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333 South Hope Street
Los Angeles, California
90071
Robyn E. Bladow
To Call Writer Directly: (213) 680-8400 Facsimile:
(213) 680-8634 (213) 680-8500
robyn.bladow@kirkland.com www.kirkland.com
May 13, 2015
The Honorable Jeffrey K. Oing
Supreme Court, Commercial Division
Courtroom 242
60 Centre Street
New York, New York 10007
Re: SNI/SI Networks L.L.C. v. DIRECTV, LLC, Index No. 652471/2014
Dear Justice Oing:
We submit this letter on behalf of Defendant DIRECTV, LLC (“DIRECTV”) in response
to Plaintiff SNI/SI Networks L.L.C.’s (“Smithsonian”) May 12, 2015 letter requesting a stay of
the Court’s April 29, 2015 Decision and Order compelling Smithsonian’s production of
documents (“Order”) pending Smithsonian’s appeal of that Order.
DIRECTV asks this Court to deny Smithsonian’s request for a stay. Smithsonian has not
demonstrated its appeal has merit (because it has no basis for asserting this Court abused its
discretion in ordering discovery), nor that it will be prejudiced absent a stay. Indeed, as
explained below, DIRECTV neutralized any conceivable basis for such a stay by agreeing that
the documents compelled by the Order could be produced on an outside-counsel’s-eyes-only
basis pending Smithsonian’s appeal. That Smithsonian is still seeking a stay despite
DIRECTV’s proposal indicates that the requested stay is intended only to cause delay.
DIRECTV further requests that this Court sign the attached confidentiality order (Ex. 1) and set a
conference for the parties to discuss a revised pretrial schedule.
Background
The Court’s April 29, 2015 Order denying Smithsonian’s motion for a protective order
held that the documents requested by DIRECTV “are material and necessary to defendant’s
defenses as well as the claims in this case.” Order (Doc. No. 34) (citing CPLR § 3101). The
Court then ordered Smithsonian to make the compelled production “within 14 days of service of
[its] order, together with notice of entry, provided that the parties have entered into a
confidentiality agreement for the production of confidential information.” Id. DIRECTV served
the Notice of Entry on April 30, 2015, and re-sent Smithsonian the draft confidentiality order on
May 1, 2015. Smithsonian refused to sign the confidentiality order, and has not made any
further production of documents.
Beijing Chicago Hong Kong Houston London Munich New York Palo Alto San Francisco Shanghai Washington, D.C.
SNI/SI Networks L.L.C. v. DIRECTV, LLC Page 2 of 4
Index No. 652471/2014 May 13, 2015
Instead, Smithsonian asks this Court to stay its discovery Order while Smithsonian
appeals it. During the parties’ meet and confer discussions regarding Smithsonian’s stay request,
DIRECTV offered to treat the compelled documents on an outside-counsel’s-eyes-only basis
pending Smithsonian’s appeal, in an effort to eliminate any supposed need for a stay and allow
the parties to finally move this lawsuit forward. Ex. 2. Smithsonian rejected DIRECTV’s
proposal and continues to refuse to produce documents this Court found material and necessary
to the claims and defenses in this case.
This Court Should Deny Smithsonian’s Stay Request.
In determining whether a stay is warranted pending appeal, courts consider the following
factors: “whether (1) the appeal has merit, (2) any prejudice will result from granting or denying
a stay, and (3) the stay is designed to delay proceedings.” Sojitz Corp. v. Prithvi Info. Solutions
Ltd., 2010 WL 9049252, at *1 (N.Y. Sup. Ct. Feb. 22, 2010) (citing Application of Mott, 123
N.Y.S.2d 603, 608 (N.Y. Sup. Ct. 1953)). Here, each of these factors requires denying
Smithsonian’s stay request.
First, with respect to the merits of its appeal, Smithsonian must prove that this Court
abused its discretion in ordering the production of documents it found to be material and
necessary to the claims and defenses in this case. Kavanagh v Ogden Allied Maint. Corp., 92
N.Y.2d 952, 954, (4th Dep’t 1998) (“Once the lower courts have undertaken this balancing of
interests with respect to discovery requests, this Court’s review is limited to determining whether
there has been an abuse of discretion”); see also McMahon v. Aviette Agency, Inc., 301 A.D.2d
820, 821 (3rd Dep’t 2003) (finding no abuse of discretion in compelling document production
because requests were “reasonably related” to plaintiff’s claims and defendant’s defenses).
Smithsonian’s appeal has no legitimate basis for arguing an abuse of discretion occurred here.
In January, the parties presented the Court with their full arguments on the discovery
requests at issue and Smithsonian’s request for protective order, with DIRECTV identifying the
sections in the parties’ Agreement that govern how much DIRECTV should be paying to
Smithsonian for distribution of its channel and explaining why those contract provisions make
Smithsonian’s arrangements with its Other Distributors directly relevant to the amount that
DIRECTV is to pay. See Doc. Nos. 16, 24, 32, 33. After considering the parties’ submissions
and arguments, the Court ordered Smithsonian’s production of:
[A]greements it has with other distributors, including any related amendments or
side letter agreements, subject to the parties’ entering into a confidentiality
agreement and allowing for the redaction of any distributor names and of any
provisions or other information that has no bearing on the direct or indirect
economics of the other distributor deals or net effective rates, as well as any other
identifying information.
The Order noted that “[i]t is well established under the broad standard articulated by
CPLR § 3101, to obtain discovery defendant ‘need only show that the matter is relevant’” and
that the words “material and necessary” in CPLR § 3101 “are to be interpreted liberally to
SNI/SI Networks L.L.C. v. DIRECTV, LLC Page 3 of 4
Index No. 652471/2014 May 13, 2015
require disclosure of any facts bearing on the controversy.” Order (citations omitted). The Court
found that the documents requested by DIRECTV are “material and necessary to defendant’s
defenses as well as the claims in this case (CPLR § 3101) as one of defendant’s primary defenses
to the complaint is its claim that plaintiff itself failed to perform its obligations under Sections 5
and 6 of the parties’ Agreement and thus cannot prove its breach of contract claim as a matter of
law.” Id.; see also Harris v. Seward Park Hous. Corp., 79 A.D.3d 425, 426 (1st Dep’t 2010)
(breach of contract claim requires that plaintiff prove it performed under the contract). Given the
Court’s analysis and CPLR § 3101’s broad standard for discovery, there is simply no reasonable
argument that the Court somehow abused its discretion on this routine discovery issue.
Smithsonian’s appeal therefore lacks merit and its stay request should be denied. See Da Silva v.
Musso, 76 N.Y.2d 436, 443 n.4 (1990); 64 B Venture v. American Realty Co., 179 A.D.2d 374,
375-76 (1st Dep’t 1992) (court properly denied stay pending appeal “if, in its view, . . .
respondents failed to show sufficient merit to that appeal”); Sojitz, 2010 WL 9049252, at *1
(denying stay because “Respondent’s appeal is meritless”).
Second, there is no potential for harm or prejudice to Smithsonian such that a stay might
be warranted. See Da Silva, 76 N.Y.2d at 443 n.4 (when considering a motion to stay, court is
“duty-bound to consider the relative hardships that would result from granting (or denying) a
stay”). The documents Smithsonian has been ordered to produce are not privileged, nor do they
contain trade secrets. The only concern Smithsonian has raised is confidentiality, along with its
view that no one in-house at DIRECTV should see the documents. Those concerns, which do
not by themselves warrant a stay, are nonetheless neutralized by the entry of the confidentiality
order and DIRECTV’s agreement to limit review of these documents to DIRECTV’s outside
counsel while the appeal is pending. Ex. 2.
In contrast, a stay would prejudice DIRECTV by further delaying any meaningful
document discovery and depositions until after Smithsonian’s meritless appeal is resolved. See
Mamoon v. Dot Net, Inc., No.. 652902-2013, 2015 WL 274436, at *1 (N.Y. Sup. Ct. Jan. 16,
2015) (“Staying this proceeding will serve to delay this action and cause prejudice to the non-
moving parties,” because “[t]he non-moving parties will not be allowed to proceed with paper
discovery and depositions.”). Indeed, although Smithsonian’s May 12, 2015 letter purports to
fault DIRECTV for not yet noticing depositions, DIRECTV cannot move forward with
depositions until Smithsonian produces the documents that DIRECTV needs to ask about at
depositions.
Third, Smithsonian’s stay request should be denied because “the appeal is . . . taken
primarily for the purpose of delay.” Herbert v. City of N.Y., 126 A.D.2d 404, 406-07 (1st Dep’t
1987) (cautioning litigants not to engage in “meritless motion practice and frivolous and
untimely appeals”). Given the lack of merit of Smithsonian’s appeal under the abuse of
discretion standard, coupled with DIRECTV’s offer to treat the compelled documents on an
outside-counsel’s-eyes-only basis to address any confidentiality/sensitivity concerns, the only
remaining purpose for the requested stay is to further delay moving this case forward.
For all these reasons, the Court should deny Smithsonian’s stay request pending its
appeal of the Court’s April 29 Order.
SNI/SI Networks L.L.C. v. DIRECTV, LLC Page 4 of 4
Index No. 652471/2014 May 13, 2015
In addition to denying Smithsonian’s stay request, DIRECTV requests that the Court sign
the attached confidentiality order so that the parties can proceed with discovery. The attached
confidentiality order reflects the compromise the parties reached with Ms. Mikhaleva’s
assistance at the Preliminary Conference on November 7, 2014, and limits review of Highly
Confidential documents to one internal counsel designee for each party. DIRECTV notes that its
offer to treat the documents subject to the Court’s April 29 Order on an outside-counsel’s-eyes-
only basis pending Smithsonian’s appeal (subject to re-designating them in accordance with the
confidentiality order after resolution of the appeal) remains open.
Finally, DIRECTV asks that the Court set a conference for the parties to discuss a revised
pretrial schedule.
Respectfully submitted,
Robyn Bladow
cc: all counsel of record (via ECF)
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333 South Hope Street Los Angeles, California 90071 Robyn E. Bladow To Call Writer Directly: (213) 680-8400 Facsimile: (213) 680-8634 (213) 680-8500 robyn.bladow@kirkland.com www.kirkland.com May 13, 2015 The Honorable Jeffrey K. Oing Supreme Court, Commercial Division Courtroom 242 60 Centre Street New York, New York 10007 Re: SNI/SI Networks L.L.C. v. DIRECTV, LLC, Index No. 652471/2014 Dear Justice Oing: We submit this letter on behalf of Defendant DIRECTV, LLC (“DIRECTV”) in response to Plaintiff SNI/SI Networks L.L.C.’s (“Smithsonian”) May 12, 2015 letter requesting a stay of the Court’s April 29, 2015 Decision and Order compelling Smithsonian’s production of documents (“Order”) pending Smithsonian’s appeal of that Order. DIRECTV asks this Court to deny Smithsonian’s request for a stay. Smithsonian has not demonstrated its appeal has merit (because it has no basis for asserting this Court abused its discretion in ordering discovery), nor that it will be prejudiced absent a stay. Indeed, as explained below, DIRECTV neutralized any conceivable basis for such a stay by agreeing that the documents compelled by the Order could be produced on an outside-counsel’s-eyes-only basis pending Smithsonian’s appeal. That Smithsonian is still seeking a stay despite DIRECTV’s proposal indicates that the requested stay is intended only to cause delay. DIRECTV further requests that this Court sign the attached confidentiality order (Ex. 1) and set a conference for the parties to discuss a revised pretrial schedule. Background The Court’s April 29, 2015 Order denying Smithsonian’s motion for a protective order held that the documents requested by DIRECTV “are material and necessary to defendant’s defenses as well as the claims in this case.” Order (Doc. No. 34) (citing CPLR § 3101). The Court then ordered Smithsonian to make the compelled production “within 14 days of service of [its] order, together with notice of entry, provided that the parties have entered into a confidentiality agreement for the production of confidential information.” Id. DIRECTV served the Notice of Entry on April 30, 2015, and re-sent Smithsonian the draft confidentiality order on May 1, 2015. Smithsonian refused to sign the confidentiality order, and has not made any further production of documents. Beijing Chicago Hong Kong Houston London Munich New York Palo Alto San Francisco Shanghai Washington, D.C. SNI/SI Networks L.L.C. v. DIRECTV, LLC Page 2 of 4 Index No. 652471/2014 May 13, 2015 Instead, Smithsonian asks this Court to stay its discovery Order while Smithsonian appeals it. During the parties’ meet and confer discussions regarding Smithsonian’s stay request, DIRECTV offered to treat the compelled documents on an outside-counsel’s-eyes-only basis pending Smithsonian’s appeal, in an effort to eliminate any supposed need for a stay and allow the parties to finally move this lawsuit forward. Ex. 2. Smithsonian rejected DIRECTV’s proposal and continues to refuse to produce documents this Court found material and necessary to the claims and defenses in this case. This Court Should Deny Smithsonian’s Stay Request. In determining whether a stay is warranted pending appeal, courts consider the following factors: “whether (1) the appeal has merit, (2) any prejudice will result from granting or denying a stay, and (3) the stay is designed to delay proceedings.” Sojitz Corp. v. Prithvi Info. Solutions Ltd., 2010 WL 9049252, at *1 (N.Y. Sup. Ct. Feb. 22, 2010) (citing Application of Mott, 123 N.Y.S.2d 603, 608 (N.Y. Sup. Ct. 1953)). Here, each of these factors requires denying Smithsonian’s stay request. First, with respect to the merits of its appeal, Smithsonian must prove that this Court abused its discretion in ordering the production of documents it found to be material and necessary to the claims and defenses in this case. Kavanagh v Ogden Allied Maint. Corp., 92 N.Y.2d 952, 954, (4th Dep’t 1998) (“Once the lower courts have undertaken this balancing of interests with respect to discovery requests, this Court’s review is limited to determining whether there has been an abuse of discretion”); see also McMahon v. Aviette Agency, Inc., 301 A.D.2d 820, 821 (3rd Dep’t 2003) (finding no abuse of discretion in compelling document production because requests were “reasonably related” to plaintiff’s claims and defendant’s defenses). Smithsonian’s appeal has no legitimate basis for arguing an abuse of discretion occurred here. In January, the parties presented the Court with their full arguments on the discovery requests at issue and Smithsonian’s request for protective order, with DIRECTV identifying the sections in the parties’ Agreement that govern how much DIRECTV should be paying to Smithsonian for distribution of its channel and explaining why those contract provisions make Smithsonian’s arrangements with its Other Distributors directly relevant to the amount that DIRECTV is to pay. See Doc. Nos. 16, 24, 32, 33. After considering the parties’ submissions and arguments, the Court ordered Smithsonian’s production of: [A]greements it has with other distributors, including any related amendments or side letter agreements, subject to the parties’ entering into a confidentiality agreement and allowing for the redaction of any distributor names and of any provisions or other information that has no bearing on the direct or indirect economics of the other distributor deals or net effective rates, as well as any other identifying information. The Order noted that “[i]t is well established under the broad standard articulated by CPLR § 3101, to obtain discovery defendant ‘need only show that the matter is relevant’” and that the words “material and necessary” in CPLR § 3101 “are to be interpreted liberally to SNI/SI Networks L.L.C. v. DIRECTV, LLC Page 3 of 4 Index No. 652471/2014 May 13, 2015 require disclosure of any facts bearing on the controversy.” Order (citations omitted). The Court found that the documents requested by DIRECTV are “material and necessary to defendant’s defenses as well as the claims in this case (CPLR § 3101) as one of defendant’s primary defenses to the complaint is its claim that plaintiff itself failed to perform its obligations under Sections 5 and 6 of the parties’ Agreement and thus cannot prove its breach of contract claim as a matter of law.” Id.; see also Harris v. Seward Park Hous. Corp., 79 A.D.3d 425, 426 (1st Dep’t 2010) (breach of contract claim requires that plaintiff prove it performed under the contract). Given the Court’s analysis and CPLR § 3101’s broad standard for discovery, there is simply no reasonable argument that the Court somehow abused its discretion on this routine discovery issue. Smithsonian’s appeal therefore lacks merit and its stay request should be denied. See Da Silva v. Musso, 76 N.Y.2d 436, 443 n.4 (1990); 64 B Venture v. American Realty Co., 179 A.D.2d 374, 375-76 (1st Dep’t 1992) (court properly denied stay pending appeal “if, in its view, . . . respondents failed to show sufficient merit to that appeal”); Sojitz, 2010 WL 9049252, at *1 (denying stay because “Respondent’s appeal is meritless”). Second, there is no potential for harm or prejudice to Smithsonian such that a stay might be warranted. See Da Silva, 76 N.Y.2d at 443 n.4 (when considering a motion to stay, court is “duty-bound to consider the relative hardships that would result from granting (or denying) a stay”). The documents Smithsonian has been ordered to produce are not privileged, nor do they contain trade secrets. The only concern Smithsonian has raised is confidentiality, along with its view that no one in-house at DIRECTV should see the documents. Those concerns, which do not by themselves warrant a stay, are nonetheless neutralized by the entry of the confidentiality order and DIRECTV’s agreement to limit review of these documents to DIRECTV’s outside counsel while the appeal is pending. Ex. 2. In contrast, a stay would prejudice DIRECTV by further delaying any meaningful document discovery and depositions until after Smithsonian’s meritless appeal is resolved. See Mamoon v. Dot Net, Inc., No.. 652902-2013, 2015 WL 274436, at *1 (N.Y. Sup. Ct. Jan. 16, 2015) (“Staying this proceeding will serve to delay this action and cause prejudice to the non- moving parties,” because “[t]he non-moving parties will not be allowed to proceed with paper discovery and depositions.”). Indeed, although Smithsonian’s May 12, 2015 letter purports to fault DIRECTV for not yet noticing depositions, DIRECTV cannot move forward with depositions until Smithsonian produces the documents that DIRECTV needs to ask about at depositions. Third, Smithsonian’s stay request should be denied because “the appeal is . . . taken primarily for the purpose of delay.” Herbert v. City of N.Y., 126 A.D.2d 404, 406-07 (1st Dep’t 1987) (cautioning litigants not to engage in “meritless motion practice and frivolous and untimely appeals”). Given the lack of merit of Smithsonian’s appeal under the abuse of discretion standard, coupled with DIRECTV’s offer to treat the compelled documents on an outside-counsel’s-eyes-only basis to address any confidentiality/sensitivity concerns, the only remaining purpose for the requested stay is to further delay moving this case forward. For all these reasons, the Court should deny Smithsonian’s stay request pending its appeal of the Court’s April 29 Order. SNI/SI Networks L.L.C. v. DIRECTV, LLC Page 4 of 4 Index No. 652471/2014 May 13, 2015 In addition to denying Smithsonian’s stay request, DIRECTV requests that the Court sign the attached confidentiality order so that the parties can proceed with discovery. The attached confidentiality order reflects the compromise the parties reached with Ms. Mikhaleva’s assistance at the Preliminary Conference on November 7, 2014, and limits review of Highly Confidential documents to one internal counsel designee for each party. DIRECTV notes that its offer to treat the documents subject to the Court’s April 29 Order on an outside-counsel’s-eyes- only basis pending Smithsonian’s appeal (subject to re-designating them in accordance with the confidentiality order after resolution of the appeal) remains open. Finally, DIRECTV asks that the Court set a conference for the parties to discuss a revised pretrial schedule. Respectfully submitted, Robyn Bladow cc: all counsel of record (via ECF)