Maxim, Inc. v. Feifer

161 A.D.3d 551

78 N.Y.S.3d 98

MAXIM, INC., Plaintiff–Respondent,

v.Jason FEIFER, et al., Defendants–Appellants.

Maxim, Inc., et al., Plaintiffs–Respondents,

v.Wayne Gross, Defendant,Jason Feifer, Defendant–Appellant.

6208

6209

6210

6211

6212

6213N

Index 162933/15, 654137/15

Supreme Court, Appellate Division, First Department, New York.

Decided May 17, 2018

Schoeman Updike Kaufman & Gerber LLP, New York (Beth L. Kaufman of counsel), for appellants.

Sack & Sack, LLP, New York (Eric R. Stern of counsel), for respondents.

Richter, J.P., Manzanet–Daniels, Andrias, Kapnick, Webber, JJ.

Order, Supreme Court, New York County (Joan M. Kenney, J.), entered April 24, 2017, in Index No. 654137/15 (the breach of contract action), which granted plaintiffs' motion to quash a subpoena issued to nonparty Christopher Clark, and denied defendant Jason Feifer's motion to remove the confidentiality designation from certain deposition testimony and documents produced, to deem defendants' notice to admit admitted, to compel certain depositions, and for attorneys' fees and expenses, and, sua sponte, ordered all party discovery to precede nonparty discovery, modified, on the facts and in the exercise of discretion, to grant defendant's motion to the extent of ordering plaintiffs to respond to the notice to admit dated May 26, 2016, in compliance with CPLR 3123(a), within 20 days after entry of this order, to strike the confidentiality designations on documents produced by nonparty Derris & Co. and on the deposition testimony of Julie Halpin, Wayne Gross, and Maxim, Inc. by Robert Price, and to impose monetary sanctions on plaintiffs in the amount of $10,000, and otherwise affirmed, without costs. Order, same court and Justice, entered on or about April 21, 2017, which, to the extent appealed from, granted plaintiffs' motion to quash a subpoena issued to nonparty Hiltzik Strategies, unanimously affirmed, without costs. Order, same court and Justice, entered on or about April 21, 2017, which, to the extent appealed from as limited by the briefs, granted plaintiffs' motion to quash a subpoena issued to Derris & Co., and denied defendants' motion to strike the confidentiality designations on documents produced by Derris & Co. and preclude plaintiffs from placing blanket confidentiality designations on remaining documents to be produced by Derris & Co., unanimously modified, on the facts and in the exercise of discretion, to grant defendants' motion to the extent of striking plaintiffs' confidentiality designations from documents produced by Derris & Co. and precluding plaintiffs from placing blanket confidentiality designations on the remainder of Derris & Co.'s production, and otherwise affirmed, without costs. Order, same court and Justice, entered May 3, 2016, in Index No. 162933/15 (the declaratory judgment action), which, to the extent appealed from as limited by the briefs, granted plaintiff's motion for a preliminary injunction as against defendant Feifer, unanimously reversed, on the law and facts, without costs, the motion denied, and the preliminary injunction vacated. Appeal from order, same court and Justice, entered April 10, 2017, which, inter alia, denied defendants' motion to vacate the preliminary injunction, unanimously dismissed, without costs, as academic. Order, same court and Justice, entered February 17, 2017, which denied defendants' motion to dismiss the complaint, unanimously reversed, on the law, without costs, and the motion granted. The Clerk is directed to enter judgment accordingly.

In the breach of contract action, plaintiffs, Maxim, Inc. and its sole director, Sardar Biglari, allege breach of a nondisclosure agreement (NDA) and a release prohibiting defendants from, inter alia, divulging any confidential or proprietary business information regarding plaintiff Maxim, Inc. and its affiliated companies and defamation. Defendant Feifer counterclaimed, alleging that he had been fraudulently induced into accepting employment with Maxim. In the declaratory judgment action, plaintiff Maxim seeks a judgment declaring that the NDA and the release that Feifer executed are valid and enforceable. Maxim also moved for a preliminary injunction enjoining Feifer and his counsel from violating the NDA or the release by divulging, inter alia, confidential information or trade secrets or publicly disparaging Maxim and its affiliated persons and entities.

Maxim failed to establish that it would suffer irreparable harm absent the preliminary injunction it sought (see Chiagkouris v. 201 W. 16 Owners Corp., 150 A.D.3d 442, 54 N.Y.S.3d 5 [1st Dept. 2017] ). We find no support in the record for Maxim's assertions that Feifer or his counsel threatened to disclose confidential information to third parties.

The declaratory judgment action should be dismissed, because all the issues involved in it will be disposed of when the pending breach of contract action is resolved (see Reynolds Metals Co. v. Speciner, 6 A.D.2d 863, 175 N.Y.S.2d 605 [1st Dept. 1958] ).

Supreme Court acted within its broad discretion in ordering all party discovery in the breach of contract action to precede nonparty discovery, in an attempt to bring order to a contentious discovery process in an acrimonious litigation (see generally 148 Magnolia, LLC v. Merrimack Mut. Fire Ins. Co., 62 A.D.3d 486, 878 N.Y.S.2d 727 [1st Dept. 2009] ). Accordingly, the court properly quashed the subpoenas issued to nonparties Christopher Clark, Derris & Co., and Hiltzik Strategies, and denied Feifer's motion to compel depositions of certain nonparties at this time. With regard to the subpoena issued to Clark, we note that, while his communications with plaintiffs about the litigation in which he represented them are protected by the attorney-client privilege, his public communications to the press are not privileged (see Pecile v. Titan Capital Group, LLC, 119 A.D.3d 446, 447, 988 N.Y.S.2d 497 [1st Dept. 2014] ).

Contrary to plaintiffs' contention, the confidentiality agreement that they entered into with Feifer does not allow for blanket designations of document productions and deposition testimony as confidential but limits that designation to "trade secrets, proprietary...