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holding that where a prior judicial opinion in a related action may have preclusive effects, the opinion may be admissible evidence
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00 Civ. 0676 (JCF)
August 28, 2003
MEMORANDUM AND ORDER
Torah Soft Ltd. ("Torah Soft"), a computer software company, has asserted breach of contract and related claims against Michael Drosnin. Mr. Drosnin is the author of The Bible Code, a book describing how prophesies purportedly encrypted in the Hebrew Bible can be decoded using mathematical algorithms. Mr. Drosnin used a Torah Soft computer program in connection with creation of The Bible Code, and Torah Soft contends that he breached a commitment to provide an acknowledgment and contact information in the book. The defendant, in turn, asserts two claims against Torah Soft. First, Mr. Drosnin argues that by selling the software it had modified for Mr. Drosnin, Torah Soft and its principal, Dr. Yochanan Spielberg, breached an agreement that the software would be reserved for the author's exclusive use. Second, Mr. Drosnin asserts a claim of unfair competition based on the fact that Torah Soft and Dr. Spielberg marketed the modified software with the allegedly false representation that Mr. Drosnin had used it to write The Bible Code, when in fact he had relied on a different program for the bulk of his research. A complete discussion of the factual background of the case is set forth in a prior opinion, Torah Soft Ltd, v. Drosnin, 224 F. Supp.2d 704 (S.D.N.Y. 2002).
This case is before me for trial on consent of the parties pursuant to 28 U.S.C. § 636 (c), and each side has now filed in limine motions. Torah Soft seeks, first, to preclude any reference to the decision in a related case in which the Court granted an award of attorneys' fees against Torah Soft after dismissing copyright claims that it had asserted against Mr. Drosnin and others. Torah Soft Ltd, v. Drosnin, No. 00 Civ. 5650, 2001 WL 1506013 (S.D.N.Y. Nov. 27, 2001) (finding liability for fees); see also Torah Soft Ltd, v. Drosnin, 136 F. Supp.2d 276 (S.D.N.Y. 2001) (dismissing copyright claims). Second, the plaintiff seeks an order that no evidence be introduced concerning Dr. Eliahu Rips, the mathematician that Mr. Drosnin says he relied on in writing the book. The defendant opposes these requests and moves on a variety of grounds to preclude the introduction of certain testimony and exhibits proffered by the plaintiff. I will address each of these applications in turn.
The Copyright Decision
As noted above, Torah Soft first moves for an order that no evidence be introduced or reference made to the decision assessing attorneys' fees against it on the copyright claims in the related action. The plaintiff argues that a judicial finding in one case is inadmissible hearsay when proffered as evidence in another action. See Nipper v. Snipes, 7 F.3d 415, 417-18 (4th Cir. 1993); Blue Cross and Blue Shield of New Jersey, Inc. v. Philip Morris, Inc., 141 F. Supp.2d 320, 323 (E.D.N.Y. 2001).
That proposition is fine as far as it goes. However, the cases cited by Torah Soft do not address the possibility that judicial findings in the earlier case may have preclusive effects in the latter. In Blue Cross, for example, there was no issue of res judicata or collateral estoppel because the proffered judicial finding concerned the credibility of an expert witness in a prior, unrelated case, a finding that could not now bind parties who had played no role in the earlier litigation. 141 F. Supp.2d at 322. Similarly, in Nipper, although the parties were the same in both the first and second cases, the actions involved different transactions, and the court did not engage in an analysis of preclusion but simply found that the hearsay exception for public records does not apply to judicial findings of fact. 7 F.3d at 416-18.
Here, the defendant has disclaimed any intention to introduce any findings of fact from the copyright fee decision. (Memorandum in Opposition to Plaintiff's In Limine Motions at 2). And, I am doubtful that any legal determination in that case would be relevant to the narrow issues that remain in this action. However, to the extent that they may be, their admissibility will be determined when and if the defendant proposes to introduce them. Until then, the plaintiff's motion is premature and, as such, is denied. Testimony of Dr. Eliahu Rips
Dr. Eliahu Rips is an Israeli mathematician whom Mr. Drosnin consulted in writing The Bible Code. According to the defendant, it was Dr. Rips' software, not that created by Torah Soft, that was critical in conducting the text searches that form the core of the book. The parties deposed Dr. Rips in January 2000. At that time, he declined to answer a number of questions upon advice of counsel. In December 2001, after the deadline for fact discovery had passed, plaintiffs' counsel sought an order compelling Dr. Rips to appear for a continuation of his deposition and to answer the questions previously objected to. Chief among counsel's concerns was the fact that Dr. Rips declined to answer when asked who was paying the fee of the attorney representing him at the deposition. (Letter of Howard I. Rhine dated Dec. 18, 2001, attached as Exh. 1 to Plaintiff's Notice of Motion in Limine). I denied the application, noting that "[t]he marginal value of a further deposition of this witness does not warrant reopening fact discovery." (Memorandum Endorsement dated Dec. 26, 2001). Nevertheless, the plaintiff now argues that:
Rips has been playing the role of straw-man for Drosnin. Drosnin pays the legal fees for a lawyer to represent Rips. That lawyer (retained by Drosnin) instructs Rips not to answer plaintiff's legitimate questions, and then Drosnin expects to be allowed to offer testimony from Rips. That kind of gamesmanship should not be countenanced by this Court.
(Memorandum of Law in Support of Plaintiff's Motion in Limine at 3).
Yet the same factors that led me to deny the application to reopen Dr. Rips' deposition militate against precluding his testimony at trial. The questions that he declined to answer were of limited import. This is illustrated by the fact that plaintiffs' counsel waited almost two years to seek to compel answers. In any event, if Dr. Rips testifies in person at trial, counsel can ask him who has paid his attorneys' fees in this litigation. If he does not, the parties can stipulate to that fact to the extent it is relevant. Certainly, there is no basis for barring his testimony, and the plaintiff's application is therefore denied.
Use of the Printouts
It is undisputed that in writing The Bible Code Mr. Drosnin used the Torah Soft computer program to generate printouts illustrating the alleged biblical prophesies. The defendant now moves to preclude Torah Soft from offering evidence that the use of the printouts constituted a breach of contract or unjust enrichment.
Israeli law governs the plaintiff's claim of unjust enrichment in this case. See Torah Soft, 224 F. Supp.2d at 715. Pursuant to that law, the plaintiff must prove that (1) the defendant was enriched, (2) at the expense of the plaintiff, (3) contrary to the parties' legal rights. See 371/89 Leibovitz v. Eliahu Ltd., P.O. 44(2) 309, 321. (Affidavit of Joel Singer dated Jan. 30, 2002, ¶ 35). In this case, the relevant sections of the complaint allege the following:
53. The opening screen of the revised version stated "Copyright 1992 Torah Soft . . . SPECIAL VERSION FOR THE USE OF MICHAEL DROSNIN ONLY," and a label on the disk containing the revised version of the Software states "For the use of Michael Drosnin."
98. The Bible Code includes no fewer than ninety-nine (99) print-outs from the Software. The defendants merely copied, without permission, directly from the Software in placing those print-outs in The Bible Code.
99. Of those ninety-nine printouts, nine comprise a full page of The Bible Code, and forty-two comprise at least one-half a page of the book.
(First Amended Complaint). Similarly, in opposing the defendant's motion for summary judgment, Dr. Spielberg asserted:
23. The opening screen of the revised version of the Software stated "Copyright 1992 Torah Soft . . . SPECIAL VERSION FOR THE USE OF MICHAEL DROSNIN ONLY." A label on the disk containing the revised Software also includes a Torah Soft's copyright notice and states "For the use of Michael Drosnin."
24. Every subsequent version of the Software that I sent Drosnin (from the Fall of 1992 through early 1997) contained similar copyright notices, both on the disk and on-screen. I never agreed — implicitly or explicitly — that Drosnin could print-out Bible code finds from the Software and then reproduce them in any book.
(Declaration of Yochanan Spielberg dated March 25, 2002).
Thus, Torah Soft appears to have claimed that Mr. Drosnin was unjustly enriched because he published the printouts in violation of the plaintiff's intellectual property rights. Such a claim, however, is no longer viable. In the related copyright action, the Honorable Shira A. Scheindlin, U.S.D.J., determined that Torah Soft's display of Bible code discoveries is not protectable under the copyright laws of the United States. Torah Soft, 136 F. Supp.2d at 290-91. Of course, it is conceivable that the printouts might be protected by copyright somewhere else in the world where The Bible Code has been published. But the plaintiff, whose burden it is to prove foreign law, has proffered no evidence to that effect. Accordingly, Torah Soft's unjust enrichment claim cannot be premised on any copyright interest in the printouts.
Nevertheless, the parties could have entered into an agreement by which Mr. Drosnin stipulated not to utilize printouts from Torah Soft's program. In that respect, Torah Soft's rights would extend beyond the scope of copyright protection and could form the basis both for an unjust enrichment claim and an independent breach of contract claim. But the plaintiff has never asserted that there was any such agreement. While Dr. Spielberg complains that he did not give "permission" for use of the printouts, that agreement relates only to the "permission" that would be necessary to use copyrighted material. It would be anomalous to refer to receiving "permission" to breach a contractual obligation. Similarly, the legend on the software, that it was "for the use of Michael Drosnin only," reflects a claim of copyright protection; it does not suggest an independent bargained-for agreement. Thus, nothing in Torah Soft's pleadings or in its subsequent submissions states a claim for limiting Mr. Drosnin's use of the printouts on a basis other than copyright law. Torah Soft is therefore precluded from introducing evidence that by including the printouts in the book, the defendant breached any contract or was unjustly enriched. Sales After 1997
This ruling does not bar general background evidence concerning use of the printouts, provided there is no implication that such use was wrongful.
The defendant next contends that the plaintiff should be precluded from offering evidence of damages that accrued after July 1, 1997. The Bible Code had been published in May 1997, and on June 16, Dr. Spielberg wrote to Mr. Drosnin and to his United States publishers, Simon Schuster, objecting to the fact that Torah Soft had not been credited. One June 12, Mr. Drosnin's attorney responded, rejecting Dr. Spielberg's contentions, but offering to provide credit in future editions:
Nevertheless, Mr. Drosnin has no objection whatsoever to acknowledging your contribution to his research. He did not do so in the initial edition because he was under the impression that you might not wish to be identified publicly with his work. If you wish him to do so, however, he would be happy to acknowledge your efforts in subsequent printings. Please let me know.
(Letter of Kenneth David Burrows dated June 23, 1997, attached as Exh. N to Affidavit of Lacy H. Koonce, III, dated March 3, 2003 ("Koonce Aff."), attached to Defendant's Notice of Motion). The defendant now argues that by rejecting this offer, the plaintiff failed to mitigate and should be precluded from relying on subsequent sales of the book in calculating his damages.
While the defendant's legal theory is sound, the factual predicate is open to dispute. If the parties agreed to the scope of the "credit" that Dr. Spielberg demanded, and if they also agreed that Mr. Drosnin had communicated a willingness to provide credit at least to that extent, then the plaintiff could be found to have failed to mitigate. But these facts have not been established, and it is inappropriate for Mr. Drosnin to seek what is effectively partial summary judgment in the guise of a motion in limine. It is the defendant's burden to demonstrate a failure to mitigate, see Greenway v. Buffalo Hilton Hotel, 143 F.3d 47, 53 (2d Cir. 1998), and Mr. Drosnin has not carried that burden on the basis of undisputed facts. Accordingly, this aspect of his motion is denied.
Joint Marketing Evidence
The defendant further seeks to exclude evidence relating to the plaintiff's claim, previously dismissed, that the parties had agreed to market the plaintiff's software together with the book. Mr. Drosnin identifies the evidence in question as the deposition testimony of Gurujeet Khalsa and Gurujot Khalsa, former employees of a company known as Kriya Systems, Inc. ("Kriya"), as well as the plaintiff's trial exhibits 51, 53, 54, 55, and 56.
In the mid-1990's, Mr. Drosnin had negotiated with Kriya concerning the possibility of marketing Bible code software together with the book. No agreement was ever reached. Thereafter, Mr. Drosnin established his relationship with Torah Soft. Upon the commencement of this action, the plaintiff claimed, in part, that Mr. Drosnin had breached an agreement to market the Torah Soft computer program jointly with The Bible Code. I held, however, that any such agreement was at best a conditional one, and the necessary condition had not been satisfied. Torah Soft, 224 F. Supp.2d at 714-15. Therefore, to the extent that the testimony of the Kriya employees is relevant at all, it cannot be offered in support of any joint marketing claim.
Nevertheless, the plaintiff argues that the deposition testimony is pertinent to a number of other issues. For example, the plaintiff contends that the estimate that "at least ten percent of the people that bought the book would want to buy the software" should be admissible. But the Kriya employees have certainly not been qualified as marketing experts, and their prognostication, standing alone, cannot be considered reliable.
Similarly, Gurujot Khalsa's testimony that Mr. Drosnin believed that the sale of software together with the book would be an "amazing success" is not admissible. While it may represent an admission by the defendant, it is not relevant. The actual sales of the book can be objectively determined, and only an expert can estimate what the sales of the software might have been had it been credited in the book. Mr. Drosnin's hopeful speculation has no probative value.
However, the deposition testimony can be offered to show that because Mr. Drosnin discussed particular terms with Kriya, he is likely to have agreed to similar terms with Torah Soft. Pursuant to Rule 406 of the Federal Rules of Evidence,
Evidence of the habit of a person or of the routine practice of an organization, whether corroborated or not and regardless of the presence of eyewitnesses, is relevant to prove that the conduct of the person or organization on a particular occasion was in conformity with the habit or routine practice.
It is true that "the conduct at issue must constitute a `regular response to a repeated specific situation.'" McCarrick v. New York City Off-Track Betting Corp., No. 91 Civ. 5626, 1995 WL 261516, at *5 (S.D.N.Y. May 3, 1995) (quoting Thompson v. Boggs, 33 F.3d 847, 854 (7th Cir. 1994); see also Constitution Reinsurance Corp. v. Stonewall Insurance Co., No. 94 Civ. 1888, 1998 WL 556164, at *2 (S.D.N.Y. Sept. 1, 1998). Nevertheless, such rulings "are not inconsistent with the trend towards admitting evidence of business transactions between one of the parties and a third person as tending to prove that he made the same bargain or proposal in the litigated situation." Fed.R.Evid. 406 advisory committee's note (citation omitted). Thus, to the extent that the negotiations with Kriya involved the same elements as are at issue in the plaintiff's currently viable claim, that evidence will be admitted. This does not include, however, claims such as breach of fiduciary duty which have long since been dropped from this case.
The parties may designate those portions of the deposition testimony of Gurujeet Khalsa and Gurujot Khalsa that they wish to proffer at trial in light of these rulings. Likewise, the plaintiff shall be permitted to introduce exhibits insofar as they are consistent with the discussion above.
Summary Exhibits
The defendants objects to the plaintiff's trial exhibits 1, 2, 74, 75, 76, and 111 on the ground that they do not satisfy the requirements of Rule 1006 of the Federal Rules of Evidence for the admission of summaries. That is certainly the case with respect to exhibits 1 and 2, which are simply compendia of many individual documents. Those documents may or may not be separately admissible, and they must therefore be individually identified. However, to the extent that the parties agree to their admission, they may be offered in evidence collectively.
Exhibits 74, 75, and 111 are summaries, and their admissibility will depend on the adequacy of the foundation laid at trial. If the underlying information is found admissible, then the summaries may also be introduced. By contrast, Exhibit 76 is apparently a digest of information gleaned from court proceedings in Israel. This is akin to a condensation of a trial witness' anticipated testimony, not the type of "summary" anticipated by Rule 1006, and is therefore inadmissible.
The Defendant's Subsequent Projects
Mr. Drosnin contends that evidence concerning his plans to market the movie rights to The Bible Code and to write a sequel is irrelevant and should be precluded. He is correct. Accordingly, plaintiff's trial exhibits 38, 48, 49, 53, 54, 59, and 82 are inadmissible to the extent they address these issues. The plaintiff is free, however, to proffer the balance of these exhibits for any appropriate purpose.
Miscellaneous Exhibits
Finally, a number of the plaintiff's trial exhibits are inadmissible because they are simply the legal arguments or discovery instruments of counsel. Accordingly, exhibits 70, 71, 83, 97, 100, and 116 shall be precluded. Likewise, Exhibit 112, which is a summons for Mr. Drosnin to appear in a rabbinical court in Israel to answer the plaintiff's charges, is both irrelevant and potentially prejudicial. Exhibits 98 and 99 are different versions of the Torah Soft software and are admissible in light of the fact that they have been made available to defendant's counsel. (Affirmation of Howard I. Rhine dated March 25, 2003, ¶ 19).
Conclusion
The parties' respective motions in limine are resolved in accordance with the terms of this Memorandum and Order.
SO ORDERED.