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FILED: NEW YORK COUNTY CLERK 04/24/2015 10:55 PM INDEX NO. 650908/2014
NYSCEF DOC. NO. 336 RECEIVED NYSCEF: 04/24/2015
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
SYBRON CANADA HOLDINGS, INC.,
Implant Direct Sybron International, LLC
Implant Direct Sybron Manufacturing, LLC
Implant Direct Sybron Administration, LLC, Index No. 650908/14
Plaintiffs,
-against- lAS Part 41
(Marks, J.)
GERALD A. NIZNICK, Implant Direct Int'l, Inc.,
Implant Direct Mfg., LLC, Mikana Manufacturing
Company, Inc., Motion Seq. No. No. 12
Defendants.
IMPLANT DIRECT INT'L, INC., Implant Direct
Mfg., LLC, Mikana Manufacturing Company, Inc.,
Defendants and Counterclaim
Plaintiffs,
-against-
SYBRON CANADA HOLDINGS, INC.,
Implant Direct Sybron International, LLC
Implant Direct Sybron Manufacturing, LLC
Implant Direct Sybron Administration, LLC,
Plaintiffs and Counterclaim
Defendants.
DEFEFNDANTS' MEMORANDUM OF LAW IN OPPOSITION TO
PLAINTIFFS' MOTION FOR SANCTIONS FOR DEFENDANTS'
ALLEGED DISCOVERY ABUSES
DAVIDOFF HUTCHER & CITRON LLP
Attorneys for Defendants
605 Third Avenue- 34th Floor
New York, New York 10158
(212) 557-7200
517472v.7
TABLE OF CONTENTS
TABLE OF AUTHORITIES ......................................................................................................... iii
PRELIMINARY STATEMENT ....................................................................................................
1
STATEMENT OF FACTS ......................... ·.................................................................................... 5
DEFENDANTS DID NOT FAIL TO PROVIDE MEANINGFUL DISCOVERY ........... 5
A. Defendants Provided Substantial Discovery Concerning The
Employee Call Option............................................................................................. 5
B. The Substantial Discovery Concerning Konheim's Departure
From The JVCs ....................................................................................................... 9
C. Defendants Properly Objected To Request No. 47, Which Sought
Production Of All Documents Relating To Dr. Niznick's Personal
Relationship With Ms. Jurcoane, And To The Production Of Exs. R- U ........... 12
D. Defendants Properly Objected, And Did Not Agree To Produce
Exs. V- Y, Which Plaintiffs Claim Concern The Integration Transaction .......... 13
E. Defendants Did Not Fail To Produce Documents Related To Plaintiffs'
Claim That Its Release Of Claims Under The Employment Call Option
Was Procured By Fraud ........................................................................................
15
F. Striking Defendants' Pleading Is Not Warranted For Defendants'
Production OfDocuments From Kehr, Schiff & Crane LLP ...............................
16
G. Striking Defendants' Answer Is Not Warranted By Dr. Niznick's
Inadvertent Deletion Of Two Emails To Stratton That Are Not
Relevant To This Matter .......................................................................................
17
H. Striking Defendants' Answer Is Not Warranted By A Disputed
Conversation With Wing Which Admittedly Did Not Result In The
Destruction Of Any Documents ............................................................................
18
I. Missing Metadata Does Not Warrant The Sanctions Plaintiffs Seek ................... 19
J. Striking Defendants' Pleading Is Not Warranted By Dr. Niznick's
Conduct In The Zest Litigation, Any More Than Striking Plaintiffs'
Pleading Is Warranted By Danaher's Conduct In The Total Control Litigation .. 19
ARGU.MENT ............................................................................................................................... 20
STRIKING PLEADINGS IS A DRASTIC REMEDY AND UNWARRANTED
HERE, WHERE DEFENDANTS HAVE PRODUCED SUBSTANTIAL
DISCOVERY, WHICH THEY AGREED TO SUPPLEMENT BEFORE THIS
MOTION WAS MADE .................................................................................................... 20
CONCLUSION ............................................................................................................................. 26
11
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TABLE OF AUTHORITIES
CASES
150 Nassau Assocs. LLC v. RC Dolner LLC,
96 A.D.3d 676 (1st Dep't 2012) .............................................................................................. 22
1523 Real Estate, Inc. v.East Atlantic Props., LLC,
41 A.D.3d 567 (2d Dep't 2007) ............................................................................................... 20
A.F.C. Enters., Inc. v. New York City Sch. Constr. Auth.,
33 A.D.3d 737 (2d Dep't 2006) ............................................................................................... 21
Alpha Funding Group v. Continental Funding, LLC,
17 Misc. 3d 959 (Sup. Ct. Kings Co. 2007) ............................................................................. 21
Amini v. Arena Constr.,
110 A.D.3d 414 (1st Dep't 2013) ............................................................................................ 21
Arcade Contracting & Restoration v. 24 Aqueduct Lane Condominium Ass.,
51 A.D.3d 610 (2d Dept. 2008) ............................................................................................... 21
Barber v. Ford Motor Co.,
250 A.D.2d 552 (1st Dep't 1998) ............................................................................................. 22
Bassett v. Banda Sangsa Co.,
103 A.D.2d 728 (1st Dept., 1984) ......................................................................... 23
Bettan v. Geico Gen. Ins. Co.,
296 A.D.2d 469 (2d Dep't 2002) ........................................................................................ 21-22
Cache La Poudre Feeds LLC v. Land 0 'Lakes, Inc.,
244 F.R.D. 614 (D. Colo. 2007) ......................................................................................... 24-25
Campbell v. New York City Transit Auth.,
109 A.D.3d 455 (2d Dep't 2013) ................................................................................. 20, 21,23
Commerce & Indus. Ins. Co. v.Lib-Com, Ltd.,
266 A.D.2d 142 (1st Dep't 1999) ................................................................................ 20, 21,23
De Socia v. 136 East 561h Street Owners,
74 A.D.3d 606 (1st Dept. 2010) ............................................................................................... 23
Double Fortune Prop. Investors Corp. v.Gordon,
55 A.D.3d 406 (1st Dep't 2008) ............................................................................................... 22
lll
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Duluc v. AC & L Food Corp.,
119 AD.3d 450 (1st Dept. 2014) ..............................................................................................
17
Espinal v. City of NY,
264 A.D.2d 806 (2d Dept. 1999) ............................................................................................. 24
Glaser v. City of NY,
79 A.D.3d 600 (1st Dept., 2010) .............................................................................................. 23
Hanson v. City of N. Y,
227 A.D.2d 217 (1st Dep't 1996) ............................................................................................ 22
Roland v. Cascino,
122 A.D.3d 575 (2d Dep't 2014) ............................................................................................. 21
Jenkins v. City of NY,
13 A.D.3d 342 (2d Dept. 2004) ............................................................................................... 22
National Day Laborer Organizing Network v. US Immigration,
877 F.Supp.2d 87 (S.D.N.Y. 2012) .......................................................................................... 25
Negro v. St. Charles Hasp. and Rehab. Ctr.,
44 A.D.3d 727 (2d Dept. 2007) .................................................................... 20, 23
Novick v. DeRosa,
51 A.D.3d 885 (2d Dept. 2008) ............................................................................................... 24
Palmieri v. Piano Exchange, Inc.,
124 A.D.3d 611 (2d Dep't 2015) ....................................................................................... 20,21
Pegasus Aviation I, Inc. v. Varig Logistica S"A,
118 A.D.3d 428 (1st Dept. 2014) .............................................................................................
17
Perez v. City of NY,
15 Misc. 3d 1136(A) (Sup. Ct., Bronx Co., 2007) ................................................................... 24
Tornheim v.Blue & White Food Prods. Corp.,
73 AD .3d 746, 746 (2d Dep 't 201 0) ....................................................................................... 22
Total Control v. Danaher Corporation,
359 F.Supp.2d 387 (E.D. Pa. 2005) ...................................................................................
19, 20
Voom HD Holdings LLC v. Echostar Satellite LLC,
2010 WL 8400073 (Sup. Ct. NY Co. 201 0) ............................................................................ 25
Wachtel v. Health Net Inc.,
239 F.R.D. 81 (D.N.J. 2006) .................................................................................................... 25
lV
517472v.7
Walter B. Melvin Architects v. 24 Aqueduct Lane Condo.,
51 A.D.3d 784 (2d Dep't 2008) .......................................................................................... 21, 22
Zouev v. City of N. Y,
32 A.D.3d850 (2d Dep't 2006) ......................................................................................... 21,23
Zubulake v. UBS Warburg LLC,
229 F.R.D. 422 (S.D.N.Y. 2004) ............................................................................................. 24
STATUTES
CPLR 3124 .................................................................................................................................... 22
CPRL 3126 ................................................................................................................................
1, 22
Fed. R. Civ. P. Rule 37 ...................................................................................... 20
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Defendants submit this memorandum of law in opposition to Plaintiffs' motion for
sanctions pursuant to CPLR 3126. As a result of alleged discovery abuses by defendants,
plaintiffs seek to strike defendants' defenses to plaintiffs' claims under the Cause Call and
Employment Call Options (First and Second Causes of Action), as well as defendants' Seventh
and Eighth Counterclaims arising out of the "Integration Transaction," or, in the alternative,
granting adverse inferences on these claims. This motion should be denied in its entirety.
PRELIMINARY STATEMENT
Desperate to avoid litigating their unmeritorious claims on the merits, plaintiffs seek what
is tantamount to an award of judgment in their favor without ever having to prove their case.
Importantly, plaintiffs make this motion despite the fact that defendants-- both before the
motion was made and at a conference before the Court -- advised that they would do the very
things plaintiffs claim they did not do, which alleged "failing" forms the principal basis for this
motion. Plaintiffs claim -- incorrectly and without any basis --that defendant Dr. Niznick was
improperly allowed to select the documents defendants produced in this action unsupervised by
counsel. Plaintiffs claim that defendants instead should conduct their discovery by having
defense counsel obtain from Dr. Niznick a mirror of his electronic files and run search terms
agreed to by plaintiffs. Before the instant motion was made, defendants made clear they would
do precisely that, because defendants (unlike plaintiffs) do want this case resolved on the merits.
Defendants agreed to so supplement their production even though plaintiffs provided no
authority showing defendants had any obligation to do so, despite repeated requests.
This discovery is presently proceeding. Defendants have engaged a third party to obtain,
and that third party has obtained, copies of Dr. Niznick's electronic records. These records are
presently being searched utilizing search terms designated by plaintiffs.
Plaintiffs nonetheless elected to make the instant motion. Notably, this is the FIRST
DISCOVERY MOTION made in this action. NO ORDERS have been entered by the Court,
directing defendants to do that of which plaintiffs complain here, and NO ORDERS ISSUED BY
THE COURT WERE NOT COMPLIED WITH. Plaintiffs' motion does not claim otherwise.
Despite the fact that there have been no repeated failures to comply with Court orders,
plaintiffs' very first discovery motion does not seek to compel discovery, but instead SEEKS
THE HARSHEST SANCTION AVAILABLE, striking large portions of defendants' pleading.
Plaintiffs seek this sanction despite the fact that defendants have provided substantial discovery -
- having produced to date over 13,000 pages of relevant documents. Defendants have also
produced 7,454 pages of documents obtained from defendants' transactional outside counsel. In
addition, defendants' counsel has undertaken the representation of six non-party witnesses whose
records plaintiffs subpoenaed. Defense counsel has supervised their production as well -- in
excess of an additional 5,800 pages. Defendants have also answered interrogatories. Over thirty
depositions are scheduled and have commenced. (Samson Aff. ~~ 2-5.)
The award of the sanctions plaintiffs seek -- striking significant parts of defendants'
pleading-- is completely inappropriate. As shown below (at 20), it is the preference of courts to
decide cases on their merits. Striking a pleading for discovery failures is a "drastic remedy"
which should be granted only if there is a clear showing the discovery failures at issue are
willful, contumacious, or in bad faith, and inadequate excuses are offered for such failures.
Demonstrating willfulness usually requires a showing of repeated failures to comply with court
orders directing discovery, which has not happened here.
Plaintiffs cannot meet this burden. At bottom, plaintiffs' motion rests on a false premise.
Plaintiffs claim that "Dr. Niznick was left on his own to search for and identify relevant
documents for production" without the supervision of counsel. (Pl. Mem. at 16-18.) Plaintifis
claim that as a result, defendants failed to produce "swaths" and "scores" of "critical" documents
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that would have been produced had discovery been conducted properly (!d. at 1 and 19-21.)
Plaintiffs are mistaken. Not surprisingly, plaintiffs cite no authority and provide no
affidavit from counsel, delineating conversations in which they were purportedly so informed.
Contrary to plaintiffs' unsubstantiated claims, as explained in the accompanying affidavit of Don
Gottesman, defendants' document production was supervised by counsel. (Gottesman Aff. ~~ 2-
6) This resulted in an extensive production of material and relevant documents. 1
In any event, as made clear above, before this motion was made, defendants agreed to
supplement their production by having counsel conduct a review of Dr. Niznick's documents, as
plaintiffs have requested. In meet and confer conferences with plaintiffs' counsel, defendants'
counsel confirmed that they had supervised defendants' document production, and that
documents were gathered, not by using search terms, but rather by collecting requested relevant
materials from those available. (Samson Aff. ~~ 8-9) Plaintiffs claimed that the only proper way
for defendants to produce documents was for defense counsel to obtain a mirror of defendants'
electronic records, and have them searched using agreed search terms. Defense counsel
repeatedly asked plaintiffs to provide authority supporting this claim. If, upon review, such
authorities supported plaintiffs' claim, defendants would act as these cases directed. Plaintiffs,
however, did not do so. When plaintiffs raised this issue with the Court at conference,
defendants repeated this request, and asked the Court for guidance. The Court did not direct
defendants to do as plaintiffs requested. Defendants nonetheless elected to do so to ensure these
claims are resolved on the merits. (id. ~~ 9-15 and Ex. 5)
Given the forgoing, defendants' actions are hardly of the bad faith type that justify
1
This isnot surprising, because, elsewhere in their brief,plaintiffsclaim they were not told how defendants'
conducted their production. (See Pl.Mem. at 2 and 21.) This claim is not true. Plaintiffswere told that Dr.
Niznick's document production was supervised by counsel.
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sanctions. In the unlikely event the Court finds defendants failed to meet their discovery
obligations, there is a reasonable excuse -- given plaintiffs' failure to provide supporting
authorities, and absence of a judicial direction that defendants undertake such action.
Plaintiffs are similarly incorrect when they claim that as a consequence of Dr. Niznick's
allegedly unsupervised discovery, "swaths" and "scores" of "critical" documents have not been
produced. In fact, this motion rests on the purported failure to produce 21 documents out of the
many thousands of relevant documents produced to date. Given that defendants are
supplementing their production by conducting discovery as plaintiffs have requested, the alleged
absence of these documents does not warrant the imposition of the drastic sanctions sought.
In any event, claims that "swaths" of' critical' documents (Pl. Mem. at 11) have not been
produced on multiple subjects are simply not true. None of the 21 documents on which plaintiffs
rely are in any way "critical" to this action. They are -- at best -- tangentially related to this
action, or duplicative or cumulative of far more pertinent documents, which defendants have
produced. Meaningful and substantial discovery has been provided on each of these subjects.
Indeed, many of these "critical" documents were called for in document requests
defendants properly objected to (see, e.g., below at 7, 12-15). Notably, not included among the
35 exhibits plaintiffs have supplied this Court in support of this motion is Defendants'
objections. No orders have been entered striking those objections, or directing production of the
documents properly objected to. Not producing documents defendants have properly objected to
does not warrant the sanctions sought, and plaintiffs have cited no case that so holds.
Indeed, if anyone has been (and remains) at fault in this discovery process, it is plaintiffs.
Discovery has hardly proceeded as plaintiffs have described at pages [3-4] of their memorandum
of law. As explained more fully in the accompanying affidavit of Martin H. Samson, plaintiffs
have failed to produce their documents in a timely fashion, or in accordance with the deadlines
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set in the Court's Order of August 19, 2014. In addition, notwithstanding its volume, whole
swaths of documents are still missing from plaintiffs' production. Truly critical documents have
in fact not been produced. Moreover, as further set forth in the accompanying Samson Affidavit,
plaintiffs' efforts to locate documents were seriously flawed.
Lastly, it is important to understand what an award of the sanction plaintiffs seek here
will accomplish. Plaintiffs seek via penalty provisions found in the parties' contracts to acquire
defendants' interests in the JVCs for approximately $75 million less than its true value, because
Dr. Niznick purportedly resigned 30 days before his tenure was set to expire, or because he made
derogatory comments about the company and management which did not cause the company any
injury, and purportedly violated non-competition (and not non-disparagement) provisions of the
parties' agreements, all because of discovery failings. This is wholly inappropriate. These
claims instead should be resolved-- and rejected-- on their merits.
STATEMENT OF FACTS
DEFENDANTS DID NOT FAIL TO PROVIDE MEANINGFUL DISCOVERY
A. Defendants Provided Substantial Discovery Concerning The Employee Call Option
Plaintiffs claim that defendants failed to produce "several important emails ... "
concerning the Employment Call Option that "clearly scuttle Dr. Niznick's claim that he did not
resign, but was terminated .... " (Pl. Mem. at 5-6.) Plaintiffs claim these documents should have
been produced in response to Request No. 45, which calls for documents concerning Dr.
Niznick's alleged resignation from the JVCs in November 2013.
These emails do no such thing. Plaintiffs' Employment Call Option claim centers on an
email sent by Dr. Niznick on November 1, 2013, and its impact on Plaintiffs' rights thereunder.
Plaintiffs claim (Am. Comp. at ~ 61) that Dr. Niznick wrote in this email: "Per my employment
contract, I hereby give you 30 days' notice. My last day with the company will be November 30,
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2013." Plaintiffs further claim "that resignation took effect when received, without any need for
the Board to accept it. Consistent with that notice, Niznick's employment with the [JVCs]
terminated on November 30, 2013." (!d.) Plaintiffs contend this alleged resignation (30 days
before Dr. Niznick was set to retire) triggers the penalty Employment Call Option, allowing them
to purchase defendants' interest in the JVCs for approximately $75 million less than their value.
Defendants dispute these contentions. As plaintiffs concede, Dr. Niznick wrote this
email in an effort to dissuade plaintiffs from proceeding with an investigation into his alleged
sexual relationship with a subordinate that supposedly resulted in her receiving favorable
treatment at work. See p. 8, infra. Importantly, when the Board refused to discontinue the
investigation, Dr. Niznick on November 6, 2013 withdrew this notice. The Board claimed that
he could not withdraw the notice and told Dr. Niznick he would cease to be President on
November 30,2013.
One of the issues in this case is whether Dr. Niznick could withdraw this notice. If he
could, then he was terminated by the Board's subsequent acts, including its refusal to honor its
withdrawal. Another issue is whether the notice triggered any right by plaintiffs to exercise the
Employment Call Option, because the notice was sent after that option expired. That, in turn,
requires the interpretation of the employment agreement plaintiffs claim extends the term of the
Option found in the parties' operating agreements. That employment agreement is ambiguous.
Yet another issue is whether plaintiffs gave Dr. Niznick "good cause" to resign by proceeding
with the investigation despite the fact that he was due to retire on December 30, 2013. If Dr.
Niznick had good cause to resign, his resignation does not trigger the Employment Call Option.
Defendants have provided substantial and meaningful discovery concerning this claim.
The most pertinent documents concerning this alleged resignation include the November l, 2013
email ("Nov. 1, 2013 Email") Dr. Niznick sent that constitutes his purported notice of
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resignation, the November 6, 2013 letter from his counsel withdrawing the same, and the JVCs
response thereto. All ofthese documents defendants have produced. (Przybylko Aff. Exs. 1-3.)
Contrary to plaintiffs' contentions, the documents plaintiffs reference neither 'scuttle'
defendants' claims, nor 'contradict' Dr. Niznick's version of events. Nor are they "important"
emails. Most are, instead, simply irrelevant. Plaintiffs first cite Ex. E, a December 2, 2011 email
Dr. Niznick wrote. This email was written 2 years before the events in question and provides no
insight into the meaning of an email written two years later, or whether it constituted a
resignation that could be withdrawn. Nor would it be produced in response to Request No. 45
(as properly objected to by defendants), on which plaintiffs' claim therefor rests? Plaintiffs offer
no explanation as to its relevance, and the failure to produce it proves nothing. 3
The same is true of Exs. F, G and H. Each was written before the transmission of the
Nov. 1, 2013 Email, and provide no insight into its meaning. Exhibit F is a May 2, 2013 email in
which Dr. Niznick wrote to Konheim that "we don't want to build a succession team." From the
unredacted version of this email exchange (which plaintiffs have elected not to provide the
Court) it is clear that the subject of this exchange is a possible meeting with one Jerry Michael
Feeney for potential employment in an unspecified capacity. Neither Konheim nor Dr. Niznick
believed he would be a valuable addition, with Konheim expressing that "I don't know that
bringing someone in right now is the way to go. With the recent changes that we made there, I
can handle just having Ginger, Tom and Dawn reporting to me" and Dr. Niznick concluding "I
am not impressed." Again, this has nothing to do with the events of November 2013, and
2
Request No. 45 callsfor production of "All Documents ...relating to Niznick's resignation as President of the
Joint Venture Companies." Defendants properly objected "on the grounds that it is vague insofar as it calls for the
production of documents "relating to" Niznick's resignation as President. Subject to the foregoing, Defendants will
produce responsive documents, if any." The referenced email, sent some two years before the alleged resignation,
does not relate thereto, and would not be responsive to this request.
3
The email states "I own 25% ofthe Joint Venture, which is run by a Board of Directors. Sybron had control but
they do what I want when faced with me threatening to quit so I have my cake and got to eat it also."
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plaintiffs do not explain why it is relevant, or should have been produced in response to Request
No. 45, calling for documents about the November 2013 resignation.
Ex. G is an email from Dr. Niznick to Daniel Raskas that predates the November 1 2013
Email by six weeks. The passage of this email on which plaintiffs rely states "you don't have to
agree to any of these changes and I don't need to work for the company." Again, this email
offers no guidance as to the effect or import of the November 1 2013 Email, and plaintiffs make
no attempt to explain its relevance. It certainly is not responsive to Request No. 45.
As to Ex. H, plaintiffs claim that this October 30, 2013 email by Dr. Niznick "belies [his]
claim that he resigned because of a hotline complaint against him." (Pl. Mem. at 6.) But
Plaintiffs have already acknowledged that that is precisely why Dr. Niznick sent his November 1
2013 Email. See Plaintiffs Memorandum in Opposition to Defendants' Motion to Strike, at 22.
Ex. H does not prove otherwise. It simply says "I may resign in 30 days or sooner."4
Far more pertinent-- and critical -- is a document, D4187-92, plaintiffs have failed to
produce concerning the Employment Call Option. (Przybylko Aff. Ex. 4) As explained more
fully in the Samson Affidavit, this is a draft of the Employment Agreement sent by Ed
Buthusiem, then a member of the JVCs' Board of Managers, to Dr. Niznick and others. In this
draft, plaintiffs seek to have the pertinent clause in the Employment Agreement read as follows:
This amendment to your employment will have no effect on the terms of the Joint
Venture Company's Operating Agreements, other than the date in Section 4.02(f)
and 9.04(b)(i)(l) ofthe Joint Venture Company's Operating Agreements, as
amended by the First Amendment to the Joint Venture Company's Operating
December 31,2012.
4
Plaintiffs last cited document is Ex.I, a November 1, 2013 email from Dr. Niznick to Tom Stratton that says in its
entirety "Subject: I have given 30 days' notice and called fora special BOD meeting. Let's see if theyblink."
Stratton responds "if history is an indication, they will." This document is responsive to Request No. 45, and
defendants have already agreed to produce it. (Samson Aff. Ex. 3) The failureto produce this email, however,
hardly warrants the sanctions of striking defendants' pleading. This email is,at best, cumulative of other evidence
already produced, and is additional evidence, as Plaintiffs have already admitted, that Dr. Niznick sent his
November 1 2013 Email in the hopes of dissuading the Board from pursuing its investigation.
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Unlike the documents plaintiffs reference, this document truly iscrucial. In this draft, it
is clear that plaintiffs were seeking to amend the Operating Agreements by this language --
hence the inclusion of the language "this amendment ... will have no effect on the terms of the
... Operating Agreements, other than the date . . ..shall be extended from December 31, 2011, to
December 31, 2012." However, this was not agreed to by defendants, and the language "other
than" was stricken from the agreement finally signed, clearly indicating that defendants did not
agree to allow this to be an amendment to the Operating Agreements, as plaintiffs claim. Thus,
the final language in the parties' agreement ("This amendment to your employment will have no
effect on the terms of the Joint Venture Company's Operating Agreements, and .... )uncouples
the first part of the sentence from the balance, making clear that the Employment Agreement
does not amend the Operating Agreement, and hence that plaintiffs' Employment Call Option
claim fails. This is only one example of the many failings of plaintiffs' document production.
B. The Substantial Discovery Concerning Konheim's Departure From The JVCs
The balance of plaintiffs' claims similarly do not justify an award of drastic sanctions.
Plaintiffs seek such sanctions because defendants allegedly failed to produce four emails relating
to Konheim's departure from the JVCs in August 2013. Defendants have produced substantial
and material discovery concerning this claim. The referenced documents are at best cumulative.
In large part they add nothing of substance to that claim, or the facts surrounding it.
Jon Konheim is Dr. Niznick's son-in-law. From January 2012 to the end of August 2013,
Jon worked two days a week for the JVCs. The balance of his time was spent serving as the
CEO of Acromil, an aerospace company owned jointly indirectly by Jon and Dr. Niznick. At the
end of August 2013, Jon left the employ ofthe JVCs, and went to work full time for Acromil.
Plaintiffs claim that in the summer of 2013, Dr. Niznick "enticed" Jon to leave the JVCs
employ. According to plaintiffs, Dr. Niznick threatened that Jon would leave if the parties could
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not reach agreement on the terms of an extension of Dr. Niznick's employment with the JVCs,
then being negotiated, as well as other items of import to Dr. Niznick. When an agreement was
not reached by the deadline set by Dr. Niznick, Konheim resigned. (Am. Compl. at ~ 11.)
Konheim's resignation purportedly triggered plaintiffs' rights to purchase defendants' interest in
the JVCs for a discount of in excess of$75 million less than its value. (!d. at~ 113.)
Defendants dispute these contentions. Among other things, Jon rejoined the JVCs part-
time in 2012 to aid Dr. Niznick and reduce his workload. This is evidenced, inter alia, by the
fact that Jon's employment is a term of Dr. Niznick's October 2011 Employment Agreement.
Under that agreement, Dr. Niznick agreed to reduce his own work load, and the JVCs agreed to
hire Jon to that end. Dr. Niznick's compensation is similarly reduced and reallocated to Jon. In
2013, with the term of Dr. Niznick's employment set to expire, and the parties unable to reach
agreement on an extension, Jon decided to return full time to Acromil, which he felt would
benefit from his increased presence. Importantly, the JVCs took no steps to retain Jon, nor did
they seek to reemploy him after Dr. Niznick finished these negotiations.
Defendants have already provided substantial and meaningful discovery on this claim.
They produced August 6, 2013 Board minutes providing "Dr. Niznick stated that Jon Konheim
wili submit his resignation September 1, 2013 if satisfactory agreement is not achieved regarding
his future employment with the Company." (Przybylko Aff. Ex. 5.) Defendants also produced
an August 16, 2013 letter from Dr. Niznick to Raskas, in which Dr. Niznick discussed an offer
he made to continue as a consul
Preview
FILED: NEW YORK COUNTY CLERK 04/24/2015 10:55 PM INDEX NO. 650908/2014 NYSCEF DOC. NO. 336 RECEIVED NYSCEF: 04/24/2015 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK SYBRON CANADA HOLDINGS, INC., Implant Direct Sybron International, LLC Implant Direct Sybron Manufacturing, LLC Implant Direct Sybron Administration, LLC, Index No. 650908/14 Plaintiffs, -against- lAS Part 41 (Marks, J.) GERALD A. NIZNICK, Implant Direct Int'l, Inc., Implant Direct Mfg., LLC, Mikana Manufacturing Company, Inc., Motion Seq. No. No. 12 Defendants. IMPLANT DIRECT INT'L, INC., Implant Direct Mfg., LLC, Mikana Manufacturing Company, Inc., Defendants and Counterclaim Plaintiffs, -against- SYBRON CANADA HOLDINGS, INC., Implant Direct Sybron International, LLC Implant Direct Sybron Manufacturing, LLC Implant Direct Sybron Administration, LLC, Plaintiffs and Counterclaim Defendants. DEFEFNDANTS' MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFFS' MOTION FOR SANCTIONS FOR DEFENDANTS' ALLEGED DISCOVERY ABUSES DAVIDOFF HUTCHER & CITRON LLP Attorneys for Defendants 605 Third Avenue- 34th Floor New York, New York 10158 (212) 557-7200 517472v.7 TABLE OF CONTENTS TABLE OF AUTHORITIES ......................................................................................................... iii PRELIMINARY STATEMENT .................................................................................................... 1 STATEMENT OF FACTS ......................... ·.................................................................................... 5 DEFENDANTS DID NOT FAIL TO PROVIDE MEANINGFUL DISCOVERY ........... 5 A. Defendants Provided Substantial Discovery Concerning The Employee Call Option............................................................................................. 5 B. The Substantial Discovery Concerning Konheim's Departure From The JVCs ....................................................................................................... 9 C. Defendants Properly Objected To Request No. 47, Which Sought Production Of All Documents Relating To Dr. Niznick's Personal Relationship With Ms. Jurcoane, And To The Production Of Exs. R- U ........... 12 D. Defendants Properly Objected, And Did Not Agree To Produce Exs. V- Y, Which Plaintiffs Claim Concern The Integration Transaction .......... 13 E. Defendants Did Not Fail To Produce Documents Related To Plaintiffs' Claim That Its Release Of Claims Under The Employment Call Option Was Procured By Fraud ........................................................................................ 15 F. Striking Defendants' Pleading Is Not Warranted For Defendants' Production OfDocuments From Kehr, Schiff & Crane LLP ............................... 16 G. Striking Defendants' Answer Is Not Warranted By Dr. Niznick's Inadvertent Deletion Of Two Emails To Stratton That Are Not Relevant To This Matter ....................................................................................... 17 H. Striking Defendants' Answer Is Not Warranted By A Disputed Conversation With Wing Which Admittedly Did Not Result In The Destruction Of Any Documents ............................................................................ 18 I. Missing Metadata Does Not Warrant The Sanctions Plaintiffs Seek ................... 19 J. Striking Defendants' Pleading Is Not Warranted By Dr. Niznick's Conduct In The Zest Litigation, Any More Than Striking Plaintiffs' Pleading Is Warranted By Danaher's Conduct In The Total Control Litigation .. 19 ARGU.MENT ............................................................................................................................... 20 STRIKING PLEADINGS IS A DRASTIC REMEDY AND UNWARRANTED HERE, WHERE DEFENDANTS HAVE PRODUCED SUBSTANTIAL DISCOVERY, WHICH THEY AGREED TO SUPPLEMENT BEFORE THIS MOTION WAS MADE .................................................................................................... 20 CONCLUSION ............................................................................................................................. 26 11 517472v.7 TABLE OF AUTHORITIES CASES 150 Nassau Assocs. LLC v. RC Dolner LLC, 96 A.D.3d 676 (1st Dep't 2012) .............................................................................................. 22 1523 Real Estate, Inc. v.East Atlantic Props., LLC, 41 A.D.3d 567 (2d Dep't 2007) ............................................................................................... 20 A.F.C. Enters., Inc. v. New York City Sch. Constr. Auth., 33 A.D.3d 737 (2d Dep't 2006) ............................................................................................... 21 Alpha Funding Group v. Continental Funding, LLC, 17 Misc. 3d 959 (Sup. Ct. Kings Co. 2007) ............................................................................. 21 Amini v. Arena Constr., 110 A.D.3d 414 (1st Dep't 2013) ............................................................................................ 21 Arcade Contracting & Restoration v. 24 Aqueduct Lane Condominium Ass., 51 A.D.3d 610 (2d Dept. 2008) ............................................................................................... 21 Barber v. Ford Motor Co., 250 A.D.2d 552 (1st Dep't 1998) ............................................................................................. 22 Bassett v. Banda Sangsa Co., 103 A.D.2d 728 (1st Dept., 1984) ......................................................................... 23 Bettan v. Geico Gen. Ins. Co., 296 A.D.2d 469 (2d Dep't 2002) ........................................................................................ 21-22 Cache La Poudre Feeds LLC v. Land 0 'Lakes, Inc., 244 F.R.D. 614 (D. Colo. 2007) ......................................................................................... 24-25 Campbell v. New York City Transit Auth., 109 A.D.3d 455 (2d Dep't 2013) ................................................................................. 20, 21,23 Commerce & Indus. Ins. Co. v.Lib-Com, Ltd., 266 A.D.2d 142 (1st Dep't 1999) ................................................................................ 20, 21,23 De Socia v. 136 East 561h Street Owners, 74 A.D.3d 606 (1st Dept. 2010) ............................................................................................... 23 Double Fortune Prop. Investors Corp. v.Gordon, 55 A.D.3d 406 (1st Dep't 2008) ............................................................................................... 22 lll 517472v.7 Duluc v. AC & L Food Corp., 119 AD.3d 450 (1st Dept. 2014) .............................................................................................. 17 Espinal v. City of NY, 264 A.D.2d 806 (2d Dept. 1999) ............................................................................................. 24 Glaser v. City of NY, 79 A.D.3d 600 (1st Dept., 2010) .............................................................................................. 23 Hanson v. City of N. Y, 227 A.D.2d 217 (1st Dep't 1996) ............................................................................................ 22 Roland v. Cascino, 122 A.D.3d 575 (2d Dep't 2014) ............................................................................................. 21 Jenkins v. City of NY, 13 A.D.3d 342 (2d Dept. 2004) ............................................................................................... 22 National Day Laborer Organizing Network v. US Immigration, 877 F.Supp.2d 87 (S.D.N.Y. 2012) .......................................................................................... 25 Negro v. St. Charles Hasp. and Rehab. Ctr., 44 A.D.3d 727 (2d Dept. 2007) .................................................................... 20, 23 Novick v. DeRosa, 51 A.D.3d 885 (2d Dept. 2008) ............................................................................................... 24 Palmieri v. Piano Exchange, Inc., 124 A.D.3d 611 (2d Dep't 2015) ....................................................................................... 20,21 Pegasus Aviation I, Inc. v. Varig Logistica S"A, 118 A.D.3d 428 (1st Dept. 2014) ............................................................................................. 17 Perez v. City of NY, 15 Misc. 3d 1136(A) (Sup. Ct., Bronx Co., 2007) ................................................................... 24 Tornheim v.Blue & White Food Prods. Corp., 73 AD .3d 746, 746 (2d Dep 't 201 0) ....................................................................................... 22 Total Control v. Danaher Corporation, 359 F.Supp.2d 387 (E.D. Pa. 2005) ................................................................................... 19, 20 Voom HD Holdings LLC v. Echostar Satellite LLC, 2010 WL 8400073 (Sup. Ct. NY Co. 201 0) ............................................................................ 25 Wachtel v. Health Net Inc., 239 F.R.D. 81 (D.N.J. 2006) .................................................................................................... 25 lV 517472v.7 Walter B. Melvin Architects v. 24 Aqueduct Lane Condo., 51 A.D.3d 784 (2d Dep't 2008) .......................................................................................... 21, 22 Zouev v. City of N. Y, 32 A.D.3d850 (2d Dep't 2006) ......................................................................................... 21,23 Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y. 2004) ............................................................................................. 24 STATUTES CPLR 3124 .................................................................................................................................... 22 CPRL 3126 ................................................................................................................................ 1, 22 Fed. R. Civ. P. Rule 37 ...................................................................................... 20 v 517472v.7 Defendants submit this memorandum of law in opposition to Plaintiffs' motion for sanctions pursuant to CPLR 3126. As a result of alleged discovery abuses by defendants, plaintiffs seek to strike defendants' defenses to plaintiffs' claims under the Cause Call and Employment Call Options (First and Second Causes of Action), as well as defendants' Seventh and Eighth Counterclaims arising out of the "Integration Transaction," or, in the alternative, granting adverse inferences on these claims. This motion should be denied in its entirety. PRELIMINARY STATEMENT Desperate to avoid litigating their unmeritorious claims on the merits, plaintiffs seek what is tantamount to an award of judgment in their favor without ever having to prove their case. Importantly, plaintiffs make this motion despite the fact that defendants-- both before the motion was made and at a conference before the Court -- advised that they would do the very things plaintiffs claim they did not do, which alleged "failing" forms the principal basis for this motion. Plaintiffs claim -- incorrectly and without any basis --that defendant Dr. Niznick was improperly allowed to select the documents defendants produced in this action unsupervised by counsel. Plaintiffs claim that defendants instead should conduct their discovery by having defense counsel obtain from Dr. Niznick a mirror of his electronic files and run search terms agreed to by plaintiffs. Before the instant motion was made, defendants made clear they would do precisely that, because defendants (unlike plaintiffs) do want this case resolved on the merits. Defendants agreed to so supplement their production even though plaintiffs provided no authority showing defendants had any obligation to do so, despite repeated requests. This discovery is presently proceeding. Defendants have engaged a third party to obtain, and that third party has obtained, copies of Dr. Niznick's electronic records. These records are presently being searched utilizing search terms designated by plaintiffs. Plaintiffs nonetheless elected to make the instant motion. Notably, this is the FIRST DISCOVERY MOTION made in this action. NO ORDERS have been entered by the Court, directing defendants to do that of which plaintiffs complain here, and NO ORDERS ISSUED BY THE COURT WERE NOT COMPLIED WITH. Plaintiffs' motion does not claim otherwise. Despite the fact that there have been no repeated failures to comply with Court orders, plaintiffs' very first discovery motion does not seek to compel discovery, but instead SEEKS THE HARSHEST SANCTION AVAILABLE, striking large portions of defendants' pleading. Plaintiffs seek this sanction despite the fact that defendants have provided substantial discovery - - having produced to date over 13,000 pages of relevant documents. Defendants have also produced 7,454 pages of documents obtained from defendants' transactional outside counsel. In addition, defendants' counsel has undertaken the representation of six non-party witnesses whose records plaintiffs subpoenaed. Defense counsel has supervised their production as well -- in excess of an additional 5,800 pages. Defendants have also answered interrogatories. Over thirty depositions are scheduled and have commenced. (Samson Aff. ~~ 2-5.) The award of the sanctions plaintiffs seek -- striking significant parts of defendants' pleading-- is completely inappropriate. As shown below (at 20), it is the preference of courts to decide cases on their merits. Striking a pleading for discovery failures is a "drastic remedy" which should be granted only if there is a clear showing the discovery failures at issue are willful, contumacious, or in bad faith, and inadequate excuses are offered for such failures. Demonstrating willfulness usually requires a showing of repeated failures to comply with court orders directing discovery, which has not happened here. Plaintiffs cannot meet this burden. At bottom, plaintiffs' motion rests on a false premise. Plaintiffs claim that "Dr. Niznick was left on his own to search for and identify relevant documents for production" without the supervision of counsel. (Pl. Mem. at 16-18.) Plaintifis claim that as a result, defendants failed to produce "swaths" and "scores" of "critical" documents 2 517472v.7 that would have been produced had discovery been conducted properly (!d. at 1 and 19-21.) Plaintiffs are mistaken. Not surprisingly, plaintiffs cite no authority and provide no affidavit from counsel, delineating conversations in which they were purportedly so informed. Contrary to plaintiffs' unsubstantiated claims, as explained in the accompanying affidavit of Don Gottesman, defendants' document production was supervised by counsel. (Gottesman Aff. ~~ 2- 6) This resulted in an extensive production of material and relevant documents. 1 In any event, as made clear above, before this motion was made, defendants agreed to supplement their production by having counsel conduct a review of Dr. Niznick's documents, as plaintiffs have requested. In meet and confer conferences with plaintiffs' counsel, defendants' counsel confirmed that they had supervised defendants' document production, and that documents were gathered, not by using search terms, but rather by collecting requested relevant materials from those available. (Samson Aff. ~~ 8-9) Plaintiffs claimed that the only proper way for defendants to produce documents was for defense counsel to obtain a mirror of defendants' electronic records, and have them searched using agreed search terms. Defense counsel repeatedly asked plaintiffs to provide authority supporting this claim. If, upon review, such authorities supported plaintiffs' claim, defendants would act as these cases directed. Plaintiffs, however, did not do so. When plaintiffs raised this issue with the Court at conference, defendants repeated this request, and asked the Court for guidance. The Court did not direct defendants to do as plaintiffs requested. Defendants nonetheless elected to do so to ensure these claims are resolved on the merits. (id. ~~ 9-15 and Ex. 5) Given the forgoing, defendants' actions are hardly of the bad faith type that justify 1 This isnot surprising, because, elsewhere in their brief,plaintiffsclaim they were not told how defendants' conducted their production. (See Pl.Mem. at 2 and 21.) This claim is not true. Plaintiffswere told that Dr. Niznick's document production was supervised by counsel. 3 517472v,7 sanctions. In the unlikely event the Court finds defendants failed to meet their discovery obligations, there is a reasonable excuse -- given plaintiffs' failure to provide supporting authorities, and absence of a judicial direction that defendants undertake such action. Plaintiffs are similarly incorrect when they claim that as a consequence of Dr. Niznick's allegedly unsupervised discovery, "swaths" and "scores" of "critical" documents have not been produced. In fact, this motion rests on the purported failure to produce 21 documents out of the many thousands of relevant documents produced to date. Given that defendants are supplementing their production by conducting discovery as plaintiffs have requested, the alleged absence of these documents does not warrant the imposition of the drastic sanctions sought. In any event, claims that "swaths" of' critical' documents (Pl. Mem. at 11) have not been produced on multiple subjects are simply not true. None of the 21 documents on which plaintiffs rely are in any way "critical" to this action. They are -- at best -- tangentially related to this action, or duplicative or cumulative of far more pertinent documents, which defendants have produced. Meaningful and substantial discovery has been provided on each of these subjects. Indeed, many of these "critical" documents were called for in document requests defendants properly objected to (see, e.g., below at 7, 12-15). Notably, not included among the 35 exhibits plaintiffs have supplied this Court in support of this motion is Defendants' objections. No orders have been entered striking those objections, or directing production of the documents properly objected to. Not producing documents defendants have properly objected to does not warrant the sanctions sought, and plaintiffs have cited no case that so holds. Indeed, if anyone has been (and remains) at fault in this discovery process, it is plaintiffs. Discovery has hardly proceeded as plaintiffs have described at pages [3-4] of their memorandum of law. As explained more fully in the accompanying affidavit of Martin H. Samson, plaintiffs have failed to produce their documents in a timely fashion, or in accordance with the deadlines 4 517472v.7 set in the Court's Order of August 19, 2014. In addition, notwithstanding its volume, whole swaths of documents are still missing from plaintiffs' production. Truly critical documents have in fact not been produced. Moreover, as further set forth in the accompanying Samson Affidavit, plaintiffs' efforts to locate documents were seriously flawed. Lastly, it is important to understand what an award of the sanction plaintiffs seek here will accomplish. Plaintiffs seek via penalty provisions found in the parties' contracts to acquire defendants' interests in the JVCs for approximately $75 million less than its true value, because Dr. Niznick purportedly resigned 30 days before his tenure was set to expire, or because he made derogatory comments about the company and management which did not cause the company any injury, and purportedly violated non-competition (and not non-disparagement) provisions of the parties' agreements, all because of discovery failings. This is wholly inappropriate. These claims instead should be resolved-- and rejected-- on their merits. STATEMENT OF FACTS DEFENDANTS DID NOT FAIL TO PROVIDE MEANINGFUL DISCOVERY A. Defendants Provided Substantial Discovery Concerning The Employee Call Option Plaintiffs claim that defendants failed to produce "several important emails ... " concerning the Employment Call Option that "clearly scuttle Dr. Niznick's claim that he did not resign, but was terminated .... " (Pl. Mem. at 5-6.) Plaintiffs claim these documents should have been produced in response to Request No. 45, which calls for documents concerning Dr. Niznick's alleged resignation from the JVCs in November 2013. These emails do no such thing. Plaintiffs' Employment Call Option claim centers on an email sent by Dr. Niznick on November 1, 2013, and its impact on Plaintiffs' rights thereunder. Plaintiffs claim (Am. Comp. at ~ 61) that Dr. Niznick wrote in this email: "Per my employment contract, I hereby give you 30 days' notice. My last day with the company will be November 30, 5 517472v.7 2013." Plaintiffs further claim "that resignation took effect when received, without any need for the Board to accept it. Consistent with that notice, Niznick's employment with the [JVCs] terminated on November 30, 2013." (!d.) Plaintiffs contend this alleged resignation (30 days before Dr. Niznick was set to retire) triggers the penalty Employment Call Option, allowing them to purchase defendants' interest in the JVCs for approximately $75 million less than their value. Defendants dispute these contentions. As plaintiffs concede, Dr. Niznick wrote this email in an effort to dissuade plaintiffs from proceeding with an investigation into his alleged sexual relationship with a subordinate that supposedly resulted in her receiving favorable treatment at work. See p. 8, infra. Importantly, when the Board refused to discontinue the investigation, Dr. Niznick on November 6, 2013 withdrew this notice. The Board claimed that he could not withdraw the notice and told Dr. Niznick he would cease to be President on November 30,2013. One of the issues in this case is whether Dr. Niznick could withdraw this notice. If he could, then he was terminated by the Board's subsequent acts, including its refusal to honor its withdrawal. Another issue is whether the notice triggered any right by plaintiffs to exercise the Employment Call Option, because the notice was sent after that option expired. That, in turn, requires the interpretation of the employment agreement plaintiffs claim extends the term of the Option found in the parties' operating agreements. That employment agreement is ambiguous. Yet another issue is whether plaintiffs gave Dr. Niznick "good cause" to resign by proceeding with the investigation despite the fact that he was due to retire on December 30, 2013. If Dr. Niznick had good cause to resign, his resignation does not trigger the Employment Call Option. Defendants have provided substantial and meaningful discovery concerning this claim. The most pertinent documents concerning this alleged resignation include the November l, 2013 email ("Nov. 1, 2013 Email") Dr. Niznick sent that constitutes his purported notice of 6 517472v.7 resignation, the November 6, 2013 letter from his counsel withdrawing the same, and the JVCs response thereto. All ofthese documents defendants have produced. (Przybylko Aff. Exs. 1-3.) Contrary to plaintiffs' contentions, the documents plaintiffs reference neither 'scuttle' defendants' claims, nor 'contradict' Dr. Niznick's version of events. Nor are they "important" emails. Most are, instead, simply irrelevant. Plaintiffs first cite Ex. E, a December 2, 2011 email Dr. Niznick wrote. This email was written 2 years before the events in question and provides no insight into the meaning of an email written two years later, or whether it constituted a resignation that could be withdrawn. Nor would it be produced in response to Request No. 45 (as properly objected to by defendants), on which plaintiffs' claim therefor rests? Plaintiffs offer no explanation as to its relevance, and the failure to produce it proves nothing. 3 The same is true of Exs. F, G and H. Each was written before the transmission of the Nov. 1, 2013 Email, and provide no insight into its meaning. Exhibit F is a May 2, 2013 email in which Dr. Niznick wrote to Konheim that "we don't want to build a succession team." From the unredacted version of this email exchange (which plaintiffs have elected not to provide the Court) it is clear that the subject of this exchange is a possible meeting with one Jerry Michael Feeney for potential employment in an unspecified capacity. Neither Konheim nor Dr. Niznick believed he would be a valuable addition, with Konheim expressing that "I don't know that bringing someone in right now is the way to go. With the recent changes that we made there, I can handle just having Ginger, Tom and Dawn reporting to me" and Dr. Niznick concluding "I am not impressed." Again, this has nothing to do with the events of November 2013, and 2 Request No. 45 callsfor production of "All Documents ...relating to Niznick's resignation as President of the Joint Venture Companies." Defendants properly objected "on the grounds that it is vague insofar as it calls for the production of documents "relating to" Niznick's resignation as President. Subject to the foregoing, Defendants will produce responsive documents, if any." The referenced email, sent some two years before the alleged resignation, does not relate thereto, and would not be responsive to this request. 3 The email states "I own 25% ofthe Joint Venture, which is run by a Board of Directors. Sybron had control but they do what I want when faced with me threatening to quit so I have my cake and got to eat it also." 7 517472v.7 plaintiffs do not explain why it is relevant, or should have been produced in response to Request No. 45, calling for documents about the November 2013 resignation. Ex. G is an email from Dr. Niznick to Daniel Raskas that predates the November 1 2013 Email by six weeks. The passage of this email on which plaintiffs rely states "you don't have to agree to any of these changes and I don't need to work for the company." Again, this email offers no guidance as to the effect or import of the November 1 2013 Email, and plaintiffs make no attempt to explain its relevance. It certainly is not responsive to Request No. 45. As to Ex. H, plaintiffs claim that this October 30, 2013 email by Dr. Niznick "belies [his] claim that he resigned because of a hotline complaint against him." (Pl. Mem. at 6.) But Plaintiffs have already acknowledged that that is precisely why Dr. Niznick sent his November 1 2013 Email. See Plaintiffs Memorandum in Opposition to Defendants' Motion to Strike, at 22. Ex. H does not prove otherwise. It simply says "I may resign in 30 days or sooner."4 Far more pertinent-- and critical -- is a document, D4187-92, plaintiffs have failed to produce concerning the Employment Call Option. (Przybylko Aff. Ex. 4) As explained more fully in the Samson Affidavit, this is a draft of the Employment Agreement sent by Ed Buthusiem, then a member of the JVCs' Board of Managers, to Dr. Niznick and others. In this draft, plaintiffs seek to have the pertinent clause in the Employment Agreement read as follows: This amendment to your employment will have no effect on the terms of the Joint Venture Company's Operating Agreements, other than the date in Section 4.02(f) and 9.04(b)(i)(l) ofthe Joint Venture Company's Operating Agreements, as amended by the First Amendment to the Joint Venture Company's Operating December 31,2012. 4 Plaintiffs last cited document is Ex.I, a November 1, 2013 email from Dr. Niznick to Tom Stratton that says in its entirety "Subject: I have given 30 days' notice and called fora special BOD meeting. Let's see if theyblink." Stratton responds "if history is an indication, they will." This document is responsive to Request No. 45, and defendants have already agreed to produce it. (Samson Aff. Ex. 3) The failureto produce this email, however, hardly warrants the sanctions of striking defendants' pleading. This email is,at best, cumulative of other evidence already produced, and is additional evidence, as Plaintiffs have already admitted, that Dr. Niznick sent his November 1 2013 Email in the hopes of dissuading the Board from pursuing its investigation. 8 517472v.7 Unlike the documents plaintiffs reference, this document truly iscrucial. In this draft, it is clear that plaintiffs were seeking to amend the Operating Agreements by this language -- hence the inclusion of the language "this amendment ... will have no effect on the terms of the ... Operating Agreements, other than the date . . ..shall be extended from December 31, 2011, to December 31, 2012." However, this was not agreed to by defendants, and the language "other than" was stricken from the agreement finally signed, clearly indicating that defendants did not agree to allow this to be an amendment to the Operating Agreements, as plaintiffs claim. Thus, the final language in the parties' agreement ("This amendment to your employment will have no effect on the terms of the Joint Venture Company's Operating Agreements, and .... )uncouples the first part of the sentence from the balance, making clear that the Employment Agreement does not amend the Operating Agreement, and hence that plaintiffs' Employment Call Option claim fails. This is only one example of the many failings of plaintiffs' document production. B. The Substantial Discovery Concerning Konheim's Departure From The JVCs The balance of plaintiffs' claims similarly do not justify an award of drastic sanctions. Plaintiffs seek such sanctions because defendants allegedly failed to produce four emails relating to Konheim's departure from the JVCs in August 2013. Defendants have produced substantial and material discovery concerning this claim. The referenced documents are at best cumulative. In large part they add nothing of substance to that claim, or the facts surrounding it. Jon Konheim is Dr. Niznick's son-in-law. From January 2012 to the end of August 2013, Jon worked two days a week for the JVCs. The balance of his time was spent serving as the CEO of Acromil, an aerospace company owned jointly indirectly by Jon and Dr. Niznick. At the end of August 2013, Jon left the employ ofthe JVCs, and went to work full time for Acromil. Plaintiffs claim that in the summer of 2013, Dr. Niznick "enticed" Jon to leave the JVCs employ. According to plaintiffs, Dr. Niznick threatened that Jon would leave if the parties could 9 517472v.7 not reach agreement on the terms of an extension of Dr. Niznick's employment with the JVCs, then being negotiated, as well as other items of import to Dr. Niznick. When an agreement was not reached by the deadline set by Dr. Niznick, Konheim resigned. (Am. Compl. at ~ 11.) Konheim's resignation purportedly triggered plaintiffs' rights to purchase defendants' interest in the JVCs for a discount of in excess of$75 million less than its value. (!d. at~ 113.) Defendants dispute these contentions. Among other things, Jon rejoined the JVCs part- time in 2012 to aid Dr. Niznick and reduce his workload. This is evidenced, inter alia, by the fact that Jon's employment is a term of Dr. Niznick's October 2011 Employment Agreement. Under that agreement, Dr. Niznick agreed to reduce his own work load, and the JVCs agreed to hire Jon to that end. Dr. Niznick's compensation is similarly reduced and reallocated to Jon. In 2013, with the term of Dr. Niznick's employment set to expire, and the parties unable to reach agreement on an extension, Jon decided to return full time to Acromil, which he felt would benefit from his increased presence. Importantly, the JVCs took no steps to retain Jon, nor did they seek to reemploy him after Dr. Niznick finished these negotiations. Defendants have already provided substantial and meaningful discovery on this claim. They produced August 6, 2013 Board minutes providing "Dr. Niznick stated that Jon Konheim wili submit his resignation September 1, 2013 if satisfactory agreement is not achieved regarding his future employment with the Company." (Przybylko Aff. Ex. 5.) Defendants also produced an August 16, 2013 letter from Dr. Niznick to Raskas, in which Dr. Niznick discussed an offer he made to continue as a consul