Spitzer's battle with former AIG CEO Maurice Greenberg continues

Former New York Gov. Eliot Spitzer was ordered to pay nearly $133,000 by a state judge last week for half the reproduction cost of discovery in a defamation lawsuit brought against him by former American International Group Inc. (AIG) Chief Executive Officer Maurice “Hank” Greenberg.

Supreme Court Justice Victor Grossman in Putnam County said in a decision published this week that Spitzer must pay half the cost of 47 million pages he asked Greenberg to reproduce as part of discovery, or material to be used during proceedings.

Grossman likened the lawsuit and the conflict on discovery to an episode of HBO’s “Game of Thrones,” and said both Spitzer and Greenberg have deep enough pockets to share the cost until the litigation is resolved.

“The Court presumes each party has sufficient resources to cover these expenses as no claim is made on the contrary,” Grossman wrote. “Finally, while the parties’ dispute has taken on the appearance of an episode of Game of Thrones, to each of them, there is much at stake.”

Reactions

Spitzer did not return a call seeking comment. Robert Dwyer, a partner at Boies Schiller Flexner in Manhattan, who represents Greenberg, said his team was pleased with the decision and didn’t plan to appeal.

Greenberg — who built AIG into one of the biggest insurers in the United States, and is still the chairman and CEO of C.V. Starr & Co. Inc. — is also represented by John Gardiner, a partner at Skadden, Arps, Slate, Meagher & Flom in Manhattan.

Jay Ward Brown, a partner at Ballard Spahr in Manhattan, deferred comment to a Spitzer spokeswoman. The spokeswoman did not immediately offer comment on the decision.

The history

The lawsuit was brought against Spitzer by Greenberg in 2013 over public remarks the former governor and state attorney general made in 2012. Those statements stem from allegations Spitzer brought as the state attorney general against Greenberg for financial services misconduct.

Greenberg alleged in the suit that Spitzer made defamatory statements against him both in his book “Protecting Capitalism,” which was published in Putnam County in 2013, and in public statements. Those statements were made within days of each other during two different appearances by Spitzer on CNBC’s “Closing Bell With Maria Bartiromo” and his own show, “Viewpoint.”

Greenberg sued Spitzer over the public remarks, after which discovery in the lawsuit was scheduled to begin. According to Grossman, Spitzer requested that Greenberg’s attorneys reproduce any and all documents to show that his public remarks were “materially false.”

That prompted Greenberg’s attorneys to reproduce millions of documents from past proceedings against Greenberg over financial services activities. AIG had been involved in lawsuits filed by the SEC, the U.S. Department of Justice, and the state AG’s office years earlier.

The result was the reproduction of more 47 million pages, which were copied digitally onto disks, hard drives and other storage media. The price for reproducing that content, according to Greenberg’s attorneys, came to $265,454.57.

Earlier cases

Grossman acknowledged two cases decided by appellate courts in New York that differ on who should pay for discovery reproduction costs in civil litigation. Rubin v. Alamo Rent-A-Car, decided in 1993 by the Appellate Division, Second Department, said the person seeking the discovery should pay the cost, according to Grossman. That would be Spitzer in this case.

But the decision in U.S. Bank N.A. v. Greenpoint Mtge. Funding Inc., decided in 2012 by the Appellate Division, First Department, said the cost should fall on the party producing the documents, according to attorneys for Spitzer. The Court of Appeals hasn’t addressed the issue.

Grossman declined to have either party pay the full cost of reproduction, instead leaving it to be decided when the lawsuit is resolved.

“At this stage of the proceedings, recognizing the enormity of the expense (which was not known at the time of the discovery demands or Preliminary Conference), the Court will require [Spitzer] to reimburse [Greenberg] to the extent of one-half of the production costs of $265,454.57, or the amount of $132,727.29, subject to a further determination and award of disbursements at the conclusion of the action,” Grossman wrote.

He also opined that the state Legislature has not yet set guidelines on how courts should evaluate these issues while the technological applications of discovery continue to advance.

“Ultimately, the state trial courts are left to their best efforts and discretion to address the emerging issues,” Grossman said.

Related: Greenberg’s defamation case against Spitzer can proceed, panel finds

Dan M. Clark is the Albany reporter for the New York Law Journal. He covers the state Court of Appeals, the state legislature, state regulators, and more. Email Dan anytime at dmclark@alm.com.