GOLDENSON et al v. STEFFENS et al

Filing 288

ORDER granting in part and denying in part 249 Motion to Bifurcate; denying 250 Motion to Compel Offer of Proof; granting in part and denying in part 251 Motion to Exclude Evidence and Arguments Relating to Indemnification and Prior Representa tion by Simpson Thacher; denying 253 Motion in Limine to Preclude Defendants from Testifying as to Any Analyses Performed on Ascot; denying 254 Motion in Limine Concerning the Defendants' Redactions of Relevant Information; denying 254 Motion for Oral Argument/Hearing. By JUDGE JOHN A. WOODCOCK, JR. (MFS)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
DANIEL R. GOLDENSON, et al.,
Plaintiffs,
v.
JOHN L. STEFFENS, et al.,
Defendants.

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2:10-cv-00440-JAW

ORDER ON MOTION TO BIFURCATE AND MOTIONS IN LIMINE
Daniel and Suzanne Goldenson and various entity plaintiffs (the Goldensons)
are taking John L. Steffens, Gregory Ho, and various entity defendants (the
Defendants) to trial on charges that they committed fraud, breaches of fiduciary
duty, and intentional infliction of emotional distress.

The allegations of liability

arise from the connection between the Ascot Fund, owned and operated by J. Ezra
Merkin, and the spectacular collapse of Bernard Madoff’s Ponzi scheme. In short,
the Goldensons allege that the Defendants sold them on Ascot while concealing that
it was really nothing more than a feeder to Mr. Madoff’s “investment fund.” Now
before the Court are a number of pretrial motions relating to evidence, testimony,
and other trial procedure.
I.

MOTION TO BIFURCATE
A.

Background

The Defendants move to bifurcate the issue of punitive damages from the
main trial on liability under Federal Rule of Civil Procedure 42(b). Mot. to Bifurcate

Punitive Damages from Liability and Compensatory Damages at 1 (ECF No. 249)
(Def.’s Mot. to Bifurcate). In parallel, they ask that they not be required to respond
to the Goldensons’ renewed discovery request for the Defendants’ tax returns until
such time as the Court determines that the jury may properly consider punitive
damages. Id. at 1-2. The Goldensons object to both requests. Pl.’s Opp’n to Def.’s
Mot. to Bifurcate Punitive Damages from Liability and Compensatory Damages
(ECF No. 256) (Pl.’s Bifurcation Opp’n).
This motion to bifurcate is tangled up with a discovery dispute. On February
9, 2012, the Goldensons requested from the Defendants “[a]ll individual federal
income tax returns and supporting statements and forms, including any
amendments thereto, filed by John L. Steffens and Gregory P. Ho for tax years 2007
through 2011.” Def.’s Mot. to Bifurcate Attach. 1 Letter from Alfred C. Frawley IV to
David Spears, at 1 (ECF No. 249) (Renewed RFP No. 9). The Magistrate Judge
denied the Plaintiffs’ Motion to Compel production of the returns as “premature.”
Report of Hr’g and Order Re: Disc., Scheduling at 3 (ECF No. 103) (Order on Disc.).
However, the Magistrate Judge held that “[t]he plaintiffs are free to renew RFP No.
9 following the court’s resolution of anticipated summary judgment motions if
Steffens and Ho remain potentially liable for punitive damages.” Id. at 3-4. The
Goldensons renewed this request on March 13, 2014, following the Court’s
disposition of the motion for summary judgment.

Renewed RFP No. 9.

The

Defendants move the Court to deny this renewed request. Def.’s Mot. to Bifurcate at
5.

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B.

Discussion

Under Federal Rule of Civil Procedure 42(b), the Court may bifurcate a trial
on one or more issues “[f]or convenience, to avoid prejudice, or to expedite and
economize” the trial. The party moving for bifurcation bears the burden to show
that it will meet these criteria. See F & G Scrolling Mouse, L.L.C. v. IBM Corp.,
190 F.R.D. 385, 387 (M.D.N.C. 1999) (collecting district court cases)). The decision
to bifurcate is an exercise of the Court’s discretion. Gonzalez-Marin v. Equitable
Life Assurance Soc’y of U.S., 845 F.2d 1140, 1145 (1st Cir. 1988).
In this case, there is very little, if any, prejudice to the Defendants from the
jury’s consideration of whether the Plaintiffs have sustained their burden to
establish the Defendants’ liability for punitive damages under the Maine standard
set forth in Tuttle v. Raymond, 494 A.2d 1353, 1363 (Me. 1985).

To prove liability

for punitive damages, a plaintiff must establish by clear and convincing evidence
that “the defendant[]s’ conduct was motivated by ill will towards the plaintiff[s] or
that the defendant[s] engaged in deliberate conduct which, while motivated by
something other than ill will toward any particular person, is so reprehensible that
malice toward a person injured as a result of the conduct can be implied.” DONALD
G. ALEXANDER, MAINE JURY INSTRUCTION MANUAL § 7-114 (4th ed. May 2012)
(ALEXANDER); Tuttle, 494 A.2d at 1363.
The Defendants’ worry that the jury will be confused by the differing
standards of proof—preponderance and clear and convincing evidence—is
unconvincing, because the Court will in any event be required to instruct the jury
on the clear and convincing standard on the common law fraud count. ALEXANDER §
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7-30 (“To prevail in the action for fraud, the plaintiff must prove the following facts
by clear and convincing evidence”).
The Defendants’ second concern is that the jury will be confused by the
introduction of the term “malice” into the trial. However, the Court is not convinced
that the introduction of this term, carefully explained, will cause the jury any undue
confusion.
The Court agrees with the Defendants, however, that the introduction of the
Defendants’ wealth into the liability phase of this trial would be potentially
prejudicial. Therefore, the Court will initially pose only the liability question on
punitive damages to the jury. If the jury renders a verdict for the Goldensons on
the punitive damages count, the Court will allow the parties to proceed with further
evidence on the punitive damages count only, including the wealth of the
Defendants. This is somewhat similar to what Judge Hornby of this District did in
Shannon v. Sasseville, 684 F. Supp. 2d 169, 172 (D. Me. 2010).1
As the Court has determined that the jury may consider the punitive
damages count during the liability phase of trial, and as the Plaintiffs must have
the Defendants’ tax returns in order to prepare for the possibility that they will be
required to present evidence on the proper amount of punitive damages, the Court
agrees with the Plaintiffs that the time has come for the Defendants to hand over
The Court acknowledges that in Shannon, the jury first reached only the issue of
compensatory damages; however, the Shannon case involved a claim against the plaintiff’s uncle for
sexual abuse, and the jury’s finding of liability virtually mandated submission of the punitive
damages question to the jury. Shannon, 684 F. Supp. 2d at 172. Here, as it is possible given the
tonal differences among the counts the jury could find the Defendants liable on all underlying
compensatory counts and not liable on the punitive damages count, the Court has decided to pose the
punitive damages question directly to the jury.
1

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their tax returns to the Plaintiffs. Although the Plaintiffs have argued that they
should be allowed to introduce the returns to establish the Defendants’ receipt of
money from Ezra Merkin and to impeach Mr. Steffens, the Court does not reach
those issues. Before the Goldensons seek to introduce evidence of the Defendants’
wealth or the information revealed in their tax returns to the jury other than in the
punitive damages phase of trial (if any), they must first approach the Court and
obtain express permission to do so.
II.

MOTION TO COMPEL OFFER OF PROOF
The Defendants next request that the Court direct the Goldensons to submit

an offer of proof before trial regarding the proposed testimony of expert witness
Arthur Laby, Esq. Mot. to Compel Pls. to Submit an Offer of Proof Concerning
Expert Testimony of Arthur Laby (ECF No. 250) (Def.’s Mot. to Compel).

The

Goldensons oppose this motion. Pl.’s Opp’n to Defs.’ Mot. to Compel Pls. to Submit
an Offer of Proof Concerning Expert Testimony of Arthur Laby (ECF No. 255) (Pl.’s
Opp’n to Mot. to Compel).
This dispute has its roots in two previous orders of the Court. On February
25, 2013, the Court issued an order on the parties’ respective motions to exclude
each other’s experts.

Order on the Parties’ Daubert2 Mots. to Exclude Expert

Testimony (ECF No. 190) (Daubert Order). This order included a section restricting
the scope of Professor Laby’s trial testimony.3 Id. at 26-30. On March 7, 2014, the
Court issued its order on the Defendants’ motion for summary judgment. Order
2
3

Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993).
Arthur Laby, Esq. is a professor of law at Rutgers School of Law – Camden.

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Granting In Part and Denying In Part Defs.’ Mot. for Summ. J. (ECF No. 236)
(Summ. J. Order). The Summary Judgment Order referred to Professor Laby’s
deposition testimony to resolve several disputed factual matters. E.g., Summ. J.
Order at 28 n.66, 29 n.68. The order also defined the legal framework applicable to
the Goldensons’ claims. Id. at 149-224.
A.

Position of the Parties
1.

The Defendants

The Defendants invoke the Court’s “gatekeeping” function under Federal
Rule of Evidence 702: to “‘ensure . . . before admitting expert testimony . . . [that]
the testimony is such that it will assist the trier of fact in understanding or
determining a fact in issue.’” Def.’s Mot. to Compel at 4 (quoting Correa v. Cruisers,
A Division of KCS Int’l, Inc., 298 F.3d 13, 24 (1st Cir. 2002) and citing Morin v. E.
Me. Med. Ctr., 780 F. Supp. 2d 98, 103-04 (D. Me. 2010)). In their view, an offer of
proof is appropriate because following the Summary Judgment Order “it is no
longer clear what Professor Laby can testify to at trial.” Id. at 5. They contend that
under the Court’s Daubert Order and Summary Judgment Order, “the question of
what a fiduciary duty consists of and what standards of conduct it imposes is a legal
one that cannot be answered through expert testimony.” Id. Comparing the legal
and factual issues left in play by the Summary Judgment Order to the restricted
scope of testimony the Court imposed in the Daubert Order, the Defendants
conclude that there is no room left for Professor Laby’s expert testimony. Id. at 5-6.

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2.

The Goldensons

The Goldensons first argue that it is procedurally improper for the Court to
require an offer of proof before trial. Pl.’s Opp’n to Mot. to Compel at 2. They next
point out that the Defendants had an opportunity to explore the facts underlying
Professor Laby’s opinions at his deposition. Id. at 3. In particular, they fault the
Defendants for steering Professor Laby toward legal conclusions in his deposition
and avoiding the facts underlying those conclusions.

Id. (citing Aff. of Jay P.

McCloskey Attach. 50 Dep. of Arthur B. Laby, Esq., at 27:13-32:11 (ECF No. 215)
(Laby Dep. Tr.) and quoting Laby Dep. Tr. at 31:16). Finally, the Goldensons point
out that the Court has already qualified Professor Laby as “‘a qualified expert on
securities laws and the securities industry.’” Id. at 4 (quoting Daubert Order at 27).
Despite their opposition to providing an offer of proof, the Goldensons’ reply
brief includes a section entitled “Professor Laby’s Anticipated Testimony” that
quotes extensively from their expert designation. Id. at 4-8 (citing, among other
things, Decl. of Max Nicholas Attach. 1 Pl.’s Expert Witness Designations (ECF No.
142) (Nicholas Decl.)).
B.

Discussion

Although the Defendants’ concerns about the permissible scope of Professor
Laby’s testimony are legitimate, there is no need for a pre-trial offer of proof to
resolve them. The Court already ruled that “the proper place to define legal terms,
such as ‘fiduciary duty’ and ‘good faith and fair dealing,’ is in the jury instructions
because ‘it is not for the witnesses to instruct the jury as to the applicable principles
of law, but for the judge.’” Daubert Order at 26 (quoting Nieves-Villanueva v. Soto7

Rivera, 133 F.3d 92, 99 (1st Cir. 1997)). The Court determined that Professor Laby
could “opine on how the facts of this case tie into the legal framework and the
relevant industry.”

Id. at 27.

Nothing about the Summary Judgment Order

changed that conclusion. The legal framework in this case, although it will be given
to the jury by the Court, applies to a complex industry and contains a variety of
terms of art that lay jurors may not understand at the outset. Professor Laby will
testify as to how, in his view, the facts fit into the legal framework.
Professor Laby “may not testify about his legal conclusions concerning
whether the Defendants owed the Plaintiffs fiduciary duties or breached those
duties.” Id. at 28. The Court has every intention to “‘exercise reasonable control
over the mode and order of examining witnesses and presenting evidence,’” id. at 30
(quoting FED. R. EVID. 611(a)), to prevent Professor Laby from “engag[ing] in
narratives and summarize[ing] contested facts.” Id. However, the legal framework
the Court defined in the Summary Judgment Order neither threatens to render
Professor Laby’s testimony wholly superfluous nor calls into question the sufficiency
of the Court’s previous ruling in the Daubert Order.
The Court dismisses as moot the Defendants’ Motion to Compel.
III.

MOTION IN LIMINE
SIMPSON THACHER

REGARDING

INDEMNIFICATION

AND

In opposing the Defendants’ motion for summary judgment, the Goldensons
argued that the Defendants’ indemnification for their legal fees by Spring Mountain
Partners QP I, LP (the QP I Fund) was evidence in support of the Defendants’
liability for intentional infliction of emotional distress (IIED). Pl.’s Opp’n to Defs.’

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Mot. for Summ. J. at 37-38 (ECF No. 212). They also argued that the Defendants’
notice to QP I Fund investors, that Spring Mountain Capital had hired the law firm
of “Simpson Thacher”4 to represent “us” following the revelation of the Madoff
fraud, was relevant to the IIED claim. Id. In responding to these assertions in the
Goldensons’ statement of additional material facts, the Defendants raised relevancy
objections, claiming the facts were not material to any legal dispute raised by the
complaint. E.g., Defs.’ Reply to Pls.’ Statement of Additional Facts ¶¶ 421-28 (ECF
No. 224). The Court ruled on each of these relevancy objections, holding the facts
relevant to the IIED claim. Summ. J. Order at 132-35 nn.383-91. However, the
Court did not discuss these facts in detail in its ruling that part of the IIED claim
survived summary judgment. See Summ. J. Order at 212-16.
The Defendants now request that the Court prevent the Goldensons from
introducing at trial evidence or arguments of: (1) the Defendants’ indemnification
for their legal fees by the QP I Fund; and (2) representation of the Spring Mountain
entities by Simpson Thacher. Mot. to Exclude Evidence and Arguments Relating to
Indemnification and Prior Representation (ECF No. 251) (Def.’s Mot. to Exclude).
The Goldensons object.

Pls.’ Opp’n to Defs.’ Mot. to Exclude Evidence and

Arguments Relating to Indemnification and Prior Representation (ECF No. 257)
(Pl.’s Opp’n to Mot. to Exclude).

4

Simpson Thacher & Bartlett LLP.

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A.

Position of the Parties
1.

The Defendants

The Defendants’ first position is that the evidence of their indemnification by
the QP I Fund is not relevant under Federal Rule of Evidence 401 and should be
excluded under Rule 402. Defs.’ Mot. to Exclude at 2-3. This is so, they contend,
because the Goldensons had notice of this indemnification from the Confidential
Offering Memorandum (COM) that Mr. Goldenson reviewed before he invested in
the QP I Fund.

Id. (citing Decl. of Max C. Nicholas Attach. 1 Confidential

Memorandum, at PLS’ RSP 000297 (ECF No. 252) (QP I COM)). They assert that
the indemnification provision is “not ambiguous and is not a disputed fact at issue
for trial.”

Id. at 3.

Because, in the Defendants’ view, their indemnification is

consistent with this contract provision, it cannot be relevant to any of the
Goldensons’ claims. Id. at 3.
Even if the indemnification were relevant, the Defendants argue that its
probative value would be substantially outweighed by the danger of unfair
prejudice, making it inadmissible under Rule 403. Id. at 4-6. They are concerned
that the indemnification evidence will encourage the jury to improperly compare the
parties’ abilities to pay their legal fees and invite an emotional response. Id. at 4-5.
They are also concerned that they would have to respond to this evidence with their
own evidence of their contractual right to indemnification, and also encourage the
jury to find liability in the Defendants’ because it would appear that they will be
unharmed financially by having to pay damages.

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Id. at 5.

They compare the

indemnification evidence to evidence of insurance, generally barred under Rule 411.
Id. at 5-6.
Finally, the Defendants anticipate that the Goldensons will argue that
Spring Mountain Capital’s notice to its investors that it had retained Simpson
Thacher contributed to Mr. Goldenson’s severe emotional distress. Id. at 7. They
offer a decision by Judge Rich earlier in this case that “‘the available objective
evidence does not demonstrate that the plaintiffs were [Simpson Thacher’s] clients’
and that ‘[t]he letters on which the plaintiffs rely cannot reasonably be construed so
to indicate.’” Id. at 7 (quoting with alterations Memorandum Decision on Pls.’ Mot.
to Compel at 19-20 (ECF No. 136) (Mem. Dec.)). They argue that this decision is the
law of the case and should not be revisited. Id. at 7-8.
2.

The Goldensons

The Goldensons argue that the Defendants’ indemnification for their legal
fees by the QP I Fund is relevant to several of their claims.

Pl.’s Opp’n to Mot. to

Exclude at 3-7. First, they characterize as a “core defense” the Defendants’ position
that they were not investment advisors to the Goldensons. Id. at 3-4. They argue
that the indemnification clause only operates against claims brought “‘in connection
with their professional roles’ as investment advisors.” Id. at 4 (quoting Defs.’ Mot.
to Exclude at 3) (emphasis supplied by the Goldensons). This, in their view, makes
the indemnification agreement relevant to almost all of their claims. See id. at 3-4.
Next, the Goldensons dispute that the QP I COM represents a contractual
indemnification obligation from QP I to the Defendants; they assert that “the COM
is not a contract.” Id. at 4. Rather, they contend that the QP I COM merely refers
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to the Fund’s partnership agreement, which is the binding contract. Id. However,
the Goldensons assert, with some emphasis, that “there is no Fund Agreement
between the Defendants and the Plaintiffs.” Id. (emphasis in original). They deny
that there exists any evidence that the Defendants and the QP I investors agreed to
any contractual indemnification agreement. Id. at 5.
The Goldensons next argue that the Defendants are charging their legal fees
to the QP I Fund, not pursuant to an indemnification agreement, but as expenses
under the COM’s provision for such expenses. Id. at 5. They quote from the QP I
COM for the proposition that such expenses are only to be paid for services
“performed or paid on behalf of the Fund by the Management Company.” Id.
(quoting, with emphasis, QPI COM at PLS’ RSP 000280).
As their final point on the topic of relevance, the Goldensons argue that the
indemnification agreement is relevant to the IIED claim, the “Defendants’ scienter”
(presumably the scienter element of the federal securities fraud claim, see Summ. J.
Order at 173-74), and also breach of fiduciary duty, fraud, conspiracy, and punitive
damages. Id. at 6.
The Goldensons also contend that the evidence of the indemnification
agreement is not unfairly prejudicial under Rule 403. Id. at 7-8. In their view,
because the evidence is probative of the Defendants’ wrongful conduct, any
prejudice is not an unfair prejudice. Id.
Lastly,

the

Defendants

argue

that

evidence

of

Simpson

Thacher’s

representation of Spring Mountain is admissible. Id. at 10. They deny that the

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Magistrate Judge’s ruling—that “‘the available objective evidence does not
demonstrate that the plaintiffs were [Simpson Thacher’s] clients”—affects their
present contention that the Defendants fraudulently charged QP I investors for
Spring Mountain Capital’s legal fees. Id. at 10 (quoting Mem. Dec. at 7). In the
alternate, they argue that the jury might conclude that the Defendants were trying
to “lull their investors into a false sense of security” by pretending that Simpson
Thacher had been hired “‘to protect the [QP I] Fund’s assets.’” Id. (quoting Nicholas
Decl. Attach. 6 Letter From Spring Mountain Capital to Investor (ECF No. 252)
(Investor Letter)).
B.

Discussion

Relevant evidence is generally admissible. FED. R. EVID. 402. Evidence is
relevant if it tends to make any material fact either more or less likely to be true.
FED. R. EVID. 401.

However, “[t]he court may exclude relevant evidence if its

probative value is substantially outweighed by a danger of . . . unfair prejudice,
confusing the issues, [or] misleading the jury.” FED. R. EVID. 403.
1.

The Indemnification Agreement and Federal Rule of
Evidence 411

The indemnity provision in the QP I COM is as follows:
Indemnification. The Fund Agreement provides that the Fund shall, to
the fullest extent permitted by law indemnify and hold harmless each
Indemnified Party from and against any loss or expense suffered or
sustained by him/her/it by reason of the fact that he/she/it is or was an
Indemnified Party, including, without limitation, any judgment,
settlement, reasonable attorneys’ fees and other costs or expenses
incurred in connection with the defense of any actual or threatened
action or proceeding, provided that such loss or expense resulted from
a mistake of judgment on the part of an Indemnified Party, or from
action or inaction that did not constitute gross negligence, willful
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misconduct or bad faith, or for losses due to the negligence, dishonesty
or bad faith of a broker or other agent of an Indemnified Party
provided that such broker or agent was selected, engaged or retained
by the Indemnified Party in accordance with the standard of care set
forth above. The Fund Agreement also provides that the Fund will, in
the sole discretion of the General Partner, advance to any Indemnified
Party reasonable attorneys’ fees and other costs and expenses incurred
in connection with the defense of any action or proceeding which arises
out of such conduct. In the event that such an advance is made by the
Fund, the Indemnified Party will agree to reimburse the Fund to the
extent that it is determined that it was not entitled to indemnification.
QP I COM at PLS’ RSP 000297.5
Under Federal Rule of Evidence 411,
[e]vidence that a person was or was not insured against liability is not
admissible to prove whether the person acted negligently or otherwise
wrongfully. But the court may admit this evidence for another
purpose, such as proving a witness’s bias or prejudice or proving
agency, ownership, or control.
Courts are divided on whether indemnification agreements, outside the
context of a liability insurance contract, are within the scope of Rule 411. Compare
Elliott v. S.D. Warren Co., 134 F.3d 1, 7-8 (1st Cir. 1998) (acknowledging, without
criticism, a district court’s decision to exclude evidence of indemnification under
Rules 403 and 411); Larez v. Holcomb, 16 F.3d 1513, 1518, 1520 n.6 (9th Cir. 1994)
(reciting that “[i]t has long been the rule in our courts that evidence of insurance or
other indemnification is not admissible on the issue of damages,” but declining to
rest this conclusion on Rule 411); Curtis Mfg. Co. v. Plasti-Clip Corp., 933 F. Supp.
94, 100-01 (“[T]he court finds that said [indemnification] agreement is subject to

The Goldensons argue that this is unenforceable because the Defendants have not produced
a Fund Agreement signed by any QP I investors. This may be a consideration for the jury in
deciding whether the indemnity agreement exists, but it does not go to whether evidence of the
indemnity agreement is within the scope of Rule 411.
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Rule 411”); with Holcomb, 16 F.3d at 1523-24 (Pregerson, J., concurring in part and
dissenting in part) (“[T]he protection to insurance companies rationale for excluding
evidence under FRE 411 does not justify restricting admission of evidence regarding
the city’s obligation to indemnify its officers for compensatory damage awards”);
Huff v. Jackson, C.A. No. C-11-149, 2013 WL 625045, at *1 (S.D. Tex. Jan. 2, 2013)
(“Rule 411 applies only to liability insurance, not all types of indemnification”); DSC
Commc’ns Corp. v. Next Level Commc’ns, 929 F. Supp. 239, 242-43 (E.D. Tex. 1996).
On its face, it is unclear whether Rule 411 applies to private indemnification
agreements of the sort at issue here. The 1972 advisory committee note to Rule 411
gives one rationale for the rule:
The courts have with substantial unanimity rejected evidence of
liability insurance for the purpose of proving fault, and absence of
liability insurance as proof of lack of fault. At best the inference of
fault from the fact of insurance coverage is a tenuous one, as is its
converse. More important, no doubt, has been the feeling that
knowledge of the presence or absence of liability insurance would
induce juries to decide cases on improper grounds.
Professors Wright and Graham, however, having performed an exhaustive survey of
cases and commentary on Rule 411, find this rationale subject to heavy attack from
both academics and judges, and conclude that the advisory committee’s justification
is “shabby in the light of these criticisms.” CHARLES ALAN WRIGHT & KENNETH
GRAHAM, JR., 23 FEDERAL PRACTICE
2014).

AND

PROCEDURE § 5362, at 436 (1980 & Supp.

Professors Wright and Graham suggest that a number of other factors

underlay the adoption (and persistence) of Rule 411 “in the face of the collective
scorn of the writers”: (1) conformity with state practices; (2) a need to defend the
“package of procedures designed to preserve the fault system of liability against the
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tendency of juries to engage in ad hoc compensatory schemes”; and (3) a
conservative preference for “undermining by exceptions rather than the direct
overthrowing of the rule.”

Id. at 437-38.

They also suggest that it may be a

mechanism to assist subrogated insurers in maintaining a cloak of invisibility
during jury proceedings in which they purport to “be” the insured party. Id. at 43336.
The two most compelling rationales in this laundry list are protecting the
fault system of liability from “ad hoc compensatory schemes” and protecting a
subrogated insurer. To the latter point, the district court in DSC Communications
identified six factors useful in distinguishing “liability insurance” to which Rule 411
might apply from other types of indemnification:
1) The insurer is paid to take the risk in question;
2) the insurer is well able to pay;
3) the insurer has agreed to indemnify the insured from liability to
third persons as contrasted with coverage from losses sustained by the
insured;
4) the insurer will spread the loss among its policy holders;
5) the insured will be disinclined to take an action which might cause
the insurer to pay on a liability claim since the insured’s premiums
will rise; and
6) the insured is insuring a future risk.
DSC Commc’ns, 929 F. Supp. at 243. Of these factors, only the fourth and sixth
have even a tenuous fit with the relationship between the QP I Fund and the
Defendants. The Court concludes that the QP I Fund is not a subrogated insurer.

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There is some weight to Professors Wright and Graham’s suggestion that the
policy of Rule 411 is an integral part of the fault system of liability, designed to
counterbalance “the tendency of juries to engage in ad hoc compensatory schemes.”
This is consistent with the advisory committee’s oblique suggestion that a jury will
decide the case on “improper grounds.”6 The wrinkle, in this case, is that the entity
that would indemnify the defendants is the QP I Fund itself, in which the
Goldensons are limited partners.

In other words, if the indemnification is

enforceable, it is the plaintiffs themselves, not some deep-pocketed and remote
insurance company, who will be stuck with a pro rata portion of the bill. In sum,
although many indemnification agreements might trigger the “improper grounds”
rationale of Rule 411, that rationale is not applicable here.
The Court concludes that, in the unusual circumstances of this case, Federal
Rule of Evidence 411 does not bar evidence of this indemnification agreement.
2.

Relevance
a.

The Indemnification Agreement

To recap, the Goldensons’ four theories of relevance are: (1) that the
indemnification agreement goes to whether the Defendants were the Goldensons’
“investment advisors”; (2) that the QP I Fund’s obligation to indemnify the
Defendants hinges on a Fund Agreement that does not exist, and is therefore
The Court sees little distinction between dissuading “ad hoc compensatory schemes,” WRIGHT
& GRAHAM § 5362, at 437, and the concern that “knowledge of the presence or absence of liability
insurance would induce juries to decide cases on improper grounds.” FED. R. EVID. 411, 1972
advisory committee note. Whatever delicate language is used to dress up the concept, the basic
concern here is that a jury, knowing that the defendant won’t himself have to pay a money award
and that it will be paid by some other entity with deep pockets, will happily award an unreasonably
large amount of money damages.
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fraudulent; (3) that the Defendants are charging Madoff-related legal expenses to
their investors pursuant to the QPI COM’s “expenses” provision, not the indemnity
provision, which limits expenses to those expenses performed “on behalf of the
Fund”; and (4) that the Court already determined that the Defendants’ billing of
their legal fees is relevant. Pl.’s Opp’n to Mot. to Exclude at 3-7.
The first theory is not persuasive. The Goldensons rest this theory on the
Defendants’ statement, in their Motion to Exclude, that they are being indemnified
for their costs defending a suit brought against them “‘in connection with their
professional roles.’” Id. at 4 (quoting Def.’s Mot. to Exclude at 3). This language is
from a brief, not the COM.

The language in the COM claims that the Fund

Agreement permits indemnification for any “loss or expense suffered or sustained
[by an Indemnified Party] by reason of the fact that he/she/it is or was an
Indemnified Party.” QP I COM at PLS’ RSP 000297. An “Indemnified Party” is
“the General Partner, Management Company, and any of their respective partners,
members, managers, directors, officers, employees, consultants, agents, and legal
representatives.”

Id.

This definition has nothing to do with status as an

“investment advisor” or with actions taken by the Indemnified Party.
The second and third theories of relevance are, in essence, that the
Defendants’ charges of legal expenses to the QP I Fund are fraudulent.

The

problem with these theories is that they are largely outside the scope of the
Complaint. The First Amended Complaint alleges a wide variety of fraud with
regard to the sales practices and operation of the QP I Fund and Ascot partners

18

before the Madoff fraud came to light.

Its allegations of wrongdoing after the

revelation of the Madoff fraud—leaving aside the IIED claim—are limited to claims
that the Defendants continued to obscure the Madoff-Ascot-Spring Mountain
relationship. See First Am. Compl. ¶¶ 55, 56, 106, 107, 108, 110, 111-15, 127(H),
127(I), 157, 158. It contains no allegation that the Defendants improperly charged
their legal fees to the QP I Fund under either the expense or indemnification
provisions.
The Goldensons’ effort to attack the Defendants’ funding of their defense is
troubling. They have accused the Defendants of extremely serious fraud, and want
to argue to the jury that the Defendants’ efforts to defend themselves from that
accusation are further ongoing fraud.

Absent any concrete allegation in the

Complaint, the Goldenson may not extend their arguments about fraud and breach
of fiduciary duty to the Defendants’ effort to defend themselves.
The Goldensons’ final theory of relevance with regard to the indemnification
is that the Court already ruled it relevant to the IIED claim in the Summary
Judgment Order. Pl.’s Opp’n to Defs.’ Mot. to Exclude at 6 (citing Summ. J. Order
at 135 nn.384-91).

The only portion of this cited material that addresses the

indemnification is footnote 390, discussing paragraph 427 of the Goldensons’
statement of additional material facts. See Summ. J. Order at 135 n.390. That
paragraph asserted, as the Court modified it slightly: “The Defendants adverse to
the plaintiff have charged their legal expenses in connection with the instant
lawsuit to the QP I Fund; these legal expenses were approximately $495,000 in

19

2011.” Id. at 135. In footnote 390, the Court summarily overruled the Defendants’
oft-repeated relevancy objection with reference to a similar objection in paragraph
425, which the Court ruled was relevant to the IIED claim. Id. at 134 n.388. In
light of the additional evidence and analysis presented here, the Court is not
prepared to treat footnote 390 as law of the case on the relevance of the
indemnification agreement at trial.
The Court concludes that evidence of the indemnification agreement is not
relevant to any trial issue. The Court provisionally grants the Defendants’ motion
in limine as to indemnification. If the context of the trial generates some basis to
revisit this decision, the Court will do so on either party’s motion.
b.

Simpson Thacher’s Representation

News of Mr. Madoff’s fraud broke on December 11, 2008. Decl. of John L.
Steffens ¶ 32 (ECF No. 197). On December 15, 2008, Spring Mountain Capital
notified investors that it had retained Simpson Thacher “to provide us with legal
advice concerning all transactional, structural, regulatory and litigation issues that
may arise in connection with this matter. . . . We are evaluating other steps to be
taken in order to protect the Fund’s assets . . . .” Investor Letter. The Defendants
argue that this evidence is inadmissible because it is irrelevant, but they do not
claim it is unfairly prejudicial. See Defs.’ Mot. to Exclude at 7-8.
The Defendants are correct that the Magistrate Judge already ruled that “the
available objective evidence does not demonstrate that the plaintiffs were [Simpson
Thacher’s] clients,” and that “[t]he letters on which the plaintiffs rely cannot
reasonably be construed to so indicate.” Mem. Dec. at 19. The Court will not permit
20

the Goldensons to offer the letter to prove that they were Simpson Thacher’s clients.
Furthermore, for the reasons discussed above, the Court will not permit the
Goldensons to argue that this letter is evidence of fraud, breach of fiduciary duty, or
extreme and outrageous conduct.
However, the letter is relevant to Mr. Goldenson’s subjective (and mistaken)
belief that Simpson Thacher had been hired to represent the interests of the QP I
investors, which in turn is relevant to the causation and severity of his alleged
emotional distress.

If the jury believes that Mr. Goldenson truly understood

Simpson Thacher to be representing the investors, and it furthermore believes all of
the other factual underpinnings of the Defendants’ alleged extreme and outrageous
conduct, then Mr. Goldenson’s subjective belief would make it more likely that the
wrongful conduct was a cause in fact of Mr. Goldenson’s distress. It would also
make it more likely that Mr. Goldenson’s emotional distress was “severe,” since it
would support the proposition that he felt deep betrayal when he learned the
additional facts of Mr. Madoff’s involvement and the Defendants’ alleged cover-up
activities.
The Court denies the Defendants’ motion in limine as to Simpson Thacher’s
representation, but will give a limiting instruction to the jury on its proper use if
the Defendants request it.
IV.

MOTION IN LIMINE REGARDING ANALYSES PERFORMED ON
ASCOT
The Goldensons move the Court to preclude any Defendant from testifying

that he or other Spring Mountain staff members performed any analysis of Ascot’s

21

trades.

Pl.’s Mot. In Limine to Preclude the Defs. From Testifying as to Any

Analyses Performed on Ascot (ECF No. 253) (Pls.’ Mot. to Preclude). The Defendants
object. Defs.’ Opp’n to Pls.’ Mot. In Limine to Preclude The Defs. From Testifying as
to Any Analyses Performed on Ascot (ECF No. 258) (Defs.’ Opp’n to Mot. to Preclude).
The Defendants also attach an affidavit from attorney David Spears and
accompanying exhibits in support of their opposition. Decl. of David Spears (ECF
No. 259) (Spears Decl.).
A.

Position of the Parties
1.

The Goldensons

The Goldensons argue that the Defendants failed to disclose any documents
related to their purported analysis of Ascot’s trade sheets during discovery, in
violation of Federal Rule of Civil Procedure 26(a), (e). Pls.’ Mot. to Preclude at 1-2.
They argue that a proper sanction under Rule 37(c) would be to preclude the
Defendants from testifying that he performed these analyses.
The Goldensons first point to Defendant John L. Steffens’ response to an
interrogatory asking him to describe “‘any and all due diligence that You or Spring
Mountain performed with respect to Madoff in connection with the investments of
any Spring Mountain fund.’” Id. at 1 (quoting Aff. of Alfred C. Frawley IV Attach.
25 Resps. of John L. Steffens to Pls.’ First Set of Interrogs. at 4 (ECF No. 214) (First
Interrog. Resps.)). Mr. Steffens answered that “‘Spring Mountain (a) relied upon
investigation of Madoff carried out by J. Ezra Merkin and entities with which he
was associated; and (b) considered information relating to Madoff that they had
access to.’” Id. at 1-2 (quoting First Interrog. Resps. at 4-5). They view this as
22

inconsistent with Mr. Steffens’ claim, in his affidavit in support of the motion for
summary judgment, that Spring Mountain analysts “‘tested Ascot’s performance
and volatility in different markets using statistical models and reported to [Mr.
Steffens] their conclusion that in a wide range of markets Ascot should have low
volatility and was likely to yield unspectacular but steady returns.’”

Id. at 2

(quoting Decl. of John L. Steffens In Support of Defs.’ Mot. for Summ. J. ¶ 24 (ECF
No. 198) (Steffens Decl.)).
In discovery, the Goldensons requested
“[a]ll documents, communications and ESI [electronically stored
information] depicting or concerning the Plaintiffs’ investments in
Ascot between September 1, 2001 and the present, including without
limitation any such documents, communications and ESI regarding
such investments made by and through Ascot’s status as a SubManager or Portfolio fund of Spring Mountain.”
Id. at 2 n.1 (quoting Pls.’ Reply to Defs.’ Resp. to Pls.’ Mot. for Enlargement of Time
Permitted for Designation of Expert Witnesses Attach. 1 Pls.’ First Req. for Produc.
of Docs. and Things, at 7 (ECF No. 74) (Pls.’ First Produc. Req.)).

They also

requested
“[a]ll documents, communications and items of ESI depicting or
concerning Bernard L. Madoff and/or Bernard L. Madoff Investment
Securities LLC in the possession of Spring Mountain, including all
documents, communications and items of ESI sent by Spring Mountain
to investors in any Spring Mountain fund.”
Id. (quoting Pls.’ Mot. to Compel the Produc. of Docs. Attach. 6 Defs.’ Objections to
Pls.’ Second Req. for Produc. of Docs., at 8 (ECF No. 104) (Defs.’ Second Produc.
Objections)).

23

In the Goldensons’ view, the Defendants should have produced documentary
evidence of their “qualitative analysis” of Ascot in response to these requests. Id. at
2. Because they did not, the Goldensons conclude that either the documents do not
exist or the Defendants are withholding them in violation of Rule 26. Id. at 4. The
Goldensons assert that this is particularly unfair because, in their portrayal, Mr.
Steffens has “changed his story concerning what he knew about Madoff’s role in
Ascot.” Id. at 4. As evidence of this change in position, they compare Mr. Steffens’
answer to the First Amended Complaint, Answer to Am. Compl. ¶¶ 5, 106 (ECF No.
46) and his first interrogatory response, First Interrog. Resps. ¶ 10, to his later
declaration in the summary judgment motion. Steffens Decl. ¶ 29. They urge that
“[i]n the interests of the integrity of the discovery process” the Defendants should
not be allowed to “testify[] as to the adequacy of their due diligence into Madoff at
trial.” Id. at 5. The Goldensons also claim that they have suffered prejudice from
the non-production of Ascot analyses because their forensic accounting expert was
unable to review them. Id.
2.

The Defendants

The Defendants’ position is straightforward: The documents do not exist, and
the Goldensons did not ask the right questions.

Defs.’ Opp’n to Pls.’ Mot. to

Preclude. They point out that the interrogatory question to which Mr. Steffens
responded asked about his due diligence into Mr. Madoff, not into Ascot. Id. at 2.
When Mr. Steffens submitted his declaration in support of summary judgment, he
swore to the due diligence that he performed on Ascot, not Mr. Madoff. Id. at 3.
They further swear, supported by Attorney Spears’ affidavit, that they are not
24

“sitting on a secret stash of trade sheets and reviews of Ascot’s trades that they
intend to spring on Plaintiffs at trial.” Id. at 4 (citing Spears Decl. ¶¶ 1-3).
The Defendants further deny that Mr. Steffens’ alleged inconsistencies are
material to an analysis under Rule 37, and also deny that there are any
inconsistencies between his statements. Id. at 5-6. They distinguish between Mr.
Steffens’ earlier assertion, that he did not know Mr. Madoff was making “all,
virtually all or most of the purported investment decisions concerning Ascot,” and
his later assertion that he believed “that at various times ‘Madoff executed Ascot’s
trades pursuant to a limited grant of discretion from [Mr.] Merkin.’” Id. at 6. In the
Defendants’ view, these two statements are completely consistent. Id. at 7.
The Defendants conclude that the Goldensons’ remedy is to challenge Mr.
Steffens’ credibility at trial, perhaps using his interrogatory responses as prior
inconsistent statements under Federal Rule of Evidence 607. Id. at 7.
B.

Discussion

Federal Rule of Civil Procedure 37(c) provides that:
If a party fails to provide information or identify a witness as required
by Rule 26(a) or (e), the party is not allowed to use that information or
witness to supply evidence on a motion, at a hearing, or at a trial,
unless the failure was substantially justified or is harmless.
The Goldensons urge the Court to preclude Mr. Steffens from testifying to any
“qualitative analyses” he or his staff performed on Ascot because they failed to
disclose them during discovery under Rule 26.
First, the Court addresses the preliminary matter of Mr. Steffens’
purportedly inconsistent interrogatory responses and affidavit. The relevance of

25

these statements to the Goldensons’ motion to preclude him from testifying to his
staff’s analyses of Ascot is murky. The existence of un-produced Ascot analyses has
very little to do with what Mr. Steffens said, at different times, about what he knew
about Ascot and Mr. Madoff. However, to assuage any doubts that the Court might
have overlooked some factors relevant to the exercise of its discretion, the Court will
examine these details.
The Goldensons’ two sets of interrogatories to Mr. Steffens asked very specific
questions. They defined “Ascot” and “Madoff” separately. Spears Decl. Attach. 1
Pls.’ First Set of Interrogs. Propounded to Def. John L. Steffens, ¶¶ 9, 11 (ECF No.
259) (First Interrogs.); Spears Decl. Attach. 2 Pls.’ Second Set of Interrogs.
Propounded to Def. John L. Steffens, ¶¶ 9, 11 (ECF No. 259) (Second Interrogs.)). In
Interrogatory 4, in the first set, the Goldensons asked:
4.
Describe any and all due diligence investigation that You or
Spring Mountain performed with respect to Madoff in connection with
investments of any Spring Mountain fund.
First Interrogs. ¶ 4. Mr. Steffens answered:
Steffens and Spring Mountain (a) relied upon investigation of Madoff
carried out by J. Ezra Merkin and entities with which he was
associated; and (b) considered information relating to Madoff that they
had access to.
First Interrogs. Resps. ¶ 4.
In Interrogatory 10, in the first set, the Goldensons asked:
10.
Please state whether the fact or belief that Madoff was making
all, virtually all or most of the purported investment decisions
concerning Ascot Partners, L.P. and/or the Ascot Fund, Ltd. was
material information upon which a reasonable investor would rely in
deciding whether to acquire interests in those funds, and if You
contend that such information was immaterial to that decision, specify
26

all information, statements, documents, statutes, regulations or
grounds of any kind, whether based in fact or law, upon which You rely
in support of that position.
First Interrogs. ¶ 10. Mr. Steffens replied:
Steffens did not have knowledge or otherwise have reason to believe
that Madoff was making all, virtually all or most of the purported
investment decisions concerning Ascot Partners, L.P. and/or the Ascot
Fund Limited.
First Interrogs. Resps. ¶ 10.
In Interrogatory 16, in the second set, the Goldensons asked:
Please describe Your knowledge, as it existed prior to December 1,
2008, of the degree in which Madoff participated in the Investment
Decisions of Ascot Partners, L.P. and Ascot Fund Limited.
Second Interrogs. ¶ 16. Mr. Steffens answered:
[P]rior to December 1, 2008, Steffens believed that at various times
Madoff executed trades on behalf of Ascot Partners, L.P. pursuant to a
limited grant of discretion from Merkin.
Spears Decl. Attach. 4 Resps. of John L. Steffens to Pls.’ Second Set of Interrogs. ¶
16 (ECF No. 259) (Second Interrogs. Resps.)); see also Steffens Decl. ¶ 29.
The Court agrees with the Defendants that there is very little here on which
to base a finding of inconsistency. Mr. Steffens swore in his first interrogatory
response that he did not believe that Mr. Madoff was making “all, virtually all or
most of the purported investment decisions concerning [Ascot].”

In his second

interrogatory response, he swore that he believed that Mr. Madoff “executed trades
on behalf of [Ascot] pursuant to a limited grant of discretion from Merkin.” His
sworn statement in support of the summary judgment motion was of similar
substance. As the Defendants point out, making all or virtually all of the decisions
about a fund is different from executing trades under a limited grant of discretion.
27

Mr. Steffens swore that he did not understand the first statement to be true, but he
did understand the second statement to be true. The Court perceives no inequitable
changing of position that would factor into its decision on a Rule 37(c) sanction.
Turning to the heart of the matter, the Court also perceives no discovery
violation that would justify a sanction of any kind under Rule 37(c). In the first set
of interrogatories, the Goldensons asked Mr. Steffens what diligence he had
performed on Mr. Madoff, not what diligence he had performed on Ascot. First
Interrogs. ¶ 4. Mr. Steffens said that, with respect to Mr. Madoff, he relied on
information provided to him by Mr. Merkin.

First Interrogs. Resps. ¶ 4.

This

statement does not require or imply that he did not perform qualitative analysis on
Ascot itself. Later, the Goldensons asked for documents “depicting or concerning
the Plaintiffs’ investments in Ascot,” Pls.’ First Produc. Req. at 7, and documents
“depicting or concerning Bernard L. Madoff and/or Bernard L. Madoff Investment
Securities LLC.”

Defs.’ Second Produc. Objections at 8.

In response to these

requests, the Defendants produced no qualitative analysis or trade sheets of Ascot,
and swear that they have none in their possession. Spears Decl. ¶¶ 1-3. Then, still
later, Mr. Steffens swore that he personally reviewed Ascot’s trade sheets and
directed his staff to perform qualitative analysis of Ascot and that they reported
back to him favorably. Steffens Decl. ¶ 27.
First, the Court is not entirely convinced that written Ascot qualitative
analyses, if they exist, would be within the scope of either of the two document
production requests.

Nonetheless, assuming they were, the fact that the

28

Defendants did not produce documents memorializing such a qualitative analysis
does not necessarily imply that it was never done. The Spring Mountain staff could
well, as the Defendants suggest and internal memoranda confirm, have reviewed
the trade sheets at Ascot in an “on-site visit” and not taken them into Spring
Mountain’s possession. See Defs.’ Opp’n to Pls.’ Mot. to Preclude at 4 n.1 (citing
Spears Decl. Attachs. 7, 8 (ECF No. 259)). The “qualitative analyses” may have
been oral reports of the Spring Mountain staff’s reasoned conclusions based on the
Ascot trade sheets they allegedly reviewed.

While this may not be exemplary

business practice, it is not logically impossible.

At any rate, counsel for the

Defendants swear that they possess no such documents, and the Court perceives no
principled grounds on which to disbelieve that claim. Consequently, there is no
reason to impose sanctions on Mr. Steffens under Rule 37(c).
The Court denies the Goldensons’ Motion to Preclude the Defendants From
Testifying as to Any Analyses Performed on Ascot.
V.

MOTION IN LIMINE REGARDING DEFENDANTS’ REDACTIONS
The Goldensons identify sixteen email chains, produced by the Defendants

during discovery with certain names and information redacted, that they ask the
Court to review in camera and compel the Defendants to un-redact. Pls.’ Mot. In
Limine Concerning the Defs.’ Redactions of Relevant Information (ECF No. 254)
(Pls.’ Mot. re: Redactions). In the alternate, they ask the Court to preclude the
Defendants from testifying as to what they told their investors about the
relationship between Ascot and Mr. Madoff. Id. The Defendants object. Defs.’

29

Opp’n to Pls.’ Mot. In Limine Concerning the Defs.’ Redactions of Relevant
Information (ECF No. 260) (Defs.’ Opp’n re: Redactions).
A.

Position of the Parties

In the Goldensons’ view, they will be prejudiced by the redactions because
they make it difficult to understand who sent what to whom. See generally Pls.’
Mot. re: Redactions. They note that the Court already expressed some confusion
with the identities of the correspondents in one of the redacted emails, in its
Summary Judgment Order.

Id. at 9 (citing Summ. J. Order at 97 n.274).

Furthermore, the Goldensons view it as unfair for the Defendants to testify to what
they told their investors about Ascot and Madoff, because the redactions made it
impossible for the Goldensons to discover witnesses who would testify to the
contrary. Id. at 9-10.
The Defendants make four points in response. Defs.’ Opp’n re: Redactions.
First, they observe that this is essentially a discovery dispute, and the discovery
period closed on May 7, 2012. Id. at 2. The Defendants posit that the Goldensons’
motion to compel the disclosure of the redacted names is two years late. Id. at 2, 5.
They also recall that Judge Rich denied a substantially identical motion from the
Goldensons on May 9, 2012, which the Goldensons did not appeal or ask the Judge
to reconsider. Id. at 3-4 (citing Report of Hr’g and Order re: Discovery (ECF No.
123)).
Second, the Defendants point out that the Goldensons have cited no legal
authority for their request to preclude the Defendants from testifying as to their
business practices.
30

Third, the Defendants note that the Goldensons elected not to depose Mr.
Steffens, Defendant Gregory Ho, or any of the entity defendants during discovery.
Id. at 5-6. They suggest that the Goldensons could have used a deposition to find
out more context and information about the Defendants’ alleged practice of
informing their clients about the Ascot-Madoff relationship. Id. This, in their view,
belies the Goldensons’ argument that it would be unfair to allow the Defendants to
testify on this subject at trial. Id.
Finally, the Defendants dispute the merits of the Goldensons’ request to unredact the emails. Id. at 7-8. They deny that there would be any probative value to
viewing the names underlying the emails that would outweigh the privacy concerns
of the third parties concerned. Id. at 7.
B.

Discussion

“[The Goldensons’] motion is a discovery motion in the guise of a motion in
limine.” Falconer v. Penn Maritime, Inc., 232 F.R.D. 34, 35 (D. Me. 2005). General
discovery in this case closed on May 7, 2012, exactly two years before the
Goldensons filed this motion in limine. Compare Report of Hr’g and Order re: Disc.,
Scheduling Mots.,at 8 (ECF No. 98) with Pls.’ Mot. re: Redactions.7 The Goldensons’
motion is therefore exceedingly untimely. See FED. R. CIV. P. 16(b); D. ME. LOC. R.
16.2(c)(2). Furthermore, the Goldensons have given no reason at all to explain why
they could not have raised and resolved this dispute during the discovery period.
See Pls.’ Mot. re: Redactions.
Judge Rich extended the deadline to take expert depositions to May 21, 2012. Report of Hr’g
and Order re: Disc., Scheduling, at 4 (ECF No. 103).
7

31

Furthermore, as to at least one of the email chains presently in dispute, the
Defendants are correct that Judge Rich already considered and rejected the
Goldensons’ arguments here. See Report of Hr’g and Order re: Disc. (ECF No. 123)
(Order re: Disc.); compare Decl. of David Spears in Opp’n to Pls.’ Mot. re: Redactions
Attach. 1, at Ex. A (ECF No. 261) with Pls.’ Mot. re: Redactions Attach. 5 (ECF No.
254).

He ruled that “although . . . the [third-party] investors’ identities were

arguably relevant, the probative value of the disclosure of their identities was too
attenuated to outweigh the invasion of their privacy interests . . . or the court’s trial
management concerns.” Order re: Disc. at 2. The Goldensons did not appeal that
order or move for reconsideration, and now give no reason to call that conclusion
into question.
Finally, any prejudice to the Goldensons will be minimal.

Although the

Court struggled to place one isolated redacted email into context during the
summary judgment stage, the Goldensons will have the benefit of examining Mr.
Steffens and Mr. Ho on the witness stand to establish precisely that necessary
context.
“If [the Defendants] failed to produce discoverable documents, this should
have been brought to the Court’s attention [two years] ago, when the case was still
in its discovery stage, not on the eve of trial.” Falconer, 232 F.R.D. at 35. The
Court denies the Goldensons’ Motion In Limine Concerning the Defendants’
Redactions of Relevant Information and denies the Goldensons’ motion for a hearing
on this matter.

32

VI.

CONCLUSION
The Court
(1) GRANTS in part and DENIES in part the Defendants’ Motion to Bifurcate
(ECF No. 249);
(2) DENIES the Defendants’ Motion to Compel Offer of Proof (ECF No. 250);
(3) GRANTS IN PART the Defendants’ Motion to Exclude Evidence and
Arguments Relating to Indemnification and Prior Representation by
Simpson Thacher (ECF No. 251), to the extent it seeks to exclude evidence
of the QP I Fund’s indemnification of the Defendants, and otherwise
DENIES the motion;
(4) DENIES the Goldensons’ Motion In Limine to Preclude the Defendants
from Testifying as to Any Analyses Performed on Ascot (ECF No. 253);
and
(5) DENIES the Goldensons’ Motion In Limine Concerning the Defendants’
Redactions of Relevant Information (ECF No. 254).
SO ORDERED.

/s/ John A. Woodcock, Jr.
JOHN A. WOODCOCK, JR.
CHIEF UNITED STATES DISTRICT JUDGE
Dated this 7th day of July, 2014

33