GARY R. BROWN, Magistrate Judge.
Two years ago, the crushing force of Hurricane Sandy devastated large areas of this judicial district. While much has been done to facilitate recovery, assistance has not been consistent or timely, leaving some homeowners behind — even those who properly paid for flood insurance. That some homeowners have faced insufferable delays has not been lost on the public
Against this backdrop arises the instant dispute, which has exposed reprehensible gamesmanship by a professional engineering company that unjustly frustrated efforts by two homeowners to get fair consideration of their claims. Worse yet, evidence suggests that these unprincipled practices may be widespread.
Specifically, the evidence adduced in this matter demonstrates that U.S. Forensic, an engineering firm retained by defendant Wright National Flood Insurance Company ("Wright") to examine a storm-battered house in Long Beach, New York, unfairly thwarted reasoned consideration of plaintiffs' claim through the issuance of a baseless report. The engineer sent by U.S. Forensic opined in a written report that the home at issue had been damaged beyond repair by Hurricane Sandy. A second engineer, who did little more than review the photographs taken by the inspecting engineer, secretly rewrote the report, reversing its conclusion to indicate that the house had not been damaged by the storm, and attributing — without sufficient evidence — defects in the home to long-term deterioration. This process, euphemistically dubbed a "peer review" by U.S. Forensic, was concealed by design from the homeowners, remained uncovered during the Court-assisted discovery process and came to light through near happenstance. In a misguided attempt to defend these flawed practices, defendant has elicited evidence that this "peer review" process may have affected hundreds of Hurricane Sandy flood insurance claims — and possibly more.
In this decision, the undersigned addresses the evidence presented, makes relevant findings and directs certain relief to ameliorate the highly-improper practices brought to light in this case.
Following the failure of mediation to resolve this matter, plaintiffs' counsel filed a "Motion to Set Discovery Schedule and Set for Trial," informing the Court, for the first time, that it had evidence of a U.S. Forensic engineering report that provided a conclusion contrary to the report upon which Wright based its denial of much of plaintiffs' flood insurance claim. DE [57]. In response, Wright, among other things, denied all knowledge of the seemingly altered report, blamed plaintiffs for failing to provide evidence of the earlier report prior to mediation, sought to select a different expert as "this engineer and U.S. Forensics [sic] are now allegedly tainted," and demanded that plaintiffs provide all information concerning the discrepancies in the engineering reports to the new engineer.
Electronic Order dated October 1, 2014. On October 16, 2014, an evidentiary hearing was held, at which the parties produced three witnesses. At the conclusion of the hearing, plaintiffs' counsel indicated that, in addition to the relief previously sought, the Court should consider addressing discovery violations that resulted from the failure to provide the draft engineering reports in this case. Tr. 168. Following the hearing, both sides were permitted to submit post-hearing briefs and supporting materials.
Plaintiffs were the owners of a property located at 24 Michigan Street, Long Beach, NY, which is located about one block from the beach. The owners, who own and reside in an adjacent home, bought the house at 24 Michigan Street with plans to ultimately expand their own home, but rented the house to help pay the mortgage. Tr. 22. After Hurricane Sandy struck, one of the homeowners observed significant damage to the house that did not exist prior to the storm, including extensive damage to the floors, which had shifted in the storm. Tr. 14-15. Following the storm, the back door would no longer open, such that the homeowner had to break it down to gain access to the house. Tr. 16.
On or about November 17, 2012, David Maxime, an independent adjustor, examined the home. Based largely on the report of the adjustor, defendant paid the plaintiffs slightly more than $60,000 (in several installments) for cosmetic, non-structural damage. Tr. 21. Maxime also prepared a document entitled "Engineer Request for Fidelity,"
Pl.'s Ex. 2 (emphasis added). Presumably in response to this request, U.S. Forensic sent George Hernemar, a licensed engineer to conduct an inspection of the premises on December 4, 2012. Pl's. Ex. 3 & 5.
Trained in Sweden, Hernemar obtained employment as a contractor with U.S. Forensic, a nationwide engineering firm, after answering an ad on Craigslist for a New York licensed engineer. Tr. 44-45, 88. He testified that he conducted approximately fifty home inspections for U.S. Forensic to assess damage inflicted by Hurricane Sandy. Tr. 44-45. U.S. Forensic had been engaged by Fidelity to report on the damage to the 24 Michigan Street property.
Following his inspection, Hernemar wrote and transmitted a report
Pl's Ex. 5 (emphasis added). However, plaintiffs never received this report from their insurance carrier. Rather, they received a report dated January 7, 2013 ("January 7 report") which contains completely divergent "Results and Conclusions":
Pl's Ex. 3 (emphasis added). Based upon this report, defendant refused to pay for any structural damage to the home.
At the hearing, Hernemar and a second witness explained that the radical changes in his report resulted from a "peer review process," though the description of that process varied greatly. Hernemar testified that he "wrote both of these reports" and insisted that no one made any alterations or changes to the reports. Tr. 57; cf. Tr. 58 ("All those reports you have presented to me, I'm the author of them.") Rather, he testified, he had "an open discussion" on the telephone with U.S. Forensic engineer, who pointed out that "the draft was based on assumptions." Tr. 59, 71. As a result, Hernemar "issue[d] a report changing [his] opinions." Tr. 78. And though his testimony was, at times, confused, he testified unequivocally that "I rewrote my report." Tr. 90; cf. Tr. 106 (Hernemar "made changes to the draft report"); 119 ("I did the changes").
After Hernemar testified, counsel for defendant attempted to end the hearing, foreclosing further inquiry on this subject:
Tr. 119-120. Both counsel for plaintiff and the Court disagreed. Id. After a lunch recess, counsel for defendant tried again:
Tr. 121. Importantly, counsel for defendant acknowledged that he was aware of the information to which Michael Garove, the "peer review" engineer, would testify:
Tr. 123-4. Notwithstanding counsel's representation, counsel for plaintiff requested that Garove be permitted to testify, which application was granted. Tr. 124-26.
Michael Garove testified that he is an engineer licensed in Louisiana and New York, having obtained the latter license in 2011, who has worked for U.S. Forensic for approximately four and a half years. Tr. 128. He did not, at any time, inspect the 24 Michigan Street home or any portion of the property, and was unsure whether he had inspected any of the surrounding homes. Tr. 129. He was, however, assigned to review the December 9 report authored by Mr. Hernemar. Tr. 137. He received an email assigning him review of that report, "most likely from Gary Bell," Managing Partner of U.S. Forensic. Tr. 137-8. Garove provided the following description of U.S. Forensic's "peer review" process:
Tr. 138-40.
Thus, rather than the "open discussion" described by Hernemar, Garove described a process by which the report authored by the inspecting engineer was rewritten by an engineer who had not inspected the property and whose identity remained concealed from the homeowner, the insurer and, ultimately, the Court. Garove acknowledged that he revised the December 9 report, sent what became the final report to Hernemar and, remarkably, stated that the two had no further discussion or contact in the matter. Tr. 145-47. Instead, it appears that Hernemar "adopt[ed Garove's] conclusions completely." Tr. 147, 152.
Garove endeavored to minimize the changes he made in this report, testifying that "in this case a lot of stuff just got moved around, it got restructured, because the grammar was not correct or it wasn't in the proper place in the document." Tr. 139-40. In truth, Garove reversed the conclusion of the inspecting engineer, and removed many pertinent observations which were inconsistent with Garove's conclusions. And, despite repeatedly asserting that he had never read the January 7 report, in response to a question by the Court, Garove conceded that he, in fact, wrote the January 7 report. Tr. 156.
In his declaration, Garove has the temerity to assert the following:
DE [71]-1 at ¶ 26. The thought is, then, that Garove, sitting in a remote location and never seeing the subject property, can do a better job than a licensed engineer sent to the scene. This assertion begs the question of why U.S. Forensic would not simply send a photographer to homes to be inspected, and produce purportedly superior reports at lower cost by having a remote engineer review the resulting photographs. It also raises the issue of why Garove did not sign the subject report, since he is the one who actually performed the analysis.
Garove's assertions are undermined by the substance of the report, which provides the reader, in uncertain terms, with assurances that this report is based upon a physical inspection of the property by, and relying upon the expertise of, Hernemar, the inspecting engineer. The January 7 report lists Hernemar as the "Engineer of Record," while making no mention of Garove, any other contributor, or any peer review process. Pl.'s Ex. 3. The report's conclusions are expressly premised upon "[t]he physical evidence observed at the property," and states that "our work to complete this assignment was performed by George Hernemar, P.E." Id. at 1-2. A substantial portion of the report is devoted to "Site Observations," and makes repeated references to such observations. See, e.g., id. at 3 ("No. . . evidence of recent shifting . . . was observed beneath the building"); 4 ("We observed no evidence or indication . . ."); 5 ("but no evidence or any recent shifting . . . was observed."). Taken together, these statements concerning the methodology employed and the information relied upon render the report misleading.
Moreover, the changes wrought by Garove on Hernemar's work journeyed beyond misleading into the realm of misrepresentation. In the December 9 report, Hernemar noted that a deposit of sand prevented him from examining the foundation to determine whether it had collapsed, and would have to be removed before a "definite determination" could be reached. Pl.'s Ex. 5 at 4; Tr. 61 ("the foundation was covered with sand, so there was no way to tell definitively what happened to [the] foundation"). As counsel for Wright elicited in cross-examination of Hernemar, limited access to the crawlspace similarly circumscribed the inspection. Tr. 107 (The foundation "was covered in sand. The whole foundation. Plus, there was no access to the crawlspace."). Hernemar's conclusion that the foundation of the house had collapsed was, in part, an extrapolation from his examination of a neighboring house — the foundation of which was visible — and which, he believed, had been subject to similar hydrostatic forces during the storm. Tr. 82-83.
Garove tacitly acknowledges this limitation in his Declaration: "As I initially believed, it was later confirmed that the foundation walls beneath the building had not collapsed." DE [71]-1 at ¶ 63. Yet, notwithstanding the fact that the foundation walls could not be seen or photographed, Garove modified the report not only to remove this limitation, but to repeatedly and conclusively state that "no evidence" was observed of damage to the foundation components.
In addition to changes, Garove included the following "comment" addressed to Hernemar in the redline draft:
DE [77]-1 at 1 (emphasis added). Unsurprisingly, Hernemar accepted all of Garove's changes and had the document issued as instructed. Notwithstanding the vehement assertions of Wright's counsel, Hernemar's acquiesce to this baseless reversal of the report's conclusion and alteration of the observations does little to validate this unprincipled process.
Troublingly, the "peer review" process extended beyond this one example. In this very case, as noted elsewhere, Hernemar described a peer review of his supplemental report that resulted, again, in a change to his ultimate conclusion concerning foundation damage upon reinspection. Tr. 109; 111-112. Furthermore, Hernemar stated that — in his rough estimation — he completed fifty Hurricane Sandy inspections for U.S. Forensic, and that in four or five instances, extensive changes were wrought as a result of so-called peer review. Tr. 89. This process was limited neither to this one engineer, nor specifically to U.S. Forensic. See Tr. 58 (describing process as "normal"); 110 (process was "standard"); 129 ("peer review process is actually a very standardized process across the field of engineering"); DE [71]-1 at ¶¶ 13-16 (describing hundreds of peer reviews of reports by different engineers).
On December 31, 2012 — after Hernemar's initial inspection but prior to the release of the January 7 report — an inspector from the City of Long Beach examined the structure. As a result of that inspection, the City provided plaintiffs with a "substantial damage letter" dated January 3, 2013, which indicates that the house "received damages of [63.4%] of the value of the predamaged structure as a result of the flooding that occurred on October 29, 2012." Pl.'s Ex. 1; Tr. 6-7. Based on that finding, the City advised plaintiffs that the house "must either be removed. . . or have the lowest floor . . . elevated to at or above the 100-year flood elevation." Pl's Ex. 1. In supporting documents, the inspector calculated a replacement cost of $269,850 and an "actual cash value"
Upon receipt of the January 7 report — which ran counter to all of the other information received by the plaintiffs — the homeowners began contacting Wright, seeking a second inspection by a different engineer. Tr. 16. After plaintiff made several dozen telephone calls to the Company, Wright relented, apparently asking U.S. Forensic to again inspect the property. Tr. 16. On January 25, 2013, U.S. Forensic sent Hernemar to conduct a reinspection. Tr. 17-18. It was during this visit that plaintiffs viewed and photographed the cover and conclusion pages of Hernemar's December 9 report, thereby bringing to light the issues discussed in this opinion. Tr. 17.
Given this relatively small insurance recovery and the damage to the home which rendered it uninhabitable, plaintiffs could no longer rent the house. Without the rental income, plaintiffs could not afford to continue paying the mortgage and property taxes, so they sold the 24 Michigan Street house for the value of the property. The house has since been razed. Tr. 22.
In an effort to streamline resolution of these claims, and reduce the costs and burdens on the parties, after thorough consultation with counsel for all parties, the Committee of magistrate judges appointed to manage Hurricane Sandy cases effected an expedited discovery process. In the course of nearly a dozen Case Management Orders ("CMOs") and through hundreds of conferences, the Committee has implemented this process, modifying and adding provisions based upon experience gained over the past months.
In CMO#1, issued on February 21, 2014, the Committee directed defendants to produce:
CMO 1 at 9. On April 7, 2014, in CMO 3, the Committee reiterated this direction:
CMO 3 at 9-10. The Committee addressed any potential claims of privilege, noting:
CMO 3 at n.5. Thus, since February 2014, defendant has been under unequivocal and repeated Court direction to produce all expert reports, photographs and "written communications that contain any description or analysis of the scope of loss or any defenses under the policy." Yet, Hernemar's December 9 report, the redline document that transformed that report into the January 7 report, as well as a bevy of email communications
Counsel for Wright raise two defenses for the defendant's failure to comply with these Court orders. The first is a belated contention that the so-called "draft" reports are protectable work product under Federal Rule of Civil Procedure ("Rule") 26(b)(4)(B). See DE [71] at 13-14. Because counsel failed to raise this issue earlier, either through an application for a protective order or the provision of a privilege log, it is clearly an afterthought. Of course, the Committee essentially addressed this argument in CMO 3 by holding the privilege relating to non-testifying experts inapplicable to reports and written communications relating to these cases. See CMO 3 at n.5; cf. Weber v. Paduano, No. 02 Civ. 3392 (GEL), 2003 WL 161340, at *7 (S.D.N.Y. Jan. 22, 2003) ("investigations into the causes and effects of an accident, undertaken soon after the event itself, are generally considered part of an insurance company's ordinary course of business").
The privilege argument flatly fails on the merits, as the protections relied upon by defendant under Rule 26(b) apply only to drafts "that are prepared in anticipation of litigation or for trial." Fed. R. Civ. P. 26 (b)(3)(A). The authorities cited by defendant uniformly echo this limitation. See, e.g., In re Application of Republic of Ecuador, 280 F.R.D. 506, 511 (N.D. Cal. 2012), aff'd sub nom., Republic of Ecuador v. Mackay, 742 F.3d 860 (9th Cir. 2014) ("expert reports were prepared for trial and in anticipation of litigation"). Counsel's efforts to label these documents as draft expert reports — particularly on the facts here — cannot protect them from disclosure. As one district judge has held:
Safeco Ins. Co. of Am. v. M.E.S., Inc., No. 09-CV-3312 ARR VMS, 2013 WL 1680684, at *5 (E.D.N.Y. Apr. 17, 2013). Based upon the evidentiary hearing, I find that not only did Wright fail to demonstrate any legitimate need to protect the documents at issue, but that plaintiffs have overwhelmingly demonstrated a need for disclosure. In light of the unorthodox methodology employed to generate reports that resulted in a denial of plaintiffs' insurance claim, permitting defendant to withhold these documents would constitute a serious injustice.
Where a Court orders production of draft reports — and, to be clear, CMO 3 unequivocally so directs — the Rule provides that it must "protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representative concerning the litigation." Fed. R. Civ. P. 26(b)(3)(B). Counsel for Wright describe the preparation of these drafts as follows:
DE [71] at 1. In light of this description of the preparation of these documents, it difficult to understand how counsel can assert work product in good faith. Because counsel did not even appear in the matter until a year after their creation, the documents at issue simply cannot contain any mental impression of counsel, and were clearly not prepared for the purposes of litigation. Thus, the Court need not conduct further review of draft reports or associated emails or other written communications before their production.
The second defense raised by counsel arises from the undisputed fact that U.S. Forensic only provided the two so-called final reports to Wright, which, in turn, disclosed those reports to plaintiffs.
As a result, "[p]roduction may be ordered when a party has the legal right to obtain papers, even though he has no copy." Zervos v. S. S. Sam Houston, 79 F.R.D. 593, 595-96 (S.D.N.Y. 1978). Many cases have held that to properly comply with document demands, a party may be required to produce documents held by a third party where the relationship amounts to control. See, e.g., Cooper Indus., Inc. v. British Aerospace, Inc., 102 F.R.D. 918, 919-20 (S.D.N.Y. 1984) (defendant, a wholly owned subsidiary of its parent British affiliate, controls documents owned by the parent company where "it is inconceivable that defendant would not have access to these documents and the ability to obtain them for its usual business"); Herbst v. Able, 63 F.R.D. 135, 138 (S.D.N.Y. 1972) (corporation's former and current employees were "persons within its control"); M.L.C., Inc. v. N. Am. Philips Corp., 109 F.R.D. 134, 138 (S.D.N.Y. 1986) ("control" over agreements held by corporate subsidiary).
There has been no claim here, nor does one seem likely, that defendant lacked the legal right and/or practical ability to obtain these documents from U.S. Forensic. Indeed, the evidence produced at the hearing suggests precisely the opposite — the nature of the business relationship between Wright and U.S. Forensic included the repeated provision of documents and personnel by the engineering firm at the request of the insurer. Common sense dictates a similar conclusion.
In fact, the argument by defendant's counsel seems to be limited to the fact that "[i]n the Defendant's claims file, which was fully and timely produced, was an original report, and then a supplemental report." DE [59] at 2. Thus, counsel's contention is that by producing its own file, Wright satisfied its discovery obligations and counsel discharged its duty to perform a "reasonable inquiry" merely by asking Wright for that file. Under the circumstances, this level of investigation did not satisfy counsel's obligations. As this Court repeatedly directed the parties to produce all reports and written communications, an investigation that failed to include an inquiry with the engineering firm is clearly insufficient under the circumstances. This is particularly true where, as here, as defendant's counsel well knew, plaintiffs were not permitted to seek discovery directly from U.S. Forensic, as such disclosure was not authorized under the CMOs, and there was a reasonable chance that U.S. Forensic would prove to be defendant's expert at trial.
In fact, one particular aspect of discovery in this matter undermines defense counsel's claim that provision of the two reports in Wright's claims file effectively discharged its obligations under this Court's discovery orders. Among the items ordered produced in CMO 1 were "all . . . photographs taken of the damage or claimed losses." CMO 1 at 9. Hernemar testified that while he attached approximately twenty photographs of the property which were included as part of his December 9 (and ultimately January 7) reports, he took more than fifty photographs which were supplied to U.S. Forensic. The January 7 report, which became part of Wright's claims file and was produced, notes that:
Pl.'s Ex. 3 at 5. Thus, in order to comply with this Court's directive that all photographs be provided, defendant would necessarily have had to contact U.S. Forensic to obtain the additional but unsupplied photographs expressly identified in the report. Thus, counsel's limitation of its discovery inquiry to Wright's claims file was a clear violation of its discovery obligations.
Counsel for Wright repeatedly and vociferously argue that plaintiffs' counsel failed in its obligations under the CMOs by failing to provide Wright — prior to the mediation — with a copy of the fragment of the December 9 report that their clients had obtained by photographing the title and conclusion pages with a cell phone in January 2013. To an extent, defendant is correct, and plaintiffs' failure somewhat mitigates the harm caused by defendant. Plaintiffs' counsel is hereby admonished that future violations of this kind could result in sanctions.
At the same time, after receiving evidence that the engineers report apparently had been altered, counsel for Wright initially did little to investigate the matter. See Deft.'s Mem. in Opp., DE [59] at 2 (observing that the fragment "seems to be a draft report" and suggesting "it might be that this was a document that had not yet gone through the normal internal peer review process"). Next, as noted above, counsel for Wright endeavored to prematurely circumscribe the hearing, which would have left the Court and plaintiffs with a distinct misimpression of the practices employed by U.S. Forensic. Tr. 119-124. And lastly, even after the hearing, Wright attempted to defend the indefensible practices exposed here. See, e.g., Deft.'s Post-Hearing Mem., DE [71] at 5 (comparing U.S. Forensics practices to documented NASA peer review processes); 7 ("[t]here was nothing nefarious on US Forensic's part in the revision of the report"); 8 (comparing Garove's alteration of the report to a jury trial).
Based on the above, I find that counsel for Wright violated its obligations to comply with this Court's discovery orders,
Section 636(b)(1)(A) of Title 28, United States Code empowers magistrate judges to hear and determine any pretrial matter pending before the Court (with the exception of eight specifically enumerated types of motion which are not relevant here). Because sanctions pursuant to Rule 37 fall within the scope of pretrial matters, magistrate judges are well within their authority to impose such sanctions. Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 525 (2d Cir. 1990)(holding that "[m]onetary sanctions pursuant to Rule 37 for noncompliance with discovery orders usually are committed to the discretion of the magistrate, reviewable by the district court under the clearly erroneous or contrary to law standard"). "It is well settled that district courts enjoy wide discretion in sanctioning litigants appearing before them." Novak v. Wolpoff & Abramson, LLP, 536 F.3d 175, 177 (2d Cir. 2008); see also S. New England Tel. Co. v. Global NAPS Inc., 624 F.3d 123, 143 (2d Cir. 2010) (reviewing district court's imposition of sanctions for failure to comply with court ordered discovery for abuse of discretion). The Second Circuit has noted:
Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002).
Rule 37(b) sets forth a non-exclusive list of sanctions that the court, in its discretion, may levy on a party who "fails to obey an order or permit discovery. . . ." Fed. R. Civ. P. 37(b)(2). As relevant to the instant action, the listed sanctions include "prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence;" "striking the pleadings in whole or in part;" as well as "treating as contempt of court the failure to obey any order." Fed. R. Civ. P. 37(b)(2)(A)(ii)-(iii), (b)(2)(A)(v), (b)(2)(A)(vii). Again, the Second Circuit's holding in Residential Funding proves instructive:
306 F.3d at 106. The evidentiary limitations provided in Rule 37(b)(2)(A)(i)-(ii) offer a means to craft an appropriate remedy in this case.
The major effect of the reprehensible practices uncovered here — as well as counsel's failure to disclose these practices at an earlier juncture — was to unnecessarily complicate and delay this action. The context remains important: according to the City of Long Beach, the losses here totaled approximately $205,000, while the testimony at trial suggested that the insurer has already paid out about $80,000. Pl's Ex. 1. Thus, based on these rough figures, the most that could be at issue here amounted to approximately $125,000 and, based on the coverage limits of $250,000, no more than about $170,000 could be at stake. To a government-backed insurer, these are trifling figures, and in the world of federal cases, such figures are unimpressive, particularly when compared to the exorbitant costs of litigation. On the other hand, to individual homeowners, these are staggeringly large sums. The violations in this case resulted in many months of delay for plaintiffs, and, unnecessarily, a full day evidentiary hearing and numerous briefs to fully explore these issues.
That ends now. Under Rule 37(b), in the Raimey case, I hereby prohibit defendant Wright from supporting its defenses or opposing plaintiffs' claims with any expert testimony other than that of Hernemar, and they may not produce, rely upon or create any expert reports other than those already produced. Defendant's application to obtain yet another expert to examine plaintiffs' claim (and its directive to plaintiff to help prepare that expert) is hereby denied. While a more significant sanction — such as striking the answer or even contempt — might be warranted on these facts, I find that this sanction constitutes a just order, which is intended to expedite this matter and avoid further unneeded complications in this case.
Having imposed that sanction, one additional matter needs to be determined. As the Second Circuit has observed:
Residential Funding Corp., 306 F.3d at 106-7. Further, the Second Circuit has held "[w]hen an attorney's misconduct or failing does not involve an attempt to place the other side at an unfair disadvantage, any sanction should ordinarily be directed against the attorney rather than the party, absent strong justification." World Wide Polymers, Inc., 694 F.3d at 160. Because counsel for plaintiff withheld information relating to the apparent discrepancy in reports until the mediation, no monetary sanction is appropriate for the period leading up to the mediation. However, given discovery failures by defendant's counsel, the unreasonable response by defendant to the allegations, and counsel's shocking attempt to curtail inquiry during the hearing, it is reasonable to charge the costs associated with the hearing to defendant's counsel. Plaintiffs' counsel, therefore, may make application for reimbursement from defendant's counsel for all reasonable costs associated with the motion, the hearing and all related briefing, including attorneys' fees, travel costs and transcription costs, within thirty days of the date of this Order.
As a result of the startling findings contained herein, plaintiffs in this case, as well as all other Hurricane Sandy cases, must be provided with additional discovery to determine whether there are other expert reports, drafts, photographs and email communications that have not been disclosed to date. In their post-hearing brief, plaintiffs set forth a broad discovery plan, seeking eight depositions and twelve broad categories of documents. For the reasons set forth above, the costs of implementing such a plan may well outweigh the amounts at issue in these cases. The Committee assigned to manage these cases has endeavored "to speed resolution of these matters while also reducing costs for the parties and the burdens on the Court," CMO 1 at 2, and ultimately "to facilitate the efficient resolution of the cases." CMO 3 at 1. The Committee's approach has been consistent with the Court's mandate under Rule 1 to construe the rules "to secure the just, speedy, and inexpensive determination of every action and proceeding." Thus, to implement a plan by which the litigation costs would likely consume potential recovery would not serve the interests of any party. Moreover, this massive undertaking would result in delays and complications, which will further frustrate prompt resolution of these claims.
At the same time, the issues that have surfaced require some accommodation. Therefore, as an initial response, I am directing that — within thirty days of the date of this Order — all defendants in any Hurricane Sandy case provide plaintiffs with copies of all reports described in CMO#1 — plus any drafts, redlines, markups, reports, notes, measurements, photographs and written communications related thereto — prepared, collected or taken by any engineer, adjustor or other agent or contractor affiliated with any defendant, relating to the properties and damage at issue in each and every case, whether such documents are in the possession of defendant or any third party. Such production should provide counsel with sufficient information to proceed to mediation and/or settlement and, where necessary, trials in these cases. Furthermore, upon receipt of such information, counsel for plaintiffs may make application for further discovery as appropriate and consistent with the principles set forth in this decision. Obviously, it would behoove defendants in all cases to be as forthcoming as possible at this juncture.
Based on the foregoing, it is hereby ORDERED that:
