Professional Documents
Culture Documents
IN THE
ARGUMENT .......................................................................................................... 16
i
B. The District Court’s Reliance on Danann Realty
Corp. v. Harris Is Misplaced.........................................................32
CONCLUSION....................................................................................................... 40
ii
TABLE OF AUTHORITIES
FEDERAL CASES
Davis v. Scherer,
468 U.S. 183 (1984)............................................................................................17
DeMuria v. Hawkes,
328 F.3d 704, 706 (2d Cir. 2003). ................................................................17, 27
Patane v. Clark,
508 F.3d 106 (2d Cir. 2007) ..............................................................................18
Scheuer v. Rhodes,
416 U.S. 232, 236 (1974)....................................................................................17
iii
UBS AG, Stamford Branch v. Healthsouth Corp.,
No. 07 Civ. 8490 (LAP), 2008 WL 2337846, at *5 (S.D.N.Y. June
6, 2008) ...............................................................................................................32
STATE CASES
Cahill v. Regan,
5 N.Y.2d 292; 184 N.Y.S.2d 348 (1959)............................................................19
Demaria v. Brenhouse,
277 A.D.2d 344; 716 N.Y.S.2d 99 (2d Dep’t 2000) ..........................................19
Doldan v. Fenner,
309 A.D.2d 1274; 765 N.Y.S.2d 401 (4th Dep’t 2003).......................................23
Farber v. Breslin,
47 A.D.3d 873; 850 N.Y.2d 604 (2d Dep’t 2008)..............................................28
Gibli v. Kadoshi,
279 A.D.2d. 35; 717 N.Y.S.2d 553 (1st Dep’t 2000).........................................28
iv
Integrated Book Technology, Inc. v. T/R Systems, Inc.,
2 A.D.3d 1193; 770 N.Y.S.2d 186 (3rd Dep’t 2003) ..........................................23
Newin Corp. See, e.g., Ladenburg Thalman & Co., Inc. v. Imaging
Diagnositc Systems, Inc.,
176 F. Supp. 2d 199 (S.D.N.Y. 2001) ...............................................................27
Starr v. Johnson,
143 A.D.2d 130; 531 N.Y.S.2d 589 (2d Dep’t 1988) ........................................39
Steen v. Bump,
233 A.D.2d 583; 649 N.Y.S.2d 731 (3d Dep’t 1996) ........................................28
FEDERAL STATUTES
28 U.S.C. § 1291........................................................................................................1
28 U.S.C. § 1331........................................................................................................1
28 U.S.C. § 1338........................................................................................................1
v
MISCELLANEOUS
http://www.goldenglobes.org/nominations/year/2006 ............................................21
http://www.oscar.com/nominees/index?pn=index#10_BestDocumentaryFeat
ureNominationCategory......................................................................................22
vi
Jurisdictional Statement
The District Court had original jurisdiction under 28 U.S.C. §§ 1331 and
1338. Appellate jurisdiction exists under 28 U.S.C. § 1291. This appeal is from an
Order (Preska, J.) dismissing the case below pursuant to Fed. R. Civ. P. 12(b)(6)
and entered in the United States District Court for the Southern District of New
York on September 3, 2008. The Order appealed from disposed of all claims.
Appellants Cindy Streit, et al. timely filed a Notice of Appeal from the Order
on September 29, 2008. Subsequently, Staff Counsel to this Court raised the issue
that Appellants’ claims against Defendant Major Studio Partners, Inc. were
"without prejudice" and no certification pursuant to Fed. R. Civ. P. 54(b) had been
was final for the purposes of the appeal filed on September 3, 2008.
Upon further discussion with Staff Counsel, counsel for the parties executed
of Reinstatement (R. A197-98). That stipulation was filed in the Second Circuit on
December 2, 2008 and the mandate of the Second Circuit withdrawing the appeal
1
Thereafter, on or about December 5, 2008, Appellants filed in the District
Order approving the dismissal of Defendant Major Studio Partners, Inc. with
their initial appeal by filing a second Notice of Appeal from the District Court’s
(1) Whether the District Court erred by finding that the Releases executed
(2) Whether the District Court’s finding that the Releases barred
fraudulent inducement and well-settled New York law that the mere allegations of
2
Statement of the Case
This appeal arises from the Appellants’ unwitting performance in the now
infamous “dinner party scene” in the even more infamous movie: “Borat: Cultural
“Borat movie”).
should the law enable sophisticated business people to hire experienced, high-
con-artists to insulate themselves from liability for their fraud and other
3
world-wide to millions of viewers? Does the law provide no recourse for these
victims?
that the “Standard Consent Agreements” releasing all of Appellants’ claims (the
“Releases”) were not ambiguous and (2) that the Appellants waived their
the Releases. Appellants urge this Court to reconsider the pleadings in this case
and the Releases themselves. The Releases are ambiguous at best and, in reality,
a roadmap for this Court to set aside the Releases based on the fact that the
Despite the Court’s finding that the Releases were valid and thus acted as a
bar to all of Appellants’ claims, this case presents a clear example of fraud. The
hundreds of millions of dollars at Appellants’ expense. This Court now has the
4
opportunity to undo the injustice that was perpetrated by the Appellees. The
The story of this case began when Appellant Cindy Streit (“Streit”) agreed to
provide dining etiquette training to, and, along with the other Appellants, have
dinner with a “foreign dignitary” from the country of Belarus to be filmed for a
“ETS Agreement”).
On the night that the training and dinner were to occur, the Appellees served
some of the Appellants wine while they waited for almost two hours for the
dignitary to arrive. At no time during that long wait did the Appellees present the
Appellants with the Release which the District court has found absolves them of
their fraudulent conduct. Instead, the Appellees waited to present the Releases to
the Appellants until just moments before the “dignitary” arrived. They then rushed
the Appellants to sign the Releases. Prior to the execution, Appellee Todd
Schulman (acting under the alias “Todd Lewis”), an employee of Springland Films
(a d/b/a of One America Productions, Inc.), assured Streit and the other Appellants
that the Releases did not change any of the terms of the ETS Agreement and would
5
not harm the guests in any way. Unbeknownst to the Appellants, the Appellees
were scamming them in an effort to shoot a scene for the Borat movie.
that the Appellees repeatedly lied to and systematically defrauded the Appellants
into appearing in the Borat movie and signing the Releases. Under long-standing
New York law, however, well-plead allegations of fraud defeat a motion to dismiss
this well-established law in its September 3 Decision and Order. For that reason
Although Appellees argue that the wording of the Release contradicts any
claim of fraud, they are wrong. The Appellees contend that the Borat movie is
not only belied by Appellee Sacha Baron-Cohen (“Cohen”) himself but also by
film journalists, authors and the awards bestowed upon the Borat movie, none of
which, were in the documentary category. The Borat movie is not a documentary,
movie is premised on fooling multiple innocent and unwitting participants like the
Appellants. At the very least, the phrase “documentary-style film” renders the
Releases ambiguous. As a result, the District Court erred in granting the Motion to
Dismiss.
6
Appellees also claim that the disclaimers in the merger clause of the Release
First, as mentioned above, a party cannot fraudulently induce another party to enter
into a contract to his/her detriment and then shield itself from liability through the
use of a disclaimer in the contract of the very fraud used to induce the signing of
the contract in the first place. Second, Appellees, who were all Hollywood
insiders, had peculiar knowledge of the material facts, had a duty in equity and
good conscience to disclose the true nature of their business, and, in failing to do
so, effectively made it impossible for the Appellants to conduct any meaningful
investigation into the ramifications of the Release or the veracity of the Appellees’
representations.
The Appellants must now live with the fact that they will forever be linked
to a vulgar and offensive film in which they are portrayed as backward and racially
intolerant. Tellingly, in its Decision and Order, the District Court lumps in
Appellants with the other unwitting participants in the film and fails to distinguish
their appearance from any of the others in the film. See September 3 Decision and
Order at 3 (R. 168) (“[t]he movie challenges its viewers to confront, not only the
bizarre and offensive Borat character himself, but the equally bizarre and offensive
reactions he elicits from “average” Americans). This is how the Appellants will
7
The Appellees, on the other hand, through their defrauding of Appellants,
contribution or humiliation. The Appellants are entitled to the day in court that
A91).1 On or about October 21, 2005, Appellee Schulman, operating under the
alias “Todd Lewis” of Springland Films, contacted Streit to request the services of
the United States (R. A91). Schulman stated that the dignitary needed etiquette
and dining skills training and inquired whether Streit and ETS could provide such
services (R. A91). Schulman also explained that this portion of the documentary
was designed to portray a Southern, in-home style dining experience and requested
that Streit arrange for such a dinner (R. A91). During all times relevant hereto,
Schulman was acting as an agent for and in conspiracy with the other Appellees
(R. A91). Streit agreed to perform the requested etiquette and dining skills training
and to arrange a catered dinner complete with appropriate guests (R. A91).
1
All references beginning with the prefix “R” are to the Revised Record on appeal.
8
On the evening of October 21st, Schulman requested to meet with Streit in
order to finalize the arrangements and for Schulman to examine a potential training
location (R. A92). Schulman also requested to meet one of the guests that would
The following day, October 22nd, Schulman and Appellants Streit and
for the training and dinner (R. A92). During that meeting, Schulman provided
further details about the “foreign dignitary,” discussing the dignitary’s home
former Soviet Union (R. A92). Schulman also stated that the dignitary worked
with Belarus Television and this “educational documentary” was for the cultural
enrichment of that country (R. A92). Schulman further represented that the
was being made to help build relations between the United States and Belarus (R.
A92). Streit asked Schulman whether Belarus Television was similar to Alabama
Public Television, and he replied that it was very similar (R. A92). Schulman
represented that Appellants’ role in the documentary was mainly for school
children to learn cultural diversity and to learn about Southern traditional values
Schulman knew the dignitary’s name (R. A92). Schulman responded that he did,
9
but was unsure how to pronounce it (R. A92). Schulman further stated that the
dignitary spoke English so there would not be problems with communication (R.
That evening, Schulman notified Streit that Springland had authorized Streit
to perform the requested training and dinner services (R. A92). At that time,
Schulman stated that the restaurant at which they met would not be appropriate for
filming and, as such, requested that the dinner and training take place in a Southern
home “with columns” (R. A92-93). Schulman stated that he would pay $600 extra
for an in-home setting. Both the training and dinner were to take place on October
On the evening of October 22nd and on October 23rd, Streit arranged for the
Jared and Lynn Jared, among others (R. A93). Streit also arranged for catering
services and reserved a dining facility – a home with columns (R. A93).
In the hours prior to the training and dinner on October 24, 2005, Streit and
Chounard and Monica Levenson, negotiated a written contract for Streit’s services
(R. A93). At all times relevant hereto, Chounard and Levenson were acting as
agents for and in conspiracy with the other Appellees (R. A93). Consistent with
10
the representations of Appellees Schulman, Levenson, Chounard and Springland,
During the dinner later that evening, Appellee Cohen performed numerous
offensive and outrageous acts, several of which, identified below, became part of
the final, edited version of the Borat movie, its trailers and other promotional
The scenes in the Borat movie leading up to the dinner include Cohen
driving to the house where the dinner is scheduled to take place (R. A94). At this
2
Appellants have included one originally purchased version of the Borat Movie in
the Appendix. Should the Court require further copies, Appellants will provide
them at such time.
11
point, the Borat movie flashes to the following road name: “Secession, Private
Drive” (R. A94). The road on which the dinner facility was located does not bear
this name, nor do any of the Appellants live on or know of such a road (R. A94).
Upon information belief, Appellees scripted the “Secession Drive” scene to set the
stage for Cohen’s portrayal of Appellants as being racially intolerant (R. A94).
and then complimented the other guests on their willingness to let “retarded”
persons dine with them (R. A94). He asked the dinner guests whether they owned
slaves (R. A94). He made several derogatory and sexists comments to the women
who were present (R. A94). At one point, Cohen excused himself to the bathroom
only to come back to the dinner table holding a plastic bag purportedly containing
his own feces (R. A94). Upon information and belief, a member of Springland
films had defecated in the plastic bag prior to filming the dinner scenes (R. A94).
Appellant Streit was shocked at the sight of the plastic bag, but assisted
Cohen to the restroom, only to have Cohen falsely describe his own culture’s
bathroom etiquette (R. A94). During this scene in the film, Cohen tells Streit that
his understanding is that the host of the dinner is responsible for “wiping” him (R.
to American ideals, Appellants acted with benevolence toward Cohen and made all
12
After returning from the restroom, there was a knock at the door and Cohen
asked to dine with them (R. A95). Appellants have since learned that this was
professional actress Luenell Campbell (a.k.a. Jane Sanguinetti Luenell) (R. A95).
The Borat movie depicts that, at this point in the dinner, certain of the guests chose
order to give the impression that Appellants and others present at the dinner were
intolerant of dining with members of another race and left as a result of her
presence (R. A95). What was filmed, but not shown in the Borat movie, however,
was that Streit apologized to Ms. Campbell for what Streit believed was
Appellants at all times acted in goodwill towards Ms. Campbell. The scripting,
filming and showing of the “Secession Drive” scene leading up to the dinner was
designed to set the stage for this false portrayal (R. A95). At the end of the dinner
scenes, the film shows Cohen leaving and asking whether the cause of the
commotion was that the “retard had gotten out of his cage” (R. A95).
appeared show Cohen at an “antique” store that sells various civil war and
13
with “Secession” (R. A95). Upon information and belief, Appellees’ scripting,
filming and showing of this portion of the Borat movie was made for the purpose
of linking the scenes of the dinner with “Secession,” its association with the
Indeed, this is exactly how it has been interpreted by the viewing public (R.
A96). One movie review describes the “dinner scenes” as follows: “You hear
about people so racist they can’t stand to be in the same room as one of ‘them’” (R.
A96). Another says it this way: “The other guests try to excuse it all away up until
Borat’s dinner guest arrives, an overweight black prostitute. Not something that
distributed scenes from the Appellants’ dinner with Cohen into a segment for the
Borat movie and have used these scenes in advertising and promotion for the
movie in multiple media, including print, television and the Internet (R. A96). The
dinner scenes are frequently depicted in trailers for the Borat movie and are among
the most critical components to the popularity and financial success of the movie
(R. A96).
The Borat movie was released in the United States on or about November 3,
2006 (R. A96). The movie carries an R-rating “for pervasive strong crude and
sexual content including graphic nudity, and language” according to the Motion
14
Pictures Association of America and the National Association of Theatre Owners
(R. A96).
In its first ten days in the box office, the Borat movie grossed approximately
$68,000,000.00 (R. A96). Upon information and belief, as of December 21, 2006,
ticket sales for the Borat movie had grossed more than $227,613,553.00 worldwide
(R. A96). Upon information and belief, DVD sales and the sale of other movie-
related items have dramatically increased the amount of total revenue generated by
Upon information and belief, the total production cost for the Borat movie
was only $18 million (R. A97). Appellees were able to keep such costs to a
minimum by defrauding Appellants and others into playing the roles that would
involvement with the movie and their names, likenesses and images have been
repeatedly associated with the acts performed by Appellee Cohen at the October
be shown on Belarus Television (R. A97). There was no “foreign dignitary,” but
15
only Cohen, a paid actor who carried out this previously-scripted, outrageous
conduct (R. A97). There was no “educational documentary,” but only a film
Not everyone involved in the filming of the Borat movie were victims of
fraud (R. A97). Appellees selectively disclosed the purpose and intent of the Borat
Anderson and Luenell Campbell (aka Jane Sanguinetti Luenell) (R. A97).
movie script and knowingly participate in the Borat movie (R. A97). Unlike the
Appellants, they had the option to decide whether or not to have their names,
pornography, sexism, nudity, anti-Semitism and vulgarity (R. A97). And, unlike
the Appellants, they had the option to determine how their participation in the
Borat movie would affect their personal, social and business lives (R. A97-98).
Argument
As set forth below, for several reasons, the District Court’s Decision and
Order should be reversed. First, The District Court erroneously found the term
Movie, a film that, as reflected by the awards it won and the criticism it received, is
16
virtually impossible to classify. The term is not only ambiguous, but was integral
to Appellees overall scheme to deceive Mrs. Martin into executing the Release.
Second, in enforcing the terms of the Release, the District Court misplaced its
reliance on Danann Realty Corp. v. Harris, 5 N.Y.2d 317 (1959), a case involving
facts and circumstances of Danann are light years away from those here. Finally,
the District Court failed to properly address clear New York law holding one party
misrepresents facts and where, like here, that party possesses superior information
I. STANDARD OF REVIEW
The standards for reviewing the District Court’s dismissal are well-settled in
the Second Circuit. The Second Circuit applies “a de novo standard of review to
the grant of a motion to dismiss on the pleadings, accepting as true the complaint’s
Hawkes, 328 F.3d 704, 706 (2d Cir. 2003). “On a motion to dismiss, the issue is
‘whether the claimant is entitled to offer evidence to support the claims. Scheuer
v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v.
complaint must plead enough facts to state a claim for relief that is plausible on its
17
face. Bell Atlantic Corp. v. Twombly 127 S.Ct. 1955, 1966 (2007).” See also
Patane v. Clark, 508 F.3d 106 (2d Cir. 2007). Further, whether a contractual term
Walk-in Medical Centers, Inc. v. Breuer Capital Corp., 818 F.2d 260, 263-64 (2d
Cir. 1987).
failure to state a claim upon which relief can be granted should be reversed since
the Court erred in finding that the Releases executed by the Appellants were not
ambiguous.
In its order dated September 3, 2008, the District Court grounded its
decision to dismiss Appellants’ Complaint on the fact that each of the Appellants
had signed a Release prior to the filming of the dinner scene. In reaching its
decision, the District Court expressly found that the Releases were not ambiguous
and, thus, were enforceable. In relevant part, each Release provides that:
The Release provides that the producer of the Borat movie was Springland
Films. In fact, it was One America Productions. The Release provides that the
character, from a fictional country, who intentionally provokes base reactions from
N.Y.2d 292; 184 N.Y.S.2d 348 (1959); Demaria v. Brenhouse, 277 A.D.2d 344,
345; 716 N.Y.S.2d 99, 100 (2d Dep’t 2000) (each standing for the proposition that
a release may not be read to cover matters which the parties did not intend it to
cover).
In Psenicska v. Twentieth Century Fox Film Corp., et al; Case No. 07 Civ.
worded release do not come close to describing the true nature of the Borat movie
Motion to Dismiss the Complaint, dated April 8, 2008; pp. 4-9; Psenicska v.
Twentieth Century Fox Film Corp., et al; Case No. 07 Civ. 10972 (“Psenicska
19
Appellees attempt to conjure a whole new meaning for the words Appellees chose
(R. A146-51).
that the term “documentary-style” is misleading when viewed in the context of the
Borat movie (R. A146-51). Further, Psenicska argues that the Appellees’
expression in the Release that they “hope to reach a young adult audience with
impression with respect to the substance of the film (R. A146-51). Citing to a
young people are more than capable of finding serious treatment of a topical issue
Psenicska as if set forth fully herein. Perhaps more importantly, the prior
children” made the reference to “young adults” in the Release all the more
As further evidence that the movie was not in the style of a documentary,
Appellee Cohen was nominated for, and won, the 2007 Golden Globe Award for
Best Actor: Musical or Comedy. Cohen’s fellow nominees were Johnny Depp, for
20
“Pirates of the Caribbean: Dead Man’s Chest,” Aaron Eckhart for “Thank You for
Smoking,” Chiwetel Ejiofor for “Kinky Boots” and Will Ferrell for “Stranger than
4, 2008). The Borat Movie was also nominated for Best Motion Picture in the
same category. Its fellow nominees were “The Devil Wears Prada,” “Dreamgirls,”
“Little Miss Sunshine” and “Thank You for Smoking.” Id. None of these movies
Feature” included the following films: (1) “Taxi to the Darkside” – The case of an
Afghan taxi driver beaten to death in 2002 while in U.S. military custody forms the
heart of this examination of the abuses committed during the detainment and
interrogation of political prisoners; (2) “No End in Sight” – Analyst and scholar
Charles Ferguson examines the process behind the Bush Administration’s decision
Experience” – The experiences of Iraq War veterans are seen through their
Moore’s look at American health care explores the reasons behind the adoption of
a for-profit system and profiles individuals whose lack of proper care and battles
with insurance companies have drastically affected their lives; (5) “War/Dance” –
Chief among the victims of the ongoing warfare in northern Ugandan are the
21
country’s children. Three students in the Patongo refugee camp, all victims of
terrible violence and losses, nevertheless prepare to enter a music competition that
http://www.oscar.com/nominees/index?pn=index#10_BestDocumentaryFeatureNo
minationCategory (last viewed June 7, 2008). It goes without saying that the Borat
Furthermore, and more importantly, these are the type movies that come to
the Appellants, based on their own understanding of the term documentary and the
pictured the movie in which they agreed to appear as being similar to these movies
– i.e. a documentary. And, upon reading the Releases, the mere use of the phrase
“documentary-style” did not cause the Appellants to pause and think “this says
of course, it is not surprising that the Appellants did not consider that possibility.
The reason is because in light of the earlier representations made by Appellees, the
3
For further evidence that the Borat movie is more deserving of a comedic or
satirical definition, the Court need look no further than the UK’s definitive film
guide. Halliwell’s, which, describes the movie as “a spoof.” See Gritten:
Halliwell’s Film Video & DVD Guide 2008 at p. 151 (Harper Collins 2007) (R.
A153-154).
22
description in the Release gave the Appellants no reason to think that the movie
‘closest of judicial scrutiny’” Golden Pacific Bancorp. V. Fed. Deposit Ins. Corp.,
273 F.3d 509 (2d Cir. 1993) (citations omitted) (release is a species of contract
release may not form the basis for a motion to dismiss.” Information
Superhighway, Inc. v. Talk America, Inc. 274 F. Supp. 2d 466, 470 (S.D.N.Y.
2003) (denying motion to dismiss where release was ambiguous as to the acts to be
released); see also Integrated Book Technology, Inc. v. T/R Systems, Inc., 2 A.D.3d
1193, 1195; 770 N.Y.S.2d 186, 187 (3rd Dep’t 2003) (affirming trial court’s denial
of motion to dismiss where release was ambiguous as to what was being released);
Doldan v. Fenner, 309 A.D.2d 1274; 765 N.Y.S.2d 401 (4th Dep’t 2003) (finding
that the term “no fault” in a release could be ambiguous to a lay-person entering
23
into a release waiving certain personal injury claims). Moreover any ambiguities
must be construed against Appellees as the drafters. Lifson v. INA Life Ins. Co. of
New York, 333 F.3d 349, 353 (2d Cir. 2003); See also Golden Bancorp., 273 F.3d
reasonably intelligent person who has examined the context of the entire integrated
The District Court expressly found that the phrase “documentary-style film”
contained in the Release was not ambiguous. In its Order, the court points out that
the “Plaintiffs seem unwilling to recognize that the operative word in the phrase
recognize that “style” is the operative word, but, contrary to the District Court’s
conclusion, Appellants contend that adding the word “style” as a suffix creates
style film” not to accurately describe the film, but rather to create ambiguity so that
the Release could be read to encompass the true nature of the movie without
belying the lies and false statements the Appellees made to the Appellants to
persuade them to appear in the movie in the first place. To be sure, the Appellees
laid their trap with the utmost skill. But, should the Appellees be permitted to
24
manipulate release agreements, which serve a valid and just purpose, for unjust
As a technical matter, adding the word “style” to the end of another word
immediately diminishes the precision of the word being modified. The word
certainly chose this phrase for that exact reason. The Appellees intended the
the true nature of the film. Despite the Appellants, the Appellees, and the court all
that there is no definition for that term. Indeed, the confusion engendered by this
Somewhat astoundingly, the District Court analogizes the use of humor in “An
and the future of the planet and in “Bowling For Columbine,” Michael Moore’s
Borat Movie (R. A190). As the District Court acknowledges, both “An
Inconvenient Truth,” and “Bowling For Columbine,” use humor to make a point
and to underscore points of view about gravely serious issues. In Borat, the movie
is devoid of any point of view. And its humor, unlike in An Inconvenient Truth,”
25
and in “Bowling For Columbine,” lies in the humiliation of its unwitting
participants, not in commentary on weighty and political issues of life and death.
debatable whether the District Court should have engaged in the type of film
classification or categorization found in its Decision and Order in the first place.
See Hofheinz v. Discovery Communications, Inc., No. 00 Civ. 3802 (HB), 2001
themes and political contexts of alien visitation films was entertaining or serious,
where the District Court was deciding questions of law at the motion to dismiss
stage.
defraud the Appellants while passing judicial scrutiny. The Appellees knew that
the Appellants, upon seeing that phrase in the Release, given the detailed
description of the movie that the Appellants had previously provided, would not
have any reason to think that the movie was other than what the Appellees had
represented.
26
As a result, the Releases are clearly ambiguous and unenforceable and the
and Appellants’ allegations must be accepted as fact. DeMuria, 328 F.3d at 706.
Because the Appellants alleged, with specificity and particularity, that they
executed the Releases because of fraud, duress, and undue influence, the District
In 1975, the New York Court of Appeals held that where a complaint alleges
that the execution of a release was “improperly obtained,” that allegation, in and of
basis of such a release. Newin Corp. v. Hartford Acc. & Indem. Co., 37 N.Y.2d
Since then, numerous New York Courts have followed the decision of the
Court of Appeals in Newin Corp. See, e.g., Ladenburg Thalman & Co., Inc. v.
Imaging Diagnostic Systems, Inc., 176 F.Supp.2d 199, 205 (S.D.N.Y. 2001)
(“[u]nder relevant New York case law, mere allegations of fraud in the inducement
Breslin, 47 A.D.3d 873, 877; 850 N.Y.2d 604, 608 (2d Dep’t 2008) (finding that
the trial court erred in granting a motion to dismiss on grounds of a release where
“the allegations of fraud were sufficient to support a possible finding that the
release signed by the plaintiff was obtained ‘under circumstances which indicate
unfairness;’” and that “[d]ismissal … overlooks the fact that the plaintiff alleged
that [plaintiff] procured the release by means of fraud.”) (citation omitted); Bloss v.
Va’ad Harabonim of Riverdale, 203 A.D.2d 36, 37; 610 N.Y.S.2d 197, 198 (1st
Development, 80 A.D.2d 736, 736; 437 N.Y.S.2d 165, 165 (4th Dep’t 1981)
(ordering an evidentiary hearing on the validity of the release after finding that the
trial court erred in dismissing complaint based on release where plaintiff had
alleged fraud in its procurement); Gibli v. Kadoshi, 279 A.D.2d. 35, 40; 717
N.Y.S.2d 553 (1st Dep’t 2000) (“it is inequitable to allow a release to bar a claim
where, as here, it is alleged that the releaser had little time for investigation or
28
Here, of course, the Appellants go beyond the standards set by the Court of
Appeals; they not only contend that the execution of the Releases was “improperly
scheme to defraud the Appellants. It alleges, among other things, that Appellees,
represented to Streit and Appellant McKinnon that Springland Films was filming
of the United States (R. A92). Schulman stated that the documentary would be
similar to those shown by National Geographic, was being made to build relations
between the United States and Belarus, and that the Appellants’ role in the
documentary was mainly for school children to learn about cultural diversity and
traditional Southern values (R. A92). Schulman repeatedly referred to the visiting
4
In their motion to dismiss, the Appellees argued that the Appellants failed to meet
the heightened pleading standard of Fed. R. Civ. P. 9(b) because the Apellants did
not allege that Appellees Dune, Fox, or Everyman misrepresented anything to
anyone and further that Appellants Moseley and Mr. and Mrs. Jared do not allege
that any of the Appellees misrepresented anything to them. This argument is
without merit. Appellants have alleged that at all times Appellees were acting in
concert and conspiracy to defraud Appellants. Complaint at ¶¶33 and 103-106.
Alexander & Alexander of New York, Inc. v Fritzen, 68 N.Y.2d 968, 969 (1986)
(“[a]llegations of conspiracy are permitted only to connect the actions of separate
Appellees with an otherwise actionable tort”).
29
Rather than address Newin Corp. and its progeny, the District Court simply
ignored it altogether. In an analytical sleight of hand, the District Court found that
omissions. But the District Court’s analysis ignores completely the numerous
The fact is that there was no “restyling” of any of Appellants allegations as the
District Court erroneously found. Further, this analysis effectively allows an end-
run around the New York Court of Appeals decision in Newin Corp. and the cases
that followed it. Should the District Court’s September 3 Decision and Order be
Streit and Springland Films executed a written contract for Streit’s Etiquette
Training Services business to arrange for a dinner and to provide etiquette training
(R. A93). The contract provides, among other things, that “[t]hese sessions will
be filmed as part of a documentary for Belarus Television and for those purposes
only” (R. A143). It also states that “[t]he portrayal of the participants will be
filmed and used for purposes only of the utmost dignity and class” and that “[t]here
30
At no time during the days leading up to the filming or during the
negotiation of the ETS Agreement did the Appellees provide Streit with a copy of
the Release so that she could review it, investigate, or consult an attorney. Instead,
Appellee Schulman, acting for all the Appellees, waited until the last minute before
filming commenced and after some of the Appellants had been drinking wine and
then hurriedly thrust the Releases on the Appellants and rushed the Appellants to
sign (R. A138). Further, Streit specifically asked Lewis if the Release changed
any of the terms in the ETS Agreement (R. A139). Lewis assured Streit that the
Release did not change the ETS Agreement and that there was nothing in it that
assurances in the face of the Release all made the Appellants feel comfortable with
the Release. The systematic deception, which the Appellees’ carried out over
several days leading up to the filming, made the last minute execution of the
inducement.
The Borat character was not a dignitary from Belarus; the Borat movie was
Appellee Springland was a shell company created to hide the true identity of
Appellee One-America and 20th Century Fox; Appellee Springland was not
31
Schulman’s employer and was not the producer of the Borat Movie; the individual
“Todd Lewis” was an illusion to hide Schulman’s true identity; the Borat movie is
not a “documentary-style film;” and the Releases did change the ETS Agreement,
or at least Appellant Streits’ rights thereunder. Indeed, nothing that the Appellees
represented to the Appellants before they executed the Releases was true. It was
In its order the District Court relies heavily on the 1959 New York Court of
Danann. The District Court, quoting UBS AG, Stamford Branch v. Healthsouth
Corp., No. 07 Civ. 8490 (LAP), 2008 WL 2337846, at *5 (S.D.N.Y. June 6, 2008),
differ significantly from the facts of this case such that the District Court’s reliance
32
on Danann is misplaced and does not justify the inequitable result reached by the
District court. The release in Danann was part of a merger clause in a complicated
seller regarding the operating expenses of the building and expected profits to be
earned. The contract in that case contained the following release language:
Danann at 320. The Court of Appeals held that the disclaimer provision in the
the seller had made no extra contractual representations regarding the building’s
33
operating costs or potential profit and disclaimed any reliance on any such
purchaser had the opportunity to inspect the property and the books and records
detailing the rents, leases, expenses and operations of the property. The contract in
people. In contrast, the Appellants in the present case did not have an opportunity
to learn about the true nature of the film; in fact, the Appellees made certain that
they did not know the true nature of the film. The Appellants did not receive the
Releases until the very last second with little, if any, time to review. The Releases
certainly were not negotiated, and there was a great disparity of knowledge and
information between the Appellants and the defrauding movie producers. The
systematic deception perpetrated by the Appellees could not be any less analogous
In Cirillo v. Slomin’s Inc., 196 Misc. 2d 922, 768 N.Y.S.2d 759 (N.Y.
Sup.Ct., Nassau Co. 2003), the court discussed at length the decision in Danann:
****
The instant situation, however, contemplates a consumer
sales transaction, in which the merchant provides to the
consumer a boiler plate contract form on a nonnegotiable
basis. In such context, the consumer must be afforded
more protection, and the reality of his contractual
statements must be examined more closely.
****
With respect to the issue of justifiable reliance, the
Danann dissent admonishes:
“In the realm of fact it is entirely possible for a party
knowingly to agree that no representations have been
made to him, while at the same time believing and
relying upon representations which in fact have been
made and in fact are false but for which he would not
have made the agreement. To deny this possibility is to
ignore the frequent instances in everyday experience
where parties accept … and act upon agreements
containing … exculpatory clauses in one form or another,
but where they do so, nevertheless, in reliance upon the
honesty of supposed friends, the plausible and disarming
statements of salesmen, or the customary course of
business. To refuse relief would result in opening the
35
door to a multitude of frauds and in thwarting the general
policy of the law.
****
This argument is more compelling here, in the context of
a consumer sales transaction, than in the context of the
business transaction that took place in Danann. A
consumer’s reliance upon the representations of the
seller’s sales agent may be justifiable, especially with
respect to technical matters (such as the capabilities of an
alarm system), presumably within the agent’s expertise,
which are incapable of independent verification by the
consumer.
****
This case provokes the following questions: Is the
consumer’s claim, innately, any less reliable than the
purported disclaimer of reliance? The consumer must
sign the contract if he wants to obtain the product or
service, and ordinarily must adopt it wholesale, without
opportunity to negotiate as to particular provisions. Can
the consumer really be said to “represent” a state of facts
(i.e., that no oral representations were made to him), by
virtue of his acquiescent signature? What if such state of
facts is rendered untrue by the acts of the merchant’s
sales agent? In such circumstances, the consumer’s claim
that he relied upon the sales agent’s oral representations
is no more inherently unreliable than the compulsory
boiler plate disclaimer. To reflexively disallow parol
evidence on the basis of such a disclaimer is to reward
the ingenuity of draftsman at the expense of sound public
policy, and to invite sales agents, armed with
impenetrable contracts, to lie to their customers. Here,
the danger of fraudulent claims is outweighed by the
danger of unrestrained fraud against the consumer.
Appellants are more similarly situated to the consumer in Cirillo than to the
36
consumer in Cirillo, signed a boiler plate contract, under duress, and without
opportunity to negotiate the contract or to learn the true nature of the underlying
discussed in Cirillo, the Danann court even acknowledged that the particular facts
discussed in Cirillo, the facts of Appellants’ case and public policy considerations
If a party has a duty to disclose, that party’s failure to disclose a material fact
(2d Cir. 1995). Under New York law, the following circumstances, among others,
give rise to a duty to disclose facts: “ where the party has made a partial or
ambiguous statement, on the theory that once a party has undertaken to mention a
relevant fact to the other party, it cannot give only half of the truth; … and …
where one party possesses superior knowledge, not readily available to the other,
and knows that the other is acting on the basis of mistaken knowledge.” Brass v.
American Film Technologies, Inc., 987 F.2d 142, 150 (2d Cir. 1993) (quotations
to the Appellants both orally and in writing that they were producing an
reality the Appellees knew the true nature of the film – an R rated major motion
Yet, the District Court found in its Decision and Order that Appellants were
The fact is that under the circumstances (which the Appellees went to great
pains to manipulate), the Appellants could not have uncovered the truth about the
Borat movie, facts within the exclusive knowledge of the Appellees. The
Appellants never had the opportunity to review the script. They were not informed
that the film included professional actors, which included celebrities such as
represented until filming began. Appellees carefully and strategically concealed all
of the material facts regarding the film until after the Releases were signed. And,
38
just to make sure that the Appellants had no opportunity to fully appreciate the
gravity and legal significance of the Releases, the Appellees waited until the last
possible moment to present the Releases and only after encouraging the Appellants
to drink wine for at least an hour and a half; they assured the Appellants that there
was nothing in the Releases that would harm them in any way or that changed the
ETS Agreement; and, once the Releases had finally been distributed, they
repeatedly stated that the Appellants needed to “hurry up” and sign them so that
Moreover, Schulman’s failure to disclose his true identity and his execution
of the Release with a false name, by itself, constitutes grounds to reverse the
District Court. See Starr v. Johnson, 143 A.D.2d 130, 132; 531 N.Y.S.2d 589, 591
(2d Dep’t 1988) (holding that the defendant was under a duty at the time of the
accident to disclose his true identity in order for a release to be validly asserted).
“Todd Lewis” was under a duty to reveal to the Appellants not only that he was, in
fact, Todd Schulman, but also that his employer was not Springland, but One
America, and the true intent of the filming (i.e., to embarrass the Appellants). Full
disclosure would have at least given the Appellants the opportunity to conduct
binding agreement. By violating these duties, the Appellees rendered the Releases
unenforceable.
39
Conclusion
For all the foregoing reasons, Appellants respectfully request that this Court
issue an Order reversing the District Court, remanding the case back to the District
Complaint and granting such other and further relief as it deems just and proper.
Respectfully submitted,
By: __________________________
Adam Richards (AR-2489)
40
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