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EXHI IT
ILED: NEW YORK COUNTY CLERK 03/09/2016 04:56 PM INDEX NO. 159042/
YSCEF DOC. NO. 306 RECEIVED NYSCEF: 03/09/
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FILED: NEW YORK COUNTY CLERK 0 3 0 9 j 2 0 l 6 1 1 : 0 9 AM] INDEX NO. 159042/201
NYSCEF DOC. NO. 303 RECEIVED NYSCEF: 03/09/201
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SUPREME COURT
OF THE STATE OF NEW
YORK
NEWYORK COUNTY
PRESENT:
Just ce
•V•
~
PART
INDEX NO / r2 ~ - ¥ -
MOTION
D TE
MOTION
SEQ NO
QO
The following papers, numbered 1 to were read on this motion tolfor
Notice
of
Motion Order to Show Cause Affidavits Exhibits
Answering Affidavits Exhibits -
Replying Af f i dav i t s - -
Upon the foregoing papers,
it
is ordered that this motion Is
Motion sequence 004 and 005 are consolidated and resolved as follows:
I
No(s) _ _
I
No(s).
1No(s).
In this action to recover monies paid for drug rehabilitation services for a family member,
plaintiffs, Heidi Gore and Nathaniel S. Gore ( plaintiffs ) move to
(1)
strike the answer,
affirmative defenses, and counterclaims of defendants Narconon GulfCoast, Inc. ( Narconon )
and Debbie Ross ( Mrs. Ross ) (collectively, defendants ), or in the alternative, (2) deem as
resolved issues
of
whether: (a) materials provided to patients were based upon the teachings ofL.
Ron Hubbard and the Church
of
Scientology; (b) defendants have ties to the Church
of
Scientology; and (c) defendants' website disclosed the fact that Narconon's treatments were
based on these teachings; or (3) preclude defendants from offering proof favorable to them on
such issues; or (4) for an adverse inference at trial that the lost evidence was relevant and would
have contradicted defendant's position; and (4) costs, expenses, and attorneys' fees (Seq. 004).
By separate motion (seq. 005), plaintiffs also move for plaintiffs' expenses incurred and
attorneys' fees and for sanctions against defendants for their frivolous conduct.
In
support
of
sanctions, plaintiffs argue that after two court orders to produce documents,
the Court, by order dated March 17 2016, directed defendants to produce and recreate all
relevant documents responsive to plaintiffs' request within 30 days and ordered that the failure
to fully comply with this order shall result in the striking of defendants' answer, affirmative
Dated: _ _
----------
.S.C
3 CHECK IF APPROPRIATE:
................... ..............
0
SUBMIT ORDER
[J REFERENCE
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defense, and counterclaims (the March 2016 order ).
Plaintiffs contend that defendants produced documents and workbooks, which reference
other workbooks and hardbound books that also exist, but were not produced. Thus, defendants'
claim that there was nothing more to produce was disingenuous. Plaintiffs also point out that
:virs
Ross testified at her deposition that she burned everything and anything that said
Narconon on it, and as to another book that she testified existed, no such book has been
produced. Further, although Chris Ross (Mrs. Ross' son) testified at his deposition that that three
of their website pages referenced defendants' use
ofthe
teachings
ofL
Ron Hubbard, none
of
the produced copies of the website show any reference to L Ron Hubbard or Scientology.
Defendants were on notice of plaintiffs' complaint as early as 2012. Thus, defendants' failure
to
maintain copies
of
their website leaves plaintiffs unable
to
challenge defendants' claim that the
website disclosed the teachings ofL Ron Hubbard. Defendants' destruction
ofthe
materials
possibly evidenced more direct ties to the Church
of
Scientology itself. The deadline
to
produce
documents has expired, and thus, sanctions are warranted for defendants' violation
of
several
court orders.
Defendants oppose the motions, arguing that more than 5000 pages
of
documents were
produced to plaintiff in addition
to
documents from email searches using search terms required of
plaintiffs, course materials, tax returns, and documents responsive to plaintiffs' post deposition
demands. The Court directed defendants to recreate documents after defendants advised
plaintiffs that defendants destroyed the books related to Narconon International course work
when they terminated their license agreement with Narconon in October 2013. Thus, it is
of
no
moment that defendants burned these documents, which is nevertheless in doubt based on Mr.
Ross' testimony. And, there is no evidence that the destroyed documents were not recreated and
produced to plaintiffs. Further, it would be unprecedented to strike a pleading based on a failure
to
produce a book which is available for sale on Amazon, and which defendants' counsel
ordered. Plaintiffs misconstrue the deposition testimony
of
defendants, and evidence exchanged
during the jurisdictional phase
of
this case demonstrate that defendants did not control its outside
website vendor. Public policy favors deciding cases on the merits. Further, plaintiffs' motion is
lacking a separate affirmation of good-faith effort
to
resolve the issues, as required under the
Uniform Rules.
In reply, plaintiffs add that defendants' eventual compliance with some of their discovery
obligations is insufficient. It cannot be disputed that Mrs. Ross burned the documents at issue,
and that defendants failed to recreate all documents reflecting the teachings
of
L Ron Hubbard
within the time frame as directed. Defendants used the entire library
ofL
Ron Hubbard's drug
rehabilitation books that needed to br recreated. The fact that a book is available online is
of
no
moment. Plaintiffs' counsel's affirmation explains the many efforts undertaken to obtain the
discovery the subject of this motion.
Plaintiff also requests attorneys fees and costs based on defendants' alleged frivolous
conduct concerning discovery production.
Discussion
Courts have broad discretion to fashion a remedy for spoliation in the interest of justice
Ortega v City o New York,
9 NY3d 69 [2007]), generally finding that sanctions are warranted
when prejudice is severe
see e.g., Kirkland,
236 AD2d at 175;
Squitieri v City o New York,
248
2
2 o f 7
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AD2d 201, 204 pst Dept 1998]). Under New York law, spoliation sanctions are appropriate
where a litigant, intentionally or negligently, disposes
of
crucial items
of
evidence involved in an
accident before the adversary has an opportunity to inspect them (Kirkland v New York City
Hous.
Auth.,
236 AD2d 170, 173 [1st Dept 1997]). Courts have defined spoliation as the
intentional or negligent destruction
of
key or crucial evidence, and have held that sanctions
are warranted when crucial items
of
evidence are destroyed
(Kirkland v New York City Hous.
Auth ;
236 AD2d 170, 173 [1st Dept 1997]; see also Atlantic
Mutua Insurance
Co v Sea
Tramfer Trucking Corp., 264 AD2d 659, 660 [1999]; see DeKenipp v Rockefeller Center, Inc.,
856 NYS2d 23,
23
[S Ct
NY
Cty 2007] [holding that [s]poliation is the loss, destruction, or
alteration
of
key evidence to a lawsuit ];
see also Squitieri, supra]; Mudge, Rose, Guthrie,
Alexander Ferdon v Penguin Air Condition Corp., 221 AD2d 243 [1st Dept 1995]). In
deciding whether to impose sanctions, courts look to the extent that the spoliation
of
evidence
may prejudice a party, and whether a particular sanction is necessary as a matter
of
elementary
fairness. The burden is on the party requesting sanctions to make the requisite showing (Duluc
v
AC
L
Food
Corp., 119 AD3d
450 451-52
[1st Dept 2014] [internal quotation marks and
citations omitted],
lv denied
24
NY
3d 908 [20 14 ]).
In this action, plaintiffs allege that in September 2012, and based on their internet
research and telephone conversations they had with defendants' representatives, they paid
$40,000 to defendants to provide drug rehabilitation services to a family member (the Patient ).
Soon after Mrs. Gore enrolled the Patient, plaintiffs independently discovered that
Narconon was based upon the teachings
ofL.
Ron Hubbard, the founder
ofthe
Church
of
Scientology. Mr. Gore called Narconon opposing the Patient's stay at Narconon, and spoke with
Mrs. Ross, who agreed to pro-rate the fee
if
the Patient left the program. Thus, plaintiffs
arranged for the Patient to leave the program the following Sunday, September 11, 2012 and
attempted to arrange for the refund. However, in a letter response sent to plaintiffs, defendants
stated that the deposit and fees were non-refundable, explained that the program is monetarily
heavily weighted in the beginning, and stated that monies were spent
on
the Patient during his
stay at the facility totaling $205.26. As a result
of
defendants' refusal to refund plaintiffs, this
action alleging unjust enrichment, promissory estoppel, fraudulent misrepresentation, fraudulent
concealment, and rescission ensued.
To pursue these claims, and as relevant herein, beginning in October 2014, plaintiff
sought documents to establish defendants ' ties to
L
Ron Hubbard and the Church
of
Scientology, the types of drug rehabilitation treatments, services, Scientology-related
educational/teaching materials defendants utilized, and defendants' Website pages, marketing
materials, and development of defendants' website.
By order dated October 28, 2014, the Court directed defendants to produce certain
discovery by December 19, 2014.
When defendants failed to comply, the deadline was extended by So-Ordered Stipulation,
dated January 30, 2015, which directed that,
inter alia,
Defendants' complete document
production will be hand delivered to counsel for Plaintiffs on or before February 4, 2015.
By
order dated February
24 2015
(when defendants again failed to produce any
documents), the Court directed defendants to complete document production by February 25,
2015.
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On February 25, 2015 (the deadline), defendants served discovery responses. This was
followed by a letter dated March 16, 2015, wherein defendants' counsel stated, that an
exhaustive search was conducted and that documents responsive to the demands were either
previously produced, located at off-site storage, or that all Narconon materials have been
destroyed or returned
p r
the termination agreement with Narconon International,
which
required such destruction and/or return. (Emphasis added). According to defendants, they also
served by email 4 pages of post-termination correspondance.
As a result, by order dated March
17,
2015, this Court ordered defendants to produce
and
recreate all relevant documents responsive
to
plaintiffs' request within 30 days (i.e., April
16,
20 15). The Court also ordered that the failure to comply would result in the striking
of
defendants' answer, affirmative defense, and counterclaims. According to defendants, on April
15, 2015 (the day before the deadline), they sent plaintiffs 1,135 pages
of
documents
as
a
representation of patients' charts detailing the type
of
services provided on a 90-day stay basis.
Defendants maintain that these documents indicate the five-day initial withdrawal regimen,
initial drug test and lab work, sauna therapy, psychosocial assessment, and student education and
individual, group, and family therapy. And, on April16, 2015 (the deadline), defendants
produced two workbooks: (1) Narconon, Changing Conditions in Life Course 7 Based on the
works of
L
Ron Hubbard; and (2) Narconon, The Way to Happiness Course 8 Based on the
works of L Ron Hubbard.
1
Thereafter, on or about May 4, 2015 (approximately three weeks after the Apri116, 2015
deadline), defendants produced additional books specifically demanded by plaintiffs. According
to defendants, this document production consisted
of
4,532 pages course materials such as Book
1 Therapeutic Training Routine Course, Book 2 New Life Detoxification Program, Book 3
Learning Improvement Course, Book 4A and 4B Comunication and Perception Course,
Book 5 Ups and Downs in Life Course, Book 6 Personal Value and Integrity Course,
Narconon Changing Conditions in Life Course 7, and Narconon The Way to Happiness
Course 8.
2
·
Defendants contend that on May
4,
2015, they also sent additional documents,
including email pages based on search terms required by plaintiffs, pleadings from other cases,
and a discovery affidavit.
t
is undisputed that the following deposition of Mrs. Ross (on September 25, 2015)
confirmed that documents were destroyed, and that they were destroyed by fire.
At the deposition of Mr. Ross (also on September 25, 2015) Mr. Ross stated that the
home page, the resources page and the contact us page I believe are the three places that the
teachings
ofL Ron Hubbard were on (EBT, pp. 114-115). And, on October 15,2015, a
paralegal for counsel for defendants attested that she performed a search of the defendants'
website as it existed on July 12, 2012, printed screen shots of each page, and saw no mentions
of Scientology or L Ron Hubbard.
Thus, based on demands made at Mrs. Ross' deposition for, inter alia, Clear Body, Clear
Mind, the effective purification program by
L.
Ron Hubbard (Ross, EBT p. 184
,
by order dated
1
Defendants add that they also sent tax returns, and 26 pages
of
requested Narconon Bad Publicity.
2
Ross testified at her deposition to the use of such materials in the program.
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September 28,2015, the Court directed plaintiffs to produce documents requested at
Defendants' EBT by October 23, 2015.
The Court notes that contrary to plaintiffs' contention, the fact that documents were
destroyed by fire does not, in and
of
itself, warrant a sanction, as defendants previously advised
on March 16 2015 that documents were destroyed as required under its termination agreement
with Narconon International. And, Mrs. Ross testified at her deposition that she had a very
small book that was called Clear Body, Clear Mind, which she
no
longer had but was available
on Amazon.
Plaintiffs' claim that defendants' failure
to
preserve their website leaves plaintiffs unable
to confront defendants' claim that the site disclosed the teachings
ofL
Ron Hubbard is
insufficient to warrant sanctions under the circumstances herein. It is noted that Ross' deposition
testimony that that the teachings of
L.
Ron Hubbard were on the website, is not necessarily
inconsistent with the attestation that the website did not mention Scientology or L. Ron
Hubbard. First, although recreation of the website was untimely, production of same does allow
plaintiffs a basis, if any, to challenge the claim that defendants' website did not reveal
defendants' reliance on Scientology and
L
Ron Hubbard's teachings. The website includes
pages describing how defendants' program Does Things Differently, the New Life
Purification Program, and descriptions of various courses, such as The Ups and Downs to Life
Course, and The Way to Happiness Course. Defendants produced Narconon Changing
Conditions in Life Course 7 and Narconon The Way to Happiness Course 8 both of which
expressly state that they are Based on the works ofL Ron Hubbard. Thus contrary to
plaintiffs' claim, they may examine and compare the website pages and the books and other
materials provided to establish their claim that defendants utilized the teachings of Scientology
and/or L. Ron Hubbard, but did not disclose same on their website.
As to plaintiffs' ability to establish additional ties between defendants and L. Ron
Hubbard and the Church
of
Scientology, the types of drug rehabilitation treatments, services, and
Scientology-related educational/teaching materials defendants utilized, the above production by
defendants was made, albeit after the Court-ordered deadline.
Second, Mr. Ross explained at his deposition that defendants' website was created by
another company. According to the attestation
of
defendants' counsel's paralegal, she was able
to recover these pages by accessing the website Wayback Machine, which archives on a
periodic basis, websites prior to their change or deletion.
While no explanation is given as to defendants' delay in producing Book 1 Book 2 Book
3 Book 4A and 4B, Book
5
and Book 6 they were produced nonetheless.
Although a substantial amount of pages of defendants' production were untimely and
produced after several court interventions and appearances, plaintiff failed to establish that any
additional information not produced at this juncture constitutes key evidence without which
[they] will be 'substantially prejudiced' New York City Hous. Auth. v Pro Quest Sec., Inc., 108
AD3d 471,473 [1st Dept 2013] [citations omitted]). Moreover, plaintiffs are not without means
to
prove their claims or disprove defendants' claims, since plaintiffs can testifY at trial about the
circumstances under which she enrolled and withdrew the Patient from defendants' program,
how plaintiffs' independently discovered that defendants were allegedly tied to Scientology,
and the losses they allegedly incurred. Thus, the severe sanction of striking defendants' answer,
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-- - - -- -
affirmative defenses, and counterclaims
of
defendants is unwarranted.
However, the record indicates that defendants have failed to produce any version of
Clear Body, Clear Mind, or recreate the Red and Green volumes that defendants offered for
sale to Narconon International. As to the latter, inasmuch as the record indicates, arguably, that
Ross attempted to sell to Narconon International its Red and Green volumes and Narconon
International is allegedly related to Scientology, such volumes are precluded by use by
defendants at trial. Ross's January 14, 2014letter to Narconon International indicates that the
Red and Green volumes (which are in excellent condition' are for sale. Please forward your
offer of a reasonable fair market value for each set for consideration. Thank you for your
assistance in this regard. While defendants infer from the deposition testimonies and
submissions that such volumes were most likely hard cover materials, and thus, not used by
patients, even accepting such contentions
as
true, defendants failed to establish that such volumes
bore no relationship to Narconon International's teachings, the teachings
of
Scientology, or that
the information therein was not made available to patients or used as part of the defendants'
treatment program. Indeed, the offer for sale to Narconon supports plaintiffs' contentions to the
contrary. As such, the failure
of
defendants to recreate Clear Body, Clear Mind and the Red
and Green volumes, warrants an adverse inference at trial as to these specific materials.
3
Further, in light of the numerous attempts plaintiffs made to obtain discovery from
defendants, defendants shall be precluded at trial from offering any proof favorable to them
which was not previously exchanged as of the date of this decision on the following issues: (a)
materials provided to patients were based upon the teachings of L. Ron Hubbard and the Church
of Scientology; (b) defendants have ties to the Church of Scientology; and (c) defendants'
website disclosed the fact that Narconon's treatments were based on these teachings.
And, in light
of
the significant document production and sanctions issued herein,
plaintiffs' additional request for expenses, attorneys' fees, and sanctions is unwarranted.
onclusion
Based on the foregoing,
it
is hereby
ORDERED that plaintiffs' motion (sequence 004) is granted solely to extent that an
adverse inference shall be issued at trial as to defendants' failure to produce and/or recreate the
books, Clear Body, Clear Mind and the Red and Green volumes and defendants shall be
precluded at trial from offering any proof favorable to them which was not previously exchanged
3
However, as to the purported letter to which Mrs. Ross allegedly testified to (pages 275-276 as cited by
plaintiffs), such deposition testimony fails to establish that the letter exists . Further,
as
to any letter from
an
inspector at Narconon International to which Ross testified (pages 267-269), defendants are precluded at trial from
utilizing any such letter. According to Ross' s deposition, an inspector at Narconon wrote a letter criticizing
defendants, in sum and substance, that defendants were not part of the Scientology group.
And, inasmuch as the final exam, consisted
of
questions taken and reproduced from each
of
the books,
and that such books were provided, sanctions are unwarranted as to defendants' failure to recreate such final exam.
The deposition testimony of Chris Ross establishes that question from each
book
were typed up and constituted the
final exam.
Finally, plaintiffs' request for sanctions based on defendants' alleged failure to recreate marked-up
versions of documents
of
which plaintiffs received newly purchased copies, appears unwarranted, under the
circumstances, as the Cou did not require any recreation of markings made by defendants .
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s
o
he d te o his decision on the following issues: (a) materials provided to patients were
based upon the teachings
ofL
Ron Hubbard and the Church
of
Scientology; (b) defendants have
ties to the Church
of
Scientology; and (c),defendants website disclosed the fact that Narconon s
treatments were based on these teachings; and it is further
ORDERED that plaintiffs motion (sequence 005) for expenses incurred and attorneys .
fees and for sanctions against defendants for their frivolous conduct is denied; and it is further
ORDERED that plaintiffs shall serve a copy of this order with notice of entry upon all
parties within 20 days
of
entry.
This constitutes the decision and order
of
the Court.
DATED:
HON CAROL
R
EDMEAD
J S C
D
CASE DISPOSED NON FINAL DISPOSITION
J.S.C.
1 CHECK ONE
2
CHECK
AS
APPROPRIATE:
MOTION IS:
0
GRANTED
D
DENIED D.a GRANTED IN PART
D
OTHER
3 CHECK IF APPROPRIATE
D DONOTPOST
D
SETTLE ORDER
D
SUBMIT ORDER
D
FIDUCIARY APPOINTMENT
7
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[FILED: NEW
YORK
COUNTY CLERK 03/09/2016 02:34 Pij
INDEX NO. 159042/201
RECEIVED NYSCEF:
03/09/201
YSCEF DOC. NO. 304
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SUPREME COURT OF THE STATE OF
NEW
YORK
NEWYORK COUNTY
PRESENT:
HON.CAROLR.EDMEAD
J.s.q.
u
ce
•V•
\l cr .. v 0 . m.
3 ~
PART
INDEX NO
/ ~
t-? 1
;_
MOTION DATE
-
MOTION
SEQ
NO
rJ iJ£
The following papers, numbered 1 to were read on this motion to/fo r
Notice of Motion/Order to Show
Cause
Affidavits Exhibits
Answering Affidavits Exh i b i t s
Replying Aff idavi ts
Upon the foregoing papers, It Is ordered that this motion is
Motion sequence 004 and 005 are consolidated and resolved as follows:
I
No s).
I
No s).
I
No s).
In
this action to recover monies paid for drug rehabilitation services for a family member,
plaintiffs, Heidi Gore and Nathaniel
S.
Gore ( plaintiffs ) move
to
(1 strike the answer,
affirmative defenses, and counterclaims of defendants Narconon GulfCoast, Inc. ( Narconon )
and Debbie Ross ( Mrs. Ross ) (collectively, defendants ), or in the alternative, (2) deem as
resolved issues
of
whether: (a) materials provided to patients were based upon the teachings
ofL.
Ron Hubbard and the Church of Scientology; (b) defendants have ties to the Church of
Scientology; and (c) defendants' website disclosed the fact that Narconon's treatments were
based on these teachings; or (3) preclude defendants from offering proof favorable to them on
such issues; or (
4
for an adverse inference at trial that the lost evidence was relevant and would
have contradicted defendant's position; and (4) costs, expenses, and attorneys' fees (Seq. 004).
By separate motion (seq. 005), plaintiffs also move for plaintiffs' expenses incurred and
attorneys' fees and for sanctions against defendants for their frivolous conduct.
In
support
of
sanctions, plaintiffs argue that after two court orders to produce documents,
the Court,
by
order dated March
17,
2016, directed defendants to produce and recreate all
relevant documents responsive to plaintiffs' request within 30 days and ordered that the failure
to
fully comply with this order shall result
in
the striking of defendants' answer, affirmative
Dated:
• J.S.C.
3
CHECK
IF APPROPRIATE:
....................................
SETTLE ORDER
0DO NOT POST
[]OTHER
U
SUBMIT ORDER
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-
defense, and counterclaims (the March 2016 order ).
Plaintiffs contend that defendants produced documents and workbooks, which reference
other workbooks and hardbound books that also exist, but were not produced. Thus, defendants'
claim that there was nothing more to produce was disingenuous. Plaintiffs also point out that
Mrs. Ross testified at her deposition that she burned everything and anything that said
Narconon on it, and as to another book that she testified existed, no such book has been
produced. Further, although Cln·is Ross (Mrs. Ross' son) testified at his deposition that that three
of their website pages referenced defendants' use
ofthe
teachings ofL
Ron
Hubbard, none
of
the produced copies of the website show any reference to L. Ron Hubbard or Scientology.
Defendants were on notice of plaintiffs' complaint as early as 2012. Thus, defendants' failure to
maintain copies of their website leaves plaintiffs unable to challenge defendants' claim that the
website disclosed the teachings ofL Ron Hubbard. Defendants' destruction
of
the materials
possibly evidenced more direct ties to the Church of Scientology itself. The deadline to produce
documents has expired, and thus, sanctions are warranted for defendants' violation
of
several
court orders.
Defendants oppose the motions, arguing that more than 5000 pages
of
documents were
produced to plaintiff in addition to documents from email searches using search terms required
of
plaintiffs, course materials, tax returns, and documents responsive to plaintiffs' post deposition
demands. The Court directed defendants to recreate documents after defendants advised
plaintiffs that defendants destroyed the books related to Narconon International course work
when they terminated their license agreement with Narconon in October 2013. Thus, it
is of
no
moment that defendants burned these documents, which is nevertheless in doubt based on Mr.
Ross' testimony. And, there is no evidence that the destroyed documents were not recreated and
produced to plaintiffs. Further, it would be unprecedented to strike a pleading based on a failure
to produce a book which is available for sale on Amazon, and which defendants' counsel
ordered. Plaintiffs misconstrue the deposition testimony of defendants, and evidence exchanged
during the jurisdictional phase
of
this case demonstrate that defendants did not control its outside
website vendor. Public policy favors deciding cases on the merits. Further, plaintiffs ' motion
is
Jacking a separate affirmation of good-faith effort to resolve the issues, as required under the
Uniform Rules.
In reply, plaintiffs add that defendants' eventual compliance with some of their discovery
obligations
is
insufficient. t cannot be disputed that Mrs. Ross burned the documents at issue,
and that defendants failed to recreate all documents reflecting the teachings of L. Ron Hubbard
within the time frame as directed. Defendants used the entire library ofL . Ron Hubbard's drug
rehabilitation books that needed to br recreated. The fact that a book
is
available online is
of no
moment. Plaintiffs' counsel' s affirmation explains the many efforts undertaken to obtain the
discovery the subject of this motion.
Plaintiff also requests attorneys fees and costs based on defendants' alleged frivolous
conduct concerning discovery production.
Discussion
Courts have broad discretion to fashion a remedy for spoliation in the interest
of
ustice
Ortega
v City o New York, 9 NY3d 69 [2007]), generally finding that sanctions are warranted
when prejudice
is
severe
see e.
g.
Kirkland,
236 AD2d at 175;
Squitieri v City
o
New York,
248
2
2
of
7
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AD2d 201, 204 [1st Dept 1998]). Under New York law, spoliation sanctions are appropriate
where a litigant, intentionally or negligently, disposes of crucial items of evidence involved in an
accident before the adversary has an opportunity
to
inspect them
Kirkland v New York City
Hous Auth.,
236 AD2d 170,
173
[1st Dept 1997]). Courts have defined spoliation as the
intentional or negligent destruction
of
key or crucial evidence, and have held that sanctions
are warranted when crucial items
of
evidence are destroyed Kirkland v New York City Hous
Aut
h ;
236 AD2d 170, 173 [1st Dept 1997]; see also Atlantic Mutual Insurance Co v Sea
Transfer Trucking Corp., 264 AD2d 659, 660 [1999]; see DeKenipp v Rockefeller Center, Inc.,
856 NYS2d 23, 23 [S Ct Y Cty 2007] [holding that [s]poliation is the loss, destruction, or
alteration of key evidence to a lawsuit ]; see also Squitieri, supra]; Mudge, Rose, Guthrie,
Alexander Ferdon v Penguin
ir
Condition Corp., 221 AD2d 243 [ 1 Dept 1995]). In
deciding whether
to
impose sanctions, courts look to the extent that the spoliation of evidence
may prejudice a party, and whether a particular sanction is necessary as a matter of elementary
fairness. The burden is on the party requesting sanctions to make the requisite showing Duluc
v
C
L Food Corp., 119 AD3d 450,451-52 [1st Dept 2014] [internal quotation marks and
citations omitted],
lv denied
24 NY 3d 908 [20 14]).
In this action, plaintiffs allege that in September 20
12
and based on their internet
research and telephone conversations they had with defendants' representatives, they paid
$40,000 to defendants to provide drug rehabilitation services to a family member (the Patient ).
Soon after Mrs. Gore enrolled the Patient, plaintiffs independently discovered that
Narconon was based upon the teachings of
L.
Ron Hubbard, the founder of the Church of
Scientology. Mr. Gore called Narconon opposing the Patient's stay at Narconon, and spoke with
Mrs. Ross, who agreed to pro-rate the fee if the Patient left the program. Thus, plaintiffs
arranged for the Patient to leave the program the following Sunday, September 11,2012 and
attempted to arrange for the refund. However, in a letter response sent to plaintiffs, defendants
stated that the deposit and fees were non-refundable, explained that the program is monetarily
heavily weighted in the beginning, and stated that monies were spent on the Patient during his
stay
at
the facility totaling $205.26. As a result
of
defendants' refusal to refund plaintiffs, this
action alleging unjust enrichment, promissory estoppel, fraudulent misrepresentation, fraudulent
concealment, and rescission ensued.
To pursue these claims, and as relevant herein, beginning in October 2014, plaintiff
sought documents
to
establish defendants' ties to
L.
Ron Hubbard and the Church
of
Scientology, the types of drug rehabilitation treatments, services, Scientology-related
educational/teaching materials defendants utilized, and defendants' Website pages, marketing
materials, and development of defendants' website.
By
order dated October 28, 2014, the Court directed defendants to produce certain
discovery
by
December 19,2014.
When defendants failed to comply, the deadline was extended by So-Ordered Stipulation,
dated January 30, 2015, which directed that,
inter alia,
Defendants' complete document
production will be hand delivered to counsel for Plaintiffs on or before February 4 2015.
By order dated February 24, 2015 (when defendants again failed to produce any
documents), the Court directed defendants to complete document production by February 25,
2015.
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. On February 25, 2015 (the deadline), defendants served discovery responses. This was
followed
by
a letter dated March
16,
2015, wherein defendants' counsel stated, that an
exhaustive search was conducted and that documents responsive to the demands were either
previously produced, located at off-site storage, or that all Narconon materials have been
destroyed or returnedp r the termination agreement with Narconon International, which
required such destruction and/or return. (Emphasis added). According to defendants, they also
served
by
email 4 pages
of
post-termination correspondance.
As a result, by order dated March 17, 20
15,
this Court ordered defendants to produce
and recreate all relevant documents responsive
to
plaintiffs' request within 30 days (i.e., April
16, 2015 . The Court also ordered that the failure to comply would result in the striking of
defendants' answer, affirmative defense, and counterclaims. According to defendants, on April
15,
2015 (the day before the deadline), they sent plaintiffs I, 135 pages
of
documents as a
representation of patients' charts detailing the type
of
services provided on a 90-day stay basis.
Defendants maintain that these documents indicate the five-day initial withdrawal regimen,
initial drug test and lab work, sauna therapy, psychosocial assessment, and student education and
individual, group, and family therapy. And, on April
16,
2015 (the deadline), defendants
produced two workbooks: (1) Narconon, Changing Conditions in Life Course 7 Based on the
works of L. Ron Hubbard; and (2) Narconon, The Way to Happiness Course 8 Based on the
works of
L.
Ron Hubbard.'
Thereafter, on or about May 4, 2015 (approximately three weeks after the April16, 2015
deadline), defendants produced additional books specifically demanded by plaintiffs. According
to defendants, this document production consisted
of
4,532 pages course materials such
as
Book
1 Therapeutic Training Routine Course, Book 2 New Life Detoxification Program, Book 3
Learning Improvement Course, Book 4A and 4B Comunication and Perception Course,
Book 5 Ups and Downs in Life Course, Book 6 Personal Value and Integrity Course,
Narconon Changing Conditions in Life Course 7, and Narconon The Way to Happiness
Course
8.
2
Defendants contend that on May
4,
2015, they also sent additional documents,
including email pages based on search terms required by plaintiffs, pleadings from other cases,
and a discovery affidavit.
It is undisputed that the following deposition of Mrs. Ross (on September 25, 2015)
confirmed that documents were destroyed, and that they were destroyed by fire.
At the deposition
of
Mr. Ross (also on September 25, 2015) Mr. Ross stated that the
home page, the resources page and the contact us page I believe are the three places that the
teachings ofL Ron Hubbard were on (EBT, pp. 114-115). And, on October 15,2015, a
paralegal for counsel for defendants attested that she performed a search of the defendants'
website
as
it existed on July 12,2012, printed screen shots of each page, and saw no mentions
of
Scientology or L. Ron Hubbard.
Thus, based on demands made at Mrs. Ross' deposition for, inter alia, Clear Body, Clear
Mind, the effective purification program by
L
Ron Hubbard (Ross, EBT
p.
184
, by
order dated
1
Defendants add that they also sent tax returns, and 26 pages of requested Narconon Bad Publicity.
2
Ross testified at her deposition to the use of such materials in the program.
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I
September 28, 2015, the Court directed plaintiffs
to
produce documents requested at
Defendants' EBT by October 23, 2015.
The Court notes that contrary to plaintiffs' contention, the fact that documents were
destroyed
by
fire does not, in and
of
itself, warrant a sanction, as defendants previously advised
on March 16 2015 that documents were destroyed as required under its termination agreement
with Narconon International. And, Mrs. Ross testified at her deposition that she had a very
small book that was called Clear Body, Clear Mind, which she no longer had but was available
on Amazon.
Plaintiffs' claim that defendants' failure to preserve their website leaves plaintiffs unable
to confront defendants' claim that the site disclosed the teachings of L Ron Hubbard is
insufficient to warrant sanctions under the circumstances herein. It is noted that Ross' deposition
testimony that that the teachings
of
L. Ron Hubbard were on the website, is not necessarily
inconsistent with the attestation that the website did not mention Scientology or L. Ron
Hubbard. First, although recreation
ofth
website was untimely, production
of
same does allow
plaintiffs a basis, if any, to challenge the claim that defendants' website did not reveal
defendants' reliance on Scientology and
L
Ron Hubbard's teachings. The website includes
pages describing how defendants' program Does Things Differently, the New Life
Purification Program, and descriptions
of
various courses, such as The Ups and Downs to Life
Course, and The Way
to
Happiness Course. Defendants produced Narconon Changing
Conditions in Life Course 7 and Narconon The Way
to
Happiness Course 8 both of which
expressly state that they are Based on the works of L. Ron Hubbard. Thus contrary to
plaintiffs' claim, they may examine and compare the website pages and the books and other
materials provided to establish their claim that defendants utilized the teachings
of
Scientology
and/or L Ron Hubbard, but did not disclose same on their website.
As to plaintiffs' ability to establish additional ties between defendants and L Ron
Hubbard and the Church of Scientology, the types of drug rehabilitation treatments, services, and
Scientology-related educational/teaching materials defendants utilized, the above production
by
defendants was made, albeit after the Court-ordered deadline.
Second, Mr. Ross explained at his deposition that defendants' website was created by
another company. According
to
the attestation
of
defendants' counsel's paralegal, she was able
to recover these pages by accessing the website Wayback Machine, which archives on a
periodic basis, websites prior to their change or deletion.
While no explanation is given as to defendants' delay in producing Book 1 Book 2 Book
3 Book 4A and 4B, Book 5, and Book 6 they were produced nonetheless.
Although a substantial amount
of
pages
of
defendants' production were untimely and
produced after several court interventions and appearances, plaintiff failed to establish that any
additional information not produced at this juncture constitutes key evidence without which
[they] will be 'substantially prejudiced ' New York City Hous. Auth. v Pro Quest Sec., Inc., 108
AD3d 471,473 [1st Dept 2013] [citations omjtted]). Moreover, plaintiffs are not without means
to prove their claims or disprove defendants' claims, since plaintiffs can testify at trial about the
circumstances under which she enrolled and withdrew the Patient from defendants' program,
how plaintiffs' independently discovered that defendants were allegedly tied to Scientology,
and the losses they allegedly incurred. Thus, the severe sanction of striking defendants' answer,
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affirmative defenses, and counterclaims
of
defendants is unwarranted.
However, the record indicates that defendants have failed to
produce any version
of
Clear Body, Clear Mind, or recreate the Red and Green volumes that defendants offered for
sale
to
Narconon International. As to the latter, inasmuch
as
the record indicates, arguably, that
Ross attempted
to
sell to Narconon International its Red and Green volumes and Narconon
International is allegedly related to Scientology, such volumes are precluded by use
by
defendants at trial. Ross's January 14, 2014letter
to
Narconon International indicates that the
Red and Green volumes (which are in excellent condition' are for sale. Please forward your
offer of a reasonable fair market value for each set for consideration. Thank you for your
assistance in this regard. While defendants infer from the deposition testimonies and
submissions that such volumes were most likely hard cover materials, and thus, not used by
patients, even accepting such contentions as true, defendants failed to establish that such volumes
bore no relationship to Narconon International's teachings, the teachings of Scientology, or that
the information therein was not made available to patients or used
as
part
of
the defendants'
treatment program. Indeed, the offer for sale to Narconon supports plaintiffs' contentions
to
the
contrary. As such, the failure of defendants
to
recreate Clear Body, Clear Mind and the Red
and Green volumes, warrants an adverse inference at trial as to these specific materials.
3
Further, in light
of
the numerous attempts plaintiffs made
to
obtain discovery from
defendants, defendants shall be precluded at trial from offering any proof favorable to them
which was not previously exchanged as of the date of this decision on the following issues: (a)
materials provided to patients were based upon the teachings of
L
Ron Hubbard and the Church
of
Scientology; (b) defendants have ties to the Church
of
Scientology; and (c) defendants'
website disclosed the fact that Narconon's treatments were based on teachings.
And, in light of the significant document production and sanctions issued herein,
plaintiffs' additional request for expenses, attorneys' fees, and sanctions is unwarranted.
onclusion
Based on the foregoing, it is hereby
ORDERED that plaintiffs' motion (sequence 004) is granted solely
to
extent that an
adverse inference shall be issued at trial as to defendants' failure to produce and/or recreate the
books, Clear Body, Clear Mind and the Red and Green volumes and defendants shall be
precluded at trial from offering any proof favorable to them which was not previously exchanged
3
However, as to the purported letter to which Mrs. Ross allegedly testified to (pages 275-276 as cited by
plaintiffs), such deposition testimony fails to establish that the letter exists. Further, as to any letter from an
inspector at Narconon International to which Ross testified (pages 267-269), defendants are precluded at trial from
utilizing any such letter. According to Ross's deposition, an inspector at Narconon wrote a letter criticizing
defendants,
in
sum and substance, that defendants were not part
of
the Scientology group.
And, inasmuch as the final exam, consisted of questions taken and reproduced from each ofth books,
and that such books were provided, sanctions are unwarranted as to defendants' failure to recreate such final exam.
The deposition testimony of Chris Ross es tablishes that question from each book were typed up and constituted the
final exam.
Finally, plaintiffs' request for sanctions based on defendants' alleged failure to recreate marked-up
versions of documents of which plaintiffs received newly purchased copies, appears unwarranted, under the
circumstances, as the Court did not require any recreation of m arkings made by defendants.
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so he d te o his decision on the following issues: (a) materials provided to patients were
based upon the teachings o L. Ron Hubbard and the Church o Scientology; (b) defendants have
ties to the Church o Scientology; and (c) defendants website disclosed the fact that Narconon s
treatments were based on these teachings; and it is further
ORDERED that plaintiffs motion (sequence 005) for expenses incurred and attorneys .
fees and for sanctions against defendants for their frivolous conduct is denied; and it is further
ORDERED that plaintiffs shall serve a copy o this order with notice o entry upon all
parties within 20 days o entry.
This constitutes the decision and order
o
the Court.
DATED:
1 CHECK ONE
2 CHECK AS APPROPRIATE :
3 CHECK IF APPROPRIATE
] O NOT POST
HON.
C ROl
R ED MEAD
J.S.C..
J.S.C.
D CASE DISPOSED 1 1 NON FINAL DISPOSITION
MOTION IS: GRANTED D DENIED ~ G R N T E D
IN
PART D OTHER
D SETTLE ORDER
D
SUBMIT ORDER
D FIDUCIARY APPOINTMENT
D
REFERENCE