Ceglia v. Zuckerberg et al
Filing
583
DECISION and ORDER denying 499 Motion to Strike. Plaintiff ordered to file any rebuttal expert reports within 10 days. Signed by Hon. Leslie G. Foschio on 10/31/2012. (SDW)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
PAUL D. CEGLIA,
Plaintiff,
v.
MARK ELLIOT ZUCKERBERG, and
FACEBOOK, INC.,
DECISION
and
ORDER
10-CV-00569A(F)
Defendants.
APPEARANCES:
PAUL A. ARGENTIERI, ESQ.
Attorney for Plaintiff
188 Main Street
Hornell, New York 14843
BOLAND LEGAL, LLC
Attorney for Plaintiff
DEAN M. BOLAND, of Counsel
18123 Sloane Avenue
Lakewood, Ohio 44107
GIBSON, DUNN & CRUTCHER, LLP
Attorneys for Defendants
ORIN S. SNYDER,
ALEXANDER H. SOUTHWELL, and
THOMAS H. DUPRESS, JR., of Counsel
200 Park Avenue, 47th Floor
New York, New York 10166-0193
JURISDICTION
This action was referred to the undersigned by Honorable Richard J. Arcara on
May 27, 2011 for pretrial matters. The action is presently before the court on Plaintiff’s
motion to strike Defendants’ expert witness report (Doc. No. 499), filed August 22,
2012.
BACKGROUND and FACTS1
In this action, Plaintiff Paul D. Ceglia (“Plaintiff”), alleges that a “Work for Hire”
contract (“the purported contract”), purportedly executed on April 28, 2003 by Plaintiff
and Defendant Mark Elliott Zuckerberg (“Zuckerberg”), established a partnership for the
development and commercialization of two separate internet business ventures
including “The Face Book,” the social-networking website now known as Defendant
Facebook, Inc. (“Facebook”), and StreetFax (“StreetFax”), a project which Plaintiff was
developing and hoped to market for profit. The purported contract provides, as relevant
here, Plaintiff would assist in funding Facebook’s development in exchange for “a half
interest (50%) in the software, programming language and business interests derived
from the expansion of that service to a large audience.” First Amended Complaint
(Doc. No. 39) (“Amended Complaint”) ¶ 1. Plaintiff asserts seven claims for relief
alleging breach of fiduciary duty, actual and constructive fraud, and breach of contract.
Defendants contend the purported contract is a forgery, and that the real contract
executed on April 28, 2003, is a two-page document titled “StreetFax” (“the StreetFax
document”), containing the entire agreement reached by Plaintiff and Zuckerberg on
April 28, 2003, which provided that Zuckerberg, in exchange for monetary payment
from Plaintiff, would perform programming work for Plaintiff’s StreetFax project. A copy
of the StreetFax document was located as an attachment to an email within the
memory of one of Plaintiff’s computers during a forensic examination performed by
Defendants’ digital forensics and electronic evidence experts Stroz Friedberg, LLC
1
The Facts are taken from the pleadings and m otion papers filed in this action.
2
(“Stroz Friedberg”), in July 2011 in connection with this action.2
On March 26, 2012, Defendants filed two dispositive motions, including a motion
to dismiss (Doc. No. 318) (“Motion to Dismiss”), and for judgment on the pleadings
(Doc. No. 320) (“Motion for Judgment”) (together, “Defendants’ Dispositive Motions”),
and also moved to stay discovery pending resolution of the Dispositive Motions (Doc.
No. 322) (“Motion to Stay”). In a Minute and Order entered on April 4, 2012 (Doc. No.
348) (“April 4, 2012 Order”), the undersigned granted the Motion to Stay in part, gave
Plaintiff 60 days in which to file expert reports opposing Defendants’ Motion to Dismiss,
after which both Plaintiff and Defendants had two months in which to depose the
experts, following which Plaintiff was given two months in which to file his opposition to
Defendants’ Dispositive Motions, and Defendants thereafter had 30 days in which to file
any reply. On August 3, 2012, all parties joined in a motion (Doc. No. 468) requesting a
ten-day extension of the deadline set by the April 4, 2012 Order. By Text Order dated
August 6, 2012 (Doc. No. 471) (“August 6, 2012 Order”), the joint motion was granted,
and the deadline to conclude expert depositions was extended from August 4, 2012 to
August 14, 2012, with the other deadlines also extended by 10 days.
The Motion to Dismiss is predicated on Defendants’ argument that the purported
contract is a forgery, such that Plaintiff, by filing and litigating the instant action, has
perpetrated a fraud on the court, and that Plaintiff has engaged in litigation misconduct
including, inter alia, the willful destruction of critical and relevant evidence. Defendants’
Motion to Dismiss relies in large part on the reports of Defendants’ experts including, as
2
Plaintiff m aintains the StreetFax docum ent is fraudulent, and that Defendants’ digital forensic
experts planted such docum ent on Plaintiff’s com puter.
3
relevant to the instant motion, a report prepared by forensic document examiner and
handwriting expert Gus R. Lesnevich (“Lesnevich”), dated March 25, 2012. Expert
Report of Gus R. Lesnevich, Forensic Document Examiner (“Initial Report”), filed March
26, 2012, as Exh. E (Doc. No. 329), to Defendants’ Motion to Dismiss. In his Initial
Report, Lesnevich concluded that during the course of this litigation, Plaintiff has
proffered at least two different versions of the purported contract, including one that
was attached to the original complaint, and a different one produced to Plaintiff’s expert
for examination in January 2011, and then to Defendants’ experts for examination in
July 2011. This conclusion was reached after Lesnevich analyzed four separate
electronic images of the purported contract, including (1) an image in TIF file format3
sent by Plaintiff to his attorney, Paul A. Argentieri, Esq. (“Argentieri”), on June 27, 2010
(“Q-1"); (2) an image attached to the original complaint filed June 30, 2010 (“Q-2"); (3)
an image taken by Plaintiff’s expert, Valerie Aginsky (“Aginsky”), during Aginsky’s
January 13, 2011 examination of the purported contract (“Q-3"); and (4) an image taken
by Defendants’ forensic document examiner expert Peter V. Tytell (“Tytell”), during
Defendants’ July 14, 2011 examination of the purported contract presented by
Argentieri (“Q-4").4 In his Initial Report prepared based on his analysis of the four
images, Lesnevich identified 20 dissimilarities among the four images, all found on
page 1 of the purported contract. The types of dissimilarities Lesnevich observed
3
“TIF” is an acronym for “tagged im age file” and refers to a file form at for storing im ages such as
photographs, resolution-dependent graphics or scanned im ages of docum ents. See TIF vs. PDF
Form ats, available at: http://www.ehow.com /about_6464437_tif-vs_-pdf-form ats.
4
The record does not indicate which of the two asserted versions of the purported contract is
attached as an exhibit to the Am ended Com plaint.
4
include dissimilarities as to (1) slant/slope of individual letters and numbers, Initial
Report at 3-10; (2) letter formation or design of the letters, id. at 11-14; (3) letter
spacing or placement on the document, id. at 15-20; (4) beginning/ending strokes, id. at
21-22; (5) height-relationship, id. at 23-26; and (6) alignment of the handwritten
interlineations with certain typeface letters, id. at 27-29. Both Q-1 and Q-2 contained
the same dissimilarities on page 1 as Q-3 and Q-4, leading Lesnevich to conclude two
different versions of the purported contract had been proffered, with Q-1 and Q-2 being
different images of the version attached as an exhibit to the original complaint (“first
version”), and Q-3 and Q-4 being different images of the version proffered for
examination by Plaintiff’s expert Aginsky and Defendants’ experts (“second version”).
For example, one of the “slant/slope dissimilarities” Lesnevich observed was that
in “the word ‘May’ in the questioned handwritten interlineations . . . the legs of the letter
“M” run parallel to each other on Exhibits Q-1 and Q-2. However, on Exhibits Q-3 and
Q-4, the legs of the letter “M” do not run parallel to each other.” Initial Report at 3-4 and
Fig. 2 at 6. With regard to letter spacing or placement on the document, Lesnevich
“examined the number ‘2003' in the questioned handwritten interlineations and found
that the space between the numeral ‘2' and the numeral ‘0' on Exhibits Q-1 and Q-2 is
significantly smaller than the space between the numeral ‘2' and the numeral ‘0' on
Exhibits Q-3 and Q-4.” Initial Report at 15 and Fig. 12 at 18.
In accordance with the April 4, 2012 Order, on June 4, 2012, Plaintiff filed his
expert reports with exhibits, including Plaintiff’s expert witness reports (Doc. No. 415)
(“Doc. No. 415"). On June 19, 2012, Plaintiff moved to strike Doc. No. 415 and all
related exhibits, requesting permission to refile Doc. No. 415 with redacted exhibits, and
5
the motion was granted by a text order entered June 20, 2012 (Doc. No. 450). By order
entered June 26, 2012, Plaintiff re-filed Doc. No. 415, redacted, as the Declaration of
Forensic Document Examiner James A. Blanco in Support of Plaintiff’s Forthcoming
Response to Defendants’ Motion to Dismiss for Fraud (Doc. No. 459) (“Blanco Report”),
attached to which are the reports of Plaintiff’s other experts.
After preparing his Initial Report, Lesnevich continued to examine the four
images based on which Lesnevich prepared a Supplemental Report (“Supplemental
Report”) (Doc. No. 472-1). In the Supplemental Report, Lesnevich particularly focused
on the second pages of the four copies of the purported contract, on which 12
dissimilarities were noticed. Consistent with the dissimilarities found among the four
copies of page 1, Q-1 and Q-2 contained the same dissimilarities on page 2 as Q-3 and
Q-4, corroborating Lesnevich’s conclusion in the Initial Report that Plaintiff has
proffered at least two different versions of the purported contract during this litigation.
The types of dissimilarities Lesnevich observed include dissimilarities as to (1)
beginning/ending strokes, Supplemental Report at 6-14; (2) letter formation or design of
the letters, id. at 15-30; and (3) letter spacing or placement on the document, id. at 3133. Lesnevich also examined the handwritten signatures, signature dates, and initials
on Exhibit Q-3, being one of the two copies of the second version of the purported
contract and, more specifically, the image taken by Plaintiff’s expert, Aginsky during
Aginsky’s January 13, 2011, physical examination of the purported contract, and
compared such handwritings to known handwriting exemplars of Zuckerberg.
Lesnevich “observed significant evidence of changes in direction, hesitation, unnatural
writing movement, poor line quality, angular writing movements, differences in letter
6
formation and design, and beginning stroke dissimilarities in the questioned Zuckerberg
signature and date of signature on Exhibit Q-3.” Supplemental Report at 34. Lesnevich
concluded “that the questioned Zuckerberg signature and date of signature on Exhibit
Q-3 were slowly drawn and not naturally written.” Id. In particular, Lesnevich found with
regard to Zuckerberg’s signature (1) line quality dissimilarities, Supplemental Report at
34-38; (2) letter formation or design of letters, id. at 39-32; (3) hesitation, id. at 44-48;
and (4) retouching dissimilarities, id. at 49-50. As to Zuckerberg’s initials, Lesnevich
found (1) tapered and blunt ending strokes, Supplemental Report at 51-52; (2)
slant/slope dissimilarities, id. at 53-56; and (3) vertical-alignment dissimilarities, id. at
57-60. Lesnevich also compared Ceglia’s signature and date of signature on Exhibit Q3 to known Ceglia handwriting exemplars, and concluded “the questioned Ceglia
signature and date of signature one Exhibit Q-3 were slowly drawn and not naturally
written.” Supplemental Report at 61. In particular, Lesnevich found dissimilarities as to
(1) pen pressure and line quality, id. at 61-67; (2) tapered and blunt ending strokes, id.
at 68-70; and (3) re-touching, id. at 71-72.
Similar to the Initial Report, Lesnevich concluded that Plaintiff “has proffered at
least two different physical documents as the Work for Hire document,” Supplemental
Report at 73, and with respect to Exhibit Q-3, the questioned Zuckerberg signature,
initials, and date of signature on the purported contract “are unnaturally written tracings
that were not written by Mark Zuckerberg,” id. at 73-74, and the questioned Ceglia
signature and signature date on the purported contract “are unnaturally written tracings”
that “could have been modeled off of another source,” including Exhibits Q-1 and Q-2.
In short, Lesnevich determined Zuckerberg’s purported signature and date on page 2
7
and initials on page 1 were “trace forgeries.”
While Lesnevich continued to examine the four images of the purported contract,
expert depositions were noticed and conducted by the parties, with Defendants noticing
and conducting depositions of all eight of Plaintiff’s experts, but Plaintiff, despite
noticing eleven depositions of Defendants’ experts, only deposed five, and canceled the
other six depositions. Lesnevich was one of the six Defendants’ experts whose
depositions had been noticed and then canceled by Plaintiff. Specifically, after
scheduling Lesnevich’s deposition for August 8, 2012, Plaintiff’s attorney, Dean Boland,
Esq. (“Boland”), informed Defendants’ attorney, Alexander H. Southwell, Esq.
(“Southwell”), by email on August 6, 2012, that Plaintiff had decided not to depose
Lesnevich, and wanted to advise Defendants of such decision before Lesnevich spent
time traveling to New York for the deposition. In response, Southwell informed Boland
that the deposition cancellation notice was sent too late, and that Lesnevich was
already en route to New York for the deposition at which Lesnevich had anticipated
providing Plaintiff with Lesnevich’s Supplemental Report. On August 9, 2012,
Defendants filed the Supplemental Report, five days before the scheduled close of
expert depositions based on the April 4, 2012 Order, as extended by the August 6,
2012 Order. Plaintiff made no attempt to reschedule Lesnovich’s deposition, nor did
Plaintiff request more time to consider Lesnevich’s findings contained in the
Supplemental Report; rather, on August 21, 2012, Plaintiff filed his response in
opposition to Defendants’ Motion to Dismiss (Doc. No. 481).
On August 22, 2012, Plaintiff filed the Motion to Strike New Expert Reports (Doc.
No. 499) (“Plaintiff’s motion”), supported by Motion to Strike New Expert Reports and
8
for Order Prohibiting the Filing of New Expert Reports in Support of Defendants’ Motion
to Dismiss for Fraud on the Court (Doc. No. 500) (“Plaintiff’s Memorandum”). On
September 21, 2012, Defendants filed Defendants’ Memorandum of Law in Opposition
to Plaintiff’s Motion to Strike New Expert Reports and for Order Prohibiting the Filing of
New Expert Reports in Support of Defendants’ Motion to Dismiss for Fraud on the Court
(Doc. No. 548) (“Defendants’ Response”), and the Declaration of Amanda M. Aycock,
Esq. (Doc. No. 549) (“Aycock Declaration”). On September 28, 2012, Plaintiff filed the
Reply to Defendants’ Response Regarding Motion to Strike New Expert Report (Doc.
No. 563) (“Plaintiff’s Reply”). Oral argument was deemed unnecessary.
Based on the following, Plaintiff’s motion is DENIED.
DISCUSSION
1.
Motion to Strike Expert Witness Report
Plaintiff moves to strike Lesnevich’s Supplemental Report and for a court order
barring Defendants from submitting any additional expert reports. Plaintiff’s
Memorandum at 1. According to Plaintiff, Defendants’ filing of Lesnevich’s
Supplemental Report after Plaintiff had filed his expert reports as part of the papers
filed in response to Defendants’ Motion to Dismiss, establishes the Supplemental
Report is a rebuttal to the Blanco Report, the filing of which is not permitted by any
court order issued in this action. Id. at 2. Plaintiff particularly argues that Defendants’
theory that the purported contract is a fraud is based on the “page one substitution”
theory asserted by Lesnevich in his Initial Report, but that Lesnevich, in the
Supplemental Report, abandons the page one substitution theory in favor of an entirely
9
new theory based on “signature tracing” or “trace forgery.”5 Id. at 2-7. In opposition,
Defendants maintain the Supplemental Report was filed in furtherance of Defendants’
obligations under Fed.R.Civ.P. Rules 26 and 37. Defendants’ Response at 6-8.
According to Defendants, exclusion of the Supplemental Report is a drastic remedy that
is not supported under the circumstances. Id. at 7-8. In further support of his motion,
Plaintiff argues Defendants are estopped from asserting the trace forgery theory by a
judicial admission made by Defendants’ attorney Orin S. Snyder, Esq. (“Snyder”) at a
court hearing on June 30, 2011. Plaintiff’s Reply at 1-2. Plaintiff further maintains the
filing of the Supplemental Report violates Fed.R.Civ.P. 26 (“Rule 26") because the
newly asserted trace forgery theory is untimely. Id. at 2-10.
Preliminarily, the parties agree that because general discovery has been stayed,
the discovery at issue is governed by Fed.R.Civ.P. 37 (“Rule 37"), i.e., court-ordered
discovery pursuant to the April 4, 2012 Order, as amended by the August 6, 2012
Order, rather than Rule 26(a)(1) which delineates what information must be disclosed to
an opposing party without awaiting a discovery request. Nevertheless, although the
April 4, 2012 Order stayed general discovery under Rule 26(a)(1), the same order
directs expert discovery limited to the issues before the court on Defendants’ dispositive
5
More specifically, according to the page one substitution theory, Zuckerberg was physically in
contact with the second page of the purported contract, as evidenced by fact that Zuckerberg’s signature
on page two is authentic, but the first page of the purported contract is a forgery, and the use of m ultiple
type styles or fonts and the pattern of ink usage indicate the two pages were prepared at different tim es
with the second page being authentic, but the first page being a forgery that was substituted for the
original first page. Plaintiff’s Mem orandum at 3-7. In contrast, the trace forgery theory provides that both
the first and second pages of the purported contract are forgeries, with Zuckerberg’s signature and initials
on such contract being forged by tracing sim ilar writings from the StreetFax docum ent recovered by
Defendants’ digital forensics experts from one of Plaintiff’s com puters, id., which Defendants m aintain is
the authentic contract executed between the parties on April 28, 2003, and which is devoid of any m ention
of Facebook or its creation.
10
motions, and expert discovery is governed by Rule 26(a)(2) which provides “a party
must disclose to the other parties the identity of any witness it may use at trial to
present evidence under Federal Rule of Evidence 702, 703 or 705 [pertaining to opinion
of expert witness].” Fed.R.Civ.P. 26(a)(2)(A). Such disclosure “must be accompanied
by a written report – prepared and signed by the witness – if the witness is one
retained or specially employed to provide expert testimony in the case . . . .”
Fed.R.Civ.P. 26(a)(2)(B). The expert witness’s report must contain, inter alia, “a
complete statement of all opinions the witness will express and the basis and reasons
for them. . . .” Fed.R.Civ.P. 26(a)(2)(B)(i). Furthermore, an expert witness has a duty
to supplement the expert report under both Rule 26(a)(2)(E) (“in a timely manner if the
party learns that in some material respect the disclosure or response is incomplete or
incorrect, and if additional or corrective information has not otherwise been made
known to the other parties during the discovery process or in writing.”), and Rule
26(e)(2) (“For an expert whose report must be disclosed under Rule 26(a)(2)(B), the
party’s duty to supplement extends both to information included in the report and to
information given during the expert’s deposition.”).
Under Rule 37(c)(1), evidence may be precluded for failure to disclose, to
supplement an earlier response, or to admit. McNerney v. Archer Daniels Midland Co.,
164 F.R.D. 584, 587 (W.D.N.Y. 1995) (“Federal Rule 37(c)(1) provides that a party who,
without substantial justification, fails to disclose information required by Rule 26, shall
not be permitted to use as evidence at trial information not disclosed.”). Rule 37(c)(1)
“is a form of a sanction, designed to encourage compliance with the disclosure
requirements of the Rules and the Court,” Schanzer v. United Technologies Corp., 120
11
F.Supp.2d 200, 206 (D.Conn. 2000), and “may not come into play unless there first has
been a violation of a disclosure obligation imposed by Rule 26(a) or 26(e)(1).” 7
MOORE’S FEDERAL PRACTICE § 37.60[1] (2012). As such, under Rule 37, where “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 trial, unless the failure was substantially justified or is harmless.”
Fed.R.Civ.P. 37(c)(1). In other words, although the Initial Report was prepared
pursuant to a court order under Rule 37, the Supplemental Report may be precluded
under Rule 37(c)(1) only if Defendants fail to provide such supplemental information as
required under Rule 26(a) or (e), and such failure is not substantially justified or
harmless.
2.
Factors
Precluding an expert’s testimony or report under Rule 37 is a “drastic remedy”
that should be used only where the “party’s conduct represents flagrant bad faith and
callous disregard of the federal rules.” Lent v. Signature Truck Systems, Inc., 2011 WL
4575312, at * 3 (W.D.N.Y. Sept. 30 2011) (citing McNerney, 164 F.R.D. at 587). “In
making this determination, courts consider several factors, including (1) the reason for
the failure to timely disclose, (2) the importance of the testimony, (3) potential prejudice
in allowing the testimony, and (4) the availability of a continuance to cure such
prejudice.” Id. (citing Arnold v. Krause, Inc., 232 F.R.D. 58, 68 (W.D.N.Y. 2004)). Here,
the circumstances fail to establish that the filing of the Supplemental Report shows
Defendants’ acted with flagrant bad faith or callous disregard of the federal rules;
12
rather, the record demonstrates the Supplemental Report was timely filed, contains
important information that is not prejudicial to Plaintiff, and that Plaintiff, upon receiving
the Supplemental Report, could have either rescheduled Lesnevich’s deposition to
address the Supplemental Report’s findings, or sought an extension of time from the
court to do so.
As stated, Plaintiff argues the Supplemental Report should be precluded as
untimely filed because it does not qualify under Rule 26(e) as supplementation insofar
as it asserts a completely new theory. Plaintiff’s Memorandum at 3-4. Specifically,
Plaintiff maintains that in his Initial Report, Lesnevich set forth the “page one
substitution” theory, i.e., that although Zuckerberg’s signature on page two of the
purported contract was authentic, Zuckerberg’s initials and handwritten references to
Facebook are forgeries. Id. at 4. According to Plaintiff, in his Supplemental Report,
Lesnevich abandons the page one substitution theory in favor of the “trace forgery”
theory, i.e., that all handwritings on both pages one and two of the purported contract
attributed to Zuckerberg are, in fact, forgeries. Id. at 5-6. According to Plaintiff, in the
Supplemental Report, Lesnevich abandons the page one substitution theory on which
the Initial Report is based, and newly presents the trace forgery theory because the
conclusions of Plaintiff’s experts were skeptical of the original “page one substitution
theory” and rendered it dubious. Plaintiff’s Memorandum at 2-4. Plaintiff further
maintains that the Supplemental Report denomination cannot negate the fact that such
report, rather than containing supplemental findings, is an attempt to “ambush” Plaintiff
with an entirely new theory after Plaintiff had already expended considerable time and
money deposing Defendants’ experts, such that Defendants’ filing of the Supplemental
13
Report had unduly prejudiced Plaintiff. Id. at 4-7. As such, Plaintiff maintains the
Supplemental Report does not qualify as a supplemental filing as contemplated by
Fed.R.Civ.P. 26 and its filing on August 9, 2012 is untimely. Id. at 7-11.
In opposition, Defendants maintain the Supplemental Report was filed in
furtherance of Defendants’ obligations under Fed.R.Civ.P. Rules 26 and 37.
Defendants’ Response at 6-8. According to Defendants, exclusion of the Supplemental
Report is a drastic remedy that is not supported under the circumstances. Id. at 7-8.
Plaintiff’s argument that the Supplemental Report does not qualify as a supplemental
report, and thus is untimely, because it is inconsistent with the Initial Report insofar as
Lesnevich, in the Supplemental Report, abandons the page one substitution theory on
which the Initial Report is based, in favor of the newly asserted trace forgery theory is
without merit.
Of particular significance is that a plain and thorough reading of the Initial Report
establishes that not only was the so-called page one substitution theory of fraud never
adopted by Lesnevich, but the Initial Report is completely devoid of any mention of
such theory. See Initial Report, passim. Rather, the record establishes the page one
substitution theory was first discussed by Plaintiff’s expert, forensic scientist Larry F.
Stewart (“Stewart”), who attempts to project the theory onto Lesnevich. See
Declaration of Larry F. Stewart in Support of Plaintiff’s Forthcoming Response to
Defendants’ Motion to Dismiss for Fraud (Doc. No. 416) (“Stewart Report”).
Specifically, in his Synopsis of Results, Stewart states that although evidence supports
that page one of the purported Facebook contract was originally executed, i.e., initialed
as regards certain handwritten emendations relating to Facebook, at the same time as
14
page 2, the first page of the StreetFax document was not the original first page of the
purported Facebook contract. Stewart Report ¶¶ 22-23. See also Stewart Report ¶ 86
(“. . . I found no basis to support a conclusion that page 1 of the Facebook Contract had
been substituted for a now missing page.”); ¶¶ 87-93 (discussing physical analysis and
various testing established both page 1 and page 2 of the purported contract were
created at the same time, using the same printer and toner). Stewart also discusses
statements made by Defendants’ forensic document examiner and chemist Gerald M.
LaPorte (“LaPorte”), and forensic document examiner and chemist Albert Lyter (“Lyter”),
regarding the possibility that a different page 1 was originally stapled to page 2 of the
purported contract, and later removed and replaced, Stewart Report ¶¶ 158-181.
However, neither LaPorte nor Lyter specifically concludes that the purported contract is
composed of a forged page one stapled to an authentic page two. See Forensic Report
of LaPorte (Doc. No. 326) (“LaPorte Report”) at 3 (“There is no evidence to refute the
possibility that another page, other than page 1 of the Work for Hire Document, was
originally stapled to page 2 and removed at a later time.”), and 20 (refuting statement by
Blanco that he “determined that the staple holes on both pages [of the Work for Hire
document] align demonstrating that these two pages [ ] have only been stapled one
time wherein they were actually stapled together,” by explaining that “purported
alignment of staple holes on two pieces of paper does not ‘demonstrate’ that those
pages have been stapled only one time. It is quite possible to detach a multi-page
document, attach a new page, and staple through the pre-existing staple hole so that it
appears the entire document was only stapled once.”); Forensic Report of Lyter (Doc.
No. 328) (“Lyter Report”) at 5 (“In my experience, a single set of staple holes does not
15
mean that a document was stapled only once or even necessarily together. It is quite
possible to create a set of staple holes that appear to match on two pieces of paper
when in fact stapling the documents more than one time.”). Furthermore, insofar as
Plaintiff refers to Defendant’s forensic document examiner expert Tytell, a plain reading
of Tytell’s report (Doc. No. 330) (“Tytell Report”), demonstrates although Tytell
concluded the purported contract “is not consistent with the normal preparation of a
two-page document . . . [because] the use of multiple type styles and the pattern of ink
usage indicate preparation of the two pages at different times,” Tytell Report at 12,
Tytell does not specifically opine that the original first page of the purported contract
was replaced with a different page that was a forgery. Accordingly, the record is simply
devoid of any evidence establishing that any of Defendants’ experts ever advocated the
page one substitution theory, posited by Plaintiff, as a basis for Defendants’ fraud
assertion, such that the trace forgery theory found in Lesnevich’s Supplemental Report
is not a newly asserted theory.6
6
The court notes that the page one substitution theory is not inconsistent with the trace forgery
theory. Specifically, Defendants’ experts consistently opined that at least two copies of the purported
contract were provided based on the findings indicating that Exhibits Q-1 and Q-2 are copies of the first
version, which was attached to the original com plaint, whereas Exhibits Q-3 and Q-4 are copies of the
second version, which was exam ined by experts for both Plaintiff and Defendants, with the sam e
dissim ilarities between the first and second versions found regardless of whether Exhibit Q-1 or Q-2 is
com pared to Exhibit Q-3 or Q-4. Such opinions suggest the possibility that the second page of either the
first or second version of the purported contract is authentic, and the first page is a forgery, yet to obtain
two pages printed on paper from a single ream , using the sam e printer and ink, after creating a new first
page which Plaintiff then initialed and dated to appear as if it was originally produced on April 28, 2003,
both signed and unsigned copies of the second page of one version of the authentic, possibly the
Streetfax docum ent, were then printed, with the forger placing the unsigned copy over the signed copy so
as to obtain, using the sam e pen as the handwritten interlineations appearing on the first page, a traced
signature of the copy from the authentic docum ent. This com bination of replacing the first page, yet
tracing the signature on the second page, is not inconsistent with either the page-one substitution theory
or the trace signature theory. As such, the court need not determ ine on this m otion an accurate
explanation of a possible m otive regarding the apparent discrepancies between Q-1 and Q-2, being
copies of the first version of the purported contract attached as an exhibit to the original com plaint, and Q3 and Q-4, being copies of the second version of the purported original contract that was provided to
16
Not only does the Supplemental Report fail to assert, contrary to Plaintiff’s
assertion, new theories not found in the Initial Report, but the conclusions of both of
Lesnevich’s reports are similar, applying several identical theories of why the
authenticity of certain handwritten interlineations is questionable. Specifically, in both
the Initial Report and the Supplemental Report, Lesnevich finds dissimilarities as to (1)
beginning/ending strokes, Initial Report at 21-25, Supplemental Report at 6-14; (2) letter
formation or design of the letters, Initial Report at 11-14, Supplemental Report at 15-30;
and (3) letter spacing or placement on the document, Initial Report at 15-20,
Supplemental Report at 31-33.
Plaintiff also maintains the filing of the Supplemental Report is not truly
supplemental and violates Rule 26(e) because the information contained in the
Supplemental Report was available to Defendants more than a year prior to the
preparation of the Supplemental Report, yet Defendants delayed more than one year
before filing the Supplemental Report, the Supplemental Report adds a new theory that
is not supported by the facts, and Defendants’ change of theory makes new reports
superfluous, and potentially will result in the submission of additional new expert
reports, and undue delay. Plaintiff’s Reply at 2-6. Plaintiff further asserts his own
request for additional time to file expert reports (Doc. No. 391), was denied by the court
on May 31, 2012 (Doc. No. 408) (“May 31, 2012 D&O”) (denying as unnecessary
Plaintiff’s request for an extension of time to file expert reports, but dismissing without
prejudice Plaintiff’s alternative request for leave to amend or supplement such reports
experts for both Plaintiff and Defendants for physical analysis and exam ination after the action was
com m enced.
17
after submission of all material Defendants are ordered to provide Plaintiff), such that
Defendants’ filing of the Supplemental Report is unfair. Id. at 6-7.
A plain reading of the Supplemental Report, however, demonstrates it merely
sets forth information that was not available when the Initial Report was completed
because Lesnevich had, at that time, only examined the first page of the purported
contract. See Initial Report at 2 (“I was asked to analyze and compare each of the
questioned handwritten interlineations on page 1 of the four images.”) (underlining
added), and 3 (“During my examination and comparison of the questioned documents, I
found at least 20 observable dissimilarities between the questioned handwritten
interlineations appearing on page 1 of Exhibits Q-1, Q-2, Q-3, and Q-4.”) (underlining
added). Lesnevich’s conclusion that “these dissimilarities in handwriting demonstrate,
to the highest degree of certainty possible, that these images are not of the same
physical two-page document,” Initial Report at 3 (underlining in original), was thus
reached based on Lesnevich’s examination of the four separate images of only the first
page of the purported contract. That the Initial Report is devoid of any reference to the
purported contract’s second page, other than the fact that the purported contract is
comprised of two pages, further reinforces that Lesnevich’s conclusion in his Initial
Report was based only of his examination of the first page. Similarly, that Lesnevich’s
conclusions in the Supplemental Report are limited to his observations of the 12
differences observed while analyzing the four copies of page 2 are consistent with
Lesnevich’s conclusions in the Initial Report, specifically, that Plaintiff had proffered two
different versions of the purported contract, is important, viz, whether forgery is afoot, to
this court’s determination of the issue before it on Defendants’ Motion to Dismiss. Nor
18
do the Supplemental Report’s conclusions impermissibly bolster the conclusions
contained in the Initial Report, but merely set forth additional findings consistent with
the Initial Report’s findings, albeit based on Lesnevich’s analysis of the purported
contract’s second page.
There is also no basis on which to find the Supplemental Report unduly
prejudicial. Courts which have found undue prejudice based on a supplemental report
have done so where the supplemental report contained new theories or included vast
amounts of new information beyond what was previously provided. See Lent, 2011 WL
4575312, at * 3 (citing cases). Here, as discussed, Discussion, supra, at 16, the
Supplemental Report does not set forth any new theory of forgery but merely extends
the same theory advanced in the Initial Report with respect to the 20 inconsistencies
found on page one of the various copies of the purported contract to the 12
inconsistencies Lesnevich observed and analyzed on the various copies of the second
page of the purported contract. Nor is there any merit to Plaintiff’s assertion, Plaintiff’s
Memorandum at 4, that the Supplemental Report is twice as long as the Initial Report.
A plain comparison of the Initial Report with the Supplemental Report establishes that
although the Initial Report contains only 10 pages of text, the remaining 22 pages being
exhibits, and the Supplemental Report contains 25 pages of text, with the remaining 49
being exhibits, the exhibits in the Supplemental Report are spaced with fewer per page,
resulting in approximately double the number of pages as would have been required
had such exhibits been spaced similar to the spacing of the exhibits in the Initial Report.
The content of the Supplemental Report is, moreover, largely consistent with the
content of the Initial Report, with the same forgery theories applied to Zuckerberg’s
19
signature, signature date, and initials. Further, neither 10 nor 25 pages of text, several
of which contain only a single paragraph containing a couple of sentences, is so
voluminous or overwhelming as to present any particular hardship to Plaintiff. Compare
Henderson v. National R.R. Passenger Corp., 412 Fed.Appx. 74, 83 (10th Cir. 2011)
(upholding district court’s judgment to strike supplemental report which added “180
pages of information” to the original report’s 16 pages).
Furthermore, Plaintiff could have avoided any prejudice resulting from the filing
of the Supplemental Report on August 9, 2012, by rescheduling Lesnevich’s deposition,
or requesting additional time to review the Supplemental Report to determine if it was
necessary to reschedule the deposition. Nevertheless, Plaintiff, consistent with the
court’s earlier order denying Plaintiff’s request for an extension of time in which to file
expert report, but dismissing with prejudice Plaintiff’s alternative request for leave to
amend or supplement such reports after submission of all material Defendants are
ordered to provide Plaintiff, May 31, 2012 D&O at 2, will grant Plaintiff ten (10) days to
file further expert reports as necessary to rebut Lesnevich’s Supplemental Report.
Thus, there is no merit to Plaintiff’s contention that failure to strike the Supplemental
Report is unfair to Plaintiff.
Accordingly, consideration of the factors in light of the record establishes no
basis for striking the Supplemental Report, or for directing Defendants not to file further
supplemental reports where it is determined such supplementation is necessary to
provide a complete report.
20
Judicial Estoppel
Nor are Defendants estopped, as Plaintiff asserts, Plaintiff’s Reply at 1-2, by
judicial admission regarding whether Zuckerberg’s signature on the purported contract’s
second page is authentic because the court has never adopted such assertion. In
further support of his motion, Plaintiff argues Defendants are estopped from asserting
the trace forgery theory by a judicial admission made by Defendants’ attorney Orin S.
Snyder, Esq. (“Snyder”) at a court hearing on June 30, 2011. Plaintiff’s Reply at 1-2.
In support of this argument, Plaintiff references the following exchange that
transpired at an oral argument before the undersigned on June 30, 2011, regarding
cross-motions filed by the parties for discovery:
The Court: But [Defendant Zuckerberg] did sign some agreement.
Mr. Snyder: Correct. So the question is not whether the signature - The Court: So the question is whether it’s [Defendant Zuckerberg’s] signature
on this agreement.
Mr. Snyder: That’s not a disputed issue in this case.
Plaintiff’s Reply at 2 (quoting June 30, 2011 Hearing Transcript at 56).
Plaintiff maintains that Snyder’s statement that whether it is Zuckerberg’s actual
signature that appears on the second page of the purported contract is “not a disputed
issue in this case” has waived any dispute as to whether, in fact, the signature of the
second page is Zuckerberg’s, and thus Defendants are judicially estopped from relying
on the trace forgery theory set forth in the Supplemental Report, in which the
authenticity of Zuckerberg’s signature is questioned. Id. There are several problems
with this argument.
As a general matter, “‘statements made by an attorney concerning a matter
within his employment may be admissible against the party retaining the attorney.’”
21
Purgess v. Sharrock, 33 F.3d 134, 144 (2d Cir. 1994) (quoting United States v.
McKeon, 738 F.2d 26, 30 (2d Cir. 1984)). Under the doctrine of judicial estoppel,
“‘where a party assumes a certain position in a legal proceeding, and succeeds in
maintaining that position, he may not thereafter, simply because his interests have
changed, assume a contrary position, especially if it be to the prejudice of the party who
has acquiesced in the position formerly taken by him.’” New Hampshire v. Maine, 532
U.S. 742, 749 (2001) (quoting Davis v. Wakelee, 156 U.S 680, 689 (1895)). “This rule,
known as judicial estoppel, ‘generally prevents a party from prevailing in one phase of a
case on an argument and then relying on a contradictory argument to prevail in another
phase.’” Id. (quoting Pegram v. Herdrich, 530 U.S. 211, 227 n. 8 (2000)). The purpose
of the judicial estoppel doctrine “is ‘to protect the integrity of the judicial process.’” Id.
(quoting Edwards v. Aetna Life Ins. Co., 690 F.2d 595, 598 (6th Cir. 1982)). Further, “[a]
court can appropriately treat statements in briefs as binding judicial admissions of fact.”
Purgess, 33 F.3d at 144 (citing Leslie v. Knight Soda Fountain, 55 F.2d 224, 225 (2d
Cir. 1932)).
Where, however, as here, the district court has not adopted the prior position
asserted, judicial estoppel does not apply. Stichting Ter Behartiging Van de Belangen
Van Oudaandeelhouders In Het Kapitaal Van Saybolt International B.V. v. Schreiber,
407 F.3d 34, 35 (2d Cir. 2005). Significantly, in the instant case, the district court never
adopted Mr. Snyder’s comments at the June 30, 2011 oral argument as Defendants’
position on the issue of whether Zuckerberg’s signature appearing on the second page
of the purported contract is authentic. Nor is there any indication in the record
establishing that Defendants benefitted from such comments by Snyder, New
22
Hampshire, supra, at 749, and Plaintiff fails to point to any action in this case to
establish such judicial adoption. As such, Defendants are not judicially estopped from
asserting the trace forgery theory set forth in the Supplemental Report.
Second, Plaintiff raises this argument for the first time in his reply in further
support of Plaintiff’s motion. It is settled, however, that arguments raised for the first
time in replying in further support of a motion are generally deemed waived. See
Connecticut Bar Association v. United States of America, 620 F.3d 81, 91 n. 13 (2d Cir.
2010) (citing Norton v. Sam’s Club, 145 F.3d 114, 117 (2d Cir. 1998)); see also Ruiz v.
Commissioner of Department of Transportation of City of New York, 858 F.2d 898, 902
(2d Cir. 1988) (holding it was within district court’s discretion to reject argument first
raised in reply to opposition to motion where such argument was “so belatedly
advanced and so vaguely supported.”).
Finally, even if the court were, in the exercise of its discretion, to consider this
belated argument, the Initial Report, if accepted, casts serious doubt as to whether all
four images of the purported contract Lesnevich analyzed and compared in preparing
his Initial and Supplemental Reports were from the same document. Specifically,
Lesnevich concluded in both the Initial and Supplemental Report that Plaintiff had
provided at least two different versions of the purported contract for expert inspection.
See Initial Report at 30 (“I conclude to the highest degree of certainty possible, beyond
any reasonable doubt, that the Questioned Documents are images of at least two
different physical documents. * * * Ceglia has proffered at least two different physical
documents as the Work for Hire document. In particular, Ceglia produced a Work for
Hire document to Plaintiff’s experts in January 2011, and to Defendants’ experts in July
23
2011 that was different than the document he attached to his [original] Complaint.”)
(bracketed material added); Supplemental Report at 23 (“Ceglia has proffered at least
two different physical documents as the Work for Hire document.”). Assuming,
arguendo, both of these findings are correct, they raise the very issue before the court
on Defendants’ Motion to Dismiss, i.e., whether the signature which Snyder indicated,
on June 30, 2011, is Zuckerberg’s or is simply a tracing, a form of forgery, see United
States v. Delia, 944 F.2d 1010, 1014 (2d Cir. 1991) (recognizing tracing an original
signature constitutes forgery), of Zuckerberg’s signature made from another contract,
such as the StreetFax contract which Defendants maintain is the authentic contract
relevant to this case.
CONCLUSION
Based on the foregoing, Plaintiff’s motion to strike (Doc. No. 499) is DENIED;
Plaintiff is ORDERED to file any rebuttal expert reports within ten (10) days.
SO ORDERED.
/s/ Leslie G. Foschio
LESLIE G. FOSCHIO
UNITED STATES MAGISTRATE JUDGE
DATED:
October 31, 2012
Buffalo, New York
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