Grasso, Jr. M.D. et al v. The United Group of Companies, Inc. et al

Filing 80

SUMMARY ORDER - That defendants' motion to strike (Dkt. No. 64) is GRANTED. That the Clerk strike plaintiffs' reply (Dkt. No. 63). That plaintiffs' motion for certification of question for interlocutory appeal and stay of action pending appeal (Dkt. No. 59) is DENIED. Signed by Senior Judge Gary L. Sharpe on 2/14/2019. (jel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
________________________________
JOSEPH GRASSO, JR. et al.,
1:16-cv-965
(GLS/CFH)

Plaintiffs,
v.
THE UNITED GROUP OF
COMPANIES, INC. et al.,
Defendants.
________________________________
SUMMARY ORDER

On April 23, 2018, plaintiffs filed a motion for certification of question
for interlocutory appeal and stay of action pending appeal. (Dkt. No. 59.)
The motion centers on the court’s April 9, 2018 Memorandum-Decision and
Order, which dismissed several of plaintiffs’ claims because they were time
barred under N.Y. C.P.L.R. § 213(8). (Dkt. No. 56.) Specifically, plaintiffs
request that the court amend its Memorandum-Decision and Order under
Fed. R. App. P. 5(a)(3) to include the certification required by 28 U.S.C.
§ 1292(b) and stay this action until the Second Circuit Court of Appeals
addresses the following question: “[a]re [p]laintiffs’ fraud, breach of
fiduciary duty, aiding and abetting a breach of fiduciary duty, and negligent
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misrepresentation claims time-barred under New York law?” (Dkt. No. 59
at 2 (internal footnote omitted).) Defendants filed a response in opposition
to plaintiffs’ motion on May 21, 2018. (Dkt. No. 62.) Thereafter, plaintiffs
filed a reply brief, (Dkt. No. 63), which defendants subsequently moved to
strike, (Dkt. No. 64). For the following reasons, defendants’ motion, (id.), is
granted,1 and plaintiffs’ motion, (Dkt. No. 59), is denied.
Generally, only final decisions are appealable. See 28 U.S.C.
§ 1291. However, in exceptional circumstances, a district court may certify
questions regarding its interlocutory decisions to the Court of Appeals for
discretionary review if: (1) the court’s decision “involves a controlling
question of law”; (2) “as to which there is a substantial ground for
difference of opinion”; and (3) “an immediate appeal from the order may
materially advance the ultimate termination of the litigation.” 28 U.S.C.
§ 1292(b). “To satisfy the second element, the plaintiff must establish that
there is substantial reason to doubt the correctness of the district court’s
ruling[.]” Koziol v. King, 6:14-cv-946, 2014 WL 12656908, at *2 (N.D.N.Y.
Nov. 19, 2014). However, “[a] mere claim that the district court’s ruling was

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For non-dispositive motions, “[r]eply papers . . . are not permitted
without the [c]ourt's prior permission.” N.D.N.Y. L.R. 7.1(b)(2).
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incorrect does not demonstrate a substantial ground for difference of
opinion.” Id. (internal quotation marks and citation omitted); see Weber v.
U.S. Tr., 484 F.3d 154, 159 n.3 (2d Cir. 2007) (“Congress did not intend 28
U.S.C. § 1292(b) to serve an error-correction function.”). Additionally, even
when all three prongs are met, “the decision whether to certify a question
for interlocutory appeal is within the complete and unfettered discretion of
the district court.” Koziol, 2014 WL 12656908, at *2 (internal quotation
marks and citations omitted).
Here, even assuming that plaintiffs have satisfied the first and third
prongs of the statutory criteria, plaintiffs fail to demonstrate that there is
substantial reason to doubt the correctness of the court’s April 9, 2018
ruling. Despite purportedly advancing three arguments in support of their
position, plaintiffs essentially make the same argument three times: if the
court would have looked at the underlying financial statements as a whole,
it would have come to the conclusion that reasonable minds could differ
regarding whether plaintiffs’ duty of inquiry was triggered. (Dkt. No. 59,
Attach. 1 at 5-8.) However, plaintiffs’ position is flawed in several aspects.
First, the court already considered the financial statements as a
whole––the parts that were favorable to plaintiffs, (Dkt. No. 56 at 21-22),
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and the parts that were not favorable to them, (id. at 23-24). Moreover, the
court already rejected plaintiffs’ argument that “the statements taken as a
whole overwhelmingly reveal that the Income Fund was . . . thriving,” (id. at
21 (emphasis added)), and concluded that “the financial statements raised
red flags that would have made a reasonable investor of ordinary
intelligence aware of the probability that he had been defrauded,” (id. at 22
(internal citation omitted)).2 Next, contrary to plaintiffs’ contentions that the
court applied an improper standard and that there is conflicting authority on
this issue, (Dkt. No. 59, Attach. 1 at 5-8), the court applied the same wellestablished standard that has been uniformly applied by courts when faced
with a N.Y. C.P.L.R. § 213(8) issue. (See Dkt. No. 56 at 19-21; Dkt. No. 62

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Plaintiffs seem to contradict their position that the court failed to
consider the statements as a whole when they fault the court for
“conduct[ing] its own analysis of the financial statements.” (Dkt. No. 59,
Attach. 1 at 7.) It should be noted that the court’s analysis was informed
by defendants’ memorandum of law in support of their motion to dismiss
plaintiffs’ amended complaint, which persuasively demonstrated that
“[p]laintiffs’ own allegations confirm that their duty to inquire of a potential
fraud had been triggered long prior to the two year window before filing
this action,” (Dkt. No. 13, Attach. 1 at 12), and plaintiffs’ response papers,
which asked the court to analyze the statements “taken as a whole,” (Dkt.
No. 27 at 13). Thereafter, the court undertook a careful and complete
analysis of the financial statements referenced in plaintiffs’ amended
complaint. (Dkt. No. 56 at 17, 21-25.) As such, this was hardly an
“independent” analysis. (Dkt. No. 59, Attach. 1 at 7.)
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at 8 (collecting cases).) In fact, plaintiffs only cite one case in support of
their argument, Milman v. Box Hill Sys. Corp., 72 F. Supp. 2d 220, 229
(S.D.N.Y. 1999), which the court already considered the first time plaintiffs
raised it in their response in opposition to defendants’ motion to dismiss.3
(Dkt. No. 27 at 13). In sum, plaintiffs merely regurgitate the same
arguments, which the court previously rejected. Although plaintiffs have
every right to disagree with the court’s conclusion, more is required to
satisfy § 1292(b). See Weber, 484 F.3d at 159 n.3; Koziol, 2014 WL
12656908, at *2.
Accordingly, it is hereby
ORDERED that defendants’ motion to strike (Dkt. No. 64) is
GRANTED; and it is further
ORDERED that the Clerk strike plaintiffs’ reply (Dkt. No. 63); and it is
further
ORDERED that plaintiffs’ motion for certification of question for
interlocutory appeal and stay of action pending appeal (Dkt. No. 59) is

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Notably, plaintiffs have never explained how Milman, which
considered the timeliness of a Securities Act claim, is applicable to the
question of when a duty of inquiry arises under N.Y. C.P.L.R. § 213(8).
See Milman, 72 F. Supp. 2d at 228-29.
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DENIED; and it is further
ORDERED that the Clerk provide a copy of this Summary Order to
the parties.
IT IS SO ORDERED.
February 14, 2019
Albany, New York

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