Wolters Kluwer Financial Services, Inc. v. Scivantage

Procedural entryThis page is a short order in Wolters Kluwer Financial Services, Inc. v. Scivantage. Read the opinion of the Court — 564 F.3d 110
Court of Appeals for the Second Circuit·Decided April 21, 2009·No. 07-2491-cv (L)·Published

Opinion

07-2491-cv (L) Wolters Kluwer Financial Services, Inc. v. Scivantage

1 UNITED STATES COURT OF APPEALS 2 3 FOR THE SECOND CIRCUIT 4 5 August Term, 2008 6 7 8 (Argued: December 2, 2008 Decided: April 21, 2009) 9 10 Docket Nos. 07-2491-cv (L), 07-3410-cv (Con), 08-0031-cv 11 (Con), 08-0036-cv (Con), 08-0029-cv (Con) 12 13 - - - - - - - - - - - - - - - - - - - -x 14 15 Wolters Kluwer Financial Services, Inc., 16 17 Plaintiff, 18 19 Marc S. Reiner, Kristan Peters, 20 Dorsey & Whitney LLP, 21 22 Appellants, 23 24 - v.- 25 26 Scivantage, Adname Charchour, 27 Sanjeev Doss, Cameron Routh, 28 Gregory Alves, 29 30 Defendants.* 31 32 - - - - - - - - - - - - - - - - - - - -x 33

34 Before: JACOBS, Chief Judge, McLAUGHLIN, B.D. 35 PARKER, Circuit Judges. 36 37 A law firm and two of its partners appeal from the

* The Clerk of Court is directed to amend the official caption as indicated. 1 imposition of sanctions by the United States District Court

2 for the Southern District of New York (Baer, J.). We affirm

3 the imposition of sanctions as to one partner (who is no

4 longer with the firm), but reverse as to the firm and the

5 other partner.

6 FRED WARDER, Esq., Patterson 7 Belknap Webb & Tyler, LLP, New 8 York, N.Y., for Appellant Marc 9 S. Reiner. 10 11 FRANCIS CARLING, Esq., Collazo 12 Carling & Mish, LLP, New York, 13 N.Y., for Appellant Kristan 14 Peters. 15 16 FRANK H. WOHL, Esq., Lankler 17 Siffer & Wohl, LLP, New York, 18 N.Y., for Appellant Dorsey & 19 Whitney, LLP. 20 21 DENNIS JACOBS, Chief Judge: 22 23 This appeal is from non-monetary sanctions imposed by

24 the United States District Court for the Southern District

25 of New York (Baer, J.) upon the law firm of Dorsey &

26 Whitney, LLP (“Dorsey”), and two of its partners: Kristan

27 Peters (no longer with the firm) and Marc Reiner. In the

28 underlying litigation, Dorsey client Wolters Kluwer

29 Financial Services, Inc. (“Wolters”) sued four of its former

30 employees in the Southern District of New York, alleging

31 that they had taken certain proprietary information and

2 1 divulged it to their new employer, the technology company

2 Scivantage. After considerable discovery conducted under

3 orders of confidentiality, Dorsey voluntarily dismissed the

4 suit and re-filed a substantially identical suit in the

5 District of Massachusetts (Scivantage having contested

6 personal jurisdiction in the Southern District of New York).

7 Dorsey then filed a motion in the Massachusetts action

8 seeking injunctive relief and attaching some of the

9 discovery material produced by defendants in New York.

10 Following a hearing into the voluntary dismissal and the use

11 of the discovery material (as well as other issues) the New

12 York district court issued a 130-page opinion imposing non-

13 monetary sanctions on Dorsey, Peters, Reiner, and their

14 client. Wolters has not appealed. We affirm the imposition

15 of sanctions on Peters in light of the abundance of evidence

16 of her misconduct; but we reverse the sanctions imposed on

17 Dorsey and Reiner.

19 I

20 Although the sanctions are non-monetary, the district

21 court respected the reputational impact of sanctions, and

22 made detailed findings that allow disposition on appeal

3 1 without remand. See Wolters Kluwer Financial Services Inc.

2 v. Scivantage et al., 525 F. Supp. 2d 448 (S.D.N.Y. 2007)

3 (Opinion & Order). We adduce only those facts necessary to

4 explain the disposition of this appeal.

5 Dorsey filed suit on behalf of Wolters in March, 2007,

6 alleging federal and state violations, and seeking

7 injunctive relief. The district court granted a temporary

8 restraining order and ordered expedited discovery. The

9 parties exchanged discovery documents, and the individual

10 defendants were deposed.1 While discovery was ongoing, the

11 district court entered a Confidentiality Order providing in

12 part that certain material--including all discovery material

13 at issue here--“shall not be used [in] any other litigation

14 proceeding,” and that the district court’s jurisdiction to

15 enforce those restrictions would survive the lawsuit.

16 Defendants moved to dismiss on the ground (inter alia)

17 that the district court lacked personal jurisdiction over

18 the defendants, all of them located in Massachusetts. The

1 During one of these depositions, defendant Sanjeev Doss admitted that he had Wolters files on his computer when the suit was filed, but that he had deleted them. This admission raised concerns of spoliation among the Dorsey attorneys, and appears to have raised the temperature of the litigation. 4 1 Dorsey attorneys then began to consider voluntary dismissal

2 in New York and re-filing in the District of Massachusetts.

3 Wolters gave Peters permission to dismiss the suit. During

4 a subsequent conference call with the court and opposing

5 counsel, however, Peters did not mention the pending

6 dismissal. Either during or shortly after the conference

7 call, Peters (the partner in charge) instructed Reiner (the

8 junior partner on the case) to file the dismissal; Reiner

9 sent notice of the dismissal by regular mail--though not

10 electronically.

11 Despite the dismissal, Peters refused to return the

12 discovery material produced by defendants, including three

13 CDs (containing 153,000 pages of documents) that were

14 produced after the dismissal had been quietly effected.

15 Despite repeated orders by the district court to return all

16 discovery material, including copies of deposition

17 transcripts, the return of discovery material was not

18 completed until two weeks after the suit was dismissed. In

19 the meantime, Peters filed a motion for temporary injunctive

20 relief in the District of Massachusetts, appending 115 pages

21 of material produced in New York that were subject to the

22 Confidentiality Order.

5 1 Defendants moved for sanctions, and the district court

2 scheduled an evidentiary hearing. The parties subsequently

3 settled, and the defendants withdrew the sanctions motion;

4 but the court, having its own concerns regarding the

5 lawyers’ conduct, proceeded with the hearing. Ultimately,

6 the court imposed a total of twenty-seven non-monetary

7 sanctions on Dorsey, Peters, and Reiner, and their client.

8 The firm and the individual lawyers appeal.

10 II

11 We review a district court’s imposition of sanctions

12 for abuse of discretion. Schlaifer Nance & Co. v. Estate of

13 Warhol, 194 F.3d 323, 333 (2d Cir. 1999). The reviewing

14 court must ensure that the district court’s sanctions are

15 not based on “an erroneous view of the law or on a clearly

16 erroneous assessment of the evidence.” Id. (internal

17 quotation marks omitted). An assessment of the evidence is

18 clearly erroneous where the reviewing court “is left with

19 the definite and firm conviction that a mistake has been

20 committed.” Zervos v. Verizon New York, Inc., 252 F.3d 163,

21 168 (2d Cir. 2001) (internal quotation marks omitted). And

22 the imposition of sanctions is also improper where “it

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