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During the summers of 1976 and 1977, Food Service Dynamics, Inc. (“FSD”), a New York corporation, participated in the Summer Food Service Program for Children, a Federally-funded feeding program administered by the U.S. Department of Agriculture (“USDA”). The services provided by FSD consisted of providing meals to, and managing the food service for, sponsors who provided food services under the program. USDA did not allow FSD to participate in the 1978 summer program.
On July 10, 1979, FSD filed a civil action in the Supreme Court of the State of New York, Kings County, against U.S. Representative Elizabeth Holtzman of New York and three officials of USDA responsible for the administration of the program for the summer of 1978. The complaint charged that: (1) the USDA defendants unlawfully revoked FSD's registration as a vendor authorized to participate in the program for the summer of 1978; (2) Rep. Holtzman and the USDA defendants conspired to deprive FSD of its right to so participate; and (3) Rep. Holtzman defamed FSD at a June 26, 1978 press conference. With respect to this last claim, FSD charged that Rep. Holtzman stated that: (1) officials of USDA had approved vendors who previously engaged in questionable bidding practices, including FSD; (2) bidder FSD supplied food for some affiliates of B'nai Torah Institute, several officers of which were convicted of fraud in the summer feeding program; and (3) USDA had failed to take action to remove any of the eight caterers accused previously of rigging bids or serving poor food. The complaint sought $6,500,000 in actual damages and $6,000,000 in punitive damages from defendant Holtzman.
On August 8, 1979, Rep. Holtzman and the USDA defendants filed a joint petition and bond for removal to the U.S. District Court for the Eastern District of New York. The petition was subsequently granted.
On September 4, 1979, Rep. Holtzman answered the complaint, denying the material allegations and setting forth certain affirmative defenses. On that same day, Rep. Holtzman served a document request and a notice of deposition on FSD.
In her answer, Rep. Holtzman asserted first that FSD had failed to state any claim upon which relief could be granted. Second, she maintained that the acts alleged in the complaint were committed within the scope of her Congressional office and in furtherance of her duties to investigate and speak out on matters of public interest and to examine and report upon the implementation of legislation. Third, defendant Holtzman claimed her actions were privileged under the Constitution of the United States and Federal common law. Fourth, she argued that the statements made related to matters of public concern, including public health and safety, the administration of a Federally-sponsored program, and the expenditure of Federal funds. Fifth, Rep. Holtzman contended that statements to USDA mentioned in the complaint were statements regarding matters within the jurisdiction of that agency, which was charged with the responsibility of acting in the public interest in its administration of the program. Sixth, Rep. Holtzman asserted that her statements were true in all material respects as of the date of the press conference.
Meanwhile, during the pendency of this civil action, a grand jury on November 27, 1979 handed down an indictment charging several FSD officials with numerous crimes resulting from their prior participation in the summer feeding program, including filing false and fraudulent federal income tax returns. On May 1, 1980, two officers of FSD entered into a plea agreement with the U.S. Attorney for the Eastern District of New York; in the agreement the two officers each pled guilty to a single count of the indictment.
During the past two years, the parties have been involved in frequent disputes regarding discovery, primarily related to requests for production of documents. On October 2, 1980, Rep. Holtzman filed a motion for an order pursuant to Rule 31 of the Federal Rules of Civil Procedure dismissing the action or, in the alternative, compelling FSD to produce certain documents initially requested by the Congresswoman on September 4, 1979. The documents at issue were the Federal, state, and local income tax returns of indicted FSD principals Robert Duchanov, Barry Goldstein, and Bernard Drang, which, according to Rep. Holtzman, had been ordered produced by the court several months previously (on December 4, 1979) but had never been made available to the defendant. Claiming that FSD's recalcitrance was without justification, Rep. Holtzman argued that the case should be dismissed as a sanction against FSD and as a warning to future litigants.
On October 17, 1980, the plaintiff filed a memorandum in opposition to Rep. Holtzman's motion under Rule 37. The plaintiff asserted that the Congresswoman had not asked for the tax records at the time of her original document request and that, in any event, the records were not relevant and therefore not the proper subject of document production in the case. On the same day, Rep. Holtzman filed a reply memorandum arguing that: (1) her initial document request clearly called for the production of the tax returns of the FSD officers and directors; and (2) the income tax returns were
"Rule 37 of the Federal Rules of Civil Procedure, entitled "Failure To Make Discovery: Sanctions", provides, in pertinent part:
(a) Motion for Order Compelling Discovery. A party, upon reasonable notice to other parties and all persons affected thereby, may apply for an order compelling discovery as follows:
(2) Motion. If ... a party, in response to a request for inspection submitted under Rule 34, fails to respond that inspection will be permitted as requested or fails to permit inspection as requested, the discovering party may move for ... an order compelling inspection in accordance with the request.
(b) Failure to comply with Order.
(2) Sanctions by Court in Which Action is Pending. If a party or an officer, director, or managing agent of a party : . . fails to obey an order to provide or permit discovery, including an order made under subdivision (a) of this rule or Rule 35, the court in which that action is pending may make such orders in regard to the failure as are just, and among others the following:
(A) An order that the matters regarding which the order was made or any other designated facts shall be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order;
(B) An order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting him from introducing designated matters in evidence;
(C) An order striking out pleading or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof, or rendering a judgment by default against the disobedient party;
patently relevant to Rep. Holtzman's defense to the defamation charge, for impeachment purposes at trial, and to the issue of damages.
On November 18, 1980, U.S. District Court Judge Eugene Nickerson filed a memorandum and order granting Rep. Holtzman's motion to compel the production of the FSD officials' income tax returns and denying her motion to dismiss the complaint. The court found that the tax returns were relevant to the case:
Truth is a defense to defamation. Any fraudulent statements found in the tax returns of officers and directors of plaintiff corporation would be relevant in evaluating the truth of defendant Holtzman's public declarations that plaintiff was unfit to serve as a vendor in a federallyfunded program. Nor can this request be considered a fishing expedition into the private financial affairs of plaintiff's officers. The grand jury indictment charging the three officers with tax fraud provides a sufficient basis to warrant inquiry into their tax returns. (Memorandum and
Order, November 18, 1980, at 4] On June 12, 1981, District Judge Nickerson filed another memorandum and order directing the U.S. Attorney for the Eastern District of New York to make available to the parties the grand jury minutes of the testimony given in the criminal case against the FSD officials by several witnesses concerning the subject matter of the civil suit. The witnesses-Sidney Pinter, Israel Goldberger, Gabor Rosner, and Abraham Tenenbaum-had testified before the grand jury under a grant of use immunity but had refused to testify at depositions in the civil case asserting their Fifth Amendment privilege. In response to Rep. Holtzman's request, the court made the testimony of three of the witnesses available. Judge Nickerson explained:
The use immunity provided to Pinter, Goldberger, and Rosner protects them against both direct and indirect use of the compelled grand jury testimony in any criminal prosecution. Kastigar v. United States, 406 U.S. 441, 453 (1972). It does not, however, protect them from a criminal prosecution based solely on information and evidence derived from legitimate sources wholly independent of the grand jury testimony. Id. at 460.
Therefore, if defendant Holtzman had no access to grand jury testimony and in a deposition asked questions of these witnesses derived entirely from her own independent investigation, the answers to these questions, if given voluntarily, could be used against them in a criminal case. However, if defendant Holtzman were provided with access to the witnesses' grand jury testimony and were permitted only to ask questions derived from that testimony, responsive answers to these questions would be derived from the immunized grand jury testimony and could not be used against the witness in a criminal proceeding. In re: Corrugated Container Antitrust Litigation, M.D.L. No. 310 Appeal of Phillip L. Fleischacker, 80-1090, slip op. at 6852
(2d Cir. March 2, 1981). [Memorandum and Order, June 12,
1981, at 2-3] The court also directed the witnesses to respond to all questions concerning the “specific subjects that actually were touched upon by questions appearing in the transcript of the immunized testimony." [Id. at 4] They were not compelled to respond to questions other than those concerning the “specific subjects.
Since one of the witnesses-Mr. Tenenbaum-had not testified before the grand jury and was not granted immunity, he was not directed to answer any questions which might incriminate him.
On June 16, 1981, the plaintiff filed its first request for the production of documents from Rep. Holtzman. Rep. Holtzman filed her response on July 17, 1981, at which time she asserted that she was not required to produce any documents until the plaintiff had fully complied with her previous production request. According to Rep. Holtzman, FSD had "concededly" not complied.
Discovery continued in the case through the summer of 1981. On September 23, 1981, U.S. Magistrate John L. Caden, to whom certain discovery-related matters had been referred, issued a protective order, at Rep. Holtzman's request, governing the confidentiality of the documents she had previously provided to FSD. The order stated that: (1) FSD was to make no further copies of the Holtzman documents; (2) one set of copies of the documents provided to FSD was to be given to the three USDA defendants who were also prohibited from further copying; and (3) all documents were to be returned to Rep. Holtzman at the conclusion of the lawsuit.
Several status conferences were held over the next few months. At the last of these, convened on December 24, 1981, counsel for the parties agreed by stipulation to adjourn all discovery until July 15, 1982.
Status—The case is pending in the U.S. District Court for the Eastern Distict of New York. Bodenmiller v. Stanchfield
Civil Action No. 79-21814 (Sup. Ct. Suffolk County, N.Y.) On August 27, 1979, Frank Bodenmiller, a former employee of Congressman Thomas Downey of New York, filed suit in the state Supreme Court in Suffolk County, New York against the Congressman, his administrative assistant, Rosalie Cipola, and various employees of the U.S. Postal Service and members of its employees union. The complaint alleged that Mr. Bodenmiller, who in the course of his staff work purportedly had been conducting an investigation of the American Postal Workers Union contract with the Postal Service, was slandered by the Postal Service and Union defendants in order to discredit his investigation. According to the complaint, defendants Downey and Cipola "adopted the accusations" made against the plaintiff "in order to insure continued political support” from_the Postal Workers Union. (Complaint, August 27, 1979, at 5] The complaint sought damages of $2 million each from Rep. Downey and Ms. Cipola, $10 million each from Donald Stanchfield (Director of Motor Vehicle Craft of the American Postal Workers Union-Hicksville, N.Y. Local), the Union (Hicksville Local), and Anthony Passaro (a Postal Service employee and member of the Union).
On November 2, 1979, the plaintiff filed a motion for a default judgment, asserting that the defendants had not responded to the complaint within the required time. With respect to the Congressional defendants, he contended that service had been accepted on their behalf by a New York attorney, Kevin Brosnahan.
On January 10, 1980, the General Counsel to the Clerk of the House filed an opposition to the plaintiff's motion and moved to be substituted as the counsel of record for the Congressional defendants. In his pleading the General Counsel noted that attorney Brosnahan had not been properly designated as an agent for service of process pursuant to New York law and that therefore mailing of the summons and complaint to him was not service upon the defendants. Furthermore, the General Counsel maintained that the Congressional defendants had several meritorious defenses to the allegations, including absolute immunity under the Speech or Debate Clause; ' statutory permission (under Title 2 of the United States Code) to supervise and terminate Congressional employees, with or without cause; and common law official immunity.
On March 21, 1980, Justice Paul T. D'Amaro of the Suffolk County Supreme Court denied the motion for a default judgment, citing both the “strong public policy favoring a trial on the merits' and the possible meritorious defenses to the action. Additionally, the court noted that the plaintiff had not shown he was seriously prejudiced by the failure of the defendants to answer the complaint in a timely manner.
On April 4, 1980, the Congressional defendants moved to dismiss the action as to them because the complaint did not contain the exact words allegedly used by Rep. Downey and Ms. Cipola in slandering the plaintiff, as was required by New York law. According to the General Counsel, since the particular words were not pleaded there was no valid claim of slander per se. Second, the defendants contended, they were absolutely immune from common law torts as long as they were acting within the scope of their authority. Finally, the defendants argued, the first cause of action asserted no wrong-doing on the defendant's part and made no allegation of special damages.
The plaintiff cross-moved for an order allowing him to replead after discovery the exact words allegedly used by Rep. Downey and Ms. Cipola in slandering him. This was opposed by the Congressional defendants in an affirmation filed on September 23, 1980, which also supported their motion to dismiss the complaint. On October 21, 1980, Judge Orgera denied the motion to dismiss with leave to replead after submission of the proper papers. Subsequently, on February 9, 1981, the General Counsel refiled the motion to dismiss and a supporting memorandum on behalf of the Congressional de fendants.
On August 3, 1981, Justice D'Amaro issued a memorandum denying, as "premature," the motion of Rep. Downey and Ms. Cipola to
* The Speech or Debate Clause of the U.S. Constitution provides that "for any Speech or Debate in either House, (U.S. Senators and U.S. Representatives) shall not be questioned in any other Place.” (art. I, $6, cl. 1]