22-3235-cv, 23-11-cv, 23-938-cv United Realty Advisors, LP v. Verschleiser

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 3rd day of October, two thousand twenty-four.

PRESENT: REENA RAGGI, RICHARD C. WESLEY, RAYMOND J. LOHIER, JR., Circuit Judges. ------------------------------------------------------------------ UNITED REALTY ADVISORS, LP, JACOB FRYDMAN, PRIME UNITED HOLDINGS, LLC,

Plaintiffs-Appellees,

v. Nos. 22-3235-cv, 23-11-cv, 23-938- cv

ELI VERSCHLEISER,

Defendant-Appellant,

RAUL DEL FORNO, OPHIR PARNASI, ALEXANDRU ONICA, ALEX VEEN, SOFIA SVISCH, ALEXANDER MERCHANSKY, MULTI CAPITAL GROUP OF COMPANIES, L.L.C., ERIC FISCHGRUND, FRANK CHANDLER, CAESARS ENTERTAINMENT CORPORATION, ALBERT AKERMAN, DAVID O. WRIGHT, ASHER GULKO, THE FISHOFF FAMILY FOUNDATION, BENJAMIN FISHOFF, STEVEN VEGH, JAFFA HOLDINGS, LLC, ELAN JAFFA, WHITEGATE FUNDING, LLC, PINCUS RAND, MARK APPEL, JOSEPH SPIEZIO, INTERMEDIA.NET, INC.,

Defendants. ------------------------------------------------------------------

FOR PLAINTIFFS-APPELLEES: No appearance

FOR DEFENDANT-APPELLANT: Asher C. Gulko, Gulko Schwed LLP, Cedarhurst, NY, Stuart S. Zisholtz, Zisholtz & Zisholtz, LLP, Mineola, NY

Appeal from a judgment and order of the United States District Court for

the Southern District of New York (John G. Koeltl, Judge).

2 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment and order of the District Court are

AFFIRMED.

Defendant-Appellant Eli Verschleiser appeals from the November 28, 2022

judgment and May 18, 2023 order of the United States District Court for the

Southern District of New York (Koeltl, J.), entered after a jury verdict finding

Verschleiser liable for violating federal racketeering and computer hacking

statutes and committing various state law torts. Verschleiser was also ordered to

pay $2,133,007 in damages and $1,101,899.04 in prejudgment interest, for a total

of $3,234,906.04. On appeal, Verschleiser challenges (1) the amount of

compensatory damages awarded; (2) the award of punitive damages; (3) the

award of prejudgment interest; and (4) the failure to award him costs incurred

after he purportedly made a favorable settlement offer pursuant to Federal Rule

of Civil Procedure 68. We assume the parties’ familiarity with the underlying

facts and the record of prior proceedings, to which we refer only as necessary to

explain our decision to affirm.

3 I. Duplicative Compensatory Damages Award

In considering a jury’s damages award, we “accord substantial deference

to the jury’s determination of factual issues.” Dancy v. McGinley,

(2d Cir. 2016) (quotation marks omitted). Here, the jury determined that

Verschleiser violated the Racketeer Influenced and Corrupt Organizations Act

(RICO), 18 U.S.C. §§ 1961–68; Computer Fraud and Abuse Act,

;

Electronic Communications Privacy Act,

; and Stored

Communications Act,

, 2707. The jury also found him liable for

misappropriation of trade secrets, breach of contract, tortious interference with

existing contractual relations, tortious interference with prospective business

relations, and conversion under New York law. The $2,133,007 in damages

(excluding prejudgment interest) that it awarded reflected $33,000 in

compensatory damages for violating two of the three federal computer hacking

statutes; $1.4 million in compensatory damages for misappropriating trade

secrets; $1 in nominal damages for the RICO violations (trebled to $3) and each of

the other state law claims; and $700,000 in punitive damages.

Relying primarily on Wickham Contracting Co. v. Board of Education,

(2d Cir. 1983), Verschleiser challenges the jury award of compensatory

4 damages for the injuries underlying the computer hacking and misappropriation

claims. In Wickham Contracting, we reasoned that when a plaintiff seeks

compensation “for the same illegal acts under different legal theories,” he should

receive “a single recovery.”

. Nevertheless, “[a] jury’s award is not

duplicative simply because it allocates damages under two distinct causes of

action.” Indu Craft, Inc. v. Bank of Baroda,

(2d Cir. 1995). Here,

Verschleiser argues that the compensatory damages award was duplicative

because RICO claims for which the jury awarded only nominal damages

subsumed the computer hacking and misappropriation claims.

We disagree. To start, both the District Court’s instructions and verdict

sheet explicitly cautioned the jury not to award duplicative damages for the

same injury. The jury then awarded compensatory damages for the computer

hacking and misappropriation claims that align precisely with the trial evidence

regarding Plaintiffs-Appellees’ losses related to specific transactions and events.

Moreover, the RICO claims were based on six predicate acts of mail fraud or wire

fraud. The record does not compel the conclusion that the computer hacking and

misappropriation offenses were merely predicate acts under RICO or that the

jury necessarily relied on those offenses in finding Verschleiser liable for the mail

5 or wire fraud predicates. See id.; Gentile v. County of Suffolk,

, 153–54

(2d Cir. 1991) (holding jury did not award duplicative damages where “plaintiffs

presented substantial evidence . . . [of] multiple injuries as a result of the

violation of their rights under state and federal law”); see also Morse v. Fusto,

(2d Cir. 2015). We see no reason to conclude that the jury awarded

$1 in nominal RICO damages and then added $1,433,000 in compensatory

damages for the computer hacking and misappropriation claims based on the

same injury. See Indu Craft,

.

II. Punitive Damages

Verschleiser next challenges the punitive damages award as excessive.

Again, we disagree. To determine whether a punitive damages award is

excessive, we consider: “(1) the degree of reprehensibility of the tortious conduct;

(2) the ratio of punitive damages to compensatory damages; and (3) the

difference between this remedy and the civil penalties authorized or imposed in

comparable cases.” Patterson v. Balsamico,

(2d Cir. 2006)

(quotation marks omitted). Here, the award — less than half of the

compensatory damages award — was reasonable given the evidence adduced at

trial. See Motorola Credit Corp. v. Uzan,

, 87 & n.10 (2d Cir. 2007); see

6 also Jennings v. Yurkiw,

(2d Cir. 2021) (“Even where

compensatory damages are substantial, punitive damages awards that are a

multiple higher may be warranted because of the deterrent function of punitive

damages.”).

III. Rule 68 Offer

Finally, Verschleiser challenges the final judgment based on a $2.5 million

settlement offer he claims to have extended before trial under Rule 68, which

provides that if a party receives and rejects an offer of judgment but “finally

obtains” a judgment that is “not more favorable than the unaccepted offer,” that

party must “pay the costs incurred after the offer was made.” Fed. R. Civ. P.

68(d). Verschleiser argues that the District Court should have shifted costs he

incurred after May 1, 2018 — the date the offer was purportedly made — to the

Plaintiffs-Appellees. We are not persuaded, however, because Verschleiser

failed to provide sufficient evidence that he ever made such an offer of judgment.

Indeed, before the District Court, counsel for the Plaintiffs-Appellees disclaimed

that such an offer was ever made. 1

1Because Verschleiser has not shown that he made the relevant Rule 68 offer, we decline to consider his argument that prejudgment interest should not have been assessed after the alleged offer was made. Verschleiser’s remaining challenge to the prejudgment interest award

7 We have considered Verschleiser’s remaining arguments and conclude

that they are without merit. For the foregoing reasons, the judgment and order

of the District Court are AFFIRMED.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court

based on a lack of actual damages finds no support in the record, which contains ample evidence of damages. 8