Elsevier Inc. v. Grossman et al
OPINION AND ORDER: For the reasons stated above, Plaintiffs may file a motion for summary judgment on the issue of domestic injury on or before September 15, 2017, and Mr. Grossmann may not introduce evidence to oppose this motion. In the event th at the Court does not grant Plaintiffs' summary judgment motion on the issue of domestic injury, the Court will set a new trial date. For now, the trial regarding the issue of domestic injury set to begin at 9:00 a.m. on January 8, 2018 is ad journed sine die. The terms of the Court's prior sanctions orders remain in effect; Mr. Grossmann may not contact Plaintiffs, their counsel, or their employees without the Court's consent. For each and every violative contact, Mr. Grossma nn will be sanctioned an additional $500 to compensate Plaintiffs and their counsel for the time they must spend dealing with that contact. With regard to PTI and IBIS, Plaintiffs are advised to proceed in accordance with Attachment A of the Courts individual rules if they wish to pursue a default judgment against these entities. (Signed by Judge Katherine Polk Failla on 8/7/2017) Copies Sent By Chambers. (js)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ELSEVIER INC., ELSEVIER B.V.,
ELSEVIER LTD., and ELSEVIER MASSON :
PIERRE GROSSMANN, IBIS CORP.,
INTERNACIONAIS, and JOHN DOE
DOC #: _________________
DATE FILED: ______________
August 7, 2017
12 Civ. 5121 (KPF)
OPINION AND ORDER
KATHERINE POLK FAILLA, District Judge:
This is the thirteenth order the Court has been compelled to issue
addressing the propriety and/or imposition of sanctions against Defendant
Pierre Grossmann. To review, on June 29, 2012, Plaintiffs Elsevier Inc.,
Elsevier B.V., Elsevier Ltd., and Elsevier Masson SAS (collectively, “Plaintiffs” or
“Elsevier”) brought this action against Defendants Publicações Técnicas
Internacionais (“PTI”), IBIS Corp. (“IBIS”), and Mr. Grossmann (together with
PTI and IBIS, “Defendants”), alleging that Defendants had operated a scheme to
(i) obtain subscriptions to the journals sold by Plaintiffs at discounted rates
and (ii) to resell those journal subscriptions to institutions otherwise obligated
to pay full price for them. For the more than five years that have elapsed since,
protracted litigation has ensued with regard to the merits of Plaintiffs’ case, the
sufficiency of Plaintiffs’ pleadings, the inaction of Defendants PTI and IBIS, and
the misconduct of Mr. Grossmann. This Opinion and Order marks the latest
chapter in the saga.
As of today, the Court has reached the end of its tether with regard to
Mr. Grossmann’s behavior. His misconduct has gone on for far too long; he
has been undeterred by this Court’s repeated attempts to curb his behavior.
The Court has been left no choice but to impose a more severe sanction against
Mr. Grossmann than it has to date. The Court will describe fully the scope of
that sanction and the reasons for its imposition in the sections that follow.
On February 15, 2017, Plaintiffs filed their motion (i) for a new trial
against Mr. Grossmann pursuant to Federal Rule of Civil Procedure 59 on the
issue of domestic injury with respect to Plaintiffs’ RICO claims and (ii) for leave
to amend Plaintiffs’ Amended Complaint pursuant to Federal Rule of Civil
Procedure 15 to set forth supplemental, domestic-injury allegations. (Dkt.
#297-300). In the May 2017 Opinion, the Court (i) granted Plaintiffs’ motion
for a new trial on the issue of domestic injury; (ii) set aside its conditional
The Court outlined the bulk of the background relevant to this case in its Opinion
issued on August 4, 2016 Opinion (the “August 2016 Opinion”). See Elsevier, Inc. v.
Grossman, 199 F. Supp. 3d 768, 774-78 (S.D.N.Y. 2016), order clarified sub nom.
Elsevier Inc. v. Grossmann, No. 12 Civ. 5121 (KPF), 2016 WL 7077037 (S.D.N.Y. Dec. 2,
2016). In its subsequent Opinion and Order resolving Plaintiffs’ motion for a new trial
and for leave to amend (the “May 2017 Opinion”), the Court provided a description of
more recent events. See Elsevier Inc. v. Grossmann, No. 12 Civ. 5121 (KPF), 2017 WL
1843298, at *1-2 (S.D.N.Y. May 8, 2017). Therefore, to avoid redundancy, the Court
here incorporates by reference the factual and procedural background statements set
forth in these Opinions, and focuses its attention in this section on only the most
relevant recent events.
default judgment, properly considered an entry of default, against Defendants
PTI and IBIS; and (iii) granted Plaintiffs’ motion for leave to amend their
pleading with regard to their RICO and RICO conspiracy claims against
Defendants PTI and IBIS. (Dkt. #338). See generally Elsevier Inc. v.
Grossmann, No. 12 Civ. 5121 (KPF), 2017 WL 1843298 (S.D.N.Y. May 8, 2017).
The Court scheduled a trial regarding the issue of domestic injury to start on
January 8, 2018. (Id.).
On May 25, 2017, Plaintiffs filed a Second Amended Complaint (the
“SAC”). (Dkt. #346). Service was made on Defendants by Federal Express on
May 23, 2017. (Dkt. #355). Defendants PTI and IBIS failed to answer the SAC,
and Plaintiffs requested the entry of default against them on June 19, 2017.
(Dkt. #356-57). A Clerk’s Certificate of Default was issued with regard to each
entity on June 26, 2017. (Dkt. #359 (PTI); Dkt. #360 (IBIS)).
In tandem with the proceedings on the merits of Plaintiffs’ claims, the
Court has overseen prolonged sanctions litigation prompted by Mr.
Grossmann’s shockingly inappropriate, harassing conduct. (See Dkt. #212,
228, 244, 275, 281, 292, 301, 331). The Court will summarize the history of
this litigation in brief here.
On January 6, 2017, the Court issued an Order (the “January 2017
Order”), in which it explained that it found itself “compelled to exercise its
inherent power to sanction Mr. Grossmann for his violations of its orders in
an effort to enforce his compliance with future orders and to compensate the
[Plaintiffs] for the time and resources that they have been forced to expend on
the countless fire drills prompted by Mr. Grossmann’s harassing conduct.
(Dkt. #275 (citing Revson v. Cinque & Cinque, P.C., 221 F.3d 71, 78 (2d Cir.
2000); Powell v. Ward, 643 F.2d 924, 931 (2d Cir. 1981) (internal quotation
marks omitted) (quoting McComb v. Jacksonville Paper Co., 336 U.S. 187, 191
(1949))). The Court found that Defendant “Grossmann’s threats of criminal
prosecution and campaign of harassing communications, occasionally laced
with racial slurs and references to historical atrocities, [were] entirely without
color and motivated by the improper purpose of extorting a monetary
settlement.” (Id. (citing Milltex Indus. Corp. v. Jacquard Lace Co., 55 F.3d 34,
38 (2d Cir. 1995) (quoting Oliveri v. Thompson, 803 F.2d 1265, 1272 (2d Cir.
1986)))). Accordingly, the Court banned Mr. Grossmann from communicating
with Plaintiffs or their counsel without the Court’s express permission. (Id.). If
Mr. Grossmann violated this Order, he was warned that he would be fined for
every violative communication “to compensate the parties for the time and
resources that they [we]re forced to dedicate to respond” to each. (Id.).
On February 17, 2017 (Dkt. #301), April 25, 2017 (Dkt. #331), and on
June 2, 2017 (Dkt. #353), the Court sanctioned Mr. Grossmann for his flouting
of the Court’s orders. As of June 2, 2017, the Court calculated that Mr.
Grossmann owed Plaintiffs a total sanctions award of $18,500. (Dkt. #353).
Mr. Grossmann was directed to pay this sum, in its entirety, by June 30, 2017.
(Id.). The Court understands that Mr. Grossmann failed to do so. (Dkt. #369).
In the June 2, 2017 Order, the Court informed Mr. Grossmann in no
uncertain terms that he would receive no additional chances to demonstrate
his capacity to comply. (See Dkt. #353). The Court cautioned Mr. Grossmann
that if he did not stop contacting Plaintiffs, Plaintiffs’ counsel, and Plaintiffs’
employees without the Court’s consent, and if he did not pay Plaintiffs the
$18,500 that he owed to them by June 30, 2017, the Court would “impose a
more severe sanction that will effectively end this case.” (Id. (emphasis
omitted)). Because Mr. Grossmann failed to comply with the Court’s directives,
the Court must now act on its warning.
“Federal courts possess certain ‘inherent powers,’ not conferred by rule
or statute, ‘to manage their own affairs so as to achieve the orderly and
expeditious disposition of cases.’” Goodyear Tire & Rubber Co. v. Haeger,
— U.S. —, 137 S. Ct. 1178, 1186 (2017) (quoting Link v. Wabash R.R. Co., 370
U.S. 626, 630-31 (1962)). “That authority includes ‘the ability to fashion an
appropriate sanction for conduct which abuses the judicial process.’” Id. at
1186 (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 44-45 (1991)).
However, “[b]ecause of their very potency, inherent powers must be
exercised with restraint and discretion.” Xiao Xing Ni v. Gonzales, 494 F.3d
260, 270 (2d Cir. 2007) (internal quotation marks omitted) (quoting Chambers,
501 U.S. at 44). A court’s “inherent power generally extends only to a court’s
management of its own affairs: to impose decorum, to maintain order, to
control admission to the bar, to discipline attorneys, to punish for contempt,
and to vacate its own judgments if tainted by fraud.” Xiao Xing Ni, 494 F.3d at
267. “Courts may impose sanctions pursuant to their inherent authority ‘only
upon a particularized showing of bad faith, which requires clear evidence that
the challenged actions are entirely without color and are taken for reasons of
harassment or delay or for other improper purposes.’” Kennedy v. City of N.Y.,
No. 12 Civ. 4166 (KPF), 2016 WL 3460417, at *2 (S.D.N.Y. June 20, 2016)
(quoting Vaigasi v. Solow Mgmt. Corp., No. 11 Civ. 5088 (RMB) (HBP), 2016 WL
616386, at *19 (S.D.N.Y. Feb. 16, 2016)); accord, e.g., Schlaifer Nance & Co. v.
Estate of Warhol, 194 F.3d 323, 336 (2d Cir. 1999). And a court may not
impose a sanction if it effectively “confer[s] subject-matter jurisdiction on itself
where it may have been lacking.” Funk v. Belneftekhim, 861 F.3d 354, 371 (2d
Cir. 2017). Doing so “exceeds a district court’s sanctioning discretion,
particularly where alternatives are available.” Id.
For the reasons the Court has detailed in its prior sanctions orders (see
Dkt. #212, 228, 244, 275, 281, 292, 301, 331), and because Mr. Grossmann’s
harassing conduct has persisted despite those orders’ issuance, the Court
must exercise its inherent powers once more to sanction Mr. Grossmann. In
this section, the Court will describe the two parts of the sanction it hereby
As described above, the Court determined that as of June 2, 2017, Mr.
Grossmann owed Plaintiffs a total sanctions award of $18,500.00. (Dkt. #353).
To date, Mr. Grossmann has failed to remit payment. (Dkt. #369).
Instead, Mr. Grossmann has persisted in violating this Court’s orders.
On July 5, 2017, Plaintiffs’ counsel 2 advised the Court
that Mr. Grossmann had sent six emails to counsel and
Plaintiffs’ employees in violation of the Court’s orders
during the time period from June 5, 2017, to July 5,
2017. (Dkt. #364).
On July 12, 2017, Plaintiffs’ counsel advised the Court
that Mr. Grossmann had sent an additional email to
counsel and Plaintiffs’ employees in violation of the
Court’s orders and which used particularly “insulting,
threatening, harassing, vulgar, and offensive language.”
On July 13, 2017, Plaintiffs’ counsel advised the Court
that Mr. Grossmann had sent two additional emails to
counsel and Plaintiffs’ employees in violation of the
Court’s orders. (Dkt. # 373).
And finally, on July 27, 2017, Plaintiffs’ counsel advised
the Court that Mr. Grossmann had sent two additional
emails to counsel and Plaintiffs’ employees in violation
of the Court’s orders. (Dkt. #371, 372).
For these 11 violations of the Court’s January 6, 2017 Order, the Court
sanctions Mr. Grossmann $5,500.00, to be paid to Plaintiffs ($500 per each of
the above 11 emails that Plaintiffs and/or their counsel and employees
The Court understands that several emails directed to Plaintiffs’ counsel were not
received by counsel because of misspellings in his email address. (See Dkt. #364, 367).
received). 3 Therefore, in total as of today, Mr. Grossmann owes Plaintiffs
$24,000.00. Mr. Grossmann must pay Plaintiffs this sum on or before
September 15, 2017.
However, as the pattern of conduct described above and in this Court’s
prior orders should indicate, the Court has been unable to curb Mr.
Grossmann’s behavior with monetary sanctions alone. Mr. Grossmann has
willfully persisted in his harassment of Plaintiffs, their counsel, and their
employees for many months, despite the Court’s repeated warnings that his
doing so would eventually force the Court to impose more severe sanctions on
him. And as the Court found previously, Mr. Grossmann’s conduct has been
entirely without color and undertaken for the improper purposes of harassment
and settlement extortion.
Thus, the Court has been left to determine what additional sanction it
may fashion for Mr. Grossmann’s conduct, which it finds plainly abusive of the
judicial process. See Goodyear Tire, 137 S. Ct. at 1186 (quoting Chambers,
501 U.S. at 44-45). The Court is mindful that in its May 2017 Opinion, the
Court granted Plaintiffs’ motion for a new trial on the issue of domestic injury
and set a trial on that issue to start on January 8, 2018. See Elsevier Inc.,
2017 WL 1843298. Therefore, the Court has endeavored here to sculpt a
The Court will not sanction Mr. Grossmann for the emails he sent directly to the Court
and not to Plaintiffs, their counsel, or their employees during this time period because
these emails were not violative of the Court’s orders. (See Dkt. #354, 358, 362, 363,
sanction that will permit Plaintiffs to vindicate their right to a new and fair trial
that is not compromised by Mr. Grossmann’s threats and harassment.
The Court has considered simply deeming the issue of domestic injury
admitted, and entering judgment in Defendant’s favor. But the Court has
ultimately declined to do so here in light of the Second Circuit’s recent
expression of a preference for evidentiary sanctions rather than sanctions that
effectively dismiss a case. Specifically, in Funk v. Belneftekhim, the Circuit
indicated that barring defendants from asserting a sovereign-immunity defense
was an impermissible sanction, particularly because “prohibiting defendants
from offering further supporting evidence” on the relevant issue was a lesser
sanction that would likely achieve the same result. 861 F.3d at 371-72. The
Circuit admitted that “the practical difference between an evidentiary sanction
and one striking defendants’ foreign sovereign immunity claim may appear
small,” but still held the former was preferable because while “[e]videntiary
sanctions could shape, [and] even limit, the factual record[,] ... the district
court would still have to make a merits ruling from that record on defendants’
foreign sovereign immunity claim.” Id. at 372.
To be clear, the instant case is distinguishable from Funk in several
ways. Here, the Court has already made a merits ruling of sorts; in its May
2017 Opinion, the Court deemed sufficient Plaintiffs’ proffered evidence of
domestic injury. Elsevier Inc., 2017 WL 1843298, at *6 (“Plaintiffs have
indicated that at a new trial in this case, they would introduce evidence that all
but three of the 51 journals at issue in this case were shipped from and/or
authorized to be shipped from within the United States. The Court finds this
proffer satisfactory, and grants Plaintiffs’ motion for a new trial on the issue of
domestic injury.” (citation omitted)). Moreover, the Court’s resolution of the
domestic-injury issue is only dispositive in light of a jury’s finding at trial that
Plaintiffs have already proven all other elements of their RICO claims under
1964(c). Id. at *1. And finally, the sanction imposed here does not give the
Court subject-matter jurisdiction as did the sanction in Funk; this Court has
subject-matter jurisdiction under 28 U.S.C. § 1331. See, e.g., Am. Psychiatric
Ass’n v. Anthem Health Plans, Inc., 821 F.3d 352, 359 (2d Cir. 2016) (“[T]he
absence of a valid ... cause of action does not implicate subject-matter
jurisdiction, i.e., the court’s statutory or constitutional power to adjudicate the
case.” (omission and emphasis in original) (internal quotation marks omitted)
(quoting Lexmark Int’l, Inc. v. Static Control Components, Inc., — U.S. —, 134 S.
Ct. 1377, 1387 n.4 (2014)); Alphas Co. of N.Y. Inc. v. Hunts Point Terminal
Produce Coop., Inc., No. 14 Civ. 145 (ALC), 2017 WL 1929506, at *3 (S.D.N.Y.
May 9, 2017) (applying Am. Psychiatric Ass’n in the RICO context and holding
that failure to demonstrate RICO cause of action did not implicate subjectmatter jurisdiction).
In an abundance of caution however, given Mr. Grossmann’s pro se
status and the special solicitude that it affords him, see Tracy v. Freshwater,
623 F.3d 90, 100-04 (2d Cir. 2010); McLeod v. Jewish Guild for the Blind,
— F.3d —, No. 15-2898-cv, 2017 WL 3044626, at *3 (2d Cir. July 19, 2017)
(per curiam) (affirming “well-worn precedent concerning a district court’s
obligation to liberally construe pro se submissions”), and the Circuit’s guidance
in Funk, the Court will impose only an evidentiary sanction at this stage. The
Court will preclude Mr. Grossmann from introducing evidence as to the issue
of domestic injury.
For the reasons stated above, Plaintiffs may file a motion for summary
judgment on the issue of domestic injury on or before September 15, 2017, and
Mr. Grossmann may not introduce evidence to oppose this motion. In the
event that the Court does not grant Plaintiffs’ summary judgment motion on
the issue of domestic injury, the Court will set a new trial date. For now, the
trial regarding the issue of domestic injury set to begin at 9:00 a.m. on
January 8, 2018 is adjourned sine die.
The terms of the Court’s prior sanctions orders remain in effect;
Mr. Grossmann may not contact Plaintiffs, their counsel, or their employees
without the Court’s consent. For each and every violative contact, Mr.
Grossmann will be sanctioned an additional $500 to compensate Plaintiffs and
their counsel for the time they must spend dealing with that contact.
With regard to PTI and IBIS, Plaintiffs are advised to proceed in
accordance with Attachment A of the Court’s individual rules if they wish to
pursue a default judgment against these entities.
August 7, 2017
New York, New York
KATHERINE POLK FAILLA
United States District Judge
A copy of this Order was mailed by Chambers to:
100 Hilton Ave, Unit M23
Garden City, NY 11530
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