GOLDENSON et al v. STEFFENS et al
ORDER overruling in part, sustaining in part and deferring ruling in part 277 Plaintiffs' Objections to Defendants' deposition designations. By JUDGE JOHN A. WOODCOCK, JR. (MFS)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
DANIEL R. GOLDENSON, et al.,
JOHN L. STEFFENS, et al.,
ORDER ON PLAINTIFFS’ OBJECTIONS TO DEFENDANTS’ DEPOSITION
Daniel and Suzanne Goldenson are locked in a rapidly approaching civil jury
trial with John L. Steffens, Gregory Ho, and other entity Defendants over alleged
financial services fraud.
The Goldensons object to segments of the Defendants’
designations of the deposition testimony of two witnesses: Brian Burns, the
Goldensons’ former broker at Merrill Lynch, and Arnold Mayberg, the Goldensons’
DEPOSITION OF BRIAN BURNS
The parties deposed Brian Burns on February 15, 2012.
Designations Attach. 1 Dep. of Brian Burns, at 6:9-10 (ECF No. 269) (Burns Dep.).
On June 2, 2014, the Defendants designated thirty-three segments of this
deposition as exhibits.
Defs.’ Dep. Designations at 1-2.
On the same day, the
designations. Pls.’ Dep. Designations at 2 (ECF No. 266). On June 25, 2014, the
Goldensons objected to sixteen of the Defendants’ thirty-three designations. Pls.’
Objections to Defs.’ Dep. Designation at 1-5 (ECF No. 277) (Pls.’ Objections). The
Defendants replied in opposition to these objections on July 3, 2014. Defs.’ Resp. to
Pls.’ Objections to Dep. Designations by Defs. (ECF No. 285) (Defs.’ Resp.).
Position of the Parties
The Goldensons characterize certain segments of the deposition of Mr. Burns
as being about an “alleged dispute between Mr. Goldenson and the ML Blackrock
Municipal Multi-Strategy Fund, LLC.”
Pls.’ Objections at 1.
They argue that
evidence of this dispute is irrelevant under Federal Rule of Evidence 401; unfairly
prejudicial and confusing under Rule 403; inadmissible under Rule 404 for the
purpose of proving Mr. Goldenson’s character; and inadmissible under Rule 608(b)
for the purpose of attacking Mr. Goldenson’s character for truthfulness through a
specific instance of conduct. Id. at 1-2.
The Goldensons next take issue with eighteen exhibits, identified as D-178
through D-195 and D-241 through D-245. Id. at 2. They characterize most of these
exhibits are relating “only to the collateral Blackrock matter.” Id. The remainder,
they assert, relate to residential real estate litigation in which Mr. Goldenson was
The Goldensons also argue that if the Court permits the Defendants to
introduce deposition testimony regarding Mr. Goldenson’s dispute with Blackrock
and the real estate litigation, they “must certainly be permitted” to examine the
defendants on a civil complaint for fraud against Spring Mountain Capital, L.P.
from the New York state courts and on the indictment of Spring Mountain’s former
managing director for conspiracy, wire fraud, tax evasion, and false statements. Id.
Finally, as to certain segments, the Goldensons raise form and hearsay
objections. Id. at 2-5.
The Defendants argue that the disputed segments bear on “[Mr. Goldenson’s]
interactions with Mr. Steffens; his investment history and approach to investing;
his heavy reliance on [Mr.] Burns for investment advice; and his history of
depression and how it related to his investments.”
Defs.’ Resp. at 3.
Defendants also argue that it would not be fair to permit the Goldensons to exclude
the Defendants’ segments because the Goldensons themselves designated sections
of Mr. Burns’ testimony in which he discusses his dispute with Merrill Lynch over
the Blackrock investment.
The Defendants extend this argument to the
exhibits to which the Goldensons object, characterizing them as necessary context
for the evidence that the Goldensons plan to offer regarding the nature of Mr.
Goldenson’s relationship with Mr. Steffens. Id. at 3-4. They further argue that the
disputed exhibits also show the nature and extent of Mr. Goldenson’s relationship
with Mr. Burns, which, in their view, relates to Mr. Goldenson’s argument that Mr.
Steffens, and not Mr. Burns, was Mr. Goldenson’s primary investment advisor. Id.
at 5. The Defendants also point out that some of the contested exhibits demonstrate
Mr. Goldenson making references to his “mental and emotional problems in relation
to his investment in the Blackrock hedge fund and securities investments in
general.” Id. at 6.
The Defendants next suggest that Mr. Goldenson’s use of certain terms in his
writings, such as “fiduciary” and “proprietary,” may demonstrate that he had an
idiosyncratic understanding of their meanings. Id. at 7. This, in the Defendants’
view, bears on the key disputed conversation among Mr. Goldenson, Mr. Steffens,
and Mr. Merkin. Id. at 7-8.
Addressing the Goldensons’ argument on Rule 608(b), the Defendants
respond that some of the written statements to Merrill Lynch in 2004 go to Mr.
Goldenson’s credibility on key issues at this trial rather than collateral issues. Id.
at 8. They argue that they are offering this extrinsic evidence for the permissible
purpose of “impeachment by contradiction,” not on his character for truthfulness.
Id. They further argue that Rule 404(b) does not bar the Burns testimony and
documents because they are not being offered to show “bad character”; rather, in the
Defendants’ view, they offer the evidence to show Mr. Goldensons’ relationship to
Mr. Steffens and Mr. Goldenson’s capability as an investor. Id. at 8-9.
Turning to the 2004 real estate litigation, the Defendants claim that it is
relevant to Mr. Goldenson’s claim of intentional infliction of emotional distress. Id.
at 9. Because this litigation was “a frequent topic of discussion in Mr. Goldenson’s
sessions with [his psychiatrist] Dr. Spitz,” the Defendants argue that they must be
relevant to whether Mr. Goldenson’s anxiety and depression were proximately
caused by the Defendants’ alleged wrongdoing. They also argue that the real estate
litigation is relevant to Mr. Goldenson’s “history of making large investments
without any input from or communication with Mr. Steffens.” Id. at 9-10.
In a footnote, the Defendants reject the Goldensons’ suggestion that
introducing the evidence now in dispute would open the door to questioning from
the Goldensons about litigation involving Spring Mountain Capital, L.P. and the
indictment of Spring Mountain’s former managing director. Id. at 10 n.6. They
contend that the facts alleged in these matters make them irrelevant to the legal
issues at this trial. Id.
In most of the disputed segments of the deposition of Mr. Burns, counsel for
the Defendants questions Mr. Burns regarding Mr. Goldenson’s investment in the
ML Blackrock Municipal Multi-Strategy Fund, LLC (ML Blackrock), an investment
vehicle offered by Merrill Lynch. E.g., Defs.’ Dep. Designations Attach. 1 Dep. of
Brian Burns at 34:20-36:2 (ECF No. 269) (Burns Dep. Tr.). For the most part, Mr.
Burns’ testimony focuses on the circumstances under which Mr. Goldenson made an
investment in ML Blackrock in late 2003; the disclosures that Mr. Burns made to
Mr. Goldenson regarding the investment; Mr. Goldenson’s request in 2004 to
liquidate his investment in ML Blackrock before the “lockup” period during which
the investment should have been illiquid; the reasons for and circumstances of that
request; and Mr. Burns’ successful efforts to obtain that liquidation.
The Court, having reviewed the deposition transcript, finds that most of the
segments are admissible. They are relevant to Mr. Goldenson’s sophistication as an
investor, to his propensity to take independent action on his investments, and to the
nature of his relationships with both Mr. Burns and Mr. Steffens. These compound
facts are relevant, in turn, to whether there was a great disparity of position
between Mr. Goldenson and Mr. Steffens that might give rise to a fiduciary
relationship. Although the 2003-2004 ML Blackrock incident does pose some risk of
unfair prejudice or confusion of the issues, this risk does not substantially outweigh
the probative value of the testimony. FED. R. EVID. 403.
Nor is the Burns deposition testimony barred by Rules 404(b) or 608(b). Rule
404(b) bars evidence of “other act[s] . . . to prove a person’s character in order to
show that on a particular occasion the person acted in accordance with the
character.” Here, the evidence is relevant for a variety of purposes unrelated to
character: e.g., to establish whether there existed a fiduciary relationship between
Mr. Steffens and Mr. Goldenson, and whether Mr. Goldenson’s understanding about
the “proprietary” nature of Ascot’s alleged trading was reasonable. For the same
reasons, the evidence is not offered to attack Mr. Goldenson’s character for
truthfulness, such that it would be barred by Rule 608(b).
The Goldensons also object that some of the passages are simply statements
by counsel for the defense. This is true, but most of the passages were necessary
during the deposition to give context to the questions that were to follow, and are
necessary for the same reason now.
E.g., Burns Dep. Tr. 66:13-19; 84:11-86:6,
The Goldensons object to the form of questions posed on lines 89:19-22, 90:2122, 92:13-24, and 99:19-22. The Court overrules these objections; the Goldensons do
not explain the basis for their objections, see Pls.’ Objections at 3-5, and the
questions are not plainly improper nor confusing.
The Goldensons also object to the questions on lines 108:14-109:18 because
they are questions of the witness’s own counsel, not counsel for either party. Id. at
At the Burns deposition, Thomas Briody, Esq., in-house counsel for Morgan
Stanley Smith Barney, asked five questions to clarify when Mr. Burns had left
Merrill Lynch and joined Smith Barney. Burns Dep. Tr. 108:10-109:18. Mr. Spears’
question follows the context of Attorney Briody’s questions:
Q. And then you subsequently became part of Morgan Stanley Smith
In isolation, this question and answer makes no sense unless
preceded by Mr. Briody’s brief set of questions. If the Goldensons objected to Mr.
Briody asking questions at Mr. Burns’ deposition, they should have said so at the
time; the Court concludes that they have waived the objection. Furthermore, the
Goldensons have not suggested any prejudice from Mr. Briody’s questions clarifying
Mr. Burns’ career path, and the Court can imagine none. This objection may lapse
into the category of objections made because they can be made. The Court overrules
the Goldensons’ objections.
Finally with respect to Mr. Burns, the Goldensons raise hearsay objections to
(1) a letter from an official at Merrill Lynch to Mr. Goldenson; (2) an email from
Barbara Bartro, Mr. Burns’ assistant, to Mr. Burns; and (3) the cover of a
memorandum relating to ML Blackrock.
Id. at 3-5.
The Defendants did not
squarely respond to this hearsay objection. See Defs.’ Resp. at 4 n.2. Aware that the
primary reason for the motion in limine is to allow the parties to properly edit the
videotape, the Court concludes that it does not have enough information about the
documents and the testimony to exclude the colloquies that make reference to the
It is unclear, for example, whether the deponent is using the
documents to refresh his recollection or whether he is testifying from the documents
themselves. The Court overrules the Goldensons’ objections to those questions.
As to the eighteen exhibits that the Goldensons reference in their
memorandum—D-178 through D-195 and D-241 through D-245—the matter is not
ripe for decision. The Goldensons did not ask the Court to take any action on these
exhibits beyond “urg[ing] the Court to keep this trial focused on the Plaintiffs’
claims against the Defendants, and not any past claims the Plaintiffs may have
brought against third parties.” Pl.’s Objections at 2. It is difficult to appreciate the
context of these exhibits, so the Court will rely on counsel to press the admissibility
issue, if necessary, during trial. As it does not appear to be necessary to issue a
pretrial ruling on admissibility in order to edit the videotape, the Court will defer
ruling on this issue until trial.
DEPOSITION OF ARNOLD MAYBERG
The Goldensons argue that “any evidence of their accountant’s tax treatment
of their residential rental property . . . [and] conservation easement [is] utterly
irrelevant under Fed. R. Evid. 401.”
Id. at 5.
The Defendants reply that this
evidence is relevant to the Goldensons’ breach of fiduciary duty and fraud claims
because it shows the Goldensons’ “sophistication in all financial matters and their
access to and reliance on a variety of professional to assist with their investment
decisions.” Def.’s Resp. at 10.
The Court has reviewed the disputed sections of Mr. Mayberg’s deposition
testimony. See Defs.’ Dep. Designations Attach. 2 Dep. of Arnold Mayberg, at 47:850:05, 80:15-89:5 (ECF No. 269). The Court sustains the Goldensons’ objection to
47:8-50:05. Even assuming that evidence about the Goldensons’ residence in Maine
could be probative, Mr. Mayberg’s actual responses are too elusive and vague to be
As regards the later testimony about Mr. Goldenson’s tax return, although
the testimony appears only very remotely related to financial sophistication, it is at
least marginally relevant on that score.
The danger of prejudice from evidence
about the Goldensons’ wealth is mitigated because it is cumulative. The Court
overrules the Goldensons’ objection to 80:15-89:5.
The Court OVERRULES the Goldensons’ objections to the Defendants’
designation of the depositions of Brian Burns and Arnold Mayberg, except for lines
47:8-50:05 of the Mayberg deposition, as to which lines the Court SUSTAINS the
relevance objection. The Court DEFERS ruling on the eighteen exhibits identified
in the Goldensons’ brief.
/s/ John A. Woodcock, Jr.
JOHN A. WOODCOCK, JR.
CHIEF UNITED STATES DISTRICT JUDGE
Dated this 8th day of July, 2014
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