Opinion
97 Civ. 2008 (LAK)
March 11, 2003
ORDER
The Court again has been bombarded with letters from counsel raising a plethora of issues and requests for relief. The matters are dealt with as follows:
1. By letter dated March 3, 2003, Steven Rondos, Esq., counsel for the defendants-judgment debtors, purports to remind the Court that he withdrew from the representation. He goes on to say that the Court, on February 5, 2003, ordered him to comply with certain discovery demands, that he intends to file an appeal to protect his clients' rights, and requests a stay of the February 5 order to enable them to seek a stay from the Court of Appeals. Counsel for plaintiff, by letter dated March 10, 2003, resists that application, claiming that (a) Mr. Rondos agreed as late as February 24 to produce the materials that he was directed to produce, and (b) plaintiff would be prejudiced by any further delay. By separate letter, also dated March 3, 2003, plaintiff seeks, among other things, the Court's aid in compelling Mr. Rondos to comply with the February 5, 2003 order. On March 7, 2003, the defendants-judgment debtors filed a notice of appeal from the February 5, 2003 order. The Court proceeds to consider Mr. Rondos' application for a stay pending appeal of the February 5, 2003 order.
Mr. Rondos' purported withdrawal without leave of the Court is inconsistent with S.D.N.Y. Civ.R. 1.4, as the Court pointed out in an order endorsed on Mr. Rondos' February 14, 2003 letter to the Court. He remains counsel for the defendants-judgment debtors unless and until relieved by order of the Court.
The current episode of this long saga, in which plaintiff seeks to enforce a substantial judgment obtained a long time ago despite what it contends are extensive efforts to frustrate that process, began on January 11, 2003, when plaintiff's counsel sought the Court's aid in connection with its post-judgment efforts to obtain discovery. In particular, it complained that Mr. Rondos, who by this point had become a witness as well as counsel for the defendants-judgment debtors, improperly had asserted the attorney-client privilege at his deposition to block disclosure of a variety of matters relevant to plaintiff's efforts to collect the judgment. Among other things, the letter pointed out that Mr. Rondos represents not only the judgment debtors, but the current owners of the business they formerly owned, whom plaintiff claims are alter egos of the judgment debtors and fraudulent transferees, and that he bills one of the judgment debtors for services rendered both to the judgment debtors and the transferees.
The local rules of this Court require that discovery disputes be raised informally in the first instance. S.D.N.Y. Civ.R. 37.2. The individual practices of the undersigned amplify this preference as follows:
"A conference must be requested before the filing of any motion relating to a discovery dispute. Counsel wishing to make such a motion should send a letter to the Court concisely describing the basis for the proposed motion and requesting a conference. The party opposing the relief sought may respond within two (2) business days by letter briefly describing why the relief sought should not be granted.
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Counsel should be prepared to discuss with the Court the matters raised by such letters, as the Court will seek to resolve discovery disputes quickly and without the filing of formal motions." Silberberg, Civil Practice in the Southern District of New York App. III-111 (2d ed. 2002).
Notwithstanding the foregoing, Mr. Rondos never responded to plaintiff's January 11, 2003 letter. Nonetheless, the Court conducted a conference call with Mr. Rondos and plaintiff's counsel on February 5, 2003 concerning the discovery dispute. At no time did Mr. Rondos request that plaintiff be required to proceed by formal motion, ask to submit papers in opposition to the January 11, 2003 letter, or object to disposition of the plaintiff's application on the basis of the January 11, 2003 letter and the oral presentations. At the conclusion of the presentations, the Court ruled in plaintiff's favor and entered an order to that effect the same day.
This of course is consistent with the fact that practice in this case, as in many others, has been conducted without formal motions on repeated occasions, as evidenced most recently by Mr. Rondos' bringing on his application for a stay pending appeal by letter rather than by motion.
In determining whether to issue a stay pending appeal, the Court must consider, among other pertinent factors, the applicant's likelihood of success, the threat of irreparable injury, the equities and, in appropriate cases, the public interest.
Beginning with the defendants-judgment debtors' likelihood of success, it appears — although Mr. Rondos' letter does not even address the issue — that there are two conceivable theories on which the February 5 order might be attacked on appeal, viz. that it was entered as the result of the informal procedure described above and that it is incorrect on the merits. Defendants-judgment debtors are not likely to prevail on either theory.
It is quite doubtful that there would be a meritorious objection to resolving this discovery matter informally as long as both sides were given an opportunity to be heard, as occurred here. Mr. Rondos chose not to respond to plaintiff's January 11, 2003 letter, although he allowed almost a month to pass after receiving it before the Court scheduled the conference call. He was afforded a full opportunity to address the issues in the conference call. But that issue need not be decided. The fact is that defendants-judgment debtors did not object to the matter being resolved in this fashion and did not seek submit or seek leave to submit any written opposition. They therefore waived any procedural objection they otherwise might have had.
So far as the merits are concerned, the party whose invocation of the attorney-client or other privilege is challenged bears the burden of demonstrating that the material in question satisfies the relevant privilege. Defendants-judgment debtors made no written and no serious oral effort to sustain that burden. Moreover, the representations in plaintiff's January 11, 2003 letter, which were not disputed by Mr. Rondos, demonstrate, among other things, that (a) some of the documents as to which Mr. Rondos invoked privilege were not listed on his privilege log, which resulted in a waiver of any privilege as to those documents under S.D.N.Y. Civ.R. 26.2, e.g., Smith v. Conway Organization, Inc., 154 F.R.D. 73 (S.D.N.Y. 1994), and (b) some of the conversations as to which he invoked privilege took place in the presence of Mr. Palmisano who not only interpreted, but also is a fact witness and was not instructed to keep the matters interpreted confidential, thus eliminating an essential element of the privilege, confidentiality. All in all, there is very little likelihood of success on appeal.
The presence of an interpreter to facilitate an otherwise privileged conversation, the Court assumes, would not of itself be inconsistent with maintenance of the privilege.
Turning to the other factors, the Court assumes that there is a risk of irreparable injury in that disclosure of the materials in question, once it occurs, could not be undone. On the other hand, the equities strongly favor the plaintiff. It seems quite clear that Mr. Rondos is at the center of efforts by the judgment debtors to frustrate plaintiff's effort to collect its judgment in circumstances where he is heavily involved also with the supposed transferees of the defendants' business to parties who are, by no means, arm's length strangers to the judgment debtors. Although it is premature to pass any definitive judgment, there is a great deal to suggest that the supposed transfers are nothing more than an improper and perhaps fraudulent ploy to defeat plaintiff's collection efforts, this coming on the heels of a good deal of prevarication and misconduct in connection with prior efforts by the judgment debtors to vacate the judgment. See, e.g., Mario Valente Collezioni, Ltd. v. Confezioni Semeraro Paolo, S.R.L., 115 F. Supp.2d 367, 369-71, 374 n. 37 (S.D.N.Y. 2000), aff'd in part and remanded, 264 F.3d 62 (2d Cir. 2001), on remand, 174 F. Supp.2d 170 (S.D.N.Y. 2001).
Taking all of the foregoing into consideration, the application for a stay pending appeal is denied.
2. Plaintiff's counsel, by letter dated March 3, 2003, seeks to compel Mr. Rondos to comply with the February 5 order and to schedule the continuation of his deposition so that he may be examined on matters as to which his claims of privilege have been overruled. The defendants-judgment debtors and Mr. Rondos shall comply with the February 5, 2003 order no later than March 17, 2003. Mr. Rondos shall appear for and submit to continued deposition at 9:30 a.m. on March 18, 2003 or such other date as he and the plaintiff may agree upon.
3. The Court has considered Mr. Rondos' request to stay the order in light of his claimed withdrawal from the representation. In view of the facts that Mr. Rondos' claimed withdrawal, for the reasons stated above, has no legal effect and he remains counsel for the judgment debtors, there is no reason to grant such relief, at least at this point. Further, while the Court would consider any such request in the event an application to withdraw were made and granted, it notes that the judgment debtors have been on notice since at least as early as Mr. Rondos' February 14, 2003 letter of his wish to withdraw and thus have had almost a month already in which to find and retain new counsel. It will take this into account should circumstances warrant.
SO ORDERED.