East Point Systems, Inc. et al v. Maxim et al

Filing 185

ORDER granting in part and denying in part 169 Motion in Limine to preclude recordings and deposition transcripts; granting 170 Motion in Limine to preclude expert testimony by Kevin Flaherty; granting 171 Motion in Limine to preclude Muller affidavit; denying 172 Motion in Limine to preclude allegedly privileged exhibit and related deposition testimony. Signed by Judge Victor A. Bolden on 12/04/2015. (LaPre, E.)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
EAST POINT SYSTEMS, INC.,
THOMAS MARGARIDO, JASON
MARGARIDO, AND PAUL TAFF,
Plaintiffs,
v.
STEVEN MAXIM, S2K, INC., MAXIM
ENTERPRISES, INC., MAXIM FIELD
SERVICE SUPPLY, INC., EDWIN
PAJEMOLA, AND CLEVELAND FIELD
SYSTEMS, LLC,
Defendants.

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CIVIL ACTION NO.:
3:13-cv-00215 (VAB)

DECEMBER 4, 2015

RULING ON MOTIONS IN LIMINE
I.

INTRODUCTION
This matter is set for a bench trial in three days. Defendants Steven Maxim, S2k, Inc.,

Maxim Enterprises, Inc., and Maxim Field Service Supply, Inc. (collectively, the “Maxim
Defendants”) have filed four motions in limine.
II.

STANDARD OF REVIEW
The purpose of a motion in limine is to allow the trial court to rule in advance of trial on

the admissibility and relevance of certain forecasted evidence. See Luce v. United States, 469
U.S. 38, 40 n.2 (1984); Palmieri v. Defaria, 88 F.3d 136, 141 (2d Cir. 1996). “Evidence should
be excluded on a motion in limine only when the evidence is clearly inadmissible on all potential
grounds.” Levinson v. Westport Nat’l Bank, No. 3:09-CV-1955 (VLB), 2013 WL 3280013, at *3
(D. Conn. June 27, 2013) (quoting Highland Capital Mgmt., L.P. v. Schneider, 379 F. Supp. 2d
461, 467 (S.D.N.Y. 2005)). A court considering a motion in limine may reserve judgment until

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trial, so that the motion is placed in the appropriate factual context. See Nat’l Union Fire Ins.
Co. of Pittsburgh, Pa. v. L.E. Myers Co. Grp., 937 F. Supp. 276, 287 (S.D.N.Y. 1996).
III.

DISCUSSION
A.

Motion to Preclude Recordings and Depositions (ECF No. 169)

Maxim Defendants move to preclude (1) video and audio recordings of a two-and-onehalf-hour telephone call among John Muller, Jennifer Muller, and certain defendants, and (2)
transcripts of the depositions of Edwin Pajemola, Ira Andrew Strickland, and Heather Berghorst.
The motion is GRANTED IN PART AND DENIED IN PART.
The recordings contain unsworn, out-of-court statements. To the extent that such
statements are offered to prove the truth of the matters asserted therein, they are hearsay. Fed. R.
Evid. 801(c). The Federal Rules of Evidence except from the rule against hearsay an unavailable
witness’s former testimony given as a witness at a trial, hearing, or lawful deposition offered
against a party who had an opportunity and similar motive to develop such testimony through
examination. Fed. R. Evid. 804(b)(1).
First, Plaintiffs have not established that the persons recorded are unavailable under Fed.
R. Evid. 804(a). The Joint Trial Memorandum indicates that John and Jennifer Muller are
expected to testify. Joint Trial Memo. at 15, ECF No. 167.
Second, the unsworn recording does not contain testimony given by a witness at a trial,
hearing, or lawful deposition at which the Maxim Defendants had an opportunity to crossexamine, and therefore does not fall within the exception. The recordings are precluded, but may
be used for impeachment purposes if a witness denies having made statements he or she made in
the recordings, or contradicts statements made therein. See Fed. R. Evid. 613(b); see also United
States v. Demosthene, 334 F. Supp. 2d 378, 382 (S.D.N.Y. 2004) aff’d, 173 F. App’x 899 (2d

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Cir. 2006) (precluding tape-recorded conversation as hearsay not falling within any exception,
but allowing it to be used for impeachment). If either party wishes to use any statements in the
recordings for impeachment purposes, the Court would prefer, in order to alleviate concerns
about making timely objections in response to a video or audio recording, that such statements be
offered in the form of a transcript, as discussed during the final pre-trial conference.
The deposition testimony, to the extent that it was made under oath and the party or
parties against whom it is offered had an opportunity and similar to develop it, is not precluded if
the declarant or declarants are unavailable to testify at trial, Fed. R. Evid. 804(b), and the
testimony otherwise complies with the Federal Rules of Evidence.
B.

Motion to Preclude Alleged Expert Testimony (ECF No. 170)

The Maxim Defendants move to preclude the testimony of a certified public accountant,
Kevin Flaherty, regarding financial losses allegedly suffered by Plaintiffs. The Maxim
Defendants contend that Mr. Flaherty would testify as an expert and that the Court should
preclude him from so testifying because Plaintiffs, despite initially disclosing him as an expert,
never provided a written expert report, see Fed. R. Civ. P. 26(a)(2)(B), or summary of facts and
opinions, see Fed. R. Civ. P. 26(a)(2)(C). Plaintiffs now maintain that Mr. Flaherty will not
testify as an expert, but instead will, as a fact witness, “testify about his observations of
Plaintiffs’ records regarding losses suffered” and not offer expert opinion regarding them. ECF
No. 179 at 3.
Plaintiffs provided the Court with no authority for the proposition that a certified public
accountant not employed by the plaintiff company, and who had no personal involvement with
the plaintiff company or its financial records during the relevant time periods, may testify as a
fact witness, following his review of the business’s financial records, about financial losses (i.e.,

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damages) allegedly suffered by the plaintiff company. The Court’s independent research
revealed that, in cases where accountants were allowed to testify as fact witnesses, the
accountants were personally familiar with the relevant business’s records, or the accounting of
the transactions at issue. See, e.g., United States v. Rigas, 490 F.3d 208, 222-25 (2d Cir. 2007)
(accountant properly was allowed to testify as fact witness to summarize books and records
because he had personal knowledge of those books and records – he worked full-time at the
company for nearly twenty months reviewing documents within the company and correcting its
financial statements); United States v. Cuti, 720 F.3d 453, 456, 458 (2d Cir. 2013) (partner of
company’s lead outside auditor and company’s chief in-house accountant, both of whom
personally participated in the accounting transactions at issue, could testify as fact witnesses
because “although not qualified as experts, [they] were . . . personally familiar with the
accounting of the transactions at issue.”); Wechsler v. Hunt Health Sys., Ltd., 198 F. Supp. 2d
508, 529 (S.D.N.Y. 2002) (accountant could submit affidavit as fact witness, but not an expert,
because he was “personally involved in the compilation of [the defendant’s] financial
statements” and “was personally involved with the financial statements of [the defendant] during
the relevant time period”) (internal quotation marks omitted); JGR, Inc. v. Thomasville Furniture
Indus., Inc., 370 F.3d 519, 524-26 (6th Cir. 2004) (district court erred in allowing certified public
accountant to testify as a lay witness about lost profits and loss of business value because he had
never been an owner, officer, or director of the company, relied on information provided by the
company’s principal without independently verifying it, and therefore had no basis upon which
to offer lay opinion testimony about lost profits or business value); DIJO, Inc. v. Hilton Hotels
Corp., 351 F.3d 679, 685-87 (5th Cir. 2003) (district court erred in allowing financial consultant

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who “had little significant actual knowledge about [the company] and its operations” to testify as
lay witness about lost profits).
The Court does not have enough information at this time to determine whether Mr.
Flaherty has personal knowledge. It appears, from the filings before the Court, that he was not
employed by the Plaintiffs and was not personally involved with the compilation or maintenance
of the Plaintiffs’ financial records during the relevant time periods, and therefore could not
testify as a fact witness. But the Court will allow Plaintiffs an opportunity to lay a foundation for
his personal knowledge, if they can. Thus, insofar as the Maxim Defendants’ motion in limine
seeks to preclude Mr. Flaherty from testifying as an expert, it is GRANTED. However, if
Plaintiffs demonstrate that Mr. Flaherty has personal knowledge, under the standards of the case
law identified supra, Mr. Flaherty will be permitted to testify only about his personal knowledge.
C.

Motion to Preclude Affidavit (ECF No. 171)

The Maxim Defendants move to preclude the affidavit of John and Jennifer Muller.
Plaintiffs have not opposed this motion. The motion is GRANTED.
Statements in the affidavit offered to prove the truth of the matter asserted therein are
hearsay, Fed. R. Evid. 801(c), and the prior testimony exception does not apply because the
Mullers apparently are available and expected to testify, Joint Trial Memo. at 15, ECF No. 167;
Fed. R. Evid. 804(b)(1). The affidavit is precluded to the extent that statements therein are
offered to prove the truth of the matter asserted. But the affidavit may be used to impeach John
and/or Jennifer Muller. See Fed. R. Evid. 613(b).
D.

Motion to Preclude Allegedly Privileged Materials (ECF No. 172)

The Maxim Defendants move to preclude Exhibit 13 and deposition testimony related to
Exhibit 13 on the ground that this evidence is covered by the attorney-client privilege, is

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irrelevant, and its probative value is substantially outweighed by a danger of prejudice.
First, Exhibit 13 allegedly was inadvertently produced during discovery.
Second, Exhibit 13 was used during the deposition of Steven Maxim. In apparent
recognition that Exhibit 13 was subject to the attorney-client privilege, defense counsel objected
during the deposition and reserved the right to “clawback” the document under a protective order
provision allegedly providing that “[I]nadvertant production of documents . . . subject to . . .
attorney-client privilege . . . shall not constitute a waiver of the . . . privilege, provided that the
disclosing party notifies the Receiving Party in writing via facsimile, electronic mail, or first
class mail, of such inadvertent production immediately upon learning the same.” ECF No. 172 at
2. Nonetheless, defense counsel allowed Exhibit 13 to continue to be used during the deposition,
and allowed Mr. Maxim to testify about it.
Second, Defendants again disclosed Exhibit 13 by publicly filing it in this case, making
no effort to file it under seal or in camera. See ECF No. 172. It is now available to the public,
was transmitted via the Court’s CM/ECF system to all parties accepting electronic notifications,
and, according to Defendant’s certification, see ECF No. 172 at 7, was mailed to those parties
not accepting electronic notifications. See, e.g., Curto v. Med. World Commc'ns, Inc., 783 F.
Supp. 2d 373, 378-79 (E.D.N.Y. 2011) (attorney-client privilege waived where plaintiff
voluntarily filed memoranda “on the publicly-accessible electronic docket, without undertaking
to file the documents under seal or in camera, and . . . served copies of the [memoranda] upon
Defendants’ counsel directly.”) (internal citation omitted); Cruz v. Coach Stores, Inc., 196
F.R.D. 228, 230 (S.D.N.Y. 2000) (attorney-client privilege waived where privileged document
was publicly filed as part of a motion); First Am. CoreLogic, Inc. v. Fiserv, Inc., 2010 WL
4975566, at *2 (E. D. Tex. Dec. 2, 2010) (finding waiver of attorney-client privilege when party

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attached privileged communications to motion for protective order and served the documents on
the defendants).
Even if the initial disclosure of Exhibit 13 during discovery was inadvertent, that
inadvertent disclosure was compounded by Defendants permitting the use of Exhibit 13 at Mr.
Maxim’s deposition, publicly filing it, and serving it on the other parties in this case.
As to the deposition testimony related to Exhibit 13, the attorney-client privilege applies
to communications made in confidence between a client and his attorney for the purpose of
obtaining legal advice. See In re Richard Roe, Inc., 68 F.3d 38, 39 (2d Cir. 1995). Such
requirements were not met during Mr. Maxim’s deposition, at which Plaintiffs’ counsel and a
court reporter, at minimum, were present, and during which Mr. Maxim was not seeking legal
advice.
Exhibit 13 and related deposition testimony are not precluded on grounds of the attorneyclient privilege. The Court will DENY the motion in limine, but will reserve judgment until trial,
when the motion is placed in the appropriate factual context, to determine whether this evidence
is relevant, and whether its probative value is substantially outweighed by a danger of prejudice.

SO ORDERED at Bridgeport, Connecticut this fourth day of December, 2015.

/s/ Victor A. Bolden
VICTOR A. BOLDEN
UNITED STATES DISTRICT JUDGE

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