Hernandez v. The Money Source, Inc.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

-------------------------------------------------------X

RICHARD HERNANDEZ, STEVE

HERNANDEZ and MARIA KEEGAN,

MEMORANDUM OF

Plaintiffs, DECISION & ORDER

FILED

-against- 17-cv-6919 (GRB)(AYS) CLERK

TH E MONEY SOURCE INC., 4:41 pm, Jul 1   2, 2022

U.S. DISTRICT COURT

Defendant EASTERN DISTRICT OF NEW YORK

---------------------------------------------------------X LONG ISLAND OFFICE

GARY R. BROWN, United States District Judge:

“To allow this conduct to continue without repercussions and sanctions is to condone the

very conduct. Enough is enough.”

-Joseph M. Labuda, Esq. in a letter to this Court in Piccolo et al. v. Top Shelf

Provisions Co. Inc., 16-CV-6930 (GRB), DE 96

In this action, which is scheduled for trial in a matter of days, the Court twice deemed a set

of in limine motions filed by defendant as improper and ordered those motions withdrawn, advising

counsel that these mainly ill-considered motions should only be refiled after further review and

discussion, and that sanctions would be imposed without hesitation if legally unsound or otherwise

improper applications were again refiled. Less than twenty-four hours later, defendant’s counsel,

quoted above, refiled all but one of these motions for a third time. For the reasons set forth below,

the Court DENIES motions in limine Nos. 1 through 9, GRANTS IN PART motion in limine No.

10 and directs Mr. Labuda to SHOW CAUSE why sanctions should not be imposed against him

under 28 U.S.C. § 1927.

BACKGROUND

The factual background of this case and the underlying claims and defenses are fully

discussed in the summary judgment decision by the late Magistrate Judge A. Kathleen Tomlinson,

which was adopted by the undersigned and is incorporated by reference herein. DE 61. Following

that decision, at a pretrial conference, the Court set January 11, 2022 as a firm date to begin jury

selection so that this matter, which has dragged on for some time, could be tried. DE 73. In

October 2021, counsel for defendant moved to adjourn that trial for six months on the grounds that

one associate in the case would be out on maternity leave, which application was opposed by

plaintiffs. Id.; DE 75. In light of the large number of attorneys working on this case, the Court

denied that application. Electronic Order dated October 27, 2021.

Mr. Labuda entered the case soon thereafter, and applied, once again, to delay the trial. DE

78, 79. Remarkably, Mr. Labuda’s request for reconsideration represented that “Desiree Gargano,

although at Certilman Balin . . . ha[s] not participated in this matter.” DE 79 at 2. This proved

curious, as defendant’s earlier application to delay trial was predicated entirely upon Gargano’s

upcoming maternity leave, noting “Desiree is an integral part of our defense team and it would be

challenging at best for the Defendant to have to put on its defense without her.” DE 73 at 1. As

such, and based upon the failure to otherwise demonstrate good cause, the Court again rejected the

application. Electronic Order dated November 17, 2021.

Motions in Limine 1-9

In June 2021, defendant’s prior counsel filed a single motion in limine, challenging the

admissibility of plaintiffs’ expert testimony. DE 65. As further justification for his November

2021 motion for reconsideration seeking a later trial date, Mr. Labuda identified the need to

develop further “motions in limine,” and describing a raft of potential additional issues to be

resolved before trial. DE 79 at 2-3. Thereafter, Mr. Labuda filed, on December 28, 2021, a total

of eight motions in limine, discussed further below. DE 103. Though trial was then unavoidably

delayed due to a COVID surge, on January 12, 2022, Mr. Labuda filed a ninth such motion, DE

116, and in June 2022, added a tenth motion in limine to preclude expert testimony. DE 128.

On June 17, the Court entered the following order:

Whereas there appear to be at least ten pending motions in limine, the pending

motions are deemed WITHDRAWN. As stated in the undersigned's Individual

Rules, "[c]onsistent with Rule 37.3 of the Local Rules, prior to seeking a pretrial

conference or filing any non-dispositive pre-trial motions, the parties are to meet

and confer in an effort to reach agreement with respect to these submissions or

narrow the scope of the request." See Rule III.c. See also Fields v. Bayerische

Motoren Werke Aktiengesellschaft, No. 18-CV-2889(GRB)(AYS), 2022 WL

905129, (E.D.N.Y. Mar. 28, 2022) (denying pending motions in limine and

ordering the parties to meet and confer in a good faith attempt to resolve their

differences before filing unresolved in limine motions with the Court).

Electronic Order dated June 17, 2022. Undeterred, one week later, Mr. Labuda moved to reinstate

all previously filed motions. DE 133. Plaintiffs had but one such motion pending.

In turn, the Court entered a second order providing as follows:

About two weeks ago, this Court withdrew approximately ten motions in limine,

mostly by defendant, to allow counsel the opportunity to reconsider the filings,

meet and confer and limit the motions only to those which reasonably require the

Court's intervention and are presumably made in good faith. Astonishingly, by

letter dated 6/27/22, Mr. Labuda seeks to restore ALL of these motions to the

calendar, claiming, without explanation, that the parties "have not been able to

agree to narrow the scope of the myriad issues raised in the parties’ respective

motions." This conclusory statement encompasses, for example, defendant's motion

in limine number eight, which requests that -- contrary to express statutory

command -- this Court exclude the plaintiffs from attending portions of the trial.

Suffice it to say that the motion to renew those motions is denied, but perhaps

further explication is required, as counsel doesn't seem to have heard the Court's

message. Irrespective of the meet and confer requirement, each counsel should

reconsider each motion before refiling, AS THE COURT WILL NOT HESITATE

TO IMPOSE SANCTIONS FOR MOTIONS FILED UNREASONABLY OR

OTHERWISE IN BAD FAITH.1

Electronic Order dated 6/30/2022.

1 Since the dawn of the Internet age, language set in capitals had generally reflected one of two scenarios: either (1)

the writer had inadvertently depressed the “CAPS LOCK” key or (2) to reflect emphasis and avoid misunderstanding,

as computer platforms (such as the Court’s ECF system) often fail to consistently recognize bold or underlined text.

Obviously, the use of all caps to warn counsel of the possible imposition of sanctions fell squarely into the latter

category.

Astonishingly, still seemingly oblivious, within 24 hours of the entry of the above order,

Mr. Labuda again moved to restore all of these motions to the calendar, with the sole exception of

motion number eight which the Court had already identified – as an example – as a motion plainly

contrary to law. DE 138. He further took the liberty of refiling these motions, without even taking

the time to excise the patently spurious motion number 8. DE 139-141. Plaintiffs, by contrast,

managed to resolve their sole in limine motion without the need for Court intervention. DE 138.

Background Related to Defendant’s Tenth Motion in Limine2

To establish damages, plaintiffs retained the service of Dr. Stephen Shapiro, proffered as

an economics expert. In 2019, Dr. Shapiro issued an expert report. DE 65-3. In November 2019,

Dr. Shapiro updated his report because of a calculation error in the “age related earnings growth

and growth in the United States Consumer Price Index.” He did not “ma[k]e any changes to the

methodology and analytics approach used to calculate damages.” DE 65-8.

Two years later, on December 6, 2021, plaintiffs’ counsel requested leave to amend the

Joint Pre-Trial Order (“JPTO”) to add the “updated” expert report of Dr. Shapiro which they had

received three days prior. DE 85. According to counsel, “Plaintiffs’ expert economist wrote his

initial report in July 2019 and he wanted the opportunity to revisit his report since it has been about

2.5 years since he completed it.” Id. At the time, trial was slated to begin in just a little over 30

days, with jury selection scheduled for January 11, 2022. Electronic Order dated October 13,

2021.

The Court granted the motion to amend the JPTO with Dr. Shapiro’s updated report.

Electronic Order dated December 9, 2021. The following day, defense counsel requested leave to:

2 Of course, when counsel unleashes a barrage of spurious motions, as has clearly happened here, it creates a risk that

a legitimate motion can get lost. However, to ensure that the parties are treated fairly, the Court has been careful to

separate the proverbial baby from its bathwater.

(1) supplement its expert report, and (2) again depose plaintiffs and their expert regarding earnings

and efforts to mitigate. DE 88. The Court denied counsel’s request to amend the JPTO and re-

depose plaintiffs but allowed defendant to “supplement its expert report to the extent that such

supplementation is directly responsive to Plaintiffs’ amendments to their expert report, as

referenced in Plaintiffs’ December 6, 2021 letter.” Electronic Order dated December 14, 2021.

On December 16, 2021, defense counsel asked the Court to compel the deposition of

plaintiffs’ expert because of an “eleventh-hour change” in his report. DE 94. As counsel

explained, “the report does not merely ‘update’ the expert’s prior opinion to account for the elapse

of time since his corrected October 2019 report. Rather, the report conjures up a wholly new basis

for the expert’s new numbers and abandons the prior basis.” Id. The Court granted defendant’s

motion, permitting a renewed deposition of the expert. Electronic Order dated December 17,

2021.3

Days later, trial was cancelled sine die on the advice of the Court epidemiologist in light

of the Omicron surge, and in April the trial was rescheduled for July 18, 2022. Electronic Orders

dated January 5, 2022 and April 22, 2022. On June 14, 2022, defense counsel filed a motion in

limine to preclude the expert report and testimony of Dr. Shapiro. DE 128. On June 29, 2022,

plaintiffs filed their opposition, with which they submitted Dr. Shapiro’s revised December 2021

expert report with this Court. DE 137, 137-4.

On review, it appears that defendant’s assessment of plaintiffs’ supplemental expert report

hit the mark. The original expert report, filed in 2019, calculating the lump sum value of lost

compensation based on economic projections. DE 65-13. The 2019 projections were based upon

3 Since the parties disagreed (unsurprisingly) over the length and format of the deposition, DE 97-98, the Court’s

intervention was necessary to order that “Defendant’s deposition of Plaintiffs’ expert witness Dr. Shapiro shall be

limited to 3.5 hours in length, not limited in scope, and may be conducted virtually.” Electronic Order dated January

3, 2022.

the “annual average growth in median salaries for male credit counselors and loan officers”

published by the Census Bureau. DE 65-13 at 3. Problems emerged, however, seemingly because

of the boom in the housing market attendant to the pandemic: plaintiffs’ actual salaries dwarfed

Shapiro’s projections, even exceeding the compensation projections for their original positions for

2019 through 2021. These events would seem to dramatically reduce the damages to which

plaintiffs may be entitled if they prevail at trial.

Rather than explain these issues and deal with the consequences, Shapiro changed his

methodology, abandoning the Census Bureau’s salary data and substituting projections based upon

“the year-over year [sic] percent change in the volume of originated residential mortgages,”

derived from a database maintained by the Federal Housing Finance Agency. DE 145-4, n.4. The

altered methodology not only goes unexplained; it takes a great deal of careful reading and

comparison of the two reports – including a close examination of the footnotes – to unearth his

bases. Id. At the supplemental deposition ordered by the Court, Shapiro admitted, among other

things, that he had never “used that particular metrics [sic] to project compensation in any case

other than this case.” Tr. at 14, DE 145-3.

The results are simply staggering. Even though plaintiffs earned far more in reality than

in the expert’s earlier projections (and, indeed, earned more than they “would” have earned at their

prior employment inside this theoretical world), the new methodology somehow demonstrates that

they are far worse off (and therefore entitled to greater damages). Dr. Shapiro’s supplemental

report substitutes the actual figures earned by plaintiffs in, for example, 2020 and 2021 at United

Mortgage, which proved a multiple of his 2019 projections:4

4 This alarming disparity could be seen as undermining the validity of his original projections, but in fairness, it would

have been impossible to have foreseen the dramatic impact that the pandemic would have on the housing market.

Plaintiffs’ Actual Earnings at United Mortgage

Compared to Shapiro’s Original Projections (rounded)

2019 Report 2021 Report

(Projected Wages) (Actual Wages)

2020 2021 2020 2021

Steven Hernandez $102,000 $103,000 $263,000 $175,000

Richard Hernandez $147,000 $149,000 $378,000 $235,000

DE 65-13, 145-4. Since they earned far more than projected, the reality of these figures would

seem to greatly reduce plaintiffs’ projected losses. However, using his new methodology, Shapiro

also wildly altered his projections as to the sums plaintiff would have earned had they maintained

their original positions at New Penn Financial, their employer prior to working for defendants:5

Changes to Plaintiffs’ Theoretical Earnings at New Penn

Based on Shapiro’s New Methodology (rounded)

2019 Report 2021 Report

2020 2021 2020 2021

Steven Hernandez $151,000 $153,000 $241,000 $250,000

Richard Hernandez $351,000 $356,000 $562,000 $583,000

Id. The net changes are truly staggering, as summarized below:

Calculated “Lump Sum Equal to All Lost Compensation”

as Presented in Dr. Shapiro’s Reports (rounded figures)

2019 Report 2021 Report

Steven Hernandez $1.3 million $2.2 million

Richard Hernandez $5 million $9.1 million

Total Projected Losses $6.3 million $11.3 million

5 Of course, it is possible that plaintiffs’ compensation at New Penn would have increased with the housing boom at

New Penn, but one cannot draw any reasonable inferences predicated upon Shapiro’s work, which falls clearly into

the realm of convenient guesswork and conclusory speculation.

Id. Thus, somehow, though they were actually making far more money than originally projected,

plaintiffs’ losses nearly doubled as a result of Shapiro’s new methodology. Something just doesn’t

add up.

DISCUSSION

Defendant’s In Limine Motions 1-9

That Mr. Labuda filed these motions three times after being cautioned by the Court might give

rise to an impression that they were important, well-crafted and thoroughly considered. Unfortunately,

with one exception, defendant’s in limine motions focus on trifling matters; many are simply baseless

or directly contrary to earlier rulings by this Court. The motions, and this Court’s ruling thereon, are

as follows:

Motion Number 1: Exclusion of Certain Emails

Defendant seeks to exclude certain emails as “not the best evidence” and based upon hearsay

and relevance. The use of the term “best evidence” here represents a complete misapplication of the

best evidence rule. See Fed. R. Evid. 1002; Fed. R. Evid. 1001(d). Essentially, counsel attempts to

bootstrap the best evidence rule onto the instant set of emails as these documents purportedly refer to

certain data contained in another computer system. However, the emails themselves constitute

originals under Fed. R. Evid. 1001(d), making the objection easily dispatched on that ground.

Defendant also argues that the data referenced in these emails constitute hearsay. However,

plaintiffs make clear in their response that these documents will not be offered for the truth asserted,

undercutting the applicability of the hearsay rule. See, e.g., Wright v. Urban Outfitters, No. 1:06-cv-

13389, 2009 WL 10736929, at *4 (S.D.N.Y. Nov. 30, 2009) (“Here, plaintiff is not presenting these

emails to establish the truth of their contents, but to establish that the defendant had notice of her

complaints. Accordingly, the evidence is not hearsay”). That plaintiffs’ more limited offer of these

documents resolves this objection demonstrates the importance of the Court’s directive to confer on

these matters, and further underscores the failure of defendant’s counsel to do so in good faith.

Motion No. 2: Suppression of Taped Conversation

Plaintiffs intend to offer an audio recording made by plaintiff Steve Hernandez of a telephone

conversation of his termination by defendant’s representative Jedd Lara, apparently recorded without

Lara’s knowledge. According to the facts proffered by defendant, Lara was in California at the time

of the termination call, while Hernandez was in New York.6 DE 139 at 9. California is a “double

consent” state, requiring that both parties consent to recording of a telephone conversation. Relying

on California criminal and tort law, defendant argues that the Court “must exclude the tape recording.”

Id. at 9-11.

Of course, in a federal court, questions of procedural law are governed by federal law, while,

under an Erie analysis in diversity cases, substantive law is drawn from the states. Thus, that the instant

recording may well excludable under California law is entirely irrelevant to its admissibility in this

case. On Lee v. United States, 343 U.S. 747, 754–55 (1952) (“violation of state law, even had it been

shown here, as it was not, would not render the evidence obtained inadmissible in federal courts”).

“Rules of evidence . . . are generally considered procedural in nature.” De Larancuente v. Am. Airlines,

Inc., No. 18-cv-4939 (NG) (RER), 2022 WL 2239556, at *3 (E.D.N.Y. 2022); see also United States

v. Morrison, 153 F.3d 34, 57 (2d Cir. 1998) (rejecting claim that surreptitious recording violated

California law because “federal law governs the admissibility of evidence in a federal criminal trial”).

It is elementary that the Federal Rules of Evidence “apply to proceedings before . . . United States

district courts[,]” Fed. R. Evid. 1101, and “questions relating to the admissibility of evidence, whether

oral or otherwise, should usually be determined by the local law of the forum.” Restatement (Second)

6 The parties dispute whether Hernandez knew that Lara was in California at the time the recording was made, but this

fact is irrelevant for the analysis.

of Conflict of Laws § 138, cmt. a (Am. L. Inst. 1971). “[U]nder federal law [as well as New York], a

telephone conversation may be taped as long as one party to the conversation consents to the taping.”

Locke v. Aston, 31 A.D.3d 33, 35 (1st Dept. 2006).

Thus, defendant’s motion No. 2 is baseless.

Motion No. 3: Wage Claims after January 2019

Defendant seeks to exclude evidence concerning any wage claims arising after January 3, 2019,

the date of plaintiffs’ termination and roughly coextensive with a purported spinoff and sale of certain

of defendant’s operations. Of course, while presented as an evidentiary motion, the true nature of this

application is a substantive determination that would have been more properly raised during the

summary judgment phase of this case. Putting that issue aside, however, defendant’s motion is

similarly without basis.

Cobbling together a set of citations from discrimination cases, defendant argues that there can

be no liability for back pay following plaintiffs’ termination and/or the purported sale of business

assets. However, the instant dispute, as Judge Tomlinson found in her Report & Recommendation, is

predicated upon fraudulent inducement, and thus the damages extend to “lost professional

opportunities, damage [to] their professional reputation . . . diminution of their earnings and earnings

potential and damage to their career growth.” DE 61 at 19 (quoting DE 1, ¶ 90). Thus, the date of

termination and/or sale of business operations do not provide a basis for excluding evidence of

damages, and the motion is denied.

Motion No. 4: “Victim” and “Whistleblower”

Stringing together a cartload of largely irrelevant and non-binding state court decisions,

counsel for defendant moves that plaintiffs’ counsel should be barred from using terms such a

“victims,” “victimized,” and “whistleblower” during the trial. DE 139 at 14-15. Recently, in Fields

v. Bayerische Motoren Werke Aktiengesellschaft, this Court rejected a nearly identical motion in

limine, holding it up as an example of applications “seek[ing] relief so very inconsequential that their

filing only highlights counsels’ failure to reasonably engage with each other in anticipation of trial.”

No. 18-CV-2889 (GRB)(AYS), 2022 WL 905129, at *2 (E.D.N.Y. 2022) (rejecting in limine motion

seeking to bar the use of the word “victim” by plaintiff). Ironically, the Fields case is the very opinion

cited in this Court’s June 17, 2022 Order withdrawing the in limine motions. Apparently, defense

counsel opted not to read it.

The motion is denied. See id. at *2, n.2 (“Courts have uniformly held that such matters are

‘not appropriate to be ruled upon in a Motion in Limine’”) (quoting Gannon v. Menard, Inc., 2019 WL

7584294, at *5 (S.D. Ind. 2019) (collecting cases)).

Motions No. 5 (Excluding Incomplete Exhibits) and 7 (Judicial Notice of Mortgage Rates)

In motions 5 and 7, defendant asks the Court to exclude certain exhibits which they contend

are incomplete, and take judicial notice of Fannie Mae and Freddie Mac mortgage rates. These

applications require little discussion as the Court has previously entered orders rejecting both these

applications. See Electronic Order dated December 21, 2021 (“Defendant is precluded from arguing

that the absence of signature pages and other extraneous material should render the exhibits

inadmissible”) and December 14, 2021 (denying request to supplement record with Fannie

Mae/Freddie Mac interest rate reports).

Motion No. 6: Use of Deposition Transcripts and Motion No. 9: Misnumbered Trial Exhibits

Defendant argues that plaintiff should be precluded from offering deposition testimony for two

of its witnesses who will now, it represents, be available at trial. DE 139 at 16. Plaintiffs’ counsel

properly notes that “Plaintiffs have a right to use the transcripts as permitted by the federal rules,” a

proposition that would include permissible uses even assuming these witnesses appear at trial. Id.

Motion No. 9 may be defendant’s most frivolous application. DE 140. According to Mr.

Labuda, plaintiff’s counsel provided him with a trial binder in which the exhibits are misnumbered and

several exhibits are missing. (What he does not claim is that the plaintiff supplied documents that had

not been previously turned over.) As a result, he would have the Court exclude all of plaintiff’s

evidence. DE 116. Plaintiffs’ counsel responds that the exhibit numbers changed because she reduced

the number of exhibits and attempted to organize them into the order in which they would be

introduced. DE 117. Nevertheless, Mr. Labuda persists in seeking exclusion of all of plaintiffs’

evidence, having filed this motion three times. DE 116, 138, 140.

Equally important, these applications are precisely the types of matters that should have been

resolved professionally between counsel, and not the subject of pointless motion practice. Hence, the

Court’s direction for the parties to meet and confer in good faith before refiling such motions is an

order that defense counsel clearly failed to follow. The motions are denied.

Defendant’s Tenth Motion in Limine: Request to Strike Supplemental Expert Report

Of the defense motions filed, number 10 is the sole motion that bears consideration.

Plaintiffs move to strike this motion as “baseless and redundant,” noting

Defendant already made a motion to preclude Plaintiff’s expert and report which

was denied. While Dr. Shapiro subsequently updated his report to reflect the drastic

changes that occurred within the mortgage loan industry because of Covid, he

explained his methodology and reasoning at his 2nd deposition.

DE 142.

Given the unjustified, methodological sea change underlying the supplemental report, plaintiffs’

arguments ring hollow.

As a procedural matter, the supplemental report of plaintiffs’ expert runs contrary to the

dictates and purposes of Rule 26 and the related disclosure requirements. The Court took

extraordinary care to mitigate any potential prejudice and permit defendant an opportunity to

present a complete evidentiary picture at trial, permitting, for example, the opportunity for post-

discovery deposition of plaintiffs’ expert and the submission of supplemental reports by

defendant’s expert. Had the supplemental report been limited, as described by plaintiffs’ counsel,

to an “opportunity to revisit his report since it has been about 2.5 years since [Shapiro] completed

it,” these efforts might have proven sufficient. Compare Faulkner v. Arista Recs. LLC, 46 F. Supp.

3d 365, 379 (S.D.N.Y. 2014) (finding “introduction of additional expert testimony, after the close

of expert discovery would unduly prejudice Defendants who have not been awarded the

opportunity to prepare a rebuttal report or depose Ms. Crain regarding her opinions”).

But Shapiro’s supplement proved far more than simply a recalculation of projections

considering additional information. Rather, the supplemental report devises an entirely different

methodology, the need for which has not been adequately explained. Such a change in

methodology warrants striking the supplemental report. Wechsler v. Hunt Health Sys., Ltd., 381

F. Supp. 2d 135, 157 (S.D.N.Y. 2003) (striking on procedural grounds a supplemental report that

unjustifiably utilized “a new alternative analysis”). And the timing of this supplement was a

volitional choice by plaintiffs’ counsel and/or their expert, another impermissible factor. Coene v.

3M Co., 303 F.R.D. 32, 42 (W.D.N.Y. 2014) (“The rule does not, however, permit a party to

supplement an expert report at any time it wishes, but instead imposes an obligation to supplement

the report when a party discovers the information that it has disclosed is incomplete or incorrect”)

(internal quotations and citation omitted).

The Court is, of course, mindful that “preclusion of an expert report can be a harsh

sanction.” In re Bear Stearns Companies, Inc. Sec., Derivative, & ERISA Litig., 263 F. Supp. 3d

446, 452 (S.D.N.Y. 2017). Yet, the submission of a supplemental report that fundamentally

changes the approach taken by the expert (and unaccountably results in a damages projection twice

that of the initial report even though plaintiff earned substantially more in mitigation wages) long

after the close of discovery warrants exclusion of that report.

The exclusion of the supplemental report on procedural grounds is further buttressed by an

analysis under Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, (1993). As the Second Circuit

has held:

The flexible Daubert inquiry gives the district court the discretion needed to ensure

that the courtroom door remains closed to junk science while admitting reliable

expert testimony that will assist the trier of fact. To warrant admissibility, however,

it is critical that an expert’s analysis be reliable at every step.

Amorgianos v. Nat’l R.R. Passenger Corp., 303 F.3d 256, 267 (2d Cir. 2002). Following Daubert,

Congress amended Rule 702 to require that courts permit expert testimony only “if (b) the

testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles

and methods; and (d) the expert has reliably applied the principles and methods to the facts of the

case.” Fed. R. Evid. 702.

Here, Shapiro’s substitution of the “originated residential mortgages” rate as the sole

projection metric in place of Census Bureau salary data runs afoul of the second two elements of

this Rule. In the portions of the deposition supplied, Shapiro fails to offer any reasoned explanation

for the change7 and acknowledges that he had never “used that particular metrics [sic] to project

compensation in any case other than this case,” Tr. at 14, DE 145-3, undermining the notion that

his newfound approach represents “reliable principles and methods.” Fed. R. Evid. 702(c).

Furthermore, the unjustified methodological turnabout, along with the wildly disparate results,

demonstrates that Shapiro has failed to “reliably appl[y] the principles and methods to the facts of

7 Given the history of this matter detailed above, a reasoned inference could be drawn that Shapiro reworked his

opinion only because of a dissatisfaction with the damages amount under the original formulae. In other words, his

new methodology appears responsive not to the ring of truth, but that of a cash register.

the case.” Fed. R. Evid. 702(d). As such, I find the matters contained in the supplemental report8

excludable under Fed. R. Evid. 702.

Consideration of Sua Sponte Sanctions Pursuant to 28 U.S.C. §1927

As Judge Spatt noted:

28 U.S.C. § 1927 authorizes the courts to sanction an attorney “who so multiplies

the proceedings in any case unreasonably and vexatiously.” 28 U.S.C. § 1927.. . .

[T]o impose sanctions under § 1927, the court must make a finding of “conduct

constituting or akin to bad faith.” In re 60 E. 80th St. Equities, Inc., 218 F.3d 109,

115 (2d Cir.2000) (citation and internal quotation marks omitted). See U.S. v. Int'l

Bhd. of Teamsters, 948 F.2d 1338, 1345 (2d Cir.1991) (“Bad faith is the touchstone

of an award under this statute.”); Revson v. Cinque & Cinque, P.C., 221 F.3d 71,

79 (2d Cir.2000) (“[A]n award under § 1927 is proper when the attorney's actions

are so completely without merit as to require the conclusion that they must have

been undertaken for some improper purpose such as delay.”). “Unlike Rule 11

sanctions which focus on particular papers, the inquiry under § 1927 is on a course

of conduct.” Bowler v. U.S. Immigration & Naturalization Serv., 901 F.Supp. 597,

605 (S.D.N.Y.1995).

Mahoney v. Yamaha Motor Corp. U.S.A., 290 F.R.D. 363, 367 (E.D.N.Y. 2013).

Plaintiff’s counsel had not moved for the imposition of such sanctions, however, such

sanction may be imposed sua sponte, provided notice and an opportunity to be heard is provided

to counsel. Gallop v. Cheney, 642 F.3d 364, 370 (2d Cir. 2011) (“we may, with adequate notice

and opportunity to be heard, impose sanctions nostra sponte”). For avoidance of doubt, this ruling

constitutes such notice to Mr. Labuda, who is directed to show cause in writing, if any he has, why

such sanctions should not be imposed. Such submission will be filed on or before July 15, 2022.

8 Indeed, Shapiro’s unexplained yet convenient methodological pivot, the plain unreliability of the methods adopted

in his supplemental report, as well as the startling, if explicable, delta between his projections and actual earnings.

raises a fair question as to whether the entirety of his testimony might be stricken as unreliable. Hunt v. CNH Am.

LLC, 511 F. App’x 43, 46 (2d Cir. 2013) (upholding district court’s exercise of discretion in striking supplemental

report and rejecting balance of expert testimony “pursuant to Federal Rules of Evidence 702 and 403”). However,

given that plaintiffs would suffer irremediable prejudice from such a sanction, the harshness of this remedy, and the

likelihood that such matters are “properly explored on cross-examination,” the Court will permit expert testimony

from Shapiro based upon his initial report. McCullock v. H.B. Fuller Co., 61 F.3d 1038, 1043 (2d Cir. 1995).

Plaintiffs’ counsel may, if she chooses, file a declaration on or before that date, detailing the

amount of attorneys’ fees and other costs resulting from the subject conduct.

To be clear, under consideration is Mr. Labuda’s repeated filing of motions in limine nos.

1-9, as discussed herein, notwithstanding the Court’s warning that the filing of baseless motions

would likely result in sanctions. Relatedly, his failure to meet and confer in good faith, as directed

by the Court, in an effort to reduce the issues and eliminate unneeded motion practice forms

another basis for the imposition of potential sanctions.

It is conceivable that Mr. Labuda’s prior conduct in this and other cases may be relevant in

determining the propriety, nature and extent of any potential sanction. Usherson v. Bandshell

Artist Mgmt., No. 19-CV-6368 (JMF), 2020 WL 3483661, at *18 (S.D.N.Y. June 26, 2020), aff’d

in part sub nom. Liebowitz v. Bandshell Artist Mgmt., 858 F. App’x 457 (2d Cir. 2021), and af’'d

sub nom. Liebowitz v. Bandshell Artist Mgmt., 6 F.4th 267 (2d Cir. 2021) (district court should

consider “whether there is a pattern of misbehavior rather than an isolated instance”); Piccolo et

al. v. Top Shelf Provisions Co. Inc., 16-CV-6930 (GRB), DE 96 (letter from Mr. Labuda noting

“Courts must consider prior conduct of counsel in issuing sanctions”). The Piccolo case, litigated

before the undersigned, was a matter characterized by “repeated instances of unprofessional

conduct by both counsel” who “handled th[e] matter in a needlessly contentious fashion.” Piccolo

v. Top Shelf Prods., Inc., 2018 WL 4374914, at *4 (E.D.N.Y. 2018); Piccolo v. Top Shelf Prods.,

Inc., 541 F. Supp. 3d 256, 260 (E.D.N.Y. 2021). One of the many problems in that case occurred

at a deposition, at which Mr. Labuda “repeatedly directed his client not to answer questions without

the assertion of a privilege.” 2018 WL 4374914 at *3. In an effort to abate such conduct, “the

Court entered orders on no less than eight occasions . . . reminding counsel of their obligations of

professional courtesy and cooperation,” which were wholly ignored by counsel. 541 F. Supp. 3d

at 259. Mr. Labuda has engaged in similar, unprofessional conduct in at least one other case before

other judges of this Court. See, e.g., Maldonado v. Srour, 2015 WL 5098617, at *1 (E.D.N.Y.

2015) (imposing fees and costs where Mr. Labuda improperly instructed his client not to answer

deposition questions, a judge ordered him to cease such conduct and “Mr. Labuda refused to adhere

to that order”).

Yet one need not look beyond the parameters of this case for other instances of

unprofessional conduct by Mr. Labuda. In this action, he filed a woefully undocumented request

to have six principal defense witnesses testify by video at trial, including Darius Mirshahzadeh

(defendant’s CEO), representing to the Court that requiring their testimony in person would “put

their lives at risk” due to the increased chances of contracting COVID in connection with travel.

DE 134. Though Mr. Labuda claimed that his firm had spoken to each such witness, and went on,

at some length, about Mr. Mirshahzadeh’s health profile, the application contained no declarations

and relied on these representations of counsel. Mr. Labuda represented that the witnesses,

including Mirshahzadeh were “very reluctant and hesitant to broad a plane through crowded and

congested airports for a round-trip flight to/from New York at this time.” DE 134 at 2. In response,

plaintiffs’ counsel supplied photos and social media postings by Mirshahzadeh demonstrating that he

was then vacationing in Mexico for a month. DE 136. Of course, if COVID risks truly presented the

issues Mr. Labuda asserted, Mexico would not have been an appropriate destination in June 2022.9

Thus, the application for Mirshahzadeh to testify via video was, at best, insufficiently researched and,

at worst, an effort to mislead the Court.

9 Oshin, O., “Mexico returns to CDC’s highest-level COVID warning,” thehill.com, June 13, 2022.

CONCLUSION

Based on the foregoing:

1. Defendant’s motions in limine Nos. 1-9 are DENIED as baseless and frivolous;

2. Defendant’s motion in limine No. 10 seeking to strike the supplemental report of

plaintiffs’ expert is GRANTED; while plaintiffs’ cross-motion to strike said motion

is DENIED;

3. Defendant’s counsel will show cause by July 15 as to why sanctions should not be

imposed, and

4. Nothing in this decision will serve to impede the commencement of jury selection

and trial, as previously scheduled.

SO ORDERED.

Dated: Central Islip, New York

July 12, 2022

/s/ Gary R. Brown

GARY R. BROWN

United States District Judge