Berke, et al. v. Presstek, et al.

Opinion

Berke, et al. v. Presstek, et al. CV-96-347-M 06/02/98 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Bill Berke, et al.. Plaintiffs

v. Civil No. 96-347-M

Presstek, Inc., et al.. Defendants

O R D E R

Presstek defendants move to strike exhibits and references

in plaintiffs' amended complaint to a consent order between the

Securities and Exchange Commission and Presstek, and a consent

judgment related to defendants Robert Howard and Robert Verrando.

Defendants contend that plaintiffs inappropriately refer to

"findings" by the SEC and point to the consent decrees as

evidence of defendants' liability. Defendants argue that the

references to the consent decrees should be stricken pursuant to

Federal Rule of Civil Procedure 12 (f) .

Rule 1 2 (f) provides "the court may order stricken from any

pleading any insufficient defense or any redundant, immaterial,

impertinent, or scandalous matter." Because motions to strike

are not favored, challenged "matter" in a pleading will not be

stricken "unless it is clear that it can have no possible bearing

upon the subject matter of the litigation." Nault's Auto. Sales

v. American Honda Motor Co., 148 F.R.D. 25, 30 (D.N.H. 1993)

(guotations omitted). Pleadings will not be stricken absent

clear immateriality or prejudice to the moving party. See, e.g.. In re Chambers Dev. Sec. Litiq., 848 F. Supp. 602, 622 (W.D. Pa.

1994); Tektel, Inc. v. Maier, 813 F. Supp. 1331, 1334 (N.D. 111.

1992); 5A Charles Allen Wright and Arthur R. Miller, Federal

Practice and Procedure, § 1382 at 697-98 (2d ed. 1990). The

moving party (defendants here) bears the burden on a motion to

strike. Capitol Indem. Corp. v. Tranel Dev. Inc., 144 F.R.D.

346, 348 (N.D. 111. 1992) . Thus, to succeed on a motion to

strike under Rule 1 2 (f), "the defendant must demonstrate that no

evidence in support of the allegation would be admissible, that

the allegations have no bearing on the issues in the case, and

that to permit the allegations to stand would result in prejudice

to the movant." Wine Mkts Int'l, Inc. v. Bass, No. CV 96-1349

ADS, 1998 WL 32482 (E.D.N.Y. Jan. 23, 1998); see also Sierra Club

v. Tri-State Generation and Transmission Ass'n, 173 F.R.D. 275,

285 (D. Colo. 1997); Capitol Indemnity Corp. v. Tranel Devs.,

Inc., 144 F.R.D. 346, 347 (N.D. 111. 1992).

The parties agree that the SEC's factual findings, included

in the consent decrees, cannot be used to prove liability. See

Fed.R.Evid. 408; see also Lipskv v. Commonwealth United Corp.,

551 F.2d 887, 892(2d Cir. 1976). Nevertheless, consent decrees

may be admissible for other purposes, such as to show knowledge

or intent. See, e.g., Mclnnis v. A.M.F., Inc., 765 F.2d 240, 247-

48 (1st Cir. 1985); Wegerer v. First Commodity Corp. of Boston,

744 F.2d 719, 723-24 (10th Cir. 1984); UnitedStates v. Gilbert,

668 F.2d 94, 97 (2d Cir. 1981). It would not be appropriate to

make evidentiary determinations at this preliminary pleading

2 stage in the context of a motion to strike. Instead, the

question properly posed is whether references in the complaint to

the SEC's consent decrees have any bearing on issues in this

suit — not whether the allegations and exhibits attached to the

complaint are, or might be, competent evidence if offered at

trial. Since the consent decrees operate to settle disputes

about the same or similar conduct by some parties to this action,

the SEC proceedings and consent decrees are, generally,

sufficiently related to plaintiffs' claims to survive defendants'

motion to strike. In addition, defendants have not shown any

possible prejudice.

Nevertheless, because plaintiffs' specific allegations at

paragraphs 4 2 (j) and 231, i.e. "Presstek consented to an order

making findings of fact. . . .," are patently false, those two

allegations are stricken.1 In addition, plaintiffs' allegations,

presented as SEC findings (at paragraphs 92, 232, and 234, for

example) are considered to be plaintiffs' allegations only, as no

weight may be added simply because the SEC may have included such

a finding in a consent decree. Similarly, the court cautions

1The SEC's December 22, 1997, consent decree with Presstek attached to the amended complaint as exhibit B, says: Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, the Respondent, without admitting or denying the findings set forth herein, except that it admits to the jurisdiction of the Commission over it and over the subject matter of these proceedings, consents to the entry of the findings and to the issuance of this Order Instituting Proceedings ("Order").

Emphasis added.

3 plaintiffs that the exhibits attached to the complaint are no

more authoritative than their own allegations of the same facts

and do not serve to establish the truth of the matters asserted,

or the allegations in the complaint. Needless to say, plaintiffs

will not refer to such allegations before a jury without the

court's prior approval.

Defendants' motion to strike (document no. 118) is granted

as to the specific statements in paragraphs 42 (j) and 231, and is

otherwise denied as explained in this order.

SO ORDERED.

Steven J. McAuliffe United States District Judge

June 2, 1998

cc: Edward F. Haber, Esg. George R. Moore, Esg. Patricia I. Avery, Esg. Kevin E. Sharkey, Esg. Paul D. Young, Esg. Mark L. Mallory, Esg. Patricia D. Howard Solomon Cera, Esg. Barrie L. Brejcha, Esg. Kenneth A. Cossingham, Esg. Thomas J. Pappas, Esg. R. Bruce McNew, Esg.