The New York Racing Association Inc.

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re:
THE NEW YORK RACING ASSOCIATION
INC.,
Debtor.
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Chapter 11
Case No. 06-12618 (JLG)
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MEMORANDUM DECISION AND ORDER GRANTING REARGUMENT AND
ADHERING TO ITS NOVEMBER 2015 ORDER GRANTING IN PART AND DENYING
IN PART GETNICK & GETNICK LLP’S MOTION FOR PROTECTIVE ORDER
A P P E A R A N C E S :
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
By: 	Brian S. Rosen, Esq.
Attorneys for The New York Racing Association, Inc.
BLANK ROME LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
By: 	Andrew B. Eckstein, Esq.
-and-
GETNICK & GETNICK LLP
521 Fifth Avenue
33rd Floor
New York, New York 10175
By: 	Michael E. Getnick, Esq.
Of Counsel
(Admitted Pro Hac Vice)
Attorneys for Getnick & Getnick LLP
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JAMES L. GARRITY, JR.
United States Bankruptcy Judge
Introduction
In this reopened Chapter 11 case, and in connection with the prosecution of its Motion to
Clarify (defined below), The New York Racing Association, Inc. (“New NYRA”) sought
discovery from Getnick & Getnick LLP (“G&G”), the law firm that served as New NYRA’s
“special business integrity counsel” until New NYRA terminated that appointment in March
2011. 	G&G opposed the discovery and moved this Court for a protective order pursuant to Rule
26(c) of the Federal Rules of Civil Procedure (“FRCP”), as made applicable herein by
Bankruptcy Rules 9014 and 7026 (the “Protection Motion”).1 On November 24, 2015, the Court
conducted a hearing (the “November 24 Hearing”) on the Protection Motion and issued a ruling
from the bench in which it granted the motion in part and denied it in part (the “November 2015
Ruling”).2 On March 23, 2016, the Court entered an order (the “Protective Order”) embodying
the November 2015 Ruling.3 New NYRA now contends that this Court erred in granting any
portion of the Protection Motion, and that all of its Discovery Requests should be reinstated in
full and without limitation. The matter before the Court is New NYRA’s motion seeking (i)
reargument of the Protection Motion pursuant to Local Bankruptcy Rule (“LBR”) 9023-1 and
Bankruptcy Rule 9023; and (ii) reconsideration of the Protective Order pursuant to FRCP
60(b)(1), as made applicable herein by Bankruptcy Rule 9024 (the “New NYRA Motion”).4
1 See Getnick & Getnick LLP’s Motion for Protective Order [ECF Doc. No. 1180].
2 See Transcript of November 24 Hearing (“11/24 Tr. “) [ECF Doc. No. 1202].
3 See Order Granting In Part and Denying In Part Motion For Protective Order With Respect to Requests for
Production and Interrogatories [ECF Doc. No. 1203].
4 See Motion of the New York Racing Association, Inc. for Reargument and Reconsideration of Order Partially
Granting Getnick & Getnick LLP’S Motion for Protective Order [ECF Doc. No. 1204].
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As discussed below, the Court finds that the New NYRA Motion establishes a sufficient
basis for the Court to review its November 2015 Ruling and Protective Order. New NYRA is
correct that the Court failed to make specific findings in support of its determination that G&G
established cause under Rule 26(c) for the issuance of the Protective Order. Therefore, the Court
GRANTS reargument on the issues of whether (i) G&G has met its burden under Rule 26(c) to
warrant imposition of the Protective Order, and (ii) whether partially granting the Protective
Order unfairly prejudices and results in manifest injustice to New NYRA. However, upon
reconsideration of those and other matters raised in support of and in opposition to the Protective
Motion, for the reasons stated below, the Court adheres to its November 2015 Ruling and the
Protective Order, GRANTING IN PART and DENYING IN PART the Protection Motion.
Jurisdiction
This Court has jurisdiction pursuant to 28 U.S.C. §§ 1334(a) and 157(a) and the
Amended Standing Order of Referral of Cases to Bankruptcy Judges of the United States District
Court for the Southern District of New York (M-431), dated January 31, 2102 (Preska, C.J.).
This is a core proceeding under 28 U.S.C. § 157(b)(2)(A).
Background 5
Old NYRA Retains G&G as Special Business Integrity Counsel
On November 2, 2006, The New York Racing Association Inc. (“Old NYRA”)
commenced a voluntary case under chapter 11 of the Bankruptcy Code in this Court. As of the
commencement of the case, Old NYRA operated thoroughbred horseracing and pari-mutuel
wagering at certain racetracks in New York under New York State franchises (collectively, the
5 The Court recounts the facts only to the extent relevant to the New NYRA Motion. Those facts are not in dispute.
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“Franchise”) which were scheduled to expire on December 31, 2007. In February 2007, New
York State announced a new RFP proposal for the award of the Franchises. In furtherance of its
response to the RFP, Old NYRA approached G&G to act as Old NYRA’s “special business
integrity counsel” and G&G agreed to do so. Pursuant to an application dated July 16, 2007 (the
“Application”), which was supported by the Declaration of Neil V. Getnick of G&G, sworn to on
July 14, 2007 (the “Getnick Declaration”), Old NYRA sought this Court’s authorization to
employ and retain G&G as special business integrity counsel in accordance with the terms of a
letter agreement, dated July 16, 2007 (the “Retainer Agreement”). See Appl. ¶ 18.6 In part, the
Retainer Agreement provides as follows:
It is the intent of both NYRA and G&G that this Agreement will start on July 25,
2007 (the “Effective Date”), the opening day of the 2007 Saratoga meet, subject
to court and/or regulatory approval. The term of this Agreement will be five (5)
years starting from the Effective Date (the “Term”), unless NYRA does not
maintain a franchise to conduct thoroughbred racing and a license to conduct pari-
mutuel wagering in the State of New York (the “Franchise”), in which case the
Term will end as of the date NYRA no longer maintains the Franchise.
Retainer Agreement, 2-3. It also provides that G&G will be paid a “monthly retainer and
minimum fee for professional services” of $125,000 (the “Monthly Minimum”) “to be billed
against hourly billings by G&G and persons working under the direction of G&G [including
auditors and investigators and other professionals and consultants.]” Id. at 2. By order dated
September 21, 2007 (the “Getnick Order”),7 this Court granted the Application and authorized
6 See Notice of Presentment of Order Pursuant to Sections 327(e) and 328(a) of the Bankruptcy Code and Rule
9014 of the Federal Rules of Bankruptcy Procedure, Authorizing the Employment of Getnick & Getnick, As Special
Business Integrity Counsel, As Of July 25, 2007 [ECF Doc. No. 456]. A copy of the Application is annexed to the
notice as Exhibit 1. A copy of the Retainer Agreement is annexed to the Application as Exhibit A.
7 See Order, Pursuant to Sections 327(e) and 328(a) of the Bankruptcy Code and Rule 2014 of the Federal Rules of
Bankruptcy Procedure, Authorizing the Employment of Getnick & Getnick, as Special Business Integrity Counsel, as
of July 25, 2007 [ECF Doc. No. 543].
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Old NYRA to employ and retain G&G as “special business integrity counsel,” under sections
327(e) and 328(a) of the Bankruptcy Code and Bankruptcy Rule 2014(a), effective as of July 25,
2007, pursuant to the terms of the Retainer Agreement, with one change. In response to an
objection filed by the Official Committee of Unsecured Creditors,8 G&G and Old NYRA agreed
to modify slightly the termination provision in the Retention Agreement. That modification is
reflected in the Getnick Order which provides, in relevant part, that:
notwithstanding anything contained in the Application, the Getnick Declaration and
the Retainer Agreement to the contrary, (a) at any time prior to the entry of a final
order confirming a chapter 11 plan in NYRA’s chapter 11 case (the “Plan”), NYRA
shall have the right to terminate the Retainer Agreement and G&G’s services
thereunder, without cause and the payment of penalty upon sixty (60) days prior
written notice to G&G, and (b) upon and after the entry of a final order confirming
the Plan, the services to be provided pursuant to the Retainer Agreement may only be
terminated in accordance with the terms and provisions of the Retainer Agreement.”
Getnick Order 2-3.
Under Old NYRA’s Chapter 11 Plan New NYRA Secures
Racing Franchises and Retains G&G as Special Business Integrity Counsel
By Order dated April 28, 2008, this Court confirmed Old NYRA’s Modified Third
Amended Chapter 11 Plan.9 Under that plan, among other things, New NYRA (as successor to
Old NYRA) was awarded the Franchise and Old NYRA assumed the Retainer Agreement and
assigned it to New NYRA. The plan became effective on September 12, 2008, and by order
dated March 5, 2009, this Court entered the final decree closing Old NYRA’s chapter 11 case.10
8 See Objection of the Official Committee of Unsecured Creditors to Debtor’s Application for an Order Pursuant to
Sections 327(e) and 328(a) of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure,
Authorizing the Employment of Getnick & Getnick, As Special Business Integrity Counsel, As Of July 25, 2007 [ECF
Doc. No. 477].
9 See Order Confirming Modified Third Amended Plan of Debtor Pursuant to Chapter 11 of the United States
Bankruptcy Code [ECF Doc. No. 1008].
10 See Final Decree Closing Debtor’s Chapter 11 Case Pursuant to Bankruptcy Code Section 350(a), Bankruptcy
Rule 3022 and Local Rule 3022-1 [ECF Doc. No. 1160].
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New NYRA Terminates G&G’s Services
On March 10, 2011, New NYRA terminated G&G’s employment as special business
integrity counsel and retained alternative integrity counsel. G&G maintains that its services were
terminated after G&G had presented New NYRA’s senior management and certain members of
its Board of Directors issues raised by two then ongoing integrity investigations undertaken by
G&G, and that G&G’s termination had the effect of prematurely ending those investigations. See
Getnick & Getnick LLP’s Supplemental Request for Enforcement of This Court’s [Getnick
Order] and Related Relief ¶ 3 (the “Supplemental Request”) [ECF Doc. No. 1178]. Thereafter a
dispute arose with respect to payments allegedly due and owing to G&G under the Retainer
Agreement, and the turnover by G&G of Old NYRA’s and New NYRA’s files. Despite the
parties’ efforts, they were unable to resolve the dispute.
New NYRA Files Motion to Clarify To Reopen The
Case And Confirm Its Right to Terminate G&G’s Services
Pursuant to a motion, dated April 27, 2012, New NYRA sought to reopen Old NYRA’s
chapter 11 case for the limited purpose of clarifying and, if necessary, amending the Getnick
Order, and addressing any claims associated therewith (the “Motion to Clarify”).11 	As discussed
below, in substance, the “clarification” New NYRA seeks is that it was free to terminate G&G’s
services when it did so. On May 21, 2012, G&G consented to the reopening of Old NYRA’s
chapter 11 case,12 and, on May 24, 2012, G&G filed a further response to the relief requested in
11 See Motion of the New York Racing Association, Inc. for Entry of an Order, Pursuant to Section 350(b) Of the
Bankruptcy Code and Rule 5010 of the Federal Rules of Bankruptcy Procedure, Reopening the Chapter 11
Bankruptcy Case for the Limited Purpose of (A) Clarifying and, if Necessary, Amending Order Authorizing The
Employment of Getnick & Getnick LLP and (B) Addressing Claims Associated Therewith [ECF Doc. No. 1167].
12 See Getnick & Getnick LLP’s Consent to Reopening of the Case and Reservation of All Other Objections to the
Pending Motion of The New York Racing Association, Inc. [ECF Doc. No. 1169].
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the Motion to Clarify (the “Further Response”).13 The Court entered an order reopening the
bankruptcy case on May 31, 2012. 14
There is no dispute among the parties that the Retainer Agreement gave rise to an
attorney-client relationship governed by New York law between G&G and both Old NYRA and
New NYRA. In support of the Motion to Clarify, New NYRA maintains that it had an
unqualified right to terminate that relationship since under New York law, “[that] right is read
into all attorney-client agreements, so the fact that the Retainer Agreement and Getnick Order do
not contain explicit language allowing Old NYRA, and now New NYRA, to terminate the
relationship does not bar New NYRA from exercising this right.” Motion to Clarify ¶ 29. New
NYRA asserts that given its and G&G’s conflicting interpretations of the Retainer Agreement
and Getnick Order, this Court should grant the Motion to Clarify by “amending the Getnick
Order to acknowledge New NYRA’s right to unilaterally terminate its relationship with G&G.”
Id. It says that in doing so, the Court would “provide clarity and avoid future conflict between
New NYRA and G&G.” Id. In support of that motion, New NYRA contends that the Retainer
Agreement is an attorney-client agreement governed by New York law, and citing In re
Cooperman, 82 N.Y.2d 465 (N.Y. 1994) and Rule 1.16(b)(3) of the N.Y. Rules of Prof’l
Conduct, 22 N.Y.C.R.R. § 1200 (2009), argues that pursuant to the so-called “discharge rule”
governing attorney-client agreements, it has an unqualified right to terminate the Retainer
13 See Further Response of Getnick & Getnick LLP (“G&G) To the Motion Of The New York Racing Association,
Inc. (“NYRA”) To Re-Open The Case and “Clarify” or “Amend” this Court’s [Getnick] Order Approving G&G’s
Employment As NYRA’s Independent Business Integrity Counsel [ECF Doc. No. 1172].
14 See Order Granting Motion of The New York Racing Association, Inc. for Entry of an Order, Pursuant to Section
350(b) of the Bankruptcy Code and Rule 5010 of the Federal Rules of Bankruptcy Procedure, Reopening the
Chapter 11 Bankruptcy Case for the Limited Purposed of (A) Clarifying and, if Necessary, Amending Order
Authorizing the Employment of Getnick & Getnick LLP and (B) Addressing Claims Associated Therewith [ECF Doc.
No. 1175].
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Agreement, and that such right is read into all attorney-client agreements, even if there is
contract language to the contrary. 	Id. at ¶¶ 29, 32-34. Although New NYRA acknowledges that
a retainer agreement may be excepted from the discharge rule if the attorney entering into such a
contract has changed his position or incurred expense based upon the execution of the retention
agreement, or an attorney is employed under a general retainer for a fixed period of time, see id.
at ¶ 35 (quoting Atkins & O’Brien LLP v. ISS Int’l Serv. Sys., Inc., 252 A.D.2d 446, 448 (N.Y.
Sup. Ct. 1998)), it contends that neither exception is applicable in this case. Id. New NYRA
argues that the first exception is not implicated “because, given the omnipresence of the
discharge rule, it would have been unreasonable for G&G to rely on the Retainer Agreement and
G&G did not substantially change its position in reliance on the agreement.” Id. at ¶ 36. It
contends that the second exception is not implicated because, by definition, the Retainer
Agreement is not a general retainer. Id. at ¶ 37.15 New NYRA maintains that the plain language
of the agreement proves that it is not a general retainer because the agreement “does not indicate
that the Monthly Minimum [payable under the agreement] is in exchange for G&G’s
availability.” Id. at ¶ 39. It contends further that “no reference is made to G&G’s availability
anywhere in the agreement[],” and that “[a]n agreement that does not clearly indicate that the
fees are in exchange for availability is not a general retainer.” Id. (citation omitted).
G&G Files Supplement Request to Enforce the Getnick Order
On September 30, 2014, G&G filed it Supplemental Request with the Court to enforce
the Getnick Order. In doing so, among other things, G&G sought payment of all amounts that it
15 New NYRA contends that the three types of retainer “widely recognized by the courts” are: “special retainers, in
which the client agrees to pay the attorney a specified fee in exchange for specified services, general retainer, in
which fees are given in exchange for availability and hybrid general-special retainer, in which part or all of the
‘general retainer’ is eventually applied to the bill for services performed.” Motion to Clarify at ¶ 37 (citing Lester
Brickman & Lawrence A. Cunningham, Nonrefundable Retainers Revisited, 72 N.C.L.Rev. 1, 5-6 (Nov. 1993)).
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would have earned under the Retainer Agreement had New NYRA not terminated its services.
Briefly, in furtherance of the Supplemental Request, G&G contends the Retainer Agreement
provided for G&G’s retention as independent business integrity counsel for a period of five years
effective July 25, 2007, and that pursuant to the Getnick Order “NYRA could terminate G&G’s
engagement before the expiration of the five-year period in only one circumstance: NYRA’s loss
of its New York State racing franchise. That circumstance has never occurred.” Supplemental
Request ¶ 2 (footnote omitted). G&G further contends that the Getnick Order “is unambiguous
on its face,” and that New NYRA “willfully disobeyed the plains terms of the [Getnick] Order by
prematurely terminating G&G’s engagement.” Id. at ¶ 16. 	In that light, G&G asks this Court to
“enforce the [Getnick] Order as written and award G&G the appropriate relief – its unpaid
attorney’ fees and expenses through the end of the five-year term, as provided in the Retainer
Agreement.” Id. G&G contends that the amounts owed to it under the agreement totals
$3,912,703, plus interest. Id. at ¶ 17.
G&G Opposes the Motion to Clarify
G&G also opposes the Motion to Clarify arguing that (i) section 206(5) of the New York
Racing, Pari-Mutuel Wagering and Breeding Law (the “N.Y. Racing Law”); (ii) that certain
Memorandum of Understanding between New York State and Old NYRA dated September 4,
2007 (the “MOU”); (iii) the Retention Agreement, and (iv) the Getnick Order “all contemplate
an extraordinary arrangement in which NYRA’s independent integrity counsel would retain true
independence – that is, an arrangement in which pending investigations could not be cut short by
NYRA’s termination of counsel at will, in which counsel could impose ‘checks and balances’ on
NYRA’s conduct rather than serving as a mere defender and advocate, and in which counsel
would have any independent obligation to protects the State’s and public’s interests.” See G&G
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Further Response to Motion to Clarify at ¶ 12.16 G&G contends that the Retainer established a
“special attorney-client relationship that was not terminable at will.” Id. at ¶ 13. It argues that
“NYRA sought and obtained its exclusive racing franchise by assuring New York State and the
public at large that NYRA’s activities would be subject to oversight and investigation by an
independent integrity counsel – a special position created by New York law specifically for the
holder of the franchises.” Id. at ¶ 15. G&G maintains that in doing so “NYRA undertook a
public trust” and “violated that trust, as well as this Court’s [Getnick] Order by prematurely
firing G&G in the midst of two integrity investigations[]” and thereafter “compounded the
violation by demanding first the G&G turn over all hard copies and destroy all electronic copies
of its final integrity report, and then later that G&G strip itself of all of its files and turn them
over the NYRA.” Id. G&G asserts further that in or about February 2007, when it agreed to act
as Old NYRA’s special business integrity counsel, it agreed to do so only after Old NYRA
committed to “a fixed term for the retention, with no allowance for early termination, and a
monthly retainer and minimum fee to ensure that G&G would have the time and resources to
complete long-term investigations and other necessary tasks.” Id. at ¶ 19. Moreover, G&G
contends that Old NYRA agreed to cooperate fully with G&G and agreed that G&G would have
“’maximum independence’ in discharging its responsibilities, ‘including, but not limited to,
interacting with governmental entities and industry regulators, consistent with the underlying
counsel relationship between NYRA and G&G.’” Id. Thus, G&G argues that New NYRA
cannot rely on Cooperman because its engagement was “radically different” from a traditional
attorney-client relationship since the engagement: (i) was subject to approval by New York
16 See Further Response of Getnick & Getnick LLP To the Motion of The New York Racing Association, Inc. [ ] to
Re-Open The Case and “Clarify” or “Amend” This Court’s 2007 Order Approving G&G’s Employment As NYRA’S
Independent Business Integrity Counsel [ECF Doc. No. 1172].
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State; (ii) could not be revoked during the five year term; (iii) gave it “maximum independence;”
and (iv) required NYRA to “cooperate fully” with G&G. Id. at ¶ 49. Moreover, G&G contends
that, in any event, Cooperman is inapplicable because G&G engagement did not involve a non-
refundable fee. Id. at n. 7.
The Discovery Dispute
New NYRA Serves Discovery Requests and G&G Seeks a Protective Order
On or about January 26, 2015, NYRA served its First Request for Production of
Documents from and Interrogatories Directed to Getnick & Getnick LLP (the “Discovery
Requests”), consisting of fifteen Requests for Production and eleven Interrogatories.17 In
response, on March 17, 2015, G&G filed the Protection Motion. In support, G&G contends that
the only issues before the Court are (i) whether NYRA violated the Getnick Order by terminating
G&G’s engagement as “independent integrity counsel” and (ii) whether G&G is entitled to
enforcement of the Getnick Order as written. G&G argues that those are threshold and
potentially dispositive issues of law that can be resolved without discovery. Protection Mot. 1-2,
15. G&G asserts that on the “pretext” that G&G and NYRA had a traditional attorney client
relationship, NYRA is abusing the discovery process in an effort to obtain confidential files that
it has no right to obtain and to which it had been denied access during G&G’s tenure as special
business integrity counsel. Id. at 2, 15. G&G argues that the Getnick Order “approved a special
engagement that differed fundamentally from any traditional attorney-client relationship,” and
that “G&G was engaged to conduct independent investigations and oversight to ensure NYRA’s
business integrity.” Id. It maintains that the unique nature of the relationship was confirmed by
the terms of the Getnick Order, specific provisions of the N.Y. Racing Law and the MOU, and
17 A copy of New NYRA’s Document Request is annexed as Exhibit A to the Protection Motion.
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that “[p]ursuant to those judicial, statutory and contractual authorizations, G&G’s engagement
involved functions in the public interest that no ordinary attorney performs.” Id. at 2. 	G&G
asserts that granting NYRA access to the files it has sought through discovery would not only
preempt the Court’s ability to adjudicate the nature of the relationship among the parties, but also
would undermine the proper functioning of an independent business integrity counsel under the
Getnick Order and New York State law and place at risk G&G’s confidential sources. Id. at 15-
16. Moreover, G&G contends that NYRA’s efforts to take discovery violate public policy since
NYRA allegedly has violated the “public trust” in terminating G&G’s employment and
demanding the turnover of documents. Id. 	G&G also contends that this Court should bar the
discovery based upon its inherent power to stay discovery, its power under Fed. R. Civ. P. 26(c)
to bar discovery that would impose “annoyance, embarrassment, oppression or undue burden or
expense” on the party opposing discovery, and on the grounds that NYRA is judicially estopped
from challenging enforcement of the Getnick Order. Id. at 16-17.
New NYRA Objects to Protective Order
On April 10, 2015, New NYRA filed its objection to the Protection Motion.18 In support
of that objection, New NYRA asserts that the dispute among the parties “is about an attorney-
client relationship that more than soured” and “submits that this dispute has narrowed to the
parties going in separate directions with what the client, New NYRA, is entitled to receive, its
files, and G&G, as former counsel, looking for compensation. Id. at ¶ 1.19 It maintains that there
18 See Objection of The New York Racing Association, Inc. To Getnick & Getnick LLP’s Motion for Protective
Order [ECF Doc. No. 1183].
19 In support of its contention that it is entitled to conduct discovery, New NYRA asserts that at a telephonic
status/settlement conference held on September 30, 2014, Judge Grossman stated that in the absence of a global
resolution to the Motion to Clarify and Supplemental Response, G&G would be required to turn over the
information and documents sought in the Discovery Requests (at that time discussed but not served) as part of the
discovery associated with those matters. NYRA Objection to Protection motion, ¶ 3. G&G denies that Judge
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is no merit to the Protection Motion because the Discovery Requests are “reasonably calculated
to produce admissible evidence necessary for New NYRA to establish the grounds for relief
requested in the Motion to Clarify and, by extension, rebut the assertions set forth in the
Supplemental Request.” Id. at ¶ 16. 	It contends that the issues to which the Discovery Requests
relate “form the core dispute between the parties” and are “whether NYRA had the right to
terminate the Retainer Agreement on March 11, 2011 and whether a ‘true’ attorney/client
relationship existed between New NYRA and G&G.” Id. In addition to denying that those
issues are “legal issues” that can be resolved without discovery (id. at ¶¶ 17-19), and denying
that the Discovery Requests are barred under principles of judicial estoppel (id. at ¶¶ 26-28),
New NYRA contends that G&G has not met its burden under Rule 26(c)(1) of establishing the
“good cause” necessary for such relief. Id. at ¶ 20 (citations omitted); see also id. at ¶ 21 (“The
Protection Motion contains a series of unsubstantiated, conclusory statements regarding the
alleged impropriety of the Discovery Requests. None are sufficient as a matter of law to warrant
the issuance of a protective order.”); id. at ¶ at 22 (“G&G fails to identify a protectable interest
sufficient to outweigh New NYRA’s need for the Discovery Requests in order to allow New
NYRA to fully litigate the issues raised in this dispute.”). It also denies that granting New
NYRA access to G&G’s files will “undermine the proper functioning” of the special business
integrity counsel since G&G has not served in that role for over five years and “[t]he Discovery
Requests were not served until January 2015.” Id. at ¶ 23. New NYRA further contends that to
the extent that G&G’s argument was intended to apply to New NYRA’s present special business
integrity counsel, G&G failed “to make any particular or specific demonstration of fact that such
counsel’s performance would be undermined.” Id. Moreover, New NYRA contends that G&G
Grossman issued such a directive. The Court does not question the good faith of the parties in taking their
respective positons regarding Judge Grossman’s directives. However, it will not further consider that argument.
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“attempts to transform the fundamental attorney/client relationship, as acknowledged by G&G to
exist, into something mythical where integrity counsel need not answer to anyone, has no client
to serve, and no fiduciary or ethical duties to which it must abide,” and that “this is not the basis
for a protective order and is far from reality.” Id. at ¶ 24. New NYRA also asserts that while
G&G contends that allowing the requested discover will “place at risk G&G’s confidential
sources,” G&G has failed to provide specific facts identifying the “risks” those sources face and,
in any event, New NYRA is prepared to make exceptions to the Document Requests for “specific
documents prepared by [G&G] with express commitments of confidential to interviewees.” Id.
at ¶25 (quoting Protective Mot., Exhibit 3).
The Court Grants the Protection Motion In Part
And Denies It In Part and Enters Protective Order
The Court decided the Protection Motion on the papers submitted by New NYRA and
G&G, and on November 24, 2015, issued the November 2015 Ruling granting the motion in
part, and denying it in part. In that ruling, after reviewing the parties’ arguments in support and
in opposition to the Protection Motion (11/24 Tr. 7:8 – 10:3), the Court rejected G&G’s judicial
estoppel argument (id. at 10:8-11:16; 11:24-12:1), and its contention that the Court could address
the so-called “threshold issues” without granting New NYRA any discovery. Id. at 12:1-2.
However, the Court found that it would limit discovery “based upon the Court’s concerns
relating to public policy and undermine [sic] the function of business integrity counsel.” Id. at
12:3-8. Thus, the Court denied “the request for a protective order with regard to document
requests and interrogatories that seek information going to the nature of the relationship between
NYRA and G&G.” Id. at 12:21-24. However, the Court granted the motion with respect to the
remaining Document Requests and Interrogatories, finding that those “document requests and
interrogatories seek documents and information that go beyond the scope the matters at issue
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before the Court at this time.” Id. at 13:1-4.20 Thus, the Court found “for that reason alone, [the
Court] will issue a protective order with regard to document requests and interrogatories that go
beyond the scope of the matters before the Court.” Id. at 13:4-7. The Court was clear that its
ruling was “without prejudice . . . .” Id. at 13:8.
On March 23, 2016, the Court entered the Protective Order. That order excused G&G
from responding to Requests for Production Nos. 4, 5, 7, & 9-12,21 and Interrogatories Nos. 4, 5,
6, 8 & 9.22 In addition, the Court limited Request for Production No. 8 to “all Documents and
20 As set forth below, for purposes of this motion, the Court has grouped New NYRA’s Discovery Request into three
categories: Category I, Category II and Category III. In the November 2015 Ruling, the Court, in effect, denied the
Protection Motion as it relates to the Category I Discovery Requests, but granted it as it relates to the Category II
and Category III Discovery Requests.
21 Those requests call for the production of following documents:
REQUEST FOR PRODUCTION 4: All Documents and Communications Concerning G&G’s work or
activities conducted pursuant to the engagement contemplated by the Retainer Agreement, including,
without limitation, all time records of G&G relating to such work or activities.
REQUEST FOR PRODUCTION 5: All Documents and Communications Concerning G&G’s
interactions with the Oversight Board pertaining to NYRA.
REQUEST FOR PRODUCTION 7: All Documents and Communications Concerning G&G’s
investigations, reports, inquiries, meetings, or discussions pertaining to the Racetracks and the conduct of
business with respect to the Racetracks during the period from July 16, 2007 up to and including the date
hereof.
REQUEST FOR PRODUCTION 9: All Documents and Communications Concerning the two integrity
investigations which G&G allege were prematurely terminated by NYRA.
REQUEST FOR PRODUCTION 10: All Documents prepared for, or at the direction of, or provided or
presented to, the Board of Directors of NYRA.
REQUEST FOR PRODUCTION 11: All Communications between G&G and the Board of Directors of
NYRA.
REQUEST FOR PRODUCTION 12: All Documents and Communications Concerning New York State’s
takeover of NYRA in 2012.
22 Those interrogatories call for the following information:
INTERROGATORY 4: A detailed description of the services G&G rendered to NYRA or Old NYRA,
including, but not limited to, those services provided under the Retainer Agreement.
INTERROGATORY 5: A list of all Documents prepared during the course of G&G’s engagement
pursuant to the Retainer Agreement, or any other engagement with NYRA or Old NYRA.
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Communications concerning the drafting or interpretation of the Getnick Order,” and Request for
Production No. 15 to “all Documents and Communications concerning or prepared in connection
with actually engaging, retaining, and employing G&G as independent business integrity counsel
by NYRA.” 	Protective Order at ¶¶ 4, 5. 23 The Court denied the Protection Motion with respect
to each of the remaining Document Requests and Interrogatories.
The New NYRA Motion
New NYRA Contends That The
Court Erred In Issuing the Protective Order
New NYRA contends that all of its Discovery Requests should be reinstated “in full and
without limitation.” New NYRA Motion ¶ 3. Accordingly, it asks this Court to: (a) grant
reargument of the Protection Motion pursuant to LBR 9023-1 and Bankruptcy Rule 9023 and in
particular, as to whether (i) G&G has met its burden under Rule 26(c) to warrant imposition of
the Protective Order and (ii) whether partially granting the Protection Motion unfairly prejudices
New NYRA and results in manifest injustice; and (b) reconsider entry of the Protective Order
FRCP 60(b)(1), made applicable by Bankruptcy Rule 9024, on the grounds that the Court has
INTERROGATORY 6: Provide a full history of any compensation received from NYRA.
INTERROGATORY 8: All facts that support G&G’s contention that NYRA ceased to provide
information critical to G&G’s performance of its job.
INTERROGATORY 9: All facts that support G&G’s contentions concerning the New York State
takeover of NYRA in 2012.
23 As served, those Document Requests provided, as follows:
REQUEST FOR PRODUCTION 8: Produce all Documents and Communications Concerning the
Getnick Order.
REQUEST FOR PRODUCTION 15: Produce all Documents and Communications Concerning or
prepared in connection with any engagement, retention, or employment of G&G by NYRA or Old NYRA.
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made a mistake of law and has insufficiently considered certain key arguments in favor of
granting the Discovery Requests without limitation. Id. at ¶ 15.
As support for its motion New NYRA first contends that G&G failed to establish “cause”
under Rule 26(c) to warrant a protective order staying the Discovery Request. New NYRA Mot.
at ¶ 20. It argues that GG did not provide the Court with specific facts demonstrating the harm
or prejudice that it would suffer as a consequence of complying with the Discovery Requests, but
instead “proffered vague, unsubstantiated and conclusory statements none of which taken on
their own, or in combination with each other are sufficient to satisfy its burden.” Id. at ¶ 21. To
that end, New NYRA complains that G&G failed to offer “a shred of evidence or even rational
conjecture” in support of its assertion that complying with the Discovery Requests would result
in a violation of public policy. Id. at ¶ 23. Further, repeating an argument made in opposition to
the Protection Motion, New NYRA denies G&G’s contention that compliance with the
Discovery Requests would undermine the proper functioning of the business integrity counsel
and submits such argument lacks merit because G&G has not served in that capacity since 2011.
Id. at ¶ 24. Moreover, in challenging G&G’s public policy argument, New NYRA argues -- for
the first time -- that “[c]ompliance with the Discovery Requests would be in the public interest as
it would liberate critical information regarding the internal operations of New NYRA, an entity
subject to public overnight, from a private entity (G&G) whose interest in keeping such
information hidden out beyond scrutiny is directly contrary to the public interest.” Id. at ¶ 23.
New NYRA also argues that G&G’s refusal to hand over Old NYRA and New NYRA
documents cuts against the fundamental nature of the attorney client relationship – a relationship
that G&G acknowledged in which the public has an interest. Id.
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Next, New NYRA contends that this Court erred in issuing the Protective Order because
(i) neither the Protective Order nor the November 2015 Ruling contains any finding that G&G
would be harmed by complying with the Discovery Requests, and (ii) because the Court
erroneously found that some of the documents requested went beyond the scope of the matters at
issue in the Motion to Clarify since such a finding could be made only after the Court found that
G&G met its burden under Rule 26(c). Id. at ¶¶ 5 n.5, 14, 27. Further, it contends that the Court
erred in issuing the Protective Order because the Discovery Requests were specifically tailored
to yield the maximum amount of detail regarding the G&G/Old NYRA-New NYRA relationship
and limiting the scope of the Discovery Request would unfairly deprive New NYRA of
discovery to which it is entitled and any such limitation will preclude it from receiving the
evidence it requires to put on its case in connection with the hearing on the Motion to Clarify.
Id. at ¶ 22. New NYRA contends that this Court’s failure to consider the effect that a partial
grant of the Protective Order would have on New NYRA’s ability to effectively prosecute the
Motion to Clarify “creates a result that severely inhibits and prejudices New NYRA’s ability to
develop a full understanding to the relationship between Old NYRA/New NYRA and G&G and
consequently prejudices New NYRA’s ability to effectively prosecute the Motion to Clarify.”
Id. at ¶ 26. To buttress that argument, New NYRA includes a list of the Discovery Requests
that the Court denied, accompanied by a “clarifying argument as to how denying such request
prejudices New NYRA and why this Court should reconsider the Protective Order . . . .” Id. at ¶
15.
G&G Opposes the Motion
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G&G opposes the motion (the “G&G Objection”)24 arguing, in substance, that the motion
is nothing more than a rehash of New NYRA’s Objection to the Protection Motion, and that the
motion fails to show (i) an intervening change of controlling law; (ii) the availability of new
evidence; (iii) the need to correct a clear error or prevent manifest injustice; or (iv) that this
Court made a clear error of law or that otherwise insufficiently considers arguments NYRA
advanced in opposition to G&G’s motion. G&G Obj. 2. Moreover, G&G contends that there is
no unfair prejudice to New NYRA, let alone “manifest injustice” because the November 2015
Ruling was “without prejudice” to New NYRA’s ability to seek discovery “in the event that facts
. . . change[], making that information relevant to matters that are before the Court.” Id. at 7
(quoting 11/24 Tr. 13:10-11). Cf. NEM Re Receivables, LLC v. Fortress Re, Inc., 2016 WL
3144390, at *6 (S.D.N.Y. May 5, 2016) (finding no “manifest injustice in denying
reconsideration of the Court’s holding that the statute of limitations had run on . . . breach of
contract claim” because movant had failed to prove in the first instance that it was improperly
induced to refrain from filing a timely action). G&G also contends that the limitation on
discovery is especially appropriate under the “proportionality” standard explicitly codified by
Rule 26 (as amended in December 2015), and that the New NYRA Motion ignores the
proportionality requirement. 	Id. New NYRA filed a reply (the “Reply”) that focuses primarily
on its now expanded rationale for seeking particular discovery, first outlined in the Motion for
Reconsideration.25
New NYRA’s Request for Reargument Is Granted
24 See Objection of Getnick & Getnick LLP to Motion of the New York Racing Association, Inc. for Reargument and
Reconsideration of Order Partially Granting Getnick & Getnick LLP’s Motion for Protective Order [ECF Doc. No.
1213].
25 See Reply of the New York Racing Association, Inc. In Support of Motion for Reconsideration and
Reconsideration of Order Partially Granting Getnick & Getnick LLP’s Motion for Protective Order [ECF Doc. No.
1214].
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New NYRA seeks (i) reargument of the Protection Motion pursuant LBR 9023-1 and
Bankruptcy Rule 9023, and (ii) reconsideration of the Protective Order pursuant to FRCP
60(b)(1) and Bankruptcy Rule 9024. Under Rule 60(b)(1), the Court “[o]n motion and just terms
. . . may relieve a party . . . from a final judgment, order or proceeding for . . . mistake,
inadvertence, surprise or excusable neglect.” Fed. R. Bankr. P. 60(b)(1). A “final order” within
the meaning of that rule “is one that ‘ends the litigation on the merits and leaves nothing for the
court to do but execute the judgment.’” Nelson v. Unum Life Ins. Co. of America, 468 F.3d 117,
119 (2d Cir. 2006) (per curiam) (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 467
(1978)). It does not apply to interlocutory discovery orders like the Protective Order. See
Glendora v. Marshall, 947 F. Supp. 707, 717, n.3 (S.D.N.Y. 1996) (stating that “Fed.R.Civ.P.
60(b) . . . is not the vehicle for challenging a magistrate judge's discovery ruling.”) (citation
omitted); Franzon v. Messina Memorial Hospital, 189 F.R.D. 220, 223 (N.D.N.Y. 1999) (“This
Court’s prior Order regarding a discovery issue was interlocutory in nature and, thus, not within
the ambit of Rule 60.”). Still, it is well settled that the Court has inherent power to reconsider a
prior decision at any time before judgment. See Dictograph Products Co. v. Sonotone Corp.,
230 F.2d 131, 134–36 (2d Cir.) (Hand., L.J.), cert. dismissed per stip., 352 U.S. 883 (1956).
Accordingly, “although FRCP 60(b) refers to relief from final orders, it does not restrict the
bankruptcy court’s power to reconsider any of its previous orders when equity so requires.”
Meyer v. Lexonx (In re Lennox), 902 F.2d 737, 740 (9 th Cir. 1990). “[B]ankruptcy courts, as
courts of equity, have the power to reconsider, modify or vacate their previous orders so long as
no intervening rights have become vested in reliance on the orders.”). Id. at 739-40.
Accordingly, the Court will evaluate the motion under both Local Bankruptcy Rule 9023-1 and
FRCP 60(b)(1).
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Local Bankruptcy Rule 9023-1(a) provides:
A Motion for Reconsideration of a court order determining a motion shall be
served within fourteen (14) days after the entry of the Court’s order determining
the original motion . . . . The motion shall set forth concisely the matters or
controlling decisions which counsel believes the Court has not considered. No
oral argument shall be heard unless the Court grants the motion and specifically
orders that the matter be reargued orally.
S.D.N.Y. LBR 9023-1(a). The standard applicable to motions for reargument is identical to that
applicable to motions to alter or amend a judgment under Rule 59(e) of the Federal Rules of
Civil Procedure. Hough v. Margulies (In re Margulies), Bankr. No. 10-14012, Adv. No. 10-
04050, 2012 WL 3782535, at *2 (Bankr. S.D.N.Y. Aug. 31, 2012). Those standards are
designed “to ensure the finality of decisions and to prevent the practice of a losing party
examining a decision and then plugging the gaps of a lost motion with additional matters.”
Carolco Pictures Inc. v. Sirota, 700 F. Supp. 169, 170 (S.D.N.Y. 1988) (quoting Lewis v. New
York Telephone, No 83 Civ. 7129, 1986 WL 1441, at *1 (S.D.N.Y. Jan. 29, 1986)). “A Rule
59(e) motion is not intended to be a vehicle for a party dissatisfied with a court's ruling to
advance new theories that the movant failed to advance in connection with the underlying
motion, nor to secure a rehearing on the merits with regard to issues already decided.” Cordero
v. Astrue, 574 F. Supp. 2d 373, 380 (S.D.N.Y. 2008) (citation omitted). See also Freedman v.
Weatherford Int’l Ltd., No. 12 Civ. 2121, 2014 WL 4547039, at *2 (S.D.N.Y. Sept. 12, 2014)
(“A party seeking reconsideration may neither repeat arguments already briefed, considered and
decided, nor advance new facts, issues or arguments not previously presented to the Court.”
(quotation omitted)). Accordingly, Rule 59(e) motions “must be narrowly construed and strictly
applied in order to discourage litigants from making repetitive arguments on issues that have
been thoroughly considered by the court.” Range Rd. Music, Inc. v. Music Sales Corp., 90 F.
Supp. 2d 390, 391-92 (S.D.N.Y. 2000).
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The three grounds that justify relief under Rule 59(e) are: (1) an intervening change of
controlling law; (2) the availability of new evidence; or (3) the need to correct a clear error or
prevent manifest injustice. Virgin Atl. Airways, Ltd. V. Nat’l Mediation Bd., 956 F.2 1245, 1255
(2d Cir.), cert. denied, 506 U.S. 820 (1992). “Reconsideration of a previous order by the court is
an ‘extraordinary remedy to be employed sparingly in the interests of finality and conservation of
scarce judicial resources.’” Cordero, 574 F. Supp. 2d at 380 (quoting In re Health Mgmt. Sys.
Inc. Sec. Litig., 113 F. Supp. 2d 613, 614 (S.D.N.Y. 2000)). The decision whether to reconsider
a previously decided motion “is committed to the sound discretion of the court.” Basse Freres
Alimentation Orientale (2013) Inc. v. Frunut Global Commodities L.L.C., No. 14 Civ. 0818,
2014 WL 6467001, at *1 (S.D.N.Y. Nov. 18, 2014). See also McDowell v. Calderon, 197 F.3d
1253, 1255 n.1 (9th Cir. 1999) (stating that a “district court enjoys considerable discretion in
granting or denying” a Rule 59(e) motion) (quotation omitted) (citation omitted). The moving
party bears the burden of demonstrating that reconsideration is warranted. In re Crozier Bros.,
Inc., 60 B.R. 683, 688 (Bankr. S.D.N.Y. 1986) (“A motion based on manifest errors of law or
fact will not be granted except on a showing of some substantial reason. The burden is on the
movant to demonstrate [the] manifest errors.”).
Relief under Rule 60(b)(1) is similarly limited. 	“Properly applied, [Rule 60(b)]
preserves a balance between serving the ends of justice and ensuring that litigation reaches an
end within a finite period of time.” House v. Secretary of Health and Human Services, 688 F.2d
7, 9 (2d Cir. 1982) (citations omitted). “Since 60(b) allows extraordinary judicial relief, it is
invoked only upon a showing of exceptional circumstances.” Nemaizer v. Baker, 793 F.2d 58, 61
(2d Cir. 1986). And requests for such relief “‘are addressed to the sound discretion of the . . .
court . . . . ’ ” In re Waugh, 367 B.R. 361, 366 (Bankr. E.D.N.Y. 2007) (quoting Mendell v.
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Gollust, 909 F.2d 724, 731 (2d Cir.1990), aff'd, 501 U.S. 115 (1991)). Relief under Rule
60(b)(1) is available to correct a court’s mistake of fact or law, provided the motion is made
before the time for appeal expires, Gey Assocs. Gen. P’ship v. 310 Assocs. (In re 310 Assoc.),
346 F.3d 31, 34-35 (2d Cir. 2003).
New NYRA contends that this Court should grant its request to reargue the Protection
Motion to correct its clear error in granting that motion without specifying how G&G met its
burden of demonstrating cause under Rule 26(c) and without consideration of the unfair
prejudice to New NYRA by the issuance of the Protective Order. Although the Court was clear
in the November 2015 Ruling that it had reviewed the pleadings and considered all the
arguments in support and in opposition to the Protection Motion, New NYRA is correct that the
Court failed to make specific findings related to “good cause” under Rule 26(c) or address New
NYRA’s claim that it will be unfairly prejudiced if it is denied full access to the information and
documents sought in the Discovery Requests. Thus, the Court finds that it is appropriate to
GRANT the request for reargument. However, the Court concludes that further oral argument is
not necessary. See LBR 9023-1(a) (“No oral argument shall be heard unless the Court grants the
motion and specifically orders that the matter be reargued orally.”). .
On Reconsideration the Court Adheres to Its November 2015 Ruling and Grants In Part
and Denies In Part the Protection Motion
FRCP 26 states, in relevant part, that “[t]he court may, for good cause, issue an order to
protect a party or person from annoyance, embarrassment, oppression, or undue burden or
expense . . . .” Fed. R. Civ. P. 26(c)(1). In protecting the moving party, the Court may, among
other things “forbid[ ] the disclosure or discovery” or “forbid[ ] inquiry into certain matters, or
limit[ ] the scope of disclosure or discovery to certain matters”. Id. at 26(c)(1)(A) and (C)
(emphasis added).
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To support the issuance of a protective order under Rule 26(c), the moving party must
establish good cause “by particular and specific facts rather than conclusory allegations” (In re
Breeden v. Arkin, Schaffer & Supino (In re Bennett Funding Group, Inc.), 2000 LEXIS Bankr.
1563, *17 (Bankr. N.D.N.Y. 2000) (citation omitted) (entering protective order preventing
depositions until other discovery complied with even though neither party set forth sufficient
facts and substantive reasons). Additionally, in articulating such particular and specific facts, the
movant must set forth ‘some injustice, prejudice, or consequential harm that will result’ if the
protective order is denied.” Id. (quoting Blum v. Schlegel, 150 F.R.D. 38, 41 (W.D.N.Y. 1993).
Loussier v. Universal Music Group, Inc., 214 F.R.D. 174 (S.D.N.Y. 2003), is instructive as it
required a movant for a protective order to set forth “specific examples or articulated reasoning”
in attempting to establish cause. Loussier, 214 F.R.D. at 177. If good cause is established, the
Court “may balance the countervailing interests to determine whether to exercise discretion and
grant the [protective] order.” In re Hasbrouck v. BankAmerica Hous. Servs., 187 F.R.D. 453,
455 (N.D.N.Y. 1999).
As noted, in support of their Protection Motion G&G argued that: (i) the Court should
deny New NYRA any opportunity to take discovery since certain dispositive “issues of law”
could be resolved without discovery; (ii) New NYRA’s access to its files not only would
preempt the Court’s ability to adjudicate the nature of the relationship among the parties but also
would undermine the proper functioning of an independent integrity counsel and violate public
policy; (iii) the Court should exercise its inherent power to bar the Discovery Requests because
responding to them would subject G&G to “annoyance, embarrassment, oppression, or undue
burden or expense;” and (iv) New NYRA is judicially estopped from challenging the
enforcement of the Getnick Order. In the November 2015 Ruling, the Court rejected G&G’s
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contentions that (i) the matters in issue could be resolved without discovery; (ii) the Court should
exercise its inherent power to bar the Discovery Request, and (iii) New NYRA was judicially
estopped from challenging enforcement of the Getnick Order. See 11/24 Trans. 11:23-12:2.
Neither G&G nor New NYRA seeks reconsideration of those rulings and the Court adheres to
them. See discussion supra, pp. 14-15.
The matter that is central to the disputes among G&G and New NYRA is the nature of
their attorney-client relationship. See also 11/24 Tr. 4:21-24 (“It appears to the Court that the
central issue [underlying] all of the disputes . . . between G&G and [New] NYRA involves the
relationship among those parties prior to [New] NYRA’s termination of G&G’s services . . . .”).
Resolution of that matter not only will inform the Court’s assessment of the merits of the Motion
to Clarify, but it will also impact G&G’s right to recover unpaid fees and expenses under the
Retainer Agreement and New NYRA’s right to access documents and information in G&G’s
files that G&G created or obtained during the course of its tenure as special business integrity
counsel to Old NYRA and New NYRA. 	As noted, contends, in substance, that the Retainer
Agreement is an attorney-client agreement governed by New York law that is terminable at will,
without financial penalty, in accordance with the so-called “discharge rule” governing New York
attorney-client agreements. In making that argument, New NYRA relies principally on the plain
language of the agreement and application of New York law to the agreement. As also noted,
G&G disputes New NYRA’s characterization of the Retainer Agreement and maintains, in
substance, that the role of “special business integrity counsel” was created under New York State
law specifically to address issues unique to the racing industry in New York State, and to enable
Old NYRA to emerge from bankruptcy with a new racing franchise agreement awarded to New
NYRA. G&G argues that when read in light of the MOU, the N.Y. Racing Law, and the Getnick
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Order, the Retainer Agreement does not give rise to a traditional attorney-client relationship that
was terminable at will by New NYRA.
In reviewing the merits of the New NYRA’s request for reconsideration, the Court
groups New NYRA’s Discovery Requests, as follows: (i) those relating to the negotiation,
drafting and execution of the Retainer Agreement (Document Request Nos. 2, 3, 6, 8 (as
modified by the Court in the Protective Order), 14, and 15 (as modified by the Court in the
Protective Order); Interrogatories 2, 3, and 7) (collectively, “Category I Discovery Requests”);
(ii) those relating to the work done, and work product produced, by G&G as special business
integrity counsel (Document Request Nos. 4, 7, 9, and 10; Interrogatories 4, 5, 6, and 8)
(collectively, “Category II Discovery Requests ”); and (iii) those relating to G&G’s
communications with New NYRA’s Board of Directors and communications with or documents
provided to The New York State Non-Profit Racing Association Oversight Board (the
“Oversight Board”), excluding documents or communications that would fall within Category I
(Document Requests 5, 11, and 12; Interrogatory 9) (collectively, “Category III Discovery
Requests”).26
The Category I Discovery Requests call for the production of documents and information
that bear on the negotiation and formulation of the terms of the Retainer Agreement and which,
if disclosed, do not compromise public policy or the office of special business integrity counsel.
They are not at issue in this motion because the Court denied the Protection Motion as to those
discovery requests. See Protective Order ¶¶ 3, 4, 5. In contrast, the Category II and Category III
Discovery Requests do not address issues relating to the terms and conditions of G&G’s
26 Interrogatory 1 is not included in any of the three foregoing categories as it simply seeks the identities of the
persons involved in the preparation of any responses to the Discovery Requests.
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retention as special counsel integrity counsel at all. Rather, they focus on the work performed by
G&G in that capacity subsequent to being retained, and its work product and G&G’s
communications with third parties in the course of its retention as special business integrity
counsel. The documents and information responsive to those Discovery Requests may very well
be relevant to G&G’s request for compensation, but the Court will not consider that matter until
it resolves the Motion to Clarify. The Court finds no merit to New NYRA’s assertion that it
should be given access to the fruits of G&G’s work to establish the nature of the attorney-client
relationship among the parties in order to rule on the Motion to Clarify. The parties’ attorney-
client relationship is based on and springs from the Retainer Agreement and related documents
which this Court is being asked to interpret as part of the Motion to Clarify. The work
performed by G&G may not necessarily inform the Court of the scope of G&G’s retention. The
Court again finds that those requests seek documents and information that are beyond the scope
of the issue of the nature of the attorney-client relationship among the parties. See 11/24 Tr.
13:1-7.
New NYRA argues that the Court should not consider whether the information called for
in the Category II and III Discovery Requests is relevant to the resolution of the Motion to
Clarify until it finds that G&G has demonstrated good cause to grant the Protection Motion. See
New NYRA Mot. at ¶ 19. The Court disagrees. The showing of “good cause” required under
Rule 26(c) is predicated on the documents or information sought being relevant in the first place
to the dispute being adjudicated. Rubin v. Hirschfeld, No. CIV.3:00CV1657, 2002 WL
32503670, at *2 (D. Conn. Jan. 15, 2002) (“[T]he parties seeking discovery [ ] must first
establish that the discovery sought is relevant to the claims and defenses plead.”); cf. Penthouse
Intern., Ltd. v. Playboy Enters., Inc., 663 F.2d 371, 391 (2d Cir. 1981) (“Where, as here, the
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documents are relevant, the burden is upon the party seeking non-disclosure or a protective order
to show good cause.”). Thus, “[a]n overly broad request may justify issuance of a protective
order precluding irrelevant discovery.” Sec. Ins. Co. of Hartford v. Trustmark Ins. Co., 218
F.R.D. 24, 27 (D. Conn. 2003).27
Moreover, and in any event, G&G has met its burden under Rule 26(c) of establishing
“cause” for the issuance of the Protective Order as to the Category II and III Discovery Requests.
G&G has demonstrated that the disclosure of documents and information responsive to those
requests is contrary to public policy and will undermine the functioning of the office of “special
business integrity counsel.” 	New York State’s public policy of seeking to ensure that
thoroughbred horseracing and pari-mutuel wagering at racetracks in New York State are
conducted in a fashion that promotes the public confidence and trust in the credibility and
integrity of those activities is well settled and not in dispute. See N.Y. Racing Law § 100 (“[I]t is
essential to maintain the public confidence and trust in the credibility and integrity of legalized
gaming activities.”). In furtherance of that policy, “[t]he integrity counsel is an statutorily-
created, independent entity that is not subject to direct control by NYRA, but its sole purpose is
to “’ensure the integrity of the franchised corporation, its officers and employees, and its
operations.’” Garcia v. New York Racing Ass’n, Inc., No. 1:10-cv-01092, 2011 WL 3841524, at
*4, n.4 (N.D.N.Y. Aug. 29, 2011) (quoting N.Y. Racing Law § 206(5)). G&G maintains that
27 Cooks v. Town of Southamption, No. 13-3460, 2015 WL 1476672 (E.D.N.Y. Mar. 31, 2015), a case cited by New
NYRA, is not to the contrary. There, the Plaintiff in a civil rights action sought to compel the defendant to produce
certain documents identified by an agent of the defendant during his deposition. The defendant objected to
producing the document on relevancy grounds and sought a protective order barring disclosure. The court found that
defendant failed to make as sufficient showing of “good cause” to justify issuance of a protective order, but only
after finding that plaintiff had met his burden of making a prima facie showing that discovery sought was relevant to
the matters in issue. 2015 WL 1476672 at *9. New NYRA also cites Hasbrouck v. BankAmerica Hous. Servs., 187
F.R.D. 453, 455 (N.D.N.Y. 1999) as support for its argument. Although Hasbrouck discussed relevancy in the
context of determining a balancing of the equities after good cause has been demonstrated, rather than as a threshold
manner as addressed in Cooks, it addressed relevancy as a matter of degree, such as it being minimally relevant (see
Hasbrouck, 187 F.R.D. at 461), not as being wholly irrelevant as the Court does here.
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“NYRA undertook a public trust” when it obtained the racing franchise from New York State
since it “sought and obtained its exclusive racing franchise by assuring New York State and the
public at large that NYRA’s activities would be subject to oversight and investigation by an
independent business integrity counsel -- a special position created by New York law specifically
for the holder of the franchise.” Protection Mot. 15. As noted, G&G maintains that New NYRA
violated that trust when it terminated G&G’s retention in the midst of two integrity
investigations. It is undisputed, that, as G&G contends, during its tenure as special business
integrity counsel, neither Old NYRA nor New NYRA had access to the documents and
information being sought in the Category II and Category III Discovery Requests. In this light,
and for purposes of determining whether G&G has shown “cause” for relief under Rule 26(c),
the Court credits G&G’s assertions in support of the Protection Motion that disclosure of the
documents and information at issue in those requests potentially will undermine the
independence of integrity counsel and with it the policy goals of promoting public confidence in
the integrity and credibility of racing activities.28 It also finds merit to G&G’s contention that
disclosure of the requested materials will adversely impact the operation of special business
integrity counsel – even though New NYRA terminated G&G’s services more than five years
ago. 	Among other things, the Court credits G&G’s concerns that granting New NYRA access to
the materials sought in the Category II and III Discovery Requests could have a “chilling”
28 The Court finds no merit to New NYRA’s assertion that “[c]ompliance with the Discovery Requests would be in
the public interest as it would liberate critical information regarding the internal operations of New NYRA, an entity
subject to public overnight, from a private entity (G&G) whose interest in keeping such information hidden out
beyond scrutiny is directly contrary to the public interest.” New NYRA Motion ¶ 25. 	Indeed, that runs counter to
the public policy considerations reflected in section 100 of the Racing Law the underlie the very nature of section
206(5)’s independent business integrity counsel.
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impact on integrity counsel’s access to confidential informants, notwithstanding New NYRA’s
offers to protect disclosure of their identities.29
Having determined that G&G has met its burden of establishing “cause” under Rule 26(c)
to deny the Category II and III Discovery Requests, the Court must balance New NYRA’s
countervailing interests in enforcing those requests. As noted, in asserting that the Court erred in
granting any relief under the Protection Motion, New NYRA provided “clarifying arguments” as
to why the Court should reconsider its November 2015 Ruling and grant New NYRA unfettered
access to the information and documents responsive to the Category II and Category III
Discovery Requests. See Motion for Reconsideration at 15-16.30 See also NYRA Reply In
29 G&G contends that “[a]llowing access [through discovery] would also expose G&G’s confidential sources to
risks of retribution and other potential harms.” Protection Mot. 3; see also id. at 5, 16. In responding to the Motion
for Reconsideration, G&G expounded on that concern, arguing that
confidential sources need to know that their identities will be protected to avoid potential
retaliation. The passage of time does not undermine these concerns. Later revelation of
anonymous sources would have a chilling effect on present and future investigations by
independent counsel.
Reconsideration Obj. 9. The Court acknowledges G&G’s concern for confidential sources, whether their own, or
those of any other independent counsel that may serve as business integrity counsel, and finds its statement in its
Objection to be a reasonable articulation of that concern.
30 Below is a listing of each of the Discovery Requests that the Court denied, accompanied by what New NYRA
describes as a clarifying argument as to how denying such request prejudices New NYRA and why this Court
should reconsider the Protective Order:
REQUEST FOR PRODUCTION 4 AND INTERROGATORIES 4, 5, 6, AND 8:
These requests are calculated to procure information that would reveal whether G&G’s
relationship with Old NYRA/New NYRA was of a character and nature that would justify an
employment term that was inviolable, even for “cause.” Information about the types of work
performed by G&G pursuant to the Retainer Agreement will be a key component in establishing
whether or not the Old NYRA/New NYRA – G&G relationship was in any way different from a
traditional attorney-client relationship. Further, these Discovery Requests were drafted with the
aim of discovering facts and information G&G would likely rely on in asserting that any failures
on G&G’s part were due to the acts and conduct of Old NYRA or New NYRA. Without access to
this discovery, New NYRA will be prejudiced in determining the full scope of the G&G/New
NYRA relationship for purposes of supporting the Motion to Clarify. If the Court has any
concerns that the scope of the requests extends to services provided prior to entry of the Getnick
Order, New NYRA is willing to limit the scope of this request to documents and communications
generated between entry of the Getnick Order and the dated of G&G’s termination.
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REQUEST FOR PRODUCTION 5:
G&G’s reporting duties are essential to its proper functioning as integrity counsel. If G&G
faithfully dispatched its reporting duties as integrity counsel, its reports to the Oversight Board
would presumably capture the full scope of its conduct and duties. Additionally, G&G has
continuously asserted that any attorney-client relationship was with the Oversight Board and not
Old NYRA/New NYRA. . . . Information provided to the Oversight Board is thus important for
New NYRA to analyze the strength of this argument in connection with briefing on the Motion to
Clarify. Information responsive to this Discovery Request will be invaluable in determining
whether the nature of G&G’s work was of a type that would justify an inviolable five-year
employment term.
REQUEST FOR PRODUCTION 7:
This request was reasonably calculated to provide information as to the full range of conduct G&G
engaged in while executing its duties as integrity counsel, and consequently, provide further
insight into the nature of the relationship between Old NYRA/New NYRA and G&G. As with the
other Discovery Requests, this request was drafted with an eye to determining the true nature of
the Old NYRA/New NYRA – G&G relationship and to supporting New NYRA’s position that it
enjoyed a traditional attorney-client relationship with G&G, subject to the same rights and abilities
to terminate as any other attorney-client relationship.
REQUEST FOR PRODUCTION 9:
If New NYRA did, in fact, interfere with G&G’s execution of its role as integrity counsel by
prematurely terminating the engagement, that would strengthen G&G’s contention that the
engagement term was inviolable.3 Indeed, if such information exists, G&G will almost certainly
use it in opposing the Motion to Clarify and in support of its position that G&G enjoyed a
relationship with Old NYRA/New NYRA that differed in fundamental ways from the traditional
attorney-client relationship. Evidence supporting G&G’s claims must be made available so that
this Court can fully evaluate the viability of the Motion to Clarify.
REQUESTS FOR PRODUCTION 10 & 11:
These requests are reasonably calculated to reveal how G&G directly interacted with its own
client, which would be invaluable in developing a fuller understanding of the relationship between
the parties, and to enable New NYRA to understand and, to the extent necessary, challenge
G&G’s characterization of that relationship. Since this Court has recognized that the nature and
extent of that relationship is the central matter to be determined at a future hearing on the Motion
to Clarify, New NYRA seeks these categories of documents in an effort to develop for the Court
the most fulsome picture possible of that relationship.
REQUEST FOR PRODUCTION 12 AND INTERROGATORY 9:
If G&G really did have the type of relationship and connections that would have justified Old
NYRA agreeing to an inviolable term, then, as integrity counsel to New NYRA for four years
prior to the state takeover in 2012, there is a reasonable expectation that G&G would have played
an instrumental role in the state takeover. Further, G&G has referenced the state takeover in
arguments concerning the nature of the relationship between Old NYRA/New NYRA and G&G.
See Getnick & Getnick LLP’s Supplemental Request for Enforcement of this Court’s 2007 Order
and Related Relief [ECF Doc. No. 1178]; Protection Motion. New NYRA expects that G&G
would use such information in opposing the Motion to Clarify and is therefore entitled to such
discovery so it can fully prepare for the future hearing on the Motion to Clarify and assist this
Court in evaluating the true nature of the relationship between Old NYRA/New NYRA and G&G.
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Support of Motion for Reconsideration at ¶¶ 7-12 (repeating the arguments raised in the Motion
for Reconsideration).31 In raising these contentions New NYRA runs afoul of the well settled
parameters of Rule 59(e) and Rule 60(b) discussed above since it is making arguments that it
could have made in its opposition to the Protection Motion. See, e.g., Exxon Shipping Co. v.
Baker, 554 U.S. 471, 486, n.5 (2008) (“Rule 59(e) permits a court to alter or amend a judgment,
but it may not be used to relitigate old matters, or to raise arguments or present evidence that
could have been raised prior to the entry of judgment.” (internal quotations omitted) (footnotes
omitted) (quoting 11 C. Wright & A. Miller, FEDERAL PRACTICE AND PROCEDURE § 2810.1, pp.
127–128 (2d ed.1995))); Morales v. Quintiles Transnational Corp., 25 F. Supp. 2d 369, 372
(S.D.N.Y. 1998) (“[Rule 59(e)] review is narrow and applies only to already-considered issues;
new arguments and issues are not to be considered.”); Westport Ins. Corp. v. Goldberger &
Dubin, P.C., 255 F. App'x 593, 595 (2d Cir. 2007) (“New arguments based on hindsight
regarding how a movant would have preferred to have argued its case do not provide grounds for
Rule 60(b) relief.” (citing Nemaizer v. Baker, 793 F.2d 58, 62 (2d Cir.1986))); In re Donald
Sheldon & Co., Inc., 222 B.R. 690, 693 (S.D.N.Y. 1998) (finding no reason why new argument
should be considered on Rule 60(b) motion).
As the Court reads New NYRA’s “clarifying arguments,” New NYRA urges that it
should be given full access to the Discovery Requests because: (i) the nature of the attorney-
client relationship among New NYRA and G&G will be revealed through the substance of
G&G’s communications with the Oversight Committee and the contents of the reports and other
work product generated by G&G in the course of its retention as special business integrity
31 See Reply of the New York Racing Association, Inc. In Support of Motion for Reconsideration and
Reconsideration of Order Partially Granting Getnick & Getnick LLP’s Motion for Protective Order [ECF Doc. No.
1214].
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counsel; (ii) it requires certain of the documents and information it is seeking to rebut what it
anticipates will be G&G’s arguments in opposition to the Motion to Clarify; and (iii) it requires
certain of the documents and information it is seeking to assess the merits of G&G’s fee request.
Notwithstanding the procedural defects in the requests, and in any event, the Court does not find
that the substance of the “clarifying arguments” tip the balance in New NYRA’s favor in
enforcing the requests. The Court will not consider G&G’s Supplemental Request until after it
resolves the Motion to Clarify. At that time, and on a schedule to be set by the Court, New
NYRA will be free to renew its requests for documents and information related to the matters at
issue in the Supplemental Requests, subject to G&G’s right to oppose those requests. Thus there
is no prejudice to New NYRA in denying the requests at this time. Nor will New NYRA be
prejudiced by this Court’s denial of its request to obtain materials it believes G&G will use in
opposing the Motion to Clarify as this ruling is without prejudice to New NYRA’s right to seek
appropriate relief if G&G does so. Finally, the Court will not authorize access to G&G’s work
product. The prejudice to G&G far outweighs any potential benefit to New NYRA. As noted, it
is undisputed that New NYRA was denied access to those materials while G&G served as its
special business integrity counsel. As G&G correctly contends, that disclosure effectively will
preempt this Court’s resolution of the nature of the attorney-client relationship among the parties,
since New NYRA will be afforded access to documents that it may not be able to obtain if the
Court determines that the parties enjoyed a “special” attorney-client relationship, as G&G
contends.
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Conclusion
Based on the foregoing, the request for reargument is GRANTED, and, without further
oral argument, the Court adheres to its November 2015 Ruling. Accordingly, the Protection
Motion is GRANTED IN PART and DENIED IN PART.
IT IS SO ORDERED:
Dated: New York, New York
October 17, 2016
/s/ James L. Garrity, Jr.
United States Bankruptcy Judge
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