Part of a public library containing court papers related to lawsuits involving Scientology in some way. Collected to help lawyers and critics of Scientology in future lawsuits from or against this cult. Please report back if this has been of help, or send new contributions to the collection. Thanks. Andreas Heldal-Lund (heldal@online.no)

    TIME WARNER, INC., Time Inc. Magazine Co., and Richard Behar, Defendants.
                             No. 92 CIV. 3024 (PKL).
                  United States District Court, S.D. New York.
                                  Feb. 4, 1994.
  Morrision Cohen Singer & Weinstein, New York City (Jonathan W. Lubell, of
 counsel), Michael Lee Hertzberg, New York City, Bowles & Moxon, Hollywood, CA
 (Timothy Bowles, of counsel), for plaintiff.
  Cahill Gordon & Reindel, New York City (Floyd Abrams, Dean Ringel, Phillip
 Essig, and Adam Liptak, of counsel), Time Inc., New York City (Harry M.
 Johnston, Robin Bierstadt and Robert P. Marshall, Jr., of counsel), for
                                OPINION AND ORDER

  LEISURE, District Judge,
  *1 Plaintiff, Church of Scientology International ("CSI") brought this
 action to recover for damages allegedly suffered from the publication of
 allegedly false and defamatory statements concerning CSI in the cover story of
 the May 6, 1991 issue of Time magazine (the "Article").  The complaint alleges
 that passages or sets of statements contained in the Article libeled CSI.
  Plaintiff now moves this Court for an order for sanctions pursuant to this
 Court's inherent powers, based on defendant's alleged discovery abuse.
 Plaintiff seeks an order from this Court:  (1) directing that defendant's
 failure to provide plaintiff with complete versions of taped conversations be
 considered by the Court in determining whether there is sufficient evidence of
 actual malice, and be submitted to the jury as evidence of actual malice;  (2)
 dismissing defendant Richard Behar's counterclaims or, in the alternative,
 precluding Behar from using any portion of the taped conversations which were
 originally produced in incomplete form;  and (3) directing defendants and their
 counsel to fully reimburse plaintiff for all attorneys' fees incurred in
 investigating defendants' discovery procedures.
  Defendants oppose plaintiff's motion.  Defendants also contend that the
 instant motion is frivolous and, accordingly, defendants should be awarded the
 costs of opposing it.  For the following reasons, plaintiff's motion is denied
 in its entirety and defendants' motion for costs is hereby denied.
  The instant motion for sanctions arises out of defendants' response to
 plaintiff's First Request for Production of Documents.  Plaintiff alleges that
 defendants purposefully withheld certain portions of audio tape cassettes which
 defendants provided to plaintiff for the purpose of discovery.
  The alleged discovery abuse occurred in January 1993.  In response to
 plaintiff's initial discovery request, defendants produced to plaintiff a
 number of audio tape cassettes which were to be reproductions, in full, of
 certain conversations recorded by defendant Behar while he was researching the
 Article. [FN1]  The tapes at issue are comprised of 57 conversations with a
 variety of Behar's sources.  Affidavit of Dean Ringel, Esq., in Opposition to
 Plaintiff's Motion for Sanctions ("Ringel Aff.") at P 6.  In order to protect
 Behar's confidential sources, and for reasons of security, defendant's counsel,
 Cahill, Gordon & Reindel ("Cahill") decided to have the tapes reproduced "in-
 house", i.e., in counsel's offices, as opposed to in a recording studio.
 Affidavit of Floyd Abrams, Esq., in Opposition to Plaintiff's Motion for
 Sanctions ("Abrams Aff.") at PP 3-5.
  A number of the tapes which were first provided to plaintiff contained
 momentary gaps, or periods of silence, in the recorded conversations.  The
 existence of these gaps, which provides the impetus for the instant motion,
 were initially detected by CSI's counsel while counsel was listening to the
 tapes and preparing transcripts thereof.  Affidavit of Jonathan W. Lubell,
 Esq., in support of Plaintiff's Motion for Sanctions ("Lubell Aff.") P 3.
 After discovering these gaps, plaintiff's counsel contacted an audio tape
 expert who examined the tapes and recommended that plaintiff's counsel examine
 the original or "master" versions of the tapes.  Accordingly, Michael Lee
 Hertzberg, Esq., co-counsel for plaintiff, requested a visit to Cahill's
 offices in order to listen to the masters tapes.  Def.Memorandum at 9.  Cahill
 granted Hertzberg's request.
  *2 On March 17, 1993, Hertzberg, accompanied by an attorney from Cahill,
 spent the entire day at the Cahill offices reviewing the master tapes produced
 by defendant.  Id. at 10.  Later in the evening of March 17, 1993, or
 shortly thereafter, Cahill sent plaintiff's counsel replacement tapes by
 messenger.  The replacement tapes contained the full conversations from which
 omissions had previously been discovered.  Additionally, plaintiff's counsel
 reviewed all the outstanding audio tapes in order to determine if any other
 omissions had occurred.  Upon so doing, plaintiff's counsel discovered that
 other selected portions of the tapes also contained momentary gaps in the
 recorded conversations.  To cure this problem, defendants' counsel provided
 counsel for CSI with re-recorded tapes of the additional conversations on or
 about March 21, 1993.  Ringel Aff. at P 6;  Ringel Aff. at Exhibit F.
  In a conference held on March 23, 1993, this Court directed counsel for CSI to
 review all the audio tapes without the assistance of an expert, and to consult
 with an expert only if counsel felt it was necessary.  Thereafter, Paul
 Ginsberg, the president of Professional Audio Laboratories, was chosen as an
 expert by CSI.  Ginsberg was given full access, by Cahill, to all of the audio
 tapes, both masters and copies.  After a complete review, Ginsberg submitted a
 13-page report (the "Tape-Report") to CSI.  The Tape-Report was critical of the
 production process, namely alluding to a lack of professionalism.  However,
 because of the nature of such an examination, the report was not able to detect
 instances of intentional tampering or willful obfuscation. [FN2]
  It is well established that a court has discretion to impose sanctions on a
 litigant for failure to produce evidence.  Failure to cooperate in discovery
 can yield court imposed sanctions pursuant to Fed.R.Civ.P. 37(b), which
 states in relevant part:
   [if] a part fails to obey an order to provide or permit discovery ... or if a
 party fails to obey an order entered under Rule 26(f), the court in which the
 action is pending may make such orders in regard to the failure as are just....
  Fed.R.Civ.P. 37(b).  See Cine Forty-Second Street Theatre v. Allied
 Artists, 602 F.2d 1062, 1066 (2d Cir.1979). [FN3]  However, in the instant
 case, no court order was in effect addressing the tapes at issue and,
 therefore, the Court appears to have no authority to impose sanctions under
 Rule 37(b) of the Federal Rules of Civil Procedure. [FN4]
  However, the Court can rely on its broad inherent powers to sanction parties
 "acting in bad faith, vexatiously, wantonly, or for oppressive reasons."
 Sassower, 973 F.2d at 81 (citing Chambers v. NASCO, Inc., 111 S.Ct. 2123,
 2133 (1991));  International Brotherhood of Teamsters, 948 F.2d at 1345.
 The Second Circuit has noted that this inherent power "stems from the very
 nature of courts and their need to be able 'to manage their own affairs so as
 to achieve the orderly and expeditious disposition of cases.' "  United
 States v. International Brotherhood of Teamsters, 948 F.2d at 1345 (quoting
 Chambers v. NASCO, Inc., 111 S.Ct. 2123, 2132 (1991) (quoting Link v.
 Wabash Railroad Co., 370 U.S. 626, 630-31 (1962))).  Thus, absent a violation
 of a court order, this Court, is not powerless to address abuses of the
 discovery process, in that a violation of a court order is not a prerequisite
 for the imposition of sanctions.  See Sassower v. Field, 973 F.2d 75, 80-81
 (2d Cir.1992), cert. denied, 113 S.Ct. 1879 (1993);  United States v.
 International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of
 America, AFL-CIO ("International Brotherhood of Teamsters"), 948 F.2d 1338,
 1345 (2d Cir.1991);  Mill-Run Tours, Inc. v. Khashoggi, 124 F.R.D. 547, 552
 (S.D.N.Y.1989);  see also Penthouse Int'l, Ltd. v. Playboy Enters., Inc.,
 663 F.2d 371, 386 (2d Cir.1981) ("A federal district court possesses broad
 inherent power to protect the administration of justice by levying sanctions in
 response to abusive litigation practices.");  Capellupo v. FMC Corp., 126
 F.R.D. 545, 550-51 (D.Minn.1989) (with respect to the destruction of
 documents, "the Court relies on its inherent power to regulate litigation,
 preserve and protect the integrity of proceedings before it, and sanction
 parties for abusive practices").  Accordingly, in the present case, this Court,
 acting pursuant to its inherent powers, could sanction malicious attempts to
 frustrate discovery.  See, e.g., Turner v. Hudson Transit Lines, Inc., 142
 F.R.D. 68, 72 (S.D.N.Y.1991);  Capellupo, 126 F.R.D. at 550-51.
  *3 However, "[t]he Supreme Court has cautioned that because of the 'very
 potency' of a court's inherent power, it should be exercised 'with restraint
 and discretion.' "  International Brotherhood of Teamsters, 948 F.2d at
 1345 (quoting Chambers, 111 S.Ct. at 2132).  "Sanctions imposed under a
 court's inherent power--commonly known as the bad faith exception to the
 'American Rule' against fee shifting--'depend[ ] not on which party wins the
 lawsuit, but on how the parties conduct themselves during the litigation.' "
 Id. (quoting Chambers, 111 S.Ct. at 2137).  The Second Circuit, "in
 recognizing the need for restraint, as always required a particularized showing
 of bad faith to justify the use of the court's inherent power."  Id.
 Specifically, the Second Circuit has " 'declined to uphold awards under the
 bad-faith exception absent both " 'clear evidence' that the challenged actions
 'are entirely without color, and [are taken] for reasons of harassment or delay
 or for other improper purposes' " and "a high degree of specificity in the
 factual findings of [the] lower courts." ' "  Id. (quoting Oliveri, 803
 F.2d at 1272 (quoting Dow Chemical Pacific Ltd. v. Rascator Maritime S.A.,
 782 F.2d 329, 344 (2d Cir.1986) (citations omitted))).
  In the instant action, plaintiff has failed to convince this Court that
 defendants acted in bad faith.  Plaintiff has not made an adequate showing,
 much less the "particularized showing" of bad faith that must be shown before
 this Court would impose sanctions on defendants pursuant to this Court's
 inherent power.
  In Outley v. City of New York, 837 F.2d 587, 590 (2d Cir.1988) the Second
 Circuit reversed the lower Court's imposition of sanctions, issued pursuant to
 the Court's inherent powers for a violation of Fed.R.Civ.P. 26(e), stating
 that "[t]he rules for discovery were not designed to encourage procedural
 gamesmanship, with lawyers seizing on the mistakes of their counterparts in
 order to gain some procedural advantage."  In Outley, the Second Circuit
 provided significant guidance as to the factors a court should consider when
 imposing sanctions pursuant to its inherent powers.  Among the factors to be
 considered are:  the explanation, if any, for the failure to provide the
 information;  the level of bad faith;  the prejudice to the inconvenienced
 party;  the importance of the information;  and the inconvenience to the court
 itself.  Id. at 590-91 (citations omitted).
  Applying these factors to the instant consideration, the record before this
 Court does not support the imposition of sanctions.  The volume of tapes
 provided by defendants, fifty-seven conversations in all, coupled with the fact
 that defendants' counsel had to extricate the discoverable conversations from
 those that were unrelated to this action and from those that were privileged,
 could readily explain the aforementioned glitches in the production of the
 duplicate tapes.  See Carter-Wallace, Inc. v. Hartz Mountain Industries,
 Inc., 553 F.Supp 45, 52 (S.D.N.Y.1982) (finding that sanctions were not
 appropriate where minor errors occurred in the context of a large document
 production, recognizing that where thousands of documents are being exchanged,
 some documents will inevitably be found and turned over later than
  *4 After CSI's counsel detected the existence of gaps in the recordings,
 defendants' counsel provided plaintiff with complete versions of the tapes in
 question.  The alacrity with which substitute recordings were provided not only
 is evidence of Cahill's good faith attempts to facilitate discovery, but also
 prevented plaintiff from suffering any prejudice that could have been caused by
 the incompleteness of the first recordings submitted by Cahill.  See also,
 Quadrozzi v. City of New York, 127 F.R.D. 63, 74 (S.D.N.Y.1989) ("The degree to
 which the offending party failed to comply with discovery, the importance of
 the information withheld and the extent of the prejudice occasioned by the
 delay all bear on a courts determination of whether to impose sanctions"
 (emphasis added) (citing Litton Systems, Inc. v. American Telephone and
 Telegraph, Co. 91 F.R.D. 574, 576 (S.D.N.Y1981), aff'd, 700 F.2d 785 (2d
 Cir.1983)));  Haffer v. Temple University, 678 F.Supp 517, 549
 (E.D.Pa.1987) (declining to impose sanctions for the late production of reports
 where no prejudice was shown in light of the relevancy and because the court
 determined that "[p]laintiff will have had the[ ] reports months before
  Plaintiff contends that defendants' failure to provide counsel with complete
 duplicates is analogous to cases where discovery documents have been willfully
 destroyed.  Def.Memorandum at 18.  Plaintiff argues that "[t]he only
 distinction between the instant case of alteration, and a case of tape or
 document destruction, is that in the present scenario the missing segments of
 conversation were not irretrievably lost, but instead ultimately furnished to
 plaintiff ..." Id. at 19.  Plaintiff's argument is unpersuasive.  There is a
 crucial difference between the destruction of evidence and its eventual
 production.  This case is not one where information was destroyed.  In the
 final analysis, plaintiff received the recordings in their entirety, and
 received them a few days after the omitted portions were discovered and
 requested.  The prejudice, if any, which plaintiff suffered does not
 necessitate the imposition of sanctions.  Additionally, it is of some
 significance that the replacement copies of the tapes were provided by
 defendants without the need for this Court to issue an order compelling their
  While the quality of defendants' audio tape reproductions may have suffered
 from Cahill's decision to sacrifice expertise in favor of enhanced security,
 Cahill's behavior has not approached the level of bad faith.  Accordingly, the
 plaintiff's motion is hereby denied.
  Defendants contend that "[i]f any costs are to be assessed on this motion--and
 they should be--they should be assessed against CSI and its counsel for
 pursuing a course imposing enormous costs on defendants without any basis in
 law of fact."  Def.Memorandum at 24.  This Court construes defendants'
 allegations as a cross-motion for sanctions pursuant to Fed.R.Civ.P. 11.
  *5 The goal of Rule 11 is to "discourag[e] dilatory and abusive
 litigation tactics and eliminat[e] frivolous claims and defenses, thereby
 speeding up and reducing the costs of the litigation process."  McMahon v.
 Shearson/American Express., Inc., 896 F.2d 17, 21 (2d Cir.1990).  "In deciding
 whether the signer of a pleading, motion, or other paper has crossed the line
 between zealous advocacy and plain pettifoggery, the court applies an objective
 standard of reasonableness."  United States v. International Brotherhood of
 Teamsters, 948 F.2d 1338, 1344 (2d Cir.1991) "Rule 11 is not intended to
 chill an attorney's creative, imaginative or enthusiastic advocacy on his
 client's behalf.  So long as his pleadings meet the test of reasonableness and
 are not interposed for ... improper purposes ... sanctions are not
 warranted."   McMahon, 896 F.2d at 22.  This applies even to those
 "positions that may arguably be at odds with existing precedent."  Cross &
 Cross Properties, Ltd. v. Everett Allied Co., 886 F.2d 497, 504 (2d
 Cir.1989).  "Thus, not all unsuccessful legal arguments are frivolous or
 warrant sanction."  Mareno v. Rowe, 910 F.2d 1047 (2d Cir.1990), cert.
 denied, 498 U.S. 1028 (1991).  Moreover, "[c]ourts should ... resolve all
 doubts in favor of the signer."   Cross, 886 F.2d at 504.
  Having reviewed the arguments raised by plaintiff's counsel in the instant
 case, the Court concludes that the imposition of Rule 11 sanctions is not
 merited.  Although plaintiff's motion was denied by the Court, it did not rise
 to the level of frivolousness that would make the imposition of sanctions
  For the reasons stated above, plaintiff's motion for sanctions is denied in
 its entirety.  Plaintiff's request for costs and attorney's fees is denied.
 Defendants' request for an award of costs and attorney's fees in opposing the
 motion also is denied.  All parties to this action shall appear before this
 Court for a pretrial status conference on February 18, 1994 at 9:30 a.m., in
 Courtroom 312, United States District Court, 40 Centre Street, New York, New

      FN1. Defendant Behar, a reporter, conducted research interviews for the
     Article over a period of several months.  During that period, Behar was
     also collecting information related to other stories.  Information relating
     to other articles was contained on Behar's original audio cassettes.  The
     information relating to the Scientology Article had to be distilled from
     the other research Behar was conducting at this time.  Defendants'
     Memorandum of Law in Opposition to Plaintiff's Motion ("Def.Memorandum") at

      FN2. As plaintiff correctly points out, the National Commission for the
     Review of Federal and State Laws Relating to Wiretapping and Electronic
     Surveillance stated in its 1976 report that:
     [a]n inherent limitation to the analytical approach [for evaluating tapes]
     is the inability of scientific tests to distinguish between intentional and
     accidental falsifications....  Accidents involving magnetic tapes can occur
     without anyone's knowledge....  Because the distinction between intentional
     and accidental falsifications is important from the legal point of view,
     the forensic examiner must refrain from speculating about this matter.
     Defendant's Memorandum at 5.  Accordingly, the Tape-Report does not
     delineate whether the gaps detected in the tapes could have been caused by
     mechanical error, human error, or a conscious attempt to thwart discovery.
     See Plaintiff's Notice of Motion for Sanctions for Discovery Abuse at
     Exhibit C;  See also, Affirmation of Earnest Aschkenasy in Opposition to
     Plaintiff's Motion for Sanctions ("Aschkenasy Aff.") at P 4.

      FN3. The mildest sanctions provided by Fed.R.Civ.P. 37 is an order to
     reimburse the opposing party for expenses caused by the failure to
     cooperate.  More stringent measures to which courts may turn, include
     striking out portions of the pleadings, prohibiting introduction of
     evidence on particular points, and deeming disputed issues determined
     adversely to the disobedient party.  Harshest of all would be an order of
     dismissal and the entering of a default judgment.  Cine Forty-Second
     Street Theatre v. Allied Artists, 602 F.2d 1062, 1066 (2d
     Cir.1979) (finding that a grossly negligent failure to obey an order
     compelling discovery may justify the severest disciplinary measures).

      FN4. Rule 37(b) is only applicable for violations of an order of the
     court relating to the specific discovery sought.  See Daval Steel Prods.
     v. M/V Fakredine, 951 F.2d 1357, 1363-64 (2d Cir.1991) ("there must be a
     valid court order in force before sanctions may be imposed pursuant to
     Rule 37(b)(2)");  Salahuddin v. Harris, 782 F.2d 1127, 1131-32 (2d
     Cir.1986);  Israel Aircraft Indus., Ltd. v. Standard Precision, 559 F.2d
     203, 208 (2d Cir.1977).  Since there was no court order in effect in the
     instant case, the Court cannot impose sanctions pursuant to Rule
     37(b).   See Daval Steel Prods., 951 F.2d at 1364;  but see Turner v.
     Hudson Transit Lines, Inc., 142 F.R.D. 68, 72 (S.D.N.Y.1991) (suggesting
     that courts may have the power to sanction the destruction of evidence
     under Rule 37(b) even prior to the issuance of a discovery order).

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