Nikkal Industries, Ltd. v. Salton, Inc., 87 Civ. 6092 (CHT).

• Decision Date: 11 May 1988
• Docket Number: No. 87 Civ. 6092 (CHT).,87 Civ. 6092 (CHT).
• Citation: 689 F. Supp. 187
• Parties: NIKKAL INDUSTRIES, LTD., Plaintiff, v. SALTON, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

689 F. Supp. 187

NIKKAL INDUSTRIES, LTD., Plaintiff, v. SALTON, INC., Defendant.

No. 87 Civ. 6092 (CHT).

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

May 11, 1988.

Ginsburg, Feldman and Bress by Mary Helen Sears, Jonathan Ginsburg, Beth A. Rosenbloom, Washington, D.C., Lynch, Rowin, Burnbaum & Crystal, P.C. by Mark Rowin, New York City, for plaintiff.

Dewey, Ballantine, Bushby, Palmer & Wood (Sanford M. Litvack, Jonathan W. Miller, David A. Koenigsberg, Caroline Silk, of counsel), New York City, for defendant.

OPINION

TENNEY, District Judge.

This case involves advertising claims for home ice cream makers. Plaintiff Nikkal Industries, Ltd. ("Nikkal") filed a complaint against defendant Salton, Inc. ("Salton") alleging that defendant's advertising violated the Lanham Act, 15 U.S.C. § 1125 (1982 & Supp.1987), and sections 349 and 350 of the New York General Business Law (McKinney 1968 & Supp.1987). Defendant made counterclaims asserting that Nikkal's advertising violated the same statutory provisions. Nikkal's complaint seeks damages, and preliminary and permanent injunctive relief. Judge Leonard B. Sand previously ruled that Nikkal was not entitled to any preliminary relief. Nikkal then made a motion to disqualify a defense witness who may testify as an expert. The issue was sent to Magistrate James C. Francis IV for a Report and Recommendation ("Report"). In the interim, the case was transferred to this court. Magistrate Francis recommends that Nikkal's motion be denied. For the reasons set forth below, the court finds that Magistrate Francis's Report was correct. Accordingly, Nikkal's motion is denied.

BACKGROUND

In early October 1987, Beth Rosenbloom ("Rosenbloom"), an attorney for Nikkal, contacted Dr. Robert C. Sorensen ("Sorensen") in reference to this litigation. Transcript¹ ("Tr.") at 10-11. Sorensen is a market research expert. Tr. at 6-8. Rosenbloom's objective was to ascertain whether Sorensen would be interested in becoming employed by Nikkal as an expert witness.² Tr. at 11. Rosenbloom also made it clear that Nikkal was contacting other possible experts as well. Id. Shortly thereafter, Rosenbloom telephoned Sorensen again and arranged for a meeting to take place. Id. Sorensen voiced concern that his advice would go uncompensated and therefore requested remuneration. Tr. at 11-12, 22-23. Rosenbloom agreed to pay Sorensen for his attendance at the meeting and forwarded various publicly available documents to him. Tr. at 11-13.

On October 13, 1987, Sorensen attended the meeting which was held at the offices of Nikkal's counsel. Those present included three of Nikkal's attorneys and its vice president for marketing, Charles J. Johnson ("Johnson"). Johnson furnished Sorensen with information about Nikkal useful in conducting a market survey. Tr. at 49-50. He also gave to Sorensen information concerning marketing and sales methods which he considered privileged. Tr. at 54-56. Sorensen advised Nikkal on how to perform market research and provided Nikkal with an estimate of the cost. Tr. at 37-38. In addition, some of the contested advertising was displayed at the meeting. Tr. at 64. The remainder of the meeting involved discussions of the essential issues of the case, and potential techniques for conducting a market survey. Tr. at 14-16, 26, 35-42. The meeting lasted about ninety minutes. Tr. at 16, 49. At the conclusion, Nikkal informed Sorensen that if they wished to utilize his services they would contact him within a couple of days. Tr. at 16.

After waiting ten days, Sorensen called Jonathan Ginsburg ("Ginsburg"), an attorney for Nikkal, and inquired about the status of his relationship with Nikkal. Ginsburg told Sorensen that Nikkal had retained another expert. Tr. at 16-17. Ginsburg offered to pay Sorensen for his attendance at the meeting and for any time spent reviewing the case. Tr. at 19. Sorensen declined to accept the offer since he felt that his relationship with Nikkal was insufficient to justify compensation. Id. This final contact between Sorensen and Nikkal ended with Ginsburg suggesting that Sorensen might be retained in the future. Tr. at 18.

On November 24, 1987, David Koenigsburg ("Koenigsburg"), an attorney for Salton, telephoned Sorensen regarding his possible retention by Salton as an expert witness. Sorensen informed Koenigsberg of his prior contact with Nikkal in regard to this litigation. Tr. at 8. A few days later Salton contacted Sorensen and both sides entered into an oral agreement. Tr. at 9. Sorensen's primary duty was to evaluate the reliability of any market research techniques offered at trial by Nikkal. Tr. at 9-10.

DISCUSSION

A. Standard of Review

Plaintiff argues that "as is well settled, the Magistrate's fact findings are fully reviewable by the court." Plaintiff's Memorandum of Objections ("Pl.Mem.") at 11. This mistaken assertion is rejected by the court. In reviewing Magistrate Francis's findings, the court will be guided by the Judicial Procedure Act, 28 U.S.C. § 636 (1986), which directs that one of two standards are applicable in the instant situation. Either a de novo review or a clearly erroneous standard will be employed. The standard depends on whether the issue decided by the magistrate is dispositive or non-dispositive.

A district judge is authorized under 28 U.S.C. § 636(b)(1) to have a magistrate decide any pretrial matter except certain specified motions. These motions are ones deemed by Congress to be dispositive. See United States v. Raddatz, 447 U.S. 667, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980). Under Section 636(b)(1)(A) the magistrate's decision does not dispose of the litigation. As a result, Congress vested the magistrate's findings with a substantial degree of authority. Therefore, a district court will only reverse a magistrate's findings if they are "clearly erroneous or contrary to law."

However, if the issue referred to a magistrate is made pursuant to section 636(b)(1)(B), then the matter is deemed a dispositive one and the court's review is governed by a de novo standard. A de novo review involves the court making its own determination based upon "the ... record developed before the magistrate, without being bound to adopt the findings and conclusions of the Magistrate." Aluminum Co. of America v. United States E.P.A., 663 F.2d 499, 502 (4th Cir.1981), quoting House Report No. 94-1609, P.L. 94-577, reprinted at 1976 U.S.Code Cong. & Admin.News 6162. See Raddatz, 447 U.S. at 675, 100 S.Ct. at 2412. See also Baldwin Hardware Corp. v. Harden Inds., 663 F.Supp. 82, 84 (S.D.N.Y.1987).

The matter referred to Magistrate Francis was non-dispositive and therefore a clearly erroneous standard governs. "A finding is `clearly erroneous' when, although there is evidence to support it, the reviewing court on the entire record is left with the definite and firm conviction that a mistake has been committed." Agricultural Services Ass'n v. Ferry-Morse Seed Co., 551 F.2d 1057, 1071 (6th Cir. 1977), quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541-42, 92 L.Ed.2d 746 (1948). Consistently, it has been held that a magistrate's report resolving a discovery discourse between litigants should be afforded substantial deference and be overturned only if found to be an abuse of discretion. See Empire Volkswagen, Inc. v. World Wide Volkswagen Corp., 95 F.R.D. 398, 399 (S.D.N.Y.1982), judgment aff'd, 814 F.2d 90 (2nd Cir.1987); Detection Systems, Inc. v. Pittway Corp., 96 F.R.D. 152, 154 (W.D. N.Y.1982). Accordingly, the court will not overturn Magistrate Francis's Report unless the ruling is clearly erroneous or contrary to law.

B. Alleged Errors

1. Factual

Magistrate Francis found that Nikkal's meeting with Sorensen amounted to no more than "a comprehensive employment interview." Report at 6. Furthermore, "counsel did not supply Dr. Sorensen with data specific enough for him to form even a preliminary view of the merits of the litigation." Id. "Finally, since Dr. Sorensen was not retained by Nikkal, any disclosure to him of plaintiff's legal theories constituted a waiver of protection otherwise afforded to work product." Report at 9.

Nikkal vehemently opposes the Report for the following reasons. First, the Magistrate erred in concluding that Nikkal informed Sorensen that his services were not desired. Second, the Magistrate used an "unseemly" approach by presuming he had to resolve a credibility contest between both sides. Third, the Magistrate erred in finding that the consultation did not involve privileged communications. Fourth, the Magistrate was wrong in finding that Nikkal did not retain Sorensen.

(a) Alleged error regarding Nikkal's intent to hire Sorensen

Nikkal's contention is rejected because there was evidence to support the Magistrate's finding. Tr. at 16-18, 24, 32. In addition, it is beyond question that Nikkal never in fact utilized Sorensen's services. Tr. at 17-18. During the first and final communication subsequent to the meeting, Sorensen was told that Nikkal had hired someone else. Tr. at 17. After being so informed, Sorensen discarded the materials which Nikkal had furnished him. See Affidavit of Robert C. Sorensen, ¶ 19, sworn to February 11, 1988 attached to Exhibit ("Exh.") E of Pl.Mem. Consequently, Magistrate Francis's finding was supported by the evidence.

(b) The Magistrate's weighing of credibility

The court will not dwell for any great length upon this contention since it borders on the frivolous. To suggest that Magistrate Francis acted in an unseemly fashion by taking credibility into account is absurd because there were in fact sharply differing versions of what occurred at the meeting. It was for this very purpose, namely to determine whether Nikkal had imparted any privileged information to Sorensen, that Judge Sand referred the matter to Magistrate Francis. Accordingly, Magistrate Francis acted quite reasonably in taking credibility into account.

(c) The finding of...