Interpreter Services, Inc. v. BTB Technologies, Inc. et al

Filing 73

ORDER deferring 39 Motion for Sanctions; granting 45 Motion to Stay; deferring 57 Motion to Amend/Correct; deferring 66 Motion for Leave to Submit Additional Affidavit. Signed by U.S. Magistrate Judge John E. Simko on 6/30/11. (CMS)

FILED
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION

JUN 30 2011

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INTERPRETER SERVICES, INC.,
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CIV. 10-4007
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Plaintiff,
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ORDER

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v.
BTB TECHNOLOGIES, INC., and
THOMAS M. DAFNOS, Individually,
Defendants.

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Pending are Motion for Sanctions, I Motion to Stay Proceedings,2Motion for Leave to Submit
Additional Affidavit,3 and Motion to Amend the Complaint.4 Because the deadline for filing
motions is imminent and because more time is needed to address the issue about fake evidence, the
motion to stay is GRANTED and the rulings on the remaining motions are deferred.

BACKGROUND
The centerpiece is email which BTB insists is fake evidences and which Interpreter Services
insists was among BTB's 1,141 pages of Rule 26 initial disclosures. 6 Interpreter Services does not
intend to use the emails as evidence and suggests the emails are not relevant. But Interpreter

IDoc.39.

2Doc.45.

3Doc.66

4Doc.57.

SDoc.42.

6Doc. 42, ~ 14; Doc. 49, ~ 5- 8 & ~ 18-19; & Doc. 65, ~ 5.

Services earlier held a different view i.e., suggesting to BTB that the emails would support a claim
for tortious interference with contract and asking BTB to supplement its Rule 26 initial disclosures
to include the disputed emails, and upon BTB's refusal Interpreter Services supplemented their own
Rule 26 initial disclosures to include the disputed emails. 7 One or both counsel have suggested the
South Dakota Bar Association disciplinary board will be notified. 8
These emails connect this lawsuit and a lawsuit in New York. 9 The link appears to be Lamar
Stewart who was a former employee oflnterpreter Services and is "a consultant on business matters
and a trusted friend" of Kasey Entwisle who is the owner and sole shareholder of Interpreter
Services.1O Lamar Stewart is also Senior Vice President of Healinc Telecom, LLC, one of the
defendants in the New York case. II Healinc asserted a counterclaim against Waite in the New York
case. On October 14,2010, Stewart reviewed BTB's Rule 26 disclosures. 12 On October 15 he took
them home. 13 On October 21, Stewart, Entwisle, and counsel for Interpreter Services reviewed the
documents "in more detail.,,14 On October 21 "the Rule 26 discovery material was shared with

7Doc. 42, ~ 14; ~ 47; Doc. 49, ~ 10 & 11;

8Doc. 53, Ex. U.

9

Wesley N Waite, Sr. v. Stanley F. Schoenbach et ai, 10-3439, (S.D.N.Y.).

IODoc. 49, ~ 8; Doc. 50, ~ 1 & 21.

llFederal Communications Commission, proceeding 03-123, ex parte letter authored by

consultant Andrew Isar dated February 10, 2011.
12Doc.

61,~

4.

13Doc. 61, ~ 5.
14Doc. 61, ~ 7.
2

attorneys in New York, case Waite v. Scheonback, No. 10-3439."15 On November 19,2010, Healinc
asserted a counterclaim for both compensatory and punitive damages against Waite in the New York
case. The counterclaim includes specific phrases which appear in the disputed emails. The counter
claim alleges "[t]his is a tragic case of corporate espionage, conspiracy and the malicious efforts of
a high-ranking officer to destroy the business ofhis employer for his personal benefit and the benefit
ofcompetitors ofhis employer.,,16 On January 14,2011, Waite and Schoenbach settled their lawsuit
for $8,500 at a mediation after Waite had first demanded $400,000 to settle. 17 These emails were
produced to Waite for the first time at this mediation, after which Waite agreed to settle. IS Waite
has moved to set aside the settlement agreement and to reopen the case alleging the emails which
persuaded him to settle were fabricated. 19 The defense has resisted the motion. 20 Both ofthe senders
ofthe disputed emails have denied authoring the emails, i.e. Waite and Dafnos. The New York court
has established a briefing schedule with the last brief due July 21, 2011.

ANALYSIS
The subject emails which both parties say were among BTB's Rule 26 disclosures are Bates
stamped 0434, 0435, and 0436 and also numbered 1, 2, or 3 in original at the bottom of the

"Doc. 62, ~ 4.

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16 Wesley N. Waite, Sr. v. Stanley F. Schoenbach et ai, 10-3439, Doc. 21, p. 8, ~ 1 & p. 18-19,

57-62, (S.D.N.Y.).
17 Wesley N. Waite, Sr. v. Stanley F. Schoenbach et ai, 10-3439, Doc. 31, (S.D.N.Y.).
lSDoc.62.
19 Wesley N. Waite, Sr. v. Stanley F. Schoenbach et ai, 10-3439, Doc. 32, (S.D.N.Y.).
20 Wesley N.

Waite, Sr. v. Stanley F. Schoenbach et ai, 10-3439, unnumbered docket entry of
06/06/11, (S.D.N.Y.).
3

respective page. The trouble is that one version of 0434, 0435, and 0436 is an innocuous exchange
between Tom Dafnos and Kasey Entwhisle. The other allegedly fake version is a devious exchange
between Tom Dafnos and Wesley Waite which tells a story of what the parties describe as corporate
espionage. The content of and the parties to each version of emails are dramatically different. Both
Waite in New York and BTB in this case identify inconsistencies which suggest each of the three
pages ofemails between Dafnos and Waite has been fabricated. 21 For example, on one ofthe emails
in the chain of emails the subject line is "I Need for your guys to ....," but the reply email says "I
need for you guys to ....". Both Waite and BTB point out that changing "Need" to "need" shows
the reply email was not generated by any email system which automatically restates the "To, From,
and Re" headings and entries.
Both versions are Bates stamped 0434, 0435, and 0436, but it appears one or the other was
fabricated. This is a serious matter without regard to relevance ofthese emails in the South Dakota
lawsuit. It is therefore appropriate to explore the issue about the emails before proceeding further
in the South Dakota lawsuit.

It is ORDERED that BTB's motion to stay proceedings (Doc. 45) in this lawsuit is
GRANTED.22 All proceedings in this case are stayed pending further Order from the court.

21Doc. 41, pp. 27-28 and Wesley N Waite, Sr. v. Stanley F. Schoen bach et ai, 10-3439, Doc.
32-3, ~ 9, (S.D.N.Y).
22Doc.45.
4

It is FURTHER ORDERED that the rulings on the other pending motions are DEFERRED. 23
Dated

thi~~ay of June, 2011
BY THE COURT:

John
Unite

tates Magistrate Judge

23Docs. 39, 57, & 66.

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