KNOPF v. ESPOSITO LLP SP LLC (2021)

In December 2020, this court, at the request of the parties in this action, so-ordered a stipulation providing that (i) “[t]he documents filed by the parties on the NYSCEF system in this case will redact any and all references to: (A) communications with non-judicial federal or New York state governmental entities concerning the subject matter” of this case (and related federal actions), or “(B) communications with the Office of Court Administration of the New York State Unified Court System concerning the subject matter of the Cases”; and (ii) the parties will redact “not only direct references ․ but also suggestive language reasonably related thereto.” (See NYSCEF No. 235.)

After entry of the so-ordered stipulation, publicly available federal-court orders made clear that the “non-judicial federal or New York state governmental entities” referenced in the December 2020 stipulation were prosecutors’ offices, and that there was an ongoing criminal investigation into subjects related to the events underlying this action. (See e.g. Knopf v Esposito, 2021 WL 374729 [SD NY Feb. 3, 2021] [Denise Cote, J.] [denying defendant Frank Esposito's motion to stay the related federal action “pending the outcome of an ongoing criminal investigation by a local prosecutor's office”]; Order, Knopf v Esposito, Dkt. No. 1:17-cv-5833, ECF No. 411 [SD NY Mar. 2, 2021] [directing the New York County District Attorney's Office to produce to defendant Esposito written communications between that office and plaintiff's counsel, Eric Berry Esq.].) Most recently, Esposito and his wife, nonparty Melissa Ringel, each were indicted by a New York County grand jury on charges related to this matter that were brought by the New York County District Attorney's office. Those indictments have received substantial press coverage.

In these circumstances, this court concludes that maintaining the December 2020 stipulation's restrictions and redaction requirements would serve little purpose. And this court is mindful that a categorical stipulation of this sort is in tension with “New York's ‘presumption of openness’ of judicial proceedings.” (Bich v Bich, 69 Misc 3d 874, 876 [Sup Ct, NY County 2020], quoting Herald Co., Inc. v Weisenberg, 59 NY2d 378, 382 [1983].)

Before vacating the stipulation, however, this court sought input from the parties, both in written form and at an on-the-record conference. In response to this court's invitation, plaintiff raised an issue related to Judge Cote's discovery order in the federal action, cited above. As plaintiff noted, that order provides that “the parties shall not share the [produced] documents or their substance with anyone other than the parties in this case without advance permission from the court.”¹ (Order, Knopf v Esposito, ECF No. 411.) Plaintiff expressed concern at the possibility that absent the December 2020 stipulation, if documents produced by the New York County District Attorney's office were filed in this action, they could potentially be viewed even under seal by nonparty Michael Sanford, contrary to Judge Cote's intent in restricting dissemination of the documents.

Although this court recognizes plaintiff's concern, the court concludes that it does not warrant leaving the December 2020 stipulation in place. Whatever happens with the December 2020 stipulation in this action, the dissemination restrictions of Judge Cote's order remain in effect. To the extent that a party here believes that a past or future filing in this court has violated or will violate that order, the party is free to seek enforcement of the order from Judge Cote. The December 2020 stipulation therefore is vacated. To the extent that a party to this action believes that a particular document (or other evidence) should be redacted before it is filed in this action, the party is free to seek redaction of that individual filing from this court. (See Bich, 69 Misc 3d at 877.)

Defendants Nathaniel Akerman and Dorsey & Whitney previously filed an order to show cause seeking disqualification of counsel for plaintiff. This court declined to sign the order to show cause, and removed the supporting motion papers from the docket, because they violated the terms of the December 2020 stipulation. Given the vacatur of the stipulation these defendants may, if they so choose, refile the order to show cause (and supporting papers) within 30 days—bearing in mind their obligation to comply not only with this court's orders, but also those of Judge Cote in the related federal action.

FOOTNOTES

1.   Judge Cote's discovery order memorializes the outcome of an on-the-record court conference held in the federal action on March 2, 2021. The order does not reflect the court's reasons for reaching that outcome (either in terms of directing production of certain written communications nor restricting their further dissemination). And the parties here have not provided this court with a copy of the conference transcript.

Gerald Lebovits, J.