Funk v. Belneftekhim

VLADLENA FUNK and EMANUEL ZELTSER, Plaintiffs, v. BELNEFTEKHIM, a/k/a CONCERN BELNEFTEKHIM andBELNEFTEKHIM USA, INC., Defendants.

14 Civ. 376 (BMC) (VMS)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

January 17, 2020

MEMORANDUM & ORDER

Vera M. Scanlon, United States Magistrate Judge:

Before this Court is a motion by Defendants Belneftekhim, a/k/a Concern Belneftekhim, and Belneftekhim USA, Inc. (collectively, "Defendants"), against Vladlena Funk ("Ms. Funk") and Emanuel Zeltser¹ ("Mr. Zeltser," together with Ms. Funk, "Plaintiffs"), for the exclusion of certain evidence based on alleged fabrication or spoliation. See ECF No. 277 (the "Motion").² For the reasons set forth below, Defendants' motion seeking sanctions for fabrication of evidence is denied; Defendants' motion seeking sanctions for spoliation of evidence is granted; and the contested medical records are excluded from use by Plaintiffs at trial.

I. BACKGROUND

Plaintiffs bring this action against Defendants seeking monetary damages for common law fraud, assault, battery, false imprisonment, intentional infliction of emotional distress, tortious interference with contractual relationship, tortious interference with prospectiveeconomic advantage, conversion and prima facie tort. See Second Am. Compl., ECF No. 80 ("SAC") at 43-52.³ These state law claims, removed to federal court, arise out of the alleged abduction and torture of Plaintiffs by Defendants, allegedly acting in concert with the Belarusian KGB and other individuals associated with officials of the Government of Belarus. Id. ¶ 5. Ms. Funk and Mr. Zeltser were detained in March 2008, and released in March 2009 and June 2009, respectively. Id. ¶¶ 11, 14, 31, 72. Plaintiffs allege that during that time they were subjected to physical and psychological mistreatment, and denied access to necessary medication, all of which is alleged to have caused lasting damages. Id. ¶¶ 11, 13, 81-83.

At issue here is evidence relating to Plaintiffs' alleged physical and psychological injuries. Dr. Lev Paukman, disclosed as a specialist in internal medicine and cardiology, see ECF No. 230 at 3, allegedly treated Plaintiffs upon their return from Belarus in 2009, see ECF No. 279-4. In an Order issued by the Honorable Brian M. Cogan, in response to Defendants' motion to preclude Dr. Paukman's testimony based on Plaintiffs' alleged improper disclosure of Dr. Paukman as a witness, the Court found that if Plaintiffs timely provided a summary pursuant to Federal Rule of Civil Procedure ("Rule") 26, Dr. Paukman could testify as a treating physician. ECF No. 230 at 4. Plaintiffs subsequently served a statement pursuant to Rule 26(a)(2)(C). ECF No. 283-1.⁴ In response to a subpoena issued by Defendants for Dr. Paukman's records, Mr. Zeltser informed Defendants' counsel that in October 2012 Dr. Paukman's files had been destroyed as a result of a flood caused by Hurricane Sandy, but thatPlaintiffs would produce whatever files survived.⁵ ECF No. 279-3 at 2. On January 16, 2019, Plaintiffs provided Defendants with photocopies of documents Bates-stamped PK1-13 (the "Contested Medical Records"). See ECF Nos. 279-4, 279-5, 278 at 6-7. Mr. Zeltser's assistant, Vivian Brusk, emailed a scan of the documents to Defendants' counsel (apparently from Dr. Paukman's office), stating, "This is what I've been able to recover thus far. I am pretty sure there is more but I'll need to spend a couple more days here (Dr P's secretarial staff is not very cooperative)." ECF No. 279-5. The Contested Medical Records consist of reports of four medical examinations by Dr. Paukman of Plaintiffs in 2009 - one of Ms. Funk and three of Mr. Zeltser. See ECF No. 279-4.

After the production, Defendants took Dr. Paukman's deposition in two sessions. In the first session, Dr. Paukman testified that he had searched for records in response to the subpoena, found the Contested Medical Records in his garage, and sent them to Mr. Zeltser. ECF No. 279-2 at 3-4, 5:16-6:12; 10, 34:5-37:10. In the second session, Dr. Paukman testified that he did not know who had found the Contested Medical Records, that he had not found them himself, and that he was not sure where they had been found - whether in the garage, the basement or the office. ECF No. 279-2 at 43-45, 264:2-270:23; 48-49, 284:22-287:9; 55-56, 325:11-326:24; 57,344:10-16.⁶ Dr. Paukman testified that he did not type the Contested Medical Records because he does not type, and he does not know when the notes were typed, but he confirmed that the notes were his words. See id. 49, 287:10-288:16; 56, 326:23-25; 57, 344:17-345:2.

Defendants allege that following Dr. Paukman's depositions, they became suspicious that the Contested Medical Records were fabricated, and they requested production of the original documents (the "Originals"). On March 22, 2019, three weeks after Dr. Paukman's second deposition session, Defendants included a reservation of right to inspect the Originals in a proposed discovery schedule emailed to Mr. Zeltser and others. ECF No. 290-6 at 5 ¶ IV(B). Mr. Zeltser later informed Defendants that the documents had been discarded in April 2019. ECF No. 279-6 at 3. Dr. Paukman submitted a declaration stating:

The paper records I retained (the documents numbered PK1 - PK13 [the Contested Medical Records]) were found in storage at my Brooklyn office. However, the documents that were found in storage were not my original records. They were printouts or photocopies of my original records. The original records were electronic files stores on a computer. But the computer was discarded and replaced with a new computer before this lawsuit began as part of a periodic upgrade. The paper records I retained . . . were merely copies of those electronic records. Those records were in storage in the garage of my Brooklyn medical center along with many old patient files which were due to be discarded. Those old patient files, including the records of Mr. Zeltser and Ms. Funk . . . were all discarded in April 2019.

ECF No. 283 at ¶¶ 3-4. Defendants note that Dr. Paukman had testified during his deposition, inconflict with his declaration, that his office did not have electronic records in 2009, when the medical examinations on which the Contested Medical Records were based took place, and that his office only began using electronic records approximately two years prior to the deposition - in other words, in 2017. ECF No. 279-2 at 56, 328:12-22; see Defs.' Reply Mem., ECF No. 289 at 5.

II. Motion

Defendants move for the Court to find that the Contested Medical Records were fabricated and, at trial, to exclude them, Dr. Paukman's testimony, and Plaintiffs' testimony about the alleged examinations underlying the Contested Medical Records. They also move for the Court to instruct the jury to take as an established fact that Plaintiffs did not seek medical attention upon their return from Belarus. See Defs.' Mem., ECF No. 278 at 11. Defendants argue that the Court should make this finding because (1) Plaintiffs have strong motive to fabricate evidence because they have no other admissible documentary corroboration for their testimony regarding the abuse they allegedly suffered in Belarus; (2) it is implausible "that these four reports, so favorable to Plaintiffs, just happened to survive the flood"; (3) Defendants cannot review any other potentially inconsistent records, because all or many of Dr. Paukman's patient files were lost in the flood;⁷ and (4) Defendants cannot verify that the photocopies provided of the Contested Medical Records are copies of physical documents found in Dr. Paukman's storage because the alleged Originals were discarded during this litigation, after Defendants sent their reservation of their right to review them. Defs.' Mem. at 8-10. Defendants argue in thealternative that the Court should find that Plaintiffs spoliated evidence, and impose the above-proposed sanctions on that basis. Id. at 12.⁸

The Court held a telephone conference during which counsel stated that they would rest on their paper submissions regarding the alleged fabrication and spoliation of evidence, and declined to request a hearing or oral argument. See ECF No. 291.

III. ANALYSIS

A. Fabrication

"If a party commits fraud on the court, the court has the inherent power to do whatever is reasonably necessary to deter abuse of the judicial process." Hargrove v. Riley, No. 04 Civ. 4587 (DGT) (LB), 2007 WL 389003, at *11 (E.D.N.Y. Jan. 31, 2007). Fraud on the court is "fraud which seriously affects the integrity of the normal process of adjudication." McMunn v. Mem'l Sloan-Kettering Cancer Ctr., 191 F. Supp. 2d 440, 445 (S.D.N.Y. 2002) (quoting Gleason v. Jandrucko, 860 F.2d 556, 559 (2d Cir. 1988)). Fabrication of evidence can constitute fraud on the court. See Hargrove, 2007 WL 389003, at *11 (finding the plaintiff "perpetrated a fraud on the court through his submission of fraudulent documents and sworn affirmations of those documents' authenticity"). Sanctions for such conduct must be based on "clear and convincing evidence that a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter by unfairly hampering the presentation of the opposing party's claim or defense." Id. (internal quotationmarks & alterations omitted). "Under this exacting standard, the Court may only find fraud upon the court based on evidence that produces in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established, evidence so clear, direct and weighty and convincing as to enable the factfinder to come to a clear conviction, without hesitancy, of the truth of the precise facts in issue." Esposito v. Suffolk Cty. Cmty. Coll., No. 16 Civ. 4833 (ADS) (ARL), 2019 WL 1044099, at *2 (E.D.N.Y. Mar. 4, 2019) ("Esposito I") (internal quotation marks, citations & alterations omitted). In other...