Koch v. Greenberg

• Decision Date: 31 March 2014
• Docket Number: No. 07 Civ. 9600JPO.,07 Civ. 9600JPO.
• Citation: 14 F.Supp.3d 247
• Court: U.S. District Court — Southern District of New York
• Parties: William I. KOCH, Plaintiff, v. Eric GREENBERG, Defendant.

14 F.Supp.3d 247

William I. KOCH, Plaintiff

v.Eric GREENBERG, Defendant.

No. 07 Civ. 9600JPO.

United States District Court, S.D. New York.

Signed March 31, 2014.

Bruce A. Wessel, Marshall Alan Camp, Moez M. Kaba, Steven Nathaniel Feldman, Irell & Manella LLP, Los Angeles, CA, Layn R. Phillips, Melissa Rush McCormick, Regine Rutherfurd, Robert Darby, Bradley James Leimkuhler, Jared Ronald Gale, John Charles Hueston, Irell & Manella LLP, Newport Beach, CA, Edward M. Spiro, Elkan Abramowitz, Adam Lewis Pollock, Morvillo, Abramowitz, Grand, Iason, & Anello P.C., New York, NY, for Plaintiff.

Anthony Paul Coles, Patterson, Belknap, Webb & Tyler LLP, New York, NY, Arthur Joel Shartsis, Amy L. Hespenheide, Felicia A. Draper, Frank Albert Cialone, Roey Ze'Ev Rahmil, Tracy Salisbury, Shartsis Friese LLP, San Francisco, CA, Daniel G. Bird, David Charles Frederick, Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC, Washington, DC, for Defendant.

OPINION AND ORDER

J. PAUL OETKEN, District Judge:

Plaintiff William I. Koch brought this diversity action against Defendant Eric Greenberg, asserting claims of fraud and violations of New York's General Business Law (“N.Y. GBL” or “GBL”). Koch's claims derive from his purchase of rare French wine consigned by Greenberg through an auction house in October 2005. Koch purchased over 2,600 bottles of wine from Greenberg at the auction, and he subsequently claimed that 24 of those bottles were counterfeit. In March and April 2013, this Court held a three-week jury trial on Koch's claims. The trial was bifurcated between an initial phase—covering liability and non-punitive damages—and a punitive damages phase. On April 11, 2013, the jury returned a verdict for Koch on all three claims, awarding compensatory damages of $355,811 (the purchase price for the 24 bottles) and an additional $24,000 in statutory damages on one of Koch's GBL claims ($1000 per bottle). (Dkt. No. 451.) The next day, April 12, 2013, the jury returned a verdict in Koch's favor in the second phase of the trial, awarding Koch $12 million in punitive damages. (Dkt. No. 452.)

Presently before the Court are Greenberg's motion for judgment as a matter of law, or, in the alternative, for a new trial (Dkt. No. 495), and Koch's motion for attorney's fees, injunctive relief, and interest (Dkt. No. 497.) For the reasons that follow, the motions are granted in part and denied in part: (1) Greenberg's motion for judgment or for a new trial is denied, except to the extent that (a) the $355,811 compensatory damages award is reduced to $212,699, pursuant to New York General Obligations Law § 15–108, as a result of Koch's prior settlement with Zachys, and (b) the $12 million punitive damages award is remitted to $711,622; (2) Koch's request for attorney's fees is denied; (3) Koch's request for injunctive relief is denied; and (4) Koch's request for pre- and post judgment interest is granted.

I. Background

Familiarity with the background of this case is presumed, and the Court addresses only those aspects of its factual and procedural background that are relevant to the instant motions.

A. Factual Background

This case concerns the sale of 24 bottles of wine by Zachys Wine Auctions, Inc. (“Zachys”). These 24 bottles of wine, which were among a larger set of bottles consigned by Greenberg and purchased by Koch, bore certain indicia of inauthenticity, suggesting that the wine was counterfeit, or not what it was purported to be. After discovery of this fact, Koch brought suit against Greenberg, alleging common law fraud and claims under N.Y. GBL §§ 349 and 350, which address deceptive business practices. The trial was bifurcated into two phases, with the first encompassing liability and the second addressing Koch's claim for punitive damages associated with his fraud allegations. On April 11, 2013, the jury found in favor of Koch on all claims, specifically finding that Greenberg had committed fraud under two theories—affirmative misrepresentation and fraudulent concealment—and that he had engaged in materially deceptive business practices in violation of GBL §§ 349 and 350. The jury awarded compensatory damages of $355,811—representing the purchase price for the 24 bottles—and an additional $24,000 in statutory damages under GBL § 349, which authorizes “treble damages” up to $1000 per violation. On April 12, 2013, the jury awarded Koch $12 million in punitive damages.

B. Procedural Background

In an opinion and order dated September 30, 2012, the Honorable Barbara S. Jones, to whom this case was previously assigned, denied Greenberg's motion for summary judgment, holding that there were genuine disputes of material fact with respect to the claims at issue here. Koch v. Greenberg, No. 07 Civ. 9600(BSJ), 2012 WL 7997484 (S.D.N.Y. Sept. 30, 2012). On October 24, 2012, this case was reassigned to the undersigned.

Jury selection for trial began and was completed on March 26, 2013. The first phase of the trial took place from March 27, 2013 through April 11, 2013. The punitive damages phase of the trial lasted one day, beginning and ending on April 12, 2013. At the close of evidence, Defendant's counsel asked the Court that his motion for judgment as a matter of law be “deemed made now with briefing to be filed in due course.” (Tr. 2109.)¹ The Court reserved on the motion, subject to later briefing. (Id. )

Defendant's motion for judgment as a matter of law, or, in the alternative, for a new trial, was filed on June 21, 2013. (Dkt. No. 495.) Plaintiff's opposition was filed on August 2, 2013 (Dkt. No. 503), and Defendant replied on August 23, 2013 (Dkt. No. 505.) Plaintiff filed his motion for attorney's fees, injunctive relief, and interest on June 24, 2013. (Dkt. No. 497.) Defendant's opposition was filed on August 9, 2013 (Dkt. No. 504), and Plaintiff replied on September 10, 2013 (Dkt. No. 507).

II. Legal Standards

A. Motion for Judgment as a Matter of Law Pursuant to Rule 50

Federal Rule of Civil Procedure 50 provides that a motion for judgment as a matter of law may be made at any time before the case is submitted to the jury, and, in the event of denial, the movant may renew the motion no later than 28 days after trial. Fed.R.Civ.P. 50(a)(2), (b). “In reviewing a Rule 50 motion, a court may consider all the record evidence, but in doing so it ‘must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence.’ ” Cross v. N.Y.C. Trans. Auth., 417 F.3d 241, 247 (2d Cir.2005) (quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) (citations omitted)). The movant's burden on a Rule 50 motion will be “particularly heavy after the jury has deliberated in the case and actually returned its verdict.” Id. at 248. Thus, in order to grant such a motion, “there must be ‘such a complete absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture, or ... such an overwhelming amount of evidence in favor of the movant that reasonable and fair minded men could not arrive at a verdict against him.’ ” Song v. Ives Laboratories, Inc., 957 F.2d 1041, 1046 (2d Cir.1992) (quoting Mattivi v. South African Marine Corp., 618 F.2d 163, 168 (2d Cir.1980) (citation omitted)).

As this Court has cautioned before, “whenever a court contemplates encroaching on the role of the jury, it should recall that the jury trial is central to the democratic system envisioned by our Founding Fathers.” Psihoyos v. John Wiley & Sons, Inc., No. 11 Civ. 1416(JPO), 2012 WL 5506121, at *1 (S.D.N.Y. Nov. 7, 2012). As one such Founder “colorfully noted, trial by jury is a key ‘indemnification against being ridden like horses, fleeced like sheep, worked like cattle, and fed and clothed like swine and hounds.’ ” Id. (quoting The Revolutionary Writings of John Adams 55 (C. Bradley Thompson ed., 2000)).

Accordingly, with both the role of the jury and Rule 50's “stern standard” in mind, the Court must “give deference to all credibility determinations and reasonable inferences of the jury, and may not weigh the credibility of witnesses or otherwise consider the weight of the evidence.” Bucalo v. Shelter Island Union Free Sch. Dist., 691 F.3d 119, 128 (2d Cir.2012) (quotations and citation omitted).

B. Motion for a New Trial Pursuant to Rule 59

After a jury trial and upon motion, a court may “grant a new trial on all or some of the issues—and to any party....” Fed. R. Civ. Pr. 59(a)(1). “A motion for a new trial should be granted when, in the opinion of the district court, ‘the jury has reached a seriously erroneous result or ... the verdict is a miscarriage of justice.’ ” Song, 957 F.2d at 1047 (quoting Smith v. Lightning Bolt Productions, Inc., 861 F.2d 363, 370 (2d Cir.1988) (citations omitted)). Rule 59 motions differ from motions for a new trial pursuant to Rule 50 in two significant respects. First, “[u]nlike judgment as a matter of law, a new trial may be granted even if there is substantial evidence supporting the jury's verdict.” DLC Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 134 (2d Cir.1998). And second, in considering a Rule 59 motion, “a trial judge is free to weigh the evidence himself, and need not view it in the light most favorable to the verdict winner.” Id. “A new trial may be granted, therefore, when the jury's verdict is against the weight of the evidence.” Id. at 133 (citations omitted). Despite this, however, a court will grant a Rule 59 motion only when the jury's verdict proves “egregious” in light of the evidence presented at trial. Id. at 134 (quotations and citations omitted).

III. Defendant's Motion for Judgment as a Matter of Law

A. Fraud Claim

Greenberg contends that Koch “failed to present clear and convincing evidence of fraud.” (Defendant Eric Greenberg's Memorandum of Law, Dkt. No. 496 (“Def.'s Mem.”), at 2.) Fraud requires the following elements: (1) representation of material...