CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiff,
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]
I. AUTHORITY FOR IMPOSING SANCTIONS
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))).
II. THE IMPOSITION OF SANCTIONS IS NOT APPROPRIATE
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
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.
III. SANCTIONS PURSUANT TO RULE 11
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).