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`12 Civ. 5121 (KPF)
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`OPINION AND ORDER
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`Plaintiffs,
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`v.
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`------------------------------------------------------- X
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`ELSEVIER INC., ELSEVIER B.V.,
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`ELSEVIER LTD., and ELSEVIER MASSON
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`SAS,
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`Defendants. :
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`:
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`------------------------------------------------------ X
`KATHERINE POLK FAILLA, District Judge:
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`PIERRE GROSSMANN, IBIS CORP.,
`PUBLICAÇÕES TÉCNICAS
`INTERNACIONAIS, and JOHN DOE
`Nos. 1-50,
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`Pending before the Court is a renewed motion for judgment as a matter
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`of law pursuant to Federal Rule of Civil Procedure 50, filed by Plaintiffs Elsevier
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`Inc., Elsevier B.V., Elsevier Ltd., and Elsevier Masson SAS (collectively,
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`“Plaintiffs” or “Elsevier”) against Defendant Pierre Grossmann. On January 14,
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`2016, a jury determined that Defendant had violated the civil provisions of the
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`Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C.
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`§§ 1961-1968; however, the jury awarded only $11,108 in damages, as
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`opposed to the $31,345 sought by Plaintiffs. Plaintiffs now ask the Court to
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`enter judgment for the full amount of damages, trebled in accordance with
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`Section 1964(e) of RICO, for a total of $94,035, plus pre-judgment interest. In
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`the alternative, Plaintiffs request a new trial under Federal Rule of Civil
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`Procedure 59 solely as to the issue of damages. For the reasons set forth in the
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`USDC SDNY
` DOCUMENT
` ELECTRONICALLY FILED
` DOC #: _________________
` DATE FILED: ______________
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`October 9, 2018
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`Case 1:12-cv-05121-KPF Document 438 Filed 10/09/18 Page 2 of 12
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`remainder of this Opinion, the motion for judgment as a matter of law is
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`denied, and the motion for a new trial is granted.
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`BACKGROUND1
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`This Court’s prior decisions provide a thorough review of the relevant
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`facts. See Elsevier, Inc. v. Grossman, No. 12 Civ. 5121 (KPF), 2013 WL
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`6331839, at *1-3 (S.D.N.Y. Dec. 5, 2013) (“Elsevier I”) (granting Plaintiffs leave
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`to amend the complaint); Elsevier, Inc. v. Grossman, 77 F. Supp. 3d 331, 337-
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`41 (S.D.N.Y. 2015) (“Elsevier II”) (granting in part Defendants’ motion to
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`dismiss); Elsevier, Inc. v. Grossman, 199 F. Supp. 3d 768, 773–78 (S.D.N.Y.
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`2016) (“Elsevier III”), order corrected, No. 12 Civ. 5121 (KPF), 2016 WL 7077037
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`(S.D.N.Y. Dec. 2, 2016); Elsevier Inc. v. Pierre Grossmann, IBIS Corp., No. 12
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`Civ. 5121 (KPF), 2017 WL 5135992, at *1-2 (S.D.N.Y. Nov. 2, 2017) (“Elsevier
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`IV”) (granting Plaintiffs’ motion for summary judgment). As a result, the Court
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`assumes the parties’ familiarity with the underlying facts and will discuss
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`those facts only to the extent necessary to resolve the instant motions.
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`Plaintiffs — publishers of scholarly books and academic journals —
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`brought this action to recover for sales of journals to Defendant that had been
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`improperly made at discounted rates for individual, personal use. See Elsevier
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`III, 199 F. Supp. 3d at 774-75. Plaintiffs charge two rates for its journals
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`depending on whether the purchaser is an institution or an individual. See id.
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`1
`In addition to the evidence provided by the parties at trial, this Opinion draws on facts
`contained in Plaintiffs’ brief in support of their motion for judgment as a matter of law
`on the issue of damages (“Pl. Br.” (Dkt. #186)), and Plaintiffs’ letter renewing that
`motion (“Pl. Letter” (Dkt. #420)).
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`2
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`Case 1:12-cv-05121-KPF Document 438 Filed 10/09/18 Page 3 of 12
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`Institutions pay full price, while individuals can purchase journals at a
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`discounted rate. See id. Defendant and two companies under his control took
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`advantage of this pricing structure and, after purchasing the journals at a
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`discounted rate, resold them to institutions at the higher rate, pocketing the
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`difference while violating Plaintiffs’ terms and conditions of sale. See id.
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`A.
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`The Evidence at Trial
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`The trial against Defendant Grossmann began on January 11, 2016.
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`(Dkt. #196-203).2 As relevant to the issue of damages, Plaintiffs introduced
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`into evidence “a chart that identified each fraudulent subscription, and
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`explained how [Plaintiffs] matched up the fraudulent order [at the discounted,
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`individual rate] with the Defendant’s subsequent re-sale of that subscription to
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`an institutional customer” at the higher price. (Pl. Letter 2). Plaintiffs were
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`able to match some of the subscriptions by cross-referencing a 148-page
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`spreadsheet that had been produced by Defendant during pre-trial discovery.
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`(Id.). This spreadsheet included purchase order numbers and invoices from
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`some of the subscriptions purchased by Defendant from Plaintiffs at the
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`individual rate. (Pl. Br. 5). Unfortunately, Defendant did not “produce the vast
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`majority of such records … despite [Plaintiffs’] document requests.” (Id. at 3).
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`For those fraudulent subscriptions that could not be cross-referenced
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`with defense documents due to Defendant’s pre-trial discovery deficiencies,
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`2
`On June 29, 2012, Elsevier filed suit against Defendants Pierre Grossman, IBIS Corp.,
`Publicações Técnicas Internacionais, and various “John Doe” Defendants. (Dkt. #1; see
`also Dkt. #33 (first amended complaint)). In June 2017, “Elsevier obtained default
`judgments against the corporate defendants, and Grossman, proceeding pro se, became
`the lone defendant to proceed to trial.” Elsevier IV, 2017 WL 5135992, at *1.
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`3
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`Case 1:12-cv-05121-KPF Document 438 Filed 10/09/18 Page 4 of 12
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`Plaintiffs attempted to match each individual subscription to an end
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`institutional user through a variety of other means. (Pl. Br. 5). In addition to
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`identifying which individual rate subscription on Plaintiffs’ chart corresponded
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`with a subscription that was resold by Defendant at the higher institutional
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`price, the chart also included “the amount of damages attributable to each
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`subscription.” (Id. at 2).
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`During the trial, Plaintiffs also presented testimony from multiple
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`witnesses regarding Defendant’s fraudulent subscription business. See
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`Elsevier III, 199 F. Supp. 3d at 776. “Grossman testified on his own behalf,
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`and claimed that Defendants were falsely accusing him of subscription fraud to
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`run him out of business,” but did not present any additional evidence to the
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`jury. Id. After a four-day trial, the jury found Defendant liable under
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`Section 1962(c) for conducting or participating in a RICO enterprise through a
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`pattern of racketeering activity. (Dkt. #202). Instead of the full amount of
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`$31,345 sought by Plaintiffs, the jury awarded only $11,108 in damages
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`against Defendant. (Id.).
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`B.
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`The Post-Trial Litigation
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`On February 15 and 16, 2016, Plaintiffs filed a number of post-trial
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`motions, including a motion for judgment as a matter of law pursuant to
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`Rule 50 for the full amount of damages or, alternatively, for a new trial
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`pursuant to Rule 59 on the issue of damages. (Pl. Br. 1-3). Before this Court
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`had the opportunity to rule on Plaintiffs’ motion, the Supreme Court decided
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`RJR Nabisco, Inc. v. European Cmty., — U.S. —, 136 S. Ct. 2090, 2106 (2016),
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`4
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`Case 1:12-cv-05121-KPF Document 438 Filed 10/09/18 Page 5 of 12
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`which held that a RICO plaintiff must plead and prove a domestic injury to its
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`business or property to prevail. Because the Supreme Court’s decision had
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`issued before judgment in the instant case had been entered, this Court denied
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`Plaintiffs’ motion for judgment as a matter of law on the issue of damages,
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`without reaching the merits of the motion. See Elsevier III, 199 F. Supp. 3d at
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`794. Instead, this Court held that due to the intervening change in the law,
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`Plaintiffs — without having established domestic injury — had failed to
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`establish RICO liability. See id.
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`Given the procedural history of the case, the Court granted Plaintiffs the
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`opportunity to make a proffer of evidence establishing domestic injury and
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`Plaintiffs moved for summary judgment on the issue. (Dkt. #384-87). On
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`November 2, 2017, this Court granted Plaintiffs’ motion, finding that Plaintiffs
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`had successfully proved domestic injury for 48 of the 51 fraudulent
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`subscriptions. See Elsevier IV, 2017 WL 5135992, at *4. Having now
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`established RICO liability, Plaintiffs filed a letter renewing the prior motion for
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`judgment as a matter of law on the issue of RICO damages. (Pl. Letter).
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`A.
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`Applicable Law
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`DISCUSSION
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`Two principles guide the Court’s consideration of Plaintiffs’ request for
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`judgment as a matter of law: first, the standard Rule 50(b) imposes for granting
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`such a motion; and second, the Court’s ability to increase an award of damages
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`under Dimick v. Schiedt, 293 U.S. 474 (1935).
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`5
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`Case 1:12-cv-05121-KPF Document 438 Filed 10/09/18 Page 6 of 12
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`1.
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`Rule 50(b)
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`“Rule 50 imposes a heavy burden on [a] movant[.]” Elsevier III, 199 F.
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`Supp. 3d at 778 (internal quotation mark omitted) (quoting Cash v. Cty. of Erie,
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`654 F.3d 324, 333 (2d Cir. 2011)). Rule 50(a) provides that a party can move
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`“for judgment as a matter of law ... at any time before the case is submitted to
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`the jury” on the ground “that a reasonable jury would not have a legally
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`sufficient evidentiary basis to find for the” non-moving party. Fed. R. Civ.
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`P. 50(a). “A party who moved at trial for judgment as a matter of law under
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`Rule 50(a) may file a renewed motion after trial for judgment as a matter of law
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`under Rule 50(b).” Johnson v. Burns, No. 15 Civ. 4789 (PAE), 2017 WL
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`1755971, at *4 (S.D.N.Y. May 4, 2017). And Rule 50(b) instructs that “[i]n
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`ruling on the renewed motion, [a] court may: [i] allow judgment on the verdict,
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`if the jury returned a verdict; [ii] order a new trial; or [iii] direct the entry of
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`judgment as a matter of law.” Fed. R. Civ. P. 50(b).
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`“A Rule 50 motion may only be granted if ‘there exists such a complete
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`absence of evidence supporting the verdict that the jury’s findings could only
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`have been the result of sheer surmise and conjecture, or the evidence in favor
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`of the movant is so overwhelming that reasonable and fair minded [persons]
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`could not arrive at a verdict against [it].’” Warren v. Pataki, 823 F.3d 125, 139
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`(2d Cir. 2016) (quoting S.E.C. v. Ginder, 752 F.3d 569, 574 (2d Cir. 2014)), cert.
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`denied sub nom. Brooks v. Pataki, 137 S. Ct. 380 (2016)). “In reviewing a Rule
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`50 motion, all credibility determinations and reasonable inferences of the jury
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`are given deference and [the court] may not weigh the credibility of witnesses.”
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`6
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`Case 1:12-cv-05121-KPF Document 438 Filed 10/09/18 Page 7 of 12
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`Vangas v. Montefiore Med. Ctr., 823 F.3d 174, 180 (2d Cir. 2016). In turn,
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`“[j]udgment as a matter of law is appropriate ‘only if [the court] can conclude
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`that, with credibility assessments made against the moving party and all
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`inferences drawn against the moving party, a reasonable juror would have been
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`compelled to accept the view of the moving party.’” Warren, 823 F.3d at 139
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`(quoting Zellner v. Summerlin, 494 F.3d 344, 370-71 (2d Cir. 2007)).
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`2.
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`The Dimick Framework
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`A separate issue is occasioned by Plaintiffs’ request to increase the
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`amount of the jury’s verdict. Additur is the process by which, if a trial court
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`considers a verdict inadequate, it may condition the denial of plaintiff’s motion
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`for a new trial on defendant’s consent to the entry of judgment in excess of the
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`verdict. See Earl v. Bouchard Transp. Co., 917 F.2d 1320, 1331 (2d Cir. 1990).
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`State courts will use additur to “fix” damages without holding another trial,
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`and may unilaterally increase an award of damages from a jury. See Liriano v.
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`Hobart Corp., 170 F.3d 264, 272 (2d Cir. 1999).
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`In Dimick, the Supreme Court — while allowing the use of remittiturs to
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`reduce a jury verdict that is found to be excessive — held that the Seventh
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`Amendment bars the use of additurs in federal court. See Dimick, 293 U.S. at
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`486. Permitting a federal court to increase a damages award unilaterally would
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`erode the “controlling distinction” between court and jury — including the
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`power of the court “to determine the law and [the power of the jury] to
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`determine the facts.” Id. More than 80 years later, additur is still prohibited in
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`federal courts. See, e.g., Elyse v. Bridgeside Inc., 367 F. App’x 266, 267 (2d Cir.
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`7
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`Case 1:12-cv-05121-KPF Document 438 Filed 10/09/18 Page 8 of 12
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`2010) (summary order) (finding that the “motion to increase the damages
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`award was properly denied by the district court on the ground that additur is
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`constitutionally impermissible”); Peebles v. Circuit City Stores, Inc., No. 01 Civ.
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`10195 (CSH), 2003 WL 21976402, at *13 (S.D.N.Y. Aug. 19, 2003) (“That
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`alternative remedy [of additur] lies beyond the Court’s power.”); cf. Fox v. City
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`Univ. of N.Y., No. 94 Civ. 4398 (CSH), 1999 WL 33875, at *11 (S.D.N.Y. Jan. 26,
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`1999) (“It follows that, even in a diversity case presenting only state law claims,
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`a federal trial judge cannot make an order of additur, even though his state
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`court colleague could.”).
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`B.
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`Analysis
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`Plaintiffs argue that “a fair and reasonable jury, with the correct
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`understanding of RICO liability, could not have arrived at any damages verdict
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`other than for $31,345, the full amount sought by [Plaintiffs.]” (Pl. Br. 16). In
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`order to have awarded only $11,108, Plaintiffs reason, the jury must have
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`misunderstood the legal precept that Defendant was liable for all damages
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`caused by the RICO enterprise, not just the damages caused by his personal
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`involvement. (Id.). Plaintiffs point to the chart introduced at trial — which
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`delineated the damages of each fraudulent subscription — as proof that, had
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`the jury properly understood the extent of Defendant’s liability, “no reasonable
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`juror could have failed to arrive at a damages verdict other than the full
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`amount sought by Elsevier.” (Id.).
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`In evaluating Plaintiffs’ claim under Rule 50(b), this Court must be
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`careful not to invade the province of the jury. See Dimick, 293 U.S. at 486.
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`8
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`Case 1:12-cv-05121-KPF Document 438 Filed 10/09/18 Page 9 of 12
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`Simply put, under Dimick, this Court does not have the authority to increase
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`the award of damages at Plaintiffs’ request. See id. Additur is constitutionally
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`impermissible. See, e.g., Fox, 1999 WL 33875, at *10-11 (noting that, until the
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`Supreme Court overrules Dimick, the case remains good law).
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`One narrow exception to Dimick merits discussion. Several courts have
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`recognized that Dimick is not applicable to cases “where the jury has found the
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`underlying liability and there is no genuine issue as to the correct amount of
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`damages.” See, e.g., U.S. E.E.O.C. v. Massey Yardley Chrysler Plymouth, Inc.,
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`117 F.3d 1244, 1252 (11th Cir. 1997). The Second Circuit made note of a
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`modest exception in Liriano v. Hobart Corp., 170 F.3d 264, 273 (2d Cir. 1999),
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`and held that, while additur is impermissible, “simply adjust[ing] the jury
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`award to account for a discrete item that manifestly should have been part of
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`the damage calculations and as to whose amount there was no dispute” was
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`permissible. In that instance, the Court increased the damages the jury
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`awarded to the plaintiff in a products liability case “to account for a hospital
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`bill whose amount and nature were not in dispute.” Id at 272. The Court
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`granted the plaintiff’s motion to add $21,252.34 to the total jury award of
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`$1,352,500. See id. at 278-79.
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`This is not a case where Plaintiffs are asking for a discrete adjustment to
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`account for an undisputed amount. Instead, Plaintiffs are asking the Court to
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`triple the amount of damages awarded by the jury. Furthermore, those
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`damages were disputed by Defendant. Although the Court ruled, in resolving
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`an application for sanctions for conduct during discovery, that Defendant could
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`9
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`Case 1:12-cv-05121-KPF Document 438 Filed 10/09/18 Page 10 of 12
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`not contest that the allegedly fraudulent subscriptions on Plaintiffs’ chart had
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`been sold to institutional end users, Defendant disputed the totality of the
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`allegations against him: “So basically what I’m trying to say, I’m here to tell
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`you, they — it’s ridiculous, this accusation against me.” (Pl. Br. 10). Because
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`Plaintiffs are not asking for a discrete, undisputed adjustment to the awarded
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`damages, Dimick remains applicable to this case.
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`However, this Court does have the authority to grant Elsevier a new trial
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`under Rule 59(a) solely as to the issue of damages. “The district court is
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`authorized to grant a new trial based on the weight of the evidence only if it
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`determines that the jury’s verdict was ‘seriously erroneous,’ or ‘a miscarriage of
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`justice.’” Elyse, 367 F. App’x at 268 (quoting Sorlucco v. N.Y.C. Police Dept.,
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`971 F.2d 864, 875 (2d Cir. 1992)). When the issues of damages and liability
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`are not “so interwoven that the former cannot be submitted to the jury
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`independently of the latter without confusion and uncertainty,” the new trial
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`may be limited to the issue of damages. Brooks v. Brattleboro Mem’l Hosp., 958
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`F.2d 525, 531 (2d Cir. 1992) (quoting Gasoline Products Co. v. Champlin
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`Refining Co., 283 U.S. 494, 500 (1931)).
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`It is quite clear to this Court that the jury’s verdict resulted from its
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`desire to have “matching” documents on both sides, documents that were
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`missing from the trial record because of Defendant’s misconduct during
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`discovery. As previously mentioned, Plaintiffs introduced at trial a
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`comprehensive chart that identified each fraudulent subscription, along with
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`the amount of damages attributable to each. (Pl. Br. 5). Plaintiffs also
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`10
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`Case 1:12-cv-05121-KPF Document 438 Filed 10/09/18 Page 11 of 12
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`matched each fraudulent order, as best they could, with Defendant’s
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`subsequent resale of that subscription. (Id. at 2). Unfortunately, Defendant
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`did not produce the “vast majority” of documents in his possession that would
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`have aided Plaintiffs in this task. (Id. at 3).
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`Due to Defendant’s failure to provide records during discovery, Plaintiffs
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`sought an adverse inference instruction against Defendant. (Pl. Br. 4). The
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`Court declined to impose that relief. (Id.). However, the Court is now
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`concerned that, in the absence of such an instruction, the jury misunderstood
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`both its role and the evidence at trial, erroneously awarding only a third of
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`requested damages even as it found liability for the entire course of conduct.
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`Although this Court may grant a new trial “even if there is substantial evidence
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`supporting the jury’s verdict,” Manley v. AmBase Corp., 337 F.3d 237, 244 (2d
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`Cir. 2003), in this case, no evidence supports the jury’s finding of damages.
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`Plaintiffs introduced evidence of each subscription, along with the precise
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`corresponding damages at trial. Having found Defendant guilty for violating
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`RICO, the jury’s subsequent failure to award full damages was clearly
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`erroneous. Therefore, the Court grants Plaintiffs’ motion for a new trial on the
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`issue of damages.
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`CONCLUSION
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`For the reasons above, the Court grants Plaintiffs’ motion for a partial
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`new trial solely on the issue of damages, and denies the motion as to judgment
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`as a matter of law on the issue of damages. That said, given the length of time
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`over which this case has transpired, the Court would understand if Plaintiffs
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`11
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`Case 1:12-cv-05121-KPF Document 438 Filed 10/09/18 Page 12 of 12
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`wished not to proceed to a retrial. The Court stands ready to set a new trial
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`date if Plaintiffs so desire. Accordingly, Plaintiffs are ORDERED to notify the
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`Court in writing, on or before October 31, 2018, whether they wish to pursue a
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`trial. At that time, Plaintiffs should also indicate if they would be willing to
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`proceed with a bench trial.
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`SO ORDERED.
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`Dated:
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`October 9, 2018
`New York, New York
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`__________________________________
`KATHERINE POLK FAILLA
`United States District Judge
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`Pierre Grossman
`100 Hilton Ave
`Unit M23
`Garden City, NY 11530
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`A copy of this Order was mailed by Chambers to:
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