Reilly v. Natwest Markets Group, Inc.

• Decision Date: 28 December 2001
• Docket Number: No. 00 CIV 3234 JES.,00 CIV 3234 JES.
• Parties: Michael T. REILLY, Plaintiff, v. NATWEST MARKETS GROUP, INC. and National Westminster Bank, Defendants.
• Court: U.S. District Court — Southern District of New York

178 F.Supp.2d 420

Michael T. REILLY, Plaintiff, v. NATWEST MARKETS GROUP, INC. and National Westminster Bank, Defendants.

No. 00 CIV 3234 JES.

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

December 28, 2001.

Michael T. Reilly, Far Hills, NJ, Plaintiff Pro Se Cravath, Swaine & Moore, New York City, Douglas D. Broadwater, Gregory E. Birkenstock, of counsel, for Defendants.

MEMORANDUM OPINION AND ORDER

SPRIZZO, District Judge.

Plaintiff pro se Michael T. Reilly ("plaintiff") brings this action against defendants Natwest Markets Group, Inc. and National Westminster Bank (collectively "defendants"), claiming relief on several grounds, all of which relate to defendants' conduct during the various phases of Reilly v. Natwest Mkts. Group, 96 Civ. 0641 ("Reilly I"). Plaintiff seeks relief pursuant to (1) New York Labor Law §§ 195, 215; (2) 42 U.S.C. §§ 1985, 1986; and (3) common law tort claims under New York law. Defendants move to dismiss plaintiff's Amended Complaint with prejudice pursuant to Fed. R. Civ. Proc. 12(b)(6) and seek sanctions pursuant to Fed. R. Civ. Proc. 11 and 28 U.S.C. § 1927 (2001). For the reasons set forth below, the Court grants defendants' motion to dismiss plaintiff's Amended Complaint and denies defendants' motion for sanctions.

BACKGROUND

In Reilly I, plaintiff alleged that defendants terminated his employment contract without cause and sought damages for (1) breach of contract; (2) quantum meruit; (3) violation of N.Y. Labor Law; and (4) defamation. Reilly I was bifurcated to resolve the issue of liability first and then damages. After a jury found that defendants willfully terminated plaintiff without cause, the court impaneled another jury to determine the issue of plaintiff's damages.

During the damage phase pre-trial period, plaintiff requested from defendants certain documents that were highly relevant to plaintiff's quantum meruit claim. Specifically, plaintiff requested access to files documenting the various transactions he had worked on while employed by defendants ("the Deal Files") so that he could prove the reasonable value of his goods and services to defendants. Plaintiff served defendants with a request for production of the Deal Files on September 8, 1997. See Pl.'s Req. for Damages-Phase Prod. of Docs. ("Pl.'s Damages-Phase Doc. Req.") at Rider A. Prior to this specific request, however, plaintiff had requested generally all documents concerning (1) completed transactions that he was involved with during 1994 and 1995; (2) pending transactions at the time of his termination in August 1995; and (3) transactions he maintained a role in between August 1995 and January 1996. See Pl.'s First Req. for Prod. of Docs. ("Pl.'s First Doc. Req.") at Rider A.

At no time during the damage phase pre-trial period did plaintiff receive any of these requested documents. On November 26, 1997, plaintiff informed defendants that all of the documents they had theretofore produced contained files pertaining to employees other than plaintiff and requested that his Deal Files be produced on or before his February 10, 1998 deposition. See Order re: Sanctions Mot. dated June 25, 1998 ("Reilly I Sanctions") at 2. On April 3, 1998, after several pre-trial conferences, this Court ordered defendants to "produce all documents responsive to plaintiff's document request." Order re: Doc. Req. ("Doc.Req.Order") at 2.

Following the Court's order, between April 3, 1998 and May 7, 1998, defendants maintained that they had submitted all documents in their possession. See Reilly I Sanctions at 3. During that same period, plaintiff continued to request the production of the Deal Files and threatened to ask this Court for an adverse inference instruction if defendants did not comply. See id. at 3. On May 5, 1998, plaintiff's counsel moved for an adverse inference instruction to the jury, referring to defendants failure to produce material evidence. See Pl.'s Mem. on Preclusion Issues dated May 3, 1998 ("Pl.'s Preclusion Mem.") at 7-10.

At the final pre-trial conference on Friday, May 8, 1998, Judge Conti — to whom the case had been transferred — was informed that defendants had told plaintiff's attorney just the day before that seven (7) linear feet of plaintiff's Deal Files had been located on the very same floor that plaintiff had worked; trial was set to begin in this Court on Monday, May 11, 1998. After hearing from both parties, Judge Conti stated that defendants' untimely production of documents was "unconscionable." Hr'g Tr. dated May 5, 1998 at 10. Judge Conti then granted plaintiff's Rule 37 request for discovery sanctions in the form of an adverse inference instruction to the jury and a preclusion order preventing defendants' from using the Deal Files or referring to plaintiff's deposition at trial.¹ See Reilly I Sanctions at 4. After an eight-day trial, plaintiff received a jury verdict of over $7 million.

During the post-trial phase, plaintiff moved Judge Conti to consider imposing additional sanctions in response to defendants' discovery behavior, including a default judgment in the amount of $13.5 million.² Plaintiff claimed that the pre-trial discovery sanctions were inadequate because they were given before plaintiff had a chance to determine whether the Deal Files were complete. Indeed, according to plaintiff, the trial had shown that the Deal Files were incomplete and "sanitized" insofar as they only contained public documents and a limited number of plaintiff's notes and papers. See Reilly I Sanctions at 5. Judge Conti instructed plaintiff that to justify further sanctions he would have "to establish what damages he sustained or to what extent the presentation of his case was hindered by [defendants'] actions in violation of court orders regarding discovery." Order re: Post-Trial Issues dated June 3, 1998 ("Post-Trial Order") at 5.

Following briefing by both parties and a hearing on June 9, 1998, Judge Conti found that, although defendants were grossly negligent in their search for the Deal Files and their failure to properly preserve plaintiff's Deal Files went beyond mere negligence, plaintiff had not proven by a preponderance of the evidence that defendants' conduct was willful. Id. at 7-8. Judge Conti further held that because of the adverse inference instruction, "plaintiff was not significantly prejudiced in the presentation of his case." Id. at 9.

In the fall of 1998, after the post-trial issues were resolved, both plaintiff and defendants appealed to the United States Court of Appeals for the Second Circuit ("the Second Circuit"). On June 17, 1999, the Second Circuit held that Judge Conti did not abuse his discretion and that the adverse inference instruction adequately redressed defendants' gross negligence. See Reilly v. Natwest Mkts. Group, Inc., 181 F.3d 253, 271 (2d Cir.1999). The Second Circuit also concluded that defendants were barred from contesting the amount of contract damages — although it was greater than the contractual maximum — because defendants chose not to challenge the point on appeal. See id. at 264. Finally, the Second Circuit reversed the award of quantum meruit damages, holding that because plaintiff never rescinded his express contract, he was not entitled to recovery. See id. at 262-65. Plaintiff was left, therefore, with $2.054 million in contract damages, $1.054 million in damages for defendants' willful refusal to pay plaintiff in violation of N.Y. Labor Law, and an additional $263,500 in liquidated damages pursuant to N.Y. Labor Law. See id. at 263-64. In affirming in part, vacating in part, and remanding in part, the Second Circuit found that the only remaining issues were the amount of pre-judgment interest plaintiff was entitled to on his contract damages and the amount of attorney's fees plaintiff was entitled to under N.Y. Labor Law § 198(1-a). Id. at 271-72.

On November 28, 1999, following the Second Circuit's decision, plaintiff moved Judge Conti pursuant to Rule 60(b) to reconsider his prior order denying additional post-trial sanctions. Plaintiff claimed that the $5.5 million quantum meruit award was part and parcel of Judge Conti's decision and that the "force and effect" of the pre-trial sanction had been nullified by the Second Circuit's decision to vacate the quantum meruit award. See Pl.'s Rule 60(b) Mot. dated Sept. 29, 1999 ("Mot. to Reconsider Sanctions") at 11. After conducting another hearing on the matter, Judge Conti denied plaintiff's motion for relief, finding that "a thorough review of the record has convinced this Court of the appropriateness of its prior rulings." Order re: Plaintiff's Rule 60(b) Mot. dated Oct. 18, 1999 ("Rule 60(b) Order") at 1-2.

Following determination of the remanded issues, a Second Amended Judgment was entered on February 9, 2000 for an amount totaling $3.531,519.80. See Order re Second Am. J. ("Second Am. J.") at 2. During the subsequent six (6) months, the parties disputed the form, amount, and procedure for satisfying the judgment. Most significantly, plaintiff contends that the judgment was intentionally overstated by $2.000 for disingenuous reasons and the defendants never sought to correct it, and that defendants contacted one of plaintiff's former attorneys to induce plaintiff to accept the improper judgment. See Pl.'s Am. Compl. dated June 21, 2000 ("Reilly II Compl.") at ¶ 10. Defendants maintain to the contrary that the overstated judgment was a typographical error that they were willing to correct and that contacting plaintiff's former attorney was necessary because plaintiff had a lien on the judgment that they were attempting to pay. See Defendants' Letter to Plaintiff dated Feb. 17, 2000 ("Letter from Defendants"); Defs.' Mot. to Dismiss dated July 21, 2000 ("Mot. to Dismiss") at 12. Defendants deposited the requisite amount with the Court and the judgment was satisfied on August 29, 2000.

The instant action, which was filed on April 27, 2000 during the post-remand phase...