) ............................................................................. 11 Stone v. Stone, 229 A.D.2d 388 (2d Dep’t 2005) ............................................................................. 11 Those Certain Underwriters at Lloyds, London v. Occidental Gems, Inc., 11 N.Y.3d 843 (2008) .............................................................................................. 11 Rules CPLR § 3126 .................................................................................................................. 8 CPLR § 4403 ...................................................................................................... 1, 11, 12 22 NYCRR § 202.44 ....................................................................................................... 1 ii 3 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 Class Plaintiffs, by and through their undersigned Class Counsel, respectfully move the Court under CPLR § 4403 and Section 202.44 of the Uniform Rules for Trial Courts for an order confirming the Twenty-Fifth Report and Recommendation (“25th R&R”) entered by the Discovery Referee, William P. Harrington, on March 9, 2023 (Dkt. 1569). PRELIMINARY STATEMENT As Class Plaintiffs have advised,1 they consent to confirmation of the 25th R&R in a continuing effort to advance this four-plus-year-old case to trial. Class Plaintiffs make this motion to give the Court the benefit of review of the sanctions motion submissions and for completeness of the record on the public docket. PROCEDURAL BACKGROUND2 1. Houlihan Lawrence withholds “fundamentally relevant” evidence On March 21, 2022, in their first merits request for production of documents, Class Plaintiffs sought documents sufficient to show every In-House Bonus (“Bonus”) payment, so that they could identify the thousands of Class Members entitled to summary judgment even if the Court found that only those whose agents received a Bonus were entitled to disclosure. Presaging its intent to litigate “virtually every conceivable discovery issue,”3 on April 11, 2022, Houlihan Lawrence 1 Letter from J. Vest to Hon. L. Jamieson, Mar, 15, 2023 (Dkt. 1574) 2Sections 1-5 are reprinted (with minor non-substantive modifications) from Class Plaintiffs’ motion for sanctions. 3 20th R&R, dated Nov. 9, 2022 (Dkt. 1468) at 10 4 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 refused to produce any document responsive to Class Plaintiffs’ requests, including those evidencing its Bonus payments, except for its transaction files.4 2. The Court compels identification of Bonus payments On April 20, 2022, Class Plaintiffs promptly moved to compel.5 Throughout the ensuing two months of hard-fought litigation, which included Houlihan Lawrence’s cross-motion for a protective order, both Class Plaintiffs and Houlihan Lawrence recognized that Class Plaintiffs sought documents sufficient to permit them to identify Houlihan Lawrence’s Bonus payments: May 2: Houlihan Lawrence acknowledged that Class Plaintiffs sought “discovery into each and every Houlihan Lawrence agent’s in house bonus eligibility and into the in house bonus status of each and every Houlihan Lawrence transaction.”6 May 5: Class Plaintiffs again sought “documents sufficient to show (a) the HL sales agents eligible for an In-House Bonus; and (b) the dual-agent transactions further tainted by its actual payment of one.”7 May 12: Houlihan Lawrence again opposed Class Plaintiffs’ request for “In-House Bonus payment and eligibility records.”8 May 19: After briefing on Class Plaintiffs’ motion to compel was complete, Houlihan Lawrence cross-moved for a 4 Ex. 1, HL’s Resp. and Obj. to Pls.’ Third Request for Production of Documents 5 Letter from J. Vest to W. Harrington, Apr. 20, 2022 (Dkt. 1431) at §§ 5.6, 5.7 6 Letter from R. MacGill to W. Harrington, May 2, 2022 (Dkt. 1553) at § II.d (emphasis added) 7Letter from J. Vest to W. Harrington, May 6, 2022 (Dkt. 1552) at 14 (emphasis added) 8Ex. 2, Letter from R. MacGill to W. Harrington, May 12, 2022 at ¶ 7 (emphasis added) 2 5 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 protective order regarding “Plaintiffs’ request for production of In-House Bonus eligibility and payment records.”9 May 25: Class Plaintiffs argued in opposition to that motion that the “In-House Bonus payment and eligibility records are essential to permit Class Plaintiffs to identify those Class members whose rights HL violated in the event the Court determines that only those whose transactions HL further tainted by actual payment of an In-House Bonus are entitled to relief.”10 June 1: In reply, Houlihan Lawrence again opposed production of evidence of its “actual payment of the in-house bonus in any individual transaction.”11 On June 10, 2022, the Discovery Referee denied Houlihan Lawrence’s cross- motion for a protective order, granting Class Plaintiffs’ request for production of “In- House Bonus Payment and Eligibility discovery.”12 On July 19, 2022, the Court confirmed the 16th R&R, without objection from Houlihan Lawrence, thereby converting the Discovery Referee’s ruling into an Order of the Court.13 3. Houlihan Lawrence defies the Court’s first Order Nevertheless, one month later, on August 18, 2022, Houlihan Lawrence produced only “documents sufficient to show agents on Houlihan Lawrence’s 50/50 and in house bonus plans during the class period.”14 Because Houlihan Lawrence maintained that Bonus-eligibility “can change over time,” Class Plaintiffs could not 9 HL Disc. Mot. No. 11 (Dkt. 1405) at 1 (emphasis added) 10 Pls.’ Opp. to HL Disc. Mot. Nos. 1-19 (Dkt. 1406) at § 11 (emphasis added) 11 HL Reply in Supp. of Disc. Mot. No. 11 (Dkt. 1407) (emphasis added) 12 16th R&R, June 10, 2022 (Dkt. 1356) at 12 13 Decision and Order, Hon. L. Jamieson, July 19, 2022 (Dkt. 1426) at 3 14 Letter from R. MacGill to J. Vest, Aug. 18, 2022 (Dkt. 1504) 3 6 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 use Houlihan Lawrence’s list of agents who had “at some point had a 50/50 plus bonus or IHB compensation plan” to determine whether an agent had received a Bonus in connection with any particular dual-agent transaction.15 Indeed, Houlihan Lawrence bragged about as much, instructing, “You cannot take this list and make the general assumption that every transaction by every agent on this list involved an in house bonus.”16 That brazen disclaimer showed that Houlihan Lawrence made its August 18 production aware of and intending its inadequacy. Having waged a two-month discovery battle to secure the 16th R&R and waited two more for Houlihan Lawrence to comply with it, Class Plaintiffs were, frankly, apoplectic. Therefore, on September 23, 2022, Class Plaintiffs moved to enforce the 16th R&R, recounting the same procedural history as above to demonstrate Houlihan Lawrence’s “clear and flagrant violation of the 16th R&R.”17 Despite Houlihan Lawrence’s contumacious conduct, Class Plaintiffs sought “[n]either monetary sanctions, an award of attorneys’ fees and costs, nor public censure” of Houlihan Lawrence or its counsel.18 Instead, Class Plaintiffs, interested not in retribution but only in moving forward, sought production of “an Excel spreadsheet identifying both the recipient and the amount of the In-House Bonus payment, if any, that Houlihan Lawrence made on every side of every 15 Id. (emphasis added) 16 Id. 17Letter from J. Vest to W. Harrington, Sept. 23, 2022 (Dkt. 1506) at § 1 (emphasis in original) 18 Id. at 1 4 7 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 transaction identified on the lists of MLS and Non-MLS dual-agent transactions produced by Houlihan Lawrence during pre-class certification discovery.”19 In support, Class Plaintiffs argued: Only Houlihan Lawrence can identify the In-House Bonus payments that it made in the ordinary course of its business. The Discovery Referee must not allow Houlihan Lawrence to procure further delay by producing disaggregated records that Plaintiffs will have to try to figure out how to combine and interpret to identify Houlihan Lawrence’s In-House Bonus payments. Ordering Houlihan Lawrence to produce a list of In- House Bonus payments will mitigate the prejudice caused by Houlihan Lawrence’s misconduct and ensure that the Court can adjudicate most Class members’ claims on summary judgment (even in the unlikely event the Court decides that only those Class members whose agents received an In-House Bonus were entitled to an In-House Bonus disclosure).20 In its October 14, 2022 response,21 Houlihan Lawrence did not even try to dispute the facts demonstrating its disobedience—that Class Plaintiffs had sought production of documents sufficient to permit identification of its Bonus payments; that the 16th R&R directed Houlihan Lawrence to produce them; and that Houlihan Lawrence had failed to do so in its August 18 production.22 Thus, in their October 19, 2022 reply, Class Plaintiffs, while still stopping short of requesting sanctions, nevertheless quoted the Court of Appeals’ admonition that, “[i]f the credibility of courts orders and the integrity of our judicial system are to be maintained, a litigant cannot ignore courts orders with impunity.”23 19 Id. at 4 20 Id. 21 Letter from R. MacGill to W. Harrington, Oct. 14, 2022 (Dkt. 1507) at 5-7 22 Letter from J. Vest to W. Harrington, Oct. 19, 2022 (Dkt. 1508) at § 1 23 Id. at 2 (quoting Kihl v. Pfeffer, 94 N.Y.2d 118, 123 (1999) 5 8 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 4. The Court again compels identification of Bonus payments On December 19, 2022, the Discovery Referee, while generously sidestepping Houlihan Lawrence’s disobedience, granted Class Plaintiffs’ motion. Recognizing that evidence of Houlihan Lawrence’s Bonus payments is “fundamentally relevant to the claims and defenses raised in this litigation,” and “also at the heart of Plaintiffs’ damages claims,”24 the Discovery Referee directed Houlihan Lawrence to produce an Excel spreadsheet showing “both the recipient and the amount” of every Bonus payment made by Houlihan Lawrence during the Class Period.25 In other words, after Houlihan Lawrence disobeyed the Order to produce the ordinary- course-of-business records necessary for Class Plaintiffs to identify its Bonus payments, the Discovery Referee compelled Houlihan Lawrence to use those records itself to identify its Bonus payments for Class Plaintiffs. Importantly for purposes of the sanctions motion, before making that directive, the Discovery Referee expressly rejected Houlihan Lawrence’s arguments, saying, “HLI’s arguments are not credited,”26 including its assertion that identification of its Bonus payments should await expert discovery because it purportedly lacks sufficient ordinary-course-of-business information to identify them except through a difficult forensic data expert analysis. 24 22nd R&R, Dec. 19, 2022 (Dkt. 1496) at § 1, p. 3 (emphasis added) 25Id. at 3 (“HLI is directed to produce the In-House Bonus information on an Excel spreadsheet in the detail requested by Plaintiffs.”) 26 Id. at 2 6 9 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 The day after the December 20, 2022 status conference, during which the Court directed the Discovery Referee and the parties to “move faster,”27 Class Plaintiffs asked Houlihan Lawrence to consent to confirmation of the Discovery Referee’s ruling. After Houlihan Lawrence ignored that request, on January 3, 2023, Class Plaintiffs moved to confirm the 22nd R&R, including, as relevant here, that portion directing Houlihan Lawrence “to produce a spreadsheet showing the recipient and amount of every In-House Bonus payment.”28 After not agreeing to consent to confirm the 22nd R&R, putting Class Plaintiffs to the burden and expense of moving the Court, Houlihan Lawrence did not oppose Class Plaintiffs’ motion prior to its January 13, 2023 statutory deadline. Accordingly, on January 20, 2023, the Court confirmed the 22nd R&R in its entirety, thereby giving it the full force and effect of another Order of the Court.29 5. Houlihan Lawrence defies the Court’s second Order Despite its clear and unambiguous obligation to produce an Excel spreadsheet detailing its Bonus payments, on February 2, 2023, Houlihan Lawrence’s deadline to comply with the 22nd R&R, Houlihan Lawrence directed Class Plaintiffs to its transaction files and other parts of its document production (which, incidentally, neither individually nor collectively permit identification of its 27 Hon. L. Jamieson Hr’g Tr., Dec. 20, 2022 (Dkt. 1516) at 21:19-24 28Pls.’ Mot. to Confirm the 22nd R&R, Jan. 3, 2023 (Dkt. 1501) at 4 (emphasis added) 29 Order, Hon. L. Jamieson, Jan. 20, 2023 (Dkt. 1514) 7 10 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 Bonus payments).30 Falsely asserting the sufficiency of its production, Houlihan Lawrence repeated the same arguments rejected by the Discovery Referee in the 22nd R&R, including that it purportedly has no obligation “to create documentation that does not exist in the ordinary course of business” and that its Bonus payment identification must therefore await “expert discovery.”31 6. Houlihan Lawrence continues to deny its production obligation Just over two business days later, on February 7, 2023, Class Plaintiffs sought “leave of Court to move under CPLR § 3126 for sanctions against Houlihan Lawrence for its violation of the Order confirming the 22nd R&R.”32 The Court granted the leave request the next day, directing Class Plaintiffs to file their motion for sanctions before the Discovery Referee.33 In its first response to Class Plaintiffs’ leave request, Houlihan Lawrence continued to ignore the plain language of the 22nd R&R, again implicitly denying its obligation to produce the Court-ordered Excel spreadsheet: Plaintiffs’ proposed motion for sanctions is not supported or supportable. On December 22, 20222, Houlihan Lawrence produced more than what was contemplated or required by the Twenty-Second Report and Recommendation: Houlihan Lawrence produced the actual structured data for the class counties and dates as it is maintained in the ordinary course of business, reflecting all available ordinary-course data for these transactions.34 30 Ex. 3, Letter from R. MacGill to J. Vest, Feb. 2, 2023 31 Id. 32 Letter from J. Vest to Hon. L. Jamieson, Feb. 7, 2023 (Dkt. 1518) 33 Ex. 4, Pls.’ Memo of Law in Supp. of Pls’ Mot. for Sanctions, Feb. 7, 2023 34Letter from A. Donnellan to Hon. L. Jamieson, Feb. 7, 2023 (Dkt. 1520) (emphasis in original) 8 11 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 In reply, Class Plaintiffs argued that Houlihan Lawrence’s continued attempt to re- litigate whether it was “obligated to create documentation that does not exist in the ordinary course of business [(i.e., the Excel spreadsheet)] further shows why sanctions are clearly warranted.”35 On February 8, 2023, in its second response to Class Plaintiffs’ leave request, Houlihan Lawrence announced its intention to produce the Court-ordered Excel spreadsheet, but again insisted that it was “not in default of any court order” because “[t]here is no order directing Houlihan Lawrence to create this analysis.”36 Because Houlihan Lawrence accused Class Plaintiffs of making “false statements” about its obligations under the 22nd R&R and pursuing production of the Court- ordered Excel spreadsheet in furtherance of a bad faith litigation strategy, Class Plaintiffs told the Discovery Referee that a decision on their sanctions motion was now “unavoidable.”37 In its February 15, 2023 opposition to Class Plaintiffs’ sanctions motion, Houlihan Lawrence, while finally turning over the Court-ordered Excel spreadsheet identifying its Bonus payments, again asserted that it complied with the 22nd R&R by producing “structured data.”38 Given Houlihan Lawrence’s continuing refusal to acknowledge the plain language of the 22nd R&R, in reply, Class Plaintiffs argued that the Discovery 35 Letter from J. Vest to Hon. L. Jamieson, Feb. 8, 2023 (Dkt. 1522) 36 Letter from A. Donnellan to Hon. L. Jamieson, Feb. 8, 2023 (Dkt. 1526) 37 Ex. 5, Letter from J. Vest to W. Harrington, Feb. 8, 2023 38 Ex. 6, Letter from A. Donnellan to W. Harrington, Feb. 15, 2023 9 12 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 Referee needed to recognize Houlihan Lawrence’s violation of the 22nd R&R before considering in possible mitigation its belated production of the Court-ordered Excel spreadsheet to avoid sanctions: Because Houlihan Lawrence audaciously still contends that it had no obligation to produce a Bonus-payment spreadsheet, the Discovery Referee must find it guilty of sanctionable conduct before considering in possible mitigation its post-deadline production of the Kleinrichert report under the imminent threat of sanctions. Failure to make this critical finding will unjustly expose Class Plaintiffs to further unfounded accusations of making ‘false statements’ and bringing the Motion only in furtherance of a bad faith litigation strategy. The Court must know that Class Plaintiffs had good and proper grounds for seeking sanctions even if the Discovery Referee too generously spares Houlihan Lawrence punishment.39 The parties completed briefing on Class Plaintiffs’ sanctions motion on February 24, 2023.40 7. The 25th R&R confirms Houlihan Lawrence defied the 22nd R&R As requested by Class Plaintiffs, the first sentence of the “Discussion” in the 25th R&R implicitly confirmed that Houlihan Lawrence was indeed in default of the 22nd R&R when Class Plaintiffs sought leave to move for sanctions on February 7, 2023: The 22nd Report & Recommendation directed HLI to produce the In-House Bonus information on an Excel spreadsheet within 14 days of the confirmation.41 39 Ex. 7, Pls.’ Rep. in Further Supp. of Pls.’ Mot. for Sanctions, Feb. 20, 2023 40 See Ex. 8, Letter from A. Donnellan to W. Harrington, Feb. 22, 2023; Ex. 9, Letter from J., Vest to W. Harrington, Feb. 24, 2023 4125th R&R (Dkt. 1569) at 4 (recognizing Houlihan Lawrence’s “delay in producing the required Excel spreadsheet”) (emphasis added) 10 13 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 With that straightforward affirmation of what the 22nd R&R plainly said, but what Houlihan Lawrence self-righteously refused to concede right up to entry of the 25th R&R, Class Plaintiffs established Houlihan Lawrence’s defiance of the 22nd R&R until under the imminent threat of sanctions. ARGUMENT CPLR § 4403 provides “[u]pon the motion of any party or on his own initiative, the judge required to decide the issue may confirm or reject, in whole or in part, the verdict of an advisory jury or the report of a referee to report; may make new findings with or without taking additional testimony; and may order a new trial or hearing.” In general, “[w]here a referee’s findings are supported by the record, the court should confirm the referee’s report and adopt the recommendation made therein.” Shen v. Shen, 21 A.D.3d 1078, 1079 (2d Dep’t 2005); see also Stone v. Stone, 229 A.D.2d 388, 388 (2d Dep’t 2005) (The findings and recommendations of a Special Referee “should be confirmed whenever the findings are substantially supported by the record, and the Referee has clearly defined the issues and resolved matters of credibility”); Namer v. 152-54 W 15th St. Realty Corp., 108 A.D.2d 705, 706 (1st Dep’t 1985) (a court reviewing the findings and recommendations of a Special Referee will generally “look with favor upon a Referee’s report in as much as the Referee, as a trier of fact, is considered to be in the best position to determine the issues presented.”). The deference afforded New York courts to supervise disclosure “extends to its decision to confirm a referee’s report, so long as the report is supported by the record.” Those Certain Underwriters at Lloyds, London v. Occidental Gems, Inc., 11 N.Y.3d 843, 845 (2008). 11 14 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 For the reasons set forth in their March 15, 2023 letter to the Court,42 Class Plaintiffs consent to the Court exercising its discretion pursuant to CPLR § 4403 to adopt the Discovery Referee’s recommendation that Houlihan Lawrence’s “12-day delay in producing the required Excel spreadsheet” does not “warrant[] the preclusion order which Plaintiffs [sought] as a sanction.”43 CONCLUSION For the foregoing reasons, Class Plaintiffs respectfully request that the Court confirm the 25th R&R in its entirety. Dated: March 16, 2023 New York, New York By: /s/ Jeremy Vest Jeremy Vest, Esq. MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C. 919 Third Avenue New York, NY 10022 William S. Ohlemeyer, Esq. BOIES SCHILLER FLEXNER LLP 333 Main Street Armonk, NY 10504 Class Counsel for Class Plaintiffs 42 Letter from J. Vest to Hon. L. Jamieson, Mar. 15, 2023 (Dkt. 1574) 43 25th R&R (Dkt. 1569) at 4-5 12 15 of 16 FILED: WESTCHESTER COUNTY CLERK 03/16/2023 02:21 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 1587 RECEIVED NYSCEF: 03/16/2023 Certificate of Counsel Pursuant to Commercial Division Rule 17 I, Jeremy Vest, counsel for Plaintiffs, hereby certify, pursuant to Commercial Division Rule 17, that the word count for the foregoing document, excluding the caption, table of contents, table of authorities, and signature block, is 2,935 words. This document therefore complies with the rule, which limits briefs, memoranda, affirmations, and affidavits to 7,000 words. I certify that the word count Microsoft Word generated for this document is 2,935. Dated: March 16, 2023 New York, New York /s/Jeremy Vest Jeremy Vest 13 16 of 16