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Shanus v. R.L. Americana, LLC

United States District Court, D. New Jersey

May 12, 2017

COREY SHANUS, Plaintiff,
v.
R.L. AMERICANA, LLC f/k/a ROBERT EDWARD AUCTIONS, LLC and ROBERT LIFSON, Defendants.

          OPINION (UNDER SEAL)

          MCNULTY. District Judge.

         The plaintiff, Corey Shanus, is a purchaser of baseball memorabilia who has come to believe that some items in his collection are bogus. Shanus bought some of the questioned items from defendant R.L. Americana, LLC (formerly known as Robert Edward Auctions, LLC) ("REA"), an auction house owned by defendant Robert Lifson. Others he bought from non-party and now-defunct auction house Mastro Net, Inc. ("Mastro Net"), Lifson's former employer.

         Count 1 of the Complaint, alleging "lulling fraud, " concerns two potentially counterfeit items purchased from Mastro Net in 2002 and 2003. Shanus claims that Lifson fraudulently vouched for the items' genuineness and failed to disclose red flags about the items' phony origins for years. By the time he saw through Lifson's statements and omissions, he says, Mastro Net was defunct or at least judgment-proof, and the statute of limitations had run on any breach of contract claim against Mastro. Count 2, also a fraud claim, alleges that Lifson conspired with baseball memorabilia collector and seller Peter Nash (not a party to this action), to inflate the entire market for baseball memorabilia. As a result of this inflation, says Shanus, he overpaid for items he acquired between 2006 and 2014. Count 3, asserting breach of contract, concerns an item Shanus purchased from REA in 2007. Shanus alleges that REA breached the terms of sale by not disclosing that the item had failed a professional authenticator's review for genuineness.

         The parties have filed cross-motions for summary judgment on all counts (ECF Nos. 152, 157). The parties have also filed a number of ancillary motions: three by each party to exclude the testimony of the other's experts, and two by the defendants for sanctions against Shanus (Id.). [1]

         For the reasons discussed below, the defendants' motion for summary judgment on Shanus's claim that Lifson fraudulently lulled him into sleeping on his rights (Count 1) is granted. The remaining motions are denied.

         I. BACKGROUND

         The parties substantially agree on the facts summarized below, except where otherwise noted.

         A. Factual Background

         1. Shanus's History with Sports Memorabilia

         Shanus, a graduate of the University of Pennsylvania and the University of Chicago Law School, is a sophisticated private collector of sports memorabilia. He took up that pursuit in the 1980s and has developed his collection extensively since that time. (Defs. Stmt. ¶¶ 22-23; Pl. Resp. ¶¶ 22-23)[2] The defendants characterize Shanus as an aggressive collector who often purchases items he desires at above-market prices. (Defs. Stmt. ¶ 24) Shanus demurs, claiming that his purchases reflect his accurate view of the items' market value. (Pl. Resp. ¶ 24)

         2. Lifson's Relationship with Nash

         Lifson was the owner and operator of an auction business called Robert Edwards Auctions from early 1990 through 2000. From 2000 to 2003, Lifson worked for the auction house Mastro Net, where he was an officer, minority shareholder, and director, specializing in Americana memorabilia. Lifson denies having any sub-specialty in baseball memorabilia or authentication. (Defs. Stmt. ¶ 65; Def. SJ Opp. 11-12) The former owner of Mastro Net, Bill Mastro, is not a party to this action, but plays prominentiy in the parties' allegations. In 2003, Lifson again formed his own auction business, REA, which he owned and operated in New Jersey. (Pl. Br. 4; Defs. Resp. ¶3)

         From early 1990 until 2009, Lifson had a close working relationship with a sports memorabilia collector named Peter Nash. Nash consigned to Robert Edward Auctions, Mastro Net, and REA large quantities of purportedly rare and valuable 19th and 20th century items (the "Nash items"). At times, Lifson would advance cash to Nash, holding the consigned but not yet auctioned items as collateral. That credit arrangement between Nash and Lifson was in place when Lifson owned Robert Edwards Auction and continued while he was employed by Mastro Net. In the latter period, Mastro Net would reimburse Lifson for the cash advances he made to Nash.

         By July of 2004, Nash was in debt to Lifson for over $500, 000. Nevertheless, Lifson continued to extend cash advances to Nash, setting aside "tubs of sports memorabilia" that Nash had previously consigned to him as collateral. (Pl. Br. 5; Rosenfeld Decl. Ex. G; Defs. Resp. ¶¶ 5-6) Additionally, around this time, Nash executed a promissory note and mortgage on his real estate, valued at approximately $423, 000, for the benefit of REA. (Defs. Resp. ¶¶ 7-8; Pl. Resp. ¶ 142; Rosenfeld Decl. Ex. G)

         One subset of Nash items that Lifson was well known for carrying was a collection that, according to Nash, was originally owned by Henry Chadwick (the "Chadwick Collection"). Chadwick is known as baseball's first noted sportswriter and historian. (Pl. Br. 4; Rosenfeld Decl. Ex. H, p.71, Ex. I, p. 120, Ex. G, pp. 30-33, 144)

         3. Lifson's and REA's Alleged Fraud and Breach of Contract

         a) 2002-2003: Shanus Purchases 1861 and 1853 Trophy Balls

         In September of 2002, Shanus purchased the 1861 Grant Match Trophy Baseball (the "1861 Trophy Ball"), an item that had been part of Nash's Chadwick Collection, for over $50, 000 at a Mastro Net auction.[3] Mastro Net represented that the 1861 Trophy Ball was "from the earliest days of baseball" and was "handmade by future sporting good magnate, Al Reach, who is also recognized as being the first professional ballplayer . . . ." (Pl. Br. 11; Rosenfeld Decl. Ex. V) The parties agree that the terms and conditions set forth in Mastro Net's August 2002 Auction Catalogue, in which the 1861 Trophy Ball was listed, provide that "all material is guaranteed genuine." (Pl. Stmt. ¶ 29; Defs. Resp. ¶ 29)

         Shanus claims that before purchasing the 1861 Trophy Ball, he "consulted with Lifson, " who advised him "there was no reason to think that the trophy ball was not real." (Pl. Br. 11) He testified that prior to bidding on the 1861 Trophy Ball he performed due diligence: He reviewed books to confirm that the relevant Grant Match game had occurred, he reviewed materials from Sotheby's (the auction house from which Nash had previously purchased the 1861 Trophy Ball), and he inspected the item itself. Shanus testified that he was comforted by another fact he learned through his own research: that the item had come from the collection of a well-known collector named Barry Halper. (Defs. Resp. ¶ 27; Kozyra Cert. Ex. 6 pp. 131-133 85 Ex. 11 pp. 194-195; Defs. Stmt. ¶ 84-89) Additionally, Shanus stated in a 2009 draft complaint against Mastro Net that he received representations from Bill Mastro and former Mastro Net President Doug Allen that the 1862 Trophy Ball had been "independently examined before being offered for sale and that there were independent experts to verify [its] authenticity." (Defs. Resp. ¶ 32 (quoting Kozyra Cert. Ex. 17 ¶ 18; see also Kozyra Cert. Ex. 16, pp. 401-402)[4]

         In April 2003, Shanus purchased an 1853 Knickerbocker Trophy Ball (the "1853 Trophy Ball") for $161, 992.45 at a Mastro Net auction. Shanus contends that the 1853 Trophy Ball was subject to the same "genuine" guarantee as the 1861 Trophy Ball, pursuant to terms and conditions set forth in Mastro Net's 2003 catalogue. That catalogue also represents that the 1853 Trophy Ball is "the earliest known game-used trophy ball in existence" and that it "commemorat[es] the game played between the Knickerbockers Baseball Club (baseball's first organized team) and the Gotham Club of New York on July 5, 1983." (Pl. Br. 12; Rosenfeld Decl. Ex. Y)

         Shanus states that before bidding on the 1853 Trophy Ball, he performed due diligence. Shanus says he talked to Lifson, who assured him of the item's genuineness, told him that it came from Nash's Chadwick Collection, and referred Shanus to Nash's business partner Paul Reiferson for further advice. According to Shanus, Reiferson assured him that the 1853 Trophy Ball was authentic. (See Pl. Resp. ¶¶ 96-97) According to Shanus's 2009 draft complaint, Bill Mastro and Allen represented that the 1853 Trophy Ball had been independently examined. Shanus testified that Bill Mastro represented to him that the item was "real." (Defs. Resp. ¶ 32 (citing Kozyra Cert. Ex. 11, pp. 201-203)) Before bidding, Shanus also considered that it appeared to be consistent with a similar trophy ball from 1854 that he had seen at the Baseball Hall of Fame. (Defs. Resp. ¶ 27; Kozyra Cert. Ex. 11, pp. 200-208)

         b) 2003-2005: Early Warnings

         By his own admission, Shanus first developed concerns about the authenticity of the 1862 and 1853 Trophy Balls later in 2003. At that time, he asked a furniture expert to examine the casing on another trophy that Mastro Net would be offering at auction. (Pl. Stmt. ¶ 50; Shanus Decl. ¶ 5) The expert told Shanus that the casing contained certain modern enhancements. Shanus says he inquired of Lifson, who assured him that the trophy was a genuine antique and that the modern enhancements had been placed by Mastro Net to upgrade and reinforce the item. (Pl. Br. 17; Rosenfeld Decl. Ex. I, p. 296-297) Lifson testified to the contrary; he says that he did not speak to Shanus about the trophy casing at that time. (Defs. Resp. ¶ 52; Kozyra Opp. Cert. Ex. A)

         Another warning sign appeared in 2004. Lifson was contacted by Josh Evans, a dealer and authenticator of sports memorabilia who was the Chairman and founder of a well-known auction house called Leland's. (see Defs. Stmt. ¶¶ 34-35) Evans demanded that Lifson refund money for items that Leland's long-time client Charlie Sheen[5] had purchased from REA. Evans believed the items to be counterfeit. One of those allegedly counterfeit items was a baseball contained in a box bearing the purported signatures of early 20th Century Chicago Cubs legends Joe Tinker and Johnny Evers (the "Tinker-Evers Box"). The Tinker-Evers Box had come from Nash's collection. (Pl. Stmt. ¶¶ 33-35)

         The background of Evans's 2004 approach to Lifson was as follows. Evans testified that long before, back in the mid-1990s, he had concluded that the Tinker-Evers Box was a counterfeit. At that time, Evans met with Nash, who presented him with a number of items, including the Tinker-Evans Box, that he wished to sell through Leland's. (Pl. Br. 13; Rosenfeld Decl. Ex. H, pp. 37-45) Evans concluded that the Tinker-Evers Box was fake primarily because it lacked historical context (the box was crafted from baseball cards, which historically were collected by children and not used for craft). During the same meeting with Nash, Evans concluded that the signature on another of Nash's items was fake. (Id.) Indeed, Evans became convinced that all of the items Nash showed him that day had been fabricated by the same artist. (Id.) Much later, Evans learned that Sheen had independently purchased the Tinker-Evers Box through REA. It was out of concern that his long-time client had purchased a fake that Evans contacted Lifson in 2004. (Id.; Pl. Stmt. ¶ 36)

         Evans's 2004 call included an ultimatum: Unless Lifson refunded Sheen's money, Evans would go to the media and disclose Lifson's involvement in the sale of counterfeit items. Lifson refunded Sheen's money. (Id.) The defendants claim that Lifson, after investigation, had concluded that Sheen's item was legitimate, but nevertheless made a business decision to refund the money. (Defs. Resp. ¶ 36)

         At some point in 2003-2004, Evans also communicated his concerns about the Nash items to Shanus directly. Evans told Shanus that he believed the Nash items, including the 1853 Trophy Ball (which Shanus had already purchased) were fakes. Evans suggested that Shanus have the 1853 Trophy Ball tested. (Defs. Stmt. ¶ 104; Pl. Resp. ¶ 104) According to Shanus, when Shanus told Lifson of Evans's concerns, Lifson brushed them off as "sour grapes" and reassured Shanus that the 1853 Trophy Ball was authentic. (Pl. Br. 18; Rosenfeld Decl. Ex. I, pp. 255-260) Lifson tells a different version, in which his assurances were far more vague and general. Lifson says he simply told Shanus that he had in the past talked to members of the Chadwick family, who confirmed that they sold memorabilia to Nash. (Defs. Resp. ¶ 54; Kozyra Cert. Ex. 36, pp. 186-187)[6]

         In April of 2005, Evans again told Shanus that he believed the 1853 Trophy Ball was a fake. This time Evans offered to pay to have the item tested for authenticity. Shanus declined, allegedly because he was concerned "about the risks of damaging allegedly genuine and valuable memorabilia." (Pl. Br. 18; Rosenfeld Decl. Ex. I, pp. 257-265)

         Shaken by Evans's insistence, however, Shanus again called on Lifson at his REA office. There, Lifson directed Shanus to a closet containing Nash items. Among the items was a 1907 letter, purportedly handwritten by Henry Chadwick, which discussed the 1853 and 1861 Trophy Balls (the "Chadwick Letter"). The record is unclear as to whether Lifson specifically directed Shanus's attention to the Chadwick Letter, but the parties agree that Lifson knew that Shanus would see it. (Pl. Br. 19; Rosenfeld Decl. Ex. 1, pp. 281-282; Ex. G, pp. 190-197; Pl. Stmt. ¶ 60; Defs. Resp. ¶ 54) According to Shanus, the Chadwick Letter not only assuaged his concerns but so intrigued him that he asked to purchase the Letter on the spot. Lifson declined but told Shanus he could purchase the Chadwick Letter at a future REA auction. (Pl. Stmt. ¶ 61)

         At the end of that year, in December of 2005, Shanus told Lifson that he wished to purchase a silver trophy ball commemorating baseball pioneer James Creighton (the "Silver Trophy Ball"). Lifson told Shanus that Nash still owned the Silver Trophy Ball, but that as a favor, Lifson would arrange for Shanus to purchase the item directly from Nash for $105, 000. Lifson claimed he would not profit from the transaction, and declined to guarantee the authenticity of the Silver Trophy Ball. (Pl. Br. 20; Pl. Stmt. ¶ 60; Defs. Resp. ¶ 60; Rosenfeld Decl. Ex. I, pp. 302-207)

         Lifson's reluctance to vouch for the authenticity of the Silver Trophy Ball struck Shanus as peculiar. Shanus then asked Lifson outright if he had concerns about the authenticity of any Nash items. In Shanus's account, Lifson responded that he was confident the Nash items were genuine and that he was not aware of any information to the contrary. (Pl. Br. 20-21; Rosenfeld Decl. Ex. I, pp. 302-307, Ex. FF, pp.82-88) Lifson denies making any such representations as to the authenticity of Nash items or as to his knowledge of the Silver Trophy Ball's pedigree at this time. (Defs. Resp. ¶ 66)[7]

         c) 2004-2005: Purported Market Manipulation

         Since its inception in 2004, REA has held an auction each spring. In advance of each annual auction, REA circulates to prospective participants a catalogue that lists the items offered for sale and the auction's terms and conditions. (Pl. Br. 5; Rosenfeld Decl. Ex. G). The parties agree that the auction's terms and conditions, at least in 2005-2007, stated that "[u]nder no circumstances are consignors permitted to bid on their own lots." They also required successful bidders to pay for their purchases within 14 days, although Lifson testified that this rule had "many exceptions" in practice. (Rosenfeld Decl. Exs. G, K; Defs. Resp. ¶12) For example, Lifson says, REA would often arrange for winning bidders to pay in instalments. (Defs. Resp. ¶ 12) Lifson testified that Shanus himself had "a history of making [] credit agreements with sellers/consignors when purchasing items through auction negating the need for him to pay the full purchase price to REA." (Defs. Resp. ¶ 20 (citing Rosenfeld Decl. Ex. G, pp. 364-365))

         In advance of REA's spring 2004 auction, Nash and Lifson entered into an arrangement that permitted Nash to circumvent the rule against consignors bidding on their own lots. The parties disagree as to whether this workaround was legal, but they agree that it was structured as follows: An entity called Cooperstown Monument Company, Inc. ("Cooperstown"), of which Nash was President, registered to bid at REA's 2004 and 2005 auctions. Nash wrote to REA, by a letter dated April 14, 2004, that Cooperstown was a completely separate entity from Nash. (Defs. Resp. ¶ 13; Kozyra Cert. Ex. 71) Cooperstown then bid on items that Nash had consigned to REA. In both 2004 and 2005, Cooperstown was the successful bidder on several of such items. (Pl. Br. 6-7; Rosenfeld Decl. Exs. L-M; Defs. Resp. ¶¶ 15-16)

         By April of 2005, Cooperstown had not paid in full for the items on which it successfully bid at REA's 2004 auction, prompting Cooperstown, Nash, and REA to enter into two separate agreements (together, the "REA-Cooperstown arrangement"). The first agreement required Cooperstown to pay REA, "following the [2005] auction, " $20, 000 plus the buyer's commission for each Nash Item on which it successfully bid. (Rosenfeld Decl. Ex. N) Meanwhile, Nash agreed to extend credit to Cooperstown. REA was already in possession of Nash collateral. Therefore, the agreement also provided that, to the extent Cooperstown successfully bid on a Nash item, the balance Cooperstown owed to REA would be worked out solely between Cooperstown and Nash. (Rosenfeld Decl. Exs. N-O; see also Pl. Stmt. ¶¶ 15-16; Defs. Resp. ¶¶ 15-16)

         Under the second agreement, REA agreed to lend Cooperstown the money to pay the buyer's commissions it owed to REA. The money that REA lent to Cooperstown was to be repaid by the proceeds on items Cooperstown consigned to REA's 2006 auction. (Rosenfeld Decl. O) This agreement was conditioned on the understanding that Nash was personally guaranteeing the remainder of Cooperstown's bids, which were secured by whatever memorabilia of Nash or Cooperstown were already in the hands of REA. (Pl. Br. 8; Rosenfeld Decl. Exs. N-O; Defs. Resp. ¶¶ 16-17) Additionally, Cooperstown would not take possession of the items on which it successfully bid. Rather, these items would be added to the store of Nash collateral that REA already held. These items, along with the existing Nash collateral held by REA, would be auctioned off to compensate REA in the event that Nash did not pay the total amount he personally owed to REA by September 1, 2005. (Id.)

         Shanus alleges that the REA-Cooperstown arrangement was never disclosed to REA's other bidders. (Pl. Br. 8; Rosenfeld Decl. Ex. G, p. 365) The defendants deny this generally, but cite no evidence that the arrangement was disclosed. (Defs. Resp. ¶ 19)

         Protected by the REA-Cooperstown arrangement, REA sold certain Nash items to Cooperstown for record prices. REA reported on its website that at its 2004 auction it had sold a letter concerning the origins of baseball (the "Origins of Baseball Letter") for $310, 000, despite estimates that it would sell for $20, 000-$30, 000. (Pl. Br. 8; Rosenfeld Decl. Ex. P) REA also reported that at its 2005 auction it had sold the "Fashion Course Trophy Ball" for $498, 000- roughly three times the price for which any other trophy ball had ever sold. Lifson was quoted in an article posted to REA's website as saying that the results of REA's 2005 auction would redefine industry price guides. (Pl. Br. 8; Rosenfeld Decl. Ex. R; Defs. Resp. ¶ 22). The parties agree, however, that neither the Origins of Baseball Letter nor the Fashion Course Trophy Ball ever actually changed hands; rather, they stayed in the possession of REA as collateral. (See Defs. Resp. ¶ 23; Rosenfeld Decl. Exs. P&Q)

         Shanus claims the REA-Cooperstown arrangement artificially drove up market prices for all baseball memorabilia-not just the Nash items on which Cooperstown successfully bid. This marketwide inflation, he says, him to pay inflated prices for memorabilia he later purchased from REA and other auction houses. (Pl. Br. 9) Shanus's claim rests on the opinion of his retained expert, Princeton University economics professor Orley Ashenfelter. Prof. Ashenfelter analyzed market data and determined that the REA-Cooperstown arrangement caused price shocks that thereafter increased the price of baseball memorabilia across the market. Ashenfelter opines that as a result, Shanus overpaid between $101, 000 and $201, 000 for memorabilia he purchased between January 2006 and May 2014. (Pl. Br. 9-10; Rosenfeld Decl. Ex. S)

         The defendants deny any sufficient causal connection between the REA-Cooperstown arrangement and the prices Shanus paid for unrelated memorabilia between 2006 and 2014. They also urge that Shanus has "unclean hands" because he personally partook in a scheme of "shill bidding" (placing fictitious bids without intending to win the item) with his close friends. The shill bidding, the defendants claim, artificially inflated the bid prices of certain items at REA's 2004 auction. (Defs. Stmt. ¶ 30-32) Shanus admits that he purchased "certain items at REA's 2004 auction that were consigned by [his friends], with the understanding that the items would be returned to [his friends] and that they would reimburse him in full for the purchase price of these items, which they did." (Pl. Resp. ¶ 31; see Kozyra Cert. Ex. 6, pp. 51-80) He distinguishes this from shill bidding, a practice in which he says he has never engaged.

         The defendants also claim Shanus inflated the value of his own sports memorabilia. He did so, they say, by purposely arranging for Bill Mastro to falsely report record sales prices at Mastro Net auctions but then return Shanus's items to him to sell at a later time. (Defs. Stmt. ¶¶ 37-39) Shanus denies this; in a deposition, explained the relevant transactions in more innocent, less calculated terms. [See Pl. Resp. ¶¶ 37-39; Rosenfeld Decl. Ex. I, pp. 447-452)

         Finally, the defendants say Shanus, a New York resident, routinely had just-purchased items shipped to his mother's residence in Florida to avoid paying New York sales and use taxes. (Defs. Stmt. ¶¶ 41-48) Shanus admits that he had never filed a sales tax form with the State of New York as of 2013, but says this was merely a mistake. (Pl. Resp. ¶¶ 41, 47, 49)

         d) 2006: Authenticators Raise Concerns

         Between 2004 and 2007, REA used the services of Professional Sports Authenticators Services ("PSA") to review autographed items REA planned to sell at auction. The opinions of authenticators were discussed in REA's standard terms and conditions of sale, which provided:

[REA] utilizes a third-party authentication process for bats, jerseys, gloves and autographed items. In placing a bid on such items, the documentation and letters supporting the opinion or authenticity that are noted in the description are explicitly deemed acceptable to the bidder. There will always be experts that will have differing opinions. In many cases more than one authentication service has reviewed a given item. As has always been the case at REA, in all cases where the authenticators were not in unanimous agreement regarding authenticity, those items were not accepted for auction.

(Pl. Br. 14; Rosenfeld Decl. Ex. K, 2007 terms § 17; Defs. Stmt. ¶ 81) REA represented that this was part of a strict policy it had pioneered in 1996. (Pl. Br. 14; Rosenfeld Decl. Ex. K, 2007 terms § 17)

         The terms and conditions also included the following disclaimers:

Auctioneer does not warrant authenticity of any material that is accompanied by a Certificate of Authenticity or its equivalent, from an Independent third-party authentication provider. The bidder shall solely rely upon the warranties of the authentication provider issuing the Certificate or opinion, or on the warranties of the authentication provider of the bidder's choice.
[REA] disclaims all liability for damages, consequential or otherwise, arising out of, or in connection with the sale of any property by Auctioneer to bidder. . . . Any statement made by the Auctioneer is a statement of opinion and does not constitute a warranty or representation.

(E.g., Rosenfeld Decl. Ex. K, 2007 terms, §§ 17, 31; Kozyra Cert. Ex. 38, pp. 376, 378) Prospective bidders were required to acknowledge and accept these terms and conditions when registering or participating in an REA auction. (Defs. Stmt. ¶ 80; Pl. Resp. ¶ 80)

         In early February of 2006, PSA examined 25 items, many if not all of which REA had acquired from Nash's Chadwick Collection. PSA's authenticators determined that all 25 were counterfeits. Their lead authenticator described the items' signatures as the "worst assemblances of any forgeries [he'd] ever seen in [his] life." (Pl. Br. 15; Rosenfeld Decl. Ex. Z, p. 116-130) PSA told Lifson that it would not authenticate the items for REA's upcoming 2006 auction.

         At the same time, also in preparation for the 2006 auction, REA hired James Spence Authentication Services, Inc. ("JSA"). JSA, too, determined that certain Chadwick Collection items REA planned to sell were not authentic. Specifically, JSA found that certain items had been created by cutting and pasting fake materials and forgeries alongside real materials and autographs- a process known as "salting." To confirm their suspicions of salting, authenticators at JSA arranged to review a collection of items that another baseball memorabilia hobbyist, Alfred Angelo, had obtained from Nash. JSA found the same pattern of salting in Angelo's collection. JSA's owner, James Spence, reported his findings to Lifson. Spence informed Lifson that he had advised Angelo to go after Nash for selling him bogus items. (Pl. Br. 16; Rosenfeld Decl. Ex. AA, p. 195-215)

         On February 20, 2006, authenticators from PSA and JSA gathered for an all-day review of "buckets of autographed items of baseball memorabilia that Lifson had obtained over the years from Nash." (Pl. Br. 16) Several Chadwick Collection pieces-including the Chadwick Letter, Shanus says-were among those under review. At the end of the day, PSA and JSA concluded that most of the items they had reviewed could not be authenticated. (Pl. Br. 16; Rosenfeld Decl. Ex. X, p. 180-185) Shanus claims the Chadwick Letter was one of those non-authenticated items, but the defendants deny this. Thereafter, PSA indicated that it would not authenticate most Nash items for REA, [8] while Spence conveyed to Lifson his belief that the Nash items were the work of a "con man." (Pl. Br. 16-17; Rosenfeld Decl. Ex. AA, p. 215)

         At the time, Lifson did not convey the results of the February 20, 2006 PSA/JSA review to Shanus.

         e) 2007: Shanus Purchases the Chadwick Letter

         REA offered the Chadwick Letter for sale at its 2007 auction. His interest still stoked from his 2005 visit to Lifson's closet, Shanus purchased the Chadwick Letter for $11, 750. As noted, the terms and conditions of REA's 2007 auction provided that REA would not sell an item if authenticators had not been in unanimous agreement as to the item's authenticity. (Pl. Br. 19; Rosenfeld Decl. Ex. K; Defs. Resp. ¶ 62) JSA had signed off on the authenticity of the Chadwick Letter, but PSA had not. Shanus therefore claims that REA violated the terms of sale by improperly failing to disclose PSA's rejection of the Chadwick Letter during the February 20, 2006 review session. (Pl. Supp. ¶¶ 62-63) The defendants deny that PSA even reviewed, let alone rejected, the Chadwick Letter in February of 2006. And the disclosure, they say, was accurate; REA informed bidders that only JSA had authenticated the Chadwick Letter, and only as to the handwriting. (Defs. Stmt. ¶¶ 169-171)

         f) 2008-2009: Mastro Net's Demise

         The FBI initiated an investigation into Mastro Net in August of 2008. According to Shanus, who relies on the analysis of his forensic accounting expert, Mastro Net became so financially disabled that it was effectively judgment-proof after February 2009. (Pl. Br. 25; Pl. Stmt. ¶¶ 79-82; Rosenfeld Decl. Ex. LL) Subsequently, Bill Mastro and Doug Allen pled guilty to charges related to, inter alia, fraudulent inflation of auction prices at Mastro Net from 2002 to 2009 and their failure to disclose alterations and negative laboratory results. Both have been sentenced to terms of imprisonment. (Defs. Br. 2; Defs. Resp. ¶ 79; ¶ 36)

         Drawing on court documents from the criminal case and relying on the opinion of their own expert, Alexander Krasnomowitz, the defendants dispute that Mastro Net was insolvent by February of 2009. They point to court documents which show that Bill Mastro sold his sports memorabilia collection for $2.4 million in December 2010 and still had a net worth of $1.3 million in August 2015. (See generally Defs. Stmt. ¶¶ 51-59)

         g) February 2009: Lifson's Disclosures

         On February 2, 2009, Shanus received from Lifson an email invitation to an upcoming sealed bid auction. To the email was attached a document entitled "Terms and Conditions of Bid." The terms contained the disclaimer that the "The Collection' is sold 'AS IS' and with all faults. The sale is made without recourse. The Collection' includes items that may be authentic, items that may not be authentic, and items that may be authentic in part." (Rosenfeld Decl. Ex. GG) After reviewing the terms, Shanus approached Lifson and asked about the origin of the items to be sold ("The Collection") and the reason for the unusual terms and conditions. Lifson responded that The Collection consisted of Nash items and, for the first time, told Shanus that their authenticity was in question. (Pl. Br. 22; Rosenfeld Decl. Ex. I, 272-275)

         According to Shanus, Lifson went on to reveal the following to Shanus: (1) Nash had never paid for the Origins of Baseball Letter in 2004; (2) in 2006, Lifson was advised that another Nash trophy ball item had failed authentication; (3) PSA or JSA advised Lifson at some later date that the authentication of certain Nash items had been rescinded; and (4) Lifson had sued Nash over non-payment and Nash, when questioned about the origins of Nash items, had invoked his Fifth Amendment privilege. Lifson denies making those statements. By his own account, he told Shanus he was not aware of any issues with the 1853 Trophy Ball, but recommended Orion Analytics LLC ("Orion") if Shanus wished to have his 1853 Trophy Ball tested. (Defs. Resp. ¶ 72)

         Thereafter, Shanus had James Martin, the principal of Orion, test the 1853 Trophy Ball and the 1861 Trophy Ball. Martin analyzed paint samples and conducted historical research on other materials used in the Trophy Balls. (Pl. Br. 23; Rosenfeld Decl. Ex. I, Ex. HH) On August 13, 2009, Martin issued a report on the 1853 Trophy Ball and on October 21, 2009, he issued a report on the 1861 Trophy Ball. Both reports conclude that the Trophy Balls were not created at the time of their purported origins, as the paint on each contained substances that were not used in paint before the 1940s or 1950s. (Rosenfeld Decl. Exs. JJ, KK, HH; Defs. Resp. ¶¶ 76-78).[9]

         Shanus finds it significant that he received Martin's report on the 1861 Trophy Ball more than six years after his purchase of the item. At that time, he says, New York's six year statute of limitations for a claim of breach of contract against Mastro Net had lapsed. Likewise, he stresses that he received Martin's report on the 1853 Trophy Ball just shy of six years after he purchased the item, but still well beyond the time when Mastro Net could have afforded to pay a judgment. (Pl. Br. 24; Pl. Stmt. ¶ 82)

         The defendants take the view that Mastro Net was still capable of satisfying a claim after February 2009-and certainly in March through June 2009, when, records show, Shanus contacted Bill Mastro and Allen and demanded reimbursement for the 1853 Trophy Ball. (Defs. Resp. ¶ 82 (citing materials from Mastro's sentencing, various financial documents, and the Krasnowitz report; Defs. Stmt. ¶¶ 118-119))

         Nevertheless, it was not until December 2009 that Shanus, through counsel, served Bill Mastro and Allen with a draft complaint naming them, Mastro Net, and Legendary as defendants. (Defs. Stmt. ¶ 124; Kozyra Cert. Ex. 17) The draft complaint alleged breach of contract in connection with Shanus's purchase of the Trophy Balls, lulling fraud against Bill Mastro and Allen, fraud against Mastro Net, Bill Mastro, and Allen for shill bidding, and successor liability against Mastro Net's successor in interest. (Id. ¶ 125) Shanus claims that the draft complaint was created solely to catalyze a settlement. (Pl. Resp. ¶ 124) It is undisputed that the draft complaint was never filed and Shanus never settled with Mastro Net, Bill Mastro, or Allen. (Id. ¶ 126; Defs. Stmt. ¶126)

         h) Lifson's Relationship to Shanus and Purported Failure to Disclose

         Shanus describes Lifson as a trusted advisor in the baseball memorabilia industry. Many, including Shanus, relied on Lifson's advice with respect to "the provenance and authenticity of baseball memorabilia, " especially Nash items. (Pl. Stmt. ¶¶ 26-27) The defendants demur, saying Lifson has never held himself out as an authenticator of sports memorabilia and had only an arms-length transactional relationship with Shanus. (Defs. Resp. ¶¶ 26-27)

         Shanus claims that during 2003-2009 generally, he talked to Lifson about various Nash items he had purchased from Mastro Net or REA, or was considering purchasing from REA. He says that Lifson never disclosed any concerns about the authenticity of items from Nash-not after hearing from Evans about Charlie Sheen's Tinkers-Evers Box, (Pl. Br. 18; Rosenfeld Decl. Ex. G, p. 123), and not after PSA and JSA more generally questioned the authenticity of Nash items during their February 2006 review. To the contrary, Shanus claims, Lifson often reassured him as to the authenticity of the Nash items. (Pl. Br. 21; Shanus Decl. ¶ 7) Shanus alleges that he would have "immediately submitted the Trophy Balls for forensic testing" had Lifson disclosed any concerns about Nash items. (Id.; Pl. Resp. ¶ 9)

         B. Procedural History and Pending Motions

         Shanus first filed a complaint on April 4, 2011, in the Southern District of New York. The parties thereafter stipulated to a transfer of venue to the District of New Jersey. (Pl. Br. 25; Rosenfeld Decl. Exs. A-B) On March 26, 2012, the Honorable Dennis M. Cavanaugh denied the defendants' motion to dismiss the amended complaint its entirety. The defendants had sought dismissal on the grounds that Shanus's lulling fraud claim is barred by New York's statute of limitations[10]; that Shanus failed to state a claim for both lulling and market manipulation fraud pursuant to Fed.R.Civ.P. 9(b); and that Shanus failed to state a claim for breach of contract because REA had expressly disclaimed any warranties. (Rosenfeld Decl. Ex. D) Shanus v. Robert Edward Auctions, LLC, No. 2:ll-CV-2839 DMC MF, 2012 WL 1044316, at *5-9 (D.N.J. Mar. 28, 2012) (ECF No. 33 at 10-16).

         The defendants filed an answer to the amended complaint. They asserted counterclaims for tortious interference and trade libel, which Judge Cavanaugh dismissed as barred by the New York statute of limitations. (Rosenfeld Decl. Ex. F; ECF No. 60) Shanus v. Robert Edward Auctions, LLC, No. 2:ll-CV-2839 DMC MF, 2013 WL 393950, at *3-4 (D.N.J. Jan. 30, 2013) (ECF No. 60 at 6-8).

         The parties now cross-move for summary judgment on all three of Shanus's claims against the defendants and also on his request for punitive damages for Counts 1 and 2. Concurrently, the parties have filed, collectively, four in limine motions to exclude expert testimony. For present purposes, I view these as objections raised under Fed.R.Civ.P. 56(c)(2), which provides that "[a] party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible evidence." The defendants bring three separate motions to exclude (i) the expert testimony of James Martin, who opines that the Trophy Balls are not authentic based on his analysis of paint samples; (ii) James Martin's testimony on the ground that Martin is not really an expert, but actually an "improperly paid fact witness"; and (iii) the testimony of Prof. Ashenfelter, who presents statistical evidence that the REA-Cooperstown arrangement artificially stoked prices in the baseball memorabilia market, including prices of items Shanus purchased between 2006 and 2014.

         Shanus, for his part, moves to exclude the testimony of three experts for the defendants: (i) Bruce A. Snigger, a textile engineer who opined that the 1861 Trophy Ball is authentic; (ii) Richard J. Corcoran, III, an accountant who opines that the REA-Cooperstown arrangement had no long-term impact on baseball memorabilia prices; and (iii) Alexander Krasnowitz, an accountant who opines that Mastro Net was solvent and capable of satisfying judgments of any claim Shanus could have asserted before the statute of limitations on his breach of contract claim against Mastro Net had run.

         The defendants also bring two motions for sanctions against Shanus: (i) seeking legal fees, costs, and judgment on the grounds that Shanus's claims are frivolous and thus violate Federal Rule of Civil Procedure 11; and (ii) seeking to dismiss Shanus's claim for lulling fraud or alternatively, exclude the testimony of James Martin, on the ground that Shanus would not permit the defendants' expert to drill into the 1853 Trophy Ball, in violation of a discovery order and Federal Rules of Civil Procedure 16(f) and 37(b)(2)(A).

         For the reasons discussed infra, the motions to exclude the testimony of James Martin, Bruce Snigger, and Alexander Krasnowitz, and also the defendants' motion for Rule 16 and 37 sanctions are moot. I address the remaining motions following discussion of the cross motions for summary judgment.

         II. DISCUSSION

         A. Choice of Law

         In this diversity action, the choice of law rules of the transferring court- here, the Southern District of New York-apply as to state law matters considered substantive for Erie purposes. See n.10, supra; Van Dusen v. Barrack, 376 U.S. 612, 637-39 (1964) (in a diversity case, the state law that would have applied in the transferor court also applies in the transferee court); see also Klaxon Co. v. StentorElec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021 (1941). "Statutes of limitations are substantive for Erie purposes." Dixon Ticonderoga Co. v. Estate of O'Connor, 248 F.3d 151, 160-61 (3d Cir. 2001)) (citing Guaranty Trust Co. v. York, 326 U.S. 99, 110 (1945)). And as Judge Cavanaugh previously explained, "New York courts treat statutes of limitations as part of the forum's procedure, and therefore apply New York statutes of limitations even if the underlying claim ultimately will be governed by the substantive law of another jurisdiction." Shanus, 2013 WL 393950, at *3-4 (quoting Architectronics, Inc. v. Control Sys., 935 F.Supp. 425, 431 (S.D.N.Y. 1996) (citing Sun Oil Co. v. Wortman, 486 U.S. 717, 722-29 (1988))); see also Ins. Co. of N. Am. v. ABB Power Generation, Inc., 925 F.Supp. 1053, 1059 (S.D.N.Y. 1996) (recognizing and applying the rule that New York courts apply the New York statute of limitations even where a tort occurred in another state or where a contractual choice of law clause directs application of another state's substantive law, and also applying New York law to determine when claims accrued).

         Therefore, I apply to the Count 1 lulling fraud claim New York's statute of limitations for an action based upon fraud: "the greater of six years from the date the cause of action accrued or two years from the time the plaintiff or the person under whom the plaintiff claims discovered the fraud, or could with reasonable diligence have discovered it." N.Y. C.P.L.R. 213(8); see also 203(g) ("[W]here the time within which an action must be commenced is computed from the time when facts were discovered or from the time when facts could with reasonable diligence have been discovered, or from either of such times, the action must be commenced within two years after such actual or imputed discovery or within the period otherwise provided, computed from the time the cause of action accrued, whichever is longer.").

         The parties agree that New York law governs the lulling fraud claim (Count l).[11] They also agree that New Jersey law applies to the breach of contract claim (Count 3), pursuant to a choice-of-law clause in REA's terms and conditions. (Kozyra Cert. Ex. 38 § 32 (ECF No. 167-24) ("Bidder hereby consents to the application of the law of the State of New Jersey arising out of interpreting any issues arising out of its relationship with Robert Edward Auctions, LLC.")). See Woodling v. Garrett Corp., 813 F.2d 543, 551 (2d Cir. 1987) ("When [a choice-of-law] provision exists and the jurisdiction chosen by the parties has a substantial relationship to the parties or their performance, New York law requires the court to honor the parties' choice insofar as matters of substance are concerned, so long as fundamental policies of New York law are not thereby violated.").

         The parties disagree as to whether New York or New Jersey law applies to Shanus's market manipulation claim (Count 2). The defendants say the REA terms and conditions govern any claim arising out of Shanus's relationship with REA. Therefore, they say, the New Jersey choice-of-law provision should govern. Shanus responds that the choice-of-law clause applies only to contract claims, and ...


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